China just showed Washington how it plans to fight the next trade war

BEIJING — When President-elect Donald Trump fired the opening shots in a trade war during his first term, Chinese officials often took days to respond, and Chinese businesses followed every threat with alarm.

But this week, after the Biden administration broadened its restrictions on advanced technology that could be sent to China, Beijing announced broad retaliation in a single day. The country’s stock market investors mostly shrugged at the Biden administration’s action.

And Wednesday, General Motors, a onetime cornerstone of American industrial might, said it was taking a $5 billion hit to profit to recognize that it was no longer able to compete adequately with Chinese carmakers.

The fast-moving developments have underlined how far China has come as an industrial superpower and its readiness for a potentially bruising battle with the second Trump administration. China now has a manufacturing sector that is larger than those of the United States, Germany, Japan, South Korea and Britain put together. It produces some of the world’s most advanced technology.

The most recent sign of China’s industrial muscle came in the profit charges by General Motors, which the company has incurred while restructuring its China joint venture with SAIC Motor. When Trump took office in early 2017, the Chinese ventures of GM and Volkswagen were locked in a long-running battle for leadership in China while domestic brands lagged far behind.

But GM brands that used to rank among the leaders in China sales no longer even rank among the top 20. BYD, a Chinese electric car manufacturer based in Shenzhen, is now the bestselling brand in China and is rapidly stepping up exports.

China has used tariffs and other fiscal policies to help its homegrown companies gain an advantage: It charges taxes totaling as much as 100% on imported cars and sport utility vehicles with large gasoline engines, a category in which GM is strong. By contrast, electric cars from Chinese manufacturers face a tax rate of only 13%.

So GM and its Detroit rivals have long been unable to sell more than a trickle of cars from the United States in China.

The big question now is how the Trump administration will respond to China’s assertive stance.

Chinese officials appear to be preparing for a world in which they do not seek confrontation with the United States but are prepared for the two countries to pursue their own economic paths.

This article originally appeared in The New York Times.

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