China’s leaders are set to meet to address strategies for shielding the economy from U.S. tariffs imposed by President Trump. The upcoming National People’s Congress is expected to reveal growth targets amid significant economic challenges, including a struggling property market and low consumer demand. Analysts anticipate a focus on technological self-reliance and potential policy supports to boost economic stability.

Next week, China’s leadership is set to meet behind closed doors to formulate strategies aimed at protecting the struggling economy from tariffs and trade threats posed by U.S. President Donald Trump. These gatherings, known as the “Two Sessions,” serve primarily to ratify decisions made by the Communist Party while offering limited visibility into policymaking. Nevertheless, they provide valuable insights into the leadership’s priorities amidst the challenges posed by the unpredictable U.S., China’s largest trading partner and strategic adversary.

Chinese President Xi Jinping has acknowledged that the nation is confronting “numerous difficulties” in its economy, as noted in an article scheduled for publication in the Communist Party’s journal, Qiushi. However, he emphasized that the conditions favorable to long-term growth remain intact. Analysts anticipate that during the upcoming National People’s Congress, Premier Li Qiang will announce economic growth targets for 2025, likely around five percent, reflecting optimism amidst ongoing economic headwinds and reluctance to implement large-scale fiscal stimulus.

The complicated landscape for the Chinese economy is compounded by various factors, including a declining property market, subdued household spending, and high youth unemployment. Harry Murphy Cruise from Moody’s Analytics described these issues as a “migraine” for policymakers, with the combined impact presenting a significant challenge. These difficulties coincide with Trump’s recent tariffs, which imposed a 10 percent duty on China-made imports, raising fears of further escalations that could strain hundreds of billions in trade.

Under heightened pressure, China’s leadership has pursued a strategy of technological self-reliance to reverse the U.S.-led effort to exclude China from international supply chains, especially in high-tech sectors. This has resulted in substantial investments in domestic chip manufacturing, including a $47 billion fund aimed at enhancing research, innovation, and productivity. Analysts believe this comprehensive approach could mitigate economic challenges while fostering a shift away from reliance on the real estate market.

As officials prepare for the meeting, the prospect of intensified U.S. tariffs could prompt China to intensify measures to support domestic growth through interest rate cuts and subsidies. Wang Tao of UBS suggests that if the U.S. enacts further tariffs or if the property market deteriorates, additional policy responses are anticipated throughout the year. The sluggish domestic consumption continues to hinder broader economic recovery, leading to proposals for expanding consumer goods trade-in programs to stimulate spending.

Overall, the ongoing property crisis, characterized by declining home prices and excessive debt, remains a critical concern for the Chinese economy. The recent data indicates a significant drop in home prices, especially in key urban areas, signaling a profound crisis in confidence among consumers and investors. As policymakers navigate these challenges, addressing the interconnected issues stemming from the real estate sector will be vital for restoration of economic stability.

China’s leadership is convening to address tariffs and economic instability, with particular attention on the impacts of U.S. policy changes and domestic market challenges. President Xi recognizes the complexities facing the economy, while analysts predict a realistic five percent growth target. The continuing crisis in the property market and low consumer confidence underline the urgency for effective stimulus measures. Striking a balance between addressing immediate economic pressures and maintaining long-term growth strategies will be paramount for policymakers in the coming year.

Original Source: www.france24.com

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