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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1. Wang Yi in India - Wang Yi has been in India for the 16th BRICS High-Level Meeting of National Security Advisers and Senior Officials. He met with PM Modi and Indian National Security Advisor Doval, as well as the other officials attending, including the Secretary of the Russian Federation Security Council. I have posted translations of the readouts of the key meetings in this section.

Wang Yi said there are four lessons of the US-Iran conflict:

First, the importance of upholding international rules. The resolution of any international or regional hotspot issue should be premised on observing international rules; the law of the jungle may prevail for a time, but it is not sustainable.

一是维护国际规则的重要性。任何国际和地区热点问题的解决都应以遵守国际规则为前提，丛林法则可以得逞一时，但不可持续。

Second, the importance of respecting national sovereignty. Territorial integrity must not be violated and a country’s internal affairs must not be interfered in; this is the most basic bottom line of international morality.

二是尊重国家…

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1. Li Qiang inspects Dalian - Premier Li, on his way to Summer Davos that opens Tuesday in Dalian, went on an inspector tour of the city. According to the readout, translated here, he:

stressed the need to deeply implement the spirit of General Secretary Xi Jinping’s important instructions on the all-around revitalization of the Northeast in the new era and on building a modernized industrial system; to persist in the direction of intelligence, greening, and integration; to strengthen original and leading scientific-technological breakthroughs; to reinforce the re-engineering of the industrial base; to vigorously develop high-end equipment manufacturing; to accelerate the building of a modernized industrial system; and to continuously inject new momentum into high-quality development.

He visited Dalian Shipbuilding Industry Co., Ltd. 大连船舶重工集团有限公司 and CFHI Dalian Nuclear Power Petrochemical Co., Ltd. (China First Heavy Industries) 一重集团大连核电石化有限公司.

2. Response to US expan…

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Today’s top items:

1. Accelerating the Development of "AI+Consumption" - The Ministry of Commerce (商务部), Central Cyberspace Affairs Commission Office (中央网信办), National Development and Reform Commission (国家发展改革委), Ministry of Education (教育部), Ministry of Industry and Information Technology (工业和信息化部), Ministry of Civil Affairs (民政部), Ministry of Housing and Urban-Rural Development (住房城乡建设部), and Ministry of Culture and Tourism (文化和旅游部) jointly issued the “Implementation Opinions on Accelerating the Development of ‘AI+Consumption’”. I have posted a translation here.

According to the “General Requirements”:

Guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, comprehensively implement the spirit of the 20th Party Congress and the successive plenary sessions of the 20th Central Committee, fully, accurately, and comprehensively implement the new development concept, give full play to China’s advantag…

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1. Wang Yi speaks with Iranian counterpart - Wang Yi had a call Wednesday with Iranian Foreign Minister Araghchi. According to the readout:

Araghchi briefed on the situation regarding the first-stage memorandum of understanding reached between Iran and the United States, and sincerely thanked China for the constructive role it had played in advancing the negotiations and reaching the agreement. Araghchi said the memorandum of understanding should be earnestly implemented, including Israel halting its military operations against Lebanon. Iran has always viewed its relationship with China from a strategic height, and looks forward to enhancing mutual trust with China, deepening cooperation across all fields, and jointly advancing the comprehensive strategic partnership between the two countries.

阿拉格齐通报了伊朗和美国达成第一阶段谅解备忘录有关情况，衷心感谢中方为推动谈判和达成协议发挥的积极作用。阿拉格齐表示，有关谅解备忘录应得到切实执行，包括以色列停止对黎巴嫩的军事行动。伊方始终从战略高度看待对华关系，期待同中方增进彼此互信，深化各领域合作，共同推进两国全面战略伙伴关系。

Wang Yi said China welcomes the fir…

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We must optimize the layout of higher education, strive to build universities and advantageous disciplines that are of Chinese characteristics and world-class, continuously enhance the capacity to self-reliantly cultivate and to attract and gather high-level talent, and cultivate and strengthen the nation's strategic talent forces. - Xi Jinping

Today’s top items:

1. May economic activity - The May activity data, out from the NBS Tuesday, show the now-familiar split: exports and factories holding up while domestic demand remains weak. Industrial output rose 4.5% year-on-year, which Caixin credits to the AI buildout and resilient exports masking the property drag. Retail sales fell 0.6%, the first drop since the end of 2022.

NBS Spokesman Fu Linghui said the better gauge for retail sales is the combined goods-and-services retail measure that debuted this month, which shows that activity up 2.8% in January–May. The headline retail sales number leaves out most services, and services retail (服务零售额) rose 5.4%, with tourism and culture/sports/leisure both up more than 10%. Fu blamed the goods decline on a high base from last year’s trade-in subsidies and the “6·18” sales, plus the weather. He also conceded that residents’ “consumption capacity and willingness still need strengthening.”

Fixed-asset investment fell 4.1% in the first five months, worse than the 1.7% drop economists expected and steepening from April. Caixin notes manufacturing investment is now contracting, and that ex-property investment at -1.2% is the weakest since the series began in 2024. Home prices kept sliding, faster in the resale market.

Bank lending beat forecasts, but the PBoC’s own data show households still paying down debt and firms favoring short-term bills over long-term loans. Caixin calls it a fragile recovery.

2. Xi Jinping Thought on Party Building - There is a new variant of Xi Thought - Xi Jinping Thought on Party Building.

A national conference on Party building convened Monday in Beijing. Cai Qi, the Politburo Standing Committee member who runs the Secretariat, attended and delivered the address, and Li Xi, the PSC member who heads the CCDI, also attended. According to Xinhua’s account, the conference formally established “Xi Jinping Thought on Party Building” (习近平党建思想) as the “fundamental guideline for strengthening Party building in the new era” and a component of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, credited with “major original contributions to the development of the Marxist theory of Party building.”

According to the readout, translated here:

The meeting stressed that studying and implementing Xi Jinping Thought on Party Building is an important political task for the whole Party in the current period and for some time to come. Party members and officials should be organized and prompted to read the original works, study the original texts and grasp the underlying principles — to know both the what and the why — to further deeply appreciate the decisive significance of the “Two Establishments” and resolutely achieve the “Two Upholds.” Systematic and theoretical research and exposition should be conducted, deeply explaining this thought’s foundational achievements, original contributions, scientific system, rich content, spiritual essence and practical requirements, with propaganda carried out in ways that Party members, officials and the masses welcome. The study and implementation of Xi Jinping Thought on Party Building should be continuously pushed to go deeper and become more solid, guiding Party organizations at all levels to consciously apply it in planning and advancing Party building, and to do well in all aspects of full and rigorous Party self-governance with higher standards and more concrete measures.

会议强调，学习贯彻习近平党建思想，是当前和今后一个时期全党的一项重要政治任务。要组织推动党员、干部读原著学原文悟原理，知其然又知其所以然，进一步深刻领悟”两个确立”的决定性意义，坚决做到”两个维护”。要组织开展体系化学理化研究阐释，深入阐释这一思想的原理性成果、原创性贡献和科学体系、丰富内涵、精神实质、实践要求，以党员、干部、群众喜闻乐见的方式进行宣传。要持续推动学习贯彻习近平党建思想走深走实，引导各级党组织自觉运用习近平党建思想谋划和推进党的建设，以更高标准、更实举措抓好全面从严治党各项工作。

A commentary in the latest issue of Qiushi, translated here, says the “advancing of Xi Jinping Thought on Party Building…can be said to have come at exactly the right time”:

Through their own personal experience, the broad ranks of Party members, cadres, and the masses have come to understand ever more deeply that the fundamental reason Party building in the new era has been able to achieve historic, pioneering accomplishments lies in the navigation and helmsmanship of the Party Central Committee with Comrade Xi Jinping at its core, and in the scientific guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era. The international community has also highly affirmed the new atmosphere of the CPC’s governance and China’s governance. The advancing of Xi Jinping Thought on Party Building conforms to the overall situation and trend and to the will of the Party and the people, has a solid practical foundation, and can be said to have come at exactly the right time.

广大党员、干部、群众在亲身经历中，越来越深刻认识到新时代党的建设能够取得历史性、开创性成就，根本在于以习近平同志为核心的党中央领航掌舷，在于习近平新时代中国特色社会主义思想科学指引。国际社会也高度肯定中国共产党之治、中国之治的新气象。习近平党建思想的提出，顺应大局大势、党心民心，具有坚实的实践基础，可谓正当其时。

Party building joins rule of law, the economy, diplomacy, ecological civilization, and the military as another named sub-body of Xi Jinping Thought, each with its own conference. Studying and implementing it is now “an important political task for the whole Party, now and in the years ahead.” And it is an especially important task in the 17 or so months ahead, as this thought and the expected campaign around it are important political moves ahead of the 21st Party Congress. There are so many strains of Xi Jinping Thought on XXX that I am hoping the 21st Party Congress will simplify things for all of us and finally collapse them into Xi Thought, and perhaps that is Xi’s goal, with help from his consigliere Cai Qi.

According to the readout, this thought distinctly puts forward (这一思想鲜明提出):

1. Upholding the Party’s leadership is the most essential feature of socialism with Chinese characteristics 坚持党的领导是中国特色社会主义最本质的特征

2. Upholding the centralized, unified leadership of the Party Central Committee 坚持党中央集中统一领导

3. Upholding full and rigorous self-governance of the Party 坚持全面从严治党

4. Upholding staying true to the founding mission and keeping the mission firmly in mind 坚持不忘初心、牢记使命

5. Upholding taking the Party’s political building as the overarching guide 坚持以党的政治建设为统领

6. Upholding using the Party’s innovative theory to forge unity of mind and soul 坚持用党的创新理论凝心铸魂

7. Upholding the tempering of strong Party spirit 坚持锤炼坚强党性

8. Upholding the improvement of an organizational system that connects top and bottom and executes forcefully 坚持健全上下贯通、执行有力的组织体系

9. Upholding the building of a high-caliber contingent of officials equal to the heavy responsibility of national rejuvenation 坚持建设堪当民族复兴重任的高素质干部队伍

10. Upholding the normalization and long-term institutionalization of conduct building 坚持推进作风建设常态化长效化

11. Upholding using strict discipline to manage and govern the whole Party 坚持用严明的纪律管全党治全党

12. Upholding the integrated advancement of ensuring that officials do not dare to, are unable to, and have no desire to engage in corruption 坚持一体推进不敢腐不能腐不想腐

13. Upholding governing the Party through institutions and in accordance with regulations 坚持制度治党、依规治党

14. Upholding the implementation of the political responsibility for Party management and governance 坚持落实管党治党政治责任

More Party time ahead for cadres, but not in a fun way…

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Today’s top items:

1. Workers’ Daily on AI and workers’ rights - Workers’ Daily, published and sponsored by the All-China Federation of Trade Unions (ACFTU), ran a four-part series over the last month under the headline “Observing the Protection of Workers’ Rights Under the AI Wave AI浪潮下的劳动者权益保护观察”, and concluded the series with an editorial in the Thursday paper. I have posted translations of all four parts (1,2,3,4) and the editorial.

The editorial says there are general areas of concern for workers:

According to the reports, under the AI wave, the rights-protection issues of greatest concern to workers cluster around three areas.

从报道看，AI浪潮之下，劳动者较为关注的权益保护问题集中在三个方面。

First is the concern that the development of digital avatars carries hidden risks of rights infringement. Some enterprises have institutionalized the development of AI “skill packs” and the training of digital avatars of employees, even folding such tasks into performance e…

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On today's show Andrew and Bill begin with takeaways from Xi's visit to North Korea this week, including the conspicuous silence on North Korea's nuclearization, Kim Jong Un's assistance to Russia's war in Ukraine, Beijing as Kim's top priority, U.S.-Japan dialogue on regional nuclear threats, and an email about the PRC as a communist country. From there: CPPCC Chairman Wang Huning leads an inspection tour of Xinjiang ahead of the July 1st implementation of the national ethnic unity law, plus thoughts on Xinjiang's strategic importance generally and why Beijing sees its recent efforts as successful. At the end: China preps for an AI infrastructure buildout, the Pentagon alleges that Alibaba, Baidu and BYD are linked to the PLA, the Busan truce is being tested by both sides, and two Knicks stars wish students good luck on the Gaokao.

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1. More on Xi’s DPRK visit - Xi’s visit to Pyongyang confirms that the PRC really has given up talking about North Korea denuclearization, and it seems to be gearing up to ignore even more the existing UN sanctions on the DPRK. Given the delegation with Xi and language in the readout like “expand practical cooperation in trade, agriculture, construction, science and technology, health care, and other areas”.

The US and Japan are publicly at least not accepting the nuclearization of North Korea. The readout from the just concluded U.S.-Japan Extended Deterrence Dialogue said this:

Both delegations discussed China’s dramatic and opaque nuclear weapons buildup and rejected Russia’s notion that the DPRK’s pursuit of nuclear weapons was a closed issue. They reaffirmed their commitment to the complete denuclearization of the DPRK.

After the Trump visit to China, the White House fact sheet on the trip said that “President Trump and President Xi confirmed their shared goal to …

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Xi Jinping and Kim Jong Un agreed that the years of joint combat between China and the DPRK in the 1950s are an everlasting historical memory for both sides, and that the two sides must jointly safeguard the memorial facilities for the CPV martyrs and carry out distinctive education in revolutionary tradition and in ideological and moral education for young people, so that the great spirit of Resisting U.S. Aggression and Aiding Korea is carried forward and made greater, and so that the great traditional friendship between China and the DPRK is passed down through the generations. - From the readout of the visit to China-DPRK Friendship Tower

Today’s top items:

1. Xi concludes his visit to North Korea - Xi is back in Beijing after his two-day trip to the DPRK. At a luncheon Tuesday Xi said:

I and General Secretary Kim Jong Un reached important common understandings on developing the China-DPRK relationship in the new era, and we exchanged views in depth on safeguarding regional and globa…

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The shared socialist ideal is the defining character of China-DPRK relations. The Communist Party of China and the Workers' Party of Korea are both Marxist ruling parties, and China and the DPRK are fellow travelers on the socialist road. I firmly believe that as the two parties and two countries join hands to push forward each side's party and state cause and continue to strengthen pragmatic exchanges and cooperation, this will powerfully promote national prosperity and strength and the happiness and well-being of the people, and will continuously demonstrate the marked advantages and bright prospects of socialism. - From Xi's signed article in DPRK media

Today’s top items:

1. Xi in North Korea - Xi Jinping is in North Korea on his first trip to the country in seven years. According to the Xinhua readout (translation) of Xi’s meeting with Kim Jong Un Monday, Xi articulated four points for developing PRC-DPRK relations:

First, persist in taking high-level exchanges as the guide and consolidate the foundations of political mutual trust. Strategic guidance by the top leaders is the greatest strength of China-DPRK relations. I am willing to maintain close strategic communication with General Secretary Kim and lead China-DPRK relations continually to new heights. This year marks the 65th anniversary of the signing of the China-DPRK Treaty of Friendship, Cooperation and Mutual Assistance, and the two sides should hold solemn commemorative activities. The party-to-party relationship plays an important guiding role in the development of China-DPRK relations. The two parties should further expand and enliven friendly exchanges at all levels and in all fields, and deepen exchanges and mutual learning on the experience of governing party and country. The two sides should strengthen exchanges in diplomacy, law enforcement, the armed forces, and other areas, and properly implement the important consensus reached between General Secretary Kim and me, so as to pool wisdom and strength for the development of China-DPRK relations.

第一，坚持以高层交往为引领，夯实政治互信根基。最高领导人战略引领是中朝关系的最大优势。我愿同总书记同志保持密切战略沟通，引领中朝关系不断迈向新高度。今年是《中朝友好合作互助条约》签订65周年，双方要隆重举办纪念活动。两党关系对中朝关系发展发挥重要引领作用，要进一步拓展和活跃两党各层级各领域友好交往，深化治党治国经验交流互鉴。双方要加强外交、执法、军队等交流，落实好我和总书记同志达成的重要共识，为中朝关系发展汇聚智慧和力量。

Second, persist in taking the well-being of the people as the goal and raise the level of practical cooperation. The Chinese side is willing to strengthen the alignment of development strategies with the DPRK, expand practical cooperation in trade, agriculture, construction, science and technology, health care, and other areas, and better benefit the peoples of both countries. The two sides should take the full reopening of border ports of entry and the resumption of civil aviation flights and international passenger rail services as an opportunity to expand people-to-people exchanges and bring about a two-way flow.

第二，坚持以为民造福为目标，提升务实合作水平。中方愿同朝方加强发展战略对接，扩大经贸、农业、建筑、科技、医疗卫生等务实合作，更好造福两国人民。双方要以边境口岸全面复通、民航航班和国际客运列车恢复运营为契机，扩大人员往来，实现双向奔赴。

Third, persist in taking the passing-on of friendship as a driving force and tighten the bonds of people-to-people affinity. The traditional friendship between China and the DPRK, forged in blood, is a precious common treasure of the two peoples. The Chinese side is willing to work with the DPRK side to properly maintain and manage the memorial facilities for Chinese People’s Volunteer Army martyrs in the DPRK, carry out revolutionary-tradition education and ideological education for young people with distinctive characteristics, and pass on the two countries’ red genes and traditional friendship. China is willing to work with the DPRK to make good use of each side’s strengths and resources to strengthen exchanges and cooperation in education, the arts, tourism, sports, media, youth, sub-national, and sister-city ties, so that the traditional China-DPRK friendship takes deeper root in the people’s hearts.

第三，坚持以友谊传承为动力，拉紧民心相通纽带。中朝用鲜血凝成的传统友谊是两国人民共同的宝贵财富。中方愿同朝方一道，共同维护好、管理好在朝志愿军烈士纪念设施，开展富有特色的革命传统教育、青少年思想教育，传承好两国红色基因和传统友谊。中方愿同朝方用好各自优势资源，加强教育、文艺、旅游、体育、媒体、青年、地方、友城等交流合作，让中朝传统友谊更加深入人心。

Fourth, persist in taking fairness and justice as the guiding concept and enrich the substance of strategic coordination. In response to the major question of where humanity is headed, I put forward the concept of building a community with a shared future for mankind and the four major global initiatives, hoping to push global governance to develop in a more just and reasonable direction; this has won broad support and a positive response from the international community, including the DPRK side. Asia is the home in which China, the DPRK, and other regional countries live and earn their livelihoods. China and the DPRK should strengthen strategic coordination and cooperation, firmly defend their respective sovereignty, security, and development interests, and jointly safeguard peace and development in the region.

第四，坚持以公平正义为理念，丰富战略协作内涵。面对人类向何处去这一重大课题，我提出构建人类命运共同体理念和四大全球倡议，希望推动全球治理朝着更加公正合理的方向发展，得到包括朝方在内的国际社会广泛支持和积极响应。亚洲是中朝等地区国家的安身立命之所。中朝两国应加强战略协调和配合，坚定捍卫各自主权、安全、发展利益，共同维护地区和平与发展。

Xi made no mention of denuclearization, a hopeless endeavor at this point.

Minister of Defense Dong Jun is part of Xi’s delegation. I do not believe Xi’s 2019 delegation included the Minister of Defense.

Much of the commentary around this visit talks about how Xi is concerned about North Korea’s closer ties with Russia as Kim has supported Putin in his war with Ukraine. Is there any chance though that Xi is not completely unhappy with that support, given how much he does not want to see Putin lose, and in fact now that Ukraine has regained the initiative there may be some urgency in giving Russia more support?

The June 9 People’s Daily page 1 is all Xi and Kim:

2. Li Qiang on future industries - Last week was a big week for prioritizing developing future industries, starting with the June 1 issue of Qiushi, discussed here in Sinocism. On Friday, the weekly State Council Executive meeting had as one of its agenda items studying work on future industry development, and included a warning on “blindly following trends”. From the readout:

The meeting noted that, in light of the characteristics of future industries, forward-looking layout must be further strengthened, the intensity of advancement must be increased, and the initiative in development must be firmly grasped. The technological foundation must be made solid, investment in basic research must be continuously increased, and tackling of original and disruptive technologies must be systematically arranged. Ecosystem-building must be emphasized, the deep integration of industry, academia, research, and application must be promoted, close cooperation between the upstream and downstream of industrial chains must be encouraged, and more startups and unicorn enterprises must be cultivated in key tracks. Support policies must be improved, the guiding role of government investment funds and the like must be brought into play, and mechanisms for investment growth and risk-sharing must be established. Scientific and reasonable layout must be guided, regulatory governance must be improved, and rushing in all at once and blindly following trends must be prevented.

会议指出，要根据未来产业特点，进一步加强前瞻布局、加大推动力度，牢牢把握发展主动权。要筑牢技术根基，持续增加基础研究投入，系统布局原创性、颠覆性技术攻关。要注重生态建设，推动产学研用深度融合，鼓励产业链上下游密切合作，在重点赛道培育更多初创企业和独角兽企业。要完善支持政策，发挥好政府投资基金等引导作用，建立投入增长和风险分担机制。要引导科学合理布局，完善监管治理，防止一哄而上、盲目跟风。

3. Cai Qi takes over as Central Party School President - We learned from the official report of a graduation ceremony of the Central Party School that Cai Qi is now President of the school, replacing Chen Xi, who stayed in his post far longer than expected. We have no idea why Chen was replaced now, and the move has triggered speculation of trouble for Chen. Those rumors may be true. It also makes sense that Cai now has this additional role, as the preparations for the 21st Party Congress are gearing up and the Party School is an important institution for personnel evaluation.

The timing of the announcement that Wei Xiaodong, Party Group Secretary and Chairman of the Beijing Municipal Committee of the Chinese People’s Political Consultative Conference, is under investigation just as Cai Qi was taking over the Party School has caused some speculation, as Wei’s time as head of the Beijing Organization Department (April 2017 to January 2021) covered most of Cai Qi’s tenure as Beijing Party Secretary, so others have suggested one of Cai’s guys is in trouble.

I am skeptical, as if Wei is anyone’s “guy” he is more likely Chen Xi’s since Chen was head of the Central Organization Department when Wei became head of the Beijing Organization Department. We may never know, but if I had to guess, Wei’s downfall is not a problem for Cai, and Cai’s addition of the Party School title is likely another sign he will be sticking around in the 21st Party Congress as Xi’s top consigliere.

4. MSS warning on AI “transfer stations” - The Ministry of State Security on Monday published a piece on its WeChat public account titled “’AI Transfer Stations’: Guard Against the Risks” (《”AI中转站”，风险要防范》), warning that the rapidly growing market for third-party “AI transfer stations” (AI中转站) — proxy services that consolidate multiple AI model APIs onto a single platform — has produced widespread privacy leaks, the resale of user prompts to other model vendors for training, model substitution, embedded backdoors, and unauthorized cross-border data transfers. I have posted a translation here.

The MSS does not mention the most common reason Chinese users pay for these transfer stations is to reach frontier models — OpenAI, Anthropic, Google — that are blocked or unavailable through licensed PRC channels.

One of the four main appeals of the platforms, in the MSS’s own list, is “bypassing usage restrictions”:

Users can even use these stations to bypass restrictions on network access, official authorization, and cross-border transmission, connecting directly to some overseas large models.

用户甚至可以借此绕过网络访问、官方授权、跨境传输等限制，直连部分海外大模型。

On the risks, the MSS is explicit about prompt resale:

Some “AI transfer stations” lack standard data encryption and control mechanisms, and some even privately intercept user data and resell it to other large-model vendors for system training, causing user privacy leaks.

部分”AI中转站”缺乏正规数据加密与管控机制，有的甚至私自截留用户数据，倒卖给其他大模型厂商用于系统训练，造成用户隐私泄露。

And on backdoors and unauthorized data export:

Some “AI transfer stations” conceal backdoors. Bad actors may use these “backdoors” to implant malicious code on user devices, stealing account keys, cloud credentials, and the like, and may even install remote-control programs that continuously monitor user devices and steal user data.

部分”AI中转站”暗藏后门。不法分子可能通过”后门”向用户设备植入恶意代码，借此窃取账号密钥、云端凭证等，甚至植入远程控制程序，持续监控用户设备、窃取用户数据。

There are warnings in the US too about the use of these transfer stations. A recent report by the think tank CNAS - Adversarial Distillation - says they help facilitate distillation of leading US models:

Transfer stations are commercially mature intermediaries that resell unauthorized access to U.S. model APIs, routing traffic through proxy infrastructure to circumvent geographic restrictions, evade detection, and obscure the true origin of requests. They serve a broad customer base of Chinese developers, researchers, and other users seeking access to blocked U.S. models, which sustains the infrastructure that adversarial distillation campaigns exploit

So maybe this is a point of agreement for the US and PRC sides in any future AI dialogue…

5. US lists PRC tech firms as “Chinese military companies” - The US Department of War issued a revised 1260H list of “Chinese military companies” operating in the United States that added several top PRC tech firms including Alibaba, Baidu, BYD. The list was initially publicly updated in February and then quickly withdrawn as it had incorrectly removed ChangXin Memory Technologies Inc. and Yangtze Memory Technologies Co. The Trump Administration appears to have decided to withhold releasing the updated list until after the Trump-Xi summit. Inclusion on the 1260H list is more of an optics than a substantive problem for these firms, but the PRC government will not be pleased. Alibaba’s inclusion may now be a bit awkward for the NBA/WNBA and the US schools and other organizations who have taken large donations from Alibaba chairman Joe Tsai.

6. Japan’s rare earths China problem - Nikkei Asia reports that China’s expanded rare earths-related controls on exports to Japan are biting:

Based on trade data from China’s General Administration of Customs, Nikkei analyzed exports of the seven restricted rare earths, including dysprosium and terbium. Exports limits were initially imposed by the Ministry of Commerce in April 2025.

Exports of the seven rare earths for the January-April period fell 34% on the year, with steeper declines of 88% for March and 82% for April. Dysprosium and terbium, used in magnets for electric vehicle motors, saw exports fall to zero since January.

Yttrium exports for the January-April period dropped more than 90%. The rare-earth element is crucial in laser-equipped medical devices and chipmaking equipment, as well as in the aircraft and space fields.

What will the Trump Administration do when US companies start having supply issues because their Japanese suppliers can not get the rare earth supplies they need? And when will the Japanese government start retaliating?

7. Surge in EV sales exacerbating road maintenance funding stress - Yicai has a long piece on how the surging NEV fleet is breaking the tax base that pays for road upkeep, and the reforms now being discussed in response. The Ministry of Transport’s Highway Science Research Institute estimates the annual funding shortfall for ordinary public road maintenance runs around 50% nationally, with roughly 40% of ordinary roads “listed for maintenance but with no money to maintain, due for repair but with no money to repair” (列养但无钱养，应修但无钱修). On toll roads, by 2021 debt service alone was consuming 79.37% of total spending while maintenance had fallen to 5.7%, down from 9.0% in 2013, per data Jiangxi University of Finance and Economics professor Gao Lin showed Yicai.

Ordinary roads are funded mainly by transfers from the central refined-oil consumption tax — more than 80% of annual maintenance spending — but new fuel-vehicle additions collapsed from 6.01 million in 2024 to just 430,000 in 2025, and the gap will only widen.

Hainan, which has the country’s highest NEV penetration (62.9% in 2025) and abolished its toll booths decades ago in favor of a fuel surcharge, is the test case and is now piloting a BeiDou-positioning “free-flow” mileage fee. China Passenger Car Association secretary general Cui Dongshu and Fudan management school professor Ni Chenkai both told Yicai a mileage tax, possibly weight-adjusted, is the most likely path; Cui pitched a “mileage + vehicle weight + vehicle type/operating conditions” composite. Yicai also reports the relevant authorities have discussed a consumption tax on EV batteries, currently exempt.

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Earlier today I published this week’s episode of Sharp China. It is our monthly free episode, so if you like it please share with friends and colleagues. From the show notes for Seizing the Commanding Heights; Decoding Shangri-La Dialogue; Europe Moots Trade Policy; The PRC Expels a New York Times Journalist:

On today's show Andrew and Bill begin with Xi Jinping's call to seize the commanding heights of science, technology, and industry across six industries of the future, as well as the State Council's move to release a 34-article law that will implicate domestic firms, foreign businesses and potentially foreign governments, as well as PRC financial institutions and individual investors. From there: Reactions to Sec…

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Show Notes:

On today's show Andrew and Bill begin with Xi Jinping's call to seize the commanding heights of science, technology, and industry across six industries of the future, as well as the State Council's move to release a 34-article law that will implicate domestic firms, foreign businesses and potentially foreign governments, as well as PRC financial institutions and individual investors. From there: Reactions to Secretary of War Pete Hegseth's remarks at the 2026 Shangri-La Dialogue, why an absence of Taiwan mentions in his main speech is not necessarily seen in Beijing as a shift in policy, and questions regarding U.S. partnerships elsewhere in the region. At the end: The looming trade tensions between Europe and China, the expulsion of New York Times journalist Vivian Wang, the 37th anniversary of the Tiananmen Square massacres, and Steph Curry's new endorsement deal with Li-Ning.

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Related Readings:

New regulations on outbound investment; Qiushi on future industries; Chip export control dysfunction; Shangri-La Dialogue; EU-China -- Sinocism

Agricultural and rural modernization; Socialist political economy; UK-PRC; PRC media in Africa -- Sinocism

China Tightens Rules on Outbound Investment in Fight for Global Tech Edge -- WSJ

State Council Regulations on Outbound Investment -- Sinocism Translation

China Expands Outbound Investment Rules to Cover Individuals -- Bloomberg

Pete Hegseth says US-China ties are ‘better than in years’ -- FT

Hegseth’s Message to Asian Partners: Do More to Get More -- NYT

Japan’s defence minister Koizumi rejects China accusations of ‘new militarism’ -- FT

Brussels fires starting gun on tougher China trade policy, as Beijing vows retaliation -- SCMP

Watching China in Europe - June 2026 -- Noah Barkin

After China Orders a Times Reporter to Leave the Country, the U.S. Reciprocates -- NYT

Tiananmen Tonight Trailer -- Tiananmen Tonight

Vandals break into Tiananmen crackdown museum in US, founder says -- Hong Kong Free Press

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Today is the 37th anniversary of the June 4th crackdown on the Tiananmen. We talked about it bit on this week’s episode of Sharp China we recorded today, and especially about how well the PRC has memory-holed the events of 1989. I have nothing much new to add to what I have written before, so instead I will report what I wrote two years ago on the 35th anniversary:

Today is the 35th anniversary of June 4th. The security services are still paranoid about and cracking down on any expressions of memory of the events 35 years ago, and now in Hong Kong too. I was a student at Peking University for the 1989 Spring semester, and when classes stopped in April I got a job as a fixer for CBS News, even though my Chinese wa…

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1. 15th Five-Year Plan for Accelerating Agricultural and Rural Modernization - The State Council issued the “15th Five-Year Plan for Accelerating Agricultural and Rural Modernization,” the latest of the sectoral plans of the 15th Five-Year Plan. According to the readout, the document sets targets through 2030 with an outlook to 2035, and organizes work under seven areas. I have posted a translation here.

The “general requirements”:

Take Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era as guidance; thoroughly implement the spirit of the 20th Party Congress and the successive plenary sessions of the 20th Central Committee; conscientiously implement the arrangements of the Fourth Plenum; comprehensively implement the important expositions and instructions of General Secretary Xi Jinping on “three rural” work; uphold solving the “three rural” issues as the top priority of the entire Party’s work; uphold and strengthen the Party’s overall leadersh…

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