Why China Remains Undeterred About Opening Up Its Economy

China has reaffirmed its commitment to opening up its economy to the world in 2025, despite potential trade disruptions with the US under President-elect Donald Trump's administration.

The country's economy, the world's second-largest, has struggled to recover from the Covid-19 pandemic, facing challenges like a debt crisis in the housing sector, low consumption, and high youth unemployment.

Moreover, after Trump's inauguration, China needs to brace itself, as the president-elect has promised to hike tariffs on Chinese imports.

Chinese officials from the National Development and Reform Commission (NDRC) have vowed to press on with their plans to expand systemic openness, build a market-oriented business environment, and attract foreign investment in high-tech sectors like advanced manufacturing, energy saving, and environmental protection.

"No matter how the external environment changes, full of uncertainty, China's determination and actions to open up to the outside world will remain unchanged", NDRC officials said on Friday.

The country aims to shift its focus from high-growth-at-all-costs to sustainable development, as evident from its growing investment in renewable energy, with wind and solar power capacity reaching 40.5% of total power generation capacity last year, per AFP.

However, China's economic prospects may be impacted by Trump's trade policies, which could lead to a decline in exports, investment, and employment. A potential 60% tariff on Chinese imports could result in a 1-1.5 percentage point drag on China's economic growth over a 12-month period, according to J.P. Morgan.

Demographic challenges, such as an aging population, also pose a long-term threat to China's economic growth. The country has seen a significant increase in elder care facilities, reaching 410,000 in 2024, while childcare providers have also grown to 100,000, according to NDRC deputy director Zhao Chenxin.