Four Chinese Innovation Trends to Watch in 2025

As we enter 2025, it’s shaping up to be a pivotal year for global superpowers. The re-election of Donald Trump could either "Make America Great Again," as promised to his voters, or destabilize the U.S. both internally and on the global stage. Will AI continue driving tech giants’ valuations upward, or are we on the brink of a U.S. stock market crash? Could Trump ignite new trade wars with former allies and adversaries, and what ripple effects might this have on Europe, China, and the Global South?

On the military front, will the conflict in Ukraine finally come to an end, and how will Europe navigate its aftermath? Could the crisis in Gaza and regime change in Syria escalate into a regional war involving Iran? Meanwhile, will China manage to restore confidence in its economy, or are we witnessing the early tremors of a systemic economic shock?

Lastly, will the U.S. and even some EU countries retreat from their commitments to the 2015 Paris Climate Agreement, and will China now take the lead in steering the world toward a sustainable, green future? This year hopefully holds the answers to these critical questions, and the outcomes will undoubtedly reshape our world order for years to come.

2025 is shaping up to be another year of unpredictability, with any predictions about global trends sharply divided. Some analysts believe the U.S. will thrive while Europe struggles, while others see Trump’s return as a wake-up call for Europe to unite and strengthen its position. Opinions about China's economic trajectory differ even more. Some predict that China's economy will peak in 2025, mirroring Japan's economic stagnation post 1995. Others are more optimistic, expecting stimulus policies and innovation initiatives to kickstart a new phase of economic recovery and growth.

One thing seems clear: Western trend watchers anticipate China’s economic peak is imminent, while Chinese trend watchers predict a U.S. market crash and prolonged stagnation in Europe. Given the current global uncertainties, 2025 stands out as one of the most challenging for me, as a thought leader, to make confident predictions.

However, despite the turbulence in world affairs, I am confident in identifying four key Chinese innovation trends poised to shape the global future in 2025.

1.   Chinese companies are ready to go global.

What set 2024 apart for Chinese innovation was the global recognition of the exceptional quality of Chinese New Energy Vehicles (NEVs), which took the world by storm. It was the year BYD surpassed Tesla in global car sales, marking a significant milestone. In response, both the U.S. and Europe imposed tariffs on Chinese NEVs to protect their domestic automotive industries. Meanwhile, non-Chinese car brands continued to lose market share in China to competitive local brands. 2024 also saw Volkswagen closing factories in Germany, Northvolt filing for bankruptcy in the US, and Japanese automotive giants Nissan and Honda announcing plans to merge in a bid to compete with the growing dominance of Chinese automakers.

2024 marked a significant mindset shift for Chinese companies, as they now much more confidently believe they can compete with any global brand. Looking ahead, 2025 is set to see even greater momentum for Chinese brands going global. This shift is driven by three key factors:

1. Chinese buyers are trading down, making global markets increasingly attractive for Chinese companies.

2. Chinese brands have closed the quality gap with Western competitors, positioning themselves as globally competitive players.

3. Biden’s technology war against China has inadvertently boosted self-confidence in Beijing and among Chinese producers, encouraging them to view global markets as strategic opportunities for expansion rather than mere export destinations.

South-East Asia and the Middle East are seen as mid-term investment and growth opportunities, while Europe is viewed as a short-term market focused on profit and brand establishment.

2.   Chinese Large Language Models (LLMs) will rise as a phoenix

In the final days of 2024, the Chinese startup DeepSeek launced a groundbreaking open-source AI model (DeepSeek V3). This model outperformed Meta’s Llama 3.1 and Alibaba’s Qwen 2.5, while delivering results on par with OpenAI’s ChatGPT-40 and Amazon’s Claude 3.5.

The most significant achievement, however, was the efficiency and speed of its development. The Chinese research lab trained the model in just two months, using GPUs that cost only $5.5 million USD, a stark contrast to the hundreds of millions or even billions spent by American competitors.

What sets DeepSeek V3 apart is its mixed-model architecture. Instead of relying on a single monolithic approach, it activates different sub-models dynamically to optimize performance for specific token-generation tasks. This design reduces inference costs, enhances scalability, and improves latency and processing speed. DeepSeek V3 not only demonstrates technical excellence but also signals a new era of cost-efficient AI innovation from China.

Kaifu-Lee from 01.AI recently discussed how, in 2024, Chinese engineers made significant strides in optimizing limited access to Nvidia GPU resources. By leveraging innovative engineering solutions, they managed to train advanced AI models at a fraction of the cost incurred by their American counterparts. Instead of treating the challenge as a computational problem, Chinese developers approached it as a memory optimization issue, employing multilayer caches, specialized inference engines, and other efficient techniques.

I predict that Chinese large language models (LLMs) will become significantly cheaper than American alternatives, positioning China as the "GenAI factory of the world." This cost advantage will likely appeal to countries and organizations operating under financial constraints. Such a shift could disrupt the U.S. AI-driven tech stock market, though I am not yet prepared to make a definitive prediction.

3.   Three new industries will take off: Robotaxis, eVTOL, and Humanoid Robots

In 2024, three emerging industries in China have made significant waves, with robotaxis leading the charge. Similar to trends in America, robotaxis are rapidly gaining traction. While Level 4 (L4) autonomous driving technology is already road-ready, regulatory constraints remain a limiting factor. With 32,000 kilometers of test roads already established in China, 2025 is set to see robotaxis operating in at least 65 Chinese cities. The cost of L4 vehicles has decreased significantly in China, making investments in the sector more profitable, and the average usage has already reached 20 robotaxi rides per day. Given that China now commands 70% of the global NEV (New Energy Vehicle) market, it is well-positioned to achieve similar dominance in the robotaxi sector starting in 2025.

Another industry that gained significant momentum in 2024 is the eVTOL (Electric Vertical Take-Off and Landing) sector, also known as the low-altitude economy. In 2024, the first licenses for flying and manufacturing flying taxis were issued to eHang. I had the opportunity to experience one of their flying taxis in April in Guangzhou, and the company projects having 10,000 flying taxis operating in Shenzhen by 2030. Meanwhile, Xpeng has established the first modern assembly line for flying cars, marking another milestone in the industry. What makes me particularly optimistic about China's low-altitude economy is China’s commitment to this sector, demonstrated by the creation of a new government department to support and accelerate its development.

One of the most fascinating trends to watch is the evolution of humanoid robots. With Generative AI enabling robots to talk, think, and learn more like humans, their potential applications have expanded significantly. China is making impressive strides not only in AI development but also in robot engineering, bringing humanoid robots closer to matching human physical capabilities. At the World Robot Conference held in Beijing in the summer of 2024, the atmosphere felt like stepping into a sci-fi future. Once again, cost efficiency is where China excels. For instance, Chinese robo-dogs are priced at $3,000, a stark contrast to the $75,000 robo-dogs from Boston Dynamics. Furthermore, Unitree has established the world’s first mass-production assembly line for humanoid robots, which are expected to debut in factories and logistics, revolutionizing industrial workflows.

4.   The “New Quality Productive Forces” Initiative will go from rhetoric to metric

In 2023, Beijing introduced the "New Quality Productive Forces" (NQPF) initiative, a bold plan aimed at modernizing China over the next decade. This initiative follows the Made-in-China 2025 strategy launched in 2015, which focused on upgrading 10 key industries and achieving technological independence. While Made-in-China 2025 targeted specific industrial sectors, NQPF takes a more holistic approach, aiming to transform the Chinese economy as a whole. NQPF serves as China's latest blueprint to become the world's leading technological superpower.

Surprisingly, despite its ambitious scope, Western media appears to be paying less attention to NQPF compared to the Made-in-China 2025 plan. This lack of global focus could very well be the biggest blind spot regarding China's real masterplan.

This new paradigm aims to transition China’s economic growth model from its traditional reliance on investment, infrastructure, and exports to one centered on innovation, knowledge, quality, productivity, and sustainability. In essence, the shift is from “Made in China” to “Created in China”, and from being the “Factory of the World” to becoming the “R&D Center for the World”. Starting in 2025, I predict China will introduce hundreds of KPIs designed to achieve its strategic goals by 2035 or earlier. The graph I’ve created below illustrates the meaning behind the four key pillars represented by NQPF and outlines the transformative shifts we can expect over the next decade.

2025 marks a pivotal year:

• Traditional Industries will begin their transformation to meet NQPF standards, embracing higher levels of efficiency, innovation, and sustainability.

• New Industries - such as eVTOL and robotaxis - will gain significant momentum through NQPF-driven policies and investments, positioning themselves to set new global benchmarks.

• Future Technologies will emerge under the guidance, support, and funding of the NQPF framework, laying the foundation for breakthroughs that could redefine global innovation landscapes.

2025 will likely represent the beginning of a systematic, KPI-driven approach that prioritizes quality over quantity, long-term resilience over short-term gains, and innovation over low-cost.