China’s economic transition is now targeted on coupling excessive-high quality improvement with excessive-stage security.
This shift is fueling resilient growth by means of better technological self-reliance and a strengthened home demand base, famous specialists at a current Washington, DC, occasion.
“The overarching political guidance for China’s economy now is to quote ‘coordinate development and security’,” mentioned Yeling Tan, a professor of public coverage on the University of Oxford and nonresident senior fellow on the Peterson Institute for International Economics.
Tan shared this perception throughout a digital panel on Oct 8 hosted by the PIIE, the place specialists explored China’s evolving improvement strategy. The occasion was held towards the backdrop of Beijing’s intensified help for growth, with current developments signaling power.
The International Monetary Fund famous in a briefing final week that China’s economic system has proven robustness regardless of commerce pressures, buoyed by fiscal measures in early 2025. The World Bank, on Oct 7, upgraded its 2025 forecast for China to 4.8 %. Reuters reported in early October that China’s “new economy “sectors are performing strongly.
Panelists highlighted how this strategy, which Tan referred to as the “economic security growth model”, strikes past export- or funding-pushed labels. It facilities on coordinating improvement and security by means of pillars of methods and measures akin to twin circulation, self-reliant excessive-tech innovation, and a toolkit for addressing international economic coercion.
Dual circulation takes the home market because the mainstay whereas letting inner and exterior markets increase one another.
“Trade statistics show that direct trade between China and the US and other advanced economies is plateauing,” Tan mentioned. “Trade with the rest of the world continues to increase.”
The second pillar restructures towards self-reliant innovation insulated from geopolitical dangers, involving a “whole-of-nation” push to fund science and expertise domestically, hyperlink labs and universities, and unleash “new quality productive forces”.
Fiscal allocations have risen steadily for training, science and expertise from 2023 to the projected 2025, Tan mentioned. “Education approvals for science and engineering programs reached nearly three-quarters by 2024, from about half in 2020. China’s industrial robot adoption far exceeds global rates,” Tan mentioned, stating that totally different methods are transferring in a transparent route: promising innovation-led growth.
The third pillar establishes export controls and laws, enabling responses to “coercion”.
China’s AI strides additionally exemplify the strategy’s potential, closing gaps regardless of US curbs and fostering world advantages.
Martin Chorzempa, a senior fellow at PIIE, mentioned US export controls on superior AI chips did not restrain Chinese computational energy “as much as the US would have hoped”.
US companies maintain eight of the highest 10 and 13 of the highest 20 fashions, based on Artificial Analysis. But China secures six high-20 spots. “China is actually completely dominating the most capable models that are open,” Chorzempa mentioned. Companies like DeepSeek, Alibaba, Kimi and Zhipu AI garner huge downloads, together with in Silicon Valley, the place US companies use them for security or privateness, observers be aware.
The competitors, to some extent, benefits the world. “The rest of the world then will be able to play the two off of each other and make sure that they have access to highly capable AI systems they can apply in their country,” Chorzempa mentioned.
Stanford’s 2025 AI Index this month mentioned China is narrowing efficiency gaps. The World Economic Forum in June deemed China’s advances anticipated, given coordinated methods. SoftCircles weblog spotlighted improvements just like the DeepSeek-R1 AI model and Huawei’s Ascend 910C chip.
Chorzempa mentioned diffusion decides winners. “The real winners from those technologies are not who develops it first or who has the most capable technology at the very beginning, it’s who actually diffuses and uses that throughout the economy,” he mentioned, mentioning that AI spreads quicker than any prior expertise.