João da Silva
Journalist
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Chinese leaders are expected to unveil a significant recovery plan at a key annual meeting to revive the country’s late economy, which is now facing a trade war with the United States.
Thousands of delegates attend the National People’s Congress (NPC), a rubber parliament, which will announce decisions that have already been taken behind closed doors.
But the one -week gathering is closely monitored by observers for indices on Beijing policy changes – and this year is more important than most.
President Xi Jinping had already fought against persistent consumption, a real estate crisis and unemployment, before the new 10% deduction from Donald Trump on Chinese imports comes into force on Tuesday.
This follows the 10% rate imposed in early February, bringing the total American levy to 20%. And it strikes what was a rare luminous point for the Chinese economy: exports.
Beijing retaliated almost immediately on Tuesday, as he did last month. He announced a retail action which included prices of 10% to 15% on certain agricultural imports from the United States – it is the key because China is the largest market of these goods, such as American corn, wheat and soy.
However, during this week’s meeting, known as two sessions, the spotlights will be on how to stimulate growth following these prices.
Party leaders should announce 5% as a growth target for 2025, as in previous years. And it may have come with a commitment to pump thousands of Billions from Chinese Yuan – or hundreds of billions of dollars – in the system.
Beijing was able to achieve the 5% target last year, but growth was motivated by strong exports, which led to a record of record trade of almost billions of dollars.
Repeating this will be much more difficult this year. “If the prices persist, Chinese exports to the United States could fall a quarter to a third,” said Harry Murphy Cruise, responsible for the Chinese economy at Moody’s Analytics.
Beijing will have to count more than ever on domestic spending to reach a growth of 5% – but it was one of its greatest challenges.
Crunch of expenses
Analysts say that the expansion of domestic demand, which was the third objective at last year’s meeting, could now go at the top of the priority list.
Beijing has already deployed projects to encourage its inhabitants to spend more, in particular by allowing them to exchange and replace consumer goods such as cooking devices, cars, phones and electronic devices.
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The late economy of China is at the top of the agenda at a week’s meeting
But it is widely planned that there will be a series of new programs to increase spending. If they will be enough to stimulate consumption is the key question.
Severe restrictions on the pandemic era as well as prolonged real estate crisis and government repression on technology and finance have fueled pessimism among the Chinese. And a small net of social security means that savings have become particularly crucial in the event of unexpected expenses.
But China’s leadership is optimistic. CPCC spokesperson Liu Jieyi told journalists before the session that if the economy was faced with challenges such as low demand, it was “important to recognize that China’s economic fundamentals are stable, there are many advantages, resilience is strong and that the potential is important”.
Development of “high quality”
The investment in what President Xi calls “high -quality development”, which covers high -tech industries renewable energies with artificial intelligence, should also be a major objective.
The second world economy, China has long made it possible to become a world leader in technology, in part to reduce its dependence on the West.
State media have already praised recent examples such as Deepseek and Unity Robotics, which both attracted world attention, as examples of “technological progress” of China.
Deepseek’s success in particular has experienced a Gathering of AI grant, analysts noting a renewed interest in China among foreign investors.
A comment in the Xinhua newspaper managed by the State said that “the new Chinese energy industries and the global green transition, driven by its advanced technologies, will continue to be significant growth engines”.
But the new US Levies – which also come from the prices of the first mandate of Trumps – could hinder these plans, especially because they could alleviate the feeling of investors.
“The chaos that the prices leave in their wake is kryptonite for investment,” explains Mr. Murphy Cruise. “The prices should offer a punch for two to the Chinese economy, landing the blows of both exports and investments.”
