Hubris and caution — China’s posture as 2026 begins, Pg6

Key Highlights:

• In 2026, China navigates economic challenges while projecting strategic confidence, tightening domestic control, and expanding global influence.
• China's economic growth in 2025 was weaker than 5%, with weak domestic demand and an overbuilt property sector.
• U.S. National Security Strategy 2025 frames China as an economic competitor, shifting focus to the Western Hemisphere.
• India-China relations saw cautious stabilization in 2025, but no progress on structural issues, with border situations remaining stable but not normal.
• China's trade surplus crossed $1 trillion in the first 11 months of 2025, intensifying vulnerabilities for economies like India.

Detailed Insights:

• Until late 2024, China showed anxiety about U.S. containment and economic slowdown, but by mid-2025, a sense of regained momentum emerged.
• President Xi Jinping is focusing on national security, technological self-reliance, and the "real economy," while continuing to rely on exports for growth.
• China is reinforcing a state-led model, prioritizing advanced manufacturing, semiconductors, AI, green energy, and dual-use technologies.
• China's export dependence is growing, leading to disruptions for developed and developing economies, with IMF warning against exporting its way out of a slowdown.
• The U.S. remains committed to preventing Chinese hegemony in Asia but is less inclined to prioritize relations with India as a strategic counter to China.
• China is positioning itself as the leader of the Global South, increasing BRI projects and diplomatic initiatives, but facing unease over financing and debt.
• India must strengthen asymmetric deterrence and accelerate domestic technological and industrial capabilities amid U.S.-China tactical accommodation.

Key Concepts Involved:

• Technological Self-Reliance: A nation's ability to produce technology without relying on external sources.
• Grey-Zone Tactics: Activities that are coercive but fall below the threshold of conventional warfare.
• Asymmetric Deterrence: Using different strategies to deter a stronger opponent.