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Earlier this month, U.S. President Donald Trump delivered his first State of the Union address of his second term, vowing to maintain tariffs and reshape global dynamics. At the same time, a similar yet starkly different event took place on the other side of the world.
Unlike the atmosphere in the U.S. Congress — once a symbol of vibrant democracy, now likened to a circus or kindergarten — the annual meeting of China’s National People’s Congress is a meticulously scripted affair.
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U.S. President Donald Trump and Chinese President Xi Jingping in 2017
(Photo: Reuters)
The speech was not delivered by Chinese President Xi Jinping but by Foreign Minister Wang Yi, who returned to the role in July 2023 after Qin Gang’s dismissal. With a stern expression and minimal gestures, Wang gave a 90-minute speech, repeating the word “stability” 14 times.
The repetition was deliberate: a signal that while the U.S. president wields a metaphorical flamethrower, China presents itself as the responsible global leader ready to build relationships — even with nations traditionally aligned with Washington. “No country should expect to suppress China on the one hand and maintain good relations with us on the other,” Wang declared, carefully avoiding any direct mention of the U.S.
While Wang aimed to sound measured, earlier that day, China’s foreign ministry issued its strongest statement since Trump took office: “If the U.S. moves toward conflict, China will respond in kind. When the U.S. returns to cooperation, China will do the same. If the U.S. wants war — whether a tariff war, trade war or any other type of war — we are prepared to fight to the end.”
China’s concern: a sharp drop in U.S. exports
Tariffs on imports remain central to Trump’s agenda. His first-term trade war with China severely hurt American agriculture, forcing him to allocate tens of billions in taxpayer funds to compensate farmers for lost exports.
Under Joe Biden, U.S. agricultural exports to China peaked at $38 billion in 2022 before dropping to $29 billion in 2023 and $25 billion last year. In January, agricultural exports to China plummeted 56% due to Beijing’s response to Trump’s tariffs, which cover nearly everything from electronics and clothing to toys.
China’s main challenge in facing another four years of a volatile U.S. president who shifts positions daily is its own economic struggles. Consumer spending is down, the real estate sector is in crisis and youth unemployment is rising.
Trump’s 20% tariffs on Chinese goods have hit one of the country’s few economic bright spots: exports. Wang pledged 5% economic growth this year, but if Chinese exports to the U.S. drop by 25–33% as projected, that goal will be difficult to achieve.
For the past two years, China has met its 5% target thanks to strong exports, generating a record $1 trillion trade surplus. If Trump’s tariffs remain in place, China will need to boost domestic consumption. Beijing has introduced stimulus measures, including trade-in programs for appliances, cars, phones and electronics, alongside the issuance of 1.3 trillion yuan ($179 billion) in special bonds to finance these initiatives.
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In a rare move, Beijing also raised its fiscal deficit — from 3% to 4% of GDP — the highest increase in decades, reflecting the urgency to boost growth. The government plans to create over 12 million urban jobs, cap urban unemployment at 5.5% in 2025, and increase support for high-tech industries, real estate stabilization and elderly care programs. China also announced a 7.2% rise in its defense budget.
The key question is whether these measures will be enough. Strict COVID-19 pandemic-era restrictions, a prolonged real estate crisis and government crackdowns on tech and finance firms have dampened national morale. However, Beijing sees reasons for optimism in the success of tech firms like DeepSeek and Unitree Robotics, which have attracted foreign investors to China’s AI sector.
China’s ace: Elon Musk
The tariff war isn’t one-sided — China has significant leverage through retaliatory tariffs. Earlier this month, Beijing imposed targeted 15% tariffs on major U.S. industries where China is the largest market, including corn, wheat, soybeans, poultry, pork and beef.
Wall Street’s reaction to Trump’s tariffs and his erratic policy shifts has fueled Chinese hopes that the trade war won’t last long. Meanwhile, Beijing is capitalizing on America’s retreat from global leadership in fields like healthcare and climate change.
“Trump’s speech sent the message that the U.S. only cares about its own interests and will pursue them ruthlessly, disregarding international norms,” Wang said. “Trump withdrew from the Paris Climate Agreement and the World Health Organization, making it clear that the U.S. no longer upholds the values and global order it has championed since World War II. In contrast, China is ready to work with the international community to tackle shared challenges like climate change.”
Quietly, China holds another significant card: Elon Musk. The Tesla CEO is highly dependent on China, where the company sold 657,000 vehicles in 2024 — nearly 37% of its global sales. Tesla’s Shanghai gigafactory produces over half a million cars annually, a third of its worldwide output, with plans to reach one million.
If China feels pressured, it could restrict Tesla’s operations — a move that would directly impact Trump, who recently showcased an American-made car dealership on the White House lawn, signaling his vested interest in protecting Tesla.