China has unveiled a comprehensive "special action plan" aimed at boosting domestic consumption in response to economic challenges posed by US-imposed tariffs. The announcement comes as US President Donald Trump has doubled tariffs on all Chinese imports to 20% as of this month, intensifying trade tensions between the two nations. In retaliation, China has implemented new tariffs on US agricultural imports, which took effect last week.
The National Development and Reform Commission, China's top economic planning agency, acknowledged that consumer confidence remains weak. Li Chunlin, the deputy director of the commission, addressed questions about the new plan at a news conference on Monday. The initiative seeks to counteract the economic impact of the tariffs and stimulate domestic demand.
“There is still a lot of work to be done to boost consumption, expand domestic demand and better meet the people’s needs for a better life,” said Li Chunlin, emphasizing the challenges ahead.
China's economy showed signs of growth earlier this year, likely bolstered by fiscal stimulus measures. The Consumer Price Index (CPI), a key indicator of inflation, decreased by 0.7% in February compared to the previous year. Furthermore, industrial production expanded by 5.9% in the first two months of the year. However, retail sales grew by only 4.0% during the same period, marking its lowest level in over a year.
Zichun Huang, an economist at Capital Economics, noted the influence of fiscal policies on economic performance.
“China’s economy had a decent start to the year, likely driven by fiscal stimulus,” stated Huang.
Despite these initial gains, China's economy faces several challenges, including an uncertain employment outlook and a prolonged downturn in the property sector. The National Bureau of Statistics (NBS) reports data for January and February combined to account for the Lunar New Year holiday impact.
Looking forward, Premier Li Qiang has promised stability for China's economy during a major political meeting earlier this month. He assured that the "giant ship of China's economy" would "sail steadily toward the future." The country's growth target for this year is set at "around 5%."
Zichun Huang offered insights into future economic prospects:
“We expect the recovery to continue over the coming months, but given the wider headwinds weighing on China’s economy, we don’t expect any near-term improvement to be sustained for long.”