China Market Intelligence

Late last year, China’s State Administration for Market Regulation (SAMR) released a draft implementation plan for the Regulations on Fair Competition Review (RFCR)—a regulatory overhaul reflecting a decade-long push to ensure that government policies are non-discriminatory and comply with fair competition principles.

Last month, preferential procurement of low-priced medical products under China’s volume-based procurement (VBP) system reignited public debate over the right balance between quality and affordability in the healthcare system. This procurement was prominent during the country’s 10th round of VBP for drugs and 5th round for high-value medical consumables in December.

On February 1, President Donald Trump followed through on his plan to impose an additional 10 percent tariff on all imports from China, effective Tuesday. He also imposed a 25 percent tariff on most imports from Canada and plans to impose tariffs on imports from Mexico at the same rate next month.

China’s economy experienced a moderate rebound in the final quarter of 2024, providing the needed push for the country to meet its annual growth target of around 5 percent. According to data released by the National Bureau of Statistics, China’s real GDP in 2024 reached RMB 134.9 trillion ($18.42 trillion), marking 5 percent year-on-year growth.

Republican control of the Senate, which will last until at least 2026, means that the legislative agenda on China will be guided by new committee chairs who have the power to shift the policies of their Democratic predecessors. While some policies may only be recalibrated, others are likely to do a full pivot.

During its final month in office, the Biden administration has released a slew of measures regulating commercial relations with China, capping off years of work in some areas and jumpstarting new types of rulemaking in others. Recent measures include precedent-setting export controls on the semiconductors needed to power artificial intelligence (AI) models, new blacklistings, and a Section 301 investigation.

Amid an economic downturn and growing pressure to restore foreign investor confidence, China’s Ministry of Finance (MOF) recently published a draft definition of “domestic products” for government procurement. The move aims to establish a nationwide standard. However, its effectiveness in resolving longstanding issues facing the business community in this area remains to be seen.

With Republicans maintaining control of the House of Representatives in the 119th Congress, which runs from now through December 2026, many of the same China policy priorities from last year are expected to stay front and center. Speaker of the House Mike Johnson (R-LA) is likely to task standing committee chairs with keeping the pressure on China-related proposals, though these will have to be balanced with other Republican priorities like immigration policy and tax cuts.

Chinese tech startups may have found a new lifeline as venture capital investment in the country declines. Driven by waning investor confidence and mounting geopolitical tensions, nearly 40 percent of domestic and foreign venture capital funds have scaled back their China operations in the first nine months of 2024, resulting in a $5 billion investment decrease compared with 2023.

The global automotive industry is at a crossroads. Chinese automakers have captured over two-thirds of China’s auto market and expanded abroad rapidly, helping the country become the world’s number one producer and exporter of vehicles. Chinese automotive suppliers, most notably electric vehicle (EV) battery makers, are establishing factories overseas and licensing their technology to foreign automakers.