Economic turmoil and political opportunity: What could Trump’s return mean for China?
Beijing is bracing for what could be a volatile and highly unpredictable path in its growing great power rivalry with Washington.
China is bracing for what could be a volatile and highly unpredictable path ahead in its growing rivalry with the United States after Donald Trump made a historic political comeback to win the race for the White House.
His return could bring tariffs of up to 60% on Chinese goods — which could devastate economic growth in the world’s second-largest economy and upend global supply chains — plus technology controls and fiery rhetoric about Beijing, adding to the strain on already strained relations between the superpowers.
But Trump’s protectionist trade stance and transactional approach to foreign policy could also weaken U.S. alliances and global leadership, presenting opportunities for Beijing to fill the void of America’s withdrawal and shape an alternative world order.
“Trump’s return to power will certainly bring greater opportunities and greater risks for China,” said Shen Dingli, a foreign policy analyst in Shanghai. “Whether it eventually leads to more risks or more opportunities will depend on how the two sides interact with each other.”
Officially, China has sought to present a neutral position on Trump’s victory. Its Foreign Ministry said on Wednesday (6) that it “respected” the United States’ choice.
Chinese leader Xi Jinping congratulated Trump on Thursday. Known for his fondness for autocrats, Trump regularly praises Xi and calls the Chinese leader “a very good friend,” even as U.S.-China relations have plummeted under his watch.
Xi told the president-elect that China and the United States can “find the right path” to “get along well in the new era,” according to a Chinese Foreign Ministry readout.
But beneath the calm surface, Beijing is likely bracing for impact — and uncertainty.
“Trump is a very fickle person,” said Liu Dongshu, an assistant professor of international relations at City University of Hong Kong. “It remains to be seen whether and to what extent he will implement the policies he promised during the election campaign, and whether he will stick to his first-term agenda,” he added.
Very High Rates
During Trump’s first term, the hard-line populist who promised to “make America great again” launched a bruising trade war with China, put Chinese telecom giant Huawei on the lowest price list on national security grounds and blamed Beijing for the Covid-19 pandemic.
By the end of his first term, bilateral relations had fallen to their lowest point in decades. This time, Trump threatened on the campaign trail to slap 60 percent tariffs on all Chinese-made goods and revoke its “permanent normal trade relations” status, which had given China the most favorable trade terms with the U.S. for more than two decades.
This punitive measure, if carried out, could deal a death blow to an economy already beset by a housing crisis, weak consumer demand, falling prices and rising local government debt.
Investment bank Macquarie estimates that at the sky-high 60% level, tariffs are likely to cut the country’s growth by two percentage points, which would be just under half China’s expected annual economic expansion rate of 5%.
“Trade war 2.0 could upend China’s ongoing growth model, in which exports and manufacturing have been the main growth engine,” Larry Hu, chief China economist at Macquarie, wrote in a research note Wednesday.
Investors seemed to anticipate that outcome as Trump’s lead over Vice President Kamala Harris widened on Wednesday, sending Chinese stocks and the yuan sharply lower.
Tariffs act as a tax on imports, harming consumers in the country that imposes them as well as businesses that rely on imported raw materials and intermediate goods to manufacture finished products.
A significant escalation of global trade tensions is likely to inflict pain not only on China and the US, but also on other countries involved in global supply chains.
Unlike his establishment Republican predecessors, Trump has taken an erratic and unconventional approach to policymaking, adding to Beijing’s sense of uncertainty.
“Trump began his first term as an enthusiastic admirer of Xi Jinping, before slamming tariffs and then smearing Beijing during the pandemic,” said Daniel Russell, vice president for international security and diplomacy at the Asia Society Policy Institute.
“So Beijing will likely approach the president-elect cautiously — probing to determine which Trump to expect and where there might be opportunities to exploit,” added Russell, who previously served as the top Asia adviser to former President Barack Obama.
Challenges and opportunities
But Trump’s “America First” agenda and transactional worldview could also play into Beijing’s hands, experts say.
“While Beijing is deeply concerned about the unpredictability of Trump’s China policy, it remembers that challenges also bring opportunities,” said Tong Zhao, a senior fellow at the Carnegie Endowment for International Peace.
“Despite fears of a new trade war, Beijing believes Trump’s tough tariff policies would be deeply unpopular in Europe, creating an opening for China to strengthen economic ties with Europe and counter U.S. efforts to step up technology and supply chain decoupling between China and Western nations,” he said.
The alliances that outgoing President Joe Biden has meticulously built to fend off threats from a rising China could be undermined by Trump’s long-standing contempt for NATO (he declared in February that he would not defend alliance allies that did not spend enough on defence against a future attack by Russia) and international institutions in general.
That would provide Beijing, which is growing more incensed at what it perceives to be Washington’s plan to enclose and contain China with a “Asian NATO,” with some much-needed respite.
Xi, who has increased attempts to assert leadership in the Global South and create a new global order free from Western domination, may also benefit from the possible inward turn of the United States under Trump.
Russia’s connections with Taiwan Beijing might also be trying to take advantage of Trump’s propensity for striking deals, especially with Taiwan.
Although it has never held control of the island, China’s Communist Party claims it as its own. The United States increased its arms sales and diplomatic trips to Taiwan during the previous Trump administration, which was headed by China hawks.
However, recent remarks made by the former leader have raised questions about America’s commitment to the democratic island.
Trump claimed throughout the campaign that Taiwan should reimburse the US for protection and accused the self-governing democracy of “stealing” the US chip sector.
According to industry insiders, Taiwan’s semiconductor sector grew naturally as a result of a combination of investment, hard effort, and foresight. Additionally, in recent decades, the island has purchased the great majority of its weapons from American armaments producers.
But Trump’s campaign rhetoric, however, has suggested a more transactional approach to Taiwan. Asked by the Wall Street Journal in an interview whether he would use military force against a Chinese blockade of Taiwan, Trump said he would not go that far because Xi respected him and knew he was “crazy.”
Rather, he claimed he would impose 150% to 200% taxes on Beijing. “China may try to get more concessions from Washington on the Taiwan issue, using positive incentives and coercive leverage to pressure the United States to reduce its military and political support for Taiwan, given Trump’s relatively weaker interest in defending Taiwan,” Zhao said.
In remarks, Trump, who has praised his cordial relationship with Russian President Vladimir Putin, hinted that the United States would exert pressure on Ukraine to reach an uncomfortable truce with Russia.
Liu stated at the City University of Hong Kong that while ending the conflict in Ukraine may eliminate a significant cause of contention in relations between China and Europe, it might also make Moscow’s alliance with Beijing, which has grown stronger since Russia’s invasion, more difficult.
“If the U.S. and Russia ease relations, it could create more daylight between Russia and China, effectively driving a wedge between them,” Liu said. “From everything he has said, it is clear that Trump considers China, not Russia, as the main adversary.”
