“Liberation Day”: China as the unexpected winner
This column was previously published in l’Opinion on April 7, 2025
Being prepared for Trump’s major offensive and having assimilated the brutal changes taking place in the USA, China is going to be in a position to show its true industrial, economic and geopolitical clout.
April 2nd 2025 will be a date that goes down in history, just like the Bretton Woods agreement in 1944 or the abandoning of the gold standard in 1971. Financial markets reacted immediately by placing firmer sanctions on American indices and penalizing the dollar, which is supposed to act as a safe-haven currency in times of great crisis. Strangely enough, China could emerge as the victor after President Trump’s offensive, for which it was well prepared.
Firstly, from the economic standpoint, Beijing is bound to suffer from the automatic slow-down in its exports to the USA, but it will also be able to test the power it wields over global production lines, particularly because of its growing control over semi-finished goods. It is unrealistic for the USA to believe that it can impose 600 billion dollars’ worth of tariffs on the rest of the world without any reaction from the latter. The stagflation that awaits us in the West — a reflection of the 1970s — will mean that China can go on steadily exporting its lethal deflation, even to the extent of increasing the cost to its own population.
Secondly, from a geopolitical standpoint, President Trump is offering Beijing the leadership of the “free trade” world on a plate. Instead of isolating China’s state capitalism as a systemic rival, Washington has united the whole planet against itself. It has even incited Japan, South Korea and China to come together and trade freely with each other!
What is at stake is the redefinition of a “New World Order”. This begins with a period of considerable chaos for which China, and to a larger extent Asia, is better prepared than the West.
A historic disruption is taking place in South-East Asia, where Washington has exchanged “hegemonic security” for “hegemonic insecurity,” which will hasten the “de-dollarization” of intra-Asian trade. Beijing will be able to unite the whole of the Global South — for China’s own benefit — starting with multinational organizations.
Finally, what is at stake is the redefinition of a “New World Order”. This begins with a period of considerable chaos for which China, and to a larger extent Asia, is better prepared than the West. “The treaty-based concepts are typical of the old order,” S. Jaishankar, India’s Minister of External Affairs, told the Financial Times recently. In that respect, Robert Habeck, the German Minister for Economic Affairs, was right to state that, for Europe, “Liberation Day” had an impact comparable to that of the war in Ukraine. The real issue is that of a monetary war: financing the US budget deficit that stands at 6% of GDP — untenable over the long term. The USA has decided to make the rest of the world responsible for reducing it. This includes Europe, which means saying goodbye to the Atlantic link. The expected devaluation of the dollar aims to bring what remains of European competitiveness to its knees by inflation, only to be finished off by Chinese deflation.
The end of free trade, the end of the rule of law, the end of the Atlantic link: China has well assimilated the brutal changes taking place in the USA, whereas the European elite still wants to believe in yesterday’s world. However, the initial reaction of the markets seems to indicate that, were Europe to get its act together at last and unify the rest of the world, Donald Trump could well end up finding himself the biter bit.
