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China braces for new tensions with Trump over trade, technology and Taiwan
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China braces for new tensions with Trump over trade, technology and Taiwan

TAIPEI, Taiwan — The first time China faced Donald Trump in the White House, there was a trade war, a breach of protocol involving Taiwan’s former leader and a spat between the president that turned sour.

As President-elect Trump prepares to begin his second term in office, China is bracing for unpredictability in its ties with the United States and renewed tensions over trade, technology and Taiwan.

A new tariff war is looming

Perhaps the biggest fallout for China — if Trump sticks to his campaign promises — is his threat to impose blanket tariffs of 60 percent on all Chinese exports to the US.

Such tariffs would be a blow to China’s already shaky economy, which is suffering from high youth unemployment, a long property slump and government debt. A 60 percent tax on Chinese imports could shave 2.5 percentage points, or about half, off China’s projected economic growth, according to an analysis published earlier this year by UBS.

During Trump’s previous term, the US imposed tariffs on more than $360 billion of Chinese goods. That brought Beijing to the negotiating table, and in 2020 the two sides signed a trade deal in which China committed to improving intellectual property rights and buying an additional $200 billion in American goods. A few years later, a research group showed that China had bought virtually none of the goods it had promised.

President Joe Biden kept most of those tariffs in place and added new taxes this year on imports, including steel, solar cells and electric vehicles.

As last time, the tariffs could serve as a tool to force Beijing back to the negotiating table, said Henry Gao, a law professor at Singapore Management University who focuses on international trade.

Chinese state-run news outlets have carried reports of the outcome…

Chinese state media news broadcast reports on the outcome of the US presidential election in Beijing on Wednesday, November 6, 2024. Credit: AP/Ng Han Guan

“Given China’s weak economic position this time, I think there will be more willingness to talk,” he said. “So, while the tariff may have some short-term effects on the Chinese economy, the situation could improve once they reach an agreement.”

Taking into account the trade talks could be Trump’s calls to Chinese President Xi Jinping to help negotiate a resolution to the war in Ukraine, which Trump has boasted he could do quickly, without saying how.

Earlier, Trump asked for Xi’s help in dealing with North Korea’s rogue leader, Kim Jong Un. That dynamic could repeat itself, with Trump weighing trade grievances against seeking China’s support in global crises, according to Wang Huiyao, founder of the Center for China and Globalization think tank in Beijing.

“China is the largest trading partner of both Russia and Ukraine,” Wang wrote in a recent commentary. “These close economic ties provide China with a unique opportunity to play a greater role in peacemaking efforts.”

Chinese men hand out national flags during National Day celebrations...

Chinese men hand out national flags during National Day celebrations near a Huawei pop-up store in Beijing, Wednesday, Oct. 2, 2024. Credit: AP/Ng Han Guan

It is willing to make you crazy because of Taiwan

There is one scenario in which Trump has threatened to impose even higher tariffs — 150 percent to 200 percent — on Chinese goods: if China invades Taiwan, a self-ruled democracy that Beijing claims as its own.

The US does not recognize Taiwan as a country, but it is its strongest supporter and biggest arms supplier.

Trump angered Beijing in December 2016 by receiving a congratulatory call from Taiwan’s then-president Tsai Ing-wen in a breach of diplomatic protocol. No US president has spoken directly to a Taiwanese leader since Washington and Beijing established ties in 1979.

Trump’s move created anxiety in China-watching circles, but he ultimately remained supportive of the status quo in relations between Taipei and Beijing.

China expects him to continue to do so, said Zhu Feng, dean of Nanjing University’s School of International Relations.

“Will (he) want to come back to support Taiwan independence? It is unlikely,” he said.

Regarding China’s repeated threats to annex Taiwan, Trump told The Wall Street Journal last month that he would not have to use military force to prevent a blockade of Taiwan because Xi “respects me and knows I’m crazy.”

During the campaign, Trump spoke at times about his personal connection with Xi, which began exuberantly during his first term but soured over disputes over trade and the origins of the COVID-19 pandemic.

But Trump also said Taiwan should pay the US for defending itself against China, likening the relationship to insurance. Taiwan spends about 2.5 percent of its GDP on defense and has purchased hundreds of millions of dollars worth of American weapons this year.

Trump has intentionally maintained a sense of uncertainty in his relationship with China, said Da Wei, director of the Center for International Security and Strategy at Tsinghua University in Beijing.

“We are clear about the challenges,” he said. “In terms of opportunities, we still don’t see them clearly.”

Token Disputes

During his first term, Trump began targeting Chinese technology firms over security concerns, focusing on large companies such as telecommunications giant Huawei. Biden continued in this direction by placing restrictions on China’s access to advanced semiconductors, which are needed to develop strategic industries such as artificial intelligence.

But Trump criticized Biden’s CHIPS and Science Act, a bipartisan bill that allocated $53 billion to develop domestic semiconductor manufacturing. Taiwan currently produces nearly 90% of the world’s most advanced chip supply.

The island’s largest semiconductor maker, TSMC, has expanded production in Arizona in part to respond to the CHIPS Act and to be prepared to resist any further protectionist U.S. policies, said Shihoko Goto, director of the Indo-Pacific Program at Wilson Center. .

Trump has promised to eliminate the CHIPS Act, although critics say that would undermine his campaign to reindustrialize the US. The president-elect also accused Taiwan of “stealing” the U.S. chip industry decades ago.

“Rather than providing a silicon shield, Taiwan’s dominance of the chip industry may actually be the source of tension between Taipei and Trump, as Taiwan’s successes in the chip sector can be seen as only possible as a result of taking over the United States.” advantages,” said Goto.