donald trump <u+2019>s surprise victory represents a planetary shift for markets and the global economy. it stands to reason that china<u+2019>s orbit will also shift. mr. trump made china a centerpiece of his campaign, decrying the world<u+2019>s second-largest economy for stealing jobs, competing unfairly, suppressing its currency and generally serving as an economic boogeyman. investors will now have to wonder whether he follows through on threats to impose large tariffs on chinese-made goods. in the least, trump<u+2019>s victory could make the relationship between the two economic powers contentious and highly uncertain. while tensions between the two have at times grown hot in recent years, it has more been a story of interdependence in terms of trade, investment, tourism, education and entertainment. apple, america<u+2019>s largest company by market capitalization makes nearly all its products in china, employing tens of thousands on both sides of the pacific. china is also apple<u+2019>s largest market outside the u.s. to sell those iphones and ipads. failed attempts to jump start an indigenous airline industry means stepping on a plane in china usually involves a boeing . hollywood has increasingly turned to china for fresh audiences. and china has turned to hollywood for producing know-how, investing in studios and signing up distribution deals for u.s. content. ford and general motors count on china , the world<u+2019>s largest auto market, as a major profit center. china has invested heavily in auto-parts manufacturing , shipping parts to the u.s. and producing locally in factories in michigan. so what would a u.s. trade war with china mean? perhaps the winners would be the non-u.s. competitors. some of those are chinese, others from outside china: airbus in airlines, samsung electronics in phones, komatsu instead of deere and caterpillar in heavy equipment. volkswagen and hyundai may enjoy better access to china<u+2019>s auto market than u.s. counterparts. european banks may gain a leg up in financing chinese companies. a clear upside for china is that the obama administration<u+2019>s trans-pacific partnership free-trade pact<u+2014>which excluded china and was viewed by many as an attempt to reassert u.s. economic influence in asia<u+2014>is now toast. in the next several years, chinese growth might even receive a small boost as asian nations nervous about u.s. commitment to the region draw closer to china. but any chinese trade gains could be far outweighed by the global and regional uncertainty mr. trump<u+2019>s victory has created, both for global supply chains and, perhaps more importantly, the fragile peace in asia underpinned by u.s. dominance since world war ii. there are important short-term impacts too that emerged in the wee hours wednesday. the decline in the u.s. dollar and decreased expectations that the federal reserve will raise rates should help beijing manage massive capital outflows. to the extent the dollar is less attractive relative to the yuan, that should stanch money fleeing the country . also notable in the market maelstrom as results poured in was that china<u+2019>s currency, traded in hong kong, rallied against the dollar, putting it in the league of other haven currencies such as the yen, pound and euro. that is an important signal that could embolden china to think of itself in a more pre-eminent position versus the u.s. as it competes for economic influence in asia and beyond. a trump presidency will change the world for companies and investors. the u.s.-china relationship will be at the center of that change. write to alex frangos at alex.frangos@wsj.com
trump and china: america<u+2019>s most important economic relationship just got very complicated - wsj
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