China comes to the table with confidence and capability

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Late on Friday, after Wall Street's official trading session ended, the U.S. said it would impose an additional 100 percent tariff on imports from China, as well as export controls on critical U.S.-made software.

While Washington's accusation that China fired the first shot in this round of trade disputes - by tightening control on rare earth exports - is unfounded, the announcement nevertheless rattled the American market. Shares of major American tech companies like Nvidia, Tesla and Amazon all fell by more than 2 percent after the bell. These losses added to the already steep declines following U.S. President Donald Trump's earlier threat that he was mulling a "massive" tariff hike on Chinese imports.

Threatening to flip the table is not a new tactic for the U.S. However, China has and will continue to come to the table with confidence and capability.

Data from China's National Bureau of Statistics show that September's purchasing managers' index for China's manufacturing sector was up 0.4 percentage point from the previous month at 49.8. While still below the 50-point threshold that separates expansion from contraction, it shows acceleration in production activities and improvement in the business climate.

Overall, in the first half of 2025, China's GDP grew 5.3 percent year on year. During the same period, industrial output increased by 6.4 percent compared to the same period last year, with equipment manufacturing and high-tech manufacturing posting rapid growth. Retail sales, a major gauge of consumption, climbed 5.0 percent to 24.55 trillion yuan, or 3.45 trillion U.S. dollars.

With policy adjustments amid tariff challenges, domestic demand contributed to 68.8 percent of China's GDP growth in the first half of this year. Final consumption expenditure contributed 52 percent, making it the main growth driver.

The performance of the Chinese economy has been acknowledged by various international agencies. In the July update of its World Economic Outlook, the IMF projected that China's economy will expand by 4.8 percent in 2025, up 0.8 percentage point from its previous forecast. This is the largest upward revision among all countries and regions included in the report. Similarly, in its latest growth forecast for East Asia and Pacific, the World Bank also raised its 2025 growth projection for China by 0.8 percent to 4.8 percent. 

All signs point to a steady upward trajectory for the fundamentals in the Chinese economy, which gives confidence to China’s decision makers.

The U.S. backtracking on its trade promises comes at a critical juncture when Chinese policymakers are readying to gather and formulate development strategies for the next five years. And the remarkable transformation witnessed in the past five years is a testament to the capabilities of the policymakers.

China's National Development and Reform Commission said earlier that from 2021 to 2025, China's economic increment is projected to exceed 35 trillion yuan, or 4.89 trillion U.S. dollars, meaning roughly 30 percent annual contribution to global economic growth. The commission also noted that from 2020 to 2024, China's total R&D expenditure surged nearly 50 percent, or about 1.2 trillion yuan, giving innovation a key role in driving development.

These economic successes have translated into tangible improvements in Chinese people's lives. Income growth has largely kept pace with economic growth, and the income disparity between urban and rural areas has continued to narrow. With progress made in the medical system, such as expansion of the national medical insurance list of drugs whose costs can be reimbursed, China has made sure that its elderly and the vulnerable are cared for.

It's been proven again that China's policymakers are competent enough to weather storms, domestic or external. And with policy agility, the Chinese economy remains resilient amid complexities and challenges.

All economies face headwinds from time to time; China and the U.S. are no exceptions. The wise thing to do is not to tear up agreements but to keep up the hard negotiating work.

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