China Stakes It All: Maxi-Stimuli to Consumption to Resist the Storm of US Tariffs

Faced with an escalating trade war with the United States that threatens to sink its powerful export sector, China is deploying a high-risk strategy, placing almost all its chips on reviving domestic consumption.

Beijing is in a race against time to implement increasingly incisive measures aimed at convincing its citizens to open their wallets, in an attempt to offset the devastating effects of American tariffs.

Tariff Escalation Is Brutal : Washington has raised tariffs on Chinese goods to an effective rate of around 156%, making it commercially unsustainable for many Chinese companies to sell into the American market. Beijing responded with significant retaliation (125% duties on US goods), but the blow to the export engine is undeniable.

In this scenario, domestic demand is no longer just a component of growth, but becomes the main strategic lever to support an economy that shows signs of slowing down . The recent China International Consumer Products Expo on the southern island of Hainan is a case in point. Billed as Asia-Pacific's largest premium consumer goods fair and the only one nationwide dedicated to this sector, the event (which saw the participation of over 4,100 brands from more than 70 countries) aims not only to attract wealthy foreign buyers, but above all to signal the crucial importance placed on consumption.

But these are not just showcase events. The central government and local authorities are multiplying concrete interventions:

1. National Campaigns: The Ministry of Commerce, together with other key agencies, launched the “Shopping in China” campaign, focusing on luxury shopping, gastronomy, cultural tourism and events. At the same time, an initiative was launched to help exporting companies to reorient themselves towards the domestic market, the only way out in the face of US tariff barriers.
2. Local Stimuli: Several provinces are allocating significant funds. Hainan has promised over 10 billion yuan (about 1.28 billion euros) between 2025 and 2027 to support consumption, including through subsidies for low-interest consumer loans. Along the same lines, Sichuan has introduced subsidized interest rates for loans for the purchase of durable goods such as vehicles, appliances and furniture.
3. Government Action Plan: Already last month, the central government presented a comprehensive action plan to steer the Chinese economy towards a consumption-led growth model, pledging to increase wages, support rural incomes, resolve the problem of late payments and stabilize the real estate market.

As underlined by the state-run newspaper Economic Daily , it is essential to “strengthen people's confidence and willingness to spend”. Only by transforming this confidence into vibrant shopping scenes and tangible pro-consumption policies will “China's economy gain greater resilience and vitality.”

The strategy is clear: faced with the partial closure of the fundamental American market and global uncertainties, China is playing everything by betting on the strength of its internal market. It is an obligatory move, but one with results that cannot be taken for granted.

The success of this massive effort to stimulate domestic demand will largely determine the ability of the world's second-largest economy to navigate the turbulent waters of geopolitics and secure sustainable growth for the foreseeable future. The bet is open, but whether it is a winner is anything but certain: incentives for domestic consumption were already active in China. Consumption cannot be stimulated forever and without limits.

It must be said that such a campaign seems incredible for us Europeans, who have been accustomed to economic repression and austerity for decades, first for budgetary reasons, then for green policies. Here consumers are always wrong.

The article China stakes everything: Maxi-Consumption Stimuli to Resist the Storm of US Tariffs comes from Economic Scenarios .

This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/la-cina-si-gioca-tutto-maxi-stimoli-ai-consumi-per-resistere-alla-tempesta-dei-dazi-usa/ on Tue, 15 Apr 2025 06:00:18 +0000.