PRC and Russia reaffirm ties as Trump and Zelenskyy clash
Plus, Trump vows additional 10% tariffs on PRC imports
Welcome back to What’s Happening in China, your weekly China brief.
I hope you’ve had a great week.
On the third anniversary of Russia’s invasion of Ukraine, Xi Jinping and Vladimir Putin reaffirmed Sino-Russian ties, emphasizing that their countries share “long-term development strategies and foreign policies.” In a 95-minute video call on Monday—initiated by Putin—Xi said that the “two countries are true friends that share weal and woe,” while Putin stressed that “developing relations with China is a strategic choice made by Russia with a view to the long term; it is not an act of expediency, not affected by any temporary incidents, and not subject to interference by external factors.”
According to the readouts from both sides (PRC, Russia), Putin briefed Xi on the latest Russia-U.S. interactions, claiming that Xi “expressed his support for the dialogue initiated between Russia and the United States, as well as China’s readiness to help find ways to settle the Ukrainian conflict peacefully.”
At the same time, there’s been speculation that Trump’s push for a swift peace deal—on terms favorable to Russia—might be part of an attempt to drive a wedge between Moscow and Beijing. By blaming Ukraine for the war, calling Zelensky a dictator, publicly berating him, and signaling a desire to cut U.S. aid, Trump could be laying the groundwork for what some have dubbed a “reverse Nixon” strategy: Trump may try to court Russia as a counterweight to Beijing, much like Nixon courted China to counter the Soviet Union.
But how realistic is that? On Thursday, Beijing dismissed the idea as a strategy “doomed to fail.” The Sino-Russian relationship is built on shared geopolitical and economic goals—energy, trade, military coordination, and a mutual interest in reshaping the global order. While Putin might entertain U.S. outreach to extract concessions, it seems unlikely he would gamble on a leader as erratic as Trump at the cost of his most reliable strategic partner.
Meanwhile, on the same day as the Xi-Putin call, the U.S. sided with an all-star lineup of authoritarian regimes—Russia, North Korea, and Belarus, among others—in voting against a UN General Assembly resolution condemning Russia’s war against Ukraine. The resolution, put forward by Ukraine and other European democracies, was adopted with 93 votes in favor. The PRC abstained.
Let’s get into it.
— PC
Keywords: China–Russia relations • Russian invasion of Ukraine • Trump-Zelenskyy clash • trade war • chip export curbs • Two Sessions • NPC • CPPCC • Politburo meeting • food security • Tasman Sea • Australia • New Zealand • MH370 • Alibaba • Huawei • DeepSeek • Tesla • climate target • air pollution
Through the Lens
In Focus
I. “True friends that share weal and woe“
China’s President Xi Jinping had a call with Russia’s President Vladimir Putin on Monday and said he was pleased with Moscow’s efforts to hold a summit with the U.S. toward ending the war in Ukraine, state broadcaster reported.
Putin updated Xi on the latest contacts with the U.S., according to CCTV, which didn’t give further details.
Xi said that “China is pleased to see that Russia and relevant parties have made positive efforts to resolve the crisis,” according to CCTV.
The Chinese side “expressed support” for the dialogue between Russia and the U.S. and said it is prepared to assist to peacefully resolve the conflict, according to a statement from the Kremlin.
Read: Xi tells Putin that China is pleased with Russia's efforts to end Ukraine war (AP)
Related: Attempting a "reverse Kissinger" will fail ()
II. The Two Sessions
The Two Sessions refers to the concurrent annual meetings of the National Committee of the Chinese People’s Political Consultative Conference (CPPCC), which opens on March 4, and the National People’s Congress (NPC), which begins on March 5. These meetings are expected to conclude on or around March 11.
[…]
Anticipation surrounding this year’s event has been heightened by a rare “symposium on private enterprises” that Xi hosted on February 17, attended by some of the country’s top entrepreneurs. This uncommon symposium, last held in 2018, raised hopes for China’s struggling economy — particularly following the January return of President Trump, a self-proclaimed “tariff king” who has already imposed an additional 10% levy on Chinese imports. Now, attention shifts to how much Beijing is willing to boost stimulus, support businesses, and respond to Trump’s trade policies.
The Two Sessions is expected to reveal a more pro-growth agenda compared to last year, with approximate targets of 5% for GDP growth, 4% of GDP for the fiscal deficit ratio, and 2% for consumer inflation. Further stimulus will come from roughly 3 trillion yuan in ultralong special treasury bonds and 4.5–5 trillion yuan in local government special-purpose bonds. Measures to boost consumer spending and encourage private-sector innovation will also be introduced. While Beijing aims to stabilize growth, it is unlikely to unleash the proverbial “bazooka” stimulus, as it needs to conserve fiscal resources for a potential trade war. Similarly, sweeping structural reforms remain improbable as the government remains committed to Xi’s vision of high-tech industrial self-reliance.
Read: What to Watch at China’s Two Sessions in 2025 (Asia Society)
Related:
The Two Sessions: What Will China Do on Stimulus, Trade Wars, and Tech Competition? (Asia Society)
Beijing police detain petitioners ahead of annual parliament (RFA)
III. What’s an extra 10% between competitors?
China’s Ministry of Commerce said Friday that it “firmly opposes” U.S. President Donald Trump’s latest threat to ramp up tariffs on Chinese goods and vowed retaliation, if necessary.
“If the U.S. insists on its own way, China will take all necessary countermeasures to defend its legitimate rights and interests,” a Ministry of Commerce spokesperson said in a statement, translated by CNBC.
“We urge the U.S. side to not repeat its own mistakes, and to return as soon as possible to the right track of properly resolving conflicts through dialogue on equal footing.”
The statement followed Trump’s Thursday announcement that the U.S. would impose an additional 10% duty on Chinese imports on March 4, which coincides with the start of China’s annual parliamentary meetings.
The new tariffs would be on top of the 10% further tariffs that Trump levied on China on Feb. 4.
Read: China vows to retaliate as necessary after Trump threatens tariffs (CNBC)
**You’re reading the monthly free edition of What’s Happening in China. If you haven’t already, upgrade 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
Safeguarding China’s regime is the top priority, Xi Jinping tells Politburo (SCMP)
Chinese President Xi Jinping has refocused attention on national security and risk reduction, telling the Communist Party’s inner circle that safeguarding the political system is the top priority.
Addressing the Politburo on Friday, Xi said the party would advance the Peaceful China Initiative to an “even higher level”, despite changing conditions.
“To adapt to changes [in circumstances and targets], the Peaceful China Initiative can only be strengthened, and it cannot be weakened,” state news agency Xinhua quoted Xi as saying.
“We should safeguard the security of the regime, the political system, as well as ideology.”
Xi stresses advancing Peaceful China Initiative to higher level (The State Council of the People's Republic of China)
Party committees and governments at all levels should work to lay a solid foundation for the long-term stability of the country by promptly and effectively addressing security issues, Xi stressed.
Noting that the Peaceful China Initiative is for the people and relying on the people, Xi urged efforts to effectively safeguard the legitimate rights and interests of the people, as well as social fairness and justice.
"Preventing and defusing all kinds of risks is a major task of building a Peaceful China," Xi said, stressing the need to give top priority to safeguarding national political security.
China's Xi Urges 'Calm' Response To Challenges Ahead Of Key Meeting (Barron's)
Chinese President Xi Jinping told top officials on Wednesday that Beijing should address domestic and international difficulties "calmly", one week before the country's biggest annual political gathering.
The world's second largest economy is facing down sluggish internal demand and a protracted property sector crisis, as well as the possibility of a deepening trade war with the United States after President Donald Trump took office.
Xi's comments were in response to a 2024 work report submitted by officials, which he "earnestly reviewed... and put forward important requirements", state news agency Xinhua said.
This year, "we must enhance our political capabilities, calmly respond to challenges brought about by changes in the domestic and international situation (and) adhere to the general key of working to seek progress while maintaining stability," Xi said, according to Xinhua.
China abruptly replaces tech czar behind AI and chip push (The Straits Times)
China has abruptly replaced the nation’s tech czar who oversees Beijing’s efforts to build a world-class, cutting-edge chip industry and rival the US as a high-tech superpower.
Mr Jin Zhuanglong, a 60-year-old aerospace expert, is no longer listed as party secretary of the Ministry of Industries and Information Technology after he disappeared from public view last December, fuelling speculation about his position.
The ministry, which oversees a wide spectrum of areas from China’s moonshot effort in chipmaking to overcapacity issues in electric vehicles, said in a statement on Feb 28 that Mr Li Lecheng now occupies that role, without giving a reason for the change.
Xi Jinping’s Purges Have Escalated. Here’s Why They Are Unlikely to Stop (Asia Society)
Xi’s concentration of power coincided with the reversal of China’s marketization and global involvement as exemplified in China’s dual circulation policy, which unsurprisingly yielded disastrous consequences in China’s economic performance and overall governance. Although there have been no obvious signs to indicate Xi’s power is being challenged from within the leadership, as Mao’s was, that does not mean Xi is not anxious about governance, let alone his power and authority. The implication is that the autocratic leader purges his allies, especially in the security, military, and police domains, because they are the instruments of state coercion and the leader needs absolute control over these sectors, even more so than those government departments that were more directly involved with the governance catastrophes. Moreover, purging officials who are ostensibly directly connected to governance failures could be read as an admission of responsibility on Xi’s part. This explains why Xi did not purge the health minister over Covid or economic officials over the bad economy, but instead unleashed his anti-corruption campaigns primarily at the military and the like.
The central concern is power. The targets of purges also provide a ready supply of scapegoats for the leader’s governance problems — not individually, but as a political phenomenon. For Stalin, they were anti-revolutionaries; for Mao, class enemies, including “capitalist roaders”; for Xi, corrupt cadres whose sabotage causes policy failures and makes the Great Leader’s further consolidation of power necessary and more desirable for better governance.
2025 No. 1 Document pushes productivity, scales back food security rhetoric (Trivium China)
China's top leaders are doubling down on efforts to boost farm productivity.
On Sunday, the Party Central Committee and State Council released the 2025 No. 1 Document, outlining key priorities for rural policy for the year.
ICYDK: For 22 years in a row, the Party's first policy document of the year has focused on agriculture, farmers, and rural development – a sign of how highly the Party center prioritizes rural issues.
As in the 2024 No. 1 Document, the latest doc emphasizes improving yields – a key measure of farming productivity – as the top agricultural policy priority for the year.
China says its defence spending 'entirely necessary' (HKFP)
Beijing said Tuesday its defence spending was “entirely necessary” after Russian President Vladimir Putin backed a suggestion by US counterpart Donald Trump that Russia, the United States and China all cut their defence budgets in half.
[…]
Putin said Monday in a televised interview that Trump’s proposal for 50 percent cuts to the three countries’ defence budgets was “a good idea”, adding that he could not speak for China.
China amends military regulations to emphasise the need for war readiness (SCMP)
Beijing has rolled out a series of amendments to its regulations on the People’s Liberation Army, putting a stronger focus on the importance of war readiness and overseas missions.
Set to take effect in April, the amendments emphasised that “winning battles should be the military’s top responsibility” and directed the PLA to establish a “fundamental focus on preparation and readiness for combat,” according to state news agency Xinhua.
In a report last Friday, Xinhua said the revised regulations would “further enhance the rule of law within the military, cultivate a solid force that is loyal to the party, capable of fighting effectively and maintains a strong sense of discipline and integrity”.
China said to be planning military parade for WWII anniversary, with Putin to attend (SCMP)
China is expected to hold a rare military parade later this year to mark the 80th anniversary of the end of World War II, with Russian President Vladimir Putin likely to attend, according to diplomatic sources.
Putin will travel to Beijing for the parade, which will commemorate the September 3 anniversary, a source with knowledge of the matter said.
The source said the Russian leader was likely to visit the country for a few days as he would also take part in the annual Shanghai Cooperation Organisation summit, which will be hosted by China and held around the same time.
China adviser pushes to lower legal marriage age to 18 to boost birthrate (Reuters)
A Chinese national political adviser has recommended lowering the legal age for marriage to 18 to boost fertility chances in the face of a declining population and "unleash reproductive potential", a state-backed newspaper said on Tuesday.
Chen Songxi, a member of the National Committee of the Chinese People’s Political Consultative Conference (CPPCC), told the Global Times that he plans to submit a proposal on completely relaxing restrictions on childbirth in China and establish an "incentive system" for marriage and childbirth.
Chen's comments come ahead of China’s annual parliamentary meeting next week where officials are expected to announce measures to offset the country's declining population.
The legal age for marriage in China is 22 for men and 20 for women, amongst the highest in the world, compared with most developed countries where the legal marriage age is 18.
Son of Chinese journalist jailed for espionage calls for his father's release (AP)
The son of a Chinese journalist accused of espionage called for his father’s release from a seven-year prison sentence in the high-profile case that signaled Beijing’s tighten grip on journalism.
Dong Yuyu, then a senior editor at a Communist Party-run newspaper that was increasingly out of step with the party’s hardening line, was arrested in February 2022 as he was having lunch with a Japanese diplomat in Beijing.
Dong Yifu said at the National Press Club in Washington on Monday that his father is planning to appeal his convictions. He urged Japanese authorities to help show that the senior Dong’s meetings with Japanese diplomats had nothing to do with espionage.
Interview: A former China correspondent examines identity and control under Xi (RFA)
Emily Feng: […] My parents were born in China, and I still have family there. I never held a Chinese passport, but I have a deep connection to the place. When I lived there, I realized I had seen only a tiny bit of it. I had seen it through my family’s eyes, through their immigration story. But there are many different versions of China, depending on who you are in China.
China’s ‘OK Boomer’ Makes No Sense — And That’s the Point (Sixth Tone)
Imagine you’re asked an uncomfortable question about your personal life. Rather than answer directly — or politely shift the conversation to safer ground like the weather — you instead respond with nonsensical wordplay. For example, when asked that perennial favorite, “Do you have a boyfriend?” you might answer, “Yes, a few.”
This quirky approach, known as yidu luanhui in Chinese, went viral on the country’s social media platforms in 2024 as a meme-friendly way to push back against the often condescending, patriarchal communication style of parents and elder relatives.
[…]
Underlying this behavior is a widespread belief among young Chinese that the older generation will not — and cannot — understand the way the country has changed since their own young adulthoods.
**Never miss a key story from China. Upgrade your subscription for exclusive posts and stay up to date. Find out more.**
Xinjiang
Thailand deports 48 Uighurs to China despite human rights concerns (Al Jazeera)
Thailand has deported at least 40 Uighurs to China’s Xinjiang region despite strong objections from activists and human rights groups, who warned that the deportees were at risk of torture, ill-treatment and “irreparable harm” if returned.
Thailand’s Defence Minister Phumtham Wechayachai confirmed the deportation on Thursday, telling the Reuters news agency that China gave assurance that the Uighurs sent back to Xinjiang would be looked after.
[…]
For years, rights groups have been accusing China of widespread abuses, including mass detention of Uighurs, a mainly Muslim ethnic minority that numbers about 10 million in the western region of Xinjiang. Beijing rejects those claims.
Thailand criticized for deporting 40 Uyghurs to China (DW)
Germany, the United States and Australia, along with UN agencies, have condemned Thailand's move to deport a group of at least 40 Uyghurs to China, against their will.
Uyghurs are a Turkic-speaking Muslim minority based in China's northwestern Xinjiang province. Many have fled China since 2014, facing widespread human rights abuse.
The deported are part of a larger group that Thailand had held in detention for a decade after they fled China in 2013 and 2014. According to the Office of the UN High Commissioner for Human Rights, five members of the group died in custody, while eight others remain detained in Thailand.
Just last month, Thailand denied any plans to repatriate the group of minority Muslims after US-based Human Rights Watch (HRW) said Thai immigration officials had asked the Uyghurs to complete new paperwork and take their photographs.
Hong Kong & Macao
Hong Kong is to cut thousands of civil service jobs and invest in AI to tackle a rising deficit (AP)
Hong Kong will cut thousands of civil service jobs and boost spending in artificial intelligence as it seeks to tackle an increasing deficit, authorities said Wednesday.
Finance Secretary Paul Chan said during a budget speech that there would be a “cumulative reduction” of government recurrent expenditure by 7% from now until 2027-2028. Hong Kong’s deficit had reached $87.2 billion Hong Kong dollars ($11.2 billion) for the financial year of 2024-2025, making it the third straight year of losses.
“It gives us a clear pathway towards the goal of restoring fiscal balance,” Chan said.
He said 10,000 civil servant posts would be cut by April 2027, representing a reduction of about 2% of the civil service in each of the next two years. Salaries will also be frozen in the civil service this year.
Hong Kong parents dismayed after HK$2,500 student grant axed in budget (SCMP)
Annual grants of HK$2,500 (US$321) for each of the nearly 800,000 students in Hong Kong will be cut, while spending on public universities will be slashed by HK$2.8 billion over the next three years, leaving parents unhappy about the way the government opted to tighten its belt.
In an unprecedented move, the government also said it would claw back HK$4 billion from the reserves of the eight public universities.
The estimated recurrent expenditure on education is expected to drop by 2.3 per cent to HK$102.9 billion in the 2025-26 financial year.
Former Hong Kong lawmaker, 6 others jailed for rioting after 2019 mob attack (Reuters)
A Hong Kong court on Thursday sentenced former lawmaker Lam Cheuk-ting and six other men to jail terms of up to around three years for rioting after being attacked by a mob in the summer of 2019 as pro-democracy protests raged.
On the night of July 21, 2019, more than 100 white-shirted men stormed the Yuen Long train station, attacking passers-by and journalists with clubs and sticks. Around a dozen attackers would eventually be jailed for rioting and conspiring to wound with intent.
But in a twist that stoked public outrage, Lam and six others who had tried to defend the public that night, were also arrested and charged with rioting.
[…]
In handing down a 37-month sentence for Lam, District Court judge Stanley Chan noted he had not engaged in violent acts, but his presence as a prominent democrat and his live streaming of the attack had inflamed the situation and created a "magnet effect" drawing more people to the scene.
Lam, who is already serving a nearly seven-year jail term for a separate subversion charge in a case where he and 46 other democratic campaigners were found guilty of violating a China-imposed national security law, will serve 34 months of his rioting sentence after that term finishes.
Verdict for Jimmy Lai’s nat. security trial expected in October (HKFP)
A verdict for Apple Daily founder Jimmy Lai’s national security trial is expected in October, a Hong Kong court has heard in a separate proceeding over the newspaper’s winding up.
EU ‘deeply concerned’ over ‘narrowing space’ for HK civil society (HKFP)
The European Union has expressed concern over the “further narrowing” of space for civil society in Hong Kong, citing the city’s Democratic Party’s plan to disband and the suspension of research by an independent pollster.
Ethnic minority NGO Hong Kong Unison votes to disband, as ex-staff slam ‘irresponsible’ decision (HKFP)
Two ex-employees of Hong Kong Unison, an NGO dedicated to serving the city’s ethnic minorities, have accused the organisation of making an “irresponsible decision” to disband after over two decades of operation.
Unison passed a motion on Friday to begin the process of winding up after 24 years of service, saying “its historical mission has been successfully accomplished.”
HK Disneyland records first profit in 9 years, lawmaker says (HKFP)
Hong Kong Disneyland Resort has turned a profit for the first time in nine years, while the number of the park’s visitors has soared by over a million, according to a lawmaker.
Hong Kong Considers Regulating Basketball Betting to Boost Revenue (Caixin)
Facing a fiscal deficit for the sixth consecutive year, the Hong Kong government is exploring the regulation of basketball betting as a potential new revenue source, Financial Secretary Paul Chan announced Wednesday in his latest budget speech to the Legislative Council.
Chan said that the government aims to curb illegal gambling and will invite the Hong Kong Jockey Club (HKJC) to submit proposals on legalizing basketball betting.
Taiwan
China holds ‘shooting’ drills off Taiwan’s coast, vows ‘reunification’ push (The Straits Times)
China’s military held “shooting training” on Feb 26 off Taiwan’s south-west coast in a move Taipei described as provocative and dangerous, while a senior Chinese leader vowed unswerving efforts to bring the island under Beijing’s control.
[…]
Earlier on Feb 26, China’s official Xinhua news agency said the ruling Communist Party’s fourth-ranked leader Wang Huning had called this week for greater effort in the cause of Chinese reunification.
China must “firmly grasp the right to dominate and take the initiative in cross-strait relations, and unswervingly push forward the cause of reunification of the motherland”, it quoted Mr Wang as telling an annual meeting on work related to Taiwan.
China flexes military muscle in Indo-Pacific, testing US and allies (VOA)
China has held a series of live-fire military drills across the Indo-Pacific region over the past week, from the Taiwan Strait to the Tasman Sea. Analysts say the exercises, which included “extremely capable” weapons systems, were aimed at testing the United States and regional countries’ responses to military threats.
“China understands there is a strategic window to demonstrate its ability to conduct military exercises [in areas near some U.S. allies] because the bandwidth of the Trump administration is spread quite thin by global issues that it has to deal with,” said Stephen Nagy, a professor of politics and international studies at Tokyo's International Christian University.
“These drills are predatory because when China senses gaps, it will move in and fill those vacuums,” he told VOA by phone.
Taiwan 'Closely Watching' Ukraine Amid Trump Pivot (Bloomberg)
Taiwan Vice Premier Cheng Li-chiun vowed to boost the archipelago’s defense capabilities including through developing its own military drones, as the Trump administration weakens support for Ukraine casting doubt over Washington’s commitment to Taipei.
“Taiwan has been paying very close attention to the developments in Ukraine,” Cheng told Bloomberg TV, in response to a question on whether the government is worried about President Donald Trump’s decision to reverse years of US foreign policy to embrace Russian leader Vladimir Putin.
“For Taiwan, the most important thing now is how we can take responsibility in the Indo-Pacific region,” she said, calling bolstering such capabilities the basis for peace. “We’re paying close attention to the Trump administration’s policies,” Cheng added, when asked about the outlook for Taiwan’s relationship with the US.
Taiwan detains Chinese-crewed cargo ship after undersea cable damaged (The Guardian)
Taiwan’s coastguard has detained a cargo ship and its Chinese crew after an undersea cable in the Taiwan Strait was damaged on Tuesday, saying it cannot rule out the possibility it was a deliberate “grey zone” act.
President Lai meets with 228 Incident overseas survivors group (Focus Taiwan)
President Lai Ching-te (賴清德) said his government would continue to firmly unite Taiwan and protect its people on Monday, during a meeting with the Overseas 228 Survivors Homecoming Group in Taipei.
Lai thanked the group for its longstanding work of actively speaking out for Taiwan, noting that it had been 78 years since the 228 Incident.
Tens of thousands of people, including numerous Taiwanese intellectuals and elites were subsequently killed or imprisoned by then-ruling Kuomintang (KMT) in the aftermath of the 1947 anti-government uprising.
Will Taiwan Survive the Next Four Years? ()
The continued existence of Taiwan requires extremely careful, thoughtful policymaking on the part of the U.S. government. These are not qualities the Trump administration has in abundance. On the one hand, Taiwan needs support, both morally and militarily, and American leaders need to continue to signal that and ensure that Taiwan has the means to defend itself. On the other hand, we also need to reassure Beijing that the U.S. does not support Taiwanese independence and is not taking tangible steps to move things in that direction.
Will 2027 invite conflict for Taiwan and China? (Brookings)
No place should exist daily under threat and pressure. But the island has to play a balancing act. For the security of its people, the government cannot be too adventurous. In elections, on the whole, over the last few decades, Taiwanese have voted for those who support the status quo and offer more conservative, cautious approaches on cross-Strait issues. Of course, the vast majority of Taiwanese increasingly see themselves as Taiwanese, rather than Chinese Taiwanese, or even Chinese pure and simple. But they are very well aware of the harm that would happen if there was a breakout of conflict, and that they sit on the front line of this. So, they tend to support an approach that promotes Taiwan’s economic and other interests, but not in a way that is confrontational.
World
Asia
N. Koreans endure years of forced labour on Chinese ships: report (HKFP)
North Koreans have been forced to work on Chinese-flagged fishing vessels without touching land for as long as a decade, facing verbal and physical abuse as well as harsh conditions, a report said Monday.
China holds live-fire exercises in Gulf of Tonkin after Vietnam marks its territorial claims (ABC News)
Chinese authorities said they began live-fire exercises in the Gulf of Tonkin on Monday, only days after Vietnam announced a new line marking what it considers its territory in the body of water between the two countries.
China's Maritime Safety Administration said the exercises would be focused on the Beibu Gulf area, closer to the Chinese side of the Gulf of Tonkin, and would run through Thursday evening.
It gave no further details, but the drrlls follow an announcement last week by Vietnam establishing a baseline used to calculate the width of its territorial waters in the Gulf of Tonkin.
Chinese investment surge into Vietnam raises risk of Donald Trump retaliation (Financial Times)
Chinese companies are fuelling almost one in three new investments in Vietnam, in a sign of how they have relocated operations abroad to avoid Donald Trump’s trade war with Beijing.
But this shift is likely to increase Vietnam’s vulnerability to tariffs as Trump targets countries that have racked up big trade surpluses with the US.
Vietnam has been one of the biggest beneficiaries of trade tensions between the world’s two largest economies. Its surplus with the US reached a record $123.5bn last year, the third-largest after China and Mexico.
Part of that has been driven by the exports of companies such as Apple and Intel, which have moved production lines from China to Vietnam to spread supply chain risks and avoid punitive tariffs.
But Vietnam is also increasingly getting investment from Chinese companies, accounting for 28 per cent of new projects last year, up from 22 per cent in 2023.
Philippines Nabs Alleged Chinese Spies Targeting Marcos Office (Bloomberg)
The Philippines arrested two more suspected Chinese spies and their local cohorts that it said targeted military camps and the presidential palace as it steps up its campaign against espionage amid geopolitical tensions with Beijing.
A Chinese national living in Manila, who has another Chinese associate, employed three Filipinos to drive through those areas in the capital as well as the US Embassy, the National Bureau of Investigation said in a statement on Tuesday.
They used vehicles equipped with devices that can be used for surveillance, eavesdropping, data theft and network disruption, the bureau said, adding that the Filipinos were paid a fee of up to 3,000 pesos ($52) a day for the job.
The Chinese embassy in Manila didn’t immediately respond to a request for comment. It earlier said that the “so-called ‘espionage’ operation of a Chinese citizen in the Philippines is baseless speculation and accusation,” referring to the arrest in late January of one Chinese accused of spying. There was no immediate response from the office of President Ferdinand Marcos Jr..
No passengers, no planes, no benefits. Pakistan's newest airport is a bit of a mystery (AP)
With no passengers and no planes, Pakistan’s newest and most expensive airport is a bit of a mystery. Entirely financed by China to the tune of $240 million, it’s anyone’s guess when New Gwadar International Airport will open for business.
Located in the coastal city of Gwadar and completed in October 2024, the airport is a stark contrast to the impoverished, restive southwestern Balochistan province around it.
U.S.–China–Southeast Asia Relations in a Second Trump Administration (Asia Society)
How will a second Trump presidency impact U.S.–Southeast Asia relations, and what are the implications for regional stability and economic growth? This paper analyzes views of Donald Trump’s second term in the region and the Trump's administration most likely approach to Southeast Asia. In particular, it assesses regional perceptions of risks in the security and economic domains and discusses how China may seek to capitalize on those perceptions.
U.S. Soft Power Is Spiraling in Asia, With China Filling the Void (Council on Foreign Relations)
Beijing appears to be seeking to move to places where USAID has moved out. Beijing seems to be considering increasing a range of humanitarian aid projects in health, education, and sanitation in mainland Southeast Asia, in some of the region’s poorest states. Beijing picks out particularly notable and newsworthy projects to take over, too; it assumed the cost of a high-profile de-mining project in Cambodia that the United States used to fund, for instance. In strategically important Nepal, Politico reported that China would likely provide the aid to replace the funding that USAID had provided. In Colombia, “non-governmental organizations that received USAID funding say the Chinese government is interested in putting up money to help fill the void.”
Cook Islands PM beats no confidence vote, slams New Zealand (NZ Herald)
Cook Islands Prime Minister survived a no-confidence vote Wednesday, blaming “misinformation” from former colonial ruler New Zealand for destabilising his Pacific country.
Parliament voted 13-to-9 against the motion of no confidence in Mark Brown’s Government, sparked by a partnership deal he signed with Beijing.
The agreement, sealed during a state visit to China this month, irked the New Zealand’ Government and worried some Cook Islanders keen to maintain close ties with Wellington.
New Zealand says China has agreed to consider concerns about its recent military drills (ABC News)
China has agreed to consider concerns that its military did not give enough notice before staging live-fire exercises in the waters between New Zealand and Australia last week, the foreign minister of New Zealand said Wednesday.
The drills prompted passenger flights between the two countries to divert in midflight after Chinese naval vessels warned pilots they were flying above a live-fire exercise.
“I think it would be true to say that he took our concerns on board,” Foreign Minister Winston Peters said after meeting and having dinner with his Chinese counterpart Wang Yi in the Chinese capital.
Defence minister urges calm over China warships episode as they travel west (ABC News)
Defence Minister Richard Marles has urged Australians to take a "deep breath" over the Chinese warships off Australia's east coast as the Coalition intensifies its attack on the government's response to live-fire drills last week.
The opposition has accused Labor of ignoring the strategic implications of the episode because it has repeatedly stressed that the Chinese vessels haven't broken international law.
But Mr Marles said that legal principle was critical because so many Australian vessels moving through waters close to China depend on it.
"It's really important that we take a deep breath here. Our touchstone has to be international law," he said.
Airline pilots surprised by Chinese live-fire warning near Australia, messages show (Reuters)
Pilots first heard about a Chinese live-fire naval exercise near Australia last week when already in the air, receiving messages that forced some to change paths through a busy air corridor, satellite text messages to and from pilots seen by Reuters show.
The incident highlights how airlines are increasingly having to react at short notice to geopolitical disruptions and military hazards, such as missile and drone barrages between Israel and Iran last year.
It also shows how China's military, in its first drills in the Tasman Sea between Australia and New Zealand, is raising tensions by being more assertive across the Indo-Pacific region, according to Western defence analysts, including near Taiwan.
China has said it gave adequate warning to Australian and New Zealand authorities about the exercise.
A Shot Across the Bow: China Signals New Era of Sea Power in the Southwest Pacific (The Diplomat)
The live-fire exercises were a display to show that China’s military forces could cut off the air and sea links between Australia and New Zealand at any time, with no warning.
China’s aggressive act is a shot across the bow to New Zealand and Australia, but also to the countries of the wider Pacific. It is a demonstration of China’s growing sea power in the Southwest Pacific and meant to normalize the PLA presence there.
The PLAN live-fire exercises were not merely a tit-for-tat response to Australia or New Zealand’s periodic freedom of navigation exercises in the South China Sea or Taiwan Strait, as some commentators have claimed. They were designed to send the message loud and clear that China wants to rule the waves in the Pacific and to force Australia and New Zealand to accept the new normal.
In essence, China is challenging the existing strategic setup. Chinese Communist Party (CCP) General Secretary Xi Jinping calls the new China-centered maritime order he wants to impose a “community of oceanic destiny.”
MH370: search for missing Malaysia Airlines flight resumes after 11 years (The Guardian)
MH370’s disappeared from radar shortly after taking off from Kuala Lumpur airport in March 2014. It was bound for Beijing, with 12 crew and 227 passengers on board. The plane has never been found, and the reason for its disappearance is unknown.
Americas
Trump Administration Seeks More Restrictions on China Tech, Weighs Nvidia Curbs (Bloomberg)
Donald Trump’s administration is sketching out tougher versions of US semiconductor curbs and pressuring key allies to escalate their restrictions on China’s chip industry, an early indication the new US president plans to expand efforts that began under Joe Biden to limit Beijing’s technological prowess.
Trump officials recently met with their Japanese and Dutch counterparts about restricting Tokyo Electron Ltd. and ASML Holding NV engineers from maintaining semiconductor gear in China, according to people familiar with the matter. The aim, which was also a priority for Biden, is to see key allies match China curbs the US has placed on American chip-gear companies, including Lam Research Corp., KLA Corp. and Applied Materials Inc.
The working group-level meeting between US, Japanese and Dutch officials took place last week on the sidelines of a summit in Japan, people familiar with the matter said.
That comes in addition to early discussions in Washington about sanctions on specific Chinese companies, other people said. Some Trump officials also aim to further restrict the type of Nvidia Corp. chips that can be exported to China without a license, Bloomberg News has previously reported. They’re also having early conversations about tightening existing curbs on the quantity of AI chips that can be exported globally without a license, said some of the people, who asked not to be identified because the deliberations are private.
Microsoft, Amazon, Nvidia Urge Trump to Revise Chip Export Curbs (Bloomberg)
Tech companies with a combined market valuation of more than $8 trillion are urging the Trump administration to rethink chip export restrictions that they fear will push US allies into the arms of Chinese competitors.
In rapid succession on Thursday, Microsoft Corp.’s president and Amazon.com Inc.’s chief executive officer both said the Trump team should reconsider Biden-era regulations that would cap the export of artificial intelligence semiconductors to nations including Israel, Saudi Arabia and the United Arab Emirates. Their entreaty echoed a similar call from Nvidia Corp.’s CEO.
At a time when many tech companies have been eager to be seen expressing support for President Donald Trump and his economic policies, the remarks in the last 24 hours show that they have some big asks, too.
Big fines coming for US export violations, says ex-Commerce official, as China sales probed (Reuters)
The U.S. Commerce Department is likely to impose hefty fines on companies in the coming months for illegally shipping technology to customers in countries like China, a top department official who left last month said on Thursday.
Matthew Axelrod, as Commerce's assistant secretary for export enforcement during the Biden administration, pushed for tougher penalties against companies that violated export controls on China, Russia and Iran.
He signed off on a $300 million penalty on Seagate Technology in 2023 for shipping 7 million hard drives to China's Huawei, which is on the U.S. Commerce Department Entity List that restricts sending U.S. goods and services to the company because of its risks to national security.
"We had hoped some major investigations would resolve in 2024, but it looks like it will now be 2025," said Axelrod, who expects the Trump administration to aggressively enforce export controls. He is joining the Gibson Dunn law firm on Monday.
Trump science policy nominee calls China most formidable technology, science competitor (Reuters)
President Donald Trump's nominee to head the White House Office of Science and Technology Policy says China is the top U.S. competitor in both areas and warned the future depends on who leads in key sectors.
"China has emerged as both our preeminent geopolitical rival and our most formidable technological and scientific competitor," nominee Michael Kratsios said in written testimony seen by Reuters ahead of his U.S. Senate confirmation hearing on Tuesday.
"The shape of the future global order will be defined by whomever leads across AI, quantum, nuclear, and other critical and emerging technologies. Chinese progress in nuclear fusion, quantum technologies, and autonomous systems all press home the urgency of the work ahead," Kratsios said.
Kratsios in the first Trump administration served as the United States chief technology officer and associate director of the agency he is nominated to lead.
Alleged China Abuse of US Programs for Startups Is Subject of House Probe (Bloomberg)
The Republican leaders of three US House committees have begun an investigation into what they called China’s “systematic exploitation” of two federal funding programs that the Pentagon and other agencies use to tap innovation by American startups and small businesses.
“Due to inadequate oversight and weak due diligence measures, it appears that China has become one of the largest beneficiaries of these programs — turning what should be a pillar of American innovation into a tool for the CCP’s technological and military advancement,” according to a letter from the committee leaders, referring to the Chinese Communist Party.
A Tale of Two Typhoons: Properly Diagnosing Chinese Cyber Threats (War on the Rocks)
How should the United States address the multiple cyber “typhoons” emanating from China? Over the past year, Chinese cyber threat actors have gained access to important U.S. networks. The most high-profile of these are Volt Typhoon, which burrowed into U.S. critical infrastructure, potentially to preposition cyber assets in the event of a crisis or conflict with the United States, and Salt Typhoon, which penetrated multiple telecommunications networks to spy on Americans.
There are two fundamental problems with the current state of the policy debate. The first is that Volt Typhoon and Salt Typhoon are fundamentally distinct, but policymakers tend to treat them interchangeably. The second problem, which follows from the first, is that policymakers are grasping for the same policy levers — especially deterrence — to address these threats when they suggest different solutions.
US intel shows Russia and China are attempting to recruit disgruntled federal employees, sources say (CNN)
Foreign adversaries including Russia and China have recently directed their intelligence services to ramp up recruiting of US federal employees working in national security, targeting those who have been fired or feel they could be soon, according to four people familiar with recent US intelligence on the issue.
The intelligence indicates that foreign adversaries are eager to exploit the Trump administration’s efforts to conduct mass layoffs across the federal workforce – a plan laid out by the Office of Personnel Management earlier this week.
U.S. to Hit Chinese Ships With Hefty Port Fees (WSJ)
The U.S. trade war with China is escalating beyond tariffs with a plan by the Trump administration to impose steep fees on Chinese shipping companies and any Chinese-built vessels that enter U.S. ports.
The proposal, unveiled on Friday [Feb 21] by the office of the U.S. Trade Representative, would impose millions of dollars in new fees each time one of these vessels enters a U.S. port, adding costs that would likely be passed down to U.S. importers and exporters through higher freight rates.
Trump Tariffs: Mexico Open to New Levies on China to Avoid US Duties (Bloomberg)
US Treasury Secretary Scott Bessent said Mexico has proposed matching Washington’s tariffs on China and urged Canada to do the same, signaling a potential path to avert levies on their own exports in the coming days.
“I do think one very interesting proposal that the Mexican government has made is perhaps matching the US on our China tariffs,” Bessent said in an interview with Bloomberg Television.
“I think it would be a nice gesture if the Canadians did it also, so in a way we could have ‘Fortress North America’ from the flood of Chinese imports,” he said.
Trump looking to strike ‘big deals’ to counter China’s belt and road projects: Rubio (SCMP)
The Belt and Road Initiative, a transcontinental infrastructure scheme, has raised concern in Washington about Beijing’s expanding influence. It has seen more than 150 countries signing cooperation agreements but has prompted accusations about the risk of debt traps – claims China has denied.
“It is not in our interest to live in a world, particularly in a hemisphere we call home, surrounded by countries that have taken on loans and debt from China that put them at China’s mercy,” Rubio said.
He warned that the initiative would “threaten” US interests and lead to China dominating its trading partners, but Trump was working to “reverse all of that”.
Rubio also said countries in the Indo-Pacific, including Japan, South Korea, the Philippines, Australia and India, want the US to “remain engaged and involved”.
Trump, Xi, and the false hope of a grand bargain (Brookings)
For Washington to shape the U.S.-China relationship to its advantage, it must engage Beijing from a position of strength. That means investing in its own economic resilience, military capabilities, technological leadership, and global alliances. At the same time, the United States should sustain measured economic and diplomatic ties with China—not as a concession, but for its own benefit. Without such engagement, America’s ability to influence Beijing diminishes, leaving military confrontation as the only remaining tool of leverage—an outcome that is both dangerous and unrealistic.
The IPCC meets amid Trump’s climate attacks. What to watch for. (E&E News by POLITICO)
Delegates from more than 190 countries are meeting in Hangzhou, China, this week to make decisions related to the content and timing of the seventh assessment report by the Intergovernmental Panel on Climate Change, a U.N. body that evaluates the science behind climate change.
The conclusions of the assessments — which are released every five to seven years — help inform governments about the sources of greenhouse gas emissions, the pollution’s effects on the planet and the risks of not acting to curb it. The comprehensive reports are also integral to ascertaining whether countries are doing enough to reduce emissions — a process under the Paris climate agreement known as a stocktake.
The U.S. delegation was prevented from attending the IPCC meeting by the Trump administration, said a government official who was granted anonymity because they were not authorized to discuss the situation. The move follows President Donald Trump’s announcement last month that he would immediately withdraw from the Paris deal.
US sanctions more Hong Kong firms for aiding Iranian drone makers (The Independent)
The Treasury Department imposed sanctions on six firms in Hong Kong and mainland China for allegedly supplying components to Iran’s drone and missile programmes in violation of US bans.
The firms acted as fronts to acquire American parts for Iranian military companies, which in turn supplied weapons to Russia and militant groups, it said in a statement on Wednesday.
The US had already sanctioned two other Hong Kong firms earlier in February.
The sanctioned firms could face asset seizures, visa restrictions and penalties while any financial institution dealing with them could risk secondary sanctions.
**Stay up to date on the most relevant stories from China. Upgrade your subscription to unlock exclusive posts. Learn more.**
Europe
China and Russia are ‘true friends tempered by fire’, Xi Jinping tells Kremlin aide (SCMP)
Chinese President Xi Jinping told senior Kremlin aide Sergei Shoigu on Friday that the two countries were “true friends like steel repeatedly tempered by fire”, according to state broadcaster CCTV.
“Both sides should continue to strengthen their coordination in international and regional matters,” Xi told the secretary of Russia’s Security Council.
He added he had discussed a number of important issues with Russian President Vladimir Putin this year and urged both sides to work together to implement their agreements.
Shoigu’s visit came amid a warming in relations between the United States and Russia, which has prompted speculation over how it will affect Moscow’s relationship with China, which has grown stronger since the start of the Ukraine war.
China urges EU to stop discrediting China after Russia sanctions (Reuters)
China urged the European Union to stop sanctioning Chinese companies and discrediting the country, its commerce ministry said on Tuesday, after Chinese entities and individuals were included in the EU's latest sanctions package against Russia.
China always opposes unilateral sanctions that have no basis in international law and are not authorized by the United Nations Security Council, a ministry spokesperson said, adding the EU's move had a negative impact on China-EU economic and trade relations.
Your best friend has abandoned you: inside China’s latest EU charm offensive (SCMP)
As US President Donald Trump takes a flame-thrower to relations with Europe, Chinese diplomats have been moving through the continent with a message: your best friend has abandoned you. Let’s uphold the multilateral order together.
The message was transmitted, either in this language or similar terms, over recent weeks in Brussels, Dublin, Munich and Paris, according to people present at or briefed on the meetings, as China looks to use the fractured transatlantic alliance to draw Europe closer to its orbit.
Several European officials and diplomats said Beijing was on a “charm offensive” and looking to make hay from the American pivot under Trump. The US has dramatically sided with Russian President Vladimir Putin in his war on Ukraine and thrown support behind the far-right in European elections.
Trump on Wednesday promised 25 per cent tariffs on EU-made goods and on Monday even voted with Moscow at the United Nations on resolutions condemning Russia’s 2022 invasion of Ukraine.
Virtually nobody now expects the Western powers to continue collaborating on China policy, an idea pitched during a trip to Washington last week by trade commissioner Maros Sefcovic.
Spain calls for EU to forge China policy without US (Financial Times)
The EU should craft its own China policy and not ape the Trump administration’s confrontational stance, Spain’s foreign minister has said, as Brussels tries to adapt to Washington’s recent hostility towards European allies.
Some EU capitals have suggested embracing the US’s hawkish stance on China to curry favour with President Donald Trump, but others warn against jeopardising the bloc’s economic relations with Beijing.
“Europe must take its own decisions, on its own. And we have to decide when China can be a partner and when China is a competitor,” José Manuel Albares told the Financial Times.
“We can have certainly a dialogue with the country that I think is our natural ally, the United States. But Europe must take its own decisions,” he said.
EU trade chief plans China visit amid soaring tensions with Donald Trump (SCMP)
The European Union’s trade chief Maros Sefcovic intends to visit China at the end of March, according to people familiar with the plan.
It will mark his first trip to Beijing as commissioner for trade and economic security and comes after a maiden visit last week to Washington, where he made initial contacts with the Trump administration’s top trade and commerce officials.
Sefcovic, a veteran commissioner who took on a new portfolio in December, will meet with Chinese Commerce Minister Wang Wentao. Wang invited the Slovakian to China earlier this year, but it is understood Sefcovic delayed because he wanted to visit the US first.
China could blackmail Germany via wind turbines, government-linked report warns (E&E News by POLITICO)
Germany’s political system and social cohesion are at stake unless it restricts Chinese wind turbines in the country, a government-backed analysis seen by POLITICO warns.
The report, which the German defense ministry commissioned, argues Beijing could purposefully delay projects, harvest sensitive data and remotely shut down turbines if given access to wind farms. It also advises the country to stop an existing wind project using Chinese turbines from going ahead.
Chinese lithium factory in Sines could get €350 million in EU grants (Euractiv)
The Chinese CALB lithium battery factory in Sines, in south western Portugal, whose €2 billion project was launched on Monday in Lisbon, could receive up to €350 million in support under the European incentive scheme for reindustrialisation.
"[The European incentive scheme for reindustrialisation and the acceleration of innovation and new technical skills] allows support of up to 35%, hence the figure of €350 million that has been put forward," Economy Minister Pedro Reis told journalists at the launch ceremony for CALB's new lithium battery factory project in Sines, at the Superior Technical Institute in Lisbon.
Trump is pushing Europe and China closer together. Europe should tread carefully (Chatham House)
A growing – increasingly lopsided – reliance on Chinese trade and technology is not only damaging Europe’s competitiveness, but also presents significant national security risks, which have already proven difficult to diversify away from, including 5G telecommunications infrastructure and port technology. China also continues to target Europe through increasingly brazen cyber and other hybrid incursions.
Increased reliance on China could also undermine Europe’s emerging role as the remaining stronghold of a more values-based international order.
While a more pragmatic relationship with China will offer opportunities – to hedge, to get Beijing’s support on specific issues, and fill the vacuum left by the US in areas like climate change or AI governance – it should be treated with great caution.
One Europe, many policies: balancing EU relations with Taiwan and China (Foundation for Strategic Research)
With Taiwan increasingly in the spotlight, European states face greater challenges in managing their relations with both Beijing and Taipei. Engagement with either side requires carefully navigating each country’s own “One China policy”. As China increases its pressure and more Europeans than ever interact with Taiwan, there is a greater need to understand what underpins the evolving balance.
This paper will explain why the words and symbols related to this policy matter so much and how to weigh the compromises that all European Union (EU) member states have struck. Some recent incidents show how language has real consequences for relations with China, international security, and economic interests.
British energy secretary to visit China in March to restart energy talks, sources say (Reuters)
British Energy Secretary Ed Miliband will visit China in March to restart talks on energy cooperation and meet Chinese investors, three sources with direct knowledge of the plan said, as the Labour government seeks closer China ties amid worsening U.S.- and EU-China relations.
The sources, who were not authorised to speak to media, said Miliband will visit Beijing on March 17-19, which Reuters is reporting for the first time.
Middle East & North Africa (MENA)
UAE ramps up China charm offensive to deepen investment, tech ties (Semafor)
While UAE investments in China surged 120% in the first nine months of 2024, Chinese foreign direct investment in the country rose just 16%. There’s a growing appetite among Chinese businesses to expand in the UAE: Tech giant Baidu is in talks to introduce its Apollo Go robotaxis in Dubai, its first foreign deployment of the technology.
Chinese tourism to the UAE is also surging. Arrivals in Dubai were up 30% to 824,000 visitors last year, and Emirates airline is racing to meet demand. The carrier is expanding its China network, adding Shenzhen and Hangzhou this summer, despite delays in new aircraft deliveries from Boeing and Airbus.
Sub-Saharan Africa
Lagos EV Market Sparked by High Gas Prices, Chinese Car Models (Bloomberg)
While the EV revolution is well underway in many parts of the world, the idea of charging up a car with electrons is still somewhat bemusing in the West Africa nation where half of the population have no access to electricity, and the other experiences frequently interrupted power.
Yet after gasoline prices began to soar in Nigeria in 2023, EV proponents saw an opportunity to pitch their wares to the millions of drivers across Africa’s most populated nation. There are now at least 10 dealerships across Nigeria pushing two- and four-wheel EVs, mainly from Chinese makers. Separately, efforts are underway to build up a nationwide EV charging infrastructure and Saglev is even backing a domestic manufacturing facility to build zero emissions vehicles.
Rather than be deterred by the notoriously erratic power supply in Nigeria, investors see EVs as a savvy long-term bet in a country that needs to quickly switch to reliable clean power for cost reasons alone.
“The actual EV story in Africa is not actually climate change but economic,” said Saglev Chief Executive Sam Faleye, a native Nigerian who left his medical practice in the US to go into EVs in Africa. He has partnered with Chinese EV maker Dongfeng to annually assemble up to 2,500 units in Nigeria by as early as this year.
Global Institutions & Multilateral Relations
China has a very important role to play in tackling climate change and others may look to the Asian country for additional leadership in the field, COP30 President-Designate Andre Aranha Correa do Lago said on Thursday.
Asked about China’s potential role as the United States steps back from climate change efforts, Correa do Lago said China has been playing a big part in providing solutions for a significant number of years.
"We have to work harder with China because China has been able to give some fantastic answers to the fight against climate change," he told reporters in an online news briefing held by the Oxford Climate Journalism Network.
Since taking office last month, President Donald Trump has withdrawn the U.S. from the Paris climate agreement, clawed back American global climate finance and severed international climate partnerships.
Trump has also pulled the U.S. out of key U.N. climate change assessments, Reuters reported last week.
Correa do Lago, who is due to lead the COP30 annual global climate summit in Brazil in November, also praised China's solar panel push. The world's largest solar panel producer has ratcheted up production capacity after years of subsidies, keeping global prices low.
"They are doing their own thing, and their own thing is benefiting the rest of the world. Reducing the prices of solar panels is one of the most fantastic policies to expand renewable energy in developing countries," he said.
Business, Economy & Finance
Trump Tariff Jolt Has Markets Alert for China Response (Bloomberg)
Here’s what strategists are saying:
Billy Leung, investment strategist at Global ETFs:
“The extra 10% is frustrating because it keeps uncertainty alive. For Chinese stocks, the move is mostly sentiment-driven — global investors reacting, not onshore. The iShares China Large-Cap ETF (FXI) selling into the New York close shows offshore positioning is still weak, and with China’s ‘Two Sessions’ next week, there’s a chance for stimulus chatter to shift sentiment.”
Kristina Clifton, senior economist at Commonwealth Bank of Australia:
“We expect the NPC to announce an increase in government spending to help counteract the impact of higher tariffs on the US’s imports from China. An unexpectedly large increase would strengthen the Aussie, kiwi and offshore yuan.”
Luis Estrada, strategist at RBC Capital Markets:
“We are expecting volatility into March 4 deadline across the Mexican peso, loonie, and offshore yuan, but policy reaction from any of the three governments is unlikely in anticipation of tariffs. And until tariffs are effective, its premature to anticipate the type of response it could trigger.”
Serena Zhou, economist at Mizuho Securities Asia:
“The government will prioritize its efforts to support domestic consumption, with a fiscal deficit up to 4% of GDP. In view of the tariff threat, China may slightly delay monetary easing measures in order to support the yuan.”
Matthew Haupt, portfolio manager at Wilson Asset Management:
“You’d expect a moderate response given the level is not too punitive, but we could see a continuous easing of conditions around property and domestic infrastructure spending.”
What Does Xi’s Meeting With Entrepreneurs Mean for the Private Sector? (Carnegie Endowment for International Peace)
The different perspectives on this meeting reflect, not surprisingly, the various understandings of the underlying problem facing China’s private sector. If the problem is mainly one of low confidence, then strong, confidence-building gestures may be enough to make a difference. If, however, the problem is primarily a structural one of weak domestic demand, then these gestures may have a positive impact in the short term but it won’t be sustainable and will quickly fade if fiscal expansion isn’t redirected toward the demand side.
While most investors seem to favor the structural argument, some investors, along with much of the Chinese press, appear to favor the confidence argument.
China government spending on citizens lags behind economic peers (Financial Times)
China’s government spends less on its citizens than most other countries with similar or greater income levels, analysis by the Financial Times shows, potentially undermining Beijing’s efforts to encourage consumption to boost its flagging economy.
The country’s leaders will announce new economic targets at the annual meeting of its rubber stamp parliament next month and unveil stimulus measures to overcome weak domestic demand following the bursting of its property bubble.
China’s state spends only about 6 per cent of GDP on what is known as individual consumption — services ranging from healthcare to social security that directly benefit citizens — while households spend another 38 per cent, according to data by the World Bank.
Analysis of the data showed government spending on individual consumption in China, which is classified as an upper-middle income country by the World Bank, lags behind most members of the Brics group of emerging nations, including Brazil and Russia. It is also lower than that of many other emerging and developed economies.
Robin Xing, chief China economist at Morgan Stanley, said the analysis underlined the need for Beijing to increase government spending on social welfare to unlock consumption.
“Without deeper social welfare reform, people will keep all these precautionary savings instead of consuming,” said Xing.
China Plans Bank Capital Injections of at Least $55 Billion (Bloomberg)
China plans to start re-capitalizing three of its biggest banks in coming months, according to people familiar with the matter, following through on a broad stimulus package unveiled last year to shore up the struggling economy.
Authorities are looking to inject at least 400 billion yuan ($55 billion) of fresh capital into the first batch of Agricultural Bank of China Ltd., Bank of Communications Co. and Postal Savings Bank of China Co., said the people, asking not to be identified discussing private information. The plan, which could be completed as soon as the end of June, is subject to change and the amount for each bank is still being finalized, said the people.
China Raises Scrutiny of Outflows Via Hong Kong Listings, Foreign Deals (Bloomberg)
China is increasing scrutiny of outbound investments by domestic companies as well as their use of proceeds from Hong Kong share sales, people familiar with the matter said, after record capital outflows put pressure on the yuan.
Authorities have recently informed China-incorporated firms seeking initial public offerings or second share sales in Hong Kong to get a “no objection” indication from the State Administration of Foreign Exchange if they want to deploy the proceeds overseas, the people said, asking not to be identified discussing private information. Firms that can’t secure such an indication have been told to repatriate their proceeds to mainland China, the people said.
Separately, regulators have begun to more closely examine money that companies send offshore in the name of overseas direct investment, according to people familiar with that effort, adding that there’s concern some firms may be faking transactions in order to move money out of China. Officials have become concerned after a record $168 billion of investment outflows last year, the people said.
China Developers Buy Land at Premiums After Housing Rules Relaxed (Bloomberg)
Chinese state-backed developers are starting to buy land at a premium again after the government eased limits on home prices to revive a slumping market that’s been a drag on the economy for more than four years.
The number of land parcels that sold for at least 20% above the asking price accounted for 37% of deals this year, according to a Bloomberg analysis of transactions worth at least 1 billion yuan ($138 million) tracked by China Index Academy. That compares with just 14% for all of last year and 4.6% in 2023.
Seven out of the 10 transactions this year involved state buyers, including China Resources Land Ltd., China Overseas Land & Investment Ltd., Poly Developments and Holdings Group Co., and mixed-ownership firm Greentown China Holdings Ltd.
The renewed interest in land deals signals some state-backed developers are betting on an eventual rebound in the housing market, even as sales and prices continue to slide on weak consumer confidence. While not a full recovery, it’s the latest sign that China’s property market is stabilizing.
China opens up its vast telecoms sector to 13 foreign companies (SCMP)
China has granted approval to 13 foreign-invested companies to begin operating in the country’s telecommunications sector on a pilot basis, as it steps up efforts to attract more foreign investment and revitalise its economy.
The permits granted by the Ministry of Industry and Information Technology will allow the companies to offer value-added services in areas such as internet access and information services, Chinese state news agency Xinhua reported on Friday.
The companies included in the first batch of approvals are mainly Chinese affiliates of major overseas telecoms groups, such as German giants Deutsche Telekom and Siemens.
U.S.-China Tensions Hurt Foreign Firms’ Confidence, Chamber Survey Shows (Caixin)
Optimism and confidence among foreign companies operating in China fell last year amid headwinds including growing tensions with the U.S., intensifying competition, and rising labor and operating costs, a report published Wednesday by the American Chamber of Commerce in South China showed.
Even so, 91% of the 316 companies that took part in the chamber’s survey said they would not decouple from the Chinese market as a result of U.S. trade tensions, up from 86% in 2023, and 76% plan to reinvest in China this year, according to the annual Special Report on the State of Business in South China.
2025 Special Report on the State of the Business in South China (The American Chamber of Commerce in South China)
The 208-page bilingual 2025 Special Report on the State of the Business in South China, the 21st such endeavor, provides a comprehensive and quantitative analysis of the business community and valuable insights into the development trends in South China. This year, 316 companies participated in the study in total. The report provides constructive suggestions for enterprises in terms of future development strategy and investment layout.
This publication is researched and produced independently by AmCham South China and does not represent the opinions of the US or any other government or organization. AmCham South China does not receive any funds from any government in the production of this publication.
Mercedes-Benz China plans to cut workforce costs by 25% by 2027, source says (Reuters)
Mercedes-Benz is cutting 10-15% of sales and finance jobs in China and plans to reduce costs for office-based roles by a quarter in the country by 2027, a person with direct knowledge of the matter said.
The roughly 2,000 people working in research and development at Mercedes-Benz China will be unaffected by the cuts, the source added, in a sign that the carmaker is focusing heavily on adapting its products to the Chinese market where it faces a growing pool of domestic rivals.
The German luxury carmaker is cutting costs globally and warned last week that 2025 earnings would fall sharply from last year.
China’s government now allows companies to register data as assets (Rest of World)
Chinese firms generate staggering amounts of data daily, from ride-hailing trips to online shopping transactions. A recent policy allowed Chinese companies to record data as assets on their balance sheets, the first such regulation in the world, paving the way for data to be traded in a marketplace and boost company valuations.
But uptake has been slow. When China Unicom, one of the world’s largest mobile operators, reported its earnings recently, eagle-eyed accountants spotted that the company had listed 204 million yuan ($28 million) in data assets on its balance sheet. The state-owned operator was the first Chinese tech giant to take advantage of the Ministry of Finance’s new corporate data policy, which permits companies to classify data as inventory or intangible assets.
“No other country is trying to do this on a national level. It could drive global standards of data management and accounting,” Ran Guo, an affiliated researcher at the Asia Society Policy Institute specializing in data governance in China, told Rest of World.
Tech & Media
China Tells Its AI Leaders to Avoid U.S. Travel Over Security Concerns (WSJ)
Chinese authorities are instructing top artificial-intelligence entrepreneurs and researchers to avoid visiting the U.S., people familiar with the matter said, reflecting Beijing’s view of the technology as an economic and national security priority.
The authorities are concerned that Chinese AI experts traveling abroad could divulge confidential information about the nation’s progress. They also worry that executives could be detained and used as a bargaining chip in U.S.-China negotiations, in an echo of a fight over a Huawei executive held in Canada at Washington’s request during the first Trump administration.
AI has become the latest technology battleground between the U.S. and China, symbolized by the emergence of Chinese AI models from the likes of DeepSeek and Alibaba. They are challenging U.S. leaders including OpenAI and Google, and Beijing is increasingly pressuring its entrepreneurs in leading-edge fields to hew close to state interests.
Huawei improves AI chip production in boost for China’s tech goals (Financial Times)
Huawei has significantly improved the amount of advanced artificial intelligence chips it can produce, in a key breakthrough that supports China’s push to create its own advanced semiconductors.
The Chinese conglomerate has increased the “yield” — the percentage of functional chips made on its production line — of its latest AI chips to close to 40 per cent, according to two people with knowledge of the matter. That represents a doubling from 20 per cent about a year ago.
The move represents an important advance for Huawei, which has been rolling out its latest Ascend 910C processors, which offer better performance than its previous 910B product.
The improved yield means that Huawei’s production line for Ascend chips has become profitable for the first time, according to the people with knowledge of its business. The company has a goal to further improve yields to 60 per cent, in line with the industry standard for similar chips.
The breakthrough is a step forward for China’s hopes to build computing infrastructure that can support its burgeoning AI industry, despite US export controls designed to hamper the country’s ability to develop sensitive technologies.
DeepSeek rushes to launch new AI model as China goes all in (Reuters)
[…] the Hangzhou-based firm is accelerating the launch of the successor to January's R1 model, according to three people familiar with the company.
Deepseek had planned to release R2 in early May but now wants it out as early as possible, two of them said, without providing specifics.
The company says it hopes the new model will produce better coding and be able to reason in languages beyond English. Details of the accelerated timeline for R2's release have not been previously reported.
China’s Deepseek Plans For Weather Forecasting Face National Security Test (Bloomberg)
The China Meteorological Administration has discussed using DeepSeek to help power its predictions and weather observations as part of a push to leverage AI to sharpen its modeling. It’s a growing trend in the world of forecasting, with agencies in the US and Europe also assessing the technology.
But the innovation-versus-security tension is on full display in China. In draft regulations on meteorological uses of AI, the nation’s weather agency lists adherence to the “comprehensive national security concept” as the foremost guiding principle. The directives also empower the CMA to inspect the data and algorithms of AI weather model providers.
China’s ports adopt DeepSeek AI model to streamline operations, protect data (SCMP)
China’s home-grown technological innovations – like the DeepSeek large language model that has taken the artificial intelligence (AI) industry by storm – are enabling the world’s second-largest economy to empower industries and critical infrastructure to carry out their core functions with fewer concerns over data security.
Just over a month since the January launch of the latest model from the AI start-up that shares its name, three major ports in China have already implemented or are planning to adopt the tool for greater efficiency and service quality.
Hubei Port Group researcher Yu Jiaxiang said the use of domestic technology is “vital” to ensure data security in port operations, facility layout and cargo information.
“It also involves the stability and security of the supply chain,” Yu said.
The Ningbo-Zhoushan Port – the world’s third-largest container port by throughput in 2024 according to shipping news service Lloyd’s List – has begun integrating the DeepSeek model into its intelligent gate and customer service system.
Chinese surveillance providers embrace DeepSeek ()
Chinese cybersecurity companies’ adoption of DeepSeek will enhance online censorship and further Beijing’s desired indigenization of China’s tech ecosystem, experts said.
Alibaba to Spend $53 Billion on AI Infrastructure Over Three Years (Bloomberg)
Alibaba Group Holding Ltd. pledged to invest more than 380 billion yuan ($53 billion) on AI infrastructure such as data centers over the next three years, a major commitment that underscores the e-commerce pioneer’s ambitions of becoming a leader in artificial intelligence.
The internet company co-founded by Jack Ma plans to spend more on its AI and cloud computing network than it has over the past decade. Alibaba envisions becoming a key partner to companies developing and applying AI to the real world as models evolve and need increasing amounts of computing power, the company said on its official blog.
That target marks one of China’s biggest AI infrastructure budgets, underscoring Alibaba’s growing ambitions in the field. But it comes at a time investors are pondering whether big tech firms are overestimating future demand for AI services, or the capital needed to create them.
Chinese rivals to Musk's Starlink accelerate race to dominate satellite internet (Reuters)
The billionaire's Starlink communications network is facing increasingly stiff challenges to its dominance of high-speed satellite internet, including from a Chinese state-backed rival and another service financed by Amazon.com founder Jeff Bezos.
Shanghai-based SpaceSail in November signed an agreement to enter Brazil and announced it was in talks with over 30 countries. Two months later, it began work in Kazakhstan, according to the Kazakh embassy in Beijing.
[…]
Musk's primacy in space is seen as a threat by Beijing, which is both investing heavily in rivals and funding military research into tools that track satellite constellations, according to Chinese corporate filings and academic papers whose details have not been previously reported.
China launched a record 263 LEO satellites last year, according to data from astrophysicist Jonathan McDowell analyzed by tech consultancy Analysys Mason.
The emergence of competition to Starlink has been welcomed by Brazil's government, which wants high-speed internet for communities in far-flung areas but has previously faced off with Musk over commerce and politics.
[…]
Few of Musk's international rivals have the same ambition as SpaceSail, which is controlled by the Shanghai municipal government. It has announced plans to deploy 648 LEO satellites this year and as many as 15,000 by 2030; Starlink currently has about 7,000 satellites, according to McDowell, and has set itself a target of operating 42,000 by the end of the decade.
SpaceSail's launches will eventually comprise the Qianfan, or "Thousand Sails," constellation that marks China's first international push into satellite broadband. Three other Chinese constellations are also in development, with Beijing planning to launch 43,000 LEO satellites in the coming decades and investing in rockets that can carry multiple satellites.
"The endgame is to occupy as many orbital slots as possible," said Chaitanya Giri, a space technology expert at India's Observer Research Foundation.
China's rush to occupy more of lower-Earth orbit has raised concerns among Western policymakers, who worry that it could extend the reach of Beijing's internet censorship regime. Researchers at the American Foreign Policy Council think-tank said in a February paper that Washington should increase cooperation with Global South nations if it wanted to "seriously contest China's growing foray into digital dominance."
Tesla reportedly launches FSD in China — or has it? (The Verge)
Tesla is starting to push a software update to its customers in China that appears to fulfill a long-gestating goal for the company to offer its controversial Full Self-Driving features in its largest car market. Or does it?
According to Not a Tesla App, it’s unclear whether the version of FSD that Tesla is offering in China is the same as the one available in North America. For one thing, it’s not even called FSD, but rather, “Urban Road Autopilot Assistance” (URAA).
IBM shuts China research arm after lay-offs and revenue decline (SCMP)
US computing giant IBM is shutting down one of its major entities in China, 32 years after it was established to manage local research and development operations.
The decision follows last year’s lay-offs of over 1,000 employees at the IBM China Development Lab and China Systems Lab across several cities.
IBM (China) Investment Company Limited had “completed its mission” of carrying out development in China and would cease operation, a company representative said by email on Friday.
Science, Health & Environment
China aims to eliminate severe air pollution this year (Reuters)
China aims to effectively eliminate severe air pollution by the end of 2025, a senior environment official said, as authorities ramp up efforts in pollution control and emissions reduction in the "battle for blue skies."
China will improve its air quality forecasting and early warning systems and enhance coordinated management of harmful airborne particles known as PM2.5, as well as ozone pollution, said Li Tianwei, Director of the Department of Atmospheric Environment.
"The battle for blue skies remains unchanged," Li said according to a transcript on the Ministry of Ecology and Environment's website on Monday.
Though some progress has been made, air pollution remains a major problem in China and affects economies and people's quality of life, said the World Health Organization (WHO).
China missed key climate target last year, official data shows (HKFP)
China missed a key climate target in 2024 and emissions in the world’s second-largest economy rose slightly as coal remained dominant despite record renewable additions, official data showed Friday.
The figures mean the world’s biggest emitter is off-track on a key commitment under the Paris climate agreement, analysts said.
China prepares for wave of EV battery retirements (Dialogue Earth)
Faced with waves of retirements, the State Council last week passed an action plan to promote electric vehicle (EV) battery recycling, according to a Xinhua bulletin.
Details were not published but the plan called for more recycling regulation, and for speeding up work to establish and revise relevant standards, such as green design and product carbon footprint accounting, stated a Xinhua news piece.
Rain, Ruin, Repeat: The Chinese Villages Caught in Climate Chaos (Sixth Tone)
Months after the worst flooding Hunan province has seen in decades, villagers in the hardest-hit areas continue to struggle with displacement and instability. Experts warn that climate change is making such disasters more frequent and severe.
New China-Led Study Links Pesticides to Massive Ecological Damage (Sixth Tone)
The study, involving experts from multiple countries, reveals the harmful effects of pesticide use on non-target species, and urges urgent policy shifts toward eco-friendly alternatives.
Akeso: A little-known Chinese company made a drug that beat the world’s biggest selling medicine (CNN)
In September, Akeso, a little-known Chinese biotech company founded nearly a decade ago shook up the biotech sector with its new lung cancer drug.
Ivonescimab, the new drug, was found in a trial conducted in China to have bested Keytruda, the blockbuster medication developed by Merck that has raked in more than $130 billion in sales for the American behemoth that has dominated cancer treatment.
Patients treated with Akeso’s new drug went 11.1 months before their tumors began to grow again, compared with 5.8 months for Keytruda, according to clinical data released at the World Conference on Lung Cancer, a top medical forum.
Arts & Culture
Berlin film festival top prize for coming-of-age drama, best director for China’s Huo Meng (SCMP)
Dreams (Sex Love), a tender coming-of-age drama about a young woman’s first crush on a teacher and the art of writing won the Golden Bear top prize at the 75th Berlin Film Festival.
The grand jury Silver Bear prize was awarded to Brazilian filmmaker Gabriel Mascaro’s film The Blue Trail, a dystopian story set in the Amazon about an elderly woman who chooses to reject living the rest of her life in a senior housing colony.
Chinese director Huo Meng won best director for Living the Land, his feature about four generations of farmers.
The Golden Bear-winning film by Dag Johan Haugerud, starring Ella Overbye, is the last in a three-part series by the Norwegian director exploring emotional and physical intimacy.
Sports
US-born Eileen Gu's US$6.6m training budget censored on Chinese internet (HKFP)
Chinese authorities appear to have censored a document showing plans to spend more than US$6.6 million this year on training for two American-born winter sport athletes, including double-Olympic gold medallist Eileen Gu.
China Bans Teenage Go Player for Using AI to Cheat (Sixth Tone)
A 19-year-old Go player in China has been banned for eight years after using AI to cheat in a national tournament, sparking fresh debate over the role of technology in the centuries-old game.
Qin Siyue, an upcoming professional player, was suspended by the Chinese Weiqi Association (the governing body for Go in China), which also revoked her rank and nullified her results.
If you enjoyed this week’s edition, please like, comment, restack, or share it with others.
See you next week!