Exclusive interview with former Deputy Representative of the Ministry of Commerce for International Trade Negotiations, Chong Quan: The challenges facing China-U.S. relations are escalating from tariff issues to "systemic competition," and we must be prepared for a "long-term battle."

Everyday Economic News Reporter | Zhang Huaisui
Editor | Dong Xing Sheng

On March 5th, the Fourth Session of the 14th National People’s Congress opened at the Great Hall of the People in Beijing. This year’s “Government Work Report” (hereinafter referred to as the Report) continues to prioritize expanding domestic demand as the primary focus of economic work through 2026.

The report states that adhering to demand-driven growth, coordinating consumption promotion and investment expansion, and exploring new space for domestic demand growth will better leverage China’s super-large market advantage.

Meanwhile, in deploying the main goals and major tasks for the “14th Five-Year Plan” period, the report also emphasizes that, in the face of complex and severe external environments, it is essential to uphold expanding domestic demand as a strategic foundation. It advocates closely combining policies that benefit people’s livelihoods and promote consumption, with investments in goods and people, vigorously boosting consumption, and significantly increasing the resident consumption rate and effective investment.

This means that expanding domestic demand will become the main engine driving economic growth over the next five years.

Under the policy backdrop of “demand-led” growth, what roles will the “three engines” of economic growth—consumption, investment, and exports—play in 2026? How can issues of insufficient confidence in consumption and investment be addressed? What is the trend for foreign trade exports this year? How are the “crisis and opportunity” reflected in various aspects?

Focusing on these questions, during the National Two Sessions, the Daily Economic News (hereinafter referred to as NBD) conducted an exclusive interview with Chong Quan, former member of the Party Leadership Group of the Ministry of Commerce, former Deputy Representative for International Trade Negotiations at the Ministry of Commerce, and former President of the China WTO Research Institute.

Chong Quan has made significant contributions in bilateral and multilateral trade and investment negotiations, WTO dispute resolution, and anti-monopoly efforts, playing a key role in safeguarding national economic interests and promoting fair trade.

This year, China’s export growth is expected to reach about 5%

NBD: 2026 marks the beginning of the “14th Five-Year Plan.” How do you view the current “confidence bottleneck” faced by China’s economy? How does this “bottleneck” compare to the period before China joined the WTO?

Chong Quan: First, from a macro fundamental perspective, China’s economic “stability” is evident. The structure of primary, secondary, and tertiary industries continues to optimize, showing a balanced and coordinated development pattern. From the demand side, in 2025, the “three engines”—final consumption expenditure, gross capital formation, and net exports of goods and services—contributed 2.6, 0.8, and 1.6 percentage points respectively to GDP growth, with ongoing structural improvements and a further consolidation of the main role of domestic demand. This fully demonstrates that China’s long-term positive economic fundamentals remain unchanged, with strong resilience, large potential, and vibrant vitality.

Regarding the current “confidence bottleneck,” I see it more as a reflection of the profound transformation phase and the challenges brought by complex external changes.

First, structural contradictions on both supply and demand sides are prominent. Currently, “strong supply but weak demand” is a notable feature, with domestic effective demand insufficient and the momentum for recovery in consumption and investment needing further stimulation. Residents’ willingness and capacity to consume need to be further activated, and the tendency toward precautionary savings has increased, reflecting that market confidence recovery is a gradual process.

Second, the profound and complex changes in the external environment. The world is experiencing a once-in-a-century shift, with unilateralism and protectionism on the rise, and global industrial and supply chains undergoing deep adjustments. This structural squeeze has significantly reduced the space for China’s previous reliance on “external demand at both ends” in the international cycle, increasing external demand uncertainty.

At the same time, China faces the “growing pains” of transitioning between old and new kinetic energy. During high-quality development, we are undergoing a profound shift in growth drivers. Some traditional industries face overcapacity adjustments, the real estate market is transitioning to new development models, and local fiscal and debt balances are under pressure. These transitional “subtractions” may temporarily impact market expectations and confidence.

Before joining the WTO, China’s main contradictions were insufficient production capacity and capital. The “bottleneck” then was how to break through constraints and integrate into the world. After joining the WTO, China successfully integrated into the international cycle, forming a pattern of “two markets and two resources,” leveraging external demand to unleash domestic production potential.

Today, China has become the world’s second-largest economy and the largest trading nation, with a complete modern industrial system and the advantage of a super-large market. The current “bottleneck” is not about insufficient production capacity but about how to achieve a dynamic balance between supply and demand at a higher level and realize self-reliance and strength in a complex environment.

NBD: The Government Work Report places the emphasis on demand-led growth as the top priority. Does this mean that the importance of exports has decreased? What roles will the “three engines” play in driving economic growth in 2026?

Chong Quan: Currently, the global geopolitical landscape is undergoing profound adjustments. The acceleration of technological revolutions, exemplified by AI, and the increasing challenges posed by climate change are reshaping the world trade pattern in unprecedented ways.

Meanwhile, a notable fact is that in 2025, China’s trade surplus exceeded 1 trillion USD. This data has attracted global attention, but more importantly, it reflects a deeper meaning—China has shifted from a trade giant to a trade power. This not only confirms the correctness of the export-oriented development strategy since reform and opening up, especially after joining the WTO, but also signifies a qualitative leap in China’s international competitiveness.

In this context, understanding “demand-led” growth, we need to grasp a fundamental judgment: emphasizing domestic demand does not mean exports are no longer important.

The reason for prioritizing domestic demand is that, at this new stage of development, building a strong domestic market and making good use of our large-scale market advantage are essential to consolidating the foundation of economic development and coping with external uncertainties. From advancing the construction of a unified national market to optimizing consumption supply and stimulating consumption potential, all policy measures aim to make domestic demand a “stabilizer” and “ballast” for economic growth.

Looking ahead to 2026, the “three engines” will play different but mutually supporting roles.

First, consumption will continue to serve as the fundamental driver. Currently, China’s consumption structure is undergoing profound changes—from being mainly goods-based to a balanced development of goods and services. The growth potential of service consumption, especially in cultural tourism, health and wellness, and digital services, is accelerating. This means that the support from domestic demand will become more diverse and sustainable.

Second, exports are expected to maintain strong resilience. Predictions suggest that China’s export growth in 2026 could reach about 5%, continuing to outpace overall economic growth. This is supported by a mild recovery in global industrial production, providing strong backing for exports of intermediate and capital goods. Meanwhile, China’s export structure is shifting from goods to services, with knowledge-intensive service exports becoming new growth poles. The “quality leap” in exports will become more prominent.

NBD: You mentioned earlier that exports will remain resilient in 2026. How do you forecast this year’s foreign trade situation? Where do the “crisis and opportunity” manifest?

Chong Quan: My basic judgment for China’s foreign trade in 2026 is that, although external environment complexities, severity, and uncertainties are increasing, China still has conditions to maintain resilience, and export growth is expected to stay within a reasonable range, close to 2025 levels.

It is important to note that the focus of foreign trade policy is undergoing profound adjustment—from past sole pursuit of export scale to safeguarding the integrity of the industrial system and seeking continuous upgrading under increasing external pressures. This is a more strategic and resolute policy orientation.

The “crisis” side mainly stems from profound external changes. First, external demand faces significant uncertainty. WTO forecasts that global merchandise trade volume growth in 2026 may slow from 2.4% in 2025 to around 0.5%. The weakening of global economic growth momentum and shrinking external demand cannot be ignored.

Second, geopolitical risks continue to ferment. Regional conflicts and great power rivalries not only disrupt trade logistics but also heighten risks in cross-border payments and financial settlements, challenging trade stability.

Third, protectionism is escalating. It is extending from targeted tariffs to comprehensive restrictions along entire supply chains. Some countries, under the guise of “de-risking,” are pushing rule barriers, technological blockades, and investment reviews, creating higher-level “decoupling” and “break chains” risks for China.

The “opportunity” side lies in the structural adjustment and kinetic energy conversion of China’s foreign trade. First, the diversification of trading partners continues. Recently, exports to ASEAN, Africa, and Belt and Road countries have steadily increased, deepening economic and trade cooperation with “Global South” countries. This diversification enhances resilience against demand fluctuations in developed economies.

Second, export structure is accelerating upgrading. From “the three new” (new energy vehicles, lithium batteries, photovoltaic products) to high-end electromechanical equipment, China’s technology-intensive products are increasing their global market share. Meanwhile, knowledge-intensive service exports are becoming new growth engines, with the potential of service trade accelerating.

Third, new formats like cross-border e-commerce are growing rapidly. With their flexibility, efficiency, and direct reach to consumers, they are becoming important for stabilizing foreign trade. By 2026, China’s cross-border e-commerce import and export scale is expected to surpass 3.2 trillion yuan, further contributing to foreign trade resilience.

Additionally, the operation of the Hainan Free Trade Port’s system reforms is gradually releasing benefits. Hainan is becoming a new open testing ground for attracting outward-oriented industries. This institutional innovation may explore new paths for China’s engagement with high-standard international trade rules and inject new vitality into foreign trade.

Looking at “crisis” and “opportunity” together, an important opportunity now is that global markets still have strong demand for Chinese products, especially for “the three new” and other technology-intensive products. This not only reflects China’s industrial upgrading achievements but also provides strong support for sustained foreign trade growth.

NBD: The “14th Five-Year Plan” suggests expanding high-level opening-up with a focus on service sector market access. Compared to goods trade, what are the potential advantages of service trade?

Chong Quan: The “14th Five-Year Plan” explicitly emphasizes “focusing on the service sector to expand market access,” which is a strategic deployment of great significance. To understand this, we must recognize a basic fact: if in the past decades China’s integration into the world was mainly through goods trade, then in the coming period, service trade will become the “new engine” and “main battlefield” of high-level opening-up.

Compared to goods trade, the potential of service trade manifests in multiple dimensions. First, the broad space for knowledge-intensive service exports. Currently, China’s knowledge-intensive service exports still lag behind major service trade powers like the US and UK, especially in high value-added areas such as finance, legal, consulting, and intellectual property. There is considerable room to increase market share and influence, which is both a gap and an opportunity. With improvements in domestic professional service capabilities and accelerated internationalization, knowledge-intensive services are fully capable of becoming new drivers of foreign trade growth.

Second, digital trade is emerging as a new engine. In recent years, exports of telecommunications, computing, and information services have maintained rapid growth, with digital services expanding overseas. Notably, digital cultural products like online literature, online games, short videos, and online dramas are highly popular in overseas markets, and the cultural influence of “Chinese流” (Chinese style) is transforming into tangible service exports. This “digital + culture” integration opens up new imaginative space for service trade.

At the same time, the potential of inbound tourism is enormous, and the service trade deficit is expected to continue narrowing. Historically, tourism services have been the main source of China’s service trade deficit. But recent developments—such as expanded visa-free policies, improved cross-border payment facilitation, and the strengthening of “China Tours” branding—are leading to a rapid recovery and strong growth in inbound tourism.

Finally, high-end services like finance, legal, and intellectual property rights still have untapped internationalization potential. These are core components of modern services and high ground in global service trade competition. As China’s service marketization, rule of law, and internationalization levels continue to improve, exports in these high-value-added fields are expected to gradually open up.

The challenges in China-US relations are shifting from tariff conflicts to “systemic competition”

NBD: You recently mentioned “China-US rivalry and global governance.” Focusing on 2026, are the challenges mainly about tariffs, or are they deeper, involving “rules and system” blockades? During the “14th Five-Year Plan,” how do you think we should build a “bottom-line” approach to US relations?

Chong Quan: China-US relations are among the most important bilateral relations in the world today. Their trajectory not only concerns the well-being of the peoples of both countries but also profoundly influences the global landscape. First, we need to recognize a fundamental change: China-US economic and trade relations have always been mutually dependent. After the US launched trade wars and implemented “small courtyard high wall” containment policies, the interdependence has decreased year by year, undergoing profound adjustments.

Data from the General Administration of Customs show that in 2025, China’s import and export with the US totaled 4.01 trillion yuan, accounting for 8.8% of China’s total trade. This figure is disproportionately small relative to the size of the two economies and results in efficiency losses and higher costs for both sides. Although this change was initiated by the US, and China responded passively, it has become an unavoidable premise in planning our US relations.

Against this background, the challenges China-US relations in 2026 are no longer just about tariffs but have escalated into deeper “rules and system” blockades and “systemic competition.”

We should see that US policy focus is shifting from indirect trade measures to more direct, fundamental technological restrictions. In critical frontier areas like semiconductors, AI, and quantum computing, the US continues to tighten restrictions, attempting to slow China’s innovation through technological blockade. This means the competition has moved from market and product levels into the realm of core technology and innovation roots.

In facing such challenges, the “bottom-line” thinking during the “14th Five-Year Plan” should be summarized as: be prepared for a “long-term war,” strengthen internal capabilities, and resolutely do well our own affairs—making the real economy stronger, better, and bigger, and continuously enhancing independent innovation.

In terms of implementation, I believe the first step is to tackle core technologies—focus on breakthroughs in “choke points” such as semiconductors, AI, high-end software, and biomedicine. Strengthening national strategic science and technology forces, leveraging the advantages of the new national system, and stimulating market entities’ innovation vitality are essential. The goal is to achieve a series of strategic breakthroughs during the “14th Five-Year Plan.”

Second, diversify the industrial chain layout and deepen pragmatic cooperation with “Global South” and Belt and Road countries. Building a more diversified and resilient supply chain network can reduce dependence on single markets and safeguard industrial chain security through openness.

Third, control strategic resources, accelerate the integration and technological upgrading of key minerals like rare earths. Transform resource advantages into industrial advantages and rules influence, forming effective countermeasures in key areas.

Meanwhile, give full play to the role of “specialized, refined, distinctive” small and medium-sized enterprises and “little giants.” These are the capillaries and vitality sources of a manufacturing powerhouse. Creating a better environment for their development will help more “invisible champions” emerge in niche fields.