China’s leaders are downplaying the potential impact from U.S. President Donald Trump’s trade war, saying they have the capacity to protect jobs and limit damage from higher tariffs on Chinese exports.
The briefing Monday by several senior officials of different government ministries appeared aimed at shoring up confidence with promises of support for companies and the unemployed, easier lending conditions and other policies to counter the impact of combined tariffs of up to 145% on U.S. imports from China.
It followed a meeting of China’s powerful Politburo last week that analysts said had focused on ways to counter keep growth on track despite slowing exports.
“Chinese policymakers are on heightened standby mode,” Louise Loo, lead economist at Oxford Economics said in a a report. She noted that the policies were similar to earlier pronouncements.
The status of exchanges, if any, between the White House and Chinese leader Xi Jinping remains unclear.
Trump said last week that he’s actively negotiating with the Chinese government on tariffs — while U.S. Treasury Secretary Scott Bessent said talks have yet to start.
Beijing has denied that any such talks were underway, and China has retaliated against Trump’s tariffs by putting 125% import duties on products from the U.S., among other measures.
The officials who spoke Monday reiterated China’s rejection of what leaders there call bullying.
“They make up bargaining chips out of thin air, bully and go back on their words, which makes everyone see one thing more and more clearly, that is the so-called ‘reciprocal tariffs’ severely go against historical trends and economic laws, impact international trade rules and order and seriously impair the legitimate rights and interests of countries,” said Zhao Chenxin, deputy director of the National Development and Reform Commission, the country’s main economic planning agency.
The trade war between the world’s two largest economies has the potential to bring on a recession in the U.S., with repercussions across the globe. China has been struggling to recharge its own growth after the job losses and other shocks of the pandemic.
Economists at the International Monetary Fund and some investment houses have downgraded their estimates for growth in China this year, to about 4%. Millions of export oriented jobs are at stake.
Still, Chinese officials say they believe the economy has the momentum to expand at the target rate of about 5% this year, in line with growth in 2024.
Yu Jiadong, a vice minister of Human Resources and Social Security, told reporters in Beijing that a full and objective analysis shows China’s “employment policy toolbox is sufficient.”
The government will step up support for companies to help them keep workers and also encourage entrepreneurship among the unemployed, Yu said.
China also can manage without energy imports from the United States, said Zhao, the NDRC deputy director.
“Enterprises reducing or even stopping energy imports from the United States will have no impact on our country’s energy supply,” he said.
China has been gradually cutting its imports of U.S. grains and other farm products, and Zhao said that stopping such purchases would not compromise the food supply. Most grain purchases were for livestock feed and the international market has adequate stocks to make up for any reduction in imports of corn, sorghum, soy and oil from American suppliers, he said.
A deputy governor of the central bank, Zou Lan, said the People’s Bank of China will cut interest rates and relax reserve requirements as needed to encourage lending.
“Incremental policies will be introduced in a timely manner to help stabilize employment, enterprises, markets, and expectations,” Zou said.
China can expand domestic demand through various policies including rebates for swapping old vehicles, appliances and factory equipment for new ones, Zhao said, forecasting that demand for equipment upgrades will exceed 5 trillion yuan ($34.8 billion) a year.
In the longer term, China also is promoting the shift of more people to cities from the countryside, Zhao said.
“Every 1 percentage point increase in the urbanization rate can stimulate trillions of investment demand,” he said. “Our country has very real potential and space to expand domestic demand.”