Chinese policymakers sought to reassure both domestic and international markets on Monday, stating that the country’s economic recovery would not be derailed by the broad tariffs imposed by the United States. However, analysts continue to caution that the hefty tariffs could exacerbate the risk of a sharp economic slowdown.
The trade tensions, largely stemming from U.S. President Donald Trump’s global trade war, have already sent shockwaves through financial markets and fueled concerns of a potential recession. The escalating back-and-forth tariffs between the U.S. and China, the world’s two largest economies, threaten to disrupt supply chains and impact various industries.
Despite these concerns, Zhao Chenxin, vice head of China’s National Development and Reform Commission (NDRC), expressed strong confidence that China would meet its 5% economic growth target for 2025. Zhao emphasized that while no immediate stimulus measures were announced, new policies would be rolled out in the second quarter of 2025 based on evolving economic conditions.
“The achievements of the first quarter have laid a solid foundation for the entire year,” Zhao said during a press conference. “Regardless of international developments, we will stick to our development goals and remain focused on our long-term strategy.”
This optimistic outlook from Chinese officials stands in stark contrast to the growing concerns from international observers, many of whom believe that the ongoing trade war will significantly hinder China’s economic performance. Major institutions such as the International Monetary Fund (IMF), Goldman Sachs, and UBS have all revised their growth forecasts for China downward, with many expressing doubt that the country will meet its official growth target.
In response to President Trump’s “Liberation Day” tariffs, which were imposed on April 2, China has retaliated with its own 125% tariffs on U.S. imports. The two countries’ trade war has led to what some are calling a de facto trade embargo between the two nations.
As the trade war intensifies, Chinese President Xi Jinping has ramped up diplomatic efforts, particularly in Southeast Asia, to build international support against the U.S. tariff strategy. Beijing has also issued threats of retaliation against countries that align themselves with Washington.
The trade dispute comes at a time when China’s economy is already facing significant challenges, including the threat of deflation and a prolonged real estate crisis. Analysts predict that the government will likely roll out further monetary and fiscal stimulus to support growth in the coming months.
Alongside Zhao, Zou Lan, deputy governor of the People’s Bank of China (PBOC), stated that the central bank would continue to lower interest rates and reduce the reserve requirements for commercial banks. Zou reaffirmed the PBOC’s commitment to maintaining stability for the yuan.
The PBOC’s last rate cut occurred in September, when it lowered its 7-day reverse repo rate by 20 basis points.
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