Chinese President Xi Jinping has cautioned the United States against reigniting a trade war, asserting that such conflicts yield “no winners.” His remarks, delivered during a meeting with global financial leaders, followed China’s announcement of an antitrust probe into U.S. chipmaker Nvidia. This move is seen as a significant step in the intensifying race for dominance in artificial intelligence (AI), a critical frontier for both national security and economic power.
Addressing the gathering, Xi emphasized that “tariff wars, trade wars, and technology wars go against the historical trend and economic laws, and there will be no winners.” He criticized the U.S. strategy of “small courtyards with high walls,” a phrase coined by U.S. National Security Advisor Jake Sullivan to describe restricting China’s access to advanced technologies while maintaining broader trade ties. Xi argued that such isolationist approaches harm global interests and undermine collective economic progress.
Tensions between the two economic superpowers have escalated following the Biden administration’s decision to impose fresh export restrictions. The new measures limit China’s access to semiconductor technology and impose controls on over 100 Chinese companies. Former President Donald Trump’s pledge to raise tariffs on Chinese imports if the flow of illegal drugs into the U.S. is not curtailed has further strained relations. Reports suggest that Xi and Trump had recent communications, though China’s Foreign Ministry has not confirmed this.
China’s reliance on exports to fuel economic growth adds to the complexity of the situation. Official data revealed a sharp decline in exports and an unexpected drop in imports, with export growth slowing to 6.7% in November from 12.7% in October. Analysts, however, suggest that this may not mark the end of China’s export boom. Zichun Huang of Capital Economics noted that U.S. tariff threats could temporarily boost exports as American firms increase orders in anticipation of future restrictions.
In response to the challenging global economic landscape, China’s Communist Party Politburo has signaled a shift toward a “moderately loose” monetary policy, a notable change after more than a decade of restraint. This policy shift, economists believe, could stabilize growth and improve trade conditions. According to analysts at Citi, the Chinese government may further support exports by offering tax rebates and clarifying procurement rules to encourage international trade.
The ongoing power struggle between the U.S. and China highlights the fragile balance of global economic cooperation. Xi’s message serves as a reminder that trade wars disrupt growth for all involved, reinforcing the need for diplomatic solutions to avoid long-term economic harm.
