Impending showdown in China-US techno-sphere
New Delhi will have to keep a close watch on global debates on economic security and the impetus building to restructure the world’s trading system
The year 2025 has begun on a bad note for Chinese tech companies with the United States (US) designating social media and gaming giant, Tencent, and battery manufacturer Contemporary Amperex Technology (CATL) as military companies. Tencent’s interests span the spheres of finance, cloud computing, media, messaging, video-streaming and movie production. Under American law, a list of entities that may be aiding and furthering the Communist Party of China’s military-civil fusion strategy, which aims to leverage private firms in improving technologies that have defence applications, must be maintained.

With this development, the US-China technology contest is heating up, ahead of the inauguration of Donald Trump as President. Significantly, Trump’s first term saw technology restrictions imposed on Chinese majors like Huawei and ZTE. Then, Trump had taken on Baidu, Alibaba and Tencent (the BAT trinity in China’s techno-sphere). He promoted the Clean Cloud initiative that sought to build public opinion against the cloud-storage services of the BAT trinity that were trying to expand in the American market. The US government also moved to counter Beijing’s influence in submarine-internet cables, telecommunications infrastructure, mobile phone app ecosystems, and cloud computing.
In December 2024, the Biden administration brought in technology controls in semiconductors, adding new Chinese entities to a trade blacklist. The new regulations cover not only Chinese semiconductor manufacturers but all the supporting ecosystems of chip-making equipment and design software that are important components of the sector. Additionally, there has also been a crackdown on the export of memory chips used in Artificial Intelligence (AI) applications. The rules cover items produced overseas with the help of US technology. Private equity firms that have put money into developing China’s technology sector have also been included in the blacklist. The move was seen as the Biden administration’s bid to strike at ancillary links in China’s technology supply chain and builds on previous regimes aimed at limiting China’s access to advanced technology that may have military implications.
Beijing has hit back with tit-for-tat measures. Recently, China’s ministry of commerce announced its intention to curb the export of know-how related to the production of lithium-ion batteries, which is key to the global push for electric automobiles and clean-energy transition. It also aims to add extraction technology for gallium — important for semiconductor production — to the restricted export list that will require an export licence. Days after Trump’s electoral win, Beijing imposed export curbs on critical elements like tungsten, graphite, magnesium and aluminium alloys, used regularly in electronic products, classifying them as “dual use”. Apart from their use in technology supply chains, they also have applications in building military equipment, arms, spacecraft, and in the aviation sector. A European Union study found that China controls more than 80% of the extraction and processing of international tungsten supply and nearly 90% of global magnesium production. Earlier, China had tightened controls on the export of gallium, germanium, and rare earths in response to the US imposing controls on exports of sophisticated semiconductor and AI technologies.
Tencent and CATL do not run the risk of triggering sanctions immediately. But the designation as companies with ties to the People’s Liberation Army will have reputational consequences as seen from the stock prices of both taking a hit. It may affect the plans of both companies to expand into the American market, and deter investors and US companies that seek to do business with them. Given the size of CATL and Tencent, the categorisation by the establishment as Chinese military companies may bring unwarranted attention under the Trump presidency.
The crackdown on Chinese tech giants has implications for India. Trump’s re-emergence has galvanised conservative elements in America. There is growing clamour for more stringent measures against Beijing’s strategy of exporting its overcapacity which has impacted local industries. To deal with China, which has accumulated a trade surplus nearing $1 trillion, an international coalition of nations may be needed to create manufacturing capacity collectively. The proposed tariffs of the incoming Trump administration may hit China in those sectors where its overcapacity has an adverse impact on local manufacturing. Alternatively, there is anticipation in Washington for greater investment — political and financial capital — in building international supply chains ring-fenced to keep China out. These prospects open new economic opportunities for India which is emerging as a close partner of the US. New Delhi will have to keep a close watch on global debates on economic security and the impetus building to restructure the world’s trading system.
Harsh V Pant is Vice President for Studies at Observer Research Foundation, New Delhi. Kalpit Mankikar is fellow, China Studies, ORF. The views expressed are personal
