23 SEPTEMBER 2026
The planned Trump–Xi summit is bringing trade, technology and security into the same negotiating room. Preparations led by Scott Bessent and He Lifeng place LNG tariffs, critical-mineral supplies and shared AI risks on an agenda shaped by both commercial opportunity and strategic distrust. The immediate prospect is selective accommodation, with substantive agreements still to be negotiated. This week’s analysis explores the question behind these discussions: can Washington and Beijing make cooperation sufficiently reliable to withstand the competition that continues around it?
For America’s Asian allies, the negotiations concern the costs and boundaries of commitment. Japan is considering a defence spending target of 3.5% of GDP, opening a debate over how greater resources would translate into military capability. South Korea is weighing a larger maritime role around Hormuz while ruling out deployments that would draw it into the Iran war. North Korea’s latest drills and renewed backing for Russia sharpen the security context. Our Regional Alliances section examines how Tokyo and Seoul can demonstrate solidarity while retaining control over national priorities and escalation.
Beyond these political decisions, the infrastructure supporting regional influence is evolving. China’s communications upgrades in Djibouti could strengthen its ability to sustain distant operations and monitor military activity, although intelligence collection remains unconfirmed. Our map and infographic examine the geography and capabilities behind that expansion. Cooperation is also acquiring practical foundations: the Quad is developing disaster-response logistics procedures, while the EU and South Korea have established a working group to explore secure satellite connectivity. These initiatives show how influence increasingly depends on dependable communications, coordination and access.
Economic diversification completes the picture. Europe’s goods trade deficit with China, averaging approximately €1 billion daily in 2025, is intensifying demands for rebalancing and more secure supplies. New Zealand’s parliamentary approval of India trade-agreement legislation and American support for Thailand’s nuclear feasibility study illustrate other efforts to widen economic options. Across this edition, governments are seeking relationships that expand their choices. Whether those relationships deliver will depend on the difficult work following diplomatic announcements: securing finance, implementing commitments and sustaining cooperation when interests diverge.
- Key Developments
- Statistics of the Week
- Map of the Week
- Photo of the Week
- Infographic of the Week
- Regional Alliances
- Analysis
Beijing Prepares Security Pitch amid Regional Tensions
Ahead of the Xiangshan Forum scheduled for 15–17 September, Reuters reported that Chinese Defence Minister Dong Jun was expected to promote closer security cooperation and a multipolar international order. US representation was expected at Pentagon director level, while Vietnam planned to send its defence minister. The gathering came amid tensions over Taiwan and the South China Sea and preparations for Xi Jinping’s Washington visit.
The forum offered Beijing an opportunity to address doubts about American regional commitments. Its diplomatic appeal nevertheless depends on whether neighbouring governments find China’s conduct consistent with its security proposals. Participation provides channels for dialogue without establishing acceptance of Beijing’s preferred regional order.
North Korea Combines Missiles and Artillery in Live-Fire Drills
North Korea said its 12 September launches formed part of drills involving five army units, attack drones, cruise and ballistic missiles, and multiple rocket launchers. South Korea reported short-range ballistic missiles travelling approximately 250 kilometres eastward. The launches followed the conclusion of the US–Japan–South Korea Freedom Edge exercise.
The combination suggests an emphasis on coordinating different strike systems, potentially complicating defensive responses. However, KCNA’s account does not independently establish the effectiveness of that coordination. The exercise indicates continued readiness development while adding pressure to an already active cycle of regional military signalling.
Kim Reaffirms Support for Russia and Broader Cooperation
North Korean leader Kim Jong Un pledged deeper cooperation with Russia in a 14 September message replying to Vladimir Putin’s congratulations on North Korea’s founding anniversary. KCNA reported that Kim backed Russian victory in what he called a “sacred war”, apparently referring to Ukraine. He also recently reaffirmed friendship with China.
The message reinforces Pyongyang’s political commitment to Moscow, but announces no additional troop deployment or specific assistance package. Its strategic significance lies in sustaining expectations of support, while the separate outreach to Beijing suggests North Korea continues to cultivate both major partners.
China and France Discuss Trade Frictions and Taiwan
Chinese Foreign Minister Wang Yi and French counterpart Jean-Noël Barrot spoke on 14 September about bilateral relations, EU–China trade tensions, Taiwan, Iran and Ukraine. According to China’s account, Wang urged France to avoid official engagement with Taiwan and encourage constructive European dialogue with Beijing. Barrot reaffirmed France’s one-China policy and readiness to support efforts to resolve trade disagreements.
The call illustrates Beijing’s interest in using relations with a major European power to contain wider economic tensions. However, China’s description of the exchange should not be read as French endorsement of all its positions. The immediate significance is continued diplomatic engagement across several disputes, with practical compromises still requiring negotiation.
China and Latvia Coordinate Response to Deadly Mudslides
Wang Yi and Latvian Foreign Minister Baiba Braže discussed search-and-rescue cooperation on 14 September following mudslides affecting Nepal and Tibet. According to China’s official account, 33 Latvian citizens were missing. Braže thanked China for information and rescue efforts, while Wang pledged continued assistance and coordination. The ministers also marked 35 years of diplomatic relations.
The exchange shows how consular emergencies can create an immediate basis for cooperation even when broader relations are politically sensitive. Its principal significance is humanitarian: locating missing people, supporting families and coordinating follow-up. Expressions of bilateral goodwill should therefore be assessed alongside the delivery of those practical responsibilities.
Quad Advances Disaster-Relief Logistics Planning in Tokyo
Australia, India, Japan and the United States conducted a tabletop exercise in Tokyo on 3–4 September, according to a joint statement released on 14 September. Hosted by Japan’s defence ministry, it examined natural-disaster scenarios under the Quad Indo-Pacific Logistics Network. Participants worked on coordinating national logistics capabilities and developing standard operating procedures, building on earlier exercises in Hawai‘i and Guam.
The exercise gives the Quad’s regional agenda a practical humanitarian dimension. Common procedures could shorten response times and make available capabilities easier to combine. However, progress on planning does not itself establish a fully operational network; effectiveness will depend on tested arrangements, available transport and coordination with affected governments.
Japan Weighs Defence Spending Target of 3.5% of GDP
Japan is considering a defence-spending target of 3.5% of GDP, Bloomberg reported, citing people familiar with discussions with US officials. One option would phase the increase over ten years, while a lower target remains possible. A new five-year defence plan is expected by year-end; no formal commitment was announced.
Such an increase could substantially expand Japan’s military resources and address American burden-sharing demands. Its credibility would depend on financing and procurement capacity. Comparisons also require consistent GDP baselines: the report notes that Japan’s existing spending ratios differ according to the reference year used.
Bessent and He Prepare Talks on Trade and Strategic Disputes
US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng were scheduled to meet in New York on 20 September, alongside US Trade Representative Jamieson Greer, ahead of the Trump–Xi summit. The agenda included tariffs, critical-mineral supplies and artificial intelligence. Bessent’s earlier announcement also linked the preparations to discussions over China’s financial relationship with Iran.
The talks bring commercial bargaining together with security concerns that cannot readily be settled through purchases alone. Limited agreements could help sustain bilateral stability, but the available reporting described preparations rather than negotiated outcomes. Any assessment of progress must await concrete commitments and implementation.
United States Funds Thailand’s Nuclear Feasibility Study
The US Trade and Development Agency signed an agreement with Thailand’s Electricity Generating Authority on 14 September to fund a study of American small modular reactor technologies. The proposed capacity is approximately 600 megawatts. The study will assess potential sites, costs and regulatory requirements, considering designs from several US suppliers without selecting a particular vendor.
The initiative could support Thailand’s longer-term energy diversification while creating opportunities for American nuclear companies. Its current scope is preparatory: a feasibility study neither authorises construction nor secures project financing. The strategic value will depend on whether Thailand develops a viable investment case, regulatory capacity and arrangements for managing a nuclear programme over its lifetime.
New Zealand Parliament Approves India Trade Agreement Legislation
New Zealand’s parliament approved legislation implementing its India free-trade agreement on 16 September by 93 votes to 29. The agreement would eliminate or substantially reduce tariffs on approximately 95% of New Zealand exports to India, while giving Indian goods duty-free access to New Zealand. Entry into force still requires both countries to complete their procedures.
The vote strengthens the agreement’s domestic political foundation and moves exporters closer to improved market access. Its longer-term effect will depend on businesses using those preferences and overcoming practical market-entry barriers, rather than tariff reductions alone.
EU Signals Stronger Action over China Trade Imbalance
European Commission President Ursula von der Leyen said on 16 September that the EU would use its available instruments to address its trade imbalance with China. She cited a goods deficit averaging €1 billion daily in 2025 and announced plans for a European critical-raw-materials corporation to support procurement and stockpiling.
The statement suggests closer coordination between trade defence and supply security. However, reducing a bilateral deficit and diversifying mineral supplies are different objectives requiring different measures. The policy test will be whether European action improves industrial resilience without unnecessarily increasing costs or provoking disruptive retaliation.
Kim Yo Jong Rejects Renewed Denuclearisation Pressure
Kim Yo Jong criticised the IAEA’s discussion of North Korean denuclearisation, according to a KCNA statement reported on 17 September. She asserted that Pyongyang’s nuclear-weapons status was irreversible, reiterating the leadership’s rejection of demands to relinquish its arsenal.
The statement suggests that negotiations premised on an early commitment to disarmament would encounter the same fundamental obstacle. It provides no new negotiating offer or announcement of a weapons test. The immediate significance is political signalling intended to narrow the terms on which Pyongyang expects international engagement to proceed.
India and Pakistan Trade Protests after Naval Collision
India and Pakistan summoned each other’s senior diplomats on 16 September after their naval vessels collided in international waters the previous day. Each blamed the other. India reported no major damage and invoked a 1991 agreement requiring naval vessels and submarines to maintain at least three nautical miles’ separation.
The incident illustrates how close manoeuvring can generate diplomatic confrontation even without substantial physical damage. Competing accounts leave responsibility disputed. Its broader implication is the need for effective bridge-level communication and adherence to separation rules before a local encounter develops into a wider crisis.
Washington Signals Willingness to Discuss AI Risks with Beijing
US Treasury Secretary Scott Bessent said the United States was open to discussing shared artificial-intelligence risks with China, Reuters reported on 16 September, citing Axios. He expected talks to cover both open- and closed-weight models and expressed interest in avoiding a division between the countries’ AI systems.
The proposal suggests room for cooperation on dangerous uses despite technological competition. Its usefulness would depend on defining specific risks and agreeing workable safeguards. The statement establishes willingness to talk; it does not announce common standards, restrictions on model development or a change in technology controls.
China Plans Senior Representation at ASEAN Trade Gathering
China announced on 16 September that Vice Premier Ding Xuexiang would address the opening of the 23rd China–ASEAN Expo and associated business and investment summit in Nanning on 17 September. The announced participants included senior representatives from Myanmar, Vietnam and Laos, alongside ASEAN Secretary-General Kao Kim Hourn.
The planned attendance underlined the importance Beijing attaches to sustained economic engagement with Southeast Asia. Such gatherings can help officials and businesses develop projects and maintain communication across differing national priorities. Attendance alone, however, establishes neither new investment commitments nor a common geopolitical position; the relevant outcomes are the agreements and commercial activity that follow.
China Seeks Deeper Integration of BeiDou with Emerging Technologies
Vice Premier Zhang Guoqing said on 15 September that China would strengthen BeiDou’s integration with artificial intelligence and satellite internet. Addressing a navigation-system applications summit in Zhuzhou, he also called for continued upgrades, wider service coverage and greater participation in satellite-navigation governance. Approximately 900 representatives attended, according to the official account.
The agenda suggests Beijing wants navigation services to support a wider ecosystem of digital applications and industrial cooperation. This could strengthen the international role of Chinese technologies where users adopt connected services and equipment. However, the announcement provides policy direction rather than a quantified capability advance; practical gains require reliable performance, compatible applications and sustained uptake.
Wang and Rubio Discuss Preparations for High-Level Exchanges
Chinese Foreign Minister Wang Yi and US Secretary of State Marco Rubio spoke on 17 September about forthcoming high-level interactions between China and the United States. China’s official account said Wang called for stronger communication, cooperation and management of differences, stressing respect for each side’s core interests. The ministers also discussed the Middle East.
The call forms part of the diplomatic preparation needed to identify achievable outcomes and prevent disputes from overwhelming a leaders’ meeting. Beijing’s description emphasises stability, but provides little detail about American positions or agreed concessions. Its immediate value lies in maintaining communication; broader claims of convergence require evidence from subsequent negotiations.
Seoul Rules Out Involvement in Iran War while Reviewing Maritime Role
South Korean President Lee Jae Myung said on 18 September that he would not deploy military assets to the Middle East in ways that would draw the country into the Iran war. He nevertheless said Seoul was considering an expanded role in safeguarding navigation through the Strait of Hormuz.
His formulation preserves options for protecting maritime interests while setting a political limit on participation in hostilities. It should therefore not be interpreted as ruling out every possible military contribution. The unresolved issue is what mission could meet that distinction under deteriorating security conditions.
€1 Billion a Day: Europe’s Trade Imbalance with China
This week’s statistic highlights the scale of the EU’s goods trade deficit with China: approximately €1 billion per day in 2025. Citing this imbalance in her 16 September address, European Commission President Ursula von der Leyen pledged stronger action to rebalance the relationship and warned of pressure on European industry.
Trade Commissioner Maroš Šefčovič is seeking tangible negotiating results by October. Alongside this effort, von der Leyen proposed a European corporation to procure and stockpile critical raw materials, addressing dependence on Chinese supplies, particularly rare earths.
The figure illustrates the magnitude of the imbalance, but a bilateral trade deficit alone cannot establish the causes of industrial decline. The strategic challenge is to improve European competitiveness and reduce concentrated supply dependencies while preserving access to essential inputs. For the Indo-Pacific, these priorities could increase Europe’s interest in alternative suppliers and industrial partnerships across the region. Their effectiveness will depend on commercially viable alternatives and sustained investment. October’s negotiating timetable offers an early test of whether political demands can produce concrete progress. 
Djibouti: China’s Expanding Reach at the Red Sea Gateway
This week’s map highlights the concentration of foreign military facilities around Djibouti City. China’s PLA Support Base lies beside Doraleh’s commercial port infrastructure, while American, French, Japanese and Italian installations operate nearby. Djibouti’s position near Bab el-Mandeb, connecting the Gulf of Aden with the Red Sea, places these facilities close to maritime routes linking Asian production centres with European markets.
This geography gives particular significance to the communications upgrades documented in CSIS’s 17 September investigation. Satellite imagery identifies two facilities developed within China’s base since mid-2024, incorporating high-frequency antennas, satellite communications dishes and other equipment. These additions strengthen links with deployed ships, aircraft and command authorities in China. They could also support monitoring of nearby military activity, although open-source evidence cannot confirm whether signals intelligence collection is underway.
For the Indo-Pacific, Djibouti illustrates how China’s maritime ambitions extend into the western Indian Ocean and its adjoining waterways. The combination of port access, military logistics and improved communications can support more sustained operations far from Chinese shores. The proximity of competing powers’ installations also makes this small coastal area a consequential setting for military observation and strategic competition. 
Seoul and Brussels Take Security Cooperation into Orbit
This week’s photograph shows Jeoung Giyoung, South Korea’s Deputy Minister for the Advanced Capabilities Program at the Defense Acquisition Program Administration, alongside European Commissioner for Defence and Space Andrius Kubilius in Brussels on 17 September. Holding the signed documents before their respective flags, the officials mark a new step in cooperation on secure satellite connectivity.
The administrative arrangement establishes a working group to explore cooperation with IRIS², the EU’s planned secure communications constellation. Bringing together the European Commission, European Space Agency and relevant South Korean agencies, the group will examine joint applications, exchange information and assess technical options for cooperation. South Korea’s potential integration into IRIS² remains under exploration; the arrangement does not itself confer programme membership or operational access.
The photograph captures the growing technological dimension of Europe’s engagement with Indo-Pacific partners. Combining European space capabilities with Korean industrial expertise could broaden cooperation in infrastructure relevant to security and resilience. Its practical value will depend on whether these preliminary discussions produce workable technical arrangements and sustained institutional commitments.
China’s Djibouti Upgrade: Supporting Operations Beyond Home Waters
This week’s schematic infographic examines the communications infrastructure strengthening China’s military presence in Djibouti. CSIS identifies two facilities developed since mid-2024 in the base’s southeastern and northwestern corners. Their equipment includes high-frequency antennas, satellite communications dishes and probable 5G arrays, supporting different functions within what analysts assess is an increasingly integrated communications and surveillance architecture.
The operational significance lies in connectivity and redundancy. Longer-range communications can help Chinese ships and aircraft maintain contact with command authorities, while local networks support activities within the base. Some equipment could also enable signals intelligence collection. Observing transmissions’ origins, frequencies and timing could reveal patterns of military activity even where message contents remain encrypted. However, CSIS explicitly cautions that open-source evidence cannot confirm whether such collection is underway.
The upgrades illustrate how overseas military effectiveness depends on the infrastructure connecting deployed forces with information and command systems. For China, better communications could make distant operations more sustainable and coordinated. The strategic implications therefore extend beyond the base’s physical footprint, while the precise intelligence capabilities and their operational use remain uncertain. 
The Alliance Bargain under Pressure: Japan’s Spending Debate and South Korea’s Limits
Introduction
Japan’s defence spending debate and South Korea’s position on the Middle East expose two dimensions of alliance burden-sharing: the resources partners commit and the operations they are prepared to support. Both governments face expectations to contribute more while retaining responsibility for national priorities. Their responses suggest that demonstrating commitment increasingly requires negotiating its financial scale, operational purpose and acceptable risks.
Japan: A Spending Target Still under Consideration
Bloomberg reported that Japan is considering a defence spending target of 3.5% of GDP, with one scenario envisaging an increase over ten years. A lower target remains possible, and no formal commitment has been adopted. A new five-year spending plan is expected at the end of 2026. The proposal therefore signals the direction of debate without establishing the eventual budget or timetable.
Even the baseline requires care. According to the report, this fiscal year’s ¥10.6 trillion in defence and related expenditure represents 1.9% of Japan’s 2022 nominal GDP, but approximately 1.5% of the current fiscal year’s GDP forecast. Comparisons between existing spending and future targets must use consistent definitions and denominators.
Strategically, a higher allocation would demonstrate willingness to assume greater responsibility. Its military value would depend on procurement choices, personnel, maintenance and the ability to sustain operations. A credible commitment requires financing that survives annual budget negotiations and investments that address agreed capability shortfalls.
South Korea: Contribution with Conditions
President Lee Jae Myung stated on 18 September that South Korea would not deploy military assets in ways that could draw the country into conflict connected to the Iran war. He nevertheless left open an expanded role in safeguarding navigation through the Strait of Hormuz. This preserves room for cooperation while placing an explicit limit on exposure to hostilities. Reuters reporting.
The distinction is politically meaningful but operationally demanding. Any proposed maritime contribution would require clarity over its mandate, command arrangements, rules of engagement and response to an attack. A mission described as protecting navigation could still confront circumstances requiring force. Seoul would therefore need to reconcile its stated limits with the contingencies participating personnel might encounter.
For alliance management, the relevant question is how precisely governments define their contributions before deployment. Predictable limits can support cooperation by allowing planners to identify which responsibilities each partner can reliably undertake.
Economic Commitments Add Another Layer
The Cho Hyun–Marco Rubio meeting also addressed implementation of South Korea’s pledged $350 billion in US investments. Washington pressed for progress, while Seoul raised procedural and commercial-viability concerns. Cho additionally conveyed willingness to contribute substantively to restoring freedom of navigation through Hormuz, without specifying the form of that contribution.
These parallel discussions show how economic and security expectations can accumulate within an alliance. Each commitment nevertheless requires its own assessment. Investment projects depend on commercial feasibility; defence budgets must produce usable capabilities; operational contributions require political consent and manageable risks. Treating all three as interchangeable measures of loyalty would obscure whether an agreement is deliverable.
Conclusion
Allies demonstrate commitment most convincingly through contributions that are funded, militarily useful and politically sustainable. Japan’s next test is whether its spending debate produces an adopted plan with clear capability priorities. South Korea’s is whether a defined maritime role can satisfy its security interests while remaining consistent with Lee’s limits. Washington’s challenge is to negotiate contributions that strengthen collective capacity while accommodating the national decisions on which their execution depends.
Negotiating Interdependence: The US–China Bargain on AI, Energy and Critical Minerals
Introduction
The talks scheduled for 20 September between US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng bring trade, critical minerals and artificial intelligence into preparations for the planned Trump–Xi summit. The agenda concerns potential agreements; the reporting does not establish a completed bargain.
These discussions suggest three distinct incentives for cooperation: commercial gains from energy trade, greater predictability in essential supplies, and reduced exposure to shared technological risks. Their coexistence creates opportunities for stabilisation, while leaving substantial competition over industrial capacity and strategic advantage.
LNG: A Commercial Opening
Washington and Beijing are discussing reducing or eliminating China’s 15% tariff on American liquefied natural gas. The proposal accompanies discussions about reciprocal tariff reductions covering approximately $30 billion in goods on each side. These arrangements remain under negotiation ahead of the planned 24 September summit.
Tariff relief could improve the commercial case for renewed purchases. Its practical effect would depend on delivered prices, contractual terms and confidence that market access would endure. Buyers and suppliers considering long commitments must assess whether another political dispute could undermine their economics. A tariff concession can therefore facilitate trade without immediately producing sustained purchasing relationships.
Critical Minerals: Access and Vulnerability
Critical minerals present a more difficult bargain. US officials say Chinese deliveries of rare-earth magnets and other critical materials have fallen short of expectations under previous arrangements. This makes implementation a central negotiating issue.
The underlying vulnerability extends beyond shipment volumes. The International Energy Agency identifies concentrated refining, specialised equipment and technical expertise as obstacles to diversification. Additional mines alone cannot resolve shortages further along the production chain.
A negotiated improvement in access could ease immediate industrial pressures while leaving incentives to develop alternative suppliers intact. This creates tension between short-term accommodation and long-term resilience: cheaper, more reliable Chinese supplies could reduce the commercial urgency of competing projects. Durable diversification would still require financing, technical capabilities and dependable demand. For the talks, predictable licensing and verifiable deliveries would offer more meaningful evidence of progress than another general supply assurance.
AI: Risk Dialogue and Technology Competition
Bessent has expressed willingness to discuss shared AI risks with China, including both open- and closed-weight models.
Such engagement could establish a limited area of common interest between technological competitors. Both governments have reasons to examine dangerous misuse and failures whose consequences could cross borders. An initial mechanism could focus on identifying shared concerns, maintaining technical contacts and communicating about serious incidents.
That agenda has a different purpose from decisions governing access to advanced semiconductors and manufacturing equipment. Bessent’s statement announces no relaxation of technology controls. Cooperation on selected risks could therefore proceed while competition over technological capabilities continues. Its credibility would depend on defining what information participants would exchange, how confidentiality would be protected and whether dialogue could survive disputes elsewhere in the relationship.
The Test: Cooperation That Survives Disagreement
Bringing these subjects together may widen the negotiating space, but it also creates opportunities for disputes in one area to disrupt progress in another. If supply access or safety discussions become contingent on repeated political concessions, an apparent settlement could remain fragile.
For Indo-Pacific governments and businesses, the useful measures are practical: implemented tariff changes, dependable material supplies and functioning channels for managing technological risks. Clear scope, review procedures and mechanisms for addressing non-compliance would make limited agreements more predictable. These arrangements would also allow participants to assess progress separately across sectors, rather than treating summit diplomacy as a single verdict on the wider relationship.
Conclusion
Selective cooperation can stabilise US–China relations where both sides gain from predictable exchange or reduced risk. Its durability will depend on implementation and the ability to preserve useful arrangements during continuing strategic disagreements. The summit’s significance should therefore be judged by whether proposed concessions become workable commitments—and whether those commitments remain reliable after the immediate diplomatic occasion has passed.
