China has warned the United States of potential retaliatory measures after Washington launched sweeping trade investigations targeting 76 economies, including China, over allegations of forced labour use and industrial overcapacity, escalating tensions in an already fraught bilateral relationship.

What the US Investigations Cover

The US has opened Section 301 investigations against 16 economies, including China, citing alleged 'overcapacity' in key industries. Separately, Washington launched another probe targeting 60 economies, including China, over claims that those countries have not adequately banned imports of goods manufactured with forced labour.

Section 301 of the US Trade Act of 1974 empowers Washington to investigate foreign trade practices deemed unfair or discriminatory and to impose retaliatory trade restrictions. The mechanism was used extensively to levy tariffs on Chinese imports during President Donald Trump's first term in office.

Beijing's Formal Response

The Chinese Embassy said Beijing was 'strongly dissatisfied' with the US action and had lodged formal representations with Washington. It accused the US of abusing its domestic trade law and destabilising global supply chains.

'We will closely monitor the progress of the US investigation and reserve the right to take all necessary measures to firmly safeguard our legitimate rights and interests,' the Chinese Embassy said during a briefing for reporters on Friday.

Beijing further argued that the World Trade Organization (WTO) had already ruled that US Section 301 tariff measures against China violate WTO rules. 'By once again abusing the Section 301 process and placing domestic law above international rules, the US is making a serious mistake, severely undermining the security and stability of global industrial and supply chains and seriously disrupting the international economic and trade order,' the embassy said.

Export Controls and Counter-Listings

In a parallel move, China placed 10 US entities involved in military activities on its export control list, prohibiting the export of dual-use items to those entities. Beijing said the action was a direct response to Washington adding what it described as 'Chinese military companies' to its own restricted list, and was intended to safeguard national security and meet non-proliferation obligations.

China also pushed back against broader US restrictions on Chinese companies, accusing Washington of 'excessively expanding the concept of national security' and misusing state power to suppress Chinese enterprises.

Parallel Diplomatic Track

Notably, the warnings came even as Beijing and Washington continued diplomatic engagement aimed at stabilising their economic relationship. The two sides have agreed to establish a Board of Trade to discuss reciprocal tariff reductions and related issues.

Both governments also set a goal of expanding two-way agricultural trade and agreed in principle to include relevant agricultural products in a reciprocal tariff reduction framework. The Chinese Embassy said teams from both sides would remain in contact and encourage businesses to expand cooperation, with trade to be conducted 'independently in accordance with market principles.'

Broader Context

The US and China have remained locked in disputes over tariffs, technology controls, subsidies, and market access for years. As the world's two largest economies and major trading partners, their periodic confrontations have repeatedly unsettled global markets. This latest escalation follows a pattern of tit-for-tat trade actions that have intensified since 2018, and analysts warn that simultaneous investigations across 76 economies signal a broadening of Washington's trade enforcement posture well beyond its bilateral dispute with Beijing.

How the two sides navigate the newly formed Board of Trade — and whether agricultural trade concessions can hold amid the investigative pressure — will likely define the next phase of the world's most consequential economic relationship.