The world today is undergoing profound changes unseen in a century. Against this backdrop of deep transformation, China’s assessment of its domestic and international situations – as well as its broader understanding of the global landscape and its foreign relations – not only shapes its national development but also exerts a far-reaching influence on the international political and economic order.
Strategic Assessments of Domestic Development and Global Change
China maintains a clear strategic understanding of both its developmental trajectory and the international environment. Domestically, the nation’s core task is to achieve high-quality development by replacing traditional growth drivers with new engines of innovation. This transition entails moving away from a model historically reliant on real estate investment toward one propelled by technological advancement and innovation. According to statistics, the contribution of real estate and related sectors to economic growth has declined from nearly 25% in the mid-2010s to less than 15%, while tech-led emerging industries have assumed a significantly greater role.
Internationally, China views the global order as undergoing remarkable changes unseen in a century. Among them, the transformation of Sino-U.S. relations from strategic cooperation to strategic competition is one of the defining features and likely to remain so for the foreseeable future. China’s modernisation journey also carries immense consequences for the current world order. Once China modernises substantially, the country will encompass a population exceeding the aggregate total of all nations that have achieved modernisation over the past three centuries. Concurrently, China is widely viewed as having the potential to become the world’s largest economy within the next decade, a development that would have significant implications for existing international economic order. At present, the next-generation technologies - primarily artificial intelligence – have emerged as a key arena of strategic rivalry between the two powers, with both striving to drive the next phase of global innovation.
China’s Relations with Major Nations and Regions
China’s relationships with the world’s major countries and regions present a multifaceted and pragmatic picture.
Sino-U.S. relations are currently characterised by an intricate dynamic described as “bargaining through struggle.” At the tactical level, tensions have marginally eased, with both sides reaching a consensus on establishing trade and investment councils and exploring reciprocal tariff reductions. However, containment manoeuvres by the United States have shown no signs of abating in the technological and industrial spheres. In April 2026, the U.S. Congress introduced the MATCH Act with the aim of establishing a multilateral technology control framework, while in May, it added 188 Chinese entities to its so-called “military-related” list. These measures reflect Washington’s strategic anxiety over China’s rise and its determination to maintain a competitive edge.
Meanwhile, the strategic partnership with Russia continues to develop at a high level. As 2026 marks the 25th anniversary of the Sino-Russian Treaty of Friendship, the two heads of state issued a joint statement agreeing to extend the treaty, propelling bilateral relations into a new phase of development. Although differences occasionally arise over specific areas of cooperation, shared strategic interests far outweigh any point of friction, providing a strong foundation for the partnership in the years ahead.
China-Europe e relations face a complex set of challenges. China had previously hoped that the European Union would emerge as an independent third party to balance Sino-U.S. relations. However, differing stances within the bloc have hindered efforts to pursue a substantive China policy independent of Washington. Simultaneously, China’s industrial upgrading has intensified competitive pressures on Europe’s advanced manufacturing sectors. Following the EU’s imposition of anti-subsidy duties of up to 35.3% on Chinese electric vehicles in October 2024, both sides reached an interim agreement through a Minimum Import Price mechanism in January 2026, helping to ease trade tensions and prevent further escalation of the dispute. Nonetheless, concerns within Europe regarding China’s growing industrial capabilities continue to shape the EU’s cautious approach towards economic engagement with Chinese enterprises.
In the case of Japan, bilateral ties have gradually receded from the front rank of China’s major-power diplomacy, reflecting the relative decline in Japan’s macroeconomic weight within the global economy. Notably, differences over Taiwan have hampered mutual trust, undermining Japan’s historical role as a conduit between China and the West.
On the other hand, Sino-South Korean relations are undergoing a period of structural recalibration. Having remained South Korea’s largest trading partner for 21 consecutive years, China continues to play a central role in the country’s economic landscape. But those ties are evolving from a traditional model of vertical complementarity to one characterised by a more complex interplay of competition and cooperation. South Korea values China’s diplomatic influence in navigating North Korean affairs; thus, while the foundation of collaboration stays intact, the relationship has entered a delicate period marked by both interdependence and strategic balancing.
China’s relationships with its neighbouring states and emerging regions remain on a generally positive trajectory. China and ASEAN have been each other’s largest trading partners for five consecutive years, while nations such as Vietnam continue to regard their ties with China as a strategic priority. In Central Asia, the construction of the China-Kyrgyzstan-Uzbekistan (CKU) Railway is set to create new trade corridors and strengthen regional connectivity. Meanwhile, in the Middle East, China has played an active role in facilitating diplomatic diversification for Gulf states like Saudi Arabia and the United Arab Emirates. Relations with India also remain broadly stable, as India aims to preserve its strategic autonomy and pursue a dynamic equilibrium among the world’s major powers.
Divergent Foreign Policy Philosophies of China and the United States
A fundamental distinction lies between the diplomatic philosophies of China and the United States. The U.S.-led alliance system operates on an unbalanced “leader-member” structure, compelling partners to take sides. By contrast, China consistently champions a global network of partnerships grounded in the principles of “dialogue over confrontation and partnership over alliance.” Under this approach, countries are not required to choose between competing blocs, nor are they discouraged from maintaining relations with other nations, provided China’s core interests are not undermined. China has repeatedly stated that even if it were to attain the world’s foremost position in terms of national strength, it will not pursue hegemony or replicate the traditional model of power-politics. Instead, it remains committed to promoting an international relations system rooted in equality, openness, and cooperation.
The views expressed in this article are solely those of the author and do not necessarily reflect the views, policies or positions of the HKGCC.
Dr Fang Zhou, Research Director of the One Country Two Systems Research Institute in Hong Kong