macroeconomy: worst-case planning
April 2025 saw a new heavyweight stimulus deployed cautiously in the face of chaotic US tariffs. A 25 April Politburo meeting urged strengthened ‘baseline thinking’ in fiscal and monetary planning. This will be embodied in stepped-up bond issuance, citing unused fiscal capacity from earlier plans (less than 28 percent of planned bond financing was completed in Q1). Beyond the existing 'Two New' stimulus, increasing consumption remained a key priority, with a likely future push to raise consumption in the service economy.
Stability and targeted support were major topics of a State Council executive meeting to shore up employment, above all through services and tourism. Market confidence was the point of a PBoC stock buyback relending facility, which gained momentum. A measured approach prevails for now, utilising existing tools and addressing specific areas. Existing policies and new measures informed by the recent State Council meeting will be rolled out unusually quickly in Q2, according to Zhao Chenxin 赵辰昕 Deputy Director NDRC, at a press conference.
trade: PRC e-commerce loses its shein
As firms frontload shipping ahead of further tariff hikes, PRC exports spiked 12.4 percent in March y-o-y, with notable double-digit upticks to ASEAN, Africa and India. Imports remain sluggish, falling 4.3 percent, leaving a sizable trade surplus of some US$103 bn.
Trade tensions with the US went ballistic, with several rounds of retaliation resulting in a 145 percent US tariff on PRC goods and 125 percent in return on US goods at time of writing. Packages valued below US$800 (de minimis exemption) will now face a 120 percent duty, dealing a blow to the likes of Shein and Temu. Some two-thirds of de minimis shipments to the US originate from the PRC. Conflicting reports on tariff carve-outs and the status of negotiations further muddied the waters and added uncertainty, not to mention entropy.
In response to Trump 2.0's sweeping April tariffs, Beijing eased its earlier restraint, resorting to tit-for-tat tariffs, export controls on rare earths, sanctions on select US firms and an anti-dumping probe. Without negating this stance, Paul Chan, Hong Kong 陈茂波 Financial Secretary, reaffirmed that the city, with its free port status, would not mirror Beijing, hinting at a window remaining for the PRC to import US wares at lighter tariffs.
Endorsing Beijing’s tit-for-tat stance, Huo Jianguo 霍建国 Chinese Academy of International Trade and Economic Cooperation former president hopes to blunt Trump’s aggression by Beijing imposing tariff-driven inflation. Remain open to negotiations, urges Huo, building a broader coalition to put pressure on US unilateralism. Echoing ideas first heard in 2019, Xing Ziqiang 邢自强 Morgan Stanley China advises boldly boosting trade in response: slashing tariffs, market access barriers and industry subsidies. Beijing notably stepped up opening rhetoric in April, with
- a MofCOM work plan extending service sector pilots to a further nine cities, with faster uptake of newly assigned tasks
- an NDRC campaign cleaning up dozens of domestic market barriers
- a joint CPC Central Committee and State Council opinion liberalising some sci-tech, medicine, financial and professional services in FTZs (free trade zones)
- a PBoC action plan supporting and enhancing cross-border financial services and products
- backing RMB settlement for PRC state-owned and private firms going global
Other trade developments this month include
- tax refunds made easier for tourists: minimum spend reduced to C¥200 and cash-back limit raised to C¥20,000
- an e-commerce memorandum and an economic partnership agreement on manufacturing and farming cooperation signed with Kenya
energy: electricity policy powers ahead
Power delivery continues to reform. NDRC and National Energy Administration (NEA) issued 'Electric power auxiliary service market basic rules'. At the same time, NEA released new Guiding Opinions on virtual power plants (VPPs): linked networks distributing energy, designed to support grid peak demand. The Opinions set out goals, directions, and specific tasks to guide VPP expansion in the 15th five-year plan. NDRC and three other central agencies announced the first batch of large-scale V2G (vehicle-to-grid) pilots on 2 April 2025. The aim is to make NEVs a key component of its energy storage and grid balancing systems by 2030. NDRC and NEA issued Notice accelerating building the electricity spot market, providing a new timeline for specific regional pilots.
Meanwhile, the Green Electricity Certificate (GEC) market stays on a 2024 trajectory that reportedly saw growth in issuance and entities taking part. The NEA has accordingly launched a GEC ‘write-off’ mechanism to prevent double-counting of environmental benefits and improve alignment with other policy.
Upgrades to the coal-fired power complex got a rollout plan on 9 April, following a National Coal Association forecast of PRC coal consumption peaking by 2028. Emissions from new and upgraded plants are to be reduced by 10–20 percent from 2024 levels. Despite ongoing commitments to strictly limit new coal power projects, approvals and construction have stepped up sharply since 2022. A minor competitor to coal, nuclear power project investment reached a record high in 2024 at C¥147 billion. State Council approved another 10 units.
agriculture: vision to lead globe in sustainable ag
Plans were unveiled to build the PRC into an agricultural powerhouse 2024–35. Grain output is to stabilise at 700 million tonnes by 2027, rural revitalisation to be complete by 2035, and PRC sustainable ag practice to lead the globe by mid-century. The plan, which sets three-phase targets, fuses food security, tech breakthrough and rural–urban integration. The stubborn ‘big country, smallholder’ dilemma is targeted. Rural financial system reform is needed, but structural credit frictions, plus credit data gaps and risk management hurdles, may still constrain rollout.
Q1 grain and protein output remained stable, reinforcing domestic supply resilience. Grain imports plunged 40.8 percent year-on-year as trade controls tightened. Soybean imports fell to a 17-year low in March, with a rebound anticipated in Q2. A deepening pivot toward Brazil, catalysed by the tariff kickboxing match with the US, is evident. Premium beef supply gaps, due to pricing out of US imports, make for longer-term pressures to upgrade domestic production.
scitech: XI looks through smart lenses
An inspection tour of Shanghai burnished Xi’s support for AI. Smiling on young tech workers and trying on a pair of smart glasses at an incubator, he highlighted the city’s hopes of becoming a hub for global innovation and a magnet for talent. A Politburo study session hailed AI as a growth driver. Xi foresees a nationwide system boasting real-world applications, self-reliance, and constant innovation.
Other regions claim merit in the AI age. Guangdong would groom itself as a robot hub. Dongguan favours smart manufacturing, slipstreaming on Shenzhen’s tech skills. Hangzhou’s 'AI+' scheme focuses on efficient power distribution in its big electric vehicle (EV) base, addressing digital needs of conventional industry.
Tariffs have left the tech industry unfazed. Diversifying operations in Southeast Asia since Trump's first term, manufacturers are unlikely to change their current supply chains. Hong Kong has risen as a transit hub for tech firms expanding into new markets in ASEAN and the Middle East.
environment: just-in-time NDCs
Xi Jinping told a Climate and Fair Transition Summit that national determined contributions (NDCs) will arrive in time for the next UN climate conference in Belém, Brazil (November 2025). He added that the NDCs will apply nationally by 2035, covering all greenhouse gases, re-committing to green transition and multilateral climate action. Emissions control will be ‘total’ in the wake of ‘peak carbon’ to be reached in 2030.
The PRC environment regulator launched EIA (environmental impact assessment) regs for new pollutants in six major industries, not least petrochemicals, pharmaceuticals and pesticides. Relevant ‘Opinions’ restrict new projects from going ahead unless they meet requirements for new pollutants, control of which must be factored into discharge permits.
governance: downward spiral
Dramatic personnel shifts have prompted more than the usual offshore speculation about power shifts. Former heads of the top anti-corruption and internal control bodies, Li Ganjie 李干杰 at the United Front and Shi Taifeng 石泰峰 at the Central Organisation Department swapped seats. Organisation Dept. officials are assumed to be leaders in waiting, many ascending to the Politburo Standing Committee. Li’s position swap with Shi is hence deemed a demotion, linked to the expulsion from the CPC of Li Gang 李刚, former leader of the CCDI–NSC group in the Central Organisation Department.
The judiciary issued new interpretations of criminal IP cases, with tougher penalties. While lowering the threshold for conviction in cases of patent and reproduction fraud, it increased the upper limit of criminal fines from five to ten times the cash value of illegal gains.
education and health: AI tops new education majors
AI digitisation and boosting health consumption were themes this month. AI applied in education and healthcare was headlined at a national education digitisation conclave, and in a pharma industry digital transformation plan. AI again stole the show as the most favoured in a new round of university major adjustments.
With the wildly uncertain and threatening US tariff policy, alternative routes for PRC innovative drugs and medical devices are sought. Further opening and collaboration with other countries are key. Medical pilot zones will be ‘opened’ further nationwide. South Asia became a hotspot for PRC high-level visits and collaborations in education and healthcare.
geopol: new security model for Asia
With the escalating trade war with Washington, Beijing hopes to mend fences with neighbours. A Central Conference on Work Relating to Neighbouring Countries was held in Beijing 8-9 April, with the Politburo Standing Committee in full attendance. Xi Jinping proposed the ‘model of security for Asia’ (亚洲安全模式), referring to a security model for Asia featuring ‘sharing weal and woe, seeking common ground while shelving differences, and prioritising dialogue and consultation’.
To this end, Xi visited Vietnam, Malaysia, and Cambodia 15-18 April, signing cooperation agreements spanning areas such as AI, railway cooperation, development assistance, healthcare, agriculture, and media; external reporting noted little in the way of positive response beyond formalities.