The Asia Society Policy Institute’s Center for China Analysis (CCA) has unveiled its flagship annual report, China 2025: What to Watch. This report, based on CCA’s distinctive “inside-out” methodology, provides a comprehensive analysis of critical developments to monitor in China during 2025 and beyond. The report emphasizes China’s challenges on both domestic and international fronts, highlighting the crucial decisions that could shape its future trajectory.
In the introduction, Jing Qian, Co-Founder and Managing Director of CCA, and Jennifer Choo, Director of Research and Strategy, assert that 2025 will be a defining year for China. They explain, “The coming year will prove pivotal in testing Beijing’s resilience and adaptability as it confronts an increasingly hostile geopolitical environment while navigating extremely complex domestic challenges.” They stress that China is “at a crossroads,” with decisions made in this year likely to have lasting repercussions on the nation’s future.
A significant focus of the report is on the growing tensions between the United States and China. CCA Senior Fellow Lyle Morris predicts that U.S.-China relations are set to deteriorate further in 2025. He anticipates that former President Donald Trump, if reelected, may adopt a tougher stance on trade, which could include imposing heavy tariffs on Chinese products. Morris warns, “This may destabilize an already fragile relationship.” He underscores the importance of identifying specific areas of cooperation, stating, “Forging discrete areas of cooperation will remain key…Even though the chances of a genuine thaw that resolves fundamental differences…are low in 2025, recent agreements to enhance military-to-military communications and working groups to combat the illicit fentanyl trade are…the kinds of cooperation that can build positive momentum.” Despite the bleak outlook for overall relations, these collaborative initiatives are seen as steps toward stability.
The Taiwan Strait is highlighted as another potential flashpoint in the report. According to ASPI Managing Director and CCA Senior Fellow Rorry Daniels, tensions around Taiwan are likely to escalate. Daniels points out that the absence of robust U.S.-China diplomacy, especially under a Trump presidency, could exacerbate the situation. She writes, “In the likely absence of robust U.S.-China diplomacy under a Trump presidency, Beijing’s reactive policy responses to a growing U.S.-Taiwan relationship will be viewed by Washington not only as threatening but also worthy of a counter-response. This downward spiral could easily lead to policy miscalculations and a cross-Strait crisis.” The report warns that missteps in this volatile region could result in severe consequences.
Domestically, China faces a delicate balancing act between maintaining political control and fostering incentives within its governing elite. CCA Senior Fellow Guoguang Wu delves into the challenges facing the Chinese leadership in this area. He notes that the Xi Jinping administration will likely continue its anticorruption campaigns, albeit with a politically selective approach. “Anticorruption campaigns will continue and become even more politically selective as the Xi regime struggles to incentivize cadres while also maintaining tight control over them,” Wu explains. This dual challenge underscores the complexities of governance in a nation where centralized control is paramount.
China’s climate policies are also at a turning point in 2025. CCA Senior Fellow Li Shuo examines the implications of an economic slowdown on Beijing’s environmental commitments. He predicts that implementing more aggressive measures to reduce emissions could be difficult in the context of economic challenges. Li writes, “Whether Beijing decides to pledge strong climate targets under the Paris Agreement, transition away from coal, and double down on its clean energy development are key things to watch in 2025.” With global attention on China’s environmental agenda, the decisions made this year will significantly influence its role in addressing climate change.
The report concludes with an overarching assessment from Jing Qian and Jennifer Choo, emphasizing the need for strategic adaptability and pragmatic policymaking. They state, “All in all, navigating 2025 will demand strategic adaptability, political openness, and policy pragmatism by China’s leadership. The choices made this year will reshape the nation’s trajectory, not just domestically but regionally and globally.” Their analysis underscores the magnitude of decisions facing China in the coming year.
In addition to these themes, the report explores other crucial areas, including fiscal reforms, industrial policy, and public health challenges. Experts within CCA highlight the lingering societal impacts of COVID-19 and the complexities involved in addressing these challenges while pursuing economic growth. These interconnected issues illustrate the breadth of obstacles China must navigate in 2025.
The report paints a picture of a nation at a pivotal moment, confronting significant domestic and international challenges. Whether through fostering areas of cooperation with the United States, managing heightened tensions in the Taiwan Strait, or implementing transformative climate policies, China’s leadership will need to make carefully calculated decisions to shape its future.