Thursday, November 14, 2024

Next China: All Trump's people

Top job picks signal tough approach

Hi this is Philip Glamann in Beijing, where pessimism about the future of China-US ties is mounting.

One big reason for that is President-elect Donald Trump picked Marco Rubio as his secretary of state this week. Rubio has made clear his distaste for the ruling Communist Party, calling for the US to get much tougher on China both economically and militarily. Read about the people Trump is picking for his Cabinet here and why subservience is a major job qualification here.

Right back at you, Beijing has essentially said to the Republican from Florida over the years. Chinese state media once called him one of Washington's "political weirdos," and Beijing has sanctioned him twice as it sparred with Washington over Hong Kong and Xinjiang issues.

Marco Rubio Photographer: Victor J. Blue/Bloomberg

Those moves would make Rubio the first sitting secretary of state ever sanctioned by China and bar the US's top diplomat from coming here.

The nations could eventually work out an agreement allowing trips to happen but it's unclear when and how that might work.

Rubio becoming secretary of state would be "a nightmare come true" for Beijing, said Zhu Junwei, a former researcher in the People's Liberation Army who is now director of American research at Grandview Institution in Beijing.

"China has to consider what to do with the sanctions before being able to have any engagement with him," she added.

Two other Trump picks for top posts are also pretty worrisome for China. Congressman Mike Waltz, who once declared America was in "a Cold War with the Chinese Communist Party," is set to become national security advisor.

And Elise Stefanik, the nomination for US envoy to the UN, has cited countering national security and economic threats posed by the Asian country as one of her priorities when serving as congresswoman. 

Looming over all of this is Trump's threat to hit Chinese exports to the US with 60% tariffs. That step would deal a savage blow to trade between the world's two largest economies and massively complicate Beijing's efforts to turn the economy around. Read our story on how China might respond to tariffs here.

Of course, Trump won't just be surrounded by China hawks. Elon Musk, who makes Teslas in the country and is friendly with Premier Li Qiang, may be a tempering voice, though he'll be busy trying to make the US government more efficient.

Still, Trump's first term was a period of pretty interesting times in China-US ties, like the tit-for-tat consulate closures. Buckle up for Interesting Times 2.0.

What We're Reading, Listening to and Watching:

Flying Brand

Back in 2018, Lululemon had about 10 stores in China. Fast forward to 2024 and it has 130 and hit $1 billion in Chinese sales for the first time.

To say that explosive growth is surprising would be an understatement, especially considering how the economy is slowing and as changing tastes batter brands like LVMH and Starbucks.

Read our full story about Lululemon's success in China here

Lululemon's flagship store in Shanghai in October.

Some of Lululemon's success is partly due to a changing definition of luxury in China.

"Health and wellness are the new luxury categories in China," said Jessica Gleeson, the CEO of retail consultancy BrighterBeauty. Even Shanghai, once a hub of cutting-edge office fashion, is becoming "a city of sneakers and athleisure," she adds.

On top of that, the pandemic's work-from-home legacy has ushered in an era of loose, comfy clothing that's boosting athleisure brands everywhere.

Other such labels are also becoming pretty popular in China. Think outdoor gear maker Arc'teryx, footwear company Hoka and ski wear label Descente, whose goods can easily be spotted in places like Beijing's trendy Sanlitun area.

Here's just how popular Lululemon is in China. Its goods are flying off shelves despite the fact that they cost 20% more than in the US.

20%!

The means yoga pants run upward of $150 and jackets are like $600. That's even in a retail landscape packed with local brands hawking "dupes" of the company's clothes for a third of the price.

Mila Li, 33, a white collar worker in Shanghai, said she was willing to splash out more for Lululemon because it's better made than its rivals.

She also correctly points out that "only when wearing the best pants am I motivated to exercise."

Fuel for the Fire

$1 trillion
That's the figure that China's overall trade surplus will likely approach this year at the current pace. The goods trade surplus soared to $785 billion in the first 10 months of 2024, the highest on record. The situation generates pushback from many countries, and may provide the incoming Trump administration with grist for its tariff mill.

Behind the Great Firewall

A weekly look at the big water cooler news in China.

China was stunned this week by a man plowing a four-wheel drive into a crowd of pedestrians outside a sports center in Zhuhai, a southern city bordering Macau that was expected to be in the spotlight because it was hosting a big air show.

Some 35 people died in the incident and dozens more were injured — the deadliest known act of civilian violence since Xi took office some 12 years ago. Read our story about the incident shattering public trust in the president's safety record here.

Many people expressed deep sadness on Chinese social media, with one person writing on Weibo: "How many families were broken overnight just because of him? Seeing the number of people killed really breaks my heart."

A woman lights a candle outside a sports center in Zhuhai following the attack. Photographer: Ng Han Guan/AP Photo

The police said the attack was carried out by a 62-year-old surnamed Fan, who was angry about a divorce. Some people had trouble believing that. They question, for example, how authorities could know Fan's motives if he was found unconscious because he badly injured himself with a knife.

"I am waiting for the follow-up investigation to see if people's lives matter less than national events," one Internet user said.

That comment suggested suspicion the authorities were trying to explain away the car ramming so that the air show wasn't upstaged.

China likes to tell its people it is "one of the safest countries with the lowest crime rate in the world." The Public Security Ministry has said severe violent crime was down 10.7% in 2023 compared to four years earlier.

The average person can be forgiven for not quite feeling that. Social media users have connected a flurry of stabbings to mounting economic strains, and there's evidence protests are on the rise.

Maybe people will take some solace in authorities pledging to increase patrols in places where gatherings happen. Read our story about that vow here.

Yet the attack in Zhuhai had many people on social media worried they needed to be more careful when they're out in public – a stark contrast to officials who issue sweeping proclamations about the safest land under the sun.

"The social atmosphere has become so hostile, let's all be careful not to trigger someone," one person wrote.

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