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How Chow Yun-fat became a Hong Kong cinema superstar without losing his humility - A special profile from SCMP US President Donald Trump’s landmark visit to China comes as the US-Iran war disrupts global energy supplies, fuels economic uncertainty and adds fresh strain to Washington-Beijing ties.
In the latest instalment of a series examining how rivalry, interdependence and geopolitical crises are reshaping the relationship between the two powers, we explore the intensifying US-China legal arms race. For years, global businesses have been struggling to navigate rising trade tensions between the United States and China. Now, they are bracing for a daunting new level of complication: an intensifying legal arms race between the two powers.
Both Washington and Beijing have been racing to erect rival – and often conflicting – legal and regulatory regimes in recent months, as they seek to gain strategic leverage in their ongoing stand-off over a host of trade, technology and security issues. But that is leaving companies from South Korea to the Netherlands – not to mention China and the US – trapped in what analysts described as an “impossible position”, unable to comply with one side’s mandates without violating the other’s.
A glimpse of this new reality came in early May, as Beijing for the first time invoked its “Blocking Rules” – a measure adopted in 2021 to counter “improper” foreign actions – toMeanwhile, across the Pacific, American authorities have imposed sanctions on a string of Chinese entities accused of maintaining trade links with Iran – including the five oil refiners that Beijing sought to protect last week.
The US Congress is also advancing a slew of bills – led by the Multilateral Alignment of Technology Controls on Hardware Act – aimed atThe proliferation of extraterritorial laws is putting firms in “very difficult” dilemmas, according to analysts and industry insiders, as they now risk facing “two opposing forms of pressure” simultaneously – such as American legal requirements to restrict trade and Chinese orders to maintain it.
“The US-China relationship is no longer defined exclusively by trade restrictions and technology chokepoints, but increasingly by each side’s ability and willingness to deploy legal and regulatory measures and countermeasures,” said Laila Khawaja, research director at Gavekal Technologies. “China has not only enriched its legal tools, but also demonstrated a growing willingness to deploy them.
”– also suggests the country is seeking to strengthen its bargaining position with the US ahead of any planned trade negotiations by showing its counterbalancing capabilities, according to Khawaja. The ball is now in Washington’s court to choose whether to test that leverage or negotiate within it, she added.
Further escalation risks triggering a stronger Chinese response backed by an expanded legal toolkit, while stepping back could weaken the credibility of the US’ own policy frameworks – and potentially invite domestic political backlash. Beijing’s show of strength, however, is not only creating issues for Western multinationals. Chinese companies with operations overseas are likely to find that China’s measures bring new complications, but provide little relief from US pressure.
“Under current legal frameworks, a completely risk-free solution that fully complies with the demands of both systems simply does not exist,” said Chen Litong, a senior partner at the Dentons law firm’s Shanghai office, in an article published in domestic media outlet Caixin earlier this month. Cameron Johnson, a senior partner at Shanghai-based consultancy Tidal Wave Solutions, echoed this point.
If a company enforces US sanctions that China deems a threat to its access to vital resources, it would be liable for punishment under Beijing’s new regulations, he said.
“And on the US side, if you don’t , you could be cut off from the US market,” Johnson added. Martin Geissler, a partner at management consultancy Argon & Co, suggested that Washington might “deliberately tolerate” certain grey-zone structures for the time being, but he warned that such tolerance was fickle and could be revoked, turning corporate contracts into geopolitical instruments.
“Beijing, meanwhile, will push for supply-chain stability through China-shoring, local service structures and, where possible, the transfer of operational know-how,” Geissler added. However, it remains unclear whether US bills such as the Match Act will pass Congress or survive a potential veto from President Donald Trump, noted Paul Triolo, senior vice-president for China and the technology policy lead at DGA-Albright Stonebridge Group.
“It remains unclear how provisions of these types of bills would be enforced, because they would require significant monitoring and also generate major diplomatic problems with countries such as the Netherlands and Japan,” he added. With the situation putting companies in “an impossible position”, Triolo said, many advocates were calling for both sides to hold back on expansive export controls, particularly those that extraterritorially extend into legal grey areas.
Global semiconductor giants such as the Netherlands’ ASML and Japan’s Tokyo Electron Ltd, along with US tool makers holding contracts in China, are particularly exposed to such legal conflicts, according to Triolo. Geissler agreed, adding that “they may face US pressure to restrict support for China, while simultaneously facing Chinese pressure not to disrupt supply-chain stability”. On May 7, Qiushi – the leading theoretical journal of China’s ruling Communist Party – reaffirmed the country’s push to strengthen its legal arsenal.
“International competition is increasingly manifesting as a contest of systems, rules and laws, with fierce struggles playing out in areas such as sanctions and counter-sanctions,” the journal said in a commentary, specifically naming the US’ sanctions and “small yard, high fence” tech restrictions. For China, even though a basic legal foundation has been established, “weak links remain at the execution level, such as in cross-border evidence acquisition, asset tracking and freezing, and precise compliance guidance for enterprises,” it said.
Beijing is taking aim not just at the US, but also at trade investigations and sanctions from the European Union, analysts said.
“These efforts follow the growing number of investigations and trade restrictions, including tariffs, export controls and other economic sanctions imposed by the US and the EU, in particular,” according to Arendse HuldStill, it is “not yet certain” how broadly China’s new supply-chain regulations would be applied, she added, suggesting they might initially target only multinationals directly involved in lobbying for economic actions against China. “Nonetheless, foreign companies with a footprint in China should factor potential exposure ... into their supply-chain-risk assessments,” Huld wrote.
The vagueness of Beijing’s new regulations aims to maximise deterrence and give the Chinese government asymmetric leverage in trade negotiations, the Economist Intelligence Unit said in an April report.
“The timing matters: Trump had hoped to secure concessions on Boeing purchases, soybean imports and energy imports,” the EIU said. “The Chinese regulations follow the expansion of critical-mineral export controls in late 2025, which asserted the country’s own extraterritorial reach. ”Rare earth export restrictions have helped China counter the US’ own controls, which have gradually expanded in recent years to encompass a range of high-end technologies, including advanced semiconductors. , meanwhile, has seen both sides leverage trade restrictions.
The conflict erupted after Washington added Nexperia’s parent company – the Chinese firm Wingtech Technology – to its trade blacklist, which led the Dutch government to seize control of Nexperia. But the story took another turn after China cut off the flow of chips from Nexperia’s Chinese factories, sparking frantic talks between Beijing, Brussels and The Hague that ended in an uneasy stalemate.
Legal wrangling over the company’s ownership With Trump in Beijing until Friday for a high-profile summit with President Xi Jinping, a likely outcome of the trip would be a managed extension of This could involve China giving a verbal commitment to continue exporting rare earths to the US in exchange for Washington withholding new tariffs, sanctions and export controls, she said.
“Given the very limited time for substantive discussions, the meeting is unlikely to deliver breakthroughs on deeper concerns such as substantial rollback of export controls, Taiwan or China’s growth model, all of which will require prolonged negotiations. ” Triolo said that “there is a growing consensus – among a group of think tankers, industry players and outside observers – that the export controls on both sides have gone too far, and reached a point where their utility is significantly diminished”.
“Further expansion would only end up causing more collateral damage to global supply chains,” he added. -- SOUTH CHINA MORNING POSTYume the Akita dog gifted by Japan to Putin dies
US-China Relations Trade Tensions Legal Arms Race Regulatory Regimes US Sanctions Chinese Blocking Rules Trade Negotiations Geopolitical Crises Technology Export Controls Supply Chain Stability
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