Xi in North Korea; Li Qiang on future industries; Cai Qi now Party School President; MSS on AI "transfer stations"; Updates to US "Chinese Military Companies" list
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.