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Why China’s Economy Fears a Biden Administration

In spite of the punitive tariffs levied under the Trump administration, China has been reticent on welcoming his Democratic opponent. Why?

Posted: 20th November 2020 by Finance Monthly
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With the dust finally settling on the US presidential election, reactions from world leaders have been largely predictable. Heads of state have rushed to congratulate President-elect Joe Biden almost as soon as the vote swung his way in key states, with Canadian Prime Minister Justin Trudeau and French President Emmanuel Macron being among the first to call the former US Vice President on 7 November. More followed soon afterwards, seeking to reaffirm alliances and build early ties with the next head of the nation.

This has not been the case for all world leaders. China’s President Xi Jinping conspicuously refrained from congratulating President-elect Joe Biden on his election victory, apparently waiting until the confirmation of his winning Arizona on 13 November – and therefore depriving Trump of any conceivable comeback – to finally extend a hand. Xi’s reticence speaks to the Chinese government’s deep distrust of the US, and perhaps of the incoming administration more than the one outgoing.

Though the CCP has remained largely silent on Biden in official statements, it has made its opinions known elsewhere. "China should not harbour any illusions that Biden's election will ease or bring a reversal to China-US relations, nor should it weaken its belief in improving bilateral ties,” read an editorial published in the state-run tabloid Global Times on Sunday. “US competition with China and its guard against China will only intensify.”

To an observer, this hardly makes sense at first glance. In many respects, a Biden presidency is likely to prove beneficial to the Chinese government and economy. One of the main planks of the Trump administration’s foreign policy has been the imposition of tariffs on hundreds of billions of dollars’ worth of Chinese goods, sparking a trade war that Biden has slammed as “the wrong way” of confronting China and is likely to be rolled back during his term. The Trump administration’s severe restrictions on Chinese student visas are all but certain to be lifted as well, as are more minor swipes made by the outgoing government. Most of all, a Biden administration will not be prone to the same unpredictable outbursts as its predecessor, sometimes hailing Xi Jinping for his “hard work” and “transparency” and sometimes condemning him as “totalitarian”.

“US competition with China and its guard against China will only intensify.”

However, Biden’s administration will differ from Trump’s in one crucial respect: its willingness to embrace cooperation on the world stage – and, consequently, leave fewer openings for China’s ambitions. Though the Trump administration was characterised by an unpredictable foreign policy, this did not always manifest in the form of sanctions and tariffs; several abrupt policy shifts have had the effect of ceding leadership to China in key political and economic areas.

We have seen shades of this occurring recently in the White House’s refusal to join the 170-nation-strong COVAX alliance on the grounds that it was “influenced by the corrupt World Health Organisation and China”, leaving a leadership vacuum that China gladly filled. The administration’s earlier move to withdraw the US from the WHO and the United Nations Human Rights Council, both also pitched as repudiations of Chinese influence, gave the CCP further room to increase that same influence.

These are the splits that have had an obvious net positive effect for China and its image, but there have been other divergences from the international norm that have driven a wedge between the US and the international partners it ordinarily relies on in trade and diplomacy. A prominent example of this was the fracturing of the Iran nuclear deal, a high-profile break from diplomatic consensus that left allies scrambling to save trade agreements built up in the deal’s aftermath. Another was the Trump administration’s systematic blocking of nominees to the WTO Appellate Body, which renders it unable to form the quorum required to hear and resolve international trade disputes. While both of these departures were less concerned with rebuking China, they confounded America’s allies and eroded efforts to present a unified international front against threats like China’s growing economic dominance.

The chances of this erosion continuing under the Biden administration, which has posited the explicit aims of “working with our allies to stand up to China” and restoring the United States to a “position of global leadership”. Foreign leaders’ rush to build ties with Biden, even as Trump contends that the election is not over, illustrates even further that the old alliances are looking for a return to form. China is right to be wary; despite outside appearances, its economy is not an unstoppable machine. Even prior to the outbreak of the COVID-19 pandemic, its GDP growth in 2019 fell back to the lowest levels seen since the early 1990s, and the continual exodus of its young professionals is an albatross on its development.


As it moves to expand trade with other nations through agreements like the Regional Comprehensive Economic Partnership – a free trade pact spanning a third of the global economy, formed in the aftermath of the US withdrawal from the rival Trans-Pacific Partnership a year after Trump took office –  and pledges to open its economy even further, China will thrive in the void of competition left by America. It remains to be seen how long this void will be maintained.

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