Keyu Jin

Opinion | Why China’s current trade war strategy is to keep calm and make new friends

Realising that the conflict with the US goes beyond business concerns and that Trump might reverse course on political or economic grounds, China has adopted a wait-and-see approach. Meanwhile, it is courting other allies

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Keyu Jin

Published: 6:00pm, 12 Jul 2019Updated: 6:08pm, 12 Jul 2019

Those now hoping for an eventual trade deal between China and the United States should not hold their breath. Contrary to what US President Donald Trump seems to think, the Chinese have not reached their wits’ end and will not suddenly accede to his demands.

A successful negotiation usually requires that each side understand the other’s perspective. One can question the wisdom of China’s approach to the dispute thus far, but without a deeper apprehension of the country’s short- and long-term thinking, little progress will be made.

Trump’s supporters insist that he should be taken seriously, not literally. Chinese leaders seem to agree. They have shrugged off the Trump administration’s excessive and unreasonable demands, but harbour few doubts about its intent: to keep China down. That objective has little to do with specific business concerns, and may even derive from “civilisational” – if not racist – hostility. The Chinese thus have had to adjust their strategic calculus, both in the short and long run.

Beyond the latest “truce” between Trump and Chinese President Xi Jinping, China’s overall approach to the trade dispute is to play it cool. The Chinese have realised with hindsight that appearing too eager for a deal made them look weak and vulnerable during the earlier stages of the conflict.

They now know that if you give Trump an inch, he will try to take a mile. After China offered major concessions in the last round of talks in May, the US threatened to impose still more tariffs on Chinese exports, but even with the new truce, existing tariffs remain in place.

The Chinese government would hate nothing more than to resemble the court of the Qing dynasty in its decline. Hence, its current wait-and-see strategy is premised on two judgments.