China-Russia: 25 Years of Pragmatism Over Ideology

Risks and Rewards: The next 25 years will create a greater Central Asia

Twenty-five years ago, on July 16, 2001, China and Russia signed the Treaty of Good-Neighborliness and Friendly Cooperation. The treaty predated the Ukraine conflict, tensions over Taiwan and today's accelerating strategic competition between China and the United States. It was not a reaction to events. It was a recognition that two major powers sharing a 4,300-kilometre border would achieve more through cooperation than confrontation.

The treaty established principles of mutual respect for sovereignty, territorial integrity, equality and non-interference. More importantly, it created a framework for long-term political, economic, scientific and security cooperation. Twenty-five years later, it has exceeded expectations.

The results are clear.

- July 16, 2001 – Treaty signed. Bilateral trade totaled approximately US$10.7 billion.

- 2004 – The final border agreement resolved the last major territorial dispute, ending centuries of uncertainty.

- 2005 – The first Peace Mission joint military exercise marked the beginning of regular strategic defence cooperation.

- 2011 – The treaty was formally extended, confirming both governments viewed the relationship as permanent rather than transactional.

- 2014 – A thirty-year natural gas agreement valued at approximately US$400 billion launched what became the Power of Siberia pipeline.

- December 2019 – Russian pipeline gas began flowing directly into China.

- 2018 – Bilateral trade exceeded US$100 billion for the first time.

- 2022 – Despite unprecedented Western sanctions on Russia, trade reached approximately US$190 billion.

- 2023 – Bilateral trade climbed to a record US$240.1 billion.

- 2024 – Trade reached approximately US$244.8 billion, more than twenty-two times the level when the treaty was signed.

- 2025-2026 – Cooperation expanded into nuclear energy, civil aviation, artificial intelligence, Arctic development, digital commerce, financial settlement in national currencies and advanced manufacturing.

Energy remains the backbone of the relationship, but it is no longer its defining feature. Russia supplies energy, minerals, uranium, timber, grain and other strategic resources. China contributes capital, manufacturing, engineering, infrastructure and increasingly sophisticated technology. Cross-border infrastructure has expanded rapidly while growing settlement in renminbi and rubles has reduced dependence on the US dollar and exposure to financial sanctions.

The relationship extends well beyond the two countries. China and Russia are the principal pillars of an emerging Eurasian architecture through the Shanghai Cooperation Organisation, BRICS+, regular strategic consultations and increasingly sophisticated joint military exercises. These institutions are not designed to replace existing international organizations overnight. They are creating alternatives and expanding choices.

It's a distinction that matters. Much of the Global South is no longer willing to accept a post-Cold War order in which political influence and economic development flow primarily through Western institutions. Countries across Asia, Africa, the Middle East and Latin America increasingly seek strategic autonomy rather than strategic alignment. They want investment without political conditions, diversified markets instead of dependence and multiple centres of finance, technology and diplomacy. The China-Russia partnership has become one of the principal drivers of that transition toward a genuinely multipolar world.

The geopolitical logic is equally straightforward. Since the end of the Cold War, successive American administrations have pursued policies designed to preserve US primacy. NATO's steady expansion eastward ultimately culminated in the Ukraine conflict. From Moscow's perspective, the issue was never simply Ukraine. It was the continued expansion of a military alliance toward Russia's borders. Whether one agrees with that assessment is secondary. Ignoring it makes understanding the conflict impossible.

Washington has long viewed the combination of Russian natural resources and European technology and manufacturing as a strategic challenge to American dominance. Similar thinking shaped US policy toward Japan during the 1980s. The Plaza Accord succeeded in slowing Japan's economic ascent at the very moment it appeared capable of challenging American industrial leadership.

China is now viewed through much the same lens. American strategists such as Elbridge Colby have argued openly that the United States must preserve military and economic predominance by constraining China's rise. His 2021 work advocates maintaining American dominance in the Western Hemisphere while disrupting China's energy supplies, logistics networks and maritime access during any future conflict. These ideas have moved beyond academic debate. They increasingly shape American defence planning and alliance strategy.

From Beijing's perspective, the lesson is obvious. China does not endorse the war in Ukraine. It has consistently called for negotiations and a political settlement. At the same time, it understands why the conflict occurred and recognizes that similar methods of strategic pressure could one day be directed toward China over Taiwan. Ensuring secure access to energy, resources and overland transport therefore becomes an economic necessity as much as a security imperative.

Geography reinforces that conclusion. Russia possesses the world's largest landmass and some of the planet's greatest reserves of oil, natural gas, minerals, timber and freshwater. Secure overland transport reduces dependence on vulnerable maritime chokepoints while the Northern Sea Route offers an additional corridor linking Asia and Europe. China will continue developing maritime trade, the Belt and Road Initiative and other transport corridors. Its strategy has never been dependence on a single route. It is resilience through diversification.

One major issue remains unresolved. Negotiations continue over pricing for the proposed Power of Siberia 2 pipeline. Commercial negotiations of this scale inevitably take time, but both countries have strong incentives to reach agreement.

The next twenty-five years will be shaped less by diplomacy than by economics. Much has already been achieved in energy and raw materials, but the greatest opportunities lie ahead. Russia's resources, scientific capability and geography complement China's capital, manufacturing strength and technological capacity. Together they can build integrated supply chains extending from energy and advanced materials to aerospace, artificial intelligence, biotechnology, quantum computing and advanced manufacturing.

Infrastructure will become an equally important source of growth. Expanded rail networks, logistics hubs, pipelines, telecommunications, digital payment systems and Arctic infrastructure will lower costs and strengthen Eurasian connectivity. As the Northern Sea Route becomes increasingly commercial, it will complement existing maritime trade rather than replace it.

The opportunities extend well beyond the bilateral relationship. Through the Shanghai Cooperation Organisation, BRICS+ and the Belt and Road Initiative, China and Russia are helping build an economic ecosystem stretching across Eurasia, Africa, the Middle East and Latin America. Central Asia, once viewed as peripheral, is becoming one of the principal crossroads of the Asian Century. Far from being a zero-sum system, expanding connectivity creates new opportunities for participating countries. Twenty-five years from now, the Eurasian interior is likely to be one of the world's fastest-growing centres of commerce, logistics and industrial development.

The risks are equally evident. Sanctions will continue to complicate investment, finance, insurance and technology transfer. Secondary sanctions, political instability, commodity price volatility, cybersecurity threats and military tensions will remain significant constraints. Technology competition will intensify as export controls, semiconductor restrictions and financial sanctions accelerate indigenous innovation and the emergence of parallel economic systems.

For governments, businesses and investors, the conclusion is straightforward. Those who continue to view Eurasia through the assumptions of the post-Cold War era risk missing one of the defining economic transformations of the twenty-first century.

Twenty-five years ago, China and Russia signed a treaty to stabilize their relationship. Today, that treaty has become the foundation of a broader strategic partnership helping reshape global trade, finance, energy and geopolitics. Ironically, the very policies intended to isolate both countries have accelerated their cooperation. Mutual benefit, complementary strengths and the perception of a common strategic challenger have transformed a bilateral agreement into one of the principal pillars of the emerging multipolar order.

This is a recent interview about governance by Xinhua News China's official wire service.

https://english.news.cn/20260710/7bd752d7e57f40ecbdd32608c1ea6c00/c.html

My role as a commentator is to condense the complex into the comprehensible. But governance isn't something that can be reduced to a few soundbites.

To explain my comments, I wrote three essays.

The first is about the function of governance.

The second discusses how governments differentiate themselves through narratives.

The third compares the US, EU, and China in terms of their governance over the last 18 years.

Governance, Function, Narratives, Performance

Summary

Governments exist for one reason: to organize society so people can live together peacefully, productively and with confidence in the future. Everything else—ideology, political branding, narratives of legitimacy—is methodology. Governments did not emerge from political philosophy; they emerged from necessity. As populations grew beyond families and tribes, strangers required rules, institutions and systems that allowed cooperation rather than conflict. Civilization begins with organization.

Throughout five thousand years of history, governments have taken many forms—monarchies, republics, democracies, socialist states, constitutional systems. Some flourished. Others failed. History offers no evidence that any political model guarantees success. Instead, it demonstrates that successful governments consistently deliver four universal public goods: organization, safety, certainty and opportunity. These are not ideological objectives; they are practical ones. Today, every citizen wants an organized society. Every family wants safety. Every business needs certainty before investing. Every generation expects greater opportunity than the last. This is the only standard that ultimately matters.

Governments naturally develop narratives to explain their authority and justify their legitimacy—Divine Right, popular consent, historical inevitability, collective ownership, individual liberty. These stories strengthen cohesion, define identity and mobilize support. They are not false; they are political. The problem arises when narratives become confused with purpose. Democracy, socialism, communism, monarchy and theocracy all describe different sources of legitimacy. None changes the practical responsibilities of governing. Regardless of ideology, citizens expect roads to function, hospitals to operate, schools to educate, courts to resolve disputes and businesses to invest with confidence. Governments that fail to provide these public goods eventually lose legitimacy, regardless of their ideological claims.

An important distinction is that capitalism is an economic philosophy, not a system of government. Markets cannot define property rights, enforce contracts, provide national defence or resolve collective action problems. Even the freest markets depend upon governments to establish and maintain the conditions under which markets function. The invisible hand still requires a visible framework. Successful governments adapt, borrow from different traditions and pursue results rather than doctrinal consistency. History rewards pragmatism more consistently than ideological purity.

Measured against these standards, the past eighteen years offer an instructive comparison. China has demonstrated exceptional organizational capacity through long-term planning, infrastructure expansion and industrial policy, translating national priorities into sustained execution. The European Union has built one of history's largest integrated markets, yet institutional complexity and competing national interests have slowed decision-making. The United States possesses enormous institutional strengths but has seen political polarization undermine policy durability, with major initiatives reversed after elections and long-term planning subordinated to short-term cycles.

Modern security extends beyond military strength to include food, energy, public health, cybersecurity, economic resilience and critical infrastructure. The United States maintains military primacy but faces internal challenges. Europe depends on collective defence while addressing industrial and energy vulnerabilities. China emphasizes domestic stability and economic resilience. Each system defines security differently; each faces its own challenges.

Certainty is perhaps the most valuable public good governments can provide. People invest in the future only when they believe rules will remain stable. China's long-term planning provides strategic continuity. Europe offers strong legal certainty, though regulatory complexity slows innovation. The United States, once the benchmark for predictability, now sees policy instability as trade, taxation and regulation shift with each administration.

Opportunity remains the ultimate purpose. China has lifted over 800 million people from poverty, built a vast middle class and leads in STEM graduates and manufacturing, though demographic pressures and economic maturation present new challenges. The United States leads in frontier innovation but faces widening inequality and slowing mobility. Europe provides high living standards and social protections but struggles with slower growth and ageing populations.

No system is without strengths or weaknesses. Governments should be judged by outcomes, not by what they call themselves. Can they organize society? Can they protect their people in all modern dimensions? Can they create enough certainty for families and businesses to plan decades rather than election cycles? Can they expand opportunities for future generations? These questions apply everywhere.

The world is entering a multipolar era. Economic power is broadly distributed. Asia drives global growth. Middle powers pursue strategic autonomy. Institutions created after 1945 are being challenged by realities that did not exist when they were designed. This transition requires less ideological competition and more effective governance. Shared problems—climate change, pandemics, artificial intelligence, cybersecurity, energy transition—cannot be solved by ideology alone.

Governments are instruments created to solve practical problems. History may remember them for the ideals they proclaimed; but their tenures were based on the efficacy of their rule. The governments that endure are those that organize effectively, protect their people, create confidence in the future and expand opportunity across generations. That has been the purpose of government for five thousand years. It remains the only standard that ultimately matters. Everything else is methodology.

Essay I

Government Beyond Ideology

Every government exists for one reason: to organize society. Everything else is methodology. Governments did not emerge from political philosophy; they emerged from necessity. As populations grew beyond families and tribes, people required rules, institutions and systems that allowed strangers to cooperate. Civilization begins with organization. Without it there is no commerce, no security, no prosperity and no enduring peace.

For more than five thousand years governments have taken many forms. Kingdoms became empires. Republics replaced monarchies. Democracies emerged alongside socialist states. Constitutional systems evolved from absolute rule. Some flourished. Others failed. History offers a simple lesson: no political system has a monopoly on good government. Ideology explains how governments justify themselves; but good governments is about reality, not rhetoric.

The purpose of government has remained remarkably constant throughout history: to provide organization, safety, certainty and opportunity. These are not ideological objectives—they are practical ones. They are also universal. Every citizen wants to live in an organized society. Every family wants to feel safe. Every business needs certainty before making long-term investments. Today, every generation expects greater opportunity than the one before it. Governments should be judged by how well they deliver these four public goods.

Organization comes first because everything else depends upon it. Markets require laws. Property requires legal protection. Contracts require enforcement. Infrastructure requires planning. Education requires investment. Healthcare requires coordination. Even societies that describe themselves as free markets depend upon governments to establish the rules that make markets possible. Without organization there is no freedom—only disorder, where power belongs to whoever possesses the greatest wealth, influence or force. Organization transforms a collection of individuals into a functioning society.

The second responsibility is safety. Historically, governments protected citizens from invasion, crime and civil disorder. That definition is no longer sufficient. Modern security includes food, energy, healthcare, cybersecurity, environmental resilience, financial stability and the protection of critical infrastructure. The COVID-19 pandemic demonstrated that disease can threaten nations as effectively as war. Cyber attacks can disable financial systems without firing a shot. Supply chain disruptions can undermine national resilience as effectively as military blockades. Security can no longer be measured simply by the size of an army or the sophistication of military technology. A government that cannot protect its people will eventually lose their confidence.

The third responsibility is certainty. It is perhaps the least discussed responsibility of government, yet it is one of the most important. People make decisions based on their expectations of tomorrow. Families purchase homes because they believe property rights will be protected. Businesses build factories because they expect contracts will be honoured. Investors commit capital because they believe regulations will remain reasonably predictable. Students spend years acquiring skills because they expect opportunities will exist when they graduate. Economic development depends as much upon confidence as it does upon capital. Governments create that confidence through stable institutions, predictable laws and transparent administration. Absolute certainty is impossible, but reasonable certainty makes long-term progress possible.

The fourth responsibility is opportunity. Organization, safety and certainty are not objectives in themselves; they create the conditions under which people can improve their lives. Education develops human capital. Infrastructure connects markets. Healthcare protects productivity. Innovation creates new industries. Competition rewards initiative. Opportunity is how one generation leaves the next better off than itself. Without opportunity, stability becomes stagnation. Without organization, safety and certainty, opportunity cannot exist. The four responsibilities reinforce one another; weakness in one eventually undermines the others.

This is why ideological debates often miss the central issue. Governments should not be judged by what they call themselves—they should be judged by what they accomplish. Can they organize society? Can they protect their people? Can they provide enough certainty for families and businesses to plan decades rather than election cycles? Can they expand opportunity so that each generation enjoys greater possibilities than the last? These questions apply regardless of culture, geography or political system because they reflect universal human needs.

The same principles extend beyond national borders. Countries are members of an international community just as citizens are members of a nation. The responsibilities remain remarkably similar. International organization requires institutions that facilitate cooperation while respecting sovereignty: trade rules, financial institutions, development banks and diplomatic forums. These exist because no nation can solve every challenge alone. As economic and political power becomes more broadly distributed, international institutions must evolve to reflect contemporary realities rather than historical power balances.

International safety should also be understood more broadly than military alliances. Security includes freedom of navigation, resilient supply chains, public health cooperation, cybersecurity, disaster response and conflict prevention. No country, regardless of its size or military strength, can isolate itself from global instability. Collective security has become a practical necessity rather than an idealistic aspiration.

International certainty depends upon consistent behaviour. Trade agreements should be respected. Investment requires confidence. Diplomatic commitments should survive changes in political leadership. Predictability lowers risk. Lower risk encourages investment. Investment expands prosperity. When agreements become temporary political instruments rather than durable commitments, uncertainty like a virus infects the international system. Businesses delay investment. Markets become more volatile. Strategic competition replaces cooperation.

The final international responsibility is opportunity. Trade expands markets. Investment creates employment. Technology raises productivity. Infrastructure connects economies. Education develops future generations. Development is not a zero-sum competition. History demonstrates that periods of expanding global prosperity have generally coincided with periods of expanding international cooperation.

The world is now entering a new phase. The post-Cold War assumption that one political and economic model represented the inevitable destination of history is giving way to a more complex reality. Economic power is becoming more broadly distributed. Asia has become the principal engine of global growth. Emerging economies seek greater representation in international institutions. Middle powers increasingly pursue strategic autonomy rather than exclusive alignment with competing blocs. Multipolarity is no longer a prediction—it is the emerging reality.

The question is no longer whether governments have different political systems—they always have. The question is whether those systems can deliver the four responsibilities that define good government. Can they organize society? Can they provide safety in all its modern dimensions? Can they create enough certainty for people to invest in the future with confidence? Can they expand opportunity while acting as responsible members of the international community? These are the questions that matter. Not ideology. Not political labels. Not competing claims of moral superiority.

Governments are not ends in themselves; they are instruments created to solve practical problems. History sometimes remembers governments for the theories they embraced, but it always remembers the societies they built. The governments that endure are those that organize effectively, protect their people, create confidence in the future and expand opportunity across generations. That has been the purpose of government for five thousand years. It remains the only standard that ultimately matters. Everything else is methodology.

Essay II

The Narratives Governments Use

Every civilization tells itself a story. Every government does the same. These stories explain where authority comes from, why governments deserve obedience and what makes one political system superior to another. Throughout history these narratives have taken many forms. The Divine Right of Kings claimed authority came from God. Monarchies argued that stability required hereditary rule. Republics claimed legitimacy flowed from the consent of citizens. Liberal democracies placed their faith in elections and individual liberty. Socialist systems emphasized collective ownership and social equality. Communist parties argued they represented the historical interests of the working class. Each presented itself as the correct answer to governing society. Each claimed moral superiority. Each argued that history validated its approach.

Yet history tells a different story. Governments did not emerge from political philosophy; they emerged from necessity. Long before philosophers debated the ideal state, human beings faced a practical problem. As populations grew beyond families and tribes, strangers needed rules that allowed them to cooperate rather than compete through violence. Agriculture required irrigation systems. Trade required contracts. Cities required sanitation. Communities required justice. Armies required organization. Taxation required administration. Civilization begins with organization. Everything else follows. Political philosophy arrived later. Ideology did not create governments; governments created ideologies to explain themselves. That distinction matters.

For more than five thousand years governments have changed their appearance many times. Kingdoms became empires. Empires fragmented into nation states. Republics replaced monarchies. Democracies emerged beside socialist systems. Constitutional monarchies evolved from absolute rule. Some lasted centuries. Others disappeared within decades. Some created extraordinary prosperity. Others collapsed into chaos. No political system possesses a monopoly on either success or failure. The historical record simply does not support that conclusion. Instead, history suggests something much more practical: every successful government performs the same essential functions. It organizes society. It provides safety. It creates certainty. It expands opportunity. Everything else is methodology.

This is where rhetoric and reality begin to diverge. Political rhetoric emphasizes differences, while reality emphasizes common purposes. Governments naturally seek legitimacy. They therefore develop narratives explaining why their authority is justified and why competing systems are inferior. These narratives strengthen social cohesion, define national identity and mobilize public support. That does not make them false; it makes them political. The problem arises when political narratives become confused with economic and social realities.

Democracy is often presented as an end in itself. Socialism is frequently described as the destination of history. Communism once claimed scientific inevitability. Monarchy rested upon hereditary legitimacy. Theocracy locates authority in divine will. Each describes a different source of political legitimacy. None changes the practical responsibilities of governing. Regardless of ideology, citizens still expect roads to function, hospitals to operate, schools to educate, police to provide security, courts to resolve disputes, businesses to invest with confidence, and families to believe tomorrow will be better than today. These expectations are universal. They transcend culture, geography and political philosophy.

This is why governments that fail to provide these public goods eventually lose legitimacy regardless of ideology. History is filled with examples. Kings have been overthrown. Democracies have collapsed. Communist parties have dissolved. Military governments have fallen. Religious states have fragmented. The common factor is rarely ideology itself. It is failure to govern effectively.

One important distinction deserves separate consideration. Capitalism is often treated as a system of government. It is not. Capitalism is primarily an economic philosophy. Like other belief systems, it rests upon foundational assumptions about human behaviour. Its central premise is that decentralized markets, guided by competition and Adam Smith's "invisible hand," allocate resources more efficiently than centralized authority. For many advocates this functions almost as an article of faith. Markets become self-correcting. Competition becomes inherently beneficial. Individual incentives become the primary engine of collective prosperity. Like all belief systems, capitalism has produced remarkable successes. It has also produced excesses, monopolies, financial crises and widening inequality when left without effective governance.

The lesson is not that markets fail. It is that markets themselves require organization. Markets cannot define property rights. They cannot enforce contracts. They cannot provide national defence. They cannot administer justice. They cannot build every piece of public infrastructure. They cannot resolve every collective action problem. Even the freest markets depend upon governments to establish and maintain the conditions under which markets function. The invisible hand still requires a visible framework.

This illustrates a broader point. Economic philosophies explain how prosperity should be created. Political ideologies explain why governments possess authority. Neither replaces the practical responsibilities of governing. The danger begins when governments become more committed to defending ideological purity than solving practical problems. Reality rarely conforms perfectly to theory. Successful governments adapt. They borrow ideas from different traditions. They adjust institutions to changing circumstances. They pursue results rather than doctrinal consistency. China's reforms after 1978 illustrate this principle. So do the Nordic welfare states. So does the evolution of constitutional monarchies. So does the mixed economy that emerged across much of the developed world after the Second World War. History rewards pragmatism more consistently than ideological purity.

Perhaps this explains why governments that appear very different often behave similarly once they assume responsibility. Conservative governments intervene during financial crises. Socialist governments encourage private investment. Democratic governments restrict freedoms during emergencies. Authoritarian governments liberalize markets when growth slows. Ideology shapes preferences. Responsibility shapes behaviour. The closer governments move toward the practical realities of governing, the more similar they often become.

The world is entering another period of profound change. The post-Cold War debate over which ideology should dominate international affairs is giving way to a different conversation. Citizens increasingly ask practical rather than philosophical questions. Can governments manage technological disruption? Can they maintain economic growth? Can they provide affordable housing? Can they protect public health? Can they ensure national security? Can they create opportunities for future generations? These questions are remarkably similar whether they are asked in Beijing, Brussels, Washington, Delhi, Jakarta or Brasília, because human needs do not fundamentally change.

The language of politics however does change. The aspirations of ideologies evolve. The institutions of government adapt. The narratives become more sophisticated. Yet, the responsibilities remain constant. Governments exist to organize society, to provide safety, to create certainty and to expand opportunity. Everything else is a discussion about methodology. The stories governments tell matter. They shape national identity. They inspire citizens. They influence policy. They help explain why societies choose one path rather than another. But they should never be confused with the purpose of government itself. History ultimately judges governments less by the ideals they proclaim than by the lives they improve. That has been true for five thousand years. It remains true today.

Essay III

Governments Should Be Judged by Results, Not Ideology

Every government exists for one reason: to organize society so people can live together peacefully, productively and with confidence in the future. Everything else is methodology. Throughout history governments have taken many forms. Monarchies, republics, democracies, socialist states and constitutional systems have all succeeded at times and failed at others. History offers no evidence that any one political model guarantees good government. It demonstrates something much simpler: successful governments consistently provide four things: organization, safety, certainty and opportunity.

These are universal objectives. Every citizen wants to live in an organized society. Every family wants to be safe. Every business needs certainty before investing. Every generation wants greater opportunities than the last. This is the standard by which governments should be judged. Not ideology. Not political branding. Not the frequency of elections. Not the volume of political rhetoric. Governments are not religions requiring faith. They are institutions designed to solve problems.

Measured against this standard, the past eighteen years provide an instructive comparison between the United States, China and the European Union. Each represents a different philosophy of governance. Each has produced impressive achievements. Each also reveals the limitations of its own system. The question is not which system is morally superior. The question is which has consistently delivered organization, safety, certainty and opportunity.

Organization is the foundation. Without organization there are no functioning markets, no enforceable contracts, no protected property rights and no long-term economic development. China has demonstrated exceptional organizational capacity. National priorities are translated into long-term planning through successive Five-Year Plans. Infrastructure has expanded at an unprecedented pace. High-speed rail now exceeds 48,000 kilometres. China has built the world's largest modern logistics network, the world's largest manufacturing base and one of the world's most advanced digital payment systems. Industrial policy has accelerated leadership in electric vehicles, batteries, renewable energy and advanced manufacturing. Whether one agrees with every policy is beside the point. The system has demonstrated an ability to establish priorities, mobilize resources and execute policy over long periods.

The European Union represents almost the opposite model. Its institutions are designed to build consensus among twenty-seven sovereign states. That has produced one of history's most successful peace projects and one of the world's largest integrated markets. It has also made rapid decision-making increasingly difficult. Migration, energy policy, industrial competitiveness and defence have often been slowed by institutional complexity and competing national interests, for example over Ukraine and Gaza.

The United States possesses enormous institutional strengths, but over the past eighteen years political polarization has increasingly undermined organizational effectiveness. Policy has become less durable. Executive orders replace legislation. Major initiatives are reversed after elections. Long-term planning is often subordinated to two-year and four-year political cycles. The ability to make decisions increasingly differs from the ability to sustain them.

Safety is the second responsibility. Military strength remains important, but modern security extends much further: food, energy, public health, cybersecurity, economic resilience and critical infrastructure. The United States continues to field the world's most capable military and maintains an unmatched alliance network. Yet internally it faces persistent challenges from violent crime, opioid addiction, political violence, cyber threats and deteriorating infrastructure. Externally it has remained engaged in multiple military conflicts, Afghanistan, Iraq, Ukraine, Gaza, Iran, etc…, while strategic competition with both Russia and China has intensified.

Europe has enjoyed remarkable internal peace but remains heavily dependent upon NATO for collective defence. The Ukraine conflict exposed weaknesses in industrial capacity, energy dependence and military readiness that European governments are now attempting to address through unprecedented defence spending.

China has emphasized domestic stability while avoiding major overseas military interventions. It has invested heavily in public security, disaster response, transportation resilience, healthcare capacity and energy diversification. Beijing’s military modernization is defensive, intended to protect sovereignty and territorial integrity rather than project power globally.

Each system defines security differently: the United States emphasizes military primacy, Europe emphasizes collective defence, and China emphasizes domestic stability and economic resilience.

Certainty may now be the most valuable public good governments can provide. People invest in the future only when they believe the rules will remain reasonably stable. Businesses build factories expecting contracts to be honoured. Families buy homes believing property rights will endure. Students spend years acquiring skills expecting future opportunities.

China's long-term planning has provided remarkable strategic continuity. Priorities such as advanced manufacturing, technological self-reliance, infrastructure modernization and green development have remained broadly consistent despite changing economic conditions.

Europe continues to provide strong legal certainty, although regulatory complexity sometimes slows innovation and increases business costs.

The United States once represented the global benchmark for policy predictability. Today businesses face increasing uncertainty as trade policy, taxation, industrial incentives, environmental regulation and international commitments often change with each administration. Political competition has increasingly produced policy instability.

Opportunity remains the ultimate purpose of government. Organization, safety and certainty exist to create better lives. China's record over the past generation is historically significant. More than 800 million people have escaped extreme poverty over the course of reform and opening up. A middle-income population larger than the entire population of the United States has emerged. China now graduates more STEM students annually than any other country, leads global manufacturing in numerous sectors and has become the world's largest market for electric vehicles and renewable energy. Growth has moderated as the economy matures. Demographic pressures and the restructuring of the property sector present genuine challenges. They are the challenges of managing success rather than overcoming underdevelopment.

The United States remains the world's innovation leader in frontier technologies. Its universities, financial markets and entrepreneurial culture continue to produce extraordinary breakthroughs. Yet opportunity has become increasingly uneven. Income inequality has widened. Housing affordability has deteriorated. Social mobility has slowed compared with earlier generations.

Europe provides high living standards, universal healthcare and extensive social protections. These remain considerable strengths. At the same time, slower growth, ageing populations and declining industrial competitiveness have limited the expansion of new opportunities.

No system is without strengths. No system is without weaknesses. The lesson is not that one model should replace another. The lesson is that governments should be judged by outcomes rather than ideology. Can they organize society effectively? Can they provide safety in all its modern dimensions? Can they create enough certainty for families and businesses to plan decades rather than election cycles? Can they expand opportunity for future generations? These questions matter far more than whether governments describe themselves as democratic, socialist, capitalist or liberal.

The international system is entering a multipolar era. Power is becoming more broadly distributed. Economic growth is increasingly driven by Asia. Middle powers are pursuing strategic autonomy. Institutions created after the Second World War are being challenged by realities that did not exist when they were designed. This transition requires less ideological competition and more effective governance. The objective should not be about exporting political systems. It should be improving governmental performance.

The world's problems are increasingly shared: climate change, pandemics, artificial intelligence, cybersecurity, supply chain resilience, energy transition and financial stability. None can be solved by ideology alone. They require governments capable of organizing society, protecting their citizens, providing certainty and expanding opportunity while acting responsibly as members of the international community. That has always been the purpose of government. It remains the only standard that ultimately matters. History remembers the ideals governments proclaim, but their rule is predicated on the expectations of their people.

Anadolu Agency

https://www.aa.com.tr/en/features/explainer-what-nato-s-ankara-summit-means-for-china/3996400

NATO’s recent meeting is a strategic diversion that tries to paper over widening divisions between the EU and US by focusing on China. Economically they signal that competing supply chains for data, technology, weapons, ammunition, and dual use items will continue to harden.

Turning to retirees’ savings... Will Japan succeed in saving the yen?

24 - Muhammad Tariq

Japan is heading down a new path in its attempts to rescue the yen, as investors interpreted the statements of Japanese Finance Minister Satsuki Katayama as a different political and economic signal. Instead of resorting to direct intervention in the currency market, or moving towards spending more foreign exchange reserves, the government is opening a new door that redirects Japan’s huge savings inward in order to support the currency and stimulate the economy.

Katayama said the government would explore ways to encourage pension funds, particularly the Government Pension Fund International (GPIF), to increase their investments in Japanese assets. Her remarks sent the yen higher and boosted prices for government bonds and domestic stocks, amid bets that Tokyo might be about to change one of the most important features of its investment policy over the past decade.

The significant impact of the Japanese finance minister’s remarks stems from the fact that the GPIF is not an ordinary pension fund, but rather the largest of its kind in the world, managing assets of approximately 294 trillion yen (about $1.8 trillion), and holding nearly $931 billion in foreign assets, including more than $232 billion in US Treasury bonds.

Supporting the yen from within

Japan has previously relied on traditional tools to counter its weak currency, including intervention in the foreign exchange market and maintaining a highly accommodative monetary policy, but recent developments suggest the government is beginning to view domestic savings as a more sustainable tool to support the yen.

The British newspaper, the Financial Times, confirms that investors treated the Finance Minister’s statements as a kind of “indirect intervention” in the currency market, because redirecting part of pension fund investments towards yen-denominated assets may boost demand for the local currency more sustainably than short-term interventions in the exchange market.

Reuters recalls that this step represents a reversal of the approach Japan has followed since the era of former Prime Minister Shinzo Abe, when major investment institutions were encouraged to increase their foreign investments in pursuit of higher returns, in light of extremely low domestic interest rates. Today, however, the government appears more inclined to bring part of these funds back home, with rising yields on Japanese bonds and improving performance of local stocks.

Beyond the yen

But reading the step as merely an attempt to save the currency oversimplifies a more complex picture. Professor Einar Tangen, Senior Fellow at the Centre for International Governance Innovation and Chairman of Asia Narratives, believes that “what is happening goes far beyond the issue of supporting the yen,” adding that the Japanese government has come to realize that the economic model it has relied on for decades has reached its limits.

Tangen told “24” that the Japanese economy for many years was built on three main pillars: export-led growth, extremely low interest rates, and achieving higher returns through overseas investment. However, geopolitical changes, slowing global demand, and the reshaping of supply chains have pushed Tokyo to seek a different model based on mobilizing domestic savings to finance innovation, advanced industries, and infrastructure within Japan.

According to Tangen, the government’s core message has become clear: “We want Japanese capital to work for Japan again.”

Plenty of money... and cautious consumers

Although Japan has enough savings to finance a wide economic transformation, the root of the problem lies in the fact that a large portion of these funds have remained away from productive investment. This is due to household behavior following the long deflationary experience, weak wages, and declining confidence in the future. Japanese households prefer to keep their money in bank accounts and deposits due to growing anxiety.

Successive Japanese governments have worked to gradually move households “from saving to investing,” by expanding tax-exempt investment accounts known as NISA, and encouraging individuals to buy stocks and investment funds instead of leaving money in deposits. The Bank of Japan has described this shift as part of a broader attempt to build an advanced asset management center and change how families deal with their financial wealth. However, changing incentives does not necessarily mean changing behavior quickly.

Tangen says governments can adjust tax rules and direct financial institutions in much less time than it takes to change household decisions, explaining that increased investment alone will not drive Japanese people to spend unless incomes rise steadily and young people and families feel greater confidence in the future.

Labor shortage and population decline

Tangen believes that Japan’s crisis is deeper than a lack of capital; the country suffers from an aging and shrinking population. He stresses that investment may raise productivity, but it will not compensate for the labor shortage or halt population decline, at a time when those over 65 have exceeded 30% of the population.

Added to this is the burden of government debt. According to the International Monetary Fund, total public debt is expected to reach 203% of GDP this year, a ratio that remains the highest among advanced economies, even with expectations of a gradual decline in the coming years.

This debt becomes more sensitive as interest rates rise. Japan has for decades financed its deficit at very low cost, but long-term bond yields have risen sharply as the Bank of Japan gradually exits the era of ultra-low interest rates, and investor concerns over government spending and the weak yen have intensified.

Real support... but not a complete cure

Despite the complexity of the situation, directing part of pension funds back into Japan is likely to have a tangible impact, because increased buying of local bonds and stocks reduces capital outflows and raises demand for yen-denominated assets. This was evident immediately after Katayama’s remarks; the currency rose by about 0.6%, while 10-year government bond yields fell by 11.5 basis points, their largest daily decline in more than a year.

The sustainability of this effect depends on turning these statements into actual decisions, as the fund does not fall under the Ministry of Finance but is overseen by the Ministry of Health, Labour and Welfare, and any change requires broader consensus within the Japanese government.

In a later development, Japan’s Nikkei newspaper reported that the government is considering raising the share of alternative investments, such as unlisted stocks and real estate, from its current level of 1.7% towards the permitted ceiling of 5%. This, if implemented, would direct a larger portion of funds to local companies and projects, rather than limiting purchases to listed stocks and bonds. However, the Ministry of Health, Labour and Welfare, which oversees the fund, did not comment on the report, according to Reuters.

Tokyo wants some of these funds to reach sectors that can raise economic productivity, such as robotics, artificial intelligence, advanced manufacturing, and digital infrastructure. Tangen says these investments may improve corporate profits and support wage growth, but they alone will not address the labor shortage or population decline, and therefore he expects their gains to be gradual rather than transformative.

Japan’s New Effort Is Not A New Model

A recent Reuters article on Japan’s efforts to shift its massive pension funds into domestic assets has sparked a rally in yen and bonds. The desire is to change the trajectory of Japan’s economy. But from Beijing’s perspective, this is less about monetary policy than an attempt to correct four decades of economic drift—and it is not a new growth model.

Japan’s latest effort to steer pension funds toward domestic investment reflects a growing recognition that the economic model established after the 1985 Plaza Accord is no longer sustainable. The Plaza Accord fundamentally altered Japan’s trajectory. The rapid appreciation of the yen undermined export competitiveness, contributed to the asset bubble of the late 1980s—fueled by low interest rates meant to counter the strong currency—and ushered in what became known as the “Lost Decades.” Nearly forty years later, despite being one of the world’s largest economies, Japan’s economy is worth less in nominal U.S. dollar terms than it was when the Accord was signed, largely because of prolonged stagnation and the sharp depreciation of the yen. The lesson from Beijing’s perspective is that exchange rates can reshape an economy, but they cannot substitute for competitiveness. The government hopes redirecting pension assets toward domestic investment will revive growth. That may help at the margin, but it does not address Japan’s underlying constraints.

Japan’s greatest economic challenge is not capital. It is people. The population is shrinking, the workforce is aging and births continue to fall. Investment can improve productivity, but it cannot replace millions of workers or create consumers who do not exist. Every developed economy is competing for skilled labor, making immigration an increasingly difficult political choice. Across the OECD, Japan’s labor productivity remains among the lowest, and weak business dynamism—firm entry and exit rates are roughly half those of the United States—means too many resources remain trapped in low-productivity “zombie firms.” No pension reform can resolve that. Consumers spend when they expect tomorrow to be better than today. Japanese households have accumulated more than $14.76 trillion in financial assets because three decades of slow growth, deflation and wage stagnation rewarded saving rather than spending. A dual labor market, with a growing share of non-regular workers, has suppressed wage pressure further. Redirecting those savings into equities or infrastructure will not fundamentally change consumer behavior unless real wages consistently outpace inflation.

A stronger yen lowers import costs but hurts exporters. A weaker yen helps exports but raises the cost of imported food, energy and industrial inputs—a hidden tax on households in a country that imports roughly 85–90% of its energy and about 60% of its food. Japan remains caught between competing pressures. Its economy still depends heavily on exports while relying on imported raw materials. Pension fund reform cannot eliminate that structural dilemma. Moving savings from bank deposits and foreign assets, including U.S. Treasuries, into domestic investment may increase capital available for Japanese industry. But capital has never been Japan’s primary constraint. The country already possesses abundant domestic savings. The question is whether profitable opportunities exist at sufficient scale. Investment cannot overcome shortages of labor, land, energy or natural resources.

Japan imports most of its energy, many industrial minerals and a significant portion of its food. Even if domestic investment accelerates, manufacturing expansion still depends on reliable access to imported resources and the ability to efficiently process them. China remains central to processing many rare earths and strategic minerals—accounting for roughly 85–90% of global processing capacity—essential for advanced manufacturing, electric vehicles, robotics and electronics. Japan has explored deep-sea mining alternatives, but these remain commercially unviable at current costs (exceeding $50/kg) and are more strategic reserves than near-term substitutes. Building alternative supply chains will require years of investment, higher production and end-user costs. Japan increasingly competes in industries where labor, environmental compliance and regulatory costs continue to rise. At the same time, competitors across Asia are improving rapidly while maintaining lower production costs. Vietnam, Indonesia, India, South Korea and China are all moving up the manufacturing value chain, making it more difficult for Japan to preserve technological leadership. South Korea, in particular, has shown stronger productivity growth in recent decades, while Japan’s productivity gains have lagged.

From Beijing’s perspective, economics ultimately outweighs politics, unless it involves red-lines, like Taiwan. China remains Japan’s largest trading partner despite strategic competition. The two economies remain deeply integrated through manufacturing, supply chains and investment. Bilateral trade still exceeds US$300 billion annually. China’s export controls on selected rare earths and strategic metals are viewed in Beijing as targeted national security measures rather than economic coercion. They also remind Japan that economic resilience depends not only on diversification but also on maintaining stable regional relationships.

Japan cannot consume its way to prosperity without first producing internationally competitive goods and services. Its long-term economic model has always been straightforward: import raw materials, apply technology, engineering and innovation to create high-value products and export them to global markets. Export earnings pay for imported resources, support higher wages, maintain living standards and generate the domestic demand that sustains the broader economy. That model remains Japan’s best path forward. The challenge is that it is now the ambition of nearly every major Asian economy. China is moving further into advanced manufacturing. South Korea remains highly competitive. India seeks to become a global industrial hub. Vietnam and Indonesia are climbing the value chain while attracting foreign investment. Even developed Western economies are pursuing industrial policies designed to bring manufacturing home. From Beijing’s perspective, redirecting pension savings into domestic investment is a rational policy. But it is not a new growth model. Ultimately, Japan’s future will depend less on where its pension funds invest than on whether it can maintain technological leadership, secure access to resources, raise productivity faster than its competitors—while addressing weak business dynamism and labor market dualism in the process—rebuild consumer confidence and preserve constructive economic relations across Asia. Capital can finance growth, but it cannot by itself create competitiveness. Competitiveness has and will continue to be the basis of Japan’s success. The issue is how it rekindles the spark it had in the 1970s, given the constraints it faces today—a question countries around the world continue to wrestle with.

Business confronts a new blended paradigm of security and trade

The NATO Summit in Ankara marked another milestone in the Alliance's transformation from a security organization built around deterrence into one preparing for sustained competition among major powers. Defence spending targets have increased, industrial cooperation is expanding and governments are searching for ways to rebuild military capabilities that atrophied after the Cold War.

Much of the discussion has focused on budgets, procurement and interoperability. These are important, but they overlook the fundamental issue. Rearmament is not simply a financial exercise. It is an industrial one.

Modern militaries depend on basics that begin long before a missile is assembled or a drone enters service. They begin with mining, refining and processing critical minerals, metals, chemicals, investment, expertise, and manufacturing facilities. Areas that China currently dominates that will take time and expertise to respond to not just money, so expanded defence budgets alone are not a solution.

For decades China has invested systematically across the entire value chain of critical minerals, chemicals, expertise, and manufacturing facilities. While much of the EU and US attention focuses on mining, China's real strategic advantage lies in processing and refining. Rare earth ores extracted almost anywhere in the world require processing in China before they become usable components in advanced manufacturing. China's advantage is the technology that allows it to produce the purity of material needed at low cost points.

China produces roughly 95 percent of the world's primary gallium, a material essential for gallium nitride semiconductors used in advanced radar, electronic warfare systems and missile guidance. It is also the dominant processor of graphite, tungsten, magnesium and several other minerals considered indispensable for defence production. In rare earth separation and refining, Chinese companies account for more than 90 percent of global capacity, while China's share of heavy rare earth processing approaches a near-monopoly.

This did not occur by accident. It reflects decades of coordinated industrial policy, sustained capital investment, environmental trade-offs and the deliberate development of manufacturing ecosystems. Processing capacity cannot simply be replicated by opening another mine. It requires specialised technology, trained labour, supporting industries and years of accumulated expertise.

That distinction matters because Western policymakers discuss reducing dependence on China as though new mining projects alone solve the problem. They will not. Even when rare earth concentrates are extracted in the United States, Australia or Africa, the material will still require processing before entering advanced manufacturing supply chains. So, processing remains the most critical strategic bottleneck.

From Industrial Leverage to Strategic Legal Defences. China's export controls on gallium, germanium, graphite and selected medium and heavy rare earth elements demonstrate that Beijing views critical minerals as part of a broader national security framework rather than purely commercial commodities. These measures emerged in the context of responding to the widening technology restrictions, sanctions and export controls imposed by the United States and its allies.

One point of clarification: Although China imposed restrictive export controls on gallium, germanium, antimony and superhard materials to the United States in 2024, the most restrictive clause—which "in principle" prohibited exports to the U.S.—was temporarily suspended from November 9, 2025, to November 27, 2026. The suspension does not eliminate the controls entirely but reflects Beijing's tactical calibration of these measures. The broader point remains: China has demonstrated its willingness to leverage critical minerals strategically in response to US, EU, and Japanese containment actions. The controls are meant to remain in place as a signalling mechanism during the suspension period.

What is developing is the legal architecture surrounding these measures. In 2026 China expanded its anti-sanctions framework through State Council Decrees No. 834 and No. 835, allowing penalties against entities that participate in what Beijing describes as "improper extraterritorial jurisdiction" or actions that disrupt Chinese industrial and supply chains.

· Decree No. 834 (March 2026): Provisions of the State Council on Security of Industrial and Supply Chains—China's first dedicated administrative regulation on industrial and supply chain security.

· Decree No. 835 (April 2026): Regulations of the People's Republic of China on Countering Foreign States' Unlawful Extraterritorial Jurisdiction—establishes a legal framework to block foreign "long-arm jurisdiction."

In May 2026 Beijing invoked its blocking rules to prohibit Chinese entities from complying with certain U.S. sanctions related to Iranian oil purchases. MOFCOM issued Announcement No. 21 of 2026 on May 2, 2026, barring Chinese citizens and companies from "recognizing, enforcing, or complying with" U.S. sanctions imposed on five Chinese "teapot" oil refineries for buying Iranian oil.

That same month, China's Ministry of Justice applied Decree No. 835 to determine that an EU investigation into Nuctech, a Chinese security equipment company with subsidiaries in Europe, was a case of "improper extraterritorial jurisdiction." In line with the decision, no organisation or individual may assist in the EU probe.

The issue is no longer limited to physical exports. Multinational firms increasingly face conflicting legal obligations across jurisdictions. As James Hsiao, a Hong Kong partner with the multinational law firm White & Case, observed in Al Jazeera's reporting, companies may be required under U.S. or EU sanctions rules to restrict dealings with a counterparty while simultaneously considering whether those actions create risk under Chinese countermeasures.

A third legal instrument, still in draft form as of June 2026, would allow Chinese prosecutors to bring cases against foreign organisations and individuals whose "unlawful acts harm the country's national interests or social public interest," according to state media. This is part of a broader effort to strengthen China's public interest litigation law.

This does not mean China is attempting to coerce foreign firms into abandoning Western markets. Beijing presents these measures as defensive mechanisms intended to protect national supply chains and counter what it views as extraterritorial pressure. The practical result, however, is that compliance itself has become a geopolitical issue. As Beijing-based advisory firm Trivium China put it, foreign companies will be "increasingly caught between an American rock and a Chinese hard place."

Industrial Capacity Has Become the New Measure of Military Power. Critical minerals explain why rebuilding defence industries will be difficult. The experience of Ukraine explains why it has become urgent.

More than three years of high-intensity warfare have demonstrated that modern conflict remains a contest of industrial endurance. Precision weapons and advanced technology matter, but they have not replaced the need to manufacture enormous quantities of artillery ammunition, missiles, drones and replacement equipment.

Russia has steadily expanded defence production despite extensive sanctions. Western intelligence assessments indicate that Russian artillery output now exceeds the combined production of Europe and the United States by a substantial margin.

Europe and the United States have responded with hundreds of billions of dollars and euros in new defence spending. The problem is not simply funding. Explosives production, specialised steel, propellants, electronic components and precision machining all require capabilities that were allowed to contract during the post-Cold War era. Production capacity, not procurement budgets alone, has become the limiting factor.

China presents an instructive contrast. Although Beijing has not fought a major war in decades, it has continued expanding shipbuilding, machine tools, advanced electronics, chemicals, batteries and critical mineral processing. Civilian industrial policy has created strategic depth that could support military mobilisation if required.

The New Economics of War. For much of the post-Cold War period, military power was measured by technological superiority. Advanced aircraft, precision-guided munitions and carrier strike groups became the defining symbols of military dominance. Recent conflicts suggest that assumption is becoming increasingly difficult to sustain.

Ukraine has shown that inexpensive unmanned systems can destroy equipment worth hundreds or thousands of times more. Commercial drones costing hundreds of dollars have been adapted to attack armoured vehicles worth millions, while one-way attack drones costing tens of thousands of dollars have forced defenders to expend interceptor missiles costing several million dollars.

The reality is stark. The attacker no longer needs every drone to reach its target. It needs enough inexpensive systems to force the defender into consuming far more expensive interceptors. Quantity and affordability are again becoming decisive variables.

This is driving a shift from platform-centric warfare toward system-centric warfare. Success increasingly depends on integrating sensors, communications, artificial intelligence, electronic warfare and autonomous systems into networks capable of absorbing losses while continuing to operate. Individual platforms remain important, but they no longer determine the outcome by themselves.

The implications extend well beyond NATO or Ukraine. The international system is entering a period in which competition will increasingly be defined by industrial ecosystems rather than military alliances alone.

For three decades globalization encouraged countries to optimize for efficiency. Manufacturing dispersed across borders, companies pursued the lowest production costs and governments assumed economic interdependence would reduce the likelihood of conflict. The pandemic, the semiconductor shortage and the wars in Ukraine and the Middle East have undermined that assumption.

The United States, the European Union, Japan and South Korea are investing heavily in semiconductors, batteries and critical mineral supply chains. China is accelerating investment in the same sectors while strengthening domestic innovation and industrial upgrading. The objective on all sides is not complete decoupling but reduced vulnerability.

This is creating a more fragmented global economy. Countries increasingly operate across overlapping systems with different technology standards, financial arrangements and regulatory frameworks rather than within a single integrated marketplace.

The Global South is becoming increasingly important because many of the world's largest reserves of critical minerals are located in Africa, Latin America, Central Asia and Southeast Asia. These countries are demanding greater participation in downstream industries, technology transfer and infrastructure development rather than remaining simple exporters of raw materials.

Developing alternative supply chains therefore requires more than investment. It requires long-term partnerships. China recognised this evolution years ago through infrastructure projects, industrial partnerships and manufacturing integration across multiple regions. The West is now attempting to narrow that gap, but rebuilding comparable ecosystems will take years.

The Strategic Contest Beyond the Battlefield. The central lesson emerging from Ankara is not that NATO lacks money or technology. It is that military power can no longer be separated from industrial policy.

The larger question still unanswered is whether wars are winnable and what comes after.

Military strength rests on economic strength. Economic strength depends on industrial capacity. Industrial capacity depends on secure access to energy, raw materials, skilled labour, technology and resilient supply chains. Each layer supports the next.

This is why China's position cannot be understood simply by comparing defence budgets or counting naval vessels. The more consequential comparison concerns manufacturing capacity, infrastructure, engineering capability, logistics networks and the ability to mobilise national resources over extended periods.

Beijing's new legal framework reinforces this industrial advantage. By penalizing foreign firms that cooperate with Western sanctions, China has extended its industrial strategy into the compliance decisions of multinational corporations. These measures are not about coercion—they are about making it structurally costly for businesses to participate in Western efforts to constrain Chinese industry. The result is a legal environment that fragments global operations, forces duplication of compliance systems and discourages investment that might otherwise flow across both jurisdictions.

The wars in Ukraine and the Middle East have reaffirmed an old reality: nations fight with the industrial systems they have spent decades building, not the budgets they approve once conflict begins. NATO's rearmament reflects an understanding that the international security environment has changed fundamentally. Whether Western economies can rebuild the industrial foundations necessary to sustain that effort remains one of the central geopolitical questions of the coming decade.

The decisive contest will be fought less on the battlefield than in mines, refineries, semiconductor fabrication plants, shipyards, research laboratories and factories—and in the legal departments of every multinational corporation trying to decide whether to stay, leave, or somehow straddle both sides. Those who control the industrial foundations of the twenty-first century, and the legal frameworks that govern them, will possess the greatest influence over its strategic future.

For business this means more careful and complex structuring of their businesses. The result will be higher costs, as firms are forced to create duplicate structures and facilities to avoid compliance issues, but competition will continue.

Beijing continues to put the pieces in place for its RMB settlement system while using the opportunity to reinforce Hong Kong’s position as the world’s premier offshore RMB financial centre.

At the Hong Kong FIC & Bond Connect Summit, People’s Bank of China (PBOC) Governor Pan Gongsheng announced a series of measures aimed at strengthening Hong Kong’s financial markets. They include expanding the RMB liquidity facility available to Hong Kong banks from RMB 200 billion to RMB 500 billion, with terms extended to three years; increasing the annual Southbound Bond Connect quota from RMB 500 billion to RMB 800 billion; increasing China’s foreign reserve allocation into Hong Kong assets; and launching a central clearing system for physical gold alongside a memorandum of understanding linking Hong Kong more closely with the Cross-border Interbank Payment System (CIPS).

The announcements were presented as measures to support Hong Kong, but they are equally another step in Beijing’s long-term effort to make the RMB easier, faster and less expensive to use in international trade. They build on initiatives announced in late June, which I discussed in my June 29 Substack on China’s strategic RMB internationalization.

Rather than creating an entirely new system, these measures strengthen an infrastructure that has been developing for years. China already has a network of 33 offshore RMB clearing banks located not only in established financial centres such as Hong Kong, London, Singapore and New York, but also across Asia, the Middle East, Africa and South America. Together with CIPS, they provide a comprehensive global direct RMB trade settlement network.

Pan’s latest measures increase offshore RMB liquidity while expanding the financial tools available for managing cash flow and interest-rate risk. In practical terms, that means fewer delays, lower financing costs and narrower foreign exchange spreads for companies trading with China. Given that China is now the largest trading partner for roughly 70% of the world’s economies, this offers businesses a significant alternative for settling trade directly in RMB. It is not designed to replace the U.S. dollar or compete with it in global capital markets. Instead, it provides an additional settlement option for countries conducting business with China.

The practical impact is straightforward. A European importer paying a Chinese supplier previously might have waited several days while its bank sourced RMB, absorbing higher foreign exchange costs in the process. With greater offshore liquidity and more sophisticated funding and hedging tools, that same transaction can increasingly be settled within hours at substantially lower cost. Banks holding RMB will also be able to manage liquidity more efficiently through expanded repo facilities, longer-dated government bond futures and additional funding support from China’s major state-owned banks, reducing the cost of providing RMB financing to clients.

The broader significance extends well beyond international finance. These measures reflect the same approach Beijing is applying across the Chinese economy: maintaining competitiveness by systematically reducing transaction costs and improving efficiency. Whether through eliminating domestic market barriers, expanding digital payment systems, modernising logistics, deploying artificial intelligence, upgrading manufacturing or reforming financial markets, the objective is consistent—remove friction, shorten transaction times and lower costs. Every minute saved and every unnecessary fee eliminated strengthens the competitiveness of Chinese firms while making China a more attractive trading partner.

This should not be confused with financial liberalisation. Beijing continues to maintain clear boundaries between its domestic financial system and offshore RMB markets, allowing the currency to become more practical for international commerce while preserving financial stability and limiting speculative capital flows. The experience of the 1997 Asian Financial Crisis remains an important lesson in why China prefers gradual internationalisation over unrestricted capital account convertibility.

The result is a steady expansion of the RMB’s international role through policies and mechanisms that reduce friction, improve efficiency and lower costs, while preserving the policy flexibility Beijing considers essential for long-term economic resilience.

At a broader strategic level, the contrast is striking. As the recent NATO Summit emphasized separation, duplication and resilience through redundancy, Beijing is pursuing almost the opposite approach. Its strategy is to deepen connectivity, simplify transactions and reduce the cost of doing business. Ultimately, the success of that approach will be determined less by geopolitics than by whether businesses conclude it saves them time and money.

What Survives the Cutting Room Floor

On the 105th anniversary of the founding of the Communist Party of China, I was interviewed by Hu Yousong of Xinhua News. Three other foreign commentators were interviewed separately. My interview lasted more than an hour. I assume theirs did as well. By the time the cameras stopped rolling, there were probably four or more hours of conversations waiting to be reduced to a video only a few minutes long.

Hu is an experienced journalist. He spent the last seven years covering Washington before his visa became trapped in the growing political uncertainty between China and the United States. There is a certain symbolism in that. At a time when the world's two largest powers need more communication, there is less of it. Dialogue is becoming collateral damage in geopolitical competition.

I have always been fascinated by the editing process. What survives post-production often tells a different story from what was originally recorded. Every interview contains nuance, caveats and unexpected turns. Editors cannot include everything. They must choose. Those choices create the narrative.

That is neither good nor bad. It is simply the reality of journalism.

The finished piece reflects something important about China today. It is remarkably distant from the revolutionary movement represented by the famous propaganda posters of the Party's early years, as depicted above. The fifty delegates who gathered in Shanghai in 1921 founded a political movement. More than a century later, that movement has become a governing party with over 100 million members responsible for leading the world's second-largest economy and overseeing one of history's most ambitious modernization projects.

That transformation is the real story.

The emphasis is no longer revolution for its own sake. It is governance. Long-term planning. Economic development. Technological innovation. Poverty alleviation. Infrastructure. National rejuvenation. Whether one agrees with every policy is beside the point. China today cannot be understood through the language of 1921 alone.

The video reflects this evolution. It is less about ideology than leadership. Less about class struggle than national development. Less about changing the system than making the system work.

From a Chinese perspective, this narrative makes perfect sense. The legitimacy of the Party rests not simply on its history but on its performance. Stability, rising living standards and long-term planning are presented as evidence that China's political system has delivered results.

Many in the West view the same story differently. Their focus is often on political participation, civil liberties and individual rights. Where Chinese audiences may see stability, Western audiences may see centralization. Where China sees continuity, others see concentration of power.

Both perspectives exist because people begin with different assumptions about what good governance looks like.

What struck me about the finished production was that it featured four foreign voices discussing Chinese leadership. That was valuable in itself. Yet I also found myself wondering how much richer the discussion might have been if those voices had been contrasted with the views of ordinary Chinese citizens.

No one speaks for China.

Equally, no foreign commentator speaks for the West.

Every opinion represents one facet of a much larger reality. Understanding comes from hearing multiple perspectives rather than searching for a single authoritative voice.

Perhaps that is what makes the editing process so interesting. The audience sees a polished narrative. Those who participated remember the questions that never appeared, the answers that were shortened and the conversations left on the cutting room floor. The finished piece is authentic, but it is necessarily incomplete.

That observation extends beyond journalism.

Every country constructs narratives about itself. Every media organization edits reality. Every audience interprets events through its own experiences. The challenge is not to eliminate narratives. That is impossible. The challenge is to recognize that every narrative reflects choices about what to include, what to exclude and what to emphasize.

It is unfortunate that this comes at a time when the world needs more conversations, not fewer. Political tensions have made communication more difficult. Journalists face restrictions. Scholars encounter barriers. Exchanges that once built understanding are becoming less common.

The irony is obvious. Never before have we possessed so many ways to communicate. Never before have so many people been able to speak across borders instantly. Yet meaningful dialogue is becoming harder to sustain.

That is why I found the Xinhua piece interesting. It was not simply a commemoration of the Communist Party's 105th anniversary. It was a reminder that every story is shaped twice: first by those who tell it and then by those who edit it.

What survives the cutting room floor often tells us as more about the narrative than those bring interviewed.

China’s Strategic Yuan Internationalization

China is redesigning the financial architecture that supports the use of the Yuan as a trade settlement option. The objective is not to replace the US dollar or fully liberalize China’s capital account. The objective is to make the yuan easier, cheaper and safer to use for trade, investment and reserve management,

while preserving Beijing’s control over domestic financial markets.

The reforms announced by People’s Bank of China Governor Pan Gongsheng at the 2026 Lujiazui Forum represent institutional change rather than technical adjustment. China is building the infrastructure required for a global currency without accepting the risks associated with unrestricted capital flows. Financial stability remains the overriding priority.

For decades the yuan has functioned as a trade settlement currency, but it lacked one of the defining characteristics of an international reserve currency: liquidity. Foreign investors could purchase Chinese government bonds, yet accessing cash often required selling those assets. The result was higher transaction costs, reduced flexibility and less incentive to hold yuan-denominated securities.

China’s solution is to separate liquidity from liquidation. Instead of forcing investors to sell assets, Beijing is creating mechanisms that allow them to borrow against them. That single institutional change materially increases the attractiveness of holding yuan reserves.

Three reforms illustrate the strategy.

The first is the FIMA Repo Facility. Foreign central banks can obtain yuan liquidity by pledging Chinese government bonds and other approved assets as collateral. During periods of market stress they no longer need to liquidate their portfolios. The facility strengthens confidence in yuan assets by providing a permanent liquidity backstop.

The second is Shanghai’s offshore foreign-exchange trading pilot. Six of China’s largest commercial banks can now conduct offshore yuan trading through the China Foreign Exchange Trade System. Closer integration between the onshore and offshore markets improves price discovery, narrows exchange-rate differences and reduces currency risk for international users.

The third is Shanghai’s long-term offshore financial development plan. Rather than opening the capital account, Beijing has adopted a phased strategy extending through 2027, 2030 and 2035. The objective is to develop deep offshore yuan markets while maintaining regulatory control over domestic capital flows.

Together these reforms transform the yuan from a settlement currency into a more complete financial currency. China is no longer promoting the renminbi simply as a means of payment. It is constructing the institutions that allow governments, banks and investors to hold, finance and deploy yuan assets with greater confidence.

The Middle East demonstrates how this strategy is expanding China’s financial network. China is now the Gulf’s largest trading partner, creating the commercial foundation for wider yuan use. The United Arab Emirates has emerged as the region’s principal offshore renminbi hub, handling most Middle Eastern yuan settlements while developing clearing, financing and investment services around the Chinese currency. The UAE is not replacing the dollar. It is adding yuan infrastructure alongside the existing dollar system, giving governments and businesses greater flexibility in managing trade and investment.

This network is beginning to reinforce itself. Energy exports can be settled in yuan. Those yuan can then be invested in Chinese government bonds, policy bank securities or yuan-denominated corporate debt. Chinese capital, in turn, finances Gulf borrowers through dim sum bonds and other renminbi instruments, including ADNOC’s proposed offshore bond issuance. Trade generates investment, investment generates liquidity and liquidity generates further demand for yuan assets. Each transaction strengthens the network.

This is the strategic significance of China’s reforms. Beijing is creating a self-reinforcing financial ecosystem rather than attempting to overthrow the existing one. Shanghai supplies the financial infrastructure. The Gulf supplies commercial demand. The UAE provides the regional financial hub linking trade, investment and capital markets into a single yuan-based network.

The recent Iran conflict has accelerated this process by increasing demand for payment systems that reduce exposure to geopolitical risk. It has created opportunity, but not the strategy itself. China’s financial reforms were already underway because the underlying drivers are structural. As China’s trade relationships deepen, the financial infrastructure supporting them must expand as well.

The constraints remain deliberate. China has not adopted full capital account convertibility and has no intention of doing so in the foreseeable future. Beijing continues to regard unrestricted capital flows as a threat to financial stability. Internationalisation therefore proceeds through controlled institutional expansion rather than wholesale liberalisation.

The United States also retains overwhelming structural advantages. The dollar continues to dominate global reserves, trade finance and international capital markets. Gulf sovereign wealth funds still invest the overwhelming majority of their assets in dollar-denominated markets, while the UAE continues to balance its growing economic partnership with China against its long-standing security relationship with Washington.

China’s objective is therefore evolutionary rather than revolutionary. It is enlarging the international role of the yuan by making it increasingly useful, increasingly liquid and increasingly difficult to ignore. Every new institution expands the network. Every new participant strengthens it. Every new transaction increases its commercial value.

The result will not be the end of dollar dominance. It will be the emergence of a more diversified international financial system in which the yuan occupies a significantly larger role. China is not replacing the existing order. It is methodically constructing an alternative financial architecture alongside it.

The 105th anniversary of the founding of the Communist Party of China is more than a historical milestone. It marks the evolution of one of the most consequential political institutions of the modern era. During its existence, the Party has guided China through national liberation, state-building, economic modernization and, increasingly, the shaping of international governance. Whether one agrees with China's political system or not, its historical impact is undeniable.

China's story is not simply one of economic growth. It is the story of a civilization rebuilding itself after more than a century of foreign invasion, internal division and national humiliation.

When the Communist Party was founded in 1921, China was politically fragmented, economically impoverished and militarily weak. The collapse of the Qing Dynasty had left competing warlords struggling for power. Foreign states occupied Chinese territory under unequal treaties. The Japanese invasion had brought devastation on a scale almost unimaginable today. Poverty was widespread. Literacy was limited. Life expectancy was approximately 35 years.

The Party's first achievement was restoring sovereignty. Without sovereignty there could be no independent development. Its second achievement was political unity. Fragmentation gave way to a functioning national government capable of administering one of the world's largest populations. Its third achievement was constructing the institutions necessary for long-term development.

This foundation often receives less attention than the economic reforms that followed, yet it made those reforms possible.

China's modernization began with nation-building. Literacy campaigns dramatically expanded education. Unfortunately, minority groups were allowed to maintain differences while the vast majority adopted Mandarin as the common national language, necessary to strengthen communications and mobility across regions. Public health campaigns improved life expectancy. Infrastructure connected isolated communities. Education ceased to be the privilege of a small elite and became the foundation of national progress.

Culture played an equally important role.

China did not seek modernization by abandoning its civilizational identity. Instead, it adapted Marxism to Chinese realities while drawing upon thousands of years of cultural traditions that emphasized education, social harmony, merit, family responsibility, long-term thinking and effective governance. Modernization became a process of combining historical continuity with institutional innovation, not about abandoning the old for the new.

Economic reforms and the “opening up” accelerated this transformation.

Since 1978 China's economy has expanded from approximately US$150 billion to nearly US$19 trillion. More than 800 million people have been lifted out of extreme poverty, accounting for nearly three-quarters of global poverty reduction according to the World Bank. Life expectancy has risen to almost 79 years. Literacy now exceeds 97 percent. China produces more than one-quarter of global manufacturing output. It operates the world's largest high-speed rail network, now exceeding 48,000 kilometers. Seven of the world's ten busiest container ports are Chinese. China has become the world's largest producer of electric vehicles, batteries, solar panels and renewable energy equipment while rapidly advancing in artificial intelligence, quantum computing, new materials, biotechnology and aerospace.

These outcomes were not inevitable.

The Party itself evolved through successive stages. It began as an ideological group committed to change, then a revolutionary movement committed to national liberation. In power it became an administrator responsible for rebuilding a shattered country. It has since evolved into the leadership of a modern socialist state managing one of the world's most advanced and complex economies. During a time of geopolitical headwinds, climate change, and an economic paradigm shift due to the digital revolution.

China's success is due to one characteristic: adaptation.

The Communist Party has repeatedly shown its pragmatic ability to adjust its policies without abandoning its objectives. Local experimentation precedes national implementation. Successful policies are expanded. Unsuccessful policies are revised or abandoned. Governance is treated as a continuous process of solving practical problems rather than defending ideological orthodoxy or empty promises. Planning, implementation, yearly report cards are the means by which China archives.

Equally important has been the Party's emphasis on cultivating leadership. Governing a country of more than 1.4 billion people requires administrative capacity on an extraordinary scale. The Party has consistently emphasized identifying, training, promoting and retaining individuals capable of managing increasingly complex responsibilities. Merit, discipline, experience and long-term planning have become defining characteristics of China's governance model.

None of this implies perfection.

China has experienced profound policy failures. The Great Leap Forward and the Cultural Revolution imposed enormous costs upon Chinese society. Yet the reform era demonstrated something equally important: the capacity for institutional self-correction. Rather than remaining trapped by past mistakes, China reassesses its development strategy as necessary while preserving long-term national objectives. That willingness to evolve is the Party's greatest institutional strength.

Public support reflects this record.

For Chinese families, development is measured through experience rather than political theory. Better schools. More opportunities. Better healthcare. More disposable income. Better environment. Longer lives. Modern transportation. Improved housing. Rising incomes. Safer communities. These changes have occurred across successive generations.

National pride has also become linked to economic development. The Party ended the “Century of Humiliation” and restored China's future to its people. Economic modernization and national rejuvenation are now viewed as complementary rather than separate.

China is now entering the next stage of its development.

The emphasis has shifted from rapid growth to high-quality growth. The 15th Five-Year Plan focuses on advanced manufacturing, scientific innovation, artificial intelligence, biotechnology, green development, domestic consumption and technological self-reliance. Demographic change, environmental sustainability and geopolitical competition have replaced poverty reduction as the principal policy challenges.

The Party's ambitions, however, now extend beyond China's borders.

On 17 June 2026, only weeks before the Party celebrates its 105th anniversary, the State Council Information Office released More Just and Equitable Global Governance: China's Principles, Proposals and Actions. The timing was significant. The document serves as both a policy statement and a historical marker, reflecting China's transition from concentrating primarily on national development to proposing reforms for international governance.

The white paper introduces the Global Governance Initiative as the fourth pillar of China's international vision, complementing the Global Development Initiative, the Global Security Initiative and the Global Civilization Initiative.

Together these four initiatives form a coherent framework.

Development creates prosperity.

Security provides stability.

Civilization promotes mutual understanding among diverse cultures.

Governance establishes the international institutions capable of sustaining peace, development and cooperation.

Rather than four independent proposals, they represent an integrated vision for managing an increasingly interconnected and multipolar world.

China's argument is not that the post-war international order should be abandoned.

Quite the opposite.

The white paper explicitly reaffirms the central role of the United Nations and the principles of the UN Charter. The problem, from China's perspective, is not the Charter itself but institutions that no longer adequately reflect contemporary realities.

The international system established after 1945 emerged from a world profoundly different from today's. At that time much of Africa remained under colonial rule. China itself was impoverished. Most developing countries had little influence over global decision-making.

The world has fundamentally changed.

Developing countries now represent the overwhelming majority of humanity and an increasing share of global economic output. China alone contributes approximately 30 percent of global economic growth. Emerging economies account for most future global demand, investment and infrastructure development.

Yet representation within many international institutions has changed far more slowly.

China therefore advocates reform rather than replacement.

The white paper calls for strengthening the United Nations while expanding representation for developing countries, particularly Africa and the broader Global South, within the Security Council and other international institutions. It supports reforms to the International Monetary Fund and the World Bank so voting rights more accurately reflect today's distribution of economic activity. It argues that international rules governing artificial intelligence, cyberspace, outer space, the deep sea and the polar regions should be developed cooperatively rather than dominated by a small number of powerful states.

Underlying these proposals are five principles: sovereign equality among all nations; respect for international law and the UN Charter; genuine multilateralism; people-centered development; and practical cooperation instead of ideological confrontation.

This vision resonates strongly across much of the Global South.

Many developing countries increasingly argue that the institutions governing trade, finance, development and security should better reflect contemporary demographics, economic realities and developmental priorities. Their objective is not to dismantle the international system but to make it more representative, more democratic and more equitable.

China's own development experience informs this perspective.

Its modernization demonstrates that countries can achieve prosperity without abandoning their own history, culture or institutions. Development does not require ideological uniformity. Different civilizations may legitimately pursue different pathways toward modernization while cooperating within a common international framework.

Life itself is dynamic. Every solution creates new challenges. Every generation confronts problems unimaginable to its predecessors. Successful governance therefore requires adaptation without sacrificing strategic direction.

That may ultimately define the Communist Party's greatest achievement over the past 105 years.

It has evolved from a revolutionary organization into the governing institution of a modern socialist state. It has guided one of history's largest poverty reduction campaigns, overseen one of the fastest periods of industrialization ever recorded and now seeks to contribute to the evolution of global governance itself.

China's journey is therefore not complete.

National rejuvenation continues. Technological competition, demographic transition, environmental sustainability and geopolitical uncertainty will define the next stage of development.

The Party's response suggests that China's future is no longer viewed solely through a domestic lens. National rejuvenation is increasingly linked to building a more representative international order in which developing countries enjoy greater opportunity, greater participation and greater influence.

The release of the Global Governance Initiative on the eve of the Party's 105th anniversary symbolizes that transition. Having rebuilt China, the Party now argues that the next historical task is helping to build a more just, more equitable and more inclusive international system—one that preserves the United Nations, reforms global institutions to reflect twenty-first century realities and ensures that the Global South becomes not merely a participant in global governance but one of its principal architects.

By Einar Tangen · 2026-06-22 · Source: Web Exclusive

The International Military Tribunal for the Far East in session in Tokyo, Japan, between 1946 and 1948

On May 3, 1946, the International Military Tribunal for the Far East convened in Tokyo to try Japanese wartime leaders for their crimes. After two and a half years of hearings, the judges from 11 countries found all 25 defendants guilty. Among them, seven war criminals, including Hideki Tojo, were sentenced to death by hanging, sixteen were sentenced to life imprisonment, and two were given fixed-term prison sentences. However, the court allowed the Japanese emperor and the architects of biological warfare to walk free. The world expected justice, but what it got was a compromised proceeding.

The destruction of evidence

This was not for lack of effort by the prosecution team. The Japanese military systematically burned records. The prosecution team was well-meaning but drowning. Morrow and Sutton’s four-week tour of China was a frantic dash—Shanghai, Peiping (Beijing), Chungking (Chongqing) and Nanking. On one single day in Nanjing, they interviewed 120 eyewitnesses. The Shanghai Evening Post and Mercury reported that the team “frequently go to bed at 3 a.m. However, records show that during the Tokyo Trial, defense attorneys repeatedly requested the international tribunal reject evidence on the grounds that it was “cumulative evidence.” Cumulative evidence is evidence considered to be redundant as it establishes the same facts as evidence previously provided.

Yet despite this destruction, the prosecution managed to locate three critical documents: U.S. Embassy telegrams describing post-occupation Nanjing, German Ambassador to China Oskar Trautmann’s secret eyewitness report to Germany’s Foreign Ministry, and the complete records of the Nanking Safety Zone and the Nanking International Relief Committee for 1937-38.

Biological and chemical warfare

Sutton investigated Japanese aircraft dropping grain and globules over Changteh (Changde, Hunan Province) in November 1941, followed immediately by a plague outbreak. He interviewed key witnesses--Dr. F.Z. King, Dr. W.E. Chen and Dr. Robert Pollitzer. He traveled to Nanjing specifically to meet Pollitzer. He documented everything.

Sutton’s final recommendation was to secure five specific witnesses and obtain an affidavit from Mrs. E.J. Banon, who had witnessed the airdrops. It is unclear whether this was ever done. The biological warfare charges never proceeded. Researchers at Japan’s Unit 731, responsible for chemical and biological warfare, including Ishii Shiro, received immunity in exchange for their data and continued work with the U.S.

Political constraints

On January 25, 1946, General Douglas MacArthur cabled Washington with a warning: prosecuting Emperor Hirohito would cause “a tremendous convulsion” and “disintegration of Japanese society,” and require “a minimum of a million troops” for an indefinite occupation.

MacArthur had initially proposed a separate U.S. military tribunal to try only Tojo Hideki and his cabinet--a narrow proceeding that would have avoided the emperor entirely. That idea was rejected. But MacArthur’s subsequent decision to shield the emperor was not merely pragmatic; it was calculated. He needed a stable Japan as a logistics hub for a planned war with the Soviet Union. The irony, the Allies prosecuted Hermann Göring, Rudolph Hess and Joachim von Ribbentrop in Germany without fear of social collapse. The difference was strategic, not practical.

Japan remains unreconciled with its wartime past. The Yasukuni Shrine controversy, the revisionist history textbooks, and the “comfort women” denialism all trace their origins to the Tokyo Trial’s limited accountability. By shielding the emperor and ending prosecutions prematurely, MacArthur ensured that Japan never experienced the kind of Vergangenheitsbewältigung--coming to terms with the past--that Germany underwent. China and the Republic of Korea live with those decisions every day.

Despite its shortcomings, the Tokyo Trial marked the first time in human history that international judicial practice systematically established aggressive war as an international crime and made clear that national leaders must bear individual criminal responsibility for launching wars of aggression. It sent a signal to the world that aggression would be punished and atrocities would be brought to justice. In doing so, it elevated peace, justice, and humanity as core values of the postwar order and laid an important legal and political foundation for the international order after World War II. The victims were neither forgotten nor reduced to cold statistics; instead, they were incorporated into an ongoing process of historical reflection and public education. For this reason, the Memorial Hall of the Victims in the Nanjing Massacre by Japanese Invaders has become a national first-class museum and the site of the National Memorial Ceremony, serving as an important place of remembrance, education and compassion.

Together, the memorial and the legacy of the Tokyo Trial reinforce the idea that justice is achieved not through retaliation but through accountability, evidence and historical truth. By remembering those who died while remaining committed to the legal process, China created its own path to transforming memory into a foundation for peace and a better future.

The author is an American commentator and senior researcher with the Center for International Governance Innovation in Canada.

Related:•Tokyo Trial at 80: John Magee’s lens preserves the truth of Nanjing Massacre•Beijing Book Fair Deal Spreads Legendary Chinese Tokyo Trial Judge Legacy•First Chinese Transcript of Tokyo War Trial Released in Shanghai•Tokyo Trial at 80: Remembering history so that tragedies never repeat•From Atrocity to Accountability: The Tokyo Trial and the Nanjing Massacre

Beijing’s Economic Development Shift

China's economic and social dynamics are part of a continuum that continues to adapt to the needs of its future while many developed nations focus nostalgically on the glories of their past.

Every solution simply creates a new set of problems. China internally and externally faces new challenges. Internally to do with the costs of its domestic development achievements. Externally due to the frictions set in motion by its economic and political successes.

The most consequential mistake many make is considering Beijing's policies separately as opposed to carefully calibrated parts of a strategic masterplan.

For example, MERICS has just put out an analysis that correctly identifies the Chinese government's Unified National Market as one of the most significant economic reforms China has taken in its 15th Five-Year Plan. It is an excellent article well worth reading but it fails to link it to other components of Beijing policies. The Unified National Market, the Six Networks initiative, industrial upgrading, codifying environmental reforms, digital governance and changes to cadre evaluation are all mutually reinforcing in terms of how China is radically reshaping its development model to address its domestic and global challenges.

The Unified National Market, for more than four decades, much of China's growth was driven by competition between provinces, cities and counties. Local governments cultivated hometown champions, protected local industries, directed investment, controlled access to land and financing, and competed aggressively for economic activity. The model delivered extraordinary growth but also produced duplication, fragmentation, overcapacity and waste.

The Unified National Market is an attempt to move beyond that model.

This is not simply an effort to remove local protectionism. It is an effort to transform China from a collection of competing regional economies into an integrated continental economy. The objective is to allow capital, labour, technology, energy, data and goods to flow according to economic efficiency rather than administrative boundaries.

The timing is not accidental. As external markets become less predictable and geopolitical competition intensifies, Beijing views the domestic market as its most important controllable asset. The leadership's goal is to link market integration directly to industrial upgrading, technological self-reliance and the development of what Xi Jinping calls "new quality productive forces."

The implications are profound.

For decades local governments effectively acted as venture capitalists. They picked winners, directed resources toward favoured enterprises and often protected local firms from outside competition. Their aim was to create a perceived legacy of accomplishment to earn promotions. The result was the creation of many successful companies but also many inefficient ones whose competitiveness depended more on local support than market performance.

A Unified National Market changes the equation.

Large and well-capitalised firms will be among the primary beneficiaries. They can optimize supply chains, production facilities and distribution networks across a national market of more than 1.4 billion people. Scale, efficiency and productivity become more important than political proximity. Guanxi and crony capitalism will not disappear, but their value declines when access is governed by national standards rather than local relationships.

Smaller firms will face a different reality. Many will no longer survive simply because they enjoy local protection. Their future lies in specialisation and efficiency, servicing larger industrial ecosystems and national champions. This is how many of Germany's Mittelstand firms operate. They dominate highly specialised niches while supplying larger industrial networks.

The result should be stronger Chinese companies that are competitive domestically and internationally. Success in a Unified National Market becomes preparation for global competition because firms must compete against the best operators from every province rather than relying on administrative barriers.

The need for reform is reflected in the scale of existing distortions. According to OECD analysis released in 2026, approximately 60 percent of Chinese firms' gains in global market share between 2005 and 2023 were attributable to government subsidies rather than productivity improvements. Chinese firms received between three and eight times more subsidies than competitors in OECD economies. Such policies accelerated industrialisation but also created inefficiencies that Beijing increasingly appears determined to address. While China has slightly different numbers and sees much of the interpretation as due to hypocritical political narratives, given Airbus and Boeing to name one example. The larger issue is that China needs to transform its thinking beyond a developing country protecting nascent industries from dominant global corporations, to a global competitor in its own right. This necessitates ending inefficient economic practices that once helped but now harm its economic progress.

The implications for local governments will be significant.

Municipalities will have to rethink their investment strategies. For decades they poured resources into local champions, industrial parks and prestige projects. Some succeeded. Many did not. Vast amounts of capital were allocated based on local interests rather than national efficiency.

Evidenced by Xi Jinping’s continued emphasis on shifting from high-speed GDP growth to high-quality development that prioritizes sustainable economic gains and technological self-reliance over raw output numbers. Underlined by an emphatic warning to government officials against superficial, debt-fueled projects and "fake construction kick-offs". Under these directives, official performance will no longer be judged on short-term GDP expansion, but rather on genuine achievements in public welfare and fiscal responsibility, with strict accountability and consequences for those who invest recklessly

This means local and provincial governments will be judged not by how many local champions they create but by how effectively they support the broader economy. The emphasis shifts from picking winners to creating conditions in which efficient firms can thrive.

This is where the proposed Six Networks initiative becomes important.

Many observers see the programme as another infrastructure stimulus. That misses the point.

Water networks, advanced power grids, computing power networks, next-generation communications, underground utility corridors and integrated logistics systems are not isolated construction projects. Together they form the physical and digital backbone of a Unified National Market.

A modern industrial economy requires more than roads and ports. It requires data to move as efficiently as goods, computing power to be used as efficiently as electricity and energy systems, capable of supporting advanced manufacturing, artificial intelligence, and automation. These networks are designed to increase productivity and reduce friction across the entire economy.

The objective is not simply more infrastructure. It is more efficient infrastructure.

At the same time, the greatest challenge remains political rather than technical.

The desire to favour local interests is deeply embedded within China's administrative culture. Local officials have spent decades being rewarded for local outcomes. That instinct will not disappear easily.

The result is the central government will rely on data, artificial intelligence, and digital governance.

If local reports cannot always be trusted, then performance must increasingly be measured directly. Real-time dashboards, national databases, AI-assisted monitoring systems and integrated data platforms will provide Beijing with mechanisms to evaluate local performance using objective metrics rather than subjective reporting.

This creates substantial opportunities for companies involved in cloud computing, industrial software, AI analytics, digital governance and enterprise data systems.

It also aligns with a broader shift in policy priorities.

Recent measures such as the Environmental Code reinforce Beijing's signal that it values quality development over the quantity of development. Environmental outcomes, technological capability, productivity, innovation and quality of life are becoming more important than headline GDP figures.

This is reflected throughout the 15th Five-Year Plan. China has targeted annual R&D investment growth exceeding 7 percent, alongside significant reductions in carbon intensity and energy intensity. The emphasis is increasingly on building a more efficient, advanced, productive, sustainable, and socially balanced economy rather than simply a larger one.

Viewed individually, these initiatives can appear rational but separate. Viewed together, they form a coherent but radical shift in China’s national development strategy, an extraordinary change .

The Unified National Market, the Six Networks initiative, industrial upgrading, codifying environmental reforms, digital governance and changes to cadre evaluation are all mutually reinforcing. They point toward a China that is attempting to optimise itself as a single integrated economic system.

Many governments today remain focused on short-term political cycles and immediate consumption. China appears increasingly focused on the fundamentals that underpin long-term competitiveness: infrastructure, productivity, technological capability, market integration and administrative efficiency.

Whether the strategy succeeds remains to be seen. Local resistance should not be underestimated. But the direction is unmistakable. China is attempting to transition from a federation of competing local growth machines into a highly integrated, technologically advanced and data-driven continental economy designed for an increasingly competitive and fragmented world.

Essay 3

Geopolitical Economics

The Emerging Geography

This is the third in a series of essays about the emerging geography of geopolitical economics.

Essay 1

American Oligarchy

From Powell, to Wolfowitz, to Colby: The Evolution of America's Strategic Architecture

What began as an effort to defend corporate interests gradually evolved into a framework for preserving geopolitical primacy and ultimately into a system for managing global economic competition.

https://asianarratives.substack.com/p/american-oligarchy?r=1v5gvj

Essay 2

China From Deng, to Jiang, to Hu, to Xi.

Wang Huning the Intellectual Architect of China's Rise

Political systems are often remembered through the leaders who govern them. Yet beneath every political order lies a deeper layer of ideas and individuals who advanced them that shape how leaders understand power, legitimacy, development, and national purpose. In the United States, the evolution of modern strategy can be traced through a sequence of influential documents and intellectual interventions. Lyndon Johnson's victory and push for the Great Society and expansion of federal powers, led to the 1971 Powell Memorandum, an anti-democratic masterplan to impose corporate control over America, the 1992 Wolfowitz Doctrine's assertion that American unipolar primacy was a global necessity regardless of means, followed by a parallel piece led by Richard Pearle in his 1996 A Clean Break, Defense of the Realm paper that advised Israel to dominate or destroy those around them rather than trying to negotiate peaceful coexistence, and finally Elbridge Colby's 2001, The Strategy of Denial: American Defense in an Age of Great Power Conflict, an intellectual framework for establishing hemispheric dominance as part of a grand strategy to assert American influence and contain China. Together, these texts and ideas form a strategic architecture that explains much of America's contemporary trajectory.

https://asianarratives.substack.com/p/china-from-deng-to-jiang-to-hu-to?r=1v5gvj

Essay 3

Geopolitical Economics:

The Emerging Geography

If the future of globalization is neither complete integration nor complete decoupling, then the question becomes where the new economic bridges will be and who stands to benefit from them.

The answer increasingly lies in the overlapping frameworks of the Belt and Road Initiative, BRICS, RCEP, the Shanghai Cooperation Organization, and a growing network of bilateral and regional trade arrangements. These institutions are often analyzed separately, but in practice they form parts of a broader ecosystem. Together they are creating new channels for trade, investment, industrial development, technology transfer, logistics integration, and financial cooperation across much of the Global South.

The significance of these arrangements is frequently misunderstood. They are not military alliances. They are not ideological blocs. They are not even particularly coherent organizations in the traditional sense. Their importance lies in their ability to reduce friction between markets, facilitate capital flows, improve infrastructure, and create opportunities for development.

This reflects a broader distinction between the economic visions emerging from Washington and Beijing.

The American approach increasingly assumes that economic security is achieved by protecting existing capacity, securing critical supply chains, and reducing strategic dependence.

The Chinese approach assumes that economic security comes from expanding productive capacity, increasing connectivity, and creating new centers of growth. One seeks resilience through selective separation. The other seeks resilience through integration.

The difference is not the absence of competition. China competes aggressively. The difference is that Chinese policymakers generally view development as a virtuous process. The objective is not simply to capture a larger share of existing economic activity but to create additional economic activity through infrastructure, industrialization, and connectivity.

This is the logic underpinning the Belt and Road Initiative.

A railway creates trade that did not previously exist. A port expands commercial opportunities for entire regions. A power plant enables industrial development. A digital network creates access to new markets. Not every project succeeds, but the strategic logic remains consistent. Growth is achieved by enlarging the pie rather than trying to divide it.

This philosophy creates different opportunities across different regions.

ASEAN: The Manufacturing and Logistics Winner. No region is better positioned than ASEAN. Southeast Asia sits at the intersection of Chinese industrial capacity, American consumer demand, Japanese and Korean investment, Indian growth, and global supply-chain diversification. Geography alone makes the region indispensable.

Vietnam, Indonesia, Malaysia, Thailand, and increasingly the Philippines are becoming major beneficiaries of manufacturing relocation and industrial investment. Yet much of this production remains deeply integrated with Chinese supply chains.

The popular narrative is that factories are leaving China. The reality is more nuanced. What is occurring is the expansion of Chinese-centered industrial ecosystems into neighboring economies. Machinery, components, engineering expertise, logistics systems, and industrial inputs continue to flow from China even when final assembly occurs elsewhere.

This creates a virtuous cycle. ASEAN benefits from being both an alternative to China and a partner of China. For the foreseeable future, it is likely to remain the brightest spot in the global economy.

The Gulf: Capital Meets Industrial Capacity. The Gulf states represent one of the clearest examples of economic complementarity. Saudi Arabia, the United Arab Emirates, and Qatar possess enormous pools of capital, ambitious modernization plans, strategic geography, and access to global energy markets.

China brings industrial capacity, infrastructure expertise, manufacturing ecosystems, digital technologies, renewable energy systems, and one of the world's largest consumer markets.

The synergies are strong. The Gulf wants to be a center for logistics, finance, tourism, technology, light manufacturing, and advanced services. China can help build the infrastructure and industrial foundation required to achieve those ambitions.

The challenge is geopolitical. The conflict involving Iran has complicated many of the assumptions underlying Gulf development plans. As long as uncertainty surrounds the Strait of Hormuz, investors will price risk into long-term projects. Alternative export routes, bypass pipelines, and expanded transportation corridors may eventually reduce this vulnerability, but until then the pace of transformation will likely be slower than originally envisioned.

More broadly, the continued expansion of regional conflict threatens the stability required for economic transformation. The vision of the Gulf as a global center for business, finance, tourism, and innovation depends on predictability. Persistent instability undermines that objective.

Central Asia: The Return of the Silk Road. For centuries Central Asia sat at the center of Eurasian commerce. Then maritime trade largely bypassed it. Today that is changing. Kazakhstan and Uzbekistan are emerging as critical connectors linking China, Russia, Europe, South Asia, and the Middle East. Rail corridors, logistics hubs, pipelines, industrial zones, and digital infrastructure are restoring strategic importance to a region that had long been economically peripheral.

This is perhaps the purest expression of Belt and Road logic. The objective is not merely to move goods through Central Asia but to create economic activity within Central Asia. Transit creates logistics. Logistics attract industry. Industry attracts investment. Investment creates development.

For countries that were once viewed primarily as transit corridors, the opportunity increasingly lies in becoming production hubs in their own right.

South Asia: Scale Meets Geography. South Asia's importance derives from both population and location.

Pakistan remains central to China's western development strategy. The China-Pakistan Economic Corridor provides Beijing with access to the Arabian Sea while creating opportunities for infrastructure, energy, logistics, manufacturing, and industrial development within Pakistan itself.

Bangladesh is emerging as another beneficiary of manufacturing diversification. Rising Chinese labor costs and expanding global demand are creating opportunities for industrial expansion across the region.

India remains the largest unanswered question. Its size ensures that it will be a major participant in any future Asian economic order. Yet its relationship with China remains characterized by a mixture of competition, cooperation, and strategic caution. How India positions itself within the emerging multipolar economy will be one of the defining questions of the next two decades.

Africa: The Long-Term Growth Story. If ASEAN represents the immediate opportunity, Africa represents the long-term opportunity. The continent combines demographics, urbanization, resource wealth, and infrastructure demand on a scale unmatched elsewhere.

China's strengths align closely with Africa's needs. Infrastructure, transportation, energy, manufacturing, telecommunications, healthcare, and industrial development all represent areas where Chinese firms possess substantial experience and competitive advantages.

East Africa is emerging as a logistics and transportation hub. North Africa is developing into an industrial bridge between Europe, Africa, and the Middle East. Countries such as Egypt, Morocco, Kenya, Ethiopia, and Tanzania are increasingly becoming integrated into global trade networks.

The opportunity extends beyond resources. The next phase of engagement will increasingly focus on manufacturing, industrial parks, renewable energy, logistics, education, and human capital development.

South America: Opportunity and Contestation.

South America occupies a unique position. The region possesses many of the resources essential to twenty-first-century growth. Agricultural land, food production, critical minerals, renewable energy potential, and industrial commodities all make the region strategically important.

Brazil has emerged as one of China's most important economic partners. Argentina offers significant opportunities in agriculture, energy, and mining. Across the continent, Chinese investment continues expanding.

The challenge is political. Unlike ASEAN or Africa, Chinese engagement in South America intersects directly with long-standing American strategic interests. Washington continues to view the region through the lens of historical influence and strategic competition.

As a result, South America will likely remain a region where economic opportunity and geopolitical rivalry coexist simultaneously.

The Countries Most Likely to Benefit

Looking across all these regions, a relatively clear group emerges.

- Saudi Arabia sits at the intersection of capital, energy, logistics, and industrial transformation.

- Indonesia combines scale, resources, manufacturing potential, and strategic geography.

- The United Arab Emirates continues to position itself as a financial and commercial bridge between continents.

- Kazakhstan occupies one of the most important positions within Eurasian transportation networks.

- Egypt controls one of the world's most significant trade corridors while developing into a manufacturing and logistics hub.

- Vietnam, Malaysia, and Thailand continue benefiting from supply-chain diversification and regional integration.

- Pakistan remains strategically positioned between South Asia, Central Asia, the Middle East, and China.

- Brazil occupies a critical role in food security, energy, and resource supply chains.

What unites these countries is not ideology. It is geography. Each sits at the intersection of multiple economic networks. Each benefits from connectivity. Each gains from increasing trade flows rather than their restriction.

The Emerging Multipolar Economy

The future global economy is unlikely to resemble the Cold War's rigid blocs. Nor will it resemble the hyper-globalized world of the early 2000s.

Instead, it will be characterized by overlapping networks of trade, investment, infrastructure, technology, and development. The countries that prosper will not necessarily be those most closely aligned with Washington or Beijing. They will be those capable of participating in multiple systems simultaneously. They will be the connectors, the logistics hubs, the manufacturing centers, the financial intermediaries, and the development platforms linking different parts of the global economy together.

This is where Wang Huning's intellectual framework intersects with China's economic strategy. The underlying assumption is that development creates stability, connectivity creates development, and prosperity becomes more durable when it is shared across multiple participants. Critics may question whether this vision can ultimately succeed, but it represents a fundamentally different conception of globalization than the one coming from the West.

The future of geopolitical economics will therefore be determined not by who can isolate themselves most effectively, but by who can build the most valuable bridges between increasingly diverse centers of economic power.

In a multipolar world, the bridge builders will prove more important than the gatekeepers.

The Economic Logic Behind Stability and Normalization

Much of the Western commentary surrounding Xi Jinping's visit to North Korea assumes Beijing is seeking to reassert control over a wayward ally that has moved too close to Russia.

This interpretation says more about how Washington views alliances than how China does.

The assumption is that China must be uncomfortable with growing Russia-North Korea cooperation and is therefore attempting to pull Pyongyang back into line. Yet there is little evidence that Beijing sees the relationship in these terms. Russia can provide military cooperation, energy and diplomatic support. What it cannot provide is what North Korea ultimately needs: trade, investment, manufacturing capacity, infrastructure and access to the world's largest industrial economy and market.

China doesn't need to compete with Russia because the two relationships serve different purposes. While all share a desire for regional stability.

The symbolism of the visit is important. This is Xi's first state visit of 2026 after hosting leaders from more than twenty countries so far this year. The decision to travel to Pyongyang first gives Kim Jong Un significant diplomatic face and signals North Korea's strategic importance to Beijing.

For Kim, the objective is increasingly clear. The old goal of reunification has been abandoned. Kim has publicly repudiated the idea and increasingly describes North and South Korea as separate states with separate futures. His objective is no longer reunification but recognition.

North Korea seeks acceptance as a permanent sovereign state with recognized borders, normal diplomatic relations, economic engagement and security guarantees for the existing government. Kim's increasingly frequent public appearances with his daughter suggest he is also thinking about succession and the long-term continuity of the state.

China's interests are different. Beijing's primary concern is not control but predictability. For decades China's objectives on the Korean Peninsula have remained remarkably consistent: prevent war, prevent regime collapse, avoid refugee flows across the border and ensure that no crisis produces a strategic shock to the region. Whether there are one or two Korean states matters less than whether the region remains stable.

This creates an opportunity. Russia's renewed engagement with North Korea has given Pyongyang options it did not previously possess. For most of the post-Cold War period North Korea was heavily dependent on China. That dependence created diplomatic friction, because of North Korea’s determination to remain independent. Today Kim can negotiate with greater confidence because he has alternatives.

The paradox being that Russia's involvement makes peace easier rather than harder. A North Korea that feels secure is more likely to negotiate than one that feels isolated.

From Beijing's perspective, the logical next step is not greater control but greater normalization.

China could support North Korea's gradual acceptance as a permanent state within the regional order. It could host future peace talks aimed at formally ending the Korean War. It could encourage expanded trade, investment and economic integration in exchange for reduced military tensions and fewer provocations.

Denuclearization is unlikely to be on the agenda. Beijing understands that North Korea's nuclear program is not going away. The more realistic goal is reducing the risk of conflict.

One of Beijing's greatest concerns is the possibility that a North Korean crisis could trigger a wider arms race in Northeast Asia. A confrontation involving North Korea could strengthen calls in Japan for an independent nuclear deterrent. It could do the same in South Korea. It would almost certainly deepen military cooperation between Washington, Tokyo and Seoul. China has no interest in such an outcome.

A stable and economically engaged North Korea is therefore preferable to either confrontation or collapse.

The economic dimension of this strategy is often overlooked. Most discussions of North Korea focus on missiles, sanctions and military threats. Beijing is more likely to see the peninsula through a developmental lens. A stabilized North Korea represents one of the last major untapped economic opportunities in Northeast Asia.

North Korea possesses significant deposits of iron ore, coal, copper, zinc, lead, gold, graphite, magnesite, tungsten, molybdenum and rare earth elements. While estimates vary, the country is believed to possess some of the largest undeveloped mineral reserves in Asia.

The significance for China is not that North Korea could replace, for instance Australia, as a supplier of bulk commodities. Australia will continue to be an important source for iron ore and major energy exports. The scale of Australian production is simply much larger than what North Korea could offer.

North Korea's value lies elsewhere. In an era increasingly defined by supply-chain resilience, proximity can be as important as scale. North Korea could provide sources of strategic minerals needed for batteries, electric vehicles, advanced manufacturing, electronics and defense industries. Resources that currently travel thousands of kilometers by sea could instead move by rail across a shared border.

For Beijing, diversification matters as much as volume. North Korea could become a supplementary source of rare earths, graphite, magnesite, tungsten and other industrial minerals that are increasingly important to high-value manufacturing. It would not replace Australia, but it could reduce dependence on distant suppliers while strengthening regional supply chains.

The opportunities extend well beyond mining. China's northeastern provinces have spent years searching for new engines of growth. North Korea's resources, labor force and geography could complement Chinese manufacturing, Russian energy and eventually South Korean capital and technology should political conditions permit.

Industrial zones along the border could expand. Infrastructure projects could connect North Korea more deeply into Chinese rail networks. Transportation corridors could link Northeast China with the Russian Far East and the Sea of Japan. Border regions that have long been economically stagnant could become centers of trade and investment.

North Korea's east coast ports could also acquire greater strategic significance. As Arctic shipping routes gradually become more commercially viable, transport links connecting Northeast Asia to northern maritime corridors will become increasingly valuable. Geography alone gives North Korea an important role in any future regional logistics network.

The broader economic logic is straightforward. Northeast Asia contains some of the world's largest industrial economies, most advanced manufacturing clusters and deepest pools of capital. Yet political tensions continue to limit economic integration.

A more stable North Korea could help unlock some of these opportunities. Labor-intensive manufacturing could find a lower-cost production base close to existing supply chains. Resource extraction could reduce dependence on more distant markets. Infrastructure investment could improve regional connectivity. Political stability could lower risk premiums and encourage long-term investment.

The benefits would extend well beyond North Korea itself. A stable eastern border would reduce political risk for investors throughout Northeast Asia. It would lower insurance costs, improve logistics, encourage infrastructure development and increase confidence in long-term regional projects.

For China, stability creates economic opportunity. For North Korea, economic opportunity reinforces stability. This is the logic underpinning Beijing's approach. Seen from Beijing, the ideal outcome is straightforward.

An independent North Korea recognized as a permanent state.

Reduced military tensions.

Expanded trade and economic development.

A formal peace process replacing a frozen conflict.

No war.

No collapse.

No regional arms race.

Western analysts often describe China's objective as influence. The better description is stability. Xi's visit is not about reclaiming North Korea. It is about shaping the conditions for a more predictable regional order. After decades of confrontation, Russia's re-engagement with Pyongyang may have created the conditions for exactly that.

For Beijing, the greatest opportunity is not strategic dominance. It is the possibility that one of Asia's longest-running security challenges could gradually become one of North Asia's most significant economic development opportunities.

Wang Huning the Intellectual Architect of China's Rise

Political systems are often remembered through the leaders who govern them. Yet beneath every political order lies a deeper layer of ideas and individuals who advanced them that shape how leaders understand power, legitimacy, development, and national purpose. In the United States, the evolution of modern strategy can be traced through a sequence of influential documents and intellectual interventions. Lyndon Johnson's victory and push for the Great Society and expansion of federal powers, led to the 1971 Powell Memorandum, an anti-democratic masterplan to impose corporate control over America, the 1992 Wolfowitz Doctrine's assertion that American unipolar primacy was a global necessity regardless of means, followed by a parallel piece led by Richard Pearle in his 1996 A Clean Break, Defense of the Realm paper that advised Israel to dominate or destroy those around them rather than trying to negotiate peaceful coexistence, and finally Elbridge Colby's 2001, The Strategy of Denial: American Defense in an Age of Great Power Conflict, an intellectual framework for establishing hemispheric dominance as part of a grand strategy to assert American influence and contain China. Together, these texts and ideas form a strategic architecture that explains much of America's contemporary trajectory.

China possesses a parallel story, not identical, but equally revealing. Rather than a succession of leaders with agendas and individuals with ideological strategies, contemporary China can be understood as the product of a remarkably consistent intellectual project spanning three generations of leadership: Jiang Zemin, Hu Jintao, and Xi Jinping. All influenced by China’s preeminent political theorist Wang Huning.

While Jiang, Hu, and Xi have become the public faces of successive eras, Wang has served as the principal architect of China's ideological framework that has resulted in its transformation from an emerging power into a central pillar of the international system. His significance lies not only in terms of his political longevity, but in his ability to develop a coherent worldview that remained through successive leadership transitions, as China was adapting to changing geopolitical circumstances, while maintaining strategic continuity.

Therefore to understand contemporary China, you have to understand Wang Huning.

Born in Shanghai and trained as a political scientist, Wang emerged during the reform era as one of China's most respected intellectuals. Unlike many academics who specialized in narrow fields, Wang sought to understand the fundamental relationship between economic modernization, political stability, national identity, and state power.

His early writings revealed a recurring concern: modernization alone could not sustain a civilization. Economic development can generate wealth, but wealth by itself does not create cohesion, legitimacy, or strategic purpose. Nations require institutions, cultural confidence, and a shared vision of their future to be sustainable.

Themes that were at the center of his study of the United States, often translated as “America Against America”. Based on his observations during an extended visit to the United States in the late 1980s, Wang identified what he viewed as a central contradiction within American society. The United States possessed extraordinary technological dynamism, economic innovation, and military power. Yet beneath these strengths he observed rising social fragmentation, widening inequality, cultural polarization, and weakening collective identity.

The book was not anti-American. Indeed, it reflected an admiration for many aspects of American achievement. But, Wang's conclusion was that America's pursuit of economic success without social cohesion was producing instability. His view was that material abundance cannot compensate indefinitely for institutional decay or cultural fragmentation.

This insight became one of the intellectual foundations of China's subsequent development strategy.

When Jiang Zemin assumed leadership after the turbulence of 1989, China faced a fundamental challenge. The country needed rapid economic growth while preserving political stability. Deng Xiaoping had initiated reform and opening, but how to manage modernization under a Marxist Socialist governance structure had not been developed.

During the Jiang era, Wang contributed to what became known as the theory of the "Three Represents." This formulation expanded the Communist Party's social base by incorporating entrepreneurs, professionals, and emerging economic elites into the political system. Rather than viewing market reforms as a threat to Party legitimacy, the theory sought to integrate new economic forces into existing political institutions.

The significance of this shift is often underestimated. Many developing countries experienced rapid growth only to see economic transformation produce political fragmentation. China's approach under Jiang attempted the opposite. New sources of wealth would be incorporated into the state rather than allowed to evolve into independent centers of political power.

The objective was not simply growth. It was about controlled “modernization”.

When Hu Jintao assumed the Presidency, China had already become an economic giant, but new contradictions were emerging. Regional inequality was widening. Environmental pressures were intensifying. Social tensions were becoming more visible. The challenge was no longer how to generate growth, but how to ensure that growth remained politically and socially sustainable.

Wang's influence became evident through the concept of the "Scientific Outlook on Development" and the broader vision of constructing a "Harmonious Society." These ideas represented a significant evolution in Chinese strategy.

The Jiang period had focused primarily on accelerating modernization. The Hu era concentrated on managing its consequences.

The emphasis shifted toward balanced development, social welfare, environmental protection, and reduction of inequality. Although often dismissed by foreign observers as political slogans, these concepts reflected an emerging recognition that long-term national power depends upon social stability and institutional resilience as much as economic expansion.

In strategic terms, Hu's period can be viewed as China's consolidation phase. The foundations established during the reform era were strengthened and adjusted to prevent the kinds of internal fractures Wang had observed in other societies.

The transition to Xi Jinping marked the beginning of a third stage.

If Jiang focused on growth and Hu on balance, Xi's period has concentrated on national rejuvenation and strategic positioning.

The central concept of the era—the "Chinese Dream"—is perhaps best understood as the culmination of themes that had appeared throughout Wang's intellectual career. Economic modernization was never intended as an end in itself. It was a means toward the restoration of China as a prosperous, technologically advanced, culturally confident, and internationally influential civilization-state.

Under Xi, Wang's influence has become even more evident. The concept of confidence expanded beyond economics into four dimensions: confidence in China's path, theory, system, and culture. The Belt and Road Initiative connected domestic development with international engagement. Military modernization accelerated. Technological self-sufficiency became a strategic priority. Poverty alleviation campaigns sought to eliminate extreme rural poverty. The state increasingly emphasized long-term planning over short-term economic metrics.

Throughout these initiatives, there is a consistent intellectual thread.

China's objective was not simply to become richer.

It was to avoid what Wang perceived as the historical vulnerabilities that had undermined other great powers: social fragmentation, ideological uncertainty, institutional weakness, and strategic dependence.

A marked contrast to America's strategic evolution.

The Powell Memorandum sought to reshape the relationship between business and politics within the United States. The Wolfowitz Doctrine articulated a vision of maintaining American primacy after the Cold War internationally. A Clean Break advanced a strategy of regional transformation in the Middle East. Colby's work reflects a shift toward long-term competition with China as the defining challenge of the twenty-first century.

Each represented an attempt to answer a fundamental strategic question: how should America preserve and extend its power?

China's intellectual evolution under Wang addressed a different question: how can a civilization regain national strength without reproducing the weaknesses that historically accompanied great-power status?

A distinction that matters

American strategic thinking after the Cold War often assumed the permanence of existing advantages. Chinese strategic thinking has generally proceeded from the assumption that advantages are temporary and must be continuously reinforced through institutional adaptation.

This difference helps explain why China's development has often appeared simultaneously pragmatic and ideological. Economic reforms, technological investment, anti-corruption campaigns, industrial policy, educational expansion, military modernization, and diplomatic initiatives are not viewed as separate endeavors. They are components of a larger project of national rejuvenation.

In this sense, Wang Huning's role resembles that of a grand strategist more than a traditional political theorist.

He did not merely develop slogans for successive leaders. He provided an intellectual framework capable of connecting immediate policy choices to long-term national objectives. His achievement was his ability to create continuity across three distinct administrations while allowing sufficient flexibility for adaptation to changing circumstances.

The result has been one of the most remarkable periods of sustained national transformation in modern history. Since the early 1990s, China has moved from the periphery of the international system toward its center. Hundreds of millions have been lifted from poverty. Industrial capabilities have expanded dramatically. Technological capacity has advanced across multiple sectors. China's diplomatic, economic, and military influence has grown on a global scale.

These developments cannot be attributed solely to any single leader. Nor can they be explained purely through economics. They emerged from the interaction between leadership, institutions, strategy, and ideas with one common denominator Wang Huning.

Just as students of American power examine the Powell Memorandum, the Wolfowitz Doctrine, A Clean Break, and Colby's writings to understand the intellectual foundations of contemporary U.S. strategy, future historians will look to “America Against America”, the theory of the Three Represents, the Scientific Outlook on Development, the Harmonious Society framework, and the concepts underpinning the Chinese Dream as components of a single evolving architecture that has led to China's modernization.

Viewed from this perspective, the Jiang, Hu, and Xi eras are not separate chapters. They are linked phases in one strategic project. Jiang integrated China into the global economy. Hu sought to ensure the sustainability of that integration. Xi has sought to convert accumulated national capacity into long-term civilizational renewal.

Deng Xiaoping was the great reformer of modern China. Wang Huning will ultimately be remembered as its principal architect of strategic thought. As the theorist who defined the means, methods, and values by which China would achieve its goals. In essence creating a compass and using it to navigate from national recovery to national rejuvenation.

The story of modern China, therefore, is not merely the story of three leaders. It is the story of an evolving worldview. And no individual has done more to shape that worldview than Wang Huning.

American Oligarchy

From Powell, to Wolfowitz, to Colby: The Evolution of America's Strategic Architecture

The modern American system did not drift accidentally toward concentrated wealth, permanent military engagement, and systemic confrontation with major rivals. It evolved through a sequential strategic architecture built over five decades.

Three key documents illustrate that evolution:

- The 1971 Powell Memorandum

- The 1992 Wolfowitz Doctrine and its companion piece A Clean Break: A New Strategy for Securing the Realm (1996)

- Elbridge Colby's The Strategy of Denial (2021)

Each emerged in a different era and addressed a different challenge. Yet together they reveal a remarkable continuity of thought. The first sought to secure domestic political power. The second extended that logic into foreign policy. The third applies it to the global economy itself.

Viewed as a continuum, they describe an increasingly ambitious project: the management of political, military, and economic systems in order to preserve existing power structures against emerging challenges.

Stage One: Powell and the Restructuring of Domestic Power

The story begins not with foreign policy but with domestic politics.

Following Barry Goldwater's crushing defeat in 1964, many conservative thinkers and business leaders concluded that the United States was moving in a direction increasingly hostile to corporate interests. The Great Society, civil rights legislation, consumer protection laws, environmental regulation, labor activism, and expanding federal authority all appeared to point toward a future in which democratic politics might place permanent constraints on concentrated economic power.

In 1971, Lewis Powell Jr. produced a memorandum for the U.S. Chamber of Commerce that became one of the most influential political documents of the postwar era.

Powell argued that free enterprise faced a broad cultural challenge emanating from universities, media institutions, organized labor, public interest groups, and progressive political movements. His response was not electoral. It was institutional.

He advocated the creation of a permanent infrastructure capable of influencing public discourse, legal interpretation, education, policy formation, and ultimately governance itself.

Most importantly, Powell identified the judiciary as a strategic center of gravity. Elections could come and go. Courts could shape outcomes for generations.

Over the following decades this vision was implemented with remarkable discipline. Business interests funded think tanks, advocacy organizations, academic programs, legal networks, media platforms, and policy institutes. Organizations such as the Heritage Foundation, the American Legislative Exchange Council, and especially the Federalist Society became pillars of a new political architecture.

The Federalist Society in particular created a pipeline through which legal ideas could move from universities into clerkships, regulatory agencies, appellate courts, and eventually the Supreme Court.

The result was not merely electoral success. It was institutional durability.

By the early twenty-first century, major decisions such as Citizens United reflected a legal environment increasingly favorable to corporate political participation. Simultaneously, growing academic research suggested that organized economic interests often exercised greater influence over policy outcomes than the preferences of ordinary voters.

The significance of the Powell doctrine was not that it won elections. But that it changed the terrain upon which elections occurred.

Politics increasingly became a contest managed through institutions rather than resolved through democratic majorities alone.

At the same time, American capitalism itself was undergoing transformation.

Industrial owners increasingly gave way to professional managers, consultants, accountants, lawyers, and financial executives. Financialization steadily displaced production as the organizing principle of economic life. Success became measured less by productive capacity and more by shareholder returns, stock valuations, mergers, acquisitions, and financial engineering.

Corporations became progressively detached from workers, communities, and national development goals.

The domestic foundations of modern America were restructured around financialization, quarterly results, and bonuses .

Stage Two: Wolfowitz and the Globalization of Primacy

The collapse of the Soviet Union created an unprecedented strategic opportunity.

For the first time in modern history, a single power stood without a peer competitor.

The question facing Washington was simple: should American primacy be managed, or preserved indefinitely?

The answer emerged in the 1992 Defense Planning Guidance drafted under the supervision of Paul Wolfowitz.

The document argued that American strategy should focus on preventing the emergence of any rival capable of challenging U.S. dominance. Although politically controversial and later softened, its core principle survived.

The objective was no longer containment.

It was preemption.

Potential competitors would be discouraged before they became actual competitors.

Four years later, many of the same intellectual currents appeared in A Clean Break: A New Strategy for Securing the Realm, prepared for Israeli Prime Minister Benjamin Netanyahu by a group of American neoconservative strategists led by Richard Perle.

While written for a different audience, A Clean Break reflected a remarkably similar worldview.

Both documents rejected traditional balance-of-power thinking.

Both viewed security as dependent upon maintaining favorable regional and international power structures.

Both displayed skepticism toward diplomatic arrangements that might limit strategic freedom of action.

In effect, the Wolfowitz Doctrine universalized American exceptionalism at the global level while A Clean Break incorporated Israel into the same strategic logic at the regional level.

Security increasingly became defined not by coexistence with rivals but by shaping the environment before rivals could consolidate power.

This represented a profound shift.

Under traditional balance-of-power systems, stability itself was the objective.

Under the emerging framework, instability could become useful if it weakened adversaries and prevented the emergence of competing centers of influence.

The focus shifted from managing regional balances to restructuring them.

Following September 11, this worldview gained substantial influence within Washington.

The Iraq War became its most consequential expression.

Publicly justified through terrorism and weapons of mass destruction, the intervention also reflected a broader belief that military power could be used to reorder geopolitical realities and reinforce American strategic dominance.

The results were mixed at best.

The wars that followed consumed enormous resources, weakened confidence in American leadership, eroded trust in international institutions, and generated growing skepticism regarding interventionist policies.

Yet the underlying assumption remained intact.

Political outcomes could still be engineered through sufficient application of military, economic, and institutional power.

Stage Three: Colby and the Weaponization of Interdependence

China's rise exposed the limitations of earlier assumptions.

Military superiority alone could no longer guarantee strategic dominance if a rival possessed superior industrial capacity, technological depth, manufacturing scale, infrastructure development, and supply chain influence.

This challenge forms the foundation of Elbridge Colby's The Strategy of Denial.

Unlike previous doctrines, Colby argues that strategic competition will be decided not simply by armies and navies but by industrial ecosystems.

Semiconductors.

Supply chains.

Shipping networks.

Rare earth minerals.

Telecommunications infrastructure.

Energy systems.

Advanced manufacturing.

Artificial intelligence.

Financial architecture.

Under this framework, economics and national security become inseparable.

Globalization ceases to be a neutral system of exchange and becomes a battlefield.

Industrial capacity becomes military capacity.

Technology becomes geopolitical power.

Supply chains become strategic leverage.

The continuity with Powell and Wolfowitz is striking.

Powell sought to secure domestic capitalism from political challenges.

Wolfowitz sought to secure American primacy from geopolitical challengers.

Colby seeks to prevent China from converting economic scale into strategic independence and ultimately geopolitical leadership.

The instruments change.

The logic does not.

Export controls.

Technology restrictions.

Investment screening.

Industrial subsidies.

Economic sanctions.

Supply-chain restructuring.

Alliance-based production networks.

All are mechanisms designed to shape future outcomes before competitors can fundamentally alter the balance of power.

Competition becomes systemic rather than episodic.

The Common Thread

Taken together, these three stages reveal something deeper than individual policy debates.

Each reflects a declining confidence in the self-correcting nature of open systems.

In the Powell framework, democratic politics become unreliable.

In the Wolfowitz framework, diplomacy becomes unreliable.

In the Colby framework, economic interdependence becomes unreliable.

The preferred solution in each case is greater management by elite institutions capable of shaping desired outcomes independent of short-term political fluctuations.

This is why contemporary debates increasingly revolve around control rather than openness.

Control of courts.

Control of narratives.

Control of supply chains.

Control of technologies.

Control of financial networks.

Control of strategic geography.

What began as an effort to defend corporate interests gradually evolved into a framework for preserving geopolitical primacy and ultimately into a system for managing global economic competition.

The Emerging Contradiction

The long-term sustainability of this architecture remains uncertain.

Its greatest weakness may be that it excels at preserving power but struggles to articulate an end state beyond preservation itself.

The same forces that increased elite influence weakened social cohesion.

Financialization reduced industrial resilience.

Permanent fundraising degraded governance.

Military overextension strained resources and legitimacy.

Public trust in institutions continues to decline.

Meanwhile China presents a fundamentally different model.

Rather than prioritizing political competition, it prioritizes strategic continuity.

Rather than emphasizing financial returns, it emphasizes industrial development.

Rather than viewing multipolarity as a threat, it presents multipolarity as the desired destination.

Whether Beijing ultimately succeeds remains an open question.

But it possesses something Washington increasingly struggles to define: a clearly articulated endgame.

As a result, Chinese policymakers increasingly view America's difficulties not primarily as ideological failures but as structural ones.

The central challenge is not democracy versus authoritarianism.

It is the growing inability of American institutions to reconcile short-term political and financial incentives with long-term national objectives.

From Powell to Wolfowitz to Colby, a common thread runs through the evolution of American strategy: the pursuit of stability through control.

What began as a project to secure domestic economic power evolved into a doctrine of geopolitical primacy and ultimately into a framework for managing global economic competition.

Together these documents illuminate more than a series of policy choices.

They reveal the gradual construction of an architecture of power that has shaped both the American system and the international order for more than half a century.

Australia has announced another adjustment to the AUKUS submarine program.

https://www.minister.defence.gov.au/statements/2026-05-30/joint-statement-aukus-defence-ministers-meeting

Rather than acquiring a mixture of new and used Virginia-class submarines, Canberra will now acquire three in-service boats while continuing to commit vast sums to submarine infrastructure, maintenance facilities and related undersea warfare capabilities.

The Pentagon intends to build 32 new submarines assuming it gives 3 to Australia. At current production rates that will take over 24 and a half years.

The rationale, according to the government, is greater efficiency, simplified logistics and lower costs.

The danger: China.

The strategy: defend Australia's trade and trade routes against China.

The contradiction. China accounts for roughly 34% of Australia's trade and is linked, directly and indirectly, to around a quarter of Australia's GDP.

Taxes generated by trade with China will pay a significant portion of the submarines intended to defend Australia's trade, and trade routes, with China, from China.

One might reasonably assume that if China wished to inflict serious economic harm on Australia, it would stop trading with it.

Two Australian comedians, the late John Clarke and Bryan Dawe, would have had a field day with this. Their classic sketch, The Front Fell Off, captured the uniquely Canberra talent of explaining a policy until its contradictions become impossible to ignore.

Clarke and Dawe's The Front Fell Off:

https://www.youtube.com/watch?v=3m5qxZm_JqM&utm_source=chatgpt.com

Add on that the same type of absurdity was mocked years ago by the ABC comedy Utopia.

"On the Defence" (Season 3, Episode 7).

In this famous defence white paper episode, Tony drags officials through the logic of their own strategy until they reluctantly acknowledge that the country they are preparing to defend themselves against is their largest trading partner.

The scene aired in 2017. Nearly a decade later it reads less like satire than a Cabinet briefing.

What makes AUKUS remarkable is not merely its cost. It is that policymakers continue to describe China's economic success as essential to Australian prosperity while insisting China is the justification for Australia's largest defence expenditure since the Second World War.

The more the policy is explained, the less coherent it becomes.

Some strategies are absurd. Some policies are flawed. Some policies are expensive. AUKUS increasingly appears determined to be all.

Bridges not conflicts

China opened the meeting by recalling Xi Jinping’s 2024 state visit to Serbia, presenting it as the beginning of a new chapter in building a China–Serbia community with a shared future. During that visit, the two countries formally upgraded relations beyond the comprehensive strategic partnership established in 2016, making Serbia the first European country to adopt this framework with China.

Xi pointed out that recent years of intensified cooperation had already produced tangible gains for both societies, framing the relationship as a model of modern state-to-state relations based on sovereignty, mutual respect, and pragmatic development rather than ideological alignment or coercive pressure. He emphasized that both China and Serbia had endured “sufferings and glories,” experiences that forged political cultures rooted in independence, dignity, peaceful development, fairness, and justice.

Xi described the China–Serbia ironclad friendship as “unique,” possessing deep historical roots, strong public support, and practical strategic foundations. Beijing reaffirmed support for Serbia’s chosen development path and called for closer alignment between Serbia’s long-term strategy and China’s 15th Five-Year Plan. The emphasis was not on military integration or security blocs, but on trade corridors, industrial cooperation, infrastructure connectivity, and technological modernization.

The substance of the agenda reflected the broader diplomatic contrast increasingly emerging between Beijing and Washington. At a moment when the United States often approaches international relations through sanctions, export controls, military deployments, alliance structures, and strategic containment policies, China is attempting to present itself as advancing influence through commerce, infrastructure, investment, and long-term economic integration.

Xi highlighted the Belt and Road framework, with transport and energy infrastructure at its center, while also expanding cooperation into artificial intelligence, the digital economy, green energy, and advanced manufacturing. Serbia has already become one of the largest recipients of Chinese investment in Europe, with Beijing financing and constructing highways, rail projects, steel production, mining operations, and industrial facilities across the country.

The free trade agreement between China and Serbia, which entered into force on July 1, 2024, was presented as another cornerstone of the partnership. The agreement immediately removed tariffs on roughly 60 percent of traded goods, with further tariff reductions scheduled over the next decade. Beijing portrayed the agreement as evidence that its partnerships are designed around market access, industrial growth, and development integration rather than geopolitical dependency.

Xi also stressed the social and cultural dimension of the relationship, promoting what he called the “policy mix” of visa-free travel, free trade, and direct flights. He referenced the 70th anniversary of diplomatic relations and called for expanded exchanges in culture, education, sports, tourism, and subnational cooperation. Reinforcing the reality that strategic ties are sustained not only through governments, but through growing economic and social interaction between its people.

Placed within the broader global environment, Xi framed the partnership as part of a transition toward what Beijing describes as an “equal and orderly multipolar world.” He advocated true multilateralism, inclusive globalization, and a shared future for humanity, language that increasingly defines Chinese diplomacy as it seeks to contrast itself with what it portrays as an increasingly militarized and fragmented Western-led order.

Aleksandar Vučić mirrored and reinforced this tone throughout the visit. He described the relationship as a “steel friendship” and pledged that Serbia would remain a reliable partner of China. Vučić praised Beijing’s support for Serbian sovereignty and territorial integrity, particularly on Kosovo, while Serbia reiterated support for China’s position on Taiwan.

Vučić also focused heavily on the practical outcomes of cooperation. He highlighted infrastructure construction, manufacturing expansion, energy investment, and emerging opportunities in technology and green development. Speaking publicly during Xi’s visit, Vučić stated that “the sky is the limit” regarding future cooperation between the two countries. He pointed to visa-free travel and direct flights as proof that the relationship extends beyond elite diplomacy into tourism, employment, commerce, and direct human interaction.

The symbolism of the visit also carried geopolitical weight. Xi arrived in Belgrade on the 25th anniversary of the 1999 NATO bombing of the Chinese embassy, an event that remains deeply embedded in both Chinese and Serbian political memory. Beijing used the anniversary to underscore a shared skepticism toward Western interventionism and to reinforce the narrative that both countries favor sovereignty, non-interference, and a less Western-dominated international system.

The choreography of the visit was deliberate. Xi anchored the relationship in history, development, and long-term strategy. Vučić responded with economic and political acknowledgement and cooperation. Together they projected the China–Serbia partnership as a model of resilient multipolar cooperation built around trade, infrastructure, industrial development, and sovereignty at a time when much of the Western international system is increasingly defined by confrontation, sanctions, and military competition.

Strategic Calculus

Shehbaz Sharif's China Visit

Pakistan Prime Minister Shehbaz Sharif’s visit to China comes at a moment when multiple regional crises are beginning to merge into a single strategic discussion involving CPEC 2.0, Gulf instability, energy security, and the future direction of the Belt and Road Initiative.

From Beijing’s perspective, the visit is about stabilizing overlapping pressure points surrounding the Strait of Hormuz, Pakistan’s fragile economy, and wider regional security risks. China’s position throughout the Gulf crisis has remained notably consistent. Since the March 31 joint five-point peace initiative announced with Pakistan, Beijing has emphasized de-escalation, protection of shipping lanes, negotiations, protection of infrastructure, and adherence to multilateral diplomacy.

The Strait of Hormuz remains central because China’s economic system remains deeply dependent on Gulf energy flows. Any prolonged disruption threatens Chinese industrial supply chains, global trade routes, and already fragile international energy markets. From Beijing’s perspective, the temporary understanding between Washington and Tehran appears less like a final settlement and more like a fragile pause in a broader unresolved confrontation. The core disputes — sanctions, uranium enrichment, frozen Iranian assets, verification mechanisms, naval access, and regional security arrangements (Israel's nuclear weapons) — remain unresolved.

Pakistan appears to believe its position between China, Iran, Saudi Arabia, and the Gulf states gives Islamabad additional leverage with Beijing at a time when Pakistan urgently needs financial assistance and desires support for CPEC 2.0. Islamabad increasingly presents itself not only as an economic partner but also as a strategic intermediary capable of helping stabilize parts of the regional environment surrounding China’s western Belt and Road corridors.

The composition of the Pakistani delegation is therefore significant. The presence not only of the prime minister, but also the deputy prime minister and army leadership, suggests discussions extending far beyond economics into security coordination, regional diplomacy, energy infrastructure, and military cooperation. Recent reporting confirms that approximately 8,000 Pakistani troops and JF-17 fighter jets have been deployed to Saudi Arabia, underscoring Islamabad's willingness to extend strategic depth to Gulf partners in exchange for financial support.

At the center of the economic discussions is CPEC 2.0, the next phase of the China–Pakistan Economic Corridor. The first phase focused heavily on ports, transport corridors, and power generation. The second phase is expected to move toward industrial development, mining, agriculture modernization, logistics integration, technology transfer, and increasingly green infrastructure tied to China’s evolving Belt and Road framework.

While the broader concept of an "ecological civilization" remains an overarching Chinese framework, the tangible driver of the Green BRI in Pakistan is increasingly economic necessity. Facing chronic energy shortages, fiscal pressure, and rising import costs, Islamabad sees Chinese-backed renewable infrastructure—solar technology, battery systems, and electric vehicle manufacturing—as a necessary solution rather than an optional environmental branding exercise.

At the same time, Pakistan’s broader strategic environment remains difficult. Economically the country faces debt pressures, inflation, weak reserves, and continuing dependence on external financing. Militarily tensions continue to simmer along the Afghan border, while political relations with India remain tense. Simultaneously Pakistan has expanded security coordination with Saudi Arabia, contributing to regional speculation that Islamabad may be willing to extend aspects of its strategic deterrence umbrella deeper into parts of the Gulf in exchange for financial support and investment. However, Beijing has not endorsed this speculation. China's views are not clear, but it may regard any nuclear or strategic umbrella arrangements as bilateral matters between Islamabad and Riyadh. Meanwhile Beijing maintains a clear distance from direct military entanglement in Gulf rivalries.

In addition, there is increasing discussion surrounding possible transfers of Pakistani military hardware to Saudi Arabia. Whether fully accurate or partially signaling, such reports add another layer of complexity to Beijing’s calculations. China wants stability across the Gulf and uninterrupted energy flows, but appears determined to avoid direct military entanglement in Middle Eastern rivalries.

This leaves Beijing balancing several objectives simultaneously: preserving stability around the Strait of Hormuz, preventing wider regional war, protecting energy supplies, expanding CPEC 2.0, advancing the Green BRI, and avoiding direct involvement in escalating security confrontations.

China’s consistency throughout the broader Gulf crisis has stood in notable contrast to the daily tactical shifts and public posturing coming from Washington. Beijing’s approach has remained centered on containment, stabilization, and long-term strategic positioning rather than short-term political signaling.

For Pakistan, the visit represents both economic necessity and strategic opportunity. For China, it represents another attempt to maintain regional stability without becoming directly pulled into the conflicts now spreading across the Gulf, South Asia, and the wider Belt and Road space.

Glenn Diesen is a historian who interviews those who warn us against repeating the mistakes of history.

In this interview we talk about Washington's “own goals” and China's “patience” strategy.

https://youtu.be/-V8u-iEESO8?si=86xJWmn39Nl1eSKP

His frequent guests include:

• Jeffrey Sachs: Economist and Columbia University professor, frequently discussing the global shift away from a Western-centric world.

• John Mearsheimer: International relations scholar, known for his analysis of the war in Ukraine and great power competition.

• Scott Ritter: Former UN weapons inspector and author.

• Douglas Macgregor: Retired U.S. Army Colonel and former senior advisor to the U.S. Department of Defense.

• Seyed Mohammad Marandi: Geopolitics professor at the University of Tehran.

• Dmitry Polyanskiy: Permanent Representative of the Russian Federation to the OSCE.

• Lawrence Wilkerson: Retired U.S. Army Colonel and former chief of staff to Secretary of State Colin Powell.

• Richard D. Wolff: Marxist economist and professor emeritus of economics.

• Max Otte: German political economist and investment manager.

• Brian Berletic: Geopolitical analyst and host of the New Atlas.

For the most up-to-date interviews and full guest lists, you can check Glenn Diesen’s Substack or stream episodes on the Greater Eurasia Podcast on Apple Podcasts.