Xi has a plan to retaliate against Trump’s game

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The author is a professor at Georgetown University and a senior consultant at The Asia Group. He served on the staff of the US National Security Council from 2009-2015

If Donald Trump’s China policy is defined by uncertainty and contradictionXi Jinping’s policy is defined with clarity and determination. The Chinese president’s approach to the American president-elect is no secret. Beijing has been clear since the election about its views and possible responses.

Xi plans not only to respond, but to take advantage of Trump’s moves. During Trump’s first term, Beijing insisted on a response. Determined not to repeat that. Xi is well on his preparations and he has already marked it as such.

Most Chinese analysts were not surprised by Trump’s election, linking his return to a global wave of populism and nationalism. Beijing believes it now understands Trump’s game and can control his administration. China’s hope is based on the conclusion – right or wrong – that China in 2025 is different from 2017, and so is the US and the world.

Many Chinese argue that Xi is politically and economically strong and self-reliant, even amid the recent crisis. Chinese analysts view the US economy as fragile and US politics as deeply divided. In terms of politics, Beijing sees the influence of the US on the decline throughout the global south and Asia – and support for China’s vision is on the rise.

Xi has already signaled that he will treat his ties with Trump as purely business, albeit Don Corleone-style. He will not accept Trump and will retaliate fast and hard in order to generate power. Beijing actually declined Trump’s invitation for Xi to attend the inauguration.

But Beijing has also signaled it wants talks and is open to a deal to avoid new tariffs. However, the Chinese, who prefer to use back channels, struggle to find the right one to understand what Trump “really” wants. Beijing’s main view is that Washington and its allies will remain hostile to China for the foreseeable future. So, Xi is open to negotiations because he wants breathing room on the economic front, so China can organize its forces for long-term competition.

Beijing remains concerned that the Trump administration will focus on a deep recession, regime change in China and support for Taiwan independence, all as ways to maintain and destabilize China. Hence Xi’s “red lines”. in a November meeting with President Joe Biden Peru with a clear message to the next administration.

Beijing’s proposed responses to Trump fall into three baskets: retaliation, accommodation and diversification. Based on US policies, Beijing in recent years has created a range of foreign controls, investment restrictions and regulatory investigations that could harm US companies. Beijing cannot match tariffs for tariffs, so it will seek to impose costs in very painful ways. For China, failure to retaliate would show domestic weakness and only embolden Trump.

This has already begun. By the end of 2024, Beijing has banned the export of precious minerals used in chipmaking to the US, suppressed the supply of US-made drones, threatened to put a list of a high-profile American clothing company and launched an antitrust investigation into Nvidia. By taking such actions, Beijing assesses its capabilities and shapes future prices.

China’s second strategy is adaptation. From the autumn of 2023, Beijing launched a strong economic and financial stimulus to help businesses and consumers now. This policy change is producing positive, albeit disproportionate, effects. It was certainly very necessary, but its size and nature were also developed with a possible trade war in mind.

Beijing’s third strategy involves expanding its economic ties. It argues for a single tariff reduction on imports from non-US partners. During his visit to Peru, Xi inaugurated a deep-water port that could transform China’s trade with Latin America, an important non-U.S. source of food, energy and minerals. At the end of 2024, Xi also participated for the first time in meetings with the heads of 10 major international economic organizations. His message was clear: China will lead the world’s economic stability, prosperity and freedom, and oppose all forms of protectionism.

Many things can go wrong. Beijing’s hopes are aligned with Trump’s team. Both sides believe they have the upper hand, can impose more costs and endure more pain. The conditions are set for complex, destabilizing forces, which at best result in a ceasefire. And that is only about economic problems, not Taiwan, the South China Sea, technological competition or nuclear power development. The cold war is starting to look cheesy in comparison.