Geographies in Depth

China at Davos 2025: Continuing importance to global growth

China's economic transformation and its evolving role in the global economy emerged as strong themes at Davos 2025

China's economic transformation and its evolving role in the global economy emerged as strong themes at Davos 2025

Kaiser Kuo
Writer, Forum Stories
This article is part of: World Economic Forum Annual Meeting
  • China showcased its transition from traditional growth drivers to a new model centered on domestic consumption, advanced manufacturing, and green transformation, while emphasizing continued commitment to opening up amid geopolitical tensions.
  • The green transition, particularly in electric vehicles and renewable energy, emerged as a key driver, with the halls of the Congress Centre buzzing with discussions of China's latest breakthrough in AI — the DeepSeek model.
  • Regional leaders, particularly from ASEAN, emphasized pragmatic engagement with both China and the United States - but geopolitical uncertainty casts a shadow.

China's economic transformation and its evolving role in the global economy emerged as strong themes at Davos 2025, with discussions highlighting both the challenges and opportunities ahead as the world's second-largest economy pursues high-quality development amid heightened geopolitical tensions.

The stark contrasts in perspectives on China's economic trajectory and its place in the global order underscored the complexity of the current moment, even as Chinese leadership emphasized continued opening up and international engagement.

3 trends shaping China's development

In a special address that set the tone for China's presence at the forum, Vice Premier Ding Xuexiang reaffirmed China's commitment to economic opening and highlighted three major trends shaping China's development: the advancement of high-quality growth, accelerating green and low-carbon transition, and reform and opening up moving toward a higher level.

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"China's door of opening up will not be closed but will only open wider, and our business environment will only get better," Ding emphasized, addressing international concerns about China's economic direction. He highlighted that China's overall tariff level has been reduced to 7.3% and pointed to expanded opening in sectors like telecommunications, internet, education, culture, and medical services.

The urgency of maintaining global economic engagement was a recurring theme. Malaysian Prime Minister Anwar Ibrahim, speaking as the incoming ASEAN chair, offered a perspective that captured the attitudes of many regional leaders who feel pressured to choose sides as US-China competition heats up: "We engage strongly with the United States traditionally. We will continue to do so,” he noted, before questioning the singular focus on China as a source of regional tension: “China is an important neighbour,” he said. "We have excellent relations with Singapore. We still have border issues with them. We have excellent relations with Thailand... But why is it that we must then single out China as an issue?"

China actively managing multiple transitions

What emerged at Davos was a picture of China actively managing multiple transitions — from traditional to new growth drivers, from high-carbon to green development, and from basic to advanced manufacturing — all while navigating an increasingly complex international environment.

China's economic resilience and transition garnered significant attention. Zhu Min, deputy managing director of the IMF, described how China is moving away from its traditional growth model based on infrastructure investment, exports, and real estate — all of which are suffering diminishing returns — toward new drivers. "Domestic consumption is number one. Number two, make sure Chinese manufacturing becomes stronger... The third is green transformation," he explained, outlining the path forward.

China's evolving role in global industry

The electric vehicle sector emerged as a prime example of China's evolving role in global industry. Pan Jian, co-chairman of Chinese EV battery giant CATL, emphasized the need for global collaboration: "It's not going to be a one-country effort in terms of EVs. It's going to be a global effort." He highlighted China's success in fostering a robust EV ecosystem through what he called a "perfect marriage between the public and private sectors," while noting that software integration has been crucial to China's EV success: "In China, we no longer call them EVs; we call them EIVs — where the 'I' stands for 'intelligent.' The 'I' is what truly makes the difference. Without the intelligence aspect, EV penetration in China would never have exceeded 30%."

It's not going to be a one-country effort in terms of EVs. It's going to be a global effort.

Pan Jian, co-chairman of CATL

AI: China's latest breakthroughs

The manufacturing transition was particularly evident in discussions about smart factories and industrial AI adoption. The halls of the Congress Centre buzzed with discussions of China's latest breakthrough in artificial intelligence — the DeepSeek model, which gained attention not only for its exceptional performance in reasoning tasks but also for its remarkably low training costs. That China launched such a sophisticated Large Language Model despite strict technology export restrictions underscored the country's determination to advance in frontier technologies. In a session on manufacturing transformation, Siemens CEO Roland Busch highlighted China's rapid advancement: "I was in 2014 at Tsinghua University... it was basic. In 2019 it was already equal to what we did in Europe and the US. And actually, it's full top notch what China is doing there in manufacturing."

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Geopolitics casts a shadow

However, geopolitical tensions cast a shadow over discussions. The recent US Department of Defense designation of CATL as a "Chinese military company" highlighted the challenges ahead for Chinese companies operating globally. While Chinese officials and business leaders consistently emphasized openness and collaboration, there was clear recognition of the need to navigate an increasingly complex international environment.

Bonnie Chan, CEO of Hong Kong Exchanges and Clearing, pointed to signs of renewed international investor interest in Chinese markets following recent policy measures: "Immediately after the stimulus package was announced, in the short course of two weeks, the Hong Kong stock exchange broke records three times in terms of average daily trading volume."

Yet questions about consumption and domestic demand persist. As Chan noted, "The reason that we are seeing consumption being a little anaemic in China is because people are saving... But I don't think that's a huge issue because I prefer saving and not consuming to borrowing and consuming."

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While sessions on China at Davos 2025 may not have resolved all uncertainties about the country's economic trajectory, they highlighted China's continued importance to global growth and its determination to pursue economic transformation while maintaining international engagement. The discussions emphasized that despite heightened global tensions, the scale and interconnectedness of China's economy make collaboration essential for addressing global challenges from climate change to technological advancement.

What emerged was a consensus that while the path ahead involves complex challenges, there remains substantial room for productive engagement. As Vice Premier Ding noted, "We should work together to narrow down division, reduce the risk of confrontation... because if the world becomes divided, the consequences would be unimaginable."

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