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China has introduced new measures to revive its struggling economy, anticipating potential challenges from a second Trump presidency.
The government aims to address substantial local government debt, which risks dampening growth, reports bdnews24.con citing the BBC.
Trump’s election platform promised high import tariffs, some up to 60 percent on Chinese goods, which could obstruct Xi Jinping’s plans to develop China as a technology leader and further strain US-China relations.
Downturn in property, high government debt, unemployment, and low consumption have hampered China’s growth since the pandemic, raising the stakes for recent initiatives by the National People’s Congress.
During Trump’s first term, tariffs on Chinese goods reached 25 per cent, and despite Biden’s administration maintaining and even expanding these, China is in a weaker economic position than before.
China has faced difficulty reaching pre-pandemic growth levels, leading the International Monetary Fund (IMF) to revise its growth forecast to 4.8 per cent for 2024, with a further drop to 4.5 per cent expected in 2025.
In response, China’s latest plan includes a 6.0 trillion yuan fund to support debt-laden local governments, whose infrastructure-driven borrowing has become unsustainable amid a property sector downturn.
China has been moving towards “high-quality development,” focusing on advanced manufacturing and green industries.
While China has achieved success with high-tech exports like solar panels, EVs, and lithium-ion batteries, rising resistance from the US and Europe, such as the EU’s recent 45 per cent tariffs on Chinese EVs, poses challenges.
With Trump potentially returning to the White House, Beijing must consider if its latest economic measures will be enough to shield against external pressures and stimulate sustainable growth.