• South China Morning Post journalist awarded Hong Kong Baptist University fellowship
• China extends funding programme to lure top young scientists from overseas
• China invites descendants of US Flying Tigers who fought Japan to mark end of World War II
• China’s Starlink rivalry, US-India tensions casting doubt over Quad: SCMP daily highlights
• China’s mammoth merger of shipbuilders nears – and so do the industry implications
• Chinese tourists offered visa-free entry to South Korea from September
• China ‘Bulldozer Hero’ saves over 100 flood victims during heavy rain that lashes Beijing
• Sit down, Spot: Robot dog from China’s Unitree tops Boston Dynamics rival in payload
• Will a free year of preschool entice parents to procreate? China bids to boost births
• China calls for halt to ‘dangerous’ Gaza siege as Israel weighs full takeover
• Chinese and Russian navies patrol the Pacific after wrapping up joint military drills
• HSBC to keep the highest yield among Greater China region’s banks, JPMorgan analysts say
• BYD’s commanding lead in Sri Lanka, Tesla’s comeback bid in China: 7 EV reads
• OpenAI’s release of open-source models seen as challenge to China’s lead in the field
• A booming coffee class and zero-tariff policy drive China’s push for African bean imports
• China’s campaign to ease local government debt scores first big win in Inner Mongolia
• Handling of teen bullying case sparks tension and arrests in southwestern Chinese city
• China’s AI-powered drug firm XTalPi surges on US$6 billion deal with Harvard entrepreneur
• China’s rocket shortage means it may have to pick a favoured candidate to take on Starlink
• How China has taken lead in rare earths race
• China’s economists weigh pros and cons of consumption benchmarks
• China girl with heart infection wakes up from coma when shown college acceptance letter
• Work on China-backed Afghan copper mine gains pace after 17 years but old fears linger
• EU biofuel proposals risk discriminating against firms from outside the bloc: China’s EcoCeres
• ChinaJoy 2025: Tencent, Huawei and smaller studios leverage AI to boost video gaming
• For the US, it’s Mountain Pass – or fail – in bid to supplant China’s rare earth supremacy

South China Morning Post journalist awarded Hong Kong Baptist University fellowship

https://www.scmp.com/news/hong-kong/education/article/3321001/south-china-morning-post-journalist-awarded-hong-kong-baptist-university-fellowship?utm_source=rss_feed

Hong Kong Baptist University (HKBU) has awarded a fellowship to a South China Morning Post senior correspondent in a one-of-its-kind programme designed to raise industry standards for journalists working in the city.

Natalie Wong, who specialises in political news at the Post, was among three journalists selected for the Professional Journalism Fellowship programme on Wednesday.

The trio will take a funded absence from work to attend undergraduate or postgraduate courses as auditors for one or two semesters in the coming 2025-26 academic year to broaden their horizons before returning to their newsrooms.

The university’s Professor Raymond Roy Wong, known as the “Godfather of Journalism” and the sponsor of the programme, said the initiative provided the fellows with an opportunity to reflect on their professional and personal growth at a time when the media sector was facing challenges.

“The global media industry is facing unprecedented challenges, ranging from the disruptive influence of artificial intelligence and the proliferation of misinformation to intense competition on social media platforms,” he said.

“Media professionals should demonstrate adaptability, innovation and critical thinking skills. I hope that the fellows will fully embrace their time at HKBU, seizing this opportunity to expand their knowledge, hone their skills, and reflect on their professional and personal growth, so they are well-equipped to meet the evolving challenges upon their return to the newsroom.”

Natalie Wong is the Post’s third award-winning journalist to receive the fellowship after news editor Denise Tsang and senior correspondent Laura Zhou in 2022.

With about 15 years of experience largely in political news, she has won multiple journalism awards, including for a series of exclusive stories on the controversy surrounding a Dubai prince who shelved plans to open a family office in Hong Kong.

Twelve fellows have taken part in the annual programme, an initiative launched and paid for by the Dorothy Shen Wong Memorial Fund, since its debut in 2022.

The fund was created by Wong, who gave HK$50 million (US$6.4 million) to the university’s school of communication and film in 2020, the largest donation the faculty has received, in memory of his late wife and to support journalism education.

Wong holds an honorary doctorate degree in social sciences from the university, where he is also an honorary fellow and an honorary permanent president of its foundation.

The three fellows will be granted a stipend commensurate with their respective incomes and levels of journalistic experience.

Professor Raymond Li, chair of the programme and head of university’s department of journalism, said this year’s fellows had diverse backgrounds and extensive experience, with reporting expertise covering local society, politics, culture, sports and China’s macroeconomy.

“Their unique practical experience will expose our students to fresh perspectives, innovative thinking and critical insights into the latest developments and emerging trends in the journalism industry, inspiring them to pursue careers in journalism in the future,” he said.

The two others taking part in this year’s fellowship are Shao Zhijie, a journalist at BBC Chinese, and Cissy Zhou, a senior business correspondent at Nikkei Asia.

China extends funding programme to lure top young scientists from overseas

https://www.scmp.com/news/china/science/article/3320920/china-extends-funding-programme-lure-top-young-scientists-overseas?utm_source=rss_feed

China is ramping up its campaign to lure top young scientists from abroad, extending a major funding programme for a second round – a move that could be partly aimed at US-based researchers facing budget constraints.

The National Natural Science Foundation of China (NSFC) – the top funder of basic research – last week issued an additional call for applications for the Excellent Young Scientists Fund (Overseas) following its first round earlier this year.

Since its launch in 2021, the programme has awarded individual grants of 1 million to 3 million yuan (US$140,000 to US$418,000) to thousands of scientists – born in China or overseas – under the age of 40. Applicants must have at least three years of postdoctoral experience abroad and commit to a full-time position at a Chinese institution.

The additional round this year aimed to “improve China’s talent funding system, better use science grants to attract and support researchers, and bring more outstanding young researchers from overseas to work in China”, the NSFC said in a statement on its website on July 30.

In the United States, early-career scientists have been contending with shrinking federal support and deepening uncertainty since Donald Trump’s return to the White House.

Major funding agencies, including the National Science Foundation (NSF), have been told to slash overheads – the indirect expenses that cover lab space, infrastructure and administrative support, which are often closely tied to postdoctoral research.

In some cases, funding has been suspended for political reasons. Last week, the University of California, Los Angeles joined Duke and Columbia in having hundreds of grants frozen over White House accusations that it had failed to “promote a research environment free of antisemitism”.

According to Grant Witness – a volunteer project tracking federal science cuts under the Trump administration – the NSF has terminated more than 2,600 grants, totalling US$1.37 billion. The National Institutes of Health has reportedly lost over US$2 billion in federal support.

Following the new NSFC call for funding applications, top Chinese universities like Peking and Zhejiang – both leading host institutions in past rounds – have reposted the announcement on social media, inviting overseas researchers to apply through their campuses.

Peking University, for example, is offering incoming researchers “internationally competitive” salaries, performance-based bonuses, and access to departmental and philanthropic funding, according to its social media post on Monday.

It also promised strong lab infrastructure, housing subsidies and “rare access to elite K-12 education” for faculty children – resources that are often hard to secure in cities like Beijing.

According to past university policies, successful applicants have also received faculty appointments and matching research grants – incentives rarely seen in early-career recruitment elsewhere.

Meanwhile, the future of US research funding remains uncertain. The House’s 2026 budget proposal for NSF would cut its funding to around US$7 billion, a 23 per cent drop from 2025. The Senate version would keep it near US$9 billion.

The Trump administration’s own request, released in May, called for a dramatic 57 per cent cut, reducing the NSF’s budget to just US$3.9 billion. Final decisions are not expected before this autumn.

China invites descendants of US Flying Tigers who fought Japan to mark end of World War II

https://www.scmp.com/news/china/diplomacy/article/3320949/china-invites-descendents-us-flying-tigers-who-fought-japan-mark-end-world-war-ii?utm_source=rss_feed

China has invited descendants of the American Flying Tigers to Beijing for the commemoration of the end of World War II, according to people familiar with the situation.

A source said they include Cynthia Chennault, the daughter of Claire Lee Chennault who commanded the volunteers who helped in China’s fight against Japan, and one of his granddaughters, Nell Calloway.

The Flying Tigers, officially known as the American Volunteer Group, were a group of pilots who were hired to fight for China – then under the rule of the Nationalists – against the Japanese invasion.

The Tigers fought the better-equipped Japanese air force over the skies of China and Southeast Asia between late 1941 and the summer of 1942, when they were formally incorporated into the US Air Force to continue the fight.

The invitations were extended under the name of the National People’s Congress, China’s legislature, and the Chinese People’s Association for Friendship with Foreign Countries, a semi-official body set up to improve relations with other countries, the source said.

Jeffrey Greene, chairman of the non-profit Sino-American Aviation Heritage Foundation, said he and his wife Katherine have also been invited to attend the official events in the Chinese capital “on September 2 and 3 commemorating the Chinese and Allied victory in the Second World War”.

China announced in June that it would hold a series of events to commemorate the 80th anniversary of the end of the conflict.

These will include a military parade in Tiananmen Square on September 3, an event foreign visitors will be invited to watch, according to the source.

Wu Zeke, deputy head of the operations bureau at the Central Military Commission’s Joint Staff Department, said the parade was intended to highlight the historical significance of the war of resistance against Japanese aggression – China’s preferred term for the conflict – and Beijing’s will to “resolutely defend” the post-war order.

China held its first Victory Day parade in September 2015, featuring thousands of troops, when more than 100 foreign guests or relatives of veterans from 15 countries were honoured.

That included US veterans who fought with the Chinese people in defending the invasions of the Japanese in the 1940s, as well as families from Canada and Russia.

This year’s commemoration takes place at a tense time in the relationship between China and the United States.

Beijing has increasingly looked to the Flying Tigers and other similar examples of historical cooperation as a way of improving relations today – particularly people-to-people exchanges, which have largely stalled since the pandemic.

Last month Xie Feng, China’s ambassador to the US, sent a video message to a group of American students and teachers visiting the western region of Xinjiang, telling them the spirit of the air corps “embodies the courage and commitment of China and the US in defending peace”.

“It remains a cherished legacy of both China and the United States – past, present, and future,” he said.

China’s Starlink rivalry, US-India tensions casting doubt over Quad: SCMP daily highlights

https://www.scmp.com/news/china/article/3320991/chinas-starlink-rivalry-us-india-tensions-casting-doubt-over-quad-scmp-daily-highlights?utm_source=rss_feed

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

As China scrambles to build massive internet networks in space to rival Starlink, a growing divide is quietly emerging on the ground between national priorities and local ambition.

China spent decades carving out a commanding lead in the rare earth realm. Now the US wants its old piece of the supply chain back – is it still within reach?

A joint naval flotilla from China and Russia began its sixth Pacific patrol on Wednesday after concluding combat drills near Vladivostok, according to a Wednesday report by the People’s Liberation Army Daily.

As trade tensions between Washington and New Delhi escalate, an anticipated high-profile visit of US President Donald Trump to India this fall is now clouded by uncertainty.

China recorded a surprise rebound in marriage registrations in the second quarter as a new policy making it easier for couples to tie the knot kicked in, raising hopes that the government’s efforts to mitigate the country’s demographic decline may be starting to show results.

As Beijing gathers public input on China’s next five-year plan – a mission statement for the next half-decade of economic and social policy – how best to bolster domestic consumption has emerged as a topic of considerable debate as the country seeks new avenues for growth amid a murky landscape for global trade.

China is reaching out to Africa’s top coffee-producing nations as part of a broader strategy to secure new supply chains overseas.

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China’s mammoth merger of shipbuilders nears – and so do the industry implications

https://www.scmp.com/economy/china-economy/article/3320981/chinas-mammoth-merger-shipbuilders-nears-and-so-do-industry-implications?utm_source=rss_feed

China’s two major shipbuilders appear to be mere days from completing a merger that will form the largest publicly listed shipbuilding company in the world.

The China Shipbuilding Industry Company announced that Tuesday will be the final trading day for its shares before the company is absorbed by China CSSC Holdings.

Analysts have deemed the move a strategic masterstroke in Beijing’s broader industrial and military ambitions, particularly as the United States increasingly views China as a rival in multiple sectors.

“This merger marks the largest strategic restructuring in China’s shipbuilding history, aimed at optimising resource allocation and enhancing competitiveness in the global market,” said Xu Yi, an analyst at Haitong Futures.

She explained that the merger, which covers the three core businesses of military equipment, commercial vessels and marine engineering, will focus on phasing out low-efficiency docks while concentrating on high-end vessels.

CSSC Holdings, the combined entity, will offer a comprehensive range of business operations, with total assets exceeding 400 billion yuan (US$55.6 billion) and annual revenue surpassing 130 billion yuan, Founder Securities said in a July note after the merger was greenlit by the Shanghai Stock Exchange.

When unveiling the merger terms in September, the two companies noted that the merger was intended to further align with national strategic priorities, strengthen support for military development, and better regulate intra-industry competition.

This merger continues China’s shipbuilding industry consolidation, following the 2019 merger of China State Shipbuilding Corporation and China Shipbuilding Industry Corporation into the China State Shipbuilding Group, the parent company of the two listed shipbuilders.

Compared with 2019, shipbuilders now face growing demand as the global fleet enters a phase of renewal and upgrading, driven by the shipping industry’s decarbonisation efforts and shift toward clean energy, said Wu Jialu, chief analyst of industrial research at Citic Futures.

With demand growing, and as Chinese shipbuilders have been bridging the gap with their major competitor, South Korea, the merger can strengthen China’s advantage, Wu said.

Given that the US has repeatedly raised concerns about China’s dominance in shipbuilding, which is closely linked to naval development, the merger may trigger further worries, adding to Washington’s planned port fees on Chinese-built or -operated vessels set to take effect in October.

China still secured more than half of the world’s new vessel orders in the first half of this year, but its share dropped from around 70 per cent a year earlier, as buyers grew cautious due to the threat of US port fees.

A previous commentary from a US think tank, the Centre for Strategic & International Studies, has warned about the threat posed by China’s shipbuilding industry, calling for allied nations to share concerns and assess the risks of procuring vessels from Chinese dual-use shipyards, which have “deep ties” with China’s military industrial complex.

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Chinese tourists offered visa-free entry to South Korea from September

https://www.scmp.com/news/china/diplomacy/article/3320983/chinese-tourists-offered-visa-free-entry-south-korea-september?utm_source=rss_feed

South Korea has rolled out a temporary visa waiver programme for Chinese tour groups in the latest effort to help thaw frosty relations as the two countries navigate fragile bilateral ties.

Starting September 29, members of Chinese tour groups will be allowed to enter South Korea visa-free until June 30, 2026, the office of Prime Minister Kim Min-seok said on Wednesday.

It marked the first time that South Korea allowed travel visa exemptions for Chinese tour groups, regardless of point of entry. Previously, only Jeju Island offered such access, allowing group visitors visa-free stays of up to 30 days.

“With South Korea’s inbound tourism market recovering rapidly, the implementation of this visa waiver programme is expected to help boost demand for travel to Korea, revitalise regional economies and fuel domestic consumption,” a government official said, according to the Seoul-based Yonhap News Agency.

Chinese nationals made up the largest group of overseas tourists travelling to South Korea, with about 2.5 million arrivals in the first half of this year, according to The Korea Herald, citing the Korea Tourism Organisation.

Last November, Beijing announced a unilateral visa-free policy for South Korean nationals, allowing them to stay in China for up to 15 days until the end of this year.

The measure drove strong growth in South Korean travel to China, with passenger traffic from last November to March up 20.4 per cent, to 5.7 million visits, according to the Ministry of Land, Infrastructure and Transport in Seoul.

Tourism has acted as one of the barometers of the relations between the two Asian countries.

After Seoul’s decision to allow the deployment of the US-made Terminal High Altitude Area Defense (THAAD) system in 2017, Beijing imposed curbs on group tourism to South Korea until 2023, when outbound group travel to the Asian neighbour was resumed.

Beijing had objected to the deployment, arguing that the United States could use the system’s radar to spy on China.

The latest move by Seoul came after new South Korean President Lee Jae-myung took office with a pledge to recalibrate his country’s relationship with China – its largest trading partner – which had deteriorated under his predecessor Yoon Suk-yeol.

Chinese President Xi Jinping is expected to visit South Korea for the Apec summit to be held in the coastal city of Gyeongju from October 31 to November 1.

Still, distrust towards China appeared to run deep.

Last month, the Chinese embassy in South Korea issued a safety advisory amid growing anti-China protests near its compound in Seoul.

In an interview with The Washington Post published on Sunday, South Korean Foreign Minister Cho Hyun said that China had become “somewhat problematic with its neighbors”.

In response, China’s embassy in Seoul issued a statement on Monday, stressing that China maintains good relations with all of its neighbours and that the two sides have maintained positive engagement to boost bilateral relations.

On Tuesday, the South Korean presidential office also tried to clarify its China policy, stating that Seoul was working on advanced bilateral ties with China “even if there are differences on certain issues”, Yonhap reported, citing an anonymous official with the office.

China ‘Bulldozer Hero’ saves over 100 flood victims during heavy rain that lashes Beijing

https://www.scmp.com/news/people-culture/environment/article/3320244/china-bulldozer-hero-saves-over-100-flood-victims-during-heavy-rain-lashes-beijing?utm_source=rss_feed

A Beijing man has earned the nickname “bulldozer hero” after he used his digger to rescue more than 100 people from heavy rainfall and floods.

China’s capital and its neighbouring provinces suffered heavy rainfall in the past week, which reportedly took 30 lives.

Beijing Daily reported that the rainfall lasted 147 hours, during which the city received 40 per cent of its annual precipitation.

As the total amount of rain was increasing to more than 300 millimetres in Beijing’s Miyun County, the government sent rescuers to evacuate residents.

On July 28, Wang Tianyu, the 35-year-old owner of a construction company, was woken up by a phone call from his friend, seeking his help to save his elderly family who were trapped in a village.

Wang immediately drove his company’s bulldozer to the village and picked up his friend, street vendor Wang Chong, on the way.

Wang said the water level in the village was at least a metre high.

The pair picked up villagers they saw along the way. Many climbed to rooftops, and they lifted the bulldozer’s arm and caught them with the bucket.

Wang said they carried more than 100 people with the bulldozer; the biggest group was of 10 people at one time, and at least two people each time.

They also worked with firefighters, carrying them around the flooded area to assess the situation.

While firefighters tried to save villagers, they were stopped by the rapidly flowing water. Wang also volunteered to stop the torrents momentarily with the bulldozer’s bucket, buying time for the firefighters.

A fire station chief, Zang Hui, said the bulldozer had done them a big favour, allowing them to evacuate many people in time.

Wang said he was scared after the rescue because his bulldozer almost got washed away by the flood several times. The water also flowed into the driver’s cabin.

He worked nonstop from 6am to 7pm that day. Like him, many parts of his bulldozer were worn out.

Wang Tianyu has been named “bulldozer hero” for his deeds.

Wang Chong said they saw at least another 15 bulldozers in the village that helped with the rescue.

“The flood was merciless but people are compassionate,” said one online observer.

“These bulldozer drivers are Beijing’s Band of Brothers,” said another.

Sit down, Spot: Robot dog from China’s Unitree tops Boston Dynamics rival in payload

https://www.scmp.com/tech/article/3320940/sit-down-spot-robot-dog-chinas-unitree-tops-boston-dynamics-rival-payload?utm_source=rss_feed

Unitree Robotics introduced a quadruped robot that can hold as much as 100kg, albeit only when stationary, as Chinese companies continue to challenge Western rivals on both price and performance.

Called the A2, the robot dog can withstand an adult standing and even hopping on it, according to a video published by the company on social media on Tuesday.

When in motion, the unit’s payload falls to 25kg, but that outperforms rival four-legged robot Spot from US-based Boston Dynamics, which has a maximum payload of 14kg, according to specifications. Unitree said the A2 was suitable for “logistics, industrial inspection and emergency rescue” in “extreme and complex environments”.

Constructed from aluminium alloy and high-strength engineering plastic, the machine was designed for demanding environments, Unitree said. In the video, the dog somersaults down stairs, hops on two legs, spins while supporting itself on one leg and rushes down steep slopes.

The unit could operate for three hours when fully loaded, which could extend to five hours when unencumbered, Unitree said. Spot has an average runtime of one and a half hours and a standby time of three hours.

Both models can operate in temperatures between minus 20 and 55 degrees Celsius, but the A2 can climb a slope of 45 degrees, better than Spot’s maximum of 30 degrees.

Unitree did not disclose pricing, but the company sought to make robots more affordable. Last month, it launched a humanoid robot, R1, with a price of US$5,900, making it one of the cheapest offerings in the market.

The Hangzhou, Zhejiang province-based unicorn has made headlines several times this year as it gears up for an initial public offering, which would be the first mainland listing by a humanoid robot maker. In July, the company submitted tutoring documents to China’s securities regulator, a key compliance step before formally applying for a listing, which it said it planned to do by December.

Last month, Shanghai’s AgiBot said it would buy a controlling stake in publicly traded Swancor Advanced Materials, which would pave the way for a back-door listing. However, AgiBot said that was not its intent.

Will a free year of preschool entice parents to procreate? China bids to boost births

https://www.scmp.com/economy/china-economy/article/3320954/will-free-year-preschool-entice-parents-procreate-beijing-bids-boost-births?utm_source=rss_feed

China will waive tuition fees for children in their final year at public kindergartens from this autumn, as the country intensifies efforts to address its plummeting birth rate.

The move, part of a phased plan to make preschool education free, aims to “effectively lower education costs and improve the level of basic public education services”, the State Council, China’s cabinet, said on Tuesday.

Children enrolled in approved private kindergartens will also have their tuition fees reduced, with the amount based on the value of the fee exemption at public kindergartens in the same locality.

While parents will still have to pay other fees, such as meal expenses and administrative charges, the scheme is expected to offer welcome relief to families struggling with a weak labour market and a prolonged real estate slump that has eroded household wealth amid a slowing economy.

“These measures can be viewed as a continuation of previous consumption policies,” said Ding Shuang, chief Greater China economist at Standard Chartered Bank, adding that they are a step in the right direction even if their impact remains uncertain.

Kindergartens will be provided with subsidies to offset the loss of tuition revenue from the new policy, with funding to be shared by the central and local governments.

Beijing will fund at least half, and up to 80 per cent, of the total cost, depending on the fiscal strength of the locality, according to guidelines released by the State Council.

The announcement did not give an estimate for the total cost of the scheme or the average amount each family could be expected to save.

Last week, China announced a childcare cash subsidy – the first of its kind at a national scale – offering parents 3,600 yuan (US$501) a year for each child under the age of three.

The new policies are being introduced as China confronts a ticking demographic time bomb of a declining birth rate and a rapidly ageing population.

“While the birth rate is probably not something that can be changed by just one or two measures, these measures can marginally reduce the cost of having and raising children,” Ding said.

China is one of the most expensive countries in the world to raise children in relative terms, according to a report issued last year by the Beijing-based YuWa Population Research Institute. It said the average cost of raising a child to the age of 18 in China was 538,000 yuan, over six times the country’s per capita gross domestic product.

The country’s population fell by 1.39 million last year – the third consecutive year of decline – despite a slight uptick in births as some parents sought to have children born in the auspicious Year of the Dragon.

And even then, the 9.54 million babies born last year were only slightly over half the number in 2016, when Beijing relaxed its strict, decades-long population planning policies.

Kindergartens across the country are also being forced to close their doors as the birth rate falls. The Ministry of Education said in June that there were 253,300 kindergartens in China last year, with the number down 7.7 per cent year on year.

China calls for halt to ‘dangerous’ Gaza siege as Israel weighs full takeover

https://www.scmp.com/news/china/diplomacy/article/3320946/china-calls-halt-dangerous-gaza-siege-israel-weighs-full-takeover?utm_source=rss_feed

China has called on Israel to “immediately halt” its actions in the Gaza Strip while urging greater unity among Arab countries over the Palestinian territory, amid reports that Israel’s prime minister and top security officials are weighing a full occupation of Gaza.

A complete takeover, which reportedly would include areas where hostages might be held, would be a dramatic escalation of Israel’s military operation, as a humanitarian crisis has deepened in recent weeks.

Local health authorities have reported people being killed or injured by Israeli gunfire while waiting for restricted aid deliveries as international experts have warned of famine. Israel has accused Hamas, which runs the Gazan government, of looting food and other items.

At a United Nations Security Council meeting on Tuesday, Geng Shuang, China’s deputy permanent representative to the UN, urged Israel to “immediately halt such dangerous actions”, which he said Beijing was deeply concerned about.

“Fully implementing the two-state solution and achieving Palestinian independence is the only viable path to resolving the Palestinian issue and preventing similar hostage crises in the future,” Geng was quoted as saying by state news agency Xinhua.

He also called for a binding and sustainable ceasefire agreement.

Israel’s security cabinet, which would need to approve a complete takeover of the territory, was due to meet on Thursday after Israeli Prime Minister Benjamin Netanyahu reportedly met on Tuesday with military leadership, according to Israeli media.

The Palestinian Ministry of Foreign Affairs condemned such a strategy and urged the international community to “intervene urgently to prevent their implementation, whether they are a form of pressure, trial balloons to gauge international reactions, or genuinely serious”.

Similar messages were reiterated by China’s special envoy for Middle East affairs in a meeting with ambassadors of Arab countries on Tuesday in Beijing.

“China supports greater unity among Arab countries and plays a greater role in addressing the Palestine issue,” said Zhai Jun, according to a statement from China’s foreign ministry.

The Palestinian issue had reached “a critical juncture”, the statement said, adding that Beijing called for an immediate ceasefire and unimpeded delivery of humanitarian aid.

“China is ready to work alongside Arab nations and the broader international community to achieve a comprehensive, just and lasting resolution to the Palestinian issue based on the two-state solution.”

The Integrated Food Security Phase Classification issued a dire warning in late July, stating that “the worst-case scenario of famine is unfolding” in Gaza, with starvation, malnutrition, and disease fuelling a surge in hunger-related deaths.

Additionally, the United Nations Children’s Fund (Unicef) reported last month that more than 320,000 children – every child under five in Gaza – were at risk of acute malnutrition, with thousands already suffering from severe acute malnutrition, the most life-threatening form of undernutrition.

The humanitarian crisis, coupled with frustration towards the Israeli government, has driven a new wave of countries to recognise an independent Palestinian statehood.

This week, France, the United Kingdom, Canada and Malta announced their plans to recognise a Palestinian state, which currently has observer status at the United Nations. So far, nearly 150 countries in the UN have recognised the Palestinian state, many doing so decades ago.

Most of the Middle East, Africa and Asia recognise Palestinian statehood. However, nations like the United States and other Western powers have refrained, maintaining that Palestinian statehood should be part of a final agreement addressing the long-standing Middle East conflict.

If France and Britain recognise a Palestinian state, the US would stand alone as the only permanent member of the UN Security Council that has not granted such recognition.

The two-state solution, envisioning the establishment of a Palestinian state alongside Israel in the West Bank, Gaza Strip and East Jerusalem – territories captured from Egypt by Israel during the 1967 “Six-Day War” – remains the internationally favoured path to resolving the conflict.

China was among the first nations to support the Palestinian National Liberation Movement, known as Fatah, and in 1988, Beijing officially recognised the state of Palestine.

Beijing solidified bilateral ties with the Palestinian territory in June 2023 with the establishment of a bilateral strategic partnership. China has also pledged to continue advocating for international recognition of the Palestinian state.

Last year, following talks in Beijing, rival Palestinian factions Fatah and Hamas signed an agreement aimed at ending their division and to set up an “interim national reconciliation government” to govern post-war Gaza.

Chinese and Russian navies patrol the Pacific after wrapping up joint military drills

https://www.scmp.com/news/china/military/article/3320944/chinese-and-russian-navies-patrol-pacific-after-wrapping-joint-military-drills?utm_source=rss_feed

A joint naval flotilla from China and Russia began its sixth Pacific patrol on Wednesday after concluding combat drills near Vladivostok, according to a Wednesday report by the People’s Liberation Army Daily.

In the final phase of the “Joint Sea 2025” exercise, which began on Sunday, the drills emphasised realistic combat scenarios, including joint manoeuvres, submarine rescue operations, air and anti-ship defence, anchorage security, and sea resupply, with live-fire drills.

PLA Daily reported that during the manoeuvres, the two navies established communication channels, exchanging real-time information on hydrography, weather, and air and sea surveillance.

On Tuesday, state broadcaster CCTV aired footage featuring Zhang Zhiyang, duty officer aboard the Chinese destroyer Shaoxing, who reported encounters with aircraft and ships from third countries during the voyage and drills.

This was the Shaoxing’s first overseas exercise. During the drills, the vessel transited through the Tsushima Strait into the Sea of Japan, or East Sea.

PLA Daily has published daily updates on the joint drills since they began, stating that the teams “operated efficiently, issuing combat tasks and making swift decisions”

According to the military newspaper, the joint flotilla on Monday received simulated enemy threats immediately upon arrival in the designated waters.

Crews aboard China’s Shaoxing and Urumqi destroyers and Russia’s Admiral Tributs and Sovershennyy warships took battle positions for joint air-defence exercises and intercepted mock aerial threats, according to the Wednesday report.

Later that night, shortly after anchoring, another simulated threat appeared on radar, with multiple high-speed surface targets approaching the ships, according to PLA Daily. It added that response teams had rapidly deployed precise and concentrated fire, neutralising the threat.

Footage released via CCTV depicted the Shaoxing’s main gun firing during anti-ship drills.

In the anti-submarine exercise, naval helicopters from both countries coordinated search patterns, while multiple maritime patrol aircraft monitored from above to form a surveillance network against underwater threats, according to PLA Daily.

On Tuesday, the newspaper reported on a deep-sea submarine rescue drill held near Vladivostok. A Russian submarine simulated distress by resting on the seabed, prompting a rescue request to China’s newly commissioned Xihu rescue ship.

The Chinese crew deployed side-scan sonar, rapidly locating the distressed submarine, and launched a deep-submergence rescue vehicle (DSRV). Within minutes, the DSRV docked with the Russian submarine’s rescue platform, completing the exercise, according to PLA Daily.

On the Chinese side, the exercise featured equipment and troops from the PLA’s Eastern and Northern Theatre Commands, according to earlier CCTV reports. These included the destroyers Shaoxing and Urumqi, the Qiandaohu replenishment ship, the Xihu rescue ship, fixed-wing aircraft, shipboard helicopters and marine corps units.

The Shaoxing is an advanced Type 052D destroyer, commissioned in March 2022. It specialises in regional air defence and anti-ship operations. The Urumqi, also a Type 052D destroyer, entered service in early 2018 and has taken part in missions such as escort duties and joint exercises.

The Qiandaohu, China’s first 10,000-tonne-class supply ship, commissioned in 2004, has completed multiple escort and international drill missions.

The Xihu, a newly commissioned 13,000-tonne rescue ship, is designed for advanced rescue, medical, and repair capabilities.

In addition to the Admiral Tributs anti-submarine destroyer and the Sovershennyy frigate, Russia also sent its Igor Belousov rescue vessel to take part in the drills.

This was the 11th edition of the annual “Joint Sea” drills. According to China’s defence ministry, this year’s exercise was aimed at “jointly responding to security threats in the western Pacific”.

This year’s joint exercise was held amid growing tensions in the region, fuelled in part by the US military’s deployment of its Typhon mid-range missile system in the Philippines – a move China and Russia view as altering the strategic balance in the Asia-Pacific.

HSBC to keep the highest yield among Greater China region’s banks, JPMorgan analysts say

https://www.scmp.com/business/banking-finance/article/3320935/hsbc-keep-highest-yield-among-greater-china-regions-banks-jpmorgan-analysts-say?utm_source=rss_feed

HSBC will retain the highest return to shareholders among lenders in the Greater China region, according to JPMorgan analysts, who have raised their price target for the bank’s shares twice since July.

The Hong Kong bank’s shares may advance to HK$122 by the end of 2026, JPMorgan said after raising its price target on August 1 from a July 22 revision of HK$118. The stock rose 0.2 per cent in a declining market to HK$96.50 in Hong Kong on Wednesday.

The 160-year-old bank, which traces its roots to Hong Kong and Shanghai, was likely to return between 9 per cent and 11 per cent to shareholders this year, the highest yield among banks in the region, said JPMorgan analysts Katherine Lei, Lincoln Yu, Chen Haomin, Kian Abouhossein, Sheel Shah and Benkat Madasu.

The bank booked a one-off loss of US$2.1 billion from its diluted stake in Bank of Communications (Bocom), which drove its second-quarter pre-tax profit to slide 29 per cent from a year earlier to US$6.33 billion, HSBC said on July 30. Interim pre-tax profit fell 26.5 per cent to US$15.8 billion in the six months ended June.

It announced a second-quarter dividend of 10 US cents per share and set aside US$3 billion to buy back its own stock over the next three months.

The dividend will not be derailed because HSBC retains a capital buffer by carrying US$14 billion in outstanding threshold deductions, compared to Bocom’s US$21 billion carrying value in the first half of the year. Any further impairment on Bocom below US$14 billion is expected to have a muted impact on HSBC’s capital, dividend payments or share buy-backs, according to JPMorgan.

Bocom was planning on raising 56.60 billion yuan (US$8.90 billion) through a private placement of shares, Reuters reported in March.

HSBC’s first-half revenue declined by 9 per cent to US$34.1 billion. Its return on tangible equity for the period stood at 14.7 per cent.

The fall in revenue was driven by asset disposals, interest rate cuts and subdued loan growth, according to the JP Morgan report. However, it said the bank’s fee income remained a bright spot, underpinned by strong performance in transaction banking and wealth management.

Regarding Hong Kong’s commercial property market, the report said HSBC’s exposure to risks from the sector was manageable despite identifying oversupply in office space as an ongoing challenge.

As Hong Kong’s new crypto bill came into effect on August 1, under which eligible institutions are allowed to issue fiat reserve-backed stablecoins, analysts in the report expected HSBC to position itself to facilitate different stablecoin wallets rather than becoming an issuer.

HSBC launched tokenised deposit services in May, allowing wholesale clients to make 24/7 cross-border transactions in Hong Kong and Singapore. The services will expand into the UK and Eurozone next month, and into the US and the United Arab Emirates in 2026.

BYD’s commanding lead in Sri Lanka, Tesla’s comeback bid in China: 7 EV reads

https://www.scmp.com/business/china-evs/article/3320894/byds-commanding-lead-sri-lanka-teslas-comeback-bid-china-7-ev-reads?utm_source=rss_feed

We have put together stories from our coverage on electric and new energy vehicles from the past two weeks to help you stay informed. If you would like to see more of our reporting, please consider .

Aggressive pricing, shrewd tax engineering and a trusted local partner have propelled China’s BYD to a commanding position in Sri Lanka’s electric vehicle (EV) and hybrid market, disrupting a sector long constrained by import restrictions and setting the stage for dramatic expansion.

Tesla, faced with a shrinking market share in mainland China, plans to follow the lead of its local rivals by rolling out larger and longer-range variants of its Shanghai-made vehicles to entice consumers.

Singaporean financial adviser Winnie Koh faced a dilemma when selecting her family’s next car – she appreciated the value for money offered by Chinese EV brands, but still had lingering concerns about their quality.

Stellantis-backed Leapmotor has announced the latest phase in its global push by launching an electric midsize sedan that offers similar features to Tesla’s Model 3 at less than half the price. The Hangzhou-based EV builder said the B01, priced from 89,800 yuan (US$12,542) in mainland China, would target markets around the world as it pursued new growth engines amid cutthroat competition at home.

Hackers are increasingly targeting Malaysia’s growing automotive sector, cybersecurity experts have warned in a new report that raises alarm over gaps in threat detection, including potential data theft via phones hooked to digital dashboards on vehicles.

EV makers from Tesla to Nio are shifting their focus from price cuts to developing spacious family-friendly, long-range vehicles for the mainland Chinese market.

China has released ethical guidelines for autonomous driving technology, highlighting the need for user safety and technology transparency. The Ministry of Science and Technology said automated driving systems “must demonstrate a high degree of respect for human life and actively seek effective strategies to minimise harm”.

OpenAI’s release of open-source models seen as challenge to China’s lead in the field

https://www.scmp.com/tech/big-tech/article/3320923/openais-release-open-source-models-seen-challenge-chinas-lead-field?utm_source=rss_feed

US artificial intelligence powerhouse OpenAI on Tuesday launched two open-source AI models, a move that is expected to challenge China’s dominance in the field.

Sam Altman, co-founder and chief executive at the San Francisco-based firm, said in an X.com post that the two new open models, the GPT-OSS-120b and GPT-OSS-20b, were “a big deal”, adding that the company believed them to be “the best and most usable open models in the world”.

The launch came as more Chinese open-source AI models – including the Qwen family developed by Alibaba Cloud, the AI and cloud computing unit of Alibaba Group Holding – are gaining global popularity. Alibaba owns the South China Morning Post.

OpenAI is also expected to launch its GPT-5 model soon. Bloomberg News reported that OpenAI was in early talks about a potential stock sale for current and former employees that would value the company at about US$500 billion.

According to OpenAI, the performance of the two open source models was comparable to o4-mini and o3-mini, two of the Microsoft-backed firm’s smaller o-series of reasoning models.

OpenAI’s change of direction signals a return to the company’s origins – its last open model was in 2019 – in what is seen as a challenge to the flurry of Chinese open-source models. However, analysts said China still leads in the field in terms of sheer numbers of open models in the market.

“In the open-source space overall, China still has an edge over the US in the number of highly competitive models available,” said Ray Wang, research director of semiconductor, supply chain and emerging technology at consultancy Futurum Group. He added that OpenAI’s open-source move would put pressure on Chinese rivals.

China’s AI start-ups and Big Tech firms rushed to release a series of open-source models to compete against each other, a trend that accelerated after Hangzhou-based DeepSeek shocked the industry with the release of two high-performance, low-cost open models in December and January.

DeepSeek’s open-source success also prompted OpenAI’s Altman to reflect on whether the US firm was “on the wrong side of history”.

The past few weeks have seen a new rush of Chinese open models. Alibaba released an updated Wan video tool with “film industry-level creativity”, as well as a Qwen-Image model that is more accurate when rendering text within an image as well as in editing.

Beijing-based Zhipu AI introduced GLM-4.5, which it said secured third place globally and first place among domestic models based on the average score across “12 representative benchmarks”.

Last month, Beijing-based Moonshot AI’s introduction of its Kimi 2 received praise for its frontier performance. The Kimi 2 model comes with 1 trillion parameters, more than eight times the number for GPT-OSS-120b.

China is home to 1,509 AI models, including both proprietary and open-source versions, according to data from this year’s World Artificial Intelligence Conference held in Shanghai.

OpenAI’s new open models have stirred lively discussions among the Chinese tech community. One thread discussing the new models on the Quora-like question-and-answer platform Zhihu amassed more than 250,000 views.

Chinese competitors have taken notice. Zhipu described OpenAI’s new models as “game changers”.

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A booming coffee class and zero-tariff policy drive China’s push for African bean imports

https://www.scmp.com/news/china/diplomacy/article/3320908/booming-coffee-class-and-zero-tariff-policy-drive-chinas-push-african-bean-imports?utm_source=rss_feed

China is reaching out to Africa’s top coffee-producing nations as part of a broader strategy to secure new supply chains overseas.

Observers say the shift – which coincides with Brazil seeking new buyers in China because of a new 50 per cent US tariff on Brazilian coffee – is driven by China’s strong domestic demand.

The scale of this push is clear: last week, Beijing authorised 183 new Brazilian coffee companies to export to China. This is in addition to a US$2.5 billion deal signed in November between China’s largest coffee chain, Luckin Coffee, and a Brazilian export agency which would supply 240,000 tonnes of beans between 2025 and 2029.

Meanwhile, Chinese buyers are also turning to Africa, thanks in part to Beijing’s new zero-tariff policy on products from 53 African nations, which has made African coffee more competitive in the Chinese market. For countries such as Ethiopia, the birthplace of Arabica coffee, and Uganda – known for fruity Arabica and bold Robusta – this offers a golden opportunity to access the massive Chinese market.

Sub-Saharan Africa geoeconomic analyst Aly-Khan Satchu said the strategy was a move to “lock in supply”, leveraging US tariff uncertainty and a “super spike in coffee demand in China”.

“China appears to be leveraging US tariff-related uncertainty and volatility to lock in supply, a strategy that it has utilised to great effect across other verticals,” Satchu said.

Among Chinese companies spearheading the push is Cotti Coffee, a rapidly expanding Chinese brand founded by former Luckin Coffee executives. In June, it started with the signing of an agreement by Rwanda’s agriculture ministry to invest in a new coffee industry development park.

Cotti, which operates more than 14,000 shops, has also signed deals in Ethiopia and Uganda. Its executive vice-president expressed interest in procuring 5,000 tonnes of Ugandan Arabica beans a year and discussed plans for local processing factories.

Ambassador Juju Nsababera, Uganda’s consul general in Guangzhou, described it as “more than trade – it’s value creation, branding potential, and deeper agro-industrial collaboration”.

The Ethiopian embassy in Beijing recently held a discussion with 30 Chinese coffee companies to explore trade opportunities and coffee demand in the Chinese market. A separate strategic agreement was signed in June between the Ethiopian Tea and Coffee Authority and the Chinese brand Saturnbird Coffee to increase the purchase of Ethiopian beans.

Du Xiaohui, who oversees African affairs in China’s foreign ministry, said in May that Africa’s coffee exports to China had grown by 70.4 per cent in the first quarter of this year.

According to Chinese customs data, coffee imports from Ethiopia saw a nearly fivefold increase in the first half of the year to 30,621 tonnes. Imports from Uganda more than doubled, rising from 2,660 tonnes to 6,150 tonnes over the same period.

This growing trade is driven by the booming Chinese middle class and a demand for premium, speciality coffee. Urban consumers are increasingly seeking out high-quality beans from several nations, with Ethiopian coffee, in particular, highly sought after for its unique flavour profiles and status as the birthplace of Arabica coffee.

“Demand for coffee is surging in China’s middle class, and Uganda’s premium coffee brands are among favoured beans,” according to Lauren Johnston, a China-Africa expert at the AustChina Institute.

Johnston said a prolonged drought in Brazil – the world’s largest coffee bean producer and exporter – since last year had cut output following reduced Arabica coffee harvests.

Coffee imports from Africa were also part of China’s promise to elevate trade with the continent, especially to increase African exports, and coffee was an easy way to do this, Johnston said.

“Uganda, in particular, is rich in smallholder farmers who may be able to rise into higher income brackets due to Chinese demand, thereby helping to realise long-term China-Africa poverty alleviation goals.”

Furthermore, Kenya, Tanzania, Burundi and Ivory Coast, also coffee producers, are angling for the Chinese market as the new zero-tariff policy on African exports makes them more competitive, especially amid US tariff tensions.

However, African coffee producers still primarily export to traditional markets in Europe and North America. For instance, coffee exporters such as Uganda, Ethiopia and Ivory Coast still have strong, established relationships with traditional markets in Europe and the Middle East.

China’s campaign to ease local government debt scores first big win in Inner Mongolia

https://www.scmp.com/economy/china-economy/article/3320917/chinas-campaign-ease-local-government-debt-scores-first-big-win-inner-mongolia?utm_source=rss_feed

China’s debt relief campaign for local governments, launched last year, has delivered its first major success story after Inner Mongolia exited the central government’s high-risk list.

The autonomous region was among 12 province-level jurisdictions flagged by Beijing for risky debt levels, with its exit revealed in a local budget review discussed internally in late July but only released to the public earlier this week.

“[We must] consolidate the progress made in exiting the list of key high-debt regions and guide local authorities to continue debt resolution efforts based on local conditions,” according to a statement released by the finance and economic committee of the northern region’s People’s Congress.

Inner Mongolia, the country’s top coal miner and a major supplier of renewable energy and dairy products, had previously been forced to shelve a subway project in Baotou – the region’s second-largest city – because of financial risks.

Local government debt, which accumulated after the 2008 global financial crisis, is widely seen as a ticking time bomb. It reached 51.95 trillion yuan (US$7.23 trillion) by the end of June, government data showed, driven by years of aggressive borrowing, especially through local government financing vehicles.

The model has become increasingly unsustainable, particularly as fiscal revenue from land sales has declined.

In September 2023, the State Council issued a directive targeting 12 high-risk province-level areas and called for debt control and restructuring over the following two years, along with support measures.

Under central government rules, regions on the list are barred from launching new government-funded projects – except for essential public services like water, heating and electricity. Local authorities must also suspend or delay projects that have used less than half of their allocated investment.

The high-risk regions included Tianjin, Inner Mongolia autonomous region, Liaoning, Jilin, Heilongjiang, Guangxi Zhuang autonomous region, Chongqing, Guizhou, Yunnan, Gansu, Qinghai and Ningxia Hui autonomous region.

Back in October 2024, the Ministry of Finance launched a 12 trillion yuan debt relief package, significantly easing local repayment pressures.

In March this year, Ningxia’s top fiscal official said the region had applied to be removed from the list after meeting the necessary conditions. Jilin is also working to accelerate its exit, according to local officials at a provincial meeting in May.

Chongqing is expected to exit the list by the end of this year or in 2026, according to a late July research note by Huatai Securities, which said the government had pushed ahead with clear debt relief plans.

“Exiting the high-risk list will reopen investment opportunities and inject new momentum into regional growth,” according to the research note.

“Financial institutions are also expected to ease lending restrictions to these areas, helping alleviate their financing pressures.”

However, the report cautioned that as provinces shed their high-risk status, they may receive less central support and become more exposed to the whims of the market. Those with weaker finances could encounter increased funding challenges, the authors said.

By June, China had issued 3.8 trillion yuan in bonds to swap local government debt, lowering the average interest cost by more than 2.5 percentage points and significantly easing repayment pressures, according to an article by Finance Minister Lan Foan last week.

“[The Finance Ministry] will continue guiding local authorities in carrying out hidden debt swaps to actively and prudently mitigate local government debt risks,” he said.

Handling of teen bullying case sparks tension and arrests in southwestern Chinese city

https://www.scmp.com/news/china/politics/article/3320903/handling-teen-bullying-case-sparks-tension-and-arrests-southwestern-chinese-city?utm_source=rss_feed

The handling of a school bullying case by local authorities in a southwestern Chinese city has sparked outrage among locals, according to residents and mainland media, leading to police arrests for “blocking traffic”.

Chinese outlet iFeng.com posted a video on its social media account showing hundreds of people gathering inside a government building in Jiangyou, Sichuan province, on Monday to help the parents of a teenager who had been bullied at school negotiate with officials and express their dissatisfaction with the government’s handling of the incident.

The Public Security Bureau of Mianyang city, which administers Jiangyou, told the Guangzhou-based Yangcheng Evening News it had detained people who were “blocking traffic and refusing to heed police warnings” on Monday.

A staff member at the Mianyang Public Security Bureau told the South China Morning Post that the “incidents in Jiangyou” were being handled by “local police and government”.

The Post has also contacted the Jiangyou police for comment.

The residents’ anger erupted after news went viral about a campus bullying case which locals believed was not dealt with fairly.

On Monday, following widespread public outrage over a video purportedly showing a girl being bullied by three others, police in Jiangyou said two teenage girls had been detained at a reformatory institution for allegedly assaulting and verbally abusing a 14-year-old girl.

Police said bystanders and a third girl who allegedly took part in the abuse had been “criticised and educated”, adding that the guardians of the teenagers involved had been “asked to strictly discipline” them.

On Tuesday, Jiangyou police issued a further statement dismissing claims circulating on social media that the bullies’ parents were government officials or lawyers as “rumours”, and that those who spread them had been given administrative penalties.

Mainland media reported that the mother of the bullied girl was deaf, prompting some local parents to press the local government for harsher punishment for perpetrators.

The negotiations sparked the deployment of a large number of police officers to try to maintain order. According to some local residents, at least hundreds of dissatisfied residents gathered on the streets on Monday, confronting the police.

Some social media videos that have since been blocked by Chinese censors showed clashes between people wearing Swat police uniforms and citizens near the Jiangyou municipal government, lasting from Monday evening until early Tuesday morning.

A video showed that at least dozens of the Swat officers attempted to use roadblocks to separate onlookers and tried to arrest two people in a Zhongba square near the Jiangyou municipal government in the city centre.

Another video showed a Swat officer being stopped by citizens while attempting to arrest a young man, with conflict ensuing between the two sides.

The Post has confirmed that the videos were filmed in Jiangyou late on Monday night and early Tuesday morning.

On Tuesday, a hotel employee said it had been “very chaotic” outside the night before but declined to provide further details.

An employee at a nearby shop said many police officers had been outside on Monday night and added that roads near the municipal government were closed by police on Tuesday.

Several map apps showed roads in central Jiangyou closed to traffic by Wednesday morning, but no reason was given for the closures.

China’s AI-powered drug firm XTalPi surges on US$6 billion deal with Harvard entrepreneur

https://www.scmp.com/business/article/3320904/chinas-ai-powered-drug-firm-xtalpi-surges-us6-billion-deal-harvard-entrepreneur?utm_source=rss_feed

Shares of Shenzhen-based AI-powered drug researcher XTalPi jumped as much as 23 per cent after it signed a US$6 billion deal with a firm founded by a Harvard University chemist with a reputation as a serial biotech entrepreneur.

DoveTree, established by professor Gregory Verdine, signed a definitive collaboration agreement in late June with XTalPi, the Chinese company said in a filing with Hong Kong’s bourse on Tuesday. Harvard describes Verdine as a “pioneer in chemical biology and a distinguished serial entrepreneur”.

DoveTree agreed to pay XTalPi US$100 million within 180 days of the signing for the exclusive worldwide rights to develop and commercialise drug candidates discovered by XTalPi, of which US$51 million has been paid.

“[XTalPi] will use its end-to-end AI drug discovery platform through integrated ‘AI + robotics’ technology to discover and develop small-molecule and antibody-based drug candidates for multiple targets selected by DoveTree, primarily in the fields of oncology, immunologic and inflammatory diseases, neurological disorders and metabolic dysregulation,” XTalPi said.

The company will be entitled to payments of up to US$5.89 billion if the candidates meet regulatory and commercial milestones, in addition to royalties based on a single-digit percentage of annual net sales.

XTalPi’s shares ended the morning session on Wednesday up 8.5 per cent to a five-month high of HK$7.16.

The company’s self-developed large language model (LLM) has helped increase the success rate of chemical experiments to 90 per cent from 20 to 30 per cent, Zhang Peiyu, chief scientific officer of the firm, said in January. LLMs underpin generative artificial-intelligence services like ChatGPT.

The integration of robotics and AI will reduce drug discovery timelines to just one or two years from four, Zhang told the Post’s China Conference: Greater Bay Area 2025 in Guangzhou.

Verdine is renowned for spelling out the molecular mechanism of epigenetic DNA methylation. Aberrant DNA methylation patterns have been linked to various diseases, including cancer.

He founded or co-founded more than 10 biotechnology companies, including five publicly listed entities, and three therapeutics he spearheaded have received marketing approval from the US Food and Drug Administration, according to XTalPi.

XTalPi’s deal with DoveTree adds to a growing list of drug-licensing collaborations between Chinese research firms and international pharmaceutical companies.

China’s pharmaceutical out-licensing value soared to almost US$66 billion in the first six months of 2025, more than the whole of last year, according to a July 14 report from China Post Securities.

For multinational companies, the deals provide exclusive products to expand their drug-candidate pipelines, while the Chinese developers can cash in on prior work and fund new projects.

Late last month, UK-based GlaxoSmithKline said it would potentially pay Jiangsu Hengrui Pharmaceuticals US$12.5 billion for exclusive global rights to develop and market a dozen drugs under what was the largest licensing deal ever for Chinese drug developers.

AI-assisted efforts have gained momentum in China’s healthcare industry over the past five years, aided by technical advancements, policy incentives and capital investment, Jefferies’ analysts said in a report in June.

XTalpi counted US-based Merck, Johnson & Johnson, Pfizer and Eli Lilly as collaboration partners, they said.

China’s rocket shortage means it may have to pick a favoured candidate to take on Starlink

https://www.scmp.com/news/china/science/article/3320866/china-rocket-shortage-means-it-may-have-pick-favoured-candidate-take-starlink?utm_source=rss_feed

As China scrambles to build massive internet networks in space to rival Starlink, a growing divide is quietly emerging on the ground between national priorities and local ambition.

The country appears to be fast-tracking the roll-out of Guo Wang, a state-run 13,000-satellite constellation slated for completion within a decade, tightening control over launch resources and leaving other projects in limbo.

Often known as Beijing’s answer to SpaceX’s Starlink, Guo Wang has launched three batches of satellites in the past week alone – a sharp jump from its earlier pace of about one batch every two months.

The launches, which bring the total number of Guo Wang satellites in orbit to 57, used three different Long March rockets, signalling a national push to ensure the project received all the launch capacity it needed to stay on track.

Meanwhile, Qianfan, a 15,000-satellite constellation backed by the Shanghai municipal government, has not launched since March, despite already placing 90 satellites in orbit.

With state-owned rockets seemingly out of reach, Qianfan is now turning to private rocket companies for help.

In late July, Shanghai Yuanxin Satellite Technology – the company behind Qianfan – issued its second launch tender of the year, seeking seven rocket launches to deploy 94 satellites. The contract, worth 1.4 billion yuan (US$186 million), requires all satellites to be delivered into orbit by March next year.

One option calls for launching 10 satellites at a time, using a rocket that has already flown and could deliver at least 2.8 tonnes to a 950km (590 miles) near-polar orbit. The leading contender is Beijing-based LandSpace, whose upgraded Zhuque-2E can carry up to 4 tonnes – although to a lower 500km orbit.

The second option involves launching 18 satellites at once, requiring a rocket that could deliver at least 4.8 tonnes to an 800km orbit and a firm commitment to complete its first flight by the end of this year.

So far, only a few Long March rockets meet that threshold, including the 6A, 8, 8A and 12 that have supported past Guo Wang and Qianfan launches. Among private rockets still in development, LandSpace’s reusable, heavy-lift Zhuque-3 appears to be the most promising, with a maiden flight targeted for this autumn.

Yuanxin’s first tender, issued in February, aimed to deploy 162 satellites across nine launches. But with fewer than three bids submitted, the process was cancelled, according to a statement on the tender result issued later that month.

Space observers said the launch mission divide between Guo Wang and Qianfan highlighted a key factor behind China’s launch bottleneck: the lack of reusable rockets. Unlike SpaceX’s Falcon 9 – which has launched satellites up to two or three times a week – China still relies on expendable launchers that have lower capacity and slower turnaround.

Without a comparable reusable system, the country’s squeeze on rocket access was expected to persist, leaving ambitious satellite projects fighting for limited launch slots for years to come, the experts warned.

How China has taken lead in rare earths race

https://www.scmp.com/article/3320891/how-china-has-taken-lead-rare-earths-race?utm_source=rss_feed

China’s economists weigh pros and cons of consumption benchmarks

https://www.scmp.com/economy/china-economy/article/3320819/chinas-economists-weigh-pros-and-cons-consumption-benchmarks?utm_source=rss_feed

As Beijing gathers public input on China’s next five-year plan – a mission statement for the next half-decade of economic and social policy – how best to bolster domestic consumption has emerged as a topic of considerable debate as the country seeks new avenues for growth amid a murky landscape for global trade.

One point of contention among scholars and other influential thinkers is whether to set measurable consumption targets, in a similar fashion to other headline benchmarks like gross domestic product growth.

Some have called for indicators such as the household consumption rate – the share of consumer spending in GDP – to be written into the blueprint, while others argue that such metrics are not operationally feasible as policy goals.

Among those in favour is Chang Xiuze, an economist with the Academy of Macroeconomic Research under the National Development and Reform Commission – the country's top economic planner – who has made this proposal on various occasions.

“From the perspective of the national strategy to expand domestic demand and the lives of ordinary people, could the ‘household consumption rate’ be listed separately in the 15th five-year plan as a national ‘monitoring and assessment indicator’?” he wrote after a research trip to the northeastern province of Liaoning in June.

In the note, compiled last month by the China Academy of Northeast Revitalisation think tank – where Chang serves as deputy director of the expert committee – he noted China’s household consumption rate was a “low” 39.6 per cent in 2023.

Similarly, Jin Keyu, a professor at Hong Kong University of Science and Technology’s school of business and management, said it would be “fantastic” if consumption became a “yardstick” for local governments to use as a measurement of success at a World Economic Forum event in June.

However, Ding Shuang, chief Greater China economist at Standard Chartered Bank, said making the consumption rate a mandatory target would be an “impractical” task.

“There are too many factors influencing consumption, and no direct means to ensure it is achieved. It’s not something local governments can reach simply through their own efforts,” he said.

“The idea of setting the consumption rate as a target is a bit too academic, and in practice it would be difficult to implement.”

Instead of an overall consumption goal, Ding proposed concrete steps to remove obstacles to spending. For instance, a stable mechanism for income growth could be established, and controllable benchmarks could be set.

“These indicators,” Ding said, naming civil servant salaries and minimum income standards as examples, “can also send a demonstration effect to the market, which would in turn influence overall income levels across the economy.”

Domestic consumption is high on the policy agenda this year – a necessary counter to heightened external pressures under the second term of US President Donald Trump – with Beijing already rolling out a 30-point policy package and allocating 300 billion yuan (US$41.73 billion) to a massive consumer goods trade‑in programme.

The country's five-year plans – the forthcoming edition is the 15th – are strategic documents for medium-term development, setting out Beijing’s priorities through a set of quantifiable goals.

These targets are usually divided into two categories: binding, which must be met and are often tied to resources, the environment or public welfare; and indicative, which are guiding objectives without mandatory enforcement.

The next plan is set to be discussed at the Communist Party’s fourth plenary session in October, which will gather the members of its Central Committee.

In the run-up to the meeting, President Xi Jinping has stressed the need to study and absorb public opinion as part of the plan’s formulation, after a three-month solicitation campaign gathered more than 3.11 million suggestions from the public, state news agency Xinhua reported on Monday.

China girl with heart infection wakes up from coma when shown college acceptance letter

https://www.scmp.com/news/people-culture/trending-china/article/3320294/china-girl-heart-infection-wakes-coma-when-shown-college-acceptance-letter?utm_source=rss_feed

A student in central China who suffered from a heart infection and fell into a coma woke up when she was shown her college acceptance letter.

On July 11, Jiang Chennan, 18, from Henan province sought medical help for fever and chest tightness, just after taking the “gaokao”, or national college entrance examination, in June, the mainland media outlet Jiupai News reported.

Doctors diagnosed Jiang with fulminant myocarditis, the exact cause of which in her case remains unknown.

The uncommon condition is characterised by a sudden and severe inflammation of the heart, which often leads to death. Key triggers include viral infections, emotional stress and a poor lifestyle.

After being transferred to another hospital, Jiang fell into a coma and was kept alive with artificial heart-lung support in the intensive care unit.

Her sister said that the family struggles financially. The father, who was injured in a 2023 car accident, is in debt, has trouble walking and can only rest at home.

The mother sells food on the street to support them. They also have a younger brother in secondary school.

The family borrowed money from multiple sources, and the cost of Jiang’s treatment has already exceeded 200,000 yuan (US$28,000).

On the eighth day of her coma, Jiang’s father received her college acceptance letter and took it to the hospital, telling his daughter: “We are all so happy, you have been admitted to university!”

The father recalled seeing her eyelids twitch, giving the family hope.

The next day, Jiang miraculously woke up and had a video call with her parents, during which she responded with an “OK” gesture to the news.

Her father said that while Jiang was awake, she still struggled to speak.

She has been admitted to Huanghe Transportation University, a private school in Henan. Her “gaokao” score has not been disclosed.

Doctors said that Jiang was a “lucky and miraculous girl”, noting that her heart function has fully recovered and her condition is stable. The cause of her quick awakening remains unknown.

Her father said: “No matter how tough our finances are, I will send her to university because it is her dream.”

Jiang has been moved to a general ward and is expected to start her studies in September.

The story has touched many people on mainland social media.

One online observer said: “Jiang’s hope for university may have been crucial to her waking up. I hope she recovers and starts school soon.”

“Jiang is so young and has a heart infection. She should exercise more, stay healthy, and avoid stress to ease her parents’ worries and have a happy future,” said another.

Apparent miracle stories often strike a chord on mainland social media.

On July 15, a three-year-old boy from eastern China survived a plunge from the 18th floor of his residential block. His father tied a big red flower to honour the tree that cushioned his fall.

Work on China-backed Afghan copper mine gains pace after 17 years but old fears linger

https://www.scmp.com/news/china/diplomacy/article/3320858/work-china-backed-afghan-copper-mine-gains-pace-after-17-years-old-fears-linger?utm_source=rss_feed

A China-backed copper mine in Afghanistan is poised to start construction after nearly two decades of delay, but political instability and security issues remain a major concern, an Afghan studies expert has cautioned.

State-owned China Metallurgical Group Corporation (MCC) recently announced that it was making significant progress toward starting copper extraction this year in the Mes Aynak Mine in central Afghanistan’s Logar province, home to one of the world’s largest untouched copper deposits.

According to Afghan media outlet Tolo News, MCC representative Deng Guoping said the company was ready to start production this year “if the follow-up procedures with the government go smoothly”.

This comes as a road leading to the mine nears completion, 17 years after the project contract was signed.

The Mes Aynak project was awarded to MCC under a 30-year contract in 2008 but was delayed due to security challenges, the presence of archaeological remains dating back to the Bronze Age and landmines from decades of war, and the lack of infrastructure, according to the company.

Last year, the Taliban announced a switch from open-pit mining at Mes Aynak to underground mining, a costlier process that is seen as more protective of archaeological sites. Officials further emphasised that the mine would work to avoid damage to relics, according to The Art Newspaper.

Zhu Yongbiao, director of the Centre for Afghanistan Studies at China’s Lanzhou University, said the project carried substantial significance for the ruling Taliban.

Following the chaotic withdrawal of US troops in August 2021, the Taliban took back control of Afghanistan and have since prioritised foreign investment and large-scale infrastructure projects to boost economic self-sufficiency.

“Both Afghan administrations particularly care about the demonstrative effect of such projects,” Zhu said, referring to the Taliban and the previous US-backed government.

“They hope that major engineering ventures like this will stimulate additional foreign investment, including in mining cooperation and other large infrastructure projects.”

For China, however, the project holds limited economic or geopolitical significance, according to Zhu.

The MCC decision to start the mine construction itself was a result of “a comprehensive weighing of pros and cons”, as it was also facing other pressures from the Taliban, including demands related to contract fulfilment, Zhu said.

According to Deng, MCC “has already invested more than US$430 million, but [not had] any income”.

Also, the total cost of the project has risen from US$2.8 billion to US$5 billion due to the changes in extraction technologies and methods.

Copper is a strategically vital resource, essential for manufacturing electric vehicle batteries and military equipment. Demand is expected to surge by more than 40 per cent by 2040 but supply is not keeping pace, according to the UN trade body Unctad.

The Mes Aynak deposit holds 705 million tonnes of ore, potentially yielding more than 11 million tonnes of metallic copper, according to the Belt and Road Portal, the official website for China’s Belt and Road Initiative.

As the world’s top copper consumer, China imports 60 per cent of the world’s supply of copper ore and produces more than 45 per cent of the world’s refined copper. It has therefore been strategically positioning itself to secure supplies, especially from Africa, where it faces intense rivalry with the West.

Still, the Mes Aynak project faced many risks aside from lacking critical infrastructure, Zhu cautioned, one being the Taliban government’s political unreliability.

“Their track record has demonstrated … that their business credibility and political reliability are highly questionable,” he said.

In June, the Taliban administration terminated a landmark oil extraction and development contract with a Chinese company due to alleged repeated violations of contractual terms. The 25-year contract was signed in 2023 with a pledged investment of US$150 million in the first year and a projected US$540 million over three years.

“The Taliban could very well take similar actions against other comparable projects,” Zhu warned.

Moreover, major cooperative projects like Mes Aynak could face Western sanctions or sanction escalations at any moment, complicating the situation for the companies involved, he noted.

Most Western countries do not recognise the Taliban administration, and maintain sanctions and diplomatic isolation. While China has not formally recognised the Taliban either, it has made careful inroads.

The Chinese mission was among the few that remained in Kabul after the US-backed government collapsed and in 2023, China became the first country to name a new ambassador to Afghanistan. Later that year, Bilal Karimi, a former Taliban spokesman, was appointed as an official ambassador to China.

High-level Taliban officials have since visited Beijing, most recently acting foreign minister Amir Khan Muttaqi in May. During their meeting, Chinese Foreign Minister Wang Yi assured Afghanistan of China’s support in advancing key cooperation projects as well as its reconstruction and development.

The meeting took place on the sidelines of an informal trilateral dialogue including Pakistan, where Wang called on the three neighbours to work together for regional peace.

Last month, when Russia became the first country to formally recognise the Taliban government, China welcomed the move and reaffirmed its commitment to engaging with Afghanistan.

Beijing’s growing economic engagement with Kabul is highlighted by an agreement in March to form a joint group to expand trade ties, including boosting Afghan exports to China of pine nuts, pomegranates, precious stones and minerals.

But Zhu of Lanzhou University said there was not “much more room for further expansion” in cooperation. He cited the unresolved security challenges and the Taliban’s failure to fulfil international commitments, such as on counterterrorism and human rights.

“The Taliban have not made any substantial efforts on China’s core concerns – namely the issues related to the East Turkestan Islamic Movement and religious extremism,” he said, referring to the UN-listed terrorist group that China has blamed for a number of attacks in Xinjiang and other part of the country.

He added that Beijing hoped the Taliban would fulfil its commitment in two key areas: inclusive governance, including the protection of women’s rights, and counterterrorism.

“China will actively encourage Afghanistan to maintain friendly communication with all its neighbours, including Pakistan, to ensure regional stability. This general policy direction is unlikely to change – regardless of who is in power.”

EU biofuel proposals risk discriminating against firms from outside the bloc: China’s EcoCeres

https://www.scmp.com/business/climate-and-energy/article/3320808/eu-biofuel-proposals-risk-discriminating-against-firms-outside-bloc-chinas-ecoceres?utm_source=rss_feed

EcoCeres, a Chinese producer of biofuels, said a European Union (EU) proposal aimed at combating fraud in the industry could discriminate against companies from outside the region.

In January, the European Biodiesel Board (EBB), which represents 34 firms that produce 75 per cent of Europe’s output of the cleaner-burning alternative to fossil diesel, published proposals that it said would improve the EU’s system for quality verification.

The proposals included annual on-site audits and called on the EU to impose effective sanctions, including retroactive invalidations of certificates, to compel all players in the space to exercise due diligence.

For biofuel that is imported into the EU, the board recommended mandatory content tests to determine sustainability, with results logged in an EU database.

EcoCeres CEO Matti Lievonen said the content tests for imports could be discriminatory against outside firms.

“There should not be a battle between EU and non-EU producers,” he said. “The focus of any reform should be on ensuring a level playing field.”

He added that the proposed rules could be redundant in terms of existing certification bodies and lead to inefficiencies.

“A more effective solution could involve a centralised EU framework to streamline processes and maintain consistency across the union,” he said, adding that certificate revocations could cause supply chain disruptions.

The European Commission (EC) did not immediately respond to emailed questions.

According to market research firm IMARC Group, the EU recorded US$19.5 billion in biodiesel sales last year, with that tally estimated to rise 5.7 per cent a year to US$32.2 billion by 2033. But the EU, the world’s largest consumer of renewable biodiesel, has fallen behind producers from Asia who have access to cheaper feedstocks.

“In [2022 and 2023] our domestic industry has been confronted with a surge of imported biodiesel, mostly from China,” the EBB said. “Consequently, biofuel prices have collapsed, leading to European production plants reducing production, furloughing workers and even closing facilities.”

The EU imposed tariffs of 10 to 35.6 per cent on Chinese biodiesel last year. After that, the EU’s imports from China of the dominant type of biodiesel – called fatty acid methyl ester – plunged to less than 6,000 tonnes a month in December 2024 from 140,000 tonnes in May, the EBB said. Fatty acid methyl ester is made from vegetable oil or used cooking oil.

But according to a February report from China Energy News, citing EBB data, China supplied nearly half of the feedstocks that were imported by EU producers.

Biodiesel makes up only a quarter of EcoCeres’ output at its plant in Jiangsu province, down from 85 per cent in 2022, Lievonen said. The company’s plant in Malaysia, which is 43.1 per cent owned by Hong Kong and China Gas, is scheduled to begin operations in the fourth quarter of this year, he added.

The increasing popularity of waste-based biofuels had led to a significant price premium for their ingredients and raised fraud risks, the International Sustainability and Carbon Certification (ISCC) group said in a paper published in June.

As a result, the ISCC said it significantly increased its audits in 29 nations. China, Indonesia and Malaysia were the top three. And last year, 130 firms were suspended with 97 certifications withdrawn due to irregularities uncovered by the audits, it added.

The ISCC said more actions should be taken to ensure the integrity of the sector’s products.

On July 18, the EC said a probe into fraud allegations related to biodiesel imports from China had identified some weaknesses in certification audits. But it did not confirm the existence of fraud.

Next year, the EC said, it would come up with additional measures to better prevent fraud in the market.

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ChinaJoy 2025: Tencent, Huawei and smaller studios leverage AI to boost video gaming

https://www.scmp.com/tech/big-tech/article/3320848/chinajoy-2025-tencent-huawei-and-smaller-studios-leverage-ai-boost-video-gaming?utm_source=rss_feed

Chinese video gaming companies are doubling down on artificial intelligence to enhance their titles and explore new growth opportunities, driven by rapid advances in AI models, according to executives at ChinaJoy – the country’s largest annual digital entertainment expo.

The four-day event in Shanghai drew a surge of AI companies eager to forge or deepen partnerships with local studios focused on adopting AI-driven technologies.

Huawei Technologies, the Shenzhen-based telecommunications equipment giant, took centre stage with a large booth showcasing the HarmonyOS operating system, its Android alternative that is gaining traction among Chinese game developers.

More than 6,500 games have launched on HarmonyOS so far, including popular titles like Anipop and Subway Surfers. Huawei said its AI agent Xiaoyi, also known as Celia, enhanced the mobile gaming experience by blocking calls and messages and answering player questions in real time.

In the first half of this year, sales in China’s video gaming market rose 14 per cent from a year earlier to a record high of 168 billion yuan (US$23.4 billion), according to a report from the Gaming Publishing Committee of the China Audio-Video and Digital Publishing Association.

That growth rate outpaced the 2 per cent increase seen during the same period last year, fuelled by increased government support and the industry’s accelerated adoption of AI technologies, the group said.

“There are a lot more things AI can do in video games” compared with several years ago, with the technology being applied across various stages from development to player engagement, said Jeff Zou, vice-president of US-based GameBot.

The start-up, founded by AI scientists from Tencent Holdings, collaborates with the Chinese tech giant and other major developers, as well as smaller studios, to create in-game bots and AI non-player characters.

“Large companies are adopting more AI technologies like large language models (LLMs) and reinforcement learning on their game agents,” Zou said, adding that the rapid progress in LLMs enabled the bots to conduct multi-round conversations with players.

Vast, a start-up specialising in AI-generated three-dimensional technology, showcased its Tripo AI platform, which has been used to build major titles, including NetEase’s action-adventure role-playing game Where Winds Meet, launched in December and marketed as a home-grown “triple-A” title.

The competition in 3D-generation models is intensifying. Last month, Tencent unveiled its Hunyuan 3D World Model 1.0, an open-source AI model designed to produce intricate three-dimensional environments.

At the event, Chinese gaming companies – from industry giants like Tencent and NetEase to smaller studios like 37Games – highlighted their efforts in integrating AI into their businesses.

Yu Ruichao, vice-president at Tencent’s video gaming division, said the company made strides in incorporating AI into game production, as well as expanding its applications from back-end processes to enhancing the front-end user experience.

For the US, it’s Mountain Pass – or fail – in bid to supplant China’s rare earth supremacy

https://www.scmp.com/economy/global-economy/article/3320805/us-its-mountain-pass-or-fail-bid-supplant-chinas-rare-earth-supremacy?utm_source=rss_feed

Rare earths are needed for everything from consumer electronics to electric vehicles, wind turbines and fighter jets – and China controls the supply chain. In the second of a four-part series, we look at how China gradually took a commanding role in the rare earth industry, and how the US is now working to strengthen its sources and production.

Nearly a half-century removed from being the world’s dominant supplier of rare earth elements, California’s Mountain Pass mine is once again being tasked with unearthing a veritable treasure trove of metals and minerals that the United States hopes will help bridge a supply gulf with China in an increasingly critical industry.

Splashing out hundreds of millions of dollars, the US Department of Defence is digging deep into the public coffers to bring back the mine, which has had a rocky history.

After being shut down in 2002 due to environmental concerns, Mountain Pass was reawakened during the early days of former president Barack Obama’s administration when the privately held Molycorp Minerals was formed to revive it.

It was an ambitious undertaking, with approximately US$1.5 billion invested to reinstate production and give the US a competitive boost in the rare earth supply chain. But the effort ground to a halt in 2015 when the company went bankrupt.

In the decade since, Washington has slowly woken up to the reality of Beijing’s chokehold on rare earths and watched as that dominant position has become China’s biggest bargaining chip in the two sides’ protracted trade war.

The administration of US President Donald Trump has tried, with increased urgency, to get to the core of the problem by accelerating attempts to reduce America’s deep reliance on China for the raw materials that are used in everything from military weapons and semiconductors to electric vehicles and wind turbines.

Hitting back at Trump’s “Liberation Day” tariffs in April, China tightened exports of seven critical elements whose atomic structures grant them special magnetic properties. The move had far-reaching implications, affecting factories across the globe and accelerating efforts to reduce their deep reliance on China.

But unwinding China’s deeply ingrained dominance across nearly every stage of the rare earth value chain is easier said than done. In the decades since Mountain Pass was a formidable force in the supply chain, China has honed and polished a state-backed, integrated supply chain based on its vast reserves, with a cost structure unmatched by most rivals.

“China’s rare earth dominance stems from deliberate state policy, not luck,” said Sebastian Contin Trillo-Figueroa, a Hong Kong-based geopolitical analyst. “Since the 1980s, Beijing has treated them as strategic assets, pouring investment into mining, researching, refining and manufacturing. Others exited [the industry] due to low margins and environmental costs; China scaled up, absorbing early losses to lock in long-term control.

“Breaking China’s grip on rare earths is brutally hard, and getting harder.”

China holds the largest rare earth reserves globally, according to the US Geological Survey, with extensive deposits of medium-heavy rare earth elements concentrated in its southern regions.

Amid the country’s reform and opening era, paramount leader Deng Xiaoping famously said in 1987: “The Middle East has oil, China has rare earths.”

One of the most important light rare earth elements is neodymium – a critical material for magnets used in electric vehicles.

Medium-to-heavy rare earth elements such as dysprosium and terbium are essential additives in high-performance magnets and aerospace components, while yttrium plays a key role in laser technologies.

However, for all its strategic importance, the rare earth industry offers slim commercial returns.

In 2024, the global rare earth elements market was valued at US$12.44 billion, according to market research firm IMARC Group. That figure includes downstream products in the rare earth supply chain, such as magnets, nickel-metal hydride batteries, and diesel engines. In comparison, the sum equates to about 3 per cent of Apple’s US$391 billion in revenue last year.

China, however, managed to thrive in this space by leveraging its economies of scale for maximum cost effectiveness, while also having a relatively high tolerance for the adverse environmental impacts of rare earth mining.

Rare earth elements are rarely found in their pure, metallic form in nature and are usually dispersed in complex mineral ores. Medium-heavy rare earth elements, in particular, are often found in their ionic form, making them imperceptible to the naked eye.

As such, extraction and separation processes are critical to obtaining high-purity rare earth elements for industrial use.

While the US pioneered costly methods in the mid-20th century, China, by the 1980s, had developed a more affordable extraction method using sulphuric acid. This followed the discovery of a rich, rare earth deposit in Jiangxi in 1969.

However, the sulphuric acid solution is highly corrosive. When large volumes of this solution are applied to deforested land or areas cleared for mining, the environment suffers significant damage.

After extracting rare earth elements, the residual waste, which includes toxic elements, is often left behind in the soil and can seep into the groundwater, posing a serious risk to drinking water supplies and hindering agricultural activities.

Despite the environmental toll, this cost-effective method was quickly scaled up and widely adopted across the country. Supported by the vast rare earth reserves, China ascended to prominence in the rare earth market by the late 20th century.

“China slashes costs with pollution and scale while everyone else is stuck choosing between delays, green-woke policies, or dirty hands,” Trillo-Figueroa said.

“Pollution tolerance accelerates production and allows dirtier, cheaper methods. This keeps costs low and shuts out rivals constrained by regulation.”

In 1981, China exported 2,800 tonnes of raw, rare earth materials. By 1995, China’s exports surpassed those of the US for the first time, reaching 27,000 tonnes, according to a 2023 research note by investment bank China International Capital Corporation about “embracing a new rare earth supply landscape”.

As a surge of rare earth exports from China flooded the global market, prices of the critical minerals and their alloys plunged.

The global price of praseodymium-neodymium oxide – a crucial raw material for producing high-strength, permanent magnets – dropped from around US$120,000 per tonne in 1989 to US$40,000 in 1993, and further to US$6,200 by 2001, according to the CICC note.

The rapid expansion and competitive pricing of China’s rare earth industry gradually phased out its overseas competitors, and the US became a net importer of rare earth concentrates in 1994.

“The competitiveness of China as a low-cost rare earth element processing hub has created significant barriers to the development of alternative rare earth element processing hubs in other nations that are commercially profitable,” said Rajiv Biswas, CEO of Asia-Pacific Economics, pointing to China’s low labour costs and strategic state investment.

All major mining companies in China’s rare earth industry are either state-owned or closely tied to the government, enabling them to establish large-scale smelting operations.

Meanwhile, China’s relatively low electricity costs have also supported the high-volume refining of rare earth metals from extracted compounds.

“Rare earth smelting is highly energy-intensive. If similar projects were set up in Europe or the US, electricity costs would often be several times higher than in China,” said a research note by Donghai Securities last month.

It noted that China controlled 90 per cent of the world’s smelting and separation capacity, and 69 per cent of rare earth alloy smelting.

Donghai’s analysts also estimated that the country accounts for 85 per cent of the production of rare earth permanent magnet materials, a crucial component in the EV, robotics and aerospace sectors.

The vital role such magnets play in advanced manufacturing has put them at the centre of trade tensions, with China restricting their export in April in response to US tariff hikes.

After plunging by about 50 per cent in April and May, exports to the European Union and the US rebounded in June as China sped up export-permit approvals following talks in London between American and Chinese trade officials in June.

Decades ago, China began as a miner and refiner of rare earths, rather than a major producer of magnets. But as domestic production surged and export prices plummeted, the government introduced export quotas in 1998 and export taxes in 2006 to control the damaging price competition.

“These policy moves prompted global magnet manufacturers to relocate production to China, helping to close a technological gap and accelerating the country’s push into downstream magnet processing,” CICC said in its research note.

In 1998, US neodymium magnet maker Magnequench, a Pentagon supplier, began building a plant in Tianjin after being acquired by investors. These included two Chinese state-owned firms, one of which was Beijing Zhong Ke San Huan Hi-Tech, affiliated with the Chinese Academy of Sciences. By 2003, it closed its last US factories.

Similarly, in 2000, Japanese magnet maker Seiko Epson moved all bonded neodymium magnet production to Shanghai, also partnering with Beijing Zhong Ke San Huan Hi-Tech.

Today, companies like Beijing Zhong Ke San Huan can produce voice coil actuators – linear electric motors that use a magnetic field and a coil of wire to generate force. This precision application for neodymium magnets was long dominated by Japanese manufacturers.

With China having entrenched itself in the rare earth industry by spending decades developing every stage of the supply chain, analysts have predicted that US efforts to revive its domestic industry and challenge China could take decades.

Apart from the Pentagon’s investment in MP Materials, which owns the Mountain Pass mine, Apple also signed a US$500 million, four-year deal with the company to secure a supply of rare earth magnets.

MP Materials announced in January that it had begun trial production of automotive-grade, sintered neodymium-iron-boron magnets and had started to produce neodymium-praseodymium metal.

“Now the US is re-entering by force,” Trillo-Figueroa said. “This isn’t about profit or market share, but a national security project.

“MP remains incomplete, yet its backing signals Washington’s intent to rebuild the entire value chain, whatever it takes. However, the effort faces obstacles.”

With Beijing’s commanding position in the supply chain, rebuilding would take years of costly investments and enduring political stamina for the US, he said.

“Meanwhile, Beijing may tighten exports or cut prices to undercut US progress, anytime.”

Intent on strengthening its rare earth productivity, the US has also been looking for global partners.

To fund a rare earth project in southern Greenland, Nasdaq-listed Critical Metals said in June that it had secured a loan of up to US$120 million from the Export-Import Bank of the US.

Also in June, US-based American Resources announced a partnership with an Indian firm to form a joint venture focused on recycling rare earth magnets from end-of-life products and extracting rare earth elements from such magnets.

But Dario Pong, founder of Hong Kong-based Ferro Resources, said India was “too far behind” in the industry, despite holding the world’s fifth-largest reserves of rare earth elements.

And it could take 10 years for the US to lay even just the foundation for manufacturing magnets, from mining to separation and magnet production.

“Even though the US or other countries can successfully get the basic work done, [they] have to use equipment from China in the entire process, eventually,” Pong said.

“Magnet production is the very key tech barrier for many countries, because only China and Japan have this technology,” he explained. “And even the top three Japanese magnet producers do the work in China.”