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China’s Counter-Terrorism Law of 2015 made it legal, for the first time, for Chinese security forces to engage in foreign counter-terrorism operations. This new outward-looking policy, however, only formalized the longstanding militarization and internationalization of China’s foreign policy through counter-terrorism cooperation. Since the first exercise with Kyrgyzstan in 2002, counter-terrorism joint military exercises (CT-JMEs) with foreign militaries have become a pillar of China’s regional relationships and the most visible manifestation of the internationalization of the PLA. However, despite this significance, relatively little is known about these activities. Drawing on an original and comprehensive dataset of PLA’s CT-JMEs in the period of 2002-2016, we identify the strategic calculations that drive these activities. Empirical results indicate that China has consistently prioritized CT-JME partners where terrorist threats are high and where China also has significant economic interests. We also find that this dynamic is more driven by domestic terrorist threat than by transnational terrorism. We argue that this pattern reflects a series of competing priorities in China’s regional foreign policy, which are (1) developing a credible reputation as a regional hegemon, (2) furthering military readiness and modernization, (3) safeguarding Chinese nationals and investments abroad, and (4) minimizing “blowback” from internationally-oriented terrorist organizations. While the first two of these priorities would bias toward militarized and expansive regional counterterrorism policies, the third and fourth concerns condition the impulse to engage.