Chinese officials and citizens are adopting a cautious outlook as Donald Trump resumes his role in the White House. The last trade war left lingering effects on China's economy, causing foreign firms to hesitate on investments and prompting them to diversify their supply chains. On Monday, shares in mainland China and Hong Kong saw an upward trend, reflecting a blend of hope and apprehension.
Ahead of Trump's inauguration, Chinese Vice President Han Zheng engaged with U.S. businesses in Washington. Han expressed aspirations for U.S. companies to "take root" in China, aiming to stabilize bilateral relations. President-elect Trump extended an invitation to Chinese President Xi Jinping for the inauguration on January 20. Although Xi did not attend personally, he sent Han in his stead, showcasing a gesture of goodwill, especially since China was only represented by its ambassador at the previous two U.S. presidential inaugurations.
Despite these diplomatic gestures, Trump's proposed tariffs loom over future relations. He has indicated plans to add at least 10 percent more tariffs on Chinese goods, a continuation of his past presidency's approach where more than $300 billion worth of Chinese imports were heavily taxed.
China's economy is grappling with a deep property crisis, substantial local government debt, and a youth unemployment rate of 16 percent. In Beijing, residents are acutely aware of the precarious situation. Wang, a 36-year-old resident, voiced concerns about Trump's return, fearing adverse impacts on his life in China due to potential trade wars.
"What I can see is that China's economy is not very good at the moment, due to the impact of the pandemic, and (the fact that) Trump himself is a crazy, wild person (doesn't help matters on our side)," said Wang.
"The pressure still remains quite big (for us)," Wang added.
Christopher Yeo, a finance director at a Singapore-owned digital infrastructure company in Beijing, emphasized the continuing challenges posed by Trump's tariff threats. He noted that these threats could further strain cross-border investment and financing from the U.S. and other West-aligned nations.
"But I would imagine US institutional investors would continue cutting back on their Chinese exposure," Yeo remarked.
"(Han Zheng) is seen as someone, because of his time in Shanghai, who understands the concerns of the foreign business community, he understands the economy," observed Michael Hart, president of the American Chamber of Commerce in China.
The business community also holds concerns about potential policy shifts. Dominic Desmarais, chief solutions officer at Lira Solutions, mentioned that his firm adjusted its operations based on past experiences with U.S. tariffs.
"From now on, until the situation becomes a little bit clearer, all our US clients have to pay in advance," Desmarais stated.
"If Donald Trump actually imposes 40 per cent, or whatever, duties on Chinese products coming into the United States, I don't want to be stuck with custom-made goods for specific clients that just disappear," Desmarais elaborated.
"That happened a lot, seven, eight years ago, when Donald Trump put 25 per cent duties on 85 per cent of the commodities coming out of China," Desmarais recalled.
Michael Hart highlighted Han Zheng's understanding of foreign business concerns due to his experience in Shanghai. This insight could prove beneficial as Chinese officials navigate the complexities of U.S.-China relations under Trump's administration.
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