China is bracing for the implications of sweeping reforms proposed by former US President Donald Trump’s incoming administration, particularly the establishment of a new Department of Government Efficiency, led by tech billionaire Elon Musk and Indian-origin entrepreneur Vivek Ramaswamy.
Zheng Yongnian, a top Chinese academic and policy advisor, described the initiative as a major challenge to Beijing, warning it could heighten pressure on China’s political and economic systems. Zheng, the dean of the School of Public Policy at the Chinese University of Hong Kong (Shenzhen), voiced his concerns during the Baichuan Forum hosted by the Institute for International Affairs on November 23.
“A more efficient US political system would put huge pressure on China’s current system,” Zheng said, noting that institutional reforms spearheaded by figures like Musk could lead to a new form of “state capitalism with American characteristics.” He added, “In the medium to long term, the greatest pressure on China may come from changes within the US.”
The newly formed Department of Government Efficiency aims to streamline US governance by cutting $2 trillion from the federal government’s $7 trillion budget, Musk revealed. The ambitious plan includes slashing thousands of regulations and reducing the size of the federal workforce. Both Musk and Ramaswamy, who remain private citizens while leading the initiative, have pledged to “test legal boundaries” to achieve these goals.
This bold restructuring has sparked debate globally, with Zheng cautioning that its success could make the US far more competitive. “We should not underestimate the institutional reforms prioritised by Musk and his team,” he stated.
In response, China is preparing to bolster its economic resilience, particularly in the face of Trump’s proposed 60% tariff hike on Chinese exports worth over $427 billion annually. New measures to support China’s export sector and ease foreign trade restrictions were announced on November 21.
Additionally, President Xi Jinping has reaffirmed China’s commitment to expanding “high-standard opening up” during recent international meetings, including the APEC Economic Leaders’ Meeting in Peru and the G20 Summit in Brazil. These efforts include expanding visa-free travel to nine more countries, bringing the total to 38.
Trump’s hardline approach toward Beijing, including his emphasis on tariffs, is expected to strain bilateral ties further. Zheng highlighted that while Trump’s policies could damage the international trade system, he does not anticipate outright conflict.
Beijing’s counter-strategies include promoting trade liberalization and strengthening regional alliances in response to the US’s renewed assertiveness on global issues, including Taiwan and the South China Sea.
As Trump’s second term begins on January 20, 2025, the international community will closely watch the unfolding dynamics between the two superpowers. Experts warn that the measures led by Musk and Ramaswamy could redefine global economic and political landscapes, compelling other nations, including China, to adapt swiftly.
