Xi Jinping’s no. 2 signals openness to policy shift as tariffs hit

China’s leaders will step up efforts to offset from Trump’s tariffs, with infrastructure investment likely to accelerate in the second quarter

Chinese Premier Li Qiang said government officials need to ensure market confidence at “critical moments” with prompt and proactive policy measures, comments that appear to signal urgency to shore up the economy as the trade dispute with the US worsens.

Market expectation is a key factor influencing economic activity and managing that must be integrated into all aspects of policymaking and governance, he told a study session of the State Council on Thursday.

Officials “must harness the strength of policies, dare to step outside the norm when needed, and deliver a well-coordinated policy mix to ensure the market truly feels the benefits,” Li said, according to a statement from the cabinet. The government should “pay attention to policy timing, and at critical moments act early and swiftly, with various measures to positively shape market expectations,” he added.

While China’s economy showed surprising strength in the first quarter, many economists have marked down the outlook for the rest of the year thanks in large part to the US tariff hikes being imposed by President Donald Trump.

China’s GDP expanded 5.4% last quarter from a year before, thanks in part to Beijing’s consumer subsidies, along with an export surge to get ahead of the tariffs. Economists at institutions including UBS Group AG, Goldman Sachs Group Inc., Citigroup Inc. and Societe Generale have lowered their forecasts for China’s 2025 growth in recent weeks, to around 4% or lower.

Li’s comments come days before a closely watched gathering of the Politburo this month. The decision-making body usually uses the April session to discuss economic policies.

China’s leaders will step up efforts to offset from Trump’s tariffs, with infrastructure investment likely to accelerate in the second quarter, the Economic Information Daily reported Friday, citing analysts. The newspaper is run by the official Xinhua News Agency.

Local government bond issuance may reach a peak in the second quarter based on publicly announced plans to sell 2.7 trillion yuan ($369.9 billion) of such bonds for the period, the report added, using research from Shanghai-based Guotai Haitong Securities Co.