China’s Patient Strategy for Meeting the Trump Challenge

With Donald Trump returning to the White House, the global geopolitical landscape has shifted rapidly. Nowhere is this more evident than in the evolving US-China competition.

On April 3, the Trump administration announced sweeping 34% tariffs on Chinese imports — a dramatic escalation in an already tense economic relationship. Beijing responded promptly with equivalent tariffs on American goods. In the days that followed, the tariff tit-for-tat intensified: China has now imposed tariffs of up to 125%, while Washington has responded with duties as high as 145%.

The message from Beijing is clear: China is prepared for prolonged economic confrontation — and intends to push back. To some extent, its response has been measured, even calculated. Rather than lashing out unpredictably, China appears to be adopting a long-term strategy for navigating what it sees as a turbulent and increasingly hostile global environment.

This posture was evident at last month’s annual “Two Sessions” meeting in Beijing. There, China’s leaders sent unmistakable signals that they see economic resilience and national security as increasingly intertwined. In the Government Working Report (GWR), Premier Li Qiang echoed Xi’s now-familiar narrative of “profound changes unseen in a century” (世界百年变局), warning that global geopolitics, unilateralism, and protectionism threaten China’s trade and development prospects. While such rhetoric has surfaced in previous years, these concerns were swiftly vindicated.

China’s annual Two Sessions — the concurrent meetings of the National People’s Congress (NPC) and the Chinese People's Political Consultative Conference — took place from March 4 to 10. As expected, the focus remained squarely on domestic policy, particularly economic challenges. Key issues included sluggish domestic consumption, mounting local government debt, and stagnant investment. These bread-and-butter topics dominated the NPC’s discussions, reflecting growing concerns about China’s economic resilience in a shifting global landscape.

International security challenges are rarely the focus of the Two Sessions. This year was no exception, despite the depth of the US-China contest. The GWR did feature the usual array of national security buzzwords — from the “holistic approach to national security” (总体安全观) to Xi Jinping’s three global initiatives. Still, the emphasis remained on internal security, including public safety, environmental protection, and, notably, economic security.

The GWR’s section on military and national security offered few surprises. Most language echoed previous years, with one notable addition: a call to “accelerate the construction of network information systems” (加快推进网络信息体系建设). While not groundbreaking, this reflects a continuing emphasis on cyber capabilities and information warfare as part of China’s broader defence modernisation strategy.

One of the more prominent — and perhaps concerning — takeaways from this year’s Two Sessions was the announcement of a 7.2% increase in China’s defence budget. For many security analysts, this sounds an alarm over increased military ambitions. Yet the increase aligns with Beijing’s broader emphasis on military modernisation and safeguarding national security, particularly public security, under Xi Jinping’s third term. While public security spending is accounted for separately from the defence budget, China’s military continues to play a critical role in delivering public security goods at home.

Importantly, however, this year’s rise mirrors the same growth rate as the previous two years, marking a decade of consecutive single-digit increases. According to official Chinese data, defence spending still accounts for less than 1.5 percent of GDP — though many analysts believe this figure underrepresents the true scale of military expenditure. Still, the increase of military expenditure should not be a surprise.

While the Two Sessions offered few new revelations about China’s international posture, recent actions have spoken louder than the GWR and leaders’ speeches. As Yun Sun noted in the journal Foreign Affairs, Trump’s second term may present “a potential opportunity for China to expand its influence farther and faster”. From Beijing’s perspective, Trump’s opposition toward free trade presents an opening to deepen economic ties with neighbouring developing countries.

Xi Jinping’s visits to Vietnam, Malaysia, and Cambodia are a case in point. These diplomatic engagements reflect Beijing’s growing confidence and strategic outreach in the region. It’s no surprise, then, that Adam Posen also argued in Foreign Affairs that China currently appears to hold the upper hand in the ongoing US-China tariff standoff. 

But China’s assertiveness is not limited to diplomacy. In the past two months, Beijing has stepped up its military activities in the Indo-Pacific. On February 19, three Chinese warships were spotted about 150 nautical miles off the coast of Sydney. They went on to conduct live-fire drills in the Tasman Sea — marking the first time People’s Liberation Army (PLA) Navy’s vessels have exercised in those waters — before circling the Australian continent. It was an unusual and conspicuous show of force, underscoring China’s evolving global naval ambitions.

These exercises are widely interpreted as part of Beijing’s strategy to expand its maritime footprint. As China rises as a maritime power, it is clearly testing regional responses — particularly from the US, which offered only a limited reaction to China’s increased naval presence in Oceania.

Tensions have also escalated closer to home. On April 1, China launched joint military exercises near Taiwan. State media framed the drills as a severe warning and forceful containment against any Taiwanese assertion of independence. The PLA flooded social media with nationalistic messaging, releasing propaganda videos and posters depicting missile strikes and a full-scale assault on the island.

Taiwan is always a top priority in Beijing’s national security agenda. While this year’s GWR used similar language to last year’s on cross-strait relations, PLA activities in recent years suggest deepening anxiety. Since the inauguration of President William Lai Ching-te — viewed with suspicion in Beijing — the PRC has grown increasingly wary of any moves toward formal Taiwanese independence. 

As the final meeting before the conclusion of the 14th Five-Year Plan in 2026, the 2025 Two Sessions offered limited insight into Beijing’s view of the emerging ‘Trump 2.0’ world order. Given that Donald Trump had only been back in office for two months at the time of the Two Sessions, Beijing may still have been calibrating its response. Yet growing signs of readiness are apparent. 

How far this posture will evolve may become clearer in the release of the 15th Five-Year Plan next year. Nevertheless, from the swiftness of tariff retaliation, to heightened military activity in the region, China appears poised to push back — and possibly press forward.

Dr Edward Sing Yue Chan is a Postdoctoral Fellow at the Australian National University and the Associate Editor of The China Journal.