POKE THE PANDA

How China could react to Trump’s taunts, from the best- to the worst-case scenario

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Donald J. Trump’s phone call this past weekend with Taiwan president Tsai Ing-wen has caused so much consternation among political analysts and advisors to both governments that the reaction has been dubbed #TaiwanFreakout.

While Trump tweeted about it as if he had just picked up the phone when Tsai rang, casually overturning decades of protocol, the conversation was well planned, according to a Taiwan official. That planning didn’t involve contacting the current US State Department, outgoing secretary of state John Kerry said on Sunday—another reminder of how far out on a limb the incoming Trump administration is willing to go on foreign policy.

“There are serious risks posed by his failure to take briefings by government professionals, and he appears to have little respect for the potential damage of actions taken without understanding long-standing U.S. national security concerns,” wrote Jeffrey A. Bader, a senior fellow at the John L. Thornton China Center, echoing the concerns of many.

Making things worse, Trump stirred the pot further by accusing China on Twitter of keeping its currency artificially low (the opposite is happening) and building a military complex in the South China Sea (which is true), thereby indicating that the Tsai call could be the beginning of a radical shift in policy, not a one-off.

Both global human-rights activists and hawkish US Republicans concur—the long-running policy of carefully appeasing Beijing’s sensitivities has not had the results the US has desired. But the danger of shifting policy so profoundly is that no one really knows how China, led by a president who has been ruthless in destroying his own political enemies and cracking down on Chinese citizens, will react.

Here’s a range of things Beijing could do, from the shrug-worthy to the downright terrifying.

Do nothing. China’s foreign ministry has already said that Trump was “tricked” by Taiwan into taking the phone call. Beijing could continue to peddle that line, despite reports to the contrary, in order to downplay the event and avoid having to react to it.

That’s not unprecedented. Last year, for example, after the US sent a warship through disputed territory in the South China Sea that Beijing claimed as its own, Beijing did little more than warn the US against “dangerous or provocative acts” in the future, despite dire predictions before the event. The fact that Trump has not taken office yet gives Beijing an easy out, although ignoring the behavior entirely could make the Xi Jinping government seem uncharacteristically weak at home. On Monday, China’s foreign ministry saidPresident-elect Trump’s team, is very clear about China’s solemn position on this issue,” but nothing further.

Punish Taiwan’s government. Since Trump is still not officially president, China can’t target him, but it could punish Taiwan to send him a message, said the nationalistic state tabloid Global Times. One way would be to pressure the few nations (including the Vatican City and Panama) that maintain formal diplomatic relations with Taiwan to abandon their ties.

Punish Taiwan’s businesses. It would be easier for Beijing to impose trade embargoes on Taiwanese goods than start a trade war with the US, Lian Qingchuan, a Chinese political commentator, told Quartz. Because China is by far Taiwan’s biggest trade partner, any changes in trade could “deal a huge blow” to the island, he explained. Taiwan exported $29 billion in electronics to China in 2015, its largest export. That’s more likely than introducing a trade embargo on the US, because China and the US are equally dependent on each other economically, Lian said.

Taiwan’s businesses in China could also suffer from the Trump-Tsai call. Speaking at a forum with Taiwanese businessmen after the phone call, Zhang Zhijun, head of China’s Taiwan Affairs Office, warned against supporting Taiwan independence after returning “to the island with money earned from the mainland.”

Taiwan businessman are already lining up to show their support for Beijing. Seafood restaurant chain Hai Pa Wang bought an ad in a local paper pledging support to the “One China” principle on Dec. 5, while the Taiwan government denounced China’s “political intervention” in Taiwanese businesses.

Punish US companies. Some of the US’s largest companies, and biggest employers, are heavily dependent on the Chinese market, including Apple, Boeing, and General Motors. Lower-end luxury-goods makers like Michael Kors are banking on huge growth in China in the future.

One Chinese state-backed tabloid has already suggested China would stop buying Boeing planes, iPhones, and US agricultural products if Trump put a high tariff on Chinese imports to the US. US technology companies are already stymied by new, opaque laws aimed at making it more difficult for them to do business in China. US businesses are forbidden from investing in certain sectors, and are having difficulty getting cash out of China. Any new restrictions or rules could hit their bottom line directly.

Still, “most viable options would hurt China more than the US,” Christopher Balding, a professor of economics at Peking University, told Quartz. “Any trade war would cause much bigger disturbances for Chinese exporters in a weak economy than the US,” he said, in part because US companies manufacture for China in China, while very few Chinese firms manufacture for the US in the US.

Sever relations with the US. While the idea that leaders from the world’s two largest economies would stop communicating entirely seems almost unfathomable, that’s what some Chinese political analysts are recommending. “If he continues to call Taiwan a country we [should] sever relations with him,” Shen Dingli, a professor of international relations from Shanghai’s Fudan University, said to the Guardian. “I don’t know what the government would do [but] I know what I would do: I will close our embassy.”

Since the US recognized the Beijing government as the head of China in 1979, that has never happened, although the US embassy in China was evacuated during the Tiananmen Square crackdown of 1989.

Threaten Taiwan militarily. This may sound like an extreme step, but China’s stated policy on Taiwan is that it will use “non-peaceful means” if Taiwan declares independence, despite the fact that Taiwan has held free and independent elections for years. After the US granted a visa to Taiwanese leader Lee Teng-hui in 1995, Beijing retaliated by holding military exercises near Taiwan that included missile tests.

“Another Chinese missile test in the Taiwan Straits is a possibility, so is official neglect of complaints by, or harassment of, Taiwanese in mainland China,” Chung Chien-peng, head of the political science department at Hong Kong’s Lingnan University, told Quartz.

Threaten the US militarily. While no one believes that this is a likely direct outcome of the Tsai-Trump phone call, the potential for a military conflict between China and the US in the future seems to one reason for the “Taiwan freakout.”

China has the world’s largest military, by sheer number, with 2.3 million active-duty personnel compared to the US’s 1.5 million, and has been modernizing its navy by adding hundreds of ships.

What Trump and his advisors may not understand is that the Chinese government “views the US as an actual physical threat to the nation and system of government in China,” Balding said, and things between the two nations are “more tense than most people understand.” The only reason tensions have not been higher is “US foreign policy has been so acquiescent for so long that there was very little to fight about.”

Tom Tsui contributed reporting.

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