1. Stock market rescue progress - The government intervention to prop up stock prices worked Tuesday. The Shanghai Composite closed up 1.8% at 3,864.37, the Shenzhen Component up 4.8% at 14,264.29, while the ChiNext and STAR Market indexes jumped 7.1% and 8.8% to 3,685.97 and 2,060.48.

Members of the Party Group of the China Securities Regulatory Commission (CSRC) held another symposium Tuesday “to solicit opinions and suggestions from various parties on promoting the stable and healthy development of the capital market”. According to the CSRC readout, translated here, “twenty-nine representatives from listed companies, securities and fund institutions, and the ranks of experts and scholars took part”. Quant funds should expect more regulation:

In the discussions, participants said that China’s economy is currently showing a development trend of overall stability and movement toward the new and the better. Since the release of the new “Nine Measures,” the overall ecology of the capital market has undergone profound changes, the effects of the comprehensive reform of investment and financing have continued to be released, the quality and investment value of listed companies have been effectively raised, and there is a solid foundation for keeping the market running steadily. Participants offered opinions and suggestions on such matters as further strengthening the capital market’s foundational institutional framework, implementing a long-cycle assessment mechanism for medium- and long-term funds, continuously improving the standardized operation and governance of listed companies, further regulating quantitative trading behavior, intensifying the punishment of market violations and irregularities, strengthening the guidance of capital-market expectations, and further institutionalizing mechanisms for market stabilization.

座谈中，大家表示，当前我国经济呈现总体平稳、向新向优的发展态势，新“国九条”发布以来，资本市场整体生态发生深刻变化，投融资综合改革效应持续释放，上市公司质量和投资价值有效提升，保持市场稳健运行具备坚实基础。与会代表围绕进一步加强资本市场基础制度建设、落实中长期资金长周期考核机制、不断提升上市公司规范运作和治理水平、进一步规范量化交易行为、加大市场违法违规惩处力度、强化资本市场预期引导、进一步推动稳市机制制度化等方面提出了意见建议。

“Strengthening the guidance of capital-market expectations” likely means more positive talk about market prospects, and “further institutionalizing mechanisms for market stabilization” sounds like a call for more “national team” support, SOE buybacks, and long-term institutional money, in a more institutionalized way.

According to the readout, the “responsible official” from the CSRC said:

At the meeting, the responsible official of the CSRC said that high-quality development of the capital market cannot be achieved without the joint participation and joint efforts of all parties, including listed companies, industry institutions, and experts and scholars. He expressed the hope that listed companies would work to strengthen their compliant-operation capabilities and enhance their core competitiveness so as to better reward investors; that industry institutions would step up counter-cyclical positioning and earnestly raise the level of their investor services; and that experts and scholars would actively offer advice and proposals and speak out rationally, so as to jointly foster a sound market environment. The CSRC will conscientiously study and absorb the opinions and suggestions raised by all parties, proactively respond to market concerns, take a coordinated approach to preventing risks, strengthening regulation, and promoting high-quality development, continue to strengthen the market’s foundational institutional framework, enhance the market’s inherent stability, improve the long-term mechanism for protecting investors’ lawful rights and interests, and better promote the long-term, steady, and healthy development of the capital market.

会上，证监会负责同志表示，资本市场高质量发展，离不开上市公司、行业机构、专家学者等各方面的共同参与、共同努力。希望上市公司着力增强合规经营能力、提升核心竞争力，更好回报投资者；行业机构加大逆周期布局力度，切实提升投资者服务水平；专家学者积极建言献策、理性发声，共同营造良好市场环境。证监会将认真研究吸收各方面提出的意见建议，主动回应市场关切，统筹防风险、强监管、促高质量发展，持续加强市场基础制度建设，增强市场内在稳定性，完善投资者合法权益保护长效机制，更好推动资本市场长期平稳健康发展。

“Industry institutions would step up counter-cyclical positioning and earnestly raise the level of their investor services; and that experts and scholars would actively offer advice and proposals and speak out rationally, so as to jointly foster a sound market environment” sounds like an instruction to not sell into weakness while ensuring commentary and analysis about the market are positive.

The monster CXMT IPO is imminent, and they need it to go off well. Even more importantly, regulators need investors to keep putting money into the market to fund the national technology strategy.

2. PRC to soon restrict open model weights? - So says the Financial Times, which reports that:

Regulators led by the Ministry of Commerce (MofCom) have been consulting leading domestic AI and chipmaking groups on how to prevent China’s advanced technologies and star start-ups from being acquired by the west, according to two people involved in the discussions.

MofCom talked to AI companies including Alibaba, ByteDance and Zhipu on limiting the transfer of key data for the training of their models overseas, as well as allowing their model weights to be downloaded by foreign users, the people said. China would still let overseas customers access the models and services, however...

That follows recent reporting from the Wall Street Journal and Reuters, and should not be a surprise.

On this week’s Sharp China, Andrew and I spent a lot of time talking about the WAIC and the PRC approach to open models. You can listen to the whole podcast here, and here is a relevant clip:

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On today's show Andrew and Bill focus on the arrival of Moonshot's Kimi K3 model and the "DeepSeek 2.0 concerns" among investors and policymakers. Topics include: The incoherent U.S. approach to the open source AI ecosystem, levers the U.S. side could pull to thwart Chinese progress, and why the Trump Administration might be reluctant to take those steps. Then: Xi's keynote address at the World AI Conference, China's coherent messaging to the world, questions about infrastructure in the Global South, and the needle the U.S. could thread with open source policy. At the end: Trump's claims of "an unprecedented election security nightmare" at the hands of the PRC, the Connected Vehicle Security Act heads to mark-up this week, Neville Roy Singham is under investigation, and Rep. John Moolenaar urges the NBA to look closer at Brooklyn Nets owner—and Alibaba Chairman—Joe Tsai.

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Today’s top items:

1. Operation stock market rescue - The National team is back to try to turn around the stock market, after losses approaching ten trillion RMB this month. China Reform Holdings Corp. Ltd. and China Chengtong Holdings Group Ltd. announced Sunday they were buying around 60B RMB of ETFs and domestic stocks, five insurance firms and multiple SOEs announced Monday they were buying stocks, and CSRC head Wu Qing held an “investor symposium” at a brokerage branch in Beijing to meet “with 8 representatives from various categories of investors — large, medium, small, and retail — to hear their opinions and suggestions on promoting the stable and healthy development of the capital market.” According to the readout, translated here:

Wu Qing said that the broad mass of investors are the foundation of the market and the most important participant group in the capital market.…

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1. World Artificial Intelligence Cooperation Organization - Ahead of the Friday opening of the World Artificial Intelligence Conference (WAIC), Xi hosted a welcome banquet and Wang Yi signed an agreement with representatives from 29 countries for the establishment of the World Artificial Intelligence Cooperation Organization. Andrew and I talked a lot about what to expect at the WAIC in this week’s episode of Sharp China, which you can listen to here.

2. “What China wants to explore is another order” for AI - So says the CCTV account Yuyuan Tantian 玉渊谭天 on the eve of the WAIC, in 中国AI的发展逻辑 The Logic of China’s AI Development, translated here. From the article:

Core technology is held by a few, and other participants can only get products and services while finding it very hard to build up technical capability of their own. In the AI era — closed-source models, paid APIs, restricted compute, locked-down ecosystems — the higher the concentration of technology, the more solid the relations of dependency in the global AI industry become.

核心技术掌握在少数人手中，其他参与者只能获得产品、服务，却很难真正积累自己的技术能力。进入人工智能时代后，模型闭源、接口收费、算力受限、生态锁死，当技术集中度越高，全球AI产业的依附关系就会越稳固。

What China wants to explore is another order: pooling the strength of all humanity and all countries to build an open-source, all-factor AI ecosystem.

而中国想探索的，是另一种秩序——集全人类、各国合力，实现开源的、全要素的AI生态构建。

This is because AI is a wholly different sort of technology and is bound to raise a series of security and ethical questions. Only with global participation and shared effort can a safe and effective path of development be found.

这是因为，人工智能是一项截然不同的技术，势必会引发安全、伦理等一系列问题，唯有全球共同参与、共同努力，才能走出一条安全、有效的发展道路。

At the 2026 World Artificial Intelligence Conference, the open logic of “all-factor sharing” in China’s international AI cooperation will be presented as a clearer, more concrete action framework. The conference may also go further toward answering where the global AI order is headed.

在2026世界人工智能大会上，中国人工智能国际合作“全要素共享”的开放逻辑，将呈现出更清晰、更具体的行动框架。大会也或许会进一步回答全球AI秩序会向何处演进。

3. Kimi’s monster new model - Moonshot is the latest PRC firm showing the way to building open-source AI, with the release today of Kimi K3, which from early reviews is a frontier-class model. Kimi obviously timed the release for the eve of the WAIC, and I will assume they coordinated it with the relevant organs. If it is as good as the initial reviews say it is, this could change lots of assumptions.

4. July 15th issue of Qiushi - I have posted a summary of the 2026 Issue 14 of Qiushi, along with selected full translations, here. The most interesting article may be Raising the Household Consumption Rate by Smoothing Economic Circulation by “special commentator” Xu Qiyuan 徐奇渊, research fellow and deputy director of the Institute of World Economics and Politics at CASS. If Xu is correct, don’t expect any changes to the slow grind towards raising consumption:

Therefore, at the present stage the key to raising China’s household consumption rate lies in promoting the optimization of the demand structure and smooth economic circulation, and in accelerating the formation of a new development model that is led by domestic demand, pulled by consumption, and endogenously growing—not in propping up the indicator through short-term stimulus policies such as “helicopter money” (直升机撒钱), still less in reducing it to a rigid assessment target. Changes in the household consumption rate depend on the relative relationship between the growth rate of household consumption expenditure and the growth rate of GDP. If investment, foreign trade, and the like expand rapidly, making GDP grow faster than household consumption expenditure, the household consumption rate will fall; otherwise it will rise. It is impossible to raise the household consumption rate by suppressing investment and foreign trade activity; the emphasis should be on promoting a higher-level virtuous cycle among investment, foreign trade, and consumption. In addition, household consumption is a slow variable; although short-term consumption subsidies can boost the data, they easily overdraw future potential, and once the policy is withdrawn, growth may fall back, making it hard to drive a fundamental transformation of the development model.

因此，现阶段提升我国居民消费率，关键在于推动需求结构优化和经济循环畅通，加快形成内需主导、消费拉动、内生增长的新发展模式，而不在于通过”直升机撒钱”等短期刺激政策拉抬指标，更不能简化为硬性考核任务。居民消费率的变动，取决于居民消费支出增速和国内生产总值增速的相对关系。若投资、外贸等扩张较快，使国内生产总值增速快于居民消费支出，居民消费率就会下降，反之就会上升。不可能为了提高居民消费率而去抑制投资和外贸活动，重在推动投资、外贸与消费形成更高水平的良性循环。另外，居民消费是慢变量，短期消费补贴虽能拉升数据，却易透支后续潜力，一旦政策退坡，就可能出现增速回落，难以驱动发展模式的根本转型。

5. Australian government gets a new China advisor - Congratulations to Richard McGregor, and to Australian Foreign Minister Penny Wong, on McGregor’s appointment as her new senior advisor.

6. Dealing with the “dog days of summer 三伏天” - We are officially in the “dog days of summer 三伏天”, and this year it is ten days longer than usual. Parts of China are in nasty heat wave, as are we here in DC, along with crazy Canadian smoke pollution that is giving me flashbacks to smoggy Beijing summer days.

The National Health Commission held a press conference held a press conference to offer advice about dealing with the heat. I have translated it here. Some of the suggestions may be useful:

Wang Hongbing, a member of the National Expert Pool for Health Science Popularization and a chief physician at Beijing Hospital of Traditional Chinese Medicine, Capital Medical University, wrote on the Healthy China WeChat account that, as part of the normal calendar cycle, this year’s sanfu period is an “extended” 40 days—10 full days longer than last year—and will run from July 15 through August 23.

国家健康科普专家库成员、首都医科大学附属北京中医医院主任医师汪红兵在“健康中国”微信公众号发文介绍，由于是正常的历法循环，今年的三伏天是40天的“加长版”，比去年多出整整10天，将从7月15日持续到8月23日。

He advised that staying healthy during sanfu requires not only preventing heat illness but also emotional self-care, appropriate exercise and a proper diet; people may also practice the TCM therapy of treating winter ailments in summer. Traditional Chinese medicine holds that the Heart opens into the tongue, corresponds to bitterness among the five flavors, has joy as its associated emotion and sweat as its bodily fluid, and corresponds to summer among the four seasons. Nourishing the Heart is therefore especially important in summer, and people should maintain a happy mood and stable emotions. Suitable summer exercise includes swimming, tai chi, Baduanjin and walking. Avoid the hottest hours with the strongest sunlight, from 11 a.m. to 4 p.m., and reduce exercise intensity appropriately.

他提醒，伏天养生，除了防暑降温，也要注意情志调养、适当运动、饮食得当，同时可进行冬病夏治。中医认为，心开窍于舌，通五味之苦，在志为喜，其在液为汗，应四时之夏，因此，夏季养心非常重要，应该保持心情愉悦、情绪平稳。夏季运动适合的项目包括游泳、太极拳、八段锦、散步等，注意避开气温最高、阳光最强烈的时段（11时至16时），且强度要适当降低。

Tashi is definitely leaning in to the “reduce exercise intensity appropriately” advice:

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On today’s show, Andrew and Bill begin by parsing the economic data released by the PRC this week, including slower-than-expected growth, the Party’s response to the status quo, export-powered growth that is widening trade imbalances, and the questions all of this will raise for foreign policymakers. From there: The Party's findings on Ma Xingrui, questions that remain unanswered, and cadre risk aversion for the next 18 months. Then: PRC messaging around openness in AI, an ongoing U.S. debate over open-source AI models, three chip bills that may end up in the NDAA, and the continued adventures in China policy on Capitol Hill. At the end: Reflections on the 10th anniversary of The Hague ruling on the PRC’s territorial claims in the South China Sea, as well as the state of play today.

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1. Xi inspects Shanghai - As expected, Xi has undertaken an inspection tour of Shanghai ahead of his Friday speech at the World Artificial Intelligence Conference. The key themes from today’s readout:

Xi Jinping stressed during an inspection in Shanghai on the 15th that advancing urban renewal with high quality is an important handhold for urban modernization, that the people’s city concept must be comprehensively put into practice, that one must persist in asking the people what they need, seeking the people’s counsel, and letting the people judge results, that all aspects of urban renewal work must be done deeply, finely, and solidly, and that residents’ sense of gain, happiness, and security must be continually strengthened.

The readout also included comments from Xi about the ongoing flooding in parts of the country:

In the course of the inspection Xi Jinping stressed that this is currently the critical period for flood prevention, and that all localities and all relevant parties must firmly establish bottom-line thinking and worst-case thinking, closely follow rainfall, flood, and typhoon conditions, carry out thorough and meticulous investigation of risks and hidden dangers, do solid work on flood prevention and control and on emergency rescue and disaster relief, and earnestly safeguard the safety of the people’s lives and property.

Will the People’s Leader visit any of the affected regions before returning to Beijing?

2. GDP data - The PRC economy slowed more than expected in Q2. Real GDP growth declined from 5.0% year-on-year in Q1 to 4.3%, below the 4.5% consensus and the lower bound of the government’s 4.5–5.0% full-year target. First-half growth was 4.7%. Sequential Q2 growth of 0.9% was in line with expectations.

AI, high-tech manufacturing, exports and selected modern services are expanding rapidly. Property, private investment, conventional infrastructure and household consumption remain weak. The official Q&A noted that “new growth drivers” contributed more than 40% of economic growth, while officials largely avoided explaining why aggregate investment is contracting.

The GDP deflator turned positive for the first time in 12 quarters.

The data is not great but probably not bad enough for significant new policy measures coming out of the upcoming July Politburo meeting that will discuss the economy. But in his meeting with experts and economists earlier this week, Premier Li, whom I assume already knew today’s data, said “counter-cyclical adjustment must be stepped up; existing policies must be used well and to the full while incremental policies are studied and reserved in advance”.

3. Problems in the US-China trade deal - Bloomberg’s Jenny Leonard reports on the open secret in DC, that the PRC side has not lived up to the Trump-Xi deal but the US is keeping quiet about the problems, especially around rare-earths. From the article:

While there’s plenty of internal grumbling and frustration voiced among Trump officials, those familiar with the situation describe a hush culture where the US government is reluctant to publicly admonish China and risk plunging the countries back into a trade war.

Some officials believe Trump is particularly disinclined toward registering any objection that could endanger his plans to host Xi for a lavish state visit in September. There’s also concern that pushing back could prompt the Chinese leader to escalate retaliation in a way that could rock markets ahead of November’s midterm elections or fully turn off access to critical minerals...

Treasury Secretary Scott Bessent and Jamieson Greer, who leads the trade office, have spent a half-dozen meetings with Chinese representatives over the course of a year attempting to iron out sourcing for the crucial inputs for American firms, only to be rebuffed.

4. Pew Research: China viewed more positively than US in many countries - Pew Research is out with a new survey of respondents in 36 countries that says People in Many Countries Now View China More Positively Than the US:

Views of China have improved in recent years while opinions of the U.S. have worsened, to the point where China is now seen more positively than the U.S. in most of 36 countries surveyed…

China being assessed more positively than the U.S. is a relatively recent shift in most countries surveyed. This reversal in favorability is often driven by shifting views of both superpowers: improving views of China coupled with worsening views of the U.S.

5. Foreign Correspondents Club on reporting challenges - The Foreign Correspondents’ Club of China’s (FCCC) 2025 Media Freedoms Report describes worsening conditions for foreign correspondents and increasing numbers of “sensitive” areas for reporting. Meanwhile, officials, propaganda organs and academics talk about the need for “new” Edgar Snows, as articulated in last week’s report Legacy of Edgar Snow: Contemporary Value and Inspiration to the World from the Xinhua Institute:

Only by approaching China with an objective eye, walking its ground, listening to its people, and seeing it for oneself as Snow did, can one move beyond prejudice and stereotypes, understand the historical inevitability and practical rationality of China’s pursuit of the Chinese path, and view China’s development achievements, opportunities and challenges fairly, it said.

The report said the legacy still inspires the world to build bridges of friendship, promote exchanges and mutual learning and address global challenges with joint efforts.

It called for more “new Snows” to uphold an attitude of openness, inclusiveness, exchange and mutual learning, continue writing new chapters of friendship between China and the rest of the world, illuminate the way forward for the peace and development of humanity, and rally the people of all countries around a new vision of building a better world.

As I wrote in an entry from the January 4, 2021 Sinocism after then MoFA spokesperson Hua Chunying said:

The PRC may want only pliant foreign journalists to better “tell China’s story”, but the information environment today is obviously a lot different than it was in the 1930s and 1940s. China is even more important now, across every dimension, so it is quite distressing to see the reversion to a much more constricted information and access. I think that is what Xi Jinping prefers, with the expectation that greater restrictions on foreign access buttress the CCP’s “political security” and allow the Party-State to better pursue its goal of increasing China’s international discourse power, aka “telling China’s story well”. So in some ways we are going back to the future, but now trying to understand a much more complicated country and society with increasingly narrow lenses.

Five years on, the PRC has gotten much more effective at telling its story well, and increasing international discourse power. The Pew poll results are in part a reflection of that.

Thanks for reading.

1. Xi inspects Shanghai

Xi Jinping Inspects Shanghai - Translation

Xinhua, Shanghai, July 15 — General Secretary of the CPC Central Committee, President, and Chairman of the Central Military Commission Xi Jinping stressed during an inspection in Shanghai on the 15th that advancing urban renewal with high quality is an important handhold for urban modernization, that the people’s city concept must be comprehensively put into practice, that one must persist in asking the people what they need, seeking the people’s counsel, and letting the people judge results, that all aspects of urban renewal work must be done deeply, finely, and solidly, and that residents’ sense of gain, happiness, and security must be continually strengthened.

新华社上海7月15日电 中共中央总书记、国家主席、中央军委主席习近平15日在上海考察时强调，高质量推进城市更新是城市现代化建设的重要抓手，要全面践行人民城市理念，坚持问需于民、问计于民、问效于民，做深做细做实城市更新各项工作，不断增强居民群众的获得感、幸福感、安全感。

On the afternoon of the 15th, accompanied by Politburo member and Shanghai Party Secretary Chen Jining and Mayor Gong Zheng, Xi Jinping came to the Shimin Xincun residential district of Bansongyuan Road Subdistrict in Huangpu District for an inspection.

15日下午，习近平在中共中央政治局委员、上海市委书记陈吉宁和市长龚正陪同下，来到位于黄浦区的半淞园路街道市民新村居民区考察调研。

Four buildings in the Shimin Xincun residential district, put up in the 1950s, have had their living conditions markedly improved through reconstruction and renewal, with self-contained kitchens and bathrooms installed and elevators added. Xi Jinping walked into the community comprehensive service point and heard a briefing on Shanghai’s push to upgrade and renovate old housing lacking sanitary facilities, on the historic resolution of the “carrying the chamber pot” problem for residents of the old city districts, and on residential compound renovation, and asked staff on site detailed questions about the situation. Xi Jinping stressed that the Party Center attaches great importance to urban work and has explicitly called for building modern people’s cities that are innovative, livable, beautiful, resilient, civilized, and smart, and that renovating old and dilapidated urban residential compounds is an important link in this. In this work one must firmly establish and put into practice a correct view of performance achievements, think what the masses think and treat as urgent what the masses treat as urgent, formulate and implement effective policies and measures, persevere over the long haul, handle well one by one the matters ordinary people care about, and keep improving the people’s wellbeing. Property management and convenience services in residential compounds must be steadily raised with “embroidery-needle skill,” striving to satisfy the residents...

市民新村居民区4幢上世纪50年代建成的楼房，通过改建更新，设立独立厨卫、加装电梯，居住条件明显改善。习近平走进社区综合服务点，听取上海市推进无卫生设施旧房提升改造、历史性解决老城区居民“拎马桶”问题和小区改造介绍，并向现场工作人员详细询问有关情况。习近平强调，党中央高度重视城市工作，明确提出要建设创新、宜居、美丽、韧性、文明、智慧的现代化人民城市，改造城市老旧小区是重要一环。工作中要牢固树立和践行正确政绩观，想群众之所想，急群众之所急，制定实施有效的政策举措，坚持久久为功，把老百姓关切的事一件一件办好，持续增进民生福祉。要以“绣花功夫”不断提升小区物业管理和便民服务水平，努力让居民群众满意。

Xi Jinping then came to the community Party-mass service station, looked over the supply of fruit and vegetables at a convenience produce stall, and had a cordial exchange in the “citizens’ parlor” with resident representatives, subdistrict cadres, community workers, and others. Xi Jinping pointed out that the community is the basic unit of the urban governance system. The level of community governance must be raised, resources, services, management, and the like must be pushed down to the grassroots front line, and burdens on the grassroots must be continually reduced while empowering them. Party building leadership must be further strengthened, new models must be actively explored for the coordinated operation of residents’ committees, homeowners’ committees, and property service enterprises under the leadership of community Party organizations, complete communities and convenient living circles must be built, and good deeds must be done, practical matters handled, and difficulties resolved for residents with heart and with feeling.

随后，习近平来到社区党群服务站，察看便民菜摊果蔬供应情况，在“市民客厅”同居民代表、街道干部、社区工作者等亲切交流。习近平指出，社区是城市治理体系的基本单元。要提高社区治理水平，推动资源、服务、管理等下沉基层一线，持续为基层减负赋能。要进一步加强党建引领，积极探索社区党组织领导下的居委会、业委会、物业服务企业协调运行新模式，建设完整社区和便民生活圈，用心用情为居民做好事、办实事、解难事。

2. GDP data

National Economy Operated within an Appropriate Range with New Growth Drivers Developing Rapidly in the First Half Year

In the first half year, under the strong leadership of the Central Committee of the Communist Party of China (CPC) with Comrade Xi Jinping at its core, all regions and departments fully implemented the decisions and arrangements made by the CPC Central Committee and the State Council, adhered to the general principle of pursuing progress while ensuring stability, fully and faithfully applied the new development philosophy on all fronts, moved faster to foster a new pattern of development, made efforts to promote high-quality development and effectively carried out more proactive and vigorous macro policies. As a result, the national economy operated within an appropriate range against pressure. Production and supply grew fast, employment was generally stable, prices increased mildly, foreign trade showed good momentum of growth, new growth drivers witnessed rapid development, and people’s wellbeing was ensured in a strong and effective way. The national economy continued to demonstrate strong resilience.

According to preliminary estimates, the gross domestic product (GDP) in the first half of 2026 reached 69,570.4 billion yuan, up by 4.7 percent year on year at constant prices. By industry, the value added of the primary industry was 3,152.2 billion yuan, up by 3.7 percent year on year; that of the secondary industry was 25,047.3 billion yuan, up by 3.9 percent and that of the tertiary industry was 41,370.9 billion yuan, up by 5.2 percent. By quarter, the GDP for the first quarter increased by 5.0 percent year on year and for the second quarter 4.3 percent. The GDP for the second quarter increased by 0.9 percent quarter on quarter.

Caixin - China’s Growth Misses, but AI and Oil Prices Snap Its 3-Year Deflation Streak

China’s economy grew a weaker-than-expected 4.3% in the second quarter, official data showed Wednesday, but surging AI and energy prices offered a rare bright spot: snapping the country’s three-year deflationary streak.

The real year-on-year growth fell short of the 4.4% median forecast in a Caixin survey, dragged down by sluggish construction activity.

Yet nominal GDP jumped 5.9% year-on-year, outpacing real growth for the first time since the first quarter of 2023. The shift ends 12 consecutive quarters of negative GDP deflator readings — a broad measure of economy-wide prices.

China’s economy grows at one of lowest rates in decades - Financial Times

Retail sales added just 1 per cent in June from a year earlier, while fixed-asset investment was down 5.7 per cent year on year for the first half of the year, compared to 4.1 per cent in the first five months.

Industrial production, one sign of strength, grew 5.3 per cent last month on a year earlier.

Lynn Song, chief greater China economist at ING, said the GDP data showed a “significant deceleration” from the first quarter and pointed to a “sharp weakening in monthly indicators”.

“Though the monthly activity data does not translate directly into the GDP contribution, we have seen fixed-asset investment further crater into negative year-on-year growth [and] retail sales barely in positive territory,” he said.

‘Bad Inflation’ Ends China’s Record Streak of Price Declines - Bloomberg

The so-called GDP deflator, which measures price changes across all domestically produced goods and services, rose 1.6% in the second quarter after three years of contraction. But the turnaround brings little comfort for an economy that slowed in the April-June period to the weakest pace since the last months of 2022.

“The higher price level is cost-push — we can call this ‘bad inflation,’” said Raymond Yeung, chief economist for Greater China at ANZ. Still, he added that positive inflation expectations are better for the economy than remaining stuck in a persistent deflationary trap.

China’s retail sales of goods, services up 2.7% in first half of 2026 | Xinhua

China’s total retail sales of goods and services, a major indicator of the country’s consumption strength, increased by 2.7 percent year on year in the first half of 2026, official data showed Wednesday.

The retail sales of services increased by 5.3 percent in the period from a year ago, and that of goods increased by 1.1 percent, according to data released by the National Bureau of Statistics (NBS).

“As living standards improve, service consumption has increasingly become a key area for unlocking consumption potential,” Mao Shengyong, deputy head of the NBS, told media.

In terms of services consumption, the categories of communication and information services, tourism consulting and leasing services, and cultural, sports and leisure services saw fast growth, the NBS data showed.

Deputy Commissioner of the National Bureau of Statistics Answers Reporters’ Questions on National Economic Performance in the First Half of 2026 - Translation

Caixin - China’s Industrial Capacity Use Falls to Six-Year Low as Coal, Chemicals Weaken

The utilization rate for industrial enterprises above a designated size dropped to 73%, down 0.6 percentage point from the first quarter and 1 percentage point lower than a year earlier, according to data released Wednesday by the National Bureau of Statistics.

The decline highlights the persistent difficulty of balancing supply and demand in the world’s second-largest economy, as China seeks to rein in excessive industrial competition while shifting toward high-tech growth drivers.

The second-quarter reading was the lowest since the first quarter of 2020, when utilization fell to 67.3% during the initial Covid-19 outbreak. It was also close to levels seen during China’s 2016 supply-side structural reforms. For the first half of 2026, cumulative capacity utilization stood at 73.3%, below the 74.4% average for 2025.

China’s property investment falls 18% in H1 2026 - ECNS

China’s real estate development investment fell 18% year on year to 3.81 trillion yuan ($561 billion) in the first half of 2026 the National Bureau of Statistics said Wednesday. Property sales and developer funding also declined.

Investment in residential projects dropped 17.8% to 2.93 trillion yuan ($431.5 billion). The floor space of newly started projects fell 23.4%, while completed floor space decreased 23.7%.

The floor space of newly built properties sold declined 11.6% to 401.4 million square meters. Sales by value fell 13.6% to 3.79 trillion yuan ($558.1 billion), with residential property sales down 13.7%.

Funds available to real estate developers decreased 20.2% to 4.02 trillion yuan ($592 billion). Domestic loans fell 31.7%, while individual mortgage loans dropped 24.9%.

70-city house prices give off multiple positive signals: more cities with new-home gains in June 70城房价释放多重积极信号！6月新房上涨城市数量继续攀升 Securities Times 证券时报 · 2026-07-15

National Bureau of Statistics data released July 15 show 20 of 70 large and medium cities had month-on-month new-home price gains in June, four more than in May and the most since May 2025. First-tier new-home prices rose 0.1% month on month, a fifth straight gain; second-tier prices went flat after a 0.1% fall; third-tier prices fell 0.3%, narrowing by 0.1 point. Nine cities had second-hand price gains, one fewer than May. Zhang Dawei of Centaline told the paper the bottoming-out trend is unchanged; Yan Yuejin of the E-house Shanghai institute said the new-home price adjustment is largely complete.

3. Problems in the US-China trade deal

China Trade Pact Violations Go Unchallenged by Trump Administration - Bloomberg

Within President Donald Trump’s trade team, two sobering conclusions are emerging: China is cheating on its trade deal. And the US isn’t going to do much about it.

Reopening access to critical minerals and rare earths, crucial for US companies manufacturing a wide range of products including cars and fighter jets, was a central objective of the pact Trump struck with Chinese President Xi Jinping last year in South Korea.

But in meetings and messages described by people who requested anonymity to detail internal discussions, staffers at the White House and Office of the US Trade Representative acknowledge Beijing simply isn’t abiding by the Trump administration’s understanding of the deal...

Wonder if just a coincidence that same day Bloomberg has that story about the Trump team frustration with China not living up to the deal, Navarro is allowed to publish this oped - Peter Navarro: America Can Break China’s Choke Hold on Critical Minerals - WSJ

China uses “starve, not strangle” tactics designed to control the critical-minerals valves without closing them entirely. Its bureaucracy slows licenses, rations access, raises costs and reminds every boardroom that the road to strategic manufacturing runs through Beijing.

In response, the U.S. is mobilizing private capital, engineering talent, entrepreneurial risk-taking and strategic government support.

America’s aim isn’t only to reduce dependence on China. It is also to undercut China’s production advantage by developing cleaner, cheaper and more-flexible technologies that can produce critical minerals at or below China’s prices.

China and the new era of critical minerals diplomacy - Financial Times

Yttrium, however, is “the killer chokepoint”, says one supplier to the semiconductor industry. “We are facing an existential risk . . . As of yet, there is no date where we will have any fully de-risked supply chain.”

The limited supply has caused “panic” in the past few months, says Nick Myers, chief executive of US rare earths start-up Phoenix Tailings. Defence, automotive and semiconductor companies are calling “all the time”, with some warning that they may be forced to halt production by Christmas if they do not source the metal, he says...

“China could shut down the entire semiconductor industry if they wanted to turn off the valve,” says Lita Shon-Roy, a sector expert at analysis group TechInsights...

One executive at a large Japanese user of rare earths says China wants to keep companies in a “neither alive nor dead” state, by supplying them with the minimum needed to avoid a supply chain collapse — which would hit Chinese companies that still rely on materials and components from Japan.

White House weighs releasing controversial intel on China and US elections, sources say | Reuters

Trump may disclose the intelligence, which was collected and analyzed during his first term, in a speech that he is due to deliver on ‌Thursday night, when he is expected to outline information about alleged vulnerabilities in the voting infrastructure that could allow for foreign interference in U.S. elections, the sources said.

Reuters could not determine the details of the intelligence, but sources said it is classified and related to whether China had the intention or ability to disrupt U.S. elections in 2020. The sources, who were granted anonymity to discuss classified material, said the intelligence did not show Beijing had manipulated or changed ​votes.

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At present two entirely different logics of development exist in the AI field: some media have summed them up as "oil thinking" and "water-flow thinking" — the former treats data and computing power as exclusive scarce resources, fostering barriers, blockades and zero-sum games; the latter treats AI as a universally beneficial public good, nurturing connectivity, sharing and mutual benefit. The vitality of technology lies in open flow. The development of AI must never move toward a technological monopoly that walls itself in, but should always be anchored to the fundamental goal of serving humanity. - People’s Daily commentary previewing the themes of the upcoming World Artificial Intelligence Conference

Today’s top items:

1. Ma Xingrui handed over to prosecutors - The Party has released a public version of the “Report on the Findings of the Review of the Ma Xingrui Case and the Recommendations for Handling It”. Unsurprisingly, former Politburo member Ma is expelled from the Party, dism…

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1. Xi to speak at the World Artificial Intelligence Conference (WAIC) - Xi will be the keynote speaker at the WAIC in Shanghai Friday. That is an upgrade for the conference as in prior years the most senior speaker has been Premier Li Qiang. Expect to hear lots about the Global AI Governance Initiative and China’s approach to helping the world benefit from AI, if this Xinhua commentary is any indication:

A just cause finds no isolation; those who walk together go far. From holding the World Artificial Intelligence Conference for eight consecutive years and proposing the establishment of a World AI Cooperation Organization, to vigorously developing an open-source and open ecosystem and promoting the global sharing of technological achievements and application experience; from advocating stronger international cooperation with and assistance to developing countries and bridging the intelligence divide, to pushing the UN General Assembly to adopt a resolution on strength…

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1. China-Russia military cooperation - A joint investigation by The Insider, Der Spiegel, and Le Monde provides shocking but unsurprising revelations about China-Russia military cooperation. The reports should destroy any lingering illusions of PRC “neutrality” in the Russia-Ukraine war.

They really do not like Elon Musk’s Starlink:

The Der Spiegel cover:

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Show Notes:

On today's show Andrew and Bill begin with Monday's SLBM test from the PLA Navy, including questions surrounding its timing and location, regional angst, and a reminder that the PLA continues to enhance its nuclear triad capabilities. Then: Two new PLA generals are promoted while rectification continues and five CMC seats remain vacant, and reactions to last week's shocking CITIC plane crash and a major security breach in Beijing. From there: An emailer asks about America's interests in maintaining the Taiwan status quo, Beijing considers limiting access to advanced AI models, the knives are out for Jeffrey Kessler at BIS, and the White House preps for Xi's visit in September. At the end Questions about the release of pastor Ezra Jin, context for the U.S. sentencing of disgraced tycoon Guo Wengui, and the Washington Wizards get a letter from Rep. John Moolenaar.

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Related Readings:

Floods and Xi’s instructions; PRC to limit access to top AI models?; PBoC policy support for Hong Kong; Tax burden on private firms -- Sinocism

Two new PLA generals; Submarine-launched missile test; Ezra Jin released; “Routine” patrols of waters east of Taiwan -- Sinocism

China’s SLBM Test Underscores the Importance of a Ballistic Missile Launch Notification Agreement -- CSIS

China conducts rare submarine-launched ballistic missile test, angering Pacific neighbors -- CNN

China test fires missile into Pacific, alarming regional powers -- Reuters

A small plane hit Beijing’s tallest tower. Much remains unclear. -- Reuters

Beijing is looking at curbing overseas access to China’s top AI models, sources say -- Reuters

‘A massive screw-up’: China hardliners take aim at Commerce Department official -- Politico

Trump speeds up helipad project ahead of Xi visit, adding $875K, records show -- WaPo

China Raises Pressure on Taiwan With Expanded Coast Guard Patrols -- NYT

China releases Christian pastor after appeal from Donald Trump -- FT

Chinese tycoon sentenced to 30 years in US jail -- BBC

Select Committee: Owner of Capitals, Wizards Should Cut Ties with Chinese Military Company Alibaba -- China Select Committee

Erling Haaland + a 195-year-old Chinese herbal tea? Yes, really.-- YouTube

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It is necessary to seize the window period of global talent flows and actively recruit outstanding young talent and teams from overseas. 要抓住全球人才流动窗口期，积极引进海外优秀青年人才和团队。- Xi Jinping at the July 8, 2026 National Science and Technology Award Conference

Today’s top items:

1. National Science and Technology Award Conference - Xi presided Wednesday morning at the Great Hall of the People over the National Science and Technology Award Conference, held jointly with the academicians’ meetings of CAS and CAE and the 11th CAST National Congress, the same format as the June 2024 National Science and Technology Conference. Xi gave a speech and handed out the top awards, Li Qiang presided, all the other PBSC members were there, and Ding Xuexiang read the award decision. About 4,300 people attended.

In his speech, Xi said:

Since the National Science and Technology Conference in June 2024, China’s science and technology cause has achieved a series of new accomplishments. For example, major original achiev…

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1. Flood disasters and Xi’s instructions - Typhoon Maysak has caused significant flooding with casualties and major damage across parts of Guangxi and Hubei. Xi issued instructions Tuesday on flood control and disaster relief after reservoir dam breaches and landslides in Guangxi, Hubei and Gansu caused what Xinhua called “major casualties and economic losses 重大人员伤亡和经济损失.” Li Qiang added written instructions tasking the National Flood Control Office and the National Disaster Prevention, Reduction and Relief Office.

From the instructions:

All localities and relevant departments must ensure the implementation of established deployments and measures, resolutely overcome complacency and the mentality of trusting to luck, keep a close watch on and enforce disaster prevention and relief responsibilities, and thoroughly carry out the screening and rectification of risks and hidden dangers in rivers and lakes, dilapidated and at-risk reservoirs [病险水库], and areas prone to geol…

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1. Xi promotes two new generals - Xi Jinping attended a promotion ceremony at the Bayi Building in Beijing on the morning of July 3, awarding the rank of general to Zhang Shuguang and to Air Force commander Wang Gang. CMC Vice Chairman Zhang Shengmin presided and read out Xi’s order. Zhang Shuguang an army general who around 2017 headed the discipline inspection and supervision bureau of the CMC discipline commission under Zhang Shengmin and was elected to the 20th CCDI in October 2022, is now Secretary of the CMC Discipline Inspection Commission and concurrently Director of the CMC Supervision Commission. Neither is a member of the current Central Committee.

These two new generals have survived the PLA purges, but as the PLA Daily reminds everyone in a full page article in the Monday edition - Carry the Rectification of Thought Through to the End 将思想整风进行到底 - the rectification will continue:

Rectify in defeat, and rectify likewise in victory; the tempering of thought h…

Read more

As ever, the US constitutes the main focus of China’s foreign-policy discourse in June. Yet there is a growing sense that, at least in the short term, America may no longer be Beijing’s principal source of strategic anxiety.

Today’s US–China section is still processing Trump’s May comments on Taiwan, widely read as favourable to Beijing, but interpreted in different ways: for Huang Jing, they mark the most significant shift in Washington’s Taiwan position since 1979; for Da Wei, they are better understood as tactical language rather than a fundamental change in US policy.

The Middle East section is overwhelmingly focused on the US–Iran memorandum of understanding signed on 17 June. The agreement is treated with caution, but broadly read less as a US victory than as evidence of, in Chen Qinghong’s words, “an empire’s twilight—fierce of face, feeble within”.

Meanwhile, Europe emerges as the more immediate economic-strategic worry. Concern over trade tensions continues, with one analyst noting that Europe’s China debate increasingly resembles Washington’s of a decade ago and warning that a tipping point into strategic competition may be approaching. Huang Yiping’s piece is deeply concerned about a trade war and, unusually for a Chinese scholar, sympathetic to European fears of a “China Shock 2.0”.

The domestic economy, covered in more detail in Sinification’s upcoming economics digest, helps connect these external trade tensions to China’s internal imbalances. Shen Jianguang identifies weak domestic demand as the fault line beneath China’s “three strongs and three weaks”; Justin Lin Yifu attributes the slowdown less to domestic failings than to weak global demand; and Jiang Xiaojuan warns against an AI transition that destroys jobs faster than it creates them.

This digest also includes a new cluster, “Going Out”: four articles on China’s outbound investment, prompted by State Council Order 837, which takes effect on 1 July. This prosaic-sounding regulation is highly significant, as Liu Jia shows in an official but helpful exegesis: it elevates two decades of NDRC/MOFCOM departmental rules into law and adds teeth—under Articles 24–25, foreign entities that discriminate against Chinese investors can be blacklisted, cut off from China-related trade and investment, and denied entry, work or residence.

The more analytically engaging writing on the new wave of “Going Out” comes from Shi Zhan, Liu Xiaochun and Li Wei, who argue respectively that renminbi appreciation would accelerate the going-global wave, that state support should in special circumstances extend as far as military means, and that firms are now exporting entire capability systems rather than mere products.

Xi’s 8–9 June state visit to North Korea is the month’s other major foreign-policy event, though analysis beyond the boilerplate is thin on the ground. Two pieces engage with the nuclear silence noted by Western analysts: Lü Chao observes that Pyongyang’s constitutional enshrinement of nuclear-weapon status sits uneasily with Beijing’s position, while Niu Xiaoping argues that crisis management has become more urgent than immediate denuclearisation. Wu Xinbo’s Japan piece extends the same regional logic, describing US–China stabilisation as a “second Nixon shock” for Tokyo.

Following the Xi–Putin summit in May, Xiao Bin provides the more official reading, with one interesting admission: delimiting the relationship’s “essence and boundaries” was partly intended to send “a clear signal to the international strategic community”. Wang Jinguo and Xie Yushi offer the more heterodox account, arguing that the Ukraine war has turned Russia’s chronic demographic decline into a “demographic earthquake”, shrinking a full-spectrum great power into a narrower Eurasian one.

Turning to society and technology, writers focus on China’s domestic ills. Sun Liping argues a single pathology—over-competition—underlies everything from lying flat to industrial overcapacity. Zhang Guijin and Qian Chen show urbanisation reasserting the traditional gender order, while a pseudonymous author offers a fascinating field study of a hollowed-out central-western “small-population county”.

On AI, authors are more upbeat. Huang Ping argues the US–China G2 renders middle powers’ technological sovereignty illusory and that China should make its firms indispensable rather than dominant. Sun Haiyong, meanwhile, claims that the AI race now turns on energy: the front where US weakness meets Chinese strength.

Finally, two complementary articles on critical minerals in Southeast Asia and Central Asia are both surprisingly candid about Chinese vulnerability: Sun Zhi and Zheng Hua argue that China’s rare-earth dominance now coexists with real dependence on Southeast Asian supply, while Zhao Huirong argues that America’s de-Sinicisation push in Central Asia is unlikely to displace China but will raise costs and squeeze China’s position.

Taken together, June’s discourse is confident about relative American decline, but less complacent about the second-order problems of Chinese power: exposed firms, resistant partners, resource chokepoints, hollowed-out counties, weak domestic demand and a social model that cannot export its costs forever.

— Jacob Mardell

1. US-China & Taiwan:

   1. Zhou Bo on Washington’s quiet downgrading of Taiwan.

   2. Li Cheng on strategic patience over Taiwan.

   3. Huang Jing on the biggest shift in US Taiwan policy since 1979.

   4. Da Wei on the lack of a fundamental US policy shift on Taiwan.

   5. Zhu Weidong on creating momentum for “de facto unification without formal unification”.

2. Middle East:

   1. Zheng Yongnian on the US–Iran agreement as a time-out, not a settlement.

   2. Senior CICIR experts on the US–Iran MOU as a fragile pause that favours Iran.

   3. Liu Zhongmin on the end of unipolar US hegemony in the Middle East.

   4. Niu Xinchun on another lost American regional war.

   5. Yan Xuetong on how the Iran war has lowered America’s strategic standing and raised China’s.

3. Europe:

   1. Huang Yiping on “China Shock 2.0” as a systemic challenge to Europe’s high-welfare model.

   2. Zhang Bin on Europe’s fragmented China debate and the over-politicisation of trade imbalances.

   3. Sun Chenghao on Europe’s China debate approaching its own strategic-competition tipping point.

   4. Lü Peng on Germany and China as opposite casualties of the same globalisation trap.

4. Going Out:

   1. Shi Zhan on RMB appreciation as an accelerant of Chinese firms’ going global.

   2. Liu Jia on China’s first outbound-investment regulation and its countermeasure “teeth”.

   3. Liu Xiaochun on making support for going-global firms a national strategy.

   4. Li Wei on the third phase of Chinese globalisation: exporting whole capability systems.

5. East Asia:

   1. Lü Chao on Xi’s Pyongyang visit and a “new stage” in China–DPRK relations.

   2. Niu Xiaoping on crisis management overtaking denuclearisation on the Korean peninsula.

   3. Wu Xinbo on US–China stabilisation as a “second Nixon shock” for Japan.

6. Russia:

   1. Wang Jinguo & Xie Yushi on Russia’s “demographic earthquake” and great-power shrinkage.

   2. Xiao Bin on the China–Russia joint statements as expectation management.

7. Economy:

   1. Shen Jianguang on three expanding divides in the Chinese economy.

   2. Justin Lin Yifu on the flaws of three pessimistic takes on the Chinese economy.

   3. Jiang Xiaojuan on AI’s unusually broad threat to educated employment.

8. Society & Local Governance:

   1. Sun Liping on over-competition as the root of China’s social and economic pathologies.

   2. Zhang Guijin & Qian Chen on Chinese urbanisation’s reproduction of the traditional gender order.

   3. Bai Che on why capable county cadres become rule-breakers.

9. Tech & AI:

   1. Huang Ping on an AI G2 and the illusion of middle-power technological sovereignty.

   2. Sun Haiyong on America’s electricity bottleneck in the AI race.

10. Critical Minerals:

    1. Sun Zhi & Zheng Hua on China’s rare-earth dependence on Southeast Asia.

    2. Zhao Huirong on Washington’s “de-Sinicised” Central Asian minerals push.

1. US-China & Taiwan

Zhou Bo (周波): The US Secretary of Defence’s omission of Taiwan at the Shangri-La Dialogue is of a piece with Trump’s deliberate playing-down of the issue during his Beijing visit—as Sino-American power converges, Beijing’s growing counter-leverage means each future arms sale to Taiwan will only come harder. More broadly, Trump’s Beijing visit, dismissed in the West as yielding little, was in fact historic: the “constructive strategically stable relationship” formula marks the first US acknowledgement of China as a power of equal, comparable standing, since strategic stability is by definition a relationship between equals. On the Strait of Hormuz, where the optimal resolution is a simultaneous, reciprocal reopening, one of the best roles China can play is to take custody of Iran’s enriched uranium—as Iran once entrusted its stock to Russia. — Senior Fellow, Centre for International Security and Strategy, Tsinghua University (观察者网, 1 June)

Li Cheng (李成): On Taiwan, time is on China’s side—Beijing should maintain strategic patience and is right not to rush into a so-called “fourth communiqué” with Washington, which would only mobilise anti-China forces. One leaders’ exchange does not change everything, but the US–China summit marked a dramatic reversal in strategic framing: from treating China as an enemy to presenting it as a friend. Trump’s thinking has been consistent since his first term—Taiwan is a pen-nib, China the desk it sits on—but America’s need for cooperation is now structural rather than merely personal to Trump. The United States faces severe domestic, financial and geopolitical difficulties; with the two powers now evenly matched [势均力敌], neither can prevail over the other and if war is avoided over the next decade, the relationship should settle into a durable pattern of competition and cooperation. — Professor and Founding Director, Centre on Contemporary China and the World, University of Hong Kong (广州粤港澳大湾区研究院, 15 June); Note: Shanghai-born, US-educated former Brookings scholar and US citizen

Huang Jing (黄靖): Trump’s statement that “Taiwan independence” means war marks the most fundamental shift in Washington’s Taiwan position since 1979, reversing the long-standing formula that a mainland “attack” on Taiwan would trigger war. The Beijing summit established US-China parity and replaced zero-sum rivalry with a “co-existing game”, underpinned by four Chinese red lines: Taiwan; “democracy and human rights”, with ideological attacks designated a forbidden zone for the first time since normalisation; China’s path and political system; and China’s right to development. Trump arrived in Beijing with no cards, yet Beijing declined to exploit his weakness. No trade agreement was signed in Beijing because Trump wants to bank the political capital at home when Xi visits the US ahead of the November midterms. — Distinguished Professor and Director, Institute of US and Pacific Studies, Shanghai International Studies University (上海全球治理与区域国别研究院, 8 June)

Da Wei (达巍): The stabilising framework established by the Trump-Xi summit has been reflected in Hegseth’s cooler tone at the Shangri-La Dialogue, especially his emphasis on military-to-military communication, but this does not signal any fundamental change in US strategy towards China or in its Taiwan policy. A few remarks by the US president do not mean policy immediately changes, and there remains a considerable distance between public comments about reconsidering arms sales and a substantive policy shift. Hegseth’s omission of Taiwan from the main speech, followed by his reiteration in the Q&A that the US position on the Taiwan Strait had not changed, reflected Trump’s lack of a final decision rather than a clear policy turn. — Director, Centre for International Security and Strategy, Tsinghua University (中评社, 1 June)

Zhu Weidong (朱衛東): The exceptional complexity and difficulty of the Taiwan issue mean that “the final resolution of the Taiwan issue will run through the entire process of national rejuvenation”, requiring Beijing to avoid both “impatience for unification” [统一急躁] and “passive waiting” [消极等待]. Reunification efforts must therefore resist both rash advance and delay, combining strategic confidence and patience with active efforts to shape the broader environment. The aim should be to create a momentum of “de facto unification without formal unification” [不统而统], recognising not only the risks and obstacles facing reunification, but also acknowledging the mainland’s growing advantages and the fact that time, momentum and legitimacy are on the mainland’s side. — Director, Institute of Taiwan Studies, Chinese Academy of Social Sciences (中评社, 10 June)

2. Middle East

Zheng Yongnian (郑永年): The US–Iran agreement is best understood as a time-out, not a settlement, and both sides needed an agreement: Washington was under international and domestic pressure, while Tehran could prolong the conflict through guerrilla tactics but had no fundamental prospect of victory. Both will claim victory because neither can afford to look defeated, but sustained implementation would make all sides better off. The Strait of Hormuz was never the prize, only leverage; the core issue remains Iran’s nuclear programme and the conflict was also a live test of AI-era warfare: Washington learnt both the uses and limits of AI-militarised force, while Tehran proved it could still resist a far stronger power. — X.Q. Deng Presidential Chair Professor and Dean, School of Public Policy, CUHK-Shenzhen (侠客岛, 22 June)

CICIR roundtable: Senior CICIR experts read the US–Iran MOU less as a US victory than as a fragile pause that largely favours Iran and leaves the next stage highly uncertain. Liao Baizhi (廖百智) says what the two sides give and receive is “almost wholly disproportionate”, as if America were “using an enormous carrot to coax Iran”. Qin Tian (秦天) says Iran led the tempo and outcome of the negotiations, and that the stabilisation of the Iranian camp marks the biggest reversal in Middle Eastern geopolitics in recent years. Chen Wenxin (陈文鑫) warns that every US concession is conditioned on Iranian “performance”, leaving Washington room to backtrack. Li Yanan (李亚男) adds that the hardest issues—the nuclear question, sanctions relief and Hormuz management—have simply been pushed into the next 60 days. Chen Qinghong (陈庆鸿) sees, on America’s 250th anniversary, “an empire’s twilight—fierce of face, feeble within” [色厉内荏]. — Directors and deputy directors, CICIR institutes of Middle East, US and World Politics studies (CICIR WeChat, 18 June)

Liu Zhongmin (刘中民): The “Islamabad Memorandum”, which for the first time recognises Iran’s regional influence through an international agreement, sends a clear signal that the era of unipolar American hegemony in the Middle East is drawing to a close. The war has left America’s Gulf alliance network in a severe crisis of trust, while Iran’s control of Hormuz marks the first substantive collapse of the postwar US maritime system in the Middle East. A new configuration composed of three centres of power—the Sunni Arab-Islamic states, the Shia camp and the Israel-led Abraham Accords states—is taking shape. The US-led Middle Eastern order is shifting from American dominance towards plural, regional autonomy, reflected in the Pakistan- and Qatar-mediated ceasefire and Iran’s proposal to coordinate management of the strait jointly with Oman. — Professor, Institute of Middle East Studies, Shanghai International Studies University (澎湃新闻, 24 June)

Niu Xinchun (牛新春): The US has lost another regional war—neither military superiority nor prolonged war can deliver final victory, and the only differences lie in the manner, timing and route of the war’s end. Iran’s blockade of Hormuz has proved an effective strategic threat against which America has no counter, leaving neither the region nor the US able to return to the pre-war status quo—Iranian primacy in the Gulf follows and the “freedom of navigation” principle upheld by the US since 1945 collapses. Trump saw “tariffs” and “war” as the two most effective and flexible instruments of foreign policy, but tariff increases have now been ruled “unconstitutional” by the US Supreme Court, while war has suffered a major reverse in Iran. The conflict may therefore prove the turning point of Trump’s tenure. — Academic Vice-President, Ningxia University; Executive Dean, China-Arab States Research Institute (世界知识, 17 June)

Yan Xuetong (阎学通): The Iran war has lowered America’s strategic standing and raised China’s: the old formula—China for the economy, America for security—is shifting, as countries begin to seek security cooperation with China too. Its aggregate impact may exceed that of the Russia–Ukraine war, intensifying the global arms race, placing greater pressure on the nuclear non-proliferation regime and raising the prospect of blockades of international waterways becoming a weapon of war. Regionally, the war is reshaping the security outlook of Middle Eastern states. It has deepened the US–Israel strategic rift and weakened regional trust in US security commitments and protective capacity, while more states explore more autonomous and diversified security paths, from Sunni military cooperation to Oman-style diplomatic balancing. Ultimately, the US and Iran have not reached a traditional armistice but an “agreement to negotiate” [同意谈判的协议], and Israel is the greatest obstacle to keeping the talks alive. — Honorary Dean, Institute of International Relations, Tsinghua University (凤凰新闻, 27 June)

3. Europe

Huang Yiping (黄益平): Europe’s fear of “China Shock 2.0” is not ordinary trade anxiety, but a systemic challenge bearing on the survival of its high-welfare model. If a broad and serious trade war or economic confrontation were to erupt between China and Europe, the shock to the global economy would be enormous. For China, the lesson is that a large economy cannot keep leaning on exports without testing its partners’ capacity to absorb them. Expanding domestic demand is therefore needed not only for China’s own rebalancing, but also to defuse external pressure. Concretely, there is still scope for China–EU cooperation: green transition, a clearer division of labour in high-end manufacturing, industrial AI and smart manufacturing, two-way opening in high-end services, and joint development of third-country markets in the Global South with individual EU states. — Boya Distinguished Professor and Dean, National School of Development, Peking University (爱思想, 13 June)

Zhang Bin (张斌): Europe’s anxiety about Chinese industrial competition is real, and not confined to a handful of protectionists, but Europe is far from monolithic. Business tends to be pragmatic, think-tank views are mixed, EU trade and investment officials are more confrontational, and Europe’s own problems—high energy costs, demography, weak investment and governance constraints—also matter. Trade imbalances have been over-politicised: structural factors such as import substitution play a role, but cyclical demand shifts may matter just as much. China should still do more to expand domestic demand, including through the exchange rate and other channels, but should frame its rise less as a “China shock” than a “China opportunity”. Its industrial ascent has lowered the manufactured-goods premium that long supported rich-country incomes, while forcing foreign firms to upgrade. — Deputy Director, Institute of World Economics and Politics, CASS (中国金融四十人论坛, 15 June)

Sun Chenghao (孙成昊): Europe’s China debate increasingly resembles Washington’s of a decade ago—the moment engagement tipped into strategic competition—but Europeans have not yet drawn America’s conclusion. Topics such as AI and digital infrastructure are increasingly treated as security questions rather than ordinary trade issues, while European anxiety has shifted from individual sectors to whole ecosystems. Greater European strategic autonomy may create more room for an independent China policy, but it will not necessarily make Europe more “pro-China”. The opening is that Europeans still talk about coexistence and practical cooperation, unlike the US debate after its own tipping point. China and Europe should therefore build working-level channels, crisis-management mechanisms and low-sensitivity cooperation in areas such as AI safety and food security. — Fellow and Head of the US–Europe Programme, Centre for International Security and Strategy (CISS), Tsinghua University (中美聚焦, 11 June)

Lü Peng (吕鹏): Germany and China sit on opposite sides of the same “Messina paradox” of globalisation: Germany is punished for being too costly—with €49-an-hour assembly labour and three-and-a-half-year approvals for a logistics centre—while China is punished for being too socially overstretched. China’s speed and cost advantage have rested on workers’ bodies and families absorbing costs that should have been socialised: long hours, weak welfare, high savings, high housing costs and little slack for consumption, fertility or innovation. The result is a cycle of razor-thin margins, weak demand and still fiercer involution. Yet although each side envies the other, neither should copy the other. China should instead enforce “time rights”—limits on working hours, paid leave and a crackdown on hidden overtime—while piloting tripartite “industry-welfare communities” in the Yangtze and Pearl River Delta clusters and rebuilding patient, relationship-based finance so industrial profits flow back into the “reproduction of people”. — Research Fellow, Institute of Sociology, CASS (FT中文网, 11 June)

4. Going Out

Shi Zhan (施展): RMB appreciation would help reduce China’s unsustainable US$1.2tn surplus and ease diplomatic friction, while lowering the cost of overseas investment and pushing Chinese firms abroad — much as yen appreciation after the Plaza Accord accelerated Japan’s outward investment. The process would carry Chinese industrial standards overseas, may seed a renminbi settlement zone, and could allow overseas RMB holders to help fund China’s social-security system through sovereign-bond purchases, creating an asset-rich “shadow China”. But the shift will mainly involve the “spillover” [溢出] of final-assembly “front-end” plants: China’s dense supply-chain “middle platform” [中台] is too embedded to relocate. Chinese firms therefore need Japanese sogo shosha-style “going-global partner” [出海合伙人] platforms that provide finance as well as logistics, and must move from taking rules abroad to helping shape them. — Professor, Institute for the Global History of Civilisations, Shanghai International Studies University (施展世界, 12 June 2026)

Liu Jia (刘佳): China’s first administrative regulation on outbound investment, in force from 1 July, writes the “holistic national security concept” into the governance of “going out” — and gives it teeth. Articles 24–25 create countermeasure mechanisms against foreign states, organisations or individuals that discriminate against Chinese investors or cut off normal transactions, including restrictions on China-related trade, investment, transactions and cooperation, and denial of entry, work, stay or residence. Article 13 closes a “human channel” of technology leakage, prohibiting transfer of export-controlled technology via seconded technicians, cross-border guidance or training. The regulation raises NDRC/MOFCOM/SAFE-led departmental rules onto a higher legal footing, keeps the filing-plus-approval framework, extends coverage in principle to Chinese resident individuals, and marks the 14th-to-15th Five-Year Plan shift from scale-and-opportunity to security-and-quality. — Research Fellow, Institute of Public Policy, South China University of Technology (IPP评论, 7 June)

Liu Xiaochun (刘晓春): Chinese firms have moved from passive respondents to active participants in global industrial restructuring—supporting their overseas expansion should now be treated as a national strategy. In certain countries and “special circumstances”, this may even require economic, financial and military means [军事等特殊手段] to protect Chinese enterprises and personnel. The current wave is historically unprecedented: thousands of firms of every size and sector are going global, across a far wider range of destinations, with entire industrial chains relocating in clusters. As these clusters expand, Chinese standards, rules and models are already spreading abroad spontaneously, though not yet in fully institutionalised form. Financial policy should adapt accordingly: unified management of cross-border RMB and foreign-exchange flows; building Shanghai into a service centre for going-global firms, covering financing, non-dollar FX trading, cross-border payments, SME treasury platforms and an “instant-response” decision-making mechanism for new demands. — Deputy Director, Shanghai Finance Institute; speech to a CF40 closed-door meeting, 12 June (CF40, 22 June)

Li Wei (李伟): Chinese firms are entering a third phase of globalisation: no longer just exporting products or building overseas channels, but exporting whole capability systems—design concepts, technical standards, supply-chain organisation, business models and long-term local operations. For firms targeting the US market, “connector countries” such as Vietnam, Indonesia, Malaysia, Thailand and Mexico are attractive first stops because they can help soften tariff and regulatory barriers. But this advantage depends on how the final market defines origin and eligibility, so firms need to turn short-term policy arbitrage into genuine local production and capability as rules-of-origin scrutiny tightens. Expansion now follows two complementary models: chain-style expansion [链式出海], in which anchor firms bring supplier ecosystems with them, and swarm-style expansion [蜂群式出海], in which SMEs use platforms, industrial belts and overseas warehouses to scale fast. — Professor of Economics and Associate Dean, Cheung Kong Graduate School of Business (FT中文网, 25 June)

5. East Asia

Lü Chao (吕超): Xi Jinping’s visit to Pyongyang marks a “new stage” in China-DPRK relations, resting not only on traditional friendship but also on shared strategic objectives: opposition to outside interference, support for multilateralism, and Pyongyang’s backing of Beijing on Taiwan, Tibet and Xinjiang. Future China-DPRK military cooperation could come to resemble China’s military cooperation with Pakistan, though closer military exchange is no alliance, is not third-party-directed, and does not breach China’s non-alignment principle. China’s denuclearisation stance remains unchanged and sanctions are a means rather than an end; yet North Korea’s constitutional enshrinement of nuclear-weapon-state status is at odds with China’s position. — Dean, Institute of American and East Asian Studies, Liaoning University; Research Fellow, Charhar Institute (察哈尔学会, from Kyunghyang Shinmun, 9 June 2026)

Niu Xiaoping (牛晓萍): On the Korean peninsula, crisis management is becoming more urgent than immediate denuclearisation. China’s formal position remains unchanged—denuclearisation through dialogue—but the practical difficulty of getting Pyongyang to give up its weapons has sharply increased. North Korea’s Ninth Party Congress made nuclear weapons the absolute core of national security and adopted a diplomacy of “interest-based pragmatism grounded in nuclear force”, seeking outside acceptance of its nuclear-state status, while South Korea’s debate over indigenous nuclear armament or nuclear sharing is also heating up. China now treats the DPRK as a key stabilising pivot on its periphery, whose strategic weight will keep rising. Pyongyang, embracing a multipolar world, is likely to pursue more active and diversified diplomacy. — Assistant Research Fellow, Institute for International Strategic and Security Studies and Centre for Northeast Asian Studies, SIIS (中评社, 10 June)

Wu Xinbo (武心波): US–China stabilisation is a “second Nixon shock” for Japan. Tokyo had bet on prolonged US–China confrontation as the route to its own military normalisation and strategic upgrading, but Washington’s move to manage rivalry instead leaves Japan strategically exposed. Full independence is blocked by three shackles — security dependence on the US, Japanese elite interests embedded in the alliance, and opposition from surrounding great powers — but full subservience is no longer viable either, because the shock has exposed the alliance’s hierarchy. Japan’s only rational course is limited autonomy within the US alliance: “security bound to America, diplomatic balancing, economic diversification”. A semi-dependent, semi-autonomous Japan cannot overturn the regional order, but it may become skilled at using—or quietly disrupting—US–China relations to regain leverage. — Professor, Shanghai International Studies University (上海国际战略问题研究会, 8 June)

6. Russia

Wang Jinguo (汪金国) & Xie Yushi (谢语诗): Russia’s war-driven demographic crisis is becoming a mechanism of great-power shrinkage. The Ukraine war has turned chronic population decline into a “demographic earthquake” [人口地震], leaving Russia “fewer, older and more unbalanced”. The strategic consequence is a Russia pushed from a full-spectrum great power towards a more selective and geographically narrower Eurasian power—still disruptive in security, energy, food and nuclear deterrence, but less able to sustain broad integration, European influence or global leadership. At home, population decline both exposes and accelerates weakening state capacity, producing “reverse modernisation” [逆现代化]: the modern tasks of identifying, managing, coordinating and redistributing across society are crowded out by coercion, extraction and ideological discipline, while social vitality, innovation and generational renewal ebb. Regionally, Russia’s Eurasian Economic Union-style dominance becomes harder to sustain as its demographic and economic pull fades, decaying from developmental integration into security-based control. — Wang: Professor, School of Politics and International Relations, Lanzhou University; Xie: PhD candidate, Lanzhou University (俄罗斯东欧中亚研究, via 时政国关分析, 18 June)

Xiao Bin (肖斌): The 2026 China–Russia joint statements are an exercise in calibrated expectation management: they delimit the partnership’s “essence and boundaries” [本质与边界]—non-alliance, non-confrontation and no third-party targeting—and send “a clear signal to the international strategic community” intended to reduce strategic misjudgement. With great-power uncertainty rising, “stable expectations” [稳定预期] have become one of the international system’s key public goods, which China–Russia ties are meant to help supply. The motives are asymmetric: for Moscow, the relationship answers immediate pressure and anchors national-system reshaping; for Beijing, deeper strategic alignment and “systemic integration” secure structural stability on its periphery. Investment co-operation remains “relatively narrow”, external risk costs are high, high-tech and SME co-operation is underdeveloped, and cross-border infrastructure cannot keep pace with trade. — Research Fellow, Institute of Russian, Eastern European and Central Asian Studies, CASS (世界知识, 20 June)

7. Economy

Shen Jianguang (沈建光): China’s economy is marked by three structural splits—strong supply but weak demand, strong external but weak domestic demand, and strong new-economy but weak old-economy sectors—reflected in the data of May’s month-on-month PMI fall, April’s near-stagnant retail sales and the sharp year-on-year contraction in fixed-asset investment. Domestic demand is the central weakness. Without stronger fiscal and monetary support, the gap may widen between successful export-oriented, high-tech manufacturing sectors and the lagging domestic economy. Even the stronger sectors are not immune: they remain exposed to external-demand shocks, depend on domestic demand to absorb capacity, and require the fiscal resources generated by a healthier broader economy. Higher transfer payments to rural residents could be especially effective, given their relatively high propensity to consume. — Vice-President and Chief Economist, JD Group (FT Chinese, 10 June)

Justin Lin Yifu (林毅夫): China’s slowdown should not be read through pessimistic claims of “state advance, private retreat” [国进民退], ageing or balance-sheet recession, since the deeper cause lies in weak global demand after 2008 rather than a domestic structural failure. Infrastructure stimulus after the financial crisis expanded the role of state firms, but also supported private producers through demand for materials, employment and consumption; ageing need not derail growth because effective labour can rise through education; and household caution reflects confidence rather than lack of savings. Policy should focus on restoring expectations and using China’s latecomer advantages, industrial upgrading space and new quality productive forces to take advantage of the fourth industrial revolution. — Dean, Institute of New Structural Economics, Peking University (观一线, 11 June).

Jiang Xiaojuan (江小涓): AI disruption differs from earlier technological shocks because it is shrinking the same categories of work across all industries at once rather than displacing workers into adjacent roles with similar skills, putting many educated young people at risk of being pushed out of regular employment. Since many displaced workers face the immediate reality of “if hands stop, mouths stop” [手停口停], social policy cannot wait for long-term adjustment: income relief, retraining and social security must be strengthened urgently. A better balance between capital expenditure and labour expenditure incentives should be established, rather than rewarding equipment purchases with tax rebates while offering no comparable incentive for hiring people. — Professor, University of Chinese Academy of Social Sciences; Chair, National Data Expert Advisory Committee (Caixin, 26 June)

8. Society & Local Governance

Sun Liping (孙立平): A single pathology—over-competition—underlies a startling range of China’s social and economic ills, from lying flat [躺平], involution [内卷] and non-marriage to industrial overcapacity. Having swung from the pre-reform absence of competition to the opposite extreme, China now treats competition as an end in itself, spread indiscriminately into domains that should resist it—public administration, basic education, healthcare, care for the elderly, public security—where doctors compete for patients and even fines become quota-contests, yielding systemic injustice and warped public services. Some managers even weaponise competition as a governance technique [治理术], cultivating a “wolf culture” of mutual trampling through ranking and last-place elimination. — Professor Emeritus, Department of Sociology, Tsinghua University (立平坐看云起, 6 June)

Zhang Guijin (张桂金) & Qian Chen (钱晨): In one Pearl River Delta city, women aged 27–40 outnumber men roughly two to one among principal hukou migrants—but this is less a story of female advancement than of the traditional gender order reasserting itself through urbanisation. The emerging pattern is “mothers migrate with the children” [母携子迁]: rural families deliberately split the household register [拆户], with mother and children taking urban hukou for school access while the father retains the rural registration, where male-skewed collective entitlements and patrilocal norms [从夫居] continue to define “home” as the husband’s village. State policy promotes gender-equal, people-centred urbanisation, but village self-governance can reassert the old order: women’s equal land rights exist in law, only to be voted away in practice. The remedy is to put women’s names on land, homestead and collective-share titles, and make marriage irrelevant to collective membership. — Zhang: Associate Research Fellow, Institute of Sociology and Population Studies, Guangdong Academy of Social Sciences; Qian: Teaching Assistant, United Front Theory Research Department, Guangdong Institute of Socialism (妇女研究论丛, Issue 2, 2026)

Bai Che (白车): In one central-western “small-population county”, capable cadres become rule-breakers because the system makes compliant action hard to square with superior-level demands. Showcase deadlines from above collide with project-compliance timelines, making irregular procedure routine, while grassroots cadres become convenient scapegoats when higher levels need a negative example. Quantified anti-corruption rankings also punish small counties for lacking the numbers to compete, and official “lying flat” spreads. Behind this is an economic hollowing: a third of residents have left since the pandemic; the county’s economy rests on 9,000 fiscally supported workers and retirees; retrenchment has choked consumption and project work, with tenders falling from over 100 last year to virtually none. E-commerce hollows out county retail, while the replacement digital-economy jobs stay in eastern industrial clusters. The unified national market accelerates this concentration, and debt-constrained local governments can no longer spend against it. — Pseudonymous field work (IPP评论, 12 June)

9. Tech & AI

Huang Ping (黄平): The AI race has settled into a US–China “G2”, leaving middle powers’ “technological sovereignty” in AI an illusion. Traditional US allies can only choose America; emerging partners are likely to do so too. Anything Chinese is treated as a potential “backdoor” [后门], and adopting it risks challenging Washington. China’s task is therefore not to make them choose China, but to stop them choosing sides: make Chinese firms indispensable across value-chain niches, not dominant. This should not be state-led or branded as an “AI globalisation initiative”. The method is market “inducement” [利诱]: high-value, localised enterprise-cluster solutions, with Beijing supplying the “certainty” [确定性] firms need abroad — policy consistency and backing, not subsidies. — Associate Professor and Assistant Dean, School of Public Policy, CUHK-Shenzhen (大湾区评论, 10 June)

Sun Haiyong (孙海泳): American AI is running into a structural electricity bottleneck, shifting the US–China AI race from chips to energy efficiency and capacity—the arena where US weakness meets Chinese strength. US net generation rose only about 6.3% between 2005 and 2024, even as data-centre demand has surged. The Trump-era answer—more fossil fuels and nuclear power—is itself supply-chain constrained, with key components in short supply. China has roughly 60% of global transformer capacity, while the US imports about 80% of its own transformers, making tariffs on Chinese kit self-defeating. Suppressing cheap, fast-build solar and storage through FEOC rules only worsens the shortfall. As US tech firms are pushed into building “shadow grids” [影子电网], capital that might have gone into chips and R&D is diverted into energy infrastructure, while a power-starved, “circular” AI economy risks becoming a bubble. — Research Fellow, Institute for Public Policy and Innovation Studies, Shanghai Institutes for International Studies (爱思想, 24 June)

10. Critical Minerals

Sun Zhi (孙帜) & Zheng Hua (郑华): China’s rare-earth dominance now coexists with real dependence on Southeast Asia: Myanmar and Laos supply over 91% of China’s major rare-earth oxide imports, while China’s proven terbium reserves would struggle to meet projected global demand even if fully mined. Southeast Asian states are pursuing neither exclusionary resource nationalism nor short-term self-sufficiency, but “embedded autonomy” [嵌入式自主]: tightening resource sovereignty through raw-ore export bans and local-processing mandates while courting rival investors to climb the value chain. As “new intermediate-zone” [新中间地带] actors, they seek Chinese processing technology and Western market access at once—Malaysia agreed not to restrict rare-earth exports to the US while still seeking Chinese know-how. Beijing’s April and October 2025 export controls further raise the strategic value of the region’s heavy rare-earth supply. — Sun: Doctoral candidate, School of International and Public Affairs, Shanghai Jiao Tong University; Zheng: Professor, School of International Relations, Sun Yat-sen University (国际论坛, via 爱思想, 19 June)

Zhao Huirong (赵会荣): America’s drive to build a “de-Sinicised” (去中国化) Central Asian critical-minerals supply chain is unlikely to displace China, which imports 70% of the region’s critical minerals and holds 35% of proven resources, 68.5% of mining capacity and 80% of output—but the attempt still squeezes the PRC. Washington’s bilateral deals, C5+1 and MSP/PGII platforms target scarce minerals—sponge titanium, chromium and rhenium in trade, tungsten and lithium in investment—while pairing resource access with corridor control, including a Kyrgyz railway keyed to the China–Kyrgyzstan–Uzbekistan Makmal node. US-led ESG and technical standards raise Chinese compliance costs; the “resource control” (资源控制) narrative attacks China’s governance discourse; and C5+1 mechanisms dilute BRI convening power. — Research Fellow, Institute of Russian, Eastern European and Central Asian Studies, CASS (国际论坛 via 爱思想, 15 June)

Shao Yuqun on the Post-Summit Shift in Trump’s Taiwan Policy (24 June)

Shao Yuqun reads Trump’s post-Beijing comments on Taiwan as more than tactical ambiguity. For her, the new “constructive strategic stability” formula marks a shift in the balance of pressure: Washington still insists its Taiwan policy has not changed, but Beijing is increasingly able to tie US–China stabilisation to American restraint over Taiwan. The test is arms sales — and whether Trump’s language hardens into policy. Read here

Zheng Yongnian on Local Government Overreach and the Private Economy (22 June)

Zheng Yongnian offers a sharper-than-usual critique of how local governments distort China’s private economy. In sectors from electric vehicles to chips and AI, officials and favoured firms rush into fashionable industries, stretch limited capital and suffocate the social vitality needed for genuine entrepreneurial breakthroughs. The deeper question is whether China can retain a capable state without allowing it to smother the market and society beneath it. Read here

Huang Qifan on China’s Trade Surplus Problem (16 June)

Huang Qifan addresses China’s US$1.2 trillion goods surplus in unusually direct terms. His answer is not denial but adjustment: moderate renminbi appreciation, stronger domestic consumption and better use of imports. The piece is noteworthy because it treats the surplus not only as a foreign-relations problem, but as a symptom of China’s own growth model. Read here

The End of Easy Capital | Economic Digest: May 2026 (9 June)

May’s economics digest asks whether China’s future-industry push can escape the weaknesses of the old debt-led model. Economists worry that the “new three” industries — electric vehicles, batteries and solar — are already showing familiar signs of duplication, overcapacity and local-government overreach. Savings remain plentiful, but patient, risk-bearing capital is scarce; equity markets are still too shallow to replace bank lending, local platforms and state-backed finance. The result is a debate about whether China can build future industries without another round of misallocated capital and hidden public debt. Read here

Qin Hui on Why Condemning Trump Is Not Enough (8 June)

Qin Hui condemns Trump’s Iran strike as reckless and morally hollow, but argues condemnation is insufficient. Iran’s blockade harms Europe, Japan, Gulf states and China, so liberal and affected powers should defend freedom of navigation and public order rather than remain passive merely because Trump acted wrongly first. Read here

Strategic Stability, Structural Strain | Digest: May 2026 (2 June)

May’s digest follows Chinese analysts as they interpret Trump’s Beijing visit as the beginning of a more stable US–China phase — but not a less troubled one. Strategic parity may be replacing coercive escalation at the top, yet the pressures beneath it remain acute: Taiwan, Europe, the Middle East, domestic economic imbalance, research bottlenecks and AI competition. The new order, if there is one, is stable only in the narrow sense that neither side can easily force the other to bend. Read here

Today’s top items:

1. Official explanation of CITIC Tower plane crash - The relevant authorities issued a new statement on last week’s plane crash, saying that the pilot was a 66-year-old divorced Beijing man who “had suffered from insomnia and anxiety for a long time, and expressions such as ‘ending my life’ appeared repeatedly in his diary.” The public verdict is that “this was a case endangering public safety caused by personal reasons.”

2. EU-China - In a story that should surprise no one, and especially officials in Beijing, Bloomberg reports that:

Despite a renewed campaign to take a tougher stance toward Beijing, the EU doesn’t have the political will to institute meaningful change or pick a fight with China, according to people familiar with discussions among the bloc’s leaders as well as talks in the European Commission, which handles trade matters for the EU…

In more encouraging news fo…

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1. Xi’s speech at the CPC’s 105th Anniversary ceremony - I have posted a translation here. He rightfully sounds confident; the Party turning 105 is an accomplishment. Who can forget those predictions over the years, and especially after 1989, that the Party was doomed? Some excerpts:

Over these 105 years, our Party has held fast to its founding mission of seeking happiness for the Chinese people and rejuvenation for the Chinese nation. It has discerned the broad trends of world development, accurately grasped the changes in the principal social contradiction across different historical periods, and united and led the people of all ethnic groups in unremitting struggle. It has achieved the great successes of the new-democratic revolution, of socialist revolution and construction, of reform and opening up and socialist modernization, and of socialism with Chinese characteristics for a new era, writing the most magnificent epic in the several-thousand-year history of the…

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The core is the soul; it is strength 核心就是灵魂，就是力量 - People’s Daily Ren Zhongping Article: Grasping Historical Initiative, Achieving Great Rejuvenation, Written on the Occasion of the 105th Anniversary of the Founding of the Communist Party of China

Today’s top items:

1. June Politburo meeting - Flood and drought risks must be especially acute right now. The June Politburo meeting had as its agenda “study and deploy flood control and drought relief work”. From the readout (translated here):

The Political Bureau of the CPC Central Committee held a meeting on June 30 to study and deploy flood control and drought relief work. CPC Central Committee General Secretary Xi Jinping presided over the meeting.

新华社北京6月30日电 中共中央政治局6月30日召开会议，研究部署防汛抗旱工作。中共中央总书记习近平主持会议。

The meeting noted that during this year’s main flood season, extreme weather and climate events in China will still be more frequent than usual, with droughts and floods occurring in equal measure. All regions and relevant departments must f…

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Today’s top items:

1. Plane flies into Beijing’s tallest building - A small plane flew into Beijing’s tallest building - the CITIC Tower aka “China Zun” - killing the pilot and injuring 13 people. The authorities released a brief statement that did not name the pilot or even the building, and then censorship went into overdrive. It looks to have been intentional.

The crash exposed some major gaps in Beijing’s security, it was likely shocking to the leadership, and heads will roll, but it probably will not hurt the low altitude economy in the long term, and may end up being constructive as it forces a regulatory revamp that derisks efforts going forward. Developing the low altitude economy 低空经济 is written into the 15th Five-Year Plan:

加快新能源、新材料、航空航天、低空经济等战略性新兴产业集群发展。

Accelerate the development of strategic emerging industry clusters such as new energy, new materials, aerospace, and the low-altitude economy.

There are lots of interes…

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1. Xi inspects Shandong - Xi Jinping inspected Dezhou in northern Shandong on June 24, Xinhua reports, walking through wheat and corn fields in Lingcheng District, stopping at a neighboring village the propaganda system declared a “National Civilized Village,” and sitting down in a farmer’s house. The readout says agricultural and rural modernization “bears on the overall picture and the quality of Chinese modernization,” and that stable grain supply is “the top priority of agricultural production.”

This is the “three summers” (三夏) period, with harvest, sowing and managmeent happening at the same time, and Xi tends to surface in a major grain province around now to talk up self-sufficiency. Shandong is one of the biggest producers. He also linked the trip to July 1 and the Party’s 105th birthday, and worked in the “correct view of political performance” (正确政绩观) along with another push to “reduce burdens at the grassroots” (为基层减负).

Shandong Provincial Party Secretary L…

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On today’s show Andrew and Bill begin with Xi Jinping Thought on Party Building and further signs that one year after from a summer of rumors and one year out from the 21st Party Congress, Xi’s power remains entrenched as ever. Then: MOFCOM and the Ministry of Finance announced restrictions on several dozen US firms, the global memory chip shortage is an opportunity for CXMT and YMTC, what to make of the U.S. government's scrutiny of ASML, and Elon Musk's alarmism at the West’s China vulnerabilities. At the end: Takeaways from the EU Council meeting on China, Germany's push for PRC currency revaluation, structural forces that yield EU inertia, and emails on Chinese soccer, space warfare, and the JIm Cramer of weather.

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