Trade and Finance to Hacking... The All-Around Spread of US-China Conflict

Huanqiu Shibao "China Also Preparing Counterattack"

[Asia Economy Beijing=Special Correspondent Sunmi Park] The escalating conflict between the U.S. and China over the responsibility for the novel coronavirus infection (COVID-19) is spreading beyond the possibility of reigniting the trade war to all-out measures including investment bans, hacking, and corporate sanctions. With China also preparing countermeasures in response to the continued U.S. attacks, the possibility of a prolonged standoff between the two powers remains open.

On the 13th (local time), U.S. President Donald Trump asserted the "China responsibility theory" on his Twitter account, mentioning both the U.S.-China trade negotiations and the damage caused by COVID-19. President Trump said, "Dealing with China is a very costly affair," adding, "We have just concluded a tremendous trade agreement. The ink is barely dry. And the world has been hit by a pandemic originating from China." He further added, "100 trade agreements could not make up for that difference. And all those innocent lives were lost."

Even after the U.S. and China trade negotiation representatives reached a consensus on the 8th via phone call to create an atmosphere and conditions for implementing the Phase 1 trade agreement, the U.S. continues to pressure China by linking the COVID-19 responsibility issue with trade negotiations. President Trump has openly stated that if China does not fulfill the Phase 1 trade agreement, which includes purchasing an additional $200 billion worth of U.S. products over the next two years, the U.S. will scrap the agreement itself, which had previously suspended additional tariffs on China.

The problem lies in the fact that the U.S. pressure on China is not limited to rhetoric but is accompanied by concrete actions, with the intensity gradually increasing.

On the same day, President Trump extended an executive order for one more year that prohibits U.S. companies from using telecommunications equipment manufactured by companies posing national security risks. This executive order, which took effect on May 15 last year, did not specify particular telecommunications equipment companies but was effectively aimed directly at China's leading high-tech companies Huawei and ZTE. Therefore, the extension of the executive order is interpreted as a signal that if China does not properly implement the Phase 1 trade agreement, the U.S. will continue to block the sale of Chinese telecommunications equipment in the U.S.

The White House also announced on the 11th that it does not want the Thrift Savings Plan (TSP), a major public pension fund for federal employees, to invest in Chinese stocks. This indicates that the U.S. is making visible moves to block Chinese stock investments in federal retirement funds, meaning that if the confrontation with China continues, financial market sanctions against China could be initiated at any time. Previously, the Attorney General of Missouri filed a lawsuit seeking damages related to China's inadequate response to COVID-19, continuing the legal battles between the U.S. and China.

U.S. security authorities have also begun investigating activities of hackers linked to China, associating China's cyberattacks with COVID-19.

The Federal Bureau of Investigation (FBI) and the Cybersecurity and Infrastructure Security Agency (CISA) under the Department of Homeland Security issued a joint statement on the same day, stating, "Attempts have been observed by hackers linked to China to illegally acquire intellectual property and public health data related to vaccines, treatments, and testing from networks and personnel involved in COVID-19 research." The U.S. expressed concern that China's hacking of critical COVID-19 research not only jeopardizes the delivery of treatments but also poses a significant threat to the U.S. COVID-19 response.

In response to the ongoing U.S. attacks, China has emphasized its existing stance that it is faithfully responding to COVID-19 and implementing the trade agreement, but also stated that it will not stand idly by if the attacks continue.

China's Global Times, citing government sources, reported, "With the U.S.'s excessive litigation against China continuing, China is preparing countermeasures," adding, "China is very dissatisfied with the ongoing U.S. lawsuits related to COVID-19 against China and has begun preparing punitive countermeasures against U.S. individuals, companies, and state government officials."

Specific countermeasures under consideration have not been disclosed. However, Yuan Zheng, a researcher in U.S. relations at the Chinese Academy of Social Sciences, said, "China must firmly crack down on U.S. politicians who damage bilateral relations for political gain," adding, "(The retaliation) should not remain symbolic but should be a countermeasure that causes them to feel pain."

On the same day, the Japanese economic media Nikkei Asian Review reported that China will start security reviews next month for public infrastructure operators in sectors such as telecommunications and transportation when procuring servers and other information technology (IT) equipment from overseas companies, suggesting that American companies like HP and Dell may be blocked from supplying products to China.

This content was produced with the assistance of AI translation services.