Donald Trump and Xi Jinping at their last face-to-face meeting in 2019
China is expected to unveil new measures to boost its flagging economy, as it braces for a second Donald Trump presidency.
Trump won the election on a platform that promised steep import taxes, including tariffs as high as 60% on Chinese-made goods.
His victory is now likely to hinder Xi Jinping’s plans to transform the country into a technology powerhouse – and further strain relations between the world’s two biggest economies.
A property slump, rising government debt and unemployment, and low consumption have slowed down Chinese growth since the pandemic.
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So the stakes are higher than ever for the latest announcement from the Standing Committee of the National People’s Congress (NPC), the executive body of China’s legislature.
During his first term in office Trump hit Chinese goods with tariffs of as much as 25%.
China analyst Bill Bishop says Trump should be taken at his word about his new tariff plans.
“I think we should believe that he means it when [he] talks about tariffs, that he sees China as having reneged on his trade deal, that he thinks China and Covid cost him the 2020 election”.
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The pressure from Washington did not ease after Trump left the White House in 2021. The Biden administration kept the measures in place and in some cases widened them.
While the first wave of Trump tariffs were painful for China, the country is now in a much more vulnerable position.
The economy has been struggling to return to pre-pandemic levels of growth since abruptly abandoning its tight Covid restrictions two years ago.
Instead of delivering a widely expected fast-paced recovery, China became a regular source of disappointing economic news.
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Even before Trump’s election victory and after China began rolling out measures to support its economy in September, the International Monetary Fund (IMF) lowered its annual growth target for the country.
The IMF now expects the Chinese economy to expand by 4.8% in 2024, at the lower end of Beijing’s “about 5%” target. Next year, it projects China’s annual growth rate will drop further to 4.5%.
But the country’s leaders were not caught entirely off guard by the end to decades of super-fast growth.
Speaking in 2017, President Xi said his country planned to transition from “rapid growth to a stage of high-quality development.”
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The term has since been used repeatedly by Chinese officials to describe a shift to an economy driven by advanced manufacturing and green industries.
But some economists say China cannot simply export itself out of trouble.
China risks falling into the type of decades-long stagnation that Japan endured after a stock and property bubble burst in the 1990s, Morgan Stanley Asia’s former chairman, Stephen Roach, says.
To avoid that fate, he says China should draw “on untapped consumer demand” and move away from “export and investment-led growth”.
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That would not only encourage more sustainable growth but also lower “trade tensions and [China’s] vulnerability to external shocks,” he says.
This more robust economic model could help China fend off the kind of threats posed by Trump’s return to power.
New economy, old problems
But China, which has long been the world’s factory for low-cost goods, is trying to replicate that success with high-tech exports.
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It is already a world leader in solar panels, electric vehicles (EVs) and lithium ion batteries.
According to the International Energy Agency (IEA) China now accounts for at least 80% of solar panel production. It is also the biggest maker of EVs and the batteries that power them.
The IEA said last year that China’s investments in clean energy accounted for a third of the world’s total, as the country continued to show “remarkable progress in adding renewable capacity.”
“For sure there is an overall effort to support high-tech manufacturing in China,” says David Lubin, a senior research fellow at London based-think tank, Chatham House.
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“This has been very successful”, he adds.
Exports of electric vehicles, lithium ion batteries and solar panels jumped 30% in 2023, surpassing one trillion yuan ($139bn; £108bn) for the first time as China continued to strengthen its global dominance in each of those industries.
That export growth has helped soften the blow to China’s economy of the ongoing property crisis.
“China’s overcapacity will increase, there is not doubt about it. They have no other source of growth,” said Alicia Garcia-Herrero, chief economist for the Asia Pacific region at investment bank Natixis.
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But along with those increased exports, there has been a rise in resistance from Western countries, and not just the US.
Just last month, the European Union increased tariffs on Chinese-built EVs to as much as 45%.
“The problem right now is that large recipients of those goods including Europe and the US are increasingly reluctant to receive them,” said Katrina Ell, research director at Moody’s Analytics.
Today, as Trump is set to head back to the Oval Office with a pledge to hammer Chinese imports, Beijing will have to ask itself whether its latest measures to boost its slowing economy will be enough.
I am grateful for two insightful articles which together throw light on why Americans were ready to re-elect a politician with such a colourful and somewhat unpredictable track record!
John Plender’s The Long View (“Central banks need escape route from boom and bust cycle”, Opinion, November 2) highlights how interest rate cycles have led to recurrent financial crises and increasing interventions, notably quantitative easing which in turn has exacerbated inequality.
In his column Ruchir Sharma (Opinion, November 4) sets out how this inequality has impacted the US.
“A growing number are priced out of homes and falling behind on credit-card debt. The bottom 40 per cent by income now account for 20 per cent of all spending while the richest 20 per cent account for 40 per cent. That is the widest gap on record and it is likely to widen further.”
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He also refers to “a widening wealth gap between the young and old”. It would seem that this part of the US electorate, disadvantaged by monetary policy, contributed significantly to Donald Trump’s comprehensive victory. While immigration and other issues have clearly played an important role, so too it would seem has the US Federal Reserve. So I strongly support Plender’s conclusion that “a debate is urgently needed around monetary policy’s neglect of credit and debt developments”.
This debate should cover all aspects of the monetary policy pursued by the Fed and other central banks since the principles of the monetarists were abandoned in the early 1990s, and especially the repercussions of QE policies. Who better to lead this debate than the FT “as the world’s global newspaper” as we, as FT subscribers, were reminded by the editor yesterday.
Early Wednesday morning, following Fox News’s projection that he would win the US election, Donald Trump took to the stage as the crowd chanted “USA, USA” and proclaimed: “We are going to turn our country around. Make it something very special. It lost that little thing called special. We are going to make it so great. It is the greatest country and potentially the greatest country in the world by far . . . We are going to make it the best it has ever been.”
My point here is that Trump speaks to an underlying belief system that I call the hegemonic state of mind. This is embodied in the phrase “make America great again”, which is so much more than a slogan.
Hegemony is used in international relations to describe a country whose power is unrivalled in international affairs. It is, quite simply, the heavyweight champion of the world.
The US has held this position since the end of the cold war, but its influence is waning.
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In 1981 Robert Gilpin, the American political scientist, explained that the most harmful aspect of “hegemonic decay” is that the people within the hegemonic country view their position at the apex of the pyramid as a God-given right. As the natural order of things. From this perspective it is inconceivable to think that the world should be ordered a different way.
Trump’s promise to the American people is that he is the guy to stop the rot and put America back where it belongs — on top. Whether it’s the row over the border, the economy or the Middle East, choose whatever policy issue you like, it all comes back to the same thing — the hegemonic state of mind. The underlying belief that America should lead the world and that Donald Trump is the best chance of delivering such a prospect.
This helps us understand why so many different types of Americans, from all ages and ethnicities, voted for him and why they all share one thing, the hegemonic state of mind.
Adrian Gallagher Professor in Global Security and Mass Atrocity Prevention, University of Leeds, Leeds, West Yorkshire, UK
Nissan has said it will lay off thousands of workers as it slashes global production to tackle a drop in sales in China and the US.
The Japanese car making giant says it will cut 9,000 jobs around the world in a cost saving effort that will see its global production reduced by a fifth.
Nissan did not immediately respond to a request from BBC News for details on where the job cuts will be made.
The company employs more than 6,000 people at its manufacturing plant in Sunderland, North East England.
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The company also cut its operating profit forecasts for 2024 by 70%. It was the second time this year that the firm has lowered its outlook.
“These turnaround measures do not imply that the company is shrinking,” said Nissan’s chief executive Makoto Uchida.
“Nissan will restructure its business to become leaner and more resilient.”
Nissan’s shares were trading more than 6% lower on Friday morning in Tokyo.
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Growing competition in China has led to falling prices, which has left many foreign car makers there struggling to compete with local firms like BYD.
In November last year, Nissan and its partners announced a £2bn ($2.6bn) plan to build three electric car models at its Sunderland factory.
The firm said it will build electric Qashqai and Juke models at the plant alongside the next generation of the electric Leaf, which is already produced there.
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