Beijing, Feb 28 (V7N) — China’s top leadership is set to gather next week for high-stakes meetings aimed at shielding the country’s struggling economy from mounting trade threats, tariffs, and geopolitical uncertainty.
The "Two Sessions" meetings—China’s annual parliamentary gathering—are largely symbolic, serving as a platform for the Communist Party to showcase policy direction while giving a veneer of openness. However, this year’s economic headwinds and the return of Donald Trump to the White House make these discussions more consequential than ever.
Key Focus: Economic Growth Amid Challenges
When Premier Li Qiang opens the National People’s Congress (NPC) on Wednesday, all eyes will be on China’s economic growth target for 2025. Analysts widely expect Beijing to stick to a 5% GDP growth target, despite significant economic hurdles:
A struggling property sector
Weak consumer demand
Rising youth unemployment
Fresh U.S. tariffs
"Any one of those challenges would be a headache for officials; combined, they are a migraine," said Harry Murphy Cruise, head of China and Australia economics at Moody’s Analytics.
Beijing has been reluctant to inject massive stimulus, despite calls from experts urging more aggressive economic intervention. Instead, targeted measures—such as interest rate cuts and subsidies—are expected to continue.
Trump’s Trade War 2.0
The biggest wildcard for China’s economy is Donald Trump. Since returning to the White House, Trump has:
Imposed 10% tariffs on a wide range of Chinese imports.
Threatened additional tariffs, which could disrupt hundreds of billions of dollars in trade.
Expanded U.S. efforts to block China from accessing high-tech chips and critical technologies.
This escalating economic confrontation with Washington has forced China to double down on technological self-sufficiency, investing billions in semiconductor production and domestic innovation.
Last year, China launched a record $47 billion chip investment fund, an aggressive push to reduce reliance on Western technology. Analysts at the Asia Society said Beijing is betting on a state-led industrial drive to replace its real estate-driven growth model.
"China is hoping to develop new economic engines that can mitigate risks related to debt, demographics, and dependence on the West," they wrote.
Beijing’s Economic Playbook: What to Expect
With rising U.S. trade pressure, experts predict Beijing will increase policy support in several key areas:
More government subsidies for household spending
Eased debt burdens for local governments
Targeted stimulus to counter shocks from tariffs or a worsening property crisis
"We expect China to increase policy support in response to greater external shock from the U.S.," said Wang Tao, UBS chief China economist.
China’s Deepest Economic Wound: Property Market Crisis
Perhaps the most pressing domestic issue for China’s leaders is the ongoing collapse of the property market.
New home prices in major cities fell 3.4% year-on-year in January.
Second-tier cities saw a 5% drop, while third-tier cities experienced a 6% decline.
Weak housing demand is fueling deflationary pressures, worsening local government finances.
"Housing remains China’s biggest economic drag," said Louise Loo of Oxford Economics. "Overcoming these powerful negative feedback loops will be policymakers' biggest challenge this year."
To stimulate consumer demand, Beijing may expand its consumer goods trade-in program, encouraging shoppers to exchange old appliances and vehicles for new ones. However, short-term incentives are unlikely to fix deeper structural problems.
As China heads into its most crucial economic year in recent history, its leadership faces mounting pressure to navigate an increasingly hostile global landscape while addressing deep-rooted domestic challenges.
The Two Sessions will offer key clues about Beijing’s next moves—but whether those measures will be enough to revive confidence in China’s economy remains to be seen.
END/WD/RH/
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