Xi’s High-Tech Vision to Counter Trump’s Trade Policies

On Wednesday, March 5th, China announced new plans to tackle its trade and economic conflict with the United States under President Trump. According to these plans, President Xi will focus on artificial intelligence, robotics, and investing in advanced technologies to strengthen China’s position.

Beijing is upset about Trump’s decision to add a 20% tariff on Chinese imports. This move directly hurts China’s economy, which relies heavily on exports.

On Tuesday night, March 4th, China’s foreign ministry strongly criticized Trump’s decision. They accused him of using China’s fentanyl exports as a weak excuse for the tariffs and claimed it was an attempt to damage China’s reputation and pressure the country.

China's fentanyl exports refer to the production and sale of fentanyl, a powerful synthetic opioid, and its ingredients. Some of these chemicals have been linked to illegal drug trade, leading to tensions between China and countries like the U.S., which faces a fentanyl crisis.

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Fentanyl is a powerful painkiller used in hospitals to treat severe pain, such as after surgery or for cancer patients. It is also used in medical emergencies and for managing chronic pain when other painkillers are not effective. However, illegal fentanyl is a major cause of overdoses.

The statement made it clear that China will not be frightened by threats or pressured by bullying, using strong language similar to that seen during the Cold War era. If the U.S. wants a war—whether it’s a tariff war, a trade war, or any other kind—we are prepared to fight to the very end.

The Times UK reported that U.S. Defense Secretary Pete Hegseth responded to China’s remarks, saying the U.S. is "ready." He added that those who want peace must be prepared for war, which is why the U.S. is strengthening its military.

He told Fox News that to prevent war with China or any other country, the U.S. must stay strong. He added that the president knows peace is achieved through strength.

On the morning of Wednesday, March 5, the Chinese Politburo released its annual "work report." By coincidence, this happened at the same time that Trump was delivering his State of the Union address to Congress on the other side of the world.

The Politburo (short for "Political Bureau") is the top decision-making body of a political party, especially in communist countries like China. It is made up of senior leaders who set policies and make important government decisions. In China, the Politburo of the Communist Party  plays a key role in governing the country.

The speech delivered by the prime minister at the opening session of China’s National People’s Congress is not just a political statement. Instead, it is carefully prepared over several months with input from the country’s internal policy experts. The congress itself is largely symbolic, serving to formally approve decisions already made by the government. However, the speech was clearly influenced by the increasing uncertainty caused by Trump's new policies.

Li Qiang the current premier  outlined very cautious plans for economic growth and spending, repeatedly highlighting China’s stability despite the challenging global situation.

The key targets remained almost unchanged from last year—a 5% economic growth rate, a 7.2% increase in the defense budget, and a slight boost in the use of long-term loans to support the economy. Li Qiang reaffirmed these goals in his announcement.

A key focus of the speech was highlighting China's progress in new technology industries. In particular, Li Qiang emphasized the success of the DeepSeek artificial intelligence model, which was launched in January at a much lower cost than its American competitors.

Li emphasized that the "AI Plus" plan, introduced by the Politburo in 2024, will be a key part of efforts to boost economic growth. China’s economy is still struggling with the effects of a housing market crash, a falling birth rate, and ongoing trade tensions.

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"AI Plus" is a strategy to integrate artificial intelligence into various industries, like manufacturing, healthcare, and finance, to boost innovation, improve efficiency, and drive economic growth in China.

He said China would continue using subsidies to support its industries, making Chinese products more competitive in the U.S. and Europe, even though this approach frustrates leaders in Washington and Brussels.

Brussels, the European Union’s de facto capital, hosts key institutions like the European Commission and European Council. It coordinates policies and governance. The EU is frustrated as China’s subsidies create unfair competition, reducing European companies’ market share and profits, risking job losses and economic challenges.

Li stated that a system will be put in place to boost funding for future industries. The goal is to support sectors like biomanufacturing, quantum technology, embodied AI, and 6G technology, ensuring their growth and development.

Official data suggests that China has managed to avoid the economic and political crisis ,some expected, 1 year ago. This comes after challenges from strict pandemic lockdowns and Xi’s efforts to limit the power of wealthy business leaders.

Xi tried to limit borrowing by major property developers, but the plan failed when two big companies nearly collapsed, causing property prices to drop. Worried homeowners spent less, and youth unemployment rose sharply.

Many economists quietly think that China didn’t actually reach its 5% growth goal from last year’s official report. However, those who spoke out about it faced consequences. If they were part of China’s financial system, they were punished. If they were outside of it, they were warned to stay silent.

Some people, however, believe that the economy is still growing in smaller cities. They say efforts to support less developed areas, away from the wealthy east coast, are finally working.

The Politburo kept its growth forecasts the same but raised the deficit limit from 3% to 4% of GDP. This shows they are still trying to boost the economy by increasing government spending.

Increase in Deficit limit means : The government is allowing itself to borrow more money, increasing the limit from 3% to 4% of the country's total income (GDP), so it can spend more to boost the economy.

Li mentioned that the goal is to boost consumer spending. However, China is now mainly focusing on developing advanced technologies like artificial intelligence and robotics. 

Next month’s Beijing half-marathon (a 21.1 km or 13.1-mile race) will also feature a special race for robots. This means that, alongside human runners, robots will have their own competition, highlighting China’s focus on robotics and technological innovation, Li said.

According to a report from The Wall Street Journal last week, tech company leaders in China are being advised not to travel to the U.S. This reflects China's growing awareness that it must build its technology industry while competing with the U.S., The Times UK reported.

Until now, the two major powers have cooperated closely. Many Chinese students have studied at top U.S. universities, and American companies have invested heavily in China.

At the Congress, Education Minister Huai Jinpeng said his top priority for the next year is to include artificial intelligence and biotechnology in school programs. He also plans to improve the teaching of math and computer science at all education levels.

Regarding defense, the speech repeated China’s usual stance that it aims to reunite with Taiwan peacefully, as long as Taiwan does not declare independence, in line with its long-standing understanding with the U.S.

On Tuesday, March 4, Elbridge Colby, who was chosen by Trump for the role of under-secretary for defense, worried Taiwan’s leadership with his statement during a confirmation hearing. He said that Taiwan’s freedom was not essential to U.S. interests and suggested that the island should raise its defense budget to 10% of its GDP.

Li repeatedly called for the Communist Party to stay united behind President Xi. He also warned that China was facing growing pressure from other countries.

Ruby Osman, a Chinese politics analyst at the Tony Blair Institute, said the main message of the speech was resilience. She explained that China’s leaders understand they need to rely on themselves for technology and economic growth, especially if the U.S. tries to isolate them, according to The Times UK.

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She said this was a local meeting with global effects. "China doesn’t usually mention the U.S. or other countries by name, but it's clear that concerns about the U.S. influence much of what is being discussed."

(Girish Linganna, the author of this article, is an award-winning Science Writer and a Defence, Aerospace & Political Analyst based in Bengaluru. He is also Director of ADD Engineering Components, India, Pvt. Ltd, a subsidiary of ADD Engineering GmbH, Germany. You can reach him at: girishlinganna@gmail.com)