Prominent Chinese Economists Urge Stronger Fiscal Measures to Address Local Government Debt
At the 2026 Tsinghua PBC School of Finance Chief Economists Forum on September 19, several prominent Chinese economists said local government debt has become a more urgent economic problem than the real estate sector and called for more expansionary fiscal and monetary policies. During a roundtable on macroeconomic policy and global rebalancing, economists including Lin Yifu of Peking University, Yao Yang of Shanghai University of Finance and Economics, Li Xunlei of Zhongtai International, and Ju Jiandong of Tsinghua University’s PBC School of Finance said the central government should issue more debt to replace local government debt.
Ju said that faster and larger central government bond issuance to replace local debt has become an important tool for supporting economic growth. Li said local governments face heavy debt and arrears pressures, with a 2027 deadline for clearing outstanding payments, making debt replacement an urgent priority. Yao said local government debt is currently China’s biggest economic problem and is more serious than the property market. He estimated that a chain of interconnected debts arising from local government debt has reached about RMB 30 trillion. Both Yao and Lin called for the government to address the problem with the same level of determination used to resolve China’s banking-sector bad loans around 2000.
At that time, the Ministry of Finance issued special government bonds to recapitalize the four major state-owned banks and established four asset-management companies to absorb their non-performing loans. Lin argued that much of today’s local government debt was incurred in support of central government fiscal policies. Because the borrowing ultimately involves banks, he said that if local governments cannot repay, the losses could eventually fall on the banking system and the Ministry of Finance, making debt replacement the preferred approach.
Source: 21st Century Business Herald, September 20, 2026
https://www.21jingji.com/article/20260920/herald/c9d4680a5be88c901027977f013cb3a2.html
China Plans to Expand BeiDou Industry to More Than RMB 1 Trillion
At a September 22 press conference, Li Chao, Deputy Director of the Policy Research Office and spokesperson for China’s National Development and Reform Commission (NDRC), said China plans to expand the BeiDou satellite navigation industry to more than RMB 1 trillion (US$140 billion) within five years during the “15th Five-Year Plan” period (2026–2030). The goal is to achieve new breakthroughs in the market-oriented, industrial-scale, and international development of BeiDou applications.
The NDRC plans to advance key technologies, including high-end chips, critical components, and integrated algorithms, while promoting the integration of BeiDou with artificial intelligence, satellite internet, and other technologies. China will also strengthen institutional support by advancing the implementation of the Satellite Navigation Regulations of the People’s Republic of China and improving industry standards, testing, and certification systems.
In 2025, China’s BeiDou industry generated more than RMB 629 billion in total output, with more than 30,000 related enterprises and institutions employing over 2 million people. BeiDou is widely used in transportation, agriculture, maritime fishing, and energy. More than 12 million commercial vehicles are equipped with BeiDou, while more than 3.5 million terminals are used in agriculture and about 70,000 fishing vessels use BeiDou services.
BeiDou positioning services are also integrated into about 1.4 billion smartphones, more than 50 million electric vehicles, 14 million shared bicycles, and 160 million wearable devices in China. BeiDou-related products have been exported to more than 140 countries and regions. China also plans to deepen international cooperation through technology exchanges, talent development, joint demonstrations, and participation in global satellite-navigation governance.
Sources: People’s Daily, September 23, 2026
http://finance.people.com.cn/n1/2026/0922/c1004-40803710.html
China and Serbia Launch Joint Police Patrols on the Streets of Serbia
Xinhua News Agency reported that China and Serbia launched a three-week joint police patrol program on September 23 in central Belgrade. Eight police officers sent by China’s Ministry of Public Security will join Serbian officers in mixed teams to conduct patrols in several Serbian cities, including Belgrade and Novi Sad.
At the launch ceremony, Zhang Zhe, chargé d’affaires of the Chinese Embassy in Serbia, said that China-Serbia relations have developed rapidly in recent years and that the two countries’ public security and interior ministries have deepened practical cooperation. He said the joint patrols would help enhance the sense of security among Chinese tourists and overseas Chinese in Serbia during the Mid-Autumn Festival and National Day holiday period and further strengthen law-enforcement and security cooperation between the two countries.
Following the ceremony, Chinese and Serbian officers began joint patrols along Knez Mihailova Street in central Belgrade. The patrols were conducted at the invitation of Serbia’s Ministry of Interior and mark the third time Chinese police officers have traveled to Serbia for joint patrols. The joint patrol officers will assist Chinese tourists and overseas Chinese in communicating with local police and coordinating responses to their security concerns.
Source: Xinhua, September 24, 2026
https://www.news.cn/world/20260924/f5e4c7f8295e4d1da4c6e53d5484c011/c.html
Beijing Tax Offices Roll Out Enforcement Push on China’s New Offshore Trust Income Tax Rules
Tax offices in Beijing’s Chaoyang district have spent the past week publicizing preparations to enforce China’s new individual income tax rules on offshore trusts, which took effect about two months ago, according to articles the bureau published on September 29 and 30 ahead of the National Day (October 1) holiday.
The district’s taxpayer service center said it had set up a dedicated team of tax officials and hotline staff, strengthened staff training, and stepped up data analysis and monitoring of public sentiment risks. It also emphasized confidentiality rules and anti-corruption warnings for staff.
The Third Tax Office held a second round of training to prepare for an expected peak in inquiries during the policy’s transition period, assigning dedicated personnel and standardizing how rules are interpreted. The Nanmofang office said it is using big data and information on high-net-worth individuals to flag suspicious offshore trust cases and has built a risk ledger aimed at preventing people from hiding assets or evading taxes through various structures. It described offshore trust taxation as an important tool for governing the taxes of wealthy individuals.
The Jinsong office organized officials to study the full life cycle of trusts, from creation to termination, and formed two teams: one to handle taxpayers’ questions and feedback, and another of foreign-language staff to review foreign-language trust documents and verify overseas materials.
The rules stem from an announcement by the Ministry of Finance and the State Taxation Administration in July (Announcement No. 21 of 2026). It says individuals who transfer property into an offshore trust, or receive income through one, must report and pay individual income tax. A companion announcement designates the tax authority where the related domestic business is registered as the supervising office. If no such business exists, the authority where the taxpayer’s domestic property is located or where they usually reside takes charge.
Source: Yicai, October 2, 2026
https://www.yicai.com/news/103383883.html
ICIJ Investigation Examines ICBC’s Role in Beijing’s Overseas Economic and Geopolitical Activities
An investigation by the International Consortium of Investigative Journalists (ICIJ) and media organizations in 24 countries examined 4.8 million records from China’s Industrial and Commercial Bank of China (ICBC) covering 2005–2024. The records reportedly show that ICBC’s London operations provided financial services to high-risk clients, including sanctioned Russian and Belarusian businessmen, politically connected companies, and heavily indebted countries.
The investigation alleges that the branch sometimes acted on instructions from ICBC’s Beijing headquarters to support broader objectives of the Chinese Communist Party. It characterizes ICBC as functioning not only as a commercial bank but also as an important financial instrument supporting China’s overseas geopolitical and economic expansion.
During the Russia-Ukraine war, ICBC’s London branch reportedly explored ways to help Russian mining giant Nornickel obtain financing in renminbi to avoid dollar transactions. The investigation also found that, shortly after the U.S. Justice Department indicted Huawei in 2019 for allegedly violating U.S. sanctions on Iran and other offenses, ICBC London rapidly transferred $1.3 billion in Huawei funds to China. Although the transaction itself was not illegal, it was reportedly carried out without prior notification to ICBC’s financial-crime prevention department, triggering internal objections.
The investigation also identified compliance and lending concerns involving developing countries. Since 2014, courts and regulators in eight jurisdictions have reportedly imposed adverse rulings or penalties against ICBC and its overseas branches totaling at least $96 million. In Zambia, ICBC provided a $285 million loan to the state-owned power company ZESCO in 2011 and later sought repayment during the country’s sovereign debt crisis. Internal documents reportedly show that ICBC headquarters instructed London employees to transfer funds from ZESCO’s account to Beijing before completing required customer reviews.
The investigation reviewed roughly 200 additional loan agreements involving nearly 30 countries, with financing ranging from about $3 million to $400 million. Borrowers included government entities and companies involved in commodities, energy, and financial services. According to the investigation, ICBC’s overseas lending has helped Chinese state-owned enterprises secure foreign contracts and finance acquisitions of transportation, energy, and telecommunications infrastructure, while also providing loans to foreign governments as part of China’s economic diplomacy.
Source: The Epoch Times, September 18, 2026
https://www.epochtimes.com/gb/26/9/17/n14851435.htm
China Drops “Prime Minister” Title for Japan’s Takaichi in Apparent Diplomatic Downgrade
China’s Foreign Ministry has begun referring to Japanese leader Sanae Takaichi by name alone, omitting her title of prime minister, a shift that a Hong Kong newspaper has described as a diplomatic “downgrade” toward Tokyo, according to a report by Taiwan’s Central News Agency.
The Sing Tao Daily reported that Foreign Ministry spokesperson Guo Jiakun used only Takaichi’s name at the regular press briefing on September 30, when responding to a question about Japan’s discussion of nuclear weapons without taboos. The paper stressed that Beijing’s foreign ministry is known for carefully weighing its wording, so the omission was unlikely to be a slip of the tongue. A review of the ministry’s published transcript confirmed that no title was used.
The paper traced a gradual change in how Beijing addresses her. When Takaichi took office last October, China called her Japan’s prime minister. A month later, after she advanced the idea that a Taiwan contingency could affect Japan, Chinese officials switched to terms such as “the Japanese ruling authorities” and “Japan’s current leader.” More recently, after she urged the removal of the “enemy state clauses” from the United Nations Charter during the UN General Assembly in New York, the spokesperson referred on September 23 to the “current Japanese regime,” calling it a prominent threat to regional peace and stability.
Sing Tao said China had now dropped even the title, likening the progression to moving a guest from a VIP room to the corridor and finally out of the hall, with courtesy and respect both withdrawn. The article concluded that relations between the two countries have not improved and that recent provocative words and actions from senior Japanese officials have inflamed tensions further.
Source: Central News Agency (Taiwan), October 2, 2026
https://www.cna.com.tw/news/acn/202610020039.aspx
Germany Faces Deepening Manufacturing Downturn Amid “China Shock 2.0”
Germany is facing growing pressure on its manufacturing sector as exports to China and industrial employment decline. According to the Centre for European Reform, exports to China from all major European economies except the Netherlands have fallen over the past five years, with Germany and Sweden recording some of the sharpest declines. Germany’s exports to China as a share of GDP fell from about 0.71 percent in 2022 to 0.48 percent in 2025. Jürgen Matthes of the German Economic Institute estimated that China-related exports supported about 1.1 million German jobs at their 2021 peak, but roughly 400,000 have since disappeared.
The employment losses have triggered growing labor unrest. On September 21, more than 175,000 workers joined a nationwide strike, disrupting production at more than 200 factories. Germany’s industrial sector is reportedly losing about 15,000 jobs per month. Volkswagen expects its 2026 revenue to fall by €6.9 billion from the previous year and plans to cut 50,000 jobs in Germany by 2030. Porsche reported a 16 percent decline in global vehicle deliveries in the first half of 2026, while auto-parts supplier ZF reported a €2.1 billion loss and plans to eliminate 11,000–14,000 German jobs by the end of 2028.
The broader EU-China trade imbalance has also widened. European Commission President Ursula von der Leyen warned on September 16 that the EU’s trade deficit with China had reached €1 billion per day and that the economic relationship was approaching a “tipping point.” Eurostat data showed an EU goods trade deficit with China of €359.8 billion in 2025, while the second quarter of 2026 alone recorded a deficit of €103 billion. Germany’s trade deficit with China reached €89.9 billion in 2025, while German exports to China fell another 14.5 percent in the first five months of 2026.
Analysts have described the trend as “China Shock 2.0,” with Chinese competition increasingly affecting Germany’s exports and domestic industrial production. MERICS economist Esther Goreichy said the pressure was hitting two major pillars of Germany’s economy—exports and industrial production. The report also highlights BASF, whose Ludwigshafen workforce fell below 30,000 for the first time since 1954, while the company has invested €8.7 billion in a large production site in Zhanjiang, Guangdong.
Source: Aboluo, September 28, 2026
https://www.aboluowang.com/2026/0928/2438857.html
Chip Curbs Reframed: Can China’s AI Models Keep Running on Domestic Computing Power?
An article from the Huxiu business outlet argues that Chinese large models will keep running even if top chips become unobtainable. Domestic chips already carry real workloads and is capable to support the running of large models. Zhipu operates a 100,000-card inference cluster that handles all live traffic for its GLM-5.3-Flash model, and its anonymous Ox-Alpha model has processed 62 trillion tokens on overseas platforms. Meituan trained LongCat-2.0 on domestic hardware. Efficiency lags, though: Huawei’s Ascend 910C reaches roughly 30-35 percent training utilization versus 40-50 percent for Nvidia H100 clusters. Since cost per token depends on chips, software, and model design, firms are optimizing the latter two.
Four firms are taking different paths. Zhipu is going asset-heavy, acquiring compiler firm Zhongke Jiajia and raising $5 billion in September. Management says 30 billion yuan ($4.2 billion) of compute, split 40 percent training and 60 percent inference, could generate up to 40 billion yuan ($5.6 billion) in annual revenue, a theoretical estimate. MiniMax, whose cloud costs exceeded 90 percent of cost of sales, is moving from renting to building domestic clusters that are not yet carrying live traffic. DeepSeek bets on model efficiency, yet raised V4-Pro prices in August due to chip limits; its 160,000-card cluster is reportedly not due until late 2027 or early 2028, and prices may fall once Huawei’s Ascend 950 ships in volume. Kimi uses open-source models and ecosystem partnerships to shorten the adaptation cycle for domestic chips; its models were quickly adapted by Huawei, Alibaba’s T-Head, Hygon, Moore Threads and Biren, but demand after K3’s launch forced it to pause new consumer sign-ups.
Adaptation solves “can run”; owned compute solves “can afford.” The author urges tracking capacity, efficiency, and cost per token, ranking Zhipu the surest short-term bet, DeepSeek the highest-upside medium-term one, and MiniMax and Kimi as unproven.
Source: Huxiu, September 25, 2026
https://www.huxiu.com/article/4893261.html