Economic upheaval and political opportunity – what Trump’s return could mean for China

By | November 7, 2024

Donald Trump arrives at an election night watch party at the Palm Beach Convention Center, Florida on November 6, 2024.

China is bracing for what could be a volatile and highly unpredictable path ahead in its escalating great power rivalry with the United States, after Donald Trump made a historic political comeback to win the race to the White House.

His return could bring tariffs as high as 60% on Chinese goods – which could devastate economic growth in the world’s second largest economy and upend global supply chains – more technology controls and fiery rhetoric on Beijing, heightening tension in already rocky relations between the superpowers.

But Trump’s protectionist trade posture and transactional approach to foreign policy may also weaken US alliances and global leadership, presenting opportunities for Beijing to fill the void of America’s retreat 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 depend on how the two sides interact with each other.”

Officially, China has sought to present a neutral stance on Trump’s win. Its Foreign Ministry said on Wednesday it “respected” America’s choice.

Xi told the president-elect that China and America can “find the right way” to “get along in the new era,” according to a readout from the Chinese Foreign Ministry.

But beneath the calm surface, Beijing is likely bracing for impact – and uncertainties.

“Trump is a very mercurial person,” said Liu Dongshu, an assistant professor of international affairs at the City University of Hong Kong. “It remains to be seen whether he will implement, and to what extent, the policies he promised during the election campaign, and if he will stick to his first-term agenda.”

Donald Trump Returns to the White House Amidst Tense Geopolitical Landscape

On November 6, 2024, former President Donald Trump arrived at a watch party at the Palm Beach Convention Center in Florida, celebrating his unexpected return to the White House. His political comeback has set the stage for a new chapter in U.S. domestic and foreign policy, especially in the realm of great power competition with China. Trump’s win signals a potential re-escalation of tensions with Beijing, marking a return to the confrontational stance seen during his first term, which focused on tariffs, technology controls, and trade imbalances. For China, this development brings both significant risks and possible opportunities in its quest to navigate U.S. rivalry and expand its influence on the world stage.

Escalating Trade Tensions: The Tariff Threat

One of Trump’s key policy points during his previous term was imposing tariffs on Chinese imports, aiming to narrow the U.S. trade deficit and push China to adopt fairer trade practices. Under his new administration, Trump has hinted at even harsher measures, including tariffs as high as 60% on Chinese goods. Such tariffs would likely have a severe impact on China’s economic growth, potentially slowing it to the lowest rates seen in decades. The high tariffs would disrupt Chinese exports to the U.S., particularly in sectors like electronics, machinery, and consumer goods, which account for a large portion of China’s exports. This action would also disrupt global supply chains, affecting businesses and consumers worldwide.

For China, these economic pressures could act as a double-edged sword. While they could drive some firms and investors away from China, they might also accelerate Beijing’s drive toward economic self-sufficiency. In recent years, China has been working to strengthen domestic industries and reduce its dependence on foreign technology, a process known as “dual circulation.” Trump’s return to power may reinforce this shift, encouraging China to invest even more heavily in indigenous innovation and boost internal consumption as an economic buffer.

Technology Controls and Decoupling

Technology remains a flashpoint in U.S.-China relations, and Trump’s second administration is expected to renew strict technology controls aimed at curbing China’s access to critical American technologies. During his first term, Trump imposed significant restrictions on Chinese tech giants like Huawei and ZTE, citing national security concerns. Further restrictions could target other major Chinese companies, especially in fields like artificial intelligence, semiconductor manufacturing, and quantum computing.

If Trump intensifies these technology restrictions, China’s tech industry may face significant challenges. The U.S. leads in several critical technologies, and access to American expertise and components is essential for many Chinese firms. However, some analysts argue that these controls could inadvertently boost China’s domestic innovation efforts, driving them to accelerate research and development. For instance, in response to previous U.S. sanctions, Huawei developed its own smartphone chips and operating system, showcasing China’s potential for tech independence.

Risks to U.S. Alliances and Global Leadership

Trump’s “America First” approach to foreign policy often prioritizes U.S. interests over traditional alliances. This transactional stance could weaken America’s global leadership position, leaving gaps in international institutions that China could exploit. Trump’s return to the White House may create challenges for longstanding allies in Europe, Asia, and beyond, who may find themselves sidelined as the U.S. focuses on self-interest.

The weakening of U.S. alliances could present an opportunity for China to strengthen its own influence, particularly among developing nations. Through initiatives like the Belt and Road Initiative (BRI) and the Asian Infrastructure Investment Bank (AIIB), China has been expanding its economic and diplomatic reach, especially in Asia, Africa, and Latin America. With America’s retreat from multilateralism, Beijing could use these avenues to build a more China-centric world order, positioning itself as an alternative leader on the global stage.

Reactions and Cautionary Measures from China

China’s official response to Trump’s victory has been measured. The Chinese Foreign Ministry offered a neutral statement, saying it “respected” America’s democratic choice. President Xi Jinping reportedly reached out to Trump, expressing hope that China and the U.S. could “find the right way” to get along in this “new era.” However, beneath this calm demeanor, Chinese officials are likely preparing for a volatile period ahead, understanding Trump’s unpredictable nature.

The possibility of intensified conflict is real, with Trump’s previous presidency marked by abrupt policy changes that often caught the Chinese leadership off-guard. Analysts, including Liu Dongshu, an assistant professor at the City University of Hong Kong, have noted that Trump’s policy decisions may vary widely from his campaign promises, leaving both allies and adversaries uncertain about his next moves. If Trump’s approach mirrors his earlier tenure, Beijing may face a rocky road, but also one with openings if U.S. strategy becomes too internally focused.

Shen Dingli’s Take: Risks and Opportunities Ahead

Shen Dingli, a prominent foreign policy analyst based in Shanghai, emphasized that Trump’s return could create both “greater opportunities and greater risks” for China. On one hand, the risks include an economic slowdown triggered by trade restrictions, as well as potential confrontations in the South China Sea or other strategic regions. On the other hand, if Trump’s America First policies weaken U.S. alliances, China could step in as a stabilizing force, cultivating stronger ties with countries seeking alternatives to American leadership.

The Bigger Picture: Navigating an Uncertain Future

The new Trump administration’s approach to China could reshape global geopolitics. With a focus on tariffs, technology controls, and nationalistic trade policies, Trump’s actions will likely influence not only U.S.-China relations but also the broader international system. As China braces for what may be an unpredictable U.S. strategy, it faces a dual challenge: managing potential economic disruptions while seizing opportunities to strengthen its global influence.

China’s response to this new era will be closely watched by the world, as its ability to adapt to U.S. pressure while asserting itself on the world stage could define the next decade in international relations. The dynamic between these two superpowers may ultimately determine the trajectory of the global economy, technological innovation, and diplomatic alliances, making Trump’s victory not only a domestic event for the U.S. but a pivotal moment for the entire world.

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