• Washington China hawks slam US approval of H20 chip sales
• Sanctioned German China expert visits Beijing in sign of easing restrictions
• US Treasury chief says trade talks with China to continue next week in Sweden
• HK$40 cherries in Hong Kong? Why US-China trade war means sweet savings
• Can China get the US out of the way of better ties with Europe?
• As China’s public bus companies bleed cash and lose riders, are rides for pets the answer?
• China’s drone warfare exercise, warning over spy souvenirs: SCMP daily highlights
• How the EU, squeezed between the US and China, can negotiate a big win
• How China’s latest mega-dam threatens to undermine thaw in ties with India
• China’s Jiangsu province narrows GDP gap with Guangdong as tech sectors fuel growth
• China unveils next-gen high-speed rail tech as US puts brakes on bullet train funding
• China showcases full spectrum of drone technology in ‘border control’ exercise
• China’s property loans rise to a 2-year high on policy support
• Chinese firms in Europe call for ‘substantive’ deal at China-EU summit
• China warns souvenirs from overseas could spy on citizens and leak state secrets
• China bets on bots: humanoid-robot sales seen gearing up, with adoption push ‘very likely’
• Moonshot’s Kimi K2 soars in popularity amid experts’ praise for Chinese AI developments
• China girl nearly dies after eating greens, laxatives for 2 weeks to fit in birthday dress
• Chinese officials accuse popular online stand-up shows of stirring ‘gender antagonism’
• China’s mega dam project in Tibet sparks stock surge in hydropower, infrastructure sectors
• Chinese kindergarten lead poisoning scandal raises fresh questions over local governance
• China’s UBTech Robotics eyes US$307 million in Hong Kong share placement
• Hong Kong stocks waver as investors wait for policy clarity from China’s Politburo meeting
• China’s fifth-gen J-35: rare close-up images suggest stealth jets ready for Fujian carrier
• China ‘military officer’ dates man for 8 years, vanishes with US$91,000 for home makeover
• Can China pass on-the-ground tests to ace its economic report card in 2025’s second half?

Washington China hawks slam US approval of H20 chip sales

https://www.scmp.com/news/us/economy-trade-business/article/3319205/washington-china-hawks-slam-us-approval-h20-chip-sales?utm_source=rss_feed

Washington China hawks are slamming the approval by US President Donald Trump’s administration of resumption of the sale of Nvidia’s downgraded H20 AI chip to China, questioning the move’s rationale and whether it was part of the June London trade deal between the two countries, as the administration claims.

Trump banned the sale of the Nvidia chip, designed to avoid export control restrictions imposed by President Joe Biden’s administration, in April as the trade war between the two global powers escalated. The decision was rescinded this month after Trump met with Nvidia chief Jensen Huang before leaving for China.

China and the US agreed in the June deal on the easing of some US export controls in exchange for access to Chinese rare earth minerals.

US Commerce Secretary Howard Lutnick, who was part of the London negotiation team, told CNBC in an on July 15 that the H20 chip was put “in the trade deal with the magnets”.

“We don’t sell them our best stuff, not our second best stuff, not even our third best. The fourth one down, we want to keep China using it,” he said, adding, “you want to sell the Chinese enough that their developers get addicted to the American technology stack.”

The same day, Treasury Secretary Scott Bessent told Bloomberg the H20 sale resumption “was all part of a mosaic”. Bessent had told US lawmakers in June there was “no quid pro quo” involving chips in exchange for rare earths. The Treasury Department did not respond a request for comment on the apparent inconsistency.

However, Rush Doshi, director of the China Strategy Initiative at the New York-based Council on Foreign Relations, claimed on social media that he “independently” knew the H20 chip was not part of the London talks.

“The Trump team previously said the H20 wasn’t part of the London talks and then reversed itself,” Doshi said, in a post shortly after China’s Commerce Ministry said on Friday that the US had “taken the initiative”, suggesting the move was unilateral and not part of the reciprocal deal.

The “evidence for a unilateral cave,” Doshi said, “is “is overwhelming.”

Doshi, a long-time China hawk, is not alone in questioning the latest action of the “tough on China” president, who since taking office in January has appeared fixated on striking a grand deal with Beijing.

Jack Burnham of the Foundation for Defense of Democracies, a Washington think tank, said in a July 16 policy paper it would be a “mistake to allow Nvidia to resume the sale of H20 chips”.

“It will offer short-term aid to the most promising aspect of Beijing’s technology sector while giving Chinese firms time to reduce their dependence on imports,” he said.

House Select Committee on China Chairman John Moolenaar, a Republican from Michigan, last week, wrote to Lutnick, asking for a briefing on how Commerce will handle potential export licence applications for the H20 chip.

“If the US is serious about leading in AI, we need to protect our advantage – not hand it over,” Moolenaar warned in the letter, reminding Lutnick that during his February confirmation hearing, he had insisted the US must prevent China from “using our tools to compete with us.”

Speaking at the Krach Institute for Tech Diplomacy at Purdue University on Monday, he said he was in agreement with Trump’s goal of further extending US technology as “the global standard and provides valuable revenue for US companies.”

However, the “core objective of all US export control restrictions to China is preventing the PLA [People’s Liberation Army] from advancing their military capability, in this case AI, through US technology.”

Nvidia’s Huang, though, has publicly criticised these curbs, calling US export controls a “failure” during a May visit to Washington.

With Nvidia’s H20 and other advanced chips restricted, China’s Huawei has ramped up efforts to replace them with domestic alternatives.

Paul Triolo of Washington-based Albright Stonebridge Group, a consulting company, said it was ultimately Huang’s ability to convince “enough” Trump administration officials, including the AI and crypto tsar David Sacks, on the issue.

Triolo said that Huang argued that “there was major downside to forcing Chinese firms to move away from the Nvidia AI stack over the longer term” and that the H20 chip “would not make a significant difference in the ability of Chinese firms to train more advanced models.”

Kelsey Quinn, an emerging technologies specialist at the Washington-based New Lines Institute, said the decision to allow H20 exports is “deeply unpopular in Washington on both sides of the aisle.”

She said that by framing the move as part of broader trade negotiations, the administration appeared to be “pre-empting criticism by presenting the decision as [a] minor component of a larger strategy to reorient” the US–China relationship.

“This way, they can argue that both sides are making concessions, but that the US ultimately gains more through a comprehensive agreement and improved access to critical rare earth minerals,” she added.

Still, Quinn warned the decision could “severely weaken” Washington’s leverage in future talks, signalling to Beijing that the US is prepared to compromise for limited access to rare earths.

She added that it “gives Beijing an opening to push for more advanced chips, not just the H20, in exchange for other critical minerals and rare earths.”

According to Quinn, the Trump administration is likely betting that exporting the H20 will deepen China’s dependence on Nvidia technology, giving the US an edge in slowing China’s technological progress while boosting Nvidia’s profits.

However, whether that bet pays off may ultimately depend on whether Chinese firms find it worthwhile to move away from Nvidia’s CUDA parallel computing platform and adopt Huawei’s Ascend platform so they can use domestically produced, higher-end chips.

Triolo of the Albright Stonebridge Group cited what he called the “complete” failure of the Biden administration’s approach to stop Chinese companies from accessing advanced US hardware and, in turn, from developing sophisticated AI models but added that “nothing coherent has been put forward by the Trump administration about the road map of controls going forward.”

“So we will keep muddling forward with little clarity about US goals and intentions, and more collateral damage to the industry and supply chains,” Triolo said.

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Sanctioned German China expert visits Beijing in sign of easing restrictions

https://www.scmp.com/news/china/diplomacy/article/3319202/sanctioned-german-china-expert-visits-beijing-sign-easing-restrictions?utm_source=rss_feed

The head of a German think tank sanctioned by Beijing four years ago has returned from a trip to China, suggesting that travel restrictions on the organisation may be easing.

Mikko Huotari, the executive director of the Mercator Institute for China Studies (Merics) was in Beijing from July 14 to 17, after being invited by a leading Chinese think tank.

Merics was among the European institutions hit with travel bans and asset freezes in March 2021, in retaliation for EU sanctions on Chinese officials accused of perpetrating human rights violations in Xinjiang, charges it denies.

The news comes on the eve of a high-stakes EU-China summit. It also comes the week after Beijing further loosened its restrictions on members of the European Parliament, suggesting the Chinese government may be trying to improve the mood music ahead of an event that has been mired in negativity.

“We welcome the easing of travel restrictions and hope that more engagement between researchers and think tankers will be possible in the future. We look forward to future opportunities to engage with our Chinese counterparts whether in China, at MERICS or elsewhere in Europe,” Merics said in a statement.

One of Europe’s largest China-focused think tanks, Merics researchers have been unable to travel to China for four years and EU leaders and officials have repeatedly called on Beijing to remove the sanctions.

There is no suggestion, however, that the Chinese government has officially removed the sanctions. While Merics staff may be able to travel to China in the future, this would only occur under certain circumstances, including being invited by an institution, suggesting they will not be free to conduct open research.

It is understood that Huotari travelled without a visa, an arrangement available to German citizens.

While in Beijing, Huotari met with researchers from the Chinese Academy of Social Sciences, which issued him an invitation letter, the China Centre for Globalisation, and Tsinghua University. He also met European diplomats, including ambassadors from the EU’s 27 member states.

Last week, Beijing dropped its restrictions on retired EU lawmaker Reinhard Buetikofer, suggesting that all of the members of the European Parliament who were targeted in March 2021 have been removed from the list.

Concern remains, however, over whether the recent developments signal a permanent resolution.

Some affected sources worry that the fact that Beijing’s pronouncements have only mentioned “restrictions” and that there has not been a statement on the foreign ministry’s website means sanctions are not fully lifted.

As well as Merics, sanctions remain on researchers from Germany, Sweden and Denmark, as well as some national-level lawmakers and diplomats from the EU’s political security committee of ambassadors.

EU sanctions on Chinese officials still remain in place, with the bloc saying that human rights conditions would need to meaningfully improve in Xinjiang before they are removed.

US Treasury chief says trade talks with China to continue next week in Sweden

https://www.scmp.com/news/china/diplomacy/article/3319197/us-treasury-chief-says-trade-talks-china-continue-next-week-sweden?utm_source=rss_feed

US Treasury Secretary Scott Bessent said on Tuesday that he would meet his Chinese counterparts in Sweden next week to continue trade talks between the two countries, suggesting the current pause in sky-high tariffs could be extended.

Bessent told Fox Business that he would be speaking with Chinese officials on Monday and Tuesday for a third round of high-level talks in Stockholm – following face-to-face discussions he held with Chinese Vice Premier He Lifeng in Geneva and London – to work out a likely extension of the pause beyond mid-August.

Beijing has yet to confirm the Stockholm talks, but Swedish Prime Minister Ulf Kristersson confirmed in a post on X on Tuesday that his country would play host to the US-China negotiations next week.

After US President Donald Trump’s announcement of “reciprocal” tariffs on April 2, Washington and Beijing raised punitive levies on each other’s exports to triple-digit percentage levels.

Since then, trade relations have thawed somewhat as the countries have engaged in talks, marked by a June telephone call between Trump and Chinese President Xi Jinping.

On Monday Bessent said that the talks were “in a good place”, a sanguine take on negotiations echoed by Beijing’s embassy in Washington, which said “new progress” had been made in resolving each other’s economic and trade concerns.

But Bessent also said on Monday that he hoped to raise at the talks the issue of China’s purchase of Russian and Iranian oil.

The embassy responded by saying that “the international community, including China, has conducted normal cooperation with Iran and Russia within the framework of international law.

“This is reasonable and lawful without harm done to any third party, and deserves to be respected and protected,” said the embassy.

China observers said that Beijing would oppose Washington’s bid to link tariff talks to Chinese relations with US adversaries.

“Beijing sees its ties and transactions with Russia and Iran as just and fair and conforms to international laws and may be unlikely to make compromises for the sake of US lowering tariffs,” said Xin Qiang, an international studies professor at Fudan University in Shanghai.

“Beijing is mindful not to fall into the trap as US uses tariffs to pursue its geopolitical agenda.”

HK$40 cherries in Hong Kong? Why US-China trade war means sweet savings

https://www.scmp.com/news/hong-kong/hong-kong-economy/article/3319193/hk40-cherries-hong-kong-why-us-china-trade-war-means-sweet-savings?utm_source=rss_feed

A bitter trade dispute between Washington and Beijing has delivered an unexpected windfall for Hong Kong shoppers, with a glut of diverted US cherries flooding the market and bringing prices for some shipments to their lowest levels in two decades.

Stalls in the bustling Yau Ma Tei Wholesale Fruit Market are now offering the popular summer fruit from Washington state for as little as HK$40 (US$5.10) a pound, a steep discount from past years.

The price is partly a consequence of high tariffs imposed on US goods by China under the tit-for-tat escalation in the trade war between the two countries.

The total tariff rate on American cherries stood at 58 per cent as of mid-June, according to an industry publication. The measure prompted suppliers to divert large quantities of the highly perishable fruit to tariff-free Hong Kong, which operates as a separate customs entity distinct from mainland China.

A senior sales specialist, surnamed Cheng, at major fruit importer Kingo Fruits (HK) said on Tuesday that the entire Yau Ma Tei market might have processed around 8,000 cartons of airfreighted cherries a day at its peak last year.

This year, the daily volume had surged to as high as 12,000 cartons at its peak, he said.

An industry veteran at wholesaler Tai Shing Chan Tai Kee, a recognisable business in the market since 1987, pointed to higher supply and a weak market.

“The ones that came by plane are possibly the cheapest in 20 years,” said the trader, who declined to give his name.

Compared with the same period last year, market “sales volume was up by about one-third”, he added. “The price became cheaper.”

Official trade data shows the city’s role as a re-export hub for the fruit to the mainland has been hit hard.

Consignments of fresh cherries re-exported from the city to the mainland plunged by 72 per cent in value year on year between February and April.

Direct imports of the fruit from the United States to Hong Kong soared 118 per cent in value in April as suppliers diverted their stock.

Andrew Chan, an operations manager at Cheung Hing Fruits, said that a 5kg (11lbs) carton of US cherries that fetched a wholesale price of HK$400 last July was now being sold for between HK$260 and HK$280, a drop of up to 35 per cent.

Sales staff at several fruit shops suggested a bumper harvest in the US, helped by good weather and sufficient rainfall in growing regions, boosting supply.

“There wasn’t as much stock last year; there’s more this year, that’s why it’s cheaper,” said a saleswoman surnamed Leung at retailer Shing Kee Lung, who added that her shop now handled more than 10 cartons of the fruit daily.

Hong Kong was also not alone in seeing cherry prices drop sharply, with Vietnam experiencing a similar glut in supply off the back of Chinese tariffs, according to news reports.

Chan of Cheung Hing Fruits said that despite the cheaper cost of goods, gross margins had not improved due to the weak Hong Kong economy and intense competition.

He said the industry had adopted a strategy of “thin profits, high turnover”.

Homemaker Jessica Lam said she would now consider buying the cheaper US cherries, turning from the premium Tasmanian varieties that could cost the equivalent of HK$120 a pound.

“Consumers are the biggest winners; they can buy high-quality US cherries at a great price,” Chan said.

Can China get the US out of the way of better ties with Europe?

https://www.scmp.com/news/china/diplomacy/article/3319145/can-china-get-us-out-way-better-ties-europe?utm_source=rss_feed

This year marks half a century of formal diplomatic relations between China and the European Union as well as the 25th anniversary of the founding of the European Union Chamber of Commerce in China. In this, the first of a series of reports examining ties between the two powers, Shi Jiangtao looks at the influence the United States has on the relationship.

China has ramped up efforts to mend ties with the European Union ahead of a planned bilateral summit later this month, seeking to capitalise on transatlantic disaffection to promote EU cooperation and counter Washington’s unilateralism.

But while Beijing’s conciliatory overtures to Brussels are distinct from its adversarial stance towards Washington, a long-awaited reset in China-EU ties remains largely out of reach.

Brussels has taken a cautious de-risking approach towards Beijing, shaped by its complex alignment with Washington and persistent concerns over China’s global rise. Progress is also constrained by structural mistrust, diverging global priorities and Beijing’s strategic tilt towards Moscow amid Russia’s invasion of Ukraine.

In the absence of substantive shifts in strategic posture from either side, observers warn of missed opportunities to recalibrate the partnership for this year’s landmark 50th anniversary of China-EU diplomatic relations.

Hopes were initially high for this year’s China-EU summit, scheduled for Beijing on Thursday, particularly as surging trade and geopolitical tensions forced the event’s cancellation last year.

As the US-China feud intensified after Donald Trump’s return to the White House, China placed greater emphasis on Europe, highlighting the EU’s elevated role in Beijing’s broader strategy to counterbalance the United States, according to Feng Zhongping, director of the Institute of European Studies at the Chinese Academy of Social Sciences.

“After Trump took office in January this year, many saw a strategic opportunity for closer China-EU ties, with China anticipating stronger collaboration amid global instability and Trump’s unpredictability,” he said.

And the July summit seemed the moment to realise that goal, given its timing in an anniversary year and the strains on transatlantic relations.

As part of a coordinated effort to court Brussels, Beijing lifted its 2021 sanctions on several European Parliament members and dispatched top diplomat Wang Yi to visit Paris, Berlin and Brussels earlier this month.

In contrast to its use of rare earth dominance over Washington in the US-China trade war, Beijing also proposed a fast-track channel to facilitate exports of the critical minerals to European companies, drawing comparisons to China’s pandemic-era medical supply corridors.

“Rare earth exports have never been, and should never be, an issue between China and the EU,” Wang affirmed, framing the initiative as part of China’s broader commitment to cooperation over confrontation.

Throughout his week-long tour, the Chinese foreign minister positioned China as a responsible global power and reliable alternative to Trump’s tariffs, his scepticism towards Nato and his perceived pivot toward Russia.

Describing the EU as an “important pole” in a multipolar world, Wang reiterated China’s support for multilateralism and shared interests in addressing climate change and other global challenges.

He also urged Brussels to maintain strategic autonomy, a diplomatic euphemism for distancing itself from Washington, while taking jabs at the Trump administration and China critics across Europe.

“China is different from the United States, so the path the US has taken should not be projected onto China … Today’s Europe faces various challenges, but these challenges have not come from China in the past, present, or future,” he told top EU diplomat Kaja Kallas on July 2, dismissing concerns about Beijing’s growing assertiveness.

However, China-EU relations have not warmed as expected, with Feng highlighting misaligned expectations, persistent internal and external challenges as key obstacles.

“I believe the problem lies in Europe’s strategic misjudgments,” he said, adding that the EU had overestimated its leverage amid the US-China rivalry and made excessive demands based on flawed assessments.

“While China needs to evaluate transatlantic relations objectively, Europe should adopt a more clear-headed approach towards China-US and China-EU dynamics,” he added.

Since 2019, Brussels has seen China as a partner, competitor and a systemic rival, while Beijing has framed the EU as a “comprehensive strategic partner”, a difference that Feng says “significantly” deviates from Beijing’s expectations and adds to bilateral tensions.

The focus now was on making sure conditions did not worsen, he said.

“The smooth convening of the China-EU summit will be a success in itself. As long as the leaders of both sides can sit down and communicate face to face, it is a positive result,” Feng said.

“The priority right now is to prevent escalation, promote cooperation wherever possible, and sustain communication at the highest level.”

Cui Hongjian, a former diplomat and the head of EU studies at Beijing Foreign Studies University, also tempered expectations for the summit.

“With the summit approaching, its outcome remains largely uncertain,” he said. “Europe believes pressure can force concessions from China; China assumes European frustration with US policy will lead to a strategic tilt toward Beijing. Both expectations are likely inflated and misaligned, further complicating bilateral dynamics.”

He added that Beijing was particularly disappointed that the EU, following the reelection of Commission President Ursula von der Leyen last year, had largely retained its hardline stance toward China – even after Trump replaced Joe Biden.

While Chinese President Xi Jinping in May framed the 50th anniversary of China-EU ties as an opportunity to improve trust, “open up a better future” and “oppose unilateral bullying” – a thinly veiled swipe at Trump’s tariffs – von der Leyen has since gone ballistic on China.

As Trump watched on at the G7 summit in Canada last month, she warned of “a new China shock”, accusing Beijing of weaponising its near-monopoly on rare earths and perpetuating what she called a “pattern of dominance, dependency, and blackmail” in global trade.

Then in a speech to the European Parliament earlier this month, von der Leyen escalated her criticism, condemning what she said was China’s “unyielding support” for Russia’s aggression against Ukraine and declaring it a “determining factor” for future EU-China relations.

Beijing rejected von der Leyen’s harsh criticism as “baseless and biased remarks that reflect double standards”

In Brussels, sentiment surrounding the upcoming summit in Beijing is “not so good”, according to Philippe Le Corre, a senior fellow at the Asia Society Policy Institute’s Centre for China Analysis.

“There are signs that China is not willing to compromise on the two issues that matter the most to the EU institutions: Ukraine and trade,” he said. “Beyond rhetoric, almost no one believes in a shift coming from China.”

Le Corre noted the worsening situation in Ukraine and the scant evidence of “China showing compassion or slowing down its partnership” with Russia. On trade, he pointed to the ballooning EU-China deficit and growing concerns over Europe’s industrial competitiveness.

He said Wang’s remarks on establishing a rare earth “fast-track” mechanism failed to reassure European stakeholders, who saw it as a temporary measure. “Beijing has shown no real flexibility. At the end of the day, the threat is still there and European companies will bear the consequences,” he said.

“The prospects [for the summit] are not looking good,” Le Corre said. “Europeans feel they are making a big effort – traveling to Beijing instead of Brussels where the annual summit is supposed to take place this year …

“What is Beijing’s game in all of this is hard to decipher – most people think China is waiting for a deal with the US, before turning to Europe. This makes EU leaders uncomfortable, if not angry.”

Cui agreed, describing the US as a “persistent complicating factor” in China-Europe ties.

“European officials have often criticised China for persistently viewing Europe as a subordinate or vassal of Washington,” he said. “For years, China’s foreign policy circles assumed Europe, as part of the US-led West, invariably followed America’s lead in global affairs.”

But the once-prevalent perception, he noted, had increasingly been challenged as transatlantic dynamics shifted across security, economic and political domains, especially since the onset of the Ukraine war over three years ago.

“Europeans are rethinking their strategic orientation – whether to remain aligned with the US as part of a single pole, or to assert relative independence as a distinct pole,” he said.

“These changes have made Chinese officials and academics more attuned to deep-rooted structural contradictions between the US and Europe, which are no longer manageable through conventional political coordination or negotiation.”

Cui noted that Beijing, aware of the US-Europe divide, had applied more differentiated policies – adopting a combative approach toward the US, while seeking to stabilise ties with Europe through engagement and long-term cooperation, especially on rare earth exports.

He added that Trump’s return to office had heightened European anxiety, prompting Brussels to recalibrate its positioning between Washington and Beijing.

From Beijing’s standpoint, both China and the EU were consumed by the ripple effects of Trump’s reelection, resulting in neither side prioritising their bilateral agenda and no breakthroughs in their relations.

“China needs to balance internal and external factors – economic security, societal concerns, and strategic imperatives. As a result, European demands must be assessed holistically,” Cui said. “Europe often criticises China for ‘talking more than acting’, but that stems from this complex policy calculus.”

Feng echoed the view, stressing that while Europe was cautious about Trump and trying to reduce its military dependence on the US, it continued to “appease” the American president because of the limits on its defences and hopes for tariff concessions.

“Consequently, when it comes to China, Europe continues to prioritise its ties with the US – being tough on China is, to some extent, a symbolic gesture aimed at Trump.”

Zhao Long, a senior research fellow at Shanghai Institutes for International Studies, stressed the need to minimise the influence of third-party pressures.

He said China’s recent diplomatic outreach was aimed at repairing ties that “have been held hostage by issues such as the Russia-Ukraine war, China-Russia relations, and securitised thinking.”

On the 50th anniversary of diplomatic relations, Zhao urged both sides to redefine the relationship on its own terms.

“China-EU ties should not be dictated by China-Russia relations, as von der Leyen suggested, or framed through the lens of the US-China rivalry,” he said. “The relationship should highlight cooperation, its independent nature, and embrace a partnership mindset free of zero-sum thinking.”

Frans-Paul van der Putten, a China expert based in the Netherlands, said there was limited room for manoeuvre because of vulnerabilities within the US-China-Europe strategic triangle.

He said the EU was geographically restrained and had conflicting economic and security interests, and so had little to offer China. Meanwhile, Beijing could not meet the EU’s demand to abandon its strategic partnership with Russia, which would weaken its own geopolitical position with the US.

Van der Putten, author of the newly published China Resurrected: A Modern Geopolitical History, noted that the recent Nato summit in The Hague revealed the extent to which Washington could extract major concessions from European capitals – potentially influencing EU positions on China as well.

Beyond US pressure, he warned that Beijing should not underestimate Brussels’ deep frustration and grievances over China’s trade practices and support for Russia at the expense of its ties with Europe.

“Transatlantic friction does not remove the core problems that exist in EU-China relations, including China’s state aid policies and close relations with Russia,” he said.

Le Corre also said China must do more to repair its image and ease tensions with Europe.

He also cautioned against overinterpreting Beijing’s outreach.

“Just because a couple of small Eastern European countries like Hungary or Slovakia are leaning towards Beijing, it doesn’t mean the EU is happy to entertain China’s charm offensive. As a matter of fact, the vast majority of member-states are not prepared to compromise their principles vis-a-vis an uncompromising Chinese government.”

As China’s public bus companies bleed cash and lose riders, are rides for pets the answer?

https://www.scmp.com/economy/china-economy/article/3319156/chinas-public-bus-companies-bleed-cash-and-lose-riders-are-rides-pets-answer?utm_source=rss_feed

With public bus companies across China struggling to keep the wheels going round and round amid rising financial pressures and declining ridership, some are embracing innovative and unorthodox measures – such as repurposing their idle fleet for delivery services, or allowing pets as passengers.

Zhengzhou Public Transport Group, which serves the capital city of Henan province, is among the latest to adopt an emerging “bus-plus-logistics” business model, having announced a partnership with courier giant SF Express earlier this month.

The two companies will explore leveraging idle bus capacity, such as during off-peak hours or when vehicles are unused out at night, to fulfil urgent intracity deliveries, according to a statement by SF Express.

The initiative comes as the Zhengzhou Public Transport Group faces mounting financial woes. In 2024, its year-on-year revenue fell by 8.38 per cent, while its operating losses deepened by 286 per cent – from 3.03 million yuan in 2023 to 11.7 million in 2024 – according to financial data provider Wind.

And it is not the only bus company under financial strain. Bus ridership has been decreasing across China in recent years, driven by a shift towards alternatives such as undergrounds, bike-sharing and ride-hailing services.

Official data showed that China’s public bus and trolleybus passenger volume stood at 38.67 billion in 2024. That was only slightly more than half of all passenger trips recorded in 2019 – a level that had already been on the decline.

Central authorities have been scaling back subsidies for new-energy vehicles in recent years, posing new cost challenges for companies that had been relying on that funding to make ends meet.

Several bus companies across the country have ceased operations or scaled back routes, and those that remain are forced to explore new business models to stay afloat.

In early 2023, public outcry followed a decision by another municipal transport company in Henan to suspend urban bus routes in a city of about 8 million people. The decision ended up being reversed, and the bus operator apologised for having an “adverse impact on society”.

Since last year, companies in cities such as Wuhan, Lanzhou and Nanjing have been launching bus-fleet-delivery initiatives that were previously piloted in rural areas before being expanded to major urban centres.

The model offers win-win opportunities as public bus companies activate their idle fleet capacity, turning underutilised resources into new revenue streams.

Meanwhile, express delivery firms gain access to buses’ urban routes and frequent stops, creating a cost-effective solution for crucial deliveries, particularly for time-sensitive orders.

To secure new streams of income, some transport operators have also explored other alternatives, such as offering pet-friendly bus lines.

Shanghai, for instance, recently introduced its first dedicated bus line for pet owners, transporting them and their pets between hotspots around the city on the weekends to tap into the growing pet economy and diversify revenue models. Tickets are priced at 20 yuan (US$2.80), around 10 times the fare for a regular bus route.

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China’s drone warfare exercise, warning over spy souvenirs: SCMP daily highlights

https://www.scmp.com/news/china/article/3319160/chinas-drone-warfare-exercise-warning-over-spy-souvenirs-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 .

China has staged a warfare demonstration using a full spectrum of uncrewed systems, underscoring its role as a leading global drone supplier, according to a state media report.

GDP growth is on pace to meet leadership’s goal for China, but a stubborn property slump, trade complications and deflationary pressure persist.

China’s top anti-spy agency has advised citizens travelling abroad to be cautious while accepting souvenirs that could have surveillance capabilities.

Chinese businesses in Europe have urged political leaders in China and the European Union to seize a “historic opportunity” to resolve their disputes and reach a “substantive” trade deal at this week’s China-EU summit in Beijing.

Rare close-up images of two PLA Navy J-35 stealth fighters flying in close formation have surfaced online, giving the clearest view yet of China’s next-generation carrier-based aircraft.

Argentina has announced a loosening of visa requirements for Chinese citizens in a new overture to Beijing as President Javier Milei seeks to recalibrate his foreign policy amid delayed trade negotiations with the US.

To spur the broader adoption of humanoid robots, China may be inclined to offer end-user subsidies as the industry rapidly evolves and the robots become more capable, according to a report by investment bank Morgan Stanley.

How the EU, squeezed between the US and China, can negotiate a big win

https://www.scmp.com/opinion/world-opinion/article/3318482/how-eu-squeezed-between-us-and-china-can-negotiate-big-win?utm_source=rss_feed

As the European Union prepares to hold its summit with China ahead of the August 1 deadline to achieve a tariff deal with the United States, it is squeezed between two superpowers. Trump’s letter threatening the EU with 30 per cent tariffs suggests that his true negotiating stance is a minimum of 15-20 per cent general tariffs and an unwavering 25 per cent on auto tariffs. Given these harsh terms, could the summit with China strengthen the EU’s bargaining position with the US?

The EU fears an influx of Chinese goods redirected from the US market due to tariffs. Even more worrying are China’s tightening restrictions on rare earth exports – which mirror the EU’s tech restrictions and underscore Beijing’s warning that trade deals with the US must not come at its expense.

A key impediment to a better China-EU relationship is the Ukraine war. While China is not known to be providing direct military reinforcement to Moscow, its economic and industrial support is seen as essential to Russia’s ability to continue waging war on Ukraine. The EU has long wished for China to use its leverage on Russia to end the war.

But the EU must also try to see things from China’s perspective. China may hold the key to altering the war’s trajectory in Europe’s favour, yet China’s focus is on a different triangle in its rivalry with the US. Both the EU and Russia believe their security is at stake in the Ukraine war. For China, however, Russia is an indispensable strategic counterweight against the US, its primary rival.

Can the EU realistically expect China to sacrifice its security for that of Europe’s simply on principle, even though any pressure exerted by China on Moscow, even in the short term, is likely to be futile in the absence of a balanced security architecture in Europe. How is this a fair expectation when the EU has been aligning with US efforts to contain China through technological restrictions?

Given that the US is relaxing its chip export controls to China, the EU needs to ask itself whether it should maintain its tight export controls on advanced chipmaking machinery when this is hurting its economic interests?

This brings us to the complicated web of relationships between the US, EU and China – the world’s three leading economic powers. The US and China are the EU’s top two trading partners. Naturally, the EU seeks to narrow its large current account deficit with China. Service exports offer the most promising pathway, as Europe holds stronger competitive advantages in this sector than in manufactured goods.

China’s strategic objective must be to neutralise the tech restrictions imposed since the first Trump administration. Unlike the inherent security tensions between the EU and China in their respective relationships with Russia, the economic interests of the EU and China can be aligned – if they can address key concerns.

Meanwhile, the transatlantic partnership, long Europe’s strategic anchor, is in flux. In February, US Vice-President J.D. Vance’s excoriating speech at the Munich Security Conference and Ukrainian President Volodymyr Zelensky’s humiliation in the Oval Office suggested a turn from what had been America’s unwavering defence of Europe. And now, despite progress in trade negotiations, Trump has threatened the EU with 30 per cent tariffs.

China sees an opportunity for the EU to exercise greater strategic autonomy and become less aligned with the US-led containment of China. But to win over the EU, China must go beyond rhetoric and leverage. Some of the EU’s wishes – that China alter its industrial model or stance on Russia – may not be realistic. But perhaps in meeting the EU’s reasonable expectations on greater market access, China may find itself scoring long-term gains.

For the EU, greater progress may be made with China with a focused negotiation agenda within the boundary of what China can realistically give. Rather than being frustrated by the lack of progress on the same list of issues, the EU should recognise it cannot blame China’s intransigence alone. Constrained by Brussels’ institutional inertia, the EU has not sufficiently adapted to rapidly evolving global geopolitical contingencies.

China should likewise be more sympathetic to the EU’s complex dynamics and domestic pressures, which have constrained it from a more flexible pragmatism. China must change its mentality in negotiating with the EU. Rather than offering minimal concessions, China should explore the full extent of the market opening and equal treatment it could provide to EU companies. How might it help the EU grow its exports of services and goods to China? How may China provide a genuine level playing field where European companies may thrive?

As leading economic and technological powers, the EU and China may strengthen their bargaining positions against Trump’s extortionary demands by acting in concert. Including China would also make it easier for the EU to rebuild a global trading system not dictated by US whims. If the EU pursues a pragmatic – rather than value-driven – path, China is more likely to meet expectations.

More than a vast market, the EU’s key value to China lies in technological collaboration. The EU’s pathway to strategic autonomy lies in broadening its partnerships. The fraying transatlantic relationship gives China a once-in-a-century opportunity and the EU a rare chance to chart its own course. It is up to China and the EU to seize this moment – China generous where it can, the EU pragmatic within its constraints – in forging a new rule-based international order, ushering in a multipolar world of dignity for all.

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How China’s latest mega-dam threatens to undermine thaw in ties with India

https://www.scmp.com/news/china/diplomacy/article/3319179/how-chinas-latest-mega-dam-threatens-undermine-thaw-ties-india?utm_source=rss_feed

Donald Trump’s approach to international relations has placed China on the defensive, but by also alienating key US allies and partners, it may have created an unexpected opening for Beijing.

Since the US president unveiled his tariff plans in April, Beijing has significantly ramped up efforts to improve ties with Europe, Southeast Asia, and even its most formidable regional rivals – Japan and India.

In a sign of deepening detente between the Himalayan neighbours, India’s external affairs minister S. Jaishankar visited Beijing last week for the first time since a deadly clash in the Galwan Valley in June 2020.

During the visit, Jaishankar, a former ambassador to both China and the United States, met with his Chinese counterpart Wang Yi and Vice-President Han Zheng, along with President Xi Jinping as part of a group meeting of foreign ministers of the Shanghai Cooperation Organisation.

The trip was widely seen as paving the way for Prime Minister Narendra Modi to attend the SCO summit in Tianjin at the end of August.

According to state news agency Xinhua, Xi said he hoped to “chart the course of the organisation together” with the nine other members of the SCO.

In a thinly veiled rebuke of Trump’s policies, Xi also called on Jaishankar and other SCO representatives to “firmly oppose hegemony, power politics and bullying, and promote a more equal and orderly multipolar world.”

During their meeting, Wang invoked the notion of a “Dragon-Elephant Tango”, urging New Delhi to work together with Beijing to “build mutual trust rather than suspicion, pursue cooperation rather than competition, and help each other succeed rather than engage in mutual attrition”.

Jaishankar hailed “good progress” in normalising relations since Xi and Modi’s last meeting in Russia last October.

The two sides have since agreed to de-escalate tensions along their disputed Himalayan frontier, resumed direct flights, and facilitated visa processes earlier this year.

However, Jaishankar emphasised the importance of avoiding “restrictive trade measures and roadblocks,” a veiled reference to Beijing’s export controls on critical minerals.

“This is best done by handling relations on the basis of mutual respect, mutual interest, and mutual sensitivity,” he said, invoking an earlier understanding that “differences should not become disputes” and competition not become conflict.

While it is still too early to tell how far the Asian rivals are willing to reconcile, Moscow has again floated the idea of reviving a Russia-India-China mechanism to counter the US.

Originally proposed in the late 1990s, the notion of a strengthened troika has long been hindered by the China-India border dispute, Beijing’s strategic support for Pakistan, and New Delhi’s growing alignment with Washington.

While India remains cautious about the proposal, mindful of its potential to further strain ties with the Trump administration amid largely stalled tariff negotiations, Beijing has endorsed Moscow’s initiative.

“Cooperation among China, Russia, and India not only aligns with the respective interests of the three countries, but also contributes to regional and global peace, security, stability, and progress,” foreign ministry spokesperson Lin Jian told a press briefing in Beijing last week.

But just days after Jaishankar’s visit, China officially announced the construction of a controversial mega-dam project on the Tibetan plateau, posing a fresh test for their fragile thaw.

According to Xinhua, the 1.2 trillion yuan (US$167 billion) project could generate three times as much energy as the Three Gorges Dam.

But the damming of the Yarlung Tsangpo, which flows south into India’s Arunachal Pradesh and Assam states before reaching Bangladesh as the Brahmaputra, has long been a source of friction.

Xinhua said the project would consist of five cascade dams situated around the city of Nyingchi.

Most of the generated electricity will be transmitted to other regions for external consumption, it added, despite concerns about an oversupply of power.

According to Chinese experts, the dam will be built in an area noted for its hydropower potential, rich biodiversity, fragile ecosystem and high seismic activity.

Beijing announced its approval of the long-rumoured project in December, but much of its details remain shrouded in secrecy, including its overall scale and whether a comprehensive scientific feasibility study was undertaken.

New Delhi has consistently voiced concerns about the dam’s potential impact on the environment and downstream water supplies, concerns the foreign ministry’s spokesman Guo Jiakun shrugged off earlier this year.

China’s Jiangsu province narrows GDP gap with Guangdong as tech sectors fuel growth

https://www.scmp.com/economy/economic-indicators/article/3319135/chinas-jiangsu-province-narrows-gdp-gap-guangdong-tech-sectors-fuel-growth?utm_source=rss_feed

The race for China’s provincial economy crown has turned red hot, with Jiangsu closing the gap with Guangdong through tech-driven growth.

Jiangsu’s gross domestic product (GDP) now stands at 97.44 per cent of Guangdong’s, with the distance between the two provinces narrowing to 175.76 billion yuan (US$24.5 billion) in the first half of 2025 – compared to 191.62 billion yuan for the same period last year, according to data released by provincial authorities.

That marks the closest margin in years, threatening Guangdong’s decades-long dominance as China’s top provincial economy. The province, which borders Hong Kong, became the country’s first export powerhouse during the reform era.

“Jiangsu is more resilient due to its diversified industrial structure among different local cities, lower real estate dependence and smaller reliance on exports,” said Peng Peng, executive chairman of the Guangdong Society of Reform, a local think tank.

“External trade pressures also weigh on its [Guangdong’s] economy.”

Despite Guangdong’s GDP reaching over 6.87 trillion yuan in the first half of 2025 – up 4.2 per cent year-on-year – growth in the manufacturing hub lagged the national average of 5.3 per cent.

Exports, a traditional pillar of the southern province’s economy, were down from 12.1 per cent growth in the first quarter of 2024 to just 1.1 per cent in the same period this year.

In contrast, Jiangsu’s economy grew by 5.7 per cent to over 6.69 trillion yuan, powered by emerging industrial clusters in electric vehicles and new energy manufacturing.

The province also outperformed Guangdong in several key metrics. Its value-added industrial output rose 7.4 per cent, nearly double Guangdong’s 4.0 per cent, thanks to strengths in equipment manufacturing, electronics and the automotive sector – now Jiangsu’s primary engines of growth.

While Guangdong maintained a lead in hi-tech industries like drones, industrial robots and energy storage batteries – with production growth rates above 20 per cent – its overall industrial growth slowed, with manufacturing expanding by just 4.5 per cent.

Traditional sectors, such as fuel-powered vehicles and real estate, continued to weigh on Guangdong’s economy. Investment fell 9.7 per cent due to weaker confidence, compared to Jiangsu’s 3.9 per cent decline.

Jiangsu also posted stronger retail sales growth – up 5.0 per cent in the first half versus Guangdong’s 3.5 per cent – and led in per capita disposable income, which hit 30,706 yuan compared to Guangdong’s 28,343 yuan.

David Wong, a lecturer at Hang Seng University in Hong Kong, called for greater integration within the Guangdong-Hong Kong-Macau Greater Bay Area.

“The province’s development focus has long been overly concentrated in core cities like Shenzhen, Guangzhou, and Dongguan, limiting broader and more sustainable economic expansion,” Wong said.

China unveils next-gen high-speed rail tech as US puts brakes on bullet train funding

https://www.scmp.com/news/china/science/article/3319128/china-unveils-next-gen-high-speed-rail-tech-us-puts-brakes-bullet-train-funding?utm_source=rss_feed

China has pulled the wraps off its next-generation high-speed rail technology as the United States revokes federal funding for California’s high-speed rail project.

China’s latest bullet train, the CR450, is undergoing final performance tests to prepare it for commercial operation trials at 400km/h (250mph), the official Science and Technology Daily reported on Monday.

The team surpassed the previous upper speed of 350km/h, at which high aerodynamic resistance and energy consumption levels had for decades been a technological barrier.

An increase in speed of 50km/h would lead to a 30 per cent rise in resistance, and greater energy consumption, a researcher at the China Academy of Railway Sciences, Shao Jun, told the newspaper. High-speed trains face 95 per cent of their resistance from air.

To boost speed and save energy, the scientists adjusted the head shape of the train to reduce drag, drawing inspiration from nature to create a design based on fast-flying birds and cutting resistance by about 2.6 per cent.

They then looked at the train’s undercarriage, a previously overlooked area that had potential to reduce drag.

A team member had proposed an idea for a cover structure to shield the exposed areas of the bogie, creating a more complete aerodynamic shape to lower resistance, Shao said. After repeated optimisation of the cladding structure, resistance was reduced by 22 per cent.

This means that even with a 50km/h increase in speed, the energy consumption of the new train remains comparable to that of the CR400 Fuxing trains operating at 350km/h.

Researchers for the project developed a new material resistant to temperature challenges, deformation and fatigue to handle the braking of the ultra-speed vehicle.

The team aimed to keep the braking distance on the new train the same as that of the CR400 – from 400km/h to zero within 6.5km (4 miles) – for the train to steadily slow to a stop.

The energy released in this process is enough to heat 6.8 tonnes of water from freezing to boiling in 2 minutes.

While the team did not specify the metals used in the new material, they said it took hundreds of tests to finalise the formula and more than a year to assess its performance.

Science and Technology Daily said the CR450 was on show at an industry conference in Beijing earlier this month, with attendees keen to get a first-hand look at the technology.

The national high-speed rail network covers 48,000km, accounting for more than 70 per cent of the world’s total, and links 97 per cent of cities in China with a population of more than 500,000 people.

While China forges ahead in high-speed transport technology, the field is not receiving support in the United States. Last week, the administration of President Donald Trump terminated US$4 billion of federal funding for California’s high-speed rail project.

Announcing the funding cut on Truth Social on July 16, Trump called the project a “train to nowhere” and a “boondoggle”.

“I am thrilled to announce that I have officially freed you from funding California’s disastrously overpriced, ‘HIGH SPEED TRAIN TO NOWHERE.’ This boondoggle, led by the incompetent Governor of California, Gavin Newscum, has cost Taxpayers Hundreds of Billions of Dollars, and we have received NOTHING in return except Cost Overruns. The Railroad we were promised still does not exist, and never will. This project was Severely Overpriced, Overregulated, and NEVER DELIVERED,” Trump posted.

The project aims to link Los Angeles and San Francisco in less than three hours with a train travelling over 320km/h. Its first US$10 billion bond issue was approved by California voters in 2008.

In April, the Trump administration withdrew nearly US$64 million in grants for a proposed high-speed rail in Texas to connect Houston and Dallas, with Transport Secretary Sean Duffy calling it “a waste of taxpayer funds”.

The project planned to cover 385km in less than 90 minutes using Japan’s famed high-speed shinkansen system.

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China showcases full spectrum of drone technology in ‘border control’ exercise

https://www.scmp.com/news/china/military/article/3319159/china-showcases-full-spectrum-drone-technology-border-control-exercise?utm_source=rss_feed

China has staged a warfare demonstration using a full spectrum of uncrewed systems, underscoring its role as a leading global drone supplier, according to a state media report on Monday.

The drone and counter-drone exercise at a testing ground in the Inner Mongolia autonomous region simulated the “seizure and control of critical border locations”, state broadcaster CCTV reported.

It said numerous domestically made systems were deployed in live operations across six phases of the futuristic battlefield scenario, covering reconnaissance, AI planning, infiltration, aerial attack, elimination and anti-access.

Unmanned aerial vehicles (UAVs) on display included intelligence, surveillance and reconnaissance or ISR drones, long- and short-range loitering munitions, uncrewed helicopters, as well as tactical first-person view or FPV devices.

Ground equipment, from smart command and control systems to anti-drone defences, was also on show at Monday’s exercise.

An OW-5 anti-drone laser weapon carried out a live-fire demonstration in a rare public display. Its “high-energy beam barely visible to bare eyes” shot down a target drone “a few kilometres away”, the CCTV report said.

The OW5 series was first unveiled at the Zhuhai air show in 2021 as a static exhibit, and the latest presentation showcased the upgraded OW5-A50 with a 50-kilowatt power output. The system integrates the command-and-control station, radar and electro-optical sensors, power module and laser gun into one 8x8 Dongfeng heavy-chassis truck. It can perform key point air defence either with a stand-alone vehicle or as part of an integrated network protection system.

According to the CCTV report, the advantage of laser weapons as a drone countermeasure is that they can lock on and destroy targets instantly with unlimited ammunition for as long as the power supply lasts.

The exercise also featured a display of drone-artillery coordination, with a 155mm howitzer rapidly engaging targets using real-time coordinates transmitted digitally from a reconnaissance UAV.

CCTV also aired footage of a group of small tactical drones putting on a live demonstration of their capabilities. Among them was a large flying jammer able to interfere with the electro-optical equipment of other UAVs within a range of several kilometres.

The special combat tactical drones display included the Flying Frog, a vertical take-off and landing or VTOL reconnaissance drone, as well as the Flying Falcon – a high-speed loitering munition, and the grenade-throwing Black Bee, along with the bomb-dropping Flying Whale.

“With these smart partners, our infantry soldiers can evolve into future nodes with full-domain situational awareness and precision strikes, to win by intelligence on the modern battlefield,” the report said.

State-owned China North Industries Group Corporation – the country’s largest arms maker and exporter, commonly known as Norinco – organised the event, where it also introduced its loitering munitions family, Feilong or Flying Dragons.

The series ranges from the anti-personnel Feilong-10, which is small enough to be carried and has a range of less than 10km, to the Feilong-300A – an anti-radiation tactical drone that can target air defence radars up to 300km away.

The Feilong-60 can be fired from normal rocket launchers and works as a reconnaissance data source for guiding rocket fire or as a hoverable cruise missile. The smaller Feilong-30’s launchers are designed to be loaded onto various platforms, including trucks, combat vehicles and ships.

All of these suicide drones could be combined to form a networked swarm that is capable of conducting a saturated attack, according to the CCTV report.

China’s property loans rise to a 2-year high on policy support

https://www.scmp.com/business/banking-finance/article/3319149/chinas-property-loans-rise-2-year-high-policy-support?utm_source=rss_feed

China’s outstanding property loans rose to a two-year high in June, central bank data showed on Tuesday, following a series of policy measures aimed at stabilising the sector.

China’s outstanding property loans stood at 53.33 trillion yuan (US$7.43 trillion) at the end of June, up 0.4 per cent from a year earlier, the People’s Bank of China said in a statement.

Growth accelerated from 0.04 per cent in March, reaching the highest level since June 2023, according to central bank data.

But growth remained modest, dwarfed by the double-digit increases seen before 2021.

Outstanding individual mortgage loans came in at 37.74 trillion yuan, down 0.1 per cent from a year earlier, while outstanding property development loans rose 0.3 per cent to 13.81 trillion yuan, the central bank said.

Beijing has rolled out a number of rounds of policy measures in recent years to support the property sector, including allowing debt-laden developers to sell housing inventories and undeveloped land to local governments.

Despite the support, the property downturn remained a drag on the economy despite the policy support, with investment in the sector falling sharply in the first six months, while new home prices in June tumbled at the fastest monthly pace in eight months.

Chinese firms in Europe call for ‘substantive’ deal at China-EU summit

https://www.scmp.com/economy/china-economy/article/3319129/chinese-firms-europe-call-substantive-deal-china-eu-summit?utm_source=rss_feed

Chinese businesses in Europe have urged political leaders in China and the European Union to seize a “historic opportunity” to resolve their disputes and reach a “substantive” trade deal at this week’s China-EU summit in Beijing.

They called for a reduction in trade barriers and political interference, stressing that Beijing and Brussels needed to find a compromise on thorny issues such as electric vehicles and rare earth exports, as both faced a common threat in US President Donald Trump’s tariff war.

“We the business community hold high expectations, hoping that China and Europe can seize this historic opportunity to achieve substantive results” at the summit, said Fang Dongkui, secretary general of the China Chamber of Commerce to the EU (CCCEU).

The comments come as Chinese and European leaders remain divided over a slew of issues ahead of a highly anticipated leaders’ meeting on Thursday, which will be chaired by European Commission President Ursula von der Leyen and European Council President Antonio Costa, as well as Chinese Premier Li Qiang.

President Xi Jinping will also meet von der Leyen and Costa during their stay in Beijing this week, China’s Ministry of Foreign Affairs announced on Monday.

The CCCEU hopes the two sides can broker a deal to remove trade barriers in several areas, including the EU’s tariffs targeting Chinese electric vehicles, Fang told the Post.

Chinese state media reported in early July that China and the EU had reached the “final step” in negotiations over a deal that would replace the European anti-subsidy duties with a price undertaking by Chinese EV makers.

However, it remains unclear if the two sides can confirm such a deal on Thursday, with the European side appearing pessimistic about the prospects for a breakthrough. Fang remained cautious.

“If finalised, this would be a major boost for car companies and the supply chain. Of course, we fully understand the complexity of the negotiations,” he said.

Both sides would need to find a compromise between their areas of concern, including the EU’s anti-subsidy probe into electric vehicles and China’s export controls on rare earths, according to Fang.

China’s exports of rare earths rebounded in June, with a higher proportion of rare earth magnet exports going to the EU, customs data showed, after Beijing accelerated its approval of export permits for the minerals.

The shadow of the Trump administration also looms over Chinese companies, especially those in the EV sector, who fear the US might coerce the EU into adopting a more aggressive trade stance towards China.

The US announced tariffs of up to 40 per cent on several of China’s key trading partners in East Asia and Southeast Asia in early July, with many analysts seeing the move as a pressure tactic designed to force countries to pick a side between Beijing and Washington.

In a meeting last week with the EU’s chief trade negotiator, Maroš Šefčovič, the CCCEU’s automotive working group raised concerns that escalating global trade tensions might influence EU policies, with Europe being pushed towards a full decoupling from China.

The meeting took place the day before Šefčovič left for trade talks in Washington. China’s business community in Europe wishes to see the EU maintain its strategic autonomy as it negotiates its US trade deal, according to Fang.

“China–EU economic ties should not be hijacked by geopolitics, but should instead serve as a stabiliser and engine for global trade,” Fang said.

Looking ahead, Chinese companies still see huge potential for cooperation with Europe in key areas, such as renewable energy, advanced manufacturing and technological innovation. But that will depend on both sides reducing political interference in commercial affairs and focusing on their shared interests, Fang said.

“In short, the business community hopes to see more efforts to ‘reduce’ – fewer barriers, less suspicion, and reduced friction – so that markets and enterprises can truly drive China–EU relations forward,” he said.

China warns souvenirs from overseas could spy on citizens and leak state secrets

https://www.scmp.com/news/china/politics/article/3319118/china-warns-souvenirs-overseas-could-spy-citizens-and-leak-state-secrets?utm_source=rss_feed

China’s top anti-spy agency has advised citizens travelling abroad to be cautious while accepting souvenirs that could have surveillance capabilities.

Items such as backpack charms, key rings, necklaces and earrings might have hidden spy functions, including cameras, listening devices and tracking features, the Ministry of State Security warned on social media on Tuesday.

It said the public must understand national security regulations and exercise caution with these “modified travel souvenirs”.

It added that overseas spy agencies might push these altered gifts through “forced gifting”. State sector personnel, employees in classified roles, and scholars and students in universities and research institutions are prime targets, according to the ministry.

It said these gifts could pose a risk of leaking state secrets if they entered classified workplaces.

Under China’s counter-espionage law, individuals and organisations are prohibited from the unlawful use or possession of specialised equipment designed for spy activities. The law’s amended version further clarifies the legal liability for assisting others in carrying out espionage.

Beijing has elevated national security to new prominence in recent years through tighter legislation and administration.

The government has also attached greater importance to political integrity by working to combat politically subversive or sensitive content.

The ministry warned that some map-themed merchandise sold overseas might “inaccurately depict or omit national territory”. It said these items could “severely compromise national sovereignty and territorial integrity” and were strictly forbidden for cross-border transport.

China has unresolved land and maritime territorial disputes with surrounding nations, including tensions over its border with India and in the South China Sea.

The ministry urged citizens not to buy “improper materials”, such as sensitive or misleading content on state, social or political matters, which are considered illegal publications in China.

It also advised Chinese citizens not to transport any pets bought overseas due to national security concerns.

Live flora and fauna, such as amphibians and insects, have become hot souvenir items among Chinese tourists travelling abroad, who bring them back to China and raise them as “exotic pets”.

Ecological security is a national priority, and China is ramping up enforcement to fight the ecological threats posed by invasive species.

Under Chinese law, bringing invasive species or those that threaten the ecosystem into Chinese territory constitutes a criminal act.

According to 2024 customs data, national ports intercepted 71,000 specimens of quarantinable pests and 13,000 banned “exotic pets”.

In September, China’s first criminal case involving the illegal introduction of invasive species concluded with a first-instance verdict.

The defendant received a nine-month prison sentence and a 100,000 yuan (US$13,935) fine after he was detained in 2022 for carrying 2,015 red-eared slider hatchlings into the country without valid quarantine certificates. The turtle species is listed as an invasive species in China and is considered to be among the top 100 worst invasive alien species in the world by the International Union for Conservation of Nature.

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China bets on bots: humanoid-robot sales seen gearing up, with adoption push ‘very likely’

https://www.scmp.com/economy/china-economy/article/3319103/china-bets-bots-humanoid-robot-sales-seen-gearing-adoption-push-very-likely?utm_source=rss_feed

To spur the broader adoption of humanoid robots, China may be inclined to offer end-user subsidies as the industry rapidly evolves and the robots become more capable, according to a report by investment bank Morgan Stanley.

The comments underscore a growing focus on the demand-side uptake of humanoid robotics. By comparison, most of the year-to-date government policies have focused on the supply side, such as funding for research and development, according to the report, published on Tuesday.

“We think an adoption push is very likely in China” during the second half of this year, said analysts, led by Sheng Zhong, in the report. They added that this “could strengthen market sentiment, and there are events to watch for a tech breakthrough”.

The report stressed that “downstream adoption” would become the sector’s main focus for the rest of the year, citing recent announcements of larger commercial orders.

“Robot models require a significant amount of training data to improve the success rate and efficiency,” it explained. “The push for adoption, and the collection of data from real working scenarios, could help to form a virtuous cycle for R&D and applications.”

Shenzhen-based UBTech Robotics secured a 90-million-yuan (US$12.5 million) purchase from state-owned car exporter MiEE (Shanghai) Automotive Technology – by far the largest deal in the humanoid industry, according to a Friday filing on the China Tendering and Bidding Public Service Platform.

Earlier this month, two prominent Chinese robotics start-ups, AgiBot and Unitree Robotics, landed orders totalling 124 million yuan from state-owned China Mobile, the world’s largest telecommunications firm by total subscribers.

China’s humanoid robot industry has made rapid strides in recent years, backed by generous government support in the form of subsidies, tax incentives, public-private research collaborations, and the facilitation of industrial cluster developments – a strategic move to dominate emerging technologies and outpace the United States in the race for innovation supremacy.

“China’s government support remains instrumental for China staying ahead,” Morgan Stanley’s analysts said.

“Embodied intelligence” was first identified as a future industry in the government work report in March, with entrepreneurs in the field becoming increasingly visible at important meetings – including Unitree Robotics’ founder and CEO, Wang Xingxing, who attended a February symposium with President Xi Jinping.

In an embodied-intelligence action plan earlier this year, China’s capital city, Beijing, said it aimed to deploy 10,000 robots with embodied intelligence by 2027, while fostering an industry cluster worth more than 100 billion yuan.

“In our view, these events show the government’s strong focus on this emerging industry, and the desire to keep China in a leading position,” the Morgan Stanley report said.

Most humanoid integrators are targeting deliveries in the range of hundreds to thousands of units this year – including around 6,500 for Agibot and 1,100 to 1,300 for UBTech – according to the report. But analysts noted it may be “challenging for integrators to achieve all of these targets, given the progress so far”.

They also expected continuous model launches, hardware breakthroughs and software innovations in the second half of the year, with more participants and resources in the humanoid industry.

“Key integrator model updates, plus hardware and software improvements, could also signal progress and support or hamper the value chain’s performance,” the report said.

Moonshot’s Kimi K2 soars in popularity amid experts’ praise for Chinese AI developments

https://www.scmp.com/tech/tech-trends/article/3319100/moonshots-kimi-k2-soars-popularity-amid-experts-praise-chinese-ai-developments?utm_source=rss_feed

The launch of the Kimi K2 artificial intelligence model by Alibaba Group Holding-backed Moonshot AI has drawn rapid uptake amid praise from industry experts.

Downloads of Kimi K2, launched on July 11, doubled to 145,000 on Monday from 76,000 on Friday, according to AI and machine-learning developer platform Hugging Face.

The large language model (LLM) from the Beijing-based start-up uses a mixture-of-experts (MOE) architecture and boasts 1 trillion total parameters, with 32 billion activated per inference. For comparison, DeepSeek-V3 has 671 billion parameters.

“While companies like OpenAI invest hundreds of millions in compute resources, Moonshot’s Kimi K2 shows a more cost-efficient approach to training and inference – highlighting a possible turning point in AI development strategy,” said Henning Steier, Bluespace Ventures’ chief marketing officer, in a LinkedIn post.

The model is free via Kimi’s app and browser interface, unlike OpenAI’s GPT and Anthropic’s Claude, which charge monthly subscriptions.

MOE is a machine-learning approach that divides an AI model into separate sub-networks, or experts – each focused on a subset of the input data – to jointly perform a task. This is said to greatly reduce computation costs during training and achieve faster performance during inference.

Moonshot said it developed Kimi K2 at a fraction of the cost typically spent by larger AI firms.

Pietro Schirano, a former AI engineer at Anthropic and a founder of Magic Path, praised Kimi K2, saying in a post on X that the model was “so good at tool calling and agentic loops and knowing when to stop”.

“It’s the first model I feel comfortable using in production since [Anthropic’s] Claude 3.5 Sonnet,” he said.

Kimi K2’s “advanced agentic intelligence” allowed it to understand how to use tools and get practical work done, according to Moonshot. It could, for example, generate a detailed salary analysis with statistical visualisations and interactive web pages, or plan a trip to a concert by managing tasks across search engines, calendars, email, flights, and hotel and restaurant reservations, the company said.

“The gap between the open model in the West and the open model in China is getting wider,” said Nathan Lambert Allen, a researcher at the AI Research Institute, reacting to Kimi K2 in his newsletter. He added that Chinese companies like DeepSeek, Moonshot AI, and Vidu had introduced “much more useful models” than their counterparts in the West.

At the China International Supply Chain Expo in Beijing on Thursday, Nvidia founder and CEO Jensen Huang praised the significant potential of open-source AI, describing it as “very powerful”.

He also commended Moonshot’s Kimi specifically, referring to it as “one of the best reasoning models in the world today”, alongside Alibaba’s Qwen. Alibaba owns the Post.

Kimi K2 was recognised as one of the world’s top open-source AI models in a report on Friday from LMArena, an American benchmarking platform developed by researchers from the University of California, Berkeley. Kimi K2 – along with MiniMax M1, Qwen 3, and a variant of DeepSeek R1 – outperformed notable competitors like Google’s Gemma 3-72B and Meta Platforms’ Llama 4-Maverick.

On its X account on Friday, LMArena said Kimi K2 was “one of the most impressive” open-source LLMs to date, adding that it was gaining popularity because its user responses were “humorous without sounding too robotic”.

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China girl nearly dies after eating greens, laxatives for 2 weeks to fit in birthday dress

https://www.scmp.com/news/people-culture/trending-china/article/3318442/china-girl-nearly-dies-after-eating-greens-laxatives-2-weeks-fit-birthday-dress?utm_source=rss_feed

A teenage girl almost died after she ate just small portions of vegetables and laxatives for two weeks in a dangerous attempt to fit into a new birthday dress.

Mei, a 16-year-old from central China’s Hunan province, had to go through an emergency 12-hour medical procedure after she lapsed into a critical condition as a result of her extreme diet.

For two weeks, Mei ate nothing but a small amount of vegetables and laxatives, according to the mainland news outlet Xiaoxiang Morning Herald.

She was sent to hospital after she suddenly lost strength in her limbs and developed shortness of breath.

Examinations showed that her blood potassium levels had plunged to well below normal.

This resulted in a condition called serious hypokalaemia, which is often caused by an unhealthy diet.

A doctor at another hospital in Hunan, surnamed Li, said an unbalanced diet and dehydration can lower levels of potassium in the body.

Serious hypokalemia can cause respiratory failure and sudden cardiac arrest, Mei’s doctor, Peng Min, at Hunan People’s Hospital, said.

Peng said to get enough potassium, people should eat potatoes, chicken and bananas, plus drink sufficient water every day.

Mei’s health has returned to normal and she was recently discharged from hospital.

She promised that she would never use extreme methods to lose weight again.

Mei is not the first person in China to have put her life in danger with an unhealthy diet.

Last year, a 26-year-old Chinese man was also hospitalised with hypokalaemia.

He used intermittent fasting to lose weight, only eating during an eight-hour window each day. The man also did heavy daily exercise.

In 2021, a 38-year-old woman went to hospital after trying to lose weight by drinking a large amount of water.

Following video instructions she found online, she drank 4,000ml of salt water all at once, resulting in what doctors called water intoxication.

“She treated herself quite harshly. All she needs to do is to 5km a day,” one online observer said.

“The weight you lose via an unhealthy diet can easily bounce back,” said another.

“Laxatives. She was not losing weight, she was trying to kill herself,” said a third.

Chinese officials accuse popular online stand-up shows of stirring ‘gender antagonism’

https://www.scmp.com/news/china/politics/article/3319097/chinese-officials-accuse-popular-online-stand-shows-stirring-gender-antagonism?utm_source=rss_feed

Chinese authorities are accusing online stand-up comedy shows of “stirring up gender antagonism”, after performances featuring female comedians addressing gender-related topics have gained popularity in recent weeks.

The shows provide a unique space for discussing social issues, including problems faced by women, but the Zhejiang province publicity department said some of the content had “gradually deviated from humour and simplified gender topics into pitting men and women against each other”.

The article published on the department’s official WeChat account on Sunday said such content was “an effective way to attract eyeballs” and that “getting clicks doesn’t equal having value”.

It further said an “extreme online environment” magnified antagonism, so that some jokes about male characteristics could be understood as “attacking all men” and some jokes making fun of phenomena related to women could be labelled misogynistic.

Creators must find a balance between “offending the audience” and striking a chord, the Zhejiang article said as it called for constructive criticism and discussion, and urged them to reveal “life’s absurdities through lightheartedness and bridge division with laughter”.

“We sincerely hope that the rising stand-up comedy scene can become more rational and profound, with less division and more understanding,” it said.

Although the statement did not name any content, authorities were referring to the latest seasons of King of Comedy, which debuted on iQIYI video platform on July 11, and Rock and Roast, which was shown on Tencent video on June 27. In recent weeks, multiple comedy bits by women have gone viral online and struck a chord with netizens.

In one particular performance on King of Comedy, Fan Chunli, a 50-year-old woman from a small rural village, said that when she told her parents she wanted a divorce from her abusive husband, her family thought it was shameful and refused to support her.

In her routine, she told the audience she had taken the matter into her own hands – in 2023, she began a new career by joining a stand-up comedy club, and in 2024, she divorced her husband and took custody of her two daughters.

In China, the fervour for stand-up comedy shows began in 2017 with Tencent’s first season of Rock and Roast. At that time, only a few women performed stand-up. But over the years, more women took part in the shows and their bits about everyday life – including period shaming, being forced to marry, the preference for sons and workplace discrimination – went viral online.

But with the popularity also came criticism, including accusations that there was too much discussion of women’s topics and an unnecessary roasting of men. The tension peaked in 2020, when Yang Li joked about her dating woes, asking, “How can men be so ordinary yet so confident?”

She had become an icon to many women but was viciously attacked by men. Online fury erupted when she featured in ads by Intel and Mercedes-Benz in 2021, then for e-commerce platform JD.com last year.

To women comedians, they are simply talking about their real-life shared experiences, rather than creating conflict.

A Shanghai-based part-time comedian who did not want to be named told the South China Morning Post she “felt meaningful” telling her story to the outside world.

“I once talked about what it’s like being the elder sister in a Chinese family that has a son, and it resonated with people", she said.

Xianzi, a feminist who works in the film and television industry although has not worked on these programmes, told the Post the comedy segments that made it to the show were already quite mild, because talking about women’s rights in China – including violence and sexual harassment – pointed to government inaction and could be quite a sensitive topic.

But she believed video platforms – picking up the signals from authorities – would be under pressure to gradually cut back some content after the Zhejiang commentary was published.

“If platforms believe this topic is popular with the audience, they might think of other ways to present it, but if stand-up comedy gets censored because of attention from the government, it’s hard to continue,” she said.

China’s mega dam project in Tibet sparks stock surge in hydropower, infrastructure sectors

https://www.scmp.com/business/china-business/article/3319091/chinas-mega-dam-project-tibet-sparks-stock-surge-hydropower-infrastructure-sectors?utm_source=rss_feed

China’s construction of the world’s largest hydropower dam in Tibet has boosted related stocks, as analysts predict that infrastructure construction companies, energy developers, and power grid equipment manufacturers would benefit from the substantial investment into what Beijing calls the “project of the century”.

Chinese Premier Li Qiang on Saturday announced the start of the project, situated on the lower reaches of the Yarlung Tsangpo River, which becomes the Brahmaputra River as it leaves Tibet and flows south into India and finally into Bangladesh, state news agency Xinhua reported.

The project features five cascade hydropower stations, with a total estimated investment of about 1.2 trillion yuan (US$167 billion) and an anticipated annual electricity generation capacity of 300,000 gigawatt-hours, according to Xinhua.

This makes it the world’s largest hydropower facility, with five times the investment and three times the capacity of China’s current largest dam, the Three Gorges Dam.

Stock prices in China’s infrastructure construction and hydropower sectors surged when trading resumed on Monday following the announcement.

Shares of Power Construction Corporation of China, a state-owned developer involved in the project, jumped 10 per cent to reach the daily limit on both Monday and Tuesday. Companies specialising in hydro equipment, such as Dongfang Electric, and cement firms, including Huaxin, also saw significant price gains on Monday.

“This project will be conducive to boosting [China’s] economy and raising the national clean energy mix,” said Citigroup analyst Pierre Lau in a research note on Tuesday. In addition to the 1.2 trillion yuan investment in construction, Citi anticipated an additional 768 billion yuan in investments to build power grids, spurred by the initiative.

As the world’s largest carbon emitter, China is rapidly expanding its renewable energy sector to meet national goals of peaking emissions by 2030 and achieving net-zero emissions by 2060, while also stabilising its power supply.

The country is the world’s leading hydropower producer. It added 14.4 gigawatts of new capacity last year and is poised to exceed its target of 120 gigawatts in pumped storage hydropower by 2030, according to data from the International Hydropower Association.

Citi expected the dam project and the substantial related investments to benefit hydropower plant and grid equipment manufacturers in China, including Dongfang Electric, Sieyuan Electric, Pinggao Group, and XJ Electric.

However, some analysts cautioned that market enthusiasm could wane in the coming weeks, given the project’s lengthy construction timeline, which could extend beyond a decade. The project has also raised concerns among downstream countries, including India, regarding water supply and environmental impact.

“While the hydro project is applauded as a significant step towards China’s decarbonisation goals, it is important for investors to monitor its environmental impact management from a long-term view,” wrote Daiwa analyst Dennis Ip and his colleagues in a note on Tuesday.

Chinese kindergarten lead poisoning scandal raises fresh questions over local governance

https://www.scmp.com/news/china/politics/article/3319051/chinese-kindergarten-lead-poisoning-scandal-raises-fresh-questions-over-local-governance?utm_source=rss_feed

China’s worst food safety scandal in almost two decades, in which hundreds of children suffered lead poisoning, has prompted fresh questions about the quality of local governance.

On Sunday, the authorities in the northwestern province of Gansu said 10 local officials were under investigation over the incident in the city of Tianshui.

One political scientist, speaking on condition of anonymity, said the slow response to the incident showed how local officials “try to avoid taking responsibility”.

He added that a “passive feedback mechanism” made it hard for the public to obtain accurate information.

The investigation found that a local hospital and the provincial centre for disease control and prevention (CDC) had falsified test results.

On Monday, the media outlet Caixin published a commentary questioning whether the data falsification was “motivated by pressure or profit”.

It said that children at the Peixin kindergarten had been tested for more than a year after a cook first used lead paint to colour food, but local hospitals had not reported any problems.

It said the Tianshui authorities had ample time to act, but “unfortunately every opportunity was missed”, blaming official “corruption and inaction”.

The official investigation found that the education bureau of Maiji district, where the kindergarten was located, had ignored illegal enrolments and had not conducted any food safety inspections of private kindergartens over the past two years.

Officials from both the education bureau and the district’s market supervision bureau are now being investigated over allegations that they had taken bribes from the kindergarten owner.

Eight people, including the kindergarten owner and principal, have been detained over the scandal.

Media reports said that parents had only received confirmation that their children had been poisoned after they went to the neighbouring province of Shaanxi for testing.

Caixin said the main hospital in Tianshui and the local CDC “had failed again”.

The media outlet warned that if local government scandals needed higher-level interventions, this would “signify greater governance risks”.

“Judging from the fact that many local officials involved in the incident have been dealt with for other violations and disciplinary offences, local governance in some places has indeed suffered a visible decline,” the article said.

Hu Xijin, former editor-in-chief of Global Times newspaper, said the incident had highlighted the “chaos in food safety governance” in Tianshui.

He also said that the initial attempts by the Tianshui authorities to cover up the incident showed that “local officials had failed miserably in communicating with the public”.

“They thought the public would accept their monopoly on information, that they would believe whatever they were told and see whatever they were allowed to see. This is a serious mistake in governance,” he said.

On Sunday, the investigation team said 247 of the 251 kindergarten’s pupils and 28 staff members had shown signs of lead poisoning, along with five former pupils.

On Monday, state broadcaster CCTV reported that China’s market regulator had issued new food safety guidelines for schools.

The lead poisoning scandal in Tianshui is the biggest food safety crisis in China since 2008, when around 300,000 children were poisoned after melamine, a chemical used to produce plastics, was added to powdered milk.

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China’s UBTech Robotics eyes US$307 million in Hong Kong share placement

https://www.scmp.com/business/markets/article/3319084/chinas-ubtech-robotics-eyes-us307-million-hong-kong-share-placement?utm_source=rss_feed

Shenzhen-based UBTech Robotics, China’s top maker of humanoid robots, plans to raise about HK$2.41 billion (US$307 million) through a share placement in Hong Kong, according to a filing on Tuesday.

The company, which became the first robotics maker on the Hong Kong stock exchange in 2023, is offering 30,155,450 new shares at HK$82.00 per share, representing a discount of about 9.14 per cent to the closing price of HK$90.25 on Monday.

The new shares would represent around 6.39 per cent of the company’s enlarged issued share capital after the placement, it said.

UBTech planned to use the proceeds for business operations and development, including working capital, investments, project construction and renovation, as well as for repayment of loans and interest, according to the filing.

Since its listing at the end of 2023, the company has carried out a series of follow-on fundraisings, including nearly HK$2 billion in the past 12 months.

UBTech shares dropped by about 5.6 per cent to HK$85.15 on Tuesday morning.

Founded in 2012, the company rose to prominence in February 2016 when 500 of its Alpha robots danced at China’s national Spring Festival gala. It received backing from Tencent Holdings, ICBC, and iFlyTek in fundraising rounds before its initial public offering (IPO).

On July 18, UBTech won a 90.5 million yuan (US$12.6 million) contract to supply robotic equipment to MiYi (Shanghai) Automotive Technology, which was the world’s most valuable order for a humanoid robotics company, according to multiple Chinese media reports. The order was expected to begin delivery from September this year.

On Thursday, the company released a new robot that can change its own batteries. A demonstration showed the Walker S2 approaching a charging station, taking a depleted battery out of its chest and placing it into a charging dock, then inserting a fully charged replacement before walking away.

In recent years, China’s central and local governments introduced supportive policies to promote the development of humanoid robots. In February, the municipal government of Shenzhen, in China’s southern Guangdong province, announced it would subsidise such companies up to 10 million yuan. Wuhan, in central China’s Hubei province, said in June it would subsidise such companies up to 60 million yuan.

Hangzhou-based start-up Unitree Robotics filed pre-IPO documents for a mainland listing with China’s securities regulator last week, a move that analysts said signalled that the industry was moving from “laboratory to commercialisation”.

Companies raised US$31.4 billion in the first half of the year in Hong Kong through follow-on offerings, including share placements and equity-linked debt issuances like convertible bonds, up from US$27.9 billion in 2024, according to data compiled by Dealogic.

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Hong Kong stocks waver as investors wait for policy clarity from China’s Politburo meeting

https://www.scmp.com/business/china-business/article/3319075/hong-kong-stocks-waver-investors-wait-policy-clarity-chinas-politburo-meeting?utm_source=rss_feed

Hong Kong stocks fluctuated between gains and losses on Tuesday as investors awaited a high-level government meeting in China that may set the policy tone for the second half.

The Hang Seng Index rose 0.1 per cent to 24,996.73 as of 10.07am local time. The Hang Seng Tech Index was little changed.

On the mainland, the CSI 300 Index and the Shanghai Composite Index both slipped 0.1 per cent.

Hansoh Pharmaceutical Group gained 3.5 per cent to HK$37.15, and Kuaishou Technology rallied 3.2 per cent to HK$73.80. On the downside, New Oriental Education and Technology slid 3.9 per cent to HK$37.15, and Li Auto retreated 2.3 per cent to HK$120.

Investors are waiting for fresh catalysts that can extend the run-up that drove the Hang Seng Index to the highest level in more than three years. Eyes will be on a Politburo meeting later this month convened by President Xi Jinping, which will offer more insights into how the government will steer the world’s second-largest economy amid tariff strife and the struggling property market.

Expectations are rife that policymakers at the conference will reiterate the case for cutting unneeded capacity in emerging industries including solar panels, electric vehicles and lithium batteries.

Other major Asian markets were mixed. Japan’s Nikkei 225 climbed 0.2 per cent as trading resumed after a public holiday to react to the ruling Liberal Democratic Party’s historical setback in the upper-house election. South Korea’s Kospi retreated 0.4 per cent, while Australia’s S&P/ASX 200 added 0.2 per cent.

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China’s fifth-gen J-35: rare close-up images suggest stealth jets ready for Fujian carrier

https://www.scmp.com/news/china/military/article/3319049/chinas-fifth-gen-j-35-rare-close-images-suggest-stealth-jets-ready-fujian-carrier?utm_source=rss_feed

Rare close-up images of two PLA Navy J-35 stealth fighters flying in close formation have surfaced online, giving the clearest view yet of China’s next-generation carrier-based aircraft.

A military observer said the markings and flight characteristics offered the strongest evidence yet that the J-35 had entered production and was approaching operational readiness for deployment aboard China’s latest aircraft carrier.

Unlike previously circulated ground-based photos, the latest images appear to be air-to-air studies in tight formation. Their clearly visible identification marks suggest the fifth-generation fighter jets have entered initial production, according to former People’s Liberation Army instructor Song Zhongping.

The images, which first began circulating on China’s X-like Weibo at the weekend, show the jets bearing clear “Chinese navy” markings on their fuselages and “Flying Shark” insignia on their tails – the strongest visual indication yet of formal naval integration.

These markings, along with the official serial numbers “0011” and “0012”, suggested the fighters were part of a low-rate initial production run, Song said.

“The Flying Shark insignia confirms the J-35 has joined the navy’s carrier aviation force,” he said. “It indicates the aircraft may have been in active service and is building combat and logistical support capabilities.”

Though the latest photos provide the clearest view, the J-35 itself is not an unfamiliar aircraft. Earlier prototypes have been spotted flying alongside J-15 carrier-based and J-20 stealth fighters, as well as early-warning aircraft, during rehearsals for a September 3 military parade in Beijing to mark the 80th anniversary of the end of World War II.

Earlier this month, a programme by state broadcaster CCTV featuring the J-15T at its production facility clearly showed at least two “green-primed” J-35 airframes in the background. The green primer layer is a coating used during the aircraft manufacturing process, before final painting and outfitting. The airframes were not blurred – in a departure from a technique frequently used by the PLA to prevent inadvertent exposure of advanced military technologies.

Earlier state media reports have also implied that the J-35 is operating in tandem with the J-15T fighter in a high-low capability pairing, moving towards a balanced carrier-based combat system.

The J-35 is expected to undergo extensive land-based training as well before being fully deployed aboard China’s newest and most advanced carrier.

There are widespread expectations that the J-35 will become the main fighter jet aboard the Fujian, China’s first carrier equipped with electromagnetic catapults designed to launch heavier aircraft with higher payloads.

The warship has undergone eight sea trials and is expected to enter service before the end of the year.

Military observers commenting on the latest J-35 photos on social media noted that neither aircraft featured traditional nose-mounted airspeed probes or “pitot tubes”. This typically indicated that the model had successfully completed its prototype and testing phases, and had entered formal production.

However, Song said that was not always a definitive indicator. “Modern airspeed systems no longer require traditional external pitot tubes [for testing]. Sensors can now be embedded internally, improving the fighter’s stealth capabilities and aerodynamic efficiency.”

He also downplayed online speculation about the significance of the two J-35s flying side by side, saying: “Flying two aircraft – a lead and a wingman – is the most basic tactical formation. It’s standard procedure.”

The emergence of the high-definition images of fully painted operational J-35 models marks a significant step forward for the PLA’s naval fighter programme. It places China alongside the United States as the only countries operating two distinct fifth-generation stealth fighters, with at least one variant capable of carrier-based operations.

For China they are the J-20 land-based and J-35 carrier-capable jets, while the US has the land-based F-22 Raptor and the F-35 Lightning II multirole fighters including the carrier-capable F-35C.

The carrier-based J-35 and the land-based J-35A for the PLA Air Force both stem from the earlier FC-31 demonstrator but have evolved into specialised platforms that significantly enhance China’s military aviation capabilities.

China ‘military officer’ dates man for 8 years, vanishes with US$91,000 for home makeover

https://www.scmp.com/news/people-culture/trending-china/article/3318421/china-military-officer-dates-man-8-years-vanishes-us91000-home-makeover?utm_source=rss_feed

A Chinese factory worker was left heartbroken and financially devastated after his fiancée, who claimed to be a military officer, vanished after allegedly fleecing him and his family out of 650,000 yuan (US$91,000).

The 30-something man, surnamed Ji, who had only met the woman a handful of times over an eight-year period, had been under pressure from his parents to get married.

He worked at a car factory in Chengdu, Sichuan province, in southwestern China, and met a woman who uses the pseudonym “Li Hua” through an online dating app in late 2018.

Li claimed to be a “military officer” serving in the Armed Police Force in Dujiangyan City, also in Sichuan province.

In late 2018, Li introduced Ji and his parents to her supposed family in Chishui, Guizhou province, also in southwestern China, where the marriage was “basically decided”.

By 2020, they had even taken wedding photos together.

However, the couple had reportedly only met “four or five times”, usually for brief lunch dates in Dujiangyan before she would rush back to “her unit”.

The deception centred on financial exploitation.

Li claimed to have bought a four-bedroom flat and persuaded Ji that while she would cover the cost of the property, he should pay for the renovation.

She continued to extract money under various pretexts, including wedding banquet expenses, raising pigs, and her parents’ illness and credit card debt.

Altogether, Ji and his family, who are farmers and had saved up for his marriage, transferred more than 650,000 yuan to her.

Ji said: “I was just too trusting of her.”

Meanwhile, Li strictly forbade Ji from posting any photos of them online, insisting that her military identity needed to remain confidential.

She also refused to show him her identity documents, again citing security reasons.

“She kept saying everything was classified. Every time I asked about her personal details, she just told me they were confidential,” said Ji.

She also made excuses when Ji suggested visiting her hometown or discussing wedding plans.

The elaborate deception finally unravelled when Ji and his father visited the flat that Li Hua had claimed to own, only to find the unit locked.

The building’s property management confirmed that no one named Li Hua was registered as an owner in the complex.

In January, Ji reported the case to the police, and in February, a criminal investigation was launched.

Police confirmed that Li is currently untraceable and has been placed on an online wanted list.

The incident, reported by Red Star News, sparked widespread discussion on mainland social media.

One person said: “What a patient scammer, dragging the scam out for eight years!”

“This is killing me. It is the first time I have ever heard of a woman impersonating a military officer to scam someone into marriage!” said another.

While a third wrote: “Eight years, only met four or five times, and they still got to the point of talking about marriage? That is impressive.”

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Can China pass on-the-ground tests to ace its economic report card in 2025’s second half?

https://www.scmp.com/economy/china-economy/article/3319025/can-china-pass-ground-tests-ace-its-economic-report-card-2025s-second-half?utm_source=rss_feed

Having gone five years without a raise, and now facing increased odds of being laid off, a 36-year-old accountant in the southwestern Chinese city of Chengdu is among those feeling a disconnect between robust headline economic figures and the day-to-day reality.

Justin Li has been struggling to make ends meet since the onset of the pandemic. Since then, his monthly salary of 7,000 yuan (US$975) has not changed. And now, as his company undergoes a round of lay-offs, his dream of buying a home seems more distant than ever.

“With my current income, I don’t dare take on a mortgage,” said Li, who relies on rental housing to provide a home for his wife, mother and one-year-old daughter. “What if I lose my job one day? The job market is weak right now – there’s too much unknown about the future.”

Last week, when Beijing delivered its midyear economic report, a better-than-expected growth rate of 5.3 per cent in gross domestic product (GDP) showed how China’s economy remained resilient in the face of various headwinds, including an unprecedented trade war with the United States.

While it is widely believed that Beijing will not allow its “around 5 per cent” GDP growth target to be missed for the full year, risks lurking beneath the rosy headline figures – from sluggish consumer confidence and persistent deflationary pressure to a protracted property slump and trade uncertainty – are fuelling concerns of a second-half slowdown and prompting growing calls for stronger policy support.

“We need to distinguish between official economic data and how households and businesses actually feel,” said Chen Zhiwu, chair professor of finance at the University of Hong Kong.

“What people are feeling is a different world from the rosy data in the first half.”

He noted that the disconnect between macro figures and on-the-ground sentiment was likely to persist in the second half of the year amid persistent headwinds, and he stressed the need to give people a sense of security about their jobs and assets.

“The property market will likely remain in a state of limbo in the next half, while consumption could come under pressure from new austerity measures,” he said. “Export uncertainties remain, but the pressure is expected to ease from the US, with some rebound likely in industrial production and manufacturing.”

China’s exports, one economic bright spot last year amid sluggish domestic demand, weathered trade headwinds in the first six months of 2025 with a 5.9 per cent increase – largely supported by front-loaded orders and gains in other markets that offset a contraction in shipments to the US.

However, analysts from Nomura, led by Lu Ting, warned in a note last week of “a sharp export slowdown” in the second half, citing “notable payback from prior front-loading, still-high tariffs, the withdrawal of tariff exemption for small parcels, and the late US efforts to crack down on transshipments”.

The trade war between the world’s two largest economies escalated to an unprecedented level earlier this year. While tensions have temporarily eased following rounds of trade talks, Chinese goods are still facing an effective US tariff rate of over 40 per cent, according to estimates by investment banks.

To counter heightened external uncertainty, Beijing has doubled down on boosting domestic consumption, ploughing 300 billion yuan (US$41.8 billion) worth of support into its massive trade-in programme.

At multiple meetings last week, China’s leadership reiterated how boosting domestic demand was a strategic priority, urging more in-depth and practical research into it, with a strong emphasis on turning findings into “actionable results”.

Efforts so far appear to be paying off, with official data showing that consumer spending contributed to 52 per cent of the nation’s economic growth in the first half of the year, compared with 44.5 per cent in 2024.

But economists, including central bank adviser Wang Yiming, have cautioned that consumption depends on people’s expectations for future earnings, making it unlikely to see a sharp increase in the short term.

“The multiplier effect of the consumption trade-in programme, which so far focuses only on durable goods, would also wane over time,” analysts from Morgan Stanley, led by Robin Xing, said in a note last week.

With the subsidy programme now appearing to be losing momentum, there are growing calls for the government to give greater weight to long-term structural reforms, supporting consumption in a more sustainable way – such as by raising household incomes through stabilising employment and strengthening the social safety net.

“Weak income growth is a major obstacle to consumption recovery,” Larry Hu and Zhang Yuxiao, from investment bank Macquarie, said in a research note last Tuesday.

According to the National Bureau of Statistics, the country’s household disposable income grew in nominal terms by 5.3 per cent, year on year, in the first half of 2025 – the slowest pace in three years.

Norah Wan, who works at a Shanghai-based consultancy firm, said job-hopping is usually common in her industry, but this year she has seen much less turnover among her peers.

“The current environment doesn’t give people much motivation to switch jobs,” she said. “In today’s job market, you might end up with a lower pay level than what you’re getting now.

“So, most people would rather hold on to their current position and keep going.”

Ding Shuang, chief Greater China economist at Standard Chartered, said that, within overall domestic spending, service consumption remains a bright spot, stressing that its growth “has come without the support of consumption subsidies”.

Unlike durable goods, for which demand tends to shrink after single purchases, services-based consumption could generate more consistent momentum. In the first half of the year, service retail sales grew by 5.3 per cent, year on year, accelerating by 0.3 percentage points from the first quarter and slightly outpacing the 5 per cent expansion in overall retail sales, according to the National Bureau of Statistics.

“If the remaining subsidies for this year can be fully utilised in the second half – or even partially directed toward supporting service consumption – then consumption should continue to make a steady and sustained contribution to the economy this year,” Ding said.

“Compared with consumption, we believe the greater risks lie in external trade and property investment in the next half.”

Data from the first half of the year shows that China’s prolonged real estate downturn has yet to bottom out, with property investment falling 11.2 per cent, a deeper contraction than the 10.7 per cent decline recorded in the first five months.

Analysts from the China Finance 40 Forum, a think tank comprising senior Chinese regulators and financial executives, said in a note on Monday that, with the impact of the trade-in programme waning, new areas of focus were needed to boost domestic demand.

“By comparison, urban renewal is one of the few areas that is both urgently needed and capable of shifting the macro landscape at scale,” they wrote. “It could serve as a breakthrough point to expand government-led public investment.”

Last week, China’s top leadership held a high-level Central Urban Work Conference – the first such meeting since late 2015 – where officials vowed to intensify efforts to create a “new model” for China’s property development, with renovations of urban villages and repairs to dilapidated housing among the focal points.

The prolonged property market slump has also continued to weigh on China’s deflationary pressures – a concern widely flagged by economists – dragging nominal GDP growth in the second quarter down to 3.9 per cent.

“[The] nominal GDP growth suggests deflation remains the key threat,” said analysts from ANZ bank in a note last week. “The leadership will have to fine-tune the countercyclical policy to rebalance and reflate the economy.”

Earlier this month, Beijing addressed “disorderly low-price competition” during a meeting of the Communist Party’s highest economic policymaking body, but analysts from Morgan Stanley said they remain “cautious” about the effectiveness of this “anti-involution” campaign, citing broader overcapacity across industries and more limited fiscal space for demand-side stimulus.

“The front-loaded nature of government bond issuance, year to date, means that the fiscal impulse would fade in the second half, especially compared with a high base last year,” they noted.

This year, China has set its highest deficit ratio at 4 per cent, allowing for more government spending than under the traditional 3 per cent. The ultra-long-term bond issuance target was also raised 30 per cent, from 1 trillion yuan last year to 1.3 trillion yuan, to continue the consumer trade-in and equipment-upgrade programme introduced last year.

From January to May, China’s broad fiscal spending reached 14.51 trillion yuan, up 6.6 per cent from a year earlier, analysts from China Minsheng Bank said in a note on July 13, citing Ministry of Finance data.

In comparison, there was still more than 7 trillion yuan in broad fiscal space left for the country in the second half, according to their estimate.

They also noted that 89.8 per cent of this year’s 2 trillion yuan debt-swap quota was filled by the end of June, as part of China’s 12-trillion-yuan debt-swap plan rolled out in late 2024 to ease repayment pressure on local governments.

Last year, the economy began with a robust 5.3 per cent year-on-year expansion in the first quarter, but momentum faltered in the second quarter as growth slowed to 4.7 per cent. It cooled further to 4.6 per cent in the third quarter, prompting a policy pivot towards a stimulus package in September.

While the market is speculating whether Beijing will unveil a stimulus package similar to September’s amid economic headwinds, experts are tempering expectations.

“This year’s figures have so far held up well, and the situation is not comparable to last year, when the economic slowdown had already set in by the latter part of the second quarter,” Ding said. “Stimulus measures are typically introduced only when there is a clear downturn in the real economy, so there is less urgency this time around.”

Analysts from Macquarie added: “A further growth slowdown is plausible in the coming months. But how big will it be? No one knows for sure, because it’s largely determined by the events in Washington.”

“Tariffs will not change the 5 per cent annual growth, but will only change how Beijing achieves that growth,” they added.