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Chinese President Xi Jinping has announced a sweeping economic plan aimed at stabilizing China’s economy amid growing domestic challenges and escalating trade tensions with the United States. At a key politburo meeting on Friday, officials outlined measures to counter the effects of high US tariffs, a lingering housing crisis, and rising youth unemployment.
According to the meeting’s readout published by state media outlet Xinhua, while China’s economy has shown a “positive trend” and rising social confidence in 2025, external shocks—particularly the trade war with Washington—continue to weigh heavily on recovery prospects. “We must strengthen bottom-line thinking, fully prepare emergency plans, and do a solid job in economic work,” the readout said.
The politburo pledged a package of targeted domestic interventions to counter the effects of President Donald Trump’s sweeping tariffs, which include a 125% levy on all Chinese imports to the US and punitive rates on steel and automotive goods. These measures aim to boost internal demand, protect vulnerable sectors, and mitigate international fallout.
Key policies include increasing unemployment insurance payouts, boosting middle and low-income wages, and expanding the service sector. The government also plans to enhance financing for struggling businesses and accelerate the development of a new real estate model through housing stock expansion and city renewal programs.
Diplomatic Tensions and Trade Negotiation
China reaffirmed its commitment to multilateralism and pushed back against what it called “unilateral bullying practices” by the US. “We should strengthen financing support. We should accelerate the integration of domestic and foreign trade,” the readout stated.
While Trump has hinted that tariffs on Chinese imports may be “substantially” reduced, Beijing has contradicted these claims. China’s Foreign Ministry has repeatedly stated that no formal trade negotiations are currently underway, despite Trump’s assertions that talks are ongoing. “He’s called,” Trump told Time magazine about Xi, though he did not specify when the conversation occurred.
Trade Exemptions and Market Reactions
The politburo meeting was held as reports emerged that Beijing is considering exempting certain US products from its own 125% retaliatory tariffs. Bloomberg and Reuters reported that medical devices, semiconductors, and certain industrial chemicals like ethane could be removed from the duty list. On Thursday, a Shenzhen-based supplier said it had been informed by customs that eight types of semiconductor products would no longer attract the punitive tax.
Michael Hart, president of the American Chamber of Commerce in China, confirmed that authorities had been consulting with businesses about US imports that could not be sourced domestically.
Stock markets across the Asia Pacific rose on the back of speculation that both governments were preparing product-specific exemptions as a way to de-escalate trade tensions. Trump acknowledged that “tariffs will come down substantially,” but reiterated that they “won’t be zero.”
Long-Term Strategy Amid Global Uncertainty
Wen-ti Sung, a non-resident fellow at the Atlantic Council’s Global China Hub, interpreted the politburo’s strategy as a clear indication that Beijing views the international macroeconomic climate as hostile. “China will be digging into the trenches and is preparing for a long trade fight with Trump,” he said.
The trade conflict, which began during Trump’s first term, has intensified in 2025 as both nations implement and escalate tariffs. The lack of a unified message on negotiations underscores the broader uncertainty surrounding the dispute’s trajectory.
Whether the exemption of select US imports marks the beginning of de-escalation or simply a tactical adjustment remains unclear. But with both sides showing signs of entrenchment, the global economy is bracing for more volatility in the months ahead.
