China’s Strategic Moves Last Week Signal Shifts in Trade, Diplomacy, and Security

Last week marked an important moment for China as key decisions and developments unfolded across diplomacy, trade, security, and domestic governance. From renewed international engagements to shifts in economic and energy policy, these events highlighted how Beijing is navigating internal pressures while asserting its position on the global stage. Together, they reflect China’s ongoing effort to balance growth, stability, and influence in a rapidly changing world.

Canada and China Agree to Cut EV and Canola Tariffs, Resetting Trade Ties

• China and Canada took a major step in renewing economic cooperation during Canadian Prime Minister Mark Carney’s visit to Beijing. The two countries signed an initial agreement to reduce tariffs on electric vehicles and canola, aiming to lower barriers and strengthen strategic economic ties. Carney’s visit marked the first by a Canadian prime minister since 2017, signaling a thaw in relations after past trade tensions. The leaders discussed broader cooperation across energy, agriculture, and other sectors, pointing to a new era of engagement between Beijing and Ottawa.

China’s Trade Surplus Hits Record High as Economic Pressures Mount

• Official data show that China closed 2025 with a record annual trade surplus of nearly $1.2 trillion. Despite declines in exports to the United States, strong demand from other regions such as the European Union and Southeast Asia helped boost overall trade balances. This milestone highlights the resilience of China’s export sector, even as global economic headwinds and geopolitical trade tensions persist. Analysts say sustaining this performance will require continued diversification of export markets and stronger domestic demand.

Beijing Orders Chinese Firms to Drop US and Israeli Cybersecurity Software

• In a move tied to rising tech and national security concerns, Chinese authorities instructed domestic companies to stop using cybersecurity products from more than a dozen firms based in the United States and Israel. The list targets well-known brands and reflects Beijing’s intent to reduce dependency on foreign tech amid intensifying competition with Western nations. The directive is part of broader efforts to foster domestic alternatives and safeguard China’s digital infrastructure.

Lithium Prices Surge After China Announces Changes to Battery Export Tax Policy

• China’s plan to phase out export tax rebates on battery products triggered a significant spike in global lithium prices. The government announced that the existing value-added tax rebate for battery exports will be gradually reduced and eliminated by January 2027, prompting exporters to accelerate shipments ahead of the change. This policy shift aims to address industrial overcapacity and reshape competitiveness in the battery supply chain, with immediate effects on raw material demand.

Japanese Public Views China’s Military Growth as Top Security Threat

• A government survey in Japan revealed that a majority of Japanese citizens now regard China’s expanding military capabilities as their country’s foremost security concern. For the first time in recent years, China overtook North Korea in public perception as the leading threat, influenced by Beijing’s military modernization and activities near contested regional waters. While this survey reflects Japanese public opinion, it also signals broader regional unease over China’s strategic ambitions.

China’s Top Diplomat Begins Strategic Africa Tour

• China’s top diplomat, Foreign Minister Wang Yi, launched his annual New Year tour of Africa, focusing on strengthening strategic trade routes and partnerships. His itinerary included visits to Ethiopia, Somalia, Tanzania, and Lesotho, emphasizing infrastructure cooperation and resource access. Beijing’s engagement with African nations is part of its long-standing Belt and Road framework aimed at expanding markets and securing supply chains vital to China’s economic interests.

Securities Regulator Vows Tighter Market Oversight Amid Stock Rally

• With China’s benchmark stock index approaching a decade-high, the nation’s securities regulator pledged increased oversight to guard against excessive speculation and maintain market stability. The move comes as trading volumes surge and investors closely watch policy signals from Beijing. Tighter scrutiny aims to ensure orderly market conditions and protect investors as equity valuations rise.

China Urges Japan to Respect One-China Policy and Avoid Provocative Moves

• China’s foreign ministry reiterated its demand that Japan adhere to the one-China principle and avoid actions that might be interpreted as supporting Taiwanese separatism. This warning follows ongoing tensions between Beijing and Tokyo over regional security issues and diplomatic posturing. China also accused Manila of misrepresenting its actions in the South China Sea, underscoring Beijing’s firm stance on core territorial and sovereignty matters.

China Congratulates Uruguay on G77 Chairmanship at the United Nations

• At the United Nations, China extended congratulations to Uruguay for assuming the chairmanship of the Group of 77 and China for 2026. Beijing described the group as a key platform for advancing multilateralism and safeguarding the interests of developing nations. China reaffirmed its commitment to cooperating with G77 partners on global governance and development priorities, highlighting shared diplomatic goals on the international stage.

Japan Officially Protests China’s Resource Development in East China Sea

• Japan lodged a formal diplomatic protest with Beijing over a Chinese-built natural resource development structure in the East China Sea. Tokyo labeled the action “extremely regrettable” and raised concerns that the installation could infringe on disputed maritime rights. The incident comes amid ongoing tensions between the two nations over territorial claims and access to offshore energy resources, reflecting broader strategic competition in the region.

China’s Anti-Corruption Campaign Reaches Nearly a Million Officials in 2025

• A new analysis reveals that nearly 1 million Chinese officials were disciplined in 2025 under President Xi Jinping’s anti-corruption drive, one of the highest annual totals in decades. The campaign has increased scrutiny in sectors such as finance, defense, and energy and extended to provincial leaders and military officers. The aggressive enforcement aims to tighten party discipline ahead of major policy shifts in 2026.

U.K. Faces Domestic Pushback Over China’s Proposed “Mega Embassy”

• Plans by China to build a large new embassy complex in London sparked protests from British politicians and civil society groups who raised national security and surveillance concerns. Critics argue the development, on a strategic site near central infrastructure, could be used for intelligence gathering. The debate intensified just days before the U.K. government’s decision deadline.

Energy Talks After Halt in China’s Power Imports from Russia

• China and Russia entered negotiations after a halt in electricity exports from Russia to China, according to reports. The suspension was linked to rising power costs and infrastructure priorities in Russia’s Far East. Both sides indicated talks aimed at resuming trade, though details on terms have not been disclosed. The situation underscores ongoing cooperation challenges in the energy relationship between the two neighbors.

Record-High Trade Surplus Highlights China’s Export Strength

• Official data showed China’s trade surplus hit nearly $1.2 trillion in 2025, setting a new record even as exports to the United States declined. Growth in shipments to other regions, including Europe, Southeast Asia, and Africa, helped offset weaker U.S. demand. Analysts say robust export performance will be critical in sustaining China’s economy in 2026 amid global tariff pressures.

U.S. Criticizes Canada’s Decision to Allow Chinese EV Imports

• In a development tied to China’s role in global supply chains, U.S. officials publicly criticized Canada for agreeing to allow up to 49,000 Chinese-made electric vehicles into its market under reduced tariffs. The comments reflect broader tensions between the United States’ trade policy and China’s growing role in the EV sector, illustrating how China’s international economic ties can become flashpoints in global trade politics.

The events of last week underline how China continues to operate on multiple fronts at once. Economic adjustments, diplomatic outreach, regional disputes, and internal reforms all moved forward in parallel, showing a leadership focused on control, long-term planning, and global positioning. As these developments evolve, they are likely to influence not only China’s domestic direction but also its relationships with major economies and neighboring regions in the months ahead.

Fuel our creativity with a cup of coffee! ☕️❤️❤️❤️