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China’s Solar Industry Battles Severe Overcapacity Amid Calls for Structural Reform

China’s solar energy sector is grappling with one of the most acute cases of “involution” — the term used to describe destructive, low-return competition — in the country’s economy today. While global annual demand for new solar capacity stands at approximately 700 gigawatts (GW), China’s domestic production capacity has ballooned to around 1,400 GW, roughly double what the world needs each year.

During China’s annual “Two Sessions” legislative meetings, Zhong Baoshen, chairman of leading solar manufacturer LONGi Green Energy and a delegate to the National People’s Congress, called for the establishment of a capacity exit mechanism to help the industry escape its current downward spiral. He warned that after China’s newly installed solar capacity peaks at over 300 GW in 2025, installations could face a cyclical decline in 2026, with the structural imbalance between supply and demand still unresolved.

Zhong proposed using efficiency standards as a benchmark — specifically photovoltaic conversion rates — to guide the retirement of outdated production capacity and align industry-wide output with actual market demand. He also criticized companies that lack genuine innovation, relying instead on poaching talent for quick capacity expansion while using non-competitive resources to undercut prices, ultimately squeezing out firms that invest in real technological advancement.

In a notable policy parallel, Zhong urged regulators to apply a framework similar to the real estate sector’s “three red lines” — a set of financial thresholds introduced to curb excessive borrowing among property developers. He recommended monitoring solar companies’ debt-to-asset ratios, net debt levels, and short-term repayment ability, imposing financing restrictions on non-compliant firms and encouraging industry consolidation.

On the policy front, China’s Ministry of Finance has already announced the elimination of VAT export tax rebates for solar products, effective April 1, a measure industry experts view as a signal against cutthroat, low-price competition in overseas markets.

Source: Central News Agency (Taiwan), March 4, 2026
https://www.cna.com.tw/news/acn/202603040248.aspx

Briefings | | |   Economy/Resources

China’s Belt and Road Initiative Investments in Africa Hit Record Highs Amid Global Trade Tensions

Africa emerged as the top destination for Chinese Belt and Road Initiative (BRI) investment in 2025, marking what analysts describe as the most active year for the initiative since its launch in 2013. According to a joint report released on January 18 by Griffith University’s Asia Institute and Fudan University’s Green Finance and Development Center, China’s total investment and construction contracts in Africa surged to $61.2 billion in 2025, a staggering 283 percent year-on-year increase, pushing Africa ahead of the Middle East as the initiative’s largest recipient region.

The report attributes the growth primarily to large-scale infrastructure projects financed through Chinese policy banks, including the Export-Import Bank and the China Development Bank. Unlike earlier BRI investments focused narrowly on roads and bridges, 2025’s projects are more deeply integrated with industrial parks and local resource development, aligning with African nations’ demands for domestic value chain upgrades.

The year was described as both the “dirtiest and greenest” for Chinese energy engagement in Africa. Fossil fuels remained central, with a $23 billion (approximately $23 billion USD) investment agreement in the Republic of Congo aimed at boosting oil output, and a $20 billion (approximately $20 billion USD) natural gas industrial park deal in Nigeria. At the same time, investment in copper, cobalt, and other critical minerals reached a record $32.6 billion, while green energy projects, including solar, wind, and a major green hydrogen initiative in Nigeria led by LONGi Green Energy, saw significantly increased activity.

Africa is also serving as a strategic manufacturing hub for Chinese firms seeking to sidestep U.S. tariffs. Morocco, benefiting from a U.S. free trade agreement and facing only a 10 percent U.S. tariff rate, has attracted a wave of Chinese factory relocations, including Bowey Alloys’ $150 million special alloy materials plant and Hangzhou Radix Energy’s $30 million automotive bearing facility in Tangier.

From 2013 through end-2025, cumulative BRI construction contracts totaled $837 billion and non-financial investment reached $561 billion, bringing total engagement to $1.399 trillion. The report anticipates continued expansion in 2026, focused on energy, mining, and emerging technologies.

Source: Radio France International, February 27, 2026
https://rfi.my/CTr1

Briefings | | |   Geo-Strategic Trend

China’s Military Warns of Internal Espionage Threats Following Iran Strike

The assassination of Iranian Supreme Leader Ali Khamenei by a joint U.S.-Israeli operation has sent shockwaves through Beijing, prompting China’s People’s Liberation Army (PLA) to issue a series of stark warnings about the dangers of foreign infiltration and espionage.

On March 2, the PLA Daily‘s official commentary studio, “Junzhengping,” published a piece on Weibo titled “The Silent Shadow War: Everyone Must Stay Vigilant.” The commentary argued that as global competition intensifies, methods such as infiltration, intelligence theft, and subversion have become standard tools of “certain forces” seeking to sow instability from within. The piece drew a direct lesson from Iran’s downfall, stating that “the most fortified strongholds are often breached from the inside.”

The commentary warned Chinese citizens against complacency in everyday interactions, noting that casually mentioning sensitive information could hand adversaries the missing piece of an intelligence puzzle, accepting minor gifts or favors could open the door to manipulation, and taking seemingly friendly conversation at face value could allow bad actors to map out vulnerabilities.

China’s Ministry of State Security, the piece noted, publishes new cases of foreign espionage activity almost daily. The article urged every citizen to “stay alert, hold the line, and distinguish right from wrong,” so as to weave a security network that is “round-the-clock and without blind spots,” leaving no room for infiltration or subversion to take hold.

This followed an earlier PLA Daily commentary published on February 28, which called on “every Chinese son and daughter” to internalize the principle of never forgetting danger in times of peace. Only by “staying attuned to risk and preparing before the storm arrives,” it said, can China safeguard the hard-won stability it has achieved.

Source: Central News Agency (Taiwan), March 3, 2026
https://www.cna.com.tw/news/acn/202603030295.aspx

Briefings | | |   Defense/Military

U.S. Actions in Middle East and Beyond Seen as Strategic Moves Against China

Growing instability in the Middle East following U.S. and Israeli military operations against Iran is raising serious concerns about the impact on China’s energy security and broader geopolitical ambitions, according to analysts in Hong Kong.

Writing in Ming Pao, Hong Kong analyst and former editor-in-chief of the Hong Kong Economic Journal Chen Jingxiang noted that China is Iran’s largest oil customer, purchasing more than 80 percent of Iran’s oil exports. Since the outbreak of hostilities, Iran has announced a blockade of the Strait of Hormuz — a critical chokepoint through which approximately one-third of China’s crude oil supply passes. A sustained closure of this vital energy corridor could significantly disrupt China’s energy supply.

Beyond energy, Iran holds a key strategic position in China’s Belt and Road Initiative. A cooperation agreement signed between the two countries in 2016 deepened collaboration in transportation, railways, and energy. The outbreak of conflict now threatens to seriously undermine China’s investments and interests in Iran.

Iran is also an important political ally of China. Tehran joined the Shanghai Cooperation Organisation — a China-led bloc — in 2023, with Chinese state media at the time hailing the move as an opportunity for Iran to better realize its geoeconomic potential. China’s broader circle of strategic partners includes Russia, North Korea, and Pakistan.

The article argues that U.S. actions targeting Venezuela and Iran — both among China’s top oil suppliers — as well as Washington’s intervention in Panama Canal port operations, are part of a coherent strategy aimed at weakening China’s global influence.

Despite President Trump’s frequent public praise of Chinese leader Xi Jinping and his characterization of Xi as a “good friend,” the analyst contends that Washington’s actual moves are consistently aimed at undermining Beijing. China, the article concludes, should harbor no excessive expectations for the Trump-Xi summit scheduled later this month.

Source: Central News Agency (Taiwan), March 4, 2026
https://www.cna.com.tw/news/acn/202603040045.aspx

Briefings | | |   Geo-Strategic Trend

China’s 31 Provinces Embrace Austerity in 2026 Budget Plans

All 31 of China’s provinces have released their 2026 budget drafts, each echoing the central government’s directive for Party and government agencies to “live frugally” by cutting administrative and non-essential expenditures. The push reflects an intensifying fiscal squeeze that has been building for years, with some analysts arguing that curbing wasteful local government investment would yield even greater savings than trimming routine spending.

The “living frugally” policy generally refers to reductions in the so-called “three public expenses” — overseas official travel, official hospitality, and government vehicle costs — along with other non-urgent outlays. According to a report by Yicai on February 27, the approach has become a long-term policy directive, particularly as the gap between fiscal revenues and expenditures has widened in recent years.

Several provinces reported concrete results. Tianjin cut 5.87 billion yuan (approximately $806 million USD) in non-essential spending in 2025. Jiangxi saw its three public expenses fall 21 percent, large-scale provincial renovation spending drop 41.9 percent, and conference fees decline 36.4 percent. Shaanxi pledged to further slash budgets for festivals, trade shows, and forums, while Hebei committed to continued reductions across meetings, training, and outsourced service fees.

An anonymous local fiscal official noted that reining in ineffective and hastily launched investment projects — those started without adequate planning or assessment — would save considerably more public funds than cutting general administrative expenses.

The frugality drive traces back to March 2019, when President Xi Jinping explicitly linked government belt-tightening to improving ordinary citizens’ lives. The policy gained further urgency during the COVID-19 pandemic as local finances deteriorated. It was formally institutionalized in May 2025, when the Party and State Council issued a revised regulation on strict economy and opposing waste, moving the directive from a slogan into enforceable policy.

Source: Central News Agency (Taiwan), February 27, 2026
https://www.cna.com.tw/news/acn/202602270112.aspx

Briefings | | |   Economy/Resources

China Targets Japan’s Military Buildup With Export Controls

China’s Ministry of Commerce recently announced it is adding 20 entities involved in enhancing Japan’s military capabilities to its export control list, while placing another 20 Japanese entities on a watch list for failing to verify the end users and end uses of dual-use goods. Beijing framed the move as a matter of national security, non-proliferation obligations, and a direct response to what it describes as Japan’s accelerating “re-militarization.”

China argues that under the Cairo Declaration, the Potsdam Proclamation, and Japan’s Instrument of Surrender, Japan is legally prohibited from rearming. Yet major Japanese defense contractors — Mitsubishi Heavy Industries, IHI Corporation, and Kawasaki Heavy Industries — have continued producing warships, fighter jets, and missiles. China specifically cites Mitsubishi’s involvement in developing hypersonic glide weapons and shipbuilding contracts that it claims threaten stability in the East and South China Seas.

The article points to Japan’s rapid defense spending growth as evidence of a deepening military-industrial complex. Defense budgets have risen for 14 consecutive fiscal years from 2012 to 2026, more than doubling since 2022. Stock prices of major defense firms have surged dramatically since November 2022 — Mitsubishi Heavy Industries by over 650 percent, IHI by over 480 percent, and Kawasaki Heavy Industries by over 280 percent — even as Japan’s broader manufacturing sector grew at less than 1 percent annually over the same period.

Under Prime Minister Sanae Takaichi, the article claims, remilitarization has accelerated further, with plans for large-scale bond issuance and a special defense income tax to fund military expenditures, alongside the establishment of a national intelligence agency this year.

The piece also raises alarm over Japan’s nuclear ambitions, noting that Japan had stockpiled 44.4 tons of separated plutonium as of end-2024 — far exceeding civilian energy needs — and possesses the full technical infrastructure to produce weapons-grade material. China warns that if Japan crosses the nuclear threshold, the global non-proliferation framework would face a severe blow. The article concludes that China’s export controls are a lawful and necessary step to prevent militarism’s resurgence and to uphold the postwar international order.

Source: People’s Daily, February 28, 2026
http://paper.people.com.cn/rmrb/pc/content/202602/28/content_30142715.html

Briefings | | |   Geo-Strategic Trend

China’s Soft Power Play: Subsidized Tours Aim to Win Over Taiwan’s Youth

A report by Le Monde, filed from Beijing, details how China is using subsidized travel and youth exchange programs as a soft power tool to reshape how young Taiwanese perceive the mainland — with mixed results.

The article follows two Taiwanese university students, referred to by pseudonyms Mei and Lian, who traveled to China in January through an association offering heavily discounted trips specifically designed for Taiwanese youth. The pair paid only for their round-trip airfare plus a registration fee equivalent to roughly 100 euros (approximately $110 USD, or NT$3,700), with the remainder covered by subsidies from the Chinese government and provincial authorities — the same provincial bodies that house so-called “united front” departments tasked with cultivating support for Beijing’s agenda.

Over about ten days, the two visited Hangzhou — home to AI firms DeepSeek and Unitree, as well as Alibaba’s headquarters — before traveling to the Changbai Mountain region for snow scenery and then Harbin for its winter festival. Mei noted that China seemed more advanced than Taiwan in some respects, pointing to hotel robots that could navigate elevators and hallways to deliver food orders.

During the trip, the organizing association arranged meetings with Chinese peers of similar age. These individuals avoided aggressive political messaging and largely steered clear of direct discussions about unification — instead encouraging Mei and Lian to post photos of places they found beautiful or impressive on social media. With only around 1,000 followers each, the two were seen as authentic, unsponsored voices rather than obvious influencers.

The article concludes that the initiative was only partially successful. Both women came away impressed by China’s modernity, infrastructure, and scenery, but Mei’s sense of Taiwanese identity remained intact. “We want to keep our democracy,” she said. Her mother, for her part, refused to speak to her for two months after learning of the trip.

Source: Central News Agency (Taiwan), February 26, 2026
https://www.cna.com.tw/news/acn/202602260307.aspx

Briefings | | |   Geo-Strategic Trend

EU Tightens Checks on Chinese Baby Formula Ingredient After Contamination Confirmed

The European Union announced on Wednesday (February 25) that it is imposing stricter inspections on a baby formula ingredient imported from China, after confirming that cereulide toxin is the source of contamination in infant formula products.

Cereulide, which can cause nausea and diarrhea, was first detected in December last year in formula containing arachidonic acid oil. Following the discovery, European giants including Nestlé, Danone, and Lactalis launched recalls of infant formula products across more than 60 countries. Ireland’s Food Safety Authority has since stated that the recalls were triggered by the possible presence of cereulide in the affected products.

Arachidonic acid oil, the ingredient in which the toxin was detected, is strictly regulated in Europe and is used in some infant formulas as a source of Omega-6 fatty acids.

Since December, three infant deaths in France have been suspected to be linked to the recalled formula. French authorities are investigating, though they have emphasized that no causal relationship between the deaths and the formula has been established. Nestlé has said it will cooperate with the investigation and that there is currently “no evidence” linking its products to the deaths.

In its Wednesday statement, the European Commission said it was “necessary to strengthen controls on arachidonic acid oil imported from China” under special conditions. Shipments entering the EU from China will now require an official certificate confirming the absence of cereulide, and for the next two months, 50 percent of physical shipments will be subject to random sampling checks.

The Commission explained that investigations have shown Chinese-sourced arachidonic acid oil used in formula production “constitutes the source of contamination,” posing a potential serious risk to human health. While no company was named by the EU, Chinese firm Cabio Biotech — a major global producer of arachidonic acid oil supplying brands such as Nestlé and Danone — is reportedly under investigation for allegedly supplying the contaminated ingredient.

Source: Deutsche Welle, February 25, 2026
https://p.dw.com/p/59Onh

Briefings | | |   Economy/Resources