China Security Report — February 28, 2026

Security analysis based on open-source intelligence and web research. Period: February 21 — February 28, 2026.

Executive Summary

The period from February 21 to February 28, 2026, saw China navigating a complex security landscape marked by intensified diplomatic engagements, persistent regional tensions, and significant cybersecurity challenges. Relations with the United States were a focal point, with a US Supreme Court ruling impacting tariffs and preparations for a high-stakes presidential visit. Beijing continued its assertive posture in the South China Sea and Taiwan Strait, employing "gray-zone" tactics and engaging in signal spoofing. Concurrently, a major China-linked cyber espionage campaign targeting global telecommunications and government agencies was uncovered, highlighting the evolving nature of state-sponsored threats. China also deepened its strategic coordination with Russia and sought more structured dialogue with the European Union amidst ongoing trade imbalances.

Key Security Developments

• Diplomatic Relations with the United States and Trade Tensions
  On February 21, 2026, the US Supreme Court struck down President Donald Trump's sweeping tariffs, including a 10% "fentanyl" tariff and a 10% reciprocal tariff on Chinese goods, ruling that Trump exceeded his authority. This decision complicated already intricate US-China relations, though analysts predicted Beijing would be cautious in exploiting the advantage ahead of Trump's anticipated trip to Beijing from March 31 to April 2. On February 25, China's Ministry of Commerce (MOFCOM) issued a warning against the US imposing further tariffs under Section 301, vowing to "take all necessary measures to resolutely defend [China's] legitimate rights and interests."

• Extensive China-Linked Cyber Espionage Campaign Uncovered
  On February 25, 2026, researchers from Google's Threat Intelligence Group and Mandiant reported that hackers working for the Chinese government had breached over 50 telecommunications companies and government agencies across 42 countries. The campaign utilized a sophisticated technique, exploiting cloud platforms' legitimate features, specifically the Google Sheets API, to hide malicious traffic and control backdoor malware dubbed "GRIDTIDE." Google subsequently disabled the attackers' cloud platform access and sinkholed their web domains, effectively severing persistent access to compromised environments.

• Escalating Cyber Threats Against the Philippines
  The Armed Forces of the Philippines (AFP) Cyber Command chief, Brigadier General Joey Fontiveros, warned on February 19, 2026, of intensifying cyber threats against the Philippines from China-based actors. These threats are linked to territorial disputes in the West Philippine Sea (WPS) and involve malware deployment, DDoS attacks, data leaks, and website compromises aimed at advancing Beijing's regional ambitions. High-risk sectors include public administration, educational services, and finance.

• Continued Assertiveness in the South China Sea
  China continued its efforts to establish a maritime order under its leadership in Southeast Asia, becoming a key investor in the region's "blue economy" and strengthening security ties with countries concerned about US reliability. However, negotiations for an ASEAN-China Code of Conduct (COC) in the South China Sea remained fraught in 2026, with major disagreements persisting over legal interpretations and China's coercive behavior. The China Coast Guard (CCG) maintained a significant presence, with reports of verbal and physical harassment against littoral states' vessels.

• "Gray-Zone" Tactics and Signal Spoofing in the Taiwan Strait
  On February 23, 2026, the Institute for the Study of War (ISW) reported that the People's Republic of China (PRC) was using signal spoofing to create illusory vessels, including a China Coast Guard ship named "CHINACOASTGUARD 18602," inside a Taiwanese harbor near the Tamsui River in New Taipei. These spoofed Automatic Identification System (AIS) signals, which appeared briefly before "teleporting" to distant locations, are assessed as part of a cognitive warfare effort to degrade Taiwan's threat awareness.

• Joint Naval Drills with Russia and Iran in the Strait of Hormuz
  Russia, China, and Iran launched the "Maritime Security Belt 2026" naval drills in the Strait of Hormuz, as reported on February 17, 2026. Chinese naval assets participating included the Type 052DL guided-missile destroyer Tangshan (D122), the Type 054A frigate Daqing (F576), and the Type 903A replenishment ship Taihu (K889), demonstrating layered anti-ship, anti-submarine, and logistical capabilities. This exercise carries significant geopolitical implications amid intensifying maritime competition.

• US-Philippines Reaffirm Taiwan Strait Security and Condemn China's Activities
  Following the 12th Philippines-United States Bilateral Strategic Dialogue in Manila, the US and the Philippines reaffirmed the importance of regional security in the Taiwan Strait on February 17, 2026. A joint statement condemned China's "illegal, coercive, aggressive, and deceptive activities in the South China Sea" and emphasized collective defense in deterring aggression along the first island chain, which includes Taiwan. This followed the completion of the US-Taiwan Agreement on Reciprocal Trade (ART) on February 12, which included a record $11 billion US arms package to Taiwan.

• EU Seeks "More Structured" Dialogue with China
  On February 21, 2026, the EU's trade chief Maroš Šefčovič stated that the European Union would aim to step up its diplomatic engagement with China to address Beijing's vast trade surplus and other economic frictions. This push for a "more structured, more frequent" dialogue comes despite ongoing "de-risking" efforts by some EU members and China's closer alignment with Russia. German Chancellor Friedrich Merz is scheduled to travel to China next week.

• China's Defense Budget Increase
  China is reported to have increased its defense budget by 7.2% in 2025, bringing total military spending to $245 billion, according to figures released at the annual session of the National People's Congress. This increase, reported on February 28, 2026, reinforces China's position as the world's second-largest military spender and is seen by analysts as a response to rising tensions with the US, Australia, and neighboring countries, as well as efforts to modernize its naval and strategic forces.

• Deepening China-Russia Strategic Coordination
  Chinese President Xi Jinping and Russian President Vladimir Putin held a virtual meeting on February 4, 2026, where they emphasized deeper strategic coordination and mutual support in safeguarding national sovereignty and security. Putin plans two visits to China in 2026, signaling a continued strengthening of ties that both leaders described as being at an "unprecedented level" and not directed against any third party.

• New Cybercrime Legislation Proposed
  China unveiled a draft Cybercrime Prevention and Control Law on February 7, 2026, which would significantly expand state powers to address online crime. The proposed law includes provisions to bar convicted cybercriminals from leaving the country for up to three years after serving their sentences and allows legal action against Chinese nationals abroad and foreign entities for online activities deemed to harm China's national interests.

• China's Critical Stance on US Military Ambitions in Palestinian Territories
  On February 21, 2026, China adopted a sharply critical view of US military actions in and around the Palestinian territories, specifically rejecting any plans for the United States to control the Gaza Strip or the forced displacement of Palestinians. Chinese intelligence and security agencies questioned the role of the US-brokered International Peace Council, suspecting its primary objective is to eliminate Hamas's underground tunnels. Beijing emphasized that land routes are the only effective solution for aid delivery and considered foreign military intervention a "provocative and extremely dangerous" step.

Geopolitical Impact and Regional Dynamics

China's security developments during this period have significant geopolitical implications, particularly for regional stability and its relationships with major global powers. The US-China rivalry remains a central dynamic, with the Supreme Court's tariff ruling and the upcoming Trump-Xi summit highlighting the complex interplay of economic and strategic competition. While a "fragile trade truce" is sought, China's warning against new US tariffs underscores the persistent friction. Beijing's critical stance on US military presence in the Palestinian territories further illustrates its challenge to US global influence and its alignment with countries like Iran, as evidenced by shared intelligence on US THAAD deployments in Jordan.

In the Indo-Pacific, China's assertive actions in the South China Sea and Taiwan Strait continue to be major destabilizing factors. The ongoing difficulties in negotiating an ASEAN-China Code of Conduct, coupled with China's "bullying behavior," suggest a continued trajectory of heightened tensions and potential for miscalculation. The US-Philippines reaffirmation of Taiwan Strait security and condemnation of China's activities, alongside the US arms package to Taiwan, signal a strengthening of alliances aimed at deterring Chinese aggression. China's use of "gray-zone" tactics, such as signal spoofing in the Taiwan Strait, demonstrates its strategy of controlled escalation to erode Taiwan's strategic comfort zone without triggering direct conflict.

China's deepening strategic partnership with Russia is another critical element shaping the broader strategic landscape. The virtual meeting between Xi and Putin and the planned visits underscore a commitment to mutual support and coordination on global governance, particularly in the face of a "complex and ever-changing international situation." The joint "Maritime Security Belt 2026" naval drills with Russia and Iran in the Strait of Hormuz project a united front against perceived Western dominance and signal a growing challenge to maritime primacy in critical energy chokepoints. Meanwhile, EU-China relations are characterized by "cautious engagement," with the EU seeking to manage trade imbalances and "de-risk" its economic ties while maintaining dialogue, reflecting a pragmatic approach despite underlying political tensions.

Military and Defense Analysis

China's military and defense posture during this period reflects a continued commitment to modernization and an assertive projection of power, particularly in its near abroad. The reported 7.2% increase in China's defense budget for 2025, reaching $245 billion, underscores Beijing's sustained investment in its armed forces. This increase is widely interpreted as a response to rising geopolitical tensions and a drive to accelerate the modernization of its naval and strategic forces. US defense officials estimate China's actual defense expenditures could be significantly higher than official figures, as military-related costs are often embedded in other budgets.

The People's Liberation Army (PLA) continues to enhance its capabilities and operational readiness. In the Taiwan Strait, China has been engaged in sustained, large-scale drills with increasingly aggressive objectives, shifting from periodic exercises to more continuous pressure. These activities include live-fire drills, missile tests, naval maneuvers, and airspace incursions, designed to demonstrate capability and rehearse scenarios. The use of "gray-zone" tactics, such as the reported signal spoofing in the Tamsui River, indicates a sophisticated approach to psychological warfare and testing strategic thresholds without direct military confrontation.

In the South China Sea, China's force posture involves an expanded presence of its Coast Guard and the strategic deployment of its vast fishing fleet, which a January 2026 US congressional report described as a "gray zone militia strategy" capable of blockading naval forces. This dual-use approach allows Beijing to assert its territorial claims and expand influence while evading direct military confrontation. The participation of advanced naval assets, such as the Type 052DL guided-missile destroyer, in the "Maritime Security Belt 2026" drills in the Strait of Hormuz demonstrates China's growing blue-water combatant capabilities and its intent to conduct sustained operations beyond littoral confines. This also signals a broader effort to project power and influence in strategically vital regions.

Outlook and Forecast

Short-term trends (1-3 months) indicate a period of continued diplomatic maneuvering and persistent security challenges for China. The upcoming visit of US President Donald Trump to Beijing in late March/early April will be a critical event, potentially shaping the trajectory of US-China relations for the immediate future. While both sides appear keen to manage tensions through dialogue, the underlying economic and strategic competition, particularly concerning trade tariffs and technological dominance, will remain. We can expect China to continue its "governance consolidation" internally, as indicated by the Party's "Correct View of Political Achievement" campaign, while externally focusing on "rule framing" in its engagements. Cybersecurity threats from China-linked actors are likely to persist and evolve, targeting critical infrastructure and government agencies globally.

Critical flashpoints and risk areas will primarily remain the Taiwan Strait and the South China Sea. In the Taiwan Strait, China's intensified "gray-zone" measures, including cyber disruptions, economic coercion, maritime incidents, and limited blockade-style pressure, are expected to continue, creating a dangerous "new normal" where miscalculation becomes increasingly possible. The US and its allies, particularly the Philippines, will likely maintain their commitment to deterring aggression, potentially leading to further counter-responses from Beijing. In the South China Sea, the failure to finalize a legally binding Code of Conduct by ASEAN and China, coupled with China's assertive maritime activities, raises the risk of accidents or miscalculations involving vessels from claimant states.

Indicators to monitor include the outcomes and tone of the Trump-Xi meetings, particularly regarding any new trade agreements or shifts in US declaratory policy on Taiwan. The scale and nature of PLA military exercises and Coast Guard activities in the Taiwan Strait and South China Sea will be crucial indicators of China's intent and strategic thresholds. Progress, or lack thereof, in the ASEAN-China Code of Conduct negotiations will also be a key barometer of regional stability. Furthermore, monitoring the frequency and sophistication of China-linked cyberattacks, especially against critical infrastructure, will provide insights into evolving cyber warfare strategies. Finally, the implementation of China's 15th Five-Year Plan (2026-2030), particularly its focus on economic integration with the Asia-Pacific and Global South, will reveal China's long-term strategic economic and security objectives.

Strategic recommendations for stakeholders interacting with China during this period should focus on a multi-pronged approach. Diplomatically, maintaining open channels for dialogue while clearly articulating red lines and upholding international law is essential. Economically, diversifying supply chains and strengthening cyber defenses against state-sponsored attacks are crucial to mitigate risks. Militarily, enhancing deterrence capabilities through alliances and joint exercises, particularly in the Indo-Pacific, can help counter China's assertive posture. For regional partners, fostering internal ASEAN unity and developing robust crisis response mechanisms are vital to effectively address South China Sea disputes. Lastly, a coordinated international response to China's cyber espionage activities, including attribution and countermeasures, is necessary to deter future attacks.