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China’s Large-Scale Drills in the East China Sea: A Renewed Escalation Against Taiwan

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Beijing has initiated large-scale military exercises in the East China Sea, marking another escalation of its aggression against Taiwan, which China claims as part of their respective territories. The exercises aims to test the capabilities of the People’s Liberation Army and involves 76 military aircraft and 19 naval vessels, some of which entered Taiwan’s self-defense identification zone.

As part of the drills, the Chinese military released footage depicting missiles striking various targets, including animated simulations of explosions in Taiwanese cities, specifically targeting strategic locations where military bases and ports are located.

China’s campaigns against Taiwan have intensified since the 2024 elections, with Beijing labeling Taiwan’s President Lai Ching-te as a “separatist” and a “parasite.” The large-scale exercises, which simulated blockades, coincided with a visit to Asia by U.S. Defense Secretary Pete Hegseth, who has strongly condemned Beijing’s military aggression.

A spokesman for Taiwan’s presidential office stated on X that China’s blatant military provocations not only pose security challenges in the Taiwan Strait but also undermine the stability of the entire region. The exercises are occurring near Australia, New Zealand, Japan, Korea, the Philippines, and the South China Sea (SCS), a crucial and disputed waterway claimed by China.

The United States, Japan, and the European Union have expressed concern over these large-scale military exercises in the South China Sea. The U.S. State Department criticized China’s military actions, stating that Beijing’s maneuvers “increase tensions and threaten regional stability.” Additionally, the European Union reiterated its opposition to any unilateral and substantial changes to the status quo in the Taiwan Strait.

China has conducted numerous large-scale military exercises around Taiwan in recent years, frequently involving blockades and incursions. The recent Strait Thunder-2025A exercises underscore Beijing’s growing military power and its readiness to project force in the region, raising alarms about potential future conflicts.

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China makes new accusations against the US – investigation launched into Panama Canal deals

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China is making fresh accusations against the United States. Beijing’s antitrust regulators launched an investigation into the allegations that a Washington consortium is deliberately trying to delay and postpone two deals in the Panama Canal Zone. The deal was supposed to be finalized this week, but it didn’t happen.

The deal was led by BlackRock, the world’s largest asset manager with $11.6 trillion in assets. BlackRock has been seen as a way to ease tensions in the region and its involvement was announced last month. BlackRock has agreed to lead a group that will buy Hong Kong firm CK Hutchison’s interests in 43 different ports, covering 199 berths in 23 countries.

However, the State Administration for Market Regulation of China, the country’s top market regulator, said it was investigating the deal to ensure that it was conducted in accordance with the law and that it protected both the principle of fair competition in the market and the public interest.

Following the announcement, CK Hutchinson decided not to sign any more agreements related to the two Panamanian ports this week.

Earlier last month, a group of investors led by BlackRock said it would spend $22.8 billion to buy the Balboa and Cristobal ports at either end of the Panama Canal from CK Hutchison.

Mike Waltz, Trump’s national security adviser, told reporters late last month that Panama’s leadership had begun “negotiations on managing the ports on both sides of the canal.”

The construction of the Panama Canal began in the early 20th century under the direction of the United States and was completed in 1914. For much of the 20th century, the canal remained under U.S. control. However, during the Carter administration, an agreement was reached to transfer control to Panama, and since 1999, the country has independently managed its operations. Upon taking office, President Donald Trump adopted a firm stance on the Panama Canal, particularly voicing concerns over the management of its ports by the Chinese company CK Hutchison. In response to this pressure, CK Hutchison ultimately decided to relinquish its position and agreed to sell its shares.

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China’s Central Bank in Georgia: A Path Toward Debt-Trap Diplomacy?

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On March 26, 2025, the National Bank of Georgia (NBG) and the People’s Bank of China (PBOC) signed a Memorandum of Understanding (MOU), outlining collaboration in the following areas:

  • Monetary policy;
  • Exchange of information and expertise in financial technology, payment systems, and securities market development.

During an official visit to Beijing, the Governor of the NBG, Natia Turnava, met with representatives of key Chinese state-controlled financial institutions, including the Industrial and Commercial Bank of China, the Bank of China, and the China Construction Bank.

As previously reported by Civic IDEA, periodic meetings between the NBG and the PBOC have taken place since March 2024, exploring avenues for cooperation. Consequently, the signing of the March 26, 2025, MOU was anticipated.

This engagement with the Chinese banking sector aligns with the increasingly anti-Western foreign policy direction pursued by the ruling Georgian Dream party. Notably, on August 30, 2021, then-chairman of the party, Irakli Kobakhidze, announced the rejection of a €75 million EU microfinance assistance package.

The pro-China orientation of the Georgian Dream has been reflected in Georgia’s evolving debt structure. As of 2025, Georgia’s external credit obligations to international financial institutions where China plays a dominant role have risen significantly:

  • Asian Development Bank (ADB): $2.26 billion
  • Asian Infrastructure Investment Bank (AIIB): $211 million

While both ADB and AIIB are international financial institutions, and their cooperation does not inherently expose Georgia to “debt-trap diplomacy,” direct collaboration between the NBG and Chinese state institutions marks a significant shift. The March 26 MOU suggests that following the Anaklia port project, Georgia’s financial sector may now also fall under Chinese influence.

Risks Associated with Cooperation with China’s Banking Sector

Closer cooperation with China’s banking institutions presents economic and political challenges for Georgia, primarily due to the structural characteristics of China’s financial system:

  • Communist Party Influence: Chinese banks, akin to other state-owned enterprises, operate under Communist Party control. While the PBOC previously functioned with a degree of institutional independence, in 2024, President Xi Jinping introduced reforms tightening party oversight. As a result, analysts believe that China’s financial system has become an even more direct instrument of party policy.
  • Opacity: Unlike Western central banks, the PBOC lacks transparency. It does not adhere to a consistent communication strategy, often making abrupt monetary policy decisions without prior notification or clear justification, thereby generating uncertainty both domestically and internationally.
  • Corruption: Corruption remains a persistent issue within China’s banking sector. In 2024, former PBOC Vice Governor Fan Yifei was sentenced to life in prison for corruption, underscoring governance weaknesses.
  • Financial Instability: China’s economy continues to face significant challenges. The COVID-19 pandemic severely impacted financial institutions, with Bloomberg reporting that 13% of Chinese financial entities were classified as “high-risk.” As of March 2025, China’s total debt exceeded 300% of GDP. Additionally, the ongoing US-China trade war has further exacerbated economic volatility.

Given these factors, China’s banking system functions as a tool for advancing the political ambitions of the Communist Party. China and its affiliated institutions have been actively striving to expand their global economic influence. In recent years, the People’s Republic and its close authoritarian allies, including BRICS member states, have promoted de-dollarization in international trade. In response to these efforts, U.S. President Donald Trump threatened to impose a 100% tariff on BRICS nations.

A key player in advancing de-dollarization is the People’s Bank of China. In 2024, the PBC signed currency swap agreements with more than 40 foreign financial institutions. If cooperation between the National Bank of Georgia and the PBC intensifies, Georgia may gradually shift away from the Western monetary system, increasing its financial reliance on China.

Due to the nature of China’s financial system, several emerging economies have defaulted under the weight of its lending practices, which are characterized by:

  • Confidentiality: Former U.S. National Security Council official Grant T. Harris has highlighted that one of the defining features of Chinese loans is their secrecy. Key terms, and in some cases even the existence of the agreements, are often undisclosed.
  • Challenging Debt Restructuring: China is not a member of the Paris Club, ( an informal group of creditor nations that negotiates with debtor countries to restructure or provide relief on sovereign debt ) an international forum for coordinating debt relief. Consequently, debtor nations must engage in direct negotiations with Beijing, often resulting in outcomes that undermine their sovereignty. A notable example is Sri Lanka, which, in 2017, was compelled to transfer 70% of its strategic Hambantota Port to a Chinese state-owned entity due to its inability to service its debts.
  • Cross-Default Clauses: Many Chinese loan agreements include cross-default provisions, whereby a borrowing nation is considered in default if it fails to meet unrelated obligations. These obligations can include shifts in diplomatic policy or regime change, granting Beijing significant leverage over debtor states.
  • Collateral-Based Lending: Chinese loans frequently require collateral arrangements, sometimes involving strategic assets. In 2011, Tajikistan ceded 1,000 square kilometers of land to China as part of a debt settlement arrangement.

Considering Georgia’s past experiences in Sino-Georgian relations, the growing presence of Chinese financial institutions in the country raises credible concerns regarding potential debt-trap diplomacy. Previous agreements signed between Georgian Dream and Chinese banks have often been marked by a lack of transparency. Despite multiple reports of irregularities in Chinese banking operations, the Georgian government has consistently refrained from addressing these concerns.

In light of these trends, it remains plausible that the Georgian Dream will continue to facilitate Chinese financial expansion in Georgia, potentially exposing the country to unsustainable debt and economic dependency on Beijing.

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New Legislation to ban Political Opposition

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On the 34th anniversary of Georgia’s independence referendum, the ruling party, Georgian Dream, introduced controversial draft legislation to outlaw opposition parties. This move could significantly alter any shreds of the democratic framework still left in Georgia, marking a critical shift.

On 31st of March, 2025 Georgian Dream officially launched draft legislation outlawing basically the entire opposition. The actual wording of the law sounds like a repetition of the constitutional provision protecting the state from forceful overthrow of government or the creation of illegal armed forces. Still, once coupled with the political statements proceeding draft law, it is absolutely clear for all observers of the political developments in Georgia that the government guarantees fulfillment of its electoral promise to abolish the political party – National Movement, and all its “affiliates”.

Overview of Legislation:

The proposed amendments, introduced in two pivotal laws – “On Political Unions of Citizens” and “On the Constitutional Court of Georgia” – equip the Constitutional Court with extensive powers to disband political parties. Notably, parties can now be banned not only for actions threatening the state, such as advocating violence or attempting to overthrow the government, but also for more ambiguous reasons, such as sharing similar policies or membership with previously outlawed groups.

Key Provisions: 

  • The Constitutional Court may ban any party that engages in activities threatening the constitutional order or integrity of the state.
  • Parties with goals or core activities mirroring those of previously banned parties can also be prohibited, essentially preventing the reformation of these groups under new guises.

The true meaning of the initiated changes was conveyed multiple times by the leaders of the Georgian Dream, both from parliament and the executive branch. The best description comes from Mr. Makhashvili, the chair of the European Integration Committee. As Levan Makhashvili mentioned on Georgian Public Broadcaster – Channel One, recognizing the National Movement and its affiliated parties as unconstitutional was also an election promise of the Georgian Dream.

“For the possible decision of the Constitutional Court on the ban to be effective and to produce real results, and to prevent political parties from remaining in the political space with other names, other colors, and other packaging despite the Constitutional Court’s decision, specific decisions are necessary at the operational level. The parliamentary initiative serves this purpose.

Our goal is to improve the political space so that those who want to do good for the country can function in the political space. There is no place for criminals in the Georgian political space. These decisions serve not to persecute anyone but to ensure that criminal forces are not represented in the Georgian political scene,” said Levan Makhashvili.

We shall not be mistaken when reading the text of the proposed amendments, as the real goals have been clearly expressed several times over the past couple of weeks. This is the statement from March 27th by the leader of the parliamentary majority, Mr.Mdinaradze, three days after the draft law was initiated:

“They (opposition parties) will not be able to participate in the self-government elections! This will be ensured by the Georgian state and its constitutional order. Even at this stage, it is clear that the conclusion of the investigative commission will be a solid legal basis for declaring these parties unconstitutional, and the Constitutional Court, we are sure, will also make an objective decision. The collective “National Movement” will no longer be able to participate not only in the self-government elections but also in any elections held in this country. As anti-Georgian, anti-constitutional, anti-national and criminal parties, they will be declared unconstitutional parties and their activities will be prohibited! ” – stated Mamuka Mdinaradze.

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The U.S. maintains its “ironclad” commitment to the Asia-Pacific region

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U.S. Defense Secretary Pete Hegseth reaffirmed Washington’s “ironclad” commitment to its defense treaty with the Philippines on Friday, pledging to provide advanced military capabilities to bolster deterrence against threats, including what he described as Chinese “aggression.”

During meetings with Philippine Defense Secretary Gilberto Teodoro and President Ferdinand Marcos Jr., Hegseth emphasized the strong and ongoing security cooperation between the two nations. As tensions with China rise, both sides underscored their shared commitment to maintaining peace in the Indo-Pacific and the South China Sea, where Manila has repeatedly accused Beijing of hostile actions.

“Deterrence is necessary around the world, but specifically in this region, in your country, considering the threats from the communist Chinese,” Hegseth stated. He also stressed that the United States was not seeking war and described President Donald Trump as a leader focused on peace.

In response, China dismissed concerns over freedom of navigation and airspace in the South China Sea, urging the United States to cease “instigating ideological confrontation” and “sowing discord” in the region.

Hegseth’s visit to the Philippines marks the first stop in his Asia tour. He announced that the United States would send additional advanced military assets to the Philippines, including the NMESIS anti-ship missile system and unmanned surface vehicles, which he described as “highly capable.” The two nations also agreed to conduct joint special forces training exercises on Batanes, the Philippines’ northernmost islands, which are strategically located near Taiwan.

The United States does not have formal diplomatic ties with Taiwan, but it remains the island’s most significant military supporter, bound by the Taiwan Relations Act. This law requires the U.S. to provide Taiwan with weapons for self-defense but does not explicitly state whether Washington must intervene militarily if Taiwan is attacked—a policy known as strategic ambiguity.

When asked whether the U.S. would defend Taiwan in the event of a Chinese attack, Rubio stated in an interview with Herridge earlier this March: “We don’t want to see a conflict. But we have made very clear through years and years of our policies – the Six Assurances, the Taiwan Relations Act – that we are against any sort of change in status by force or by threat or by coercion, and that remains our policy.”

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European Union Warms Tone Towards China

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The European Union is about to mark 50 years of diplomatic relations with China by “deepening trade and investment cooperation,” according to the EU’s trade commissioner, who spoke in Beijing on Thursday, as reported by a Chinese source.

During a meeting with Chinese Vice-Premier He Lifeng, Maros Sefcovic made these remarks, according to a report from Xinhua News Agency. The meeting took place on the first day of his two-day visit, with the officials dining at the Diaoyutai State Guesthouse. The European Commission did not release its own account of the discussion.

Earlier that day, Sefcovic met with Chinese Customs Minister Sun Meijun before attending an event hosted by the EU Chamber of Commerce in China, where he engaged with European businesses.

At the business event, the Slovak commissioner reportedly reinforced a shift in tone that European Commission President Ursula von der Leyen has emphasized in several speeches this year.  

In those speeches, von der Leyen—who has previously taken a firm stance on China—has moderated her language, stressing that the EU could expand trade ties with Beijing and even explore new agreements.

These public remarks were intended to signal to the United States that Europe has options. However, according to EU sources, they were also meant to indicate to China that Brussels remains open to credible proposals.

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China as a Challenge in the U.S. Annual Threat Assessment Report

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A recent U.S. Annual Threat Assessment from the U.S. Intelligence community highlights the military and cybersecurity threats posed by China, particularly concerning its ambitions toward Taiwan. The report indicates that while Beijing has made notable advancements in enhancing its military capabilities, this progress has been inconsistent. Additionally, the document emphasizes that China’s growing military prowess empowers it to confront the United States with conventional weapons and execute cyberattacks that pose significant risks to critical American infrastructure and assets.

Additionally, the report indicates that China is poised to surpass the United States as a global leader in artificial intelligence by 2030. This ambition is part of a broader strategy to enhance its technological edge, with potentially profound implications for international security. CIA Director John Ratcliffe highlighted that China is actively working to restrict the flow of chemicals used in fentanyl production into the United States, acknowledging the economic repercussions this crisis has on its own businesses.

The tensions between the U.S. and China have been further fueled by the fentanyl crisis in America, which remains the leading cause of drug overdose deaths. In response to Beijing’s perceived inaction in curbing the supply of this dangerous substance, the Trump administration implemented a 20% tariff on Chinese imports. Conversely, Chinese diplomats, including Liu Pengyu, have accused the U.S. of exaggerating the “China threat” to justify its military dominance. Liu emphasized that China is dedicated to peace, stability, and progress while safeguarding its sovereignty and security, suggesting that the U.S. should take responsibility for its own public health challenges.

The intelligence report highlights the military pressure that China exerts on Taiwan, noting that the People’s Liberation Army (PLA) is actively enhancing its capabilities to assert control over the island and counter any potential U.S. intervention. This development raises significant concerns among American policymakers, reflecting Beijing’s increasing readiness to employ military force to enforce its territorial claims. However, it is essential to recognize that China is grappling with substantial domestic challenges, including widespread corruption, an aging population, and economic vulnerabilities that could undermine the Communist Party’s hold on power. Analysts anticipate that China’s economy may continue to decelerate, driven by declining consumer and investor confidence. These internal issues could complicate Beijing’s external ambitions and reshape its strategic calculations. As the geopolitical landscape evolves, the interplay between China’s external aspirations and its internal realities will be crucial in determining the future of U.S.-China relations and the dynamics of regional security.

Author: Liza Barbakadze

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Washington’s new tariffs on Chinese ships

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A major debate is underway in Washington this week between U.S. officials and representatives of the American maritime, export and agricultural sectors, which was triggered by the imposition of additional tariffs on Chinese-made and Chinese-owned ships calling at U.S. ports.

The president’s plan calls for a revival of the local shipbuilding industry by imposing tariffs of up to $1.5 million on ships bound for China.

In arguing for the critical importance of imposing the tariffs, the USTR argues that Chinese government subsidies harm American businesses by limiting competition and investment opportunities, while also posing economic and national security risks that Beijing could use strategically in a potential conflict.

The measure, which enjoys bipartisan support in Congress, is intended to discourage ocean carriers from buying Chinese ships, while the proceeds from the tariffs would be used to revive the U.S. shipping industry.

These potential port fees have limited the availability of ships needed to deliver agricultural, energy, mining, construction, and manufacturing products to international consumers.

Shipowners have already withdrawn their bids to ship coal to the United States in the future, as a result of the USTR’s sanctions, Xcoal Energy & Resources CEO Ernie Thrasher said in a letter to U.S. Commerce Secretary Howard Lutnick.

As Thrasher notes, the imposition and enforcement of these penalties could result in a complete halt to U.S. coal exports for 60 days, jeopardizing $130 billion in shipments. In addition, these penalties could increase the market value of U.S. coal supplies by 35%, making them uncompetitive on the world market.

The proposed tariffs could also make it harder for U.S. exports of other energy products, such as oil, liquefied natural gas and fuel oil, the American Petroleum Institute said in a submission to the USTR.

More than 200 companies, trade groups and individuals have already submitted comments or requested to speak at the hearing, which will take place over two days in Washington this week. Nearly all groups oppose a proposal by the Office of the U.S. Trade Representative to impose millions of dollars in new tariffs every time a Chinese-made ship enters a U.S. port.

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Chinese Premier met with American Senator

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On March 23rd, in Beijing, after the annual business summit, the Chinese Premier, Li Qiang, held a meeting with American Senator Steve Daines and the representatives of the large U.S. businesses, such as Pfizer and Apple.

Notably, Daines is the first American politician to visit China after Donald Trump’s inauguration. He is a member of the Senate Foreign Relations Committee and Trump’s avid supporter. Apart from this, he was involved in the negotiations between the U.S. and China on trade issues during Trump’s first term as President.

The meeting is especially important to China after the increased tariffs from the American side – the country is trying to expand foreign investment and convince businesses that the country’s economic environment is favorable. The Premier called on American companies to „resist protectionism“ and defend globalization.

According to Li Qiang, China will increase access to markets in various sectors for foreign investors. He warned the representatives that „breaking supply chains would only deepen crises“.

The Premier also remarked that China is ready for „unexpected shocks caused by external sources,“ and the government will introduce new policies to guarantee the smooth operation of the Chinese economy where it’s needed.

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China-Iran ties could prompt a tougher US stance

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Analysts anticipate that Washington will increase pressure on Tehran in response to last week’s trilateral nuclear talks between China, Iran, and Russia – an expectation that aligns with the growing consensus in the U.S. against both Beijing, the host of the meeting, and Iran.

The discussions, which urged an end to “illegal sanctions” on Tehran, took place just days after Iran dismissed Donald Trump’s proposal to restart negotiations on its nuclear program. 

Wang met with Iranian and Russian deputy foreign ministers on Friday, stressing China’s hope that “all parties will meet each other halfway and resume dialogue and negotiations as soon as possible.” He also urged the U.S. to “show political sincerity and return to the talks as soon as possible.”

Meanwhile, the U.S. and five other nations convened a closed-door Security Council meeting to discuss the matter, with Britain suggesting that sanctions could be reinstated if Iran expanded its nuclear program. According to China’s foreign ministry, Wang further expressed opposition to any “forced intervention” by the United Nations Security Council.

Despite facing resistance, China remains committed to pursuing multilateral negotiations on the nuclear issue. Experts believe Beijing will use these discussions to strengthen its role as a key mediator in the Middle East while expanding its regional influence.

During the March 14 talks in Beijing, the three nations reaffirmed their dedication to non-proliferation and jointly condemned “sanctions, pressure, or the threat of force.” Additionally, Wang proposed a five-point plan to address the Iranian nuclear issue, which emphasized adherence to the Joint Comprehensive Plan of Action (JCPOA) nuclear deal. The U.S. abandoned this agreement under President Donald Trump during his first term.

The U.S. on Thursday issued new Iran-related sanctions, targeting entities including for the first time a Chinese “teapot,” or independent refinery, and vessels that supplied crude oil to such processing plants.

It was Washington’s fourth round of sanctions on Iran’s oil sales since President Donald Trump said in February he was re-imposing a “maximum pressure” campaign including efforts to drive down the country’s exports to zero. Trump aims to stop Tehran from obtaining a nuclear weapon and funding militant groups.

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