Beijing Entrenches Asymmetric Closed-Door Strategy

Executive Summary:

• The People’s Republic of China (PRC) is constructing a functional closed-door regime for the core factors of production, simultaneously retaining people, capital, frontier technology, and proprietary information inside the country under the banner of national security.
• Mobility controls once limited to senior cadres now extend across the entire administrative apparatus and into the private sector, with judicial and administrative exit bans applicable to ordinary citizens, private-sector founders, and foreign nationals operating inside the PRC.
• Outbound capital faces a closing aperture. Traditional foreign exchange channels remain quota-constrained, while the cryptocurrency and offshore renminbi-pegged stablecoin routes that previously absorbed unsanctioned outflows have been formally shut.
• Frontier technologies are retained through a periodically expanded export-control catalogue that defines the standing prohibitions and restrictions and a foreign-investment security review that backstops it by blocking outbound flows the catalogue does not list, as the Manus case demonstrates.
• Information outflows have been re-characterized as a national security risk, with overseas access to corporate, financial, and academic databases curtailed, in-country due diligence by foreign firms constrained, and important data required to remain onshore.

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In April, the State Council of the People’s Republic of China (PRC) issued two consecutive administrative regulations with immediate effect: Order No. 834, the Provisions on the Security of Industrial and Supply Chains (产业链供应链安全管理条例), and Order No. 835, the Regulations on Countering Improper Foreign Extraterritorial Jurisdiction (反外国不当域外管辖条例) (Xinhua, April 7; April 13). Two weeks later, the Office of the Working Mechanism for the Security Review of Foreign Investment of the National Development and Reform Commission (NDRC) prohibited Meta’s acquisition of Manus, a Chinese-origin artificial intelligence (AI) agent firm, ordering both parties to undo the transaction (NDRC, April 27). The decision arrived after Manus co-founders Xiao Hong (肖弘) and Ji Yichao (季逸超) had been summoned to Beijing in March and placed under exit bans, preventing their departure during the security review (Financial Times, March 24).

Regulatory measures of this nature, such as supply chain regulations, countersanctions instruments, and foreign investment reviews, may appear as a series of isolated incidents, but represent functionally aligned enforcement driven by a single guiding doctrine. Each domain of cross-border outflow has been reclassified as a national security matter, requiring an inter-ministerial review process that can lead to outflows being blocked under an expanding coercive toolkit. The Manus case is only one recent example of this doctrine in action, with a single transaction simultaneously activating controls on persons (exit bans on the founders), capital (the foreign investment security review), technology (the export-review framework applied to model architecture and engineering know-how), and information (the cross-border treatment of training data).

Outbound Mobility Controls Extend From Cadres to Private Citizens

Controlling outbound mobility is foundational to this doctrine. This hinges on ensuring that the persons who control a transaction or asset are inside PRC jurisdiction—even if the transaction or asset is otherwise outside it. The legal basis for this control is dispersed across the Exit and Entry Administration Law (出境入境管理法), the Criminal Procedure Law (刑事诉讼法), and counterespionage legislation, with substantial administrative discretion at each layer. Search results on the official China Judgments Online (中国裁判文书网) database for civil and criminal cases spanning 2016–2025 show that mentions of “exit ban” (限制出境) in verdicts grew rapidly over the latest ten-year period and largely doubled every year between 2021 and 2024. This reflects an expansion in the statutory base: by 2023, 14 laws authorized exit bans, including four enacted between 2018–2022 alone, such as the Supervision Law (监察法), which allows exit bans on individuals merely connected to an investigation (SPP, February 5, 2025; Safeguard Defenders, May 5). Orders No. 834 and 835 sit one tier below, as administrative regulations issued under that statutory authority but adding new operational triggers for exit bans in the supply-chain and countersanctions contexts.

Across the Party-state apparatus, a parallel and longer-standing regime governs civil servants, employees of public institutions (事业单位), and state-owned enterprise (SOE) managers. Its earliest visible form was the early-2010s “naked officials” (裸官) regime, which removed senior cadres whose spouses and children had emigrated abroad on the theory that overseas ties constituted both evidence of disloyalty and a vector of foreign coercion (China Brief, January 14). The instruments built on that doctrine have since been generalized down the rank hierarchy. A sample of internal documents from a national ministry, a provincial organization department, and a university reveal a standardized regime for private foreign travel (Zhongnan University of Economics and Law, December 4, 2015; National Public Complaints and Proposals Administration, April 1, 2016; Hubei Department of Justice, January 3, 2017). Registered personnel surrender passports, Hong Kong and Macao travel permits, and Taiwan travel permits to the personnel department for centralized custody (集中保管); approval is item-by-item (一事一报); itineraries cannot be altered without re-approval; and approval for in-service deputy bureau-level cadres or above is generally not granted absent special circumstances. The situation has tightened further as rank-and-file employees in some units must now sign confidentiality undertakings or provide in-house guarantors before personal travel (Voice of America, October 23, 2023).

The April 2026 regulations expand this doctrine. Article 16 of Order No. 834 and Article 17 of Order No. 835 each explicitly list exit bans among the permissible administrative measures against organizations and individuals—including foreign nationals—that fail to comply with supply chain security obligations or that resist countersanctions enforcement (Xinhua, April 7; April 13). Both routes operate without judicial process and a criminal predicate requirement, reflecting an extension of instruments once reserved for cadres and judicial defendants to the much broader population of foreign business personnel (Safeguard Defenders, May 5). The Manus exit bans, imposed under the Exit and Entry Administration Law during the NDRC’s foreign-investment security review, demonstrate the scope of its application: personal mobility controls extend to private-sector executives and foreigners alike.

Capital Outflow Channels Tighten on Multiple Fronts

In the last two years, the traditional outbound capital channel—the State Administration of Foreign Exchange (SAFE) quota and approval system administered under the Foreign Exchange Administration Regulation (外汇管理条例)—has tightened asymmetrically, constraining private and individual outflows while leaving state-led channels open. As last amended in April 2024, the regulations cap individual foreign exchange purchases at $50,000 per person per year, require a declared purpose, and prohibit overseas real estate and equity investment, with violators subject to suspension of exchange rights (SAFE, April 30, 2024). For enterprises, outbound direct investment requires sequential NDRC, Ministry of Commerce (MOFCOM), and SAFE clearances before funds can be remitted; and investments in real estate, hotels, and entertainment are classified as restricted categories subject to discretionary refusal (State Council General Office, August 18, 2017). In 2024, soaring individual demand for offshore assets ran into Qualified Domestic Institutional Investor (QDII) quota limits, with foreign asset managers rationing access as allocations fell short. [1]

By contrast, state-aligned outbound investment continues to flow on materially easier terms. Deals by central state-owned enterprises (央企), policy-bank-financed vehicles, and projects tied to the One Belt One Road (OBOR) initiative pass through a streamlined approval track. Encouraged-category projects in energy, resources, infrastructure, and advanced manufacturing receive NDRC and MOFCOM clearance on an expedited basis under the 2017 State Council guidance, while the restricted-category sectors that primarily attract private capital, namely real estate, hotels, entertainment, and sports clubs, remain subject to discretionary refusal (State Council General Office, August 18, 2017). The 2024 outbound flow figures reflect the resulting tilt toward state-aligned destinations: of the roughly $144 billion in non-financial outbound direct investment, just over a quarter went to OBOR counterparties alone, with investment in this corridor growing nearly 23 percent year-on-year, more than double the overall non-financial ODI growth rate of 10.5 percent (MOFCOM, September 8, 2025).

More consequential than the calibrated tightening of legal quotas is the closure of one of the principal informal routes that had absorbed unsanctioned outflows. Beijing has now fully prohibited the cryptocurrency leg of the underground-banking architecture, eliminating what was once a legal gray area through which large volumes of unsanctioned capital had moved. Previously, a Chinese resident looking to send money outside the PRC typically would transfer renminbi (RMB) domestically to an “underground banker” (地下钱庄) who would arrange, through cooperating offshore networks holding stablecoins or other digital assets, the corresponding payment in U.S. dollars or another foreign currency to a designated overseas account, thus circumventing the foreign-exchange quota (TRM Labs, February 12, 2024). A 2021 prohibition on cryptocurrency trading and mining got rid of domestic exchanges and miners but left the underground-banking and offshore-stablecoin architecture largely operational, as two recent U.S. government reports have separately documented in the case of cooperation with Mexican drug-trafficking organizations (SAFE, September 24, 2021; U.S. Department of State, March 2025; Government Accountability Office, December 2025).

In response, the People’s Bank of China (PBOC), together with seven other ministries and regulators including NDRC, MOFCOM, and SAFE, on February 6 issued the Notice on Further Preventing and Handling Risks Related to Virtual Currencies (关于进一步防范和处置虚拟货币相关风险的通知) (PBOC, February 6). The notice extends prohibitions in three directions. First, it prohibits the tokenization of real-world asset. Second, it bars any domestic or foreign entity—including overseas branches of domestic firms—from issuing offshore stablecoins pegged to the RMB without regulatory authorization. Third, it asserts extraterritorial application against foreign entities providing virtual currency-related services to PRC residents (Han Kun Law Offices, February 10; Beijing DHH Law Firm, March 20). Enforcement of the measure is helped by the centrally-controlled and fully traceable digital RMB, which started to bear interest on January 1 (People’s Daily, January 1). Sanctioned outbound channels remain regulated and quota-limited, while previous gray-zone channels have formally been prohibited, even if enforcement against underlying peer-to-peer flows remains a separate question.

Technology Export Licensing Expands Around Frontier Sectors

The Catalogue of Technologies Prohibited or Restricted from Export (禁止出口限制出口技术目录), maintained jointly by MOFCOM and the Ministry of Science and Technology (MOST), is the central instrument governing outbound technology flow under the 2020 Export Control Law (出口管制法) and the Regulations on the Administration of Import and Export of Technologies (技术进出口管理条例). Items on the prohibited list cannot leave the PRC under any circumstances; items on the restricted list require a Letter of Intent on Technology Export Licensing from MOFCOM affiliates at the provincial level before negotiations and a separate export license before transfer (National Database of Laws and Regulations, November 29, 2020).

The catalogue was last comprehensively revised in late 2023 (MOFCOM, December 21, 2023). The single new prohibited item was human cell cloning and gene-editing technology; the three new restricted items were crop heterosis utilization technology, bulk material loading and unloading transportation technology, and LiDAR systems above defined thresholds. A further set of modifications, concerning lithium-extraction and gallium-extraction technologies, was issued on July 15, 2025 (MOFCOM, July 15, 2025). Three months later, MOFCOM announced a separate and more consequential set of measures on rare earth-related items and technologies, asserting extraterritorial jurisdiction over PRC-origin rare earth content above a 0.1 percent value threshold (MOFCOM, October 9, 2025). Separately, on July 31, 2023, MOFCOM and the General Administration of Customs imposed export controls on selected unmanned aerial vehicle (UAV) engines, payloads, and counter-UAV systems, including a two-year temporary control on certain consumer-grade UAVs (MOFCOM, July 31, 2023).

The catalogue alone is not the constraint on outbound technology flow. As the Manus case demonstrates, a complementary mechanism exists in which the foreign investment security review framework substitutes for any specific catalogue entry. The case nonetheless turned on the firm’s model architecture, training data, and engineering know-how having been developed inside the PRC and therefore treated as subject to PRC jurisdiction even after Butterfly Effect’s (北京蝴蝶效应科技) mid-2025 change of company domicile and relocation of approximately 40 core technical staff to Singapore (The Paper, December 30, 2025; Xinhua, January 8). [2] No catalogue entry on AI agent architectures was cited; instead, the security review considered the technology, data, and capital aspects of the case under the 2020 Measures for the Security Review of Foreign Investment. The case was the first publicly announced refusal by NDRC under that mechanism since its establishment in 2011 (Institute for National Defense and Security Research, April 30). Precedent matters because it establishes that the instruments of pre-approval, security review, and individual exit ban can be combined to retain a piece of technology even where, formally, no specific catalogue item has been triggered.

Cross-Border Information Channels Close at Both Ends

The state has recently tightened control over both ends of the cross-border information channel: the inbound flow of corporate and academic data to overseas users, and the outbound flow generated through foreign-firm operations and data-handling activities inside the PRC. Beginning in early 2023, the principal databases used by overseas analysts for due diligence on Chinese companies, the corporate registry aggregators Qichacha (企查查) and Tianyancha (天眼查), and the financial data platform Wind Information (万得), began restricting overseas access to filings, ownership structures, and litigation records, requiring mainland Chinese mobile numbers and IP addresses for verification (Bloomberg, May 3, 2023). In March 2023, the operator of the China National Knowledge Infrastructure (CNKI), the country’s largest academic database, suspended access for more than a dozen overseas universities and research institutions, citing compliance with the Cyberspace Administration of China’s (CAC) Measures on Data Cross-Border Transfer Assessment (数据出境安全评估办法) (CAC, July 7, 2022; Nikkei Asia, March 23, 2023). Overseas users were thereby detached from much of the routine corporate, financial, and academic information they had previously accessed from outside the country.

Enforcement has also reached the in-country generation of information by foreign firms. The 2023 amendment to the Counter-Espionage Law (反间谍法) substantially broadened the definition of espionage to include the acquisition of “documents, data, materials, and items concerning national security and interests” (关系国家安全和利益的文件、数据、资料、物品) (SPP, April 26, 2024). Under that umbrella, in 2023, state security and police authorities raided the Beijing office of the U.S. due diligence firm Mintz Group and detained Chinese employees, questioned staff at the Shanghai office of Bain & Company, and conducted multi-jurisdictional actions against the expert-network firm Capvision Partners (凯盛融英) (China Brief, October 20, 2023). The April 2026 supply-chain regulation places this enforcement pattern on a permanent administrative footing. Article 13 of Order No. 834 provides that any organization or individual who, in violation of PRC laws, administrative regulations, departmental rules, and relevant state provisions, “carries out, inside the territory of the PRC, investigations or other information-collection activities related to industrial and supply chains” (在我国境内开展与产业链供应链相关的调查等信息收集活动) shall be subject to handling measures by the relevant authorities. In practice, this captures the audits multinationals must conduct to satisfy the U.S. Uyghur Forced Labor Prevention Act (UFLPA) or the European Union Corporate Sustainability Due Diligence Directive (CSDDD). Article 15 authorizes investigations into foreign organizations and individuals whose conduct causes substantial harm to PRC supply-chain security; based on the investigation, authorities may bar the foreign party from PRC-related trade and investment, prohibit Chinese counterparties from transacting with it, deny entry to its personnel, and revoke residence qualifications. Article 16 extends compulsion onshore, by making PRC entities that fail to comply with such measures potentially subject to data-export bans and exit bans (Xinhua, April 7).

The formal data-export regime is exemplified by the 2021 enforcement action against ride-hailing platform Didi Global. Two days after Didi listed on the New York Stock Exchange (NYSE) in late June that year, CAC announced a cybersecurity review and ordered the company to suspend new user registrations (CAC, July 2, 2021). One year later, CAC fined Didi $1.2 billion, citing illegal handling of personal information and “data-processing activities seriously affecting national security” (严重影响国家安全的数据处理活动), with the latter withheld from public disclosure on national-security grounds (CAC, July 21, 2022). Didi delisted from the NYSE in mid-2022. The architecture has since been formalized in CAC Order No. 11 of 2022 and CAC Order No. 16 of 2024 (CAC, July 7, 2022, March 22, 2024). Together with database restrictions and supply-chain regulation, this regime converts information itself into the fourth controlled factor, alongside persons, capital, and technology. As a result, what Chinese residents and PRC-domiciled data may convey to the outside world is now subject to discretionary state authorization.

Conclusion

The asymmetric closed-door strategy stands in stark contrast to traditional autarky. Rather than restricting all cross-border flows, the state has bifurcated its approach. The underlying core factors of production are now retained under a single security-driven framework. This diverges from older outbound instruments for tangible resources, such as the critical minerals export-licensing regime, which is calibrated to produce foreign dependence rather than domestic retention.

Under this model, the PRC remains active in pushing manufactured exports and non-sensitive services out of the country to keep earning foreign exchange and bind global supply chains to Chinese producers. At the same time, however, the factors that generate wealth and innovation, elites, highly mobile capital, future-defining frontier technology and intellectual property, and the granular information that reveals an industry’s hand, have without exception been labeled national-security assets. As such, they are subjected to mandatory retention, and required, in the regime’s own logic, to stay home. The downstream effect is a one-directional decoupling. Foreign firms, regulators, and investors retain exposure to PRC markets but lose the people, capital, technology, and granular information needed to assess that exposure accurately. Over time, this asymmetry will raise the cost of any policy response calibrated to conditions inside the PRC, from export controls and investment screening to forced-labor compliance audits, while leaving Beijing’s outbound commercial channels intact.

Notes

[1] Launched in 2006, the Qualified Domestic Institutional Investor (QDII, 合格境内机构投资者) scheme allows licensed PRC financial institutions—banks, securities firms and fund managers, insurers, and trusts—to convert onshore funds into foreign currency within an aggregate quota set by the State Administration of Foreign Exchange (SAFE) and invest the proceeds in approved offshore securities on behalf of domestic clients. SAFE has continued to issue new quotas in tranches, including just over $3 billion in June 2025 and a further $5.3 billion across 78 institutions in late March 2026, bringing the cumulative approved quota to more than $176 billion as of the end of April 2026. Pacing, however, remains discretionary and well below market demand, as reflected in persistent onshore premiums and recurring purchase caps on QDII-linked funds (STCN, January 15; SAFE, April 30).

[2] Butterfly Effect is the name of the company that developed Manus (Baidu, accessed May 11).

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Expanding Tools Control Foreign-Related Economic Activity

Executive Summary:

• Beijing is tightening controls on who and what are allowed to leave the People’s Republic of China (PRC), in part to prevent entities, particularly those with overseas operations and particularly those in critical sectors from moving beyond its regulatory reach.
• Three new regulatory instruments have come into force since March that advance Beijing’s capacity to control and shape foreign-related economic activity. All are explicitly designed to safeguard three things: national sovereignty, national security, and the PRC’s development interests, which are broadly defined.
• Penalties for entities deemed to have violated the new regulations range from visa controls (refusals, revocations, and expulsions), cancellation of residence permits and qualifications, asset seizures, data transaction restrictions, and prohibitions on cross-border trade and investment.

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Over the past few years, Beijing has ramped up its legal and regulatory framework to better engage in what it calls a “foreign-related legal struggle” (涉外法律斗争) (MOJ, April 7). To General Secretary Xi Jinping, strengthening rule by law in foreign affairs is “an urgent task for promoting high-level opening up and responding to external risks and challenges” (推进高水平对外开放、应对外部风险挑战的当务之急) (Xinhua, November 28, 2023).

The release of the Chinese Communist Party (CCP) Central Committee’s recommendations for the 15th Five-Year Plan has made this urgency more acute. U.S. export and trade policies have become more unpredictable and costly since President Trump’s return to the White House in early 2025; and as the People’s Republic of China (PRC) has become increasingly reliant on exports as a source of economic growth, more focus has been given to handling economic and other relations with the rest of the world.

The recent spate of regulatory activity suggests a third motivating factor for Beijing. As its own policy environment becomes more hostile for many private sector entities, particularly those with overseas operations and particularly those in critical sectors, it must move quickly to prevent—or at least disincentivize—them from leaving.

This danger is very real. In November 2025, the European Union Chamber of Commerce in China surveyed its membership on the PRC’s export control regime. The headline takeaway was that a third of companies impacted by the controls were looking to divert sourcing away from the PRC (European Union Chamber of Commerce in China, April 14). While Western companies have been considering derisking strategies for several years, some domestic firms are now attempting to decouple, moving their entire businesses beyond the reach of the PRC’s legal and political systems.

In 2025, reports suggested that Chinese authorities sought to prevent PRC nationals employed by electronics manufacturer Foxconn from leaving the country to help establish iPhone factories in India (Rest of World, January 10, 2025). More recently, authorities appear to have prevented the founders of Manus AI from leaving the PRC. Manus, an agentic artificial intelligence startup that made headlines when it was launched in 2025, was acquired by Meta soon after. The Ministry of Commerce has claimed that it is “unaware of the relevant situation” (商务部不了解相关情况), though it has not denied implementing exit bans on the company’s founders (Xinhua, April 2). These rumored actions are now backed by an expanding set of regulatory and legal instruments, making it more likely that they will be deployed in future to prevent the outflow or critical materials, technologies, intellectual property, and talent.

The broader context was set at the most authoritative level by the 20th Party Congress report, which called for “making efforts to enhance the resilience and security of industrial and supply chains” (着力提升产业链供应链韧性和安全水平). This shift was the result of assessments following the first Trump administration that the PRC’s coercive tools were not fit for purpose, and that Beijing needed an updated toolkit of control rules, sanctions, and investment restrictions that it could rely on to foster its centrality in global supply chains and support its own domestic innovation. This led to the buildout of an unreliable entity list, the creation of blocking rules to protect domestic firms from the extraterritorial application of other countries’ laws, the hastily enacted Anti-Foreign Sanctions Law, the Tariff Law, and a whole host of cybersecurity, merger, and export control rules, reviews, and regulations (The Washington Quarterly, April 8).

More recently, the 15th Five-Year Plan, which has raised the importance of expanding opening up compared to previous plans, called for “improving the export control system” (完善出口管制体系) and “strengthening security reviews … and improving monitoring, prevention, and control mechanisms” (加强境外投资安全审查 … 健全 … 监测、防控、处置机制) for outbound investments (Xinhua, March 13; China Brief, April 4).

The last few months have also seen a flurry of more targeted laws and regulations come into force. Explicit in all of these is the emphasis on safeguarding three things: the PRC’s national sovereignty, national security, and development interests (国家主权、安全、发展利益). Many of the instruments supplement other laws beyond those mentioned above, such as the 2015 National Security Law (国家安全法) and 2023 Foreign Relations Law (对外关系法).

On March 1, a revision to the PRC’s Foreign Trade Law (对外贸易法) came into effect. Among other things, the revision bolstered the country’s trade countermeasures. It established a “negative list system for cross-border service trade” (跨境服务贸易负面清单制度), “strengthened the bottom line of security and improved risk prevention and control” (筑牢安全底线，完善风险防控), and added “national security exceptions and trade retaliatory clauses” (国家安全例外和贸易反制条款), authorizing restrictive measures against foreign entities (Hunan Provincial Party Committee Office of Foreign Affairs, March 10).

On April 7, the State Council released the “Regulations on the Security of Industrial and Supply Chains” (关于产业链供应链安全的规定). These are designed to “ensure the security and controllability of core technologies, as well as related information systems and data” (企业、科研机构等应当完善风险防控体系，实现核心技术及相关信息系统、数据的安全可控). To this end, they establish information sharing and data security mechanisms and monitoring and early warning platforms, improve emergency management systems, and develop “physical and capacity reserves” (实物储备和能力储备) in critical sectors. They also empower the government to prohibit research into domestic supply chains, prohibit or restrict the import and export of goods and technologies, and permit investigations into entities suspected of wrongdoing. These investigations can involve “inspecting or copying relevant documents and materials” (查阅或者复制相关文件、资料) and can result in prohibiting or restricting import and export activities, investments, and ingress or egress of relevant personnel from the PRC, among other penalties. They can even target organizations and individuals that only “indirectly participate” (间接参与) in acts that the regulations prohibit (State Council, April 7).

A week later, the State Council followed by releasing the “Regulations on Countering Foreign Improper Extraterritorial Jurisdiction” (反外国不当域外管辖条例). In one sweeping clause, they empower the government to “exercise extraterritorial jurisdiction over conduct having an appropriate nexus to China” (有权对与中国存在适当联系的行为实施域外管辖措施), though they leave undefined what counts as an “appropriate nexus.” For those who are judged to be implementing or assisting in implementing foreign improper extraterritorial jurisdiction measures, the regulations provide a number of “countermeasures and restrictive measures” (反制和限制措施). These include visa controls (refusals, revocations, and expulsions), cancellation of residence permits and qualifications, asset seizures, data transaction restrictions, and prohibitions on importing to, exporting from, or investing in the PRC. Key to the operation of these regulations is a new Malicious Entities List (恶意实体清单), that will publicize entities that violate the regulations (State Council Information Office, April 13). Expert commentaries on the regulations, published by the PRC Ministry of Justice (MOJ), frame them as a response to “the containment and suppression by the United States and the West” (美西方围堵遏制), and as aimed at maintaining the stability of the PRC’s external development environment (MOJ, April 7, [a], [b]).

Conclusion

The PRC has been beefing up its legal and regulatory capacity to control and shape both its own and foreign economic activity for several years. Beijing has accelerated these efforts over the last year—and especially in the last several weeks. Now that it has expanded its toolkit on paper, like Chekov’s gun, the toolkit will inevitably be deployed in due course, likely based on purely political incentives. In fact, this has already happened: In January, the PRC restricted the export of rare earth elements to Japan as a response to remarks made by the Japanese prime minister (PRC Ministry of Commerce, January 6). In the end, although Beijing frames its measures as intended to bring stability to the international economic system, these latest regulatory innovations are likely to have the opposite effect.

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Chinese responses: Rare Earth Export Controls, Port Fees on Chinese vessels, Grabbing Nexperia

Rare Earth Export Controls, Port Fees on Chinese vessels, Tariffs, Grabbing Nexperia – summary

We have to note that none of this comes out of the blue.  China has faced only unwillingness from U.S. trade negotiators and a series of what we can only call unfriendly actions, designed to coerce.  The time is over.  What is happening here is a slew of actions by China that confirms what I’ve intuited since the beginning of the tariff onslaught.  If it gets too difficult to trade, there will not be trade.  At this time China seems to be at that point.  They don’t care any longer about trade with the U.S.

The Chinese MOFCOM spokesperson remarked:

Rare Earth Export Controls: Directly aimed at military activity and weapons manufacturing, to better defend world peace and regional stability.

These export controls are directly aimed at weapons manufacturing and are intended to reduce military conflicts and support non-proliferation.

They are not export bans. Licenses for eligible applications will be granted.

China announced these controls before implementing them.

These export controls will support the security and stability of global industrial and supply chains-

China’s national security is mentioned and this is easy to see.  They won’t sell products to those that manufacture weapons intended to threaten China.

Port Fees on Chinese Vessels:  This is a confusing conglomeration of payment for tonnage on Chinese-built vessels, partially Chinese-built vessels, and generally a game of confusion.

MOFCOM states:

Particularly since the China-U.S. economic and trade talks in Madrid in September, the U.S., in just 20 days, has introduced a string of new restrictive measures targeting China. It has put multiple Chinese entities on the Entity List and Special Designated National List; arbitrarily expanded the scope of control over businesses with the Affiliates Rule that affects thousands of Chinese companies; and persisted with the implementation of Section 301 measures targeting China’s maritime, logistics and shipbuilding industries in disregard of China’s concerns and goodwill. The U.S. actions have severely harmed China’s interests and undermined the atmosphere of bilateral economic and trade talks, and China is resolutely opposed to them.

The Spokesperson notes that the U.S. has shown a negative attitude and willfully persists in implementing those measures, issuing a notice on October 3 setting out the specific requirements for imposing fees on Chinese vessels.

In response to U.S. actions, China took countermeasures and decided to charge special port fees on U.S.-linked vessels.  China describes these countermeasures as necessary acts of passive defense.

Tariffs:  Willful threats of high tariffs are not the right way to get along with China. … If the U.S. insists on going the wrong way, China will surely take resolute measures to protect its legitimate rights and interests.

The MOFCOM Statement:  http://english.mofcom.gov.cn/News/SpokesmansRemarks/art/2025/art_c202dcc0433d476db52b1e7f7fe53926.html

Dutch Grab of Nexperia:  The Dutch government said on Sunday that it has made a “highly exceptional” decision to intervene in Nexperia, a subsidiary of Chinese company Wingtech, citing concerns that it could “pose a risk to Dutch and European economic security.” On September 30, the Dutch Ministry of Economic Affairs issued an administrative order restricting the business decisions of Nexperia and its affiliated entities, effectively depriving Chinese shareholders of their standard control. Wingtech subsequently issued a statement, expressing a strong protest against such discriminatory treatment targeting Chinese-funded enterprises. It is evident to anyone with clear judgment that the Dutch government is seriously harassing a chip company controlled by Chinese enterprises under the pretext of a fabricated “national security” concern.

In the early stages of capitalism, some countries relied on violence and colonial plunder to accumulate primitive capital, even fostering within their own cultures the misguided historical notion that “plunder brings wealth.” In today’s geopolitical context, the Dutch government, under the pretext of “supply chain security,” has imposed excessive interference on Chinese enterprises and then cloaked its asset seizure under a façade of legality – a seamless sequence of actions that inevitably evokes memories of certain dark chapters in this country’s history. It is no wonder that some have wryly observed that

a few Western countries now treat “national security” as a privateering license, a reflection of “colonial genes” awakening in the 21st century.

Global Times editorial:  https://www.globaltimes.cn/page/202510/1345566.shtml

It is clear from trade numbers that China’s trade is increasing with the rest of the world, while trade with the US is decreasing.  Professor Wolff aptly describes the situation, stating that the trade environment in the US does not encourage trade but rather discourages it.

The decrease is not only in trade numbers.

US treasuries held by China are reducing.

De-dollarization is increasing.

So it is a 3 front wall of pressure, epitomized by footage of U.S. soldiers standing in food distribution lines.

China has chosen an optimum moment to rebalance power.

The tweets and twitters are interesting.  One person says .. Do Your Chrismas Shopping Now, and here is another illustrating the real effect on U.S. Business.

For those of you who think this tradewar is not serious…. pic.twitter.com/Bz0mhnCw5i

— The key to success is documentation. (@VietVantage) October 13, 2025

I must hold to my point that if trade is made too complicated, it will not happen.  As Russia is fighting NATO, China has entered the arena with a view to an economic decapitation strike to put the U.S and the collective West in the place of normal countries without exorbitant privilege.  China clearly feels strong enough now, as evidenced by its actions at the WTO, where, for trade advantages, they are no longer insisting that it is a developing country.

Even trade numbers and reported statistics are difficult these days, as the effect of de-dollarization is not easy to measure.  How do the IMF and World Bank count that which is not there?  Even Africa has now floated its own ratings organization, and Russia and India are doing their business in Yuan.  It is not only ‘that which is not there’, it is also new business being done, and the values are not flowing through the usual channels for statistical reporting.  For myself, I am watching trends and not specifically numbers.  The change in the world is growing massive, and one of those trends is that China is creating its own certification system for commercial aircraft, for example.    This period is truly historical, with comprador countries lacking agency, madly spinning between the new large poles being formed.  One example is that we are seeing more and more media that Turkey is wavering between west and mulitpolarity.

There are some numbers which on the face of it and standing alone, tells the story. In September alone, China’s exports grew by 8.3%, the fastest pace in months.

Shipments to the US fell by 27%. Exports to the EU rose more than 14%, exports to ASEAN nations were up by almost 16%, and exports to Africa rose by 56%.

Direct shipments to the US now make up barely 10% of China’s total exports. The US is learning a harsh, obvious truth that it should have learned a long time ago. The world is bigger than the United States, and the United States is no longer essential.

Hold onto your hats!