Speaking at the “1+10 Dialogue” in Beijing on Tuesday—an event attended by the heads of the IMF, World Bank, WTO, OECD, and other global economic bodies—Li warned that escalating tariffs and trade restrictions were undermining global growth. He stressed that the world is facing increasingly “mutually destructive” consequences from tit-for-tat levies.
“Since the beginning of the year, the threat of tariffs has loomed over the global economy,” Li said. “The calls to uphold free trade are growing ever stronger.”
Global Pushback Widens Beyond the U.S.
While China has long been locked in trade tensions with the United States, pressure is now broadening to Europe and other major economies. These governments argue that China must do more to shift away from its heavily export-driven model and strengthen domestic demand to ease global imbalances.
French President Emmanuel Macron, during a state visit last week, said he directly warned Beijing that the EU could impose more tariffs. His comments came as the European Commission rolled out new plans to safeguard Europe’s industrial resilience against strategic dependencies and import surges.
Economists say Washington’s tariff hikes—first under Trump, now expanded during his renewed presidency—have triggered global disruptions. But they also contend that China’s resistance to structural reforms leaves many countries with limited policy options.
“China is not taking any action… I don’t see China caring about all of these visiting officials,” said Alicia Garcia-Herrero of the Bruegel think tank, arguing that Beijing’s export-heavy strategy now accounts for nearly 40% of global growth in 2025—an unusually high figure given China’s own robust expansion.
Exports Shift as Countries Raise Barriers
Monday’s data showed that China’s efforts to redirect exports since Trump’s 2024 election victory are paying off. With steep U.S. tariffs in place, Chinese goods are increasingly moving to Europe, Australia, and Southeast Asia, raising competitive pressures in those markets.
“Tariffs distort trade flows but don’t fix fundamental imbalances,” noted Fred Neumann, HSBC’s chief economist for Asia-Pacific. He said China’s surplus is a symptom of deeper structural dependence on foreign demand.
Domestic Demand Still Weak—and the World Is Losing Patience
Chinese leaders say they remain committed to reducing reliance on credit-driven industrial output and have promised new measures to boost consumption. Yet analysts argue that policy signals still point to Beijing’s longstanding “production-first” strategy, with little urgency to shift toward household spending.
“So far, there are no signs that Trump’s tariffs have tamed China’s export juggernaut,” wrote Brad Setser of the Council on Foreign Relations. China has now posted more than six monthly surpluses above $100 billion since Trump returned to office, compared with only one such month in 2024.
HSBC’s Neumann warned that without stronger domestic demand in China, countries overwhelmed by import competition may resort to further protectionist measures to shield their industries—deepening global trade fragmentation.
Mounting Diplomatic Outreach
Amid these tensions, a steady stream of world leaders—including Macron, Spain’s King Felipe, and German cabinet ministers—have visited Beijing in recent weeks. Their message, analysts say, is unified: China must adjust its economic model before the global trading system comes under even heavier strain.
“I think countries are starting to ask, ‘What instruments do we have to stop this?’” Garcia-Herrero said. “The pressure is mounting, and China is not ready to respond.”
For now, with China on track for about 5% growth in 2025, policymakers appear unlikely to pursue major stimulus, favouring infrastructure spending over household-driven reforms. But as trade tensions intensify, Beijing’s next moves will be crucial in shaping the global economic landscape.