On Wednesday, China appointed a new top international trade negotiator, Li Chenggang, amidst ongoing tariff tensions with the United States. Li succeeds Wang Shouwen, who was involved in the trade negotiations leading to the 2020 trade deal between the two nations. This change in leadership occurs as both countries have been progressively increasing tariffs on each other’s goods, contributing to a growing economic rift.
Currently, China is facing exorbitant tariffs on exports to the U.S., reaching as high as 145%. In contrast, other countries have been granted a 90-day reprieve from many duties, highlighting the unevenness in the trade climate. Earlier in the day, China revealed that its economy had expanded at a rate of 5.4% annually during the first quarter of the year, primarily driven by robust export performance. However, analysts predict that the economy of the world’s second-largest nation is set to slow down significantly as tariffs on U.S. imports from China come into effect.
The growth rate of 5% in 2024 is still closely tied to exports, with the official growth target for the country remaining around 5% for the year. In retaliation to the U.S. tariffs, Beijing has enforced tariffs as high as 125% on American exports, simultaneously expressing its commitment to maintaining open markets for trade and investment. Despite the immediate pressures these tariffs place on the Chinese economy, officials like Sheng Laiyun, spokesperson for the National Bureau of Statistics, have indicated that they believe such measures will not hinder China’s long-term growth potential.
The rationale behind the transition in trade negotiators is not explicitly clear. Still, it coincides with Chinese officials asserting that the country has various strategies to counter U.S. actions, including increasingly calling upon its substantial domestic market of 1.4 billion consumers, as well as seeking trade relations with European nations and countries in the global south. However, analysts caution that, given the sluggish domestic consumption in China, finding adequate replacements for U.S. consumers will be challenging.
In addition to trade policy shifts, China has introduced further export controls on rare earth elements. These materials are critical for high-tech products, aerospace production, and defense sectors, demonstrating China’s strategic maneuvering in the global supply chain. As tensions escalate between the U.S. and China, the implications of these trade policies will continue to reverberate, influencing both countries’ economies and their respective positions in international trade.
