President Donald Trump has wasted no time getting down to business as US commander in chief, but few countries in the world will be watching his moves as closely as China.

Since his election in November, President Trump has challenged Beijing over its military build-up in the South China Sea, slammed its currency and trade policies and, perhaps most controversially, upended decades of diplomatic protocol by questioning a longstanding US policy towards Taiwan.

He’s also handed key jobs to people with controversial views on China, not least his choice for Secretary of State Rex Tillerson, who has suggested that Beijing be blocked from accessing its artificial islands.

The leaders in Zhongnanhai, the gated compound that is China’s equivalent to the White House, want to know how seriously they should take such statements. Will they translate into policy? And within Trump’s inner circle, whose voice will prevail?

“They (China’s leaders) might be willing to give up something but if Trump asks too much, China is willing to fight,” says Zhang Baohui, a professor of political science at Lingnan University,

Here’s four ways China could try to handle the Oval Office’s unpredictable new occupant.

Trump’s bluster could be just that. There’s a long history of US presidents taking a tough stance on China only to moderate it once in office.

President George W. Bush came to power vowing to treat China as a “strategic competitor” only to default to engagement. President Ronald Reagan said he would cut off diplomatic links with Beijing. Two years after he was elected, he visited China.

Jon Huntsman Jr., a former US ambassador to Beijing, says Trump’s fiery talk on China fits that pattern.

“This is kind of a replay of what we’ve seen before. Trump at some point is going to have to say ‘I’ve gotta sit down and do business with the Chinese,” he told CNN.

Trump has already moderated one of his key stances on China. In an interview with the Wall Street Journal, he walked back on an earlier pledge to name China a currency manipulator on day one of his administration.

However, analysts say this strategy is risky for China. If President Xi Jinping stays too quiet in the face of Trump’s provocations, it makes Xi, who has built his credibility on being a strong leader, look weak.

This could trigger protests — something Xi is unlikely to want in a year that will also see some leadership changes in Beijing when the Chinese Communist Party holds its once-every-five-years congress.

“Xi definitely doesn’t want relations with the US to stir up trouble. He’s anxious not to allow nationalistic young men and women to demonstrate against the US,” says Willy Lam, an adjunct professor at the Centre for Chinese Studies at the Chinese University of Hong Kong.

Many Chinese observers stress Trump’s background as a business man and believe his posturing over Taiwan and the South China Sea is simply an opening gambit in advance of real business negotiations.

“I don’t think Trump and his team will carry out the bulk of their threats,” says Lam.

“We need to remember that Trump is a shrewd businessman. He’s raising an extreme position from which he might do a bit of climbing down if the Chinese were amenable to making other compromises.”

China has been busy behind the scenes reaching out to people close to Trump, says Zhang Baohui, a professor of political science at Lingnan University,

Many saw the meeting between Trump and Jack Ma, Alibaba founder and Asia’s richest man, as an example of this outreach.

“They will first try and shape his China policy by trying to work with him,” says Zhang.

“They’ve floated the idea of trying to invest in US infrastructure. The Chinese fundamentally think he is a businessman who wants to create jobs — even if he’s willing to play dirty tricks over things like Taiwan.”

It’s a strategy that’s worked well elsewhere for Beijing, with China building and forging infrastructure deals in Africa, Eastern Europe and southeast Asia.

Personalities count, especially in China where connections or guanxi are viewed as key to getting anything done.

Zhang says that many in China want a meeting between Trump and Xi as soon as possible, with some suggestion that Trump could be invited to a multilateral meeting on China’s “one belt, one road” initiative in May.

Another opportunity would come in July when the G20 meeting is held in Germany or November when Vietnam hosts APEC — the Asia Pacific Economic Cooperation summit.

“When they meet directly and have glass of Maotai together over dinner, Xi could disarm Trump. He’s a good diplomat,” says Zhang, referring to a popular Chinese liquor.

China may also use Trump’s pick for US ambassador to Beijing, Iowa governor Terry Branstad, to cement ties between Xi and Trump.

Branstad and Xi have known each other since 1985, when Xi visited Iowa as a provincial official on a state exchange program during Branstad’s first term as governor, and have maintained a friendship of sorts.

Of course, China could make life difficult for Trump if it wants to. Lam at the Chinese University of Hong Kong says China is already quietly preparing for a trade war.

“The Chinese commerce department has drawn up a meticulous list of possible retaliatory measures — which US companies would be hit with what kind of tariffs should the US (fire) a salvo in a trade war,” he says.

It’s not something to take lightly, especially for a US president who’s staked his legitimacy on delivering jobs and an economic revival, says Jing Ulrich, Managing Director and Vice Chairman of Asia Pacific, JPMorgan Chase.

“Remember Boeing has projected selling in the next 20 years $1 trillion worth of aircraft into China. If tariffs were put on that would be very damning to an iconic US company. And that’s just one example,” she says.

China could hit back in other ways. It could choose to squeeze Taiwan economically, become more aggressive in the South China Sea or shore up its ties with North Korea.

Shen Dingli, a professor of International Relations at Fudan University in Shanghai, says he believes that China is willing to negotiate with the US and the two should be able to resolve their differences on trade — but Taiwan is a red line for China’s leaders.

“We cannot do Taiwan as a bargaining chip,” he says.

“If Trump still plays the Taiwan card then China and the US would have a very serious confrontation. This is hopefully not what Trump wants to have.”</s>Why did this happen?

Please make sure your browser supports JavaScript and cookies and that you are not blocking them from loading. For more information you can review our Terms of Service and Cookie Policy.</s>China's claim to Taiwan have shot back into the spotlight since U.S. President-elect Donald Trump broke diplomatic protocol and spoke with Taiwan President Tsai Ing-wen this month, angering Beijing.

Trump has also questioned the "one China" policy which the United States has followed since establishing relations with Beijing in 1979, under which the United States acknowledges that Taiwan is part of China.

The election of Tsai from the pro-independence Democratic Progressive Party this year infuriated Beijing, which suspects she wants to push for the island's formal independence, though she says she wants to maintain peace with China.

Taiwan Foreign Minister David Lee said Taipei would not engage in "dollar diplomacy" after Sao Tome's decision.

"We think the Beijing government should not use Sao Tome's financing black hole ... as an opportunity to push its 'one China' principle," Lee told a news conference in Taipei on Wednesday.

"This behaviour is not helpful to a smooth cross-Strait relationship."

Tsai held emergency meetings with cabinet officials and security advisers on Wednesday, and told her ministers:

"Foreign diplomacy is not a zero-sum game," according to her office spokesman, Alex Huang.

Tsai's office said in a statement China's use of Sao Tome's financial woes to push its "one China" policy would harm stability across the Taiwan Strait.

"This is absolutely not beneficial to the long-term development of cross-Strait relations," it said.

China says Taiwan has no right to diplomatic recognition as it is part of China, and the issue is an extremely sensitive one for Beijing.

In Beijing, China welcomed Sao Tome's decision, without explicitly saying it had established formal relations with the former Portuguese colony or making any mention of a request for financial aid.

"We have noted the statement from the government of Sao Tome and Principe on the 20th to break so-called 'diplomatic' ties with Taiwan. China expresses appreciation of this, and welcomes Sao Tome back onto the correct path of the 'one China' principle," the foreign ministry said in a statement.

Ministry spokeswoman Hua Chunying declined to comment when asked when the two countries may exchange ambassadors, and dismissed a question on how much China may have offered Sao Tome to switch ties as being "very imaginative".

Defeated Nationalist forces fled to Taiwan at the end of a civil war in 1949 and Beijing has never renounced the use of force to bring Taiwan under its control.

In Africa, only Burkina Faso and Swaziland now maintain formal ties with Taiwan. President Tsai will visit Central American allies Honduras, Nicaragua, Guatemala and El Salvador next month.

"We now have 21 allies left. We must cherish them," Lee said.

China and Taiwan had for years tried to poach each other's allies, often dangling generous aid packages in front of developing nations.

But they began an unofficial diplomatic truce after signing a series of landmark trade and economic agreements in 2008 following the election of the China-friendly Ma Ying-jeou as Taiwan's president.

Sao Tome and Principe's tiny island economy is heavily dependent on cocoa exports but its position in the middle of the oil-rich Gulf of Guinea has raised interest in its potential as a possible oil and gas producer.

Diplomatic sources in Beijing have previously said Sao Tome was likely high on China's list of countries to lure away from Taiwan.

In 2013, Sao Tome said China planned to open a trade mission to promote projects there, 16 years after it broke off relations over Sao Tome's diplomatic recognition of Taiwan.</s>For the third time since his election, President-elect Donald Trump has riled up China with his apparent disdain for a policy that has governed relations between China and Taiwan for 37 years. So what is the 'One China' policy anyway? For the third time since his election, President-elect Donald Trump has riled up China with his apparent disdain for a policy that has governed relations between China and Taiwan for 37 years.

Start the conversation, or Read more at USA Today.</s>TAIWAN'S last two African allies have no plans to switch allegiances and break ties with Taipei as Beijing tries to woo the self-ruled island's diplomatic partners.

Burkina Faso won't cut relations with Taiwan despite people and companies with links to China offering</s>Tsai's office declined to comment on whether she would be meeting members of U.S. President-elect Donald Trump's team, but the U.S. mission in Taiwan, the American Institute in Taiwan (AIT), said the visit would be "private and unofficial".

Trump angered China when he spoke to Tsai this month in a break with decades of precedent and cast doubt on his incoming administration's commitment to Beijing's "one China" policy.

An adviser to Trump's transition team said he thought "further high-level engagement for the foreseeable future is unlikely" when asked if any meetings were planned. The adviser did not want to be identified by name.

China is deeply suspicious of Tsai, who it thinks wants to push for the formal independence of Taiwan, a self-governing island that Beijing regards as a renegade province, ineligible for state-to-state relations.

China's Foreign Ministry repeated a previous call for the United States not to allow the transit and not send any "wrong signals to Taiwan independence forces".

"We think everyone is very clear on her real intentions," the ministry said, without explaining.

The United States, which switched diplomatic recognition from Taiwan to China in 1979, has acknowledged the Chinese position that there is only "one China" and that Taiwan is part of it.

Tsai is transiting through the United States on her way to and from visiting Honduras, Nicaragua, Guatemala and El Salvador. She will leave Taiwan on Jan. 7 and return on Jan. 15.

Tsai will arrive in Houston on Jan. 7 and leave the following day. On her return, she will arrive in San Francisco on Jan. 13, Presidential Office spokesman Alex Huang told a regular news briefing.

The AIT said the transit did not contradict the "one China" policy.

"President Tsai's transit through the United States is based on long-standing U.S. practice and is consistent with the unofficial nature of our relations with Taiwan," Alys Spensley, acting AIT spokeswoman, told Reuters.

"There is no change to the U.S. 'one China' policy," she added.

Spensley said Tsai's transits would be "private and unofficial". The U.S. State Department said AIT chairman Ambassador James Moriarty would greet Tsai in Houston and San Francisco.

China has claimed sovereignty over Taiwan since 1949, when Mao Zedong's Communist forces won the Chinese civil war and Chiang Kai-shek's Nationalists fled to the island.

Speaking to members of China's largely ceremonial advisory body to parliament on Friday, Chinese President Xi Jinping said next year China would make "unremitting efforts" at unification and developing peaceful relations across the Taiwan Strait, state news agency Xinhua said.

Taiwan had as many as 30 diplomatic allies in the mid-1990s, but now has formal relations with 21, mostly smaller and poorer nations in Latin America and the Pacific and also including the Vatican.</s>Yu Zhengsheng, the ruling Communist Party's fourth ranked leader, was speaking at an annual work conference on policy towards the self-ruled island. His comments came in the wake of concerns that, under a new presidency, the United States is shifting its stance toward Taiwan.

U.S. President Donald Trump, who was inaugurated on Friday, broke with decades of precedent last month by taking a congratulatory telephone call from Taiwan President Tsai Ing-wen.

That, along with subsequent comments by Trump that the "one China" policy was up for negotiation, has infuriated Beijing, which views Taiwan as a wayward province, to be brought under its control by force if necessary.

Proudly democratic Taiwan has shown no interest in being run by China.

China is deeply suspicious of Tsai, whose ruling Democratic Progressive Party espouses the island's formal independence, a red line for Beijing, and has cut off a formal dialogue mechanism with the island.

China must "resolutely oppose and check any form of 'Taiwan independence' separatist activity, maintain national sovereignty and territorial integrity, and maintain the peaceful development of cross-Taiwan Strait relations and peace and stability", state-run Xinhua news agency paraphrased Yu as saying.

In a letter to Pope Francis released by her office on Friday, Tsai said Taiwan aspires to create a "new era" of peace with China as military action cannot resolve problems.

Defeated Nationalist forces fled from China to Taiwan in 1949 after losing a civil war with the Communists.

The report made no mention of Tsai's letter to the Pope. The Vatican is one of a handful of countries to maintain formal ties with Taiwan.

Yu said that China would seek to "unite" all parties and groups in Taiwan that accept both sides of the Taiwan Strait are part of "one China".

China will also look at ways of making life easier for Taiwanese people to invest, work and live in China, Yu added, without giving details.

Since ties began thawing in the 1980s, Taiwanese have invested billions in China, attracted by a common culture and language and the lure of China's vast market and cheap pool of labour.</s>Taiwan's last two African allies have no plans to switch allegiances and break ties with Taipei as Beijing tries to woo the self-ruled island's diplomatic partners. Burkina Faso won't cut relations with Taiwan despite people and companies with links to China offering funding in return for recognition of the One-China principle, according to Foreign Minister Alpha Barry.

Start the conversation, or Read more at Bloomberg.</s>Senegal, with backing from leaders in the region, has threatened to invade Gambia to depose its leader, Yahya Jammeh, if he does not hand over power to challenger Adama Barrow, who beat him in an election in early December.

"We urge relevant parties to stay cool-headed, to attach importance to the interests of the people and country, to appropriately resolve the political crisis through dialogue and political consultation and to maintain peace and stability," she told a daily news briefing.

China has a growing diplomatic and business presence in Africa and has been deeply involved in efforts to bring peace to South Sudan, for example.

China resumed diplomatic ties with Gambia in March. The country was previously a diplomatic ally of Taiwan, the self-ruled island China claims as its own. China views Taiwan as a wayward province, with no right to formal foreign ties.

The small West African state had previously been one of only a few African countries, along with Burkina Faso, Swaziland and São Tomé and Príncipe, to recognise Taiwan. São Tomé switched ties to China last month.</s>Three sources said one possibility being considered was conducting war games near the self-ruled island that China considers as a breakaway province. Another was a series of economic measures to cripple Taiwan.

It was not clear whether any decisions had been taken, but the sources, who spoke on condition of anonymity, said the Taiwan issue had become a hot topic within the upper echelons of China's People's Liberation Army (PLA) in recent weeks.

Trump, due to take office on Jan 20, angered Beijing this month by speaking to Taiwan's president by telephone, breaking decades of precedent and casting doubt on his incoming administration's commitment to Beijing's "one China" policy. Beijing fears this could embolden supporters of independence in Taiwan.

"If Trump challenges 'one China' after becoming president, this would cross our red line," said another source, who has ties to China's leadership.

China's defence ministry declined to comment. An official at the ministry's news department said China's position was clearly laid out in the 2005 Anti-Secession Law, which authorises the use of force against Taiwan in the event China judges it to have seceded.

Asked about any possible aggressive moves from China, Taiwan

defence ministry spokesman Chen Chung-shi said: "We are fully

prepared, and plan for the worst while preparing for the best."

China claims self-ruled Taiwan as its sacred and inviolable territory and is deeply suspicious of President Tsai Ing-wen, whose ruling Democratic Progressive Party espouses the island's independence. Tsai, who took power this year, says she wants to maintain peace with China, but China is unconvinced.

Tsai said on Saturday that Taiwan will be "calm" when facing issues to do with China, but uncertainties next year will test the self-ruled island and its national security team.

Beijing has also been angered by a trip planned by Tsai in January to Latin America in which she will transit through Houston and San Francisco. China has urged the United States to block the stopovers.

Chinese officials have blamed Taiwan for creating trouble rather than Trump, and many of them believe he will be more accommodating to China once in office.

"We're ready. If Taiwan wants to make trouble so can we. Let's hit them hard," said an official in Beijing who meets regularly with China's most senior military officers, including those who work directly with President Xi Jinping.

"We can hold exercises close to Taiwan, and show them the damage we could cause. Taiwan will have to give in then," the official added, citing a recent conversation with one of the military officers.

The United States is bound by law to provide Taiwan with the means to defend itself, but it's unclear if the United States would send troops in the event of war between China and Taiwan.

Washington also acknowledges Beijing's position that there is only one China and Taiwan is its territory.

A retired senior officer who maintains contacts with the PLA told Reuters that China probably wouldn't need to fire any missiles to bring Taiwan to its knees. China is Taiwan's largest trading partner, and Taiwan runs a huge trade surplus with China, worth $27 billion in 2015.

"We can just cut them off economically. No more direct flights, no more trade. Nothing. Taiwan would not last long," the officer said. "There would be no need for war."

In addition, any Western economic blockade of China put in place in the event of war with Taiwan would also be damaging to China, already dealing with a slowing economy.

A U.S. defence official, who spoke on condition of anonymity, said Chinese actions had been more provocative in the past month, since Trump won the U.S. election and made comments about Taiwan.

This month, a Chinese naval flotilla headed by its sole aircraft carrier, the Liaoning, took part in drills that took it around Taiwan.

Chinese air force jets have performed similar drills in recent weeks, flying close to the island, though China has officially called the air force and naval exercises routine.

China also scored a diplomatic victory when tiny Sao Tome and Principe switched recognition to Beijing from Taiwan.
Burkina Faso and Swaziland refuse to break relations with Taiwan and recognize the One-China policy despite being offered aid from China.