China: Preparing Strong Retaliatory Measures

Published on March 19, 2018

President Xi Jinping has relayed to senior officials in Beijing that he considers the signing two days ago of the Taiwan Travel Act by US President Donald Trump to be a severe – and deliberate – escalation of tensions in Sino-US relations, coming on the heels of already heightened tensions over trade.

*** The Taiwan Travel Act has raised the stakes to a new level, and if President Trump were to allow the US Secretary of Defense or Secretary of State to visit Taipei, or welcome Taiwan officials to visit the White House, Chinese officials warn Beijing will not hesitate to expel the US Ambassador to China, and to take “unprecedented retaliatory measures” that would deliver a heavy blow to US agricultural producing states and to the US financial markets. ***

*** Xi, from what we understand, has already instructed officials to prepare a full slate of countermeasures on trade, including specific and targeted actions against certain US goods through retaliatory, high tariffs, and through the imposition of new, strict import standards. As warned before, China considers the latest US threats and potential actions on Intellectual Property Rights to be the opening salvo to a potential trade war (see SGH 3/15/18, “ChinaBristling at Trade Threats”). ***

*** Beijing, nevertheless, does still interpret Trump’s latest moves as “opening positions” in negotiations before the two leaders meet face to face, and believes the US president will continue to push for concessions from China even while averting an outright collapse in talks. They see the current tactics following the same template, albeit a much more alarming one, as the White House positioning in the run-up to the first Xi-Trump summit held at Mar-A-Lago last year. ***

But the two sides have yet to discuss, far less agree on, the first Xi-Trump meeting for 2018. And with the signing of the Taiwan Travel Act, on the heels of heightened tensions over trade, and the firing of Secretary of State Rex Tillerson in favor of the more hawkish CIA Director Mike Pompeo, Beijing is bracing for a period of instability in relations with the US for months to come, relations they believe will remain on knife’s edge until the two leaders agree to set their first summit of this year.

Taiwan, Tillerson, and Pompeo

On Saturday, China issued its strongest warning to the US yet since Xi took office in autumn of 2012, over the Taiwan Travel Act.

Five departments, including, most pointedly, China’s Ministry of National Defense, issued warnings that the Trump administration refrain from the implementation of relevant clauses of the act, and stop seeking any official contacts and military ties with Taiwan.

After Trump signed the Taiwan Travel Act, President Xi made it clear to officials in Beijing that he considered it a deliberate provocation by Trump himself. The act, though not legally binding, is said to “severely violate” the one-China principle, as well as the three joint communiques the US signed with the People’s Republic of China.

Foreign Minister Wang Yi for his part also lodged a formal protest and “stern representations” over the Taiwan Travel Act on Saturday.

Wang relayed China’s position that it will take all necessary measures to deal with the situation if US warships were to anchor in Taiwan, and to expel the US Ambassador to China from Beijing if US Secretary of State or Secretary of Defense was to visit Taipei, or Taiwan officials visit the White House.

With Trump’s recent sacking of several key administration officials, Chinese officials expect policy from Washington to continue to turn more hawkish and confrontational.

They are specifically alert to the implications of the recent firing of Rex Tillerson, and Trump’s plan to replace Tillerson with CIA head Mike Pompeo, and believe Pompeo may prove to become the most hostile US Secretary of State to China in recent US history.

With Trump’s already tough stance on Sino-US bilateral trade, Taiwan, and the South China Sea, officials in Beijing are now bracing for instability in Sino-US relations for months to come.

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