[WORLD] As the US-China trade war intensifies in 2025, Chinese citizens are experiencing the ripple effects firsthand. From rising consumer prices to job insecurities and economic uncertainty, the tariffs have begun to erode public confidence and disrupt daily life across the country.
Economic Pressures on Households
The Chinese government has introduced stimulus measures, such as a 300 billion yuan ($42 billion) subsidy program encouraging purchases of new appliances and vehicles through trade-ins. While over 34 million consumers participated, generating sales worth 174.5 billion yuan in the first four months of 2025, economists argue that such short-term incentives are insufficient to rebalance China’s economy, which has long been centered on manufacturing and investment. Structural challenges, including limited social safety nets, low wages, income stagnation, deflation, and high youth unemployment, continue to suppress consumer confidence and spending.
Despite calls for change, President Xi Jinping remains focused on strengthening manufacturing, especially in high-tech sectors, and is cautious about expansive welfare measures. This cautious stance may limit the effectiveness of policies aimed at stimulating consumer-driven growth.
Manufacturing Sector Faces Challenges
Chinese manufacturers are grappling with the renewed tariffs, which have significantly squeezed profit margins. For instance, a factory owner producing cast-iron bathtubs reported a 15% margin loss, while another in Shenzhen, who borrowed 2 million yuan to upgrade facilities, now faces a 40% decline in orders and struggles with mounting debts.
Some exporters have attempted to relocate production to Southeast Asia to evade US tariffs. However, the introduction of "worldwide" tariffs by the US has undercut this strategy, leaving many businesses with limited options.
Impact on Real Estate Market
China's property sector is expected to remain weak in 2025, with home prices projected to fall by 4.8%, according to a Reuters poll of 12 analysts conducted in May. This marks a downward revision from a previous forecast of a 2.5% decline earlier in the year. Analysts now expect prices to stay flat in 2026, rather than post modest growth. Contributing to the prolonged downturn are factors such as oversupply, low buyer confidence, high developer debt, and weak economic conditions. Adding to the sector's challenges are escalating trade tensions between China and the U.S., which are dampening economic growth and buyer sentiment. Reuters
Public Sentiment and Trust Erosion
A 2024 survey revealed that about one-third of Chinese respondents rated their trust in the U.S. as 1 out of 7, with only 1% expressing full trust. This growing distrust reflects the broader impact of the trade war on public perception and international relations. Revista Merca2.0
Government's Response and Future Outlook
In response to the economic challenges posed by the trade war, Chinese Premier Li Qiang announced that China is considering new economic policy tools, including unconventional measures, to counter disruptions in the global economic and trade order. These strategies aim to bolster domestic demand and investor confidence amid ongoing trade tensions.
However, analysts caution that without comprehensive reforms to the financial and social welfare systems, efforts to stimulate consumer-driven growth may fall short. The dual circulation strategy, which prioritizes domestic consumption, faces challenges due to structural vulnerabilities in China's economy, including a high debt-to-GDP ratio and a sluggish real estate market.
As the US-China trade war continues into 2025, Chinese citizens are bearing the brunt of economic disruptions. While government measures aim to mitigate the impact, structural challenges and public skepticism pose significant hurdles. The path forward will require not only strategic economic policies but also efforts to rebuild trust and confidence among the Chinese populace.
WhatsApp
Instagram
Threads
