As US President Donald Trump ratcheted up economic pressure on China over the past week, Beijing sent back its own message: Its rise won’t be interrupted.
A major political meeting taking place in the capital was the ideal backdrop for Beijing to respond. The “two sessions” gathering of China’s rubber-stamp legislature and its top political advisory body is where the government reveals its plans and sets the tone for the year ahead.
The top item on its priority list? Boosting consumer demand to ensure China doesn’t need to rely on exports to power its vast but slowing economy. And the next: driving forward leader Xi Jinping’s bid to transform the country into a technological superpower, by ramping up investment and enlisting the private sector.
Beijing is making these moves as it prepares for what could be a protracted economic showdown with the United States. Trump doubled additional tariffs on all Chinese imports to 20% on Tuesday and has threatened more to come – as well as tighter controls on American investment in China.
“We can prevail over any difficulty in pursuing development,” China’s No. 2 official Li Qiang told thousands of delegates seated in Beijing’s Great Hall of the People at the opening meeting of the National People’s Congress Wednesday. The “giant ship of China’s economy” will “sail steadily toward the future,” he said.
A foreign ministry spokesperson was more direct when asked about trade frictions on Tuesday: “If the US insists on waging a tariff war, trade war, or any other kind of war, China will fight till the end,” he told reporters.
And while Beijing’s priorities – and rhetoric – may echo those of years past, this time they are coming from a country that is starting to regain its swagger after being battered by its own Covid restrictions, a property sector crisis and by a tech war with the US.
“Confidence” has been an unofficial buzzword of the weeklong event, which ends Tuesday. It was used nearly a dozen times during a press conference held by China’s economic tsars on Thursday, splashed across state media coverage and included in a pointed reminder – that “confidence builds strength”– during the closing lines of Li’s nationally broadcast speech.
That optimism might be more aspiration than reality. Many in China are looking to the future with uncertainty. They’re more willing to save than spend, while young people are struggling to find jobs and feeling unsure whether their lives will be better than those of their parents.
But unlike last year, the country is entering 2025 buoyed by the market-moving successes of Chinese firms and technology. And while Trump’s return has Beijing concerned about economic risks, it’s also eyeing opportunity for its own rise.
Confidence boost
This mood isn’t just percolating in the halls of power.
On the streets of the capital, gleaming homegrown electric vehicles weave through traffic, including those from carmaker BYD, which now goes toe-to-toe with Elon Musk’s Tesla for global sales – a reminder of China’s successful push to become a leader in green tech.
Then there’s the box office record-smashing animation “Ne Zha 2” and the breakout success of privately owned Chinese AI firm DeepSeek. Its large language model shocked Silicon Valley and upended Western assumptions about the costs associated with AI.
In Beijing this week, “you can ask DeepSeek” has been a playful and proud punchline in casual conversation.
“Last year, people may have been impacted by the US narrative that China is declining, that China has peaked,” said Wang Yiwei, director of the Institute of International Affairs at Renmin University in Beijing. “We still have many difficulties. We still have many problems, of course, but it’s not that we’ve reached peak China.”
“China is developing quickly now and that’s attracted international attention, especially from the United States,” but that may not be a bad thing, said a medical graduate student surnamed Xia. “Trump’s increase on tariffs is competition … (and) if there’s no competition maybe China’s independent development is not sustainable.”
High stakes rivalry
But even as Chinese officials seek to project confidence, international observers say the economic stimulus measures announced this week show Beijing is girding itself for major challenges to come.
Premier Li alluded to that in his opening address. “The external environment is becoming more complex and severe, which may have a greater impact on the country’s trade, science and technology and other fields,” he said.
China doesn’t want to deal with that volatility while also grappling with a weak economy at home. That’s one reason why it’s trying to boost consumption and spur growth, setting an ambitious expansion target of “around 5%” this year. Beijing is also aware that trade frictions mean the economy needs to rely less on exports.
“It is likely that Beijing has thought through the scenarios of Trade War 2.0, but whatever happens, it is clear that China’s growth will have to rely more on domestic demand,” said Bert Hofman, a professor at the East Asian Institute at the National University Singapore and former World Bank country director for China, in a note.
Still, some analysts say Beijing’s initiatives are short on details and much less aggressive than needed to rev up the economy and boost consumer confidence.
“It adds up to a sense by the leadership that they want to refocus on growth and development, but still a desire to do only as much as necessary in terms of stimulus to get there,” said Michael Hirson, a fellow at the Asia Society Policy Institute’s Center for China Analysis.
Xi may also be balancing this goal with another concern: a need to save some firepower to support the economy if China faces “a nasty four years dealing with Donald Trump,” he said.
Beijing also wants to direct resources toward the high-tech transformation of its economy and industries. That’s another key part of the government’s 2025 agenda – and a long-term objective of Xi, who unlike US presidents is not subject to term limits on his leadership.
Beijing is pushing for innovations in AI, robotics, 6G and quantum computing, announcing a state-backed fund to support tech innovation and even welcoming foreign enterprises – in a significant tone shift for Xi – to play a role.
China is still smarting from the first Trump administration’s campaign to keep its tech champion Huawei out of global mobile networks and from the Biden administration’s efforts to convince allies to join it in cutting Chinese access to advanced semiconductors.
Last month, Washington said it was considering expanding restrictions on US investment in sensitive technologies in China.
But Beijing this week has also touted its confidence in advancing no matter the barriers.
“Be it space science or chip making, unjustified external suppression has never stopped,” Chinese Foreign Minister Wang Yi told reporters Friday. “But where there is blockade, there is breakthrough; where there is suppression, there is innovation.”
“We are witnessing an ever-expanding horizon for China to become a science and technology powerhouse,” he said.
The Trump threat?
How much Trump’s policies will challenge China remains an open and urgent question for Beijing.
The US president has refrained so far from slapping Chinese imports with the blanket 60% or more tariffs that he had threatened on the campaign trail.
He’s been focused elsewhere, including on unleashing sweeping changes to US global leadership by decimating US foreign assistance, threatening to take control of other countries’ sovereign territory, and upending US alliances in Europe, while pulling closer to Russia at the expense of Ukraine.
There are potential risks for Beijing in that shake-up. For example, if a Washington-Moscow rapprochement pulls Xi away from Russian President Vladimir Putin, his closest ally, or if an American dial-down of security in Europe allows it to ramp up attention on Asia.
But Chinese diplomats have also been taking advantage of the changes to play up their country as a responsible and stable global leader, despite criticisms of Beijing’s own aggressive behavior in Asia.
When it comes to tariffs, observers say Beijing is trying to moderate its response, holding out for a potential meeting between Xi and Trump or perhaps even a deal that could avert an escalating trade war.
While China immediately retaliated against two sets of US tariffs this year, including with levies on US energy and key agricultural goods, it has remained measured in its reprisals.
The country’s deficit with the US means it will have less room to hit back if a trade war escalates, but Beijing is expected to be calculating other measures like export controls that it could use for leverage.
And the view from some parts is that even if tariffs cause the Chinese economy short-term pain, it will be the US which loses in the long run. China is still an indispensable part of global supply chains. It’s also better prepared to weather this trade war than the last one, because it’s sending goods to more markets globally now, data show.
“If you play (imposing tariffs) with a peer competitor, it actually would not work that well compared to if you’re doing this with small countries or medium powers,” said Zhou in Beijing, who is also the author of the forthcoming book “Should the World Fear China?”.
China, he said, wants cooperation not friction.
“But since the US is still the stronger side in this relationship, (it will) decide which kind of relationship this is … so China has to say ‘OK – if this has to be to be one of competition, then we must dare to fight,’” he said.
