The writer is a professor at Georgetown University and a senior advisor to The Asia Group. He served on the staff of the United States National Security Council from 2009 to 2015.
If Donald Trump's China policy is defined by uncertainty and contradiction, Xi Jinping's strategy is defined by clarity and determination. The Chinese president's approach to the American president-elect is no secret. Beijing has been very clear since the elections about its views and possible responses.
Xi plans to not only respond, but also take advantage of Trump's actions. During Trump's first term, Beijing was quick to respond. We are determined not to repeat this. Xi is well underway in his preparations and has signaled this.
Most Chinese analysts were not surprised by Trump's election, linking his return to a global wave of populism and nationalism. Beijing believes it now understands Trump's tactics and can manipulate his administration. China's confidence rests on the conclusion, accurate or not, that China in 2025 is different from 2017, as is the United States and the world.
Many Chinese say Xi is stronger politically and that the economy is more self-reliant and resilient, even in the face of recent challenges. Chinese analysts view the U.S. economy as more fragile and U.S. politics as deeply divided. Geopolitically, Beijing considers that American influence is declining in the South of the world and in Asia, and that support for the Chinese vision is increasing.
Xi has already indicated that he will treat his ties with Trump as a purely business relationship, albeit in a Don Corleone manner. He will not take Trump personally and will fight back early and hard in order to generate leverage. Beijing in fact rejected Trump's invitation for Xi to attend the inauguration.
But Beijing also indicates that it wants dialogue and is open to an agreement to avoid new customs tariffs. However, the Chinese, who prefer to use back channels, are having difficulty finding the right channel to understand what Trump really wants. Beijing's basic assumption is that Washington and its allies will remain hostile to China for the foreseeable future. Thus, Xi is open to negotiations because he wants some room to maneuver on the economic front, so that China can marshal its forces for long-term competition.
Beijing remains concerned that Trump's team is focused on deeper economic decoupling, regime change in China, and support for Taiwan independence as ways to contain and destabilize China. Hence Xi's four red lines during his November meeting with President Joe Biden in Peru, in a clear message to the new administration.
Beijing's planned responses to Trump fall into three categories: retaliation, adaptation and diversification. Mirroring U.S. policies, Beijing has in recent years created a series of export controls, investment restrictions and regulatory investigations that could harm U.S. businesses. Beijing is unable to match tariffs, and will therefore seek to impose costs in ways that inflict maximum pain. For China to fail to retaliate would be a sign of domestic weakness and would only embolden Trump.
It has already started. At the end of 2024, Beijing blocked the export to the United States of essential minerals used to make chips, put pressure on the supply chain of U.S.-made drones, threatened to blacklist a company leading American clothing company and launched an antitrust investigation against Nvidia. By taking such measures, Beijing anticipates its capabilities and creates future exchange currencies.
China's second strategy is adaptation. Starting in fall 2023, Beijing launched vigorous fiscal and monetary stimulus measures to help businesses and now consumers. This policy change generates positive, albeit uneven, impacts. It was certainly absolutely necessary, but its scope and nature were also developed with a view to a possible trade war.
Beijing's third strategy is to expand its economic ties. It debates unilateral reductions in customs duties on imports from non-American partners. During his trip to Peru, Xi inaugurated a deep-water port that could reshape China's trade with Latin America, a key non-U.S. source of food, energy and minerals. In late 2024, Xi also participated in meetings with the leaders of 10 major international economic organizations for the first time. His message was clear: China will be the main force for global economic stability, prosperity and openness, and opposes all forms of protectionism.
Lots of things could go wrong. Beijing's confidence is matched only by that of the Trump team. Both sides believe they have the upper hand, can impose more costs and endure more pain. The stage is set for a complex and destabilizing dynamic that, at best, results in a ceasefire. And that only concerns economic issues, not those of Taiwan, the South China Sea, technological competition or the modernization of nuclear forces. By comparison, the Cold War is beginning to seem quaint.
