China Quote✒️
“Trump has a mistaken zero-sum view of the world, and he has no sense of the capacity of economies to adjust. So, raising tariffs very rapidly will be a major distortion to the economy, a major disturbance to the economy, both in China and the US, but more in the US, which we will have a hard time adjusting. Tariffs of 10 per cent is one thing, 50 or 60 per cent is another”.
– Joseph Stiglitz, Economist who won the Nobel Prize for economics in 2001, served as chairman of the Clinton administration’s Council of Economic Advisers. He is a professor at Columbia University and a former chief economist at the World Bank.
China’s reaction to the Comeback of the Millennium: Trump 2.0
Written By Priyanka Garodia – Geopolitical Research Analyst, South Asia
The world was watching the 2024 Presidential elections in American and China was no exception. The election of Donald Trump as the 47th President has raised both hopes and apprehensions regarding the future of the bilateral relations between USA- China, and major players in the world order. Given the recent deterioration in relations between the two countries, the election of Trump will have significant implications on the already fragile relations between the two.
The Official Chinese Response
Chinese President Xi Jinping extended his congratulations to Trump on his victory and emphasised a more pragmatic approach towards managing bilateral relations between the two countries. Xi hoped for a more cooperative relationship between the two that would prioritise mutual gain rather than confrontation. This was well in line with Beijing’s diplomatic strategy that has historically sought dialogue when dealing with countries like the United States and other foreign countries.
The Foreign Ministry mirrored the sentiment of the Chinese President. With caution and measure, they failed America’s democratic processes and expressed willingness to collaborate with the Americans more prudently. China has adopted a strategic tone when dealing with the election of Trump by avoiding criticism and publicly advocating for stability. Given Trump’s unpredictability as a leader and a deep desire to avoid confrontations given its recent economic hardships, China’s diplomatic posture has not caught anyone by surprise.
Chinese Public Sentiment and Social Media
Chinese public opinion on the election on Trump was quite colourful. On Xiaohongshu, the Chinese equivalent of Instagram, “Trump wins 2024 US Elections” was trending at number one, with comments ranging from support to surprise and disbelief. Most users were startled by the election results having not expected a second term for the controversial leader. Public sentiment remains largely divided in China with most worrying about Trump’s hardline stance. While some users laud Trump’s populist leadership, some remain sceptical.
Potential Impact on Sino-US Relations
Trump’s return to office will impact Sino-US relations gravely. Bi-lateral tensions between the two countries are at a historic high. The Key areas on tension include trade, technology and geopolitical issues. Trump first term as President saw a significant collapse of the relationship with the Chinese and a lot of unresolved negativity remains. Given Trump’s history with tariff impositions, he has vowed to impose newer tariffs on China that could reach up to 60%. This is to supplement his plan of imposing a “universal baseline” of tariffs on imports that would help reduce trade imbalances with China. While these tariffs have been imposed with the intention of reducing American reliance on Chinese goods, they could have unintended consequences for both the Chinese and American economies.
Trump has been highly critical of the Biden administration’s handling of China which he believes to be extremely soft. He has expressed his discontent on American reliance on Chinese goods especially in critical technological issues including semiconductor production. He has vehemently opposed the CHIPS Act that stressed American development of semiconductors to reduce Chinese of the same as not being enough. He has linked technological supremacy with national security and will in all probability be stubborn about it.
Decoupling of economic ties between America and China is a complex and potentially damaging process for both countries. The American economy could suffer from increased prices, supply chain disturbances and economic uncertainty with increased tariffs on China. On the other hand, the export-driven growth model of the Chinese economy would be impacted with more restrictions being placed on technology and trade exports. The cumulative fallout of the deteriorating economic relations between the two countries could affect global economic stability.
Another issue of contention between the Chinese and America under Trump will be Taiwan. Trump has very bluntly warned China that he would not tolerate the invasion of the country under any circumstances. The risk of escalation with Trump in power has become very real for the world given his confrontational style when dealing with people and nations he does not like. For China, Taiwan remains an issue that they will not move from, they seek unification with Taiwan even if it entails force. A potential conflict between China and the US could impact stability in the Asia-Pacific region.
What Next?
The United States and China hold considerable influence over global stability and security in the world. Given the nature of problems that the world faces including climate change, public health challenges and the unknown consequences of emerging technologies, cooperation between the eagle and the dragon is the need of the hour. Trump has a legacy of being an unpredictable, incoherent and erratic leader with fascist tendencies. Xi’s reaction and message to Trump upon election is reflective of China’s recognition that cooperation would be the preferred state of affairs. However, China will not shy away if faced with confrontation. It will prioritise its national interests, both economic and security. Trade, technology and Taiwan are some of the crucial fault lines along which both nations must manage their differences.
Blindspot👁️
Economic Activity🏦
China Reveals $1.4 Trillion Plan to Bail Out Local Governments
Meaghan Tobin and John Liu write in The New York Times that the Chinese government approved a $1.4 trillion plan on Friday to revive its economy, allowing local governments to refinance crippling debts. This measure is part of a broader effort launched in September to stimulate growth, which gained urgency after Donald Trump’s election, as he threatened to impose tariffs of up to 60% on Chinese imports.
China Is Better Prepared for Another Trump Trade War
Reed Stevenson writes in Bloomberg that China has strengthened its economic defences, preparing to counter a renewed trade conflict as Trump resumes the U.S. presidency. With Trump threatening high tariffs on Chinese goods, China is set to retaliate by imposing export controls on critical raw materials and taxing American agricultural imports. Additionally, Beijing is enhancing economic resilience by boosting liquidity and adjusting currency controls, positioning itself for potential trade frictions.
China October Exports Sharply Beat Estimates, Imports Decline More Than Expected
Anniek Bao writes in CNBC that China’s exports rose by 12.7% in October, exceeding analyst forecasts, while imports fell by 2.3%, a steeper decline than expected. Amid weakening domestic demand and a property sector crisis, exports remain a key economic driver. Despite stimulus measures, including interest rate cuts and eased property rules, domestic challenges persist. China’s factory activity saw slight improvement, reaching a PMI of 50.1, with potential additional fiscal stimulus announcements expected soon.
Shenzhen to Invest US$1.7 Billion in Economy for Flying Cars, Drones by 2026
Iris Deng writes in the South China Morning Post that Shenzhen plans to invest 12 billion yuan in the low-altitude economy over the next two years, targeting infrastructure for flying cars and drones. The city will build 1,200 take-off platforms and over 8,000 5G-Advanced stations by 2026. Additional investment of 20 billion yuan is set through 2030, with aims to make Shenzhen a hub for urban air mobility, drone logistics, and smart airspace management in collaboration with the Greater Bay Area.
Inside China🐉
China Hands Death Sentence to State Secrets Leaker
Al Jazeera reports that China has sentenced a former state employee, identified as Zhang, to death for leaking classified information to foreign intelligence agencies. The Ministry of State Security alleges Zhang was recruited overseas and exploited due to financial vulnerabilities, leaking significant state secrets and endangering national security. This rare sentence underscores Beijing’s intensified focus on anti-espionage, particularly after expanding its espionage laws to cover broader security-related information.
Xi Urges Building Strong, Modernised PLA Airborne Force
Xinhua reports that Chinese President Xi Jinping has called for enhanced troop training, combat preparedness, and operational capabilities in the People’s Liberation Army (PLA) airborne forces. During his inspection of an airborne corps in Hubei, Xi emphasised modernising equipment, joint training with other military branches, and fostering technologically advanced combat capabilities. He also highlighted the need to build robust Party organisations within the military and combat corruption, aiming to strengthen the PLA’s readiness and adaptability.
China’s Lawmakers Review Bill to Raise Local Government Debt Ceilings
Reuters reports that Chinese lawmakers are reviewing a bill proposed by the State Council to increase local government debt limits. This initiative aims to address the hidden debt burden that has hampered investment and economic growth. Finance Minister Lan Foan announced a large-scale debt swap programme as a “strong” debt reduction measure, alongside ongoing bond quotas. China’s debt management strategies could include over 10 trillion yuan in new debt issuance, expected to be finalised by Friday.
How Xi Jinping’s Tutoring School Ban Backfired
Katsuji Nakazawa writes in Nikkei Asia that President Xi Jinping is subtly reversing his 2021 ban on for-profit tutoring schools, shifting focus due to China’s rising unemployment crisis. The initial policy aimed to address educational inequality but led to economic strain, and the government now prioritises job creation, with “capitalist roaders” gaining influence in shaping policies to support economic stability.
China and the World🌏
Xi to attend APEC meeting, G20 Summit, visit Peru, Brazil
Xinhua reports that Chinese President Xi Jinping will attend the 31st APEC Economic Leaders’ Meeting in Lima and visit Peru from 13-17 November at the invitation of Peruvian President Dina Boluarte. Xi will then attend the 19th G20 Summit in Rio de Janeiro and pay a state visit to Brazil from 17-21 November, invited by Brazilian President Luiz Inácio Lula da Silva.
China’s Xi urges strengthening ‘strategic’ ties with Malaysia
Anadolu reports that Chinese President Xi Jinping met with Malaysian Prime Minister Anwar Ibrahim in Beijing, emphasising the need to deepen strategic ties and mutual political trust to support each nation’s core interests. Xi called for enhanced cooperation in digital economy, artificial intelligence, and new energy, aiming to build a China-Malaysia community with a shared future.
Premier Li calls for solidarity of Mekong nations
Cao Desheng writes in China Daily that Premier Li Qiang urged Greater Mekong Subregion (GMS) nations to enhance unity and cooperation at the eighth GMS Summit in Kunming. Li highlighted goals such as advancing the Belt and Road Initiative, strengthening energy infrastructure, and promoting regional economic integration through both “hard” (infrastructure) and “soft” (policy and regulatory) connectivity. The summit concluded with the adoption of a Joint Declaration and the GMS Innovation Strategy for Development 2030.
China Pledges Support for Myanmar’s Political Transition
The Straits Times reports that Chinese Premier Li Qiang has voiced Beijing’s support for Myanmar’s political reconciliation and transition during a meeting with junta leader General Min Aung Hlaing in Kunming. Li emphasised China’s commitment to strengthening cooperation with Myanmar and advancing the China-Myanmar Economic Corridor. He also urged Myanmar to ensure the safety of Chinese nationals and combat cross-border crimes, including online scams and telecom fraud.
Senior Chinese Official Vows to Further Ties with Italy
CGTN reports that senior Chinese official Li Xi, during a visit to Italy, emphasised deepening strategic cooperation with Italy, marking the 20th anniversary of the China-Italy comprehensive partnership. Li discussed collaboration on green energy, digital technology, and anti-corruption with Italian leaders, including Senate President Ignazio La Russa and Foreign Minister Antonio Tajani. He also promoted the “China-Italy Action Plan” to enhance political trust, support people-to-people exchanges, and strengthen multilateral efforts within the UN and G20 frameworks.
China-South Korea ties: empty ambassador chair highlights complications in relationship
Vanessa Cai writes in South China Morning Post that China has left its ambassadorial post in South Korea vacant for over three months, sparking discussions about the complexities in their diplomatic relations. Experts suggest that heightened geopolitical tensions, North Korea’s missile development, and US-South Korea-Japan alliances are adding layers to Beijing’s considerations. South Korea’s new envoy, Kim Dae-ki, signals Seoul’s intent for continued engagement, but experts argue that China currently prioritises other international alliances, with the vacancy potentially persisting until post-US election.
Philippines Says Joint Maritime Exercises Rein in China
Channel News Asia reports that joint naval exercises conducted by the Philippines, United States, and allies have helped curb aggressive Chinese actions in the South China Sea, according to Philippine Rear Admiral Roy Vincent Trinidad. Notably, Chinese naval forces avoided confrontational tactics during these exercises, dubbed Multilateral Maritime Cooperative Activity (MMCA). While China asserts sovereignty over disputed areas, the Philippines advocates for ASEAN’s stronger stance against Chinese aggression, urging regional unity and compliance with international maritime laws.
A Pakistani Guard Wounds 2 Chinese Workers in Karachi
AP News reports that a Pakistani security guard shot and injured two Chinese nationals at a textile mill in Karachi on Tuesday. Officials stated that the incident was unrelated to militant violence. China has recently urged Pakistan to enhance security for its citizens, following previous attacks on Chinese workers involved in the Belt and Road Initiative. The guard responsible has been arrested, and Pakistani authorities are in close communication with the Chinese Embassy as investigations continue.
Chinese Hackers Gained Access to Huge Trove of Americans’ Cell Records
John Sakellariadis writes in Politico that a China-backed hacking group, known as Salt Typhoon, accessed a significant amount of Americans’ call records by infiltrating several U.S. telecommunications providers. These records include Call Detail Records, revealing who Americans communicate with, the frequency, and detailed location data through 5G networks. Although the extent of data stolen remains unclear, the breach has raised serious national security concerns, especially regarding potential risks to U.S. political figures, military, and intelligence personnel. Detecting and removing the hackers has proven challenging, given the hackers’ embedded presence in older networking infrastructure.
Germany arrests US citizen on suspicion of spying for China
Tamsin Paternoster writes in Euronews that German prosecutors have detained a US citizen, identified as Martin D, in Frankfurt on suspicion of providing Chinese intelligence with sensitive US military information. The suspect, who worked for the US armed forces, allegedly offered intelligence to China in 2024. The arrest follows multiple espionage-related detentions this year, as Germany strengthens investigations into foreign intelligence activities.
Tech in China🖥️
Chinese scientists propose ram-rotor detonation engine for hypersonic flight
Zhang Tong writes in South China Morning Post that researchers from Tsinghua University have developed a Ram-Rotor Detonation Engine (RRDE), combining a ramjet compressor with a detonation engine for improved hypersonic propulsion. This innovative engine design maintains a fixed detonation wave position, achieving high pressure gains and resilience to airspeed fluctuations. However, further research is needed to address manufacturing challenges and optimise the blade profile for broader inlet conditions.
Semiconductor Firms ASML, AMD, Qualcomm Reaffirm China Commitment at CIIE Trade Fair
Ann Cao writes in the South China Morning Post that major semiconductor firms, including ASML, AMD, and Qualcomm, showcased new technologies at the China International Import Expo (CIIE) in Shanghai, signalling continued commitment to the Chinese market despite increasing US sanctions. ASML displayed information on lithography systems, AMD exhibited AI infrastructure solutions, and Qualcomm introduced its new Snapdragon 8 Elite mobile platform. Participants expressed optimism for potential trade sanction relief, following recent tensions.
SMIC reports record revenue, but faces competition with limited gross margin
Jingyue Hsiao writes in DIGITIMES Asia that SMIC, China’s leading semiconductor foundry, achieved $2 billion in quarterly revenue with a utilisation rate above 90%. However, the company’s gross margin remains limited compared to competitors, emphasising the challenges posed by intense market competition in China’s semiconductor sector, despite record sales.
De/Cypher Data Dive📊
After joining the World Trade Organization in September 2001, China’s market share grew rapidly for nearly two decades, peaking at 22 percent in 2017, making China the largest foreign supplier to the United States. This trend reversed after the US government imposed tariffs on roughly two-thirds of its goods imports from China beginning in July 2018. (Federal Reserve System, USA).
The United States Trade Representative (USTR) announced the final Section 301 tariff increases on Chinese imports. Section 301 of the U.S. Trade Act of 1974 authorizes the President to take action, including tariff-based and non-tariff-based retaliation.
Image of the Week📸
