Welcome to Overseas Coverage’s China Temporary.
It’s been a 12 months of endurance for China, because the nation struggles to shake off the lengthy financial hangover of the COVID-19 pandemic.
Chinese language President Xi Jinping appears greater than keen to attend. He has maintained a seemingly unbreakable grip on energy, effectively previous the purpose at which he was anticipated to step down, and retirement is nowhere in sight.
This 12 months, Xi guided China by means of high-stakes commerce clashes with america and, much less efficiently, by means of continued financial challenges on the house entrance. Although this 12 months actually underscored Beijing’s financial clout on the world stage, with the increase many years now within the rear view, the trail forward is way much less clear.
Beneath are 4 traits that China Temporary adopted in 2025.
Profitable the Commerce Warfare
Many individuals anticipated U.S. President Donald Trump’s tariffs to set america on a collision course with China. Few, nevertheless, anticipated simply how decisively Beijing would prevail on this recreation of hen.
After Trump introduced a broad bundle of tariffs on most U.S. buying and selling companions in April that threatened to crush U.S.-China commerce, each side appeared to acknowledge the necessity for negotiation. A fragile truce was reached in Could, nevertheless it quickly gave technique to months of renewed escalation and retaliation, adopted by a rare climbdown after Trump and Xi’s face-to-face assembly in October.
Since then, Trump has gone out of his technique to accommodate Xi, seemingly desirous to safe a commerce deal: He has pressured Japan to melt its stance on Taiwan, tried to neuter U.S. authorities actions which may antagonize Beijing, and accepted exports of a few of the world’s strongest synthetic intelligence chips to China.
China, in the meantime, has quietly reneged on its pledge to buy U.S. soybeans and is exporting extra items than ever regardless of steep U.S. tariffs. The Trump administration’s failure to successfully apply strain on Beijing stems partly from its hollowing out of China experience throughout the U.S. authorities—in addition to Trump’s private want for approval, significantly from authoritarian leaders.
However China’s skill to squeeze international provide chains—due to its dominance of the important minerals sector—additionally proved decisive. After greater than a decade of ignored warnings, america is now scrambling to interrupt China’s grip on these assets, however it might lack the experience or state capability to take action for the foreseeable future.
A Weak Economic system
Again dwelling, China remained mired in issues in 2025—chief amongst them an economic system that has but to get well from the shock of the COVID-19 pandemic, which brutally uncovered weaknesses that had been accumulating for years.
Essentially the most critical of these weaknesses is the actual property sector, which makes up an amazing quantity of China’s family wealth. Even earlier than the pandemic, it was an apparent bubble that Beijing repeatedly tried to deflate with out triggering a broader disaster. However every try was met with resistance from the city higher center class, forcing the federal government to retreat.
China has up to now managed the collapse of actual property giants equivalent to Evergrande, however property gross sales have cratered, and main builders equivalent to Vanke stay on the brink.
The property droop has in flip devastated native governments, which have lengthy relied on land gross sales to plug price range gaps. It has additionally uncovered unsustainable debt ranges, worsened by the prices of sustaining zero-COVID insurance policies. Whereas the central authorities has tried to restructure or take in a few of this debt, it’s nonetheless struggling to evaluate the true scale of the issue.
Persistently excessive youth unemployment compounds these pressures and undermines Beijing’s push to spice up home consumption. Taken collectively, these traits increase the specter of extended stagnation. China’s 2020s may find yourself resembling Japan’s misplaced many years, particularly if deflation turns into entrenched.
Expertise Triumphs
A employee shows photovoltaic modules for photo voltaic panels in a manufacturing unit in Suqian, in China’s Jiangsu province, on Jan. 23. AFP/China OUT through Getty Pictures
At the same time as China’s broader economic system stagnates, components of its expertise sector are nonetheless crimson sizzling. The January launch of DeepSeek-R1 underscored simply how formidable a competitor China has turn into within the international AI race.
DeepSeek’s debut reignited debate over whether or not america ought to impose tighter controls on exports of high-end chips to China or if that might speed up Beijing’s ambitions to develop its personal chip sector. This dialogue was shortly overtaken by Trump’s announcement this month that he would permit sure high-end chip exports, so long as the U.S. authorities will get a reduce of the gross sales.
China’s method to AI is proving very totally different from that of america. Reasonably than chasing the fantasy of synthetic common intelligence, Beijing has targeted on sensible integration with manufacturing and business. Plus, the agenda is being set by the Chinese language political management somewhat than tech barons, who had been successfully cowed by a authorities crackdown that ran from 2020 to 2023.
If China is aggressive in AI, it’s dominant in inexperienced expertise—and never simply because america is now ruled by local weather change deniers. China is the worldwide chief in electrical autos, even because the sector’s vicious worth struggle has pushed many home producers into chapter 11.
China can also be including renewables to its personal grid at extraordinary pace and scale, serving to to offset its standing because the world’s largest emitter of greenhouse gases. In 2025, Chinese language companies accounted for roughly 75 p.c of world clear vitality patent functions and 31 p.c of worldwide inexperienced funding, greater than some other nation.
The By no means-Ending Purge
Not lengthy after turning into president in 2013, Xi started purging potential rivals beneath an anti-corruption banner. This 12 months, the marketing campaign intensified, significantly throughout the army. A cluster of generals had been detained all year long and expelled from the Chinese language Communist Occasion (CCP) en masse in October. (A few of them had changed figures eliminated in earlier purges.)
Two important components look like driving this crackdown. The primary is endemic corruption throughout the Chinese language Individuals’s Liberation Military Rocket Drive. The incentives for graft within the army are sturdy: Budgets are big, oversight is proscribed, and since China has prevented struggle for thus lengthy, there may be little worry that corruption will likely be uncovered by a disaster, as occurred to the Russian army in Ukraine.
The second issue is Xi’s fixation on political loyalty. China’s highest-ranking commissar, Miao Hua, was purged this 12 months, reportedly for failing to handle the advanced system of patronage and bribery that governs army promotions. The difficulty stays particularly delicate since Chinese language authorities found within the early 2010s that the CIA had covertly funded some senior officers’ “promotion charges.”
The purges prolonged past the army. One other high-profile casualty this 12 months was diplomat Liu Jianchao, extensively anticipated to be the subsequent international minister, who seems to have been undone by perceptions that he was too near america after a well-received go to in 2024.
If Overseas Minister Wang Yi, who additionally holds the CCP’s high international affairs submit, retains his job by means of subsequent 12 months, it’ll sign that high-level diplomacy has turn into too politically harmful for anybody however a hardened survivor.
