China Prepared for External Shocks: Premier Strikes Upbeat Note Amid Trade War

China is prepared to deal with potential external shocks and will roll out new stimulus measures if needed, Premier Li Qiang told a forum of global business leaders and scholars, in a pitch to keep them engaged in the Chinese economy amid a trade war with the US.

- Yew Lun Tian

China is prepared to deal with potential external shocks and will roll out new stimulus measures if needed, Premier Li Qiang told a forum of global business leaders and scholars, in a pitch to keep them engaged in the Chinese economy amid a trade war with the US.

Speaking on March 23 at the opening of the China Development Forum, a high-level engagement platform for top global business leaders and senior Chinese policymakers, he said: "We are prepared for potential shocks that go beyond our expectation and are mainly external."

Although he did not mention the US, it was evident that he was referring to US President Donald Trump's threat to slap even more tariffs on China.

Washington doubled duties on Chinese imports to 20 per cent on March 4, prompting Beijing to retaliate with additional tariffs of 10 per cent to 15 per cent on selected US imports. Washington is expected to announce more tariffs around April 2.

Trade tensions have affected investor sentiments. In 2024, China suffered the largest capital flight since the 1990s. Data by the State Administration of Foreign Exchange in February showed that net foreign direct investment (FDI) dropped by US$168 billion (S$224 billion) in 2024.

FDI inflows in 2024 plummeted 99 per cent over the past three years, falling to US$4.5 billion in 2024 from a historical high of US$344.1 billion in 2021.