President Donald Trump’s tariffs have been targeted primarily at China. But on April 22, the President said the current 145% tariff rate on China was “very high and it won’t be that high” over time. A day later, Treasury Secretary Scott Bessent said there was “an opportunity for a big deal” between the two countries – but added that the US would not unilaterally reduce all tariffs on China. American media have reported a willingness within the Trump administration to talk with China and reduce tariffs up to 50%. On April 24, China’s Ministry of Foreign Affairs said of the reports: “All of this is fake news.” On April 23, Fu Cong, China’s ambassador to the United Nations, said China had risen to the occasion “in the face of the US abuse of tariffs” and taken “decisive countermeasures not only to safeguard its own legitimate rights and interests, but also to uphold the common interests of the international community”. He warned that “bullying the weak, threats and coercion, and imposing one’s will on others will not win popular support, and will ultimately backfire”. Here’s what has happened in China over the past week. 1. APPOINTED A NEW TRADE ENVOY Li Chenggang, 58, China’s Permanent Representative to the World Trade Organisation (WTO) since 2021, is now the International Trade Negotiation Representative at China’s Ministry of Commerce, essentially Beijing’s top international trade negotiator. Li has long been a vocal critic of President Trump’s mercantilist economic ideas. In July 2018, when the first Trump administration planned to impose 10% tariffs on an additional $200 billion worth of Chinese imports into the US, Li, who was then China’s Assistant Commerce Minister, stressed that China’s “stance of opposing unilateralism and supporting multilateralism will not change”, and when “they (the US) go low, we go high”, according to a Reuters report from the time. And in February this year, Li told a meeting of the WTO General Council that through its “series of tariff shocks,” the US was “unilaterally and arbitrarily, blatantly violating WTO rules”, according to a report by the South China Morning Post. UPSHOT: No official explanation was provided for replacing the incumbent in the post with Li. But analysts said China could be firming up mechanisms on the trade front ahead of possible negotiations with the US or bilateral discussions with other countries. 2. CALLED ON EUROPE TO ACT Foreign Minister Wang Yi spoke with British Foreign Secretary David Lammy and Austrian Foreign Minister Beate Meinl-Reisinger and called on the United Kingdom and European Union to “jointly safeguard the multilateral trading system” amid “indiscriminate [American] attacks on other countries through its arbitrary imposition of tariffs”, the Communist Party-run China Daily reported on April 24. Lammy said, “The UK is ready to maintain communication with China on this matter”. The European Commission had said on April 22 that the EU would not decouple from the Chinese economy as a condition for a trade deal with the US. UPSHOT: After the US and China, Europe as a whole holds a sizable share of global trade. US-EU goods trade stood at around $975 billion in 2024, while the China-EU trade was around $762 billion. But while the US is primarily a consumer of European exports (a fifth of the EU’s exports in 2024 was to the US), China is mainly the supplier to Europe (more than a fifth of EU imports in 2024 were from China). It is difficult for any country or region to replace the US as a trade partner, but cooperation between China and the EU could help both sides weather the storm of Trump’s tariffs better. An EU-China Summit is slated for July in Beijing, and it will also commemorate 50 years of their diplomatic relations. 3. HIT PREEMPTIVELY AT AMERICA’S CORN BELT A Nikkei Asia report on April 21 said China has frozen purchase orders for American soybean and corn since mid-January, and sought to turn to Brazil to buy instead. “US Department of Agriculture data covering foreign orders for soybeans and corn shows none made by Chinese companies since January 16, just days before Trump took office,” the report said. Agriculture is an important component of the US-China bilateral trade. Among agri commodities, soybean is the top Chinese import from the US. The US and Brazil are two of the world’s biggest soybean producers, and China has become their major customer over the last two decades as demand for edible oil and animal protein (soybean is processed to feed livestock) has risen in the country. UPSHOT: Since 2018, when the first US-China tariff dispute arose, China has been seeking to reduce import dependence on food items. Chinese livestock companies have been reducing the use of soymeal in animal feed, and Beijing has approved genetically modified soybean and corn to boost domestic output, according to a Reuters report from last year. Soybean is the biggest US export of a single product to China by value. There is genuine apprehension among American corn farmers, many of whom are part of President Trump’s political base. Brazil produces 40% of the world’s soybean and, along with Argentina, accounts for more than half of all production. The US produces 28%. 4. OPENING UP WIDER FOREIGN PARTICIPATION IN SERVICES SECTOR On April 21, the Communist Party mouthpiece Global Times reported that China was accelerating the expansion of “pilot programs for the services sector”. Restrictions would be lifted on certain services in nine cities, including the commercial hub of Shenzhen. Foreign doctors will be allowed to open clinics, and overseas medical professionals can carry out short-term practice. Foreign-invested travel agencies will be allowed to “operate outbound tourism services”. UPSHOT: The report quoted Ling Ji, Vice Minister of Commerce and Deputy China International Trade Representative, as saying Trump’s reciprocal tariffs have “seriously undermined the multilateral trading system, severely disrupted the international trade order and posed significant threats to the security and stability of global production and supply chains”. As several world capitals watch America’s seeming backsliding with dismay, China has been seeking to project itself as a torchbearer of free trade and international commerce. Signalling a willingness to open up to the world at a time when the US is shutting itself in is part of that projection. 5. PULLING BACK FROM US PRIVATE EQUITY INVESTMENTS Citing sources, the Financial Times reported on April 21 that Chinese state-backed funds were cutting off private equity investments in the US in response to “pressure from the Chinese government”. Some of the biggest US-based PE firms, such as the Carlyle Group and Blackstone, have previously received funding from Chinese firms, the report said. UPSHOT: This would be a direct intervention by the Chinese state to slow down investments by Chinese entities in the US economy. One of these entities, the China Investment Corporation (CIC), was established in 2007 with the objective of “diversifying China’s foreign exchange holdings and seeking maximum returns for its shareholders within acceptable risk tolerance”. The CIC’s annual report for 2021 said its net assets stood at $1.35 trillion.
