Premier Li Qiang has urged stronger efforts to boost domestic demand and called on China’s exporters to diversify their markets as the country seeks to shore up its economy and mitigate external risks amid rising trade tensions with the United States.
“The external environment has undergone profound changes, posing challenges for China’s exports,” Li said in Beijing on Tuesday. “We must respond calmly to external shocks and challenges, step up efforts to boost consumption and expand domestic demand, strengthen the domestic economic cycle, and further unleash the potential of China’s massive market.”
He also pledged greater support for the property sector, once a key driver of economic growth.
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A tit-for-tat trade war with the US has put China’s trade sector – a key engine of its economy – under significant pressure. Following US President Donald Trump’s introduction of “reciprocal tariffs” this month, Chinese goods now face US tariffs as high as 156 per cent, while Beijing has raised duties on imports from America to as high as 125 per cent.
To safeguard its economy, China is gradually shifting the focus of economic growth towards the domestic market, aiming to hedge against external shocks.
The premier vowed to boost employment, incomes and social welfare, while guiding companies to produce more competitive products to support consumption and spur new demand.
Exporters should “actively explore diversified markets, innovate trade channels, and work to maintain the stability of the country’s export base”, Li was quoted as saying in a report by Xinhua.
He pledged to help exporters tap into the domestic market by building platforms to sell goods previously destined for foreign markets at home, and to steadily promote the integration of domestic and foreign trade.
Li also said that government-backed acquisition of existing houses to turn them into subsidised housing was an important means to stabilise the property market. More autonomy would be granted to local governments on the acquiring, pricing and granting of subsidised housing. Additionally, he urged pushing ahead with urban village redevelopment and the revitalisation of existing housing stock.
“There is still significant room for development in China’s property market, and further efforts are needed to unlock its potential,” he said.
China’s property market has been struggling for more than four years, after Beijing’s “three red lines” policy, which was implemented in August 2020, restricted borrowing by developers and sparked a liquidity crisis. As indebted developers failed to complete promised projects, buyer confidence sank.
Economist Ren Zeping has estimated that property and related industries accounted for 17 per cent of the country’s gross domestic product in 2020, providing nearly 13 million jobs.
Customs data released on Monday showed that China’s exports jumped 12.4 per cent year on year last month, beating market expectations, as factories rushed to ship orders ahead of anticipated US tariff increases.
More from South China Morning Post:
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- Why China is struggling to convince consumers to borrow: ‘I’m not attracted’
- China mends fences with big tech in consumption, employment push
- Economist Michael Pettis on China’s consumption paradox and the pitfalls of a trade war
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