Abstract:
In the first fortnight of January 2026, China looked like a country pulling in several directions at once, trying to keep a steady grip on the wheel while juggling competing priorities. At home, leaders were already sketching out themes for the next Five-Year Plan, emphasising “high-quality” growth through technology, greener development, and overseas expansion, while at the same time reinforcing Party control via ideology campaigns, personnel reshuffles, and another familiar round of anti-corruption clean-ups. Xi’s New Year speech leaned optimistic—highlighting progress on modernisation, advances in AI, and resilience in the face of external pressure—though much of it echoed long-standing talking points rather than signaling major shifts.
On the military front, the PLA showcased new stealth aircraft, drones, naval platforms, and joint exercises, pairing these displays with export controls aimed at Japan and repeated warnings over Tokyo’s nuclear debates. It was a familiar blend of signalling strength while insisting on a defensive posture, aimed as much at domestic as at foreign audiences.
Diplomatically, Beijing stayed active: rolling out cultural outreach in parts of Europe, expanding financial and infrastructure commitments in Africa and South Asia, reaffirming ties with partners such as Pakistan and Iran, and issuing targeted trade measures toward the United States and Japan. The approach mixed engagement with pressure, reflecting both confidence and ongoing friction in key relationships.
Economically, the government pushed modest stimulus through consumer subsidies, tourism campaigns, and “Digital China” initiatives, while maintaining strict oversight of finance, capital flows, and data governance. In technology and science, launches of new satellites, brain-mapping research, logistics drones, and deep-sea robotics underscored a clear focus on dual-use capabilities, though many projects remain long-term bets rather than immediate game-changers.
Taken together, the picture is of a leadership that is ambitious and outward-facing but highly centralised, projecting assurance while managing structural slowdowns, geopolitical pushback, and internal constraints that are harder to paper over.
