China’s leaders to discuss economic outlook next week amid rising U.S. tensions : NPR

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Chinese Communist Party leaders will meet next week to discuss economic plans for the next five years. The meeting follows President Trump’s threats to add an additional 100% tariff on Chinese imports and Beijing’s increased restrictions on rare earth minerals. This is journalist Sherisse Pham.

SHERISSE PHAM, BYLINE: China’s economy is stuck in the doldrums. Youth unemployment is at its highest level in two years. House prices have been falling for more than four years and many believe they have not yet bottomed out. And Chinese consumers, like Lu Yingcai, 32, and Liu Lu, 36, who NPR recently met on the streets of Beijing, are tightening their belts.

LU YINGCAI: (Through interpreter) I actually travel less and eat out less often. I still go out, but less frequently. And as for clothes, I might not buy as much unless it’s absolutely necessary.

LIU LU: (Through interpreter) In the past, domestic demand was driven by real estate. But today, the overall economic situation is poor and real estate is no longer able to stimulate demand. People may feel safer holding cash and be reluctant to make excessive investments.

PHAM: For decades, rising property prices have been a real source of confidence for Chinese consumers. Then the country’s housing bubble collapsed in 2021, and suddenly millions of Chinese found their biggest investments underwater.

JEREMY MARK: As soon as this was threatened, virtually everyone stopped spending and worried about the future in a way they haven’t had to do in a generation.

PHAM: This is Jeremy Mark, senior fellow at the Atlantic Council’s Center for Geoeconomics. Beijing has tried to build confidence in its economy, offering incentives for citizens to spend money on big purchases like cars, appliances and smartphones. And for a while, it worked. But as soon as the stimulus funds ran out, consumers stopped spending, according to Mark.

Last month, the government released key economic data measuring Chinese factory activity. For the sixth consecutive month, the figures indicate that industries are in contraction mode. The slowdown is also hurting China’s relations with its global trading partners, at a time when Beijing is trying to strengthen ties with them as Washington demands tariffs. Chinese factories now produce more goods than they can sell domestically, so they export the excess at deeply discounted prices. Here’s Mark again.

MARK: The whole world will feel the impact of the slowdown in the Chinese economy. In China, factory outlet prices are falling very sharply.

PHAM: Now, normally, American consumers would benefit because they could buy products made in China at cheaper prices. But Mark says…

MARK: In essence, with the tariffs, prices from China could increase much more.

PHAM: Meanwhile, other parts of the world, such as Mexico, Turkey and Southeast Asia, are seeing an influx of Chinese goods, already posing diplomatic challenges for China. Beijing is now accused of dumping cheap products and exporting excess capacity.

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JIN KEYU: China is going to have a real problem, not only with the United States but with the rest of the world.

PHAM: This is Jin Keyu, professor of economics at the Hong Kong University of Science and Technology and occasional advisor to the Chinese government. She spoke at the World Economic Forum in Tianjin in June.

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JIN: Because it’s no longer just about efficiency. It’s a question of harmony. It is also about giving to other countries…

TIAN WEI: Yeah.

JIN: …An opportunity to be part of the global supply chain…

TIAN: That’s true.

JIN: …In everything and in every sector. So China would be better off increasing its domestic consumption and, you know, harmonizing those kinds of relationships.

PHAM: So as China’s leaders meet to discuss their next five-year plan later this month, economists will be looking for signs of a policy shift because, as Jin said, China will never become a rich country unless it becomes a major consumer country.

For NPR News, I’m Sherisse Pham in Hong Kong.

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