Xi's rare rebuke

Xi criticized local governments for crowding into the same emerging sectors: AI, computing power, and EVs

Welcome back to What’s Happening in China, your weekly China brief.

Washington and Beijing are making efforts to stabilize relations ahead of a potential Xi-Trump meeting later this year. The two sides signed a trade deal late last month, easing U.S. tech restrictions and allowing PRC rare earth exports, while Washington also lifted curbs on chip design software. Last week, after meeting Chinese Foreign Minister Wang Yi, U.S. Secretary of State Marco Rubio said they are working “on finding the right date” for a Trump visit to China. And this week, news emerged that Nvidia will resume sales of its H2O artificial intelligence chips to the PRC, reversing an earlier ban.

Trump also told reporters at the White House on Wednesday that Chinese authorities have been “helping out” in controlling fentanyl flows.

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China’s National Bureau of Statistics reported on Tuesday that despite the trade war and weak domestic consumption, the economy grew 5.2% in the second quarter and 5.3% in the first half of the year.

Still, analysts remain cautious about the outlook for the rest of 2025, citing headwinds like deflation, fragile consumer sentiment, and the ongoing property crisis. “We are still facing a very severe and complex situation,” Commerce Minister Wang Wentao said Friday. “Global changes are unstable and uncertain. Some of our policies will provide new responses according to the times and circumstances.”