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China’s declining arms imports reflect growth in military self-reliance

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According to a Swedish think tank, China’s arms imports have dropped by almost two-thirds in the last five years, as the country increasingly shifted from purchasing foreign weapons to relying on domestically developed technology. A report released today by the Stockholm International Peace Research Institute (SIPRI) revealed a 64 percent decrease in arms deliveries to China between 2020 and 2024, compared to the previous five-year period.

This reduction in imports was primarily attributed to the expansion of China’s domestic weapons production, with homegrown systems now replacing the equipment that was previously sourced largely from Russia. The report suggests that this shift is expected to continue in the coming years.

Siemon Wezeman, a senior researcher at SIPRI, explained that it took China three decades to progressively replace imported high-tech weapons with domestically developed technologies. “In the last five years, the biggest things that they still imported from Russia were basically two things, helicopters and engines – they are actually extremely difficult to produce if you don’t have a background in it – and that is where China has broken through,” he said.

“China [now] makes its own engines for combat aircraft, transport aircraft and ships. The same [goes] with helicopters, where China has developed its own helicopters, completely Chinese, and is phasing out imports of those from Russia and also from European designs.”

Notably, China has announced a 7.2% increase in its defense budget for this year, continuing its efforts to expand and modernize its military to strengthen territorial claims and challenge U.S. military dominance in Asia.

With the second-largest military budget globally, behind only the U.S., China already possesses the world’s largest navy. The newly announced budget, totaling approximately $245 billion, was revealed at the National People’s Congress, the country’s annual legislative gathering. However, the Pentagon and analysts suggest that China’s actual defense spending could be at least 40% higher, as certain expenditures are categorized under other budgets.

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China, Russia, and Iran are conducting joint naval exercises

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China, along with Russia and Iran, is conducting joint naval exercises in the Indian Ocean. “Security Belt 2025” is taking place near the Iranian port of Chabahar and aims to deepen “military trust and pragmatic cooperation”.

Representatives from Azerbaijan, South Africa, Oman, Kazakhstan, Pakistan, Qatar, Iraq, the United Arab Emirates, and Sri Lanka are attending the exercises as observers.

The program includes simulated attacks on maritime targets, search, and rescue, as well as arrest missions. According to the Chinese Defense Ministry, the country will send a destroyer and a supply ship, which is a demonstration of increased military capabilities from Beijing. Apart from this, all three countries will present their own warships for the exercises.

Notably, the Iranian army conducted similar operations in February as well, with the goal of “increasing defense capabilities to counter any kind of threat”. As for China, the country organized exercises in the Tasman Sea, near Australia last month.

The exercises in the “Security Belt” for China are of special interest since said country is trying to demonstrate its maritime capabilities, especially the aquatic fighting force.

The inclusion of these three countries, from the side of China, is a sign that it is trying to counter the U.S. influence globally, especially at a time when the United States is voicing warnings about the possible attack on Iran’s nuclear facilities by Israel.

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European Parliament Lifts Restrictions on Lawmakers’ Meetings with Chinese Officials

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Amid shifting U.S. foreign policy on the Ukraine war, the European Parliament has lifted restrictions on lawmakers meeting Chinese officials, signaling a potential thaw in EU-China relations.

The restrictions were originally introduced in April 2023 in response to a diplomatic standoff that began in 2021, when the EU and China imposed mutual sanctions over alleged human rights abuses in Xinjiang. 

The guidelines, which applied to both China and Iran, stipulated that parliamentary counterparts would not be invited to visit the European Parliament and that no official missions to these countries would take place while sanctions remained in effect. Additionally, they required that bilateral meetings with officials be restricted to officeholders and reported to the parliament’s services. 

However, European Parliament President Roberta Metsola recently proposed removing these measures, a decision later confirmed by an EU Parliament spokesperson. Restrictions on Russian and Belarusian officials remain in place.

Notably, China’s special envoy for European affairs, Lu Shaye, criticized U.S. President Donald Trump’s approach to European allies, calling it “appalling.” He also argued that any peace deal for Ukraine should not be dictated solely by the U.S. and Russia.

“When you look at how the Trump administration has implemented a brazen and domineering policy towards Europe, treating its allies in this way, honestly, from a European perspective, it’s quite appalling,” Lu said Wednesday.

“I believe European friends should reflect on this and compare the Trump administration’s policies with those of the Chinese government. In doing so, they will see that China’s diplomatic approach emphasizes peace, friendship, goodwill, and win-win cooperation.” 

Lu made these remarks in Beijing during the annual session of the Chinese People’s Political Consultative Conference (CPPCC), where senior diplomats gathered for discussions. He acknowledged U.S.-Russia negotiations on the Ukraine crisis but stressed that a resolution should involve all relevant parties, including European nations.

“Various proposed solutions should be subject to equal discussion, rather than being dictated by a select few,” he said.

Meanwhile, China is ramping up its diplomatic and economic outreach, particularly in the Global South. The Chinese Ministry of Finance has proposed an 8.4 percent increase in its foreign policy budget for 2025, raising it to 64.5 billion yuan (US$8.87 billion). This marks a larger increase than last year’s 6.6 percent rise. The military budget, however, will grow by 7.2 percent, the same rate as in 2023 and 2024.

Premier Li Qiang emphasized these efforts in his annual work report at the “two sessions,” China’s largest political and legislative gathering. He highlighted Beijing’s strengthened global partnerships and participation in major international summits, including the Asia-Pacific Economic Cooperation and G20 meetings. He also pointed to the steady expansion of trade and investment under the Belt and Road Initiative.

“We consolidated and expanded partnerships across the globe, stayed committed to true multilateralism, and played a positive and constructive role in addressing global challenges and resolving regional and international hotspot issues,” Li said.

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Trade War Fuels Sino-American Tension

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On March 4th, the additional tariffs imposed on Chinese imports by the U.S. President, Donald Trump, took effect, which triggered a strict response from the official Beijing.

According to the Chinese Embassy in the U.S., “If war is what the U.S. wants, be it a tariff war, a trade war or any other type of war, we’re ready to fight till the end.” Apart from this, the Chinese Foreign Ministry representative commented on the issue and once again highlighted China’s readiness to “fight till the end” in case the U.S. wants to harm the country’s interests. The spokesperson urged the United States to return to dialogue and cooperation.

The American Secretary of Defense, Pete Hegseth, answered the statements coming from China in an interview with Fox News. He underlined the rise of countries with different ideologies in the world and stated that if the goal is to deter war with China or any other state, the country needs to be strong: “We need the defense spending, the capabilities, the weapons, and the posture in the Indo-Pacific, which is something we’re very much focused on.”

One of the spokespeople of the National People’s Congress talked about said topic with journalists as well, according to him, China’s relationship with the U.S. is bound to see disagreements, but Beijing will not accept pressure or threats.

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Trump Announces New Trade Measures Against China

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The standoff between Washington and Beijing continues. On March 4, President-elect Donald Trump outlined his plans for China during his address to a joint session of Congress. Trump said he intends to take new retaliatory trade measures against China, which could include new tariffs or attempts at economic isolation.

Trump’s March 4 address to Congress was his longest since returning to the White House, lasting 1 hour and 40 minutes. He noted that China has long benefited from weak US policies and that his administration will soon take retaliatory measures such as “retaliatory tariffs” to address this problem and confront China’s trade practices.

“On April 2, the retaliatory tariffs will go into effect, and whatever tariffs they impose on us, we will also impose new tariffs on them,” Trump said. He also noted that the tariffs imposed by China on American goods were, on average, twice as high as those imposed on products imported from China by Washington.

The president also criticized the “Chips and Science Act” passed in 2022. This law adopted in the states aims to increase domestic production of semiconductors and reduce the country’s dependence on foreign suppliers, especially China. The law provided significant funding for US-based chip manufacturers to increase production capacity and ensure the country’s technological and economic security. According to Trump, the funding provided by this act is being spent inefficiently. Instead, imposing tariffs on the manufacturers will increase domestic production.

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A new phase in the trade war: China’s response to US tariffs

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Tensions between China and the United States continue. In response to Washington’s decision, on March 4, China announced the imposition of additional 10-15% tariffs on American imports. The tariffs will apply to American agricultural and food products.

In addition, China has imposed export and investment restrictions on 25 American companies to protect national security, although Beijing officials have chosen not to name specific names. As is known, 10 of these 25 companies have come under Chinese attention for supplying arms to Taiwan.

This decision by China is a retaliatory blow to the United States, which last week imposed an additional 10% tariff on Chinese products. As US President Trump has said, Beijing has been indifferent to the problem of large-scale drug imports from China to the US, which is the main reason for the tariffs.

According to the statement made on March 4, the additional 15% tariffs will take effect from March 10 and will target US chicken, wheat, corn, and cotton imported into China, while additional 10% tariffs will apply to products such as US soybeans, sorghum, pork and beef, aquatic products, fruits, vegetables and dairy products.

“The US unilateral tariff measures seriously violate World Trade Organization rules and undermine the foundation of economic and trade cooperation between China and the US,” the Chinese Ministry of Commerce said in a statement.

In addition, China has banned the import of genetic sequencing from US medical equipment manufacturer Illumina from March 4. The company has been added to China’s “untrusted entities” list. China’s commerce ministry said in a statement that Illumina had suspended transactions with Chinese companies and taken discriminatory measures against Chinese companies.

The tariff hike on China “is likely to hurt the US itself, as it needs cheap Chinese products to reduce inflation. High tariffs on US agricultural products will also negatively affect China,” but countermeasures are politically necessary. “It would be wise to take some symbolic steps without escalating tensions,” said Wang Zhuo, partner at hedge fund Zhouzhu Invest.

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China’s Politburo Reaffirms Key Priorities for 2025

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China’s top leadership has emphasized its commitment to economic stability and high-quality development through technological advancements in 2025, as discussed during a Politburo meeting on Friday. The 24-member decision-making body of the Communist Party highlighted plans to implement proactive macroeconomic policies, boost domestic demand, and enhance the integration of technology and industrial innovation, according to a report from Xinhua.

In addition to economic growth, the government reaffirmed its focus on stabilizing the real estate and stock markets, improving living standards, and advancing high-level economic openness.

 “[We will] mitigate and manage risks in key sectors, counter external shocks, stabilize expectations, stimulate market vitality, and sustain economic recovery,” the Politburo’s statement noted.

The announcement coincided with comments from U.S. President Donald Trump, who stated on Thursday that tariffs on Chinese imports would not only begin at 10 percent on Tuesday as initially planned but would double to an effective rate of 20 percent.

On Saturday, U.S. President Donald Trump approved a memorandum titled “America First Investment Policy,” instructing authorities to deploy all available legal tools to restrict Chinese-linked investments in vital U.S. industries. 

A key focus of the Politburo meeting was reviewing the government work report, which Premier Li Qiang is expected to present at the upcoming NPC session. This report will outline China’s economic targets and priorities for the final year of the 14th Five-Year Plan.

China’s economy expanded by 5 percent last year, supported by strong exports and economic stimulus efforts introduced in late September. However, challenges persist, including weak consumer spending, a prolonged downturn in the property market, demographic shifts, and declining business confidence.

On February 17, President Xi Jinping held a high-profile meeting with leading entrepreneurs, reaffirming his support for the private sector. He encouraged businesses to take on a greater role in driving technological innovation, especially as competition with the U.S. intensifies. This was Xi’s first major engagement with private-sector representatives since 2018. A series of regulatory crackdowns and anti-monopoly investigations since 2021 have impacted business confidence, reducing local government revenue and raising youth unemployment.

To improve market sentiment, the government has been working to lower investment barriers and revise restrictions on private-sector market access. It has also taken steps to limit excessive regulatory enforcement, with a new draft law on private-sector promotion aiming to prohibit arbitrary fines on businesses without clear legal justification.

Another priority for policymakers this year is strengthening domestic demand, especially given the potential for escalating tariff tensions with the U.S. As a result, China is expanding its consumer trade-in program to include more home appliances and digital devices. Additionally, Premier Li has pledged efforts to raise household incomes to stimulate domestic consumption.

The government also aims to create a more consumer-friendly environment by cracking down on fraudulent practices, substandard products, and other factors that undermine consumer confidence.

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Trump Approves ‘America First Investment Policy’ to Restrict Chinese Investments in Key U.S. Industries

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On Saturday, U.S. President Donald Trump approved a memorandum titled “America First Investment Policy,” instructing authorities to deploy all available legal tools to restrict Chinese-linked investments in vital U.S. industries. 

According to the memorandum, the U.S. government intends to prohibit individuals and entities with ties to China from investing in key American sectors, including technology, critical infrastructure, healthcare, agriculture, energy, and raw materials. Simultaneously, the policy aims to discourage U.S. investors from financially supporting China’s military-industrial complex.

Furthermore, the memorandum classifies China—including Hong Kong and Macau—as a “foreign adversary,” accusing it of systematically channeling investments into U.S. firms and assets to gain access to advanced technologies, intellectual property, and strategic industry influence. Other nations labeled as adversaries in the document include Cuba, Iran, North Korea, Russia, and Venezuela.

The Trump administration is also considering whether to revoke or suspend the 1984 tax treaty between the two countries, arguing that the agreement—along with other economic factors—has played a role in the decline of U.S. manufacturing while facilitating the modernization of China’s military capabilities.

Additionally, the memorandum explores the possibility of expanding restrictions on American investments in China across industries deemed crucial to national security. These include semiconductors, artificial intelligence (AI), quantum computing, biotechnology, hypersonic technology, aerospace, advanced manufacturing, and directed energy systems, among other sectors aligned with China’s military-civil fusion strategy.

A US official told Reuters, “China is exploiting our capital and ingenuity to fund and modernize their military, intelligence, and security operations, posing direct threats to United States’ security with weapons of mass destruction, cyber warfare, and more.”

“National security is directly tied to economic security,” the memorandum states, emphasizing that while China does not permit U.S. companies to control its critical infrastructure, the United States should similarly prevent Chinese entities from acquiring essential American assets. However, the document does not specify when these measures will take effect.

James Wang, head of China strategy at UBS Investment Bank Research, noted in a report on Monday that while the full extent of the policy’s impact remains uncertain, businesses operating within China’s AI supply chain—including hardware, software, and internet firms—could face significant consequences. 

Wang pointed out that past U.S. investment bans have historically led to a 23% decline in affected stocks over a one-year period. “We believe the uncertainty generated by this executive order could create short-term market volatility as investors either take profits or sell off shares as part of their risk management strategies,” he explained. 

Over the weekend, China expressed its readiness to counter what it described as a “discriminatory” U.S. executive order restricting Chinese investments in critical American industries, including technology and infrastructure. 

China’s Ministry of Commerce strongly criticized the move, calling it “deeply unreasonable.”

“This policy is discriminatory and represents a blatant violation of market principles, severely disrupting normal trade and investment cooperation between businesses in both countries,” the ministry stated on Saturday.

“If implemented, this order will only distort investment flows between China and the U.S. and ultimately fail to serve American interests,” the statement continued. The ministry further emphasized that China would closely monitor developments and take necessary steps to safeguard its economic rights and interests.

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Chinese Naval Operations Raise Tensions in Australia’s Exclusive Economic Zone

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A Chinese surface action group, led by the People’s Liberation Army Navy has been detected operating off the coast of Tasmania within Australia’s Exclusive Economic Zone (EEZ). The presence of the Chinese Task Group 107 has prompted heightened surveillance by both Australian and New Zealand military forces.

Notably, on February 22, 2025, Australia’s Defense Department reported that the group was operating approximately 160 nautical miles east of Hobart, having entered Australia’s EEZ earlier that week. “Defense continues to monitor the task group while it remains in the vicinity of Australia’s maritime approaches and is coordinating closely with the New Zealand Defence Force,” the update stated. Australian officials emphasized their commitment to transparency, urging all military forces in the region to uphold the highest standards of safety and professionalism.

While the task group operates in the Tasman Sea, New Zealand’s HMNZS Aotearoa (A11) is positioned in the nearby Bass Strait to provide logistical support to Australian and New Zealand naval forces. According to naval experts, though the drills were held in international waters, Beijing could have given Australia and New Zealand a heads-up much sooner in the interests of safety.

The coordination between the two nations underscores their commitment to maintaining security and stability in the region. Simultaneously, the U.S. and Japan initiated a ballistic missile defense exercise, known as Resilient Shield, on February 25, 2025, in Japan.

Interestingly, China’s Ministry of Defense said that the exercises conducted in international waters complied with international law and did not affect aviation safety. This incident reflects ongoing concerns about regional security dynamics in the Indo-Pacific, especially as China’s military presence grows. It also underscores the importance of international norms governing military operations in shared waters. Political leaders in Australia and New Zealand have called for improved diplomatic communication and adherence to best practices in maritime operations to prevent similar incidents in the future.

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New sanctions on India and China as Trump administration tightens pressure on Iran

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The United States has imposed new sanctions on India, China, and Hong Kong, two months after the Trump administration returned to power. The United States accuses them of financing Iranian militant groups that seek to harm the United States and its allies. Moreover, this is also the fulfillment of Trump’s campaign promise, according to which Washington would apply maximum pressure on Iran’s oil industry.

The sanctions imposed by the US Treasury and State Departments target 30 individuals, entities, and vessels accused of selling and transporting Iranian petroleum products. Among those sanctioned is Hong Kong-based oil broker Petronix Energy Trading Ltd. According to a statement from the Treasury Department, Petronix purchased hundreds of thousands of tons of Iranian oil from the sanctioned Naftiran Intertrade Co.

Earlier this month, on February 4, Trump signed an executive order “to reduce Iran’s oil exports to zero.” The order also states that Iran must never be allowed to acquire or develop nuclear weapons.

As Treasury Secretary Scott Bessent said on February 24, “Iran continues to sell oil and fix destabilization the region through a shadowy network of ships, shippers, and brokers. The United States will use all available tools to seek out and target all aspects of Iran’s oil supply chain and impose appropriate sanctions.”

According to Iran’s Customs Administration, the country receives nearly $2 billion a month from oil sales to China, which accounts for about 5 percent of Iran’s economic output. China has been buying about 90 percent of Iran’s oil exports at deep discounts in recent years.

Earlier this month, the Treasury Department imposed sanctions on more than a dozen individuals and firms from mainland China, India, and the United Arab Emirates, accusing them of facilitating the shipment of millions of barrels of Iranian oil to China.

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