China Prepares for External Shocks, Promises Stimulus Measures Amid Trade War

Beijing, March 23 – Chinese Premier Li Qiang assured global business leaders and scholars that China is ready to tackle potential external shocks and will introduce new stimulus measures if necessary. Speaking at the China Development Forum, a high-level platform for engagement between top global executives and senior Chinese policymakers, Li emphasized the resilience of the Chinese economy despite ongoing trade tensions with the United States.
“We are prepared for potential shocks that go beyond our expectation and are mainly external,” Li stated, in what appeared to be a reference to U.S. President Donald Trump’s recent tariff threats. Earlier this month, Washington doubled duties on Chinese imports to 20 percent, prompting Beijing to retaliate with additional tariffs of 10 to 15 percent on selected U.S. goods. More tariffs are expected to be announced by the U.S. on April 2.
Trade tensions have significantly impacted investor sentiment. In 2024, China experienced its largest capital flight since the 1990s, with net foreign direct investment (FDI) dropping by $168 billion. FDI inflows plummeted 99 percent over three years, falling from a record $344.1 billion in 2021 to just $4.5 billion in 2024.
Despite these challenges, Li struck an optimistic tone, highlighting growth areas such as consumption, technological innovation, and the green economy. He pointed to the box-office success of the animated film Ne Zha 2 and a 20 percent increase in tourism revenue during the past winter as signs of economic vibrancy. “Any product or service, once multiplied by 1.4 billion, is bound to be a big business, a big deal, a big market,” Li said, referencing China’s population.
Li outlined plans to stabilize the economy, including adopting proactive fiscal and looser monetary policies, expanding trade-in subsidies for consumer products, and prioritizing consumption in 2025. However, deflationary pressures remain high, as concerns about income and wealth growth continue to dampen spending.
Technological innovation and green initiatives were highlighted as key investment opportunities. Li noted that Chinese robots could begin mass production in 2025, and he urged forum participants to oppose protectionism and unilateralism. “I sincerely hope all entrepreneurs can make concerted efforts and cooperate in good faith to resist unilateralism and protectionism,” he added.
Among the audience were U.S. Senator Steve Daines, the first American politician to meet top Chinese officials since Trump’s return to power, and 80 corporate leaders from companies such as Apple, Siemens, Samsung Electronics, BMW, Mercedes-Benz, and Saudi Aramco. Business leaders and scholars expressed cautious optimism about China’s economic outlook, with Novartis CEO Vasant Narasimhan praising China’s confidence in long-term growth.
While Li’s speech showcased China’s determination to attract foreign investment and boost consumption, experts like Nobel laureate Dr. Myron Scholes and economist Professor Lawrence Lau cautioned that more work is needed to effectively address deflationary pressures and restore consumer confidence.