China’s leaders gather for crisis talks after Trump shock

Beijing is preparing a stimulus package and further retaliation after Donald Trump’s new 125 per cent tariff on Chinese imports went into effect, as Xi Jinping shows no sign of accepting the American president’s offer to ‘do a deal’.

Donald Trump’s Treasury Secretary Scott Bessent says China was ‘goaded’ into allowing the administration to further hike tariffs on it. Picture: Getty Images

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China’s leadership was set to meet for crisis talks after Donald Trump’s new 125 per cent tariff on Chinese imports went into effect, as Xi Jinping showed no sign of accepting the American president’s offer to “do a deal” and mend the rupture between the world’s two biggest economies.

Chinese government mouthpieces on Thursday quoted Mao Zedong as they declared China would “never yield”. “We are Chinese. We are not afraid of provocations. We don’t back down,” Chinese Foreign Ministry spokesperson Mao Ning said in a post on X that included a link to a video of a fiery speech given by Chairman Mao after he sent the People’s Liberation Army to fight America in Korea in the 1950s.

China’s leadership was reportedly gathering late on Thursday for a meeting to discuss economic stimulus measures in response to a tariff hit that analysts have estimated could slow the country’s GDP growth rate by around 2.5 per cent.

The ad-hoc meeting was set to focus on “support measures for housing, consumer spending and technological innovation”, according to Bloomberg, citing sources not allowed to be identified discussing the matter. China’s financial regulators were also reportedly convening to discuss measures to boost the economy and stabilise the markets.

China woke up on Thursday to find itself the only country in the world facing higher than 10 per cent tariffs from Washington after the American president buckled to pressure from international markets and unwound most of the soaring tariffs that began less than 24 hours earlier.

Donald Trump’s Treasury Scott Bessent said China was “goaded” into allowing the administration to ramp tariffs on it. “You might even say that (Trump) goaded China into a bad position”, said Bessent. “They have shown themselves to the world to be the bad actors, and we are willing to co-operate with our allies and with our trading partners who did not retaliate.”

Hours before Trump’s international tariff backflip, Beijing had again counterpunched against Trump with a 50 per cent tariff that took total imposts on American goods to 84 per cent. China’s State Council said the new measure took effect at noon on Thursday, Beijing-time (2pm AEST).

Beijing also filed a complaint against Washington in the World Trade Organisation, issued a warning to Chinese citizens considering travel to America and released a White Paper outlining China’s objections to American claims that it engages in unfair trade practices.

Mr Trump seemed to be signalling a way for China’s leader to stop the tit-for-tat escalation cycle after announcing his latest hike on Chinese goods at the same time as ordering a 90-day pause on the rest of the world, reducing the rate on other countries to a 10 per cent baseline.

Donald Trump seemed to be signal a way for China’s leader to stop the tit-for-tat escalation cycle. Picture: AP

Speaking in the Oval Office, the US President said he was sure President Xi “one of the smartest people in the world” would “do a deal” and resist escalating their trade war.

“I think he’s going to want to do a deal. There will be a telephone call and we’ll be off to the races,” he said. “President Xi is a proud man. I know him very well. They don’t know quite how to go about it, but they’ll figure it out.”

Wall Street soared after the president’s latest pivot, with the Nasdaq closing up 12 per cent, its best day in 24 years. Sharemarkets in Japan, South Korea, Taiwan and Australia all recorded huge rebounds.

China’s highly controlled share market was muted on Thursday. Beijing has ordered state-owned firms and investment companies to buy Chinese shares to stop a slump. Shanghai’s SSE composite index crept up 1 per cent.

Commentators on China’s highly censored internet fumed about America’s latest hit and urged Beijing to continue its strategy to “fight to the end”.

“This is war, whoever retreats loses,” said one popular comment under a post by China’s national broadcaster CCTV. “If the blackmailer succeeds, the world will never be peaceful again. Saying no to bullying and refusing extortion is the true way to maintain world peace,” said another popular comment.

Beijing’s state media echoed the Chinese leadership’s defiance. “In the event that the US administration remains steadfast in pursuing a tariff and trade war to advance its zero-sum objectives, China stands prepared to resist its modern gunboat diplomacy,” the China Daily wrote in its leader editorial.

Analysts said most trade between the world’s two biggest economies would stop at the current tariffs levels. “The US and China are in a full-blown trade war, and grand bargain delusions can be shelved,” said Arthur Kroeber, the founder of China-focused consultancy Gavekal Dragonomics.

For trade exposed businesses, the latest strikes continued an awful week. “We’re just small pieces on the big game board,” one Chinese businessman told The Australian. “The ‘big’ player enjoys the game, but we are the ones who pay for it.”