BEIJING DAILY - 01 MARCH 2026
PRC Escalates Iran Rhetoric to "Strongly Condemn" Level; AI Chip Revenue Surge Continues Despite Export Controls; Two Sessions Preparation Maintains Domestic Focus
China Strongly Condemns US-Israeli Killing of Iran's Supreme Leader Khamenei
China's Foreign Ministry issued unprecedented condemnation of the US-Israeli strikes that killed Iran's Supreme Leader Khamenei, calling it a "serious violation of Iranian sovereignty" and violation of UN Charter principles. Foreign Minister Wang Yi coordinated with Russian Foreign Minister Lavrov on emergency UN Security Council response, positioning China as a diplomatic counterweight to US military action in the Middle East.
Chinese AI Chip Firms Report Major Revenue Gains Despite Export Controls
Cambricon reported its first full-year profit since its 2020 listing, while Moore Threads saw revenue surge 243% year-over-year. Moore Threads also announced full compatibility between its flagship MTT S5000 AI chip and Alibaba's Qwen3.5 models. These results demonstrate accelerating progress in China's AI chip self-sufficiency efforts despite U.S. export restrictions.
China's National People's Congress to Focus on Tech and Economic Stimulus
China's most important annual political meeting begins March 3, with investors seeking clarity on Beijing's tech ambitions and consumer economy revival plans. The Two Sessions will signal policy priorities amid U.S. technology restrictions and economic headwinds.
DRIVING THE DAY
SUMMARY: Beijing escalated its diplomatic rhetoric on 1 March from "high concern" to "strongly condemn" regarding U.S.-Israeli strikes on Iran, with Foreign Minister WANG Yi coordinating emergency UN Security Council responses with Russian counterpart LAVROV—positioning China as a diplomatic counterweight to U.S. military action in the Middle East while avoiding triumphalist messaging that could complicate President Trump's planned April visit. Chinese AI chip manufacturers continued reporting major revenue gains despite export controls, with Cambricon achieving profitability and Moore Threads announcing full compatibility between its MTT S5000 chip and Alibaba's Qwen3.5 models. State media maintained strict Two Sessions messaging discipline ahead of the 3 March National People's Congress opening, with zero substantive coverage of Taiwan developments despite continued reporting on delayed U.S. arms sales. Market volatility showed safe-haven flows with silver surging 7.23% and energy commodities posting gains amid regional crisis. END SUMMARY.
PRC Leadership & Diplomacy—Beijing Escalates Iran Rhetoric While Coordinating UN Response With Moscow
The Foreign Ministry escalated its diplomatic language on 1 March, with Beijing moving from 28 February's "high concern" formulation to "strongly condemn and firmly oppose" U.S.-Israeli military strikes on Iran. Spokesperson MAO Ning characterized the attacks as "serious violations of Iranian sovereignty and security" that "trample UN Charter principles and basic norms of international relations"—Beijing's most direct criticism of U.S. military action since the Middle East crisis began.
Foreign Minister WANG Yi coordinated with Russian Foreign Minister LAVROV on emergency UN Security Council responses, according to Foreign Ministry readouts. The coordination represents Beijing's most active diplomatic engagement on the Iran crisis, positioning China alongside Russia as a restraining influence on U.S. military operations while preserving mediation flexibility. Beijing also introduced new formulations condemning "assassination of sovereign state leaders" and actions that "incite regime change"—language suggesting broader opposition to U.S. targeting of foreign leadership.
The escalatory diplomatic rhetoric contrasts with continued state media restraint. Global Times published extensive coverage sympathetic to Iranian casualties but avoided inflammatory anti-U.S. commentary, while People's Daily carried zero coverage of the strikes despite their representing the largest Middle East military action in recent memory. This measured propaganda approach suggests high-level guidance to preserve Beijing's mediator positioning while allowing diplomatic channels to signal stronger opposition.
Technology & Innovation—AI Chip Firms Report Continued Revenue Surge With New Compatibility Achievements
Chinese AI semiconductor manufacturers continued posting major revenue gains for the period, building on trends reported in prior cables. Cambricon achieved its first full-year profit since its 2020 listing, while Moore Threads reported 243% year-over-year revenue growth—demonstrating accelerating indigenous capability development despite U.S. export restrictions.
Moore Threads announced full compatibility between its flagship MTT S5000 AI chip and Alibaba's Qwen3.5 language models on 1 March, representing significant progress in domestic AI ecosystem integration. The compatibility achievement suggests Chinese firms are successfully building end-to-end AI capabilities that reduce dependence on foreign components, potentially accelerating Beijing's AI self-sufficiency timeline.
These developments occur against the backdrop of continued U.S. enforcement actions, including Applied Materials' $252 million penalty reported in prior cables. Chinese equity markets showed muted response to the revenue reports, with ChiNext remaining flat—suggesting investors view the gains as within expected parameters rather than breakthrough developments.
PRC Leadership & Domestic Policy—Two Sessions Preparation Maintains Strict Messaging Discipline
Beijing maintained strict messaging discipline on 28 February-1 March ahead of the 3 March National People's Congress opening, with state media avoiding substantive commentary on U.S. developments despite major technology enforcement actions and the Taiwan arms sale delays. People's Daily prominently featured President XI Jinping's Qiushi article on leadership responsibility and anti-corruption work reports—standard governance messaging that continues despite international crisis.
The Two Sessions will signal policy priorities amid U.S. technology restrictions and economic headwinds, according to Bloomberg reporting. Investors are seeking clarity on Beijing's technology ambitions and consumer economy revival plans, with particular focus on stimulus measures and industrial policy direction.
State media coverage showed notable absence of Taiwan or South China Sea content despite ongoing reporting in Western media about delayed U.S. arms sales. This messaging restraint ahead of the legislative session suggests Beijing may be preserving flexibility on cross-strait issues while President Trump manages domestic political implications of the arms sale delay for his April Beijing visit.
Economy & Trade—Market Volatility Reflects Safe-Haven Flows Amid Regional Crisis
Chinese and global markets showed significant volatility reflecting safe-haven flows amid Middle East escalation. Silver surged 7.23% while gold gained 1.38%—moves consistent with investors seeking security amid geopolitical uncertainty. Energy commodities posted gains with WTI crude rising 2.78% and RBOB gasoline jumping 12.46%, reflecting supply chain concerns from regional instability.
The Hang Seng gained 2.53% while ChiNext remained flat, suggesting Chinese markets may be viewing current developments as within manageable parameters. The Baltic Dry Index rose 1.34%, indicating continued global trade flows despite regional tensions.
These market movements occur as Beijing positions itself as a stabilizing diplomatic force, potentially creating opportunities for Chinese mediation efforts that could enhance Beijing's global influence while U.S. military operations continue in the Middle East theater.
PRC POLITBURO STANDING COMMITTEE ACTIVITIES
XI JINPING: Qiushi published Xi's article 'Let Willing, Daring, and Skillful Responsibility-Taking Become Common Practice'; chaired Politburo meeting discussing draft 15th Five-Year Plan and government work report for upcoming Two Sessions
LI QIANG: Attended China-Germany Economic Advisory Committee symposium with German Chancellor Merz
ZHAO LEJI: Attended memorial symposium for Li Ximing's 100th birthday anniversary, presided over NPC Standing Committee meetings
WANG HUNING: No reporting in current collection window
CAI QI: No reporting in current collection window
DING XUEXIANG: No reporting in current collection window
LI XI: No reporting in current collection window
OTHER LEADERS WORTH WATCHING
WANG YI: Held phone call with Russian Foreign Minister Lavrov on Iran situation, condemned US-Israeli strikes on Iran
MA ZHAOXU: No reporting in current collection window
WANG WENTAO: No reporting in current collection window
HE LIFENG: No reporting in current collection window
SONG TAO: No reporting in current collection window
STATE MEDIA PULSE
Temperature: Crisis-mode coverage of Middle East escalation with measured diplomatic positioning and domestic focus on party discipline
US-Israeli aggression against Iran: Global Times provides extensive, sympathetic coverage of Iranian casualties from US-Israeli strikes, emphasizing civilian deaths including children at schools. Frames US/Israel as aggressors violating international law during negotiations.
China's principled diplomatic stance: Official Chinese positions via People's Daily and FM statements emphasize opposition to use of force, calls for restraint, and protection of Chinese nationals. Measured tone contrasts with Global Times inflammatory coverage.
Party discipline and governance: People's Daily prominently features Xi Jinping's Qiushi article on leadership responsibility and anti-corruption work reports. Standard domestic governance messaging continues despite international crisis.
Technological self-reliance advancement: People's Daily highlights achievements in humanoid robots, space commerce, and AI-driven industries. Reinforces narrative of China's innovation progress amid global instability.
Notable absences: Minimal coverage of Taiwan or South China Sea issues despite mention of delayed US arms sales to Taiwan. Economic policy discussions largely absent.
POLITICAL AND MILITARY POSTURING
Temperature: Elevated Middle East rhetoric; routine administrative content
US-Israeli strikes on Iran: Strongly condemn and firmly oppose attacks on Iranian Supreme Leader Khamenei; call for immediate cessation of military action
Iran sovereignty: Attacks seriously violate Iranian sovereignty and security, trample UN Charter principles and basic norms of international relations
Middle East stability: Express high concern over extension of conflict to entire Persian Gulf; call for dialogue and negotiation to restore Middle East peace and stability
Unilateral military action: Oppose unauthorized military strikes against sovereign nations without UN Security Council authorization; such actions destroy post-WWII peace foundations
CHINESE GOVERNMENT ACTIVITY
China's Supreme People's Procuratorate is intensifying oversight and international engagement through significant institutional reforms, including planned comprehensive inspections of all provincial procuratorates by 2026 and specialized supervision in 2025 to address implementation gaps in judicial responsibility systems. The SPP is positioning itself as a key player in global governance through international prosecutorial conferences and enhanced foreign-related case handling capabilities, particularly supporting the Belt and Road Initiative and Greater Bay Area legal frameworks. Meanwhile, China reported foreign investment inflows of 92.01 billion yuan in January 2026, while MIIT and MOST are preparing for important "Two Sessions" parliamentary meetings with focused party building and technology policy preparations.
U.S. GOVERNMENT ACTIVITY
The most significant China-related development is the arrest of a former U.S. Air Force pilot for allegedly providing defense services to the Chinese military, representing a serious national security breach that demonstrates ongoing Chinese efforts to acquire sensitive U.S. military expertise through recruitment of former personnel. Additionally, the U.S. announcement of enhanced critical minerals cooperation with the European Union and Japan appears designed to strengthen allied supply chain resilience and reduce dependence on Chinese-dominated mineral markets, particularly given China's control over approximately 60% of global rare earth mining and 85% of processing capacity. These developments underscore both the immediate security threats posed by Chinese intelligence operations targeting U.S. military assets and the longer-term strategic competition over critical resource supply chains essential for defense technologies.
CATCHING WESTERN MEDIA ATTENTION
Most notable is the report that Trump is delaying multi-billion dollar Taiwan arms sales to ensure his upcoming Beijing visit succeeds, suggesting a major diplomatic pivot. Pekingnology's analysis on Shein 'muzzling Chinese media' indicates concerning developments in corporate information control. China's positioning on Iran strikes shows Beijing attempting to play mediator while US-China relations face new complexities.