US President-elect Donald Trump's plan to overhaul the government with a new department headed by tech billionaire Elon Musk and Indian-origin entrepreneur Vivek Ramaswamy will be a biggest threat for China as it has to compete with far more efficient US political system, a policy advisor to the Chinese government said.

China's biggest risk during Donald Trump's 2.0 would be US government overhauls driven by Musk and Ramaswamy, according to Zheng Yongnian, China's top academic and policy advisor to Beijing.

"A more efficient US political system would put huge pressure on China’s current system,” Zheng, dean of the School of Public Policy at the Chinese University of Hong Kong’s Shenzhen campus, said while speaking at Baichuan Forum hosted by the Institute for International Affairs (IIA) on Saturday.

“Of course, the pressure is not exclusive to China but also others, especially Europe,” he said.

Trump named Musk and Ramaswamy to lead a new Department of Government Efficiency (DOGE).

The duo has already planned to scrap “thousands of regulations” and reduce the size of the government workforce.

Zhena said, “In the medium to long term, the greatest pressure on China may come from changes within the US.” If Trump succeeds in his efforts to overhaul the government, the US would “develop a new, more competitive system”, Zheng said, calling it a form of “state capitalism with American characteristics”.

“I think we should not underestimate the institutional reforms prioritised by figures like Musk,” he warned, the Hong Kong-based South China Morning Post reported on Sunday.

China is gearing up for Trump’s second term, beginning on January 20 next year, on several fronts, including his threat to impose a 60 per cent increase of tariffs on its over USD 427 billion annual exports to the US.

Trump, who acted tough on China during his previous term, is expected to reinforce measures against Beijing on various global fronts, including Taiwan and the South China Sea. China asserts Taiwan as part of its mainland and claims ownership over most of the South China Sea.

The Philippines, Vietnam, Malaysia, Brunei and Taiwan have counterclaims over the area.

To counter tough tariff increases by the incoming Trump administration in the US, China announced new policy measures on Thursday to back its export sector against “unreasonable foreign trade restrictions” and to create a “good environment” for its exports.

At the APEC Economic Leaders’ Meeting in Peru and the 20 summit in Brazil last week, Chinese President Xi Jinping during his meetings with a host of world leaders reaffirmed China’s commitment to promote “high-standard opening up” for investment and trade.

As part of new measures to open up, China on Friday added nine more countries, including Japan to its unilateral visa-free entry scheme, taking the total to 38.

Zhena said that to counter the US internal changes China should expand opening up countermeasures.

Zheng said Trump may damage bilateral ties with tariffs but “he does not want to go to war with China”.

Trump's “tariff stick” against China under his “America First” policy approach would not only “maximally” damage bilateral relations but also sabotage the international trade system, he added.

However, geopolitics is more of a “tool” for Trump, according to Zheng, even though he expects him to continue to ramp up tensions around the South China Sea and the Taiwan Strait.

“He does not want to go to war with China,” Zheng said, keeping in view China’s rapidly growing defence capabilities.

“Fully tapping into internal growth potential is something we must do” in response to changes in the global environment, Zheng said.

Zheng expects China to speed up institutional reform to support the domestic market under its “dual circulation” strategy, which also seeks to reduce reliance on the West, as well as set up a unified national market.

To counter Trump's policies, Zheng has called for extending the unilateral openness by China to include US capital and citizens.

“In this way, those truly isolated” would be the hardliners, Cold War advocates and anti-China factions in the US, he said.

“Although competition between China and the US is inevitable, we don’t have to be too afraid. But the core of the competition, we have to realise, is who is more open than whom,” he said.

“The ultimate winner will undoubtedly be (the side that is) more open,” he added. “I believe we will certainly outperform the US,” he said.

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