China Policy Monitor No. 1661

BEIJING WILL PAY $26B IN PREGNANCY AND CHILDCARE SUBSIDIES IN 2026
China will spend 180 billion yuan ($25.8 billion) in 2026 to try to reverse decades of population control. Beijing pledged women will have "no out-of-pocket expenses" for pregnancy next year, with medical costs and IVF fully reimbursable via the national insurance fund; an expansion that will cost an estimated 70 billion yuan. A nationwide childcare allowance introduced last year pays 3600 yuan ($500) annually per child under three, will cost an estimated 108 billion yuan to cover 30 million eligible children. On January 1, Beijing introduced a 13% tax on all contraceptives. Despite these efforts, UN projections suggest the number of reproductive-age women (those aged 15 to 49) will drop by two-thirds by 2100. With a fertility rate of 1.0 — well below the 2.1 replacement level — few believe these subsidies can overcome existing demographic trends. (Reuters, January 16, 2026)

CHINA, RUSSIA, IRAN HOLD NAVAL DRILLS IN SOUTH AFRICA
Warships from China, Russia, and Iran have arrived at South Africa's Simon's Town naval base for "joint operations to safeguard vital shipping lanes and economic activities," the PRC Ministry of Defense has said. While Beijing and Pretoria frame the maneuvers as a "BRICs exercise," the drills signal deepening military cooperation among America's primary adversaries. Initially scheduled for November but postponed as a result of a G20 summit scheduling conflict, the exercises drew criticism from the Democratic Alliance, South Africa's second-largest party, which said: "Calling these drills 'BRICS cooperation' is a political trick to soften what is really happening: Government is choosing closer military ties with rogue and sanctioned states." (Al Jazeera, January 9, 2026)

CHINA'S INFLUENCE WILL GROW, AS TRUST IN U.S. FADES – NEW POLL
A new European Council on Foreign Relations survey of 26,000 respondents across 21 countries reveals that majorities in almost every country surveyed — including 83% in South Africa, 54% in the U.S., and 51% in India — predict that China's power will grow over the next decade. Majorities in South Africa (85%) and Brazil (73%) view Beijing as a partner or ally, as compared to only 45% of Europeans. European perceptions of the U.S., meanwhile, have soured; only 16% view those surveyed viewed the U.S. as an ally, while 20% now see Washington as a rival or enemy. Russian respondents are more likely (51%) than last year (41%) to see Europe as an adversary, and less likely (37%) to consider the U.S. an enemy than they did a year ago (48%). (The Guardian, January 14, 2026)

NAVY SAILOR GETS 16 YEARS FOR SELLING CLASSIFIED MATERIAL TO CHINA
A San Diego federal judge sentenced former U.S. Navy sailor Jinchao Wei, 25, to 16 years in prison for selling classified manuals and operating data to a PRC intelligence officer for $12,000. Wei, a Petty Officer Second Class and engineer aboard the USS Essex, was arrested in August 2023 alongside Wenheng Zhao, who received a two-year sentence in 2024. Recruited via social media in 2022 by an operative posing as a maritime enthusiast, Wei provided 60 technical manuals covering weapons control, aircraft, and deck elevators. Over 18 months, he disclosed ship locations, defensive capabilities, and sensitive imagery of the Essex — an assault ship supporting 2000 Marines. Despite the manuals' explicit export warnings, Wei continued providing the classified information until his capture. (Associated Press, January 12, 2026)

BEIJING INSTALLS LOYALIST TO LEAD AIIB
Zou Jiayi, a member of the CCP Central Committee who has served as vice minister of finance and worked for the Central Commission for Discipline Inspection, has been appointed to a five-year term as president of the Asian Infrastructure Investment Bank (AIIB). Zou announced that the Beijing-headquartered institution will fill the Trump administration's leadership void, targeting a 70% lending surge (to $17 billion annually) by 2030, and promising to prioritizing climate finance. With China holding a 30% stake and effective veto power in the AIIB, Zou's appointment ensures the bank's operations continue to advance Beijing's interests. Despite its original goal to lend $100 billion in its first decade, AIIB financing totaled $69 billion, far less than the Asian Development Bank's $20 billion annual lending. (Nikkei Asia, January 16, 2026)