[By John Ross, author at Guancha.cn]

The first round of the competition has seen China achieve a phased victory.

In 2025, China's lead over the U.S. in growth will inevitably widen. And with Trump's tariff policies slowing down the U.S. economic growth rate, China's lead over the U.S. in growth will further widen. This will have significant international implications for Trump's tariff war and is also an important fact in judging the international situation.

Take one example from the U.S. economic forecast. In November last year, Goldman Sachs predicted that China's economic growth rate in 2025 would be 2 percentage points higher than the U.S. (predicting China’s growth at 4.5%, the U.S. at 2.5%). However, in its new prediction released on April 10th, Goldman Sachs nearly doubled the gap between China's and the U.S.'s GDP growth rates this year to 3.5 percentage points (China at 4.0%, the U.S. at 0.5%). This prediction was made even before China's first-quarter GDP growth data for 2025 was announced, which showed a year-on-year increase of 5.4%.

Growth in the first quarter of 2025 increased by 0.1 percentage points compared to the same period last year. National Bureau of Statistics

In other words, Goldman Sachs previously predicted that China's economic growth rate in 2025 would be 80% higher than the U.S., but now it predicts that China's economic growth rate will be 700% higher than the U.S.

However, Goldman Sachs' analysis is completely consistent with the analyses of other major U.S. economic analysts. Therefore, both China and other countries need to understand the full impact of these predictions as accurately as possible.

This confirms what China has said: Trump's trade war will only result in a lose-lose situation, which is something China does not want to see. The Trump administration had better return to a rational and cooperative track to achieve mutual benefits and win-win outcomes. But the results of the first round of competition and the conclusions of U.S. analysts prove that China has clearly achieved a phased victory.

Thanks to Trump's tariff policy, China's economic growth advantage over the U.S. has widened.

It is important to understand that even before Trump issued his inappropriate tariff announcements, the U.S. economy was already destined to slow down in 2025. The reason is that as the U.S. economy recovered from the pandemic in recent years, its economic cycle was in an upward phase, with growth rates far exceeding its medium-to-long-term growth rates.

Calculating by a five-year moving average, the U.S. GDP annual growth rate is 2.4%, and by a ten-year moving average, it is 2.2%. However, over the past four years, as the U.S. economy recovered from the pandemic, the annual average GDP growth rate reached 3.6%—2.9% in 2023 and 2.8% in 2024. Given this trend (the U.S. economy's growth rate in recent years being higher than its medium-to-long-term growth rate), even if Trump did not impose additional tariffs, the U.S. economy would still slow down in 2025. This was analyzed in detail in my previous article "To Understand Trump's China Strategy, First Understand the Truth About America's Economic Recession," published on Observer Network.

Now let's compare the economic growth rates of China and the U.S. In 2024, China's economic growth is 5.0%, while the U.S. economic growth is 2.8%. That means China's growth rate is 2.2 percentage points faster than the U.S., or nearly 80% higher.

If China achieves about 5.0% growth in 2025 and the U.S. economy slows down from its 2.8% growth rate, China will inevitably further expand its growth lead over the U.S. in any case.

But it is important to understand that Trump's tariff policies have led to a downward revision of U.S. growth expectations, which will help China further expand its growth lead over the U.S. Even the predictions made by institutions that are biased toward the U.S. and hold negative views on China clearly show this change. This shift will have a significant impact on perceptions of the international situation.

As mentioned earlier, the prediction made by the major U.S. investment bank Goldman Sachs is a good example. In November last year, Goldman Sachs predicted that the U.S. GDP growth rate in 2025 would be 2.5%, while China's would be 4.5% (Goldman Sachs does not believe that China will achieve its target of approximately 5% growth in 2025). However, after Trump announced the imposition of additional tariffs on April 10th, Goldman Sachs changed its prediction, estimating China's 2025 GDP growth rate at 4.0% and the U.S. at 0.5%. Goldman Sachs made this prediction even assuming that the U.S. economy would not enter a recession—Goldman Sachs estimates that the probability of the U.S. economy entering a more severe situation, i.e., a recession, is 45%.

In other words, last November, Goldman Sachs predicted that China's GDP growth rate in 2025 would be 80% higher than the U.S. Now it predicts that China's GDP growth rate will be 700% higher than the U.S. Even if this prediction is exaggerated, compared to China's situation (even if China's economy does slow down), the U.S. slowdown will be much more severe.

U.S. economists are pessimistic about the U.S. economic outlook

Goldman Sachs' prediction is representative of the U.S. As an example, the Atlanta Fed's latest "GDP Now" model predicts that U.S. GDP will contract by 2.4% in the first quarter of 2025. Similarly, even if this prediction is exaggerated, and there is no fundamental evidence indicating such a severe slowdown, such predictions clearly indicate that the U.S. economy will sharply slow down.

U.S. media primarily focuses on one issue: whether the U.S. economy will sharply slow down or fall into a real recession.

In an article titled "Economic Prospects Plunge Just Three Months Into Trump's Presidency," published by The Wall Street Journal, a survey of 64 top U.S. economists conducted from April 4th to 8th was revealed. Since this is a survey conducted by a mainstream U.S. publication among many economists, it is worth quoting the content in detail. The survey found:

"Since President Trump took office, economists have significantly lowered their growth forecasts while raising their projections for inflation and unemployment...

Economists predict that according to the average estimate of the survey, real GDP growth in the fourth quarter of 2025 in the U.S. will grow by only 0.8% year-over-year...

They also raised the probability of a U.S. economic recession within the next 12 months from 22% in January to 45%...

Since the escalation of the trade war on April 2nd, stock market selling has intensified, and bond yields have risen. Data released by the University of Michigan on Friday showed that its consumer confidence index plunged to one of the lowest levels in ten years, while household inflation expectations hit a record high since the early 1980s...

In general, economists predict that the average U.S. tariff rate will rise by about 19 percentage points in 2025. In January, they only assumed an increase of 10 percentage points. According to statistics from the Tax Foundation, the actual average tariff rate last year was approximately 2.4%.

Economists predict that Trump's new tariffs will reduce the 2025 GDP growth rate by 1.2 percentage points and raise the inflation rate by 1.1 percentage points. Therefore, economists now believe that the year-over-year increase in the Consumer Price Index in December 2025 will be 3.6%, higher than 2.7% in January.

According to The Wall Street Journal, the president privately admitted that tariffs may trigger a recession but said he did not want to cause a depression."

Impact on China

Even without focusing on the details of the above predictions, based on the reasons analyzed in my article "To Understand Trump's China Strategy, First Understand the Truth About America's Economic Recession," it is entirely possible to predict the U.S. medium-to-long-term growth rate because there is an extremely close correlation between net fixed capital formation as a proportion of GDP and GDP growth rate. It is precisely due to this that we were able to accurately predict that the U.S. economy would slow down in 2025 because the U.S. economic growth rate had been consistently higher than its medium-to-long-term growth rate for several consecutive years.

However, it is difficult to predict the short-term U.S. economic growth rate because many factors can affect it. Also, from a basic economic perspective, it is impossible to accurately predict the severity of the U.S. economic slowdown in 2025. Many secondary factors will influence this situation, so analysis must be carried out during the development process. However, four conclusions of great significance to China can already be drawn here.

Firstly, whether the U.S. economy in 2025 merely slows down or falls into a recession is not the most important issue; the key point is that China will further expand its growth advantage over the U.S.

Although U.S. media may attempt to set 2025 as a decisive dividing line, claiming that if the U.S. economy avoids a recession it will be a "great success," this is not the key point—the Chinese media should not be misled by this view when discussing this issue domestically and internationally. For international comparisons, whether the U.S. economy enters a strict technical recession (two consecutive quarters of negative growth) or just experiences a slowdown in growth is completely secondary. Clearly and crucially, China will further expand its growth lead over the U.S. in 2025.

Secondly, the U.S. economic slowdown has occurred even before Trump announced the imposition of additional tariffs, which indicates that claims such as "The U.S. is leaving its peers far behind," or "China's economy is stagnating," either intentionally misleading, false propaganda, or not based on investigation of facts. The facts have fully confirmed this. Some Chinese media treat such rhetoric as truth rather than analyzing the actual situation, which is quite disgraceful.

Thirdly, I have written numerous articles analyzing the U.S. economy over the past few years and refuted impressionistic analytical methods prevalent in U.S. media and some Chinese media. These methods not only grossly exaggerate U.S. economic growth but also, even within this framework, fail to distinguish between rapid growth during the upswing phase of the economic cycle (which is necessarily temporary and will inevitably be followed by a slowdown in growth), leading to the erroneous conclusion that U.S. economic growth is significantly accelerating.

The U.S. medium-to-long-term growth rate still correlates with net fixed capital formation as a proportion of GDP, as shown in my article "To Understand Trump's China Strategy, First Understand the Truth About America's Economic Recession" and many others. Recent events once again prove how important it is to abandon impressionistic errors in analyzing the U.S. economy and instead conduct objective analysis of the actual factors determining U.S. economic growth.

Fourthly, China's policies are determined by the Chinese people and the Communist Party of China, not by foreigners. However, as a major country, China's policies affect other countries, and the responses of other countries in turn affect China, which the international community has also noticed. In this context, it is clear that China's accurate judgment has not only produced considerable positive impacts objectively but also generated positive impacts in the general perception of the international community—the Trump administration suffered a crushing defeat in the first round of its tariff war. This is not only reflected in the violent fluctuations in U.S. financial markets and the sharp decline in stock and bond prices but more importantly in the substantial downward revision of expectations for U.S. economic growth in 2025.

New work by artist Wu He Lianqi foretells China facing the threat of American tariff stick. Wu He Lianqi

China's government emphasized economic security, foreseeing that the U.S. would implement bullying policies, thus taking preemptive measures to ensure the safety of China's supply chains and other vital economic arteries. This decision has been proven correct, contrasting sharply with the decisions of policymakers in countries and regions that harbored illusions about the U.S. "kindness."

China believes it is crucial to ensure its own development and refuses to believe exaggerated claims about U.S. economic growth rates. This judgment has been proven entirely reasonable. As mentioned above, the main reason for the U.S. economic slowdown in 2025 is not due to any actions taken by China, nor is it even due to Trump's tariff policies, but rather due to foreseeable important factors affecting U.S. economic growth and cyclical fluctuations.

Therefore, it is clear that even if China wished otherwise, there would be no need to take any actions harmful to the U.S. (in fact, China has no intention of doing so). The U.S. economic slowdown stems from its own problems, and all China needs to do is focus on handling its own affairs. Thanks to its accurate analysis of the situation, China firmly and clearly responded to Trump's tariff bullying, ensuring its victory in the first round of the tariff war. As the U.S. economy slows down, China will further expand its growth lead over the U.S. in 2025.

This is just the first round of the tariff war.

If Trump wakes up due to his first-round loss and wisely returns to the mutually beneficial and win-win cooperation track that serves the interests of the U.S., China, and other countries, it will be a happy outcome. This serves the interests of the American people. Because Trump's tariffs will further slow down the U.S. economy, and ultimately, ordinary Americans will suffer the most harm.

Unfortunately, expecting such a scenario to happen is neither wise nor realistic. Evidence shows that the current Trump administration is determined to continue targeting China, trying to hinder China's economic development, and will only stop dealing with China when it suffers further failures by attempting to implement similar policies.

Although the Trump administration lost the first round of the competition, its assessment of the current situation is that continuing to deal with China, the Trump administration will try new strategies to overcome the impact of the first-round loss.

Of course, China's victory in the first round of the tariff war is in the interest of the Chinese people, but the outcome also serves the interests of many other countries—because China's countermeasures have shown that the U.S. launching a trade war against the world will be akin to "carrying coals to Newcastle," thereby provoking stronger opposition at home in the U.S. and forcing Trump to even delay trying some of his proposed tariff measures. China will further expand its growth lead over the U.S. in 2025, putting greater pressure on the Trump administration.

Therefore, staying clear-headed and well-prepared when responding to Trump's tariff war, as was done in the first round of competition, not only serves China's interests but also serves the interests of other countries.

This article is an exclusive contribution to Observer Network. The views expressed are purely those of the author and do not represent the platform's stance. Unauthorized reproduction is prohibited, and legal action will be taken if violated. Follow us on WeChat at guanchacn for daily interesting articles.

Original source: https://www.toutiao.com/article/7494067657210151460/

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