If everything had gone to plan, Chinese President Xi Jinping would still confidently declare that "the East is rising while the West falls," as he did in 2021. With the decline of the United States, China would replace it to become the global leader.

Instead, over the past three years, China's growth rate has remained stubbornly below 5%. According to analysis by the Taiwan Economic Research Institute, its economy has been sent back to 1990, the pre-reform period. The three horses of growth have all gone lame: infrastructure investment, real estate, and exports. 

It was Trump who initiated this process. China was the first to bear the brunt of “MAGA,” from the trade war in 2018 continuing on into the tech war. Now, with Trump’s comeback, his “coalition of avengers” has been lined up, with an eye toward countering China. Internally, Trump is ready to solve the problems of inflation and unemployment in the Rust Belt (which were also the main reasons for the Democratic defeat in November); externally, he continues to hit China with tariffs, even as China has yet to recover from the deflation caused by the real estate turmoil and the slump in consumer spending.

This is why China is no longer talking about “the East rising and West falling.” In the face of Trump, China is already talking about harmony; it has to lick the wounds of its internal economic stagnation, and carefully face the coming storm of an unpredictable, fickle Trump.

U.S.-China interactions will be the main theme of 2025, so everyone is staring at 2025. This year, we will face a familiar yet renewed Trump, a slowing Chinese economy China, and a bloodless slugfest between these two powers. The result could mean reorganization of the global economic order.

The situation may seem chaotic, but the economy still follows its own rules. AI will drive the next wave of productivity growth in the United States, and the three major cloud service providers (CSPs) in the US will continue to make strong earnings. Although Taiwan is small, its situation will conform to the theme of this issue of the Taiwan Banker: "growth amid turbulence." After interviews with three major think tanks, the consensus is that the world will inevitably be turbulent under Trump, but opportunities still exist for Taiwan.

As the US hopes to bring manufacturing back onshore, Taiwan, a semiconductor hub who has been specifically called out by Trump, cannot stay away. Therefore, its manufacturing industry must have already planned to invest in the US in response; if Taiwanese manufacturers move over, opportunities will also emerge in finance. In the past, when Taiwanese banks set up offices in the US, it was mainly on the east and west coasts. Now that Trump wants to bring manufacturing back to the Rust Belt, what should the next move be for Taiwan's financial industry? The answer should be clear.