China is playing the long game to win its war with Trump

The Age

3 days ago

US President Donald Trump's trade war was meant to rebalance global power in the United States' favour. Instead, China is playing the long game, enduring short-term economic pain to shape any eventual deal to its advantage.
The strategy appears to be working — for now. On Monday, Washington granted Beijing another 90-day reprieve, extending a pause on tariffs through November 10. China announced it would do the same. Markets welcomed the move, which offered some relief after months of tension. The delay will give Chinese President Xi Jinping's policymakers more time to plan their next move.
Time is Xi's ally. So far, the clearest outcome of each round of talks has been a commitment to meet again. Despite Trump's insistence that China has taken significant steps to improve their trade relationship, Beijing has made no consequential concessions on any of his key concerns. (China has offered some small compromises, none on the scale of American demands.)
The extension has come at a delicate time for China's economy, which is plagued by sluggish domestic demand and a slowdown in the property sector. Bloomberg Economics says that it is among the few major nations without a clear timeline or terms for a deal, while others have struck agreements to secure lower tariffs. Even with this reprieve, it notes, Beijing faces average US tariffs of 40 per cent — almost 25 percentage points above the global average.
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This will hurt prospects for Chinese citizens, who have enjoyed more than three decades of near double-digit growth. The economy expanded by 5.2 per cent in April-June from a year earlier — enviable by global standards — but anxieties among the once-thriving middle class over the future for their children are rising. Youth unemployment remains stubbornly high, with joblessness at 14.5 per cent in June. That figure improved in recent months, but analysts point to significant challenges: More than 12 million university students are set to graduate with hopes of joining the workforce.
Still, China is betting that despite these economic costs, it can fight this trade war to the end.
Politically, Beijing is preparing the population for a long battle. State media editorials have lauded a Mao-era philosophy as a possible strategy to counter US pressure. They reference the former Chinese leader's 1938 essay ' On Protracted War ', which laid out his approach to combating the invading Japanese between 1937 and 1945.
During a series of lectures in May and June 1938, Mao spoke of how the 'contest of strength is not only a contest of military and economic power, but also a contest of human power and morale'. Scholars say the idea was to alert his fellow citizens that the war would be long and gruelling, but could be won through endurance and unity.