China, implementing a long-term and bold economic policy, initially designed forty years ago, using an outward-looking model of mildly aggressive economic policy, has today gained strength within the framework of the global economic order. At this stage, Beijing is using its means of power to install an order that puts China’s interests and values at the center.
Beijing understands the conflict of interests that this creates with the West. A West that is accustomed to treating the Chinese as the Boxers of 1899, sitting comfortably in the cinema chairs where it has recorded its own version of the Chinese national pursuit and efficiency.
China uses private entrepreneurship as a battering ram, without indifferent to the diffusion of the added value of businesses in society. In this way, it has created the largest middle class on the planet, within a few decades, and will continue to gain economic benefits from cooperation with Western countries, while at the same time preparing its economy, diplomacy, and military power to deal with ruptures and confrontations.
Economic Tools for International Power and Influence
By 2025, China is once again the world’s second-largest economy, and economic leverage is the most important tool of Chinese foreign policy. Beijing has launched initiatives aimed at both creating a China-oriented world and enhancing China’s power and influence globally. The initiatives aim to ensure that other countries gain good relations, market access, and significant investment from China. In return, countries support China’s interests by providing it with access to technology, natural resources, and global supply chains, as well as supporting China’s positions internationally.
China is working to become independent from Western markets
There are several structural challenges that reduce the growth potential of the Chinese economy, and growth has slowed. Challenges include weak consumer sentiment, an uncertain real estate market, high youth unemployment, and high levels of local government debt.
China has also faced a decline in domestic consumption since the pandemic. The authorities implemented multiple interrelated measures to stimulate the economy in the fall of 2024 and continued them in 2025. The measures are considered successful enough to boost household consumption, but not enough to prevent further slowdowns in growth in the coming years.
In 2024, the Chinese authorities set a growth target of around five percent. Structural economic challenges make China dependent on exports to achieve this growth target. China is therefore theoretically vulnerable to sanctions at a time of rising international tension, including over the war in Ukraine and the Taiwan issue. All this in theory and considering the worst-case scenario. But the Chinese have proven that they know how to exploit their superiority in numbers, so that by contributing individually but in collective actions, they can strengthen the state’s flexibility and efficiency. The authorities have set new and ambitious goals for China’s economy to become “risk-controlled and self-sufficient” by 2029. The structural challenges (roads, bridges, airports, trains and ports) are being addressed with frenetic speed and enviable efficiency.
By making China less dependent on Western markets and the West more dependent on Chinese goods and inputs, the government aims to reduce the country’s vulnerability to Western sanctions and thus give China more room to maneuver to promote its own interests.
State subsidies with strategic impact
State subsidies in high-tech sectors and strategic enterprises are constantly being designed, evaluated, and adjusted to increase China’s global competitive advantage and market share. Chinese state-subsidized production includes, among others, batteries, solar cells, and electric cars. Innovation is truly rampant today in the Research and Development (R&D) laboratories of both private and state-owned companies. Typical examples are the mini nuclear battery that can, for example, power a mobile phone for fifty years, the thorium nuclear power plant, which reduces risk and waste by up to 1000%, and the production of a diabetes treatment drug.
Along with information activities and aggressive diplomacy, China strategically uses subsidies to establish dominance in key supply chains, industry, and infrastructure. China can leverage such dominance to exert pressure on states and organizations. A typical example is the creation in three days of almost 3,000 special-purpose companies for the preferential absorption of coffee from Brazil, after the debilitating tax tariffs imposed by Trump on Brazil. A direct result of these measures is the announcement by Starbucks that it is withdrawing from the Chinese market, unable to face the competition. In this way, China has developed its domestic market but also supported Brazil, an ally member of the BRICS.
China exported five million electric cars to the global market in 2023 and the number is estimated to be about 25 percent higher in 2024. It is also the main manufacturer of batteries for every electric vehicle company on the planet. To protect European electric car manufacturers from the competitive advantages that state subsidies give Chinese manufacturers, the EU increased tariffs on Chinese electric cars in the fall of 2024. China’s continued subsidization of export production in key sectors will continue to create tension between Western and Chinese trading partners.
Infrastructure development
China aims to dominate key supply chains and secure import routes for critical minerals, energy, food and other mass goods that the country cannot produce on its own. Investment in physical and digital infrastructure abroad will ensure efficient Chinese supply chains.
China has ambitions for free access to global trade routes and is investing in ports and other maritime infrastructure worldwide. Such investment in Europe has increased significantly in recent years. The Chinese state-owned company COSCO Shipping has for years shown global interest in the development and creation of port infrastructure.
Redesigning the Approach to Doing Business Internationally
Military-civilian fusion aims to make relevant technology developed or acquired in the civilian sector available for military purposes. A large proportion of the technology that Chinese defense and security agencies seek to acquire is dual-use technology developed by commercial actors in the civilian sector but used in the defense arms sector.
US restrictions on technology exports have increased China’s interest in European technology suppliers. Chinese interest in acquisitions and investments in European technology companies will remain. This requires Chinese business actors to adapt to an investment climate of increasing restrictions and oversight from the West. China will need to work more strategically in host countries than in the past to secure investment contracts and win tenders. In addition, Chinese actors use a range of commercial and financial mechanisms to camouflage business activities that advance Chinese interests abroad. Chinese information and influence activities in Europe support both business policy and other Chinese interests.
Chinese information and influence activities in Europe
Chinese information and security services (KEST) conduct physical and digital operations against a wide range of targets in Europe, including political influencers, civil society actors, businesses, and research and development institutions. The operations are aimed at both traditional intelligence gathering, political influence, and industrial espionage.
Limited but Growing Presence in the Arctic
The China Polar Research Institute has a presence and activities in Svalbard that support China’s scientific and strategic goals in the region, but Chinese presence in the Arctic is still limited. Investments in Russian liquefied natural gas projects are the largest and most prominent Chinese projects in the region.
China has ambitions to enhance its presence, capabilities, and influence in the Arctic in the coming years, by strengthening cooperation with Russia on research and business activities, and increasing its national ice navigation capacity.
China, successfully implementing a policy of mutual benefit and cooperation, is becoming stronger every day within the framework of the global economic order.
