Is Beijing running a risky bet? If tariffs work for the US, its economy could implode. It might think a war could change things. Xi’s internal enemies may push for it, hoping for a reshuffle
China has doubled down against US tariffs, apparently wagering that two outcomes will emerge: first, that the world will unite in opposition to US strategy and potentially open channels of dialogue with China, and second, that Americans will revolt against the resulting market crash, inflation, and recession. So far, Beijing’s predictions have been correct, but it has only been a couple of days.
The coming weeks will reveal whether this trend continues or if there will be a correction. If tariffs cause a persistent backlash, both internal and external, and the US reverses its stance in a few months, China will reassess its strategy.
However, if the tariffs succeed and the developed world reaches an agreement with America, stabilizing the market and bringing inflation under control, public acceptance of the new situation may follow. China might then face a stark choice.
With US-imposed tariffs applying pressure to its trade, China’s economy could slowly be suffocated by rising internal debts, stagnation, and inflation; Beijing can decide to live with it, imploding its market or pushing in a different direction.
China has a comprehensive military-industrial capacity, potentially backed by Russia. In contrast, neither the US nor Europe boasts a comparable industrial infrastructure. While Japan and South Korea are better positioned, they are no match for China’s capabilities and might be vulnerable to threats or neutralization by Chinese missile strikes.
Ukraine demonstrated that wars are still fought with industrial capacity, and the US might need years to rebuild its full-fledged domestic military manufacturing size. This gives China a few years to wager it can embarrass the US in a military confrontation and reshape the world order, nipping in the bud of US re-industrialization.
Then, a military strike, even a relatively minimal conventional clash, could do the trick. Can the US be humiliated? Will it react to a defeat? And how? Short of a nuclear war, does the US presently possess the capabilities to win a conventional naval war?
If China goes for a military clash and loses it, President Xi Jinping may lose everything or be dragged into a long war of attrition like Russia.
Here is one more twist. Xi has many hidden internal enemies, and they could have a vested interest in pushing Xi into a war. If he fails, it will open a vast power struggle inside China. If he succeeds, nothing will change for them.
In theory, Xi should look for a third way out of this predicament, but time is short. The next few months could be critical.
