Seen from Beijing, U.S. President Donald Trump’s approach to China since returning to the White House offers evidence that Chinese President Xi Jinping is strategically correct in viewing the world as “undergoing changes unseen in a century”—and committing to make China self-reliant.

As China faces down U.S. tariffs as high as 145 percent, its use of a combination of tariffs and nontariff measures—such as adding U.S. companies to its “unreliable entity list,” expanding export controls, and initiating anti-monopoly investigations—showcases that it has expanded its tools and strengthened its capabilities to conduct targeted trade retaliation.

Unlike U.S. allies, who may have been blindsided by Trump’s aggressive tactics, China anticipated the confrontation and prepared accordingly. Since 2018, Chinese policymakers have accumulated experience navigating the intensifying U.S.-China strategic rivalry, which has come with increasingly restrictive U.S. policies.

China has urged local officials and major state-owned enterprises to bolster supply chain security and expand markets overseas. Beijing has developed domestic regulatory and administrative measures to counter foreign coercion, which makes it illegal for companies doing business in China to comply with foreign restrictions against Chinese entities—and creates a compliance dilemma for businesses.

Stringent Western sanctions to punish Russian President Vladimir Putin’s full-scale invasion of Ukraine in 2022 further motivated the Chinese government to expand yuan-based financial infrastructure to mitigate vulnerabilities to foreign sanctions.

Trump’s policies in his second term so far provide a convenient cover for Chinese leaders to walk back recent policy missteps without embarrassing Xi or the Chinese Communist Party, allowing them to galvanize political will and financial resources to promote self-reliance and rally Chinese private entrepreneurs around patriotism to advance the state’s strategic plan despite individual sacrifices.

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Analysis

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Agathe Demarais

Though the chilling effect of the Chinese government crackdown on technology companies and the humiliation of entrepreneurs has not fully dissipated, the chaos introduced by the Trump administration makes China appear less uncertain despite its economy’s persistent structural woes. The state-owned People’s Daily, for example, has invited foreign investors to “use certainty in China to hedge against uncertainty in America.”

In the past two months, the window for a Trump-Xi summit where the two leaders could strike a deal has narrowed. That does not mean that the intention to reach a deal has vanished: In a newly released white paper on U.S.-China economic and trade relations, the Chinese government called for resolving tensions through equal dialogue and mutually beneficial cooperation.

This is a clear signal that Beijing will not yield to the Trump administration’s “maximum pressure” approach.