Xi emerges as global advocate for free trade, countering Trump

US President-elect, Donald Trump has threatened to impose tariffs on the entire world. On the other hand, Xi Jinping is once again wasting no time in positioning himself as the main defender of the international trading system, according to a detailed report by Bloomberg.

Views of Chinese President Xi Jinping

China’s leader warned on November 15, that the global economy was fracturing as protectionism spreads, leading to “severe challenges.” The world, according to him has “entered a new period of turbulence and change”, the Bloomberg report explained further.

“Dividing an interdependent world is going back in history,” Xi said in a speech at the APEC CEO Summit in Peru read on stage by one of his ministers. He repeated that theme in a speech on November 16 to leaders of APEC’s 21 member economies, including the outgoing US President Joe Biden.

“We should tear down the walls impeding the flow of trade, investment, technology and services, uphold stable and smooth industrial and supply chains, and promote economic circulation in the region and the world,” Xi said.

Xi Jinping playing the same role like 2017

For Xi, it’s a role he played when Trump first rose to power in 2017. During that time, China’s head of state urged global business elites at the World Economic Forum in Davos, Switzerland, to reject trade wars and protectionism, saying it would cause “injury and loss to both sides.”

In the eight years since, Trump imposed punitive tariffs on China that were largely kept in place by the Biden administration, which also stepped up efforts to deny Beijing advanced technology. As he prepares to take office again in January, Trump is now threatening to impose 60 per cent tariffs on China, and, just as crucially, 10 per cent to 20 per cent on the rest of the world, added the Bloomberg report.

That universal tariff threat is giving Xi a fresh opening to improve ties with a range of governments bracing for tough negotiations with Trump. On Friday, Xi met one-on-one with the leaders of Thailand, Singapore, Chile, South Korea, Japan and New Zealand, all important US allies and security partners in the Asia-Pacific.

New Zealand bats for a rule-based system of trade

“We’re very invested in making sure we have a rules-based system, not a power-based system,” New Zealand Prime Minister Christopher Luxon said at the APEC CEO Summit. “There has been a shift from rules to power, and that’s something we advocate very strongly for: That irrespective of your size, we want countries to be able to navigate their way in the world through the international rules-based order.”

Further, Xi was busy with meetings, and focuses on interacting with Biden one final time, the US president kept an easy schedule. In addition to a trilateral meeting with Japanese Prime Minister Shigeru Ishiba and South Korean President Yoon Suk Yeol, he also met Peruvian leader Dina Boluarte, who inaugurated a $1.3 billion port with Xi the night before that could transform South American trade with Asia.

A global trade war is detrimental to everyone

Shou Chew, the chief executive officer of TikTok, called the app an “industry leader when it comes to online safety and data security.” Although the US passed a law this year that would ban the app if its Chinese owner doesn’t sell to an American buyer, Trump has spoken favourably about the company. What he’ll eventually do is unclear. A former Chinese Commerce Ministry official, Ren Hongbin, called on participants to “stand up to protectionism and unilateralism” added the Bloomberg report further.

“There is the rhetoric of the decoupling and derisking,” said Ren, now chairman of the China Council for the Promotion of International Trade. “The artificial severance of the global supply chain is detrimental for everyone” again highlighting the importance of discussions and negotiations between the US and China moving ahead so as to ensure smooth global growth and cumulative peace all across the world.

Some bold views about dealing with Trump came from Prime Minister Justin Trudeau, who spoke about how his government “rolled up our sleeves and did the hard work” to ensure a trade deal between Canada, Mexico and the US was updated to benefit everyone. He further added according to the Bloomberg report that political leaders needed to do a better job ensuring that trade benefits average citizens.

Market participants and global investors will closely follow these developments. All eyes are now firmly placed on the upcoming Trump administration and the steps the President-elect will take in his second term. Global trade, currencies, moves of the Federal Reserve along with other significant economic developments globally now solely depend on the future trajectory of the US-China relations.