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Hi, China Watchers.
Let's get to it. — Phelim. Today we look at the sharp escalation in the U.S.-China trade war, examine what Chinese troops are doing in Ukraine and profile a book charting a U.S. academic's journey from Mao-friendly leftist to China hawk.
'This can get really nasty, really fast'
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The sharp escalation in the U.S.-China tariff war has trade experts warning that we might be about to see a high-speed decoupling of the world's two largest economies.
"The problem with trade wars is that typically, the protagonists quickly lose control, so this can get really nasty, really fast," said Marc Busch, who has advised both the U.S. Trade Representative and the Commerce Department on technical trade barriers and is now a professor at Georgetown University. President Donald Trump hiked tariffs on China twice Wednesday — first to 104 percent then, a little over 12 hours later, to 125 percent. That second increase came after Beijing upped its own tariffs on U.S. goods to a total levy of 84 percent.
Trump said on Truth Social that his decision was "based on the lack of respect that China has shown to the World's Markets."
China, in this situation, is not just a villain but a warning from Trump to the rest of the world. "They're sending a message to countries impacted by the reciprocal tariffs that they better not retaliate," Busch said, calling the tariffs on China "Exhibit A in terms of showing what happens if you in fact do that." Other countries got a reprieve from Trump in the form of a 90-day pause on many planned tariffs.
The Chinese embassy didn't respond to a request for comment.
At this point, it seems likely that China will fight back — and on multiple fronts.
"China is feeling pressure to potentially match them as a response in order to stem further tariffs, or to change the conversation with the United States," said Greta Peisch, former general counsel of the Office of the U.S. Trade Representative and currently a partner at Wiley Law.
The Chinese government has already made clear that it's willing to extend its rancor about the tariffs outside of the trade realm. Beijing already reportedly backed out of a potential deal on TikTok over tariffs. And on Wednesday, China's Ministry of Culture and Tourism advised Chinese citizens "to fully assess the risk of traveling to the United States, and to travel with caution." The statement cited the "deterioration of economic and trade relations" between Washington and Beijing.
The Biden administration touted a policy of "derisking" from China — bringing home production of items key to national security while blocking export of high technology items that could benefit Beijing's military industrial complex. Trump's tariffs could deliver a full severing of trade ties with China, said Harry Broadman, a former Assistant U.S. Trade Representative in the George H.W. Bush and Bill Clinton administrations.
"It's a form of decoupling, but boy, there's a lot of roadkill in the way he's doing it," Broadman said. "We’re going to see jobs being lost here and companies going out of business, or shrinking."
Roughly half of Chinese imports to the U.S. are inputs for domestic manufacturing, meaning the tariffs are likely to quickly raise the prices of products ranging from imported goods like toys and clothing to any U.S.-made electronics that rely on Chinese-made lithium-ion batteries. The U.S. also could find itself suffering supply chain disruptions similar to those during the depths of the pandemic due to the unavailability of Chinese-produced goods. And while experts say that such high tariffs are unlikely to be kept in place long term, there are scenarios in which it could create a bifurcated global trading order, with the U.S. and its allies on one side and China and its partners on the other.
Trump tried to downplay such fears by talking up his affection for Chinese leader Xi Jinping and the prospects of a U.S.-China trade deal later on Wednesday.
"I think President Xi is a very smart guy, and I think we’ll end up making a very good deal for both," Trump told reporters. He added that he "can't imagine" raising tariffs on China again.
From Beijing, there are a few indications that China would be open to talks. The Chinese government published a 17,000-word "White Paper" on Wednesday extolling the mutual benefits of fair trade between the U.S. and China. And Chinese Foreign Ministry spokesperson Lin Jian blended his complaints Wednesday about the 104 percent tariff by urging the Trump administration to "let people see that they're ready to treat others with equality, respect and mutual benefit."
TRANSLATING WASHINGTON
— HEGSETH: CHINESE INFLUENCE THREATENS PANAMA CANAL: Defense Secretary Pete Hegseth re-upped Trump administration concerns about Beijing's alleged threat to the Panama Canal this week. “Together, we will take back the Panama Canal from China’s influence,” Hegseth said in reference to Panamanian security forces on Tuesday during an official visit to the canal, per Reuters. Beijing could "weaponize" its links to the canal through Chinese firms operating in the area, Hegseth added.
Hegseth's concerns come despite the U.S. investment firm BlackRock Inc. sealing a deal last month to purchase a controlling stake in a Hong Kong firm that operates the canal's port facilities. That suggests the Trump administration may have concerns about the role of Chinese government or corporate entities in Panama that go beyond the port facilities.
— REPORT: CHINA'S BIOTECH GAINS RAISE RISKS: The U.S. should invest at least $15 billion over the next five years to support its domestic biotechnology sector if it doesn't want to lose to China, a national security commission composed of members of Congress and intelligence officials said in a report Tuesday. In its final report released Tuesday, the National Security Commission on Emerging Biotechnology warned that China is rapidly taking a dominant role in biotechnology," POLITICO's Carmen Paun writes in. That can allow Beijing to fast-track everything from breakthroughs in medical treatments and agricultural crops to the development of genetically enhanced soldiers.
TRANSLATING EUROPE
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— CHINESE TROOPS HIT THE UKRAINE BATTLEFIELD: Xi Jinping's pledge to Ukraine's President Volodymyr Zelenskyy in 2023 that China wouldn't add "fuel to the fire" took a fresh beating Tuesday. It now appears that along with supplying Russia lethal weaponry, Beijing is deploying troops to support Moscow's forces on the front line.
The Ukrainian government revealed that it had taken prisoner two Chinese nationals that Kyiv said were fighting alongside Russian forces in Ukraine's eastern Donetsk region. Evidence of their nationality included personal belongings such as bank cards, POLITICO's Elena Giordano and Veronika Melkozerova reported.
"We have information that there are much more than two such Chinese citizens in the occupier's units," Zelenskyy told reporters. Chinese Foreign Ministry spokesperson Lin said Wednesday that Beijing was seeking to verify Ukraine's allegations but dismissed Zelenskyy's assertion of large numbers of Chinese troops on the battlefield as having "no basis in fact."
Russian President Vladimir Putin has already deployed other foreign forces to bolster his campaign against Ukraine. That includes thousands of North Korean troops as well as Nepalese citizens lured by relatively high pay to fight for Russia. The reported capture of the two Chinese soldiers is "disturbing" and underscores how China "is a major enabler of Russia in the war in Ukraine," State Department spokesperson Tammy Bruce told reporters Tuesday. The White House didn't respond to a request for additional comment.
It's possible, of course, that the soldiers were acting on their own. "If these guys are just freelancing, that’s one thing. If they are there as part of a larger contingent — which would be hard to do without Beijing and People's Liberation Army knowledge — that's another," said Hal Brands, who served as special assistant to the secretary of defense for strategic planning in the Obama administration.
For Beijing, the Ukraine war could offer PLA personnel — who haven't been deployed in combat since the border war with Vietnam in 1979 — live fire experience to apply to a possible Taiwan invasion attempt.
"Russia has served as the guinea pig in this unequal Moscow-Beijing axis. The Russian invasion has enabled China to learn about the effectiveness of Russian and Western weapons and tactics," said Ian Brzezinski, former deputy assistant secretary of defense for European and NATO Policy from 2001-2005, currently a fellow at the Atlantic Council.
HOT FROM THE CHINA WATCHERSPHERE
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— BEIJING LAMENTS VANCE'S LACK OF 'RESPECT': Vice President JD Vance‘s recent reference to "Chinese peasants" reaped a rebuke from Beijing this week.
"To hear words that lack knowledge and respect like those uttered by this vice president is both surprising and kind of lamentable," Chinese Foreign Ministry spokesperson Lin Jian said Tuesday. Lin's comments were a reference to Vance stating that "We borrow money from Chinese peasants to buy the things those Chinese peasants manufacture," on Fox News last week. Vance didn't respond to a request for comment.
— NATO CHIEF RALLIES JAPAN AGAINST CHINA: NATO Secretary-General Mark Rutte wants to deepen the alliance's cooperation with Japan to thwart Beijing's rapid military expansion.
"China is building up its armed forces, including its navy, at a rapid pace, so we cannot be naive and we really have to work together to assess what is happening," Rutte said during a visit to Japan's Yokosuka Naval Base on Tuesday, per The Japan Times. Rutte's Japan trip is part of his effort to steer NATO toward what he calls "projecting power" in the Indo-Pacific to offset Beijing's increasingly aggressive military footprint in the region.
— TAIWAN READY TO SEEK TARIFF RELIEF: Taipei is primed to take advantage of the Trump administration's 90-day freeze on imposition of the 32 percent "Liberation Day" tariff on the island's U.S. imports.
Ahead of the pause, Taiwanese officials said they'd already drafted proposals for the Trump administration.
"We are fully prepared – with a comprehensive plan and the right team – to enter constructive negotiations, just like other U.S. trading partners," Taiwanese premier Cho Jung-tai told reporters Tuesday, per South China Morning Post. Taiwanese President Lai Ching-te said that Taiwan's strategy will be to "start talking from bilateral ‘zero tariffs.’ To ensure #Taiwan’s competitiveness, we’ll increase U.S. imports & adopt other measures," in an X Post Monday.
HEADLINES
ChinaFile: Three potential pitfalls of Trump's approach to China
ABC News: China threat prompts New Zealand to spend $8b on defense
Foreign Policy: Trump and Xi are in a tariff trap
Foreign Affairs: China and Russia will not be split: The "Reverse Kissinger" delusion
HEADS UP
—COSTLY SEAS AHEAD FOR CHINESE SHIPS: The Trump administration may announce a decision as early next week on its proposal to impose a $1.5 million fee on Chinese-made ships that visit U.S. ports, POLITICO's Doug Palmer writes in. That's because April 17 is the one-year anniversary of the Biden administration's launch of a probe into whether China's dominance of the global shipbuilding industry is the result of unfair trade and commercial practices.. U.S. Trade Representative Jamieson Greer told Sen. Bill Cassidy (R-La.) Tuesday that a hefty port docking fee is one of "a series of potential remedies that could be used to incentivize shipbuilding in the U.S."
Beijing wants the administration to back off. The proposed fee "will not only push up global maritime shipping costs and destabilize global industrial and supply chains, but also increase inflationary pressure in the U.S. and hurt the interests of American consumers and businesses," Lin at the Foreign Ministry said Wednesday.
ONE BOOK, THREE QUESTIONS
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Responses have been edited for length and clarity.
The Book: The Anaconda in the Chandelier: Writings on China
The Author: Perry Link is professor emeritus of East Asian Studies at Princeton University and a seasoned China scholar.
Responses have been edited for length and clarity.
The book is a mix of your writings about China over more than a quarter-century — how difficult was it to choose what to include?
It was difficult in the same sense that choosing one’s favorite child would be difficult. I picked ones that I personally remember enjoying writing in the first place. I’ve got a section near the end of the book called "Day Job Joys" where I talk about language teaching and writing about Tang poetry and philosophy. I didn’t want to have it come across as a one-dimensional polemic against the Chinese Communist Party, which would not be inaccurate. I wanted different facets of my intellectual life to be there.
You have a 50-year relationship with China. How have your assumptions about the country changed over the decades?
In the late 60s — early 70s, I was an idealistic young radical. And then when I went to China in 1973 I saw for the first time that life on the ground was not the same as the ideal. There was a trend line in my understanding of China that made the Communist Party look worse and worse. When I was an idealistic radical in the 1970s against the Vietnam War and for the civil rights movement in the American south, I was rooting for the underdog. Honesty and fairness, those were my values. And when I read about Mao Zedong and the great socialist China, I said, "Wow, here we have truth and honesty and sticking up for the underdog."
Then I went and learned over the decades that the actual history of China was not rosy at all. I figured out that the ones who were picking on the little guy and not being truthful and not being fair was the Communist Party itself.
Beijing placed you on a visa blacklist for your role in helping dissident astrophysicist Fang Lizhi escape China after the 1989 Tiananmen massacre. How difficult is it to be shut out?
If I could go to China, I would. There’s no doubt about that. And I do miss being able to walk through alleyways and buy baozi [包子 — Chinese steamed buns] on the street.
There’s nothing I can do about it and I stay in touch with Chinese friends on the internet, so I don’t feel cut off. I feel that I've got all kinds of connections in order to follow developments in China, including Chinese literature, my field.
I do miss that firsthand liveliness and that ability to look people in the eye, and to overhear things on the street. But there’s no way I would change it, even if I could. If you asked me now, "Would you have said something different to Fang Lizhi on June 4, 1989, if you had known that it would end up this way?" No, I wouldn’t.
Thanks to: Heidi Vogt, Carmen Paun, Elena Giordano, Veronika Melkozerova, Doug Palmer, Emma Cordover and Dean Southwell.
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