China is bracing for what could be a turbulent and unpredictable period following Donald Trump’s historic return to the White House. As the United States gears up for another Trump presidency, Beijing is carefully assessing the potential impacts on its economy, political relationships, and its broader strategy in the ongoing great power rivalry with the US.
Trump’s policies could mean higher tariffs, stricter technology controls, and heightened tensions. But they could also open doors for China to leverage America’s withdrawal from global leadership to assert itself as the leader of a new world order. Let’s break down what Trump’s return could mean for China, its economy, and its ambitions on the world stage.
The Return of the Trade War: Sky-High Tariffs and Economic Impacts
Under Trump’s first term, the trade war with China was one of the most significant flashpoints in US-China relations. Now, Trump’s campaign promises to impose 60% tariffs on Chinese imports have raised alarms in Beijing. Such a move could deliver a devastating blow to China’s already fragile economy, which is grappling with a property crisis, sluggish consumer demand, and mounting government debts.
The Economic Fallout of Trump’s Tariffs
- 60% Tariffs: A drastic hike in tariffs could have immediate repercussions on Chinese manufacturing, exports, and domestic industries. Investment bank Macquarie estimates that these tariffs could reduce China’s growth by up to 2 percentage points, a significant drag on the country’s economy.
- Impact on Global Supply Chains: The global trade environment would be hit hard, as supply chains across the world are interconnected. The US-China trade war could escalate, causing ripple effects in economies dependent on Chinese goods and services.
- Rising Tensions: Trump’s protectionist policies could exacerbate the already rocky relations between the two superpowers, making it even harder to resolve issues like intellectual property theft and trade imbalances.
If Trump follows through on these threats, the US-China trade war 2.0 could reshape global economic structures, with China forced to find new trade partners while the US faces economic challenges of its own.
Opportunities in the Midst of Crisis: What China Might Gain
While Trump’s tariffs would undoubtedly harm China in the short term, experts say that China could also find some opportunities amidst the chaos.
Weakening US Alliances
Trump’s “America First” agenda has often been at odds with traditional US alliances. His open disdain for institutions like NATO and international agreements has led to growing divisions between the US and its allies. Europe, in particular, has long been uneasy about Trump’s leadership. If he follows through on a protectionist and isolationist foreign policy, China could step into the power vacuum left by America’s withdrawal.
- Building Stronger Ties with Europe: As Trump’s anti-globalisation rhetoric alienates European nations, China could seize the opportunity to strengthen economic and diplomatic ties with key European nations. This would help China counterbalance the US’s influence and boost its position in the global economic and political arena.
- Global Leadership: With the US retreating, China could accelerate its efforts to position itself as a global leader, particularly in the Global South. This could involve increased investment in developing economies, a larger role in international organisations, and a stronger voice on the world stage.
Taiwan and Military Tensions
Trump’s transactional approach to foreign policy could lead to greater leverage for China on the issue of Taiwan. Although Trump’s first term saw the US strengthen its relationship with Taiwan, his recent remarks suggest a more pragmatic approach. On the campaign trail, Trump suggested that Taiwan should pay for US protection, signalling a potential shift in US policy.
This rhetoric could provide China with an opening to push for fewer US military engagements in Taiwan. If Trump were to follow through on his more isolationist stance, China could intensify its diplomatic and economic pressure on Taiwan, potentially weakening its ties to the US and the West.
- Military Concessions: With Trump less interested in directly confronting China over Taiwan, Beijing could use this opportunity to pressure the US into making concessions regarding military support for Taiwan.
- Diplomatic Leverage: By engaging in direct negotiations with Taiwan’s allies, China could potentially secure agreements that would weaken Taiwan’s international position, while expanding its own influence in the region.
China’s Strategy: Navigating the Uncertainty
As Trump’s unpredictability becomes a key factor in US foreign policy, China will likely have to adapt quickly. The uncertainty around which version of Trump will govern—the populist, the deal-maker, or the nationalist—adds an element of unpredictability for China’s leadership.
The Art of Strategic Diplomacy
- Cautious Engagement: China will likely adopt a wait-and-see approach, cautiously engaging with the new administration while monitoring Trump’s actions. Chinese officials will likely probe for signals as to whether Trump’s policies will resemble his first term or take on a new, more conciliatory tone.
- Building Stronger Internal Alliances: Domestically, China may seek to bolster its economic resilience through the Belt and Road Initiative and stronger trade relationships with countries outside the US sphere of influence. The Chinese Communist Party will also focus on maintaining internal stability, ensuring that domestic factors don’t undermine its global strategy.
Russia and the US-China Relationship: A Complicated Tango
Another major aspect of Trump’s return is his relationship with Russia. Trump’s admiration for Vladimir Putin and his comments about seeking to end the war in Ukraine could have significant implications for China-Russia relations. If the US softens its stance on Russia, it could introduce friction between Moscow and Beijing, potentially driving a wedge between two countries that have aligned against the US in recent years.
- Strategic Alignment: China’s relationship with Russia is increasingly strategic, but Trump’s softer stance on Russia could create tensions between the two. While Russia might still view China as a valuable partner, any US-Russia rapprochement could undermine China’s leverage.
Conclusion: Navigating the Road Ahead
In conclusion, Trump’s return to the White House presents both risks and opportunities for China. The potential for renewed trade wars, higher tariffs, and escalating tensions is significant. However, China could also find ways to exploit the US’s retreat from global leadership, positioning itself as a more prominent player in the international community.
The next few years could be marked by increased tensions, uncertainties, and opportunities for both powers. For China, it will be essential to remain agile, leveraging its strengths while navigating the complexities of a new era in US-China relations.
