China 5: China issues stern warning over Hormuz blockade, KMT–Xi meeting signals cross-Strait shift, Beijing unveils counter-sanctions framework
China condemns U.S. actions in the Strait of Hormuz, KMT Chair Cheng Li-wun meets Xi Jinping, China rolls out new counter-sanctions rules, Beijing tightens control over industry groups, and Australia
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.