This edition focuses on the quieter edges of the China-West-Taiwan rivalry, where espionage, technology, and supply chains increasingly overlap in plain sight. From Taiwan’s new tip portal to Beijing’s rebuttal of Five Eyes claims and the Jupiter Systems case, I see a shadow contest moving through websites, vendors, and civilian networks rather than only traditional state channels.

China-West espionage

Beijing turns the Five Eyes accusation back on the West

Chinese state media on Tuesday carried a sharp Defense Ministry rebuttal to Five Eyes claims that Chinese military intelligence has used online job platforms to recruit Western officials with access to classified material. In remarks published by Chinese state media, Defense Ministry spokesperson Senior Colonel Chen Xi called the allegation a politically motivated fabrication and said the Five Eyes countries had produced no evidence for what they describe as a “China spy threat.”

What makes this more than a routine denial, in my view, is that Beijing is trying to reverse the direction of the charge. Rather than simply rejecting the allegation, the Chinese side is arguing that the United States and its partners are the habitual practitioners of espionage, and Chinese official messaging in recent days has also warned that foreign intelligence services have tried to recruit photography enthusiasts inside China to take pictures of sensitive military sites and equipment.

I think that matters because it makes the episode look less like a clean case of accusation and rebuttal and more like a two-way espionage shadow war. The Five Eyes warning earlier this month described Chinese operatives as using professional networking and job sites to approach targets in government, defense, and related fields, while Beijing is now framing the West as using looser civilian channels of its own to gather military-related information inside China.

My read is that both sides are now fighting on two levels at once. One level is operational, where each suspects the other of using deniable civilian-facing tools to reach sensitive information. The other is narrative, where each wants outside audiences to see its own behavior as defensive and the other’s as manipulative, covert, and destabilizing.

What stands out to me most is how public all of this has become. Once intelligence accusations are pushed into official statements, alliance warnings, and state media messaging, the point is no longer just to stop a specific recruitment tactic. It is also to harden public opinion, justify tighter scrutiny, and normalize the idea that China and the Western intelligence bloc are locked in a persistent contest that now reaches into job boards, hobbyist networks, and the open internet.

Taiwan-China

Taiwan opens tip portal for mainland Chinese informants

What stands out to me here is that Taiwan is trying to turn China’s internal discontent into an intelligence opportunity, and it is doing so very publicly. Taiwan’s National Security Bureau launched an online “contact window” for Chinese nationals to submit political, military, economic, and social intelligence, saying the goal is to broaden its intelligence sources.

I read this as more than a technical move. Taipei is signaling that it believes there is a constituency inside China, or at least among Chinese abroad, that is disillusioned enough to cooperate if given a secure channel and clear operational guidance. The bureau has tried to lower the barrier by offering different instructions for users inside China and overseas, along with advice such as using foreign-brand devices, VPNs, and anonymous browsing.

To me, the bigger significance is that this is part of a widening information contest across the Taiwan Strait. Beijing previously launched its own reporting platform aimed at people accused of supporting “Taiwan independence,” and Chinese authorities said that system drew thousands of reports. That makes Taiwan’s new portal look less like an isolated initiative and more like a direct reply in an escalating battle over surveillance, narrative control, and psychological pressure.

Business and security

Behind the Screens

What struck me most in this piece is that the real story is not the screen technology itself but how quietly a small supplier can become embedded inside sensitive American systems before anyone treats it as a strategic problem. The Wire China reports that Jupiter Systems, a California maker of video wall processors used by every branch of the U.S. military, was acquired in 2020 by Beijing-based Suirui Group for $7.5 million without the deal being filed with U.S. authorities.

I think that matters because it shows how the front line of U.S.-China rivalry has moved far beyond the obvious targets like big chip firms or telecom giants. Once officials intervened, the Trump administration ordered Suirui to divest, and when that process stalled, a federal court placed Jupiter into receivership, which the article describes as the first such use of a court to enforce a presidential divestment order.

What I take from this is that Washington is now looking at ownership, procurement, and supply chain exposure as national security questions in their own right. The concerns in this case included Jupiter’s military customer base, Suirui’s ties to Chinese state-backed entities, Suirui’s reported pursuit of military business in China, and the risk that Chinese ownership could open a path to data access or disruption.

I also think the messiness of the unwind is part of the lesson. Even while U.S. authorities were trying to force a separation, Jupiter had increased sourcing from China after the acquisition, expanded staffing in Shenzhen, and still remained relevant enough that parts of the U.S. defense establishment resumed buying its products by late 2025 and again this year. To me, that is the clearest reminder that economic disentanglement sounds neat in policy speeches but looks much harder in the real supply chains that sit under national security.

Additional read: Foreign Affairs, “The False Promise of U.S.-China Stability,” argues that the current calm in U.S.-China ties under President Donald Trump is better understood as a shallow and fragile stalemate than as genuine strategic stability.

Je marche dans les ruelles de Da’an un soir d’été. L’air est lourd. Un groupe de jeunes me regarde un instant de trop. L’un murmure « Yindu ren ? » avant de détourner les yeux. Ce n’est pas un regard chargé d’une taxonomie raciale planétaire. C’est une désignation précise, presque administrative. Plus tard, dans un café de Yongkang, une conversation glisse sur les projets de recrutement de main-d’œuvre indienne. Les mots deviennent plus durs : sécurité, image du pays, préférence pour ceux qui « ressemblent à nous ». Mon corps, ma peau, mes traits ne déclenchent pas ici le même type de lecture automatique que dans d’autres espaces où la race est devenue une grille totale et morale. On me nomme « l’Indien », parfois « le Sud-Asiatique », plus rarement simplement « l’étranger ». Cette précision relative, cette absence d’un grand récit racial englobant, n’est pas un hasard. Elle révèle une tradition plus ancienne et plus persistante.

Cette tradition puise une partie de ses racines dans la coopération militaire allemande avec le gouvernement nationaliste des années 1920 et 1930. Des conseillers comme Max Bauer, Hans von Seeckt ou Alexander von Falkenhausen sont venus moderniser l’armée et l’industrie de guerre. Ils ont apporté des canons, des tactiques et surtout une certaine conception de l’ordre : l’État comme organisateur suprême, la hiérarchie comme condition de l’efficacité, la nation comme entité à discipliner. Plus tard, déjà à Taïwan, d’anciens officiers de la Wehrmacht ont été recrutés secrètement pour former les forces blindées du régime martial. Ces couches se superposent à la structure parti-État héritée du modèle léniniste et à un substrat plus ancien de distinction culturelle plutôt que raciale au sens biologique et universel.

Le résultat est une vision du monde qui reste fondamentalement étatique et particulariste. L’identité n’y est pas d’abord pensée à travers des structures universelles de l’expérience humaine. Elle passe par l’appartenance au projet national, à la discipline collective, à la raison d’État. L’autre, qu’il soit phénotypiquement différent ou culturellement éloigné, est rarement élevé au rang d’une variation au sein d’une humanité commune. Il reste un élément extérieur à gérer, à nommer précisément (« l’Indien », « le travailleur migrant », « le waiguoren ») et à subordonner aux impératifs de cohésion ou de sécurité.

D’autres traditions européennes ont suivi un chemin différent. Les Lumières françaises et le libéralisme anglo-saxon ont cherché à dégager des droits et des structures valables pour toute l’humanité, indépendamment des frontières étatiques. Certaines branches de la phénoménologie ont tenté de décrire les conditions universelles de l’expérience consciente. Ces approches, malgré leurs contradictions et leurs violences coloniales, portaient en elles une prétention au global. Elles pouvaient, en principe, traiter la différence comme une question qui concerne l’humain en tant que tel et non seulement le citoyen d’un État particulier. La tradition qui a influencé le ROC puis trouvé des échos en Asie de l’Est a préféré la construction étatique de l’identité. L’État n’est pas seulement un instrument : il devient le principal producteur de sens et de hiérarchie.

Cette différence se voit clairement quand on observe le Japon de l’ère Meiji. Lui aussi a massivement emprunté aux modèles prussiens pour sa constitution, son armée et son administration. La modernisation autoritaire et étatiste est devenue le chemin privilégié. En Chine continentale comme à Taïwan, malgré des trajectoires politiques opposées après 1949, la primauté de l’État-parti ou de l’État-nation sur l’individu et sur l’universel est restée forte. Même la démocratisation taïwanaise n’a pas entièrement effacé cette formation. Elle l’a transformée, rendue plus pluraliste sur certains plans, mais les catégories de différence restent souvent liées à l’appartenance nationale ou culturelle plutôt qu’à une ontologie raciale ou humaine globale.

C’est pourquoi une conception pleinement globale de la race, au sens d’une taxonomie universelle et biologisante applicable à toute l’humanité, n’a pas émergé ici de la même façon. La différence est pensée à l’intérieur d’un horizon étatique et particulariste. On peut observer du colorisme, des stéréotypes et des réactions xénophobes, surtout quand les échelles de migration changent. Mais ces réactions restent fragmentaires, instrumentales, rarement élevées au rang d’un grand système moral et scientifique qui structurerait toute la société et toute l’histoire. Elles ne produisent pas le même type de récit total que celui qui a dominé une partie de l’Occident.

Cette limite structurelle a des conséquences directes sur la question de la puissance globale. Une puissance globale, au sens plein, n’est pas seulement celle qui fabrique les puces les plus avancées, qui déploie des porte-avions ou qui signe des contrats d’infrastructure à travers le monde. C’est celle qui parvient à faire partager, au-delà de ses frontières, une certaine expérience du monde et de l’autre qui s’impose comme désirable ou au moins crédible. Or une tradition qui reste prisonnière d’une construction étatique de l’identité peine à proposer un tel horizon. Elle peut exercer de la contrainte économique ou militaire. Elle peut séduire par la performance technologique ou par des promesses de stabilité. Mais elle reste largement une puissance dans le monde plutôt qu’une puissance du monde.

Le débat actuel sur la course technologique entre les États-Unis et la Chine continentale rate souvent ce point. On compte les brevets, les usines de semi-conducteurs, les investissements dans l’intelligence artificielle. On oublie que la domination technique ne suffit pas à produire une hégémonie globale quand l’appareil perceptif et politique reste structuré par un particularisme étatique ancien. Taïwan elle-même, malgré son excellence technologique et sa démocratisation réussie, illustre à la fois la force et la limite de cette formation : elle a su transformer l’héritage autoritaire en une société ouverte sur de nombreux plans, mais elle reste une petite puissance dont l’influence normative dépend largement de son alignement avec des traditions plus universalistes.

La question n’est donc pas seulement de savoir qui gagnera la course aux puces ou aux modèles d’IA. La question est de savoir si la tradition qui structure encore largement les sociétés d’Asie de l’Est peut, un jour, penser et faire vivre un ordre du monde qui transcende son propre cadre étatique et historique. Tant que l’identité et la différence restent subordonnées à la construction étatique, la réponse reste négative. Même victorieuse dans la tech, cette tradition risque de produire une puissance impressionnante mais finalement régionale, capable de contraindre et de commercer, mais incapable de proposer une expérience du réel qui s’impose comme globalement désirable.

C’est ce que je vois, chaque jour, dans les rues de Taipei et dans les conversations des cercles d’analystes. Ce n’est pas une question de retard ou de manque. C’est une question de forme. Une forme étatique et particulariste qui, depuis les conseillers allemands des années 1930 jusqu’aux débats actuels sur la main-d’œuvre étrangère, continue de limiter la manière dont le monde est perçu et organisé. Et cette forme ne disparaîtra pas simplement parce que les usines tournent plus vite ou que les algorithmes deviennent plus puissants.

Note: Ce texte est une exploration phénoménologique en cours. Il ne prétend pas à l'exhaustivité historique ni à la démonstration empirique. Il s'inscrit dans une réflexion plus large que je développe sur l'endgame de la compétition sino-américaine : non pas seulement qui gagne en termes de capacité militaire, économique ou technologique, mais quelle tradition philosophique et politique est structurellement capable de produire un ordre mondial que d'autres sociétés peuvent habiter, adopter ou du moins reconnaître comme légitime. C'est cette question, plus que le compte des porte-avions ou des brevets déposés, qui me semble décisive pour comprendre ce qui vient. Le français de ce texte a été corrigé grammaticalement avec l'assistance d'un modèle de langage (LLM). Les idées, les observations et les arguments sont les miens.

This is a phenomenological exploration in progress, not a work of historical exhaustiveness or empirical proof. It is part of a broader reflection I am developing on the endgame of US-China competition: not merely who wins militarily or technologically, but which philosophical and political tradition is capable of producing a world order that others can inhabit and recognize as legitimate. That question, more than any patent count or carrier deployment, is what I believe will decide what comes next. The French version of this text was grammatically corrected with the assistance of an LLM. The ideas, observations, and arguments are my own.

Merci pour l’attention!

The China OSINT Course has officially started. I’m excited to begin sharing this training with students who want to build practical skills for researching Chinese sources, tracking narratives, investigating companies, and using OSINT methods in a China-focused context.

If you have been considering joining, there is still time to sign up. The course is self-paced, so new students can jump in and start working through the material right away.

Details on how to sign up:

Now, the newsletter continues.

The old “Chimerica” idea was always more of a hope than a plan, and that hope has largely collapsed. As Ben Kostrzewa put it, the world has moved away from a system where law and policy made it easy for capital, people, technology, and trade to flow freely across borders, and the supposed China-America economic fusion turned out to be, in his words, “chimerical.” That is the right word: what once looked like a durable partnership now looks more like a temporary illusion that was built on convenience, cheap capital, and selective optimism.

The bigger point is that this is not just about U.S.-China tension. It is about a broader shift toward economic security, political screening, and a much less naïve view of interdependence. For companies and investors, the message is blunt. The era of assuming that trade will outrun geopolitics is over, and anyone still planning as if the world is flat on economic issues is already behind the curve.

Washington stops pretending China’s corporate stars are just private companies

The Pentagon has added Alibaba, Baidu, and BYD to its list of “Chinese military companies,” pushing the roster to 188 entities and making clear that Washington now views a much wider slice of Chinese commercial power as strategically compromised. The official logic rests on China’s military-civil fusion system, which is a tidy way of saying the United States no longer believes China’s corporate giants can claim innocence while operating inside a political system built to serve state power when required.

This is not a full sanctions hammer, but it is still a serious hit. The designation raises reputational risk, complicates procurement access, and tells investors and partner governments that dealing with these firms now comes with a political odor that will not wash off easily. Bluntly, Washington has decided the “we are just normal companies” line is nonsense, and that judgment was probably overdue.

Xi goes to Pyongyang and brings one of the men who runs the palace

Xi Jinping’s June 8 to 9 visit to North Korea was his first trip there since 2019, and the symbolism was obvious. Reuters and other major outlets reported that Xi used the trip to pledge stronger ties with Kim Jong Un and to position China and North Korea as partners against “hegemony,” which is diplomatic language with all the subtlety of a brick.

The more interesting signal was who went with him. Cai Qi accompanied Xi to Pyongyang, and Cai is not some forgettable protocol aide hovering near the luggage carousel. He is Xi’s de facto chief of staff, a Politburo Standing Committee member, and one of the people who controls access, paperwork, messaging, and political discipline around the top of the system. When Xi brings Cai, he is saying the trip matters politically, not just ceremonially. In other words, Beijing was not dropping by for nostalgic revolutionary cosplay. It was showing that North Korea remains close enough to the core of Chinese power that Xi wanted one of his most trusted operators standing beside him.

That also says something uncomfortable about Beijing’s priorities. China talks endlessly about stability, but North Korea remains useful precisely because it is unstable in ways that can be managed and exploited. Beijing does not want Pyongyang fixed. It wants Pyongyang dependent, predictable enough, and firmly inside the tent. This was not a peace mission. It was power maintenance with flags and motorcades.

China’s coast guard move near Taiwan is intimidation dressed up as paperwork

After Japan and the Philippines said they would begin talks on delimiting their maritime boundary, China condemned the move and then sent coast guard patrols into waters east of Taiwan, later pairing that with a broader maritime control operation. The sequencing matters because it shows Beijing reacting to regional coordination the way it often does, with pressure, signaling, and legalistic theater.

This is the routine now. When neighboring states try to sort out disputes through talks, maps, and rules, Beijing acts as if that itself is provocative because it would rather preserve ambiguity and muscle its way through it later. Calling these operations “law enforcement” does not make them lawful or normal. It is coercion in a white hull and a bureaucratic press release. The irritating part for Beijing is that every stunt like this sells the same message to the region: cooperate more, because China clearly prefers dealing with countries separately when it can lean on them harder.

Reads

Trump 2.0: Is China Filling the Void? — Yun Sun (China Leadership Monitor)

Satellite imagery published by Reuters on May 29 reveals the most significant expansion of China’s nuclear ground infrastructure in decades: a sprawling complex of launch pads, bunkers, and communications nodes built across thousands of kilometers of northwestern desert. The revelation is the latest chapter in a broader, years-long transformation of the People’s Liberation Army Rocket Force (PLARF) across western China.

Satellite images have revealed that China is constructing an extensive network of more than 80 launch pads, bunkers, and communications nodes near its nuclear missile silos in the Hami basin of eastern Xinjiang. The infrastructure clusters around two large octagonal military complexes located 140 and 230 kilometers from the silo fields, with a third structure further south near the Lop Nur nuclear test site. Five security scholars interviewed by Reuters agreed the infrastructure broadly could support China’s nuclear programme, as well as other military purposes, though they cautioned that key details remain unknown, including the specific weapons China might deploy at the launch pads.

More than 80 pads are assessed as likely platforms for China’s expanding fleet of mobile missile launchers and air-defense batteries, while the complexes also feature electronic warfare nodes, satellite communications facilities, and hardened weapons depots.

Hans Kristensen, director of the Federation of American Scientists’ Nuclear Information Project, said that while it was difficult to conclude how the various installations would be used, “it is hard to rule anything out”. Crucially, Kristensen noted that the United States and Russia rely on a combination of sheer numbers of silos, their relative isolation, and hardened construction to deter a first strike, rather than extensive missile defense. China’s extensive defensive network near its silos potentially sets Beijing apart from both powers. “I’ve never seen anything quite like it,” Kristensen said. “It’s an extraordinary effort”.

This author confidently identified two of the three silo sites referenced in the Reuters report through open-source analysis of the Hami field. The first is located at 41°13’26.41”N, 91°30’1.65”E (Site 1). The second sits approximately 50 kilometers to the south at 40°25’32.79”N, 91°15’0.02”E (Site 2), consistent with the dispersed spacing characteristic of China’s silo fields, which are designed to complicate an adversary’s targeting calculus.

Construction at Site 1 began sometime in 2022, while construction at Site 2 began in 2021.

The Hami field spans approximately 396 square miles and is assessed to contain around 110 silos. The third site within the Xinjiang complex has not yet been independently confirmed.

I remain a little skeptical about the third location as it appears to be in the early stages of construction.

Site 1: 41°13’26.41”N, 91°30’1.65”E (Dated: 2025-09-11)

Site 1: 41°13’26.41”N, 91°30’1.65”E (Dated: 2026-05-26)

The Reuters revelation connects to a broader pattern of PLARF expansion documented in earlier original reporting for The Diplomat in October 2025, which found a new PLARF brigade taking shape near Golmud city on the Tibetan Plateau. That site features a central base compound linked by new roads to multiple prepared concrete launch pads in the configuration characteristic of road-mobile missile brigades. The Golmud site, under PLARF Base 64 headquartered in Lanzhou and associated with the 647th Missile Brigade, is assessed as likely deploying the DF-26, a dual-capable intermediate-range ballistic missile with a 4,000km range. Two officials from an Asian country confirmed the Golmud installations are linked to the PLARF’s broader force expansion and expressed concern about implications for India and Taiwan. Taken together, the Xinjiang silo network and the Tibetan Plateau brigade represent a geographic pincer: fixed ICBM deterrence in the north, and flexible road-mobile reach across South and Southeast Asia from the west.

Site 2: 40°25’32.79”N, 91°15’0.02”E (Timelapse)

Site 2: 40°25’32.79”N, 91°15’0.02”E (Dated: 2024-02-09)

The disclosures build on a drumbeat of escalating revelations. A Pentagon draft report in December 2025 assessed that China had likely loaded more than 100 solid-fueled DF-31 ICBMs across its three main silo fields at Hami, Yumen, and Ordos, marking the first time Washington had put a specific deployment figure on record. China is on track to surpass 1,000 operational warheads by 2030, a pace faster than any other nuclear-armed state. Beijing has consistently denied these developments contradict its no-first-use doctrine and pledge to maintain forces “at the minimum level required for national security”, though the Pentagon has noted China is pursuing an “early warning counterstrike” posture and has shown no appetite for arms control talks.

Honest assessment: Much remains unknown about the intended purpose of these structures. There is a clear military dimension, with assets observed moving in and out. As with this author's earlier research on the Golmud area, a pattern is emerging of unusual new structures that appear linked either to conventional military forces, including storage and logistics, or to nuclear infrastructure such as rail connections and silo missile systems.

A lot happened in Asia in the last 24 hours, and most of it connects. Xi Jinping is preparing to travel to Pyongyang, extending a diplomatic hand to Kim Jong Un days after shaking Trump's in Beijing. Trump, returning from that same summit, says he will call Taiwan's president, a move that would shatter nearly five decades of protocol and test just how durable any understanding he reached with Xi actually is.

Meanwhile, Jensen Huang is in damage-control mode, conceding that Huawei has largely taken Nvidia's place in the world's second-largest economy while insisting the door is not yet closed. Taken together, today's stories are less a set of isolated developments than a single, sprawling argument about who gets to set the rules in Asia and who is being left out of the room where those rules are made.

Xi Eyes Pyongyang: Beijing’s Korean Gambit

Chinese President Xi Jinping may visit North Korea as early as next week, according to South Korean officials cited by Yonhap, one of the most consequential diplomatic signals on the Korean Peninsula in years. The timing is deliberate: it follows Xi’s summit with President Trump in Beijing last week, where both leaders affirmed a “shared goal to denuclearize North Korea” in language notable for its vagueness and absence of any enforcement mechanism.

The groundwork was laid in April, when Foreign Minister Wang Yi traveled to Pyongyang and met Kim Jong Un directly, an unusually elevated encounter, while Chinese advance teams have since conducted protocol preparations in the North Korean capital. A state visit now would formalize what Beijing has been quietly constructing: a position as the indispensable broker between Washington and Pyongyang, allowing Xi to extract concessions from both sides while controlling the pace of any diplomatic opening.

Seoul have responded with careful diplomatic language, calling on China to “play a constructive role” on the Peninsula, barely concealing its unease that a Beijing-mediated track could route Korean Peninsula diplomacy entirely around South Korea. For the Trump administration, hungry for a foreign policy headline on North Korea’s nuclear program, the arrangement may prove difficult to resist. That is, of course, precisely why Beijing is offering it.

Trump and Lai: A Call That Would Break 47 Years of Protocol

U.S. President Donald Trump said on Wednesday that he would speak with Taiwan’s President Lai Ching-te, a statement that, if followed through, would mark the first direct conversation between a sitting U.S. president and a Taiwanese leader since Washington switched diplomatic recognition from Taipei to Beijing in 1979. The last time a U.S. leader publicly acknowledged speaking to Taiwan’s president was in December 2016, when Trump, then president-elect, accepted a congratulatory call from President Tsai Ing-wen, which itself was a break from four decades of protocol that prompted China to lodge a formal diplomatic protest and prompted Wang Yi to dismiss it as “a petty trick by Taiwan.” That was between a president-elect Trump and Tsai. A sitting president calling Lai would be a categorically different, and far more consequential, provocation.

The timing and context are critical. Trump made the remark aboard Air Force One on the return flight from his Beijing summit with Xi, telling reporters he needed to speak to the person “running Taiwan” about arms sales. That framing is significant: presenting a call with Lai as transactional, centered around weapons procurement, provides Trump with diplomatic cover. The call is purely business, not a policy statement on Taiwan’s status. Taiwan’s deputy foreign minister welcomed the prospect, calling it “a very good and rare opportunity.” Lai, for his part, has said he would use any such conversation to tell Trump directly that China, not Taiwan, is the party undermining stability in the strait.

Beijing’s reaction will be the key variable. In 2016, China’s response was deliberately restrained; Xi was calculating and did not want to antagonise an incoming administration. The dynamic in 2026 is fundamentally different: Xi has just hosted Trump, secured a joint denuclearization pledge on North Korea, and extracted at least implicit U.S. caution on Taiwan independence from the Beijing summit communique. A Trump–Lai call now arrives as a direct challenge to whatever understanding the two leaders reached in Beijing, and China’s response this time is unlikely to be so measured. The question isn’t whether Beijing protests, but how loudly they do so, and whether Trump uses Lai as leverage or genuinely intends to recalibrate U.S.–Taiwan relations after a week of appearing to favor Xi.

Huang Concedes China, But Won’t Walk Away

Nvidia CEO Jensen Huang has acknowledged that the company has “largely conceded” China’s advanced AI chip market to Huawei, a striking admission that crystallizes the cost of two years of escalating U.S. export controls. Huawei’s Ascend 910B processors have become the de facto standard for Chinese AI firms cut off from Nvidia’s flagship hardware, with Huawei on track to capture the largest share of China’s AI chip market in 2026, its sales up at least 60 percent year on year.

Yet Huang is not retreating entirely. Speaking this week, he argued that China will eventually open its market to U.S. AI chips, framing it as an economic inevitability: “The Chinese government has to decide how much of the local market it wants to protect and how much of the local market it wants to expand with more AI capacity.” Nvidia is also pursuing a license to resume sales of its H20 chip, a scaled-down GPU designed specifically for the Chinese market, and has received signals from Washington that approvals could follow.

The broader warning buried in Huang’s remarks deserves more attention than it has received. He has long cautioned that ceding the Chinese market does not simply cost Nvidia revenue; it actively cultivates a Huawei capable of exporting its AI stack globally, replicating China’s Belt and Road infrastructure model in the technology domain. Washington appears to be slowly recalibrating, but the market share Nvidia have surrendered in the interim may prove very difficult to claw back.

Thank you!

We’ve had a fantastic response to the upcoming China OSINT course! If you have already enrolled in Tier 1 or Tier 2, check your inbox—I just sent out the official syllabus. Full course access will go live during the first week of June.

I designed this program specifically for busy professionals who need an efficient way to level up their intelligence-gathering capabilities. As major consulting firms have recently highlighted, pairing advanced OSINT skills with AI will be one of the most powerful ways to future-proof and transform your career over the next decade.

The Week Xi Jinping Hosted the World — and Won

I’ve spent time in rooms where power is performed rather than exercised. This week in Beijing, Xi Jinping did both.

In the span of seventy-two hours, the Chinese president received Donald Trump and then Vladimir Putin, the man whose invasion of Ukraine made China Russia’s indispensable economic partner. The backdrop was the US-Iran war, which has sharpened the strategic importance of every energy and trade conversation now taking place in Asia.

Putin arrived in Beijing for his 25th official visit to China and was greeted with a formal welcoming ceremony outside the Great Hall of the People. He brought a large delegation, including five deputy prime ministers, eight ministers, and several business executives. The agenda covered bilateral relations, trade, energy cooperation, the Ukraine conflict, and the war between the US and Iran. The two leaders are also expected to sign a joint statement, while Putin later meets Premier Li Qiang to discuss trade and economic cooperation.

The relationship is not just diplomatic theatre. Bilateral trade between Russia and China topped $240 billion in 2023, more than doubling pre-Ukraine war levels, and China now takes roughly half of Russia’s crude oil exports.

One other detail matters here. FT reported that Xi privately told Trump that Putin might regret invading Ukraine, but both China and the US denied that account. That denial matters less than the fact that the story was even plausible enough to shape the diplomatic conversation around this visit.

What Xi and Putin Are Really Discussing in Beijing

Putin’s meeting with Xi in Beijing is being sold as routine diplomacy, but the agenda is doing the real talking. The two leaders are expected to cover bilateral relations, trade, energy cooperation, the US-Iran war, and Ukraine, which is a fairly precise way of saying they will discuss the pressure points now shaping the Eurasian order.

Energy sits at the centre of it. Russia wants to lock in longer-term demand from China, especially as the Middle East war keeps markets nervous, while Beijing wants a reliable supply at terms that still work in its favor. Trade is the other anchor, with Moscow leaning harder on China than at any point since the Ukraine war began.

Putin and Xi will discuss the Power of Siberia 2 pipeline, which has kind of stalled due to negotiations over the gas price.

Ukraine will be there too, even if Beijing avoids any public pressure on Moscow. And behind the formal language, this visit is still about the same thing it has always been about: proving that neither side needs to say too much in public because both already understand the value of the relationship.

Lai Ching-te to Trump and Xi: Taiwan’s Future Is Not Yours to Decide

The timing was not accidental. On the second anniversary of his inauguration, with Vladimir Putin sitting across from Xi Jinping just across the strait in Beijing, Taiwan’s President Lai Ching-te took to the podium in Taipei today to deliver a message aimed squarely at both capitals — and Washington.

“Taiwan’s future cannot be decided by external forces,” he said, “nor can it be held hostage by fear, division, or short-term interests. Taiwan’s future must be decided jointly by its 23 million people.” It was careful language, but the audience understood it perfectly. This was a direct response to Trump, who last week warned Taiwan against declaring independence after his Beijing summit with Xi, and who has been sitting on a $14 billion arms sale to Taipei, describing it openly as a negotiating chip with China.

Lai’s position has been consistent since he took office. He argues that Taiwan is already a sovereign, independent democratic nation and that the Republic of China and the People’s Republic of China are not subordinate to each other, meaning there is no “Taiwan independence issue” to resolve because independence already exists as a fact. Beijing, which labels him a “troublemaker” and a “destroyer of cross-strait peace,” sees it differently. China has not ruled out using force to bring Taiwan under its control and has steadily increased military pressure around the island since Lai came to power.

What makes this week different is the context. Lai is no longer just managing Beijing’s pressure. He is now managing Washington’s ambiguity too. Trump’s comments after the Xi summit introduced a new variable: an American president willing to use Taiwan’s security as a lever in a broader negotiation, at the exact moment China is reinforcing its position with Russia and watching the US consume military and political capital in Iran. Lai’s speech today was a reminder that Taipei has read the room, and is not planning to quietly accept whatever arrangement Washington and Beijing work out between themselves.

Democracy, Lai said, is not “a gift that fell from the sky.” For anyone paying attention to what is happening in Beijing this week, that line carried more weight than it might ordinarily.

Meanwhile, here are some other stories from the region.

Malaysia seeks compensation over scrapped Norwegian missile deal

Malaysia says it is seeking more than US$250 million in compensation from a Norwegian firm after the cancellation of a missile deal, an unusually sharp escalation in a procurement dispute that could ripple into defence ties and future contracting confidence. The case adds another layer to Southeast Asia’s broader push to diversify suppliers while managing cost, credibility, and geopolitical exposure.

Thailand tightens visa-free entry amid crime concerns

Thailand is cutting visa-free stays for more than 90 nationalities, citing concerns over foreign-related crime and abuse of the policy, a move that could affect tourism flows and regional travel patterns. The policy shift also shows how governments are increasingly using border rules as a domestic security signal, not just a tourism tool.

I rarely recommend work by other authors in Substack, but this revelation by Netaskari gives us a rare look into China’s surveillance of foreigners. I highly recommend following the Substack.

NetAskari

Sharp Eyes: Mass surveillance of foreigners in China - Part 1

In our line of work, you have to be lucky sometimes. In a previous post we explained how unsecured and forgotten dashboard and web pages can reveal a lot about China's security and surveillance system. Now, we can reveal a much more detailed insight into how such a system could look like in real life…

Read more

a month ago · 48 likes · 2 comments · NetAskari

Thank you!

Donald Trump’s 2026 visit to China produced plenty of optics and carefully chosen language, but no clearly documented major agreements. The most revealing part of the trip was not what was signed, but what Xi Jinping and Trump said in public, in side meetings, and in post‑summit interviews.

Read more

History is about to be made as U.S. President Donald Trump prepares to land in Beijing for the first time since his 2017 visit. In the intervening nine years, the world has witnessed a punishing trade war, a global pandemic, and a deepening sense of unease in Washington over China’s growing economic, technological, and military influence. This trip is not just a diplomatic formality; it is a potential turning point in one of the most consequential rivalries of the 21st century.

Exciting news for China watchers! I’m launching a new China OSINT course designed specifically for journalists, analysts, and researchers.

Master verifying Chinese media, tracking influence ops, and using China-specific tools — all in ~4.5 hours of self-paced video content with checklists and templates you can use immediately. Tier 2 adds satellite imagery training + certificate.

I have already had a few people sign up for early-bird pricing, which will remain open for another two weeks.

More details here:

Trump heads to Beijing for high‑stakes China visit

U.S. President Donald Trump will visit China from May 13 to 15 at the invitation of Chinese President Xi Jinping, China’s Foreign Ministry announced early Monday. The ministry posted the statement on the US social media platform X, confirming plans previously outlined by the US side.

The trip marks Trump’s first journey to China in almost nine years and is the first leader‑level visit from a sitting US president to Beijing since his own state visit in November 2017. Former US President Joe Biden did not travel to China during his term, leaving the bilateral relationship at the top level anchored in virtual summits and limited in‑person diplomacy.

Trump’s visit comes at a tense moment in the Middle East, where conflict triggered by US and Israeli strikes on Iran and its retaliatory attacks has raised fears of further escalation. The trip had originally been scheduled for March 31 to April 2 but was postponed so Trump could focus on managing the war in the region, and the crisis there is expected to be a central topic in the talks.

Relations between Washington and Beijing have grown increasingly strained during Trump’s second term, as the two sides spar over US tariff hikes, technology controls, and China’s tightening grip on rare earth elements, a sector in which it dominates global supply. In addition to the economy and technology, the two leaders are also expected to discuss Taiwan, which China claims as its own territory, following the recent US approval of large‑scale arms sales to the island.

The Rare Earths Deal Holds, For Now

A senior U.S. official confirmed on Sunday that the rare earths agreement between Washington and Beijing remains in force and has not lapsed, offering a measure of reassurance ahead of a critical diplomatic meeting. The statement came as President Trump and President Xi Jinping prepare to convene in Beijing on May 14 and 15, a summit that could determine whether the arrangement gets extended beyond its current timeline.

The deal in question was formalized in late October 2025 at a Trump-Xi meeting in South Korea, under which China agreed to suspend sweeping export controls on rare earth minerals for one year and begin issuing general export licenses. In return, Washington reduced tariffs on Chinese goods by 10% and suspended several Bureau of Industry and Security restrictions. The agreement is set to expire in November 2026, leaving roughly six months before both sides face the question of whether to renew it or let tensions resurface.

Despite the official optimism, the picture on the ground has been more complicated. Reports from late 2025 indicated that while China boosted deliveries of finished products like permanent magnets, American manufacturers were still struggling to source the raw inputs needed for domestic production. The official on Sunday acknowledged that discussions remain ongoing and that an extension, if any, would be announced “at the right moment”.

The Beijing summit will be closely watched for signals on whether both sides are willing to lock in a longer-term arrangement or let the deal drift toward expiration. With the November 2026 deadline on the horizon, industries from semiconductors to automotive to defense are waiting to see whether the current supply stability holds.

Ahead of President Donald Trump’s visit to Beijing, senior US officials have begun sketching out the tough‑tone agenda they expect to bring to the table in talks with Chinese President Xi Jinping. From Iran and Taiwan to AI competition and nuclear arms control, the White House is signaling that the meeting will be as much about managing rivalry as it is about securing limited cooperation.

Below is what officials are previewing, based on a tweet from Nick Schifrin of PBS NewsHour, which Asia Communique readers can also see alongside the photo.

Taiwan passes special defense budget but cuts key drone and air‑defense programs

Taiwan’s legislature has passed a special defense budget meant to upgrade the island’s air‑defense and missile capabilities, but it did so by sharply trimming the government’s broader plan in favor of narrowly defined US‑arms purchases. The result is a hybrid outcome: a politically significant boost to firepower against China, but with key indigenous and asymmetric programs left unfunded for now.

What was passed

Lawmakers approved a special defense budget of roughly NT$780 billion (about 24.8 billion dollars), about two‑thirds of the NT$1.25 trillion (roughly 40 billion dollars) package originally proposed by President Lai Ching‑te’s government. The enacted bill is structured around two main tranches:

• NT$300 billion to fund US‑approved arms packages already cleared by Washington, including High Mobility Artillery Rocket Systems (HIMARS), M109A7 self‑propelled howitzers, TOW 2B missiles, Altius‑700M and Altius‑600 drones, and Javelin anti‑armor missiles.

• NT$480 billion earmarked for a future US‑supplied arms package, contingent on Washington issuing letters of offer and acceptance (LOAs) and subsequent legislative review.

In practice, the passed budget is heavily skewed toward hardware that can be bought from the United States, with legislative approval tied directly to US‑certified sales lists rather than broad caps on capability‑type spending.

What was cut

The opposition‑led coalition deliberately excluded several elements of the administration’s original plan, arguing that the bill should focus on US arms and not on local industry development. The cuts affect three main areas:

1. Domestic industry and joint R&D
   The legislature removed funding for Taiwan‑US technical cooperation projects, including joint research and development and deeper industrial partnerships that would have helped build a “client‑vendor” relationship with the US defense sector. The DPP and defense officials have warned that this undercuts the goal of an indigenous defense industry and could weaken long‑term trust with Washington.

2. Unmanned systems and asymmetric capabilities
   The approved bill omits or defunds significant portions of Taiwan’s drone and counter‑drone programs, including coastal surveillance drones, smart vertical take‑off and landing drones, and related counter‑UAV systems. Government and party officials say this effectively removes about 40 percent of the original budget earmarked for UAVs and anti‑ballistic missile interceptors, undermining asymmetric deterrence against mass missile and drone attacks.

3. Integrated air‑defense and AI‑enabled command
   Funding for the so‑called “T‑Dome” multilayer air‑defense network, AI‑boosted command and control, and related battlefield‑networking kits was also cut from the special budget. Senior officials argue that without these components, Taiwan’s ability to manage a high‑intensity air and missile campaign after a first strike is significantly degraded.

What happens next

The Executive Yuan has signaled it will seek a separate special budget act specifically for the programs that were cut, especially local defense‑industry projects and layered air‑defense systems, since adding them to the annual general budget would push national debt beyond the 15 percent cap set by the Public Debt Act. For now, however, the NT$780‑billion bill is the centerpiece of Taiwan’s effort to deter China, coupling a record‑scale US‑arms package with a political compromise that leaves critical gaps in its long‑term defense architecture.

Thanks!

Over the past few years, I’ve spent a lot of time working across journalism, geopolitical analysis, and open-source research focused on China, Taiwan, and the wider Asia-Pacific. This course brings that experience into a structured format with recorded video lessons, practical methods, and tools you can apply directly in your own work.

What the course includes

The course is delivered through recorded video modules and includes step-by-step walkthroughs, downloadable checklists, and template searches you can reuse in your own investigations. It is designed for journalists, OSINT analysts, policy researchers, and serious independent researchers who need a clearer, more reliable way to navigate China-related information environments.

If you wanted to learn about signing up and mining the Chinese social media platforms for OSINT insights, this course is for you!

Topics include verifying information from Chinese media and social media sources, location verification, and building a working toolkit for investigating China-focused stories and networks. The core Tier 1 includes around 4.5 hours of self-paced content, while the Tier 2 will be everything in Tier 1, expanded to 6 hours with a satellite imagery component, plus certification and a personal reference from me.

Why I made it

There is a lot of interest in China-related OSINT, but much of the public material is either too basic or too scattered to be genuinely useful. My goal was to build something practical, direct, and usable for professionals who need methods they can trust under deadline pressure.

This is not a broad introduction to internet research. It is a focused course for people who want to work more effectively on China-related investigations and analysis.

I have worked with government clients and major corporations over the years as a consultant to help them counter emerging geopolitical threats.

Enrollment

If you want to join the first cohort, you can register here:

Stripe link for Tier 1 course: https://buy.stripe.com/8x29AUf6EfYp9ey1as0Ba02

Stripe link for Tier 2 course: https://buy.stripe.com/aFa14of6Eh2t9eyaL20Ba03

Please reply to the Substack post if you have decided to sign up for the course. Once the Stripe payment goes through, I will send you further details.

If you would prefer to pay with another method, such as Google Pay, UPI, or direct bank transfer, reply to this post or contact me directly, and I can arrange that separately.

Closing note

I’ve been encouraged by the level of interest so far, and I’m looking forward to sharing this with readers who want to sharpen their reporting and research skills on China. I hope the course becomes a useful resource for people doing serious work in this space.

If any questions about the OSINT course, please let me know!

The global artificial intelligence boom has triggered one of the most dramatic reshufflings in financial markets in decades — and nowhere is that transformation more visible than in Asia. From Seoul to Taipei, chip-led rallies are rewriting equity record books, adding trillions in market value and cementing the region’s role as the backbone of the world’s AI economy.

The Numbers Tell the Story

Asia is not merely participating in the AI revolution — it is manufacturing it. The continent controls approximately 90% of chip assembly and testing capacity and more than 75% of global semiconductor manufacturing. That structural dominance has translated directly into spectacular stock market performance: Asian semiconductor companies have collectively added $4.6 trillion in market value as AI-linked demand explodes.

The surge goes beyond the headline names. Bloomberg data shows that supply chain stocks — substrate makers, multi-layer ceramic capacitor (MLCC) producers, and advanced packaging specialists — have posted gains of 530% to 770% over the past year. As Saxo Bank strategist Charu Chanana put it plainly: “Asia is the backbone of the whole AI value chain.”

Seoul’s Moment in the Spotlight

South Korea is the standout story of this supercycle. The benchmark KOSPI index has surged over 75% in the past year, driven almost entirely by an unprecedented boom in memory chips essential for AI infrastructure. In late April 2026, the KOSPI broke through its all-time high, surpassing 6,347 points — and by early May, it had reached a stunning 6,822 in intraday trading, representing one of the most remarkable single-market runs in recent memory.

The total market capitalization of the Korean stock market crossed 6,000 trillion won as a result of the rally — a historic milestone that would have seemed unthinkable just eighteen months ago.

Samsung and SK Hynix: The Twin Engines

Two companies have driven this rally above all others: Samsung Electronics and SK Hynix. Both are dominant global suppliers of High Bandwidth Memory (HBM) — the specialized chip architecture that AI data centers critically depend on to run increasingly large language models. As AI model sizes and complexity grow, HBM demand has created supply constraints severe enough to send prices and profit margins sharply higher.

The performance of their stocks reflects this: Samsung shares have nearly quadrupled since the start of 2025, while SK Hynix has surged an extraordinary six-fold. In early May 2026, SK Hynix hit a fresh intraday record high of 1,399,000 won, rising 8.7% in a single session, while SK Square — its largest shareholder — jumped nearly 13% on the same day. Macquarie projects earnings growth for Korean semiconductor companies at 48% for 2026 alone.

Notably, despite these gains, Korean equities still trade at roughly a 30% discount to global peers — a persistent phenomenon analysts call the “Korea Discount,” rooted in concerns about chaebol corporate governance. For global investors, this means a world-class semiconductor sector remains attractively valued relative to its American counterparts.

The Ripple Effect Across the Market

The chip rally is not contained to pure-play semiconductor names. It is spreading across South Korea’s entire industrial ecosystem. Power equipment companies — seen as critical enablers of AI data center infrastructure — have benefited significantly. Hyosung Heavy Industries topped 4 million won intraday, while LS Electric also posted record highs.

On the junior KOSDAQ exchange, robotics and biotech stocks have advanced alongside the broader rally, with companies like Rainbow Robotics jumping sharply as investors anticipate a broader AI-driven industrial transformation. Foreign institutional investors have been piling into Korean equities, triggering circuit-breaker mechanisms on the Korea Exchange on particularly strong trading days.

Why This Rally Has Legs

South Korea’s government has officially designated 2026 as a “breakthrough year” for artificial intelligence, backing the private sector surge with state-level semiconductor funding and policy prioritization. Semiconductor exports hit $20.5 billion in one recent reporting period — up an extraordinary 102.7% year-over-year.

Global hyperscalers are projected to spend up to $655 billion in AI infrastructure capital expenditure in 2026, and Samsung and SK Hynix are positioned as the primary suppliers of the memory architecture that makes that buildout possible. JPMorgan analysts have noted that AI-driven tech growth is no longer a purely American story — it is spreading decisively beyond U.S. borders into Asia’s manufacturing heartland.

For investors watching global markets, South Korea’s chip miracle is no flash in the pan. It is the equity market expression of a structural shift: the world’s AI ambitions run through Seoul.

Japan has crossed an important threshold in its postwar security policy, formally opening the way for exports of lethal military equipment after scrapping the “five category” rule that had long confined defense transfers to non-combat uses.

The legal change matters less for its bureaucratic wording than for what it signals: Tokyo no longer sees defense exports as an embarrassing exception to be narrowly managed, but as a strategic necessity. The old framework reflected a Japan still constrained by postwar political instincts. The new one reflects a Japan that believes the regional balance has deteriorated enough to justify treating its defense industry as part of national power.

Under the revised Three Principles on the Transfer of Defense Equipment and Technology, exports will now be judged through a new distinction between “weapons” and “non-weapons.” Major systems such as destroyers and submarines will still require National Security Council approval, and transfers will be limited to 17 countries with existing defense equipment agreements, including the Philippines and Indonesia. But the larger shift is clear: the default posture has changed from avoidance to conditional enablement.

Tokyo is justifying the move on two grounds. The first is industrial. A defense sector that cannot export is expensive to maintain, hard to scale, and vulnerable in any prolonged contingency. The second is geopolitical. If Japan wants tighter security cooperation with like-minded states, shared equipment and supply networks matter. Interoperability is not just about joint exercises; it is also about whether partners can sustain operations with compatible platforms and components when a crisis actually comes.

Prime Minister Sanae Takaichi’s insistence that Japan remains a peace-oriented nation is politically necessary, but it also misses the deeper point. This is not a repudiation of pacifist language so much as its quiet dilution. Japan is still avoiding the symbolism of becoming a conventional arms exporter without restraint, but it is increasingly willing to behave like a normal middle power operating in a dangerous neighborhood.

The most consequential part of the revision may be the ambiguity. The government says exports to countries at war remain banned, yet it has left room for “special circumstances,” a phrase broad enough to matter in a regional emergency. That suggests Tokyo wants legal flexibility without fully admitting how far it may eventually go.

My read: this is less a sudden break than the formal recognition of a trend already underway. Japan has been moving steadily toward a more hard-edged view of security for years. What changed Tuesday is that the state is now aligning its export rules with that reality.

South Korea already built the model Japan is now moving toward

Japan’s shift on arms exports looks dramatic because of its postwar history, but in practical terms it is entering terrain South Korea has occupied for years. Seoul has already turned defense exports into a pillar of statecraft, using overseas sales to scale production, lower unit costs, and deepen security relationships. Japan is only now beginning to accept that defense manufacturing cannot remain strategically useful if it is locked inside a purely domestic market.

The comparison is uncomfortable for Tokyo. South Korea’s defense exports have surged from roughly $3 billion annually in the mid-2010s to more than $14$14$14 billion in orders in 2022, driven by deals for K2 tanks, K9 howitzers, and FA-50 light combat aircraft. Poland alone signed framework agreements in 2022 covering hundreds of tanks and howitzers. By contrast, Japan’s arms export regime remained so restrictive that even when rules were loosened in the past decade, actual transfers stayed limited and politically sensitive.

That matters because Southeast Asia is becoming a key market for middle-power defense diplomacy. If Japan wants to compete there, it is no longer enough to offer development aid, coast guard assistance, or political goodwill. It needs a faster and more commercially viable defense export system. South Korea has already shown that arms exports can translate into influence. Japan is now, belatedly, drawing the same conclusion.

The Philippines is the clearest frontline partner

If Japan is looking for a test case for its new export framework, the Philippines is the obvious candidate. No Southeast Asian country has been more exposed to direct Chinese maritime pressure in recent years, and no U.S. partner in the region has moved faster to rebuild external defense ties. That makes Manila both strategically important and politically easier for Tokyo to justify.

The two countries already have a growing security relationship. Japan has provided coastal surveillance radars to the Philippines, expanded joint exercises, and supported maritime capacity-building. The Philippines has also granted the U.S. access to nine sites under the Enhanced Defense Cooperation Agreement, up from five previously, underscoring how central it has become to the regional deterrence network. Meanwhile, repeated confrontations at Second Thomas Shoal and elsewhere have made clear that Manila needs more than diplomatic backing.

The significance of Japan’s shift is that it could now move beyond the old caution that kept transfers tightly boxed into non-combat functions. Even if the first wave remains limited to surveillance systems, patrol-related equipment, or dual-use platforms, the political threshold has changed. Japan is starting to treat the defense capacity of partners like the Philippines as part of its own security environment, not just something to support from a distance.

Indonesia is the harder but more revealing test

Indonesia matters for a different reason. The Philippines fits neatly into the story of frontline balancing against China; Indonesia does not. Jakarta still prefers strategic ambiguity, avoids formal alignment, and frames its security choices in terms of autonomy. If Japan can build meaningful defense export ties with Indonesia under those conditions, it will show that its new policy is not only about supporting countries already in open friction with Beijing.

Indonesia is Southeast Asia’s largest economy and has a population of around 280 million, giving it weight that goes beyond any single procurement deal. It has pursued military modernization across air, naval, and missile domains while trying to diversify suppliers. That makes it attractive to every major defense exporter. For Japan, success in Indonesia would signal that it can become a durable part of the region’s defense industrial ecosystem rather than a niche provider to a few politically aligned partners.

This is where Tokyo’s new rules will face a market test. Strategic logic alone will not be enough. Japanese firms will have to prove they can compete on price, delivery timelines, maintenance, and financing. If they cannot, the policy shift will remain geopolitically important but commercially thin. If they can, Japan will start to gain a kind of influence in Southeast Asia that is subtler than alliance politics but potentially more enduring.

China will see encirclement, but its own behavior drove this

Beijing is unlikely to read Japan’s move as a technical policy update. It will see it as another step in the consolidation of a regional security order designed to constrain China’s rise. That interpretation is predictable, but it also leaves out the key point: China’s own coercive behavior has made policies like this easier to sell across Asia.

The background is hard to ignore. China has intensified military pressure around Taiwan, maintained regular coast guard and maritime militia operations in disputed waters, and continued pressure near the Senkaku Islands in the East China Sea. Japan’s defense budget trajectory already reflected that shift. Tokyo has been moving toward a target of around 2% of GDP in defense spending by 2027, roughly doubling spending from previous levels over a five-year period. The arms export revision sits inside that broader strategic turn.

So while Beijing will denounce Japanese “militarization,” the accusation has lost some of its force in the region. Many Asian states now see Japanese normalization as reactive rather than revisionist. That does not mean they are comfortable with every step Tokyo takes. It means the old fear of Japan has been increasingly overtaken by the more immediate reality of Chinese power.

Washington wants allies that can produce security, not just consume it

From Washington’s perspective, Japan’s decision is not just welcome; it is overdue. The United States has spent the past several years pushing allies to strengthen their own defense industrial bases, raise military spending, and develop capabilities that can function in a real contingency. That logic has become sharper as U.S. planners focus on the scale of a possible Indo-Pacific conflict.

The war in Ukraine exposed a broader problem: even advanced economies struggle to sustain high-intensity military production over time. Munitions stockpiles deplete quickly, production lines take time to expand, and supply chains become strategic vulnerabilities. Those lessons have carried directly into Asian planning. Japan’s decision to treat defense exports as part of industrial resilience suggests Tokyo now accepts that wartime sustainability depends not just on what a country fields today, but on what it can build and share tomorrow.

This is the real strategic backdrop. The United States is still the central security actor in the Indo-Pacific, but it increasingly wants a networked system in which allies help generate capacity. Japan’s export reform fits that model. It is less about selling weapons for profit alone than about building a defense ecosystem that can hold together under stress.

Asia’s middle powers are becoming more comfortable with hard power

The wider trend goes beyond Japan. Across the region, middle powers are showing a greater willingness to connect industrial policy, deterrence, and strategic alignment. They still use cautious language — resilience, stability, capacity-building — but the substance is becoming harder-edged.

Australia has expanded defense cooperation through AUKUS and major missile and shipbuilding plans. South Korea has turned its arms industry into an export engine. India continues to push defense indigenization while broadening security ties with the U.S. and its partners. Japan’s policy change fits this pattern: a region that once relied heavily on economic integration and U.S. primacy is now preparing more seriously for prolonged strategic competition.

One useful data point is military spending. According to SIPRI trendlines over recent years, Asia and Oceania have remained one of the fastest-growing regions for defense expenditure, with China, India, Japan, South Korea, and Australia all increasing spending in response to a more contested security environment. The exact numbers matter less than the direction. The region’s major players are not demobilizing into interdependence; they are rearming under it.

When Airspace Becomes Leverage: China, Taiwan, and a Canceled Visit

A recent episode involving Taiwan President Lai Ching-te highlights how the contest between Beijing and Taipei is expanding into new domains.

Seychelles, Mauritius, and Madagascar denied overflight access to Lai’s aircraft, forcing him to cancel a planned visit to Eswatini. China welcomed the move as support for the One China principle. Taiwan, in contrast, described it as political coercion.

On the surface, this looks procedural. In reality, it signals a shift. Taiwan’s leaders have long managed international travel even without formal diplomatic recognition from transit countries. Blocking airspace access moves beyond symbolic isolation and into direct operational constraint.

The destination itself matters.

Eswatini is a small, landlocked country in southern Africa, bordered by South Africa and Mozambique. It is also the last African state that maintains official diplomatic ties with Taiwan. Over the past few decades, nearly every other country on the continent has switched recognition to Beijing, largely driven by economic incentives and political alignment.

For Taiwan, relationships like the one with Eswatini are not just ceremonial. They are central to maintaining formal international space. Presidential visits serve to reinforce these ties through development aid, political engagement, and visibility on the global stage.

Lai’s trip was meant to do exactly that. Strengthen one of Taiwan’s remaining partnerships and signal continued diplomatic relevance.

The disruption of that visit points to something broader. China is not only limiting Taiwan’s recognition but also increasingly shaping the conditions under which it can operate internationally. Its influence now reaches into decisions made by countries geographically distant from the Taiwan Strait, affecting even the logistics of travel.

What stands out is the compliance of states with limited direct stakes in cross-strait tensions. Their decisions suggest that alignment with Beijing is often driven less by ideology and more by material considerations and long-term strategic positioning.

In that sense, this was not just a canceled trip. It was a demonstration of how pressure on Taiwan is becoming more practical, more global, and harder to bypass.

Thank you for reading!

If you only remember three numbers from the last 24 hours, make them these:

• 109 – the Brent crude price in early Monday trading, up roughly 50% since the Iran war began.

• >90% – how much maritime traffic through the Strait of Hormuz has collapsed compared with a year ago.

• 3,100+ – the combined war dead in Iran and Lebanon so far, with millions displaced.

For Asia, that’s not “somebody else’s war.” It is a live‐fire stress test of energy security, sea‑lane protection and economic resilience.

1. Hormuz shockwaves: Asia’s risk is now quantified

Overnight, U.S. and Israeli airstrikes on Iranian cities killed more than 25 people, hitting sites from Tehran’s Sharif University gas facility to residential neighborhoods in Eslamshahr, Qom and other cities. One strike near Eslamshahr alone killed at least 13 people; another in Qom killed 5, with 6 reported dead in additional cities and further casualties when a home in Tehran was hit.

Iran’s answer was to fire missiles at Israel and Gulf Arab states as U.S. President Donald Trump’s Tuesday deadline to reopen the Strait of Hormuz looms. In parallel, Tehran has let some ships pass while blocking vessels from the U.S., Israel and “allied” countries; overall traffic through Hormuz is down by more than 90% compared with the same period last year. That effectively weaponizes a chokepoint that normally carries around one‑fifth of global oil consumption in peacetime.

The market response is already visible in Asia. Brent crude has jumped to around 109 dollars a barrel, about 50% higher than when this war began five weeks ago. Asian equities that were open on Monday actually rose, suggesting investors are betting on eventual de‑escalation, but AP’s live tally puts the death toll at over 1,900 people in Iran and more than 1,200 in Lebanon, with millions of civilians displaced and fuel prices surging across the region.

For ports, airports and logistics operators, this is moving from abstract tail risk to base case. A Fitch Ratings assessment warns that prolonged Iran‑linked disruption to shipping routes and airspace will have “mixed but increasingly negative” credit effects on Asia‑Pacific ports and airports. The main tail‑risk scenario they flag is exactly what we are now flirting with: an extended or repeated closure of Hormuz that amplifies volume and cost shocks across energy, bulk and container supply chains.

A few Asia‑specific takeaways for readers who think in balance sheets and flight schedules rather than war maps:

• Indian ports are projected to face volume pressure if disruption continues, as freight rates, port congestion and scheduling chaos rise, even if the macro hit is “manageable” in the base case.

• Chinese importers will need longer‑haul replacement cargoes if Gulf supply stays unreliable, which means higher shipping and insurance costs baked into every barrel and container.

• Asian airports, especially in India, are likely to see traffic volatility as airlines cut or reroute West Asia flights and adjust fares for the new jet‑fuel reality.

Policy angle: for defense ministries, the headline is that sea‑lane protection and Gulf basing access are no longer luxury topics reserved for strategy papers. They are now directly linked to inflation, balance‑of‑payments risk and domestic political stability in Delhi, Tokyo, Seoul and beyond.

2. Taiwan: “Peace mission” optics vs. hard power arithmetic

While missiles arc over West Asia, Taipei is dealing with its own balancing act: an opposition “peace” visit to Beijing against the backdrop of stalled defense spending.

Taiwan’s main opposition leader Cheng Li-wun from the Kuomintang (KMT) is due in China this week for what is billed as a five‑day “peace mission,” the first such trip by a KMT chair in years. It comes just as Beijing has steadily increased military pressure around the island and as Taiwan’s opposition‑controlled parliament has been dragging its feet on a major extra defense budget sought by the government and encouraged by Washington.

The numbers behind the politics matter:

• Taiwan’s military has already warned that delays in approving funds are threatening around 2.4–3.1 billion dollars in weapons purchases and training, including elements of critical U.S. arms packages.

• The legislature only recently authorized the government to proceed with 9 billion dollars in previously stalled U.S. arms deals, underscoring how much is already backlogged even before you factor in any new spending.

Beijing will try to spin this week’s visit as proof that “peaceful reunification” has real support within Taiwan’s political class, especially if it can stage images of smiles in the Great Hall of the People while PLA aircraft keep up their now‑routine drills around the island. The ruling Democratic Progressive Party, in turn, will argue that under‑funding deterrence while chasing symbolic dialogue only deepens the asymmetry across the Strait.

For policy insiders, the key question is not whether dialogue is good or bad—it is whether Taipei can credibly fund and field the asymmetric capabilities (mobile missiles, mines, air defense, resilient C2) that recent U.S. and Taiwanese strategy documents have called for, at the same time as one major party is normalizing high‑profile visits to Beijing. That is the kind of contradiction Beijing is very good at exploiting.

3. Korean Peninsula: one drone, one apology, and a nuclear backdrop

In Seoul, yesterday’s big security story wasn’t a missile launch but a drone flight—and an unusually contrite response.

South Korean President Lee Jae‑myung used a cabinet meeting on Sunday to express “regret” to North Korea after an investigation concluded that a civilian‑run drone operation had violated the North’s airspace, an incident Pyongyang had earlier treated as a serious provocation. Prosecutors have now charged a man in his 30s for illegally operating the drones, and the probe found that an employee of the National Intelligence Service and a serving military officer were involved, turning what might have been dismissed as a stunt into an institutional embarrassment.

Lee’s message was twofold: reassure Pyongyang that this was not official policy, and tell his own public that the South’s constitution does not allow individuals to freelance escalation against a nuclear‑armed neighbor. For North Korea, though, the episode is a propaganda gift: it can point to involvement by South Korean officials as proof that “hostile acts” are systemic, not isolated, while continuing to justify its own hypersonic missile tests and nuclear force build‑up proclaimed at a parliamentary session last month.

From a risk‑management perspective, the numbers are what make this unnerving: one unauthorized drone mission, one prosecutable case, and potentially one miscalculation away from a crisis in a theater where both sides now openly plan around tactical nuclear use rather than mere conventional skirmishes. That’s why Seoul is so keen to close this particular file quickly and publicly.

4. Why this matters if you’re in Delhi, Tokyo or Taipei

For subscribers who want to connect the dots rather than doomscroll, here’s how today’s data points translate into medium‑term questions:

• Delhi: With Hormuz shipping volumes down over 90% and Brent up 50%, India’s combination of energy import dependence and ambitions as a logistics hub will be under sustained pressure. How far can New Delhi lean on discounted flows from Russia and ad‑hoc Gulf diplomacy before it has to invest more in blue‑water naval capabilities and multilateral escort frameworks?

• Tokyo: Japanese growth is already being dented by war‑related energy costs and supply chain jitter; the same Fitch assessment flags rising costs and congestion risks for Asia‑Pacific ports and airports if disruption persists. Do Japanese voters tolerate the higher defence outlays and energy prices needed to de‑risk the system, or does economic pain erode support for the country’s security overhaul?

• Taipei: If Taiwan’s opposition can block or slow multi‑billion‑dollar defence packages while showcasing warm optics in Beijing, the island risks sending mixed signals about its willingness to pay the price of deterrence. That ambiguity is precisely what can invite more coercive PLA activity over time

If you’re trying to make sense of a world where the post-Cold War order is in full retreat, your bookshelf needs refreshing. I spent the last few days cross-referencing Publishers Weekly’s Spring 2026 catalog, publisher announcements, and advance review copies to separate the books that genuinely matter from the noise. Here’s what made the cut.

I am currently reading Chokepoints: American Power in the Age of Economic Warfare by Edward Fishman. Chokepoints is an excellent read that captures the current disruption to the global economy caused by ongoing conflicts.

THE CHINA BEAT

• The Wall Dancers: Searching for Freedom and Connection on the Chinese Internet — Yi-Ling Liu (Knopf, Feb 2026) Flips the lens inward and looks at how ordinary Chinese navigate state control and self-expression online. The contrast between Shambaugh’s macro view and Liu’s ground-level reporting is genuinely illuminating.

IRAN, THEN AND NOW

Stolen Revolution: Betrayal and Hope in Modern Iran — Bozorgmehr Sharafedin & Yeganeh Torbati (Doubleday, Jun 2026) Six dissidents profiled across five decades — from the 1979 revolution through the woman-life-freedom movement. Torbati and Sharafedin are Reuters journalists who covered Iran from the ground, and this reads like the book-length version of the reporting they've been doing while the rest of the world looked away.

ISRAEL & THE MIDDLE EAST RECKONING

• Israel: What Went Wrong? — Omer Bartov (FSG/Random House, Apr 23, 2026) Bartov is one of the world’s leading historians of the Holocaust and genocide. The question he asks here — how did a state founded after the Holocaust come to embrace ethnonationalism and face credible war crimes allegations — is one you can’t dodge if you want to understand this conflict. Not comfortable. Necessary.

ECONOMIC DISORDER AS GEOPOLITICS

• The Doom Loop: Why the World Economic Order Is Spiraling into Disorder — Eswar S. Prasad (Hurst Publishers, Feb 5, 2026) Prasad has been tracking global financial architecture at the IMF and Cornell for two decades. His argument: globalization didn’t just create winners and losers — it built the conditions for systemic instability, currency weaponization, and political backlash across continents. Trade wars aren’t trade policy anymore. They’re statecraft.

• The Information State: Politics in the Age of Total Control — Jacob Siegel (Henry Holt, Mar 24, 2026) Siegel argues that the fight against “disinformation” has itself become a control architecture — a fusion of tech platforms and state power that goes back to the post-9/11 “war on terror” playbook. Read this alongside Prasad and you’ll see the same pattern: infrastructure being weaponized faster than democratic institutions can adapt.

THE BROADER MAP

• How Africa Works: Success and Failure on the World’s Last Developmental Frontier — Joe Studwell (Grove Press, Feb 17, 2026) Studwell’s How Asia Works was quietly one of the best development economics books of the last decade because he actually went to the factories and talked to the policymakers. He does the same thing for Africa. Most Western analysis of Africa is either poverty porn or growth-boosting cheerleading. This is neither.

  

• To Dare Mighty Things: U.S. Defense Strategy Since the Revolution — Michael E. O’Hanlon (Yale University Press, Jan 13, 2026). O’Hanlon is a senior fellow at Brookings. This is 250 years of American defense strategy — not as celebration, but as analysis. If you want to understand why the US behaves the way it does when power shifts, you need this context.

  

• Bonfire of the Murdochs: How the Epic Fight to Control the Last Great Media Dynasty Broke a Family—and the World — Gabriel Sherman (Simon & Schuster, Feb 3, 2026) Not strictly geopolitics, but media infrastructure shapes geopolitics more than most analysts want to admit. Sherman tracks the Murdoch succession battle and its downstream effects on democratic institutions across three continents. If you think media ownership doesn’t matter for foreign policy, you haven’t been paying attention.

  

• Data Empire: A Human History of Records and Rule — Roopika Risam (Harper, Jul 14, 2026) Data has been the key lever of political control for 11,000 years, and Risam traces the full arc from ancient record-keeping to modern surveillance states. This is the deep-history companion to Siegel’s book — different timescale, same uncomfortable conclusion.

  

  Thanks!

Hello Readers,

Quick update on what’s happening here.

When I started Asia Communique six years ago, the goal was to build a serious, sourced voice on Asian geopolitics — no spin, no hot takes. That hasn’t changed.

But I’ve kept almost everything free, and that was a mistake. The readers who actually get real value from this — the deep analysis, the monthly forecasting, the source-level breakdowns — deserve a dedicated paid tier. The current free-heavy model doesn’t serve anyone: free readers get a product they aren’t invested in, and the signal of what this is actually worth gets lost.

Here’s what changes starting April 6:

What stays free: Breaking commentary, weekly summary digests, and one flagship analysis piece per month. You can still read the publication regularly at no cost.

What moves to paid ($10/mo):

If you’re already a paid member. All existing paying members get the same paid version at the existing cost. Those who subscribe before April 6th will also keep the existing $6 price.

I'm not going anywhere either way. The free tier stays real, and the paid tier becomes a product worth paying for.

— Aadil

India and China host two of the world’s largest think-tank ecosystems, both in absolute numbers and in regional influence. Yet the relationship between these institutions and the state differs sharply, shaping how reliable their analysis is when government interests are at stake. This newsletter-style report proposes a simple framework focused on formal affiliation, funding sources, and elite circulation to rate the reliability of leading Indian and Chinese think tanks as sources for independent insight.

Rather than ranking all institutions, the report spotlights a curated set of high‑visibility foreign policy and public-policy think tanks in each country. It groups them into three broad reliability bands—”Relatively Independent”, “State‑Adjacent/Hybrid”, and “State‑Embedded”—and explains what that means in practice for journalists, policymakers, and analysts engaging with their work or events.

Note: I am not affiliated with any of these think tanks. The guide is to help media outlets and researchers.

Methodology and Caveats

Read more

One year after President Trump unveiled his “Liberation Day” tariffs from the Rose Garden, a new and uncomfortable reality is crystallizing for Washington. The world has been taking notes — and taking action. From the Persian Gulf to rare-earth processing plants in China, rival nations are no longer simply absorbing American economic pressure. They are redirecting it.

The Strait That’s Shaking the Global Economy

The Strait of Hormuz is a narrow waterway, but the numbers it carries are enormous. About 20% of the world’s oil and gas passes through it daily. Since late February, when the United States and Israel began military operations against Iran, it has been effectively closed.

The economic fallout has been swift. Analysts at Evercore ISI downgraded U.S. GDP growth projections for 2026 from 2.8% to 2.2%, with a corresponding uptick in core inflation. Fuel surcharges are trickling into food distribution. Shipping rates for imported goods have jumped sharply. And with midterm elections on the horizon, the political pain is intensifying alongside the economic pressure.

In a Wednesday night address, Trump framed the situation coolly, noting that the United States receives “almost no oil” through the strait and suggesting that other dependent nations should lead efforts to protect it. Markets disagreed with his calm: oil prices surged and stocks fell the next morning.

The deeper point here is hard to ignore. Iran accounts for less than 1% of global economic output. Yet its geographic position gives it leverage wildly disproportionate to its size. This is precisely the kind of asymmetric power that Trump’s own playbook was supposed to exploit — and now it is being used against him.

China’s Quiet, Methodical Squeeze

Beijing has been playing an even longer game. China controls the processing of the vast majority of the world’s rare-earth minerals, the materials that go into semiconductors, fighter jets, MRI machines, electric vehicles and AI data centers. Since Liberation Day last April, it has been systematically building out a licensing regime for rare-earth exports, quietly cutting off companies in the U.S. defense supply chain while placing others under case-by-case review.

The effects are becoming visible. Medtronic CEO Geoff Martha acknowledged this week that China’s controls are hitting manufacturers of MRI and CT imaging machines. Defense contractors are scrambling for alternative sourcing with limited success. Former Commerce Secretary Gina Raimondo, who says she saw all of this coming, warned at a Council on Foreign Relations event that the AI data center supply chain carries a similarly alarming level of Chinese dependency that most Americans have not yet reckoned with.

Trump’s decision to delay a planned visit to China until mid-May added to the anxiety among executives who had been hoping a summit with Xi Jinping could unlock licenses and ease the squeeze.

The Playbook Is Spreading

Edward Fishman, author of Chokepoints: American Power in the Age of Economic Warfare, frames the moment clearly. “The lesson is that the way to deal with American economic coercion is to fight back,” he said. “Iran now is proving that again.” European officials, rattled by Trump’s January rhetoric about seizing Greenland, have also been quietly mapping potential leverage points in U.S. trade relationships. The playbook Iran and China are running is becoming required reading in capitals around the world.

Chokepoints by Fishman looks like a great read that I might pick up soon.

What makes this historically significant is the inversion of America’s own doctrine. The United States built the architecture of economic warfare, from weaponizing the global banking system to choking off semiconductor technology. Rivals with strategic geography or resource dominance are now deploying the same logic back at Washington. Iran holds a waterway. China holds a periodic table. Together, they are demonstrating that even the world’s largest economy has pressure points that cannot be neutralized by tariffs or military force alone.

Trump’s core thesis — that American power, properly leveraged, produces only upside — is being stress-tested in real time. The midterm clock is ticking, and the manufacturing renaissance his tariffs were meant to spark is being quietly hollowed out by the very supply chain dependencies he never fully accounted for.

Taiwan’s Defense Budget Is Frozen. Beijing Could Not Have Written It Better.

The Hormuz closure and China’s rare-earth squeeze share a common thread: smaller or more disciplined actors exploiting structural vulnerabilities in American power. But this week brought a reminder that vulnerability is not always imposed from outside. Sometimes, a country creates its own.

Taiwan is in the middle of doing exactly that.

A Record Budget, Going Nowhere

President Lai Ching-te’s administration put forward a genuinely historic defense budget for 2026 — T$949.5 billion, a 22.9% increase over last year and equivalent to 3.32% of GDP. That figure crosses the 3% threshold for the first time since 2009 and represents a direct response to relentless Chinese military pressure, including large-scale war games simulating a blockade. Washington backed the increase publicly and enthusiastically.

The opposition-controlled legislature has stalled it. Lawmakers say they support higher defense spending in principle but will not sign “blank cheques.” A separate proposal for $40 billion in additional special defense spending is frozen as well. The practical consequence, confirmed Thursday by defense ministry budgeting chief Yen Ming-teh, is that the ministry cannot execute 21% of this year’s budget on the original schedule. That translates to T$78 billion, or about $2.44 billion, sitting idle.

What Cannot Wait

The programs caught in the delay are not abstractions. HIMARS rocket artillery systems, Javelin anti-tank missiles and follow-on pilot training for Lockheed Martin F-16 fighter jets are all affected. These are not legacy procurement items. They are precisely the capabilities Taiwan has identified as essential for a credible defense against a Chinese invasion or blockade scenario.

Yen put it simply at Thursday’s press conference: “Any delay in timing will cause irreversible negative effects.” In procurement terms, that means missed delivery windows, lapsed training cycles, and gaps in readiness that take years to close even after funding is restored.

Taiwan Is Watching, and Learning

There is an striking contrast buried in the same briefing. Even as funding stalls, Taiwan’s military is moving forward intellectually. The island’s annual Han Kuang drills begin April 11, and this year’s table-top exercises will draw directly on two recent conflicts: U.S. and Israeli operations against Iran, and the U.S. military raid that seized Venezuelan President Nicolás Maduro in January.

Joint operations planning chief Tung Chi-hsing said Taiwan is extracting specific lessons: how to execute early warning and immediate response, how to counter drone swarms, how to build and maintain layered air defenses, and how to run anti-infiltration operations. The Iran war in particular — which opened with coordinated strikes designed to degrade air defense and command infrastructure — maps closely onto the scenarios Taiwan has always war-gamed against China.

The one major emerging question from the Iran conflict is whether Taiwan will be able to keep the international waterways open during the conflict. The Middle East conflict has also taught us that Beijing will heavily rely on drones and other autonomous systems during a conflict with Taiwan. This essentially makes it difficult for the shipping lanes to operate as normal.

The Danger in Plain Sight

Taiwan’s predicament captures a tension that democracies navigating great-power competition face everywhere: the machinery of democratic politics can slow the very decisions that security demands be made quickly. Beijing does not operate under that constraint. Its military planning is not subject to opposition budget holds or legislative brinkmanship.

This is not an argument against democratic accountability. But it is a reminder that in the current environment, delay carries real cost. As the Hormuz closure demonstrates, the actors putting pressure on American power have one thing in common: they move with purpose and they move fast. Taiwan’s parliament would do well to notice.

Thanks!

China is watching the U.S.–Israeli campaign in Iran enter a decisive phase as Donald Trump’s ultimatum to “obliterate” Iranian power plants nears its deadline, while Beijing’s own message remains steady: stop the strikes, keep Hormuz open, and avoid a broader regional meltdown. Across Asia, markets and policymakers are now treating the Iran conflict as a central security and economic risk rather than a distant war.

Beijing’s latest line: condemn, de‑escalate, don’t choose sides

China has not issued a radically new policy statement in the last 24 hours, but its previous positions now sit under the shadow of Trump’s 48‑hour ultimatum. Foreign Ministry spokespeople have consistently framed the U.S.–Israeli strikes as lacking UN authorization and therefore as violations of international law, stressing that the killing of Iranian leaders and attacks on civilian targets are “by no means acceptable.”

The core message has three recurring elements: an immediate stop to military operations; opposition to “regime change” and other interventions that trample sovereignty; and support for resolving the crisis through dialogue, with China ready to “work with the international community” to restore peace. Even as Iran threatens to hit power and water infrastructure across the Gulf if its own grid is attacked, Beijing publicly avoids endorsing Tehran’s retaliatory threats, instead warning all sides against plunging the region into chaos.

State media in the last news cycle: Hormuz, energy shock, and “Day 23” of war

In the past 24 hours, Chinese state media coverage has focused on two themes: the looming showdown over the Strait of Hormuz and the risk of a global energy crunch. Xinhua’s latest “daily brief” on the U.S.–Israeli strikes, published early Monday Beijing time, highlights Trump’s explicit threat to hit Iranian power plants unless Tehran fully reopens the strait within 48 hours and Iran’s counter‑warning that any such attack would make power plants in countries hosting U.S. bases “legitimate targets.”

The same brief and Xinhua’s world digest underline how nearly a month of airstrikes and missile exchanges has devastated infrastructure in Iran and Lebanon and pushed global oil prices up by more than 50 percent, with energy markets bracing for a prolonged crisis. Beijing’s media framing is clear: the conflict is now less about battlefield gains and more about whether a miscalculation over Hormuz and energy infrastructure tips the world into its worst energy shock in decades.

How analysts read China’s posture

Recent expert commentary argues that China is playing a long, careful game over Iran: rhetorically tough on U.S. “hegemony,” but cautious about being trapped by Tehran’s brinkmanship. Beijing has condemned the strikes and demanded respect for Iran’s sovereignty, yet has offered no military backing and has signaled it does not support Iranian attacks on Gulf Arab targets.

Analysts point out that China’s real priorities are protecting sea lanes and energy supplies, preserving ties with Gulf monarchies, and keeping space for diplomacy with Washington—even as it criticizes Trump’s use of force. This “concerned onlooker” posture means that, as the ultimatum clock runs down, China is urging restraint from the sidelines rather than positioning itself as a security guarantor in the Gulf.

Chinese social media: from armchair generals to anxiety over markets

On Chinese social media, the Iran war has again surged to the forefront as users track Trump’s ultimatum and market turmoil across Asia. Earlier deep dives into Weibo and other platforms show how news of the initial strikes, the killing of Iran’s supreme leader, and the death of a Chinese citizen in Tehran generated billions of views across official and user‑generated hashtags, a pattern that is now being repeated around the Hormuz standoff.​

Netizen reactions span several strands. Nationalist voices rail against U.S. “hegemonism” and express sympathy for Iran, while others praise Iranians “seeing the end of a corrupt regime” or discuss women’s rights and theocratic rule in Iran, revealing clear divergence from Beijing’s purely sovereignty‑focused narrative. At the more technocratic end, military and tech bloggers are debating the performance of Iranian air defenses, including Chinese‑supplied radar, and whether recent failures expose weaknesses in Chinese systems—sparking pushback from “Little Pink” loyalists who insist that individual missile penetrations do not prove system failure.

New angle: markets, not missiles, dominate Chinese conversations today

With the ultimatum’s deadline approaching, much of today’s Chinese‑language commentary has shifted from frontline footage to financial risk. Business media and market‑watching social accounts are circulating charts showing Asian indexes tumbling more than 5 percent in Tokyo and Seoul, with Hong Kong and mainland‑linked markets also sharply lower as traders price in the possibility of U.S. strikes on Iran’s power grid and Iranian retaliation against Gulf energy and desalination facilities.​

In India, derivatives analysts report that options pricing around Tuesday’s Nifty expiry implies far larger‑than‑usual moves, with implied volatility spiking to near two‑year highs as investors hedge against an Iran‑driven shock. Chinese‑focused programs on international business channels are telling audiences to expect further swings in equities, bonds, and energy as the ultimatum window closes, reinforcing for Chinese viewers that the Iran war is now an immediate pocketbook issue, not a distant geopolitical drama.​

Asia Defense and Security – Last 24 Hours

Hormuz, Gulf infrastructure and Asian exposure

Iran’s leadership has spent the last day signalling that any U.S. strike on its electrical grid will be met with attacks on power and water facilities across the Gulf, explicitly including desalination plants that millions rely on for drinking water. That prospect, paired with a near‑total shutdown of Hormuz to non‑Chinese and non‑regional shipping, is pushing Asian governments to dust off contingency plans for supply diversification and to brace for further oil and LNG price spikes.

Asian energy and shipping companies are quietly rerouting cargoes and reassessing insurance coverage for Gulf routes, while some Chinese and Indian‑flagged vessels continue to transit under heightened risk, underscoring their countries’ appetite for discounted crude despite the security environment.

Asian markets and security planners react

Across East and South Asia, the Iran war is now driving both market moves and strategic conversations.

• Major stock benchmarks in Japan and South Korea fell more than 5 percent on Monday as investors weighed the risk that Trump will follow through on his threats and that Iran will in turn strike regional infrastructure, turning a regional war into a systemic energy crisis.

• In India, the spike in implied volatility and the slide in the Nifty underline how the Iran conflict has become the principal macro‑security risk for local markets, crowding out domestic narratives.​

• Security planners in U.S. partner states from Japan to the Gulf are reviewing force‑protection measures and energy contingency plans, anticipating possible missile and drone campaigns against civilian infrastructure if the ultimatum is enforced.

Global security alerts and Middle Eastern spillover

The past 24 hours have also seen fresh security alerts and intercept activity tied to the conflict. The U.S. State Department has renewed a worldwide caution for its citizens, citing the elevated threat to diplomatic facilities, transport hubs and public gatherings as Iran and allied groups threaten retaliation beyond the immediate war zone.

In the Gulf, air defenses have reportedly intercepted waves of drones and missiles aimed at energy and desalination sites, underlining how quickly the war has expanded from Iran’s territory into the wider regional infrastructure network. For Asian importers and navies that depend on those routes, the message is stark: what began as a U.S.–Israeli air campaign in Iran is now a multi‑domain contest over chokepoints and critical infrastructure that ties the Middle East directly to Asian energy and economic security.

Thank you to all the new readers who have signed up for Asia Communique!

The 2026 Iran war is not a distant Middle Eastern crisis for Asia; it is a live stress test of the region’s energy security, alliance structures, and ongoing arms buildup.
Disruption in and around the Strait of Hormuz—through which roughly one‑fifth of global oil and a similar share of liquefied natural gas (LNG) normally transit—has already snarled shipments to key Asian buyers and driven up transport and crude costs.
At the same time, the conflict is forcing U.S. allies and partners in East Asia to reassess how much they can rely on U.S. military bandwidth when around 40% of U.S. naval assets are reportedly tied down in the Middle East and the only carrier in Asia is in maintenance.

This edition argues that the Iran war will accelerate three trends that were already reshaping Asia’s security landscape: a structural push to harden energy supply chains, a surge in regional defense spending and arms racing, and a more opportunistic China positioning itself as both an energy customer and alternative diplomatic pole.
Together, these trends tighten the feedback loop between West Asian crises and Indo‑Pacific deterrence, raising medium‑term escalation and miscalculation risks even if no Asian military is directly involved in the fighting.

Energy shock as Asia’s immediate vulnerability

Asia is the world’s largest oil‑consuming region and still deeply dependent on Middle Eastern suppliers for roughly 60% of its crude imports, leaving it acutely exposed when shipping in and out of the Gulf is disrupted.
The current conflict has seen tankers bottled up inside the Gulf and insurers hike war‑risk premiums, pushing up both crude prices and freight costs for refiners across the region.​

For China and India—the first and third largest crude importers globally—the stakes are obvious.
China is the top buyer of Iranian oil, importing around 1 million barrels per day from Iran in 2025, accounting for roughly 13% of its seaborne imports; that flow is now jeopardized by the fighting and sanctions‑driven shipping and insurance complications.​
India has leaned heavily on Gulf suppliers for crude and relies on the region for about 91% of its liquefied petroleum gas (LPG) imports, a dependence that New Delhi’s own analysts now flag as a strategic liability in wartime.​

Governments across East Asia are discovering that strategic stockpiles buy time but not immunity.

Japan imported about 2.34 million barrels of crude per day in January 2026, roughly 95% of which came from the Middle East, and it remains one of the world’s top LNG importers; Tokyo has so far resisted tapping its large strategic reserves, but officials acknowledge that prolonged disruption at Hormuz would quickly tighten the market.
South Korea and Taiwan, which also source roughly half or more of their energy from the Middle East, have activated contingency plans and emphasized that current stockpiles cover only weeks to a few months of demand.

Southeast Asian states, though somewhat less import‑dependent on the Gulf, are hardly insulated.
Thailand, for example, has temporarily suspended petroleum exports to protect domestic reserves—officials say current stocks cover about 61 days—and is trying to boost gas production in the Gulf of Thailand, but analysts warn that its heavy reliance on spot‑market LNG leaves it highly exposed to price spikes and bidding wars with richer North Asian economies.​
Across the region, finance ministries are already warning that another extended oil shock on top of post‑pandemic inflation could dent growth, widen fiscal deficits, and amplify domestic political pressure over the cost of living.

From price shock to strategy shift

The war’s most durable impact is likely to be strategic rather than cyclical.
Indian policy reviews now frame the conflict as a wake‑up call on three fronts: the absence of strategic LPG reserves, the danger of concentrating import sources in one region, and the vulnerability of shipping lanes that pass through chokepoints like Hormuz.
Short‑term fixes—such as emergency powers to boost domestic LPG output, demand rationing, and ad hoc alternative supply deals—are being coupled with calls for medium‑term naval protocols to protect energy shipping and for diversification of suppliers beyond the Gulf.​

East Asian planners are drawing parallel lessons.
Energy‑intensive sectors like Taiwan’s semiconductor industry and South Korea’s petrochemicals and heavy manufacturing remain deeply exposed to fuel price volatility and physical disruption, making energy security a national‑security issue rather than a narrow economic concern.
Analysts across Japan, Korea, and Taiwan have argued that higher near‑term costs for accelerating renewables and nuclear restarts may be preferable to recurring vulnerability to distant conflicts, especially as fossil fuels still dominate their power mix—with renewables providing less than 10% of electricity in Korea and Taiwan and about 22% in Japan.​

In Southeast Asia, the sense of urgency is more uneven but palpable.
Energy agencies within ASEAN have warned that a prolonged closure or congestion of Hormuz could “severely hinder global economic activity,” with ASEAN’s Centre for Energy stressing that current disruptions are not just a temporary shock but a preview of structural fragility in Asian energy security.​
This reinforces, rather than replaces, the pre‑existing case for regional grid interconnection, diversification of fuel types, and investment in strategic reserves at the national and regional levels.

A parallel trend: record military spending

Even before the first missiles flew in the 2026 Iran conflict, Asian defense budgets were rising at their fastest pace in over a decade.
According to Stockholm International Peace Research Institute (SIPRI) data, global military spending hit a record 2.7 trillion U.S. dollars in 2024, with Asia–Oceania accounting for about 629 billion dollars, an increase of 6.3% from 2023 and the largest jump since 2009.
East Asia alone spent 433 billion dollars in 2024, up 7.8% year‑on‑year, reflecting what SIPRI describes as an unprecedented arms race driven largely by concerns over China.

China now accounts for roughly half of all military expenditure in Asia–Oceania.
Its 2024 defense budget is estimated at around 314 billion dollars, a 7% increase from 2023 and its largest annual rise since 2015, marking roughly three decades of uninterrupted growth aimed at modernizing all domains of the People’s Liberation Army by 2035.
Statista and other SIPRI‑based compilations suggest that Chinese military spending grew by more than 20% between 2020 and 2024, reaching approximately 320 billion dollars in constant 2023 prices.

Regional responses have been robust.
Japan has increased its defense spending by over 40% between 2020 and 2024, lifting its 2024 budget to roughly 55–58 billion dollars—about 1.4% of GDP and its highest level since the late 1950s—as it invests in long‑range strike capabilities and missile defenses against China and North Korea.
Taiwan has raised military spending by about 37% over the same five‑year period, sharpening its focus on asymmetric capabilities such as missiles, drones, and air‑defense systems.

India’s military expenditure has climbed by around 8% from 2020 to 2024 to reach roughly 84–86 billion dollars, keeping it among the world’s top five spenders even as it remains a major arms importer.

How the Iran war accelerates the arms race

The Iran war does not create these defense‑spending trends; it amplifies them and shifts their political justification.
Policymakers in Tokyo, Seoul, New Delhi, and Taipei can now point to a live demonstration of how quickly a distant crisis can tie down U.S. forces, jolt energy markets, and redefine risk calculations for middle powers.
In Japan, where the government has already framed its historic defense buildup as a response to a more hostile regional environment, the conflict is likely to strengthen arguments for further increases in spending and for loosening restrictions on arms exports and joint development.​

South Korean strategists are particularly focused on alliance credibility rather than on the Iran theater itself.
Analysts in Seoul warn that Washington’s demonstrated willingness to use force with limited prior consultation, and to reassign significant military assets away from the Indo‑Pacific to the Middle East, raises the risk that Korea could be dragged into conflicts beyond the peninsula or left more exposed if a crisis with North Korea or China erupted while U.S. forces are overstretched.​
That, in turn, feeds domestic debates over strengthening indigenous conventional and missile capabilities and, on the political fringes, over nuclear options, even if mainstream support for nuclearization remains low.

For India, the war intersects directly with its twin concerns about border threats and sea‑lane security.

New Delhi has long worried about the vulnerability of its energy imports to disruptions in West Asia; the present conflict validates arguments for faster naval modernization, greater maritime domain awareness in the Arabian Sea and Indian Ocean, and closer security coordination with partners such as France, the United States, and regional states like the UAE. As Indian defense spending edges upward and industrial policy pushes self‑reliance, the Iran war strengthens the case for investments in air and missile defense, anti‑submarine warfare, and escort capabilities for critical shipping, rather than just traditional land‑centric modernization.

U.S. bandwidth and allied anxiety

The war is also a real‑time test of Washington’s long‑stated “pivot” to the Indo‑Pacific.
Recent reporting suggests that about 40% of U.S. Navy ships are currently deployed to or supporting operations in the Middle East, and that the only U.S. aircraft carrier assigned to Asia is in maintenance, raising pointed questions in Tokyo, Seoul, and Taipei about how quickly credible U.S. naval power could surge in an East Asian contingency while a major operation against Iran is still underway.​
This apparent re‑prioritization contrasts with recent U.S. strategy documents that cast the Indo‑Pacific—and specifically the Taiwan Strait—as the central theater of strategic competition.

U.S. allies’ reactions are cautious but revealing.

Japanese leaders have expressed strong support for diplomatic efforts to halt Iran’s nuclear ambitions and de‑escalate the conflict but have conspicuously stopped short of endorsing the initial U.S.–Israeli strikes that triggered the broader war; legal and political constraints continue to limit any prospect of direct Japanese military involvement.​
South Korea openly worries that the Trump administration’s willingness to act unilaterally, coupled with the possibility of being drawn into secondary theaters, complicates its own deterrence and crisis planning on the peninsula.​

In Taiwan, lawmakers and analysts warn that prolonged U.S. distraction in the Middle East could embolden Beijing to step up military and grey‑zone pressure around the island, calculating that U.S. naval and air reinforcements would face competing demands and longer deployment timelines.

While no government in East Asia is publicly decoupling from the U.S. alliance network, the Iran war underscores the logic of what many have already been doing quietly: hedging by deepening intra‑Asian security ties, building more self‑reliant capabilities, and exploring limited security cooperation with European partners.

China’s balancing act and opportunity space

Beijing’s stake in the conflict is multidimensional.
China is a major energy customer for Iran and other Gulf producers, and it has portrayed itself for years as a neutral broker capable of mediating between Iran and Saudi Arabia, in contrast to what it depicts as U.S. militarization of the region.
At the same time, Chinese strategists are acutely aware that their core security interests lie in East Asia, not the Middle East, and that over‑commitment westward could undercut their ability to manage U.S. and allied pressure closer to home.​

The war nonetheless offers Beijing both risks and openings.
On the risk side, sustained disruption of Iranian and Gulf energy exports directly affects an economy that remains heavily import‑dependent for hydrocarbons despite rapid growth in renewables.
On the opportunity side, any perceived U.S. overextension or wavering commitment to Indo‑Pacific priorities allows China to frame itself to regional audiences as the steadier, geographically proximate power—particularly if it can maintain trade and investment flows while Washington is preoccupied. Chinese commentators also see the conflict as a live rehearsal of how economic warfare, sanctions, and maritime chokepoints might be used against China itself in a Taiwan or South China Sea crisis.
This reinforces Beijing’s ongoing efforts to diversify overland and maritime energy routes via projects linked to the Belt and Road Initiative, including pipelines and port access that reduce reliance on sea lanes passing through Hormuz and Malacca.​
In that sense, the Iran war is both a near‑term disruption and a data point feeding into longer‑term Chinese efforts to de‑risk its own external dependencies.

Strategic implications for Asian decision‑makers

Taken together, the Iran war and Asia’s existing security trends point toward a more militarized and less predictable Indo‑Pacific.

Energy supply chains are now plainly understood as a frontline vulnerability rather than a background economic variable, and governments are moving—unevenly but perceptibly—toward diversification of suppliers, expansion of strategic reserves, and tighter linkage between energy and naval strategy.

At the same time, the region’s defense‑spending trajectory shows no sign of leveling off; if anything, the conflict validates domestic arguments for larger budgets and more sophisticated capabilities across U.S. allies, partners, and competitors alike.

The war also complicates alliance management.

For U.S. allies, the lesson is not that Washington is abandoning Asia, but that its attention and assets are finite and can be pulled into simultaneous crises—sharpening incentives to invest in self‑defense, deepen minilateral cooperation, and, in some cases, keep lines of communication open with Beijing even as deterrence is strengthened.

For China, the conflict underscores both the leverage and vulnerability that come with being a top energy importer and a rising military power, pushing it to intensify diversification and hardening strategies.

Over the coming months, key signposts to watch will include: whether energy prices and shipping disruptions remain elevated or normalize; whether Japan and South Korea lock in additional multi‑year increases in defense spending beyond what is already planned; how India sequences its naval and air‑defense investments relative to land forces; and whether U.S. force posture in the Indo‑Pacific returns quickly to pre‑war baselines or remains strained by extended operations against Iran.

Those choices will determine whether the Iran war becomes remembered in Asia as a brief external shock—or as the moment when energy insecurity and great‑power distraction decisively accelerated the region’s slide into a more dangerous security environment.

This week, Intelligence Online reported that China’s Ministry of State Security (MSS) has ordered the “immediate withdrawal” of Chinese teams and interests from Afghanistan. Officially, Beijing is saying very little. Unofficially, its consular feeds on WeChat — and the way those alerts are blasted across Chinese news sites and onto Weibo — are doing the talking.

Put simply: if you’re Chinese and still in Afghanistan, the state is telling you to get out.

The secret order, and the public hints

According to Intelligence Online, the MSS has decided to pull back from Afghanistan for the long haul, not just ride out a bad few weeks. The key point in their piece is what this is not about: it’s not mainly a reaction to one or two incidents on the Tajik border. It’s about something deeper — a loss of confidence in Pakistan’s ability to protect Chinese interests across the whole Afghanistan–Pakistan–Central Asia arc.

For Beijing, that’s a big deal. For years the assumption was: Pakistan manages the Taliban problem, China brings the money and the engineers. If that stops working, the logic of keeping MSS teams and Chinese companies on the ground in Afghanistan starts to crumble.

Beijing isn’t going to hold a press conference to say “our bet failed.” Instead, we see the shift in the channels ordinary Chinese actually follow: consular WeChat accounts, embassy notices, and the big aggregators that repost them.

What WeChat is telling people

The clearest signal came on 23 January.

That day, the foreign ministry’s consular WeChat account “领事直通车” pushed out an alert saying Afghanistan’s security situation is “复杂严峻” — complex and severe — after a bombing in Kabul killed and injured Chinese nationals at a Chinese restaurant. The advice was unusually blunt: don’t travel to Afghanistan, and if you’re already there, “尽快撤离” — leave as soon as possible.finance.

Big portals like The Paper, Sina and Eastmoney all ran the text in full, with headlines along the lines of “中国公民尽快撤离！” (“Chinese citizens should leave as soon as possible!”), and flagged “领事直通车” as the source. Their Weibo accounts then pushed that same content into people’s feeds.

For a Chinese businessperson or worker in Kabul, you don’t need secret MSS cables to know what this means. When the official consular account tells you, in big red characters, to leave, that’s the closest thing you’ll get to an evacuation order.

Before that: “get out of the borderlands”

If you scroll back a bit, you can see how the message escalated.

On 7 January, the Chinese embassy in Kabul put out a notice focusing on the Afghan–Tajik border region. The language was already strong: it “again urged” Chinese companies and citizens in those areas to “promptly and in an orderly manner withdraw,” citing repeated cross‑border attacks in late 2025 that killed and injured Chinese workers at mining and infrastructure sites inside Tajikistan.

The embassy warned that further attacks on Chinese enterprises and staff could not be ruled out, and it published emergency contact numbers for local police and consular hotlines. That text was then mirrored on other official and semi‑official Chinese sites — local foreign‑affairs offices, overseas Chinese networks, etc. — so it didn’t just live on one embassy webpage.

Two weeks later, the focus broadened from “border areas” to “Afghanistan, full stop.” The January 7 border warning plus the January 23 WeChat blast together map a clear trajectory: first, get out of the frontier; then, if you can, get out of the country.

Beijing pulls people back – and builds fences further out

Here’s the twist: even as Beijing tells its citizens to leave dangerous stretches of the Afghan–Tajik frontier, it is quietly hardening that same frontier from the other side.

Earlier this month, Tajikistan’s lower house of parliament approved an agreement for China to finance and build nine new border infrastructure facilities along the Tajik–Afghan border. The project will cover roughly 17,000 square metres and cost about 424.8 million yuan, provided entirely by Beijing as a grant. According to Tajik security officials, the sites will include buildings equipped with modern surveillance systems, communications gear, and engineering infrastructure to strengthen the material and technical base of Tajikistan’s border troops.

This is not a one‑off. Tajik officials say that under a previous agreement with Beijing, 12 similar border facilities were built between 2017 and 2018 in other stretches of the Tajik–Afghan frontier. In other words, while China is drawing down its exposure inside Afghanistan, it is doubling down on border security just beyond it — paying to upgrade Tajik outposts that, in practice, help keep Afghan instability and militant flows at arm’s length.

The Kabul restaurant bombing: a turning point

The spark for that WeChat alert was the 19 January attack on the “China Lanzhou Beef Noodles” restaurant in central Kabul.

A suicide bomber walked into one of the few obviously Chinese venues still operating in the city’s commercial district and detonated. At least seven people were killed, including one Chinese citizen; around a dozen were wounded, among them five Chinese nationals. ISKP claimed responsibility and made a point of saying it was targeting Chinese nationals, linking the attack directly to Beijing’s policies in Xinjiang.

For Chinese officials, this hit uncomfortably close to the scenario they’ve worried about since 2021: the Taliban promising to protect Chinese projects, and then failing to stop jihadist groups from striking them. When you can’t even keep a small restaurant safe, it becomes very hard to sell Kabul as a plausible destination for large‑scale investment.

Violence doesn’t stop at Afghanistan’s borders

This isn’t just about what happens inside Afghanistan.

In late November 2025, militants operating from Afghan territory crossed into Tajikistan and attacked Chinese‑linked mining and infrastructure sites. At least five Chinese workers were killed and several more were injured in a series of incidents that included a drone dropping grenades on a mining compound.

Tajik and Chinese sources both made it clear that Chinese projects and personnel were deliberate targets, not collateral damage. Chinese embassies in the region responded with tough language and calls for urgent evacuation from affected border areas, which then fed directly into the January 7 embassy notice out of Kabul.

From Beijing’s point of view, this confirms the nightmare scenario: Afghanistan as a launchpad for attacks on Chinese projects in neighboring states as well as inside Afghanistan itself.

The new nine‑post project in Tajikistan is best read against that backdrop: if you cannot stop violence on Afghan soil, you at least try to control who and what crosses out of it.

Pakistan vs. Taliban: China’s gatekeeper is on fire

Layered on top of all this is the sudden slide toward open conflict between Pakistan and the Taliban authorities.

On 27 February, Pakistan launched airstrikes on targets inside Afghanistan, and the Taliban responded with cross‑border attacks. Pakistan’s defense minister used the phrase “open war” to describe what was happening. Chinese and international coverage has treated this as a serious escalation, not just another round of sporadic shelling.

Chinese analysts warn that if fighting along the Durand Line continues, it will threaten Chinese citizens in both countries and put pressure on key pieces of the China–Pakistan Economic Corridor. In other words, the partner Beijing hoped would manage Afghanistan risk — Pakistan — is now part of the risk.

When foreign ministry spokesperson Mao Ning was asked directly on 27 February whether China was considering evacuations from Pakistan and Afghanistan or suspending flights, she stuck to the cautious script: China is closely watching the situation and will provide “necessary assistance” to its citizens. Read together with the WeChat blasts, though, the direction of travel is obvious.

How Chinese media now talk about Afghanistan

Chinese‑language coverage and commentary after the Kabul bombing has shifted tone.

Instead of talking up opportunity and reconstruction, analysts now emphasize that Beijing is “re‑evaluating” its relationship with Afghanistan, and that security is the first and non‑negotiable condition for any serious economic engagement. Reports point out that while Chinese companies have signed big MoUs in mining, most of the supposed multi‑billion‑dollar projects are still stuck on paper.

Beijing accepted the envoy sent by the Taliban but has still not formally recognized the Taliban government, in contrast with Russia. Experts quoted in Chinese outlets argue that if Afghanistan were truly a core strategic partner, recognition would probably have come already; the hesitation is itself a signal.

The emerging picture: Afghanistan is being treated as a security headache to be managed at arm’s length, not as the next big Belt and Road prize — and China would rather pay to reinforce a frontier in Tajikistan than sink serious capital into Afghan soil itself.

Reading policy through social feeds

All of this is why watching WeChat and Weibo is so useful here.

On foreign‑policy issues, Chinese social media is not a free‑for‑all. It’s a curated space where official accounts set the tone. When “领事直通车” and the Kabul embassy repeatedly tell Chinese citizens “暂勿前往阿富汗，在当地中国公民尽快撤离” — don’t go, leave if you’re there — and that language is mirrored across multiple government and quasi‑government websites, it’s safe to say you’re looking at more than just routine travel advice.

The wording is strikingly consistent: “尽快撤离,” “有序撤离,” and “复杂严峻.” It appears on embassy sites, on central government pages, on local foreign‑affairs portals, and then gets repackaged by media outlets with large Weibo footprints. That kind of repetition usually means the center has decided on a line, and everyone is following it.

In that light, the Intelligence Online story about an MSS‑ordered withdrawal doesn’t come out of nowhere. It clicks into place alongside what Chinese citizens are being quietly told on their phones — and with where Beijing is now choosing to spend money: on fences and border posts in Tajikistan, not on new projects in Afghanistan.

Where this leaves Beijing

If the MSS is indeed drawing down in Afghanistan, China’s already cautious economic push there is likely to slow even further. Security services are the backbone for any serious overseas project in a place like Afghanistan; if they are stepping back, it’s a strong signal to everyone else to do the same.

For Pakistan, this is an uncomfortable moment. The country that marketed itself as China’s “iron brother” and security gatekeeper to the West is now locked in a shooting match with the Taliban and struggling to protect Chinese assets at home and next door. That doesn’t mean Beijing will walk away from CPEC, but it does mean the bar for new risk in the region just got higher.

And for Afghanistan, it is another reminder that foreign powers might talk about long‑term commitments, but they all have exit plans. Right now, if you want to know how close China is to the door, you don’t look at speeches. You look at WeChat — and at the new Chinese‑funded border posts going up on the other side of the mountains.

Thank you!

I wrote a new op-ed for Taipei Times about what China is thinking about the U.S.-Iran conflict. The conflict is stress testing the sanctions evasion regime Beijing built alongside Tehran: the shadow fleets to carry oil, the missile trade and other related materials.

The op-ed: Beijing has a three-body problem

Now the newsletter follows

Washington and Beijing are busily talking about “stability” even as Asia’s strategic environment feels anything but stable. On one front, Donald Trump is heading to Beijing for a summit that’s supposed to calm U.S.–China tensions without really fixing anything. On another, the war with Iran has effectively choked off the Strait of Hormuz, triggering an energy shock that lands hardest in Asian capitals. Layer on China’s drills in the South China Sea, North Korean missile tests and Japan’s record defense budget, and you get a region that’s quietly preparing for a much rougher decade.

Let’s start in Beijing.

Trump–Xi: a summit about “not blowing things up”

Trump is currently slated to visit China from March 31 to April 2 — his first state visit to Beijing since 2017, and the first meeting with Xi Jinping since the two sides agreed on their latest trade truce last October. The official line from both capitals is that they want to “maintain stability” after years of tariffs, tech controls and bruising political rhetoric. But people involved in the planning are remarkably blunt: no one expects a real reset in business or investment ties.

On the U.S. side, corporate America hasn’t yet secured the big CEO delegation it hoped would hitch a ride on Air Force One, despite lobbying from Trump’s ambassador in Beijing, David Perdue. Trade officials in Washington are wary of turning the trip into a glitzy deal-signing jamboree; the Office of the U.S. Trade Representative wants to keep the focus on tightly managed purchase commitments, not a broader reopening that would be hard to walk back later.

Beijing, meanwhile, sees little sign that Washington is ready to offer the investment protections Chinese firms want after episodes like the forced restructuring of TikTok’s U.S. business. Chinese officials are also irritated by what they view as last-minute U.S. planning for a visit that, in the Chinese system, is usually scripted months in advance. As Brookings’ Ryan Hass put it, the ambition for the trip “seems to be getting smaller by the day” — which may be the point.

Even on tariffs, the best case is muddling through. The U.S. Supreme Court recently struck down a 10% tariff Trump had imposed on fentanyl-related imports under an emergency statute, and the administration is already signaling it will simply re-impose the same levy under a different law. Trade Representative Jamieson Greer insists the meeting “is not to fight about trade,” but rather to check that China is living up to existing purchase pledges and keeping rare earths flowing. That’s not a reset; that’s crisis management.

Rare earths and Boeings: commerce as leverage

Underneath the summit optics sit two very concrete bargaining chips: rare earths and airplanes.

First, rare earths. U.S. aerospace and chip suppliers are already grappling with tightening supplies of key elements such as yttrium and scandium, even after Beijing eased some of the export curbs it imposed last year. These materials are buried inside jet engine coatings, missiles and high-end semiconductors — precisely the sectors Washington labels “strategic.” Industry sources say some coating manufacturers have paused operations or turned away smaller customers because they simply cannot secure enough feedstock, even as prices spike. Officials publicly insist there’s no crisis, but privately concede that shortages are real.

That brings us to Boeing. Multiple reports suggest Boeing is close to sealing a blockbuster order for around 500 narrow-body jets, plus potential widebodies, to be wrapped in the aura of the Trump–Xi summit. The deal would help restart big Chinese orders after years of freeze and keep Chinese airlines tied into Boeing’s ecosystem well into the 2030s, given current production backlogs. Beijing, unsurprisingly, wants something in return: multi-year guarantees on parts and support, and perhaps relief from some export-control threats.

White House aides are reportedly split on whether to unveil everything in Beijing or hold some “wins” back for a future summit on U.S. soil. In other words, even commercial deals are now rationed and sequenced as geopolitical tools.

South China Sea: “routine drills” that aren’t routine

While officials talk up “stability,” the maritime picture is tense.

At the end of January, China’s Southern Theater Command launched naval and air “combat readiness” drills around Scarborough Shoal, a disputed reef in the South China Sea claimed by both Beijing and Manila. State-linked outlets highlighted the presence of H-6K bombers armed with anti-ship missiles and a Type 055 destroyer — a clear signal that this was more than a symbolic sail-by. Chinese statements framed the drills as a response to “provocations” by unnamed countries and part of efforts to “resolutely safeguard” sovereignty and maritime rights.

All this comes on the heels of repeated U.S.–Philippines exercises in nearby waters and a flurry of multinational drills involving the U.S., Japan, France and others. The emerging pattern: overlapping exercises, increasingly capable platforms on both sides and rising risk that one dangerous maneuver or collision creates the next crisis.

North Korea: missiles as punctuation marks

Further north, Pyongyang is once again using missile launches to punctuate regional diplomacy.

On January 3–4, North Korea fired several ballistic missiles into the sea off its east coast, with South Korea and Japan estimating ranges of around 900 km. The timing was deliberate, coinciding with South Korean President Lee Jae-myung’s state visit to China, where North Korea’s nuclear and missile programs were on the agenda.

Later in the month, North Korea followed up with additional suspected ballistic missile tests as it prepares for a rare ruling-party gathering. State media has presented these launches as part of efforts to expand and modernize the country’s “nuclear deterrent” amid what Kim Jong Un calls a worsening “geopolitical crisis.” For Beijing, they are an unwelcome reminder that it either cannot or will not rein in its neighbor. For U.S., Japanese and South Korean planners, they’re yet another argument for more missile defense, more exercises and deeper trilateral coordination.

Japan’s defense build-up becomes the new normal

Against this backdrop, Japan’s quiet but relentless military build-up is hard to ignore.

Tokyo has approved a record draft defense budget of more than 9 trillion yen (about 58 billion dollars) for fiscal 2026, continuing a multi-year push to reach roughly 2% of GDP in defense spending. Officials explicitly justify the increase as a response to China’s growing military power, North Korean missiles and Russia’s more active posture in the region.

The money is flowing into more than just big-ticket ships and jets. Tokyo is funding a multi-layered coastal “Shield” made up of thousands of drones and other unmanned systems to complicate any amphibious or gray-zone incursions, aiming for full deployment by the end of fiscal 2027. It is also investing heavily in a next-generation fighter program with the UK and Italy, along with AI-enabled “loyal wingman” drones, longer-range cruise missiles and looser export rules. Put together, this is a shift from self-defense minimalism to something much more forward-leaning.

If the Strait of Hormuz really closes

All of that, though, is happening as the world’s most important energy chokepoint — the Strait of Hormuz — becomes functionally unpassable for many tankers. The Iran war has turned what was once a recurrent scare story into a live disruption.

On a normal day, about 19–21 million barrels of oil and petroleum liquids move through Hormuz, roughly one-fifth of global consumption and more than a quarter of all seaborne oil trade. The strait is also a key artery for LNG, with about 20% of global volumes — dominated by Qatar — squeezing through its narrow waters. The U.S. Energy Information Administration and other trackers estimate that more than 80% of the crude and over 80% of the LNG passing Hormuz head to Asia, with China, India, Japan and South Korea together taking roughly 70% of the oil.

That exposure is now being priced in brutally. Since the effective closure of the strait, Brent and WTI have logged their sharpest weekly gains in years, and global benchmark gas prices have jumped as much as 40–50% in a single session, particularly as Qatar shutters production at major LNG facilities. Analysts are sketching scenarios in which oil spikes toward 130–150 dollars a barrel if the disruption persists, while some Gulf officials talk up even higher worst-case numbers.

For Asia’s big economies, the math is harsh. Japan still sources roughly 80–95% of its crude from the Middle East, most of it transiting Hormuz, and depends on fossil fuels for nearly 90% of its total energy use. China gets around half of its oil imports and about a third of its LNG from the Gulf, while India’s Middle East share runs in the 40–50% range; South Korea and smaller Southeast Asian states are similarly exposed. Strategic stockpiles buy time — Japan and South Korea have more than 200 days of cover, China perhaps three to four months, India around two months — but not an indefinite blockade.

There are workarounds, but none at the same scale. Some Saudi and Emirati crude can be pumped to Red Sea ports via pipelines, and Asian buyers can lean harder on Russian, U.S. and West African barrels. Yet a multi-million-barrel-per-day gap remains, especially for LNG, which simply cannot be rerouted around Hormuz the way some oil can. The result: tankers idling in the Gulf, war-risk insurance spiking, cargo diversions via longer and costlier routes, and major lines suspending bookings to key Middle Eastern ports except for essential goods.

Militarily, a choked Hormuz pulls Asian security forces deeper into Gulf waters. Gulf states are leaning on the U.S. Fifth Fleet and European navies for escorts, but Japan and South Korea — which have deployed assets to protect shipping before — will face pressure to step up again. China, whose tankers are among the biggest users of the strait, finds itself in the awkward position of relying on a waterway patrolled by U.S. forces even as it competes with Washington globally. For developing importers like Pakistan, Bangladesh and Thailand, the problem is even starker: they risk being outbid for cargoes altogether as richer economies hoard supplies.

In short, a sustained shutdown of Hormuz wouldn’t just be another oil price spike. It would be a structural shock that tests Asia’s energy-security strategies, accelerates diversification away from Gulf hydrocarbons where possible and hardens the case for bigger navies and more forward-deployed forces. The paradox is that as Asian capitals talk about “de-risking” their relations with the West, their most immediate risk still runs through a narrow channel between Iran and Oman.

What we’re watching next

A few storylines to track in the coming days:

• Whether the Trump–Xi summit produces anything more than a Boeing mega-order, some farm purchases and vague stability language — and, just as important, what gets left out.

• How explicitly Beijing links rare earths and other critical minerals to U.S. behavior on tariffs, export controls and Iran-related sanctions.

• The tempo and intensity of Chinese and U.S.–allied drills in the South China Sea, especially around Scarborough Shoal.

• Further North Korean tests as its party meeting approaches, particularly any new hypersonic or solid-fuel systems that compress warning times.

• How quickly Japan and other Asian states move from energy shock management (stockpile releases, subsidies) to deeper structural shifts in defense and energy policy.

Everyone is talking about “stability” right now. But if you look at the drills, the budgets and the tankers stuck in the Gulf, Asia’s real story this week is nervous preparation for the next shock.

Countries in Asia are increasing their weapon purchases due to the perceived threat posed by China’s intentions:

https://x.com/NikkeiAsia/status/2030876641673548089

Thank you for reading!