• China’s rare earth exports swell in June as Beijing relaxes controls
• Stablecoin scams, innovation put China’s financial regulators in high-stakes balancing act
• Could Elon Musk really move his tech empire to China?
• How Trump’s tariffs could fund his bill; China’s exports in June: SCMP daily highlights
• Chinese planes have near miss after Air China flight makes unexplained change of height
• China’s monetary policy impact not yet unleashed, PBOC says with 5% GDP goal in mind
• Robot makers AgiBot, Unitree and UBTech land more orders from Chinese enterprises
• China urges respect for thorny issues as India’s Jaishankar makes first visit in 5 years
• China and Serbia gear up for first joint military training exercise
• Chinese women, both ex-domestic abuse victims, live as platonic partners amid rising trend
• Tech war: China approves Synopsys’ acquisition of Ansys after US lifts EDA ban
• China tames ‘sea of death’ with high-voltage renewable energy power loop
• Global sovereign wealth funds increasing allocations to Chinese assets: Invesco
• Why China’s fight against excessive competition is different from past reforms
• China-Russia ties are more mature and stable than any major global relationship: Wang Yi
• Tariffs hit China’s garment makers, maths star targeted online: 5 weekend reads you missed
• European Union on the ropes as Donald Trump and China turn the screws
• China’s exports accelerate in June as US trade truce creates opening
• Top AI medical scientists Roland Eils and Irina Lehmann leave Germany for China
• Shopaholic Chinese woman splurges US$280,000, rents big flat to store unopened packages
• Tech takes centre stage as Chinese students weigh up major choices
• Australia juggles its China trade needs with Philippines defence ties
• Li Cheng and Andy Browne discuss what Trump gets wrong about China and where next for ties

China’s rare earth exports swell in June as Beijing relaxes controls

https://www.scmp.com/economy/economic-indicators/article/3318166/chinas-rare-earth-exports-swell-june-beijing-relaxes-controls?utm_source=rss_feed

China’s rare earth exports surged in June to their highest level since December 2009, in what analysts said could be an early sign that recent behind-the-scenes agreements with the United States on the flow of critical minerals are beginning to bear fruit.

Exports of the elements reached 7,742.2 tonnes last month – a 60 per cent increase from the 4,828.7 tonnes recorded in June 2024 – and a 32 per cent jump compared to the 5,865 tonnes reported this May, according to customs data.

Rare earth exports have become a focal point for global trade in recent months, as Beijing tightened controls on shipments in April to assert its dominance over the supply chain – a move widely seen as a response to similar restrictions by the US on the flow of advanced semiconductors and increases to tariffs.

Hints of a thaw emerged in late June, when the Wall Street Journal reported that six-month export licences had been issued to select American manufacturers.

And last month, China’s Ministry of Commerce said it would improve how it handles export approvals for European countries and make it easier for their businesses to engage in legitimate trade.

Europe relies heavily on China for rare earths and magnets containing the minerals, and recent supply disruptions have unsettled local businesses.

Customs data covers shipments of all rare earth elements, not only those under export controls.

However, the US dollar value of rare earth exports dropped 47 per cent compared to the same period last year, most likely due to structural changes, said Xu Tianchen, senior China economist at the Economist Intelligence Unit.

“In addition to price changes, it’s more likely a shift in the export mix – China exported more of the cheaper rare earths and less of the high-value ones,” Xu said, adding that the unit price of permanent magnets – the main product category affected by export controls – had remained largely steady.

In April and May, he said, customs inspections were extremely strict. Whether a product contained the rarer and more valuable medium or heavy rare earths, Xu added, exports were broadly affected.

“The normalisation of medium and heavy rare earth exports will take longer, as they still require export licences and can’t bounce back overnight.”

For now, the data only reflects China’s overall rare earth export volume, without a breakdown by product category or details on whether the surge includes previously restricted items.

A clearer picture will emerge on July 20, when the government is expected to release more comprehensive figures that could reveal the true scope and impact of recent policy shifts.

On April 4, China imposed export controls on seven rare earth elements and the magnets containing those elements above a certain level after the sweeping tariffs and restrictions imposed by US President Donald Trump in his “Liberation Day” tariff package.

The vast majority of supply and refining capacity for these minerals – crucial raw materials in the automotive, aerospace, semiconductor and defence sectors – is in China’s hands, granting it a major strategic advantage.

Under current rules, those requesting rare earth shipments must apply for an export licence in a process that can take up to 45 days. They must provide proof that the material will not be used for military purposes.

After separate rounds of trade talks in Geneva and London, US Treasury Secretary Scott Bessent confirmed earlier this month that China has resumed rare earth magnet exports to the US, although volumes have not yet returned to pre-April levels.

“We are hoping that they will flow at a faster rate,” Bessent told Fox News when asked whether China had resumed the exports.

Stablecoin scams, innovation put China’s financial regulators in high-stakes balancing act

https://www.scmp.com/economy/china-economy/article/3318158/stablecoin-scams-innovation-put-chinas-financial-regulators-high-stakes-balancing-act?utm_source=rss_feed

A financial dilemma has sent local-level financial authorities across China scrambling as they try to navigate a stablecoin frenzy that some say has become a breeding ground for chaos, with scams that have already duped millions.

As a result, several local governments have elevated stablecoins to the top of their agendas in recent weeks while issuing urgent warnings to investors about illegal fundraising and fraudulent schemes.

With this in mind, the nation’s top financial authorities remain committed to financial innovation and adaptation. And regulators are doing their best to strike a balance.

But in major mainland cities such as Beijing, Shenzhen, Suzhou and Chongqing, alerts went out last week. They warned that illicit financial activities, which often lure investors with promises of high returns and guaranteed interest payments, pose significant risks to public financial security.

The word of caution came as a major investment scam – promoting high returns using buzzwords and terms such as “USDT”, a leading stablecoin also known as tether – was being widely reported across the mainland. Said to have defrauded more than 2 million investors, the scheme has evoked memories of widespread collapses among peer-to-peer lending platforms in China between 2018 and 2020.

Thus, the dangerous financial ploy has reignited concerns about regulatory challenges in managing emerging financial technologies (fintech) in a Chinese-style market economy, and the market remains wary of what is widely perceived as a recurring flaw, with “lax regulation leading to chaos, followed by crackdowns that cause collapse”.

And while stablecoins have become a buzzword in Beijing’s academic discussions, central bank authorities have maintained their crackdown on virtual currencies while remaining focused on developing a central bank digital currency – the e-CNY, or the digital form of the yuan, which has been undergoing a years-long roll-out.

As the series of local-level government warnings gained traction, the Beijing Internet Finance Association said on Wednesday that fraudsters often “package and hype complex, emerging concepts to create information asymmetry and mislead investors”.

Two days later, a warning from the Suzhou municipal government highlighted the legal risks of participating in virtual currency transactions, and a reward system was introduced for reporting illegal activities.

“What we’re seeing now is that a group of semi-informed people is being deceived by ill-intentioned people,” a Beijing-based currency expert said, pointing to what he saw as a chaotic frenzy surrounding stablecoins.

Meanwhile, as a relatively cautious approach is being taken on the mainland, Hong Kong is moving forward with new stablecoin regulation that will take effect on August 1, enabling the issuance of stablecoins and positioning the city as a leader in cryptocurrency innovation.

Unlike in Hong Kong, mainland China’s fintech ecosystem, with near-zero transfer fees and low time costs, is so convenient for both consumers and businesses that it reduces the need for stablecoins, said the expert, who declined to be named because he was not authorised to speak to the media.

Stablecoins have gained increased attention and scrutiny in recent weeks following last month’s collapse of a digital wealth-management platform that boasted more than 2 million members, handled 13 billion yuan (US$1.8 billion) in funds, and promised daily returns as high as 1 per cent, the Beijing Business Today newspaper reported last week.

After investors raised concerns about unwithdrawable funds, the platform’s founder reportedly said in a member chat group that he had fled overseas.

Despite the scandal, Chinese officials and scholars remain closely engaged in stablecoin developments, particularly as a growing embrace of stablecoins among major economies such as the United States could have a profound impact on global trade.

Last week, the Shanghai State-owned Assets Supervision and Administration Commission held a study session on cryptocurrency and stablecoin trends. Its party secretary, He Qing, emphasised the need to “stay attuned to emerging technologies and deepen research on digital currencies”, according to an official readout.

Huang Yiping, dean of Peking University’s National School of Development and a member of the Chinese central bank’s policy committee, has advocated for engagement with digital assets and stablecoins, noting that China cannot afford to miss out on innovation and should use Hong Kong as a testing ground.

“I think virtual assets, digital assets and traditional financial assets will coexist for a long time,” he said in an interview with Chinese news media platform Yicai earlier this month.

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Could Elon Musk really move his tech empire to China?

https://www.scmp.com/news/china/science/article/3318104/could-elon-musk-really-move-his-tech-empire-china?utm_source=rss_feed

Donald Trump’s recent spats with Elon Musk – which included threats to deport the South African-born billionaire – have prompted speculation that he might move his business empire to China.

The pair fell out over the US president’s tax and spending plans and the Tesla and SpaceX boss’s subsequent threats to create a new political party.

That prompted Trump to write on social media earlier this month: “Elon may get more subsidy than any human being in history, by far, and without subsidies, Elon would probably have to close up shop and head back home to South Africa. No more Rocket launches, satellites, or Electric Car Production, and our Country would save a FORTUNE.”

Musk’s business empire has collected US$38 billion in government contracts, loans, subsidies and tax credits, according to The Washington Post.

“If tensions escalate between Musk and Trump – especially over issues such as regulation, subsidies, censorship or taxation – there is a possibility that Musk might move more R&D or manufacturing capabilities abroad,” said Denis Simon, a non-resident fellow at the US think tank the Quincy Institute for Responsible Statecraft.

“China, with its advanced supply chains and infrastructure, could become a favoured destination.

“While Musk cannot fully relocate his empire to China due to export controls and national security barriers, selective knowledge transfer, symbolic alignment and manufacturing migration are very much on the table.”

However, Simon said that while it would be feasible for Musk to relocate his electric vehicle business to China, where Tesla has a plant in Shanghai, it would be harder to move other businesses, especially SpaceX.

“SpaceX’s role in US national defence, satellite communications [Starlink], and space launch services makes it essentially non-transferable,” he said.

“Musk would risk being seen as a national security threat if he even attempted to shift critical space technologies to a geopolitical rival.”

He added that China had an EV supply chain, policy incentives and a consumer base that favoured Tesla, but a full relocation of intellectual property to China would trigger a political backlash in the US, especially if it involved proprietary technology.

He added that Tesla’s Chinese operations had helped to accelerate the growth of local EV firms.

The US firm accounted for over 16 per cent of total EV sales in China in 2020, but this dropped to 6 per cent last year in the face of increasing competition from domestic rivals such as BYD and XPeng.

Zhou Yu, a geography professor at Vassar College who researches globalisation and the hi-tech industry in China, said China had already “pulled ahead” of the US in EV technology.

“Overall, what Musk says or does will have some influence on how people think about China, but he does not change much about China’s priorities or environment for innovation,” Zhou said

“Relocating R&D to China would be hard, so he might expand China’s operation more, but again the Chinese EV business ecological environment is already mature, so Musk can make little change.”

Simon also pointed to problems with locating some of Musk’s other businesses, including the brain-computer interface (BCI) firm Neuralink and the Boring Company which is working on the proposed high-speed Hyperloop transport network.

He said China might allow fast-track clinical trials on a brain-computer brain-computer interface that US regulators might be more cautious about, but concerns about ethics and safety as well as intellectual property rights would still be a factor.

He added: “Neuralink has not yet commercialised its BCI technology, but its early prototypes and regulatory submissions offer a template for Chinese researchers to emulate. China’s own efforts in BCIs are accelerating, and Musk’s public discussion of these topics acts as a global catalyst.”

As for ultra-speed transport, Simon said: “Musk’s Hyperloop idea has been more successful as inspiration than as reality.”

While China has long been the global leader in high-speed rail, “if Musk ever tried to build a Hyperloop prototype in China, it could still become a technology demonstrator for future transit systems”.

He added that regardless of Musk’s future, Beijing could use his case, and complaints about the American political system, to argue that the US was no longer a hospitable environment for disruptive innovation.

“China may not need Musk’s loyalty or direct investment to benefit; it only needs his marginalisation in the US to amplify its own tech narrative: China is a stable, state-aligned innovation hub with fewer ideological encumbrances,” he said.

This message could be aimed at foreign investors, young Chinese scientists currently in the US or countries looking for non-Western development models.

But he also pointed to potential problems for Musk if he did move to a tightly controlled society such as China.

“The moment his actions diverged from Chinese policy interests, authorities could freeze assets, restrict operations or co-opt his intellectual property. Musk’s aversion to censorship and control would be in tension with China’s tight grip on narrative and data,” he said.

Some Chinese social media users have said Musk would be welcome to move to the country following threats from Trump and other Republicans to deport him.

One comment said: “If he does not have a country, China welcomes Musk. Tesla cars will become cheaper.”

“Then come to China. China will surely welcome such talents who are rich, creative and innovative,” another person wrote.

Zhou said: “Many Chinese believe that Musk is a great innovator, so China might treat him nicely to show that it is a more stable environment.

“Still, he is a person people either love or hate, and he is so volatile, so I do not think that the Chinese government would count on him for anything,” she said.

Simon added: “Deportation or visa pressure is politically explosive. Musk’s South African birth and Canadian citizenship make him technically deportable, but any attempt to expel him would be a legal and political nightmare – unlikely even under Trump.”

How Trump’s tariffs could fund his bill; China’s exports in June: SCMP daily highlights

https://www.scmp.com/news/china/article/3318176/how-trumps-tariffs-could-fund-his-bill-chinas-exports-june-scmp-daily-highlights?utm_source=rss_feed

Catch up on some of SCMP’s biggest China stories of the day. If you would like to see more of our reporting, please consider .

As the ink on US President Donald Trump’s signature “One Big Beautiful Bill” barely dried, he turned his focus back to tariffs, ending a three-month lull in global trade tensions.

China’s exports recorded a larger-than-expected acceleration in June, as exporters took advantage of a 90-day tariff truce with the United States to speed up their shipments.

The White House “should really find some people who understand the Chinese economy and politics”, political science expert Li Cheng suggests.

The relationship between Beijing and Moscow shows great stability, maturity and strategic values, China’s top diplomat Wang Yi told his Russian counterpart, Sergey Lavrov, in Beijing ahead of a meeting of Eurasian foreign ministers.

China will hold its first joint military training exercise with the Serbian military this month as defence ties deepen between Beijing and the Balkan country.

China’s top leaders have raised concerns about excessive competition in the domestic market in recent weeks, signalling a shift in policy priorities.

Chinese construction crews have completed encircling the Tarim Basin – one of the most forbidding places on Earth – with an extra-high voltage “energy ring”.

Chinese planes have near miss after Air China flight makes unexplained change of height

https://www.scmp.com/news/china/politics/article/3318181/chinese-planes-have-near-miss-after-air-china-flight-makes-unexplained-change-height?utm_source=rss_feed

Two Chinese planes were involved in a near miss in Russian airspace earlier this month in an incident that has sparked fresh concerns over aviation safety.

Recordings of the pilots’ discussions with air traffic control suggest that an Air China passenger plane made an unexpected manoeuvre that put it on a potential collision course with an SF Airlines cargo plane.

The manoeuvre had not been requested by air traffic control and the reason why the plane did this is yet to be explained.

However, the recording shows that the air traffic controller had asked another plane in the area to change altitude and one possible explanation is that the Air China pilot had misheard or misunderstood the instruction sent to the other plane.

In the incident, which happened over Tuva, a remote part of Siberia that borders Mongolia, the two planes came within 300-400 feet (around 90-120 metres) of each other, much closer than the global minimum standard of 1,000 feet, according to live tracker Flightradar24.

Radar shows that the near-collision happened when Air China Flight CA967, an Airbus A350 travelling from Shanghai to Milan, started climbing from a height of 34,100 feet to 36,000 feet between 21:39 and 21:52 GMT on Sunday, July 6 (just before 6am the following day Chinese time).

This put it on a potential collision course with SF Airlines CSS128, a Boeing 767 cargo plane flying from Budapest to Ezhou, a city in the central province of Hubei.

Apparent recordings of the discussions between pilots and air traffic control – all conducted in English – started circulating on Chinese social media over the weekend and suggest the Russian controller was directing four planes at the time.

The two other planes – another Air China flight, CA861 travelling from Beijing to Geneva, and Hainan Airlines HU7937, flying between Beijing and Prague – were flying to the northwest of the pair involved in the incident.

Air traffic control asked the Geneva-bound flight and the Hainan Airlines plane to maintain their current altitudes – flight level 360 (or 36,000 feet) and level 340 respectively.

CA967, the Air China flight involved in the near-miss, did not receive any instructions at this point but the pilot started speaking just after the Hainan Airlines pilot repeated the controller’s instruction.

It is not clear what the Air China pilot said because the audio was interrupted, possibly due to overlapping transmissions, and only the flight number was clearly audible.

Radar information suggests that after the flight began its near-fatal ascent, the two planes were left on a course that had them flying almost directly towards each other.

The pilot on the SF Airlines cargo plane, flying at around 35,000 feet, apparently spotted the potential collision and requested information from air traffic control, which confirmed there was an Airbus A350 in front of the plane.

The controller then put the request to the Hainan Airlines plane on hold and told the two planes on a collision course to take evasive action by veering off in opposite directions.

The near-miss triggered an alarm known as the Traffic Collision Avoidance System on both planes, prompting the Air China pilot to ask air traffic control what had caused this to happen.

The controller then asked: “Are you climbing with instruction or without instruction? Confirm, please.”

The pilot replied: “No. Thank you.”

It is not known who released the recording and it could not be independently verified. Air China, SF Airlines and the Civil Aviation Administration of China have been asked for comment.

The recording circulating online also includes a conversation between the two pilots after they switched to a different communication channel and spoke to each other in Mandarin.

The sound quality meant that parts of the conversation were inaudible, but at one point the cargo pilot was heard to say: “I saw your plane climbing. Did [air traffic control] instruct you to?

“I saw that there was a plane ahead and it was only 20 nautical miles [37km] away and still climbing. Such a crossing altitude is very inappropriate. I guess you also heard me saying ‘request traffic information’.”

The Air China pilot appeared to blame the female Russian air traffic controller for the incident, saying “the girl” was “making a fuss” and had left everyone “confused”.

He later said “we couldn’t explain it clearly to them” and “didn’t know how to tell them”.

The pilot added: “I assume we’ll have to write a report on this kind of incident when we get back.”

His SF Airlines counterpart replied: “Definitely, without a doubt. I have to report home [to the company] right away.”

China’s monetary policy impact not yet unleashed, PBOC says with 5% GDP goal in mind

https://www.scmp.com/economy/china-economy/article/3318170/chinas-monetary-policy-impact-not-yet-unleashed-pboc-says-5-gdp-goal-mind?utm_source=rss_feed

China’s central bank intends to carefully calibrate the intensity and pace of its “moderately loose” monetary policy implementation, taking steps to help the country’s economy grow by Beijing’s goal of around 5 per cent this year.

Zou Lan, deputy governor of the People’s Bank of China, said on Monday that the agency would closely monitor and evaluate the transmission and actual effects of previously implemented measures. And any future steps would be based on domestic and international financial and economic conditions, as well as the performance of financial markets.

“Monetary policy operates with a lag, and the full impact of current measures is still unfolding,” Zou said at a press conference. “The PBOC will continue to implement a moderately accommodative monetary policy.

“This approach aims to more effectively stimulate domestic demand, stabilise public expectations, invigorate market vitality, and support the achievement of this year’s economic and social development goals and tasks.”

In May, the PBOC announced a raft of supportive measures to shore up China’s economy and stabilise capital markets against the backdrop of trade negotiations with the United States. The reserve requirement ratio – the amount of cash that commercial banks must hold as reserves – was cut by 0.5 percentage points, and the seven-day reverse repo rate – a benchmark interest rate – was lowered by 0.1 percentage point to 1.4 per cent. The rate of housing accumulation fund loans and relending facilities rate were also slashed by 0.25 percentage points.

In addition, it also announced extra measures to boost consumption and support key sectors, including scrapping the reserve ratio for auto financing companies, providing an additional 300 billion yuan (US$41.9 billion) in funding for technological innovation, and creating a 500 billion yuan relending tool for service consumption and elderly care.

Beijing may not be in a rush to further cut interest rates to release liquidity into the markets, as economic growth remained on track during the first half, said Zhang Yuhan, principal economist at The Conference Board’s China Centre.

China’s GDP grew by 5.4 per cent in the first quarter. Economic data for the second quarter is due to be released on Tuesday.

“Further interest cuts will depend upon domestic economic conditions and external factors such as trade frictions and the US [Federal Reserve’s] policy moves,” Zhang said.

At the press conference, Zou reassured markets of the yuan’s resilience despite external volatility, primarily regarding uncertainties surrounding the US dollar.

“First, the domestic economy continues to stabilise and improve,” Zou said. “Secondly, markets widely expect the US Fed to begin cutting rates in the second half. With major advanced economies in easing mode, the US Fed’s anticipated policy shift will ease the China-US monetary policy divergence, narrowing the yield gap.”

China will keep the yuan’s exchange rate generally stable and uphold the market’s decisive role in the exchange rate formation, Zou said, adding: “China does not seek to gain an unfair international competitive advantage through currency devaluation.”

As of the end of June, the balance of China’s broad money supply (M2) – which includes cash, short-term and longer-term deposits – had increased 8.3 per cent, year on year. And that of the narrow money supply (M1) – which excludes long-term deposits – grew by 4.6 per cent, according to PBOC data.

The gap between M1 and M2 suggests that households and firms have a propensity to save, Zhang from The Conference Board said.

“Effective implementation of existing policies and more stimulus are needed,” he said.

In the first half, households and corporations parked 17.94 trillion yuan in banks, while banks’ lending to households and businesses totalled 12.92 trillion yuan, according to the PBOC data.

Zhang Zhiwei, president and chief economist at Pinpoint Asset Management, said the monetary policy implemented in the first half of the year yielded some results.

“However, to further enhance its effectiveness, greater reliance should arguably be placed on fiscal policy rather than monetary policy,” he said. “This is because fiscal measures – particularly those targeting the real economy – tend to have a more direct and potent impact on boosting domestic demand.”

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Robot makers AgiBot, Unitree and UBTech land more orders from Chinese enterprises

https://www.scmp.com/tech/tech-trends/article/3318152/robot-makers-agibot-unitree-and-ubtech-land-more-orders-chinese-enterprises?utm_source=rss_feed

China’s fast-developing humanoid robot market segment is seeing demand from enterprises gather speed, as prominent start-ups AgiBot and Unitree Robotics have landed orders totalling 124 million yuan (US$17.3 million) from state-owned China Mobile, the world’s largest telecommunications firm by number of subscribers.

That order from China Mobile’s subsidiary in Hangzhou, capital of eastern Zhejiang province, involves the supply of 78 million yuan worth of full-size humanoid robots from AgiBot and 46 million yuan in smaller machines – with computational capability and nimble-fingered hands – from Unitree, according to a notice from the telecoms network operator’s procurement and tender website in late June.

The deal with China Mobile – with about 1 billion mobile network customers and 320 million broadband business clients in the first quarter – covers a two-year period. The total number of humanoid robots to be supplied was not disclosed.

That transaction reflects how China’s government is helping supercharge demand for humanoid robots at state-owned enterprises, as a number of manufacturers aim for mass production this year.

“Humanoid robots are expected to become the next groundbreaking innovation – following computers, smartphones and new-energy vehicles – to profoundly transform human production and lifestyles, while reshaping the global industrial landscape,” the Ministry of Industry and Information Technology said in its 2023 guidelines.

The director of China’s State-owned Assets Supervision and Administration Commission, Zhang Yuzhuo, last week visited Unitree’s facility in Hangzhou to learn how enterprises can “effectively gather innovative resources and stimulate vitality” in the fields of artificial intelligence and robotics.

Six out of 11 domestic humanoid robot makers plan to manufacture more than 1,000 units this year, market research firm TrendForce said in a report in April. These include AgiBot, Unitree, Galbot, Engine AI and Leju Robotics.

The vice-minister of China’s General Administration of Customs, Wang Lingjun, said at a press conference on Monday that the country’s industrial robot exports in the first half of 2025 increased 61.5 per cent from a year earlier.

Shenzhen-based UBTech Robotics on Sunday said it had sold more than 100 units of its US$41,000 humanoid robot, Tien Kung Xingzhe, since its debut in March. The company expects to sell over 300 units by the end of this year.

The 1.7-metre-tall humanoid robot, designed for research purposes, is an upgraded version of the Tien Kung model developed by the Beijing Humanoid Robot Innovation Centre, an institution backed by UBTech and Xiaomi.

A version of the model, dubbed Tian Kung Ultra, finished in first place at the world’s first half-marathon competition with humans and humanoid robots, which was held in Beijing in April. The robot completed the 21km race in about two hours and 40 minutes.

In the same month, UBTech and home appliances giant Midea Group accelerated the deployment of robotic workers in factories. UBTech said it secured a buyer for a “small batch” of its bipedal robots Walker S1 and Walker C for use in factories.

Beijing-based Noetix Robotics, meanwhile, said it sold more than 1,000 units of its N2 humanoid robot a month after it placed second in the half-marathon race. That pushed N2’s total sales volume to over 2,000 units, worth more than 100 million yuan, founder Jiang Zheyuan said in June.

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China urges respect for thorny issues as India’s Jaishankar makes first visit in 5 years

https://www.scmp.com/news/china/diplomacy/article/3318175/china-urges-respect-thorny-issues-indias-jaishankar-makes-first-visit-5-years?utm_source=rss_feed

Chinese Vice-President Han Zheng called for practical cooperation and mutual respect with India as he met the Indian foreign minister in Beijing on Monday.

The talks with Subrahmanyam Jaishankar came against the backdrop of tensions over succession plans for the Dalai Lama, the Tibetan spiritual leader who has lived in exile in India since 1959.

Han said China and India should “steadily advance practical cooperation, respect each other’s concerns and promote the sustained, healthy and stable development of [bilateral] relations”, state news agency Xinhua reported.

Jaishankar, meanwhile, expressed confidence that the discussions during his visit would “maintain that positive trajectory”, a readout from his ministry said.

“The resumption of the Kailash Mansarovar Yatra is also widely appreciated in India. Continued normalisation of our ties can produce mutually beneficial outcomes,” the top Indian diplomat was quoted as saying.

He was referring to the Indian pilgrimage to Mount Kailash and Lake Mansarovar in Tibet that had recently resumed after being suspended for five years over border tensions and the pandemic.

According to Xinhua, Jaishankar said India was willing to “maintain the momentum of bilateral relations, promote mutually beneficial cooperation, and strengthen communication and coordination within multilateral mechanisms”.

In a social media post following their talks, Jaishankar – who is visiting China for the first time since 2020 – said he was “pleased” to have met Han soon after arrival in Beijing.

“Noted the improvement in our bilateral ties”, he wrote, while reiterating his confidence that talks during the visit would sustain that positive momentum.

Jaishankar is in China for a Shanghai Cooperation Organisation (SCO) foreign ministers’ meeting, to be held in Tianjin on Tuesday. “Conveyed India’s support for China’s SCO presidency,” he wrote in his post.

China is this year’s rotating chair of the SCO – a 10-member bloc focused on economic and security interests. Apart from China and India, it includes Russia, Belarus, Iran, Pakistan and four Central Asian countries – Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan.

Despite improving ties, China and India are locked in a diplomatic dispute over the succession of the 14th Dalai Lama, who recently turned 90 and announced that his India-based office – the Gaden Phodrang Trust – had the exclusive authority to recognise his successor.

A senior Indian minister’s remarks supporting that statement riled Beijing, as did Indian Prime Minister Narendra Modi’s birthday greetings for the Dalai Lama.

A spokeswoman for the Chinese Embassy in India addressed the matter on social media on Sunday, calling it a “thorn” in relations.

“It has been noted some people from strategic and academic communities, including former officials, have made some improper remarks on the reincarnation of the Dalai Lama, contrary to [the] Indian government’s public stance,” the post said.

“As professionals in foreign affairs, they should be fully cognisant of the sensitivity of issues related to Xizang, and that the reincarnation and succession of the Dalai Lama is inherently an internal affair of China, brooking no interference [from] any external forces,” the spokeswoman added, referring to Tibet by its Chinese name.

“[The] Xizang-related issue is a thorn in China-India relations and has become a burden for India. [Anyone] playing the ‘Xizang card’ will definitely end up shooting oneself in the foot.”

Beijing considers the Dalai Lama a separatist figure and opposes any official recognition or support from other countries. New Delhi formally recognised the Tibet autonomous region as part of China in 2003.

Earlier this month, Beijing lodged a formal protest and urged India to stop interfering in China’s domestic affairs, after senior Indian minister Kiren Rijiju said only the Dalai Lama himself and the institution he established had the authority to identify his successor as the spiritual leader of Tibetan Buddhism. China also protested after Modi extended 90th birthday greetings to the Dalai Lama on July 6.

India has hosted the Dalai Lama and the Tibetan government-in-exile in Dharamsala since 1959, when an armed uprising in Tibet was crushed by the People’s Liberation Army.

China-India relations reached a historic low after a deadly clash along their disputed Himalayan border in 2020. But ties have gradually improved through multiple rounds of diplomatic and military talks, culminating in an agreement last October on troop disengagement and patrolling arrangements along the frontier.

The border agreement came shortly before Modi and Chinese President Xi Jinping met in Russia on the sidelines of a Brics emerging economies summit, signalling a reset in ties.

Last month, China and India also agreed to speed up the resumption of direct flights and take other steps to boost exchanges, including visa facilitation and increased cooperation between media and think tanks.

China and Serbia gear up for first joint military training exercise

https://www.scmp.com/news/china/military/article/3318169/china-and-serbia-gear-first-joint-military-training-exercise?utm_source=rss_feed

China will hold its first joint military training exercise with the Serbian military this month as defence ties deepen between Beijing and the Balkan country.

Chinese defence ministry spokesman Jiang Bin said on Monday that army special forces from China and Serbia would hold the joint training exercise Peace Defenders-2025 in Hebei in late July.

“This will be the first joint training between the Chinese and Serbian militaries. It will help strengthen the combat skills of participating troops and deepen cooperation between the two militaries,” Jiang said.

Similar joint exercises are usually hosted on a rotating basis, but neither side has said whether Serbia will host such a drill in the future.

This will also be the first time for China to conduct exercises with European forces since it held joint counterterrorism training with Belarus near the border with Poland and Ukraine last July.

Serbia is considered one of China’s closest partners in Europe, particularly since Nato’s 1999 bombing of the former Yugoslavia, of which Serbia was a part.

It is one of six Western Balkan countries waiting to join the European Union, but it has no plans to join Nato.

On a visit to Serbia in May last year, Chinese President Xi Jinping described relations between the two countries as an “ironclad friendship”.

At the time, the two countries signed a pledge to deepen and elevate their comprehensive strategic partnership and agreed to “build a community with a shared future”.

Serbia is the only European country that uses Chinese weapons, but Russia is its main supplier.

At the end of last year, the Serbian Ministry of Defence announced that its air force had completed all necessary training in China to become the first in Europe able to independently operate and maintain the Chinese-made FK-3 air defence missile system.

Often compared to the US Patriot missile system and Russia’s S-300 surface-to-air missile system, the FK-3 is the export version of China’s latest HQ-22 medium-range air defence weapon system.

The Chinese systems were believed to be delivered in April 2022 by 12 People’s Liberation Army Y-20 transport aircraft in what was reportedly the largest airlift of military equipment from China to Europe.

In 2020, Beijing delivered six CH-92A combat drones and 18 FT-8C laser-guided missiles to Belgrade. Three years later, Serbia acquired Chinese CH-95 unmanned aerial vehicles, and in February 2024, it announced plans to buy even more drones.

In recent years, Beijing has also invested heavily in Serbian infrastructure, funding numerous factories and mines, providing billions of dollars in loans for road construction and building the Belgrade-Budapest railway line.

Chinese women, both ex-domestic abuse victims, live as platonic partners amid rising trend

https://www.scmp.com/news/people-culture/gender-diversity/article/3317422/chinese-women-both-ex-domestic-abuse-victims-live-platonic-partners-amid-rising-trend?utm_source=rss_feed

Two Chinese women in their fifties who suffered from domestic abuse have been living together for 13 years as friends in a new form of partnership.

The women’s living arrangement is increasingly becoming the dream of many women in China.

Ju Ma, 59, lives with her best friend, Yan, 51, in southern China’s Guangxi Zhuang autonomous region. They are business partners in the construction industry.

The pair bought a flat together, travelled together, and were honest with each other about their income and savings.

Childless Yan treats Ju Ma’s 28-year-old daughter, Ju, as her own daughter.

They are not lovers, but both said their relationship is better than most couples.

They decided to live together after Ju Ma divorced in 2012. She had been suffering domestic violence at the hands of her husband and left him the moment her daughter was admitted to university.

At the age of 26, Yan married a man she had only known for two months because everyone around her told her she should marry someone with a good job and property.

She was kicked out just two days after they registered their marriage.

It turned out that her ex-husband married her just to get a flat from his employer. Yan also suffered from domestic abuse.

In 2005, Ju Ma could not bear the torture meted out by her ex-husband.

She left her home in central China’s Hubei province and moved to southern Guangdong province to work at a factory, where she met Yan.

The two became good friends. Yan even went to Ju Ma’s home to help her look after her younger sister who had suffered serious bone fractures in an accident.

Both their families see them as an extra child.

After starting a new business together, they cut their hair short to avoid sexual harassment from male construction workers.

After making some money, the first thing they did was buy their own flat, registered in both their names.

Ju Ma said they bought a flat with three rooms so that all three of them, including her daughter Ju, could have a room of their own.

Yan said some of her family tried to persuade her to remarry, so that she would have someone to depend on, to which she replied: “I depend on my friend.”

Ju junior sees both women as her mothers and is happy to see her mother's life now.

“She is obviously happier and more positive now than when she was living with my father,” she said.

In recent years, some women have explored new modes of platonic partnership with their female friends.

Some so-called women co-living partners jokingly refer to themselves as “hopeless straight women”, suggesting that they find men hopeless.

Ju Ma and Yan said they enjoy living with each other because both are diligent at housework, unlike their male chauvinist ex-husbands who did nothing at home and took their hard work forgranted.

China recorded 6.1 million couples registering their marriages in 2024, a drop of 20.5 per cent from the previous year.

It is the lowest since public records began in 1986 and less than half the peak recorded in 2013.

“Such a great friendship is much better than a traditional husband and wife partnership,” said one online observer.

“Their relationship transcends romance or kinship,” said another.

“Their story shows us the possibility of not getting old feeling lonely despite having no husband or child,” a woman netizen said.

Tech war: China approves Synopsys’ acquisition of Ansys after US lifts EDA ban

https://www.scmp.com/tech/big-tech/article/3318140/tech-war-china-approves-synopsys-acquisition-ansys-after-us-lifts-eda-ban?utm_source=rss_feed

China’s antitrust regulator on Monday approved American chip design software giant Synopsys’ US$35 billion acquisition of Ansys, weeks after the administration of US President Donald Trump lifted export controls on electronic design automation (EDA) products to the mainland.

The State Administration for Market Regulation (SAMR) said in a statement that it gave the green light to Synopsys’ deal for Ansys, a computer-aided engineering software vendor, under the condition that the two firms honour their contractual obligations to Chinese clients.

Synopsys and Ansys were also required not to terminate existing agreements or reject any Chinese customer’s request to renew their contracts.

The conditions set by SAMR reflect the importance of EDA technology to China’s semiconductor industry, while sending a sign of easing bilateral tensions after Washington lifted export curbs on the software.

Synopsys, Cadence and Siemens held a combined 82 per cent revenue share in China’s EDA market last year, according to a Morgan Stanley research note in May.

After announcing the Ansys acquisition in January 2024, Synopsys expected the transaction to close in the first half of this year.

Beijing, however, reportedly blocked the transaction when Washington imposed a restriction on China’s access to EDA software from Synopsys, Cadence and Siemens, according to a June report by The Financial Times.

The Synopsys-Ansys deal had already obtained approvals from other major jurisdictions in the world, including the US and the European Union, subject to certain conditions.

The US Federal Trade Commission said in May that Synopsys needed to divest its optical software and photonic software tools, while Ansys had to sell a power consumption analysis tool. The European Commission also ordered similar divestitures.

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China tames ‘sea of death’ with high-voltage renewable energy power loop

https://www.scmp.com/news/china/science/article/3318131/china-tames-sea-death-high-voltage-renewable-energy-power-loop?utm_source=rss_feed

Chinese construction crews have completed encircling the Tarim Basin – one of the most forbidding places on Earth – with an extra-high voltage “energy ring”.

The project, which has taken 15 years to build, transforms the vast inland basin – home to China’s largest desert – into a massive new-energy transmission hub.

The 4,197km (2,608-mile) power transmission and transformation project in an area of the Xinjiang Uygur autonomous region known as the “sea of death” was completed on Sunday, state broadcaster CCTV reported.

The final section of the 750-kilovolt loop – now the largest power grid loop in China – was completed at the southern edge of the Taklamakan Desert and is expected to go online in November, marking a major infrastructure milestone for south Xinjiang.

The infrastructure includes nearly 10,000 transmission towers along with nine substations that will collect wind, solar, thermal and hydropower, transforming the voltage before sending the electricity back out for consumption, according to state news agency Xinhua.

The extended power grid covers an area of 1.06 million sq km (409,268 square miles) and five prefectures in Xinjiang. According to Xinhua, most of the construction was completed along the Taklamakan Desert, which accounts for around 60 per cent of the Tarim Basin’s total area.

The Taklamakan Desert is nicknamed the “sea of death” due to the shifting dunes that cover most of its surface, making it a daunting region to traverse and build around.

“During construction in the desert, large construction vehicles could not move forward because there were no roads, and there was also the risk of getting stuck in sand pits,” Li Jun, project manager from the State Grid Xinjiang Construction Branch, told CCTV.

“Our strategy was to build roads along the entire line to solve the problem of transporting materials.”

The routes were built by excavating sand and then laying down permeable fabrics used to enhance soil stability.

The power loop has crossed diverse and challenging geography, including a desert poplar forest, the Taitema wetland, the Kunlun Mountains bordering the south of the basin and the Tianshan Mountains in the north.

To complete construction in the steep, high-altitude mountainous areas, workers set up cableways to transport nearly 3,000 tonnes of construction material to complete the transmission towers, Xinhua reported.

Grass grids were planted along the routes of the completed towers in the desert areas to help slow down dune movement.

The same technique has been applied in sand-blocking projects around China’s other deserts, including a 3,050km green belt around the Taklamakan Desert, and sand control belts across deserts in the Inner Mongolia autonomous region.

Renewable energy – including solar, wind, thermal, and hydropower – accounts for more than half of Xinjiang’s installed energy capacity.

Before the new power loop was installed, the Tarim Basin relied on a 220kV power grid with a transmission distance of up to 300km and a transmission capacity of 300,000 kilowatts.

The new infrastructure will double transmission distance and boost transmission capacity to 3 million kW, allowing connections to other regional power grids for long-distance power transmission, according to CCTV.

Construction has started on secondary transmission lines that will eventually send energy to the northwestern province of Qinghai bordering Xinjiang and further south to Sichuan, according to Xinhua.

Global sovereign wealth funds increasing allocations to Chinese assets: Invesco

https://www.scmp.com/business/banking-finance/article/3318133/global-sovereign-wealth-funds-increasing-allocations-chinese-assets-invesco?utm_source=rss_feed

Global sovereign wealth funds are increasing their allocations to Chinese assets, betting on the country’s prowess in digital technologies, renewable energy and advanced manufacturing to drive returns and hedge geopolitical risks, according to an Invesco study.

Nearly 60 per cent of sovereign wealth funds said they planned to increase their investments in China over the next five years, higher than in 2024, the study revealed on Monday.

The Invesco Global Sovereign Asset Management study was conducted between January and March, just before the US rolled out tariffs on its trading partners, including China. The study also coincided with global excitement over China’s home-grown, cost-effective chatbot from DeepSeek.

Interest in Chinese assets was particularly pronounced among sovereign funds in Asia-Pacific and Africa, with 88 per cent and 80 per cent, respectively, expressing intentions to increase their investments.

Around 73 per cent of North American funds, which are focused on long-term structural opportunities, showed a willingness to increase their exposure to China.

The global funds cited several factors when justifying their increased China investments. Some 71 per cent identified strong returns made in China, 63 per cent said they wanted to diversify and 45 per cent cited increased market access for foreign investors.

The most attractive sectors for investment in China were digital technology and software, advanced manufacturing and automation, and clean energy and green technology, the report said.

“A consensus is growing that the opportunity set around China is unique and compelling, especially relating to the evolving technology ecosystem that is being developed in the country,” said Martin Franc, Invesco’s CEO of Asia ex-Japan, in a statement. “Investors are becoming increasingly convinced of China’s innovative leadership in major technology segments and don’t want to be left behind.”

He added that respondents said they approved of supportive policies from Beijing and believed the market was a place where innovative technologies could blossom.

The report showed that 78 per cent of respondents believed China’s technology and innovation sectors would achieve global competitiveness, but only 48 per cent thought the country would become a consumption-led economy.

The study polled 141 senior investment professionals – including chief investment officers, heads of asset classes and portfolio strategists – from 83 sovereign wealth funds and 58 central banks across the world, who collectively managed US$27 trillion in assets.

Around 88 per cent of respondents globally said geopolitical instability was their top strategic concern, while 64 per cent pointed to inflationary pressures.

The report said central banks were diversifying their reserve-management strategies in response to escalating geopolitical tensions and growing fiscal uncertainties, but 78 per cent of respondents said it would take more than 20 years for a credible alternative to the US dollar to emerge.

In addition, 47 per cent of those polled expected to increase their investments in gold over the next three years.

The study also revealed an increase in the number of sovereign wealth funds that had made direct investments in digital assets. Allocations were highest in the Middle East with 22 per cent, Asia-Pacific with 18 per cent and North America with 16 per cent.

Why China’s fight against excessive competition is different from past reforms

https://www.scmp.com/economy/china-economy/article/3318110/why-chinas-fight-against-excessive-competition-different-past-reforms?utm_source=rss_feed

China's top leaders have raised concerns about excessive competition in the domestic market in recent weeks, signalling a shift in policy priorities.

In a meeting chaired by President Xi Jinping on July 1, the Central Finance and Economic Affairs Commission said Beijing needs to “focus on key and difficult issues, regulate enterprises’ disorderly and low-price competition” and “guide enterprises to improve product quality and promote the orderly exit of outdated production capacity”.

The rhetoric has brought back memories of Beijing’s 2015 “supply-side structural reform” initiative, which aimed to eliminate excess capacity in major industries. But a decade later, Chinese leaders face a very different economic landscape.

The Post breaks down the views of analysts on China’s current challenges, and why authorities have spurred efforts to target – involution – the term used for excessive competition that yields diminishing returns.

Between 2015 and 2018, China implemented reforms to reduce capacity in key industries, especially steel and coal, according to a note from Morgan Stanley published on Thursday.

The central government set reduction quotas for local governments and guided mergers of various state-owned enterprises (SOEs).

Beijing also tightened environmental regulations and ramped up inspections to encourage firms to phase out outdated capacity, economists led by Robin Xing said in the note.

To cushion the impact of factory closures and job losses, authorities also introduced demand-side stimulus measures, such as subsidies for resettling laid-off workers, debt-swap programmes to ease fiscal pressure on local governments and shantytown renovation projects, according to the note.

Economists have pointed out that 2025 is not 2015, with excess capacity now mostly concentrated in privately owned companies.

“This time, excess capacity mainly comes from private companies in the manufacturing sector. Given the ownership and product differentiation, it’s much harder for Beijing to shut down capacity using administrative measures,” Australian investment bank Macquarie Group said in a note published on Thursday.

Policymakers also have to contend with a struggling housing market, which puts pressure on raw material producers and the broader economy, economists led by Larry Hu said in the note.

Unlike in 2015, when policymakers were able to soften the impact of reforms, China now faces weaker growth and relatively high government debt that limits its fiscal flexibility.

“The government’s debt level is already high (~100 per cent of GDP), which may constrain its willingness and ability to undertake aggressive fiscal expansion,” according to the Morgan Stanley note.

In addition, much of the added capacity this time around is new and complies with environmental regulations, making it difficult for the government to order shutdowns, the note said.

Policy thinking for the latest round of reforms is still in its early stages, as regulators consult industry leaders. But economists believe Beijing is likely to take a more nuanced approach, particularly since it is mostly dealing with private companies.

“Compared with 2015-2018, the applicable tools are softer, impacted sectors are broader, and the macro backdrop is weaker. In addition, institutional inertia and industry-specific idiosyncrasies (more characteristic in downstream sectors) mean implementation may be more nuanced this time,” the Morgan Stanley note said.

Given the more challenging environment, economists remain sceptical that Beijing can replicate the success of 2015, particularly the period of reflation observed after the supply-side reforms.

“In view of the upcoming slowdown in demand due to the effects of front-loaded exports and fiscal easing fading in the second half of the year, combined with an overall reactive policy approach to provide a floor to growth, a dramatic reflation like we saw in 2015-18 may be elusive,” Morgan Stanley analysts said in the note.

They expect deflation to persist into 2026, with risks “turned slightly more skewed to the upside” in the second half of the year.

To ease price competition, Beijing will also need to launch major demand-side stimulus to offset the shock of capacity cuts and boost domestic demand, according to the Macquarie note.

China-Russia ties are more mature and stable than any major global relationship: Wang Yi

https://www.scmp.com/news/china/diplomacy/article/3318108/china-russia-ties-are-more-mature-and-stable-any-major-global-relationship-wang-yi?utm_source=rss_feed

The relationship between Beijing and Moscow shows great stability, maturity and strategic values, China’s top diplomat Wang Yi told his Russian counterpart Sergey Lavrov in Beijing ahead of a Eurasian grouping summit.

The Russian foreign minister arrived in Beijing on Saturday following a working visit to North Korea, where he met leader Kim Jong-un in Pyongyang and held the second round of strategic dialogue with North Korean Foreign Minister Choe Son-hui.

Emphasising the depth and uniqueness of their bilateral ties, Wang also said Russian President Vladimir Putin’s coming visit to China would be among top priorities between Beijing and Moscow in the coming months.

“China-Russia relations represent the most stable, mature and strategically significant major-country relationship in the world today, and both sides consistently view and advance cooperation across all domains from a historical, strategic and long-term perspective,” Wang told Lavrov, who is in Beijing for a Shanghai Cooperation Organisation (SCO) foreign ministers’ meeting, according to a Chinese readout.

“Close communication between the two foreign ministers facilitates the timely implementation of the consensus reached by the two heads of state, and the current priority is to jointly prepare for high-level engagements in the next phase, deepen comprehensive strategic coordination … and collaboratively address the challenges posed by a turbulent and changing world.”

Russia’s presidential aide Yury Ushakov said in an interview in Moscow last month that Putin would spend four days in China from August 31 to September 3, when he would join the SCO leaders’ summit and hold major bilateral talks with Chinese President Xi Jinping before taking part in activities marking the 80th anniversary of China’s victory in its resistance war against Japanese aggression.

On Tuesday, Lavrov will join SCO counterparts from Central Asia as well as Iran, India and Pakistan in China’s northern port city of Tianjin to pave the way for the leaders’ meeting in late August.

Sunday’s meeting was the second in days between Wang and Lavrov after the two diplomats met in Kuala Lumpur, Malaysia, on Thursday on the sidelines of the Asean foreign ministers’ meeting. There, Wang described the Asia-Pacific region as “the common neighbourhood” for China and Russia, which he said should strengthen bilateral coordination in their wider cooperation with Asean.

Formed by China and Russia in 2001, the SCO is a Eurasian political, economic, security and defence organisation that includes major powers in the Global South as members, including India, Russia and Iran.

It has become a pillar of Beijing’s efforts to promote its leadership in a multipolar world order.

According to the Iranian foreign ministry, Seyed Abbas Araghchi, the Islamic Republic’s top diplomat, will join his SCO counterparts in China and will hold bilateral talks with Wang and other foreign ministers on the sidelines of the Tianjin event.

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Tariffs hit China’s garment makers, maths star targeted online: 5 weekend reads you missed

https://www.scmp.com/news/world/article/3318093/tariffs-hit-chinas-garment-makers-maths-star-targeted-online-5-weekend-reads-you-missed?utm_source=rss_feed

We have put together stories from our coverage last weekend to help you stay informed about news across Asia and beyond. If you would like to see more of our reporting, please consider .

European Union on the ropes as Donald Trump and China turn the screws

https://www.scmp.com/news/china/diplomacy/article/3318045/european-union-ropes-donald-trump-and-china-turn-screws?utm_source=rss_feed

If a week is a long time in politics, after a bruising fortnight of wrestling with the world’s two superpowers, the European Union could be forgiven for thinking it has aged several decades.

A bruising encounter over Russia with China’s top diplomat Wang Yi was followed by chaotic skirmishes on trade with the United States over the last week, as the EU scrambled to avoid being crushed between the duelling titans.

The bad news for the bloc’s bureaucrats is that they may have an even trickier few weeks to navigate before they are sipping chilled rosé among the lavender fields of Provence on their notoriously long August holidays.

On Monday, trade ministers will meet in Brussels to hash out a response to US President Donald Trump’s weekend announcement of a 30 per cent tariff on all EU-made goods, with pressure mounting on the European Commission to retaliate.

French President Emmanuel Macron said on Saturday that if no agreement was reached by August 1, the bloc must consider using its anti-coercion instrument, a powerful trade weapon that would allow it to block US services and digital exports.

On Sunday, however, European Commission President Ursula von der Leyen said the EU would “extend the suspension of our countermeasures till early August”.

Next Sunday, EU leaders will head for Asia, where a stop at an expo in Osaka will be followed by an EU-Japan summit in Tokyo. From there they will fly to Beijing for an altogether more challenging affair.

Last week in Brussels, it was hard to find any optimism among officials involved about the first EU-China summit in two years.

“They’re tired of having the same discussions all over again,” said Nadine Godehardt, a China specialist at the German think tank, Stiftung Wissenschaft und Politik, at an event in Paris. “These politicians have been discussing the same things for decades now, the same lists on the table.”

A two-day summit has been condensed into one and plans for a second day in Hefei in Anhui province, where delegates were to tour a Volkswagen factory and meet business leaders, have been taken off the agenda.

While there were rumours that day two was cancelled to punish the EU for not holding high-level trade talks before the summit, sources said the EU had been told that Premier Li Qiang could not be away from Beijing on July 25 for domestic reasons.

A business round table will now take place on the margins of the summit and the postponed economic talks could take place afterwards, but only if there is progress on trade.

Chinese President Xi Jinping will co-chair the first part of the summit, which will involve thorny political discussions alongside European Commission chief von der Leyen and European Council President António Costa, followed by a banquet lunch.

Trade will be covered in an afternoon session with Li, followed by a second banquet, before the EU leaders jet back to Brussels.

But there would be no joint statement and few major deliverables were expected, diplomats said.

On trade, this could change if Beijing accepts the EU’s terms for a price undertaking agreement on electric vehicles. The Europeans also hope for a structural solution to Chinese curbs on rare earths, but are realistic about the prospects.

The summit is now seen as a chance to deliver grievances directly to Xi, who they say rarely hears Europe’s views unfiltered.

They are willing to accept criticism for travelling to Beijing, despite it being Europe’s turn to host the event, to give him their unvarnished views.

Even if nothing is achieved, the hawkish von der Leyen could tell member states calling for her to engage with China that that particular avenue had been exhausted.

She could feasibly then steer China policy in a more assertive direction, insiders believe.

In an uncompromising speech to the European Parliament last week, she called on Europe to “speed up with de-risking”.

The dismal outlook feels a far cry from a couple of months ago, when the EU – at least publicly – viewed relations with both the US and China differently.

On May 6, EU leaders exchanged glowing letters with Xi, pledging deeper ties on the 50th anniversary of the establishment of diplomatic relations and generating some faintly positive mood music after years of squabbling.

Two days later, senior EU officials were slamming Britain for agreeing to a flimsy trade deal with the US, saying their own deal, when it came, would remove all “reciprocal tariffs”.

With the US and China focused on their own tussle, Europe felt it had leverage over both, while talk of greater European independence was encouraged by von der Leyen.

“A new international order will emerge in this decade,” she said in May. “If we do not want to simply accept the consequences this will have for Europe and the world, we must shape this new order. History does not forgive either dithering or delaying. Our mission is European independence.”

In the ensuing weeks, however, both powers turned the screws on Europe while trying to cool down their own dispute.

On Friday, EU officials were still expecting to make a trade deal with Trump, only for him to announce 30 per cent duties the following day – adding that they would rise in line with any European retaliation.

Meanwhile, European firms have felt the bite of export licensing requirements for rare earths that left the EU powerless to respond.

As juggernauts to its west and east delivered haymakers in a no-holds-barred slugfest, the EU has thumbed its notebook like a librarian in a war zone.

Suddenly, European independence seems a long way off.

“For China and the US under Trump, they have the same perception of Europe – we are irrelevant, we are not important,” Justyna Szczudlik, head of the Asia programme at the Polish Institute of International Affairs, told an Asia Society event in Paris.

When the US and China secured a stopgap deal in Geneva in May to calm their spiralling trade war, Europeans noticed a change in Beijing’s tone. Having secured a climbdown from Trump, Beijing felt it could “push Europe around”, according to one official involved.

Vice-Premier He Lifeng travelled directly from Geneva to Paris for talks with French officials that turned out to be “terrible”, according to another.

Talks between Chinese Foreign Minister Wang Yi and top EU diplomat Kaja Kallas this month went equally badly.

Wang took issue with her constant prodding on Russia, according to people familiar with the exchange, and flipped. During a long lecture, he told her China did not want Moscow to lose the war because the US would then turn its full focus to Asia.

A meeting that was supposed to set the political agenda for the summit may now have set a combative tone.

Europe’s friendly language has gone too. At the Group of 7 meeting in Canada last month, von der Leyen – in the same room as Trump – took Beijing to task for its rare earth controls. “We all witnessed the cost and consequences of China’s coercion through export restrictions,” she said.

Few in Brussels were surprised by her comments, but eyebrows were raised when she chose to publish a closed-door speech from a meeting where no other leader went public.

Observers suggested Xi’s relative success in managing the trade war with the US had inspired a harder line towards Europe, in the expectation that it would not punch back – at least not where it hurts.

“I think China’s trade-off between sticks and carrots is that if you’re strong, I give you carrots. If you’re weak, like Europe, I give you sticks,” said Alicia Garcia Herrero, Asia-Pacific economist at the financial services firm Natixis, speaking at the same Paris event.

After several rounds of postponed EU retaliation against the US, Trump may have reached the same conclusion. All eyes are on whether the bloc punches back on Monday.

“We have many tools, but we really are afraid of using them. We have this anti-coercion instrument – it’s a very good instrument, but we are scared to use it,” Szczudlik said.

During a press briefing last week, one senior diplomat was stumped when a journalist asked, “Where did the self-confidence go?”

Instead, the mood in Brussels has turned to damage control. “We’ve been asked to stop the bleeding,” an EU official said of the US on Friday, in remarks that could equally apply to China. “A small pool of blood is now seen to be better than a big one.”

China’s exports accelerate in June as US trade truce creates opening

https://www.scmp.com/economy/economic-indicators/article/3318080/chinas-exports-accelerate-june-us-trade-truce-creates-opening?utm_source=rss_feed

China’s exports registered a sizeable acceleration in June as exporters took advantage of the 90-day tariff truce to speed up their shipments, beating market forecasts.

The world’s top merchandise exporter saw its outbound shipments rise by 5.8 per cent year on year to reach US$325.2 billion in June, according to customs data released on Monday.

The figure follows a reported 4.8 per cent rise in May and eclipses the 3.6 per cent increase forecast in a market survey from Chinese financial data provider Wind.

More to follow...

Top AI medical scientists Roland Eils and Irina Lehmann leave Germany for China

https://www.scmp.com/news/china/science/article/3318032/top-ai-medical-scientists-roland-eils-and-irina-lehmann-leave-germany-china?utm_source=rss_feed

Top German medical scientists Roland Eils and Irina Lehmann have joined Fudan University in Shanghai as full-time faculty members, according to the Chinese institution’s website.

The married couple joined the university in April, their arrival marking another milestone in China’s growing ambitions in artificial intelligence (AI) in medicine – a field that Eils and Lehmann have helped to pioneer.

Eils earned his doctorate in mathematics from the University of Heidelberg in 1995, and was elected as a member of the German National Academy of Sciences in 2018.

He is an internationally renowned computational biologist and scientific strategist who has led major German research institutions – including the German Cancer Research Centre and the University of Heidelberg – in establishing national platforms.

He was named one of the most influential researchers globally in 2022, according to Clarivate’s list of “Highly Cited Researchers”.

Previously, he served as director of the health data science department at Heidelberg University Hospital and was a full-time professor and founding director of the Centre of Digital Health at the Berlin Institute of Health (BIH), Charité University of Medicine.

Lehmann was a tenured professor of epigenetics and lung research at Charité and chair of the molecular epidemiology department at BIH.

She received her PhD in immunology from Leipzig University in 1991, and has chaired systems biology of human disease conferences in Berlin, Los Angeles and Nashville.

Between them, the pair have published more than 1,000 peer-reviewed papers, with a total citation count exceeding 100,000. They have published over 30 papers in top journals, including Cell and Nature.

“The deep integration of AI with medicine will facilitate the more efficient transformation of fundamental biomedical research findings into clinical practice,” Eils said in an interview posted on Fudan’s website last month.

“Deep learning technology holds great potential in the processing and analysis of health data. By analysing multimodal data, including genomics, health records, and retinal fundus photographs, these data models can assist in predicting a variety of diseases, such as cardiovascular and metabolic diseases.”

Eils and Lehmann have been at the forefront of the field of AI-assisted medical intelligence.

Eils was a key player in establishing the world’s first human pancreas cell atlas, mapping the coronavirus infection mechanism during the Covid-19 pandemic, the creation of the core computing centre for the International Cancer Genome Consortium, and the use of AI for predicting disease risks.

Lehmann has been instrumental in evaluating clinical large language models. She has also led a €13 million (US$15 million) European Union project to build real-world machine learning models for chronic obstructive pulmonary disease, asthma and other conditions.

The pair have joined Fudan’s Intelligent Medicine Institute, established in June 2022, to promote it as a global hub of innovation. The institute held its first international conference last October and plans to hold the conference annually in Shanghai.

They will also set up a German-Chinese joint laboratory for intelligent medicine at the university.

Fudan University, like other leading Chinese institutions, has been pushing to recruit top talent from around the world, from postdoctoral researchers to world-class experts. Other recent hires include Kong Long, a former Apple chip engineer, who has joined the university’s School of Microelectronics as a researcher and doctoral adviser.

Shopaholic Chinese woman splurges US$280,000, rents big flat to store unopened packages

https://www.scmp.com/news/people-culture/trending-china/article/3317363/shopaholic-chinese-woman-splurges-us280000-rents-big-flat-store-unopened-packages?utm_source=rss_feed

A 66-year-old woman in Shanghai who spent two million yuan (US$280,000) shopping online and even rented a flat to store her unopened packages has trended on social media.

The behaviour of the woman, identified as Wang, has also triggered a heated discussion about the mental health of senior citizens.

Wang lives alone in a flat in the Jiading district of Shanghai.

Over the past few years, she has spent more than two million yuan buying items from online platforms, according to the news outlet Kan Kan News.

Wang mostly hoards the unopened items in her home, creating a disorderly environment.

Her neighbours have complained about the bad smell and have often seen flies and cockroaches around Wang’s flat.

Wang says she is addicted to online shopping and that spending money in such a way makes her excited.

She also says she needs to squander her money so that her relatives and friends do not come to borrow cash from her.

“Years ago, I sold my flat in the downtown area and bought this house in the suburban Jiading district. It is easy for other people to conclude that there is a lot of money left in my pocket,” Wang was quoted as saying.

“To prevent other people from borrowing money from me, I choose to spend it buying things. When they see piles of stuff in my home, they will feel it is not appropriate to ask me to lend them money,” she added.

Wang said she usually shopped on live-streaming sessions. She mostly buys cosmetics, health supplements and gold jewellery.

The packages are piled up to the ceiling of her room, and she admits she cannot find a place to sleep.

An underground garage she owns is also packed with items she has bought. Months ago, Wang rented a flat to store the overflow.

According to a residential committee official, Wang’s daughter lives abroad while her relatives seldom visit her.

The unnamed official said they had contacted Wang’s relatives in the hope that they could make her change her ways, but to no avail.

In May last year, the residential committee organised a clean-up after getting Wang’s permission, but the hoarding continued.

Shi Yanfeng, a Shanghai-based psychiatrist, told the media that many patients with hoarding disorder suffer from depression and social anxiety.

Yan Feng, a doctor from Shanghai Mental Health Centre, said treating a hoarding disorder is a long-term project.

One online observer said: “The root of her problem is loneliness.”

“Young people should care more about elderly members of their family,” said another.

Tech takes centre stage as Chinese students weigh up major choices

https://www.scmp.com/economy/china-economy/article/3317877/tech-takes-centre-stage-chinese-students-weigh-major-choices?utm_source=rss_feed

Like millions of Chinese students, 18-year-old He Junjie is anxiously waiting to see which university and major will admit him after last month’s intensely competitive National Higher Education Entrance Examination, or gaokao.

After evaluating his score and studying the universities and programmes he qualified for, He focused on engineering when submitting his applications a few weeks ago.

Information and communications technology, as well as vehicle engineering, were the top choices, the young man from east China’s Zhejiang province said, because they “represent the direction of future industrial development”.

“Many of my classmates have also chosen majors related to new technology and engineering, because we think there’s quite a lot of demand for such talent in Hangzhou,” He said, referring to the provincial capital that is home to artificial intelligence (AI) start-up DeepSeek and humanoid robotics firm Unitree Robotics.

While international trade and urban planning were among the most popular subjects with students two decades ago, when China joined the World Trade Organization and its property market started to boom, a new wave of technology-focused academic priorities is reshaping higher education.

Engineering disciplines related to possible technological advancements have reigned supreme as China’s state-driven system funnels students into such fields amid intensified tech competition with the United States.

While interest in technology is also rising in the US, experts said interest in the technical and liberal arts was better balanced there, reflecting a flexible and market-driven system and a broader range of career paths.

“New engineering has been quite popular in recent years because it points to good employment prospects, either in terms of the number of jobs or the amount of government investment,” said Chu Zhaohui, a senior researcher at the Beijing-based China National Academy of Educational Sciences think tank.

Introduced by the Ministry of Education in 2017 and gaining traction in recent years, “new engineering” encompasses a range of interdisciplinary and emerging majors designed to align with technological advancements and industry needs. They cover fields including AI and data science, intelligent manufacturing, robotics and bioengineering.

But such preferences were often “short-sighted and utilitarian” and lacked the support of personal passion, which meant that many graduates might only be able to perform at a relatively low level, Chu warned.

Chinese students have flocked to such disciplines over the past few years as universities have accelerated adjustments of priorities.

Shanghai’s Fudan University, a top institution known for its strength in liberal arts, announced earlier this year that it would reduce the proportion of liberal arts admissions from over 30 per cent to 20 per cent to make more room for engineering students.

It will offer over 1,000 undergraduate admission slots in engineering this year, accounting for nearly 30 per cent of its total enrolment plan and representing a year-on-year increase of over 20 per cent, according to an announcement released in May.

The adjustment of university majors is a response to national strategic priorities, as Beijing emphasises technology-driven economic growth and promotes high-end manufacturing.

Over the past decade, the Ministry of Education has approved about 20,000 new undergraduate programmes covering 655 majors, with engineering majors accounting for the highest number, according to research from Huazhong University of Science and Technology that was published in March.

There had been a similar trend in the US as universities shifted their focus from diversity, equity and inclusion to employment outcomes following US President Donald Trump’s return to the White House in January, said Chen Hang, co-founder of WholeRen Group, an education consultancy based in Pittsburgh.

“This means that people are becoming more pragmatic in their choice of majors, leaning towards fields like technology, healthcare and education,” he said.

Chen gave the example of the University of California, a leading public research university, where its computer science master’s programme has an enrolment quota of 500 students but received 7,000 applications. In contrast, other programmes at the university had vacancies, he said, citing its president.

But social science degrees were still popular in the US because they were relatively easier to acquire and represented career versatility, he said. Compared with Chinese families, “American families are not as utilitarian, and there is no phenomenon of society or the government guiding the choice of majors”, he added.

While engineering dominates in China, accounting for 36 per cent of undergraduates in 2022 according to data from Statista, the rate in the US is 5 per cent.

Business is the top major in the US, accounting for 19 per cent of undergraduates in the 2021–2022 academic year, followed by health professions and social sciences, according to data from the National Centre for Education Statistics.

But that did not mean America was weaker in technological innovation than China, Chu, the Beijing researcher, said.

“For any individual to achieve their best, they must independently choose to pursue what interests them,” he said, adding that following that logic, the emphasis on personal enthusiasm in the US ultimately led to higher societal efficiency.

Having been consulted by many Chinese students on which fields to study over the past decades, he said “few had a clear idea what they wanted to do in the future and picked majors accordingly”.

Australia juggles its China trade needs with Philippines defence ties

https://www.scmp.com/week-asia/politics/article/3317926/australia-juggles-its-china-trade-needs-philippines-defence-ties?utm_source=rss_feed

As the Asia-Pacific’s power dynamics continue to evolve and shift, Australian Prime Minister Anthony Albanese’s visit to China promises to be a test of his country’s ability to walk the fine line between economic self-interest and strategic resolve.

His trip, which began on Saturday, unfolds against the backdrop of Australia’s deepening security ties with the Philippines, with Canberra stepping up support for Manila’s maritime capabilities and increasing participation in patrols and joint military exercises.

In April, Albanese’s government donated 20 state-of-the-art surveillance drones worth 34 million pesos (US$600,000) to the Philippine Coast Guard, buttressing its maritime domain awareness just days after a near-collision between Philippine and Chinese vessels in contested waters.

The donation was part of a broader civil maritime cooperation programme, encompassing vessel remediation, postgraduate scholarships, operational training, marine protection and maritime law seminars. Australia plans to double its investment in these initiatives to A$11.5 million (US$7.5 million) from 2025 to 2029.

Analysts say these moves reflect the pair’s expanding ties over time. “Australia and the Philippines are set to mark 80 years of diplomatic relations in 2026, with both countries motivated to further enhance the strategic partnership in the years ahead,” said Julio Amador, interim president of the Philippines-based Foundation for the National Interest think tank and founder and trustee of the non-profit policy advisory firm FACTS Asia.

Thanks to a visiting forces agreement signed in 2007 and effective from 2012, “the two countries boast strong defence and maritime cooperation”, Amador said. “Because of this, both have regularly conducted high-level dialogues and military exercises.”

In 2023, Canberra and Manila elevated ties to a strategic partnership, broadening cooperation to include counterterrorism, law enforcement, climate action, education, development and people-to-people exchanges.

“Australia is trying to position itself as at least an alternative pillar for development and security cooperation here in Southeast Asia,” said Don McLain Gill, a geopolitical analyst at De La Salle University in Manila. “While it still has a long way to go to significantly cement its influence in the region, the Philippines is in fact one of its most important anchors.”

The Philippines’ geographic location “is of strategic consequence to Australia”, he added. “The eastern seaboard of the Philippines’ exclusive economic zones along the South China Sea hosts an array of vital sea lanes that are critical to linking Australia and Oceania to the immediate region and to the rest of the world,” Gill said, adding that the shared democratic values between Manila and Canberra positioned the Philippines as a “strategic amplifier for Australia’s regional soft power objectives”.

Australia’s Defence Minister Richard Marles said in June last year that relations with Manila were at “high point”, calling the Philippines “vital for Australia’s capacity building” and describing the country as a bridge for broader engagement with Asean and multilateral regional platforms”.

But as Australia deepens its engagement in Southeast Asia and upholds its commitment to the international rules-based order, it risks encountering growing pressure from Beijing.

“Increased pressure from the major powers will be a recurring response to ambiguity arising from middle powers, as it has done with Asean countries,” Amador said, noting that Australia’s defence ties with the US through security groupings such as Aukus and the Quad were seen as provocative by China.

Tensions flared in February when Australia protested against what it called “unsafe and unprofessional” actions by a Chinese fighter jet towards an Australian maritime patrol over the South China Sea – a claim Beijing disputed.

“The expulsion measures taken by the Chinese side are legitimate, professional and restrained, and China has lodged solemn representations with the Australian side,” foreign ministry spokesman Guo Jiakun said.

On Tuesday last week, Albanese noted in a statement that China was Australia’s largest trading partner – accounting for one-third of its total trade – “and will remain so for the foreseeable future”.

“We will continue to patiently and deliberately work towards a stable relationship with China, with dialogue at its core,” he said.

The Australian prime minister’s state visit, through Friday, is expected to take in Beijing, Shanghai and Chengdu, with discussions on cooperation in AI, green energy and the digital economy.

But negotiations were sure to be “nuanced with geostrategic implications”, Amador said.

“Australia’s pursuit of economic interests with China may temper its security posturing,” he said, adding that this delicate balancing act risked producing “incoherent policies”.

Canberra had to “exercise diplomatic finesse in order to maintain credibility as a regional stabiliser, without escalating tensions while pursuing its economic goals,” he said. “Asean partners, including the Philippines, may watch closely how Australia walks this tightrope.”

Meanwhile, Gill argued that despite close ties with Vietnam and Singapore, Australia still “has a long way to go in order to position itself more favourably” in a region where many countries were wary of great-power rivalries.

“The challenge for Australia is to show that it is more than willing to engage with the rest of Southeast Asia in a way that would not make it seem that it is the sheriff of the United States.”

Li Cheng and Andy Browne discuss what Trump gets wrong about China and where next for ties

https://www.scmp.com/news/china/diplomacy/article/3317809/li-cheng-and-andy-browne-discuss-what-trump-gets-wrong-about-china-and-where-next-ties?utm_source=rss_feed

Welcome to Open Dialogue, a new series from the Post where we bring together leading voices to discuss the stories and subjects occupying international headlines.

In this edition, two leading China watchers discuss the consequential relationship between the world’s two largest economies and how ties might develop under the second Donald Trump administration amid growing trade frictions.

Professor Li Cheng, a leading political scientist who has studied China for decades, is the founding director of the University of Hong Kong’s Centre on Contemporary China and the World. He previously spent 17 years at the Washington-based Brookings Institution, which included heading up the think tank’s John L. Thornton China Centre.

Andrew Browne is an award-winning journalist who has covered China for The Wall Street Journal, Bloomberg, Reuters and the South China Morning Post. More recently, he was a partner at advisory firm The Brunswick Group, where he advised some of the world’s largest companies on geopolitical strategy from his New York base.

China certainly feels that the pressure is not just on China. Of course, China is a major trading partner of the US, but the US is not China’s No 1 or No 2 trading partner and trade with the US is only 16 per cent of China’s entire foreign trade – we should put that into perspective.

In my view, the trade issue certainly puts tremendous pressure on China, but there are other issues that are probably far more important from the Chinese leadership’s perspective.

Of course, US-China relations are not in good shape, to state the obvious. But this did not start five months ago. The Biden administration’s relationship with China did not go well and in Trump’s first term – especially the last couple of years – it was also in terrible shape.

In my view, this relationship and status have less to do with the top leaders – whether American or Chinese – and more to do with structural factors in terms of global geopolitical landscape changes and also the growing fear in the US, rightly or wrongly, of China.

The US feels that since World War II there has been no competitor so strong in terms of not only economic and technological areas but also military and even probably financial areas, although some of these concerns may be exaggerated.

That’s what the US calls the Thucydides Trap and what the Chinese call the rivalry between the No 1 and No 2 powers. So that is what has shaped the relationship.

But on the other hand, looking back, I think China probably sees Trump as less problematic compared with former president Joe Biden because Biden’s “two camps” framework of democracy versus autocracy certainly put China into a corner.

But under Trump, America alienates its own allies, whether in Europe or elsewhere. So it depends on how you look at it and who you ask. Of course, China is still very much concerned because Trump is surrounded by hawkish people, but on the other hand, he has said that he wants to visit China.

Let’s see if it happens. His visit certainly would improve the relationship in a dramatic way, though it may or may not be sustainable. There’s a lot of irony and uncertainty, so people have been very much confused about the whole situation.

Well, I think so – to the extent that Trump is non-ideological and almost entirely transactional. And he’s quite capable of executing U-turns and flip-flops, is open to persuasion, and is subject to multiple forces working on him, not least the last person who has his ear.

So I think that, from a Chinese perspective, they probably feel that in Trump they’ve got somebody that they can work with. To echo Dr Cheng Li, the fundamental problem with this relationship is that it is almost completely devoid of trust.

At a high level, they’re strategic competitors, and each thinks the absolute worst of the other.

On the US side, there’s a great fear that China is accelerating its technological development, catching up and surpassing the United States, and dominating many of the powerful technologies that will shape the global economy. This presents nightmare scenarios for the United States and zero-sum competition.

On the other hand, these two economies are joined at the hip. They are entirely dependent on each other in a host of different ways. And both of these economies have just stared into the abyss and realised that.

This isn’t, by the way, a tariff war any more. This is now a supply chain war – much more difficult, much more threatening, far more consequential.

China essentially threatened to close down the US automotive and defence industries – and it could do so by denying the United States access to certain rare earths. There are 17 rare earths sitting at the bottom of the periodic table. China has almost 100 per cent control over many of these.

On the US side, it has threatened to disrupt China’s entire petrochemical sector by denying it ethane, threatened to derail its entire civilian airline programme by putting export controls on jet engine parts, and so on.

The two sides looked at that and recoiled. In some ways, you could say that it was a positive development.

We saw this playing out in his first term with the much-ballyhooed phase one trade deal. This was supposed to be the culminating achievement of months, if not years, of trade negotiations between China and the US.

As a matter of fact, it wasn’t a trade agreement at all. It was a very thin purchase agreement and in the end, it turned into a bust partly because of Covid-19. Nonetheless, Trump was quite capable of packaging this up as an enormous achievement.

I have no doubt now that as these two sets of negotiators go into talks, these are going to be incredibly difficult, tough, give-and-take talks – if they try to achieve something that is really ambitious, such as completely changing the terms of their trade arrangement or changing the internal structures of each other’s economies.

This is going to be impossible, and they’ll probably end up with something that looks rather similar to what they ended up with in the first term, which is China agreeing probably to something around fentanyl, and attached to that is some kind of purchase agreement. That would be the base case.

If they want to get more ambitious, they can start talking about things like whether Trump could potentially open up the United States to Chinese investment around tech transfer, IP transfer, licensing and so on. But let’s see.

I think, though, with Trump, he needs an agreement, probably more than President Xi Jinping needs an agreement.

The World Bank halved projections for US GDP growth this year – more than any other country in the world. Real threat and real danger of inflation, falling growth, rising inflation. This is your stagflation nightmare. Trump does not want that going into the midterms in 2026.

I agree with Andy, but I want to explain a Chinese perspective. Yes, Trump is ideological, but China would probably follow up that statement by saying he is very political.

In his first term, after Covid-19 spiralled out of control, he completely changed his policy towards China. Former Chinese vice-premier Liu He’s visit to the US was just two months before Trump’s 180-degree U-turn, and so the Chinese will remember that.

This is related to what Andy said – accurately – about the lack of trust, about Trump and his unpredictable nature. Of course, there are some things that he is very predictable about, but his political nature is very important from the Chinese perspective.

The way Trump treated American allies in Europe, no Chinese leader wants to go to the White House at the moment. I think Andy made a very important point, that the trade war will certainly hurt both countries but at different levels. It will probably hurt the US more for various reasons.

The negotiations in Geneva that resulted in a return to 30 per cent, with some months of waiver, reflected the degree of tariffs that China can accept. It has been consistent.

If US tariffs go beyond 60 per cent, China may still want to cut a deal, but China might also want to get something in return, like market access and removing some Chinese companies from the Entity List.

And all the economic and geopolitical issues will be related, including TikTok and many others. This is the way to explain the Chinese behaviour.

But I want to add one more thing. Donald Trump is not really well prepared for this tariff war with China. The way he talked about Xi Jinping and thought that [Xi] would call him – people in China know that Xi Jinping would not call Trump under these circumstances.

He also talked about how China would have an uprising – like a revolution – if the trade deal was not made. It’s certainly not the case. When the foreign pressure is so strong, usually Chinese people will unite and support the leadership rather than the other way round. This tells you that Donald Trump got China wrong.

I also want to echo what Andy said about inflation. A more important impact is related to the broader cooperation in certain sectors that Andy mentioned. This will hit the US very badly.

But fundamentally, the most important one is already happening, in terms of global reaction and its impact on the US stock market and bond market.

That also explains how US$5 trillion of market value disappeared. This probably got Trump very much concerned about what China will do, as its actions will probably hit the US very badly – although China will be hesitant to use that kind of revenge.

From the Chinese leadership’s perspective, political pressure is more critical, but the fact that Donald Trump’s tariff war is against the entire world puts China in a relatively good position. The dialogues in Geneva and London certainly made China less worried about the situation.

I would just echo one point that Professor Li made. I think that the US severely underestimated China and the degree to which it was prepared this time for a trade war with the Trump administration.

So you have a figure like Peter Navarro who – at least judging from his writings, his books – has a sort of comic book understanding of China and the Chinese economy as a place filled with Dickensian workshops and slave labour, when he talks about Chinese sofas that are really acid baths, and so on.

But even a sophisticated figure like Treasury Secretary Scott Bessent, before the first set of tariff talks, said: “Look, the Chinese would be crazy to escalate. We have all the cards.” He said they’re playing with a pair of twos. Well, it turns out that the Chinese had a couple of aces up their sleeves and very, very powerful cards – which they played.

Which is why, I think now, when we go back to the negotiations, they are not going to be negotiations such as those the United States is going to have with other countries, which aren’t really negotiations.

They are more about “you present us with your best offer, we will evaluate it, tell you whether it’s acceptable, and if it’s not we’re going to put the tariffs back up again”.

Now there’s an understanding that they’re going into real negotiations with China, and both sides have leverage.

First of all, there is a lack of expertise on China in Washington, be it economic, social issues, technological issues, you name it. It’s an important phenomenon, and on top of that is also Trump’s ignorance about the Chinese mindset.

And also, among his cabinet members, six of them were anchor people from Fox News. The prevailing perception in Washington nowadays is that those hawkish US policymakers are not brainwashed by China. This is a very bad assessment. They really should talk to real experts in the United States regarding China.

But if you look at the current cabinet, look at the deputy level, there are very few or no experts on China. I think they probably should really find some people who understand the Chinese economy and politics, who can negotiate with Chinese financial or economic technocrats.

Andy has said rightly that they have absolutely underestimated China’s capacity. Yes, China has some economic problems, but remember just a few months ago there was talk about China’s economy being past its peak, that China was not investible, and also that Chinese technology would never catch up with the United States for political, cultural and other reasons. All these are being challenged now.

And so I think that certainly there are lots of mistakes being made on the part of the US that are very hard to fix. You do need to have a capable team to follow up. This is not just about one person or several cabinet members. But the US is not in the mood to seriously study the outside world.

Donald Trump is a great example. He only listens to Peter Navarro and a few others. So I think this will be very devastating from a US perspective. This is only one of the many problems I want to mention.

I would also say that the Chinese side has made some mistakes too, and the first was to believe that their problem is primarily with the United States. It’s not. Everybody is worried about China’s export machine and the degree to which Xi Jinping has attempted to rescue his economy – suffering from high debt and suffering from a multi-year real estate meltdown – by doubling down on manufacturing. And this is not sustainable.

Actually, as the United States puts up high tariffs against China, other countries are even more alarmed that goods that were headed towards the US are going to be diverted towards them. Europe is extremely worried about that. Southeast Asian countries are worried about that. There is a real problem.

Scott Bessent got it about right, that the Chinese economy is severely unbalanced, and they need to fundamentally address that issue. They are far too big to export their way out of economic difficulties. China needs to spend down its savings. It needs to reallocate national wealth from the state sector to the household sector.

On the other hand, the United States needs to do the opposite. It needs to save more, which would mean higher taxes potentially. It needs to spend less, which means curbing entitlement spending and so on.

Politically, in both countries, that type of resolution to the trade issue, which is really the only resolution, is unacceptable. And so both sides are mistaken in believing that they can resolve their issues through trade and through tariffs.

I understand Andy’s view. I also wrote extensively on the importance of empathy and inclusive growth in China’s outreach to the world, be it the Global South or North America or Europe.

I’ve been concerned about the Made in China 2025 policy. But the thing is that Beijing is working on domestic consumption for China’s economic growth. It’s not so easy.

And also, if we compare China with the United States, the US is so rich in terms of natural resources and in terms of land. But the US is not doing well. Economic disparity is out of control.

China’s policy, looking back, was wise on common prosperity, poverty elimination and the redistribution of wealth. Despite all the challenges and the overall GDP slowdown, China’s GDP per capita still grew, which means that the middle class is still growing.

I think that all countries should look at their own problems. It’s very difficult to tell the Chinese to slow down, to not do foreign trade or other things. China will probably very strongly reject this due to Chinese entrepreneurship.

My view is, yes, both parties in the US-China relationship should fix some of their own problems. But the nature and seriousness of their problems are quite different. The US has a distribution problem, economic disparity, and also it continues borrowing and spending. It’s far worse than China’s difficulties or China’s so-called industrial policy.

Nowadays when we talk about industrial policy, it’s not mainly about China but the United States. That’s the reason the trade war actually may not serve the US well. Its manufacturing sector is in terrible shape.

The US should really take advantage of its services sector, but the whole campaign is to bring manufacturing back. Unless artificial intelligence can play an important role in this area, it will not work.

I think small truce followed by small truce is probably what we should expect, and it may be the best that we can expect given that, as I was describing earlier, there’s this high-level problem of a lack of trust.

They regard themselves as strategic competitors, and all of that leaches into the trade relationship and everything else – into people-to-people exchanges, scientific exchanges, education, technology, you name it. A fragile truce is where we are and where we’re likely to remain.

I think it’s critical that these two leaders meet to prevent things from spinning out of control, and to keep things on track. Clearly, these two are the decision makers. Every decision reaches their desk.

Trump has concentrated more power in his hands than perhaps any other US president in modern times. Xi Jinping is often described as the new Mao Zedong. It’s vitally important that they meet and there is a good chance that they will later this year at an Apec summit.

The question is, what sort of expectations should we have for the outcome of a meeting between Xi and Trump? I think that in Trump’s mind, he believes that man-to-man, we can sit together and negotiate anything. We can do a deal, make a grand bargain.

I think he may be exaggerating the utility of a summit in that respect, that when he sits down with Xi Jinping, he is sitting down with a through-and-through nationalist who represents China’s interests.

When you sit down with Trump, you’re sitting down with the US president. You’re sitting down with the head of the Maga movement. You’re sitting down with a figure who has personal interests. He’s a media figure. He wants media moments. He has business interests. That was very much top of mind for leaders in the Gulf when he visited in May.

When you sit down with Xi, he is disciplined. He is focused. He represents his country and he’s not going to make spur-of-the-moment decisions. He’s going to stick to his plan, and he’s executing on that plan very, very effectively.

So if Trump feels that he’s going to go in and Xi – because he has some kind of personal rapport or affinity with Trump – is going to do a deal, I think he’s mistaken.

I just want to say one thing based on what Andy said. The way Xi handled the situation showed that he’s not primarily a Mao-like figure. It was a combination of Mao and Deng Xiaoping.

But most importantly, it’s Xi who has supervised the country’s rapid development and through a historical geopolitical landscape change. So that’s quite unique in many ways.

It’s probably too simplistic to say “just like Mao”, when with Mao the country was very much isolated, and with Xi Jinping supervising, the country is on a very different path. Finally! Andy and I have found some differences in our views!

Look, you’re obviously right. I was referring to Xi Jinping as a Chinese nationalist and, in that sense, that is the Mao legacy that he embraces. He certainly doesn’t embrace the legacy of Mao’s chaos. In fact, quite the opposite. But he does inherit quite a lot of the authority of Mao through his father. He is red aristocracy. But I agree there are fundamental differences between Xi and Mao.

First of all, there are at least six or seven issues that are far worse than a tariff war from the Chinese perspective. Even though 60 per cent tariffs will certainly bankrupt some companies, the country probably can muddle through.

But there are other issues – for example, a complete decoupling. If there was a complete decoupling, it would hit China very severely. That’s No 1.

No 2, a freezing of Chinese assets or Chinese official’s assets. This would also be a terrible thing from the Chinese perspective.

Asking China to pay for the losses from Covid-19 – some of Donald Trump’s team members, including some congressmen, have argued for that. Of course, China is not going to do that, so that would mean a very serious clash.

Also – as Andy said on completely stopping cultural and educational exchanges – no longer giving out visas for Communist Party members and their immediate family.

How many? 300 million! How do they know these people are Communist Party members? So, they are basically saying that no Chinese should enter the US and they are putting a stop to educational exchanges.

Even more important is the political or military pressure on the Taiwan issue and in the South China Sea.

These are all very crucial issues from the Chinese perspective. Now, there’s hope that Donald Trump’s visit to China will at least prevent some of these crashing issues, otherwise his hawkish team will dominate.

But the Chinese are also keenly aware that there is a lack of trust. How do we know that Donald Trump will not change the next day? And how to prevent Trump’s positive policies and approaches to China from being hijacked by his anti-China team members?

An important factor in international relations is that we cannot control unexpected events. Events can drastically change. But they could also make China and the US work together – because Donald Trump is still interested in getting the Nobel Peace Prize.

Look at his parade, look at the AI-generated images of him. What can he not do? He can do everything and anything in his view. This kind of attitude is really disturbing. He wants to end the war in Ukraine... He probably still wants to visit North Korea and hug Kim Jong-un and stop nuclear proliferation in the region.

In all these areas, he needs China’s help. For China, these are not vital or the most critical issues.

: Trump is fixated on trade and the trade deficit, and he is nothing if not consistent on this. With China, he is determined to narrow this trade deficit. He’s also determined to create jobs.

He rightly perceives that the import surges which followed China’s entry into the World Trade Organization helped to hollow out the US industrial base.

He sees that America’s lack of industrialisation is now a security threat – that during the pandemic, the US couldn’t get hold of supplies of emergency medical equipment and protective gear and syringes, and so on. So all of this is top of mind.

Layered on top of this, of course, are fears that China is outcompeting the United States in areas of high technology. That was a concern of the Biden administration as well. And so that’s where I think the fear that Professor Cheng Li talked about comes from. It’s really the technological competition.

The thing is that, in reality, technology also requires cooperation. I do believe that both countries are equally competitive in many areas. Maybe in AI, the US has an advantage, though this is only relative and subject to change. That has certainly caused a lot of anxiety. Probably, Donald Trump wants more cooperation in these areas but his hawkish team will not let that happen.

One thing I wanted to alert you to was some recent surveys of American public opinion – that despite still being quite negative, there are some changes. I think we will see more changes, looking at Trump’s current way of dealing with China.

Some other countries may also adjust their policy, despite having some concerns with China. That will put tremendous pressure on the US and on Donald Trump.

Andy is probably more aware of the general atmosphere than I am, since I left the US two years ago, but while I think it’s quite negative about China, we should not jump to the conclusion that Americans want to fight a war with China. These are different issues.

Nothing is predetermined in this area. I think the Chinese should be fully aware that, in my view, the US will probably review its policy towards China after 10 years. My favourite quote is from Winston Churchill – that America will do the right thing only after it has tried everything else.

Unfortunately, the US is in a very difficult period at the moment. Look at the military parade last month. It was astonishing to see this for a person who lived in the United States for over 30 years.

I hope it’s temporary but it will last for a while. But, as Andy said earlier, we need to emphasise inclusive growth and not see things in an absolutely zero-sum way. Because again, if the US is in a really chaotic situation, it’s not necessarily good news for China.

The same things can be said about China – if China is in trouble or chaos... it could also be a disaster for the world. So I think all these things require a mindset change, a perspective change. It will take some time. I think there will be some tough times ahead.

I would just pick up on one point there, which I think is an important one – I don’t think that when it comes to China, Trump is as fixated as Biden or the Biden administration was on national security.

Witness the presence of TikTok CEO Shou Zi Chew at the inauguration, witness Trump’s strenuous efforts to try to save TikTok, in spite of a Congressional Act that insists TikTok is sold to a US business.

Look at what happened on AI and the AI diffusion rule. The Trump administration just blew away the whole framework put in place in the final few days of the Biden administration.

It was designed to sort of rank countries in tiers based on their geopolitical alignment with the United States, and based on that the US would dole out semiconductors. That has now been completely scrapped.

On his trip to the Gulf, Trump pretty much pledged to give Gulf countries what they wanted to turn the region into an AI superpower.

And the reason for that whole AI diffusion framework was to prevent leakage of advanced semiconductors to China. So if you look at that precedent, it suggests that there is actually a deal that can be made.

As I said earlier, I think that deal may well have something to do with opening up the US wider to Chinese investment. There’s a recognition, I hope, in the US that China has technologies that the US doesn’t have and really needs, and may not be in a position to develop for years, if ever.

Batteries are a great, classic example, and I think that given the right understanding, it is possible that you could see a deal where a CATL is allowed to invest in the EV sector in the United States. Or that a TikTok or a Shein or a Temu could figure out a way of entering and remaining in the US markets by resolving issues around data and ownership and AI algorithms, and so on and so forth.

So I think that there could be technical solutions that could improve the overall US-China trade and investment relationship.

What Andy said is very important. But also there are some even more obvious things – probably less controversial – like the agriculture sector, the energy sector, oil and natural gas. The US wants to sell, China wants to buy.

With China’s help, American infrastructure could improve profoundly. I think Donald Trump may not be so ideological and he may push for that, and that would be great news for China.

So I think that both leaders should think outside the box about how to, through economic cooperation, gradually enhance some confidence in each other. It’s a high calling but it’s still possible. Donald Trump, in that regard, may be the right person because, to him, everything is transactional; he is not ideological.

Trump has never insulted the Chinese leader. Some people probably will have different views, but I think overall he has shown that he has strong interests in cooperating with China.

There’s some distrust, there are some structural tensions. Nevertheless, you do need to find some ways to avoid free-falls in this most important bilateral relationship in the world, which could be devastating.

I think the bottom line is to avoid military conflict. If we talk about the two major powers, or the two leading powers, or two AI powers caught up in war, this is beyond anyone’s imagination. This is the thing to absolutely avoid.