China shifts strategy to strengthen economy against US tariffs
China plans to respond to the new US tariffs by strengthening its domestic economy and developing trade relations, CNBC reports, quoting experts on the Chinese economy.
China intends to focus on boosting its internal economy and tightening trade ties with partners in response to the new tariffs imposed by the US. Following US President Donald Trump's announcement of an additional 34% tariff on China, the Chinese Ministry of Commerce called on the US to cancel them, announcing unspecified retaliatory measures.
Will China not focus on retaliatory tariffs against the US?
Bruce Pang, an adjunct professor at CUHK Business School (Hong Kong), assessed that China will not focus on retaliatory tariffs, but rather on improving its own economy by diversifying export directions and products and increasing domestic consumption. "I think the focus of China’s response in the near term won’t be retaliatory tariffs or such measures," Pang said in an interview with CNBC.
China, the world's second-largest economy, has been increasing its stimulus efforts since September by expanding the budget deficit and supporting consumer subsidy programmes. Xi Jinping has already met with technology entrepreneurs, including Alibaba founder Jack Ma, which demonstrates support for the private sector.
Will this be how China balances the US tariffs?
Larry Hu, chief economist for China at Macquarie Group Ltd., emphasised that Beijing will use internal stimulus to balance the impact of tariffs and achieve its economic growth target of about 5%. "My view stays the same," Hu wrote on this matter in a message to CNBC. Hu expects that instead of retaliatory tariffs, China might focus on blacklists, export controls, and investigations of foreign companies in China.
China has increased its trade with Southeast Asia, which has become Beijing's largest trading partner, surpassing the European Union and the US. In 2022, the world's largest free trade bloc was established—the Regional Comprehensive Economic Partnership (RCEP), which includes China, Japan, South Korea, Australia, and New Zealand.
