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Trump’s victory in the US presidential election has shaken the world. But China has remained largely unmoved, despite having been one of the president-elect's favourite targets on the campaign trail

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Trump’s victory in the US presidential election has shaken the world. But China has remained largely unmoved, despite having been one of the president-elect's favourite targets on the campaign trail

By Keyu Jin*

Donald Trump’s stunning victory in the US presidential election has shaken the world. From Mexican President Enrique Peña Nieto’s conspicuous silence to French President Francois Hollande’s statement that it opens up a “period of uncertainty” to the Kremlin’s barely concealed giddiness, Trump has not been received internationally like past US presidents. But one country has remained largely unmoved: China.

Trump’s stance on China is well known: he has blamed the country for everything from hacks on his opponent (thought by the US government to be the work of Russia) to climate change (which he has called a hoax cooked up by China to undermine US competitiveness). And he has promised to impose a 45% tariff on Chinese goods.

Yet prudence flows through China’s Confucian veins. Rather than jumping to conclusions about future US policies, much less taking premature action, China’s leaders have remained neutral in their response to Trump’s victory. They seem confident that, though the bilateral relationship will change somewhat, it will not be fundamentally transformed. It will still be neither very good nor very bad.

It helps that Trump has all but ceased China-bashing since the election. Instead, he posted on Twitter a video of his granddaughter reciting a poem in Mandarin – an instant hit in China. Whether intended explicitly as a message to China or not, the move highlighted the possibility of a gulf between Trump’s campaign rhetoric and his actual positions and plans.

Some in the West might think that the rhetoric alone would be enough to incense China’s leaders. But the truth is that the Chinese are far more offended by national leaders meeting with the Dalai Lama, as President Barack Obama did in June. And, as past US elections have made clear, rhetoric may well bear little relation to reality.

That is all the more true when the rhetoric in question includes promises that would harm everyone involved, as Trump’s proposed tariffs would. The availability of inexpensive products from China has long placed downward pressure on prices even of non-Chinese goods in the US market. For low-income households, which are the most likely to consume inexpensive imported goods, this has been a godsend, as it has effectively raised their purchasing power.

If Chinese imports were blocked, prices would rise, undermining consumption, impeding economic growth, and exacerbating inequality. And the US would not even be protected from manufacturing employment losses; the jobs would just go to Vietnam or Bangladesh, where labor costs are even lower than in China nowadays.

The same goes for investment flows – the second engine of globalization – which are often conveniently forgotten in discussions of the US-China economic relationship. China is one of the biggest purchasers of US Treasuries, and continues to finance US consumption and investment. China may even help to finance the large infrastructure projects that Trump has promised, thereby reducing pressure on the US budget.

So Trump is unlikely to change much in terms of US economic policy, at least if he knows what’s good for him. Where he might make some changes is in foreign policy; but those changes may be more likely to please China than to aggravate it.

The Obama administration has for years been engaged in a strategic rebalancing toward Asia. At a time when China was rapidly accumulating both economic and military strength, Obama seemed committed to containing its rise as best he could, including by involving the US in territorial disputes in the South China Sea.

By contrast, Trump, with his “America first” approach to foreign policy, has paid little attention to the South China Sea dispute. That works just fine for China, which would welcome less US involvement in Asia – in particular, in the South China Sea, as well as in Taiwan.

But here, too, there is a gap between rhetoric and reality, and no radical change should be expected. Soon after the election, Trump assured the leaders of Japan and South Korea of America’s commitment to their countries’ security, despite a campaign vow to demand more payment for US protection. Add to that the threat posed by North Korea, and a destabilizing US strategic retreat from Asia remains highly unlikely.

If Trump follows through on his pledge to mend fences with Russia, the odds that China will escape US pressure would lengthen further. Without Russia to deal with, the US would have even more time to dedicate to Asian affairs.

Moreover, a warming of the Russia-US relationship could lead to subtle changes in the Russia-China relationship, which has deepened since Russia’s annexation of Crimea wrecked its relations with the West.

Trump’s victory is far from inconsequential. He is no ordinary US president, and he must be taken seriously, though not literally, to borrow a phrase from The Atlantic’s Salena Zito. But, as China’s leaders seem to recognize, he will have little choice but to color mostly inside the lines as president. Even if he wants to deviate more from the foreign-policy consensus, the US system limits his ability to do so.

So, rather than worrying about Trump’s personal predilections or trying to predict the unpredictable, China’s leaders are remaining focused on what is really important: the need for a cooperative bilateral relationship. Other world powers should do the same.


Keyu Jin, a professor of economics at the London School of Economics, is a World Economic Forum Young Global Leader and a member of the Richemont Group Advisory Board. Copyright: Project Syndicate, 2016, published here with permission.

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13 Comments

Good sensible comments,would some one ensure that Karyn Hay the Radio Live pm host reads them.

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It facilitate to Trump encompass everyone except finish China-bashing given that the appointment. As an alternative Custom Assignment, he post on Twitter a video of his granddaughter performs a rhyme in bureaucrat an immediate hit in China.

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For low-income households, which are the most likely to consume inexpensive imported goods, this has been a godsend, as it has effectively raised their purchasing power.

A lot of cheap stuff is rubbish that in reality is very expensive. For example socks that develop holes after a couple of weeks compared to more expensive ones that last years. I think the US could easily do without China as there are plenty of other countries that can supply low quality goods at low prices.

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The majority of the chinese plastic goods sold here in NZ, do not last. Most of them ends up on landfills in clean green NZ. So as Zachary commented, the reality is that it is expensive to buy since they do not last, and the repeat business is guaranteed since these products are no longer made to last on purpose, they are manufactured to just be usable for a very short period.
Socks are another very good example, close to rubbish, look for quality Korean socks that are not made from plastic.

"And the US would not even be protected from manufacturing employment losses; the jobs would just go to Vietnam or Bangladesh, where labor costs are even lower than in China nowadays."

Competition is good, they might be able to manufacture better quality socks.

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Who owns the major rubbish collections (and landfill) operations.

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There probably should be some sort of extra tax put on the products peddled by Briscoes and The Warehouse to cover the environmental cost of burying all their rubbish. Cooling fans, chip board furniture and outdoor furniture and most of the other stuff needs to be buried after three years or so. It's a dreadful waste of energy.
If we had a society that really valued quality we would have better, longer lasting, things that were ultimately cheaper. When my family first came to NZ almost all the cars were old but well looked after because you couldn't easily buy a new car. It was quite good in a way. With globalisation we seem to have no choice but be a throw away society. It is very hard for any country to develop a unique and valuable culture.

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For once I almost entirely agree with you, till you got to the bit about globalisation. It is not globalisation that has caused the throwaway society it is mechanisation.

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It looks like you too get that weird thing happening where comments show up in the sidebar from months ago.
I think what I meant to write instead of globalisation was standardisation which is due to mechanisation - you are right.

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Interesting article, I sure hope the author is right

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A trade war would be good. A revolution against over-consumption and materialism. People have more junk than ever and hoping that it will make them happy. Most could live off half their income, sell the house and take up meditation and be a lot more content with life. More time for the kids and going to the beach :)

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That is where tiny houses can come in handy, not so much room for junk

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The author may well be right about the American system restricting what Trump can do, but I disagree that Trump would view tariffs as harmful to everyone concerned. Sure cheap crap wouldn't be so cheap anymore, but the idea is to get more manufacturing jobs and raise wages. And hopefully, as Zachary Smith alluded to above, this would actually result in a shift back to higher quality "stuff" since the cheap option is no longer viable.

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It facilitate to Trump encompass everyone except finish China-bashing given that the appointment. As an alternative write my essay, he post on Twitter a video of his granddaughter performs a rhyme in bureaucrat an immediate hit in China.

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