Trump loyalist, US senator Steve Daines, has made the first trip by a US politician to the PRC since Trump’s inauguration. He met Premier Li Qiang 李强 on 22 March. Talks focused on trade tensions and cooperation in curbing the US fentanyl crisis, and may have touched on a TikTok deal. The platform faces forced sale to US interests on 5 April.
USTR Jamieson Greer followed up with an introductory videoconference on 26 March with Vice Premier He Lifeng 何立峰. Are these moves paving the way for a Trump-Xi summit?
In a press conference during the Two Sessions, foreign minister Wang Yi 王毅 burnished Beijing's role as provider of global stability and champion of (genuine) multilateralism.
Visiting Japan, Wang met with PM Shigeru Ishiba, FM Takeshi Iwaya, and the secretary-general of Japan’s National Security Secretariat Masataka Okano. The meetings, along with the Sixth China–Japan high-level economic dialogue, the first since 2019, hint at a thaw in relations, noticeable since late 2024.
A PRC naval task force concluded a three-week voyage around Australia on 7 March. Including live-fire drills near Sydney and surveillance of sensitive military bases. The incident has fuelled debate about the PRC’s growing presence in the Pacific and Australia’s strategic vulnerabilities.
Two Sessions: little surprise
Held in Beijing 5–12 March 2025, the Two Sessions GWR (Government Work Report) delivered by Premier Li Qiang 李强, projected 5 percent GDP growth in 2025, echoing 2024. Boosting consumption now moves to top billing, yet only moderate fiscal expansion was promised.
The deficit will reach 4 percent of GDP (C¥3.9 tn, ~US$546 bn), a full percentage point higher than the previous limit. A goods trade-in and equipment renewal program launched early 2024 will see its funding doubled from C¥150 to C¥300 bn (～US$43 billion), covering expanded categories of goods: think big transport (ships and trains).
Moderate expansion of the central fiscal state continues. Most notable is Beijing’s action to strengthen scitech financing. A C¥1 tn state guidance fund to feed venture capital is to be set up, a pillar of scitech self-reliance, says Zheng Shanjie 郑栅洁 NDRC (National Development and Reform Commission) head.
Financial regulators and the PBoC (People’s Bank of China) will meanwhile launch a technology board for the bond market. Open to firms and financiers, its message is clear: finance is to serve innovation and Beijing is willing to spend to get it done.
Beijing continues to champion AI+. A SASAC press conference noted CSOEs are integrating AI into 500 use cases, leveraging the centre's firm hold over core industries like telecoms and transport.
This comes as the leadership worries about race-to-the bottom 'involuted' competition. Premier Li raised it in his GWR. A 19 March MIIT meeting set industry regulators to crack down on it.
trade and demand slow
January and February 2025 saw PRC trade starting more slowly than expected. Exports rose 2.3 percent over 2024; imports fell 8.4. Domestic demand remains sluggish, placing Beijing under greater pressure to boost consumption.
Trade tensions heated up in March, not least with the US and Canada. Given a further 10 percent US tariff levied on PRC imports, Beijing retaliated, raising duties on US ag products and sanctioning US firms. In a first for MofCOM, certain US optical fibre imports were probed for circumventing duty. Exporters, cited the investigation, finagled their products’ substitutability with similar ones already subject to anti-dumping duties. Beijing’s response to these second-wave US trade restrictions remained targeted and even-handed, echoing earlier urging of restraint by trade pundits.
Against Canada’s 2024 duties on PRC EVs, batteries and steel and aluminium products, Beijing retaliated under its first ‘anti-discrimination investigation’ of certain ag product. And pointedly against canola (see below).
PRC–US economic cooperation remains possible, given clearly defined economic security, and cooperation sought outside of areas of ‘core security concern.’ So argues Sun Lipeng 孙立鹏, CICIR Institute of American Studies. Rivalry now reaches beyond trade and scitech, adds Sun, into such areas as industry, finance, security, geopolitics and shipping. State media criticism of Hong Kong-based and Li Ka Shing-owned, CK Hutchison's sale of its overseas ports to BlackRock is a recent case.
Trump’s drastic measures may speed up US recession, warns Liu Yuanchun 刘元春 Shanghai University of Finance and Economics president. This, in turn, threatens backlash, deserving of Beijing’s close attention and ‘tactful policy coordination’.
Doubling down on existing trade and investment priorities, the GWR heralded more support for offshore trade, and financing aid for firms. More help for those hit by tariff hikes, and more policy rollout in digital trade, is proposed by Tu Xinquan 屠新泉 UIBE WTO Research Institute, in the form of rules reform, digital trade hub pilots, export tax rebates on digital services, etc.
Other trade moves in March include
- MofCOM announced four draft standards on the digital economy
- 2024 overseas direct investment audit, the first under new reporting rules, has been brought forward
- MofCOM is reportedly mulling measures to help struggling exporters pivot to the domestic market
- including support in trade fairs, sales, standards and payments
- new State Council 'Opinion' urges stricter compliance of PRC trade policy with its WTO commitments
green energy market
The GEC (green electricity certificate) market was clarified by the National Energy Authority, spurring further investment in new energy after recent pricing changes in renewable energy. 2027 is the deadline for a solid market trade system and use plan, with a substantial rise in GEC trading by 2030. It currently suffers from transaction volumes and GEC prices too low to provide real financial support for renewable projects.
Canadian canola driven out of market
The 2025 GWR reiterated the usual agricultural mantras: stabilising grain acreages, raising per-unit yields, and boosting oilseed outputs, above all soybeans, to reduce reliance on imported feed.
Beef market pressures worsened. Wholesale prices fell 25.7 percent year-on-year to C¥57.32/kg in mid-March. Despite an 11.3 percent drop in January-February imports, excess volumes are still blamed for the slump. A safeguard hearing on beef imports is set for 31 March.
Trade friction with Canada kept rising. On 20 March, Beijing imposed 100 percent tariffs on Canadian canola oil, meal, and peas, and 25 percent on seafood and pork. This sharpens market disruption for canola meal: Canada supplied 74 percent of PRC imports and 45 percent of total domestic supply. Combined with an ongoing anti-dumping probe into Canadian canola seed, supply is likely to tighten.
embodied intelligence
With new funding onstream to grow 'future industries', localities are investing tens of billions in ‘embodied intelligence’ (jùshēn zhìnéng 具身智能, i.e. AI systems integrated with physical entities, such as robots). The Two Sessions listed this alongside bio-manufacturing, quantum technology and 6G.
The GWR urges that US dominance of commercial aerospace needs to be broken. A fifth batch of satellites was launched for the 'Qianfan' constellation, designed to rival Starlink. Preparing for its use, Beijing is helping coordinate frequencies and orbital resources.
Promoting 'AI+' manufacturing, digital agents and IP financing, trials in March underline the state's push for firms to lead national scitech research.
carbon market covers more major emitters
The carbon market officially expanded to include steel, cement, and aluminum. But an emissions cap has yet to be introduced.
the PRC Voluntary Carbon Market also registered its first batch of CCERs (Certified Voluntary Emission Reductions), since its official launch in January 2024. Of the 78 projects announced in 2024, 14 were approved, representing a total of 57.32 million tonnes of anticipated emission reductions. The approved projects include offshore wind and solar and thermal power.
Reducing energy intensity (measured as energy consumption per unit of GDP) by 3 percent in 2025 is a GWR goal. Under revised calculation methods that exclude non-fossil energy and raw material consumption, this target is set to align with the 14th 5-year plan objective of a 13.5 percent reduction in energy intensity over the plan’s duration.
private sector protection
The GWR added two extra bills to the 5-year legislative plan in 2025
- formulating a Financial Law
- modifying the Food Safety Law
A move to boost support for the private sector was a popular topic. Delegates sought to reinforce the Private Economic Protection Law. Zhang Qiaoliang 张巧良, Shandong Kangqiao Law Firm proposed a 'private economy legislation index'. It would quantify legal effectiveness, enforcement fairness, judicial performance and property rights protection. Lawful investigation of private entities was urged, forestalling rent-seeking. Our negative corollary lens tells us rent-seeking and unlawful investigations must be on the rise.
education... more STEM
Nurturing STEM talent and aligning campus curricula with industry and innovation needs was again prioritised in the Two Sessions and in State Council initiatives to rescue consumption. More ‘double-first class’ universities (e.g. Tsinghua and Peking) are adding undergrad admission slots in strategic emerging industry fields like AI and new energy.
Ministry of Education followed up in its spring employment promotion to students with a ‘Double Thousand Plan’, to upskill graduates and target future industries, strategic emerging sectors, traditional industry transformation, digital economy, green economy, low-altitude economy and essential public services. Healthcare was more prominent in the Two Sessions; the industry is anticipating more IPO relaxation for biotech.