As Donald Trump prepares for another potential term in office, China is taking proactive measures to brace for renewed trade tensions and tariffs. Unlike the aggressive responses of the past, Beijing is opting for a more calculated approach, focusing on global alliances, self-reliance in tech, and economic buffers to withstand expected trade challenges. With new tariffs already promised by Trump, China is exploring diplomatic and economic strategies to cushion its economy.
Evolving Response: From Confrontation To Strategic Resilience
In response to Trump’s first term, China reacted strongly to U.S. tariffs and restrictions, leading to a trade war that impacted both economies. This time, however, China is aiming for a more measured response. Xi Jinping’s recent message to Trump emphasized “cooperation, not confrontation,” with a focus on stabilizing U.S.-China relations. According to Zhao Minghao, an international relations expert at Fudan University, China’s approach will focus on minimizing direct confrontation while seeking early deals to ease trade tensions.
However, China’s economy is in a more fragile state than it was in 2016, with slower growth and a struggling property sector. Trump’s proposed end to China’s most-favored-nation trading status and plans for tariffs exceeding 60% pose a serious threat. Experts like Zhao believe the actual tariffs may be lower due to potential U.S. inflation concerns, but the uncertainty has already alarmed Chinese producers who rely heavily on the U.S. market.
Diplomacy And Global Trade Outreach
China is also taking a diplomatic approach to boost global support. Recently, Beijing has worked to resolve tensions with India and Japan and has strengthened relationships with allies in the Global South through BRICS and the Shanghai Cooperation Organisation. According to Jean-Pierre Cabestan of Hong Kong’s Baptist University, China is also likely to increase outreach to Europe, Australia, and Japan, partly to take advantage of any potential divisions between the U.S. and its allies over trade policies and the Ukraine war.
Eric Olander, editor-in-chief of the China-Global South Project, noted that Trump’s previous term left space for China to expand its influence in Africa, Latin America, and Southeast Asia, areas Trump largely neglected. As Trump’s approach is likely to focus less on these regions, China aims to secure a stronger position and rebalance its foreign trade towards the Global South.
Boosting Self-Reliance In Technology
A central part of China’s strategy is strengthening its tech industry, particularly after Trump’s initial trade war targeted Chinese technology firms. Following U.S. export restrictions on companies like ZTE and SMIC, China has prioritised domestic technology development in critical sectors such as AI and space. Under Xi Jinping’s direction, China has shifted focus towards self-sufficiency, with government procurement data showing a rapid increase in projects replacing foreign hardware and software with domestic alternatives.
Winston Ma, a former managing director of China’s sovereign wealth fund, notes that the 2018 ZTE ban “was the start of defensive thinking.” This self-reliant shift, however, has limits. Many Chinese tech firms still lack access to cutting-edge chips, affecting their global competitiveness.
Despite strides in domestic tech, Nazak Nikakhtar, a former U.S. Commerce Department official, predicts Trump will intensify export controls on China. This includes expanding the entity list to limit Chinese companies’ access to crucial technology, with new restrictions potentially affecting suppliers outside the U.S.
Navigating Uncertainty And Building Resilience
With Trump’s tariffs looming, China’s strategy reflects a balance between softening trade frictions and strengthening internal resilience. Economic stimulus may be necessary, with analysts projecting a boost beyond the expected $1.4 trillion to stabilise jobs and government revenue. As the U.S.-China trade conflict extends into the tech sector, Ma observes that “the coming years are the most critical for this U.S.-China tech rivalry.”
By reinforcing alliances, advancing self-reliance, and preparing economic buffers, China is gearing up to navigate one of the most challenging phases in U.S.-China relations.
(With Inputs from Reuters)
