Shifts in China’s Foreign Policy: It is time to reveal strength
Dr. Ashraf Momtaz
For decades, China’s foreign policy has been based on a strategic principle articulated by former Chinese President Deng Xiaoping with his saying, “Hide your strength and bide your time,” during the period of economic opening and reform led by Deng in the early 1980s. This pragmatic approach focused on the economic and political transformation of China. Historically, the concept of hiding strength and waiting for the right moment dates back to the military leader and philosopher Sun Tzu in his book “The Art of War” around 475 BC, where he advocated avoiding overt displays of power while patiently building internal capacity until the opportune moment arises to emerge as an influential power.
When Deng Xiaoping took leadership from 1978 to 1992, he adopted a cautious foreign policy that kept China away from international confrontations and provocation of Western powers, especially the United States, preferring to focus on reforming the Chinese economy and achieving breakthroughs in health, education, and infrastructure. As China transformed into a great economic power, its foreign policy continued to aim at avoiding international conflicts and seeking to establish external relations based on economic cooperation and mutual interests. However, 2025 witnessed a significant shift in Beijing’s policy from the “hiding capacity” strategy to “showing strength” during three major crises that Beijing faced in the preceding months.
The India-Pakistan Crisis
On April 23, 2025, a diplomatic crisis erupted between India and Pakistan—China’s geopolitical ally—following a terrorist attack in the Paisaran Valley in Kashmir, which resulted in the deaths of 25 tourists and injuries to more than 20 others. India accused Islamabad of supporting cross-border terrorism, initiating diplomatic expulsions, suspending visas, closing borders, and withdrawing from the Indus Water Treaty, while Pakistan denied these accusations and responded by expelling diplomats, suspending visas, imposing trade restrictions, and closing airspace and border crossings. The situation escalated when the Indian aircraft carrier INS Vikrant left port to deploy in the Arabian Sea towards Pakistan, leading to clashes between Pakistani and Indian forces, with exchanges of fire at multiple locations along the line of confrontation. Pakistan did not hesitate to escalate further, announcing a military operation named “Al-Bunyan Al-Marsous,” targeting Indian missile depots and airbases with airstrikes, claiming to have shot down five Indian Air Force planes, including three French-made Rafales.
Washington quickly recognized the blow dealt to its key partner in countering Chinese influence, urging the Indian administration through intense communications from Secretary of State Marco Rubio to accept de-escalation; otherwise, the continuation of the conflict could lead to uncontrollable consequences for India and costly strategic repercussions for the United States. Within days, India acquiesced to U.S. President Donald Trump’s announcement on May 10 of a comprehensive and immediate ceasefire agreement between the two neighbors.
The conflict was a political shock for New Delhi, as India’s calculations did not anticipate the level of military superiority that China had granted its ally Pakistan over the years against its primary rival in Asia. Despite having one of the largest armies in the world, India suffered significant symbolic and military losses in this crisis. Pakistani Air Force fighters of the J-10C model were able to shoot down Rafale aircraft for the first time, which India believed would grant it air superiority in conflict zones, thus reshaping military power equations on the Asian continent.
China leveraged the crisis to achieve several strategic victories within the context of its forward-leaning policy. First, Beijing sent a clear message that it would not abandon its allies and that it not only provides them with economic and political support but also guarantees them qualitative military superiority. Second, it diminished Indian influence in Asia; from the very first day of the conflict, China decisively intervened to support Pakistan logistically through military and intelligence assistance, ensuring Islamabad’s superiority on the ground and in the air throughout the days of clashes with India. China achieved its goals as India not only lost a military conflict but also suffered a severe blow to its military prestige and regional influence, solidifying China’s leadership in Asia for the coming years. Third, China inflicted direct damage to the reputation of Western weaponry, as the downing of Rafale fighters—the crown jewel of the French Air Force—sent a warning to the world that China had become a key player in the arms race and that Chinese weaponry could be trusted as a high-quality alternative at a significantly lower cost than Western arms.
The impact of China’s success during this crisis was evident in the visit of Indian Prime Minister Narendra Modi to China last August during the Shanghai Cooperation Organization summit, where he met with Chinese President Xi Jinping in a meeting described as “historic” to redraw the course of bilateral relations. Modi appeared to be retreating from his hardline positions on contentious issues with Beijing, as flexibility was evident from India in opening a new chapter in relations with China. An agreement was reached to manage borders and resume direct flights between the two countries, and China showed readiness to ease restrictions on some Indian exports. China’s support for Pakistan not only curtailed Indian influence but also created a new long-term balance in Asia in favor of Beijing’s political, economic, and military power.
The Trade War
This time was different from the previous one. When President Trump announced in his first term in 2018 the imposition of tariffs on Chinese imports of steel (25%) and aluminum (10%) to reduce the significant trade deficit with China, estimated at about $400 billion, Beijing appeared confused in dealing with this trade war, and Chinese supply chains to global markets were severely affected. At that time, China avoided direct escalation with the United States, focusing instead on structural adaptation rather than retaliatory responses, resorting to non-tariff tools (such as customs inspections, regulatory delays, or adjusting safety standards) as indirect pressure on Washington while maintaining the image of a “responsible partner.” Chinese diplomacy was defensive, especially in the face of Trump’s accusations of intellectual property theft and forced technology transfer from American companies operating in China, and it resorted to devaluing the yuan to support its exports to other markets.
With Trump returning to the White House this year, China was prepared for the second round of the trade war. When the U.S. President announced in a press conference in early April the imposition and adjustment of large tariffs of up to 10% on a wide range of America’s trade partners and doubled tariffs on China (125%), it marked a significant escalation in Trump’s trade war, aimed at reshaping the global trading system in favor of the United States. Global markets experienced record declines, prompting countries such as the European Union, Canada, and Japan to negotiate with Trump to cancel or reduce the tariffs. However, China reacted differently, raising the stakes with Washington to an open trade war. The response from Beijing was swift, imposing retaliatory tariffs of 84% on American goods (such as soybeans, cars, and aircraft) in a “tit-for-tat” manner, reflecting a strict negotiating approach. The United States is one of the largest export markets for Chinese goods, with data from the General Administration of Customs of China indicating that total Chinese exports in 2023 exceeded $3.38 trillion, with exports to the United States amounting to approximately $500 billion according to the U.S. Census Bureau. Thus, the United States accounted for about 15% of total Chinese exports; nevertheless, China was better equipped this time to confront Washington through a package of preventive policies to mitigate the impacts of the trade war.
First, since 2018, Beijing has significantly diversified its trade partners, strengthening its relationships through the RCEP (Regional Comprehensive Economic Partnership) with Asia-Pacific countries, increasing its exports to “Global South” countries (Africa, Latin America, and the Middle East), and vigorously promoting the “Belt and Road Initiative” to create alternative trade routes for Chinese goods supply chains, making the American market relatively less sensitive to Chinese growth rates. According to Chinese customs data, Chinese exports grew by more than 6% during the first three quarters of 2025 year-on-year, and these exports managed to compensate for losses in the U.S. market by redirecting to alternative markets, with exports to the European Union rising by over 14%, to ASEAN countries by 15.6%, while exports to Africa increased by 56.6% and to Latin America by 15.2%.
Second, China focused on technological self-sufficiency by injecting massive investments into industries such as semiconductors, artificial intelligence, and clean energy. Chinese industries developed local supply chains to avoid reliance on American technology, enabling them to compete with American companies in areas like electric vehicles and digital infrastructure.
Third, China used rare earth minerals as leverage against the United States, preemptively imposing broad export restrictions that require government approval before exporting any product containing more than 0.1% of Chinese rare earth minerals. China’s strength lies not only in possessing a significant proportion of these minerals but also in controlling and monopolizing between 85% to 90% of the technologies for refining and processing them. Dysprosium, for example, is a leading rare earth mineral due to its essential role in future industries like electric vehicles, semiconductors, military technology, and advanced air defense systems.
Fourth, China adopted more stable financial and monetary tools, maintaining a more confident monetary policy by stabilizing the yuan to avoid triggering a new wave of uncertainty in global markets. It supported the use of the digital yuan (e-CNY) in international trade to reduce reliance on the dollar and signed currency swap agreements with its partners to facilitate trade in local currencies.
Finally, China embraced an approach focused on defending its interests through soft economic diplomacy with a broad cooperative vision for its geopolitical environment. Beijing sought to build an economic bloc alternative to American economic hegemony through the BRICS group and the Shanghai Cooperation Organization, offering “win-win” partnerships with non-Western countries, including Egypt, Brazil, and South Africa, while positioning itself as a supporter of global stability against “American protectionism.”
China quickly reaped the benefits of these policies. In May, Washington softened its stance during negotiations with China, resulting in a 90-day truce during which tariffs on Chinese goods were temporarily reduced to 30%, with China agreeing to reciprocate by lowering tariffs on American goods to 10%, and this truce was extended for an additional 90 days. Trump aimed to meet with President Xi Jinping on the sidelines of the APEC (Asia-Pacific Economic Cooperation) summit in South Korea at the end of October. During the meeting with Xi, Trump used a “friendly” tone, describing the encounter as “great,” resulting in an agreement to reduce tariffs imposed by Washington on China and remove Chinese restrictions on exporting rare earth minerals. A few days after the meeting, Trump made a phone call to President Xi lasting about an hour, during which he praised the strength of relations with China, describing them as “very strong,” and announced his acceptance of Xi’s invitation to visit Beijing in April, while Xi would visit the United States later in 2026.
China emerged victorious in the current round of Trump’s trade war, transitioning from a cautious policy and reactive confusion to a long-term initiative strategy. China no longer views the trade war merely as a bilateral conflict with America but as part of a broader battle to reshape the global economic system in a way that serves its interests in the long run.
Confrontation with the Historical Rival
In early November, statements from new Japanese Prime Minister Sanae Takaiichi regarding Japan’s intention to intervene militarily if China were to annex Taiwan reignited a historical legacy of animosity towards China. Relations between China and Japan have long been influenced by historical events, particularly Japan’s occupation of China in the early 20th century, which peaked during World War II, a period referred to in Chinese memory as the “Century of Humiliation.” The Japanese military committed numerous humanitarian atrocities, with the Nanjing Massacre in 1938 being one of the bloodiest events of the occupation, resulting in the deaths of over 300,000 Chinese civilians, leaving a deep mark on the collective Chinese memory towards Japan. Events from the occupation are still taught in Chinese schools and are considered a core part of national identity, with public protests against Japan organized during historical anniversaries, reflecting ongoing popular anger towards Japan over the years.
Historical tensions also impact territorial disputes between China and Japan, with the Diaoyu Islands being a maritime dispute between the two countries. Japan considers the islands part of its territory and currently administers them, while China claims sovereignty over the islands, viewing them as part of its historical territory. Geographically, these islands are located in a strategic area in the East China Sea, where many maritime routes pass, and it is believed that the surrounding area is rich in natural resources, including gas and oil reserves.
Thus, the historical legacy forms an essential basis for understanding the relations between China and Japan, and its effects continue to resonate in the political and popular relations between the two countries. However, China has sought to overcome these historical sensitivities, extending a hand to enhance economic relations with Tokyo as part of its vision for achieving mutual development in the Asian region. Since 2017, China has been Japan’s largest trading partner, with a value of $350 billion, and is also the largest destination for Japanese exports, including industrial equipment, auto parts, and electronic components. Japan imports rare earth minerals from China, and there are joint projects in green hydrogen, batteries, and low-carbon infrastructure. Amid rising strategic competition between China and the United States, Japan has sought to maintain economic cooperation with China to protect the security of its supply chains.
However, the new Prime Minister’s remarks neglected all these economic interconnections with China.
Takaiichi’s political background reflects motivations behind her statements against China. The first female Prime Minister in Japan’s history belongs to the Liberal Democratic Party, which holds right-wing tendencies, and throughout her political career, she has been known for her anti-China positions. Observers believe that Takaiichi inherited her ideology from her spiritual father, former Prime Minister Shinzo Abe, having risen during Abe’s era and held the position of Minister of Internal Affairs and Communications, later serving as Minister of State for Economic Security. Upon taking office, she surprised everyone with her parliamentary speech, stating that “any military move by China in Taiwan could pose an existential threat to Japan and may warrant a military response from Tokyo.”
Takaiichi’s statements ignited a volcano that seemed dormant in Beijing, leading to the most severe crisis with China, which viewed these statements as a direct challenge to the “One China” principle and a red line that cannot be crossed. The Chinese response was fierce and revealed Takaiichi’s ignorance of the current power dynamics between China and Japan, as if she were trapped in a bygone historical era that no longer has relevance in reality. The Chinese Ministry of Defense’s assertion that Japan would “pay a heavy price” was not merely an official statement; since the outbreak of the crisis, China has not ceased to take punitive measures against Japan politically, militarily, and economically.
Politically, China took unprecedented actions immediately following the statements, summoning the Japanese ambassador to Beijing based on “instructions from senior leadership” to deliver a strong formal protest regarding Takaiichi’s remarks. The use of the term “summoned by instructions” is rare in Chinese diplomacy, reflecting the seriousness of the crisis; it was not merely a routine call but a high-level and stern warning. The spokesperson for the Chinese Foreign Ministry announced that Chinese Premier Li Qiang canceled plans to meet with the Japanese Prime Minister on the sidelines of the G20 summit held in South Africa last November.
Militarily, China sent indirect warning messages to Tokyo, as a Chinese J-15 fighter jet took off from the Chinese aircraft carrier Liaoning near Okinawa Island in southern Japan, targeting Japanese F-15 fighter jets with its radar. The Chinese fighter jet locked its control radar in firing mode, one of the most threatening actions a military aircraft can undertake, indicating a potential attack that forces the targeted aircraft to take evasive action.
Economically, Beijing imposed a blockade of economic sanctions on Japan, which is already suffering from slowed growth and rising inflation and unemployment rates. When the Chinese Foreign Ministry warned Chinese citizens against traveling to Japan, millions of Chinese tourists—who constitute about 25% of Japan’s total visitors annually—canceled their bookings. This led to a decline in the shares of companies linked to tourism and travel, with shares of Shiseido dropping by as much as 11%. Moody’s estimates indicate that a 50% drop in Chinese tourists would reduce Japan’s GDP by 0.2 percentage points in the short term. Additionally, China suspended imports of Japanese seafood, affecting hundreds of Japanese exporters. Despite these measures, China has not yet tightened the economic blockade on its neighbor, refraining from banning the import of Japanese goods or taking any steps that would affect Japanese industries’ supply chains or suspend any economic agreements between the two countries.
The results of China’s response quickly manifested, as Takaiichi retracted her statements, acknowledging in a press conference that China is an important neighbor to Japan, and both sides need to build constructive and stable relations, asserting that Tokyo is “always open to dialogue” with Beijing. To ease tensions, a senior Japanese official visited China, reaffirming Japan’s commitment to the positions outlined in a joint statement issued in 1972, which specified clear obligations on the Japanese side and established a diplomatic framework recognizing China’s sovereignty over Taiwan and the foundations for economic cooperation between the two countries.
Additionally, China successfully exported a political crisis to Takaiichi at the outset of her premiership, as several public protests erupted in Tokyo, during which demonstrators called for the retraction of her statements and an end to tensions with China. Takaiichi faced a storm of criticism from senior Japanese politicians, including former Prime Minister Shigeru Ishiba, who stated that her remarks were “too close to claiming that any emergency in Taiwan is an emergency for Japan,” emphasizing that previous administrations deliberately avoided making definitive statements on such hypotheticals. It has been customary for Japanese prime ministers to refrain from making direct comments about defending Taiwan, a practice known diplomatically as “strategic ambiguity.” Yoshihiko Noda, the leader of the Constitutional Democratic Party of Japan, stated that Takaiichi “crossed the line” and was “reckless to a great extent,” placing Sino-Japanese relations in a dangerous position. Former Prime Minister Yukio Hatoyama accused Takaiichi of trying to “fuel the crisis and call for military enhancement,” asserting that Japan “respects the fact that Taiwan is part of China and that it is a domestic political issue for China, and Japan should not interfere.”
Since the beginning of the crisis, Washington has not provided any official support for its most important ally in Asia, as Trump did not intervene to endorse Takaiichi’s remarks, and the U.S. administration maintained silence on Beijing’s responses. These statements received no support from Asian neighbors, even those with disputes with China, such as South Korea and India, as everyone preferred to maintain their economic and trade interests with China, leaving Takaiichi isolated from any regional or international support in facing Beijing.
The common thread among the crises that China’s foreign policy has witnessed this year is that China did not manufacture these confrontations nor sought them out; rather, it found itself in a position that forced it to deal with and confront these issues with an approach different from what Chinese diplomacy has been accustomed to. The Chinese mentality is gradual by nature, favoring stability and avoiding confrontation with others due to its cultural heritage and the agricultural nature of Chinese civilization. However, the inevitability of power, economic interests, and the current international circumstances may make the coming year witness new evidence of China’s strategy to advance towards sharing global leadership with the United States, potentially surpassing it in the near future.
