China's Long Game: Xi's Strategy For A Sustained Trade War With The United States

Axel S�rensen

5 min read

Post on Apr 25, 2025

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Economic Self-Reliance: Reducing Dependence on the US Market

Xi Jinping's strategy hinges on reducing China's dependence on the US market and building a more self-reliant economy. This involves a two-pronged approach: achieving technological independence and diversifying trade partnerships.

Technological Independence:

China's focus on developing indigenous technologies is paramount. The country aims to lessen its reliance on US imports and technology, particularly in strategically crucial sectors. This "tech war" aspect of the China-US trade war is a key element of Xi's strategy.

• Massive investment in R&D and domestic semiconductor manufacturing facilities: Billions are being poured into research and development, with a particular emphasis on building domestic capacity in semiconductor manufacturing – a sector where the US currently holds a significant advantage. This includes initiatives like the "Made in China 2025" plan.
• Government initiatives promoting domestic tech companies and discouraging reliance on US counterparts: The Chinese government actively supports domestic tech champions through subsidies, tax breaks, and preferential regulatory treatment, while simultaneously implementing policies to reduce reliance on US technology.
• The impact of sanctions and export controls on driving innovation within China: Ironically, US sanctions and export controls have arguably accelerated China's efforts to achieve technological self-sufficiency, forcing innovation and spurring domestic development in areas previously reliant on foreign technology.

Diversifying Trade Partnerships:

Simultaneously, China is actively diversifying its trade relationships to lessen its dependence on the US market. This involves strengthening ties with a wider range of countries.

• Increased engagement with the Belt and Road Initiative (BRI) countries: The BRI, a massive infrastructure project, aims to connect China with numerous countries in Asia, Africa, and Europe, creating new trade routes and opportunities.
• Strengthening trade ties with ASEAN, Africa, and Latin America: China is actively cultivating strong economic and diplomatic relationships with nations across the globe, creating alternative markets for its goods and services.
• The implications of these partnerships for global trade dynamics: This diversification has significant implications for the global trading system, potentially challenging the US's traditional dominance and creating a more multipolar world order.

Strategic Geopolitical Positioning: Challenging US Hegemony

Beyond economic self-reliance, Xi's strategy involves challenging US global hegemony. This involves strategic alliance building and promoting alternative global governance structures.

Strengthening Alliances:

China is proactively forging strategic alliances with countries that are wary of or openly oppose US influence, creating counterbalances to US power.

• Closer ties with Russia and other BRICS nations: The relationship with Russia has deepened significantly, forming a key part of China's counterweight to the US. Cooperation with other BRICS nations (Brazil, India, South Africa) also strengthens this strategy.
• Expanding diplomatic and economic influence in regions like the South China Sea and Africa: China's assertive foreign policy in these regions directly challenges US interests and influence.
• The implications for global power dynamics: These actions are reshaping global power dynamics, creating a more contested international landscape.

Promoting Alternative Global Governance:

China is actively involved in creating and promoting alternative international organizations and forums that challenge the existing US-led global order.

• Engagement with the World Trade Organization (WTO) to reshape global trade rules: China uses its growing influence within the WTO to advocate for changes that better reflect its interests and challenge existing rules that favor developed nations.
• Initiatives such as the Asian Infrastructure Investment Bank (AIIB) as alternatives to Western-dominated institutions: The AIIB provides an alternative source of financing for infrastructure projects in Asia, reducing reliance on Western institutions like the World Bank.
• The long-term implications for international cooperation and global governance: This strategy aims to create a more multipolar and less US-centric global governance system.

Domestic Consolidation: Managing Economic and Social Impacts

A successful long-term strategy requires managing the domestic impacts of the China-US trade war. This involves maintaining social stability and building economic resilience.

Social Stability:

Maintaining social order and addressing potential economic disruptions resulting from the trade war is vital.

• Government initiatives to address unemployment and income inequality: The government implements various social welfare programs and economic stimulus packages to mitigate the impact of the trade war on the population.
• Censorship and control of information to minimize dissent: The government employs strict censorship to limit negative news and criticism of its handling of the trade war.
• The role of propaganda and nationalism in bolstering public support: Nationalistic narratives and propaganda are used to rally public support and maintain confidence in the government's handling of the trade war.

Economic Resilience:

Strengthening the economy's resilience against external shocks is crucial for long-term success.

• Focus on domestic consumption and investment to offset reduced exports: China is shifting its economic focus towards domestic consumption and investment to compensate for potential losses in exports.
• Financial reforms aimed at strengthening the stability of the Chinese financial system: Economic reforms are aimed at strengthening the resilience of the financial system.
• The challenges of balancing economic growth with social stability: This balancing act is a significant challenge for the Chinese government, requiring careful navigation of economic policies and social control measures.

Conclusion:

Xi Jinping's strategy in the face of a sustained China-US trade war is a multifaceted approach aimed at achieving long-term economic self-reliance, challenging US geopolitical hegemony, and maintaining domestic stability. While the immediate impacts of the trade war are felt by both sides, China's long-term strategy suggests a willingness to endure short-term pain for long-term strategic gain. Understanding this "China-US trade war" strategy is crucial for navigating the evolving geopolitical landscape. Further research into specific policy implementations and their effectiveness is needed to fully grasp the implications of this ongoing struggle. Staying informed about developments in the China-US trade war is essential for businesses and policymakers alike.