China's Long Game: Understanding Beijing's Strategy in the Trade War

Strategic Insights -

As the US and Chinese representatives prepare to meet in Switzerland to ease their escalating trade war, a potential sign of Beijing's approach has emerged in an opinion piece published in the state-owned journal Beijing Daily. The article, arguing that the trade war is an American attempt to strangle China's economic growth, refers to former Chinese leader Mao Zedong's 1938 essay On Protracted War, a piece of writing that set out Mao's approach to combating the invading Japanese during the second Sino-Japanese war. This strategy was also key to the subsequent establishment of the People's Republic of China in 1949, after the communist victory in the long-running Chinese civil war.

Key Takeaways:

  • Beijing's perception of the trade war as a long-term development reflects Mao's strategy of guerrilla warfare, where a war of attrition would end with a Chinese victory as it would slowly bleed the conventionally stronger Japanese forces of resources.
  • The decision to reference Mao's text reflects not only China's strategy in the current trade war but also the lasting influence of his ideas on Chinese policymakers and media figures.
  • Beijing's approach has also been reflected in how it has been preparing for a second Trump trade war ever since its experiences in the first Trump presidency.
  • China believes that Chinese consumers are more capable of "eating bitterness" (coping with hardship) than Americans, and that this long view approach has also been reflected in how Beijing has been preparing for a protracted trade war.
  • The US administration, on the other hand, appears to have banked on the trade war being a comparatively brief affair that should be ended by a quick and decisive knock-out blow against Beijing.
  • China's strategy, similarly to Mao's, is to slow down the process and grind out the best deal it can over time.
  • Another of Mao's political ideas was what he termed the "people's war", which envisioned a slow movement where one group creates "shadow institutions" that gradually displace established ones in order to build support from the local population.
  • China has supported, or created, alternatives to US-led institutions, such as the Asian Infrastructure Investment Bank, Shanghai Cooperation Organisation and the Belt and Road Initiative.
  • These Beijing felt were too dominated by the US, and it seems to chime with Trump's lack of commitment to US involvement in international institutions.

Statistics:

  • According to the article, Mao's approach was to describe a struggle that might seem a world away from the current China/US tariff conflict.
  • The article states that Mao's argument was that a war of attrition would end with a Chinese victory as it would slowly bleed the conventionally stronger Japanese forces of resources.
  • The expected instant deal has failed to materialise, and US stores are now warning that shelves may soon be empty of many goods.
  • The trade war has become a war of attrition, and whatever moves Xi makes now are likely to be only his first in what he sees as a very long game, in the great Maoist tradition.

Sources:

  • The Conversation UK -- "Why Trump fails to understand China's trade war tactics, and what his negotiators should be reading"
  • Beijing Daily -- "Today, it is necessary to revisit On Protracted War" (opinion piece)
  • On Protracted War (Mao Zedong's 1938 essay)