China Retaliates Against Latest US
Sanctions with Drone Export Curbs and Counter-Sanctions
Beijing frames the measures as a ‘restrained’
response to the US’ recent sanctions and robot import ban, but warns of potential
further actions
·
China
Announces Countermeasures: China
has responded to the latest US sanctions by imposing counter-sanctions on
seven US entities, tightening export controls on drones and related
technologies, and launching a national security investigation into imported
office equipment.
·
Drone
Export Restrictions: China
will subject exports of drones, key drone components and related
technologies destined for the US to strict case-by-case approval
with immediate effect, citing national security and non-proliferation
commitments.
·
Sanctions
on US Entities: China
added six US entities to its countermeasures list for allegedly
assisting US sanctions related to Xinjiang, prohibiting Chinese
individuals and companies from cooperating with them.
·
Action
Against Compliance Testing LLC: A seventh US company, Compliance Testing LLC, was also
sanctioned for allegedly assisting the US Federal Communications Commission
(FCC) in measures that China claims undermine its sovereignty, security and
development interests.
·
National
Security Investigation: China
has launched its first investigation under the revised Foreign Trade Law's
national security provisions, examining imported printing and copying
office equipment using foreign-developed software.
·
Focus on
US Technology Firms: The
probe is expected to affect major suppliers of printing software, including Microsoft
and HP, and will assess whether foreign government policies pose risks
to China's national security.
·
Response
to Recent US Measures:
Beijing's actions follow Washington's decision to:
o
Add 43
Chinese companies to the Uygur Forced Labour Prevention Act (UFLPA)
Entity List.
o
Expand
restrictions covering sectors such as cotton, food, pharmaceuticals, metals and
lithium.
o
Ban
imports and sales of certain foreign-made robotic devices and power
inverters, industries where China has a significant global presence.
·
China
Rejects Forced Labour Allegations: Beijing reiterated its denial of allegations of forced labour in Xinjiang,
describing the US measures as unjustified.
·
Calibrated
Retaliation: China's
Commerce Ministry described its response as restrained, stating that it
values stable China-US economic relations while demanding that Washington
withdraw its latest restrictions.
·
Warning
of Further Action: China
warned that it would adopt additional countermeasures if the US
continues to impose new restrictions.
·
Strategic
Shift in Trade Conflict: Analysts
view the measures as a calibrated escalation, signalling that
competition is increasingly centred on technology, supply chains and export
controls rather than tariffs.
·
Drone
Industry Becomes New Pressure Point: The drone restrictions extend China's earlier strategy of leveraging
dominance in rare earth minerals to other strategic sectors where it
enjoys significant global market share.
·
Growing
Importance of Export Controls: Analysts noted that export controls have evolved into a regular
instrument of strategic competition, with both countries seeking leverage
over critical technologies, dual-use goods and supply chains.
·
Diplomatic
Context: China's
response comes shortly after a video call between Vice-Premier He Lifeng,
US Treasury Secretary Scott Bessent, and US Trade Representative
Jamieson Greer, during which Beijing expressed concerns over US trade
actions.
·
Upcoming
High-Level Engagement: Despite
the latest measures, analysts believe both countries are seeking to avoid
uncontrolled escalation ahead of President Xi Jinping's expected visit to
Washington in September 2026, although further unilateral actions could
disrupt diplomatic engagement.
·
Overall
Assessment: The
latest developments underscore the continuing transformation of the US-China
trade dispute into a broader strategic competition, with export controls,
technology access and supply-chain resilience becoming the primary tools of
economic statecraft.
China
has hit back against a round of US sanctions with a barrage of counter-sanctions
targeting a group of American entities and a tightening of export restrictions on
the drone supply chain, the Ministry of Commerce announced on Wednesday.
The
export controls will subject any shipments of “drones, their key components and
related technologies” to the US to “strict case-by-case scrutiny”, with the measures
set to take effect immediately, the ministry said in a statement, citing the need
to “safeguard national security and meet China’s international commitments on non-proliferation”.
On
the same day, the commerce ministry also added six US entities to its countermeasures
list – banning Chinese entities and individuals from cooperating with them – over
allegations that they had assisted US sanctions related to China’s western Xinjiang
Uygur autonomous region, describing their conduct as “egregious”.
A
seventh US company, Compliance Testing LLC, was added to the countermeasures list
for assisting the US Federal Communications Commission (FCC) in introducing measures
that “endanger China’s sovereignty, security and development interests”.
Separately,
the commerce ministry launched a national security investigation regarding imported
printing and copying office equipment with foreign-made software. US tech firms
– such as Microsoft and HP – are seen as major players in the printing software
sector.
The
inquiry is the first to be launched using the new national security provisions laid
out in China’s revised foreign trade law, according to the commerce ministry, adding
the investigation would cover the effect of foreign government policies on China’s
security interests.
The
measures are a response to a string of recent actions by US authorities.
Last
week, Washington added 43 Chinese companies to its own entity list under the Uygur
Forced Labour Prevention Act, covering sectors ranging from food and cotton to pharmaceuticals,
metals and lithium production. Beijing has repeatedly denied allegations of forced
labour in Xinjiang.
Meanwhile,
the FCC banned the import and sale of new foreign-made robotic devices and power
inverters, two sectors where China is a leading global player.
“China’s
countermeasures have been restrained overall. China values the hard-won stability
of China-US economic and trade relations. We hope the US side can work with China
in the same direction,” the commerce ministry said in a statement.
But
the ministry demanded that Washington immediately rescind its measures, warning
that China would retaliate further if the US pressed ahead with new restrictions.
Analysts
said Beijing’s response marked the latest “calibrated escalation” in an ongoing
US-China trade and technology dispute, which has seen both sides attempt to gain
strategic leverage by threatening to cut off access to key resources and technologies.
For
some, the drone industry restrictions build on the tactics Beijing used during its
trade war with Washington last year, when it tightened export controls over rare
earth minerals – a vital industry where it controls most global supplies.
“Beijing
is extending the rare-earths playbook up the value chain, from raw inputs like gallium
and germanium to finished-goods components in a sector it dominates,” said Alicia
Garcia-Herrero, chief economist for Asia-Pacific and the Middle East at French investment
bank Natixis.
Drones
were already a point of friction in US-China relations. Chinese companies are the
undisputed leaders in the industry, dominating the global supply chain. In December,
the FCC banned the import of all new models of foreign-made drones and related components,
citing national security risks.
Beijing
appears to have taken particular issue with the timing of Washington’s latest actions.
The US sanctions were announced on July 31, a day after Chinese Vice-Premier He
Lifeng held a video call with US Treasury Secretary Scott Bessent and Trade Representative
Jamieson Greer.
During
the call, China expressed serious concern over the US’ recent economic and trade
moves, Xinhua reported. But Washington had pressed ahead with its measures “in complete
disregard” of China’s repeated representations, the commerce ministry said in another
statement on Wednesday.
The
decision “seriously contravenes” the consensus reached by Chinese President Xi Jinping
and US President Donald Trump during their recent meetings and seriously harms China’s
“legitimate rights and interests”, according to the statement.
For
Garcia-Herrero, Beijing was trying to signal it was “keeping its powder dry” as
both sides race to “de-risk” their economies – plugging holes in their supply chains
before the other side can weaponise the vulnerability.
Xu
Tianchen, senior economist at the Economist Intelligence Unit, said Beijing’s move
was a reciprocal response rather than an escalation, pointing to Xi’s expected visit
to Washington in September.
Xi
and Trump last met during the US president’s visit to Beijing in May. At the time,
Trump said Xi would visit America “on September 24, or thereabouts”, with subsequent
meetings likely to take place on the sidelines of major international summits in
November and December.
“Xi’s
visit is an important event. Following China’s countermeasures and continued communication
between the two sides, tensions are expected to ease,” Xu said, though he added
that the possibility of engagement being derailed by further unilateral US actions
could not be ruled out.
Matteo
Giovannini, a senior finance manager at the Industrial and Commercial Bank of China,
said the key signal was that “export controls are no longer exceptional policy tools,
as they have become a normal feature of strategic competition”.
“The
contest is shifting from tariffs towards control over critical technologies, supply
chains, and dual-use goods, where both Washington and Beijing believe they possess
meaningful leverage.”