WILL CHINA´S SHOPPERS CUSHION THE TRUMPIAN BLOW? / THE ECONOMIST

Til they drop

Will China’s shoppers cushion the Trumpian blow?

Perhaps. But nastier outcomes are also imaginable

Areal Armani polo shirt might cost 1,400 yuan ($190) if bought from the fashion house’s shop on JD.com, one of China’s biggest e-commerce platforms. 

But search for “Armani manufacturer” on the same app and similar shirts can be found for just 60 yuan. 

The cheaper offerings seem to have been made by Armani suppliers and sold directly to local consumers without the brand’s mark-ups—a steal for Chinese shoppers, if true.

Such products have been sold for years on Chinese e-commerce platforms, despite occasional purges. 

There may soon be more. 

Although the Trump administration says it wants a deal with China, there has been no sign of progress. 

American tariffs on many Chinese goods are currently at a hefty 145%, meaning that many factory operators are looking to sell their wares within China instead of exporting them. 

E-commerce firms, rather than the state, are the ones helping them do that.

China’s government has yet to unveil an economic-stimulus plan in response to the tariffs. 

But its biggest tech companies have rushed in with a flurry of measures meant to rescue exporters. 

JD.com has announced that it will buy 200bn-yuan-worth of goods meant for export, which it will then resell at home. 

Pinduoduo, another outlet, has said it will invest 100bn yuan to help suppliers adjust after Mr Trump cancelled a rule that allowed them to ship low-value packages to America without paying border levies. 

Pinduoduo’s Boston-based subsidiary, Temu, has relied heavily on such tax-free shipments.

“Export-turned-internal-consumption”, as the concept is described, is becoming a national effort. 

Alibaba, an e-commerce giant founded by Jack Ma, will launch an “export channel” where firms can sell their products locally. 

Baidu, an internet firm, says that it will help up to 1m firms do so with AI-sales avatars. 

Douyin and Kuaishou, two video apps, will host live-streaming sessions to sell exports. 

Meituan, a delivery app, will extend its network to thousands of new counties across China. 

On April 20th Yonghui, a supermarket chain, began selling products sourced from the Chinese suppliers of Costco and Sam’s Club, two American retailers.

Leaders in Beijing find themselves in a difficult situation. 

Exports drove 40% or so of the growth in GDP in the first quarter of 2025, the highest first-quarter tally in over a decade, as foreign buyers loaded up in anticipation of tariffs. 

Now early gauges show American imports falling swiftly.

Will shoppers at home be able to fill the hole? 

They have spent freely in the first months of the year. 

Household consumption grew by 5.2% year on year in the first quarter, up from 4.5% the quarter before. 

Although much of this has been attributed to an official trade-in programme, which has subsidised home-appliance upgrades, other sales are growing fast as well. 

For instance, in March the value of sportswear bought online grew by 30% year on year.

But relying on domestic demand is risky. 

This is not the first time China has tried to kick-start a national market for export goods. 

As demand from America shrank during the global financial crisis of 2007-09, Chinese leaders called on exporters to sell more at home. 

They tried again in mid-2020 during the covid-19 pandemic. 

Even if such efforts helped stall factory lay-offs, they did not make much difference over the longer term.

Economists expect the impact of the trade-in scheme to diminish as people fill up on microwaves and the like. 

Meanwhile, China’s property crisis continues to drag down consumer sentiment. 

Goods prices have been falling for months; adding a wave of supply to a market suffering from weak demand could worsen deflation.

The shift may also exacerbate China’s “race to the bottom” mentality, which, some Chinese commentators suggest, will in turn spur price wars in industries where margins are already thin. 

It is like “asking people to walk with their hands”, noted a financial blogger who goes by the name Weishao. 

China’s economy is export-orientated for a reason, he writes; there is simply not enough domestic demand right now. 

All the cheap Armani polos in the world are not going to change that.