Business
Xi’s real test is not Trump’s trade war
BBCListen to Laura read this article
If you say the name Donald Trump in the halls of wholesale markets and trade fairs in China, you’ll hear a faint chuckle.
The US president and his 145% tariffs have not instilled fear in many Chinese traders.
Instead, they have inspired an army of online Chinese nationalists to create mocking memes in a series of viral videos and reels – some of which include an AI-generated President Trump, Vice-President JD Vance and tech mogul Elon Musk toiling on footwear and iPhone assembly lines.
China is not behaving like a nation facing the prospect of economic pain and President Xi Jinping has made it clear that Beijing will not back down.
“For more than 70 years, China has always relied on self-reliance and hard work for development… it has never relied on anyone’s gifts and is unafraid of any unreasonable suppression,” he said this month.
His confidence may come in part because China is far less dependent than it was 10 years ago on exports to the US. But the truth is Trump’s brinkmanship and tariff hikes are pushing on pressure points that already exist within China’s own struggling economy. With a housing crisis, increasing job insecurity and an ageing population, Chinese people are simply not spending as much as their government would like.
Xi came to power in 2012 with a dream of a rejuvenated China. That is now being severely tested – and not just by US tariffs. Now, the question is whether or not Trump’s tariffs will dampen Xi’s economic dreams, or can he turn the obstacles that exist into opportunities?
Xi’s domestic challenges
With a population of 1.4 billion, China has, in theory, a huge domestic market. But there’s a problem. They don’t appear willing to spend money while the country’s economic outlook is uncertain.
This has not been prompted by the trade war – but by the collapse of the housing market. Many Chinese families invested their life savings in their homes, only to watch prices plummet in the last five years.
Housing developers continued to build even as the property market crumbled. It’s thought that China’s entire population would not fill all the empty apartments across the country.
The former deputy head of China’s statistics bureau, He Keng, admitted two years ago that the most “extreme estimate” is that there are now enough vacant homes for 3 billion people.
Getty ImagesTravel round Chinese provinces and you see they are littered with empty projects – lines of towering concrete shells that have been labelled “ghost cities”. Others have been fitted out, the gardens have been landscaped, curtains frame the windows, and they appear filled with the promise of a new home. But only at night, when you see no lights, can you tell that the apartments are empty. There just aren’t enough buyers to match this level of construction.
The government acted five years ago to restrict the amount of money developers could borrow. But the damage to house prices and, in turn, consumer confidence in China, has been done and analysts have projected a 2.5% decline in home prices this year, according to a Reuters poll in February.
And it’s not just house prices that worry middle-class Chinese families.
They are concerned about whether the government can offer them a pension – over the next decade, about 300 million people, who are currently aged 50 to 60, are set to leave the Chinese workforce. According to a 2019 estimate by the state-run Chinese Academy of Social Sciences, the government pension fund could run out of money by 2035.
There are also fears about whether their sons, daughters and grandchildren can get a job as millions of college graduates are struggling to find work. More than one in five people between the ages of 16 and 24 in urban areas are jobless in China, according to official data published in August 2023. The government has not released youth unemployment figures since then.
EPA – EFE/REX/ShutterstockThe problem is that China cannot simply flip a switch and move from selling goods to the US to selling them to local buyers.
“Given the downward pressure on the economy, it is unlikely domestic spending can be significantly expanded in the short term,” says Prof Nie Huihua at Renmin University.
“Replacing exports with internal demand will take time.”
According to Prof Zhao Minghao, deputy director of the Center for American Studies at Fudan University, “China does not have high expectations for talks with the Trump administration… The real battleground is in the adjustment of China’s domestic policies, such as boosting domestic demand.”
To revive a slowing economy, the government has announced billions in childcare subsidies, increased wages and better paid leave. It has also introduced a $41bn programme offering discounts on items such as consumer electronics and electric vehicles (EVs) to encourage more people to spend. But Prof Zhang Jun, the Dean of Economics at Fudan University, believes this is not “sustainable”.
“We need a long-term mechanism,” he says. “We need to start increasing residents’ disposable income.”
This is urgent for Xi. The dream of prosperity he sold when he took power 13 years ago has not become reality.
A political test for Xi
Xi is also aware that China has a disheartened younger generation worried about their future. That could spell bigger trouble for the Communist Party: protests or unrest.
A report by Freedom House’s China Dissent Monitor claims that protests driven by financial grievances saw a steep increase in the last few months.
All protests are quickly subdued and censored on social media, so it is unlikely to pose a real threat to Xi for now.
“Only when the country does well and the nation does well can every person do well,” Xi said in 2012.
This promise was made when China’s economic rise looked unstoppable. It now looks uncertain.
Getty ImagesWhere the country has made huge strides over the past decade is in areas such as consumer electronics, batteries, EVs and artificial intelligence as part of a pivot to advanced manufacturing.
It has rivalled US tech dominance with the chatbot DeepSeek and BYD, which beat Tesla last year to become the world’s largest EV maker.
Yet Trump’s tariffs threaten to throw a spanner in the works.
The restrictions on the sale of key chips to China, including the most recent move tightening exports from US chip giant Nvidia, for instance, are aimed at curbing Xi’s ambitions for tech supremacy.
Despite that, Xi knows that Chinese manufacturers are at a decades-long advantage, so that US manufacturers are struggling to find the same scale of infrastructure and skilled labour elsewhere.
Turning a challenge into an opportunity
President Xi is also trying to use this crisis as a catalyst for further change and to find more new markets for China.
“In the short term, some Chinese exporters will be greatly impacted,” says Prof Zhang. “But Chinese companies will take the initiative to adjust the destination of exports to overcome difficulties. Exporters are waiting and looking for new customers.”
Donald Trump’s first term in office was China’s cue to look elsewhere for buyers. It has expanded its ties across South East Asia, Latin America and Africa – and a Belt and Road trade and infrastructure initiative shored up ties with the so-called Global South.
China is reaping the rewards from that diversification. More than 145 countries do more trade with China than they do with the US, according to the Lowy Institute.
In 2001, only 30 countries chose Beijing as their lead trade partner over Washington.
Geopolitical gains
As Trump targets both friend and foe, some believe Xi can further upend the current US-led world order and portray his country as a stable, alternative global trade partner and leader.
The Chinese leader chose South East Asia for his first trip abroad after the tariff announcement, sensing his neighbours would be getting jittery about Trump’s tariffs.
Around a quarter of Chinese exports are now manufactured or shipped through a second country including Vietnam and Cambodia.
Recent US actions may also present a chance for Xi to positively shape China’s role in the world.
“Trump’s coercive tariff policy is an opportunity for Chinese diplomacy,” says Prof Zhang.
Getty ImagesChina will have to tread carefully. Some countries will be nervous that products being manufactured for the US could end up flooding into their markets.
Trump’s tariffs in 2016 sent a glut of cheap Chinese imports, originally intended for the US, into South East Asia, hurting many local manufacturers.
According to Prof Huihua, “about 20% of China’s exports go to the US – if these exports were to flood any regional market or country, it could lead to dumping and vicious competition, thereby triggering new trade frictions”.
Getty ImagesThere are barriers to Xi presenting himself as the arbiter of free trade in the world.
China has subjected other nations to trade restrictions in recent years.
In 2020, after the Australian government called for a global inquiry into the origins and early handling of the Covid pandemic, which Beijing argued was a political manoeuvre against them, China placed tariffs on Australian wine and barley and imposed biosecurity measures on some beef and timber and bans on coal, cotton and lobster. Some Australian exports of certain goods to China fell to nearly zero.
Australia’s Defence Minister Richard Marles said earlier this month that his nation will not be “holding China’s hand” as Washington escalated its trade war with Beijing.
China’s past actions may impede Xi’s current global outreach and many countries may be unwilling to choose between Beijing and Washington.
Getty ImagesEven with all the various difficulties, Xi is betting that Beijing will be able to withstand any economic pain longer than Washington in this great power competition.
And it does appear that Trump has blinked first, last week hinting at a potential U-turn on tariffs, saying that the taxes he has so far imposed on Chinese imports would “come down substantially, but it won’t be zero”.
Meanwhile, Chinese social media is back in action.
“Trump has chickened out,” was one of the top trending search topics on the Chinese social media platform Weibo after the US president softened his approach to tariffs.
Even if or when talks do happen, China is playing a longer game.
The last trade war forced it to diversify its export market away from the US towards other markets – especially in the Global South.
This trade war has China looking in the mirror to see its own flaws – and whether it can fix them will be up to policies made in Beijing, not Washington.
Top picture credit: Getty Images
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For quite a while now, people within the business community have been talking about how AI continues to improve task efficiency and streamline operations, but few are truly exploring how this new era is affecting new business lead generation.
Since opening Agent99’s doors 18 years ago, part of my new business strategy has simply been to ask people how they found us. The majority of our leads come through referrals, followed by Google. However, just last week, I was on two new business calls and when I asked both prospects how they came across Agent99, they gave the same surprising response: “by asking ChatGPT”.
Where consumers and clients once relied on Google for recommendations, be it agencies, restaurants, dry cleaners, or anything in between, that’s no longer the default.
Today, people are entering these same queries into AI tools and expecting real-time, curated answers based on a mix of web data, reviews, and sentiment. And this shift has caught many business owners off guard. A high Google ranking no longer guarantees your business will be visible or recommended through AI platforms. All that work on your SEO strategy? It’s no longer the only game in town.
This was a light bulb moment for me as a business owner. If you’re not thinking about how you rank on AI platforms and prioritising this, you’re losing new business opportunities.
When I took a deeper look at why we were ranking so well on ChatGPT, and how this new kind of ‘search engine’ prioritises content, I realised (after some thorough research) that it’s because we’ve consistently focussed on our own PR (ie third party credible endorsement), winning awards, garnering reviews from our clients, and reporting on our marketing campaigns on our own website blog and social pages. This is what AI platforms prioritise when making recommendations.
So, if you’ve noticed a dip in leads lately or you simply want to boost your company’s visibility in the AI space, here are three strategies I strongly recommend.
Make your SEO plan AI-friendly
It’s no longer enough to optimise your company website for Google alone. Instead of short, Boolean-style search queries, people are now asking long-form, conversational questions. And in response, tools like ChatGPT are generating concise, curated answers drawn from a wide range of sources — with a clear preference for natural, human-sounding language.
It might seem ironic that AI prefers human content, but it’s the new reality.
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To match this, we recommend rewriting key pages on your website, starting with your ‘About’, ‘Services’ and ‘Home’ pages, using language that mirrors how real people would ask for your services in everyday conversation.
For example, instead of writing: “We deliver integrated management solutions,” try: “We help Australian businesses develop management strategies that support sustainable growth”.
If relevant, start a blog that directly answers the kinds of questions people might be asking ChatGPT, and think carefully about how they’re asking them. Once you’ve mapped out your content strategy, commit to publishing consistently. AI platforms favour businesses that post regularly and demonstrate long-term authority in their field.
Prioritise earned media and content
AI tools place more weight on what others say about your business than what you say about yourself. So, while your website content is important, the next priority is securing earned media coverage. This includes article mentions in credible publications and thought leadership content in niche outlets relevant to your industry.
While the media landscape has evolved, organic coverage on high-authority platforms still carries serious influence. That includes local business media, trade publications, and long-form podcasts — especially those with strong digital footprints. A single mention in a well-respected outlet often holds more weight than a dozen paid ads in the eyes of AI.
You should also be submitting your business for awards, rankings, and “Best of” lists. Third-party recognition like “Top PR Agencies in Australia” or “Best Accountants in Melbourne” dramatically increases your chances of being recommended by AI tools for those search terms.
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Lastly, make sure you’re actively collecting client testimonials and online reviews. Reach out to past and current clients and ask for a testimonial you can publish. Genuine, positive sentiment from others boosts your ranking and trust level within AI results.
Show up where conversations are happening
A lesser-known — but highly effective — way to improve your AI visibility is by showing up where your audience is already talking. Think Reddit, Quora, LinkedIn comments, Facebook groups, and even the comment sections of popular blogs or YouTube videos. AI tools are constantly crawling and learning from these conversations, and businesses that participate meaningfully often see a lift in visibility.
Start by choosing two or three platforms where your target audience is most active. If you’re B2B, this might be LinkedIn or industry forums. If you’re more consumer-facing, Reddit, TikTok, or Facebook might be the place. Jump in, answer questions, share your perspective, and most importantly, offer value.
When your brand is mentioned organically or involved in high-engagement threads, it sends strong signals to AI tools. Over time, this can help position your business as a credible authority in your space.
Also, respond to users who tag or mention your brand on social platforms. Engaging with user-generated content builds trust, encourages loyalty, and creates digital breadcrumbs that prove your relevance and responsiveness — two factors that AI prioritises more than ever.
AI isn’t just a trend; it’s a fundamental shift in how consumers discover and choose businesses.
Rather than fearing this new giant in the room, lean in. By understanding how AI platforms work and proactively shaping your digital footprint, you’ll improve your ability to attract quality leads, earn recommendations, and strengthen your brand presence in what’s becoming an increasingly competitive and complex market.
The maternity fashion retailer Seraphine, whose clothes were worn by the Princess of Wales during her three pregnancies, has ceased trading and entered administration.
Consultancy firm Interpath confirmed to the BBC on Monday that it had been appointed as administrators by the company and that the “majority” of its 95 staff had been made redundant.
It said the brand had experienced “trading challenges” in recent times with sales being hit by “fragile consumer confidence”.
The fashion retailer was founded in 2002, but perhaps hit its peak when Catherine wore its maternity clothes on several occasions, leading to items quickly selling out.
Prior to the confirmation that administrators had been appointed, which was first reported by the Financial Times, Seraphine’s website was offering discounts on items as big as 60%. Its site now appears to be inaccessible to shoppers.
The main job of administration is to save the company, and administrators will try to rescue it by selling it, or parts of it. If that is not possible it will be closed down and all its saleable assets sold.
Will Wright, UK chief executive of Interpath, said economic challenges such as “rising costs and brittle consumer confidence” had proved “too challenging to overcome” for Seraphine.
Interpath said options are now being explored for the business and its assets, including the Seraphine brand.
The retailer’s flagship store was in Kensington High Street, London, but other well-known shops, such as John Lewis and Next, also stocked its goods.
The rise in popularity of Seraphine, driven in part by Royalty wearing its clothes, led to the company listing on the London Stock Exchange in 2021, before being taking back into private ownership in 2023.
Interpath said in April this year, the company “relaunched its brand identity, with a renewed focus on form, function and fit”.
“However, with pressure on cashflow continuing to mount, the directors of the business sought to undertake an accelerated review of their investment options, including exploring options for sale and refinance,” a statement said.
“Sadly, with no solvent options available, the directors then took the difficult decision to file for the appointment of administrators.”
Staff made redundant as a result of the company’s downfall are to be supported making claims to the redundancy payments service, Interpath added.
Tuesday will mark another big milestone in the long road to justice for the victims of the Post Office IT scandal.
The chair of the inquiry into it – Sir Wyn Williams – will publish the first part of his final report, focusing on compensation and the human impact of the scandal.
Thousands of sub-postmasters were wrongly blamed for financial losses from the Post Office’s faulty Horizon computer system, which was developed by Fujitsu.
More than 900 people were prosecuted and 236 were sent to prison in what is believed to be one of the biggest miscarriages of justices in UK history.
Sir Wyn put those victims at the heart of the inquiry’s work, which has pored over several decades worth of technical evidence and grilled many of those who had a role in ruining so many lives.
Dozens of sub-postmasters gave evidence too – many who had lost their businesses, their homes and some who served prison sentences.
Sir Wyn’s findings on their treatment will surely be damning given everything he has heard since the inquiry began in 2022.
The inquiry became almost box office viewing – racking up more than 20 million views on YouTube, with people with no connection to the Post Office following it closely.
However, it is going to be months before we find out who Sir Wyn will point the finger of blame at.
That will come in part two of the report, meaning that accountability is still a long way off.
Sir Wyn has taken a big interest in compensation for the victims, admitting at one point that he’d stretched his terms of reference on the issue, “perhaps beyond breaking point”.
He held four separate hearings on redress and issued an interim report in 2023, likening the various schemes to a “patchwork quilt with a few holes in it”.
Victims and their legal representatives still battling to secure final payouts will be looking to see what his conclusions are on compensation and whether it is living up to the mantra of being full and fair.
They hope his recommendations will result in more action.
Still, you might be wondering why we’re only getting the first part of the final report.
Sir Wyn knows how pressing compensation is to many of the victims and that’s why he wants to publish his recommendations on the issue as soon as possible.
“It’s something I am very keen to say as much about as I reasonably can,” he told the inquiry last year.
But the implication from this is that part two – establishing what happened and who is to blame – isn’t coming out any time soon.
This second report may not be published until 2026 given the sheer volume and complexity of the evidence as well as the need to give those who are criticised the chance to respond.
As for justice, any criminal trials may not start until 2028. Police investigating the scandal confirmed last month that files won’t be handed to prosecutors until after the final inquiry report is published.
After years of waiting, even after part one of Sir Wyn’s report is published, the sub-postmasters’ long road to justice will continue.
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