Four weeks after the ceremonious Trump-Xi summit in Beijing, the apparent U.S.-China truce showed cracks this week with the news that China arrested a U.S. citizen and the Pentagon’s announcement that it added Alibaba, Baidu, and BYD, among other companies, to a list of entities it believes have cooperated with the Chinese military.

As CNBC explained, while the “designations do not impose sanctions explicitly,” they mean that “the Defense Department will be prohibited from contracting directly with listed companies starting later this month, and from procuring their products or services through third parties beginning in June 2027.”

China’s Ministry of Commerce, in response, said “China is strongly dissatisfied and firmly opposes this,” and it urged “the U.S. to immediately stop its erroneous practices, immediately withdraw relevant measures and return to the correct track of building a constructive strategic and stable China-U.S. relationship.”

“Otherwise, China will resolutely and forcefully retaliate, and the US will bear full responsibility for the consequences,” the statement said.

Four weeks on, the goodwill generated by the Beijing summit is already proving difficult to sustain.

***

While experts continue to digest Xi’s visit to the DPRK this week, one of the more striking interpretations to me came from Seong-Hyon Lee, a senior fellow at the George H. W. Bush Foundation for US-China Relations, who concluded that it “was not a routine exercise in economic diplomacy; it marked the formal, institutionalised demise of the post–Cold War denuclearisation paradigm concerning North Korea,” representing “a transition from treating North Korea as a volatile non-proliferation hazard to tacitly endorsing it as a permanent, sovereign nuclear buffer state.”

A conclusion shared by Emma Chanlett-Avery, Deputy Director of the Asia Society Policy Institute’s Washington: “Xi may have now calculated that the regime has advanced its capabilities so far that denuclearization is no longer feasible.”

Let’s jump into it.

— PC

Through the Lens

In Focus

I. The Pentagon’s “1260H list”

The Pentagon added a slew of Chinese companies, including Alibaba Group, Baidu Inc and carmaker BYD, to a list of entities it believes have aided the Chinese military, complicating the fragile diplomatic relationship between Washington and Beijing.

The Defense Department published an updated “1260H list” Monday evening stateside — a roster of companies the Pentagon considers affiliated with China’s military or defense industrial base.

The designations do not impose sanctions explicitly, but mean the Defense Department will be prohibited from contracting directly with listed companies starting later this month, and from procuring their products or services through third parties beginning in June 2027.

Read: Pentagon expands list of China military-linked firms to include Alibaba, Baidu in fresh blow to diplomatic thaw (CNBC)

Related: Beijing ‘strongly dissatisfied’ with Pentagon move against China tech firms (Nikkei Asia)

II. Xi’s visit to Pyongyang

The state visit by Xi Jinping to meet with Kim Jong-un was not a routine exercise in economic diplomacy; it marked the formal, institutionalised demise of the post–Cold War denuclearisation paradigm concerning North Korea and the definitive codification of what may be termed the “Mediator’s Veto”.

The clearest signal from the summit lies in what was deliberately left unsaid. A rigorous textual tracking of Chinese state readouts(Opens in new window) and Xi’s front-page essay in the North Korean newspaper Rodong Sinmun reveals the absolute, systematic erasure of the word “denuclearisation”. As recently as his 2019 Rodong Sinmun essay, Xi still endorsed a political resolution of Korean Peninsula issues – language that at least gestured toward an eventual settlement. The vanishing of even that framing removes the last rhetorical bridge to nuclear disarmament. By replacing these foundational non-proliferation terms with a commitment to support North Korea’s development along a path conforming to its own national conditions, Beijing has executed a calculated pivot.

This represents a transition from treating North Korea as a volatile non-proliferation hazard to tacitly endorsing it as a permanent, sovereign nuclear buffer state.

Read: Xi’s visit to Pyongyang did not revive denuclearisation diplomacy – it buried it (Lowy Institute)

Related:

• Analysis: Why China’s Xi wants a ‘brighter’ future with North Korea (CNN)

• Russia–North Korea Military Cooperation in Response to China’s Tactical Ambiguity ()

• Asia ASAP: Xi Jinping and Kim Jong Un Meet in Pyongyang ()

III. “Do not spread bad news.”

Li Xi, a financial journalist at a Beijing media outlet, told Tian Jian that beginning in the first half of last year, his publication introduced new rules governing coverage of “negative” economic conditions. These included a long list of topics — the property market slump, the collapse of local government revenues from land sales, declining household incomes, existential challenges facing businesses, corporate layoffs and unemployment, and the banning of coal-burning for rural household heating. All of these were marked as demanding “caution.” “Our editors have repeatedly told us to be careful with our pitches,” Li said, “and instead to ‘sing the praises of a bright future,’ and not spread bad news.”

“Writing about which stocks are underwater, about rising social security contributions, about farmers not being allowed to burn coal for heat — none of that is acceptable,” Li added.

Stories on these topics, said Li Xi, have gradually come to be classified as “high-risk story pitches.” Even when they are not explicitly prohibited, they tend to be rejected at the pitch stage, and rarely do they ever find their way into real editorial discussions. “At our meetings, we don’t even bring up these kinds of negative pitches anymore,” he said.

Read: The Economic Downturn and China’s Silent Press (, )

Related: Beijing is squeezing journalists but the media is self-sabotaging too (, )

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We’re jumping straight in this week, but before we do, I couldn’t ignore this week’s 37th anniversary of what is colloquially referred to as 六四 (liù sì), 64, the tragic Sunday of June 4, 1989, when the hopes of millions who had been peacefully protesting across China for weeks in support of a more democratic future were crushed in and around Beijing’s Tiananmen Square.

I’ll never forget a colleague telling me that his sister, like so many other university students at the time, traveled to the capital to join the protests. The same colleague, whose parents refused to talk about the matter, told me he planned to explain the inexplicable to his teenage son one day. And one of my best friends shared his father’s advice: “Don’t talk about it with other people.”

天安门 (Tiān’ānmén) means “Gate of Heavenly Peace.”

— PC

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In an interview with Le Monde this week, executive vice-president of the European Commission for Prosperity and Industrial Strategy, Stéphane Séjourné, referred to China as an “existential challenge.”

In spite of all the challenges that China poses to the EU, the group has remained divided on how to respond, unable to agree on a coherent long-term strategy that protects its collective interests, as individual member states fear retaliation from and negotiate directly with Beijing.

The list of grievances is long: China’s industrial overcapacity and state subsidies, lack of reciprocal market access, discrimination against foreign firms and unequal competitive conditions, the EU’s excessive dependence on key products such as rare earths, critical minerals, batteries, pharmaceuticals and medical supplies, technology transfer pressures and lack of intellectual property protections, China’s use of trade and economic coercion, …

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Just a few days after Trump met with his “friend” Xi Jinping in Beijing, the Chinese leader this week hosted Russia’s Vladimir Putin for his 25th visit to China, complete with a similarly pomp-filled welcome: red carpets, a ceremony outside the Great Hall of the People, a military band, and children waving flags.

In the year marking the 30th anniversary of the China-Russia strategic partnership of coordination and the 25th anniversary of the China-Russia Treaty of Good-Neighborliness and Friendly Cooperation, Xi Jinping praised the two countries’ “longstanding friendship” and called for the two to “deepen multilateral coordination, further increase coordination and collaboration on multilateral platforms.”

At the same time, the Chinese leader took the opportunity to make a veiled attack on the U.S. and promote his signature political slogan: “The damage caused by unilateral actions and hegemony is unprecedented, and the …

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While some praised the summit as a successful exercise in stability maintenance and relationship building, others saw a weakened and passive United States. A surprisingly docile Trump, accompanied by an entourage of government officials and business leaders, was in Beijing this week for a visit that delivered few concrete outcomes but plenty of pomp and pageantry.

In the first U.S. presidential visit to China in nearly a decade, Trump was welcomed at Beijing Capital Airport by Chinese Vice President Han Zheng, flanked by two rows of children waving flags in carefully choreographed enthusiasm. The two-day visit included a lavish state banquet at the Great Hall of the People and a tour of the Temple of Heaven. Xi Jinping did not give Trump a “big, fat hug,” but he did show him centuries-old trees during a garden stroll at the ultra-private Zhongnanhai and agreed to send Trump rose seeds as a gift.

The talks touched on Iran…

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While the Chinese side hasn’t confirmed it yet (not unusual), all signs point to the Trump–Xi two-day summit in Beijing, scheduled for May 14–15, going ahead, with U.S. officials and security vehicles spotted recently in the capital in preparation for the event.

On trade, it’s likely the two sides will announce new commercial deals, with the U.S. reportedly bringing a smaller CEO delegation than in 2017, including CEOs from Nvidia, Apple, Exxon, and Boeing, according to Semafor. U.S. Trade Representative Jamieson Greer has also mentioned creating a “Board of Trade” as a tool to help manage bilateral trade.

Taiwan—“I think both countries understand that it is in neither one of our interests to see anything destabiliz(ing) happen in that part of the world,” U.S. Secretary of State Marco Rubio said this week—will be on the agenda. The Iran war—the U.S. announced new sanctions today on Chinese companies for helping Tehran—an…

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The Politburo held its April meeting on Tuesday to review the economic outlook. From the readout, although “China’s economy has gotten off to a strong start,” the economy “faces some difficulties and challenges, and the foundation for sustained economic recovery and improvement still needs to be further consolidated.”

With less than 2 weeks to go before the May 14-15 Trump-Xi summit in Beijing, the conflict in Iran, concerns regarding Taiwan, and mutual complaints about trade policies remain key sources of tension.

Writing in Foreign Policy this week, and Haolan Wang lowered the expectations for the meeting: “success should be measured not by whether Trump and Xi make a dazzling announcement but by whether they leave behind thicker diplomatic machinery than they found. Summits are usually judged by deliverables: action plans, business deals, a joint statement. Those matter. But history suggests that the more important question is whether a meeting creates durable mechanisms that make future crises easier to navigate.”

***

By ordering Meta to unwind its $2 billion acquisition of Manus, a China-founded AI startup based in Singapore, Beijing sent a strong message this week to actors in the tech sector, from entrepreneurs to foreign and domestic investors, as well as law and consultancy firms.

Under Xi Jinping, technology is a part of national security, and any such deals are now examined in the context of U.S.-China strategic competition.

According to the Wall Street Journal, “Beijing has handed the two companies a preliminary deadline of several weeks to unwind the deal and fully restore Manus’s Chinese assets to their original state.”

***

Chinese netizens reacted with sharp humour to China’s Ministry of State Security, the country’s intelligence agency, claim that “anti-China forces are promoting ‘lying-flat’ narratives toward Chinese youth.”

Take a look at some of the reactions compiled and translated by the indispensable China Digital Times:

I suspect my boss is a “hostile foreign force,” because we work ourselves to death every day, but we’re still broke. Clearly, our spymaster boss is using this tactic to incite employees to slack off, the diabolical fiend.

Give everyone a two-day weekend, an eight-hour workday, and the full “five social insurances” plus the “housing provident fund.” Enforce the Labor Law properly, and those hostile foreign forces will be speechless.

Another comment reads: “Foreign organizations” is a catch-all term, a basket you can stuff anything into. Weak economy? Blame foreign organizations. Low birth rate? Pin it on those foreign organizations. Low marriage rate, high divorce rate? Darn those hostile foreign organizations. Everything’s their fault.

In the current economic environment, where the youth unemployment rate remains high, blaming foreigners is a familiar scapegoat.

Let’s jump into it.

— PC

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Jumping straight in this week.

— PC

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Xi Jinping had a busy week in Beijing meeting a series of world leaders.

The list included Spanish Prime Minister Pedro Sánchez, Crown Prince of Abu Dhabi Sheikh Khaled bin Mohammed, Vietnam’s leader To Lam, and Russian Foreign Minister Sergei Lavrov.

As tensions in the Strait of Hormuz—disrupted by the U.S. war on Iran—continue to unsettle global markets, Xi told Sánchez on Tuesday that “the international order is crumbling into disarray,” as Beijing seeks to project an image of stability and position China as a reliable partner.

Let’s jump into it.

— PC

Through the Lens

In Focus

I. “The Iran war is not about China”

In Washington, great power competition has become the dominant frame for US foreign policy analysis, and there is a tendency to use it to interpret every major geopolitical event. So it is understandable that some have tried to frame the war in Iran as having a China angle. In this case, however, that framing is misleading. This war is not about China, and attempts to make it so obscure more than they clarify.

China is not a decisive actor in this conflict. It did not shape the conditions that led to escalation, it is not a military participant, and it lacks either the leverage or the willingness to impose outcomes on the primary belligerents. The drivers of this war lie in US decision-making, Israeli strategic calculations, and Iranian responses. Efforts to retrofit China into this equation say more about lazy thinking in Washington than about realities on the ground.

Read: The Iran war is not about China ( for the Atlantic Council)

Related:

• Xi puts forward four-point proposal on promoting Middle East peace, stability (Xinhua)

• Iran used Chinese spy satellite to target U.S. bases (The Japan Times)

• China calls reports it supplied weapons to Iran ‘baseless smears’ (HKFP)

• Medical scans and chips: the hidden fallout of the Iran war for China (CNN)

• Analysis: China has so far weathered the historic oil crisis. But as Xi prepares to meet Trump, costs are starting to grow (CNN)

• Why China Isn’t Pushing Iran to Accept U.S. Demands to End War (The New York Times)

• What has Beijing learnt from the near-closure of the Strait of Hormuz? ()

II. China’s (export) controls

As China’s mammoth trade surplus stokes global tensions, Beijing has enacted sweeping new regulations to investigate and punish foreign companies that stop using Chinese suppliers in response to political pressure at home.

Foreign business groups expressed strong concern about the vaguely worded rules, which took effect when Premier Li Qiang signed them on April 7. Analysts warned that the regulations could make it harder for foreign companies to divest from joint ventures in China or shift orders to overseas suppliers.

The new regulations are part of Beijing’s broader effort to counter what it sees as rising protectionism in the West, driven by a surge in Chinese exports and growing concerns about trade imbalances. China’s exports exceeded imports by almost $1.2 trillion last year, and the country notched another large surplus in the first quarter.

[…]

The 18-point regulations, described in state media as an effort to “prevent security risks in industrial and supply chains,” supplement the already formidable authority afforded to Chinese regulators to investigate multinational corporations for moving supply chains out of China.

Under the new rules, regulators can question employees and examine corporate records during investigations. The regulations also allow authorities to bar companies and individuals from leaving China if they are suspected of moving supply chains elsewhere under foreign pressure.

Read: New Rules Hinder Foreign Firms From Moving Supply Chains From China (The New York Times)

Related:

• China shock 2.0: the flood of high-tech goods that will change the world (Financial Times)

• EU firms rethinking China operations over rare earths curbs: Lobby (CNA)

• Report: Exporting Control: China’s New Strategic Toolkit (European Union Chamber of Commerce in China)

• China’s New Supply Chain Rules Up the Ante for Foreign Firms ( for WPR)

• Expanding Tools Control Foreign-Related Economic Activity (Jamestown)

III. Slow down, you’re aging too fast

So what would it actually take to restore something like demographic hope? The material substrate has to come first: housing affordability, labor market security, genuine workplace flexibility, a more equitable distribution of domestic labor between men and women. What does not work, and the evidence here is pretty clear, is top-down campaigns asking young people to embrace motherhood as a patriotic duty. Young people are not naive. They can see the gap between what the state is asking of them and what the state is actually delivering in return. That gap is what fuels the disillusionment, and slogans do not close it.

Read: Aging Before Affluence w/ Emma Zang ( and )

Related:

• China’s First DINK Generation Is Growing Old (Sixth Tone)

• Pushed Out as Demand Falls, China’s Obstetricians Start Over (Sixth Tone)

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Unification is a “historical inevitability,” Chinese leader Xi Jinping told Cheng Li-wun, the controversial chair of Taiwan’s Kuomintang (KMT) party, on Friday in Beijing.

The meeting was described by various media as the first of its kind in a decade, but Brian Hioe of New Bloom noted that “of the last six KMT chairs who were not temporary acting chairs, four had traveled to China and met with Xi Jinping.”

Cheng, who also traveled to Shanghai and Nanjing, opposes Taiwan independence and advocates closer ties with China.

Speculation about an imminent invasion of Taiwan remains constant, and while Xi’s tone is threatening—“Taiwan independence is the chief culprit in ​undermining peace in the Taiwan Strait - we will absolutely not tolerate or condone it.”—Beijing is patient.

As Taipei-based journalist points out, “As the world speculates if and when Xi might choose to invade Taiwan, it overlooks the fact that he effectively…

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Jumping straight in this week.

— PC

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Early this week, the White House announced new dates for the Trump-Xi summit in Beijing. Originally scheduled for March 31-April 2, the trip is now set for May 14-15, one day shorter than the original plan.

The U.S. President last week announced he had asked to postpone the visit so he could stay in Washington because of the war with Iran. “President Xi understood that it’s very important for the president to be here throughout these combat operations right now,” Karoline Leavitt, the White House spokesperson, said.

Ahead of the summit, on Friday Beijing announced new trade probes into U.S. practices, likely a reaction to Washington’s efforts to revive its tariff agenda after the Supreme Court last month ruled Trump’s signature economic policy illegal.

Meanwhile, in what will probably draw a strong reaction from China, four U.S. senators are headed to Taiwan where, according to the Financial Times, they “will urge lawmak…

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Originally scheduled to take place from March 31 to April 2, Trump this week asked to postpone his visit to Beijing because of the war with Iran. Politico reported today that “The Trump administration is telling foreign officials and others that it will not reschedule a summit between the president and Chinese leader Xi Jinping until the Iran war ends.”

As we covered in last week’s newsletter, Chinese authorities were frustrated by the way summit preparations were unfolding, so it’s unlikely they were too upset by the delay.

Even with the summit on hold, both sides have been working to keep dialogue moving. U.S. Trade Representative Jamieson Greer and Treasury Secretary Scott Bessent met Chinese Vice Premier He Lifeng last weekend in Paris for trade talks ahead of the now-postponed summit, discussing the possible creation of a U.S.-China “Board of Trade” and “Board of Investment” to help manage bilateral trade and investment.

As Ryan Hass, an American foreign policy analyst and Brookings scholar, notes, “Washington and Beijing now find themselves navigating relatively calm waters,” although, as he warns, “The two governments have deferred, not resolved, the underlying tensions that originally drove the relationship toward confrontation.”

Let’s jump into it.

— PC

Through the Lens

In Focus

I. Trump-Xi summit

Trump had been due in the Chinese capital at the end of this month for talks with President Xi Jinping, but has delayed his trip by several weeks to deal with the fallout from the war.

His decision last month to join Israel in strikes on Iran has plunged the Middle East into violence, pushed energy prices to years-long highs and seeded fears of global supply shortages due to Iran’s effective closure of the Strait of Hormuz.

With Trump struggling to define how the intervention will end and traditional allies reluctant to back him, the US leader may come to China needing a diplomatic win.

“A show of US force that was meant to intimidate Beijing has instead served to puncture the illusion of US omnipotence,” said Ali Wyne, a senior adviser focusing on US-China ties at the International Crisis Group think tank.

“Unable to reopen the Strait of Hormuz alone, Washington now needs its principal strategic competitor to help it manage a crisis of its own making,” Wyne said.

Read: Trump’s Mideast muddle could play into Xi’s hands at planned summit (France 24)

II. China’s energy supply

Iran has continued to ship to China, the primary buyer of its oil, despite the war. China’s imports of Iranian crude have slipped only marginally, according to Kpler estimates, from 1.57m barrels per day in February to 1.47m barrels per day in March.

Chinese vessels operated by state-owned firms are meanwhile working to navigate the broader region. The Kai Jing supertanker diverted to pick up Saudi crude at a Red Sea port earlier this month, Chinese media outlet Caixin reported, and is set to dock in China in early April.

And even if Beijing is forced to confront an overseas supply crunch, it has quietly amassed an extraordinary hoard to mitigate the ramifications of a major shock.

Beijing does not disclose the size of its oil reserves, and estimates vary significantly. But it is widely agreed to be sitting on a massive stockpile: about 1.4bn barrels, according to Columbia University’s Center on Global Energy Policy.

Read: China has been preparing for a global energy crisis for years. It is paying off now (The Guardian)

Related:

• China talks up oil sufficiency as Trump seeks Beijing’s help on Hormuz (CNBC)

• China oil majors resume seeking Russian oil after a 4-month halt, sources say (Reuters)

• China’s fuel export ban to further tighten Asia supply (Reuters)

• China–Middle East Air Cargo Recovers as Routes Shift North From Gulf Hubs (Caixin)

• Chinese Airlines Hike Surcharges on Rising Jet Fuel Prices (Caixin)

III. The robots are coming

As in much of the world, AI has become part of everyday life in China. But what most excites Chinese politicians and industrialists are the strides being made in the field of robotics, which, when combined with advances in AI, could revolutionise the world of work. The technology behind China’s current robotics boom is deep learning, the mathematical engine behind large language models such as ChatGPT, which learn by discerning patterns from huge datasets. Many researchers believe that machines can learn to navigate the physical world the way ChatGPT learned to navigate language: not by following rules, but by absorbing enough data for something like human dexterity to emerge. The aim, for many technologists, is the development of humanoid robots capable of performing factory labour – work that employs hundreds of millions of people worldwide.

The resources being pumped into achieving this goal are staggering. In 2025, China announced a £100bn fund for strategic technologies including quantum computing, clean energy and robotics. Major cities have invested their own resources into robotics projects, too. There are now roughly 140 Chinese firms hoping to build humanoids. Some of the frontrunners made their debut in February, at the lunar new year festival gala, a state-choreographed spectacle loosely comparable to the Super Bowl in terms of bombast and national significance. Hundreds of millions watched as robots performed comedy sketches and martial arts routines. The speed of progress has been startling. Last year, the robots were doing a synchronised cheerleading routine. This year, they did cartwheels and parkour. The intended message was clear: the robots are coming, and China will be the nation building them.

Read: Inside China’s robotics revolution ( for The Guardian)

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With just over 2 weeks to go before Trump lands in Beijing for a three-day U.S.-China summit, Chinese authorities are reportedly frustrated by the way preparations are unfolding. Bloomberg reports that “Chinese officials are dissatisfied with what they consider last-minute planning ahead of Trump’s arrival on March 31” and that the “White House’s lack of communication about Trump’s expectations for the visit has also been an issue for Beijing.”

U.S. Trade Representative Jamieson Greer and Treasury Secretary Scott Bessent will meet Chinese Vice Premier He Lifeng this weekend in Paris for economic and trade talks ahead of the summit.

While the two sides have been trying to maintain a stable relationship ahead of the high-level meeting, tensions remain. On Friday, China’s Commerce Ministry condemned a U.S. probe into excess industrial capacity, with spokesperson Guo Jiakun saying that “We oppose any form of unilateral tarif…

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Driving the news this week were the opening of the Two Sessions, the concurrent gatherings of the National People’s Congress (NPC) and the Chinese People’s Political Consultative Conference (CPPCC), and the U.S.-Israeli attack on Iran and Beijing’s reaction.

At the opening session of this year’s NPC, Premier Li Qiang announced a GDP growth target of 4.5% to 5% for 2026, the lowest in decades. “While recognizing our achievements, we are also clear-eyed about the difficulties and challenges we face,” he said, a reference not only to domestic headwinds but also to a volatile international environment.

While Beijing condemned the use of force and voiced support for Tehran in “safeguarding its legitimate rights and interests,” saying it opposes outside interference in Iran’s ​internal affairs, CNN reported that the U.S. “has intelligence suggesting that China may be preparing to provide Iran with financial assistance, spare p…

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Jumping straight in this week.

— PC

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At last weekend’s Munich Security Conference, when asked whether the U.S. should send troops to defend Taiwan in the event of a PRC invasion, U.S. congresswoman Alexandria Ocasio-Cortez clumsily hesitated before reiterating Washington’s longstanding policy [of strategic ambiguity], saying the goal is “to make sure that we never get to that point.” Her answer aligned with U.S. policy, even if the delivery was awkward. For that, she was later mocked by Donald Trump and U.S. Vice-President JD Vance.

A few minutes after insulting Representative Ocasio-Cortez, the president of the United States, who is scheduled to visit China next month, made the shocking statement that he was discussing potential arms sales to Taiwan with Xi Jinping. The remark raised concerns in Taipei and Washington about whether such consultations would conflict with the Six Assurances, the second of which states that the U.S. “has not agreed to consult…

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Beijing reacted sharply in November when Japanese Prime Minister Sanae Takaichi, asked by an opposition lawmaker about “survival-threatening situations,” said a hypothetical Chinese attack on Taiwan could constitute “an existential threat” to Japan and potentially draw Tokyo into a conflict alongside the United States.

Foreign Ministry spokesperson Lin Jian responded that Japan “must correct its wrongdoing at once and retract the unjustified remarks,” warning that “those who play with fire will perish by it.”

On Sunday, Takaichi, the first woman to serve as Japan’s prime minister, emerged from a snap election with a historic supermajority. Her conservative Liberal Democratic Party won 316 of 465 seats in the lower house of the National Diet, enough to override the opposition-controlled upper house.

This is the first time since the Second World War that any party in Japan has won a two-thirds majority on its own, giving the prime minister a mandate for a more assertive foreign policy, including toward China.

Beijing will now have to decide whether to continue its confrontational rhetoric toward Tokyo or adopt a more diplomatic approach. For now, however, when asked about Japan’s LDP landslide victory, Lin Jian reiterated on Monday China’s demand that Japan retract “the erroneous remarks of Sanae Takaichi on Taiwan,” while on Friday at the Munich Security Conference, Chinese Foreign Minister Wang Yi said that “sensible people should be cautious about Japan.”

Before we jump in, as this is our last issue before the new year, I’d like to wish you a healthy and prosperous Year of the Horse.

春节快乐！

— PC

Through the Lens

In Focus

I. Takaichi’s historic election

Prime Minister Sanae Takaichi’s historic election victory is handing Chinese leader Xi Jinping a dilemma: Engage with Japan’s most popular post-war leader or continue a deep freeze with the US’s top ally in Asia.

Takaichi emerged Sunday from a snap election with a historic majority that gives her a mandate for a more assertive foreign policy, just as China ramps up pressure. Since November, when she implied in parliament that a Chinese invasion of Taiwan could prompt Japan to deploy its military, Beijing has imposed export controls and tourism curbs to pressure her to retract those remarks.

Chinese leaders must now must decide whether to maintain economic pressure on Tokyo, or find an off-ramp to the dispute. Takaichi has stated she wants stable relations with Beijing, but it remains politically impossible for her to retract her comments without appearing to compromise Japan’s security.

Several Japanese officials, who asked not to be identified speaking about a sensitive topic, said their hope is China will have little choice but to eventually re-engage because Takaichi’s strong domestic mandate means her administration will likely be around for the next few years.

At a press conference on Monday, Takaichi said Japan was continuing to communicate with China at “various levels” and would respond “calmly and appropriately from the standpoint of Japan’s national interests.”

Read: China’s Xi Faces Dilemma Over Japan After Takaichi’s Historic Election Win (Bloomberg)

Related:

• China says its policy towards Japan will not be changed by one election (The Straits Times)

• Why a resurgent Japan is good for Asia (Chatham House)

• With eye on China, Koizumi stresses importance of rules-based order (The Japan Times)

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The Financial Times reported this week that Beijing threatened to cancel Trump’s planned visit to China in April if a new U.S. arms sales package to Taiwan goes ahead. In their first call since November, Xi Jinping warned Trump on Wednesday that China “will never allow Taiwan to be separated,” adding that Washington “must handle the issue of arms sales to Taiwan with prudence.”

This rhymes with last week’s news that Beijing refused to confirm Starmer’s trip to China until London approved the construction of a new Chinese mega-embassy.

Despite the warning, according to Reuters, Taiwan President Lai Ching-te said on Thursday that “Taiwan–U.S. relations are rock-solid” and that cooperation would continue unchanged.

Still, to avoid further escalation with Beijing, it is now possible that the U.S. arms sale is delayed until after Trump’s April visit.

Let’s jump into it.

— PC

Through the Lens

In Focus

I. Xi-Trump call

China is considering buying more U.S.-farmed soybeans, President Donald Trump said after what he called “very positive” talks with President Xi Jinping on Wednesday, even as Beijing warned Washington about arms sales to Taiwan.

In a goodwill gesture two months before Trump’s expected visit to Beijing, Trump said Xi would consider hiking soybean purchases from the United States to 20 million metric tons in the current season, up from 12 million tons previously. Soybean futures rallied.

Hours after Xi’s virtual meeting with Russian President Vladimir Putin, Xi and Trump discussed Taiwan and a wide range of trade and security issues that remain a source of tension between the world’s two biggest economies. Both leaders publicly affirmed their personal stakes in strong relations after the call, their first since November.

Trump said on Truth Social that the call was “all very positive,” that his relationship with Xi is “extremely good,” and that “we both realize how important it is to keep it that way.” An official Chinese government account said that Xi had said, “I attach great importance to Sino-U.S. relations.”

Read: Trump, Xi discuss Taiwan and soybeans in call aimed at easing China, US relations (Reuters)

Related:

• Be ‘prudent’ about supplying arms to Taiwan, Xi tells Trump in call (The Guardian)

• China’s Xi holds calls with Trump, and Putin, on same day (DW)

II. Critical minerals: reducing reliance on China

Vance said the US-China trade war of the past year has exposed how dependent most countries are on critical minerals, the sale of which Beijing largely dominates. Therefore, collective action is needed to make the West self-reliant, he stressed.

“We want members to form a trading bloc among allies and partners, one that guarantees American access to American industrial might while also expanding production across the entire zone,” Vance said at the opening of a meeting that Secretary of State Marco Rubio hosted with officials from 55 European, Asian and African nations.

“We want to eliminate that problem of people flooding into our markets with cheap critical minerals to undercut our domestic manufacturers,” Vance told a gathering ⁠without mentioning China.

Read: US wants to establish critical minerals trade bloc (DW)

Related:

• U.S. plans critical mineral price floors with Mexico, EU and Japan (CNBC)

• EU, US and Japan to cooperate on critical raw materials supply chains (Euronews)

• EU’s climate goals at risk without China’s critical raw materials, EU auditors warn (Euronews)

• China criticises US plan for critical minerals trade bloc (Reuters)

• Critical minerals and coalitions of the willing ()

• Leapfrogging China’s Critical Minerals Dominance (Council on Foreign Relations)

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Following the controversial approval of a Chinese mega-embassy in London, Keir Starmer flew to the PRC this week for a four-day visit, the first by a British prime minister since Theresa May in 2018. In Beijing, Starmer met Xi Jinping, calling China “a vital player on the global stage” and saying he hoped to build a “more sophisticated relationship.” Xi said, “The current international situation is complex and intertwined. As permanent members of the UN Security Council and major global economies, China and the UK need to strengthen dialogue and cooperation.”

The thaw in relations already delivered a few immediate results. Sanctions were lifted on six serving British MPs and peers; visa rules will be relaxed, allowing UK citizens to visit the PRC visa-free for stays under 30 days; and China agreed to cut tariffs on British whisky from 10% to 5%. Both sides also agreed on a new border security pact to disrupt the supply …

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