Monday, January 20, 2025

China readies for Trump

Chinese President Xi Jinping is ensuring that China is prepared for the unpredictable return of Donald Trump to the US presidency.
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It hasn't escaped Beijing's attention that Donald Trump is kicking off his presidency siding with China.

The returning US leader came out in favor of Chinese-owned app TikTok, pledging to delay enforcement of a US ban nearly five years after trying to get just such an embargo in place. No sooner had the video-sharing platform gone dark in the US yesterday than it was reinstated.

But for Chinese officials, Trump's support for TikTok isn't necessarily good news. It signals the unpredictable and outright contradictory policy that they must grapple with once he is sworn in today.

For President Xi Jinping, the test is whether China can use that proclivity for inconsistency to its own advantage.

Trump and Xi held a call on Friday that the incoming president described as "a very good one for both China and the U.S.A."

Yet Trump has floated possible levies as high as 60% on Chinese goods — a move that could halve the Asian nation's growth rate.

While Xi isn't in Washington for the inauguration, Vice President Han Zheng's attendance will likely be taken as an olive branch: Han met with Vice President-elect JD Vance yesterday.

Xi's former chief of staff, Ding Xuexiang, is expected to carry a similar message of openness when he addresses the World Economic Forum in Davos this week. A recent flurry of positive economic data may help reinforce the benefits of engagement.

But while Beijing is offering friendly gestures, it's also keeping up a steady stream of jabs.

China's commerce ministry announced a probe into US chipmaker subsidies, said it will investigate the parent company of Tommy Hilfiger and Calvin Klein, and added four American companies to its unreliable entity list.

Officials are showing off an expanded toolkit to respond to any escalation as Trump's second trade war looms.

Beijing knows that Trump could turn on a dime. It's ensuring that China is prepared to do the same. — Rebecca Choong Wilkins

A smartphone screen displays a message indicating TikTok's unavailability after the platform went dark due to a nationwide ban yesterday. Photographer: Jacek Boczarski/Anadolu/Getty Images

Global Must Reads

Trump is poised to invoke emergency powers in his first hours in office as part of a plan to unleash domestic energy production while seeking to reverse President Joe Biden's actions to combat climate change, sources say. At a rally yesterday in downtown Washington, Trump said his second presidency will mark the start of "a brand new day of American strength and prosperity, dignity and pride."

Trump speaks during his rally in Washington yesterday. Photographer: Al Drago/Bloomberg

A ceasefire in the Gaza war began taking hold as Hamas released three female hostages yesterday in exchange for 90 Palestinian prisoners. The six-week truce aims for the gradual release of 33 of the almost 100 Israeli hostages still held in Gaza by Hamas — designated a terrorist group by the US and other governments — and of about 1,000 Palestinians in jails in Israel.

Mexico has launched a panic app, lined up more than 2,600 lawyers and almost 2,200 consulate workers to support the roughly 5 million undocumented Mexicans living in the US who are facing Trump's threat to carry out "the largest deportation operation" in the nation's history.

The lead candidate for Germany's Greens in next month's snap election took his campaign pitch to deeply conservative Bavaria at the weekend, part of an effort to push back against the image of the party as meddlesome and dogmatic and show he's ready to reach out to new voters. Robert Habeck, the current economy minister,  is also targeting those uncomfortable with a recent shift to the right by the poll-leading opposition conservatives.

The 15-month Israel-Hamas war and its fallout tilted the balance of power in the Middle East against Iran, to the benefit of longtime rival Saudi Arabia. With Tehran's proxies in Lebanon and the Palestinian territories decimated, its Syrian ally Bashar al-Assad deposed and its enemy Israel emboldened, Saudi Crown Prince Mohammed Bin Salman is wasting no time filling the void.

Iran has meanwhile been suffering its worst power outages in decades, impacting large swathes of the economy, crimping key industries and pushing a country rich in energy resources further into crisis even before Trump's expected tougher stance toward the Islamic Republic takes effect.

A South Korean court issued a fresh warrant to formally detain President Yoon Suk Yeol, allowing investigators to keep the embattled leader in custody longer as they look into criminal allegations over his short-lived declaration of martial law.

Chrystia Freeland kicked off her campaign to lead Canada yesterday, telling supporters that she's the best candidate to do battle with Trump.

Spanish Prime Minister Pedro Sánchez sprung more policy surprises at the weekend, pushing out the long-standing head of Spain's main telecommunications provider and stepping up efforts to shut many foreign buyers out of the country's property market.

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Chart of the Day

A longshot bet has emerged among a group of die-hard bond traders — that the US Federal Reserve's next move on interest rates will be up, not down. The wager, which arose after a blowout jobs report on Jan. 10, stands in stark contrast to the consensus on Wall Street for at least one rate cut this year.

And Finally

Four years after global elites at the World Economic Forum in Davos thought they were done with Trump, private jets arriving at the Swiss mountain resort for the latest iteration starting today are coinciding with the former president's triumphant return to the White House. Davos Man, the loaded term for affluent attendees of the forum, loves big ideas. And this year, there's a new one: embrace Trump, and fast.

Illustration by Deena So'Oteh

Thanks to the 12 people who correctly answered the trickier-than-usual Friday quiz and congratulations to Gaby Sivzattian, who was first to name Mozambique as the country where the newly installed president is the world's tallest leader.

More from Bloomberg

  • Next China for dispatches from Beijing on where China stands now — and where it's going next
  • Check out our Bloomberg Investigates film series about untold stories and unraveled mysteries
  • Next Africa, a twice-weekly newsletter on where the continent stands now — and where it's headed
  • Economics Daily for what the changing landscape means for policymakers, investors and you
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