China, The Frenemy

For the most of the last four years, China was largely seen as the world’s big bad wolf. But in mere months since taking over as the president of the US, Donald Trump has, for many, unseated China to become the world’s new chief baddie.

It’s a development that, for the most part, has given Beijing an opening to realign its image in the world.

In our last issue we talked about how China is now projecting itself as an “open and inclusive” destination to scientists laid off from Trump’s budget cuts. This week, Beijing’s representatives sent that message to the business community too, with ‘openness’ and ‘inclusivity’ being heard everywhere from the China Development Forum to the ongoing Boao Forum.

The message speaks to China’s push to gain (or regain) global clout at a time when the US is picking fights with almost all of its allies.

Last week, foreign ministers from Japan, China and South Korea met in Tokyo, where Beijing’s Wang Yi called for the three countries to restart free trade talks. This was the first such meeting between officials of the three countries since 2023 — a year that saw Japan and South Korea aligning more closely with the US in a chip war against China.

Circumstances have changed drastically for the two countries today, now that Trump’s 25% auto levies threaten an industry seen as the pillar of their economies.

Early this week, Chinese Vice Premier He Lifeng also met Maros Sefcovic, the trade chief of the European Union, another US ally facing the threat of sharp levies. He told Sefcovic that China was ‘willing to work’ with the bloc to push back against Trump’s threats. After their meeting, Sefcovic, who has previously called China the EU’s ‘most challenging trade partner’, said that China and the EU had a “mutual interest” in addressing their differences.

That’s a far cry from the state of EU-China relations last year, which one official had described then as “the unfolding of a slow-motion train accident”.

A bolder Beijing

The potential isolation of the US has also emboldened China to take a more aggressive approach as it reaches out to businesses and fellow nations. Take the case of Xi Jinping’s annual meeting with global CEOs — a tradition he started only last year due to the outflows of foreign investment. When he held that first meeting last year, Xi was completely focused on talking up China’s economic potential — so much so that the Financial Times described him as “salesman-in-chief”.

This week, though, as he hosted that meeting again, Xi changed tack. Instead of focusing on the virtues of the Chinese economy — which he still needs to do considering foreign investment into the country has only declined further — Xi chose to remind foreign executives that they faced 'severe' trade headwinds (from Trump’s tariffs). "We need to work together to maintain the stability of global industrial and supply chains,” he said.

Similarly, last week, China’s ambassador Wang Di dangled the carrot of ‘a free-trade agreement’ to Canada. The offer came with several warnings, however. Canada would have to remove recent restrictions it placed on Chinese investments, and Beijing should not be used as a “bargaining chip” in negotiations with the US, Wang warned.

China’s overtures to Canada are carefully timed, considering it would be an important trade destination for Ottawa in the face of higher tariffs in the US. Canada has already diverted much of its oil supply to China, and that trade will only grow considering Trump seems to have triggered a lasting change in how Canadians view their neighbour.

Of course, these developments don’t mean that the EU, Canada or Japan won’t still see China as a risky trade partner. But as their once closest ally becomes their now biggest headache — it appears China is a partner they can’t afford to unfriend.

Beijing’s opportunities = global risks

It’s worth noting that Beijing’s opportunities extend far beyond diplomacy. In Africa, for instance, it can fill gaps created by Trump’s cuts to USAID by stepping up the provision of vaccines, medicines and other healthcare infrastructure. It’s already deeply influential in the continent and is even a chief player in building a “Great Green Wall” to stem the expansion of the Sahara desert.

Meanwhile, it is also playing a bigger role in agencies like the United Nations and the World Health Organisation, pledging greater funds and assistance to address gaps left by the US. And it has also promised a greater commitment to combating climate change — by expanding its carbon market, boosting renewables and toughening up policies — at a time when Washington doubles down on fossil fuels.

While all of that makes for an interesting four years ahead in global politics, China’s growing influence poses its own risks to the world. A bolder China could move to secure control of Taiwan, whose countless chip factories help power almost all industries around the world.

A bolder China will also look to dump its cheap products anywhere it possibly can, as it has done so far in Southeast Asia, where it has slowly gained increasing leverage.

• As part of its push to lure more foreign investment, China has released all employees of US due diligence firm Mintz Group after two years in captivity.

• An AI expert says DeepSeek has reduced the AI development gap between China and the US to just three months.

• China is set to be the world’s biggest buyer of chipmaking equipment this year despite slashing its overall investment in the technology.
  

• And Vietnam has signed deals worth over $4 billion to buy US energy and equipment, in a bid to avoid Trump’s tariffs. It will also cut levies on some imports from the US and trial satellite internet services by Elon Musk’s Starlink.