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 outlining 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 the strategy of expanding domestic demand as a fundamental policy. It advocates closely combining measures to benefit people’s livelihoods and promote consumption, investing in both physical assets and human capital, vigorously boosting consumption, significantly increasing the resident consumption rate, and expanding 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 Drivers” of economic growth—consumption, investment, and exports—play in 2026? How can issues of weak consumer and investor confidence 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 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 negotiations, WTO dispute resolution, and anti-monopoly areas, 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 contribution to GDP growth from final consumption expenditure, gross capital formation, and net exports of goods and services—the “three engines”—were 2.6, 0.8, and 1.6 percentage points respectively, with ongoing structural improvements. The role of domestic demand as the main driver is further consolidating. This fully demonstrates that the long-term positive fundamentals of China’s economy 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 the complex external environment.

First, there are structural contradictions on both supply and demand sides. Currently, “strong supply, weak demand” is a prominent 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; the tendency for 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 limited the “external loop” of international circulation that China once relied on, significantly increasing external demand uncertainties.

At the same time, we face the “pain period” of transitioning between old and new growth drivers. In the pursuit of high-quality development, we are undergoing a profound shift in momentum. Some traditional industries face overcapacity adjustments, the real estate market is transitioning to new development models, and local fiscal and debt balances are challenged. These “subtractions” during the transformation process 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 global economy. After joining WTO, China successfully integrated into the international cycle, forming a “dual market, dual resources” pattern, 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 amid complex environments.

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 Drivers” play in 2026?

Chong Quan: Currently, the global geopolitical landscape is undergoing profound adjustments. The acceleration of technological revolutions, such as 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 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 WTO accession, but also indicates that China’s international competitiveness is experiencing a qualitative leap.

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.

Image source: Daily Economic News reporter Zhang Jian

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

First, consumption will continue to serve as the fundamental driver. Currently, the domestic consumption structure is undergoing profound changes, shifting from primarily goods consumption to a balanced mix 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 outlook is supported by a gradual recovery in global industrial production, providing strong support 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 evident.

Image source: Qingbaijiang District Publicity Department

Investment structure will continue to optimize. This year’s investment focus is shifting from traditional scale expansion to deep integration of “investment in physical assets” and “investment in people.” High-quality urban renewal, increasing social welfare-related investments, and effectively stimulating private investment will be key highlights. Although fixed asset investment growth may slow to around 1%, the investment structure will be more optimized, with higher efficiency and closer ties to people’s well-being.

“Digital + Culture” Integration Opens New Space for Service Trade

NBD: You mentioned 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 2026 foreign trade 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 emphasis on scale to safeguarding the integrity of the industrial system and seeking continuous upgrading under increasing external pressures. This is a more strategic and determined 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%. With weakening global economic momentum, the pressure of shrinking external demand cannot be underestimated.

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.

Additionally, protectionism is escalating. It is extending from targeted tariffs to comprehensive restrictions along entire supply chains. Some countries, citing “risk reduction,” are pushing for rule barriers, technological blockades, and investment reviews, raising the risk of decoupling and supply chain disruption to higher levels.

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

Second, export structure is accelerating upgrading. From “the new three” (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. This indicates China’s manufacturing is moving up the value chain.

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. In 2026, cross-border e-commerce import and export are expected to surpass 3.2 trillion yuan, further contributing to foreign trade resilience.

Furthermore, the operation of Hainan Free Trade Port’s customs clearance reforms is gradually unleashing institutional dividends. Hainan is becoming a new open testing ground for attracting outward-oriented industries. This institutional innovation may explore new pathways for China to align with high-standard international trade rules and inject new vitality into foreign trade.

Hainan Free Trade Port Image source: Daily Economic News reporter Zhang Jian

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

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

Chong Quan: The “14th Five-Year Plan” explicitly proposes “focusing on the service sector to expand market access,” which is a strategic deployment of great significance. To understand this, first recognize a basic fact: in the past decades, China’s integration into the world was mainly through goods trade. Moving forward, service trade will become a new engine and main battlefield for 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. This gap also represents potential. As domestic professional service capabilities improve and internationalization accelerates, knowledge-intensive services are fully capable of becoming new drivers of 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. The integration of “digital + culture” opens new horizons for service trade.

Meanwhile, inbound tourism has huge potential, and the service trade deficit is expected to continue narrowing. Tourism services have long been the main source of China’s service trade deficit, but recent developments are changing this. With expanded visa-free policies, improved cross-border payment facilitation, and the “China Tour” brand effect, inbound tourism is recovering rapidly and showing strong growth.

Finally, high-end services like finance, legal, and intellectual property rights still have untapped international 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 improve, exports in these high-value fields are expected to open up gradually.

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

NBD: You recently mentioned “US-China 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: US-China relations are among the most important bilateral relations today, and their trajectory not only affects the well-being of both peoples but also profoundly influences the global landscape. First, a basic fact has changed: the US-China economic and trade relationship has always been one of interdependence. After the US launched a trade war and adopted containment policies, the degree of mutual dependence 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 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 a premise we must face when planning US relations.

Against this background, the challenges in US-China 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 toward China is shifting from indirect trade measures to more direct, fundamental technological restrictions. The US continues to tighten controls on key frontier areas like semiconductors, AI, and quantum computing, 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.

Image source: Daily Economic News media library

In facing these challenges, the “bottom-line” thinking during the “14th Five-Year Plan” should be summarized as: prepare for a “protracted war,” strengthen internal capabilities to withstand external turbulence, resolutely do well our own affairs, continuously strengthen, improve, and expand the real economy, and comprehensively enhance independent innovation.

In terms of implementation, I believe the first step is to tackle core technologies—focusing on breakthroughs in “choke points.” We need to reinforce national strategic science and technology in key areas like semiconductors, AI, high-end software, and biomedicine, leveraging the advantages of the new national system, while stimulating market entities’ innovation vitality, aiming for significant 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 critical minerals like rare earths. Transform resource advantages into industrial advantages and rule-making power, establishing 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 enterprises are the capillaries and vitality sources of a manufacturing powerhouse. Creating a better environment for their development will help more “hidden champions” emerge in niche fields.