2025 was a turbulent year for China. The country began the year battling geopolitical headwinds and weak domestic demand. By April, new tariffs and trade frictions triggered some of the most significant trade actions in decades.

Yet by November, the story had changed. China’s annual trade surplus passed $1 trillion, a record high. GDP growth remained steady at around 5%. The country seems to have shrugged off concerns of “deglobalization.”

What does 2026, the Year of the Horse, pose for China? The headlines may focus on Trump tariffs or real estate woes, but there are more subtle trends happening that will define China’s economic trajectory. China presents new challenges for international business, particularly from confident local competitors, but there are still opportunities for disciplined global executives. Five key questions will matter as the world’s second-largest economy navigates a fast-changing global economy.

How will tariff uncertainty shape your China strategy?

China has long dominated global manufacturing, thanks to its cost competitiveness and integrated supply chains. That strength remains intact despite higher U.S. tariffs in 2025, which have now stabilized at around 50%. The tariffs barely dented China’s trade: The country’s share of global goods exports held steady at around 14%, four times greater than India and Vietnam combined.

The reason is that China has already broadened its trade partners. Goods exports to the U.S. represent just 2-3% of China’s GDP, and over half of China’s goods exports now go to Global South economies including ASEAN, Latin America, the Middle East, and Africa.

China also exports more knowledge-intensive goods, such as electronics and automobiles, and fewer labor-intensive goods, like furniture and toys.

Beijing’s bought itself some time, but 2026 will be the test of how resilient China’s export economy truly is. Trade patterns will continue to shift, with one analysis by the McKinsey Global Institute suggesting that as much as 30% of global trade could be shift corridors by 2035. The trade map is being redrawn in real time.

Multinational companies with a presence in China need supply chain flexibility, so that can rewire their operations as quickly as China’s companies can.

Where are Chinese consumers spending, and what does that mean for global brands?

Before the pandemic, Chinese consumers drove near-double-digit retail growth each year. Yet in 2025, consumer confidence hit historic lows, youth unemployment hovered around 15%, and real estate remained stagnant. Yet retail spending grew around 4-5% in the first three quarters of 2025 year-on-year.

Chinese consumers continue to spend—just on different things. Tourism spending rose 12% in the first three quarters of 2025, while box office revenue jumped 22%. Government subsidies supported double-digit growth in spending on electric vehicles and home appliances. Discretionary spending, however, struggled.