Trump sows uncertainty - and Xi Jinping sees an opportunity - Voice of Asia

Despite the US imposing an additional 10% tariff on all Chinese goods, if China is angry about it, they are doing a good job of hiding it. So far, Beijing has remained restrained, not immediately retaliating.

In contrast, both Canada and Mexico vowed to retaliate. Canadian Prime Minister Justin Trudeau announced a 25% tariff on over $100 billion of US goods, stating his country would "not back down." US President Donald Trump subsequently reached agreements with both countries to temporarily suspend tariffs on their imports. However, the tariffs on China are scheduled to take effect on Tuesday.

In 2018, when Trump first initiated multiple rounds of tariffs on Chinese imports, Beijing stated it was "not afraid of a trade war." This time, they have urged the US to engage in dialogue and "meet China halfway." There are reports of a possible phone call between Trump and Xi this week. Nevertheless, this does not mean the announcement will be without impact, especially considering this 10% tariff is on top of a series of tariffs imposed on hundreds of billions of dollars of goods during his first term.

The Chinese government's low-key response is partly because they don't want to further fuel public anxiety when many are already worried about the economic slowdown. But today, the Chinese economy is less dependent on the US than before. Beijing has strengthened trade agreements in Africa, South America, and Southeast Asia, and is now the largest trading partner for over 120 countries. Zhuang Jiaying of the Carnegie China Center believes the additional 10% tariff may not provide the leverage Trump wants. “China will think that perhaps they can withstand a 10% tariff, so I think Beijing is staying calm. Because if it’s not a big issue, then there is no reason to clash with the Trump administration unless there is a real benefit for Beijing.”

President Xi Jinping may have other considerations: he may see an opportunity in this. Trump’s threats to impose tariffs on allies, including the EU, in his first month in office, may have made other US allies worried about their future. By contrast, China hopes to project an image as a calm, stable, and potentially more attractive global trading partner. Sun Yun, director of the China program at the Stimson Center, stated: “Trump's ‘America First’ policy will pose challenges and threats to almost all countries in the world. From the perspective of US-China strategic competition, the decline in US leadership and credibility will benefit China. Although it is unlikely to be beneficial for China on a bilateral level, Beijing will definitely try to profit from it…”

As the leader of the world's second-largest economy, Xi has made no secret of his ambition for China to lead an alternative world order. Since the end of the COVID-19 pandemic, he has traveled extensively and supported major international institutions like the World Bank and agreements like the Paris Climate Accord. Chinese state media has described this as embracing countries around the world and deepening diplomatic ties. Previously, when Trump halted US funding to the WHO in 2020, China pledged additional funding. It is widely expected that Beijing may step in again to fill the US void after Washington withdrew from the WHO. Similarly, China may look to fill the void for long-term US-dependent countries and organizations thrown into disarray by frozen US aid, despite its own economic headwinds.

John Delury, a professor of modern Chinese history at Yonsei University in Seoul, said that Trump's "America First" principle may further undermine Washington's position as a global leader. "The combination of tariffs on major trading partners and the freezing of foreign aid sends a message to countries in the Global South and OECD countries that the US is not interested in international partnerships and cooperation," he told the BBC. “As the US withdraws from the world stage, President Xi Jinping's consistent advocacy of ‘win-win’ globalization takes on a whole new meaning.” Beijing has been seeking opportunities to overturn the US-led world order of the past 50 years, and the uncertainty of the Trump 2.0 era may very well be that opportunity.

Mr. Zhuang Jiaying stated: “As to whether this will actually provide a key advantage for Beijing, I am not so sure. Many US allies and partners, particularly in the Pacific region, have reasons to cooperate with Beijing, but they also have reasons to be wary. This is why we see Japan, South Korea, the Philippines, and Australia moving closer, partly due to their concerns about China.” The Australian Institute of International Affairs believes a trilateral relationship between Australia, Japan, and South Korea is "gathering momentum," driven by the "impact of a second Trump term." All three countries are concerned about China’s assertive stance in the South China Sea and the possibility of a war over Taiwan. Beijing views Taiwan as a breakaway province that will eventually become part of China, and does not rule out using force to achieve this goal.

Taiwan has long been one of the most contentious issues in US-China relations, with Beijing condemning any action by Washington that is seen as supporting Taipei. But when Trump has repeatedly threatened to annex Canada or buy Greenland, it may be difficult for Washington to push back against signs of Chinese aggression. Most countries in the region use their military alliances with Washington to balance their economic ties with China. But now, they are wary of Beijing and uncertain about the US, and they may form new Asian alliances without relying on any one major world power.

Trump announced the tariffs over the weekend when Chinese families were celebrating the New Year and inviting the God of Wealth into their homes. Bright red lanterns hung in Beijing’s empty streets as most workers had left for their hometowns during this biggest holiday of the year. China’s response has been much more subdued than Canada’s or Mexico’s. The Ministry of Commerce announced plans to take legal action and use the World Trade Organization to voice its grievances. But this poses no threat to Washington. The WTO’s dispute settlement mechanism has been effectively shut down since 2019, when Donald Trump (then in his first term) blocked the appointment of judges to hear appeals.

As the holiday comes to a close, and party and government officials return to work in Beijing, they need to make decisions. In recent weeks, officials have been encouraged by signs that the Trump administration may want to stabilize relations, especially after the two leaders held what Trump called a “very good call” last month. For now, China is remaining calm, perhaps hoping for a deal with Washington to avoid further tariffs and prevent relations between the world's two largest economies from spiraling out of control. But some believe this will not last, as both Republicans and Democrats have identified China as the country’s biggest foreign policy and economic threat. Professor Wu Xinbo, director of the Center for American Studies at Fudan University, stated: “Trump’s unpredictability, impulsiveness, and recklessness will inevitably lead to major shocks in bilateral relations. In addition, there are quite a few China hawks, even extreme hawks, in his team. The next four years will inevitably see serious damage to bilateral relations.”

China is undoubtedly concerned about its relationship with the US and the damage a trade war could do to its slowing economy. But it will also seek to take advantage of the current political winds to draw the international community towards it and into its sphere of influence.