Advisers in Beijing and international analysts say China may be prepared to deliver painful economic blows if it continues Trump In following a hostile economic approach with Beijing, according to a report by the British newspaper “Financial Times”, which was reviewed by the “Eqtisad Sky News Arabia” website.
- The beginning of trade tensions between China and the United States dates back to Trump’s victory in the 2016 elections, which surprised the Chinese government, which did not expect this shift.
- Trump quickly began imposing high tariffs on… Chinese exportsIn addition to implementing restrictions on Chinese investments and imposing sanctions on Chinese companies.
- In light of this, China has worked to strengthen its economic position by enacting a set of laws that give it the ability to respond strongly, such as the anti-sanctions law that allows it to take countermeasures against foreign sanctions, and the list of unreliable entities that lists foreign companies that it considers to threaten its interests. Nationalism.
- The Export Control Act has also been strengthened, allowing Beijing to use its control over many essential resources such as rare earths and lithium, which are vital materials in modern technology, as leverage over the United States.
Potential impact on US companies
The report quoted the head of China analysis at Control Risks, Andrew Gilholm, indicating that China may be more capable of harming American interests than many believe, explaining that Beijing has already begun to impose sanctions on some American companies such as Skydio. It is the largest drone company in the United States and a supplier to the Ukrainian military, preventing Chinese companies from supplying it with essential components.
China also threatened to place PVH, whose brands include Calvin Klein and Tommy Hilfiger, on the list of unreliable entities, which could deprive the company of access to the huge Chinese market. Gilholm considered that these steps are only the beginning of what may be coming Chinese economic measures.
Fortifying supply chains
In light of these tensions, China is seeking to make its technology and resource supply chains more resistant to fluctuations that US sanctions may cause. China is also making a great effort to expand its trade with countries that do not follow the same political and economic orientations as the United States.
For her part, Zhong Wang, a foreign policy expert at Zhejiang University in China, added that while Chinese-American relations were more stable during the last period of US President Joe Biden’s term, the policies that Biden followed for the most part continued in the same direction as Trump’s policies.
But China cannot ignore the threats made by Trump during his election campaign to impose customs duties that may exceed 60 percent on all Chinese imports, especially in light of the slowdown in economic growth in China, the weakness of consumer and corporate confidence, in addition to high unemployment among young people.
In this context, Professor Gong Jeong from Beijing International University of Business and Economics said that China may be willing to make more direct investments in American industry or move some of its factories to countries that do not raise Washington’s concerns.
Chinese countermeasures
While some analysts, such as Joe Mazur, an analyst specializing in Chinese-American trade, believe that the economic protectionism that Trump may impose may be in China’s interest, as imposing duties on imports may push some major economies to strengthen their trade relationship with China in search of more export markets. suitability.
On the other hand, there are those who believe that the countermeasures that China may take may lead to long-term harm to Chinese companies and its economy in general. In this context, James Zimmerman, partner at the law firm Loeb & Loeb, confirmed In Beijing, the Chinese government may be completely unprepared for a second Trump term, including the diplomatic chaos that may accompany this phase..
Expectations of a return to trade tensions
Zimmerman also believes that trade tensions may increase due to China’s failure to fulfill commitments agreed to in a trade deal with the first Trump administration in 2020, which included China purchasing large quantities of American goods.
Zimmerman concludes that China’s moves should focus on avoiding imposing more tariffs, noting that the possibility of the trade war expanding if Trump wins a second term is a possibility.
Beijing’s preparations
For his part, the advisor to the Arab Center for Studies and Research, Abu Bakr Al-Deeb, said in exclusive statements to the “Eqtisad Sky News Arabia” website, that China has prepared well to deal with Trump’s upcoming presidency in the White House, as if it was anticipating this stage and preparing to confront it, pointing out that If Trump goes ahead with his threats to impose high tariffs on China, Beijing has many strategic options to confront the economic repercussions.
He explained that China has developed plans to strengthen its resilience in the face of these challenges. Including devaluing its national currency, the yuan, to boost its exports, in addition to adopting measures that include imposing restrictions on the export of important raw materials, and imposing customs duties on American agricultural products. He also indicated the preparation of a list of entities targeting major American companies as part of its strategy.
China’s measures include reducing taxes and providing investment facilities with the aim of achieving economic balance in the face of American policies. Beijing also adopted a policy of “unilateral openness”, strengthening its trade relations with countries far from Washington, such as Australia and South Korea, by providing facilities such as easing visa requirements without demanding similar measures from those countries. China is also considering providing economic incentives in vital sectors, including electrical equipment, communications, and agricultural products, to open new markets and strengthen trade partnerships with Europe and Asia.
Al-Deeb pointed out that China is also moving to block supplies of vital minerals and sell US assets, such as Treasury bonds, as part of its policies to confront US measures. China has announced an Economic Program B to deal with the local government debt crisis, part of its efforts to support its slowing economy in the face of new risks.
Alternative tools
He also drew attention to China’s success in passing its goods to American markets through third countries such as Vietnam, Indonesia, and Mexico. He explained that many of the products supplied to the United States are actually manufactured in Chinese factories, which reflects the complexity of supply chains between the two countries since 2021, despite Washington’s attempts to diversify them. This approach has widened trade imbalances, with Vietnam, for example, achieving a record trade surplus with the United States.
He warned that US protectionist measures may lead to higher prices inside USwhich increases costs for American companies and consumers.
At the conclusion of his statement, El-Deeb pointed out the possibility of Elon Musk playing an important role in bringing views closer between the United States and China during Trump’s next term, explaining that Musk has strong relations with Chinese officials, especially after he established the first car factory owned entirely by a foreigner in China. He cited the experience of American diplomat Henry Kissinger, who succeeded in normalizing relations between the two countries during his historic visit to Beijing.
Beijing crisis
According to a New York Times report, as Trump now prepares for his second term in the White House, he pledges to intensify trade hostilities with China by imposing additional tariffs of 60 percent or more on all Chinese imports. It is pressing on a country that has suffered from a powerful combination of overlapping forces: the disastrous end of a real estate investment wave, incalculable losses in the banking system, a local government debt crisis, faltering economic growth and chronically low prices – a possible harbinger of long-term stagnation.
The report added: The decline in the fortunes of Chinese companies at home has led Chinese companies to focus in particular on sales abroad. This makes the country vulnerable to any threat to its export growth, a weakness that would reinforce expected pressure from the Trump administration in its plans to seek a deal that would increase Chinese purchases of American goods.
“The balance of power has definitely shifted in favor of the United States,” Eswar Prasad, a professor of trade policy at Cornell University who previously served as head of the China department at the International Monetary Fund, was quoted as saying. “The Chinese economy is not on the verge of collapse, but it has been suffering for some time.” .
Tariff war
In addition, the economic expert, Dr. Ali Al-Idrissi, explained in statements to the Sky News Arabia economics website that China can confront the tariff war and American policies, such as those that the administration of former President Donald Trump will adopt, by adopting several effective strategies to enhance its economic flexibility and reduce… The impact of these policies on them.
Dr. Al-Idrissi explained that these strategies include:
- Diversifying international markets: China seeks to expand the scope of its international trade by strengthening its relations with the European Union, Asian countries, Africa, and Latin America, in order to reduce its dependence on the American market.
- Strengthening the domestic economy: Focus on raising the level of domestic consumption as a main driver of economic growth, which makes the Chinese economy less affected by tariff wars.
- Innovation in technology: China is working to develop domestic technology and invest in strategic industries such as artificial intelligence, 5G, and robotics, to reduce its dependence on American technology companies.
- Strengthening relations with developing countries: Through the Belt and Road Initiative, China seeks to build economic partnerships with developing countries, providing alternative markets and enhancing its global economic influence.
- Cooperation with international allies: This constitutes cooperation with bloc countries BRICS International organizations such as the World Trade Organization are a means for China to confront American policies through bilateral and multilateral trade agreements.
- Improving the internal business environment: China is constantly working to improve the business environment and attract more foreign investments, which contributes to strengthening the domestic economy and reducing dependence on foreign markets.
Al-Idrissi stressed that these strategic measures reflect the ability of… China To confront global economic challenges, and to enhance its flexibility to face any future pressures resulting from American policies.
