- China braces for renewed trade tensions as Donald Trump returns to the White House.
- Vice President Han Zheng meets U.S. business leaders to discuss trade stability.
- China’s economy struggles with a faltering property market and declining foreign investments.
- Youth unemployment rises, adding pressure to the already fragile economy.
- China responds to potential tariffs with export controls on U.S. companies.
As former U.S. president Donald Trump resumes power, China remains cautious, fearing renewed trade tensions. The U.S.-China relationship, marked by tariffs, trade wars, and economic friction, could face further escalation during Trump’s second term. This uncertainty has left both nations on edge, wary of each other’s next move.
Ahead of Trump’s inauguration, Chinese Vice President Han Zheng visited Washington. He met with prominent U.S. business leaders, including Tesla CEO Elon Musk. Han emphasized the importance of U.S. businesses “taking root” in China, believing it would help stabilize the relationship despite the political and trade challenges between the two global powers.
China Struggles with Economic Strain
While Chinese officials remain hopeful about economic cooperation, China’s economy faces internal struggles. The country is grappling with a weakening property market, a slowing growth rate, and significant foreign investment decline. The property sector, in particular, has been a source of instability for China’s economy. The recent troubles, which include mounting debt, have raised concerns about broader economic implications.
The challenges are exacerbated by high youth unemployment, which has reached alarming levels. At 16%, youth unemployment is a pressing issue, contributing to increasing financial strain among young adults in China. This has led to cautious consumer behavior, as many young people prioritize saving over spending.
These challenges, combined with the uncertainty of U.S.-China relations, make China’s economic outlook particularly precarious as Trump resumes his position as president.
The Threat of Renewed Trade War
Under Trump’s previous administration, the U.S. imposed tariffs on more than $300 billion worth of Chinese goods. Since then, Trump has voiced intentions to increase tariffs by at least 10%, a decision that could further damage China’s economy at a critical moment. While Trump’s new trade policies remain uncertain, the mere prospect of renewed tariffs has sent ripples of concern through the business community.
In response, China has already begun implementing export controls on U.S. companies, including key industry players like Lockheed Martin and Boeing Defense. These measures signal a sharp response to U.S. trade pressures, and experts warn that more retaliatory actions could be on the horizon.
Chinese leaders, including Han Zheng, have been working to reassure U.S. companies of their continued importance to China’s economic growth. In meetings with representatives from eight major U.S. firms across sectors such as technology, banking, and logistics, Han emphasized that China remained open to business collaboration, despite the mounting tension.
A Mixed Sentiment Among Chinese Citizens
For ordinary Chinese citizens, however, there is an underlying sense of caution. Many are still reeling from the effects of the previous trade war. A Beijing resident, 36-year-old Wang, shared concerns about the ongoing economic uncertainty, saying, “What I can see is that China’s economy is not very good at the moment, and Trump himself is a crazy, wild person. The pressure still remains quite big for us.”
This sentiment is shared by many in the business community as well. Dominic Desmarais, a chief officer at Lira Solutions, a firm based in Suzhou, expressed anxiety over potential future tariffs. “If Trump actually imposes 40%, or whatever, duties on Chinese products coming into the United States, I don’t want to be stuck with custom-made goods for specific clients that just disappear,” Desmarais said.
China’s Vulnerability and the Global Business Landscape
The backdrop of these fears is China’s increased vulnerability. Unlike when Trump first raised tariffs in 2018, China is now facing a much more fragile economic situation. The ongoing property crisis, combined with the debt problems of local governments and the surge in youth unemployment, places China in a precarious position. This vulnerability could make it more susceptible to the damaging effects of another trade war with the U.S.
Moreover, foreign businesses are diversifying their supply chains, reducing reliance on China in favor of alternative markets like Vietnam. Christopher Yeo, a finance director at a Singapore-owned company in Beijing, highlighted this shift: “I would imagine U.S. institutional investors would continue cutting back on their Chinese exposure.”
The Road Ahead for U.S.-China Relations
Trump’s return to the White House marks a new phase in U.S.-China relations. The next few months will be crucial in shaping the future of trade and cooperation. While both nations want a positive relationship, history suggests trade tensions may rise. China must navigate both internal and external pressures.
A stable relationship relies on ongoing dialogue and shared economic interests. However, China’s economic challenges and the unpredictable nature of Trump’s policies leave many business leaders uneasy. This uncertainty raises questions about the future of their cooperation.
China’s ability to handle potential trade disruptions will depend on its resilience and diplomacy. As the world watches, the outcome of U.S.-China relations will have global implications. China must adapt, safeguard its interests, and balance its relationship with the U.S. to manage looming economic pressures.