1. Beijing Deploys Legal Tools to Counter U.S. Sanctions

What Happened: On May 2, China’s Ministry of Commerce issued a prohibition order under its 2021 Blocking Rules, ordering domestic companies not to recognize or enforce U.S. sanctions on five Chinese petrochemical firms linked to Iranian oil transactions. The directive shields private Chinese refiners from U.S. sanctions tied to the Iranian oil trade and prohibits domestic compliance. This marks a stark departure from Beijing’s longstanding approach of publicly criticizing U.S. sanctions while often allowing major firms to comply to preserve access to the U.S. financial system.

Why It Matters: Beijing is now using the legal tools it built between 2020 and 2022, including its formalized export control regime, to counter U.S. “long-arm jurisdiction.” This escalation puts pressure on Chinese banks and corporations, leaving them caught between domestic mandates and international financial compliance. Ultimately, both Washington and Beijing are aggressively testing each other’s boundaries, capacities, and economic leverage just one week before the high-stakes Trump-Xi summit in Beijing.

By Shengyu Wang, Research Assistant, Center for China Analysis

Learn More: Read “Guided Autonomy: America Watching in Xi’s China“ by CCA Senior Fellow Guoguang Wu.

2. Wang–Rubio Call Spotlights Taiwan Ahead of Beijing Summit

What Happened: On April 30, China’s Minister of Foreign Affairs, Wang Yi, held a phone call with U.S. Secretary of State Marco Rubio to discuss U.S.-China relations and prepare for the upcoming Trump-Xi summit. The two officials discussed Iran, the war in Ukraine, and U.S. sanctions and technology controls on China, among other hot-button issues. Taiwan, in particular, was discussed at length. Wang Yi reiterated that Taiwan is a non-negotiable “core interest,” warning against U.S. support for Taipei, while Rubio emphasized deterrence and support for Taiwan, framing it in terms of democracy and regional stability.

Why It Matters: Their positions on Taiwan remain fundamentally incompatible, setting up a delicate discussion between Trump and Xi in Beijing. Trump could ease tensions by shifting U.S. rhetoric—for example, by publicly stating that the United States “opposes Taiwan independence” as Beijing desires. Such a move could reduce friction over the thorniest issue in U.S.-China relations by signaling clearer limits on U.S. support for Taiwan independence. However, any rhetorical shift has risks: it would likely face pushback in Congress, draw concern in Taiwan, and could prompt Congress to insert new legislative language pushing back on Trump’s formulation.

By Lyle Morris, Senior Fellow on Foreign Policy and National Security, Center for China Analysis (@LyleJMorris)

Learn More: Read “Xi Travels Less but the World Is Coming to Beijing“ by CCA Fellow Neil Thomas and CCA Intern Yuxuan Wei.

3. Taiwan’s President Lai Visits Eswatini Despite Airspace Disruptions

What Happened: On May 5, Taiwan’s President Lai Ching-te returned to Taipei after completing a state visit to Eswatini, its only African diplomatic ally. China reportedly pressured three Indian Ocean states—Seychelles, Mauritius, and Madagascar—to revoke overflight permission for Lai’s aircraft, delaying the trip by about ten days from its original April 22 start date for King Mswati III’s 40th accession anniversary. Lai ultimately flew aboard the private jet of the King, with the return trip taking a sweeping southern detour through the Indian Ocean. Three Taiwanese Air Force F-16s escorted the aircraft as it re-entered Taiwanese airspace.

Why It Matters: Taiwan’s successful visit demonstrates its resilience in maintaining formal partnerships under pressure, including through the use of “arrive then announce” diplomacy to circumvent interference from China. Meanwhile, China’s pressure on Eswatini reflects its broader strategy to raise the political and reputational costs of maintaining ties with Taiwan. The episode also suggests this competition is extending into more operational domains—such as overflight permissions and transit access—creating a more restrictive environment in which Taiwan’s external engagement increasingly relies on ad hoc arrangements.

By Feifei Hung, Affiliated Researcher, Center for China Analysis

Learn More: Read “Positioning the KMT in the U.S.–China–Taiwan Triangle: Cheng Li-wun’s Early Tenure“ by CCA Senior Fellow Lyle Morris and CCA Intern Sheng-Wen Cheng.

4. Australia and China Advance Jet Fuel Cooperation

What Happened: From April 28 to 30, Australian Foreign Minister Penny Wong traveled to China to meet her counterpart, Wang Yi, China’s Minister of Foreign Affairs. The pair convened the eighth China-Australia Foreign and Strategic Dialogue to foster mutual trust and cooperation. Both sides reaffirmed the importance of their bilateral relationship and commitment to deeper collaboration. Wong also announced that China agreed to cooperate with Australian businesses on jet fuel shipments.

Why It Matters: Amid ongoing instability and energy market volatility from tensions over the Strait of Hormuz, China-Australia cooperation is vital in bolstering energy security for both nations and regional partners. Since March, China has reduced its fuel exports to protect its domestic supply. However, China’s openness to working with Australia lends credibility to reports that it may loosen its restrictions on fuel exports this month.

By Taylah Bland, Fellow on Climate and the Environment, Center for China Analysis (@Taylahbland)

Learn More: Read “The Evolving Politics of Climate Change in China“ by CCA Senior Fellow Guoguang Wu and CCA Fellow Neil Thomas.

5. Xi Urges Youth to Serve National Priorities

What Happened: Ahead of China’s Youth Day, Xi Jinping sent a letter to representatives of Chinese youth, urging them to follow the Party’s guidance and dedicate themselves to frontline sectors like technological innovation, rural revitalization, social services, and border defense. The letter calls on young people to align their personal ambitions with the broader goals of national development. This message comes as 2026 marks the first year of the 15th Five-Year Plan, presenting new opportunities for youth to drive national progress.

Why It Matters: During his first term, Xi introduced China’s first central-level youth development blueprint—the Medium- and Long-Term Youth Development Plan (2016–2025)—which promoted youth advancement across ten key areas, including ideology, education, health, employment, and entrepreneurship. In the ideological sphere, Beijing launched initiatives such as the “Young Marxists Training Project,” aimed at cultivating no fewer than 200,000 young Marxists annually. While the CCP likely does not lack young political loyalists, the more pressing question is whether it faces a shortage of talent capable of driving national strategic priorities. How Beijing plans to cultivate such talent over the next decade will be an important issue to watch.

By Lobsang Tsering, Senior Research Associate on Chinese Politics, Center for China Analysis

Learn More: Read “The 19 Percent Revisited: How Youth Unemployment Has Changed Chinese Society“ by CCA Fellow Barclay Bram.

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1. China Blocks Meta’s Manus Acquisition

What Happened: On April 27, the foreign investment security office of China’s National Development and Reform Commission ordered the unwinding of Meta’s roughly $2 billion acquisition of Manus, a Chinese-founded AI agent startup based in Singapore. The decision followed U.S. sanctions on Hengli Petrochemical’s Dalian refinery over Iranian oil purchases and comes amid broader pressure on Chinese firms in sensitive supply chains.

Why It Matters: Chinese AI application developers face a monetization gap at home — domestic willingness to pay is low, and capital markets are thin. The decision signals to Chinese AI entrepreneurs and investors that nominal offshore corporate structure offer limited protection from political risk. Beijing risks narrowing the very exit pathways that make Chinese AI ventures financeable. AI startups are likely to either move abroad from the outset or rely more heavily on domestic markets and capital to avoid regulatory risk.

By Shengyu Wang, Research Assistant, Center for China Analysis

Learn More: Read “China’s AI Token Drive is Really About Upgrading Inland Economies,” an opinion piece by CCA Fellow Lizzi C. Lee.

2. Pakistan President’s China Visit Puts CPEC Back in Focus

What Happened: On April 25, Pakistani President Asif Ali Zardari began a week-long visit to China, with scheduled stops in Hunan and Hainan to advance economic cooperation and the next phase of the China-Pakistan Economic Corridor (CPEC). In Hunan, discussions centered on seed technology, agricultural research, machinery, mineral processing, and industrial collaboration. In Hainan, China’s southern free-trade port province, Zardari expressed interest in port development, fisheries, and strengthening trade and investment ties. The visit also coincides with Pakistan’s announcement of new transit routes linking Gwadar, a port in Pakistan, to the Iranian border.

Why It Matters: Zardari’s trip highlights the core challenge of CPEC 2.0: shifting from infrastructure buildout to commercial productivity. Pakistan is looking to Hunan for agricultural and industrial inputs and to Hainan as a model for port-led trade and logistics, aimed at making better use of existing CPEC infrastructure, including Gwadar. At the same time, new transit routes to Iran position Gwadar within a broader regional trade network, especially as instability near the Strait of Hormuz increases demand for alternative routes. Yet success will depend on whether these efforts translate into sustained investment, exports, and cargo flows, and not leave CPEC underutilized.

By Jie Gao, Research Associate on Foreign Policy and National Security, Center for China Analysis

Learn More: Read “The Electoral Equation: China’s BRI Investments Amid Political Transitions” by ASPI Director of South Asia Initiatives Farwa Aamer and Blake Berger.

3. China-India Defense Ministers Hold Talks as Tensions Ease

What Happened: China’s Defense Minister Dong Jun met with his Indian counterpart Rajnath Singh on April 28 on the sidelines of the Shanghai Cooperation Organization’s Defense Ministers’ meeting in Bishkek, Kyrgyzstan. The meeting addressed tensions along the Line of Actual Control (LAC) on the disputed Himalayan border, with both ministers calling for “peace and tranquility.”

Why It Matters: This was not the first meeting between Dong and Singh — they met in Qingdao in June last year, and before that in November 2024 — but the tone suggests some improvement in relations between the militaries of the two Indo-Pacific powers. Efforts to stabilize the Sino-Indian relationship have accelerated since the Trump Administration’s “Liberation Day” tariffs, and the two ministers also addressed the situation in the Middle East, where they share common interests. Dong’s position as a PLA Navy admiral, rather than in the ground forces that have faced off along the LAC over the past five years, could aid his efforts to engage more constructively with Indian counterparts. However, without a position on the Central Military Commission, his military and political authority is more constrained than that of his predecessors, such as Li Shangfu and Wei Fenghe.

By Andrew Chubb (@zhubochubo), Foreign Policy and National Security Fellow, Center for China Analysis

Learn More: Read “A New Triangle: The Interplay Between China and EU-India Relations” by CCA Senior Fellow Philippe Le Corre.

4. Beijing Tightens Political Control While Expanding Protections for Gig-Economy Workers

What Happened: Beijing recently issued new guidelines on strengthening the management and services for “new employment groups,” referring largely to gig-economy and flexible workers. The directive outlines two primary objectives: first, to ensure that these workers are guided by Xi Jinping Thought, reinforcing their alignment with the Party and deepening their political, ideological, theoretical, and emotional identification with it; and second, by 2027, to achieve comprehensive coverage of Party organizations within these groups, while gradually standardizing labor practices, improving working conditions, and more effectively safeguarding workers’ legal rights.

Why It Matters: As the lead-up to the 2027 Party Congress intensifies, Beijing is focused on ensuring that the country’s roughly 84 million gig-economy workers do not become a source of social instability. At the same time, authorities are increasingly concerned about what they see as weakening political and ideological identification among younger generations with the Party. As a result, the central leadership is reportedly paying greater attention to causes of declining patriotic consciousness among young people and signs of weakening ideals and convictions among young cadres. Youth accounted for approximately 26% of China’s population in 2025, underscoring the scale and urgency of this challenge.

By Lobsang Tsering, Senior Research Associate on Chinese Politics, Center for China Analysis

Learn More: Read “The 19 Percent Revisited: How Youth Unemployment Has Changed Chinese Society“ by CCA Fellow Barclay Bram.

5. Southern China Battles Extreme Rainfall

What Happened: On April 26, torrential rainfall struck Qinzhou, a city in Guangxi, southern China. Qinzhou authorities said the city’s meteorological station recorded over 270 millimeters of rainfall (about 10 inches) during a 24-hour period. The rain forced the evacuation of more than 200 residents, submerged vehicles, and caused waterlogging, as rescue crews were deployed to help those trapped in their homes. Rainfall of this magnitude typically occurs in mid- to late May, after the arrival of the summer monsoon.

Why It Matters: The rare timing and intensity of this downpour in southern China reinforces that climate impacts in the form of extreme weather are still occurring. With the monsoon season yet to start and the summer months still to come, China must continue to prioritize adaptation and resilience. Beyond policy, continued coordination across departments on emergency management and early warning is crucial to safeguarding communities and infrastructure.

By Taylah Bland (@Taylahbland), Fellow on Climate and the Environment, Center for China Analysis

Learn More: Read “Unpacking China’s New Headline Climate Targets” by CCA Senior Fellow Li Shuo and Fellow Kate Logan.

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1. China’s Humanoid Robots Break Men’s World Record in Beijing Half-Marathon

What Happened: On April 19, Honor’s humanoid robot “Lightning” won the Beijing E-Town Half Marathon in 50 minutes and 26 seconds, surpassing the men’s world record and outpacing all 12,000 human competitors. The event drew over 300 robots from more than 100 teams.

Why It Matters: The race is as much industrial policy as it is spectacle. Humanoid robot development is a stated priority in China’s 15th Five-Year Plan, and investment in embodied AI reached 73.5 billion yuan in 2025. Chinese firms AGIBOT, Unitree, and UBTech lead global vendors by humanoid shipment volume. But doubts remain: only 40% of robots ran autonomously, and ultimately, humanoid robots may struggle to translate into real-world applications, such as in elder-care settings. Beijing’s playbook of high-visibility demonstrations to accelerate commercialization has worked before with EVs and AI, but whether humanoids follow the same trajectory remains an open question.

By Shengyu Wang, Research Assistant, Center for China Analysis

Learn More: Watch "DeepSeek Moment, One Year Later: The State of U.S.-China AI Competition," moderated by CCA Fellow Lizzi C. Lee with CCA Honorary Senior Fellows Alvin Wang Graylin and Paul Triolo.

2. Central Inspection Teams Target China’s Security and Stability Sectors

What Happened: China’s central discipline inspection teams launched a new round of inspections across 36 central institutions in the security and social stability sectors, including the Central Political and Legal Affairs Commission, the Ministry of Public Security, and the National Public Complaints and Proposals Administration. According to the announcement, the inspections aim to reinforce loyalty to Xi Jinping while ensuring that the central leadership’s major decisions are fully implemented. During this period, dedicated hotlines and mailboxes have been established to receive complaints, particularly those involving disciplinary violations by senior officials.

Why It Matters: The previous round of inspections in regions such as Xinjiang helped drive high-level purges, including Politburo member Ma Xingrui. Reports indicate that more than 60% of major corruption cases stem from public tip-offs submitted during inspection periods. As a result, the coming months could see further investigations or purges targeting senior officials in the political-legal affairs, social stability, and public welfare systems. Amid intensified political scrutiny, the 36 institutions under inspection are likely to exercise greater caution when handling major issues.

By Lobsang Tsering, Senior Research Associate on Chinese Politics, Center for China Analysis

Learn More: Read “What Will Xi Jinping’s Priorities Be in 2026?” by CCA Fellow Neil Thomas and Lobsang in China 2026: What to Watch.

3. China Warns Travelers Off Seattle Airport

What Happened: China warned its citizens to avoid Seattle-Tacoma International Airport after reports that roughly 20 Chinese scholars were denied entry to the United States despite holding valid visas. Chinese officials accused U.S. border authorities of “malicious interrogation,” framing the episode as a consular and treatment issue rather than an isolated immigration case.

Why It Matters: The incident reflects a broader shift in how both governments are managing cross-border academic exchange. The United States has increased scrutiny of Chinese researchers on national security grounds, while China has become more willing to respond publicly through travel advisories and diplomatic signaling. These actions are raising the uncertainty and cost of routine mobility. Over time, unpredictable entry conditions may discourage early-career scholars and weaken one of the few remaining channels of stable U.S.–China engagement. The dynamic also risks becoming self-reinforcing: heightened screening invites reciprocal warnings, which in turn strengthen the case for further restrictions, narrowing the space for scientific collaboration, especially in sensitive or strategic fields.

By Emma Zang (@DrEmmaZang), Fellow on Chinese Society, Center for China Analysis

Learn More: Watch “What is the Cost to Global Science? U.S.-China Relations and the Future of Innovation” featuring Yasheng Huang, CCA Honorary Senior Fellow, Susan Shirk, Director Emeritus of the 21st Century China Center, and others.

4. PLA Warships Transit Near Southwest Japan Following Taiwan Strait Passage

What Happened: China and Japan conducted closely timed naval activities, with each side transiting through sensitive waterways. On April 22, two PLA Navy vessels returned from the western Pacific via the Yonaguni–Iriomote Waterway following what Beijing described as a routine exercise, days after the same formation transited through the Yokoate Waterway in the first publicly recorded PLA transit of that channel. Both passages are strategically significant as they run along Japan’s southwest island chain near military facilities and potential intervention corridors tied to Taiwan and the East China Sea.

Why It Matters: This episode reflects a pattern of reciprocal deterrence signaling through operational activity between China and Japan. The PLA transit followed Japan’s April 17 Taiwan Strait passage — which Beijing criticized — and served as a deterrent signal directed at Tokyo over Taiwan-related activity. Days earlier, Japan fully participated for the first time in the annual U.S.–Philippines Balikatan exercise, highlighting its expanding role in regional contingency planning. This dynamic is likely to lead to a more entrenched rivalry in which Beijing frames Japan’s naval moves through the lens of remilitarization and historical revisionism, complicating near-term diplomatic engagement.

By Jie Gao, Research Associate on Foreign Policy and National Security, Center for China Analysis

Learn More: “A Stress Test for Resilience: Risks & Opportunities for the U.S.-Japan Alliance,” by Emma Chanlett-Avery, Director of Political-Security Affairs and Deputy Director at Asia Society Policy Institute.

5. China’s Clean Tech Exports Surge amid Middle East Energy Crisis

What Happened: China’s exports of solar panels and batteries jumped sharply in March, both month-on-month and year-on-year, offering early evidence that global demand for Chinese clean-tech products is being buoyed by volatility stemming from the conflict in Iran and the broader Middle East crisis. According to data released by China’s General Administration of Customs on April 18, exports of lithium-ion batteries, electric vehicles, and solar cells grew by 34%, 53%, and 80%, respectively, on an annual basis.

Why it matters: This surge builds on a wave of overseas sales already driven by China’s cost competitiveness, rising global energy demand, and accelerating fuel switching. The war in Iran is likely to intensify that trend. With its domestic economy relatively insulated from oil and gas price shocks and its clean-tech industries primed for export, China is emerging as one of the long-term energy winners of this crisis.

By Li Shuo, Director of China Climate Hub, and Senior Fellow, Center for China Analysis

Learn More: Read “The Evolving Politics of Climate Change in China” by CCA Fellow Neil Thomas and Senior Fellow Guoguang Wu.

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1. China Expresses Alarm Over U.S. Blockade of Strait of Hormuz

What Happened: Chinese officials labeled President Donald Trump’s decision to blockade the Strait of Hormuz as “dangerous,” “irresponsible,” and against global interests. The remarks from China’s Ministry of Foreign Affairs came after the United States began enforcing a blockade on Iranian ports along the Strait on Monday. President Trump ordered the blockade after peace talks with Tehran collapsed this weekend. Beijing warned the move risks further escalation and disruption of global energy flows, which China heavily relies upon.

Why It Matters: China’s diplomatic posture toward U.S.–Iran developments — especially around the Strait of Hormuz — has been consistent but more sharply articulated in recent days. China is positioning itself as a forceful voice for de-escalation, implicitly blaming U.S. actions for jeopardizing fragile diplomatic progress. Given China’s recent behind-the-scenes brokering of a ceasefire through Islamabad, Beijing is taking a more active diplomatic approach in Iran and the Middle East in general. Ultimately, however, China is keenly aware that true peace flows through the corridors of Washington, Tehran, and Jerusalem.

By Lyle Morris, Senior Fellow on Foreign Policy and National Security (@LyleJMorris)

Learn More: Read “PLA Watch,” a monthly newsletter centered on delivering insights into China’s military affairs on the Center for China Analysis’s Substack.

2. KMT Chair Meets Xi in Beijing

What Happened: On April 10, KMT Chair Cheng Li-wun met with Xi Jinping in Beijing. At a post-meeting press conference, Cheng relayed Xi's closed-door remarks, stating that mainland China respects the social system and way of life chosen by Taiwan compatriots. Xi also stressed the importance of in-person meetings and indicated that cross-Strait exchanges should not be limited to KMT–CCP interactions. Cheng emphasized that if the KMT returns to power in 2028, the party would pursue an institutionalized cross-Strait peace framework. The following day, the PRC's Taiwan Affairs Office released ten policy measures spanning direct flights, tourism, agricultural and fisheries trade, cultural exchanges, and KMT–CCP communication mechanisms.

Why It Matters: The meeting was a win for both Cheng and Xi, but its impact is uncertain. For the KMT, the visit allows Cheng to demonstrate tangible achievements ahead of upcoming elections in Taiwan, bolstering her legitimacy within the KMT base and reinforcing her position that engagement can bring about cross-Strait stability. For Beijing, the meeting and subsequent policies are policy incentives designed to cater to Taiwan’s opposition party. The meeting also signals to Washington that cross-Strait relations can be managed peacefully, albeit in a way that bypasses Taiwan's ruling government. However, it remains unclear how Taiwanese voters will respond to the visit, especially at the ballot box.

By Sheng-Wen Cheng, Research Intern, Center for China Analysis

Learn More: Read “Positioning the KMT in the U.S.–China–Taiwan Triangle: Cheng Li-wun’s Early Tenure” by CCA Senior Fellow Lyle Morris and Sheng-Wen Cheng.

3. China Unveils Counter-Sanctions Framework Targeting Foreign Firms

What Happened: China enacted the “Anti-Foreign Unjustified Extraterritorial Jurisdiction Regulations,” a formal legal framework designed to counter measures it deems as unlawfully extraterritorial, including foreign sanctions. Its centerpiece is the “Malicious Entity List,” similar to the U.S. Treasury’s Specially Designated Nationals list. The regulation targets foreign entities and individuals who promote or enforce “unjustified” sanctions against China, subjecting them to penalties, including trade bans, data transfer blocks, and entry restrictions.

Why It Matters: This is the latest case of Beijing seeking to build its strategic leverage by mirroring the established sanctions toolkits of the United States and the EU, shifting from passive defense to an active, institutionalized posture. For global firms, complying with Western sanctions could now trigger direct, legally binding retaliation from China. Crucially, the regulation includes a “penetration rule,” mirroring the U.S. Office of Foreign Assets Control 50% rule, meaning penalties automatically extend to any subsidiaries actually controlled by a blacklisted entity.

By Lizzi C. Lee, Fellow on Chinese Economy (@wstv_lizzi), and Shengyu Wang, Research Assistant, Center for China Analysis

Learn More: Read “China’s Rare Earth Export Controls” on the Center for China Analysis’s Substack, by CCA Honorary Senior Fellow Paul Triolo and Senior Partner at Tidalwave Solutions Cameron Johnson.

4. Beijing Tightens Control Over Industry Associations While Steering International Engagement

What Happened: Beijing recently issued new guidance aimed at deepening reforms of China’s industry associations and chambers of commerce. The most significant provisions require organizations to adhere to Xi Jinping Thought, strengthen internal Party-building, and adopt governance structures consistent with the socialist market economy. The directive also mandates the establishment of formal reporting mechanisms for major issues, requiring associations to report to and seek “instructions” from Party authorities. Oversight will be tightened in key areas, including asset and financial management, foreign exchanges and international cooperation, and ideological work.

Why It Matters: China currently has more than 100,000 registered industry associations and chambers of commerce, with a combined membership of roughly 7.7 million companies. The new guidance signals a dual objective in the realm of international engagement, encouraging organizations to establish or participate in international economic and trade dialogue mechanisms, while formalizing adherence to Party leadership and Xi Jinping Thought in international exchanges. Taken together, these changes suggest that most industry associations will face tighter constraints in global engagement. Those that remain active on the international stage are likely to be organizations that have received explicit institutional authorization and support from Beijing.

By Lobsang Tsering, Senior Research Associate on Chinese Politics, Center for China Analysis

Learn More: Read “The Art of Dealing with China“ by CCA Fellow Lizzi C. Lee, CCA Co-Founder and Managing Director Jing Qian, and CCA Senior Fellow Craig Allen.

5. Australia–China Deepen Clean Energy Ties but Energy Security Risks Linger

What Happened: On April 7, Australian Prime Minister Anthony Albanese spoke by phone with Chinese Premier Li Qiang. The two leaders discussed further cooperation in clean energy and electric vehicles while underscoring the importance of continued bilateral cooperation in light of ongoing geopolitical instability. Albanese said the two discussed regional energy security, but the Xinhua readout made no mention of energy security or fuel. Albanese is set to attend the 2026 APEC Economic Leaders’ Meeting later this year, where he is expected to meet with Premier Li.

Why It Matters: Amid ongoing tensions due to the U.S.–Israel–Iran conflict and associated strains on energy security and supply chains, China has imposed fuel export bans to protect its domestic industry. China is a major supplier of Australian jet fuel, so any tightening of Chinese export controls could have downstream effects on Australia’s aviation sector and broader energy supply. The call also highlights the need to balance deeper cooperation in future-facing sectors like clean energy, while addressing immediate vulnerabilities exacerbated by an uncertain geopolitical environment.

By Taylah Bland, Fellow on Climate and the Environment, Center for China Analysis (@Taylahbland)

Learn More: Read “The Evolving Politics of Climate Change in China” by CCA Fellow Neil Thomas and Senior Fellow Guoguang Wu.

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1. Chinese AI Firms Expose U.S. Military Movements in Iran

What Happened: Several Chinese companies with ties to the PLA have launched AI tools designed to monitor U.S. military movements in and around Iran. One of the Chinese companies, Hangzhou-based MizarVision, reportedly used satellite imagery, flight transponder data, and ship tracking information processed through AI to track U.S. carrier group movements and shifts in military posture ahead of Iranian operations. In response, the U.S. government requested on April 5 that private U.S. companies restrict access to satellite imagery from sensitive areas and delay commercial image releases to minimize intelligence risks.

Why It Matters: The case highlights both the opportunities and risks posed by publicly available commercial satellite imagery and AI analytics. Private companies can now leverage this data to generate near-real-time military intelligence, sharing it with private and public clients. While the U.S. government regulates sensitive imagery exports, foreign firms can still exploit private sector data — presenting policymakers with the difficult challenge of balancing the benefits of open satellite imagery against the national security risks of foreign companies sharing that data with foreign governments.

By Sheng-Wen Cheng, Research Intern, Center for China Analysis, and Lyle Morris, Senior Fellow on Foreign Policy and National Security (@LyleJMorris).

Learn More: Read “PLA Watch,” a monthly newsletter centered on delivering insights into China’s military affairs on the Center for China Analysis’s Substack.

2. Chinese AI Models Now Drive Nearly Half the World’s AI Traffic

What Happened: According to OpenRouter, a platform that aggregates access across major AI models, total usage for the week of March 30 to April 5 reached 27 trillion tokens. Chinese models accounted for 12.96 trillion, exceeding U.S. models (3.03 trillion) for the fifth consecutive week. The six most-used models on the platform were all Chinese, led by Alibaba’s Qwen3.6 Plus and Xiaomi’s MiMo-V2-Pro.

Why It Matters: The data highlights where China is currently strongest: open-weight AI. Chinese models are competitive on cost, speed, and practical performance, driving broad adoption among developers worldwide, including many U.S. startups, for production and agent-based use. At the same time, this is not the full picture. Closed-source frontier models from U.S. firms continue to lead in raw capability and enterprise spending. Critics also note that OpenRouter skews toward price-sensitive developers and certain use cases, and that some Chinese models game the system by engaging in "bench-maxing," though these caveats do not negate the broader trend in adoption.

By Shengyu Wang, Research Assistant, and Lizzi C. Lee, Fellow on Chinese Economy, Center for China Analysis (@wstv_lizzi)

Learn More: Read “Cinematic Sovereignty: How China’s New Generation of AI Video Models Could Reshape U.S. Soft Power Projection” by CCA Senior Fellow Alvin W. Graylin on the Center for China Analysis's Substack.

3. Beijing Congratulates Min Aung Hlaing on His Election as Myanmar’s President

What Happened: The Chinese Foreign Ministry spokesperson Mao Ning congratulated Min Aung Hlaing on his election as Myanmar's new president, after winning over half of the votes in a carefully controlled election. Min Aung Hlaing had previously served as the Commander-in-Chief of the Myanmar Defence Services from 2011 to 2026, and seized power from a democratically elected government led by Aung San Suu Kyi in the 2021 coup d'état.

Why It Matters: Myanmar has long been strategically important to China, given its overland access to the Indian Ocean via the China-Myanmar Economic Corridor (CMEC) and the deep-sea port of Kyaukphyu, currently under construction. Beijing will likely use the election as an opening to deepen supply chain integration while demanding security guarantees and maintaining economic ties with rebel groups. For one, the rebel-controlled Kachin State, which lies to the north of the country and borders China and India, features a significant concentration of heavy rare earth elements, which play a pivotal role in renewable technologies and defense. The mining of these elements surged in the aftermath of the coup and has amplified the geopolitical salience of Myanmar for China's foreign policy — especially in light of possible rapprochement between the newly “elected” government and Western states in search of diversification in their rare earth supplies.

By Brian Wong, Non-Resident Honorary Fellow, Center for China Analysis

Learn More: Read “Military Elections Will Not Resolve Myanmar’s Deeper Problems” by Dr. Hunter Marston.

4. Cuba Deepens Reliance on China’s Clean Technology

What Happened: Last month, Cuba experienced two nationwide blackouts within a single week, underscoring the persistent instability of its electricity grid. In light of the longstanding U.S. embargo, tightened under the Trump administration, Havana seeks to secure energy supplies, and Beijing has emerged as a key provider of clean energy technology. Reports indicate that China supplied Cuba with one gigawatt of photovoltaic panels in 2025, alongside a sharp rise in battery imports to US$56 million, up from US$7.3 million in 2024.

Why It Matters: Amid ongoing U.S. energy constraints, Cuba’s uptake of Chinese energy technologies offers a potential pathway to scale up its energy supply, underscoring China’s growing geopolitical relevance as a competitive supplier of alternative energy solutions. More broadly, it highlights Beijing’s expanding role as countries elsewhere seek to close urgent energy gaps in the wake of the war in Iran.

By Taylah Bland, Fellow on Climate and the Environment, Center for China Analysis (@Taylahbland)

Learn More: Read CCA’s report, “The Evolving Politics of Climate Change in China,” by CCA Senior Fellow on Chinese Politics, Guoguang Wu, and CCA Fellow on Chinese Politics, Neil Thomas.

5. Beijing Links Rights Protection to Stability

What Happened: During a recent inspection in Liaoning, Chen Wenqing, China's top security official, urged local governments to step up efforts to identify and resolve social disputes, protect citizens’ legal rights, and maintain stability. He stressed integrating “rights protection” with “stability maintenance,” targeting flashpoints such as family, neighborhood, and land-related conflicts, and called for stronger early intervention mechanisms to prevent extreme incidents. By 2025, China had established 2,848 county-level social governance centers, which have handled over 10.7 million disputes.

Why It Matters: Before 2012, China saw roughly 100,000 mass incidents annually, underscoring persistent tensions between rights protection and stability maintenance. While Beijing now releases fewer figures, some Chinese analysts believe improved grassroots governance has reduced such incidents. More importantly, Xi Jinping in 2014 reframed the relationship, arguing that “rights protection is the foundation of stability, and stability is its guarantee,” seeking to reconcile what were once treated as competing priorities. As uncertainty mounts, Beijing’s ability to maintain this delicate balance remains an open question — particularly as some Western reports, such as those by Freedom House, indicate a surge in domestic incidents throughout 2025.

By Lobsang Tsering, Senior Research Associate on Chinese Politics, Center for China Analysis

Learn More: Read “The 19 Percent Revisited: How Youth Unemployment Has Changed Chinese Society” by Barclay Bram, CCA Fellow on Chinese Society.

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1. Taiwan’s KMT Chair Cheng Li-wun to Beijing

What Happened: On March 30, Beijing announced that Xi Jinping had extended an invitation to Kuomintang (KMT) Chair Cheng Li-wun to visit the mainland. Cheng accepted and will lead a KMT delegation to Jiangsu, Shanghai, and Beijing from April 7–12, which is the first visit by a sitting KMT chair to the mainland since 2016. However, whether a direct meeting between Cheng and Xi will take place has not been confirmed.

Why It Matters: The timing is significant on multiple fronts. Domestically, a meeting with Xi could reinforce Cheng’s leadership within the KMT and validate her strong pro-China stance. Cheng currently is facing internal pressure, notably from Taichung Mayor Lu Shiow-yen, whose recent visit to Washington and initial support for a defense budget exceeding the KMT caucus position — later moderated — are seen as a challenge to Cheng’s approach ahead of the 2028 presidential cycle. Internationally, Cheng’s visit gives Beijing the opportunity to show Washington that cross-strait dialogue can be managed bilaterally by Taiwan and the mainland, strengthening Xi’s hand in the run-up to the Trump-Xi summit in mid-May.

By Sheng-Wen Cheng, Research Intern, Center for China Analysis, and Lyle Morris, Senior Fellow on Foreign Policy and National Security (@LyleJMorris).

Learn More: Read “PLA Watch,” a monthly newsletter centered on delivering insights into China’s military affairs on the Center for China Analysis’s Substack.

2. Three Chinese Ships Transit the Strait of Hormuz

What Happened: On March 31, Mao Ning, spokesperson for China’s Ministry of Foreign Affairs, confirmed that three Chinese ships had recently transited through the Strait of Hormuz. Mao underscored that “the Strait of Hormuz and waters nearby are an important route for international goods and energy trade” while restating that “China calls for an immediate end to hostilities to restore peace and stability in the Gulf.” In response to the ongoing instability, China is reportedly considering extending its fuel export ban into April.

Why It Matters: The Strait of Hormuz remains a volatile bottleneck for global energy flows. While China has a diversified energy mix, network of importers, and stockpile of oil and gas, that doesn’t insulate it from potential disruptions. Roughly 45-50% of China’s crude oil imports transit the Strait of Hormuz, which represents around 6.6% of China’s overall energy consumption. China maintains its stance that the conflict should be de-escalated through diplomacy and appears to have a dual priority: safeguarding domestic energy security while preserving critical trade routes.

By Taylah Bland, Fellow on Climate and the Environment, Center for China Analysis (@Taylahbland)

Learn More: Listen to “Jeffrey Feltman on the Israel-Hezbollah Conflict” with non-resident Distinguished Fellow Jeffrey Feltman and Asia Society Policy Institute’s former Managing Director Rorry Daniels on Asia Inside Out, a podcast by ASPI.

3. Boao Forum at 25 Reaffirms China’s Regional Message of Openness and Stability

What Happened: The Boao Forum for Asia held its 2026 annual conference in Hainan from March 24–27, marking its 25th anniversary under the theme, “Shaping a Shared Future: New Dynamics, New Opportunities, New Cooperation.” Coming at the start of China’s 15th Five-Year Plan, the forum offered an early read on Beijing’s economic direction: green growth, digital upgrading, and sustained regional integration amid complex protectionist headwinds. The broader message was that Asia must remain a driver of growth and cooperation under conditions of rising uncertainty. Hainan’s Free Trade Port featured prominently as the practical expression of that agenda, positioned as a gateway for high-standard opening and stronger regional links.

Why It Matters: Boao was a timely exercise in reassurance. Under a confluence of tariff, supply-chain, and geopolitical pressure, Beijing used the forum to reaffirm that China still sees its future, at least in Asia, in openness, integration, and growth, with Hainan serving as a working model of high-standard opening. In that sense, Hainan will function as proof of concept: a demonstration of how China intends to deepen trade, services, and connectivity across the region, especially with its southern neighbors. The prominence of sustainability and “new productive forces” further suggested that Beijing wants the next phase of regional integration to center on resilience, green growth and clean energy, and economic upgrading. That reading was reinforced by regional voices at the forum, including Singapore Prime Minister Lawrence Wong’s emphasis on China’s role in Asia’s stability and prosperity.

By Kevin Zongzhe Li, former Affiliated Researcher, Center for China Analysis

Learn More: Read “Another Continent, Another Planet: The Curious Case of the Missing China Conversation at Davos” by CCA Fellow Neil Thomas.

4. China Launches World’s First International Data Governance Body

What Happened: China launched the World Data Organization (WDO) in Beijing on March 30, positioning it as the first global NGO focused on data governance. With more than 200 members across more than 40 countries, the WDO aims to harmonize cross-border data rules, cut compliance costs, and help Global South countries build data capacity.

Why It Matters: Beyond signaling China’s ambitions in global data governance, the WDO is a bid to ease investor concerns over “over-securitization.” As data becomes the backbone of AI development, Beijing is seeking a greater role in shaping global standards, and the WDO is an important step in that direction. However, despite recent institutional milestones like the establishment of the National Data Administration, China’s domestic data ecosystem remains fragmented. Recurring, large-scale data leaks expose severe gaps in privacy protection and cybersecurity, revealing a reality in which the overarching legal and regulatory framework has yet to catch up with Beijing’s data ambitions.

By Shengyu Wang, Research Assistant, and Lizzi C. Lee, Fellow on Chinese Economy, Center for China Analysis (@wstv_lizzi)

Learn More: Read “Assetizing, Trading, Franchising: China’s Strategy for Building a National Data Economy,” by CCA Affiliated Researcher Ran Guo.

5. Beijing Tightens Grip on Local Party Committees Ahead of Key Political Milestones

What Happened: Xi Jinping recently chaired the CCP Politburo’s March meeting, which reviewed the Regulations on the Work of Local Party Committees. The meeting emphasized that local Party committees must safeguard the authority of Xi and the central leadership and strictly implement their decisions. First introduced on a trial basis in 1996 and formalized in 2016, the regulations are now under renewed review — signaling a fresh push to reinforce central control over local governance in support of Xi’s national development agenda, most recently set forth in the 15th Five-Year Plan.

Why It Matters: The CCP now counts over 100 million members, with 5.25 million grassroots organizations and 3,199 local Party committees, making it the second-largest political party in history after India’s Bharatiya Janata Party. Xi has long warned of weak central oversight and remains wary of local autonomy and policy drift. Despite decades of institutional tightening, enforcement has been uneven. As the 21st Party Congress in 2027 approaches, strengthening local governance is likely to be a central priority at the upcoming Fifth Plenum. More robust oversight will be critical not only for implementing the 109 major projects outlined in the 15th Five-Year Plan, but also for enabling foreign firms to expand beyond China’s top-tier cities — both of which are key to shaping Xi’s economic legacy as he nears the end of his unprecedented third term.

By Lobsang Tsering, Senior Research Associate on Chinese Politics, Center for China Analysis

Learn More: Read Xi Gets His Way at Last, by CCA Senior Fellow Christopher K. Johnson.

1. Trump-Xi Summit Rescheduled for May

What Happened: The White House announced on Wednesday that the delayed summit between President Trump and President Xi Jinping in Beijing would be rescheduled for May 14–15. The meeting, originally slated for mid-April, was postponed so Trump could remain in Washington to manage the ongoing war in Iran. White House press secretary Karoline Leavitt also announced plans for Trump and first lady Melania Trump to host Xi and Madame Peng Liyuan for a reciprocal trip in Washington, DC later this year, underscoring both sides’ desire to restore leader level exchanges.

Why It Matters: The long-anticipated summit will be the first time a U.S. president has visited China since Trump’s own 2017 trip, and the first in-person meeting between Trump and Xi since the APEC Leaders’ Summit in Busan last October. Trade will be a key watchpoint on the agenda, especially after the February Supreme Court ruling invalidated Trump’s IEEPA-based tariffs, reducing Washington’s trade leverage heading into the talks. The war in Iran also looms large over the meeting: China buys over 80% of Iran’s oil exports, giving Beijing an outsized economic stake in the conflict. The meeting, originally scheduled for three days, has been reduced to two, and the shortened format may limit how much ground the two sides can cover.

By Jamie Lui, Assistant Director of Research and Strategy, Center for China Analysis

Learn More: Read “U.S. Leaders Need to See What’s Happening in China” an opinion essay in the New York Times by CCA Co-Founder and Managing Director Jing Qian and CCA Fellow Neil Thomas.

2. Li Qiang Casts China as Global “Fitness Center” at China Development Forum

What Happened: Premier Li Qiang, in his keynote at the China Development Forum this week, outlined China’s shift toward “new quality productive forces” and technological upgrading. He described the domestic market as a “fitness center” for global firms, framing it as an environment that demands sustained effort and adaptation. The metaphor points to an evolving official narrative, with China placing less emphasis on its role as a low-cost manufacturing base for foreign capital and more on its position as a competitive, innovation-driven market where firms are expected to navigate structural changes and intensifying local competition.

Why It Matters: The choice of metaphor is notable. Foreign business leaders, including Jörg Wuttke, former president of the European Union Chamber of Commerce in China, have used the “fitness center” analogy to characterize the pace and intensity of innovation in China. By echoing this language, Beijing appears to reinforce a perspective already articulated by foreign investors and executives, while signaling its expectations to multinational firms about the new, dual reality of operating in China: conditions are more demanding, but continued participation can support long-term competitiveness.

By Shengyu Wang, Research Assistant, and Lizzi C. Lee, Fellow on Chinese Economy, Center for China Analysis (@wstv_lizzi)

Learn More: Watch “Can China Become an Innovation Superpower?” by CCA Honorary Senior Fellow Yasheng Huang and Lizzi.

3. China Leans on Tehran Ties to Protect Energy Flows in Hormuz

What Happened: On March 24, Chinese Foreign Minister Wang Yi urged Iranian Foreign Minister Abbas Araghchi to seize a “window for peace” during their second high-level call since the start of the Iranian crisis. The call came as the United States explored indirect ceasefire talks with Iran, but no breakthrough had emerged. As fighting continues, the Strait of Hormuz remains a volatile bottleneck for global energy flows, prompting President Trump to repeat calls for a multilateral naval escort, an effort Washington hopes key partners — potentially including China — will support.

Why It Matters: Rather than joining a U.S.-led multilateral naval escort, Beijing appears to prefer protecting its economic stakes in the region through direct engagement with Tehran. By prioritizing diplomacy, China leverages its unique relationship with Tehran to negotiate safe passage for its vessels, an advantage that would be compromised by joining a Western-led military operation. Beijing also seeks to preserve its global image as a neutral power, and Chinese strategists worry that adding more naval presence would trigger a “vicious cycle” of retaliation. The success of China’s diplomacy is already evident as major Chinese shipping firms like Cosco have resumed Gulf bookings, and some Chinese-owned ships have resumed transiting Hormuz under Iran’s proposed safe corridor for “non-hostile” vessels. China is banking on its mediator role to secure vital energy flows while avoiding the strategic risks and high costs associated with direct military entanglement.

By Jie Gao, Research Associate on Foreign Policy and National Security, Center for China Analysis

Learn More: Listen to “Jeffrey Feltman on the Israel-Hezbollah Conflict” with non-resident Distinguished Fellow Jeffrey Feltman and ASPI’s Managing Director Rorry Daniels on Asia Inside Out, a podcast by the Asia Society Policy Institute.

4. China Signs Declaration to Triple Nuclear Energy

What Happened: At the second Nuclear Energy Summit 2026 in Paris on March 10, China signed the Declaration to Triple Nuclear Energy. The Declaration, which first launched at the World Nuclear Symposium ahead of COP28, calls for a collective effort to triple global nuclear energy capacity by 2050 in order to help countries keep on track to meet their Paris Agreement climate goals. China’s endorsement of the Declaration reflects recent 15th Five-Year Plan goals to develop 110GW of nuclear capacity by 2030. At the end of 2025, China’s nuclear capacity totaled 62GW which fell short of its 70GW target. China had also missed its earlier 58GW target for 2020. These shortfalls are largely attributed to the suspension of construction after the Fukushima nuclear disaster.

Why It Matters: Amid a backdrop of geopolitical instability and volatile global energy markets, China’s approach to increasing its nuclear capacity reinforces its “all of the above” strategy to diversify its energy sources. Its efforts to scale up solar, wind, hydro, and nuclear energy have reflected a desire to reduce reliance on external markets and build resilience domestically.

By Taylah Bland, Fellow on Climate and the Environment, Center for China Analysis (@Taylahbland)

Learn More: Read “The Evolving Politics of Climate Change in China” by CCA Fellow Neil Thomas and Senior Fellow Guoguang Wu.

5. Xi Reaffirms Commitment to Xiong’an as Political Stakes Rise

What Happened: On March 23, Xi Jinping, during his fourth inspection tour of the Xiong’an New Area since its establishment, reaffirmed that Beijing’s decision to develop Xiong’an was “entirely correct.” He called for sustained “strategic resolve” and “long-term patience” in transforming the area into a model of high-quality development. Following his remarks, Premier Li Qiang and Vice Premier Ding Xuexiang urged officials to fully implement Xi’s instructions, with a focus on improving public services and accelerating the growth of emerging and future industries. Xinhua News Agency reiterated that the project is a national “millennium plan.”

Why It Matters: As one of the signature “millennium projects” of the Xi era, Xiong’an was launched in 2017 with the slogan: “The 1980s looked to Shenzhen, the 1990s to Pudong, and the 21st century to Xiong’an.” Total investment has now exceeded 1 trillion yuan. Yet persistent criticism over slow progress in supporting infrastructure and public services has led some observers to label the area an “unfinished” city, raising questions about the project’s effectiveness. Beyond Xi Jinping himself, Xiong’an’s trajectory is increasingly tied to the political fortunes of senior officials overseeing regional development — particularly Li Qiang, Ding Xuexiang, He Lifeng, Yin Li, and Chen Min’er.

By Lobsang Tsering, Senior Research Associate on Chinese Politics, Center for China Analysis

Learn More: Read “Xi’s Personal Priorities: What Matters Most to China’s Leader?” by CCA Fellow Neil Thomas and Lobsang.

1. Trump’s China Trip Delay Not Expected to Change Beijing’s Basic Approach PLA Air Activity Near Taiwan Paused During Two Sessions

What Happened: Donald Trump announced he will delay his planned visit to China by about a month as he deals with the war in Iran. Recent reporting suggests Chinese officials remain in contact with Washington about the summit and are treating the postponement as manageable rather than alarming. A short delay gives both sides more time to prepare for a meeting that appears to have been short on planning and concrete deliverables, even as pre-summit talks continue on trade, agriculture, rare earths, and investment issues.

Why It Matters: The delay is unlikely to produce a major shift in China’s position. Whatever happens in Iran, Xi Jinping still appears to want a relatively stable relationship with Washington and to avoid a sharper spiral of tariffs, sanctions, or export controls. A prolonged war could raise energy and economic risks for China, but it is unlikely to overturn Beijing’s preference for steadier ties. The most likely path for U.S.-China relations remains high-level diplomatic stabilization with continued economic and security competition unfolding below. The postponement rather than cancellation of Trump’s trip suggests neither side wants to abandon top-level engagement, but certain shocks to the relationship, such as the kind seen during the 2023 balloon incident, can still disrupt diplomacy quickly.

By Neil Thomas, Fellow on Chinese Politics, Center for China Analysis (@neilthomas123)

Learn More: Read “Can the United States and China Find a New Equilibrium on Trade and Technology?” in China 2026: What to Watch, by Brendan Kelly and Michael Hirson

2. PLA Air Activity Near Taiwan Paused During Two Sessions

What Happened: Between February 27 and March 5, and again from March 7 to 10, 2026, PLA air activity around Taiwan’s Air Defense Identification Zone (ADIZ) paused completely — the longest lull since Taiwan began publicly releasing daily military data in 2020. The pause represents a rare break in otherwise routinized military drills near Taiwan. Air activity resumed on March 11, returning to an established pattern of regular incursions.

Why it Matters: The most likely explanation for the pause is that PLA air incursions into Taiwan’s ADIZ typically drop significantly around the time of China’s annual “Two Sessions” meetings, which occurred from March 4–11 — though a pause in air activity for 11 days is unprecedented since at least 2020. An alternate explanation is that recent PLA purges have degraded operational readiness. However, the PLA has demonstrated a capacity for complex joint operations near Taiwan despite recent personnel changes, including major exercises following the December 2025 purge of General Zhang Youxia. PLA Navy operations also did not decline during the same window, with 76 vessel transits recorded near Taiwan. Thus, these latter explanations seem less plausible. Now that air activity has resumed, expect sustained incursions near Taiwan for the foreseeable future.

By Lyle Morris, Senior Fellow on Foreign Policy and National Security (@LyleJMorris), and Sheng-Wen Cheng, Research Intern, Center for China Analysis

Learn More: Read “PLA Watch: Special Issue by Dr. Phillip C. Saunders” on the Center for China Analysis’ Substack

3. China’s Retail and Investment Data Show Conflicting Trends

What Happened: China’s National Bureau of Statistics (NBS) released its January–February 2026 data covering retail sales, fixed asset investment, and monetary conditions. Retail sales rose 2.8% year-on-year, with services at 5.6%, supported by the extended Spring Festival holiday and early trade-in subsidies. Fixed asset investment (FAI) rebounded to +1.8%, led by infrastructure (+11.4%) and equipment spending (+11.5%) as the 15th Five-Year Plan cycle begins. Private investment stayed in contraction at -2.6%, and real estate remained weak with new starts down 23%. The broad money supply (M2) grew 9.0%, signaling ample liquidity.

Why It Matters: The data came in well above a deeply pessimistic market consensus. Caixin’s survey had forecast FAI at -3.7% versus the actual +1.8%. But the composition raises concerns. Growth is driven by infrastructure and policy-supported equipment upgrades, while private investment, real estate, and underlying consumption remain soft. Inflation signals are still weak. February CPI rose 1.3%, driven by holiday effects, but the January–February average was only +0.8%, far below the 2.0% target. February producer prices at -0.9% confirms ongoing factory-gate deflation. Data from the People’s Bank of China shows ample liquidity in the banking system, yet credit demand remains subdued. Reaching the 2.0% inflation target will likely require stronger push on demand-side policy.

By Shengyu Wang, Research Assistant, and Lizzi C. Lee, Fellow on Chinese Economy, Center for China Analysis (@wstv_lizzi)

Learn More: Read “2026: The Year of Rebalancing” by Lizzi and Jing Qian, CCA Co-Founder and Managing Director.

4. Xi to Double-down on Centralized Governance Over the Next Five Years

What Happened: The full text of the 15th Five-Year Plan, spanning sixty-two chapters, has been officially released. A critical focal point for political direction is Chapter 61, which details three strategic pillars designed to reinforce the “centralized and unified leadership of the CCP” through 2030: 1) Comprehensive Party oversight: integrating Party leadership into every stage of plan implementation while maintaining a commitment to “democratic, scientific, and law-based” decision-making. 2) Professional competency: enhancing the capacity of officials to govern in accordance with rules and regulations. 3) Strict supervision: intensifying oversight of “top leaders” and the rising generation of young cadres to ensure ideological and operational alignment.

Why It Matters: While Xi Jinping has made “centralized and unified leadership” a hallmark of his tenure, this plan suggests he is not abandoning the traditional Chinese sixteen-character principle that has guided CCP decision-making since the 1990s: “collective leadership, democratic centralism, individual consultations, and collective decision-making.” By blending absolute central authority with these established consultative mechanisms, Xi aims to continue to navigate the delicate balance between security and development. Barring significant internal upheaval or systemic “black swan” events, the CCP appears structurally positioned to meet its core political and developmental targets over the next five years.

By Lobsang Tsering, Senior Research Associate on Chinese Politics, Center for China Analysis

Learn More: Read “What Happened at China’s Two Sessions in 2026“ with key takeaways from CCA experts.

5. China Passes New Environmental Code

What Happened: At the Two Sessions on March 12, China’s legislature adopted the Ecological and Environmental Code, the second such code after the 2020 Civil Code. This legislation consolidates elements of China’s existing environmental framework, bringing together laws and regulations across air, land, and water with a specific chapter dedicated to green and low-carbon development. It also reinforces China’s continued role in global environmental governance.

Why It Matters: Amid continued climate impacts and geopolitical instability, China’s environmental code reinforces the country’s commitment to strengthening its domestic and international environmental governance. The emphasis on green and low-carbon development aligns with China’s leadership in clean technologies and the broader economic benefits the industry yields.

By Taylah Bland, Fellow on Climate and the Environment, Center for China Analysis (@Taylahbland)

Learn More: Read “The Evolving Politics of Climate Change in China” by CCA Fellow Neil Thomas and Senior Fellow Guoguang Wu.

1. Xi Signals Focus on Long-Term National Strength by Addressing Foundational Challenges

What Happened: As in previous years, Xi Jinping met with several political, economic, social, and security delegations during the just-concluded Two Sessions. His main focus was the upcoming implementation of the 15th Five-Year Plan. Xi emphasized that China will face an “increasingly complex environment” over the next five years. He noted that China remains “a socialist and developing country with significant urban–rural disparities.” On development, Xi urged officials to “study new conditions and address emerging problems” in order to tackle “deeper structural challenges.” On security, he stressed the importance of prioritizing “foundational, long-term” capacity building — strengthening “the basic underpinnings” of military force development and combat effectiveness.

Why It Matters: Between the lines, Xi’s remarks suggest that beyond concerns about political loyalty within the Party and short-term economic pressures, he remains deeply focused on China’s unresolved structural and foundational challenges in both development and security. Given his assessment that China still faces major regional disparities and remains fundamentally a developing country, Beijing’s top priority over the next five years will likely be to continue strengthening overall national power — rather than chanting slogans, such as “The East is Rising, the West is Declining” or risking a costly move such as a military attack on Taiwan.

By Lobsang Tsering, Senior Research Associate on Chinese Politics, Center for China Analysis

Learn More: Watch a webinar co-hosted by Center for China Analysis and the South China Morning Post on the key takeaways from the Two Sessions featuring CCA Fellows Neil Thomas, Lizzi C. Lee, and Lyle Morris, moderated by Neil Denslow.

2. China Announces Moderate Defense Budget Increase

What happened: During the 2026 National People’s Congress, China announced a moderate increase to its defense budget of RMB 1.91 trillion (US$277 billion). The increase amounts to a 7% increase year-on-year, but marks the slowest rise since 2021. The increase continues China’s steady military spending growth but also marks a modest slowdown from the 7.2% rate of annual increase recorded in 2023, 2024, and 2025. Chinese authorities said the funding would support PLA modernization, improve combat readiness, and accelerate the development of advanced weapons and defense technologies.

Why It matters: While the slowdown is marginal, it suggests that downstream fiscal pressures within the Chinese economy may be having an impact on defense priorities. The decline is likely due to a variety of factors, including tightening fiscal policy and a muscular anti-corruption campaign that has gutted the ranks of senior PLA officers. Given that the campaign singled out mismanagement of funds within the equipment and procurement systems of the PLA, it is not surprising that the overall defense growth rate has slowed down this year. However, this does not necessarily signal a shift in Beijing’s long-term military ambitions. Beijing may simply be prioritizing tighter oversight and more efficient use of defense funds in the short term until the corruption campaign has run its course. Thus, the slowdown is likely short-lived, and with spending expected to return to previous growth rates in the years ahead.

By Sheng-wen Cheng, Research Intern, Center for China Analysis, Lyle Morris, Senior Fellow on Foreign Policy and National Security, Center for China Analysis

Learn More: Read “What to Watch at China’s Two Sessions in 2026” by CCA Fellow on Chinese Politics, Neil Thomas, and CCA Senior Research Associate on Chinese Politics, Lobsang Tsering.

3. China Signals a New Phase of “Resilience-First” Tech Investment

What Happened: Xi Jinping’s remarks during the Two Sessions suggest that Beijing is putting more weight on economic resilience, technological self-reliance, and China’s ability to withstand external pressure. In his comments to the delegation from Jiangsu province, Xi said that major economic provinces must “maintain a solid development foundation” and improve their capacity to absorb outside shocks in order to help stabilize the national economy. He also stressed that building a modern industrial system and reinforcing the real economy will remain top priorities as China prepares its next Five-Year Plan.

Why It Matters: A key backdrop is fiscal policy. Since 2013, central government spending on science and technology has nearly doubled. It rose significantly in the mid-to-late 2010s, flattened during the COVID-19 outbreak, and has now entered a new phase of acceleration. Since 2024, planned central budget spending on science and technology has increased by 10% each year, a notable trend given tighter overall fiscal conditions. The signal is clear: the leadership is treating science and technology spending as a strategic priority tied to resilience, industrial strength, and security. The 2026 budget makes this even clearer by giving stronger support to basic research, with central government basic research spending set to increase by 16.3%.

By Shengyu Wang, Research Assistant, Center for China Analysis

Learn More: Read “2026: The Year of Rebalancing” by Lizzi C. Lee, CCA Fellow on Chinese Economy, and Jing Qian, CCA Co-Founder and Managing Director.

4. China Elevates Biomedicine to Emerging Pillar Industry in 2026 GWR

What Happened: In the 2026 Government Work Report (GWR), Premier Li Qiang identified biomedicine as an “emerging pillar industry” (新兴支柱产业), elevating its standing within China’s technology value chain. The GWR also identified expanding foreign-owned hospital access and inbound biotechnology investment as two priorities for opening China’s services sector in 2026.

Why It Matters: The upgrade from “emerging industry” to “emerging pillar industry” — placing biomedicine alongside established priorities like integrated circuits, aerospace, and the low-altitude economy — signals Beijing’s sustained push to develop global competitiveness in medical research and manufacturing, following a landmark year for Chinese biomedical innovation. The designation had been previewed by President Xi Jinping at the 2025 Central Economic Work Conference, remarks only made public in recent weeks. The GWR’s explicit focus on foreign biotechnology and hospital investment also aligns with record levels of Chinese–Western dealmaking and pilot programs that debuted in the sector last year, suggesting continued policy support and a gradual widening of market access for foreign firms.

By: Patrick Beyrer, Research Associate, Center for China Analysis

Learn More: CCA Co-Founder and Managing Director Jing Qian and Fellow on Chinese Economy Lizzi C. Lee argue that sustaining China’s biotechnology boom will require overseas cooperation in their recent Nature article, “China’s Biotech Boom: Why the Nation Must Collaborate to Stay Ahead.”

5. 15th Five-Year Plan Tests Climate Ambition

What Happened: On March 5, China’s National People’s Congress unveiled the draft of the 15th Five-Year Plan (2026–2030) (15th FYP), which serves as the overarching blueprint for economic and social development through the end of the decade. On climate, the 15th FYP sets a target to reduce carbon intensity by 17% by 2030 and to double non-fossil energy within the next decade and continue clean energy buildout. It also elevates the importance of climate adaptation, calling for stronger risk assessments and greater capacity to respond to extreme weather.

Why It Matters: The plan calls for a 17% reduction in carbon intensity by 2030, leaving China short of its Paris Agreement pledge to cut carbon intensity by more than 65% from 2005 levels by the end of the decade. Pandemic-era disruptions, slower economic growth, and continued reliance on heavy industry have complicated progress toward this goal. Projections indicate that China would need to reduce carbon intensity by 23% over the next five years to close the gap. However, it appears Beijing is transitioning away from relying on targets in favor of utilizing its clean technology industries to reduce emissions.

By Taylah Bland, Fellow on Climate and the Environment, Center for China Analysis (@Taylahbland)

For More: Read “The Evolving Politics of Climate Change in China” a new report by CCA Fellow Neil Thomas and Senior Fellow Guoguang Wu.

1. China Maintains Careful Distance from Middle East Conflict

What Happened: Following U.S. and Israeli strikes on Iran, and Iran’s subsequent retaliatory attacks, Beijing has condemned the use of force and supported Tehran in “safeguarding its legitimate rights and interests.” Chinese Foreign Minister Wang Yi has held a flurry of de-escalation calls with regional players and major powers — including the foreign ministers of Russia, Iran, France, Oman, and Israel — urging immediate de-escalation and a return to diplomacy. Notably, according to publicly available readouts, Wang has not yet communicated with his U.S. counterpart since the outbreak of the conflict. Meanwhile, China appears to have avoided visible military involvement by withdrawing its navy from a scheduled joint drill with Iran and Russia ahead of Operation Epic Fury.

Why It Matters: China’s restrained approach reflects its longstanding strategy of avoiding entanglement in other states’ security conflicts. In contrast to U.S. alliances, Beijing’s partnerships with countries such as Iran are flexible and non-binding, intended to promote economic cooperation rather than mutual defense. With a focus on its domestic regime stability and security in its near periphery, China does not view the Middle East as a core interest worthy of military involvement. Beijing is also reluctant to risk escalation with the United States ahead of the Xi–Trump Summit scheduled for April, given the much higher stakes of a U.S.–China strategic stability as compared to Beijing’s lower level of trade and investment with Tehran.

By Jie Gao, Research Associate on Foreign Policy and National Security, Center for China Analysis

Learn More: Watch “Implications of the Escalating U.S.-Iran Conflict,” with Asia Society Trustees Vali Nasr and Hamid Biglari.

2. Beijing’s New Candor on China–U.S. Relations in Li Qiang’s 2026 Government Work Report

What Happened: On March 5, 2026, Premier Li Qiang delivered his annual Government Work Report to the National People’s Congress, declaring that China met its 2025 economic and social development targets and successfully concluded the 14th Five-Year Plan. He acknowledged that progress came amid significant external shocks and domestic pressures. Li highlighted the five rounds of China–U.S. economic and trade consultations, the leaders’ meeting in Busan that produced an important consensus, and continued domestic efforts to stabilize employment, enterprises, markets, and expectations. Looking ahead to 2026, he committed to strengthening coordination between development and security under Xi Jinping’s leadership, continuing to implement the policies outlined in the Fourth Plenum and the 2025 Central Economic Work Conference, while also advancing the goals of the 15th Five-Year Plan.

Why It Matters: As in previous years, the premier again openly acknowledged mounting internal and external challenges while projecting confidence and resolve. What distinguishes this year’s report, however, is its direct reference to “China–U.S. relations” and “U.S. tariffs” in the main text of the report. In the past, the bilateral relationship was typically addressed indirectly — through phrases such as “external challenges” or “global risks” — or discussed later at press conferences or in expert commentary. Li Qiang’s explicit language this year signals Beijing’s more cautious, strategic approach to managing the risks and opportunities posed by the United States to China’s national rejuvenation — especially Xi’s 2035 vision.

By Lobsang Tsering, Senior Research Associate on Chinese Politics, Center for China Analysis

Learn More: Read “What to Watch at China’s Two Sessions in 2026” by CCA Fellow Neil Thomas and Lobsang Tsering.

3. Beijing Signals KPI Reform Beyond GDP in 2026

What Happened: Beijing has signaled that in 2026 it will adjust how local officials are assessed, reducing the singular emphasis on GDP growth. Just ahead of the Two Sessions, it launched a five-month campaign, with party directives urging bureaucrats to prioritize social welfare, consumption, green development, and long-term sustainability, while cracking down on debt-fueled projects, data manipulation, and vanity infrastructure. Zhejiang and several other provinces have hinted at incorporating livelihood indicators into official reviews. Although GDP targets have not been scrapped, the message from Beijing is that promotion will no longer hinge solely on headline growth.

Why It Matters: Cadre incentives have long shaped China’s economic trajectory. When promotions were closely tied to growth rates, local governments competed to expand output, often relying on heavy investment and rising debt. Diversifying KPIs could, in theory, redirect incentives toward consumption and livelihood priorities, aligning with Beijing’s rebalancing goals under the 15th Five-Year Plan. In practice, however, enforcement will be difficult. GDP remains a hard metric, while “people-centered” goals are less measurable. The shift clashes with Beijing’s push to advance manufacturing and technology, which demand resources and deliver faster, more visible results than welfare or consumption.

By Lizzi C. Lee, Fellow on Chinese Economy, Center for China Analysis (@wstv_lizzi)

Learn More: Read Lizzi’s “China’s Total Factor Productivity Is Either Extremely Low or Surging Past the United States” published under CCA initiative “ Reality-Check Check.”

4. Shenzhen Wage-Arrears Fund Highlights Worker Protection Limits

What Happened: In the run up to the Lunar New Year holiday — peak season for wage disputes — a Shenzhen city government decision went viral on Chinese social media: It showed the city had directly paid wages to employees of a firm that had filed for bankruptcy. Shenzhen originally created its wage arrears guarantee fund in 1996, and — alongside Shanghai — remains one of only two cities in the mainland to have such a program. The fund is financed by an annual fee on all local businesses and through attempted recoveries from delinquent employers; but the fee has been largely suspended since 2018, and payouts have far outpaced revenues. The most recent public data shows Shenzhen paid out 73 million RMB in 2024 but recovered only 10 million from delinquent employers — resulting in a 50 million RMB deficit for the year.

Why It Matters: The need for these types of welfare programs is growing in China — especially in the construction sector where wage arrears have been a persistent problem: the sector saw profits drop by 14.1% in 2025, and the eight major state-owned construction conglomerates were carrying 4.25 trillion RMB in receivables at the end of 2024. A recent Xinhua report found that non-payment issues are increasingly common outside the construction sector in many localities. As China’s flexible and migrant workforce continues to expand, more of China’s workers will fall outside the existing social safety nets. The 2026 No. 1 Central Document called for strengthening wage protections for these workers, but Shenzhen’s experience suggests that even wealthy cities may lack the fiscal capacity to deliver on that goal.

By Jeremiah May, Research Assistant, Center for China Analysis

Learn More: Read “China’s Gambit: Assessing Beijing’s Consumer-Driven Economic Strategy,” by CCA Senior Fellow on Chinese Economy, Diana Choyleva.

5. China Tightens Air Quality Standards

What Happened: On February 24, China’s Ministry of Ecology and Environment released the updated Ambient Air Quality Standard. The new standard, replacing the 2012 version, targets fine particulate matter (PM2.5 and PM10) alongside sulfur dioxide and nitrogen dioxide and enforces stricter daily and annual concentration limits. Under the updated secondary standards, the annual average concentration limit for PM2.5 will fall from 35 to 25 μg/m³. Implementation will take two phases: from March 2026-2030, transitional limits will apply with full implementation happening in 2031.

Why It Matters: This is the first time in 14 years that China has updated its Air Quality Standard. The update acknowledges China’s longstanding efforts to address air pollution while underscoring that there is more work to be done. Over the last decade, China has worked to address air quality concerns through targeted policies and efforts to reduce carbon emissions. These tighter restrictions reflect Beijing’s continued commitment, bringing the limits closer to international norms and safeguarding public health by reducing exposure to harmful pollutants that can trigger respiratory conditions such as asthma.

By Taylah Bland, Fellow on Climate and the Environment, Center for China Analysis (@Taylahbland)

Learn More: Read CCA’s new report, “The Evolving Politics of Climate Change in China,” by Neil Thomas, CCA Fellow on Chinese Politics, and Guoguang Wu, CCA Senior Fellow on Chinese Politics.

1. Spring Festival Data Show Pockets of Strength, but Broader Caution Remains

What Happened: Data from the nine-day 2026 Spring Festival holiday point to a firmer-than-expected pickup in activity, though not across the board. Domestic travel and hotel stays increased year-on-year, alongside record booking volumes and higher per-capita spending, according to Alibaba’s online travel platform Fliggy. Retail and catering activity also strengthened, rising 8.6% year-on-year in the first four days of the holiday. Cross-border trips by mainland residents increased 10%, while inbound travel rose 22%, supported by visa-free policies. Train travel reached a post-pandemic high. In contrast, holiday box office revenue fell to its lowest level since 2020.

Why It Matters: The data offer modest encouragement, but it is important not to overinterpret them. The pickup suggests that temporary policy measures, including subsidies or cash incentives for holiday purchases and targeted local support for Spring Festival tourism, may be gaining some traction. The recent stock market rally may also have reinforced a modest wealth effect and improved consumer sentiment, while the extended nine-day holiday likely enabled longer trips and boosted travel-related spending. Still, income growth remains soft, employment uncertainty persists, and consumer confidence is fragile. For now, there is not yet clear evidence of a durable, broad-based recovery in household demand.

By Lizzi C. Lee, Fellow on Chinese Economy, Center for China Analysis (@wstv_lizzi)

Learn More: Read “Can Beijing Truly Pivot Toward a Consumption-Led Economy?” by Diana Choyleva, CCA Senior Fellow on Chinese Economy in China 2026: What to Watch.

2. China Advances Its Data Regime to Power AI Innovation

What Happened: China’s National Data Administration, together with leading industry regulators, issued new guidelines to cultivate the country’s data service institutions. The policy supports the development of data exchanges, platform firms, and data merchants to promote the nationwide circulation and commercialization of data. The guidance explicitly calls for “expanding channels for the flow and trading of high-quality datasets to fit AI development.” The move comes as Beijing intensifies efforts to unlock the economic value of data, increasingly framing data as “the new oil” to fuel strategic technologies, especially AI.

Why It Matters: Access to data can shape AI innovation outcomes. Today, most private-sector data in China remain unused for AI training, often held privately in organizational and legal silos. A dedicated data-flow regime could create a structured pipeline to feed China’s “AI+” ambitions by lowering barriers to new training data. At the same time, aligning data governance with AI development may reinforce China’s broader push to institutionalize a national data market — one that includes registering data as corporate assets, building state-backed data exchanges, and expanding a franchising model to allow corporate access to government-held datasets.

By Ran Guo, Affiliated Researcher, Center for China Analysis

Learn More: Read “Assetizing, Trading, Franchising: China’s Strategy for Building a National Data Economy” by Ran.

3. Beijing Gives Lukewarm Response to Visiting German Chancellor

What Happened: During his two-day inaugural visit to China, German Chancellor Friedrich Merz exchanged economic and security concerns with President Xi Jinping and Premier Li Qiang in Beijing. Merz, who arrived with over two dozen German business leaders, urged China to lower subsidies for domestic manufacturers, loosen restrictions around critical mineral exports, and highlighted the widening trade gap between the two countries, while pressing Beijing to wield its influence with Moscow to halt the war in Ukraine. Merz also toured Unitree Robotics’s hub in Hangzhou. On the future of the China-Germany relationship, President Xi expressed hopes of bringing ties to “new levels,” anchored in reliability, innovation, and people-to-people exchanges. At the end of his visit, Merz announced China’s pledge to order up to 120 new aircrafts from the European aviation giant, Airbus.

Why It Matters: Merz’s visit underscored how much economic leverage Beijing holds in their bilateral relationship. China’s industrial achievements, especially in advanced manufacturing and automation, have shifted the equilibrium from complementarity — where Germany’s premium exports feed China’s assembly lines — to direct competition. This new structural reality is recognized by Beijing, with Xi for the first time explicitly mentioning the importance of managing “competition” in his meeting with the German chancellor. Unlike his two predecessors, who received warmer pledges of cooperation from Xi, Merz encountered a more lukewarm attitude from the Chinese leader — offering no promises to open China’s market or assurances of stability in Beijing’s policy toward Germany. Instead, the joint statement reflects efforts to acknowledge concerns and set guardrails to an increasingly competitive relationship.

By Jie Gao, Research Associate on Foreign Policy and National Security, Center for China Analysis

Learn More: Watch “China’s EU Diplomacy: The View from France, Germany, and the United States” with CCA Senior Fellow on Foreign Policy, Philippe Le Corre, and CCA Senior Fellow on Foreign Policy and National Security, Lyle Morris.

4. Cai Qi Launches Nationwide Party Education Campaign Ahead of Fifth Plenum

What Happened: On February 24, Cai Qi, chief of staff to Xi Jinping and head of the Central Leading Group for Party Building, convened a meeting to launch a nationwide education campaign. The campaign centers on studying and implementing Xi’s principles on practicing a “correct view of political achievements.” It seeks to reinforce the Party’s stated requirements of “building the Party for the public good, serving the people, making sound decisions, and acting pragmatically.” The initiative will primarily target leading bodies and officials above the county level, with particular emphasis on top leaders. It will proceed through an integrated process of discipline inspection and rectification, and is expected to conclude largely by the end of July.

Why It Matters: The campaign comes ahead of the Fifth Plenum later this year, which is expected to focus heavily on Party building. The renewed emphasis on “building the Party for the public good” reinforces the message that the Party represents the broad interests of the people rather than the private interests of any individual or faction. By tightening political discipline, maintaining anti-corruption efforts, and enhancing officials’ approaches to political performance, the campaign aims to further consolidate internal cohesion in preparation for the 21st Party Congress in 2027. Most importantly, this suggests that Xi is in the process of establishing — if it has not already been established — “the Leading Group for Cadre Inspection and Evaluation for the 21st Party Congress.”

By Lobsang Tsering, Senior Research Associate on Chinese Politics, Center for China Analysis

Learn More: Read “What Will Xi Jinping’s Priorities Be in 2026?” by CCA Fellow Neil Thomas and Lobsang in China 2026: What to Watch.

5. Northern China Sandstorm Disrupts Spring Festival

What Happened: From February 20–23, Northern China was impacted by a major sandstorm that brought yellow skies, gale-force winds, and severely depleted air quality across 130 cities due to soaring PM10 levels. Beijing was hit particularly hard — with the Air Quality Index exceeding 500, China’s maximum reading reserved for severe air pollution — and Spring Festival events temporarily halted under a yellow alert for strong winds and a blue alert for sandstorms. China’s weather alerts follow a 4-tier color system, with red signifying the most severe, followed by orange, yellow, and blue. The sandstorm sparked widespread attention on social media, with viral posts of the intense winds and near-zero visibility.

Why It Matters: China has experienced periodic sandstorms in recent years, with the last major event hitting in 2021. These storms arise from an array of factors, including desertification, overgrazing, and ecological degradation, resulting in hazardous air quality, agricultural disruption, and significant economic costs. China must continue strengthening its adaptive capacities, such as tree-plantings, to mitigate these threats.

By Taylah Bland, Fellow on Climate and the Environment, Center for China Analysis (@Taylahbland)

Learn More: Read “China’s Extreme Weather AI Tools Can Help Countries Adapt” by Taylah.

1. Elite Signaling and Political Undercurrents During the Chinese New Year

What Happened: Ahead of the Chinese New Year, Xi Jinping and other senior state leaders either personally visited or dispatched representatives to visit nearly 130 retired high-ranking officials, including former President Hu Jintao. According to official reports, these retired leaders expressed firm support for Xi’s position as the “core” leader. At the New Year reception in Beijing, Xi noted that 2026 will mark the 105th anniversary of the founding of the CCP and the launch of the 15th Five-Year Plan. He emphasized that Beijing will step up efforts to promote high-quality development, safeguard social harmony and stability, and continue strengthening Party discipline.

Why It Matters: Amid mounting domestic and external pressures, the public show of support from retired senior leaders suggests at least surface-level elite unity behind Xi. However, attention is increasingly focused on the political influence these elders may wield in 2026 and in particular at the 21st Party Congress in late 2027. August 17, 2026, will also mark the 100th anniversary of late President Jiang Zemin’s birth. The scale, tone, and messaging of the various commemorative events are likely to send important political signals, potentially reflecting subtle maneuvering between Xi’s supporters and other factions within the Party.

By Lobsang Tsering, Senior Research Associate on Chinese Politics, Center for China Analysis

Learn More: Read “What Will Xi Jinping’s Priorities Be in 2026?” by CCA Fellow Neil Thomas and Lobsang in China 2026: What to Watch.

2. Humanoid Robots Steal the Spring Festival Spotlight

What happened: China’s Spring Festival Gala’s biggest sensation was humanoid robotics. Unitree, MagicLab Atom, Galaxia General, and Songyan Dynamics all put robots on the national stage. Unitree’s “Martial Arts BOT” stole the spotlight with synchronized kung fu routines alongside professionally trained young martial artists, featuring flips, staff sparring, and high-dynamic formation control that founder Wang Xingxing called a global first. The split-screen contrast between 2026 and last year showcased stunning progress in fluidity, flexibility, and speed. Other humanoids appeared in comedy skits, marking their most prominent mainstream cultural debut to date.

Why It Matters: The show captured the Chinese humanoid robotics sector’s breakneck advances in just one year. Unitree’s robots’ ability to run at 4m/s while holding tight formations reflects major progress in 3D lidar for panoramic sensing and precise localization. More natural object handling is enabled by new advances in dexterous hand technology. Behind the scenes were large-scale reinforcement learning simulations, multi-sensor fusion, and millisecond-level swarm coordination. After Unitree’s breakout moment last year sparked surging orders, billion-yuan fundraising, and IPO expectations, the Gala stage has become a super roadshow for robotics firms racing toward 2026 IPOs and commercialization. In the near term, the practical uses of humanoid robots remain debated, and their performances largely reflect progress in advanced sensorimotor control and learned locomotion rather than frontier breakthroughs in general-purpose cognitive reasoning. But the Gala offered a powerful symbol: robotics and the broader technological advances they signal are becoming central to China’s national pride and imagination.

By Lizzi C. Lee, Fellow on Chinese Economy, Center for China Analysis (@wstv_lizzi)

Learn More: Read “Why China Has So Many Robot IPOs,” by Lizzi.

3. China Urges Europe to Step Up on Talks over Ukraine

What Happened: At the Munich Security Conference, China’s Foreign Minister Wang Yi argued that Europe has both the right and responsibility to play a leading role in Ukraine peace efforts and urged Europeans to ramp up participation in negotiations, hold direct dialogue with Russia, and build a more balanced and durable European security framework. Wang took part in a trilateral meeting between China, France, and Germany, held separate talks with Germany’s leadership, and met with diplomats from France, Germany, Canada, the United States, and others. Wang also appeared to take implicit aim at the United States, referring to a “certain country” that is sowing division, and called on China and Europe to “oppose unilateral bullying” and “resist bloc confrontation” together.

Why It Matters: Wang addressed Munich at a time when many in the EU are questioning the durability of their security alliances with the United States and used this as an opportunity to promote China as a reliable partner. Beijing’s decision to hold a trilateral meeting between core European powers signals its interest in engaging Europe on a more granular level instead of solely via Brussels-level channels. Still, China’s backing of Russia in its war on Ukraine leaves many in Europe feeling weary. While China rhetorically supports a stronger European role in the war in Ukraine, it has offered few commitments to pressure Moscow on altering its course in the war.

By Jie Gao, Research Associate on Foreign Policy and National Security, Center for China Analysis

Learn More: Read “China-Russia Relations Since the Start of the War in Ukraine,” by Pierre Andrieu, CCA Senior Fellow on China-Russia Relations.

4. China Deepens Antitrust Push Against Platform “Involution”

What Happened: China’s regulators have expanded scrutiny of the platform economy, summoning seven major firms — including Alibaba, Tencent, JD​.com, Meituan, Douyin, and Baidu — and issuing the new Anti-Monopoly Compliance Guidelines for Internet Platforms. The guidelines identify eight areas of heightened monopoly risk, including algorithmic collusion, below-cost sales, forced exclusivity (“choose one from two”), “lowest price across the internet” clauses, and discriminatory treatment. The move follows investigations into food delivery and travel platforms, where subsidy wars and price competition have squeezed small merchants and triggered consumer complaints. Regulators have framed these actions as part of a broader effort to curb “involution-style” competition and restore fair market order, expanding oversight beyond food delivery into e-commerce, mobility, and online finance.

Why It Matters: The campaign signals that Beijing’s “anti-involution” push is increasingly extending into services. Official commentary links concentrated platform power to predatory price wars, weakened innovation, and deteriorating service quality. By clarifying compliance “red lines” around algorithmic pricing and exclusivity arrangements, authorities are attempting to rebalance relationships between dominant platforms, small merchants, and consumers. At stake is not only competition policy but also social dissatisfaction and public sentiment, as regulators respond to grievances over price discrimination and exclusionary promotions. Whether this evolves into sustained rule-setting or remains a cyclical regulatory crackdown will shape the trajectory of China’s platform economy in the long run.

By Jennifer Choo, Director of Research and Strategy, Center for China Analysis

Learn More: Watch “ Why China’s Rebalancing Is So Hard: Tensions, Tradeoffs, and Policy Choices ,” in CCA’s The Year of Rebalancing webinar series moderated by Lizzi C. Lee.

5. Spring Festival Attracts Foreign National Travel Surge

What Happened: China has seen a surge of international travelers coming to China during the Spring Festival to partake in festivities to celebrate the Year of the Horse. During the last two weeks of January, international flight bookings to China jumped more than 400% compared to the same period last year, led by tourists from Thailand, the Republic of Korea, Malaysia, Vietnam, and Singapore. A contributing factor to the rise in international inbound tourists is China’s expansion of unilateral visa-free entry to include citizens from 48 countries and reciprocal visa exemptions to 29. Notably, on February 16, Canada and the United Kingdom were added to the unilateral visa-free list, joining countries like Australia, New Zealand, Norway, and Denmark.

Why It Matters: With visa free entries up by almost 50% year-on-year, China’s visa-free and reciprocal visa exemption programs are not only attracting international travelers to visit China but are also acting as tools to facilitate greater people-to-people exchanges. Amid ongoing geopolitical tensions, people-to-people exchanges remain an important channel to strengthen deeper understanding and connections.

By Taylah Bland, Fellow on Climate and the Environment, Center for China Analysis (@Taylahbland)

Learn More: View “China’s Mass Migration Home for Lunar New Year in Pictures” from Bette Ha, former Asia Blog contributor.

1. AI Competition Accelerates Ahead of Spring Festival

What Happened: Ahead of China’s Spring Festival celebration, competition among tech firms is intensifying across robotics, agent-style AI apps, and major model launches. Robotics firms Galbot, MagicLab, Unitree Robotics, and Noetix Robotics have landed official Spring Festival Gala partnerships, turning the holiday spotlight into a showcase for embodied AI. Big tech is also treating the holiday week as a fight for AI “entry points,” driven by a growing red-packet spending war: Tencent, Baidu, and Alibaba have all rolled out massive campaigns totaling billions of yuan. New frontier model releases are expected around the same period, including from ByteDance and Alibaba, with the biggest anticipation around DeepSeek’s next-generation V4.

Why It Matters: Spring Festival is China’s largest moment of mass travel, consumption, and digital engagement, when hundreds of millions spend long hours on their phones socializing, paying, and using apps. That makes it the most valuable window for China’s tech firms to lock in default AI entry points and maximize the visibility of new launches. Last year, DeepSeek’s surprise holiday breakout jolted Silicon Valley and reset the pace of China’s AI race. This year, the spotlight is far more contested: the field has widened from upstream model competition to downstream agent ecosystems and even embodied robotics. The holiday has become a live stress test and a microscope of China’s accelerating AI landscape.

By Lizzi C. Lee, Fellow on Chinese Economy, Center for China Analysis (@wstv_lizzi)

Learn More: Read “Why China Has So Many Robot IPOs,” by Lizzi.

2. ByteDance’s Seedance 2.0 challenges AI video generation models

What Happened: On February 7, ByteDance released its new Seedance 2.0 AI video model, which quickly went viral on Chinese and global social media platforms for its hyper-realistic visuals. ByteDance described its main use to be autonomous “multi-shot storytelling” — an end-to-end video system that turns text, images, video, and audio prompts into coherent, tightly synchronized scenes while maintaining consistent faces, clothing, sound, and scenery. Chinese AI stocks rallied up to 20% upon the release. ByteDance ran into some controversy, however, and suspended uploads of real faces after the model replicated a person’s voice from a photo alone — raising the issue of deepfake risks that accompany AI video models.

Why It Matters: Seedance 2.0 is the most advanced video generation model to date, and industry analysts ranked the model as easily surpassing both OpenAI’s Sora 2 and Google’s Veo 3.1 video models in benchmark testing. When it comes to real-world use cases, Seedance 2.0 fundamentally shifts production economics: One user produced a two-minute sci-fi short-film for just RMB 330.6 (~US$45). Feng Ji, CEO of GameScience, declared it the end of “Artificial Intelligence-Generated Content’s childhood”. The geopolitical implications are equally stark: one U.S. developer observed that Chinese AI video models now appear “two full generations ahead” of publicly available American alternatives. For the global video production industry — including America’s Hollywood and other entertainment and video-production hubs like Georgia — the question is no longer whether AI will reshape workflows: it’s whether Western AI companies can keep pace with China.

By Jeremiah May, Research Assistant, Center for China Analysis

Learn More: Watch “The Smartphone That Acts on Your Behalf: Is China’s ByteDance–ZTE Agentic AI Phone a Game Changer or a Cautionary Tale?” from China’s DeepSeek Moment webinar series.

3. Xi Reasserts Political Control Over PLA Veterans

What Happened: On February 6, Xi Jinping attended a PLA cultural performance honoring the veterans ahead of China’s Spring Festival celebrations. At the event, retired PLA officers pledged to uphold Xi’s core leadership position and Xi Jinping Thought. During the group photo session, Xi was flanked by two retired former Central Military Commission (CMC) vice chairmen and three former CMC members, along with other senior military elders. Two days after the event, the PLA Daily published a commentary quoting Xi as stating that “political character is the essential attribute of the military, and military development must first be viewed from a political perspective.” Most importantly, the commentary warned that entrenched corruption within the armed forces has not yet been fully eradicated, signaling that further purges are likely.

Why It Matters: Amid ongoing military reforms and anti-corruption purges, Xi Jinping appears intent on reinforcing absolute political loyalty within both the retired and active ranks of the PLA. Public reaffirmations of loyalty, coupled with continued warnings about unresolved corruption, function as both consolidation and deterrence — reinforcing unity while creating uncertainty for those who may be politically ambivalent. The symbolism of the event is notable: Li Jinai, an 84-year-old general and former Director of the PLA General Armaments Department and Director of the General Political Department, was seated prominently next to Xi during the group photo. Yet Li’s son, Li Lei, former assistant governor of Yunnan Province, has reportedly been under investigation since 2020, with no official updates released.

By Lobsang Tsering, Senior Research Associate on Chinese Politics, Center for China Analysis

Learn More: Check out “Unsettling Implications of Xi’s Military Purge” by CCA Senior Fellow on Chinese Politics, Christopher Johnson.

4. Hong Kong Security White Paper Reasserts the Primary of Beijing’s “One Country” Policy

What Happened: On February 10,Chinaissued a white paper outlining its account of Hong Kong’s national security developments. It frames years of political unrest, especially the 2019 protests, as evidence of legal gaps and external interference, and defends Beijing’s actions, including the 2020 National Security Law, electoral changes, and Hong Kong’s 2024 local security legislation, as necessary to restore order, strengthen governance, and stabilize the business environment.

Why It Matters: The paper was released one day after Jimmy Lai, founder of the shuttered pro-democracy newspaper Apple Daily, was sentenced to 20 years in prison under national security charges. By timing the white paper’s release with this high-profile ruling, Beijing appears to present the case as part of a broader legal framework rather than an isolated political decision, seeking to counter foreign criticism by emphasizing rule of law and stability in Hong Kong. The document also makes clear that authorities plan to continue strict enforcement of national security measures, including closer scrutiny of overseas advocacy, foreign ties, and public dissent concerning Hong Kong, while reassuring investors that stronger security will underpin long-term economic confidence.

By Jie Gao, Research Associate on Foreign Policy and National Security, Center for China Analysis

Learn More: Read “Hong Kong’s Financial Evolution: China’s Bid to Shape Global Capital Flows”, by CCA Senior Fellow on Chinese Economy Diana Choyleva.

5. BYD Sues the U.S. Government Over Tariffs

What Happened: Four U.S.-based subsidiaries of Chinese electric vehicle company BYD filed a lawsuit against the U.S. government in the U.S. Court of International Trade. The suit argues that the U.S. government’s implementation of tariffs is a misuse of the powers granted to the U.S. President under the International Emergency Economic Powers Act (IEEPA) because the “IEEPA does not employ the word ‘tariff’ or any term of equivalent meaning.” While BYD doesn’t currently sell passenger vehicles in the United States, it does produce electric buses for municipal transit agencies. BYD is seeking reimbursements for tariffs it has already paid, plus court orders to invalidate future tariffs.

Why It Matters: BYD’s suit poses a legal challenge to the existing trade restrictions placed on Chinese products. The suit should not be viewed in isolation, but rather within the broader context of mounting restrictions on Chinese clean-technology products. Despite these constraints, recent media reports point to continued commercial interest between Chinese and American companies. Ford and BYD, for example, have reportedly discussed using BYD batteries in some of Ford’s hybrid models for markets outside the United States — an illustration of how engagement with China remains important for maintaining competitiveness.

By Taylah Bland, Fellow on Climate and the Environment, Center for China Analysis (@Taylahbland)

For More: Read “The China Model’s Fatal Flaw” by CCA Fellow, Lizzi C. Lee.

1. A Signal of Institutional Stability Following High-Profile Purges

What Happened: On January 30, Xi Jinping chaired a routine Politburo meeting to review the annual Party affairs work reports of the National People’s Congress, the State Council, the Chinese People’s Political Consultative Conference, the Supreme People’s Court, the Supreme People’s Procuratorate, and the Chinese Communist Party Central Secretariat. The meeting also discussed “other matters,” a phrase sometimes used to conceal politically sensitive issues from public reporting.

Why It Matters: The timing of this meeting — just one week after the public announcement of the purge of Politburo member and Central Military Commission Vice Chair Zhang Youxia and others — signals that Xi retains effective control over elite politics, at least outwardly. The ability to convene the Politburo as planned and proceed with routine agenda items suggests that no immediate elite resistance or procedural disruption followed the purge. The public disclosure of the purges on January 24, immediately after the conclusion of a training session for senior provincial- and ministerial-level officials on January 23 in Beijing, suggests that these officials may have been briefed internally beforehand. Taken together, this sequence indicates an effort by Xi to manage elite expectations and preserve institutional stability. The absence of visible disruption suggests that routine governance continues despite the unprecedented purges.

By Lobsang Tsering, Senior Research Associate on Chinese Politics, Center for China Analysis

Learn More: Check out “Unsettling Implications of Xi’s Military Purge” by CCA Senior Fellow on Chinese Politics, Christopher Johnson.

2. Xi Holds Consecutive Calls with Putin then Trump Amid Critical Negotiations

What Happened: On February 4, President Xi Jinping held consecutive high-level talks with Russian President Vladimir Putin and U.S. President Donald Trump. Over video conference, Xi and Putin promised to strengthen strategic coordination on sensitive international issues, including Iran, Venezuela, and Cuba, and within major multilateral platforms, such as the United Nations, BRICS, and the Shanghai Cooperation Organization. Hours later, Xi and Trump held a phone call focused on Iran, stabilizing U.S.–China relations and managing tensions over Taiwan.

Why It Matters: The back-to-back calls unfolded amid intensifying negotiations on Ukraine, greater U.S. engagement in Iran, and escalating tensions over Taiwan. By speaking with Putin first, Xi reinforced China–Russia alignment and their intent to coordinate positions on these issues through multilateral platforms in response to U.S. pressure. The sequencing also hints that Beijing may prioritize an in-person Xi–Putin meeting to consolidate alignment before Trump’s planned visit to China in April. Xi Jinping has held a number of meetings with foreign leaders recently — hosting both the British and Canadian prime ministers in Beijing in January, and plans to host the German chancellor this month —during a time when many European countries look to rebalance their relationship between the United States and China.

By Jie Gao, Research Associate on Foreign Policy and National Security, Center for China Analysis

Learn More: Read “China-Russia Relations Since the Start of the War in Ukraine” by CCA Senior Fellow on China–Russia Relations, Pierre Andrieu.

3. Xi Signals China’s Reserve-Currency Ambition

What Happened: A new Qiushi article by Xi Jinping called for China to build a “powerful currency” — one that is widely used in global trade, investment, and foreign exchange markets, and ultimately attains reserve-currency status. The comments, drawn from an internal speech delivered in 2024, were made public for the first time. Xi also laid out the supporting infrastructure he believes China needs: a stronger central bank, globally competitive financial institutions, and international financial centers that can attract capital and influence global pricing.

Why It Matters: With investors reassessing dollar exposure amid U.S. policy volatility, Beijing sees an opening to push for a more multipolar currency order. The timing of the article also coincides with the RMB’s recent appreciation. But reserve-currency demand is driven by factors such as trade settlement needs, external debt-servicing requirements, exchange-rate stabilization, and store-of-value demand. The RMB still falls short: its trade settlement share has risen substantially but remains below China’s weight in global trade, while limited capital-market depth and openness continue to constrain its appeal as a reserve currency. The biggest structural constraint is that reserve status requires market trust, while China still prioritizes capital controls and financial stability over full convertibility.

By Lizzi C. Lee, Fellow on Chinese Economy, Center for China Analysis (@wstv_lizzi)

Learn More: Read “Petrodollar to Digital Yuan” by CCA Senior Fellow on Chinese Economy, Diana Choyleva.

4. Politburo Sets the Tone for the 15th Five-Year Plan with “Future Industries”

What Happened: On January 30, the Political Bureau of the Chinese Communist Party held its first collective study session of the opening year of the 15thFive-Year Plan (FYP), focused on the forward-looking planning and development of “future industries.” Xi Jinping presided over the session and emphasized that a new round of technological revolution and industrial transformation is accelerating, with cutting-edge technologies continuously emerging and driving the rapid rise of future industries. Xi characterized future industries as forward-looking, strategic, and disruptive, stressing that their development requires not only scientific planning but also holistic coordination. While calling for clearer identification of priority directions during the 15th FYP period, Xi also emphasized that development should be tailored to local conditions alongside stronger coordination to ensure future industries complement both emerging and traditional sectors.

Why It Matters: The study session provides insights into how Beijing intends to guide industrial development under the 15th FYP. Xi emphasized that enterprises should play a leading role in driving technological breakthroughs, with innovation resources increasingly concentrated toward firms. At the same time, the state is tasked with providing policy guidance, support and effective services, including fiscal and tax measures, technology finance, talent cultivation, and recruitment. Xi further highlighted that future industries involve long cultivation cycles and high market risks, requiring stronger governance systems, a balance between development and security, and more scientifically effective regulatory approaches. Overall, the session’s emphasis on planning, holistic coordination, and calibrated development under the 15th FYP reflects a corrective response to the shortcomings during the 14th FYP, which were associated with fragmented resource allocation, one-size-fits-all industrial competition, premature commercialization, and wasteful regional duplication.

By Feifei Hung, Affiliated Researcher, Center for China Analysis

Learn More: “Who Briefs Xi Jinping? How Politburo Study Sessions Help to Decode Chinese Politics,” Neil Thomas, CCA Fellow on Chinese Politics, and Feifei Hung.

5. Clean Energy Installed Capacity Overtakes Coal in Shanxi

What Happened: During Shanxi’s annual provincial people’s congress, it was announced that in 2025, installed capacity of new and clean energy exceeded that of coal-fire power for the first time. Last year “the installed capacity of new and clean energy hit 90.48 gigawatts, an increase of 18.29 gigawatts year on year, accounting for55.1% of the province’s total power capacity.”

Why It Matters:Shanxi province is coal-rich, so the latest news that installed clean energy capacity has overtaken coal is a significant milestone. While coal is still a substantial component of Shanxi’s energy mix, the growth in clean energy signals provincial alignment withChina’s overall goal of accelerating renewable energy deployment.

By Taylah Bland, Fellow on Climate and the Environment, Center for China Analysis (@Taylahbland)

Learn More: Read “Unpacking China’s New Headline Climate Targets” by CCA Senior Fellow Li Shuo and Fellow Kate Logan.

What Happened: Zhang Youxia, Politburo member and First Vice Chairman of the Central Military Commission (CMC), and Liu Zhenli, chief of staff of the CMC Joint Staff Department, are under investigation for disciplinary and legal violations. A PLA Daily editorial accused them of undermining Xi’s “Chairman Responsibility System” and exacerbating political and corruption problems. The purge — among the most serious in recent PLA history — has effectively reduced the CMC from seven members to just two: Xi Jinping and Vice Chairman Zhang Shengmin.

Why It Matters: Zhang’s downfall is especially significant given his rare combination of revolutionary pedigree, combat experience, and Hu-era institutional authority, underscoring that no figure is untouchable under Xi. While the probes are unlikely to shift Beijing’s macroeconomic or foreign policy trajectory, they carry sharper military implications: near-term disruption may weaken PLA readiness toward Taiwan, but over time, a more disciplined and loyal officer corps could strengthen coercive capacity and deterrence. Xi is likely to use the run-up to the 21st Party Congress in 2027 to elevate a new generation of trusted, operationally capable commanders.

By Lobsang Tsering, Senior Research Associate on Chinese Society, Center for China Analysis

Learn More: “How Will the Next Generation of Chinese Leaders Reconcile Effective Governance and Party Loyalty?” by CCA Senior Fellow on Chinese Politics Guoguang Wu in China 2026: What to Watch.

2. Jensen Huang’s China Trip Underscores U.S. Big Tech’s Conundrum

What Happened: Nvidia CEO Jensen Huang recently visited China, with stops in Shanghai, Beijing, and Shenzhen. Publicly, the trip featured Lunar New Year events with staff, supplier meetings, and a visit to Nvidia’s new Zhangjiang district office in Shanghai. Behind the scenes, Chinese media report that the real focus was advancing compliance for H200 chip sales. While H200 has conditional U.S. approval, key questions remain over who can buy it, how it can be used, and which regulatory hurdles apply. Huang reportedly held closed-door meetings to clarify policy changes, gauge demand for the H200 chip, and assess prospects for Nvidia’s next generation of AI processors.

Why It Matters: Nvidia is operating in an increasingly narrow space in China, squeezed between U.S. export controls, Chinese security requirements, and fast-rising domestic rivals. By 2025, Chinese compute providers had captured 34.6% of the market, as Nvidia continued to lose share. Huang himself has warned that China’s AI edge lies less in cutting-edge chips than in cheaper compute driven by energy subsidies and industrial clustering, shifting competition from performance to cost. That puts Nvidia at a disadvantage. Once the ecosystem leader shaping Chinese developers around Nvidia’s own software platform and programming model, it now looks more like a constrained bidder, competing against local alternatives with downgraded products and lingering regulatory uncertainty. Growing supply-chain security concerns only accelerate the push toward homegrown solutions.

By Lizzi C. Lee, Fellow on Chinese Economy, Center for China Analysis (@wstv_lizzi)

Learn More: Watch the webinar “China’s Tech Front: Chip Startups Rivaling NVIDIA, Robotics Buzz, and Next-Gen AI Trends” moderated by Lizzi.

3. China-UK Signal Reset During Starmer’s Beijing Visit

What Happened: British Prime Minister Keir Starmer met with Chinese President Xi Jinping and Premier Li Qiang in Beijing, where the two sides agreed to reset relations and pull back from the yearslong tensions that previously defined bilateral ties. Starmer’s visit, the first by a UK prime minister in eight years, included meetings with senior Chinese leaders and a China–UK Entrepreneurs Committee session, alongside a UK delegation of more than 60 executives from major business and cultural institutions.

Why It Matters: The two sides emphasized expanding cooperation in trade, investment, finance, climate, and diplomacy at a time when both countries face an increasingly volatile United States. Notably, Beijing granted 30-day visa-free travel for British tourists, highlighting China’s emphasis on bolstering people-to-people ties, and agreed to halve tariffs on Scotch whisky. Starmer also addressed Taiwan and Hong Kong in restrained and non-confrontational terms, reaffirming long-standing UK positions without elaboration, suggesting deliberate efforts to prevent sensitive political issues from overshadowing economic cooperation.

By Jie Gao, Research Associate on Foreign Policy and National Security, Center for China Analysis

Learn More: Listen to Tough Choices: Europe and its Middle Power Partners on The State of Asia.

4. Beijing to Hire Largest Number of Tax Officials in Over a Decade

What Happened: China will recruit its largest cohort of tax officials this year — over 25,000 — as Beijing prepares to tighten tax enforcement amid slowing economic growth and a growing budget deficit. This is the fourth consecutive year of heightened recruitment, partially intended to replace a cohort of recently retired tax bureaucrats hired in the 1980s. Beijing has stepped up tax enforcement, pressuring local authorities to collect revenue, and targeting high-income earners who fail to declare overseas income and often hold offshore investments. In addition to replacing retirees, China’s expanded tax workforce is meant to better scrutinize individuals earning income in the fast-growing digital economy, especially in e-commerce and livestreaming.

Why It Matters: China’s local governments face a deepening budget deficit, and China’s tax revenue dropped by 3.4% in 2024, a decline of US$2.5 trillion. China faces a multitude of economic challenges, including slowing economic growth, a worsening housing market, anemic consumer spending, weakening investment, and deflationary pressures that have eroded profits and wages. To counter economic pressures, Beijing is increasingly turning towards tax revenue to shore up other previously dependable sources of fiscal income.

By Jamie Lui, Assistant Director for Research and Strategy, Center for China Analysis

Learn More: Read “China’s Next Move: Economic Priorities and Policy Shifts for 2026” by Lizzi Lee, Fellow on Chinese Economy, and Jing Qian, Co-Founder and Managing Director, Center for China Analysis.

5. China Scales Extreme Weather Forecasting Capabilities

What Happened: Speaking at a national conference on meteorological work on January 26, Chen Zhenlin, head of the China Meteorological Administration, reinforced China’s commitment to boosting extreme weather forecasting in 2026. Chen noted China’s continued experience with extreme weather events like floods and said China “will pilot a new imminent warning system, apply artificial intelligence to refine typhoon and heavy rainfall forecasts, and develop new prediction products for extreme weather.”

Why It Matters: Over the last year, China significantly improved its management of extreme weather events in part due to its scale up of forecasting abilities and its coordinated departmental approach to prevention and response. With extreme weather events and their associated social and economic costs expected to continue in 2026, China is taking the right approach in leveraging its scientific and technological capabilities to safeguard communities, industries, and infrastructure.

By Taylah Bland, Fellow on Climate and the Environment, Center for China Analysis (@Taylahbland)

Learn More: Read “China’s Extreme Weather AI Tools Can Help Countries Adapt” by CCA Fellow Taylah Bland.

1. China Signals Trade De-Escalation and Economic Reassurance at Davos

What Happened: Chinese Vice Premier He Lifeng attended the 2026 annual meeting of the World Economic Forum in Davos, where he delivered a keynote speech and held bilateral meetings on the sidelines. His trip included exchanges with Swiss leaders, meetings with business leaders, as well as talks with U.S. Treasury Secretary Scott Bessent under existing economic dialogue mechanisms.

Why It Matters: Following his meeting with He Lifeng, Bessent confirmed that Chinese purchases of U.S. soybeans and rare-earth magnet shipments are proceeding largely as agreed, signaling that the U.S.-China trade de-escalation is holding. In his Davos speech, the Vice Premier pledged to boost China’s domestic consumption, improve its business environment, and “safeguard global supply chain stability” amid Western efforts to reconfigure industrial networks. He’s focus on domestic demand and supply-chain stability aims to rebut Western claims of Chinese overcapacity and systemic risk. In doing so, he frames Beijing as a vital anchor for global growth during a period of sluggish demand, heightened geopolitical uncertainty, and trade volatility. He also reinforced China’s objection to the “over-securitization” of economic issues.

By Jie Gao, Research Associate on Foreign Policy and National Security, Center for China Analysis

Learn More: Read “Can the United States and China Find a New Equilibrium on Trade and Technology?” by Brendan Kelly and Michael Hirson in CCA’sChina2026: What to Watch.

2. London Greenlights China’s New “Super Embassy” Despite Political Backlash

What Happened: The UK government gave the go ahead for China to build a new “super embassy” — a sprawling, 20,000 square meter site hosting over 200 staff in central London — despite intense criticism from lawmakers from all sides, including those in the ruling Labour Party. The embassy has long been controversial since Beijing purchased the site in 2018, and opponents worry the site, which sits on top of fiber-optic cables carrying sensitive financial and personal data, can be used as a base for Chinese espionage activities. Despite domestic pushback, the embassy’s approval would ease strained bilateral ties, in part due to the yearslong delays over the embassy’s opening. The opening is also expected to pave a clear path for Prime Minister Keir Starmer to visit Beijing, making Starmer the first Prime Minister to visit Beijing since 2018. Some suggest that Starmer hopes to revive the “golden era” of Sino-British relations, a high point of bilateral relations during the mid-2010s.

Why It Matters:  Strained relations with the United States has given the UK a reason to rebalance towards China. Trump’s aggressive rhetoric around Greenland, however, elicited a tepid response from Starmer — notably weaker compared to other European leaders. The UK’s deep reliance on the United States over economic and security matters constrains its ability to pushback against American pressure, and the embassy move is an attempt to try to rebalance toward China, in a similar fashion to recent moves by Canada. However, since leaving the EU, the UK has less economic incentives to offer China in return.

By Barclay Bram, Fellow on Chinese Society, Center for China Analysis

Learn More: Explore China’s global image on CCA’s Global Public Opinion on China, an interactive website that aggregates worldwide polling on public opinion toward China.

3. China’s Demographic Crisis Deepens as Births Hit Modern-Era Low

What Happened: On Monday, the National Bureau of Statistics revealed that China’s population contracted by 3.39 million in 2025, marking the fourth consecutive year of decline and a significant acceleration from the previous year. Births plummeted to 7.92 million — a modern-era low — dropping sharply from 9.54 million in 2024, as the temporary boost from the “Year of the Dragon” faded. The data indicates a total fertility rate estimated at just 0.96, far below the replacement level of 2.1. Simultaneously, the aging crisis is intensifying, with the population aged 60 and above reaching 23% of the total, firmly categorizing China as a “moderately aged” society on a fast track to becoming “heavily aged.”

Why It Matters: The accelerating decline suggests China is approaching a “low-fertility trap” where standard policy interventions prove ineffective. This rapid contraction seriously threatens Beijing’s economic strategy, as a shrinking workforce and weakening consumer demand undermines China’s strategy of increasingly relying on domestic consumption. The data confirms the long-held fear that China is “getting old before it gets rich,” with the dependency ratio worsening faster than the social safety net can adapt. For policymakers, the failure of current incentives implies that incremental adjustments are no longer sufficient; the situation may force Beijing to consider more drastic fiscal measures — such as issuing long-term bonds to fund massive fertility subsidies or other structural shifts, as the deepening labor shortage will severely constrain China’s long-term economic potential and global competitiveness.

By Jennifer Choo, Director of Research and Strategy, Center for China Analysis

Learn More: Read “Can Beijing Preserve Growth and Stability amid Rapid Demographic Change?” by Emma Zang, Fellow on Chinese Society, in CCA’s flagship report China 2026: What to Watch.

1. Xi is Confident in Policy Direction but Execution Remains a Challenge

What Happened: On January 12, at the Fifth Plenary Session of the 20th Central Commission for Discipline Inspection, President Xi Jinping called for advancing strict Party self-governance by strengthening political discipline, “putting power into the cage of institutions,” and increasing transparency to ensure that power operates “in the sunlight.” He further emphasized that the Party must appoint officials who are politically loyal, responsible, and accountable and linked discipline work to fully implementing the Party Central Committee’s major decisions on “new quality productive forces suited to local conditions,” on balancing development and security, preventing a return to poverty, and resolving hidden local government debt risks.

Why It Matters: Xi’s remarks reaffirm that strict Party control, national security, and technological self-reliance will remain top priorities in 2026. Notably, he emphasized the need to identify effective methods and pathways for implementing Beijing’s major policy decisions, signaling that Xi no longer questions China’s overall policy direction. Instead, execution is now framed as the core problem. For those engaging Beijing, the implication is clear: there is little scope to contest the diagnosis, but some room to shape the treatment — influencing how policies are implemented rather than whether they are justified.

By Lobsang Tsering, Senior Research Associate, Center for China Analysis

For More: Watch this Spotlight Presentation on Xi Jinping’s priorities and elite politics by Neil Thomas, Fellow on Chinese Politics, at the launch of CCA’s China 2026: What to Watch.

2. China’s Top-Tier AI Superstars Identify Three Key Gaps Behind the United States

What Happened: At the AGI-Next closed-door forum held in Beijing on January 10, China’s AI industry superstars from leading big tech firms and startups engaged in an unusually frank discussion about the country’s AI trajectory. One speaker notably framed the U.S.-China AI gap as a “rich versus poor” game, where U.S. AI firms can afford vast amounts of compute for high-risk exploration, while their Chinese counterparts are capital constrained. Much of China’s compute is tied up in maintaining existing products, which limits tolerance for research uncertainty. As a result, effort is shifting away from frontier research and toward applications. Another speaker noted that incremental model performance gains matter little to consumers, while enterprises, especially in software and coding, are willing to pay for better performance.

Why It Matters: The discussion offers a rare glimpse into the thinking of frontier scientist-entrepreneurs leading China’s AI push. The consensus was that China’s strengths lie in efficiency and execution under constraint, not in defining global research cutting edges, with broad agreement that enterprise AI represents the most pragmatic path forward. One speaker put the odds of a Chinese firm leading globally in the next three to five years at only roughly 20%, citing not only compute gaps and a lower concentration of top-tier talent but also a research culture that favors certainty and visible rankings over long-term, risky explorations. By contrast, OpenAI’s tech breakthroughs came from embracing the uncertainty of early-stage experimentations. A culture of risk aversion, he acknowledged, may be China’s hardest obstacle to overcome.

By Lizzi C. Lee, Fellow on Chinese Economy, Center for China Analysis

Learn More: Watch “The Smartphone That Acts on Your Behalf: Is ByteDance-ZTE Agentic AI Phone a Game Changer or a Cautionary Tale?,” exploring the competitive landscape of U.S.-China AI deployment, moderated by Lizzi.

3. Canada’s Carney Visits Beijing, First Since 2017

What Happened: Canadian Prime Minister Mark Carney arrived in Beijing on Wednesday night for a four-day visit, the first by a Canadian leader since 2017. Following meetings with President Xi Jinping and Premier Li Qiang, the two sides agreed to roll back the triple-digit tariffs imposed on each other’s key exports. Canada will remove its additional 100 percent duties on Chinese electric vehicles and replace them with an import quota of 49,000 units at a preferential 6.1 percent tariff rate, while China will sharply lower tariffs on Canadian canola seed and is expected to lift added duties on canola products, pork, seafood, and peas by March. Beijing also announced visa-free entry for Canadian visitors.

Why It Matters: The package marks a tangible reset after years of strained relations, reflecting a shared interest in insulating bilateral trade from Washington-driven tariff pressures. The EV-for-canola arrangement highlights the economic complementarity between China’s industrial exports and Canada’s agricultural and energy sectors, while giving Ottawa room to ease consumer costs and attract investment. Constraints remain — including Canada’s alliance with the United States and sensitivities around critical minerals — but the tariff deal and visa-free access open space for incremental confidence-building in areas such as agriculture, energy, and finance.

By Jie Gao, Research Associate on Foreign Policy and National Security, Center for China Analysis

Learn More: Explore CCA’s The Art of Dealing with China, an initiative examining the complex geo-economic environment that multinational corporations face and the varied ways they navigate it.

4. China’s State Council Takes on Food Delivery Platforms

What Happened: On January 8, Office of the State Council’s Anti-Monopoly and Anti-Unfair Competition Commission announced a broad investigation into China’s food delivery platform service industry. While China’s platform economy has long been credited with streamlining online commerce and delivering exceptional convenience for consumers, regulators are increasingly concerned that competition has become excessive and that platforms are using unfair practices to compete. The move follows the release of new rules on online trading platform governance issued on January 7, underscoring a broader government push to bring the platform economy under tighter, more standardized oversight. The investigation is part of policymakers’ wider “anti-involution” drive aimed at curbing destructive competition and stabilizing market behavior.

Why It Matters: For consumers, ever cheaper delivery has meant short term gains, but authorities warn that distorted competition is eroding margins for merchants and workers and undermining the sector’s long term sustainability. The announcement pointed to issues such as “excessive subsidies, price wars and control over traffic flow in the online food delivery platform service industry.” Over time, tighter rules could push platforms to compete less on pure discounting and more on service quality, operational efficiency, and technology — including automation and AI — reshaping how tens of millions of Chinese users, couriers, and merchants interact with the online food delivery market.

By Barclay Bram, Fellow on Chinese Society, Center for China Analysis

Learn More: Watch Barclay’s Spotlight Presentation at the launch of CCA’s China 2026: What to Watch where he examines China’s social inequality and unemployment.

5. Hebei Province Struggles for Heat

What Happened: Over the last week, reports have emerged that residents in rural Hebei Province are struggling to afford their heating bills, leaving many shivering through freezing winter conditions. In 2017, Beijing mandated that dozens of northern regions transition away from coal in favor of electric- and natural gas-powered heating systems to combat air pollution. To support the transition, the government provided household subsidies, but in parts of Hebei these subsidies have been sharply reduced or lapsed altogether, leaving residents with electricity bills they simply cannot afford.

Why It Matters: These accounts from Hebei have attracted significant attention in both Chinese and international media, illustrating the social costs that can accompany aggressive clean air policies. They underscore the ongoing challenge of ensuring sustainable energy security in rural areas, while highlighting that progress in the fight against air pollution will be uneven and prolonged. As China continues its energy transition, social welfare considerations and the interests of vulnerable communities will need to be at the forefront of policy design, alongside mechanisms to support implementation and safeguard lives.

By Taylah Bland, Fellow on Climate and the Environment, Center for China Analysis

Learn More: Watch the Spotlight Presentation by Li Shuo, Senior Fellow on Climate, at the launch of CCA’s China 2026: What to Watch where he discusses China’s climate agenda.

Five Strategic Questions for China in 2026

The year 2026 poses a hinge point for China. It marks the launch of its 15th Five-Year Plan, the policy blueprint that will guide economic and political priorities through the end of the decade, and the runway to the 21st Party Congress in 2027, when Xi Jinping will seek to further entrench his leadership and legacy. China boasts global leadership in advanced technologies, including in green tech, EVs, power batteries, and robotics, as well as in multiple AI subfields. At the same time, China enters the year facing slower growth, fragile confidence, mounting fiscal strains, and a tense but temporarily stabilized relationship with the United States. The world is also entering an era of turbulence that few could have anticipated a year ago.

These pressures are forcing hard choices upon Beijing. Can China sustain tight political control while restoring economic vitality? Can it rebalance toward consumption without undermining its state-led model? Can competition with the United States be managed without tipping into destabilizing escalation? And can Beijing advance its long-term goals — on innovation, security, and Taiwan — without compounding the risks it already faces?

This special New Year’s edition of China 5 draws on the Center for China Analysis’s flagship report, China 2026: What to Watch, and identifies five strategic questions that will shape China’s trajectory in the year ahead. Rather than predict outcomes, these essays focus on the constraints, contradictions, and signals that will determine what is possible — and what is not — in 2026. Together, they offer a framework for understanding where China is headed, what could alter its course, and why the answers matter well beyond China’s borders.

1. What Will Xi Jinping’s Priorities Be in 2026?

Bottom Line: Xi Jinping will prioritize Party control, national security, and technological self-reliance in 2026 — while tolerating limited pragmatism when growth or stability is threatened.

What’s Driving This: 2026 launches the 15th Five-Year Plan and serves as a lead-up to the 21st Party Congress in 2027, when Xi will seek to further consolidate his leadership and legacy. Slowing growth, a fragile property sector, local government debt, and U.S.-China competition have narrowed Xi’s room for maneuver. His response has been continued centralization, an expansive national security regime, strategic guidance of China’s private economy, and channeling of state resources into strategic industries. Yet these same tools have dampened bureaucratic initiative, private-sector confidence, and household sentiment — deepening the tension between control and dynamism.

What to Watch in 2026: The 15th Five-Year Plan’s resource allocation will provide critical clues. Continued emphasis on advanced manufacturing and self-reliance, paired with modest support for households, would confirm that control remains paramount. Personnel moves favoring political reliability over technocratic competence would reinforce this trajectory. Selective easing — targeted stimulus or quiet regulatory restraint — would signal tactical flexibility, but not substantial reforms.

Why It Matters Beyond China: Xi’s priorities will shape not only China’s growth trajectory but also its external behavior. A leadership focused on security and control is less likely to pursue bold economic reforms or compromise in trade and technology disputes. For foreign governments, investors, and companies, 2026 will clarify whether China is settling into a model of managed stagnation with pockets of strength — or whether Xi is prepared to accept limited adjustment to maintain social stability and sustain the system he has built.

Learn more: Read the full essay, “What Will Xi Jinping’s Priorities Be in 2026?” by Neil Thomas and Lobsang Tsering in China 2026: What to Watch.

2. Can Beijing Truly Pivot Toward a Consumption-Led Economy?

Bottom Line: Beijing now treats consumption-led growth as strategically necessary for long-term economic resilience and national security — but remains unlikely to accept the tradeoffs required to deliver it.

What’s Driving This: China’s growth model has reached diminishing returns, while debt, overcapacity, and trade tensions have intensified external pressure. By 2025, Beijing elevated consumption from an economic aspiration to a pillar of national security and social stability. Yet genuine rebalancing would require 2-3 percent annual GDP growth, redistribution away from local governments and state firms, an end to household financial repression, and greater autonomy for households — steps that conflict with Xi’s control-first governance model.

What to Watch in 2026: The 15th Five-Year Plan will reveal whether consumption is institutionalized through durable reforms — higher transfers, stronger welfare, financial market reforms, and reduced reliance on investment targets — or handled through incremental subsidies and rhetorical support. The key test will come when growth falls below politically acceptable levels: whether Beijing stays the course or reverts to investment-led stimulus.

Why It Matters Beyond China: China’s growth model shapes global demand and trade tensions. Failure to rebalance will entrench overcapacity and volatility; success would support more sustainable global growth and ease frictions.

Learn More: Read “Can Beijing Truly Pivot Toward a Consumption-Led Economy?” by Diana Choyleva in China 2026: What to Watch.

3. Can the United States and China Find a New Equilibrium on Trade and Technology?

Bottom Line: A fragile U.S.-China truce is likely to hold in 2026 — but it rests on mutual vulnerability, not trust, and remains inherently unstable.

What’s Driving This: By late 2025, Washington and Beijing had settled into an uneasy equilibrium shaped by their capacity to harm one another economically. Escalating tariffs, export controls, and China’s use of rare earths as leverage demonstrated the risks of uncontrolled decoupling. The result was a temporary stabilization: not rapprochement, but recognition that escalation carries real costs on both sides.

Yet this equilibrium is inherently unstable. Both governments are racing to reduce dependence on the other’s chokepoints — semiconductors for China, critical minerals and manufacturing inputs for the United States. Each step toward de-risking erodes the very interdependence that underpins restraint.

What to Watch in 2026: Leader-level engagement and senior communication channels will help manage flare-ups, particularly as domestic politics in the United States and in China constrain escalation. More consequential will be whether either side closes key vulnerabilities faster than expected — through semiconductor breakthroughs or supply-chain diversification — which would weaken incentives for stability.

Why It Matters Beyond China: A managed truce reduces near-term risk but perpetuates uncertainty for allies, investors, and multinational firms caught between competing systems. For third countries, 2026 will reinforce the reality that strategic hedging — not alignment with a stable order — is becoming the default.

Learn More: Read “Can the United States and China Find a New Equilibrium on Trade and Technology?” by Brendan Kelly and Michael Hirson in China 2026: What to Watch.

4. Can China Reconcile Private-Sector Vitality with State-Led Innovation?

Bottom Line: Beijing will continue courting entrepreneurs rhetorically in 2026 — but systemic uncertainty will prevent a full revival of private-sector dynamism.

What’s Driving This: China’s leadership increasingly recognizes that private firms are indispensable to innovation, particularly as U.S.-China competition shifts toward advanced technologies. Symbolic gestures — the rehabilitation of prominent entrepreneurs, new legal frameworks, and official praise for the private economy — signal a desire to restore confidence after years of regulatory crackdowns.

Yet the underlying dilemma remains unresolved. The Party wants innovation without independence, entrepreneurial creativity without autonomy, and global competitiveness without exposure. Entrepreneurs are encouraged to take risks — but only within politically defined boundaries that remain opaque and unevenly enforced. This model is well suited to scaling known technologies but far less effective at generating breakthrough innovation.

What to Watch in 2026: The credibility of Beijing’s recalibration will hinge on execution, not signaling. Consistent enforcement of new private-sector protections, restraint in security-related investigations, and reliable dispute resolution would suggest real progress. Conversely, continued discretionary enforcement — often driven by fiscally stressed local governments — would reinforce caution and capital flight.

Why It Matters Beyond China: China’s innovation trajectory affects global competition in everything from artificial intelligence to clean energy. Partial revival will produce impressive advances in select areas, but persistent uncertainty limits China’s ability to sustain broad-based growth. For global partners, this hybrid model complicates engagement — offering opportunity but without predictability.

Learn More: Read “Can China Reconcile Private-Sector Vitality with State-Led Innovation?” by Lizzi C. Lee in China 2026: What to Watch.

5. Will Beijing Recalibrate Its Approach to Taiwan?

Bottom Line: In 2026, Beijing is likely to intensify pressure on Taiwan without crossing the threshold into war — incrementally reshaping the status quo rather than overturning it.

What’s Driving This: With new leaders in Washington and Taipei and Xi Jinping entering a politically sensitive phase ahead of the 2027 Party Congress, cross-Strait dynamics are becoming more brittle. Beijing remains committed to “peaceful reunification,” but patience with nonmilitary approaches is thinning as Taiwan’s political trajectory diverges further from Beijing’s narrative of inevitability. Rather than choosing between peace and force, China is refining a third path: sustained gray-zone pressure that blurs the line between peacetime coercion and military conflict. Expanded military exercises and civilian-military measures are designed to normalize Chinese presence around Taiwan and gradually erode deterrence without triggering outright war.

What to Watch in 2026: The baseline remains continuity with caveats. Watch for cumulative shifts — expanded PLA exercises, law enforcement actions, and pressure on Taiwan’s international space — rather than singular dramatic moves.

Why It Matters Beyond China: Taiwan remains the most dangerous flashpoint in U.S.-China relations. Even without conflict, sustained coercion raises risks of miscalculation and forces regional actors to adapt militarily and diplomatically. For global markets and supply chains, the absence of war does not mean the absence of instability.

Learn More: Read “Will Beijing Recalibrate Its Approach to Taiwan?” by Lyle Morris in China 2026: What to Watch.