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China’s Year of Patience
The trends that defined Beijing’s 2025, from the trade war with Trump to challenges on the home front.
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James Palmer
By James Palmer, a deputy editor at Foreign Policy.
In the foreground, a Chinese flag blows in the wind atop a flagpole. In the background are container ships, cranes, and stacked shipping containers, surrounded by cloudy skies and gray-blue water.
A Chinese flag is seen in front of container ships, cranes, and stacked shipping containers in Shenzhen, China, on April 12. Cheng Xin/Getty Images
December 23, 2025, 12:00 PM
Welcome to Foreign Policy’s China Brief.
2025
The year’s best stories
It’s been a year of patience for China, as the country struggles to shake off the long economic hangover of the COVID-19 pandemic.
Chinese President Xi Jinping seems more than willing to wait. He has maintained a seemingly unbreakable grip on power, well past the point at which he was expected to step down, and retirement is nowhere in sight.
This year, Xi guided China through high-stakes trade clashes with the United States and, less successfully, through continued economic challenges on the home front. Though this year certainly underscored Beijing’s economic clout on the world stage, with the boom decades now in the rear view, the path ahead is far less clear.
Below are four trends that China Brief followed in 2025.
Winning the Trade War
Many people expected U.S. President Donald Trump’s tariffs to set the United States on a collision course with China. Few, however, anticipated just how decisively Beijing would prevail in this game of chicken.
After Trump announced a broad package of tariffs on most U.S. trading partners in April that threatened to crush U.S.-China trade, both sides seemed to recognize the need for negotiation. A fragile truce was reached in May, but it soon gave way to months of renewed escalation and retaliation, followed by an extraordinary climbdown after Trump and Xi’s face-to-face meeting in October.
Since then, Trump has gone out of his way to accommodate Xi, seemingly eager to secure a trade deal: He has pressured Japan to soften its stance on Taiwan, attempted to neuter U.S. government actions that might antagonize Beijing, and approved exports of some of the world’s most powerful artificial intelligence chips to China.
China, meanwhile, has quietly reneged on its pledge to purchase U.S. soybeans and is exporting more goods than ever despite steep U.S. tariffs. The Trump administration’s failure to effectively apply pressure on Beijing stems in part from its hollowing out of China expertise across the U.S. government—as well as Trump’s personal desire for approval, particularly from authoritarian leaders.
But China’s ability to squeeze global supply chains—thanks to its dominance of the critical minerals sector—also proved decisive. After more than a decade of ignored warnings, the United States is now scrambling to break China’s grip on these resources, but it may lack the expertise or state capacity to do so for the foreseeable future.
A Weak Economy
Back home, China remained mired in problems in 2025—chief among them an economy that has yet to recover from the shock of the COVID-19 pandemic, which brutally exposed weaknesses that had been accumulating for years.
The most serious of those weaknesses is the real estate sector, which makes up an overwhelming amount of China’s household wealth. Even before the pandemic, it was an obvious bubble that Beijing repeatedly tried to deflate without triggering a broader crisis. But each attempt was met with resistance from the urban upper middle class, forcing the government to retreat.
China has so far managed the collapse of real estate giants such as Evergrande, but property sales have cratered, and major developers such as Vanke remain on the brink.
The property slump has in turn devastated local governments, which have long relied on land sales to plug budget gaps. It has also exposed unsustainable debt levels, worsened by the costs of maintaining zero-COVID policies. While the central government has attempted to restructure or absorb some of this debt, it is still struggling to assess the true scale of the problem.
Persistently high youth unemployment compounds these pressures and undermines Beijing’s push to boost domestic consumption. Taken together, these trends raise the specter of prolonged stagnation. China’s 2020s might end up resembling Japan’s lost decades, especially if deflation becomes entrenched.
Technology Triumphs
A worker in white protective gear displays dark blue photovoltaic modules, used for solar panels, in a Chinese factory.
A worker in white protective gear displays dark blue photovoltaic modules, used for solar panels, in a Chinese factory.
A worker displays photovoltaic modules for solar panels in a factory in Suqian, in China’s Jiangsu province, on Jan. 23. AFP/China OUT via Getty Images
Even as China’s broader economy stagnates, parts of its technology sector are still red hot. The January release of DeepSeek-R1 underscored just how formidable a competitor China has become in the global AI race.
DeepSeek’s debut reignited debate over whether the United States should impose tighter controls on exports of high-end chips to China or if that would accelerate Beijing’s ambitions to develop its own chip sector. This discussion was quickly overtaken by Trump’s announcement this month that he would allow certain high-end chip exports, as long as the U.S. government gets a cut of the sales.
China’s approach to AI is proving very different from that of the United States. Rather than chasing the fantasy of artificial general intelligence, Beijing has focused on practical integration with manufacturing and industry. Plus, the agenda is being set by the Chinese political leadership rather than tech barons, who were effectively cowed by a government crackdown that ran from 2020 to 2023.
If China is competitive in AI, it is dominant in green technology—and not just because the United States is now governed by climate change deniers. China is the global leader in electric vehicles, even as the sector’s vicious price war has driven many domestic manufacturers into bankruptcy.
China is also adding renewables to its own grid at extraordinary speed and scale, helping to offset its status as the world’s largest emitter of greenhouse gases. In 2025, Chinese firms accounted for roughly 75 percent of global clean energy patent applications and 31 percent of worldwide green investment, more than any other country.
The Never-Ending Purge
Not long after becoming president in 2013, Xi began purging potential rivals under an anti-corruption banner. This year, the campaign intensified, particularly within the military. A cluster of generals were detained throughout the year and expelled from the Chinese Communist Party (CCP) en masse in October. (Some of them had replaced figures removed in previous purges.)
Two main factors appear to be driving this crackdown. The first is endemic corruption within the Chinese People’s Liberation Army Rocket Force. The incentives for graft in the military are strong: Budgets are huge, oversight is limited, and because China has avoided war for so long, there is little fear that corruption will be exposed by a crisis, as happened to the Russian military in Ukraine.
The second factor is Xi’s fixation on political loyalty. China’s highest-ranking commissar, Miao Hua, was purged this year, reportedly for failing to manage the complex system of patronage and bribery that governs military promotions. The issue remains especially sensitive since Chinese authorities discovered in the early 2010s that the CIA had covertly funded some senior officers’ “promotion fees.”
The purges extended beyond the military. Another high-profile casualty this year was diplomat Liu Jianchao, widely expected to be the next foreign minister, who appears to have been undone by perceptions that he was too close to the United States after a well-received visit in 2024.
If Foreign Minister Wang Yi, who also holds the CCP’s top foreign affairs post, keeps his job through next year, it will signal that high-level diplomacy has become too politically dangerous for anyone but a hardened survivor.
James Palmer is a deputy editor at Foreign Policy. Bluesky: @beijingpalmer.bsky.social
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