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January 1, 2025

From Trump's potential tariffs to high-tech development: What we're watching in 2025 

Simone McCarthy

Na Bian/Bloomberg/Getty Images

China’s 2024 was dominated by the country’s ongoing financial woes, with officials in recent months unveiling multiple measures in an attempt to inject vitality into the world’s second-largest economy. 

2025 was already set to be a test of how those moves addressed deep challenges including high local government debt, slowing growth, weak consumer demand and a dearth of opportunity for young jobseekers. 

But now, China faces a potentially compounding threat – the return of Donald Trump to the White House. 

Trump has threatened wide-ranging tariffs on Chinese imports to the United States and is likely to continue his predecessor’s policies to choke off China’s access to high-tech goods that could help it develop artificial intelligence (AI) and other capabilities with military potential. 

How the relationship between the world’s two largest economies evolves under the new American leadership will likely have profound implications for both countries – and the broader region.

The coming year marks the symbolic point by which Beijing aimed to have transformed from a mass manufacturing base into a high-tech powerhouse under its ambitious “Made in China 2025” plan, unveiled a decade ago. 

The catchphrase may have been downplayed in recent years, but China in many ways has succeeded in its plan. Its companies have catapulted themselves to the fore of global production of goods such as electric vehicles (EVs), solar panels and batteries, and are ramping up their ambitions in aerospace and AI. 

But friction with the West threatens that progress – and is likely to worsen. The US president-elect's last term saw Washington launch a global campaign against cutting-edge Chinese telecoms firm Huawei, while outgoing President Joe Biden in the past four years has coordinated with allies to cut China off from certain high-tech sectors. 

In 2024, US-led concerns about China’s industrial overcapacity have pushed not just the US but the European Union and Canada to put steep tariffs on Chinese-made EVs – hitting exports that Beijing had hoped will help power not just its high-tech transformation but its economic recovery. 

The stakes are high for Chinese leader Xi Jinping and his officials. 

The public economic optimism of the first decades of the century has been dashed in recent years by factors including Beijing’s crushing pandemic controls, a string of regulatory crackdowns on private business and a slowing economy.  A growing emphasis on national security and toeing the party line has not helped. 

Many young people are struggling to find decent work and unwilling to have children or unable to afford them. There may soon be more pets than toddlers in urban China, by one financial firm’s count – a big problem for a country with a rapidly aging society. 

Economic anxieties are also driving a consumption downgrade that has people flocking to street stalls rather than powering a transition to a high-end services economy.  

A string of violent public attacks, including the deadliest known in a decade in which 35 people were killed after a car plowed into crowds at a sports center, have put people on edge. These have been widely seen as “revenge against society” by those who are down and out and desperate. 

Authorities who already keep an iron grip on expression and activism have been increasingly skittish about any activities that in their eyes could plant the seeds of a social movement or a platform for social critique. Even Halloween revelers and college students biking en masse to try some dumplings have rattled local officials and received pushback.  

With that backdrop in mind, here’s what the Meanwhile in China team will be watching in 2025.  

Economic outlook  

Chinese officials ended last year by unveiling a string of measures to boost the economy, including a 10 trillion yuan ($1.4 trillion) plan announced in November to help local governments refinance their debt, and a September stimulus package mostly focused on monetary measures. 

The measures – while underwhelming to some economists – signaled that officials were alive to the need to address the country’s economic woes and move against the very real risk that annual growth could miss the “around 5%” target. 

Some analysts are expecting GDP growth to sink below that mark in 2025 and say policymakers will need to roll out more measures to shore up the economy – and the headline growth number – against potential tariffs from the US. 

There are signs the government is putting itself on a footing to respond to tariffs and other headwinds.  

At a key economic meeting last month, top Communist Party officials pledged to adopt a “moderately loose” monetary policy for 2025, alongside a more proactive fiscal policy to spur economic growth.  

They also said China will focus on expanding domestic demand and reviving consumption – and signaled a focus on boosting the private sector, which has been buffeted the regulatory crackdowns of recent years. 

How officials pull off current economic efforts – and the extent to which they expand on them in the coming year – will have an important and direct impact on people’s livelihoods in 2025. They’ll also play a role in determining how comfortable international firms feel operating in China.  

Key unknowns are whether public confidence can be restored in the economy and the direction of the country – and how intensely Chinese authorities look to ensure stability and social cohesion in the face of these challenges. 

The home front 

China is set to continue its drive to innovate and move toward “high-quality development” in the coming year – even as it grapples with US-led export controls on goods like cutting-edge semiconductors. 

The country’s space agency will launch a mission to explore a near-Earth asteroid and continue to prepare not just to send astronauts to the moon in the years ahead but build a research station there – part of a growing space competition with the US.   

The burgeoning commercial space sector is also expected to hit key milestones in China’s efforts to launch its own reuseable rockets and expand broadband satellite constellations to rival those of American firm and industry leader SpaceX. 

On the climate front, Beijing also has an opening to lead the global new-energy transition as it adds wind and solar power to its grid at an astonishing pace and remains a leading global producer of green technologies. While the country remains the world’s biggest carbon polluter by far, some observers believe its emissions will soon peak and fall – in what would be a significant turning point. 

Meanwhile, despite the focus on the economy and high-tech development, there’s little sign that Xi’s emphasis on national security as the paramount objective is going anywhere. 

The leader’s struggle against graft and disloyalty in his modernizing military also appears to have no end in sight. A purge of one of his closest proteges in the military, announced in November, suggests Xi, like many strongmen before him, may be increasingly turning against his own handpicked loyalists. 

It also raises questions – to watch in the year ahead – over Xi’s ability to end systemic corruption in the military and enhance its combat readiness at a time of heightened geopolitical tensions. 

The anti-corruption crackdown is also widening in the country's vast public sector. More than 200 specialized detention facilities have been built nationwide to accommodate a new interrogation system where suspects can be held for up to six months without ever seeing a lawyer or family member, a CNN investigation has found.

World view  

Those geopolitical tensions are only expected to deepen in 2025 – especially if Trump makes good on his threats to leverage broad tariffs on Chinese goods. 

Yet while Beijing has much to be concerned about with the return of the Trump administration, the mercurial leader’s tendency to rattle US allies also opens a sorely needed opportunity for Beijing. 

Already Xi has sought to cast China as a champion of globalization in contrast to a protectionist US. He’s mounted diplomacy to repair damaged ties with Europe, Australia and India – with an eye to driving a wedge between the US and its partners on China policy. 

Those efforts are only likely to ramp up in 2025, when Beijing may also have another key opportunity to showcase itself as a global power broker. 

That’s if it manages to position itself as a key player in potential peace talks between Russia and Ukraine – something Trump has suggested he’s open to as he looks to end the war.  

A Chinese role in ending the conflict could help smooth the frictions Beijing kicked up with trade partners in Europe as it tightened ties with a warring Moscow in recent years. It could also help Beijing ensure Russia, likely to remain its principle diplomatic and security partner, remains unbroken by whatever outcome is reached.

But Beijing does not appear poised to temper its territorial assertions in the South China Sea or its intimidation of the self-ruling democracy of Taiwan – ensuring many countries in Asia will continue to see it as a threat to regional peace. 

And Beijing may find itself more limited in another part of the world where it's aimed to exert diplomatic power – the Middle East – as it may be more likely to play a role in the physical rebuilding of Gaza or Syria than deciding how spiraling conflicts in both places end. 

• A South Korean court has approved an arrest warrant for President Yoon Suk Yeol, the embattled leader who plunged the country into political chaos by his shock decision to declare martial law nearly a month ago. This is the first time a sitting South Korean president has faced an arrest warrant.
• The damaged flight data recorder from the Jeju Air passenger jet that crash-landed in South Korea will be sent to the United States for analysis, Seoul’s transport ministry said Wednesday, as bereaved families began visiting the crash site.
• Azerbaijan’s President Ilham Aliyev has accused Russia of accidentally shooting down an airliner on Christmas Day in a disaster that killed 38 people, and covering up the cause.
• Taiwan’s presidential office has held a “tabletop” exercise simulating military escalations by China, a first-of-its-kind drill involving government agencies beyond the armed forces that highlights Taipei’s urgency in ensuring preparedness against an increasingly assertive Beijing.
• And, outgoing US President Joe Biden has spent the past four years building up American alliances in Asia. Will they survive a second Trump presidency?