China’s Xi nods to ‘external uncertainties’ in new year’s speech

Xi said the nation’s economy is on “an upward trajectory" and that the government has extensive international ties to offset challenges, messages that contrast with skepticism in the international investment community that Beijing is addressing its debt overhang and sagging consumption ahead of what could be a new trade war with the U.S.

“The Chinese economy faces some new conditions, including challenges of uncertainties in the external environment and pressure of transformation from old growth drivers into new ones," Xi said, in apparent nods to both U.S.-led efforts to cut Beijing from technology supply chains and signs that China can no longer rely on heavy investment to underpin its economy.

“But we can prevail with our hard work. As always, we grow in the wind and rain, and we get stronger through hard times. We must be confident," Xi said.

The address, while devoid of detail, marks one of Xi’s highest-profile messaging opportunities ahead of Trump’s inauguration.

Xi’s speech, delivered from a polished wooden desk in the Beijing leadership compound, has been an annual fixture since his first full year in power, 2013. It attracts massive coverage even if it typically provides only hints of the leader’s thinking. Much of the media attention in past years was paid to the books and photos arranged behind Xi and items on his desk such as telephones, but, as if to demonstrate a more seriousness of purpose, this year’s 10-minute address offered no peek at personal items. His backdrop was only a painting of the Great Wall and China’s flag.

A panorama of video clips shown as Xi spoke featured semiconductor manufacturing, aircraft assembly and grain harvest in China to illustrate the nation’s self-sufficiency even in the face of pressure by Western nations to cut the country off from supply chains for items like advanced technology.

Other imagery placed Xi in international forums that China has used to rally nations against U.S.-led initiatives. “In a world of both transformation and turbulence, China, as a responsible major country, is actively promoting governance reform and deepening solidarity and cooperation among the Global South," Xi said.

In a break with past years, Xi wasn’t shown during his address meeting one-on-one with foreign leaders like Russian President Vladimir Putin, though Xinhua News Agency said the two leaders exchanged New Year’s greetings earlier. According to Xinhua, Xi had told Putin their mutual trust and strategic coordination is handled in a spirit of “nonalliance, nonconfrontation and not targeting any third party," likely referring to the U.S.

Against stepped up arms sales by the U.S. to Taiwan, Xi reiterated China’s intent to take over the democratically governed island, saying “no one can ever stop China’s reunification, a trend of the times," an echo of his comments in last year’s speech, when he said: “China will surely be unified."

Trump threatens new dislocations for Xi.

“The Biden administration has stabilized the U.S.-China relationship with an emphasis on putting guardrails and reducing uncertainties, but the return of President Trump to the White House means everything is going to be uncertain," China specialist Zoe Liu told a recent podcast of the Council on Foreign Relations, where she is a fellow.

Tariffs are the immediate concern. Trump campaigned on applying 60% tariffs on Chinese imports, and in November said he’d add 10% to existing taxes on such goods.

Xi earlier had addressed relations with Washington more directly than he did in the New Year’s address in a condolence message following the death of Jimmy Carter. The former U.S. president was an important figure for Beijing because he established diplomatic relations with Beijing on the first day of 1979 and hosted Deng Xiaoping the following month. China is ready to advance China-U. S. relations along the right track of sound, stable and sustainable development, Xinhua quoted Xi as saying.

Xi had also previously indicated a readiness to work with Trump in comments to President Biden in South America in November, though the Chinese leader also issued warnings defined as four red lines that include not undermining the Chinese Communist Party or holding China back.

Economic confidence has taken a big hit in China since the Covid pandemic, much of it centered on Xi’s resistance to addressing economic risks with the kind of central government stimulus Beijing pursued in late 2009 to counter the global financial crisis.

A Chinese Communist Party conclave in December pledged a return to the “moderately loose monetary policy" last pursued during the financial crisis more than a decade ago. But it hasn’t been accompanied by the spending that Beijing pursued back then—a period of much stronger growth and rising property values.

Xi is more focused on security and technological development, while reviving the property sector is low among his priorities, according to Andrew Collier, a senior fellow at Harvard Kennedy School.

Facing a weaker growth outlook, dragged by a struggling property sector and longer-term concerns like a shrinking population, Xi said Tuesday, “We have proactively responded to the impacts of the changing environment at home and abroad."

He predicted China’s gross domestic product output will exceed 130 trillion yuan for the first time in 2025, which Xinhua said would be worth more than $18.08 trillion. Earlier in the day, he had predicted China’s economy would post 5% growth for 2024.

The International Monetary Fund projects continued economic slowing in China, including 4.5% expansion in 2025.

Write to James T. Areddy at James.Areddy@wsj.com