Trade, Taiwan and now Trump: China braces for a volatile new era in U.S. ties

HONG KONG — We must find a way to "get along," Chinese President Xi Jinping told President-elect Donald Trump in a congratulatory message Thursday — an immediate nod to the long-frayed relations between the rival superpowers as well as the disruption Trump's return to the White House might bring.

Trump could inject new levels of volatility into what is often described as the world's most important bilateral relationship, after an election win that comes at a critical moment for the globe's two largest economies.

Ties have been at their lowest point in decades amid disputes over trade, technology, Taiwan and Chinese aggression in the South China Sea . But since last year, the Biden administration has taken steps to improve communication and cooperation with Beijing, which is one of Washington's largest trading partners but is also seen as its main long-term strategic adversary.

In addition to the consequences for the global economy, an increase in U.S.-China tensions would have far-reaching implications for U.S. allies in the Asia-Pacific region such as South Korea , Japan and Australia.

A 'new era' Xi was among the many world leaders who quickly congratulated Trump, saying the U.S. and China "will both benefit from cooperation and lose from confrontation," Xinhua, China's state-run news agency, reported Thursday.

He "urged the two countries to find the right way to get along in the new era, so as to benefit both countries and the wider world," it said.

"We respect the choice of the American people," the Chinese Foreign Ministry said in a statement earlier.

Trump's return to the White House "was not entirely unexpected in Beijing," said Rick Waters, managing director of the China practice at Eurasia Group, a New York-based consulting firm.

Chinese officials saw neither Trump nor his Democratic rival, Vice President Kamala Harris , as especially appealing at a time when taking a hard line on China is just about the only issue their two parties can agree on.

From China's perspective, Waters said, Trump's first term was divided between a "transactional period" from about 2017 to 2019 that was focused on tariffs and reaching a trade deal, and an "angry period" in 2020 during which both countries blamed each other for the emergence of Covid-19, which "poisoned the relationship."

It was during that period that the U.S. closed the Chinese consulate in Houston, while China closed the U.S. consulate in Chengdu.

Beijing is therefore now trying to figure out "whether they're going to get the transactional administration or the angry one," Waters said, and "they will prepare for both options."

In Chinese state media, the message Thursday was one of cautious optimism.

A second Trump presidency "could mark a new beginning in China-U.S. relations if the chance that has been offered is not wasted," state-run newspaper China Daily said in an editorial on Wednesday.

Another trade war? But Chinese officials laser-focused on stabilizing their faltering economy are also mindful of the tariffs of 60% or more that Trump has vowed to impose on all Chinese imports.

His victory may prompt Beijing to announce a stimulus package this week that is 10% to 20% bigger than it would have been if Harris had won, CNBC reported .

Asked about possible Trump tariffs on Thursday, Chinese Foreign Ministry spokesperson Mao Ning said she would not answer hypothetical questions but that "there is no winner in a trade war."

China has also complained that the U.S. is trying to contain its development with export controls and other restrictions on strategically sensitive sectors such as semiconductors. One person it may turn to for help is tech billionaire Elon Musk , a devoted Trump supporter with extensive business interests in China who is wildly popular there.

"The Chinese are hoping that he will be someone that can facilitate a warmer, less containment-oriented set of policies on technology," though it remains to be seen whether Musk can deliver on that, said Ian Bremmer, founder and president of Eurasia Group.

In addition to imposing high tariffs and greater tech restrictions, a Trump administration might reduce academic exchanges and other contacts between the U.S. and China, "thus impacting public perceptions on both sides," said Wang Huiyao, founder and president of the Center for China and Globalization, a think tank in Beijing.

But Trump cannot turn away from China entirely, Wang said. He may need to coordinate with Beijing, for example, if he wants to "quickly" end the wars in Ukraine, Gaza and Lebanon, given its close economic ties with both Ukraine and Russia and its growing diplomatic role in the Middle East.

"Although this claim is suspicious given the complexity of the Middle East and the Russia-Ukraine war, Trump cannot fulfill his promises without China's help," Wang wrote in an essay published on Sunday by the China-United States Exchange Foundation, a nonprofit group based in the Chinese territory of Hong Kong.

China is also key to containing the nuclear ambitions of neighboring North Korea , Wang said, which depends on Beijing as its biggest trading partner although it is also growing closer to Russia.

Taiwan faces uncertainty The status of Taiwan, a self-ruling democracy that Beijing claims as its territory, remains the biggest flashpoint in U.S.-China relations. The U.S. does not have formal diplomatic ties with the island but is its most important international backer and is legally bound to provide it with defensive weapons in the face of possible Chinese military attack.

A Trump presidency "will entail significant uncertainty for Taiwan," said Wen-Ti Sung, a nonresident fellow at the Atlantic Council who is based in Taipei.

Trump said repeatedly during the campaign that Taiwan should pay the U.S. for defending it against China, likening the relationship to insurance, and that its globally dominant semiconductor industry is "stealing" American jobs. Taiwan already spends billions of dollars on U.S. military equipment.

Trump's transactional nature "means that Trump will expect U.S. support for Taiwan to come at a price," Sung said.

The U.S. has long maintained a policy of "strategic ambiguity" when it comes to whether it would come directly to Taiwan's defense. Asked last month whether he would use U.S. military force to defend Taiwan against Chinese aggression, Trump told the Wall Street Journal editorial board that he "wouldn't have to" because Xi "respects me and he knows I'm f- crazy."

Trump created serious issues with Beijing during his first presidential transition in 2016 when he accepted a call from Taiwan President Tsai Ing-wen , the first president or president-elect to do so since Washington switched its official recognition from Taipei to Beijing in 1979.

Tsai's successor, President Lai Ching-te , sent a letter congratulating Trump and expressing hope for greater cooperation, Taiwan's Foreign Ministry said Wednesday. On Thursday, Lai's office denied reports that he was also seeking a congratulatory call with Trump.

Waters said that Trump and his team have since "come to realize the sensitivity" of the Taiwan issue for Beijing, saying, "They've got a lot of experience on it now."

While cross-Strait tensions are likely to remain high in the coming years, Waters said, "I don't know that I would necessarily see Taiwan as an issue where the U.S. will create deliberate instability or uncertainty early on."

Sung agreed that the near-term likelihood of a war in the Taiwan Strait remains very low, even if Trump is less engaged in the world. Instead, China is likely to keep up military and other pressure on Taiwan, as well as pressing its vast territorial claims in the South China Sea.

"An isolationist U.S. presidency means China can have greater space to use non-military means to strengthen its stranglehold over Taiwan, thereby leaving the military option as a low-priority policy instrument," he said.