Research & Analysis

President Donald Trump announced on Wednesday that he had an “excellent” call with Chinese President Xi Jinping and looks forward to visiting China in April. The Treasury Department and the Office of the US Trade Representative are leading trade discussions in preparation for the visit.

According to official government data, China’s economy hit its target of 5% growth in 2025, but only just. Unofficial estimates paint a bleaker picture, with the Rhodium Group concluding that China’s real GDP grew by just 2.5% to 3% in 2025, largely due to persistent deflation and a sharp decline in investment.

In December, China officially opened the Hainan Free Trade Port (FTP). The Belgium-sized Hainan Island is now a separate customs territory, allowing goods to enter the island tariff-free and exempt from value-added and consumption taxes across 74% of tariff categories. Items subsequently shipped to mainland China may also qualify for tariff-free treatment if their local processing in Hainan accounts for at least 30% value-added.

For multinational companies operating stable supply chains, general licenses were initially viewed as a potential step toward greater predictability. Recent practice, however, suggests that while general licenses are now more commonly issued, they are also being implemented in a far more constrained and actively managed manner than their stated regulatory design might imply.

At the World Economic Forum in Davos, President Donald Trump doubled down on his “America First” trade stance, taking some jabs at China in the process. But his top trade negotiators offered a more optimistic tone when addressing the US-China trade relationship.

Congressional engagement on US-China trade issues is set to intensify in 2026 as the midterm elections put the economy, tariffs, and trade policy under the microscope. With control of Congress up for grabs, Democrats and Republicans are especially attuned to the downstream impacts of trade policy, including on consumer prices. Those pressures, paired with bipartisan concern over China’s rapid technological advancement and monopoly on critical minerals, are likely to drive Congress to take a more active role in shaping trade and industrial policy.

Beijing has issued unusually granular implementation guidelines for its AI+ manufacturing program. The plan, rolled out on January 9, defines deliverables, timelines, and an enforcement architecture that will mobilize provinces, state-owned enterprises, and industrial parks to implement AI solutions in China’s manufacturing sector.

China will unveil its 15th five-year plan covering 2026-2030 in March. The economic blueprint also serves as the final rally for the country to meet its pledge to cap carbon emissions by 2030.

President Donald Trump on Wednesday issued two statutorily required proclamations responding to the findings of Section 232 investigations into critical minerals and semiconductors, which concluded in October and December, respectively. The limited scope of follow-up actions is further evidence that the administration is prioritizing its detente with China ahead of a potential presidential visit to the country in April.

House Minority Leader Hakeem Jeffries (D-NY) on Monday appointed Representative Ro Khanna (D-CA) to succeed Representative Raja Krishnamoorthi (D-IL) as the top Democrat on the House Select Committee on the CCP. Earlier that day, Krishnamoorthi announced he would step down as ranking member, likely to focus on his upcoming Senate campaign. Both Krishnamoorthi and Khanna have served on the select committee since its inception in 2023.