What “weapons” does China possess in the fight against the US?

The two largest economies in the world — the United States and China — are intensifying their trade war, making the threat of a global economic crisis even more apparent. The Donald Trump administration has imposed massive tariffs of up to 245% on Chinese goods, while Beijing has retaliated by setting tariffs of up to 125% on US imports.

So, what are China’s countermeasures against Trump’s policy, and what strengths does Beijing have in this trade war? BBC analysts have provided detailed answers to these questions.

China Can Withstand an Economic Crisis

China, with a population exceeding 1.4 billion people, is the world's second-largest economy and possesses a massive domestic market that helps it withstand global shocks. Although the high tariffs imposed by Trump are putting severe pressure on Chinese exporters, the country’s strong domestic consumption capacity significantly eases this impact.

In this situation, the Chinese Communist Party has the opportunity to further strengthen its focus on the domestic market and national products. Despite the current worrisome atmosphere, Beijing maintains confidence in its internal strength.

China Is Investing Heavily in Future Technologies

For a long time, China served as the world's industrial hub. However, under President Xi Jinping, the country’s economy has started to compete with the United States not only in manufacturing but also in the field of high technologies. Currently, China is striving to take the lead in sectors such as artificial intelligence (AI), renewable energy, and semiconductor chips.

Chinese manufacturer BYD overtook Tesla in 2024, becoming the world’s largest producer of electric vehicles. Moreover, in the AI sector, China introduced a chatbot named DeepSeek as a competitor to ChatGPT. Meanwhile, Apple has been losing market share to local brands like Huawei and Vivo.

Beijing has announced plans to invest over $1 trillion in supporting the artificial intelligence sector over the next decade.

China Learned Lessons After Trump

Since 2018, when Donald Trump imposed tariffs on Chinese solar panel imports, Beijing began diversifying its external trade relations. Currently, China's largest trading partner is not the United States, but Southeast Asia.

In 2023, China strengthened trade relations with more than 60 countries — nearly twice as many as the US trading partners. Moreover, by the end of 2024, China achieved a record $1 trillion profit, becoming the world's largest exporter.

China Can Apply Pressure Through US Bonds

Another significant leverage China holds is its influence in the US government bond market. Currently, China holds over $700 billion worth of US bonds. This remains one of Beijing’s important "trump cards" for applying economic pressure on Washington.

Counterattack Through Rare Earth Minerals

One of China’s key strengths lies in its dominance over the world's largest reserves and processing of rare earth minerals. China is the primary supplier of minerals like dysprosium and yttrium, which are critical for manufacturing AI chips, electric vehicles, and wind turbines.

After Trump introduced new tariffs, Beijing responded by restricting the export of these rare minerals. According to the International Energy Agency, currently, 61% of rare earth mineral extraction and 92% of processing are attributed to China.

Conclusion

In conclusion, China has several powerful tools to protect itself from the economic impact of this trade war. By leveraging its strong domestic market, technological innovations, global trade networks, and strategic resources, Beijing can effectively counter the US pressure based on tariffs.

News