Xi touts China’s AI, chip wins in triumphant New Year’s speech

“China has become one of the world’s fastest-rising economies in terms of innovative capacity,” he declared in a televised address on Wednesday beamed to the nation’s 1.4 billion people, in which he touted China’s achievements in large AI models and breakthroughs in chip research and development.

The Chinese leader underscored the role of innovation in his government’s aim for high-quality economic development and the integration of technology and industry, citing the advancements in humanoid robots and drones. He also touted China’s progress in aerospace and defense, pointing to the country’s latest aircraft carrier, the Fujian, which is equipped with a new electromagnetic catapult launch system.

China had “overcome numerous difficulties and challenges” to meet the targets set out in its 14th Five-Year Plan, Xi said, adding that the country’s gross domestic product is on track to reach 140 trillion yuan ($20 trillion) in 2025. 

“Our economic, technological and national defense capabilities, along with our overall national strength, have risen to new heights,” Xi said.

The speech was Xi’s most upbeat New Year’s Eve address in recent years, coming after his government overcame a multitude of challenges to underscore China’s status as a rising global superpower.

The year opened with a surprise breakthrough when Chinese AI startup DeepSeek defied US chip curbs to release a powerful, low-cost model that stunned Silicon Valley and rattled Wall Street. Chinese chipmakers have rushed to the IPO market, raising funds that are key to the nation’s goal of technological self-reliance and winning the global race on artificial intelligence.

China also stared down US President Donald Trump’s renewed trade war, wielding its dominance over rare earths to extract concessions on tariffs and export controls. Chinese shipments found new homes outside the US, pushing its trade surplus beyond $1 trillion for the first time — a new record in global trade history.

Ties between the world’s largest economies have stabilized in recent months after Xi and Trump struck a one-year truce in South Korea in October. Trump is scheduled to visit China in April.

In a further sign of Xi’s confidence in handling relations with Washington, the Chinese leader on Wednesday did not highlight “external uncertainties” as a challenge in his outlook for the new year as he had done for 2025. Instead, he noted that 2026 marks the start of the government’s 15th Five-Year Plan and called for a focus on high-quality development.

“We must remain anchored to our objectives, maintain firm confidence, and build on our momentum,” he said.

Anti-Corruption Drive

Xi also stressed the need to push ahead with his anti-corruption campaign, calling for the ruling Communist Party to enforce strict discipline and promote self-reform to “remove decay and grow new flesh.” Xi’s widening purge has ousted scores of military generals and investigated a record number of high-level officials for corruption this year.

Despite the triumphant tone, Xi still faces plenty of challenges at home, including a host of structural vulnerabilities in the world’s second largest economy.

Earlier on Wednesday, Xi declared that China is expected to meet its growth target of “about 5%,” providing an upbeat backdrop to data showing a recovery in the nation’s manufacturing sector. Official data released on Wednesday showed the first expansion in factory activity in nine months, with the manufacturing purchasing managers’ index rising to 50.1 in December from 49.2 in November.

But the economy remains fragile as the year draws to a close. Investment lost further ground in November, consumer spending growth slowed sharply and the property sector deteriorated, reflecting persistent weaknesses in domestic demand.

Xi has previously signaled a tolerance for slower growth in some regions and even said recently that China should crack down on “reckless” projects, highlighting his focus on the quality, rather than pace, of economic growth.

As in previous years, Xi used his speech to reiterate the ruling Communist Party’s stance on Taiwan. “Compatriots on both sides of the Taiwan Strait are connected by blood that is thicker than water. The historical trend toward national reunification is unstoppable,” he said, alluding to Beijing’s longtime vow to bring the self-ruled island under its control, by force if necessary.

Xi’s message to Taiwan came after the People’s Liberation Army’s concluded its most expansive drills around the island democracy in decades. For two days, Chinese warships and aircraft simulated a blockade of the global chip hub with live-fire exercises encircling the main island, while dozens of rockets struck waters near its northern and eastern ends on Tuesday.