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
Former PLA Eavesdropper and Special Forces Veteran Among Chinese Nationals Accused of Spying in South Korea
Two Chinese nationals with People’s Liberation Army (PLA) backgrounds have been charged or detained in South Korea over alleged military espionage, according to a report that cites a prosecution indictment. The case has fueled suspicion that Beijing is running organized intelligence operations there.
The first suspect, a man in his 60s identified as A, allegedly served 40 years in a PLA signals-monitoring unit under the General Staff Department in Beijing, retiring as a lieutenant colonel. Prosecutors say he intercepted military communications 13 times between March 2024 and August 2026, using radio receivers and antennas set up in hotel rooms near air force towers and runways. Seven of the incidents took place at Gunsan, which hosts both South Korean and U.S. air forces. He allegedly took 13.9 terabytes of recordings and frequency data back to China. He was arrested at a Gunsan hotel after re-entering the country shortly before the Ulchi Freedom Shield exercise. He says it was “a hobby.”
The second suspect, B, is an ethnic Korean Chinese in his 40s and a Chinese Communist Party member who allegedly served in PLA special forces and public security from 1998 to 2006. Running a military-uniform shop near Camp Humphreys, he allegedly cultivated a U.S. soldier and a South Korean civilian employee at U.S. Eighth Army headquarters with meals and gifts. He is accused of obtaining footage of Apache and F-35 training, parachute drills and exercise review materials, then passing summaries to outside parties through Chinese messaging apps and social media. B says he was merely building rapport for his business.
Experts note a string of similar cases, including Chinese nationals convicted for photographing naval and air bases. They warn that dissolving the military counterintelligence command and curtailing prosecutors’ powers, leaving roughly 100 police investigators on counterespionage, could worsen the problem.
Source: Chosun Daily, September 29, 2026
https://cnnews.chosun.com/client/news/viw.asp?nNewsNumb=20260965450
China Launches First AI Capacity-Building Program for Officials from 37 Developing Countries
At the 2026 World Artificial Intelligence (AI) Conference in Shanghai in July, Xi Jinping announced that China would provide 5,000 AI training opportunities to developing countries over the next five years.
As part of the initiative, China opened its first AI capacity-building seminar in Beijing on September 7, bringing together senior government officials and AI policymakers from 37 developing countries, including Kazakhstan, Russia, Algeria, and Brazil. The six-day program was hosted by the Chinese Foreign Ministry and organized by Peking University.
The seminar focused on AI safety and governance, technological advances, innovative applications, and international cooperation. In addition to seminars and roundtable discussions, participants visited Chinese AI research and industrial sites, including the Beijing Academy of Artificial Intelligence, Zhongguancun, a humanoid-robot data-training center, and the Shougang Park technology hub. The program is intended to showcase China’s AI capabilities and development model, covering areas ranging from AI for Science and embodied intelligence to research, innovation ecosystems, and industrial applications.
Source: International Center for Science and Technology Innovation website, September 9, 2026
https://www.ncsti.gov.cn/kjdt/xwjj/202609/t20260909_255655.html
China Introduces Interest Subsidies for First-Home Mortgage Loans
On September 29, China’s Ministry of Finance, the People’s Bank of China, and the National Financial Regulatory Administration issued a notice introducing a mortgage interest subsidy program for homebuyers. The policy, which takes effect on October 1, focuses on first-time homebuyers purchasing smaller, lower-priced homes and is intended to reduce their mortgage interest costs.
Under the policy, eligible households must use a newly issued commercial personal housing loan to purchase their first home, with both new and second-hand homes qualifying. The home must be no larger than 120 square meters (1,292 square feet) and priced at no more than RMB 1.5 million (US$220,000). The government will subsidize interest on up to RMB 1 million of the mortgage at an annual rate of 1 percentage point for up to five years. Based on current first-home mortgage rates, the subsidy is equivalent to roughly one-third of the interest rate. For a RMB 1 million long-term mortgage, it could reduce total interest payments by nearly RMB 50,000.
The policy will initially remain in effect for one year, from October 1, 2026, through September 30, 2027. During the implementation period, all households meeting the eligibility requirements will receive the subsidy, with no overall cap on the amount of fiscal funds available. The government said sufficient funds have been budgeted, with subsidies to be settled based on actual eligible claims.
Source: National Financial Regulatory Administration website, September 29, 2026
https://www.nfra.gov.cn/cn/view/pages/ItemDetail.html?docId=1273762&itemId=915
Belgium Detains Chinese-Belgian Suspect in Semiconductor Espionage Case
Belgian prosecutors said a 52-year-old man identified as H.L., who holds Chinese and Belgian citizenship, has been in pretrial detention since May on suspicion of semiconductor-related espionage. H.L., a former senior executive at Belgian chipmaker BelGaN, was arrested at Brussels Airport on May 10 while preparing to fly to Beijing. He is suspected of illegally transferring proprietary intellectual property and trade secrets related to gallium nitride (GaN) chip production overseas. BelGaN, which developed GaN chips used in electric vehicles, aerospace, and military applications, declared bankruptcy in July 2024, resulting in approximately 420 job losses.
Belgian media reported that investigators suspect BelGaN’s Chinese owners, who took control of the company in 2021, may have sought to transfer its technology to China rather than revive the company. H.L. allegedly also held a senior position at Chinese semiconductor company Gankool (Fuzhou Jiagu Semiconductor) while working at BelGaN. Investigators reportedly found similarities between Gankool’s production technology and BelGaN’s and suspect an arrangement to transfer BelGaN’s intellectual property and trade secrets to Gankool. A second suspect remains at large, while BelGaN’s former CEO, Chinese national Alan Zhen Zhou, is also reportedly under investigation. H.L. faces allegations including espionage, unlawful disclosure of trade secrets, participation in a criminal organization, misuse of company assets, and violations of bankruptcy law.
Source: Epoch Times, September 7, 2026
https://www.epochtimes.com/gb/26/9/7/n14844378.htm
Study Times: Strengthening Public Opinion Guidance and Management
Qin Lu, deputy director of the Central Party School’s Department of History and Culture, argues that China’s rapidly changing media environment has made public opinion a growing source of social tensions and a major governance challenge. He proposes the following measures for the authorities to strengthen public-opinion management:
- Shift from emergency response to routine governance: Rather than treating public-opinion incidents as isolated “emergencies,” authorities should integrate public-opinion management into the broader national governance system.
- Address problems before they become public-opinion crises: Qin emphasizes that resolving underlying social and livelihood problems should be the foundation of public-opinion management. Governments should use social-governance centers, the 12345 government-service hotline, public-opinion monitoring, and government social-media platforms to identify public concerns, respond to grievances, and defuse potential tensions.
- Build an integrated system: He proposes combining regular press briefings, daily public-opinion guidance, and emergency response. Government press offices and social-media platforms should proactively explain policies, respond to public concerns, build credibility, and serve as rapid official-information channels when controversies emerge.
- Respond quickly with both “emotion and facts”: Officials should establish clear criteria for when and how to respond to emerging controversies. Initial responses should address both the underlying incident and public emotions through empathy, reassurance, apologies when appropriate, and transparent updates. Qin warns that defensive messaging or attempts to shift responsibility can intensify negative sentiment and trigger secondary controversies.
- Strengthen information management and preparedness: Government communications should provide both factual information and confidence-building messages, including clear explanations of an incident’s causes, investigation, response, and follow-up. Qin also calls for regular training, simulation exercises, and reviews of past cases to develop practical response plans and improve interdepartmental coordination.
- Overall framework: Qin proposes a comprehensive system of “good governance of people’s livelihoods → information release → public-opinion guidance → public-opinion response,” making public-opinion management a routine component of governance rather than a response limited to exceptional crises.
Source: Study Times, September 18, 2026
https://www.studytimes.cn/llsd/202609/t20260917_91732.html
Chinese Universities Tighten Spending Amid Growing Budget Pressure
Several Chinese universities are urging staff to “practice strict economy and live through tight times” as shrinking budgets increase financial pressure. Beijing Forestry University recently issued measures restricting spending on travel, meetings, training, official receptions, and overtime meals, while Anhui Jianzhu University prohibited reimbursement for tobacco, alcohol, and high-end dishes at research-related meals. Shanxi Finance and Economics Vocational College also tightened rules on official receptions, travel, meetings, and promotional materials.
The financial pressure is reflected in declining budgets at several universities. In 2025, Renmin University’s total budget revenue was RMB 9.17 billion (US$1.37 billion), down RMB 816 million (US$121 million) from the previous year, while Yunnan University and Fuzhou University saw declines of RMB 801 million and RMB 677 million, respectively. Other universities, including the University of Science and Technology of China and Minzu University of China, also reported reduced government funding. Meanwhile, Chinese social media has seen increasing reports of salary and performance-pay cuts among university faculty, including reduced research bonuses, canceled overtime-teaching subsidies, and cases in which poor performance reportedly resulted in salary deductions.
Source: Central News Agency (Taiwan), September 15, 2026
https://www.cna.com.tw/news/acn/202609150331.aspx