Beijing has recently taken three political and economic steps to prepare for the next phase of U.S.–China relations as President-elect Donald Trump returns to the White House for a second term.
Its preparation suggests the Chinese Communist Party (CCP) finds itself in a precarious position, unsure of how to navigate the challenges posed by both Trump and Sen. Marco Rubio (R-Fla.), Trump’s pick for secretary of state. The Republican-controlled Senate will probably confirm Rubio’s nomination without much drama. His hawkish stance on China’s communist regime adds a layer of complexity to Beijing’s strategy.
Three days later, a Hong Kong court handed its verdict to a group of prominent pro-democracy lawmakers and advocates. Under Hong Kong’s draconian national security law, 45 people were sentenced to up to 10 years in prison.
On the trade front, Chinese authorities announced on Nov. 15 a reduction in export tax rebates for a wide range of products.
Defensive Move
Governments provide export tax rebates to reimburse businesses for the taxes they pay on exported goods. This practice aims to make domestic products more competitive in international markets by reducing the overall cost of exporting them. However, the World Trade Organization (WTO) prohibits such export subsidies.When China joined the WTO in 2001, it committed to eliminating these subsidies, but more than two decades later, it has not delivered on its promise.
Xi’s True ‘Red Line’
Xi outlined four critical “red line” issues as Beijing’s taboos: Taiwan, democracy and human rights, the Chinese regime’s political system and ideological path, and China’s rights to development.These “red lines” convey the following warnings: The CCP strongly opposes any form of U.S. support for Taiwan’s independence and rejects external criticism or pressure regarding its governance model and human rights record.
In addition, the regime is determined to preserve its socialist/communist system and firmly opposes any attempts to change or challenge its political framework. The CCP also asserts its right to pursue economic development and technological progress without external restrictions.
While some argue that Taiwan is the CCP’s true “red line,” this may not be the case. Xi emphasizes preserving the CCP’s political system and ideological path. As China’s economy shows signs of prolonged stagnation, defending the Party’s “system” has become his ultimate red line, even overshadowing issues like Taiwan.
By highlighting the significance of the Chinese regime’s system, Xi is signaling to Trump that he hopes Washington will agree to maintain the status quo. More importantly, Xi is addressing his domestic audience, warning them that the CCP will not tolerate any challenge to the existing framework that sustains the CCP leadership and the socialist system in China.
Xi’s hardline stance contrasts sharply with Beijing’s conciliatory tone and willingness to make concessions when China joined the WTO in 2001.
Today, the CCP’s rhetoric insists that the deterioration of U.S.–China relations is entirely the fault of the United States. However, the United States only resorted to a counteroffensive after years of broken promises and provocations by China.
Countering Backlash From Rubio
Behind the Hong Kong government’s rush to deliver a verdict against a group of pro-democracy activists is the CCP’s fear of facing Rubio’s reaction if the verdict is delayed until after January.All 47 defendants were involved in organizing an unofficial primary to select opposition candidates for Legislative Council elections, strengthen pro-democracy representation, and challenge pro-Beijing candidates. However, the authorities deemed it an attempt to undermine the Hong Kong government, categorizing it as a subversive act under the CCP-imposed national security law.
Rubio, a fierce opponent of communist regimes, has been a vocal critic of the CCP’s growing influence in Hong Kong and would undoubtedly lead a strong pushback against the Hong Kong government’s treatment of pro-democracy activists.
During the 2019 pro-democracy protests in Hong Kong, as concerns grew over the erosion of freedoms and autonomy, Rubio played a significant role in advancing the Hong Kong Human Rights and Democracy Act through Congress. His leadership was crucial in securing bipartisan support for the legislation, which aimed to hold the CCP and Hong Kong officials accountable for undermining the territory’s democratic rights and freedoms.
