Chinese Debates on a Fragmenting Global Order | Sinification: February 2026
Global Order & US-China Relations | Japan | Taiwan | Middle East | Europe | Latin America | Chinese Economy | Technology & Society
This monthly report is prepared for Sinocism by the excellent Sinification, an invaluable resource for understanding how domestic and international affairs are debated within the Chinese establishment. The articles below cover 28 January–24 February 2026, with additional commentary on Iran added following the killing of its Supreme Leader, Ali Khamenei, in joint U.S.–Israeli strikes on Saturday. — Bill
What is China’s place in a post-US-led global order? That question—given new urgency by the US–Israeli strikes that killed Iran’s Supreme Leader on 28 February—runs through this month’s digest, which was largely compiled before these events unfolded.
In January’s edition, we highlighted the emergence of more assertive calls to recalibrate China’s diplomatic posture. Those calls persist—in Chen Wenling’s proposal that Beijing articulate “untouchable” red lines in the economic realm with the same clarity it reserves for Taiwan and in Tian Feilong’s combative insistence that China maintain an “escalatory” posture over Panama’s voiding of CK Hutchison’s canal contract. However, the corpus remains divided over the nature of the emerging global order and how China should navigate it.
Some of the more concrete proposals for innovation in the international system involve mechanisms to address global trade imbalances. Former MOFTEC official Ma Xiaoye argues that the post-free-trade era will be defined by “managed trade”, with framework agreements setting volumes and values by product category. Meanwhile, Jin Canrong and Di Dongsheng, alongside Ding Yifan of the State Council’s Development Research Centre, sketch out a system of global trade based on collective regulation of trade surpluses and deficits.
Commentary on the Iran conflict from four prominent international relations experts spans the days before and after the US–Israeli strikes. Pre-strike analyses express concern over political rupture, surging religious extremism and the weakening of the “Axis of Resistance”, with Niu Xinchun framing the US–Iran impasse as an irresolvable “mini-Cold War”. Jin Liangxiang describes the nuclear negotiations as a calculated “trap” designed to provide pretext for military action, while noting that China’s strategic oil reserves are sufficient to weather short-term disruption. Zheng Yongnian, writing after the killing, casts the assassination as a “Religious War 2.0” and warns that international order is shifting from one based on rules to one governed by fear.
Japan also receives renewed attention—unsurprisingly given Takaichi’s landslide re-election—but much of the coverage will be familiar to readers of our November briefing: Japan as an unreconstructed right-wing power, constitutional revision on the horizon, and the US-Japan alliance as a vehicle for containing China. One genuine point of contention lies in the question of urgency: while most voices treat Japan’s military modernisation as an unstoppable trajectory, two—Jin Canrong and Zhang Wenmu—stand out for their explicit calls for China to resolve the Taiwan issue before Japan completes its rearmament.
Coverage of Europe centres on musings about the decline of the transatlantic relationship, prompted by the Munich Security Conference and the visits of Western leaders to China, with a particularly strong call from Zhang Jian for Europe to “abandon NATO”.
Turning to the Chinese economy, two themes—capital account liberalisation and property sector management—come to the fore, including provocative heterodox arguments from Li Xunlei and Zhao Yanjing.
On the capital account issue, Li Xunlei argues that the prevailing consensus—that free convertibility would crash the RMB—is mistaken, and that the currency is undervalued by roughly half, while Miao Yanliang of CICC dismantles seven “outdated assumptions” underpinning resistance to opening. Others are more cautious: Zhang Chun of SAIF, for example, insists full onshore opening will not occur over the next two decades.
On the property question, Zhao Yanjing offers a sharp heterodox defence of land revenue as equivalent to municipal equity, arguing that the government’s property crackdown rested on a category error, while Sheng Songcheng outlines a more orthodox approach to stabilising the real estate market.
Finally, discussion of the socio-economic impacts of AI include Cai Fang’s warning of a deepening “reverse-Kuznets process” as labour migrates to lower-productivity sectors, alongside Zhang Dandan’s advocacy of an early-warning system to allow timely retraining and support for employees hit by AI uptake.
A debate over proposals to abolish the High School Entrance Exam (中考) has also been in the air: Yao Yang frames its abolition as essential for shifting away from China’s high-pressure development model, while Chen Zhiwen defends the exam as a core pillar of social governance.
— Jacob Mardell
In Brief
Ma Xiaoye on the post-free-trade era being defined by framework agreements that set target volumes and values by product category.
Zheng Yongnian on the Davos Forum marking the death of the “Global North” as a concept.
Wu Baiyi on US financial hegemony unravelling and emerging economies laying the foundations for future de-dollarisation.
Ding Yifan, Jin Canrong & Di Dongsheng on the international system facing not “China + 1” but a “World - 1” as US retrenchment accelerates.
Chen Wenling on the need for China to articulate economic red lines with the same clarity it reserves for Taiwan.
Wang Jisi and David Lampton on the emergence of a rare window for a “new normalisation” of US–China relations.
Li Yongjing on Japan being a right-wing nation-state rather than a country with a right wing.
Zheng Yongnian on the simultaneous collapse of the three constraints that once held back Japan’s militarisation.
Shen Yi on Takaichi exploiting the “window of opportunity” created by America’s relative decline.
Zhang Wenmu on the conditions for reunification with Taiwan being at their most favourable.
Jin Canrong on China needing to resolve the Taiwan issue before Japan completes its military modernisation.
Liu Guoshen on why China’s national rejuvenation will naturally dissolve, rather than depend on resolving, the Taiwan issue.
Wang Hailiang on Beijing’s growing leverage requiring Washington to adjust and accommodate tougher Chinese demands.
Jin Liangxiang on the US–Israeli strikes as a premeditated “trap” and the adequacy of China’s strategic oil reserves.
Liu Zhongmin on the “two Middle Easts” and the risk of surging Islamic extremism amid US withdrawal from counter-extremism
Niu Xinchun on the irresolvable Iran-US impasse and the likelihood of a regional “mini-Cold War”.
Zheng Yongnian on the killing of Khamenei as a “Religious War 2.0” and the erosion of the rules-based order.
Zhou Bo on Europe’s attitude towards China entering a “second phase”, with European leaders now visiting the PRC en masse.
Zhang Jian on it being time for Europe to let go of its NATO obsession.
Jiang Feng on Europe “shifting from defence to offence” and moving beyond deep anxiety towards “strategic composure”.
Sun Yanfeng on China’s willingness to inflict economic pain on Panama to defend overseas interests.
Tian Feilong on China needing to maintain an “escalatory” posture over Panama’s voiding of CK Hutchison’s canal contract.
Xia Bin on why China must prioritise financial security and RMB regionalisation over premature capital account opening.
Li Xunlei and Zhang Deli on China’s share of global exports not yet peaking.
Miao Yanliang on fears surrounding capital account opening being based on seven outdated assumptions.
Li Xunlei on the RMB’s undervaluation and the mistaken consensus that free convertibility would crash the currency.
Zhang Chun on China’s onshore capital account opening not happening for at least twenty years.
Zhao Yanjing on the government’s property market crackdown being built on a category error.
Sheng Songcheng on China needing to stabilise real estate within one to two years.
Cai Fang on artificial intelligence deepening China’s employment challenges, accelerating the movement of labour from high-productivity to low-productivity sectors.
Zhang Dandan and Li Jia on the likelihood of AI rapidly impacting employment and the need to establish a data-fuelled early-warning system.
Yao Yang on the need to abolish the High School Entrance Exam (zhongkao) and rethink China’s utilitarian development model.
Chen Zhiwen on why the proposals to abolish the zhongkao rest on faulty assumptions about its role.
1. Global Order & US–China
Ma Xiaoye (马晓野): The post-free-trade era will be defined by “managed trade” [管理型贸易]—framework agreements that set target volumes and values by product category. The post-war economic order was built on US debt claims and designed to absorb American overcapacity—now that the US is a thirty-nine-trillion-dollar debtor nation pursuing reindustrialisation, the economic logic underpinning that order has reversed. Middle powers like Canada and the EU are racing to strike managed trade deals with China ahead of a US–China framework agreement—securing a seat at the table before the two largest trading partners set the rules without them. — Former Director of US Affairs, MOFTEC; Founding Director, Academy for World Watch, Shanghai (FT中文网, 8 February)
Zheng Yongnian (郑永年): The Davos Forum marks the death of the “Global North” as a concept: Western allies were “beaten awake” [打醒] by Trump’s stick, and the old order has collapsed because America can no longer sustain the costs of empire. A new order has not yet emerged, but the international system is already undergoing “feudalisation” [封建化] as each great power builds a regional order centred on itself. While Trump revives neo-colonialism in Latin America—retrenchment not as retreat but consolidation for future expansion—China, as the “key variable” in international relations, should hold the banners of free trade and multilateralism that America has dropped. — Founding Director, Institute for International Affairs, The Chinese University of Hong Kong, Shenzhen (侠客岛, 29 January)
Wu Baiyi (吴白乙): The core of US hegemony—its “super financial imperialism” [超级金融帝国主义]—is unravelling as Trump abandons “great power self-discipline” [大国自律] for transparent self-interest and utilitarian alliances, destroying the stability upon which this financial hegemony relies. Amidst unsustainable national debt threatening dollar confidence, Carney’s proposed “middle power front” constitutes a hedging strategy by traditional allies against Washington-related risk. Although the ultimate catalyst for transforming the global financial order remains unknowable, the structural basis for future de-dollarisation is being laid as emerging economies develop a “trinity” [三位一体] of currency swaps, digital currencies and alternative domestic payment systems. — Professor and Director, Institute of Latin American Studies, Chinese Academy of Social Sciences (海外看世界, 23 February)
Ding Yifan (丁一凡), Jin Canrong (金灿荣) & Di Dongsheng (翟东升): As US strategic retrenchment accelerates, the international system faces not “China + 1” but a “World - 1”. China, tempered into an “indestructible body” [金刚不坏之身] by years of pressure, now finds itself at the top table, with the US effectively conceding its peer status. Yet China cannot simply take the baton from America or it will repeat the same structural mistakes; it must build a fairer system of “common finance” [共同财政] in which both surplus and deficit countries bear adjustment responsibility, addressing international concerns—acknowledged as legitimate—that China is “walking its own road yet leaving no road for others”. US–China relations have entered a “bargaining” phase in America’s five stages of grief over China’s rise, but China’s own psychological readiness for leadership has not yet caught up with its material strength. — Development Research Centre of the State Council; Renmin University of China (观察者网, 28 January)
Chen Wenling (陈文玲): China needs to articulate economic “bottom lines” [底线] with the same clarity it reserves for Taiwan, establishing four untouchable red lines. These are: the inviolability of overseas investment rights (citing the forced Nexperia divestment as a precedent that “must not recur”); the preservation of normal trade with partners including Venezuela, Iran and Russia; protection of supply chains Chinese enterprises have built abroad; and equal access to international straits and sea lanes. US strategy is not contraction but “strategic refocusing” [战略再聚焦], with greater precision and intensity than before. Yet the US-Western bloc is undergoing a “landmark fracturing”, and China should seize this moment to use its comprehensive national strength to “form necessary pressure” on those who harm its interests. — Chief Economist, China Center for International Economic Exchanges (北京对话, 29 January)
Wang Jisi (王缉思) and David M. Lampton: A rare window exists for a “new normalisation” of US–China relations, which should begin with Taiwan, the most dangerous flashpoint—and one where de-escalation may be more achievable than assumed, given that Beijing’s own Anti-Secession Law criteria for military action are not currently met. Signs of an opening already exist and the Fourth Plenum’s emphasis on re-energisation through openness echoes Deng Xiaoping’s logic of pacifying the outside world to focus on domestic strength. Beyond Taiwan reassurances, concrete steps include reopening China’s Houston and Chengdu consulates, dramatic mutual tariff reduction, and relaxing constraints on journalists. — Professor, School of International Studies, Peking University (Foreign Affairs, 12 February)
2. Japan
Li Yongjing (李永晶): Japan is not a country with a right wing — it is a right-wing nation-state [右翼民族国家]. Conventional frameworks that treat Japan’s right wing as one pole in a left-right contest exaggerate the left’s influence and obscure the reality that right-wing thought, anchored in Emperor-system nationalism [天皇制民族主义], has constituted the defining character of Japanese political life since the Meiji era. Today’s right wing, however, faces an “intellectual hollowing-out” [思想空洞化]: unlike pre-war predecessors who offered sophisticated if dangerous theoretical frameworks, the contemporary right lacks ideological depth yet retains its proven capacity for action. — Associate Professor, Department of Political Science, East China Normal University (文化纵横, 10 February)
Zheng Yongnian (郑永年): The three constraints that once held back Japan’s “normalisation” [正常国家]—constitutional limits, American restraint and domestic pacifist sentiment—have all collapsed simultaneously, clearing the path for an accelerated rightward shift. Japanese society’s deep conformism [顺从和从众性] makes far right’s capture of the state apparatus far more likely than in Europe, where citizens openly resist. Japan’s framing of Taiwan as a domestic concern [内政化] reflects not merely geopolitical calculation but an unresolved colonial mentality [殖民心态]. If Japan continues to provoke, China should consider reopening the never-settled question of Ryukyu’s status. — Founding Director, Institute for International Affairs, The Chinese University of Hong Kong, Shenzhen (大湾区评论, 13 February)
Shen Yi (沈逸): The Takaichi Taiwan remarks are not another cyclical China-Japan flare-up but a structurally different event: Japan’s right wing is exploiting the “window of opportunity” created by America’s relative decline to shed its defeated-nation status, while the US pushes allies to the forefront to assume more forward-deployed roles. China’s response should not be confined to bilateral Sino-Japanese relations—it must seize the moral high ground of defending the post-war order, connecting China’s growing strength with a narrative that revisits the shared US-China history of fighting militarism and fascism. Concretely, China should activate the UN Charter’s “enemy state clauses” [敌国条款] against Japan and reopen the never-settled question of Ryukyu’s legal status. — Professor, Department of International Politics, Fudan University (观察者网, 2 February)
3. Taiwan
Zhang Wenmu (张文木): The conditions for reunification with Taiwan are at their most favourable and most mature—but by dialectical logic, peak maturity also means peak fragility, and the window is fleeting. Every previous attempt at reunification was derailed by unexpected events, from the Korean War in 1950 to Chiang Ching-kuo’s death in 1988. Today history has again placed a favourable opportunity before China, and delay invites disruption. — Professor, School of Strategic Studies, Beihang University (张文木战略, 9 February)
Jin Canrong (金灿荣): China should resolve the Taiwan issue before Japan completes its military modernisation and breaks through existing constraints. Japan’s comprehensive rightward shift is now a fait accompli: the centrist opposition was routed, the far right is ascendant, and Takaichi will accelerate the transformation from “peace state” to “normal country”. However, Japan’s internal problems remain severe and election victory does not guarantee smooth sailing for Takaichi. Moreover, today’s China, possessing the largest industrial system in human history, means Japan can no longer “gamble on national fortune” [赌国运] at China’s expense. — Professor, School of International Relations, Renmin University (胡锡进观察/金金乐道, 9 February)
Liu Guoshen (刘国深): China’s growing strength demands a fundamental rethinking of the Taiwan question. Rather than scrambling anxiously over every provocation, Beijing should manage Taiwan from a position of calm, confident superiority — letting structural gravity do its work. The sovereignty debate is already in “garbage time”; 183 nations have settled it. The priority is therefore to deepen cross-Strait integration, shape the international order, and build long-term gravitational pull, allowing unification to emerge as a natural outcome of China’s rise rather than through costly confrontation. — Director, Collaborative Innovation Centre for Peaceful Development of Cross-Strait Relations, Xiamen University (中评社, 24 February)
Wang Hailiang (王海良): China’s position on Taiwan has never been stronger, and Washington must reckon with this reality. February’s Xi-Trump phone call was a strategic warning shot: Beijing is drawing a thick red line (很粗重的红线) ahead of any April summit, covering not just arms sales but political commitments. Trump understands the transactional logic: stable China relations require handling Taiwan carefully. His “America First” arms strategy will inevitably prioritise Taiwan, but Chinese pressure remains a counterweight. Lai Ching-te’s “four unchangeds” are self-delusion. Given shifting power balances, Beijing can now demand (提高要求), not merely request. The US may need to make more substantive statements on Taiwan. — Director, Shanghai Institute for East Asian Studies (中评社, 11 February)
4. Middle East
Jin Liangxiang (金良祥): The US–Israeli strikes were premeditated, not a response to failed diplomacy—the nuclear negotiations were a mutual “stalling tactic” [缓兵之计], with the talks ultimately serving as a calculated “trap” [局] by the US and Israel to provide pretext for military action. Israel’s ultimate aim is to permanently eliminate Iran as a strategic threat in pursuit of a “Greater Israel” [大以色列], while America was drawn in partly by overconfidence following the Venezuela operation. Without ground troops, the conflict will settle into prolonged strikes and confrontation, with China’s strategic oil reserves and energy diversification sufficient to weather short-term disruption to imports via the Strait of Hormuz. — Director, Centre for Middle East Studies, Shanghai Institutes for International Studies (南方+, 28 February 2026)
Liu Zhongmin (刘中民): Iran’s fragile position and the Iran-aligned Assad regime’s defeat to the Hayat Tahrir al-Sham (HTS) highlight the decline of the “Axis of Resistance” amid Israel’s rising primacy in regional security. Within this reshaping of regional power, America’s departure from counter-extremism—epitomised by its de-sanctioning of HTS—and support for Israeli expansion risk regional destabilisation and surging non-state Islamic extremism. Hence, the US–Iran conflict forms part of a widening “two Middle Easts” [两个中东] phenomenon, further splitting the region between state and non-state actors, secular and Islamist ideologies, and US/Israel-anchored security frameworks versus the “Axis of Resistance”. However, instability will likely remain concentrated in the Eastern Mediterranean, with a broader Persian Gulf conflict constrained by US aversion to full-scale war. — Director, Middle East Studies Institute, Shanghai International Studies University (观察者网, 23 February)
Niu Xinchun (牛新春): For the Iranian regime, softening its ideological stance to accommodate Washington poses a greater existential threat than confrontation itself, rendering the US–Iran diplomatic impasse “irresolvable” [无解] except through regime change. The conflict is structurally a regional “mini-Cold War” [小冷战]—fusing great power competition with irreconcilable ideological opposition between secular capitalism and political Islam—that can only end with the transformation or collapse of one side’s system. Both sides wish to avoid catastrophic hot war, making the persistence of this standoff at an increasingly dangerous level the likeliest outcome. — Researcher, China-Arab States Research Institute, Ningxia University (文化纵横, 27 February 2026)
Zheng Yongnian (郑永年): The killing of Khamenei is not merely a geopolitical event but a “Religious War 2.0” [2.0版宗教战争] between irreconcilable absolutes, driven by Trump’s deep religious values—a dimension Chinese analysts, as products of a secular civilisation, have widely underestimated. Trump’s “hit-and-run” strategy deliberately avoids the occupation trap of the Bush era, but the broader consequence is the erosion of rules-based order, replaced by a “fear-based jungle world” [基于恐惧的丛林世界] governed by raw power. Critically, Israel’s role as America’s Middle Eastern “strategic pivot” has a direct East Asian parallel: if Japan similarly leverages US power to pursue its own objectives, how is China to respond? — Founding Director, Institute for International Affairs, The Chinese University of Hong Kong, Shenzhen (大湾区评论, 1 March 2026)
5. Europe
Zhou Bo (周波): Europe’s attitude towards China has entered a “second phase”: the first-phase campaign to pressure Beijing over Russia–Ukraine has failed, and European leaders are now visiting Beijing en masse with a far more pragmatic focus on trade. Rubio’s Munich speech was a “sugar-coated apple” [糖霜苹果]—beneath the flattery, US demands remain unchanged, but Europe’s thinking remains that “if we can avoid divorce, let’s avoid it”. If a Ukraine ceasefire requires peacekeeping, China could potentially lead a Global South-majority force, supplemented by non-NATO European states like Ireland, Austria and Switzerland. — Senior Fellow, Center for Strategic and Security Studies, Tsinghua University (观察者网, 15 February)
Zhang Jian (张健): It is time for Europe to abandon its NATO obsession and move towards genuine independence and autonomy. NATO expansion has worsened Europe’s security environment by provoking hostilities with Russia, limited its capacity for independence by locking it into dependence on American-led military systems and procurement, and exacerbated tensions between Atlanticists and Europeanists. The Greenland affair crystallises this contradiction—time is running out for Europe, but it is not too late to abandon NATO. — Vice President, China Institutes of Contemporary International Relations (环球时报, 4 February)
Jiang Feng (姜锋): Europe is “shifting from defence to offence” [转守为攻], moving beyond deep anxiety towards “strategic composure” [战略定力] and serious reflection on its own security and development. This year’s Munich Security Conference displayed a historic reversal in the subject-object relationship: America was no longer setting the agenda but was itself discussed as a problem. Meanwhile, a nascent “middle-power alliance movement” shaped the discourse and China-related discussions were constant, with participants expecting China to play a role and offer solutions. — Former Party Secretary, Shanghai International Studies University (环球时报, 13 February)
6. Latin America
Sun Yanfeng (孙岩峰): China possesses the resolute “determination and strength” [决心和实力] to counter any infringement upon its overseas interests in the Panama Canal, threatening to inflict “serious damage” [伤筋动骨] on Panama through trade and investment restrictions—and, in the long term, even diverting trade routes towards the South American Bi-Oceanic Railway or a revived Nicaragua Canal project. This posture responds to Panama acting as a geopolitical “pawn” [马前卒] in the cancellation of Hong Kong company CK Hutchison’s port operating licences. By sacrificing the diplomatic neutrality underpinning its prosperity as a global logistics hub, Panama imperils its hard-won sovereignty, risking domestic economic erosion and a regressive transformation into a colonial-era banana republic. – Director, Institute of Latin American Studies, China Institutes of Contemporary International Relations (环球时报, 9 February)
Tian Feilong (田飞龙): China must maintain an “escalatory” posture over Panama’s voiding of CK Hutchison’s canal contract—including secondary sanctions on American overseas interests, and potentially postponing Trump’s planned visit to China. A defeat in this “geopolitical legal war” would devastate the Belt and Road’s global credibility, and pro-American proxy forces in Panama must be made to pay a heavy price to deter imitators. This is a crisis event for the PRC’s national rejuvenation that demands China unite with the Global South and “awakened” Western countries, while strengthening its own foreign-related rule of law [涉外法治] capacity. — Deputy Dean, School of Law, Minzu University of China (观察者网, 8 February)
7. Chinese Economy
Xia Bin (夏斌): China remains a “financially weak nation” [金融弱国] and must continue prioritising macroeconomic control rather than prematurely carrying out capital account liberalisation. Strategic financial development requires a limited, measured globalisation anchored firmly in the real economy, maintaining protective financial firewalls whilst systematically cultivating the real economic strength needed to shape a new international financial order. Rather than aiming straight for RMB internationalisation, “RMB regionalisation” [人民币区域化] represents the most realistic near-term objective, to be achieved through developing offshore RMB markets and controlled financial pipelines to direct offshore RMB capital into domestic investments. – Honorary Professor, Department of Finance, Nankai University (观察者网, 3 February)
Li Xunlei (李迅雷) and Zhang Deli (张德礼): China’s share of global exports has not peaked and is projected to reach ~17% by 2030, up from around 14–15% today. The headline value share appears to have plateaued, but this is an illusion created by aggressive price cuts and RMB depreciation—strip these out and the volume share has already surged from 13.2% to 17.0% since 2019. Unlike Japan and Germany—whose export shares peaked then declined through industrial hollowing—China remains the “terminal station of global manufacturing transfer” [全球制造业转移的终点站], with no economy able to replicate its supply chains and scale. The price drag is now reversing as government rebate cuts put a floor under export prices and $960 billion in unconverted exporter dollar holdings could trigger self-reinforcing RMB appreciation. — Li Xunlei, Chief Economist, Zhongtai Securities; Zhang Deli, Head of Macro Research, Zhongtai Securities (李迅雷金融与投资, 13 February)
Miao Yanliang (缪延亮): Fears surrounding capital account opening rest on seven outdated assumptions and cognitive biases, and the real risk lies not in potential outflows but in foreign underallocation—foreign holdings of Chinese government bonds account for just 5.9% of the market, compared with 31.5% for US Treasuries. The conditions that drove the 2015–16 capital flight have largely disappeared, while China’s halfway position is becoming untenable: once the current account is open, capital controls are progressively eroded as firms disguise capital movements as trade, “borrowing the road” [借道], just as Europe found after 1958. With the dollar weakening and the RMB appreciating, this represents a strategic window to increase openness. — Managing Director and Chief Global Economist, CICC (中金点睛, 9 February)
Li Xunlei (李迅雷): The current consensus that free convertibility would crash the RMB is wrong—the currency is undervalued by roughly half and opening up would cause appreciation, not depreciation, by shrinking the liquidity and credit discounts that keep the RMB trading far below its purchasing power. China’s vast money supply is not a flood waiting to escape—it is bloated precisely because the closed capital account forces the central bank to create base money passively from reserve accumulation; opening would shrink it while attracting foreign capital into an undervalued currency. The RMB remains a “local grain coupon” [地方粮票] not a “national grain coupon” [全国粮票]—76.5% of offshore payments stay in Hong Kong—and “problems of development cannot be solved by development alone; only by advancing reform.” — Chief Economist, Zhongtai Securities (李迅雷金融与投资, 5 February)
Zhang Chun (张淳): Full onshore capital account opening will not occur for at least 20 years, and the goal is not to replace the dollar—currency hegemony would bring the same industrial hollowing that afflicts America—but to become the leading second-tier currency at ~20% global share within 5-10 years. China is pioneering an offshore-first pathway, building RMB financial infrastructure in “financial special zones” [金融特区] like Shanghai Lingang and Hong Kong, modelled on how Shenzhen’s SEZ piloted economic reform before it went nationwide. The immediate bottleneck is not trust or geopolitics but financial plumbing: countries receiving RMB through trade lack offshore equity, bond, or derivatives markets in which to invest it, so they convert back to dollars. — Professor of Finance, Shanghai Advanced Institute of Finance, Shanghai Jiao Tong University (观察者网, 29 January)
Zhao Yanjing (赵燕菁): The crackdown on China’s property market was built on a category error—land revenue is not fiscal revenue but financial capital, equivalent to a city issuing equity in itself, and “without these bubbles there would have been no success of reform and opening up, still less any so-called China miracle.” Suppressing house prices to reduce dependence on land sales is equivalent to crashing a company’s share price to reduce reliance on IPOs: the equity that collateralises all existing local government debt is destroyed, forced asset sales eliminate liquidity, and the economy descends into involution. Chinese real estate prices can and must return to pre-2021 levels—America’s subprime crash was no smaller than Japan’s, but decisive intervention enabled recovery in years, whereas Japan’s indecision prolonged stagnation for three decades. — Professor, School of Architecture, Xiamen University (爱思想, 3 February)
Sheng Songcheng (盛松成): China must stabilise its real estate sector within one to two years — with over 90% of residents owning property, falling prices erode household wealth on a vast scale, amplified by leverage, and deepen the broader problem of insufficient domestic demand. The 15th Five-Year Plan sets a two-stage pathway: first, “scrape the poison from the bone” [刮骨疗毒] by de-risking real estate and local government debt; then, build a tiered supply system—subsidised housing for disadvantaged families and market housing for upgrading demand, with restrictions removed. The housing provident fund should be decoupled from property and redirected—following Singapore’s example—towards healthcare and care for the elderly. — Professor, CEIBS; former Director-General, Survey and Statistics Department, PBoC (财新, 11 February)
8. Technology & Society
Cai Fang (蔡昉): Artificial intelligence is poised to deepen China’s existing unemployment challenge, accelerating an ongoing “reverse-Kuznets process” in which labour shifts from high-productivity to lower-productivity sectors. The current paradox of high youth unemployment coexisting with a highly qualified workforce will thus worsen. Left unchecked, AI adoption will widen income gaps between high- and low-skilled workers in the near term, although the eventual arrival of AGI may render skill differentials largely irrelevant. In response, Chinese policymakers should learn from high-income countries and adopt a mindset shift that: (1) reconceives the purpose of employment as lower-productivity sectors absorb more workers; and (2) decouples labour remuneration from individual productivity through stronger redistribution mechanisms. — Chief Expert, National High-End Think Tank(s), Chinese Academy of Social Sciences (中国金融四十人论坛, 12 February)
Zhang Dandan (张丹丹) and Li Jia (李嘉): Given the likelihood of AI rapidly impacting employment, China must establish a data-driven early-warning system to track granular shifts in specific tasks and skills, ensuring sufficient lead time for strategic policy intervention. By integrating high-frequency data from recruitment and flexible employment platforms, the state can then better facilitate the forward adjustment of national education and training frameworks. This proactive approach will ensure that the speed of workforce retraining and redeployment keeps pace with the broader economic transition, avoiding the emergence of long-term structural unemployment. — Vice Dean, National School of Development, Peking University; Dean, School of Economics, Singapore Management University (中国金融四十人论坛, 10 February)
Yao Yang (姚洋): Genuinely implementing the policy of “investing in people” [投资于人] requires rethinking China’s social model, which still reflects a utilitarian development pathway in which individuals are viewed as mere tools for boosting GDP and achieve national catch-up—a mindset rooted in China’s Legalist political tradition. However, pursuing efficiency without considering human costs has allowed algorithm-driven labour exploitation and inequality of opportunity to flourish, particularly disadvantaging rural children. The current education system “ruins” [毁掉] rather than “cultivates” [培养] students, heaping on the pressure and emphasising “selection” [选拔] over real education and learning. As an important driver of the social pressure and educational inequality that this engenders, the High School Entrance Exam [中考] should be abolished alongside an expansion of compulsory education. — Dean, Dishui Lake Advanced Finance Institute, Shanghai University of Finance and Economics (观察者网, 5 February)
Chen Zhiwen (陈志文): With a projected decline in the number of school pupils and a resulting surplus of educational resources, proposals to abolish the Senior High School Entrance Exam [中考] have gained traction but rest on faulty assumptions. These examinations operate primarily as instruments of social governance rather than mere educational checkpoints, upholding transparent and fair school selection. Despite the limitations of a score-centric system, transitioning towards project-based evaluations or more subjective assessments would likely create additional competitive “tracks” more susceptible to elite manipulation, undermining the institutional foundations of equity and social justice without meaningfully reducing competition. — Academic Committee Member, China Association for Educational Development Strategy (财新, 14 February)
SINIFICATION’S FEBRUARY POSTS IN REVIEW
Rethinking China’s Diplomatic and Economic Strategy | Digest: January 2026 - James Farquharson, Jacob Mardell, and Thomas des Garets Geddes Feb 2
Jin Canrong: China’s Foreign Policy Requires Recalibration - Jacob Mardell and Thomas des Garets Geddes Feb 3
On China’s Trillion Dollar Trade Surplus | Xu Mingqi - Jacob Mardell, Elijah Karshner, and Max J Zenglein
Today’s edition opens with an introduction by Max J. Zenglein, Asia-Pacific Senior Economist and Centre Leader, Asia Economy, Strategy and Finance, at The Conference Board of Asia. He is also Chair of Sinification’s board of trustees. Max was previously Chief Economist at the Mercator Institute for China Studies (MERICS). His research focuses on economic systems, industrial policy, labour markets, and the evolving dynamics of globalisation and economic security. Max is one of those people without whose support my professional path would have taken a very different turn, and to whom I remain deeply indebted. — Thomas
Why China Is Falling Behind in AI | by PKU Scholar Hou Hong - James Farquharson, Thomas des Garets Geddes, and Paul Triolo
The Bureaucratisation of Chinese Research: More Money and Less Innovation – by Zhang Hong, a Biologist at CAS - James Farquharson
The following is an account by Zhang Hong, a biologist at the Chinese Academy of Science (CAS), of a scientific culture being eroded by the infusion of centrally managed resources and overly bureaucratic assessments. Because most critiques of China’s scholarly trends come from the
N.B. Sinification features a broad spectrum of voices, ranging from conservative hawks and state propagandists to more moderate and liberal thinkers. Readers are encouraged to bear this diversity in mind when engaging with the content.
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