As the tariff battle between Washington and Beijing worsens, China has halted license applications from American companies in financial services and other industries until progress is made towards settling the trade dispute, reports AP, citing an official belonging to a business group.
The disclosure marks the first public acknowledgement that US companies expect their operations in China, or access to China's markets, may be disrupted by the dispute over Beijing's technology policy.
China is running out of American imports for penalties in response to U.S. President Donald Trump's tariff hikes, which has prompted worries that Chinese regulators might target operations of U.S. companies.
The license delay applies to industries Beijing has promised to open to foreign competitors, according to Jacob Parker, vice president for China operations of the U.S.-China Business Council. The group represents some 200 American companies that do business with China. -CNBC
In meetings held over the last three weeks, Cabinet-level officials told USCBC reps that applications from US firms will be put off "until the trajectory of the US-China relationship improves and stabilizes," according to Parker.
Chinese officials, meanwhile, have promised to increase non-US foreign access to several areas, including banking, insurance, securities and asset management.
"There seem to be domestic political pressures that are working against the perception of U.S. companies receiving benefits" amid the dispute, said Parker, who added that Chinese officials want an end to Trump's tariff hikes as well as a negotiated settlement.
Beijing matched Trump's earlier tariff increase on $50 billion of imports but is running out of American goods for retaliation due to their lopsided trade balance. China bought American goods worth about $1 for every $3 of goods it exported to the United States.
Trump is poised to decide whether to raise duties on $200 billion of Chinese goods. Beijing has issued a $60 billion list of goods for retaliation. -CNBC
Foreign ministry spokesman, Geng Shueng, said Monday that China is planning to "definitely take countermeasures" if Trump goes ahead with the hike.
Industries in the crosshairs include those tied to engineering or logistics, in which the US has a trade surplus with China. Chinese commentators, meanwhile, think that Beijing may leverage its multitrillion-dollar holdings of US government debt against the US - however that would impose costs on China.
In June, Beijing said that it would impose "comprehensive measures" if necessary, without specifying what those may consist of.
Chinese business leaders have also rejected Trump's demand that China roll back their "Made in China 2025" initiative, which calls for the state-led emergence of robotics, AI and other technologies.
Washington, Europe and other trading partners say those plans violate Beijing's market-opening commitments. But Communist leaders see them as a path to prosperity and global influence.
Chinese negotiators agreed in May to narrow their multibillion-dollar trade surplus with the United States by purchasing more American soybeans and other products. Beijing scrapped that deal after Trump's first tariff increase went ahead July 6. -CNBC
Meanwhile, the Trump administration wants Beijing to reduce the privileges of state-owned companies, and get rid of requirements that foreign companies hand over technology to Chinese partners. That said, Chinese officials in meetings with the USCBS suggested that they would be open to buying more American exports, but "showed no appetite at all" for industry reform, changes to their technology polic or any other US priorities, according to Parker.
"I don't consider that to be very positive for any kind of negotiated outcome in the short term or medium term," he said.