“We are resetting the meeting,” Trump told reporters at the White House on Tuesday. “We’re working with China. They were fine with it.”

Trump’s  comments that he wants to remain in Washington come as the war against Iran extends into its third week and the Strait of Hormuz remains closed to almost all global shipping.

“Because of the war, I want to be here. I have to be here,” Trump said.

Trump was scheduled to visit Beijing from March 31 to April 2. The president said he now plans to visit in “about five weeks” or towards the end of April. His last state visit to China was in 2017, during his first term.

China’s Ministry of Foreign Affairs said on Tuesday that the US and China “remain in communication” about Trump’s plans to visit.

Trump and Xi were expected to discuss a range of issues, from trade tariffs and Chinese export controls on rare earth minerals and magnets, to the US relationship with Taiwan and Chinese fentanyl exports.

The US-China trade war was put on pause in October when Xi and Trump signed a truce following a meeting in South Korea, and both sides have been working on a more comprehensive trade agreement to resolve their dispute.

While China and Xi were in Trump’s crosshairs at the start of his second term last year, the president’s tone towards both has softened since his meeting with the Chinese leader in South Korea.

“I look forward to seeing President Xi; he looks forward to seeing me, I think,” Trump said from the White House. “We have a very good relationship with China. It’s much different than it was in the past.”

Trump has also signalled that he is seeking China’s help to reopen the Strait of Hormuz, which has been largely blocked by Tehran since the US and Israel launched their war on Iran 19 days ago.

The waterway is a critical conduit for global trade and Middle East oil exports, and the price of oil has fluctuated significantly due to its closure and constricting fuel supplies.

Trump told The Financial Times that China was among the group of countries that should lobby Tehran to reopen the strait.

Trump previously accused Tehran and Beijing of belonging to the “Axis of Autocracy” due to their close economic ties, as China is Iran’s largest trading partner. China has also supplied Tehran with critical technology to support electronic warfare, some of which has been on display in recent weeks.

If the strait remains closed and the war continues, Trump could still see himself on the back foot when his meeting with Xi next takes place, said Ali Wyne, senior researcher of US-China relations at the International Crisis Group.

Proponents of the Trump administration’s foreign policy had hoped that Operation Epic Fury, as the US campaign on Iran has been named, “would enhance President Trump’s negotiating posture vis-a-vis President Xi by underscoring his willingness to take dramatic, unexpected actions”, Wyne said.

“The gambit, however, has quickly boomeranged. Facing the severest oil supply shock in history, Trump is now exhorting Xi to help him reopen the world’s most vital waterway, the Strait of Hormuz,” he said.

Official figures show exports jumped by more than 20% in January and February, which is almost three times the rate predicted by economists. It puts the country on track to top the record-breaking annual trade surplus it saw in 2025.

The announcement comes as US President Donald Trump is expected to visit China in early April to meet his Chinese counterpart Xi Jinping.

The world’s second largest economy is heavily reliant on exports as it faces a number of issues including weak consumer spending, a shrinking population and a property market crisis.

Beijing typically combines January and February trade data to adjust for distortions caused by the Lunar New Year holiday, which falls on different dates each year.

China’s exports were boosted by strong demand for electronics while shipments of agricultural and manufactured goods also rose.

Trade with European countries grew by 27.8%, while exports to Asean countries – a group of South East Asian nations including Thailand, Singapore and Philippines – climbed by nearly 30%.

But China’s exports to America fell more than 10% as Trump imposed tariffs and other measures to address trade imbalances between the two countries.

Last week, China set an annual economic growth target of 4.5%-5%, down from its 5% goal in 2025, which had been met largely due to exports.

Exports have been the key driver of China’s economy, lifting it in spite of poor domestic spending and a property slump.

The meeting between Trump and Xi come as China, like many country’s in Asia, is dealing with the economic impact of the US-Israeli war with Iran, which 

It is the first time the target has been lowered since it was cut to “around 5%” in 2023. A target was not set in 2020 due to the pandemic.

The details were released during China’s biggest political gathering, known as the “two sessions”, alongside the release of some details of the 15th Five Year Plan for the world’s second largest economy.

Beijing aims to reshape its economy as it faces issues like weak consumption, a shrinking population, an ongoing property crisis, global trade tensions and an energy crunch due to the Iran war.

One China analyst told the BBC that the lower target gives China “more room to manage the economy” without being forced into making huge financial commitments just to hit a precise goal.

“China has used flexible targets before, particularly during the pandemic, but it’s not the norm,” Jason Bedford fromthe East Asian Institute research group added.

The two sessions event, which began on Wednesday and usually runs for at least a week, brings the country’s leaders together for back-to-back meetings.

Details of China’s gross domestic growth (GDP) target and its objectives under its latest Five Year Plan were included in a 46-page report published by Premier Li Qiang, seen by the BBC.

The full text of the plan, which will outline China’s economic development objectives to 2030, will be voted on during the closing day of the gathering.

It is expected to be released by state media one or two days later.

Li told delegates that the Five Year Plan will include investments in innovation, high-tech industries, scientific research and more efforts to boost household consumption.

His comments underline Beijing’s concerns that weak domestic consumption makes the country too reliant on exports, as well as highlighting its ambitions to upgrade the country’s manufacturing industries.

The report outlines plans for more than 100 major projects over the next five years to expand China’s industrial capacity, with a focus on science and technology, transportation and energy.

China aims to lead a green energy push, reducing carbon emissions and improving environmental protection, Li wrote.

The country will also build a “childbirth-friendly society” as it addresses concerns over employment, education and healthcare, the report said.

China faces an ageing population and falling birth rates, complicating Beijing’s plans to boost its economy.

In January, official figures showed that China hit its 5% economic growth target for 2025 as a whole. But Beijing also said economic expansion had slowed to 4.5% in the last three months of the year, weighed down by weak domestic spending and a long-running property crisis.

More than two-thirds of China’s provinces have scaled back their growth ambitions, either lowering targets or shifting language from aiming higher than a certain rate to targeting “around” that level.

Zhou Zheng, a policy analyst at China Macro Group, said Beijing’s new growth target reflects that it is “being realistic” as it deals with complex domestic challenges and a difficult global trade environment.

China’s economic growth still marks a “great achievement” given it has been simultaneously tackling major issues that are deeply interlinked and will take time to solve, Zhou said.

But Georgetown University researcher Ning Leng said China’s growth figures should be taken with “a grain of salt”, as other data suggests a weaker economic picture.

The crisis in China’s property sector has hit the country hard and is a key reason for its domestic consumption being weak, she added.

The real estate market once accounted for nearly a third of the Chinese economy and was a key source of income for local governments – many of which now have huge debts.

The industry’s problems have also led to layoffs and pay cuts across the country.

Manufacturing and exports have helped support China’s economy, recording the world’s biggest-ever trade surplus last year – the value of goods and services sold abroad compared to its imports – of $1.19tn (£890bn).

But has means China has become particularly reliant on exports to plug the gaps, which is a weakness the US can sense, Ning said.

US President Donald Trump’s tariffs have put further pressure on China’s export-reliant economy.

The country has responded by pouring huge resources into redirecting trade to other countries to ensure its products can be sold, sustaining its manufacturing sector, said Ning.

Trump is expected to visit China in April and meet President Xi Jinping for their first face-to-face talks this year.

Meanwhile, the US-Israel war with Iran means Beijing has now lost two key sources of cheap oil this year.

It also can no longer access Venezuelan oil after the US seized President Nicolás Maduro in January.

But Beijing has highlighted that it is far less dependent on fossil fuels as it has for several years been transitioning to renewable energy.

Trump wrote on Truth Social that the call was “productive” and he “appreciated” Xi’s approval of deal, which would reportedly see TikTok’s US business sold to a group of US investors.

China’s official state news agency Xinhua left the outcome of their discussion less clear, with Xi quoted as saying that Beijing “welcomes negotiations over TikTok”.

TikTok, which is run by Chinese firm ByteDance, was previously told it had to sell its US operations or risk being shut down.

Trump, however, delayed implementing the ban four times since it was first announced in January, and earlier this week extended the deadline again to December.

In his post, Trump wrote the two had “made progress” on trade issues and would meet at the Asia-Pacific Economic Cooperation (Apec) summit, scheduled to begin at the end of Octoberin South Korea, and said he would travel to China.

“I also agreed with President Xi that we would meet at the Apec Summit in South Korea, that I would go to China in the early part of next year,” Trump said, adding that Xi would travel to the US at “an appropriate time”.

Trump told reporters on Friday afternoon that a deal still had to be signed, and signalled there could be a formal process to do so soon.

“We look forward to getting that deal closed,” he said, adding that the US would have “very tight control” of the app.

That deal will reportedly see a group of US firms – said to include Oracle, which was co-founded by Trump ally Larry Ellison – that would enable TikTok to continue operating in the US, using algorithm technology licensed from ByteDance.

A sticking point in negotiations appears to be who will own the powerful algorithm that pushes content to TikTok’s 170 million American users.

Speaking alongside British Prime Minister Sir Keir Starmer in the UK on Thursday, Trump sidestepped a question from a reporter about whether an American buyer would need to build a new algorithm, or if they could continue to use the current algorithm.

Trump addedhe believes TikTok has “tremendous value” to the US.

“The people that are investing it are among the greatest investors in the world,” he said. “And they’ll do a great job – and we’re doing it in conjunction with China.”

Xinhua reported that China’s position on TikTok is “very clear” and that it welcomed firms to “conduct commercial negotiations based on market rules and reach solutions that comply with Chinese laws and regulations and a balance of interests”.

“We hope that the US will provide an open, fair and non-discriminatory business environment for Chinese companies to invest in the United States,” it added.

A statement by ByteDance on Friday cast further doubt on the status of a deal.

“ByteDance will work in accordance with applicable laws to ensure TikTok remains available to American users through TikTok US,” a ByteDance spokesperson said.

The spokesperson thanked both presidents for “their efforts to preserve TikTok in the United States”.

Many US lawmakers – including some from within Trump’s own party – have expressed unease with the prospect of a deal, citing ongoing concerns about ByteDance’s links with the Chinese Communist Party, or CCP.

“I am concerned the reported licensing deal may involve ongoing reliance by the new TikTok on a ByteDance algorithm that could allow continued CCP control or influence,” Michigan Republican representative John Moolenar, chair of the House Select Committee on the Chinese Communist Party, said in a statement.

While Trump initially called for TikTok to be banned during his first term, he has changed course, and on Thursday said he viewed the platform as a key part of his 2024 electoral campaign.

In January, the US Supreme Court upheld a law first passed in early 2024, banning the app unless ByteDance divested from its US operations. The app went “dark” only briefly at the time, before the ban was delayed.

The US Department of Justice previously expressed concerns that TikTok’s access to the data of US users posed a national security threat of “immense depth and scale”.

The call between Xi and Trump is the second so far this year.

In June, the two leaders spoke to discuss China’s export of rare earth minerals, resulting in China agreeing to approve a “certain number” of export permits to US companies, as well as the magnets made from them.

Chinese and US officials have held four rounds of talks in recent months, and so far held off on implementing extremely high tariffs and strict export controls.

The US has already imposed 20% tariffs on some Chinese goods it says are linked to fentanyl trafficking.

Other thorny issues – including tech export restrictions and Chinese purchases of US agricultural products – so far remain unresolved.

In Foshan city, which has been hit the hardest, chikungunya patients must stay in hospital, where their beds will protected with mosquito nets. They can only be discharged after they test negative or at the end of a week-long stay.

Spread through the bite of an infected mosquito, the virus causes fever and severe joint pain, which sometimes can last for years.

Although rare in China, chikungunya outbreaks are common in South and South East Asia and parts of Africa.

How widespread are the infections in China?

Aside from Foshan, at least 12 other cities in the southern Guangdong province have reported infections. Nearly 3,000 cases were reported in the last week alone.

On Monday, Hong Kong reported its first case – a 12-year-old boy who developed fever, rash and joint pain after traveling to Foshan in July.

The virus is not contagious, and only spreads when an infected person is bitten by a mosquito that then goes on to bite others.

Officials say all the reported cases have been mild so far, with 95% of the patients discharged within seven days.

Still, the cases have led to some panic, given the virus is not widely known in the country.

“This is scary. The prolonged consequences sound very painful,” one user wrote on Chinese social media platform Weibo.

The US has urged travellers to China to exercise “increased caution” following the outbreak.

Authorities across Guangdong province have vowed to take “decisive and forceful measures” to stop the spread of the disease.

Those with symptoms, such as fever, joint pain or rashes, are being urged to visit the nearest hospital so they can be tested for the virus.

Authorities have instructed residents to remove stagnant water in their homes, such as in flowerpots, coffee machines or spare bottles – and warned of fines up to 10,000 yuan ($1,400) if they don’t do this.

They are also releasing giant “elephant mosquitoes” that can devour smaller, chikungunya-spreading bugs; and an army of mosquito-eating fish.

Last week, officials in Foshan released 5,000 of these larvae-eating fish into the city’s lakes. In parts of the city, they are even flying drones to detect sources of stagnant water.

Some neighbouring cities had ordered travellers from Foshan to undergo a 14-day home quarantine, but that has since been withdrawn.

Some people have compared these measures to those imposed during the pandemic, and questioned their necessity.

A user on Weibo wrote, “These feel so familiar… But are they really necessary?”

Another wrote: “What’s the point of the quarantine? It’s not as though an infected patient will then go around biting other people?”

China implemented severe restrictions during the pandemic, including forcing people into quarantine camps and sealing residential buildings and whole neighbourhoods on short notice for days or even weeks.

What is chikungunya?

Most people bitten by an infected mosquito will develop symptoms of chikungunya within three to seven days.

Apart from fever and joint pain, other symptoms include rash, headache, muscle pain and swollen joints.

In most cases, patients will feel better within a week. In severe cases however, the joint pain can last for months or even years.

Those at risk for more severe disease include newborns, the elderly, and people with underlying medical conditions, such as heart disease or diabetes.

There is no cure, but deaths from chikungunya are rare.

The virus was first identified in Tanzania in 1952. It then spread to other countries in sub-Saharan Africa and South East Asia.

To date, it has been reported in more than 110 countries.

The best way to prevent the virus from spreading is to reduce pools of stagnant water that allow the mosquitoes to breed, according to the World Health Organization.

• US President Donald Trump says the US has achieved a “total reset” in relations with China after both countries agreed to reduce tariffs on each other’s goods for 90 days
• US markets have surged after the deal between Washington and Beijing, a major de-escalation in their trade war
• Markets in the US are now trading at similar levels to the beginning of the year, our New York business reporter Natalie Sherman writes – marking a significant recovery since Trump announced his “Liberation Day” tariffs in April
• US tariffs on Chinese imports will fall from 145% to 30%, while Chinese tariffs on US goods will fall from 125% to 10%
• It is a bigger cut than expected, writes our correspondent Theo Leggett – but 30% is still a high tariff

Stocks jumping for companies with Chinese imports

Bob Doll, chief executive of Crossmark Global Investment, has been speaking to Michelle Fleury on Opening Bell about the stock market, where shares in companies that bring in goods from China are, unsurprisingly, surging.

Shares in Target, for example, have jumped more than 5%, while Nike is up more than 8%.

Oil prices and the dollar have risen too.

Despite the optimism on Wall Street this morning, Doll says the announcement does not completely clear up economic risks.

Businesses and households have had their confidence shaken, and the rise in tariff rates remains significant. Even the reduced 30% tariff rate could drive exports from China to the US down by more than a third, according to Macquarie Bank.

“From Liberation Day to now, uncertainty levels have moved up a lot and getting through that is not going to be simple,” Doll says. “My guess is, it’s not going to be a straight line up.”

Trump says he will ‘equalise’ drug prices between US and world

In addition to speaking on the tariff pause with China, Trump has been laying out his plans to reduce US drug prices and bring them in line with the rest of the world.

After explaining the vast differences in pharmaceutical prices that US patients pay compared to their counterparts in the UK, EU and other developed countries, he says “what we’re doing is equalising”.

He adds: “We’re all going to pay the same, we’re going to pay what Europe is going to pay.”

Trump also claims the US is going to pay the lowest price in the world, so “we’re no longer paying 10 times more than another country.”

US-China relations are ‘very good’ – Trumppublished at 16:1616:16

We can bring you a bit more now on Trump’s initial comments at the White House. He describes the relationship between the US and China as “very good”.

“We’re not looking to hurt China,” he says, adding that China was “being hurt very badly”.

“They were closing up factories. They were having a lot of unrest, and they were very happy to be able to do something with us.”

Trump goes on to say that his administration made a “great trade deal” with China, which was “a much bigger deal originally, and then they cancelled it right on the last day.”

As a reminder, the US will still apply a 30% tariff on Chinese goods during the 90-day pause agreed to by the two countries. US goods face a 10% tariff in China.

Trump says China has agreed to stop sending fentanyl to US

Trump says he’s charging China a 20% tariff rate “for the fact that they send fentanyl” into the US.

“And they’ve agreed they’re going to stop that,” Trump says.

He adds that “they’ll be rewarded by not having to pay … hundreds of billions of dollars in tariffs.”

China is the primary source of the precursor chemicals used to produce fentanyl, which killed over 74,000 Americans in 2023 after taking drug mixtures containing fentanyl, according to the US Centers for Disease Control (CDC), external.

Trump says ‘total reset’ reached with China after escalating trade war

Trump says his administration has achieved a “total reset with China” with the latest agreement, after weeks of an escalating trade war.

“The best part of the deal”, Trump adds, is that “China agreed to open itself up to American business”.

Trump adds the US has “opened” itself to Chinese imports but that “they didn’t open their country to us”.

“It never made sense to me. It’s not fair,” Trump says.

He also says China will “suspend and remove all of its non-monetary [trade] barriers”, but says that the deal still needs to be signed.

Trump says he will speak to Xi Jinping ‘maybe at the end of the week’

US President Donald Trump is now speaking at the White House.

Commenting on further negotiations related to the tariff agreement with China, Trump says he will speak to Chinese President Xi Jinping “maybe at the end of the week”.

We’ll bring you the key lines in our next few posts – you can also follow along by clicking Watch live at the top of the page.

Tariffs? What tariffs?

The stock market in the US is soaring this morning, a reflection of the outcome of US-China trade talks over the weekend, which yielded a much more significant drop in tariffs than many analysts had expected.

The S&P 500 is up roughly 2.6%, the Dow by about 2.5% and the Nasdaq by more than 3.3%.

The market had already recovered significant ground since 2 April, when Trump’s “Liberation Day” tariffs sparked turmoil.

In the US, the stock indexes are now trading at levels close to where they started the year.

US markets surge following US-China agreement

The bell has sounded on Wall Street and trading in the world’s biggest economy is now open.

Here’s where the three main indexes are on opening:

• S&P 500 – up 2.6%

• Nasdaq – up 3.3%
• Dow Jones – up 2.5%

Chinese companies expect more tariff changes

Companies in China are preparing for more tariffs down the line, despite the 90-day pause announced earlier today.

“To be honest, many Chinese companies no longer believe that tariffs will remain unchanged. For businesses, the best they can do is build a moat around their company before the next round of tariffs arrives,” said Elaine Li, head of Greater China at Atlas Ways, which offers services for Chinese enterprises’ global development.

Elaine Li told BBC Chinese that for many Chinese exporters, the latest tariff reductions are only temporary.

The rapid changes in tariffs led them to a more diversified global strategy, and they have already moved from getting orders passively to exploring international markets proactively. “It’s hard to wake someone who’s pretending to sleep, but it’s even harder to put someone to sleep when has just awakened.”

Uncertainty remains, says EU Chamber of Commerce in China

Reacting to the 90-day pause in US-China tariffs, the European Chamber of Commerce in China says while it’s “encouraged by the decision, uncertainty remains”.

“This is partly because certain tariffs have only been suspended for 90 days, and partly because of the erratic nature in which these tariffs were implemented in the first place,” it says in a statement.

It says it hopes to see both sides continue to engage in dialogue to “resolve differences, and avoid taking measures that will disrupt global trade and result in collateral damage for those caught in the cross-fire”.

‘Trump caves on China’, says Democratic lawmaker

California congressman Eric Swalwell, a Democrat, welcomed the Trump administration’s US-China trade agreement but still snuck in a diss.

“Just like I TOLD YOU. Trump caves on China,” Swalwell wrote on X, re-posting a previous post of his from April that said “Trump will cave on tariffs”.

He attributed the temporary reduction in tariffs to pressure from Democrats, without going into detail.

“Thank you! YOU went to the town halls and town squares. WE did this,” he says.

Earlier, US Treasury Secretary Scott Bessent announced that both China and the US would lower their reciprocal tariffs by 115 percentage points for 90 days from 14 May, after the two countries held talks in Switzerland at the weekend.

US stock markets to open shortly

In just under an hour, US stock markets will open, and our business editor Simon Jack says the S&P 500 is expected to open above the level it was the day before Trump’s “Liberation Day”.

As we reported earlier, global stock markets have welcomed news of the agreement between the US and China to pause tariffs for 90 days.

Hong Kong’s benchmark Hang Seng Index was still trading when the announcement was made, and jumped on the news, ending the day up 3%.

European stock markets also saw a boost following the announcement.

We’ll bring you the latest once trading in the US is under way.

Chinese exporter welcomes ‘pleasant surprise’ of US-China deal

“I’m glad sanity is back in style,” says Tat Kei, a Chinese exporter of personal care appliances to the US, whose factory employs 200 people in Shenzhen.

However, with the US still placing a 30% import tax on items arriving from China, he says prices will still rise for US customers, despite the tariffs truce.

Tat Kei’s still looking to move some production to south-east Asia.

“President Trump is going to be here for the next 3.5 years. I don’t think this is going to be the end of it…not by a long shot,” he says.

Tat Kei earlier spoke to the BBC World Service’s Business Dailyprogramme when the US and China were still engaging in tit-for-tat tariffs and most US-bound orders at his factories were cancelled.

White House says deal is ‘an extraordinary first step’

White House Press Secretary Karoline Leavitt tells Fox News that the latest US-China agreement on trade was “an extraordinary first step in the right direction”.

China also agreed to “continue having discussions” about further opening its market to US products and goods, Leavitt says, and to “continue seriously discussing the grave impact that Chinese produced fentanyl is having” in the US.

“President Trump will continue negotiations with China, so we can hopefully, inevitably get to a fair and comprehensive, big trade deal,” she adds.

US-China deal is full steam ahead for shipping companies

This weekend’s trade agreement between the US and China is certainly good news for shipping companies.

Remember, about 90% of global trade is moved by sea. Everything from clothes and toys to furniture and cars.

The extraordinary tariffs had led to a collapse in the amount of goods being moved across the Pacific Ocean but investors sense that will rebound and that will mean more profits.

Just two of the world’s five biggest shipping companies are traded on stock markets.

And the direction of travel is clear, five hours into the European trading day Denmark’s Maersk is up more than 11.5% whilst Germany’s Hapag-Lloyd is up more than 13.5%.

Both companies have welcomed the agreement with Maersk earlier saying “we hope it can lay the foundation for the parties to also reach a permanent deal that can create the long-term predictability our customers need”.

Meanwhile Hapag-Lloyd says its now expecting an increase in bookings on sailings from China to the US and that might mean it uses larger ships than it had otherwise planned.

How did we get here?

For those of you not steeped in global trade policy, here’s a brief timeline of the events that led up to the 90-day pause in tariffs between the US and China:

• 1 February: US President Donald Trump announces a 10% tariff rate on almost all Chinese goods entering the US
• 4 February:China responds with various tariffs of 10-15% on certain US products
• 4 March: Trump doubles the tariff rate on Chinese goods to 20%
• 2 April:The US announces a further 34% tariff rate on Chinese imports, bringing the total to 54%. China responds with a 34% tariff on most US goods
• 9 April: China says it will impose 84% tariffs on US goods from 10 April, up from 34%. Trump’s “reciprocal” tariffs come into force, with China’s tariffs revised to 84% – bringing the total to 104%. Trump later says tariffs on China will go up to 125%, which brings the total including the levy from February up to 145%
• 11 April: Beijing increases its tariffs on goods from the US up to 125% and says it won’t respond to further increases
• 12 May: The US and China announce a 90-day pause on “reciprocal” tariffs starting 14 May after holding trade talks in Switzerland. It will bring US tariffs on Chinese imports down from 145% to 30%, and Chinese tariffs on US goods will fall from 125% to 10%

What could the tariff deal mean for TikTok?

You may recall a law last year ordering TikTok’s Chinese parent company ByteDance to sell the app or see it banned in the US.

Since then President Trump has extended the deadline twice to June 2025, leaving everyone wondering what is actually going on.

The Chinese government would likely need to approve such a sale – which means it’s inevitable such a big sticking point between the US and China might have gotten muddled up in the trade talks.

Trump told NBC News in May there were people ready to buy the app – but his tariffs had limited China’s ability to do business with the US.

He said he believed TikTok would be a “very easy subject to solve” in a tariff deal.

So a 90 day pause on tariffs – and pledges to continue trade discussions – may help secure a TikTok sale.

US-China deal leaves Beijing ‘psychologically stronger’, says analyst

Despite the US and China calling this a joint agreement, people in Beijing will interpret it as the Trump administration walking back from the tariffs, says Janka Oertel, director of the Asia programme at the European Council on Foreign Relations.

“We are back to square one, now negotiating can begin. The outcome is uncertain but China is in a psychologically stronger position now than before,” Oertel says.

However, Oertel says “it’s not really a deal yet” without seeing details on fresh commitments from Beijing on key issues like market access or expanded imports of US goods.

What does this truce suggest about the future strategy of US tariffs?

That’s a question many will be pondering this morning as everyone digests the truce announcement between the world’s two biggest economies.

Economists at Deutsche Bank have suggested the lowering of tariffs, and last week’s UK-US deal on them, means there’s both “a likely cap and floor” to Trump’s rates of 10 to 30%.

“The UK has one of the least imbalanced relationships with the US and now has a universal tariff rate of 10%. China has one of the most imbalanced relationships and now has a tariff rate of 30,” says George Saravelos, head of FX research at the investment bank.

“It is reasonable that these two numbers now set the bounds of where American tariffs will end up this year, a material increase in visibility from just last week.”

• The US and China agree to slash tariffs on each other’s goods for 90 days in a major de-escalation of their trade war
• US Treasury Secretary Scott Bessent says both sides will cut tariffs by 115% from Wednesday
• It means US tariffs on Chinese imports will fall to 30%, while Chinese tariffs on US goods will fall to 10%
• It is a bigger cut than expected, writes our correspondent Theo Leggett – but 30% is still a high tariff
• Our correspondent in Beijing, Laura Bicker, says Chinese officials were becoming concerned at the impact of US tariffs. Bessent also acknowledged last month that the situation was unsustainable
• The breakthrough agreement comes after both sides held trade talks in Geneva over the weekend

US-China deal leaves Beijing ‘psychologically stronger’,

Despite the US and China calling this a joint agreement, people in Beijing will interpret it as the Trump administration walking back from the tariffs, says Janka Oertel, director of the Asia programme at the European Council on Foreign Relations.

“We are back to square one, now negotiating can begin. The outcome is uncertain but China is in a psychologically stronger position now than before,” Oertel says.

However, Oertel says “it’s not really a deal yet” without seeing details on fresh commitments from Beijing on key issues like market access or expanded imports of US goods.

What does this truce suggest about the future strategy of US tariffs?

That’s a question many will be pondering this morning as everyone digests the truce announcement between the world’s two biggest economies.

Economists at Deutsche Bank have suggested the lowering of tariffs, and last week’s UK-US deal on them, means there’s both “a likely cap and floor” to Trump’s rates of 10 to 30%.

“The UK has one of the least imbalanced relationships with the US and now has a universal tariff rate of 10%. China has one of the most imbalanced relationships and now has a tariff rate of 30,” says George Saravelos, head of FX research at the investment bank.

“It is reasonable that these two numbers now set the bounds of where American tariffs will end up this year, a material increase in visibility from just last week.”

World Trade Organization head welcomes ‘significant step forward’

It’s interesting that these talks between the US and China happened in Geneva.

Switzerland’s neutrality has long lent itself to helping solve major global problems and it is also home to the World Trade Organization (WTO) whose role is to draw up and enforce the rules of global trade.

I understand that head of the WTO, Dr Ngozi Okonjo-Iweala, has been following the talks closely and spoke to Chinese Vice Premier He after the weekend meeting.

In a statement she said she was “pleased with the positive outcome of the talks”, adding that they “mark a significant step forward and, we hope, bode well for the future”.

She underlined how important that is for the entire global economy. Discussions on how to reform the WTO so that’s it better suited to the modern global economy have been going on for some time.

The WTO has been warning that if the global economy were to split into two blocs it could result in a long-term reduction in global real GDP of nearly 7%.

Markets back above ‘liberation day’ level

The news that the US and China will roll back the majority of the swingeing tariffs imposed on each other, at least temporarily, has given stock markets a boost and seen the value of safe haven assets like gold fall.

The benchmark S&P 500 share index in the US is now expected to open above the level it was the day before Donald Trump rocked the world financial system with a universal tariff of 10% and very steep so-called reciprocal tariffs on high exporting countries in Asia.

The 90-day pause that was announced very quickly after markets – including the safe harbour of US government bonds – plunged saw markets recover just over half their losses.

Those losses in US shares will have been fully reversed if markets open in the US at the level they have been trading overnight in Asia.

But some investors are privately concerned that the bounce back in shares is overly optimistic given that trade still has, and will continue to have, significantly more friction, cost and risk.

Shipping giant says US-China deal is ‘a step in right direction’published at 12:1012:10Danish shipping giant Maersk says the US-China agreement to pause tariffs for 90 days is a step in the right direction.Shares in Maersk traded 12.9% higher as of 09:48 GMT (10:48 BST).The firm says it hopes the deal “can lay the foundation for the parties to also reach a permanent deal that can create the long-term predictability our customers need”.”Right now, our customers have gotten 90 days of clarity with reduced tariffs, and we are working hard to help them make the best use of this window,” it adds.

Danish shipping giant Maersk says the US-China agreement to pause tariffs for 90 days is a step in the right direction.

Shares in Maersk traded 12.9% higher as of 09:48 GMT (10:48 BST).

The firm says it hopes the deal “can lay the foundation for the parties to also reach a permanent deal that can create the long-term predictability our customers need”.

“Right now, our customers have gotten 90 days of clarity with reduced tariffs, and we are working hard to help them make the best use of this window,” it adds.

US-China agreement is a ‘pleasant surprise’ for markets

Stock markets have welcomed news of the agreement between the US and China as investors hope that a global trade war can be averted.

Hong Kong’s benchmark Hang Seng Index was still trading when the announcement was made, and jumped on the news, ending the day up 3%.

European stock markets are also higher and early indications are that the main US stock markets will open up by more than 2%.

Russ Mould, investment director at AJ Bell, says the agreement is “a major breakthrough” as far as investors are concerned and has been welcomed “with open arms”.

“Some people thought the best-case outcome from the weekend’s discussions would be an agreement to simply keep talks going,” he tells me.

“Therefore, to have reached an initial deal so quickly and one that rolls back tariffs by a large amount is a pleasant surprise.”

Oil prices jumped on hopes that global growth will be boosted by the tariff agreement, and the price of benchmark Brent crude rose more than 3% to $64.14 a barrel.

However, the price of gold fell 3% to $3,224.34 an ounce.

The disruption caused by President Trump’s tariffs has helped the gold price to rise in recent weeks as it is seen as a safer asset in times of uncertainty.

Are 90 days enough to address the long-term challenges?

Given the pace at which US President Donald Trump has upended the global economy with his trade war, 90 days might seem like a long time.

It certainly gives US and Chinese negotiators a chance to ease the tensions that have cast a shadow over the global economy since he returned to office in January.

However there were talks between the world’s two biggest economies for most of Trump’s first four-year term that brought limited success.

Eventually a “Phase One Trade Deal” was agreed in January 2020 where China pledged to boost US imports by $200bn above 2017 levels and strengthen intellectual property rules.

In return the US cut some tariffs. But China never manged to hits its purchasing targets – and there are still complaints about intellectual property protections.

On top of which, in the years that followed, both sides added restrictions on trade with each other.

The difficulty in overcoming their differences points to the more fundamental long-term conflict between the world’s two biggest economies.

China’s economy is run with a lot of government direction and that sits uneasily with America’s free market capitalism – and in particular the failings Trump has identified and is trying to address with his trade war.

What we’ve learned so far today about the US-China tariff deal

After months of tit-for-tat tariff measures, the US and China have announced a major reduction in levies against each other, albeit temporarily.

It marks a de-escalation of the ongoing trade war between the two countries. Here’s what we’ve learned so far today:

• Both sides are set to slash tariffs by 115% – with US tariffs on Chinese products falling to 30% and China’s reciprocal tariffs on the US falling to 10%

• The changes will take effect on Wednesday and continue for 90 days – allowing time for both sides to ease tensions through negotiations, our business reporter Jonathan Josephs writes
• Both sides have vowed to continue discussions on trade, with future talks to be held in either China, the US or a third country
• The announcement has given stock markets a boost following major losses after Trump’s initial “Liberation Day” tariff announcement
• The US tariff of 30% is still high, writes our international business correspondent Theo Leggett, but analysts say that the amount will be “manageable”

How tariffs have changed between the US and China

After multiple rounds of tit-for-tat tariffs, the US and China have agreed a deal that will significantly cut import tariffs both sides have imposed on one another for a 90-day period.

A look at the join statement from the US and China on trade

We’ve been looking at the joint statement released by the US and China after their trade meeting in Geneva. Here’s a summary of the deal:

• The 90-day pause will come into effect from Wednesday, with the US reducing tariffs on China to 30%, down from 145%. China will reduce duties on US goods to 10%, down from 125%

• Both countries will establish “a mechanism to continue discussions about economic and trade relations”, spearheaded by US Treasury Secretary Scott Bessent and China’s Vice premier He Lifeng
• Future talks may be held in China or the United States, the statement adds
• Both sides recognise the “importance of their bilateral economic and trade relationship to both countries and the global economy”
• They acknowledge the “importance of their bilateral economic and trade relationship to both countries and the global economy”
• The statement says both the US and China believe that “continued discussions have the potential to address the concerns of each side in their economic and trade relationship”
• It adds that talks will move forward in the “spirit of mutual opening, continued communication, cooperation, and mutual respect”

What are tariffs and how do they work?

As a reminder, tariffs are taxes charged on goods bought from other countries.

Typically, they are a percentage of a product’s value.

A10% tariff means a $10 product would have a $1 tax on top – taking the total cost to $11 (£8.35).

Companies that bring foreign goods into the US have to pay the tax to the government.

They may pass some or all of the extra cost on to customers. Firms may also decide to import fewer goods.

Some of the issues that the US and China might discuss

There is clearly a sense of optimism from both sides after this weekend’s talks in Geneva but there’s a lot of work to be done.

The 90-day tariff suspensions give the US and China more time to make progress, however, the list of US complaints is long.

President Trump has long been unhappy with the fact that the US buys substantially more goods from China than it sells it.

Other concerns include a lack of protection for the intellectual property rights of American companies in China including the forced transfer of technology.

There’s also unhappiness about alleged Chinese government subsidies that give their companies an unfair advantage – something Beijing says Washington also does.

And in some industries, like steel and aluminium production, those subsidies are argued to support excess manufacturing which drives global prices down, Beijing has also dismissed that argument.

Plus there are disagreements over regulations in industries ranging from food to cosmetics.

These differences have been years in the making so it’s difficult to see how all of them can be resolved by August but substantial progress would certainly ease tensions.

US dollar and Yuan up after deal agreed

The value of the US dollar and Chinese Yuan have both risen at the news of the suspension.

The dollar has risen in value against the pound, Euro and Japanese Yen.

The Yuan is also up against those three major currencies, as well as the dollar itself.

China was becoming concerned at the impact of US tariffs

China had maintained a defiant stance as US tariffs spiralled. It retaliated with its own steep levies and pledged that it would not back down.

This country can take the pain of an economic war with America – to an extent. It is the lead trade partner for more than 100 other countries.

But officials in Beijing have become increasingly concerned about the impact the tariffs could have on an economy that is already struggling to deal with a property crisis and high youth unemployment.

Factory output has already slowed and there are reports that some companies were having to lay off workers as production lines of goods bound for the US began to grind to a halt.

The commerce ministry said the agreement reached with the US is an important step to “resolve differences” and “lay the foundation to bridge differences and deepen cooperation”.

Such a positive statement from Beijing would have seemed inconceivable just a month ago.

There is a slight sting in the tail. The ministry ended its statement with a reminder of who it sees as being in the wrong.

“We hope the US. side will continue to work with China to thoroughly correct the practice of unilateral increases.”

A larger cut than expected – but 30% is still a high tariff

The tariff cut was bigger than expected – and that has been welcomed by analysts.

The current US tariff, at 30%, is still high – but has been described by analysts as “manageable”.

Some of the measures have only been paused, not cancelled.

But for the moment, today’s news is being seen as a welcome step forward.

China says tariff cuts in the ‘common interest of the world’

Some more updates from China now – its ministry of commerce says it hopes the US will “keep working with China” on trade.

It adds that tariff cuts are in the “common interest of the world”.

This deal will be welcomed internationally

As US Treasury Secretary Scott Bessent admitted this morning, the tariffs in place amounted to a de facto “trade embargo” between the world’s two biggest economies.

US tariffs on Chinese imports? 145%.

Chinese tariffs on the USA? 125%.

Those tariffs will now be reduced to more workable levels for an initial 90-day period. It’s a boost to the two protagonists involved.

But – in an interconnected world that continues to rely on strong US demand – this rapprochement will be welcomed internationally.

The rest of the world could not afford trade between the US and China to grind to a halt altogether.

Pause to begin on 14 May, with more talks planned

A joint statement on the deal confirms the 90-day pause will begin on 14 May.

It also says both countries will “establish a mechanism to continue discussions about economic and trade relations”.

Scott Bessent will represent the US, while vice premier He Lifeng will represent the Chinese government.

The further talks may be held in the US, China, or an agreed third-party nation.

US tariff on China falls to 30%, with fentanyl element still in place

After several months in which trade tensions between the US and China have escalated rapidly, this was the first sign of a thawing of relations, with the US delegation claiming they had found a constructive path forward.

Ahead of today’s announcement the US tariff on most Chinese imports stood at 145%. That will now be reduced to 30% for the next 90 days.

China has reduced its own duties on US goods from 125% to 10% for the same period.

The US measures still include an extra component aimed at putting pressure on Beijing to do more to curb the illegal trade in fentanyl, a powerful opioid drug.

But US officials said they had been positively surprised by the willingness of China to deal with the problem.

Stocks and oil prices rise at tariff news

In China, Hong Kong’s Hang Seng index has risen sharply at the tariffs announcement.

The index is up by 3.4% as of 08:30 BST (15:30 local time).

The UK’s FTSE 100 index is also up since opening at 08:00 BST, by 0.7%.

Oil prices have also risen, with the value of Brent Crude – a key indicator of oil prices generally – up by 2.8%.

US tariff on China was 145%

We’re waiting for more details on the new tariffs – but, as we’ve reported, Scott Bessent says each side will cut their tariffs by 115%.

The current US tariff on Chinese imports is 145% – while China charges a 125% tariff on some US goods.

So today’s news means the rates should fall to 30% and 10% – but we’re yet to see that confirmed.

China confirms suspension of ‘tariff countermeasures’ – reports

China’s commerce ministry confirms the suspension of “all tariff countermeasures” taken against the US since 2 April, Reuters reports.

Bessent: Tariffs to fall by 115%

Bessent says after “robust” discussions, the US and China have agreed a 90-day pause on “reciprocal” tariffs, meaning both sides will reduce their tariffs by 115%.

BREAKING NEWS: Treasury Secretary Scott Bessent announces China tariff pause

US Treasury Secretary Scott Bessent, speaking in Geneva, has just announced an agreement on tariffs between the US and China. We’ll have more details in our following posts.

After he resigned from the institute, the researcher, identified by his surname Liu, came up with a “carefully designed” plan to sell intelligence to foreign agencies, according to an article published on Wednesday by China’s Ministry of State Security.

The ministry did not name Liu’s former employer or the foreign groups that allegedly bought his material.

The announcement comes amid increasing warnings from China that its citizens are being co-opted by foreign entities to serve as spies.

“Desperadoes who want to take shortcuts to heaven will all suffer consequences,” the ministry said in Wednesday’s article.

Believing that he had been treated unfairly at the institute, Liu saved a large amount of classified material before he left, intending to use it for revenge and blackmail, the ministry stated.

He then joined an investment firm and, after failed investments drove him into debt, approached a foreign spy agency which got the material from him at a “very low price”, according to the ministry.

This agency subsequently cut off contact with Liu, the ministry added, and he tried to sell the information abroad.

“In half a year, he secretly travelled to many countries and seriously leaked our country’s secrets,” the article said.

Liu, who confessed after being arrested, has been stripped of political rights for life.

Beijing has been increasingly wary of espionage, and warned that its citizens are being recruited by foreign spy agencies trying to secure Chinese state secrets.

Last November, a former employee at a Chinese state agency was handed the death sentence after his USB work flash drive was allegedly seized by foreign spies and he became their “puppet”, according to Chinese authorities.

In February last year, Australian writer Yang Hengjun, known for blogging about human rights issues in China, was handed a suspended death sentence on espionage charges. That sentence was upheld,and Yang remains behind bars in China, despite Australian leaders calling for his release.

Concerns about Chinese influence and infiltration operations are also brewing among governments across the world, several of which have in recent years stepped up arrests of Chinese nationals on espionage charges.

All of them were dual citizens and their identities have been withheld, Canada’s foreign minister Mélanie Joly said.

A spokesperson for the Chinese embassy in Canada reportedly urged Ottawa to “stop making irresponsible remarks”, as pundits feared a further downturn in relations between the countries after years of strain.

China’s foreign ministry said on Thursday that it had acted “in accordance with the law”, while the embassy said there was “solid and sufficient” evidence for their crimes.

Beijing had “fully guaranteed the rights and interests of the Canadian nationals concerned”, the embassy said, urging Canada to respect “China’s judicial sovereignty”.

China does not recognise dual citizenship and takes a tough stance on drug crimes. However, it’s rare for the death penalty to be carried out on foreigners.

Joly said she had been following the cases “very closely” for months and had tried with other officials, including former prime minister Justin Trudeau, to stop the executions.

In a statement to Canadian media, Global Affairs Canada spokesperson Charlotte MacLeod said Canada had “repeatedly called for clemency for these individuals at the senior-most levels and remains steadfast in its opposition to the use of the death penalty in all cases, everywhere”.

China imposes the death penalty on serious crimes including those related to drugs, corruption and espionage. While the number of executions are kept secret, human rights groups believe China has one of the highest execution rates in the world.

“These shocking and inhumane executions of Canadian citizens by Chinese authorities should be a wake-up call for Canada,” said Ketty Nivyabandi from Amnesty International Canada. “We are devastated for the families of the victims, and we hold them in our hearts as they try to process the unimaginable.”

“Our thoughts also go to the loved ones of Canadian citizens whom China is holding on death row or whose whereabouts in the Chinese prison system are unknown.”

In 2019, Canadian national Robert Lloyd Schellenberg was sentenced to death in China for drug smuggling, in a high-profile case condemned by the Canadian government. He was not among the Canadians that were executed.

“We’ll continue to not only strongly condemn but also ask for leniency for other Canadians that are facing similar situations,” Joly said on Wednesday.

Relations between Canada and China have been icy since 2018 after Canada detained a Chinese telecom executive, Meng Wanzhou, on a US extradition request. China arrested two Canadians shortly afterwards, both of whom have now been released.

In 2023, Canadian media released reports, many based on leaked intelligence, about detailed claims of Chinese meddling in the country’s federal elections. China denied the reports, calling them “baseless and defamatory”.

More recently, China imposed retaliatory tariffs on some Canadian farm and food imports after Ottawa levied Chinese electric vehicles, steel and aluminium.

Beijing is going on a spending spree that will encourage Chinese people to crack open their wallets.

Simply put, they are not spending enough.

Monday brought some positive news. Official data said retail sales grew 4% in the first two months of 2025, a positive sign for consumption data. But, with a few exceptions like Shanghai aside, new and existing home prices continued to decline compared to last year.

While the US and other major powers have struggled with post-Covid inflation, China is experiencing the opposite: deflation – when the rate of inflation falls below zero, meaning that prices decrease. In China, prices fell for 18 months in a row in the past two years.

Prices dropping might sound like good news for consumers. But a persistent decline in consumption – a measure of what households buy – signals deeper economic trouble. When people stop spending, businesses cut prices to attract buyers. The more this happens, the less money they make, hiring slows, wages stagnate and economic momentum grinds to a halt.

That is a cycle China wants to avoid, given it’s already battling sluggish growth in the wake of a prolonged crisis in the property market, steep government debt and unemployment.

The cause of low consumption is straightforward: Chinese consumers either don’t have enough money or don’t feel confident enough about their future to spend it.

But their reluctance comes at a critical moment. With the economy aiming to grow at 5% this year, boosting consumption is a top priority for President Xi Jinping. He is hoping that rising domestic consumption will absorb the blow US tariffs will inflict on Chinese exports.

So, will Beijing’s plan work?

To tackle its ailing economy and weak domestic demand, Beijing wrapped up its annual National People’s Congress last week with increased investment in social welfare programmes as part of its grand economic plan for 2025.

Then came this week’s announcement with bigger promises, such as employment support plans, but scant details.

Some say it is a welcome move, with the caveat that China’s leaders need to do more to step up support. Still, it signals Beijing’s awareness of the changes needed for a stronger Chinese consumer market – higher wages, a stronger social safety net and policies that make people feel secure enough to spend rather than save.

A quarter of China’s labour force is made up of low-paid migrant workers, who lack full access to urban social benefits. This makes them particularly vulnerable during periods of economic uncertainty, such as the Covid-19 pandemic.

Rising wages during the 2010s masked some of these problems, with average incomes growing by around 10% annually. But as wage growth slowed in the 2020s, savings once again became a lifeline.

The Chinese government, however, has been slow to expand social benefits, focusing instead on boosting consumption through short-term measures, such as trade-in programmes for household appliances and electronics. But that has not addressed a root problem, says Gerard DiPippo, a senior researcher at the Rand think tank: “Household incomes are lower, and savings are higher”.

The near-collapse of the property market has also made Chinese consumers more risk-averse, leading them to cut back on spending.

“The property market matters not only for real economic activity but also for household sentiment, since Chinese households have invested so much of their wealth in their homes,” Mr DiPippo says. “I don’t think China’s consumption will fully recover until it’s clear that the property sector has bottomed out and therefore many households’ primary assets are starting to recover.”

Some analysts are encouraged by Beijing’s seriousness in targeting longer-term challenges like falling birth rates as more young couples opt out of the costs of parenthood.

A 2024 study by Chinese think tank YuWa estimated that raising a child to adulthood in China costs 6.8 times the country’s GDP per capita – among the highest in the world, compared to the US (4.1), Japan (4.3) and Germany (3.6).

These financial pressures have only reinforced a deeply ingrained saving culture. Even in a struggling economy, Chinese households managed to save 32% of their disposable income in 2024.

That’s not too surprising in China, where consumption has never been particularly high. To put this in perspective, domestic consumption drives more than 80% of growth in the US and UK, and about 70% in India. China’s share has typically ranged between 50% to 55% over the past decade.

But this wasn’t really a problem – until now.

There was a time when Chinese shoppers joked about the irresistible allure of e-commerce deals, calling themselves “hand-choppers” – only chopping off their hands could stop them from hitting the checkout button.

As rising incomes fuelled their spending power, 11 November in China, or Double 11, came to be crowned as the world’s busiest shopping day. Explosive sales pulled in over 410 billion yuan ($57bn; £44bn) in just 24 hours in 2019.

But the last one “was a dud,” a Beijing-based coffee bean online seller told the BBC. “If anything, it caused more trouble than it was worth.”

Chinese consumers have grown frugal since the pandemic, and this caution has persisted even after restrictions were lifted in late 2022.

That’s the year Alibaba and JD.com stopped publishing their sales figures, a significant shift for companies that once headlined their record-breaking revenues. A source familiar with the matter told the BBC that Chinese authorities cautioned platforms against releasing numbers, fearing that underwhelming results could further dent consumer confidence.

The spending crunch has even hit high-end brands – last year, LVMH, Burberry and Richemont all reported sales declines in China, once a backbone of the global luxury market.

On RedNote, a Chinese social media app, posts tagged with “consumption downgrade” have racked up more than a billion views in recent months. Users are swapping tips on how to replace expensive purchases with budget-friendly alternatives. “Tiger Balm is the new coffee,” said one user, while another quipped, “I apply perfume between my nose and lips now – saving it just for myself.”

Even at its peak, China’s consumer boom was never a match for its exports. Trade was also the focus of generous state-backed investment in highways, ports and special economic zones. China relied on low-wage workers and high household savings, which fuelled growth but left consumers with limited disposable income.

But now, as geopolitical uncertainties grow, countries are diversifying supply chains away from China, reducing reliance on Chinese exports. Local governments are burdened by debt, after years of borrowing heavily to invest, particularly in infrastructure.

Xi Jinping has already vowed “to make domestic demand the main driving force and stabilising anchor of growth”. Caiyun Wang, a National People’s Congress representative, said, “With a population of 1.4 billion, even a 1% rise in demand creates a market of 14 million people.”

But there’s a catch in Beijing’s plan.

For consumption to drive growth, many analysts say, the Chinese Communist Party would have to restore the consumer confidence of a generation of Covid graduates that is struggling to own a home or find a job. It would also require triggering a cultural shift, from saving to spending.

“China’s extraordinarily low consumption level is not an accident,” according to Michael Pettis, a senior fellow at the Carnegie Endowment for International Peace. “It is fundamental to the country’s economic growth model, around which three-four decades of political, financial, legal and business institutions in China have evolved. Changing this won’t be easy.”

The more households spend, the less there is in the pool of savings that China’s state-controlled banks rely on to fund key industries – currently that includes AI and innovative tech that would give Beijing an edge over Washington, both economically and strategically.

That is why some analysts doubt that China’s leaders want to create a consumer-driven economy.

“One way to think about this is that Beijing’s primary goal is not to enhance the welfare of Chinese households, but rather the welfare of the Chinese nation,” David Lubin, a research fellow at Chatham House wrote.

Shifting power from the state to the individual may not be what Beijing wants.

China’s leaders did do that in the past, when they began trading with the world, encouraging businesses and inviting foreign investment. And it transformed their economy. But the question is whether Xi Jinping wants to do that again.