Commentary

If the notion that the East is rising and the West is declining is part of China’s strategic discourse, it means Beijing believes time is on its side, says Lyle Morris of the Asia Society Policy Institute.

FILE PHOTO: Chinese President Xi Jinping applauds during the 7th formal meeting of the Franco-Chinese Business Council in Beijing, China, on December 4, 2025. LUDOVIC MARIN/Pool via REUTERS/File Photo

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19 Jan 2026 06:00AM

ARLINGTON, Virginia: The policy challenges China faces in 2026 already run deep: from a stagnating economy, societal discontent and youth unemployment at home, to worsening ties with Japan, South China Sea tensions and a leader in Taiwan it considers a troublemaker – and to top it all off, of course, the sprawling nature of United States-China competition.

Add to that the US’ recent audacious capture of Venezuelan leader Nicolas Maduro and ambitious plans to control Venezuelan oil (of which China is the biggest buyer) and US President Donald Trump’s fixation of needing Greenland to counter China. From Beijing’s perspective, there are plenty of potential landmines primed to knock long-term plans off course.

But issues are never treated in isolation in Beijing. Politics, economics, society and foreign policy are interlinked and exert influence in mutually reinforcing ways.

Given the interactive nature of these issues, how will President Xi Jinping approach foreign policy in 2026 and beyond, considering significant domestic challenges? How does Beijing view the balance of power between China and the United States, and how might this perception impact US-China relations and regional security?

SPLIT SIGNALS IN NATIONAL SECURITY STRATEGY

A second Trump presidency was a scenario Beijing prepared for. His administration’s National Security Strategy (NSS), released in December 2025, offers more information that will influence Beijing’s calculus on US-China relations.

Most striking were the split signals on China regarding trade and defence.

On trade, Mr Trump struck a much more conciliatory, softer tone about rebalancing the economic relationship, “prioritising reciprocity and fairness to restore American economic independence”, adding that “trade with China should be balanced and focused on non-sensitive factors”.

It also highlights a new approach to China, including an intent to pursue a “mutually advantageous economic relationship with China,” despite rhetoric elsewhere in the document highlighting China’s unfair trade practices.

The 2025 strategy was more muted, compared to the 2017 NSS during Mr Trump’s first term, which labelled China a “revisionist” power bent on reshaping the world in ways “antithetical” to US interests.

When coupled with rhetoric on pursuing a “mutually advantageous” economic relationship with Beijing, Mr Trump seems to be opening the door for new economic opportunities with China that did not exist under his predecessor Joe Biden.

But if there was any hope in Beijing that Mr Trump might be softening his approach to China in the military domain, the NSS put those hopes to rest.

On Taiwan, the document noted that deterring any conflict over the island China sees as its own is a priority. On the South China Sea, it stated that “strong measures must be developed along with the deterrence necessary to keep those lanes open, free of ‘tolls,’ and not subject to arbitrary closure by one country”.

The NSS laid out a new, stark vision for the US’ role in the world, injecting an “America First” ideology and a renewed emphasis on the Western Hemisphere.

THE VIEW FROM BEIJING

But China always thinks beyond the current person in the White House. While changes in US national security strategy undoubtedly influence China’s thinking, they do not always lead to wholesale shifts in perceptions.

So, how the NSS shapes Beijing’s thinking on the balance of power and foreign policy should be considered within a larger and longer narrative.

The notion that “the East is rising and the West is declining” (东升西降) has become embedded in some parts of China’s strategic discourse, as my colleagues examined in the Asia Society’s China 2026 report, published by the Center for China Analysis. While not uniformly held, Beijing believes that time is on its side, that the US will face divisions domestically and with allies and that China may well outpace the United States in comprehensive power.

Still, how it perceives the power balance shifting is one of the key elements in understanding whether China will adopt an increasingly assertive foreign policy approach in 2026.

Should Beijing remain convinced that China is rising while the United States is in terminal decline (as some in Beijing believe), China may respond aggressively to efforts to curb its global influence. It could intensify political outreach and economic diplomacy in areas like the Global South. China might also look for opportunities to exploit frictions between the US and its allies.

But it should not be forgotten that Mr Xi likely prioritises domestic issues, such as regional development and political governance, over expansive foreign policy, especially if China continues to face economic headwinds. Thus, even if a consensus over US power being in decline is reached, that does not mean that he will invariably become more risk-tolerant on the world stage.

WHAT COULD GO WRONG

If the above conclusion holds true, China will likely consolidate its regional influence in the Indo-Pacific while stopping short of triggering direct, large-scale conflict with the US.

Beijing is keenly aware of US comprehensive national power and military might. It will likely seek to control escalation and not risk destabilising of the overall relationship.

Persistent frictions between the Trump administration and its allies will be viewed as the hollowing out of what was long considered to be “iron-clad” US alliance partnerships in Asia and Europe. The NSS is case in point, harshly criticising NATO and the EU for failing to increase their defence budgets and not pulling their collective alliance weight.

This will likely embolden China to quietly advance its interests using grey-zone tactics at the expense of the US and its allies. This could include continued harassment of Philippine vessels and intensified naval patrols in the South China Sea and military coercion targeting Taiwan. Beijing is increasingly confident that its vast toolkit of grey-zone tactics is sufficient to deter Taiwan’s president Lai Ching-te from crossing Beijing’s “red lines”.

The American strike on Venezuela is unlikely to fundamentally alter its foreign policy. If anything, the event provides China with an opportunity to portray the US as a global hegemon that flouts international legal norms.

Going forward, the key long-term risk lies in mutual miscalculation. If Beijing overestimates US weakness, or Washington overreacts to perceived Chinese aggression, flashpoints in the relationship risk tipping into confrontation.

Lyle Morris is Senior Fellow on Foreign Policy and National Security at Asia Society Policy Institute’s Center for China Analysis. This analysis draws on the China 2026: What to Watch report issued by the Center for China Analysis at Asia Society Policy Institute.

Source: CNA/ch