China’s response to the US move to block chip sales to Chinese tech giant Huawei has been limited by economic realities, experts say. China’s retaliation so far has been limited to tariffs on US soybeans, pork, and other agricultural products. This reflects the reality that China cannot match the US’ economic might, and its options are limited to exacting only limited economic retribution.
Furthermore, many of the policies that the US has put in place against Huawei, including banning its access to US chip technology, could easily be duplicated by China or its allies. As such, this often leaves Beijing in the position of responding to US actions in a manner that is diplomatic rather than economically punitive.
At the same time, Chinese policymakers have sought to find ways to lessen the economic impact of US policy. In April 2021, for instance, China lowered tariffs on semiconductor imports from the US, in what some analysts believes was a bid to reduce the trade imbalance between the two countries.
Ultimately, China’s response to the US chip ban has been limited by economic realities. Beijing is not in a position to match Washington’s economic might and has been limited to exacting only limited economic retribution. Nevertheless, the Chinese government has nonetheless tried to find ways to lessen the economic impact of US policies.