- China targets 5% growth, ¥1.3T treasury bonds ¥300B stimulus
- Trump’s trade measures could disrupt China’s global trade
- China prioritizes domestic consumption development
China expects a less favorable trade environment due to US tariffs, but still sets an ambitious 5% growth target, issues 1.3 trillion yuan ($179 billion) in ultra-long special treasury bonds, and focuses on domestic consumption and its stimulation by allocating ¥300B.
More About China’s Strategy Amid Trump’s Trade War
Trump’s trade war is being met with measures from China, which is adapting its strategy to the new realities.
Premier Li Qiang, in a speech at the opening of the annual meeting of China’s parliament, warned:
“Changes unseen in a century are unfolding across the world at a faster pace. An increasingly complex and severe external environment may exert a greater impact on China in areas such as trade, science, and technology.”
To this end, China is taking a variety of measures to shift and stimulate its economy, boosting domestic consumption in anticipation of making it more difficult to sell its goods around the world. In particular, stimulating domestic consumption has become a critical priority, for which an additional 300 billion yuan consumer subsidy scheme for electric vehicles, appliances, and other goods has already been allocated.
Andrew Xia, chief economist at Shangshan Capital Group, emphasized:
“Further expanding the trade surplus is no longer a good strategy, so we need to rely on domestic demand for growth.”
Speaking of institutional investors and domestic businesses, Beijing plans to raise 500 billion yuan to re-capitalize major state banks, as well as issue 1.3 trillion yuan ($179 billion) in ultra-long special treasury bonds this year, up from 1 trillion yuan in 2024. Local governments will be allowed to issue 4.4 trillion yuan in special debt, up from 3.9 trillion yuan.
So China is betting on 5% growth in 2025 as well as a larger budget deficit plan of around 4% of economic output regardless of increased tariffs, but there are concerns that even if this works, it may not be the end. For example, Dave Fong, who manufactures school bags, talking teddy bears, stationery, and consumer electronics in China said:
“We worry that they will add another 10% and then another 10%. That’s a big problem.”
Conclusion
Trump’s trade war against several countries, not only China but also Canada and Mexico, is starting to have bigger stakes for each side and is forcing a reorganization of economic models that have been decades in the making.
Some would say that the U.S. is finally bringing order to world trade, others might accuse it of destroying global trade, but on the way to one end or the other, the means are getting tougher and it seems that everyone is at risk.
However, such times may prove to be more favorable for alternative markets, and alternative currencies, which many crypto enthusiasts are looking forward to. Be aware and stay tuned for updates on the rapidly evolving politics, economic, and crypto landscape.
The information provided in this article is for informational and educational purposes only and does not constitute financial, investment, or trading advice. Any actions you take based on the information provided are solely at your own risk. We are not responsible for any financial losses, damages, or consequences resulting from your use of this content. Always conduct your own research and consult a qualified financial advisor before making any investment decisions. Read more
