China's Economic Policies and Their Global Implications
Since initiating market reforms in 1978, China has engineered one of history's most remarkable economic transformations. Sustaining an average GDP growth rate above 9%, the nation has not only lifted over 800 million people out of poverty but has fundamentally reshaped the global economic order (World Bank, 2024). This article provides a brief overview of developments in China, including its technological advancements, trade policies, and geopolitical strategies, and analyses their implications for the global economy.
China's Strategic Economic Expansion
China's ascension to global superpower status is not solely a result of economic growth but rather a meticulously crafted strategy centred on securing natural resources, expanding geopolitical influence, and leveraging economic interdependence. Moyo (2012) highlights China's systematic approach to securing essential resources—oil, gas, minerals, and arable land—as a foundation of its economic expansion. By 2012, China had surpassed the United States as the world's largest consumer of many key commodities, accounting for nearly 40% of global copper consumption and approximately 49% of global coal usage. This resource dominance has only intensified over the years, enabling China to dictate prices and supply chains, thereby consolidating its economic leverage.
At the heart of this expansion lies a sophisticated network of state-owned enterprises (SOEs). Operating as extensions of state policy, these entities strategically acquire foreign assets across the energy, mining, and agricultural sectors. Their operations transcend conventional market logic, instead serving as instruments of China's long-term strategic interests.
The Belt and Road Initiative and Infrastructure Investments
The Belt and Road Initiative (BRI), launched in 2013, is China's masterstroke in global development strategy. With investments surpassing $1 trillion, this vast network encompasses over 200 cooperation agreements across more than 150 countries and 30 international organisations (WEF, 2023). Infrastructure projects, which are often underwritten by resource-backed loans, enable China to gain preferential access to vast reserves of oil, cobalt, and rare earth minerals that are critical for technology production. The country has secured long-term supply agreements with resource-rich nations such as Angola, Sudan, and the Democratic Republic of Congo.
Environmental consciousness has emerged as a key component of the BRI's evolution, marked by the 2020 BRI Green Development Coalition (BRIGC). China's position as the world's leading renewable energy producer strengthens this initiative, with substantial investments across solar, wind, battery, and electric vehicle technologies creating a comprehensive green technology ecosystem.
Trade Policies and Global Economic Repercussions
China's trade policies have significantly changed in recent years, particularly in response to the US-China trade war. The Phase One trade agreement signed in 2020 marked a temporary truce, but tensions remain high. President Trump's administration is expected to escalate the trade war, following the announcement of a 10% Â additional tariff on imports from China which has led to China placing counter tariffs on US imports, including a 15% tariff on imports of coal and liquified natural gas from the US.
On the other hand China has increased its regional influence through participation in the Regional Comprehensive Economic Partnership (RCEP), strengthening its economic ties with Asia-Pacific countries and creating a new trade bloc that accounts for nearly 30% of global GDP. Moreover, China's influence extends beyond direct investment into currency and trade. The push for the renminbi's internationalisation (RMB) and the establishment of the Asian Infrastructure Investment Bank (AIIB) challenge the U.S.-led financial order. By diversifying trade away from dollar dependency, China will gradually reshape global financial structures.
The Technological and Industrial Transformation
The "Made in China" (MIC 2025) state-led industrial policy aims to reduce reliance on foreign technology, promote domestic innovation, and transform China into a global leader in high-tech industries. The three-step strategy consists of:
1.     Making China a strong manufacturing country by 2025
2.     Competing with other manufacturing countries by 2035
3.     Transforming China into a manufacturing superpower by 2049
Central to China's ascent is its emphasis on technological innovation and industrial modernisation. The country has made significant strides in semiconductors, green energy, 5G, quantum computing, and AI, positioning it as a formidable competitor to the United States and Europe in the global tech race.
A notable example is the emergence of DeepSeek, a Chinese AI language model demonstrating capabilities comparable to Western counterparts like ChatGPT. Developed with a reported investment of $6 million—significantly lower than OpenAI's estimated $100 million for its most advanced ChatGPT version—DeepSeek underscores China's rapid technological advancements. This development has contributed to volatility in global tech markets, with companies like Nvidia experiencing market fluctuations, including a close to $600 billion dip in market value upon DeepSeek's launch.
China's evolving economic environment has prompted multinational corporations to reassess their investment strategies. Volkswagen, for instance, is reportedly open to selling its Osnabrück factory in Germany to a Chinese buyer, reflecting China's growing influence in the global automotive industry (Reuters, 2025). Additionally, Volkswagen has expanded its partnership with China's SAIC Motor, extending their joint venture until 2040 (Volkswagen Group, 2024).
The Expansion of China's Space Capabilities
Early 2025 marked a pivotal moment in China's space ambitions with the advancement of the Thousand Sails megaconstellation project. Supported by an ambitious schedule of Long March 6 rocket missions throughout 2025, this satellite network aims to challenge SpaceX's Starlink in the race for global internet coverage, demonstrating China's commitment to competing in frontier technologies.
Conclusion
China's position as the world's second-largest economy carries profound implications for the global economic order. Its strategic control over essential resources shapes global inflation and supply chain dynamics, while its state-led capitalism presents an alternative development model for emerging economies. China's increasing dominance in technology production, particularly in rare earth processing and 5G networks, increasingly challenges Western technological hegemony.
China's market presents a complex interplay of opportunity and risk for investors. While its leadership in high-growth sectors—AI, green technology, and space infrastructure—offers compelling growth potential, risks remain significant due to state intervention in business operations, fluctuating regulatory environments, and geopolitical tensions, particularly concerning U.S. trade policies. Effective strategy demands balanced exposure to high-growth sectors, prudent risk management through diversification, and constant vigilance regarding regulatory and geopolitical developments that could reshape market dynamics.
Comments