China’s Economic Strategy at Summer Davos 2025: Boosting Consumption and Global Cooperation#

Key Points from Li Qiang’s Address#

• Consumption Powerhouse: Li emphasized China’s goal to expand domestic demand and transition from a manufacturing hub to a “consumption-driven economy of massive scale,” creating new market opportunities for global businesses.
• Economic Growth Commitment: Li expressed confidence in maintaining China’s economic growth at a “relatively fast speed,” targeting around 5% GDP growth for 2025, following a 5.4% expansion in Q1 2025. He highlighted China’s role as a major driver of global growth, contributing ~30% to world economic expansion.
• Open-Source Technology: Li noted that China’s technological advancements, such as high-speed railways and electric vehicles, have an “open-source feature,” and the country is willing to share these innovations globally to boost economic momentum.
• Global Cooperation: Amid rising protectionism and trade barriers, Li urged countries to avoid “decoupling and fragmentation” and politicizing trade. He advocated for dialogue, mutual respect, and cooperation under the World Trade Organization framework to ensure stable global supply chains.
• Global South’s Rise: Li highlighted the increasing influence of the Global South in global trade, noting the diversification of the economic and trade landscape.
• Entrepreneurial Spirit: Li called for businesses to embrace an entrepreneurial spirit, share resources, and avoid “vicious competition,” while China fosters a market-oriented, law-based business environment.
• Rejection of Zero-Sum Games: Li stressed that global challenges require joint consultation and mutual benefits, not “law of the jungle” approaches or zero-sum games, to make the economic “cake” bigger.

Economic and Geopolitical Context#

• Trade Tensions: China faces challenges from a U.S.-led tariff war initiated in April 2025, with a 90-day trade truce nearing its end. Tensions with the EU persist, particularly over medical-device sales bans, and Middle East conflicts, exacerbated by U.S. actions against Iran’s nuclear facilities, add uncertainty.
• Export Challenges: China’s export growth slowed to 4.8% year-on-year in May 2025, below expectations, as U.S. orders declined. A recent U.S.-China trade “framework” agreement in London offers a temporary reprieve, but uncertainties remain.
• Foreign Investment: Foreign direct investment in China fell 13.2% year-on-year in the first five months of 2025, prompting Beijing to relax market access in sectors like telecommunications, healthcare, and education to attract investors.
• Consumption Drive: China’s consumer goods and equipment trade-in program generated 1.1 trillion yuan (US$153 billion) in sales in 2025, supported by 162 billion yuan in government funds, with an additional 138 billion yuan planned for the second half.
• Private Sector Support: Beijing has bolstered its private economy through a new law promoting entrepreneurship and a high-profile meeting with top entrepreneurs hosted by President Xi Jinping in February 2025.

Broader Implications#

• Global Trade Dynamics: Li’s call for cooperation reflects concerns over rising trade barriers, with over 1,200 discriminatory measures globally in 2024, a sixfold increase from pre-pandemic levels. The rise of regional trade agreements (from <100 in the early 2000s to >600 today) signals shifting trade pathways.
• Economic Resilience: China’s focus on consumption aims to offset external trade pressures, leveraging its vast market to drive growth. This aligns with efforts to maintain global supply chain integration, as emphasized by Li’s rejection of decoupling.
• Sentiment on X: Posts on X highlight the evolving U.S.-China trade framework, with some optimism about rare earths and tariff agreements, though concerns persist about China’s restrictions on rare earth export licenses to U.S. firms, adding uncertainty.

Conclusion#

At the 2025 Summer Davos, Premier Li Qiang positioned China as a future consumption powerhouse, committed to sustaining economic growth and fostering global cooperation amid trade and geopolitical challenges. By promoting open-source technology, supporting the private sector, and advocating for dialogue over confrontation, China aims to navigate a complex global landscape while maintaining its role as a key driver of world economic growth. However, ongoing trade tensions and declining foreign investment highlight the need for continued policy efforts to achieve these goals.