Jason Douglas of The Wall Street Journal reports that while Beijing has already brandished the ways it could hit back at Trump’s levies, such retaliation risks boomeranging. Douglas writes:
In the weeks since the election, China has flaunted the ways in which it could hit back at the U.S. in the event of a new trade war with the U.S., including everything from choking off the metals needed for everyday products to punishing American companies that do business in China.
But using such tools too aggressively risks backfiring on Beijing.
The big danger is that taking shots at Western companies and restricting exports of critical minerals and other essentials will only encourage the U.S. and its allies to double down on their efforts to untangle their economies from China’s.
That would spell trouble for Beijing as long as it remains wedded to an economic model that relies so heavily on selling its goods to Western consumers. […]
If Beijing were to squeeze U.S. companies operating in China, such a move could give the second Trump administration pause, particularly if it spooked the stock market. But it also might persuade U.S. companies to dial back their presence in China and dissuade new ones from investing.
“Every aggressive move by China accelerates U.S. companies’ diversification and decoupling efforts,” said Craig Singleton, senior China fellow at the nonpartisan Foundation for Defense of Democracies. […]
Overall, according to analysts, Beijing must be mindful of how its efforts to hit back at the U.S. will be viewed by the rest of the world. Just as some countries voice unease over their dependence on the dollar and the U.S. financial system, others might look askance at their dependence on China for manufactured goods.
“Ultimately, these are your customers. You have to keep them buying from you,” said Rhodium’s Wright. “One way or the other, Beijing has incentives to slow escalation.”
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