A tremendous increase in tariffs, followed by a tremendous retaliation. A nationalist Chinese blogger who compares President Trump's taxation with a declaration of war. China's Foreign Ministry vowed that Beijing “fight to the end.”
For years, the two biggest forces in the world have been flirting with the idea of economic decoupling as tensions between them rose. With their worsening trade relations this week, the outlook for such a divorce is closer than ever.
It was highlighted on Wednesday when China announced an additional 50% tariff on US goods and announced a new US tax that took effect several hours ago. China also struck American businesses, imposing export controls on dozens of people, adding six others to the list of “unreliable entities,” preventing them from doing business in China.
China's new tariffs, which will take effect on Thursday, mean that all American goods shipped to China will face an additional 85% import tax. The lowest US tax on Chinese imports is currently 104%. Both numbers were unimaginable a few weeks ago.
China's top leader Xi Jinping and Trump have been locked up in a chicken game – each of them don't want to risk looking weak by making concessions – the trade war battle could even become out of control and burn tensions in other territory of competition, such as the fate of Taiwan, the autonomous island that Beijing advocated.
Trump's naked knuckle tactics make him a singular force in American politics. But in Mr. XI, he faces a hardened enemy who is looking at US competitive tactics aimed at overcoming China's pure political turmoil of the late 20th century and ultimately destroying the legitimacy of the ruling Communist Party.
“We're looking forward to seeing you in a way that's a great opportunity to learn about our efforts,” said Scott Kennedy, a senior advisor to the Center for Strategic and International Studies, a Washington think tank. “For China, this is about their sovereignty. It's about the Communist Party's grip on power. For Trump, it could be just a political campaign.”
Already vulnerable due to the property crisis, China's economy is now facing the fantasies of a global recession and the catastrophic slowdown in trade, its critical industry and major factors of growth. In signs of growing unrest in Beijing, Chinese censors appeared to be blocking social media searches for the hashtag, which refers to the number 104, like the scale of US tariffs.
“This is a huge shock to China-US economic relations like the earthquake,” Wu Singbo, dean of the International Institute at Hudan University in Shanghai, said of the tariffs imposed on Wednesday. “It remains to be seen whether this is a temporary disruption or a long-term inevitable trend.”
Certainly, the US-China decoupling is still far from becoming a reality. Chinese and American companies like Tiktok and Starbucks are still entrenched in each other's countries. And Chinese banks remain bound by a financial system controlled by the US dollar.
China and the US are still on the brink of brink, Kennedy said, each trying to force them to offer trading on the knees. But if the Trump administration is chasing Chinese financial institutions, spat could become even more dangerous, for example by revoking the US Bank of China license or ousting it from the international payment system Swift.
In rebelling against Trump's move, Beijing has achieved status as a victim of unfair American trade practices and protectionism. Ironically, China has done the same thing for decades, even if it hasn't made the same worse by limiting foreign investment and subsidizing Chinese companies.
Xi himself has not commented directly on the latest US tariffs. However, shortly after they came into effect on Wednesday afternoon, Chinese state media announced that he had given a speech at a meeting with six other members of the Political Bureau Standing Committee, the pinnacle of Chinese power and other top officials. In it, Xi called on officials to strengthen relations with Chinese neighbours and “strengthen industrial and supply chain cooperation.”
Lin Jiang, a spokesman for China's foreign ministry, addressed new tariffs on Wednesday, saying that China “never accepts such rog arrogance and bullying behavior” and “will definitely retaliate.” The new tariffs were announced hours later.
Fractures between the Chinese and American economies can be felt all over the world. Business has been the foundation of bilateral relations for nearly 50 years. Without it, involvement in other global issues, such as security, climate change, future pandemics and financial crisis, will likely stall.
China has sought to underestimate its vulnerability to economic turmoil unleashed by the Trump administration. It states that reliance on the US market is dependent on exports, particularly when it comes to developing its own country's technology, making it more self-sufficient.
However, it is a paper on serious issues in the Chinese economy, and it has largely stagnated due to the collapse of the real estate market. Furthermore, an attack on Trump's global trading system. This will hit the core of China's only current economic bright spot, including target countries like Vietnam, where Chinese companies opened factories to avoid previous US tariffs.
The fallout from trade disruptions hurt the US, which relies on China for all kinds of manufactured goods, but it also damages China, said Wang Yuesheng, director of the Institute of International Economics at Peking University.
“The impact on China is primarily that Chinese products can't go anywhere,” Wang said. It will destroy export-oriented companies that make furniture, clothing, toys, appliances and more along China's east coast, which exist primarily to serve American consumers.
“These companies will be hit very hard,” Wang said.
The threat to China's exports exacerbates the challenging challenge of regaining foreign investment. This has made it increasingly difficult to implement strict national security laws that have escaped since the community's pandemic and have done business in China.
Xi tried to plead foreign investors and hosted a group of foreign executives in Beijing last month. In his speech, he said that China's development owes not only to the Communist Party leaders, but also to “support and support of the international community, including contributions from Chinese foreign funding companies.”
Beijing's current strategy is to be pushed back to the US and hope that Trump will succumb to domestic pressures to reverse courses, says Evan Medeiros, a professor of Asian Studies at Georgetown University, who served as President Barack Obama's Asian Advisor.
“They know that if they succumb to pressure, they will get more pressure,” he said. “They will resist it with the belief that they can withstand more pain than China can.”
Until then, it appears that Chinese leaders are protecting the country for a prolonged battle. One sign: Influential bloggers are allowed to place emphasis on the crisis and suggest other ways to retaliate against the US.
One of them, Ren Yi, is a Harvard-educated Chinese blogger under the pen name “Chairman Rabbit,” and listed six potential measures, including China's restrictions on U.S. services businesses, such as law firms and consulting companies. Cut off American poultry and soybean imports. And it ended its collaboration with Washington to reduce fentanyl flow to the United States.
“Trade War,” he wrote, “not mere economic friction, it's a “smoke-free war.” This needs to be understood from that perspective. ”
Vivienne Wang Contributed with a report from Beijing Keith Bradshire From Guangzhou, China. Claire Who Contributed research from Seoul siyi Zhao From Beijing.
