“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of light, it was the season of darkness, it was the spring of hope, it was the winter of despair,” wrote Charles Dickens in A Tale of Two Cities.
Two speeches delivered an hour and many oceans apart last week vividly brought back images from Dickens’ world. Those speeches underlined the opposing approaches that the heavyweights and Pakistan’s largest trading partners — China and the US — are pursuing to achieve their economic ambitions and shape the future of the rest of the world.
Chinese Premier Li Qiang’s address while delivering the annual work report to the National People’s Congress shows that for China, it is all about unity and global cooperation to overcome the obstacles through “innovation and opening up” to revive its troubled economy.
Pakistan’s largest trading partners — Beijing and Washington — continue to walk on diverging paths
President Donald Trump’s pledge during his State of the Union address to levy more tariffs on imports, on the other hand, represents Washington’s growing reliance on protectionist trade policies that stand to upset the global economic order and start a global trade war.
The contrast in the policies that the two powers will be pursuing to pull off their national goals is unmistakable. While Mr Trump was all for protectionist policies to “make America great again”, Mr Li vowed to “remain steadfast in our commitment to opening up … and continue to expand our globally orientated network of high-standard free trade areas”.
The differences don’t end there. Beijing continues to focus on transitioning to a greener economy “for all areas of economic and social development” as the American leader boasts of having withdrawn from the Paris Climate Accord.
Facing steep tariffs on its exports to the US, leading to a new trade conflict between the two powers, China is fast moving away from export-dependent economic expansion to growth fuelled by domestic consumption. It has defied all predictions of economic gloom in recent years, which is good news for the global economy as well as countries like Pakistan that are heavily reliant on Beijing for investments, trade and budgetary support.
Mr Trump has imposed a 20 per cent tariff on Chinese goods since Feb 4 on top of the 25pc duties he had levied on some $370 billion worth of Chinese goods in his first term. Some of these products saw US tariffs increase sharply under former president Joe Biden last year, including a doubling of tariffs on Chinese semiconductors to 50pc and a quadrupling of tariffs on Chinese electric vehicles to over 100pc.
Chinese goods now face an average American tariff of about 34pc in the world’s largest consumer market, compelling it to speed up shifting its growth strategy from being export-dependent to one fuelled by higher domestic consumption.
Still smarting from the slowdown induced by the pandemic, China’s GDP has grown by nearly 5pc in the last few years, driven by sizable fiscal stimulus. It has successfully spurred a substantial post-pandemic economic recovery amid a myriad of problems, ranging from a slump in the real estate sector, stagnant domestic demand, mounting local government debt, deflation, oversupply in some sectors (due to lower exports), unemployment and dwindling foreign investment.
For 2025, Beijing has again set a growth target at around 5pc as the world’s second-largest economy pledges to stimulate domestic demand with more supportive fiscal and monetary policies, according to the work report. The growth target is in line with the country’s mid-term and long-term development goals and underscores the resolve to meet difficulties head-on and strive hard to deliver as China battles stuttering employment for young people, stubbornly low consumer demand and a persistent property sector debt crisis.
China aims to create more than 12 million urban jobs and keep the urban unemployment rate at around 5.5pc by making domestic demand the “main engine and anchor” of growth. The report adds that Beijing should “move faster to address inadequate domestic demand, particularly insufficient consumption. Unilateralism and protectionism are on the rise domestically; the foundation for China’s sustained economic recovery and growth is not strong enough.”
For this, the country will pursue a more proactive fiscal policy and exercise a moderately loose monetary policy, with the projected deficit-to-GDP ratio set at 4pc, up from 3pc last year. The deficit target shows that Beijing is willing to abandon traditional fiscal policy to rescue the economy.
In terms of monetary policy, China will make timely cuts to the reserve requirement ratio and interest rates. Efforts will be taken to refine and develop new structural monetary policy instruments to provide stronger support for the sound development of the real estate sector and the stock market, the report says. Officials flagged more monetary policy easing “at an appropriate time”, leaving the door open to more stimulus measures on top of those announced last week if economic growth veered off track.
China is also targeting an increase in the consumer price index, a main inflation gauge, by around 2pc, aimed at better balancing supply and demand through a combination of policies and reform measures so that the general price level will stay within an appropriate range. This target is down from around 3pc last year.
To encourage foreign investment, Beijing will open internet-related, cultural and other sectors and expand trials to open sectors such as telecommunications, medical services and education, besides effectively protecting private enterprises’ legal rights and interests.
The country will effectively prevent and defuse risks in major areas, the report said, outlining steps to introduce city-specific policies on adjusting or reducing property transaction restrictions and effectively prevent debt defaults by real estate companies. Similarly, China will redouble its efforts to stabilise the job market this year and promote full and higher-quality employment.
“Employment is crucial to people’s well-being,” the report said and added, “The country will continue to implement an employment-first policy this year and channel more financial support to help reach full and high-quality employment this year.
“More tax breaks, subsidies and fee cuts will be granted to companies in key fields such as biomanufacturing, quantum technology, embodied artificial intelligence, 6G technology and small and medium-sized companies. Stronger support will be given to labour-intensive companies that can create more jobs.”
Published in Dawn, The Business and Finance Weekly, March 10th, 2025
