BEIJING: In a candid address, Xie Feng, China's ambassador to the United States, stated unequivocally that trade wars offer no victors, as renewed tensions loom on the horizon with the anticipated return of a confrontational US administration under Donald Trump.

At a recent dinner organized by the US-China Business Council in Shanghai, Xie emphasized that the ongoing differences between the two superpowers should foster greater exchanges and mutual understanding rather than serve as a pretext for conflict and division. His remarks arrive at a precarious moment, with trade relations remaining a paramount concern for both countries.

Reflecting on the Past

Reflecting on the past, Xie acknowledged the detrimental effects of the trade war, which saw China's economy growing at just 6% in 2019 — its slowest pace in nearly three decades. This downturn has continued, placing additional pressure on China's economic plans, with officials now aiming for a modest growth rate of around 5% in 2024.

Analysts warn that with Trump pledging to implement blanket tariffs as high as 60% on Chinese imports, the already fragile economic landscape could be jeopardized further. This is a stark increase compared to the previous tariffs that ranged from 7.5% to 25%.

The Presence of US Businesses in China

Xie pointed out the significant presence of US businesses thriving in China, noting that 60% of new McDonald's outlets were opened in the country over the past year, and Shanghai boasts the highest number of Starbucks cafes of any major city globally. "As we witness more success stories of mutually beneficial cooperation, it becomes clear that the potential for collaboration between China and the United States is vast and should be continually expanded," he remarked.

Warnings Against Containment

However, he cautioned that efforts to contain or suppress China would ultimately be futile, warning that such tactics would "hit a wall." This sentiment echoes the resolve among analysts who predict strong resistance from China should a new trade war emerge. Joe Mazur, a senior analyst with Trivium China, suggested that even in a scenario where US-China relations improve, Beijing would remain committed to prioritizing self-sufficiency and economic security. “If new tariffs materialize, expect aggressive retaliation from China, as the focus would likely shift from diplomacy to firm countermeasures,” he stated.

Economic Implications

Julian Evans-Pritchard, Head of China Economics at Capital Economics, provided a more measured perspective, noting that while a 60% tariff on Chinese goods could have major implications for trade dynamics, its direct impact on China’s GDP would be less than 1%.

Conclusion

As the geopolitical chess game intensifies, both nations are left to contemplate what lies ahead in their complex relationship. The question remains: can China and the US navigate these tumultuous waters to find common ground, or are they destined for continued confrontation?