Been spendin’ most their lives livin’ in the free trade paradise
It feels a bit like 1995 listening to Canadian and European leaders
Friends,
In August 1995, Coolio and L.V. (Larry Sanders aka Large Variety) released “Gangsta’s Paradise” which reached number 1 in the United States, Australia, and much of Europe. Six months later, the song went triple platinum.
Coolie sampled heavily from Stevie Wonder’s 1976 “Pastime Paradise,” who received credit for co-writing Coolio’s version… and supposedly convinced him to take the profanities out, a first for Coolio.
For more, there is an excellent New York Times article from just after Coolio’s death in September 2022 on the song and how it changed his life (“The Story of ‘Gangsta’s Paradise,’ Coolio’s Biggest Hit”). Coolio viewed his song as both a blessing and a curse.
As I read about the EU’s announcement of a Free Trade Agreement with India, as well as the trips by Canadian Prime Minister Mark Carney and British Prime Minister Keir Starmer to the People’s Republic, I couldn’t help but be reminded of these lines from the Stevie Wonder version:
They’ve been spending most their lives
Living in a pastime paradise
They’ve been wasting most their time
Glorifying days long gone behind
Don’t get me wrong, I’m sure the agreement Brussels and New Delhi hammered out took a lot of effort, long hours in windowless conference rooms arguing over tariff rate reductions, investments, and market access. It most certainly took enormous political commitment to get this done so quickly and having Ursula von der Leyen show up on India’s Republic Day to cement the agreement was a powerful symbol.
My friend James Crabtree had an excellent hot-take out today titled, “The end of the post-modern world order: India, Europe, Trump and reflections on a week in New Delhi.” He spent the last week in Delhi and met with a number of the European negotiators.
But I can’t help but think this approach to geopolitics is so 1995.
This era of geopolitics kicked off in 1994, when Bill Clinton and his Canadian and Mexican counterparts signed NAFTA (North American Free Trade Agreement). 1994 was also the year when Bill Clinton decided to drop prerequisites on human rights before deepening America’s trade relations with the PRC (see President Clinton’s press conference on May 26, 1994 announcing a major shift in U.S. policy towards the PRC, “President Clinton Press Conference on Human Rights in China, 1994”). Then on January 1, 1995, the World Trade Organization (WTO) came into existence and a new era was born.
With the Cold War Era over, security treaties and superpower summits were a thing of the past. FTAs and trade negotiations took their place. This was a normative world in which lawyers and arbitral tribunals took pride of place. This decoupling of trade and security was an environment the European Union was designed to thrive in. This was the birth of the post-modern order that Robert Cooper described in his book The Post-Modern State and the World Order, and which James Crabtree highlights so well in his substack post.
Today that post-modern order has ended, yet some leaders are still committed to the 1995 playbook. This is what makes this India-EU FTA seem… well… ill-timed.
It isn’t all bad.
If carried out, I think it will be spectacular for India.
Indian firms will get increased access to a massive consumer market, Indian workers will get jobs producing products to be sold to more wealthy European consumers, and European capital (that could be used to create jobs for Europeans) will flow to India to pursue labor and regulatory arbitrage. And given the flow of cheap Russian energy to India, Indians will gain another advantage in producing products for the European market (more on that dynamic below).
But what does Europe get out of this?
The tariffs on European wine will be cut from 150% to 75% (perhaps down to 10-20% over the next few years) and some European firms will get a short-term boost for their exports, but India wants to become a manufacturing and industrial power in its own right. What is Europe’s comparative advantage that will permit them to reach some sort of balanced trade with India? Delhi wants their own citizens to produce the goods that Europeans presumably want to sell to them. Delhi wants their own citizens to provide services that Europeans presumably want to sell as well. This has a China Shock vibe written all over it. Europe finds itself de-industrializing and losing technology leadership because it blindly followed free trade orthodoxy with regards to the PRC for the last three decades and now it is trying the same thing with India from a much weaker position.
I don’t think this ends well for Europe, but it was essentially the only play that Brussels knows how to make.
The efforts by the Canadian and British Prime Ministers to pursue these 1990s style trade deals with the People’s Republic of China seem even less well-timed.
I understand that elites in Ottawa and London are pissed at Washington and outraged by President Trump’s treatment of them, but it isn’t clear to me that jetting off to Beijing, when they have essentially no leverage, will provide the kinds of economic prosperity that they are promising their citizens.
On Saturday, as he was flying back from Beijing, Keir Starmer posted to his own Substack an essay on why he went to the PRC (“China: Why I went, and what I did while I was there.”). It is a revealing read for how unambitious the Prime Minister seems to be.
The post reeks of desperation as he tries to conjure up the heady days of the 1990s and convince his constituents that more trade deals with the PRC will fix the cost-of-living problems his voters care about.
Newsflash for the Prime Minister: British citizens are worried about the cost of living because they have seen how the post-modern order and free trade have destroyed their own jobs and the industrial might of their country. Slightly lower tariffs on Scotch Whisky and a few more cheap products from China won’t fix that existential dread.
The order which these leaders are longing for is dead, which means you can’t use the same playbook anymore.
It is no secret that Carney and Starmer went to Beijing to court Xi Jinping because they want to create leverage against President Trump so that he ends his pressure campaign on them.
Apparently, Mark Carney, and to a lesser degree, Starmer, believe that if they appease the Chinese Communist Party and accelerate their dependency on the PRC, they will force the Americans to reconsider the demands they are making on Ottawa and London.
I don’t follow their logic.
To listen to Carney’s Davos speech, he justifies these actions because he is standing up for values and the liberal international order built on rules. He calls on middle powers to work together in maintaining this liberal order even as he pursues a unilateral approach with Beijing, the global leader in illiberalism. For Carney, Washington’s coercion is unacceptable and therefore his outreach to Beijing is completely justified.
Trivia Question: Which member of the G7 is being subjected to the most severe campaign of coercion by another major economy?
Hint – It isn’t Canada
Beijing is waging a massive campaign of pressure and coercion to force Tokyo to buckle, yet not a peep of solidarity from Carney, Starmer, or any European leader.
Instead, we see Carney concluding a new strategic partnership deal with Beijing and Starmer flying to Beijing with hat in hand to hammer out one-sided trade deals that benefit Beijing more than the UK. French President Macron did the same in December and the German Chancellor is scheduled to follow his counterparts to Beijing in February. These things are going on despite the fact that Xi Jinping has provided far more support to Putin in his war on Ukraine and Europe, than President Trump ever has.
Xi’s coercion of Japan provides a perfect opportunity for middle powers to stand in solidarity against less liberal world leaders, but that isn’t what they are doing.
Their collective silence on the PRC’s coercion of Japan provides Chinese and Russian strategists all the evidence they need to conclude that the Europeans and Canadians won’t defend the values they profess to believe in and that they want to be divided and conquered. This behavior suggests that Beijing and Moscow can continue to target individual middle powers with coercion and have little to fear from collective security.
Imagine an alternative history for January 2026…
As Beijing ramps up its punishment of Tokyo, Carney and Starmer cancel their trips to Beijing in a show of solidarity with a fellow liberal democracy and G7 member.
The Irish Prime Minister, the Finnish Prime Minister, and the German Chancellor all announce that they are cancelling their planned, unilateral trips to Beijing. Trips that were largely focused on furthering trade and business relationships that Beijing wants. Each of these leaders point to Xi’s aggression against Japan, Taiwan, and the Philippines as the reason for their cancelations, stating that the geopolitical risks that the Chinese Communist Party poses cannot justify their further economic entanglements with the PRC.
French President Macron announces that it was a mistake to travel to Beijing in December 2025 and says he is reconsidering his objections to NATO in the Indo-Pacific because Europeans should stand shoulder to shoulder with their Japanese counterparts. Going so far as to say that he now supports a NATO footprint in Tokyo.
Instead of going to Davos during the week of January 19th, these leaders fly to Tokyo, along with Ursula von der Leyen and there they join the South Korean President and the Australian Prime Minister. This puts the final nail in the coffin of the World Economic Forum (WEF) and Davos man, as President Trump speaks to an empty hall in the Swiss Alps.
As the leaders of the world’s most important liberal democracies and middle powers gather in Tokyo, they pledge to stand up against coercion together and announce various interlocking trade and security agreements among themselves. A new era is born in which trade and security are viewed as coupled, as opposed to the Post-Cold War Era which saw trade as decoupled from security concerns. Between the EU, Canada, Japan, South Korea, the UK, and Australia, they become the world’s largest and most powerful economic bloc, with a military potential that dwarfs what Beijing and Moscow can muster.
Under this scenario, Prime Minister Takaichi gains a significant domestic political boost which calms Japanese markets and bolsters support for Japanese government bonds. Tokyo and Seoul cement a defense alliance directed against the predations of Beijing, Pyongyang, and Moscow. The countries of Southeast Asia are persuaded to pursue even greater alignment with this emerging middle power bloc.
When Mark Carney gives a speech at the University of Tokyo to a packed auditorium about middle powers standing together to maintain a liberal international order, it doesn’t sound like complete hypocrisy (as it did in Davos as he had just flown back from Beijing).
Both Beijing and Moscow must take seriously the prospect that the middle powers that they had spent years manipulating and playing off one another are now joining forces to stand against them. Chinese exports faced higher tariffs and barriers in each of these countries as this bloc privileges their own prosperity instead of the race to the bottom that coupling with the PRC entails.
Without access to this bloc of middle powers or to the United States, the Chinese economy, dependent on exports to keep their Ponzi scheme going, collapses by the end of 2026 forcing Xi Jinping to give up power heading into the 21st Party Congress. Aggression against Taiwan, Japan, or the Philippines is off the table as Chinese citizens demand that the Party cede power and undertake serious economic and political reforms.
Without Xi as his patron and protector, Putin must sue for peace and in doing so faces a backlash over his costly war that drives him from power.
Commentators that viewed the world’s autocrats as on the rise in the period of 2022 to 2025, revise their assessments as faith in democratic stability returns.
This scenario might even incentivize President Trump to view his middle power counterparts differently and adjust his dealings with them. He famously respects power and these leaders have demonstrated that they possess it. Regardless of whether that happens, President Trump’s successor in January 2029 faces a very different world order that he/she must make adjustments to.
But this is just a fantasy.
That kind of alternative history would have required serious men and women to have worked together to become ruler-makers, not just rule-takers. It would have required them to take responsibility for creating and maintaining the international order that advantages them. It would have required acknowledging that the World Trade Organization, that product of 1995 optimism, was dead and buried, and that simply calling plays from the 1995 playbook wouldn’t work. It would have required them to explain to their citizens that they faced far more serious challenges than just Donald Trump.
Instead, we got something far less ambitious.
My suspicion is that folks like Prime Minister Carney believe that by triangulating with the PRC against the United States, that they can capitalize on their public’s distaste of President Trump to eke out a little more time in power and continue to re-arrange the deck chairs on their sinking economies.
Well, that is a dangerous game Mr. Former Bank of England.
Meme from a Canadian posted in response to Carney’s trip to Beijing
A far better and sustainable approach would be to construct a GATT 2.0 that excludes the PRC and the Russian Federation, rather than expanding their dependence on the Chinese Communist Party.
Carney complains that Trump is harming America’s allies more than its rivals, but just a glance at the effective U.S. tariff rates paints a very different story.
Or consider the campaign the United States is waging against Russia’s shadow fleet. The campaign is meant to prevent Moscow from realizing the revenues from its energy industry which it uses to fund its war on Ukraine.
Or the decades long effort by the United States to get NATO members to actually fulfill their defense spending obligations so that NATO can effectively deter Moscow.
Canada, like many other NATO Members, has fought, tooth and nail, against fulfilling their NATO obligations.
Here’s a helpful chart from the World Bank Group based on data from SIPRI, the Stockholm International Peace Research Institute (hardly MAGA-friendly institutions). The red line is the 2% of GDP mark that NATO members made for defense spending and the green line represents the year (2014), when Canadian leaders pledged to President Obama that they would hit their defense spending targets.
This, in chart form, is what an irresponsible ally looks like.
So perhaps it is unsurprising that Carney, Starmer, and other European leaders are ignoring what Xi Jinping is doing to Japan because to recognize it and take it seriously would require them to admit that the United States has a point, that the global trading system under the WTO does not work, and that they must tell their citizens some hard truths.
But nah… much easier to blame Trump for all the problems.
One more thing about the India-EU Trade Deal
The deal doesn’t appear to address Indian purchases of Russian oil and natural gas, which presumably should be a major concern to Brussels since those purchases help fund the Russian war effort.
Since February 2022, India has become the second largest purchaser of Russian crude oil exports, after the PRC.
Since 2022, India has increased its imports of Russian crude oil by 2340%... does that mean that Indian consumers are using 2340% more oil than they did in 2021?
No.
Indian refineries are simply laundering Russia energy exports to European buyers. Over the last four years, India became the top supplier of diesel and jet fuel to Europe. Europeans bought nearly a half billion euros worth of petroleum products from India in December 2025 alone, nearly four times as much as they were buying from India in 2021.
Perhaps a simplified chart would best illustrate what has changed in Europe’s energy dependence on Russia between 2021 and 2025.
So last week provided some good news, for those who want to undermine Moscow. The EU announced it would finally prohibit the importation of some Russian energy products through third countries.
Great job Brussels, it only took 47 months to announce the closure of the loophole that has been funding the Russian war effort.
But wait, you will notice that this announcement doesn’t mean Europeans will stop buying Russian energy products in January 2026. First of all, it only applies to gas from third countries and as this headline shows, Europe continues to buy over 200 LNG cargoes from the Russian arctic directly, down slightly from 217 in 2024.
This direct European purchase of Russian gas was about 7.2 billion euros in 2025 and accounts for more than three quarters of all the Russian production from the Yamal LNG terminal… the PRC only received 51 tanker deliveries from Yamal in 2025.
The ban announced on January 26, only covers LNG imports from third countries and won’t start until the beginning of 2027. The EU won’t block imports of Russian gas through pipelines from third countries until the autumn 2027.
The text says nothing about refined petroleum products like diesel and jet fuel which presumably India will increasingly launder for the EU under this India-EU FTA.
Soooo… Europe won’t stop importing laundered Russian gas for another year and it won’t stop importing gas through pipelines containing Russian gas for almost two more years.
Perhaps even more frustrating is this: “by 1 March 2026, EU countries must prepare national plans to diversify gas supplies and identify potential challenges in replacing Russian gas.”
Excuse me, what?!?
It has been four years since the start of Russia’s full-scale invasion of Ukraine and EU member states still do NOT have national plans for replacing Russian imports.
Are they kidding?!?
I was under the impression that Russia’s Ukraine War was an existential threat to Europe, that Moscow was waging a hybrid war against Europe with the sabotage of European critical infrastructure, that enabling Russia in any way undermined Western unity, and that Moscow was on the verge of invading Europe… now I learn that Europeans haven’t even bothered to plan for how they might replace their dependence on Russian energy products?!?
I guess Brussels and the member states have been too busy over the last four years planning for and ensuring they have the legislation in place to replace American tech companies.
High Risk Gamble in Tokyo
Japanese Prime Minister Takaichi is pursuing a high-risk gamble with her decision to dissolve the lower house of the Diet (the House of Representatives) and to hold a general election on February 8 for all 465 seats.
Her plan is to get a majority for the LDP so she doesn’t have to rely on her party’s coalition partners, but the opinion poll bump she got last month appears to be deflating, with double digit drops in her approval rating since the announcement of the snap election.
She has said that if the LDP fails to get a majority, she will resign, which would be a shame given the leadership turbulence Japan has seen over the last five years.
The interest rates on long-term Japanese government bonds have recached a 27-year high and the yen is weakening, just as Takaichi is signally even more Japanese government spending and an end to “this trend of excessive austerity and insufficient investment.”
The Constitutional Democratic Party (CDP) has joined with Kōmeitō, the LDP’s traditional partner, to form the CRA (Centrist Reform Alliance). It isn’t clear whether the two parties have time to coordinate their opposition to the LDP, but if they do, this might be a very difficult election for Takaichi and her Party.
The biggest losers might be the LDP’s current coalition partners, the DPFP (not to be confused with the DPP in Taiwan) and Sanseitō, which made a big splash last year in the Upper House election as the so-called far right populist party. The Democratic Party for the People, is a new center right party that joined with the LDP to form a government late last year. Takaichi is likely betting that LDP candidates with her endorsement can cannibalize DPFP seats. Sanseitō’s support has faded since last year.
Even if Takaichi’s bet pays off, she will still need to manage some form of a coalition since the LDP lacks a majority in the Upper House.
Well, on the bright side, the benefit of a snap election is that we will know the outcome in week.
Thanks for reading!
Matt
MUST READ
Panama Canal ports will keep operating after court finds concession unconstitutional, president says
Alma Solís, Associated Press, January 30, 2026
Panama’s president moved to assure the public on Friday that critical ports at both ends of the Panama Canal will continue to operate without interruption — a day after the country’s Supreme Court ruled that the concession held by a subsidiary of Hong Kong’s CK Hutchison Holdings was unconstitutional.
The court’s decision late Thursday advances a U.S. aim to block any influence by China over the strategic waterway and immediately drew a sharp rebuke from Beijing.
President José Raúl Mulino said that until the court’s ruling is executed — a period of time he did not specify — Panama’s Maritime Authority would work with Panama Ports Company, the CK Hutchison subsidiary, to ensure continuing operations at the port.
Once the concession is formally ended, a local subsidiary of Danish logistics company A.P. Moller-Maersk will operate the ports in a transitional phase until a new concession can be bid and awarded, Mulino said.
“Panama moves forward, its ports will continue operating without interruption and we will continue serving the world at the logistics center of excellence that we are,” Mulino said in a recorded video address.
The court’s ruling followed an audit by Panama’s comptroller, which alleged irregularities in the 25-year extension of the concession, granted in 2021.
The Trump administration made blocking China’s influence over the Panama Canal one of its priorities in the hemisphere. Panama was U.S. Secretary of State Marco Rubio’s first overseas stop as the United States’ top diplomat.
Despite the insistence by Panama’s government and the canal authority that China has no influence over its operations, Rubio made clear that the U.S. viewed the operation of the ports as a national security issue for the U.S. President Donald Trump had gone so far as to say Panama should return the canal to U.S. control.
The court’s brief statement gave no guidance on what would happen to the ports now.
The ruling draws backlash from Hong Kong
CK Hutchison’s subsidiary, Panama Ports Company, said it has not been notified yet about the decision but insisted its concession was the result of transparent international bidding.
It said in its statement that the ruling “lacks legal basis and jeopardizes not only PPC and its contract, but also the well-being and stability of thousands of Panamanian families who depend directly and indirectly on port activity, but also the rule of law and legal certainty in the country.”
It said that it reserves all rights to proceed legally in Panama or elsewhere, but gave no more details.
The Hong Kong government firmly rejected the ruling in a statement, saying it strongly opposes any foreign government using coercive, repressive or other unreasonable means to seriously harm the business interests of Hong Kong enterprises. It said the Panamanian government should respect the spirit of contracts and provide a fair business environment.
“Given the current situation in Panama, Hong Kong enterprises should carefully review their existing and future investments there,” it said.
In Beijing, China’s foreign ministry spokesperson, Guo Jiakun, told reporters that China would take all necessary measures to safeguard the legitimate rights and interests of “the Chinese company,” without elaborating on the potential steps.
Political analyst Edwin Cabrera said once the parties are notified, the issue of what to do with the ports goes to Panama’s executive branch, specifically the Panama Maritime Authority.
“I have the impression from conversations that I have had with some people that the operation (of the ports) will not stop,” Cabrera said.
A sale deal that apparently angered Beijing
CK Hutchison Holdings announced a deal last year to sell its majority stake in the Panamanian ports and others around the world to an international consortium that included BlackRock Inc. But the deal appeared to stall over objections by the Chinese government.
The company said last July that it was considering seeking a Chinese investor to join as a significant member of the consortium, a move that some interpreted as way to please Beijing, but CK Hutchison hasn’t said more since.
The awkward position the company found itself in highlights the challenges Hong Kong business elites face in navigating Beijing’s expectations of national loyalty, especially when relations between China and the United States are strained. CK Hutchison is owned by the family of Hong Kong’s richest man, Li Ka-shing.
Last year, Panama’s comptroller audited the concession to the Panama Ports Company, which had held the contract to operate the ports since 1997. The concession was renewed in 2021 for 25 years, during the prior Panamanian administration.
Comptroller Anel Flores said the audit found payments that were not made, accounting errors and the apparent existence of “ghost” concessions operating within the ports since 2015. The company denied those allegations.
The audit determined that the irregularities had cost the government about $300 million since the concession was extended and an estimated $1.2 billion during the original 25-year contract.
Flores also said the extension was granted without the required endorsement of his office.
On July 30, the comptroller challenged the Panama Ports Company’s contract to operate the ports before the Supreme Court.
COMMENT – The ChiComs are not going to be happy with this… but of course if Beijing tries to pressure Panama too hard, Panama can always drop their relations with Beijing and reestablish diplomatic relations with Taiwan, I’m sure Taipei would love to help Panama out.
Maybe Beijing should have let CK Hutchinson sell its stake when they had the chance.
China cancels all flights on 49 routes to Japan
The Straits Times, January 27, 2026
All scheduled flights on 49 air routes between China and Japan have been cancelled for February, flight data showed on Jan 26, as Chinese airlines extended special ticket change and refund policies for Japan-related travel.
Data from flight information platform Flight Master showed that as at Jan 26, 49 China-Japan routes had cancelled all flights scheduled for February, an increase from January.
In January, the cancellation rate for flights from the Chinese mainland to Japan stood at 47.2 per cent, up 7.8 percentage points from December.
China’s three major domestic carriers – Air China, China Eastern Airlines and China Southern Airlines – issued notices on Jan 26 detailing special handling measures for tickets on Japan routes, citing a travel reminder issued by China’s Foreign Ministry.
Under the policies, passengers holding eligible tickets purchased or reissued before midday on Jan 26 can make one free change, subject to fare differences, or apply for fee-free refunds for unused segments. The measures cover Japan-related flights scheduled between March 29 and Oct 24, including services to Tokyo, Osaka, Nagoya, Fukuoka, Sapporo and Okinawa.
The latest adjustments follow earlier steps taken by Chinese airlines to manage Japan-bound demand. In December 2025, Air China, China Eastern and China Southern extended a previous Dec 31 deadline for ticket refunds and rebooking to March 28, marking the end of the winter-spring travel season.
COMMENT – Clearly designed to increase the pressure on Tokyo.
Zhang Youxia’s Differences with Xi Jinping Led to His Purge
K. Tristan Tang, Jamestown, January 26, 2026
Executive Summary:
On January 24, authorities announced investigations into Central Military Commission (CMC) Vice Chairman Zhang Youxia and Chief of Staff of the CMC Joint Staff Department Liu Zhenli.
Official statements point to disagreements with Xi Jinping over PLA development and training, and even instances of open resistance to his directives, as the cause of the generals’ downfall.
Zhang Youxia’s timeline for PLA joint operations training did not align with Xi Jinping’s 2027 deadline for the PLA to be capable of invading Taiwan. His force-building agenda also focused on fewer priorities and placed less emphasis than Xi on military struggle as a standalone objective, instead integrating it into training activities.
January 2026 marked the start of the final annual training cycle before 2027. The divide between Zhang Youxia and Xi Jinping no longer centered on debate or planning and instead shifted to execution and direct noncompliance. This problem was clearly visible across the PLA, and it posed a serious threat to Xi’s authority.
What Zhang Youxia’s Purge Could Mean for China’s 21st Party Congress
Manoj Kewalramani, RSIS, January 29, 2026
KEY TAKEAWAYS
While the official line suggests that the downfall of Zhang Youxia and Liu Zhenli is due to political corruption, embedded in the language are accusations of faction-building.
The purge of a senior official like Zhang raises serious questions about the Chinese military’s cohesion and combat capability, and is likely to breed a culture of mistrust and anxiety across the entire party-state ecosystem in the near term.
In the long term, these purges will change the dynamics of civil–military relations in China, with implications for Xi Jinping’s tenure and beyond.
COMMENTARY
In late January, China’s Ministry of National Defence announced that two of the country’s leading military officials, Central Military Commission (CMC) Vice Chairman Zhang Youxia and Chief of the CMC Joint Staff Department Liu Zhenli, were under investigation as they were “suspected of serious violations of discipline and law”. In the Chinese system, Zhang was the highest-ranking professional soldier. The ouster of Zhang and Liu has left the CMC, China’s highest military decision-making body, effectively at its thinnest, with just one other member besides Chinese President Xi Jinping.
A day after the revelation, the PLA Daily published an editorial detailing the charges against the two men. It claimed that the probe against Zhang and Liu was “a major achievement in the anti-corruption struggle of the Party and the military” and a demonstration of the Party Central Committee’s attitude of ensuring “no off-limit zones, full coverage, and zero tolerance” when it comes to corruption.
The editorial shed light on the specific charges against the duo. It claimed that they had “seriously trampled upon and undermined the CMC Chairman Responsibility System, fuelled political and corruption issues that affect the Party’s absolute leadership over the military and endanger the Party’s ruling foundation, affected the image and prestige of the CMC leadership team, and seriously impacted the political and ideological foundation of the unity and forge-ahead spirit of all officers and soldiers.” In addition, it contended that their actions had “caused immense damage to the military’s political construction, political ecology, and combat capability construction, and have had an extremely vile influence on the Party, the state, and the military.”
Some reportage indicated that the charges against Zhang and Liu involve failures to rein in close associates, family members and relatives, as well as shortcomings in identifying and flagging problems in Party leadership at an early stage. Other reports argued that Zhang has been accused of leaking nuclear secrets to the United States. One line of assessment linked the probe to corruption tied to capability-building, arguing that the purge reflects performance failures as the People’s Liberation Army (PLA) moves towards its centenary in 2027. In this view, Zhang’s leadership did not deliver the results demanded. Another perspective has been that following the purge of CMC Vice Chairman He Weidong and Director of the Political Work Department Miao Hua in late 2025, which weakened or destroyed their factional networks within the PLA, Zhang may have emerged as the only remaining dominant power centre. This essentially painted a target on Zhang’s back because, from Xi’s standpoint, a single entrenched faction, even one led by someone considered to be a long-time ally, would be unacceptable if it created a potential counterweight to his authority.
If one is to go by the limited information available and the nature of the charges framed in the PLA Daily editorial, then it is evident that the downfall of Zhang and Liu is primarily a case of political corruption rather than professional or operational failure. In particular, the language around them undermining the CMC Chairman Responsibility System – which is an old concept but was codified in Party documents in 2017 – was indicative of the two men being charged for questioning Xi’s authority. Embedded in the language are also accusations of faction-building, i.e., of exercising leadership through the cultivation of a political network that excluded or marginalised other groupings. For instance, the editorial argued that probing Zhang and Liu will allow the military to “rectify the roots and clarify the origins from a political perspective, eliminate toxins and malpractices from an ideological perspective, and remove rot to promote healing from an organisational perspective.”
The purge of a senior official like Zhang will inevitably have downstream effects on the broader network of officers who have advanced under his watch and raises serious questions about the Chinese military’s cohesion and combat capability. It is also likely to breed a culture of mistrust and anxiety across the entire party-state ecosystem. However, the most significant impact of the probe against Zhang is likely to be seen in personnel changes as the Communist Party heads into its 21st National Congress, scheduled for autumn 2027.
By that time, Xi will be 74. It is widely expected that he will seek a fourth term as general secretary. If successful, he would effectively remain at the apex of the system until 2032. That outcome is entirely plausible. But it is not the only possibility. Other scenarios remain conceivable:
Xi could remain in power, but have a successor who takes over the vice presidency and is tipped to take charge in 2032;
He could anoint a successor and step out of the Politburo Standing Committee but retain a paramount, “chairman-like” role;
He could step down from the presidency while remaining general secretary and CMC chairman;
He could step down as general secretary and president but retain the CMC chair role;
Some other form of hybrid arrangement could emerge.
In this context, it is important to think through how the purge of Zhang is likely to shape outcomes in 2027.
Zhang’s dismissal has, in effect, wiped the slate clean at the very top of the CMC. What will follow are new, younger appointees. Crucially, these officers are unlikely to have had the kind of personal connection with Xi that Zhang did. The social and political distance between Xi and the next generation of CMC leaders is, therefore, likely to be much greater. This has two implications.
First, these new appointees are far less likely to question Xi’s authority, resist his agenda or pose an independent political challenge. Zhang, after all, was a peer in some ways. He was older than Xi. He had combat experience and possessed the stature and institutional weight that come with that status. Second, while a younger and more deferential leadership may deliver compliance, it may also weaken policy debate and distort information flows upward. Xi may get decisiveness and loyalty, but potentially at the cost of candour and institutional feedback.
From a succession perspective, however, this trade-off may be precisely the point. If we assume that Xi begins to think seriously about managing a transition around or after 2027, the existence of a powerful peer-like figure at the top of the PLA would complicate that process. A figure like Zhang could, at least in theory, shape elite consensus, question the choice of successor, or act as a focal point for alternative preferences within the system.
By removing Zhang, Xi may have significantly reduced that risk. A newly constituted PLA leadership that is loyal to Xi personally, lacking peer status, and fragmented in terms of independent power would be far less capable of contesting his decisions. In that sense, Zhang’s purge may not simply be about consolidating control in the present, but about pre-emptively managing the politics of succession in the future, such that when the time comes, the choice of successor, the terms of transition and the sequencing of roles remain firmly in Xi’s hands.
Whoever Xi’s eventual successor may be, that individual is almost certain to be politically far weaker than Xi himself. In that context, a politically powerful military leadership could pose a serious constraint, not just on the successor, but indirectly on Xi’s ability to shape outcomes after stepping back. From this perspective, clearing the slate at the top of the PLA may serve a longer-term purpose of ensuring that the military does not emerge as an independent pole of power during or after a leadership transition. Seen this way, Zhang’s removal may be an early signal that Xi is preparing the ground for a tense succession process.
China Built a Vast Oil Stake in Venezuela. Now It Risks Getting Muscled Out.
James T. Areddy, Wall Street Journal, January 23, 2026
After Maduro’s ouster, Beijing’s interests are now subject to Trump preferences.
When Venezuela booted out American oil companies in a nationalization campaign nearly two decades ago, China stepped in. Now, Beijing’s foothold there is in doubt as the U.S. asserts new power over Venezuela’s oil patch.
Chinese government-owned oil companies hold claims to more than 4 billion barrels of Venezuelan oil, nearly five times as much as the only U.S. major that today produces in the South American nation, Chevron. Beijing’s production deals, oil rigs and debt-backed supply arrangements have long bought it enormous sway in Venezuela—all of it now suddenly subject to the Trump administration’s preferences.
The Chinese producers expanded their claims in the aftermath of a 2007 Venezuelan nationalization drive that pushed out Exxon Mobil and ConocoPhillips. China quickly emerged as a financier, equipment supplier and political partner in what Caracas called an “iron brotherhood” that until now insulated it from U.S. pressure.
Since orchestrating the ouster of Venezuelan President Nicolás Maduro this month, President Trump has welcomed China to continue buying Venezuelan oil, so long as Beijing pays market prices. Nearly all of the country’s paltry output in recent years had ultimately flowed there in largely black-market purchases, at a steep discount to global prices.
Trump has yet to articulate a position on the more strategic Chinese presence in the Venezuelan oil industry as a producer and claimant to reservoirs of crude in the ground, some of which are adjacent to blocks Caracas took from American producers.
China’s embassy in Washington said its assets in Venezuela are governed by international law and benefit both nations. “China will take all necessary measures to protect its legitimate rights and interests in Venezuela,” a spokesman said. Chinese oil companies didn’t respond to requests for comment.
African nations now send more money to China than they receive in new loans
Colleen Goko, Reuters, January 27, 2026
China’s role as a leading financier to developing nations has shifted over the past decade, with new loans to poorer countries falling sharply while debt repayments continue to rise, according to analysis released by ONE Data.
The inaugural report by the ONE Data initiative found that many low- and middle-income countries — particularly in Africa — are now transferring more funds to China in debt payments than they receive in fresh financing from the world’s second-largest economy.
The swing has coincided with a surge in net financing from multilateral institutions, which have become the main source of development finance once debt-service outflows are taken into account.
Multilateral lenders increased net financing by 124% over the past decade and now provide 56% of net flows, equivalent to $379 billion between 2020 and 2024, the analysis found.
“The fact that there’s less lending coming in, but that previous lending from China still needs to be serviced — that’s the source of the outflows,” said David McNair, executive director at ONE Data.
In 2020-24, the most recent period for which data is available, Africa saw the largest impact, with an inflow of $30 billion in 2015-19 turning to an outflow of $22 billion.
The data does not include cuts that took effect in 2025. The closure of the U.S. Agency for International Development last year and a drop in allocations from other developed countries has already hit developing economies, especially in Africa.
Once 2025 data becomes available, it is likely to show a large drop in Official Development Assistance flows, said McNair.
He said the trend was “a net negative” for African nations, as many governments face difficulties funding public services and investment - but would at the same time promote domestic accountability as governments rely less on external financing.
The report also highlighted a broader decline in bilateral finance flows and private external debt - also trends likely to be exacerbated by aid cuts from 2025 onwards.
COMMENT – African countries went from receiving $30 billion to paying out $22 billion, a $52 billion swing.
Nvidia helped DeepSeek hone AI models later used by China’s military, lawmaker says
Stephen Nellis, Reuters, January 28, 2026
U.S. chipmaker Nvidia helped China’s DeepSeek hone artificial intelligence models that were later used by the Chinese military, the chairman of a U.S. House of Representatives committee said in a letter seen by Reuters on Wednesday.
DeepSeek shook markets early last year with a set of AI models that rivaled some of the best offerings from the United States but were developed with far less computing power, fuelling concerns in Washington that China could catch up with the U.S. in AI despite U.S. restrictions on the sale of high-powered computing chips to China.
In a letter to U.S. Commerce Secretary Howard Lutnick, Representative John Moolenaar, a Michigan Republican who chairs the House Select Committee on China, said documents obtained by the committee from Nvidia showed the achievement came after extensive technical assistance from Nvidia.
“According to NVIDIA records, NVIDIA technology development personnel helped DeepSeek achieve major training efficiency gains through an ‘optimized co-design of algorithms, frameworks, and hardware,’ with internal reporting boasting that ‘DeepSeek-V3 requires only 2.788M H800 GPU hours for its full training’ - less than what U.S. developers typically require for frontier-scale models,” Moolenaar wrote in the letter.
Authoritarianism
Xi Jinping: A Year in the Headlines
Alex Colville, China Media Project, January 26, 2026
China’s leader maintained a commanding lead in the headlines of the CCP’s flagship People’s Daily in 2025, despite a substantial decline over the past year. What do these mixed signals mean?
Tibetan Review, December 27, 2025
China’s top legislature has passed a revised Law on the Standard Spoken and Written Chinese Language on Dec 27 and it will come into force on Jan 1, 2026. The new law will have grave implications for linguistic identity of the people in the ethnic monitory areas, given President Xi Jinping’s ongoing signature campaign to Sinicize them in the name of strengthening the sense of the Chinese nation as one community.
To begin with, the new law designates the third week of September as the week for a nationwide promotion for the standard spoken and written Chinese language. In the ethnic minority areas, this event will no doubt be used to demonstrate what percentage of their populations had attained proficiency in Mandarin and, by extension, decline in fluency in their own mother tongues.
The standard spoken and written Chinese language is an important symbol of the nation, said China’s official chinadaily.com.cn Dec 27.
The revised law is designed to strengthen the promotion, standardization, and use of Mandarin Chinese (Putonghua) and standardized Chinese characters across Chinese society — including education, public services, international events, and cyberspace. It also reinforces legal obligations and penalties related to language use, noted China party mouthpiece People’s Daily.
The chinadaily.com.cn report said that a dedicated chapter on legal liability specifies law enforcement departments and outlines penalties in detail. It cited the law as saying interference with others’ learning or use of the standard spoken and written Chinese language will be subject to criticism and education by relevant departments, along with orders for correction and warnings. Administrative penalties for public security violations shall be imposed if such acts constitute violations of public security management.
Such provisions ring a familiar bell when one remembers the mother-tongue and cultural eduction repression that has been going on in Tibet over past several years, leading to closing down of privately run schools and the arrest of their founders. The law appears to suggest that any criticism of Tibetans lacking proficiency in their own mother tongue while being fluent in Mandarin could be punished.
The revised law stipulates that even international exhibitions, conferences and other events held within China that use foreign languages for signs, labels, or promotional materials should also include the standard Chinese language, noted China’s sate new agency Xinhua Dec 27.
China’s Use of Economic Punishment: Strategic Signalling, Red Lines and Returns
Xue Gong, RSIS, January 26, 2026
Key Takeaways
China will continue to use economic punishment as long as it remains a credible signalling tool.
China’s willingness to absorb the costs of such punishment reflects a calculated trade-off.
Commentary
On 6 January 2026, China’s Ministry of Commerce announced new export controls on dual-use items destined for Japan. The move was widely interpreted as a punitive response to Japanese Prime Minister Sanae Takaichi’s remarks regarding Japan’s potential role in a Taiwan contingency.
China’s latest retaliation against Japan is not unfamiliar. It echoes a playbook first tested in 2010, when Beijing imposed a ban on rare-earth exports to Japan following a collision near the disputed islands, which the Chinese call Diaoyu and the Japanese refer to as Senkaku. That episode marked not only a diplomatic crisis but also a turning point in China’s rare earths policy. What had been a fragmented and poorly regulated rare earths sector was subsequently consolidated under tighter state control, and Beijing began to recognise that its dominance in critical supply chains could be leveraged for geostrategic ends.
Since 2010, China’s growing interest and capacity in wielding economic statecraft have fuelled a growing literature questioning the effectiveness of China’s economic coercion. Measured narrowly, sanctions often fail to achieve their immediate objective of changing the target country’s behaviour. In the latest scenario, Japan is unlikely to revise its Taiwan-related statements. China also failed to secure compliance in cases such as stopping Lithuania’s decision to allow Taipei to establish a representative office or Seoul’s decision to host US THAAD, an anti-ballistic missile defence system. Likewise, it could not pressure Australia to reverse its call for an international probe into China’s handling of COVID-19.
Increasing use of economic coercion will harm China’s reputation as a credible trading partner. Also, repeated use of economic measures has prompted adaptive responses. The 2010 rare-earth embargo left Japan acutely aware of its supply-chain vulnerability and prompted it to diversify, invest and stockpile alternative sources despite higher costs. Australia too has redirected its exports and pursued alternative markets. By the same token, advanced economies like the European Union have developed institutional frameworks for economic security and risk mitigation to reduce their reliance on China.
Mark Chiu, Lingua Sinica, January 19, 2026
Calls to free pro-democracy tycoon Jimmy Lai go against rule of law, says Hong Kong’s top judge
Hans Tse, Hong Kong Free Press, January 19, 2026
Chief Justice Andrew Cheung said Hong Kong’s rule of law is “far more robust and enduring than the outcome of any single case,” raising concern about what he said were “simplistic assertion[s] that the rule of law is dead.”
Hong Kong’s top judge has criticised calls to release Jimmy Lai after the pro-democracy media mogul’s conviction on foreign collusion and sedition charges, saying that such demands “strike at the very heart of the rule of law.”
Addressing the ceremonial opening of the legal year on Monday, Chief Justice Andrew Cheung defended the integrity of the city’s courts against wide-ranging criticism over the conviction of Lai during his high-profile national security case.
“Few court decisions please everyone. Rather, the strength of our justice system lies in its adherence to the law and its openness to scrutiny,” Cheung told a room packed with officials, judges, and legal professionals. Criticism “must be grounded in a careful reading of the judgment and a sincere effort to understand the court’s reasoning,” he said.
Last month, Lai, the founder of the now-shuttered Apple Daily newspaper and a prominent pro-democracy campaigner, was found guilty of conspiracy to commit foreign collusion under the Beijing-imposed national security law and conspiracy to publish seditious publications. He has not yet been sentenced and could face up to life behind bars.
US President Donald Trump had said he felt “so badly” about Lai’s conviction and that he had spoken to his Chinese counterpart Xi Jinping, urging Lai’s release.
Cheung refrained from making explicit comment about Lai’s case, saying the proceedings are still underway. But the chief justice said a number of “matters of importance” revolving around the case should be addressed.
Without naming anyone, Cheung said the calls to “prematurely release a defendant” would circumvent the legal process designed for ensuring accountability under the law and go against the rule of law.
“A foundational tenet of the rule of law is that no one is above the law, regardless of their status, occupation, office, political affiliation, personal belief or conviction, popularity, wealth, connection, or any other characteristic. The law applies equally to all, without fear or favour,” he said.
He also said Hong Kong’s rule of law is “far more robust and enduring than the outcome of any single case,” raising concern about what he said were “simplistic assertion[s] that the rule of law is dead.”
“It cannot be that the rule of law is alive one day, dead the next, and resurrected on the third, depending on whether the Government or another party happens to prevail in court on a particular day,” he said.
Cheung criticised threats of foreign sanctions against judges in Hong Kong, saying they were attempts to interfere with judicial independence in the city.
“Intimidation and threats are no different from bribery and corruption, they being, in truth, two sides of the same coin. Both are means of subverting justice, and have absolutely no place in a civilised society governed by the rule of law,” he said.
COMMENT – So the so-called Chief Justice of Hong Kong’s Court of Final Appeal doesn’t like be criticized… well he has overseen an abortion of justice and acts like a Communist Party hack, so he should expect to be criticized. Of note Andrew Cheung is a graduate of Harvard Law School… I’m sure his alma mater is proud.
Fearing China clash, Japan asks fishermen to avoid flashpoint islands
Mariko Katsumura, Reuters, January 27, 2026
Japanese Panda Fans Bid Farewell to Furry Ambassadors
Ephrat Livni, New York Times, January 26, 2026
Japan-China tensions drive high-tech mineral prices to record highs
Shugo Yamada, Nikkei Asia, January 27, 2026
How China’s leadership purge could raise the military threat for Taiwan
E. Eduardo Castillo, The Independent, January 26, 2026
China’s military says top general undermined Xi Jinping’s authority
Kathrin Hille and Demetri Sevastopulo, Financial Times, January 25, 2026
Xi Jinping says China seeks to uphold UN-based world order
Hong Kong Free Press, January 26, 2026
Stung by Trump, America’s Top Trading Partners Shift Gaze to China
Kim Mackrael and Max Colchester, Wall Street Journal, January 26, 2026
Keir Starmer prepares for his Chinese charm offensive
George Parker, Lucy Fisher and Joe Leahy, Financial Times, January 25, 2026Xi Jinping Thought on Demography: How to Lose a Population and Call It Progress
Massimo Introvigne, Bitter Winter, January 28, 2026
China’s new official doctrine admits the birthrate won’t recover—and rebrands decline as “high-quality development.”
China goes on hiring spree for tax officials as fiscal pressures mount
Financial Times, January 25, 2026
Three potential pathways for US-China relations under Trump
Ryan Hass, Brookings, January 26, 2026
China fears a flood of unemployed workers in rural areas
The Economist, January 25, 2026
China tightens rail approvals as Xi warns on overbuilding, waste and ‘operational’ trouble
Mia Nurmamat, South China Morning Post, January 27, 2026
China’s consumer spending push faces major challenge – debt-averse households
Frank Chen, South China Morning Post, January 27, 2026China’s Uyghur Surveillance Technology Used by Iran to Track Protesters
Uyghur Times, January 15, 2026
Environmental Harms
Experts: What to expect from China on energy and climate action in 2026
Anika Patel, Carbon Brief, January 16, 2026Fishing and Force: China’s Dark Fleets and Maritime Militias
Sweekriti Pathak, ORF, January 29, 2026
ADF, January 27, 2026
‘Mad fishing’: the super-size fleet of squid catchers plundering the high seas
Harriet Barber, The Guardian, January 6, 2026
Every year a Chinese-dominated flotilla big enough to be seen from space pillages the rich marine life on Mile 201, a largely ungoverned part of the South Atlantic off Argentina
In a monitoring room in Buenos Aires, a dozen members of the Argentinian coast guard watch giant industrial-fishing ships moving in real time across a set of screens. “Every year, for five or six months, the foreign fleet comes from across the Indian Ocean, from Asian countries, and from the North Atlantic,” says Cdr Mauricio López, of the monitoring department. “It’s creating a serious environmental problem.”
Just beyond Argentina’s maritime frontier, hundreds of foreign vessels – known as the distant-water fishing fleet – are descending on Mile 201, a largely ungoverned strip of the high seas in the South Atlantic, to plunder its rich marine life. The fleet regularly becomes so big it can be seen from space, looking like a city floating on the sea.
CO₂ and Greenhouse Gas Emissions
Hannah Ritchie and Pablo Rosado, Our World in Data
COMMENT – The PRC has about 15% of the global population and produces about 32% of the global CO2 emissions.
Here is another helpful chart to put the PRC’s CO2 emissions in perspective with the world’s second third largest CO2 emitters, Europe and the United States.
Who seriously thinks that China’s emissions will level off and drop at 12 billion tons annually?
Foreign Interference and Coercion
The Bureau, January 19, 2026
A high-level Canadian Security Intelligence Service assessment in June 2019 concluded that Beijing, jolted by Canada’s detention of Huawei executive Meng Wanzhou, launched a “calibrated and multi-faceted pressure campaign” that blended trade coercion — including curtailing canola imports — with the detention of Canadians and clandestine interference surrounding the 2019 federal election, aiming to exert “personalized political pressure on Canada’s leadership,” with the Ministry of State Security driving the response and CSIS collection further establishing that President Xi Jinping received reports “directly from the MSS.”
The assessment — marked “SECRET” for Canadian Eyes Only and titled PRC Strategy and Tactics to Influence the Meng Wanzhou Proceedings — warned that Beijing was “actively leveraging its leading intelligence service, the Ministry of State Security, to both apply pressure and encourage dialogue with Canada on Beijing’s terms.”
It further assessed that MSS units were tasked from “high levels” to “actively respond,” spurring competition inside the service to make the “largest possible impact,” while PRC missions in Canada moved to shape the political environment ahead of the 2019 vote.
“Multiple corroborated reports confirm that PRC missions are moderating their support for the Prime Minister and other Liberal candidates,” the document says, describing an effort to exploit electoral unpredictability — and to hedge across party lines — to maximize Beijing’s leverage over politically influential Canadians.
Six years later, those warnings have acquired new relevance.
In mid-January, Prime Minister Mark Carney, on a trade mission to Beijing, reached an initial agreement that would allow China to export up to 49,000 electric vehicles into the Canadian market at a sharply reduced tariff, while China would lower tariffs on Canadian canola seed by March 1 to a combined rate of about 15%.
Reuters also reported that senior United States officials described Canada’s decision as “problematic,” warned Canada would “regret” it, and said the Chinese vehicles would not be allowed to enter the United States — casting the deal as not only an economic dispute, but a national-security and data-security flashpoint tied to connected-vehicle technology.
The Bureau is re-examining the 2019 CSIS assessment to test an uncomfortable question: is Ottawa once again confronting the same pressure dynamics Canadian intelligence described during the Meng crisis — trade leverage aimed at politically connected decision-makers, influence operations applied to Canadian democratic processes, and coercive tactics calibrated for maximum political effect — and has Beijing again secured a strategic outcome under high-pressure conditions, pulling Canada closer to its orbit and further from Washington?
Glass Onion: Peeling Back the Layers of a Pro-China Online Ecosystem
Margot Fulde-Hardy and Lili Turner, Graphika, January 13, 2026
Key Findings
Graphika has uncovered a network of 43 domains and 37 subdomains that pushed pro-China messaging while posing as the New York Times, the Guardian, the Wall Street Journal, and other legitimate media outlets.
We identified technical links connecting this network to two Chinese companies that Google’s threat analysis group previously determined ran a pro-China campaign dubbed HaiEnergy. The tactics, techniques, and procedures (TTPs) used by the network closely resemble HaiEnergy and similar activity sets, including Paperwall, DuringBridge, and BayBridge.
These domains and subdomains hosted advertisements, Chinese state media content, and pro-Communist Party of China (CPC) messaging pulled from external websites. We linked the hosted content to 30 Chinese companies and three Chinese individuals involved in public relations (PR) and digital marketing.
We identified evidence that these companies and/or individuals leveraged these domains in contracts to promote the activities undertaken by CPC-linked entities. It is unclear whether these entities were aware that the promotion involved domains that spoofed English -and Chinese-language media outlets.
The domains copied specific design elements directly from the websites of legitimate outlets in an effort to make their impersonation more convincing. Many also shared the same content management system (CMS) template.
After Chinese marketing and PR firms placed content on the spoofed websites, the likely clients often promoted the material on Chinese platforms and websites, claiming it as evidence that influential news outlets had covered their company.
On Western platforms, Spamouflage-linked accounts amplified content from these domains, demonstrating overlaps between the Chinese influence operation and this ecosystem of Chinese PR and marketing companies.
Embassy Echo Chamber: How Beijing Directs Its Propaganda Network in the Philippines
Ray Powell, SeaLight, January 21, 2026
Attacking the Light, Defending the Darkness: Beijing’s Echo Chamber in Manila
Ray Powell, Inquirer, January 23, 2026
Government plans to tighten scrutiny of Chinese influence in UK
Lucy Fisher, Financial Times, January 26, 2026Labour’s year-long China charm offensive revealed
Graham Lanktree, Politico, January 25, 2026
British ministers have been laying the ground for Keir Starmer’s handshake with Xi Jinping in Beijing this week ever since Labour came to power.
In a series of behind-closed-door speeches in China and London, obtained by POLITICO, ministers have sought to persuade Chinese and British officials, academics and businesses that rebuilding the trade and investment relationship is essential — even as economic security threats loom.
After a “Golden Era” in relations trumpeted by Tory Prime Minister David Cameron, Britain’s once-close ties to the Asian superpower began to unravel in the late 2010s. By 2019, Boris Johnson had frozen trade and investment talks after a Beijing-led crackdown on Hong Kong’s democracy movement. At Donald Trump’s insistence, Britain stripped Chinese telecoms giant Huawei from its telecoms infrastructure over security concerns.
Inside Keir Starmer’s massive China reset
Dan Bloom, Politico, January 27, 2026
Canadian Prime Minister Mark Carney left Beijing and promptly declared the U.S.-led “world order” broken. Don’t expect his British counterpart to do the same.
Keir Starmer will land in the Chinese capital Wednesday for the first visit by a U.K. prime minister since 2018. By meeting President Xi Jinping, he will end what he has called an “ice age” under the previous Conservative administration, and try to win deals that he can sell to voters as a boost to Britain’s sputtering economy.
Starmer is one of a queue of leaders flocking to the world’s second-largest economy, including France’s Emmanuel Macron in December and Germany’s Friedrich Merz next month. Like Carney did in Davos last week, the British PM has warned the world is the most unstable it has been for a generation.
UK can’t ignore China, says Starmer ahead of Beijing trip
Paul Seddon, BBC, January 27, 2026
Sir Keir Starmer has said the UK cannot afford to ignore the economic opportunities presented by China, as he prepares to become the first British prime minister in eight years to visit Beijing.
In an interview with Bloomberg News, Sir Keir said his visit would bring “significant opportunities” for British companies.
He insisted the UK would not be forced to “choose between” China and maintaining close ties to the US, amid rising trade tensions between the two superpowers in recent years.
The UK would maintain “close ties” with the US on business, security and defence, he said, but added that “sticking your head in the sand and ignoring China... wouldn’t be sensible”.
COMMENT - Starmer says he won’t choose between the United States and China.
So, there is no longer a “special relationship.”
Got it, good to know.
Kind of reminds me of when German Chancelor Olaf Scholz would say that Germany didn’t want to join into “Cold War-style blocs”… so Berlin would leave NATO right?
The Europeans demand that the United States perpetually defend them against Russia (even as Europe feeds the Russian economy by purchasing their energy products through third countries)… but refuse any sort of reciprocal alignment with the United States against the PRC.
So “values” only go so far, I guess.
This is the kind of hypocrisy that has been destroying the transatlantic relationship since before Donald Trump entered office.
Why Thailand, a US treaty ally, is stocking up on Chinese weapons
Liu Zhen and Seong Hyeon Choi, South China Morning Post, January 24, 2026China pressing European countries to bar Taiwan politicians or face crossing a ‘red line’
Helen Davidson, The Guardian, January 12, 2026
Chinese officials have been pushing “legal advice” on European countries, saying their own border laws require them to ban entry to Taiwanese politicians, according to more than half a dozen diplomats and officials familiar with the matter.
The officials made demarches to European embassies in Beijing, or through local embassies directly to European governments in their capital cities, warning the European countries not to “trample on China’s red lines”, according to the European diplomats and ministries who spoke to the Guardian.
The manner of the approaches varied – some to individual countries and some as groups, some by written note verbale (a semiformal diplomatic communication) and others in person. They occurred in November and December, and were at least partly in response to recent European trips by Taiwanese officials including its current vice-president and foreign minister, and a former president.
Beijing said it “respects the sovereignty of the European side in introducing and implementing visa policy”, but an “institutional loophole” had allowed frequent visits by Taiwan politicians, according to one note verbale seen by the Guardian.
The Chinese cited multiple EU laws and regulations, including one known as the Schengen Borders Code, which says a condition for entry by non-EU nationals is that they “are not considered to be a threat to the … international relations of any of the member states”.
The officials’ suggestion, the Guardian understands, was that allowing Taiwanese officials to enter a European country would threaten that country’s international relations with China.
In some cases they also referred to the Vienna convention on diplomatic relations, or suggested the European countries follow the UN’s example and bar all Taiwanese people from government buildings, the Guardian was told.
“Beijing’s application and interpretation of this regulation is bold,” said Zsuzsa Anna Ferenczy, assistant professor at Taiwan’s National Dong Hwa University, when told about the moves. “It is Beijing’s interpretation that EU-Taiwan ties threaten EU-China ties. This is not at all the perception or reality in Europe.”
China’s foreign ministry did not respond to questions. But the note verbale said European countries should reject any “so-called diplomatic passports” issued by Taiwan, and “prohibit Taiwanese personnel from entering Europe to seek official contact and exchanges and trample on China’s red line”.
“China hopes the EU institutions and European countries will, out of the larger interests of China-EU relations and bilateral relations, make the political decision of refusing the entry of Taiwan’s so-called president or vice president (former ones included),” it said, also listing other officials.
Human Rights and Religious Persecution
Calvin, Human Rights in China, January 19, 2026
On October 9, 2025, a highly unusual religious crackdown began in China. Jin Mingri, the senior pastor of Beijing Zion Church, along with more than twenty pastors, preachers, and core staff members, were detained by police simultaneously. They were arrested in multiple locations including Beijing, Guangdong, Sichuan, and Shaanxi, and taken to Beihai, Guangxi for detention. This method of law enforcement, involving multiple provinces and cities, simultaneous arrests, and centralized detention, is extremely rare in the history of Chinese house churches. Shortly thereafter, from late 2025 into 2026, hundreds of church members in the Yayang area of Zhejiang were also arrested in a concentrated operation, and the Chengdu Autumn Rain Covenant Church, which had previously experienced repression, was targeted once again. Several Autumn Rain staff members, including Li Yingqiang, were arrested. This sequence of events indicates that this operation was not an isolated incident, but a systematic crackdown that is being continuously implemented.
Since Zion Church’s main venue was seized and its seminary was forced to close in 2018, the church has been under long-term high-pressure surveillance. However, the October 2025 action, in terms of its level of mobilization, scale of execution, and its political signals, clearly exceeded the scope of previous local government “stability maintenance” law enforcement.1 This was no longer a routine crackdown on a “religious group that refused to be managed,” but a highly coordinated nationwide political action with a clear strategic intent.
Over the past thirty years of religious governance practices in China, even during the “cross-removal campaign” in Zhejiang2 or the suppression of large house churches in various locations, the enforcement power was mainly in the hands of local party committees and public security systems, with the central government playing more of a policy-setting and tacit approval role. In contrast, this nationwide coordinated action across multiple provinces and cities, with simultaneous timing and centralized detention locations, can almost certainly be attributed not to the spontaneous actions of local governments, but to the coordinated design of the Chinese Communist Party (CCP) leadership.
Thus, a key question arises: Why now? Why Zion Church? Why did the method of suppression escalate from long-term, localized, and fragmented actions to a nationwide, simultaneous, and concentrated crackdown?
A Shift in Governance Logic: From “Local Religious Issues” to “Networked Risks”
To answer this question, we must move beyond a single-event perspective and examine the changes in the overall structure of Chinese house churches.
Under a continuously tightening policy environment, a large number of house churches have undergone a profound transformation in recent years: from physical churches centered on specific locations to online, networked structures highly dependent on digital technology. Churches are no longer concentrated in a single fixed location, but instead connect small gathering points scattered across different cities, communities, and families into a unified whole through video conferencing, instant messaging tools, and online courses.
This model used technology to significantly enhance the mobility, secrecy, and cross-regional expansion capabilities of the churches, while organizationally weakening the effectiveness of traditional control methods used by local governments, such as shutting down venues and cutting off utilities. However, it is precisely this structural change that has transformed house churches from “objects of local governance” to “national risks” in the eyes of the CCP.
A religious network that is not controlled by the government, yet can spread rapidly through the internet and form a unified identity and stable organizational structure nationwide, directly strikes at the most sensitive nerve within the CCP’s logic of governance.
COMMENT – Why are Chinese Communists so terrified of Chinese Christians, or anyone religious group for that matter? Is the Party really so selfish that it can’t stand that any of its citizens put their faith in something other than the Chinese Communist Party?
Trying to excise religion, root and branch, is likely only to backfire. Unsurprisingly, humans don’t like being told there is only one right way to think and believe.
Rectifying Names, Erasing Mongols: The Unmaking of Mongolian Education in China
James Leibold, Made in China Journal, January 20, 2026
On a clear October morning in 2025, two massive cranes rolled up to a middle school in the People’s Republic of China (PRC). Workers prised off the large Chinese and Mongolian signs running along the roofline of the main teaching building and replaced them with a new sign that erased the Mongolian name from the facade: Tongliyuu Mongol Ündüsütennie Dumdad Surguul (Tongliao Mongolian Middle School) was now the No.6 Middle School of Tongliao City.
This was not an isolated incident. Since 2021, we have recorded the renaming of nearly 100 Mongolian-language schools across the Inner Mongolia Autonomous Region (IMAR) (for the list, see Borjgin n.d.). Chinese Communist Party (CCP) officials insist this is mere bureaucratic rationalisation aimed at ensuring that educational resources match the needs of students and the nation. Yet, for Mongolian students, teachers and parents, it looks like something else entirely: cultural erasure, subtly chronicled—and protested—on social media, as a basic search for ‘ethnic Mongolian schools’ on Chinese-language social media apps such as Weixin, Douyin, and Xiaohongshu clearly shows.
Fake Website Launched to Impersonate Campaign for Uyghurs, Raising Cybersecurity Concerns
Uyghur Times, January 15, 2026
Submission details Hong Kong human-rights abuse
Law Society Gazette, January 27, 2026
Tiananmen vigil activists sought end to communist rule in name of democracy, Hong Kong nat. sec trial told
Hans Tse, Hong Kong Free Press, January 27, 2026Ghojaniyaz Yollugh Tekin, Uyghur Historian Sentenced to 17 Years in Prison
Uyghur Times, January 16, 2026
Ghojaniyaz Yollugh Tekin, a 59-year-old Uyghur historian and expert on Uyghur place names, is serving a 17-year prison sentence for his research and writings, according to sources familiar with his case.
Tekin, formerly an educator at the Aksu Education Institute in northern part of Uyghur region, focused on Uyghur toponymy—the study of the linguistic development and historical origins of place names. A police officer in Tekin’s home village in Uchturpan County told Radio Free Asia that he is currently held in Hotan, roughly 500 kilometers south of Aksu city.
He was detained in 2017 during China’s large-scale crackdown on Uyghurs and other Turkic peoples in the region. Tekin’s imprisonment in late 2018 was reportedly linked to his writings and statements emphasizing that Uyghurs are part of the broader Turkic world rather than Chinese, according to researcher Abduweli Ayup.
Tekin’s detention reflects a broader campaign affecting an estimated 1.8 million Uyghurs, including intellectuals, educators, cultural figures, and business leaders, who were sent to so-called “re-education” camps.
COMMENT – 17-year prison sentence for writing and providing evidence that Uyghurs are part of the broader Turkic world rather than of Chinese heritage.
Workers at Chinese factory that produces Labubu toys are being exploited, says NGO
Amy Hawkins, The Guardian, January 13, 2026
COMMENT – Probably the least surprising news of the month.
The Denial Has Collapsed: UN Confirms Forced Labor in Tibet and Xinjiang
Lopsang Gurung, Bitter Winter, January 27, 2026
Even the usually cautious United Nations has now issued an official statement suggesting Beijing may be guilty of “enslavement as a crime against humanity.”
Industrial Policies and Economic Espionage
Ex-Google Worker Guilty of Stealing AI Tech for Chinese Firm
Isaih Poritz, Bloomberg Law, January 29, 2026
A former Google engineer was convicted Thursday of economic espionage and trade secrets theft for taking hundreds of the company’s confidential documents on AI chip technology to build a startup in China.
A 12-person jury in San Francisco federal court after three hours of deliberation unanimously found Linwei Ding guilty on all seven counts of trade secrets theft and all seven counts of economic espionage for benefiting the Chinese government.
The verdict caps off a two-and-a-half week criminal trial in the US District Court for the Northern District of California where federal prosecutors claimed that Ding, a Chinese national first hired by Google in 2019, copied thousands of internal Google documents onto his Apple Notes App and uploaded them as PDFs to his personal computer.
China Turns to Cheaper Brazil Soybeans After Meeting US Pledge
Hallie Gu, Bloomberg, January 27, 2026
German firms’ China investments driven to four-year high by US trade wars
Rene Wagner, Reuters, January 27, 2026
Drugmakers AstraZeneca, GSK to join Starmer delegation to China, sources say
Andrew Macaskill, Reuters, January 26, 2026
Maker of China’s C919 jet set to pick up production pace after delay: sources
Frank Chen, South China Morning Post, January 26, 2026
China’s labs pull ahead as global drugmakers invest in biotech pioneers
Aanu Adeoye and Patrick Temple-West, Financial Times, January 25, 2026
China furniture seller Markor slammed by nation’s real estate slump
Kohei Fujimura, Nikkei Asia, January 27, 2026
Britain Seeks Trade with China Without Triggering Trump’s Fury
Michael D. Shear and David Pierson, New York Times, January 27, 2026
China Tells Alibaba, Tech Firms to Ready Nvidia H200 Orders
Bloomberg, January 23, 2026
Cyber and Information Technology
Google Aims Knockout Blow at Chinese Company Linked to Massive Cyber Weapon
Robert McMillan, Wall Street Journal, January 28, 2026
Company targets global network employed by hackers that often use devices running in homes of everyday Americans.
Google has aimed a knockout blow at a massive cyber weapon that researchers say is running silently on millions of devices in the homes of consumers.
On Wednesday, Google used a federal court order to get dozens of domains belonging to Ipidea removed from the internet, said Google, a unit of Alphabet. Google and security researchers say the mysterious Chinese company is an unsavory enterprise that sneaks unwanted and dangerous software on millions of phones, home computers and Android devices.
Control of the domains allowed Google to both shut down the public websites and technical back-end of the company, which operates using more than a dozen brand names. Google has also taken steps to remove hundreds of apps affiliated with the company from Android devices, it said.
The actions are expected to knock more than nine million Android devices off Ipidea’s network. They target a little known but important part of the internet that has increasingly worried cybersecurity experts.
Called “residential proxy” networks, these online services are built out of apps that are installed on virtually any type of internet-connected device—among them media players, PCs and mobile phones. Companies such as Ipidea then rent out access to the devices to paying customers who want to use the internet anonymously. The businesses operate like Airbnbs for network bandwidth, except the people whose devices are being rented out often don’t realize what is happening.
China’s fear of ‘selling young crops’ spurred review of Meta’s Manus deal
Financial Times, January 22, 2026
Governor Abbott Updates Texas’ Prohibited Technologies List
Office of the Texas Governor, January 26, 2026
ByteDance Emerges from TikTok Saga With ‘Major Win’ on US Access
Bloomberg, January 23, 2026
TikTok finalises Trump deal to stay online in US
Hannah Murphy and Ryan McMorrow, Financial Times, January 23, 2026
The Trump Administration’s Cyber Strategy Fundamentally Misunderstands China’s Threat
Matthew Ferren, Council on Foreign Relations, January 26, 2026
Military and Security Threats
China Trains AI-Controlled Weapons with Learning from Hawks, Coyotes
Josh Chin, Wall Street Journal, January 26, 2026
Russia, Ukraine and the race for Chinese drone components
Charles Clover, William Langley, Chris Cook and Christopher Miller, Financial Times, January 20, 2026
Xi Jinping takes sole operational control of army as China probes military leaders
Kathrin Hille and Demetri Sevastopulo, Financial Times, January 24, 2026U.S. Department of War, January 26, 2026
Pentagon’s New Defense Strategy Strikes Conciliatory Tone on China
Michael R. Gordon, Wall Street Journal, January 23, 2026
US unveils national defence strategy to counter China in Indo-Pacific
Demetri Sevastopulo and Steff Chávez, Financial Times, January 23, 2026
One Belt, One Road Strategy
Panama High Court Gives Trump a Win Over Canal by Ousting Hong Kong Port Operator
Santiago Pérez, Wall Street Journal, January 30, 2026
In blow to China, Supreme Court says CK Hutchison’s contract breaches the constitution.
The Supreme Court of Panama has annulled a contract for a Hong Kong company to operate two ports at either end of the Panama Canal, handing President Trump a victory for his security ambitions in the Western Hemisphere and denting China’s influence in the region.
The high court said the terms under which CK Hutchison runs the ports of Balboa on the Pacific Coast and Cristóbal on the Atlantic side were unconstitutional, setting the stage for the company’s departure from the port facilities.
For Panama’s Supreme Court justices, the political pressure was significant, as the port operations put Panama center stage in the rivalry between the U.S. and China.
The ruling comes a year after Trump set his sights on Panama. He said Chinese infrastructure that has been built up around the canal in the past three decades was a security threat to the U.S.
“China is operating the Panama Canal, and we didn’t give it to China,” Trump said in his inaugural address last year.
Hutchison can’t appeal a Supreme Court ruling, but it can request clarifications that could delay the termination of its operating license.
Once the license is revoked, the government aims to ensure the continuity of port operations by hiring APM Terminals, a unit of shipping firm A.P. Moeller-Maersk, to manage the facilities until it opens a bidding process with new license terms, possibly separating the two ports, said Panama’s pro-American President José Raúl Mulino.
“Our ports are one of the strategic pillars for the national economy and a key link for international trade,” Mulino said in an address to the nation early Friday.
The Hutchison unit operating the Panama ports denounced the ruling, saying it undermined Panama’s reputation as a reliable place to do business. The company said its contract was the result of transparent bidding and the ruling was “diametrically opposed to previous decisions” on similar contracts.
CK Hutchison shares fell 4.75% in Hong Kong trading Friday.
A Chinese foreign ministry spokesman cited the Hutchison statement and said Beijing would take all necessary measures to safeguard the rights of Chinese companies.
The high-court decision is a diplomatic defeat for China and comes weeks after the U.S. military’s capture of Venezuelan strongman Nicolás Maduro, an ally in China’s efforts to secure a strategic foothold in Latin America.
“It’s a diplomatic setback for China, but not an economic setback,” said John Feeley, who served as U.S. ambassador to Panama from 2015 to 2018. Chinese shippers, which rank among the top users of the canal, will still be able to use the waterway as the ruling won’t have an effect on canal operations, he said.
Private lawyers and Panama’s comptroller filed lawsuits against Hutchison at the Supreme Court, alleging the contracts violated the interests of the government and taxpayers. A government audit showed as much as $1.3 billion in lost government revenue since Hutchison’s arrival in the late 1990s.
In China’s Orbit: Beijing’s Space Diplomacy in the Global South
CSIS, January 23, 2026WAY BACK MACHINE – China slams US as Panama quits Belt and Road Initiative
Al Jazeera, February 7, 2025
Amid pressure from the US, Panama is first Latin American country to leave Beijing’s global infrastructure club.
COMMENT – I had forgotten that Panama quit the Belt and Road Initiative last year.
China Signals It Won’t Give an Inch to the U.S. in Latin America
Small Wars Journal, January 2, 2026
China Signals It Won’t Give an Inch to the U.S. in Latin America
James T. Areddy, Wall Street Journal, December 31, 2025
Opinion
A Central Military Commission Built for War - Against The PLA
Mark Parker Young, November 13, 2025The Binary Logic of the Carney Doctrine
Ross Douthat, New York Times, January 24, 2026
As Donald Trump rampaged about in his first term, leadership of the free world was transferred, by general liberal acclamation, to Angela Merkel of Germany. She was cast as the embodiment of internationalist virtue: prudent, broad-minded, diplomatic, multilateralist and expertise-driven above all.
Then Trump left office, Merkel left office, and suddenly it was possible to notice that her leadership of Germany had been well-nigh disastrous.
The mismanaged eurozone crises that followed the crash of 2008 and her open door to Middle Eastern migrants both contributed mightily to the collapse of the very firewall against far-right parties she was supposedly maintaining. Much worse, she accepted, for enlightened environmentalist reasons, her country’s deindustrialization and an ever-increasing reliance on Russian oil and gas. And when Vladimir Putin invaded Ukraine, it suddenly became clear that Merkel’s legacy wasn’t a strong alternative to Trump’s America; it was a weak European core threatened by and dependent upon an authoritarian rival to its east.
The lessons of the Merkel era came to my mind this week watching the praise for Mark Carney, the prime minister of Canada, after his speech in Davos declaring partial independence from an American-led order.
There was much to admire in the speech. Carney’s words were remarkably free of the cant upon which most politicians nowadays depend. He told some important truths, stressing especially the ways in which the liberal international order was always defined by power and self-interest as well as idealism. He was correct to cast Trump’s recent return to power as part of a “rupture” with the post-Cold War order and to emphasize great-power competition as a key feature of this age.
Finally, his not-so-veiled threat to the United States, the suggestion that middle powers like Canada need not be constrained by their traditional American alliance, is an understandable response to some of the absurdities that Trump has visited upon our northern neighbor — the “51st state” jibes (Canada, of course, will bring at least 10 new states when it joins with us someday), the excessive trade warring and the Greenland gambit.
But as with Merkel, it’s worth considering where the logic of Carney’s vision of world order might lead. Certainly middle powers can sometimes work together against greater ones. In crucial areas, though, the new world order is not truly multipolar, and its middle powers are ill equipped to bandwagon. Rather, they often face a binary choice, in which the more independence they assert from the United States, the more they risk subordination to China.
In the military arena, for instance, on paper Europe and Canada are rich enough to rearm and form some kind of third force between the Trumpian United States and the Sino-Russian quasi-axis. In practice, though, path dependency and old age are powerful forces. Disentangling from the American alliance is incredibly technically difficult, and ramping up spending while your welfare states cope with aging populations is incredibly politically difficult. And achieving the first without achieving the second leads, in most scenarios, to increased accommodation with Moscow and Beijing.
In the realm of artificial intelligence the choice is even starker. American companies and their Chinese competition dominate the tech frontier, and it’s very hard to imagine a future where the architecture of A.I. isn’t forged by either American nerd-kings or Communist scientist-apparatchiks. It is possible that either A.I. future could lead to our destruction. But there is not some third, nonaligned A.I. path, and I don’t think Ottawa is going to find one.
Finally, and most controversially, I suspect the same “if not America, then China” logic applies to political ordering as well. The United States under Trumpian conditions has allowed populism to come to power, bringing chaos and authoritarian behavior in its train. Recoil from that by all means — but recognize that it happened through democratic mechanisms, under freewheeling political conditions.
Meanwhile, the modes through which Europe and Canada have sought to suppress populism involve harsh restrictions on speech, elite collusion and other expression of managerial illiberalism. And what is China’s dictatorship if not managerial illiberalism in full flower? When European elites talk about China as a potentially more stable partner than the whipsawing United States, when they talk admiringly about its environmental goals and technocratic capacity, they aren’t defending a liberal alternative to Trumpian populism. They are letting the magnet of Chinese power draw them away from their own democratic traditions.
Or, one might counter, they’re being pushed in that direction by Trump himself. World leaders are flesh and blood, and it’s hard to ask them to keep faith with America when the American president is insulting and threatening them, not just telling impolitic truths.
So even though I am still betting on the American future, I wouldn’t ask Mark Carney or any other leaders to simply keep the faith. I would just ask them to consider every step away from us in light of the potential destination and the powers waiting there.
Keir Starmer will have to play it tough in China
Michael Kovrig, Times of London, January 26, 2026Canada faces the most serious trade threat in a generation — and Carney’s to blame
Barry Appleton, National Post, January 26, 2026
On Saturday, U.S. President Donald Trump threatened Canada with 100 per cent tariffs on all goods if Prime Minister Mark Carney proceeds with his China trade deal. The president’s language was characteristically blunt: Canada would become a “drop off port” for Chinese goods, and “China will eat Canada alive, completely devour it.” This is the predictable consequence of Carney’s reckless foreign policy.
Carney rolled the dice on Canada’s economic future, but the table was rigged against him from the start. By courting Beijing on electric vehicles and canola, he was testing the structural limits of the Canada-United States-Mexico Agreement (CUSMA). Anyone who has read the treaty could have told him how this would end.
The danger lies in CUSMA Article 32.10 — the agreement’s infamous “poison pill.” This provision requires Canada to notify the United States three months before negotiating a “free trade agreement” with a “non-market country” (read: China).
Article 32.10’s power lies in what it doesn’t say: CUSMA nowhere defines a “free trade agreement,” and under the Vienna Convention, undefined terms are interpreted by their ordinary meaning and effect — not by what the parties choose to call them. An arrangement exchanging preferential tariff reductions for market access fits any functional definition of trade liberalization, and the absence of a definitional safe harbour means the interpretive ambiguity favours the broader reading Washington is entitled to assert.
If Washington dislikes the resulting deal, it has the unilateral right to terminate CUSMA and replace it with a bilateral U.S.-Mexico agreement. Canada would be entirely out of the North American trading bloc.
Carney appears to have believed he could sidestep this tripwire. Canada’s announcement of a trade arrangement with Chinese President Xi Jinping — swapping market access for Chinese EVs in exchange for lowered tariffs on Canadian canola — was a direct provocation.
The first black eye to Washington came with the deal itself. The second came in Davos, Switzerland, when Carney warned of a “rupture” in the American-led world order without naming the president directly. Trump noticed. He responded by disinviting Canada from his Board of Peace and, on Saturday, by threatening to shut down trade entirely with our biggest trading partner.
The prime minister’s defenders will say he is standing up for Canadian sovereignty. But the better part of valour is discretion. Strength without wisdom is provocation. There is nothing bold about gambling the livelihoods of Canadian auto, steel, aluminum and softwood lumber workers on a bluff you cannot back up.
Canada is, undeniably, the leveraged party in this relationship. As Jared Kushner candidly admitted in 2020, CUSMA’s sunset clause was designed as a “16-year lease” to provide Washington with ongoing leverage over its smaller partners. The agreement was engineered to keep Canada dependent. Taking steps that violate the spirit of that agreement might work if you have countervailing leverage. It is suicidal when you do not.
This dependency runs deeper than canola and cars. CUSMA’s digital chapter already restricts Canada’s ability to govern data flows, demand source code transparency or mandate data localization. We signed away the keys to our digital kingdom years ago. Now, by inviting Chinese EVs — mobile surveillance platforms on wheels — into our market, we have layered a national security crisis onto a trade dispute. Trump’s “drop off port” accusation is the logical American reading of what Canada has done.
I have argued for years that Canada needs to diversify its trade relationships. We are over-exposed to the U.S. market, and now we have almost two decades of trade-laziness to clean up. But there is a profound difference between building domestic capacity in critical minerals and semiconductors to supply our allies and pivoting to a strategic adversary.
We are waving a rule book at a bulldozer. Canada lacks the institutional machinery to handle this confrontation. While the United States deploys hundreds of security-cleared advisors through its Industry Trade Advisory Committees to scrutinize every move we make, Ottawa’s trade strategy appears to rely on improvisation and hope. That is not a strategy, it’s gross negligence.
Thankfully, Canada retreated. A 100 per cent tariff would be catastrophic. It would devastate the auto sector, cripple steel and aluminum and send shock waves through every export-dependent industry in this country. It would gut CUSMA and tell foreign investors that Canada is radioactive for inbound investment. The Trump administration does not need a dispute panel to impose it. It will use powers under Section 232 of the Trade Expansion Act or Section 301 of the Trade Act and dare us to sue. What comfort do we offer Canadian workers when our own prime minister handed Washington the legal and political ammunition it needed?
It pays to know the zoning rules when you have a difficult neighbour. It strains credulity that the prime minister pursued a China reset without consulting trade officials who know the terms of CUSMA. If he did consult them, he likely ignored their advice. If he did not, that is worse. Either way, the result is the same: Canada now faces the most serious trade threat in a generation, and we provoked it ourselves.
Carney bet that the United States needs our energy and resources too much to retaliate. He was wrong. In the eyes of this U.S. administration, trade law is a suggestion, and leverage is the only currency. By ignoring the poison pill of Article 32.10, Canada acted like a tenant trying to sublet a room to the landlord’s sworn enemy. The eviction notice is now on the table.
COMMENT – “Canada acted like a tenant trying to sublet a room to the landlord’s sworn enemy”… a fairly apt analogy.
Zhang Youxia’s Fall and the Quiet Shift in China’s Pressure and Beijing’s Caculus on Taiwan
Jason Hsu, January 27, 2026
Zhang Youxia’s fall is not a sign that China’s pressure on Taiwan is easing. It is a sign that the form of that pressure is evolving.
Starmer’s surrender to Beijing, Xi Jinping holds all the cards
Wessie du Toit, Unherd, January 30, 2026
The new Chinese embassy in perspective
Charles Parton, Observing China, January 19, 2026
COMMENT – Some well-considered perspective on the future Chinese embassy in London.
How China pulled off a great tech reversal
Kyle Chan, FInancial Times, January 26, 2026
The Island That Actually Matters to American Interests
Nicholas Kristof, New York Times, January 24, 2026Donald Trump Sets His Sights on China in South America
John Sitilides, National Interest, January 29, 2026
The Venezuela strike is just the beginning of a larger campaign to root out foreign influence in the Western Hemisphere.
On January 15, the State Department released its “Agency Strategy Plan,” much of which mirrors the November National Security Strategy, but more deeply reveals the Donald Trump administration’s intentions for re-ordering US foreign policy. The new State Department plan bluntly elaborates the primacy of “vital chokepoints like the Panama Canal,” warning that the US “will no longer permit foreign adversaries to use commerce and investment as a stalking horse for control of the region’s critical infrastructure and strategic territory.”
A Hong Kong-based company, CK Hutchison Holding, has been operating two Panama Canal ports since 1997. After Beijing enacted a national security law in 2020 that criminalized any Hong Kong actions deemed as collusion with foreign forces, Washington has been concerned about free passage, as 40 percent of all annual US trade with Asia sails through the vital chokepoint. In the event of a crisis, the Chinese Communist Party could order the Hong Kong company to deny US naval passage of destroyers, combat ships, and amphibious transport dock ships to support and reinforce Pacific Command fleet operations.
Secretary of State Marco Rubio’s first overseas trip was to Panama City, where he met with President José Raúl Mulino to express the United States’ insistence that the Chinese Communist Party’s control over the ports must end.
Panama later announced it would end its participation in China’s predatory Belt and Road Initiative, embedded in 20 countries throughout South America.