5 Predictions for China in 2025

Welcome to Foreign Policy’s China Brief.

This was a relatively quiet if depressing year for China. But 2025 could be a lot stormier, especially when it comes to clashes with the United States. As the COVID-19 pandemic showed when it began nearly five years ago, there are many potential unknowns in a country of 1.4 billion people. The return of the mercurial Donald Trump to the White House adds to the uncertainty.

However, there are some things that we can still count on; below, we round up five bets on China’s next year.

A Harsh Trade War

With Donald Trump beginning a second term as U.S. president and promising at least 60 to 70 percent tariffs on China, the leadership in Beijing is readying for a ferocious economic struggle. To be sure, Trump makes a lot of promises and threats that never materialize, but tariffs are an article of faith to him—and there are plenty of fellow believers tapped for his new administration.

China’s manufacturing economy is already seriously overcapacity. Losing a large part of the U.S. market would be a major problem, even if the United States also struggled with inflation and a lack of alternative providers. This time around, though, China has more options—especially after the pandemic showed the powerful role that its supply chains play in the U.S. economy.

Despite Washington’s efforts at so-called friend-shoring and hardening supply chains, Beijing has plenty of potential leverage. As economist Lizzi C. Lee recently noted in Foreign Policy, China has been testing out countermeasures to target U.S. companies and could take sweeping steps in response to Trump’s broader plans.

Chinese President Xi Jinping’s planning shouldn’t get too much credit. The economic crisis has not changed the leader’s commitment to a directed economy and officials’ unwillingness to tell him no. After two years of factory prices dropping, and with the consumer economy on the brink, Xi’s grasp of economics seems shaky: He has reportedly said that he doesn’t see what’s so bad about deflation.

Brooding Public Discontent

Ironically, Trump’s tariffs could help Xi. It’s unlikely that the tariffs will lead to an economic rethink in Beijing, as some Chinese economists have optimistically suggested, but they could provide a convenient scapegoat.

Popular discontent is growing amid the economic slowdown, especially among young people struggling with record unemployment and faced with a repressive government. As in the past, insecurity is driving young job-seekers toward government work, but even those so-called iron rice bowl posts aren’t guaranteed anymore.

Movements such as “lying flat”—meaning, giving up on work or ambition—tend to be cyclical among Chinese youth. But bitterness and cynicism seem especially prevalent today, with idealists leaving China if they can.

It’s not just the economy. The moment of Chinese national unity in 2020, when the country seemed to have beaten a pandemic that brought the world to its knees, made the subsequent two years of COVID-19 lockdowns especially disillusioning.

Yet the Chinese Communist Party (CCP) has successfully stymied civil society and any channels for political anger, trying to make an example of those who stood up in 2022. Given that economic anger has driven major protests in the past, the government might be happy to be able to blame the United States if things get even worse.

A Grassroots Government Crisis

 The economic slowdown is hitting particularly hard at the lower levels of China’s government, where local governments are still struggling with a massive debt problem. The pandemic years were difficult for local budgets, since lockdowns were not only harmful economically but also extremely costly to maintain.

On top of that, land sales made up a substantial portion of local government budgets, and real estate developers are no longer buying thanks to the slow collapse of China’s housing bubble. Local government revenue from land sales was down by more than 22 percent this year, continuing a yearslong fall.

Local governments are turning to desperate measures to save money. Some are withholding wages—a common practice among cash-strapped private businesses in China, but previously rare in officialdom. Others are engaging in extortion.

One concern is that many local debts accumulated during the boom years were unsanctioned, meaning that even the central government doesn’t have a clear idea of how big the problem is or how much fiscal space it has. Beijing has tried to offer a lifeline, but local officials will scramble to keep debts connected to corrupt bargains from the central authorities’ attention.

That local strain directly affects the Chinese public—both as government services falter and officials seek pettier extortion opportunities to stay afloat. In 2025, that could play out unpredictably, sparking more local outrage and even protests that suddenly take center stage.

Global Opportunities

Chinese Foreign Minister Wang Yi arrives to speak during the 79th Session of the United Nations General Assembly in New York on Sept. 28, 2024.

Chinese Foreign Minister Wang Yi arrives to speak during the 79th Session of the United Nations General Assembly in New York on Sept. 28.Bryan R. Smith/AFP via Getty Images

There is good news for China on the global stage. The incoming Trump administration has made it clear that it is hostile to international organizations, especially those linked to the United Nations. It has promised, for example, an immediate withdrawal from the World Health Organization (WHO).

The Trump team’s argument is that China has too much influence in these groups—and it may hope to use the threat of withdrawal to coerce concessions. But the more that Washington voluntarily removes itself from global bodies, the greater the opportunities for Beijing.

China’s sheer size makes it hard to call it out in multilateral forums. Its strategy within international organizations is deliberate and patient—and Beijing’s diplomats are aided by the institutional resemblance between global bureaucracy and Chinese governance.

But China is also increasingly able to sell itself as a force for stability and continuity compared to a chaotic United States—a position that helped it negotiate recent deals at this year’s U.N. Climate Change Conference, known as COP29.

The PLA on a Leash

The Chinese military just made news with a flashy display of a possible sixth-generation fighter jet. But the People’s Liberation Army (PLA) is unlikely to get to play with many new toys in 2025—and even less likely to use them for real.

It’s been 45 years since China went to war, and it’s a good bet that the streak will continue: With Beijing occupied by domestic problems, foreign adventurism seems less likely than usual in 2025, however provocative its language as Trump’s second term begins.

There is a greater constraint, however: anti-corruption purges within the Chinese military that have been going on all year. Not only is the PLA shedding leadership, it also has strong incentives to avoid a conflict that could expose greater levels of graft—such as ammunition and fuel shortages or poor-quality equipment.

It is theoretically possible that the anti-corruption drive could produce a stronger and more capable military for future conflicts, but next year should be a quiet one. That doesn’t mean there is no danger—especially in the South China Sea—but any conflict is likely to be caused by an accidental collision that must be defused.