Welcome to Foreign Policy’s China Brief.
The highlights this week: Chinese President Xi Jinping travels to North Korea, the U.S. military expands its list of blacklisted Chinese companies, and financial regulators move to close foreign stock-trading loopholes.
Xi Jinping Meets Kim Jong Un
On Tuesday, Chinese President Xi Jinping wrapped up a two-day visit to North Korea, where leader Kim Jong Un greeted him with fanfare. It was Xi’s first visit to the country since 2019, and as Deng Yuwen wrote in Foreign Policy last month, his main priority lies with preventing North Korea from drifting too far into Russia’s orbit. So far, readouts from the event have consisted only of boilerplate announcements about increased cooperation and sustained friendship.
Since 1961, North Korea has been China’s only formal treaty ally, bound by a mutual defense pact forged in the aftermath of the Korean War, when Chinese intervention helped save the Kim regime. Yet Chinese-North Korean relations were strained for decades.
North Korea resented China’s perceived abandonment of socialism in the 1980s, its diplomatic recognition of South Korea in 1992, and what Pyongyang saw as inadequate Chinese assistance during a devastating famine in the 1990s.
For its part, China was angered by North Korea’s pursuit of nuclear weapons but lacked the leverage to stop it. North Korean refugees also frequently cross into northeastern China.
Since 2018, Xi has done much to repair relations with North Korea, despite the COVID-19 pandemic interrupting travel. China has downplayed explicit references to the denuclearization of the Korean Peninsula and has expanded trade and economic ties. Nevertheless, considerable friction remains, including a few factors likely to pull the two countries apart in the long term.
One of the most important factors is human-level diplomacy. Many Chinese officials I’ve spoken to about working with North Koreans found the experience irritating—a sentiment that, based on the far more limited contacts I’ve had with North Koreans in China, appears to be reciprocated.
Chinese officials often struggle to understand why North Korea has not embraced Chinese-style economic reforms and tend to view their counterparts as stubborn and provincial. North Koreans, whose political ideology strongly emphasizes national autonomy, resent being treated as junior partners.
Recent economic reforms in North Korea could persuade Chinese officials that the country won’t remain stuck in the past forever. However, officials on both sides operate in politically fraught environments where contact with foreigners carries significant risk.
It’s worth remembering that Kim ordered the execution of his uncle Jang Song Thaek in 2013 in part because of Jang’s close ties to China. The subsequent purging and sidelining of many China-friendly officials alienated Chinese diplomats who had cultivated personal relationships with their North Korean counterparts.
Another weight on the relationship is that the Chinese public’s views of North Korea are overwhelmingly negative. A common euphemism for complaining about repression under Xi is referring to China as “West Korea” (literally, “North Korea of the West”). That stands in contrast with the enthusiasm that many Chinese show for South Korea. For Chinese tourists, North Korea is mostly a curiosity, while South Korea is the top foreign destination.
Culturally, North Korea has not had a meaningful hit in China since 1972’s The Flower Girl, a film adaptation of a revolutionary opera supposedly written by former North Korean leader Kim Il Sung. South Korean pop culture, on the other hand, enjoys enormous popularity and has become a model for China’s entertainment industry.
The economic disparity is even greater: Chinese trade with North Korea totaled $2.2 billion in 2024, compared with $328 billion with South Korea. This is disconcerting for Pyongyang, which still regards Seoul as its principal enemy.
Finally, the structural forces wedging the two countries apart are significant. In 2024, North Korea signed a mutual defense pact with Russia, leading to the unusual spectacle of thousands of North Koreans fighting alongside Russian forces in Ukraine. (China, which has not fought a war since 1979, may be interested in learning from their experiences.)
There will likely be many more Xi-Kim meetings in the years ahead. China genuinely wants North Korea to open its economy, both to stabilize the regime and to help revitalize China’s struggling northeastern provinces. But if Pyongyang continues cozying up to Moscow, I wouldn’t expect cooperation with Beijing to be smooth.
What We’re Following
Pentagon blacklist expansion. The U.S. Defense Department has added three major Chinese companies—Alibaba, Baidu, and BYD—to a list of firms allegedly linked to the Chinese military. Though these companies are only barred from U.S. military contracts in the immediate term, the designation could make U.S. companies more reluctant to buy from them.
That could, in turn, complicate U.S. President Donald Trump’s efforts to rebuild economic ties with Beijing. The move is another indication that U.S. military and intelligence assessments of China run on a track largely separate from the White House.
A vast U.S. bureaucracy continues to produce reports and impose sanctions, occasionally interrupted by high-level interventions in Beijing’s favor.
EV road strain. China’s success with electric vehicles is producing an unexpected side effect: a shortfall in funding for road maintenance, according to a new report from Yicai. Though funding is often available for road construction in China, maintenance is traditionally funded by fuel taxes, which have declined as EVs have become more popular.
China’s extensive toll system is theoretically meant to fill the gap, but in practice, it is uneven and poorly enforced, with toll collectors waiving vehicles through in exchange for bribes smaller than the tolls.
Traveling on Chinese backroads offers a glimpse into the practical limits of the state, since rural villages often set up illegal toll booths. That was particularly evident during the early days of COVID-19, when those controls were used to restrict entry into villages.
FP’s Most Read This Week
Tech and Business
Offshore trading shut down. Chinese financial regulators have moved to close loopholes that allowed mainland citizens to trade foreign stocks, in a coordinated effort with Hong Kong authorities. China exercises tight capital controls, and citizens have long relied on a variety of workarounds, from coats or suitcases lined with cash to more sophisticated technical methods.
Previously, crypto mining offered another route: Electricity paid for in yuan could be used to mine bitcoin, which was then sold overseas for dollars. The latest crackdown, however, targets online brokerages such as UP Fintech and Futu, whose shares have plunged in response.
Chinese exports up. Despite U.S. tariffs and the Iran war, China’s exports rose by 19.4 percent in May from a year earlier. The country is riding the artificial intelligence wave. Though China’s semiconductor industry still lags behind those of Taiwan, South Korea, and the United States, it dominates in the production of discrete semiconductors—individual, single-function chips.
Massive investments have yet to close the gap with rivals, but they have bolstered China’s global influence. The payoff has been even greater in green technology, where China is benefiting from the rush to find alternatives to fossil fuels from the Gulf.
