DEJA VU
But for all the bonhomie between the two superpowers, a sense of deja vu lingers among those who remember how quickly ties deteriorated during Trump’s first term.
“From now on, until the situation becomes a little bit clearer, all our US clients have to pay in advance,” said Dominic Desmarais, chief solutions officer at Lira Solutions, a Suzhou-based firm that connects Chinese manufacturers with overseas buyers of everything from toys to furniture and titanium products.
“If Donald Trump actually imposes 40 per cent, or whatever, duties on Chinese products coming into the United States, I don’t want to be stuck with custom-made goods for specific clients that just disappear,” he added.
“That happened a lot, seven, eight years ago, when Donald Trump put 25 per cent duties on 85 per cent of the commodities coming out of China.”
Another trade war would find China much more vulnerable than when Trump first raised tariffs in 2018, as it grapples with a deep property crisis, huge local government debt and 16 per cent youth unemployment, among other challenges.
The precariousness of China’s situation is not lost on the streets of its capital.
“What I can see is that China’s economy is not very good at the moment, due to the impact of the pandemic, and (the fact that) Trump himself is a crazy, wild person (doesn’t help matters on our side),” said a Beijing resident surnamed Wang, 36.
“The pressure still remains quite big (for us).”
The effects of the last trade war continue to be felt in the world’s second-largest economy, where foreign firms are holding off on investing and diversifying their supply chains by putting more money into alternative nearby markets, such as Vietnam.
Christoper Yeo, a finance director at a Singapore-owned digital infrastructure company in Beijing, said he expects Trump’s tariff threats to continue to pinch on cross-border investment and financing from the US and other West-aligned nations.
His firm’s current source of funding is from non-US shareholders, and, therefore, he said he does not expect Trump’s return to the White House to impact on his life in China.
“But I would imagine US institutional investors would continue cutting back on their Chinese exposure,” he said. “There used to be a few US firms invested in Chinese infrastructure as well – that is non-existent now.”
