Washington's new Xinjiang list self-harming leverage

There is a peculiar contradiction at the heart of Washington's China policy. Diplomatic engagement continues, but so does economic pressure. While the United States likes taking the initiative to set some of the agenda in the bilateral economic relationship, rather than using that to build a more healthy and stable relationship, Washington reaches reflexively for punitive measures.

The latest example came on July 31, when the US Department of Homeland Security added 43 Chinese companies to the so-called "Uyghur Forced Labor Prevention Act Entity List" — the largest single expansion since the law took effect in 2021.

The timing was particularly striking: just one day earlier, Chinese Vice-Premier He Lifeng had held what both governments described as a "candid, in-depth and constructive" video call with US Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer. Rather than reinforcing the message of stability, Washington once again demonstrated that engagement and escalation have become two sides of the same policy.

In the July 30 discussions, both sides agreed to use existing consultation mechanisms to improve communication, build trust and manage differences. But twenty-four hours later, Washington unveiled a sweeping new sanctions list covering companies involved in aluminium, copper, lithium, batteries, seafood, pharmaceuticals, textiles and consumer goods.

In a statement issued on Saturday, the Chinese Ministry of Commerce rightly accused Washington of seriously deviating from the understandings reached between the heads of state almost immediately after reaffirming its commitment to dialogue.

The US Department of Homeland Security tried to justify the move as a way of protecting US workers and ensuring fair competition — language aimed at reassuring voters in industrial states who have been hit by the US' policies that have disrupted its own supply chains and unsettled its own businesses. Indeed, the contradiction in the US' China policy can be understood when viewed through the lens of domestic politics.

The US administration faces mounting political pressure ahead of the 2026 midterm elections. Demonstrating toughness on China remains one of the few issues capable of uniting much of Washington's bitterly divided political establishment. Congress has consistently demanded more aggressive enforcement of the UFLPA. Expanding the "Entity List" helps insulate the White House from criticism by China hawks while seemingly reinforcing its claims that it is strengthening supply-chain security.

Importantly, the UFLPA offers Washington a more sophisticated form of leverage than blanket tariffs. Tariffs invite immediate retaliation and risk derailing preparations for future high-level meetings. Entity listings, by contrast, can be expanded incrementally, tightened selectively and, if circumstances change, quietly relaxed. They impose costs without closing the door to negotiations, allowing the administration to accumulate bargaining chips while preserving diplomatic flexibility.

This reflects a broader evolution in US strategy. Rather than pursuing comprehensive economic "decoupling", Washington increasingly relies on targeted restrictions under the false pretext of "national security", "supply-chain resilience" or "human rights".

The pattern has become increasingly predictable. The US promotes dialogue while introducing new pressure points. Chinese Foreign Minister Wang Yi's meeting with Secretary of State Marco Rubio in Manila on July 22 was likewise described as "practical, positive and constructive", with both sides agreeing to prepare for further high-level exchanges. Yet even as officials spoke of managing differences responsibly, Washington was preparing another escalation through regulatory measures rather than tariffs.

Whether this strategy ultimately serves US interests is another question. Its measures presented as defending "human rights" on the false pretext of "forced labor in Xinjiang" function as industrial policy by other means, targeting sectors central to China's long-term economic ambitions with the aim of curbing its development. Yet far from slowing China's drive for technological self-reliance, each new restriction is met with resolute countermeasures from Beijing that inflict damage on the US and only strengthen China's resolve to reduce the country's reliance on Western markets, technologies and financial systems.