The big global lesson of 2025: Do not underestimate China

An economy that was expected to falter has emerged as a winner

- SHULI REN

From US President Donald Trump's trade war to AI developments, 2025 has been full of dramatic twists and turns. One consequential takeaway is to never, ever underestimate China.

At the onset of the year, the world’s second-largest economy was left for dead. Economists were predicting lost decades akin to what Japan experienced in the 1990s and its dominance of manufacturing was being challenged by Trump's second term and the drive by exporters to diversify their supply chains and move operations abroad. Global investors had largely fled, seeing that the country’s ‘3D’ problems—deflation, debt and demographics—were structural and insurmountable.

By year-end, the perception couldn’t be any more different. President Xi Jinping was [among the few leaders] who stood up squarely to Trump’s bullying tactics on trade. Xi forced him to back down by weaponizing Beijing’s control of rare earth materials. It has kept its status as the world’s most vibrant factory, so much so that some are lamenting that Europe, for one, has nothing to sell to China. As for global money flows, foreign investors are returning as an AI boom has lifted the Hong Kong bourse to a four-year high.

How did China manage to shake off its malaise and dazzle the world with Deep-Seek moments in tech, biotech and even defence? Were the seeds of success always there and elites in the West simply chose not to see them? It’s a bit of both.