China's economy has demonstrated a remarkable surge since September last year, marked by a robust GDP performance in the fourth quarter. This strong start for 2025 is underpinned by a series of stimulus measures and top-tier policy designs aimed at addressing structural challenges and fostering new engines of economic growth.
However, this momentum unfolds amidst intensifying global headwinds, as shifting international dynamics increase pressures on China's economic stability. Chinese President Xi Jinping acknowledged these challenges in an article, emphasizing that despite adverse impacts from the changing external environment, China's economy remains supported by a stable foundation, abundant strengths, strong resilience, and vast potential.
Navigating these dual realities—balancing external risks with domestic opportunities—is central to China's 2025 strategy. This year not only marks the culmination of the 14th Five-Year Plan (2021–2025), which has guided the nation's efforts toward high-quality development, technological innovation, and sustainable economic reforms, but also sets the stage for the launch of the 15th Five-Year Plan (2026-2030). The new plan will shape China's next phase of growth amid evolving global and domestic challenges.
Harmonizing Market Efficiency with Proactive Governance
In his article, Xi stressed the importance of coordinating the relationship between an efficient market and a well-functioning government. He highlighted the need for the government to act decisively when necessary while also knowing when to refrain from intervention.
Recent policy moves by China exemplify this focus. In January, the National Development and Reform Commission (NDRC) released guidelines for building a unified national market. This initiative encourages all localities and government departments to integrate into the unified national market, aiming to lower transaction costs, create a favorable environment for technological innovation and business development, and strengthen competitive advantages.
Such structural reforms align with a growing consensus among economists that China's economic evolution hinges on fostering innovation and productivity rather than relying on short-term fixes. Matteo Giovannini, a finance professional at the Industrial and Commercial Bank of China, noted that deregulating key industries, encouraging private sector participation, and attracting foreign investment in high-tech and green energy sectors will be instrumental in driving this transformation.
Resilient and Adaptable
Xi's article further addressed the balance between total supply and demand to ensure smooth economic circulation, reflecting the main tasks outlined by the Central Economic Work Conference held in December last year. These tasks not only drove a dramatic rebound for the Chinese economy but also laid a positive foundation for its 2025 trajectory.
Experts have expressed optimism about China's adaptability and resilience, particularly given its stage of high-quality development. Official data indicates that China's GDP in 2024 increased by 5 percent from 2023, reaching 134.9 trillion yuan ($18.77 trillion). This growth underscores the steady expansion of domestic demand and the successful results of industrial transformation.
