We’re jumping straight in this week.

— PC

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“The European side should harbor no illusions about gaining benefits through pressure, and certainly should not underestimate China’s determination and ability to safeguard its own interests,” the Ministry of Commerce said on Friday.

After last week’s announcement of a new EU-China “shared understanding” on hybrid cars, market access, and rare earth exports, developments this week have already exposed the fragility of that understanding. To Beijing’s dissatisfaction, the European Union is now exploring ways to impose similar quotas on imports from China in other sectors while also preparing new tools to detect and respond quickly to import surges.

At the conclusion of a two-day meeting in Brussels, the European Council said that it “took stock of global macroeconomic imbalances, and invites the Commission to continue to engage in results-oriented dialogues, to make effective use of the EU’s instruments, and to urgently e…

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Before EU trade commissioner Maroš Šefčovič flew to Beijing this week for a final round of talks with Chinese Commerce Minister Wang Wentao, German Chancellor Friedrich Merz and French President Emmanuel Macron sent a joint letter to the European Commission pushing for tougher EU action to address unfair trade practices:

The EU has been trying to address Chinese overcapacity and its growing trade deficit with China, which has reached €1 billion ($1.12 billion) a day. European officials have warned that the imbalance is putting pressure on EU manufacturing and contributing to job losses. There now seems to be a growing consensus on the need for a more coherent China policy.

China’s commerce ministry, in response, accused the two leaders of “encouraging the EU to resort to protectionist tools at every turn,” calling for “less politicizing economic and trade issues or overstretching the concept of national security” and to “avoid taking the wrong path in the wrong way and ultimately hurting themselves.”

At the end of the two-day meeting in Beijing, the EU and China announced an agreement aimed at limiting imports of Chinese hybrid cars into the EU, alongside improved access to the Chinese market for certain European products. Šefčovič also said the two sides had “reached a shared understanding to further facilitate China’s export licensing for rare earths and permanent magnets.”

EU leaders will now discuss relations with China and the outcome of the negotiations at the upcoming European Council summit on October 15–16.

Let’s jump into it.

— PC

Through the Lens

In Focus

I. EU-China: It’s a deal. For now.

The EU said it has reached a landmark deal with China to “halve” its sales of hybrid cars in the bloc amid fears surging sales could kill off parts of the European car industry.

Trade commissioner Maroš Šefčovič said the deal was the first of its kind and the result of “intense” negotiations with China since June to curb a trade deficit of €1.18bn (£1bn) a day, which has caused mounting tensions between the two economic powers.

The deal “opens the prospect of cutting China’s export [of hybrids] by more than a half”, Šefčovič said, adding that this would translate into a reduction in exports of plug-in and battery-powered hybrid cars by “several millions” over the next four years, said Šefčovič said Šefčovič at a press conference in Beijing on Friday.

“It is the first time that China has accepted to moderate its exports without going through the phase of prior trade tension,” he said, a reference to the usual investigations that must take place before safeguards under WTO trading rules are put in place.

China has been flooding Europe with cars, including hybrids and pure battery electric vehicles (BEVs), threatening European manufacturers. Hybrids combine an internal combustion engine with a small battery. They are sold by carmakers as a transitional step towards BEVs.

Read: China agrees to ‘halve’ hybrid car exports to EU in landmark deal | Automotive industry (The Guardian)

Related:

• Merz and Macron want the EU to hit back harder — and faster — against trade threats (Politico)

• EU toughens China stance ahead of Šefčovič’s Beijing visit (Politico)

• EU ‘pulling out all stops’ with minerals projects as it tries to avert China trade war (The Guardian)

• European industry groups call for urgent EU action on China trade (Reuters)

• China’s ‘Self-Reliance’ Drive Is Upending Trade With Europe (The New York Times)

Read more

The People’s Republic is currently on a weeklong holiday marking the 77th anniversary of its founding, so we’re jumping straight in.

— PC

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In a very rare—and nonreciprocal, since it was Vice-President Han Zheng who received him at the airport in Beijing in May—gesture, Donald Trump welcomed Xi Jinping and his wife, Peng Liyuan, on the tarmac at Joint Base Andrews on Wednesday, as the Chinese leader arrived for a visit heavy on pageantry.

While the PRC continues to support Iran amid its ongoing conflict with the U.S. and Russia in its war against Ukraine, the U.S. president showered the Chinese leader with praise.

“I met President Xi at the plane (Airport!) yesterday and he looks strong, vibrant, and fit - Better than ever. Madam Xi, of course, BEAUTIFUL!” Trump posted on social media.

On trade, according to the Chinese readout, during his talks with Trump, Xi said that “the two sides had a new round of consultations, and reached a new joint arrangement,” as he called for cooperation “in the spirit of equality, mutual respect, a…

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As the leaders of the two most powerful nations in the world prepare to meet, debate over the risks of AI intensified this week.

After OpenAI CEO Sam Altman told Fortune last week that “Presidents Trump and Xi would get the Nobel Peace Prize together if they could agree on something that should be easy to agree to,” Anthropic’s Dario Amodei shared an essay on why the AI industry should slow down. “We must slow the pace at which we improve the capabilities of AI models,” he warns. “Progress will still seem fast, and we must make wise use of the time we gain.”

With the U.S. and China locked in an intense technological competition, Amodei recommends that the “US and other democratic governments attempt to coordinate with authoritarian governments, to the extent this is possible, while taking seriously the challenges of verifying compliance.”

Elon Musk responded: “Dario is right.”

On Monday, Guo Jiakun, a spokesperson for China’s Foreign Ministry, responding to a question by Reuters, dismissed Dario Amodei, Sam Altman, and Elon Musk’s concerns: “Fear-mongering, confrontation and vicious competition will only hamper efforts toward sound global AI governance, which serves no one’s interest.”

Meanwhile, Chen Yixin, China’s minister of state security, wrote in a piece shared on Sunday that “various hostile forces” use AI to wage “a propaganda war and a cognitive war against us, directly threatening our political security, institutional security, and ideological security,” signaling no interest in slowing AI development.

Trump, too, showed no interest in slowing the U.S. AI push: “Look, we’re leading China in AI... and, frankly I want to keep it that way because whoever wins AI, wins.”

Tomorrow, U.S. Treasury Secretary Scott Bessent, U.S. Trade Representative Jamieson Greer, and Chinese Vice ​Premier He Lifeng will meet in New York, and AI will be on the table, with discussions including “both open- and closed-weight models,” according to a statement by Bessent.

Scott Kennedy, senior adviser and Trustee Chair in Chinese Business and Economics at the Center for Strategic and International Studies in Washington, D.C., set the right expectations for the upcoming summit: “If nothing goes horribly wrong—and Xi expresses faux admiration at the White House’s new helipad—the two sides will consider the gathering a success. But others should not.”

Let’s jump into it.

— PC

Through the Lens

In Focus

I. Nobody wants to slow the AI race

Generally speaking, China doesn’t fret as much about A.I. as an existential threat to humanity. You don’t see its political leaders or the founders of Chinese A.I. companies warning that superhuman A.I. is “probably the greatest threat to the continued existence of humanity,” as Mr. Altman wrote in 2015. It’s not central to Chinese A.I. policymaking, nor a part of Chinese tech culture.

That’s mainly because of differences in how the two countries think about A.I. training and development. The leading American A.I. companies are hyper-focused on advancing “recursive self-improvement” — using A.I. systems themselves to develop even better A.I. systems. There are fears that this feedback loop could accelerate the pace of A.I. development to the point where humans no longer have control over the process. American tech leaders believe this takeoff point might be around the corner.

Chinese A.I. companies are also working on recursive self-improvement. But because of their limited access to A.I. computing power and the slower pace of progress, they believe the takeoff moment is still technologically a long way off. Chinese policymakers seem to share that outlook and so are more focused on building resilient A.I. supply chains and increasing A.I. adoption throughout the economy.

So why would the Chinese agree to a slowdown in A.I. development if they don’t think a crisis is imminent? If anything, Chinese A.I. companies are trying to move faster, hoping to narrow the performance gap with American A.I. models.

Read: America and China Look at A.I. and See Very Different Problems (The New York Times)

Related:

• Editorial: ‘Dr Frankenstein’ alarm cries of US’ AI elites a self-serving bid for profit (China Daily)

• China’s AI leaders keep quiet despite U.S. ‘publicity’ on tech risks (CNBC)

• US military had close call after using AI for false intelligence report, sources say (CNN)

• AI military risks spark concern at China security conference (Reuters)

• The US and China are hurtling toward Kissinger’s worst AI nightmare (Semafor)

• The ‘But China!’ Dilemma Driving the A.I. Race (The New York Times)

• To bargain with China, the US needs to regulate AI (, )

Read more

We’re jumping straight in this week.

— PC

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It was a busy week of diplomacy for Xi Jinping, who attended the Shanghai Cooperation Organization (SCO) summit in Bishkek, Kyrgyzstan, and then traveled to Cairo on a three-day visit, his first to Egypt in ten years, marking the 70th anniversary of diplomatic relations between the two countries.

In Bishkek, Xi said that “the trend toward a multipolar world is irreversible,” and, in the presence of Russia’s Vladimir Putin, Indian Prime Minister Narendra Modi, and Iranian President Masoud Pezeshkian, among other leaders, he said that “sovereign equality and mutual respect are fundamental principles.” In a speech that reads like a veiled criticism of Washington’s policies, Xi added that “protectionism, decoupling and supply-chain disruption will lead nowhere.”

Then, in Cairo, Xi Jinping celebrated diplomatic ties between the PRC and Egypt, the first Arab and African country to recognize and establish formal diplomatic relations with the People’s Republic, saying that “the older-generation leaders of the two countries led their peoples in striving side by side for national independence and against imperialism and colonialism.”

While the United States remains involved in a complex war against Iran, Xi said that the “people in the Middle East should remain masters of their own affairs, and external interference should be rejected,” and that “China supports regional countries in strengthening dialogue on peace and security, exploring the building of a new security architecture for the Middle East, and taking their future into their own hands.”

***

At this week’s G20 meeting of finance ministers in Asheville, North Carolina, China was the only member to dissent from a joint statement, objecting to four paragraphs on supply chains, including critical minerals, and global economic imbalances.

Xi Jinping’s first state visit to the U.S. in over a decade, where he will be welcomed with a state dinner, is less than three weeks away, and expectations for anything beyond relationship maintenance are low.

Let’s jump into it.

— PC

Through the Lens

In Focus

I. G19+1 summit

Treasury Secretary Scott Bessent said Tuesday that 19 of the members of the G20 had agreed to address streams of “cheap exports” that cause global economic imbalances, but said China had dissented.

Bessent made his comments at the end of a two-day meeting with finance ministers and central bankers where he tried to focus on growth, telling reporters he had urged some of his G20 counterparts to take a page from the Trump administration’s playbook of using tariffs and other measures to crack down on trade imbalances.

“We believe that non-market-based economies pushing out a never-ending stream of cheap exports is not sustainable,” Bessent told reporters, describing the sentiment that all but one G20 member had agreed to.

“It is clear that the country with the world’s largest and unsustainable current account surplus, the People’s Republic of China, was the dissenter,” Bessent said.

The Trump administration, echoing many economists, has blamed China for trade imbalances that have left it with a large trade surplus while the U.S. has a sizable deficit. At the closing press conference Tuesday, Bessent also previewed the coming meeting between President Donald Trump and China’s President Xi Jinping.

Read: Bessent says China dissented from G20 agreement on ‘cheap exports’ (AP)

Related:

• China hits back at G20 pressure over exports and trade imbalances (CNBC)

• PBOC Chief Blames Protectionism for Global Imbalances at G20 (Caixin)

• China’s Great Power Vision Comes into Focus (China Leadership Monitor)

• How China can muddle through to superpower status (Semafor)

• Trump-Xi Washington summit: Why some expectations are low (CNBC)

II. EU wants to convince China

The European Commission is exploring ways to persuade Beijing to rein in its exports to the bloc as Brussels seeks to reduce an eye-popping trade deficit with China, its trade chief said Monday.

“Mechanically, if you look at our deficit issue, what’s needed is the increase of European products to China … We also need to look at how to manage better the Chinese exports to the European Union,” Maroš Šefčovič said in an interview.

“It’s very clear that the most efficient and the best way for the future relationship would be if this problem is being tackled from both sides,” he added.

The Commission is under pressure from national leaders to show concrete results from its engagement with Beijing by mid-October. Two months ago, member countries urged Brussels to come up with new tools to reduce the EU’s €1 billion-a-day trade deficit with China. The matter is only growing more urgent, with EU chemical and car manufacturers closing plants and cutting jobs as they struggle to compete with cheaper Chinese imports.

The trade commissioner said he will speak with his Chinese counterpart, Wang Wentao, by videoconference “in the middle of September” before visiting Beijing “at the beginning of October.” A team of EU negotiators is also in China this week, Šefčovič said, where talks are “very open, very tough,” with “all topics … on the table.”

Read: EU wants to convince China to curb exports to the bloc (Politico)

Related: Watching China in Europe - September 2026 ()

III. RIP He Yong 何勇

“Is there any hope?” That primal scream, repeated over pounding drums in the title track of his only album, became He Yong’s most enduring contribution to Chinese music. He died in Beijing on September 1, 2026, at age 57; no cause of death has been announced.

Born on February 15, 1969, in Beijing, He Yong began studying music at age 6 under his father, He Yusheng, a professional sanxian player, and appeared as a child actor in the 1980 film Four Little Friends. He picked up the guitar at 15 and joined the band Mayday in 1987, performing at a widely publicized concert for student protesters during the Tiananmen demonstrations of 1989. In the underground rock scene that followed, He crossed paths with fellow pioneers Cui Jian and Dou Wei, forming connections that would shape Chinese rock for years to come.

He Yong’s defining moment arrived in May 1994 with the release of his only album, Garbage Dump, produced under the record label Moyan Culture. Written at the height of the Tiananmen protests, the fatalistic title track became the album’s signature song, building through repeated guitar riffs and explosive drumming to its climactic, screamed refrain. Other tracks, including “Pretty Girl” and “Drum and Bell Tower,” tackled materialism, environmentalism, gender, and the erosion of Chinese heritage, cementing He Yong’s place alongside Dou Wei and Zhang Chu as one of the “Three Prominents of Moyan.” His song “Bell and Drum Towers,” a nostalgic ode to old Beijing, appeared on the soundtrack of Zhang Yuan’s 1993 film Beijing Bastards.

Read: He Yong, Pioneer of Chinese Rock and Voice of “Garbage Dump,” Dies at 57 (That Eric Alper)

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I’m back after the summer break. I hope you had a good one if that was the case.

With just a few weeks to go before hosting Chinese leader Xi Jinping in Washington on September 24, the Trump administration increased pressure on Beijing this Monday by announcing secondary Iran sanctions.

Even though Chinese banks are considered to be providing Iran with an economic lifeline, none were included in the U.S. Department of the Treasury’s list of sanctioned entities, leading to bipartisan calls for the administration to “hold accountable any financial institution that knowingly helps the Iranian regime evade sanctions, finance terrorism, or fund activities that threaten Americans and our allies.”

The Chinese Ministry of Foreign Affairs, in response, said that it is “firmly against sanctions that have no basis in international law or UN Security Council mandate,” and that “China’s cooperation with Iran complies with international law.”

While the road to the upcoming summit has been bumpy, the two sides seem committed to maintaining the fragile truce. On Wednesday in Beijing, in preparation for the upcoming leaders summit, Chinese Minister of Foreign Affairs Wang Yi sounded measured when he met with U.S. Ambassador to China David Perdue, saying that while relations between the two countries “still face various risks and challenges,” they must “overcome obstacles to high-level exchanges, and promote the development of China-U.S. relations in a stable, healthy, and sustainable direction.”

Let’s jump into it.

— PC

Through the Lens

In Focus

I. U.S. sanctions, Iran, and China

When US Treasury Secretary Scott Bessent unveiled “Operation Economic Outcast,” threatening damaging new sanctions on countries that refuse to stop doing business with Iran, he didn’t name the one country that could decide its success or failure: China.

The world’s second-largest economy has long been a critical economic lifeline for Tehran, buying up the vast majority of its oil exports – worth an estimated tens of billions in US dollars last year – in addition to other trade.

Bringing it on board with the White House’s latest effort to subdue an Iranian leadership stubbornly defiant after almost six months of war, however, is an extremely tall order.

Beijing flatly rejects what it calls “unilateral” US sanctions and has long defended its right to regular trade with partners like Iran and Russia. It also surmises that Washington would be wary of triggering a broader economic confrontation that would hurt both countries, right ahead of the US midterms.

On Tuesday, following Bessent’s press conference, China’s Foreign Ministry vowed to “take all necessary measures” to safeguard its “own legitimate rights and interests” in the face of US sanction threats.

Read: Trump’s fallback strategy on Iran faces just one big problem (CNN)

Related:

• US Plans 7.5% Tariff on Chinese Goods Before Xi-Trump Summit (Bloomberg)

• Xi Jinping Hits the Road ()

II. Nepal-Tibet flood disaster

The Red Cross has said at least 93,000 people may have been affected by Wednesday’s flash floods on the Nepal-Tibet border, which have killed nearly 600 people, left another 1,900 missing, and triggered a huge rescue operation that is being hampered by fears of new flooding.

The International Federation of Red Cross and Red Crescent Societies (IFRC), the world’s largest humanitarian network, said it feared the death toll would continue to rise as some of the hardest-hit areas remained inaccessible after roads and bridges were destroyed by the torrents.

“The trauma of this event is enormous,” David Fisher, the IFRC head of delegation for Nepal, said on Friday.

“Thousands of homes have been destroyed or suffered significant damage. We believe that at least 93,000 people have been affected and are in great need. The death toll is very high and unfortunately likely to continue to rise.”

The deadly floods occurred on Wednesday morning after an enormous section ⁠of a glacier in the Himalayas broke loose and crashed on to the valley floor in Nepal’s Langtang national park, unleashing a massive surge of water, mud, rock and ice that thundered down rivers and valleys. The resulting floods obliterated villages and destroyed power stations, roads and bridges.

Read: At least 93,000 ‘in great need’ after Nepal-Tibet flash floods, says Red Cross (The Guardian)

Related:

• Chinese rescuers find ‘nothing but ruins’ at border crossing as Nepal seeks help to ID and store the dead (The Guardian)

• Chinese control of information hampers assessment of Tibet flood damage (The Guardian)

• Tibet-Nepal floods: Shocking footage isn’t being shown in China - and we know little about victims there (BBC)

• People missing in Nepal-China flooding are from over 30 countries (AP)

III. China and the next global economic crisis

When the Chinese export machine stalls, the reckoning will be most painful for China. But a material slowdown in its economy would send shock waves around the world, especially among China’s major trading partners, not only in the Asia Pacific but also in countries elsewhere whose economies have become intertwined with China’s. The United States would not be immune to the shock, but it would be the only actor with the economic and institutional capacity to stabilize the global economy.

The surest way to avoid this costly chain of events is a preemptive and gradual rebalancing of the Chinese economy. This has long been China’s best path toward more sustainable growth, and a route the United States has advocated for years. But whereas in decades past it was a smart choice, now it is a necessity.

[…]

A crisis is not inevitable. China’s economy is resilient, and at least on paper, its leadership has signaled a recognition of the problem and an interest in taking steps to address it. The Chinese Communist Party adopted an anti-involution campaign in 2025, and its 15th Five-Year Plan, for 2026 to 2030, promotes consumption, particularly in rural areas. The CCP has also taken modest steps to strengthen its social safety net, with the goal of reducing the incentive for households to save instead of spend.

But China’s leadership remains unwilling to make the most important change: fundamentally reorienting the country’s growth strategy toward a more sustainable model. Beijing has, in general, continued to suppress domestic consumption, with the goal of maximizing industrial output in strategic and low-value sectors alike.

Read: The Next Global Economic Crisis Could Be Made in China (, Foreign Affairs)

Related:

• Why the World Needs to Force China’s Yuan to Revalue (WSJ)

• Who Paid for China’s Last Debt Cleanup, and Who Will Pay for the Next? (, Carnegie Endowment for International Peace)

Read more

The Chinese government on Wednesday announced a series of countermeasures against the U.S. in response to recent actions by Washington, including tightened controls on drone exports to the U.S., as well as key components and related technologies, on a “case-by-case basis.”

The new measures come in response to last week’s U.S. Federal Communications Commission restriction on imports of foreign-made robotic devices, including humanoids, on the grounds of cybersecurity concerns; the Department of Homeland Security’s addition of 43 companies to the Uyghur Forced Labor Prevention Act (UFLPA) Entity List; and sanctions on mainland China and Hong Kong shipping companies accused of transporting Iranian oil to China.

China’s Commerce Ministry said that the U.S. measures “seriously violate the important consensus reached by the two heads of state and severely damage China’s legitimate rights and interests.” It emphasized that “China's countermeasures have been generally restrained” and warned that if the U.S. “insists on introducing new restrictive measures against China, China will take further countermeasures.”

While Xi is scheduled to visit the United States on September 24, the two sides seem to be testing the limits of a fragile truce.

Before we dive in, I’ll be taking a short break over the next couple of weeks, so this will be the last issue for a little while.

Wishing you a wonderful rest of the summer.

Let’s jump into it.

— PC

Through the Lens

In Focus

I. Yet another tit-for-tat

China announced a series of economic measures Wednesday against the United States, including controls on exports of drones to the U.S. and a ban on dealings with six American entities, in response to recent restrictions imposed by Washington.

Tensions are simmering between the world’s two biggest economies ahead of an expected visit by Chinese President Xi Jinping to the U.S. in September, despite signs of warming ties during his meetings with U.S. President Donald Trump in Beijing in May.

The Commerce Ministry said the sanctions are in response to recent moves from the U.S., including a ban by the U.S. Federal Communications Commission on imports of Chinese drones, and the Department of Homeland Security’s decision to add 43 Chinese companies to the Uyghur Forced Labor Prevention Act entity list to prevent imports of goods made with forced labor.

The “measures seriously violate the important consensus reached by the two heads of state and severely damage China’s legitimate rights and interests. China has no choice but to take necessary countermeasures in response,” the ministry said in a statement.

It emphasized that China was acting with restraint and urged the U.S. to scrap its measures against Beijing and cease its “erroneous practices.” It also warned of further sanctions if the U.S. rolls out new restrictive measures against China.

Read: China bans trade with 6 US companies, adds controls on drone exports to US (AP)

Related: Analysis: As US and China throw up tit-for-tat sanctions, is Trump’s Xi meeting at risk? (CNN)

II. Beijing’s global tax hunt

China has launched a global hunt for hundreds of billions of dollars in unpaid taxes going back decades as Beijing seeks to fill a deepening fiscal hole by targeting the ultra-rich.

Authorities have stepped up scrutiny of overseas capital gains and investments, in some cases going back as far as 2000, in a campaign that comes as Beijing also seeks to significantly expand control of outbound capital flows.

Chinese banks and other financial institutions have been instructed to review overseas investments by wealthy Chinese to check if income has been declared to Beijing’s tax authorities, according to foreign officials as well as Chinese bankers and family office managers.

Their efforts, part of a suite of tax reforms targeting the country’s wealthy — including offshore trusts — are focusing on gains made from purchases of real estate, equities, precious metals and cryptocurrencies, among other assets.

The retroactive nature of the campaign — with reviews in some instances going back more than 25 years — has been confirmed by multiple officials, bankers and advisers.

Read: China launches global tax hunt going back decades (Financial Times)

Related: Insurance and bank stocks slide amid China tax crackdown fears (Financial Times)

III. The future, made in China?

In Robert Kagan’s book “The World America Made,” he enumerates a succession of global powers, all of which were convinced of their own durability: “There has been an Egyptian order, a Roman order, a Greek order, an Islamic order, a Mogul order, an Ottoman order, and many others.” Each was born of particular, often fragile circumstances. The American order, Kagan wrote in 2012, would endure “until some yet to be determined moment.”

That moment seems to have arrived. Mark Leonard, the director of the European Council on Foreign Relations, told me that the international system the U.S. constructed after the Second World War—and ran, often to its benefit—is “definitely dead and beyond redemption.” He said that Trump’s dismantling of the country’s alliances signalled the end of the “willingness of the American public to play the role America has played for most of the last eight decades.”

But America’s diminished stature does not necessarily clear a path for China.

Read: The Future, Made in China (, The New Yorker)

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The Chinese Communist Party’s ruling Politburo held its July meeting this week. From the readout:

It is important to ensure that the Party remains a vibrant Marxist governing party that stays at the forefront of the times, enjoys the wholehearted support of the people, withstands all tests, and serves as the strong leadership core for building socialism with Chinese characteristics, the meeting said.

On the economy, the leadership signaled cautious support, without any major stimulus plan:

The meeting noted that macroeconomic policies should be more forceful and effective with a view to better advancing the implementation of major national strategies and enhancing security capacity in key areas, as well as promoting large-scale equipment upgrades and consumer goods trade-in programs. Monetary policy tools should be used comprehensively and adjusted in a timely manner, and policies to boost domestic demand via fiscal-monet…

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We’re jumping straight in this week.

— PC

Read more

“We never interfere in US elections and have zero interest in that,” said Chinese Foreign Ministry spokesperson Lin Jian on Friday in reaction to U.S. President Donald Trump’s claims this week of Chinese interference in the 2020 U.S. elections.

Beijing’s measured response, as Ryan Hass, a China expert at the Brookings Institution, explained, reflects its view that these accusations are aimed primarily at a domestic audience. Chinese leaders see them as “the actions of a diminishing president of a declining country,” he wrote, adding that “PRC leaders also can read US polling and know that Trump’s approval rating is stuck in the 30s and that his desired election legislation is stuck in Senate.”

With the U.S. set to host Chinese leader Xi Jinping in late September and concerns about retaliation ahead of November’s midterm elections, the fragile U.S.-China truce appears to remain intact, even as reports emerge that Beijing is not following its share of the trade agreement the two countries reached in South Korea last year.

***

According to a new poll from the Pew Research Center, “Global views of the United States worsened last year as President Donald Trump’s second term began, though most people still had a more positive opinion of the U.S. than China. This year, that is no longer the case.”

Here are some of the key findings:

• In most of the 36 countries surveyed, China is viewed more positively than the U.S. The U.S. is viewed more positively in just six countries: India, Japan, the Philippines, South Korea, Poland, and Israel.

• While confidence in both Trump and Xi is generally low, Xi is more favorably viewed across many of the 36 countries surveyed.

• More people say the U.S. respects individual freedoms than China, though the gap is narrowing.

Let’s jump into it.

— PC

Through the Lens

In Focus

I. Trump’s election interference claims: “This isn’t a story about China”

The White House appears to be shielding China from scrutiny in President Donald Trump’s push to get to the bottom of what he has declared an official cover-up of Chinese interference in the 2020 presidential election.

While Trump said in his Thursday speech to the nation that he had ordered the FBI, the CIA, the Department of Justice and the Office of the Director of National Intelligence to investigate what he calls an official cover-up of China’s activities, there’s so far been no mention of Beijing as a target of that probe or others.

DOJ said in a statement that it’s “following through on the president’s directive,” but declined to comment whether its investigation will extend to Chinese election meddling. The FBI, ODNI and CIA did not immediately respond to a request for comment.

“This isn’t a story about China,” White House trade adviser Peter Navarro told reporters Friday. He said the focus of investigations will be on “nefarious actors domestically” who worked to undermine the election’s integrity. The White House declined to comment on whether it plans to go after Beijing for any of the crimes it is alleging.

Democrats are seizing on the lack of action against China as proof that Trump is more interested in using his accusations of an official cover-up of Beijing’s interference to punish perceived political enemies within the intelligence community.

Read: Trump spares Beijing in probe of alleged Chinese election plot (Politico)

II. Target missed

China’s economy in the second quarter expanded at its weakest pace since the fourth quarter of 2022, reinforcing calls for policy stimulus as an accelerating slide in investments deepened the strain on growth, while consumption stayed subdued.

Gross domestic product growth came in at 4.3% in the April to June period, data from the National Statistics Bureau showed Wednesday, missing economists’ forecast for 4.5% growth in a Reuters poll, and slowing from 5% in the first quarter.

That second-quarter growth came below Beijing’s full-year growth target range of 4.5% to 5%, the least ambitious goal in decades, amid tensions with trade partners, including the U.S. and the European Union, and sluggish domestic demand.

Given the disappointing growth, Tianchen Xu, senior economist at Economist Intelligence Unit, expects stimulus measures to be ramped up in the third quarter, including a policy rate cut to stimulate investment demand.

Read: China posts slowest quarterly GDP growth since 2022 as investment slumps (CNBC)

Related:

• China bets on faster state-backed projects to shore up growth, avoid broad stimulus (Reuters)

• China’s record consumer defaults undermine Beijing’s push to boost spending (Reuters)

• Chinese Consumers Tighten Purse Strings Despite Modest Income Gains (Caixin)

• China’s graduate glut: millions enter a job market with little use for them (The Guardian)

III. To the moon!

Chinese President ​Xi Jinping on Friday cast Beijing as the champion of a new global AI order, using China’s premier tech conference to promote open-source technology and challenge U.S. influence over ‌the rules governing the fast-moving sector.

In a speech to the opening ceremony of the World Artificial Intelligence Conference (WAIC) in Shanghai, Xi urged countries to seize the “historic opportunity” of open-source AI, and pledged to help developing nations build AI capabilities, warning against the emergence of “new historical injustices” from unequal access to the technology.

The remarks amounted to Xi’s clearest articulation yet of China’s ambition to shape global AI governance, framing its open-source models as a global public good and positioning Beijing as an alternative to Washington ​at a pivotal moment in the race for technological leadership.

Read: Xi pitches China as leader of new global AI order, challenging US dominance (Reuters)

Related:

• China’s Xi Jinping launches new AI alliance: What is it? (Al Jazeera)

• Xi Jinping’s Big AI Speech, Annotated ()

• How to read Xi Jinping’s speech at the World AI Conference ( on X)

• China’s Moonshot AI unveils Kimi K3 that rivals OpenAI, Anthropic (CNBC)

• Who Is Moonshot AI? (The Wire China)

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We’re jumping straight in this week.

— PC

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After this week’s meeting in Brussels between EU trade chief Stéphane Séjourné and Chinese Commerce Minister Wang Wentao, they agreed to continue talking.

In a joint press statement, the two sides said they would “establish a joint monitoring mechanism to exchange relevant data, monitor trade flows and support technical work with a view to improving transparency, enhancing mutual trust and managing trade frictions” while agreeing to “meet again at ministerial level in Autumn 2026.”

“Dialogue is essential, but the dialogue has to deliver,” said Ursula von der Leyen, president of the European Commission, on Friday, hinting at retaliation depending on Beijing’s response to EU complaints about unfair trade practices.

“We are basically prepared for everything, and we have all the instruments on the table, and we are thinking about other possibilities if necessary,” she said.

As they enter the hottest months of the year, the EU …

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We’re jumping straight in this week.

— PC

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A few weeks ago, in an interview with Le Monde, EU trade chief Stéphane Séjourné referred to China as an “existential challenge.”

At the close of this week’s European Council summit, European Commission President Ursula von der Leyen promised to use EU trade defense tools “more proactively and more strategically.”

“€1 billion in trade deficit per day is simply unsustainable. We cannot continue to raise these issues without any concrete results,” said European Council President António Costa.

The European Commission said it would propose a new diversification instrument, a country-agnostic—but clearly aimed at China—tool designed to reduce dependence on critical, weaponizable chokepoints.

Despite the rhetoric, European leaders fear retaliation, and maintain that the goal is de-risking, not decoupling. But retaliation is inevitable, and unity will be crucial.

"Retaliation ‌will not affect everyone equally. Not everyone is equ…

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Four weeks after the ceremonious Trump-Xi summit in Beijing, the apparent U.S.-China truce showed cracks this week with the news that China arrested a U.S. citizen and the Pentagon’s announcement that it added Alibaba, Baidu, and BYD, among other companies, to a list of entities it believes have cooperated with the Chinese military.

As CNBC explained, while the “designations do not impose sanctions explicitly,” they mean that “the Defense Department will be prohibited from contracting directly with listed companies starting later this month, and from procuring their products or services through third parties beginning in June 2027.”

China’s Ministry of Commerce, in response, said “China is strongly dissatisfied and firmly opposes this,” and it urged “the U.S. to immediately stop its erroneous practices, immediately withdraw relevant measures and return to the correct track of building a constructive strategic and stable China-U.S. relationship.”

“Otherwise, China will resolutely and forcefully retaliate, and the US will bear full responsibility for the consequences,” the statement said.

Four weeks on, the goodwill generated by the Beijing summit is already proving difficult to sustain.

***

While experts continue to digest Xi’s visit to the DPRK this week, one of the more striking interpretations to me came from Seong-Hyon Lee, a senior fellow at the George H. W. Bush Foundation for US-China Relations, who concluded that it “was not a routine exercise in economic diplomacy; it marked the formal, institutionalised demise of the post–Cold War denuclearisation paradigm concerning North Korea,” representing “a transition from treating North Korea as a volatile non-proliferation hazard to tacitly endorsing it as a permanent, sovereign nuclear buffer state.”

A conclusion shared by Emma Chanlett-Avery, Deputy Director of the Asia Society Policy Institute’s Washington: “Xi may have now calculated that the regime has advanced its capabilities so far that denuclearization is no longer feasible.”

Let’s jump into it.

— PC

Through the Lens

In Focus

I. The Pentagon’s “1260H list”

The Pentagon added a slew of Chinese companies, including Alibaba Group, Baidu Inc and carmaker BYD, to a list of entities it believes have aided the Chinese military, complicating the fragile diplomatic relationship between Washington and Beijing.

The Defense Department published an updated “1260H list” Monday evening stateside — a roster of companies the Pentagon considers affiliated with China’s military or defense industrial base.

The designations do not impose sanctions explicitly, but mean the Defense Department will be prohibited from contracting directly with listed companies starting later this month, and from procuring their products or services through third parties beginning in June 2027.

Read: Pentagon expands list of China military-linked firms to include Alibaba, Baidu in fresh blow to diplomatic thaw (CNBC)

Related: Beijing ‘strongly dissatisfied’ with Pentagon move against China tech firms (Nikkei Asia)

II. Xi’s visit to Pyongyang

The state visit by Xi Jinping to meet with Kim Jong-un was not a routine exercise in economic diplomacy; it marked the formal, institutionalised demise of the post–Cold War denuclearisation paradigm concerning North Korea and the definitive codification of what may be termed the “Mediator’s Veto”.

The clearest signal from the summit lies in what was deliberately left unsaid. A rigorous textual tracking of Chinese state readouts(Opens in new window) and Xi’s front-page essay in the North Korean newspaper Rodong Sinmun reveals the absolute, systematic erasure of the word “denuclearisation”. As recently as his 2019 Rodong Sinmun essay, Xi still endorsed a political resolution of Korean Peninsula issues – language that at least gestured toward an eventual settlement. The vanishing of even that framing removes the last rhetorical bridge to nuclear disarmament. By replacing these foundational non-proliferation terms with a commitment to support North Korea’s development along a path conforming to its own national conditions, Beijing has executed a calculated pivot.

This represents a transition from treating North Korea as a volatile non-proliferation hazard to tacitly endorsing it as a permanent, sovereign nuclear buffer state.

Read: Xi’s visit to Pyongyang did not revive denuclearisation diplomacy – it buried it (Lowy Institute)

Related:

• Analysis: Why China’s Xi wants a ‘brighter’ future with North Korea (CNN)

• Russia–North Korea Military Cooperation in Response to China’s Tactical Ambiguity ()

• Asia ASAP: Xi Jinping and Kim Jong Un Meet in Pyongyang ()

III. “Do not spread bad news.”

Li Xi, a financial journalist at a Beijing media outlet, told Tian Jian that beginning in the first half of last year, his publication introduced new rules governing coverage of “negative” economic conditions. These included a long list of topics — the property market slump, the collapse of local government revenues from land sales, declining household incomes, existential challenges facing businesses, corporate layoffs and unemployment, and the banning of coal-burning for rural household heating. All of these were marked as demanding “caution.” “Our editors have repeatedly told us to be careful with our pitches,” Li said, “and instead to ‘sing the praises of a bright future,’ and not spread bad news.”

“Writing about which stocks are underwater, about rising social security contributions, about farmers not being allowed to burn coal for heat — none of that is acceptable,” Li added.

Stories on these topics, said Li Xi, have gradually come to be classified as “high-risk story pitches.” Even when they are not explicitly prohibited, they tend to be rejected at the pitch stage, and rarely do they ever find their way into real editorial discussions. “At our meetings, we don’t even bring up these kinds of negative pitches anymore,” he said.

Read: The Economic Downturn and China’s Silent Press (, )

Related: Beijing is squeezing journalists but the media is self-sabotaging too (, )

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We’re jumping straight in this week, but before we do, I couldn’t ignore this week’s 37th anniversary of what is colloquially referred to as 六四 (liù sì), 64, the tragic Sunday of June 4, 1989, when the hopes of millions who had been peacefully protesting across China for weeks in support of a more democratic future were crushed in and around Beijing’s Tiananmen Square.

I’ll never forget a colleague telling me that his sister, like so many other university students at the time, traveled to the capital to join the protests. The same colleague, whose parents refused to talk about the matter, told me he planned to explain the inexplicable to his teenage son one day. And one of my best friends shared his father’s advice: “Don’t talk about it with other people.”

天安门 (Tiān’ānmén) means “Gate of Heavenly Peace.”

— PC

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In an interview with Le Monde this week, executive vice-president of the European Commission for Prosperity and Industrial Strategy, Stéphane Séjourné, referred to China as an “existential challenge.”

In spite of all the challenges that China poses to the EU, the group has remained divided on how to respond, unable to agree on a coherent long-term strategy that protects its collective interests, as individual member states fear retaliation from and negotiate directly with Beijing.

The list of grievances is long: China’s industrial overcapacity and state subsidies, lack of reciprocal market access, discrimination against foreign firms and unequal competitive conditions, the EU’s excessive dependence on key products such as rare earths, critical minerals, batteries, pharmaceuticals and medical supplies, technology transfer pressures and lack of intellectual property protections, China’s use of trade and economic coercion, …

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