Trade war marathon

China’s leaders have exuded confidence in countering a political storm which apparently targeted President Xi Jinping, after his counterpart from the U.S., Donald Trump, unleashed a full-blown trade war against Beijing. In private conversations, and in a section of the non-state media, many said that instead of a tit-for-tat tariff war, China should have tactically surrendered to U.S. demands and quietly opened up its market to additional U.S. products, which was one of Mr. Trump’s demands. They also said that China should not have reacted too aggressively to Washington’s main accusation that it was “stealing” cutting-edge intellectual property from American high-technology firms. In return, Mr. Xi could have successfully saved the crown jewels of his Made-in-China 2025 blueprint — the plan for digital manufacturing, which requires high-tech U.S. hardware including advanced computer chips. Adopting the lie-low approach mastered by Deng Xiaoping may have also allowed advanced technology to flow into China through straightforward acquisition of select American firms. By pursuing a non-confrontational approach, China could have safeguarded its critical plan to escape the middle income trap through the Made-in-China 2025 route. Instead, Mr. Xi had to face the heat at Beidaihe in the backdrop of Mr. Trump’s “trade war.” Beidaihi is an exclusive coastal retreat in Beijing’s neighbouring Hebei province. Once a year, China’s present and former leaders seal themselves for nearly two weeks in this isolated seaside resort. The result is secretive, no-holds-barred brainstorming, where the current crop of leaders respectfully listens and often imbibes the advice given on all critical issues of governance by the previous generation. So, when the top echelons of the ruling class went off the radar in early August, there was speculation that hard questions were being asked of Mr. Xi’s vision, policies and highly personalised leadership style. However, many say that reports of internal dissonance within the ruling elite is bazaar gossip, aired by disgruntled individuals. Since the Beidaihe conclave, the Communist Party of China has asserted that the Trump administration’s trade war was less a commercial assault and more a frontal attack on China’s rise as a global rival. Therefore, no amount of tactical agility by the Xi administration would have worked to shift Washington’s focus from undermining China. Instead of a trade war, Mr. Trump had launched a Cold War, the narrative goes.

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