- As the 2024 U.S. presidential election looms, China’s ambassador to the United States, Xie Feng, cautions against renewed trade tensions, advocating for cooperation over confrontation.
As the U.S. presidential election draws near, China braces for the potential impact of Donald Trump’s return to office, a prospect that brings memories of the intense trade war between the world’s two largest economies. In a diplomatic yet pointed address on November 7 at a US-China Business Council dinner in Shanghai, China’s top envoy to the United States, Xie Feng, urged both nations to prioritize constructive engagement over adversarial tactics. Xie’s speech underscored that “there are no winners in tariff or trade wars, nor in wars over science and technology or industry,” a statement with direct relevance should Trump make good on his campaign promises for steep tariffs on Chinese goods.
The last U.S.-China trade war, initiated under Trump’s administration, left lasting effects on China’s economic growth trajectory. In 2019, as the brunt of the trade tariffs took effect, China’s economy slowed to a 6 percent growth rate—the weakest expansion in nearly three decades. The toll of trade restrictions, coupled with global economic shifts, has continued to weigh on China’s economy. Today, China’s growth forecast for 2024 is a modest 5 percent, a figure that would be under additional pressure if Trump’s proposed 60 percent tariffs materialize.
Xie’s speech made no direct mention of the impending U.S. election or Trump by name. However, his call for dialogue rather than discord and mutual benefit over barriers highlighted a vision for U.S.-China relations rooted in collaboration rather than confrontation.
Xie emphasized the interwoven nature of the U.S. and Chinese economies, citing successful examples of American businesses thriving in China as proof of the mutual benefits. McDonald’s, for example, opened 60 percent of its new stores in China over the past year, while Shanghai remains the only city globally with more than 1,000 Starbucks locations. These figures serve as evidence, Xie argued, of the deep and complex economic relationships between the two countries.
“The more success stories of mutually beneficial cooperation, the better,” Xie said, calling for an expanded list of cooperation areas between China and the U.S. and pointing to existing ventures as a testament to what both economies stand to gain through strengthened ties.
For Xie, such stories are not isolated successes but cornerstones of a larger framework that could stabilize U.S.-China relations and avoid another costly trade war.
While Xie projected a hopeful message, the underlying tension was unmistakable. Trump’s previous term in office was marked by an aggressive trade policy that saw tariffs ranging from 7.5 percent to 25 percent on Chinese goods. This time, however, Trump has pledged to impose a blanket 60 percent tariff if re-elected, a threat that has many in China preparing for the potential fallout.
Experts like Joe Mazur, senior analyst at Beijing-based consultancy Trivium China, suggest that China may be prepared to retaliate more assertively than in the past. Mazur explains that a second round of U.S.-imposed tariffs would likely lead to “aggressive retaliation” from China, a strategic shift from the comparatively measured responses seen in the first trade war. Mazur suggests that if economic pressure is reapplied, China may forgo previous restraint in favor of actions designed to prompt the U.S. to reconsider its approach.
For Julian Evans-Pritchard, Head of China Economics at Capital Economics, the economic calculations behind China’s response will weigh heavily on potential retaliatory moves. Evans-Pritchard estimates that a 60 percent tariff on Chinese goods would have a limited direct impact on China’s GDP—under 1 percent. However, the secondary impacts, such as supply chain disruptions and the chilling effect on business investment, would be harder to quantify but no less significant.
Analysts warn that continued economic warfare between the U.S. and China could have far-reaching effects beyond immediate GDP figures. A new trade war would likely accelerate China’s push towards self-sufficiency, particularly in high-tech industries where reliance on U.S. technology remains a potential vulnerability. As Mazur points out, Beijing’s response to further U.S. trade restrictions would likely involve heightened investments in domestic industries and supply chains. The Chinese government has already increased funding in sectors like semiconductors, artificial intelligence, and green technology to reduce dependence on foreign suppliers.
These efforts, which align with China’s long-term strategy for economic security, could shift global trade dynamics. “If [new tariffs] were to happen, we would see China double down on its already significant investment in domestic innovation and production,” Mazur added. This move toward self-sufficiency reflects a larger goal in Beijing to shield the Chinese economy from external pressures that could arise from geopolitical shifts or global crises.
Apart from the direct effects of tariffs, the battleground for supremacy in science, technology, and industry is another crucial area of potential conflict between the U.S. and China. In his speech, Xie cautioned against viewing technological competition as a zero-sum game. Instead, he argued that advances in one country could be beneficial for the other, advocating for a collaborative approach in scientific and technological exchanges.
Despite these calls for cooperation, the reality has been a steady decoupling in technology sectors as both the U.S. and China strive for independence in key industries. For example, the U.S. has implemented export controls on semiconductor technology, a move that China views as an attempt to curb its advancements in critical sectors. Meanwhile, China has ramped up investments in domestic semiconductor production, aiming to close the technology gap and lessen its dependency on U.S. tech.
As tensions continue, the push for self-sufficiency and the desire to dominate emerging technologies could lead to an unprecedented bifurcation of the global technology landscape. This shift is particularly concerning in industries like 5G, artificial intelligence, and quantum computing, where U.S.-China cooperation had previously enabled shared progress.
Xie’s message highlighted a key question for U.S.-China relations: Can the two nations avoid a zero-sum confrontation and find avenues for constructive engagement? For many business leaders and policy experts, cooperation is not just preferable but essential for global economic stability.
The response to Xie’s speech among business leaders at the Shanghai event was largely positive, with many expressing hope that both governments would heed calls for moderation. However, some noted the challenges in reconciling the strategic objectives of the two countries. China’s economic strategy under President Xi Jinping places a strong emphasis on economic independence, a vision that may be at odds with the U.S. administration’s preference for rebalancing trade relations in its favor. U.S.-based CEO present at the event, “Both sides stand to lose a great deal if we can’t find common ground. The world is interconnected, and our economies are no exception.”
