Xi Touts "New Levels" of National Strength as Hypersonic Tests and US Arms Deal Ratchet Tensions
Xi Touts "New Levels" of National Strength as Hypersonic Tests and US Arms Deal Ratchet Tensions
BEIJING — President Xi Jinping declared today that China’s defense and technological capabilities have reached "new levels," a statement analysts view as a direct strategic signal following a week of rapid escalation over Taiwan.
While officially framed as a review of national progress, the timing of Xi’s remarks is unmistakable. The speech comes less than 96 hours after the United States finalized a record-breaking $11.1 billion arms package for Taiwan—including HIMARS launchers and anti-tank systems—and coincides with confirmed reports of advanced PLA hypersonic missile tests.
The Strategic Signal: Hypersonics and Sanctions Xi’s assertion of strength serves as the rhetorical capstone to Beijing's tangible retaliation against Washington. On December 26, the Foreign Ministry sanctioned 20 U.S. defense contractors, including units of Lockheed Martin and Northrop Grumman. However, Xi is now moving the narrative beyond economic countermeasures to emphasize kinetic capability.
Observers note this rhetoric aligns with significant People’s Liberation Army Navy (PLAN) activity. On December 28, the PLAN successfully test-launched a YJ-20 hypersonic anti-ship missile from a Type 055 destroyer. The integration of hypersonic capabilities onto China’s premier surface combatant alters the strategic calculus in the Taiwan Strait, signaling that Beijing is prepared to back its territorial red lines with high-speed, hard-to-intercept force.
Domestic Context: The 15th Five-Year Plan The projection of military power contrasts with a complex domestic economic reality. Data from the National Bureau of Statistics released yesterday showed a decline in industrial profits for November 2025.
To offset these headwinds, the newly submitted draft of the 15th Five-Year Plan (2026–2030) doubles down on "technological self-reliance." Xi’s mention of "new levels" likely references recent claimed breakthroughs, including a 700 km/h maglev test and 6G stealth surface technology, positioning technological supremacy as the solution to economic stagnation.
Market Implications: The CCG and Miscalculation Risk For regional security monitors, the convergence of Xi’s confidence, new hypersonic naval assets, and the influx of heavy weaponry into Taiwan creates a volatile environment.
Crucially, with the China Coast Guard (CCG) now fully integrated into military command structures, the threshold for a "military encounter" is lowering. The CCG’s aggressive operations in gray-zone waters, combined with the PLAN's new hypersonic posture, significantly increase the probability of friction turning into a direct exchange of force—a scenario that would trigger immediate market volatility regarding Taiwan's status in 2026.