China Leans on Domestic Market to Buffer Exporters from US Trade Conflict

China is doubling down on its vast domestic market to shield its exporters from the ongoing trade conflict with the United States, Bloomberg reports.

The Commerce Ministry announced Friday that it would leverage the country’s massive consumer base to help companies navigate “external shocks,” a clear reference to the economic fallout from the US-China trade tensions.

“The domestic market offers strong backing for enterprises involved in foreign trade,” the ministry stated following a meeting in Beijing led by Vice Minister Sheng Qiuping.

The ministry emphasized the need to capitalize on the “advantages of the super-large-scale market” and to integrate efforts to stabilize foreign trade with strategies to boost domestic consumption.

This renewed focus comes as leading Chinese e-commerce giants are launching initiatives to connect exporters with local consumers. JD.com, Alibaba Group Holding Ltd., and Tencent Holdings Ltd. have all announced programs aimed at helping exporters expand their domestic reach. JD.com, in particular, has pledged to purchase no less than 200 billion yuan ($27.4 billion) worth of products from exporters over the next year, facilitating their shift toward the domestic market.

However, analysts remain cautious about the feasibility of entirely offsetting the loss of American business with domestic sales. Lingering concerns about business confidence, weakened consumer sentiment, and a struggling job market are making consumers hesitant to loosen their purse strings. Furthermore, excess capacity in certain industries is driving fierce price competition, exacerbating existing deflationary pressures on the Chinese economy.

Despite these challenges, the Commerce Ministry is actively seeking to facilitate collaboration between industry associations, supermarkets, and e-commerce platforms to support exporters. The ministry had previously indicated its intention to help these entities cooperate to overcome the current challenges.

On Sunday, the Ministry launched a pilot program in Hainan province, aimed at promoting domestic sales of goods initially intended for export. This initiative involves trader groups from key sectors including mechanical and electrical products, textiles, food, metals, minerals, chemicals, and healthcare. The Ministry plans to extend the project to ten additional provinces, signaling its commitment to a nationwide push to redirect export-oriented production towards the domestic market.