China made a strategic outreach to executives of major U.S. businesses during the China Development Forum held on Sunday and Monday, signaling its intent to counteract trade pressures without resorting to aggressive retaliation. This move comes as Beijing grapples with economic challenges, including deflationary pressure and a real estate slump, which have impacted regional growth prospects for international businesses.
Nevertheless, despite the high-profile trade war launched by the administration’s tariffs and other ongoing trade tensions, the United States still is China’s largest single-country trading partner. In the past few months, China has stepped up relief efforts to prop up its economy, a plan that took root in late September. This has included pressing for deeper trade ties with countries in Southeast Asia, as well as with the European Union. China’s recent push in high-tech manufacturing hasn’t moved the needle much on its overall gross domestic product growth. Over the last three years, it has played a role of only +1.1 percentage points on average.
China's top policymakers affirmed the country's stimulus plans earlier this month, emphasizing a message of reassurance regarding strategies to boost consumption and steer the nation in a "modestly positive direction." Conversations at the forum reflected China’s commitment to creating positive global business ties. Simultaneously, China warned that it would retaliate with countermeasures against U.S. tariffs.
The internationalism of the conference was further emphasized by the presence of China’s leaders in the business world, highlighting that country’s emerging global economic status. Cristiano Amon of Qualcomm remarked on the importance of technology in economic growth, stating:
"We will remain optimistic because the role of technology is important, I think more than ever."
He claimed that technology would be at the center of our nation’s economic prosperity.
For every pessimistic doomsayer at the forum, there was one more voice proclaiming positive tidings on China’s economic recovery. Wendell P. Weeks expressed a positive outlook:
"This year, you feel a lot of positive momentum beginning in China. So I feel like recovery is underway."
Questions remain as China still works to chart a course in its ongoing trade conflict with the U.S. Scott Kennedy highlighted the potential impact of new tariffs:
"If the U.S. imposes significantly large tariffs in early April, then you go from managing costs and de-risking to possibly de-coupling."
Kennedy emphasized the high level of anxiety surrounding these developments:
"And then that might mean the game is up. So I think the level of anxiety is pretty high. And that's why China is trying to provide this message of reassurance."
And indeed, China’s economic landscape is critically important to the vast majority of multinational corporations. They rely on it for major revenue and as an essential element of their supply chains. Qualcomm's Amon attested to China's unprecedented role in the world economy and its technological significance:
"I think technology is going to be part of economic growth."
China has understandably been eager to shrink the footprint of foreign pressures. Later this fall, it will release new standards that establish a legal structure for public agencies to tackle these issues. Firms such as PVH, which owns Calvin Klein, have landed on China’s list following this year’s tariff escalations. This development is a powerful, clear example of their deliberate long game.
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