The U.S.-China Economic and Security Review Commission has released its 2025 Annual Report to Congress, and its conclusions are urgent. Beijing’s diplomats have spent the year promoting the idea that China is a responsible guardian of global stability, but the Commission states that China’s actions tell a very different story. The report says China is actively working to reshape the global order, weaken competitors, and position itself as the dominant power in the Indo-Pacific and beyond.
This annual report exists to inform Congress about China’s actions and their impact on U.S. national security. It outlines the economic, military, technological, and geopolitical strategies China is using, and it offers specific recommendations to help Congress respond. According to the Commission, countering China is no longer a regional matter but a global challenge that requires stronger U.S. economic tools, secure supply chains, and close cooperation with allies.
The U.S.-China Economic and Security Review Commission was created by Congress to study and explain how China’s policies affect American security and economic interests. Each year it provides lawmakers with a detailed assessment and a list of recommendations. The 2025 report covers China’s industrial expansion, destabilizing activities across the Indo-Pacific, growing military power, cyber intrusions into U.S. infrastructure, and deepening partnerships with Russia, Iran, and North Korea.
The Commission emphasizes that Congress must understand the scale of the challenge. It warns that a world shaped by China’s political and economic model would be, in its own words, “less stable, less secure, less prosperous, and less free.”
Background: A Two-Speed Chinese Economy with Global Consequences
China has reached the final year of its Made in China 2025 plan with a manufacturing system supercharged by years of state funding. The Commission says China now has a “state-directed manufacturing base without historic parallel,” capable of scaling new technologies quickly and capturing major portions of future industries. These gains are built on “cumulative and overlapping capabilities” created through massive subsidies and distortive policies.
Meanwhile, China’s consumers are weak and its broader economy is unbalanced. Even so, Chinese leaders continue to pour resources into strategic sectors. The report warns that this creates a “dual-speed trajectory” where overcapacity in industry collides with stagnation in domestic demand, distorting global markets and threatening the competitiveness of the United States and its allies.
Main Threats to the United States from China
Below are the key threats identified in the Commission’s 2025 report, expanded in detail and based entirely on the content you provided.
Industrial Overcapacity and Market Distortion
China’s government driven industrial machine is producing far more goods than global markets can absorb. This overcapacity is not the product of healthy economic growth but of policies designed to dominate strategic sectors. The report says these “overlapping capabilities” make it possible for China to rapidly scale emerging technologies and capture first mover advantage. This harms global competitors and erodes the industrial base the United States depends on for national security.
China Shock 2.0 and Worldwide Job Losses
The Commission warns of a new China Shock driven by China’s record breaking trade surplus and systemic dumping of low cost exports. China already posted an unprecedented 992 billion dollar surplus in 2024 and is on track to beat that in 2025. Subsidized goods are overwhelming Southeast Asian markets, causing “hundreds of thousands of job losses in Indonesia” and thousands of factory closures in Thailand. The report says the effects are spreading to Africa, Latin America, and Eastern Europe, threatening the economic stability of developing nations and weakening U.S. manufacturing.
Weaponization of Supply Chain Chokepoints
China has systematically expanded global dependence on its exports while reducing its own reliance on foreign imports. According to the report, Beijing used its “monopoly over the processing of rare earth elements” to pressure the United States by restricting exports of critical minerals and magnets. These materials are essential for defense systems and advanced manufacturing. The Commission warns that China has shown it is ready “to weaponize these chokepoints again when politically advantageous.”
Control Over Pharmaceuticals, Energy Equipment, and Semiconductors
Rare earths are only one part of China’s leverage. The report notes that Chinese producers “wield significant control over active pharmaceutical ingredients and key energy infrastructure equipment,” and that China is investing heavily to gain similar control over “foundational semiconductors.” If China cut off access, it could disrupt the supply of lifesaving medicines and damage the U.S. economy. These vulnerabilities reveal how deeply U.S. industries depend on Chinese components.
Cyber Intrusions into Critical Infrastructure
China’s influence extends into U.S. infrastructure through both hardware and cyber operations. Many Chinese made devices with remote access capabilities are embedded in American power grids, water systems, telecommunications networks, banking systems, and transportation networks. The report warns that Chinese cyber actors like Volt Typhoon are “pre-position[ing] assets inside of U.S. critical infrastructure,” which could allow Beijing to disrupt vital systems during a crisis. The Commission describes these intrusions as “an operational rehearsal for coercion below the threshold of war.”
Destabilizing Gray Zone Activities
Beijing portrays itself globally as a promoter of stability, but the report shows that China has “intensified its destabilizing gray zone activities.” Against the Philippines, China has conducted dangerous maneuvers that nearly killed a Filipino mariner and risked triggering the U.S.-Philippines defense treaty. Beyond East Asia, China has sabotaged undersea cables, run unannounced live fire drills in the Tasman Sea, and launched cyberattacks targeting telecommunications networks across dozens of countries. These actions test alliances and normalize coercion.
Support for Russia, Iran, and Other Malign Actors
The report describes how China is enabling conflicts in Europe and the Middle East by providing “dual-use technologies to Russia and Iran.” This support helps both countries continue their wars of aggression while teaching China valuable lessons in sanctions evasion and wartime logistics. The Commission warns that these lessons have “direct application to a future Taiwan contingency.” By working with Russia, Iran, and North Korea, Beijing gains a network of partners able to assist it in a crisis.
Military Modernization and Preparation for a Taiwan Conflict
The report says China is rapidly improving its ability to carry out a successful invasion of Taiwan. The People’s Liberation Army is developing new platforms for amphibious assault and increasing operations that allow it to shift “from a routine exercise to an actual blockade or invasion with almost no advance warning.” The Commission points out a “troubling divergence” between China’s English language messaging, which downplays conflict, and domestic propaganda, which claims Taiwan’s “provocations” could justify near term military action.
Expansion of Space and Counterspace Capabilities
China sees space as a vital warfighting domain and is increasing its ability to target U.S. space systems. The report highlights China’s development of direct ascent anti satellite weapons and co orbital interference platforms designed to blind and disorient U.S. forces in a conflict. China is also investing in artificial intelligence and quantum computing, which have military applications and can accelerate its intelligence advantages.
Building Regional Hegemony in the Indo-Pacific
The Commission explains that China has spent decades expanding its economic footprint in Southeast Asia and the Pacific Islands. Now Beijing is using that influence to secure “greater military access and security influence.” China is building a growing network of ports, logistics hubs, and surveillance outposts. It also uses security partnerships and “high-tech surveillance” systems to help local leaders maintain domestic control. This “inside-out” approach gives China leverage over both the internal and external security behavior of regional governments.
Global Export of Authoritarian Influence
China uses Southeast Asia and the Pacific Islands as “pilot zones” to refine strategies for global influence. Scam centers operated by Chinese crime syndicates, often with at least “implicit backing” from elements of China’s government, allow Beijing to expand its internal security presence under the guise of cooperation. These tools of surveillance, coercive finance, and authoritarian governance are already being exported to Africa, Latin America, and Central Asia. The Commission warns that if Beijing succeeds, the world could be reshaped by a model of “weaponized interdependence” and state surveillance.
Key Recommendations for Congress
The report offers ten major recommendations to strengthen America’s ability to compete with and deter China.
Create a Unified Economic Statecraft Entity
The Commission recommends that Congress consider forming a single economic statecraft body that brings together export control, sanctions, and enforcement agencies. It says this would close the “critical gap” between laws on paper and real world enforcement, especially against Chinese and Russian evasion networks.
Strengthen Pharmaceutical Supply Chain Security
Congress should require manufacturers to report the origin of all active pharmaceutical ingredients and key starting materials. The FDA should use this information to produce a confidential report on U.S. vulnerabilities and track changing dependence on China over time.
Build a Resilient U.S. Bioeconomy
The report says the United States must “unlock biology as a general-purpose technology before the end of the decade.” This includes creating a Bio-Measurement Laboratory, expanding biotechnology loan programs, and increasing federal procurement of biobased products to reduce strategic dependence on China.
Protect the Power Grid from Chinese Technology
The Commission urges Congress to ban imports of Chinese made energy storage systems with remote monitoring and to prevent federal grid modernization funds from being spent on technology from high-risk entities.
Strengthen Export Controls on Advanced Semiconductors
Congress should direct the Bureau of Industry and Security to require tracking technology for advanced chips, move from a sell model to a cloud-based rent model, and treat certain Chinese export requests under a strict “policy of denial.”
Establish a Quantum First by 2030 National Goal
The Commission warns that “whoever leads in quantum will control the encryption of the digital economy.” It calls for major investments in quantum research, modernized lab infrastructure, workforce development, and the creation of a Quantum Software Engineering Institute.
Preserve U.S. Primacy in Space
The report recommends increasing support for the Space Force, improving space wargaming, and producing an unclassified assessment of China’s commercial space capabilities. It also urges continued U.S. leadership in civil space exploration.
Combat Chinese Scam Centers
The Commission recommends creating an interagency task force to investigate Chinese run scam centers in Southeast Asia, recover stolen American data, and impose sanctions on those responsible.
Assess U.S. Readiness for a Taiwan Crisis
Congress should require the Defense Department and Indo-Pacific Command to produce a report evaluating whether the United States is meeting its legal obligation under the Taiwan Relations Act to maintain the capacity to resist Chinese coercion or force.
Conclusion: A Strategic Test for the United States
The 2025 report presents a stark warning. China is expanding its economic power, technological reach, military capabilities, and global influence at the same time it deepens its coordination with Russia, Iran, and North Korea. The Commission says the United States must strengthen its economic tools, protect key industries, modernize export controls, and work more closely with allies to prevent a world defined by Chinese coercion and surveillance.
The message to Congress is simple. China’s ambitions are global, and the United States must respond with a strategic plan that protects prosperity, security, and freedom for future generations.