As China works out a path for the Trump era, it has plenty of its own problems to deal with

Good morning. Viewed from the west, you might imagine the sole issue for China at the moment is how to respond to Donald Trump. But while that is a central diplomatic concern, Beijing has another urgent matter on its mind: how to revitalise its sluggish economy.

For the past week, the annual Two Sessions meetings in Beijing have offered important clues on both questions – and painted a picture of a country trying to keep some very tricky plates spinning at the same time. As the gathering draws to an end, and Beijing institutes its own tariffs in response to Trump’s today, there is significant pressure on Xi Jinping – but also an opportunity to stake out a new position of influence on the global stage.

For today’s newsletter, I spoke to Amy Hawkins, the Guardian’s senior China correspondent, about Beijing’s prescription for its economic ills – and what it makes of the return of its bright orange frenemy. Here are the headlines.

Five big stories

In depth: ‘Some in Beijing feel emboldened by Trump – but it’s early days’

The highly choreographed Two Sessions meetings are the annual centrepiece of Chinese Communist party (CCP) messaging around the country’s direction. And while it’s not exactly full of surprises, it’s a crucial guide to what Xi Jinping (pictured above) sees as his country’s priorities. It consists of gatherings of the National People’s Congress (NPC), the party’s legislative body, and the Chinese People’s Political Consultative Conference (CPPCC), a talking shop for business leaders, academics and others from across the country. (Helen Davidson has a full primer here.)

“It’s a grand ceremonial event,” Amy Hawkins said. “But all the decisions are predetermined – the NPC has never rejected a bill put before it. So the most significant element is what’s being emphasised.”

Ahead of its conclusion tomorrow, here’s a summary of what we’ve learned.

Economic woes | Growth struggles and a new strategy

At the opening of the NPC, China’s premier, Li Qiang – second only to Xi Jinping in the CCP – announced a 5% target for GDP growth this year. That is the same target as last year, and while it might sound like a boom to Europeans, it is relatively conservative by China’s standards, going by the past 20 years. “The aim has been to project a mood of stability,” Amy said. “China has had a really turbulent few years with the pandemic, the state of the economy and now dealing with a capricious United States.”

That is not to say that the 5% figure will be easy to meet, though. “The target was only met last year with a huge last-minute export boom as people rushed to sell goods to the US before the Trump tariffs came in,” Amy said. “You’re seeing the after effects now – exports in January and February were pretty low.”

All of that sits in the context of a bleak wider economic picture, causing a serious rethink of how China’s economy operates. Amy rattled off a list of difficulties: “Unemployment is a big problem. Property prices are really down. Business activity is down. And people are not spending money post-Covid. So what China needs to do is boost consumer demand. We heard a lot of that this week.”

One important measure outlined at the NPC was a plan to raise China’s deficit target to 4% of total output, up from 3% last year. That is particularly significant given anxieties about borrowing on a local level: huge deficits amounting to trillions of dollars were run up to fund infrastructure projects that helped the country after the 2008 financial crash.

“Xi Jinping has really cracked down on debt, so this is a big step to take,” Amy said. “But there is a growing acceptance that you can’t just boost the economy through people in other countries spending money and expect that to trickle down.”

Trump’s tariffs | Rhetoric grows more hostile

The recognition in China that an economy relying heavily on exports doesn’t necessarily benefit ordinary people stands in sharp contrast to the response in Canada and Mexico, where Trump’s gyrations on tariffs have caused more upheaval. Crucially, China sends just 14% of its exports to the US, against 83% in Mexico and 77% in Canada.

“For the average person in the street, the domestic economic picture is much more of a priority,” Amy said, referring to China. “People in Beijing don’t feel the effects in their daily lives unless they’re working in exports.”

Nonetheless, the tariff threat has already had an impact: imports have fallen sharply, by 8.4% at the start of this year – perhaps a sign China’s manufacturing base is cutting back in anticipation of new restrictions on sales to the US. And the subject is the source of intensifying official rhetoric.

“A week ago, the trade war felt largely symbolic,” Amy said. “But then Trump doubled the tariffs last week, and China has responded in kind,” with a 10-15% charge on American farm products coming in from today. Meanwhile, there is no sign that China is interested in the kind of gestures that have appeased Trump, at least for now, in Mexico and Canada. Last week, a foreign ministry spokesperson said that Beijing would “fight to the end” with the US in a “tariff war, trade war, or any other war”.

The US and Russia | Scepticism about Trump’s new world order

Beijing is perhaps less concerned about another aspect of Trump’s strategy: the idea that Russia can be prised away from its relationship with China to form a new front with the US. “I don’t think anyone in China takes that seriously,” Amy said.

As Pjotr Sauer pointed out in First Edition last Wednesday, Xi and Putin each recognise that the other is likely to stay put for many years to come, in contrast with the unpredictability of American politics. Indeed, the two countries’ navies are staging joint military drills with their Iranian counterparts in the Gulf of Oman this week.

“They are two countries with a 4,000km border, and that geographic reality influences the relationship a lot,” Amy said. “Both countries have pragmatic and ideological reasons to maintain the relationship, and China has been Russia’s economic lifeline.”

Nonetheless, China is watching events in Ukraine “with apprehension”, she added, given the signalling from Washington about a pivot to Asia. “The understanding in Beijing is that Trump is perhaps more friendly but malleable, and that he is surrounded by hardcore China hawks – his secretary of state, Marco Rubio, says China is the biggest threat to the US. They will be wary that his position could change.”

In Taiwan, long the subject of Chinese threats of annexation, there is anxiety about whether Trump will prove a reliable guarantor of independence, as Helen Davidson reported last month from Taipei. “There are obviously some in Beijing who might feel emboldened by Trump being in the White House,” Amy said.

“But it’s very early days. The signals at the moment are still that any action would only be something prompted by what China would view as a provocation, like an American politician going there.” For more on what Trump’s arrival means for Taiwan, see the very interesting interview Amy did with a retired senior colonel from the People’s Liberation Army last week.

The global south | Opportunity in US retreat

There is another audience for the messaging coming out of the Two Sessions: the global south. And after Trump announced the withdrawal of 90% of US foreign aid, there is a clear opportunity for Beijing to strengthen its influence.

“You’ve had the foreign minister saying China is a beacon of stability in an uncertain world,” Amy said. “The message to the global south is: we are a reliable partner. China isn’t going to suddenly step in with billions of dollars in aid funding to make up for what the US is taking out – it’s never going to fund civil society and grassroots organisations in the way USAid did – but for countries that have had the rug pulled out from under them, this is an opportunity to burnish Beijing’s image.”

China’s history of “no strings attached” loans to the developing world, in contrast to help from the World Bank conditional on democratic reforms, may also suggest the direction of travel.

“China still refers to itself as a developing country and a member of the global south,” Amy pointed out. “There’s a slightly mistaken idea that the Communist party wants to export its ideology: it’s not that. It’s that it wants a world where its ideology is completely tolerated, and there is no western hegemony trying to push back against it.”

What else we’ve been reading

For the Observer magazine, Eva Wiseman interviewed Cate Blanchett (above), and found an actor who speaks as naturally about bunion separators as geopolitics. She has staved off anxiety about a life not lived by “temporarily stepping into other people’s lives”, Blanchett says. “But one day I’m going to grow up and get a proper job.” Archie

The tiny town of Whangamōmona on New Zealand’s North Island is a self-declared republic where locals regard outsiders with suspicion and the internet with indifference. Community spirit runs deep, but so does a streak of eccentricity born from isolation. Anna Rankin visits the fiercely independent town to hear from residents about their lives – and the changes that are creeping in. Nimo

The term “ceasefire” does not really accurately describe the situation for civilians in Gaza, writes Nesrine Malik: the scores of people still being killed are evidence that “in such an asymmetrical power balance, and with such impunity, Israel is not incentivised to act in a way that winds things down”. Archie

The AI-generated images and videos that have become a form of Maga agitprop are more than internet slop, Kyle Chayka argues compellingly in this New Yorker piece: “They help to create a digital mirror world that reflects the future that Trump imagines … Trump’s vision of Gaza as an ethnically cleansed luxury resort may seem like political fantasy. But, on the internet, Trump Gaza already exists as a virtual beachside destination.” Nimo

Push-ups can seem daunting, but they don’t have to be. Phil Daoust offers a beginner-friendly guide to mastering the move, packed with expert tips from personal trainers. It’s not an aesthetic thing either, Daoust writes; sticking with it will serve you well into old age. Nimo

Sport

Football | A superb strike from Declan Rice rescued a point for Arsenal against Manchester United after Bruno Fernandes’ first half free kick for the hosts. Earlier on Sunday, Spurs came back from 2-0 down to draw 2-2 with Bournemouth and Chelsea beat Leicester 1-0.

Cricket | India beat New Zealand by four wickets to complete a clinical Champions Trophy triumph, but had to deal with a spirited late fightback to secure the trophy. After New Zealand amassed 251-7 from their 50 overs, India’s captain Rohit Sharma top scored with 76 as they reached their target with an over to spare.

Rugby | England ensured that they will go into the final weekend of the Six Nations with a hope of winning the title by beating Italy 47-24 to take a bonus point. Any sort of victory for France against Scotland should be enough to secure the title, but if they fail to win, England are poised to capitalise in their match against Wales.

The front pages

The Guardian splashes today with “Prisons to get hundreds more cells in case summer riots happen again”. The Daily Telegraph’s top story is “Trump – Ukraine may not survive” while the Financial Times says “Ukrainians to press Washington for resumption of aid in high-stakes talks”. “Ministers want to freeze out ‘Nimby’ groups to end nonsense planning delays” – that’s the i. “Pandemic’s dead mourned” – the Mirror covers Covid memorials while the Express previews the 80th anniversary of the end of the second world war: “Remember the sacrifice of our family of nations”. “Woke RAF is running out of top gun pilots” says the Daily Mail. Lead story in the Times is “£250 a year off bills for living near new pylons”, and the Metro has “Upskirting plague is increasing”.

Today in Focus

Cartoon of the day | Edith Pritchett

The Upside

A bit of good news to remind you that the world’s not all bad

Danylo Yavhusishyn arrived in Japan in 2022 as a teenage refugee from Ukraine, unable to speak Japanese. Now, at just 20, he is making history in sumo, debuting in the top division after a record-breaking rise. Competing under the name Aonishiki Arata, he recently secured his place among sumo’s elite with 12 wins in the new year’s tournament.
His journey began with a chance meeting with a Japanese wrestler in 2019, leading to an opportunity to train in Japan after fleeing Ukraine. Adapting quickly, he dominated university sumo before turning professional in 2023. His technique and strength have made him a formidable competitor, with some predicting he could become the first European yokozuna. Now fluent in Japanese, Aonishiki is fighting for the “Japanese family” who has helped him since he fled Ukraine, crediting his success to his mentors.

Sign up here for a weekly roundup of The Upside, sent to you every Sunday

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