China Accelerates Local Government Debt Restructuring and LGFV Exit
China’s latest round of local government debt restructuring, launched in 2024, is centered on replacing high-interest, short-term hidden debt with lower-interest, longer-term local government bonds. In November 2024, Finance Minister Lan Fo’an announced a RMB 6 trillion (US$890 billion) debt ceiling for replacing existing hidden local government debt, to be implemented over three years at RMB 2 trillion annually from 2024 to 2026. A report released by the National People’s Congress Standing Committee on August 25 showed that RMB 5.73 trillion of the bonds had been issued by the end of July 2026, with the program expected to save about RMB 600 billion in cumulative interest expenses.
Local governments previously relied on local government financing vehicles (LGFVs) to fund infrastructure projects because of restrictions on official borrowing quotas. Many LGFVs raised funds through bank loans or bond issuance, using assets such as land as collateral. However, the property market downturn reduced land prices and land-sale revenues, putting pressure on LGFV assets and cash flows and exposing accumulated local government debt risks.
In late August, authorities issued a notice requiring local financing platforms to exit the government financing platform system by the end of June 2027. According to Securities Times, platforms must meet three conditions to exit: eliminate hidden debt, sever government financing functions and become independently operated market entities, and either clear their operating financial debt or obtain approval from creditors holding at least two-thirds of the financial debt.
The transition has accelerated. More than 82 percent of financing platforms had reportedly exited by the end of 2025, while 226 additional LGFVs announced exits in 2026. However, some experts noted that certain platforms had completed only procedural exits through renaming, mergers, or debt swaps, without developing independent market-based businesses or sustainable profitability. After an LGFV exits, its debt becomes local governments’ official debt.
For China’s local governments, an immediate challenge will be how to raise funds for infrastructure and other investments after losing LGFVs as a major financing channel.
Source: Epoch Times, September 6, 2026
https://www.epochtimes.com/gb/26/9/5/n14843523.htm
China’s Credit Card Numbers Keep Falling Despite New Interest Subsidies
China’s central bank has rolled out fresh incentives to boost consumer spending, including subsidies on interest for credit card installment payments. Yet newly released data show the number of credit cards in circulation continues to shrink.
According to the People’s Bank of China’s latest payment system report, the combined total of credit and debit cards nationwide stood at 677 million by the end of the second quarter of 2026 — down 10 million from the first quarter. The figure has now declined for 15 consecutive quarters, falling by 130 million cards from its peak of 807 million at the end of the third quarter of 2022.
Mainland media outlet Economic Daily attributes the drop to the rise of mobile payments and online credit. Where consumers once relied almost exclusively on credit cards for small transactions and everyday spending, apps like WeChat Pay and Alipay, along with lightweight credit tools such as Huabei and Baitiao, now integrate seamlessly into online shopping, food delivery, and ride-hailing — requiring no in-person application or approval wait. Analysts say this convenience has outpaced the traditional, paperwork-heavy credit card.
There has also been a cultural shift: overspending and buying on credit, once seen as markers of a better lifestyle, have fallen out of favor as many younger consumers grow wary of taking on debt.
To stimulate spending, Beijing began subsidizing interest on personal consumption loans last September, initially excluding credit cards. In January, credit card installment billing was added to the subsidy program, and its scope was expanded further in August. Under the policy, any credit card installment purchase now qualifies for interest subsidies, capped at 5,000 yuan (approximately US$745) per borrower, per lending institution, per year.
Source: Central News Agency (Taiwan), September 8, 2026
https://www.cna.com.tw/news/acn/202609080100.aspx
Overseas Chinese Report Chinese Police Require Information on Their Work and Life
Several overseas Chinese nationals have recently reported that Chinese police are using “big data” to identify people who have lived abroad for extended periods and requiring them to provide information demonstrating that they are legally living and working overseas. The reports have sparked criticism online, with some users accusing authorities of expanding surveillance and control over Chinese citizens abroad.
On August 23, an Australia-based user said police contacted her family and then reached her through the local village committee, requesting proof of study, employment, and even salary records. Other users reported similar experiences. A Singapore-based user said police contacted her through WeChat and demanded photographs and employment documents, allegedly warning her of “consequences” if she refused.
On August 30, a U.S.-based user shared chat records showing that local police claimed to be using “big data” to identify long-term overseas residents and verify whether they were “legally living and working” abroad. Police reportedly requested passports, visas, photographs, video calls, and location sharing, but did not provide a clear legal basis for the requests.
Other accounts describe more intrusive measures. One overseas worker said Chinese police required her to unlock her phone and spent about two hours examining her photos, WeChat conversations, and Taobao, a Chinese online shopping platform, search history.
Source: NTDTV, September 2, 2026
https://www.ntdtv.com/gb/mkt_ipad/2026/09/01/a104129222.html
CCP Establishes New Central Leading Group to Strengthen Social Governance
The Chinese Communist Party (CCP) has established a new Central Leading Group for Social Governance (中共中央社会治理工作领导小组), headed by Politburo Standing Committee member Cai Qi, to improve cross-departmental coordination, strengthen social governance, and maintain social stability. The group is believed to have been established around the time of the Central Social Work Conference in November 2025, although its existence was publicly disclosed only later by local authorities.
The CCP established the Central Social Work Department in 2023 to oversee social work and grassroots Party-building. Since then, it has strengthened Party-building and management of the 84 million “new employment groups,” including delivery workers, couriers, and ride-hailing drivers. It has also tightened regulation of national industry associations and chambers of commerce.
Cai Qi is believed to head the Central Leading Group for Social Governance, with Li Ganjie, Li Shulei, Chen Wenqing, and Mu Hong serving as deputy heads. Local disclosures subsequently confirmed the group’s establishment. In April, authorities in Henan’s Sheqi County stated that the group’s office was located within the Central Social Work Department, while in August, officials in Zhejiang’s Chun’an County referred to directives from a meeting of the central group.
In July, the CCP Central Committee and the State Council issued guidelines on strengthening social work in the new era, calling for stronger Party influence in emerging sectors, greater Party-building efforts within internet-platform companies, and new approaches to Party-building in technology companies. The guidelines also called for improved petition and complaint-handling mechanisms and for social conflicts to be resolved at the grassroots level before they escalate.
Source: Mingpao, September 8, 2026
https://news.mingpao.com/pns/中國/article/20260908/s00013/1788800364595/中國透視-中央社會治理小組-橫空殺出-蔡奇掛帥-文-劉實
Chinese Researchers Report Major Advance in Seawater Uranium Extraction
Scientists at the Qingdao Institute of Bioenergy and Bioprocess Technology, part of the Chinese Academy of Sciences, say they have developed new materials for extracting uranium from seawater, with results published in the Journal of Hazardous Materials and Separation and Purification Technology.
The South China Morning Post reported on September 4 that the Chinese method is several times more efficient than a target set by the U.S. Department of Energy, potentially putting China ahead in efforts to tap this vast nuclear fuel source. State-run Science Daily, in a September 2 report on the same findings, described how researchers used a novel molecular design approach to create a phosphate-functionalized porous material called PhosCage, later combined with aramid nanofibers into composite aerogel microspheres (AC-POC) resistant to biofouling.
According to the Science Daily account, PhosCage reached adsorption equilibrium within five minutes in lab tests and achieved a uranium capacity of 50.4 mg/g in real seawater samples — 8.4 times the DOE benchmark. The AC-POC microspheres, tested continuously for 15 days in natural seawater, achieved a dynamic capacity of 22.55 mg/g, 3.8 times the benchmark, while their negative surface charge reportedly suppressed microbial attachment.
The report noted China’s growing reliance on imported uranium, citing World Nuclear Association data showing domestic mines produced 1,600 tonnes in 2024 against reactor demand of roughly 13,000 tonnes. It also recalled earlier, less successful U.S. efforts at Oak Ridge and Pacific Northwest National Laboratories, where costs remained far above land-based mining.
Both outlets noted limitations: tests used only 25 liters (about 6.6 gallons) of near-shore Qingdao seawater in a lab system rather than open-ocean conditions, and neither study priced the recovered uranium. Researchers said future work will focus on scaling up production and cutting costs.
Source: Guancha.cn, September 5, 2026
https://www.guancha.cn/industry-science/2026_09_05_830106.shtml
China Steps Up Xi Jinping Ideology in School Textbooks
Chinese Vice Premier Ding Xuexiang called for strengthening the Communist Party’s oversight of textbook development, saying schools must “firmly grasp the correct political direction and value orientation,” according to state broadcaster Xinhua. Ding made the remarks at a national textbook conference in Beijing on September 8.
Ding said China should deepen its grasp of education’s “political, people-oriented, and strategic attributes” and accelerate building a textbook system with “Chinese characteristics.” He called for using “Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era” to shape students’ values, and for stricter management of textbook editing, review, and selection.
Separately, the Party mouthpiece People’s Daily ran a front-page article the previous day describing textbooks as a matter of “state authority” supporting China’s push to become an “education powerhouse.” According to the article, unified textbooks for morals and rule of law, Chinese language, and history now cover all school levels nationwide, with a revision process begun in 2022 completed this fall. A student reader based on Xi’s ideology has been used nationwide since 2021, purportedly fostering student “identification with and confidence in” Communist Party rule.
The article noted a new section, “the CCP as the mainstay of the war of resistance,” was added to a history-textbook chapter on the victory over Japan. It also said a university-level textbook on “socialist political economy with Chinese characteristics,” incorporating Xi’s policy concepts, has been piloted at more than 40 universities since spring 2025. China’s education ministry reportedly aims to complete a self-directed textbook system covering 29 academic disciplines by 2030, alongside a separate biology-textbook initiative involving over 50 academicians.
Source: Central News Agency (Taiwan), September 8, 2026
https://www.cna.com.tw/news/acn/202609080336.aspx
Epoch AI: Huawei Won’t Be Able to Catch Up with Nvidia by 2030
Epoch AI published an analysis of Huawei’s AI chip roadmap through 2031, concluding that Huawei is unlikely to catch up with Nvidia in AI computing capacity by 2030. U.S. export controls continue to limit Huawei’s access to advanced semiconductor manufacturing and high-bandwidth memory (HBM), constraining both chip performance and production capacity.
- Growing compute gap: Epoch AI estimates that Huawei will produce less than 4 percent as much AI compute as Nvidia in 2026. If Huawei relies entirely on domestically produced HBM, its output could fall to around 1 percent of Nvidia’s by 2028.
- Key bottleneck—HBM: Huawei’s immediate challenge is access to sufficient HBM. As China expands domestic HBM production, the bottleneck is expected to shift from memory supply to chip performance. Even a major increase in HBM production may not close the gap, as Nvidia is simultaneously advancing its chips and adopting more advanced manufacturing processes.
- Huawei’s strategy: Huawei plans to improve its AI chips through higher performance, greater connectivity among chips, and more efficient software utilization. Epoch AI estimates that Huawei’s chips could remain roughly three to four years behind Nvidia through 2030.
- LogicFolding technology and potential limitations: Huawei’s longer-term strategy centers on LogicFolding, a 3D chip-stacking technology designed to increase transistor density without requiring the most advanced lithography equipment. The technology is not expected to reach Huawei’s Ascend line until 2030. Nvidia is also developing stacked-logic technology and may deploy it earlier, potentially limiting Huawei’s ability to gain a lasting technological advantage.
Overall, U.S. export controls appear to be slowing rather than stopping China’s AI chip development. Huawei could narrow the gap through advances in 3D stacking, software, manufacturing, and domestic supply chains. However, based on current technology and production trends, Epoch AI concludes that Huawei is unlikely to match Nvidia’s AI computing capacity by 2030.
Source: Epoch AI, September 4, 2026
https://epoch.ai/publications/huaweis-roadmap-to-2031
Leaked Documents Show China Used Aid to Buy Other Countries’ Support to Suppress Taiwan
Taiwanese media outlet SET News obtained documents allegedly leaked from China’s diplomatic system that appear to show Beijing offering financial assistance to secure diplomatic support against Taiwan. One set of documents concerns Micronesia, while another reportedly involves the African Union. SET News said the documents provide the first apparent Chinese official documentation of Beijing using financial assistance to obtain diplomatic support and restrict Taiwan’s international space.
The documents were allegedly leaked by an insider within China’s diplomatic system and circulated on the dark web through an X account called “hCharizard.”
According to the leaked documents, in late March, the Chinese Embassy in Micronesia sent a diplomatic note asking Micronesia to support Beijing’s position on Taiwan at the 79th World Health Assembly (WHA), including by submitting a letter prepared by China. On April 8, Micronesia’s Foreign Ministry replied that it had submitted the letter, signed by Health and Social Affairs Minister Marcus Samo, supporting the “one-China” principle and opposing Taiwan’s participation in the WHA.
Taiwan’s participation proposal was subsequently rejected at the May 18–23 WHA, marking its 10th consecutive year of exclusion.
The leaked documents also showed a June 10 diplomatic note from the Chinese Embassy offering Micronesia RMB 1 million (US$149,000) in aid, with the funds specifically designated for purchasing one to three Chinese-brand VIP vehicles for the Micronesian Foreign Ministry. Transportation and maintenance costs could also be covered. On June 23, Micronesia’s Foreign Ministry agreed to the revised donation agreement and said it would arrange its signing as soon as possible.
Another batch of documents reportedly shows China proposing RMB 200 million (US$ 28 million) in assistance to the African Union, along with possible request for additional funding.
Source: SET News (Taiwan), September 7, 2026
https://www.setn.com/news/1902651