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Indian Express
18-07-2025
- Business
- Indian Express
Has China beaten Trump's tariffs? Here is what new data on China's GDP growth show
On July 15, China's National Bureau of Statistics released GDP growth numbers for the first half of the year, including new data for the April-June period. The growth rate in the first quarter (January-March) was 5.4% year-on-year, and 5.2% in the second quarter. These numbers cover the period of upheaval in global trade induced by the tariffs imposed by United States President Donald Trump, and have beaten estimates made by most global analysts. How should these latest data on China's economy be understood? In this interview with The Indian Express, Lizzi C. Lee, a Fellow at the Center for China Analysis, Asia Society Policy Institute, Washington DC, provides some background and context. Not quite, but it's proven more resilient than many expected. The 5.2% growth and robust trade figures reflect a combination of front-loaded exports (ensuring they were shipped out before the tariffs came into effect), adaptive supply chains, and targeted policy support — not yet a clean bill of health. Much of the pain from tariffs is delayed thanks to stockpiling, supplier renegotiations, and the tariff truce that the US and Chinese officials agreed to after talks in Geneva in May. A 90-day deadline was agreed to, which will end on August 12. The real test will come when inventories run out and the truce expires. So, it's more a temporary reprieve than a final victory. Domestic demand remains the Achilles' heel for the Chinese economy. The data confirms strong external demand but tepid internal momentum. Imports grew modestly and retail sales softened, underscoring households' caution amid deflationary pressures, that is, factors contributing to a fall in the general price level. Additionally, property value has declined following a housing crisis, and job insecurity remains a concern for many. These issues go back much further than China's strict lockdowns during the Covid-19 pandemic or the tariffs. They're really the result of structural choices made decades ago. For a long time, the economy focused on growth above all else, channelling a large share of national income into investment, say, on building infrastructure, rather than household consumption. To make that happen, wages and household incomes were kept relatively low, which helped sustain high savings and high investment. That worked well when the investment was quite productive, but over time, it led to some problems, too. Capacity continued to grow faster than demand, and business margins thinned. Meanwhile, households didn't see their incomes or confidence grow as quickly as the economy. Even before the pandemic, growth was slowing and the economy was showing signs of what economists call a 'growth recession' — still expanding, but at a slower, less healthy pace, with weak prices and hesitant hiring. At the same time, households were saving more due to uncertainty about the future and limited social safety nets. So, the deflationary pressures and job insecurity of today are the result of long-term imbalances, brought to the surface and worsened by the pandemic and trade tensions. Addressing them will require raising incomes, improving confidence, and shifting the growth model to rely more on domestic demand. In the press release for the new GDP data, Chinese policymakers have admitted that 'effective demand is insufficient'. Without stronger consumer confidence and income growth, the recovery risks being export-heavy, but fragile at home. There have been some official expressions of concern about this model of economic growth. What is the incentive to move away from it? China's export-driven growth has been incredibly successful for decades, but it has also created some serious vulnerabilities. With the latest round of US tariffs and threats against other countries as well, it is clear that relying heavily on exports leaves the economy exposed to geopolitical risks. Internally, we're seeing what people in China now call 'involution' — a cycle of extreme competition among Chinese firms, which has led to relentless price-cutting to appeal to consumers and resultant shrinking profits. That hurts firms' ability to invest, keeps wages low, and holds back domestic demand. Meanwhile, the European Union and the Association of Southeast Asian Nations (ASEAN) have already become more important trading partners for China, and they do help cushion the blow from US tariffs. We have seen exports to these regions grow in double digits in some categories, but they're not perfect substitutes. The EU is increasingly wary of Chinese industrial overcapacity and unfair competition in the form of state subsidies, especially in green tech and Electric Vehicles. ASEAN is growing fast, but its demand is still uneven and more price-sensitive than the US market. Neither can fully replace the scale and strategic weight of the US relationship. On top of that, there's growing resistance from other countries to what they see as cheap Chinese exports flooding their markets. If China keeps doubling down on this model, it risks even more trade barriers and damage to its reputation and relationships overseas. There is now a push to move up the value chain, produce higher-quality goods, and compete more on innovation than just low prices. But making that shift is not easy or painless. Cutting excess capacity and moving away from price wars will slow growth in some industries. Prices for certain goods will go up. Some firms that have been surviving on thin margins will have to exit the market, leading to job losses. Reforming the model is clearly necessary for the long term, but it comes with real short-term costs that are hard to ignore. Why have recent government measures been considered insufficient, and could a massive stimulus be on the horizon? China tends to approach stimulus very carefully, and usually waits to see clear signs of weakness before stepping in aggressively. Given the current economic reality, intervention is weighed against the risk of piling up too much debt, fueling another housing bubble, or creating financial instability down the road. That caution also allows them to keep some policy tools in reserve for when they really need them. Right now, growth has actually been a little above the government's target, so they don't feel much urgency to roll out big, sweeping measures yet. What we've seen so far (modest fiscal spending, targeted subsidies, some selective credit easing) has helped keep the economy on track, but hasn't addressed the deeper problems. That's why many people see the stimulus extended so far as falling short. It has stabilised things on the surface but hasn't boosted confidence among households or businesses in any meaningful way. The government seems to be holding back, waiting for more decisive evidence from the data before it commits to a larger, more coordinated response. Part of that is about conserving resources, but it's also because putting together a comprehensive package of reforms and support is politically and institutionally complicated. We'll likely see stronger measures later in the year if the data shows growth starting to slip more clearly. Rishika Singh is a Senior sub-editor at the Explained Desk of The Indian Express. She enjoys writing on issues related to international relations, and in particular, likes to follow analyses of news from China. Additionally, she writes on developments related to politics and culture in India. ... Read More
The Star
12-06-2025
- Business
- The Star
China's trump card against US
THE nation is counting on one crucial advantage as it seeks to grind out a deal to ease its high-stakes trade war with the United States – dominance in rare earths. Used in electric vehicles, hard drives, wind turbines and missiles, rare earth elements are essential to the modern economy and national defence. Here's a look at how rare earths have become a key sticking point in talks between the United States and China. Mining boom: 'The Middle East has oil. China has rare earths,' Deng Xiaoping, the late Chinese leader whose pro-market reforms set the country on its path to becoming an economic powerhouse, said in 1992. Since then, Beijing's heavy investment in state-owned mining firms and lax environmental regulations compared to other industry players have turned China into the world's top supplier. The country now accounts for 92% of global refined output, according to the International Energy Agency. But the flow of rare earths from China to manufacturers around the world has slowed after Beijing in early April began requiring domestic exporters to apply for a licence – widely seen as a response to US tariffs. Under the new requirements – which industry groups have said are complex and slow-moving – seven key elements and related magnets require Beijing's approval to be shipped to foreign buyers. Deep impact: Ensuring access to the vital elements has become a top priority for US officials in talks with Chinese counterparts, with the two sides meeting this week in London. 'The rare earth issue has clearly ... overpowered the other parts of the trade negotiations because of stoppages at plants in the United States,' said Paul Triolo, a technology expert at the Asia Society Policy Institute's Center for China Analysis, in an online seminar on Monday. That disruption, which forced US car giant Ford to temporarily halt production of its Explorer SUV, 'really got the attention of the White House', said Triolo. Officials from the two countries said on Tuesday that they had agreed on a 'framework' for moving forward on trade – with US Commerce Secretary Howard Lutnick expressing optimism that concerns over access to rare earths 'will be resolved' eventually. Rare earth advantage: The slowing of licence issuance has raised fears that more automakers will be forced to halt production while they await shipments. China's commerce ministry said over the weekend that as a 'responsible major country', it had approved a certain number of export applications, adding that it was willing to strengthen related dialogue with 'relevant countries'. But that bottleneck has highlighted Washington's reliance on Chinese rare earths for producing its defence equipment even as trade and geopolitical tensions deepen. An F-35 fighter jet contains over 400kg of rare earth elements, noted a recent analysis by Gracelin Baskaran and Meredith Schwartz of the Critical Minerals Security Program at the Center for Strategic and International Studies. 'Developing mining and processing capabilities requires a long-term effort, meaning the United States will be on the back foot for the foreseeable future,' they wrote. Playing catch up: The recent export control measures are not the first time China has leveraged its dominance of rare earths supply chains. After a 2010 maritime collision between a Chinese trawler and Japanese coast guard boats in disputed waters, Beijing briefly halted shipments of its rare earths to Tokyo. The episode spurred Japan to invest in alternative sources and improve stockpiling of the vital elements – with limited success. That is 'a good illustration of the difficulty of actually reducing dependence on China,' said Triolo, noting that in the 15 years since the incident, Japan has achieved only 'marginal gains'. The Pentagon is trying to catch up, with its 'mine-to-magnet' strategy aiming to ensure an all-domestic supply chain for the key components by 2027. The challenge facing Washington to compete with Beijing in rare earths is compounded by sheer luck: China sits on the world's largest reserves. 'Mineable concentrations are less common than for most other mineral commodities, making extraction more costly,' wrote Rico Luman and Ewa Manthey of ING in an analysis published on Tuesday. 'It is this complex and costly extraction and processing that make rare earths strategically significant,' they wrote. 'This gives China a strong negotiating position.' — AFP
News18
11-06-2025
- Business
- News18
‘Deal With China Done': Donald Trump Says Beijing Will Supply Rare Earths To US
Last Updated: Trump announces Beijing will supply rare earths and magnets under new US-China deal, agreement includes Chinese students returning to US universities. US President Donald Trump on Wednesday said that a new trade agreement with China is finalised, awaiting final approval from Chinese President Xi Jinping. In a post on Truth Social, Trump said the agreement includes the complete supply of rare earth materials and magnets from China. The export of rare earths was a central issue in negotiations in London, according to several news outlets. Trump added that the US would, in return, permit Chinese students access to American universities, a provision he said was he was 'always good with". He also claimed the US is levying a total of 55% tariffs while China receives only 10%, although no official documentation of the deal has been released. 'The relationship is excellent," Trump wrote in capitals, characterising the agreement as mutually beneficial. 'WE ARE GETTING A TOTAL OF 55% TARIFFS, CHINA IS GETTING 10%. RELATIONSHIP IS EXCELLENT! THANK YOU FOR YOUR ATTENTION TO THIS MATTER!" Ensuring access to the vital elements had become a top priority for US officials in talks with Chinese counterparts, when the two sides met last week in London. 'The rare earth issue has clearly… overpowered the other parts of the trade negotiations because of stoppages at plants in the United States," said Paul Triolo, a technology expert at the Asia Society Policy Institute's Center for China Analysis, in an online seminar on Monday. Triolo told news agency AFP that the disruption, which forced US car giant Ford to temporarily halt production of its Explorer SUV, 'really got the attention of the White House". What Are Rare Earths and Where Are They Found? Rare earths are a group of 17 metals used in everything from smartphones and electric vehicles to military equipment and wind turbines. While not actually rare, they are hard to mine and refine. China dominates the global supply, producing most of the world's rare earths and controlling nearly all of the processing. Other sources include the US, Australia, Myanmar, and India, but most still depend on China for refining. 'The Middle East has oil. China has rare earths," Deng Xiaoping, the late Chinese leader whose pro-market reforms set the country on its path to becoming an economic powerhouse, said in 1992. Since then, Beijing's heavy investment in state-owned mining firms and lax environmental regulations compared to other industry players have turned China into the world's top supplier. The country now accounts for 92 percent of global refined output, according to the International Energy Agency. Why the Global Rush? Rare earths are essential to modern tech and defence systems. As demand grows, countries are racing to secure their own supplies. China's dominance has made rare earths a geopolitical tool, pushing the US and others to diversify and reduce dependence. The flow of rare earths from China to manufacturers around the world has slowed after Beijing in early April began requiring domestic exporters to apply for a licence, widely seen as a response to US tariffs. Under the new requirements — which industry groups have said are complex and slow-moving — seven key elements and related magnets require Beijing's approval to be shipped to foreign buyers. The slowdown in licence approvals has raised concerns that more carmakers could be forced to pause production as they wait for shipments. China's commerce ministry said over the weekend that it had approved some export requests, describing itself as a 'responsible major country". It added that it was open to more dialogue with 'relevant countries". But the export bottleneck has underscored how heavily Washington still depends on Chinese rare earths to build defence equipment, even as tensions rise on both trade and security fronts. top videos View all A recent analysis from the Center for Strategic and International Studies pointed out that a single F-35 fighter jet uses more than 400 kilograms of rare earth elements. (with additional inputs from AFP) tags : donald trump us china trade relations Xi Jinping Location : Washington D.C., United States of America (USA) First Published: June 11, 2025, 17:58 IST News business 'Deal With China Done': Donald Trump Says Beijing Will Supply Rare Earths To US
Yahoo
04-04-2025
- Business
- Yahoo
Trump tariffs offer opportunity for China
In unleashing global tariffs, President Donald Trump has vowed to remake the world to benefit US workers. One beneficiary could be the country he sees as the primary adversary -- China. Asia's largest economy promptly slapped identical tariffs on the United States and said it would impose export controls on rare earth elements vital in consumer and medical technology. But unlike during his first term, this time Trump is targeting not just China but the entire world -- including American allies that had increasingly joined Washington's firm line on Beijing. Just days before Trump's "Liberation Day" tariffs announcement, China moved to revive stalled free-trade talks with Japan and South Korea, both treaty-bound US allies with deep-rooted skepticism about Beijing. "If Trump's unilateralism continues, I expect Beijing to court these capitals more aggressively, positioning itself as the steadier economic anchor in the region," said Lizzi Lee, a fellow on the Chinese economy at the Asia Society Policy Institute's Center for China Analysis. "And let's not forget the optics. China is very much framing Trump's tariffs as proof of US decline -- resorting to protectionism, bullying allies and retreating from global norms," she said. Yun Sun, a senior fellow at the Stimson Center, said she had expected China to be "a little more chill" in response to Trump's tariffs but said Beijing did not appear as worried as during his first term. "I think the Chinese see this more as opportunity and believe the US is actively undermining itself," she said. "There are a number of aggrieved parties that had been solid and loyal allies of the US," she added. "Now their confidence in the approach that the US is taking around the world is -- I wouldn't say shattered -- but at least in doubt." - Burying US opening to China - To be sure, China will likely feel real pain from the US tariffs. It shipped more than $500 billion in goods to the United States last year, with the trade balance far in China's favor. Critics of China hailed what they saw as a death knell for a former near-consensus in Washington on the value of integrating the Asian power into the global economy. "The idea that Communist China could be a responsible member of an international trade regime -- the World Trade Organization -- which should be premised on equal and fair trade, is a joke," said Representative Chris Smith, a Republican who for decades has railed against Bill Clinton's 1994 delinking of China's trading privileges from human rights. "Unlike previous presidents, President Trump fully understands the nature and scope of the problem -- and the existential threat posed by China -- and what needs to be done," Smith said. Jacob Stokes, a senior fellow at the Center for a New American Security, noted that China still has a slew of issues with other countries, from territorial disputes with Japan, India and Southeast Asia to concerns in Europe over China's embrace of Russia in the Ukraine war. "China has been adept at undermining its own positions, especially with its neighbors, through assertiveness and even aggression," Stokes said. - Attention shifts from China - But Stokes said that former president Joe Biden had been effective in forming coalitions with other countries to put pressure on China, on issues from access to fifth-generation internet networks to security. "To the extent that Beijing was feeling a little bit isolated at the end of the Biden administration, I think that a lot of that pressure has come off as the locus of disruption is now clearly Washington," Stokes said. While both Trump and Biden policymakers have identified China as the top US rival, Lee, of the Asia Society Policy Institute, said Trump fundamentally saw President Xi Jinping "not as a villain, but as a peer -- another strongman." "For Trump, economic war isn't about economics or even the stock markets -- it's about the optics of domination and strength," Lee said. "And that leaves just enough room for a pivot -- if Xi offers the kind of win Trump can brand." sct/mlm
South China Morning Post
11-03-2025
- Business
- South China Morning Post
‘Two sessions' 2025 key takeaways: insights into China's economic strategy
Date and time: Thursday, March 13, 2025 | 8pm HKT Advertisement The webinar will be available on March 14, 2025, on this page and will be accessible to all logged-in readers. Please bookmark this page or add the event to your calendar to access it. The meetings of China's top legislature and advisory body opened on March 5 with the country facing economic uncertainty at home and heightened geopolitical tensions abroad. The annual gathering – collectively referred to as the 'two sessions' – provides an opportunity to gain critical insight into the nation's direction for the coming year and beyond. To give readers a better understanding of how China's leaders are addressing the country's challenges, the SCMP newsroom will partner with the Asia Society Policy Institute's Center for China Analysis to host a webinar delving into the key takeaways from the sessions and their impact on the economic landscape, politics and international relations, particularly with the United States. Joining us will be Neil Thomas, fellow on Chinese politics, and Lizzi Lee, fellow on the Chinese economy, both from the Asia Society Policy Institute's Center for China Analysis. Together with our moderator, SCMP Executive Editor Chow Chung-yan, they will discuss the significant aspects and outcomes of the two sessions. Advertisement Our panel will explore the following topics:
