Donald Trump’s trade war and Huawei ban push China to rethink economic ties with US
- Last week the US president signed an order that could restrict Chinese telecommunications companies from selling their equipment in the United States
- Talks to end the year-long trade war fell apart last month after the US increased tariffs on all Chinese goods, with Beijing responding with increases of their own
The decision by the United States to impose tariffs on all Chinese products and put smartphone maker Huawei on a trade blacklist that could choke off vital components has severely damaged the fragile trust between the two countries, forcing China to re-examine the entire bilateral economic relationship to protect itself, according to Chinese researchers.
China is still open to resuming talks to end the trade war and refuses to believe that a “decoupling” of the world’s two largest economies is well underway. But government advisers are now highlighting the risk of sourcing critical supplies from an increasingly hostile US, particularly after the decision last week to put Huawei and its affiliates on a trade ban list, and are exploring ways for the country to cut its exposure to the US.
Trade in natural gas was once viewed by Beijing as an area where ties could easily be improved, since the US has significant reserves to sell and China’s demand for the clean energy source has surged. When US President Donald Trump visited Beijing in 2017, one of the biggest deals agreed was Chinese funding for a natural gas project in Alaska worth US$43 billion.
However, the idea that China should buy large amounts of natural gas from the US must be revisited, Wang Yongzhong, a senior fellow with the Chinese Academy of Social Sciences, a governmental think tank, said on Monday.
“China may have to cap US supplies at 10 or 15 per cent of its overseas purchases for the sake of supply chain security,” said Wang, who specialises in China’s energy supply security. “What if the [energy] supply [including both liquefied natural gas and crude oil] is cut off suddenly, as we have seen in the Huawei case?”