China has a chance to play elder economic statesman

China has an opportunity to act as an elder statesman, thanks to the spectacular own goals of Donald Trump’s tariffs. Usually cast as a disruptor of the postwar economic order, and sometimes relishing the reputation, Beijing has much to gain in the public-relations arena. The challenger can now present as the defender of the system. This is a soft-power gift.

China retaliated on Friday against the sharp levies the US president imposed on it — and other US trading partners — but appeared careful not to go beyond what the White House announced on April 2. President Xi Jinping will set a 34% duty on imports from the US, matching the level of Trump’s so-called reciprocal tariffs on Chinese products. The Asian giant lobbed a few targeted measures America's way, too. Seven types of rare-earth exports will be curbed, purchases of some poultry items are to be halted, and it will step up scrutiny of US firms.

Not returning fire, an approach that Treasury Secretary Scott Bessent counseled, was never in the cards. It's one thing to respond forcefully, without truly excessive steps, but quite another to just lie down. Unlike small countries, China has room to move. It's the world's second-largest economy and, though wrestling with a long-term slowdown and a prolonged real-estate slump, has enjoyed enviable growth for several decades. If Beijing truly aspires to world leadership, the government needs to show just enough muscle. “Taken as a whole, China is not retaliating in full,” wrote Bloomberg Economics. Tariffs will now average about 52%, below Washington's effective rate on China of about 60%.

The likelihood of a recession in the US is another big self-inflicted wound. JPMorgan Chase & Co. projects a downturn. Barclays Plc tips a contraction in gross domestic product, while Citigroup Inc. and UBS Group AG see barely any growth. Markets are more forthright: The S&P 500 Index suffered its steepest two-day slide since the onset of the pandemic in 2020, oil tumbled and bond yields retreated. The prognosis is an abrupt turn from the optimism that prevailed at the start of the year when the US was leading the world.

The downdraft that will follow the tariff fiasco probably won't be limited to the US. The president has engineered a profound shock. Of course, China isn't the shooting economic star today it was in the decade or so following its admission to the World Trade Organization in 2001. Sub-par performances in Europe, as well, left America propping up the expansion. Still, Trump is the swing factor here.

Beijing hasn't always been the adult in the room. Xi's officials have lashed out when annoyed. Australia’s sales of rock lobsters were restricted, while wine exports suffered punitive tariffs. Then-Prime Minister Scott Morrison had the temerity to call for an international probe on the origins of Covid. South Korean businesses were sanctioned after Seoul deployed a shield against missiles from North Korea. Authorities have been accused of teaching and promoting anti-Japanese sentiment, while multinational corporations have learned not to openly criticize government decisions. China has long appreciated that access to its economy can be a valuable stick.

Stephen Miran, chair of the White House Council of Economic Advisers, appeared to adopt a similar attitude recently. “Countries that sell to the United States are inflexible — they’ve only got the United States to sell to,” Miran told Bloomberg Television as tariffs were being prepared. “So they’re the ones who bear the burden.” He may well be right, over the short term. Trump said Friday, after a call with Vietnamese leader To Lam, that the Southeast Asian nation is willing to end tariffs to escape the draconian penalty meted out by the US. (Vietnam was among the hardest hit in Wednesday's announcement.)

There’s more to being a grown-up than simply not being the current US administration, though that’s a good start. China has made some abrupt shifts of its own. The sudden devaluation of the yuan in 2015 roiled global markets. The state’s efforts to bring home-grown technology companies and entrepreneurs to heel hurt its reputation — just as the economy was slowing. Frequent threats against Taiwan and military drills around the island don’t engender confidence.

The government is very unlikely to change its underlying character. However, pulling some punches while Trump diminishes US standing is an opportunity to soften China’s image. The smart move would be to reach out to current discontents, especially in the region, and offer concessions of its own on trade and investment.

Trump could still change direction, despite his insistence that he won't. Market tumult of the kind seen the past two days usually gets attention at the very top. It's hard to imagine some concessions not being forthcoming. That doesn't mean the world will easily forget what transpired this week. Lawrence Wong, the prime minister of Singapore, a nation that enjoyed a meteoric rise in living standards during the halcyon days of international trade, could have spoken for many when he articulated his disappointment. The existing system isn't perfect, but “what the US is doing now is not reform,” Wong said on Friday on social media. “It is abandoning the entire system it created.” Singapore, which has emphasized its reluctance to pick sides in superpower disputes, isn't retaliating.

An American president presents as an insurgent, a wrecker. China takes the position of an incumbent. This week has seen, as Singapore put it, a “seismic change.” If China plays its hand competently, and doesn’t let its own grievances dominate, Xi can probably get away with quite a lot. It will take some doing to upstage the spectacle that transpired in the Rose Garden on Wednesday. China would be well advised not to try.