While the year marking the transition to the second quarter of the century carries symbolic weight for many, for China, 2025 stands as a critical moment of assessment and trial by fire. The tariff war with the US, relations with the new American presidency, the dominance in the energy transition technologies market, its role in the increasingly fraught geopolitical scenario, and, not least, its decisive role in global climate action, all place the Asian giant's next moves under intense scrutiny. Meanwhile, it must also navigate a slowing economy and internal rising public discontent.

At the upcoming Two Sessions (Liang Hui), the most significant political event in the People's Republic, set to begin on the 5th of March, Chinese leaders will be required to deliver on the state of the economy and, crucially, establish a new growth target. Especially considering the country’s struggle to meet the previous 5% growth target.
Moreover, this year marks the conclusion of the Made in China 2025 initiative, launched a decade ago to achieve technological self-sufficiency and position China as a global leader in high-tech industries. Additionally, according to forecasts from the IEA and various international observers, and despite the Chinese caution in making claims, this year could see the People’s Republic reach its peak emissions.
Here, among the many issues to watch for in China in 2025, is a summary of the most pressing ones.

Made in China 2025: the dream of technological leadership

A decade ago, in May 2015, the Chinese government unveiled the Made in China 2025 initiative (中国制造2025, Zhōngguó zhìzào 2025), a mega-development plan aimed at transforming the People's Republic from the “world’s manufacturing hub” for low-tech goods into a global leader in industry 4.0. Sectors identified as strategic included aerospace, biotechnology, biomedicine and pharmaceuticals, information technology, artificial intelligence, maritime and railway engineering, new materials, industrial automation and smart manufacturing, agricultural machinery, and, of course, electric vehicles.

After 2018, with the beginning of the “trade war” that Trump wanted, the initiative’s slogan largely disappeared from speeches and official documents. However, the Chinese government persisted with significant investments in high-tech industries, adopting new catchphrases such as “high-quality development” and “new productive forces”, while steadfastly emphasising the importance of achieving technological self-sufficiency.

A decade on from the initiative’s launch, it is fair to say that tangible results have been achieved, except for a few sectors, such as semiconductors. China now stands as the unrivalled leader in global markets for batteries, photovoltaic components, and the critical materials needed for their production. Its railway system has left European high-speed trains in the dust, and the cutting-edge magnetic levitation “flying train”, capable of reaching speeds of 1,000 km per hour, is currently undergoing testing. Meanwhile, the electric vehicle sector has hit a remarkable milestone, producing 10 million vehicles in a single year, with the historic overtaking, announced after New Year's Eve, of Tesla by BYD Auto.
Much has also been said about the “low-altitude economy”, referring to the exploitation of airspace below 1,000 metres with electric vertical take-off and landing vehicles (eVTOLs or “flying machines”) — a sector promising to be the next major market opportunity. Finally, as Xi Jinping highlighted in his New Year’s speech, the Chinese lunar probe Chang’e-6 made history by collecting rock samples from the far side of the Moon for the first time.

Involution, distrust, consumption

Yet, the triumphant narrative of China’s technological march forward does not paint the full picture. In the wake of the pandemic, a slowdown in economic growth, coupled with the collapse of the real estate bubble, has triggered a crisis in domestic consumption and a troubling youth unemployment rate, standing just below 20%.

The term neijuan (内卷), which translates literally as “rolling inwards” and is often rendered in English as “involution”, has become popular on Chinese social media. The buzzword came from the campus of one of the nation’s most prestigious institutions, Tsinghua University in Beijing. A photograph of a student working on his computer while riding a bicycle went viral, earning him the nickname “Tsinghua’s involuted king”. The image has come to symbolise the gruelling efforts and intense competition young Chinese face in striving to improve their economic prospects —struggles increasingly seen as futile, given that finding a job in the city is now almost impossible and the economy no longer moves as fast as it did a few years ago.

There is a sense of uncertainty among young people (who, by the way, are having fewer and fewer children) and their parents, who are now increasingly focused on savings. As Sim Tze Wei writes in ThinkChina, “retail sales expanded 3% year-on-year in 2024, well below the 5% forecast. Household consumption in China accounts for less than 40% of GDP, considerably lower than the approximately 65% seen in other developed economies.”
One of the key challenges facing Xi Jinping and the Chinese government in 2025 is to restore people's confidence and revitalise domestic consumption. Hints in this direction emerged during the 75th anniversary of the People's Republic in October (and then in the months that followed), with a series of financial measures, employment policies, and incentives aimed at boosting household consumption and addressing demographic decline. Whether these efforts will be sufficient, or if further measures will follow, remains to be seen.

China, a new climate hero?

While Xi Jinping (strategically) avoided mentioning it in his New Year’s speech, Chinese climate policies will undoubtedly remain a critical topic in 2025. With Trump’s return to the US presidency, China finds itself as the “responsible global power” in climate action — a moral leadership role that Xi likes very much, and which he also likes to claim in other areas, such as cooperation for the Global South and peace diplomacy.

Chinese leaders, however, remain cautious regarding climate targets. Published shortly before COP29 in Baku, the Annual Report on Policies and Actions on Climate Change 2024 reaffirmed the conservative goal of reaching peak emissions by 2030. Even though all major international observers, with the IEA in the lead, are already predicting this for 2025.
It could be “an excuse to avoid committing to more ambitious targets,” Belinda Shape of the CREA, based in London, told us in November. Certainly, the Chinese government’s priorities currently lean more towards economic recovery than achieving peak emissions. Nevertheless, China’s real economy is undeniably shifting towards the transition. By the end of 2024, there were as many as 1,500 GW of installed renewable capacity — around 50% of its total generation capacity. An unparalleled global record.

Who’s scared of Trump?

Not China, one might say in a joke. And most China watchers would broadly agree.
As political scientist Yan Xuetong noted in Foreign Affairs, “Chinese leaders do not look at Trump with fear.” His proposed tariff policies—a key pillar of his election campaign—are certainly a cause for concern for the Chinese economy, which is already grappling with overcapacity in several sectors, starting with EVs. However, Yan adds that China has learned valuable lessons from Trump’s first term and is now better prepared to handle him. Furthermore, as James Palmer, Deputy Editor of Foreign Policy, observes, US tariffs could paradoxically serve as a convenient scapegoat for Xi Jinping, allowing him to deal with domestic discontent over the not-so-easy economic situation.

Tariffs aside, as Simone Pieranni told us in the wake of the US elections, “Trump is a businessman, and Chinese leaders likely believe they can communicate with him more directly than with a Democratic president, who would be more focused on issues like human rights.” In short, there is no fear of ideological clashes or an alarming escalation into a Cold War-like atmosphere. “The competition between the United States and China,” Yan writes, “is not about ideology but technology. The two countries will battle for innovation in fields such as artificial intelligence and will compete for markets and high-tech supply chains.”

And finally, as already mentioned in connection with climate action, Trump's America First and his withdrawal from international agreements and bodies (the Paris Agreement, the WHO) opens new perspectives of geopolitical and "moral" positioning for China, which is increasingly eager to present itself as a "responsible" power working for global stability, equity, and sustainability.

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