China's adaptability in the face of transformation: Exploring the impact of innovation and consumer habits on China's economic development model.
China's economy in 2025 is poised for a dynamic mix of ambition, challenges, and structural transformations, while maintaining its role as a key driver of global economic expansion.
**Growth Targets and Forecasts**
China's government has set a GDP growth target of around 5% for 2025, a goal considered ambitious yet achievable by some analysts, given ongoing stimulus measures and technological innovation. The World Bank projects China's real GDP growth to moderate from 5.0% in 2024 to 4.5% in 2025 and 4.0% in 2026, citing factors like trade restrictions and global uncertainty. Other institutions, such as Vanguard and ING, have recently revised their 2025 forecasts upward—to approximately 4.6% and 4.7%, respectively.
**Macroeconomic Headwinds**
The economy faces several headwinds, including heightened global trade restrictions and uncertainty, such as elevated U.S. tariffs and shifts in export markets, which are slowing export growth and posing risks to China's economic momentum. The real estate market shows divergent trends, with new home sales rebounding in major cities, but lower-tier cities continuing to struggle with property downturns and financing difficulties. Weak aggregate demand keeps inflation low and labor market conditions soft, which may constrain consumer confidence and wage growth.
**Structural Shifts**
Despite these challenges, China is making significant strides in transitioning from traditional, investment-driven growth to a model focused on innovation, high-end manufacturing, and the development of strategic emerging industries. China is accelerating its leadership in disruptive technologies, aiming to become a global leader in AI by 2030. The government is prioritizing industrial applications of AI in sectors such as healthcare, manufacturing, finance, and smart living. The green transition is a core pillar of future growth, with significant investments in renewable energy, electric vehicles, and sustainable infrastructure.
**Role in Global Growth**
Despite domestic challenges, China remains a crucial driver of global economic expansion, given its size and ongoing investments in technology and infrastructure. China has proposed initiatives for international cooperation in AI governance, signaling its intent to play a leading role in shaping global standards and frameworks for emerging technologies. Ongoing trade tensions and shifting global supply chains affect not only China but also its trading partners, making its economic trajectory a key variable for global growth prospects.
**The Annual Meeting of the New Champions 2025**
The 16th Annual Meeting of the New Champions took place from 24 to 26 June 2025 in Tianjin, China, under the theme "Entrepreneurship for a New Era". The event, organized by the World Economic Forum, convened over 1,700 leaders from various sectors to explore entrepreneurial solutions to global challenges. The topics discussed at the meeting included adaptation, economy, financing, international cooperation, investment, R&D, trade, resilience, innovation, artificial intelligence, cities, policy, and finance.
As consumption becomes increasingly central to China's growth, technology and services are emerging as critical enablers. Increasing domestic consumption will require parallel efforts to expand employment opportunities and boost social spending on healthcare and education. A new generation of open models and digital tools in China is driving scale-based, cost-effective innovation, underpinned by advanced R&D, mass production capacity, and integrated supply chains.
China's domestic consumption patterns are evolving, reflecting a more discerning and dynamic consumer base. Boosting domestic consumption, advancing employment, and unlocking new productivity gains through innovation are critical as China transitions from an investment and export-led model to one centred on domestic demand and services.
Key experts at the meeting, including Eswar Prasad of Cornell University and Keyu Jin, Professor at Hong Kong University of Science and Technology, highlighted the importance of ongoing dialogue between China and the US regarding competition in green technologies and advanced manufacturing. They also mentioned that there is an illusion of decoupling, but trade interdependencies remain deep.
In conclusion, China's economy in 2025 is navigating a complex mix of ambitious policy objectives, macro headwinds, and profound structural changes, while remaining central to global economic dynamics. AI is considered a central force shaping China's growth trajectory by the participants of the meeting.
- China's focus on innovation in 2025, particularly in the field of artificial intelligence (AI), is seen as a strategic move, aiming to become a global leader in AI by the year 2030.
- In the realm of finance and education, efforts are underway to expand employment opportunities and boost social spending on healthcare and education, in line with the increasing centrality of consumption in China's growth.
- The 16th Annual Meeting of the New Champions in 2025 underscored the importance of ongoing dialogue between China and the US on competition in green technologies and advanced manufacturing.
- The economy's transition from investment and export-led to one centered on domestic demand and services requires boosting domestic consumption, advancing employment, and unlocking new productivity gains through innovation, aided by technology and services.
