Global Economic Update – June 25, 2025

China’s Economic Pivot: Expanding Trade and Technology Openness Amid Global Fragmentation 

Introduction

China sparked global interest on June 25, 2025, at the World Economic Forum’s Summer Davos event in Tianjin, when Chinese Premier Li Qiang presented the country’s new phase of openness to the international market. Against the backdrop of rising geopolitical tensions and fears of supply chain fragmentation, China’s accelerated de-risking from the West, and broader ambitions to expand new trade relations and technological partnerships. Ultimately, the new openness theme seeks to position China further as a core component of global economic activity, notably in the space of advanced technology, namely artificial intelligence and green energy.

Premier Li’s statements represented an overt effort to reposition China as we increasingly see it, as not just a “manufacture of the world”, it potentially acts as a consumer as well and as an innovator of technology and . China appears to be intent on embedding itself firmly into a new global supply chain ecosystem. What does this mean for global trade, competition in technology and currencies? In this post we intend to enumerate China’s development as seen and dissect the significance within the global economy, what new responses may arise from Western economies and emerging markets, if any.

1. China’s Strategy to Expand Trade Amid De-Risking

Nations in the West, mostly the Unites States and Europe, have spent much of the last few years trying to be less dependent on China-based manufactures, through de-risking. This has resulted in nearshoring, friend-shoring, and diversifying supply chains the globe over.

Interestingly, China is now actively contrasting this by:

Wider opening of its markets to foreign companies and investors.

Providing attractive trade terms to Global South countries, such as Africa, Southeast Asia, and Latin America.

Initiating new bilateral and regional trade agreements to increase cross-border trade flows.

China’s aim is to become an integral economy trilaterally global economy, to make full decoupling nearly impossible. According to Li Qiang: “China will remain a stabilizer in global trade and continue to promote mutual benefits by openness.”

This this policy may provide multinational corporations with the opportunity to take stock of how much and how quickly they are diversifying their supply chains, if China is able to offer greater departure from regulations and more access to its markets.

2. Technological Openness: China as a Global AI Powerhouse

Li’s announcement included a stunning proposition from China, namely that it intends to lead the next wave of technology innovation, particularly artificial intelligence.

Key takeaways (not limited to):

Engagement with the emerging world to export Chinese AI platforms, particularly those among the likes of Alibaba and Baidu.

Cross-border cooperation in artificial intelligence through joint centres of research, and international AI governance.

Opening China’s fast trackway into quantum computing and semiconductor space to select international partners.

These developments are largely China’s own responses to rising restrictions in the technology space from the West, as well as ongoing sanctions on semiconductor technology led by the United States. China is looking to create a broader technology environment to create further “digital bridges” with countries within the non-Western bloc.

If there is indeed a rise of Chinese AI solutions, it may likely impact global technology standards overall and provide alternatives for emerging markets to Western technology companies such Google, Microsoft, and Amazon Web Services.

3. Currency Strategy: Boosting the Yuan’s Global Role

During a recent trip to Tianjin, Premier Li Qiang reiterated China’s commitment to increasing the international use of the yuan (renminbi), part of a long-term project to shift global reserves away from the U.S. dollar. There are several key developments already underway:

China will settle more cross-border trades in yuan, particularly with countries involved in the Belt and Road Initiative (BRI).
The People’s Bank of China is working on expanding the use of the digital yuan in international transactions.
New partnerships are expected with countries in North Africa and the Middle East that will strengthen yuan-denominated energy contracts.
These measures could contribute to the dollar’s downward trajectory but only gradually, especially since China’s economies in the Global South are gaining prominence.

Nevertheless, analysts believe that full de-dollarization is far-fetched and unlikely in the short term when considering the significant depth and liquidity of dollar markets.

4. Potential Global Impacts

China’s renewed approach to openness and economic diplomacy will have serious ramifications for the global economy:
a. Generating stability in supply chains
If China can offer a more transparent and predictable environment for trade, multinational corporations may consider slowing the pace of decoupling.
Lesser trade barriers may provide an opportunity to undo some of the recent trajectories of supply chain fragmentation.
b. Shifts in the tech ecosystem
Should the Chinese choose to export AI platforms and quantum computing (as they are proposing) it brings Western tech supremacy into question.
Chinese digital infrastructure may become more entrenched in emerging markets foreign policy decisions, which would create parallel technology ecosystems.
c. Diversifying currency
Greater use of the yuan in trade and finance could create a more multipolar system for global payments.
The yuan may be inviting for countries pursuing a reduction in dollar exposure as they conduct yuan-denominated agreements.

5. Western and Regional Reactions

The West has taken a measured approach to China’s new outreach:

The European Union has expressed interest in restarting trade talks, but the EU is wary of China’s barriers to market access and questions around data security.

The United States has taken a clear hard line, continuing to keep Chinese firms out of advanced semiconductors and important AI components.

Countries in Southeast Asia, Africa, and the Middle East have largely been receptive to China’s advances. For these countries, China’s broadening market access and tech neighbourhood are opportunities for greater economic growth while diversifying from too heavy of a reliance on Western partners.

Japan, South Korea, and India are in a careful balancing act, trying to ask what can they gain from China’s newfound openness while maintaining their strategic relationship with the United States.

6. Long-Term Strategic Outlook

The course of China’s economic shift seems to be an effort to re-establish China as an important center of importance in our economy. By working to enhance trade relationships, exporting advanced technology, and fostering a more diversified currency system into trade practices, it is attempting to change the distribution of global economic power.
If successful, China’s strategy could:
– Mitigate the impact of Western de-risking measures.
– Increase its reach in influence all across Asia, Africa and Latin America.
– Erode the market share of U.S.-alined financial systems over time.
But there are still several obstacles:
– Ensuing geopolitical tension and potential conflict with the U.S. and growing coalitions.
– The success of the yuan as a global currency requires substantial liberalization in financial systems and continued trust in Chinese monetary systems and processes.
– Questions related to intellectual property protection when discussing AI and tech collaboration, and relative ethical standards will require answers.

Conclusion

China’s announcements during the Tianjin World Economic Forum represent a clear strategic pivot in its foreign economic policy. In announcing a commitment to greater openness in trade and technology, China seeks to thwart Western attempts to shut it out of global economies and supply chains.

The ramifications of this pivot, however, will likely shift trade flows, spur innovation in technology competition, and diversify the global financial system. Cold and cautious attitudes from Western countries will linger for now, but a new world order is forming, and many emerging economies will likely embrace China’s appeal and direction. This creates a more complex and multipolar world.

As we move into the second half of 2025, it will be very interesting to see whether China can balance openness with control and whether there truly is a path for China’s strategy to fundamentally change the dynamics of power in the global economy.