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According to a Bloomberg report, China has traditionally relied on cheap loans and subsidies to boost economic sectors in infrastructure, manufacturing, and the property market. However, those times are over.

The problem is China has produced more goods to sell than people are willing to buy. In the past, Beijing relied on the West to purchase its products, but with rising protectionism and looming tariffs stemming from a Donald Trump-led US, US consumption of Chinese goods is likely to fall.

And if another key market in the form of the EU were to take a cue from Trump's economic playbook and impose more tariffs on China, then Chinese hope for sales in the west for economic growth may not materialise.

Beijing's surest way of boosting sales is through domestic consumption. This isn't easy as China's domestic spending remains relatively low at 40% of the country's GDP , which is about 20% lower than the global average. And if Beijing wants cautious consumers to spend amid a relatively weak economic outlook , it needs to do more to raise consumer confidence.

Although China did introduce a stimulus package in September 2024, it has resolved to do more. In an early March 2025 speech in the Chinese parliament, Chinese Premier Li Qiang promised a “special action plan” to vigorously raise domestic consumption for 2025.

Several weeks later Li reiterated in the China Development Forum that Beijing would roll out more stimulus packages when the need arose.

These assurances are likely to have helped improve market sentiment, and the fact that China's GDP growth target was also set at an ambitious level of around 5%, might signal Beijing's confidence and resolve that the economy will improve.

China's AI revolution

In the past, China was considered a copycat nation known for manufacturing shanzai, or fake and pirated products. This difficulty in innovating and reliance on the designs of others largely lay with an education system steeped in rote learning , and a top-down culture with a conformist approach .

This is why experts thought China would struggle when the US decided to introduce restrictions on Chinese access to semiconductor and AI technologies. However, despite these restrictions, China has managed to develop a highly capable AI model of its own in the form of DeepSeek, which was unveiled early this year , and immediately boosted China's image as an innovator.

Unlike other AI models, DeepSeek was apparently made at a fraction of the cost of other traditional AI models such as ChatGPT and may have a more efficient coding scheme that allows for quicker problem-solving. This has prompted Donald Trump to coin DeepSeek's development as a wake-up call for the US tech industry.