China cannot ignore Trump, but it can evade him._

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China enters the Trump trade attack from a position of strength. Beijing understands that the battle is not about out-dated steel mills and the rust belt industries that Trump wants to revive.

The real challenge is found in the digital economy of the future. That’s a challenge China is already winning and, despite the Western narrative, it is built atop a sound economic base.

In 2024, China’s economy maintained steady growth, with GDP reaching 134.9 trillion yuan. This is a 5% increase year-on-year. High-quality development continued, with strong progress in advanced manufacturing, technological innovation, and the green transition. Investment in manufacturing grew by 9.2%, especially in high-end and tech-driven sectors.

In 2024, despite all the US efforts, China’s foreign trade hit record highs, with foreign exchange reserves exceeding $3.2 trillion.

The cheap goods China was infamous for are still produced, but they are not a substantial part of the economy. US companies have shifted production of these types of goods to Vietnam, Cambodia and Bangladesh.

China has shifted its economy to the production of high-end goods built with technical innovation. It’s an irony that Joe Biden’s exclusion of Chinese talent from the US under the Chips Act has accelerated China’s development momentum in these high-tech and semiconductor areas.

Trump believes the China economy is vulnerable because, like his visions of restoring Detroit’s ancient steel industry, he is living in the past. He continues to view China as an export-based economy with the US as its primary market. This feeds his tariff narrative so he thinks tariffs are effective weapon to destroy the Chinese economy.

Although there are worries about the impact of further tariffs on exports, China’s export position in relation the US has changed a lot since 2016.

In 2016, about 33% of Chinese exports went to the US. Today about 13-14% of total exports go to the US. Yes, it’s still a significant market, but it’s no longer an economy breaker. Exports to the US could shrink to 7% or more without having a significant impact on an already robust economy. China may not be growing as fast as in the past, but the economy is not collapsing.

New markets for China come from its support for multilateralism. China remains committed to advancing high-quality Belt and Road co-operation and strengthening global trade ties. Consistent engagement with the G20, APEC, SCO and BRICS reinforce China’s role in global governance and economic stability. This reduces the impact of tariffs and expands new markets in the global south.

The real economic strength lies in the future development of the technological economy. For example, China has taken a major leap in space communication with its new 100 Gbps satellite-to-ground laser technology. This breakthrough puts China ahead of Elon Musk’s Starlink in laser-based satellite communications.

This technology transmits the equivalent of 10 full-length movies per second using backpack-sized laser terminals on mobile ground stations which reduce weather disruptions. China is setting a benchmark in space-based connectivity that will supercharge navigation, 6G internet, and remote sensing.

Tariffs do not impact on digital output, service improvements or connectivity. The efficiencies bought about by this technology more than offsets any tariffs imposed on more physical economic outputs. The performance of BYD vs Telsa is an example to watch. The BYD products are simply more advanced, safe and reliable. Huawei’s gesture-sensing technology opens your car door without physical contact. The list goes on, but this is not about China’s technology being more advanced than the US, although in many cases this is correct.

This is about China’s independence in the sense that its success is not dependent upon the behaviour of the US economy. These are the developments that allow China to evade Trump.

This aspiration for independence, defined as freedom from foreign interference, sits at the core of Chinese policy considerations.

The West seeks diversity of supply chains and freedom from foreign interference. It is surprised that China has the same aspirations. This aspiration is the driving force behind almost all Chinese foreign policy decisions and we ignore it at our peril. The poor strategic foundations leading to AUKUS give some idea of the cost of ignorance.

In the 19th century, China was bullied by foreign powers in the so-called century of humiliation and this influences the background of modern policy reactions. Contemporaneous events in this period in the West include the US civil war and today’s use of the confederate flag, the Eureka rebellion and the use of its southern cross flag, and the European revolutions of 1848 also continue to exert an influence on modern-day political aspirations.

It should come as no surprise that in China there is a determination not to allow this foreign interference to happen again. This shapes both China’s subdued reaction to US tariffs and its advances in multiple technological fields which enable Beijing to largely evade the US.