Why Will China Endure America’s Harsh Policies?

US President Donald Trump surprised the world by announcing a three-month pause on all “retaliatory” tariffs — except those against China. These tariffs, which took effect at midnight, will stay in place. This was an unexpected move, as Trump had earlier insisted on keeping the tough tariffs. Not only will they remain, but Trump also said China’s tariffs will jump from 104% to 125%, following China’s recent decision to impose new tariffs on the US. Meanwhile, tariffs on other countries will drop back to 10%.

This is happening at a time when tensions between the US and China are rising sharply. The ongoing trade war is shaking global markets and slowing down economies worldwide. The US accuses China of trying to dominate world trade by using unfair policies, stealing technology, and relying on state subsidies. In response, China claims the US is trying to block its rise to protect its own global power.

Despite these challenges, China has been following a well-planned strategy. Rather than just defending itself, China is using this situation to strengthen its economy and grow its influence on the world stage.

First, China has been steadily reducing its dependence on the US market. It has expanded trade with many countries, becoming the top trading partner for over 120 nations. Through agreements like the Regional Comprehensive Economic Partnership (RCEP) — which covers over 30% of global GDP — China has built stronger ties, especially with ASEAN countries. In fact, China’s trade with ASEAN has now overtaken its trade with the US, helping China cushion the impact of US tariffs.

China’s Belt and Road Initiative is also moving ahead strongly, linking over 150 countries to create new trade routes and supply chains across Asia, Africa, and Latin America. Investments in key sectors, like lithium in Argentina, are helping China lead in green energy resources.

Another key part of China’s strategy is its “Dual Circulation” policy, which focuses on strengthening the domestic economy while staying active in global markets. On the home front, China is working to boost consumer spending and local industries. Internationally, it continues to grow its presence in foreign markets. This approach is designed to reduce China’s exposure to global risks and make its economy more self-reliant.

To reinforce this, President Xi Jinping recently spoke at an important diplomatic conference, stressing the need to build closer ties with neighboring countries. He encouraged officials to create new opportunities for regional cooperation, showing that China views strong regional partnerships as essential to withstand Western pressure.

By strengthening relationships with its neighbors, China is not only boosting trade and diplomacy but also building a safety net against future economic shocks.

At the same time, China is rapidly advancing in technology to counter US restrictions, especially in critical areas like semiconductors. From 2023 to 2025, China invested over $40 billion in its chip industry. Companies like SMIC have made big strides, such as producing advanced 7nm chips. Huawei also made headlines with its “Kirin 9000S” chip, developed in 2024, despite US sanctions.

China is also making progress in fields like artificial intelligence and quantum computing. Its Jiuzhang 3.0 quantum computer, launched in 2023, competes with the best in the US, reducing China’s reliance on Western tech.

Control over natural resources is another advantage. China produces about 70% of the world’s rare minerals and tightened export rules in 2024, which has affected US defense and clean energy sectors. Long-term energy deals, like a 27-year LNG contract with Qatar and increased oil imports from Russia, have made China less vulnerable to energy market swings. Plus, China dominates clean energy production, making over 80% of the world’s solar panels and 60% of global batteries.

On the global stage, China is expanding its influence to counter the US-led efforts to isolate it. The growing BRICS group, now including Saudi Arabia and Iran, is becoming a powerful alternative to Western alliances.

China is also building stronger ties with Europe, such as BASF’s $12 billion investment in Guangdong. Initiatives like the Global Development Initiative and debt relief for poorer countries are helping China boost its political influence, especially in Africa, Southeast Asia, and Latin America.

President Xi’s focus on regional diplomacy fits into this bigger picture. China’s goal is clear: to build partnerships worldwide and create a safer, more stable environment for its future growth.

Financially, China is also taking steps to protect itself from US pressure. The use of the yuan in international trade is increasing, with nearly 30% of China-Russia trade and over 20% of Belt and Road trade now using the yuan.

China is also advancing its digital currency, the “Digital Yuan,” which is being tested in 17 provinces and is already used in some cross-border transactions, offering an alternative to the US dollar-based system.

Domestically, China is supporting its economy with targeted policies. The government has introduced tax cuts and subsidies for important sectors like electric vehicles and semiconductors, helping offset the impact of falling exports.

Public campaigns promoting self-reliance are also keeping morale high, turning economic resistance into a shared national mission.

In short, China’s response to Trump’s tariffs and economic pressure is smart and far-reaching. By boosting its technology, expanding global partnerships, and making its economy more resilient, China is preparing not just to survive the trade war but to come out stronger.

President Xi’s push for closer regional ties is a key part of this effort, showing that China is ready to navigate the changing global landscape. Challenges like population decline and tensions over Taiwan remain, but China’s clear and coordinated strategy suggests it is well-prepared to tackle US economic aggression and continue its path toward global growth.