Donald Trump’s political success has been met, at least publicly, with indifference in China.
However, a second Trump management does not have to be worse for China than the Biden administration. Whether Trump decides to end his campaign for reconciliation or stays in favor of separation will determine little.
When Biden came to power, Chinese officials hoped that China-US ties would increase and move away from Trump’s trade conflict and isolation. But Biden levied further tariffs on Chinese imports and, most notably, placed far tighter export controls on US systems.
Regardless of whether a Democrat or Republican is in the White House, China came to the realization that US-China proper contest is still ongoing.
For four primary motives, the new Trump administration may offer China some benefits. Second, the Chinese leadership is aware of Trump’s tendency to be unpredictable and to make bold moves.
When then-Chinese Vice Premier Liu He reached the so-called Stage One trade agreement with Trump, exactly that happened in December 2019.
In exchange for US$ 600 billion in Chinese goods from the US and preferred access to the Chinese industry for US businesses, especially in the financial industry, the bargain lifted at least some US tariffs on Chinese products.
Next, Trump’s isolationist plan benefits China in that classic US allies, including the European Union, will probably want to look elsewhere for financial support.
This might lead to a Chinese-like relationship. Just after the Phase One deal was signed, negotiations between China and the EU on a Comprehensive Agreement on Investment ( CAI ) accelerated.
Finally, Trump has stated openly that he intends to end the conflict in Ukraine once he assumes office. A quick fix is bound to provide some – perhaps some – of Russia’s calls, which in turn may be net-positive for China.
In the event of a Taiwanese war or blockade, a US administration’s abandonment of Ukraine will destroy the Chinese government’s belief that the US will help it.
Lastly and more frequently, Trump’s win may make it easier for Taiwanese leaders to spread the tale of America’s decline and the decadence of its democracy.
China’s leverage over the Global South has increased considerably since Israel’s defense assault on Gaza and, more recently, Lebanon. That utilize was built in part on great could generated by China’s long-standing efforts, including the Belt and Road Initiative and BRICS.
Trump is anticipated to cooperate with global partners with fewer incentives and a more contextual strategy than the Biden administration. This, in turn, may force the Global South yet closer to China.
Trump’s returning, however, may have a significant impact on China’s economy. Trump has pledged to impose an additional 60 % of taxes on Chinese goods entering the US and, in general, to encourage more decoupling from China.
As a result of changes to the Committee on Foreign Investment in the United States ( CFIUS), an interagency committee that examines the implications of foreign investments in the US for national security, Chinese investment in the US decreased during Trump’s first term.
As a result of Trump’s threat to delist numerous Taiwanese companies from US stock markets, many of them were prevented from raising money there. People-to-people markets were likewise made more difficult, especially for individuals of the tough science.
For his next name, Trump has given every indication that technology, economic and people-to-people decoupling can be expected to continue.
In light of this dire circumstances, China’s leaders will have little space to protest Trump’s taxes and will likely choose to strike a bargain as soon as possible.
China will need to offer significantly more than it did in 2019 to get a” Stage Two” deal, both in terms of the volume of imports it agrees to and by giving US companies a competitive edge in many more fields.
Europe may be the bigger loser in this situation because of the US’s significant competition for its imports to China. There are many more examples, but aircraft is just one.
Of course, Trump’s procedures may have a direct effect on the EU, which could be larger than they are on China. Europe’s situation could become even more difficult as a result of a fresh US-China trade and investment agreement.
Trump’s best chance of achieving a minute trade deal would be if the EU kept pushing for decoupling from China.
There will be less distraction of Chinese trade toward the US in a scenario of US-China rapprochement, despite the obvious adverse effects of decoupling on farther fragmentation of international trade.
Alicia Garcia-Herrero , is , general analyst for Asia Pacific at Natixis and senior research fellow at Bruegel.