Lingling Wei
Appearances
Apple News Today
China hits back at U.S. tariffs
So ever since Trump left office, Xi Jinping has tried to build up this arsenal of retaliatory tools. And not only that, he has doubled down on central control over China's economy. China has invested so much more in high tech, in industrial capabilities and all that. Basically, the goal is to fortify the economy against potential sanctions from the United States.
Apple News Today
China hits back at U.S. tariffs
It's not high-end semiconductors or other stuff. It's really things like rare earth minerals, the kind of components that U.S. companies need to use in order to make trips, in order to make defense-related products.
Apple News Today
China hits back at U.S. tariffs
They have a lot of incentives, a lot of reasons to project strengths as opposed to, you know, project weakness. So that's why we are seeing that Xi Jinping is standing very firm. He's not calling President Trump. He's not, like other countries, trying to negotiate with Trump because he feels like we cannot do this under such maximum pressure. That would make us look weak.
Apple News Today
China hits back at U.S. tariffs
Because politically speaking, looking weak would be very costly for authoritarian leadership.
Apple News Today
China hits back at U.S. tariffs
Chinese leader Xi Jinping has been preparing for this moment for many years.
The Journal.
China Unleashes a Trade War Arsenal
Given how high the U.S. tariffs on China are right now, basically the U.S. market is closed to China. So China will have a very, very hard time selling to the United States. That would obviously hurt China's growth even more. Both countries' economy is at stake, and also global economy is at stake as well. We're talking about two ginormous powers fighting against each other.
The Journal.
China Unleashes a Trade War Arsenal
The impact, the direct impact, indirect impact, ripple effects, you know, just everywhere.
The Journal.
China Unleashes a Trade War Arsenal
The Chinese felt pretty good about the new administration. There was actually a sense of cautious optimism. That was because right before the inauguration day, President Trump actually invited President Xi Jinping to go to Washington to attend a ceremony. So, you know, that looked pretty good to Beijing.
The Journal.
China Unleashes a Trade War Arsenal
And at the same time, despite Trump's campaign promise to hit China with 60 percent tariffs, he actually held off doing that on day one. So there were, you know, some really kind of warm and fuzzy signs at the very beginning.
The Journal.
China Unleashes a Trade War Arsenal
It was quite to the dismay of the Chinese leadership. Rubio was actually picked and confirmed as the Secretary of State. He's quite a foe, and now he's taking a very important position in the administration. But, you know, you just have to deal with it.
The Journal.
China Unleashes a Trade War Arsenal
Basically, you know, the message was, even though we don't like you, we're sort of like foes, but we're still willing to get down to business with you.
The Journal.
China Unleashes a Trade War Arsenal
Based on the official readout, Chinese readout of the call, Wang Yi basically issued quite a warning to Rubio. The term Wang Yi used was that can be translated into something like behave yourself, right? So it was, you know, basically Wang Yi lectured Rubio during the call.
The Journal.
China Unleashes a Trade War Arsenal
So the White House obviously took notice of that. And, you know, that really put the Chinese on a bad start. That kind of really didn't go well with the administration.
The Journal.
China Unleashes a Trade War Arsenal
The Chinese definitely were trying to engage with the administration at that point of time. In fact, they have been trying to get to the core team of the Trump administration. They really want to talk to cabinet-level officials. However, they have had no luck whatsoever. Some lower-level communication has been taking place. However, higher-level communication really has gone dark.
The Journal.
China Unleashes a Trade War Arsenal
Sure. So in late February, the foreign minister we just talked about, Wang Yi, he flew to New York. On the surface, you know, he was here to attend a United Nations Security Council meeting, but there was a much bigger goal for him. which was to have a meeting with senior officials at the Trump administration.
The Journal.
China Unleashes a Trade War Arsenal
In particular, Foreign Minister Wang Yi wanted to talk to National Security Advisor Mike Waltz, but he had no luck. He didn't get a meeting with him. He didn't even get a call with him.
The Journal.
China Unleashes a Trade War Arsenal
The Trump administration, to their credit, they know China pretty well these days. They know who in China is more important than others. And they basically told the Chinese, OK, you want to talk? Sure. But we want to talk to the people who are really close to Xi Jinping. But to the Chinese, that demand was something they couldn't really agree to because that's not how China works.
The Journal.
China Unleashes a Trade War Arsenal
You know, they have very established ways of doing things and they didn't want to improvise or they did not have the ability to improvise. So basically, what China is offering for conversations is not in line with who the Trump administration wants to talk to.
The Journal.
China Unleashes a Trade War Arsenal
Especially on China's part, they definitely made quite a big effort.
The Journal.
China Unleashes a Trade War Arsenal
Like everyone else. I think everybody was surprised.
The Journal.
China Unleashes a Trade War Arsenal
That was quite a shock to people in Beijing. And they did expect the Trump administration to do something to increase tariffs even further. But the magnitude of the tariff increase completely surprised the Chinese leadership.
The Journal.
China Unleashes a Trade War Arsenal
There has been quite a sense of shock, frustration, and anger in Beijing. That's our colleague Lingling Wei.
The Journal.
China Unleashes a Trade War Arsenal
This time around, they also hit back quite hard. They put retaliatory tariffs on all American products with no exception.
The Journal.
China Unleashes a Trade War Arsenal
And they have done quite a lot. It's not just one thing. So what Beijing is doing right now is kind of deploying a very broad set of countermeasures to engage in this economic warfare with the United States.
The Journal.
China Unleashes a Trade War Arsenal
Yes, they definitely do. And they started to put together this playbook ever since Trump left office in 2020. So Xi Jinping's government has been preparing for another Trump-like assault for all those years. And all sorts of tools are all aimed at hitting the United States where it hurts. A lot of people just cannot produce stuff these days without Chinese components, right?
The Journal.
China Unleashes a Trade War Arsenal
For medicine that we consume here, for iPhones, right? And for chips, they all require components from China, right?
The Journal.
China Unleashes a Trade War Arsenal
Well, it all comes down to who buckles from the pain first. For now, the Chinese leader, Xi Jinping, has shown no sign of backing down. If anything, he's doubling down.
The Journal.
China Unleashes a Trade War Arsenal
Right now, because Trump's trade war is much broader than just with China, right, the risk is that a lot of other countries will be pushed into the arms of the Chinese. So China definitely has an opportunity to try to win over some of the traditional allies and partners of the United States.
The Journal.
China Unleashes a Trade War Arsenal
This is the worst case scenario for China. That makes very clear who is the main target for the Trump administration is China. And that makes it very, very, very difficult for China to negotiate with other countries to try to have any kind of alignment to confront the United States. So it's really the worst case scenario for Beijing right now.
The Journal.
China Unleashes a Trade War Arsenal
I do believe the U.S. has the upper hand with this move. The U.S. actually has quite some leverage over China, mainly based on how strong the U.S. economy is.
The Journal.
China Unleashes a Trade War Arsenal
I think right now still too early to say. Both of them have shown their resolve and capacity to hit back at each other. But China has its own cards as well, right? Its political system, you know, such an authoritarian system. That means its leadership doesn't to be held accountable. They definitely are in a better position to play the long game.
The Journal.
China Unleashes a Trade War Arsenal
An offering for Xi Jinping would be pausing the tariff increases or even just Trump picking up the phone to call Xi Jinping. I bet if Trump takes the initiative, makes a call, Xi Jinping would pick it up. Because after all, economic pressure in China is building even before the trade war started and now even more so.
The Journal.
China Unleashes a Trade War Arsenal
So Xi Jinping definitely still has incentives to deal, to negotiate, to have dialogue. What Xi Jinping wants to avoid at the end of the day is to get isolated by Trump's policies.
WSJ What’s News
Fed Holds Rates Steady, Dims Economic Outlook
Xi originally planned to use the issues over Chinese interests in the Panama Canal as a bargaining chip in negotiations with the Trump administration. But the deal basically pulled rock out from under him even before any negotiations started.
WSJ What’s News
Fed Holds Rates Steady, Dims Economic Outlook
The deal is a huge loss of face for Xi Jinping, China's authoritarian leader. Our reporting shows that Xi originally planned to use the issues over Chinese interests in the Panama Canal as a bargaining chip in negotiations with the Trump administration. But the deal basically pulled the rug out from under him even before any negotiations started.
WSJ What’s News
Fed Holds Rates Steady, Dims Economic Outlook
On the other hand, as you pointed out, President Trump quickly celebrated this deal as a victory over Chinese interests in America's backyard. So round one in this US-China battle for global influence, Beijing suffered a setback. In addition, if the deal does get finalized, China is worried that Chinese ships might face restrictions, surcharges and sanctions.
WSJ What’s News
Fed Holds Rates Steady, Dims Economic Outlook
Despite the top leader's anger, he doesn't really have a very simple way to torpedo the deal because the assets to be sold are all outside mainland China and Hong Kong. And at this moment, we have told by both parties of the deal that they are still very confident that it can be completed. But for sure, the pressure is mounting.
WSJ What’s News
Fed Holds Rates Steady, Dims Economic Outlook
The question now a lot of people are asking is whether or not China or the Hong Kong government would try to block the deal for national security reasons.
WSJ What’s News
Fed Holds Rates Steady, Dims Economic Outlook
Geopolitical competition between China and the United States is definitely heating up. The fact of the matter is China's economy is not really doing that well. So economically speaking, the United States does have certain leverage over China. However, Beijing's anger over this Hutchinson deal It's one example of intensifying competition between those two powers.
WSJ What’s News
Fed Holds Rates Steady, Dims Economic Outlook
The strong reaction from Beijing shows that they are going to fight back at every turn. They're not going to just sit idle and do nothing. And they do have levers to pull, including those over American companies operating in China. and China's control of critical minerals. So no doubt it will be a roller coaster ride ahead.
WSJ What’s News
How China’s Trillion-Dollar Infrastructure Bet Undercuts U.S. Dominance
As the competition between China and the West, especially the United States, intensifies, it really is important how big your friend circle is.
WSJ What’s News
How China’s Trillion-Dollar Infrastructure Bet Undercuts U.S. Dominance
Even within China, we have heard bankers complaining about being asked to finance projects that have very little prospect of returns. Those loans are not free, right? We were told that based on our conversations with bankers in China, some banks really, they have threatened to stop supporting certain projects unless regulators let them clarify that those loans were, quote,
WSJ What’s News
How China’s Trillion-Dollar Infrastructure Bet Undercuts U.S. Dominance
policy instructed, that means, you know, the banks wouldn't be held accountable for defaults, for loan losses.