China

1. Asian allies’ US worries
2. New Pax Silica demands
3. A growing tech decoupling
4. Straddling the chip divide
5. The ‘new new’ China shock
6. Novel growth proposals
7. Teapot refinery sanctioned
8. Tourism push shows returns
9. Luxury sector is refashioned
10. Burger boom in Beijing

We watch the China watchers and the surprising success of some ‘hand-crafted slop.’

The hallmark of Zhu Rongji, the former Chinese premier who died last week, was his fearless energy. “I have prepared 100 coffins,” he declared at the outset of his tenure, “99 for corrupt officials and one for myself.”

For the nation’s workers, Zhu’s no-holds-barred assault on recalcitrant bureaucrats cut both ways. On the one hand, shuttering thousands of loss-making state enterprises smashed their “iron rice bowl” — a lifetime of guaranteed employment and welfare benefits. But he also forced socialist “work units” to hand over ownership of the apartments that housed their workers to the employees themselves. That was perhaps the greatest one-off transfer of public wealth into private hands in human history.

Today, the country’s economic woes are strikingly similar to those Zhu encountered when he took office in 1998 amid the Asian financial crisis: Slowing growth, price deflation, mounting debt.

And China needs another Zhu.

Were he now in government, he would have wondered why China wasn’t doing more to boost consumer confidence and stimulate domestic demand, Fred Hu — once part of Zhu’s informal kitchen cabinet and now the founder and CEO of Primavera Capital Group, a private equity firm — told me. He’d also have been dismayed to see China entangled in bitter trade disputes with the US and Europe. And ultimately, Hu added, “What Zhu would feel most uneasy about is the loss of reform momentum altogether.”

Zhu would’ve also likely challenged China’s leadership about the worsening quality of economic statistics, Joerg Wuttke, a partner at Albright Stonebridge Group and formerly the China head of the chemicals firm BASF, added. In 2018, when Wuttke met Zhu in his retirement, the former premier asked: “How can you make economic policy decisions when you cannot trust data like non-performing loans?” Since then, numerous data sets, including youth unemployment, have been abandoned.

And even if Zhu were impressed by Chinese high-tech success, as he surely would be, said Arthur Kroeber, the founding partner of Gavekal Economics, he would have been “appalled by the waste, debt, and indifference to consumer welfare and sentiment that have arisen alongside that success.”

Growing worries over US in Asia

US allies voiced worry over Washington’s strategy in Asia after President Donald Trump said he would scale back participation in key military drills. Trump’s announcement that he would reduce the size of the joint exercises with South Korea — in part because of Seoul’s lack of support for his war in Iran — “has deepened concerns about US reliability among Indo-Pacific allies,” the Financial Times reported. Japan, which has long had difficult relations with South Korea, said cooperation between Washington and Seoul was “critical” for stability in Asia. Australia, meanwhile, said it was “very concerned” by North Korea’s nuclear program; Trump has suggested that his scaling back of the drills was linked to a desire to revive talks with Pyongyang.

Pax Silica loyalty demands

The US reportedly plans to tell countries in its Pax Silica initiative aimed at securing high-tech supply chains to eschew joining China’s rival effort. Though the draft memo, reviewed by Reuters, does not explicitly reference Beijing, it bars members from taking part in “duplicative initiatives whose expectations conflict with our own.” It comes as another US document circulated within NATO pressed alliance members on whether they supported Washington’s foreign policy, and after the US president criticized Seoul for its lack of support over the Iran war. Though the demands for ideological support from allies are unusual, they are hardly unprecedented: The George W. Bush administration barred European countries that opposed the Iraq war from bidding on reconstruction contracts.

Superpower tech decoupling

Google reportedly plans to move its smartphone supply chain outside of China by next year, the latest sign of a deepening tech decoupling as tensions mount between Washington and Beijing. The Silicon Valley giant has told suppliers it will shift manufacturing largely to India and Vietnam, Nikkei reported, and is far from alone in reducing its reliance on China: Rival Big Tech firm Microsoft has shut at least 15 joint ventures and branch offices over the past five years, according to Reuters. The direction of travel is hardly one way, either, with Chinese authorities reportedly removing Microsoft’s Windows operating system from a host of government computers earlier than scheduled as part of efforts to reduce reliance on foreign tech providers.

Power chips evade geopolitics

China “pushes” US tech companies to innovate and ship products faster, a leading American power chip CEO told Semafor. “The pace in China is unheard of,” said Onsemi’s Hassane El-Khoury; he has a unique vantage point given that his company — whose products convert power that flows through AI data centers, factories, and cars — sells in both the US and China. Onsemi isn’t subject to the same cross-border scrutiny facing advanced computing chipmakers and recently struck a deal with Great Wall Power Supply Technology, which supports Chinese data centers. El-Khoury said he feels “pretty comfortable” operating in both markets. But as hawks in Washington increasingly scrutinize anything supporting China’s AI buildout, power chips risk getting swept up in the geopolitical fray.

The next China shock

The world faces a new “China shock” stemming from advanced AI technology, experts said. While earlier transformations centered around traditional manufacturing, clean tech, and digital tech like e-commerce, a so-called China shock 4.0 will be based on “China’s approach to innovation as a national project,” as the takeup of Chinese open-source AI pushes people to also adopt the country’s technical standards and governance, an Asia Society expert argued. A Taipei-based think tank predicted robotics — the “physical AI” industry — is on a similar trajectory, even though China lags in some of the components needed to make advanced humanoids. Policymakers have dubbed AI, robots, and pharmaceuticals the “new new three” sectors driving export growth, according to Trivium China.

Novel economic growth plans

As growth stalls — investment, manufacturing, and retail sales all contracted in July — Beijing is looking for novel ways to shore up the economy. The latest idea: “Asset revitalization” to squeeze more value out of under-utilized state assets, like rights to advertising billboards along highways, airport concessions, or entry fees for tourist spots. Previous band-aid solutions, including a “cash-for-clunkers” trade-in program to boost sales of EVs and home appliances, have fizzled, leaving China dependent on exports. But with overseas sales growing at three times the pace of global GDP, former US Trade Representative Michael Froman argued the strategy could “collapse on itself,” resulting in mass business failures, cascading defaults, and shrinking government revenues — all producing a global crisis.

US sanctions ‘teapot’ refinery

A Chinese industrial giant is buying billions of dollars of illicit Iranian crude, US officials alleged, arguing that Beijing was helping to fund Tehran’s war while maintaining official neutrality. Washington sanctioned Hengli’s refinery business this year, accusing it of being a major player among China’s so-called “teapot” refineries, which have long imported sanctioned oil, The Wall Street Journal reported. China bought more than $30 billion worth of Iranian crude in 2025, a US report from March noted, providing an economic lifeline to Tehran when the US naval blockade was severely disrupting the regime’s oil exports. During the war, China’s independent refiners scaled back crude purchases, relying on stockpiles, but experts expect imports to rebound in August.

Tourism push shows results

China’s push to increase tourism is showing early returns. Arrivals and tourist spending in 2025 surpassed pre-pandemic figures for the first time, helped by a kitchen-sink approach that’s seen Beijing grant visa-free travel to visitors from 50 countries and local governments boost promotional spending. Some officials have circumvented online restrictions to use platforms like X and TikTok to sell their cities, and viral Western trends such as “Chinamaxxing” have likely provided a lift. (Beijing is also attempting to dislodge global awareness of Uyghur repression by offering heavily managed experiences in Xinjiang.) The uptick has given a reprieve to lackluster domestic retail figures, though China still generates less than a third of the inbound tourism receipts of the US, Bloomberg noted.

The luxury shopper evolves

China’s luxury market is rebounding after a prolonged slump that has reshaped domestic consumption for high-end goods. Recent earnings releases point to stronger sales for prestige beauty brands like Estée Lauder and La Mer, while companies such as LVMH reported largely flat demand for traditional luxury staples like handbags. The shift reflects the tastes of a more price-sensitive and discerning Chinese consumer, a Bloomberg columnist noted, as the country grapples with an economic slowdown and a tough job market. “The aspirational [Chinese] consumer … has moved to the top of a category she can comfortably afford, instead of the bottom of one she cannot,” the co-founder of a Shanghai-based advisory firm for luxury brands told Reuters.

Chinese go bananas for burgers

The humble burger is blowing up among fast-food restaurants in China, reflecting broader economic trends toward smaller, one-person households and cost-conscious consumers. “With meat, vegetables, and butter, it makes a very affordable balanced meal,” a Beijing university student told Reuters. China’s burger market is set to grow 8.7% annually through 2035, according to Emergen Research. When Five Guys opened this month in Beijing, customers waited hours to be served. Wendy’s also plans to enter the fray, as Chinese restaurant brands Haidilao and Yum China expand their burger offerings. “My son eats it in the car as we head to his English class,” a musician in Beijing said.

Every week, we dig through China-focused newsletters and podcasts, and bring you key takeaways from the Sinologist community.

• Employees are finding their voices at an inconvenient time for employers — right before their IPOs. In the absence of independent labor unions, Chinese employees seek leverage elsewhere: One representative case is a former RedNote employee publicizing his workplace complaints with the Hong Kong Stock Exchange as the company prepared to go public. A worker who feels “ordinary avenues have been exhausted might look for a point at which the employer is unusually exposed,” and an IPO offers “just such a moment.” — Pekingnology
• China’s AI job market is running “hot and cold” at the same time, a tech recruiter told the business-focused Zhibenlun podcast. At the top end, it’s not unusual to see graduates from Tsinghua, Peking, or Fudan University walk into $150,000 salaries; lower down, recruitment events are flooded with candidates leaving without jobs, the recruiter noted. At the very top end of the market, however, “everyone wants the same person.” — Ginger River Review
• China’s unofficial business consultants are busy. Jiemian News, a Shanghai-based, state-owned financial news outlet, recently published an article identifying a problem — in the publication’s view — with Starbucks’ business model: Too many of the people occupying seats at the coffee house are not purchasing products, and should be asked to spend their money or leave. Such “unsolicited consultants” are commonplace in China, often working at state-funded outlets. “Most of [their advice] is correct. Almost none of it is useful.” — The East is Read

• The World Robot Conference begins in Beijing on Wednesday, showcasing the latest in physical AI.
• Search giant Baidu reports earnings on Tuesday.
• China’s loan prime rates are announced Thursday, and are likely to remain unchanged. Tech multinationals Alibaba and Xiaomi report earnings, also on Thursday.

A low-budget animated film made by a mother-son duo has become a Chinese box office hit for its obscure plot and terrible animation. Niu Lai, or The Arrival of the Ox, is projected to gross as much as $2.7 million in its first month, as audiences relish the “handmade” images that contrast with the typical AI-generated visuals now dominating Chinese film. A state media outlet criticized cinemas for failing to “act as gatekeepers,” adding they risk “losing the trust” of audiences for screening Niu Lai. But moviegoers are the ones buying tickets, convinced “they are never going to see hand-crafted slop like this in the theaters again,” one online commentator wrote.