As tensions rise between the United States and China, particularly with the recent imposition of an additional 10% tariff on Chinese goods, the Chinese government has shown remarkable restraint. Instead of immediate retaliation, Beijing has urged Washington to engage in dialogue, warning that a trade war would yield no victors. When the tariffs took effect at midnight in Washington, China announced its own retaliatory tariffs ranging from 10% to 15% on various American imports, including coal, crude oil, and large vehicles, effective February 10.
The Chinese leadership appears to be holding back, likely in hopes of negotiating a deal with the U.S. to prevent further escalation and to stabilize relations between the two largest economies in the world. Notably, President Trump had previously negotiated reprieves with Canada and Mexico just before tariffs were imposed on those nations, suggesting a willingness to find common ground.
China’s evolving economic landscape
The impact of Trump’s tariffs is significant, particularly because they compound the numerous tariffs that were already established during his first term, which affected billions of dollars’ worth of Chinese imports. Concerns are mounting in China over its sluggish economy, making the need for a diplomatic resolution even more pressing.
However, the economic landscape has changed since Trump’s first term. The Chinese economy is less dependent on the United States now than it was in 2020, having strengthened its trade ties with countries in Africa, South America, and Southeast Asia. China has positioned itself as the leading trading partner for over 120 nations, allowing it to weather the U.S. tariffs more effectively.
Xi Jinping’s strategic positioning
Amidst this backdrop, President Xi Jinping may perceive a new opportunity. With Trump’s contentious policies causing divisions domestically and raising concerns among international allies, China is eager to project itself as a stable and reliable partner in global trade. As Yun Sun, director of the China programme at the Stimson Centre, states, “Trump’s America-first policy will bring challenges and threats to almost all countries in the world.”
“From the perspective of US-China strategic competition, a deterioration of US leadership and credibility will benefit China. it is unlikely to turn well for China on the bilateral level, but Beijing surely will try to make lemonade…”
In this context, Xi has made concerted efforts to promote China as a leader in global governance, especially following the COVID-19 pandemic. His active engagement with international institutions and support for agreements such as the Paris climate accords showcase China’s ambition to redefine global leadership in a post-American world. This includes pledges to fill funding gaps left by the U.S. withdrawal from major international organizations, such as the WHO.
Furthermore, Trump’s recent freeze on foreign assistance has left many countries in disarray, and China may capitalize on this by stepping in to provide support where the U.S. has retreated. John Delury, a historian of modern China, notes, “The combination of tariffs on major trade partners and freezing of foreign assistance sends a message to the Global South and OECD alike that the US is not interested in international partnership, collaboration.”
As the geopolitical landscape shifts, concerns about China’s assertiveness in regions like the South China Sea and Taiwan remain at the forefront. Nations within the Pacific are increasingly wary of China’s ambitions, and this has led to closer ties among allies such as Japan, South Korea, and Australia in response to perceived threats.
In the wake of Trump’s announcements over the weekend, coinciding with the Chinese New Year celebrations, China initially responded with legal recourse through the WTO, although this avenue remains largely ineffective due to the organization’s stalled dispute resolution processes. As Chinese officials prepare to return from the holiday, they face crucial decisions on how to navigate the turbulent waters of U.S.-China relations.
Experts predict that Trump’s unpredictability and hawkish stance towards China will likely exacerbate tensions, complicating diplomatic efforts. According to Wu Xinbo, a professor at Fudan University, “Mr Trump’s unpredictability, his impulsiveness and recklessness will inevitably lead to significant shocks in the bilateral relationship.”
China is undoubtedly concerned about the implications of a trade war on its economy, yet it also recognizes the potential to leverage the current political climate to enhance its global standing and influence.