As the U.S. prepared to impose new tariffs, China took steps to strengthen its economy. Facing challenges, China set a GDP growth target of around 5% for 2025. This shows their optimism despite economic difficulties. To support growth, the country decided to expand its fiscal deficit to 4%. This increase was aimed at boosting economic support during tough times.
In early 2025, China reported a 5.9% growth in industrial production. This indicates some resilience in their economy. Retail sales also showed positive signs, rising by 4% in January and February compared to the previous year. However, the looming trade war posed risks. Exports to the U.S. made up about 2.5% of China’s GDP, which could be affected if tariffs were to take a heavy toll. Furthermore, Canada is the largest source of U.S. mineral imports, making the trade dynamics even more complex.
To counter slowing growth, China launched a jumbo stimulus package. This plan focused on boosting domestic demand and encouraging consumer spending. Investments in technology and artificial intelligence were also a priority, aiming to drive new growth engine and economic development.
In addition, China worked to promote its internal market to offset challenges in international trade. In response to U.S. tariffs, China imposed tariffs on American goods like liquefied natural gas and coal. They also introduced an export control law to manage critical exports, including rare earths. This was meant to protect their supply chains.
Moreover, China prioritized maintaining currency stability rather than allowing depreciation. Domestically, China introduced a special action plan to enhance consumption. Local governments were encouraged to spend on welfare programs to stimulate local economies.
The government adjusted fiscal policies to support economic stabilization. Xi Jinping’s administration aimed for stabilization over excessive stimulus, focusing on consumer spending as a key driver of growth.
As the tariffs approached, the stakes were high for China’s economy, and their response highlighted a mix of resilience and caution.
