As Trump wrecks U.S. economy, China looks ahead to growth
Deputies to the National People's Congress (NPC) from Sichuan Province in Beijing, March 5, 2025. | Liu Weibing / Xinhua
The cover of this week’s The Economist magazine sums up the situation facing U.S. capitalism these days. Donald Trump stands alone atop a pile of cash holding a gas can in one hand and a hundred-dollar bill lit like a fuse in the other. Beside him, the headline: “The revised economic outlook.” With all the instability and chaos he’s caused, even the capitalist press is losing patience with the president.
But while America is being torn apart by the Trump-Musk administrations’ mass firings of public sector workers, destructive tariff battles, collapsing stock markets, and “anti-woke” culture wars, a different story is unfolding on the other side of the globe.
In Beijing this week, China unveiled plans to grow its economy, raise living standards, expand international ties, and protect its working class and people from a U.S.-launched trade war that the country doesn’t want but won’t back down from.
Thousands of elected delegates from localities and provinces around the country have converged on the Chinese capital for the dual meetings of China’s legislature, the National People’s Congress (NPC), and the country’s top political advisory body, the Chinese People’s Political Consultative Conference (CPPCC).
Chinese Premier Li Qiang delivers the government work report at the opening meeting National People’s Congress at the Great Hall of the People in Beijing, March 5, 2025. | Li Xueren / Xinhua
Referred to as “the two sessions” (or lianghui 两会 in Chinese), the meetings are the most important annual events when it comes to policymaking and planning in China.
Coming off its 75th anniversary in 2024, the People’s Republic notched a year of stability and steady growth, according to the work report given by Premier Li Qiang at the opening of the NPC. But the government also knows that tough times could lie ahead, especially with the return of Trump to the White House.
“We are keenly aware of the problems and challenges that confront us,” Li said in his report. “The international environment is increasingly complex…. Unilateralism and protectionism are on the rise. The multilateral trading system is experiencing disruption.”
Li’s words were a polite way of saying that Trump is injecting unprecedented volatility into the economy—something affecting not just China but the entire world.
As the NPC and CPPCC were opening their sessions, Trump announced another 10% import tax on Chinese goods, on top of already existing levies. The Chinese Foreign Ministry responded with its own tariffs, targeting U.S. agricultural products to start.
“If the U.S. has another agenda in mind and insists on waging a tariff war, trade war, or whatever war, China will not flinch and is ready to make due response,” Foreign Ministry spokesperson Lin Jian declared on Tuesday.
Foreign Minister Wang Yi, speaking at an NPC press conference Friday morning, made the same point, but even more bluntly. “No country should harbor the illusion that it can suppress and contain China while simultaneously building good relations with China,” Wang said. “Such two-faced methods…make it impossible to build mutual trust.”
The Foreign Ministry urged the U.S. to “stop being domineering and return to the right track of dialogue and cooperation at an early date.”
Expecting dialogue and cooperation from the Trump White House, though, might be wishful thinking. That’s why the NPC is working to ensure China’s economy is domestically stronger and integrated in mutually beneficial trade networks with other countries.
Planning for growth
Looking to the year ahead, Li said the government was “resolved to meet difficulties head-on,” emphasizing the need to stabilize employment. The report projects 5% economic growth and aims to keep inflation at a healthy 2% rate.
Compare that to the U.S., where the Atlanta Federal Reserve just downgraded its forecast for the economy, projecting it will actually shrink, with a negative growth rate of -2.8%. Prices for families in the U.S., meanwhile, are predicted to rise.) 2.9%, although experts all agree that Trump’s tariffs will explode that number if fully implemented.
Li pledged China’s central government will maintain a disciplined and measured fiscal policy, but it will not be afraid to spend the money necessary to support working class living standards and ensure that local authorities have the resources required to meet the community needs.
He projected a budget deficit of 4%, a slight uptick from 2024. In the U.S., expected overspending for FY2025 currently stands at 6.2%. The difference, however, is that a huge chunk of the U.S. deficit will be incurred to sustain tax cuts for the super-rich and to maintain the U.S. military machine.
In China, public funds will be spent on creating the jobs of the future, with significant attention given to industries like biomanufacturing, quantum technology, AI, and 6G communications. “We will unleash the creativity of the digital economy,” Li declared.
China’s DeepSeek-R1 chatbot rocked the AI world just a few weeks ago, showcasing the country’s ability to overcome U.S. chip restrictions and develop a product that can compete with apps like ChatGPT. DeepSeek wiped a trillion dollars off the values of some of the biggest tech corporations on the New York Stock Exchange overnight.
Chinese electric vehicle brands like BYD, meanwhile, are taking world markets by storm, pushing aside Tesla, the company belonging to Trump’s chief job-cutter, Elon Musk.
Like Sputnik in 1957, DeepSeek’s AI chatbot could become a symbol of the decline of U.S. hegemony. It certainly spells the end of the U.S. companies’ monopoly of the global technology economy. In this image, a poster depicting Soviet space achievements is paired with China’s latest AI achievement, the DeepSeek-R1 LMM app. | Design: People’s World
Ensuring stability and promoting confidence
Li asked the NPC delegates this week to approve a set of what he called “people-centered” macroeconomic policies. “More resources will be put toward the people’s benefit and the people’s livelihoods,” Li said.
In that vein, increased domestic consumption and investment will be key. Interest rates will be kept low to support companies and sustain employment rolls while also keeping a secure net under family incomes.
Some economists in China have advocated more direct support to working-class families. Sun Lijian, an economics professor at Fudan University in Shanghai, said recently, “Economic recovery should be linked to a rise in people’s incomes.” Sun advocated “vouchers to help people purchase what they need.” The NPC is answering with a 300 billion RMB ($40 billion USD) treasury bond to fund a block of subsidies to citizens.
Beyond income supports, though, dealing with China’s slumping real estate market would likely provide an even more effective boost to consumption. The public’s willingness to spend has lagged ever since the dramatic default of one of the country’s biggest property developers, Evergrande Group, in 2021.
Amidst an overheated property market, Evergrande took on huge amounts of debt to maintain its position and fund a massive expansion into other economic sectors. When it could no longer pay its creditors, though, the government had to intervene to stabilize markets and calm public fears. The company eventually went bankrupt, and its chairman was arrested on suspicion of illegally transferring assets offshore.
Evergande was the prime example of the type of company that violated Chinese President Xi Jinping’s maxim that “Houses are for living in, not for speculation,” a slogan he coined in 2016.
In the aftermath of the Evergrande collapse, measures were taken to restore people’s faith and put a floor under housing prices, including a renewed focus on construction of publicly-owned housing—which is more secure than private sector development—and new real estate taxes to curb damaging speculative activities.
Li’s report suggested more measures are still to come, as it promised the government would establish institutional designs “to speed up the new model design for the real estate market.” One innovation could be a nationwide property tax. Li pledged the central government will “prevent any default risk” in the market and “diffuse local government debt risks”—another source of worry in recent months.
Even though a few years have gone by, many working-class families remain reluctant to spend, though, worried about the security of their investments as housing prices remain depressed. At the same time, the state has taken steps to maintain jobs, meaning factories keep producing goods for both domestic and foreign markets. Urban unemployment is expected to remain around 5%, with the government determined to hold the line there.
That’s why Trump’s anti-China tariff crusade could exacerbate problems, making Chinese products more expensive in the U.S. and prompting importers to possibly slash orders. It could put further deflationary pressure on China’s economy.
Legislation considered by the National People’s Congress often starts out as proposals made months earlier at local meetings and sessions. Here, residents submit suggestions to deputies in Tongling, east China’s Anhui province, Apr. 26, 2024. | Chu Zhuchuan / People’s Daily
Peaceful foreign policy
International trade and cooperation provide another point of contrast between the U.S. and China. While Trump is tearing up agreements and slapping illegal tariffs on one country after another, China is working to expand its ties with other nations and aims to make trade even fairer.
The highly successful and mutually beneficial “Belt and Road Initiative,” which has deepened trade and foreign aid integration between China and nearly 150 countries, will be stepped up. Li said China will work to “optimize the international cooperation landscape; deepen bilateral and regional economic cooperation; and safeguard the multilateral trade mechanism…to further expand the convergence of interest for common development.”
The Chinese approach to international trade is the antithesis of Trump’s endless accusations that every country is cheating the U.S. and his threats of annexation and economic warfare on behalf of U.S. monopoly capital.
Diplomacy and cooperation will remain the guiding principles of China’s relations with other nations, especially via avenues like the BRICS Summit, the Forum on China-Africa Cooperation, the Shanghai Cooperation Organization, and the APEC Economic Summit. China will also continue to stand in solidarity with developing nations and oppressed peoples.
Wang highlighted China’s support for Palestinian statehood Friday as well, standing in opposition to Trump and Netanyahu’s plans for a U.S. takeover and ethnic cleansing of Gaza’s two million people. “Gaza belongs to the Palestinian people,” the foreign minister declared. “Any forced change in the status of Gaza will not bring peace, but will only lead to new instability.
China’s leadership says the country is committed to “the building of a community with a shared future for mankind.” The government is well aware, however, that the leadership in some countries—particularly but not only the U.S.—do not have a peaceful and shared future in mind.
Trump’s moves to disrupt global trade patterns and reorient U.S. imperial strategy toward “containment” of China have not gone unnoticed—nor have the dozens of U.S. military bases ringing China.
And so, while it remains committed to maintaining peace, China will continue modernizing its military and preparing for any provocations related to Taiwan or in the South China Sea. Foreign Minister Wang Yi also said Friday that the Trump administration’s reverse Kissinger strategy of trying to drive a wedge between China and Russia would fail, saying the relationship between the two countries will not “be subject to interference by any third party.”
Tale of two economies
The nearly 3,000 deputies who’ve been elected to the NPC and the 2,000+ members of the CPPCC all know that the months and years ahead will not be easy. As Li admitted in his work report to the assembled lawmakers, the international environment is “severe.”
Chinese President Xi Jinping, center, and Premier Li Qiang, right, at the March 5 session of the National People’s Congress. | Andy Wong / AP
He pledged that the government and the ruling Communist Party would “do our best to deal with external risk and shocks to safeguard financial stability and safety,” but he was honest about the challenges:
“The basis for our economic improvement is unstable. Effective demand is insufficient. Some enterprises have difficult outlooks. Employment and revenues are under pressure. Some basic level government fiscal budgets are in trouble. In some places and localities, corruption is severe.”
Despite the difficulties, the premier said, China remains optimistic and will continue to develop its socialist market economy as it begins drafting the next Five-Year Plan, covering the years 2026 to 2030.
Despite the headwinds China faces, the methodical way in which its government and people collectively craft designs for their future draws a sharp contrast to the current anarchy of U.S. capitalism, where the far-right has seized control of the state and is waging an unprecedented offensive against organized labor, women, people of color, and the whole working class.
Drawing on Dickens’ famous lines, it could be argued that one society seems to live in the age of wisdom, the other in foolishness; one in an epoch of belief, the other in the epoch incredulity. The spring of hope still prevails in one, while the winter of despair appears to be descending on the other. It’s a tale of two economies.
As with all news-analytical and op-ed articles published by People’s World, this article reflects the views of its author.
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CONTRIBUTOR
C.J. Atkins
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