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CNN
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As countries around the world scramble to negotiate concessions from US President Donald Trump’s escalation last week of a global trade war, China has taken a different tack.
Within 48 hours of Trump’s market-hammering tariffs announcement, the world’s second-largest economy swiftly retaliated with its own punitive measures on US goods and firms.
And now it’s sending out a clear message: China is well prepared to weather a trade war – and come out stronger on the other side.
That message was telegraphed to China’s domestic audience and foreign countries alike in a flurry of state media coverage and government statements over the weekend following Trump’s epic assault on the global trading system.
“US tariffs will have an impact (on China), but ‘the sky won’t fall,’” a commentary in the ruling Chinese Communist Party’s mouthpiece People’s Daily said Sunday.
“Since the US initiated the (first) trade war in 2017 – no matter how the US fights or presses – we have continued to develop and progress, demonstrating resilience – ‘the more pressure we get, the stronger we become,’” read the commentary, which was also on the front page of the paper’s Monday edition.
Trump on Wednesday unveiled an additional 34% tariff on all Chinese goods imported into the US, bringing duties on all Chinese imports to the US to well over 54% when existing tariffs are taken into effect. Beijing hit back Friday with its own baseline 34% tariffs on all American imports, as well as other measures, including export controls on rare earth minerals and trade restrictions on specific US companies.
Beijing has long slammed US tariffs as “unilateral bullying.” Its latest rhetoric may be propaganda poised to calm potential jitters at home – and project confidence to the rest of the world.
But it also speaks to what could be the strategic calculation of Chinese leader Xi Jinping and his cadres in Beijing: that Trump is not just using the tariffs as a negotiating tactic – and the epic disruption to global trade has the potential to hurt the US more than China.
“Many (People’s Republic of China) counterparts have argued (the) US is making a mistake that will undermine its own global standing,” Ryan Hass, a senior fellow at the Washington-based Brookings Institution think tank, wrote on the social media platform X on Sunday, following meetings with government officials, scholars, business leaders during a visit to China.
“There’s debate about whether the world is entering a period of blocs or a transition to an era of globalization minus the US. Beijing seems to prefer the latter scenario,” he said, adding that “China’s leaders will not countenance being seen as passive in response to US.”
‘Ready to compete’
As Trump’s tariffs target friends and foe alike, Chinese officials have already in recent weeks looked to project China as an alternative champion and protector of a globalized economy that’s enhanced the prosperity of countries around the world, as well as a stable economic partner and haven for business.
“As the world’s second-largest economy and the second-largest consumer market, China will only continue to open its doors wider, regardless of the changing international landscape,” China’s Foreign Ministry said in a statement on Saturday.
On Sunday, Ling Ji, a vice minister at China’s Commerce Ministry, hosted representatives from 20 US-funded enterprises including Tesla and GE HealthCare, according to a ministry statement.
Ling touted China as an “ideal, safe, and promising” place for investment, while calling on American businesses to “be rational voices” and “take practical actions” to maintain the stability of global production and supply chains.
Economic experts speaking to Chinese state broadcaster CCTV on Saturday also played into the idea that the trade shake-up was an opportunity for Beijing.
“China is sending a significant message to the world: we cannot back down or tolerate US bullying, as tolerance ultimately leads to more bullying,” said Liu Zhiqin, senior researcher at Chongyang Institute for Finance Studies in Renmin University of China, told the broadcaster.
“China and the US are now direct rivals in reshaping the international trade order,” said another, Ju Jiandong, a professor at the People’s Bank of China School of Finance of Tsinghua University. “We’re willing to take on the challenge – we’re ready to compete with the US in redefining the new global trade system.”
China’s trade partners are likely to take such messaging with a grain of salt.
Beijing is well known to have wielded access to its massive market as a weapon to coerce countries, often over political stances that sparked Beijing’s ire. Many will also be looking warily at whether Chinese exports will flood their own markets, hurting their own domestic production or driving down consumer prices.
But countries may have little choice but to look to strengthen ties with China if US tariffs, which hit American allies as well as rivals, become the new normal.
Beijing over the past month held economic talks with Japan and South Korea, hit last week with 24% and 25% tariffs respectively, as well as with the European Union, which was slapped with 20% duties.
Many Southeast Asian economies – key manufacturing hubs for companies looking to diversify away from China – have been hit particularly hard by Trump’s tariff war. While few want to pick a fight with Washington publicly, the region is rattled.
In Singapore, an ultra-connected free trade bastion known for treading a cautious diplomatic line, Prime Minister Lawrence Wong pulled few punches in a message to his fellow citizens over the weekend.
“The recent ‘Liberation Day’ announcement by the US leaves little room for doubt,” he said. “It marks a seismic change in the global order. The era of rules-based globalization and free trade is over. We are entering a new phase, one that is more arbitrary, protectionist and dangerous.”
Domestic challenges
China, however, is still bracing for impact – and potential further escalation.
Last year, US-China totaled roughly half a trillion in trade, and the tariffs come as China has been seeing some glimmers of economic vitality following years grappling with as a property sector crisis, high local government debt and the fallout from Beijing’s pandemic controls.
The government last month announced a slew of measures to rev up domestic consumption as it anticipated the hit to its export-powered growth.
Now, China would “vigorously boost domestic consumption with extraordinary efforts … and introduce a series of reserve policies as appropriate,” according to the People’s Daily commentary.
Unlike in many other countries, however, how the Chinese Communist Party’s navigates these challenges – and its tolerance for economic pain – will not be judged by opinion polls or an electorate that can vote it out of power for how it navigates the challenge.
“The new 34% tariff would weigh on Chinese GDP by at least 0.7 percentage points this year,” analysts from Goldman Sachs wrote in a note Sunday, forecasting that China’s policymakers “will accelerate easing measures significantly” in order to hit their target “around 5%” growth set last month.
But China’s “swifter and less restrained” retaliation this time around also raised the risk of further tariff escalation from both sides, the analysts warned.
Just how far the trade war between the two largest economies can escalate remains a key unknown, with both governments still able to ratchet penalties higher.
And the more they do, the more difficult it may be for the world’s two largest economies to find a way out.
CNN’s Joyce Jiang contributed reporting.