China Policy Monitor 1660

WANG YI HOSTS THAI AND CAMBODIAN FMS FOR TALKS IN YUNNAN
A day after Thailand and Cambodia signed a new ceasefire, Thai Foreign Minister Sihasak Phuangketkeow and his Cambodian counterpart, Prak Sokhonn, met in Yunnan, China for talks mediated by Foreign Minister Wang Yi. The agreement, which was brokered in July by Malaysia and enforced by President Trump's trade threats, collapsed into heavy fighting along the border that has killed scores of people and displaced at least half a million more. China has sought to position itself as a mediator, overshadowing U.S. efforts. The first batch of $2.8 million in PRC emergency humanitarian aid – including food, tents, and blankets for displaced Cambodians – has already arrived. After meeting with Wang, Sihasak said: "Thailand does not see China merely as a mediator in our conflict with Cambodia but wants China to play a constructive role in ensuring a sustainable ceasefire." Prak Sokhonn, for his part, said China plays a "vital role" in supporting the truce. (Associated Press, December 28, 2025)

RUSSIA VOWS TO SUPPORT CHINA IF IT ATTACKS TAIWAN
Russia will support China if it decides to try and take Taiwan by force, Russian Foreign Minister Sergei Lavrov has confirmed. Citing defense spending increases under new Japanese Prime Minister Sanae Takaichi, Lavrov blamed Tokyo for accelerating militarization in the region. Moscow's behavior during "a possible escalation in the Taiwan Strait" is set forth in a treaty with China, Lavrov said. "One of the basic principles is mutual support in defending national unity and territorial integrity. Our Japanese neighbors should weigh everything properly before taking any hasty decisions," he added. (Nikkei Asia, December 28, 2025)

BEIJING SANCTIONS U.S. DEFENSE FIRMS, SEIZES "NON-EXISTENT" ASSETS
Citing the U.S. announcement of an $11 billion military package for Taiwan, China has imposed sanctions on 20 U.S. defense companies and 10 senior executives. The sanctions list includes Northrop Grumman Systems Corp., Boeing's St. Louis branch, Epirus, and Anduril Industries founder Palmer Luckey. Their Chinese assets are frozen and PRC citizens and firms are prohibited from doing business with them. Luckey responded by mocking the announcement in a social media post: "I want to thank my family, my team, and my Lord Jesus Christ for this award. Anduril has been sanctioned for a while now, as have many of my peers, but it means so much to finally have my non-existent Chinese assets seized." (Business Insider, December 27, 2025)

CHINA PROPOSES STRICT NEW RULES TO CURB AI COMPANION ADDICTION
China's Cyberspace Administration (CAC) has introduced new draft regulations aimed at curbing addiction to "human-like" AI companions. The proposal, which would be among the world's most aggressive regulatory stances, shifts the burden of mental health monitoring from users to tech firms. Under the new rules, companies must implement systems that assess users' emotional state and dependency levels. Mandatory safeguards include prominent addiction warnings, age-related safeguards, and strict "red lines" prohibiting content that threatens national security or "core socialist values." To protect minors, the new rules call for transparent anti-addiction algorithms over engagement-driven "black box" models. Providers must assume full lifecycle responsibility for their AI, ensuring regular security assessments to protect users from psychological harm. (Reuters, December 27, 2025)

REVISED CIVIL AVIATION LAW COVERS THE "LOW ALTITUDE ECONOMY"
The National People's Congress Standing Committee has passed a revised Civil Aviation Law that for the first time regulates unmanned aircraft as part of the country's fast-growing "low-altitude economy." The changes, which are effective July 1, require all entities involved in the design, production, import, maintenance and operation of drones to obtain airworthiness certifications. Drone manufacturers must assign a unique ID code to each unit and all civilian unmanned aircraft must be registered. The new regulations come as China's low-altitude economy – a national strategic initiative focusing on commercial activities below 3000 meters – registered a worth of an estimated 1.5 trillion yuan ⁠in 2025. (MSN, December 27, 2025)

[EDITOR'S NOTE: Drone logistics are driving China's low-altitude economy, with 2.7 million packages containing everything from lunches to medicine delivered in 2024. E-commerce and food delivery leaders like JD.com and Meituan are investing in drones to ⁠improve supply chain efficiency. Drone delivery networks are being tested in rural Jiangsu, Shaanxi, and Sichuan where they can reduce shipping times by up to 70%.]