US-China trade plummeted in the first quarter of 2020 as global economic activity slowed dramatically due to COVID-19. Recently released US trade data show that goods imports from China dropped 28.4 percent year on year, while exports dropped 15.4 percent. US-China trade had already suffered in 2019 compared to years prior as a result of tariffs enacted by both countries.

On April 27, the Cyberspace Administration of China (CAC), with 11 other ministries, released the final version of the Cybersecurity Review Measures (“measures”) which will build on a patchwork of documents implementing China’s Cybersecurity Law. The measures will govern the process for regulators to assess supply chain vulnerability of certain network systems that could impact China’s national security. The measures will go into effect on June 1, replacing the network security measures, a high-level document noted by members to have been largely unenforced. 

The spread of COVID-19 in the United States has underscored partisan divides on policy while simultaneously bringing to the surface some issues where long-term interests vis-à-vis China align. While some of the anti-China noise in Washington is political bluster, such as proposals to strip China of its sovereign immunity, other initiatives with bipartisan support could have broader implications for the direction of the US-China commercial relationship and supply chain resiliency.

President Donald Trump’s April 4 executive order (EO) formalizing Team Telecom’s role in ICT reviews has brought new transparency to the licensing process while further entangling US national security and commercial interests. The interagency team, officially called the Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector, is empowered to assist the Federal Communications Commission (FCC) in assessing whether certain foreign participation in the United States’s telecommunications sector poses a national security threat.

Following cautionary reports from the US Congressional-Executive Commission on China (CECC) and the Australian Strategic Policy Institute (ASPI), US lawmakers last month proposed new limits and possible border blocks on imports from China that may have been produced with forced labor, such as garments made from cotton sourced in Xinjiang, China. This issue could pose significant disruptions to global retail supply chains as well as reputational concerns for brands and retailers. 

The COVID-19 pandemic exacerbates more than two years of trade-related stress on global supply chains. In the first quarter of this year, China’s economy contracted 6.8 percent compared with Q1 2019. This was the first reported contraction since Beijing began reporting quarterly GDP data in 1992. While many companies are optimistic that China’s economy will pick up in the second quarter, they harbor concerns China’s exports will continue to face challenges as the virus rattles major export markets like the United States and Europe. Virus-related disruptions are now resulting in increased scrutiny of companies’ future sourcing and investment strategies. 

Earlier this month, the Chinese government tightened rules for exports of certain medical products used to combat COVID-19 in response to high-profile complaints about their quality. In light of these new requirements, exporters and importers of these goods can expect that the customs process will be delayed.