China Market Intelligence

As tariffs and other trade restrictions between the United States and China continue to rise, US policymakers are flagging a related trend: an increased manufacturing presence of Chinese firms in third countries—particularly in Mexico and Vietnam. Some accuse these firms of deliberate “country hopping” to skirt US tariffs on imports from China and enter the US market at lower tariff rates.

Beijing has taken the first step toward fixing its economic problem—admitting it has one. China’s growth has continued to stagnate this year as it grapples with a protracted real estate downturn, local government debt, and record youth unemployment, which have all resulted in an acute crisis of confidence.

Accessing China’s vast public procurement market continues to be difficult for US companies. Procurement issues appeared in this year’s list of top 10 challenges for USCBC members for only the third time in our survey’s history.

Six months after China’s internet regulator published new rules on data flows, cross-border data transfer (CBDT) remains a top challenge for US companies operating in the country. Sector-specific issues and the introduction of free-trade zone CBDT rules are presenting new challenges to companies even as national-level compliance burdens have eased.

The impending presidential and congressional transition in the United States is prompting American policymakers to push for final approval on long-debated tariff policies, in part in an effort to win voters. The initiatives in question—the final Section 301 determination, new de minimis rule, and ongoing debate over China’s trade status with the United States—are all in different stages but stem from similar motives.

US-China trade continued to decline in the first half of 2024, reaching 2.3 percent year-over-year after both US exports to and imports from China contracted. That said, this is the slowest contraction in overall US-China trade since the second half of 2022.

China is hoping to replicate Silicon Valley-style innovation through its policy support for small- and medium-sized enterprises (SMEs). Several initiatives released this past summer by government ministries provide investment incentives and low-cost financing for qualified domestic companies that innovate new technologies.

On August 29, Jake Sullivan concluded his first trip to China as national security advisor, where he met with several senior Chinese officials as part of ongoing efforts to maintain open lines of communication between Washington and Beijing.

Lawmakers in the US House of Representatives convened on September 9 to vote on a series of China-related proposals that have been circulating since March, including measures aimed at addressing China’s alleged unfair trade practices and other actions deemed threatening to US national security.

On July 25, the Bureau of Industry and Security (BIS) published proposed rules that, if implemented as written, would significantly expand US export controls over US person activities and previously uncontrolled items. The rules restrict exports, re-exports, and in-country transfers of goods, software, and technologies to four categories of end users in China and other countries that the United States maintains an arms embargo on.