Technology plays a crucial role as Xi Jinping’s government faces major challenges that could derail its plans for 2025. 2024 was a complicated year for China. Although the Chinese government solved its economic problems at home, internationally it had to deal with the complexities of its alliance with Russia.
And while China continues to play a key role in the global economy, it could face challenges in five areas through 2025.
1. A New Rivalry with the United States
The most obvious concern for Beijing after Donald Trump took office in January will be the resumption of a highly aggressive US policy. Trump has already threatened China and other countries with an additional 60 percent tariff, signaling a continuation of the trade war he started during his previous presidency.
The contentious relationship with the United States is a significant challenge for China. But it is not that Beijing is not ready for it. It has learned lessons from the last US trade war. It can be seen that Chinese companies like Huawei have tried to reduce their dependence on American markets and technology by expanding into other sectors.
Similarly, China is taking retaliatory measures against the United States, such as banning the export of rare earth minerals. This means that Beijing is in a better position to fight a trade war than it was in 2017.
2. The Global Technology Race
Although tariffs will receive more attention, China could also compete fiercely in the technology race, which would be a challenge for the United States. Technology has increasingly become a key element in China’s plans as Beijing seeks to boost employment and production in the sector by boosting its exports.
Similarly, restricting this sector is a priority for the United States, as evidenced by its efforts to limit Chinese access to semiconductor technology. This is one of the new battlefronts. In addition to mastering key technologies, it is also a competition to set standards for technology.
This is reflected in what is known as the ‘Beijing Effect’ whereby China seeks to set standards for digital infrastructure similar to what the European Union has done for data management and privacy through its General Data Protection Regulation law. Such a move could potentially give China a strategic edge in the world of technology.
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3. European Union Tariffs
China has a similarly complex trade dispute with Europe, which has triggered a series of retaliatory tariff measures. For example, Beijing has imposed additional import tariffs on French brandy in response to the European Union’s restrictions on Chinese imports of electric vehicles in member states.
These tariffs have been imposed at a time when China has begun to gain a foothold in technologies that were previously exclusive to other countries. A trade war with the European Union could become a headache for Beijing, along with recent talks about expanding NATO’s role in Asia.
Especially if it leads to greater alignment between Brussels and Washington. But Trump’s established hostility towards the European Union could potentially work in China’s favor, if it means the European bloc looks for other partners.
4. Alliance with Russia
At first glance, Russia has become increasingly important to China through natural resources and markets, while China is an important source of economic cooperation for Moscow. However, this support has negatively affected China’s relations with European states. Some have seen Beijing as a facilitator in Russia’s war in Ukraine.
Similarly, the Russian invasion and war in Ukraine could provide a useful distraction for Beijing, diverting America’s attention away from China. Trump’s proposed peace plan for the Ukraine war, if successful, could allow the US to refocus on China.
A resolution to this dispute could also provide a path for rapprochement between Washington and Moscow, which would work against Beijing.
5. Conflicts in the Middle East
One cause of concern for China is the instability of the Middle East. Like Russia, the region is important to China for its resources and markets, as evidenced by the Zhuhai Air Show, where countries in the region were major customers of Chinese weapons.
Another cause for concern for Beijing is the possibility of a territorial conflict between Iran and Israel, with Iran being a key source of oil for China. A complete disruption of supplies due to armed conflict could create further economic problems for Beijing. Similarly, a renewed civil war in Syria could also create problems.
Chinese Uyghurs (a largely Muslim ethnic group) have participated in the forces that overthrew President Bashar al-Assad, most notably as part of the Turkestan Islamic Party. Some members of the TIP have threatened to use weapons acquired in Syria in a protracted war for an independent state in China’s Xinjiang region, where the Uighurs live.
In recent years, Xi Jinping’s forces have rounded up nearly one million Uyghurs, held them in concentration camps, and implemented a policy of re-education and strict surveillance. China is criticized globally for these tactics and authoritarian behavior.
While all factors point to China facing difficulties in 2025, there are also signs that Beijing is preparing to ease them. In particular, China will study the sanctions regime imposed by the West against Russia, which could potentially be used against China in the event of a conflict over Taiwan.
What happens in 2025 will be a crucial decision for Beijing as to whether it should forge new allies, move into new markets or create new economic power in the field of technology.