China has introduced a “special action plan” to stimulate domestic consumption as new US tariffs take effect. The initiative, announced by Xinhua, includes measures such as income support, childcare subsidies, and an expansion of the “cash-for-clunkers” program to replace old cars and electronics.

Premier Li Qiang previously set a 5% economic growth target, emphasizing the need to strengthen domestic spending to reduce dependence on exports. However, challenges persist, including weak consumer demand, a struggling job market, and a real estate downturn.

Amid escalating trade tensions, former US President Donald Trump doubled tariffs on Chinese imports to 20%. In response, China imposed retaliatory tariffs on US agricultural goods. Despite these pressures, retail sales grew by 4% in early 2025, slightly up from December’s 3.7%, driven by government stimulus.

China also faces deflation concerns, with the Consumer Price Index dropping 0.7% in February, its lowest level in over a year. Meanwhile, industrial production grew by 5.9% in the first two months, exceeding forecasts. While the economy showed a stable start to the year, experts caution that long-term recovery remains uncertain.