🕰️ Waiting for the Succession – How Trump Turned Xi’s Fall Into Leverage

BBIU Editorial | August 2025

Summary

President Trump is not negotiating with China now because he doesn’t need to. Xi Jinping’s internal standing is eroding fast, and the Chinese economy is in structural decline. Trump is letting the system ripen—waiting for Xi to fall or exit—so he can confront a successor who’s weaker, more desperate, and easier to extract concessions from.

1. Xi Jinping’s Political Decline: Quantified

• 📉 China's youth unemployment (16–24):
  Rose to 21.7% as of July 2025 (NBS, unofficial; official data discontinued since June 2023)

• 🏘️ Local government debt crisis:
  Estimated at ¥120 trillion (~$16.5T USD), with over 70% of provinces requesting central bailouts (Bloomberg, July 2025)

• 📦 Foreign direct investment (FDI):
  Net FDI into China turned negative in Q2 2025 (–$11.3B), first time since WTO accession (MOFCOM data leak)

• 🇨🇳 Xi’s approval rating:
  Down to 43% among urban party cadres in internal survey leaked via Hong Kong media (Mingjing, July 2025)

• 🔍 Political signals:

  • Xi skipped National People’s Congress preparatory meeting (July 12)

  • Premier Li Qiang gave unusual solo foreign policy briefing, fueling succession rumors

  • New Standing Committee appointments delayed

3. What China Lost in 3 Years

• 🧮 Exports to the U.S.:
  Down 27.5% since 2022
  (from $535B → $388B as of YTD July 2025, USTR data)

• ⚙️ Semiconductor import restrictions:
  Over $210B in lost tech access since CHIPS Act + export controls (Commerce Dept. 2022–2025 cumulative)

• 🚢 Belt & Road contraction:
  New outbound infrastructure projects down 61% vs. 2019 peak (SCMP, Belt Tracker July 2025)

• 🏭 Manufacturing exodus:
  Apple, Tesla, Siemens, and TSMC now expanding in India, Vietnam, and the U.S., not China

4. Trump’s Timing is Strategic

• Trump’s advisors (e.g., Peter Navarro, returning in 2025 as economic envoy) have explicitly stated:

  “There’s no point negotiating with a man about to leave the room.”

• The August 7 global tariff rollout left China out of the “preferred tier”—deliberately.

• Taiwan, Philippines, and Indonesia already aligned partially with U.S. trade framework.

• The succession moment—whether internal CCP compromise or formal exit—is when Trump will strike, demanding:

  • Strategic concessions in the South China Sea

  • Semiconductor compliance

  • Potential asset transfers under joint-venture restructuring

  • Controlled reintegration into global capital markets

🧭 BBIU Strategic Scenario Model: China’s Future Deal with Trump

ScenarioConditionsEstimated ConcessionsTariff OutcomeSymbolic Result

🔴 Worst Case – Coerced Capitulation

| China negotiates after Xi's fall, under a successor with no internal legitimacy, low GDP growth (<3%), and external isolation (no support from Russia, EU, ASEAN).
| • $1–1.2 trillion in industrial & capital market access to U.S.
• Strategic tech realignment: open semiconductor architecture under U.S. inspection
• Naval pullback in South China Sea + stop BRI expansion in Latin America
• Forced RMB stabilization policies via U.S. compliance unit
| Tariff reduced to 20–25%, but only after structural compliance in 4–5 sectors
| China becomes a subordinated industrial node inside the Trump-defined framework.
Narrative control shifts to U.S. permanently.
The "Chinese Dream" ends as China is symbolically demoted.

🟠 Base Case – Asymmetric Normalization

| China negotiates under a weakened Xi or transitional team, with moderate international pressure but room for maneuver (e.g., partial EU support, India neutrality).
| • ~$500–700B in bilateral infrastructure or tech commitments
• Joint U.S.–China chip regulation body
• Controlled Belt & Road rollback in Africa or Mideast
• Token military de-escalation in South China Sea
| Tariff adjusted to 15–20%, with phased rollback conditioned on implementation
| China keeps nominal sovereignty, but loses strategic autonomy in high-tech and naval influence.
Symbolically, it accepts U.S. seniority, but salvages face domestically.

🟢 Best Case – Delayed Strategic Convergence

| Xi survives politically, Trump is constrained (e.g., legal battles, second-term fatigue), and China stabilizes internal economy (GDP rebounds to >5%, yuan stabilized).
ASEAN fractures again, EU softens, and Vietnam resists full U.S. integration.
| • <$250B in capital investments
• Sectoral coordination on EVs, rare earths, or AI governance
• China retains full naval posture, BRI continues with new terms
| Tariff reset to 15%, parity with Korea/Japan
| China keeps industrial core and avoids symbolic surrender.
Trump declares “victory,” but China escapes deep structural concession.
Global perception = coexistence under competitive tension, not hierarchy.

🌍 Global Consequences of China's Deal – Three Scenarios

(Complement to BBIU Strategic Scenario Model)

🔴 Worst Case – Coerced Capitulation

China accepts deep structural concessions after Xi’s exit.

🌐 Global Consequences:

• U.S.-centric trade regime becomes hegemonic
  WTO and multilateralism are rendered obsolete. Trump’s tariff doctrine becomes the new law of commerce.

• Emerging markets reorient toward U.S. capital flows
  Countries like Brazil, India, and South Africa may abandon non-alignment to join the new “access-for-alignment” system.

• Russia further isolated
  With China constrained, Russia loses its economic escape valve, increasing desperation and global security risks.

• Taiwan normalized under U.S. umbrella
  Symbolic reunification pressure collapses; U.S.–Taiwan cooperation expands freely in semiconductors and defense.

• Global South bifurcates
  Africa, Latin America, and MENA must now choose between full alignment with U.S.-led trade or exclusion from global capital.

🟠 Base Case – Asymmetric Normalization

China negotiates from partial strength under transition leadership.

🌐 Global Consequences:

• Regional equilibrium resets
  China retains some influence in Asia, but U.S. trade becomes the anchor of industrial planning globally.

• Hybrid economic blocks emerge
  ASEAN, the EU, and India oscillate between cooperation with U.S. industrial blocs and partial engagement with China.

• Currency bifurcation deepens
  Dollar dominance consolidates, while RMB becomes increasingly regional.

• High-tech bifurcation persists
  Separate chip ecosystems (U.S.-aligned vs. Chinese) remain, but with negotiated interdependence and joint compliance zones.

• Defense flashpoints stay contained
  Taiwan, South China Sea, and cyber domains stabilize under managed tension, not integration.

🟢 Best Case – Delayed Strategic Convergence

Xi or his successor stabilizes China and negotiates with leverage.

🌐 Global Consequences:

• Multipolarity reasserted
  China retains its industrial sovereignty and becomes co-architect of a parallel trade lane alongside the U.S.

• Belt & Road 2.0 launched
  With softened U.S. posture, China expands BRI with less resistance in Africa and South America.

• India and EU regain leverage
  With no binary hegemony, mid-powers can negotiate balanced deals with both U.S. and China.

• Tech détente possible
  Joint governance frameworks in AI, rare earths, and energy may emerge under international supervision.

• Supply chain rebalancing slows
  Nearshoring and friendshoring decelerate, and global manufacturing networks regain complexity and diversity.