On a Thursday afternoon in Beijing’s Taikoo Li mall, the kind of place where juice bars quote Leonard Cohen on signage to lure wealthy young Chinese inside, shoppers browsing the flagship stores for US brands Champion, North Face, Nike and Apple said they expected prices to go up. Most who spoke to Fairfax Media said they were price sensitive, and would switch to other foreign brands, which were plentiful in Beijing. Chinese consumers may opt for European and Japanese cars instead of popular American brands like Tesla, its Beijing shop above, which will become more expensive with the new tariffs. Credit:Sanghee Liu Opting for European or Japanese products will be an easier choice for Chinese shoppers after import tariffs on 1500 foreign consumer products, ranging from cosmetics to home appliances, were slashed in July. More import tax cuts are planned for October. Loading

The move is designed to boost consumption in a slowing economy. And even as the "trade war tariff" on American cars like Ford and Tesla was raised to 40 per cent, the import tax on other foreign cars was slashed from 25 to 15 per cent in July. On Monday, the big salvos will be fired in the trade war. The Chinese government has already begun to take action to support exposed industries and its economy, after earlier punitive tariff rounds worth $US50 billion. The front page of the official People's Daily this week said the country would use the trade war as an opportunity to replace US imports. China has the world's biggest middle class, and may soon rival the US for the biggest retail market.

The Commerce Ministry says exporters could turn their focus to home, instead. "China has a huge domestic market and its consumption potential is constantly being released," said a spokesman. Jack Ma's online retail giant Alibaba announced with fanfare that it would set up a new semiconductor company to develop next-generation microchips, a big step in a drive to break China's reliance on American companies for crucial technology. In rural China, the biggest concern is pigs. China is the world's biggest pork producer, and the meat is the staple protein in the Chinese family's diet. But Chinese pigs are fed soybean meal, and most came from American farmers until China imposed a 25 per cent tariff on US soybeans in July. A soybean farm in Chunguang village, Jilin Province, China. The Chinese government is paying incentives to farmers to plant soy. Credit:Sanghee Liu

Across north-east China, the countryside is now swathed in fields of soybean, after farmers were offered a generous government subsidy of 400 yuan ($80) per mu of soybean planted, to replace American crops. A mu is a traditional measure of agricultural land. One hectare is roughly 15 mu. The Agriculture Ministry said 100 million mu must be set aside for soybeans this year. Chinese government has promised 400 yuan per 15 hectares of plantings as a subsidy to farmers to encourage them grow soybean in 2018. Credit:Sanghee Liu Chinese Premier Li Keqiang led a meeting of the State Council on Monday, approving more measures to help Chinese companies caught in the trade war. Customs clearance processes will be sped up, particularly for agriculture, and costs cut. Lending to small and medium-sized companies involved in foreign trade will be encouraged, and help given to export companies that need to diversify their markets.

Li said China wouldn't resort to massive stimulus - or government spending - to boost the economy in the face of the trade war. It would focus on stabilising jobs, by cutting company taxes. JP Morgan Chase has predicted China could lose 700,000 jobs as factories close and move offshore to avoid US tariffs, or up to 3 million jobs if it doesn't retaliate. China's economic regulator, the National Development and Reform Commission, on Tuesday pledged to speed up a host of big national rail and road construction projects. Loading Stephen Joske, an expert on the Chinese economy and former Australian treasury official in Beijing, says the most important part of the Chinese economy for Australia to watch is construction, because it is fed by Australia's mineral exports. He predicts construction activity will start to weaken, and the Chinese government will need to introduce stimulus. This is despite Beijing's campaign to reduce debt levels.

In contrast to Trump's tweets claiming China's markets are "collapsing" under the weight of his tariffs, Joske says the US tariffs have "not had an enormous impact so far" on China's economy. "But the trade war is escalating with no end in sight, so it will get worse. The US has really changed its view on China, and China doesn't know how to handle it," he says. Longer term, tariffs could be a big deal, as they will cement the already existing deep strategic mistrust. Richard McGregor, Lowy Institute Lowy Institute Senior Fellow Richard McGregor says in the short term, US tariffs might be less disruptive to China than headlines suggest. But long term, "to quote Bette Davis, fasten your seatbelts, it's going to be a bumpy night". McGregor says the US tariffs have only affected a small part of the Chinese economy.