How China is preparing for Trump's Presidency

World capitals are preparing themselves for the uncertainty that a Donald Trump presidency is set to unleash. Ahead of the January 20 inauguration, Beijing, which has been the target of Trump’s ire in recent weeks, has been carrying out quiet under-the-radar assessments this past month by different government departments, analysing the pitfalls and opportunities that a Trump administration could bring. Biggest on the list of China’s concerns is the possibility of a trade war.

Trump has threatened to impose a 45 per cent tariff on Chinese imports and to label China as a currency manipulator, accusing it of devaluing its currency (although most economists agree that the Yuan is now actually overvalued, not undervalued as it was a decade ago).

China’s mandarins appear confident that they have enough in their arsenal to deter Trump, or to inflict pain on the US economy should they need to. So while the Finance Ministry is coming up with its analysis on what countermeasures Beijing could deploy on the currency front, the Commerce Ministry is assessing duties that Beijing itself could impose should Trump spark a trade clash.

China’s richest man, Wang Jianlin, whose Wanda group owns a range of businesses in the US from hotels to multiplexes, reminded Trump that he employs tens of thousands of Americans in his businesses. In recent days, Trump seemed to somewhat change tack from his talk of trade punishments by welcoming Chinese Internet icon Jack Ma, who founded the Alibaba group, at Trump tower, leading one official to remark Trump cannot shake one hand while trying to rip off the other as much as he seems to value unpredictability.

In Beijing’s assessment, its biggest trump card, pardon the pun, is its market. From billions of dollars of orders for Boeing, to a massive market for companies such as Apple and even Starbucks, Beijing is aware it can make life very difficult for America’s biggest companies should it choose to. The feeling is Trump can also bring opportunities for Beijing. And it appears willing to seize them, judging by the unprecedented appearance of President Xi Jinping at the World Economic Forum in Davos this past week — the first by a Chinese head of state in the symbolic home of free trade and capitalism when there is growing uncertainty about global leadership.

At Davos, Xi launched a robust defence of free trade and globalisation at a time when Trump is talking of closing borders, presenting the incongruous sight of the head of the Communist Party of China emerging as the world’s leading advocate for open markets.

“Pursuing protectionism is like locking oneself in a dark room,” Xi said. “While wind and rain may be kept outside, that dark room will also block light and air. No one will emerge as a winner in a trade war,” he said, not referring to Trump but leaving little doubt about the target of his message. Xi didn’t stop there, quoting a Chinese proverb that says: “People with petty shrewdness attend to trivial matters, while people with vision attend to governance of institutions.” Xi pledged China would import $8 trillion of goods in the next five years and invest $750 billion overseas.

“Wait and watch” is certainly the mantra in Beijing as Trump takes office. The sense is that not every tweet or threat by Trump the candidate is likely to become policy under President Trump. It is policy that China will react to. And its officials say they are more than prepared.

(Courtesy: Mail Today)

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