CHARACTERISED by a mix of strategic competition, tariff and trade tensions, and sustained efforts to maintain stability, the China-United States relations are likely to see a new turn after the mid-term election results in America. The two sides had come to a strategic understanding on tariffs and trade after the September summit between US President Mr. Donald Trump and Chinese premier Mr. Xi Jinping in the White House. The thaw seems to have held up, at least till the proposed trilateral meeting between Mr. Trump, Mr. Jinping and Russian President Mr. Vladimir Putin in the near future. China seems to have shown willingness to work closely with Mr. Trump which is reflected in the extension of suspension of an additional 24 per cent tariff on imports from the United States for two months. The move is in line with the consensus reached during the White House summit and that Beijing is willing to take it further despite the setback to Mr. Trump in the mid-term polls shows that Mr. Jinping is seriously considering a long-term solution to the trade fight between the two powers. China has also hinted that it is ready to adjust relevant tariff counter-measures after subsequent measures taken by the United States.

 

The calibrated tone underlines Beijing’s readiness to change its policies as per the evolving political situation in America. In fact, the entire world has slipped into a wait-and-watch mode after the stinging electoral rebuke to Mr. Trump in the mid-term elections. With the Democrats gaining control of the House of Representatives and the Senate for the next two years of Mr. Trump’s presidency, a lot of policy changes are on the horizon. Trade, tariffs and security are bound to undergo changes under the new political system in Washington which Beijing has factored in and hence the extension of trade truce on imports from the US. While the turning point in American politics is set to have profound implications on US-China relations, the fact remains that Beijing will be extra careful in dealing with the Democrats-controlled Congress. In Mr. Trump, they had encountered a different American policy-maker who cared less about his country’s image and more about transactional diplomacy.

 

The US President’s maverick style had somewhat favoured China for the large concessions he offered at the first hint of good business. The Democrats are unlikely to follow the shoot-and-scoot foreign policy. They hold China as a strategic competitor in advanced technology, industrial capacity, supply chains and military power in the Indo-Pacific. A weakened Trump would give them a chance to intensify the fight through traditional policy instruments. China is well aware of the changing political dynamics in the US and has experienced the manner in which the Democrats set out with coordinated export controls and targeted industrial policies instead of high tariffs. The difference remains in the policy tools used by the Democrats and the Republicans.

 

In this light, China’s move to carry forward the tariff thaw is a strategy to extract a big policy decision from Mr. Trump till he wields power in the White House without support of the Congress. Though China will never get lured by the G-2 proposed by Mr. Trump with an aim to bring the top two economic powers on one platform, Mr. Jinping knows that avoiding a direct confrontation with the US will be beneficial to his Chinese dream. The Premier knows well that it takes assuaging the US President’s ego by offering direct talks. The September summit in White House was a crafty policy decision to extract concessions from the maverick businessman-turned-politician. Now, as he gears up to deal with two Americas (Mr. Trump and the Democrats-controlled Congress), Mr. Jinping has again signalled willingness to work together with the US to avoid a trade war. It depends upon how a subdued Mr. Trump takes ahead his China policy in the next two years. Beijing will be happy to wait and let the initial storm of the mid-term rout pass before making the next move. It has started really well.