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The author is a professor at Georgetown University and a senior adviser with The Asia Group. He served on the US National Security Council staff from 2009 to 2015
If we consider Donald Trump’s approach to China as unpredictable and inconsistent, then Xi Jinping’s strategy can be defined as clear and resolute. China’s president has been transparent about his views and potential actions towards the US president-elect since the election.
Xi is not only planning to respond but also to capitalize on Trump’s decisions. Unlike during Trump’s first term, Beijing is now prepared and determined to navigate the situation strategically. Xi has already indicated his intentions.
Many Chinese analysts anticipated Trump’s victory, attributing it to a global surge in populism and nationalism. Beijing believes it has a solid understanding of Trump’s tactics and can influence his administration. China’s confidence stems from the belief that the landscape in 2025 differs from that of 2017, not only for China but also for the US and the world.
According to Chinese assessments, Xi has consolidated his political power, and the Chinese economy has become more self-sufficient and resilient, despite recent challenges. On the other hand, they see the US economy as fragile and American politics as deeply divided. Geopolitically, Beijing perceives a decline in US influence in the global south and Asia, with increasing support for China’s objectives.
Xi has made it clear that he will treat his interactions with Trump strictly as a business relationship, employing a “Don Corleone” style. He is not expected to personally engage with Trump and is prepared to respond swiftly and decisively to establish leverage. Beijing declined Trump’s invitation for Xi to attend the inauguration.
While Beijing is open to dialogue and a potential deal to avoid new tariffs, they are struggling to interpret Trump’s true intentions, as he tends to communicate through unconventional channels. Beijing’s underlying assumption is that the US and its allies will maintain a hostile stance towards China in the foreseeable future. Therefore, Xi is willing to engage in negotiations to alleviate economic pressure and allow China to focus on long-term competition.
Beijing is wary that Trump’s administration may intensify efforts towards economic decoupling, regime change in China, and support for Taiwan independence to contain and destabilize China. This led Xi to outline four “red lines” during a meeting with President Joe Biden in Peru as a clear message to the incoming administration.
Beijing’s planned responses to Trump’s policies revolve around retaliation, adaptation, and diversification. In line with US actions, Beijing has implemented export controls, investment restrictions, and regulatory probes targeting US companies. Unable to match tariffs dollar for dollar, China aims to inflict maximum pain through alternative means of retaliation.
China’s adaptation strategy involves a significant fiscal and monetary stimulus since autumn 2023 to support businesses and consumers, anticipating the impact of a potential trade war. Additionally, Beijing is considering unilateral tariff cuts on imports from non-US partners and is expanding economic ties globally.
Despite the confidence on both sides, the potential for a complex and destabilizing dynamic in US-China relations remains high. The looming economic issues may only be the tip of the iceberg, with other contentious issues such as Taiwan, the South China Sea, technology competition, and nuclear modernization adding further complexity to the situation.