2024 was disastrous for Chinese President Xi Jinping. For all of his rhetoric about “the great rejuvenation of the Chinese nation,” his regime faced staggering setbacks. Military purges intended to root out corruption instead revealed systemic turmoil that continues to undermine readiness. Economic growth cratered as unemployment, bankruptcies, and capital outflows soared. Meanwhile, key partners in Moscow and Damascus stumbled or fell, undermining Beijing’s geostrategic ambitions. Together, these and other crises have revealed a China that looks increasingly fragile, not formidable.
If 2024 shattered illusions of China’s unyielding ascent, 2025 promises to lay bare the vulnerabilities that Xi can no longer conceal.
2024 was disastrous for Chinese President Xi Jinping. For all of his rhetoric about “the great rejuvenation of the Chinese nation,” his regime faced staggering setbacks. Military purges intended to root out corruption instead revealed systemic turmoil that continues to undermine readiness. Economic growth cratered as unemployment, bankruptcies, and capital outflows soared. Meanwhile, key partners in Moscow and Damascus stumbled or fell, undermining Beijing’s geostrategic ambitions. Together, these and other crises have revealed a China that looks increasingly fragile, not formidable.
If 2024 shattered illusions of China’s unyielding ascent, 2025 promises to lay bare the vulnerabilities that Xi can no longer conceal.
Facing mounting problems at home and soon an emboldened U.S. President Donald Trump in Washington, Xi is nevertheless not banking on dramatic shifts or bold reforms. Instead, he is pursuing a policy of perseverance: muddling through economic stagnation, avoiding outright confrontation with Washington, doubling down on ideological discipline, and fomenting chaos abroad to distract adversaries and buy time to stabilize his precarious position.
Yet Xi’s approach carries significant risk. While his willingness to endure hardship may fortify his grip on power today, it threatens to unravel his aspirations for China’s national revival tomorrow.
Contrary to Xi’s carefully constructed image of competence, China’s domestic dilemmas remain profound. A shrinking population, a weakening currency, and dwindling foreign investment have exposed cracks in Xi’s economic stewardship. They also undermine the Communist Party’s bargain with the Chinese people: prosperity in exchange for compliance. China’s crisis of confidence risks spiraling into a vicious cycle as weak growth deters investment, shrinks spending, deepens deflation, and raises unemployment—all of which drag growth even lower. Xi’s reliance on meager supply-side stimulus has delivered fleeting sugar highs, with modest spending upticks and short-lived credit expansions. But ballooning debt, bad real estate bets, and a stock market that has been flat for a decade leave Xi with few levers to reignite growth.
Worse still, Xi’s campaign to root out perceived weaknesses within the party, military, and private sector has compounded his conundrum. Purges of senior officials such as People’s Liberation Army Navy Adm. Miao Hua—a key enforcer of Xi’s ideological conformity accused of “serious violations of discipline”—as well as former Defense Minister Li Shangfu underscore rot within the ranks. The reported detention of more than 80 business executives in 2024 alone has stifled innovation and fueled fears of arbitrary state intervention. While these actions may consolidate loyalty and enforce control, they also deepen distrust and erode the competence that Xi needs to navigate mounting pressures.
These widening woes have only steeled Xi’s resolve. He routinely invokes Western “encirclement” and “containment,” blaming the United States for thwarting China’s rise. But he uses this narrative to justify ever-expanding repression at home, including constructing more than 200 party-run, extrajudicial detention facilities to enforce discipline and root out dissent. In Xi’s view, China’s domestic struggles ultimately stem from weak ideological discipline and insufficient loyalty to his vision. Put differently, in Xi’s mind, China isn’t broken; it’s disobedient. His solution? A stronger dose of the same medicine: tighter party control, intensified repression, and an unrelenting drive to cement his legacy as the architect of China’s historical destiny.
Amid internal challenges, Xi is turning to chaos abroad to reshape the international order in China’s favor. By offering diplomatic cover and economic support for Russia’s war in Ukraine and tacit backing for Middle Eastern disruptors such as Iran, Xi is fueling crises that distract, divide, and drain Western resources. For Xi, chaos is not merely a tactic; it’s a form of strategic currency, undermining Western cohesion while bolstering his narrative of Chinese resilience and strength. His calculation is stark: If China’s ascent is faltering, the international architecture sustaining its rivals must falter, too. Seen in this light, disorder abroad is Xi’s lifeline—a calculated gambit to obscure his inability to deliver progress at home or globally.
Yet 2025 will test Xi like never before. Intensifying scrutiny from Washington—including new semiconductor investigations, advanced technology export controls, and expanded tariffs—is set to collide with rising domestic unrest, including labor strikes and online dissent. At the same time, an emerging anti-authoritarian alignment—marked by enhanced trans-Atlantic coordination on China and the new U.S.-Japan-South Korea trilateral framework—will intensify the strain. These converging forces will challenge Xi in ways he can neither control nor predict, exposing the fragility of his centralized power and testing the limits of his carefully constructed narrative of inevitability.
Xi’s biggest X factor will be Trump, whose return promises unpredictability. In his first term, Trump waited 15 months to impose tariffs on Chinese goods. This time, tariffs are expected to hit immediately and intensely, targeting the very lifeblood of China’s faltering economy: exports. These tariffs won’t just come faster; they’ll cut deeper, with proposed rates reaching as high as 60 percent on critical sectors such as technology, consumer goods, and industrial equipment. Unlike sanctions, which Xi has worked to mitigate and take years to fully materialize, tariffs take effect overnight, leaving Beijing with little time to react and forcing Chinese manufacturers to absorb crushing losses.
Trump’s tariff threats translate into tremendous peril for Xi. China’s reliance on the United States—its largest trading partner—sustains millions of manufacturing jobs, but a rapid tariff escalation could devastate small and medium enterprises, triggering factory closures and layoffs. Vulnerable sectors such as electronics and textiles could face severe disruption, and even the electric vehicle industry—one of China’s few bright spots—is grappling with domestic oversaturation and budding Western trade barriers. Meanwhile, bipartisan support in Washington for outbound investment screening threatens to choke off critical U.S. capital flows, stalling Beijing’s technological ambitions and broader economic goals.
All told, these measures could deliver a knockout blow to China’s economy, which is almost certainly growing below Beijing’s official target of 5 percent. Tellingly, the party has threatened to fire economists if they warn of economic freefall or express “inappropriate” views—a hallmark authoritarian move to suppress inconvenient truths. Xi has made boosting domestic consumption his top priority for 2025, but this rests on shaky ground, too. If Xi trusts anything even less than markets, it’s the Chinese masses, who have shown no appetite to spend their way out of his economic quagmire. Investors share this skepticism: China’s 10-year bond yield has plunged to record lows, signaling doubts about the country’s trajectory.
Meanwhile, Xi’s reliance on global chaos to sustain his position reveals a glaring paradox: The instability he is fueling in order to distract the West could backfire if and when those crises stabilize. In 2025, the winding down of major conflicts—whether through Trump’s promised dealmaking over Ukraine or Israeli action against Iran’s last remaining proxies—could put the global spotlight back on China. For Xi, this is a nightmare scenario. The West’s fragmented focus has helped mask his vulnerabilities, but resolving these crises could empower the West to confront him head-on.
Xi’s choice is stark: hunker down by embracing a survival strategy or risk further instability by overreaching. Both paths will test his capacity for long-term endurance. Confronted by Trump’s aggressive posturing, Xi is unlikely to pursue outright economic warfare, at least initially, because he recognizes that an escalation would hurt China more than its adversaries. Instead, Xi may adopt calibrated, symbolic responses—like the recently announced rare-earth restrictions—to project strength while preserving room for negotiations. Xi may also leverage retaliatory tariffs or regulatory crackdowns on U.S. firms operating in China to signal defiance without provoking a full-scale confrontation.
Domestically, Xi’s task is how to redefine success. If political stability and ideological discipline now take primacy over economic growth, Xi will have to reframe hardship as proof positive of China’s resilience and moral superiority over the West. If national rejuvenation now takes decades longer than planned, Xi will likely cast the delays as necessary steps in achieving the “Chinese Dream.” Whether the Chinese people will embrace this new narrative—or tire of a perpetually deferred future—remains an open question.
On the global stage, Xi’s reliance on instability poses its own perils. Rather than treading water, Xi may escalate tensions elsewhere—perhaps in the South China Sea, testing U.S. resolve through confrontation with the Philippines. Yet as much as a chaos-driven strategy intends to distract adversaries and sidestep direct confrontation, it invites miscalculation. More specifically, Xi risks exposing Beijing to the vulnerabilities that have undermined other authoritarian regimes—from Russian President Vladimir Putin’s disastrous gamble of invading Ukraine to Hamas’s ill-fated Oct. 7, 2023, attack on Israel that invited overwhelming retaliation.
Of course, the irony of Xi’s leadership is that a seemingly transformational figure obsessed with progress cannot embrace change. Under his rule, China has become a power both disruptive and constrained, where every effort to tighten control risks tarnishing Beijing’s global standing and undermining the credibility of its great-power ascent. But muddling through isn’t leading, and for someone whose legitimacy hinges on delivering national prestige, mere survival risks falling dangerously short of his own lofty ambitions. Ultimately, whether 2025 becomes a turning point or simply another terrible, horrible, no good year will depend on Xi’s ability to overcome the greatest challenge of all: himself.
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