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China & Taiwan Update

China & Taiwan Update, September 15, 2026

September 15, 2026

China & Taiwan Update, September 15, 2026

Toplines

A People’s Republic of China (PRC) state-owned firm supplied Russia with materials for kamikaze drones, which is in violation of sanctions, while the PRC supplied Iran with air defense equipment, among other goods, through barter-like deals to bypass sanctions. The PRC is continuing to exchange defense technology for real-world battlefield testing with Russia and Iran, reaping significant economic benefit for the PRC. Internal Russian company shipping documents revealed on September 4 stated that the PRC state-owned firm, Jilin Chemical Fiber Group, supplied Alabuga-Volokno, a subsidiary of sanctioned Russian-state nuclear corporation Rosatom, with 46 tons of carbon-fiber chemicals, including polyacrylonitrile tow (a PAN-precursor), which could produce up to 1,300 kamikaze drones.[1] Rosatom has produced critical components of Russian Geran attack drones based on Iran’s Shahed design, which Russia previously used in an August 21 attack on the Sonyachna Halereya (“Sunny Gallery”) shopping mall in Kryvyi Rih, Ukraine.[2] Further reporting revealed on September 10 that the PRC was using a barter-like system to bypass sanctions on trading PRC goods, including at least one shipment of millions of dollars in air defense equipment as well as vehicles, communication equipment, and medicines, in exchange for Iranian oil.[3] The United States currently sanctions several PRC and Hong Kong-based entities, including five US-designated PRC independent oil refineries, for importing sanctioned Iranian crude oil. The United States has thus far declined to sanction any major PRC financial institutions suspected of facilitating Iran’s oil trade.[4] The PRC and Iran have since implemented secretive trade mechanisms by which Iran exchanges oil for import credits. This setup utilizes a Special Purpose Vehicle (SPV), allowing Beijing to pay domestic companies directly for goods shipped to Iran, thus letting Tehran bypass international banking channels and direct manufacturer transactions and avoid sanctions.[5]

This trade is facilitating the PRC’s ability to test these defense components and technologies in real-world battlefield settings, furthering modernization of the PRC’s military-industrial complex and the People’s Liberation Army (PLA) in line with previous ISW-CDOT assessments.[6] This trade additionally allows sanctioned entities within Russia and Iran to acquire advanced defense components and technology from the PRC during a time of significant military and technological supply shortages for both militaries, particularly PRC-made drone components.[7] Russia has reportedly been “totally dependent” on the PRC for its supplies of specialized PAN acrylic fiber, the main ingredient in high-performance carbon fiber production and an indispensable component for constructing the airframe, fuel tank, and engine on kamikaze drones.[8] PRC companies directly supplied at least £47 million ($59.7 million in 2024) in parts and materials to Russian companies sanctioned for producing drones between 2023 and 2024, with £10.7m ($13.6 million in 2024) of the shipments delivered to sanctioned Russian companies linked to the production of Shahed kamikaze drones in Russia’s Alabuga Special Economic Zone (SEZ), as of September 2025.[9] Iran previously received its first shipment of 300-400 PRC-made QW-12 and FN-16 man-portable air defense systems (MANPADS) worth between $60 million and $70 million and sent through Hong Kong intermediaries in the weeks following July 29.[10] The SPV has grown in importance since the beginning of 2026, serving as a conduit for an estimated $2 billion to $2.5 billion in trade, as the United States has increased pressure on companies trading with Iran.[11]

The PRC is pushing to accelerate artificial intelligence (AI) development as US tech leaders warn about the technology’s dangers. PRC entities are using frontier US AI models to accelerate PRC AI model development and enhance hacking capabilities, among other purposes. PRC Minister of State Security Chen Yixin published an article on September 13 on the PRC social media platform QQ emphasizing the importance of AI for the PRC’s national development strategy, calling for its “deep integration” in PRC industries.[12] Chen’s statements come as US industry leaders call for an AI development slowdown. The PRC Ministry of Foreign Affairs (MFA) rejected Anthropic CEO Dario Amodei’s claims that PRC leadership in AI technological development is dangerous for the world, stating that “all parties should work together on AI.”[13] The PRC has developed advanced AI models that are cheaper than US counterparts and very likely has no inclination to slow its research efforts.

The US National Security Agency (NSA), Cybersecurity and Infrastructure Security Agency (CISA), and Federal Bureau of Investigation’s (FBI) joint cybersecurity advisory group published a report on September 8 that accused six PRC-based AI companies of aggressively and maliciously distilling frontier US AI models, or training their smaller AI models on more advanced ones to reduce training time and cost.[14] The report details activities by PRC firms DeepSeek, Moonshot, Alibaba, MiniMax, StepFun, and Z.AI.[15] Anthropic separately published a report on how its Claude model is being misused by foreign state operatives, such as suspected PRC state-sponsored hackers using AI to amplify their capabilities.[16]

The PRC Ministry of Commerce (MOFCOM) said distillation is a common practice in the field of AI and claimed that US AI companies are “abusing their competitive advantage” and monopolizing the technology.[17] The joint cybersecurity advisory report stated that PRC distillation efforts are at an “industrial scale,” however, and that the PRC is attempting to maliciously extract key capabilities.[18] PRC state tabloid Global Times expanded these narratives and highlighted the PRC’s role in actively developing international regulations on AI safety.[19] CCP General Secretary Xi Jinping stated at the BRICS summit on September 13 that the PRC will lead the BRICS AI Open-Source Zone to promote cooperation on AI.[20] The PRC’s National Technical Committee 260 on Cybersecurity (TC260) unveiled the AI Security Governance Framework 3.0 on September 14, which identified AI risks and countermeasures in addition to providing proposals for global governance.[21] Xi is also set to discuss AI regulations with US President Donald Trump during Xi’s White House visit in late September, though Xi has yet to directly comment on the risks of AI.[22]

Key Takeaways

Cross-Strait Relations

Taiwan

Taiwanese Vice President Hsiao Bi-khim made an unannounced official visit to Italy to attend a high-level conference, despite PRC efforts to limit Taiwanese international engagement. Hsiao and Taiwanese Foreign Minister Lin Chia-lung visited Italy on September 11 and 12 for the second Ventotene European Conference for Freedom and Democracy at the invitation of the European Parliament.[23] Neither the Taiwanese government nor the conference organizers announced Hsiao’s participation until she arrived in Italy, out of concern for her safety.[24] The European Commission canceled its participation after the conference announced Hsiao as a guest.[25] The PRC lodged diplomatic complaints with Italy and the European Union for allowing Hsiao’s visit.[26] A PRC foreign ministry spokesperson accused Taiwan’s ruling Democratic Progressive Party (DPP) of seeking foreign support for Taiwanese independence under the guise of promoting freedom and democracy.[27] Italy does not maintain official diplomatic relations with Taiwan, like most countries, but it does have an unofficial representative office in Taiwan. The Italian government therefore avoided official contact with the Taiwanese officials during the visit.[28] Italy’s One China Policy “takes note” of the PRC’s position that Taiwan is part of the PRC but maintains ambiguity as to whether Italy shares that position, however.[29]

The secrecy around Hsiao’s visit and the European Commission’s last-minute withdrawal from the conference reflect the PRC’s escalating efforts to prevent any official Taiwanese engagement with foreign countries and organizations. The PRC has poached most of Taiwan’s diplomatic allies by convincing them to cut relations with Taiwan and recognize the PRC, leaving only 12 countries that recognize Taiwan. The PRC frequently warns countries not to host Taiwanese officials, especially officials affiliated with the DPP. PRC diplomats tailed then Vice President-elect Hsiao during her visit to Czechia in 2024 and reportedly planned to stage a car crash to intimidate or harm her.[30] The PRC also very likely intervened to block Taiwanese President William Lai Ching-te’s trip to Eswatini in April by pressuring nearby African countries to deny him overflight permission through their airspace, an unprecedented leveraging of third countries to block a Taiwanese exchange with one of its diplomatic allies. Lai made the trip in secret weeks later aboard an Eswatinian government plane.[31]

China

BRICS held its annual leaders’ summit in India on September 12 and 13, during which participants issued a joint statement on issues including de-dollarization and opposition to the war in Iran. The PRC aims to frame BRICS as an opportunity to build consensus across the “Global South” and present an alternative to the US-led world order. The BRICS nations agreed to the New Delhi Declaration on September 12, which stipulates that members would take steps toward facilitating cross-border payments in local currencies — which would support de-dollarization, a longstanding objective of BRICS.[32]

CCP General-Secretary Xi Jinping delivered a speech on September 12 where he highlighted BRICS’ role in peace efforts and leadership in global governance.[33] Xi also took the opportunity to promote the PRC’s four “Global Initiatives,” the Global Development Initiative, the Global Security Initiative, the Global Civilization Initiative, and the Global Governance Initiative. The four “Global Initiatives” are a set of frameworks that seek to challenge the US-led global order and pursue PRC-led global development centered around the “Global South.” Xi’s speech also referenced the war in the Middle East without naming the United States or Iran and called for a ceasefire and a two-state solution for the Israeli-Palestinian conflict.[34] Xi celebrated the role that the PRC plays at the helm of BRICS and noted that the PRC will assume the rotating presidency of BRICS next year.[35] Xi announced on September 13 that the PRC would spearhead a collaborative AI initiative with BRICS states, a BRICS AI Open-Source Zone.[36]

The PRC aims to present itself as an alternative to a US-led world order and as a leader and consensus-builder among “Global South” countries. The war in Iran has exacerbated existing rifts within BRICS member states, however, illustrating the limits of the PRC’s ability to promote consensus. India did not fall in line with other states’ condemnations of Israeli strikes on Iran during a 2025 Shanghai Cooperation Organization (SCO) meeting.[37] The United Arab Emirates (UAE) has also consistently opposed SCO’s efforts to condemn US-Israeli combined force actions against Iran.[38] Iran and the UAE did back a joint statement calling for the protection of civilians and trade during the BRICS summit, however.[39] Disagreements between BRICS member states on major global issues will likely impede the PRC’s ability to promote complete consensus on issues of global governance. The PRC will likely continue to use BRICS and other international organizations to promote the notion of a non-US-led, PRC-aligned world order, however.

CCP General-Secretary Xi Jinping met with Indian Prime Minister Narendra Modi on the sidelines of the BRICS summit. This meeting was likely intended to help improve PRC-India relations, given longstanding tensions. This marked Xi’s first visit to India since 2019. PRC and Indian forces clashed at the PRC-India border in the Indian territory of Ladakh in June 2020, involving approximately 900 soldiers and resulting in at least 20 Indian and four PRC deaths.[40] Xi and Modi discussed improving bilateral trade, business, and people-to-people ties.[41]

Xi’s conversation with Modi could reflect PRC interest in improving bilateral ties. The PRC and India remain at odds strategically, however. India has historically pursued a policy of nonalignment, balancing US and PRC interests. India maintains defense cooperation efforts with the United States and has shown increasing support for US coalition building in Asia, including with Japan.[42] India is a member of the security cooperation bloc the Quad along with Australia, Japan, and the United States, one example of its involvement with US-friendly coalitions. The PRC’s close relationship with Pakistan, as well as its goal of breaking up US-aligned coalitions that it believes may jeopardize its position in the Indo-Pacific, will very likely stymie the development of the Sino-Indian relationship.

The PLA likely views its ability to mobilize civilian resources for military use as a critical requirement for prevailing in a future conflict. PLA Daily, the official newspaper of the PLA, published an article on September 13 on the requirements for an effective future warfighting system.[43] The article emphasized the need to use civilian resources for “functional compensation” when military equipment was damaged or destroyed and emphasized the use of non-military means to achieve battlefield effects.[44] Another PLA Daily article published on September 13 discussed the role of civilian entities in future “control warfare,” wherein information and cognitive operations were critical to PLA success, requiring significant military-civil integration and cooperation.[45] Another PLA Daily commentary on military deception in the age of the transparent battlefield suggested that surprise will be created through unorthodox fighting methods and novel warfighting formations, possibly indicating that civilian resources will have a critical role on the future battlefield.[46]

These commentaries come only two weeks after the PRC passed revisions to its national mobilization law that widen government control over civilian resources during national crises and expand the situations in which the PRC may invoke mobilization.[47] The PRC has practiced using civilian assets in several roles, including troop and supply transportation during an amphibious landing.[48] Other recent PLA commentaries have centered the role of AI in future warfare and have noted the importance of tapping developments in the civilian sector to enhance the use of AI in military operations.[49] PLA discussions of “People’s War Under Modern Conditions,” an authoritative concept in PLA literature, also highlight that PRC control of the economy and society provide a critical advantage in mobilizing civilian resources for war compared to the PRC’s adversaries.[50] The PRC thus likely understands the effective mobilization of civilian assets and emerging technologies for wartime use to be a precondition for success in future conflict.

The PLA may also believe that its ability to restore maneuver to the modern battlefield will hinge on the mobilization of civilian resources for military purposes. PRC state broadcaster CCTV published a video discussing how to solve the present “stalemate” in ground warfare seen in Ukraine.[51] The video noted that the war in Ukraine had become characterized by pervasive battlefield reconnaissance and overwhelming precision fire, preventing the concentration of armored forces required to achieve significant breakthroughs.[52] CCTV invited several unmanned systems and information warfare experts who argued that complex unmanned ground vehicles and AI-enabled information technology would be critical to restore maneuver to the modern battlefield.[53] These observations are consistent with ISW-CDOT’s assessment that the PLA envisions the center of gravity of future warfare to be information dominance, meaning that a better ability to gather, synthesize, and disseminate information will enable battlefield advances.[54] A September 13 CCTV video showed an amphibious combined arms unit assaulting a beach and demonstrating some of these principles, as each amphibious vehicle was equipped with a drone that could be piloted from within the vehicle.[55] The exercise also showed unmanned ground vehicles participating in the assault of the beach alongside manned platforms.[56]

The PLA’s observations on the role of AI-enabled information technology and advanced unmanned systems may have driven the PRC’s attempts to expand government control over critical civilian industries. The revisions to the PRC’s national mobilization law added language the singled out emerging critical technologies being developed in the civilian sphere.[57] Other recent PLA commentaries have highlighted the rapid innovation cycle demonstrated in the war in Ukraine, particularly for unmanned systems development.[58] One of these articles notes that traditional procurement processes lack the flexibility to rapidly iterate technology in accordance with battlefield realities.[59] The PRC possesses the world’s largest civilian drone sector, accounting for 70 percent of global output by some estimates.[60] The PRC may thus view wartime or pre-war mobilization of its civilian drone and AI sectors to be more efficient than creating parallel, purpose-built military industries.

These discussions fit into an existing body of PLA commentaries on the war in Ukraine that aim to incorporate select tactical lessons from the war into PLA warfighting while maintaining that the essence of future conflict will be sharply distinct from the war in Ukraine. The CCTV discussion of future battlefield maneuver reflects a perception that a superior information network, driven by superior AI algorithms and the use of them, could nullify material disadvantages.[61] The side that can orchestrate manned and unmanned operations, synthesize battlefield data, and damage an enemy’s operational awareness will be the side that is able to restore maneuver to the battlefield according to this view. The role of civilian-driven technologies in achieving these effects, and the PRC’s estimation of its ability to effectively mobilize civilian resources to enhance warfighting, may drive the PLA’s assessments of its own preparedness for future war.

Northeast Asia

South Korea

PRC-sponsored semiconductor companies appear to be conducting industrial espionage in South Korea to accelerate PRC research and development of advanced technologies, increasing the PRC’s global market share in the near-term. South Korean officials indicted a former Samsung Electronics employee for leaking advanced semiconductor technology to PRC company ChangXin Memory Technologies (CXMT). The former Samsung employee testified on September 11 that CXMT’s founding members sought to obtain Samsung’s Dynamic Random-Access Memory (DRAM) technology and that CXMT had neither the proper research infrastructure nor the will to develop the technology on its own.[62] DRAM is a type of computer memory used for smartphones, computers, and artificial intelligence servers. South Korean experts warned on September 14 that CXMT could achieve DRAM production capacity comparable to SK Hynix’s by 2028.[63] Experts said the PRC is improving its ability to replace imported DRAM products with domestically produced alternatives, which could threaten South Korean semiconductor companies’ global market share.[64] Samsung and SK Hynix control around 65 percent of the global DRAM market share. The extent of Samsung and SK Hynix’s control of PRC DRAM imports is unknown, but South Korean customs indicate that the PRC is a top consumer of South Korean semiconductors.[65] The PRC is seeking to reach 80 percent semiconductor self-sufficiency by 2030.[66]

South Korea strengthened its intelligence efforts and began issuing harsher penalties against industrial espionage following multiple cases of employees at major South Korean companies leaking technology to PRC-based firms.[67] The South Korean National Assembly revised counter-espionage laws under the Criminal Act on February 26 to broaden the scope of what is considered espionage to include activities conducted for any foreign country, not just those committed on behalf of North Korea.[68] The revised Act took effect on September 13. The National Assembly also passed a bill on September 3 that would make the South Korean National Intelligence Service (NIS) responsible for protecting South Korean economic security.[69] The amendment grants the NIS the ability to investigate the activities of industrial spies attempting to transfer South Korea’s advanced technologies and trade secrets abroad.[70]

PRC MFA spokesperson Mao Ning called for a “fair, just, and non-discriminatory” business environment for PRC firms overseas on September 11 when asked about South Korea’s revised espionage law.[71] The PRC appears to be indirectly objecting to South Korean measures to reduce foreign industrial espionage. The PRC may frame these economic-security measures as discriminatory restrictions on PRC commercial activity. The PRC MFA also denied state involvement in espionage cases involving CXMT, stating that the PRC has instructed its firms to comply with international laws.[72] The PRC government, however, heavily sponsors CXMT. The US Department of Defense (DoD) designates CXMT as a “Chinese Military Company.”[73] The PRC has sued the DoD for this designation.[74]

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[2] https://www.politico dot eu/article/china-state-firm-supplies-russia-materials-kamikaze-drones/; https://www.telegraph.co.uk/world-news/2026/09/06/china-secretly-supplied-russia-components-killer-drones/; https://meduza.io/en/feature/2026/08/21/russian-drones-set-fire-to-the-biggest-shopping-mall-in-kryvyi-rih-a-steel-city-in-central-ukraine-half-an-hour-later-they-came-back-for-the-rescue-crews; https://www.csis.org/analysis/shahed-geran-how-russia-continues-reinvent-one-way-attack-drone ; https://www.ibtimes.co.uk/chinese-firm-ships-drone-material-russia-1818350
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[14] https://www.cisa.gov/news-events/cybersecurity-advisories/aa26-251a
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[22] https://www.businessinsider.com/trump-xi-ai-apocalypse-warning-anthropic-openai-2026-9
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[29] https://iris.uniroma1.it/retrieve/b749f19d-25a5-4657-8ae9-358cf55b939c/Pelaggi_Il-politico_2023.pdf
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[32] https://www.mea.gov dot in/bilateral-documents?dtl/41776; https://www.scmp dot com/news/china/diplomacy/article/3367315/under-trumps-shadow-brics-takes-step-towards-de-dollarisation; https://apnews.com/article/india-brics-russia-china-iran-wars-a79c5d6df774a9471743cef7d0080688
[33] https://www.globaltimes dot cn/page/202609/1370417.shtml
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[36] https://www.reuters.com/business/aerospace-defense/xi-pushes-greater-brics-economic-ties-give-bloc-larger-global-role-2026-09-13/
[37] https://www.mea.gov dot in/lok-sabha?dtl/39864/QUESTION+NO+1050+SCO+STAND+ON+ISRAELS+ATTACKS+ON+IRAN
[38] https://www.reuters.com/world/china/india-hosts-brics-summit-iran-war-tests-bloc-unity-2026-09-10/
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[46] http://www.81 dot cn/yw_208727/16485474.html
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[69] https://news.kbs.co dot kr/news/pc/view/view.do?ncd=8653876
[70] https://www.nis.go dot kr/AF/1_5.do
[71] https://www.reuters.com/world/china/south-koreas-expanded-espionage-law-takes-effect-amid-push-protect-chip-2026-09-13/
[72] https://www.yna.co.kr/view/AKR20260911151200083?section=politics/diplomacy
[73] https://www.reuters.com/world/asia-pacific/what-is-cxmt-how-did-it-become-chinas-dram-champion-2026-07-27/; https://www.straitstimes dot com/asia/east-asia/chinese-memory-chipmaker-cxmt-sues-pentagon-over-chinese-military-company-designation
[74] https://www.straitstimes dot com/asia/east-asia/chinese-memory-chipmaker-cxmt-sues-pentagon-over-chinese-military-company-designation

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