{"id":11521,"date":"2025-02-11T08:30:00","date_gmt":"2025-02-10T22:30:00","guid":{"rendered":"https:\/\/testblogs.griffith.edu.au\/asiainsights\/?p=11521"},"modified":"2026-01-14T09:25:01","modified_gmt":"2026-01-13T23:25:01","slug":"china-in-asia-in-2025-a-reliable-rock-in-a-stormy-sea","status":"publish","type":"post","link":"https:\/\/testblogs.griffith.edu.au\/asiainsights\/china-in-asia-in-2025-a-reliable-rock-in-a-stormy-sea\/","title":{"rendered":"China in Asia in 2025 \u2013 a reliable rock in a stormy sea?"},"content":{"rendered":"\n

CHRISTOPH NEDOPIL<\/a> AND JEAN DONG<\/a> | 20-MINUTE READ |<\/p>\n\n\n\n

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Download PDF<\/a><\/figcaption><\/figure>\n\n\n\n

Introduction<\/h2>\n\n\n\n

We are living in an era of constant surprises and shifting power dynamics. From Trump\u2019s political resurgence and abrupt US trade shifts to the unravelling of global alliances, disruption has become the new normal.<\/p>\n\n\n\n

China, too, has delivered seismic shocks, upending assumptions about its economic trajectory, technological ambitions, and global influence. Once a powerhouse of growth, it now faces sluggish consumer demand, deflation, and a deepening real estate crisis. Yet, at the same time, it is driving breakthroughs in AI\u2014with DeepSeek challenging US dominance by producing open-source models that rival top Western AI systems at a fraction of the cost.<\/p>\n\n\n\n

The question is no longer whether disruptions will happen, but how to interpret them\u2014and seize opportunities. Just as evaluating a company requires weighing both assets and liabilities, understanding China demands a balanced view of risks and opportunities. This report takes an Asia-Pacific perspective, providing a strategic, holistic view of China\u2019s evolving role. Four key issues define the opportunities and challenges of understanding China: its growing global influence, green transition, technological advancements, and economic trajectory. How the region navigates these complexities\u2014grounded in sustainable development\u2014will determine whether it fosters peace and prosperity or faces rising tensions and instability.<\/p>\n\n\n\n

China\u2019s international clout and challenges<\/h1>\n\n\n\n

As the Trump administration aims to reshape trade, investment, security, and sustainable development governance with the world, is China emerging as the preferred partner for Asia, the Pacific, and beyond? Has the US \u201cisolationism will help Beijing\u201d by enabling stronger partnerships with nations disillusioned by erratic US leadership as noted by Western analysts?[1]<\/a><\/p>\n\n\n\n

In last year\u2019s Griffith Asia Pacific Strategic Outlook, we highlighted China\u2019s expanding\u2014and often underreported\u2014influence in mini-lateral and multi-lateral forums. This has been  evident in its leadership role across key platforms such as  the Shanghai Cooperation Organization (SCO), the Belt and Road Initiative (BRI), the Global Development Initiative (GDI),the Regional Comprehensive Economic Partnership (RCEP) and BRICS. China\u2019s institutionalisation of its global power in these alternative multilateral forums\u2014<\/strong>outside Western influence\u2014<\/strong>continued to accelerate in 2024. Under Russia\u2019s 2024 BRICS chairmanship, the bloc expanded significantly, welcoming Egypt, Ethiopia, Iran, and the UAE at the 16th BRICS summit. In a move that surprised many Western observers, UN Secretary-General Guterres attended and underscored BRICS’ growing role in global cooperation. [2]<\/a> Indonesia officially joined BRICS in January 2025, while Nigeria and Belarus are now on track for full membership, signal the bloc\u2019s expanding influence. Meanwhile, the SCO took a major step by admitting Belarus\u2014<\/strong> the first European nation to join.[3]<\/a><\/p>\n\n\n\n

China has bolstered bilateral ties across the Asia-Pacific. With Vietnam, it announced two new railway lines to boost trade, which surged nearly 20% in 2023-2024 to surpass $200 billion. [4]<\/a>[5]<\/a>  China and Indonesia held their inaugural Senior Official Meeting (2+2 SOM) discussing counterterrorism cooperation.[6]<\/a>  In December 2024, a high-level dialogue between Japan and China eased some tensions, leading to relaxed visa rules for Chinese tourists and an agreement to hold the Japan-China Security Dialogue, despite ongoing tensions in the South China Sea and Fukushima radioactive water release issue[7]<\/a>. China also engaged with the Pacific nations, hosting five heads of state (Samoa, Fiji, Nauru, Solomon Islands, and Vanuatu) on separate occasions in Beijing.[8]<\/a> Finally, in January 2025, China mediated a ceasefire agreement in Myanmar, supporting both local and its own border security and economic interests.[9]<\/a><\/p>\n\n\n\n

China has escalated military and “grey zone” operations. Clashes between the Chinese Coast Guard (CCG) and Philippine ships in the South China Sea resulted in what officials called the \u201cmost violent\u201d and \u201cmost dangerous\u201d encounters, forcing a Filipino withdrawal from the Sabina Shoal.[10]<\/a> It also escalated military operations around Taiwan, simulating significant military engagement with large-scale drills like “Joint Sword-2024B” involving the People\u2019s Liberation Army and the CGG.[11]<\/a><\/p>\n\n\n\n

Looking ahead to 2025, US-China relations may, paradoxically, improve as Beijing tailors its approach to Trump\u2019s deal-making tendencies over ideological conflicts. Meanwhile, China will present itself as a reliable partner to regional and global allies, emphasising its peacemaker role in Myanmar while avoiding US-sensitive conflicts like Israel-Gaza. Multilaterally, China will deepen its influence, using the fifth Belt and Road Forum and 2025 APEC Summit as global litmus tests. It will also fill US vacuums in UN institutions, strengthening its global leadership. However, this diplomatic outreach will not slow China\u2019s military assertiveness. It will continue fortifying the South China Sea, making territorial opposition more costly, while testing US responses through \u201cgrey zone\u201d operations\u2014blending coercion with calculated restraint.<\/p>\n\n\n\n

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RECOMMENDED ACTIONS:<\/strong><\/h4>\n\n\n\n
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  1. Establish Clear Red Lines on Sovereignty<\/strong>: Establish clear and enforceable boundaries against China\u2019s territorial ambitions to protect national sovereignty and self-determination. This approach should go beyond national security to uphold the legitimate self-governance rights of affected nations, countering China\u2019s narratives of Western dominance while mitigating risks posed by shifting US territorial policies.<\/li>\n\n\n\n
  2. Enhance Multilateral Engagement<\/strong>: Strengthen forums such as RCEP and APEC as key platforms for multilateral cooperation that represent more balanced interests in the Asia-Pacific region. Meanwhile track and analyse China\u2019s engagement at multilateral, mini-lateral, and bilateral levels \u2014across trade, investment, defense, aid, standards, and trade barriers \u2014 to inform effective responses.<\/li>\n\n\n\n
  3. Foster Smart Collaboration<\/strong>: Leverage China\u2019s ambition to expand its multilateral and mini-lateral engagement to encourage greater cooperation on climate change, inclusive growth, and peacekeeping. Strengthen collaboration with Chinese policymakers, businesses, and researchers to drive meaningful actions.<\/li>\n<\/ol>\n<\/div>\n\n\n\n

    Green development<\/h1>\n\n\n\n

    China continued to solidify its leadership in various green technology. The developments in EVs and renewable energy have likely received most attention (also noted in our last year\u2019s report), supported by ongoing technological dominance, stabilising costs from stricter manufacturing standards and reduced export rebates. To counter Chinese dominance, import restrictions have been put in place, such as Brazil\u2019s increased tariffs on photovoltaic modules (9.6% to 25%) and Europe\u2019s tariffs on EV imports (the US has also closed loopholes in solar panel imports). Nevertheless, Chinese leadership in EVs has allowed BYD, a Chinese manufacturer, to surpass Tesla as the world\u2019s largest EV producer in deliveries in Q4 2024, while German automakers lost nearly half their Chinese market share over the past five years (26% to 14%) due to missed EV transitions (see Figure 1).[12]<\/a><\/p>\n\n\n\n

    Figure 1: German Automakers are losing out in China\u2019s EV Shift<\/strong>[13]<\/strong><\/a><\/p>\n\n\n\n

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    Source: Authors<\/figcaption><\/figure>\n\n\n\n

    Importantly, China also invests in other green technologies, accelerating global competition and providing economic and green transition opportunities, foremost green hydrogen, green steel, and transition minerals.<\/p>\n\n\n\n

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    China\u2019s green hydrogen opportunity<\/h3>\n\n\n\n

    China, the world\u2019s largest hydrogen producer and consumer[14]<\/a>, accounts for a third of global production, with demand exceeding 33 million tons annually[15]<\/a>. It also leads in alkaline electrolyser production, holding 50% of global capacity. However, hydrogen production remains fossil fuel-dominated (80.3%) and industrial byproducts-based (18.5%), with green hydrogen at less than 0.1%. Expanding green hydrogen is crucial for China\u2019s carbon neutrality goals, especially in chemicals, steel, and heavy transport. High costs and limited infrastructure pose challenges.<\/p>\n\n\n\n

    To address this, China\u2019s National Development and Reform Commission (NDRC) and National Energy Administration issued the Hydrogen Energy Plan (2021-2035) [16]<\/a>. By 2025, China aims to produce 100,000\u2013200,000 tons of green hydrogen annually and deploy 50,000 hydrogen fuel cell vehicles (HFCVs). By 2030, renewable hydrogen should support decarbonisation, with a greater role targeted by 2035. Regional plans complement national efforts. Inner Mongolia and Gansu aim for over 1 million tons of renewable hydrogen annually by 2025, surpassing national goals but still only reaching about 5% green hydrogen share. Infrastructure projects, including Sinopec\u2019s 400-km hydrogen pipeline and a proposed 737-km line in Hebei, address supply-demand mismatches. Sinopec plans a 6,000-km hydrogen network by 2050, with demand expected to reach 100-130 million tons by 2060, mostly from green hydrogen. [17]<\/a> Policies have spurred $10.33 billion in hydrogen investments and price reductions. China\u2019s largest green hydrogen complex supplies at 35 yuan\/kg ($4.86\/kg), nearing diesel competitiveness for trucking. [18]<\/a><\/p>\n\n\n\n

    However, China still depends on imports, particularly from Japan and South Korea, for critical technologies like fuel cells, storage, and refuelling stations. Geopolitical tensions and tech transfer restrictions could slow progress, but collaboration opportunities in green hydrogen remain.<\/p>\n\n\n\n

    China\u2019s green steel expansion<\/h3>\n\n\n\n

    By 2024, China had installed electric arc furnace (EAF) to produce green steel with a capacity of 151 million tonnes per annum (mtpa)[19]<\/a> and had approved an additional 7.1 million tonnes capacity in the first half of 2024[20]<\/a>. This capacity is theoretically equivalent to the combined steel production of the US and Japan in 2023 and about 15% of China\u2019s total steel production in 2024 (up from 10.1% in 2023[21]<\/a>). With decreasing steel demand (set to decline by 20% of more) [22]<\/a> and a rapidly aging steel manufacturing base (78% of China’s steel assets will need to be retired or refinanced by 2030), China has a unique window for accelerating its transition to low-carbon steelmaking technologies.<\/p>\n\n\n\n

    At this time, however, coal-based steel remains more cost effective[23]<\/a>. To succeed in the green steel transition, carbon prices over US$50 per ton of CO2 (currently the carbon price is about US$15 per ton of CO2 in China and US$86 in the EU) and green hydrogen price below US$2.80 per kg are needed as well as substantial capital investment of at least CNY1.6tn (USD220bn) by 2050 to build out capacity[24]<\/a>. To address these concerns, Hebei province, which accounts for 11% of global steel production, has released credible guidelines for transition finance in the iron and steel industry in 2024[25]<\/a>, aiming to catalyse green investments. Further in support of China\u2019s green steel transition are two carbon price developments:<\/p>\n\n\n\n