China readies itself for potential trade war with Trump

In today’s newsletter:

• Beijing arms itself for a potential Trump trade war

• An interview with the head of India’s Jio Star

• Inside Goldman’s China misadventure

Good morning. Our top story today looks at China’s efforts to ready itself for a renewed trade war with the US, as president-elect Donald Trump signals an even tougher stance towards Beijing in his second term.

President Xi Jinping’s government was caught off guard by Trump’s 2016 election victory and the subsequent imposition of higher tariffs, tighter controls over investments and sanctions on Chinese companies.

But this time around, China is prepared with powerful countermeasures if Trump reignites smouldering trade tensions between the countries. Beijing has introduced sweeping new laws over the past eight years that allow it to blacklist foreign companies, impose its own sanctions and cut American access to crucial supply chains.

Some analysts, including Andrew Gilholm of consultancy Control Risks, believe many have underestimated the damage China could inflict on US interests. However, others said Beijing’s planned countermeasures risk backfiring against Chinese companies and its own economy.

Here’s more on the moves at Beijing’s disposal — and read more China coverage below:

• More trade news: To avoid “catastrophic” tariffs when Trump takes office, the UK should offer the incoming president concessions that address his concerns about China, a senior MP has argued.

• Dollar bond market: China has borrowed almost as cheaply as the US after returning to the global dollar bond market for the first time in three years.

• Canada-China relations: Canada’s indigenous communities are seeking deals with China that could give Beijing access to the country’s natural resources, despite warnings from Canadian security services over doing business with the Chinese government.

• Rachman Review 🎧: Former Australian prime minister Kevin Rudd talks to Gideon Rachman about how Marxist-Leninist theory still shapes Xi Jinping’s policy.

Here’s what else we’re keeping tabs on today and over the weekend:

• Economic data: China’s October industrial production and retail sales figures are due. Japan, Hong Kong and Malaysia announce GDP readings.

• Results: Alibaba and Lenovo report earnings.

• Xi Jinping: The Chinese leader travels to Brazil on Sunday for a state visit and to attend the G20 summit.

How well did you keep up with the news this week? Take our quiz.

Five more top stories

1. Trump has nominated vocal vaccine sceptic Robert F Kennedy Jr as head of the US Department of Health and Human Services, the latest in a series of controversial picks for top cabinet jobs. Kennedy, who sowed doubts about Covid-19 vaccines, would be in charge of a department with a $1.8tn budget with wide-ranging influence over drug regulation and public health.

2. The head of Disney and Reliance Industries’ newly merged $8.5bn Indian entertainment titan plans to invest and “revitalise” television in the world’s most populous country even as western media organisations increasingly see it as a dying medium. “Television in this country for sure is not dead,” Jio Star’s Uday Shankar told the FT. Here’s why he believes TV is still important in India during the streaming era.

3. The head of Mitsubishi UFJ Financial Group has said the Japanese lender could return to the ranks of the global top 10 banks by market value. MUFG chief Hironori Kamezawa told the FT that Japan’s normalisation of monetary policy is expected to benefit lenders after two decades of ultra-low interest rates. Read the full interview.

4. Donald Trump’s criticism of electric vehicles looks likely to lead to the end of government subsidies for consumers who buy them, dealing a blow to the EV industry. But analysts see the incoming president’s shake-up of the rules as a “huge positive” for Elon Musk’s Tesla.

5. Argentina said yesterday it would “re-evaluate” its role in global climate talks after walking out of the COP29 summit. Libertarian President Javier Milei has fuelled concerns that the South American country could become the first to follow Donald Trump’s threatened exit from the landmark Paris agreement.

The Big Read

Goldman Sachs’ years-long struggle to gain control of its Chinese business is a cautionary tale for other western financial institutions. The FT has pieced together a full account of a misadventure on which the group itself has rarely commented and which barely features in its investor communications.

We’re also reading . . . 

• GIFT City: Narendra Modi’s business-friendly pet project in Gujarat has already lured JPMorgan and HSBC. But the social scene has been slow to catch up, writes Chris Kay.

• AstraZeneca’s China crisis: The UK pharmaceutical company needs to make amends with Beijing after becoming enmeshed in Xi’s anti-corruption crackdown, writes John Gapper.

• Trump’s Pentagon pick: The president-elect’s choice of TV host Pete Hegseth to lead the defence department has brought a backlash from Washington military circles.

Chart of the day

Global diabetes rates have doubled over the past 30 years, with many middle- and low-income countries failing to provide sufferers with sufficient access to treatment, according to a new report published in The Lancet.

Take a break from the news

Padel, billed as tennis’s rebellious younger sibling with its relaxed dress code and emphasis on socialising, has exploded in popularity in recent years, with fans including the Princess of Wales and Stormzy. Igor Ramírez García-Peralta has a go at the racquet sport that has taken over the world.