China Strikes Back: New Export Controls in Response to U.S. Sanctions

13 January 2025

Chinese factory with smoke and industrial machinery background.

China has recently reacted strongly to the U.S. sanctions and export controls targeting its technology sector, particularly in cybersecurity and electric vehicle (EV) battery technologies. The Chinese government has announced plans to impose its own restrictions, signaling a tit-for-tat approach in the ongoing tech rivalry between the two nations.

Key Takeaways

China protests U.S. sanctions against its cybersecurity firms.
New export controls on EV battery technologies are being implemented.
The U.S. plans to limit AI technology exports, further escalating tensions.

China’s Response to U.S. Sanctions

In early January 2025, the U.S. Treasury Department sanctioned Integrity Technology Group, a Beijing-based cybersecurity firm, for its alleged involvement in hacking incidents targeting U.S. infrastructure. The Chinese government condemned these sanctions, claiming they were unfounded and aimed at defaming China.

Chinese Foreign Ministry spokesperson Guo Jiakun stated that the U.S. has been exaggerating the threat of Chinese cyberattacks and has initiated illegal unilateral sanctions. He emphasized that China would take necessary measures to protect its rights and interests.

Integrity Technology Group, in a statement, denied the allegations and asserted that the sanctions would not impact its operations, as it does not conduct business in the U.S.

New Export Controls on EV Technologies

In a direct response to the U.S. sanctions, China announced plans to revise its export control regulations concerning battery manufacturing technologies. This includes requiring government permits for exporting lithium-phosphate-iron (LFP) cathode materials, essential for affordable lithium-ion batteries used in electric vehicles.

The Ministry of Commerce (MOFCOM) stated that these adjustments are not aimed at any specific industry or country but are part of a routine update to align with technological advancements. The proposed measures are open for public feedback until February 1, 2025.

U.S. Plans to Limit AI Technology Exports

Simultaneously, the Biden administration is preparing to impose new restrictions on the export of artificial intelligence (AI) technology, particularly targeting China. These measures are designed to prevent AI technology from enhancing China’s military capabilities.

The proposed regulations categorize countries into different groups, allowing some U.S. allies to access AI chips while restricting China entirely. This move has raised concerns among tech companies, who fear it could undermine U.S. industrial dominance and push allies to seek alternatives.

Implications for Global Trade

The escalating tensions between the U.S. and China over technology exports could have significant implications for global trade. As both nations impose restrictions on each other’s technologies, companies may face increased uncertainty and operational challenges.

Potential for Retaliation: China may respond with further export controls and sanctions against U.S. companies, exacerbating the trade conflict.
Impact on Tech Industry: U.S. tech firms are concerned that these restrictions could hinder their competitiveness and innovation.
Global Supply Chains: The ongoing rivalry may disrupt global supply chains, particularly in the semiconductor and EV sectors.

As the situation develops, both countries will need to navigate the complex landscape of international trade and technology to avoid further escalation of tensions. The outcomes of these actions will likely shape the future of global technology markets and international relations.