WHEN AMERICA slammed sanctions on Huawei, barring its firms from supplying the Chinese telecoms-gear titan on national-security grounds, China’s state media predicted this would spur innovation in the local technology industry. In time, it may well do. For now, much of the innovating is taking place within the Chinese state, as it toys with a new system of control over Chinese business.
On January 9th the Ministry of Commerce struck back against American sanctions. It said it may force Chinese firms to stop complying with “unjustified extra-territorial application of foreign legislation” (in Beijing’s eyes, virtually all of it is). It also let companies sue foreign and domestic firms that have complied with some foreign sanctions for compensation.
This is part of a broader trend, as the Communist regime adopts a more muscular stance towards the private sector. In November it halted the $37bn flotation of Ant Group, the payments affiliate of Alibaba, China’s biggest e-commerce giant, days before it was due to list in Shanghai and Hong Kong. That month the State Administration for Market Regulation (SAMR), set up in 2018 from three regulators, issued rules to rein in e-emporiums. In December it opened an antitrust probe into Alibaba. On January 10th the Communist Party’s body for political and legal affairs vowed to…