Trump’s gift to Xi

Hi, China Watchers.  Today we look at how Beijing is using Trump tariffs to deepen ties in Southeast Asia, spill on a war of words between the Biden administration’s national security adviser and the Trump White House, and examine NATO’s growing focus on China.  

Let’s get to it. — Phelim.

XI USES TRUMP’S TARIFFS AGAINST HIM IN ASIA

President Donald Trump gambled that his 145 percent tariff on Chinese imports would bring Chinese leader Xi Jinping crawling to the negotiating table.

Xi is instead ignoring Trump’s calls to sit down to cut a deal and spending the week cozying up to Vietnam, Malaysia and Cambodia — all of which are facing sky-high U.S. tariffs. 

In a trip that concludes Friday, Xi is spreading the message that China is ready to deepen and expand imports and exports to Southeast Asian countries. Beijing’s trade with Association of Southeast Asian Nations member countries totaled more than $900 billion in 2024, roughly double the value of trade the region did with the U.S. last year.

It’s part of Beijing’s wider strategy to position Xi as the anti-Trump — a defender of a rules-based global trading system governed by the World Trade Organization rather than unilateral tariffs designed to block import. 

“China will continue to seek joining hands rather than throwing punches, removing barriers rather than erecting walls, and promoting connectivity rather than decoupling,” Chinese Foreign Ministry spokesperson Lin Jian said Tuesday.

“Xi Jinping doesn’t even need to say it out loud. It’s clear China is portraying itself as the reliable economic partner for Southeast Asian countries,” said Brian Harding, former country director for Asian and Pacific security affairs in the Office of the Secretary of Defense. “The countries in the region are going to fundamentally not trust the United States moving forward.”

It’s messaging that has paid off in both Vietnam and Malaysia, which face “Liberation Day” tariffs of 46 percent and 24 percent respectively. Xi left Hanoi with memorandums of understanding for bolstering supply chains and accelerating completion of an $8 billion rail project to boost the flow of goods across the Chinese-Vietnamese borders. 

“Facing the rise of unilateralism, Malaysia will work closer with China to jointly tackle risks and challenges,” Malaysian Prime Minister Anwar Ibrahim said in a meeting with Xi on Wednesday.

Xi can count on a similar warm welcome today in Phnom Penh. Cambodia is facing a whopping 49 percent tariff and its authoritarian government christened a major street “Xi Jinping Boulevard” last year in recognition of his “historic contributions to the country’s development,” the Malaysian newspaper The Star reported.

The timing of Trump’s tariffs also works in Xi’s favor. China and ASEAN are in the final phases of a three-year effort to widen the terms of the ASEAN China free trade agreement. ASEAN warned last week that Trump’s tariffs will “impact economic security and stability, affect livelihoods of millions of people in the region and hinder economic progress.”

 “They’re upgrading their preferential alternative with China at the same time they may be seeing a potential disruption in their very important trade relationship with America,” said Marc Mealy, executive vice president of the U.S.-ASEAN Business Council, a group of U.S firms with manufacturing or trade ties to the region.

And the tariffs are far from the only Trump administration move likely to help Beijing expand its regional influence.“If you combine the tariffs and foreign aid cuts and things like cutting off of Voice of America, Radio Free Asia and revoking a lot of student visas for foreign students — in Southeast Asia it greatly reduces those countries’ level of confidence in the U.S. as a long-term reliable partner,” said Scot Marciel, a former principal deputy assistant secretary for East Asia and the Pacific at the State Department.

TRANSLATING WASHINGTON

— STATE SANCTIONS CHINESE ‘TEAPOT’ PRODUCER: The State Department imposed sanctions Wednesday on a Chinese teapot refinery linked to illicit purchases of Iranian oil between 2020 and 2023. The company allegedly bought “more than a billion dollars’ worth of Iranian crude oil,” State Department spokesperson Tammy Bruce said in a statement. 

The Chinese embassy said it was unfamiliar with the refinery’s sanctions woes. “We firmly oppose the U.S. abuse of unilateral sanctions and ‘long-arm jurisdiction,’ which undermines international trade order and rules, disrupts normal economic and trade exchanges, and infringes upon the legitimate rights and interests of Chinese companies and individuals,” said Chinese embassy spokesperson Liu Pengyu.

— SULLIVAN-WHITE HOUSE CHINA POLICY SPAT: Jake Sullivan, who served as President Joe Biden’s national security adviser, ripped the Trump administration’s China strategy from his new perch at Harvard University. 

Perceptions among “people in Washington” that the goal of China policy is “we win, they lose, we crush them” aren’t in the best interests of the U.S., Sullivan said at an event at Harvard on Tuesday. He also asserted the need for a China policy focused on “a steady state of competition where we live alongside one another as major powers in the world.”

Sullivan’s take drew a sharp response from the  White House.  

“He should stick to academia where his actions won’t make the world a more dangerous place,”said National Security Council spokesperson Brian Hughes, flagging multiple crises that occurred during the Biden administration, including the chaotic U.S. withdrawal from Afghanistan and Russia’s full-scale invasion of Ukraine.

— COMMERCE IMPOSES CURBS ON NVIDIA CHIPS: The Commerce Department will now require a license for sale of high-end semiconductor firm Nvidia’s lower-grade H20 artificial intelligence chips to China, POLITICO’s Ari Hawkins writes in. 

It’s one of the first major moves by the Trump administration to crack down on U.S. firms selling semiconductors to countries outside the United States. Commerce told Ari that the department is introducing new license requirements for the Nvidia H20 chip, as well as a chip from Advanced Micro Devices, known as MI308.  “The Commerce Department is committed to acting on the President’s directive to safeguard our national and economic security,” Commerce spokesperson Benno Kass told him. The export restriction will shave $5.5 billion off company revenues Nvidia said in a filing with the Securities and Exchange Commission on Tuesday.

TRANSLATING EUROPE

Julianne Smith was the Brussels-based U.S. ambassador to NATO from 2021 to 2024. Smith spoke to China Watcher about rallying NATO members to confront the China challenge and the risks of the Trump administration walking away from such cooperation.

Responses have been edited for length and clarity.

NATO unity is clearly fraying — how might that benefit Beijing?

European allies are questioning whether or not they need to de-risk from the United States much as they have tried to do from China.  

What pains me in all of this is that I am absolutely certain that both Russian President Vladimir Putin and Xi Jinping are celebrating the fact that there is now this tension across the transatlantic relationship, providing them with a wedge that they might further drive between Europe and the United States.

You helped push a China focus into NATO’s updated Strategic Concept plan in 2022. Explain.

The Trump administration in its first term succeeded in getting the alliance to conduct its first China review in 2019. And that was important because it opened up the possibility of a debate about China and what types of vulnerabilities could exist through Chinese investments and Chinese actions in and around the Euro-Atlantic area. 

So it wasn’t about looking at how NATO could defend Taiwan or sail into the South China Sea with European armies, but it was a conversation about what China was doing in the Euro-Atlantic space and that was an important step. Then when we came in, we were able to get all of the allies to insert the word China into the strategic concept for the first time in NATO’s history. 

And then the challenge for us after 2022 was determining what that meant in practice. So we started focusing on deepening our relationships with four Indo-Pacific partners — Japan, Korea, Australia, and New Zealand — sharing insights on some of the hybrid tactics that China and Russia use. Sharing insights on Ukraine because we had a number of countries in the Indo-Pacific that were supporting Ukraine. 

Are you concerned that the Trump administration may drop cooperation with NATO in addressing China’s strategic challenge?

Backing away from that work would weaken America’s hand in coping with the challenges that China poses to the international system, to American competitiveness, to maintaining our technological edge. 

It would be short-sighted for the United States to miss an opportunity to continue to do good work with our European allies on this subject. And frankly, the Chinese would no doubt celebrate and benefit from a decision by the United States to walk away from our good work that we’ve already done with NATO on the Indo-Pacific. Whether it’s talking about protecting critical infrastructure or fortifying our networks against cyberattacks or coping with disinformation campaigns, it’s really an area of opportunity.

HOT FROM THE CHINA WATCHERSPHERE

— BEIJING BLASTS ‘NSA CYBERATTACK’: Beijing accused the National Security Agency of targeting the Asian Winter Games in the city of Heilongjiang in February. “The U.S. government conducted cyberattacks on the information systems of the Games and the critical information infrastructure in Heilongjiang,” Chinese Foreign Ministry spokesperson Lin Jian said Tuesday. Chinese state media went one further and named three alleged National Security Agency personnel that Beijing said were behind the attacks on Games-related systems including arrival/departure management and registration. 

“Investigations by Chinese technical teams revealed that the cyberattacks were carried out by the Office of Tailored Access Operations of the NSA,” Xinhua news agency reported Tuesday. The NSA didn’t respond to a request for comment.

— AMNESTY LAUNCHES EXILE HONG KONG CHAPTER: The international nonprofit human rights organization Amnesty International has started a new overseas-based Hong Kong chapter. Amnesty International Hong Kong Overseas — the London-based organization’s first exile chapter — will have an initial three full-time staff and a presence through national AI nodes in countries including the U.S., Australia and Taiwan, the organization said Tuesday. Amnesty closed its Hong Kong-based operations in 2021 over concerns that the territory’s national security law, which conflates government criticism with sedition, would put its staff at risk of official reprisals. 

Hong Kong’s government said the AIHKO constituted “smearing and interfering” in the territory’s internal affairs. “Their despicable maneuver with politics is doomed to fail,” said Hong Kong government spokesperson Kit K.S. Hung in a statement. 

— CHINESE OFFICIAL TROLLS AMERICAN ‘PEASANTS’: A Chinese official who supervises Beijing’s ties to Hong Kong and Macau raged against the Trump administration’s 145 percent tariff on imports from those territories. The tariff threatens “take away Hong Kong’s life,” said Xia Baolong, director of China’s Hong Kong and Macau Affairs Office on Tuesday, per Reuters. Xia added that China won’t submit to U.S. trade pressure. “Let those peasants in the United States wail in front of the 5,000 years of Chinese civilization,” Xia added. It’s unclear whether Beijing’s new international trade representative at the Ministry of Commerce, Li Chenggang, announced via Chinese state media Wednesday, will espouse similar views. 

HEADLINES

MSNBC: U.S.-China tariff tensions could turn military disputes into something more dire

Gothamist: Inside the downfall of Linda Sun, accused Chinese spy who worked for NY governors

The Washington Quarterly: China’s new economic weapons  

Kyiv Independent: ‘Don’t come, there’s nothing good here’ — Chinese soldiers warn against following Russian propaganda to fight in Ukraine

HEADS UP

AmCham HK

— KURT CAMPBELL — HONG KONG BUSINESS BOOSTER: Back in May, then-Deputy Secretary of State Kurt Campbell was focused on critiquing Beijing’s role in “human rights abuses” in Hong Kong. Next Thursday he’ll pivot to touting the territory as a regional finance center rather than criticizing its imprisonment of more than 1,900 political prisoners under the territory’s national security law. Campbell will make the keynote speech at the AmCham Annual China Conference where he’ll talk up “the recognition of Hong Kong as a key international business hub in Asia,” according to an AmCham statement. Campbell didn’t respond to a request for comment.

Thanks to: Heidi Vogt, Ari Hawkins, Emma Cordover and Catherine Bouris.

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