China’s National People’s Congress (NPC) 2025 convened 2,900 delegates to discuss China AI regulations and its economic effect as Beijing prioritizes AI development to face its debt, struggling property sector, and US trade tensions.
While AI regulation in China is Beijing’s main priority for economic stability, lingering challenges faced throughout the journey still casts doubt on its ambitions, with the key concern remains whether China’s AI race with the US is diverting focus from economic recovery and citizen welfare.
China AI Regulations and Economic Challenges
The China regulation of AI is magnifying pressure to drive AI innovation while managing an economy weighed down by slow consumption and bloated debt, as Beijing plans to raise the deficit ratio to 4% from 3% for economic stability, but mass scale stimulus is unlikely, even if China is about to regulate AI.
The US-China trade tensions further ignite the raging flames as Beijing retaliates against increased American tariffs – which were confirmed by President Trump in his address to Congress on Wednesday – by imposing strict measures on US farm imports.
In parallel, President Xi Jinping seeks private sector support, holding meetings with business leaders like Alibaba’s Jack Ma and Huawei’s Ren Zhengfei.
“Xi realizes he needs the private sector to keep his underlying priorities chugging along,” said Neil Thomas, a fellow at the Asia Society Policy Institute, adding that “improving China’s innovation capabilities, improving China’s technological self-reliance – the private sector is pretty good at this stuff, and Xi wants to harness rather than set free the private sector energy to achieve these goals.”
Instead of allowing businesses to thrive, Beijing is actively looking to limit their innovation under tight state control, with concerns about long term economic sustainability.
Will China Win the AI War?
Despite advances of any China AI regulation, it still is heavily reliant on American tech for its creativity from Google, Microsoft, and Qualcomm. Cutting off access to these firms to Chinese businesses would hurt US companies but would also greatly limit China’s AI regulation ability to compete abroad. Without solid economic foundation as well as underlying tech infrastructure, can China reasonably dominate America in the game of AI? With Trump back in the picture, Beijing faces even more uncertainty on the path it needs to march on.
Chinese mobile giants, including Xiaomi, Honor, and Oppo, launched their expert products in the Barcelona Mobile World Congress (MWC), but uncertainty looms over potential restrictions by the US and the Trump administration.
Trump’s “America First” vision and past Huawei crackdown have experts risking other Chinese firms are at risk, especially if they expand too fast. Though these firms are aiming at Europe rather than the US to avoid direct intervention, their reliance on American firms like Google, Microsoft, and Qualcomm complicates sanctions.
If Trump imposes stricter technology restrictions, it can disrupt AI regulations in China expanding global smartphone market and China AI regulations investments, slowing economic growth and innovation in its tech sector while impacting US tech companies that rely on Chinese partnerships.
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