China has warned countries against trade agreements concluded with the United States at Beijing, increasing its rhetoric in a spiral trade between the two largest economies in the world.
Responding to the reports suggesting that the administration of the American president Donald Trump puts pressure on other countries to isolate China, a spokesperson for the Chinese Ministry of Commerce said on Monday that Beijing “would take countermeasures in a resolute and reciprocal” against the nations that align with the United States against this.
The warning comes as countries are preparing for talks with the United States to look for exemptions from “reciprocal” rates that Trump imposed, then paused about 60 business partners.
So, what is this last verbal spit, how much influence does China have in world trade and can it prevail over other capitals and Beijing?
What is the backdrop?
The Wall Street Journal recently reported that Trump was trying to use pricing talks to push American economic partners to brake trade with China and reintegrate the manufacturing domination of Beijing.
In return, these nations could obtain discounts of American samples and commercial barriers. The Trump administration said it was in negotiations with more than 70 countries.
On Monday, the Chinese Ministry of Commerce retreated, warned other nations that “to seek its own temporary selfish interests to the detriment of the interests of others is to seek the skin of a tiger”. Indeed, he argued that those who try to conclude agreements with the United States – the Tiger – would ultimately be eaten themselves.
The ministry also said that China would in turn target all countries that would be satisfied with American pressure to injure Beijing.
What is the status of American-Chinese trade?
After Trump suspended his “reciprocal prices” on the main American trade partners on April 9, he increased them on China. US commercial levies from most Chinese exports increased to 145%. Beijing retaliated with its own 125% tasks on American goods.
Trump has long accused China of exploiting the United States on trade, throwing its prices as necessary to revive national manufacturing and returning jobs in the United States. He also wants to use prices to finance future tax reductions.
For his part, Chinese President Xi Jinping went to three countries in Southeast Asia last week to strengthen regional ties. He called on business partners, including Vietnam, to oppose unilateral intimidation.
“There are no winners in commercial wars and tariff wars,” Xi said in an article published in the Vietnamese media, without mentioning the United States.
As with other countries in Southeast Asia, Vietnam has been caught in the cross-war fires. It is not only a manufacturing center itself, but China also uses it frequently to send exports to the United States to avoid the prices imposed by the first Trump administration in Beijing in 2018.
Elsewhere, the Trump administration has started talks with East Asia allies on prices with a Japanese delegation visiting Washington, DC, last week and South Korean officials who are expected to arrive this week.
Many countries are now stuck between the two largest economies in the world – China, a large source of manufactured goods and a key trading partner, and the United States, a crucial export market.
How dependent on the world of Chinese exports?
In a report published in January by the Lowy Institute, a reflection group based in Sydney, analysts found that in 2023, around 70% of countries imported more China than in the United States.
The rapid rise of China as a commercial superpower dates back to 2001, the year it joined the World Trade Organization (WTO) and when it began to dominate global manufacturing after years of successful industrial protectionist policies.
During the 2000s, China benefited from the relocation of international supply chains, turbocharged by substantial foreign investment entries, large low-cost labor pools and an undervalued exchange rate.
By 2023, China had become the largest trading partner against at least 60 countries, almost twice as much as for the United States, which has remained the largest commercial partner for 33 savings.
The gap between them also widens in many countries: the Lowy Institute analysis revealed that in 2023, 112 economies exchanged more than twice as much with China than with the United States, against 92 in 2018 during the First Trump Trade War.
“The critical dependence that China has developed in the world, especially in Asia, means that lots [of trading partners] cannot do without China, “said Alicia Garcia-Herrero, economist at the Natixis investment bank.”From critical minerals to silicon chips, Chinese exports are almost irreplaceable. »»
Has world trade has led more to China since Trump’s last trade war?
In 2018, two years after his first administration, Trump imposed prices of 15% on more than $ 125 billion in Chinese goods, including shoes, smart watches and flat -screen televisions.
Since then, the United States has become an even greater source of demand for non-Chinese exports, in particular Mexico and Vietnam, reflecting the impact of years of American prices on China.
However, if Trump’s goal was partly to hurt Beijing, his first salvo failed.
Since 2018, many other nations have deepened their trade relations with China – to the detriment of the United States.
When China joined the WTO, more than 80% of countries had more two-way trade with the United States than with China. This had only fallen by 30% by 2018, the year of Trump’s first prices on China, according to lowy institute analysis.
This trend has only solidified since then: in 2018, 139 nations have exchanged more with China than with the United States. By 2023, this number had increased to 145, and around 70% of global economies are now negotiated more with China than with the United States – against only 15% in 2001.
“Trump does not seem to understand how important Chinese trade flows have become,” Garcia-Herrero told Al Jazeera. “In addition, he does not offer much by carrots, like more investment, so I don’t think he will get what he wants.”
Can countries afford to alienate China on trade?
According to Garcia-Herrero, a few countries like Mexico that have particularly deep business links with the United States, “will probably say no to Chinese imports.”
However, she pointed out that “the presence of China in supply chains is so massive for most other American business partners, decoupling is practically impossible.”
Indeed, in the world, China has become an invaluable source of imports. The European Union, for example, had a trade deficit with China worth 396 billion euros ($ 432 billion) in 2022, against 145 billion euros ($ 165 billion) in 2016.
China represents 20% of EU products imports. The equivalent figure in Great Britain is 10%. Last week, the secretary of the Treasury, Rachel Reeves, said that he would be “very stupid” for the United Kingdom to engage in less trade with China.
In the developing world, the commercial role of China is just as crucial. About a quarter of total imports from Bangladesh and Cambodia come from China. Nearly a fifth of the imports of goods from Nigeria and Saudi Arabia come from China.
“Trump’s trade policy is short-sighted,” said Garcia-Herrero. “Trying to trade with China can work in countries where the United States has military bases … They may have to accept the concerns of the United States.”
“But for most countries, especially those in the world of world, the more than Trump threatens, the more countries go on the side of China.”
