Yearender: Xi leads China through a pivotal 2025

BEIJING -- China rang in the new year on Thursday, closing an extraordinary year widely seen as pivotal for the country's development.

2025 marked the successful completion of China's 14th Five-Year Plan, a period during which the country posted notable gains in economic strength, scientific and technological capabilities, defense capabilities, and composite national strength, pressing ahead with its modernization drive.

Economic performance stood out. China's gross domestic product is expected to have grown by around 5 percent in 2025, keeping it among the fastest-growing major economies, while total output is projected to reach roughly 140 trillion yuan (about $20 trillion).

Summarizing 2025, President Xi Jinping noted that China's economy had "pressed ahead under pressure and advanced toward new and higher-quality growth."

Despite escalating global trade tensions and the convergence of domestic cyclical and structural challenges, the world's second-largest economy faced significant tests but demonstrated greater resilience than many anticipated.

That resilience rests on a clear strategy. "It is imperative to confront the uncertainty of rapid external changes with the certainty of high-quality domestic development," said Xi, also general secretary of the Communist Party of China (CPC) Central Committee and chairman of the Central Military Commission.

In April, the United States announced "reciprocal tariffs" on all trading partners, which quickly escalated into an unprecedented tariff war. Under Xi's leadership, China responded with calm resolve and effective measures.

Xi held four phone calls with his US counterpart Donald Trump, reiterating that the two countries can help each other succeed and prosper together. Chinese and American teams held multiple rounds of consultations, yielding substantial progress. This injected much-needed stability into the turbulent global trade landscape.

Innovation, in Xi's telling, is the way forward -- a theme woven through his speeches and inspection tours throughout the year.

In April, Xi visited a fast-growing large-model incubator in Shanghai, China's AI hub. The tour came days after a CPC leadership study session on artificial intelligence, at which he called for AI-driven technological innovation, industrial upgrading and applications. Xi has repeatedly framed AI as strategically vital if China is to seize the next wave of scientific and industrial transformation.

China's decade-long push for innovation is paying off. In 2025, it entered the top 10 of the Global Innovation Index. China is one of the economies with the fastest-growing innovation capacity, Xi said in his 2026 New Year message delivered on Wednesday.

"Many large AI models have been competing in a race to the top, and breakthroughs have been achieved in the research and development of our own chips," Xi said.

Besides innovation, reform and opening up -- long seen as an engine powering China's miraculous economic rise -- remain key to unlocking fresh potential. In November, Xi visited the southern island province of Hainan, just a month before it implemented island-wide special customs operations in the Hainan Free Trade Port.

"We have stayed on the path of reform and opening up with Chinese characteristics, step by step, to reach where we are today," he said during the trip.

Turning Hainan into a special customs supervision zone -- allowing freer entry of overseas goods, broader zero-tariff coverage and more business-friendly rules -- marked a key step for China to open wider to the rest of the world.

Over the past year, a series of reform measures came into force. China enacted a law promoting the private sector and revised its anti-unfair competition legislation. The negative list for foreign investment was shortened further. Access was widened in services such as telecoms and healthcare. Visa rules were also eased, with unilateral exemptions for nearly 50 countries alongside expanded visa-free transit schemes.

"As Chinese modernization has advanced through reform and opening up," Xi has said, "it will embrace broader horizons through further reform and opening up."