Year end special report: In 2025, the world economy is interwoven with "five colors"
Beijing, December 28 (Xinhua) -- In 2025, the world economy will be intertwined with five colors
Xinhua News Agency reporter Yan Jie and Yu Rong
In 2025, the world economy will move forward amidst turbulence.
The US tariff war has seriously impacted the multilateral trading system; Economic uncertainty and concerns about US dollar credit risk have driven international gold prices to record highs repeatedly; Artificial intelligence (AI) set off an investment boom and triggered foam concerns; China continues to serve as the largest engine of global economic growth; The global South is driving the reshaping of the world economic landscape with greater vitality... Challenges and opportunities, destruction and reshaping, growth and risk, forming a picture of intertwined global economic trends throughout the year.
'Haze Grey': Tariff headwinds intensify global economic challenges
In 2025, the United States provoking a tariff war is a hot topic in the world economy throughout the year. The tariff policies of the Trump administration in the United States have impacted the international economic and trade order, eroded global growth momentum, and become the biggest "risk source" dragging down the world economy. This year, the United States announced the imposition of so-called "equivalent tariffs" on the vast majority of trading partners, implementing or threatening to impose tariffs on products such as automobiles, steel and aluminum, movies, semiconductors, etc., which drew opposition from multiple countries.
From the perspective of the United States itself, high tariffs have failed to enhance its industrial competitiveness and solve its own structural contradictions. Instead, they have pushed up inflation costs through price transmission mechanisms, weakened corporate investment willingness and consumer spending power, and damaged the innovation capabilities of the US manufacturing and high-tech industries deeply embedded in the global supply chain. Willen Pachaun Paddy, director of Thailand China the Belt and Road Research Center, pointed out that the high tariff policy is essentially an overdraft of long-term development potential with short-term political logic. The latest economic outlook report released by the Organization for Economic Cooperation and Development (OECD) in early December predicts that due to factors such as tariffs, the growth rate of the US economy will decrease from 2.8% in 2024 to 2.0% in 2025, and further slow down to 1.7% in 2026.
From a global perspective, high tariffs suppress global demand, impact export-oriented economies, and drag down the growth prospects of the world economy. The adjustment of the global supply chain is no longer primarily based on efficiency and comparative advantage, but is artificially distorted by high tax rates, resulting in increased production and transaction costs, increased uncertainty, and decreased stability of the global industrial system. Delamora, Director of the International Trade and Commodities Division at the United Nations Conference on Trade and Development (UNCTAD), believes that uncertainty in tariff policies affects investors, trading partners, and supply chain operations, impacting global trade growth trends.
The headwinds of tariffs pose an urgent need for reforming and improving global economic governance, maintaining international economic and trade order, and supporting the multilateral trading system with the World Trade Organization at its core. Michael Schuman, President of the German Federal Association for Economic Development and Foreign Trade, stated that the tariff war has prompted global reflection on a core issue: whether to adhere to a rules based multilateral trading system or to regress to the "jungle era" of bullying and the law of the jungle.
'Safe haven yellow': Gold price 'skyrockets' reflecting US dollar credit risk
In 2025, international gold prices will rise from the beginning of the year to the end of the year, marking the largest increase since the 1979 oil crisis. The soaring gold price reflects the increasing structural risks in the global economy and also reflects the deep turbulence in the international monetary system. It is the result of the combination of geopolitical risks, trade policy uncertainty, and damage to the US dollar credit system.
The increase in US dollar credit risk is an important driving factor for the rise in international gold prices. The snowball of US federal government debt is getting bigger and bigger, and debt expansion is on the brink of losing control. Market concerns about the sustainability of US bonds are driving international capital towards gold. The "suspension" of the US federal government has intensified investors' concerns about the rise of US dollar credit and US debt, pushing the international gold price higher.
In fact, many economies around the world have taken action to reduce their dependence on the US dollar, from increasing their holdings of gold, reducing their holdings of US Treasury bonds, changing the currency of oil settlements, to reducing US dollar trade settlements and exploring the establishment of bilateral currency swap mechanisms and regional currency settlement mechanisms. Gold is serving as a "new anchor" to support non US dollar currency credit. According to a report by the Bank for International Settlements, the proportion of US dollars in global central bank foreign exchange reserves has decreased from over 70% at the beginning of this century to around 58% in recent years.
Darryl Gepy, former director of the National Committee of the Australia China Business Council, said that the global pursuit of gold reflects the desire of all parties to establish a stable foundation for currency, rather than relying entirely on debt backed US dollar issuance. Horst L ö cher, an economics professor at the Frankfurt School of Financial Management in Germany, believes that the world is moving towards a more multipolar international monetary system. In the long run, the dominant position of the US dollar in the "unipolar" position will decline.
Technology Blue: Opportunities and Risks Coexist in the AI Investment Boom
By 2025, artificial intelligence will be a global industry and capital market theme. According to statistics, the total scale of AI related investment projects by American tech giants has reached trillions of dollars. The soaring corporate valuation and a series of "recycling investments" have created a number of "corporate stars", which also triggered the market's concern about the AI boom giving rise to asset foam.
Major technology companies continue to increase investment in hardware and infrastructure, and AI competition has become a key factor driving the overall debt level of the high-tech industry. According to Nikkei Asia magazine, the total interest bearing liabilities of 1300 major technology companies worldwide have risen to $1.35 trillion, four times that of 10 years ago. Industry insiders believe that companies betting on AI have generally failed to achieve profitability and are burdened with heavy debts, with revenue not yet sufficient to make up for the expanding funding gap.
James McIntosh, a market columnist of the Wall Street Journal of the United States, believes that if AI fails to improve productivity as expected or bring huge profits, then the AI industry may bring "a painful situation after the bursting of the Internet foam".
Risk and opportunity often come together. In the long run, technological innovation represented by AI will effectively improve labor productivity and stimulate new business models. Lecher believes that despite significant fluctuations in stock prices of AI companies, the development of AI technology still has enormous potential and will be widely applied in the coming decades.
In the view of Steve Hoffman, CEO of the well-known Silicon Valley incubator "Founder's Space", 2025 is a crucial year for AI to move towards "truly creating value", and AI will bring significant productivity improvements to the world economy.
Opportunity Red: China Becomes a Stable Anchor in the World Economy
2025 is the final year of China's 14th Five Year Plan. This year, the Chinese economy has pushed forward under pressure and developed towards new and better directions, demonstrating strong resilience and vitality. Several international organizations have recently raised their expectations for China's economic growth, and China continues to be the largest engine of global economic growth.
Overseas individuals believe that the profound changes driven by innovation, the continuous promotion of green transformation, and the potential release of a strong market have continuously accumulated new driving forces for China's economic and social development, and provided opportunities for world economic growth.
South African economist Sandilei Swana believes that one of the biggest opportunities China has created for world economic growth is the large and constantly upgrading domestic market. The open and shared innovation ecosystem in China is continuously injecting momentum into global economic recovery, climate governance, and energy security, "said Chen Jiaxing, Acting Chairman of the Regional Strategy Research Institute, a Malaysian think tank.
Faced with the complex and uncertain international situation, China has always demonstrated strategic determination and governance wisdom, providing the most valuable and scarce certainty for the turbulent and changing world with stable national policies, steady economic growth, and stable development expectations. It has become the "anchor of stability" for world economic growth and the "gravitational field" for sharing development opportunities.
Trombek Abdrov, an economic expert from Kyrgyzstan, believes that China promotes high-quality joint construction of the "the Belt and Road", builds the "matrix" of exhibitions, proposes four global initiatives that benefit the world, and promotes inclusive economic globalization with practical actions. China continues to integrate into the global industrial and supply chains, making them more resilient, diversified, and reliable, which benefits all participants in the world economy
'New Green': The Global South profoundly changes the economic landscape
In 2025, countries in the global South will play a more important role in maintaining and strengthening the multilateral trading system and promoting more inclusive economic globalization, becoming a key force in reshaping the world economic landscape.
At the beginning of 2025, Indonesia officially joined the BRICS cooperation mechanism, and 9 partner countries joined the BRICS family, deepening the "Greater BRICS Cooperation"; The Shanghai Cooperation Organization, China Central Asia Mechanism, Forum on China Africa Cooperation, China Arab States Cooperation Forum, China Latin America Forum and other platform mechanisms are steadily advancing... Against the backdrop of weakened trade in developed economies, the markets of the southern countries, which account for 70% of the world's population, are thriving and increasingly becoming the main driving force for global trade growth. Nowadays, the global South accounts for over 40% of the world's total economic output and contributes 80% to global economic growth, profoundly rewriting the map of the world economy.
The role of countries in the global South in the global governance system is shifting from passive participation to active participation, and they are starting to work more actively together to promote a more fair, just, and reasonable global economic order. Kenyan international expert Stephen Ndegwa said that more and more countries in the global South are actively speaking out in international forums such as the World Trade Organization, and continuously enhancing their voice in global economic governance, which has become an undeniable force.
In the view of Dennis Depp, Co President of Roland Berger Global Management Committee, a German management consulting firm, the future world economic landscape may show a more diverse and differentiated trend. By promoting multilateral cooperation and accelerating industrial layout, countries in the global South are expected to exert greater influence in global economic governance and promote more sustainable and balanced development of the world economy.