Virendra Pandit
New Delhi: Expect a paradigm shift in geopolitical discourse after January 20, 2025, when Donald Trump becomes the US President again. While Europe is trembling with fear, a scared China is treading cautiously.
“China has no plan to surpass or replace the United States,” Beijing’s Ambassador to Washington Xie Feng said in Hong Kong on Friday, addressing Chinese officials and the US Ambassador to China, the media reported on Saturday.
Attempting to avoid confrontation and reset bilateral relations with the US ahead of Trump’s return to the White House in two months, he said China is willing to be partners and friends with the United States.
The 47th US President-to-be, Trump has pledged to impose tariffs on Chinese imports in excess of 60 percent, but Beijing and Chinese companies hope his protectionist policies will also irk US allies in Europe and Asia, giving China an opening to increase its global influence and improve trade ties.
Chinese President Xi Jinping called on Friday to reject unilateralism and protectionism in favor of economic globalization.
However, analysts say China’s pitch as a counterbalance to a Trump-led United States has lost its shine compared to 2016, when Trump was first elected.
The Sino-U.S. partnership is never a zero-sum game, Xie Feng said, adding that the two nations have great potential to work together in areas including trade, agriculture, energy, artificial intelligence, and public health.
He emphasized a “tone of dialogue” to address each side’s concerns, saying “It is entirely possible to bring issues to the table to communicate frankly, and seek solutions on equal footing.”
He said Taiwan is the biggest “flashpoint” that could lead to conflict and confrontation between Beijing and Washington and called for clear opposition to “separatists” in Taiwan.
While trying to cozy up to Trump, Beijing is also warning Washington.
China will fight back if Trump follows through on his promise to impose a 60 percent tariff on Chinese imports, Zhu Min, a former top official at the People’s Bank of China, was quoted as saying.
“If Trump and the administration really levy a 60 percent tariff on China, I think China will retaliate” and bring the case to the World Trade Organization (WTO), said Zhu, a former deputy governor at the central bank.
He said the tariffs would impact the Chinese currency, which is determined by market forces such as trade and capital flows. The tariffs will also affect China’s demand for US Treasuries. China is the second-largest foreign creditor to the US government after Japan, holding about USD 775 billion in Treasuries.
Tariffs “will affect the exchange rate, it will affect China’s capital flow and also how much China will buy US Treasury bills,” said Zhu, who is now chairman of the National Institute of Financial Research at Tsinghua University.
Trump imposed tariffs of up to 25 percent on more than USD 300 billion of Chinese imports while he was in the White House — triggering retaliation from Beijing — and President Joe Biden has largely kept them in place.
On the campaign trail this year, Trump threatened to increase the levies on Chinese goods to as high as 60 percent, which could decimate trade between the world’s two biggest economies.
If the trade war were to escalate, “it would be tough things” for both countries, said Zhu, who also served as the Deputy Managing Director at the International Monetary Fund (IMF). “It would be nice if both sides can sit down, talk, and cut a deal because, economically, both sides really complement each other.”
He pointed out that China’s exports globally have thrived in recent years, surging to almost USD 4 trillion, from USD 2.5 trillion in 2019. Even so, he said Beijing has made a “strategic shift” to reduce its dependence on trade and to boost domestic demand, a process he acknowledged will “take some time.”
The “short-term goal” for Beijing is to stabilize the housing market, reduce the debt burden of local governments, and boost consumer confidence, he said.