Welcome to Foreign Policy’s China Brief.
The highlights this week: Chinese President Xi Jinping balances wins abroad and challenges at home, Hong Kong businessman Jimmy Lai is sentenced to 20 years in prison, and a Panamanian court voids Chinese-linked port deals.
Welcome to Foreign Policy’s China Brief.
The highlights this week: Chinese President Xi Jinping balances wins abroad and challenges at home, Hong Kong businessman Jimmy Lai is sentenced to 20 years in prison, and a Panamanian court voids Chinese-linked port deals.
Xi’s Balancing Act
It’s the final week before the Lunar New Year, or the Spring Festival. This is traditionally a time when people take stock of the last year, businesses clear their books, and families prepare for reunions. But what does this moment look like for Chinese President Xi Jinping?
After years of so-called wolf warrior rhetoric, China’s relative quiet on the world stage in the last year is paying dividends. A flurry of leaders have recently visited Beijing, including British Prime Minister Keir Starmer and Canadian Prime Minister Mark Carney. This doesn’t reflect Chinese diplomatic skill so much as U.S. dysfunction: Even close U.S. allies seem to find China’s predictability preferable to U.S. President Donald Trump’s erraticism.
Xi can also point to a U.S.-China relationship in which the United States appears to be the supplicant. To the frustration of China hawks in his administration, Trump seems eager to strike a wider trade deal with Beijing, and belligerence has given way to open flattery. In readouts from a Trump-Xi call last week, Trump came across as fulsome, while the Chinese side was carefully optimistic.
At home, Xi’s position is grimmer. Post-pandemic economic and social malaise persists in China, but the most acute danger is political, especially with respect to the military. A sweeping purge carried out under Xi, culminating last month in the removal of top general Zhang Youxia, has shrouded China’s entire officer corps in suspicion.
Xi is increasing propaganda and tightening control to try to secure the army’s loyalty, but that approach is more likely to result in backstabbing than stability. In the worst-case scenario, it could tempt generals who believe they are doomed to make a run at the top. (As one famous Chinese historical lesson emphasizes, excessive discipline creates bad incentives for rebellion.)
Beyond fears of disloyalty, Xi’s purge has also created a governance problem. As Deng Yuwen points out, Xi no longer seems to trust military middlemen, which will force him to take on more decisions himself. Corruption in the personnel system was a major driver of the purge; now, promotions are likely in limbo until Xi personally signs off, leaving key military roles unfilled.
Similar bottlenecks will likely affect other areas of government. For example, there has been no new foreign minister since Qin Gang’s fall nearly three years ago. Wang Yi, the head of the Chinese Communist Party (CCP) committee on foreign affairs, continues to hold the post concurrently. Some vacancies may remain unfilled until the 21st National Congress of the CCP in late 2027.
There is no imaginary corps of technocrats waiting in the wings—only an aging, mistrustful leader and a lot of frightened people beneath him. The Chinese zodiac’s upcoming Year of the Fire Horse is said to bring forth new energy, though there’s little sign of it in China’s leadership.
What We’re Following
Takaichi wins big. On Sunday, Japanese Prime Minister Sanae Takaichi won a snap election, giving her party a supermajority in the lower house. The results are a firm rebuke to China: After Takaichi repeatedly suggested Japan might intervene in a Chinese attack on Taiwan, Beijing launched an unusually aggressive campaign against her—which only made her more popular.
A weak opposition helped fuel Takaichi’s victory, but her willingness to stand up to China certainly didn’t hurt. Since the election, Beijing has issued further warnings about Takaichi’s “militarism” and declined to offer congratulations on her electoral victory
Jimmy Lai sentenced. Former Hong Kong media tycoon Jimmy Lai has been sentenced to 20 years in prison—effectively a life sentence for a 78-year-old—in a case that has come to symbolize the collapse of free speech in the city.
A longtime opponent of the CCP, Lai was convicted last December on charges of conspiring to collude with foreign forces and publish seditious material. Lai’s case marks the longest punishment given thus far under a controversial national security law imposed in Hong Kong in 2020.
Lai is a British national, and his case has given fresh ammunition to critics in the U.K. Parliament who oppose London’s recent attempts to cozy up to Beijing. It’s also worth noting that Lai is an outlier within Hong Kong’s billionaire class, which largely accommodated CCP rule after 1997, as the city’s most powerful families retained their grip on the economy.
FP’s Most Read This Week
Tech and Business
Precious metals markets. With China’s economy still sluggish, investors have sought safe haven in precious metals. A burst of speculation pushed prices to record highs in January before sentiment abruptly turned. Silver briefly reached $120 an ounce and gold to $5,600, only to retreat to around $80 and $5,000, respectively.
Global instability emanating from the United States drove both the rally and the decline, though China’s regulatory moves also played a role. On Jan. 1, Beijing restricted silver exports to state-authorized platforms, largely to control supplies for photovoltaic manufacturing, which accounts for roughly 30 percent of all global silver trades.
Meanwhile, other investment vehicles have also suffered from China’s economic problems, notably the Asian art market, which has fallen sharply since 2020. Chinese art prices remain inflated after rising 15-fold between 2000 and 2020, sustained in part because it is a favorite vehicle for money laundering and high-end bribery.
Panamanian ports. China is likely to turn the screws on Panama after the country’s supreme court voided the port deals of a Chinese-linked firm in late January, ruling them unconstitutional. The Trump administration has urged Panama to scale back ties with Chinese companies, and China may see Panama as yielding to this pressure. (Beijing often refuses to acknowledge that other countries have genuinely independent court systems.)
In retaliation, China will likely draw on the same coercive economic tools it used against Norway over the 2010 Nobel Peace Prize being awarded to Chinese dissident Liu Xiaobo, or against Lithuania in 2021 for allowing Taiwan to open a de facto embassy.
The United States once condemned such tactics as bullying, but the Trump administration has increasingly used similar tools, weakening its claim to moral authority.
