• The US shouldn’t disrespect China’s right to the high seas
• US envoy calls for barring Chinese-linked operators from key Panama Canal ports
• 90-day extension of US-China tariff truce is likely, US Commerce Secretary Lutnick says
• China-Russia trade hits 2025 high as Trump hints at 25% tariff over Russian oil imports
• China’s Buddhist regulator pledges stricter controls after Shaolin abbot scandal
• China plots pathway to tech supremacy through brain-computer interfaces
• China aims for its brain-computer interface firms to rival Elon Musk’s Neuralink
• Indian Prime Minister Modi ‘set for first China trip in 7 years’ amid Trump tariff row
• China’s ‘big advantage’; US debuts hypersonic missile: SCMP daily highlights
• Did US missiles in Philippines trigger China’s rocket launch?
• China should keep GDP growth between 4.5% and 5% for next 5-year plan: scholar
• 80% of mainland Chinese shoppers bought Hong Kong products online: poll
• Chinese influencer in Thailand shares trafficker-taken photos online to find birth family
• Scorch marks at Deep Blue’s test site in China point to reusable rocket failure
• Elderly Chinese draw flak for gathering in fast-food restaurants for free air conditioning
• China’s DJI launches first robot cleaner with drone-level obstacle avoidance system
• As China defuses its time bomb of debt, US hears the ticking intensify
• Hong Kong stocks surge on China’s surprisingly strong July exports
• ‘Dormant bombs’: unique genes that make us smart may also fuel cancer, China study shows
• NWD, China Resources Land to pay reduced premium for Northern Metropolis project
• US debuts Dark Eagle hypersonic missile in Australia with China in mind
• China boy stays calm by chanting classic poems while trapped in lift, gains online praise
• World robotics conference in China marks 10th year with JD.com as strategic partner
• How China used rare earths and the US playbook to turn on the chip tap again

The US shouldn’t disrespect China’s right to the high seas

https://www.scmp.com/opinion/china-opinion/article/3320974/us-shouldnt-disrespect-chinas-right-high-seas?utm_source=rss_feed

Last month, the United States coastguard “detected and responded to” the Chinese research vessel Xue Long 2 around 290 nautical miles north of Utqiagvik, Alaska. The US said the vessel was sailing within its “extended continental shelf” and implied the Chinese operation was engaged in “malign state activity”.

This reveals troubling inconsistencies in the US’ approach towards international maritime law, raising serious doubts about Washington’s commitment to the rules-based international order it so frequently claims to champion.

According to the United Nations Convention on the Law of the Sea (Unclos), waters beyond 200 nautical miles fall under the legal regime of the high seas. Article 87 of Unclos guarantees all states the freedom of navigation and marine scientific research in these areas.

The Xue Long 2, designed for polar research, was operating in accordance with this principle. Yet, the US, by invoking national security and treating the vessel as a threat, seeks to shift the burden onto China to justify lawful conduct.

In 2019, the International Tribunal for the Law of the Sea reaffirmed that even non-physical interference with freedom of navigation or scientific research can constitute a breach of international law. The US’ response to the Xue Long 2 is not just an isolated legal overreach but a symptom of a broader strategic posture that prioritises political expediency over legal consistency.

Unclos permits states and competent international organisations to conduct marine scientific research on the high seas and in “the Area” – which can be understood as the international seabed beyond national jurisdictions. Moreover, the convention makes clear that a coastal state’s rights over the continental shelf shall not infringe upon other states’ freedoms.

Even if the US had a validated claim, the scope of its regulatory authority under Unclos is limited. Restrictions on marine scientific research beyond 200 nautical miles are permitted when activities involve direct exploitation, drilling or harmful interference, none of which occurred in the Xue Long 2’s case.

For its extended continental shelf claims, the US cites Article 76 of Unclos. Yet, it has not ratified the convention and has made no formal submission to the Commission on the Limits of the Continental Shelf as required by Article 76 of the convention. In any case, even if a coastal state successfully claims an extension of its continental shelf under Article 76, this only changes the legal status of the seabed and subsoil in that area. It does not change the legal status of the water column above, which remains part of the high seas.

These processes serve the common heritage principle, reserving resources beyond national jurisdiction for the shared benefit of all peoples. This is especially evident in Article 76, as well as Article 82 of Unclos.

By asserting extended continental shelf rights without validation via the Commission on the Limits of the Continental Shelf, the US seems to selectively care about the Unclos provisions that suit its interests while discarding other provisions that impose constraints.

While the first section of Article 76 defines the continental shelf up to the natural prolongation limit and is widely accepted as customary international law, more detailed procedural rules are treaty-specific and are arguably not binding on non-parties.

Some have argued the US could establish its extended continental shelf unilaterally, relying on customary law. But the principle of the commission’s validation remains central to uniformity and legitimacy. Without it, extended continental shelf boundaries are indefinite and disputes over jurisdiction could remain unresolved.

Because the US has neither ratified Unclos nor made submissions to the commission, the seabed in areas beyond 200 nautical miles arguably belongs to the Area, subject to the common heritage principle in Unclos. China’s scientific mission in those waters is within the legal framework that the convention intended to foster.

By framing the Xue Long 2 as a national security threat, US rhetoric starkly contrasts with its own military surveys within China’s claimed exclusive economic zone. Such missions have included surveillance flights and warship patrols, activities which would violate Unclos Articles 88 and 301, which mandate the peaceful use of the seas.

This double standard reveals a pattern: when the US operates near the shores of other nations, it invokes freedom of navigation; when others do the same near its extended maritime claims, it cries foul under national security pretexts. The inconsistency erodes the credibility of Washington’s advocacy for a rules-based maritime order.

More importantly, the US cannot credibly argue that its rights to the continental shelf arise from treaty-based norms while not being a party to the relevant treaty in question. This selective engagement undermines the coherence of international law and threatens the stability of maritime governance.

The Xue Long 2 incident is a warning sign of escalating tensions in the Arctic. As climate change creates maritime routes and resource frontiers, powerful states are tempted to unilaterally advance their interests. The Arctic, already a geopolitical flashpoint, risks becoming a theatre of legal fragmentation unless states recommit to multilateral norms.

The US risks establishing a dangerous precedent where geopolitical interests override international law and scientific research is curtailed in the name of security. If the US wishes to champion a rules-based international order, it must lead by example – ratify Unclos, submit its claims to the Commission on the Limits of the Continental Shelf and comply with obligations relating to resource sharing. Selective adherence, strategic ambiguity and coercive enforcement are not the hallmarks of legal leadership, but symptoms of legal exceptionalism.

The US has not only violated China’s rights under Unclos. It has also undermined its own credibility as a steward of maritime law. Upholding the law of the sea requires consistency, transparency and respect for the rights of all states – large or small, rival or ally. Anything less invites disorder on the world’s oceans.

US envoy calls for barring Chinese-linked operators from key Panama Canal ports

https://www.scmp.com/news/us/diplomacy/article/3321147/us-envoy-calls-barring-chinese-linked-operators-key-panama-canal-ports?utm_source=rss_feed

The US ambassador to Panama on Wednesday called for the removal of Chinese-linked operators from key Panama Canal ports, sharpening Washington’s campaign to curb Beijing’s influence over Latin American strategic infrastructure.

Speaking during a visit to Colón, Kevin Marino Cabrera criticised Panama Ports Company, a subsidiary of Hong Kong-based CK Hutchison, and said Washington supported efforts to replace it.

“Our position is that they are a bad operator. They have not done a good job,” Cabrera said. “It is a company of the Communist Party. We are enthusiastic that they will soon no longer be operating those ports.”

He added that any new operators should be reliable companies “committed to supporting the Panamanian people”.

Cabrera’s remarks followed a series of political and legal developments surrounding the 25-year concession renewal granted to Panama Ports Company in 2021.

In late July, Panamanian Comptroller General Anel Flores filed two lawsuits before the Panamanian Supreme Court seeking to annul the contract. The filings allege the renewal process violated constitutional procedures and included financial irregularities.

Flores also accused the company of failing to pay nearly US$1.2 billion owed Panama under the agreement. The concession covers the Balboa and Cristóbal terminals, which are at the Pacific and Atlantic ends of the canal and handle a significant portion of Panama’s maritime traffic.

Also in late July, President José Raúl Mulino said he did not support “the continuation” of the contract and raised the possibility of replacing the current model with a public-private partnership in which Panama would hold a controlling stake.

The dispute has added new uncertainty to CK Hutchison’s plan to sell its global port portfolio in a deal worth around US$23 billion. The transaction, involving 43 ports worldwide, including those in Panama, was agreed to with a consortium led by BlackRock and the Mediterranean Shipping Company.

In March, China’s antitrust regulator announced a review of the deal, citing national interest. CK Hutchison later said it would bring in a strategic investor from mainland China to join the consortium, in a move widely seen as aimed at satisfying Beijing’s concerns.

Mulino’s proposal to restructure the port arrangement, however, has introduced further complications. Legal analysts have said shifting to a state-majority partnership would require congressional approval for financing and could delay implementation by up to 18 months.

Panama Ports Company said in a statement last week that engagement with the government was essential and that it would discuss the matter “at the appropriate time within the sale process”. The company called for dialogue and reiterated the importance of legal certainty and investor confidence.

Panama Ports holds 90 per cent of the concession, with the remaining 10 per cent owned by Panama’s government. According to company figures, it has invested more than US$1.69 billion in the country and paid US$126 million in dividends over nearly three decades.

The Balboa and Cristóbal ports handled nearly 40 per cent of Panama’s total container volume in 2024, according to the Panama Canal Authority.

The issue forms part of a broader strategic competition between the United States and China in Latin America. While Chinese investment in regional infrastructure has expanded during the past decade, Washington has increasingly raised concerns about what it sees as Beijing’s control over critical assets.

President Donald Trump has repeatedly accused Panama of charging excessive tolls and has even suggested the US could demand to retake control of the canal, which it handed over in 1999.

Cabrera, a Cuban American from Miami, was confirmed as ambassador earlier this year. He previously served as a Miami-Dade County commissioner and directed Trump’s 2020 campaign in Florida. After his nomination, he vowed to promote strong US-Panama ties and support “partnerships that serve both countries’ long-term interests”.

90-day extension of US-China tariff truce is likely, US Commerce Secretary Lutnick says

https://www.scmp.com/news/china/diplomacy/article/3321145/90-day-extension-us-china-tariff-truce-likely-us-commerce-secretary-lutnick-says?utm_source=rss_feed

A 90-day extension of a US-China tariff truce is likely, US Commerce Secretary Howard Lutnick said on Thursday, the most concrete signal from the US side about moving the deadline since bilateral talks concluded in Stockholm last week.

“I think we’re going to leave that to the trade team and to the president to make those decisions, but it feels like likely that they’re going to come to an agreement and extend that for another 90 days,” he said on Fox News when asked if the truce, which is set to expire on Tuesday, would be extended.

Lutnick made similar comments last week while the talks were under way July 28 and 29, noting that a 90-day extension was a likely outcome of negotiations. But after the talks, only the Chinese side declared a consensus on extending the pause on tariff increases.

US Trade Representative Jamieson Greer said in a CBS interview last Friday that the two sides were “working towards” an extension.

The commerce secretary spoke hours after US President Donald Trump’s sweeping worldwide tariffs came into effect on Thursday, imposing at least 10 per cent on imports from about 90 countries, after multiple rounds of delays since they were first announced in April.

Since April, the US has gradually increased tariffs on Chinese imports to as much as 145 per cent. In retaliation, Beijing imposed tariffs of up to 125 per cent and introduced export controls on strategic raw materials.

In May, both sides agreed in Geneva to a 90-day suspension of new tariffs. A second round of talks followed in June in London, where an understanding to ease export controls on US semiconductors and Chinese rare earth minerals was struck, before the most recent round in Stockholm.

Still, much appears in flux. On Wednesday Trump floated the idea that China could be subject to punitive tariffs for purchasing Russian oil, hours after he imposed 25 per cent tariffs on India for doing so. White House trade adviser Peter Navarro suggested on the same day that such action was unlikely because the higher duties might hurt the US.

On Thursday, Lutnick also elaborated on Trump’s Wednesday announcement that companies that manufacture semiconductors within the US would be exempt from 100 per cent tariffs on the chips they import, emphasising the role of an auditor in the process.

“If you commit to build in America during his term, and if you file it with the Commerce Department, and if your auditor oversees you building it all the way through, then he will allow you to import your chips while you’re building without a tariff,” Lutnick said on Fox.

Lutnick’s remarks came as Trump continues his pressure on the semiconductor industry, posting on Truth Social on Thursday that Lip-Bu Tan, the chief of California-based Intel, should resign due to being “highly conflicted”.

Earlier in the week, US Senator Tom Cotton, Republican of Arkansas, sent a letter to the chair of Intel’s board contending that Tan’s ties to Chinese companies could pose a national security threat.

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China-Russia trade hits 2025 high as Trump hints at 25% tariff over Russian oil imports

https://www.scmp.com/economy/china-economy/article/3321111/china-russia-trade-hits-2025-high-trump-hints-25-tariff-over-russian-oil-imports?utm_source=rss_feed

Bilateral trade between China and Russia reached its highest level of the year in July, with the latest customs data coming as US President Donald Trump has hinted that China could be next to join India in facing a 25 per cent punitive tariff over continued purchases of Russian oil.

Total trade between China and Russia stood at US$19.14 billion in July, up 8.7 per cent from June, according to figures from China’s General Administration of Customs released on Thursday. But that marked a 2.8 per cent decrease from a year earlier.

In the first seven months of 2025, total trade between China and Russia also fell 8 per cent, year on year, to US$125.8 billion.

China’s imports from Russia in July totalled US$10.1 billion, up 4.02 per cent from a year earlier. But in the same month, Chinese exports to the country dropped by 8.91 per cent, year on year, to US$9.1 billion.

Russia was one of China’s leading crude suppliers last year, shipping a record 108.5 million tonnes, or 19.6 per cent of its total oil imports, Chinese customs data showed.

However, oil deliveries in July fell compared with June – amounting to less than 4 million tonnes, according to figures from Ukraine’s Foreign Intelligence Service. Chinese customs authorities are expected to release detailed oil-trade data from Russia on August 20.

For the first seven months of 2025, Russian tankers shipped 32 million tonnes to China – 4 million less than during the same period in 2024, according to the Ukrainian agency.

Official Chinese figures also show a slowdown, with the volume of Russian oil imported from January to June down 10.9 per cent, year on year, to 49.11 million tonnes.

Despite blanket Western sanctions on Moscow, China-Russia trade – under their “no limits” strategic partnership announced in 2022 – hit record highs in 2024. However, the US and EU have increasingly tried to cut off Russia’s lifelines by threatening secondary sanctions on those seen as helping it.

India has not said whether it would retaliate against Washington’s latest tariffs with levies on American products. Meanwhile, White House envoy Steve Witkoff met Russian President Vladimir Putin in Moscow on Wednesday, ahead of a Friday deadline for the country to reach a ceasefire with Ukraine or face new economic sanctions.

Oxford Economics put the odds of Russia agreeing to a 30-day ceasefire with Ukraine at 30 per cent.

On Wednesday, the economic advisory firm said it expected the main buyers of Russian oil – China, India and Turkey – to use their leverage over Moscow to “stave off sanctions” and provide it with “an opportunity for rapprochement with the US”.

Aleksei Chigadaev, a former visiting lecturer at the Higher School of Economics in Moscow, said China’s leadership views Russia as “a strategic buffer, a source of discounted raw materials, and a geopolitical partner that helps counterbalance the West”.

However, he noted that Beijing remained cautious and would not jeopardise its broader interests, such as access to global markets and technology.

“China has an incentive to reduce imports from Russia marginally, [and] to negotiate a relaxation of US measures without jeopardising its relationship with Russia,” said Matt Gertken, chief geopolitical strategist at BCA Research in Canada.

China’s Buddhist regulator pledges stricter controls after Shaolin abbot scandal

https://www.scmp.com/news/china/politics/article/3321135/chinas-buddhist-regulator-pledges-stricter-controls-after-shaolin-abbot-scandal?utm_source=rss_feed

China’s Buddhist regulator has promised to impose stricter discipline and supervision on the religion in the wake of the scandal surrounding the disgraced abbot of the Shaolin Temple.

The Buddhist Association of China said in a lengthy statement on Thursday that it would “further deepen the comprehensive and strict governance of religion” after Shi Yongxin was placed under investigation for alleged financial and sexual misconduct.

It said Shi’s actions had “a serious negative impact on the healthy transmission of Buddhism” and added that he may not only face severe criminal penalties but also severe karmic consequences.

Shi is facing a criminal investigation over accusations he embezzled project funds and temple assets.

He is also accused of maintaining improper relationships with multiple women and fathering children with them, according to a statement released by the temple last month.

The regulator has also cancelled his ordination certificate.

Shi, the holder of an MBA who was nicknamed the “CEO monk”, was ordained in 1981 and became the abbot of Shaolin Temple in 1999.

Since then he has transformed the monastery in Henan province – known as the birthplace of Zen Buddhism and Shaolin kung fu – into a multibillion-dollar global brand.

Shi was also the former head of the provincial Buddhist association and a member of China’s rubber-stamp parliament for two decades.

If Buddhists – especially monks who bear the heavy responsibility of upholding Dharma, the Buddha’s teachings – break the fundamental precepts of the religion, it will inevitably lead to the corruption and decline of Buddhism as a whole, the association said.

“Upholding the precepts is not merely a personal matter for individual Buddhists, it is a matter of great importance that concerns the public image of Buddhism … and the future and destiny of the religion itself,” it added.

“This will cause society to despise or even reject Buddhism, ultimately pushing the religion toward destruction.”

The association also cited a 2021 conference on national religious work, attended by President Xi Jinping, in stressing the need for self-discipline among religious communities and the “comprehensive and strict governance of religion”.

The Communist Party’s policy of “Sinicising religion,” aims to bring all doctrines and practices into line with its ideology and ensure loyalty to the party and state.

“Shi Yongxin’s serious misconduct has served as a wake-up call for Buddhists across the country,” the Buddhist association added, saying internal oversight mechanisms needed to be improved.

It stressed its support for the investigation into Shi and said it would “draw deep lessons” from his case to promote the healthy transmission of Buddhism in China.

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China plots pathway to tech supremacy through brain-computer interfaces

https://www.scmp.com/news/china/science/article/3321136/china-plots-pathway-tech-supremacy-through-brain-computer-interfaces?utm_source=rss_feed

China has unveiled a road map to achieve critical technological advances by 2027, with brain-computer interfaces (BCI) playing a pivotal role in the nation’s tech rivalry with the United States.

Seven ministries, including the Ministry of Industry and Information Technology, jointly released a policy blueprint on Thursday providing innovation and implementation guidelines for China’s BCI industry.

The document mandates that breakthroughs in key technologies – such as electrodes, chips and integrated products – reach advanced international standards by 2027.

While global attention has centred on Elon Musk’s Neuralink, China has been quietly advancing a state-backed neuroscience revolution.

China aims to position itself among the top global BCI innovators by 2030 and cultivate two to three global industry leaders in the field. The policy frames BCI – a frontier technology merging life sciences and information science – as a critical battlefield in the US-China tech rivalry.

Chinese research teams have already established various technical approaches across non-invasive, semi-invasive and invasive BCI categories.

At Nankai University in Tianjin, Professor Duan Feng’s team pioneered a vascular intervention method requiring only a neck micropuncture to insert a 2mm (0.08 inch) electrode scaffold into cerebral vessels.

In June, the technique restored autonomous grasping in a stroke patient to 82 per cent of healthy-side strength within two weeks, with a signal stability of 99.7 per cent.

The biomimetic spider-web electrode mimics vascular pulsation to avoid brain tissue damage, with clinical trials now under way in Beijing and Wuhan.

Meanwhile, Tsinghua University’s approach involves implanting a coin-sized processor beneath the skull, placing electrodes over the dura mater without penetrating brain tissue.

Three quadriplegic patients implanted with the device achieved more than 90 per cent accuracy in water bottle grasping tests and self-feeding via mind-controlled pneumatic gloves.

Follow-up studies revealed an unexpected benefit: neural regeneration through BCI training, suggesting new pathways for spinal cord repair. The team’s brain-inspired chips also reduced energy consumption while accelerating signal processing.

A team from the Chinese Academy of Sciences and Huashan Hospital in Shanghai developed a coin-sized ultra-flexible electrode that was 100 times more flexible and only about one-fifth the width of Neuralink’s threads.

Its core innovation – a dynamic neural decoder – has enabled signal transmission with latency under 100ms and exceptional stability.

Beyond medical applications, the team plans to control robotic arms and embodied AI robots later this year, expanding into broader human-machine interaction scenarios.

The three technical pathways collectively address needs from minimal risk to ultra-high precision.

The government directive bolsters the ecosystem through full-chain support: electrode development to focus on better biocompatibility and signal-to-noise ratio; specialised chips to target high-channel acquisition and ultra-low-power processing; and AI-powered decoding software to improve cross-scenario adaptability. In addition, high-precision surgical robots will need to be developed to implant brain-computer interfaces.

Crucially, a plan by the Shanghai Science and Technology Administrative Service Centre includes BCI in its “future industry standards” initiative, offering 500,000 yuan (US$69,650) per international standards project.

Medical reimbursement barriers will also be eased. In March, Hubei province established China’s first pricing standard for invasive BCI procedures at 6,552 yuan per session.

The National Healthcare Security Administration has also established relevant charging items in the system, policy support that is considered vital given existing surgical costs.

China has 28 million stroke patients – a number that grows by 3 million annually – and about 4 million spinal cord injury cases.

The “clinical needs-driven R&D” model has accelerated technological iteration, according to the document, with policy coordination across ministries and existing medical device distribution networks covering thousands of hospitals aimed at improving pathways to commercial applications.

The policy document outlines the future application scenarios across various fields: in healthcare, innovation will focus on the diagnosis and treatment of neurological disorders and the restoration of motor functions; in industrial settings, research will explore brain-controlled robots and operations in extreme environments; and in the consumer sector, attention will be given to products such as driver-status monitoring systems and brain-controlled home appliances.

As policy, capital and technology converge, China will transform the “science fiction of BCI” into clinical reality, the document said.

China aims for its brain-computer interface firms to rival Elon Musk’s Neuralink

https://www.scmp.com/tech/tech-trends/article/3321123/china-aims-its-brain-computer-interface-firms-rival-elon-musks-neuralink?utm_source=rss_feed

Chinese brain-computer interface (BCI) companies, such as Nanjing Panda Electronics and MicroPort NeuroScientific, are benefiting from supportive policies, as the country vows to develop “two or three” global players in the sector by 2030 to compete with US entrepreneur Elon Musk’s Neuralink.

In a document released on July 30 by seven ministries, including the Ministry of Industry and Information Technology, China outlined its goal to achieve breakthroughs in key BCI technologies by 2027. The plan includes establishing an advanced technology system and an industrial framework.

While the government did not specify which companies it would support, its target of creating “two to three leading players” has generated excitement among investors. In addition, policymakers aimed to nurture numerous “little giants” and “unicorns”, underscoring its commitment to developing BCI technology into a robust industry.

In Hong Kong, shares of Nanjing Panda Electronics jumped over 19 per cent on Thursday, while MicroPort NeuroScientific rose 8 per cent. In Shanghai, Xiangyu Medical gained more than 11 per cent, and Jiangsu Apon Medical Technology increased nearly 8.5 per cent.

China’s initiative represents a significant government endorsement of BCI technology. Cities and universities across the nation are conducting BCI-related clinical trials, while hospitals in Beijing and Shenzhen opened BCI wards in the first half of this year.

BCI technology is mainly used in medical rehabilitation by directly reading neural signals to facilitate communication between the human brain and external devices.

In June, a team from Nankai University in the northern port city of Tianjin said it ran the world’s first interventional BCI experiment on a human, successfully helping a hemiplegic person regain motor function in an affected limb.

The team said that when compared with Neuralink’s first clinical trial of an invasive BCI device implant in January 2024, the Chinese operation had advantages such as reduced trauma, higher signal acquisition accuracy and shorter recovery times.

In February, Shanghai-based company StairMed made headlines by raising 350 million yuan (US$48 million) in what it called the largest-ever funding round for a Chinese BCI start-up. For comparison, US leader Neuralink completed a US$650 million financing round in June, valuing the company at about US$9 billion.

The global BCI market was valued at US$2.62 billion last year and was projected to reach US$12.40 billion by 2034, according to data from market intelligence and consulting firm Precedence Research in March.

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Indian Prime Minister Modi ‘set for first China trip in 7 years’ amid Trump tariff row

https://www.scmp.com/news/china/diplomacy/article/3321120/indian-prime-minister-modi-set-first-china-trip-7-years-amid-trump-tariff-row?utm_source=rss_feed

Indian Prime Minister Narendra Modi will visit China later this month, according to media reports, as the thaw between the two countries gathers pace at a time when New Delhi’s relations with the United States have been hit by growing trade tensions.

Modi will visit between August 31 and September 1 for a Shanghai Cooperation Organisation (SCO) summit in the northern city of Tianjin, according to multiple Indian outlets.

Ties between the two Asian giants have seen a steady improvement in recent months after a deadly clash along their disputed border in 2020 brought relations to their lowest point in decades.

The trip would be Modi’s first to China in seven years and pave the way for Modi to meet President Xi Jinping for the first time since they came face to face in Russia 10 months ago.

It comes amid growing strains between India and the US – including this week’s announcement of 50 per cent tariffs – that have prompted speculation New Delhi may shift its approach towards China.

The foreign ministries in Beijing and Delhi have been asked for comment.

“It’s very clear that China-India relations are in a state of continuous improvement,” Lin Minwang, deputy director of the Centre for South Asian Studies at Fudan University in Shanghai, said.

He said India had not been deeply engaged with the SCO – a regional security and economic group – in recent years, but a visit could be “a reflection of India re-engaging with the [bloc]”.

“[The visit] signifies a pivotal step towards reconciliation, reflecting the evolving attitude of both nations, the international settings and the realisation of the critical role that India-China play in global stability and order,” said Rajiv Ranjan, associate professor of Chinese Studies at the University of Delhi.

He also said the trip would underscore the significance for China-India ties of blocs such as the SCO, where small groups of countries cooperate on specific areas of interest.

Lin said Modi’s visit should not be tied to US President Donald Trump’s announcement that he would raise tariffs on India to 50 per cent later this month for ignoring his warnings to stop buying Russian oil.

He said the Indian leader’s visit was likely to have been planned in advance and it was “very clear that since last year Modi has quietly been adjusting his previously one-sidedly pro-American policies”.

“But how far he can go in improving relations with China, the SCO and Russia remains to be seen,” Lin added.

“For India, this is currently part of its balancing diplomacy. Improving relations with China and Russia, participating more actively in SCO activities, and using this as leverage to help resolve its conflicts with the US and the West.”

New Delhi rejected the US tariff hike as “unfair, unjustified and unreasonable”, while Trump warned China could be next.

Ranjan said Trump’s tariff threats “highlight the dangers of unilateralism and hegemonic behaviour, which both India and China have encountered” and “may introduce a new dimension to India-China relations”.

But he said any benefits were likely to be “limited and short-lived” so the two sides should “not only recalibrate their current bilateral mechanisms but also establish new frameworks that ensure sustainable and constructive engagement”.

Before the recent souring of the US-India relationship, China and India had already been working to improve relations following the deadly clash between their troops in the disputed Galwan Valley in June 2020.

Earlier this year, China reopened access to Tibet for Indian pilgrims, while India eased visa restrictions for Chinese travellers. The two sides have also said they were working to resume direct flights.

India’s defence and foreign ministers have visited China in the past two months, while diplomats said the latest round of talks on resolving border tensions two weeks ago went “positively”.

However, earlier this week India carried out joint naval drills with the Philippines in the disputed South China Sea, prompting Beijing to warn “no third party is in any position to interfere”.

India and the Philippines also referred to Manila’s long-running maritime dispute with Beijing when President Ferdinand Marcos Jnr visited New Delhi this week.

On Wednesday, both nations expressed “concern for the situation in the South China Sea” and said a 2016 ruling by a tribunal in The Hague should be the basis for “peacefully resolving disputes in accordance with international law”.

The ruling said China’s expansive claims in the waters had no basis in international law, but was dismissed by Beijing as “illegal, null and void”.

China’s ‘big advantage’; US debuts hypersonic missile: SCMP daily highlights

https://www.scmp.com/news/china/article/3321126/chinas-big-advantage-us-debuts-hypersonic-missile-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 .

Concerns over China’s local-level debt have long loomed large in international discourse, with a mountain of “hidden” debt viewed as a “ticking time bomb” that threatens to trigger a cascade of defaults while posing a risk to financial stability.

China’s exports continued to accelerate in July as a fall in shipments to the United States was offset by growth in a range of markets including Africa, Europe and Latin America, with chip exports surging by nearly 30 per cent year on year.

A genetic study in China that could have major implications for human evolution – and cancer research – has shown that a special type of recently evolved gene can be sequestered by cancerous tumours to fuel their growth.

When the US president unveiled his tariffs in April, China knew it had a trump card that had been quietly gaining in value over the decades and that no other country in the world held. As the threatened tariffs rose, Beijing announced that it was imposing export controls on seven rare earth elements and magnets.

The US appears to be strengthening its allied deterrence against China by deploying its Dark Eagle hypersonic missile, a move that could “further intensify” regional rivalry, Chinese experts have warned.

Taiwan’s collection of cyberhackers may not be sophisticated, but they are “diligent” when it comes to executing attacks on various mainland Chinese targets, according to one of the country’s top cybersecurity experts.

Pakistan is deepening technological cooperation with China, expanding beyond aircraft and missiles to advanced sectors such as space exploration and nuclear technology, according to the country’s planning minister.

Did US missiles in Philippines trigger China’s rocket launch?

https://www.scmp.com/week-asia/politics/article/3321122/did-us-missiles-philippines-trigger-chinas-rocket-launch?utm_source=rss_feed

A Chinese rocket launch that triggered loud explosions and panic in the western Philippine province of Palawan has drawn sharp condemnation from Manila, with observers suggesting Beijing may have been sending a geopolitical signal amid growing US missile deployments in the region.

The Philippine Space Agency (PhilSA) confirmed on Monday that China had launched its Long March 12 rocket from the Wenchang Space Launch Site in Hainan that afternoon, after residents in Palawan’s capital, Puerto Princesa, and nearby areas reported hearing loud explosions.

PhilSA said debris from the launch was expected to fall about 21 nautical miles off Puerto Princesa and 18 nautical miles from the Tubbataha Reefs Natural Park – areas previously designated as drop zones.

In response, authorities across Palawan monitored the province’s eastern waters for debris after sonic booms were heard across the island.

Locals posted photos of smoke and a fiery object falling from the sky on social media.

“Did you hear it too? Two loud explosions, as if a drum fell from the sky, were heard,” local news publication Palawan News wrote online on Monday.

Local radio station Brigada FM wrote that residents on Monday evening were startled by a loud sound, followed by the ground shaking.

While Monday’s launch was not the first time China had tested its rockets near the Philippines, “to our knowledge, this is the first time that this has been experienced by people residing near the designated drop zones”, PhilSA told This Week in Asia.

“As the Long March 12 rocket passed over Palawan, its condensation trail became visible and sonic booms were reported to be heard by residents in nearby municipalities,” PhilSA added, a first since China began testing its rockets near the Philippines.

National Security Adviser Eduardo Año on Tuesday slammed China’s rocket launch, calling it “irresponsible testing” that alarmed the public “and placed the people of Palawan at risk”.

“Loud explosions caused by the Chinese rocket launch caused widespread alarm and concern in Puerto Princesa City and other municipalities, particularly in coastal barangays in the province,” Año said in a statement. “Local residents also saw a fire ball cross the sky that later exploded causing the ground to shake.”

The Philippines’ Department of Foreign Affairs on Wednesday called on “all spacefaring states to conduct their space activities in a manner consistent with norms of responsible behaviour, and with due regard to the rights and interests of other states”.

The country would continue to work with China on “appropriate notification mechanisms on rocket launches” and management of post-launch impacts, it added.

The space agency also warned about the dangers from the aftermath of the rocket launch, adding that unburned debris from rockets such as its booster and fairing posed “danger and potential risk to ships, aircraft, fishing boats, and other vessels that will pass through the drop zone”.

PhilSA said the debris could wash towards nearby coasts. It did not rule out the “possibility of an uncontrolled re-entry to the atmosphere of the rocket’s upper stages returning from outer space”.

The timing and proximity of the launch have led some analysts to suggest that Beijing may be signalling its displeasure over the presence of US missile systems in the Philippines – particularly the NMESIS anti-ship missiles and HIMARS artillery rockets – after previously calling for the removal of the Typhon system.

“This is not the first time that Chinese rocket debris has fallen into waters close to Philippine shores, but concerns were raised about their increasing intensity and proximity to the country’s shores,” Lucio Blanco Pitlo III, a geopolitical analyst and a research fellow at the Asia-Pacific Pathways to Progress Foundation, told This Week in Asia.

“It is speculative to say that the locations of the debris signals Beijing’s irritation about its smaller coastal neighbour, but it cannot be discounted.”

Palawan – the country’s westernmost province and near the disputed Spratly Islands – hosts sites that permit access to US troops under a defence agreement between Washington and Manila. One of these sites is Balabac Island, a new location “in the extreme south of the frontline province”, according to Pitlo.

“Last September, as the US Typhon mid-range missile system stayed despite some reports that it would be pulled out, China staged its first intercontinental ballistic missile test launch in 44 years,” he told This Week in Asia.

The missile’s flight path flew close to the site of the Typhon in Ilocos Norte – a northern province facing Taiwan – before terminating in the French Polynesia’s exclusive economic zone in the Pacific Ocean, he added.

“As reports of a possible second Typhon deployment surface – apart from Manila already hosting US NMESIS anti-ship missiles – where the recent rocket debris landed may be taken as a manifestation of Beijing’s increasing ire,” Pitlo said.

Chester Cabalza, founder and president of the think tank International Development and Security Cooperation, shared similar views.

The Long March 12 test launch could be “[Beijing’s] answer to the US’ NMESIS and HIMARS known to be deployed in key strategic locations in the West Philippine Sea and its northern frontline in Luzon”, Cabalza said, noting that the systems were deployed to the Luzon Strait near Taiwan during the annual Balikatan and Kamandag joint military exercises between American and Filipino forces this year.

It was possible that China wanted “to test its multipronged dominance in all domains, including aerial space, to weaken Manila’s strong defiance against Beijing”, he said.

“What sort of message does it give us if our biggest neighbour would scare civilian Filipinos in Palawan who are not used to exploding rockets?” Cabalza asked.

“If they want to rehearse and simulate their rocket testing, China should have done it in their own landlocked territory and not in disputed waters where neighbours may feel unsafe.”

China should keep GDP growth between 4.5% and 5% for next 5-year plan: scholar

https://www.scmp.com/economy/china-economy/article/3321104/china-should-keep-gdp-growth-between-45-and-5-next-5-year-plan-scholar?utm_source=rss_feed

China will need to achieve annual gross domestic product growth of at least 4.5 per cent over the next five years to reach a 2035 benchmark, with a figure of “around 5 per cent” ideal for hitting the politically important target, a top Communist Party publication has suggested.

The country’s average annual growth rate “has to exceed 4.5 per cent” to ensure China has the per capita GDP of “moderately developed countries” by that year – a goal set during the party’s 20th National Congress in 2022 – wrote Cui Youping, a professor at the Institute of Party History and Literature, in an article for the Study Times on Wednesday.

The article, outlining eight priorities for the 15th five-year plan – a blueprint for the next half-decade of national development – was published on the front page of the journal owned by the Central Party School, China’s premier ideological training centre.

Other priorities included in the piece were technological advancement and the improvement of people’s livelihoods.

“If a growth rate of around 5 per cent is maintained during the 15th five-year plan period, it will lay a solid foundation for achieving the 2035 goal,” added Cui, whose institute is directly under the party’s powerful Central Committee.

Citing World Bank data, he noted that the per capita GDP of moderately developed countries is around US$30,000. China’s was US$13,400 in 2024.

However, said JD.com chief economist Shen Jianguang, even if Beijing sets its growth target towards the lower end of the range, it will still be on track to reach its development target.

“As incomes get higher and the workforce declines, it will become increasingly difficult to maintain previous growth rates,” he said, noting that growth is likely to reach 5 per cent in 2025, which provides some flexibility for a slightly lower growth target in the years after.

Shen added that the yuan is expected to appreciate slightly against the US dollar in the next five years, which would also help, since the per capita GDP level for moderately developed countries is calculated in dollars, while China primarily uses its own currency.

“Therefore, we might not even need a 4.5 per cent growth rate to reach a GDP per capita of US$30,000,” he said. “If a 4.5 per cent target is set, the goal is completely achievable.”

The Central Committee will discuss the plan during its fourth plenary session, scheduled to be held in October. President Xi Jinping has stressed that the plan must “unify top-level design with consultation with the people”.

During a public consultation period from May to June, over 3.1 million suggestions and comments were delivered via online platforms. Xi subsequently encouraged the study of these suggestions, state news outlet Xinhua reported on Tuesday.

Though China’s economy expanded by 5.3 per cent in the first six months of the year, putting it on track to meet the annual growth target of “around 5 per cent”, concerns linger over persistent weaknesses in domestic demand and employment.

In the Study Times article, Cui argued that the solution to these issues is innovation.

“Scientific and technological innovation will become a key factor in driving China’s economic transformation, industrial upgrading and enhancing its core competitiveness,” he said, calling for further investments in high-end computer chips, artificial intelligence and biotechnology over the next five years.

Cui noted that traditional industries still account for over 80 per cent of China’s manufacturing sector. However, these industries, which have relied on exports and absorbed the bulk of the nation’s workforce, have been significantly affected by rising labour costs and external shocks.

Modernising China’s industries is thus critical to shifting its economy from old to new growth drivers, the professor said.

While Chinese shipments to the US – its largest export market – fell 21.7 per cent year on year in July in response to high effective tariff rates, the nation’s total exports remained resilient, rising 7.2 per cent over the same period, fuelled by demand from other markets and a surge in chip shipments.

80% of mainland Chinese shoppers bought Hong Kong products online: poll

https://www.scmp.com/news/hong-kong/hong-kong-economy/article/3321117/80-mainland-chinese-shoppers-bought-hong-kong-products-online-poll?utm_source=rss_feed

Nearly 80 per cent of mainland Chinese consumers polled said they shopped online for Hong Kong products, according to survey findings by the statutory trade body, which called for the city’s retailers to step up live streaming and influencer marketing to boost market share.

The Hong Kong Trade Development Council said on Thursday that its findings were based on a survey of 2,200 middle-to-high-income consumers from various mainland cities during the second and third quarters of 2024.

The survey showed that 78 per cent of mainland consumers bought products from the city online in the past year, and that they were frequent shoppers, averaging 9.4 purchases per month, particularly those in tier one and the nine cities in the Greater Bay Area.

“When shopping online, mainland consumers’ primary consideration is whether the products are genuine, not low prices,” council director of research Irina Fan Yuen-yee said.

“This suggests that Hong Kong businesses can leverage the superior quality of Hong Kong products and the strong reputation of Hong Kong brands in mainland China to expand into the mainland e-commerce market.”

Online shopping for Hong Kong products was particularly popular among young mainland consumers aged 18 to 29, with 83 per cent of this group having made an online purchase in the past year, the survey showed.

These consumers, along with others, valued authenticity, a wide selection and the reputation of merchants over low prices and other factors.

Consumer electronics and electrical products were the most sought-after items with 72 per cent of respondents buying them, followed by luxury goods and fashion products.

But council principal economist Chu Wing-chor said that mainland consumers who purchase Hong Kong merchandise online tended to spend a higher average order amount on children’s products, drugs and health supplements and pet products compared with the overall average.

“Hong Kong merchants selling these items should take note of that when it comes to marketing their products,” Chu said.

The survey also indicated that most consumers surveyed prioritise promotional offers when contemplating the purchase of a new product or brand, and that they actively sought out user reviews on different e-commerce and social media platforms, including live streaming and short videos.

“Some Hong Kong businesses are still unfamiliar with how to communicate with mainland Chinese consumers,” council economist Eric Chu Tak-hin said.

He added they might consider using multichannel operation strategies, leveraging both traditional e-commerce sites such as Taobao and emerging interest-based platforms like RedNote and Douyin to reach different consumer groups and increase traffic.

Eric Chu advised that Hong Kong merchants should refrain from solely chasing after the most popular influencers to prevent excessively high costs and insufficient returns.

“It is crucial to conduct thorough market analysis and utilise data to choose the right influencer endorsements that align with their products to emphasise authentic user experiences,” he said.

The council revealed its findings amid its flagship event, the Hong Kong Shopping Festival 2025, which would take place on mainland e-commerce platforms from August 1 to 31.

The festival has attracted nearly 260 brands offering more than 500 unique products across seven major categories, including food and fashion.

In addition to month-long discounts, the event will debut seminars on cross-border e-commerce, logistics, e-payments, digital marketing and live-streaming production.

The festival is part of the council’s efforts to help Hong Kong companies expand into the mainland market, as the city is undergoing economic transformation.

Chinese influencer in Thailand shares trafficker-taken photos online to find birth family

https://www.scmp.com/news/people-culture/trending-china/article/3320443/chinese-influencer-thailand-shares-trafficker-taken-photos-online-find-birth-family?utm_source=rss_feed

A Chinese online influencer based in Thailand has told how she was trafficked when she was a little girl and now hopes to find her biological family.

The woman in her early 20s, who is known as Aurora online, has 5 million followers on social media.

She has also been dubbed “Sister Toufu” because of a viral video showing her buying the food, Jiupai News reported.

Her videos are usually about her life studying in Thailand, travelling across the country and trying Thai food.

On June 30, however, Aurora released a sad video in which she told of her kidnap ordeal.

She said she did not know where her biological family lived or what her original name was.

She did recall that her family was a happy one. Her biological parents loved her, while her brother and two sisters often took her to play near a creek.

When she was about five years old, her father took her to another city on a motorbike, where she was told to call another woman “mum”. They then lived together.

Not long after that, Aurora was kidnapped by a woman while she was playing on the street. That woman took her to a village in central Henan province where she was sold to a man in his 50s.

According to Aurora, her adoptive father did not have a wife.

He hoped his adoptive child could excel in her studies and be admitted to a prestigious university.

However, Aurora did not study well, resulting in frequent beatings by her adoptive father.

Both he and his brother-in-law sexually assaulted her, she revealed.

Aurora said she had tried to kill herself but failed. Later, she went to study at a tertiary education institute and opened a shop on the internet to earn money to support herself.

In 2022, Aurora went to Thailand to study after self-learning Thai.

“I often saw videos of people looking for biological families and of family reunions. For the past over 10 years, I have been thinking of my biological parents every day. So I got up the courage to do this video to share my own story,” Aurora said.

“I hope my parents, my brother, or my sisters can see my video and contact me,” she said.

She also released a picture of herself taken by the kidnapper at a railway station before they embarked on their journey to Henan.

Mainland Chinese internet users suggested the place could be Guangzhou North Railway Station in Guangdong province, southern China.

In early July, Aurora returned to China and reported her case to police in Guangzhou. The investigation is ongoing.

“I will be content as long as I know how things are going with my parents and if they are healthy or not. I would like to tell them that no matter if they are rich or poor, I still love them,” Aurora said.

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Scorch marks at Deep Blue’s test site in China point to reusable rocket failure

https://www.scmp.com/news/china/science/article/3321091/scorch-marks-deep-blues-test-site-china-point-reusable-rocket-failure?utm_source=rss_feed

A leading Chinese rocket company appears to have quietly failed another key reusability test, casting doubt on its goal of flying and landing China’s first reusable rocket.

Publicly available satellite images suggest an explosion took place at Deep Blue Aerospace’s test site near Ejin Banner, Inner Mongolia, some time between late July and early August.

Dramatic scorch marks can be seen east of the launch pad – on the opposite side from where the rocket was supposed to land – indicating it may have veered off course shortly after lift-off before crashing during its attempted touchdown.

The company did not respond to inquiries from the South China Morning Post. However, a source familiar with the matter who asked not to be named confirmed that the flight had “ended in failure”.

The test was believed to be a vertical take-off, vertical landing (VTVL) flight, similar to one carried out by Deep Blue about a year ago, according to the source. In a VTVL, a prototype rocket lifts off vertically and tries to land back at or near the same spot, a crucial step in developing reusable launch systems.

In that September 2024 flight, the rocket completed most of its planned manoeuvres but lost control during the final descent, crash-landing on the recovery pad and damaging its upper section.

If confirmed by the company, the more recent flight would be a step backwards in terms of control and precision.

The Jiangsu-based company was once seen as a front-runner in China’s commercial reusability race. In 2021 and 2022, it used a prototype of its Nebula‑1 rocket, powered by kerosene and liquid oxygen, to successfully conduct three VTVL tests at the 10-metre (33 feet), 100-metre and 1km levels.

These early wins were not only the first successful VTVL tests in China using a liquid-fuelled rocket, but also helped Deep Blue attract new investment and position itself as one of the most ambitious players in the country’s commercial push for reusable launch systems.

After last year’s flight, the company said the rocket had reached its target altitude of 5km and achieved “10 of 11” key technical goals. Its team would quickly analyse the failure to prepare for future recovery flights, it said.

In a March update, Deep Blue said a follow-up VTVL mission would take place soon, and that a full orbital launch of its two-stage Nebula‑1 rocket – along with a first-stage recovery attempt, similar to SpaceX’s Falcon 9 – was targeted for mid-2025.

The recent test flight may have involved a problem with the rocket’s control system, as scorch marks appeared hundreds of metres east of the launch pad, far from the designated recovery pad, according to a space enthusiast group analysing satellite imagery captured by Europe’s Sentinel‑2 satellite on July 28 and August 2.

“The density and radial pattern of the scorch marks suggest the flight termination system likely did not trigger,” the group said. “The rocket appears to have exploded on impact, meaning the control system may not have performed as intended in a failure scenario.”

Meanwhile, several of Deep Blue’s rivals are pressing ahead with plans to debut their own reusable rockets. Companies including Space Pioneer and LandSpace have announced that they hope to pass major flight milestones this year.

Elderly Chinese draw flak for gathering in fast-food restaurants for free air conditioning

https://www.scmp.com/news/china/article/3321074/elderly-chinese-draw-flak-gathering-fast-food-restaurants-free-air-conditioning?utm_source=rss_feed

Elderly Chinese gathering in fast-food restaurants in places such as Shanghai and Shandong have been criticised online for not ordering anything while occupying seats.

China’s DJI launches first robot cleaner with drone-level obstacle avoidance system

https://www.scmp.com/tech/article/3321088/chinas-dji-launches-first-robot-cleaner-drone-level-obstacle-avoidance-system?utm_source=rss_feed

Chinese drone champion DJI has launched its much-awaited vacuum cleaning robot that is equipped with drone-level obstacle avoidance capabilities, in a move that intensifies competition in the country’s crowded robot vacuum market.

The new Romo series is a combination vacuum cleaner and mopping robot. Equipped with binocular fish-eye vision sensors and three wide-angle lidars, the machine can avoid thin items like playing cards and cables thicker than 2mm, according to a post on DJI’s WeChat account on Wednesday.

The unit has a battery life of three hours, enabling it to clean an area of roughly 178 square metres (1,916 sq ft) and can be fully charged in 2.5 hours. It can operate in environments of between 0 and 40 degrees Celsius.

The cleaner, with a built-in water tank with a capacity of 164 millilitres, can adjust the water volume and automatically add more when encountering excess dirt. The mop will automatically lift when it encounters a carpet.

Users can connect to the cleaner remotely using a phone, which allows them to see what’s happening, like a security camera function, as well being able to talk to family members at home.

The new product comes in three models, with the most expensive Romo P featuring a see-through outer shell for the cleaner and dock, while the cheapest Romo S has a white cover for both.

The product is covered by the Chinese government’s 15 per cent subsidy for electronic devices, with an additional discount of 300 yuan (US$42) offered by DJI. Applying both discounts, buyers of the 4,699 yuan Romo S can purchase the machine for 3,739 yuan.

The cleaner, currently only available in mainland China, has sold more than 4,300 units on Alibaba Group Holding’s Tmall and JD.com since its launch on Wednesday night. Other channels, such as DJI’s website and its store on ByteDance’s Douyin short video platform, did not disclose sales volume.

Alibaba owns the South China Morning Post.

DJI has ventured into a sector already crowded with Chinese players. Worldwide shipments in the robotic cleaner segment reached 20.6 million units last year, up 11.2 per cent year on year, led by China’s Roborock with a 16 per cent global share, followed by US-based iRobot with 13.7 per cent. The remaining names in the top five were all Chinese firms – Ecovacs Robotics, Xiaomi and Dreame – according to market research firm IDC.

Ecovacs, Roborock and Narwal were the top three suppliers in the mainland China market, which grew 6.7 per cent last year.

China’s robotic cleaner market saw shipments of 1.75 million units in the fourth quarter of last year, a nearly 30 per cent year-on-year increase, thanks in large part to Beijing’s subsidy scheme, IDC said.

DJI has been expanding its product lines beyond just drones. Last week, it unveiled an 8K panoramic video camera, the Osmo 360, marking its first entry in the 360-degree imaging market, which is led by China’s Insta360.

Meanwhile, the camera maker is moving into DJI’s turf with plans to launch a drone this month under the brand name Antigravity.

As China defuses its time bomb of debt, US hears the ticking intensify

https://www.scmp.com/economy/china-economy/article/3321048/china-defuses-its-time-bomb-debt-us-hears-ticking-intensify?utm_source=rss_feed

Concerns over China’s local-level debt have long loomed large in international discourse, with a mountain of “hidden” debt viewed as a “ticking time bomb” that threatens to trigger a cascade of defaults while posing a risk to financial stability.

But some experts now contend that, after a sweeping debt-restructuring campaign, the outlook for China is shifting. And they say that, by comparison, the debt challenges facing the United States are causing considerable alarm.

“After years of effort, the overall debt risks of local governments in China have been brought under control and are gradually being resolved,” said Zhao Xijun, a finance professor at Renmin University in Beijing.

He added that China’s debt is largely held by local governments, giving the central government room to step in and assist with repayment. In the US, by contrast, the burden sits at the federal level – a situation he called “more concerning”.

Late last year, China rolled out a 12 trillion yuan (US$1.67 trillion) debt swap – a move that significantly eased repayment pressure on local authorities, with the Ministry of Finance identifying 14.3 trillion yuan in hidden local government debt by the end of 2023, much of it accumulated through local government financing vehicles (LGFVs).

The swap has enabled local governments to extend repayments, with the weighted average maturity of bond issuance lengthening by 3.18 years, year on year, to 15.88 years in the first half of 2025, Beijing-based China Chengxin International Credit Rating (CCXI) said in a note last month.

LGFVs – quasi-public companies set up to bypass borrowing limits – have proliferated since the 2008 global financial crisis, funding a nationwide infrastructure boom but rarely generating returns. Their debts sit off local governments’ balance sheets, yet carry an implicit state guarantee.

Beijing’s efforts to rein in such off-the-books liabilities predate last year’s action. In 2018, the Ministry of Finance asked local governments to clean up such hidden debt within five to 10 years. And at the end of 2022, former finance minister Liu Kun disclosed that those hidden debts had shrunk by more than one-third in the span of five years.

These efforts are starting to bear fruit, as Inner Mongolia was announced this week as the first region to exit the central government’s “high-risk” list – a designation introduced in September 2023 for 12 province-level regions with heavy debt burdens, requiring them to curb borrowing and restructure debt within two years while receiving targeted support.

Zhao at Renmin University said the restructuring has largely lowered the interest rates on new debt compared with older obligations.

“Combined with the generally low market rates at present, this has effectively reduced the financing costs for local governments and eased their interest-payment burden,” he said.

According to CCXI, aided by a lower interest-rate environment, the bond-issuance rates of local governments have trended down this year, with the weighted average around 1.92 per cent – roughly half a percentage point lower than a year earlier – and with June’s rate dipping to just 1.8 per cent, the lowest this year.

In the US, by comparison, the yield on 10-year Treasury notes has hovered between 4 and 4.5 per cent for much of 2025, while the tug-of-war between President Donald Trump and Federal Reserve Chair Jerome Powell has kept the outlook for rate cuts uncertain.

“The situation is, on the one hand, easier [for the US] because they hold a reserve currency, the US dollar; on the other hand, it’s harder because they need to rely on foreign investors to finance the deficit, while China’s debt is basically domestically owned,” said Alicia Garcia-Herrero, chief economist for the Asia-Pacific region at French investment bank Natixis.

“That’s a big advantage for China.”

She added that China’s nominal GDP growth still outpaces that of the US, making its debt “more sustainable”, but she cautioned that if this encourages unlimited borrowing, it could become a problem.

According to the latest World Economic Outlook database released by the International Monetary Fund in April, the ratio of general government debt to gross domestic product for the United States is estimated to reach 122.46 per cent this year, compared with 96.31 per cent for China.

Worries over the sustainability of US government debt have intensified following the passage of Trump’s “Big Beautiful Bill”, which raised the debt ceiling by US$5 trillion and prompted warnings of a looming “debt bomb” from figures such as Elon Musk and Ray Dalio.

Zhao noted that because US debt is concentrated at the federal level, the government can roll over its obligations only by issuing new debt or by increasing revenue.

“Its slowing economic growth makes raising revenue difficult, so the US largely relies on rolling over debt to meet its obligations, which actually adds to the burden and heightens default risks,” he warned.

“That is why the US is now trying to find external sources of income, such as by imposing additional tariffs or collecting ‘protection fees’,” he added, referring to Trump’s top economic adviser Stephen Miran’s proposal that other countries should help shoulder the US’ role in providing “global public goods”, including by directly transferring funds to the US Treasury.

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Hong Kong stocks surge on China’s surprisingly strong July exports

https://www.scmp.com/business/china-business/article/3321020/hong-kong-stocks-rise-fourth-day-amid-bullish-mood-global-equities?utm_source=rss_feed

Hong Kong stocks extended gains into a fourth day on Thursday, as a strong reading on China trade data bolstered hopes that the world’s second-largest economy would sustain growth momentum throughout the year.

The Hang Seng Index rose 0.5 per cent to 25,041.03 at the noon break, adding to an aggregate 1.6 per cent gain over the past three days. The Hang Seng Tech Index also rose by 0.5 per cent. On the mainland, the CSI 300 Index and the Shanghai Composite Index both added 0.1 per cent.

Alibaba Group Holding rallied 2.4 per cent to HK$119.50 and parcel delivery firm ZTO Express jumped 5 per cent to HK$164.40. Chipmaker Semiconductor Manufacturing International added 3 per cent to HK$54.20 and China Mobile lost 0.1 per cent to HK$85.50 before the disclosure of interim reports later on Thursday.

“China’s exports supported the economy strongly so far this year,” said Zhang Zhiwei, chief economist at Pinpoint Asset Management in Hong Kong. “The government is on track to deliver the growth target of 5 per cent for the full year.”

Still, growth in overseas shipments could moderate in the coming month, as the effect of front-loading Chinese goods to avoid higher tariffs waned, according to Zhang. US President Donald Trump hinted at a higher tariff rate on China after imposing a punitive 25 per cent levy on India for purchasing oil from Russia.

Mainland exports increased 7.2 per cent from a year earlier in July, the customs office said on Thursday. That beat the 5.6 per cent estimate of economists polled by Bloomberg. Imports rose 4.1 per cent against a projection of a 1 per cent decline.

The trade data adds to confidence among investors that the resilience of China’s growth in the first half will hold up, which justifies the decision of the Politburo last week to refrain from further stimulus measures. China’s economy grew by a faster-than-expected 5.2 per cent in the second quarter, taking investors aback and driving the Hang Seng Index to its highest in three and a half years last month.

In the next week, investors will face a deluge of more July economic data, which could offer further insights into the strength of an economy that has been struggling with deflation and the woes of the property market. Inflation data is due over the weekend, with the consensus estimates suggesting declines in both consumer and producer prices.

Corporate earnings will also take centre stage, with almost 70 companies on the 85-member Hang Seng Index scheduled to release first-half reports throughout August. Some 14 constituents have reported so far, with profit growth averaging 14 per cent versus 17 per cent for the preceding six-month period, according to Bloomberg data.

Sunshine Lake Pharma, the first stock to commence trading by introduction on the local exchange after a takeover of its Hong Kong-listed subsidiary, traded at HK$60.50, representing a premium of less than 1 per cent to thelast traded price of its unit a day earlier.

Other major Asian markets were mixed. Japan’s Nikkei 225 climbed 0.8 per cent and South Korea’s Kospi also rose 0.6 per cent, while Australia’s S&P/ASX 200 lost 0.2 per cent.

‘Dormant bombs’: unique genes that make us smart may also fuel cancer, China study shows

https://www.scmp.com/news/china/science/article/3320803/dormant-bombs-unique-genes-make-us-smart-may-also-fuel-cancer-china-study-shows?utm_source=rss_feed

A genetic study in China that could have major implications for human evolution – and cancer research – has shown that a special type of recently evolved gene can be sequestered by cancerous tumours to fuel their growth.

The team of researchers from Peking University and the Chinese Academy of Sciences (CAS) examined a group of young genes that emerged de novo, meaning they recently evolved from regions of the genome that do not code for proteins rather than from coding genes through typical gene evolution.

Unlike most genes, which evolve from existing genes through duplication and modification, “motherless” de novo genes come from DNA that previously had no function. These new genes are thought to be key to some uniquely human traits, such as our advanced cognitive abilities and susceptibility to certain diseases.

“We identified 37 young de novo genes,” the team said in a paper published in the peer-reviewed journal Cell Genomics on July 17, adding that they found strong evidence that these genes were functional and actively coded for the creation of proteins.

“Collectively, this set of 37 genes represents the most rigorously validated catalogue of young human de novo genes to date.”

The researchers said that the expression of these genes was “significantly” increased in tumours, while the deletion of some of the genes could suppress the proliferation of tumour cells.

“This is evolution’s gamble,” Li Chuanyun, corresponding author and researcher at the CAS Institute of Genetics and Developmental Biology, said in a July 18 article on the CAS website.

“The same genetic innovations that make us smart appear to make us vulnerable, but we are turning this evolutionary vulnerability into clinical opportunity,” he added.

As a proof of concept, the team developed mRNA vaccines that expressed two of these genes and found that when injected into humanised mice, they triggered an immune response and inhibited tumour growth.

Humanised mice are genetically modified to incorporate human genes, cells, tissues, or even organs, making them valuable models for studying human biology and diseases.

De novo genes arise from scratch from non-coding regions of the genome, which can lead to genes that code for new biological functions or species-specific traits.

Some pilot studies have linked human de novo genes to spermatogenesis, the process of sperm cell production in the testes, as well as brain development, the team said.

Their tightly controlled activation during early development is through “tumour-like” activity, such as preventing programmed cell death, which suggests abnormal expression of these genes could be involved in tumour formation.

To obtain their de novo gene catalogue, the team – which also included researchers from Westlake University, Jilin University, the Chinese Institute of Brain Research, and the Chinese Academy of Medical Sciences – first identified 100 candidate genes from published studies.

They then traced the origin of these genes to confirm their lack of a “mother” and ended up with 20 human-specific genes and 17 genes found in both humans and apes.

The young de novo genes “showed predominant expression in testes and brain tissues” and appeared to have tightly controlled windows of activity corresponding to early development, the researchers said.

By analysing nearly 5,300 samples from The Cancer Genome Atlas representing 22 types of tumours, the team found that a number of these genes were abnormally activated in cancer tissues.

“Many of these genes have been overlooked in cancer genomics, often misclassified as non-coding,” the researchers said.

These genes were like “dormant bombs”, as they were inactive in healthy adult tissues but were reactivated in tumours, making them an ideal candidate for intervention, Li said.

As their target to create a proof of concept mRNA vaccine, the team chose two human-specific de novo genes – ELFN1-AS1 and TYMSOS – which are expressed during early development and only reactivate in tumours “exclusively”.

When tested in mice that were humanised with stem cells to better mimic the human immune response, the vaccines produced anti-tumour immune responses, particularly when used in combination with existing immunotherapies.

This meant they could be useful as powerful targets to help train a patient’s immune system to attack cancer cells.

“These findings underscore young human de novo genes as neoantigens in cancer immunotherapy,” the team said.

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NWD, China Resources Land to pay reduced premium for Northern Metropolis project

https://www.scmp.com/business/article/3321023/nwd-china-resources-land-pay-reduced-premium-northern-metropolis-project?utm_source=rss_feed

New World Development (NWD) and mainland developer China Resources Land are finalising discussions with the Hong Kong government on a land premium for their Northern Metropolis megaproject, with a proposed price that is cheaper than rates secured in nearby areas recently.

The price of the two involved sites, located in southern Yuen Long, was between HK$1,500 and HK$1,600 per square foot after the government – eager to speed up the development of the Northern Metropolis – took into consideration market conditions, according to a source close to the matter. The source was not specific about an amount, but it was estimated to be more than HK$2 billion (US$254.8 million).

In December 2023, China Resources Land agreed to invest in a plot of land owned by NWD as part of a HK$10 billion venture between the Hong Kong developer and state-controlled mainland conglomerate China Resources Group.

When completed, the project will include 1,800 residential units on a site of nearly 150,000 sq ft and a total buildable gross floor area of about 720,000 sq ft. Construction is scheduled to commence this year, according to the developers.

The land premium rate for NWD’s site in Yuen Long South is “reasonable”, due to its mature development and convenience in terms of transportation, according to surveyors, adding that the rates of recent land exchanges would become reference points for ones in the future. NWD’s shares rose 13 per cent to HK$7.13 at 10.20am on Thursday.

In April, a consortium led by Sun Hung Kai Properties (SHKP) and Henderson Land agreed on a land premium rate of HK$1,682 per square foot for its 34B residential site in the Hung Shui Kiu/Ha Tsuen New Development Area, which will have 2,300 residential units after completion, according to the Development Bureau.

That price is lower than the land premium rates of a mixed-use site close to Fanling and Sheung Shui, at HK$1,600 per square foot, which is another collaboration between NWD and state-controlled mainland conglomerate China Merchants Shekou Group. But the Yuen Long site is better located and the land values in the area are higher.

The source also said the Hong Kong Real Estate Developers Association (REDA) had met with Secretary for Development Bernadette Linn Hon-ho earlier this year to discuss the development of the Northern Metropolis.

The representatives included Keith Kerr, the chairman of The Development Studio, REDA executive committee chairman Stewart Leung Chi-kin, CK Asset Holdings, Henderson Land, SHKP, NWD and Sino Land. The topics discussed included financing and instalment payments for land premiums, the person added.

For future land exchanges, land premium rates would be set at around HK$1,500 per square foot, according to Alex Leung, senior director at CHFT Advisory and Appraisal.

A plan for the Northern Metropolis development, unveiled in 2023, pledged to build some 500,000 homes in the area and to create four major zones covering innovation and technology, high-end professional services and logistics, commerce and industry, and eco-recreation. The project is designed to address the long-standing issue of land and housing scarcity in Hong Kong.

The development of the Northern Metropolis, spanning an area of 30,000 hectares, encompasses the Yuen Long and North Districts and includes existing new towns such as Yuen Long, Tin Shui Wai, Fanling and Sheung Shui.

US debuts Dark Eagle hypersonic missile in Australia with China in mind

https://www.scmp.com/news/china/diplomacy/article/3320992/us-debuts-dark-eagle-hypersonic-australia-china-mind?utm_source=rss_feed

The US appears to be strengthening its allied deterrence against China by deploying its Dark Eagle hypersonic missile, a move that could “further intensify” regional rivalry, Chinese experts have warned.

The United States Army Pacific, a service component for America’s Indo-Pacific Command, confirmed on the weekend that it had deployed a Long-Range Hypersonic Weapon (LRHW) system – commonly referred to as Dark Eagle – to Australia’s Northern Territory as part of the three-week Talisman Sabre 2025 military exercise that wrapped up on Monday.

It was the first time that the weapon had been used overseas and beyond the continental US.

“The deployment of the LRHW system to Australia is a major milestone for the army and demonstrates our ability to rapidly deploy and operate advanced capabilities in support of our allies and partners,” Wade Germann, commander of the Hawaii-based 3rd Multi-Domain Task Force which transported the weapon to Australia, said on Sunday.

As a land-based, manoeuvrable missile system, Dark Eagle can travel at over 6,100km/h (3,800mph) and strike targets more than 2,700km (1,700 miles) away.

The US deployment of the weapon showed a “flexing of military muscle”, according to Xin Qiang, deputy director of the Centre for American Studies at Fudan University in Shanghai.

He said the move indicated the importance that Washington attached to the US-Australia alliance, including its readiness to strengthen defence coordination and security cooperation with Canberra.

Xin expected that the deployment was unlikely to have a direct impact on China.

He said many US actions had targeted China in recent years, including the Aukus trilateral security partnership with Australia and the United Kingdom.

“I’m afraid that is also the main intention of the US [this time] – to exert a certain deterrence against China, to demonstrate the unity and interoperability of its alliances, as well as the credibility of its stated security commitment to the region – to project this posture and attitude,” he said.

Chen Hong, director of the Australian Studies Centre at East China Normal University in Shanghai, said the US had been steadily cultivating and shaping Australia into a key military hub for American forces since the US began advancing its Indo-Pacific strategy.

With the LRHW deployment, the US was seeking to comprehensively and gradually improve Australia’s long-range strike ability, he said.

He said he expected that Washington aimed to turn the South Pacific nation into a potential launch pad for future military action against China.

“Australia has not only already been a tool of the US Indo-Pacific strategy, but is increasingly becoming both a strategic and tactical weapon for Washington across multiple aspects,” Chen said.

The overseas deployment of the hypersonic missile system is another example of Washington ratcheting up its force projection in the Asia-Pacific region.

The US deployed a Typhon missile system – also known as the Mid-Range Capability (MRC) system – in the Philippines last year, with the weapon apparently remaining in the Southeast Asian country, drawing repeated criticism from Beijing.

Xin, from Fudan, expected that China would be vigilant about the US deployment of Dark Eagle, although he also said China’s own development of hypersonic weapons had been rapid in recent years.

He said US military deployments in the Philippines and Japan, as well as Washington’s policy statements on the South China Sea and Taiwan Strait, targeted Beijing.

“I think China will certainly maintain a high level of alertness and attention to this,” Xin said. “The military and security rivalry or competition between China and the US in the Indo-Pacific is likely to further intensify.”

Zhou Bo, a retired senior colonel in the People’s Liberation Army, said the inclusion of Dark Eagle in the Talisman Sabre 2025 exercise carried symbolic weight, as the weapon could reach China’s periphery.

If the missile, with a range of around 2,720km, were placed at Steep Point, mainland Australia’s westernmost location, it could strike as far as the James Shoal in the South China Sea, said Zhou, who is also a senior fellow in the Centre for International Security and Strategy at Tsinghua University.

Still, he said, the weapon was unlikely to be the “game changer” the US military had described, given that China’s DF-17 hypersonic missile had a comparable range and the DF-27 could reach up to 8,000km – far surpassing that of the LRHW.

“In terms of weapons comparison, it’s not a case of them having something we don’t. What we have may even be better than theirs,” he said.

He also noted that the weapon’s use in the Talisman Sabre 2025 exercise would not guarantee its future stationing in Australia, and that it was difficult to conclude whether Canberra would approve its use on Australian territory during wartime.

Fu Qianshao, a Chinese military aviation analyst and former member of the air force, also expected that deploying Dark Eagle in Australia was of little threat to China.

“Even if it were to pose a threat, we have corresponding countermeasures,” he said.

The latest Talisman Sabre drill, a biennial event involving more than 40,000 troops from the US, Australia and 17 other nations this year, started on July 13 while the Australian Prime Minister, Anthony Albanese, was in China.

In recent years, Australia has increased its military presence in the South China Sea, while China’s surprise live-fire naval drills in international waters of the Tasman Sea earlier this year drew protests from Canberra.

Meanwhile, Canberra is also facing growing pressure from Washington on defence matters. The Pentagon has reportedly urged both Australia and Japan to clarify their positions in the event of a conflict with Beijing over Taiwan.

“What makes us alert and concerned is that there seems to be an increasingly evident rift or divergence between Canberra’s diplomatic and military spheres,” Chen said.

He said the Albanese government’s efforts to improve relations with China through diplomacy continued to be undermined – or sabotaged – by its defence and security sectors.

“If the Albanese government succumbs to pressure and political inducements from the US military and Australia’s domestic China hawks, the hard-won progress in China-Australia bilateral relations could be damaged, or even lost entirely,” he said.

Additional reporting by Sylvie Zhuang

China boy stays calm by chanting classic poems while trapped in lift, gains online praise

https://www.scmp.com/news/people-culture/article/3319802/china-boy-stays-calm-chanting-classic-poems-while-trapped-lift-gains-online-praise?utm_source=rss_feed

An eight-year-old boy in China who found himself alone in a stuck lift reacted to his predicament with remarkable calmness, garnering widespread praise online.

The surveillance camera in the lift of a residential building in northern China’s Hebei province captured the entire incident.

The unnamed boy, trapped on the 11th floor while en route to his flat, initially pressed the buttons for other floors and then gently tapped on the lift door to assess his situation.

Upon realising he was stuck, he pressed the emergency button.

Loudly yet politely, he informed the helpline operator of his situation and location.

The operator, from the property management company, reassured him that help was on the way.

After the call ended, the boy attempted to lift his spirits by repeating phrases like “Someone will come soon,” “Don’t be afraid,” and “Add oil,” punctuating his words with playful air punches to signify courage.

He was also heard murmuring: “I’m only eight, but I already have the fortune of being stuck in a lift.”

As time passed and boredom set in, he began reciting the classic Chinese poem The Ballad of Mulan, a work typically included in textbooks for older students.

A staff member from the property management company arrived within 10 minutes and opened the lift door.

Upon seeing an adult come to his rescue, he finally burst into tears but still remembered to express his gratitude with a firm “thank you.”

His mother was unaware of his mishap until he returned home.

She had sent him into the lift that day while his father waited for him outside on their floor. After a while, noticing that his son might be stuck, he went downstairs to seek help, only to find that the boy had already contacted the helpline himself.

The boy even proudly demonstrated his new-found knowledge, saying: “You have to press the emergency button for three seconds to activate it.”

His composed reactions earned him widespread praise online.

“He has a strong mind in his small body,” one commenter remarked.

“His recitation of poems was likely not just out of boredom, but a way to shift his focus away from fear. He is a clever boy,” another noted.

“Even in the face of fear, he managed to uplift himself and politely thanked the staff who came to assist him. He must have received an excellent family upbringing,” a third person observed.

World robotics conference in China marks 10th year with JD.com as strategic partner

https://www.scmp.com/tech/big-tech/article/3320990/world-robotics-conference-china-marks-10th-year-jdcom-strategic-partner?utm_source=rss_feed

E-commerce giant JD.com will serve as the “exclusive global strategic partner” of the 2025 World Robot Conference in Beijing, as the event marks its 10th anniversary this month amid the rapid development of China’s robotics industry.

At the conference, which will run from Friday to Tuesday, JD.com would announce “a major strategic plan to promote the development of the robotics industry and further deepen strategic cooperation with intelligent robot brands”, the company said in a statement on Tuesday posted on the event’s website.

JD.com is expected to collaborate with some of the country’s leading humanoid robot makers, including Unitree Robotics and AgiBot, on an immersive, hi-tech exhibition area at the conference.

The Beijing-based company’s major participation in the conference reflects the progress being made in China’s robotics sector, as the government has helped supercharge demand for humanoid robots in state-owned enterprises, while a number of manufacturers enter mass production this year.

JD.com did not immediately respond to a request for comment on Wednesday.

JD.com has been making investments in humanoid robot technology since March and has set up internal units focused on robotics, according to a report by the Shanghai Securities Journal.

PaXini Tech – a start-up specialising in haptic technology for robots and other systems – on Tuesday said it had raised funds from investors led by JD.com in its Series A financing round. A statement from the company said it had already raised 1 billion yuan (US$139 million) in four months.

On July 30, JD.com led a financing round for an undisclosed amount in RoboScience, a start-up in the field of so-called embodied intelligence.

Earlier that month, three robotics-related companies – Spirit AI, LimX Dynamics and Engine AI – announced on the same day that they each completed a new funding round with JD.com as the lead investor. No financial details were given.

In May, JD.com subsidiary JD Technology became a shareholder in Shanghai Zhiyuan New Innovation Technology, the parent firm of AgiBot, according to a company record change on May 22, from registry information provider Aiqicha.

Apart from those investments, JD.com has launched a new embodied intelligence brand called JoyInside and updated its artificial intelligence technology brand JoyAI.

Other Chinese Big Tech companies – including Alibaba Group Holding, ByteDance and Tencent Holdings – have also been boosting their outlay in the robotics sector. Alibaba owns the South China Morning Post.

Those three firms were among the notable backers of Hangzhou-based Unitree in its latest funding round, which lifted the firm’s valuation to over 10 billion yuan.

China’s robotics market is set to grow at an annual rate of 23 per cent to US$108 billion by 2028, from US$47 billion in 2024, solidifying the country’s lofty position in the industry, according to a Morgan Stanley report in June.

How China used rare earths and the US playbook to turn on the chip tap again

https://www.scmp.com/news/china/science/article/3320951/how-china-used-rare-earths-and-us-playbook-turn-chip-tap-again?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 third of we look at how Beijing’s dominance in the critical minerals is matching up to Washington’s lead in artificial intelligence, as well as how they are related.

When the US president unveiled his tariffs in April, China knew it had a trump card that had been quietly gaining in value over the decades and that no other country in the world held.

As the threatened tariffs rose, Beijing announced that it was imposing export controls on seven rare earth elements and magnets.

Rare earths are essential components in many technologies, from consumer electronics and electric vehicles, through clean energy and aerospace, to medical and defence equipment. They are also used in research and development, including semiconductors.

China holds half of the world’s reserves of rare earths and most of the global refining capacity.

And from 2020 to 2023, 70 per cent of rare earth compounds and metals imported by the United States were from China, according to the US Geological Survey.

By some US estimates, limits on access to these minerals could affect nearly 78 per cent of all Pentagon weapons systems.

The minerals have now become a central element of the US-China trade war, becoming leverage not only in reducing Washington’s tariffs but also in challenging American efforts to maintain its dominance in another area of intense rivalry – artificial intelligence chip technology.

The US has been trying to slow China’s AI progress by limiting its access to advanced chips since late 2022 – a strategy that has hindered broad adoption of the technology by Chinese enterprises, as a senior executive from tech giant Tencent acknowledged in May.

Without chips, China could find it hard to overcome the so-called scaling law in AI, a principle espoused by many developers that asserts the larger the training data and model parameters, the stronger the model’s eventual intelligence.

Among the chips on the banned list are US manufacturer Nvidia’s most advanced graphic processing units – products that can handle the highest demands of AI processing.

The rare earth ban forced the United States to the negotiating table.

By June, after marathon trade talks in London, US President Donald Trump said China had agreed to resume exports of rare earth elements and magnets to the United States.

Access to chips helped to break the deadlock, with US Commerce Secretary Howard Lutnick saying later that chips were included “in the trade deal with the magnets”.

But it was not access to the US company’s most advanced technology – the H100.

The US resumed sales of Nvidia’s downgraded H20 chip to the Chinese market – a decision announced by CEO Jensen Huang last month during his third visit to China this year.

In Lutnick’s words, the H20 was Nvidia’s “fourth best” processor and “we want to keep China using it”.

Analysts said the developments underscored the significance of rare earths in the US and China’s geopolitical tug of war. Technological dependencies – on these materials as well as AI and scientific talent – would remain strategic choke points, they warned.

Analyst Evelyn Zhou Mengwei, who focuses on rare earths at London-based minerals research and pricing firm Benchmark Mineral Intelligence, noted that the response to China’s export controls mirrored Beijing’s reaction to being denied access to advanced chips.

“Since China dominates rare earth processing technology, especially for heavy rare earths, the export controls highlight the ex-China market’s dependence, prompting governments to increase financial support for technology development,” Zhou said.

“We have seen growing government investment announcements in processing and recycling projects. This situation is similar to [when] the US imposed export controls on semiconductors and AI – China accelerated efforts towards chip independence.”

According to Kenny Evans, a fellow in science and technology policy at Rice University’s Baker Institute for Public Policy in Texas, rare earths “are China’s strongest leverage point”.

“It is clear Trump wants to make a deal, but it is in Beijing’s best interest to drag out negotiations, allowing China to continue to catch up technologically to the US in key areas, such as quantum, AI and advanced computing and communications.”

It is a tug of war that could end in China’s favour, especially as unease grows among the Chinese scientific community in the US about government policy more broadly.

Evans said the Trump administration’s moves to revoke Chinese student visas and the House’s push to revive the China Initiative had “created a climate of fear and deep uncertainty”.

“There is already evidence of more students choosing to pursue degrees in their home countries and researchers leaving the US for more welcoming environments – which are gifts to Beijing’s efforts to indigenise its national innovation ecosystem and outcompete the US in strategic technology sectors.”

China’s massive science and engineering talent pool – which historically has looked to the US for education and research careers – could also become another potential lever for Beijing to exert pressure on the US, according to Evans.

“If the US wants to cede scientific leadership to China, I can think of no better way than working to defund public research, to limit academic freedom, and to turn away scores of bright and ambitious students and scholars,” he said.

Echoing Zhou, Evans also observed that the use of export controls as a policy lever to compete with China had “accelerated China’s goal of indigenising its chipmaking production supply chain”.

According to a commentary in May by the Information Technology and Innovation Foundation, a Washington-based think tank, “US export controls have accelerated China’s efforts to close the gap”.

Chips developed by tech giant Huawei were expected to match performance with Nvidia’s advanced product at a lower cost, while Chinese companies were innovating differently as well as deploying less-efficient chips more effectively, the commentary said.

Last month, the White House released its first comprehensive strategy on AI, declaring that the US was “in a race to achieve global dominance” in the technology. “Whoever has the largest AI ecosystem will … reap broad economic and military benefits,” it said.

Under the plan, the US Commerce Department will take the lead in developing new export controls on chipmaking components to close “loopholes” in restrictions that now focus on major systems.

But a paper issued in December by the Centre for Emerging Technology and Security, part of The Alan Turing Institute in Britain, noted that chip restrictions had strengthened China’s resolve for indigenous innovation.

US-led export controls explicitly targeting the Chinese chip industry had “further emboldened Beijing in its quest for self-sufficiency and dominance in numerous parts of the semiconductor supply chain”, it said.

“China recognises that, to achieve its goals in domains such as AI, it must overcome a chip-deficient environment and quicken its drive for self-sufficiency across the semiconductor supply chain.”

The US too is looking to be more self-sufficient.

Neha Mukherjee, rare earths research manager at Benchmark Mineral Intelligence, said there was “a bigger push [in the US] for diversification of resources” around rare earths compared to a decade ago.

“The [US] government is actively looking into this and viewing rare earth elements assets as strategic tools. Public funding is flowing into this space like never before,” she said.

“The biggest testimony” to this was the July deal that made the Department of Defence the largest shareholder in MP Materials, which operates the only rare earths mine in the US, Mukherjee added.

Her colleague Zhou said that companies across the US, Europe, and the Asia-Pacific region had been “racing to secure and develop rare earth assets” since China banned the export of technology to make rare earth magnets in late 2023.

More than US$1.25 billion in capital investment announcements have been made globally since April, reflecting strong support for technological advancement, according to Zhou, who gave more details of the relevant Benchmark report in a post on LinkedIn.

Around 91 per cent of investments in mining, refining, magnet manufacturing and recycling of rare earths came from government-backed consortiums, with the US in the lead at US$570 million in total announcements, the post said.

“There has been a marked global surge in strategic consolidations, spanning acquisitions, mergers, joint ventures, and technology partnerships to speed up the development of the supply chain,” Zhou said.

She pointed to Apple’s commitment to buy US$500 million of “American-made rare earth magnets” from MP Materials. “Globally, efforts are under way to build and diversify more resilient and sustainable rare earth supply chains.”

According to Rice University’s Evans, finding alternative supplies of rare earths could be challenging. China emerged as the leader in rare earth element processing after decades of strategic focus, he said. “I doubt US export controls will do much to change that.”

Without a trade deal in the short term, rare earths “could contribute to further decoupling in science and technology, especially if the Trump administration continues its aggressive posture on immigration and enforcement”, Evans said.

“Longer term, I am concerned about the future of US-China collaboration in science, which is an incredibly important and productive partnership that has spurred countless new scientific discoveries and innovations.”