China shifts strategy to boost economy amid U.S. tariff hike
China plans to respond to the new U.S. tariffs by strengthening its domestic economy and developing trade relations, CNBC reports, citing experts on the Chinese economy.
China intends to focus on stimulating its internal economy and tightening trade ties with partners in response to the new tariffs imposed by the U.S. Following U.S. President Donald Trump's announcement of an additional 34% tariff on China, the Chinese Ministry of Commerce called on the U.S. to cancel them, announcing unspecified retaliatory measures.
Will China not focus on retaliatory tariffs against the U.S.?
Bruce Pang, an adjunct professor at CUHK Business School in 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 programs. 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 U.S. tariffs?
Larry Hu, chief economist for China at Macquarie Group Ltd., emphasized 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 U.S. 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.
