With little option in the face of mounting protectionist measures from Washington, and coupled with a need to “give the public an account” of what is being done in response, Beijing may be forced to retaliate.
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That was the message conveyed by former central bank governor Yi Gang on Wednesday, and it painted a worrisome picture of relations between the world’s two largest economies over the next four years.
“We all understand that, from an economics perspective, [retaliatory actions are] never a good choice,” Yi said at the annual Beijing-Tokyo Forum in Tokyo. “But there’s not much policymakers can do about that” in the face of mounting domestic pressure and rising concerns among international industry players.
Yi, who received a PhD in economics from the University of Illinois in the 1980s and was at the helm of the People’s Bank of China from 2018-23, did not explicitly mention the United States, but his comments were made as the focus among guest speakers was predominantly on US president-elect Donald Trump.
And the messaging came just one day after China said it would restrict US-bound exports of minerals crucial to the tech trade, following Washington’s unveiling on Monday of new tech restrictions intended to limit Beijing’s footprint in advanced semiconductors.
As policy advisers, we should speak up for the benefits of free trade
Trump, who will start his second presidential term on January 20, last week threatened to impose an additional 10 per cent tariff on all imported Chinese products on his first day in the White House, on top of tariffs already in place – a legacy of the US-China trade war that played out during his first term and continued under the administration of President Joe Biden.