Trump and Xi will meet in Beijing – an intensifying economic war between the two superpowers

However, behind the diplomatic clichés and smiles for the cameras, the two superpowers are quietly preparing for something much more difficult and jarring – a devastating economic war. According to a report in the “New York Times”, both sides are now mapping weak points and sharpening the tools designed to inflict maximum damage on the other side.

Beijing is not afraid of escalation

These measures are part of a broader campaign by Beijing to fend off what it perceives as growing efforts by Washington to limit its economy and technological growth. Over the past year, the two countries have stepped up their economic attacks, slapping each other with high tariffs, restricting the flow of rare elements and critical technologies, and imposing harsh sanctions on key industrial companies.

China’s doomsday weapon

But what started as a game of “measure against measure” has escalated, reaching entire global supply chains, leaving countries and companies desperately struggling to manage the consequences. Now, after years of only defensive responses, China is going on the offensive against entities that obey Washington.

Last April, Beijing announced sweeping regulations giving local regulators the power to investigate corporate records, question employees and prevent companies or executives from leaving China if they are found to be helping move supply chains out of the country. This move puts companies that make goods for American consumers in a powerless position.

“hot stove” approach

Many of them have already moved factories to countries like Vietnam or Mexico to escape the huge tariffs. Beijing provided a glimpse of this campaign as early as 2024, after PVH, owner of the Calvin Klein and Tommy Hilfiger brands, stopped buying cotton from Xinjiang province due to a US import ban linked to forced labor in the region. China has accused PVH of discrimination, launched an investigation and put the company on its “list of untrustworthy entities”.

Taiwan crisis

Senior officials in the American administration told the parties involved in the deal that the White House ordered the sale approval to be frozen on purpose, to ensure that Trump would have a successful and bumpy-free summit with his Chinese counterpart. “Ahead of your summit with the Chinese president next week, we urge you and your staff to make clear that America’s support for Taiwan is unbreakable,” the eight Democratic and Republican senators wrote together. They strongly warned against turning support for the democratic island, which is exposed to invasion threats from Beijing, into a cheap bargaining chip in economic or diplomatic negotiations with China. “American support for Taiwan is non-negotiable,” they stressed.

Last Friday, Taiwan’s lawmakers approved an unprecedented $25 billion special defense budget, managing to bridge internal political rifts despite continued pressure from Beijing. The budget is intended to finance urgent deterrent measures, and most of it is expected to be used to purchase defensive weapon systems from the United States and advanced anti-UAV technologies.

China, for its part, was quick to respond sharply to these moves, and the spokeswoman for the Chinese Foreign Ministry clarified that Beijing will take “all the necessary measures to resolutely protect our national sovereignty and territorial integrity.”