Barrier to entry – China’s restrictions on U.S. imports

Source: By Adam Jourdan and Michael Martina, Reuters • Posted: Thursday, March 15, 2018

(Reuters) – Amid rising trade tensions between the United States and China, President Donald Trump is seeking to impose tariffs on up to $60 billion of Chinese imports and will target the technology and telecommunications sectors, Reuters has reported.

Trump is likely to target Chinese high technology companies to punish China for investment policies that effectively force U.S. companies to give up their technology secrets in exchange for being allowed to operate in the country, as well as for other IP practices Washington considers unfair.

China generally contends that as a developing economy it needs to take certain measures to protect its domestic industries from more advanced international rivals.

Below are some of the trade barriers that China imposes, which could prompt retaliation from the United States.


China keeps close control over the use of tech within its borders, including full or partial blocks against many popular U.S. firms including Google, Facebook Inc, Twitter Inc and others.

The Chinese government has adopted a raft of strict new cybersecurity regulations, which foreign business groups complain either put China off limits or require them to provide sensitive intellectual property for government checks.

Local regulators are also tightening rules on foreign data and cloud services, implementing new surveillance measures and increasing scrutiny of cross-border data transfers. Laws that came into effect in June require firms to store data locally.

Cloud service operators that want to be in China must enter into local joint ventures with equity capped at 50 percent.

Beijing also has a “Made in China 2025” plan, which aims to dramatically increase domestically made products in high-tech sectors with major government investment.


Global carmakers can only operate in China, the world’s largest auto market, via joint ventures (JVs) with local partners, with their stake limited to 50 percent, part of a government drive to protect home-grown auto firms.

Tesla Inc chief executive Elon Musk said on Twitter earlier this month that China trade barriers created an unfair playing field and that it was “like competing in an Olympic race wearing lead shoes.”

Beijing is spearheading a major push toward electric vehicles with strict quotas set to come into play next year.

China also imposes a 25 percent duty on imported vehicles, versus a 2.5 percent import tax in the United States.


Foreign financial firms face long-standing equity caps to participate in some services in China, including a 50 percent limit on life insurance and a 49 percent cap on foreign-invested securities broker-dealers.

This month, China’s securities regulator published draft rules that would allow foreign firms to increase their shareholding in joint-venture brokerages to 51 percent, with full control possible after three years..

In 2012, the WTO ruled China was discriminating against foreign payment card companies, and despite pledging last year to give “full and prompt market access” to U.S. payment network operators, no U.S. firm has yet been granted a license.


China has a strict quota system for imported movies, limiting the number allowed to be shown on domestic cinema screens through the scheme to 34 each year. Hollywood producers also get around 25 percent of the box office, compared to nearer 40 percent they received in other overseas markets.


China bans imports of poultry, poultry products and eggs due to avian flu. It conditionally lifted an import ban on U.S. boneless beef and beef on the bone in June last year.

The U.S. has complained about China’s price support for domestic wheat, corn and rice. It launched a challenge at the WTO in September 2016, which set up a dispute panel in September last year to hear the case.

At the start of 2017, Beijing raised import tariffs on ethanol from the United States and Brazil, the world’s top exporters, and slapped hefty punitive duties on U.S. distillers grains (DDGS), a byproduct of ethanol production used as an animal feed ingredient.


China last year updated its essential drug list of medicines covered by state insurance, opening the door to more imported medicines to treat major diseases including cancer and hepatitis.

However, slow drug approvals – though getting faster – mean innovative drugs take many years longer to hit pharmacy shelves in the country, the world’s second largest consumer of medicines. A major focus on cutting healthcare costs also means that access often hand-in-hand with forced price cuts.


China requires rail equipment suppliers to its domestic train networks, which are among the world’s longest, to prove that at least 70 percent of their supply chain is in China.

Reporting by Adam Jourdan in SHANGHAI and Michael Martina in BEIJINGAdditional reporting by Pei Li, Matthew Miller and Josephine Mason in BEIJING and Brenda Goh in SHANGHAI; Editing by Sam Holmes