The Report on the Work of the Government this year has made it clear that we should expend high level opening up and seek stability in foreign trade and capital.. However, amid an adverse international landscape, what can we do in stabilizing foreign trade and investment? Where will the China-US trade war go as Trump stays in power again? And how can Chinese enterprises make success abroad?
Yu Miaojie, President of LNU, Fellow of the International Economic Association noted in the interview that in 2025 the China’s foreign trade will meet a mix of dangers and opportunities. He believed that China should expand foreign trade export to more destinations to fend off the possible tariff shocks in the future.
He noted that it is important for Chinese companies to go global as some countries impose high tariffs on China. But he also stressed that those thriving and successful enterprises abroad need to take on more social responsibilities to ensure that others think Chinese companies are not merely profit-driven.
Guancha Net: Amid a complex and volatile international landscape, do you have any comment on China’s foreign trade in 2024 and any opinion about the foreign trade in 2025? And what advantages does China boast and what challenges do we need to brace for?
Yu Miaojie: Despite of the challenging and complex international environment, China’s foreign trade achieved an excellent performance in 2024. As we expect, China’s foreign trade gained an increase of five percent compared with the trade volume of 41.76 trillion CNY in 2023.
As for the foreign trade in 2025, I deemed that it will be tougher for companies to export goods to the US as protectionism would on the rise after Trump’s come back to the White House. First, Trump will impose 10% tariffs on products to other countries including China, which means the average tariffs of products exported from China to the US will be 24%. That is a hard blow to companies. However, it is not the end. The US will continue to impose higher tariffs on China’s products, and it is said that the tariff will even reach 60%. The US has intensified its customs supervision and regulation on USMCA, the Mexico in particular, and made stricter restrictions on the product origins. Consequently, those companies that build their factories in Mexico and then export products to the US will be hit hard.
So how to respond to that? In my opinion, we should diversify our export destinations and export more to Russia, BRICS countries, OECD countries and southeast countries. The total export will increase due to the diversified export destinations. Besides, we need scale up our import and fully play the role of CIIE as a window to the outside world. The import of intermediate products can reduce tariffs and costs and improve profits. Although the expansion of the import on final products will increase competition in the short term, it will promote the development of industry productivity in the long run, which is also a good thing.
As such, I believe that the China’s foreign trade in 2025 will meet some challenges but more opportunities.
Guancha Net: Yes, challenges and opportunities will co-exist. As you mentioned, the whole world is concerned with Trump’s tariff policy, China particularly. Now, people are concerned about how the Trump administration will impose tariffs on China in all sectors; whether it will adopt extreme measures? So what do you think how the China-US trade war will unfold after Trump’s return to office; what impact will be brought to China’s economy; and what tools and advantages China can make good use of to deal with the possible shock?
Yu Miaojie: Trump’s re-election will make the trade war more tense. He will take following steps: First, Trump’s administration will impose 10% tariff on all products imported from China, second the tariff may surge to 60%, then he will launch anti-dumping and countervailing duty investigations on China’s products under the guise that China is an non-market economy, and last China’s enterprises will be banned from investing in the US.
How should we respond to the China-US trade war?
I believe that first we need ask ourselves what we want? Actually, all tools and measures we take is to achieve the ultimate goal, the Chinese modernization. As a result, all steps are carried out for this end. Of course, we have to make it clear what Trump wants on whether cracking down on China and blocking the Chinese rejuvenation or grabbing for more economic profits? We can make better preparations after we make clear judgement.
In my view, we need to oppose three false opinions.
First, the China-US trade war will not last long. It holds that we will embrace a bright future after Trump leaves office. China and the US will cooperate in foreign trade again.
Second, China is fated to lose. In fact, in a long term, China will win in the trade war. I think confidence is more important than gold. But we are not overconfident, because that is the conclusion with our careful and unbiased analysis.
Third, the US will wage a war with China. From my perspective, the China-US trade war is a protracted war. This means we will not achieve our end at one stroke. Whether we will take anti-sanctions or not and to which extension is serving for the Chinese modernization. To fight or not to fight are methods for our end to make the Chinese modernization undisturbed and undisruptted. ‘The battle’ means we need be somber-minded that the US ,as the largest economy in the world, is an economic power. Nevertheless, I believe China is able to win.
As the battle between China and the US is enduring, we can not just focus on that in the years of Trump’s administration. We need take steps based on the following aspects: First, do we have a unified national market; Second, do we boast the full-industry supply advantage; Third, do we enjoy a talent pool; Fourth, can the institutions and mechanisms be implemented from the top to the local level.
China has an upper hand in these four respects in the long term.
At first, China’s unified national market is forming gradually, though it is lagging behind the US. At the moment, the domestic trade is accounting for two thirds of GDP, and our goal is to push that figure to three quarters.
Secondly, after the unified national market is built, we also have a comparative advantage in the full industrial chains. The biggest problem the US faces now is the industrial hollowing, which is actually China’s comparative advantage.
Thirdly, talent advantage. Upholding “America First”policy, the US imposes visa restrictions on talents from other countries, blocking the inflow of the talent to the US. China has put greater emphasis on the integrated development of education, science and technology and talent never seen before. Besides, we have launched the initiative of transforming China into a leading country in education and invested more in supporting and cultivating talents.
Fourthly, advantage in institutions and mechanisms, which is solely owned by China. The American systems is baffled with serious decentralizd decision-making and blame shifting, almost resulting in the government shutdown. China, on the contrary, adopts a decision-making system that cover all aspects. That is crucial in the combat between China and the US.
More importantly, China is a nation that fully upholds win-win cooperation in globalization, while the US adopts the policy of “America First”. Economic globalization is still a prevailing trend but the US has clearly claimed its absence. Therefore China as well as other countries will take the lead.. In my opinion, the saying that a justice cause gain abundant supports is demonstrated fully in our development, security and openness, instead of nonsense.
Above is my opinions about the future trade war between China and the US. From my view, we need to be patient and confident about that one day China must win in the battle between the two nations.
Guancha Net: This is a protracted war. Ultimately, China will win. Going forward, let’s talk about the development of the “new trio”. Recent years have seen that the “new trio”, electric vehicles, lithium-ion batteries and photovoltaic products, as the new driver for high-quality development of our foreign trade, being exported more to outside world. However, some west countries labeled these products as overcapacity to impose more tariffs on them. Will these tariffs give a blow to the export of the “new trio” in 2025?
Yu Miaojie: The rethorics that China is overcapacity does not hold water. Currently, some argues that our industries face oversupply. On the contrary, they are lack of demand because of the weak foreign demand.
To make that easily understood, I will draw an analogy. During the Great Depression from 1929 to 1933, is the milk overcapacity when many west companies pour it to rivers? The answer is no. That is because people at that time could not afford the milk and the price remained high. As a result, the root cause is lack of demand,instead of the overcapacity.
The reason why some west countries claim China has overcapacity is that they believe China will grant subsidies to these industries, so the product price is lower, which is a competitive edge. As such they have to adopt anti-dumping measures.
Actually, there is something wrong in their logic.
First, does China grant industrial subsidies? Yes, it is a fact, but do America and other countries have industrial subsidies? A definite yes. And China learned from them. For example, what a large subsidies America and EU has granted for the competition between Boeing and Airbus. That happened after the 1960s. That is what we have learned from them.
Second, the Inflation Reduction Act issued by the US explicitly states that the government has to grant industrial subsidies.
Third, does China violate the regulation set by WTO in terms of industrial subsidy. The answer is no or almost no. According to the regulation, whether an industry can be subsidized depends on its essence and how to grant subsidy. If the goal is for research and development, which is called “green box”, it will be approved. Our policies introduced are directly to subsidize the innovation industries. Additionally, WTO states that it is allowed to subsidize the green industries. So it is in conformity to that to subsidize the “new trio”. Besides, our subsidies will not just be granted for domestic companies, and foreign-funded enterprises can apply for that too. China should be highly recognized for its promotion on the green development worldwide.
Nowadays, China’s green trade export has accounted for 14% globally, higher than the general trade, 11%. That means much more demand for China’s green products.
If you go around EU countries, you will find the prices of electricity, gas, coal and oil are extremely high. In this case, the EVs from China enjoy a great popularity. Now some companies welcome China’s enterprises like BYD to make investment abroad if China is willing to transfer technologies. Suffice to say that the “new trio” related products cater for needs of people around the world. They are delighted to buy better and greener products with lower prices. I believe that in 2025, there is still much room to improve the “new trio” related products.
Guancha Net: You just refuted some voices of overcapacity in China’s industries with a lot of facts. But why do they still impose tariffs on China’s products?
Yu Miaojie: As I mentioned before, some west countries think owing to subsidies China has overcapacity, and thus China could undersell its products to their countries. In order to make China’s products less competitive, they will impose anti-dumping duties and countervailing duties, up to 90% to 100% , equivalent to doubling the import price of the Chinese products. Obviously, what they did is run counter to free trade, and detrimental to both their consumers and environment.
We conducted a research. And we found that China engaged in green trade with nations along the BRI countries, and our green products help them reduce climate pollution and improve their ability of environmental protection. The green trade is really beneficial to countries and their people, even to the world.
Guancha Net: What do you think the underlying cause that makes our “new trio” related products competitive？
Yu Miaojie: That actually shows China’s capacity of curve overtaking. A decade ago, people are pessimistic about the EVs and have many concerns of their quality. But now China’s “new trio” has made impressive progress in ten years, with the sell of EVs ranking the first globally particularly. It seems that overnight China has made the theory of curve overtaking real.
It is hard for China to surpass America and European countries as they have made efforts for 200 years or so in traditional industries such as fossile-fuelled cars. But all countries are on the same starting line in EVs development. And as China has invested more in research and development, technology and talent cultivation and enjoys greater scale economy, it stands at the forefront. West nations may hold that the fossile-fuelled cars are good, while the EVs are troublesome as they need build charging piles for EVs. As such, they pay less attention to it, and China seized the opportunity.
Guancha Net: In face of roaring protectionism, what can the Chinese government and enterprises do? Do you have any suggestion?
Yu Miaojie: I believe the most important is to frame a new pattern of opening up in an all-round manner, and deal with the protectionism in some countries with greater openness. For instance, we will open to other countries and adopt the strategy of fighting for unity when the US adopts protectionism to us.
It’s crucial for us to build a new pattern of opening up in all respects,which is larger, wider and deeper.
Larger opening up means we need do not only goods trade, but service trade, and both offline trade and e-trade. Wider opening up focuses more on green trade and e-commerce. And deeper opening up means we need to transform from factor-based opening up to system-based opening up. One of the main reasons that China has become the largest trader in the world lays in our cheaper labor cost. Now, our target is to transform from factor-based opening up to system-based opening up, and make regulation, governance, standard and management more well-conceived. And we will observe the international rules, permit self-governance, conform to industrial standards and manage enterprises well. The concrete methods could be modeled from the practices from Hainan Free Trade Port and Free Trade Area.
In sum, we need build a new pattern of opening up in all aspects to rise to deglobalization.
Guancha Net: Chinese companies are speeding up to go overseas under the pressure of rising protectionism and stiff domestic competition. Many people hold that you will be phased out if you do not or blindly go overseas. So what kind of companies do you think are suitable for going global? And what qualities should companies going overseas be equipped for survival and development.
Yu Miaojie: First of all, going overseas is very important. Currently, building factories abroad is a great approach for enterprises to shun high tariffs against the backdrop of higher tariffs imposed on China by some countries. Secondly, it will be detrimental if we unduly push enterprises going overseas. What kind of companies is suitable for going overseas? From an academic view, the productivity of a company must meet a certain level. Put it simple, a company is able to go overseas when both its profit rate and operating performance reach a certain level. If a company fails to sell its products well in domestic market, there is no need to go global. Therefore, we need make it step by step as it is very difficult to expend international market owing to stiffer competition and unfamiliar cultures.
Then, why do companies go overseas? In my view, there are three aspects.
First, the labor cost in some countries is cheaper. For instance, some companies would invest in Ethiopia. Indeed, although their productivity is half that of China, the labor cost just one tenth that of China, offering them an comparative edge. As such, labor-intensive companies can take into consideration investing in countries like Ethiopia.
Second, the resources are attracting companies to go abroad. Their destinations could be Congo and Australia as they boasts great mine fields such as diamond and iron sand.
Third, Chinese companies go global for local markets. It is normal for businesses to seize all opportunities. And it is normal when they ask for technology transfers.
But some companies may worry about that they may lose comparative edges after offering the latest technologies. In fact, as the technology is upgrading constantly, now you use the latest technologies to help production and perhaps after two years new technologies may emerge at the headquarter. Hence, we should be open-minded to embrace the world. It’s important to go overseas and Chinese companies need to go global.
Guancha Net: What can the government offer to support when companies move faster to go overseas? And what should they pay more attention to?
Yu Mioajie: First, the government can provide information and build a platform. For example, I will make an investment in Madagascar. And as people there speak French, our government can offer French training and information about local culture, and help companies to connect with local chamber of commerce.
Second, some state-owned banks can support them with funds. For example, some banks can offer capitals and credits to support companies. It is important to support them so that they can get started.
For companies, if they make success abroad and become stronger, they need take on more social responsibilities. The Chinese companies should avoid being called “ profit-driven”. Companies could do charity and public services such as investing in the construction of schools and parking lots. For instance, I know that a company invested in Mauritius. As it rains more, a company built bus shelters, which did not cost too much, and it could also be used for advertisement.
Guancha Net: Let’s talk about service trade. The goods trade is in surplus, while the service trade is in deficit in a long period, a huge gap between the developed countries. What is the reason?
Yu Miaojie: Indeed, China’s service trade has seen a long-term deficit and a small total. At present, the service trade total is about 950 billion USD, which is still a gap in comparison with the US, 1.7 trillion USD. We need redouble our efforts to catch for it. China’s service trade includes tourism, education, transportation and health care, which all show obvious deficits. The reasons that deficit occurs in industries are also different. But objectively, we have more work to be done in providing software facilities in service trade.
Taking an example, China boasts abundant tourism resources, but many sight spots are rarely known by others. For example, now I am in Liaoning Province. Benxi City in Liaoning Province has an amazing water cave, which will take an hour or so to enjoy by boat. Actually, I have been to 40 to 50 countries, and I seldom see so beautiful sightseeing like this. That means we make less promotion.
Additionally, China’s trade in education services faces a significant deficit. While nearly 300,000 Chinese students study in the US, only about 880 American students are enrolled in Chinese universities. This disparity stems partly from insufficient promotion, but also from the need to enhance Chinese universities’ openness, capabilities and overall standards in global education.
Policy making in this area should focus on details. My suggestions for improving trade in services can be summarized as “expand scale, optimize structure, and build distinctive strengths”.
Building Distinctive Strengths. South Korea offers a good example. Its beauty industry, now the world’s leading, was virtually nonexistent in the past. This demonstrates how a nation can cultivate a globally dominant sector through focused innovation and branding. China can draw lessons from this. Take traditional Chinese medicine (TCM) as an example. There’s a witty saying: “TCM lets people live in blissful ignorance, while Western medicine ensures they die with full clarity.” By modernizing and promoting such unique assets, we can carve out a competitive edge in global services trade.
Guancha Net：You are right, we need to not only focus on the details, but also promote our strengths. The next question is about foreign investment. We have noticed that in 2024, governments at all levels in China, from the central to local, have emphasized and pushed for improvements in the business environment. However, there have still been fluctuations in attracting foreign investment. How do you interpret these fluctuations and adjustments in foreign investment? Moving forward, how can China better attract foreign investment in terms of both quality and quantity?
Yu Miaojie：Indeed, there have been some fluctuations in foreign investment, and we should analyze the changes in foreign investment in China on an industry-by-industry basis.
When it comes to labor-intensive industries, we must acknowledge that labor costs in China have been rising compared to ASEAN and other Southeast Asian countries. As a result, labor-intensive industries may gradually relocate—a trend that reflects the natural evolution of global industries. This shift resembles the “flying geese” model of industrial transfer, where production moved from the U.S. to Europe, then to Japan, followed by the Four Asian Tigers, and later to mainland China. Such transitions are part of economic development.
However, in capital-intensive industries, China still possesses distinct comparative advantages. For these industries, the most critical factor is not labor costs—its rising does not necessarily diminish their competitiveness. Instead, the key lies in well-developed upstream and downstream industrial chains and the benefits of industrial clustering, both of which are areas where China excels in.
Therefore, I believe China’s policies and promotional efforts to attract foreign investment should gravitate towards capital-intensive industries. China offers one of the safest investment environments globally with no history of instability and is among the countries with the highest returns on investment. As long as we emphasize these strengths, refine our industrial policies and keep our doors open, capital-intensive industries will continue to thrive and expand their presence in Chinese mainland.
We have observed that while the central government has introduced policies to attract foreign investment, local governments also have their own initiatives in this regard. Local authorities should take greater initiative and play a more proactive role in interpreting and implementing these policies effectively. For instance, Council for the Promotion of Trade could adopt a more active stance in facilitating these efforts. In fact, many companies do not fully know about our policies, so that the government can establish some platforms to offer counsels for these business, foreign investor in particular.
Guancha Net：Next, I’d like to discuss Northeast China with you. As president of Liaoning University, you have deep insights into the region’s economy and investment environment. There have long been mixed opinions about the Northeast economy—once a pivotal pillar of the nation’s industrial system, yet also plagued by the saying, “Investment doesn’t cross Shanhaiguan.” Recently, however, the ice-and-snow economy has brought renewed vitality to the region. In 2024, you published a new book, Northeast China Is a Land of Promise: Liaoning, a Treasure Bowl. To achieve the comprehensive revitalization of the Northeast, where should the region focus its efforts? What specific suggestions do you have?
Yu Miaojie：Having worked at Liaoning University for over two years, I’ve come to deeply appreciate that Northeast China is truly a land of promise. Why do I say that? First, the region is endowed with abundant natural resources. It serves as the nation’s granary with vast agricultural output and boasts rich reserves of minerals and energies. Second, its industrial foundation is unparalleled. As the earliest industrialized region in China, the Northeast has a dense railway network and a robust industrial ecosystem. Take Liaoning alone: it covers 39 out of 41 major industrial categories, showcasing its comprehensive supply-chain advantages. Third, the Northeast excels in education and talent. Liaoning, for example, is home to 114 higher education institutions, including over 40 public universities, making it a powerhouse for nurturing skilled professionals. These strengths—resources, industrial depth, and human capital—are the bedrock for revitalization. The key now is to transform these advantages into modern competitiveness, whether through high-end manufacturing, agritech or leveraging its academic institutions to innovation.
Why did the saying “Investment doesn’t pass Shanhaiguan” emerge in the past? Primarily because the business environment at that time suffered setbacks. However, significant improvements have been made in recent years. Taking Liaoning as an example, the province has fundamentally transformed its business environment by improving its political ecosystem. Moreover, the provincial government now requires all levels of government to issue a “Guide to Handling Affairs Without Relying on Personal Connections.” For example, if I catch a cold now, my first instinct would naturally be to go to the hospital and register, rather than checking if I have any friends working there. These are completely different reactions. The fact that people used to think of relying on personal connections reflects the poor business environment of the past. But now, Liaoning’s business environment has truly undergone a fundamental transformation. The reason for this fundamental change is that Liaoning’s disciplinary inspection work has become a national benchmark, leveraging big data for case handling, supervision, and information empowerment. Today, the environment is truly clean and corruption-free.
In recent years, Liaoning’s Party Secretary Hao Peng and Governor Li Lecheng have set the goal of “three years of intensive efforts” (2023-2025). In 2023, Liaoning Province proposed its new-era goals, which include: building a strategic stronghold for national major initiatives, creating a hub for major technological innovation, establishing a new highland for internationally competitive advanced manufacturing, pioneering modernized large-scale agricultural development, developing a model zone for high-quality integration of culture, sports, and tourism, and becoming a pivotal hub for Northeast Asia’s open cooperation.
Now, you can genuinely feel the changes in Liaoning, particularly in the attraction of high-end talents. For example, at Liaoning University over the past two years, we have recruited more than 70 outstanding scholars from around the world. Today, many top-tier academics are actively choosing to work in Liaoning.
Shenyang is striving to become a National Central City and a Northeast Asia International Hub City, benchmarking against global metropolises like Seoul in South Korea and Tokyo in Japan.
Guancha Net：You said before that Liaoning university may be the first one to win the Noble prize in Economics.
Yu Miaojie：Indeed, we have recently been recruiting top talent from various fields, including two renowned American economists. One is the highly distinguished Professor Russell Cooper, who currently works in Italy and is considered Nobel Prize-worthy—though whether he can ultimately win the award will depend on luck, among other factors. The other is the eminent Chinese-American economist Professor Wing Thye Woo, a Distinguished Professor in the Department of Economics at the University of California, Davis, who has also joined Liaoning University on a full-time basis. Now, it is widely recognized within the industry that Liaoning University has become one of the key hubs for research on the Chinese economy in the northern region.
Guancha Net：I have another question about the humanities. Recently, I came across the topic of the “global retreat of the humanities”, which has attracted widespread attention and discussion. It’s evident that in recent years, it’s not uncommon to see some universities cutting humanities programs and courses. What do you think of this phenomenon? What do you believe are the reasons behind it?
Yu Miaojie: First, I believe the “great retreat of the humanities”is a short-term phenomenon. From a long-term development perspective, it does not align with the trends of our era. In the 1940s and 1950s, many countries had just emerged from semi-colonial, semi-feudal societies and became newly independent nations. At that time, these nations placed a strong emphasis on developing STEM disciplines, believing that mastering these fields was the key to global competitiveness. As a result, more STEM professionals were trained. Since they were produced in greater numbers and proportions, many naturally rose to leadership positions. But in the long run, a society cannot thrive without the critical thinking, cultural insights, and ethical reflection that the humanities provide. The current trend is more of a temporary adjustment than a permanent shift.
Then, during the peak of globalization—especially before the 2008 financial crisis—the importance of the humanities steadily grew, including applied and social science disciplines like economics, finance, and accounting. Now, as the global economy faces challenges and anti-globalization sentiments rise, some countries are placing renewed emphasis on technological competition. This has naturally elevated the status of STEM fields, which aligns with an objective cyclical pattern. However, this does not mean the humanities have lost their significance. The humanities cultivate critical perspectives on ethics, culture, and societal structures—skills essential for addressing complex, interconnected challenges. While STEM drives innovation, the humanities ensure it aligns with human values and long-term sustainability. The current shift is more about short-term priorities than a fundamental devaluation of liberal arts education.
For example, if we study a rarely learned language and find only one expert in it, that person becomes a master of an obscure yet invaluable discipline—a rare treasure. On the other hand, some fields may face challenges because they are oversaturated or perceived as impractical. However, from the perspective of societal development, the humanities and social sciences are like gems among the sciences. The more advanced a society becomes, the more it needs these disciplines. The issue isn’t about usefulness or irrelevance—it’s about failing to effectively integrate academia, industry, research, and practical application. Once we bridge that gap, many humanities fields will play a unique and indispensable role in future progress. Philosophy, ethics, cultural studies, and political economy, for instance, are crucial for navigating complex societal challenges—from AI governance to cross-cultural diplomacy. Their value isn’t measured by immediate utility but in shaping frameworks for sustainable development. In short, the humanities aren’t declining; they’re evolving. The key is adapting their transmission and application to contemporary needs.
Guancha Net: What role should the humanities play in socioeconomic development? Under the “great changes unseen in a century” , what transformations must humanities disciplines undergo to adapt to this era and drive socioeconomic progress?
Yu Miaojie: This is a great question. In my view, the role of the humanities is irreplaceable—they must serve as a crucible for critical thinking. When teaching university students, I often emphasize: My goal isn’t merely to equip them with directly applicable vocational skills, which is the mission of technical schools. Practical application matters, but at a university, what you truly learn is how to think—the ability to adapt to any challenge through independent analysis. This intellectual agility is the core value of the humanities.
In terms of program development, we need to consider how the liberal arts can better stay grounded and closely integrate with regional and social development. Taking Liaoning University as an example, we place special emphasis on researching real-world issues and engaging with the actual world. We have also established urban research institutes in various locations, where our faculty and students can conduct fieldwork and identify local needs. When we send faculty members to these areas, those from the sciences typically take positions at technology bureaus, while those from the liberal arts may work at developments and reform commissions. This approach allows us to better promote societal progress from both macro and micro perspectives.
Guancha Net：Therefore, the liberal arts must continue to harness their power of critical thinking—this is indispensable for societal development. Thank you, President Yu. Those are all my questions today. Once again, thank you for joining us. We truly appreciate your time.
Yu Miaojie：Thank you.
