Beijing Braces for a Rematch of Trump vs. China
Officials are preparing for the potential of more turbulent U.S. relations and another trade war should Trump get re-elected
Xi’s anger at the remark foreshadowed a broader worry coursing through Beijing: What awaits China should Trump and his inner circle regain power?
Trump’s four years in the White House had brought turmoil to the relationship. When he left in 2020, Beijing breathed a sigh of relief. “Good riddance, Donald Trump!” the official Xinhua News Agency said in an unusually expressive tweet.
Now Chinese officials are quietly preparing for the prospect of Trump’s return to the White House—and bracing for drama in its U.S. relations to amp up again, according to people close to the Chinese leadership’s thinking.
President Biden has made life difficult for Beijing, too, by keeping in place and even expanding Trump’s tough-on-China economic policies, and by building up coalitions with U.S. allies to counter China. Yet Biden has also sought to dial back rancor with Beijing, an effort Xi appreciates, the people said.
A case in point: Washington took care not to antagonize Beijing around January’s presidential election in Taiwan, the self-ruled island that China claims as its own, a matter in which it has repeatedly warned the U.S. not to meddle.
Some officials see benefits for China from a potential Trump win in November. In their view, he could accelerate what Xi believes is the U.S.’s decline as the singular world power, cause more political and social disarray in America and push away allies Biden has won over, potentially helping Beijing rebuild relations with Europe.
But overall, they believe the harm of a second Trump term likely would outweigh any potential benefits, the people close to the leadership say. Much will depend on who would be in Trump’s inner circle.
Pompeo, who has said he’s open to joining a second Trump administration, leads a list of 28 former Trump administration officials Beijing put on a sanctions list and banned from entering Chinese territory. The day before Biden took office, a Chinese Foreign Ministry spokeswoman labeled Pompeo “Clown of the Century” for his allegations that China committed genocide against the Uyghur ethnic group in Xinjiang.
Trump and his trade-war lieutenant, Robert Lighthizer, have openly advocated all but cutting off China’s access to America’s markets, technology and capital.
“The Chinese believe that if Trump returns to the White House, the upside to the U.S.-China relationship would be capped but the downside is bottomless,” said Yun Sun, director of the China program at the Stimson Center, a Washington think tank.
China’s Foreign Ministry said in a statement, “whoever is elected as the U.S. president, we hope the U.S. will work with China” to promote the bilateral relationship. “China opposes some people in the U.S. using China rhetoric for election purposes,” it said.
‘Reverse Nixon’
Interviews with policy advisers in both capitals as well as people who have consulted with Chinese officials give a picture of the preparations in Beijing.
Some Chinese ministries, such as for foreign affairs, trade, investment and technology, have designated officials to be U.S. election watchers, with a focus on the Trump camp.
One immediate concern is the potential for another trade war. Chinese companies are speeding up efforts to expand their access to advanced technologies such as artificial intelligence in regions like the Middle East, worried that a Trump victory could quicken the pace of U.S. tech sanctions against China.
Despite calls from U.S. Treasury Secretary Janet Yellen and others to stop flooding the world’s markets with cheap goods, China is set on a state-led drive to manufacture its way out of the worst economic headwinds in recent decades. Officials reason that is the best way to outcompete the U.S., especially if Trump returns to the White House.
Senior Chinese officials have stepped up their courtship of American business leaders, quizzing them on who they think would be in a Trump cabinet and trying to get them to lock in their China investments.
The Biden years, with wars in Ukraine and Gaza, have seen a deeper demarcation in geopolitics, with, roughly speaking, the U.S. and Europe on one side and China and Russia on the other. A Trump win could muddle that constellation.
A big worry for Xi, according to the people close to the leadership, is whether Trump will disrupt his “bromance” with Vladimir Putin. When he was in the White House, Trump repeatedly sought to bring the U.S. closer to Russia.
Xi has cultivated a personal bond with the Russian leader and fears that if Trump cozies up to Putin, it could weaken Beijing’s own relationship with Moscow, a crucial partner in Xi’s standoff with the West.
Worse, some China strategists say, Trump could try to pull off a “reverse Nixon.” Much like former President Richard Nixon sought China out to counter the Soviet Union during the Cold War, Trump might seek to turn Moscow against Beijing.
For now, Washington is focused on reducing Beijing’s assistance to Russia. The Biden administration is pressuring China to cut back its support for Russia’s defense industry—a message Secretary of State Antony Blinken delivered to Xi and other senior officials on his visit to China last week.
Walk in the woods
Beijing’s relations with Washington have entered a period of relative calm since Biden and Xi met in California in November, a summit intended to break a diplomatic impasse after a suspected Chinese spy balloon flew over America last year.
As the program was being set for the summit, the Xi team had one wish: that the two leaders take a stroll together.
Beijing wanted to beam back to the Chinese public amicable snapshots of Xi with Biden—much like a 2013 summit produced images of Xi and former President Barack Obama leisurely taking a walk—to show that their leader had China’s most important bilateral relationship under control.
The White House accommodated the wish. The four-hour meeting at a woodsy estate outside San Francisco included a widely televised promenade by the two leaders.
The administration has often said it seeks to manage the U.S.-China competition responsibly, even though Biden has largely carried on the Trump administration’s trade stance.
“The Chinese know what they don’t like about Biden,” said Rick Waters, a former senior China official at the State Department and now managing director for China at Eurasia Group, a political-risk consulting firm. “But they do put value in Biden’s effort to try to stabilize the relationship.”
Since the summit, though, despite the establishment of a dozen working groups to restart talks on trade and other policies and a recent phone call between Biden and Xi, there is little actual negotiation going on.
Biden officials say it will take time to get to conversations of greater substance. In Beijing, a potential Trump victory is also a factor.
The Chinese “likely think it makes little sense to compromise if the Biden administration is to go the way of the dodo bird,” said Scott Kennedy, a China expert at the Center for Strategic and International Studies who recently consulted with officials and government advisers in Beijing.
‘Bad experience’
Trump’s surprise 2016 victory upended the U.S.’s longstanding strategy of deepening economic ties with China.
Xi and his underlings initially believed Trump’s tough talk masked a fear of China’s economic strength. When Trump started setting tariffs on China in early 2018 to force Beijing to change its state-led economic practices, Beijing hit back in kind each time, figuring the businessman-turned-president would eventually back down.
Tit-for-tat escalation followed. The American levies on imports of Chinese goods ended up quadrupling from 3% to 12% on average during Trump’s first term.
Long used to being the more histrionic party in the relationship, China’s Communist rulers found themselves having to deal with an erratic dealmaker using extreme pressure to extract concessions from Beijing.
“Under Trump, we had a bad experience,” Liu Jianchao, a senior party diplomat seen as China’s likely next foreign minister, said at a closed-door session with American think tanks earlier this year, according to people who attended the meeting.
The economic cost to Beijing of Trump’s tariffs, retained by Biden, is real. Chinese companies slapped with tariffs exported less to the U.S., reduced hiring, spent less on research and development and were less likely to start new ventures, according to research from economists at Peking University, Fudan University and other leading Chinese universities. Overall, the damage to China’s gross domestic product from the trade war was three times as high as the hit to the U.S., according to some Chinese economists.
In Washington, Trump’s aggressive stance on China was a hit. A bipartisan consensus has since taken hold that the U.S.’s previous engagement with Beijing had failed in its goal to make China adopt a more market-driven economic approach.
Still, Trump’s trade war didn’t accomplish its main goals.
A so-called Phase One trade agreement signed between Washington and Beijing in early 2020 was centered on China’s promise to increase purchases of American goods and services by $200 billion over two years. According to estimates by the Peterson Institute for International Economics, Beijing fell 40% short of its commitment.
The U.S. didn’t get the fundamental reforms of China’s economic policies it had sought, such as reducing state subsidies that give Chinese companies a leg up on their foreign competitors.
Tech sanctions
For now, a big part of Beijing’s planning for a potential return of Trump involves tariffs and advanced technology.
Some economic officials are turning to books such as “No Trade Is Free,” by Lighthizer, Trump’s trade strategist who negotiated the Phase One deal with Beijing and who has been floated as a candidate for Treasury secretary in a second Trump administration.
Other Beijing officials are inviting U.S. and other Western experts to scenario-planning sessions aimed at gauging the pace and the scope of U.S. export controls should Trump win again.
Already, according to a February research report by Jimmy Goodrich, a China and semiconductor-industry expert and senior adviser to Rand Corp., Chinese government researchers have been trying to deepen cooperation in areas such as biotech, quantum computing and AI with the Abu Dhabi Technology Innovation Institute.
A spokesman at the government-funded institute in the United Arab Emirates, a Middle Eastern ally of Beijing’s, said it is a global research institute with over 70 partnerships with organizations in 34 countries.
Efforts by Beijing to get around U.S. tech sanctions are likely to accelerate in the months ahead, Chinese analysts say. Washington is concerned that Chinese companies could get their hands on powerful AI chips through other foreign entities that buy them from the U.S.
Trump has said that if re-elected, he might impose tariffs of up to 60% on imports from China. It’s unclear how such a move could be carried out.
People close to the Trump campaign said that as the presidential race intensifies, Trump likely will try to contrast his gloves-off approach to China with Biden’s, which tends to be more targeted.
A spokeswoman for the Trump team referred to his past remarks indicating he would take an aggressive stance if he gets back in power. “My agenda will tax China to build up America,” Trump said early last year. “As a matter of both economic and national security, I will implement a bold series of reforms to completely eliminate dependence on China in all critical areas.”
If Trump gets re-elected, said Matt Turpin, a visiting fellow at the Hoover Institution who served on Trump’s National Security Council, “on day one, he would ask how China lived up to the Phase One trade agreement. Then he would instruct Lighthizer to pick up where we left off.”
In his book, published last year, Lighthizer describes China as “the greatest threat that the American nation and its system of Western liberal democratic government has faced since the American revolution.”
Bargaining chip
China has already been shifting its trade away from the U.S. and other developed economies. A report by the McKinsey Global Institute shows that developing economies including Russia accounted for more than half of China’s goods trade last year, up from 42% in 2017.
In its statement, China’s Foreign Ministry said, “the fact has long proven that trade wars and tariff wars are not beneficial to either side.”
Compared with his stance on trade, Trump has been more ambiguous on Taiwan. Asked by Fox News in July whether the U.S. should come to Taiwan’s defense in a Chinese invasion, Trump said, “If I answer that question, it’ll put me in a very bad negotiating position.”
The remark prompted speculation that Trump would treat the Taiwan issue somewhat like a business deal, potentially using it as a bargaining chip in trade negotiations, such as getting China to buy more American goods.
That approach would likely have limited success with China’s leaders, who see Beijing’s goal of eventually taking control of Taiwan as a sacred mission.
Beijing’s view is that “Taiwan is ours to begin with,” said one Chinese foreign-affairs adviser. “Why would we write a big check for it?”
Write to Lingling Wei at Lingling.Wei@wsj.com