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"While this was happening, Beijing played its hand skillfully. Decades earlier, when China first embarked on its economic reform project, Deng Xiaoping, China’s leader until his death in 1997, urged subsequent generations of leaders to maintain a low international profile. "

I understand the meaning of the phrase that they took advantages of the situation. But does the phrase in bold sound natural, and are there any equivalent expressions?

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The expression to play one's hand is idiomatic and very common. There is no need to substitute it with another unless its author wanted to appeal to a wider and more international audience, some of whom might be unfamiliar with its meaning.

Astonishingly, I did not find a dictionary reference that supported the game of cards inspired phrase. The closest I found was in Merriam-Webster's entry for hand

9 a (1) : a player in a card game or board game (2) : the cards or pieces held by a player • studied her hand
b : a single round in a game • lost the first hand but won the next two
c : the force or solidity of one's position (as in negotiations)trying to strengthen their hand

As a suitable alternative, the adjective shrewd, and its derivatives would be appropriate here. It carries a positive connotation and suggests that the person or persons are cautious and wary of making any mistakes, but ultimately they are thinking about gaining the best advantage for themselves, which I think is a common perception many westerners have of the Chinese government.

While this was happening, Beijing shrewdly kept a low profile

With some tweaking, one could use any of the phrases suggested below

  • displayed shrewd leadership
  • [their low profile] was a shrewd political move
  • a shrewd player

Cambridge Dictionary defines

shrewd, shrewdly, shrewdness: having or based on a clear understanding and good judgment of a situation, resulting in an advantage:

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There's an expression that is close to play one's card in meaning: take an active role.

Does God play a hand in our lives, or does He just watch?

Your expression in bold also comes up in the Longman Dictionary of Contemporary English, 5th version:

play your cards right: to say or do things in a situation in such a way that you gain as much as possible from it

Who knows? If you play your cards right, maybe he’ll marry you.

but it's used in another way.

In light of all that has been said, I wouldn't think that this idiomatic expression could be replaced with anything just as simple as it is. If so, the sentence would be a bit longer and even more complicated and wouldn't reflect what the original expression conveys.

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An alternative idiom:

be quick on the uptake TFD

understand things quickly/understand even simple things with difficulty

As in:

While this was happening, Beijing, being quick on the uptake as usual, won the desired concessions.

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versed in TFD

to familiarize someone with something by study or experience

As in:

While this was happening, Beijing, being well versed in the art 'politics' remained silent.

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