STEVE INSKEEP, HOST:
Here's where we stand in the trade war. The United States paused its tariffs against Canada and Mexico. A new deadline comes in 30 days. The U.S. went ahead overnight with tariffs against China, and China has announced its own tariffs on the U.S. China also imposed export controls on crucial materials like tungsten. In other words, the U.S. made it harder to import stuff from China, and China responded by making it even harder to import stuff from China - tough move. But as we've been reporting, China's economy goes into the trade war in less than perfect shape, which Chinese people are reflecting on as they celebrate the Lunar New Year. NPR's John Ruwitch reports from the city of Kunming.
UNIDENTIFIED PERSON: (Speaking Mandarin).
JOHN RUWITCH, BYLINE: As the holiday was getting started, Kunming's Zhuanxin farmers' market was hopping.
LIU BOWEN: (Speaking Mandarin).
RUWITCH: Twenty-three-year-old Liu Bowen has a table where she sells wall and door decorations for good luck in the new year.
LIU: (Speaking Mandarin).
RUWITCH: It's the most important day on the calendar, she says. Decorations are a tradition, and sales have been good, but the market's not normally this bustling.
LIU: (Speaking Mandarin).
RUWITCH: She says her mom has a stall across the way selling vegetables year-round, and demand has been soft. Weak consumption has indeed been a huge problem for the Chinese economy, which never quite bounced back the way many expected after the authorities dropped stifling COVID rules more than two years ago. The government says GDP growth hit its target last year anyway, expanding by 5%. But people like 36-year-old Zeng Jun say it doesn't feel like it.
ZENG JUN: (Through interpreter) The economic situation here is - how can I put it? - just so-so. The overall environment is bad.
RUWITCH: Zeng is a partner in a company that makes novelty ice cream bars. They're shaped like local landmarks and sold to tourists. He says revenue fell by 30- to 40% in 2024 from the year before.
ZENG: (Through interpreter) Most people just don't have money in their wallets. They're conservative with their spending. I am, too. I watch what I have in my wallet.
RUWITCH: In the fall, the government rolled out a string of support measures, cutting interest rates, propping up the stock market, loosening rules around real estate. It also introduced trade-in subsidies for appliances and later consumer electronics. This incentivized 28-year-old Wen Hao, a teacher in the northern city of Tianjin.
WEN HAO: (Speaking Mandarin).
RUWITCH: Wen says the subsidy got him more than 8% off an iPhone 16. It came at the right time for him, but he warns these targeted subsidies probably aren't a game-changer.
WEN: (Speaking Mandarin).
RUWITCH: People will use them to buy what they need, he says, but no one's going to buy something they don't need because of the subsidies. Arthur Kroeber, head of research for the research firm Gavekal Dragonomics, says the policy support has helped a little.
ARTHUR KROEBER: But it's not like we've got a - we're not back to boom times by any stretch of the imagination.
RUWITCH: That's primarily because China hasn't really addressed deflation, which is a problem, he says. Prices have been falling for nearly two years in the world's second-largest economy.
KROEBER: And you get into the spiral of people not spending money and businesses not investing, and it can be very difficult to get out of that.
RUWITCH: New tariffs from the Trump administration could make matters worse. Back at the market in Kunming, Wang Yimin sells coffee at a temporary stall to fortify shoppers against the cold. He used to run a cafe. He closed it about a month ago because he couldn't make rent. I ask him how he feels about the prospect of a trade war heating up with the United States. He says he likes Donald Trump, but a trade war would not be good.
WANG YIMIN: (Speaking Mandarin).
RUWITCH: He says it'll be ordinary people like him in China and in the United States who would pay the price.
John Ruwitch, NPR News, Kunming, China.
(SOUNDBITE OF GREENFACE'S "LUV LETTER") Transcript provided by NPR, Copyright NPR.
NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.
