The New Yorker:

A professor at M.I.T. on how Xi Jinping is likely to respond to U.S. tariffs and why the standoff won’t weaken the Chinese Communist Party’s grip on power.

By Isaac Chotiner

Donald Trump came into office threatening tariffs on Chinese goods, but few observers predicted that he would raise them as high as he has. In early April, he slapped a minimum fifty-four-per-cent tariff rate on imports from the country; less than two weeks later, he raised the rate to more than a hundred per cent, causing Chinese President Xi Jinping’s government to reciprocate by levying similar tariffs on American goods. Although Trump had gone back and forth about whether certain products, such as smartphones and computers, will be exempt, the markets have been consistent in responding negatively to his moves, and economists have raised the risk of a recession significantly since the beginning of the year. No one knows exactly what Trump will do next, or whether the tariffs represent a long-term policy or a bargaining position, but the uncertainty—in addition to spooking businesses around the world—has raised questions about how China is likely to respond in the medium and the long term to the U.S.

I recently spoke by phone with the economist Yasheng Huang, an expert on China who teaches at M.I.T.’s Sloan School of Management. During our conversation, which has been edited for length and clarity, we discussed the ways in which tariffs provide an opportunity for Xi to reform his country’s economy, how the tariff war is likely to play out, and why disappointing economic growth figures have not caused any weakening of the Chinese Communist Party’s grip on power.

What do you think is the central goal for Xi Jinping and the Chinese Communist Party (C.C.P.) in terms of how to deal with the American Administration under Trump on tariffs? What are they hoping to achieve?

I think it’s clear they don’t want a trade war. Their economy is struggling, and the export sector has been one of its few bright spots. Last year, they had almost a trillion-dollar trade surplus. The property sector is not doing well. The technology sector is doing well, but it’s not really adding that much to G.D.P. growth. So this was purely a trade war that was initiated by the United States, and not by China.

I don’t think they want to cave in. That would make the Chinese leadership look very bad. And, moreover, I don’t think they trust the Trump Administration. Even if they were to give concessions this time around, I don’t think they believe that the concessions would hold. So there are multiple motivations on their part not to quickly come to an agreement if that agreement requires significant concessions.

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