BEIJING DAILY - 26 FEBRUARY 2026
PRC Escalates Economic Coercion Against Japan; Issues Trade Warning Ahead of Xi-Trump Meeting; Courts Germany Amid Transatlantic Tensions
Beijing Places Export Restrictions on 20 Japanese Defense-Linked Entities
China imposed export controls on 20 Japanese entities with defense industry ties, escalating its monthslong economic pressure campaign against Tokyo. This represents a significant ratcheting up of bilateral tensions and follows Japan's tightening alignment with U.S. security policies in the region. The move signals Beijing's willingness to use economic coercion against key U.S. allies.
China Warns U.S. Against New Tariffs Before Xi-Trump Meeting
Beijing issued a formal warning that it will respond if ongoing U.S. trade investigations lead to additional tariffs on Chinese goods. The statement comes as both sides prepare for a meeting between Xi Jinping and Donald Trump, with trade tensions returning to center stage despite earlier Supreme Court decisions limiting Trump's tariff authority.
German Chancellor Merz Delivers Blunt Trade Warning During Beijing Visit
Chancellor Friedrich Merz's first visit to China featured unusually frank criticism of Chinese trade practices, despite Beijing's efforts to showcase the relationship. Joint statements emphasized strategic cooperation, but German concerns about overcapacity and market access suggest Europe's frustration with Beijing may run deeper than previously apparent. This complicates China's efforts to split transatlantic unity.
Pentagon Allocates $12.6 Billion for Enhanced China Surveillance Capabilities
The Pentagon disclosed plans to spend an additional $12.6 billion to improve surveillance of China's military activities, including submarines and satellites, citing an "unprecedented Chinese military buildup" in Asia. The funding increase reflects growing U.S. concern about PLA modernization and represents a significant expansion of Indo-Pacific monitoring infrastructure.
Driving the Day
SUMMARY: Beijing imposed export restrictions on 20 Japanese defense-linked entities on 25 February, marking a significant escalation in its monthslong economic pressure campaign against Tokyo and signaling willingness to deploy economic coercion against key U.S. allies. The move follows Japan's tightening security alignment with Washington. Separately, Beijing issued a formal warning that it will retaliate if ongoing U.S. trade investigations produce additional tariffs, complicating preparations for an upcoming Xi-Trump meeting. Chancellor MERZ's first China visit (24-26 February) featured unusually blunt German criticism of Chinese trade practices despite Beijing's efforts to showcase bilateral cooperation, suggesting European frustration with PRC economic behavior may complicate Beijing's strategy of splitting transatlantic unity. Taiwan Affairs Office materials escalated political warfare rhetoric against the Lai administration, criticizing a purported U.S.-Taiwan trade agreement and governance failures while maintaining routine cultural exchange messaging. END SUMMARY.
