Mercator Institute for China Studies (MERICS)

🎇The MERICS Team wishes you happy holidays and all the best for 2025!🎇 We look forward to providing you with analyses of key developments in China in what is set to be a tumultuous year.

Chinese history – while containing a wealth of cultural, scientific and social achievements – has always been deeply political. In our final event in 2024, MERICS Director External Relations Bernhard Bartsch discussed the politics of Chinese history with three outstanding experts: · Christine Howald, Deputy Director, Central Archive of the National Museum Berlin · Daniel Leese, Professor of Sinology at The University of Freiburg · Volker Stanzel, Former German Ambassador to China and Japan and Senior Distinguished Fellow at Stiftung Wissenschaft und Politik (SWP) If you weren’t able to join the event at our Berlin offices, you can now listen to a conversation with Daniel Leese in the latest episode of our podcast, hosted by Johannes Heller-John. Learn more about the Chinese Communist Party’s very political approach to the past: https://lnkd.in/exEWCPsn

#China’s race for supremacy in #artificialintelligence is rooted in a quest for geopolitical, economic, computing and electric power, says Rebecca Arcesati. But to exploit AI’s potential China will have to face major internal and external challenges. Read more in her comment piece: https://lnkd.in/e4Zb8Wyz, via World Energy Magazine.

For Europe, 2025 will be a year of adjustments. Donald Trump has pledged to compete on tougher terms with China through tighter restrictions on trade and technology that will hit Europe too. Beijing is most likely to respond by taking a more hardline approach to any attempts at de-risking. Europe could find itself squeezed by trade disputes with its two largest economic partners.  To help European actors anticipate what 2025 might bring, MERICS has developed a foresight effort to identify key China risks. These are:   ⚡The geopolitical adjustments after Trump returns to the White House ⚡Cheap Chinese exports will continue to flood into Europe ⚡Research and tech collaboration with Chinese partners will become riskier ⚡Beijing’s support for Moscow will worsen the challenges Europe faces from Russia ⚡Beijing’s push to build a “fortress economy” will increase risks for European firms You can read a free excerpt from the latest MERICS China Security and Risk Tracker compiled by MERICS Lead Analyst Helena Legarda Herranz via the link in the first comment. MERICS Members have access to the full publication.

⏳One day left to take part in our MERICS China Forecast 2025 survey!   As China continues to play a key geopolitical and geo-economic role, “Getting China right” is getting even more important. With your contribution, we want to identify the most important trends with regards to #EU-#China relations. The survey’s findings will be presented at our digital MERICS China Forecast conference on January 15.   🖊️ Please take 12-15 minutes of your time and answer our questions: https://lnkd.in/eBkygGPs 🗓️ Sign up for the MERICS China Forecast 2025 conference here: https://lnkd.in/eSgs4M2r China Horizons – Research Consortium

The EU take yet another step in becoming consequential on China’s support to Russia’s war efforts: 💥 Today, the EU adopted the 15th sanctions package to limit Russia’s ability to wage its illegal war against Ukraine. A significant package with 84 listings… For the first time, it imposes fully-fledged sanctions (travel ban, asset freeze, prohibition to make economic resources available) on various Chinese actors supplying drone components and microelectronic components in support of Russia’s war. More information here: https://lnkd.in/eVvtQf3F 💡Why does it matter? ☀️ This package of sanctions on Chinese entities includes assets freeze and prohibition to make economic resource available: That is a new step in dealing with China’s supplying killing drones, drone components and microelectronic components; ☀️ Europe increases the costs for China to support Russia’s war efforts and the EU would have the capacity to increase pressure and costs by listings more Chinese entities and possibly individuals if Beijing continues on the same trajectory; ☀️ This is a positive signal for European coherence and unity on China, at a time where the countervailing measures on Chinese EVs put the spotlight on increasing fragmentation in the European China policy; ☀️ Becoming consequential on China is a step forward for EU to become a geopolitical actor that matters; ☀️Europe needs to show to its partners that it can be complex and nuanced in dealing with China: Europe will not hedge. 🔥 This is part of the recommendations that Gunnar Wiegand, nathalie sebanadze and I proposed in our piece: “China-Russia alignment: A threat to Europe’s security” Link here: https://lnkd.in/e2sRXePH

China sees quantum technology as pivotal in global science and tech competition. It has stepped up government spending on scientific and industrial development to about USD 15 billion. At the same time, Beijing has increased secrecy and raised restrictions on the transfer of quantum-related knowledge outside the country. According to MERICS experts Antonia Hmaidi and Jeroen Groenewegen-Lau, “current global competition in quantum technology is similar to that over nuclear capabilities during the early Cold War. Whoever develops quantum technologies first will have palpable military advantages in cryptology, detection and information processing, not to mention a symbolic victory in a tech field all global powers agree is of strategic significance.” In a new MERICS Report, they zoom in on China’s quantum ambitions. The report is part of a series of publications from the MERICS China Tech Observatory, a project funded by the Federal Ministry of Research and Education (Bundesministerium für Bildung und Forschung). Key takeaways: 📃China now publishes more quantum-related research papers annually than any other country, including the US. ⏳As an early-stage technology, quantum computing and communication are the perfect research mission for China. They require long-term planning and large state investments, closely resembling past research missions. 📡China leads the world in quantum communications, where it boasts the world’s largest quantum communication network, which includes two quantum satellites. 🥇European countries are leaders in quantum research but have struggled to translate these research results into practical applications. 🤝The EU should move beyond protecting technological advances by stepping up union-wide efforts to promote the scientific and industrial development of quantum capabilities. Links in the first comment.

It's already that time of the year again! The Central Economic Work Conference readout was released today. I've only had a quick glance through it and compared it with previous years (see my standardized chart below). A couple of thoughts below:    Unsurprisingly, there's a lot of continuity here, and I think this reinforces what a some of us have argued for a while now - Xi has a consistent and clear vision of how he wants to shape the economy, and to the extent that we have seen changes/will see changes, they will mainly be limited to the margins. Beyond the changes I note below, there's not much that is new and significant to report. One change in this year's CEWC compared to last year is the specificity of the 'Expand domestic demand'. In 2023, it was extremely vague and where it was specific, the language focused on supporting consumption where it also supported industrial policy goals (support measures to increase consumption of EVs, for example). In 2024, it explicitly states, among other things, increases to pension and healthcare payments, which is pretty big - we don't know how much it will actually be, but I assess this as a pretty significant signal to try to boost confidence, even if the eventual increases are insufficient. Opening up is very similar to in the past, but has an important linguistic point - "自主开放和单边开放" "autonomous and unilateral opening up". I suspect this will be the language used for the coming months as Beijing tries to position itself as the reasonable player opening up on its own terms while Trump goes 'spray and pray' with tariffs. On real estate and debt risk management, there's less this year than last year on local debt risks. On real estate, there's more of a focus on stopping things from falling apart too quickly compared with last year where the language was more unrelenting on the crackdown. That said, don't expect a return to tolerance of risks, as outlined with, "牢牢守住不发生系统性风险底线" “Resolutely uphold the bottom line of not allowing systemic risks" if I was a mid-lebel cadre trying to make decisions based on this CEWC, I would not be having a good time - I would be expected to support consumption, boost supply-side investment, advance tech self-reliance and breakthroughs, all while also mitigating financial/debt/real estate risks with less and less revenue available to me. It will be interesting to see how things proceed en route to the Two Sessions this spring!

MERICS Senior Economist François Chimits will take part in a CEPII discussion on the future of China's economy. More info and registration via the post below. ⬇️

✨✨✨ We just published the second newsletter of the China Tech Observatory (CTO) ✨✨✨ – a project funded by the German Ministry for Education and Research (Bundesministerium für Bildung und Forschung). You can read a summary of this issue here: