Research & Analysis

Bilateral tensions flared over the weekend after China announced new export controls on rare earth elements. The move was a response to the Commerce Department’s “50% rule,” which was released late last month and dramatically expanded the number of Chinese firms on the Entity List.

The Senate on Thursday passed its version of the National Defense Authorization Act (NDAA) for 2026. The new version includes several China provisions that were excluded from the package offered in mid-September. The bill now moves forward to conference with the House, which passed its version earlier in September.

China’s economy has grown faster than expected this year, but growth in tax receipts has fallen behind. In response, Beijing is turning to tax reform as a cornerstone of fiscal stabilization, combining short-term measures to raise revenue from existing sources with longer-term efforts to standardize its tax regime.

For companies, this marks a shift from episodic policy shocks to institutionalized legal pressure, including conflicting compliance burdens, more discretionary enforcement, and increased uncertainty. Beijing, in turn, can use US firms’ regulatory exposure as a strategic lever to influence trade negotiations, shape corporate behavior, and advance longer-term industrial policy goals.

Although BIS frames the measure as an administrative plug to a loophole in semiconductor export controls, in practice, the rule is a broad decoupling action. As a result of the rule, the number of firms facing Entity List restrictions will climb from around 1,200 to an estimated 11,000, sending a chill through the commercial relationship.

The Commerce Department’s Bureau of Industry and Security on Tuesday published an interim final rule broadening the reach of its export controls blacklist. Under the new provision, any entity that is at least 50% owned by one or more entities on the list will itself automatically be subject to Entity List restrictions.

The export controls and sanctions tracker lists all active Commerce, Treasury, and State Department export controls aimed at China—including Hong Kong. This tracker is updated regularly and an archived tab will be added in the future as entities and individuals are removed from US government blacklists.

Senior executives of USCBC member companies on Thursday met with Chinese Premier Li Qiang in New York. Members discussed market access issues and the need for a level playing field and predictable, stable business environment for US companies in China. They also highlighted the importance of ongoing dialogue between senior US and Chinese leaders.

With mandatory centralized traceability and monthly reporting requirements, the new rules grant regulators unprecedented oversight over supply flows and domestic profitability, with repercussions for global price stability.

On August 26, China’s State Council released guiding opinions on the implementation of China’s AI+ Action Plan over the next 10 years. The plan is China’s most comprehensive policy statement yet on embedding artificial intelligence throughout its economy and society, providing ministries, regulators, and local governments with key implementation goals. Target areas for AI integration include R&D, agriculture, industrial processes, and services.