Chinese officials and the general public are feeling a mix of hope and apprehension as Donald Trump prepares to take office again, with a strong desire to prevent a recurrence of the contentious trade war that strained relations between the two economic giants during his previous administration.

In discussions with Tesla CEO Elon Musk and other representatives from the U.S. business sector in Washington prior to Trump’s inauguration, Chinese Vice President Han Zheng expressed his aspiration for American companies to “establish a presence” in China and contribute to the stabilization of bilateral ties, as reported by the official Xinhua news agency.

During Trump’s last presidency, he imposed tariffs on over $300 billion worth of Chinese imports. Recently, he has indicated plans to introduce additional tariffs of at least 10% on top of existing ones on Chinese products, a strategy that could further impact China as it grapples with economic challenges.

Simultaneously, the president-elect made a seemingly diplomatic gesture by inviting Chinese President Xi Jinping to his inauguration on Monday. Xi opted to send Han as his representative, a sign of goodwill considering that China was only represented by its ambassador at the last two U.S. presidential inaugurations.

In their meeting on Sunday, Han conveyed to Musk, who has been appointed by Trump to lead an initiative aimed at enhancing U.S. government efficiency, that he “welcomed Tesla and other American companies” to partake in the advantages of China’s growth and to foster China-U.S. relations.

The vice president’s engagement with U.S. business leaders was led by FedEx CEO Rajesh Subramaniam and included executives from eight different American firms across various sectors such as technology, finance, and logistics. An American executive present noted that the meeting exceeded its scheduled time and was characterized by a friendly atmosphere.

Michael Hart, president of the American Chamber of Commerce in China, stated to Reuters in Beijing that Han Zheng, due to his experience in Shanghai, is perceived as someone who comprehends the concerns of the foreign business sector and has a solid grasp of the economy. He described this understanding as a beneficial aspect of Han’s profile.

Following a phone conversation on Friday, both Xi and Trump expressed optimism, with Trump labeling the discussion as “very good” and Xi indicating that they both anticipated a positive beginning for U.S.-China relations.

During a regular press briefing on Monday, Chinese foreign ministry spokesperson Mao Ning mentioned a “new starting point” in the relationship between China and the U.S. On the same day, stock prices in mainland China and Hong Kong experienced an increase.

A NEW TRADE WAR

However, despite the apparent camaraderie between the two nations, a sense of familiarity with past tensions remains among those who recall how swiftly relations soured during Trump’s initial term.

Dominic Desmarais, chief solutions officer at Lira Solutions, a company based in Suzhou that links Chinese manufacturers with international buyers of various products, remarked, “Until the situation clarifies, all our U.S. clients will need to pay in advance.”

He expressed concern about the potential for significant tariffs, stating, “If Donald Trump imposes a 40% duty on Chinese imports, I want to avoid being left with custom-made items for clients that may no longer be viable.” He noted that similar issues arose seven to eight years ago when Trump enacted a 25% tariff on a large portion of goods from China.

A new trade war would leave China in a more precarious position than it was when Trump initially imposed tariffs in 2018, as the country faces a severe property crisis, substantial local government debt, and a youth unemployment rate of 16%, among other pressing issues.

The gravity of China’s economic challenges is evident in the capital. A 36-year-old Beijing resident, who preferred to be identified by his surname Wang, remarked, “From what I observe, China’s economy is struggling right now, largely due to the pandemic’s effects, and the unpredictable nature of Trump certainly complicates our situation.” He added, “The pressure on us remains significant.”

The repercussions of the previous trade war are still impacting the world’s second-largest economy, with foreign companies hesitating to invest and opting to diversify their supply chains by channeling funds into alternative markets like Vietnam. Christopher Yeo, a finance director at a Singapore-based digital infrastructure firm in Beijing, anticipates that Trump’s tariff threats will continue to hinder cross-border investment and financing from the U.S. and other Western-aligned countries.

His company currently relies on funding from non-U.S. investors, so he does not foresee Trump’s potential return to the presidency affecting his operations in China. “However, I believe U.S. institutional investors will likely keep reducing their exposure to Chinese markets,” he noted. “There used to be several U.S. firms involved in Chinese infrastructure, but that presence has vanished.”