Alicia Garcia-Herreronatisis is a lead economist with a Ph.D. in economics from George Washington University, currently a senior researcher at Bruegel, an adjunct professor at the Hong Kong University of Science and Technology (HKUST), and an advisor to the Spanish government, as well as the former lead economist for emerging markets at Spain's BBVA. /Courtesy of Bruegel

The approach of the Trump administration's second term toward China will be somewhat different from that of the first term. While there will be pressure against China, there is a greater possibility that emphasis will be placed on transactions that maximize U.S. national interests.

Alicia Garcia-Herrero, the chief economist of Natixis, who is originally from Spain, is one of Europe's leading China experts. She is active in Hong Kong as the Asia-Pacific chief economist at the French investment bank Natixis, serving also as an adjunct professor at the Hong Kong University of Science and Technology (HKUST) and a senior research fellow at the prominent European think tank Bruegel. In the Christmas holiday season, Garcia-Herrero was interviewed via email and messaging app while traveling in Europe and India. She predicted that Donald Trump, who had showcased his friendship with Vladimir Putin during the first Trump administration (January 2017 - January 2021), would seek multiple ways to drive a wedge between Russia and China. Regarding China's increasing possibility of a military invasion of Taiwan due to economic difficulties, she noted, "That possibility is increasing, and I can only hope it doesn't happen."

Russian President Vladimir Putin (right) and Chinese President Xi Jinping are toasting during the welcome dinner of the BRICS summit held in Kazan, Republic of Tatarstan, Russia, on Oct. 23, 2024. /Photo by AP Newsis

What is the difference between the China policy approach of the Trump administration's second term and first term?

The approach will be somewhat different from that of the Trump administration's first term. While there will be pressure against China, there is a greater possibility that emphasis will be placed on transactions that maximize U.S. national interests. Given that China's status and international relations have changed compared to the first Trump administration, there are expected to be changes in approach.

Trump vowed to impose a 60% tariff on imports from China during the election period. Yet, he praised Xi Jinping, the President of China, as a 'good friend' and 'amazing person.' This is interpreted as a strategy of pressure through strong trade policies while keeping the door open for dialogue. This 'two-track strategy' is also reflected in the composition of the second-term cabinet. While nominees like Marco Rubio, the Secretary of State, prefer complete decoupling from China, the co-leaders of the Ministry of Efficiency, Elon Musk, and some economic officials, are said to focus on maintaining trade relations with China while imposing high tariffs.

Doesn't Trump's deep-rooted animosity toward China show even before entering the political arena, as seen in his posts on Twitter (now 'X')?

Trump's animosity toward China remains unchanged, but during the first administration's hardline policy toward China, he did not manage to gain much from China. In the meantime, China has increased its self-sufficiency in many areas, including science and technology. However, it is still a long way to go for the Chinese economy, which remains vulnerable to U.S. pressure.

However, China is pushing for technological self-reliance in the face of U.S. technology controls. For example, Changxin Memory (CXMT) began production of high-bandwidth memory (HBM) in August 2024. While the products produced by Changxin Memory fall short of those from SK Hynix or Samsung, production has been expedited by 1 to 2 years from the initial forecast. Previously, China had established a semiconductor investment fund worth 64 trillion won, the largest in history, in May 2024.

The external conditions have changed a lot, with China and Russia strengthening their ties under U.S. pressure.

During his first term, Trump showcased his friendship with Putin both publicly and privately. This 'bromance' between the two leaders has stirred controversy in the U.S. While Trump still seems to have a fondness for Putin, he appears to be more cautious in his remarks after re-election. Trump is expected to deploy various methods to drive a wedge between Russia and China. Russia supplies natural gas to China through the 'Power of Siberia' pipeline, and Trump may seek to prevent Russia from increasing its natural gas supply to China through the 'Power of Siberia 2' pipeline, which is currently under construction. Additionally, he may leverage the natural gas card to bring Putin to the negotiation table, for instance by increasing the supply of Russian natural gas to Europe instead of to China.

What about Iran?

Iran is completely different from Russia. Trump dislikes Iran. The U.S.'s pro-Israel stance was clearly revealed when it allowed Israel to occupy the Golan Heights after the collapse of Bashar al-Assad's regime in Syria. During Trump's second term, Iran is likely to face difficult times. The possibility that Russia and China will help Iran also seems low.

As economic difficulties increase, do you see the possibility of China invading Taiwan militarily? Many hold a dim view of Trump's potential intervention in Taiwan.

The possibility of an invasion is increasing. I can only hope it doesn't happen. If tensions rise between China and Taiwan, tensions on the Korean Peninsula will also intensify. There is no doubt about that. Previously, China's influence on the Korean Peninsula was a major variable, but now, due to North Korea's dispatch of troops to the Ukraine-Russia war, Russia's influence must also be a concern. The situation on the Korean Peninsula has become more dangerous than before. If China invades Taiwan, it will also pose significant problems for Europe. The China-Taiwan issue is a global risk factor.

The Biden administration has stated an unconditional intervention principle if China invades Taiwan, but Trump has not yet made any specific comments on this issue. In a pre-election interview with The Wall Street Journal (WSJ), he merely said, "If China invades Taiwan, I will raise the tariff by 200%."

There are an increasing number of 'new neutral countries' that do not side with either the West or China.

It is true that the middle ground has widened, but it seems that more countries will lean towards the U.S. because Trump will watch how countries in the middle ground react after intimidating them.

According to Bloomberg, there are currently at least 101 new neutral countries between the pro-Western bloc led by the U.S. and the pro-Russian bloc led by Russia and China. Bloomberg classified Middle Eastern countries such as Saudi Arabia, the United Arab Emirates (UAE), Qatar, Israel, major African nations like Nigeria, South Africa, Egypt, and Asian countries such as India, Pakistan, Indonesia, Thailand, Singapore, Vietnam, along with Latin American countries like Brazil and Mexico as new neutral countries.

Record levels of natural gas imports from China and Russia... a close energy alliance between China and Russia.

The U.S. government's all-encompassing pressure on China and Russia has strengthened the two countries' energy alliance. According to Gazprom, the world's largest energy producer, the daily supply of Russian gas to China through the Siberian pipeline broke the record on December 7, 2024 (local time).

Since 2019, Russia has been supplying natural gas to China through the 'Power of Siberia' pipeline from the Chayanda gas field in Siberia. Gazprom has increased the transport capacity of the 'Power of Siberia' pipeline to its maximum level of 38 billion cubic meters per year starting December 1, 2024. This pipeline has a design capacity of 38 billion cubic meters per year.

After invading Ukraine in February 2022 and facing disruptions in natural gas exports to Europe, Russia is looking for new paths in China and elsewhere. As a result, China is estimated to have emerged as the largest importer of Russian natural gas in 2024. Earlier, Gazprom announced that the eastern pipeline capable of additionally supplying 10 billion cubic meters of natural gas to China would commence operation from 2027. Also, construction is underway for the 'Power of Siberia 2' pipeline, which will transport 50 billion cubic meters of gas annually from northern Russia through Mongolia to China.

The fact that Russia is reviewing the feasibility of the costly 'Power of Siberia 2' project suggests that China has expressed its intention to import more Russian energy. Once completed, China will surpass European countries to become Gazprom's largest customer.