China Expands Tax Scrutiny of Offshore Trusts Held by Wealthy Individuals
As China’s economic growth slows and fiscal pressures mount, authorities are reportedly expanding tax enforcement to offshore trusts, which have long been used by wealthy Chinese individuals to protect assets, manage inheritance, and mitigate financial and political risks.
Sources inside China said that tax authorities in Shanghai, Jiangsu, Shenzhen, and other jurisdictions have begun requiring owners of offshore trusts to disclose detailed financial information, including dividend income and capital gains from share sales. Shanghai reportedly began collecting information on income earned during the previous two years in early 2025. In one reported case, a local tax bureau imposed a 20 percent tax on investment income along with additional penalties. The campaign targets trusts established in offshore jurisdictions such as the Cayman Islands, the British Virgin Islands, the Cook Islands, and Hong Kong.
A 2023 study found that the Chinese business elites’ use of offshore family trusts accelerated after 2018, with founders of more than 60 overseas-listed Chinese companies establishing such structures. According to the China Business Journal, in 2018 alone at least 15 Chinese entrepreneurs listed in Hong Kong established offshore trusts, transferring an estimated US$28.5 billion in assets overseas. They included Alibaba founder Jack Ma, PDD Holdings founder Colin Huang, Xiaomi founder Lei Jun, and JD.com founder Richard Liu (Liu Qiangdong).
Analysts believe most wealthy individuals are unlikely to conceal offshore assets, as their businesses, families, and core assets remain closely tied to China, making the legal and political consequences of noncompliance potentially severe. Instead, many are expected to adopt a strategy of public compliance while quietly restructuring their holdings, redesigning family trust arrangements, and accelerating the overseas relocation of assets—and, in some cases, their personal residency.
Source: Epoch Times, June 5, 2026
https://www.epochtimes.com/gb/26/6/4/n14782255.htm
Revolving Door Between China’s State Security and Foreign Affairs Systems
China’s Ministry of Foreign Affairs has appointed Li Qian, a former vice minister of the Ministry of State Security (MSS), as head of the Central Commission for Discipline Inspection (CCDI) team stationed at the ministry. Analysts say the appointment reflects Beijing’s growing emphasis on political security within the diplomatic corps.
The appointment follows a series of high-profile personnel exchanges between China’s foreign affairs and state security systems. Former Vice Foreign Minister Sun Weidong resurfaced this year as Executive Deputy Director of the Office of the Central National Security Commission, while Liu Haixing moved from the Foreign Ministry to the national security apparatus before returning to head the CCP’s International Department. Analysts view these appointments as evidence of increasingly close institutional ties between China’s diplomatic and state security systems.
The personnel shifts have renewed scrutiny of the intelligence role of Chinese diplomats abroad. Critics point to the 2023 expulsion of Chinese diplomat Zhao Wei from Canada over allegations of intimidating a lawmaker, while former U.S. diplomat John J. Tkacik Jr. has argued that former Foreign Minister Qin Gang may have conducted intelligence work under diplomatic cover. Some commentators also contend that China’s foreign-language universities have long served as recruitment channels for the Ministry of State Security, further blurring the line between diplomacy and intelligence.
Source: Epoch Times, July 10, 2026
https://www.epochtimes.com/gb/26/7/10/n14806905.htm
Report Warns of Sharp Decline in U.S. Students Studying in China
A 2026 report by the U.S.-China Education Trust (USCET) found that fewer than 2,000 American students are currently studying in China, down more than 80 percent from approximately 11,000 in 2019. The number peaked at around 15,000 during the 2011–2012 academic year before plunging during the COVID-19 pandemic, when China’s border restrictions reduced the U.S. student population to as few as 300–350.
The report says the sustained decline reflects more than the lingering effects of the pandemic. It attributes the downturn to deteriorating U.S.-China relations, intensifying strategic competition in areas such as defense and technology, China’s national security policies, exit bans, and growing concerns over personal safety. According to the Institute of International Education’s Open Doors data, the number of American students in China rebounded to about 1,749 in the 2023–2024 academic year but has remained below 2,000, far below pre-pandemic levels.
Former U.S. Ambassador to China Nicholas Burns warned that if the trend continues, the United States could face a serious shortage of China specialists over the next decade. He argued that a shrinking pool of Americans with firsthand knowledge of China’s language, culture, society, and political system would weaken the ability of the U.S. government, businesses, and academic institutions to understand China and formulate effective policies.
Source: Epoch Times, July 23, 2026
https://www.epochtimes.com/gb/26/7/22/n14815062.htm
Report Claims “Restoration Party” Is Expanding Anti-CCP Activities
Yuan Hongbing, a Chinese legal scholar living in Australia, citing sources inside the Chinese Communist Party (CCP), claimed that an internal Ministry of Public Security document circulated after July 1 acknowledged widespread inaction and declining morale among officials responsible for China’s domestic stability maintenance system. According to Yuan, “lying flat,” bureaucratic inertia, and passive non-compliance have become increasingly common among local public security and grassroots officials.
The sources attributed the trend primarily to mounting fiscal pressures on local governments. Budget shortfalls have resulted in delayed or reduced salaries and bonuses for police officers, while grassroots officials—including neighborhood committees, township governments, and village Party branches—have also experienced prolonged delays in wage and subsidy payments. Yuan argued that these financial constraints have weakened the effectiveness of the CCP’s stability maintenance apparatus, particularly at the county and township levels.
Yuan also claimed that the same internal document identified an anti-CCP organization known as the “Restoration Party” (复国党), which reportedly advocates overthrowing Xi Jinping’s rule and replacing the current political system with a “Republic of China 2.0” framework. According to the report, the group has adopted a decentralized, cell-based organizational structure to expand its activities inside China.
Yuan further claimed that the Restoration Party has carried out operations in the Beijing–Tianjin region to seize what it describes as illicit wealth held by CCP officials, with the stated goals of assisting the public and financing anti-CCP resistance activities. According to Yuan, the group has conducted more than 100 successful operations and has also organized anti-CCP graffiti campaigns in multiple regions across China. He argued that declining enforcement by local stability maintenance authorities has created unprecedented opportunities for domestic resistance movements. The authenticity of the Ministry of Public Security document and Yuan’s claims could not be independently verified.
Source: NTDTV, July 15, 2026
https://www.ntdtv.com/gb/2026/07/15/a104115463.html
Chinese Courts Rule Against Pension Suspensions in Two Falun Gong Cases
The Chinese Communist Party (CCP) has persecuted Falun Gong practitioners since launching its nationwide campaign against the spiritual group in July 1999. In addition to imprisonment and other forms of physical and legal persecution, authorities have also imposed financial penalties, including dismissals from employment and suspension of pensions. Although China’s laws protect citizens’ pension rights, Minghui.org has documented numerous cases in which Falun Gong practitioners have had their pensions suspended or been ordered to repay previously received benefits after serving prison sentences.
However, two recent court rulings have challenged this CCP’s longstanding practice.
One case involved Jia Fengxian, a 62-year-old retired government employee in Zhuozhou, Hebei Province. She was sentenced to seven months in prison in 2019 for distributing information about Falun Gong. In February 2026, the Zhuozhou Social Insurance Service Center suspended her pension and demanded repayment of approximately RMB 480,000 (US$71,000) in pension benefits, citing an internal government document. The agency also filed a civil lawsuit against her. On June 25, the court dismissed the case, ruling that the Zhuozhou Social Insurance Service Center and Jia Fengxian were not equal civil parties, making the agency’s civil lawsuit legally improper.
A second case involved Cui Zhongxin, 89, and his wife Qi Guoxin, 84, both retired employees of the Liaohe Oilfield system in Liaoning Province. After serving prison sentences related to their Falun Gong practice, the couple’s pensions were suspended in 2020. After years of unsuccessful petitions and legal challenges, the Liaoning Provincial High Court ruled on March 2 that the pension suspension was unlawful, ordered the authorities to restore the couple’s pension benefits and repay the withheld funds, and overturned the earlier lower-court rulings.
Source: Epoch Times, July 15, 2026
https://www.epochtimes.com/gb/26/7/14/n14809468.htm
Chinese State-Owned Enterprises Reportedly Ordered to Replace Anthropic’s Claude Code
A notice circulating on Chinese social media claims that state-owned enterprises in Shandong Province have been instructed to investigate employees’ use of Anthropic’s Claude Code and other foreign AI coding assistants and replace them with domestic alternatives. The notice alleges that Claude Code contains a hidden detection mechanism that identifies users in China’s time zone or those accessing the service through proxy servers and transmits related information back to Anthropic’s servers.
The directive reportedly originated from provincial cyberspace authorities and was distributed throughout Shandong’s state-owned enterprise system. It follows a July 8 advisory issued by China’s Ministry of Industry and Information Technology, which warned that certain versions of Claude Code contained a potential “security backdoor” and recommended uninstalling or upgrading the affected software.
Chinese technology media reported that reverse engineering found Claude Code collected information such as users’ system time zones and proxy settings and attached hidden markers to certain network connections. However, a Chinese network engineer said such behavior does not necessarily indicate the existence of a backdoor, noting that many software products collect similar information for security and anti-abuse purposes. He argued that Beijing demands Chinese software to set up “backdoor” but warns about foreign software for “backdoor” activity, to reinforce public distrust of foreign technology.
Chinese technology media reported that reverse engineering found Claude Code collected information such as users’ system time zones and proxy settings and attached hidden markers to certain network connections. However, a Chinese network engineer said such behavior does not necessarily indicate the existence of a backdoor, noting that many software products collect similar information for security and anti-abuse purposes. He argued that while Beijing requires domestic software to incorporate “backdoors,” it simultaneously portrays similar data collection by foreign software as evidence of espionage or security risks, reinforcing public distrust of foreign technology.
Source: Epoch Times, July 18, 2026
https://www.epochtimes.com/b5/26/7/17/n14811411.htm/amp
Leaked China–Russia Plan to Counter Starlink Satellites
A July 10 investigative report by the Kyiv Post cites a leaked briefing from a Chinese military forum indicating that the Chinese Communist Party (CCP) and Russia have discussed strategies to counter SpaceX’s Starlink satellite communications network as part of a broader framework for military-technology cooperation. The document, reportedly prepared by the China Aerospace Science and Technology Corporation (CASC), outlines a range of measures designed to degrade Starlink through kinetic attacks, electronic warfare, and cyber operations.
The briefing proposes three categories of countermeasures. First, it advocates cost-effective anti-satellite operations capable of destroying multiple low-Earth-orbit satellites with a single munition, potentially through anti-satellite weapons or other interception methods. Second, it recommends deploying high-powered electronic jamming systems to disrupt Starlink communications in targeted areas. Third, it outlines cyber operations aimed at compromising the network through malware implanted in Starlink ground terminals, potentially disrupting or disabling satellite communications.
Beyond military and technical measures, the document proposes diplomatic and regulatory efforts to constrain Starlink’s global expansion. It suggests that China and Russia coordinate through international organizations to argue that the rapid growth of Starlink’s satellite constellation increases collision risks and complicates space governance, while also challenging SpaceX’s use of radio spectrum and low-Earth-orbit resources. If authentic, the leaked briefing suggests that Sino-Russian military cooperation is extending beyond joint exercises to include coordinated strategies for undermining Western space-based communications infrastructure.
Source: Aboluo, July 15, 2026
https://www.aboluowang.com/2026/0715/2408385.html
Chinese Economist Admits Economy Has Remained “Too Cold” for Three Years
Public criticism of China’s economy by prominent Chinese scholars is relatively uncommon. However, at the 122nd China Macroeconomy Forum (CMF) on July 11, Li Daokui (李稻葵), dean of Tsinghua University’s Institute for Chinese Economic Practice and Thinking, acknowledged that China’s economy has remained “too cold” for the past three years and estimated the country’s broad unemployment rate at 10.2 percent.
Li argued that China’s greatest economic challenge is not a K-shaped recovery or widening economic polarization, but a prolonged, broad-based slowdown affecting the entire economy. He warned that strong performance in a few sectors cannot compensate for weakness across the broader economic base.
Li highlighted two indicators that he believes require urgent attention: broad unemployment and fixed-asset investment. His research team recalculated China’s unemployment rate by including discouraged workers who have stopped actively seeking jobs but still want employment. Based on this methodology, he estimated the broad unemployment rate at 10.2 percent, including approximately 24 million long-term discouraged workers, of whom about 13 million are between the ages of 16 and 24. He warned that persistently high youth unemployment poses a risk to social stability.
Li also pointed to the continued contraction in fixed-asset investment, noting that investment declined throughout 2025 and fell another 4.1 percent year-on-year during the first five months of 2026—an unusually prolonged downturn. He attributed the slowdown to the exhaustion of China’s traditional growth drivers, arguing that neither the property sector nor large-scale infrastructure investment is providing the economic momentum that fueled growth over the past two decades.
Source: United Daily News (Taiwan), July 14, 2026
https://money.udn.com/money/story/5603/9626860