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Taiwan's Tsai wraps up trip highlighting growing European relations
Tsai, who led Taiwan from 2016 to 2024, toured Lithuania, Denmark and the United Kingdom for 10 days until Monday, meeting with prominent lawmakers and political leaders past and present. Though she is no longer in office, her trip appeared to mark a concerted drive to counter Beijing's efforts to sideline Taiwan on the world stage.
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The Diplomat
2 hours ago
- The Diplomat
China's Position on Russia and Ukraine Is a Warning to the West and the Pacific
Wang Yi's remarks confirm what many have long suspected: China's interests are best served not by stability, peace, or sovereignty, but by a prolonged conflict. The recent revelation that Chinese Foreign Minister Wang Yi told EU leaders that Beijing does not want to see Russia lose its war in Ukraine is not just a diplomatic slip; it is a moment of clarity. Behind closed doors, China has dropped the mask of neutrality and revealed a sobering truth: it views a Russian defeat not as a moral failure or geopolitical catastrophe, but as a threat to its own strategic ambitions. This quiet admission, made to the EU's foreign policy chief Kaja Kallas, cuts sharply against Beijing's carefully curated public stance. China claims it is a disinterested bystander in the Ukraine conflict. However, Wang's remarks confirm what many in global diplomatic circles have long suspected: China's interests are best served not by stability, peace, or sovereignty, but by a distracted, divided, and weakened West. To understand why, we must revisit the so-called 'no limits' partnership between China and Russia, announced just weeks before the 2022 invasion of Ukraine. Although not a formal military alliance, this strategic pact underscores a shared worldview. Both nations resent the dominance of liberal democracies and seek to reshape the global order in their own authoritarian image. Since the invasion, China has supported Russia's economy through trade, provided diplomatic cover in international forums, and participated in joint military exercises. At the same time, it continues to claim neutrality, masking its support for Russia behind the guise of plausible deniability. Wang's frank admission reveals the deeper logic behind this alignment. If Russia collapses in Ukraine, the United States and its allies will be free to pivot fully toward the Indo-Pacific and focus on deterring China's growing assertiveness, especially regarding Taiwan. In this strategic calculation, the prolongation of war, and the suffering it causes, is considered an acceptable cost if it keeps the West overextended. This is a profoundly cynical and destabilizing position. It confirms that, in the eyes of China's leadership, values such as territorial integrity, international law, and the protection of civilians are expendable. It also exposes a chilling willingness to allow or even encourage ongoing conflict if doing so creates space for China to advance its own interests. As an alumna of the Inter-Parliamentary Alliance on China (IPAC), I have worked alongside legislators from democracies large and small who see this moment for what it truly is: a test. China is not simply observing how the West responds to Russia's invasion. It is studying our unity, our resilience, and our tolerance for risk. The outcome in Ukraine will directly influence Beijing's decisions regarding Taiwan and its broader conduct across the Indo-Pacific. In the Pacific, this challenge is no longer hypothetical. It is unfolding in real time. Through cyber influence operations and debt-leveraged infrastructure projects with potential military uses, Beijing is actively reshaping the region's strategic landscape. For small island developing states, whose survival depends on the integrity of international law and multilateral institutions, any erosion of those norms poses a direct threat to sovereignty and self-determination. This is why continued support for Ukraine is not solely about defending the right of a European nation to exist. It is about upholding a global order that protects all nations, especially those that are small and vulnerable. If Ukraine is forced into a territorial compromise, or if the West retreats under pressure, it will send a dangerous message to authoritarian powers everywhere: that aggression is effective, that might makes right, and that democracies lack the resolve for prolonged resistance. China's leaders are betting on that retreat. Wang Yi's comments were not an error in diplomacy. They were an intentional signal. It is now the responsibility of all of us, from Brussels to the Blue Pacific, to respond with unity, determination, and an unshakeable commitment to the values that have preserved peace for generations. If we fail to meet this moment, the next confrontation may arrive much closer to home.
The Diplomat
3 hours ago
- The Diplomat
China's H1 Economic Data Was Encouraging, But It's Not Out of the Woods Yet
China's economic growth rate peaked in 2007 when it hit a jaw-dropped 14.1 percent; it has been declining since then. The decline was accelerated by Xi Jinping's crackdown on the real estate sector through his 'three red lines' policies, then by the COVID-19 pandemic. Now China's annual economic growth has stagnated at around 5 percent, according to official data, and many outside experts think the real total is even lower. China just published its economic data for the first half of 2025, indicating a better-than-expected growth rate. According to the latest data, China's GDP growth rate through the first six months of 2025 was 5.3 percent, better than the annual target of 5 percent. Despite this, the structural challenges remain solid. Internal factors – like the growing disparity between rural and urban areas and rising youth unemployment – are combining with the ongoing trade war with the United States and geopolitical crises in Ukraine and the Middle East to pose a serious geoeconomic challenge for the party-state. First, the good news for China: the trade war with the United States has not dampened either its exports or its manufacturing output (yet). On April 2, Donald Trump's administration in the United States imposed double-digit tariff rates on almost every country in the world, including China — though it quickly delayed the largest increases for a 90-day review period. The 'Liberation Day' announcement, as Trump called it, forced Beijing not just to retaliate, but to speed up the process of diversifying its economy from the United States. To that end, China's policymakers have two twin goals: expanding exports to other parts of the world while also focusing on boosting household consumption, which remains stuck at around 40 percent, far lower than the OECD average of 60 percent. Amid Trump's renewed trade war, Chinese policymakers doubled down on export diversification. Trade with ASEAN (15.9 percent of China's total trade) and key European economies (12.6 percent) expanded significantly. Amid those efforts, despite the U.S. tariffs, China notched a trade surplus of $586 billion in the first half of 2025, larger than the same period in 2024. That surplus is equivalent to more than 6 percent of China's GDP, the highest recorded rate since 2013. Despite the trade friction between the two superpowers, China's exports to the U.S. stabilized in the second quarter of 2025 due to temporary tariff reprieves and partial agreements brokered during high-level meetings in Geneva and London. These diplomatic efforts injected a degree of predictability into the trade environment. However, the broader strategic shift remains intact: Beijing is decoupling in economic relations and trying to reduce its structural dependency on the U.S. market in favor of a more geopolitically diverse portfolio. China remains the world's manufacturing powerhouse. Its industrial production rose by 6.8 percent in June, beating the forecast of 5.6 percent. Chinese factories have diversified supply chain opportunities in markets other than the United States, which is a significant factor in resiliency of industrial production. Despite these external opportunities, China still faces serious structural domestic economic challenges. Household consumption has remained stagnant for two decades at around 35-40 percent, coupled with exceptionally high saving rates. In addition, the youth and skilled unemployment rates have touched 15 percent, according to official data. While exports provide crucial support to the economy, China's leadership is aware of and indeed often acknowledges these domestic challenges. Beijing has implemented targeted fiscal measures to stimulate consumer spending and shift away from investment-heavy growth. National and provincial subsidy programs sought to expand domestic household consumption. Borrowed from the post-Global Financial Crisis 'cash-for-clunkers' program, China expanded this program to incentivize consumers to replace outdated products – including automobiles, electronics, home appliances, and more – with environmentally friendly alternatives. From January to May 2025, subsidies supported the purchase of over 77 million household appliances, 56 million electronic devices, and 6.5 million electric bikes. More than 57 million home decor items also received support. Consequently, retail data showed a 6.4 percent year-on-year rise in May, surpassing expectations. However, the impact was short-lived; growth slowed to 4.8 percent in June, falling short of the projected 5.3 percent. The factors behind this decline can be the earlier-than-usual online shopping promotions in May and administrative disruptions to the subsidy rollout in June. Still, despite the recent decline, Beijing's policies of combining fiscal stimulus with green development goals have led to a moderate upward trend in consumption. The real estate sector is more problematic. The property sector, which has long been the backbone of local economies in China, is facing more severe regulatory challenges. Many urban Chinese had invested their savings in real estate (more than 70 percent of household wealth), and with the regulatory crackdown and ensuing downturn, they lost their initial value. Meanwhile, according to the latest data, new-home prices in 70 major cities in June fell by 0.27 percent compared to May, marking the steepest decline in eight months. Second-hand home prices experienced an even more pronounced drop of 0.61 percent, their most significant monthly decline since September. The increasing number of cities reporting falling prices suggests that the weakness in China's real estate sector is not abating but spreading. The downturn is exacerbated by the declining real wages of urban middle classes and a rising gap between the rich and the poor. The poor and middle classes cannot afford real estate in China due to rising prices. The real estate sector presents two interconnected challenges. First, the downturn reduces consumer confidence, particularly among lower-middle and upper-middle class households, who rely on property as a significant source of wealth. Second, it undermines local government revenues, which are heavily dependent on land sales. This could reduce future fiscal policy options. China's economic performance in the first half of 2025 was encouraging, as expanded export growth and a domestic stimulus program helped tackle external shocks and internal deceleration. However, short-term resilience does not guarantee long-term transformation. Despite China's trade diversification ambitions, internal pressures like stagnant consumption, falling property prices, and a low consumption-to-GDP ratio persist. While the economy has remained stable in 2025, sustained momentum will require systemic reforms to boost household incomes, expand public services, and enhance labor mobility. Beijing's leadership recognizes the structural challenges, but policy solutions remain uneven. China's test lies in embracing a proactive, reform-driven approach to economic rebalancing. Its success will determine China's economic growth in the second half of 2020 and shape the global economy.
The Diplomat
6 hours ago
- The Diplomat
The Digital Silk Road in the Gulf: Navigating Risks Amid China-US Rivalry
The Gulf region represents a convergence of regional instability and great power rivalry, with Chinese high-tech exports caught in the crossfire. China's Digital Silk Road has emerged as a strategic avenue to circumvent mounting U.S.-led barriers to its high-tech development, offering an alternative model for digital globalization that emphasizes Chinese standards, platforms, and infrastructure. The initiative aims to embed Chinese digital ecosystems – including advanced 5G, Internet of Things (IoT), artificial intelligence (AI), and sovereign cloud services – in core economic markets. One of the key testbeds for this strategy is the Gulf, where nations are implementing far-reaching digital transformation agendas under frameworks like Saudi Arabia's 'Vision 2030' and the United Arab Emirate's 'We the UAE 2031.' Leading Chinese firms – Huawei, ZTE, Alibaba Cloud, and CSCEC Middle East – have secured major roles in these transitions. Yet the Digital Silk Road's Gulf deployment is not unfolding in a stable context. The region is beset by escalating geopolitical tension and insecurity. Over the past two years, Houthi militias have launched missiles and drones targeting commercial traffic in the Red Sea – threatening maritime routes key to infrastructure logistics. Simultaneously, the recent Iranian-Israeli military strikes precipitated airspace restrictions in GCC states, affecting domestic connectivity and disrupting telecom deployments. These disruptions have coalesced with intensifying U.S. scrutiny of Chinese telecom giants, with Huawei and ZTE at the center of security debates. The Gulf thus represents a convergence of regional instability and great power rivalry, with Chinese digital exports caught in the crossfire. In this environment of volatility, traditional models centered on infrastructure exportation and rapid deployment are insufficient. Chinese technology firms must now navigate a complex landscape of security concerns, regulatory demands, and public trust issues. To remain viable and expand influence, they must evolve toward strategies of technology localization, embedding themselves within Gulf regulatory and operational ecosystems, and secure hedging, co-creating governance standards and resilience mechanisms. The effective combination of technology localization and secure hedging would become one of the most useful tools for Chinese exporters to solidify their role as stakeholders in global digital governance – thus ensuring sustained participation amid Sino-American tech competition. As the Gulf's digital frontier becomes increasingly contested, companies that internalize this dual paradigm can not only endure but also shape the emerging digital order, forging a strategic advantage in a globally contested arena. Digital Silk Road in the Middle East: Progress and Risks Over the past two years, Digital Silk Road initiatives in the Gulf have accelerated dramatically, embedding Chinese digital infrastructural frameworks in national development agendas. Huawei has spearheaded this expansion through multilateral agreements with regional carriers like Zain KSA and STC, advancing pillars of connectivity. At the 2025 Mobile World Congress in Barcelona, Huawei and Zain KSA announced a landmark 'Cloud‑First' agreement that integrates AI-driven enterprise services into Saudi Arabia's infrastructure plans, building on prior 5G collaborations and newly launched 5.5G testbeds designed for smart city applications. Meanwhile, Alibaba Cloud has established major data centers and hybrid clouds in Abu Dhabi and Dubai, aligning with national security priorities around data localization. ZTE, in partnership with Etisalat, has rolled out 5G test networks in the UAE, demonstrating the broad institutional reach of Chinese telecom vendors. CSCEC Middle East, the regional arm of China State Construction Engineering Corporation, has also ventured into digital infrastructure with ambitious smart urban developments and metro system integrations. Collectively, these companies are not merely delivering infrastructure – they are actively shaping Gulf digital ecosystems in ways that globalize Chinese technical norms and reinforce the country's position amid escalating U.S. export controls on semiconductors, AI chips, and telecom gear. Despite the strategic momentum, the Gulf's digital economy remains deeply vulnerable to layered shocks. Principally, there are four core risk vectors: geopolitical and security risks, regulatory and compliance risks, trust and perception risks, and operational and contractual risks. From a security perspective, the Red Sea has become a contested maritime corridor, with frequent Houthi rocket and drone attacks disrupting international shipping lanes essential for equipment transport and fiber-optic cable deployment. Simultaneously, the recent Iranian-Israeli military escalation led to intermittent GCC airspace closures, delaying site access and preventing on-site installations. Additionally, as U.S. secondary sanctions target Chinese telecom firms, Gulf governments must weigh both security considerations and diplomatic alignments when contracting with Chinese vendors. Politically, Gulf states are rapidly implementing strict data localization and AI governance regimes. The Saudi National Data Management Office (NDMO) mandates local storage for critical government and public-sector data. The UAE's federal Data Protection Law and parallel 'We the UAE 2031' AI framework require robust algorithmic transparency and data oversight. Chinese vendors, long used to turnkey export models with centralized data flows, now find themselves needing to restructure contractual arrangements. These often include local content requirements, joint venture obligations, and IP licensing protocols that reflect sovereign security interests. Then there are the added trust and perception risks. Huawei remains emblematic of Chinese tech under Western scrutiny. U.S. agencies frequently label Huawei as a national security threat, advising allied states to restrict its involvement in telecom infrastructure. To counterbalance this, Gulf nations have actively diversified their vendor ecosystems; the UAE's Microsoft-G42 cloud collaboration is a salient example. Chinese companies must now overcome preconceptions through proactive engagement, transparency, and demonstrated compliance with international norms. Finally, there are the impacts all these factors have on operations on the ground. Geopolitical events frequently trigger force-majeure scenarios that disrupt timelines for smart-city builds and cloud rollouts. Supply chain dislocations – from shipping lane rerouting to restricted financing – expose project budgets and contractual obligations to delay-related penalties. Moreover, currency fluctuations and embargo risks make it difficult for Chinese firms to forecast and manage financial liabilities. Together, these layered risks define the contours of the Gulf's Digital Frontier – a market simultaneously high in digital ambition and elevated by strategic volatility. Chinese companies must grapple with more than technical implementation; they must engage in diplomatic, regulatory, and perceptual management if they are to sustain long-term roles in this contested region. Chinese Firms Responding to Gulf Tech Risks Within the constraints of the Gulf's Digital Frontier, two architectural approaches emerge: embedding into local systems via operational localization and collaborative governance, anchored by transparent compliance protocols. Chinese firms – like CSCEC Middle East and Huawei – are already deploying these strategies. CSCEC Middle East has taken an ambitious stance with projects such as Dubai Digital Park, a smart-city endeavor integrating intelligent building systems, public infrastructure monitoring, and fiber-backed ICT networks. While the technical specifications are standard for advanced urban development, the project's strength lies in its embeddedness – targeting placement of 75,000 Emiratis into private sector roles over five years, ensuring local alignment and acceptance. Moreover, the initiative was the first to formally comply with Dubai Municipality's Building Information Modeling (BIM) regulations, integrating local digital governance norms from the outset. Crucially, CSCEC has implemented continuous compliance checks with data-localization laws – holding real-time data within UAE servers, processing analytics onsite, and allowing data access only through approved national gateways. This tight regulatory alignment has helped insulate the company from maritime delivery disruptions linked to Red Sea volatility or airport entry issues following airspace closures, as local teams have continued smoother operations irrespective of external constraints. In Saudi Arabia, Huawei's footprint illustrates a multilayered approach to mitigating strategic risk. The 2025 'Cloud-First' agreement with Zain KSA aims not merely at digital services but hinges on constructing sovereign cloud zones in Riyadh. These facilities will house sensitive government and enterprise data on Saudi soil with local encryption, which aligns directly with NDMO mandates. Huawei also co-created Saudi AI labs embedded in King Abdullah Economic City, staffed predominantly by Saudis and overseen by a joint Saudi-Chinese oversight committee, reinforcing algorithmic transparency and data ethics standards. The company's public-sector AI deployment – such as its pilgrimage-monitoring system for the 2025 Hajj – has been transparently subject to independent audits and deployed with cyber-resilience protocols configured for mass gatherings under high-security conditions. Notably, this project has continued despite regional airspace restrictions, as cloud and telemetry infrastructure was pre-verified for alternate sourcing routes and modular on-premises deployment. Beyond these measures, Huawei has coordinated with STC on a data-center cluster architecture designed to reroute workloads across multiple regional locations – thereby maintaining service continuity even if one site is compromised. In essence, Huawei is demonstrating that Chinese technology, when integrated intelligently and transparently within sovereign frameworks, can stand up to both regional and geopolitical disruption. These dual-lined strategies – operational localization and compliance-anchored deployment – create a firewall between Chinese tech exports and the unpredictable regional dynamics that define the Gulf's digital landscape. Why Both Technology Localization and Secure Hedging Are Necessary To thrive, Chinese companies operating under the Digital Silk Road must deploy both mechanisms: technology localization, which binds operations firmly to host-state ecosystems, and secure hedging, which builds joint resilience and governance structures. Technology localization is about more than just physical presence – it demands structural integration. This includes setting up sovereign cloud zones and telecom networks under local jurisdiction, training and employing local staff, and building compliance processes that are bound by host-country norms. In the case of Huawei and Zain KSA, Chinese-built data centers are not only situated within Saudi territory but managed under strict NDMO guidelines and staffed heavily by Saudis. Similarly, CSCEC's Dubai smart-city deployment aligns with local digital project documentation and data processing regulations, embedding compliance within daily operations. Localization ensures that Chinese deployments are immune to external shocks, whether from shipping delays, airspace restrictions, or geopolitical volatility. While localization anchors Chinese firms operationally in the Gulf, it does not fully address the political sensitivities and security concerns they face. Secure hedging is the necessary second layer – a strategy that strengthens trust, mitigates geopolitical risk, and embeds Chinese technology into the host countries' regulatory and governance systems. In the Gulf's strategic environment, concerns over Chinese tech are driven not only by technical issues but also by broader political optics. Host governments, while eager to modernize, are wary of over-reliance on Chinese vendors amid ongoing China-U.S. tensions. Secure hedging responds to this by promoting joint regulatory frameworks, shared oversight, and transparent technical operations that reinforce mutual accountability. This strategy involves co-developing standards and audit mechanisms, especially for sensitive sectors like 5G and AI. By aligning with local data protection laws and allowing independent verification, Chinese firms can demonstrate compliance and reduce suspicion. Secure hedging also requires resilient technical architecture – such as mirrored data centers and modular cloud systems – that ensures continuity during crises like airspace closures or shipping disruptions. Equally important, secure hedging carries diplomatic value. Through participation in regional governance platforms and multilateral dialogues, Chinese companies project a cooperative posture and help normalize their role in critical infrastructure. In sum, secure hedging transforms Chinese tech exports from contested assets into integrated, resilient systems. It enables firms to navigate both physical disruptions and political pressures – securing their place in the Gulf's evolving digital future. Enduring Engagement and Strategic Leverage China's Digital Silk Road in the Gulf is unfolding in an environment deeply shaped by the complex interplay of regional instability and Sino–American tech rivalry. What began as infrastructure exports has transitioned into something more enduring – and strategically significant. Firms such as Huawei and CSCEC Middle East are not simply delivering projects; they are embedding themselves in Gulf states' digital architectures, aligning to sovereign standards, and shaping shared governance frameworks. Contrary to expectations from some analysts that geopolitical tensions might discourage Chinese participation, current evidence shows an intensification of engagement. Localization and co-governance have become core pillars, ensuring that Gulf states see value not only in the technology itself, but in inclusive, transparent deployment – insulated from disruptions triggered by shipping risk, airspace shutdowns, or escalations in U.S. security discourse. This trajectory holds meaning beyond immediate infrastructure returns. As the China-U.S. tech competition evolves into a game of systemic influence, Gulf digital systems become strategic assets. Chinese companies' deep integration into the region positions China with structural leverage – access not only to projects, but to the digital backbone of vital economies. In effect, the Digital Silk Road is morphing into a geopolitical instrument, offering China a long-term 'card' in the global balance of power. Moving forward, the countries of the Gulf appear determined to deepen cooperation – with Chinese firms embedding into governance frameworks and shared standards. For Beijing, the dividends are precision: not only market share, but geopolitical endurance and influence. In emerging multipolar technology landscapes, the Digital Silk Road's success – in the Gulf and beyond – will depend not just on exported equipment, but on sustained co-creation, anchored in sovereignty and resilience.
