More than half a month ago, after the United States announced that 188 Chinese companies had been included in the export restriction list, semiconductors, new energy, high-end manufacturing and other related industrial chains and capital markets fluctuated rapidly. Many foreign trade practitioners were worried that the supply of core components would be cut off, overseas market channels would be tightened, and the operating pressure of enterprises would increase significantly.
Many ordinary people initially regarded this move as an ordinary trade friction and did not realize the deep impact behind it.
But just 14 days later, China launched a complete targeted counterattack package, which included two core measures: first, to implement strict export licensing controls on ten categories of strategically related products; second, to include 46 overseas entities that actively participated in the technological blockade against China into the non-purchasable list.
Different from the fragmented response methods in the past, this two-way control covers both the supply side and the procurement side. It no longer passively responds to external suppression, but proactively builds an industrial security wall.
U.S. sanctions target core tracks
Structural adjustments have occurred in the industry in the short term
The 188 companies included in the restricted list by the United States this time were not randomly selected. They are all concentrated in the core track of global future industrial competition and are mainly divided into four major sectors: First, companies in the entire semiconductor industry chain, covering chip design, wafer manufacturing, packaging and testing, and semiconductor materials.
, photolithography supporting equipment and other sectors are also the sectors with the greatest restrictions this time; second, new energy track companies, most of the leading companies in the upstream and downstream of photovoltaics, energy storage, and power batteries are on the list; third, artificial intelligence, industrial robots, high-end precision equipment manufacturing entities; fourth, aerospace, shipbuilding, and communication infrastructure-related R&D and production companies.
The core purpose of the United States is very clear, which is to try to slow down the upgrading of China’s high-end manufacturing industry by cutting off the supply of high-end equipment and raw materials, and maintain its own advantages in the two high-growth tracks of chips and new energy.
In the 14 days since the sanctions were implemented, three types of intuitive changes have occurred in relevant domestic industries: First, foreign trade exports have been under short-term pressure. Some photovoltaic and energy storage manufacturers focusing on the North American market have been forced to adjust their order delivery processes and accelerate the development of emerging markets such as Southeast Asia, the Middle East, Latin America, and Europe. Short-term logistics and channel expansion costs have increased, and the new order signing cycle for small and medium-sized foreign trade factories has also lengthened; second, the procurement cost of upstream high-end equipment has increased, and some rely on overseas precision.
Small and medium-sized enterprises such as testing instruments and special semiconductor raw materials have begun to turn to domestic substitution. In the short term, additional investment is required for production line debugging and adaptation, and production efficiency has declined slightly. The third is the structural differentiation of the capital market. Enterprises with complete domestic substitution supply chains and diversified overseas market layouts have limited fluctuations, while small and medium-sized enterprises that rely on a single overseas supply chain and have customers highly concentrated in North America are under more obvious pressure. Domestic equipment and domestic material tracks have received continuous attention from funds.
It is worth noting that this sanction does not involve an industry-wide blockade. Sino-US private trade in general consumer goods, agricultural products, and light industrial daily necessities will still maintain normal exchanges. The general public’s daily purchase of imported daily necessities and food will not be significantly affected.
Two major countermeasures have been implemented accurately, and two-way protection has solidified the bottom line of industrial security
The first countermeasure launched by China is to implement export license controls on ten categories of core products.
The ten categories of products controlled this time are all strategic products whose overseas industrial chains are highly dependent on China’s supply, including rare metal refined and processed products, special graphite materials, photovoltaic core silicon materials, high-end silicon carbide substrates, industrial rare earth permanent magnet materials, key cathode materials for power batteries, etc. Most of the global production capacity of such products is concentrated in China. It will take at least 3 to 5 years to build equivalent alternative production capacity overseas, and the time and capital costs are extremely high.
The control implements layered rules, which does not completely prohibit exports, but requires companies to submit complete materials such as the background of the purchaser, product usage, and final flow before exporting. They can only export after passing the review. For overseas companies that have cooperated with the US blockade against China, export licenses will not be issued directly.
This control not only forms a reciprocal check and balance, but also fully takes into account the people’s livelihood and foreign trade needs. Ordinary building materials, residential photovoltaic products, ordinary batteries and other people’s livelihood products are not included in the control list, and the daily order delivery of small and medium-sized foreign trade merchants will not be affected.
In the long term, control will also force the in-depth integration of the domestic raw material downstream industry chain, enhance the bargaining power of domestic raw material companies, accelerate the integrated layout of upstream and downstream, and improve the industry’s overall ability to resist risks.
The second countermeasure is to include 46 overseas entities that actively participate in restrictions on China into the non-purchasable list.
The screening criteria are clear and specific, targeting only three types of entities: overseas manufacturers that proactively implement restrictions on the U.S. entity list and unilaterally terminate the supply of equipment and technology to China; overseas institutions that cooperate with U.S. inspections and arbitrarily obtain commercial data and technical information from domestic cooperative enterprises; overseas supply chain companies that assist the U.S. in completing technology blockades and indirectly hinder domestic industrial upgrading. Overseas companies in the field of ordinary consumer goods are not affected at all.
The control rules require that all domestic enterprises, institutions, and scientific research institutes are not allowed to purchase any equipment, raw materials, and technical services from entities on the list. Projects that are indeed difficult to substitute require special application and approval.
The non-purchasable list has made up for the previous defense shortcomings of the industrial chain. It has not only reduced the revenue sources of restricted overseas manufacturers and weakened their R&D expansion capabilities, but also forced domestic companies to accelerate the switching of domestic equipment suppliers, creating greater market space for local self-developed equipment manufacturers, forming a virtuous cycle of R&D investment and market expansion.
At the same time, the policy has set up a sufficient buffer period. Maintenance and after-sales services of the delivered equipment can be performed normally according to the original contract to avoid any impact on existing production.
The long-term trend of industrial independence is established
Equality and win-win are the optimal solutions to trade
After the implementation of the two major countermeasures, four major deep-seated industry changes are gradually emerging: First, the global industrial chain has shifted from the single globalization that pursued extreme low costs in the past to the coexistence of multiple regional industrial chains, and major economies are building independent and controllable supply chain systems; second, industrial autonomy has changed from a multiple-choice question for enterprises to a must-answer question, no matter how large the scale is.
Small manufacturing companies are sorting out their supply chain lists and accelerating the replacement of restricted overseas products; third, the trade game is becoming more reciprocal, and China is no longer passively accepting suppression unilaterally, and already has the industrial foundation for reciprocal countermeasures; fourth, although short-term supply chain adjustments will bring some pain, in the long term, the competitiveness of domestic high-end manufacturing industries will steadily improve, getting rid of the “stuck neck” constraints of external technology and raw materials.
It is necessary to correct several common misunderstandings among the public: first, the control policy will not trigger comprehensive trade decoupling, and the import and export of ordinary commodities will not be affected at all, and will only target strategic products in the high-end industrial field; second, the core starting point of the countermeasure policy is industrial security protection rather than pure retaliation.
Again, moderate reciprocal control can maintain a long-term and stable global trade environment; in the end, domestic substitution cannot be achieved overnight, and technological breakthroughs in some high-end fields will require 2 to 5 years of continuous research and development. Control policies only create a window period for domestic industries to grow, and do not completely eliminate imports in the short term.
The global industrial chain game has never been a zero-sum game. Unilateral restrictions will ultimately make both parties bear the cost of rising costs and shrinking production capacity. Equality, openness, mutual benefit and win-win are the best solutions for the long-term development of global trade.
