War without gun smoke
Tariffs, Chinese soldiers captured in Ukraine, tech race, recoupling with China, Iran and Russia, and more.
This is The China Week, a succinct roundup and analysis of what happened in the People’s Republic in the last seven days. The China Week is free for the next few weeks—please subscribe here if this was forwarded to you, or give a subscription as a gift.
The big story of the week is obviously China’s response to the Donald Trump tariffs.
“The trade war is not simply an economic friction but ‘a war without gun smoke,’ and must be understood from that perspective.” That’s the view (Chinese, English) of the well-connected opinion leader Chairman Rabbit, the pseudonym of Ren Yi 任意, a grandson of noted Communist Party reformer Ren Zhongyi 任仲. His language is similar to all the messaging coming out of Beijing: China is prepared to fight.
It’s unquestionable that the tariffs are going to hurt China (see this analysis by Xie Yanmei), but who would you bet to come out ahead in a war, with or without smoke: A country led by a narcissist drunk on power, whose citizens have had their brains mashed by TV, social media, and decades of domestic peace and historically unprecedented prosperity; or a country where people were starving in living memory and whose universities churn out millions of STEM graduates every year?
Other things I worked on this week:
What even is Trump’s China strategy? A ChinaFile Conversation
Three potential pitfalls of Trump’s approach to China by Ali Wyne
Shifting terrain in U.S.-China Relations, and Xi Jinping’s vision for China’s Future, a conversation with Julian B. Gewirtz and Susan Jakes.
—Jeremy Goldkorn
Fiery rhetoric
China’s likely retaliation to Trump’s tariffs
On April 7, Donald Trump threatened to place an extra 50% tariff on Chinese imports. If the new tariff is implemented, total U.S. tariffs on Chinese imports will be more than 100%. Trump was responding to China’s 34% levy on American imports announced last week, in retaliation to the Trump’s 34% tariff on all Chinese goods. Other measures from Beijing include restrictions on rare earth mineral sales to the U.S., and restrictions on U.S. businesses.
China’s ministries of Commerce and Foreign Affairs both made statements today characterizing the Trump tariffs as “bullying” and “blackmail,” and vowing to “fight to the end and resolutely take countermeasures to safeguard China’s own rights and interests.”
What will China do next?
In the above-mentioned Chairman Rabbit post (Chinese, English), he describes six countermeasures against the U.S. trade war that are being prepared. The Inside China newsletter by state-affiliated journalist Fred Gao reports the same countermeasures, which are:
Suspend cooperation on fentanyl
Further restrict U.S. exports of soybeans, sorghum, and other products to China
Restrict U.S. poultry exports to China
Impose countermeasures in the services trade
Reduce or ban U.S. film exports to China
Investigate U.S. companies’ intellectual property gains in China
Neither of them mention a further countermeasure which appears to have already been initiated: “China has fixed the renminbi at its weakest level in 18 months in the first sign it will permit currency depreciation to offset an escalating trade war with the U.S.,” according to the Financial Times. In addition, last week Bloomberg reported that China had “taken steps to restrict local companies from investing in the U.S.…in a move that could give Beijing more leverage for potential trade negotiations.”
Update (April 9): Beijing announced additional tariff on U.S. goods, from 34% to 84% and added more U.S. companies to its Unreliabe Entity list.
Ukraine
Chinese soldiers captured in Donetsk
On April 8, Ukraine’s President Volodymyr Zelenskyy announced on social media:
Our military has captured two Chinese citizens who were fighting as part of the Russian army. This happened on Ukrainian territory—in the Donetsk region…We have information suggesting that there are many more Chinese citizens in the occupier's units than just these two…
…I have instructed the Minister of Foreign Affairs of Ukraine to immediately contact Beijing and clarify how China intends to respond to this. Russia's involvement of China, along with other countries, whether directly or indirectly, in this war in Europe is a clear signal that Putin intends to do anything but end the war. He is looking for ways to continue fighting. This definitely requires a response.
Zelenskyy’s post includes a video of one of the soldiers, who speaks Mandarin.
There has not yet been a response from the Chinese government, and it’s unlikely to be mentioned by any Chinese government officials unless a journalist asks about it at tomorrow’s Foreign Ministry daily press briefing (an edited transcript will be published here towards the end of the working day in Beijing).
The technology race
Flying and electric cars, AI, biotech etc.
China’s progress in technology and advanced manufacturing is not slowing down. News this week:
Flying cars and drones: State messaging continues to push the “low-altitude economy”: This week the China Daily predicted that “China’s low-altitude economy…is poised to soar following its inclusion in the Government Work Report for two consecutive years” (2024, 2025).
AI: Chinese universities have surpassed their U.S. rivals in research output, per the website AIRankings (or see this South China Morning Post report, and a WIRED story based on different research: The AI race has gotten crowded—and China is closing in on the U.S.)
Passenger jets: China's COMAC delivered its second C909 jet to a. foreign customer, Lao Airlines, according to a company press release. COMAC’s first foreign buyer was Gallop Air, a Brunei-based airline owned by a Chinese businessman.
Chips: “Chinese scientists have developed the world’s most complex two-dimensional semiconductor microprocessor, with the chip set to enter pilot-scale production,” reports the South China Morning Post (although bear in mind, as Wang Zichen points out, that the SCMP’s science and tech reporting sometimes needs factchecking).
Biotech: “China is moving fast to dominate biotechnology, and the U.S. risks falling behind permanently unless it takes action over the next three years, a congressional commission said” reports the Wall Street Journal.
The relentless innovation fuelling China’s “brutal” car wars is the headline of a Financial Times story about the amazing Chinese electric cars that coming to a market near you, unless you live in the U.S.
Recoupling with China, decoupling from the U.S.
For the last eight years, Washington has pushed “decoupling” from China, as other Western nations have pursued “de-risking.” But now, as the U.S. pushes its allies away with tariffs and talk of annexations, those allies are looking to shore up relations with Beijing again.
Some stories that illustrate the trend from this week:
“From ‘French farms to Chinese tables’: France’s economy minister touts trade potential” reports Caixin.
“A sense of ‘renewed optimism’ between Australian and Chinese businesses has been fuelling efforts to create an environment where both sides can ‘live in harmony’ and grow economically, according to …David Olsson, chairman of the Australia China Business Council,” according to the South China Morning Post.
EU calls for ‘negotiated resolution’ with China in face of U.S. tariffs, says the Financial Times, and also from the FT: China ‘optimistic’ about deeper UK financial co-operation.
Spain is selling more white wine to China, reports The Drinks Business.
Nukes and the “Axis of Resistance”
Iran and Russia, and China
On April 2, Russia's Foreign Minister Sergei Lavrov discussed “the situation on the Korean Peninsula as well as Iran's nuclear program” with his Chinese counterpart, Wang Yi 王毅.
ChinaMed has the context and analysis: Anticipating a new nuclear deal: Chinese and Iranian experts analyze the Iran-China-Russia meeting in Beijing.
Chinese Communist Party and domestic politics
Princeling crackdowns and personnel changes
Xi Jinping’s anti-corruption campaign continues:
“Chinese authorities are investigating [Liu Tianran 刘天然] the financier son of Liu He 刘鹤, a former vice-premier and confidant of Xi Jinping who negotiated a trade deal with the first Trump administration, according to people familiar with the probe,” reports the Financial Times.
If you follow Party personnel changes, China's State Council appointed and removed several officials, while two others swapped jobs. There is nothing to read into these changes aside from politics-as-usual inside the Communist Party.