People’s Daily | “The sky won’t fall!”

According to a report from People’s Daily, the U.S. government is moving against the tide of the world and has introduced so-called “reciprocal tariffs” on almost all trading partners, including China. China has taken resolute and effective countermeasures at the first opportunity, which has attracted global attention. Currently, we should objectively analyze the impact of the U.S.’s abuse of tariffs on us, rationally view the good momentum of our economic development, and firmly maintain confidence in responding to this round of U.S. containment.

(1) The U.S.’s abuse of tariffs will have an impact on us, but “the sky won’t fall.” The U.S. government’s imposition of an additional 34% tariff on us, plus the tariffs imposed earlier, will seriously suppress bilateral trade and will inevitably have a negative impact on our exports in the short term, increasing the pressure of economic downturn.

However, it should be noted that China is an ultra-large-scale economy, and we have strong resilience in the face of the U.S.’s tariff bullying. In recent years, we have actively built a diversified market, and our dependence on the U.S. market has been declining. Our exports to the U.S. as a share of total exports have fallen from 19.2% in 2018 to 14.7% in 2024, and the decline in exports to the U.S. will not have a disruptive impact on the overall economy. Many products within the U.S. have a high degree of dependence on us. Currently, the U.S. not only cannot do without China for many consumer goods, but also needs to import many investment goods and intermediate products from China, with the dependence on several categories exceeding 50%, making it difficult to find alternative sources in the international market in the short term. Against the backdrop of deep integration of global industrial and supply chains, Sino-U.S. trade cannot be completely interrupted. Emerging markets have huge potential for economic and trade cooperation and are increasingly becoming an important foundation for stabilizing our foreign trade. China is the main trading partner of more than 150 countries and regions around the world. Since 2018, our exports to ASEAN have increased from 12.8% to 16.4%, and our exports to countries along the “Belt and Road” have increased from 38.7% to 47.8%, and they are maintaining a relatively rapid growth momentum. The domestic market has a broad buffer space and is an important rear area. According to statistics, among the hundreds of thousands of enterprises with export performance in 2024, nearly 85% of the enterprises also conduct domestic sales business, and the domestic sales amount accounts for nearly 75% of the total sales. The country is accelerating the removal of policy bottlenecks and sticking points for “exporting to domestic sales,” and various policies to expand domestic demand are also increasing in scope, and the capacity of the domestic demand market will increasingly become apparent.

(2) Currently, China’s economy is stabilizing and improving, and we have the confidence and the foundation to cope with the impact of U.S. tariffs. Since the U.S. initiated the trade war against China in 2017, no matter how the U.S. fights and suppresses us, we have always maintained development and progress, demonstrating the resilience of “becoming stronger under pressure,” which has become our greatest confidence in responding to external shocks. Economic cycles are constantly improving. In recent years, we have continuously optimized supply, improved demand, and smoothed domestic economic cycles, and the endogenous power of the economy has been significantly enhanced. Especially after the meeting of the Political Bureau of the Central Committee on September 26 last year, with the implementation of a series of incremental policies, the domestic economy has continued to rebound and improve. In the first two months of this year, domestic demand growth, such as investment and consumption, was better than expected, exports have initially withstood the test, the manufacturing and service PMI continued to rise, and a growth of more than 5% is expected in the first quarter. Technological empowerment continues to exert force. We have seized the most important supply of developing new quality productive forces, adhered to scientific and technological innovation to drive industrial innovation, and made breakthroughs in integrated circuits, artificial intelligence, humanoid robots, and other fields, demonstrating the huge vitality of China’s technological innovation. “Choking neck” and suppression will only force China to accelerate the breakthrough of core technologies in key areas. Risk mitigation has achieved significant results. In recent years, we have withstood internal and external pressures, insisted on doing difficult but correct things, and continuously resolved risks in key areas such as real estate, local government debt, and small and medium-sized financial institutions. At present, the three major risks have been effectively controlled and are in a state of convergence. Positive changes have occurred in real estate market transactions and social confidence, and the warming trend in first-tier cities is relatively obvious. Expectations from all parties are constantly improving. China’s long-term stable social environment, continuously optimized business environment, unwavering adherence to goals, and the policy continuity of drawing a blueprint to the end have provided enterprises with long-term stable expectations. Since this year, the views of domestic and foreign countries on China’s economic prospects have significantly improved, and international organizations such as the Organization for Economic Cooperation and Development and many Wall Street financial institutions have raised their forecasts for China’s economic growth, are optimistic about China’s capital market, and regard China’s “certainty” as a safe haven to hedge against the U.S.’s “uncertainty.”

(3) In the face of the U.S.’s indiscriminate use of tariffs, we know what to do and have the means to deal with it. We have fought a trade war with the U.S. for 8 years and have accumulated rich experience in the struggle. Although the international market generally believes that the U.S.’s abuse of tariffs is beyond expectations, the Central Committee of the Communist Party of China has already anticipated the U.S.’s new round of economic and trade containment against us, has fully estimated the possible impact, and has also made sufficient preparations and reserves for the response plan. The Central Economic Work Conference last year has already made a comprehensive deployment on how to deal with the U.S.’s new round of containment and suppression against China, emphasizing the need to enrich and improve the policy toolbox, dynamically adjust policies according to the degree of external impact, strengthen counter-cyclical regulation, and improve the forward-looking, targeted, and effective nature of macro-control. At this year’s National People’s Congress and the Chinese People’s Political Consultative Conference, many policies we have introduced, such as setting this year’s fiscal deficit rate at around 4%, and using treasury bond funds to expand support for “two new” and “two important” are specific manifestations of unconventional policies.

In the future, according to the needs of the situation, monetary policy tools such as reserve requirement ratio cuts and interest rate cuts have left sufficient room for adjustment and can be introduced at any time; fiscal policy has clearly stated that it will increase spending intensity and accelerate spending progress, and fiscal deficits, special bonds, and special treasury bonds still have room for further expansion as the situation warrants; we will boost domestic consumption with unconventional efforts, accelerate the implementation of existing policies, and introduce a batch of reserve policies at an appropriate time; we will firmly stabilize the capital market with practical policy measures and stabilize market confidence, and relevant pre-planned policies will be launched one after another; governments at all levels will provide precise assistance to industries and enterprises that are severely affected by the impact through “one case per line” and “one policy per enterprise,” support enterprises in adjusting their business strategies, and guide and help enterprises to explore the domestic market and non-U.S. markets while maintaining trade with the U.S. as much as possible. At the same time, we will urge the U.S. to correct its wrong practices and, in a manner of equality, respect, and mutual benefit, consult with China and countries around the world to properly resolve trade disputes.

(4) Firmly do our own things well and respond to external environmental adjustments with domestic economic structural adjustments. The great changes unseen in a century are accelerating in the world today, and the U.S. tariff policy further exacerbates the uncertainty of the global political and economic landscape. As a responsible major global power, we must turn pressure into motivation, regard responding to the U.S.’s impact as a strategic opportunity to accelerate the construction of a new development pattern, promote high-quality development, and promote economic structural adjustments, and inject more stability into global economic development with our own stable development. In the face of high tariffs that continue to compress trade space with the U.S., we must take expanding domestic demand as a long-term strategy, strive to make consumption the main driving force and ballast stone of economic growth, and leverage the advantages of the super-large market. On the one hand, starting from the demand side, we will improve the consumption capacity and willingness of residents by steadily promoting income increase and burden reduction; on the other hand, starting from the supply side, we will accelerate the construction of a unified national market, improve the business environment, and support domestic enterprises to provide high-quality products and services around the needs of the people.

In the face of the U.S.’s changeable and extreme pressure, we have not closed the door to negotiations, but we will not be complacent, but have made various preparations to cope with the impact. Those who share the same goals will win, and those who share the same boat will prosper. We have the strong leadership of the Central Committee of the Communist Party of China, and we have the institutional advantages of concentrating our strength to accomplish great things, and we will certainly be able to turn crises into opportunities and move forward steadily. As General Secretary Xi Jinping pointed out: “China’s economy is a vast ocean, not a small pond.” This vast ocean can withstand the baptism of storms and the invasion of trade cold currents, and will eventually allow the world to witness the composure and determination of “embracing all rivers.”

Editor Chen Yanting Source: People’s Daily