Welcome to the 81st edition of our weekly newsletter! I am SUN Chenghao, a fellow with the Center for International Security and Strategy (CISS) at Tsinghua University, Council Member of The Chinese Association of American Studies and a visiting scholar at the Paul Tsai China Center of Yale Law School (fall 2024).
ChinAffairsplus shares Chinese academic articles focused on topics such as China’s foreign policy, China-U.S. relations, China-European relations, and more. This newsletter was co-founded by me and my research assistant, ZHANG Xueyu.
Through carefully selected Chinese academic articles, we aim to provide you with key insights into the issues that China’s academic and strategic communities are focused on. We will highlight why each article matters and the most important takeaways. Questions or criticisms may be addressed to sch0625@gmail.com
Today, we have selected an article written by Zhu Min, Gong Bing and Yang Siyao, who analyze Changes in U.S. Economic Policy Toward China Over the Past Three Decades and China’s Strategic Countermeasures.
Summary
Over the past three decades, U.S. economic policy toward China has undergone a structural evolution from engagement and cooperation to competition and containment, and then to systemic suppression, forming a systematic policy framework against China with trade, finance, science and technology, and security as the core pillars. This system has further deepened since the beginning of Trump’s second term.
After returning to the White House, the Trump administration has introduced and frequently adjusted its policies toward China in the three core areas of trade, finance, and science and technology in a short period of time, with more explicit policy objectives, systematic suppression measures, and a significant increase in the cross-pillar policy integration, demonstrating a more evident intention to comprehensively promote the decoupling of the China-U.S. economies. During this period, high inflation, financial market risks, games among interest groups in the U.S., as well as China’s strong countermeasures have become important restrictive factors curbing the extremization of U.S. policies toward China. These constraints have continued to play a role in the second term of the Trump administration, rendering its China policy characterized by a firm strategic objective and wavering implementation path. In general, the direction of U.S. economic policy toward China in the Trump administration’s second term may be irreversible, yet its implementation pace and intensity are still subject to internal and external constraints, showing volatile and transactional features.
China should build a systematic, hierarchical and tradable response strategy in the three key areas of trade, finance, and science and technology. It should maintain strategic resolve while flexibly taking advantage of the fluctuating window of U.S. policies and optimize the mechanism of countermeasures and games while stabilizing growth, strengthening science and technology and promoting security as the main thread.
Why It Matters
The transformation of U.S. economic policy toward China has not only reshaped bilateral relations between the two countries, but also profoundly influenced the global economic order, industrial and supply chain structures, and functioning of international governance systems. Compared with studies that focus on a single domain or short-term policy developments, this article adopts a long-term perspective, examining trade, finance, technology, and security within an integrated analytical framework, thereby capturing the overarching logic and internal coherence of U.S. economic policy toward China. For these reasons, the study not only contributes to a more nuanced understanding of the complexity of U.S. economic policy toward China but also provides meaningful practical insights for China in assessing future trends and refining its policy responses.
Key Points
Evolution of the Concepts and Objectives of U.S. Economic Policy Toward China
Over the past three decades, U.S. economic policy toward China has undergone a clear, phased evolution. During the Clinton and George W. Bush administrations, the United States largely pursued a cooperation-oriented approach. The core strategy of “constructive engagement” aimed to integrate China more deeply into the U.S.-led global free trade system, cooperation remained the dominant theme of this period.
During the Obama administration, as China’s economic scale expanded rapidly, the global financial crisis shook the U.S.-led international order, the United States began to systematically adjust its economic policy toward China. It increasingly viewed China as a potential challenger. As a result, U.S. policy gradually sought a new balance between cooperation and containment, while reinforcing a competitive orientation through strategic initiatives such as the “Pivot to Asia.”
In the period of the Trump administration’s first term and the Biden administration, U.S. economic policy toward China further shifted from competition to containment and suppression, with the space for bilateral economic cooperation significantly reduced. Both identified China as the primary challenge to the United States in the economic, technological, and global governance domains, and steadily intensified pressure on China. Overall, the evolution of U.S. economic policy toward China reflects not short-term fluctuations, but a structural shift driven by changes in the balance of power between the two countries, transformations in the global political economy, and the reconfiguration of domestic political forces within the United States. Its underlying logic has moved from “shaping China through engagement” to “maintaining U.S. dominance through competition and containment,” exhibiting strong long-term continuity.
Evolution and Implementation of U.S. Policy Instruments Toward China
Evolution of the Policy Framework and Toolkit: Over the past three decades, the United States has built a systematic framework around four core pillars—trade, finance, technology, and security. As U.S. policy shifted from cooperation to competition and containment, these instruments expanded in scope, variety, and intensity. At the same time, the boundaries between policy domains have become increasingly blurred, producing stronger cross-domain linkages.
In trade, U.S. policy has evolved from a dual approach of cooperation and threat to one dominated by unilateral measures. During the Clinton and George W. Bush administrations, the United States promoted cooperation by supporting China’s accession to the World Trade Organization and establishing dialogue mechanisms, while employing tariffs and trade disputes as instruments of pressure. During the Trump administration’s first term and the Biden administration, trade policy became more instrumentalized and routinized, with tariffs and institutional tools widely deployed as part of a broader strategic competition framework.
In investment and finance, U.S. policy has shifted markedly from openness and cooperation to restriction and partial decoupling. Since Trump’s first term, however, the United States strengthened controls over cross-border capital flows, restricted Chinese firms’ access to financing, and sought to redirect capital flows. The Biden administration has largely continued this trajectory, further integrating financial policy with technology policy, making it an important tool of strategic competition.
In technology, U.S. policy has undergone a “leapfrog” transformation from fragmented controls to systematic, full-chain restrictions. The Trump administration institutionalized these controls, while the Biden administration has advanced “full-chain” restrictions and allied coordination, forming a systemic regime centered on key sectors such as semiconductors, while also reinforcing domestic technological capabilities through industrial policy.
In security, U.S. policy expanded from military security into broader economic domains, producing a pronounced trend of securitization. Since Trump’s first term, the United States has increasingly invoked “national security” to justify measures in trade, technology, and industrial chains, while the Biden administration further deepened the integration of security and economic policy.
The Wavering Nature of U.S. Economic Policy Toward China: In the implementation of its economic policy toward China, the United States has consistently faced significant cost constraints and structural limitations. Over time, China and the United States have developed a high degree of interdependence in key areas such as trade, finance, science and technology, and knowledge exchange. It has imposed considerable economic and institutional costs on efforts to promote decoupling or pursue extreme suppression policies toward China. In practice, such policies may not only fuel domestic inflation and weaken employment and output, but also undermine corporate performance, capital market stability, and innovation capacity, thereby constituting a de facto “bottom-line constraint” on policy implementation.
Moreover, the implementation of U.S. policy is shaped by a range of internal and external factors. Domestically, there is a clear divergence among interest groups. This internal contestation directly influences both the direction and intensity of policy. Externally, China’s countermeasures and changes in the global macroeconomic and financial environment also impose constraints by altering cost structures and expectations of policy outcomes.As a result, U.S. economic policy toward China exhibits a pronounced wavering implementation path. While its strategic objective—competition and containment as the dominant approach—has become increasingly clear, its implementation is frequently adjusted in response to domestic economic conditions and international developments.
Continuity and Development of U.S. Economic Policy Toward China in the Second Term of the Trump Administration
Entering the second term of the Trump administration, U.S. economic policy toward China has further advanced the existing framework of containment and suppression, marking a new stage of systemic and comprehensive intensification. The United States has explicitly defined China as its core competitor, and embedded its China policy more closely within the “America First” strategy. Its core objectives focus on reducing dependence on China, narrowing the trade deficit, restricting bilateral investment, and containing China’s development in key frontier technologies.
The second Trump administration has also upgraded the existing toolkit and emphasized cross-pillar instruments. In trade, policy has expanded beyond tariffs to include non-tariff barriers and rule-based constraints. In technology, the United States has expanded export controls, investment restrictions, corporate sanctions, and allied coordination. In finance, it has tightened restrictions on capital flows and Chinese firms’ access to financing.
At the same time, U.S. economic policy toward China exhibits a pronounced trend of securitization, with trade, finance, and technology policies increasingly integrated under the logic of national security. Policy implementation remains subject to multiple constraints, including the need to control inflation, maintain employment and financial stability, and balance competing domestic interest groups. These constraints mean that, even as containment intensifies, U.S. economic policy toward China continues to display a degree of flexibility and room for adjustment.
Wavering and Volatility in the Implementation of U.S. Economic Policy Toward China in the Second Term of the Trump Administration
In the early stage of Trump’s second term, U.S. economic policy toward China has shown clear wavering and volatility. Its trajectory can be characterized as “intense suppression—sharp fluctuation—gradual moderation.” In trade, the United States rapidly raised tariffs and expanded non-tariff barriers, but later lowered tariffs and delayed some measures under negotiation and macroeconomic pressures. In finance, policy tightened but remained more cautious than in trade and technology. In technology, export controls and corporate sanctions continued to escalate in semiconductors and artificial intelligence, while some measures were adjusted or suspended in response to negotiation dynamics or market pressures.
The volatility of these policies is the result of multiple interacting factors. On the one hand, the second Trump administration has adopted a more aggressive policy stance toward China in terms of concepts and objectives. On the other hand, domestic inflationary pressures, financial market volatility, and losses to corporate interests have imposed significant constraints on policy implementation. Simultaneously, large multinational corporations and technology firms have exerted “corrective” pressure on the government through lobbying and policy intervention. In addition, China’s countermeasures, together with changes in the global macroeconomic and geopolitical environment, have further increased the costs of sustaining extreme policies, reinforcing the wavering implementation path of U.S. economic policy toward China.
Conclusion
Overall, Trump’s second term has further strengthened U.S. economic suppression of China, made decoupling more explicit, and deepened policy integration across trade, finance, and science and technology. Yet implementation remains constrained by inflation, financial stability concerns, domestic interest-group games, and China’s countermeasures. For China, the key is to maintain strategic resolve, use the fluctuating window in U.S. policy implementation, strengthen economic and industrial resilience, and refine its countermeasures, negotiation tools, and policy responses to secure greater strategic initiative.
About the Authors
ZHU Min朱民: Senior Expert Committee Member, China Center for International Economic Exchanges; Former Deputy Managing Director, International Monetary Fund
GONG Bing巩冰: Associate Professor, School of International Political Economy, University of Chinese Academy of Social Sciences
YANG Siyao杨斯尧: Postdoctoral Fellow and Assistant Researcher, PBC School of Finance, Tsinghua University
About the Publication
The Chinese version of this article was published in The Chinese Journal of American Studies（《美国研究》）, which was founded in 1987 and is jointly sponsored by the Institute of American Studies at the Chinese Academy of Social Sciences and the Chinese Association for American Studies. Originally launched as a quarterly and published as a bimonthly since 2014, the journal features Chinese scholarship on the United States, including its politics, economy, foreign policy, military affairs, science and technology, and culture.
