Media

Overview

• Beijing is proactively buffering its economy and securing its interests by leveraging global trade and investments in anticipation of an increasingly confrontational U.S.-China relationship under President-elect Trump. These measures focus especially on improving relations with key trade partners, highlighting Beijing’s fluid use of economic means to achieve geopolitical ends. This increasingly proactive stance is a significant departure from the “wait and see” posture Beijing adopted prior to the U.S. election, and it will likely create pan-regional ripple effects with major implications for business.
• Even before the prospect of a second Trump term, China had a long track record of leveraging economic inducements and coercion to assert its geopolitical stance. In 2017, for example, Beijing boycotted South Korean goods after Seoul consented to hosting U.S. THAAD missile systems. In 2010, it MEMORANDUM 2 sanctioned Norwegian salmon after Chinese dissident Liu Xiaobo won the Nobel Peace Prize. That same year, China banned mineral exports to Japan to protest an incident between the Japanese Coast Guard and a Chinese trawler in the East China Sea.
• As U.S.-China ties become increasingly strained, China could even more vigorously leverage economic tools to secure its strategic interests. Many of its current efforts are outward facing, aimed at mending diplomatic rifts, boosting China’s position on the global stage, and expanding avenues of overseas economic and security cooperation – especially with the Global South.
• Looking ahead, multinational firms should prepare for a China that is more resourceful, resilient, and assertive with both carrots and sticks than it was during Trump’s first term.The main challenges posed by China’s global outreach efforts include greater market access for Chinese competitors; growing greenfield investment for Chinese fabs in Southeast Asia, Latin America, and Eastern Europe aimed at skirting U.S. and EU tariffs, and Beijing’s continued pursuit of export-oriented growth, enabled by willing trade partners.