How China plans to push back against Donald Trump in ‘economic cold war’
Government wants to position itself as a champion of free trade and defender of globalisation, says source close to Beijing
As Washington escalates trade tensions with threats of tariffs on another US$200 billion worth of goods, China’s leadership is positioning itself as a defender of the world trade order and, in the words of a source close to decision makers in Beijing, bracing for an “economic cold war”.
The source, who requested anonymity as he was not authorised to speak publicly about Beijing’s strategy, told the South China Morning Post that China was trying to put the trade row into a global context, by illuminating whether the world should uphold the multilateral system under the World Trade Organisation, as China has suggested, or let US President Donald Trump’s unilateralism prevail.
While the former Soviet Union aimed to defeat capitalism during the cold war, Beijing is trying to convince governments, organisations and companies – including US firms – that it is a champion of free trade, and send a message that, in contrast to Trump’s “America first” policy, China is “still open for business” and wants to keep globalisation on track.
It also sees an opportunity to find common ground with others hit by Trump’s trade wrath – including the European Union, Canada and Russia – and to stand up to Washington. China has, for example, been lobbying the EU to present a united front against the United States trying to unmake the existing world order, and the two sides have agreed to set up a working group to revamp and resolve disputes through the WTO.
“The US is sabotaging the global free-trade system which was initiated by Washington decades ago. This is a new cold war which threatens world peace and global development,” the source said. “China is committed to further opening up … to bring opportunities to the world.”
He added that China would try to push back against Trump’s “trade bullying” to protect its own interests as well as the free-trade system that has helped it and many other countries.
Washington and Beijing on Friday began applying 25 per cent tariffs on US$34 billion of each other’s goods, locking horns in what Beijing called “the biggest trade war in economic history”.