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Looming threats of a China-US standoff

Jan 12, 2025 11:45 PM IST

Neither China nor the US wants a costly confrontation in 2025, but early signals from Beijing and Washington show us that conflict is becoming harder to avoid.

Presidents Joe Biden and Xi Jinping managed to keep United States (US)-China tensions contained in 2024, but when Donald Trump strides back into the White House later this month, he will break this fragile stability, driving an unmanaged decoupling of the world’s most important geopolitical relationship and increasing the risk of global economic disruption and crisis.

FILE PHOTO: U.S. President Donald Trump and China's President Xi Jinping shake hands ahead of their bilateral meeting during the G20 leaders summit in Osaka, Japan, June 29, 2019. REUTERS/Kevin Lamarque/File Photo (REUTERS) PREMIUM
FILE PHOTO: U.S. President Donald Trump and China's President Xi Jinping shake hands ahead of their bilateral meeting during the G20 leaders summit in Osaka, Japan, June 29, 2019. REUTERS/Kevin Lamarque/File Photo (REUTERS)

Trump will begin his second term as US president by announcing new tariffs on Chinese goods in order to force a new economic agreement on Beijing. These new tariffs won’t reach the 60% blanket tariff level he threatened during the election campaign, but the top rate on all Chinese imports is likely to double to about 25% by the end of 2025.

China’s leaders, meanwhile, will respond more forcefully and offer fewer concessions than during Trump’s first term, despite the continuing weakness of China’s economy. They fear that a conciliatory approach will stoke already rising public anger in China by appearing to accept a national humiliation. If their more constructive approach toward the US of the past year only brought them the return of “Tariff Man” Trump and more of his threats, they might well wonder, why stick to a pragmatic path? Trump’s threats are the latest in a long line of aggressions from Washington that confirm the suspicions of many in Beijing that US policymakers are intent on containing China’s rise as a great power.

The most sensitive of all subjects in US-Chinese relations is technology policy. Beijing objects to what it believes are US attempts to freeze China’s technological development to slow the country’s economic rise. Trump’s security team will add more Chinese companies to the so-called entity list, making licensing more difficult for them, and will expand export controls into more economic sectors. Trump will also follow the Biden administration’s lead on restricting the export of advanced computer chips to Chinese tech firms. Beijing has already shown a willingness to retaliate against these trade and investment measures by restricting the export of critical minerals and the technology used to process them. Critical minerals are vital to the production of a broad range of modern technologies, including electric car motors, computers, and some products Washington considers essential for US national security.

Though not at risk of a Chinese invasion in 2025, disputes over Taiwan will also make US-Chinese relations more toxic this year. Though Trump himself appears uninterested in Taiwan, the more hawkish members of his new team, including incoming secretary of state Marco Rubio and national security advisor Mike Waltz, will push not only for closer US ties with Taipei but also a more explicit US guarantee for Taiwan’s security. That’s a bright red line for Beijing.

For now, China’s leaders believe their pressure tactics have kept Taiwan’s nationalist president William Lai in check, and they’re probably right. Taiwan’s economy remains strong, and he doesn’t need to provoke China to bolster his public popularity. But if Beijing perceives that Taipei has made substantial moves toward greater de facto independence or if Washington crosses any of China’s other red lines — if America’s chief diplomat visits the island or US naval vessels anchor in a Taiwanese port — China might escalate militarily via a blockade or the seizure of one of Taiwan’s outer islands. These risks will grow as Taiwan’s 2028 elections approach and Beijing ramps up pressure to prevent another William Lai victory.

Neither China nor the US wants a crisis in 2025. Xi and Trump both hope to prioritise domestic policy this year. Xi faces serious economic challenges, growing social stability concerns, and a military leadership in disarray. Trump wants to avoid any problem that might sink the US stock market and hopes to cut deals that boost confidence in his leadership. With unified government and consolidated control of his party, Trump is in a better position than Biden ever was to ensure that Washington speaks with a single voice. But there is no foundation for an agreement that strengthens broader US-China relations. Beijing can offer to buy more of America’s agricultural products and energy exports. It can make life easier for US companies that want to do business in China. Xi can greenlight more Chinese investment in the US and even play a more actively supportive role in getting to a ceasefire in Ukraine. But these constructive gestures won’t satisfy Trump and the hawks in his administration, who believe that China’s rise is bad for the US. Trump’s determination to tighten the pressure on China and its stumbling economy will push China’s leaders in the opposite direction.

Two wildcards hang over US-China ties this year: Trump himself and new favourite advisor Elon Musk. Trump could try to build a better personal relationship with President Xi. Musk’s many commercial interests in China could make him a useful go-between. But the forces pushing the US and China in opposite directions are much bigger than either of these possibilities, and neither is likely to determine the outcome.

The effects of the coming breakdown in relations will be felt all over the world. Most countries have no interest in a new Cold War, making one unlikely in the near term. But key US allies and trade partners such as Japan, South Korea, Mexico, and the European Union may increasingly be forced to choose sides — at least in the growing number of national security-related areas — and at a significant cost to their economies.

Neither China nor the US wants a costly confrontation in 2025, but early signals from both Beijing and Washington shows us that conflict is becoming harder to avoid.

Ian Bremmer is the founder and board president of Eurasia Group Foundation. The views expressed are personal

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