Warm welcome all…
The war in Iran is reshaping diplomatic traffic and roiling global energy markets. April brought sustained pressure on multiple fronts. Beijing, meanwhile, continues its long-term institutional build: new laws, new accountability frameworks, new standards ambitions.
New legal tools for economic retaliation and a harder line on supply chain security are arming Beijing ahead of Trump’s expected arrival on 14 May.
happy reading!
Philippa
geopol: Beijing holds court
Building up in early 2026, a wave of high-level visits to the PRC in April continued the trend. Leaders and senior officials from Thailand, Spain, the UAE, Vietnam and Russia visited Beijing 4 to 15 April. This surge in visits, argued Jin Canrong 金灿荣 Renmin University School of International Studies, was linked to ‘turmoil in the Middle East’ and its spillover effects. More countries, he added, see their interests at stake, and therefore look to Beijing to play a greater role.
The Iran war continued to dominate April commentary. Analysts focused on the PRC–Pakistan five-point initiative on the state of the Gulf and the Middle East, and on peace talks mediated by Islamabad. Islamabad’s role is limited, argued Liu Zongyi 刘宗义 Shanghai Institute of International Studies Centre for South Asian Studies, to messaging rather than genuine mediation.
Jin Canrong further contended that Pakistan has taken the lead in mediation (rather than Egypt or Türkiye) due to close relations with Beijing: initiatives backed by the PRC ‘carry greater weight’. He was pessimistic about the outcome, arguing that negotiations would ultimately yield no results and that the conflict would resume in a new and potentially more severe stage, with the US and Israel targeting Iran’s economic and civilian infrastructure. ‘Chairman Rabbit’ 兔主席 went even further, describing the talks as ‘fake’: Washington proposes conditions unacceptable to Iran, while Tel Aviv takes no part at all in the negotiations.
environment: cadres on the hook for carbon
Decarbonisation targets become politically accountable under assessment measures for carbon peaking and neutrality jointly issued by the Party Central Committee and State Council general offices in April. At the core is a ‘5+9’ indicator framework: five binding indicators covering total carbon emissions, carbon intensity reduction, coal and oil consumption, and non-fossil energy share; and nine supporting indicators across energy, industry, construction, transport and carbon trading.
Provincial governments are rated excellent, qualified or unqualified: they fail outright if any binding indicator is missed or if three or more supporting indicators fall short. Assessment results feed into the KPIs of provincial cadres, subjecting them to formal rebuke should timely corrections not be made. Oversight from the centre is being stepped up. Climate policy, once led mainly by administrative departments, is now more tightly steered from the top.
energy: baseline thinking
Security moved to the top of the energy policy agenda in April. Weathering the Gulf crisis well, the PRC has stockpiles, a renewables base built up over the years, and diversified imports. Yet vulnerabilities persist: foreign supplies are relied on for most oil and gas; key minerals essential for renewable energy are sourced abroad. The ‘two ends abroad’ dilemma is sharpening, whereby upstream resources depend heavily on imports, and downstream markets face trade barriers.
A study session on coordinating energy security with the green transition, presided over by Premier Li Qiang, signalled that Beijing deems these challenges intertwined. He urged continuing the development of renewables as well as ‘clean’ and efficient use of fossil fuels, framing both as a single undertaking.
trade: pressing ahead on services
Trade tensions ran high in April. EU entities (seven EU defence and aerospace firms) were, for the first time, placed on the PRC export control list, citing their involvement in arms sales to Taiwan. This came three days after the EU imposed controls on 27 mainland Chinese and Hong Kong entities for alleged sanctions evasion and supplying arms to Russia. Amid rising geoeconomic tensions and sanctions risks, new rules were enacted to counter ‘foreign extraterritorial jurisdiction’, equipping authorities with legal tools to block and penalise what they deem improper applications of long-arm jurisdiction within the PRC. A new industrial supply chain security law (discussed further under governance) gives Beijing additional retaliatory tools against discriminatory trade restrictions.
Exports slowed sharply in March, growing at around 2.5 percent y-o-y, down from around 22 percent in January–February, as global orders cooled. Imports surged roughly 27.8 percent, lifted by higher prices for tech imports and domestic demand recovery. US-bound shipments fell some 16 percent in the first quarter, continuing a slide that began in early 2025.
The PRC needs to speed up turning home-grown IP into global standards, argues Zhang Monan 张茉楠 China Centre for International Economic Exchanges US and EU Centre. Its industries need to ‘move up the smile curve’, while cutting licensing costs and compatibility risks. A target for services trade has been set, via a State Council opinion, to reach C¥100tn (~US$13.7tn) from the current C¥80.9tn (~US$11.1tn). There will be backing for producer and ‘quality of life’ China Services. Across select cities, 16 services trade ‘innovative development’ demo zones are to roll out, with new zones for digital trade and e-commerce due for imminent launch.
Other developments included a free trade zone approved in Inner Mongolia, focused on border trade and integration with northern neighbours, and zero-tariff treatment extended to 20 more African countries with diplomatic ties to the PRC.
macro: headline growth, domestic drag
Driven by exports and front-loaded infrastructure spending, Q1 2026 GDP grew 5 percent y-o-y. Yet domestic demand lags. Retail sales grew just 2.4 percent, households eased back on spending and private investment contracted. March PPI (Producer Price Index) turned positive for the first time since September 2022, but mainly due to imported energy costs rather than demand recovery. With headline growth on track but internal demand soft, April policy moved on several fronts.
Fiscal and financial authorities loosened access to capital. The local government special-purpose bond ‘self-review and self-issuance’ pilot expanded to Hebei, Jiangxi, Hubei and Chongqing, giving more jurisdictions faster project approval and issuance. Support for freight hubs and commercial circulation pilot cities channels fiscal support into infrastructure, logistics and consumption.
In cross-border finance, monetary and foreign exchange authorities tripled overseas lending leverage ratios for foreign-invested banks from 0.5 to 1.5 and raised Export–Import Bank of China’s ratio from 3 to 3.5, expanding outbound funding capacity within macro-prudential limits.
Capital market regulation tightened alongside new support measures. CSRC (China Securities Regulatory Commission) deepened ChiNext reform, adding a fourth listing standard for pre-profit, high-R&D firms and issued draft rules on illegal gains, illegal securities transfers and futures company oversight.
Eight agencies jointly issued new measures for online marketing of financial products, forcing them back to licensed institutions’ channels and excluding third-party platforms from consultation and suitability assessment. This fills a major cross-sector online financial supervision gap, argues Dong Ximiao 董希淼 Merchants Union chief economist.
scitech: from lab to market
Beijing is pushing harder to close the gap between research output and commercial application. A State Council screening of over 1.3 million patents held by universities and research institutions identified 680,000 with strong commercial potential, matching them with 460,000 firms; yet the industrialisation rate is still low. The Ministry of Education directed research institutions to become tech transfer hubs, and an Aisixiang article urges structural reforms to push research at all levels toward the market. MIIT is pushing the AI sector to market near-term profitable terminal devices.
Anti-involution in photovoltaics was flagged as a priority, keeping pressure on overcapacity in a sector already squeezed by trade barriers abroad. New guidance was issued on deploying the Anti-Unfair Competition Law, arguing for a shift from price-only enforcement to multi-factor assessment covering cost structures, product quality and market conditions. New energy industries, including photovoltaics, batteries and EVs, are identified as priority targets, signalling that competition in strategic sectors will be managed through enforceable legal constraints as well as industrial policy.
governance: security is key
Sweeping retaliation is promised by the new industrial supply chain security law against foreign governments, regions and international organisations discriminating against PRC supply chains. Beijing may now restrict foreign organisations or individuals from trading, investing or working in the PRC if deemed to have even threatened to damage supply chain security.
At the National Defence University on 8 April, Xi Jinping opened a senior military officers training class by demanding absolute loyalty to the Party’s ideology, organisation and mission. He reiterated firm belief in Marxism, implying that concerns about discipline and political reliability are near the top of his military agenda.
MSS-affiliated think tank senior researcher Chen Xiangyang 陈向阳 laid out Beijing’s national security framework for the 15th 5-year plan period, with two priorities: tightening centralised Party control over the security apparatus and expanding coverage into emerging domains including AI, data and low-altitude technology.
ag: rural resilience under price stress
Q1 rural data pointed to a steadier start to the 15th 5-year plan cycle. Farm supply stayed ample, with meat, poultry and egg output up 4.8 percent y-o-y, milk up 3.4 percent and aquatic output up 4.3 percent. Policy focus has moved toward building local growth: investment in the primary sector rose 15.9 percent, farm and sideline food processing grew 6.8 percent and rural income per head rose 5.4 percent in real terms. Policy is now backing longer chains, lead firms, deeper food processing, 40 local speciality clusters, 50 modern farm parks and 200 ‘strong rural industry towns’.
The pork cycle is the weak spot. Hog prices have fallen to their lowest point in almost a decade, pushing both piglet and finishing margins into loss. By 10 April, 7 kg piglets sold at losses of some C¥80 per head, while the national piglet price fell to C¥23.77 per kg, down 39 percent year-on-year. Q2 will stay weak, with soft pork demand, high hog stocks and heavy slaughter weights. A supply turn is more likely in late Q3, as earlier herd cuts work through the market.
Middle East urea prices hit US$780 per tonne in April, about double a year earlier, but stayed near C¥1,900 per tonne (~US$261 per tonne) in the PRC. The gap relies on coal-based urea, spare capacity, reserves and curbs on spring farming. Beijing also issued over 10 million tonnes of fertiliser reserves, helping keep spring sowing costs in check.
social policy: more AI, from classroom to clinic
Building on the launch of six new AI education centres, an ‘AI+ Education’ action plan, issued on 8 April, mandates AI integration from primary school to lifelong education. It promises a connected system by 2030. Explicitly framed in response to US, EU and Singapore rivalry, AI literacy will be taught at all school and university levels, with vocational programs redesigned around AI industry needs. UNESCO and other multilateral forums will be used to push Beijing’s AI education standards and platforms abroad.
Drug regulation is a further AI objective. A plan issued in April sets targets for 2030 and 2035, with drug application reviews ever more assisted by AI, which reads and flags issues in submissions.
Pressure is mounting for patients to follow a triage path. Those who go directly to a tertiary hospital, skipping primary care, will face lower insurance reimbursement. A mandated differential, in the region of ten percentage points per tier, is designed to steer demand toward community-level care.