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US-China relations
OpinionChina Opinion
Andy Xie
Opinion
Andy Xie

Why China need not worry about Trump’s tech and financial warfare

When future historians look back on China’s rise, Trump’s trade war might well be viewed as having helped to prevent a Chinese crisis

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A portrait of the late Chinese leader Mao Zedong watches over a currency exchange bureau showing renminbi rates in Hong Kong on November 29. A weaker currency gives China immunity against US financial aggression. Photo: AFP
Andy Xie
Dr Andy Xie is a Shanghai-based independent economist specialising in China and Asia, and writes, speaks and consults on global economics and financial markets.
China has overcome Donald Trump’s trade war and tech sanctions before. This time, it is in a much stronger position to withstand new threats. As a result, the United States could pivot away from trade confrontations towards information and financial warfare. However, China’s nearly US$1 trillion trade surplus would be a strong buffer against financial instability.

Trump began the trade war with China in 2018. By 2023, exports from mainland China and Hong Kong to the US had fallen by about a quarter. Less exposure to the US market has made China more resilient to new tariffs, which reduces the incentive for Washington to escalate the trade war.

Trump talked about a 60 per cent tariff on Chinese goods during his campaign. More recently, he floated the idea of an extra 10 per cent on top of the existing tariffs. He also wants 25 per cent duties on Canadian and Mexican goods.

Many auto workers voted for Trump despite benefiting from trade and being able to buy cheap Chinese television sets, for example; their real competition is arguably coming from Mexico and Canada. No amount of tariffs on China would bring the production of TV sets back to the US. But tariffs on cars from Canada and Mexico could revive US carmakers. Trump’s tariff policy should tap into this possibility.

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