Chinese officials and citizens express a blend of hope and apprehension as Donald Trump prepares to return to the White House. The memories of the previous trade war linger, casting a shadow over the prospects of economic recovery and international relations. The impact of past tariffs continues to reverberate through China's economy, influencing foreign investment decisions and supply chain strategies. Amidst these tensions, stock markets in mainland China and Hong Kong experienced a positive surge on Monday, reflecting cautious optimism.
In a gesture aimed at fostering bilateral relations, Chinese Vice President Han Zheng engaged with US businesses in Washington ahead of Trump's inauguration. Han expressed hopes that American companies would "take root" in China, contributing to the stabilization of diplomatic ties. This diplomatic visit coincided with the US president-elect's invitation to Chinese President Xi Jinping to attend the inauguration. Xi, however, chose to delegate Han, marking a significant upgrade from previous inaugurations where China was represented solely by its ambassador.
Despite these diplomatic efforts, Trump's promise to impose additional tariffs of at least 10 percent on Chinese goods looms large. During his previous presidency, he levied tariffs on over $300 billion worth of Chinese imports, which deeply affected China's economic landscape. Now, as China's economy grapples with challenges such as a deep property crisis, substantial local government debt, and a staggering 16 percent youth unemployment rate, the stakes are high.
The precarious state of China's economy is evident in daily life on the streets of Beijing. A sense of déjà vu pervades among those who recall the rapid deterioration of US-China relations during Trump's first term. The phrase "a new starting point" frequently emerges in discussions among Chinese officials regarding the future of China-US ties.
One significant concern among foreign businesses is the ongoing reluctance of US firms to invest in Chinese infrastructure projects. This trend, which began during the last trade war, persists and is exacerbated by Trump's renewed tariff threats. Dominic Desmarais, chief solutions officer at Lira Solutions, highlights the cautious approach businesses are adopting:
"From now on, until the situation becomes a little bit clearer, all our US clients have to pay in advance," – Dominic Desmarais, chief solutions officer at Lira Solutions
Desmarais further elaborates on the potential risks:
"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," – Dominic Desmarais, chief solutions officer at Lira Solutions
"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." – Dominic Desmarais, chief solutions officer at Lira Solutions
Christopher Yeo, a finance director at a Singapore-owned digital infrastructure company in Beijing, predicts continued caution among investors:
"But I would imagine US institutional investors would continue cutting back on their Chinese exposure," – Christoper Yeo, finance director
The challenges facing China's economy are palpable to its residents. Wang, a 36-year-old Beijing local, expresses concerns about the current economic climate:
"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)," – Wang, 36, Beijing resident
"The pressure still remains quite big (for us)." – Wang, 36, Beijing resident
Nonetheless, there is hope that diplomatic engagements can bridge divides. Michael Hart, president of the American Chamber of Commerce in China, acknowledges Han Zheng's understanding of international business concerns:
"(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," – Michael Hart, president of the American Chamber of Commerce in China
Leave a Reply