Eight years ago, Republican Donald Trump stormed the White House. He imposed tariffs on China while in power. He also gave a heated speech. However, angry Chinese leaders responded to his behavior. The result triggered a trade war between the world's two largest economies, which plunged the two countries' relations to their lowest point in years.
In a dramatic and historic victory, Trump is re-entering the US House of Representatives. Before coming to power, he planned to impose a 60 percent tariff on Chinese goods.
Reuters says Beijing has deepened ties with allies to counter the threat of Trump's return. Increasing self-reliance in technology. In addition, the US is already preparing for a more risky economy under the threat of new tariffs by reserving money separately.
According to a BBC report, President Xi Jinping wanted to make China a technological superpower. Experts believe that Trump's victory will destroy his plan.
China is suffering from an economic crisis after the corona epidemic. Since then, the country has experienced a slump in property prices, rising government debt, and rising unemployment, which has slowed its economic growth.
Trump imposed tariffs of up to 25 percent on Chinese goods for the first time since coming to power in the United States. This time he has planned to impose more than twice the duty. But China analyst Bill Bishop thinks Trump should think twice before adopting such a plan.
He said, 'When Trump talks about tariffs, it is clear from his words that he thinks China has broken the trade agreement. Even China and Covid are one of the reasons for his defeat in the 2020 elections.
Trump left the White House in 2021. However, Washington did not reduce the pressure on China even after he left the White House. The actions taken by Trump were also continued by the Biden administration. In some cases it even expanded.
China has been scrambling to restore the economy to pre-pandemic growth levels since the world lifted its strictest coronavirus restrictions two years ago. But that effort is not seeing success.
Last September, the International Monetary Fund (IMF) cut the country's annual growth forecast.
The IMF predicted that China's economy would grow by 4.8 percent in 2024. Later, they estimate that China's annual growth will further decrease to 4.5 percent.
In 2017, President Xi Jinping said China was planning to move from 'rapid growth to high-quality development'. Some economists think that China cannot solve the problem by exporting only. Stephen Roach, former chairman of Morgan Stanley Asia, warned that if China is not careful, it will suffer the same decades-long stagnation as Japan.
To avoid such a situation, Roach added, China needs to focus on new consumer demand and move away from export- and investment-led growth.
The move, he said, would not only encourage sustainable growth, but also help 'reduce trade tensions and risks to the Chinese economy abroad'.
Such a stronger economic model could help China counter the threat posed by Trump's return to power for a second term.
New economy, old problem
China has long been known as the world's low-cost manufacturing factory. Now the country is trying to regain that recognition through high-tech exports. China is the world leader in solar panels, electric vehicles and lithium ion batteries.
According to the International Energy Agency (IEA), China now accounts for at least 80 percent of solar panel production.
China accounted for one-third of the world's total investment in green energy last year, the IEA said. Because the country has made “continuing remarkable progress in increasing renewable energy capacity”.
“There is definitely an all-out effort in China to support high-tech manufacturing,” said David Lubin, senior researcher at Chatham House, a London-based think tank. He commented that their efforts have been 'quite successful'.
In 2023, exports of electric vehicles, lithium-ion batteries and solar panels are expected to increase by 30 percent and exceed one trillion yen, or US$139 billion. These industries have helped China rise to global dominance for the first time.
This export growth has somewhat mitigated the impact of the ongoing property crisis on China's economy.
Alicia Garcia-Herrero, Asia Pacific Chief Economist at Natixis Investment Bank, said, 'There is no doubt that China's overcapacity will increase. They have no other source of growth.'
However, along with the increase in those exports, the resistance of the western countries also increased. Not only in the United States, but last month the European Union increased the tariff on electric cars manufactured in China by up to 45 percent.
Katrina L, director of research at Moody's Analytics, said, “The problem now is that big customers like Europe and the US are increasingly reluctant to buy those products.”
Today, as Trump prepares to reassume presidential powers and responsibilities and vows to corner Chinese exports, Beijing will have to wonder whether its recent steps to revive the economy will be enough.
