Growth Dragons Weekly: China Secures Trade Truce, Banks' Steady Results, Midea & Haier Expand Amid Headwinds, Meituan Arms for Battle
What happened in China this week:
China’s Tit-for-Tat Response Worked — A Temporary Truce Achieved Between the US and China
Home Appliance Market Shrinks 3.2%, But Midea and Haier Still Grew 10% in 3Q25
China Banks Face Margin Pressures, Yet Banking System Holds Steady
WuXi AppTec Delivers 3Q25 Blowout Results, Raises Full-Year Guidance on CRDMO Strength
Meituan Raises War Chest as Profit Collapses 97% in Price War
#1 China’s Tit-for-Tat Response Worked — A Temporary Truce Achieved Between the US and China
China’s economy stands at a critical juncture, grappling with internal headwinds even as it secures a vital, stabilizing truce in its trade relationship with the United States. While China’s long-term strategy involves a pivot toward domestic consumption, its near-term growth still heavily relies on external demand.
The recent positive meeting between U.S. President Donald Trump and Chinese President Xi Jinping offers a crucial short-term reprieve. It eases external pressure and gives Beijing some breathing room to push forward with its ambitious economic transformation.
Internally, signs of economic stress are mounting. The manufacturing sector—once a key growth engine—is in a prolonged slump, with the official PMI contracting for the seventh consecutive month in October. A weak property sector and tepid domestic demand have weighed down growth, with consumption unable to offset broader structural drags.
In response, Beijing is charting a new path in its upcoming five-year plan. The Communist Party has pledged to “significantly” increase the role of domestic consumption in the economy, aiming to reduce China’s reliance on exports and build a more resilient growth model powered by its 1.4 billion consumers.
But this transformation has proven difficult. Despite several rounds of policies and initiatives aimed at stimulating consumer spending, the results have fallen short of producing sustained momentum. Cultural norms around prudence and saving in uncertain times remain deeply entrenched. It remains to be seen whether more effective, long-term policy support can truly shift this behavior.
In the meantime, China still needs exports to keep factories running and to meet its 5% GDP growth target. That’s why the recent trade deal with the U.S. matters. The agreement helps avert a full-scale trade war, offering immediate relief to China’s beleaguered export sector. By scrapping the threat of a 100% tariff hike and lowering the overall tariff rate on Chinese goods from 57% to 47%, the deal directly eases the complex international environment that has been straining China’s industrial base.
Additional agreements were also reached. The tariff on fentanyl exports from China was reduced from 20% to 10%. China agreed to suspend recent rare earth export restrictions for one year and pledged to purchase large quantities of soybeans and other U.S. agricultural goods. Both countries also agreed to suspend additional port fees.
While China remains dependent on exports in the short term, it has not capitulated to U.S. pressure. China’s tit-for-tat negotiating approach appears to have paid off—at least for now—as the U.S. backed down from further tariff escalations.
This fragile truce does more than provide economic relief—it strengthens China’s diplomatic and strategic standing. With the U.S. stepping back and President Trump skipping the APEC summit, Xi has taken center stage. He continues to build alliances with key partners like Japan and Canada, pushing APEC’s agenda to secure global supply chains and diversify China’s trade relationships.