Research & Analysis

At a press conference this month, the People’s Bank of China announced a new round of supportive economic measures aimed at enhancing liquidity, reducing borrowing costs, and supporting targeted sectors. These measures follow promises of further stimulus first announced in late 2024 and reiterated throughout Q1 2025.

Beijing is recalibrating its domestic consumption strategy in 2025. Using the services sector as a testing ground, recent policy efforts aim to boost both actual and perceived wealth among Chinese households, thereby fostering a “wealth effect” that encourages consumption. Through livelihood-oriented reforms, premium services campaigns, and selective liberalization to attract foreign investment, the government is attempting to engineer consumer sentiment by making spending feel safe, worthwhile, and emotionally rewarding.

New US tariffs and retaliatory tariffs from China have impacted US companies in China across sectors, but mitigation strategies vary. Nearly all firms are exploring further localizing their supply chains in China to build resilience to trade disruptions. Meanwhile, exemptions from China’s retaliatory tariffs on US imports are just starting to take shape, and the Chinese government has yet to announce an official point of contact for companies to make their case.

Senior US officials are set to meet with a Chinese trade delegation this weekend in Switzerland. The meetings signal a potential thaw in tensions following weeks of tariff escalation first initiated by the United States.

The Trump administration this week signaled a willingness to soften its tariff stance, offering relief for certain imports while continuing to pursue trade agreements with countries seeking relief from reciprocal duties. Reprieve for China imports, however, remains minimal.

Terminating the treaty would have significant financial and operational consequences for most, if not all, American companies operating in China. The treaty contributes to a level playing field for American companies in China. For example, the treaty establishes a mutual agreement procedure, a mechanism through which US companies can request relief from Chinese taxation that is inconsistent with the treaty.

This report explores the latest comprehensive data available on exports of both US goods (2024) and services (2023) to China as well as the American jobs they support. This data does not reflect US and Chinese tariff increases enacted so far in 2025, which are expected to significantly reduce US exports if they remain in place.

After weeks of aggressive posturing toward China, the Trump administration this week took a softer tone and suggested a willingness to negotiate soon. President Donald Trump on Tuesday said that tariffs on China could come down substantially, though he did not indicate when or to what extent.

China’s economy got off to a strong start in 2025, but it is uncertain whether this momentum can be maintained amid an intensifying trade war with the United States. According to data released by the National Bureau of Statistics, China’s first quarter real GDP reached 31.88 trillion yuan ($4.37 trillion), increasing 5.4% year-on-year and surpassing most forecasts.

Over the past month, US-China trade tensions have escalated to unsustainable heights. In response to new US tariffs, China imposed a 125% tariff on all US imports, noting that it will not engage in any further tariff increases as part of a “numbers game.”