Chinese Communist Party leader Xi Jinping has warned of “many difficulties and challenges” for China’s economy ahead of the annual session of the National People’s Congress in Beijing this week.
In an article published in the ideological party journal Qiushi on Monday — two days before the congress opens — Xi warned of the “many risks and hidden dangers” facing China’s economy, before alluding to the threats of further U.S. tariffs on Chinese goods.
“At present, the adverse effects of changes in the external environment have deepened, and our country’s economy still faces many difficulties and challenges,” Xi wrote in the piece.
U.S. President Donald Trump last month imposed a 10% tariff on Chinese imports in retaliation for what he said was Beijing’s refusal to stop the outflow of precursors for the synthetic opioid fentanyl.
Beijing then introduced a 15% retaliatory tariff on certain U.S. energy exports to China. Last week, Trump warned he would ramp that rate up a further 10% on March 4. As a presidential candidate last year, Trump vowed tariffs of “more than” 60% on Chinese imports.
Beijing is now “studying and formulating countermeasures” in the event that those tariffs go ahead, the party-backed Global Times newspaper cited an anonymous source as saying on Monday.
“The countermeasures will likely include both tariffs and a series of non-tariff measures, and U.S. agricultural and food products will most likely be listed,” the paper quoted the source as saying.
China’s economic troubles
While they mull countermeasures, though, officials in Beijing have maintained they would prefer to forget about tariffs altogether.
Chinese Foreign Ministry spokesperson Lin Jian said at a press briefing on Monday that there are “no winners” in a tariff war.
“The U.S. attempt to politicize and weaponize trade and economic issues, levy tariff hikes on Chinese imports under the pretext of fentanyl and create blocks to its normal trade, investment and economic cooperation with China will only harm its own economic interests and international credibility,” Lin said.
China is ready to engage in “dialogue and consultation on the basis of equality and mutual respect,” Lin added.
“In the meanwhile, we will take all measures necessary to safeguard our legitimate rights and interests,” he said.
The pending trade war comes at a time of economic stress in China.
Since the start of the U.S.-China trade war under the first Trump administration, Xi has appealed for restructuring to replace exports with domestic consumption as the main driver of growth.
But three years of zero-COVID restrictions and a slew of U.S. tariffs and restrictions has prompted many manufacturers to relocate away from China and spooked foreign investors.
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Meanwhile, widespread unemployment and a burst real estate bubble has made life much harder for ordinary Chinese.
Those concerns were reiterated in Xi’s article, which pulled heavily from China’s Central Economic Work Conference in December.
“We must face up to difficulties, strengthen our confidence and strive to transform positive factors from all aspects into development results,” Xi wrote, adding that expanded domestic demand isn’t just a quick fix but “a strategic move.”
Growth figures questioned
Struggling Chinese exporters told RFA Mandarin that the new tariffs proposed by Trump will further harm their businesses.
The head of an electronics factory in Shenzhen who gave only the surname Ge for fear of reprisals said that the value of her company’s exports to the United States has been slashed in half since last October, and that tariffs will make things worse.
“Some taxes are paid by U.S. importers, which pushes up prices,” she said. “U.S. importers usually pass on the costs of tariffs to consumers, making our goods more expensive.”
Ge has cut the number of employees from 17 to just seven, while the sales team has been slashed from 10 to four.
“Chinese exports may lose market share to competitors in Vietnam, Indonesia and other countries as U.S. importers look for other suppliers,” she said.
Political commentator Willy Lam told RFA Mandarin there is still hope that Trump won’t carry out his threat to impose tariffs above 60%.
“The 10% increase in tariffs ... is still lower than the rates Trump mentioned in 2024 of 60% or more,” Lam said. “In general, Trump’s attitude towards Xi Jinping is milder than expected.”
Analysts expect growth to be set around the 5% mark during this week’s congress, and there has also been speculation about the possibility of renewed economic stimulus packages.
“The general public in China is short of money,” Lam said. “Most importantly, they lack confidence in the government right now.”
U.S.-based economic commentator Qin Weiping cited falling marriage rates and birth rates as an indicator of low economic confidence, as young people increasingly struggle to make ends meet.
“People have no confidence in the economy, or in the future,” he said. “So demand for residential property is naturally weaker.... It will be hard to fix the real estate problem because this is a vicious cycle.”
The government should consider hiring more graduates as civil servants, Qin suggested, citing the 12.22 million who graduated in 2025 alone, swelling the ranks of the young unemployed.
Xie Tian, a professor at the Aiken School of Business at the University of South Carolina, said China’s growth figures were questionable in any case, alleging the numbers were fudged for political reasons.
“No-one believes it — whether they say it’s 5% or 15% — because that’s basically impossible,” Xie said. “If the economic growth rate was 5%, their unemployment rate wouldn’t be that high.”
But others noted a growing conundrum in China’s recent efforts to stimulate domestic growth without relying on traditional exports.
Qin, the economic commentator, noted Chinese officials appeared increasingly focussed in their official documents on achieving growth through artificial intelligence, which necessitates fewer workers.
Only further investment in labor-intensive industries would solve China’s problem of dampened domestic demand, he said, by putting more spending money into the pockets of China’s consumers.
“Give them a level playing field and allow the economy to get on the right track ... which will gradually solve the problem of unemployment,” he said. “People need to feel that business is good, money is easy to make, and that life is getting better and better.”
“It’s that simple.”
