globe wrapped in chinese flag

The Cannon Backfires? In the Long Run, Trump 2.0 May Strengthen China’s Global Status

November 26, 2024

This year has seen elections held in more than 70 countries that are home to almost half the global populationincluding eight of the world’s most populous nations. India, the United States, Indonesia, Pakistan, Nigeria, Brazil, Bangladesh and Russia all went to the polls, as did other major economies such as France, Japan, Mexico, South Africa and the United Kingdom.  

Inevitably, much of the focus in China has been on the outcome of the U.S. election and the far-reaching impact of expected changes to U.S. foreign policy, historical alliances and global trade policy. President-elect Donald Trump has made a succession of shocking picks (awaiting Senate confirmation), many of which will have a minimal impact on U.S.-China relations—though the expected confirmation of China hawk Marco Rubio as Secretary of State suggests that Trump 2.0 will be taking a combative stance towards Beijing.

Yet while the international media will follow Trump’s every move in the run up to his inauguration in January, election results elsewhere around the world merit attention.

In India, Prime Minister Narendra Modi and his ruling Bharatiya Janata Party (BJP) received a stinging rebuke from the electorate in national elections which concluded in June, with the BJP forced to seek coalition partners after failing to receive an absolute mandate. Modi has since adopted a lower profile and appears to be pursuing a more conciliatory line in both domestic and foreign policy: in October Modi met Chinese President Xi Jinping at the BRICS summit in Russia in their first formal meeting since 2019 (the two had a quick meeting on the fringes of the G20 summit in Bali in 2022). Both sides appear willing to reduce border tensions and improve economic cooperation, though Modi will be mindful of the need to balance any modest rapprochement with Beijing with continuing commitment towards the India-U.S. relationship. Under President Joe Biden the United States has sought to strengthen bilateral cooperation with India in areas such as defense, technology and supply chain cooperation—commitments which we expect the Trump administration broadly to maintain.

Following Indonesian President Prabowo Subianto’s victory in the February elections, the government has maintained its policy of carefully balancing relations between China (Prabowo met Xi in Beijing earlier this month) and the United States (where he subsequently met Biden earlier this month as well). Under the previous administration of President Joko Jokowi Widodo, Indonesia’s economic development gained momentum, symbolised by the emergence of its nickel refinery capabilities with the help of massive Chinese investment. Prabowo will be keen to maintain or strengthen Indonesia’s beneficial economic ties with China while underlining its security commitment to U.S. tiesa stance which Trump may find difficult to accommodate.

In Brazil, midterm elections saw a weakening of both President Luiz Inácio Lula da Silva’s left-wing Workers’ Party and the right-wing Liberal Party of former President Jair Bolsonaro, as many voters shifted towards the centre. The result is positive for Chinese investors who will continue to be welcomed by Lula’s China-friendly administration—Lula held talks with Xi before the G20 summit in Rio de Janeiro. This year marks the 50th anniversary of diplomatic relations between Brazil and China, and both sides are keen to strengthen the relationship, particularly in light of the U.S. election outcome (Lula expressed his support for Democrat presidential candidate Kamala Harris before the election).

Meanwhile, the UK’s new Labour government is pressing the reset button in its relationship with China. UK Prime Minister Keir Starmer also met Xi on the sidelines of the G20—the first leadership-level meeting between the two sides since 2018. With unpredictability and uncertainty likely to characterise Trump 2.0, post-Brexit Britain is seeking stronger and more reliable trading relations with China. For its part, China may see in the UK a trading partner less encumbered by geopolitical complexity and the regulatory restrictions on Chinese investment being imposed by the United States and European Union.

At the same time, Europe-China relations—currently disjointed and strained by geopolitical and macro-economic tensions—may be turned on their head as the new Trump administration seeks a swift resolution to the Russia-Ukraine war and tests historical alliances, for example by withdrawing from NATO or imposing tariffs on European imports. Even as Europe’s political climate shifts towards the right, some European countries struggling to keep economic momentum may seek pragmatic trading partnerships with China, including wooing Chinese investment into their markets.

In Asia, it remains to be seen whether Trump 2.0 will see the United States maintain its high-profile presence in the Indo-Pacific or withdraw from the region to focus on more pressing domestic issues. Trump’s natural inclination might be to pull back from supporting traditional allies in Southeast Asia—he has threatened to withdraw from the Indo-Pacific Economic Framework, which includes seven ASEAN members. However, his hawkish advisers will advocate for strong security ties with countries in the region—for example, the Philippines.

The short-term impact of the U.S. election outcome portends a continuing deterioration in the U.S.-China relationship as the incoming administration threatens to follow through on campaign pledges—tougher tariffs, sanctions and regulations designed to restrict or even ban Chinese investment outright. Yet Trump’s inconsistent and unclear attitude towards Chinese investment—not to mention his love of the deal—raises the possibility of renewed Chinese investment into the United States once the new administration has settled in. Trump himself has hinted that he may welcome Chinese companies, including carmakers, to set up U.S. manufacturing operations as long as they bring in investment and create jobs for American workers—a sure way to consolidate domestic political support.

Outside the United States, the potential damage caused by Trump 2.0 at a global level presents an opportunity for China. It is likely that traditional alliances may once again be dismantled as the United States both withdraws its historical support for global partners in Europe and Asia while strengthening its own protectionist measures at home. China stands to benefit from a more inward-looking United States through improved relationships not only with partners in the Global South but also across a European bloc already feeling the strains of geopolitical tensions and economic challenges.

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