How America could end up making China great again

As Donald Trump unleashes a volley of tariffs and his administration talks up the strength of its military alliances in Asia, you might think that these are anxious times in the country that America sees as its main adversary. In fact, The Economist’s reporting from Beijing reveals a very different picture. MAGA is putting pressure on China’s leaders to correct their worst economic errors. It is also creating opportunities to redraw the geopolitical map of Asia in China’s favour.

China has come out badly from Mr Trump’s Rose Garden rant. Counting the new levy of 34%, plus existing duties, the total rises to 65%—and slightly higher if you include the disruptive removal of a tariff exemption for small packages. Given that exports are still roughly 20% of GDP, as they were in 2017, this will hurt China’s economy. China’s tactic of rerouting its firms’ manufacturing chains through countries such as Vietnam to bypass tariffs will work less well now that America is erecting barriers globally.

The trade war comes as China is still struggling with deflation, a housing bust and dismal demography. For the past five years the Communist Party has neglected weak consumption and embraced an unwise statism that has cramped the private sector. China has exported its overcapacity, swamping the world with goods, and fostered a spiky chauvinism that unsettles America’s allies both in Asia and Europe.

Despite all this, China enters the new age of MAGA stronger than in Mr Trump’s first term. President Xi Jinping has long argued that America is too polarised and overstretched to sustain its global role. One of his slogans warns of “great changes unseen in a century”. His paranoid nationalism used to seem like dystopian hyperbole. Now that Mr Trump is committing such wanton self-harm and general destruction, it looks ahead of its time.

Mr Xi has been preparing for today’s chaotic world ever since becoming China’s leader in 2012. He has urged economic and technological self-sufficiency on his country. China has reduced its vulnerability to American chokeholds, such as sanctions and export controls. Although its banks still need access to dollars, it now makes most non-bank international payments in yuan.

China’s domestic economy has unrecognised strengths. Competition and an embrace of technology mean that its industrial firms thrash Western rivals in everything from electric vehicles to the “low-altitude economy”, meaning drones and flying taxis. Viewed from China, Mr Trump’s tariffs will condemn Detroit to 1970s-style obsolescence, just as his crusade against universities will set back innovation.

As America puts up walls, China will have a chance to reset trade relations around the world by offering to invest in manufacturing in partner countries rather than flooding them with exports.

These economic opportunities sit alongside a geopolitical one. America’s China policy is alarmingly unclear. Hawks in the administration insist that, by turning away from Europe, America is freeing up resources to contain China. However, Mr Trump admires Mr Xi and has sent an ally, Senator Steve Daines, to Beijing to put out feelers for a deal. In his first term, Mr Trump struck a trade agreement with China; now he wants to haggle over TikTok.

Mr Xi has no intention of filling the vacuum left by Uncle Sam, but he has a chance to expand China’s influence, especially in the global south.  Still, dangers lie ahead for China. A trade war could trigger a global recession. If Mr Trump fails to strike a deal with the government in Beijing, he could lash out over currencies and impose more sanctions. China may yet poison relations with the rest of the world by dumping exports on it. Whether it seizes this moment depends on one man: Mr Xi. But the fact the opportunity exists owes much to another: Mr Trump.

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