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SCMP Reporters

The live webinar, which was available for all readers, has ended. For our paid subscribers, this webinar will be available for on-demand playback along with a comprehensive summary of the key discussion points. If you do not have a subscription, please consider subscribing here.
The world is about to face a new era in American politics, with Donald Trump elected the 47th president of the United States. The outcome is likely to have an outsize impact on the strategic relationship between China, Asia and the US.
SCMP executive editor Chow Chung-yan and executive managing editor Zuraidah Ibrahim shared their unique insights in an event moderated by managing editor for content Yonden Lhatoo.
Watch the webinar here:


A previous upload of this video had technical issues that resulted in some parts of the dialogue being cut.
Here are some edited highlights of the discussion:
Trump is back. What is the worst and best-case scenario for China?
Chow Chung-yan: Before the election, a lot of experts said that when it comes to China, no matter who ends up in the White House, it’s going to be the same. There is some truth in this, but it is also going to be very different.
In Washington, one thing both sides can agree on is that China is an existential threat to the US. But I do think Trump’s approach and his strategy will be very different from the Democrats’.
For China, the best-case scenario is that nobody in Beijing would be naive to think that any president will restore relations back to 10 years ago. But they hope that while China and the US compete, they compete on a negotiated premise, meaning that both sides agree on some untouchable principles, and then we can compete on agreed rules and conditions on many fronts.
But the chance for this scenario is not very high. It is actually quite low.
The worst-case scenario is that China and the US will compete, and the US will use everything within its power trying to delay or walk back China’s development. The US has advantages on the three fronts: it still has the world’s largest consumer market, in real dollar terms, about three times as big as China’s.
The second US advantage is still technology. The gap between China and the US in sensitive technology is still five to 10 years. The technology containment will not only continue, but is likely to expand. The US will try to restrict China’s access to not only cutting-edge technology, but any infrastructure technology or frameworks that China must rely on.
The third part that China must rely on is capital markets. The US dollar will remain the global currency in the foreseeable future. So the US will probably take advantage of this, by trying to deny capital access for Chinese companies, so that US companies can retain an advantage.
On the geopolitical front, the US will use the so-called salami slicing tactic to gradually undermine China’s presence in this part of the world, particularly in the South China Sea and the Taiwan Strait.
In this scenario, there will not be as much emphasis placed on negotiation. The US will then judge Beijing’s reaction, and then may be willing to negotiate accordingly. If the result is in their favour, Washington will just continue regardless of Beijing’s protests. I think the chance of this scenario is very high.
In [another] worst-case scenario, the US will seek not only to compete with China, but will actually seek a regime change in a Soviet Union-style collapse. In this scenario, the US will also actively encourage Taiwan to seek independence, and if that happens, they could even use that opportunity to start a hot war with China. But I also rate this scenario as an unlikely case.
What can Asian leaders, who’ve been forming alliances and conducting bilateral relations with China, expect to have to navigate?
Zuraidah Ibrahim: Asia is not monolithic. It’s made up of very many diverse countries with different degrees of closeness with the US or with China.
What is most predictable is in the area of trade and tariffs. Trump said that “tariff” is the most beautiful in the dictionary. I think we can expect that to happen. He has promised 60 per cent tariffs on all Chinese goods and as much as 20 per cent tariffs on all other goods. And this makes countries that have a huge trade surplus with Washington particularly vulnerable.
Many Asian countries are vulnerable. For example, Vietnam has a huge trade surplus with Washington. I think it will be hit. Ironically, it was a great beneficiary of Trump 1.0 when Trump imposed tariffs on China. That was a lot of supply-chain diversification and a lot of Chinese factories relocated. But now Vietnam will be faced with its own set of tariffs. That is going to have an impact on its export competitiveness.


One other impact is that Southeast Asian countries have to brace themselves for the flood of Chinese goods that are going to come into the market making Southeast Asian exports even more uncompetitive. Of course, consumers will benefit, but I think the exporters will be affected.
But the US also needs to consider the impact of the imposition of tariffs on its own domestic economy. It will be very inflationary. The US dollar will strengthen and as we know, inflation wasn’t good for the Biden administration. But of course you can do something to mitigate inflation with productivity gains, AI tech or new innovations.
In the last few days, we have actually seen Chinese companies making inquiries to relocate their factories, their operations into Southeast Asia. A lot of real estate developers and realtors have been telling us that they have received a lot of inquiries from Chinese companies, whether it’s Vietnam, Thailand, Malaysia. They all are getting prepared for the onslaught of new tariffs.
It will inject greater risk and volatility into the global economy and with that we will be looking at the prospect of slower investment and growth for the global economy.
The other area of concern will be on the security front. For the longest time, the US has pledged some sort of a security umbrella for the region. For countries that have military alliances like South Korea or Japan, they will need to be prepared to have these security assumptions coming under renewed scrutiny by the White House.
I think the Quad is going to go out the window. Trump, with his isolationist tendencies, has never been a fan of multilateral institutions or these multilateral institutions that have held the international order in place. I think it will be questioned. He has already appointed someone who is anti-UN to be the UN representative to the US. So you can imagine what sort of rocky relationship that will be.
Asian leaders rely on China for a lot of their economic investments as they do the US, and they need some sort of security protection from the US. Some of that might go away, but they are willing to bide their time. They will play the game of strategic hedging.
I want to draw your attention to this very fascinating, very brief phone call, the Indonesian President Prabowo Subianto had with Trump. It was quite interesting that Mr Probawo addressed Trump as “sir” throughout the entire conversation – which he would like very much – in which, Trump lavished praise on Mr Prabowo, and said that his English was very good. And then Prabowo said his English was good because he had American training. So, I think the White House would be foolhardy to confuse seeming deference with obeisance.
Note that Prabowo’s first visit upon his election in March was to China, and his first visit upon being sworn in last month was to China, to meet President Xi Jinping. He was going to meet him at Apec. But no, that wasn’t enough. He went to see him in Beijing. They cut about US$10 billion worth of deals. So this is a very good demonstration of the kind of hedging game that Asian leaders will continue to play.
Chow Chung-yan: This Trump administration is going to be quite different from the last one. When Trump started the tariff war with China, the No 1 objective was to force China to purchase more from the US and then to balance the trade surplus. China has demonstrated how China can skirt the tariff by encouraging Chinese companies to go out, set up shops in different countries around the world, not only in Asia, but in Mexico, in countries very close to the US.
This time, the tariff is not an end in itself. The tariff’s purpose is actually to encourage the manufacturing sector to relocate back to the US. If the US starts a tariff war with China and then only sees the factories move to countries like Vietnam or India, then this is not acceptable, so why should I risk trade war with China?
So the whole purpose of this Trump tariff is going to be forcing others to relocate that factory back to the US.
Trump promised to tackle inflation. Now, people will say that this will inevitably push up domestic prices and add to the inflation problem.
But the tariff impact on inflation is not as obvious because the price of the final product on the shelf includes not only the import price but also the transport, the labour costs, etc. So if it does a 20 per cent tariff increase on this mark, by the time you arrive in the shop, the consumer price reflection is maybe only 8 per cent, and Trump can do a lot of the things to bring down the costs and then inflation.
Some people say that because of the inflation concern, the Trump administration may not really go that far with the tariff. My personal view is that they probably will because if you look into the details, they actually believe they have ways to manage inflation and they have the power to.
How much of China’s preparation is going to work for the Trump storm that is coming?
Chow Chung-yan: Depending on where you get your news, the conclusion will be that the Chinese economy is in serious trouble. But that is not the full picture, particularly when it comes to the top leadership. They realise they actually have been preparing for this since before the election, preparing for actually for years. In Beijing’s mind, the economy, stock market, property market is only one part of the equation.
What they really want to see is for China to consolidate its leadership position in the global supply chain. It needs to build up its industrial capacity, particularly in the hi-tech sector. It needs to achieve the technology and the independence, or relative independence, and it needs to grow the Belt and Road Initiative market because that is the future.
If you look at the economic data, you will see that China is actually making progress on this front. Chinese investment has been slowly but steadily flowing from the property sector into the manufacturing sector, and this trend is continuing. China’s industrial output is growing.
As long as the 600 million grass-roots people are secured, then politically and socially speaking, China is in a very stable condition.
Trump’s victory in a sense strengthened Chinese President Xi Jinping’s position, because his argument to the Communist Party and the Chinese people is that this a very critical conjuncture, we are facing an opportunity and also challenge you may only see once in 100 or 200 years and the only way for China to ride out of this storm is that it needs to remain very focused now.
If China can avoid any kind of large internal turbulence or political instability, then it’s only a matter of time. China will have a setback here and there, but by and large, the trend is going to be in China’s favour. So China can actually afford to wait to play the patient game and then China will become more competitive. China is going to make a lot of investment to help build up that infrastructure and this is going to be focused on the sectors that the Chinese actually are super competitive in.
Is there going to be a war with Taiwan, is that going to escalate?
Chow Chung-yan: I don’t think so. Yes, the US is going to sell a lot of weapons to Taiwan. The complaint I heard from Washington on both sides, is that they think that Taiwan made too little commitment to its own defence.
Taiwan is trying to persuade Washington that it deserves more attention than Ukraine. Part of Washington’s point of view is that both Ukraine and Israel are spending much more of their resources on their defence. The result is the US is going to sell a lot of retired weapons to Taiwan and Taiwan will need to take it at a price that Trump names. China can protest, but I don’t think Trump will hold back too much on that.
I don’t see anyone in Washington who has an appetite for war. And I also do not think that they are prepared for that. So, I don’t see that during his term in office, the risk of a hot war in Taiwan or even in this part of the world will be very high.
Can Trump bring an end to war in the Middle East, can he control Benjamin Netanyahu?
Zuraidah Ibrahim: I don’t know whether he can control Netanyahu. I especially hope he can bring it to an end. But I think the bigger question is, at what cost? I think we do need to look at the appointees that he is assigning to the Middle East.
I think one big piece of news that came overnight was the appointment of Mike Huckabee, the former Arkansas governor, to be the US ambassador for Israel.
I think this is really bad news for the Palestinians. Mike Huckabee has a long history of being entirely supportive of the Israeli settlers, not just Israel, but the settlers. The situation is going to get worse. And on top of that, I think there is a lot of anxiety and speculation that, the Israeli hawks will use the next few weeks before January 20 when Trump enters the white House to attack Iran to target their nuclear facilities.
If that happens, I think we’re in for a bigger conflagration. And this is why I think, just a couple of days ago, the Saudi crown prince – and, you know, Saudi Arabia is very fond of Trump – Mohammed bin Salman took it upon himself to for the first time after more than a year of war to declare that what Israel was doing in Palestine was, in Gaza, was genocide.
And I think this makes the possibility of any sort of Saudi participating in the Abraham Accords a distant possibility. I don’t think it’s going to happen for the foreseeable future.
The Arab leaders, the Gulf leaders, are very worried about war between Iran and Israel because they will lose the security umbrella that the US provides. The public backlash will be tremendous. Jordan will be particularly vulnerable. The UAE is going to be very vulnerable. So they know that a Trump White House could mean bigger danger for them, even though they are more in favour of Trump, if not for the Gaza war.
I think relations between them and Trump would be, as they say, keen but measured as there are economic benefits to be gained from them. But that is not going to happen for now. So I think we’re in for a worse time.
I think we shouldn’t underestimate the strength of the relationship between China and Iran. There are a lot of backchannel negotiations taking place. I think we know where China will stand when it comes to a war between Iran and Israel. I think China will have to pick a side. I think the annexation of the West Bank is a very real possibility.
If you recall, in 2020, Trump offered what he called the deal of the century, where it would lead to about 87 per cent of Palestinian lands being given to Israel, and in exchange, the Palestine state, whatever form that there remains, will get about 50 billion of aid and development over a decade.
That works out to nothing right? So that was the deal of the century. Of course, not much came to pass from that, but I don’t think we should be surprised if he tries to parlay some other version of that. That is not going to be well received.


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