In a stunning move, President-elect Donald Trump revealed that Ukrainian President Volodymyr Zelensky would not be invited to his inauguration, while Chinese President Xi Jinping was welcomed. This surprising decision signals a potential shift in U.S. foreign policy under Trump's upcoming ad...
Xi Jinping and Donald Trump's bromance could be rekindled in 2025, if both sides play their cards right. This is positive and would help create the right environment for an improvement in ties between the two superpowers, but timing and tone are everything. The economic rivals will need to give and take to prevent the relationship from getting worse.
It was a smart move by the U.S. president-elect to invite Xi to his inauguration in January (the Chinese leader reportedly turned it down), but future attempts need to be more than just empty gestures to make a real difference.
A face-to-face meeting, sooner rather than later, is essential to set the tone of the bilateral relationship over the next four years. The alternative is continued misunderstanding, which in the worst-case scenario could lead to actual conflict.
During Trump's first term, he regularly talked up his warm ties with Xi, going so far as to say the two leaders "love each other." Still, that didn't stop the then-U.S. president from imposing harsh trade tariffs on Beijing, the start of a prominent shift in U.S.-China relations that solidified during the Biden administration.
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Next year looks to be another challenging one for Xi. China is facing a continued loss of investor confidence, a deepening real estate crisis, ballooning local government debt, a volatile stock market, deflationary pressures and increasing popular discontent. Improving relations with the U.S. could go a long way toward lifting sentiment at home.
To do that, Xi will have to find some common ground with Trump. That won't be easy. During his campaign, Trump floated revoking Beijing's most-favored-nation status. He also said he would slap tariffs of as much as 60% on all imports from China. Bloomberg Economics says this would manifest itself in three waves of tariff hikes, starting in summer 2025, with levies on China ultimately tripling by the end of 2026. Further analysis indicates China could say goodbye to 83% of its sales to the U.S., a huge pressure on exports which are already suffering.
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A Trump presidency is forcing China to change economic policy. Last week's annual economic work conference made "boosting consumption" China's top priority, with measures such as increasing government-sponsored pension and medical insurance payments.
Trump is using tariffs as leverage. He has a potential Cabinet lined up with China hawks who could revive hardline trade policies.
The Chinese leader is well aware of the impending threats. So after Trump's election, he reached out with a congratulatory message stating that "both China and the United States stand to gain from cooperation and lose from confrontation." But this relationship has to work on Beijing's terms, too.
Xi's boundaries are clear. He emphasized last month the "four red lines" Washington should not cross: Taiwan, democracy and human rights, the Chinese political system and Beijing's right to development. The declaration was a warning to the Trump administration that breaching them could further heighten tensions.
Some form of formal communication channels should be established before any further tariffs are imposed by Washington, to prevent a cycle of retaliation from Beijing. If that doesn't happen, it will take months or even longer to get both sides back to the negotiating table. A potential template exists for talks: The strategic channel between National Security Advisor Jake Sullivan and Foreign Minister Wang Yi that has helped stabilize relations since 2022.
The countries came together by signing an agreement extending scientific cooperation for another five years. It allows for science and tech cooperation but minimizes the risk to national security, and keeps the development of critical and emerging technologies off-limits to Beijing.
On China's side, rebuilding relations will depend on its perception of Trump's national security team and whether back channels can aid future negotiations. The new Washington administration could adopt a more transactional approach that could leave Taiwan's security as a bargaining chip. China's recent naval exercises around the Taiwan Strait were among Beijing's largest in 30 years, according to Taiwanese officials, a reminder that China sees the self-ruled island as its own, and it wants the U.S. to stay out of its way.
The most we can hope for is a renewed cordiality between Trump and Xi. The nature of the U.S.-China relationship will be defined by strategic competition. Preventing further deterioration is crucial.
Vaswani is a Bloomberg columnist and former lead Asia presenter for the BBC.
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