President Xi Jinping called President-elect Trump to congratulate him on his election win, and warned the U.S. would “gain from cooperation and lose from confrontation” with China.
The message comes as the Chinese Communist Party (CCP) must prepare for deeper tensions as Trump has vowed to bring back the trade war of his last presidency with blanket tariffs.
“Xi Jinping noted that history tells us that both countries stand to gain from cooperation and lose from confrontation. A China-U.S. relationship with stable, healthy and sustainable development serves the common interests of the two countries,” China’s foreign ministry said in a readout of the conversation.
“It is hoped that the two sides will, in the principles of mutual respect, peaceful coexistence and win-win cooperation, enhance dialogue and communication, properly manage differences, expand mutually beneficial cooperation, and find the right way for China and the United States to get along with each other in the new era to the benefit of the two countries and the world.”
This week, Republicans captured control of the Senate and have favorable prospects in the undecided race for power in the House. With both chambers in Congress and the presidency, little would stand in Trump’s way of a steep sanctions regime.
In recent years, U.S.-China relations have worsened not only on trade – China has been threatening U.S. allies like the Philippines, Japan and Taiwan in the South China Sea. They’ve been accused of sending Chinese nationals to spy on U.S. military bases and sent what was believed to be a surveillance balloon across the U.S.
While Trump ushered in an era of steep trade competition and increased support for Taiwan, President Biden did not necessarily warm the relationship.
Trump increased duties by at least 10% during his first term on over $300 billion worth of goods. Biden did not lift those tariffs.
That was on top of export controls on a variety of items that started under Trump and furthered under Biden.
On the campaign trail this year, Trump has proposed a 10% tariff on all U.S. imports and 60% on Chinese-made products.
CHINA EXERTS NEW RESTRICTIONS ON EXPORTS OF MINERALS CRITICAL TO US WEAPONS MAKING
If Trump successfully raises tariffs to 60%, it could reduce China’s exports by $200 billion and cause a one percentage point drag on GDP, said Zhu Baoliang, a former chief economist at China’s economic planning agency, at a Citigroup conference.
Last year, China exported about $500 billion worth of goods to the U.S., about 15% of all of its exports.
Mainland China and Hong Kong stocks fell Wednesday as it became clear Trump would win the election.
China’s exports grew 12.7% year-on-year, hitting a 27-month high in October, in anticipation of the potential for a Trump victory, as Chinese vendors likely rushed out products that could be hit by tariffs next year.
Beijing is expected to unveil a bold stimulus package on Friday to aid its ailing economy, amid lackluster consumer spending and deflation.
The U.S. and Europe both increased tariffs on electric vehicles recently, darkening trade outlook for a market where China has long dominated.
China has been taking key steps to buoy its markets, and has an arsenal in response to U.S. tariffs that could include imposing duties on U.S. agricultural imports, export controls on critical minerals essential for U.S. defense and targeting U.S. companies with interests in China.
