The year 2025 has brought numerous challenges for China with it. The country’s future could be severely impacted by these complications. Xi Jinping, the President of China, will have to make urgent policy decisions to ensure the sustainable rise of China as the global hegemon.
This issue is straining the Chinese’s overall economic efficiency, healthcare services, and pension system. The Xi administration has tried to counter this challenge by encouraging a larger family system and relaxing the one-child policy. However, to date, all such actions have proved to be a futile effort. Economic uncertainties and life inclinations of the Chinese youth make them reluctant to contribute to the government’s efforts against demographic instability. For sustainable economic development and social stability, President Xi Jinping needs to find resilient solutions.
Economic Challenges and the Path Forward
China is also facing significant economic challenges that jeopardize its long-term economic growth outlook. According to the International Monetary Fund (IMF), in 2024, the global economic growth has declined to 2.9 percent. This holds the potential to further exacerbate China’s economic challenges. Although the country has succeeded in eradicating extreme poverty, its economic forecast is discreet at a mere 4.6 percent, leading to a long-term economic recession.
Massive debt, decreasing prices, and oversupply have sparked a severe crisis in China’s real estate sector, a significant driver for the country’s economic growth. This is leading to financial strains among the local governments of the country, as they are heavily dependent on land sales for generating revenue. The incumbent Chinese government needs to counter these economic issues by fostering innovation, promoting domestic consumption, and instituting structural reforms. However, these ambitions can only be achieved by transforming short-term economic stability into long-term economic reliability, which would be an uphill task.
Geopolitical Tensions and Diplomatic Dilemmas
Moreover, China’s geopolitical challenges are also increasing at an unprecedented level. The US President Donald Trump has further intensified the country’s trade war with China, by imposing heavy tariffs on Chinese goods, soon after his inaugural as the 47th US president. Rising tensions surrounding the Taiwan issues are also expected to escalate and can usher in a cross-Strait crisis that could lead to making the situation more complicated. The United States has already been involved in lobbying against China in the South China Sea. It has been supporting anti-China littoral states, to destabilize Xi Jinping’s government in China.
Taiwan issue has always been a bone of contention between the two countries, raising security concerns in the South China Sea. In a recent summit with Indian Prime Minister Narendra Modi, Trump agreed to sell F35 stealth aircraft to India. This move is also motivated to counter the rise of China. President Xi will have to take prudent measures to manage and mitigate rising geopolitical tensions in the region. China will have to forge new alliances, safeguard its strategic interests, and engage in enhanced diplomacy to counter the US attempts to isolate China in the region. Otherwise, the country will have to face significant economic and diplomatic repercussions.
Trump 2.0 will further intensify the country’s anti-China activities. However, his prime focus will be on tougher economic and trade policies against China. During his previous term as the US president, Donald Trump imposed tariffs on Chinese commodities, in an attempt to address problems like unfair trade practices, and alleged intellectual property theft, along with reducing the US trade deficit with the country. This sparked a trade war between the two economic giants of the world. President Donald Trump is once again repeating the history.
The United States is also competing in technology with China. Just like his previous term, the US President is imposing restrictions on China’s technological companies. China will also retaliate to such actions, as it did in the past. To cope with the domestic challenges, the country needs to increase wages and social mobility and decrease living costs. It also needs to take effective measures to counter climate change, which is being accelerated by rapid industrialization and is taking a significant toll on the lives of the middle class in the country. Although China has made considerable progress in mitigating the impacts of climate change by instituting strict regulations and investing in renewable energy resources, the magnitude of the issue is gigantic. The failure of Xi’s government to effectively address these challenges could impinge China’s long-term economic and diplomatic ambitions in 2025.
Taut Bataut – is a researcher and writer that publishes on South Asian geopolitics
