Failure of trade bullying becoming ever more apparent

Reportedly, the US Department of Defense has decided to remove Hesai Technology from the blacklist of enterprises it alleges have links with the Chinese military because the Pentagon believes that the world's leading manufacturer of laser sensors for electric vehicles does not meet the criteria for being blacklisted. This is an embarrassing flip-flop of the Joe Biden administration, which just added the company to the list in January this year claiming it had sufficient evidence to justify its decision.

In June, some US lawmakers also mooted the removal of DJI from the list under mounting pressure from US industry and market as the Chinese company has a large share of the drone market in the United States with the performance to cost ratio of its products unmatched by other manufacturers.

The US Congress passed legislation in 2021 requiring the Pentagon to compile the list. The act aims to strengthen the scrutiny of Chinese companies operating in or selling their products and services to the US.

Notably, the Shanghai-based and Nasdaq-listed Hesai Technology sued the Pentagon in May, saying there was no evidence of its connection with the Chinese military and called the US' blacklisting move "arbitrary and capricious".

Although people familiar with the matter told the media that US government lawyers were concerned that the reasons for blacklisting the company would not withstand legal scrutiny based on the criteria listed in the 2021 legislation, it would still be extremely difficult for Chinese companies to win a lawsuit against the US government on US soil.

The US has also tried to coerce other countries to participate in its trade restriction measures targeting China, particularly in the advanced semiconductor industry, irrespective of the impact this would have on the global industry and supply chains.

The only reason why the Biden administration seems still intent on sticking to its de facto trade bullying and economic coercion practices, after most allies and many US companies have actually started distancing or directly stepping away from them, is that, with the US presidential election around the corner, it simply cannot afford to admit the failure of its China-containment strategy, a hallmark policy of its diplomacy, even if the policy proved not only futile but also self-harming.