In 2024, China commemorated the 75th anniversary of the founding of the People's Republic of China. The Third Plenary Session of the 20th CPC Central Committee, held from July 15 to 18, 2024, emphasized structural transformation, technological innovation, and sustainable development. A significant outcome was the plan to establish a "high-level socialist market economy" by 2035, signalling a transition from the "primary stage of socialism" and early reform era. This approach aims to balance state-owned and private enterprises, with the private sector playing a crucial role in innovation, tax revenue, GDP, and employment. The plenum focused on deepening reforms such as market-based pricing, privatization, and financial liberalization, integrating the private sector further into China's socialist framework. Key initiatives included Hukou reform to enhance mobility and access to social benefits for 20% of the population, and local government budget reforms to improve transparency and financial oversight.

Concurrently, China's anti-corruption campaign intensified, with over 4,000 disciplinary cases reported in 2024, targeting high-ranking officials across sectors like finance, energy, and education. Notable investigations involved former officials in the central bank and oil industry. The military also faced scrutiny, with a renewed anti-corruption drive leading to the dismissal of several top military officials.

Foreign Affairs

Following its mediation efforts in the Russia-Ukraine conflict in 2023, China appointed Li Hui as its special envoy for Eurasian affairs, focusing on facilitating peace talks in Ukraine. In March 2024, Li Hui met with officials in Kyiv, Moscow, and Brussels, emphasizing dialogue and de-escalation. In April 2024, China and Brazil issued a joint statement on Ukraine, calling for a ceasefire and renewed peace negotiations. China’s peace efforts culminated in its participation in the Friends of Peace summit in Geneva in September 2024.

In the Gaza conflict, Zhai Jun, China’s special envoy to the Middle East, visited Egypt, Qatar, and Saudi Arabia in November 2024, engaging with Arab League members and mediating humanitarian corridors for aid to Gaza.

At the G20 Summit in Rio de Janeiro in November 2024, President Xi Jinping proposed reforms to economic, trade, financial, and environmental systems with a focus on inclusivity, equity, and sustainability (G20 Leaders’ Declaration, 2024). The Global Development Initiative (GDI) expanded to include 82 participating countries, emphasizing poverty alleviation, infrastructure development, and digital economy initiatives. Meanwhile, the Global Security Initiative (GSI), promoting collective security, garnered support from 119 nations, while the Global Civilization Initiative (GCI) was institutionalized with the UN's adoption of an International Day of Dialogue Among Civilizations in June 2024 (UN Resolution, June 2024).

China’s comprehensive strategic partnership with Russia deepened, as demonstrated by three high-level meetings between President Xi Jinping and President Vladimir Putin in February, July, and November 2024.

China’s relations with Europe advanced significantly. During President Xi's visit to Europe in May 2024, China marked 60 years of diplomatic ties with France, signing agreements in areas such as renewable energy and high-tech industries. In bilateral meetings with leaders from Germany, the UK, Spain, and Italy, discussions centred on enhancing free trade, multilateralism, and supply chain resilience (Ministry of Foreign Affairs of China, May 2024). China also strengthened ties with Eastern Europe, including Serbia and Hungary, through infrastructure investments and trade agreements.

China deepened its engagement with ASEAN, the Lancang-Mekong Cooperation framework, and South Asia. Key achievements included the successful conclusion of the China-ASEAN Free Trade Agreement (FTA) 3.0 upgrade in August 2024.

In 2024, tensions with the Philippines escalated, primarily due to disputed maritime claims in the South China Sea. China accused the Philippines of increasing military cooperation with the United States in the region, while the Philippines condemned China’s growing presence and assertiveness around contested islands and waters. This led to several confrontational incidents between Chinese and Philippine vessels, heightening the already strained relations between the two countries.

In 2024, US-China diplomacy saw significant efforts to stabilize relations amid ongoing tensions. High-level engagements included strategic communication between Wang Yi and Jake Sullivan in August and a meeting between President Xi Jinping and President Joe Biden at the APEC Summit in Lima on November 16, where they agreed to enhance cooperation on climate change and economic issues. Military dialogues were partially restored, with the US-China Defense Policy Coordination Talks resuming in January and maritime security consultations taking place later in the year. Despite these efforts, challenges persisted, including disputes over Taiwan and trade, as well as China’s defense minister declining a meeting with US counterparts in November, underscoring the fragile state of bilateral relations.

The Beijing Summit of the Forum on China-Africa Cooperation (FOCAC) in October 2024 strengthened China's ties with Africa, featuring agreements on debt relief, healthcare, and digital infrastructure. In Latin America, Xi visited Brazil and Argentina in November 2024, signing trade and investment deals to deepen economic integration with the region (FOCAC Final Declaration, 2024).

Military Domain

In 2024, China made substantial progress in modernizing its military, enhancing international security cooperation, and conducting strategic military exercises. The National Defense budget was officially increased by 7.2%, or $ 231.4 billion, making 2024 the ninth straight year of increased military spending. These efforts spanned advancements in military technologies, expanded international military partnerships, and a significant boost to its nuclear arsenal.

A major development was the restructuring of the People’s Liberation Army (PLA) in April 2024, when the PLA’s Central Military Commission (CMC) dissolved the Strategic Support Force (SSF) and created the Information Support Force (ISF). The Aerospace Force (ASF) and Cyberspace Force (CSF) were also established as distinct branches, reporting directly to the CMC. The ASF and CSF retain their roles in space and cyber operations, while the ISF focuses on enhancing joint information support capabilities crucial for modern warfare.

At the Zhuhai Air Show in November 2024, China unveiled new combat aircraft, including the J-20 interceptor, the J-35A stealth fighter, and the H-20 stealth bomber, which boasts a 16,000 km range, extending China’s reach into the South Pacific. Additionally, China demonstrated advanced drone combat swarms and counter-drone systems, highlighting their strategic relevance, especially regarding Taiwan. The successful test of an Intercontinental Ballistic Missile (ICBM) in August 2024, capable of striking the U.S. mainland, underscored China’s growing long-range strike capabilities.

On the international stage, China strengthened its defense ties through joint military exercises, including the Joint Sea-2024 naval drills with Russia in July 2024 and strategic air patrols over the Bering Sea in September 2024. Despite tensions with the US, China resumed high-level military communications in October 2024, including Defense Policy Coordination Talks, aiming to prevent misunderstandings. Additionally, regional joint drills with countries like Singapore, Thailand, and Cambodia in June 2024 focused on non-traditional security areas, including anti-terrorism and humanitarian aid.

China also emphasized its military diplomacy through the participation of the People's Liberation Army Navy (PLAN) hospital ship "Peace Ark" in the Mission Harmony-2024 exercise in May 2024, which involved anti-terrorism and anti-piracy training.

In nuclear strategy, China accelerated the expansion of its nuclear arsenal, increasing its stockpile from 410 warheads in 2023 to 500 in December 2024. This rapid growth aligns with China’s broader goal to modernize its military forces and bolster its strategic deterrence capabilities.

To further improve military readiness, the PLA introduced an integrated training model in March 2024 designed to enhance joint operations across military branches, improving combat efficiency. This included the Joint Sword-2024B drill in the Taiwan Strait in October 2024, reinforcing China's stance on territorial integrity. The PLA Navy continued its fleet modernization, strengthening China’s maritime presence both regionally and globally, while China’s defense cooperation with Russia deepened through joint naval and air exercises, highlighting their growing strategic military alliance.

Economic Overview

According to data from China's National Bureau of Statistics released in January 2025, China grew 5% year-on-year in 2024, with its gross domestic product reaching $18.77 trillion. China's population stood at 1.408 billion at the end of 2024, a decline of 1.39 million from the previous year.

Due to sluggish domestic demand and ongoing struggles in the property sector, the government introduced policy measures, including monetary easing and fiscal support. Notably, in June 2024, the People’s Bank of China (PBOC) cut the reserve requirement ratio for banks, aiming to boost liquidity in the market (People’s Bank of China, June 2024 Policy Announcement). However, the effectiveness of these policies has been constrained by weak credit demand and low consumer confidence, especially due to concerns about job security and corporate downsizing (China Economic Outlook Reports, 2024).

Despite these challenges, the government has focussed on high-quality growth through technological innovation, industrial upgrading, and improvements in total factor productivity. A notable development was the unveiling of the AI Plus Initiative in April 2024, which aims to integrate artificial intelligence across various industries to enhance efficiency and drive innovation. Additionally, the government has prioritized fostering a more competitive innovation ecosystem, including expanding funding for research and development by 12% compared to 2023 (Ministry of Science and Technology, Annual Report 2024).

Externally, China is grappling with rising trade investigations, with a notable increase in cases in industries such as steel and chemicals. For example, in August 2024, the European Union initiated an anti-dumping investigation into Chinese solar panels (European Commission Trade Announcement, August 2024). The government's response includes pursuing negotiations through the WTO, retaliatory measures, and increasing overseas investments to counteract these challenges (Ministry of Commerce, 2024). Geopolitically, companies are adapting their overseas strategies to mitigate risks linked to US-China tensions, with regions like Mexico and Southeast Asia gaining appeal as alternative manufacturing hubs (International Trade Reports, 2024).

Since Donald Trump began imposing tariffs on Chinese imports in 2017 to reduce the US’s dependence on China, China's dominance in global manufacturing has only grown. In 2024, China reported a record trade surplus of nearly $1 trillion, three times its 2018 surplus (China’s Customs Administration, 2024). It now accounts for 27% of global industrial production, a share expected to rise to 45% by 2030 (United Nations Industrial Development Organization, 2024).

The re-election of US President Donald Trump in November 2024 has heightened uncertainty regarding potential tariffs and China’s trade status. In response, China has doubled down on its efforts to internationalize the yuan, including the establishment of new offshore yuan trading hubs in Dubai and Johannesburg in October 2024, as part of its broader strategy to reduce reliance on the US dollar (People’s Bank of China, October 2024 Announcement).

Fiscal measures approved by the National People’s Congress in March 2024 included increasing the quota for local special bonds to 4 trillion yuan and restructuring local government debt (National People’s Congress Budget Approval, March 2024). These measures aim to reduce hidden debts and ensure better fiscal management. The Ministry of Finance also emphasized a "zero tolerance" policy for new hidden debts, reinforced by inspections conducted in September 2024, to prevent future financial risks (Ministry of Finance, September 2024 Report).

On September 24, 2024, Chinese leaders announced a massive $ 1.07 trillion stimulus package, equivalent to 6% of GDP, to revitalize the property sector, boost consumption, and revive capital markets. Key measures included mortgage-debt servicing cuts, bond issuance, stock market facilities, and capital for state-owned banks.

In addition, China sought to stimulate consumption through targeted measures, including a nationwide consumption promotion campaign launched in July 2024, offering subsidies for green and smart appliances (Ministry of Commerce, July 2024 Announcement). These efforts are part of a broader strategy to rebalance the economy towards consumption-driven growth while addressing structural issues such as regional economic disparities (Development Research Centre of the State Council, 2024).

Implications for India

With the 21 October 2024 agreement on disengagement and patrolling between India and China, there is a return of cautious optimism. For India, there is need for a pragmatic approach to manage the ongoing trade imbalance, which reached $85 billion in 2023. While India must reduce its dependency on Chinese imports in critical sectors, especially pharmaceuticals, electronics, and renewable energy, it also cannot entirely decouple from China due to its integral role in global supply chains. India must, therefore, strategically engage with China, particularly in sectors like energy transition technologies and global value chains, while prioritizing domestic manufacturing capabilities, such as semiconductor production, to reduce reliance on Chinese imports.

India should also focus on building strategic capacity in critical sectors to compete globally. This includes fostering domestic champions in areas like defence, space, and electronics, with policy support and incentives. Investments in semiconductor manufacturing and local production of solar equipment are essential to decreasing India’s dependency on China. Additionally, India must continue to engage with global powers like the US, Japan, and the EU to diversify its supply chains and reduce vulnerabilities. However, India’s strategic autonomy should remain a key priority, balancing engagement with China with partnerships that align with India’s long-term economic and security interests.

In October 2024, a meeting between Prime Minister Modi and President Xi Jinping on the sidelines of the 16th BRICS Summit highlighted a shared interest in addressing critical global issues. Both leaders issued statements emphasizing the need to strengthen communication, enhance mutual trust, and promote development aspirations.

Additionally, the 23rd meeting of Special Representatives for the China-India Boundary Question held in Beijing was a significant development in the ongoing diplomatic efforts. China's Special Representative, Wang Yi, and India's National Security Adviser, Ajit Doval, reached six points of consensus aimed at resolving the border issue. Both sides positively evaluated their progress in addressing border-related issues and reaffirmed their commitment to maintaining peace and stability in the border areas.

Prognosis for 2025

With the return of Donald Trump to the White House, the US-China competition is expected to intensify, particularly amid rising transatlantic tensions. China's economic outlook for 2025 appears challenging, with low growth projections and concerns over deflation. The government's priority seems to be managing domestic crises and external pressures, particularly from the US, rather than fostering consumer-driven growth. Any policy adjustments are expected to be marginal, unless triggered by unforeseen external events, such as increased US tariffs or significant social instability.

As the global race in artificial intelligence (AI) accelerates, China is determined to enhance its technological capabilities, particularly in semiconductor development and AI software. The country is investing heavily in boosting its computing power to stay competitive, despite mounting US restrictions on its access to advanced technology. With a target of achieving 300 exaflops of computing power by 2025, China’s efforts to expand its tech infrastructure will likely strain its economy, as it grapples with growing energy demands and limited access to crucial tech components.

China's trade surplus is projected to reach a record high in 2025, driven by surging exports. However, this surplus has contributed to imbalances with emerging economies. The US’s trade war tactics and tariffs are expected to further shift trade flows without altering China’s manufacturing dominance. More exports are likely to be routed through third countries to circumvent direct tariffs, complicating global trade dynamics.

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