By Hasan Muhammad

Editor's Note: The writer is a freelance columnist on international affairs based in Karachi, Pakistan. The article reflects the author's opinions and not necessarily the views of China Economic Net.

Beijing is speeding up its financial reform, which is expected to change the face of its economy as the United States is further restricting investment outbound to China. The drive to enhance the domestic financial robustness is not only a precaution against Washington’s changing policies but also an attempt to enhance the country’s stability and innovation in the technology sector. The sources point out that 2025 may become a turning point for the Chinese financial sector with the focus on the measures that are likely to boost investment, enhance the capital market, and promote home-based technology firms.

Some of the major strategies that China is implementing towards financial independence include increasing the role of State capital in the early-stage, technology-driven companies. This is a deliberate effort to prevent the void that will be left by the US venture capital firms that have exited China due to the increasing restrictions from Washington.

No matter how Washington chooses to use trade tariffs and financial tools to influence China, the long-term effect is noticeable: it ultimately pressures Beijing to quicken its strategy for economic autonomy. The solution to the challenge of external risks can only be found in enhancing domestic development, and the capital market is central to this change. Passivity is no longer an option – China is getting ready to take its place among the leading countries in the most innovative sectors.

The shift of focus to financial self-reliance takes place as the United States sends conflicting signals. On February 26, U.S. President Donald Trump said, “We’ll invest in China,” while at the same time demanding that Chinese investment come into the U.S. on equal terms. However, his previous signing of the “America First Investment Policy” memorandum does not reflect the same sentiment. The document includes very strict rules on investment by Americans in Chinese sectors like semiconductors, artificial intelligence and quantum computing, as well as restrictions on Chinese access to important sectors of the US economy.

To China, these actions serve as yet another example of the unpredictability of Washington’s economic policy. The only possible answer is to redouble the efforts on domestic technological development in order to avoid being dependent on the outside world. In this changing world, Chinese capital market is playing a more significant role in the economic development of the country.

A very important part of the Chinese financial strategy is the modernization of the primary investment market. A major problem for tech startups is the ability to raise long-term funding, particularly in an environment where the traditional investment models reward short-term returns.

While enhancing its domestic financial structure, China is also working on attracting foreign long-term capital. Last month, the State Council published a strategic vision to promote the strategic shareholding by foreign investors in Chinese listed companies and to simplify the establishment and financing of foreign investment firms in China. These measures together with the change of the assessment of the foreign investors towards Chinese asset values present a possible improvement of the foreign equity investment.

China’s financial reform is not a mere reaction to the external factors; it is a strategy for the future economic stability. Thus, by promoting the development of a capital market, implementing further structural changes and attracting foreign investment, China is enhancing its position as a major player in the world economy. Washington’s tensions with Beijing will likely continue, but Beijing’s focus on domestic development and financial power ensures that it stays on the offensive. In a world of growing economic fragmentation, China’s strategy of financial and technological autonomy may turn out to be its strongest trump card in the future.