(Reuters) — Donald Trump, who takes office on Friday (January 20), has rattled Beijing with threats to impose tariffs on Chinese imports and by questioning the United States’ commitment to the “one China” policy, under which Washington acknowledges China’s position that Taiwan is part of its territory.
The billionaire businessman has also vowed to declare China a currency manipulator.
Like the rest of the world China is watching and waiting to see what will happen after Trump becomes president.
“Both countries might need to adopt new steps to restart talks over their bilateral trade relations. So I think that it is very unlikely that Trump will do anything because the consequences are too serious,” said Jia Qingguo, the dean of the School of International Relations at China’s elite Peking University and a government advisor.
U.S. companies are heavily invested in China, making them vulnerable in a full-blown trade war. Jia said that many of the Trump administration’s appointees are benefactors of globalisation, and would therefore be less likely to support a trade war with the world’s number two economy.
Chinese state media has threatened serious retaliation if the new president comes out swinging on trade relations, and the fact that China is gearing up for a trade war is not lost on U.S. business leaders.
“China, like any other country faced with such a contingency, would of course be preparing actions in response. Some of those actions, for example with respect to anti-dumping investigations, have already moved forward, and others are in the process, and those are possibilities,” said Lestor Ross, policy committee chairman of U.S. business lobby American Chamber of Commerce in China.
Amidst Trump’s pro-protectionist stance, Chinese President Xi Jinping, in flowery language, defended free trade at the World Economic Forum in Davos on Tuesday (January 17), voicing Beijing’s desire to play a greater global role.
In the diplomatic sphere, Trump broke with decades of precedent by taking a congratulatory telephone call from Taiwan President Tsai Ing-wen, angering Beijing.
Trump has also said that the “One China” policy is up for negotiation, triggering a furious response from state-run Chinese newspapers who said Beijing would be forced to “take off the gloves” if Trump did not change his rhetoric.
China considers Taiwan a breakaway province, with no right to have any kind of diplomatic relations with other countries.
“Of course, for us, we’ll be very happy if that happens, you know. But the thing is, China plays a zero sum game in this diplomatic recognition. There is no possibility for dual recognition, in other words, for the U.S. to recognise both Taiwan and China at the same time. So if that happens, then the result will be setting, re-establishing diplomatic ties with Taiwan, but cutting off diplomatic ties with the PRC (People’s Republic of China). And I don’t think the U.S. will do that,” said Taiwanese legislator Lo Chih-Cheng, of Tsai’s Democratic Progressive Party.
Further complicating matters, last week Taiwan’s foreign ministry said that a delegation led by former premier and ex-ruling party leader Yu Shyi-kun, and including a Taiwan national security adviser and some lawmakers, will attend Friday’s inauguration.
The Chinese Foreign Ministry repeatedly voiced their opposition to any Taiwan delegation travelling to the inauguration.
“Certain forces in the Taiwan region are hyping up that the Taiwan authority have been invited to send a so called delegation to the US to attend the presidential inauguration. This is obviously them hyping it up themselves. The aim is to use this as an opportunity to interfere in and damage Sino-US relations. We have already many times expressed our opposition,” said Chinese Foreign Ministry Spokeswoman, Hua Chunying, touchin on the subject for the third day in a row.
Meanwhile, in China, where the growing middle class is more than attuned to chomping on Big Macs while sipping Starbucks coffee, people highly doubt a Trump presidency will do much damage.
“I have the feeling that it won’t affect my own life in any way. I think Obama was great when he held office. Trump I think intends to target China, which includes (his contacts) with Tsai Ing-wen, you know,” said 22-year-old Shanghai resident Gao Haibo.
The incoming U.S. administration’s tough talk against China has set the stage for showdowns on everything from security to trade and cyberspace, but contradictory signals are sowing uncertainty over how far President-elect Donald Trump is prepared to go in confronting Beijing.
Highlighting the contested South China Sea as a potential flashpoint, Trump’s Secretary of State nominee Rex Tillerson threw out an explosive challenge to Beijing recently by calling for it be denied access to artificial islands it is building in the strategic waterway.
Trump has vowed to greatly expand the U.S. Navy to 350 ships, but his transition team has not made clear how he will fund this, amid other massive spending plans.