From Tariffs to Tactics
China’s central bank and financial regulators are set to unveil a new “financial policy package to stabilise markets and expectations” on Wednesday, signalling policymakers' flexibility in responding to evolving global trade dynamics. Currently facing US tariffs as high as 145%, Beijing is taking measured steps to preserve its 5% growth target while ensuring market stability.
This initiative complements President Xi Jinping’s diplomatic outreach since April, which has included high-level visits to Vietnam, Cambodia, and Malaysia, deepening regional ties at a critical juncture. As the US market becomes increasingly restrictive, China is intensifying efforts to diversify its export base. With China, the world's leading manufacturing nation, producing approximately 31% of global manufacturing output, Beijing is focused on securing access to alternative international markets.
Rather than retreat, China is using the current US trade posture as an opportunity to present itself as a leader in economic globalisation. In Europe, President Xi has timed a renewed push for cooperation to coincide with the 50th anniversary of China-EU diplomatic relations. The recent removal of sanctions on members of the European Parliament has paved the way for improved relations, with European Commission President Ursula von der Leyen and European Council President António Costa scheduled to visit Beijing in July.
China’s ~USD1 trillion trade surplus in 2024 underscores its strong global position and gives the nation leverage to deepen trade ties. With active trade relationships involving 172 economies and a 10% year-on-year rise in outbound direct investment, to USD162 billion, China’s Belt and Road Initiative continues to expand infrastructure and industrial partnerships, especially in emerging markets.
European diplomats increasingly see potential for closer engagement, particularly as China underscores its commitment to a stable, rules-based trading system. Its emphasis on economic consistency and open trade may prove appealing to partners navigating global uncertainty.
Meanwhile, broader trade ties will no doubt support Beijing advance the internationalisation of the renminbi. Initiatives such as currency swap agreements, offshore yuan hubs, and inclusion in international payment networks are designed to reduce reliance on the US dollar and enhance China's monetary influence globally.
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