Faced with Trump's trade aggression, China proposes collaboration with the European Union

Lin Jian, a spokesman for the Chinese Foreign Ministry, expressed China's willingness to work with the European Union to address global challenges, in a swift response to US President Donald Trump's aggressive trade policy in his speech to the US Congress, according to Reuters.

The Chinese official stressed that China-EU relations have strategic importance and great global influence, in the context of the risks of global fragmentation and instability.

The European Union is facing the threat of tariffs from the United States on its products, and this transatlantic tension has been fueled by President Donald Trump's trade policy.

Ursula von der Leyen, the president of the European Commission, said that the EU wants to work quickly with the United States to resolve these disputes, but warned that negotiations will be difficult. At the same time, von der Leyen stressed that the EU will continue to minimize its risks in relations with China, but that there is still the possibility of finding common solutions that benefit both sides, including in the field of trade and investment.

Von der Leyen noted that, following an anti-subsidy investigation, the EU imposed additional tariffs on Chinese electric vehicles, in addition to the standard duties on car imports. This measure generated a strong reaction from China, which responded by raising access barriers to the Chinese market for some European products, such as brandy.

China reiterated that it attaches great importance to relations with the EU, considering the Union an essential strategic partner in a multipolar world and hoping to build a relationship based on mutual trust.

• Premier Li Qiang: "Increasingly severe external environment may have a major impact on China in areas such as trade, science and technology"

China announced more fiscal stimulus yesterday, pledging greater efforts to support domestic consumption and mitigate the impact of the escalating trade war with the United States, aiming to achieve a GDP growth target of 5% this year, according to Reuters.

Premier Li Qiang warned yesterday in a speech at the opening of the annual meeting of China's parliament that "changes unseen in a century are unfolding around the world at a faster pace." Li Qiang added: "An increasingly complex and severe external environment may have a major impact on China in areas such as trade, science and technology."

The trade war with the Trump administration is threatening China and its vast industrial sector at a time when persistently weak household demand and problems in the debt-ridden real estate sector are making the Asian country's economy increasingly vulnerable. The US has imposed new tariffs on its major partners, upsetting the decades-old global trade order on which Beijing has built its economic model, the source said.

In this context, pressure on Chinese officials has led to the establishment of consumer-focused incentives (including bond issuance) to avoid deflationary pressures and reduce reliance on exports and investment for growth.

The term "consumption" was mentioned 31 times in the Chinese premier's speech, up from 21 times last year, while the word "technology" was mentioned 28 times, up from 26 times in the 2024 plan, according to analysts at Guotai Junan Securities.

"For the first time, consumption growth has been elevated to the top of the 2025 major tasks, replacing technology, which had been in the lead," said Tilly Zhang, a technology analyst at Gavekal Dragonomics. "It is not a pivot from previous industrial policy, but rather a desire to create a more balanced macroeconomic framework."

China announced more than a decade ago that it wanted to shift to a more consumption-based growth model, but has made little progress toward that goal. Investors are not betting on that shift now. The CSI AI Industry and Hang Seng Tech indices rose 3% yesterday, while the consumer discretionary sector rose just 0.6%.

• Special bond issues

China's premier said Beijing plans to issue 1.3 trillion yuan ($179 billion) of special long-term treasury bonds this year, up from 1 trillion yuan in 2024. Local governments will be able to issue 4.4 trillion yuan of special debt, up from 3.9 trillion yuan last year.

Separately, Beijing plans to raise 500 billion yuan to recapitalize major state-owned banks.

Analysts say the higher debt issuance and spending figures are intended to cushion the impact of tariffs.

"We expect the authorities to adjust the budget by mid-year if the growth rate is affected by trade disputes," ANZ Bank analysts conclude.

• China targets 5% economic growth in 2025

The Chinese premier announced yesterday that the state aims for economic growth of around 5% this year (the same as in 2024), but a larger budget deficit than before, in the context of a trade war with the US.

According to yesterday's announcement, the budget deficit target is higher by one percentage point for 2025, namely 4% of GDP, which means 5,660 billion yuan (734 billion euros). Beijing officials still expect inflation to be 2% this year (the lowest in two decades), down from 3% in 2024. China also plans to create 12 million new jobs in urban areas by 2025.