By Eric Vandenbroeck and co-workers

Trump Has Assembled a Team of China Hawks. How Will Beijing Respond?

US President-elect Donald Trump’s proposed cabinet is stacked with so-called China hawks who have made clear an ambition to confront America’s ascendant superpower rival in nearly every policy realm, from the economy to security. But unlike at Trump’s previous inauguration eight years ago, Chinese leaders may not be caught off-guard by a more confrontational approach. Instead, experts say this time around Beijing is more experienced in dealing with the transactional leader and the ideological hardliners around him, and may seek to establish back-channels through more China-friendly figures in Trump’s inner circle, such as Elon Musk.

Musk often echoes some of Beijing’s talking points, such as maintaining a healthy “win-win” economic relationship and even calling Taiwan an integral part of China. The future success of a key Musk business like Tesla could hinge on what course relations between the world’s two largest economies take over the next four years.

 

The China Play

Early in the Biden administration, senior officials got together, read the intelligence, and concluded that the 2020s would be the decisive decade in U.S. competition with China. Without corrective action, the United States faced a growing risk of being surpassed by China technologically, dependent on it economically, and defeated militarily in the South China Sea or the Taiwan Strait.

The new Trump team will take the United States through the second half of the decisive decade. There is much to be done. Trump’s national security picks, particularly Mike Waltz as national security adviser, Marco Rubio as secretary of state, and Elise Stefanik as ambassador to the United Nations, understand the task ahead and have views consistent with a growing bipartisan consensus on the need to outcompete China. Their most significant obstacle in carrying out a competitive approach may be Trump’s penchant for dealmaking, transactionalism, and flattery toward President Xi Jinping, which sometimes undercut his staff’s more hardline approaches, including the expansion of export controls and a vocal defense of human rights, among other measures, the first time around.

If Trump’s new team can overcome that challenge, they will have an opportunity to improve America’s competitive position. Closing the gap during the decisive decade may call for building on the work of President Joe Biden, just as the Biden team built on the work of the Trump administration. The Biden administration focused on rebuilding American strength by focusing on its foundations at home and its relationships with partners abroad, an approach summed up in its “invest, align, compete” tagline. That formula can also serve as a way to fulfill the Trump administration’s vision of “peace through strength.” But rebuilding American power will require the Trump administration to undertake new efforts, too, that depend on bipartisan congressional support and the buy-in of the American public.

 

Strength Starts at Home

Some of the most urgent questions about U.S. China policy turn on questions about domestic policy, which provides the basis for American strength. But the foundations of that strength have atrophied, especially since the end of the Cold War. The administration will need to undertake significant structural reforms to remedy these weaknesses.

The United States needs to fix its defense industrial base to rapidly deter China and, if necessary, defeat it in a potential conflict. At present, the United States would expend all its munitions within a week of sustained fighting and would struggle to rebuild surface vessels after they were sunk, with a national shipbuilding capacity less than that of one of China’s larger shipyards. The Trump administration must focus on making progress on two timelines: the two-year problem of fielding more uncrewed systems and cruise and ballistic missiles in the Indo-Pacific, as well as the five-to-ten-year problem of revitalizing the United States’ shipbuilding industry, which has been declining for decades without an adequate commercial sector to keep it viable.

Washington also needs to protect its critical infrastructure from cyberattacks. China has compromised U.S. critical infrastructure on which millions of Americans rely, including water and gas, transportation, and telecommunications systems, to incite chaos, sowing panic, and reducing U.S. will in a conflict scenario. As it invests in offensive capabilities, the Trump administration will also need to bolster American defenses through a combination of regulatory measures, new legislation holding companies accountable for lackluster cyber defenses, and novel technical efforts that can complicate the abilities of bad actors to penetrate U.S. networks.

Finally, the United States needs to invest in reindustrialization and technological leadership. China already accounts for more than 30 percent of global manufacturing, can innovate successfully, increasingly leads in the sectors of tomorrow, and is redirecting massive amounts of capital into manufacturing as its housing market stagnates. The result, a second “China shock” akin to the one that flooded U.S. markets with cheap Chinese goods at the beginning of this century, will threaten the United States’ future as an industrial power and leave it more dependent on China than China is on the United States. Addressing this problem will require not only tariffs but also industrial policies to stimulate manufacturing and high-tech industry and coordination with allies and partners. Punitive measures directed at allies, such as tariffs, will complicate the United States’ ability to enlist them in efforts to protect against China’s excess capacity.

To advance this domestic agenda, the Trump administration cannot rely only on executive branch authorities. It will need significant bipartisan congressional support. The Biden administration approached some major domestic initiatives in this fashion, including through its infrastructure bill and the CHIPS and Science Act, and the Trump administration could do the same.

The Trump administration will also need to mobilize the American public. Since the 9/11 attacks in 2001, every American president has given a primetime address from the Oval Office on some aspect of Middle East policy. None have done so on China. Trump may consider an address to the nation on China policy, but how he frames the nature of the competition with China will matter more than whether he delivers such a speech. With a clear-eyed but not demagogic tone, stressing competition but not necessarily confrontation, and linking competition with China directly to the interests of Americans, Trump could rally the American public, civil society, academia, and the corporate sector behind the administration’s efforts.

Footage of President-elect Donald Trump at a shopping complex in Beijing, November 2024

For Beijing, after years of ties with Washington at a historic low, the prospect of having an ally like Musk influencing the White House is a definite positive.  Henry Huiyao Wang, a former senior government official and the founder and president of the Beijing-based Center for China and Globalization, says that while Beijing is “preparing for the worst” there remains hope that Trump, with the support of American billionaires like Musk, can be “more pragmatic” and US-China tensions can be dialed back.

 

Threats, Bluffs, and Promises

Beijing, for its part, is already taking steps to prepare for the incoming administration. It is deeply concerned about Trump’s threat to levy 60 percent tariffs on Chinese goods and has already signaled it is prepared to retaliate with tariffs, export controls, and sanctions of its own, as well as crackdowns on U.S. companies operating in China. If Chinese officials believe retaliation will provoke further escalation from Trump, they may be restrained, mirroring their behavior in the trade war during Trump’s first term. If they believe, however, that retaliation may cause the Trump administration to back down for fear of rising inflation or risks to key American companies, then they are more likely to respond forcefully, perhaps even seeking to escalate to de-escalate, a tactic previewed by Beijing in its targeting of Micron, an American semiconductor manufacturer, and its recent use of export controls on rare earth elements in response to U.S. export controls. But there is a third possibility: if Trump levies a 60 percent tariff early in his presidency and shows limited interest in negotiation, and China concludes that the risks to its economy (and Xi’s reputation) are existential and intolerable, then Beijing may have no choice but to respond forcefully, regardless of the expected American response.

It’s unclear whether the Trump administration’s tariff threat is a negotiating tactic intended to achieve a change in China’s behavior, a nonnegotiable U.S. policy intended to achieve decoupling or a mix of both. For Beijing, the best outcome may be to hope for the former and, through a mixture of retaliation and personal diplomacy, push for a bargain that might include trade, technology, and even counternarcotics measures. To increase the odds of such an outcome, Beijing may initially retaliate against companies with close ties to Trump, including Elon Musk’s Tesla, in order to incentivize de-escalation. Chinese officials may also seek to split Trump from his more hard-line staff and play to his direct self-interest, as they did in negotiations following the start of the U.S.-Chinese trade war during his first term. Their strategy resulted in Trump downplaying China’s crackdown against protesters in Hong Kong, expressing support for its internment camps in Xinjiang, offering to lift export controls on Huawei and ZTE, and even accepting a trade deal that did not address China’s industrial policy practices. Given this history, the possibility that Beijing suggests a grand bargain to Trump in which semiconductor export controls and other would-be nonnegotiable U.S. policies, potentially including U.S. Taiwan policy, are negotiated directly with Beijing should particularly concern the administration’s more competitively inclined staff. Such a proposal should be rejected.

Elon Musk with Chinese leader Xi Jinping at a gala dinner in San Francisco in 2023. The world’s richest man has deep connections to top Chinese Communist party leaders 

Musk’s business empire sits across a minefield of possible conflicts on issues of national security, tech competition, supply chains, and free speech, as well as the future of Taiwan.

The world’s richest man has deep connections to top Chinese Communist party leaders and is in the middle of lobbying Beijing over important decisions for his $1tn electric vehicle business, Tesla.

X owner Elon Musk spends a lot of time posting extreme right-wing talking points and misinformation on his social media platform. But on the eve of Election Day, shortly before NBC News projected Donald Trump's re-election.

Musk posted a pro-Trump video arguably more concerning than pretty much anything he’s shared before. The video features messaging tied to QAnon, one of the most noxious, brain-corroding conspiracy theories circulating among the MAGA faithful. And, once again, one has to wonder how we’ve ended up in a situation where a man with so much power believes such backward things.

Tesla has received billions of dollars in cheap loans, subsidies, and tax breaks from the Chinese government. The carmaker is highly dependent on its Shanghai factory, the biggest in its global network, for not only selling to the country of 1.4bn people but also exporting its China-made cars to other parts of the world. Musk’s Chinese suppliers, especially in batteries, are also crucial to the company’s global manufacturing operations, including in the US.

Musk believes his pivot to autonomous driving and artificial intelligence could boost Tesla’s market valuation as high as $5tn, five times higher than today. But he is also racing against a clutch of rival Chinese carmakers and tech groups, from BYD, Xpeng, and Nio to Baidu, Xiaomi, and Huawei, who are all developing similar.

Among Chinese consumers, Tesla’s rapid global success coupled with an admiration for maverick entrepreneurship has garnered Musk a cult following, and the nickname “the Silicon Valley ironman”. He has met Xi, the powerful Chinese leader, at least twice.

Yet among defense officials in Beijing, Musk’s business empire poses several questions of national security, placing Musk in conflict with the absolute priority of Xi and his leadership.

The researchers added: “Starshield satellites could undertake kamikaze-style attacks on spacecraft and be equipped with weapons payloads to carry out space strikes, posing threats to space security,” referring to the version of the Starlink satellite network that is devoted to American national security applications.

There are also signs that Musk’s personal views clash with others in Trump’s close orbit who want the US to push back harder against Beijing’s increased military assertiveness, including over Taiwan.

Yaqiu Wang, research director for China at Freedom House, says that Musk’s claim that he is a “free speech absolutist”, made when he bought the social media platform in 2022, has been proved a “complete sham” by his acceptance of Chinese censorship and attacks on critics.

“It’s unclear whether the Chinese government has requested account information of X users who express critical views of the CCP and whether X has handed over such information. Given Musk’s coziness with Beijing, his lack of principle on free speech and privacy rights, and his penchant for authoritarian rule, this should be a concern,” Wang says.

Ultimately, when it comes to influencing Trump on China there will be a “jumble” of views competing for the president’s ear, says Andrew Gilholm, head of China analysis at consultancy Control Risks.

On the one hand, there will still be traditional Wall Street titans and tech leaders who are seen as Beijing-friendly and don’t want to rock the boat with China. And on the other hand, there are hawks, such as Marco Rubio, who are ideologically anti-China and want to hammer China on all fronts. And then there is Musk. Musk is a wild card.

 

 

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