Reuters, Beijing As Donald Trump returns to the White House, Chinese officials and citizens are optimistic but wary, hoping to prevent a recurrence of the brutal trade war that strained relations between the two superpowers during his first term.

According to the official Xinhua news agency, Chinese Vice President Han Zheng expressed his hope that American businesses would "take root" in China and contribute to the stabilization of bilateral relations during meetings with Tesla (NASDAQ:TSLA) CEO Elon Musk and other members of the American business community in Washington prior to Trump's inauguration.

At the same time, the U.S. president-elect made the seemingly accommodative move of inviting Chinese President Xi Jinping to attend his inauguration on Monday. Xi sent Han in his place, a gesture of goodwill given that China was only represented by its ambassador at the previous two U.S. presidential inaugurations. Trump previously imposed tariffs on over $300 billion worth of Chinese imports during his time as president. In recent months, he has stated that he would add tariffs of at least 10% on top of what is already imposed on Chinese goods.

 

Han told Musk, who was selected by Trump to head a division that aims to make the U.S. government more efficient, during their Sunday meeting that he "welcomed Tesla and other U.S. companies" to participate in China-U.S. ties and profit from China's development.

According to an American executive in the room, FedEx (NYSE:FDX) CEO Rajesh Subramaniam chaired the vice president's meeting with U.S. businesses, which included the heads of eight U.S. companies from a variety of industries, including technology, banking, and logistics. The meeting went well beyond its allocated time and was very friendly, the executive said.

 

According to Michael Hart, president of the American Chamber of Commerce in China, "(Han Zheng) is seen as someone, because of his time in Shanghai, who understands the concerns of the foreign business community, he understands the economy," Bloomberg reported in Beijing.

"It's a nice fig leaf, or whatever you want to call it, so that's positive."


After their phone conversation on Friday, Xi and Trump were optimistic, with Trump describing it as "a very good one" and Xi expressing their shared optimism for a successful beginning to U.S.-China ties.

During a routine press conference on Monday, Chinese Foreign Ministry spokesperson Mao Ning spoke of "a new starting point" in China-U.S. relations.

 

Hong Kong's and mainland China's stocks increased Monday.

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Despite the camaraderie between the two superpowers, some people nevertheless feel a twinge of nostalgia because they recall how rapidly relations soured during Trump's first term.

"From now on, until the situation becomes a little bit clearer, all our U.S. clients have to pay in advance," stated Dominic Desmarais, chief solutions officer at Lira Solutions, a company based in Suzhou that links Chinese producers with foreign consumers of everything from titanium products to toys and furniture.

"If Donald Trump actually imposes 40%, or whatever, duties on Chinese products coming into the United States, I don't want to be stuck with custom-made goods for specific clients that just disappear," he said.

"That happened a lot, seven, eight years ago, when Donald Trump put 25% duties on 85% of the commodities coming out of China."


China is far more vulnerable to another trade war than it was when Trump initially increased tariffs in 2018 since it is currently dealing with a severe property crisis, massive local government debt, and 16% youth unemployment, among other issues.

 

The streets of China's capital do not fail to convey the fragility of the country's circumstances.

"What I can see is that China's economy is not very good at the moment, due to the impact of the pandemic, and (the fact that) Trump himself is a crazy, wild person (doesn't help matters on our side)," said a 36-year-old Beijing resident with the surname Wang


"The pressure still remains quite big (for us)."

The second-largest economy in the world is still feeling the consequences of the last trade war, as international companies are delaying investments and diversifying their supply chains by investing more in other nearby countries like Vietnam.

He stated that he does not anticipate Trump's return to the White House having an effect on his life in China because his company now receives investment from non-U.S. stockholders.
"But I would imagine U.S. institutional investors would continue cutting back on their Chinese exposure," he stated. "There used to be a few U.S. firms invested in Chinese infrastructure as well - that is non-existent now."