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THIS WEEK:

Panama withdraws from the Belt and Road Initiative, China’s tariff response underscores clean energy advantage, Huawei-DeepSeek partnership challenges Nvidia, Vatican plays the bishop’s opening, and Xi on family values

1. Panama Withdraws from the Belt and Road Initiative

What Happened: On Monday, President José Raúl Mulino said that Panama would withdraw from China’s Belt and Road Initiative (BRI), becoming the first Latin American country to do so. The decision followed a visit from U.S. Secretary of State Marco Rubio and threats from President Donald Trump to “take over” the Panama Canal.

Why It Matters: The move is a setback for China’s influence in Latin America and a strategic victory for the Trump administration. Since Panama signed a memorandum of understanding with China in November 2017, Washington has expressed concern over Beijing’s outsized influence over the Panama Canal — a vital global trade hub. Secretary Rubio hailed the move as “a great step forward” for U.S.-Panama relations.
 
By Lyle Morris, Senior Fellow on Foreign Policy and National Security, Center for China Analysis (@LyleJMorris)

Panama folding to the United States and exiting the BRI illustrates the limits of China’s power in the Western hemisphere. Panama has received huge injections of investment since it joined the initiative in 2017, which raises the question as to whether the United States has offered alternative inducements or if it is a matter of sheer political influence. – Andrew Chubb, Fellow on Foreign Policy and National Security, Center for China Analysis (@zhubochubo)

Learn More: For more on public perceptions of China in the Global South, explore the Global Public Opinion on China interactive website.

2. China’s Tariff Response Underscores Clean Energy Advantage

What Happened: In response to Donald Trump’s 10% tariffs on all Chinese goods, China announced a 15% tariff on U.S. coal and liquefied natural gas (LNG) and a 10% tariff on crude oil, agricultural machinery, large-displacement cars, and pickup trucks. It also restricted exports of five critical minerals: tungsten, tellurium, bismuth, molybdenum, and indium.

Why It Matters: China’s announcement foregrounds its lack of dependence on U.S. fossil fuels and its ability to exploit chokeholds for clean technologies. As its power sector leapfrogs from coal to renewables, China has avoided becoming reliant on LNG, which it imports mostly from non-U.S. sources. Imports of U.S. coal and crude oil account for only a small fraction of China’s totals, but U.S. exporters are more dependent on the Chinese market, which is a top-five purchaser of both fuels. Restricting tellurium could also stymie the ambitions of First Solar, the largest U.S. solar panel manufacturer.

By Kate Logan, Director, China Climate Hub and Climate Diplomacy, Asia Society Policy Institute; and Fellow, Center for China Analysis (@Kate_K_Logan)

Learn More: Watch Kate discuss China’s climate policy in her spotlight presentation at the China 2025: What to Watch launch event.

3. Huawei-DeepSeek Partnership Challenges Nvidia

What Happened: Huawei Cloud has deployed DeepSeek’s AI models — V3 and R1 — on its Ascend AI cloud platform, giving Chinese developers cutting-edge AI without relying on Nvidia GPUs. This marks a major step in China’s efforts to establish a self-sufficient AI ecosystem.

Why It Matters: Nvidia’s dominance is due to CUDA, proprietary software that locks developers into its ecosystem. Running DeepSeek’s models on Huawei’s chips suggests China is progressing toward an alternative. If these domestic models deliver competitive performance, it could weaken the potency of U.S. export controls and disrupt Nvidia’s hardware and software lead, accelerating China’s path to AI sovereignty.
 
By Lizzi C. Lee, Fellow on Chinese Economy, Center for China Analysis (@wstv_lizzi)
 
Learn More: CCA experts unpacked the R1 model’s impact in “The DeepSeek Moment: How a Chinese Startup Outsmarted U.S. Sanctions.”

4. Vatican Plays the Bishop’s Opening

What Happened: The Holy See announced the appointment of bishops to dioceses in Luliang, Shanxi, and Fuzhou, Fujian, under a China-Vatican agreement. First signed in 2018 and renewed in 2024 for four more years, the agreement provides a framework for mutual consent in appointing church leaders.

Why It Matters: The Vatican hopes that the framework will ease tensions between underground Catholic churches and the state-sanctioned Chinese Catholic Patriotic Association. Beijing is cautiously building better relations with the Vatican, the only country in Europe with which it does not have diplomatic relations.

By G.A. Donovan, Fellow on Society and Political Economy, Center for China Analysis (@GA_DonovanASPI)

Learn More: CCA Fellow John Osburg’s latest paper explores how members of China’s urban middle class are turning to religion and spirituality in greater numbers.

5. Xi on Family Values

What Happened: On February 1, Qiushi published a Xi Jinping speech on “family values,” stressing that only by realizing the national dream of the great rejuvenation can the family dream come true. He urged that all citizens, especially the younger generation, must uphold traditional Chinese and Communist values of love for the Party and motherland.

Why It Matters: In 2016, Xi launched a nationwide campaign promoting “civilized model families,” which stresses the importance of patriotism, law-abiding behavior, and hard work. This rhetoric fosters a highly politicized and securitized family culture, emphasizing the significance of the conservative nuclear family while marginalizing nontraditional family structures.

By Lobsang Tsering, Senior Research Associate, Center for China Analysis

Learn More: CCA Senior Fellow Lynette H. Ong examined the exodus of people and capital from China and why its citizens are increasingly pessimistic about the future.