With China's economy under pressure, critics questioned why the country should bring in foreign talent when its own graduates were having trouble finding work, warning that doing so could intensify competition for jobs. Some of the backlash also took on nationalist, and at times openly xenophobic, overtones, with Indians emerging as one of the most visible targets.

Similar sentiment resurfaced this summer. On Chinese social media, posts began claiming that large numbers of Indian tourists were "flooding into China," while others highlighted cases of alleged misconduct and accused Indians of "taking up" China's resources. Scattered incidents, along with unverified or exaggerated claims, were increasingly folded into a much broader narrative about Indians as a group.

It was against this backdrop that The Paper 澎湃新闻, a leading Shanghai-based digital news outlet, published a commentary pushing back against the growing hostility. The piece urged readers not to commit the basic logical fallacy of judging an entire country by the behavior of a few individuals. It also warned against xenophobia and click-driven nationalism, while calling on Chinese society to remain open, confident and inclusive in its engagement with the outside world.

The commentary was published on July 2 on The Paper’s official WeChat account. Below is my full English translation.

如何看待近期关于印度的一些讨论？

How Should We View the Recent Discussions About India?

Recently, posts claiming that "Indian tourists are flooding into China" and highlighting "uncivilized behavior by some Indians in China" have been circulating online from time to time. Some have gone further, arguing that "China's visa policy toward India is flawed" or that "Indians are taking up China's resources," stirring considerable public anger. How should we view this? Here are a few thoughts.

This latest wave of online debate began with complaints about "uncivilized behavior by some Indian tourists." If some Indians visiting China behave inappropriately, they should of course be criticized. China has a tradition of treating visitors as guests, but once here, visitors are expected to abide by China's laws and regulations. If boundaries are crossed, individuals should be dealt with according to the law, regardless of their nationality. There is absolutely no question about this.

The problem arises, however, when we allow the actions of a few individuals to negate an entire country and fuel xenophobia. We cannot completely shut our doors to India simply because of a small minority. Furthermore, it is unacceptable to unfairly pin all negative incidents on Indian people just because the topic generates online traffic and attention.

When considering how China should get along with India, we need to look at the bigger picture.

Historically, China and India are both ancient civilizations with a history of cultural exchange spanning over two millennia. From Buddhist monk Xuanzang's sixteen-year pilgrimage to India, from which he brought back 657 Sanskrit Buddhist scriptures, to Rabindranath Tagore's visit to China and his profound friendship with Chinese poet Xu Zhimo, and then to Dr. Dwarkanath Kotnis sacrificing his precious life to support the Chinese people's resistance against Japanese aggression—these stories of people-to-people ties constitute the true fundamentals of China-India relations.

In practical terms, China and India are immovable neighbors. Together, their populations account for more than one-third of the world's total. As both countries strive toward modernization, peaceful coexistence and win-win cooperation are inevitable imperatives.

It is undeniable that differences exist between China and India, but both nations possess the wisdom to manage them. Recently, the border situation has noticeably de-escalated, which is a positive development. Both sides have also recognized that the boundary question does not represent the entirety of China-India relations. It must be placed in its proper perspective to prevent isolated disputes from jeopardizing the broader relationship.

In recent years, Chinese and Indian leaders have met in Kazan and Tianjin. Since then, bilateral relations have continued to improve, with practical cooperation strengthening. According to official Indian statistics, bilateral trade in goods reached US$151.1 billion in the 2025-26 fiscal year, making China India’s largest trading partner. This shows how deeply intertwined the two economies have become. Naturally, the smooth flow of hundreds of billions of dollars in goods cannot be achieved without the facilitation of personnel exchanges.

Beginning in 2025, direct flights between China and India were also gradually restored. With more direct flights, it is only natural that more people are traveling between the two countries than before, and certainly more than during the pandemic years. Moreover, more than 80 percent of the Chinese visas issued to Indian nationals are for business and trade purposes, by far the largest category. Those traveling purely for tourism actually make up only a small minority.

At a broader level, the accelerated rise of the Global South in the current international landscape means that the significance of China-India relations extends far beyond the scope of simple bilateral ties. Particularly as the global governance system undergoes profound restructuring, from the BRICS mechanism and the Shanghai Cooperation Organisation (SCO) to climate negotiations and WTO reforms—the Global South would struggle to project a unified voice without China-India collaboration.

Furthermore, India is the host of this year's BRICS Summit. China has stated its support for India in fulfilling its duties as the BRICS chair to jointly promote the development and expansion of the BRICS mechanism. All this shows that facilitating travel between the two countries may appear on the surface to be merely a matter of easing visa and entry procedures, but it essentially signifies the reconnection of the two major engines of the Global South.

Returning to the visa issue, China has introduced a series of measures in recent years to make visas and travel more convenient. These measures are not aimed at any particular country, but at the world as a whole. To date, China has concluded mutual visa-exemption agreements with 160 countries, and extended unilateral visa-free policies to 50 countries.

They bring not only increased international tourism revenue but also enhanced commercial cooperation and an improved reputation for our business environment. These are tangible national dividends that will ultimately benefit ordinary Chinese people as well.

By opening its doors to the world, China demonstrates the magnanimity captured in the traditional saying that "those nearby are pleased, and those from afar are drawn to come." This reflects the broad vision of a major country, one that prioritizes long-term "win-win" outcomes over temporary "reciprocity."

That is why discussions about the supposed "lack of reciprocity in China-India visa policies" should also be approached rationally. It is true that India tightened visa issuance for Chinese nationals in previous years. Although it has now resumed issuing business and tourist visas, there remains a noticeable gap compared with China's visa policies.

While China should urge India to demonstrate sincerity and take concrete action, it is also important to recognize that India's policies are undergoing dynamic adjustments. Infinitely escalating the visa issue or turning it into an outlet for emotional venting will likely only backfire, squeezing the space for the improvement and development of bilateral relations.

Once the noise dies down, we should return to reason. Over the past several years, the suspension of exchanges between China and India has indeed contributed to a growing information deficit and even a trust deficit. Some people like to post all manner of sensational everyday scenes from India and other South Asian countries online, while amplifying alleged "misbehavior" by Indians in China. This has left many Chinese people with a fragmented, label-driven and stereotyped understanding of India.

Such content may appear to be "patriotic expression," but in reality it often promotes confrontation and xenophobia in pursuit of clicks and attention. At its core, it exploits patriotic sentiment and national feeling. It not only pollutes a healthy online environment, but is also inconsistent with the open and self-confident mindset expected of a major country.

The underlying character of Chinese civilization has always been one of embracing diversity with openness and tolerance. We should maintain the mindset of citizens of a great nation and display the grace and civility befitting a nation known for its tradition of hospitality and good manners.

In a recent article, Hu argues that the Philippines and Japan have both misread the nature of China-U.S. strategic competition, though in different ways. The Philippines, he writes, has exaggerated the intensity of the rivalry and sought to advance its own interests by aligning more closely with Washington, while Japan has interpreted signs of U.S. retrenchment as an opportunity to strengthen its strategic role and pursue greater political and military normalization.

More broadly, Hu contends that both countries underestimate China's national strength and resolve, and that their miscalculations have become a growing source of instability in the Asia-Pacific as China-U.S. relations themselves become relatively more stable and predictable.

The article first appeared in Issue No. 7, 2026 of 现代舰船 Modern Ships, a magazine run by China State Shipbuilding Corporation Limited (CSSC)'s in-house think tank. It was also published on Mingkun Technology's official WeChat blog on July 19.

With Dr. Hu's permission, this newsletter shares the full article below.

菲律宾日本误判中美战略竞争

How the Philippines and Japan Misjudge China-U.S. Strategic Competition

Since the San Francisco summit in November 2023, China-U.S. strategic competition has gradually moved toward greater stability. This has been especially evident in the military and security sphere, where both sides have explicitly stressed the need to avoid war and conflict. During President Donald Trump's visit to China from May 13 to 15, 2026, the two countries announced the establishment of a "constructive relationship of strategic stability," further underscoring this trend. For both sides, competition persists, but stability has become increasingly important.

In fact, this is not merely a policy choice by the two countries but also an inevitable consequence of present-day realities. China-U.S. strategic competition differs significantly from every historical case of great-power rivalry in at least three respects.

First, China and the United States are not neighboring countries. Despite major technological advances, geography remains highly important in great-power rivalry, particularly military competition. The fact that the two countries are not neighbors leaves greater room for compromise and accommodation in their strategic competition. As President Xi Jinping has repeatedly noted, "The Pacific Ocean is vast enough to accommodate both China and the United States." By contrast, the great powers involved in historical rivalries were generally neighbors.

Second, today's military and technological conditions are fundamentally different. Since the end of World War II, the advent of nuclear weapons and the development of nuclear deterrence have imposed constraints on both the intensity and the limits of competition among major powers. Since the 21st century, the global proliferation of anti-access and area-denial platforms and technologies has greatly constrained major powers' ability to project and employ military force overseas. Broadly speaking, current and future technological conditions are more conducive to the diffusion of power than to its concentration, making historical models of hegemonic transition increasingly unsustainable.

Third, international institutions and norms have undergone transformative changes. After World War II, countries across the Third World gained independence, while the nation-state system and nationalism spread worldwide. This trend grew still stronger after the end of the Cold War. When confronted with external aggression, Venezuela represents an exception, while Iran is more typical of how modern nation-states respond. The expansion and exercise of great-power influence are coming under increasing pressure from institutional frameworks and international norms. Earlier modes of competition based on overseas expansion or the establishment of geopolitical spheres of influence have therefore become increasingly difficult to sustain.

There are also other differences, including those arising from strategic culture and the distinctive features of the present era. Together, these factors account for the unique nature and complexity of China-U.S. strategic competition. Neither the experience of the U.S.-Soviet Cold War nor the theories and historical cases associated with the "Thucydides Trap" can adequately explain this competition, much less predict its trajectory with any precision.

In recent years, third countries have frequently misjudged China-U.S. strategic competition by viewing it through the lens of historical analogies and past experience. The Philippines and Japan are two particularly notable examples.

Since the administration of Ferdinand Marcos Jr. took office, the Philippines has exaggerated the intensity of China-U.S. competition. It believes that by aligning itself with the U.S., it can secure a range of its own interests, including its claims to sovereignty and maritime rights in the so-called "West Philippine Sea." It has therefore repeatedly provoked China over the South China Sea and the Taiwan question. Yet the frictions between China and the Philippines since 2023 have shown that although the U.S. hopes to exploit the Philippines and its disputes with China, it does not want those disputes to escalate excessively, still less to take risks on the Philippines' behalf.

Japan represents the opposite extreme of misjudgment. It believes that the U.S. is showing signs of retreat and retrenchment, and that Japan therefore needs to highlight its own value while seizing the opportunity to achieve political and military normalization. It has consequently strengthened its alignment with the U.S. and repeatedly sought to court attention through its positions on historical issues such as Taiwan question.

These misjudgments of China-U.S. strategic competition have been accompanied by a misreading of China's strength. Unlike the U.S. and other countries, which have relatively objective assessments of China's capabilities, the Philippines and Japan share a tendency to seriously underestimate both China's national power and its resolve.

The Philippines believes that it can "deter" China by arming itself and recruiting more allies and partners. Japan, meanwhile, believes that it can go toe-to-toe with China even without the U.S. As a result, both countries have shown little hesitation in crossing China's red lines. One to China’s south and the other to its north, they have become the two countries in the world most willing to openly defy China.

In recent months, these misjudgments by the Philippines and Japan have become the greatest source of instability in Asia-Pacific security. At a time when the overall China-U.S. relationship has become relatively stable and predictable, the actions of the Philippines and Japan deserve even greater attention and vigilance from countries in the region. For China, it is necessary to assess objectively the impact of intervention by the U.S. and other external actors, while treating the Philippines and Japan as independent actors rather than merely as "U.S. followers." China should strengthen its countermeasures against provocations by the two countries and ultimately compel them to "return to reality."

Awarded every four years by the International Mathematical Union, the Fields Medal is widely regarded as mathematics' highest honor. Wang and Deng were two of the four recipients in 2026, becoming the first Chinese nationals in history to win the medal.

Both of them began their university education at Peking University in 2007, and their subsequent paths became markedly international. Wang completed her undergraduate degree in mathematics at Peking University in 2011, continued her studies at École Polytechnique and Université Paris-Saclay, and earned her PhD from the Massachusetts Institute of Technology (MIT).

Deng entered Peking University before transferring to MIT, where he received his bachelor's degree in 2011. He later earned a PhD in mathematics from Princeton University and held positions at the Courant Institute and the University of Southern California before becoming a professor at the University of Chicago.

Their victories were naturally greeted with enormous pride in China. Much of the domestic coverage highlighted the Chinese foundations of their education: both had received rigorous schooling in China, both had studied at Peking University, and had developed their mathematical abilities within a system that places considerable emphasis on mastery of fundamental knowledge and technique.

This soon became part of a broader debate over how their achievements should be understood. One view held that their success demonstrated the strength of Chinese basic education and undergraduate training: the solid foundations laid in China made their later breakthroughs possible.

Another noted that the work for which they were honored was developed largely at institutions overseas, arguing that a more flexible research environment, greater tolerance for uncertain and long-term exploration, and a lower professional cost of failure may have given them more room to pursue difficult problems without an assured return. These positions were not necessarily mutually exclusive, but online discussion often placed them in direct competition.

A separate episode added another layer to the controversy. An interview with Deng was first published by the Beijing International Center for Mathematical Research. When Peking University's official account later republished it, readers noticed that one complete Q&A had been omitted.

Deng had been asked what advice he would give students considering whether and when to study abroad, and whether eventually to return to China. He replied cautiously that there was no single answer that applied to everyone, but recommended, circumstances permitting, that a scholar spend at least one substantial period abroad—not necessarily to remain there, but to experience another academic ecosystem, meet new colleagues and develop new forms of collaboration. The reason for the omission is not publicly known, but the missing passage apparently attracted attention in the context of the wider debate.

It was amid these arguments that I came across and translated the following essay. Its question is broader than whether China or overseas institutions deserve more credit for two Fields Medals. It asks where "the collective" should stand before a researcher has produced anything that others can celebrate. I have been unable to identify its author and just found it thought-provoking enough to share with you.

—Yuzhe

Where Should "the Collective" Stand Before the Flowers and Applause Arrive?

鲜花和掌声尚未出现时，集体应在哪里？

When word arrives from another time zone that a researcher has won a major international academic prize, several of the schools they once attended may, within days, hold alumni gatherings. Principals who have never met the researcher appear before the cameras and reminisce about the child who would keep asking questions in class and continue the discussion after the bell. The universities they attended are equally quick to publish lightly polished recollections of past conversations, together with messages of congratulations.

A résumé that had once attracted little notice is spread out again. At every stage, people eagerly look for some connection to themselves, carefully placing the researcher and the achievement within a narrative in which they appear as the product of collective cultivation.

These connections are genuine, and the congratulations are entirely understandable. It is only natural for an achievement to cast reflected glory on the people and places once associated with the person behind it. Yet after several rounds of retelling, the subject of the story gradually changes.

The focus quickly shifts away from "what problem the researcher actually solved and how they reached ground no predecessor had reached", toward "what we gave them and how much of the credit belongs to the education, environment and resources we provided." "They once grew up here" becomes "this place made them who they are." The difference may appear to be merely one of wording, but the causal claim has quietly changed.

Compared with these broad narratives of collective cultivation, the researcher's own acknowledgments are usually far more specific. They thank the person who introduced them to the right problem at the right moment, the colleagues willing to share their intuitions and doubts, and the environment that allowed them to concentrate on their work. An acknowledgment may not provide a complete inventory of contributions, but it at least breaks the vague notion of "the collective" down into identifiable people and actions.

Here, "the collective" is not abstract. The participants have names, and the course of collaboration can be traced. It is possible to identify who actually posed the questions, provided methods or materials, developed the arguments and revised the judgments. Who offered education and support, and who made a creative contribution to the particular achievement, can be explained separately and clearly.

Some will say that early education matters—a true but empty statement. Researchers, of course, do not simply materialize out of nowhere. The basic language with which people make sense of the world comes from compulsory schooling; mathematical notation and foundational methods are inherited from earlier generations. From childhood to adulthood, human development also depends on stable living conditions and public resources. To deny any of this would be to deny the starting point that society provides for the individual.

The problem is that necessary conditions are not sufficient to produce a particular achievement. Those who provide such conditions certainly deserve recognition for their support, but that does not make them the creators of the resulting achievement. These conditions may explain why a researcher had the opportunity to set out, but they cannot, on their own, explain why the researcher reached a particular destination.

If "without the former, there could be no latter" were accepted as a basis for assigning credit, the chain could be traced endlessly backward. The ancestors of Homo sapiens, ancient fish, the Earth and eventually even the Big Bang could all be placed on the list of contributors. The longer the chain becomes, the less useful it is in answering who posed the question, who changed the direction of inquiry and who completed the argument. Once everything is subsumed into a sufficiently grand "collective," authorship itself disappears from view.

One important function of universities and research institutions is to bring people to the edge of what is already known. Standardized, large-scale training can indeed help people master established knowledge and methods more efficiently. But once that edge has been reached, the next step cannot be inferred from the size of an institution's budget, the length of its history or its bureaucratic rank. A timetable can set a deadline for submitting a paper, and performance metrics can tally completed work, but neither can reliably tell us where an apparently obscure line of inquiry may lead.

Progress along an established path can be supported by quasi-industrial forms of training. But when basic research confronts genuinely unknown questions, exploration itself can no longer easily be organized according to a uniform process or measured by a simple input-output ratio.

A new line of research often begins without enough evidence to support it. Nor can researchers necessarily explain, in the language already available, what a given investment will yield or how long it will take. They must make the case in grant applications that a path with no guaranteed outcome is still worth pursuing. When the results remain elusive, they must decide whether to withstand the pressure and continue.

When researchers are required to promise results in advance and are evaluated against fixed targets, the uncertainty inherent in basic research is turned into their personal responsibility. They consequently learn to choose the safest topics—the ones most likely to produce publishable papers—while becoming less willing to explore extremely difficult, unfinished ideas that might nevertheless open up entirely new territory.

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Years later, once an achievement becomes sufficiently impressive, the courses the researcher took, the institutions they worked in, the funding they received and the positions they held are linked together retrospectively, as though success had always been the inevitable outcome of this established trajectory and therefore further proved its correctness. Meanwhile, lines of inquiry that never received comparable support, never led to a prize or have yet to produce conspicuous results are selectively forgotten.

Some argue that research institutions must bear the cost of every project and therefore have no choice but to weigh many practical factors. Investments may come to nothing, and choices may prove mistaken. Yet within a funding system or research institution of sufficient scale, the risk of any one project's failure is indirectly spread across society. However, what the researcher personally puts at stake—a crucial window in their career, their academic reputation and their time—cannot be distributed in the same way.

This asymmetry is particularly pronounced for graduate students, postdoctoral researchers and early-career scholars. If they fail to meet rigid performance requirements, or if years of research do not produce papers that count toward an evaluation, they may face delayed graduation, the loss of a position or the interruption of their research.

Some narratives fashioned in the spotlight rely solely on associations found in a CV to present an achievement as proof of an institution's own ability to cultivate talent, thereby claiming a share of the honor after the event. Yet when exploratory work needs support in advance, researchers often face the combined constraints of grant-review procedures, employment systems and evaluation rules. Even when support is secured, if the research encounters setbacks or fails to produce publishable "outputs" on schedule, the individual is left to bear the consequences.

Risk and honor are not always distributed along the same lines. In such narratives, invoking "the collective" can obscure specific contributions and responsibilities while, in practice, reinforcing existing systems of evaluation and resource distribution.

Once the narrative of "what we gave them" becomes a basis for evaluation and resource allocation, it is no longer merely rhetorical. An achievement whose causal relationship with an established model of education or training has never been demonstrated may nevertheless be used as evidence that the existing model works. Those with substantial power over the choice of research topics, appointments and funding can then more easily continue applying the old standards. Existing evaluation rules and patterns of resource distribution are thereby perpetuated.

The accidental but valuable departures that occur during exploration are also more likely to disappear from the success story. The real, winding process of creation is then tidied into a causal narrative fit for publicity and made to look reproducible.

The question of whether the individual or the collective matters more is a false one. What deserves scrutiny is how the individual and the collective actually work together in the attempt to solve each particular academic problem.

A collective is not an abstract agent suspended above individuals. It operates through relationships of collaboration, institutional arrangements and the allocation of responsibility. A community of knowledge depends on actual people sharing methods, questioning one another and correcting errors together.

When researchers themselves have little opportunity to participate in the key decisions that shape the direction of their work, and lack channels through which to explain their reasoning, raise objections or seek a review, those who speak in the name of "the collective" are in practice only the small number of people who control funding, evaluation and the institution's public voice. Individuals have not truly disappeared, nor is the collective unreal. It is simply that some people's names have become blurred, while the decision-making power of others may consequently become more secure.

People have every reason to be pleased that they once walked part of the way with someone who later won a prize. A more gracious message of congratulations might simply say: We were fortunate to have played a small part in one stage of their growth.

Only before the flowers and applause appear does the real test come into view: when a person has no achievement for others to claim a share in, but only questions, departures from accepted paths and a long period of uncertainty, will the so-called collective still be willing to let that person continue—to keep climbing toward a summit with no guarantee that they will reach it?

First electric vehicles, then tires and chemicals. Now China's duck meat has become the latest product subject to EU trade scrutiny. The European Commission has opened an anti-dumping investigation into imports of Pekin duck meat from China following a complaint filed by five EU producers in May.

The complaints alleges that cheap loans, subsidized soy feed, or preferential financing give Chinese producers an unfair price edge.

The filing reflects an understandable effort by European producers to protect their commercial interests amid intensifying competition. But the complaint also raises technical questions that deserve close scrutiny.

One concerns whether the product named in the investigation corresponds precisely to the duck varieties China exports. The other concerns the EU's use of its "significant distortions" methodology and third-country benchmarks.

I. Technical Questions Raised by the Investigation

A. Questions Over the Scope of the Product Under Investigation

One point of contention is whether the "Pekin Duck" named in the EU notice corresponds to the duck breed actually exported from China to Europe.

Chinese duck products shipped to the EU are predominantly made from the "Cherry Valley ducks (樱桃谷鸭)", not the Pekin duck referenced in the probe, according to a statement published by the China Chamber of Commerce of Import and Export of Foodstuffs, Native Produce and Animal By Products (CFNA). CFNA therefore considers the product covered by the EU investigation to be materially different from the varieties actually exported by China.

"Beijing Ya (北京鸭)," officially translated as "Pekin duck," is a Chinese national geographical indication product, while the Cherry Valley breed descends from Pekin ducks that were exported to the UK for selective breeding in the late 19th century. The Cherry Valley duck inherited Pekin duck's fine genes: efficient feed conversion, fast growth and high meat yield. In 2017, the UK's Cherry Valley Farms sold its equity to Beijing Capital Agribusiness Group and CITIC Agriculture.

The distinction does underline the need for the EU to define the scope of the investigated product precisely and ensure that its biological, commercial and customs classifications correspond to the products actually exported from China.

A CFNA staff member who requested anonymity said that, in the Chinese context, "Pekin duck" refers to a specific breed raised within a defined geographical area and used mainly in the domestic market. "Not a single purebred Pekin duck is exported," the staff member said, adding that the two have developed into distinct breeds.

B. Questions Over the Method Used to Determine Normal Value

A second and more consequential question concerns how the EU intends to determine the "normal value" of Chinese duck meat.

In its notice, the European Commission said:

In light of the information available, the Commission considers that there is sufficient evidence pursuant to Article 5(9) of the basic Regulation tending to show that, due to significant distortions affecting prices and costs, the use of domestic prices and costs in the country concerned is inappropriate, thus warranting the initiation of an investigation on the basis of Article 2(6a) of the basic Regulation.

Many Chinese producers, however, argue that their prices in the European market do not meet the legal conditions for a finding of dumping.

A limited survey of retail outlets in Berlin suggests that Chinese duck products are not uniformly priced below European products at the consumer level. At Go Asia, the largest Asian supermarket in Germany with more than 70 stores across the country, a 1.35-kilogram frozen prepared whole roast duck imported from China was priced at €19.99, or about €14.81 per kilogram, before being discounted to €16.99, or €12.59 per kilogram. A boneless frozen roast duck from China was priced at €9.99 for 500 to 575 grams, equivalent to €17.37–€19.98 per kilogram.

By comparison, European-origin duck products observed at a Kaufland supermarket ranged from €8 to €18.72 per kilogram, depending on the product type, origin, degree of processing and package size.

At the very least, this limited, randomly collected retail sample shows that the Chinese duck products observed were not being sold at exceptionally low prices.

Even if Chinese duck products were found to be generally cheaper than comparable European products, that alone would not constitute dumping. By the EU's own definition,

Anti-dumping measures counter dumping practices occurring when non-EU manufacturers sell their goods in the EU below the normal value (usually the sales price) on their domestic market.

Chinese producers note that their exports are NOT priced below normal value when this is calculated on the basis of their actual domestic prices and costs.

Industry representatives have also questioned the possible use of Brazilian duck-industry data to determine the normal value of Chinese duck meat. Feed expenses, labor costs, production scale and consumption patterns differ substantially between China and Brazil. These differences raise legitimate questions about whether Brazilian data provide an appropriate and comparable benchmark.

This methodological dispute extends beyond the choice of Brazil. China has long maintained that, after the relevant provision of Section 15 of its WTO accession protocol expired in December 2016, there was no longer a legal basis for continuing to treat Chinese prices and costs differently merely because of the country's economic system.

The EU subsequently moved away from formally treating China under a "non-market economy" designation and introduced a country-neutral methodology based on the existence of "significant distortions." Under this approach, the European Commission may disregard reported domestic prices and costs, in this case, China's, if it concludes that they have been affected by substantial government intervention. It may then construct normal value using international benchmarks or costs from a representative third country.

The new methodology is not legally identical to the former surrogate-country system. In principle, it requires the Commission to identify distortions affecting particular prices, sectors or production factors. Nevertheless, when Chinese companies' actual costs are broadly rejected and replaced with external benchmarks, the practical effect can be much the same. From China’s perspective, the change in terminology has therefore not removed the discriminatory effects of the previous approach.

If the Commission believes that Chinese duck-production costs are distorted, it should identify which costs are affected -- such as feed, financing, land, energy or labor -- and demonstrate how the alleged intervention has influenced the companies under investigation. General observations about China's economic system should not replace product-specific and company-specific evidence.

This brings to mind a previous China-EU dispute over poultry meat. The EU signed up a quota assignment treaty with Brazil and Thailand on poultry meat products in 2012, which harmed the interests of Chinese poultry meat exporters. In 2017, a WTO panel upheld China's complaint that the EU had failed to take China's rapidly growing exports into account when allocating tariff-rate quotas for two categories of processed poultry products, including duck meat.

II. How China's Duck Supply Chain Works

China has built an integrated industrial chain spanning breeding stock, feed production, farming, slaughtering, processing and distribution. Clustered duck industries in provinces such as Shandong, Jiangsu and Sichuan have operated at world-leading efficiency levels.

Li Shixiang, deputy director of the animal husbandry development center of Changle County, located in Weifang City of east China's Shandong Province, said that China's livestock industry has been rapidly upgrading toward standardized, large-scale and intelligent production.

"Changle has so far built four benchmark smart duck farms. These facilities are equipped with automated feeding, watering, environmental control, manure removal and Internet of Things technologies. Intelligent farming has significantly improved production efficiency," Li said.

Another factor at work is the "every-part-counts" approach featuring China's poultry industry. Not a single part of the duck goes to waste in China, each finding its own market. Breast meat becomes roast duck; feet, wings and necks are turned into popular braised snacks; feathers are processed into down filling for winter jackets; the blood is made into tofu -like blood curd; and even the carcass is boiled for soup or ground into animal feed additives.

All of these have significantly lifted the overall returns, contributing to the price edge of China’s cooked duck breast exports.

The duck industry is a snapshot of the broader transformation reshaping China’s agricultural sector. As many European media outlets have observed, Chinese producers have become increasingly competitive across a range of agrifood categories—including foie gras, caviar, and truffles—which were once considered premium European specialties. Their success follows a strikingly similar formula: leveraging technological innovation, scaling up production, and streamlining supply chains to turn what were once luxury delicacies into affordable products for ordinary consumers.

III. Opportunities for China-EU Agricultural Cooperation

The probe comes at an unusual moment: the EU is close to granting protected geographical status to "Pekin duck," which would bar non-Chinese producers from using the name.

Observers noted that as Pekin duck is an iconic Chinese product, the EU's probe bears strong symbolic significance.

Fang Jiongsheng, a professor from the School of Political Science and Public Administration at Shandong University, said EU industries face challenges from sky-high energy costs, to underinvestment and regulatory burdens. This industrial malaise has been taking a toll on Europe's broader economy, its labor markets and household livelihoods.

"Shrouded in the tariff threats of Trump's second presidency, the EU sees its trade-defense toolbox as thin. It is gripped by profound anxiety, and now seeks to tighten its trade restrictions so as to survive in a turbulent global trading system," Fang said.

For a long time, mutual benefit has defined China-EU economic and trade ties. Being each other's second-largest trading partners, the two sides boast highly complementary economies. Agricultural and food trade is a major area of practical China-EU cooperation.

The two sides have also made an agreement on geographical indications, which has brought hundreds of iconic products, such as French Champagne and China’s Anxi Tieguanyin tea, under mutual recognition and protection, ushering in a "golden era" for branded agricultural trade.

A humble Pekin duck should not become a symbol of division, but a reminder that cooperation remains the recipe for mutual prosperity.

(Additional reporting by Li Aoqiu in Shandong, China, and Li Chao in Berlin, Germany.)

Zheng Weimin (郑纬民) is a member of the Chinese Academy of Engineering and a professor in Tsinghua University's Department of Computer Science and Technology. A specialist in computer architecture and high-performance computing, his research spans parallel and distributed computing, CPU design, cloud computing, and network storage and disaster recovery. He formerly headed Tsinghua's Institute of High Performance Computing and also serves as chief scientist at Haizhi Technology.

Zheng sees China's AI compute problem as a structural mismatch: high-end capacity remains scarce, while much of its low- and mid-range computing power is underused because the software, scheduling and application layers are not yet mature enough. He argues that investment in domestic chips must be accompanied by stronger foundational software, high-performance graph computing and full-stack solutions that work in real industrial settings. Ultimately, he says, AI infrastructure should be judged not simply by how much computing power it provides, but by how efficiently it converts that power into high-quality tokens and deployable intelligence.

Below is a translation of his discussion with Tencent. Please note that the translation is mine and has not been reviewed by Prof. Zheng.

中国工程院院士郑纬民：中国AI算力，真正缺的是什么？

Zheng Weimin of the Chinese Academy of Engineering: What Does China Really Lack in AI Computing Power?

China's AI computing sector is experiencing an apparently paradoxical moment.

On the one hand, large models and AI agents are being deployed across industries at an accelerating pace, token consumption is rising rapidly, and high-end computing power remains in short supply. On the other hand, some computing resources that have already been built are not being fully utilized because of inadequate software compatibility, poor alignment between supply and demand, and limited scheduling capabilities.

This issue was also highlighted in the Research Report on AI Computing Infrastructure as an Enabler, published by the China Academy of Information and Communications Technology in 2025. According to the report, utilization loads vary considerably across China's AI computing infrastructure. In particular, some intelligent computing facilities led by local governments or state-owned investment platforms have yet to deliver their full practical value.

What this reveals is not merely a question of chip supply. A more complex set of factors must also be considered: whether the software ecosystem is mature; whether domestically produced chips can support real-world workloads; whether models, knowledge and tools can be effectively organized; and how many high-quality tokens each unit of computing power can produce. Here, "high-quality tokens" refers to effective model inputs and outputs that accurately carry business knowledge, generate reliable reasoning results and create tangible business value, rather than merely increasing token volume. Together, these factors are redefining the efficiency of China's AI infrastructure.

Zheng Weimin, an academician of the Chinese Academy of Engineering and chief scientist at Haizhi Technology, believes that China's AI computing sector is at a critical stage of transition. The shortage of high-end computing power is only the most visible contradiction. The deeper challenge is how to use foundational software, graph computing and a full-stack ecosystem to unlock the value of existing computing resources—and how to move infrastructure beyond merely providing models toward providing schedulable and executable intelligent production capacity.

During the 2026 World Artificial Intelligence Conference (WAIC), Zheng spoke with media about the structural imbalances affecting China's domestic computing capacity, the sovereign AI ecosystem and computing infrastructure.

Q: At what stage is China’s AI computing infrastructure currently? You have said that "high-end computing power is in short supply, while low- and mid-range computing power is oversupplied." How should this structural imbalance be addressed?

Zheng Weimin: China’s AI computing infrastructure is currently at a critical stage of transition and faces a pronounced structural imbalance.

Frankly speaking, the United States' export controls on high-end AI chips to China are the direct cause of the domestic shortage of high-end intelligent computing power.

At the same time, the fundamental reason China's market for low- and mid-range computing power is "oversupplied" is that its software ecosystem is not yet mature, making it difficult to mobilize large amounts of hardware efficiently.

At a time when high-end computing power is scarce, China must steadily advance domestic substitution and expand its hardware capacity. At the same time, however, it must rely on independently developed and controllable "foundational software" to unlock the value of its existing computing resources and make efficient use of low- and mid-end computing power as well.

This involves a crucial underlying technology: high-performance graph computing.

When large models are deployed in enterprise settings, they commonly suffer from hallucinations and a lack of controllability. A software system is therefore needed to organize and constrain models, knowledge, tools and business processes. This is known as an AI Harness. Such a system makes it possible to complete tasks more accurately while using less computing power.

This is also why I have always advocated "doing useful research." The academician and expert workstation jointly established by our team and Haizhi Technology, for example, is deeply engaged in this field. Our goal is to turn laboratory technologies into products that the country can genuinely use.

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Q: You have identified three pillars of sovereign AI: autonomous computing power, stronger algorithms and ecosystem self-reliance. Which of the three is currently the most obvious weak link? What is the most important breakthrough needed to move domestically produced chips from being merely "capable of running" to being something users are "willing to use"?

Zheng Weimin: The most obvious shortcoming at present is ecosystem self-reliance.

Autonomous computing power provides the physical foundation, while strong algorithms serve as the core engine. But ecosystem self-reliance determines whether the entire system can genuinely take root in practice. For domestically produced chips to bridge the gap between being "capable of running" and being products that users are "willing to use," China urgently needs mature, fully domestic full-stack solutions. Only when domestically produced chips are actually operating in real and complex industrial settings can the ecosystem become truly self-reliant.

China must therefore clarify the entire chain of needs extending from technology providers to end users, including public services, security and banking, and deploy technical talent appropriately. Building on underlying technologies, it must pursue the highest possible cost-effectiveness and efficiency.

An ecosystem combining a "domestic computing foundation" with "top-tier capabilities for deploying industrial AI" represents the crucial breakthrough needed to make China’s domestic computing ecosystem more self-reliant and competitive.

Q: You have proposed a shift "from MaaS (Model as a Service) to TaaS (Token as a Service)," describing tokens as the "new oil" of the AI era. Token consumption in China has increased a thousandfold in two years. Why is existing infrastructure unable to "produce" enough tokens, and what new requirements does TaaS impose on computing infrastructure?

Zheng Weimin: The transition from MaaS to TaaS represents an important direction in the evolution of AI infrastructure.

In the past, MaaS primarily addressed the supply of model capabilities. As large models enter the stage of large-scale application, however, the focus of future competition will gradually shift toward the ability to efficiently generate, organize and use high-quality tokens.

We must recognize that enhancing token capabilities does not depend solely on expanding the scale of computing capacity. It depends even more on the coordinated optimization across computing, data, knowledge and application systems, so that computing resources can be effectively converted into intelligent capabilities.

From a technological perspective, the development of TaaS requires two core challenges to be addressed simultaneously.

First, it is necessary to improve resource-utilization efficiency across the entire chain of large-model inference and service delivery, and to establish a new type of computing infrastructure designed for token generation.

Second, the underlying token-service platform must be connected with knowledge bases for specific vertical industries and with end-to-end business processes. This will create a complete closed loop extending from basic token-computing units to deployable and schedulable intelligent execution capabilities.

Looking at the broader development trend, TaaS requires a technological system in which computing infrastructure, knowledge infrastructure and intelligent execution infrastructure evolve in coordination. This will drive a shift in AI away from a model centered primarily on supplying model capabilities and toward one that supplies intelligent production capabilities for specific industry scenarios.

Q: You have consistently advocated "doing useful research." Against the current backdrop of "choke-hold" vulnerabilities in China's domestic foundational software, what is the strategic significance of research platforms built on deep collaboration among industry, academia and research institutions in bridging the last mile from the "laboratory" to the "production line"?

Zheng Weimin: The most important institutional breakthrough offered by deep collaboration among industry, academia and research is that it breaks down the barrier between universities "publishing papers" and companies "developing products," while establishing a long-term and in-depth mechanism for collaboration.

In foundational software, universities possess cutting-edge theoretical and technological research capabilities, while companies bring real application scenarios and engineering experience. Neither can be dispensed with.

Universities and research institutes have advantages in theoretical research, but academics do not always understand what the market actually needs or have familiarity with specific business scenarios. Companies, having served customers over long periods, have a clearer understanding of practical needs and the problems that arise when technologies are deployed.

Bringing the two sides together can make university research more targeted and increase the practical value of companies' technologies and products.

To return to the example of Haizhi Technology, in 2021 we established an Academician and Expert Workstation for High-Performance Graph Computing, bringing together university research capabilities and the company's industrial experience.

In 2023, the two sides jointly advanced the development of AtlasGraph, a domestically developed distributed graph database, helping extend the relevant technologies from underlying foundational software into higher-level AI applications.

During the event, David Daokui LI(李稻葵), director of the Academic Center for Chinese Economic Practice and Thinking (ACCEPT) at Tsinghua University, bluntly refuted the prevailing market narrative of a "K-shaped" divergence — the idea that some sectors are thriving while others decline. He warned against relying on a small upward sliver to pull up the broader economy, stressing instead that China's greatest macroeconomic crisis is an overall cooling that has persisted for three years.

Li cited a broadly defined unemployment rate of 10.2% and the decline in fixed-asset investment in 2025 and the first five months of 2026, a downturn extremely rare in the statistical history of the People's Republic of China.

He argued that the twin engines that drove China's growth for the past two decades, namely real estate and local infrastructure, have stalled. While ordinary households have quietly absorbed the cost of the property crash, avoiding a wave of mortgage defaults, local governments are now drowning in a severe debt crisis. This local debt blockage is the primary pathology behind the current economic chill.

He urged the central government to break with convention and sharply expand bond issuance — doubling the planned 12 trillion yuan, or going even further — to use lower-cost central funding to restructure local debt, revive local finances and unblock the real economy.

Below is a translation of his speech transcript available online. Please note that the translation is mine and has not been reviewed by Prof. Li.

李稻葵：中国经济不是K型分化，而是整体偏冷

David Daokui LI: China's Economy Faces an Overall Cooling, Not a K-Shaped Divergence

My first central argument is that the greatest challenge facing China's macro-economy today is not a K-shaped divergence, but an overall cooling—and this cooling has persisted for three years.

Using the term "K-shaped divergence" creates the false hope that the upward arm of the "K" can pull up the entire economy. This misdirects our focus. While I agree with the previous speakers, we must recognize that single upward trajectory cannot carry the weight of the entire economic base. We must treat this issue with urgency.

First, the broad unemployment rate. Using foundational National Bureau of Statistics data, we recalculated this metric by including the "discouraged labor force"—those who have been unable to find jobs over the past two years and are no longer counted in official labor statistics. They have not given up, but are still actively seeking work. By adding them back into the calculation, we estimate the broad unemployment rate currently stands at 10.2%. This represents about 24 million long-term discouraged unemployed individuals, posing a significant risk to social stability.

Second, fixed-asset investment. From January to May, cumulative fixed-asset investment fell by 4.1%, with private and manufacturing investments both in negative territory. A cumulative contraction in fixed-asset investment has only occurred twice in the statistical history of the People's Republic of China: in 1961 and 1967. The severity of the current contraction is unprecedented.

These two issues demand our utmost attention. If left unresolved, all broader economic goals will face severe difficulties. Despite this, I must emphasize: China's economy has a bright future and enormous potential. We remain fully confident in it, but we must confront these problems directly.

Accepting that this cooling is a severe macroeconomic issue, we must analyze why the economy has operated below its potential growth rate for three consecutive years.

I will first offer an overall assessment and then explain the specific mechanisms involved.

In short, new growth drivers are not yet ready, while the traditional engines have stalled. Over the past two decades, China's booming economy was not primarily driven by household consumption (which accounts for roughly 35%-38% of GDP, excluding services), but by two massive engines:

The first was large-scale infrastructure investment, which continued for nearly two decades and arguably represented the largest infrastructure expansion in human economic history. The second was the broad-based rise of the real estate sector, which unquestionably provided an enormous boost to economic growth.

The pillar of infrastructure has been local governments. By our repeated calculations, over the past 20 years, local government infrastructure investment plus daily expenditures averaged 41% of GDP annually. This far exceeded household consumption and served as the primary driver of the Chinese economy. Approximately 75% or more of local government expenditure went toward infrastructure, with only a small fraction used for daily operations. This massive spending generated an enormous multiplier effect on the economy.

Today, both real estate and infrastructure have stalled. Regarding real estate, I entirely agree with Dr. Lu Ting's analysis on falling prices. However, I want to add that the impact of the real estate downturn on China's economy is actually much smaller than anticipated a few years ago, largely because households have absorbed a massive portion of the shock.

Chinese households hold approximately 400 trillion yuan (roughly 57 trillion U.S. dollars) in net housing wealth. Despite a significant drop in this net value, household consumption has not plummeted. Citizens have borne the pressure of falling prices while remaining remarkably composed. They deserve immense credit for this. In the West, a comparable drop would have led to mass mortgage defaults. China, overall, does not face this crisis.

Therefore, while the property downturn has hit fixed-asset investment and local fiscal revenues, these effects pale in comparison to the contraction of local governments. The primary factor causing the current economic cooling is local government debt.

As mentioned earlier, over the past 20 years, local governments have consumed an average of 41% of GDP. The problem now is that local governments have become a "blockage" in the overall operation of the economy.

How is it "blocked"? Let's start with households: more and more income is being deposited into banks. Macroeconomic data clearly shows that household deposits have been rising in recent years. While some of this money is being used to pay off mortgages early, the overall total is going up. As for enterprises, investment is weak, and the corporate leverage ratio remains largely flat. Companies hold both deposits and loans, meaning that, overall, they have not secured any net investment resources from the financial system.

Meanwhile, our micro-to-macro calculations show that total local government debt now exceeds 100% of GDP. Historically, this debt has been short-term (under five to seven years) with very high interest rates. Vast amounts of capital are simply rolling over old debt. Despite central government debt-resolution quotas, crushing interest rates mean local debt levels are still rising.

Local governments already depend heavily on fiscal transfers from the central government. Without continuously rolling over their debt, many would struggle even to maintain normal operations, let alone meet their interest obligations. As they issue new debt to repay old debt, borrowing outpaces repayment, and the total debt stock expands.

The result is: households hesitate to borrow; businesses are unwilling to convert financial resources into investment; and a large proportion of the money borrowed by local governments simply circulates within the financial system without producing new economic activity, because it is used to repay existing debt. This is the financial manifestation of the blockage currently affecting the economy.

In the real economy, total local government expenditure, including both routine expenditure on personnel and operations and capital expenditure, has dropped from 41% to 35% of GDP, with capital expenditures plummeting. Furthermore, local governments are squeezing enterprises by clawing back previously promised tax incentives or collecting taxes in advance.

Local governments have therefore become a component of the Chinese economy that "absorbs heat". A computer chip needs to dissipate heat in order to function, but local governments have effectively become "heat absorbers"—a "black hole" that drains energy from the economy. This is the fundamental reason China’s economy is currently running too cold.

Fundamentally, the economy has failed to rotate its growth engines, stalling in the pivot away from real estate and infrastructure toward a new development path.

Specifically, after completing major infrastructure projects, local governments have become preoccupied with repaying their debts. Because interest rates remain high, the more debt they repay, the greater the total debt burden becomes. This process absorbs enormous amounts of economic and financial energy without converting that energy into actual output or productivity.

It has also created a series of additional problems, including overdue payments to businesses and the collection of taxes in advance, ultimately saddling businesses with an overwhelming operational burden.

What, then, should be done? If we agree on this diagnosis, I propose the following strategies:

First, the problem must receive the highest level of attention, and we must maintain a strong sense of urgency. The overall economy is running cold. We should stop fixating on the small upward sliver of a "K-shaped" recovery, because they cannot pull the entire Chinese economy forward.

Second, the central problem is the blockage, and the source of that blockage is local government debt. The solution therefore follows naturally: China should expand the debt capacity of the central government. Central government debt currently amounts to less than 30% of GDP, leaving considerable room for expansion. Local governments, meanwhile, possess large quantities of commercially valuable assets that can be monetized. The central government should issue substantially more debt. The planned 12 trillion yuan in issuance is far from sufficient and should be doubled or increased even further.

After the debt is issued, local governments can propose projects for the central government to fund. Specific applications could include:

• Purchase unsold local properties and convert them into affordable housing or housing with a reasonable rent-to-price ratio, and package them into Real Estate Investment Trusts (REITs) for commercial operation;

• Invest in "people-focused" projects, such as granting urban residency to migrant workers, supported by central government transfer payments funded through the issuance of additional treasury bonds;

• Qualified local governments can apply to the central government and sign guarantees, promising to regulate future borrowing and avoid reckless debt issuance, in order to swap out their existing high-interest debt.

Through this series of operations, it is possible to significantly improve the ability of local governments to assist in economic transition and foster new growth drivers, or at least turn them from a negative force into a positive one. This money can be used to stabilize real estate, invest in people, boost livelihood spending, or be paired with local consumption subsidies (such as hosting concerts). There are many ways to do this. But currently, the economic driving capacity of local governments is simply insufficient.

If we can reach this consensus, I believe the Chinese economy can quickly recover from its current state of cooling and blockage. I want to emphasize again: the Chinese economy has a future, it is bright, and it holds great potential. Once these problems are resolved, the economy will quickly return to an upward trajectory and realize its growth potential.

This concludes my analysis. I welcome any criticisms or corrections. Thank you all!

Today's newsletter features a comprehensive reading of the plan, formally titled Plan for Building a New Energy System during the 15th Five-Year Plan Period (2026-30).《新型能源体系建设“十五五”规划》. The analysis comes from Dr. Lu Ruquan 陆如泉, who is perhaps one of the best-qualified people to interpret the document.

Dr. Lu heads the Economics & Technology Research Institute at China National Petroleum Corporation (CNPC ETRI), the only one among China's 29 nationally recognized elite think tanks dedicated to energy.

He holds dual bachelor's degrees in Petroleum Engineering and English from China University of Petroleum and earned his PhD in international relations from the China Institutes of Contemporary International Relations. A former deputy general manager of CNPC's International Department and a veteran of its Iraq and Sudan projects, he has, since 2006, devoted himself to strategic management and policy analysis.

Dr. Lu's analysis was originally published on his WeChat public account on June 28. Since the piece is already clearly structured, I will not bother adding a summary of my own. Dr. Lu has kindly authorized me to translate the piece, please find the full English version below.

透析《新型能源体系建设“十五五”规划》的十大关键词

Ten Keywords to Decode the 15th Five‑Year Plan for a New Energy System

The most heated topic in China's energy sector these days has probably been the Plan for Building a New Energy System during the 15th Five-Year Plan Period (2026-30).《新型能源体系建设“十五五”规划》. On June 25, the National Development and Reform Commission and the National Energy Administration (NEA) officially released the plan. On June 26, NEA Administrator Wang Hongzhi introduced the plan's key points for accelerating the new energy system during the 15th Five-Year Plan period at a State Council Information Office press conference, and answered questions from reporters.

I also received many interview requests from journalist friends these days. Their questions mainly focused on the following areas:

— How is the new plan (2026-30) different from the last plan (2021-26)? Which new formulations deserve the most attention?

— The plan stresses balancing energy security and green transition. Do you think the weight of energy security in China's energy strategy is rising? How do you think these two goals can be balanced?

— The international community is following China's energy transition closely. What does this plan mean for the global energy transition?

— At the press conference, the NEA said investment in key energy projects and new business forms during the 15th Five-Year Plan period (2026-30) will exceed 20 trillion yuan (roughly 3 trillion U.S. dollars). From the perspective of enhancing system resilience and achieving green and low-carbon goals, how should this 20 trillion yuan be allocated to maximize investment effectiveness?

— China's energy transition has entered a more challenging second half. Compared with the previous phase of quantitative expansion, what qualitative changes will the energy system undergo over the next five years? What unprecedented new challenges will arise? During the 15th Five-Year Plan period (2026-30), the oil and gas industry will face the dual pressure of ensuring supply and pursuing transition. How will its strategic mission change?

— The plan defines the 15th Five-Year Plan period (2026-30) as a period of adjustment and reshaping for international energy cooperation. How should we understand the phrase "participating in and leading the transformation of global energy governance," and what are the practical levers for doing so?

Over the past couple of days, I have studied the plan carefully. In response to these questions, I will analyze it along four dimensions.

I. New Features of the "15th Five-Year Plan for a New Energy System" Compared with the "14th Five-Year Plan for a Modern Energy System"

It is worth noting that the terms "modern energy system" and "new energy system" respectively come from the reports to the 19th (in 2017) and 20th (in 2022) National Congresses of the Communist Party of China. Compared with the 14th Five-Year Plan period (2021-25), which focused on building a "modern energy system," the core difference of the 15th Five-Year Plan (2026-30) lies in a comprehensive elevation of the system's architecture: moving from a "modern energy system" centered on scaling up, to a "new energy system" centered on systemic restructuring, high‑quality development, and high‑level security. The specific differences are as follows:

First, the core positioning is different. The 14th Five-Year Plan (2021-25) focused on "modern energy system," emphasizing scale expansion and structural optimization; the 15th Five-Year Plan (2026-30) focuses on a "new energy system," emphasizing system restructuring and high-quality development.

Second, the main indicators have been significantly upgraded. The target for comprehensive energy production capacity has risen from 4.6 billion tonnes of standard coal equivalent to 5.8 billion tonnes; total installed power capacity has jumped from 3,000 GW to 5,400 GW; the share of non-fossil energy in total energy consumption has increased from 20% to 25%; and the share of non-fossil energy in power generation has risen from 39% to 50%.

Third, the development philosophy has changed. The focus is shifting from "kick‑starting new energy at scale" to "integrating generation, grid, load, and storage across the whole system"; from "prioritizing supply security" to "taking safe and sufficient supply as the precondition and low-carbon transition as the main thread"; and from "hardware building" alone to a dual-drive model powered by "both market mechanisms and digital technologies."

Fourth, the power system is being restructured. The 14th Five-Year Plan (2021-25) focused on expanding installed capacity; the 15th Five-Year Plan (2026-30) emphasizes high-proportion consumption of renewable power and system flexibility. It makes clear that wind and solar power will become the "dual mainstay" of both installed capacity and electricity generation.

Fifth, the meaning of "security" has been deepened. The focus has expanded from "ensuring basic supply" to "firmly securing the strategic bottom line under extreme conditions." The plan places particular emphasis on increasing oil and gas reserves and production, stabilizing annual crude oil output at 200 million tonnes, replacing petroleum consumption, and securing the supply of critical mineral resources for new energy.

Sixth, scientific and technological innovation has moved to a new stage. The goal has shifted from "technological breakthroughs" to "overall self-reliance and controllability in key technologies and equipment across the industrial chain." New specific indicators have also been added, such as average annual growth of over 5% in PCT patent filings in the energy field, and more than 100 demonstrations of first-of-their-kind major technical equipment.

In addition, the plan proposes a new spatial layout of "using western energy in western China," adds binding targets such as reductions in carbon emissions per unit of electricity generation, and for the first time establishes virtual power plants and vehicle‑to‑grid interaction as independent market entities.

If the 14th Five-Year Plan (2021-25) was about building the "framework" and "scale" of the energy system, then the 15th Five-Year Plan (2026-30) is about carrying out a profound "interior renovation" and "system upgrade." The core objective is to make the entire energy system smarter, safer, and greener.

II. Ten Keywords that Capture the Essence of the Plan

Based on the full text of the new plan, I have identified the ten most transformative and symbolic keywords:

Keyword 1: Wind and solar power as "dual mainstay". The plan makes clear that by 2030, wind and solar power will account for more than 50% of total installed power capacity, and non-fossil energy will account for 50% of total power generation. This means that new energy will, for the first time, become both the "capacity mainstay" and the "generation mainstay" of the power system. China's energy structure is reaching a historic turning point.

Keyword 2: The new power system. The power system is being upgraded from "generation‑grid‑load‑storage" to a system tailored for a high proportion of new energy. The core task is to reposition coal‑fired power as "supporting and regulating power" and to accelerate the construction of intelligent dispatch systems, thereby solving the consumption challenges posed by large‑scale, variable new energy.

Keyword 3: Flexible regulation capacity. This is about systematically addressing the volatility of weather-dependent energy sources. The plan sets clear targets: 160 GW of pumped storage, 300 GW of new energy storage, and for the first time brings virtual power plants (50 GW) and vehicle‑to‑grid interaction (50 GW) into the large‑scale regulation framework.

Keyword 4: The strategic bottom line of energy security. "Extreme scenarios" are written into a Five‑Year Plan for the first time. The plan emphasizes stabilizing annual crude oil production at 200 million tonnes and building large‑scale oil reserves and underground gas storage clusters, so that the nation's energy supply is secure even under extreme conditions.

Keyword 5: "AI+." The plan makes an innovative proposal for compute‑power synergy, promoting "electricity empowering computing, computing boosting electricity". The plan envisions smart power plants, digital oil and gas fields, and AI‑enabled intelligent system‑wide dispatch and unmanned coal mining.

Keyword 6: A unified national power market. The power market is transitioning from pilot programs toward full-fledged construction. The aim is to organically link inter‑provincial spot markets, capacity markets, and ancillary services markets, using price signals to guide resource flows and break down inter‑provincial barriers so that electricity truly "circulates" across the country.

Keyword 7: The full hydrogen-ammonia-methanol chain. This area is moving from demonstration to industrialization. The plan sets a 2030 target of 2 million tonnes of green hydrogen. Beyond laying out hydrogen pipelines, it also outlines, for the first time, dedicated pipelines for green methanol, promoting the large‑scale use of hydrogen in transport, chemicals, and power generation.

Keyword 8: Using western energy in western China and strengthening eastern self-sufficiency. Overturning the traditional one-way logic of "west-to-east electricity transmission," the plan requires that 70% of new energy demand in eastern regions during the 15th Five‑Year Plan period (2026-30) be met locally. Energy‑rich regions are encouraged to convert energy on‑site, for example through direct green-power connections, balancing "west‑for‑west use" with "west‑to‑east transmission."

Keyword 9: Controlling the total amount and intensity of carbon emissions. China is formally moving from "controlling both the volume and intensity of energy use" to "controlling the total amount and intensity of carbon emissions." The plan adds a binding indicator requiring carbon emissions per unit of power generation to fall by more than 10%, and expands the scope of the national carbon market, using carbon constraints to force green transition.

Keyword 10: Integration of energy production and consumption. Consumers are no longer passive "end‑users". Factories, industrial parks, and EV users are encouraged to aggregate their own resources through virtual power plants, smart micro‑grids, and direct green electricity connections, thus participating in system interaction and becoming new entities that both "generate and regulate".

These ten keywords thread together the core logic of the new plan: from scale expansion to systemic restructuring, and from hardware construction to mechanisms and digital‑intelligent drivers. Of course, these ten are simply my own selection and may well omit other important aspects.

III. The Positioning of the Oil & Gas Industry in the Plan and Its Future Development Priorities

As someone from the oil sector, my greatest interest naturally lies in how the plan positions the oil & gas industry and charts its future development.

It is obvious that the plan puts non‑fossil energy in the leading role, and the content dealing with the positioning and future direction of oil & gas is not extensive. Yet, based on the plan's text, it can be summarized as: the "ballast stone" for security and the "stabilizer" for the green transition. Its core mission, in an era of peaking consumption and shrinking incremental volumes, is to fortify the energy security baseline through "stabilizing production, increasing reserves, and strengthening pipeline networks", while simultaneously achieving its own green and low‑carbon transformation through "integration, reducing oil (as fuel), and increasing chemicals".

In terms of core positioning, oil & gas are the "ballast stone" that underpins energy security. During the 15th Five‑Year Plan period (2026-30), oil & gas remain strategically tasked with safeguarding national energy security.

First, "stabilizing oil and increasing gas" is the core task. The plan makes clear that annual crude oil output should remain stable at around 200 million tonnes, and natural gas production should grow steadily.

Second, in terms of key regional layout, the plan focuses on building strategic oil and gas security bases in areas such as Ordos, the Bohai Bay, Sichuan-Chongqing area, Tarim Basin, and Songliao Basin.

Third, in strengthening reserves and pipeline networks, the main task is to improve the oil & gas reserve system and continue improving the "national unified network" for oil and gas, with a target of 500 billion cubic meters per year of primary gas pipeline transmission capacity.

In terms of transition and development direction, oil & gas are undergoing a green transformation from "fuel" to "feedstock." While ensuring security, the oil and gas industry also faces a profound green transition, with three new characteristics:

First, in upstream exploration, the requirement is to "stabilize oil and increase gas" across four major frontiers: boosting investment in deep onshore, deepwater, unconventional, and mature oil and gas fields, so that offshore and unconventional resources become the mainstay of stable crude oil production.

Second, in downstream refining, the direction is strict capacity control and a shift toward "high‑end, sophisticated" products. Refining capacity should be strictly controlled under the principle of "capacity replacement with reduction," while companies should be guided toward optimization and restructuring. At the same time, enterprises are encouraged to increase the yield of chemical feedstock oil, specialty oil products, and high-end new materials.

Third, in green transition, the task is to build "low-carbon and zero-carbon" oil & gas fields; carry out large-scale integration of oil & gas fields with new energy, such as integrated "wind-solar-gas-storage" development; explore coordinated development of offshore oil & gas fields and offshore wind power; promote the construction of regional CCUS (carbon capture, utilization and storage) industrial clusters; and increase the electrification rate of oil and gas field production.

My overall impression is that the oil & gas industry's development over the next five years will be a combination of "defense" and "attack". "Defense" means defending the baseline of 200 million tonnes of domestic crude output and a complete pipeline and reserve system; while "attack" means exploriing new frontiers such as deep strata and deep water, and transform toward "feedstocks" and "new materials", achieving a low‑carbon transformation through integrated development with new energy.

IV. Overall Considerations for International Energy Cooperation and Global Energy Governance in This Plan

Having worked for a long time in international energy cooperation, I naturally pay special attention to the energy cooperation content in the plan. The seventh part of the plan, "A Multi‑dimensional International Cooperation System", is indeed a major strategic addition. China is no longer positioning itself merely as a "strategic buyer", but also emphasizes "participation and leadership".

On the one hand, energy cooperation is to shift from "participant" to "leader", and the hallmark of this shift is control over rules and discourse power. Previous plans tended to stress "utilizing international resources", whereas the new plan, for the first time, unequivocally sets out to "participate in and lead" global energy governance. This means China must move from passively adapting to international rules toward actively formulating and exporting rules.

Concrete levers include: conducting high‑caliber energy diplomacy in China, operating the Belt and Road and Global Clean Energy Cooperation partnerships well, and even promoting the establishment of non‑governmental international organizations in the nuclear energy field in China. China will gradually increase its voice on issues such as global carbon pricing and mutual recognition of green certificates.

On the other hand, greater emphasis is placed on exporting the full value chain of "technology + standards." Previous international cooperation mostly involved "exporting products and production capacity," such as selling solar panels and wind turbines. This has now been upgraded to an integrated approach of exporting "products, technologies, standards, and services" together.

It is particularly worth noting that the plan, on the one hand, addresses international "green trade barriers," such as the EU's carbon border adjustment mechanism, by enhancing the international recognition of China's green certificates to empower exports. On the other hand, it champions "small yet beautiful" best‑practice green projects, rather than simply large‑scale engineering works. At the same time, the plan explicitly proposes building an international green fuel bunkering and trading center in Shanghai. This signals that China is trying to seize the commanding heights in the international pricing and standards systems for green fuels.

Overall, the release of this plan marks the formal transition of China's energy development from the "first half" of scale expansion to the "second half" of systemic restructuring. This means China will no longer simply pursue the construction of more power stations. Instead, it will address deeper questions about how the entire energy system can operate efficiently, remain absolutely secure, and integrate into the global system. If I were to sum up the plan's essential philosophy in four phrases, they would be:

— Security is the bottom line: keeping oil and gas production stable and building new reserve systems are elevated to a new strategic height.

— Green is the core: the "dual mainstay" status of wind and solar power is established for the first time, and a full pivot is made toward "controlling the total amount and intensity of carbon emissions".

— Innovation is the driver: through "AI+" and a unified national power market, the energy system is being made smarter and more efficient.

— Governance is about leadership: China is committed to transforming from a "participant" in global governance to a "leader".

Industrial firms based in China receive more subsidies than their competitors based everywhere else. Between 2005 and 2024, Chinese firms received on average three to eight times more government support than firms based in the OECD, a conservative estimate. These subsidies were also considerably higher than the support received by firms based in non-OECD economies such as Brazil, India, and Indonesia.

In today's newsletter, I am delighted to feature a critique of the OECD report and other related studies from Dr. Fan CUI (崔凡).

Dr. Fan CUI is a Professor and Ph.D. advisor at the School of International Trade and Economics, University of International Business and Economics (UIBE). He also serves as Director of the Research Department at the China Society for WTO Studies, and an Arbitrator at the China International Economic and Trade Arbitration Commission.

Dr. CUI holds a master's degree in international trade from UIBE, as well as an LL.M. in International Business Law and a Ph.D. in Economics from the London School of Economics and Political Science.

With research focus on China's trade and foreign direct investment policies, laws, and regulations, he was actively involved in drafting China's Foreign Investment Law and its implementing regulations.

In his critique, Dr. CUI takes issue with several core assumptions behind the OECD report:

• Biased framing and flawed measurement: The report, he argues, starts from a predetermined narrative about Chinese subsidies and applies inconsistent benchmarks, especially in its treatment of below-market borrowing, which risks overstating support to Chinese firms.

• Weak causal claims on market share: Dr. CUI questions the report's claim that subsidies explain a large share of Chinese firms' market-share gains, pointing to inconsistent sample selection, weak instruments, and the omission of key factors such as China's scale economies and manufacturing depth.

• Missing the real sources of competitiveness: The critique argues that the report downplays the role of industrial capabilities, market size, innovation, and supply-chain efficiency, while conflating legitimate, WTO-consistent policy tools with unfair trade distortion.

The critique was first published in Chinese on Dr. CUI's personal WeChat public account. With his authorization, I translated the original article into English, and Dr. CUI reviewed the translation and made revisions to the English text.

A Critique of the OECD MAGIC Database of Industrial Subsidies and Related Reports

The OECD released a report on its MAGIC (Manufacturing Groups and Industrial Corporations) database of industrial subsidies on the 1^st June, 20261. We hereby present a critique of it and other related reports.

I. Biased research objectives lead to double standards in data processing

In recent years, research on subsidies conducted by certain organizations has shared a common pattern: adopting an arbitrary definition that differs from that used by the World Trade Organization (WTO), abandoning any discussion of the WTO-compliance and economic rationality of subsidies, disregarding official subsidy notification data submitted by WTO members, ignoring the historical reality of trade distortions caused by competitive agricultural subsidy of the European Union and the United States, and in an attempt to prove that subsidies in China are disproportionately larger than those in other countries. The objective of such research is clear: to attribute the growth of China’s manufacturing sector mainly to subsidies. It is precisely because of this predetermined objective that, despite the input of significant research resources, those studies often remain riddled with errors.

Some organizations seek to reinforce stereotypes about China and portray China as a violator of international subsidy rules, which is inconsistent with the facts. Turning to the WTO dispute settlement database, it could be found a total of 145 cases related to the Agreement on Subsidies and Countervailing Measures. Among the three largest trading members, China, the United States, and the European Union, the number of cases in which each has been a respondent is as follows: 19 against China; 45 against the United States; and 24 against the European Union (this does not include cases brought against individual EU member states alone)2.

In several of these cases, both the United States and the European Union have refused or delayed compliance with adverse rulings. For example, in cases DS217, DS234, and DS577, the United States, after losing, refused or delayed implementation, leading the WTO to authorize the prevailing parties to retaliate. The European Union acted similarly in case DS316. China, for its part, has respected and complied with the binding rulings in all relevant cases hence has never been subject to any WTO-authorized retaliation.

It is precisely because it is difficult to portray China as a rule-breaker in WTO dispute settlement proceedings that, in recent years, numerous studies targeting China have explicitly stated that their findings cannot be used as a basis for WTO dispute settlement and that their scope is not limited to subsidies as defined by the WTO. Beneath these seemingly objective disclaimers, however, the predetermined research objectives inevitably lead to double standards in identifying subsidies.

The OECD report names its subsidy database the "MAGIC" (Manufacturing Groups and Industrial Corporations) database. The acronym is telling. Let us take a closer look at what tricks this database performs.

The MAGIC database currently covers three types of subsidies: government grants, income-tax concessions, and below-market borrowings (BMB). The relevant reports do not disclose the specific firms covered, nor do they provide detailed data sources. They merely state that the data are derived from firms' annual reports, financial statements, bond prospectuses, IPO prospectuses, etc., supplemented by government-sourced data. The 525 firms covered, whose headquarters are located across various countries and regions, are all leading players in their respective industries in terms of sales, output, or production capacity.

In studies conducted by other organizations, authors typically disclose their data sources. For example, data on Chinese firms often come from financial databases such as Wind, making it relatively easy to check and/or identify potential issues. Because the OECD has indicated that it publishes aggregate data and that firm-level data are confidential, some of its conclusions regarding government grants and income-tax concessions are indeed difficult to verify. Although firm-level data are not disclosed, the OECD's methodology for calculating below-market borrowings is described in its relevant documentation.

According to an OECD report published in October 20253, "the estimation of below-market borrowings compares the actual interest rates charged to firms against hypothetical benchmark interest rates that could have been charged in a private market, based on the characteristics of the borrower......". It is claimed that the benchmark interest rates are constructed by combining a risk-free base rate and additional risk-adjusted spreads, which themselves include credit risk spreads and government guarantee spreads. For borrowings in different countries and regions, the MAGIC database selects risk-free base rates from the following categories: common banking reference rates (e.g. the US Secured Overnight Financing Rate, Euro Interbank Offered Rate, Tokyo Interbank Offered Rate, etc.); one-year government bond yields; or other commonly used one-year base rates, such as the base rates published by the People's Bank of China (e.g. the Loan Prime Rate, LPR).

However, as other researchers correctly noted4, the LPR that the OECD uses for China is not a risk-free base rate at all. The LPR represents the average lending rate that major quoting banks (currently 20 banks) charge to their highest-credit-quality clients. It is quoted on the 20th of each month (or the next business day if that falls on a holiday), with the highest and lowest quotes excluded before the average is calculated, and is updated monthly. The core anchors for the quotes are the Medium-term Lending Facility (MLF) rate, the banks’ comprehensive cost of funds, and the average risk premium for their highest-credit-quality clients. Notably, the final LPR is determined by taking the arithmetic average of the quotes from the major banks and rounding to the nearest 0.05%. The firms included in the MAGIC database are all leading firms, which are likely to be highest-credit-quality clients as well. For specific clients, banks may either add a premium to, or grant a discount on, the LPR. Even before the LPR was introduced in China, the central bank base rate was not a risk-free base rate either; it already incorporated risk spreads, and the People’s Bank of China allowed banks to add a premium or grant a discount based on specific situations.

By contrast, the base rates the OECD selects for other countries are essentially, or very close to, risk-free base rates, and corporate borrowing rates are generally set at a premium above them. In China, indicators much closer to a risk-free rate do exist. For example, China's one-year LPR is currently 3.0%, while the one-year government bond yield, which may be used as a risk-free rate, is, at the time of writing, 1.1670%. It seems that the spread between the two, which fluctuates with market conditions, is entirely counted by the OECD as subsidies to Chinese firms. Given these definitions of interest rates, Figure 3 on page 9 of the OECD (2026)5 becomes quite easy to explain. The figure shows that borrowing rates for Chinese firms frequently fall below the benchmark rate. This is a result of the differences in the choice of risk-free base rates made by the MAGIC database itself, rather than a reflection of actual subsidies in China. From the methodology the MAGIC database uses to select interest rates, it is clear that its data and estimates suffer from fundamental errors.

II. The problem in explanation of market-share growth

Box 1 on page 15 of OECD (2026)6 argues that 59% of the increase in the market share of Chinese companies is caused by subsidies. For all companies in the database whose market share increased, it claims that 22% of their market-share growth is caused by subsidies.

The model used in this analysis comes from another OECD report (OECD, 2025b)7. In calculating the above results, the 22% figure in Box 1 is obtained after excluding all samples whose market share declined or remained unchanged. That in fact leads to estimation bias. At the same time, when Box 1 estimates the 59% figure for Chinese companies, it does not make clear whether this result applies only to Chinese companies whose market share increased. The two figures are therefore not calculated on a consistent basis.

Although the model in (OECD, 2025b)8 uses some control variables, including a series of dummy variables, and also uses instrumental variables to partially address endogeneity, it still has obvious econometric shortcomings. China’s ultra-large domestic market is conducive to the development of industries with scale economies. Similar factors may need to be captured in the model through interaction terms between country-level variables and industry- or firm-level variables. The model used in the report lacks explanatory variables that reflect important influencing factors.

Meanwhile, in (OECD, 2025a)9, the test results for a similar model show that the instrumental variables used are quite weak. Even if the significance of the coefficient for the core explanatory variable is acceptable, some of the quantitative conclusions drawn, including the 59% and 22% quantitative results in Box 1 of (OECD, 2026)10, are highly misleading.

III. Further comments

Let us look at the industries that the OECD (2026)11 identifies as most heavily subsidized. The largest is the new-energy industry. As we know, the five-year average of global temperatures is about to exceed the threshold of 1.5 degrees Celsius above pre-industrial levels. Countries should use subsidies in a reasonable and WTO-consistent manner to promote the development of new energy and related industries. So-called overcapacity in some new-energy sectors should be examined together with insufficient capacity in areas such as power transmission and transformation, and energy storage. What we should oppose are discriminatory new-energy subsidies, such as those under the U.S. Inflation Reduction Act, rather than opposing new-energy subsidies in general. The fact is that China has made a tremendous contribution to the development of the global new-energy industry and to addressing climate change.

The next sector is chips and semiconductors. China faces comprehensive blockades in the field of high-end chips. China's related subsidies are not prohibited subsidies, nor are they linked to imports or exports. In the face of external blockades, it is necessary for China to use subsidies for research and development as well as production.

As to the steel sector, some researchers showed that the actual amount of China's steel subsidies was very small12. In the shipbuilding sector, developed countries have long used export credits, while China uses export credits in accordance with WTO rules and with reference to the standards of the OECD Arrangement on Officially Supported Export Credits. In recent years, China's shipbuilding industry has developed rapidly. The fundamental reason is the improvement of China's overall manufacturing capabilities.

The analysis by OECD (2026)13 is, on the whole, untenable. On the one hand, reports by the OECD argue that subsidies do not raise productivity. On the other hand, they attribute the increase in the market share of Chinese companies mainly to subsidies. Such reports ignore the real sources of Chinese companies’ competitiveness and seem to attribute the declining competitiveness of their own member countries to Chinese subsidies. When one fails to identify the real cause of their disease, they will never find the right cure.

China's subsidy system is not perfect. For many years, China has continued to work on improving its compliance and scientific soundness. This is because China is very clear-headed in recognizing that subsidies can play a role in targeted efforts to address market failures such as climate change, but they are by no means the fundamental means of enhancing firms' market competitiveness, including international competitiveness.

In recent years, China has continued to refine relevant policies such as fair competition review, trade policy compliance, and negative lists for local fiscal subsidies, creating a level playing field for state-owned enterprises, private enterprises, and foreign-invested enterprises. Through those measures, various bottlenecks and blockages within China's ultra-large domestic market have continued to be cleared, and the unified national market has become more integrated. China should not slow down the pace of further market-oriented reforms no matter what biased studies may claim. Building a fair and competitive business environment is always a work in progress. By strengthening the governance of local subsidies and advancing the construction of a unified national market, China's industries with economies of scale and innovation-intensive industries may become even more internationally competitive.

Although China runs a surplus in trade in goods, it simultaneously registers deficits in trade in services as well as in the non-reserve capital and financial account. China does not deliberately pursue a trade surplus. It seeks to expand imports and, through outbound investment, carry out industrial capacity cooperation with its trading partners to help them restore or develop manufacturing sectors aligned with their respective comparative advantages.

China remains open to further refining and strengthening subsidy rules, as well as to engaging in dialogues and negotiations on disciplines governing state-owned enterprises. At the same time, China advocates reinstating the validity of the non-actionable subsidy provisions under the WTO Agreement on Subsidies and Countervailing Measures, which grant clear authorization for all WTO members to adopt reasonable subsidies for green development, research and development, and subsidies addressing regional development imbalances based on the principle of non-discrimination. Enditem

New posts keep appearing in your feed, one after another. Their headlines are short, often overly compressed, and punctuated with an exclamation mark from time to time. It can be surprisingly hard not to click.

As a journalist tracking developments across China, I need to subscribe to WeChat official accounts run by authorities from provincial to municipal level. By now, even county-level governments seem to have joined WeChat in large numbers, turning the platform into an essential window for public communication. (That's Why Every China Watcher Must Be on WeChat)

But I often find myself struggling with information overload. Part of the problem is that I find it hard to resist clickbait-style headlines. I click, spend time reading, and then realize I have learned almost nothing.

Let me give a few random examples. One government-service account once published a post titled, "Attention! Today at 12:04! Officially entering…" I clicked, half-expecting an urgent notice about a water outage or some disruption to daily life. It turned out to be a short explainer on the beginning of winter.

Another official media account pushed out a headline reading, "Major Notice! Fully Cancelled—" which sounded confusing and dramatic, but the post was merely about an adjustment to the working hours for property transaction services.

I felt frustrated for a while, even exasperating. Why, I wondered, did so many government-run accounts write headlines like this—copy, chopped-up, and deliberately withholding the point? Why make public information feel like a guessing game?

Today's newsletter offers at least one possible explanation. It is based on the work log of a new media editor at a local state-owned newspaper—someone who moved from a market-oriented newsroom into the relative safety of the system, hoping for a simpler and more stable life.

At first, the job seemed almost ideal to the author: copy, paste, tweak the headline, publish, clock out. No reporting, no interviews, no writer's block. Just a socially respectable job and real life after work. Then the meaninglessness began to bite.

What makes this piece valuable is not only its personal honesty, though that honesty is rare enough. It also reveals how today's Chinese information overload is produced: the result of administrative performance targets meeting platform logic.

Once page views, reposts, and likes become the measure of "communication capacity", institutions learn to flood the zone. They recycle the same stories, sharpen the same headlines, chase the same traffic, and push more and more content into an already saturated public sphere.

The author uses a very apt comparison:

Sometimes I tried to console myself by thinking of it as something like a chain restaurant, like McDonald's or KFC. They need physical branches in different locations. In new media, we were just opening "branches" online for different regions. We were serving different groups of users. Just because one outlet had already published a story didn't mean everyone would see it. Thousands of accounts targeting different audiences were still needed to keep redistributing the same information until it spread widely enough.

The result is a strange kind of information factory: thousands of editors doing repetitive work to make the internet noisier, while privately wondering whether any of it matters.

I am grateful to the author for writing this down. It cannot have been easy. Her account gives readers a rare look inside a job that is usually invisible, but helps shape what millions of people see every day—and why, in an age of endless content, valuable information can feel harder than ever to find.

This article, authored by Li Guang, was first published in February 2026 on the WeChat account of T Magazine China. The T Magazine is a publication of The New York Times covering fashion, living, travel, and design. Its Chinese edition is operated by a Chinese media company.

Please note that the following English translation below has NOT been authorized by the original author or anyone else. It is entirely my own.

Inside a State-Owned Newspaper: The Work Log of a Clickbait "Editor"

体制内报社，一个标题党「小编」的工作史

It Was Easy, But Something Felt Wrong

What if the work itself is meaningless? As long as you don't talk about meaning or think about value, all that seems to matter is what the job gives you materially. You trade it for leisure, win back your time, and gain freedom in your personal life. If such a simple, socially recognized job is placed right in front of you—with its only obvious flaw being a lack of meaning—what reason is there to turn it down?

After several years as a reporter at a market-oriented media outlet, Li Guang, then approaching 30, was exhausted by the mental strain of writing. She passed the exam for a state-owned newspaper in her hometown and became a new media editor. She envisioned a simpler, easier life from then on, one that would also satisfy her parents.

At first, the job was exactly as she had imagined: a sort of "light manual labor" that required no mental exertion. Every day, she casually used Ctrl+C and Ctrl+V to copy and paste news from major outlets, tweaked the headlines to make them more sensational, and published them at a fixed rhythm. Work was leisurely and simple, free from complex interpersonal troubles; after clocking out, she was never disturbed by work messages, achieving a perfect balance between work and life. But slowly, something began to feel wrong.

First came boredom. She told herself this was merely "despicable human nature," an absurd and greedy attempt to seek meaning in such a comfortable job. Then she realized she had become something of a gambler, swinging each day between wild excitement and deep disappointment over page-view numbers, even though she had not produced the news herself and was only republishing it through copy and paste.

At work, absurd things that overturned her values happened often. She felt guilty, but kept doing them out of sheer inertia. A year later, Li Guang could copy and paste nearly 70 articles a day. She still did not know a single colleague from another department, yet somehow she had "developed a sense of empathy" for all of them.

To be fair, these were small things. She thought she could ignore and endure them. A job, she believed, could not really damage or change her that much. But over time, the pain became harder to put into words. She suffered not only from the job itself, but also from the feeling that she was being overly dramatic about it. She complained to friends and mocked the absurdities of being a "new media editor." Yet, when she tried to write them down, the very jargon within the system she had mocked began slipping unconsciously from her pen: "public opinion arena," "guidance," "tearing apart," "breeding ground," "remain optimistic about this"...

She had once thought that "lying flat" meant actively stepping away from the stage, but the truth is, when a person decides to lower their expectations for meaning, the system does not stop shaping them.

In the end, this article was compiled from Li Guang's own writing and her venting during chats with friends. Even when she was a reporter, racking her brains every day to write articles, she had never experienced anything like this: writing a single story could be so incredibly difficult.

A Perfect Fit: Copy-and-Paste Work, True Clocking Out, and Becoming My Father's Pride Again

After several years as a reporter at a market-driven media outlet in a first-tier city, I had had enough of that life: barely having any time of my own, writing and editing wherever I could grab a moment, forcing down food I didn't even like, sharing an apartment, and commuting by whatever was available—shared bikes, carpool rides, or the subway.

My parents kept pushing me to return hometown and find a stable, low-stress job within the system, even promising me a car and a house. I asked friends working in similar units what such jobs were really like. Apart from boredom, I could not find many flaws. The advantages, however, seemed obvious: a stable life, a comfortable home, and plenty of time for myself.

Even so, when I passed the exam and landed a position at the state-owned newspaper in my hometown, I still couldn't shake the doubt. Things that look too good always seem to come with a catch. Nervous, I went to a temple said to be especially effective for career prayers, only to draw the worst fortune possible.

On the day I left the first-tier city, rain poured down and traffic ground to a halt. Dragging a suitcase and juggling bags of every size, I sprinted into the station—only to realize I was still too late. I missed my high-speed train. At that moment, all my anxiety about the future came crashing down. I sank down where I stood and cried until I couldn't anymore.

The anxiety eased the moment I stepped into the newspaper's offices. The building was grand and brand-new, its silver facade almost dazzling in the sun. Each floor had roughly four times the space of my old company, and every doorway seemed to lead to another set of doors. The place was so large that I kept getting lost. Generous square footage and a magnificent, imposing exterior defined the look of this newspaper.

My position was New Media Editor. I no longer needed to pitch stories, contact sources, conduct interviews, or write drafts word by word like before, nor did I really need to discuss topics with reporters or edit their articles.

My day-to-day work was simple: pick a few pieces, copy and paste them into the backend of WeChat official account, and tweak the formatting, including font size, spacing, line height, to match the standard layout.

After my supervisor approved them, I clicked "Publish." The only real thinking involved was the occasional headline tweak or trimming a piece for length. Most of the time, the keys I used most were Ctrl+C and Ctrl+V.

On my first day, everyone acted as if I should already know how to do the job. At first I just watched quietly, tracking how often my colleagues posted in the work group, what kinds of stories they chose, and what headlines they used. Before long, I realized a role this straightforward didn't really require much training.

The selection criteria were not complicated. Beyond importance and timeliness, it mostly came down to page-view numbers. The articles usually came from other official outlets or from our own app. Stories about everyday life and gossip performed best. Even big, universally recognized events like the Olympics could be less appealing to local readers than, say, a dip in vegetable prices. Most of the time, I chose pieces that had already performed well elsewhere, which meant I could often reuse the original headlines.

The new media editor role ran on shifts—an early shift and a late shift—and I got a day off every three or four days. I lived a ten-minute walk from the office. On early-shift days, I usually got up at 6:00 a.m., either set aside some bread the night before or grabbed steamed buns at a convenience store, and ordered coffee delivery. By 7:00, I would be at my desk with breakfast, eating while browsing the news and flagging anything I might use later.

The busiest and most nerve-racking moment came when the scheduled posts were sent to the work group for the leader's approval. At that point, even if I desperately needed to use the restroom, I could not leave my seat, because the leader might message at any moment asking me to replace something for breaking news.

Eventually, I figured out the most efficient way to work: the moment I saw suitable news, I immediately copied and pasted it into the backend, ready for any last-minute request from the leader to swap articles. A massive amount of news stored in the backend ultimately ended up in the trash. Fortunately, they caused no actual material loss, just cyber junk. The only thing wasted was the labor I had spent copying and pasting.

Once the leader gave the final go-ahead, I had to reply "Received" immediately and click "Publish" in the backend. Then I would take a short breather and start preparing the next post, keeping to a rhythm of one push every one to two hours. Around noon, I would spend about ten minutes eating in the cafeteria, then return to work until three or four in the afternoon. After that, the late shift would take over, working through to midnight, though most nights they could wrap up before 10:00 p.m.

Even though I formatted and published around a dozen pieces a day, the work itself was easy, more like light manual labor than anything else. I left work with exactly as much brainpower as I had brought in. The only discomforts were dry eyes, sore hands, and a stiff back, but I never had to deal with writer's block again. When I clocked out, I really clocked out. I did not need to keep an eye on the work group, and no colleague or leader would ever bother me after hours.

Back when I was a reporter at a well-known market-driven outlet, my father still felt I was not doing "proper work." Now, when he takes me to dinners and tells his friends I work at a state-owned newspaper, there is unmistakable pride in his voice. For the first time in years, perhaps since I got my university acceptance letter at eighteen, I had once again become the kind of daughter my father could be proud of.

Most of my days off landed on weekdays. I would spend them wandering around the city, visiting coffee shops, craft stores, small boutiques, malls, and parks. The only downside was that all my local friends were at work, so I usually went by myself, snapping photos of a new dessert I had found or a view that caught my eye. When I sent the pictures to my friends, they would flood me with jealous messages.

Only occasionally would boredom and a sense of meaninglessness creep in. When I first started working there, I could not help but thinking: this must be my despicable human nature at work. The moment a person becomes comfortable, they start looking for meaning.

Hooking Readers: Traffic Codes, Headline "Magic Weapons", Shockingly Low Standards, and Still Knowing No One in Other Departments After More Than a Year

At the very beginning, it was not that hard to let go of all that talk about "value," "mission," and "meaning" at work.

Other than genuinely urgent breaking news, like major policy changes that affected people's daily lives, extreme weather, or large-scale disasters, the stories that reliably pulled in the most traffic were, basically, just gossip and obituaries. Deaths, affairs, divorces, and marriages accounted for nearly half of our page views.

Take obituaries, for instance. Once we had cracked that traffic "code," official outlets like ours would sometimes run several in a single day, covering everyone from celebrities and business founders to online influencers. I was not in a position to decide whether a celebrity's death deserved more coverage than an influencer's. Still, I could not help wondering whether the death of a completely unknown actor in some far-off country really needed to be a headline. But I knew obituaries guaranteed clicks.

Learning how to "properly" handle headlines was the first real lesson I received on the job. "Deliberately obscuring details" was one of the most common techniques, and choosing exactly what to hide is especially critical.

A standard move, especially with actors or directors who were not household names nationwide, was to attach labels such as "Well-known Male Star," "Well-known Female Star," or "Famous Director." The cover image will often hide half their face on purpose, so readers could not immediately tell who it was. If the person was a foreign celebrity, editors would be careful to obscure distinctive features that might reveal their ethnicity. Of course, if someone was truly famous, no one bothers with "well-known," as their name alone was clickbait enough.

The irony is obvious: people who are actually well-known do not need the "well-known" tag at all. The whole logic of headline writing was as snobbish as a vanity fair.

Soon, I mastered the three foolproof "magic headlines": exclamation marks, "Just In," and "Breaking." For example, a minor helicopter crash in Tanzania—thousands of kilometers away, with two people killed—could be packaged as: "Breaking: Plane Crash, None Survive!" Many readers would click simply because the headline was sensational enough.

For a while, there was also a dependable formula for certain minority holidays, for example, "Holiday Notice! Five Days Off in a Row, No Make-Up Workdays! (Not for Everyone)". Posts like that were almost guaranteed to bring in traffic.

But pushing this kind of bait again and again was like dosing readers with a strong drug: with each repeat, the click-through rate fell. By the second, third, and fourth time, people caught on and stopped reacting. That was when we had to get more… creative.

"Huang Xiaoming, Rewarded 5,000 Yuan!" was one of those "creative" headlines. The story itself was plain: a villager in Ningxia Province named Huang Xiaoming found a copper kettle dating back to the late Qing dynasty. He handed it over to a museum and received a certificate and a 5,000-yuan reward. Nothing extraordinary, except that he happened to share a name with a famous Chinese actor. An editor leaned hard on that coincidence, siphoning clicks that really belonged to the celebrity.

The same trick worked with police bulletins and death notices, too. As long as the name resembled a celebrity's, it did not even have to match exactly. In my experience, a single similar-looking character was enough for plenty of readers to misread it, and quietly donate another click to our numbers.

I still remember trying to imagine what the job would be like before I started. The first time I opened those accounts, I was stunned by the sheer number of exclamation marks. Just imagining myself writing headlines peppered with them made my heart seize up.

Now I add exclamation marks willingly. I toss in "Just In" and "Breaking" with practiced ease. When that kind of post shows up in my feed these days, I don't feel disgust anymore. Instead, I think of the editor behind it who, like me, forced to rack their brains over a title, and I feel a weary kind of solidarity. I'm not sure whether that is something to be happy about. Somehow, I even became the "headline expert" among my friends, the person they consult when they want a better click-through rate.

Sometimes I would wonder: at what point does this kind of concealment become deception? The article itself might be detailed and specific; the headline is just a hook. Does that count as tricking people? Once, we slapped "Breaking!" on a headline, only for the story to turn out to be nothing more than a leader's speech. Readers reported it as clickbait. I had nothing to say in our defense. We really were just trying to lure people into clicking so the page-view counter in the bottom-left corner would tick up a little higher.

Because every post ended with an editor's byline, I was once singled out. Under a high-traffic celebrity story, a reader left a comment in the backend that named both me and the reporter, saying they would remember us and publicize our "evil deeds" on other platforms.

My palms went cold. I wished so badly that I had a more common name, one that would let me disappear among thousands of people with the same name and avoid being identified. What's more, I felt innocent: I was merely carrying out my superiors' will and following the newspaper's rules, a pitiful little editor with no control over her own work.

Once you give up a principle, it can feel as if the floor just keeps dropping, lower and lower, with no end in sight. I felt this sharply the day I saw the story about a female student at Dalian Polytechnic University.

The headline read something like: "'Improper associations with foreign individuals, harming national dignity or damaging the university's reputation' — Li X. faces expulsion." Her FULL name was written right there in the title.

That day, I felt totally disheartened, feeling that all media was doomed and everyone had lost their bottom line. But asking myself honestly, if I were the one handling this news, how would I process it? Would I follow the herd, or would I actively choose to conceal her name and handle it differently than other media?

I cannot say for sure that I would have made the better choice, because I realized I had handled something similar before.

It was a wanted notice featuring a strikingly attractive woman. She was the only woman on the list, and my supervisor told me to use her photo as the cover image. We both understood perfectly well what that meant: a "beautiful female suspect" was, by itself, a guarantee for clicks.

Sure enough, the numbers exploded after the post went out. Within an hour, it had more than 70,000 views. In the backend, the comments split into two camps: one group fawned over her looks, laced with off-color jokes; the other accused the editor of misogyny. Some even called me out by name: "Editor Li Guang, how can you be so misogynistic? You're official media, not some click-chasing account!"

I felt deeply wronged. The person who reviewed the post was a man; the leader who gave the final order was a man. Yet in the end, I was the one singled out and punished in public opinion. But I couldn't claim innocence either. I felt like one of those grey-area, toe-the-line traffic chasers — the kind people curse every day for being vulgar and shameless, but who keeps doing it anyway, because the clicks still count.

I really wanted to know whether my colleagues shared these struggles, but the shift system meant I hardly ever even ran into people from my own team. Most of them were much older than I was; some had joined the unit before I had even started college, and they fully expected to stay until retirement. Their conversations mostly revolved around raising kids and family relations.

In that spacious, half-empty office, I could sometimes hear staff from other departments clustered together, chatting through an entire lunch break about who had gotten married. I was always on my own: eating lunch alone, ordering afternoon tea alone.

In more than a year on the job, I had not attended a single annual party, team dinner, or team-building event, and I still did not know anyone from other departments. Each department felt like a sealed-off island—doors shut, people scattered in their own corners under the same roof, working quietly and separately.

Even with the reporters, I only ever communicated online. I did not know what they looked like, and we never had any real face-to-face interaction.

A few days after the Dalian Polytechnic University incident blew up, I chose to run a story about a rape survivor who had come forward to accuse her attacker. Half joking, I told a friend it was my small act of rebellion, my way of "doing a little good" to offset the faint guilt sitting in the back of my mind. But I knew perfectly well, too, that whatever impact it had would be tiny.

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Luck, Fairness, and Peers: Hitting the "Million-View" Jackpot, Running Out of Luck, and Talking Myself into Seeing the Paper as an Information-Distribution Chain Restaurant

Just as my doubts about the new job were growing more frequent, things suddenly took a turn: I got lucky.

During one of my shifts, breaking news came in about a nationally beloved actress. I pushed it out immediately, and WeChat gave it official traffic promotion. Within ten minutes, the post had passed 100,000 views. I sat there staring at the backend all day, watching the page-view and comment counts climb every time I refreshed the screen. It all happened so fast. An hour later, the article had soared into the millions.

I felt as if I had done something right, as thrilled and adrenaline-pumped as if I had won the lottery. Since returning to my hometown, my income was no longer what it had been in the first-tier city, so I had cut back on daily spending. But that day, when I went to dinner with a friend, I felt like a nouveau riche and could not help but want to celebrate by spending money. A 500-yuan-per-person dinner suddenly felt entirely worth it, even though the bonus from that story might not even amount to that much.

For a long time afterwards, it felt as if Lady Luck had chosen me. Whatever I posted casually could easily get 70,000 or 80,000 views. I went to work every day full of anticipation, wondering what big story might happen to fall into my lap today. Even after clocking out and going home, I could not resist opening the backend to check if the views were still climbing.

That lasted about a month. Then luck moved on to someone else. The moment my shift ended and a colleague took over, major news would break. My own numbers dropped to a historic low, with each post getting fewer than 50,000 views. I felt an indescribable sense of loss, even blaming everyone and everything, feeling like destiny had played a cruel joke on me.

This slump lasted for a while until my reason finally returned and reminded me that I was actually being manipulated by traffic. Data was the only real thrill this job offered: crude, direct, and immediate positive feedback. But in reality, I had not done anything right or wrong. It was all chance.

After more than a year on the job, I came to see that luck was, in its own way, fair. Everyone got a turn being favored by the gods of traffic. Over time, our numbers mostly evened out.

At first, I thought the newspaper's reporters were not very competent. Their drafts often felt half-baked and full of gaps. They would submit press releases from partner institutions, including police stations and hospitals, without changing a single word.

When I tried to mark one of these pieces as "Original" before publishing it, WeChat would tell me the article did not qualify, because the exact same press release had already been published word for word by the institution that issued it. Even in giveaway posts for free movie tickets, reporters often failed to include basic information, such as when the event started, who was eligible, or how the tickets could be claimed. I had to call them myself to check. Sometimes, when I saw another outlet run a local public-interest story, such as rising gas prices, or back-to-school interviews, which performed well, and I would call our reporters and suggest they do a local version of the same story.

Later, I learned that reporters' KPIs were not based on the quantity or quality of what they wrote. They were under pressure to bring in business. Much of their daily work involved rushing between the publicity offices of local institutions, signing contracts, and publishing press releases. In other words, their primary task was not to find stories or write articles, but to "serve clients."

At one point, I thought that instead of spending my days copy-pasting as a small-time editor, I would rather transfer to reporting. But once I understood what reporters actually did, I realized their job was no easier than mine. After talking with friends at other local newspapers, I found that this was common everywhere.

Because of this job, I followed hundreds of official media WeChat accounts, and my feed became completely flooded. Every few seconds, another news item would pop up, headlines packed with "Breaking" and endless exclamation marks. I read a hundred times more news than before, yet I felt I was no longer truly paying attention to any news anymore. When I reviewed what those hundreds of accounts posted over a day, I found that 90% of the content was practically identical. The only real differences were update frequency and the number of posts.

I remember the uproar over the actress criticized for her outrageously expensive earrings. During that episode, the news updates arriving every few seconds became almost perfectly uniform: different outlets reporting the same story with slightly different, but essentially interchangeable, cover images and headlines. That meant there were hundreds of editors behind the scenes doing exactly what I was doing: filtering out the stories most likely to attract traffic, then copying and pasting them. The thought that so many people were trapped in the same repetitive, tedious work brought me no comfort at all. It only made me feel even sadder.

Sometimes I tried to console myself by thinking of it as something like a chain restaurant, like McDonald's or KFC. They need physical branches in different locations; in new media, we were just opening "branches" online for different regions. We were serving different groups of users. Just because one outlet had already published a story didn't mean everyone would see it. Thousands of accounts targeting different audiences were still needed to keep redistributing the same information until it spread widely enough.

After taking this job, I never opened WeChat articles in my free time again. Reading long-form pieces had once been an indispensable part of my life. I used to spend half an hour, sometimes even an hour, reading them slowly, sinking into that state of total absorption, and then talking with colleagues about what I had taken from them. Now, even when I come across some brilliantly written viral article being shared all over Moments, I don't feel the slightest desire to click on it.

A Donkey Spinning in Circles: Publishing 70 Articles a Day, A Glittering Facade with a Stale, Dim Interior, and Missing the "Blessing" of China's 996 Grind

Just three months in, the job I had once thought was practically perfect, nothing but advantages, was left with only one redeeming feature: leisure. Before long, even that last advantage disappeared.

In the second half of 2024, the Publicity Department of the Communist Party of China Central Committee launched a comprehensive evaluation of the communication performance of mainstream media outlets and ranked them accordingly. The participants included key accounts of hundreds of provincial and sub-provincial media. The criteria were largely data-driven: page views, likes, shares, and other similar metrics.

One day, "making the top XX on the list" was handed down by leadership as a formal directive for our newspaper.

For national-level outlets and provincial or municipal media serving huge populations, getting 100,000 views on a headline was easy. They were like naturally gifted students who can rank near the top simply by showing up to class and doing the usual homework. Even when they covered the same story and use exactly the same headline we do, they will still attract more traffic by default.

Our account was like a mid-tier student in the class, neither top-tier nor at the bottom, and therefore not someone the teacher paid much attention to. Mediocre students like us had to rely on dumb, brute-force methods: post more articles so the cumulative views would rise. That was when our workload started to multiply.

Before that, we published around a dozen pieces a day. Later, the volume first doubled, then doubled again, eventually reaching 70 articles a day. The posting frequency kept increasing, and the number of pieces we had to sort through and format each hour became four times what it had originally been.

At that point, layout and aesthetics were no longer enforced so strictly. Line spacing, letter spacing, indentation, even the font size of image captions—as long as the page looked more or less consistent, we no longer adjusted every detail with care. By then, I had become so practiced that I could format a piece in a single minute.

Working hours expanded along with the publishing volume. As the number of articles kept rising, the late shift stretched later and later, until leaving work at 1:00 a.m. became routine.

With every extra minute my shift ran over, my anger rose another notch. I kept wanting to ask: what piece of news could possibly be so important that it was worth sacrificing my sleep just so I can copy, paste, and push it out to readers at the earliest possible moment, especially when those readers are already asleep themselves?

On shift days, I usually kept my meals to under 15 minutes, shoveling food from my tray while scrolling through the endlessly refreshing news feed on my phone, preparing the next items I would need to publish.

A few times, major breaking news came in while I was eating in the cafeteria. The leader demanded that it be pushed out immediately, so I had to put down my chopsticks and rush back to my desk.

Through sheer effort, we finally met our goal in the first few months of the year. But once the ranking had gone up, it could not be allowed to drop, could it? I felt like I was being hoisted onto a pedestal and could no longer get down. There were even a few occasions when our ranking got too high, and the leader reminded us to rein it in a bit so we would not stand out too much. My hand, gripping the mouse every day, felt like it was developing tenosynovitis. I had no other solution but to constantly search for better ergonomic mice.

If we did not have this information, would our lives be worse off? I thought about it, and the answer was no—not much would change. Whenever I vented to friends and they asked, "Is it really necessary to post so much news?" or "Is there even that much news to post?", I found myself speechless.

Over time, I came to believe that janitors, taxi drivers, and delivery workers did work far more meaningful than mine. Janitors use their labor to turn chaotic, messy spaces into tidy ones. Taxi drivers take people from one place to where they need to be. Delivery workers dart through the city to make sure hungry office workers can still get a hot meal. My work, by contrast, seemed only to make the information landscape noisier and more chaotic.

Waking up early became my nightmare. If I had an early shift the next day, I would set several alarms and check them obsessively before bed. Even so, I would still jolt awake in the middle of the night, terrified by nightmares of oversleeping. A few times, I woke before the alarm, my first thought being absolute panic that I had slept too deeply and missed it. I would grab the phone on the nightstand, and only when the time showed 5 AM did I breathe a sigh of relief.

Sleeping became another nightmare. Even if I lay down immediately after a late shift, the lack of buffer time before bed turned falling asleep into a burdensome task; the more I wanted to sleep, the harder it was to fall asleep. Having never been troubled by sleep issues before, I went to the hospital for the first time to get a prescription for Stilnox, just so I could knock myself out with medication during the latter half of the night after an agonizing late shift.

For a while, I couldn't muster an interest in anything. I was no longer curious about the changes around me. When friends discussed topics we used to share an interest in, I only envied their vitality. I suspected I had fallen into a mild depression and booked a therapist, but found myself in a tough spot when the therapist suggested setting a fixed time for weekly sessions. The rotating shift system meant I couldn't set aside a regular time for therapy, not even for one hour. Our shift schedule wasn't fixed; it rotated every week. After repeatedly confirming that I couldn't carve out a set hour, the therapist said something I'll never forget: "If you can't even lock down one hour a week for treatment, it's hard to imagine the rest of your daily life unfolding with any rhythm."

I even developed the absurd thought that "996" (working 9 AM to 9 PM, 6 days a week) was indeed a "blessing"—at least it provided a fixed rhythm of work. I originally came to the local newspaper for an easier life, yet now I couldn't even secure one hour for therapy. This plunged me into an intense existential crisis. Every day I spun around in circles like a busy donkey, having no idea what all this was for.

After working there for a while, I sometimes felt puzzled: this office building had only been completed a few years ago, and its exterior looked brand new, grand, and imposing, yet why did the interior always feel so incredibly stale and dim? My office area was on the shaded side of the building, devoid of sunlight year-round. There seemed to be no difference between day and night; the incandescent fluorescent lights overhead permanently cast a pale, stark glow.

During the late shifts, I often didn't notice the sky changing colors outside; only the gradual emptying of the office area made me realize it was getting late. On the entire floor, besides me, only one or two people from other departments were sporadically on duty. Only the security guard uncle was guaranteed to keep me company. He would patrol on a hoverboard, gliding silently like a ghost through the office, and he always startled me.

After publishing the final post, I shut down my computer and walked home. The entire city was asleep. The windows of the buildings in my line of sight were pitch black, with only the streetlights still on. There were no pedestrians or traffic on the road. Occasionally, a delivery rider would speed by on a scooter, still hustling for someone needing a late-night meal, while I—this manufacturer of information noise—finally came to a halt.

Pekingnology

Why Every China Watcher Must Be on WeChat

WeChat (微信 Weixin) is not just another messaging app in China – it’s essentially “the operating system for daily life” in the country. With over 1.3 billion users worldwide (covering almost 80% of China’s population), WeChat has grown from a simple chat app into a ubiquitous …

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a year ago · 91 likes · 12 comments · Zichen Wang

The physical closure brought by the pandemic over the past five years apparently has seeped into the minds of many Chinese people, and may last far longer. I was surprised to find that people—both outsiders and students on campus—have become, at the very least, numb to the prolonged closure of university gates, if not outright comfortable with it. In the decades before COVID, such a situation would have been unthinkable.

Just look at the comment sections on Chinese social media. Whenever someone argues that campuses should reopen, waves of hostile replies follow. Here is a typical one:

（真开放了）你猜谁会在路上找女生要微信，谁会盯着女生并猥亵，谁会去图书馆自习室偷电脑，谁会去搞诈骗坑学生？？？

"If they really open up, guess who will be asking girls for WeChat on the roads, staring at them and harassing them, stealing laptops from libraries, or running scams against students?"

This is the psychology of closure at work. The longer a campus remains off limits, the more mysterious it becomes to those outside. The more mysterious it becomes, the more nervous those inside become about the imagined crowds pressing at the gate. And the solution, somehow, is always more closure, which only makes the mystique more powerful.

In my view, the answer is simple: open the gates. Leave them open long enough, and the magic wears off. A campus becomes a campus again, not a forbidden city with lecture halls.

And when the universities in question are not just any universities, but Peking and Tsinghua, the issue becomes more complicated. Given the deep anxiety Chinese families attach to education, these two institutions are no longer merely campuses. For many Chinese people, they are symbols. Every holiday season, parents bring their children to Beijing from across the country just to catch a glimpse of them.

That is where the grey industry finds its opening. When official reservation slots remain almost impossible to secure, some people exploit personal connections, working with insiders and outsiders to smuggle large numbers of visitors onto campus. It is a highly profitable business. Chinese parents are rarely reluctant to spend money for their children's education.

Credit is due to the Hong Kong–based Phoenix Weekly for its reporting. The article below was first published on its WeChat account on May 14 and the English translation is mine. The author appears to be a Peking University alumnus.

高校大门开放争议背后：一个人的抗争，一群人的生意

Behind the Debate Over University Gate Closure: One Man's Fight, a Business for Many

On May 13, Wuhan University announced the cancellation of its reservation system for public visitors, allowing people to enter the campus simply by showing their ID cards. The move brings to an end the entry-by-reservation system the university introduced in July 2023.

The decision to "tear down the walls" sparked heated discussions on social media. Supporters argue that universities ought to be free and open public spaces, while opponents maintain that campuses require order, fearing an influx of visitors would disrupt the tranquility needed for research and teaching.

In recent months, we have been tracking and investigating the "campus-entry business" thriving outside the gates of China's two top academic institutions: Tsinghua University and Peking University. By interviewing scalpers, brokers, university staff, and Li Zhi, an associate professor at Peking University's College of Engineering, we have tried to piece together how this "wall" was built step by step, who is profiting from it, and who is being worn down by it.

At Peking University, there are two ways to get through the gates without a reservation: vault the turnstiles in broad daylight, as Associate Professor Li Zhi does, or pay 120 yuan (about 17 U.S. dollars) to be smuggled in.

Since 2021, more than 10 million students have sat the Gaokao, China's national college entrance examination, every year. For decades, Tsinghua and Peking University have stood at the apex of this brutal competition. The almost religious reverence for elite universities has made both campuses pilgrimage sites for countless families. In 2018, the two universities introduced a reservation system with daily visitor quotas. Applicants had to apply online under their real names, with spots allocated by time slots. Demand has long far exceeded supply, leaving huge numbers of would-be visitors locked out through official channels.

As a result, what was once free admission acquired a clear black-market price within a few kilometers of the campus gates: 80 yuan for Tsinghua, and 120 yuan for Peking University.

In our recent undercover investigation into the grey network linking scalpers, brokers, faculty, and students, it became clear that this is not just a story about easy money. The scalpers exploiting loopholes are only the outer edge of the system. What really sustains and fuels the trade is the ever more impenetrable campus wall.

As we traced these transactions, another question emerged: when did university campuses start to close themselves off? Li Zhi, an associate professor at Peking University’s College of Engineering, offers a particularly revealing case. For 18 years, he has held firm to the view that universities should be fully open. He refuses to voluntarily show his staff ID, declines to use facial-recognition scans, and often simply vaults the turnstiles.

His long resistance forms a striking contrast with the tourists trying every possible way to get in. On one side is a host who rejects the rules; on the other are visitors willing to pay to get around them. The campus gate is no longer just a physical barrier. It has become a flashpoint where rules and desire, privilege and profit, resistance and compromise collide in new ways.

I. A History of Campus Closure

In Li Zhi's memory, China's most famous university was once entirely open, at least in practice.

Having grown up in Beijing with relatives living near Peking University, Li frequently went into the campus to play. In his recollection, entering and exiting never required any formalities. No one checked IDs, no one registered names, "you simply came and went as you pleased." Later, after joining the university as a faculty member, he lived in the Changchun Garden outside the west gate, crossing the campus every day to commute.

There were guards at the gates, but they were largely there for show. They paid little attention to the people passing through. Forget ID cards—no one even checked student or staff passes. To Li, the idea of being stopped and questioned just to enter Peking University was once unimaginable.

That changed in the summer of 2008.

With Peking University's Khoo Teck Puat Gymnasium hosting the table tennis events for the Beijing Olympics, the university abruptly tightened access in June and July for security reasons. Notices appeared at the gates saying that, in principle, entry required a student or staff ID and that outsiders were no longer allowed.

Li vividly remembers a confrontation with a security guard that summer. Entering through the west gate, he was stopped and asked for ID. His first reaction was to resist: why should anyone check his ID when he had lived there for decades? He did not force his way through, but nor did he back down. Since the guard would not let him pass, he simply stood there. "I'm not afraid of wasting time. If you want to wait it out, I'll wait it out with you."

In the end, the guard called the police. Once the officers arrived and established that Li was a PKU faculty member, the matter was dropped.

From that point on, Peking University's ID-checking system was formally in place. The Olympics ended, but the system remained, and it is still there today. Li recalls that enforcement was loose at first. Many relatives of staff lived nearby. Some elderly residents had family passes, while others were so familiar to the guards that they were waved through. Even with checks in place, many auditors and other outsiders could still get in—with so many gates, trying enough of them usually lead you one with lax security.

What really made the campus gates close ever tighter came later, when universities became tourist attractions.

With the rise of the influencer economy and social media, Wuhan University's cherry blossoms, Xiamen University's Furong Tunnel, Tsinghua's Old (Second) Gate, and Peking University's Weiming Lake gradually became viral check-in spots. During blooming seasons or holidays, crowds poured in.

Among them, Xiamen University, hailed as "China's most beautiful university," saw daily tourist numbers climb to nearly 10,000 during peak travel seasons, with even larger crowds on weekends. Under growing pressure, the university formally imposed restrictions on campus visits in December 2012. At the time, Tao Yuansheng, deputy director of Xiamen University's security department, said registering visitors' ID details would help improve behavior and serve as a strong deterrent to "fake tourists" intent on theft.

A few years later, Tsinghua and Peking University also tightened control over outside visitors.

On July 7, 2018, Peking University officially launched an online reservation system for individual campus visits. The system required bookings to be made seven days in advance and set clear rules on entry time slots and identity checks. It marked the definitive end of the walk-in era.

To Li Zhi, however, this enclosure in the name of "order" does not conceal its flawed logic. His starting point is simple: a university is meant to be open.

"Since childhood, going in and out of campus was always casual. Then suddenly you have to show ID just to enter. That is unacceptable to me, no matter how high-minded the justification sounds," Li said. "Look at universities abroad—unless they are military academies or classified institutions, which ones do not let people in freely? You can even eat in their cafeterias. A university is part of public life. It absolutely does not belong only to students and staff."

Some argue that too many visitors disrupt the normal study and daily life of teachers and students. Li sees that as a management problem, not a reason to shut the gates.

"Most people who come to Peking University want to see Weiming Lake and the old historic buildings. They generally do not go into teaching buildings or dormitories. The university could easily separate teaching areas from scenic areas, and place reasonable limits on access to teaching spaces. But it cannot seal off the entire campus. Besides, the area around Weiming Lake is basically a park and should be open to the public."

That belief is why Li began his long-running standoff with campus security in 2008.

His position was clear: the guards had no right to check his ID. "You can call the police, and I will go to the station with you, but you have no right to stop me." He ended up at Yanyuan police station many times because of it. In the most serious scuffle, a guard accidentally fell during the altercation and then rather ceremoniously went to hospital for an injury assessment, which found nothing. Li was called in to give a statement and later paid the guard a small sum on humanitarian grounds.

After repeated clashes, the guards gradually got to know him and usually let him through. Li suspects Peking University's security department may even have a "list" telling guards not to hassle certain people. For a while, he and the guards reached a tacit understanding: at the gates he used most often, they recognized him and waved him through; at others, he could still be stopped. He also went to the security department and the president's office to argue that this style of management was unreasonable. The university, unsurprisingly, had its own explanations—too many visitors, disorder, and so on.

This cat-and-mouse game entered a second phase in the autumn of 2019.

That was when Peking University began installing turnstiles and facial-recognition systems. Li recalls that the East Gate got them first, apparently promoted by the university as a technological advance in administration. From that point on, entry no longer meant just flashing an ID; it meant handing over biometric data. Li has never voluntarily registered his facial data. "Under the law, I have not authorized the university to use my biometric information." Worried that his face might still be scanned, he began using his backpack to block the facial-recognition screen as he passed through the gates.

Eventually, he stopped even doing that. He decided to simply vault the turnstiles.

"The barriers aren't that high. I can just lift a leg and step over them. Some even have gaps wide enough for me to squeeze through."

The guards, of course, would question him, and sometimes give chase. On one occasion, after Li vaulted the turnstile at the East Gate, a guard ran after him. Li broke into a run. By his own account, he was a poor sprinter in school, close to failing, but fairly good at long-distance running. Before long, the guard gave up running, got on a bicycle, and radioed in: "Target spotted."

Half-joking, Li told him, "Your fitness really isn't up to scratch. You still can't catch me?" The guard replied, "You do run fast, and this heavy coat is slowing me down." Li then showed his staff card and said that as long as the guard reported his name to his superiors, everything would be fine. And it was.

In recent years, this cat-and-mouse routine has become part of Li's daily life.

Once, while he was leaving campus, a guard told him to use facial recognition again.

"So it's this much trouble even to leave?" Li said he could not make sense of it.

The guard replied, "You leave the same way you came in."

Li immediately picked up on that. "That was exactly what I wanted to hear." He lifted his leg, stepped over the barrier on his way out, and told the guard, "This is how I came in."

On another occasion, after he had stepped outside, a guard grabbed his backpack and refused to let go. The two ended up in a two-minute tug-of-war. The bag was sturdy enough not to tear. Li later went back onto campus and filed a complaint with the security department about the gate rules. There, he was told some of the logic behind them—for example, the university worried that students with psychological problems might get into trouble off campus, so exits also had to be monitored.

Li found that reasoning unconvincing. "People like that exist everywhere. You can't sacrifice everyone else's freedom just to protect them."

His resistance did produce one small change. Not long after the "turnstile chase" incident, facial scans were no longer required to leave campus. Colleagues joked with him: thanks to your hurdling, the rest of us can walk straight out now. Li, though, did not find it funny.

"It has been four years since the COVID-19 pandemic ended. Universities need to rethink what kind of gate-control system they actually need. A modern university reflects how modern a society is. Universities must be open. The question should be how to open them, not whether to open them."

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II. Admission Quotas With a Price Tag

While Li Zhi was sparring with security guards over ID checks, a very different drama was playing out just outside the campus gates.

Especially after July 2023, when Tsinghua and Peking University lifted their pandemic restrictions and reopened under a "limited reservation system", what was meant to be free campus access quickly turned into a highly organized, openly priced, and wildly profitable black-market business within a few kilometers of the gates.

"Tsinghua University, 80 yuan; Peking University, 120 yuan."

That is now the going underground rate for getting into China's two most elite universities. For an upgraded service, a current student can escort visitors and provide a guided tour for 300 yuan an hour. Package it as an "Elite Teacher Study Tour", and the price can jump to several thousand, or even tens of thousands, of yuan.

Every winter and summer holiday, the trade becomes even more feverish. On one side are official reservation slots that disappear in seconds. On the other are waves of parents eager to get their children inside, if only to let them absorb some of the prestige.

For many ordinary families, a few hundred yuan in "guide fees" is not cheap. But against the backdrop of a child's future, it can seem negligible. For scalpers and gate fixers, by contrast, this is an almost cost-free business. All they need is a student ID, a familiar face at the gate, or access to an internal account that can work the reservation system.

This underground trade has already developed into a mature, closed-loop ecosystem.

At 8:30 a.m., at Qinghua Donglu Xikou subway station, a gate fixer named Dong Fan showed up as arranged.

He gestured for his client to unlock a shared bike, handed over a student ID card belonging to a female student at Tsinghua's Academy of Arts & Design, and told the client to follow his e-scooter closely. The entry slot had been bought on an e-commerce platform for 80 yuan. On those platforms, listings for "Tsinghua and Peking University visits" rise and fall from a few dozen to several hundred yuan depending on demand.

The destination was Tsinghua's East Gate. Near the last traffic light, Dong Fan signaled for the client to wait and watch, then slipped into the crowd streaming towards the gate. At that point, he hung a badge around his neck and claimed to be technical support staff at a Tsinghua college. Whether because of the student ID or simply the sheer number of people, the guards did not stop them. They walked straight in.

Just like that, an outsider had entered Tsinghua.

In the trade, this is known as the "bring-in" method. Dong Fan said he had been doing it for three years, meaning the business started as soon as the campus reopened. He said his job gives him frequent access to students, for example by "taking students out for exchange activities". He also claimed to know students at Peking University, so he takes clients there as well, at 120 yuan a head.

A deeper look at online platforms shows that, compared with the "bring-in" method, some operators are far more professionalized.

In online shops offering such services, the division of labor is remarkably clear. One person handles customer service, another manages the operating channels, and the boss controls the "resources"—connections with two or three master's or PhD students at Tsinghua and Peking University who can make reservations on behalf of others, since students are allowed two visitor bookings a day for family or friends. Customer-service staff said they also provide student guides for 300 yuan an hour, while entry alone costs 160 yuan per person. They acknowledged that as campus controls have tightened in recent years, fewer students are willing to take the risk.

Compared with these small-time operators, study-tour agencies prefer what they call "safe channels."

One broker said his agency's Tsinghua and Peking University study tours could "guarantee entry," rather than just taking photos outside the gates. For a group of about 20 people, the fee was 200 yuan per person. Adding a current student as an on-campus guide raised the price to 600 yuan a head. Entry without a guide still cost 200 yuan.

"We're a legitimate travel agency, not just privately sneaking people in via students," the broker said. Their main contacts, he claimed, were university staff or long-term campus residents, each with their own reporting channels. In practice, he said, this was "more convenient than collaborating with students", and even if the university discovered it, "the impact would be limited".

III. The Backdoor Inside the "System"

The biggest revenue streams, however, lie hidden inside the universities' own administrative systems.

A source at Peking University said the university has many secondary units, such as departments and institutes, and almost all of them have the authority to reserve visitor entry. Within each unit, that power is typically held by a small number of administrative staff.

For years, one loophole has been repeatedly exploited: "cancel and reapply."

"For example, say I work in student affairs and still have 50 slots left today after covering faculty and student needs. Once those 50 people enter campus, I can immediately cancel their reservations in the back-end system. The slots are restored at once, and I can register another 50 people."

Through this snowball method, reservation slots can effectively become unlimited.

In the insider's account, most illicit entries happen this way. He said the practice became so rampant over the past two years that one research institute under Peking University was internally disciplined. The institute reportedly had only a few dozen staff, yet used this method to get 3,000 people into Peking University in a single day. At a market rate of 200 yuan per person, that would amount to 600,000 yuan in revenue in one day.

In July 2023, Peking University issued a notice about a study-tour program called "Peking University Golden Autumn Customized Course." The group had been organized by several alumni, who split 139 participants into accompanying-visitor reservations. Each participant was charged 10,800 yuan, bringing the total to about 1.5 million yuan.

Beyond this more organized trade, there is also a business built on student networks. Under university rules, each student gets eight guest passes a month. In some departments, student-union cadres use their connections to mobilize ordinary students to contribute their quotas.

For insiders, this trade is far from risk-free. In a warning notice issued in September 2025, Tsinghua University disclosed four cases in which insiders had colluded with outside tour guides and scalpers to register visitors illegally for profit. The staff involved were placed in administrative detention, and one student was stripped of their recommendation for graduate study.

Yet as long as the gap between supply and demand persists on either side of the gates, the grey market that thrives in the cracks is unlikely to disappear.

For well-connected study-tour agencies, there is another "legal" cover: borrowing official school stamps.

Zhao Lei, who once worked for such an agency, said that during winter and summer holidays many primary and secondary schools have formal school-to-school channels for visits to Tsinghua and Peking University. Study-tour agencies strike deals with those schools, using their official stamps and application letters to package paying tourists recruited from the public as "visiting students" from the schools.

"Once a school stamps the paperwork and submits the roster, it is almost impossible for the university to verify whether every child actually attends that school," Zhao said. Under this legal cover, agencies can bring tourists onto campus on a large scale. "One stamp can mean hundreds of spots. The reviewers simply can't check them one by one."

In practice, though, the time spent inside Tsinghua or Peking University may amount to only half a day. The rest is spent touring other sites in Beijing or listening off campus to so-called teachers talk about their experiences.

Even this brazen method is not foolproof. Zhao recalled one study-tour group that was hit by a surprise inspection from Peking University, which checked the entry roster on the spot. The scheme was exposed, and the insiders who helped arrange the reservations were penalized.

IV. The Cost of Closure

Whether in Li Zhi's stubborn turnstile-vaulting or the feverish demand reflected in the scalping trade outside the gates, the same question keeps surfacing: when a university chooses to wall itself off, what exactly does it lose?

In Li's view, the most immediate loss is academic exchange.

"In the past, if a professor from another university happened to be passing through Peking University and wanted to drop in or attend a lecture, they could simply walk in. Now they have to go through an application process. Many find it too much trouble and stop coming altogether. Academic exchange and interaction between universities are gradually being eroded." He says he often hears the same complaint from peers at academic conferences. If many intellectual sparks once came from chance encounters, then spontaneous exchanges without a fixed purpose or prior booking have now all but disappeared from campus.

What is also fading is the old "drop-in culture" among universities in Haidian District. It used to be normal for students from nearby campuses to arrange football matches, sit in on classes, or attend lectures together. For generations of students, those were ordinary shared experiences.

Today, unless there is a formal inter-university event or someone inside can help with reservations, it is extremely difficult for students to meet on campus. "There are so many universities in Haidian, all close to one another. We used to go wherever we liked, whenever we liked. Now if we want to meet, we can only do it off campus," Li said.

In his view, campus closure has also driven a deeper wedge between universities and the surrounding community. University campuses are an important part of urban public space. Peking University’s Weiming Lake, Tsinghua’s Grand Auditorium, and its library were once places where nearby residents could walk and relax. Since access was restricted, those spaces have effectively become exclusive internal resources.

"And that is breeding public resentment towards universities," Li said. "People come all this way and still cannot get through the gates—of course they are angry. They will only think Peking University is arrogant and aloof. That is clearly damaging to the university's reputation."

Against the backdrop of an openly priced grey market, meanwhile, the claim that closing the gates is necessary to maintain order looks increasingly hollow.

At least judging from this investigation, closure has not solved the problem. It has only pushed it underground: scalpers, illegal reservations, borrowed official stamps, stolen IDs. Because legitimate access is scarce, these practices have only become more widespread. People smuggled in by scalpers operate entirely outside the university’s supervision. Rather than removing hidden risks, the wall has made campus access even harder to control.

Faced with that wall, Li's position has always been clear: universities must remain open.

He points to international practice: campuses stay open, while core academic areas are restricted. Or universities can prioritize teaching and research on weekdays, while opening more fully to the public on weekends and holidays. "Opening without any regulation certainly creates pressure, but it can absolutely be managed through more refined governance."

In a country where more than 10 million students sit the national college entrance exam each year, Tsinghua and Peking University carry a significance that goes far beyond their campuses.

They are social symbols of class mobility, reverence for knowledge, and the hope of moving up. And that powerful yearning cannot be stopped by a turnstile. It will either find a way in through official channels, or slip through the cracks in the dark.

For 18 years, Li Zhi has tried to defend what he sees as the public character of the university, vaulting turnstiles and arguing with security guards. Outside the gates, the parents and children who queue, pay, and pull strings are expressing the same desire in a different way: they want to get in.

Perhaps one day the campus gates will fully reopen. The only questions are when, and how.

(Dong Fan and Zhao Lei are pseudonyms)

Pekingnology

Wuhan University professor blasts security- and selfishness-driven fragmentation, where "even basic information is not shared"

Below is a translation of 吕德文：孤岛效应是一大公害，是社会衰败的征兆 Lü Dewen: The silo effect is a major public harm and a sign of societal degeneration, posted on January 3 in the 新乡土 New Rural WeChat blog of 武汉大学中国乡村治理研究中心 China Rural Governance Studies Center, Wuhan University…

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3 years ago · 77 likes · 2 comments · Zichen Wang

Pekingnology

An Open Day for a Closed Campus

Today (April 18, 2026), Peking University—one of China’s two most famous universities, together with Tsinghua University—benevolently stages a “Campus Open Day,” inviting the public to “walk into PKU and encounter infinite possibilities…

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5 months ago · 28 likes · 2 comments · Zichen Wang

Trump said:

From the beginning, our citizens have shared a deep sense of mutual respect. Founding Father Benjamin Franklin published the sayings of Confucius in his colonial newspaper. Today, a sculpture recognizing that ancient Chinese sage is carved on the United States Supreme Court.

But far less attention was paid to another episode Trump cited as evidence of a long history of China-U.S. amity: a Chinese-inscribed stone tablet inside the Washington Monument.

Trump went on:

The appreciation ran in both directions. Chinese admirers of President George Washington gifted a stone tablet honoring his memory to adorn the Washington Monument. It bears the words of a Chinese official who called the great general and statesman a hero among men.

The image above shows the tablet Trump referred to. It is the only commemorative stone inscribed in Chinese among the 188 memorial stones embedded in the interior walls of the Washington Monument, donated by individuals, organisations, and communities from around the world.

According to the U.S. National Park Service, the block sits at the 220-foot level of the monument, on the 10th landing. It was donated in 1853 by the American Mission, Ningpo, China.

The Chinese inscription was later translated into English by Dr. Peter Parker, an American physician and missionary, and the translation was included in the book History of the Washington National Monument and of the Washington National Monument Society.

Below is the Chinese text of the inscription, together with Dr. Parker's English translation from more than a century ago.

钦命福建巡抚、部院大中丞徐继畬所著《瀛寰志略》曰：

Su-Ki-Yu, by imperial appointment, Lieutenant Governor of the Province of FuhKun (FuhKun refers to Fujian today — Yuzhe), in his Universal Geography, says:

"按，华盛顿，异人也。起事勇于胜广，割据雄于曹刘，既已提三尺剑，开疆万里，乃不僭位号，不传子孙，而创为推举之法，几于天下为公，骎骎乎三代之遗志。其治国崇让善俗，不尚武功，亦迥与诸国异。余尝见其画像，其貌雄毅绝伦，呜呼，可不谓人杰矣哉！

It is evident that Washington was a remarkable man. In devising plans he was more decided than Chin-Sing, or Wu-Kang; in winning a country, he was braver than Tsau-Tsau or Lin Pi. Wielding his four-footed falchion, he extended the frontiers thousands of miles, and then refused to usurp the regal dignity or transmit it to his posterity, but first established rules for an elective administration. Where in the world can be found such a public spirit? Truly, the sentiments of three dynasties (Three dynasties refers to Xia, Shang and Zhou dynasty in ancient China — Yuzhe) have all at once unexpectedly appeared in our day! In ruling the State he promoted and fostered good customs, and did not depend on military merit. In this he differed from all other nations. I have seen his portrait; his air and form are grand and imposing in a remarkable degree. Ah! Who would not call him a hero?

米利坚，合众国以为国，幅员万里，不设王侯之号，不循世及之规，公器付之公论，创古今未有之局，一何奇也！泰西古今人物，能不以华盛顿为称首哉！

The United States of America regard it promotive of national virtue generally and extensively neither to establish titles of nobility and royalty nor to conform to the age, as respects customs and public influence, but instead deliver over their own public deliberations and inventions, so that the like of such a nation—one so remarkable—does not exist in ancient or modern times. Among the people of the Great West, can any man, in ancient or modern times, fail to pronounce Washington peerless?

大清国浙江宁波府镌，耶稣教信辈立石。

咸丰三年六月初七日，合众国传教士识。

This stone is presented by a company of Christians and engraved at Ningpo, in the Province of Che Heang (Che Heang refers to Zhejiang today — Yuzhe), China, this third year of the reign of the Emperor He-en Fung, six month and senventh day. [July 12, 1853]

For decades, the tablet remained little known. It returned to diplomatic visibility in 1998, when Bill Clinton mentioned it in a speech to students at Peking University during his China visit. Clinton said:

From the windows of the White House, where I live in Washington, D.C., the monument to our first President, George Washington, dominates the skyline. It is a very tall obelisk. But very near this large monument there is a small stone which contains these words: The United States neither established titles of nobility and royalty, nor created a hereditary system. State affairs are put to the vote of public opinion.

This created a new political situation, unprecedented from ancient times to the present. How wonderful it is. Those words were not written by an American. They were written by Xu Jiyu, governor of Fujian Province, inscribed as a gift from the government of China to our nation in 1853.

I am very grateful for that gift from China. It goes to the heart of who we are as a people -- the right to life, liberty, and the pursuit of happiness, the freedom to debate, to dissent, to associate, to worship without interference from the state. These are the ideals that were at the core of our founding over 220 years ago. These are the ideas that led us across our continent and onto the world stage. These are the ideals that Americans cherish today.

The more revealing story, however, is not the stone itself, but the man whose words were carved into it: Xu Jiyu (actually it is Xu Jishe徐继畬), then Governor of Fujian province.

A reform-minded scholar-official, Xu authored the book Universal Geography《瀛寰志略》 in 1848, which introduced nearly 80 countries and regions around the world, including an account of George Washington.

More than a geography book, Universal Geography was one of Qing China's early attempts to describe the modern world in systematic terms—its politics, economies, militaries, histories, and empires.

For example, Xu gave detailed accounts of Britain's constitutional monarchy and America's democratic republic, and praised both. He was especially taken by Washington: a military founder who did not crown himself, did not pass power to his descendants, and helped create a system in which public affairs were subject to public deliberation.

The book also tracked Western colonial expansion, including British rule in India and Southeast Asia, and the potential threat it posed to China.

By today's standards, Xu's work is somewhat dated. In its own time, it was a breakthrough. Completed more than a decade before China's Self-Strengthening Movement gathered force, it challenged the old China-centered view of the world and helped open a window onto global politics.

That made Xu politically vulnerable. Partly because of his account of Western political systems, conservatives at court accused him of excessive admiration for foreign countries. In 1851, he was removed as Governor of Fujian and recalled to Beijing to take up a largely ceremonial post. The following year, he was stripped of office altogether and sent home.

His fortunes later turned. In 1865, as the Self-Strengthening Movement gained momentum, Xu was brought back into government and appointed to a post roughly comparable to today's vice foreign minister. He helped train a new generation of diplomats and translators, becoming an important figure in China's early engagement with modern diplomacy.

On March 29, 1868, The New York Times profiled Xu in an article titled "America in China", comparing him to Galileo.

The last official act of Mr. Burlingame in his capacity as Minister to China, was a very significant one. It was, as elsewhere recorded, the official presentation of a copy of Stuart’s Washington to a Chinese writer who, twenty years ago, was sent into exile for his tribute to our great First President—an exile from which he seems to have been lately recalled to greater honors and rewards than ever, by the personal intercession of Mr. Burlingame. It is a wondrous sign of the times when so deep-dyed a criminal is restored to favor and crowned with laurels. Till within a quarter of a century, the study of barbarian annals has been one of the most dangerous branches of learning a Chinese could pursue; and a candid geographer has dared the fate of Galileo.

The writer in question was Seu-ki-yu, degraded from office and banished by a former Emperor “for eulogizing Washington in his works, The Geography of the World and The Men of Note of Other Countries,” published, we believe, in 1849, and for which the author suffered eighteen years of exile. One is interested to know what it was that was so treasonable in utterance. We are not without a key to explain what the published account makes mysterious.

Xu died in Beijing in 1873, aged 79.

Apparently in the mid-19th century, some Chinese officials were already trying to understand the American experiment, and to translate it into the political language of their own civilization.

I. PEACEFUL COEXISTENCE

On May 11, the official WeChat account of China's Foreign Affairs Ministry released a video titled "Peaceful Coexistence." The English text below was provided by the Ministry.

China and the United States, two leading global players, the world's two largest economies. How they interact with each other has far-reaching and global implications. To clash, confront each other, and wear each other down, or engage in sincerity and good faith? The history of China-U.S. relations offers an unmistakable answer.

Surging through the flames of World War II, the American "Flying Tigers" undertook the perilous Hump airlift and fought shoulder to shoulder with the Chinese people against fascism. In the years of frozen ties, "ping-pong diplomacy," where the small ball moved the big globe, enabled "a handshake that crossed the Pacific Ocean." In the years that followed, China-U.S. exchanges and cooperation brought out their respective strengths and delivered win-win results. Together, they fought terrorism, tackled the financial crisis and battled Ebola. Time and again, people have seen that when China and the U.S. join hands, they generate positive energy for the world.

Today, China-U.S. trade matches the annual GDP of a mid-sized country. 80,000 U.S. companies invest in China. 80% of Apple's core suppliers have plants in China. Tesla's Shanghai Gigafactory accounts for half of its global output. All this shows that China and the U.S. helping each other succeed and prospering together is a tangible prospect within reach. It will serve both countries and benefit the world. More importantly, the Chinese and American peoples both want a life of peace and happiness. Their joys and sorrows are much the same. Their online chats and in-person interactions reflect how the world should be. Neither China nor the US can remodel each other, but they can choose how they want to engage. The right choice is to commit to the principle of mutual respect, to hold the line on peaceful coexistence, and to strive for the prospect of win-win cooperation.

The Earth is too small for China and the U.S. to turn against and confront each other. And the Pacific Ocean is vast enough for both to prosper in their own ways. China and the U.S. must coexist peacefully on this planet for all time to come. A ready and open China is right here. It is now for the U.S. to choose the right course.

II. On the Eve of President Trump's Visit to China

On May 12, Chaoyang Shaoxia朝阳少侠, a semi-official WeChat account reportedly linked to China's Ministry of Foreign Affairs, published an article titled "On the Eve of President Trump’s Visit to China写在特朗普总统访华前夕." The English translation below is mine.

🌏 After nine years, U.S. President Donald Trump is about to visit China for a second time, drawing close attention at home and abroad. What is the significance of this visit? Here are some thoughts.

I. China-U.S. engagement reflects major-country responsibility

In 1972, during his visit to China, then U.S. President Richard Nixon said: "…if we can find common ground to work together, the chance for world peace is immeasurably increased."

History moves forward, but the wisdom of standing together through difficulties and coexisting peacefully continues to shine. The truth that China and the U.S. gain from cooperation and lose from confrontation, never goes out of date. As two major global players, China and the U.S. together account for nearly a quarter of the world's population and over half of the global economic output. The scale of bilateral trade remains enormous. Even though it declined in 2025, two-way trade still stood at 560 billion U.S. dollars, roughly equivalent to the annual GDP of a mid-sized country. If China-U.S. relations "sneeze," the international situation may well "catch a fever." What the people of China, the U.S., and the rest of the world need is not conflict between China and the U.S., but dialogue and communication.

In recent years, every time China-U.S. relations have gone through ups and downs, a handshake and dialogue between the two heads of state have helped restore stability, bringing a rare sense of stability to an unsettled world. At the beginning of spring this year, the two heads of state discussed the year's agenda for China-U.S. relations over the phone. At the height of the economic and trade frictions in 2025, several phone calls between the two heads of state, together with their meeting in Busan, directly helped stabilize the situation.

Today, the smoke of the Russia-Ukraine conflict has not yet cleared, the war in the Middle East continues, and the ship of the world is already rocking badly. Whether it can navigate through hidden reefs and turbulent waters depends, to a large extent, on whether China and the U.S. choose to "cross the river in the same boat" or "crowd each other out on that boat." New York Times columnist Thomas Friedman recently wrote that China and the U.S. "must govern, innovate, collaborate and coexist at a planetary scale to thrive." Otherwise, both countries will be "overwhelmed" by shared challenges.

It is completely normal for the two countries to have different views on certain hotspot issues. The key is to prevent differences from escalating into misunderstandings, and misjudgments from turning into conflicts. The responsibility of a major country is not to pursue its own interests exclusively, but to bring benefits to the whole world. As the saying goes, "He who shares interests with the world will be supported by the world."

II. China-U.S. engagement reflects the will of the people

The year 2025 was dubbed by many as the "First Year of China-U.S. Online Diplomatic Relations."

Early in the year, millions of American "TikTok refugees" flooded into Xiaohongshu (RedNote), where Chinese netizens enthusiastically became "cyber tour guides." From comparing daily lives and expenses to sharing photos of pets and food, from teaching English to learning Chinese, people in both countries discovered through ordinary everyday life that their joys, sorrows, frustrations, and hopes were not so different after all.

At the end of the year, a group of young Americans became "Chinamaxxing" on TikTok. They followed Chinese creators in drinking hot water, practicing Tai Chi, and learning to make Tanghulu (candied hawthorn sticks), and integrated “Chinese style” into their own rhythm of life.

Offline, China's initiative proposed at the end of 2023 to welcome 50,000 young Americans to China for exchange and study programs over a five-year period has attracted large numbers of American young people and injected strong momentum into people-to-people exchanges between the two countries. The 240-hour visa-free transit policy has also amazed American tourists, who found themselves falling into a "sweet trap" woven together by Chinese food, culture, and development. Many realized that they had been misled by Western media for decades.

This two-way embrace between the two peoples meets the needs of today and echoes the lessons of history. The brightest moments in the history of China-U.S. exchanges have always been lit up jointly by the two peoples. Over 80 years ago, the American "Flying Tigers" undertook the perilous Hump airlift and fought shoulder to shoulder with the Chinese people against fascism. Over 50 years ago, "ping-pong diplomacy," where the small ball moved the big globe, enabled a handshake that crossed the Pacific Ocean. Over 30 years ago, Mrs. Gardner fulfilled her husband's dream of returning to his childhood home in Kuliang, creating a touching chapter in the history of people-to-people friendship between China and the U.S.

A poll by the Chicago Council on Global Affairs in 2025 showed that 53% of Americans held a favorable view of China, a clear rise from 41% in 2024. Many other polls also show that a majority of Americans hope China-U.S. relations can remain stable and that the two countries can cooperate more. This shows that both Chinese and Americans want to live good lives, and neither side wants confrontation and turmoil. Good news for China-U.S. relations naturally becomes something people on both sides hope to see.

As for those who constantly hype up the so-called "China threat," the American people should see them clearly. They are not acting in the interests of the American people, but are using anti-China rhetoric to achieve their own political agenda. In essence, they are enemies of the American people.

III. In bilateral interaction, China has confidence and strength

Today, China possess real confidence and strength in developing relations with the U.S.

In 2025, China's total exports rose to 3.8 trillion U.S. dollars, setting a historic trade surplus record of 1.2 trillion U.S. dollars. Its GDP reached a new milestone of 140 trillion yuan, equivalent to the combined economic output of Germany, Japan, India, the UK, and Italy. Against the backdrop of sluggish global economic growth, China contributed 30% of global growth with an economy that accounts for 17% of the global total. No matter how strong the winds and waves, the "ballast" remains steady.

In the first quarter of this year, amidst the one-year anniversary of the tariff war compounded by the Iran crisis, China once again refreshed outside perceptions of its economic stability and resilience with year-on-year GDP growth of 5.0%. A succession of "Sputnik moments" in Chinese technological innovation has emerged, demonstrating that the competitiveness of Chinese manufacturing lies not merely in price, but in its comprehensive system.

China has always followed its own rhythm and managed its own affairs well. The "15th Five-Year Plan" is already underway. In the next five years, China will lead the development of new quality productive forces, accelerate the building of a new development paradigm, and actively expand voluntary opening up. This strategic focus that turns blueprints into reality is not only China's source of confidence but also a blessing for the world.

Since the beginning of this year, leaders from many countries around the world have visited China in close succession. A survey by the American Chamber of Commerce in China shows that nearly 60% of U.S.-funded companies surveyed plan to increase their investment in China. The trend of "Going to China" reflects a global vote of confidence in China's development. "Partnering with China will bring more opportunities" and "Investing in China is investing in long-term stability" are becoming an international consensus, and this trend will continue to grow.

IV. Principles and bottom lines must be upheld in China-U.S. engagement

In developing China-U.S. relations, China is full of sincerity, but it also acts on principle.

The Taiwan question is the most important issue in China-U.S. relations. The U.S. should recognize that China must be reunified and will surely be reunified. The U.S. should play a constructive role in supporting China's reunification and opposing "Taiwan independence."

The U.S. also needs to abandon ideas such as "decoupling from China is beneficial to the U.S." and "China's success is America's failure." The Pacific Ocean is vast enough for both countries to develop in their own ways and prosper together. For decades, China's U.S. policy has remained consistent and stable, and the U.S. should do the same.

It is hoped that China-U.S. relations will embark on a new journey from Beijing this time, bringing more good news to the people of both countries and to the world.

Small as they are, MSEs form the everyday fabric of the economy. In Chinese policy discourse, they are described as the "capillaries" of the economy: small, widely distributed, and vital to keeping economic activity flowing. They are also an important force for innovation, job creation, and improving people's livelihoods.

As of September 2025, China had 63.487 million small and medium-sized enterprises, of which 98.1 percent were MSEs, according to a report released by the China Internet Network Information Center.

Today's newsletter features excerpts and analysis from a survey on China's MSEs. The Online Survey of Micro-and-small Enterprises, or OSOME, was jointly launched in the third quarter of 2020 by Peking University and the Ant Research. The survey has continued since then and has accumulated nearly 250,000 samples, offering a clear picture of the transformation that China's micro and small business operators are going through.

On April 28 this year, the Guanghua School of Management at Peking University released a report titled "Empirical Findings Based on a Survey of China's Micro and Small Business Operators基于中国小微经营者调查的实证发现" (hereafter "the report"). Your host read through the full report, selected several interesting sections, and added some notes.

For anyone interested, the full Chinese report has been uploaded to Google Drive. You can download it here.

I. Cautious expectations: why market optimism has not reached small businesses

Overall, micro and small business operators remain cautious about the macroeconomy, especially when it comes to expectations for economic growth. Their expectations for GDP growth in the following year have consistently fluctuated between 2.6 percent and 3.4 percent (Figure 4), remaining well below the official target of "around 5 percent."

Moreover, although the economic stimulus package introduced in September 2024 and the positive stock market performance since 2025 helped lift expectations for the equity market, including the Shanghai Composite Index (Figure 4), this optimism did not effectively spill over into other macroeconomic indicators. Nor did it provide a substantial boost to business operators' expectations for their own operations.

This suggests that the recovery signals seen in the capital market have not fully translated into broad-based confidence among micro and small business operators in the real economy. The improvement in expectations remains largely confined to the financial sphere and has yet to reach the micro-level "capillaries" of the real economy. In addition, 30 to 40 percent of micro and small business respondents chose "uncertain" when answering questions about expectations. This highlights a significant lack of confidence and a strong sense of uncertainty at the micro level. The foundation for improving expectations still needs to be consolidated.

Note: This phenomenon shows that the expectations of MSEs are shaped more by the economy as they experience it than by macroeconomic narratives. Although policy stimulus and a stronger stock market have sent positive signals, improvements in the capital market have not automatically translated into confidence in the real economy or in their own business prospects.

For MSEs, what truly shapes expectations are front-line variables such as orders, foot traffic, cash flow, financing costs, payment cycles, and consumer demand. If these operating indicators do not show steady improvement, optimism in financial markets can easily remain at asset prices, without filtering down to the "capillaries" of the real economy.

At the same time, the relatively high share of "uncertain" responses suggests that MSEs are not simply pessimistic. Rather, they lack a clear and stable anchor for expectations. This uncertainty can reinforce a wait-and-see attitude and dampen willingness to invest, hire, and expand. Therefore, the key for future policy is not only to improve macro expectations, but also to strengthen micro and small business operators' real confidence in demand recovery and business improvement through support that is visible, accessible, and sustained.

It is hard to say that the central government has not noticed the importance of "stabilizing expectations". In April 2025, Chinese Premier Li Qiang chaired the State Council’s second special study session of the year. The theme was "strengthening expectation management, and coordinating policy implementation with expectation guidance". Apparently, there is still a long way to go.

II. The share of female entrepreneurs has doubled

From the perspective of gender structure, the share of female micro and small business operators has continued to rise in recent years (Figure 13). This is closely related to the way digital platforms have lowered the capital, time, and space barriers to entrepreneurship, offering women a more flexible and lower-cost path into business.

Compared with traditional offline businesses, online shops depend less on fixed assets and physical premises, allowing women to better balance work and family responsibilities. The credit and evaluation systems within platform ecosystems also help, to some extent, offset the information and credit disadvantages that women often face in traditional financing channels. The research shows that digital platforms have become more inclusive towards female micro and small business operators through risk-control and credit-stratification mechanisms, while women's business activity and retention rates have continued to rise.

Overall, digital platforms have not only expanded the space for women's entrepreneurship, but have also contributed to a structural increase in women's share of the micro and small business economy.

Note: The share of female operators rose sharply from around 17 percent in the third quarter of 2020 to 36 percent today. This reflects the growing inclusiveness and adaptability of digital platforms for women entrepreneurs. At the same time, the inclusiveness of digital finance, including platform transaction records, user reviews, and credit mechanisms, has helped compensate, to some extent, for women's disadvantages in traditional financing and business networks, enabling them to build trust through their operating performance.

In addition, women's experience and communication strengths in sectors such as life services, retail, education, health, beauty, maternity and childcare, and content-driven consumption are highly compatible with the segmented scenarios of the platform economy.

III. Digital transformation and AI adoption

Overall, the use of AI among employees of MSEs is still concentrated in low-threshold, general-purpose, and auxiliary daily-life scenarios. Looking at specific everyday scenarios (Table 4), their use of AI is mainly concentrated in relatively general areas such as information search and learning support.

Daily life assistance, such as searching for information, planning itineraries, and translation, was the most common use case, at 30.3 percent. This was followed by learning, education, or training, at 24.5 percent. A certain share of respondents also used AI for leisure and entertainment, shopping and consumption decisions, and medical or health advice, at 18.3 percent, 18.4 percent, and 16.5 percent, respectively. By contrast, the use of AI for work-related tasks and for wealth management or financial advice remained relatively low.

Note: Overall, the use of AI by MSE owners and employees is still at an early stage of diffusion. AI has already entered the daily lives of this group through low-threshold scenarios such as information search, translation, learning and training, and leisure and entertainment. But it has not yet been fully converted into a tool for business management.

The fact that 24.5 percent of respondents use AI for learning, education, or training is particularly noteworthy. It shows that MSE operators and employees are not rejecting AI. On the contrary, they are actively using it to acquire knowledge, improve skills, and understand new information.

As Cai Fang, former Vice President of the Chinese Academy of Social Sciences, put it, whether AI becomes a blessing or a threat for MSEs depends on whether they can fully make use of its empowering features. This is an exogenous technological change that does not depend on the will of individual firms. If MSEs are to share in the technological dividends, they will need special support. For example, the government could coordinate with large technology companies to take advantage of AI's "zero marginal cost" features and share technology through models, platform APIs, tokens, and other means, helping to close the digital and intelligent divide.

IV. The marked rise of one-person companies (OPCs)

OSOME data show that before the third quarter of 2022, the share of MSEs with zero employees fluctuated at around 30 percent (Figure 18). Starting in the third quarter of 2022, this share began to rise steadily, climbing from 24.3 percent in that quarter to 52.7 percent in the first quarter of 2026, an increase of 28 percentage points.

By contrast, the share of MSEs with five or more employees remained at around 25 percent in 2021 and 2022, but has fallen to 12 percent since the fourth quarter of 2022. The business model of MSEs is showing a clear shift towards lighter assets and lower levels of formal employment.

Note: "One-person companies" (OPCs) have seen rapid growth across China in early 2026. According to a nationwide research report on OPC development released in March, their founders are mainly from the generations born in the 1990s and 2000s.

Micro and small business operators with no employees, in other words, OPCs, have increased from 34.7 percent to 52.7 percent, now accounting for more than half of the total. This trend is closely related to the rise of the gig economy and flexible employment, and is also inseparable from the wider use of AI discussed above.

This shift has lowered the threshold for entrepreneurship and made micro and small business operations more flexible. At the same time, it also means that many MSEs remain small in scale, have limited employment capacity, and face considerable uncertainty. Their ability to absorb employment and achieve stable growth remains to be seen.

V. Fewer young entrepreneurs, more retirees

From the perspective of age structure, changes in youth participation in entrepreneurship have been particularly noticeable, revealing the strong role of digital platforms in both absorbing and reshaping youth entrepreneurship.

OSOME data show that since 2020, the share of young people among platform-based micro and small business operators has fluctuated significantly. During the pandemic years of 2020 and 2021, the share of young entrepreneurs rose rapidly and reached a peak of around 71.1 percent in the fourth quarter of 2021. As the labor market gradually recovered, this share fell to 45.6 percent in the third quarter of 2024 and has since hovered around 45 percent.

This trend suggests that digital platforms provided young people with an important employment buffer and a channel into entrepreneurship during economic volatility. Young people were able to use digital tools to enter the market quickly and operate flexibly, demonstrating the immediacy and high elasticity of digital entrepreneurship. During the recovery phase, however, some young business operators exited the market, reflecting the temporary and mobile nature of digital entrepreneurship.

Over the past five years, the average age of micro and small entrepreneurs has risen steadily, as has the share of older workers, especially retirees, defined as women aged 55 and above and men aged 60 and above. These shares increased significantly from 5.6 percent and 0.5 percent to around 15.9 percent and 4.4 percent, respectively (Figure 14).

This shows that, as life expectancy rises and average health conditions improve, some older people still retain strong work capacity and a willingness to continue working after retirement. Micro and small business operations provide them with a flexible employment channel. At the same time, some retirees use micro and small business activities to earn extra income and supplement inadequate pensions. Together with the policy environment that encourages the development of the "silver economy", these factors have contributed to the expansion of older micro and small business operators.

Note: During the pandemic, platform entrepreneurship offered young people a rapid-entry employment buffer. As the labor market recovered and platform competition intensified, some young operators exited or shifted towards more stable career paths.

Meanwhile, as healthy life expectancy increased, the need to supplement pensions grew, and digital tools lowered the threshold for business operation, more retirees began to enter the micro and small business sector. Seen this way, the platform-based micro and small economy functions both as a "buffer" for young people facing employment pressure and as an important channel for older people to continue participating in work, increase their income, and maintain social connections.

They are the delivery riders running red lights on empty avenues, the wholesale vendors shivering in the pre-dawn chill, and the aging freight workers waiting for a forklift in the dark. They operate in the margins of our circadian rhythms, largely out of sight, and thus, out of mind.

Their reasons for working through the night are different. Some are between jobs. Some need extra income for children, rent, or a mortgage. Some have simply found that the night is less crowded, slightly faster, and, in its own way, more bearable. What connects them is not a single story of hardship, but a quieter and more complicated kind of endurance.

There was fatigue, certainly, and sometimes a sharp awareness that this kind of work is precarious, dangerous, or damaging to the body. But there was also a stubborn steadiness: the belief that earning money is already something to be grateful for.

The following video was produced by Hong Kong–based Phoenix Weekly, and you can watch it here. What follows is my English translation of the interviews in that short film.

寻找深夜里的劳动者

Looking for the people who work through the night

Mr. Jia, 40, food delivery rider, from Xingtai, north China's Hebei Province

Guijie, 2:20 a.m.

Reporter, 00:41

Are you still on the night shift?

Mr. Jia, 00:43

Yeah, from 5 p.m. to 5 a.m. I personally just prefer nights because the traffic is a nightmare during the day. It’s exhausting riding in the daytime. Honestly, I just want to go home right now. Haha, I'm just tired, you know? Sleepy.

I turned 40 this year. I'm unemployed right now—I mean, I don't have a formal job. I wasn't always doing this. Actually, I used to really dislike this line of work. Day or night, I felt that, honestly, this job was almost not meant for people. Running around on the streets all day, running red lights, going the wrong way down the street... Everyone sees it every day, and it really is dangerous. Yesterday, I saw a delivery guy get hit on the road. But what can you do? I'm out of work, I don't have a job, and I have to live.

Reporter, 01:35

How long have you been in Beijing?

Mr. Jia, 01:38

Seven or eight years. My family is back in my hometown. I used to be in the perfume business and had a stable job, but things just haven't been going well these past couple of years. I'm pretty much at the bottom of the ladder now. If I felt this was beneath me or something, I definitely wouldn't be doing it. But when you've fallen this hard, when you've failed to this extent, do you really care about that stuff anymore? Why would you? Who even knows who you are?

I feel like for most people, this is just a transition. You definitely can't rely on this for your future, because there is no future in it. You don't make that much, and it's not stable. I just get the feeling that society doesn't really respect this job, but they also can't live without it.

Reporter, 02:25

Do you run red lights now?

Mr. Jia, 02:28

To be honest, I have. Because you're tied to the platform. Once you choose it, you have to keep up with its pace. But I try my best not to.

Ms. Liu, 44, food delivery rider, from Luoyang, central China's Henan Province

Guijie, 3:35 a.m.

Ms. Liu, 02:39

It depends on the situation, but you really have to wait at the lights. You can't run red lights.

Reporter, 02:42

Have you ever been hit?

Ms. Liu, 02:44

I have. Close calls, or sometimes actual crashes, it happens. Making money isn't easy, haha. We're all just out here trying to make a living.

Reporter, 02:51

What hours do you work?

Ms. Liu, 02:52

I usually just do nights. I head out around midnight and ride until 7-something in the morning. Then I'll do a bit during the day at lunch, maybe for two hours. Orders are hard to get during the day; there are way too many riders, so you can't grab them. So I just do nights.

Reporter, 03:08

How much can you make in a night?

Ms. Liu, 03:09

Around 200 yuan (roughly USD 29).

Reporter, 03:10

Do you make more working at night compared to the daytime?

Ms. Liu, 03:13

Yeah. Mainly because there are fewer cars at night, so you can go a bit faster and it doesn't feel as exhausting. I just catch some sleep beforehand—sleep through the first half of the night.

I used to have a regular job, but I quit after having kids. When they're little, if they need you, you can't really work. Their dad works, and he tells me to take it easy, not to work too hard if I don't have to. He doesn't want me getting too tired. Doing this delivery gig just brings in a little extra to help out with family expenses, maybe a few thousand yuan a month. When the kids are a bit older, I'll go find a regular job again.

Making money... the more you make, the more energized you feel. I don't feel like I'm living a bad life. It's just taking orders, delivering them, back and forth in a loop. Being able to make a bit more while I'm still at an age where I can—it makes me happy. I have one kid at hom and one in school. The older one goes to school in Yanjiao燕郊. We bought a place in Yanjiao—actually, two places in Yanjiao, Hebei Province. It's close to Beijing.

Reporter, 04:18

How long have you been in Beijing?

Ms. Liu, 04:19

Over a decade, maybe 15 or 16 years. I want to stay in Beijing, but the conditions don't allow it. So we work in Beijing and live in Yanjiao nearby, hoping the kids can stay around here.

(Note from Yuzhe: There may be several reasons behind it, but many of them may get tied with China's hukou system.)

"Being able to make a bit more while I’m still at an age where I can—it makes me happy."

Mr. Cui, in his 40s, market delivery worker, from Northeast China

Dayanglu Wholesale Market, 4:05 a.m.

Mr. Cui, 04:41

I just work for folks here, delivering vegetables and stuff. Make about 300-something yuan a day. It's tough. Nothing is easy these days.

Reporter, 04:50

Where are you heading right now?

Mr. Cui, 04:51

Off to work! Gotta go make money. Let me get you a proper interview. I'll take you to one of the stalls, and you can ask them.

Ms. Gao, 38, stall owner, from east China's Shandong Province

Ms. Gao, 04:58

We get to the market around 10 PM and stay until about 11 AM the next day. It's like this every day. We might take two or three days off for Chinese New Year, but sometimes we don't even get that. Usually, after settling bills with the clients, I sleep from around 5 or 6 AM until 9 AM. It's the same in winter. The faces of the lady working for us and our delivery guy both got frostbite this winter. Plus, there are a lot of younger people in our market who've had strokes or heart attacks. I feel like it's all connected to the night shifts. Staying up all night long-term is terrible for your body. It's exhausting, every single day. You just constantly feel like you can't recover. But it's always been like this. I'm just pushing through, forcing myself to hold on.

Reporter, 05:43

What gives you a sense of achievement in this job?

Ms. Gao, 05:46

My achievement is having a truck fully loaded with goods in the afternoon, and seeing it completely sold out by the morning.

Reporter, 05:53

How long have you been in Beijing?

Ms. Gao, 05:54

I came in 2012, so it's been 14 years. Sometimes when business is really tough, like when we're losing money, I honestly just want to quit. But then I think about it, and life has to go on.

Reporter, 06:06

Your schedule is completely flipped. How does that work with your kids' normal routines?

Ms. Gao, 06:10

We're totally out of sync. We rent a two-bedroom apartment. When we get up, we're super quiet, moving really slowly so we don't wake them. Their grandma is here watching them. We manage to take them to school, but otherwise, we're just glued to the market here.

Reporter, 06:25

Do you get to talk to your kids much?

Ms. Gao, 06:27

Yeah. When I go back in the afternoon, they are usually at home. Sometimes I also pick up the little one. Our oldest is in middle school, and the youngest is in kindergarten. Because the kids go to school here, we're staying for now. Once we stop doing this, we'll have to go back to our hometown. It won’t be too long. My rough plan is to go back when the younger one starts primary school.

The cost of living in Beijing is just way too high. Honestly, if the whole family stayed here, what we earn wouldn't be enough to spend. And business is hard right now.

If I could choose again, I wouldn't pick this industry. Definitely not. I'd pick something that, at the very least, doesn't mess up my circadian rhythm with night shifts. I'd definitely choose a daytime job. I just want to end this kind of lifestyle soon, haha, and get back to normal life. This industry is just too exhausting. I want to treat myself a bit better. Basically, I just tell myself to push a bit harder, keep going, stick it out for a few more years, and then it'll be over. I don't really think about anything else. I just feel like I've been way too tired and worked way too hard these past few years.

"I just want to end this kind of lifestyle soon, haha, and get back to normal life."

Mr. Zhang, 31, chef/manager, from southwest China's Sichuan Province

Guijie, 3:08 a.m.

Mr. Zhang, 07:36

Who wants to work the night shift? Nobody does. I came here with the dream of making big money and starting a business in the big city. That's why I came to Beijing. So if you ask why I chose the night shift... it's to make a living, because the job I chose is just like this. I'm a chef and also a manager. Restaurants operate at night, so almost everyone works the night shift, from 5 or 6 PM to 3 or 4 AM. I remember once staying as late as 8 AM because we still had customers. Since you're on duty, you have to wait until the guests leave.

Mr. Zhang, 08:11

I dropped out of high school pretty early on. Actually, my grades weren't even that bad back then. I just felt like even if I took the college entrance exam, I wouldn't get into a great university.

When I first started working, I went into factories—electronics, clothing. Eventually, I figured I needed to learn a proper trade, so I chose the catering business and became a chef. Of course it felt hard at first. I've been working here for about 10 years now. My wife and I actually met in Beijing. I got married young, before I was 22. Yeah, there's hope for the future. Mostly because we have a kid now, in the first grade, so it makes us want to hustle even harder.

Reporter, 08:49

Do you still have your dream?

Mr. Zhang, 08:51

Of course I have. My original dream is very simple: make money. The dream of a regular person. You just hope that once you step into the real world, you can support yourself, and once you're married, you can support your family. So that if you run into hardship one day, you won't be stuck with empty pockets.

“You just hope that once you step into the real world, you can support yourself, and once you're married, you can support your family.”

Older man, 60, freight driver, from Baoding, north China’s Hebei Province

Drum Tower, 12:47 a.m.

Reporter, 09:13

Are you working right now?

Older man, 09:15

I'm not working. I'm waiting for the forklift. You call this a job? We just sell our physical labor. I'm not putting myself down, but people like us aren't worth filming.

I'm a bit sleepy right now. I'm used to it, a quick nap is enough. Just snooze until the forklift gets here, unload the truck, and then head home. We just haul freight at night, and once it's unloaded, we head back.

Reporter, 09:36

What time can you leave?

Older man, 09:38

Hard to say. Maybe around 2 AM. What's hard about it? At this point, I'm just getting through the days. Right now it's one trip a night, around 500 or 600 RMB. I used to be a bricklayer and carpenter. Quit that and started driving. Just scraping by to feed the family. At my age, 60 years old, I'm not thinking about doing anything else.

Mr. Meng, 62, freight worker, from Anyang, central China’s Henan Province

Guang'anmen Street, 1:07 a.m.

Mr. Meng, 10:04

I'm 62. The three of us came from Henan, just wandering around Beijing doing odd jobs for people. When you get old, it's hard to find any work. I just do landscaping for folks. Once you're over 59, nobody wants to hire you. I just make a little money as a laborer.

Reporter, 10:21

How much do you make in a night?

Mr. Meng, 10:23

A hundred something. Sigh, you can't make much money. Just out here looking around, trying to catch a gig. It's better than sitting around at home doing nothing. Why am I working overtime tonight? Because China's May Day holiday is coming up. The road landscaping is super busy right now. Putting out flowers and all that, all the government departments are super busy.

"Just out here looking around, trying to catch a gig. It's better than sitting around at home doing nothing."

Sanitation Worker, in his 60s, from Anyang, central China’s Henan Province

Drum Tower, 4:42 a.m.

Sanitation worker, 10:55

I come out at 3:20 AM, get off at 11:00 AM, and start again at 1:30 PM. I only need a few hours of sleep. As long as I'm happy, as long as I'm in a good mood, that's what matters.

Reporter, 11:03

Are you happy right now?

Sanitation worker, 11:05

I'm happy, hahaha. You gotta appreciate having a job, right? Work hard—first to give back to the country, and second to give back to your family. I'm telling you this from the bottom of my heart. Alright, bye-bye.

Ms. Zhang, 21, restaurant worker, from north China's Shanxi Province

Drum Tower, 12:25 a.m.

Ms. Zhang, 11:22

Night shifts are a bit better. For us, it's not that tiring. The shift starts at 4 PM, and by the end, around 11 or 12, there's basically nobody left.

Reporter, 11:31

Does the night shift pay more?

Ms. Zhang, 11:33

Not really. The restaurant industry in Beijing isn't like that. There's no such thing as overtime or night shift bonuses. None of that. It definitely has an impact, though. Like, we have to stagger our hours around the morning rush, so our meal times are totally irregular. Every day is just going to work and getting off work. It's a bit tiring, but hey, I get my money at the end of the day. I make a decent amount in a month, and you gotta earn it if you want their money. Plus, we don't have degrees, so roughing it a little bit doesn't mean much to me.

For those of us who stop studying after high school, we basically all come to Beijing to work. Beijing was my first stop. After high school, I spent a long time just traveling and having fun. From 2023 until last August, I was traveling all over the country—Changsha, Guangzhou, everywhere.

I'll probably work in Beijing for a year or two, save up my own money, and then maybe head back to my hometown. In a year or two, I might be able to put down a down payment back home. I actually feel pretty happy at work every day because I finally have things I'm aiming for.

I'm studying English right now. Teaching myself. Since my time is limited, I just have to learn a bit slower.

Reporter, 12:36

Do you want to go abroad?

Ms. Zhang, 12:37

I have that idea, but financially, I can’t do it for now.

Reporter, 12:40

Which country do you want to go to?

Ms. Zhang, 12:41

I want to go to Germany to study law, because I feel some people really need it.

Reporter, 12:45

What kind of people do you want to help?

Ms. Zhang, 12:47

People who need help.

The piece is authored by Liu Feng刘锋, Chief Economist at the International Institute of Green Finance of the Central University of Finance and Economics.

Liu belives the draft matters because it attempts to do something long overdue — put China's sprawling financial activity under a single, higher-order legal framework. But he is equally clear that a basic law should do more than codify the current system. It should impose discipline on it.

The draft, he argues, still leaves too much blurred: the boundary between "administration" and "supervision," the definition and handling of conflicts of interest, the link between regulation, adjudication, and enforcement, and the rules for licensing increasingly cross-sector, cross-border financial business.

In Liu's telling, a credible financial basic law must not only empower the state to manage risk, but also bind power itself through clearer division of functions, recusal rules, judicial review, procedural safeguards, and more coherent legal hierarchy.

He also places that question in a comparative frame. China's "centralized and unified" model, he argues, is good at mobilizing quickly against systemic risk; the U.S. model of multi-agency checks is better at constraining public power over time. The point is not to copy either wholesale. It is to build a Chinese financial constitution that can keep risk under control without letting regulatory ambiguity, institutional overlap, or legal vagueness become risks in their own right.

The piece was first published on April 20. Please note that the translation below is mine and has not been reviewed by Prof. Liu.

刘锋：关于《金融法》草案（征求意见稿）的观察与思考

Liu Feng: Observations and Reflections on the Financial Law of the People's Republic of China (Draft)

The Financial Law of the People's Republic of China (Draft) (《中华人民共和国金融法（草案）》) is now open for public comment. As the first foundational law in China's financial sector, the Draft establishes an overarching framework of "bringing all financial activities under regulation", and sets out a systematic approach to balancing development and security, strengthening oversight, and preventing risks. It is forward-looking and structurally comprehensive. Its introduction is of landmark significance for building a unified, coordinated, and efficient system of financial rule of law, preventing and defusing systemic financial risks, and promoting high-quality financial development.

That said, the drafting a financial law should not merely codify existing practice. It should also look ahead and construct a modern legal framework for finance that features clearly defined powers and responsibilities, aligned incentives, coherent rules, and compatibility with international standards.

If the Draft is to become a true "basic law" capable of guiding the modernization of financial governance over the coming decades, several of its key mechanisms still warrant further refinement and clarification. Drawing on long-term research into the structure of financial regulation, the governance of conflicts of interest, and legal coordination, as well as observations on the differences between Chinese and U.S. regulatory models, the author offers the following thoughts on the Draft.

I. Clarifying the Functional Boundaries Between "Administration" and "Supervision" to Strengthen Checks and Balances

Chapter VII of the Draft sets out the supervisory and administrative responsibilities of the financial management departments under the State Council. However, it is worth noting that the functional boundaries among different regulatory bodies, as well as those between regulation and administrative management, remain somewhat overlapping and unclear.

Literally, "administration" is more concerned with front-end guidance, such as policy formulation, market-entry approvals, and macro-prudential management.

"Supervision", by contrast, relates more to back-end correction, including conduct monitoring, compliance inspection, and risk disposal. The two serve different purposes and should therefore be clearly distinguished. Ambiguous boundaries may lead to overlapping regulation, inconsistent standards, or even regulatory gaps.

It may therefore be worth adding a dedicated clause in the general provisions or regulatory chapter to provide legislative definitions of "financial administration" and "financial supervision".

Financial administration could be defined as including the formulation of financial policy, industrial policy, rules, and standards; the granting of institutional and business-entry approvals; and the conduct of macro-prudential management. These functions should primarily be undertaken by development and reform, finance, and industry authorities.

Financial supervision, meanwhile, could be defined as the ongoing monitoring, assessment, and inspection of the compliance and risk profile of financial institutions, financial business, financial activities, and market participants; and taking regulatory measures and implementing administrative penalties in accordance with the law.

At the same time, it is necessary to strengthen the independence of regulatory bodies so that they can focus on risk prevention and control, compliance review, and conduct supervision, free from unlawful interference in the performance of their duties. A mechanism should also be established to safeguard the independence of regulatory decision-making. In addition, further clarifying in Article 51 the specific division of labor between the State Council's financial management departments and local financial regulatory bodies with respect to "administration" and "supervision" would help prevent structural overlap in responsibilities.

II. Establishing a Systematic Mechanism for Defining, Avoiding, and Disposing of Conflicts of Interest

The Draft refers several times to concepts such as "benefit transfer" and "improper interests". Articles 28 and 37, among others, set principled requirements for related-party transactions and the due diligence obligations of third-party service providers.

However, the author believes that the Draft still lacks a systematic definition and handling procedure for conflicts of interest. Such conflicts are ubiquitous in financial activities, particularly within mixed operations, financial conglomeration, and the "revolving door" of regulatory personnel. If mishandled, they can seriously undermine market fairness and investor confidence.

A more systematic definition of the types of conflict of interest could therefore be included in the supplementary provisions or relevant chapters, covering, for example, related-party transactions, dual roles, and information advantages through a combination of listed examples and a catch-all clause.

For instance, financial institutions could be required to make their boards of directors ultimately responsible for conflict-of-interest management, and to establish institution-wide policies applicable to all staff. Directors, senior executives, shareholders, and actual controllers could be made subject to mandatory recusal obligations where matters involve major decisions, related-party transactions, or interest allocation, with such situations also brought within the scope of information disclosure.

Internally, an independent compliance department or post should be established to review and supervise conflict-of-interest management and report to the board. Financial regulators should also be granted the authority to investigate, order rectification, and suspend relevant rights where necessary. In addition, in Chapter VII on "financial supervision", it would be worth considering supplementary provisions requiring recusal by regulatory staff in conflict-of-interest situations, together with corresponding internal oversight and disclosure systems.

III. Smoothing the Connection Between Legislation, Judicature, and Law Enforcement to Ensure Procedural Justice

While the Draft touches upon the connection between law enforcement and the judiciary in legal liability and risk disposal, its provisions remain largely principled regarding post-legislative evaluation, the specialization of judicial trials, and the procedures, time limits, and responsible parties for linking regulatory enforcement with criminal justice.

It grants significant power to financial management departments in areas such as legal liability, risk disposal, and regulatory measures, but is relatively weak on judicial review, procedural justice, and rights relief, potentially affecting the fairness and predictability of law enforcement.

It would therefore be advisable to add provisions in the supplementary or general chapters authorizing the State Council's financial management departments to carry out regular evaluations of the implementation of the Financial Law (for example, every five years) and report to the Standing Committee of the National People's Congress, so that the law can be dynamically improved on that basis.

Building on Article 70, the law could go further by promoting the legal establishment of an integrated "three-in-one" mechanism for financial adjudication (civil, administrative, and criminal). Moreover, it could make clear that, under the guidance of the Supreme People's Court, financial courts or financial tribunals should be set up in financially active regions to centralize jurisdiction over major and complex financial cases. A financial expert juror system could also be established.

Judicial oversight of administrative enforcement should also be strengthened through a clear mechanism for judicial review of financial regulatory measures, allowing regulated entities to seek administrative reconsideration or bring administrative litigation against major regulatory decisions.

Article 59 could also be strengthened to improve the link between administrative enforcement and criminal justice, with clear standards, procedures, time limits, and two-way feedback obligations for the transfer of case leads. For major cases suspected of involving crimes, a joint investigation mechanism could be explored. In addition, setting out clear legal liability for regulatory departments and their staff in cases of dereliction of duty or misconduct in office would further strengthen institutional discipline.

IV. Establishing a Unified Qualification and Review Mechanism for Cross-Boundary, Cross-Industry, and Cross-Border Business

Financial business today is increasingly cross-sectoral, cross-industry, and cross-border in nature. Article 3 of the Draft defines financial activity, and Article 26 requires financial institutions to operate within their approved scope.

However, there is still no clear top-level design on which authority, or combination of authorities, should carry out "qualification recognition" for new hybrid businesses that cross sectors and markets, especially when undertaken by financial institutions such as financial holding companies, or on what "review standards" should apply. Entry regulation still largely follows the logic of separate regulation by sector, while the unified regulation of integrated operations remains unclear. This may open the door to regulatory arbitrage and hidden risks.

One possible solution would be to establish a system of "comprehensive operation access". For financial holding companies and integrated business groups, unified qualification standards and review procedures could be introduced. For cross-sector and cross-industry operations, a "Joint Recognition Committee" made up of the relevant State Council financial management departments could be created and coordinated by the Financial Stability and Development Committee under the State Council.

The qualification review framework should be unified and cover matters such as capital adequacy, risk isolation (the "firewall" system), corporate governance, compliance management, information technology security, and anti-money laundering capability. For cross-border business in particular, it should also assess compliance with host-country regulations and home-country cooperation.

The law should make clear that, once a financial institution has obtained the relevant qualification, its parent company or holding company bears the primary responsibility for overall group risk. The licensed regulators of individual business subsidiaries are responsible for micro-prudential supervision. The "Joint Recognition Committee" is responsible for macro-prudential monitoring and coordination of the group's overall cross-sector and cross-industry risks.

Moreover, it is also necessary to improve cross-border regulatory coordination by encouraging information-sharing and enforcement cooperation between Chinese regulators and their overseas counterparts.

V. Strengthening the Connection Between the "Financial Law" and Other Laws, Regulations, and International Rules

As a foundational law, the Financial Law needs a clearer mechanism to lead and coordinate with sector-specific laws such as the Commercial Banking Law, the Securities Law, the Insurance Law, and the Trust Law. Furthermore, as China deepens its financial opening-up, this law must align with universally accepted international rules (such as the Basel Accords, FATF Recommendations, and IOSCO Principles) .

It is advisable that a principled clause could be added to the general provisions establishing the Financial Law is the basic law of the financial sector with priority application. Other financial laws, administrative regulations, and rules should remain consistent with it.

The State Council could be authorized to formulate implementation rules under this law and to coordinate the resolution of any conflicts between it and individual financial sector laws. It would also be worthwhile to introduce a principle of "regulatory consistency", drawing on the standards of international organizations such as the International Monetary Fund, the Financial Stability Board, and the Basel Committee, so as to promote alignment between China's financial regulatory rules and international practice.

A further provision could be added to Chapter IX, "Financial Development and Security", stating that the state shall actively promote the alignment of domestic financial regulatory standards with internationally accepted standards and best practices. When formulating relevant rules and standards, the State Council's financial management departments should study and appropriately incorporate internationally recognized regulatory standards, and steadily advance benchmarking and mutual recognition.

Moreover, the author believes the Draft should also add a dedicated chapter on "cross-border financial regulatory coordination" to address institutional gap. This would cover reciprocal access principles, cross-border regulatory cooperation mechanisms, and graded management of outbound data flows, providing clear legal expectations for institutions "going global."

Furthermore, the law should improve provisions on financial infrastructure by supporting interoperability between CIPS and major international payment and clearing systems, and by encouraging domestic financial infrastructures and their overseas counterparts to establish collateral mutual-recognition mechanisms, thereby providing technical support for the internationalization of Renminbi assets. It should also strengthen cross-border sharing and verification of beneficial ownership information in response to FATF assessment requirements, enhancing the international credibility of China's anti-money laundering regime. In addition, it should clarify the legal status of RMB-denominated assets issued offshore, providing a higher-level legal basis for products such as Panda bonds and offshore central bank bills.

VI. Improving Cross-Border Regulatory Coordination: Drawing on China-US Differences

The core difference between Chinese and U.S. financial regulation lies in their fundamentally different system logic. China follows an administrative, "centralized and unified" model, while the U.S. follows a law-based model of multiple authorities and mutual checks. China places greater emphasis on maintaining financial stability and centralized decision-making, while the U.S. seeks to prevent abuse of regulatory power through decentralization.

This difference is especially visible in cross-border regulation. Through laws such as the Holding Foreign Companies Accountable Act, the U.S. actively shapes cross-border regulatory rules. By contrast, although Article 85 of the Draft establishes a principle of "countering long-arm jurisdiction", it still lacks specifics on the daily coordination of cross-border capital flows, procedures for granting access to on-site inspections by overseas regulators, and approval standards for cross-border data flows.

It is therefore well worth serious consideration to add a dedicated chapter on "cross-border financial regulatory coordination" to the Draft. Such a chapter could include at least the following:

First, a principle of reciprocal market access, under which foreign financial institutions entering the Chinese market would be subject to regulatory treatment equivalent to that applied to Chinese financial institutions in the foreign institutions' home markets.

Second, a cross-border regulatory cooperation mechanism, clearly defining the statutory authority of the People's Bank of China and the State Administration of Foreign Exchange to take the lead in signing regulatory cooperation memoranda with overseas regulatory bodies, and standardizing approval procedures for providing documents and materials abroad.

Third, a graded system for outbound data management, distinguishing among "core," "important," and "general" financial data, with different approval procedures for each category. Such an arrangement would provide financial institutions with clear legal expectations when expanding overseas, avoiding business disruption caused by unclear compliance pathways.

VII. Taking a Long-Term View: Implementation Paths Aligned with International Rules

In the area of international capital flows, moving from "case-by-case approval" to "transparent rules" is a direction worth serious attention.

In the short term, supporting rules could clarify a “whitelist” mechanism for cross-border capital flows, shifting mature channels from approval to filing. In the medium term, revisions to the Foreign Exchange Administration Regulations could replace transaction-by-transaction approval with a dual-pillar framework of "macro-prudential management + micro-level supervision". In the long term, the goal should be capital-account convertibility.

For financial institutions expanding overseas, the broader trend is to move away from "going it alone" and towards “regulatory mutual recognition”. In the short term, the Financial Law could clarify the principle of "reciprocal regulatory mutual recognition", thereby providing a legal basis for launching equivalence negotiations with the European Union, the United Kingdom, Singapore, and others. In the medium term, China could promote bilateral regulatory cooperation memoranda with key Belt and Road partner countries. In the long term, it should actively participate in the formulation of international regulatory standards so that Chinese practice can be incorporated at the rule-making stage.

In anti-money laundering, the internationally accepted path of evolution is from "formal compliance" to a "risk-based" approach. In the short term, the law could clarify the filing, verification, and cross-border sharing of beneficial ownership information, while fully bringing designated non-financial institutions into the anti-money laundering framework. In the medium term, China could formulate Measures for the Administration of Anti-Money Laundering in Virtual Assets. In the long term, it should revise the Anti-Money Laundering Law and establish a differentiated framework for the allocation of compliance resources.

For Renminbi internationalization, the inevitable path is from "policy-driven" to "market-driven". In the short term, the Financial Law could clarify the legal status of offshore RMB-denominated assets. In the medium term, revisions to the Law of the People's Bank of China could formally recognize Renminbi internationalization as a statutory function. In the long term, the aim should be broad capital-account convertibility and the emergence of the Renminbi as the third-largest currency in the SDR basket.

For the internationalization of RMB-denominated assets, an encouraging direction would be to move from a "mainland-led" model to one driven by "offshore interaction". In the short term, the law could explicitly support domestic institutions in setting up RMB clearing centers and custody institutions overseas. In the medium term, China could revise the Securities Law to add a dedicated chapter on the offshore issuance of RMB-denominated securities. In the long term, it could explore an upgraded version of cross-border connectivity mechanisms, enabling continuous trading across multiple time zones.

VIII. Conclusion: The "Financial Law" as the Rule-of-Law Foundation for a "Financial Powerhouse"

The formulation of the "Financial Law" lays the rule-of-law foundation for China's evolution into a "financial powerhouse." The Draft has already made systematic arrangements in areas such as "full-coverage regulation", "risk disposal", and "serving the real economy".

But if it is to become a true "financial constitution" capable of resolving disputes, guiding development, and preventing risks, it still requires more careful institutional "fine-tuning" in key areas such as the boundary of regulatory functions, conflict-of-interest mechanisms, the linkage among legislation, justice, and enforcement, market access for cross-sector business, and alignment with international rules.

From a broader perspective, China's "centralized and unified" model is well suited to building systems quickly and concentrating resources to prevent systemic risk, while the U.S. "multi-agency checks and balances" model places greater weight on preserving market flexibility and maintaining vigilance against public power through long-term institutional contestation.

In drafting the Financial Law, China need not mechanically imitate either model. Instead, on the basis of its own national conditions, it should absorb the reasonable core of internationally accepted rules and organically combine "effective control" with "sufficient flexibility", thereby providing robust legal support for the building of a financial power.

Finally, the author hopes that, during the public comment period, the legislature will fully absorb the practical experience of market participants and translate policy intent and institutional requirements into legal language that is more accurate, concise, and enforceable. That would help make China's financial governance more law-based, professional, and international, and in turn better serve the real economy, contain financial risks, deepen financial reform, and lay a solid institutional foundation for the building of a financial power.

Since the February 28 joint U.S.-Israeli strikes on Tehran, this 54-mile stretch of water has been plunged into high alert. The safety of this route doesn't just sway the energy markets anymore; it holds the fate of a rapidly growing number of Chinese traders deeply invested in the Middle East.

Today's newsletter features a piece from Southern Weekly, a Guangzhou-based newspaper renowned for its investigative reporting, on the 24-day blockade of the Strait of Hormuz, the Chinese seafarers left drifting at sea, and the Chinese exporters forced into paralysis on shore.

The piece below was first published on Southern Weekly's WeChat account on March 23. Please note that the translation below is mine and has not been reviewed.

霍尔木兹海峡“封锁”24日：漂在海上的船员，与被迫停摆的外贸人

24 days into Hormuz closure: Chinese Seafarers adrift, traders at a standstill

Adrift at Sea

In the middle of the night, a white speck streaked across the sky in a long arc towards the horizon. Seconds later, flames erupted on the opposite shore.

Shortly after 1 a.m. local time on March 9, a falling drone struck an oil storage facility at the port of Fujairah in the United Arab Emirates (UAE), setting it on fire. The blast was captured on video by the second officer on watch aboard a Chinese merchant ship, and later posted online by the vessel's captain, Li Yan. At the time, the ship was anchored off Khor Fakkan, outside the Strait of Hormuz, just 10 nautical miles from the explosion.

Li, who works for a shipping company in southeast China's Fujian Province, had set sail from Novorossiysk on Russia's Black Sea coast on February 14, carrying 54,930 tonnes of wheat. The vessel was supposed to pass through the Strait of Hormuz into the Gulf and unload in Iraq on March 5. But on March 3, as it approached Khor Fakkan to refuel and resupply, Li received a message from the shipowner: "Do not enter the Persian Gulf. Wait at anchorage." The assigned anchorage was in the Gulf of Oman, east of the Strait of Hormuz and north of Fujairah, UAE.

In his 16 years at sea, Li Yan has dropped anchor countless times, but he told Southern Weekly this was the most chaotic experience of his career. "There was no GPS signal at the anchorage," he recalled. Dropping anchor blindly in such complicated waters is highly dangerous; snagging an undersea cable can lead to severe consequences, including massive compensation claims and potential legal trouble.

Left with no alternative, Li had his crew continuously scan coastal targets on the radar to calculate their bearings and distance. They had to constantly monitor their spacing from nearby vessels, relying on intermittent BeiDou satellite signals from their cell phones just to confirm their location. It took from 11 p.m. until after 3 a.m. to finally get the ship safely anchored.

Li then waited there for six days. The ship's GPS never returned, and the automatic identification system (AIS) remained down, leaving the crew completely blind to detailed traffic data and the positions of nearby vessels.

"If I can see Chinese characters on a ship, I assume it's Chinese; otherwise, I have no idea," Li said. Aircraft periodically roared overhead, and some crew members reported hearing shelling in the distance.

This bottleneck followed the February 28 launch of major US and Israeli military operations against Iran, which prompted Iran's Islamic Revolutionary Guard Corps to ban all ships from the Strait on March 2. According to The New York Times, at least 16 oil tankers, cargo and other commercial ships have been attacked in the Persian Gulf since the conflict began. Many ships have halted or diverted, and at least hundreds of vessels have been forced to wait outside the Strait.

Between March 1 and 19, only 116 voyages passed through Hormuz, down 95 percent from a year earlier, according to an industry data firm Kpler.

The prolonged wait has left the crew increasingly anxious. Li's primary concern is their freshwater supply. When they first dropped anchor, the vessel had over 130 tonnes of freshwater; that has now dropped to just over 100 tonnes. To conserve it, the crew is using seawater to flush toilets and has shut down the laundry. Because the ship's machinery also requires water, 30 to 40 tonnes must be kept in reserve, leaving only about 80 tonnes available for use. "At two tonnes a day, we can last a month at most," Li noted. "And the longer this drags on, the worse the water quality becomes."

Li reported the looming shortage to the shipowner. However, entering the port is impossible due to the war, and diverting to another port to resupply would burn too much fuel, an expense the owner refuses to cover. For now, the crew's only option is strict water rationing.

Food supplies, meanwhile, are holding steady. "Meals aren't a major issue for the time being," Li said. While fresh vegetables will run out around March 20, the ship has ample reserves of meat, frozen foods, and dry goods, along with long-lasting staples like potatoes, frozen cauliflower, and dried green beans.

On the night of March 10, Li received orders to weigh anchor and steam east to escape the High-Risk Area (HRA). They were instructed to drift in international waters off southern Pakistan and await further instructions. "Staying at anchorage means paying port fees, and the waters we were in are considered dangerous," Li explained. "With still no word on our discharge port, leaving the HRA to drift outside it was the safer option."

By March 21, Li still had no timeline for when the ship could berth and unload. Every day, he posted a short video online, always with the same caption: "Waiting."

Missing Clients and Soaring Freight Rates

"There are frictions in Iran every now and then, but nothing really comes of it over these years. Internet outages usually resolve in a week or two," said Tina, a 12-year veteran of the foreign trade industry. It wasn't until reports of the Iranian Supreme Leader's death that she realized the severity of the situation. "This is the biggest hurdle I've ever faced."

Tina runs a paints and coatings factory in east China's Anhui Province, exporting about 80 percent of her products to the Middle East. She typically communicates with clients via WhatsApp. For nine days after the war broke out, the "last seen" status of several Iranian customers remained frozen on February 28. Beyond the fate of her orders, her primary concern was whether her clients were safe.

On March 9, an Iranian client finally came online. Tina was so overwhelmed she nearly cried. He explained that he was about 30 kilometers outside central Tehran and had avoided the bombings so far, but admitted he "didn't know what would happen next."

In the first 10 days of February, Tina had shipped over 50 containers to the Middle East, five times her usual volume, hoping to get ahead of the Lunar New Year holiday and prevent inventory disruptions for her buyers.

Under normal shipping schedules, the cargo would have reached the UAE by early March. Instead, more than 30 containers are now in limbo. Some are stranded at temporary transit ports outside the Strait, while others are simply drifting at sea.

Days after the conflict broke out, Tina's freight forwarder relayed notices from the shipping lines: cargo stranded at sea would incur war-risk surcharges of USD 2,000 for a small container and USD 3,000 for a large one.

Tina calculated that these surcharges alone would add over 600,000 yuan (about $85,714) to her costs, even before factoring in additional expenses for overland transport.

Because most of her contracts are under CIF (Cost, Insurance, and Freight) terms, meaning the seller covers delivery and insurance to the destination port, this financial burden falls squarely on her. She asked her clients to split the increase, but even long-term customers declined. "Nobody wants to shoulder it," she said.

Freight forwarders are also scrambling. Facing volatile port conditions and fluctuating rates, they are rushing to find alternatives to the Strait of Hormuz for their clients.

Ma Wei, manager of the Guangzhou branch of Shenzhen A&E Container Transportation Co., Ltd, noted that his company primarily serves India, Pakistan, the Middle East, and the Red Sea. "Cargo bound for the Persian Gulf can't berth normally right now," he explained. "The main workaround is to unload at ports outside the Strait, like Khor Fakkan in the UAE and Sohar in Oman, and then wait for shipping lines to arrange inland transport."

Ma added that his company currently has over 2,000 containers drifting at sea. While shipping lines are handling the crisis differently, some have warned that cargo arriving at these transit ports after March 2 will face steep war surcharges ranging from USD 1,500 to 6,000 per container.

Guangzhou Anshida Supply Chain Co., Ltd (Ontask Express) has been operating as a freight forwarder to the Middle East for over a decade, with 90 percent of its business concentrated in Saudi Arabia and the UAE. According to sales director Kevin, the company shipped over 700 containers of household goods, building materials, and other products in January and February. Roughly 200 of those have yet to arrive. "The cargo is worth nearly 100 million yuan," he noted, adding that the delays are expected to generate over 2 million yuan in additional costs.

Faced with soaring expenses and an unpredictable conflict, some traders have paused shipments to wait things out. JCtrans, a major B2B international logistics platform with 770,000 registered users across 181 countries, reported a steep decline in activity. Since March, their big-data tracking has shown a 60 percent drop in global logistics demand to the Middle East compared to the same period in January.

While stranded cargo is a pressing issue, medical device trader Dong Man is far more concerned about the rest of the year. "Our Middle Eastern clients have already confirmed they won't attend the Canton Fair in April or the China International Medical Equipment Fair in Shanghai," she said. Orders generated from these exhibitions typically account for 30 percent of her annual sales. "Even after initial discussions at the fairs, clients still need to visit the factory and inspect the products in person. Online communication simply can't replace that."

Middle East Trade: Opportunities and Risks

Many Chinese exporters have turned to the Middle East in search of untapped potential.

A decade ago, Tina focused primarily on North America. However, recent U.S. and Canadian tariffs on Chinese goods wiped out her price advantage, forcing her to pivot to new markets. She found a wealth of opportunity in the Middle East. Because the region's economies have long relied on oil as their primary economic pillar, their industrial sectors remain relatively undiversified. As a result, they depend heavily on imports for construction materials, electronics, and daily consumer goods.

Tina's company specializes in paints and coatings, a category of engineering materials she describes as an "essential necessity." Even though these products are made from petroleum derivatives and the Middle East is rich in crude oil, the region lacks sufficient processing capacity and faces high labor costs. Consequently, they still need to import these goods in massive volumes.

At the same time, recent technological advances have elevated the quality of Chinese-manufactured goods, which are now often more highly regarded than traditional "Made in Europe" products. Tina considers herself fortunate that Middle Eastern demand has steadily grown over the past decade, "to the point where it can fully replace, and even exceed, the demand we used to see from the U.S. and Canada."

Tina's journey is common among Chinese traders. Over the past three to five years in particular, she has noticed a distinct "gold rush" mentality toward the Middle East. This shift is most evident in the growing number of Chinese travelers at UAE airports and the ubiquitous presence of Chinese contractors on Saudi construction sites.

According to Kevin, Saudi Arabia's "Vision 2030", unveiled in 2016, together with the rise of Middle Eastern e-commerce after 2021, has fueled rapid growth in consumer demand across the region.

"Our business has grown by over 30 percent annually for the past five years," he noted. "While many perceive the Middle East as volatile, the GDPs of Saudi Arabia and the UAE actually rank quite high globally. Rising consumer purchasing power and two decades of general social stability have provided a secure environment for doing business there."

The data backs this up. Consider Saudi Arabia, China's largest Middle Eastern trading partner: in 2025, bilateral goods trade reached USD 108.16 billion, with Chinese exports accounting for USD 53.42 billion. Compared to 2019, when total trade was USD 78.04 billion and exports were USD 23.86 billion, the value of Chinese exports to Saudi Arabia has more than doubled in just six years.

Kevin also emphasized the growing importance of the Strait of Hormuz for trade. "With rising demand and soaring post-pandemic air freight costs, many clients have shifted from air to sea," he explained. "Sea freight is roughly 70 to 80 percent cheaper. Although it takes 20 to 25 days longer, clients compensate by advancing their production schedules and carrying larger inventories."

Meanwhile, Tina constantly refreshes her news feed, terrified of missing any updates on the Strait. "My emotions have been a rollercoaster lately," she admitted, adding that she sometimes jolts awake in the middle of the night. "With everything still up in the air, I simply can't settle down or focus."

Although 20 percent of Tina's business is still in Asia and Russia, the unresolved Middle East cargo crisis has left her too distracted to even quote prices for other clients. "This one issue overshadows everything else right now," she said. "All I can do is wait. There's no point in getting anxious; a geopolitical crisis like this is completely out of any single individual's hands."

(Note: Li Yan and Dong Man are pseudonyms.)

On January 14, the State Administration for Market Regulation (SAMR), China's top market regulator, launched a probe into Trip.com over alleged monopolistic practices involving abuse of market dominance.

And it was in late March that the pace became strikingly concentrated.

• March 23: Regulators summoned and issued administrative guidance to 12 major internet platforms, including Ctrip, JD.com, Taobao Flash Shopping, Meituan, and Douyin, targeting hyper-competitive behaviors that allegedly harm both merchants and consumers.

• March 24: Officials at a national symposium on price supervision and anti-unfair competition signaled that regulators would continue to step up price oversight and intensify the clean-up of "involutionary" competition.

• March 25: The state-run Economic Daily published an unusually blunt commentary titled "It is time to end the food delivery price war 外卖大战该结束了." The piece directly linked the cash-burning subsidy wars of food delivery platforms to China's current sluggish CPI, essentially blaming these predatory price wars for dragging down inflation.

• March 26: SAMR held its first fair competition symposium of the year with corporate representatives, urging Chinese firms to standardize their competitive behavior and "build a healthy competition ecosystem" as they expand overseas.

For many China watchers, this rapid-fire regulatory wave triggers immediate flashbacks to 2021. Is China entering another round of heavy-handed, sweeping crackdown cycle?

Not quite. But something important is shifting. Unlike the storm-like rectification campaign of 2021, the current push against "involution" looks more measured, systemic, and structural. That caution reflects several factors at once.

Part of it stems from a leadership's reassessment of how the last cycle of regulation was handled. In 2021, ministries largely moved on their own track. Antitrust pressure on platform companies came alongside a broader wave of contractionary policies: the "three red lines" in property, the crackdown on private tutoring, and production curbs. The cumulative effect was severe, especially on private-sector confidence and expectations.

That experience appears to have forced a rethink. By 2022, policymakers were already warning against the "fallacy of composition" — the risk that individually rational moves by different departments could, in aggregate, produce macroeconomic damage. From there emerged a stronger emphasis on field research, caution in rolling out tightening measures, and consistency checks on the overall stance of macro policy.

The shift also reflects harder economic constraints. Compared with 2021, growth and expectations today remain far less secure. The central leadership's repeated call to stabilize employment, enterprises, markets, and expectations places real limits on how far regulators can go. Platform companies now serve not only as corporate actors, but also as reservoirs of employment and key consumption channels. A return to the old, blunt style of regulation would carry much higher political and economic risks.

Against this backdrop, an essay published in January this year by Liu Shangxi stands out as especially relevant.

Prof. Liu is the vice-chairman of the Chinese Society of Macroeconomics, and former president of the Chinese Academy of Fiscal Sciences.

In "A Panoramic Perspective and Governance Logic of 'Involutionary' Competition in the Manufacturing Sector", Liu argues that the root of China's involutionary manufacturing competition lies not simply in market saturation, but in the operating logic of local government.

Driven by the imperative to secure tax revenue and political performance, local authorities compete to attract the same kinds of investment at almost any cost. The result is a classic fallacy of composition: locally rational behavior producing nationally excessive capacity.

Liu is also explicit in criticizing China's long-standing mercantilist instincts and export-led inertia. Swapping real resources for larger foreign exchange, while exporting ever more cheaply, is not a sustainable model, he argues.

In his view, Beijing's eventual answer to this impasse is clear: force a shift from scale expansion to efficiency and innovation, and accelerate the export not just of cheap goods, but of industrial and financial capital.

Below is the English translation of Dr. Liu's piece, which has not been reviewed by him.

A Panoramic Perspective and Governance Logic of "Involutionary" Competition in the Manufacturing Sector

制造业“内卷式”竞争的全景透视与治理逻辑

Author: Liu Shangxi

(Ph.D. in Economics, Doctoral Supervisor, Researcher at the Chinese Academy of Fiscal Sciences, Member of the 13th and 14th National Committee of the Chinese People’s Political Consultative Conference)

Abstract: The core characteristics of current manufacturing "involution" manifest in two dimensions: horizontal "price involution" and vertical "supply chain involution." Its root cause lies in the systemic misalignment of macroeconomic structure, industrial organization, and the international division of labor. Specifically, this can be deconstructed into three mechanisms: the convergence of local government behaviors, insufficient industrial concentration, and a lack of internationalization within supply chains. Currently, the central government has integrated "anti-involution" into the core agenda of high-quality development, forming a multi-level governance framework that includes the upgrading of national legislation and regulation, industry self-discipline and structural optimization, local innovative service practices, and globalized layout. Moving forward, for the manufacturing sector to achieve innovation-driven development, it must balance the coupling of policy intervention and market regulation, as well as the synergy between domestic governance and international expansion. Moreover, to enhance the international competitiveness of China's manufacturing sector, in addition to the development of the supply chain itself, it is imperative to promote the export of financial capital to uplift China's position in the global value chain.

I. Introduction

Currently, the problem of "involutionary" competition in the manufacturing sector has extended far beyond the realm of fiscal and tax policy. The decision-making logic behind local governments' investment attraction has fundamentally changed. In the past, introducing projects was about expanding the tax base; now, some localities pursue construction projects at almost any cost. Some not only refund tax revenues and land transfer fees through "collect first, refund later" schemes, but also promise massive subsidies, creating substantial future expenditure obligations. This type of debt snowballs, and some localities have even begun to default.

For a period following the implementation of the tax-sharing system, local governments, acting as independent interest entities, had to continuously develop the economy. Only through continuous growth could they secure more financial resources and tax revenues to spend, with transfer payments serving as a supplement to local financial capacity. However, now that the scale of transfer payments has expanded to 10 trillion RMB, an increasing number of localities have become highly dependent on them, thereby altering their behavioral logic.

China's manufacturing sector is currently facing the severe challenge of "involutionary" competition, a phenomenon that has drawn high-level attention from the central government and has been incorporated into the scope of national strategic governance. The July 2024 Politburo meeting explicitly proposed "preventing 'involutionary' vicious competition" for the first time, a task reiterated in the 2025 Government Work Report. Manufacturing "involution" not only depletes corporate innovation resources and reduces industrial efficiency, but is also highly likely to trigger a public risk where "bad money drives out good" (Gresham's Law).

This article aims to understand the internal logic of "involutionary" competition primarily through industrial policy theory, behavioral response mode theory, and the latest empirical data. In reality, viewed through the lens of the relationship between the government and the market, while "involutionary" competition manifests in the market, its root cause lies in skewed incentive mechanisms. This is the resulting byproduct of the continuous adjustment and evolution of the government-market relationship under China's socialist market economy.

II. Definition and Multi-dimensional Manifestations of "Involution": From Concept to Reality

A. Definition of "Involution"

In the context of manufacturing, "involution" specifically refers to a zero-sum game where enterprises fight for a limited market through homogenized competition and inefficient resource inputs, trapping the manufacturing sector in a vicious cycle of "growth without development."

"Development" and "growth" are conceptually distinct: when GDP grows, but industrial competitiveness, social welfare levels, and residents' employment, income, and consumption levels do not symmetrically improve, development lags behind growth. Such growth is unsustainable. For instance, price cuts in automobiles may appear beneficial to consumers, but if they are caused by "involution" rather than an increase in labor productivity, they are harmful to the auto industry in both the short and long term.

B. Core Characteristics of "Involution"

The core characteristics of "involution" manifest in two dimensions.

The first is horizontal "price involution." Price involution is essentially driven by enterprises' lack of differentiating capabilities based on core technologies. As technology diffuses faster and with lower barriers to entry, companies lacking core technological differentiation can only capture market share through "price wars." The typical manifestations are a continuous decline in corporate profit margins coupled with rising sales costs.

For example, from 2021 to 2024, the manufacturing sales profit margin dropped from 13.24% to 11.87%, a record low; the operating profit margin of the auto manufacturing sector fell from 6%-7% (2018-2021) to 4.2% in 2024, with the average price of new energy vehicles dropping by 6.5% year-on-year. Solar photovoltaic (PV) module prices plummeted by 70% in two years; despite the industry adding 200GW of new installations, it suffered across-the-board losses.

The second is vertical "supply chain involution." Dominant enterprises in the industrial chain leverage their monopolistic momentum to squeeze the profit margins of upstream and downstream partners, resulting in a dynamic of "compressing costs, compressing schedules, and compressing services."

Typical examples include the cement industry, where the profit margin fell to 43.3% in 2024, nearly halving from its 2020 peak; spot glass prices fell from 2,488 RMB/tonne in 2021 to 1,463 RMB/tonne, a drop of nearly 50%; the biopharmaceutical industry also faced capacity constraints due to homogenized R&D (such as the crowding into PD-1 targets). Vertical supply chain involution means that enterprises with market advantage in the chain (i.e., chain leaders) squeeze upstream and downstream profits by shifting costs.

In short, the consequences of "involution" have transcended the economic realm, touching upon sustainable economic development and social employment issues. According to behavioral response mode theory, enterprises exhibit a "survival first" behavioral preference in resource-scarce environments: under "involution," they reduce R&D intensity and pivot toward marketing competition.

For instance, a leading EV manufacturer saw its sales expenses rise from 9% to 14%. This type of "involutionary" competition ultimately leads to a decline in total factor productivity (TFP). Historically, the market share of Chinese motorcycles in Vietnam plummeted from 90% in 2002 to 1% in 2006, serving as stark evidence of how involution triggers quality deterioration and damages international reputation.

III. Deep-seated Generative Mechanisms: Three-Dimensional Structural Contradictions

The root of manufacturing "involution" lies in the systemic misalignment of the macroeconomic structure, industrial organizational formats, and the international division of labor, which can be broken down into three specific mechanisms.

A. Convergence of Local Government Behaviors: Policy Catalyzing Overcapacity

Local governments resonate with the central government; thus, when responding to central decision-making deployments, they are prone to forming "homogenized" behavioral patterns, driving redundant construction through land concessions and tax breaks.

For instance, to attract a leading auto company, a city in a central province offered "move-in ready" incentives—free land, pre-built factories, and even personalized services for worker recruitment and training. As long as the company deployed personnel to initiate production, promised to build a set number of production lines within a specific timeframe, and met the targets, it could receive up to 5 billion RMB (around USD 714 million) in subsidies. Faced with such lucrative terms, it is naturally difficult for companies to refuse.

The photovoltaic industry tells a similar story. Stimulated by local subsidies, the total planned capacity across provinces currently exceeds total global demand. Meanwhile, from 2023 to 2024, new energy vehicle industrial parks were launched simultaneously in 12 provinces, with a planned capacity of 20 million vehicles annually—again, far exceeding domestic demand.

This converged behavior, on one hand, aligns with the "mimetic mechanism" in institutional isomorphism theory, where local governments replicate the successful experiences of other regions to avoid policy risks, leading to regional industrial structure convergence and overcapacity.

On the other hand, it is driven by coercive mechanisms stemming from top-down supervision. In the process of developing the economy, local governments often need to strike a balance between "flexible innovation" and "strict alignment with central directives". Emphasizing localization might lead to accusations of "bending the rules or discounting implementation"; conversely, mechanical, copy-and-paste execution often detaches from reality, becoming "formally compliant but practically unreasonable."

This produces a fallacy of composition—viewed individually, local practices are irreproachable, but the aggregated outcome is unsatisfactory and often contradicts the overall goal.

B. Insufficient Industrial Concentration: The Structural Basis for Inefficient Competition

China has a massive number of manufacturing enterprises, but industrial concentration is low, weakening the industry's capacity for synergy. For example, the market share of the top four biopharmaceutical companies is 18.5%, far below the international average of 40%; the top ten cement companies account for about 57% of capacity, whereas in developed countries, this generally exceeds 80%.

A market with low concentration naturally breeds a "prisoner's dilemma," where enterprises are forced into "price wars" just to maintain market share. Cases where local governments facilitated industry coordination to "reduce production and stabilize prices," successfully pushing regional prices to the forefront nationally, confirm that moderate concentration improves competitive efficiency.

C. Insufficient Supply Chain Internationalization: Weak Outward-Looking Chain Leaders

There are many "inward-looking chain leaders" but few "outward-looking chain leaders" in Chinese manufacturing sector. And its globalization layout lags behind the capacity scale, exacerbating domestic zero-sum competition. Specifically, the average share of overseas revenue for manufacturing enterprises is under 20%, compared to over 50% for German and Japanese companies. Chinese companies' overseas revenue primarily comes from selling goods, while the share of revenue from technical services, patent licensing, and overseas production bases remains low. In the Southeast Asian EV market, Chinese brands account for over 90% of sales, but the local production fulfillment rate is only 30%.

Furthermore, the lack of international capacity synergy leads to "export-oriented inertia," where companies rely on low prices to expand exports—trading price for volume is already quite obvious.

According to related research estimates, the average price reduction for export products has reached as much as 30%, triggering trade frictions. In contrast, "supply chain going global" cases, like BYD's Thailand factory or SAIC Motor's Indonesia base, reduce reliance on domestic capacity through localized production, effectively circumventing "involution." This kind of international capacity coordination will be a critical direction for the future.

Why is it so difficult to reverse export-oriented inertia? Why is the path dependence on external circulation so strong? An underlying mercantilist mindset is a major root cause. Historically, mercantilism was characterized by "government intervention + pursuit of trade surpluses." In the era of metallic currency, a surplus meant the inflow of gold and silver. Today, we still place high value on surpluses, believing that a surplus means we have "profited." However, in the era of sovereign fiat money, a surplus often means exchanging real resources for numbers in foreign currency on a ledger; the true "costs" are frequently concealed.

Moreover, pursuing surpluses is imbued with the significance of stabilizing economic growth. Export surpluses are one of the "troika" growth drivers; the larger the surplus, the more favorable it is for supporting economic growth, and the more likely it is to achieve expected growth targets. Consequently, to achieve target growth rates, various localities and departments reflexively continue to expand exports and enlarge surpluses. Under this mercantilist mentality, once the supply chain truly moves toward international layout, the surplus will subsequently decline, weakening its support for economic growth. Relinquishing this established surplus "dividend" inevitably brings hesitation and reluctance.

Internationally, mercantilism is also widespread. Many countries believe trade deficits equate to "taking a loss," making it an excuse and bargaining chip in international political games. In modern national economic accounting systems, a deficit is unfavorable for economic growth, and countries pursuing growth targets generally prefer surpluses and abhor deficits. This means that, globally, "involution" is also occurring. Especially in manufacturing, global involution is intensifying, government intervention is strengthening, global growth is slowing, and global development is declining even faster.

IV. Anti-Involution Policy System: National Governance and Local Practice

The central government has integrated "anti-involution" into the core agenda of high-quality development, formulating a multi-level governance framework. Existing "anti-involution" policy tools include the revision of the Price Law and anti-dumping determinations at the national legislative level; capacity coordination and payment conventions at the industry self-discipline level; supply-demand platforms and regulatory integration at the local service innovation level; as well as supply chain overseas expansion and international standard co-creation at the globalization layout level. Most notably, for China to resolve current involution, it must go global, seek international capacity cooperation, transfer excess capacity, and expand demand space.

A. National Legislation and Regulatory Upgrades

1. Revision of the Price Law: The July 2025 Draft Amendment to the Pricing Law of the People's Republic of China added "standards for identifying low-price dumping," explicitly prohibiting pricing below cost aimed at squeezing out competitors. This means clarifying whether the motive is to eliminate rivals. Without this judgment criteria, companies pricing below cost or even negatively in special circumstances to mitigate their own risks, which is actually risk-clearing, not dumping, might be misidentified.

2. Dynamic Capacity Regulation: The Ministry of Industry and Information Technology (MIIT) implemented "capacity utilization warning line" management for ten major industries, including steel and non-ferrous metals, mandating production cuts when utilization falls below 75%. While different tools can be applied to different industries, high vigilance is required regarding the risks inherent in administrative measures, particularly their dampening effect on market resource allocation and the survival of the fittest.

3. Optimization of Centralized Procurement Rules: For instance, the National Healthcare Security Administration abolished the "lowest bid wins" rule in its 11th batch of centralized procurement, requiring companies to commit to quoting no lower than cost and to explain the rationale.

B. Industry Self-Discipline and Structural Optimization

1. Led by Leading Enterprises: For example, nearly 20 auto companies signed the Initiative on Standardizing Account Payments for Automotive OEMs and Suppliers, unifying the supply chain payment period to 60 days to alleviate cash flow pressure on small and medium-sized suppliers.

2. Establishing Capacity Synergy Mechanisms: Examples include the PV glass industry collectively cutting production by 30%, and the China Cement Association issuing Opinions on Further Promoting High-Quality Development by Advancing "Anti-Involution" and "Stabilizing Growth" in the Cement Industry. Industry self-discipline issues must be placed on the agenda as early as possible; otherwise, risks to healthy market development will mount. Furthermore, there is an urgent need to promote supply chain integration. For instance, the Wuhu municipal government integrated with the "Provincial Supply and Demand Platform" to facilitate direct supply cooperation for display modules between Tianma and Chery, reducing procurement costs by 15%.

C. Local Innovative Service Practices

Localities are making efforts to respond to the central government's call against "involution." On one hand, they are strengthening government-enterprise synergy. For example, the Shenyang municipal government safeguarded Jinzhong New Materials to implement "production reduction and price stabilization," pushing Liaoning Province's cement prices to the top ranks nationally. On the other hand, they are advancing regulatory reform. Wuhu, for example, rolled out a "comprehensive single-inspection" mechanism for enterprises, integrating multi-departmental inspections and reducing enterprise inspection frequency by 60%.

V. Deep Perspective of Governance Logic: Dialectics of Theory and Reality

A. Systemic Governance under the S-C-P Framework

We can utilize the classic industrial organization model to reveal the formation and resolution pathways of "involution."

Under the S-C-P (Structure-Conduct-Performance) framework: in terms of Structure, shrinking demand (PPI declining for three consecutive years) and oversupply (industrial capacity utilization at 75.0%) lead to market misalignment; in terms of Conduct, enterprises fall into "price involution" (deteriorating gross margin-to-sales expense ratios) and "supply chain involution" (chain leaders suppressing prices); in terms of Performance, it is reflected in declining total factor productivity and the crowding out of innovation inputs.

Current policy focal points aim exactly at reshaping market structure, eliminating regional barriers by building a unified national market, and constructing international capacity cooperation networks via platforms like the China International Supply Chain Expo (CISCE).

B. The Dialectic Between Short-term Pain and Long-term Development

This adjustment process will inevitably be accompanied by short-term pain. Whether adjusting via administrative means or guiding corporate self-correction, reducing capacity inevitably entails significant "adjustment costs," including job losses, increased sunk costs, and asset devaluation.

The current task is to guide benchmark enterprises to shift toward quality and social responsibility evaluation. Society, the industry, and enterprises themselves must engage in evaluation and extend this to other firms, accelerating the paradigm shift from "price competition" to "value competition" to couple growth with development.

C. Institutional Design of a Unified National Market

Breaking "involution" requires institutional innovation. The most crucial aspect is accelerating central-local relations reform, restructuring the incentive mechanisms of the government (including central incentives for localities, and government incentives for the market and society).

Central-local relations are the core of institutional innovation. This involves not only central-local fiscal relations but also harmonizing unified national deployment with local customization. It requires integrating national strategy with differentiated local behavioral responses to achieve incentive compatibility.

Therefore, a "one-size-fits-all" approach nationwide is unworkable, as it prevents local adaptation; conversely, total laissez-faire is equally dangerous, as it risks the fallacy of composition. We must promote regulatory reform, factor mobility, and standardized rules. Ultimately, the core issue of reform is central-local relations, which is the pillar of national governance. Unsmoothed central-local relations lead to severe overreach or absence of action by both central and local governments, which in turn twists the relationship between the government and the market.

VI. Conclusion: Moving Towards a New Ecology of Innovation-Driven Development

The essence of manufacturing "involution" is the growing pain during the transition from "creative destruction" to "destructive creation." It reflects that during the rapid expansion of manufacturing, the "destructive" elements have overall outweighed the "creative" ones. The original expansionary momentum has been "destroyed", sunk costs and marketing costs have skyrocketed, yet differentiated core technologies and business models have not been "established". Competing solely on price leads to rapidly declining operating profits.

Innovation always causes "destruction" during growth, such as business bankruptcies, rising unemployment, and falling incomes. But as long as the "creativity" outweighs the "destruction", such as the proliferation of startups, new jobs, and rising incomes in new sectors, it can offset the social costs and public risks brought by the destruction, gradually forming a new development ecology and enhancing developmental vitality.

Current policy deployments advance on three tracks: "legislative constraints — industry self-discipline — globalized layout." Their underlying logic is to reconstruct the fundamental logic of manufacturing development, shifting from a scale-expansion orientation to an innovation- and efficiency-driven one. Governing "involution" requires balancing three aspects:

First, the coupling of policy intervention and market regulation. We must avoid the "administrative reduction of capacity" from causing new distortions and risks. Anti-involution efforts should encourage mergers and acquisitions through market-oriented and law-based methods. Let the market's mechanism of survival of the fittest determine capacity levels; the government should focus on improving incentive mechanisms and the rule of law.

Second, the synergy of domestic governance and international expansion. The concentration of China's industries is relatively low, and the international competitiveness of domestic leading enterprises is limited. In response, capacity cooperation under the "Belt and Road" initiative should serve as a breakthrough point on the demand side. Industrial policy cannot be confined to our domestic "backyard" but must possess a global vision and achieve internationalization.

Moreover, industrial policy must pivot toward production and supply chain policy, looking globally to build global corporations. Industrial policy should also encompass the service sector, particularly modern finance, intermediary services (accounting, legal, consulting), commercial services, as well as technology and information services. Various digital platforms under the megatrend of the digital revolution must become a focal point of production and supply chain policy.

Third, re-examining the relationship between monopoly and competition. Monopoly and competition will move from opposition to integration, forming "monopolistic competition." The true normality of the future will not be the perfect competition of early industrialization, but monopolistic competition.

Currently, the mainstream understanding of anti-unfair competition and anti-monopoly remains trapped in the framework of early industrialization. Faced with phenomena of increasing industrial concentration, there is a reflexive tendency to suppress it, which stifles market-driven industrial M&A. This is particularly evident in the anti-monopoly crackdowns on platform enterprises. The development of the digital economy brings myriad new situations and phenomena, such as utilizing market "dominant position" to "illegally" acquire data, infringement, unfair competition, and price discrimination, all of which require theoretical redefinition.

If we directly apply the criteria for monopoly judgments from early industrialization without considering the new logic and rules of the digital economy, it will inadvertently severely suppress the development of the digital economy and platform enterprises.

The future competitiveness of the manufacturing sector depends on the market structure's capacity for self-adaptation. Domestically, it is necessary to build an industrial ecology characterized by "differentiated competition—moderate concentration—innovation-driven"; externally, it must propel the leap from "product export" to "industrial capital export" and "financial capital export."

Currently, globally speaking, China's economy is still in the preliminary stage of commodity export. Industrial capital export (such as outward foreign direct investment and setting up factories abroad) has just begun, while financial capital export has not yet been placed on the agenda. This heightens the risks associated with industrial capital export (outbound investment).

In great power competition, finance is the true lifeblood. Being choked off technologically is short-term pain; only when facing a state of war, where the market economy shifts to a wartime economy, will international production and supply chains evolve into the ultimate risk and touch upon national security. The strategic risk focal point of great power games lies in finance, not technology.

China is a major manufacturing, economic, and trading power, yet it remains weak in distribution within the global value chain. Not only has it long hovered at the mid-to-low end of the value chain, but its "value compensation" is insufficient. While supplying the international community with massive quantities of high-quality, inexpensive goods, it has effectively provided immense hidden welfare subsidies to the world.

In the past, this was viewed as a "competitive advantage." In reality, China has mostly competed on scale in the physical realm, but its returns in the value distribution stage do not match the physical scale. Currently, China's financial competitiveness does not match its goods export competitiveness; its finance sector is large but not strong, lacking true discourse power and influence in the international financial arena.

The next breakthrough requires not only accelerating the export of industrial capital but, more importantly, ensuring that the export of financial capital keeps pace, thereby achieving a substantive elevation of China's status in the global value chain. This is what China should aim for, and what must be considered for the global layout of industrial chains. Without the escort of financial capital, the risks faced by the export of industrial capital will be magnified exponentially.

In conclusion, "anti-involution" is not merely a domestic manufacturing issue. It is also a strategic issue regarding how the entire industrial chain and the financial sector accelerate their global layout.

The essay's core argument is that all three parties, the U.S., Israel, and Iran, have misjudged the war's trajectory. It treats the conflict as a war of misjudgement that is drifting towards attrition, shaped less by battlefield tactics than by political endurance, alliance frictions, energy chokepoints, and the failure of regime-change assumptions.

Key takeaways include:

1. The "Triple Misjudgement" Framework: Dr. Lu notes that the U.S., Israel, and Iran are trapped in a protracted war of attrition due to strategic misjudgments on all sides. In analyzing the U.S. position, he highlights a severe strategic overextension: he assesses that American forces entered the conflict logistically under-prepared (citing figures like 50,000 regional troops and only 7–10 days of high-intensity munitions) and hampered by contradictory political objectives across Washington's agencies.

2. The Resilience of a "Civilizational State": Dr. Lu contrasts Iran with the "artificial states" of the Middle East (whose borders were largely drawn by the Sykes-Picot Agreement). He argues that Iran's deep-rooted identity as a "civilizational state" naturally triggers intense national cohesion when faced with foreign attacks. From his perspective, Western assumptions that external military pressure would spark an internal opposition uprising fundamentally misread this inherent historical and demographic resilience.

3. Modeling Extreme Energy Shocks via the Strait of Hormuz: Dr. Lu identifies the Strait of Hormuz as the ultimate center of gravity in this conflict. He models a viable scenario where the Strait remains blockaded for three to six months, effectively weaponizing inflation against the West. By noting that Brent crude could plausibly shatter the $150 to $200 per barrel mark under these conditions, he outlines a stark, worst-case scenario of how geopolitical chokepoints could dictate the outcome of modern asymmetric warfare.

4. U.S. Domestic Politics as the Ultimate "Exit Mechanism": The analysis concludes that the war is unlikely to end via a decisive military victory. Instead, Dr. Lu argues it will conclude only when the economic pain becomes politically unbearable for the U.S.. He links the battlefield timeline to U.S. electoral cycles, projecting that if extreme oil prices persist for over three months, it could inflict lethal damage on the incumbent administration's midterm election prospects. Thus, Washington's political tolerance for economic blowback will ultimately serve as the war's exit mechanism.

Dr. Lu has kindly authorized your host to translate the piece, please find the full English version below.

The U.S., Israel, and Iran have all misjudged the trajectory of the war

其实，美国、以色列和伊朗都误判了这场战争的走向！

The conflict between the U.S., Israel, and Iran has entered its fourth week, spilling over into at least 12 countries and sending economic and political shockwaves across the globe. To date, none of the belligerents have achieved their strategic objectives, yet all claim they can outlast their opponents.

Although the conflict is less than a month old—and compared to the "tug-of-war," "war of attrition," and "protracted war" seen in the Russia-Ukraine conflict, it seems to have just begun—both sides appear to have miscalculated each other's reactions. This has led to continuous escalation with no clear way out in the foreseeable future.

If the conflict devolves into a protracted war of attrition, Russia's passive strategic position will significantly improve. Through soaring oil and gas prices and rapidly increasing export volumes, Russia's petroleum revenues will rise substantially, granting it greater strategic initiative on the Ukrainian battlefield.

Meanwhile, Western economies, Gulf states, and major Asian energy importers like China, India, Japan, and South Korea are already feeling the pain caused by the war's escalation and the blockade of the Strait of Hormuz. In fact, Iran blocked the Strait at the very onset of the war, disrupting approximately one-third of the world's crude oil and one-quarter of its LNG shipments. Brent crude futures for May delivery have remained above $100 over the past week, while Dubai and Oman crude—benchmarks for the Asian market—have soared to an exorbitant $150 per barrel.

The person feeling most discouraged right now is likely Donald Trump. He originally envisioned that the February 28 "decapitation strike" against the Iranian leadership—including the targeted elimination of Supreme Leader Ali Khamenei—would trigger the collapse of the Iranian regime. He hoped to replicate the "Venezuela Model" (the precise capture of Maduro) and experience the feeling of "winning big" once again in Iran.

However, this vision has yet to materialize. Khamenei's hardline son, Mojtaba Khamenei, has taken the reins and vowed revenge. To date, no domestic rebellion challenging the regime has emerged, and the "internal-external coordination" by the Iranian opposition that the West had hoped for has failed to appear.

Despite suffering massive airstrikes, Iran has retained its capability to launch ballistic missiles and drones at U.S. military bases across the Middle East, Israel, and crucially, major cities in U.S. partner nations in the Gulf.

It is safe to say that all three parties—the U.S., Israel, and Iran—have made severe miscalculations regarding this war. Instead of concluding swiftly as all sides desired, the war has descended into a more complex stalemate in its fourth week, bringing far greater global shocks than anticipated.

For the United States, it underestimated Iran's resilience and overestimated its own ability to control events.

First, Trump firmly believed he could win this war quickly and at a low cost, akin to previous military interventions aimed at regime change through a swift "blitz." Furthermore, U.S. pre-war preparation was glaringly inadequate. With only about 50,000 troops deployed in the Middle East and reserves of high-intensity munitions sufficient for only 7–10 days, the U.S. was entirely unprepared for a protracted war.

Second, Trump severely underestimated the survivability and willpower of the Iranian regime. Despite the successful "decapitation" strike early in the war, Iran did not collapse. Instead, it rapidly activated a "mosaic defense," decentralizing command and launching a fiercely unexpected counterattack.

Moreover, the Iranian public did not stage the anticipated "uprising." Unlike many artificially created states in the Middle East (whose modern borders were largely drawn in secret by British and French diplomats Sykes and Picot), Iran is a "civilizational state." When faced with foreign invasion, Iranian national identity and pride are naturally awakened. With Shia Muslims comprising roughly 90% of the population, their sense of identity and cohesion is extraordinarily strong.

Third, Trump's political objectives in this war have been muddled. Washington has oscillated between "regime change" and "merely degrading military capabilities," with contradictory statements emerging from the White House, the State Department, and the Pentagon. "Besides Trump, no one in the White House right now knows exactly what Trump is thinking," commented an expert from a Washington think tank. Trump completely failed to anticipate that Iran would directly blockade the Strait of Hormuz, disrupting roughly 35% of global oil shipments, triggering a global energy crisis and inflation, and ultimately backfiring on the U.S. economy and domestic politics.

For Israel, it overestimated the strategic window and underestimated the limits of its ally's tolerance.

First, Israel assumed that the collapse of the "Axis of Resistance" and Russia being bogged down in Ukraine meant Iran was absolutely isolated and unable to fight back. In reality, once Iran shifted to homeland defense, its combat capabilities far exceeded expectations. Underpinning this is the fact that Iran has largely achieved industrialization through decades of a "resistance economy." It is the only Middle Eastern nation with a comprehensive industrial system—albeit one characterized by "low-level, low-cost, and even low-quality" manufacturing. However, this does not hinder Iran from continuously churning out ballistic missiles and drones.

Second, Israel assumed the U.S. would show unlimited tolerance for its actions. This was Israel's most severe miscalculation. Israel believed the U.S. would unconditionally support any of its military actions. But when Israel insisted on striking Iranian energy facilities and sent oil prices to spiral out of control, the rift between the U.S. and Israel immediately became public. Trump openly said he had not been informed and did not like such actions, shattering Israel's traditional security assumptions.

Third, there is a vast difference in how the U.S. and Israel perceive this conflict. Israel's "maximalist" goal (completely destroying the current Iranian regime) fundamentally conflicts with the U.S.'s "limited war" objective (avoiding the quagmire of an Iranian war and refusing to deploy ground troops on Iranian soil). As the war drags on, voices within the U.S. labeling this "Israel's war" are growing louder, shaking the foundation of U.S. strategic support.

For Iran, it has probably overestimated the deterrence of the Strait of Hormuz and underestimated its opponents' resolve.

First, Iran's attempt to use the closure of the Strait of Hormuz as leverage may yet backfire.Tehran believed blockading the Strait of Hormuz was its trump card to force the international community to pressure the U.S. and Israel. While this move did batter the global economy and compel Trump to seek a quick end to the war for midterm election votes, it paradoxically hardened America's resolve for a direct military solution.

Second, Iran's strategy of "strategic patience" has failed. For a long time, Iran utilized "strategic patience" to avoid direct conflict with the U.S. and Israel (e.g., its restrained response following Qasem Soleimani's assassination) in an attempt to buy survival space. However, this was interpreted by the U.S. and Israel as "weakness," ultimately culminating in the full-scale military strike on February 28.

Third, If the U.S. successfully organizes an escort coalition in the Strait of Hormuz, Iran's strategic passivity will become increasingly evident. Iran underestimated the solidarity of Western nations (such as the UK, France, Germany, Japan, and South Korea) in jointly condemning the attacks and forming a united escort fleet after facing direct assaults. Of course, the effectiveness of this coalition remains to be seen; if Iran's countermeasures are suppressed, the regime's future will be bleak.

This war has made one thing clear: the U.S. misjudged the controllability of the "war switch," plunging into an unwanted war of attrition. Israel misjudged the "margin of error" in the U.S.-Israel relationship, creating a strategic rift with its ally at a critical moment. And Iran, attempting to "hold the world hostage via the Strait of Hormuz," ultimately burned itself.

At this point, we must ask: What is the direction of this war? Will the Strait of Hormuz be blocked long-term (more than three months)?

Given all factors, the war is unlikely to end within the "four weeks" Trump previously boasted. Due to Iran's unexpectedly resilient fighting, the conflict is shifting toward a "protracted war" and a "war of attrition." Consequently, the blockade of the Strait of Hormuz is unlikely to be lifted within three months. The core question is no longer if there will be a long-term blockade, but how long it will last and who can hold out the longest.

A blockade lasting over three months is entirely possible. The primary reason is that major economies heavily reliant on Gulf crude oil imports, mainly Asian countries, have significantly bolstered their strategic petroleum reserves over the past few years. They can weather the "extreme" scenario of a blockade lasting three months or longer. Japan, for instance, has enough strategic reserves to cover 254 days of consumption. India and Southeast Asian nations have more limited reserves, but recent developments show they have secured waivers to resume purchasing Russian oil (which has been under U.S. and European sanctions). In short, within a three-month window, outside nations do not yet possess the absolute, desperate resolve needed to mediate the Strait of Hormuz crisis.

Furthermore, several other factors suggest the blockade could become a long-term reality:

First, Internal assessments by U.S. intelligence, including a recent Defense Intelligence Agency (DIA) report, conclude that Iran has the capability to blockade the strait for 1 to 6 months. Although the White House has publicly downplayed the extreme "6-month" scenario, private intelligence analyses confirm Iran possesses the hard power for such a prolonged blockade.

Second, the U.S. military faces practical operational difficulties. The Strait of Hormuz is nearly 100 miles long, and Iran controls a vast northern coastline from which it can launch attacks at any point, making full-spectrum defense extremely difficult for the U.S. military. While Iran's formal navy has suffered heavy losses, it still retains numerous small speedboats, frogmen, and even jet skis capable of launching suicide attacks or laying mines. Safely escorting a single oil tanker might require multiple U.S. destroyers, making the cost astronomically high.

Third, the blockade is Iran's primary leverage to "bog down the U.S." Iran's strategic goal is clear: use the blockade to drive up oil prices, exert pressure on the U.S. domestic economy and midterm elections, and force Trump back to the negotiating table. As long as U.S. and Israeli military strikes continue, Iran has no incentive to give up this trump card.

Fourth, the chances of a quick resumption of shipping are slim. As of March 21, very few ships, at most 10, have dared to "force their way" through the strait. Even if the U.S. and Israel continue to bomb Iranian energy facilities (like Kharg Island), they cannot completely eradicate Iran's coastal harassment capabilities in the short term. The Chairman of the Joint Chiefs of Staff has frankly admitted there is "no clear solution" to the strait issue.

It appears that whoever controls the Strait of Hormuz holds the decisive marker for victory. Iran is employing a stalling strategy, using the blockade and asymmetric warfare to drag the U.S. and Israel into a high-attrition quagmire, attempting to exhaust their will to fight. Strategic divergences between the U.S. and Israel are widening: Israel continues to pursue the "elimination of the Iranian regime," while the U.S. prefers "limited strikes on nuclear facilities" followed by a quick exit to avoid domestic political blowback from high oil prices.

The longer the strait remains closed, the higher international oil prices will soar. Seeing Brent crude break $150 or even $200 per barrel may become a once-in-a-lifetime reality. These sustained high oil prices are devouring Trump's midterm election prospects. Experts point out that if high oil prices persist for over three months, the probability of Trump losing the midterm elections exceeds 70%.

The outcome of this war will likely not be the total annihilation of one side by the other. Instead, it will depend on when the U.S., facing domestic political pressures (oil prices, anti-war sentiments), is the first to establish an "exit mechanism." As Ray Dalio, founder of Bridgewater Associates, commented on this war: "In war, one's ability to withstand pain is even more important than one's ability to inflict pain."

Currently, whether the U.S. can bear the political and economic costs, whether Israel can endure a long-term war of attrition, and whether Iran can survive the destruction of nearly all its military and state apparatus—all three parties are facing a severe test in this "war of miscalculations."

Key takeaways for international observers include:

In a direct acknowledgment of domestic involutionary competition, Pan confirms that Beijing is actively stepping in. The central government is now prohibiting local municipalities from offering unreasonable tax and land subsidies to attract investment, and the PBoC is actively restricting financing to over-saturated sectors.

Furthermore, addressing fears of a looming currency war amidst trade frictions, Pan explicitly shuts down speculation of a competitive devaluation, saying: "China has no need, nor any intention, to acquire trade competitive advantages through exchange rate depreciation."

Pan also pushes back against the narrative that China's trade surplus is the root of global imbalances, instead pointing to the structural flaws of the US dollar-dominated international monetary system and the weaponization of trade policies.

The following English translation has not been reviewed by Mr. Pan.

中国高质量发展与全球经济再平衡——中国人民银行行长潘功胜在2026中国发展高层论坛上的主题演讲

China's High-Quality Development and Global Economic Rebalancing—Keynote Speech by Pan Gongsheng, Governor of the People's Bank of China, at the China Development Forum 2026

Distinguished guests,

Good afternoon!

It is a great pleasure to attend this year's China Development Forum. I would like to extend sincere thanks to friends from all sectors for your continued interest in and support for China's financial development.

Taking this opportunity, I would like to share three observations under the theme of "China's High-Quality Development and Global Economic Rebalancing".

I. Global Economic Rebalancing and China's Contribution

At present, geopolitical conflict and trade frictions are occurring with increasing frequency. Discussion of global economic imbalances and rebalancing has grown markedly, and the issue has also become an important topic on this year's G20 agenda.

Since the beginning of this century, the global economy has gone through three major phases of dynamic rebalancing. China has been deeply involved in all three and has made positive contributions throughout.

The first phase came between 2001 and 2007, after China joined the WTO. By leveraging its cost advantages, China integrated into the global division of labor, effectively expanding global supply, raising productive efficiency, easing inflationary pressures worldwide, and supporting global growth.

The second phase came between 2008 and 2017, in the aftermath of the global financial crisis. During that period, global demand was generally weak, and the world economy was characterized by "three lows and one high": low growth, low inflation, low interest rates, and high debt.

China responded proactively by significantly expanding domestic demand and imports, helping to support global growth and prevent the world economy from slipping into deflation. China's contribution to global growth has remained at around 30 percent, making it the main engine of world economic growth, and this has continued to the present day.

The third phase has unfolded since the pandemic. Supply shocks and strong stimulus on the demand side, together with the rise of protectionism and de-globalization, once pushed global inflation sharply higher. China's supply chain system remained stable, continuing to make an important contribution to global price stability and overall economic balance.

China's own economy has also undergone profound structural adjustment and dynamic rebalancing. The contribution of consumption to economic growth rose from 37 percent in 2010 to 52 percent in 2025. The current account surplus as a share of GDP has fallen from around 10 percent in 2007 to an average of less than 2 percent over the past decade, which is within a reasonable range.

Here, I would like to briefly discuss two issues.

First, how should we understand the source of China's industrial competitiveness?

The rise in China's industrial competitiveness is first and foremost the result of more than 40 years of reform and opening up. In the course of opening up, China has learned from international partners, including the many outstanding global companies represented here today. China has learned through competition, and grown through learning.

Meanwhile, the following four factors have played a vital role in elevating China's industrial competitiveness:

1. A mega-sized market. Technological innovation can be industrialized, scaled up, commercialized, and iterated rapidly, generating both technological leadership and cost advantages.

2. A complete industrial and supply chain system. Industrial ecosystems, supply networks, R&D institutions, and digital infrastructure are highly clustered in certain regions, facilitating efficient division of labor and synergy.

3. Abundant, high-quality, skilled, and diligent labor resources, especially technical talent. China has over 72 million highly skilled professionals, and its total number of R&D personnel has ranked first in the world for many years, making it the country with the largest and most comprehensive talent pool globally.

4. Technological innovation capabilities driven by sustained R&D investment. Over the past five years, China's R&D expenditure has grown by an average of more than 10% annually. In 2025, China's total R&D expenditure was second only to the United States, ranking second globally; its R&D intensity (R&D expenditure as a percentage of GDP) exceeded the OECD average.

Internationally, there is still a perception that China's industrial competitiveness stems from unreasonable government subsidies. For those who hold such doubts, I encourage you to travel and see more of China, which will help foster a more accurate and comprehensive understanding of Chinese industries.

As Premier Li Qiang emphasized in his speech earlier, China advocates for fair, benign, and healthy competition. Addressing the "involutionary" competition among certain enterprises, the central government has taken measures to regulate local government investment attraction practices, prohibiting unreasonable preferential policies such as tax and land use subsidies, in order to build a unified national market.

China is also strictly enforcing industrial and environmental technical standards to restrict low-level competition. Concurrently, the People's Bank of China (PBOC) is guiding financial institutions to scientifically assess risks, curbing financing for industries plagued by "involutionary" competition from a financial perspective.

These efforts have already yielded positive results. The decline in China's PPI narrowed from -3.6% in July last year to -0.9% in February this year, and corporate operating conditions have also improved.

Second, how should we view and analyze the issue of global economic imbalances?

This is a frequently discussed topic internationally, and I would like to share my perspective.

When analyzing global economic imbalances, we must look at both goods and services trade, as well as both current and financial accounts. China is the largest surplus country in goods trade, but it is also the largest deficit country in services trade. The current account surplus accumulated by China is allocated to different regions and industries globally through outbound investments by enterprises and banks, injecting liquidity into global financial markets and strongly supporting global economic development and financial stability.

We must analyze this not only from a static perspective but also from a dynamic one. From a temporal dimension, the balance of supply and demand is a relative concept. Whether globally or within a single economy, the expansion and contraction of supply-demand gaps are subject to various disturbances.

For instance, recent conflicts in the Middle East caused a supply-side shock to oil, leading to a surge in prices. However, over a longer cycle, market forces will self-adjust to achieve a dynamic equilibrium. Economic development, income growth, changes in consumer preferences, and technological advancements create new forms of supply and demand, thereby creating new markets.

From a spatial dimension, whether between nations or among different regions within a country, building a unified market and engaging in division of labor and trade based on comparative advantages can maximize overall welfare. Thinking back to the 1980s and 1990s when I studied economics at university, a fundamental consensus in the global economic academic community was that a free trade system based on comparative advantage is the foundation of global prosperity and helps enhance global well-being. International trade is not coercive; it is the result of voluntary choices made by hundreds of millions of enterprises and households.

We must pay attention to not only economic factors but also non-economic ones. Last year, tariff and trade wars triggered a "rush to export," and the overstretch of national security concepts led to increased export control measures. These factors have disrupted the expectations of enterprises and households, causing significant disturbances to the global economic balance.

We must analyze not only the international economic and trade system but also the international monetary system. Trade surpluses are the result of the evolution of the global industrial division of labor. Over the past 40 years, the major global surplus countries have generally been those with strong manufacturing competitiveness, such as Japan, Germany, Switzerland, and China, and in recent years, this has gradually shifted to some emerging market economies in Southeast Asia. However, the major deficit countries have remained largely unchanged. This is related to the inherent flaws of the international monetary system.

In an international monetary system dominated by a single sovereign currency, the issuer of the major reserve currency can implement deficit financing over the long term at lower financing costs, exporting its currency through large-scale current account deficits. Meanwhile, sustained capital inflows objectively cause the major reserve currency to be overvalued, which to some extent weakens that country's manufacturing competitiveness.

Currently, stable, rational, and predictable cooperation is particularly precious. Trade fragmentation is undermining the foundation of free trade. We need to more resolutely oppose all forms of trade protectionism, consolidate and develop the rules-based multilateral framework and international economic and trade order with the WTO at its core, and promote inclusive economic globalization.

II. China is Actively Promoting the Transformation of its Economic Growth Model to Enhance Growth Quality and Sustainability

The recently concluded "Two Sessions" in China reviewed and approved the 2026 Government Work Report and the Outline of the "15th Five-Year Plan," clarifying the economic and social development goals and major policies for this year and the next five years. There are five key features that deserve special attention:

1. Setting scientific and reasonable economic growth targets. Mathematically, the economic growth rate is the ratio of the annual GDP increment to the total volume. In 2025, China's total GDP exceeded 140 trillion RMB (around USD 20 trillion); the annual increment is equivalent to the entire annual economic output of a medium-sized economy. China needs to maintain a reasonable economic growth rate, but the quality and sustainability of that growth are even more important. The Government Work Report set this year's economic growth target at 4.5%-5%, leaving greater room for structural adjustment and high-quality development.

2. Focusing on the transformation of the economic growth model. The 15th Five-Year Plan focuses on high-quality development, strengthening the domestic economic circulation, and persisting in domestic demand-led growth. China will implement policies to boost consumption, improve the income distribution system, optimize the social security system, expand investment and consumption in areas such as education, healthcare, and elderly care, and significantly increase the household consumption rate. China will vigorously develop the service sector and promote its reform, innovation, opening up, and cooperation. Building upon its foundation as a global manufacturing powerhouse, China will accelerate its transition into a core global demand market.

3. Emphasizing sci-tech innovation to drive productivity growth. Sci-tech innovation is China's clear and firm long-term strategic choice, which not only aligns with the trend of the global technological revolution but also meets the requirements of China's high-quality development. China will continue to promote the deep integration of sci-tech innovation and industrial innovation, strengthen the protection and application of intellectual property rights, and boost productivity.

4. Accelerating green transition and sustainable development. China has built the world's largest renewable energy system and the most complete new energy industry chain, driving a substantial decline in global wind and solar power costs. China will continue to vigorously develop a green and low-carbon economy, striving to peak carbon emissions before 2030 and achieve carbon neutrality before 2060, while upholding the multilateral climate process and facilitating global green and low-carbon development.

5. Further improving economic governance. China will scientifically manage and balance the boundaries between the government and the market, respecting and leveraging the market's decisive role in resource allocation. China will advance the construction of a unified national market, foster a sound legal environment for the economy, and create a fairer, more dynamic market environment.

The dynamic balancing and structural transformation of the economy require medium- to long-term reform plans and commitments that must be executed resolutely, rather than constantly "flip-flopping" on policies. This year, China will begin implementing its 15th Five-Year Plan. The scientific formulation and sequential implementation of Five-Year Plans is a vital experience in China's reform and development, as well as a significant institutional advantage.

III. Intensifying Financial Support for China's Economic Structural Transformation

The PBoC will maintain a supportive monetary policy stance to create a favorable monetary and financial environment for stable economic growth, high-quality development, and the smooth operation of financial markets.

China will continue to implement a moderately accommodative monetary policy. Currently, China's social financing conditions remain accommodative, and total financial aggregates are growing reasonably. We will balance the relationships between the short term and long term, between supporting real economy growth and maintaining the health of the financial system itself, and between internal and external equilibrium. We will comprehensively utilize various monetary policy tools, such as reserve requirement ratios, policy interest rates, and open market operations, to maintain ample liquidity.

According to the IMF's classification standards, China implements a managed floating exchange rate system. Since the beginning of this year, the RMB exchange rate has appreciated by approximately 1.3% against the US dollar, 3.7% against the Euro, 3.2% against the Japanese Yen, and 2.4% against the British Pound.

China has no need, nor any intention, to acquire trade competitive advantages through exchange rate depreciation. The PBoC's stance has always been clear: we adhere to the decisive role of the market in exchange rate formation, maintain exchange rate flexibility, and simultaneously strengthen expectation guidance to keep the RMB exchange rate basically stable at an adaptive and equilibrium level. The PBoC's expectation guidance, along with the use of transparent macro-prudential management tools that align with international rules and practices, corrects market "herd behavior" and market failures, helping to prevent the destructive equilibria that have repeatedly occurred in international financial history.

China will steadily promote high standard opening up of the financial sector. It will deepen the inter-connectivity of financial markets and cross-border payment systems to facilitate more investors in accessing Chinese financial markets. The scale of China's stock and bond markets both rank second globally, with market depth, resilience, and liquidity continuously improving. By the end of 2025, RMB financial assets—including domestic stocks, bonds, deposits, and loans—held by overseas institutions and individuals exceeded 10 trillion RMB. We welcome overseas investors to participate and invest in China's financial markets.

In recent years, the internationalization of the RMB has made positive progress, providing domestic and foreign entities with more diversified currency choices. Currently, RMB financing costs are relatively low. In 2025, multinational governments, international development institutions, financial institutions, and large enterprises issued Panda bonds exceeding 170 billion RMB, and the scale of offshore RMB bonds issued in Hong Kong was even larger.

China will continuously improve the institutional arrangements and financial infrastructure for the cross-border use of the RMB. It will carry out diversified monetary and financial cooperation, promote the development of the offshore RMB market, and facilitate cross-border trade and investment activities.

China will actively practice the Global Governance Initiative proposed by General Secretary Xi Jinping and actively participate in and promote the reform and improvement of global financial governance. It will strengthen international macroeconomic policy communication and coordination, improve the governance of international financial organizations, and build a diversified and efficient global financial safety net to more effectively maintain global economic and financial stability.

Distinguished guests, against the backdrop of rising global uncertainty, China will, with responsibility and courage, continue to play its role as the main engine of world economic growth, providing strong growth momentum and a stabilizing force to the world. We stand ready to work with all parties to steer the global economy toward a more open, inclusive, and balanced direction.

Thank you!

Given the system's opacity, any glimpse into its inner workings is highly valuable. A recent article from Southern Weekly, the Guangzhou-based newspaper renowned for its investigative reporting, offers a rare, granular look at how the Chinese top legislature handles legislator's proposals after the the "two sessions" wrap up. More importantly, it sheds light on how different government agencies interact behind the scenes.

The piece traces the lifecycle of a social issue. It maps out how a localized problem gets identified, translated into bureaucratic language, flagged as a priority, and navigated through a maze of ministries, Party organs, and the National People's Congress (NPC).

This matters because it complicates two dominant, yet incomplete, narratives: that Chinese policy simply flows unobstructed from the top down, and that institutions like the NPC are purely symbolic.

The reality is far more intricate. The NPC is certainly not a Western-style legislature—you won't see politicians arguing over public complaints in open debates or on the campaign trail—but neither is it irrelevant. Instead, it acts as a highly structured conduit where local concerns are aggregated, filtered, and fed into the bureaucracy.

In many ways, the Southern Weekly report serves as a vivid, real-world case study for a dynamic that Princeton political scientist Rory Truex presciently captured exactly a decade ago. In his 2016 book Making Autocracy Work: Representation and Responsiveness in Modern China, Truex coined the concept of "representation within bounds." As he astutely noted,

meaningful representation can and does arise in an authoritarian setting, in the absence of electoral accountability. It arises not from bottom-up citizen pressure, but from top-down accountability to a regime with informational needs. However, deputy activism on sensitive political issues can engender unwanted citizen attention, so regimes pre fer their deputies to exhibit "representation within bounds."

Seen from this angle, China's government is not quite as unique as it is often portrayed. Like many massive bureaucracies, it runs on compromise, coordination, and competition across departments. And like many others, it does not always deliver. As the article bluntly notes, the NPC system has long struggled with a classic bureaucratic headache: plenty of official replies, but not enough actual follow-through.

The following piece was first published on Southern Weekly's WeChat account on March 12. Please note that the translation below is mine and has not been reviewed.

当一份建议，被划上“重点”之后

When a legislator's proposal is marked "priority"

By Du Maolin, Southern Weekly reporter

One day in September 2025, Meng Hongjuan received an invitation from Beijing. The letterhead read: Department of Elderly Care Services, Ministry of Civil Affairs.

She quickly realized that a proposal she had submitted during the annual session of the National People's Congress (NPC) had been included among the NPC's "priority-supervised" proposals.

Meng is a workshop director at Zhende Medical Co., Ltd. in Zhejiang Province. Her proposal concerned the link between elderly care as a public service and elderly care as an industry. She told Southern Weekly that the letter signaled the start of follow-up communication and consultation. "It was the first time since I was elected as a deputy to the 14th National People's Congress."

Every year during the NPC session, deputies submit thousands of proposals/bills. In 2025, a total of 9,160 were received. Only a small number were ultimately singled out for priority supervision.

In practice, "priority supervision" means that the Standing Committee of the National People's Congress selects certain matters from among deputies' proposals, assigns them to the relevant handling bodies, and has the relevant special committees of the NPC supervise the process.

Deputies' proposals/bills are widely seen as an important channel through which the public can take part in the management of state affairs. Yet for many years, some deputies have criticized handling bodies for "placing more weight on replying than on implementation".

That is why the priority supervision system has been given high expectations: proposals/bills should not stop at a written response. In 2005, the system was formally introduced at the national level. Provincial, municipal, and county-level people's congresses later adopted it in turn.

Now, after twenty years, this mechanism has become part of a broader effort to improve how deputies' proposals are handled. But how, exactly, are proposals "supervised" and "processed"? What happens after a proposal is marked as "priority"?

I. The first "full coverage"

This was not the first time Meng Hongjuan had turned her attention to older people.

In 2024, her second year as a deputy to the current NPC, she submitted a proposal on accident insurance for the elderly. During her research, she heard the same concern again and again: many older people were still doing farm work or taking casual jobs. What they feared was not hardship itself, but the possibility that if an accident occurred, no one would cover the cost of medical treatment and nursing care.

These concrete, small-scale anxieties made Meng realize that advancing elderly care required a full set of supporting safeguards.

By 2025, her focus had widened further. She was already familiar with the production process for medical supplies, and not unfamiliar with the care and rehabilitation needs of older people.

That professional sensitivity allowed her to spot problems in the elderly care service system during field research. In some care institutions and at the primary level, she saw another reality at work: the number of beds was rising, but nursing and rehabilitation staff were still in short supply; facilities were being upgraded, but professional management was lagging behind.

The shortage of trained personnel and the slow pace of professional development were issues she kept recording. Before the 2025 NPC session opened, she turned those observations into five proposals, covering subjects ranging from building talent for integrated medical and elderly care services, to innovation in elderly care finance products, to support for privately run care institutions, and loosening investment restrictions for pension fund management institutions. All of them pointed to the same core goal: to make the connection between elderly care as a public service and elderly care as an industry work more smoothly.

After the session closed, Meng only then realized that her sustained attention over two consecutive years had received a different level of recognition, when she learned that her proposal had been listed as a priority-supervised proposal.

Southern Weekly has learned that Meng's proposal on elderly care was grouped under the broader priority-supervised category of "promoting the integrated development of elderly care as a public service and elderly care as an industry work". In general, priority supervision is divided into several broader categories, each covering multiple proposals from NPC deputies.

Once a priority-supervised proposal is identified, it is assigned to the relevant government departments, the Supreme People's Court and the Supreme People's Procuratorate, or other responsible bodies for handling, while the relevant special committee of the NPC oversees the process.

Take 2024 as an example. That year, for the first time, the topics for priority-supervised proposals were reviewed and approved by the Council of Chairpersons of the NPC Standing Committee. "Previously, topics were discussed and approved at the Secretary-General's office meeting after opinions had been solicited from various sides," one source familiar with the workings of the NPC told Southern Weekly.

According to Xinhua, Chinese state news agency, in 2024 the Council of Chairpersons approved 20 priority-supervised proposal categories, involving 225 individual proposals from deputies. These were supervised by seven special committees, including the NPC Financial and Economic Affairs Committee, and assigned to 19 lead handling units, including the National Development and Reform Commission.

Southern Weekly's review found that the 20 priority-supervised categories mainly fell into six broad groups: developing new quality productive forces, strengthening talent for modernization, improving public well-being, promoting green development, balancing development and security, and advancing the rule of law in China.

"The main idea is to select, as priority-supervised proposals, those that relate to the central tasks of the Party and the state, that deputies have raised in a relatively concentrated way, and that are highly comprehensive and highly visible," the same source explained.

By 2025, the number of priority-supervised proposal categories had risen to 23, with 20 handling units taking the lead. According to the NPC's official website, this marked the first time that all 35 delegations and all 10 special committees were covered.

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II. "Face to face" and "side by side"

Giving priority supervision to one batch of proposals does not mean that other proposals are ignored.

During the 2025 NPC session, more than 9,000 proposals were submitted in total. On March 26 that year, shortly after the session closed, the NPC Standing Committee held a handover meeting and assigned these proposals to 211 handling bodies for study and processing.

"But priority-supervised proposals usually take longer to handle, and the relevant departments will also hold follow-up meetings and discussion sessions," the source said.

Meng Hongjuan's experience bears this out.

About three months before she received the invitation, on June 27, 2025, the Ministry of Civil Affairs had already produced a written reply to her proposal.

Under the Deputies Law, proposals are generally to be answered within three months. If a proposal has a wide scope or is difficult to handle, the deadline can be extended to six months.

The reply Meng received was not drafted by the Ministry of Civil Affairs alone. It was the product of joint research by the Ministry of Civil Affairs together with the Ministry of Education, the Ministry of Human Resources and Social Security, the National Health Commission, and other departments.

After the written exchange came offline communication. On September 18, 2025, Meng travelled from Zhejiang to Beijing. The next morning, the Ministry of Civil Affairs organized a field visit for four NPC deputies, including Meng, to inspect and conduct research at several elderly care institutions in Xicheng and Fengtai districts of Beijing.

That afternoon, at the discussion meeting, copies of a "Collection of Materials" printed by the Department of Elderly Care Services of the Ministry of Civil Affairs were laid out on the table. The participants did not come from just one department. Meng noticed that, in addition to a vice minister from the Ministry of Civil Affairs, officials from the Ministry of Natural Resources, the Ministry of Human Resources and Social Security, and the National Health Commission were also present. The NPC Social Development Affairs Committee, which was responsible for supervision, also sent representatives.

The deputies spoke in turn. As soon as Meng raised the issue of social security for the elderly, an official from the Ministry of Human Resources and Social Security picked up the thread and responded on the spot. She recalled that this was the moment when she truly understood what the word "priority" meant: problems were raised on site, and they were also recorded and answered there and then.

Beyond this "face-to-face" exchange, there was also "side-by-side" fieldwork.

In 2024, Dong Hongtao, an NPC deputy and a mechanic with China Railway Xi'an Group Co., Ltd., submitted a proposal calling for better use of railway transport advantages to lower logistics costs across society. It was listed as a priority-supervised proposal.

Dong told Southern Weekly that just one month after the NPC session closed that year, the Ministry of Transport informed him, by letter and by phone, that his proposal had entered the priority-supervision process. Before that, he had never even heard of the concept.

In May and June 2024, the Ministry of Transport carried out research in Yulin, Shaanxi Province, under the theme of "advancing cost reduction, efficiency gains, and transformation upgrading in transport logistics."

“The ministry chose the research destination itself,” Dong said. He did not ask why Yulin had been selected, but he guessed it was related to the city's fast-growing modern logistics industry and its increasingly important role as a logistics hub at the junction of Shaanxi, Gansu, Ningxia, Inner Mongolia, and Shanxi provinces.

The fieldwork lasted two days. Dong followed the research team as it visited logistics parks and dedicated railway lines used to transport coal and other energy resources, discussing issues along the way.

"At the time I was the only NPC deputy there," he said. As he understood it, the team also visited other places and arranged face-to-face communication with nearby NPC deputies there as well.

In his view, this way of "laying out the problems on site" is more effective than simply sending documents back and forth, because departments can hear directly where the bottlenecks are on the front line.

Southern Weekly has learned that in 2024, in addition to taking part in discussion meetings organized by the handling units, the relevant special committees of the NPC also sent research teams to different parts of the country to learn about the handling of priority-supervised proposals, usually together with other departments.

Among all the departments and institutions involved in the priority supervision system, the deputies affairs committee of the NPC Standing Committee plays an important role. One of the responsibilities of the deputies affairs committee, established in 2023, is to promote the handling of deputies' proposals.

"More specifically, once priority-supervised proposals are identified, they track progress, understand how the work is moving forward, coordinate the different steps, and ensure that the supervision mechanism operates smoothly," Wang Rui, an official with the deputies affairs committee of a district people's congress standing committee under a municipality directly under the central government, told Southern Weekly.

In Wang Rui's view, the system has now moved towards maturity: the Chairpersons' Council (editor's note: at the local level, the Directors' Meeting) reviews and approves the list; the handling units take the lead; the special commissions follow up and press the work forward; and the deputies affairs committee of the standing committee coordinates the overall process.

III. Testing the waters first

This increasingly clear division of labor sketches out the path by which the mechanism has evolved since it was established in 2005.

The year before the system was formally introduced, the NPC Standing Committee carried out a trial run. After the close of the second session of the 10th NPC in 2004, it selected eight priority-supervised areas on a trial basis, involving issues such as student loans for university students, food safety management, and land acquisition compensation, and required the relevant bodies to handle them as priorities.

At the time, the selection criteria were clear: the content had to concern the central work of the Party and the state, major questions of reform, development and stability, or issues of broad public concern.

That trial run was jointly supervised by the General Office of the NPC Standing Committee and the General Office of the State Council. The immediate background was the rapid growth in the number of deputies' proposals. According to the source mentioned earlier, from the 6th NPC (1983-1988) to the 10th NPC (2003-2008), the number of proposals submitted rose from more than 2,000 to over 6,000, making the handling burden "extremely heavy".

As the numbers rose, the quality of handling came under criticism from deputies. There was not enough attention, and the results were often unsatisfactory. Sheng Huaren盛华仁, then vice chairman and secretary-general of the 10th NPC Standing Committee, once described the handling of deputies' proposals vividly: "year after year, the same old pattern; session after session, the same old faces".

China Youth Daily once reported that the standard response from handling departments at the time had become a formula of "three sentences": "Thank you for your excellent proposal; your proposal is under careful study; we hope you will continue to make suggestions on our work."

Against that backdrop, priority supervision was expected to be treated as key cases to drive broader progress: invite deputies to take part directly in the handling process, carry out field investigations at the primary level, provide serious feedback on the results, and shift the focus from mere "replying" to actual "implementation."

In some cases, the results were striking. The magazine of China's NPC once disclosed that in 2004, the proposal on "compensation for landless farmers during land acquisition" involved 27 separate proposals and 119 deputy signatures, and was listed for priority supervision.

During the handling process, the former Ministry of Land and Resources established a monthly reporting system to track the repayment of overdue land acquisition compensation. By the end of 2004, a total of RMB 17.546 billion in unpaid compensation, accumulated nationwide since 1999, had been identified and fully repaid.

After this trial phase, the priority-supervision mechanism for deputies' proposals was formally introduced during the 2005 NPC session, with the first batch covering 10 items.

One of them came from NPC deputies representing arid western regions such as Ningxia, Xinjiang, and Gansu provinces, who proposed "developing water-saving agriculture in the arid western regions".

In this case, the division of supervisory responsibilities became clearer. The Ministry of Water Resources took the lead, the National Development and Reform Commission and the former Ministry of Agriculture acted as assisting bodies, and the NPC Ethnic Affairs Committee carried out supervision. The earlier practice of joint supervision by the General Office of the NPC Standing Committee and the General Office of the State Council came to an end.

In 2005, the handling and implementation of deputies' proposals also went through a series of broader changes.

In April of that year, a special handover meeting was held in Beijing. For the first time, the General Office of the NPC Standing Committee convened a dedicated meeting to assign deputies' proposals in a unified way to 133 handling units in the capital. This high-level, centralized method of handover later became routine.

Then, in June, that practice was written into the Measures for Handling Proposals, Criticisms, and Opinions of Deputies to the National People's Congress (the "Measures"). The Measures made clear that proposals requiring priority handling were to be followed up and supervised by the relevant special commissions of the NPC, working together with the relevant handling bodies to achieve tangible results.

By the end of that year, at a meeting of the NPC Standing Committee, He Yehui, then deputy secretary-general of the NPC Standing Committee, reported on the handling of proposals, criticisms, and opinions submitted during the third session of the 10th NPC. This was the first report of its kind in the history of the NPC Standing Committee.

The mechanism's basic framework was thus established, but the process of refinement did not stop there.

In December 2018, when the Measures were revised, an entire new chapter on the "priority supervision of deputies' proposals, criticisms, and opinions" was added. It further clarified the principles and procedures for identifying priority-supervised proposals, the requirements for supervision, and the mechanisms for rolling handling and follow-up supervision, making the framework more clearly defined.

According to Southern Weekly's count, since 2005 the NPC Standing Committee has identified a total of 336 priority-supervised proposal categories, involving more than 3,600 specific proposals from deputies. More than 60 of these categories have concerned public well-being: 18 on improving services for "the elderly and the very young", 15 on advancing the Healthy China agenda, and 11 on promoting high-quality and fuller employment.

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IV. The attention of the top leader is especially important

As the numbers have accumulated, the priority supervision mechanism has moved from a working-level experiment, to being defined in normative documents, and then to receiving firmer recognition legislatively.

In March 2025, the third session of the 14th NPC reviewed and passed a decision to amend the Deputies Law, which made explicit provisions on deputies' proposals that are designated for priority handling by the Chairpersons' Council or the Directors' Council.

Before the amendment of the Deputies Law, Huang Lansong, deputy director of the Research Center on the People's Congress System at Shandong University, took part in a number of related discussion meetings. In her memory, leaders in the people's congress system, NPC deputies, and scholars all broadly supported elevating the supervision system for deputies' proposals into statutory law.

"That is because the system has been in operation for more than twenty years, and its practices have been continuously improved and refined, gradually reaching maturity," Huang told Southern Weekly. On the other hand, she said, the practical results had also been positive and had won broad recognition from deputies.

Local governments have also experimented in different ways, with different priorities. Southern Weekly has learned that some provinces divide "supervision" more finely into key supervision by members of the Directors' Council and special supervision by special commissions. In some places, the government's "top leader" takes part directly in priority supervision, creating stronger cross-departmental coordination.

Wang Rui has felt this in very concrete terms. In his district, each year the proportion of proposals approved by the Directors' Council of the district people's congress standing committee for priority supervision is around 15% to 20% of all deputies' proposals.

"After the district people's congress session closes, the deputies' proposals have already been assigned," Wang said. The district chief then holds a dedicated handover meeting on deputies' proposals and committee motions, assigning tasks to government departments, with the district people's congress also sending representatives to attend.

Wang explained further that most priority-supervised proposals usually involve multiple ministries or departments, and the areas where responsibilities overlap are often exactly where the real problem lies. Consensus can be reached in a meeting, but when it comes to aligning specific policies or arranging budgets, much more detailed coordination is needed. How to turn "consensus in the meeting room" into "institutional implementation" depends especially on whether the top leader takes it seriously.

With strong leadership attention, the deputies affairs committee where Wang works reports twice a year to the district people's congress standing committee on the progress of supervision over proposals. "The main purpose is to overcome the tendency in practice to value reply over implementation," he said.

An unnamed NPC deputy told Southern Weekly that although priority supervision places emphasis on fieldwork, discussion meetings, and face-to-face communication, whether it can ultimately be translated into policy adjustment and institutional implementation still requires observation over a longer period.

Submitting proposals is both a statutory right of NPC deputies and an important way for them to perform their duties according to law. In Huang Lansong's view, the key to handling proposals lies not only in whether replies are timely, but in whether the process creates sustained momentum for implementation and improvement. She suggested combining the implementation of deputies' proposals with mechanisms such as law enforcement inspections, and using institutionalized follow-up supervision to ensure that "supervision" and "handling" form a closed loop.

*At the interviewee's request, Wang Rui is a pseudonym.