The President’s Inbox The U.S.-China Trade War, With Zoe Liu
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May 6, 2025 In this engaging discussion, Zoe Liu, a senior fellow specializing in China studies, dives into the complexities of the U.S.-China trade war. She outlines China's strategic responses to tariff hikes and explains the economic anxieties stemming from these tensions. Liu also sheds light on the historical narrative of China's 'century of national humiliation' and its impact on current leadership. The conversation explores the resilience of the Chinese economy, particularly the role of small enterprises, as well as the challenges multinationals face in this evolving landscape.
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China's Trade Diversion Strategy
- Trade tensions caused direct trade between US and China to fall from 18% to 15% of China's exports since 2018.
- China uses trade diversion by moving manufacturing overseas to bypass tariffs and stay close to markets like the US.
China's Economy Beyond GDP
- The Chinese economy is resilient and still grows faster than many advanced economies despite slower growth than past decades.
- China's leadership measures success by technological progress and innovation, not just GDP growth.
China's National Humiliation Motive
- China retaliated to US tariffs because it perceives the trade war as also a security challenge, not just economic.
- President Xi Jinping sees standing firm as necessary to end the narrative of China's "100 years of humiliation."