China overtakes UK in soft power rankings for 1st time

China has surpassed the United Kingdom to become the second most influential soft power nation, according to the 2025 Brand Finance Global Soft Power Index released today. The latest ranking marks a significant shift in global influence, reinforcing China’s growing ability to shape international perceptions through technology, business, and culture. The annual index, based on a survey of more than 170,000 respondents across 100 countries, highlights China’s rising status across multiple dimensions. Economic diplomacy, technology leadership, and the global expansion of Chinese brands have propelled the country to an all-time high soft power score of 72.8 out of 100. While the United States retained the top position, its declining reputation — driven by political instability and governance concerns under President Donald Trump’s second term — signals mounting challenges for U.S. influence. The United Kingdom’s fall to third place underscores stagnation in its business and governance metrics, contrasting with China’s deliberate efforts to enhance its global standing. China’s soft power strategy David Haigh, Chairman of Brand Finance, attributes China’s rise to its sustained investments in economic attractiveness, cultural engagement, and governance stability. He points to China’s growing reputation for sustainability, its expanding influence in the luxury and technology sectors, and its positioning as an increasingly trusted international partner. Although China has been recognized as an economic powerhouse for decades, its ability to shape global culture and consumer behavior remains an open question. The country’s entertainment sector has made significant strides, evidenced by the box office success of Nezha 2. The animated sequel recently overtook Pixar’s Inside Out 2 to become the highest-grossing animated film globally, earning $1.69 billion. However, over 99% of its revenue came from the domestic market — a stark contrast to the globalized distribution strategy of Hollywood films. At the same time, Chinese brands in luxury, technology, and e-commerce continue to make international inroads. BYD, now the world’s largest electric vehicle manufacturer, recorded an 83 percent year-over-year increase in overseas sales last month. Beauty brand Florasis has expanded into European markets, while Pinduoduo’s fusion of social networking and e-commerce has been increasingly recognized as an innovative model for online retail. AI disruption: China's DeepSeek is reshaping the market China’s soft power gains are also emerging in the technology sector, where the launch of DeepSeek AI has shaken up U.S. markets. The debut of the cost-efficient AI model triggered a $969 billion selloff in semiconductor and AI infrastructure stocks, signaling a major disruption in the global AI race. The immediate reaction in financial markets was striking. More than 70% of stocks in the Technology Select Sector ETF (XLK) declined, with Nvidia losing nearly $600 billion in value before rebounding as investors bought the dip. DeepSeek’s success suggests that China is no longer merely catching up in AI innovation — it is actively reshaping the industry’s trajectory. However, a key challenge is censorship. DeepSeek AI employs multi-layered content moderation, filtering sensitive topics, erasing responses mid-sentence, and retrospectively reviewing answers for compliance. While this aligns with China’s regulatory framework, it also raises concerns about the AI model’s international adoption. China's soft power impact on global luxury, culture Luxury brands must also consider the broader implications of China’s soft power expansion. With global influence increasingly dictated by digital ecosystems, entertainment, and sustainability narratives, Western luxury houses may need to rethink their approach. For decades, Hollywood, French fashion, and European heritage brands have maintained uncontested cultural dominance. Now, China is closing the gap, driven by homegrown brands expanding overseas, the success of domestic films, and advancements in AI-driven consumer engagement. Yet, the question remains: can Chinese luxury and cultural brands transcend their domestic success to achieve true global influence? The record-breaking box office of Nezha 2 is a milestone, but the challenge remains whether Chinese entertainment and fashion can scale globally in the same way Hollywood and European maisons have. Who’s gaining and who’s losing in soft power? Despite China’s rise, the U.S. continues to lead the Global Soft Power Index, ranking high in Familiarity, Influence, and Business & Trade. But its governance rankings have slipped, reflecting growing political instability and economic unpredictability. Notably, the United Arab Emirates maintained its 10th position, bolstered by business-friendly policies and diplomatic influence. Israel and Ukraine saw sharp declines due to ongoing geopolitical conflicts affecting their global reputation. What’s next? The future of China’s soft power influence Whether in AI, luxury, or cultural exports, China is no longer simply competing — it is reshaping the global balance of influence. The coming years will reveal whether this momentum translates into lasting power, or if China remains an economic force without full cultural integration. For brands, investors, and global policymakers, China’s soft power expansion is no longer a future possibility — it is a present reality.

China overtakes UK in soft power rankings for 1st time

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Published February 20, 2025

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China overtakes UK in soft power rankings for 1st time