"China Can Fight a Trade War, but Its Real Test Is Growth Reform" - by CWP alum Zongyuan Zoe Liu
So far, China remains the only major economy to have engaged directly in a tit-for-tat tariff war with the Donald Trump administration since the April 1 Liberation Day tariff. Judging by the most recent numbers, Chinese officials have reason to believe that Beijing is at least holding its ground, if not winning, this extended trade confrontation with Washington—and that the Trump administration overestimated its tariff leverage over China.
As I argued in Foreign Affairs in April, China’s reaction to the Trump administration’s high-pressure tariff ultimatum reflects a carefully prepared retaliatory playbook. Since 2018, China has gained experience managing trade tensions with the United States, and it is now making use of hard-won lessons. It has moved methodically to diversify export markets, accelerating its drive for technology self-reliance; developed export control countermeasures against U.S. tech export restrictions; and worked to expand alternative financial systems and promote the broader use of the renminbi (RMB) and renminbi-based financial infrastructure.
China Can Fight a Trade War, but Its Real Test Is Growth Reform The Chinese economy has shown resilience despite external headwinds as the Trump administration ramps up its trade war, but long-term structural challenges remain. Expert Brief by Zongyuan Zoe Liu October 27, 2025 10:19 am (EST)
Zongyuan Zoe Liu is Maurice R. Greenberg senior fellow for China studies at the Council on Foreign Relations (CFR). Her work focuses on international political economy, global financial markets, sovereign wealth funds, supply chains of critical minerals, development finance, emerging markets, energy and climate change policy, and East Asia-Middle East relations. Dr. Liu’s regional expertise is in East Asia, specifically China and Japan, and the Middle East, specifically Gulf Cooperation Council countries. Dr. Liu is the author of Can BRICS De-dollarize the Global Financial System? (Cambridge University Press) and Sovereign Funds: How the Communist Party of China Finances its Global Ambitions (Harvard University Press).
Prior to joining CFR, Dr. Liu was an instructional assistant professor at Texas A&M’s Bush School of Government and Public Service in Washington, DC, where she taught courses on global economy, economic statecraft, and Chinese foreign policy. She joined the Bush School after post-doctoral fellowships at the Columbia-Harvard “China and the World Program” and the Center for International Environment and Resource Policy at the Fletcher School at Tufts University.
Dr. Liu was a research fellow at the Edwin O. Reischauer Center for East Asian Studies and a research associate at the NYU Stern Center for Sustainable Business. She was also a visiting research fellow at the Institute for International Monetary Affairs in Tokyo, Bank of Mitsubishi-UFJ, and the Delma Institute in Abu Dhabi. She taught courses on Asian energy security and political risk analysis at the School of Advanced International Studies at Johns Hopkins University.
Dr. Liu received her PhD in international relations from Johns Hopkins University and her MA in international relations from the George Washington University Elliott School of International Studies. She received her BA in history from Shandong Normal University in Jinan, China. Dr. Liu is also a CFA charterholder.
Photo Credit: https://www.cfr.org/expert-brief/china--fight-trade-war-its-real-test-growth-reform
