The economy of the People’s Republic of China has undergone fundamental changes since the founding of the state in 1949. Today China is the world’s second-largest economy by GDP, one of the largest exporters globally, and a key player in the international trade system. China’s economic role in the global economy is defined by the fact that the country’s growth dynamics have a direct impact on the stability of global markets and supply chains. In addition, the country’s active industrial development creates technological rivalry among world powers. In this context, analyzing China’s economic strategies for adapting to both internal and external challenges become especially important for all participants in the global economic system — particularly for partner countries, one of which is the Republic of Kazakhstan.
The Current State of China’s Economy
At present, the People’s Republic of China is one of the world’s leading powers in terms of economic indicators. According to the World Bank, in 2024 the country’s nominal GDP reached $18.4 trillion with a growth rate of 5%, second only to the United States. According to IMF forecasts, China’s GDP will reach $19.23 trillion in 2025 with a growth rate of 3.9%. In terms of purchasing power parity (PPP), China’s GDP is twice the nominal figure, amounting to $34.66 trillion (as of 2023), making the country the global leader by this measure.
Overall, China’s impressive economic growth has been driven by investment and export-oriented manufacturing. For example, in 2014, the industrial sector accounted for 43.1% of the country’s GDP, while the service sector made up 48.3%. By 2024, the structure of the economy shows a clear dominance of the service sector (56.7% of GDP), with a significant share still held by industry (36.5%). Agriculture accounted for 6.8%.
Compared to developed countries, the Chinese economy still maintains a relatively high share of industry and an insufficiently large service sector (for instance, in the U.S., the service sector accounts for 77% of GDP). These figures indicate that China’s economic model is in a transitional phase. It is shifting from an industrial model to a post-industrial one, reducing dependence on exports and thereby making economic growth more sustainable.
The state program “Made in China 2025”, introduced ten years ago, envisions China attaining leadership in key technological sectors — from battery and electric vehicle production to high-speed rail design and aircraft manufacturing.
An analysis of the main growth sectors of the economy shows that the primary driver is high-tech manufacturing, which includes the production of industrial robots, new energy vehicles (NEVs) — such as electric and hybrid cars — as well as semiconductors. For instance, more than half of all electric vehicles sold globally were purchased in China. Additionally, China is responsible for processing about 60% of the world’s lithium — a key metal for battery production.
The digital economy is also developing rapidly, driven by the growth of cloud technologies, big data, electronic payments, e-commerce, and telecommunications. The fintech sector is expanding alongside the development of digital payment platforms such as Alipay and WeChat Pay, which now cover the majority of China’s population. In 2023, the mobile payment penetration rate in China reached 86%.
Digitalization and industrial modernization have contributed to increased production of innovative goods, enabling the digital sector to account for 36.5% of GDP. Investments in green energy, electric vehicles, and semiconductors have strengthened China’s position in global technological competition, while the growth of IT product exports confirms the scale of the country’s industrial transformation.
Reducing regional disparities between China’s eastern and western regions remains a top priority. The coastal provinces are developing faster due to access to ports and transportation infrastructure, while the western regions are limited by geography and demographics. Despite government efforts — such as the “Go West” strategy — the economic gap persists.
Monetary and currency policy also plays an important role in China’s economy. The People’s Bank of China follows a moderately flexible monetary policy, using a variety of tools including open market operations, adjustments to the reserve requirement ratio, and interest rate regulations to maintain monetary and credit stability. Overall, there is a strong focus on supporting the real economy, including small and medium-sized enterprises, stimulating consumer demand and investment, and advancing the development of the digital yuan.
Another important aspect of China’s monetary policy is reducing its dependence on the U.S. dollar, which includes expanding the use of the yuan in international transactions and strengthening its role in the global financial system. For example, in 2010, the dollar accounted for around 80–85% of China’s cross-border settlements, whereas today that figure has dropped to 40–45%. At the same time, the share of the yuan in global transactions has increased from 2% in 2021 to more than 7% in 2025.
Based on the above, it is clear that China is a central player in the global economic system, demonstrating stable and sustained growth. Its GDP — both in nominal terms and by purchasing power parity — places the country alongside the world’s leading economies. The shift from an industrial to a post-industrial model, characterized by the expansion of the service sector, growth in high-tech industries, and rapid digitalization of economic processes, signals a structural transformation aimed at long-term sustainability. Strategic investments in technology and digital infrastructure have strengthened China’s global competitive advantage, while reforms in monetary and currency policy have enhanced macroeconomic stability and contributed to the internationalization of the yuan.
Risks and Challenges for China’s Economy
China’s economic trajectory reflects a complex interplay of modernization, diversification, and strategic state planning, making it a key player in shaping the future of the global economy. Nevertheless, at its current stage of development, China faces a range of complex challenges stemming from both internal structural factors and external economic constraints.
Among the main risks to China’s economy, demographic decline stands out. In 2024, the population decreased to 1.408 billion (a drop of 1.39 million), which limits the labor force, weakens consumption, and strains the sustainability of the pension system. Serious regional imbalances also persist, requiring a more balanced territorial policy.
Externally, China is confronted with trade and technological restrictions from the West. The worsening of relations with the U.S. and the EU increases volatility in the external economic environment and may negatively impact export-oriented industries.
Future development is associated with multi-layered challenges spanning demographic, institutional, technological, and external economic spheres. In an environment of growing uncertainty, a key condition for the resilience of China’s development model is its ability to remain internally flexible and to pursue continuous innovation.
China’s Economic Prospects
China’s economic prospects are characterized by a complex structure and multidirectional development, encompassing both traditional industries and high-tech sectors. Amid internal and external pressures, China is striving to build a sustainable growth model based on domestic demand, innovation, and industrial modernization.
A key priority remains the diversification of the economy, with a focus on knowledge-based and high-tech industries. Through the implementation of strategic initiatives, the country is strengthening its technological autonomy, while also promoting regional integration and expanding the use of the yuan in international trade, thereby reinforcing its position in the global system.
In addition, the role of the domestic consumer market as a source of sustainable demand is growing. The government’s proposed “Dual Circulation” Strategy (双循环) emphasizes the internal circulation of economic flows while maintaining external openness, which supports the development of services, creative industries, and private enterprise.
Starting in 2024, China has been adapting its geo-economic strategy, placing greater emphasis on technological self-reliance, resilient supply chains, and the domestic market. A key initiative is the concept of “New Productive Forces” (新质生产力), aimed at achieving high-quality growth through digitalization, green technologies, artificial intelligence, and automation — all of which are intended to ensure China’s long-term national economic competitiveness.
In parallel, the format of international initiatives is being modernized. The new stage of BRI 2.0 (Belt and Road Initiative) shifts the focus from large-scale projects to smaller, environmentally friendly investments, strengthening cooperation in areas such as digital trade, logistics, and cross-border technology clusters, enabling more sustainable and flexible integration with partners.
China is reinforcing domestic production chains, developing e-commerce and logistics, with a particular focus on Central Asia. At the same time, it is increasing exports of digital technologies and AI solutions, helping to offset the decline in trade with the West and bolster its technological autonomy.
Thus, despite ongoing internal structural imbalances and external geo-economic risks, China possesses significant potential to maintain economic momentum through domestic transformation, technological investment, and an expanded role in the global architecture of trade and finance.
The Impact of China’s Economic Transformation on Kazakhstan
China’s economic transformation is having an increasingly tangible impact on the format of bilateral cooperation with Kazakhstan. The new Chinese growth model—based on technological modernization, environmental sustainability, and the diversification of logistics routes—is shaping new directions for collaboration.
A key priority is the development of cross-border logistics, including the creation of transport hubs, digitalization of customs checkpoints, and the integration of Kazakhstan into the overland routes of the Belt and Road Initiative (BRI). These efforts are boosting transit and trade, accompanied by the expansion of settlements in yuan and tenge and the growth of digital commerce.
Within the framework of the “New Productive Forces” initiative, China is interested in the processing of Kazakh raw materials (such as lithium, uranium, and rare earth elements), reflecting both countries’ shared aspiration for technological resilience.
Industrial and agro-industrial cooperation is also developing through the implementation of projects involving deep processing, the production of components for green energy, and the modernization of the agro-industrial complex (AIC).
At the same time, the export of services from both countries is increasing in the ICT sector (e.g., the integration of Kaspi.kz and Alipay, as well as cooperation in Big Data, AI, and other areas).
Thus, the economic partnership between China and Kazakhstan is transitioning to a qualitatively new level. It reflects not only changes in geo-economic realities but also the mutual interest of both sides in building a more sustainable, technologically advanced, and balanced development model. In the context of geopolitical transformations, Central Asia, and Kazakhstan in particular, is viewed by China as a strategic element of its initiatives to reconfigure global supply chains and related infrastructure.
Thus, China’s economy continues to be one of the key pillars of global growth, demonstrating resilience amid a wide range of challenges. At the heart of China’s development model lies a combination of strategic state planning, large-scale investments in innovation, infrastructure, and industrialization, as well as the active expansion of international economic relations.
Through its own example of economic development and breakthroughs in technological industries, China demonstrates that there is an alternative, evolutionary path—one where cooperation takes precedence over confrontation.
China Studies Centre
