China’s leaders are taking a victory lap, feeling sure enough to mock the trade war US President Donald Trump has waged on them. They claim that China can save American jobs and minimize any “blow.” Outrageously, this is happening at the same time that President Trump has increased tariffs on Chinese exports to the United States. This confidence comes at a time when China is striving to rejuvenate its economy following significant job losses and other disruptions caused by the pandemic.
In response to Trump’s tariffs, China has responded with shock and awe punitive import taxes of 125% on a variety of American goods. This action is illustrative of the nation’s deep, underlying commitment to defending its economic core interests. Second, it signals an intent to do economic battle. Yet Chinese officials continue to insist that no negotiations on these tariffs are underway with the U.S.
The increasing hostility and instability created by the US—China trade conflict are damaging to the prospects of both economies. Economy — possibly setting off another recession, experts say. As always, China’s policymakers are alert and ready to hit the brakes in response to events.
According to Yu Jiadong, vice minister of Human Resources and Social Security, China has the confidence, conditions, and capability to overcome employment difficulties.
“Our employment policy toolbox is sufficient,” – Yu Jiadong.
To strengthen domestic demand, China will take concrete social policies to stimulate growth. Such policies range from rebates for turning in old cars, home appliances and manufacturing machinery in favor of newer versions. According to one MCIT official, the equipment upgrade demand alone will reach more than 5 trillion yuan, or around $34.8 billion, per year. This creates huge opportunities for investment throughout the country.
Moreover, the Chinese central government is determined to push forward urbanization, including through demands that auto-dependent development lead to lucrative investment opportunities. As Zhao Chenxin, the deputy director of the National Development and Reform Commission (NDRC), said in a very perceptive comment. He noted how each 1 percentage point increase in the urbanization rate can unlock trillions in investment appetite.
“Every 1 percentage point increase in the urbanization rate can stimulate trillions of investment demand,” – Zhao Chenxin.
This intentionality around urbanization goes hand-in-hand with China’s overarching strategy of increasing domestic consumption. That’s critical for keeping our economic recovery going, particularly as our export numbers are still falling through the floor. Zhao insisted that China is willing and able to move on without U.S. energy imports.
“Enterprises reducing or even stopping energy imports from the United States will have no impact on our country’s energy supply,” – Zhao Chenxin.
Meanwhile, China has developed significant arsenals. That will enable them to make up for any cutbacks on imports of key agricultural commodities such as corn, sorghum, soybeans and oil from U.S. sources. This self-sufficiency further showcases China’s ability to endure outside shocks and provide for its population through domestic food security.
In addition, the People’s Bank of China has started signaling its readiness to ease monetary policy when needed. Zou Lan, a deputy governor of the central bank, emphasized that incremental policies would be introduced promptly to stabilize employment and market expectations.
“Incremental policies will be introduced in a timely manner to help stabilize employment, enterprises, markets, and expectations,” – Zou Lan.
Despite the challenges posed by slowing exports and heightened trade tensions, China aims to maintain its growth trajectory with a target rate of around 5% this year. This ambition reflects Beijing’s commitment to navigating the complexities of international trade while laying the groundwork for sustainable domestic economic expansion.
