The strategic case for restoring open China-US commerce

Editor's note: Imran Khalid, a special commentator for CGTN, is a freelance columnist on international affairs. The article reflects the author's opinions and not necessarily the views of CGTN.

As Chinese and US delegations met in New York this weekend to discuss artificial intelligence (AI), tariffs and critical minerals, those talks will set rates and volumes. According to reports, the exchanges were "candid, in-depth and constructive." The developments subsequent to US restrictions show that while cooperation between the two major economies benefits both, confrontation harms both.

For example, before Washington restricted advanced chip sales to Chinese companies, Nvidia held roughly 95% of China's AI accelerator market. By April its share had plummeted to 55%, with China shifting to domestic chips. The controls were written to slow China's compute build-out. What they created instead was a domestic supplier base and a shrinking American market.

That outcome should inform how both governments handle the next phase. Restriction carries a price, and the bill is not sent to one side alone. While there is a case for protecting technology that is militarily sensitive, the question is how much is that category going to be expanded, and what happens to the body of commerce sitting outside it, which is considerable.

China's trade with the US crossed 4 trillion yuan ($573 billion) in 2025, according to China's General Administration of Customs. The US Census Bureau reported America imported goods worth around $156.4 billion from China over the first seven months of 2026. China remained the largest single buyer of American soybeans in 2025, accounting for over $3 billion of a $16.46 billion export total.

Supply chains bind tighter than trade balances suggest. China refines more than 70% of the world's lithium, cobalt, graphite and rare earths, holds around 85% of solar photovoltaic manufacturing capacity and 80% of the lithium-ion battery supply chain. When China's export licensing tightened in retaliation, American imports of yttrium fell to 17 tons between April and December 2025, against 333 tons in the preceding eight months. Washington had to provide over $7 billion in state support to buy the chemical element, including a $110 per kilogram price floor for one domestic producer. While substitution may be available, it is slow, it is expensive and someone has to fund it.

Co-invention shows the strain earliest. The share of US patents with Chinese inventors that also carried an American co-inventor fell from 17% in 2007 to 12% by 2016, before the present controls existed. Published research followed: Co-authored papers dropped 6.4% from their 2017 peak to 2023, the steepest fall for any country pair in that analysis. Researchers holding affiliations in both places declined more than 20% in two years.

The argument is not against export controls. A measure aimed at a specific firm, resting on a specific finding, with an appeals route, is a security measure. But the 50% affiliates rule – which automatically extends export control restrictions to any unlisted entity that is 50% or more owned, directly or indirectly, by one or more restricted parties on the US Entity List and a few other lists – is something else.

There are around 1,300 parties on the Entity List; extending restrictions to any company half-owned by a listed entity widens them to sweep in more than 20,000 Chinese firms, with no individual determination behind it. The rule, set on November 10, 2025, ends on November 9, after which it is scheduled to be reimposed automatically if there are no interventions.

Biotechnology is drifting the same way. A contract manufacturer serving much of the American drug pipeline was added to a Pentagon list in June, reaching into the sourcing decisions of firms developing cancer therapies. China responded by placing 10 American companies under export controls the same month.

Two lists would achieve more than another round of rate adjustments. The first, deliberately short, covers weapons design, military end users and the chokepoint technologies each government can defend in a published finding. The second names what stays open, with licensing timelines. Reciprocal general licenses, covering rare earth magnets moving west and non-frontier semiconductors moving east, would remove the most dependable source of quarterly disruption.

The open list is where the returns compound. Grid-scale storage chemistry, perovskite tandem cells and solid-state battery manufacturing are things neither country can produce alone at the pace cost curves require. Moreover, the gains from them do not stay put in one place: A cheaper cell from a joint program lowers electricity prices in both markets.

Infectious diseases are more urgent still. Pathogen surveillance, genomic sequence sharing and rapid vaccine platforms run on timelines measured in weeks. The past five years stripped out much of the professional contact they depend on. Joint laboratories with published data and agreed intellectual property terms would rebuild it.

A control regime that widens by ownership percentage and by default will keep producing what the chip rules have already delivered: a competitor that built faster than anyone forecast. On the other hand, a narrow list, written down and defended in public, leaves the rest free to do what they did for three decades, which is, making both economies wealthier than either manages apart.

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