Trump is the 'least worst option' for China, says professor

Key Points
  • U.S. President Donald Trump is fighting an "all front" trade war and that may not be a bad thing for China, says one professor.
  • Washington is locking itself into trade disputes with multiple countries, weakening historical ties and preventing those nations from aligning against China, she says.
  • The trade war is also pushing China toward self-sufficiency and technological independence, which is "not inconsistent" with the country's long-term goals.
Why Trump is China's 'least worst option'

U.S. President Donald Trump is fighting an "all-front" trade war and that may not be a bad thing for China, said one professor at the London School of Economics on Thursday.

Washington has locked itself into trade disputes with multiple countries, which has weakened historical ties and prevented some of those nations from aligning themselves against China, said Keyu Jin, associate professor of economics at LSE, told CNBC at the annual Barclays Asia Forum in Singapore.

"Trump is fighting an all-front war. What could not be better for China? If there were not such a strong alliance with Europe, which is what China's more concerned about — everyone ganging up against China," Jin said.

"Now, Trump is not making that possible, so that's why he's the least worst option."

The U.S. and China have slapped tariffs on billions of dollars of one another's goods. But key sticking points in trade talks include other issues like intellectual property protection and forced technology transfers.

"It is pushing China's strive for self-sufficiency, technological independence," Jin said.

For one, China is developing its own chip industry to increase domestic semiconductor production, she said.

The country aims to produce 70% of its semiconductors locally by 2025, and is ramping up investment in the sector. The Wall Street Journal also reported that China's government set up a $28.9 billion national semiconductor fund to invest in its chip industry.

"It's going to take a while, and it's very costly. China is changing the IT systems away from the West to adopting its own. We're seeing some decoupling in some sense," she added.

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Key Points
  • The U.S.-China trade war and the threat that Chinese firms could be cut off from American technology is boosting China's push for its own semiconductor industry.
  • Still, experts say it would take at least a decade for China to close the gap with the U.S. on chip technology.
  • But ultimately, the development of a homegrown semiconductor industry may hurt American firms.