2025: The year of the Chinese rise and greater global cooperation?
Author：Farid Fatah, Corporate M&A Lawyer
From：IFF
Time：2025-02-17
Introduction
2025 has gotten off to quite a start. According to the International Monetary Fund, the global economy is stable, with global growth forecasted to be 3.3 percent for both 2025 and 2026.1 In the United States, inflation is projected to be close to - though still slightly above - the country’s 2 percent target in 2025, whereas in the euro area inflationary dynamics are expected to be more subdued. In China, meanwhile, low inflation is expected to persist for the time being. This means that the gap between anticipated policy rates in the US and other countries is widening.
Yet as the Chinese New Year celebrations conclude, one should remember that 2025 is the year of the wooden snake. In Chinese culture, the snake is quick and full of surprises, though it can also be collaborative, unpredictable, and surprising. Given the current state of global affairs, it is indeed likely that this year will be full of transformation for the world - and for China in particular.
On May 19, 2015, the Chinese government unveiled an ambitious plan called Made in China 2025.2 Not only does 2025 mark the deadline of this plan, but it will also be remembered as the release date of a remarkable Chinese artificial intelligence (AI) - DeepSeek.3
Even in a world full of uncertainties, wars, global competition, and trade wars - with tariffs and retaliatory measures - one should stop and reflect on China’s rise in the last decade to see how the country’s government plan was executed. This is also important for looking ahead to the next decade of global trade, with China featuring as a prominent leader in various areas.
The first part of this paper will examine what did China during the last decade leading up to 2025, and the second part will look at where one should expect China and Chinese culture to play a role going forward in a (still) globalized world.
The decade from 2015 to 2025 has been transformative for China
Starting from around 1980, China has developed itself into a manufacturing powerhouse. With its cheap labor, many multinational companies built their business model on the country’s strong manufacturing capacity and supply chains, with Nike being one of the most emblematic examples of companies that benefited from China’s resources. A major downside, however, is that this also involved severe pollution from heavy industry as well as inefficiency and sometimes obsolete tech. This did, however, provide jobs to China’s population and help it grow wealthier while moving up the value chain.
To address China’s many challenges, the Chinese government developed a planning strategy - often referred as five-year plans - which has guided China’s development for the last 45 years and continues to do so.4 The government also specialized the country’s regions for its manufacturing capabilities and various areas of expertise. Northern provinces such as Hebei, Liaoning, and Shanxi, e.g., are dominated by heavy industry - which are polluting and inefficient but still providing jobs - while major metropolises such as Beijing in the north, Shanghai in the east, and Shenzhen in the south have become world-class innovation ecosystems, bringing together leading startups and sources of financing like venture capitalists, stock exchanges, and more.5
As part of its transition to a ‘4.0’ economy, China is counting on new tech giants and innovative companies such as Baidu, Alibaba, Tencent, ByteDance, BYD, DJI, Huawei, and now DeepSeek as it uses Big Data and AI to make its economy more self-reliant, diversified, and sophisticated. Only the US is comparable in terms of the scale of this tech-led transformation.
China has long set itself ambitious goals and plans, including comprehensive industrial policies aimed at transforming the country into a global manufacturing powerhouse and innovator by 2025 - a goal which it has largely achieved. One of China’s main objectives - which has become more urgent and important due to increased geopolitical turbulence - is to reduce its reliance on foreign tech, particularly in critical sectors like semiconductors, software, advanced machinery, and AI.6
China’s transition from being a low-cost manufacturing hub to a center of innovation-driven production - with a focus on research and development (R&D) and intellectual property (IP) development - has been truly remarkable. The Made in China 2025 plan also announced that “by 2025, R&D spending as a percentage of revenue in key industries should exceed 1.68 percent and the number of patents filed should increase by 50 percent compared to 2015 levels.” In 2017, China surpassed the US in terms of the number of patent applications filed annually, becoming the global leader in IP creation.7 China also now leads the R&D and global patent race in AI,8 which means that DeepSeek’s emergence in 2025 should not be surprising.
China’ R&D spending has reached 2.4 percent of its gross domestic product - exceeding the global average of 2.2 percent - and since 2022 China has accounted for approximately 25 percent of global R&D expenditures, second only to the US. Implementing this has helped China became the world’s largest producer of electric vehicles (EVs), with companies like BYD quickly gaining global recognition.9
In the aerospace industry, China also made headlines with the emergence of a national champion able to manufacture aircraft designed for international flights with high numbers of passengers - thus potentially rivaling EU and US champions Airbus and Boeing, which have long dominated the industry in a duopolistic manner.10 The Commercial Aircraft Corporation of China (COMAC) has also shown great capacity for cooperation while partnering with these industry leaders as well as other international companies. Such a rise demonstrates yet another sector in which China is showing an increased ability to contribute to mutual growth and trade alignments. As a case in point, France’s press has emphasized that COMAC’s C919 could generate USD 15 billion in revenue for the French company Safran.11
China’s innovations are also aligned with global concerns and policies, with its rapidly growing national fleet of EVs matching European Union goals for decarbonizing the automative sector and making it greener. On April 19, 2023, the EU adopted Regulation 2023/851 of the European Parliament and of the Council amending Regulation (EU) 2019/631 to strengthen CO2 emission performance standards for new passenger cars and new light commercial vehicles in line with the EU’s increased climate ambitions.12 This regulation states the following:
“In order to protect the environment and the health of citizens in all Member States it is important to also decarbonize the existing fleet. The market for second-hand vehicles creates the risk of shifting CO2 emissions, as well as air pollution, to less economically developed regions in the Union. To speed up the reduction of emissions from the existing fleet and to accelerate the transition to zero-emission transport, it is of the utmost importance to encourage the conversion of internal combustion engine vehicles to battery or fuel-cell [EVs], including by assessing how to facilitate the deployment of such solutions in Member States.
With stricter EU-wide targets set to come into force from 2030 onwards, car manufacturers will have to deploy significantly more zero-emission vehicles in the EU market. In that context, the incentive mechanism for zero- and low-emission vehicles would no longer serve its original purpose and would risk undermining the effectiveness of Regulation (EU) 2019/631. This incentive mechanism should therefore be removed starting on January 1, 2030. Until that date - and therefore throughout the rest of this decade - the incentive mechanism for zero- and low- emission vehicles will continue to support the deployment of vehicles with emissions from zero up to 50 grams of CO2 per kilometer - including battery-powered [EVs], fuel-cell [EVs] using hydrogen, and well performing plug-in hybrid [EVs]. The zero- and low-emission vehicles’ benchmarks should, however, be revised to take into account the rapid and accelerating uptake of zero-emission vehicles in the EU market. After January 1, 2030, plug-in hybrid electric vehicles will continue to count against the EU fleet-wide targets that manufacturers are required to meet.”
Similar policies have also been adopted by China in 2024 and unveiled at the World Economic Forum.13
In the last decade, China has achieved an impressive economic transformation and a shift from labor-intensive to innovation-driven growth. The country has certainly increased its influence in global tech standards and supply chains, though it still has its share of domestic challenges - including balancing its economic growth with environmental and social sustainability as well as dealing with its production overcapacity. Globally, China also faces increasing global competition and trade challenges, and it has found itself in an increasingly tense rivalry with the US and other advanced economies in high-tech sectors.
China has also been at the center of an increasing number of legal proceedings - it initiated a complaint with the World Trade Organization (WTO) protesting EU tariffs on its EVs in late 2024, and was the target of proceedings initiated by the EU for its patent licensing terms in early 2025.14
In terms of global pushback toward China, the US imposed export controls on advanced semiconductor equipment in 2022, and restrictions have continued to tighten in the years since. These measures intended to slow China’s progress in this sector and prolong its reliance on foreign tech for advanced chips, with companies like TSMC and ASML dominating that market.
What will China’s path forward look like in the decade leading up to 2035?
In the last decade, China has risen to become a global leader and innovator in many industries - such as EVs with BYD, Zeekr, and many others, leisure drones with DJI, social media with TikTok, fast fashion with Shein, e-commerce with Temu, smartphones with Huawei and Xiaomi, gaming with Tencent, and AI with DeepSeek - and this list is set to continue growing. Chinese players will also continue to be noticeable in the global economy, and China’s trade and innovation will play a major role beyond just tensions and trade wars. Cooperation will be key for guiding relationships with China as a country and with policymakers, as well as with Chinese companies as private actors of global trade.
One encouraging trend is that global convergence is noticeable when comparing global policymakers’ objectives and initiatives. In terms of green policies and addressing global warming and sustainability challenges, most countries are now developing incentives to develop the use of EVs and phase out vehicles that rely on fossil fuels. In data transfers and regulations, the EU has been a pioneer in setting up a framework containing regulations that protect natural persons regarding the processing of personal data and the free movement of such data. The EU also repealed Directive 95/46/EC (General Data Protection Regulation) that was adopted on April 27, 2016 - and that was followed by the US Cloud Act in 2018 and China’s recent regulation on network data security management that was approved on September 30, 2024 and has been in effect since January 1, 2025.
In the same fashion, countries are making massive investments in AI15 and gradually figuring out how to regulate this industry, with the EU Regulation (EU) 2024/1689 laying down harmonized rules intended to govern the use of this new tech.16 In America, new US president Donald Trump - together with Elon Musk, the world’s richest man - has unveiled an ambitious plan on AI called Stargate, with a promise of a USD 500 billion investment in America’s AI infrastructure.17 At the same time, Trump also acknowledged that “the release of DeepSeek AI from a Chinese company should be a wake-up call for our industries that we need to be laser focused on competing” and that this Chinese tech should be “very much a positive development” for AI overall, because “instead of spending billions and billions, you’ll spend less, and you’ll come up with, hopefully, the same solution.”18
Alignment between policymakers is clearly possible, even amid geopolitical tensions. While China faces a challenge in developing steady collaborative relationships with the US and EU, it is already creating new alternatives to connect to other nations and create truly global cooperation.
Any potential collaboration between the US and China will continue to face challenges, not least because of new tariffs being imposed on imports of Chinese goods after Trump’s recent executive order on February 1, 2025.19 And in the EU, any China cooperation would have to overcome tariffs on the imports of EVs into the EU that were imposed in late 2024,20 as well as the EU’s complaint to the WTO that was circulated to WTO members on January 22, 2025.
To be an influential player in the global scene, China still counts on its role as the de-facto leader of the BRICS grouping of major developing economies21 and on its Belt and Road Initiative.22 By doing so, China is demonstrating its willingness to contribute to multilateral mechanisms and organizations while preventing itself from being isolated by other major economies like the US or EU.
To that end, China’s leader Xi Jinping has announced that his country will continue to find new ways to adapt its supply chain to take into account the tariffs it is facing. As part of these efforts, while visiting Morocco in late 2024 Xi announced an important plant for electric battery production,23 showing that China is willing to play a bigger role in the growth of other emerging countries such as Morocco and Brazil that result in more win-win outcomes.
Such adaptations should not prevent the US and EU from cooperating with China instead of engaging in trade wars, since cooperation schemes and frameworks would still benefit each party. For the EU, restarting or reviving the Comprehensive Agreement on Investment could address the misalignments between China and the EU, and the pending litigation and proceedings that the WTO is currently considering could be handled in a way that is satisfactory for all parties involved. For its part, China could also more effectively address the EU’s IP concerns, while the EU could let Chinese players have greater access to the European market - possibly subject to joint ventures with local players or tech transfer commitments, similar to what many foreign companies operating in China agree to.
May 2025 mark the way to true common peace and prosperity.
References
1. International Monetary Fund, world economic outlook, global growth: divergent and uncertain, January 2025.
2. http://english.www.gov.cn/policies/latest_releases/2015/05/19/content_281475110703534.htm
3. C. Yu, China’s new AI model claims to beat competitors, China Daily, January 30th, 2025: https://www.chinadaily.com.cn/a/202412/30/WS67723a77a310f1265a1d5a1d.html
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6. MIC 2025: “By 2025, China aims to achieve 70% self-sufficiency in core components and key materials for high-tech industries.”
7. World Intellectual Property Indicators Report: Global Patent Filings Reach Record High in 2023, https://www.wipo.int/pressroom/en/articles/2024/article_0015.html
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10. Bruno Trévidic, The sensational commercial launch for COMAC, the Chinese rival to Airbus and Boeing, Les Echos, February 11, 2025.
11. Bruno Trévidic, The C919, the Chinese Aircraft which can bring more than 15 billion dollars value to Safran, Les Echos, February 11, 2025.
12. https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32023R0851
13. https://www.weforum.org/stories/2020/11/china-bans-fossil-fuel-vehicles-electric/
14. https://www.wto.org/english/news_e/archive_e/country_subj_arc_e.htm?country1=CHN&subject1=DISP
15. https://itif.org/publications/2024/08/26/how-innovative-is-china-in-ai/
16. https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=OJ:L_202401689
https://edition.cnn.com/2025/01/21/tech/openai-oracle-softbank-trump-ai-investment/index.html
18. https://www.nbcnews.com/tech/innovation/trump-china-deepseek-ai-wake-call-rcna189526
20. https://ec.europa.eu/commission/presscorner/detail/en/ip_24_5589
21. https://www.cfr.org/backgrounder/what-brics-group-and-why-it-expanding
22. https://eng.yidaiyilu.gov.cn
23. https://www.chinadaily.com.cn/a/202411/23/WS674112d9a310f1265a1cf2a8.html
