US President-elect Donald Trump’s pick of Scott Bessent as Treasury secretary may give Beijing room to negotiate with the US over their trade tensions, in part due to his moderate stance on tariffs.
Bessent, who runs macro hedge fund Key Square Group and was nominated on Friday, has described Trump’s threats of steep levies on Chinese imports as a “maximalist negotiating position”. He has urged a phased approach to implementation, calling for tariffs to be “layered in gradually” in an interview with CNBC earlier this month.
“This is good news for Beijing,” said John Gong, a professor at the University of International Business and Economics in Beijing who has worked as a consultant for China’s Commerce Ministry. “Wall Street has to have a seat in the Trump administration, and it got the most important one.”
For Beijing, Trump’s Treasury pick may be a moderating force in a cabinet with China hawks such as Marco Rubio as secretary of State and Michael Waltz as national security adviser. The selection has fueled a rally in currencies around the world against the dollar, as traders trim bets that the return of Trump will send tremors throughout global markets.
Amy Celico, partner at Albright Stonebridge Group, also said Bessent’s appointment would be a good sign for a Chinese government that’s looking to continue talks on bilateral and global issues.
“Naming Bessent as one of the prospective interlocutors with Chinese government should give the two sides room for this,” said Celico, who was formerly senior director for China affairs at the Office of the US Trade Representative. “But I am not saying it’ll be smooth sailing.”
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Indeed, Bessent has signaled discontent with the value of the yuan, citing his firm’s research showing the currency is undervalued.
“They’ve done a big internal devaluation, they cut labour, they’ve written down real estate — very similar to what happened to the Europeans in 2011-2012,” he said at a conference in June. “I think the RMB is really something that we have to investigate, the relationship between that and the dollar.”
The first Trump administration labeled China a currency manipulator in 2019, accusing the Asian nation of devaluing its currency to boost exports, before lifting the designation months later. Under such a determination, China could face possible sanctions including its firms being prohibited from competition for US government contracts.
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More recently, Bessent told the Wall Street Journal he will focus on following through on Trump’s tax cut and tariff pledges once he takes office, although he did not go into detail.
Bessent has also described China as both a military and economic risk to the US. “Who knew that many of the key ingredients for our pharmaceutical industry come from China?” he said in an August interview with Bloomberg Businessweek.
He called for the “immediate onshoring” of essential items, such as pharmaceuticals, and for exploring other sources of rare earths besides China, including in the US, Canada and Europe. The minerals are key to the making of electronics in products from phones to fighter jets.
But other analysts have downplayed Bessent’s — or the Treasury’s — potential power in setting the trade agenda. Derek Scissors, senior fellow at the American Enterprise Institute who previously worked at the Pentagon, said it would be a mistake to think Treasury has authority over tariffs.
“It doesn’t,” said Scissors. “When Bessent praises tariffs, he’s winning over Trump, not setting future policy.”
Scott Kennedy, a senior adviser at the Washington-based Center for Strategic and International Studies, said that ultimately the administration will implement the president’s strategy. “Too much shouldn’t be made of individual appointments,” he said.
