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Having visited China just 12 months ago, one thing that really stood out to me this time was how much the mood on the ground had shifted. The previous trip had felt somewhat subdued. Despite a more positive trajectory, the economy was clearly still finding its footing after a difficult period. In contrast, this visit was noticeably more positive; there was a renewed sense of momentum. Cities felt more vibrant, businesses more confident, and conversations far more forward looking. While challenges clearly remain, the change in sentiment was tangible, suggesting that beneath the surface, China is regaining some of its dynamism.
A 360-degree view
To build a genuine picture of what is happening in China today, our trip deliberately went beyond the usual polished narratives of tier-one cities. While we spent time in major hubs such as Shanghai and Shenzhen, we also travelled to lower-tier cities like Hefei and Suzhou, where much of the country’s industrial transformation is quietly taking place. The itinerary was designed to give us a 360-degree view of the economy – from corporate meetings and factory tours to focus groups exploring local business and government priorities. We visited busy shopping districts to gauge consumer sentiment firsthand and assessed the mix of domestic versus foreign brands across different categories. Crucially, we also met companies spanning a wide range of industries, including a leading biotech contract research organisation, a private hospital, a semi-conductor equipment manufacturer, a commercial bank, and a robotics company. One memorable visit being to a fast-food chain that is fully vertically integrated, even owning its own chicken farms. Yes, we visited the chicken farm and no, I will not forget it in a hurry! Together, these experiences provided a far more grounded and nuanced understanding of China’s evolving economic landscape
Tariffs, what tariffs?
One year on it is clear that tariffs have done little to disrupt China’s position as a global export powerhouse – something that was consistently highlighted by the analysts I spoke to during my visit just before Liberation Day last year. Despite ongoing trade tensions, China reported a record trade surplus last year, underlining the resilience of its export model. This has been achieved through diversification. While exports to the US have faced headwinds, China has successfully expanded its reach into other regions, including Southeast Asia, Latin America, and Africa. The result is an economy that remains deeply embedded in global supply chains, regardless of bilateral trade dynamics. For investors, the implication is straightforward: China cannot simply be excluded, because its role in global manufacturing and trade remains both significant and, in many cases, indispensable.
Did you know?
Electric vehicle manufacturer BYD’s biggest markets outside of China are here, in the UK, and Brazil.
From innovation to application
One of the most striking observations from my trip was not just how innovative China has become, but how quickly that innovation can be translated into real-world capacity. The country combines a deep pool of highly skilled engineers and technicians with sheer scale, allowing ideas to move from concept to production far quicker than in most developed markets. There is a clear sense that when something is prioritised, it simply gets done. We all heard about it during Covid-19 when fully operational hospitals were erected in Wuhan in a matter of days. However, I saw this firsthand myself when visiting a company that others on our trip had toured just six months earlier. In that short space of time, an entirely new, fully automated factory had been constructed and was already operational. It is hard to overstate how unusual that would be elsewhere. This ability to rapidly build and scale up is a powerful competitive advantage, one that underpins China’s leadership across many of the advanced manufacturing themes we are seeing today.
Functionality over perfection
Another area where China is rapidly gaining ground is in humanoid robotics, but interestingly, the approach differs from some of the more ambitious visions seen elsewhere. Rather than focusing solely on highly complex, general purpose humanoids, Chinese companies are prioritising practicality – developing robots capable of performing relatively simple, repetitive tasks in industrial settings. These machines are designed to handle the kind of menial, labour intensive work that is increasingly difficult to staff, whether in factories or warehouses.
This focus on functionality over perfection is important. Unlike fixed automation systems – such as traditional robotic arms embedded in production lines – humanoid and semi-humanoid robots offer a level of flexibility that allows them to operate across multiple environments and tasks. They can be redeployed as needed, making them particularly well suited to dynamic manufacturing processes and logistics operations.
The economic rationale is equally compelling. China is facing a structural labour challenge, with an ageing population and a shrinking workforce putting pressure on productivity. Humanoid robots provide a scalable solution, helping to offset labour shortages while maintaining industrial output. As with electric vehicles, China’s dominance in key parts of the supply chain, particularly rare earth materials, where it controls the majority of global production and processing, gives it a significant cost advantage. As a result, these robots can be produced more efficiently and deployed at scale, reinforcing China’s leadership in this emerging industry while addressing one of its most pressing demographic challenges.
Did you know?
Some humanoid robots in China are capable of changing their own batteries.
Labubu!
Consumption patterns in China have also evolved in a way that differs meaningfully from Western markets. Prior to Covid-19, the buzzword around Chinese consumption was ‘Premiumisation’, but today that has changed. Spending is increasingly driven by emotion and perceived personal value, rather than purely by brand prestige or global trends. Consumers are asking themselves whether a product genuinely brings them joy or meaning, rather than simply signalling status. Pop Mart is a perfect example. It became a global sensation last year thanks to its Labubu character, but in the West the hype quickly faded, leading many to dismiss it as a passing trend. However, the reality on the ground in China tells a different story.
When I visited its flagship store in Shanghai, it was so crowded it was difficult to move, clear evidence that domestic demand remains exceptionally strong. This highlights an important distinction: success in China does not depend on global appeal. With a population of 1.4 billion people, companies can thrive by deeply resonating with local consumers, even if the trend itself doesn’t travel. This shows how it’s easy to have the wrong perception of something based on what we are seeing over here, but on the ground in China it can be a very different story
Full of energy
Recent tensions in the Middle East have raised concerns among investors about the potential knock-on effects for Asia, and especially China as a major importer of oil from the region. However, what stood out during my trip was how little concern this generated among the companies we met. The reason lies in how significantly China’s energy mix has evolved over time. While the country was once heavily reliant on imported fossil fuels, it has spent years diversifying its energy sources, with renewables and nuclear now making up an increasingly large share of electricity generation. This shift reduces vulnerability to external shocks in global oil markets and provides a greater degree of energy security. Crucially, China has not only adopted renewable energy at scale domestically, but has also positioned itself as the global leader in the space. Its dominance across the supply chain, from solar panels to battery storage, is underpinned by strong government support, coordinated industrial policy, and sheer manufacturing scale. As a result, while geopolitical instability may still influence sentiment, the reality on the ground is that China is far better insulated than many expect, and increasingly in control of its own energy future.
An improving trend
A resilient export model, cutting-edge innovation, strong domestic demand, and a relatively high degree of energy security, all help explain the renewed sense of momentum in China. 12 months ago, the watchword was ‘subdued’. This year it is ‘momentum’. The question is, where will China be in 12 months’ time?
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