China counts on 3 strategic directions to survive Trump’s tariff and tech war

China’s growth prospects face three major long-term threats – debt, decoupling and demographic challenges – and many observers are curious about how Beijing will respond to these issues.

After years of trial and adjustment, policymakers have settled on three key strategic directions – a decision that has been reinforced by US President Donald Trump’s tariff war and technology restrictions against China.

First, China will not repeat its old playbook of unleashing massive stimulus and shoring up the property market. While some economists had forecast Beijing to boost fiscal spending to put growth back on track, Chinese authorities defied expectations by maintaining moderate pro-growth policies.

For many cash-strapped local governments eager to borrow fresh funds and sell land, the central government has acted like a “tiger parent” by strictly enforcing fiscal discipline. The message is clear: housing will not be the cornerstone of China’s economic future.

Before Trump’s second term, it was a popular view that the Chinese government had acted too hastily and harshly to deflate the property market bubble by forcing banks to restrict credit to developers.