China sets lower growth target as tensions rise in Middle East
China opened its annual Two Sessions with a lower GDP growth target for 2026 as Beijing reacts to the U.S.-Israeli strike on Iran and prepares for Trump's visit later this month
Welcome back to What’s Happening in China, your weekly China brief.
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 parts and missile components.”
Immediately after the attacks, questions were raised about the possibility of a cancellation of Trump’s visit to Beijing later this month, but those doubts appear to have subsided for now with reports that U.S. and Chinese trade negotiators will meet in mid-March in preparation for the high-stakes summit.
The White House announced last month that Trump will travel to China from March 31 to April 2, though Beijing has yet to confirm the dates.
Let’s jump into it.
— PC
Through the Lens
In Focus
I. China’s 2026-2030 five-year plan
China has set its target for GDP growth to a record low of 4.5-5%, the first time since 1991 that the figure has dropped below 5%, reflecting an economic strategy that is shifting away from export-led growth to a model that leaders hope will be more resilient to external shocks.
Li Qiang, China’s premier, announced the target for 2026 in the opening session of the National People’s Congress (NPC), China’s annual parliamentary gathering, which began on Thursday.
Addressing the nearly 3,000 delegates gathered in the Great Hall of the People in Beijing, Li described 2025 as a “truly remarkable” year with “profound and complex developments both at home and broad”, according to the text of the government work report.
China also on Thursday published a draft of the 15th five-year plan, an economic strategy for the period 2026-2030, which will be formally voted on next week. The plan includes chapters on boosting consumption and enhancing innovation, key priorities for Beijing over the next five years.
Read: China sets lowest GDP growth target for decades as it braces for economic slowdown (The Guardian)
Related:
Takeaways from China’s national congress opening and 5-year blueprint (AP)
China to Focus on Stabilizing Real Estate Sector in 2026 (Yicai)
Xi urges major provincial economies to gain experience in solving new problems (State Council of the People’s Republic of China)
Q&A: What does China’s 15th ‘five-year plan’ mean for climate change? (Carbon Brief)
NPC 2026: Agenda and Daily Schedule (NPC Observer)
II. US-Israeli attack on Iran
Just last week, it appeared Trump would go to Beijing in a weakened position following a U.S. Supreme Court decision invalidating many of his tariffs. But now it is Xi who may be off-balance and struggling to mount a forceful response to the biggest U.S. military operation since the Iraq war.
While Beijing has condemned the U.S.-led operations as “unacceptable” and called for restraint, its measured response shows both its limited ability to influence U.S. military action and the transactional nature of its diplomatic partnerships, experts say.
China is “proving to be a feckless friend for its authoritarian allies,” Nicholas Burns, the former U.S. ambassador to Beijing under President Joe Biden, said on X.
Read: Attack on Iran could buoy Trump in talks with China’s Xi (The Straits Times)
Related:
Chinese National Killed in Tehran as Beijing Hastens Evacuations (Caixin)
China in talks with Iran to allow safe oil and gas passage through Hormuz, sources say (Reuters)
China oil refiners cushioned from Iran conflict with ample Iranian, Russian supply at hand (Reuters)
China Tells Top Refiners to Halt Diesel and Gasoline Exports (Bloomberg)
China in the crossfire: Calculated moves amid the US-Iran showdown (Middle East Institute)
Beijing Doesn’t Think Like Washington—and the Iran Conflict Shows Why (Carnegie Endowment for International Peace)
China’s Iran discourse expands to energy, AI, and tactics (Jesse Marks)
III. Beijing against ‘Made in EU’
The European Union’s ambitious industrial policy to challenge China has been gutted, removing AI, semiconductors and quantum computing from a list of strategic technologies that must be “made in Europe” to tap billions in government funds.
Biotechnology and robotics are other cutting-edge sectors to be cut from the Industrial Accelerator Act (IAA) ahead of the proposal’s formal unveiling by the European Commission on Wednesday, a leaked draft showed.
Plans to exclude non-EU-based producers from government contracts and funds have been kicked down the road for six months, but the draft suggested those countries that align with the bloc’s economic security policies could eventually be included.
The IAA is designed to promote local industries at the expense of competing companies from outside the EU market.
Read: EU strips AI, chips and quantum from industrial plan aimed at countering China (SCMP)
Related:
‘Made in EU’ proposals put forward to boost manufacturing (DW)
China expresses ‘grave concern’ over EU’s proposed Industrial Accelerator Act (Reuters)
**Stay informed on China. Upgrade your subscription to unlock exclusive content and help keep this newsletter going. Not ready for a paid subscription? You can still support the newsletter by buying me a coffee. Buy Me a Coffee or Upgrade To Paid**
Politics & Society
Xi Jinping tells military that corrupt officers have ‘no place to hide’ (Nikkei Asia)
Chinese President Xi Jinping on Saturday vowed to continue a crackdown on corruption in the People’s Liberation Army and to strengthen oversight of the country’s growing military budget.
“The military wields the gun,” Xi said in a speech to National People’s Congress delegates from the PLA and the Armed Police Force, according to state news agency Xinhua. “There must be no one in the military who harbors disloyalty to the party, and there must be no place to hide for corrupt elements.”
Xi continued, “The fight against corruption must be advanced with unwavering determination.”
A broadcast of the meeting by state channel CCTV showed Xi striding into a room full of applauding officers with Zhang Shengmin, vice chairman of the Central Military Commission, the highest military commanding body, walking behind him. Footage then showed Zhang taking notes while Xi spoke.
Generals stripped of CPPCC roles as China’s corruption clean-up continues (SCMP)
China has revoked the political advisory seats of three generals, including two who previously held key positions in the People’s Liberation Army (PLA) ground force, as the anti-corruption drive continues within the top brass and defence industry.
Han Weiguo, Gao Jin and Liu Lei were removed from membership of the Chinese People’s Political Consultative Conference (CPPCC) and their respective roles in its Standing Committee and relevant special committees, the political advisory body said on Monday.
The authorities gave no explanation for the removals, but such adjustments often relate to changes in status, investigations or political disgrace. The announcement came after last week’s sacking of nine military officials by the National People’s Congress (NPC), China’s top legislature.
China NPC: Lawmakers Attendance Falls to Lowest Under Xi Amid Purge (Bloomberg)
The number of delegates attending China’s National People’s Congress fell to the lowest level of this century, highlighting the churn inside the country’s top legislature as President Xi Jinping’s purge of officials expands.
There were 2,765 delegates present for the opening ceremony at the Great Hall of the People in Beijing on Thursday, according to Zhao Leji, chairman of the NPC Standing Committee. That’s the lowest attendance count since at least 2000.
Meanwhile, 113 delegates — nearly 4% of the total Congress — didn’t show. That’s the highest number of absences under Xi’s tenure, with the exception of 2022, when 161 delegates missed the opening session during strict pandemic prevention measures.
This year’s rate of absences is roughly double the 2% annual average of no-shows during Xi’s time in office. Delegates can miss the annual legislative sessions for a range of reasons, including illness.
Zhao did not specify why the 113 individuals were not in attendance.
China prepares landmark law curtailing minority language rights (Financial Times)
China is set to enact a landmark law requiring ethnic minorities to use Mandarin Chinese as their main language of instruction, overturning decades-old policies that date back to the era of Mao Zedong.
[…]
The sweeping law marks the latest effort in a “Sinicisation” campaign under Chinese leader Xi Jinping, which critics say aims to force the country’s dozens of ethnic minorities to assimilate into Han-dominated society in the name of promoting inter-ethnic harmony.
[…]
Under the new Law on Promoting Ethnic Unity and Progress, while minority languages may still be taught as a second language, groups such as Tibetans, Uyghurs and Mongolians will no longer be entitled to use their native tongues for core subjects in schools and universities.
Analysts said the move would hasten the decline of minority cultures. The law “overturns the multicultural promises upon which China was founded”, moving from “an idea of unity through difference or unity through pluralism, to one of unity through sameness, through the elimination of difference”, said Benno Weiner, a historian of modern China, Tibet and Inner Asia at Carnegie Mellon University.
“The conclusion that Xi Jinping and others seem to have come to is that diversity is dangerous.”
China boosts defence spending 7% in drive to modernise by 2035 (Reuters)
China will boost defence spending by 7% in 2026, it said on Thursday, the lowest rate in five years but still outpacing wider economic growth targets and the rest of Asia at a time of growing regional tension, including over Taiwan.
Security analysts and regional military attaches are watching China’s budget closely as it scrambles to modernise the military by 2035, while stepping up deployments across East Asia and purging the top brass to tackle graft.
China will improve combat readiness and accelerate the development of “advanced combat capabilities”, Premier Li Qiang said at the opening of parliament’s annual meeting, at which he unveiled a broader GDP growth forecast of 4.5% to 5%.
“All these steps will boost our strategic capacity to safeguard China’s sovereignty, security and development interests,” Li said in his work report, adding that President Xi Jinping held ultimate command responsibility.
The figure of 7%, which follows three years of annual rises of 7.2% and is the lowest since 6.8% in 2021, is part of a spending campaign in which China’s military has developed new advanced missiles, ships, submarines and surveillance methods.
China Boosts Output of Advanced Nuclear-Armed Submarines, US Navy Says (Bloomberg)
The Chinese Navy has “dramatically increased” submarine production and could soon deploy a new vessel that’s able to hit “large portions” of the US with nuclear missiles from Chinese waters, according to the head of intelligence for the US Navy.
Two new Chinese submarines called the Type 095 and Type 096 are “expected to enter service during the late 2020s through 2030s,” the director of naval intelligence, Rear Admiral Mike Brookes, said in a statement to the US-China Economic and Security Review Commission for a hearing set for Monday.
“These submarines will incorporate substantial advancements in nuclear reactor design, sensor performance, weapons integration, and noise quieting technologies,” Brookes said.
The Type 096 submarine is projected to equipped with JL-4 nuclear missiles that “will be able to target large portions of the US from protected waters” near China’s coast, he said, adding the new capability “fundamentally” enhances China’s “strategic deterrence credibility.”
China Mandates 15-minute Breaks Between School Classes (Sixth Tone)
China has extended mandatory breaks between classes for primary and secondary school students from 10 minutes to 15 nationwide, as authorities seek to ease student stress and improve health.
The reform, announced Feb. 27 by the Ministry of Education, also reiterated a requirement that students receive at least two hours of physical education daily, a rule first introduced in 2024 after reports that some schools were canceling PE classes or manipulating timetables to prioritize academics.
China’s Baby Bust Hits Primary Schools as Enrollment Plunges (Caixin)
According to the Statistical Communiqué on National Economic and Social Development for 2025 released recently by the National Bureau of Statistics, primary school enrollment nationwide fell to 14.617 million in 2025. This represents a drop of nearly 10% from the previous year and a 22% contraction from the recruitment peak in 2023.
China’s young people are moving to smaller cities to ‘retire’ early on low home prices (AP)
It’s a stark reversal from previous generations that prized upward mobility. In decades past, China’s ascendent middle class flocked to booming megacities to chase jobs and dreams, once abundant as the country went from rags to riches. But as the once red-hot economy cooled, expectations have soared, opportunities have dwindled and competition has grown fierce.
Most large Chinese companies, especially high-paying tech firms, requires a work schedule of 9 a.m. to 9 p.m. from Monday to Saturday, a grueling lifestyle popularly known as the 996 culture. Under the intense pressure, some young professionals have called it quits altogether and joined a resistance movement called “ lying flat ” — shunning careers and capitalism for a “low-desire life.”
Some are redefining their dreams to focus on rest and relaxation, much like what some young adults in the West are doing under what they call FIRE: “Financial Independence, Retire Early.”
That’s much more achievable in China because the cost of living in some places can be so low compared to prices in the West.
How Chinese Millennials Are Reimagining Weddings (Sixth Tone)
From mountaintop elopements to music festival photoshoots, young people in China are transforming weddings from family obligations into personal statements about values and autonomy.
China Intensifies Crackdown on Excessive ‘Bride Prices’ (Caixin)
China’s Supreme People’s Court has issued a fresh warning against the practice of demanding excessive betrothal gifts, intensifying a state campaign to curb costly wedding customs that authorities say are destabilizing families and imposing crushing financial burdens.
In a press briefing Monday, the high court reiterated the legal principle prohibiting the “exaction of property through marriage.” The move addresses the traditional custom of caili — cash or assets paid by the groom’s family to the bride’s — which has spiraled into bidding wars in some regions, creating a barrier to marriage in a country struggling with demographic decline.
Chinese Communist Party elder Song Ping dies aged 109 (The Straits Times)
Chinese Communist Party elder and the longest-lived member of the elite Politburo Standing Committee, Song Ping, died on Wednesday at the age of 109, the official Xinhua news agency reported.
Song died in Beijing due to illness, according to Xinhua.
Born in 1917, Song was at the core of the communist party’s second generation of leadership, an era when reform-minded Deng Xiaoping remade China after the 27-year rule of Mao Zedong.
Hong Kong & Macao
Jimmy Lai will not appeal nat. security conviction, 20-year jail term, lawyer says (HKFP)
Hong Kong pro-democracy tycoon Jimmy Lai will not appeal against his national security conviction and 20-year jail term, his lawyer has said.
Lai, 78, was sentenced to 20 years behind bars on February 9 – the longest jail term handed down so far under the national security law that Beijing imposed following the 2019 protests and unrest.
Ex-Apple Daily editor files appeal for sentence cut in nat. security case (HKFP)
Fung Wai-kong, former editorial writer and editor-in-chief of Apple Daily’s English news section, filed his appeal on Monday, about three weeks after he was sentenced to 10 years in prison.
HK: UK woman who reported rape found guilty of blackmail, perverting justice (HKFP)
The verdict against Isabel Rose comes more than two years after Rose filed a police report saying she was raped by a man in his Mid-Levels apartment during the early hours of February 1, 2024.
Taiwan
After Khamenei: China is watching, and so should Taiwan (Lowy Institute)
China has signalled its plans to integrate decapitation strikes into its broader strategy for invading Taiwan. A 2017 review of grey-literature from PLA special forces by the Global Taiwan Institute found that decapitation strikes were seen as an important means of coercing Taiwanese into capitulation during a sustained military offensive. In March 2024, a Taiwanese defence observer named Joseph Wen published open-source imagery of a Chinese military base that showed a replica of Taiwan’s presidential zone in Taipei. In November 2025, a newspaper affiliated with the PLA Navy published an article on how decapitation strikes could be an effective countermeasure to Taiwan’s (slowly) improving defences. Although the open-source picture is incomplete, there is enough evidence to reasonably conclude that the PLA intends to orchestrate decapitation strikes targeting Taiwan’s political leadership and military chain-of-command.
Taiwan says it hopes Iran’s people can soon enjoy freedom and democracy (Reuters)
Taiwan supports the international community’s efforts to help Iran’s people pursue freedom and democracy and hopes that they can enjoy these things soon, the island’s foreign ministry said on Tuesday, offering its backing to the U.S. and Israel.
Taiwanese leaders, including President Lai Ching-te, have drawn parallels between Israel’s security situation and Taiwan’s own, given the stepped-up military pressure that the Chinese-claimed island has faced from Beijing in recent years.
Taiwan views Israel as an important democratic partner and offered strong support to the country after the October 2023 Hamas attack in southern Israel and subsequent war in Gaza. Since then, there has been an increased level of engagement.
World
Asia & Pacific
Philippines Probing More Filipinos After Alleged Leak of Sensitive Data to China (Bloomberg)
The Philippines’ top security official said more people are being probed after authorities apprehended three Filipino nationals for allegedly leaking sensitive information to Beijing, including data on Manila’s operations in the disputed South China Sea.
“There are other cases that we’re investigating,” National Security Adviser Eduardo Año told reporters on Friday.
The three suspects — an assistant at the nation’s defense department, a researcher at the Philippine Navy, and a person close to a Philippine Coast Guard officer — acted at the behest of China, according to National Security Council Assistant Director General Cornelio Valencia Jr. Año declined to identify the suspects nor say whether they were charged.
The Chinese Embassy in Manila pushed back against what it calls “fabricated” allegations by the Philippine side.
Is There An Off-Ramp for China and Japan? (ChinaFile)
As for an exit ramp, in the earlier episodes, the pressure never fully abated. Diplomatic channels eventually reopened, but there was no formal reset. Maritime incursions, propaganda intensity, and some forms of economic coercion plateaued and then normalized at a higher baseline. At some point in the future, when Chinese leaders conclude they need something important from Japan, they can choose to dial down the pressure rheostat. But while the current deep-freeze will not last forever at quite this level, the higher baseline of pressure and the structural rivalry are likely to endure.
Vietnam’s chip revolution: US ends Cold War tech restrictions (Rest of World)
“The move reflects Washington’s effort to position Vietnam as a key Indo-Pacific counterweight to China,” Shivakumar said.
For the U.S., Vietnam is about building alternatives to China, and for Vietnam, it is about winning a seat at the table of the world’s most valuable industry. Every country caught between Washington and Beijing is now studying Hanoi’s move, wondering how to make one of its own.
China accuses Australia of ‘distorting facts’ about helicopters’ encounter (ABC News)
The Chinese government has accused Australia of “distorting facts” about an encounter between two naval helicopters over the Yellow Sea.
The Australian Defence Force (ADF) said an Australian Seahawk helicopter was forced to take evasive action after a Chinese helicopter moved dangerously close to it.
The helicopter launched from HMAS Toowoomba on Wednesday. The ship was sailing through international waters to take part in efforts to enforce UN sanctions on North Korea.
Journalist Cheng Lei accuses Melbourne festival of censorship over cancelled prison play (The Australian)
Cheng Lei, the journalist and presenter detained in Beijing for three years on spurious espionage charges, has accused Melbourne’s Rising festival of censorship, claiming it cancelled a play about her imprisonment months after the board asked if she would publicly oppose artwork funded by the Chinese government.
Cheng, with collaborator and director Emma Valente, on Monday sent a letter, obtained by The Australian, to Rising festival chair Simon Phemister. In it, the pair claim the axing in February of their play 1154 Days was an act of political censorship.
“We receive this cancellation as a form of soft censorship/shadow-banning of Cheng Lei’s story, and the story’s inherent critique of the Chinese government,” the letter reads. “In the current environment, this revocation is a contribution to an alarming pattern in the arts, where corporatised boards would prefer to not program challenging and political works, rather than defend them.”
[…]
In a statement, a spokesperson for Rising said the executive had been consulted and 1154 Days had been excluded due to budget constraints. “Each year, the festival evaluates numerous productions and events from Australia and around the world, and like many others, this work was not included in the final program,” the spokesperson said.
Americas
U.S. Has a Big Ask for China: Buy Less Oil from Russia, More From America (WSJ)
Ahead of President Trump’s visit to Beijing, Treasury Secretary Scott Bessent is considering putting a tricky trade-off on the agenda for coming talks with his Chinese counterpart: reducing China’s oil purchases from U.S. adversaries like Russia.
In private consultations held in recent days with former U.S. officials, business executives and policy analysts, Bessent described a continuing effort to try to get China to instead buy American oil-and-gas products, said people familiar with the meetings. Bessent is thinking about raising the energy issue, the people said, in a meeting with his Chinese counterpart, Vice Premier He Lifeng, in Paris in mid-March. They are planning to firm up a framework for the summit between Trump and Chinese leader Xi Jinping, currently slated for the beginning of April.
Reducing Russian oil purchases would be a big ask for China, which gets crude from its strategic ally at a significant discount. American oil would be much more expensive, and shutting out Russian crude would undermine Beijing’s relationship with the Kremlin and undercut Moscow’s position in the Ukraine war.
In addition, the people said, Bessent is also considering asking China to reduce purchases of Iranian oil. While most of Iranian oil is currently offline following the U.S.-Israeli strikes, Washington wants Beijing to reduce its long-term dependence on Iranian barrels should they resume.
Xi may press Trump for public concessions on Taiwan: Ex-AIT chair (Focus Taiwan)
Asked what Beijing may want Trump to say differently about Taiwan, Bush said Xi might ask Trump to say that as a matter of U.S. policy, Taiwan is a part of China, thus setting aside “decades of policy that was devised for good reasons.”
Xi may also ask him to publicly state that the U.S. “opposes Taiwan independence,” Bush said, marking a subtle but important shift from the U.S.’ current policy that it “does not support” Taiwan independence.
Alternately, Xi could ask Trump to publicly promise to show restraint on arms sales to Taiwan, or to express support for unification, Bush said.
China Suspected in Breach of FBI Surveillance Network (WSJ)
U.S. investigators believe hackers affiliated with the Chinese government are responsible for a cyber intrusion on an internal Federal Bureau of Investigation computer network that holds information related to some domestic surveillance orders, according to people familiar with the matter.
The scope and severity of the intrusion are not known, and the investigation is in its early stages, the people said. Any preliminary conclusions could change as investigators gather more information.
If China is confirmed to be responsible for the breach, it would signal the latest intrusion by Beijing’s hackers of computer systems related to law-enforcement surveillance orders, which contain highly sensitive material.
Lawmakers Press US Agencies to Tighten Controls on Huawei’s Futurewei Unit (Bloomberg)
US lawmakers urged the Trump administration to close the loopholes that have allowed a unit of blacklisted Chinese tech giant Huawei Technologies Co. to operate freely in the US.
The leaders of a bipartisan congressional committee on China asked that the administration subject Huawei’s US unit, Futurewei Technologies, to the same restrictions as its Chinese parent, according to a letter they sent to the leaders of the departments of Commerce, Defense and Treasury, as well as the Federal Communications Commission chairman.
The letter was sent by Representative John Moolenaar, a Michigan Republican, and Representative Ro Khanna, a Democrat from California. A copy of the letter, dated Thursday, was seen by Bloomberg News.
Huawei faces export controls, financial and securities-related restrictions and a military company designation after US officials determined it was a major cybersecurity risk and accused it of extensive intellectual property theft, all of which it has denied.
Apple Blocks US Users From Downloading ByteDance’s Chinese Apps (WIRED)
ByteDance owns a vast array of different apps spanning social media, entertainment, artificial intelligence, and other sectors. The leading one is Douyin, the Chinese version of TikTok, which has over 1 billion monthly active users. While most of those users reside in China, iPhone owners around the world have traditionally been able to download these apps from anywhere without using a VPN, as long as they have a valid App Store account registered in China.
That’s not true anymore. Starting in late January, iPhone users in the US with Chinese App Store accounts began reporting that they were encountering new obstacles when they tried to download apps developed by ByteDance. WIRED has confirmed that even with a valid Chinese App Store account, downloading or updating a ByteDance-owned Chinese app is blocked on Apple devices located in the United States.
“We wouldn’t take the Chinese government’s money; we wouldn’t take the Saudi government’s money. At what point should we also stop taking U.S. government money?” a colleague at an international human rights organization that receives U.S. government funding said to me in a recent conversation. The Trump administration’s human rights violations at home—and lately, in international waters—have prompted many of my colleagues working in the human rights field to question whether the U.S. government can still be considered a “clean” funder.
CK Hutchison steps up legal push as Panama moves to seize ports (Reuters)
Hong Kong conglomerate CK Hutchison said on Friday it has escalated its legal fight in Panama after the government seized its port operations, petitioning for a review of the decree behind the takeover.
The company said Panama unlawfully occupied facilities, seized property and ignored consultations, prompting further national and international legal action.
CK Hutchison’s Panama Ports Company (PPC), which manages two terminals near the globally strategic Panama Canal, filed an administrative petition seeking reconsideration of Panama’s executive action that led to the occupation of its facilities and confiscation of its property, CK Hutchison said.
**Never miss a key story from China. Upgrade your subscription for exclusive posts and stay up to date. Find out more.**
Europe
Still Muddling Through - Chancellor Merz goes to China (German Marshall Fund of the United States)
Germany must decide if it should hedge further in the hope that economic pragmatism will soften geopolitical realities or match its de-risking rhetoric with meaningful action. A more resolute China policy must not be proclaimed in Beijing. But it must be implemented, and by Europe collectively. For Germany, that means working through the EU. Waffling without a coherent European framework is a recipe for more vulnerability and diminishing leverage with China.
Watching China in Europe – March 2026 (Noah Barkin)
Lastly, there is a growing sense, nearly a year into the Merz government, that the challenge of de-risking from China is too big and complex a challenge for the German state to tackle. All the stars have aligned. Germany has a chancellor with the most hawkish instincts on China in a generation. His party controls the key ministries. And Germany has produced one strategy document after another – including a confidential action plan on China agreed shortly before the Merz trip – that promises de-risking, diversification and a reduction of dependencies.
But the sense of urgency, the policy bandwidth, the willingness to think out of the ordo-liberal box, and the appetite for accepting short-term costs in pursuit of longer-term economic and strategic goals have not been there. “Europe is growing more dependent on China, not less,” Jens Eskelund of the EUCCC said last week. “The Chinese have figured out that if they just say ‘boo’ then we are going to cave.”
Beijing’s Balkan Classrooms (The Diplomat)
While Confucius Institutes are closing across parts of Western Europe, China is not retreating from Europe’s educational space but adapting to it, reshaping its institutional presence, and diversifying its channels for projecting influence. In the Western Balkans, Beijing is expanding its academic footprint through a more decentralized, adaptive, and politically embedded model of education diplomacy. In Serbia, a third Confucius Institute opened in 2024. In Bosnia and Herzegovina, Chinese-backed Sinology programs are among the few consistently achieving enrollment quotas. In Montenegro, academic cooperation has extended into artificial intelligence and cryptography, setting off alarms in Washington.
UK immigration officers ‘working for China’ arrested after forcing entry into flat, court hears (BBC)
Two UK immigration officers who had allegedly been hired by a Chinese-Australian woman were arrested after forcing entry into a flat in Pontefract, a jury has heard.
The moment the door to the flat was forced was recorded on an audio eavesdropping device - a bug - that UK law enforcement had put in the flat.
One of the UK immigration officers - Chi Leung “Peter” Wai - is on trial at the Old Bailey. The other - former Royal Marine Matthew Trickett - was found dead in May 2024 after he had been arrested and bailed.
Wai denies charges of assisting a foreign intelligence service and foreign interference, and a charge of misconduct in public office while conducting searches of Home Office databases.
Britain Arrests a Lawmaker’s Husband on Suspicion of Spying for China (The New York Times)
The husband of a British lawmaker was one of three men arrested on Wednesday by the British police on suspicion of spying for China, deepening concerns about the possible extent of Chinese espionage in Western nations.
A statement from the Metropolitan Police in London said that three men had been taken into custody on suspicion of “assisting a foreign intelligence service, contrary to Section 3 of the National Security Act.” The release confirmed that the country in question was China.
Police search home of former Labour MP’s husband amid China spying investigation (The Guardian)
The husband of former Labour MP Gloria De Piero has confirmed his home was searched on Wednesday as part of a police investigation into an alleged Chinese spying ring.
James Robinson, a former aide to the ex-Labour deputy leader Tom Watson, issued a statement confirming the raid on the home he shares with his wife, but said he had not been detained or questioned by police.
He said: “I can confirm that police officers visited my home yesterday with a search warrant. I understand their attendance was part of enquiries into those arrested and questioned over matters allegedly relating to China.”
UK police search journalist’s home in China spy probe (Financial Times)
Counterterrorism police raided the home of a journalist in Cardiff on Wednesday afternoon as part of their probe into individuals suspected of spying for China, according to people familiar with the matter.
The journalist works for the Nation.Cymru website and police took away their phone and laptop during the raid, the people said. The journalist could not be immediately reached for comment. Nation.Cymru declined to comment.
Here’s how Londoners will try to stop China’s massive embassy (Politico)
The group’s challenge largely centers on the dozens of secret rooms redacted from designs for the sprawling complex, the filing, seen by POLITICO, suggests.
They argue planning permission was granted without fully considering what will be built. The fire risk from activities involving potentially hazardous materials “such as from cooking or laundry” could also “not only have potentially very serious consequences for human life and limb; it could also be devastating for the listed building,” they say.
The group is also challenging the decision on the grounds it could cost British taxpayers millions of pounds to mitigate espionage fears.
In their filing, they estimate moving underground fiber optic cables that sit directly beside the embassy will run into “potentially hundreds of millions of pounds or more.”
Middle East & North Africa (MENA)
US Officials Say Iran War Undermines China’s ‘Axis of Chaos’ Strategy (Bloomberg)
Regardless of how one views the long-term implications of recent events for the group, the latest US-Israel attacks on Iran aren’t good news for China right now, said Evan Medeiros, who served as a top adviser to then-President Barack Obama on China policy.
That’s because “the stated goal this time is much broader and more consequential for China,” said Medeiros, a leading Asia scholar at Georgetown University. “That is regime change, not just eliminating the nuclear weapon program.”
Still, he and others said, China may benefit if the US gets bogged down in Iran and the Middle East.
The toppling of Venezuela and Iran’s leaders is also a reminder of the inherent weaknesses of any “Axis of Chaos” strategy, as the group doesn’t have the sort of security alliances the US enjoys.
“Russia, Iran, and North Korea don’t share interests, institutions, or even genuine trust — they share a common enemy,” said Ryan Fedasiuk, who worked in the Biden administration’s State Department.
“History suggests that coalitions built on shared resentment tend to fracture the moment the external pressure recedes or one partner’s costs exceed their benefits — which is exactly what we are seeing happen in Iran,” said Fedasiuk, who now studies China and technology at the American Enterprise Institute.
Sub-Saharan Africa
Chinese Media Lag BBC and CNN in Africa Despite Massive Investment (Bloomberg)
Bureaucratic dysfunction, leadership churn and tightening political controls have left China’s African media experiment struggling to find relevance in a region that will be home to more than a quarter of the world’s population by 2050. Africans watch the BBC, Al Jazeera and CNN, but even China’s marquee media brands barely figure in public debate in most countries on the continent. “Audiences are more attuned to news from the West than from China, which generates distrust,” says Confidence MacHarry, an analyst at SBM Intelligence, a political risk consulting firm in Lagos.
[…]
Constant “good news” starts to feel like propaganda and undercuts a lesson state-backed broadcasters elsewhere have learned: They succeed when they engage in real journalism. Qatar’s Al Jazeera is the obvious example—the network built a global audience by operating more like a newsroom than a government mouthpiece. Turkey has taken a similar tack with TRT World and, more recently, TRT Afrika.
How a China-funded survey uncovered $3B in new mineral deposits in Liberia (Business Insider Africa)
The survey, the largest in more than 50 years identified lithium, neodymium, silver, nickel, zinc, uranium, and cobalt, which could allow Liberia to diversify beyond its traditional reliance on iron ore, gold, diamonds, and rubber.
Rexford Sartuh, assistant minister for mineral exploration and research at the Ministry of Mines and Energy, said: “We are grateful that China helped with this survey, which has resulted in Liberia discovering new minerals that could enhance the country’s development.”
The discoveries are expected to attract up to $3 billion in potential investment, generating jobs and stimulating local economies in regions where the minerals are found.
Global Institutions & Multilateral Relations
Beijing Revives Asian Values in Regional Push (The Jamestown Foundation)
Beijing appears to believe that it is having some success in building its influence in Southeast Asia. Hosting APEC this year will provide it with additional opportunities to steer narratives and guide cooperation in its favor. it is less clear, however, that the rest of the region is receptive to its values-based pitches and hardline rejection of the West. In April 2025, the ISEAS – Yusof Ishak Institute in Singapore published an annual survey, “The State of Southeast Asia.” Among more than 2,000 respondents in the region canvassed in the first six weeks of the year, the PRC’s aggressive behavior in the South China Sea was ranked as the region’s top geopolitical concern; and in its analysis of the responses, the survey report’s authors wrote that despite the PRC’s positive standing, “the region’s concern about [the PRC’s] growing economic and political-strategic influence outweighs its acceptance.”
Business, Economy & Finance
China Unveils $14 Billion Fiscal Package to Boost Consumption, Investment (Caixin)
China has launched a 100 billion yuan ($14 billion) fiscal-financial package aimed at boosting domestic demand, Finance Minister Lan Fo’an said Friday.
The initiative combines fiscal incentives with bank lending to channel credit into consumption and private investment as demand remains weak.
Beijing vows to expand imports amid ‘China shock’ fears (SCMP)
Beijing has pledged to expand imports and use its vast market to help other countries boost exports to the world’s second-largest economy – a move that could help balance global trade at a time when China’s export machine faces growing scrutiny.
Beijing also planned to diversify markets and nurture new trade drivers such as artificial intelligence, seeking to stabilise trade as global supply chains come under mounting pressure from geopolitical conflicts, officials said.
Commerce Minister Wang Wentao, commenting on China’s record US$1.19 trillion trade surplus last year that unsettled trading partners, said Beijing would increase imports of agricultural products, high-end consumer goods and advanced technology this year.
“While some countries treat the market as a weapon or a bargaining chip and pursue protectionism, as a responsible major country China is proactively opening its vast market, viewing it as an opportunity and a basis for cooperation,” Wang said at a Friday press conference on the sidelines of the “two sessions”, one of the country’s most important political gatherings.
Two Sessions: China to Issue 300 Billion Yuan Bonds to Boost Big State Banks (Caixin)
China plans to issue 300 billion yuan ($43 billion) in special sovereign bonds to replenish the capital of major state-owned banks, Premier Li Qiang said Thursday at the opening of the country’s annual legislative session.
The plan, outlined in the government work report, signals Beijing’s effort to strengthen major banks.
China’s PBOC Extends Gold Buying as Middle East Tension Simmers (Bloomberg)
China’s central bank bought more gold in February, extending its streak of purchasing to 16 months, as bullion climbs amid escalating Middle East tensions.
Gold held by the People’s Bank of China rose by 30,000 troy ounces last month to 74.22 million fine troy ounces, according to data released on Saturday. The purchase extends the latest round of accumulation that began in November 2024.
Despite recent declines, gold has gained over the past few weeks, clawing its way back above $5,000 an ounce. Investors were seeking safer assets after the US and Israel attacked Iran, intensifying geopolitical risks in the Middle East.
China’s factory activity slumps more than expected in February as holiday disrupts production (CNBC)
China’s factory activity faltered in February as manufacturers paused production and cargo shipment to celebrate an extended holiday, an official survey showed on Wednesday.
The official manufacturing purchasing managers index fell to 49 in February, according to the National Bureau of Statistics, missing economists’ forecast for 49.1. A reading below 50 indicates contraction, while levels above that threshold signal expansion.
China’s Financial and Fiscal Decay (Rhodium Group)
Beijing primarily influences the domestic economy through controls on the direction of domestic credit and government spending. But the overextension of these tools for political purposes over the past two decades has exhausted their effectiveness and capacity to guide China’s economy today. The financial system lends rising proportions of a smaller volume of new credit to unproductive local government and state-owned enterprises simply to prevent them from collapsing, while fiscal spending is largely executed via those same indebted institutions. The net result is a declining payoff in terms of investment and economic activity for the same volume of lending or fiscal spending, while private sector investment remains weak. As production outstrips domestic demand, domestic prices fall and surplus output must be sold abroad, widening China’s external imbalances.
Beijing Tightens Grip on Consumer Loans With Tougher Rate Caps (Caixin)
China is stepping up a years-long effort to rein in its sprawling consumer lending industry, advancing tougher rules that threaten the survival of many fintech firms acting as middlemen between banks and borrowers.
In the weeks after the Chinese New Year holiday in late February, central authorities quietly instructed financial regulators to enforce a sharp reduction in interest rates across the personal consumer loan sector, according to people familiar with the matter. The new objective is to “lower interest rates, shrink the scale and prevent accidents,” a veteran of the loan-facilitation industry told Caixin.
China’s new home prices fall at fastest pace in over 3 years in February, survey shows (Reuters)
China’s new home prices fell at the fastest pace in more than three years in February, a private survey showed on Sunday, underscoring the property sector’s struggle to find a floor despite a stream of policy support.
New home prices in 100 cities slipped 0.04% month-on-month, reversing a 0.18% gain in January and marking the steepest decline since December 2022, according to China Index Academy, one of the country’s largest property research firms.
Official February price data for 70 cities is due on March 16. The data has shown prices have not posted a monthly increase since May 2023.
The Low-Altitude Economy’s Great Leap Upward (The Jamestown Foundation)
The PRC’s vision for the low-altitude economy, under current economic and technical conditions, constitutes a strategic misjudgment. Decision-makers in Beijing are attempting to transplant the industrial logic that fueled prior successes to a sector that lacks fundamental consumer demand. Unlike NEVs, which displaced internal combustion vehicles through superior user experiences, the low-altitude economy offers a regression in terms of cost, convenience, and safety for mass-market applications.
BYD Launches New Fast-Charging Battery Amid Slowing Demand in China (WSJ)
Chinese automaker BYD on Thursday released a new electric-vehicle battery that can be fully charged in nine minutes, an effort to address slowing demand and falling market share in the world’s largest auto market.
BYD, the world’s biggest maker of electric vehicles, said that with the new battery and new charging stations, users could charge their EV batteries to 97% of capacity from 10% in nine minutes. The battery can get to 70% of capacity from 10% in five minutes. It represents the second generation of what BYD calls its blade battery, a lighter product that has a blade-like shape and takes up less space than other batteries.
At a launch event Thursday, BYD Chief Executive Wang Chuanfu said it normally took around 30 to 60 minutes to charge an EV from 10% to 97% in China. By contrast, he said, the new BYD battery could charge in less than 12 minutes from 20% to 97% even in extreme cold when the temperature was minus 30 degrees Celsius.
The company also released a new 1,500-kilowatt charging station that it calls a flash charging station. BYD said it aimed to build up to 20,000 charging stations by the end of this year, including 2,000 units on expressways. The company has already built 4,239 stations in China and will build 1,000 charging stations on expressways by May 1, a holiday in China, Wang said.
Why Luckin Coffee, Starbucks’ biggest competitor, wants to buy Blue Bottle (Fast Company)
The Chinese coffee giant Luckin is reportedly acquiring the third wave coffee mecca Blue Bottle in a deal worth just shy of $400 million. It’s more than another acquisition: Luckin is making its most aggressive move on Starbucks since it opened its first U.S. locations in New York in 2025 in a rivalry that is quickly heating up.
But to understand what’s at play, we need to zoom out for a moment to take a quick scan of the global coffee market.
Tech & Media
China’s new five-year plan calls for AI throughout its economy, tech breakthroughs (Reuters)
China’s new five-year policy blueprint laid out its ambitions to aggressively adopt artificial intelligence throughout the world’s second-biggest economy and dominate emerging technologies such as quantum computing and humanoid robots.
[…]
Specific measures in the plan include experimenting with robots to perform jobs in sectors suffering from labour shortages and deploying AI agents that can perform tasks with minimal human guidance.
“Beijing’s goal is to use AI and robotics to boost productivity and performance in a wide range of sectors, from manufacturing and logistics to education and healthcare,” said Kyle Chan, fellow in Chinese technology at the Brookings Institution think tank.
The government also highlighted its commitment to technology - an area it calls “new quality productive forces” - in the opening paragraphs of the main government work report presented by Premier Li Qiang. That was far more prominent than last year’s report.
China’s reliance thus far on U.S. tech such as chips and planes has been a major source of frustration as trade tensions soared. Their tech war has seen both sides place export controls on some key products and resources - advanced chips most notably in the case of Washington and rare earths and critical minerals in the case of Beijing.
Nvidia stops production of chips intended for Chinese market (Financial Times)
Nvidia has stopped production of chips intended for the Chinese market, betting that regulatory barriers in Washington and Beijing will continue to limit sales to China.
The US chipmaker has reallocated manufacturing capacity at Taiwan Semiconductor Manufacturing Company away from making H200 chips to its next-generation Vera Rubin hardware, according to two people with knowledge of the matter.
The move suggests Nvidia no longer expects significant H200 sales in China in the near term, after months of uncertainty over US export approvals and potential Chinese restrictions.
Alibaba Qwen’s Lead Just Stepped Down. Is China’s Open-Source Moment at Risk? (Tony Peng)
Team reorg, resource battles, and the pressure to commercialize, seemed to be the forces that pushed Lin out.
AI agent ROME frees itself, secretly mines cryptocurrency (Axios)
A new research paper from an Alibaba-affiliated research team said it discovered an AI agent attempting unauthorized cryptocurrency mining during training — a surprise behavior that triggered internal security alarms.
The researchers — who were building a new AI agent called ROME — said they found “unanticipated” and spontaneous behaviors emerge “without any explicit instruction and, more troublingly, outside the bounds of the intended sandbox.”
The agent also made a “reverse SSH tunnel” — essentially opening a hidden backdoor from the inside of the system to an outside computer, the study said.
The Power of Innovation: The Strategic Value of China’s High-Tech Drive (Center for Strategic and International Studies)
This report argues that China’s advancement across high-tech sectors has directly strengthened the country’s international power and influence, and that other governments need to respond pragmatically to reduce the downside costs and raise the upside opportunities to make the most of these developments. Based on several years of fieldwork and analysis of quantitative data and primary-source documents, the report first evaluates China’s high-tech drive in general and with respect to specific industries. It then analyzes the effect of these developments on China’s military capabilities as well as its role in shaping international technical standards. The study concludes by suggesting that the United States and like-minded countries should pursue a pragmatic strategy, which the report calls “calibrated coupling,” to maximize the opportunities and minimize the risks to themselves of China’s high-tech drive.
**Stay up to date on the most relevant stories from China. Consider upgrading your subscription to unlock exclusive posts. Learn more.**
Science, Health & Environment
China Aims to Cut Carbon Emissions Per Unit of GDP 17% By 2030 (Bloomberg)
China, the world’s top polluter, set a cautious new five-year climate target, frustrating hopes for tighter policy that would drive the nation to peak carbon emissions well before President Xi Jinping’s 2030 deadline.
A new goal pledges to cut carbon emissions per unit of gross domestic product by 17% by the end of the decade, and compares to a previous objective to deliver an 18% reduction in the five years through 2025 — which annual reports said was narrowly missed.
“We will actively yet prudently work toward peaking carbon emissions and achieving carbon neutrality,” Premier Li Qiang said Thursday at the National People’s Congress, the once-a-year gathering of policymakers which set a modest new growth target and acknowledged rising geopolitical risks. China will balance “economic and social development, the green and low-carbon transition, and national energy security,” Li said.
Officials held back from a strict limit for the nation’s emissions and dashed expectations that target years would be set to top out consumption of coal and oil. The cautious strategy reflects China’s recent tone on climate action that is prioritizing the development of green industries, rather than aggressive emissions curbs.
China solar boom helps energy emissions fall slightly in 2025 (Financial Times)
China’s emissions from energy and industry fell slightly last year after a solar boom helped to meet a larger part of its growing power needs, according to official statistics, continuing a trend begun the year before.
The data released at the weekend showed a 0.3 per cent decline in emissions from energy and industry during 2025. This was against the wider backdrop of a 3.5 per cent rise in total energy consumption.
The figures lay the ground for Beijing’s continued support for renewables and clean tech industries when it signs off its five-year plan at a meeting next week.
The share of all clean power generation in 2025 reached 40 per cent, rising from 37 per cent the year before, driven mainly by solar, which overtook wind generation. Smaller increases came from hydro and nuclear power.
Two Giant Pandas Die in Hangzhou Zoos, Triggering State Probe (Caixin)
Two giant pandas housed in separate zoos in this eastern Chinese city died on consecutive days earlier this month, prompting regulators to launch an investigation and potential dietary review after identifying intestinal failure as the cause.
On Feb. 28, three state agencies, including the China Conservation and Research Center for the Giant Panda, announced that Banban and Xiangguo died on Feb. 9 and Feb. 10, respectively. Autopsies revealed the animals succumbed to multi-organ failure triggered by intestinal obstruction and mesenteric torsion — a twisting of the intestines.
Arts & Culture
Xinjiang rock + Chinese RnB mixtapes (Concrete Avalanche)
In this issue: an experimental electronic producer returns to the club, Pu Poo Platter serve up warming funky jazz, a pair of RnB mixtapes, frozen rock from Xinjiang, bubbly indie from Zhang ‘Nono’ Xingchan’s full band project, and more.
New Music 新唱片发行: Elephant Grave 大象暮地/JAILWHALE/Miga (Live China Music)
JAILWHALE - the solo music project of Jia Wei, a former music industry professional (and guitarist for indie alt act Uncle Hu) breaks the ice with his debut Cool State, released with emerging Beijing label Big Nothing Records. Deft melodic arrangements injected with an indie folk sensibility and spiked with a 90s alt spirit that falls somewhere between Ben Folds, The Beatles, Wilco, and Badly Drawn Boy, Jia Wei gives life to the stories and places ‘crushed by the tide of the times’ evoked most notably in his hometown in Northeast China. A spry, rustic trip that goes down nice and smooth.
How Communism Won | Institutional Genes | Chinese Comedy | Fringe Fiction (China Books Review)
Welcome to the latest round-up of new articles published at China Books Review over the last two weeks.
The Thoughtful Side of Chinese Cinema Was on Display — in Berlin (Sixth Tone)
Held from Feb. 12 to 22, this year’s Berlinale welcomed a total of nine new Chinese-language productions, including narrative shorts, animated features, experimental works, and documentaries, offering a rich tapestry of contemporary Chinese cinema.
What stands out most about this Chinese contingent is its youthfulness. Of the nine films, six are directed by filmmakers from the Chinese mainland, all of whom were born after 1985. For each, this marked their debut at a major international film festival.
Shanghai’s Vintage Book Market Reopens, Reviving a Bygone Era (RADII)
A time capsule of art and artifacts, Shanghai’s largest vintage book market has finally reopened after its 2020 closure. Arrive at 6 am, and you’ll already find it buzzing with collectors digging pile after pile in search of paper relics from the 20th century.
Sports
China’s Sun Yingsha, Wang Chuqin win singles titles at WTT Singapore Smash (Xinhua)
China’s Sun Yingsha and Wang Chuqin captured the women’s and men’s singles titles respectively at the WTT Singapore Smash on Sunday.
In the women’s singles semifinals, Sun defeated teammate Chen Yi 4-1 in the semifinals, while Wang Manyu overcame Germany’s Sabine Winter by the same scoreline to set up an all-Chinese final.
China beats Uzbekistan to reach Women’s Asian Cup quarterfinal (Xinhua)
Li Qingtong scored twice as China beat Uzbekistan 3-0 in the second group game at the 2026 AFC Women’s Asian Cup on Friday night to guarantee a quarterfinals spot.
In a dominant performance, China had 27 shots with 78 percent possession, while Uzbekistan failed to make a single attempt on goal.
Chinese teenage swimmer Yu Zidi nominated for Laureus Awards (Xinhua)
China’s 13-year-old swimmer Yu Zidi became one of youngest athletes to be nominated for the prestigious Laureus World Sports Awards when she was named among the candidates for the Laureus World Breakthrough of the Year category on Tuesday.
Yu formed part of the Chinese team that won the bronze in the 4x200 meters freestyle at the 2025 World Aquatics Championships in Singapore, becoming the youngest swimmer in history to win a world championship medal.
Events
US-China: What are the two superpowers competing for? (Chatham House)
18 March 2026 — 3:45PM to 4:45PM
Hybrid — Chatham House and Online
Ahead of the upcoming meeting between Presidents Xi Jinping and Donald Trump, this event examines what defines the US–China struggle for global influence — and what is at stake.
If you find it valuable, please like, restack, or share What’s Happening in China with others.
See you next week!
— PC