• China establishes a 'whitelist' of US-made products exempt from 125% tariffs.
• Products include pharmaceuticals, microchips, and aircraft engines, aimed at supporting domestic firms.
• The announcement indicates China's flexibility in addressing the impacts of its trade war with the US.
• Some businesses were privately informed, highlighting an unofficial approach to tariff adjustments.
• Chinese officials are gauging the broader effects of US tariffs on local and foreign companies.

In a strategic response to ongoing trade tensions, China has created a 'whitelist' of U.S.-made products exempt from its escalated 125% tariffs. This initiative is intended to ease the pressure on Chinese companies reliant on American imports, including vital goods such as pharmaceuticals and microchips, according to Reuters and Channel News Asia.

The details of this whitelist remain undisclosed, with Chinese authorities privately notifying companies of its existence. One source from a drug company indicated that they were contacted by the Shanghai Pudong government regarding the product classifications eligible for tariff exemptions, emphasizing their reliance on U.S. technology: "We still have many technologies we need from the US." This sentiment is echoed in reports from Newsweek and India Times.

The list of exempted items appears to be expanding, as recent reports noted that China has waived tariffs on ethane imports from the U.S., a vital product for certain industries, according to multiple sources including Reuters and Channel News Asia.

In a broader context, China's initiative reflects an attempt to mitigate the adverse effects of U.S. tariffs on its economy, which is increasingly feeling the strain from rising trade tensions. The Chinese manufacturing sector notably experienced a decline, with the manufacturing purchasing managers index dropping to a 16-month low. This downturn parallels the latest tariff escalations, and emphasizes the urgency for Chinese authorities to assess the impact of these trade conflicts on both domestic and foreign firms, as reported by Newsweek and India Times.