China’s Economy Is Cooling Overall, Not Just Diverging, Economist Warns
Chinese economist Li Daokui said China’s biggest macroeconomic problem is not a “K-shaped” divergence between strong and weak sectors, but an overall cooling that has persisted for three years. Speaking at the 122nd China Macroeconomy Forum on July 11, the Tsinghua University institute director warned that focusing only on divergence gives false comfort, since the “upper line” of a K-shape cannot lift the whole economy.
Li highlighted two concerning indicators. First, his team recalculated a broader unemployment rate by including discouraged workers who had stopped being counted as part of the labor force, arriving at a rate of 10.2%. He estimated about 24 million people have been long-term discouraged jobseekers, including 13 million aged 16 to 24, posing risks to social stability.
Second, fixed-asset investment turned negative in 2025 and fell a further 4.1% year-on-year in the first five months of 2026, an unusually severe and prolonged decline.
Li attributed the slowdown to the disappearance of old growth engines—large-scale infrastructure and real estate investment—without new ones emerging. While households have absorbed much of the property downturn’s impact, he said the bigger problem lies with local governments and their debt. Households are reluctant to borrow for consumption, businesses are reluctant to invest, and funds flowing to local governments are largely being used to roll over old debt rather than fund new activity.
Li proposed that the central government significantly increase bond issuance beyond this year’s planned roughly 12 trillion yuan (approximately US$1.68 trillion), directing new funds toward stabilizing real estate, human capital investment, livelihood spending, and regional consumption subsidies to help local governments drive economic transformation.
Source: Central News Agency (Taiwan), July 14, 2026
https://www.cna.com.tw/news/acn/202607140130.aspx
Ex-Hungarian Foreign Minister Joins BYD Amid Conflict-of-Interest Backlash
Péter Szijjártó, Hungary’s pro-China, pro-Russia former foreign minister, announced on July 15 that he is resigning his parliamentary seat to take a senior executive role at Chinese EV giant BYD, sparking accusations of a conflict of interest given his past efforts to secure Hungarian government subsidies for the company.
Szijjártó served as foreign minister under former Prime Minister Viktor Orbán for nearly 12 years before stepping down in April, after Orbán’s government lost power to the pro-European Tisza party. He had kept his parliamentary seat but rarely attended sessions or appeared publicly since the election.
New Prime Minister Péter Magyar accused Szijjártó on social media of long representing “foreign interests,” saying he had lobbied heavily to secure massive state subsidies for BYD. Szijjártó, for his part, said on Facebook he had received a “highly prestigious invitation” to join BYD, calling it one of the most successful global automakers of the past two decades, and said he would become the company’s executive in charge of external relations and new business development.
As foreign minister, Szijjártó had championed Chinese investment in Hungary, announcing in 2023 that BYD would build its first European plant there—calling it one of the largest investments in Hungarian economic history—backed by state financial support. In 2025 he announced BYD would locate its European headquarters and R&D center in Budapest, with the Hungarian government pledging 20 billion forints (about US$63.8 million) in subsidies. The Budapest plant allows BYD to manufacture inside the EU, sidestepping the bloc’s tariffs on Chinese EVs; the exact subsidy total has never been disclosed.
Szijjártó was also known for close Russian ties, receiving Vladimir Putin’s Order of Friendship in 2021 and continuing energy talks with Moscow after its 2022 invasion of Ukraine. The Washington Post reported he frequently briefed Russian Foreign Minister Sergei Lavrov during EU meetings.
Source: Central News Agency (Taiwan), July 16, 2026
https://www.cna.com.tw/news/acn/202607160061.aspx
China Successfully Recovers Orbital-Class Rocket Booster for the First Time
China announced on July 10 that it had successfully recovered an orbital-class rocket booster for the first time, marking a major milestone in its effort to develop reusable launch vehicle technology. According to state media, the booster from a Long March-10B launch vehicle separated from the upper stage about six minutes after liftoff, executed a controlled vertical descent, and was successfully captured by a recovery net mounted on an offshore platform. Chinese officials described the test as a major technological breakthrough.
Beijing has identified reusable rocket technology as a national priority and has relaxed financing rules to support the country’s commercial space sector. The technology is considered essential for reducing launch costs and enabling the rapid deployment of China’s planned satellite constellations, which are widely viewed as potential competitors to SpaceX’s Starlink network. The Long March-10B is also part of China’s crewed lunar program, which aims to land astronauts on the Moon by 2030.
Despite this milestone, China still trails the United States by a considerable margin in reusable launch capabilities. SpaceX has completed hundreds of successful booster recoveries and routinely reuses boosters at a rapid operational pace, while China has achieved only its first successful recovery and plans just a limited number of reuse demonstrations this year. How quickly China closes this technological gap is likely to influence the next phase of U.S.-China competition in space, as Beijing seeks to challenge U.S. leadership in the sector.
Source: VOA, July 11, 2026
https://www.voachinese.com/a/china-claims-milestone-in-reusable-rockets-but-wide-gap-with-spacex-remains-20260701-/8170387.html
Global Times Commentary: Japan’s Rare Earth Recycling Effort Reflects Its Military Ambition
Global Times published a commentary arguing that Japan’s plan to recover rare earth materials from discarded household air conditioners reflects the country’s growing strategic vulnerability following China’s tighter export controls on rare earths and other dual-use materials.
The article cites Japanese media reports that Mitsubishi Electric, a major defense contractor that has been placed on China’s export control list, is leading the recycling initiative. It argues that rare earth magnets recovered from consumer appliances could ultimately be used to support Japan’s defense industrial base, reinforcing Beijing’s rationale that its export restrictions are intended to prevent the transfer of dual-use materials that could contribute to the expansion of Japan’s military capabilities.
According to the commentary, Japan has sought to reduce its dependence on Chinese rare earth supplies through overseas mining projects in countries such as Namibia and Greenland, as well as by exploring deep-sea mineral resources. However, these efforts have produced only limited results. The article concludes that Japan’s rare earth recycling initiative underscores the difficulty of building a resilient alternative supply chain and suggests that efforts to “de-risk” from or reduce dependence on China have yet to achieve their intended objectives.
Source: Huanqiu Times, July 5, 2026
https://opinion.huanqiu.com/article/4SGFYaCaV7P
CCDI Publicizes Cases of Local Government Fiscal Data Falsification
China’s Central Commission for Discipline Inspection (CCDI) Office publicly disclosed three cases involving serious misconduct by local officials in pursuit of political performance, highlighting fiscal data falsification, hidden local government debt, and the misuse of central government funds.
According to the CCDI, the city of Nanning in the Guangxi Zhuang Autonomous Region artificially inflated fiscal revenue by RMB 2.83 billion (US$395 million) within a single year through circular financing arrangements and repeated land transactions. In one case, the same parcel of land was reportedly transferred 18 times to inflate government revenue. The report also cited Xiaoshan District in Hangzhou, Zhejiang Province, for concealing local government debt through financing vehicles while falsely reporting that all hidden debt had been eliminated and related risks fully resolved. In Jiuquan, Gansu Province, authorities were accused of diverting ultra-long-term special treasury bond funds intended for public welfare projects to urban landscaping and city beautification initiatives.
The cases suggest that some local governments continue to rely on accounting maneuvers, off-budget financing, and fiscal data falsification to meet economic and political performance targets amid a challenging economic environment.
Source: Net Ease, June 29, 2026
https://www.163.com/dy/article/L0HTE9IR0512E5AP.html
China Advances Development of Asteroid Defense and Early Warning System
Chinese authorities announced that they are advancing plans for a national asteroid defense system as part of the country’s broader space security strategy. Officials described the initiative as consistent with China’s role as a “responsible major space power” and said it is intended to strengthen the country’s capability to detect, assess, and respond to potential asteroid threats.
According to the plan, the system will integrate ground- and space-based monitoring capabilities. On the ground, China intends to establish a geographically distributed network of large-aperture optical telescopes to provide long-range, wide-area, and high-precision observation. In space, authorities plan to deploy a constellation of monitoring satellites equipped with telescopes to overcome the limitations of atmospheric interference and the day-night cycle, with particular emphasis on detecting asteroids approaching from the direction of the Sun, which are more difficult to observe from Earth.
Chinese researchers said they have achieved initial breakthroughs in asteroid impact risk prediction models and algorithms and are developing an operational near-Earth asteroid early warning system. The integrated monitoring network is designed to enable continuous, around-the-clock observation and enhance China’s ability to detect, track, and assess potential asteroid impact risks.
Source: People’s Daily, July 6, 2026
https://paper.people.com.cn/rmrb/pc/content/202607/06/content_30166956.html
PLA Daily: U.S. Pacific Command Name Change Reflects Strategic Refocus on the Western Pacific
People’s Daily republished a People’s Liberation Army (PLA) Daily analysis examining the U.S. Department of Defense’s June 16 decision to restore the name U.S. Pacific Command (PACOM), replacing the U.S. Indo-Pacific Command designation adopted in 2018. The Pentagon stated that the command’s area of responsibility, mission, and organizational structure remain unchanged. However, The article argues that the renaming reflects a broader adjustment in U.S. strategic priorities rather than a purely symbolic change.
According to the analysis, Washington’s effort to make India a central pillar of its Indo-Pacific strategy has fallen short of expectations, as New Delhi has maintained an independent foreign policy on issues including Ukraine, the Middle East, and international trade. At the same time, growing U.S. military commitments in Europe and the Middle East have placed increasing pressure on defense resources, prompting Washington to reduce its strategic emphasis on the Indian Ocean while encouraging regional allies to assume greater security responsibilities.
The article argues that the United States is increasingly concentrating military resources in the Western Pacific, which it identifies as the primary theater of great-power competition under the Trump administration’s national security strategy. It predicts expanded deployments of carrier strike groups and amphibious forces, accelerated modernization of U.S. aircraft based in Japan and South Korea, increased operations from Guam, and further development of distributed basing and unmanned capabilities. The analysis concludes that the U.S. will continue to strengthen its military posture in the Western Pacific, sustaining long-term strategic competition and increasing the risk of military confrontation in the region.
Source: People’s Daily, July 6, 2026
http://military.people.com.cn/n1/2026/0706/c1011-40754050.html
China Plays a Leading Role in UN’s Adoption of First Global Regulation for Automated Driving Systems
The United Nations World Forum for Harmonization of Vehicle Regulations approved the world’s first Global Technical Regulation (GTR) for Automated Driving Systems (ADS) during its 199th session in Geneva from June 22–26. Jointly developed by China, the European Union, the United Kingdom, the United States, Canada, and Japan, the regulation establishes a common international safety framework for the deployment of automated driving technologies.
The regulation introduces the principle that an automated driving system should achieve a safety level at least equivalent to that of a competent and attentive human driver. It also establishes minimum safety requirements for key functions, including dynamic driving task (DDT) performance, minimum risk maneuvers (MRM), and human-machine interaction, underscoring a “safety first” regulatory approach.
Chinese authorities emphasized the country’s significant role in developing the regulation. Since 2019, China has served as vice chair of the UN Working Party on Automated/Autonomous and Connected Vehicles and co-chair of the Automated Driving Systems working group. According to the Ministry of Industry and Information Technology, Chinese organizations led the drafting of several core provisions and submitted dozens of technical proposals covering dynamic driving tasks, human-machine interaction, and testing and validation methodologies.
Source: People’s Daily, July 3, 2026
http://finance.people.com.cn/n1/2026/0703/c1004-40752892.html