Under the leadership of President Donald Trump, the US is pursuing trade protectionism, deregulation and tax incentives aimed at revitalising domestic industries and reinforcing its financial dominance. Meanwhile, President Xi Jinping’s focus on expanding China’s Belt and Road Initiative (BRI) and enhancing the global use of the renminbi (RMB) underscores the nation’s ambition to reshape international finance. The International Monetary Fund (IMF) projects US gross domestic product (GDP) growth at 2.7% in 2025, while China is expected to expand by 4.6%, reflecting diverging trajectories that underline their contrasting economic strategies. Both countries’ banking systems are at the forefront of global financial flows, but their approaches to regulation, innovation and international influence remain fundamentally different. The US banking system is defined by its global sophistication, scale, and resilience, with institutions like JPMorgan Chase and Citigroup dominating international finance. The US dollar remains the world’s reserve currency, accounting for over 58% of global reserves, a position bolstered by Trump’s tax and trade policies, which favour domestic investment. However, rising corporate debt and vulnerabilities in commercial real estate present challenges. China, led by Xi, is rapidly modernising its banking sector, leveraging state-backed giants like Industrial and Commercial Bank of China and China Construction Bank to finance infrastructure projects globally. The RMB’s growing role in regional trade and digital finance leadership through platforms like Alipay and WeChat Pay are reshaping global banking norms. Yet, high corporate debt (over 220% of GDP) and property market instability constrain its growth. Trump’s protectionist policies and potential trade barriers have introduced volatility in cross-border financial flows, prompting banks to adapt to an increasingly fragmented economic landscape. Meanwhile, Xi’s focus on BRI financing is driving Chinese banks’ dominance in emerging markets, particularly in Africa and Southeast Asia, where they fund critical infrastructure projects. The competition extends to technological innovation, particularly in artificial intelligence (AI). DeepSeek’s latest R1 generative AI model, developed despite US chip restrictions, highlights how these measures may have pushed China to innovate using more efficient approaches that will seriously challenge the former’s leadership. The US-China rivalry will shape the banking industry’s trajectory in 2025, forcing institutions worldwide to navigate economic shifts and geopolitical uncertainty. While the US retains its dominance in global finance, China’s strategic investments and technological advancements continue to challenge the status quo.
