China vows to ‘fight till the end’

By Simone McCarthy and Nectar Gan, CNN

Beijing (CNN) — China has vowed to “fight till the end” after US President Donald Trump escalated his trade war by doubling tariffs on all Chinese imports to 20%.

Beijing hit back at Trump’s levies by imposing retaliatory tariffs of up to 15% on selected American goods, expanding export controls to a dozen US firms and filing a lawsuit at the World Trade Organization.It also sent a stern warning to the Trump administration: Chinese people will never bow to “hegemony or bullying.”

“Pressure, coercion and threats are not the right ways to engage with China. Trying to exert maximum pressure on China is a miscalculation and a mistake,” Lin Jian, a spokesperson for China’s Foreign Ministry, told a regular news briefing Tuesday afternoon. “If the US insists on waging a tariff war, trade war, or any other kind of war, China will fight till the end.”

The barrage of retaliatory measures and fiery exchanges came as Chinese leader Xi Jinping is preparing to hold a major political gathering designed to project confidence in his country’s ability to stay the course and weather external headwinds.

As thousands of delegates convene in the Chinese capital for the country’s “two sessions” annual meeting, Xi and his officials are set to use the highly choreographed spectacle to broadcast China as a major power steadily advancing its tech prowess and global rise.

That escalating rivalry between the two powers will be in the spotlight on Wednesday morning in Beijing, when Trump’s first address to Congress will roughly coincide with a state-of-the-union-like speech delivered by China’s No. 2 official Li Qiang at the opening meeting of the National’s People Congress (NPC), which rubber-stamps decisions already made behind closed doors.

There, Li is expected to announce China’s yearly targets for economic growth and military spending — and lay out how Beijing plans to continue its economic growth and transformation into a technological powerhouse in the face of mounting pressure from the United States.

Despite the challenges, analysts aren’t bracing for any major policy surprises or U-turnsfrom the roughly weeklong meetings of both the NPC and the country’s top advisory body. True decision-making power lies with the Chinese Communist Party, whose authority cannot be challenged in the country – and Xi, the party’s most powerful leader in decades.

The increased tariffs — and the threat of more economic and tech controls to come — are casting a long shadow over China’s two sessions, which observers will also be watching for signs on how Beijing will continue to address its rumbling economic difficulties at home.

And signs point to Beijing staying the course on its leader’s strategies to bolster innovation, industry and self-sufficiency to steel itself against frictions ahead: all while projecting that, in China, it’s business as usual.

We must “face difficulties head-on and strengthen confidence” amid growing external challenges, the Communist Party journal Qiushi quoted Xi as saying in an article released Friday that’s meant to set the tone for the gathering.

High-tech prowess

China is entering this year’s two sessions buoyed by a surge of confidence and national pride in its tech sector.

Earlier this year, privately owned Chinese AI firm DeepSeek stunned Silicon Valley with the breakout success of its latest open-source large language model. Adding to that milestone: Beijing’s long-term plans for achieving global dominance in green technologies have borne fruit, with its top electric vehicle maker rivaling Elon Musk’s Tesla.

China’s leaders are expected to continue to prioritize investment in innovation and making the world’s second-largest economy self-sufficient in high tech. Xi and his cadres see high-end chips, quantum computing, robotics and AI as critical to powering economic growth and upgrading Chinese manufacturing.

“China needs to find a new engine for its economic development. The old model, the big infrastructure, construction–driven (one), is probably not going to work … and (the high tech sector) is the most feasible path China has,” said political scholar Liu Dongshu of the City University of Hong Kong. “China will prioritize this – and US pressure makes this more urgent.”

Last month, Washington said it was considering expanding restrictions on US investment in sensitive technologies in China and would continue to restrict Chinese investment in strategic American sectors.

But it’s not all negative pressure, Liu added, as China “sees an opportunity to replace the United States in some parts of the world order.”

“China may think that since (DeepSeek’s success) it can be the leader in global AI over the US, or similarly in areas like climate change, where electric vehicles might be China’s signature policy to solve the climate change problem,” he said.

Observers will also be watching closely what steps Beijing may take to unleash private industry to advance innovation as it gears up for the potential of more restrictions from the US.

Xi sent a strong signal that China needed its entrepreneurs to step up in this fight last month, hosting the country’s top tech executives in Beijing, where he proclaimed it was “prime time” for private enterprises “to give full play to their capabilities.”

Beijing followed the meeting with steps to improve market access for private firms and discussion of a Private Economy Promotion Law, which could be passed in the months, if not the days, ahead – seen as a significant course correction following a years-long, sweeping regulatory crackdown on private industry.

‘Doubling down’

The two sessions gathering is also set, as in past years, to reflect Xi’s increasingly tight grip over China’s political system. The leader used the 2018 NPC meeting to pave the way for him to stay in power indefinitely, with the removal of the presidential two-term limit in the Chinese constitution.

Last year, the scrapping of a longstanding annual press conference led by the country’s second highest-ranking official was widely seen as another sign of Xi’s control over the official narrative – and eliminated a rare chance for journalists to interact with a top Chinese official. The event is not expected to resume this year.

This year, the gathering is expected to again highlight how united the political apparatus is around his vision for the future, despite the country’s economic hurdles.

“The NPC this year will really be in the context of continuing to derisk China’s rise and really hardening its posture against global uncertainties,” including in Beijing’s relationship with the US and Europe, said Nis Grünberg, a lead analyst at MERICS think tank in Germany.

As China “doubles down” on this approach, deepening “the role of the party and the core of the party – Xi Jinping – to steer this whole process is more important than ever to the leadership,” he said.

China’s slowing economy has been roiled by a property sector crisis and high local government debt, while foreign investment has cratered, consumption has flagged and young people struggle to find jobs.

China earlier this year reported 5% economic growth in 2024, a figure viewed with heavy skepticism by many external observers, and analysts say it’s likely to float a similar number for its GDP target this year. Signs for how Beijing plans to address these challenges will also be closely watched, after a raft of policy adjustments since last summer were seen as falling short.

In the days ahead, Beijing may unveil new efforts to boost consumer spending through stimulus or social welfare benefits. US tariffs make this even more urgent, observers say, as China’s manufacturers may need to rely more on the domestic market.

Xi linked weak demand to China’s “economic security” during a key Communist Party economic meeting late last year, according to his speech published Friday in Qiushi — in a signal of the increasing importance of addressing the issue.

But even still, analysts see little sign of a departure from Xi’s primary focus on bolstering support for industry.

Beijing is likely to release policies to “make sure that at least the big and some of the medium-sized industrial producers can survive additional (US) tariffs,” according to Victor Shih, director of the University of California San Diego’s 21st Century China Center.

Beijing is counting on its subsidized companies being able to weather those tariffs, given the dependency of US industries on Chinese goods – and to have its own firms ultimately come out dominant.

“So in a sense they’re not afraid of (them),” he added, of US tariffs.

In the short term, such industrial support could create more friction with the US and China’s other trade partners. The country’s reliance on exports as an agent of growth propelled it to a nearly $1 trillion trade surplus with the rest of the world last year – a driving factor for Trump’s tariff push.

For China, that fits in with the wider message it’s expected to send in the coming days: even as headwinds mount, it’s confidently staying its course – and ready to be seen as a champion of global trade and order.

— CNN’s Hassan Tayir contributed reporting.

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