We are barely into March 2026, yet President Donald Trump’s bold foreign policy has already delivered a series of body blows to Xi Jinping’s grand vision for China’s global dominance.
Since assuming power in 2012, Xi has promoted the “China Dream” — a nationalist narrative of national rejuvenation that envisions China supplanting the United States as the world’s preeminent superpower. Central to this is his conviction that the “East is rising and the West is declining,” a belief that has shaped over a decade of CCP propaganda, military buildup, and assertive diplomacy. Xi discarded Deng Xiaoping’s prudent “hide your strength, bide your time” approach in favor of an assertive foreign policy posture, such as militarizing the South China Sea, coercing neighbors like the Philippines and Vietnam, and expanding arms exports to build influence in the Global South.
For years, this seemed prescient. The United States, under Presidents Obama and Biden, along with European allies led by leftist leaders, has taken a path of managed decline, plagued by open border immigration, falling birthrates, identity erosion, and economic drag from green policies. The Covid-19 pandemic (originating in China) halted Trump’s first-term growth momentum, seemingly accelerating Xi’s timeline.
But 2026 has brought a stark reversal.
Xi began the year with a stunning purge: removing General Zhang Youxia — his longtime ally and the PLA’s most senior uniformed officer — from the Central Military Commission in January. Accused of “serious violations of discipline and law” (code for corruption and disloyalty), Zhang’s ouster signals deep insecurity. Even Xi’s inner circle is not immune, raising doubts about the PLA’s cohesion and readiness amid ongoing military modernization.
Meanwhile, Donald Trump kicked off the year by capturing China’s closest ally in Latin America, Venezuelan leader Nicolás Maduro and his wife, in a precise raid, merely hours after Maduro held a meeting with a high-level Chinese delegation. Chinese-built defense systems suffered “catastrophic paralysis” during the raid, exposing significant flaws in Chinese military technology and marking an embarrassing setback for Xi.
The Trump administration has also taken control of Venezuela’s oil industry, threatening China’s billions of dollars’ worth of investments in the country and the access to oil. Yet, Beijing offered only rhetorical support for Maduro; no real support materialized. This lack of action exposed China’s limited reach: allies get words, not protection.
Days later, Panama’s Supreme Court annulled longstanding contracts dating back to 1997, which included a 25-year extension granted in 2021. These contracts allowed a subsidiary of Hong Kong-based CK Hutchison Holdings to operate two key container ports at the entrances to the Panama Canal. By Feb. 23, Panama seized control of those ports. This is seen as a victory for the Trump administration’s efforts, which began in 2025, to reduce Chinese influence over the canal. CK Hutchison is often regarded in Western analyses as having ties to Beijing, despite being a Hong Kong-based private conglomerate.
The trifecta culminated in late February, as the United States and Israel conducted joint military strikes against Iran, successfully eliminating over 40 of the regime’s top leaders, including Supreme Leader Ayatollah Khamenei, during the early hours of the operation. While President Trump’s stated objectives for this military campaign primarily focus on Iran, it has also significantly affected China.
Approximately 13-14 percent of China’s annual seaborne oil imports come from Iran, making it China’s third-largest supplier, behind Russia and Saudi Arabia. The broader Middle East and Gulf region, which includes both Iran, accounts for 40-50 percent of China’s oil imports. Last year alone, China imported 5 million barrels of crude oil per day via the Strait of Hormuz.
In response to the military strikes, Iran’s Revolutionary Guard has warned ships to avoid passing through the Strait of Hormuz and has attacked oil tankers in the area. As a result, China’s access to affordable oil from the Middle East has been restricted. Essentially, within two months, China has lost two important oil suppliers, which together represented 17 percent of its oil imports.
The situation regarding oil prices could not have come at a worse time for China, as its economy is already facing significant challenges: the property market continues to decline, domestic consumption is weakening, and youth unemployment remains elevated at more than 20 percent.
Compounding the humiliation: Chinese-supplied air defense system (e.g., HQ-9B variants) in Iran reportedly failed to protect Iranian sites from stealth aircraft and missiles. Similar underperformance of Chinese-made weaponry has been observed in Venezuela during U.S. operations and in Pakistan during its brief conflict with India. China relies on arms exports to build geopolitical influence, particularly in the Global South and to counter Western dominance. These exports also help secure resource deals, such as oil ties with Iran and other countries. Battlefield flops erode the regime’s credibility and future sales prospects.
China further undermines its international standing by limiting its response to mere diplomatic condemnation and calls for a ceasefire. Such muted response reveals a pattern: Beijing prioritizes economic interests and self-preservation over ally security.
These events reveal significant gaps in Xi Jinping’s pursuit of superpower status. China is still far from matching the United States in terms of global military presence, alliance formation, currency influence, and soft power. Additionally, China is not yet able to effectively shape the international order or reliably defend its partners. These deficiencies are casting doubts about Xi’s proclaimed inevitability of his “China Dream.” Xi has been eager to step into the role of a superpower for over a decade now, yet 2026 may very well be the year when Trump starts shattering Xi’s “China Dream.”
