After accepting a congratulatory phone call from the President of Taiwan, Trump worried investors globally as China mandates the “One China” policy be in place before it interacts with any country – i.e. no government can engage in any treaties with, or interact directly with, Taiwan, which considers itself a separate nation from China. China’s leader, Xi Jinping, never directly threatened to sever diplomatic ties with America, however government controlled media did print articles hinting that it was a possibility if Trump continued down the path he was on. However, on lengthy but very positive phone call Thursday night (2/9/2017), Trump reassured Jinping that he would continue honoring the policy and sent US stocks soaring to record highs on Friday (combined with investor anticipation of Trump’s business friendly tax reform plan).

Senior Taiwanese officials were not upset with the outcome of a positive phone call between Trump and China, expressing the sentiment that it was in Taiwan’s interest for the US and China to maintain good relations. The call between both leaders was the first of its kind since Trump was inaugurated, with inside sources of the Chinese government saying their President was nervous to talk to Trump in the event of the conversation going South and details getting leaked to the media.  However, after the phone call they both were pleased with the outcome and since the “One China” issue was now behind them, they said they could continue normal relations and work on improving ties on various issues of mutual interest. Xi Jinping was quoted after the call saying, “I believe that the United States and China absolutely complement each other and advance together.  Both sides absolutely can become very good cooperative partners.”

After the rocky start investors’ nerves have now been eased, as the relationship between the US and China has a big impact on the global economy since there are many US companies with factories in China, and they are two of the world’s biggest markets.  Some political commentators believe Trump has positioned himself strongly by his show of power at the beginning of the relationship.  During the phone call between the two leaders, China stated it would like to work with the US on trade, investment, technology, energy and infrastructure, in addition to increasing coordination on geopolitical matters to promote global peace and stability.

Overall, both leaders were extremely happy with the call, with both ultimately wish the best to each others people.  They seemed to avoid the topic of border disputes in the South China Sea, and what Trump intends to do about trade – whether tariffs will be introduced – however both leaders agree that the positive first phone call is a good first step to the relationship.  There was an incident where Chinese and American aircraft's fly close to one another over the South China sea earlier on Thursday, however both governments agree it was inadvertent and a nonissue.

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