China Could Regret Not Buying More Trump Insurance
Beijing thinks it can handle a return of the former US president without easing tensions with Europe and Japan. That’s a mistake.
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China is bracing itself for a second Trump administration. The former US president, who has a coin-toss chance of recapturing the White House, has vowed to raise tariffs on Chinese goods by at least 60%. Hobbled by an epic real estate bust, the mainland economy can ill afford a new trade war.
In theory, China could cushion the shock of a Trump 2.0 by buying some “insurance” — for instance, by improving ties with the European Union and Japan, which are its second- and fourth-largest trading partners, respectively. (The US is third.)
Better relations could not only protect Chinese access to these markets but increase the odds of Brussels and Tokyo working with Beijing to resist Trump’s plans to blow up the global trading system.
Yet China has made no such moves. To the contrary, leaders resisted making concessions to stave off European tariffs on electric-vehicle imports (although a last-minute deal is still possible).
Meanwhile, Sino-Japanese relations have reached a new low after a recent spate of incursions into Japanese airspace and waters by Chinese military planes and vessels.
Instead, President Xi Jinping has opted for what might be considered “self-insurance” — relying on China’s own fiscal resources and existing strategic partnerships to mitigate the impact of a second Trump administration.
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In terms of economic policy, Xi will likely respond to a new trade war with a substantial stimulus package, funded by loose monetary policy and additional fiscal borrowing. At the end of September, Beijing showed some of its cards by surprising investors with aggressive monetary loosening. Shortly afterward, the Ministry of Finance pledged to issue long-dated treasury debt to support low-income households, recapitalize banks, and throw a lifeline to the imploding property sector.
Instructively, Beijing chose not to reveal the size of the fiscal package right away. According to Chinese law, only the National People’s Congress can approve the issuance of government debt.
Investors will find out the exact amount only when the NPC concludes its bimonthly meeting on Nov. 8 — conveniently, three days after the US presidential election. (Normally, the NPC’s Standing Committee meets later in the month. Beijing may have moved up the November date to shore up confidence in the event of a Trump win.)
As for foreign policy, Xi has doubled down on the partnership he has struck with Vladimir Putin, ignoring mounting Western pressure to cut off the supply of dual-use technology to Russia. Xi has met with Putin twice since July.
No doubt the Chinese leader believes the bird in hand is safer than courting the two — Europe and Japan — in the bush. It’s also cheaper: To placate the Europeans, China would have to reduce support for Russia drastically. To ease tensions with the Japanese, it would have to make painful concessions on security and territorial disputes.
Moreover, any payoff would be uncertain. Allies could easily be bullied or bribed by Trump to fall in line with the US when necessary.
The decision to self-insure may also be driven by hope that Trump’s bark is worse than his bite. The US economy could suffer a substantial hit should the trade relationship with China rupture completely. Inflation would rise, while US manufacturers dependent on China-made intermediate goods will struggle to find alternatives quickly.
Chinese leaders thus have some reason to view Trump’s threat as a negotiating ploy and to believe a deal can still be struck to avoid an all-out trade war. Given such uncertainty, the smart thing to do is wait and see.
Nonetheless, a policy of “self-insurance” has its own flaws. China’s stretched fiscal and monetary resources will limit its ability to dampen any new trade shock. Improving ties with the EU and Japan has its own merits and should be pursued regardless of the election outcome.
Strategically, the Sino-Russian partnership may not be as solid as Xi thinks. If Trump follows through on his pledge to end support for Ukraine and succeeds in driving a wedge between Putin and Xi, China’s “bird in hand” could easily slip away.
For now, these considerations may not trouble the Chinese leader. He and his underlings are likely to meet Trump 2.0 with defiance, not submission. The only certainty is that Sino-US tensions will get worse before they get better.
More From Bloomberg Opinion:
- Trump Muddies an Already-Chaotic Debate in China: Shuli Ren
- Trump’s Tariffs Would Hit Consumers’ Wallets: Patricia Lopez
- Putin, Kim and Xi Aren’t Just Bluffing With Nukes: Andreas Kluth
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Why I’m Voting for Kamala Harris
When it comes to the candidates’ policy positions and personal integrity, there’s a clear choice.
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I do not agree with Vice President Kamala Harris on every issue, but earlier this week, I voted for her without hesitation. I’d like to explain why, in hopes that others who have a history of supporting candidates in both parties — as I do — will join me.
As I’ve thought about the candidates in this presidential election, I’ve been guided by two main considerations: policy positions and personal integrity.
When it comes to policy, the contrast could not be clearer.
On abortion, Harris supports reproductive rights and will work to enshrine them into law. Donald Trump does not and will not.
On immigration, Harris recognizes — as most business owners do — that we need comprehensive immigration reform that both secures the border and makes it easier for people to come here legally. Trump’s plan to deport millions of people living and working here is a recipe for economic disaster.
On gun safety, Harris supports common-sense measures that will help save lives and keep guns out of the hands of criminals and other dangerous people. Trump, after talking a big game about standing up to the gun industry’s lobbyists, buckled under their pressure and did their bidding.
On the economy, Harris’ tax and tariff proposals are politically driven, but as many economists have noted, they would do far less damage to consumers and businesses — and to the national debt — than Trump’s.
On climate change, Harris recognizes the opportunity that exists for the US to reap the economic rewards that come with leading the clean energy transition rather than allowing China or other nations to beat us to it. Trump doesn’t seem to believe climate change is a problem and would allow the fossil fuel industry to continue polluting our air and water.
On public health, Harris respects science and medicine, including lifesaving vaccines. Trump has promised to turn over America’s health system to anti-vaxxer Robert Kennedy Jr., which could have deadly consequences for children, seniors and Americans of all ages.
On public safety, Harris has a record as a prosecutor of being tough on crime and standing with police. Trump talks tough, but when police officers were assaulted by a mob of his supporters on Jan. 6, 2021, as part of his disgraceful attempt to hold onto power, he sat by and did nothing. And he continues to defend those who assaulted police — he even lauds them as “warriors” — as they stormed the Capitol.
And that brings us to the other consideration: personal integrity.
As former Vice President Mike Pence and many other Republicans have concluded, Trump is not fit for high office. Not after refusing to accept the will of the people and trying to steal the 2020 election — first by attempting to strong-arm state legislators and election officials into overturning the results, and then, when that failed, by bamboozling people into attacking the Capitol to stop the counting of Electoral College ballots.
He made our country, the world’s greatest nation, look like a banana republic. Most Americans never thought we’d witness such a shameful episode. Trump, rather than apologizing for it — as some of those convicted of Jan. 6-related crimes have done — celebrates it.
Why? Because for him, nothing — not America, not our Constitution, not democracy, not the rule of law, not the lives of police officers or any other citizen — matters more than his own vanity and glory.
Strong leaders accept defeat, out of honor and duty. He has shown he has no sense of either.
The despicable way he speaks about immigrants — echoing phrases that Nazis used — is as disgraceful as it is dangerous.
The shameful way he has coddled White supremacists — remember his defense of them after they marched by torchlight in Charlottesville, Virginia — is contemptible.
The reckless way he governed while in the Oval Office — coddling foreign tyrants, weakening our alliances, undermining our intelligence services, failing to build coalitions in Congress and firing people who dared stand up to him — revealed his incompetence as a manager.
And the preposterous lie he tells about America – that our country will end unless we elect him — reveals his ignorance about the true source of our strength as a nation, which lies in our values and principles and the Constitution’s protection of our rights.
I don’t know Harris well — we have only talked a couple of times — but I’ve been impressed by the way she has run her campaign: reaching out to independents and Republicans and rallying voters of all parties by offering a positive vision of the country. She is determined to lead our nation forward, and she understands that the only way to do that is by bringing people back together.
I’m ready. I think most Americans are, too. And that’s why I hope undecided voters of all political stripes will join me in voting for Kamala Harris for president.
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