So much for easing back in after the long holiday.
On Thursday the Ministry of Commerce and General Administration of Customs issued a series of notices dramatically expanding export controls across much of the “new quality productive forces” technology supply chains. The Trump administration appeared blindsided by what is a massive escalation and, if a reaction to the last week’s 50% entity listing rule, is a disproportionate response. The PRC has escalation dominance in rare earths and clean energy-related technologies, but the US does have areas of real leverage too, though so far it has been unwilling to exercise much of that leverage. If that changes, the escalation cycle is going to accelerate and become increasingly painful.
As we discussed on this week’s Sharp China, at some point the PRC side may overplay their hand by making President Trump look weak. Are we now closer to that point with today’s actions?
1. Expanding export controls - MOFCOM and the GAC issued six announcemen…