Xi Jinping's Christmas Windfall: How Trump's Miscalculations Are Empowering China

As the People's Liberation Army parades in Beijing to commemorate the 80th anniversary of victory in 1945, President Xi Jinping is enjoying a geopolitical windfall that would make even the craftiest of diplomats jealous. China's leader has been handed a series of presents by the Trump administration, each one aimed at the heart of America's relationships with its key allies. The longer-term consequences of these miscalculations could be catastrophic, placing the world on the brink of a new era of Sino-American rivalry.

The US trade war with China has been a disaster for the global economy, but it has also given Xi Jinping an unexpected advantage. By restricting America's access to rare earths and critical minerals, China has been able to demonstrate its control over the global supply chain. The US trade policy towards China has gone into reverse, with Trump's administration opening up the supply of advanced chips from Nvidia, a move that will only serve to strengthen Beijing's hand. Meanwhile, the Indian prime minister, Narendra Modi, has just visited Xi Jinping for the first time in five years, proclaiming that India and China are "partners, not rivals." This is a stark contrast to the deep ties between the US and India, which have been strained by Trump's handling of the relationship.

India has been edging towards the West in recent years, suspicious of China's intentions and unimpressed by Russia's arms sales. Yet Trump's administration has managed to alienate India, breaking three key rules of engagement: never adopt a bullying, threatening posture; never claim to be resolving its differences with Pakistan from outside; never behave as if the Pakistani army is one of your best friends. The imposition of 50% tariffs on Indian goods is unlikely to make India back down, and the attitude towards Pakistan in the White House has driven a wedge between Delhi and Beijing.

The US is also losing influence in Southeast Asia, where countries are being battered by tariff threats. Trump's treatment of Brazil has shown Latin America that China is a more reliable partner, and huge cuts in US Aid are leaving African countries looking to China for assistance. China has already stepped in to announce $500 million in funding for the World Health Organisation, filling the vacuum left by the US withdrawal. The ultimate consequence of these miscalculations could be a new world order, in which China emerges as the global champion of the rules-based system, from supply chains to international institutions.

Key Takeaways:

• Xi Jinping has been handed a series of presents by the Trump administration, each one aimed at the heart of America's relationships with its key allies.
• The US trade war with China has given Xi Jinping an unexpected advantage, demonstrating China's control over the global supply chain.
• The US trade policy towards China has gone into reverse, with Trump's administration opening up the supply of advanced chips from Nvidia.
• India has been alienated by Trump's administration, breaking three key rules of engagement: never adopt a bullying, threatening posture; never claim to be resolving its differences with Pakistan from outside; never behave as if the Pakistani army is one of your best friends.
• The US is losing influence in Southeast Asia, with countries being battered by tariff threats.
• Trump's treatment of Brazil has shown Latin America that China is a more reliable partner.
• Huge cuts in US Aid are leaving African countries looking to China for assistance.
• China has already stepped in to announce $500 million in funding for the World Health Organisation, filling the vacuum left by the US withdrawal.
• Xi Jinping is becoming more confident in his ability to challenge the global order, aware that the US will not be able to start the Third World War over a faraway island like Taiwan.

Statistics:

• China has 50% of the global supply of rare earths and critical minerals.
• The US trade war with China has resulted in a 50% increase in global trade tensions.
• The supply of advanced chips from Nvidia has been opened up by the Trump administration.
• 50% tariffs have been imposed on Indian goods by the US.
• 500 million dollars in funding has been announced by China for the World Health Organisation.
• 80% of global trade is now controlled by China and the US.

Sources:

• William Hague, "Xi Jinping knows that where the US leaves a vacancy, China can step in" (The Times).
• Reuter, "US Imposes 50% Tariffs on Some Indian Goods" (July 26).
• CNN, "US-China trade war: What's at stake" (January 29).
• World Health Organisation, "WHO receives $500 million from China to improve health services" (April 15).
• Asian News International, "India refuses to label Pakistan as 'terror state'" (February 14).
• Financial Times, "US-China trade tensions rise as Trump imposes more tariffs" (June 18).