Analysis-White House quiet as China ramps up trade leverage before Trump-Xi summit
WASHINGTON, April 30 (Reuters) - Beijing rolled out new trade rules this month that have alarmed U.S. businesses and which analysts say could seriously undercut American efforts to reduce supply chain dependence on China. But the Trump administration's reaction has been uncharacteristically muted - U.S.
officials have so far not spoken publicly about Beijing's move. The rules, announced just weeks ahead of President Donald Trump's May 14-15 summit with Chinese leader Xi Jinping, lay the legal groundwork for punishing foreign companies that seek to shift their sourcing away from China.
The Trump administration has urged businesses to "derisk" - to be less dependent on goods from China - and retake "sovereignty" in strategic industries, including critical minerals and medicines. Beijing's new rules effectively push U.S. and other foreign businesses in the other direction.
One U.S. official told Reuters on condition of anonymity that the timing of Beijing's announcement, ahead of Trump's China trip, suggested Beijing was testing how eager the White House is to maintain the pause in the trade war, which started early last year with a U.S.
tariff broadside and Chinese retaliatory levies. "It's a clear attempt to stop derisking," the official said. Business groups have sounded the alarm about the Chinese regulations. The American Chamber of Commerce in China told Reuters China could cut purchases from foreign firms with little consequence, while foreign companies could face investigation by Chinese authorities for reducing their dependence.
"Washington's response so far has been silence. That risks signaling weakness," said Craig Singleton, a China expert at the Foundation for Defense of Democracies (FDD) think tank. With the summit approaching, the administration appeared to want to avoid escalating publicly, he added.
White House spokesman Kush Desai did not respond directly to Reuters' questions on the measures, stating only that the Trump administration "will continue to leverage every bit of America's economic might to safeguard our national and economic security." The Treasury Department and the Office of the U.S.
Trade Representative did not respond to Reuters' request for comment. The Trump administration's reticence on the new rules, which many in U.S. industry see as a shot across the bow, is a departure from the bilateral trade brinkmanship that characterized the lead-up to Trump's October meeting with Xi in South Korea.
In Busan, the two sides ultimately reached an uneasy trade truce, but Trump had threatened to cut off all U.S. software exports to China and levy 100% tariffs on Chinese goods in response to Chinese controls on critical minerals exports. China's new measures state that foreign entities that take actions "such as suspending normal transactions with our nation's citizens or organizations," are subject to investigation and punishment.
The rules do not highlight specific industries for enforcement but say Chinese agencies will develop a "key sectors list" to safeguard "circulation of raw materials, technology, equipment" and other products. The measures could affect a wide range of companies.
U.S. pharmaceutical companies, for example, have increasingly looked to move some production and sourcing to India and other countries that have less geopolitical rivalry with Washington. Under China's new rules, such actions could be seen as a threat to China's security, resulting in companies facing investment and import or export bans, and seeing staff prevented from entering the country.
A second set of Chinese regulations published days later lays out punishments for foreign firms that comply with "unjustified extraterritorial jurisdiction," Beijing's term for U.S. sanctions and export controls. Analysts and some U.S. officials worry about the precedent set by Beijing's measures.
"Left unaddressed, these new rules will normalize supply chain coercion and accelerate China's developmen…