Shanghai holds 22m people; Beijing 19m. The 50 largest cities account for more than half of GDP. When Xi Jinping took power in 2012, about half the population was urban; by 2025 two-thirds were, an increase of some 220m people—more than the population of Brazil. America's urbanisation rate is over 80%; China's may hit 70% by 2030. In the 2010s the urbanisation rate was increasing by 1.1 percentage points a year on average; in the 2020s that has dropped to 0.6 a year. Many cities in the north-east, a chilly rustbelt, are shrivelling as citizens move to the southern and eastern coasts.
Official statistics put the urban population at more than 943m in 2024. However, an alternative, internationally consistent standard implemented by the United Nations—dividing a country into a grid of 1km-square boxes and using census data and satellite imagery to identify settlements—reveals that China's urbanisation rate is actually 83.7%, not 67%, and that the urban population already peaked in 2021. By the UN's method, China has over 2,000 cities; Guangzhou is the country's second-biggest city after Shanghai, relegating Beijing to third place. India's urban population overtook China's in 2022 by the same measure. The UN projects China's urban population to fall by more than 13m from 2024 to 2029. The higher level of accomplishment leaves less room for improvement, undermining expectations that further urbanisation would give the ailing property market a helping hand. An article in Qiushi, an authoritative Communist Party journal, published on January 1st 2026 claimed China still needs to build 10m-14.9m new homes a year; nearly 40% of urban households have less than 30 square metres per person.
China's cities depart noticeably from Zipf's law, the statistical regularity by which the second-biggest city has about half as many people as the largest, the third about a third, and so on. The top-ranked cities are too small and middle-ranked cities too big, reflecting deliberate policy to promote cities with populations under 5m—where rural migrants can more easily qualify for hukou status—and to cap the growth of megacities. Leaders hope that high-speed rail binding metropolises into "city-clusters" can deliver the agglomeration benefits of bigger cities without the congestion. The Pearl River Delta cluster—Guangzhou, Shenzhen and Hong Kong—has a combined population of about 72m.
The hukou residency system controls internal migration by excluding rural migrants from access to schools and other benefits in the cities where they work. Smaller cities have largely ditched hukou restrictions, but Beijing and Shanghai remain unfriendly to migrant workers.
In the Communist Party's urban plan, published in August 2025, "city-clusters"—one or two large hub cities and their smaller neighbours, linked by high-speed rail—are to be the chief engines of growth. Nearly a decade earlier officials identified 19 potential clusters, including three critical coastal ones: Beijing-Tianjin and neighbouring areas (known as Jingjinji); Shanghai and other cities in the Yangzi River Delta; and Hong Kong with its neighbours in the Pearl River Delta.
The Pearl River Delta cluster, known as the Greater Bay Area (GBA), contains 86m people across Guangzhou, Shenzhen and Hong Kong. Shenzhen's underground train tracks stretch for 600km (London's are around 400km), with another 200km under construction; Guangzhou's are 700km long. Hangzhou, in the Yangzi Delta cluster, feeds data from cameras, government records, traffic lights and police reports into a "city brain" powered by AI, aided by Alibaba.
China loses 1% of GDP to floods each year on average, according to the World Bank. Both the GBA and the Yangzi River Delta are vulnerable to typhoons and rising sea levels. The government is building more than 400km of sea walls and is trying to "spongify" urban areas—creating parks and artificial wetlands—so they can absorb rain more efficiently. Drought already afflicts the city-cluster around Beijing; much of its drinking water has to be pumped from sites hundreds of kilometres to the south.
The rapid urbanisation of the country has fuelled a booming pre-made food industry, in which dishes are prepared in central kitchens and reheated at restaurant outlets. Industry analysts estimate that the sector generated revenue of 400bn yuan in 2022 and expected it to exceed 1trn yuan by 2026. Vast improvements in China's cold chain, from storage to distribution, have helped extend such food to cities in the hinterland. The government drafted its first standards for pre-made food in 2024, defining it as reheatable pre-packaged dishes that do not include preservatives or come from central kitchens—a formulation that allows restaurants using central kitchens to claim they are not serving pre-made food.
China was 5% of global GDP in 1955. By the 2020s it had risen to 20%, making it the second-largest economy in the world. GDP grew by 5% in 2025, driven by a record trade surplus of almost $1.2trn, despite the country's tariff war with America. GDP per person reached almost $13,900 in 2025, 15 times its level in 1990. Employment fell in 2025 by almost 1.3%. The 2026 growth target, announced at the NPC on March 5th 2026 by Li Qiang, is 4.5-5%—the lowest since 1991. The headline budget deficit is set at 4% of GDP in 2026. The government's "cash-for-clunkers" trade-in subsidy was cut by a sixth to 250bn yuan ($36bn); the 2025 scheme had subsidised 366m purchases worth 2.61trn yuan. Rural pensions were raised by 20 yuan a month, bringing the minimum benefit to 163 yuan. The government set aside 100bn yuan to subsidise consumer loans. The latest five-year plan foresees China becoming a "mid-level developed" economy in 2035, with GDP per person double its 2020 level. Households saved an even higher share of their income (32%) than the year before (31.7%); household consumption growth lagged at about 4.2%. China has just 53 private cars for every 100 households (America has 197). According to official figures, fixed-asset investment shrank in 2025 for the first time since 1989. Policymakers are suspiciously good at hitting their targets: GDP growth was off-target by just 0.17 percentage points a year on average between 2012 and 2024 (apart from the covid-19 years of 2020-22). Many economists worry that the government fiddles the figures. Growth targets swell as they pass down the hierarchy, because higher growth improves officials' chances of promotion. Between 2004 and 2022, whenever a province fell 1% short of its growth target, it increased infrastructure investment on average by 0.4% of GDP, according to research by Jeffery Chang of the Chinese University of Hong Kong and others. Xi Jinping has long been aware of these distortions: "We shouldn't judge whether a person is a hero simply by the GDP growth rate," he said in 2013. Under his leadership, growth must be "high-quality"; considerations such as environmental care and social stability increasingly matter for promotion. China's Gini coefficient, a common measure of income inequality, rose sharply in the 1990s and is now higher than that of America, according to official estimates. China's gross national income per head is roughly $13,400, placing it second among the World Bank's "upper middle-income" economies, behind Costa Rica. It is expected to join the high-income group in 2026. In 2020 Xi Jinping said it was "entirely possible" for China to double its GDP per person over 15 years. A guide to the fourth plenum, a big party meeting held in early 2026, states that the country's GDP per person should reach $20,000 by 2035 (measured at 2020 prices and exchange rates), which would make China a "moderately developed economy". Meeting both goals would require GDP per person to grow by about 4.4% a year over the next decade. Of 43 economies in the Penn World Table that reached a comparable level of prosperity after 1950, only ten managed to grow faster than 4.4% a year in the following decade, including Japan and the four original Asian tigers. China's nominal growth has lagged behind America's in recent years owing to persistent deflation and a weakening yuan: its current-price GDP, converted into dollars, fell from over 70% of America's in 2020 to 64% in 2025. By end of Q3 2024, nearly 25% of China's listed firms were loss-making, more than double the proportion five years earlier.
Sino-American trade is worth $659bn a year. Donald Trump paid a two-day visit to Beijing ending on May 15th 2026, during which the two leaders met one-on-one. China laid on a military honour guard, a 21-gun salute and cheering children, plus private tours of the Temple of Heaven and the Zhongnanhai leadership compound. After leaving Beijing, Mr Trump told Fox News that America's 44-year commitment not to negotiate with China over arms sales to Taiwan was "out of date" and described a delayed $13bn Taiwan arms package as a "very good negotiating chip", suggesting Xi Jinping had made some progress in swaying his thinking about the island. Four days later, on May 19th-20th 2026, Vladimir Putin visited Beijing; the two leaders condemned American and Israeli attacks on Iran, opposed sanctions on North Korea, criticised Trump's Golden Dome project, and called for a multipolar world order. Some 40 agreements were signed but neither side mentioned Power of Siberia 2, a 1,600-mile pipeline that would carry up to 50bn cubic metres of gas a year from eastern Russia to northern China via Mongolia; China has been driving a hard bargain. China keeps no single hydrocarbon supplier above about 20% of imports, a level already reached with Russia. About 90% of China's oil imports still come by sea, largely from the Middle East. On October 30th 2025 the two leaders met at a South Korean airbase—their first meeting in six years—and finalised a framework trade deal. Both sides agreed to delay new rare-earth export controls and reciprocal tariffs for a year, and America halved a 20% tariff imposed over fentanyl. China resumed purchases of American soyabeans, which it had stopped in May. The deal left in place an American tariff rate of 47% on Chinese goods and Mr Trump suggested it could be renegotiated annually. In a 2020 trade deal China had committed to buy at least $200bn-worth of additional American goods and services over two years but never met the targets. Earlier, in May 2025, America and China agreed a 90-day trade truce. America slashed "reciprocal" tariffs on Chinese goods from 125% to 10% (a separate 20% levy over fentanyl remained). China cut tariffs on American goods to 10% and lifted its ban on importing Boeing aircraft. A 120% tariff on de minimis e-commerce packages was more than halved.
America accounted for about 15% of China's exports in 2024, down from over 20% at the start of Donald Trump's first term and just 12% in the first half of 2025. Zhejiang province, just south of Shanghai, is one of China's export powerhouses, with some 90,000 companies manufacturing for the overseas market. Ningbo-Zhoushan Port, in Zhejiang, is the busiest port in the world by cargo throughput.
American tariffs on many Chinese goods reached 145% in April 2025, prompting Chinese e-commerce firms to help exporters pivot to domestic sales. JD.com announced it would buy 200bn yuan of goods meant for export to resell at home. Pinduoduo invested 100bn yuan to help suppliers adjust; its Boston-based subsidiary Temu had relied heavily on tax-free low-value shipments to America before Mr Trump cancelled the exemption. Alibaba launched an "export channel" for domestic resale. Baidu offered AI-powered sales avatars to help up to 1m firms sell domestically. Douyin and Kuaishou, two video apps, hosted live-streaming sessions to sell export goods. Meituan, a delivery app, extended its network to thousands of new counties.
Since early 2024 the government has run a steadily expanding trade-in subsidy programme—a variant on post-financial-crisis "cash-for-clunkers" schemes—that subsidises consumers who trade in old goods for newer, greener versions. The programme extends far beyond cars: in the first five months of 2025 it subsidised the purchase of more than 77m household appliances, 57m pieces of home decor or kitchenware, 56m electronic goods and 6.5m electric bikes. The budget is 300bn yuan, with the central government providing roughly 90% of the money. Some provinces, including Xinjiang and Chongqing (home to 32m people), ran out of funds before the programme's scheduled end.
China's highest court has ruled that employers cannot waive pension contributions (and other social-insurance payments), even if workers want them to. The ruling could raise the cost of labour by about 1% of GDP if enforced, according to Société Générale. In August 2025 the central government began subsidising consumer credit for the first time, shaving one percentage point off the interest rate for small personal loans and subsidising bigger loans for cars, elderly care, education, childbirth expenses and other services. A new 2,000km railway between Xinjiang and Tibet is under construction; a state-owned firm to oversee the project was formally registered in August 2025.
Exports drove roughly 40% of GDP growth in the first quarter of 2025, the highest first-quarter share in over a decade, as foreign buyers loaded up in anticipation of tariffs. Household consumption grew by 5.2% year on year in the first quarter, up from 4.5% the quarter before, helped by an official trade-in programme subsidising home-appliance upgrades. Goods prices had been falling for months; adding a wave of export supply to a market already suffering weak demand risked worsening deflation. China's export-price index has fallen by 15% since 2022, even as export volumes have risen, driven by overcapacity. Its goods-trade surplus with developing countries in Asia has nearly doubled over the same period, putting downward pressure on prices across the continent. A surfeit of pigs has resulted in pork-price deflation; officials pledged to shrink herds by 1m to combat it. Consumer prices were falling outright in mid-2025. China's goods-trade surplus in the first 11 months of 2025 exceeded $1trn, more than the 12-month total for any previous year. Its current-account surplus reached $650bn over the previous four quarters, about 3.4% of GDP; 45 economies ran a bigger surplus relative to GDP. Even as exports to America fell, sales to the rest of the world more than made up the difference: as much as 70% of China's extra sales to ASEAN represented indirect exports to America via third countries, according to Goldman Sachs. Sales of new flats have fallen by half since their 2021 peak, even as exports have risen by a third. The yuan's real effective exchange rate was 10% below its average of the past ten years, giving exporters a further edge. Adjusted for inflation, the real exchange rate weakened by more than 18% between March 2022 and July 2025, making China's exports cheaper. After the tariff truce with America in mid-2025, the yuan began to strengthen on a trade-weighted basis; in the last days of 2025 it moved below seven to the dollar for the first time since 2023. Kristalina Georgieva, head of the IMF, said the real depreciation had "worsened external imbalances". China has begun throwing a few sops to trading partners: making tax breaks for exporters less generous, and reaching an initial agreement with the EU to set floors under the prices of its exports of electric vehicles. The IMF's annual health check for China, released on February 18th 2026, concluded that the yuan is undervalued by about 16%—the biggest misalignment since 2011, when a similar calculation suggested 23%. The root of the problem lies in the property bust over four years ago: industrial prices paid to producers have declined for 40 consecutive months, wage growth is weak and inflation is "uncomfortably low". A country like China with a middle-aged population would be expected to run a modest current-account surplus of 0.9% of GDP, according to the IMF's models, but China's surplus was 3.7% of GDP. The IMF proposed that the government should spend less on industrial subsidies and more on rural pensions, health care, poverty alleviation and shoring up the property market, calling for "an urgent and significant fiscal package" to head off entrenched deflation. The income China earns on its vast foreign assets has stagnated since 2021 despite rising global interest rates, suggesting it is either understating its earnings or proving a hapless overseas investor, according to Brad Setser of the Council on Foreign Relations. In July 2026 the European Union will impose a levy of €3 ($3.54) on parcels worth less than €150, many of which originate from Chinese e-commerce sites. In the first three months of 2026 China's exports rose by 14.7% year on year, continuing the stellar streak despite the trade war. Total exports reached $3.8trn in 2025 (surplus of $1.2trn). Exports to America fell by over $100bn in 2025 (a 20% decline), but exports to other countries rose by roughly $300bn—genuine new demand, not merely rerouting to America via third countries: only about $33bn of those additional exports are estimated to have reached America through intermediaries. China ran a $291bn trade surplus with the EU in 2025, a 120% increase from 2020. China is becoming a "factory to the factories": exports of intermediate and capital goods grew by 10.2% in 2025, compared with 5.5% overall and a 4.6% decline in consumption goods. Memory chips were the biggest export item in the first quarter of 2026, at $46bn (up 174% year on year), driven by the global AI data-centre build-out. The average "complexity" of China's exports, as measured by Harvard's Atlas of Economic Complexity, rose from 0.29 to 0.36 over the decade to 2024; America's fell from 0.06 to -0.15. Factory-gate prices fell for 41 consecutive months before finally ending their decline in March 2026; the deflation-driven competitiveness is at the core of the export boom. The yuan appreciated about 6% against the dollar in the 12 months to April 2026, but remained cheap in real terms, having weakened by about 15% since early 2022. China's exports to Gulf countries plummeted by 52% year on year in March 2026 owing to the Iran war (the Gulf accounted for 3.8% of exports in 2025); the war prompted China to restrict exports of refined fuel. Net exports of goods and services contributed 1.6 percentage points of China's 5% GDP growth in 2025.
China settled over 30% of its current-account transactions in yuan in the first half of 2025, up from 15% in the whole of 2019. It now settles more than 50% of its total cross-border receipts (including financial flows) in yuan, up from less than 1% in 2010. China's first push to internationalise the yuan began in 2009; it ended painfully in 2015 after a stockmarket rout and currency devaluation prompted capital flight and a clampdown. The current effort emphasises retaining control over capital flows while building non-dollar financial infrastructure, including CIPS (Cross-Border Interbank Payment System), a bank-messaging system rivalling SWIFT, which has signed up 1,791 banks globally (compared with SWIFT's 11,500). China has extended 4.5trn yuan ($630bn) in swap lines to 32 central banks. Pan Gongsheng, the central-bank governor, declared in June 2025 that the global financial system was becoming "multipolar".
In March 2026 CIPS handled about 920bn yuan ($134bn) a day in transactions; the daily average in 2025 was only 680bn. On April 2nd 2026 the tally topped 1.2trn yuan. The jump coincided with the Iran war; Iran has long been paid in yuan for its oil. The yuan's share of China's overall international transactions, including trade in goods, services and assets, rose to more than 56% in March 2026, after plateauing for much of 2025. Cross-border sales and purchases of bonds, stocks and other "portfolio" investments reached $712bn in March, 40% more than the monthly average for 2025. The yuan accounted for over 8% of global trade finance in March 2026, according to SWIFT—a distant second to the dollar, on over 80%. CIPS remains dwarfed by America's CHIPS network, which handled over $2trn a day in 2025. Zhou Xiaochuan, a former central-bank governor, said China now had a "golden window of opportunity" to promote the yuan abroad.
Project mBridge, an experimental platform for cross-border payments in digital currencies, has gone beyond the conceptual stage. By November 2025 the equivalent of $55.5bn, spread over 4,047 transactions, had passed through the network. Although the central banks of Saudi Arabia, Thailand and the United Arab Emirates are also part of the project, over 95% of transactions are in e-CNY, a digital currency issued by China's central bank. Over 5,000 merchants in Hong Kong accept the e-CNY.
The Hong Kong Monetary Authority has a 200bn-yuan facility to help foreign companies borrow China's currency at benchmark rates for trade finance or working capital for up to a year. Foreign companies and governments have been issuing yuan-denominated "Panda" bonds in mainland China and "dim sum" bonds in Hong Kong. Indonesia's government raised over 9bn yuan in Hong Kong in February 2026. Portugal became the first government in the euro area to sell a dim sum bond in April 2026, raising almost 2bn yuan. China Merchants Securities, an investment firm, sees a "historic opportunity" for the currency, thanks to the government's renewed commitment, better infrastructure and low borrowing costs.
The government banned cryptocurrency trading in 2021, but Chinese mainlanders still trade more stablecoins than the authorities would like: a paper by Marco Reuter of the IMF estimates that in 2024 China bought $18.6bn of stablecoins from the rest of the world and sold $3.6bn.
China ran a trade surplus with America of nearly $300bn in 2024, while importing $145bn-worth of American goods. Its biggest imports from America are agricultural commodities. In 2024 American farmers sold $12.6bn-worth of soyabeans to China, most of which were used to boost protein in animal feed; China imported 105m tonnes of soyabeans from all sources that year. In 2017 some 40% of China's soyabean imports came from America; by 2025 only 18% did, as purchases shifted to countries such as Brazil. Xi Jinping has declared "food security" a critical national goal and is determined to reduce China's reliance on soyabean imports, investing in domestic production and reducing the share of soyabean meal in animal feed. In March 2025 China bought no American wheat or liquefied natural gas (America had provided 17% and 5%, respectively, of Chinese imports of those goods the previous year).
At the start of 2025 the central government released a "rural revitalisation plan" aimed at lifting rural incomes: in 2024 urbanites made on average more than double what rural folk did. The plan seeks to make it easier for entrepreneurs to set up businesses in villages. For decades urban factories have sucked up able rural bodies, in a process officials depended on for economic growth even as it hollowed out villages. Local governments have sought to ease the transition from village to city by reforming the hukou system, which keeps individuals tethered to the places they are born.
The government's goal is not to cram people into megacities but to spread them among a range of urban areas, including by making villages more commercial. Urban youth unemployment (aged 16 to 24, excluding students) climbed to 18.9% in August 2025, its highest since the method of calculation was changed in 2023, pushing some young people back towards the countryside. That summer 12.2m graduates flooded out of China's universities, many armed with engineering degrees, hunting for white-collar jobs.
Of China's roughly 180m rural folk who move away for employment, 47% crossed into other provinces in 2014; a decade later, just 38% do. In November 2025 the rural-affairs ministry warned that the government must "prevent a large-scale" problem of migrants "sticking around" in their home villages after the lunar new year, a rare expression of official concern. The property-market downturn has reduced construction jobs that had long absorbed many migrants. At the same time, the countryside offers less of a backstop: less than 10% of rural households had contracted out their land-use rights in 2008; by 2025 the figure is closer to 40%, meaning many returning migrants have no land to fall back on. Some export factories in coastal regions have been closing early, pushing workers home sooner. The central government wants inland towns to build up their industries and attract skilled migrants back—companies have set up factories in Hubei towns like Tianmen to tap local labour directly—but local economies can absorb only so many, and wages face downward pressure as more people compete for jobs. Among the younger generation, a growing recognition that there is more to life than work is also keeping people closer to home.
Live-streaming has injected cash into the long-neglected rural economy. Farmers sell everything from poultry to peonies on streaming platforms. In 2023 some 1.4bn orders for agricultural products were made on Kuaishou, a streaming app popular in rural areas, 56% more than the year before. Between 2021 and 2024 villages in poor parts of China made sales worth 441bn yuan on Alibaba's platforms. Local governments offer training for returning migrant workers and college graduates, teaching them sales scripts and live-streaming techniques.
Xiongan is a "city of the future" and pet project of Xi Jinping, 125km south of Beijing. Central-government and provincial planners have spent at least 835bn yuan ($116bn) on the city since 2017, when they broke ground on what had been marshy farmland. By the end of 2024 official statistics put the city's population at around 1.4m. China Satellite Network Group became the first state-owned firm to officially relocate from Beijing; China Huaneng, a state energy giant, is following its lead. By early 2024 more than 100,000 students had been relocated from campuses in Beijing. Officials want to keep the population below 5m by 2035.
Xiongan is experimenting with a merit-based hukou residency system that takes into account an applicant's educational level, skills, employment experience and tax contributions. For those who do not qualify, a parallel system resembling America's green-card lottery offers temporary rights that expire after five years.
In February 2025 the city's local government announced it would require companies to enrol all employees in state pensions and "enterprise annuities", contributed to by both firms and employees--the first regional government in China to push employers to pay into their workers' retirement funds. Staff relocating from Beijing retain their capital pension benefits.
Prospective homebuyers must hold either a Beijing or Xiongan hukou or a green card and cannot own a property elsewhere in the country--a clear disincentive to speculators. Homes are distributed through a lottery system. Land leases are limited to five years or fewer, rather than the decades-long contracts common elsewhere, to prevent developers from hoarding land to drive up prices.
About half of China's total passenger-jet fleet is made by Boeing. The C919, China's home-grown passenger aircraft, relies on crucial components, including its engines, that are made using American parts.
China's clean-energy sector—primarily solar, energy storage and electric vehicles—contributed about $1.6trn, or roughly 9%, to its $18trn economy in 2023; by 2024 solar power, electric vehicles and batteries were responsible for 10% of GDP. These industries could see their investment and sales double by 2035, according to the Centre for Research on Energy and Clean Air. China owns over four-fifths of global solar manufacturing, giving it twice the share of the solar-hardware market that the entire OPEC+ cartel has in petroleum; some 80% of the world's solar cells are Chinese-made. As well as driving growth, clean-energy industries are helping China reduce its dependence on oil imports from conflict-ridden regions such as the Middle East.
China has built a motorway network twice the length of America's and a high-speed rail network more than 15 times the size of Japan's. It produces 35% of global manufacturing output—more than America, Germany, Japan and South Korea combined. China is the only country that hosts every category of industry as defined by international standards. China's share of global export containers exceeds 36%, up from a third before the pandemic. In 2022 China had nearly 1,800 ships under construction; America had five. Xi Jinping has declared that "the real economy is the basis of everything…so we must never deindustrialise." China controls 80% of the global drone market.
China's BeiDou satellite navigation system is provided by 56 satellites and 120 ground stations, with nearly 300 ground-based backups, fibre-optic timing networks and an eLoran system for resilience. It operates across three orbital layers and is being embedded in infrastructure built under the Belt and Road Initiative. Russia and China are developing anti-satellite and other space-based weapons that can destroy or interfere with Western satellites.
Services contribute 57% of China's GDP and employ 49% of its citizens, over 36% of whom have some college education, according to Zheng Song of the Chinese University of Hong Kong. The latest economic census, released in 2025, found 411m people working in the service sector in 2023 (including the self-employed), 55m more than previously estimated from other official surveys. According to Nick Lardy of the Peterson Institute for International Economics, housing services are probably still undercounted by several percentage points of GDP.
The "Made in China 2025" plan, released in 2015, aimed to turn China into a leading manufacturing "powerhouse" by mid-century. Earlier five-year plans had promised to lift the share of services in the economy as a step towards "rebalancing", but the 2021-25 plan dropped that vow, instead promising to keep manufacturing roughly stable as a share of GDP. The next five-year plan, covering 2026 to 2030—the 15th since the party gained power in 1949—is expected to include redoubled efforts to become a "science and technology powerhouse" and a focus on "disruptive" made-in-China innovation to combat "containment and suppression by the US-led West". It may include a target to integrate artificial intelligence into 90% of manufacturing by 2030, as well as goals for humanoid robots and quantum computing.
China produces some 30% of the world's manufactured goods but accounts for just 18% of global consumption. Consumption (including state spending on things such as hospitals) is 57% of GDP, compared with 73% for the world. Lu Feng, an economist at Peking University, has called for the next five-year plan to raise that share by 5-10 percentage points by 2030. Peng Sen, a retired state planner, has suggested a similar hike, which could put the share over 70% by 2035. Xi Jinping and much of the party elite are sceptical: Xi dislikes what he calls "welfarism", warning in 2021 that overly generous governments create "lazy people" and "inevitably bring about serious economic and political problems". In July 2025 the Politburo announced that "new growth areas for service consumption must be fostered," and the central government said it would subsidise loans for consumer-facing services such as entertainment, tourism, sport, child care and elderly care. The state owns all the biggest banks and state-owned enterprises dominate telecommunications, collecting 78% of revenues. China regulates accountancy, law, retail and even estate agents more tightly than the average OECD member.
In the first nine months of 2025, China spent 37.2trn yuan ($5.2trn) on fixed-asset investment, 0.5% less than a year earlier—the first negative figure outside of the pandemic in over 30 years. Investment in property has been declining for years; investment in infrastructure and manufacturing has also flagged. Chinese officials use the label "involution" (neijuan) for the disorderly competition—price wars and aggressive bids for market share—that results from overinvestment, often driven by arms races between provincial and city governments. The Politburo, a 24-man body that includes the most powerful people in the Communist Party, has vowed to stamp out involution. Carmakers' investment spending, however, grew by 19% from January to September 2025 compared with the previous year. China has three policy banks that can channel state-directed lending into priority sectors.
China is the biggest trading partner for over a hundred countries. It is tightly stitched into Asia's supply chains: in 2022 it provided more than 19% of Japan's imports of intermediate goods, over a third of South Korea's and more than 38% of Vietnam's. China's exports to the global south have doubled since 2015, and it now sells more to South and South-East Asia, Latin America and the Middle East than to America and western Europe. In July 2025, even as exports to America collapsed, its overall exports grew by 7% year on year. China and ASEAN are revamping their free-trade deal, due to be ratified by the end of 2025. In June 2025 Xi Jinping pledged to scrap nearly all duties on imports from Africa.
China imposes strict capital controls under which individuals may take no more than the equivalent of $50,000 a year out of the country. This restriction has fuelled a vast underground banking industry: brokers match wealthy Chinese seeking to move money abroad with holders of foreign currency, using "mirror transactions" in which yuan are deposited in China and an equivalent sum in dollars or another currency appears in a foreign account, without money ever crossing borders. Chinese underground banking networks have become the world's dominant money-laundering system, charging fees of just 1-2% compared with the 7-10% levied by older networks. America's Treasury has estimated that around $154bn in illicit proceeds flow through China each year.
Officials have published a flurry of rules aimed at improving corporate governance. Controlling owners, which the vast majority of listed Chinese companies have, are now vested with a fiduciary duty to all shareholders—a group collectively known as guanjian shaoshu ("the crucial few"). Independent audit committees—the standard in the West—are being introduced. As in Japan, the securities regulator now requires companies whose shares trade below book value to disclose plans to boost their price and report on progress; over 200 have done so. Officials have also added "market-value management" as a criterion on which bosses of state-owned enterprises—about a quarter of listed firms—are evaluated. Despite a decade of growth, Chinese companies have as a whole generated next to no return for shareholders; profits remain elusive and are rarely distributed, in part because of ferocious domestic competition but also because of poor governance.
Chinese courts are inundated with intellectual-property cases, which now exceed 550,000 a year, making the country the world's most litigious when it comes to such disputes. Judges often have to work at a rate of a case per day. Shanghai is the preferred venue because its judges are well versed in IP law, but cases can take three months simply to appear on the court's docket. Excess industrial capacity has fuelled counterfeiting, as owners of idle factories look for ways to use them. In America, patent-related cases involving Chinese businesses surged by 56% in 2023. It is increasingly Chinese companies that are the ones accusing foreign competitors of stealing their ideas: Luckin, a coffee chain, successfully sued a business in Thailand that had opened cafés under the same name; Trina Solar has sued Canadian Solar in America for IP infringements.
Over the past five years China has built an export-control regime mimicking America's. The stated goal is to protect national security but many controls are aimed at shoring up Chinese industry. In 2025 the commerce ministry said it would require companies to obtain licences before exporting technologies used in EV batteries. China reacted angrily to proposed EU procurement rules that would require battery-storage systems sold in Europe to be manufactured there, viewing them as a ploy to weaken Chinese industry. Developing countries from Brazil to Vietnam are opening their doors to Chinese EV companies and urging them to use local content, but it remains unclear how tech transfer will work in practice. China's own record offers guidance: it took three decades to hone its methods—incentives for investors, local joint-venture requirements, content rules, university partnerships and, at times, theft of intellectual property.
Hong Kong is experiencing an IPO revival. In April 2025 more than 130 applications were under consideration by the exchange, up from fewer than 60 at the start of 2024. Hengrui Pharmaceuticals and CATL together sold $5.3bn-worth of shares in May 2025. Shein may abandon plans for a London listing in favour of Hong Kong. With the Hang Seng China Enterprise Index 50% higher than at the start of 2024, the China Securities Regulatory Commission (CSRC) has relaxed its opposition to secondary listings abroad.
On September 24th 2024 China's officials engineered a stockmarket rally with central-bank rate cuts and eased share-buyback rules. A year later the Shanghai Composite was up 40%. Share-trading account openings may have exceeded 30m by September 2025. Yet margin financing surpassed levels last seen during the 2015 bubble, making the government nervous about another crash. Equity markets provided only about 1% of capital to non-financial companies. Broker fees had fallen from 0.08% to 0.02% of traded value, muting the contribution of financial services to growth. The central bank's hesitation to cut rates further—even as factory-gate prices continued to fall—posed risks to the sustainability of the rally. Consumer confidence remained low: retail sales grew only 3.4% year on year in August 2025, and fixed-asset investment fell by more than 6% year-to-date.
Mainland exchanges in Shanghai and Shenzhen are far less healthy. In 2024 only 100 firms went public, the fewest for at least a decade. The CSRC is said to maintain an unofficial lower bound of 3,300 points for the Shanghai Composite and has banned entire sectors—including cosmetics and spirits—from listing. Only firms in critical technology industries are allowed to apply. Preparing an offering in China takes 12-18 months, so a healthy flow of domestic IPOs may not resume until 2026.
In 2022 Chinese IPOs raised a world-beating $81bn, but by 2024 firms raised just $20bn at home and abroad—only twice in the past two decades had share sales yielded so little. Bankers report that Hong Kong IPO sales materials are now carefully scrubbed of words such as "artificial intelligence" or "semiconductors" to avoid falling foul of American restrictions on investment in Chinese tech.
Evergrande, once China's largest property developer, collapsed during the property slump; it was delisted from Hong Kong's stock exchange on August 25th 2025. ANZ, an Australian bank, estimates that more than half of new demand in the property market over the next decade will stem from upgrading existing houses rather than building new ones.
Developers used to sell homes before construction to raise funds. When the property market tumbled, their financing dried up. According to Nomura, a bank, China had about 20m pre-sold, unfinished properties as of 2023—a staggering 17trn yuan ($2.5trn) of household wealth tied up in idle projects, a little more than 10% of GDP. In 2022 the government introduced a baojiao lou ("guaranteed delivery") programme: officials created a whitelist of pre-sold, unfinished developments and used a mix of incentives and pressure to get banks to extend credit to complete construction. Chinese banks have approved loans of more than 7trn yuan for whitelisted properties, though much has been for debt rollovers rather than new funding. Many buyers will end up taking delivery of homes worth as much as 50% less than what they paid. Defaulting on mortgage payments was the alternative; a small number dared to stage open protests, though officials cracked down swiftly. The government's unstated plan is to spread the cost as widely as possible: there will be no bail-out for developers and none for homebuyers either.
China has widespread problems with expensive but shoddily built homes. A cap on the price developers could charge per square metre was put in place in 2016, prompting builders to cut corners. In 2020 the central government restricted developers' access to funding, triggering a crisis: the funds raised by developers in 2025, including bond financing, were half those raised in 2021. Housing's share of national fixed-asset investment shrivelled to 11%, from 19% in 2020. Developers that continue to build have dramatically cut costs for materials and employ fewer, less experienced workers, while local officials insist on on-time handovers. Less than a quarter of home sales in 2025 were for new properties, down from half in 2022; buyers prefer existing homes built between 2005 and 2016, before price caps led to quality cuts. The government removed the price cap in 2025 and set out requirements for improving housing quality, such as standardising the height of ceilings.
New home sales by floor space have fallen by half since their peak in 2021. Fresh residential construction is down by nearly three-quarters; investment, by over a third. Larry Hu of Macquarie, an investment bank, calculates that 85% of the gains seen in the decade to 2021 have been wiped out—by comparison, the American housing meltdown of 2007 erased a mere 47% of the increase in home prices between 1996 and 2006.
In mid-December 2025 Beijing's housing authority announced that it would stamp out social-media accounts responsible for negative property posts; thousands have since been closed or suspended. Estate agents are being pressed to keep ugly intelligence under wraps. In November 2025 two of the country's best private sources of property data stopped providing monthly home-sales figures, reportedly at the command of the government. The government's benchmark index of house prices in 70 large cities excludes thousands of smaller cities where the downturn has been most severe and may underestimate the depth of falls in big cities too.
A report by Enhance International, a consultancy, published in early 2026 forecasts that prices for non-new homes have another 40% to fall and that the property crisis may continue until 2030. Local officials often limit discounts on new homes to avoid sudden price collapses and minimise social tensions, but doing so distorts market signals and slows the sale of China's 30m unsold homes. The central government's failure to introduce a meaningful residential property tax is another drag: although officials have promised such a levy for years, so far only small trials have taken place. With no tax on dormant investment properties—of which there are an estimated 49m—owners have less incentive to sell. New-home sales made up just over half of all transactions in 2022 but tumbled to just 26% in 2024 and continued to fall in 2025.
Property, broadly defined, contributed about 25% of GDP on the eve of its crash in 2020; by 2025 it represented 15% or less. In 2021, 80% of household wealth was tied up in real estate; that figure has since fallen to around 70%. Hundreds of developers went bust, leaving a tangle of unpaid bills. At the peak of the crisis, as many as 80m flats had been built but never sold. In the tier-one cities of Beijing, Shanghai, Guangzhou and Shenzhen, unsold inventory held by developers fell from nearly 20 months of sales in July 2024 to around twelve and a half months by January 2025. In the first four months of 2025, sales of new homes by value fell by less than 3% year on year, compared with a decline of 17% in 2024.
Local governments have been encouraged to buy unused land and excess housing with proceeds from special bonds. A plan to renovate shantytowns could create demand for 1m homes. The average housing crash takes four years to play out, according to an IMF study of house-price crashes from 1970 to 2003. The government began deflating the bubble by tightening developers' access to credit in mid-2020.
Vanke, once China's second-biggest property developer, was pleading with its creditors for an extra year to repay a bond falling due in December 2025. The housing downturn, now in its fifth year, may have wiped out 100trn yuan ($14trn) in property wealth, reckons Larry Hu of Macquarie, a bank. Zhengzhou, the capital of Henan province, has experimented with a scheme to purchase small flats from households who commit to buy pricier new homes instead. Property prices in the secondary market are more than 20% below their peak and still falling.
Prices have fallen by 20-40% since their 2021 peak, depending on the measure. By April 2025, almost half of 2,500 people surveyed by UBS had suffered a paper loss—the value of their home was below what they had paid. By the end of 2025 some 700,000 homes were expected to be in "negative equity" (worth less than the mortgage owed on them), with 1.8m expected by the end of 2026, according to May Yan of UBS. Housing also serves as collateral for about 25trn yuan of business loans for small firms; UBS expects foreclosed properties to reach 1.5m in 2026. An emergency Politburo meeting in September 2024 resolved to stabilise the market but prices in China's 70 biggest cities dropped in October 2025 at the steepest monthly rate in a year. The government was considering interest-rate subsidies and income-tax rebates for mortgage borrowers; Goldman Sachs estimated these could save households up to 0.5% of GDP if extended to existing as well as new mortgages.
As a proportion of GDP, household debt has risen from less than 11% in 2006 to more than 60%, close to rich-country levels. Between 25m and 34m people may now be in default, according to Gavekal Dragonomics, a research consultancy; if those merely in arrears are added, the total could be between 61m and 83m, or 5-7% of the total population aged 15 and older. Both figures are twice as high as they were five years ago. Borrowing for housing made up 65% of household loans (excluding loans for business purposes). The number of foreclosed residential properties listed for auction was 366,000 in 2024, according to China Index Academy, a private research firm.
Aggressive debt-collectors, known as cuigou ("pressure dogs"), use repeated phone calls to debtors and their relatives, a practice described by online support groups as "contact bombing". An online support group called the Debtors Alliance on Douban, a social-networking site, was founded in 2019 and has more than 60,000 members. Some debtors have turned their stories of ruin into a means of generating cash as online influencers, a phenomenon known as "debt IP".
Courts can place debtors on a "social credit" blacklist, which prevents them from flying, using high-speed trains or staying at luxury hotels. China lacks a national personal-bankruptcy law of the kind found in rich countries. In 2021 Shenzhen became the first city to introduce bankruptcy protection for individuals; by the end of September 2024 more than 2,700 people had applied, but courts had accepted only about 10% of cases. A few other places have dabbled in similar schemes, but the government appears in no hurry: creditors are often big state firms, and officials worry that a national law might signal tolerance of reckless spending.
In 1978, on the eve of China's economic take-off, the average household's assets were worth barely $1,500 in today's money. Now that figure has reached about $170,000, a hundred-fold real increase.
Private enterprise has been possible in China for only about 40 years, since Deng Xiaoping opened the economy in the late 1970s and declared the country should "let some people get rich first". In 2025 mainland China had 470 billionaires (America: 924), with combined wealth of about $1.8trn. Fully 98% are self-made, compared with 66% in Hong Kong and 69% in Taiwan. But wealth is ageing: those 60 or older accounted for 49% of people worth at least 5bn yuan ($720m) in 2025, up from 23% in 2016. In the decade from 2025, Chinese with a net worth above $5m are expected to pass on $2.1trn, according to Altrata, a wealth-intelligence firm.
Wealth is becoming more concentrated. In 2024 the top 1% held 30% of the wealth and the top 10% held 68%, according to estimates from the World Inequality Database overseen by Thomas Piketty, up from 16% and 41% three decades earlier. China's 500m-strong middle class has accumulated wealth through the privatisation of public housing: the urban home-ownership rate rose from 20% in 1980 to 96% in 2022, and about 70% of household wealth is in property.
The first generation to get rich is now beginning to die, creating China's first big inter-generational transfer. A study of the deaths of founders or controlling shareholders of listed firms between 2003 and 2024 found 67 cases, with an average age at death of 64; just six had written wills. From 2006 to 2015 there were fewer than 90,000 court judgments on inheritance; from 2016 to 2025 that number almost quintupled, reflecting increasingly complex families. A state-backed charity, the China Will Registration Centre, helps the elderly write and file wills.
China has neither an inheritance tax nor a recurring property tax, and its capital-gains tax is riddled with exemptions. Total tax revenue, excluding social-security contributions, has declined over the past decade, from 18% to 13% of GDP, about three-quarters the rate of peer countries. The Communist Party has repeatedly considered and rejected introducing an inheritance tax: in 1950, 1993, 2013, and most recently when lawmakers proposed one at the National People's Congress in 2025. The NPC acknowledged the merits but urged further research, putting off action until "an appropriate time". Officials fear discouraging investment during a slowdown and encouraging capital flight. Xi Jinping set goals of achieving "common prosperity" by 2050 and substantial progress by 2035, but the party has stressed that common prosperity means "first making the cake bigger, then dividing it fairly", not "robbing the rich to help the poor". As part of a common-prosperity drive, some state-owned financial institutions capped bankers' salaries at $400,000 a year.
Youth unemployment (ages 16-24, excluding students) stands at 17%. The proportion of Chinese who think hard work pays off fell from 62% in 2004 to 28% in 2023. A phenomenon known as luobokeng ("radish holes")—job descriptions theoretically open to anyone but tailored to a pre-ordained recipient—has become a focus of public resentment, particularly regarding civil-service and state-enterprise positions. Young people increasingly describe their birth as determining their future; the online counter-culture of "lying flat" (tangping) and "gnawing elders" (kenlao) reflects a generation that has given up on striving.
Local governments are responsible for the bulk of government spending, but much of China's tax revenue flows to the central government. They used to supplement their budgets by selling land to developers, but a property slump since 2021 has slashed that source of revenue. Past splurges on infrastructure have left many governments with huge "hidden" debts, usually within semi-commercial firms known as local-government financing vehicles (LGFVs). The IMF estimates that such firms sit on 66trn yuan of debt, equivalent to about half China's annual GDP. According to Goldman Sachs, the receivables of LGFVs for which financial information is available ran to 22.7trn yuan ($3.2trn, or 17% of GDP) in 2024, up from 13% of GDP in 2018; the money is largely owed to the LGFVs by local governments themselves, many in perilous financial positions.
An annual audit released in June 2025 showed that over 40bn yuan ($6bn) of state pension funds were misappropriated in 13 of 25 provinces examined. Among other things, the money was used to repay government debts. Another 4bn yuan was lifted from a programme to pay for refurbishing schools, and billions more were diverted from farming subsidies.
In 2024 the national tax haul declined by about 3%, while money raised from fines and confiscations rose by 15%. Police forces from poor, rural areas have taken to slapping charges on Chinese citizens in other forces' jurisdictions to raise funds, a practice known as "fishing in distant seas". In March 2025 Li Qiang, the prime minister, said "profit-driven law enforcement" had to stop, but the practice continues.
Since 2024 central authorities have been expanding a reform known as "zero-based budgeting", requiring officials to justify each item in their budgets from scratch every year, rather than carrying forward spending from a baseline set the year before. In March 2025 Li Qiang promised to support officials in taking the reform nationwide. Pilot results include Zhengzhou recovering 3bn yuan, Guangxi finding 18bn yuan of idle funds, and Anhui saving 21.6bn yuan since 2022 by nixing hundreds of projects. In Anhui, officials found eight overlapping schemes all trying to fund innovation. The reform has advanced furthest in provinces with relatively healthy books, such as Zhejiang. Guizhou, a south-western province with fiscal woes so serious that central-government staffers jokingly call it "Greece", is a laggard.
In November 2024 the finance ministry allowed local governments to issue extra bonds worth trillions of yuan to replace their riskier hidden debts, but central authorities have been reluctant to offer further support for fear of encouraging more irresponsible borrowing. In the long run, reforms are under way to shift tax revenues from the central government towards local ones, though the process is expected to take years.
Some 2.2m immigrants from mainland China live in America. Between 2022 and 2024 more than 67,000 Chinese migrants flowed across America's southern border, most of them economic migrants who applied for asylum as a way to stay and work. At the peak in December 2023 nearly 6,000 were crossing each month; by July 2025 only 80 encounters were recorded, after Ecuador suspended visa-free entry for Chinese nationals in July 2024 and Donald Trump cracked down at the border. Asylum acceptance rates for Chinese applicants fell from 50% in mid-2023 to 20% in May 2025. China stopped accepting American deportation flights in 2018 amid trade tensions; they resumed in June 2024. Those deported to China may be charged with illegal border crossing, punishable by up to one year of imprisonment (or three in extreme cases).
Since China opened up in the late 1970s, some 3m young Chinese have gone to study in America. The number of Chinese students in America peaked at around 372,000 in the 2019-20 academic year and fell to around 277,000 in 2023-24. Britain hosted nearly 150,000 Chinese students in 2023-24. The number of Chinese students in Japan increased to 115,000 in 2023 from under 100,000 in 2019.
Returnees from abroad are known as haigui (sea turtles), a homophone for "returning from across the sea". An overseas degree has become less useful in China's job market; many foreign consultancies and law firms that once snapped up haigui have downsized their China operations. In April 2025 Dong Mingzhu, chairwoman of Gree Electric, a large appliance manufacturer, said the company did not hire haigui in case they had been recruited as spies by foreigners.
Tsinghua University in Beijing is ranked 20th in the world according to QS World University Rankings; Peking University is ranked 14th. Beihang University graduates have been banned from studying in America since 2020 because of the university's close links to China's armed forces.
China plans to teach AI in all primary and secondary schools by 2030. In Hangzhou, the city that is home to DeepSeek, children receive at least ten hours of annual instruction in AI, from model-training to the principles of neural networks. A government crackdown on after-school tutoring in 2021, intended to ease pressure on stressed-out families, has been an unintended fillip to companies making AI-powered educational devices, since human tutors were banned from teaching the main curriculum but AI tutors were not. A national survey found that 21% of primary and secondary students said they would rather rely on AI than think independently. According to Edelman, a public-relations firm, 72% of Chinese say they "trust AI", compared with only 32% of Americans.
Around 34m young people study in China's vocational-education system, including teenagers in vocational-track high schools and students in post-secondary colleges that operate in parallel to universities. In 2022 the government revised the law on vocational education, describing practical qualifications as "equally important" as academic ones. In December 2024 the education ministry announced 40 new vocational courses, many relating to AI and biomedicine. In June 2025 the government launched a campaign to improve the skills of 30m more workers by 2027, particularly in fields such as deep-sea technology and the "low-altitude economy" (drones and flying taxis). The campaign includes efforts to send some university graduates back to college for more marketable technical skills—a reversal of the traditional one-way path from vocational to academic education. A survey by Zhaopin, a recruitment agency, found that 52% of university graduates think additional technical training would increase their employment opportunities. Youth unemployment (aged 16-24, excluding students) stood at around 17% as of October 2025.
Over half of China's young people now complete some form of higher education, provided by some 3,000 institutions. Around 4.8m pupils in the most recent gaokao cohort scored high enough for a bachelor's degree, while 8m fellow test-takers did not. In 2022 (the latest year for which data are available), 36% of all undergraduate entrants—about 1.6m people—picked an engineering degree, up from 32% in 2010. In Britain and America the proportion hovers around 5%. China's engineering workforce numbered over 20m in 2023, by one estimate the world's biggest. Yet according to a survey by Zhaopin, a recruitment agency, only 8% of students want to enter manufacturing (over a quarter prefer IT); among those who studied science or engineering, only 37% pursue engineering-related careers.
The party exercises tight control over universities: their leaders are almost always party members and funding is largely derived from the state rather than student fees. Officials have told universities since 2023 to overhaul degree programmes to focus on strategic industries and technological bottlenecks; in 2024 the education ministry announced an "emergency mechanism" to create degrees more quickly to meet "national priorities". Over 600 universities now offer undergraduate programmes in artificial intelligence, a field the party vows to dominate by 2030. Several institutions started offering degrees in "low-altitude" technologies, such as delivery drones and flying cars, in 2024. Some places will offer degrees in medical-device manufacturing from 2026.
Funding is falling or disappearing for degrees the government deems less useful. Fudan University in Shanghai announced in spring 2025 that it was slashing the share of places for humanities students from 30-40% to 20% to expand high-tech programmes and create new "innovation colleges". Sichuan University, in Chengdu, stopped offering degrees in musicology, insurance and television studies in 2024. Two provinces have said they will reduce the number of students studying English. Across the country, institutions have ended more than 5,000 programmes over the past five years.
One kind of humanities degree is gaining popularity: courses glorifying the party. Over the past decade the number of colleges for Marxist studies in Chinese universities has grown from 100 to more than 1,400, offering bachelor's, master's and doctorate degrees. At least ten universities have set up centres specifically for the study of Xi Jinping's political philosophy.
China has increased its spending on research and development by roughly 9% annually in real terms over the past decade. In 2023, adjusting for purchasing power, China outspent both America and the European Union on combined government and higher-education R&D. China now publishes more high-impact papers (those in the most-highly cited 1%) than either America or Europe. In fields like chemistry, engineering and materials science, the country is considered a world leader. Findings from the Australian Strategic Policy Institute show that China leads in research in 66 of 74 fields, measured by its share of key scientific papers, including over two dozen areas—such as computer vision and grid integration—where it has a chokehold.
The shift is reflected in Nature's index of institutional contributions to top-tier journals. When first published in 2016, the Chinese Academy of Sciences (CAS) ranked first, but American and European institutions dominated the top ten. By 2025 eight of the top ten are Chinese; Harvard ranks second and the Max Planck Society ninth. When the index is limited to papers published in Nature and Science, however, CAS is the only Chinese institution near the top, placing fourth. The index's journal selection tilts towards chemistry and physical sciences—just over half of the 2025 total—while health and biological-science journals, areas of Western strength, account for only 20%.
In August 2025 JUNO (Jiangmen Underground Neutrino Observatory), a facility ten years in the making beneath Dashi Hill in Guangdong province, began hunting for clues to the masses of neutrinos—one of the biggest unsolved problems in fundamental physics.
EVs now account for over 50% of Chinese car sales, up from 5% in 2018. Twelve provinces and administrative regions produced more than 1m cars in 2024; four managed over 2m. Guangdong province, home to BYD in Shenzhen and Xpeng in Guangzhou, produced 5.7m cars, more than any other province. Chongqing and Anhui province made about 2.5m and 2.6m respectively. Carmaking accounts for about 5% of GDP—significant but unable to offset the property industry's decline entirely. The competition among regions for carmaking output is fierce: the property crisis, which has shrunk property (broadly defined) from about 30% of GDP five years ago to just over 20%, has forced local governments to find alternative sources of growth. The Communist Party believes a vigorous push into high-end manufacturing is the solution. In the 1950s central planners spread car production across the country to avoid over-reliance on any single province; regions still compete, sometimes on dubious terms, with local governments procuring home-grown brands for official use or taxi fleets.
There are 115 Chinese electric-vehicle brands, according to Jato Dynamics, a research firm. Only a few, including BYD, make any money and are expected to survive.
Total trade between China and Russia increased by 66% from 2021 to 2024, to $245bn. Russia supplies oil, gas and other energy exports, accounting for 80% of total Russian shipments to China; in return it gets consumer goods, cars and technology, including "dual-use" goods like machine tools and semiconductors that have helped prop up the Russian war machine. While China accounted for 34% of Russia's total trade in 2024, Russia made up just 4% of China's. Russia is still China's biggest foreign weapons supplier, but China's total weapons imports fell by 64% from 2020 to 2024 compared with the previous five years, according to the Stockholm International Peace Research Institute.
Since 2019 a pipeline called the "Power of Siberia" has delivered Russian gas at low prices into north-eastern China; China expected to take a record 38bn cubic metres (bcm) of gas via the pipeline in 2025. In September 2025 Russia said China had agreed to Power of Siberia 2, a mega-pipeline that could deliver another 50bcm. China also wants to diversify its energy imports: in October 2025 it received its 11th shipment from Russia's Arctic LNG 2 project, once frozen by sanctions. It is also buying more gas from Malaysia and Qatar. In March 2025 some Chinese state-owned firms reportedly curbed Russian oil imports for fear of American sanctions being tightened.
Cumulative direct Chinese investments in Russia in 2024 reached just $18bn—equivalent to 1% of Russia's GDP and barely twice as much as China has invested in Kazakhstan. China is happy to buy Russian commodities and dump its own consumer goods there, but has little interest in helping Russia modernise or diversify its economy.
China has been providing various forms of support to Russia's war effort since 2023, including critical weapons components, civilian drones and, according to Western officials, small quantities of artillery ammunition and military drones. In 2023-24 China became the leading supplier of industrial equipment to Russia, accounting for 80-90% of imported machine tools—many of Western origin. China also supplies nitrocellulose, a key ingredient in explosives (China dominates the global market), and fibre-optic cabling used in jam-proof wire-guided drones that have become increasingly important on the battlefield.
AO IEMZ Kupol, part of a Russian state-owned arms company, developed and flight-tested the Garpiya-3 drone—a knock-off of the Iranian-designed Shahed—in China with the help of Chinese firms. In October 2024 America's Treasury Department sanctioned two Chinese companies involved. The newest Shahed drones used in Ukraine are filled with Chinese components; one example examined by Ukrainian intelligence contained only two American parts out of 15.
In September 2024 China tightened export restrictions on drones and their components. In practice the rules are applied selectively: Volodymyr Zelensky says China has shut off supply of kit such as small quadcopters to Ukraine while keeping the tap open for Russia. Zelensky has also alleged that Chinese representatives are present at production facilities in Russia; a European defence official confirmed this, adding that China is keen to test the performance of its material on a live battlefield. Russia and China are exploring sharing Western technology captured on the battlefield in Ukraine.
Parts of the Russian elite, including people in its security apparatus, worry about growing reliance on China. Russia's FSB has been locking up Russian scientists for allegedly disclosing secrets to China; many appear to have done nothing wrong, their arrests reflecting deep-rooted fear and prejudice.
Song Jian, a missile scientist, formulated the one-child policy. According to Dan Wang's "Breakneck", the policy led to 321m abortions and the sterilisation of 108m women. The policy reduced the birth rate, but it had been falling anyway; coercion may only have hastened a demographic crunch for which the country was ill-prepared. The working-age population has been in decline since 2011. The policy was later relaxed to a two-child policy, and then a three-child policy. The government now urges women to have more babies, but they pay little heed.
The policy led to the widespread seizure of children for international adoption. China legalised international adoption in 1991 and banned it in 2024. In the intervening years some 160,000 children were adopted by foreigners, mostly by Americans. Experts reckon 10% were forcibly taken from their birth parents by family-planning officials, who gave the children—girls, mostly—to state-owned orphanages. The orphanages would then "launder" these children, placing notices in local media with invented stories of their being abandoned. The newspapers were not sold in the villages where the children were seized. Adoptive families were required to hand over $3,000 or more to the orphanages as a "donation", a massive sum in rural China, given in person in hundred-dollar bills. The orphanages became dependent on the money—not least to look after disabled children abandoned by families who could not afford medical treatment. Family-planning officials had an incentive to help: "confiscating" babies could induce people to pay fines on which many rural jurisdictions had become almost entirely dependent for their budgets.
The sex ratio at birth fell from a peak of 117 boys per 100 girls for most of the 2000s to 111 in 2023. Around 100,000 sex-selective abortions of female fetuses still take place each year. By 2027 China will have 119 men for every 100 women in peak marrying-age groups. In all, there may be 30m-50m "excess men" in China, reckons Xiaoling Shu of the University of California, Davis. The surplus has left many unmarried and childless—so-called "bare branches"—and middle-class urban men are typically expected to own an apartment before they can marry, making boys ruinously expensive for parents. Singlehood is disproportionately concentrated among poorer, less-educated men and among highly educated women, whose egalitarian gender attitudes clash with many college-educated men's hostility towards feminism. In Shanghai, 25% of men and 23.6% of women say they are happy to marry someone they do not love, and about half of young unmarried women say they would not tie the knot with someone unless their parents approved. By 2001 less than 12% of people were willing to marry someone they didn't love, according to research by Liu Wenrong of the Shanghai Academy of Social Sciences; romance is increasingly forgotten in the face of practical considerations. See son preference and singlehood.
The practice of paying a "bride price" remains deeply entrenched in China, despite a law banning "the exaction of money or gifts in connection with marriage". In some parts of the country bride prices are an endowment passed by the groom's parents to the newlyweds; in others, a compensation paid entirely to the bride's family. The median bride price for marriages in the countryside doubled in real terms between 2005 and 2020, according to research by Yifeng Wan of Johns Hopkins University. In Fujian province the median was 115,000 yuan; in neighbouring Guangdong it was about 42,000 yuan.
The desperation of some men for a bride, given the sex imbalance, is a big obstacle to reform. Women also resist change, viewing bride prices as a hedge against divorce: should the marriage end, a large share of the bride price can remain with the female divorcee. Since 2019 the Communist Party has routinely called for efforts to curb bride prices, but village officials often avoid interfering out of respect for local custom. Various places have introduced caps—50,000-80,000 yuan in parts of Gansu province, for example—but enforcement is weak. Marriages in China fail more often than in America.
On July 15th 2025 the government launched "digital IDs" for use on the internet, shifting responsibility for online verification from private firms to the police. Citizens obtain a digital ID by submitting personal information, including face scans, to the police via an app; they can then log into other apps or websites without revealing personal details to companies, which see only an anonymised stream of digits and letters. A pilot went live a year earlier and 6m people signed up. The scheme is currently voluntary but may not remain so; officials and state-run media are pressing China's 1.1bn internet users to sign up.
The state already partially outsources surveillance to private firms: before posting a comment, playing an online game or paying for a takeaway, Chinese must register using their real name. The police say they punished 47,000 people who spread "rumours" in 2024. Weibo, an X-like site owned by Sina Corp with 600m users, uses a combination of blocked keywords and armies of censors to keep users in line.
The digital ID is part of a broader vision in which the state takes centralised control over the economy's data flows. Xi Jinping has called data a foundational resource "with a revolutionary impact" on international competition. State planners regard data as a factor of production, alongside labour, capital and land. On June 3rd 2025 the State Council released new rules compelling all levels of government to share data. A sweeping project to assess the data piles at state-owned firms is under way, with the aim of valuing them as assets and adding them to balance-sheets or trading them on state-run exchanges. Local governments have built data exchanges to allow data to be monetised and traded between state agencies, state-owned enterprises and private companies; in Shenzhen, firms can buy data on how consumers use power from the national grid. A national data-exchange is in the works.
The government has previously clobbered data-hoarding firms. In 2021 Ant Group, a subsidiary of Alibaba, was forced to share its consumer-credit data with China's central bank. That year Didi, a ride-hailing firm, angered regulators by listing on the New York Stock Exchange despite concerns that its data might be exposed; in 2022 it was fined 8bn yuan ($1.2bn) and forced to delist. In 2022 a hacker stole 1bn personal records from an unsecured database run by the Shanghai police. Reports of the theft were censored.
Customs officials routinely confiscate any book in Chinese about contemporary Chinese politics that is not published in mainland China. Revised rules for party members that took effect on January 1st 2024 clarify that it is an offence merely to read banned materials, not just produce, transport or distribute them; the maximum penalty is expulsion from the party. In recent months the authorities have accused numerous high-ranking officials of keeping secret stashes of banned political literature, a charge always tagged onto allegations of corruption. In 2024 two dozen corruption cases that also involved perusing banned materials came to light, about twice as many as in 2023.
China's literacy rate was less than 20% in 1949, rose to about 60% by Mao Zedong's death in 1976 and is approaching 99% today. Chinese adults read on average 4.8 physical books a year, according to a national survey. In February 2026 a new regulation promoting reading came into effect, and on April 26th the country concluded its first-ever national reading week.
Crackdowns on unapproved genres, especially danmei books (which depict male same-sex romance) and supernatural fiction, have pushed some of China's most original literature online or abroad. Jifeng, a liberal bookshop, was forced to close in Shanghai in 2018 and reopened in Washington, DC, in 2024. Causeway Bay Books, known for political contraband, moved from Hong Kong to Taipei in 2020 after five of its employees were arrested. Mainland intellectuals have also opened small independent bookshops in Tokyo, Chiang Mai, Amsterdam and beyond.
The promotion of "positive energy", especially in online discourse, has been a theme of Xi Jinping's leadership since 2012. In September 2025 the cyber administration, China's chief internet regulator, launched a campaign against negative sentiment online, banning three popular influencers from most major social-media sites and suspending or closing some 1,200 accounts on Weibo. About 17% of Chinese aged between 16 and 24 (excluding students) are unemployed, according to official data as of late 2025.
Surveys by Martin King Whyte, a sociologist at Harvard, collaborating with researchers from Peking University, conducted in 2004, 2009 and 2014 had rejected the assumption that inequality was sowing discontent: respondents focused on fairness, ascribing success to attributes such as talent. An updated survey, published in the China Journal, found a striking change. In the earlier surveys about 62% of respondents agreed that hard work was always rewarded; in the new survey just 28% did. Nearly half still thought they would be better off in five years' time, down from nearly three-quarters a decade ago. A separate study by professors from Peking University, published in the China Quarterly, found that younger respondents were less likely to believe in upward mobility for children in poorer families. The term "positive energy", promoted by officials, now carries a tone of irony, if not outright cynicism, in private conversation.
Between 2017 and 2022 China's total fertility rate crashed from 1.8 to 1.0—far below the replacement rate of 2.1—and remained at 1.0 in 2024, half that of India and one of the lowest in the world. The number of new marriage registrations more than halved to 6.1m from 2014 to 2024, a record low. In 2024 the average Chinese spent just 18 minutes per day socialising, while internet use soaked up five-and-a-half hours daily. In the first quarter of 2025 only 1.8m couples registered to get married, a year-on-year decrease of approximately 8.1%. Among those aged 25-29, the unmarried rate is over 50%. The birth rate fell to 5.63 per 1,000 people—levels not seen since 1949—while the death rate was 8.04 per 1,000. Almost all children in China are born in wedlock.
China's population shrank for the third consecutive year in 2024 and the marriage rate plummeted by 21% to a record low. Leaders for the first time promised child-care subsidies and free pre-school education in the annual work report at parliament in March 2025. On July 28th 2025 the government introduced a new subsidy to boost births: 3,600 yuan ($500) a year for families for each child under the age of three, at an estimated cost of about 100bn yuan a year (roughly 0.07% of GDP). Two provinces and at least 20 cities have offered child-care subsidies, typically larger for the second and third children. In January 2026 condoms became subject to a 13% VAT rate.
The share of couples of reproductive age struggling with infertility climbed from around 12% in 2007 to about 18% in 2020. China has roughly 600 licensed IVF clinics; assisted-reproductive technologies accounted for around 300,000 births—roughly 3% of the national total—in 2022. Assisted-reproduction treatment cycles rose from about 236,000 in 2013 to more than 1.1m in 2019. In 2022 the central government required assisted-reproductive treatments to be added to public insurance; by mid-2025 all 31 provincial-level regions had incorporated them. More than 1m people received IVF reimbursement in 2024. An IVF cycle costs 20,000–50,000 yuan. Access is restricted to married heterosexual couples, and egg-freezing is permitted only for medical reasons, not for healthy women who wish to postpone childbirth. In 2023 Sichuan became the first province to remove the requirement that parents be married to register a child's birth, allowing single mothers to claim maternity benefits.
The government promotes "mum jobs"—roles offering mothers with children under 12 more flexible work schedules—as part of a national campaign for "a birth-friendly society". The concept was first introduced in 2022, when the National Health Commission issued guidelines for supporting childbearing. By the end of 2024 Guangzhou had listed 12,760 mum jobs in e-commerce, housekeeping, manufacturing and other sectors; Chongqing had tallied more than 23,000. In 2025 Hubei province launched one of the first province-wide schemes. Critics note that most mum jobs are menial, low-paid and hourly, effectively pushing women who are already marginalised in the workplace into even more marginal positions. Shanghai tried to defuse the gender backlash by introducing gender-neutral "birth-friendly jobs" in 2024.
Nearly 60% of China's current undergraduates are women. About four in five stay-at-home mothers want to re-enter the workforce, and about two in five of them are interested in part-time or flexible roles, according to a 2023 survey by the All-China Women's Federation.
The city of Hohhot, capital of Inner Mongolia and home to two of the world's largest dairy companies, announced in March 2025 one of the biggest cash-for-kids schemes in the country: 10,000 yuan for a first child, 50,000 yuan over five years for a second and 100,000 yuan over ten years for a third. The small central Chinese city of Tianmen, in Hubei province, introduced packages totalling up to 287,188 yuan ($40,300) for a second child and 355,988 yuan for a third—mostly in the form of housing subsidies—staggering sums in a province where annual disposable income is barely 40,000 yuan per resident. In late 2023 Tianmen started offering a hotch-potch of subsidies including 60,000 yuan to couples registering there for marriage (double that for rural-to-urban migrants), a birth bonus, maternity-leave payments and a monthly child-care allowance. The city recorded a 17% increase in births in 2024 to 7,217, its first rise in eight years. More than 100 local governments have come to study its approach. Some of the uptick may reflect parents from other areas shifting residency to take advantage of the subsidies, and the policy only applies to children born before May 2027, creating a rush. Tianmen has continued to see a decline in the number of locals getting married. The city is expanding free day care for two-year-olds and running matchmaking services. China's national health commission is working to cut back abortions that are not medically necessary. Some cities, including Tianmen, provide maternal health checks to women as soon as they register for marriages, making clear what the state expects. Officials in many cities have started calling women of childbearing age, asking about their plans to have babies; some cities use AI robocalls.
Between 2021 and 2024 the number of pre-school pupils fell from 48m to 36m. Some 42,000 of 295,000 pre-schools have closed, and 360,000 of 3.2m pre-school teachers have left the profession. Savvy nursery staff are retraining for eldercare. In 2021 China had just 500,000 certified care workers, according to People's Daily—0.27 per 100 people aged 65 and above, a shockingly low number. (Rich countries average nearer six.) The number of people aged 65 and over is projected to rise from 211m to 256m in the next five years, according to the UN. Universities have launched degrees in elderly care; the first batch of students graduated in 2024 to hot demand. The government promotes "mixed-use" facilities where both young and old are looked after—for example, converting empty nursery floors into "elderly-care stations". The National Development and Reform Commission has called on local governments to provide subsidies and tax concessions for such projects.
It costs high-income families 1.3m yuan to raise a child to adulthood, estimates YuWa Population Research Institute, a think-tank in Beijing; the figure is more like 130,000 yuan for low-income families. Applying Hohhot-level subsidies nationwide could transfer as much as 95bn yuan to families in the first year, equal to about 0.07% of GDP, according to Citi.
Liuzhi is an extra-judicial form of detention created in 2018, originally aimed mainly at Communist Party members and government officials as part of Xi Jinping's anti-corruption crackdown. It is now frequently directed at businesspeople too. The system runs parallel to normal policing: detentions do not require court approval and detainees are denied the standard services of lawyers. Changes to regulations in June 2025 allow agents to hold people for up to eight months, to reset the clock if a new crime is suspected and to interrogate prisoners endlessly. Cells typically have no windows, lights are always on and detainees are often supervised 24 hours a day.
In 2025 executives of listed companies were vanishing into liuzhi at about one a week: 39 such cases were counted in stock-exchange filings by the end of September, exceeding the previous year's record tally. Most corporate liuzhi targets work for unlisted companies, which are not obliged to disclose such disappearances. Total detentions, including those of officials and businesspeople, soared by nearly 50% in 2024, to around 38,000, according to the Central Commission for Discipline Inspection (CCDI). The CCDI took some form of disciplinary action against more than 60,000 people in the pharmaceutical sector and 17,000 in finance in 2024. Anti-corruption cases filed nationally are on track to hit a record 1m in 2025, reckons Gavekal Dragonomics. When an official is investigated, their entire business network can come under scrutiny, leading to a ballooning in corporate cases.
Some CCDI investigations have been characterised as "deep-sea fishing" expeditions, in which an executive is held on flimsy grounds in the hope that the harsh conditions of liuzhi will yield a confession or the accusation of another wealthy person. More than half of the 39 executives of listed firms detained in 2025 were seized by CCDI departments far from their companies' headquarters—a sign, lawyers say, that one local government is fishing in another's jurisdiction in search of funds.
A separate credit blacklist compounds the pressure. China's bankruptcy laws are not fully developed and courts often publicly add debtors' names to a list that bans them from "high consumption"—flying, riding on high-speed trains, staying in fancy hotels and more. By the end of September 2025 some 200,000 people had been added, up from around 17,400 in the whole of 2019. About 46% of the year's blacklistings were owing to contractual disputes. On September 28th 2025 Wang Jianlin, a property tycoon who was once China's richest man, was added to the list over a contractual dispute; the ban was lifted a day later.
Between April and July 2025 at least five prominent bosses leapt to their deaths from high buildings. Wang Linpeng, founder of a successful department-store chain and once the richest man in Hubei province, was put into liuzhi in April, freed in late July and took his own life days after his release.
In February 2025 Xi met a handful of China's top company bosses in the hope of signalling a reset, and a "private-sector promotion" law was enacted. But the dominant mood among entrepreneurs has stayed gloomy.
China has at least 18 laws allowing exit bans that prevent individuals from leaving the country; five have been passed since 2018, including legislation relating to corruption, fraud and telecoms scams. An official database of public judgments recorded more than 54,000 bans in 2024, up from some 24,000 in 2022. Almost all documented cases relate to civil disputes, not criminal activity—typically creditors of a struggling business seeking to keep the owner in the country until debts are settled. Bans can also be applied to family members, ostensibly only if they are needed as witnesses, but in practice relatives are often barred from leaving to put pressure on someone involved in a case. Once imposed, bans can last years and are very difficult to contest. The Dui Hua Foundation, an American NGO, estimates that more than 30 Americans were subject to exit bans in 2024. In April 2025 an employee of America's commerce department was banned from leaving after interrogation by the Ministry of State Security. In July 2025 Wells Fargo suspended all business travel to China after one of its employees, a Chinese-born American citizen, was prevented from leaving the country.
The People's Liberation Army (PLA) is roughly 2m strong, the world's largest armed forces. China's defence spending has tripled in current dollar terms since 2010. China has the world's largest navy, already numerically larger than America's. The defence minister is Dong Jun.
In 2003 Hu Jintao, then China's president, fretted about the "Malacca dilemma": the vulnerability created by 80% of China's oil imports transiting through the Strait of Malacca. China has sought to mitigate this with oil and gas pipelines to Russia and Central Asia and through Myanmar to the Bay of Bengal. Since 2013 it has turned several disputed reefs and cays in the South China Sea into military bases. In 2017 it established its first overseas military base in Djibouti, officially to support anti-piracy patrols. It has also experimented with an Arctic shipping route along Russia's northern coast. See maritime chokepoints.
When Xi Jinping came to power in 2012, China had only about 240 warheads. It now has some 600 and is on track to reach 1,000 or more by 2030, making it the world's fastest nuclear build-up since the height of the cold war. China claims it would not be the first to use nuclear weapons, but the doctrine is fuzzy. China has deployed about 100 missiles in three vast fields of silos designed to house up to 320 missiles, loaded with solid fuel for rapid response. New satellites to detect missile launches and phased-array radars can alert Chinese commanders to an attack within 3-4 minutes, giving China a "launch on warning" capability. In 2024 the rocket forces fired a nuclear-capable missile 11,000km into the Pacific Ocean; three months later they fired several missiles in quick succession towards western China. China is developing small warheads with yields below ten kilotons, which could be placed on intermediate-range missiles such as the DF-26 "Guam killer". Phillip Saunders of National Defence University identifies three overlapping aims behind the build-up: an assured second-strike capability able to survive any American strike; a more flexible arsenal for uses short of all-out war; and great-power status. Tong Zhao of the Carnegie Endowment for International Peace notes that China could threaten to use nuclear weapons as Russia has done in Ukraine, fire a warning shot over the ocean, or set off high-altitude detonations to destroy satellites.
According to a Pentagon report released in December 2025, China plans to build six new aircraft-carriers before 2035—more than twice the rate of America, which plans to construct only three over the same period. America also plans to retire three carriers, meaning that by 2035 America will have 11 carriers to China's nine. Because China will probably concentrate its navy in Asia, Chinese carriers will soon outnumber American ones in the Pacific. China's latest carrier, Fujian, was commissioned in November 2025. It launches aircraft using an electromagnetic catapult rather than steam—only the second such system in the world, the other being on America's USS Gerald R. Ford. China's first nuclear-powered carrier is under construction in the northern port city of Dalian; subsequent carriers are likely to be nuclear too. In October 2024 China conducted dual-carrier operations for the first time. In December 2025 a carrier was spotted near Palau, in the "second island chain" stretching from Japan to Papua New Guinea. Tom Shugart of the Centre for a New American Security describes the carriers as "power-projection platforms for achieving sea control," suggesting ambitions well beyond China's shores, including protecting shipping and stanching the maritime trade of adversaries in wartime. China has built the world's largest arsenal of land-based theatre-range missiles, including nuclear-capable systems. At its September 3rd 2025 military parade, it unveiled three new land-based intercontinental ballistic missile systems simultaneously, including a silo-based missile probably intended for large-scale deployment in north-west China. China's last war was in 1979. China has built up a vast stockpile of missiles capable of striking American bases across the Pacific. The DF-26B "carrier-killer" ballistic missile has a range of more than 2,000 nautical miles, threatening aircraft-carriers far from China's coast. According to modelling by Timothy Walton of the Hudson Institute, China could deliver about 2,000 bombs or missiles a day on targets within 500 nautical miles, some 450 munitions a day over the second island chain (including Guam, 1,600nm away) and a score a day as far as Hawaii (3,600nm). The "first island chain"—the string of archipelagos running from Japan to Malaysia, with Taiwan, about 100 miles from the mainland, at its heart—marks the zone where Chinese firepower is densest.
At the 2025 Shangri-La Dialogue, a gathering of defence ministers, military commanders and spy chiefs in Singapore, China's defence minister stayed away. Its delegation was headed by a rear admiral, Hu Gangfeng, who said it was "normal work arrangements" to vary Chinese representation; China had sent a defence minister every year since 2019. The delegation held none of the press conferences or group interviews of previous years. Without its defence minister, China was denied a chance to address the entire audience, effectively ceding the space to America. Pete Hegseth, America's defence secretary, reaffirmed American commitments to the region and suggested a Chinese attack on Taiwan was imminent. The Philippines' defence minister, Gilberto Teodoro, used his speech to defend his country's efforts to challenge Chinese maritime claims in the South China Sea.
China may have been too uncertain about its relations with America to risk a public confrontation; one Chinese academic at the forum said China's priorities were to manage the trade war and pave the way for a potential meeting between Xi Jinping and Donald Trump. China has also become frustrated with the Shangri-La Dialogue, which favours candid, unscripted debate. It sees the gathering as increasingly pro-Western as European governments have boosted their presence, and may hope to promote its own Xiangshan Forum in Beijing as an alternative. China sells J-10C fighter jets, which it also operates itself, including around Taiwan. Only Pakistan has bought them so far (20 since 2022), but Pakistan's claim in May 2025 that J-10Cs and PL-15 air-to-air missiles shot down Indian fighters—including French Rafales—in beyond-visual-range combat may attract new buyers. China's modern fighters were previously untested in combat and thought inferior to Western equivalents. During the May 2025 India-Pakistan conflict, China provided Pakistan with real-time intelligence allowing it to target Indian military assets down to individual missile launchers. China also recently ordered hundreds of Chinese engineers in Indian electronics plants to return home, and has grown more active in India's neighbourhood, meddling in the domestic politics of Nepal and taking sides in Sri Lanka. In September 2025 Xi Jinping hosted over 20 presidents and prime ministers at a summit of the Shanghai Co-operation Organisation (SCO) in Tianjin, advertising China as a source of stability and prosperity. Guests included autocrats like Vladimir Putin and Kim Jong Un but also leaders of countries that lean towards the West, including Turkey, Egypt and India. Russia and North Korea are working together on space and satellite systems; in return for China's support over Ukraine, Russia is thought to be offering China its most sensitive military technology, including submarine-propulsion and missile-defence systems.
On September 3rd 2025 China held its first military parade in six years, commemorating the 80th anniversary of the end of the second world war. It was the third military parade since Xi Jinping took power in 2012. Vladimir Putin and Kim Jong Un attended; Indonesia and Malaysia sent heads of state or government for the first time. Much of the weaponry on display was designed to target American naval forces in the western Pacific, including four new supersonic or hypersonic anti-ship missiles and tanks with uncrewed turrets. The PLA is struggling to attract enough recruits with the technological skills to operate new equipment, and its ground, air, sea and other forces still have difficulty working together in combined operations.
At a recent party plenum, 37 of the Central Committee's 205 full-time members were absent—the lowest attendance since the Cultural Revolution. Since 2023 senior Chinese military commanders, including two former defence ministers and the most senior admiral, have been put under investigation for corruption or indiscipline. Another has not been seen in public since March 2025. At least 22 generals have been expelled since Xi Jinping came to power; his three immediate predecessors failed to remove a single one. Xi's campaign to root out corruption in the armed forces has targeted several senior officers. Li Shangfu, then the defence minister, was purged in 2023. Miao Hua, the admiral responsible for enforcing loyalty within the PLA, was placed under investigation in 2024. In March 2025 Lieutenant General Tang Yong, a senior member of the military commission's anti-graft unit, lost his job as an adviser to the national legislature. General He Weidong, one of two vice-chairmen of the Central Military Commission and number three in the military hierarchy, had not been seen in public since early March 2025 and was absent from events attended by Xi. On January 24th 2026 Zhang Youxia, the most senior uniformed officer and senior CMC vice-chairman, and General Liu Zhenli, head of the joint staff department, were placed under investigation—a purge unmatched since an alleged coup attempt in 1971. The CMC now has just two active members: Xi and General Zhang Shengmin, the PLA's disciplinary chief. American intelligence has assessed that the purges may have weakened the PLA's combat effectiveness.
Chinese ships have been implicated in damaging undersea infrastructure in the Baltic Sea. In 2023 a Chinese ship damaged a gas pipeline and telecommunications cables by dragging its anchor (accidentally, it claims; deliberately, the West suspects). In 2024 another Chinese ship severed more undersea cables in the Baltic in the same way. There is some blurring between Chinese and Russian grey-zone operations.
A rare set of three surveys in 2024-25 by the Carter Centre, an American think-tank, asked 6,500 Chinese people about international affairs. Two years earlier more than half of Chinese opposed unifying China and Taiwan by military force; by late 2025 that figure had fallen to 38%, while support for forced unification (under at least some circumstances) rose from 25% in 2024 to almost half. Of all their neighbours, Chinese feel most warmly about Taiwan—in line with state narratives that the Taiwanese are "family". Almost three-quarters of respondents regarded America as a national-security threat, and 62% backed retaliation against America's trade war, even if costly, including cutting off rare-earths exports; only 4% supported negotiating over chip export controls. High earners tend to view America and its culture more favourably, but are also more open to a military solution on Taiwan and think more highly of Russia. Some 44% oppose sending troops to support Russia's war in Ukraine. Despite China calling its South China Sea claims "indisputable", almost half the population would support giving up some claims in return for America reducing its security presence in Asia. The population has a remarkably low opinion of Cambodia, a diplomatic pal, because of its rampant scam industry.
Chinese state media have invoked the "Peiping model"—the bloodless 1949 takeover of Beijing during the civil war—to explain military exercises preparing for a future blockade of Taiwan. In exercises in April 2025 called "Strait Thunder 2025A", the PLA said it had practised bombing ports and energy facilities. Recent exercises have featured both the navy and coastguard, as well as maritime militia on fishing boats, deployed in a "cabbage strategy" to wrap Taiwan in layers of forces. Exercises have also rehearsed barge-borne bridges that expand the number of potential amphibious landing spots.
Analysts distinguish between a full naval blockade—likely construed as an act of war—and a "quarantine", which could restrict some shipping and be led by the coastguard rather than the navy. A quarantine could be presented as domestic law-enforcement, such as inspecting ships on the pretext of customs enforcement, disease control, or weapons interdiction. Bonnie Glaser of the German Marshall Fund argues a blockade may offer the worst mix of risk and reward for China: it could provoke an American military response without forcing Taiwan to surrender.
Chinese ports account for around 40% of the world's container traffic. Chinese firms own or operate 115 ports outside the mainland. Chinese law gives the maritime-safety authority the power to punish firms whose vessels enter restricted military areas, giving China leverage to enforce compliance from shipping companies without boarding every ship.
Xi Jinping has reportedly instructed the PLA to be ready to invade by 2027, but recent purges of PLA commanders suggest he lacks confidence in his forces.
Chinese special forces have been planning "decapitation" strikes on Taiwan's leadership for years. In 2015 Chinese state television revealed that the PLA had built a mock-up of Taiwan's presidential palace in the desert in northern China; the training site has tripled in size since 2020, and models of other Taiwanese ministries have been built, according to satellite images obtained by a Japanese think-tank in October 2025. Exercises on December 29th and 30th 2025, involving dozens of warships, military aircraft and long-range rocket fire, simulated a blockade, operations to prevent foreign intervention and strikes on pro-independence figures. The PLA's own elite units have yet to conduct any operations of note, however, and China has not yet established the high-level integration of space, air, ground and other forces that such operations would require. Nobody under 45 in China has lived through an actual Chinese military strike on another country; the last was the 1979 war in which Vietnam repelled a Chinese invasion.
A Chinese diplomatic campaign since 2023 has led 70 countries to support "all" efforts at reunification, creating cover for anything from inspections to invasion.
China promotes "cognitive warfare" against Taiwan, seeking to demonstrate its power, exhaust Taiwan, expose the limits of America's protection and ideally induce surrender without a fight. Pro-China media in Taiwan have promoted the notion that America does not care about Taiwan and wants only to sacrifice it to weaken China. China has asserted that under Trump, Taiwan will be jettisoned as a "discarded chess piece".
China has cultivated ties with Kuomintang politicians in Taiwan. After KMT legislative leader Fu Kun-chi visited Beijing, China lifted a ban on pomelo imports from his constituency of Hualien while maintaining it on pro-DPP areas.
China officially recognises 56 separate ethnicities. The Han, the dominant group, make up about 91% of the population; the other 55 minorities account for roughly 9%. In the 1950s the Communist Party accorded minorities a range of privileges: they could travel fairly freely, follow many of their religious precepts and educate children in their own languages. Outbursts of violence and protest in Tibet, Xinjiang and Inner Mongolia eventually persuaded the party that even relative autonomy had failed.
Under Xi Jinping the shift towards aggressive assimilation has dramatically accelerated. Instead of emphasising differences between groups, the party now speaks of them as together forming the "community of the Chinese nation". Textbooks devote less content to the 56 separate groups. In Tibet, authorities have arrested monks, taken control of monasteries, packed young children off to boarding schools and forced locals to denounce the Dalai Lama. In Xinjiang, rights groups have documented the detention of more than a million Muslims in a mass re-education campaign, while mosques have been destroyed. In Inner Mongolia, officials have crushed protests against making Mandarin the main language of education. Some provinces have stopped awarding extra points to minority students in the gaokao university-entrance exam.
A "law on promoting ethnic unity and progress", heading for a vote in 2026, would codify many of these changes. Among its provisions, it requires Mandarin to have precedence over minority languages in schools and in official communication; it calls for "new social customs", including barring anyone from blocking marriages on identity grounds; and it mandates that different ethnicities live in mixed communities. The law also creates a new legal basis for prosecuting anyone who opposes the party's definition of ethnic harmony, including parents who instil "detrimental" views in their children.
China's Communist Party seized Tibet in 1951. The Dalai Lama, Tibet's spiritual leader, fled to India in 1959 and has led a non-violent campaign for greater Tibetan autonomy within China ever since, a position known as the "Middle Way". China has long denounced him as a separatist "wolf in monk's robes" but has also tried to persuade him to return to Tibet and endorse party rule. There are roughly 7m Tibetans living in China and a 150,000-strong diaspora.
China's atheist government insists it alone can approve the next Dalai Lama. After the Panchen Lama—another senior Tibetan Buddhist figure—died in 1989, the Dalai Lama identified an infant successor in Tibet, but Chinese authorities whisked the child away (never to be seen or heard of again) and appointed a replacement whom many Tibetans regard as a stooge. China is expected to name its own rival successor when the current Dalai Lama dies. A diplomatic campaign since 2023 has led 70 countries to support "all" efforts at reunification with Taiwan, but China has also been trying to revive back-channel talks with the Tibetan government-in-exile since early 2023, with Chinese intermediaries asking about the Dalai Lama's health, schedule and succession plans.
China retains "developing country" status in international organisations, which entitles it to cheap loans from the World Bank, reduced contributions to global climate-adaptation funds, extra years to phase out carbon emissions, discounted UN membership fees and higher permitted rates of agricultural subsidy. Around 40 global bodies give special status to poor countries; China benefits from many of them, including paying a fraction of the ordinary fees to send mail across borders. Wang Yi, the foreign minister, has called China the global south's "ex officio" member. Xi Jinping said in 2024 that no matter how rich China grows, it "will always belong to the developing world".
Scott Bessent, America's treasury secretary, called treating China as a developing country "absurd" in an April 2025 speech and said China needed to "graduate up". At the COP29 climate talks in November 2024, negotiations nearly collapsed because rich-country envoys were unhappy that China, the world's largest carbon-emitter, initially refused to contribute to help poor countries deal with climate change. China's delegation eventually let some of its indirect climate lending be counted in the rich countries' pile, on assurance that this was voluntary and did not imply a change in its developing status.
China is an unforgiving overseas lender, driving hard bargains with developing countries and linking projects in poor countries with how recipients vote at the UN. In reforms being discussed at the IMF and World Bank, China prefers "vote" reforms that would give more influence to those with greater GDP, diluting the power of poorer states, rather than "voice" reforms that would give representatives from poor countries more top jobs.
In 2013 the United States was South America's biggest trading partner, with $280bn in total goods trade (in 2025 dollars). By 2023 that was down 25%, while China's trade with the region jumped 43% to $304bn. Only Colombia and Ecuador still trade more with the United States than with China. Chile's copper-ore exports to China almost tripled over the decade; Brazil's soyabean exports nearly doubled.
Since 2000 Chinese firms have invested more than $168bn in South America, chiefly in Brazil, in sectors ranging from mining and agriculture to telecoms, renewables and electricity utilities. Since 2005 China has lent some $111bn to Venezuela, Brazil, Ecuador and Argentina. Venezuela still owes perhaps $10bn. Ecuador owes $3bn, and Argentina renewed a $5bn swap line in 2025 despite American objections. Venezuela has been the biggest recipient of official Chinese loans and grants in South America, accepting about $106bn between 2000 and 2023, according to AidData at the College of William and Mary. In 2023 China upgraded its relationship with Venezuela to an "all-weather" partnership, a diplomatic designation assigned to just a few countries. Venezuela has also been the biggest buyer of Chinese weapons in South America. China gets only about 5% of its oil imports from Venezuela, but that accounts for roughly 80% of international demand for Venezuelan crude.
China has built electronic-surveillance sites in Cuba and runs a deep-space radio station in Argentina. Chinese investors hold stakes in infrastructure across the region, including a Hong Kong conglomerate's ownership of ports at either end of the Panama Canal.
The capture of Nicolás Maduro in January 2026—just hours after he received a delegation led by Xi Jinping's special envoy for Latin America—exposed the limits of Chinese power in the region. China condemned America's raid but offered no practical assistance. Jin Canrong of Renmin University argued that China must confront the reality that whatever it does in the region, it is likely to come face to face with America, and that China should for now proceed cautiously on investment and emphasise trade instead.
In May 2025 Xi Jinping hosted South American leaders—including Lula of Brazil, Gustavo Petro of Colombia and Gabriel Boric of Chile—in Beijing for China's biggest diplomatic jamboree since Donald Trump took office.
China built a mega-port at Chancay in Peru. The United States worries that Chinese-built commercial ports in the hemisphere could be used by China's navy. A proposed joint space observatory in northern Chile—between a private Chilean university and China's state astronomical institute—was frozen for review by the Chilean government after American complaints.
China has showered diplomatic largesse across Latin America and the Caribbean over the past two decades. For small-island countries the cost of adding another voting member to China's bloc at the UN is very low. Caribbean countries, particularly vulnerable to the impact of climate change, accept generous offers to build infrastructure knowing it leaves them in hock to China, in lieu of offers from the United States.
China built Grenada's National Cricket Stadium as a $40m gift in 2007; two months before the stadium was announced, Grenada accepted the "one-China principle" and severed ties with Taiwan. In 2025 Grenada's prime minister, Dickon Mitchell, was the first foreign leader to visit Xi Jinping in Beijing that year. In St Vincent & the Grenadines, the opposition won a landslide election victory in November 2025; the outgoing leader, Ralph Gonsalves, who had governed for 24 years, spent his final months accusing China of financing the opposition's campaign in order to secure a diplomatic flip.
China acts cautiously in the Middle East, behaving more like a middle power than a superpower. It is transactional, self-interested and focused on business deals, proposing prosperity as a cure-all even in regions stalked by sectarian violence. In 2023 it hosted meetings between Iran and Saudi Arabia that restored diplomatic relations, though Iraq and Oman had spent months preparing the rapprochement beforehand.
China vetoed several UN Security Council resolutions to impose sanctions on Bashar al-Assad's regime in Syria for the alleged use of chemical weapons. A former Chinese ambassador explained that China vetoed the Western-drafted resolutions to be taken seriously in the region, arguing that without the vetoes China would have been "excluded from any negotiations concerning Syria or other Middle Eastern issues". China's biggest interest in Syria's civil war was the presence of hundreds, possibly thousands, of Uyghur militants from Xinjiang fighting alongside Islamist rebels. Chinese officials praised Assad for combating terrorism and called on outside powers to "abandon the fantasy of regime change".
China is a stingy aid donor. It pledged $2m in 2023 to UNRWA, the UN agency that assists Palestinians—less than the contribution from Iceland (population 400,000).
Belt and Road Initiative lending peaked around 2015 and debts are now coming due across the developing world.
In August 2025 Liu Jianchao, head of the Communist Party's International Department and widely tipped as the next foreign minister, was reported to have been detained for questioning. His last public activity was on July 30th. If confirmed, it would mark another purge at the top of the foreign-policy establishment, following the disappearance of former foreign minister Qin Gang in June 2023. The "wolf-warrior" style of diplomacy once voguish among Chinese diplomats has receded sharply since mid-2022, with foreign-ministry language softening to levels of cordiality not seen in six years, according to an analysis of 16,000 press-conference answers by foreign-ministry spokespersons since 2018.
Xu Feihong is the Chinese ambassador to India.
A 2025 poll by The Economist and GlobeScan of 32,000 people in 32 countries found that China made big gains as the world's preferred "leading power" between 2024 and 2025. The share of respondents favouring China jumped by 11 percentage points to 33%, while support for America slipped below a global majority to 46%. Preference for China rose in every country sampled, including in America, where support for Chinese leadership doubled to 6% and two in five Americans thought China's influence was "mainly positive", up from a quarter during Donald Trump's first term. Preference for China strongly correlates with age: among 18- to 24-year-olds, America and China are nearly tied at 41% and 39%; among those over 65, America leads by 30 points.
The largest regional increases were in Latin America and Europe. In Brazil, Canada, Mexico, South Africa and Spain, preferences for China rose by about 20 percentage points. The single largest increase was in Indonesia, where support leapt 23 points to 62%, making it the second-most pro-China country behind Egypt. For perhaps the first time, more than half of respondents in Africa and the Middle East opted for China, which may be partly thanks to the Belt and Road Initiative. Japan and South Korea, where security concerns dominate views of China, showed no more than 5% support.
According to AidData, a research centre at the College of William and Mary in Virginia, China's total overseas financial commitments from 2000 to 2023 amounted to $2.17trn (adjusted for inflation), across more than 30,000 projects. Only 6% qualified as aid; 47% went to poor countries; and 43% went to high-income countries. America was the biggest single borrower, receiving $202bn. Loans for infrastructure under the Belt and Road Initiative accounted for only 20% of total Chinese credit in the decade after its 2013 launch. China's massive commercial banks, such as ICBC and Bank of China—state-owned but profit-seeking—were responsible for about 60% of all lending by China's state-owned creditors from 2019 to 2023, and more than 80% of such lending in high-income countries. A growing share of credit for acquisitions is directed towards industries governments deem "sensitive", such as telecoms infrastructure, microprocessors and companies that collect personal data. AidData's database spans more than 1,100 state-owned lenders and donors; even Chinese officials sometimes use the figures in their own work.
Since December 2025, Emmanuel Macron, Mark Carney, Keir Starmer and at least five other foreign leaders have trooped to Beijing. Friedrich Merz, Germany's chancellor, was expected to follow. Six of the recent visitors—from France, Canada, Britain, Finland, South Korea and Germany—are formal allies of America. For most of the past decade discussions in those capitals were about decoupling or de-risking from China; that drive is now losing momentum. Chinese officials are "jubilant", according to Western executives who met them.
The actual substance of the bilateral meetings has been thin. Canada's main concession was a sharp reduction in tariffs on Chinese electric vehicles, but a quota strictly limits the number at the lower rate. Britain's concession was to allow China to build a giant new embassy. As for European countries, China had floated resuming negotiations on a trade deal but is getting nowhere with the European Commission and not much further with national governments. Days after returning from China, Mr Macron warned that if China fails to rein in its huge trade surplus, the EU might hit it with fresh tariffs.
China has emphasised what it brands as Japan's return to the "evil path of militarism", but the message is falling flat—not only in Western capitals but also in Asian countries that suffered under Japan during the second world war. Days after visiting Beijing, South Korea's president Lee Jae Myung was jamming on the drums with Takaichi Sanae, Japan's prime minister. China's ambassador to Australia warned that it was "unacceptable" to seek benefits from China while disregarding its core interests, which diplomats read as a threat to tie economic relations to support for unification with Taiwan.
On April 30th 2025 China lifted sanctions on a number of members of the European Parliament and its institutions that it had imposed in 2021. An EU-China summit was planned for July 2025 in Beijing; the venue was moved from Brussels after Xi Jinping declined to visit the European capital. The EU considers the Comprehensive Agreement on Investment (CAI)—proposed in 2013, finalised in 2020 but never ratified by the Europeans, in part because of the 2021 sanctions on Euro-MPs—to be dead. China's strategy for Europe remains to peel the continent away from America, weakening and dividing the West. It pins its hopes on individual member states—not least Germany, which accounts for about 40% of the EU's exports to China, and France—rather than treating the bloc as a whole.
In 2024 China shipped some $560bn-worth of goods to the EU, about 30% more than its exports to America. The EU's exports to China were much smaller, at about $230bn. In the first half of 2025 Chinese exports to the EU grew by 7%, while imports from the bloc dropped by 6%. Chinese electric vehicles are about 20% less costly than European-made ones; the EU imposed tariffs of up to 45.3% on Chinese EVs, citing subsidies, but Chinese carmakers can still profit even with the tariffs.
Wang Yi, China's foreign minister, told European officials in July 2025 that China feared a defeat of Russia could prompt America to shift more attention to China, according to the South China Morning Post. Kaja Kallas, the EU's foreign-policy chief, has warned that the bloc is "ready to impose costs" for Chinese cyber-attacks on EU commercial and political targets.
In June 2025 the EU scuttled an economic dialogue with China because of a lack of progress on trade disputes. In October Germany's foreign minister, Johann Wadephul, postponed a visit to Beijing when he was not offered the usual array of high-level meetings; the Chinese were upset that he had criticised China's "increasingly aggressive" behaviour in Asian waters during a speech in Japan. European officials in Beijing reported that Chinese ministries had taken the unusual step of refusing démarches, or requests for formal diplomatic meetings. Germany's trade relations with China have shifted from rough balance to a deficit on track to exceed $100bn. China has identified Hungary and, increasingly, Spain as especially receptive to Chinese investment.
Before President Trump's trade war, China and India had resolved a four-year stand-off over a disputed border and were talking about resuming direct flights. China has agreed to resume pilgrimages of Indian Buddhists and Hindus to Tibet and is pledging to buy more Indian goods.
Chen Yixin, China's spy chief, warned in April 2025 that China must "resolutely win the comprehensive war against hegemony".
About a decade ago China offered President Barack Obama a "new type of great-power relations", calculated to appeal to his belief that America and China had special responsibilities to lead multilateral efforts on climate change and other global challenges. Obama declined, in part because the offer was conditional on respecting China's "core interests"—code for Chinese claims on Taiwan and other territories—and because America's allies disliked talk of two superpowers deciding how to run the world.
China's share of the world's manufacturing value added exceeds one-third. In green technology, Chinese firms supply the materials, components and finished goods for 60-80% of solar panels, wind turbines and electric vehicles. China's "new three" products—electric vehicles, lithium-ion batteries and solar cells—each account for at least 70% of global production capacity. Big Chinese firms can also convert coal to chemicals, providing an alternative to petrochemicals when oil prices spike.
Between 2010 and 2024, China's share of global exports rose in low-, medium- and high-tech goods and natural-resource-based manufactures alike, according to Yu Fei and Guo Kai of the CF40 Institute. China provides 64% of the value embodied in garments, textiles, leather and similar goods exported from 30 low- and middle-income countries—far higher than its share of the working-age population for the group. Lant Pritchett, a development economist, called China "a demographic pterodactyl" added to the "flying geese" of East Asian development. China's four richest cities (population 84m) have a GDP per person that exceeds Japan's; its poorest four provinces (population 140m) are closer in income to Vietnam. China is equivalent to 0.7 Japans, nearly six Malaysias, five Mexicos, four Thailands and 1.4 Vietnams—competing with all of them. In 2023 Xi Jinping said: "We must continue to transform and upgrade traditional industries, and avoid simply treating them as 'low-end industries' to be abandoned."
Manufacturing investment, especially in high-tech ventures, has been a bright spot for China's struggling economy, but rapid declines in industrial prices and profits have raised doubts about its sustainability. By early 2026, producer prices had fallen year on year for 41 consecutive months, the longest deflationary spell since 2012-16. Producer-price inflation turned positive in March 2026 for the first time since 2022; in April 2026 it reached 2.8%, an even bigger jump than expected, driven by "cost-push" inflation from the war in the Gulf raising energy prices and "demand-pull" inflation from the global AI build-out (China's manufacturers benefit from the rush to build data centres, supplying pumps, fans and other electrical machinery). Reflation remains narrow, largely confined to upstream inputs such as energy, petrochemicals and metals like copper. Industrial production overall slowed to 4.1% in April from 5.7% the previous month; the volume of crude oil processed fell 5.8% year on year. Retail sales rose by just 0.2% in April. Late in 2025 yields on ten-year Chinese government bonds dropped below Japan's for the first time in data stretching back over 20 years. The GDP deflator has dropped for 11 consecutive quarters. In May 2025 prices fell year on year in 25 out of 30 major industries; in eight, including coal-mining and steelmaking, the drop was steeper than in cars. Many Chinese manufacturers sell cars cheaply to dealers, who resell them as "used" vehicles with zero miles on the clock, splitting the market between price-sensitive buyers and everyone else.
The government uses the term neijuan ("involution") for the problem: an arms race in which extra effort brings no additional reward because everyone else tries harder too. The word appeared in a statement from the Politburo in July 2024 and reappeared in the conclusions of the Central Economic Work Conference in December. According to Zhao Wei of Shenwan Hongyuan, a Chinese securities firm, involution most severely afflicts electrical machinery, steelmaking and construction materials such as cement, ceramics and glass; another 15 industries, from cars to tobacco, show some involutionary tendencies.
From 2012 to 2016 China suffered four and a half years of falling factory-gate prices. In response, Xi Jinping introduced "supply-side structural reform", imposing production quotas and capacity cuts. Coal mines were instructed to operate for only 276 days a year. The policy restored profitability: factory-gate prices stopped falling in September 2016 and rose by more than 7% in early 2017.
In 2025 the government has been more tentative, in part because many industries now suffering from involution are led by sophisticated private firms using cutting-edge technology, not the large state-owned enterprises that were easy to boss about in the 2010s. The government told the solar-panel industry to exercise "self-discipline"; 33 panelmakers pledged to set a ceiling on production and a floor under prices. For steelmaking it imposed "three don'ts": don't produce without an order, don't sell at a loss and don't ship without sure payment. Listed firms on China's mainland (numbering over 6,300) reported receiving 195bn yuan ($27bn) in subsidies in 2024, some 13% less than the year before. In July 2025 the central-planning agency and the market regulator published draft changes to the country's price law, first enacted in 1998, that would prohibit companies from selling items below cost based on their "pricing mechanism"—an oblique reference to the algorithms that determine the price of goods on e-commerce platforms. On July 30th 2025 the Politburo signalled that curbing price wars was a priority. About 80% of industrial sectors were reporting negative price growth compared with the previous year, according to Goldman Sachs.
The household saving rate exceeds 31% of disposable income. In the first five months of 2025, households spent less than half as much on new homes as in the same months of 2021.
Consumer prices rose by only 0.2% in the year to January 2026. The falling cost of pork (down by 14%) offset the rising price of gold jewellery (up by 77%). Factory-gate prices have been falling for years. The People's Bank of China has kept its policy interest rate at 1.4% since May 2025. The margin between banks' interest income and their interest expenses is at a record low of 1.4%, far below the 1.8% recommended by regulators; the central bank worries that disorderly competition ("involution") now afflicts financial institutions. Many three- and five-year deposits will mature in 2026, allowing banks to reprice them at lower rates. Most economists expect the central bank to make just one or two cuts of 0.1 percentage points each. China's regulators have warned commercial banks against holding too many American government bonds, not as a geopolitical threat but to limit banks' vulnerability to dollar losses.
Shanxi is China's most sluggish province. In 2024 its economy grew by 2.3%, well below the national average of 5%; in the first half of 2025, it grew by 3.8%, still the slowest of any province. The province has reserves of 650bn tonnes of coal. In 2021 rising coal prices set the local economy flying—growth hit 9.1%, third in provincial rankings—but fortunes have dived since. In June 2025 Shanxi's producer prices fell by 13.6% year on year. Mining still made up 30% of GDP in 2023, a percentage point more than in 2013, despite years of official exhortations to diversify; the service sector rose from 38% to only 43% over the same period.
Xi Jinping has visited Shanxi repeatedly to press for faster economic transition, calling for a "sense of urgency" as early as 2020. A "transition demonstration zone" set up in 2017 to house renewable-energy and high-end manufacturing projects had output of about 5.3bn yuan ($738m) in the first quarter of 2025—roughly 1% of local GDP. Coal companies now also make hydrogen out of their coal, and there are plans to put hydrogen-powered vehicles on the streets, but progress is slow. Shanxi's two Foxconn plants, once the hope for broadening its industrial base, have been hit by shifting supply chains: in the second quarter of 2025 Shanxi's exports shrank by 33%, the biggest drop of any province. America imported 47% of its smartphones from China in the first half of 2025, down from 81% the year before. The launch of Black Myth Wukong, a hit video game, brought over 100m tourist visits to Shanxi's temples and caves by the end of 2024, but tourism barely affected the GDP figures.
After America, China is the world's second-largest developer of new medicines. Chinese companies ran nearly a third of the planet's clinical trials in 2024, up from just 5% a decade earlier. China's prescription-drug sales were about $125bn in 2023, a sixth of America's. New medicines account for only a fifth of the market, a share that may rise to a third by 2028. State insurance covers most purchases, pooling demand from hospitals and forcing firms into bidding wars; drugmakers must often slash prices by half or more to win coverage.
The industry was transformed by regulatory reform after political leaders set out their ambition for China to become a "biotechnology superpower" in 2016. The workforce at China's drug regulator quadrupled between 2015 and 2018, and a backlog of 20,000 new drug applications was cleared in just two years. The time taken to secure approval for human trials shrank from 501 days to 87. In 2015 China approved only 11 treatments, mostly Western imports; by 2024 the figure had risen to 93, with 42% developed domestically. Many of China's "sea turtles"—returnees who had studied or worked abroad—came back with experience of building biotech firms. In November 2019 BeOne Medicines, formerly known as BeiGene, became the first Chinese firm to win approval from America's FDA for a cancer drug. In September 2025 a lung-cancer drug developed by Akeso Bio outperformed Keytruda, Merck's blockbuster therapy, in clinical trials. Fast-follower and first-in-class treatments now make up more than 40% of the industry's pipeline, according to research published in Nature Reviews Drug Discovery.
In the first half of 2025 nearly a third of all global licensing agreements signed by big pharma were with Chinese firms—four times the share in 2021. Pfizer paid $1.25bn to 3SBio for rights to an experimental cancer drug; GSK struck a $500m deal with Hengrui for a lung-disease treatment plus options on 11 more drugs valued at up to $12bn. The market value of listed Chinese biotech firms is less than 15% that of their American peers, making them temptingly cheap partners. Some Chinese firms are setting up legally distinct companies in America—so-called "NewCos"—to spin off promising assets and mitigate political concerns. In June 2025 the FDA halted any new clinical trials that exported Americans' genetic data to China. A congressional-committee report published in April 2025, whose authors included Eric Schmidt, Google's former boss, warned that China's strength in drug discovery, combined with AI, could allow its firms to eclipse America's.
About 160 new obesity drugs are in development around the world; about a third of them are from China. Patents on semaglutide—the active ingredient in Novo Nordisk's Wegovy and Ozempic—are due to expire in China in 2026, sparking a rush to prepare generics.
The North China Pharmaceutical Group, a state-owned giant, began building new production lines for benzathine penicillin in the city of Shijiazhuang in 2024, with a particular focus on exports, even as America and other countries fretted about dependence on Chinese suppliers. Benzathine penicillin is the main treatment for syphilis and some streptococcal infections. After the pandemic and a property bust, about 30% of industrial firms were loss-making in June 2024. Overcapacity is endemic in industries favoured by the state, such as electric car-making, yet many firms stagger on, backed by local governments and loans from state-owned banks.
China and America each contribute about 20% of the United Nations' annual budget. China has begun paying its dues late; in 2024 its money arrived on December 27th, four days before the end of the financial year. China bankrolls much of the International Seabed Authority's activities.
China has invested billions in deep-sea research. It condemned Donald Trump's April 2025 executive order authorising seabed mining in international waters as a violation of international law. In February 2025 China signed a strategic partnership with the Cook Islands over seabed minerals.
China has some of the strictest rules in the world governing children's use of social media. The authorities have developed an elaborate "minor mode" that can be activated on most devices, allowing access only to child-friendly versions of apps, restricting time spent on them and preventing users getting online at night. Content for minors is stratified into five bands appropriate to age. Under-16s are not allowed to live-stream. China introduced optional screen-time limits for children on social media in 2019 and had previously imposed curfews on young gamers. Despite two decades of restrictions on gaming and social media, China has a huge industry promising miracle cures for teens addicted to screens. Kids and tech firms have discovered a loophole in the form of smartwatches, which are subject to less stringent regulation and have begun to offer their own social networks and games; regulators have promised to crack down on these too.
Tech companies have for several years provided AI companions (such as Microsoft's Xiaoice), but apps now allow users to create their own virtual partners. The biggest app in the category is Maoxiang (meaning Catbox), which had 2.2m monthly active users on iOS in February 2025, up from 1m in July 2024, according to SensorTower. Another app, Xingye (Wilderness of Stars), had 1.1m. Users divide almost equally between males and females. For several years "otome" video games, in which players develop romantic relationships with anime characters, have been big in China; "Love and Deepspace" grossed 1.3bn yuan ($179m) in 2024 on iOS.
Between 2021 and 2024 the size of China's private-jet fleet shrunk by one-quarter, to 249 jets, according to Asian Sky Group, a business-jet broker. Zero-covid rules may have encouraged some of the decline, but the main cause was that magnates lost money to a property crash and to crackdowns by a ruling party that thinks entrepreneurs are too big for their boots. The number of dollar billionaires in China peaked at about 1,185 in 2021 (37% of the global total) and has since fallen by one-third. The government relaunched campaigns aimed at stopping party members and anyone with a public profile from behaving extravagantly, going as far as banning alcohol at government functions and lambasting excessive flora in meeting rooms. Even people with lots of cash now worry about being seen spending it. None of the ten most popular private-jet routes in Asia in the year to March 2025 began or ended at a Chinese airport. Chinese buyers lean towards high-end, long-range aircraft, often more than they require, to outdo peers at the golf club.
In 2014 the prime minister, Li Keqiang, declared a "war on pollution". Since then, population-weighted PM2.5 (the leading cause of disease from air pollution) fell from 66 micrograms per cubic metre in 2013 to 33 in 2021—a rate of 4.2 a year. But between 2021 and 2024 the decline slowed to just 0.5 per year: the easy gains from end-of-pipe measures such as putting scrubbers in power-plant chimneys have been exhausted; now comes the harder part of changing polluters' behaviour. Climate change is making wildfires, sandstorms and atmospheric inversions more frequent; in 2023 dust storms in northern China pushed Beijing's PM2.5 readings up by over 30%. In 2021, 2.3m people died because of PM2.5, making up 19% of all deaths in China, according to a study in the Lancet. As the population ages it will become more vulnerable.
China's national PM2.5 limit, set in 2012 at 35 micrograms per cubic metre, is being tightened: a transitional limit of 30 micrograms took effect on March 1st 2026, with a full limit of 25 from 2031. Both are still well above the World Health Organisation's guideline of 5 micrograms (set in 2021).
Beijing had only two days of very severe smog in 2024, down from 58 in 2013. The prevalence of PM2.5 in the capital has fallen by two-thirds over a decade. Beijing's last steel mill closed in 2010; the city has ordered 11,000 polluting firms to shut since 2013.
Yet while wealthy eastern cities have cleaned up, pollution in much of the south and west has been getting steadily worse. Dirty manufacturing has migrated inland, where land, labour and energy are much cheaper. Pig-iron and steel production is accelerating in western China even as it slows in the east. Xinjiang is becoming a hub for the chemicals industry. China's chemicals sector accounts for about 40% of global production and plays a central role in the fentanyl crisis. Officials in poorer cities have far less incentive and fewer resources to go green. In 2019 PM2.5 pollution was responsible for some 1.4m premature deaths in the country, according to a study by researchers at the University of Washington. Tightening political control has reduced space for complaints about air quality; authorities have forced some environmental NGOs to shut their doors, and state media now mainly publish praise for China's achievements rather than stories on the dangers of smog.
China overtook America to become the world's biggest carbon-dioxide emitter in 2006. It released 12.6bn tonnes of carbon dioxide from burning fossil fuels in 2024, almost a third of the world's total and three times the amount America did. Over the 12-month period ending in March 2025, emissions were 1% lower than the preceding 12 months, according to the Centre for Research on Energy and Clean Air, a think-tank in Finland—suggesting they may have peaked. Carbon-dioxide emissions fell by 1% over the first half of 2025, year on year, and look set to decline for the full year. (America's emissions peaked in 2007, Britain's in the 1970s.) China has promised to become "carbon neutral" by 2060. Every five years, the 195 countries that ratified the Paris climate deal submit updated climate pledges known as "nationally determined contributions" (NDCs). China's 2020 NDCs included bringing emissions to a peak by 2030, cutting the share of fossil fuels in energy consumption and lowering carbon intensity. It still calls itself a developing country and sees climate change as a problem largely created by the West.
In a 2014 agreement with Barack Obama, China pledged that by "around 2030" its emissions would peak and renewables would make up about 20% of its primary-energy consumption; it surpassed that 20% target in 2025. At the UN General Assembly in September 2025, Xi Jinping committed China to a 7-10% cut in greenhouse-gas emissions between peak and 2035, and pledged 3,600GW of wind and solar capacity by that date.
China burned 4.9bn tonnes of coal in 2024, more than half the world's total—a record level of Chinese consumption. Coal remains the mainstay of China's power grid, supplying about 60% of electricity generation. Most coal plants produce only about 50% of the energy they could. Policymakers fear phasing coal out too quickly could destabilise the grid and clog the country's vast manufacturing engine; in 2021 and 2022 power cuts across 20 provinces made electricity an urgent concern for party leaders, reinforcing the perennial view that coal is all but synonymous with energy security. China began building nearly 100 gigawatts of new coal capacity in 2024—the equivalent of Britain's total capacity—as insurance against future shortages. The coal lobby, a powerful political force, is trying to delay reforms needed to dispatch clean power efficiently across the grid. China started its own carbon-emissions trading market in 2021, but there is no cap on the number of emission credits distributed and the majority are free; the effect on emissions has been imperceptible.
By the end of 2024, China had installed 887 gigawatts of solar-power capacity—close to double Europe's and America's combined total. It generated 1,826 terawatt-hours of wind and solar electricity in 2024, and can produce almost a terawatt of renewable-energy capacity in a year. The country generates a third of the world's electricity. China now makes more money from exporting green technology than America makes from exporting fossil fuels.
Yet the country has been installing more clean energy than the rest of the world put together. About half of the nuclear power stations under construction worldwide are in China. It had 440gw of existing wind-power capacity and added 79gw in 2024 alone. Solar power is being installed at a particularly blistering pace: a record 277gw of capacity was plugged into the grid during 2024, on top of an existing 600gw; in the first half of 2025 alone China added 256gw of solar power, more than twice as much as the rest of the world. (America's total solar capacity is around 240gw.) Hydropower supplies about a tenth of China's power. One of China's 2020 NDCs was to plug in 1,200gw of wind and solar power capacity by 2030; installations were so fast that this target was hit six years early.
Starting on June 1st 2025, newly built wind and solar farms must sell their power at market rates rather than at a guaranteed rate, potentially slowing the pace of additions. Some solar-panel manufacturers are struggling to make ends meet amid a glut of production. Tongwei, one of China's biggest producers of solar cells and polysilicon, is headquartered in the south-western city of Chengdu. Chinese solar-panel manufacturers produced 680GW of capacity in 2024, but polysilicon foundries had the capacity to produce 1,200GW; the industry shed a third of its jobs in the past year amid losses of $60bn. In 2024 solar panels cost a little more than a twentieth of what they cost in 2005. Chinese clean-technology firms filed around 75% of global patent applications in clean technology last year, up from 5% in 2000. China made 13m EVs in 2024; EV production has been growing by an average of 70% year on year since 2020. China's EV-makers received $231bn in various forms of subsidies between 2009 and 2023.
China's electricity generation has been growing by about 6% a year since 2014; in 2024 the increase was equivalent to Germany's entire output. Almost 30% of China's final energy demand is met with electricity, compared with about 20% in the EU and America, and that share is still rising fast. The country's steel-industry association expects a third of China's steel to be made with electric-arc furnaces, rather than using coking coal, by 2035, up from 15% now. China's grid is optimised for coal: only one-fifth of electricity is traded across provincial boundaries. The country has 42 ultra-high-voltage power lines linking western solar farms to coastal cities and plans to triple the number by 2050. In the first half of 2025, the curtailment rate for solar power—useful energy wasted because the grid cannot absorb it—rose to 5.7%, up from 3% a year earlier; for wind, curtailment rose from 3.9% to 6.6%.
Xi Jinping has spoken of holding the "energy rice bowl" firmly in Chinese hands, extending the traditional rice-bowl metaphor for food security to energy. His "multi-wheel drive" approach—renewables, coal, diversified imports and strategic reserves—aims to ensure no single disruption is crippling. China consumes more energy than America, Russia and India combined. It produces more oil than Kuwait or the UAE, but consumption dwarfs domestic output. Oil provides more than 18% of its total energy; the country relies on oil imports for about 13-14% of its energy needs, more than half from the Middle East. About 40% of China's oil imports come through the Strait of Hormuz, compared with 95% for Japan. In the 1990s China aimed for self-sufficiency across a range of products including soyabeans and potatoes; in the 2010s it narrowed that ambition, declaring "absolute security" only for wheat and rice, and for everything else cultivating diverse suppliers, domestic reserves and alternatives.
China's small, independent "teapot" refiners, clustered in Shandong province, collectively account for about a quarter of the country's refining output. They are willing to process Iranian crude, often paying in yuan, because unlike China's national oil companies they are small enough not to fear Western sanctions. China's strategic oil reserves are thought to total 1.3bn barrels, enough to cover about 120 days of import demand—or several months of total consumption. A retail petrol-price formula established in 2016 adjusts prices only gradually and freezes them altogether if the global benchmark exceeds $130 per barrel; during the 2020-22 oil-price surge, the formula passed only about three-quarters of the increase to consumers, according to the World Bank.
China is the world's largest importer of commodities. Despite booming electric-vehicle sales, it needs about 16m barrels a day (b/d) of oil, three-quarters of which it must import. Its purchases of natural gas tripled over the past decade. It imports 500m tonnes a year of coal, which fuels 60% of its power. It imports 88% of the iron it bakes into steel and 88% of its raw copper; it is short of bauxite, the underlying ore for aluminium. It buys four-fifths of the 120m–140m tonnes of soyabeans it feeds to its 430m pigs and 70% of the edible oil it blends into processed food.
Since early 2024, when it became clear that Donald Trump might return to the White House, officials stockpiled fuel, food and metals to limit exposure to sanctions and tariffs. The campaign accelerated after Mr Trump slapped high duties on Chinese goods in 2025. China's oil output has risen from 3.8m b/d in 2019 to 4.4m b/d, defying predictions of decline, after Xi Jinping launched a seven-year scheme to develop domestic oil and gas in 2019. Gas production is up by half over the same period. In May 2025 China's energy-planning body called for a batch of new coal mines; in September eight government bodies released a two-year plan for exploration of ten metals, including cobalt, copper and lithium.
Dongjiakou, on the Chinese coast, is the country's largest oil-storage facility. Since early February 2025 China's observable oil stocks grew by 110m barrels to a record 1.2bn—triple the size of America's reserves, according to Kayrros, a data firm. Storage capacity of 2bn barrels is only 58% full. A law passed in January 2025 requires all energy firms to hold strategic stocks. China has been a keen buyer from Iran, Russia and Venezuela, all subject to American sanctions; exports from the trio to Qingdao, Shandong's largest port, hit 590,000 b/d in September 2025. Chinese buyers account for more than 80% of Iran's crude exports; Iran supplies more than 10% of China's crude imports. Venezuela supplies less than 4%. Small Chinese refiners disguise Iranian oil as, say, Malaysian crude to circumvent American sanctions. China's overall oil demand appears to be peaking owing to the electric-vehicle boom, though it remains the world's largest importer of crude. Gas reserves stand at only 30bn–40bcm, less than 10% of annual demand, partly because of limited storage.
Chinese copper firms have gobbled up nine foreign rivals since 2024; the three deals in 2025 are bigger than the previous six combined, according to CRU, a consultancy. A Chinese company is in talks to buy much of the grid in Chile, which holds the world's largest reserves of copper and lithium. Chinese nickel miners are expanding in Indonesia despite rock-bottom prices. In May 2025 China began building a railway to move more coal from Mongolia. Tom Price of Panmure Liberum, a bank, estimates that stocks built in the past 20 months cover 20%, 50% and 108% of China's annual demand for copper, zinc and nickel, respectively.
Before the October 2025 trade truce China had refused American soyabeans, buying record amounts from Brazil and lots from Argentina instead. On October 30th Mr Trump said China had agreed to import "tremendous" amounts of American soyabeans; China did not provide details.
Between 1961 and 2024 China's average temperature rose at a rate of 0.31°C per decade, according to the China Meteorological Administration. Average annual precipitation barely changed between 1901 and 1960 but has increased by 6mm per decade since then. Extreme heavy precipitation events have become more frequent.
A 70-day heatwave across southern and eastern China in 2022 caused power shortages, crop failures and strain on infrastructure and public health; every year since 2022 has set a new national temperature record. Air conditioners are far more common than they used to be, shifting peak electricity loads to summer months. Research funded by the agriculture ministry shows that droughts could reduce yields of maize, wheat and rice by 8% by 2030; heavy rainfall could have a similar effect. In 2022 China released its first comprehensive plan for climate adaptation in the years leading up to 2035.
In 2010 only around 6% of respondents in a national survey considered climate change the country's most urgent environmental problem. By 2023 the share was more than 23%. A study published in Nature asked people in 125 countries whether they would be willing to contribute 1% of their income to fighting climate change; 81% of Chinese respondents said yes, among the highest in the world.
Since the "air-pocalypse" of 2013 China has greatly improved urban air quality, primarily by suppressing sulphur emissions from coal and fuel oils—cutting sulphur going into the sky by 20m tonnes a year. These improvements have saved hundreds of thousands of lives, but sulphate aerosols reflect sunlight and thicken clouds; scientists believe the reduction in aerosols has been a major factor in the acceleration of global warming seen since the mid-2010s.
In 2017 the government banned coal burning across northern China and started installing gas heaters in villages, part of the effort to clean Beijing's air. Hebei, a province of some 74m people surrounding the capital, bore the brunt. The policy worked: Beijing had only one "heavily" polluted day in 2025, by the government's standards, and annual average PM2.5 concentrations are less than a third of what they were around a decade ago. But heating with gas is much more expensive than coal, and government subsidies that initially bridged the gap have tapered off. Some Hebei villagers face bills of more than 6,000 yuan ($860) for a winter's heating—more than the average annual pension in rural areas. Gas prices in Hebei have risen faster than in Beijing and are now about 20% higher, partly because heating companies in the capital negotiate better deals and residents enjoy subsidised central heating. Officials send drones to spot villagers who have sneaked back to burning coal and fine rule-breakers.
In China retailers commonly extend credit to customers in reverse: the customer pays upfront for multiple transactions and receives bonus credit in return. Over 1.5bn pre-paid cards were issued in 2023, worth almost 740bn yuan. For a typical issuer, the cards account for over 10% of revenue. A customer putting down 10,000 yuan might receive an extra 2,000 yuan to spend, amounting to an effective annual "interest" rate of 20% paid in kind. Most pre-paid cards in China do not expire. A survey in 2021 by China Youth Daily found that over 80% of respondents had bought into pre-paid schemes, and over 45% had been burned when merchants folded. In March 2025 the supreme court announced new guidance requiring firms not to dodge obligations by changing name or ownership; commercial landlords are now liable for tenants that leave customers in the lurch.
China churns out more than 100,000 policy documents a year; over a fifth feature some kind of industrial policy, according to research by Hanming Fang of the University of Pennsylvania, Ming Li and Guangli Lu of the Chinese University of Hong Kong, Shenzhen, who used Google's Gemini to analyse millions of documents issued from 2000 to 2022. Subsidies are the most popular tool, appearing in 41% of policies, but are only one of 20 instruments. Cheap credit and land each feature in less than 15% of documents; protection from foreign competition appears in only 9%. About 40% of central-government policies regulate targeted industries by imposing quality or efficiency standards rather than offering handouts. Manufacturing is targeted by only 29% of policies; more focus on services, and 17% are still dedicated to agriculture. Tax breaks and explicit protectionism have become less fashionable over time, while government funds acting as venture capitalists, supply-chain cultivation and demand-side measures (such as consumer subsidies) have become more widely used. City governments are more likely to pick industries that loom large locally relative to their prominence province-wide, suggesting officials play to their city's strengths—though targets across cities are converging, with all 41 cities in the Yangzi River Delta choosing "high-end manufacturing" as a key industry. Overall, the link between industrial policy and firms' productivity is "mixed and tenuous".
A 2025 IMF paper by Daniel Garcia-Macia, Siddharth Kothari and Yifan Tao tried to put a fiscal price tag on four main types of industrial support: cash subsidies, tax breaks, cheaper borrowing and discounted land purchases. Using financial statements of listed firms and extrapolating to non-listed ones, they found that all forms of support amounted to 4.4% of GDP in 2023, and had hovered between 4% and 6% since 2011—far higher than a previous estimate by the Centre for Strategic and International Studies, which had put spending at 1.7% of GDP in 2019 (compared with 0.7% for South Korea and 0.4% for America). The researchers found that subsidies favoured semiconductors and technology hardware over agriculture and construction. After a decade of such policies, China's total factor productivity was 1.2% lower than it would otherwise have been, making GDP about 2% smaller—a loss of roughly $370bn a year at the current size of the economy. Even in propped-up sectors, there was little evidence that support improved productivity: overcrowding led to "involution", or relentless and meaningless competition, resulting in vicious price wars.
Xi Jinping is fixated on beating the West in new technologies. China's growing technological prowess owes much to the Communist Party's "innovation chain", which takes ideas developed in state-run labs and universities and turns them into commercial products. State-backed research institutes have established marketplaces where companies can bid directly on their patents. Revenue collected by research institutes from selling ideas, co-developing technology or providing consulting services nearly doubled between 2019 and 2023, to 205bn yuan ($30bn). China leads the world in international patent applications: 70,160 in 2024, 30% more than America in second place.
The city of Hefei, in Anhui province, is perhaps the best example. Its government invests in private companies, builds supply chains around them and acts as an interface between labs, universities and the private sector. Plasma-fusion cancer treatments developed in Hefei are entering trials, and quantum-secure mobile services are already on the market. In March 2025 the National Development and Reform Commission was granted control over a 1trn-yuan fund for investing in technology. It has been run since 2023 by Zheng Shanjie, formerly the highest-ranking party official in Anhui.
Xi Jinping has celebrated the nongchaoer—a term meaning those who "ride the tide" of great economic changes—the smart, young Chinese cashing in on strategic technologies such as artificial intelligence and robotics that dominate the country's five-year plans for tech supremacy. They typically hold stem degrees from one of China's top 40-odd "985" universities, which produce just 460,000 of the country's 12m graduates a year. Today's lucrative careers are concentrated in the highest echelons of tech: the top tenth of software engineers by salary have seen wages grow by 8% per year in real terms since 2020. The nongchaoer tend to concentrate in Yizhuang (a tech district in Beijing), Shenzhen and Hangzhou. They do not see officials as a source of pesky regulation but as their biggest backers: local officials subsidise R&D costs, office rent and travel to overseas conferences. Xi met a group of them publicly just before the 2026 lunar holiday. "Sci-tech self-reliance is the key to building China into a great modern socialist country," he told them. In December 2025 the central government announced a new 100bn-yuan fund to invest in startups.
The costs are mounting. Industrial subsidies, direct and indirect, cost China over 1.7% of GDP a year in 2019, compared with about 0.6% in dirigiste France. The country boasts more than 2,000 government-guided investment funds scattered throughout the land, aiming to raise over 10trn yuan ($1.4trn). As these funds have grown, private venture capital has dried up. One pot of money earmarked for semiconductors, known as the "Big Fund", became notorious for corruption, leading to the investigation or detention of at least a dozen people. As the state has played a greater role in directing innovation, private venture-capital investment has collapsed, falling by 50% year on year in the first half of 2025, according to KPMG. China's total factor productivity, which measures how well it makes use of capital and labour, has stalled. State subsidies have led to severe overcapacity in many industries: the vast majority of China's EV-makers, for example, are not profitable. Too many businesses fight for the same customers, a state of unbridled competition often referred to as "involution". Public debt, including the amount owed by local-government financing vehicles, reached 124% of GDP in 2024.
China's government is betting on practical applications of artificial intelligence—in factories and for consumers—rather than pursuing the American approach of building ever-larger frontier models. At an April 2025 Politburo study session on AI (only its second, after the first in 2018), Xi Jinping told his lieutenants to focus on how AI can be applied to everyday uses: "more like electricity than nuclear weapons". Xi acknowledged a shortage of AI talent and chips, saying "we must face up to the gap" in basic theory and key core technologies.
The government's annual work report in March 2025 introduced a campaign called "AI+", prioritising firms' adoption of AI, including in physical facilities using automated robots. An emerging strategy has two parts: undercutting America's monopoly on advanced AI by replicating Western innovations and making model weights freely available ("open source"), as DeepSeek has done; and creating moonshots that bypass America's trillion-dollar bet on large language models. Shanghai has offered funding for researchers advancing towards artificial general intelligence using new architectures, such as models that interact with the real world through imagery, algorithms to emulate the human brain, or systems that can control computers with the mind.
Morgan Stanley predicts China's AI industry will grow from $3.2bn in 2024 to $140bn by 2030; including AI-related sectors such as infrastructure and component suppliers, the figure jumps to $1.4trn. In June 2024 some 8% of Greater China firms surveyed by Gartner were using generative AI; less than a year later the figure had leapt to 43%. Accenture found that 46% of Chinese firms had broadly integrated generative AI, but only 9% saw real benefit in productivity or profit growth. Xi Jinping's televised handshake with DeepSeek's founder, Liang Wenfeng, helped transform how ordinary Chinese view AI, with grandparents suddenly keen to try out chatbots. Provincial and municipal governments have rushed to use DeepSeek to improve hotlines, analyse data and interpret policies for residents; more than 300 Chinese hospitals were already using DeepSeek by mid-2025, prompting Tsinghua researchers to ask whether hospitals were moving "too fast, too soon". Cities are rushing to offer subsidies for everything from housing to computing power to tailoring open-source models to suit business needs. The state is also an important customer: Rokid, a Hangzhou startup making AI-equipped glasses, received a 3m yuan ($420,000) subsidy from district-level government within eight minutes of applying. State museums offer Rokid glasses for tours, while state power workers use them to identify faults along transmission lines.
China's power grid, the world's largest, reached a total capacity of 3,800GW after adding over 500GW in 2025 alone—more than double America's. Over the next five years China is set to add six times as much capacity as America. Chinese data centres can secure power for around three cents per kilowatt-hour, roughly half the rate many American ones pay, and because the government sets residential power prices separately there is little risk of public opposition to power-hungry infrastructure. American AI leaders—including Sam Altman of OpenAI, Jensen Huang of Nvidia and Elon Musk of xAI—have warned that this "electron gap" could hand China an AI advantage. Altman predicted the cost of AI will "eventually converge with the cost of energy".
Despite the energy advantage, China is not yet fully exploiting it, mainly because of chip shortages. Chinese tech firms spent $24bn on AI infrastructure in 2025, compared with over $350bn by American ones. Many local-government data-centre investments have been mismanaged, with some facilities reportedly running at utilisation rates as low as 20%. On March 5th 2026 Li Qiang, the prime minister, mentioned "hyperscale computing" for the first time in his annual state-of-the-nation address. UBS expects China to build another 25GW of AI data centres by 2029, having built just 5GW over the preceding two years. Officials are encouraging data centres in western provinces with plentiful wind, solar and hydropower; by 2028 China hopes to connect them all into a single pool of cheap computing resources. China's new five-year plan for 2026-30 includes a call to "explore development paths for AGI". Alibaba became the first big Chinese firm to announce it was pursuing artificial general intelligence, in October 2025.
A new IMF study concluded AI could boost America's economy by 5.6% in ten years, compared with 3.5% for China, largely because China's relatively small services sector caps productivity gains even if AI diffuses fast in manufacturing.
By 2025, 42.8% of China had "adopted" generative AI, double the share a year earlier; the government's target is a 90% AI "penetration rate" by 2030. Of China's 700bn yuan ($100bn) of capital spending on AI in 2024, about 60% came from the government. China's "DeepSeek moment" came in January 2025, but its own AI awakening dates to 2017, when Google DeepMind's AlphaGo beat a leading Go master; a few months later China published its first national AI-development plan.
The state's leading role is not an unambiguous advantage. A fifth of the workforce is employed in the public sector and state-owned enterprises, which are notoriously slow to adopt new digital technologies. After DeepSeek's model was released, state firms and government agencies were instructed to harness its power; many opted for an easy solution, installing stand-alone machines separate from their operations. Jeffrey Ding of George Washington University says "people used it for a quick PR win. It wasn't sustainable integration."
Officials remain wary of disruption. In a meeting with tech executives a senior leader reacted with alarm to suggestions that AI might lead to mass layoffs. The "AI Plus" initiative specifies that resources should be steered to where labour is scarce and working conditions hazardous. In early 2026 thousands installed OpenClaw, an AI assistant that runs autonomously on laptops, but officials swiftly restricted its use in state-owned firms and government work, fearing it could expose sensitive information.
On March 13th 2026 the Communist Party announced its 15th five-year plan, making AI the centrepiece. The plan calls for building high-quality datasets for sectors such as transport and health care—a "big deal", according to Kendra Schaefer of Trivium China, because the Chinese state sits on a huge reservoir of data. Granting access to domestic AI firms could give them an edge over foreign competitors.
The 15th five-year plan is far more ambitious than its predecessors. Where the 2015 Made in China 2025 plan aimed to catch up with America and end reliance on foreign technology, the latest plan seeks to dominate technologies of the future. It ordains the commercialisation of AI robots, hydrogen power and brain-computer interfaces within five years, and wants breakthroughs in fusion power and quantum computing within ten. Xi Jinping's goal is a "modernised socialist state" by 2035, which implies GDP per person of $20,000-$30,000, up from less than $14,000 today, requiring 4-8% annual growth. A further milestone—becoming a "modernised socialist world power"—is set for 2049, the centennial of communist rule. China's "low-altitude economy" of delivery drones and flying taxis took off after catching the attention of officialdom around 2021. Brain-computer interfaces were first named a "future industry" in 2024 and received their own plan in late 2025; cities now host specialist industrial zones for the technology. Critics note that earlier plans, including Made in China 2025, missed many goals, and that China's desire to dominate every emerging industry may spread resources too thinly. Camille Boullenois of Rhodium, a research firm, observes that industrial policy is now being extended to "out-there tech", whereas earlier plans set distinct objectives for strategic industries and scientific innovation.
China is building a decisive global lead in getting cars with autonomous features on the road. More than half of new cars sold in China are classed as L2 (able to steer, accelerate and brake by themselves, but requiring a human driver's sustained attention). Morgan Stanley estimates that by 2030 China alone will account for half of the world's L2+ cars. Goldman Sachs expects China will have 5,000 robotaxis (driverless L4 vehicles) on the road by the end of 2025 and 632,000 by 2030, far outpacing America's 1,800 and 35,000 respectively.
By 2024 more than 32,000km of road across China had been approved for testing autonomous driving. In Beijing, by the end of 2023 techies had clocked up 39m kilometres of testing, mostly on the capital's outskirts. Wuhan handed out its first licences to fully driverless robotaxis in 2022; passengers can now hail them on one-third of its streets. More than 50 cities have written their own competing policies on things such as liability in accidents, guidelines for testing and available subsidies—a patchwork that provides plentiful examples for lawmakers to learn from.
China's road-traffic safety law still assumes all cars have fully active human drivers. National standards for L2 and L3 systems are still in draft form, but piecemeal standards on software updates and data recording took effect in January 2026. Regulators operate a "test first, regulate later" model: myriad low-risk local pilot schemes help engineers and policymakers gain experience before national rules are cemented. In September 2025 regulators published draft national safety standards that all L2 cars will have to meet, which may require cars to turn off the driver-assistance system if the driver becomes disengaged.
Hong Kong is home to 7.5m people. It was the fifth-largest source of international visitors to Japan in 2024, and its holidaymakers spent HK$33bn ($4bn) there. Superstition is pervasive in the city, even compared with the rest of Asia. Tower blocks frequently skip all floors with the number "four" because its Cantonese pronunciation is similar to the word for "death". Properties thought to be inhabited by ghosts lose a fifth of their value on average, according to a 2020 paper by Utpal Bhattacharya of the Hong Kong University of Science and Technology. Feng shui guides the design of even the most sober organisations' offices; HSBC's headquarters has escalators reportedly angled to ward off evil spirits.
In 2019 the government sought to introduce a law allowing criminal suspects to be extradited to mainland China. Pro-democracy protests erupted across the city and lasted over a year; at their height nearly 2m people, more than a quarter of Hong Kong's population, took to the streets. The extradition bill was eventually shelved, but in 2020 the central government in Beijing imposed a sweeping national-security law (NSL) that allowed it to dismantle the city's democratic system, creating sweeping categories of crime such as secession, subversion and collusion with foreign forces. A second piece of domestic legislation known as Article 23, passed in 2024, imposed tougher sentences for national-security offences and dropped the requirement that sedition be linked to violence.
Hong Kong retains a common-law legal system, but the NSL and Article 23 have transformed the legal landscape. NSL trials are held without a jury; verdicts are reached by three judges chosen from a special pool whose members serve renewable one-year terms. The NSL stipulates that a judge who "makes any statement or behaves in any manner endangering national security" can be dismissed from the pool. China's rubber-stamp parliament has the final say in interpreting the NSL.
Almost all of the 78 concluded cases under the NSL have resulted in guilty verdicts. The territory's Court of Final Appeal (CFA) has invited both local and overseas judges onto its bench since the 1997 handover; five foreign judges have quit since 2022, some citing concerns about the political environment. Lord Sumption, formerly of Britain's Supreme Court, left after four and a half years, saying that in cases about which the Chinese government felt strongly, "the courts were not prepared to operate independently of the wishes of China." The Communist Party communicates its views through local mouthpieces, especially two newspapers, Ta Kung Pao and Wen Wei Po.
The American Chamber of Commerce in Hong Kong surveys its members on confidence in the territory's legal order: in January 2025, 83% expressed confidence, up from about a quarter in 2022. The World Justice Project ranked Hong Kong 16th for rule of law in 2019; by 2025 it had fallen to 23rd. Its sharpest deterioration was in fundamental rights, where it fell from 33rd to 62nd. Mainland China fell from 88th in 2020 to 95th.
Opposition parties were barred from politics in 2021 and have since been forced to disband, along with at least 90 civil-society groups. The Democratic Party, the city's oldest and biggest opposition group, said it would dissolve in February 2025. The League of Social Democrats (LSD), the last functioning pro-democracy party, disbanded on June 29th 2025; its leader, Chan Po-ying, spoke of the impossibility of operating amid "the omnipresence of red lines and the draconian suppression of dissent". Almost all prominent pro-democracy activists are now either behind bars or in exile.
John Lee, the first chief executive drawn from the police, has promised an "ongoing and endless commitment" to the national-security law. The Hong Kong Journalists Association, a small but punchy union, is feared to be next in the authorities' line of fire.
In 2024 a group of 47 people were accused of subversion for organising an unofficial primary election to maximise the chances of opposition politicians taking control of the legislature. Two were acquitted; the remainder were sentenced to between four and ten years in prison. By May 2024 more than 200,000 Hong Kongers had arrived in Britain under a scheme allowing those who met certain conditions to emigrate to the former colonial power. As of 2025 there are 19 "wanted" activists living in exile, with bounties placed on them by the Hong Kong government; the authorities have revoked the passports of 13 exiles. Collusion with foreign forces, one of the charges levelled at the exiled campaigners, can carry a sentence of life in prison. In April 2025 the father of Anna Kwok, who leads the Hong Kong Democracy Council in Washington, became the first family member of an exiled activist to be prosecuted, charged under Article 23.
Hong Kong was once a magnet for rumour-filled books about the Communist Party's machinations, but booksellers have grown more cautious about selling sensitive works in recent years.
A vault at Hong Kong's airport holds almost 150 tonnes of gold worth more than $20bn. John Lee, the city's leader, announced plans to expand storage capacity from 200 to 2,000 tonnes within three years and to create a central clearing system for gold transactions. The Shanghai Gold Exchange opened its first offshore vault in Hong Kong in June 2025 and launched two yuan-denominated gold contracts aimed at global investors. The government hopes to position the city as a trusted gateway to China, the world's biggest producer and consumer of gold, complementing the established hubs of London and New York. Hong Kong's attractions include its time zone, British-style common-law system and status as a freeport with no foreign-exchange controls on precious metals. MKS Pamp, a gold trader and refiner, opened regional headquarters in the city in 2025.
China Dissent Monitor (CDM), a platform that tracks protests by analysing social media, has documented nearly 12,000 protests since June 2022. It counted more than 2,500 protests in the first six months of 2025, a 73% increase over the same period in 2024. Labour protests, the most common type, increased by 67%; housing-related protests—conducted mostly by construction workers and contractors who have not been paid, or by homebuyers whose purchased properties were left unfinished—doubled. About 85% of protests relate to issues affecting people's personal finances and usually target private companies rather than the state. Protesters frequently appeal to local or central authorities first, and it is common to see demonstrators kowtowing before officials to beg for help. Most resort to public dissent only after finding institutional methods of petitioning and appealing to be ineffective. Nearly a third of all protests documented by CDM target local governments, even though many do not start out that way.
The government's tight grip may have squeezed formal channels of appeal through which citizens once felt able to air grievances. Xi Jinping has been promoting "grassroots governance", giving orders to keep conflicts contained at a local level, whether by resolving grievances or silencing complainers. The party's preference is to erase evidence that dissent ever happened, but the digital afterlife of protests on platforms beyond China's firewall is extremely difficult to control. Social-media accounts outside the firewall preserve videos and traces of protests, and activists curating this archive from outside are seeing it inspire copycats on the inside.
In December 2024 China's legislative authorities changed a controversial law over shareholder liability for bankrupt companies after it sparked 17 protests in 11 cities. The end of China's zero-covid policy in 2022 was also triggered by nationwide protests. Peng Lifa, who raised a banner calling for the fall of the Communist Party on a Beijing bridge in 2022, has been sentenced to nine years in prison.
Since pivoting away from Mao's ruthlessly oppressive policies in 1979, the Communist Party has allowed some religious worship in state-run congregations. Most of China's Christians balk at following state-approved clergy; many choose to join unregistered churches. In 2018 new rules more explicitly confined the faithful to government-sponsored pews, part of Xi Jinping's campaign to "sinicise" religious groups of all types. Xi has called on Communist Party members to be "unyielding Marxist atheists" and to seek "spiritual baptism" in the party's historic achievements.
Efforts to disband unregistered churches have repeatedly backfired: rather than bringing them under party control, crackdowns have pushed them online, which has helped spread their teachings more widely. Many Christians now meet in underground "house churches" hosted in believers' living rooms, listening together to sermons as one would to a podcast. Some have found creative ways to worship, including listening to sermons while walking in public parks or conducting services on rented buses as they circle cities.
In September 2025 the government's religious-affairs department in effect forbade clergy from preaching online, unless their sermons "love the motherland, uphold the leadership of the Communist Party of China, [and] uphold the socialist system". That same month Xi convened the elite Politburo for a study session on religious affairs, demanding "strict law enforcement" and urging officials to help religious groups "establish a correct view of the country". In October 2025 about 30 pastors and other leaders associated with Zion Church, one of the largest unregistered Protestant churches, were detained in operations spanning nine cities—the most expansive crackdown on a single church for some 40 years, according to ChinaAid, a religious charity. Earlier in 2025, ten members of a different Protestant group were sentenced to prison, including one pastor who received 15 years.
Grid management is a tech-driven approach to grassroots governance first piloted in 2004 and expanded to cover most of China over the past decade. The goal, according to Minxin Pei, a scholar of Chinese politics, is to divide the country into more than 1m separate grids, each containing roughly 1,000 residents, served by a couple of "grid attendants". The system is a modern extension of the neighbourhood committees—vigilant and often invasive monitors of daily life—that have existed since the founding of the People's Republic in 1949 but had been fading in relevance until Xi Jinping came to power. Xi has instructed that "small problems shouldn't leave the village and big problems shouldn't leave the town"—local officials should resolve, and if necessary suppress, issues rather than sending them up the chain of command.
In wealthier cities, ubiquitous surveillance cameras help grid attendants oversee their areas; additional sensors alert them to risks such as overcrowded public spaces. Nis Grünberg of the Mercator Institute for China Studies, a German think-tank, says Xi is using grid management to get "deeper into the fine capillaries of society." Grid attendants monitor at-risk individuals—including the destitute, the mentally ill and known drug users—and upload reports about what they see on their rounds. In Ningxia, a north-western region, one town has asked grid attendants to visit petitioners (people who have formally raised complaints about government officials) once a day.
Officials tout the role of grid attendants in providing social services, but that is coupled with a mandate to keep a closer eye on potential troublemakers. For years local governments have used goons to intercept petitioners who manage to make it to Beijing; grid attendants are meant to help stop them at the source. The various tech platforms also breed new headaches: uploading reports can take several hours a day, and attendants often feed information into multiple apps connected to different departments, a phenomenon known as "fingertip formalism".
China's pension architecture comprises five programmes covering more than 90% of the adult population, loosely grouped into three "pillars": state, workplace and personal. The mandatory social-security scheme for urban employees covers over 530m people. Occupational pensions cover about 76m people, including 44m government workers; the money managers who handle these assets typically allocate only 10-15% of their portfolios to equities, because they are judged annually and play it safe. The government wants them to be evaluated over three years or more to encourage braver investment. A personal-pension scheme was rolled out nationwide at the end of 2024, offering tax breaks on contributions of up to 12,000 yuan a year; almost 73m people signed up, but fewer than a quarter paid in any money.
The largest scheme spans around 538m residents, most of them rural, who can choose to make small contributions in their younger years for modest benefits later. In March 2025 the government added 20 yuan to the minimum monthly payout of 123 yuan, which is often topped up by provincial governments. Over 180m people now receive rural pensions; the scheme has 358m younger contributing members. Behind the state schemes stands the National Social Security Fund, which manages some of the money collected and holds equity stakes in state-owned enterprises, with a book value of 2.1trn yuan.
Migrant workers save over 48% of their earnings, according to one estimate. Cash and deposits accounted for almost half of households' financial assets in 2022, compared with less than 14% in America, according to HSBC. Lu Ting of Nomura has argued that increasing the monthly rural pension by 300 yuan would have a double benefit: boosting spending by pensioners and reducing the saving rate of younger members who could look forward to receiving it. The extra cost would be less than 0.5% of GDP a year.
In June 2025 the Communist Party's central committee released a set of ten opinions on "improving people's livelihood"—the first comprehensive livelihood policy issued as a central document since Xi Jinping came to power in 2012. It said China should sweeten incentives to contribute to pensions, bring more flexible workers into the fold and make it easier to enrol in schemes where people live, not where they are registered under the hukou system.
China's food-delivery market was worth a staggering 1.6trn yuan ($223bn) in deliveries in 2024. China's platform companies may employ more than 10m delivery drivers. China's state trade-union federation estimates there are 84m people relying on "new forms of employment", including delivery services and ride-hailing. The government cites a broader category of 200m "flexible workers", including the self-employed and part-time workers. Both figures far exceed the 54m jobs at state-owned enterprises in cities, and make up a large share of the 734m-strong workforce. Goldman Sachs estimates that some 16m workers are involved in the production of goods bound for America.
Roughly 40m of these flexible workers are paid by the day or week to work in factories; in China's largest manufacturing complexes they can at times make up 80% of the workforce, according to a survey by Zhang Dandan of Peking University. The average age of factory gig workers is 26; about 80% are male and 75-80% are single and childless. Many consciously reject the formal employment that previous generations prized, valuing the freedom to quit at will and to source jobs seamlessly through online platforms. Since gig workers avoid formal employment, they do not pay into pensions, and most come from rural areas without an urban hukou, lacking access to urban pensions, health care, schooling and home-buying rights. Economists worry about "deskilling" as factory workers specialise in micro-tasks that involve repeating a single hand motion for hours. In August 2025 China's Supreme Court ruled that workers can claim compensation from employers that have denied them benefits, though enforcement remains unclear.
The ride-hailing sector exploded from 2.9m licences in 2020 to 7.5m in 2024. In a broader crackdown beginning in 2020, gig-economy firms were denounced as part of a "disorderly expansion of capital". But the party pivoted in 2023, when Li Qiang, the prime minister, praised the platform companies for their "increasingly prominent" role in demand and employment. By 2025, amid the trade war, the government was openly embracing the gig economy as a labour-market cushion, encouraging firms to provide social-security benefits to their workers.
Chinese firms account for 69% of rare-earth ore mined, over 90% of refined minerals and nearly all magnet manufacture. China began mining rare earths in the 1950s and consolidated the industry into two giants in 2024: Northern Rare Earth in Inner Mongolia (light rare earths) and China Rare Earth in Ganzhou (heavy rare earths). Between 2000 and 2016 the Chinese Academy of Sciences produced 2,018 papers on rare earths. In 2023 China restricted the export of processing equipment and barred experts from travelling abroad.
In 2010 China halted rare-earth exports to Japan over a maritime dispute, forcing Japan to release a detained Chinese vessel captain. In February 2025 it imposed further restrictions on rare-earth metals. On February 24th 2026 it announced new curbs on rare-earth exports to at least 20 Japanese firms, mostly in defence, with another 20 put on a watch list, ratcheting up pressure on Takaichi Sanae, Japan's China-hawkish prime minister. On April 4th 2025 it announced export restrictions on seven rare earths and on rare-earth magnets, as part of its retaliation against American tariffs. Ford and Suzuki, among other carmakers, had to suspend production at some factories. Some Western companies disclosed commercially sensitive technical drawings to secure export licences. German firms received more magnet licences than American ones; carmakers in India appeared to be at the back of the queue. Licences are typically valid for only six months. Building an alternative supply chain would take at least three years.
China's sales to America fell by 28% in April and May 2025 combined versus the same period in 2024, but overall Chinese exports rose by 6%, owing to increased shipments to Europe and South-East Asia. China's currency was stronger against the dollar than before April 2nd. By the year to September 2025, Chinese goods exports had grown by over 8% even as those to America fell by 27%. China is the largest trading partner of roughly 70 countries. After Trump imposed a levy on Chinese container ships arriving at American ports, China responded with its own port charges. Trump threatened 100% tariffs after China imposed limits on rare-earth exports, only to back down again.
In 2018, when the trade war was just getting started, China's science and technology ministry published 35 articles over three months detailing China's technological weaknesses. The series, entitled "What is choking us?", examined specific chokepoints—technologies critical to the economy that China could not produce, forcing it to rely on foreign imports. The exercise marked a turning-point: China catalogued its own weaknesses and then set about identifying America's. America exported $140bn of goods to China in 2024; China sent $440bn back. But until the early 2000s Chinese manufacturers were more reliant on inputs from America than American firms were on Chinese inputs; by 2020 that had flipped, and American manufacturers had become three times more dependent on Chinese inputs than vice versa, according to Richard Baldwin, a trade economist. America's export-control regime presumes companies are innocent unless identified as wrongdoers; China's system, by contrast, requires every company to prove its innocence before exports are approved.
Xi Jinping has shifted China from punishing transgressions by cutting access to its consumer market (as it did with Australian wine or Lithuanian beef) to squeezing the supply chains on which foreign industries depend. China implemented an export-licensing scheme covering more than 700 products relied upon by Western armed forces and strategic industries, including advanced manufacturing machines, battery inputs, biotechnology, sensors and critical minerals. The rules require Chinese producers applying for licences to identify the end user. This has allowed China to continue choking supplies of rare earths to specific Western defence firms even while resuming flows into America as part of the trade truce. A shortage of heat-resistant magnets is pushing up costs for jet-fighter engines. The legislation also includes long-arm jurisdiction, empowering officials to block goods manufactured in third countries using Chinese-made inputs from reaching specific end users.
Export controls follow a pattern of keeping high-value-added supply chains inside China, according to Rebecca Arcesati of MERICS, a Berlin-based think-tank. By restricting industrial inputs rather than finished goods, policymakers lower prices on domestic markets and give Chinese exporters a cost advantage. China's use of economic sanctions of all sorts reached an all-time high in 2025, according to research by Viking Bohman of Tufts University. In July 2025 the European Union was pressured in the run-up to an EU-Chinese summit after flows of rare-earth minerals and battery technology to Europe slowed without explanation; speeding them up then became a subject of negotiation.
In India, where Apple is building alternative supply chains, export licences for advanced manufacturing machines stopped being approved. The restricted flow of machine tools and dysprosium slowed production of iPhones and AirPods. In June 2025 Foxconn withdrew more than 300 Chinese engineers from India, suggesting co-ordination.
China accounts for 85% of global EV battery capacity. China shed over 20m factory jobs from 2013 to 2023.
On October 9th 2025 China's Ministry of Commerce said battery-makers would need a licence to export goods, kit or ingredients—part of a broader overhaul that also included new limits on rare earths. China's new controls mimic America's own: its licence requirements now encompass foreign products made with Chinese kit and technologies, imitating America's "foreign direct product rule". China's definition of "advanced" chips is very near to America's—logic chips with nodes of 14 nanometres or below, for example. The new rules apply to products containing even trace amounts of Chinese rare earths, defined as exceeding 0.1% of a product's value. Applications must be made in Chinese to unfamiliar regulators.
China remains dependent on American electronic-design automation (EDA) software for chip design. The big three firms—Cadence, Synopsys and Siemens EDA—are all based in America and retain an 82% share of China's EDA market. Although China has more EDA firms than any other country, none can match the breadth of services the big three provide.
China has practised what diplomats call "doghouse diplomacy" for two decades—punishing countries that cross its declared red lines with targeted economic measures. A database maintained by academics in Australia documents nearly 100 instances globally of "weaponised trade" since 2008; in roughly 40% of cases China was the aggressor. Early targets included foreign leaders who met the Dalai Lama; over time the net widened to cover the Norwegian Nobel Committee's decision in 2010 to award its peace prize to a Chinese human-rights activist, skirmishes in the South China Sea with the Philippines in 2012, South Korea's installation of an American missile-defence system in 2016 and Lithuania's decision in 2021 to allow Taiwan to use "Taiwan" rather than "Taipei" in its representative-office name—after which Lithuanian exporters found their country had simply vanished from China's customs system. When Canada detained a Huawei executive in 2018 to serve an American extradition request, China choked off Canadian exports of canola. China tends not to announce its trade measures as explicit punishments, maintaining plausible deniability.
Narrowly, the tactics have a dubious record: South Korea went ahead with its missile-defence system; Lithuania kept its Taiwanese office; Japan is a repeat offender. But the broader effect is to make foreign governments tread carefully. After the flurry of Dalai Lama meetings in the early 2000s, foreign leaders became much more circumspect, mostly allowing lower-ranking officials, if any, to see him. Australia softened its criticism of Xi Jinping's government after import blockades. Other countries keep the name "Taiwan" off their representative offices, mindful of Lithuania's fate. The direct cost to China is minimal: its targets are limited and often substitutable (cutting back on Philippine bananas while increasing imports from Vietnam, for instance). Unlike Donald Trump, China is skilful in the dark arts of economic leverage: the objective is to cause minimal self-harm and to have a clear blast radius abroad.
China has built a vast international state media apparatus. Xinhua, its state-run news agency, has 37 Africa bureaus, up from a "handful" two decades ago. CGTN, China's state-run television network, is the most-followed news organisation on Facebook, with 125m followers. The five most-followed news organisations on Facebook are all Chinese, despite Facebook being banned in China itself. StarTimes, a Chinese firm, is the second-largest digital-TV service in Africa.
China is one of the worst places to die. A study in 2015 by the Economist Intelligence Unit placed China 71st out of 80 countries for the quality of palliative care. A separate international study, published by the Journal of Pain and Symptom Management, ranked China 53rd out of 81 countries (Britain was top; America came in 43rd). Chinese hospitals often do not allow patients to occupy beds simply to receive palliative care. Taboos limit discussion of death: it is common for doctors not to tell patients when they are terminally ill, informing family members first instead. Chinese tradition emphasises filial duty, and people feel they are failing their parents if they give up on treatment.
Li Wei founded Songtang Hospice, a rare private institution in Beijing, in 1987. Hospice care was first mentioned in a major central-government health-policy document in 2016. Shanghai became the first city to provide inpatient or home-based hospice care in every district by 2020; Beijing achieved the same by 2024. Between 2018 and the end of 2022, the number of hospice units in Chinese hospitals increased 15-fold to more than 4,200. Yet the supply of beds remains tiny relative to annual deaths. Nursing, the biggest cost in palliative care, is not usually covered by insurance. About 300m migrants from the countryside face higher out-of-pocket costs when using urban medical services, and hospice wards are mostly in big cities.
China spends around 7% of its GDP on health (Britain shells out around 11%). The best hospitals in Beijing and Shanghai make up only around 10% of China's medical institutions. In the country's 33,000-odd township-level health centres, only half of general practitioners even have university degrees. When ill, Chinese tend to flock to specialists in big cities, leading to massive queues and perilously overworked doctors. By 2050, 487m people will be over the age of 60—about 35% of the population, up from 21% in 2025.
Top hospitals are redoubts of a health-care system that many citizens view as deeply unfair. Seeing specialists requires hours or even days of queuing. Treatment can be costly, often prohibitively so for the poor or migrants from the countryside. Peking Union Medical College, one of the most prestigious medical schools, runs a "4+4" programme offering outstanding students with an undergraduate degree in another discipline an accelerated four-year path to qualification as a doctor, rather than the usual pathway which takes more than a decade. The programme became controversial in 2025 when a sex scandal at the China-Japan Friendship Hospital in Beijing revealed public anger about perceived back-door admissions for the well-connected.
Telemedicine took off during the covid-19 pandemic, as Chinese seized on apps launched by tech companies that allowed them to consult doctors by text or video. JD Health, launched by JD.com, claimed 200m active users in the twelve months to June 2025, with an average of over 500,000 online consultations a day. In June 2025 Ant Group, an affiliate of Alibaba, launched a health app called AQ; by September it had served 140m patients and nearly 1m doctors had offered their services on the platform. Users can rate doctors and read reviews. Bottlenecks remain: the typical users of telemedicine apps are younger urban residents who already enjoy the best access to public-health services, and doctors use the apps to earn money outside regular hours, doing little to ease overwork.
In November 2025 the government released a plan calling for "full coverage" of AI-powered diagnosis and treatment tools at grassroots health centres by 2030. More than 300 Chinese hospitals were already using DeepSeek by mid-2025, prompting Tsinghua University researchers to ask whether they were moving "too fast, too soon".
Xi Jinping set a goal in 2021 to make China attract global talent by 2030 and be the top destination for the brightest by 2035. At a Communist Party meeting in 2024, the leadership said it would refocus efforts to attract foreign scholars, including by making it easier for skilled workers to move there. Universities have promoted national scholarship funds established in 2021 to woo foreigners.
Recruiting from the West focuses on two groups: a small number of senior researchers and a greater number of early-career bright sparks. Charles Lieber, a renowned former Harvard chemist convicted in America in 2021 for hiding ties to Chinese research funding, took up a post at Tsinghua University's Shenzhen campus in April 2025. Gérard Mourou, a French Nobel-prizewinning physicist, joined Peking University, and Kenji Fukaya, a decorated Japanese mathematician, joined Tsinghua. Sun Song, a star mathematician at the University of California Berkeley, moved to Zhejiang University. Alex Lamb, an AI researcher, left Microsoft in New York for Tsinghua's new AI college in 2025.
Donald Trump's re-election has caused a growing number of Western scholars to look east. More than half of post-doctoral students in America are foreign, many of them Chinese. During Trump's first term, America's justice department investigated many researchers with links to China, and more than half of Chinese and Chinese-American researchers thought about leaving America. In May 2025 the European Union said it would spend €500m ($566m) courting disaffected American scientists.
Nearly 20,000 scientists with Chinese origins departed America between 2010 and 2021, according to research by Yu Xie, a sociologist at Princeton University; they have been leaving for China at a faster rate since 2018, when the Trump administration launched its China Initiative targeting researchers for suspected fraud, conspiracy or espionage. Nine in ten of the defendants were ethnically Chinese; only one-quarter of cases ended in convictions. The Justice Department shut the programme down in 2022, but two-thirds of Chinese scientists leaving America went to China in 2021, compared with less than half in 2010. China's spending on research and development has increased 16-fold, in real terms, since the start of the century. Shi Yigong, a biophysicist, and Rao Yi, a neurologist, both formerly based in America, co-founded a new research university in Hangzhou in Zhejiang province; it has recruited more than 200 academics. Nearly half of the best AI researchers, and nearly 40% of those working in America, are from China (based on where they obtained their undergraduate degrees), according to a 2022 report by the Paulson Institute, an American think-tank.
In the first half of 2025 Chinese travellers took 3.3bn domestic trips, up 20% from the same period the year before, and total travel spending exceeded pre-pandemic levels for the first time. Yet tourists spent 4.3% less per trip than a year earlier, suggesting the increase was driven by lower-income travellers joining the market. China's property crisis, which has dragged on for more than five years, has made wealthier urbanites cautious about spending, a phenomenon known as "consumer downgrading". Consumer sentiment is weaker in the largest cities: Beijing's retail spending fell 3.8% in the first half of 2025, while the average growth rate for retail spending in five small cities in Henan province was nearly 8%. Close to 1bn Chinese live outside the main metropolises. A Bank of America survey found that 54% of respondents earning less than 100,000 yuan ($14,000) a year expected to increase their spending, up from 34% in June—a bigger jump than in higher-income groups.
Officials monitor travel over a 40-day period around the lunar new year and expected a record 9.5bn trips in 2026, up from 8.4bn in 2024. China's population is shrinking, yet the getaway rush keeps growing, partly because people increasingly squeeze in tourism alongside family visits. Holidaymakers are spending less per person than before the pandemic, according to Goldman Sachs, but overall tourism revenue increased by 5.7% year on year (adjusted for the longer 2026 holiday). Four-fifths of people use private transport, including cars and vans. Train travel's share of commercial transport rose from 11% a decade ago to 28% in 2025, buoyed by the expansion of China's high-speed rail network from 2,000km of track in 2010 to 50,000km at the end of 2025. Data from Baidu Migration show that the busiest pre-holiday travel day is creeping closer to the holiday itself: four days before in 2019, three in 2023 and just two in 2026—possibly owing to faster rail connections. The share of trips taking place within a single province rose to 62%, up from 54% in 2020, suggesting that regional economic clusters are developing and migration mostly takes place within them—in line with the government's urban planning. "Reverse chunyun", where elders visit their children in the big city instead of the other way round, trended on social media during the 2026 holiday.
Local governments outside mega-cities have been heavily promoting cheap travel options. Jiangsu province promoted a local football league in 2025 with tickets selling for just ten yuan apiece. Dali, a south-western backpackers' haven nicknamed "Dalifornia", appeared busier than ever in the summer of 2025 as bargain-hunting tourists swarmed to its lakeside old town.
China is enjoying a concert boom. In 2024 the box-office intake from performances totalled 62bn yuan ($9bn), up from 20bn in 2019, according to the China Association of Performing Arts (CAPA). Some 640,000 shows were played, up from 197,000. The surge has continued even as consumer confidence remains at the lows of 2022. Chinese commentary has come to call this "emotional consumption": paying for experiences to soothe the soul, rather than hoarding material possessions.
Local governments love concerts because visitors lift the economies of the spots they go to. Some have started offering subsidies and incentives to attract artists. In 2024 the island province of Hainan awarded Eason Chan, a Hong Kong popstar, 1m yuan for selling 68m yuan-worth of tickets for his concert in Haikou; visitors to the city spent a total of 3.2bn yuan while attending. CAPA suggests that one yuan spent on concert tickets can trigger nearly seven yuan of additional spending. The Xi Shi Music Festival in Zhuji, Zhejiang province, attracted more than 133,000 overnight visitors in early 2026, a 29% increase over the previous year's edition.
Stand-up comedy, a Western import, first arrived in China in Shenzhen in 2009 and took off in the late 2010s as online-comedy shows surged in popularity. After a crackdown in 2023, the industry roared back: in the first half of 2025 performances increased 54% year on year and ticket sales rose 135%, making it the second-largest performing genre behind plays, according to the China Association of Performing Arts (CAPA).
Women account for 39% of performers on the two most popular stand-up television shows, nearly double the share five years ago; women made up 66% of the audience at live performances in the first half of 2025. Female comedians are now described as zuiti—voicing feelings on behalf of many of the women who watch them—tackling subjects from menstrual shame to sexual harassment. The genre is not without controversy: Yang Li, a stand-up star, has been dropped by big companies for ribbing men, and in July 2025 Zhejiang province's propaganda department warned comedians against "exploiting gender tensions to gain attention".
Director Fang (Fang zhuren), a 50-year-old comedian from a village near Linyi in Shandong province, rose to prominence in the summer of 2025 after appearing on a top comedy show. She riffs on women's issues and the breakdown of her difficult marriage. Her Beijing shows sold out in seconds.
China had about 1,700 museums attracting some 250m visits a year in 2007. Since then the number has more than quadrupled to 7,000, while annual visits have risen nearly six-fold to 1.5bn. Most public museums have been free since 2008. A decade ago the "museum boom" was a term of scorn—officials had funded grand new museums around the country in pursuit of growth and modernity, and many sat empty. A second boom, driven by genuine public enthusiasm, has since transformed them into some of the country's most popular attractions; booking entry to the biggest museums is now compared to securing train seats during the Lunar New Year crush.
Modern archaeology got started in China only in the 1920s and was then set back by war and revolution; intensive, continuous excavation throughout the country has taken place only in the past four decades. Major sites include the bronze-age wonders of Sanxingdui in Sichuan, the 5,000-year-old Liangzhu settlement in Zhejiang and the Shimao pyramid in Shaanxi, each of which now has its own museum. These findings have overturned the traditional view of the plains near the Yellow River as a single source of Chinese civilisation; the question now is to what extent various regions evolved independently.
Exhibitions extolling the Communist Party tend to evoke muted enthusiasm from visitors—it is easy to get close to displays of the party's flag in the National Museum in Beijing, whereas an hour's wait is required to see a sapphire-and-ruby-encrusted crown worn by a Ming empress. The state uses exhibitions about pre-modern China to present unified narratives that weave together disparate regions and peoples into a harmonious tapestry culminating in the present. Xi Jinping has visited more than a hundred cultural and historical sites since taking power; in 2012 he used an exhibition about the party's revolutionary roots in the National Museum as the backdrop for his first speech about the "Chinese dream".
Private art museums are worse off than public ones. They have lost benefactors, and they charge entrance fees—a hard sell in a slowing economy when public museums are both free and increasingly excellent.
Between 2000 and 2020 the prices of art tracked by the MM Chinese Art Price Index increased about 15-fold, making it one of the world's best investments—a period when the property market also boomed. The index, launched by Mei Jianping of the Cheung Kong Graduate School of Business and Michael Moses, an art-investment expert, tracks 327 works of art by Chinese artists from 1988 to 2022. By late 2025 the index had fallen back to approximately 2009 levels. Art sales within China declined by 31% in 2024 compared with the year before.
The property boom that kicked off in the early 2000s was one of the biggest, fastest generators of wealth in history. Art deals became an easy way for billionaires to flaunt their riches. Liu Yiqian, a cab driver-turned-property magnate, paid $170m for Modigliani's "Nu Couché" in 2015—the second-highest amount ever paid for a piece of art at auction at the time—and did so with his Amex card. Xu Jiayin, the founder of Evergrande, was an avid collector. Many tycoons launched art museums; Mr Liu and his wife founded two in Shanghai.
The property crisis, covid lockdowns, capital controls and the state's distaste for opulence have combined to crash the market. China enforces strict capital controls and allows individuals to move only $50,000 in or out of the country each year; regulators worry that foreign art purchases are a means of shifting large amounts of money abroad. By 2017 many Chinese collectors needed to pay in instalments. First-time art buyers or those unaffiliated with galleries or cultural foundations may now be refused permission to transfer large sums overseas, which can kill purchases outright.
The Communist Party promotes visiting art exhibitions as a sign of China's openness, but leaders have become less tolerant of conspicuous wealth. Last year the state banned social-media posts meant only to show off expensive clothing and lifestyles. Tech billionaires have been conspicuously inactive in the art market; a crackdown on the tech industry starting in 2021 probably made executives less willing to engage publicly. Rupert Hoogewerf of Hurun, a consulting firm, believes that new wealth creation in industries outside real estate—such as big tea-shop chains and makers of collectible toys—might lead to more art transactions in 2026.
Between 2023 and 2026 the number of people who registered to take exams for admission to master's courses fell by a third, from 4.7m to 3.4m. Meanwhile, between 2021 and 2026, the number who applied to take the national civil-service exam more than doubled to 3.7m, a record high—the first time interest in the civil service exceeded demand for graduate courses. This year there are 38,000 national civil-service positions, meaning about 99% of those who took the written test will be disappointed. Many candidates also sit provincial- or city-level exams as a less prestigious back-up.
A survey in 2024 by Zhaopin, a hiring platform, found that by the spring recruitment round, 44.4% of postgraduates had received a job offer—one percentage point lower than those with bachelor's degrees and 12 points below those with vocational training. The shift away from master's degrees and towards the civil service reflects a weak economy: when China was booming, government jobs were thought dull; now they are prized for their stability. The trend could become self-reinforcing: the more that talented youngsters turn their backs on the private sector, the less vigorous the economy may become.
A record 3.7m young Chinese sat the annual civil-service exam in November 2025. A working paper by John Liu of the University of Hong Kong and others, using plagiarism in master's theses as a measure of dishonesty, found that those who plagiarised more were more likely to go on to work in the public sector—and once inside, were promoted more quickly. The authors trawled through 6m dissertations from CNKI, a Chinese repository of academic articles, and checked them against public records, identifying 120,000 civil servants and their dissertations.
People who entered the public sector had plagiarism scores 15.6% above the average. Customs and tax officials were the worst, with scores 25% and 26% higher than their private-sector peers. Cheaters climbed the ranks 9% faster in their first five years. From 2009 onwards plagiarism-detection software was gradually rolled out at Chinese universities, which reduced crooked behaviour, but those with higher scores were still more likely to enter the public sector.
The authors also examined a database of 140m court rulings, comparing plagiarising judges with academically honest peers. The cheaters were 10% more likely to favour the government over citizens, 15% likelier to rule for state-owned enterprises over private firms and 12% likelier to side with bigger firms over smaller ones. When trials were livestreamed over the internet, these effects disappeared. Co-author Shaoda Wang suggested that dishonest people may self-select into the public sector because they expect to thrive there.
Chinese travellers made almost nine times more overseas trips in 2025 than in 2000, and together outspend any other nationality—roughly $50bn more than Americans. The government uses travel as a tool of domestic control and external leverage: many employees of state agencies, or of publicly funded bodies such as universities, must surrender their passports, and their itineraries are vetted if they want them back. China's travel warnings, which carry particular clout with government workers, are sometimes motivated by politics more than risk—for instance, amid tensions with Japan, officials have repeatedly advised citizens against going there. In 2005 just 14% of Chinese tourists travelled independently; by 2025 that had risen to 83%, according to Fastdata, a data-services outfit, undermining the government's ability to steer them via state-organised group tours.
A decade ago China was spending $10bn a year attempting to boost its image overseas. Officials have set up 500 Confucius Institutes in foreign colleges that offer Mandarin tuition and cultural programmes.
Brand Finance, a consultancy, ranked China's "brand" eighth in the world in 2021 and second in 2025, behind America. Polls by the Alliance of Democracies Foundation show China's "net perception rating" rising from -4% in 2022 to +14% in 2025; America's dropped from +22% to -5% in the past year alone. Young people are softer on China than older cohorts.
China scrapped visa restrictions for citizens of 38 (mainly European) countries in 2024 for visits of up to a month. Some 30m foreign tourists visited China in 2024, nearly 80% more than the year before, though still fewer than the pre-covid peak. According to the 2020 census, less than 0.1% of China's 1.4bn people are immigrants (in America the share is 15%). On October 1st 2025 China introduced a new "K" visa offering longer stays, more entries and a simplified application process for young STEM graduates, even without a sponsoring employer—unlike America's H-1B visa. The scheme played well abroad but provoked fury at home: young Chinese struggling to find jobs saw it as yet more competition. People's Daily emphasised that the target was young scientists and engineers from renowned institutions, not a "low-quality workforce". Dan Wang of Eurasia Group predicted Beijing would keep the programme tightly controlled, with strict criteria, and that the first holders would mostly come from Europe and America. The visa will probably help China attract more haigui (sea turtles), the overseas Chinese who return after studying and working abroad.
Four of the ten highest-grossing mobile games of 2024 were made in China. Genshin Impact, a role-playing adventure, rakes in over $1bn a year. Black Myth Wukong, featuring the Monkey King from Chinese folklore, was the country's first blockbuster video game; some 30% of its 25m players are said to be outside the country. TikTok, a short-video app owned by ByteDance, a Chinese firm, is downloaded more than any other social-media app worldwide.
China is the world's biggest market for alcohol. In 2021 it consumed about a fifth of all the world's alcohol, producing about a quarter of global sales by value, according to IWSR, a drinks data provider. Baijiu, a fiery sorghum-based liquor, is the country's preferred tipple, but production has fallen by more than half since 2016, with demand at the lower end of the market slipping most. Beer production peaked in 2013. Wine sales, never a mainstream pleasure, slumped by two-thirds in the five years to 2024.
Kweichow Moutai is the world's most valuable spirits company. The Communist Party, which has about 100m members, has waged repeated campaigns to stamp out excessive drinking among officials. In May 2025 the party banned alcohol entirely at official events; inspectors vowed zero tolerance. Young Chinese are also rejecting the country's boozy workplace culture: a 2021 survey of some 600,000 young people by state-run media found over 80% were "disgusted" with traditions requiring employees to down shots with the boss. Between 2020 and 2024 China slapped tariffs ranging from 116% to 218% on Australian wine; in late 2024 it raised levies on French cognac after Europe raised tariffs on Chinese electric vehicles.
Some 300m Chinese are smokers—nearly half of adult men compared with just under 2% of women. Together they get through 40% of the world's tobacco. Chinese tobacco consumption has declined by just 4% since 2000, compared with 13% globally. As many as 2.6m Chinese die early every year from smoking-related illnesses, accounting for 23% of all annual deaths; in America the comparable figure is 10%. Smoking costs China roughly $300bn a year in treatment and lost productivity, according to Tobacco Atlas, produced by Johns Hopkins University and Vital Strategies, a public-health NGO.
The China National Tobacco Corporation, a state-owned giant, dominates the entire supply chain; it made some 2.4trn cigarettes in 2023. The cheapest pack of 20 typically costs 15 yuan ($2). Since 2000 tobacco taxes have accounted for almost 7% of central-government revenue. The head of China's tobacco regulator is also the boss of CNTC; the two organisations share an office.
In 2015 China expanded bans on tobacco advertising to cover billboards and public transport. The following year it unveiled "Healthy China 2030", a plan calling for the proportion of smokers to fall below 20% of adults by that year; the rate has declined from 24.4% in 2015 to 22.9%. Beijing, Shanghai and Shenzhen are among some 250 cities that have banned smoking in government offices, hospitals and schools, but enforcement is patchy. Men in rural China socialise with a smoke; even doctors greet patients with tea and cigarettes. Large packs decorated with pandas and the Forbidden City are still thought to make nice gifts. The government's last attempt to raise tobacco taxes, in 2015, was partly nullified when CNTC cut its margins to prevent prices from surging; rising incomes have since made cigarettes even more affordable.
Total trade between China and Africa was worth $296bn in 2024. China exported $179bn to Africa, while Africa sent $117bn the other way. In 2003 just 18 of Africa's then 53 countries traded more with China than with America; two decades later, 52 of 54 did. The vast majority of African exports to China are raw materials, mostly from Angola, Congo and South Africa.
On June 12th 2025 China announced duty-free access for products from every African country except Eswatini, a tiny kingdom that recognises Taiwan. The immediate impact may be limited since most raw-material exports were already duty-free, but the policy could integrate African economies more deeply into Chinese-centred supply chains. China said in 2021 that it would do more to help African exporters of manufactured and agricultural goods, though these remain a tiny share of Chinese imports from the continent.
China's cyber-espionage apparatus relies heavily on private-sector firms that serve as force multipliers for spy agencies at both the national and provincial level. Companies either hack directly or provide tools and services to enable hacks by others. In March 2025 America's government charged a dozen Chinese "contract hackers" and officials, many associated with i-Soon, a prominent company linked to large-scale intrusions worldwide.
A "cyber militia" of civilian volunteers trains alongside the People's Liberation Army. The government offers tax breaks, procurement preferences and public recognition to encourage top cyber-security firms and their staff to participate. These militia-linked operators are scattered across state-owned companies, universities and tech firms. The Ministry of State Security (MSS), China's main spy agency, commissions hacking through provincial branches and front companies. In 2022 a federal court in Cincinnati sentenced Xu Yanjun, a career MSS intelligence officer, to 20 years in prison for stealing commercial secrets from American aviation companies; he had been lured to Belgium in an FBI sting in 2018. In July 2025 Italian police arrested Xu Zewei in Milan, alleged to have hacked American universities researching covid-19 vaccines on behalf of the MSS's Shanghai branch—the first arrest involving purely cyber activity.
The Communist Party has long seen elaborate tombs as a backward tradition and a waste of land. It has banned tombs outside authorised cemeteries and made cremations compulsory in built-up areas. China's cremation rate rose to about 50% by the 2000s, then flattened, before climbing again from 2017 to reach 59% in 2021. Even where cremation is common, many families store ashes under large, ornate tombstones.
Local governments now offer cash incentives for "ecological" burials—scattering ashes under a tree, in a bamboo grove or at sea. Shanghai offers residents 3,000 yuan ($420) for sea burials. Nationwide the total number of ecological burials was 194,700 in 2024, still only 3.2% of the total but 67% more than in 2019. The property crisis, which has slashed household wealth, appears to be shifting priorities: a fancy tomb in Beijing can cost 200,000 yuan for the first 20 years, with further payments required to keep the spot. Jiang Zemin, a former president who died in 2022, was cremated and had his ashes scattered in the ocean off Shanghai.
Fu Shou Yuan, a high-end funeral company that listed around 2013, saw revenues decline by 44% in the first half of 2025, its first loss since listing, as tombs sold for much less per plot.
Government-imposed forced labour affects at least a fifth of the Uyghur and Kazakh population in the Xinjiang Uyghur Autonomous Region, making it probably the largest system of state-imposed forced labour the world has seen since the Holocaust. The forced labour taints international supply chains for solar modules, clothing, cars, electronics, chemicals and critical minerals. Chinese government agencies and companies have pressured foreign researchers to stop publicising the resulting risks. In 2024 Chinese security-service agents visited Sheffield Hallam University's Beijing student-recruitment office, demanding the university cease research on Uyghur forced labour led by Laura Murphy and confirming the university's website had been blocked in China because of the research. The university initially complied, citing commercial concerns about the Chinese-student market, before reversing course under threat of legal action.
Xi Jinping launched the Global Security Initiative (GSI) in 2022, alongside three other global initiatives (on development, governance and cultural diversity), as an attempt to build new networks of international influence centred on China. A small regional policing forum was revamped into China's biggest international security event, the Global Public Security Co-operation Forum, which attracts delegates from more than 120 countries.
China has provided nearly 900 training sessions to the police and domestic-security forces of 138 countries since 2000, according to a study by Sheena Greitens, Isaac Kardon and Cameron Waltz at the Carnegie Endowment for International Peace. The annual number of sessions grew nearly ten-fold in the first decade of Xi's rule, jumping from 14 in 2010 to 138 in 2019, before dropping during the covid pandemic. Most programmes take place at police colleges within China, hosting visiting groups of several dozen for weeks or months. Chinese police also embed abroad with foreign police; in 2025 a group of Chinese advisers went to the Solomon Islands to promote the "Fengqiao Model", a Mao-era system whereby villagers would spy on one another. Some 82% of authoritarian regimes have received police training from China, as have nearly a third of full democracies, three-quarters of flawed democracies and 86% of hybrid regimes.
Surveillance-technology exports are soaring. Two Chinese firms, Hikvision and Dahua, are the world's biggest surveillance-camera makers, with a combined market share of 40%. Huawei supplies its "Safe City" surveillance systems to more than 100 countries. Geedge Networks, a private Chinese firm, has sold internet-control technology to the governments of Ethiopia, Kazakhstan, Myanmar and Pakistan, helping them censor and spy on their citizens, according to an investigation by InterSecLab, a digital-forensics network. A study by Erin Carter and Brett Carter at the University of Southern California finds that imports of Huawei technology increase digital repression in autocratic countries but have no effect in democratic ones.
Xi Jinping has said he dreams of making China a "space power". The country has put a rover on Mars and built one of the two operational space stations orbiting Earth. China conducted nearly 100 orbital launches in 2025, but its private firms were responsible for only 16 of these—America, by contrast, conducted 180 launches, of which SpaceX managed over 160. The global space economy grew from $300bn to about $600bn over the past decade and is projected to triple again in size by 2035; America still dominates. None of the 600 companies in the Chinese sector towers over it as SpaceX does in America, though a clutch of entrepreneurs have emerged: Zhang Changwu, a former financier, founded LandSpace, while Kang Yonglai, an engineer, founded Space Pioneer.
Most Chinese launches still rely on the Long March rockets built by the state-owned China Aerospace Science and Technology Corporation (CASC). Getting a kilogram of cargo from a Chinese spaceport to low-Earth orbit costs on average about 60,000 yuan ($8,600)—roughly three times the cost on SpaceX's reusable Falcon 9. In December 2025 both CASC and LandSpace test-launched reusable rockets; in both cases the reusable booster exploded before being recaptured, though the second stages reached orbit. In 2026 Space Pioneer is expected to test its reusable Tianlong-3 vehicle.
China has two satellite megaconstellations in the works to provide global internet coverage: Guowang (projected at 13,000 satellites) and "Thousand Sails" (15,000 satellites). As of early 2026 both had only around 100 satellites apiece, compared with SpaceX's Starlink constellation of over 9,000. In December 2025 Airbus signed a deal for Thousand Sails to provide internet during flights. Geely, a Chinese car giant, is launching a constellation of several dozen satellites to help its cars navigate. Huawei and Xiaomi have started including satellite-call functions in their smartphones.
In November 2025 the China National Space Administration set up a new department to oversee commercial space and released a two-year plan to support the sector, including opening state facilities to private companies and creating a national fund to invest in commercial space. Chinese officials claimed Starlink and other foreign constellations present "pronounced safety and security challenges".
China launched more than 120 remote-sensing satellites in 2025 alone, bringing the total in orbit to more than 640—second only to America. The single largest constellation, Jilin-1, is operated by Chang Guang Satellite Technology (CGST) and comprises over a hundred satellites with close connections to the People's Liberation Army; its goal is to image any spot on Earth every ten minutes. Jilin-1 uses satellite-to-ground laser communications to transfer video from orbit and is ahead of American commercial peers on revisit cadence. China has two known commercial constellations with video capability: Jilin-1 and Zhuhai-1 (Planet is the only American firm with publicly documented video). China Siwei, part of the state-owned China Aerospace Science and Technology Corporation, offers imagery every bit as sharp as leading American firms. Chinese firms are also using AI to annotate and extract intelligence from satellite images, including identifying military objects from low-resolution pictures and tracking changes over time. China is leading in research impact in several remote-sensing technology areas, according to a congressional commission. The proliferation of Chinese imagery has ended a Western monopoly on the most advanced images from space, though Chinese providers have their own restrictions: they release nothing the Communist Party does not approve.
In 2018 Xi Jinping announced a plan to turn the tropical island of Hainan—nearly the size of Taiwan and 30 times bigger than Hong Kong—into the world's largest free-trade port (FTP). The scheme took effect in December 2025. Under the new rules 74% of goods enter the island tariff-free and can be shipped to the mainland at zero levy so long as processing in Hainan adds at least 30% to their value. Taxes on firms in strategic sectors and on high earners are capped at 15%, compared with 35% and 45% on the mainland. Citizens of 86 countries, including America, can visit visa-free.
Despite its size, the island has long been an economic backwater. At about 76,000 yuan ($10,900), its GDP per person in 2024 trailed most other special economic zones and the national average; its GDP of about $114bn was one of China's lowest. In 1984, when the central government gave Hainan permission to import foreign goods restricted elsewhere, a massive profiteering scandal followed. In 1988 it was carved out of Guangdong as a separate province and designated as China's only provincial-scale special economic zone, but results were mixed—frenzies of investment gave way to property busts and abandoned theme parks.
The government hopes the island's isolation, separated by a 20-30km stretch of sea from the mainland and 2,300km from Beijing, will make it a safe environment for reform experiments. A pilot introduced in 2025 allows firms to apply for less restricted internet access, including sites such as Google and X that are blocked on the mainland.
Hainan has set up a "special medical zone" called Boao Hope City, where private hospitals are allowed to use drugs and devices approved abroad but not in China. Mixue, the cold-drinks chain, has opened a factory on the island to import coffee beans tariff-free and turn them into drinks for sale on the mainland. Through a subsidiary, Swire Pacific, a Hong Kong firm, is building a bottling factory for Coca-Cola. The government is building 26 campuses for universities from Britain, Canada and across China, some of which have already opened.
Li Daokui of Tsinghua University, a government adviser, called the experiment one in which "this youngest and bravest student in a cohort is given permission to swim in the deep water." Chi Fulin, 74, president of the China Institute for Reform and Development in Haikou, who was among the first officials sent to Hainan from Beijing in 1987, says the island will lead the opening up of China's service sector, which has largely been closed to foreign firms.
A decade ago officials set a target for China to become an "internationally competitive" destination for medical tourism by 2030. In 2025 Chinese hospitals received nearly 1.3m foreign patients, up almost 74% from 2022. China's medical-tourism market is expected to increase from around $1.2bn in 2025 to $3.4bn by 2035, according to Market Research Future, a consultancy.
For some elective procedures such as laser eye surgery, China's best hospitals are world-class and typically cheaper than Western hospitals. Many have English-speaking staff. Most foreigners in Chinese hospitals are still residents rather than medical tourists, but big cities like Shanghai and Beijing are starting to receive more patients from abroad. Growing numbers of Vietnamese seek treatment in southern China, and Russians cross the border to hospitals in the north-east.
Public hospitals are allowed to use only 10% of capacity for international departments. Even so, the trend has provoked unease among Chinese nationalists, who worry that foreigners are consuming resources funded by Chinese taxpayers.
Pork holds a unique place in the Chinese diet; the Chinese character for "home" is a pictogram of a pig under a roof. The government maintains a strategic frozen-pork reserve. In 2018-19 African swine fever ravaged pig herds and wiped out many smaller "backyard" farms, sending prices through the roof. Big companies survived by concentrating their pigs into mechanised modern facilities—multi-storey concrete buildings holding tens of thousands of animals; one in Hubei province has 26 floors.
In 2024 China produced a record 59m tonnes of pork, about half the global total and 40% more than in 2020. But consumption is slowing: the average Chinese person ate 28kg of pork in 2024, 2kg less than in 2023, as middle-class consumers increasingly see pork as less healthy than chicken or seafood. The oversupply pushed live-pig prices to a 15-year low in March 2026; some farmers were losing more than 300 yuan ($40) per animal. Muyuan Foodstuff, China's biggest pig producer, announced plans to build the first high-rise pig farm in Vietnam, capable of rearing 1.6m swine a year.
China is the world's largest exporter of sturgeon caviar and truffles, and is rapidly expanding into foie gras, olive oil, matcha and fine wines. Domestic and international appetites for such delicacies are both growing. The global market for luxury foods is worth almost $500bn, according to Mordor Intelligence, a market-research firm.
Caviar is a case study in how innovation at scale can improve efficiency. China began farming sturgeon at the turn of the century and now makes more than two-fifths of global caviar output. Kaluga Queen, a big Chinese firm, began production in 2006 in an artificial lake nearly twice the size of Malta, keeping the water temperature below 5°C to produce caviar year-round. Drones keep count of roughly 200,000 sturgeon; gender can be determined in six months rather than the traditional three years. In 2024 the company produced 260 tonnes of roe, up from 150 in 2015, making it the world's single largest producer.
China's varied geography supports a range of luxury products. Sunny Gansu province has a glistening olive-oil industry; the mountainous Ningxia region makes impressive wines; Guizhou in the south-west uses its altitude, humidity and limited sunlight to grow tea for matcha, challenging Japan, the world's largest matcha producer. Top chefs, such as Alain Ducasse, use Chinese-produced treats in their dishes. China is adding new products to a list of geographically protected foods and drinks agreed with the European Union, including Lincang nuts (a hybrid related to macadamias), Fuzhou jasmine tea, Pu'er tea and coffee, and Jinhua pork.
Traditional purveyors are fighting back. French producers have lobbied for the "olfactory qualities" of their truffles to be better codified. Japan has promoted an official wagyu "mark" to counter foreign production of the marbled beef.
Cities such as Yiwu, Zhongshan and Guangzhou are home to thousands of Africans who buy goods to send home. In China there are more Nigerians than Indonesians and almost as many South Africans as Thais. In 2018 there were 80,000 African students in China, more than in America or any other country save France.
"Every man has his price. Mine is $3.95."