In recent weeks, the Chinese cinematic landscape has been entirely dominated by an unexpected phenomenon. 《欢迎来龙餐馆》(Welcome to Dragon Restaurant, I prefer to use this direct translation name rather than the English name: Once Upon a Time in the Middle East), a gritty, unflinching cinematic portrayal of a lone Chinese eatery operating in the crosshairs of a Middle Eastern warzone, has stormed the domestic box office. Grossing hundreds of millions of yuan and sparking intense nationwide discourse, the film has transcended its commercial trappings to become a cultural touchstone. It tells the harrowing yet deeply human story of ordinary people—restaurateurs, orphans, and collateral victims—navigating the macabre daily reality of car bombs and sectarian violence. Yet, beneath the staggering box office figures and the soaring cinematic orchestration lies a foundation of truth so visceral that it has unsettled those who actually lived it.

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For fourteen years, my career as a foreign correspondent has taken me across the globe, yet my resume has always lacked that most extreme of journalistic crucibles: the warzone. I have never experienced the sensory overload of a mortar shell detonating, nor have I typed dispatches with fingers trembling from the aftershocks of a suicide blast. However, in this supposedly peaceful era, my immediate orbit is populated by friends who have walked out of the dust and blood of Iraq, Syria, and Libya. Whenever we sit down over a quiet coffee, I am inevitably struck by a profound stillness in their demeanour. It is a quietude stripped entirely of adrenaline, romanticism, or the Hollywood-style hero complex. It is, rather, an almost religious reverence for the banal tranquillity of ordinary life.

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I. Three Must-Read Heavyweight Reports and the Question of Credibility

In the spring and summer of 2026, the fields of international communication and geopolitics welcomed three watershed reports. In April and July, Gallup and the Pew Research Center successively released their latest global polls, signaling a historic shift: global approval ratings and recognition of China’s leadership have surpassed those of the United States for the first time in both polls. Meanwhile, in June, the Digital News Report published by the Reuters Institute for the Study of Journalism at Oxford University revealed a parallel trend: the global news ecosystem is undergoing an unprecedented structural transformation. Audiences are increasingly turning to social media, video networks, and newly emerging Artificial Intelligence (AI) for information, leaving traditional broadcast television behind.

What changes do these phenomena reflect? Are they connected? For a long-time observer of international news and communication like myself, these three reports are absolute must-reads this year, and the underlying causes demand a deep dive.

The persuasiveness of any poll largely depends on the scientific rigor of its methodology and the representativeness of its sample. Driven by the professional habits of a media worker, my first instinct is always to click the methodology links and scrutinize the details:

• Gallup provided an exhaustive 242-page methodology detailing a sample spanning nearly two decades and covering over 130 countries.

• Pew’s methodology this year was over 30 pages long, accurately detailing cross-sections of race, gender, education, birthplace, partisanship, and political leanings.

Such meticulous disclosure provides a clear understanding of the data collection process, significantly cementing its credibility.

As for the Reuters Institute’s Digital News Report, I have a much more personal connection to it. In June 2023, I was at the Reuters headquarters in London’s Canary Wharf attending the launch of that year’s report. The lead author at the time was Nic Newman. I remember having a detailed conversation with him about the methodology, suggesting they include samples from more countries and regions, and conduct a more granular analysis of different media environments to better capture media characteristics across diverse cultural backgrounds. Today, the project is headed by Jim Egan, a veteran with extensive experience at the BBC and the Financial Times, and the report’s scope has grown even broader.

II. A Historic Reversal in Polling Data and the Deep Restructuring of the Media Landscape

If you carefully study the Gallup and Pew data, you will find that the shift in the international images of the US and China is not a minor fluctuation, but rather a structural displacement spanning multiple global regions, encompassing both US allies and the Global South.

1. A Comprehensive Data Crossover and Reversal

Gallup’s survey across more than 130 countries showed that in 2025, the global median approval rating for China’s leadership rose to 36%, while the US plummeted to 31%. China’s 5-percentage-point lead is the widest gap Gallup has recorded in nearly 20 years.

Even more noteworthy is the shift in “disapproval” ratings: global disapproval of US leadership soared to a record high of 48%, while China’s disapproval rating remained stable at 37%. The US saw its approval rating drop by 10 percentage points or more in 44 countries, with the most severe declines occurring among its traditional Western allies:

• Germany’s approval of US leadership plummeted by 39 percentage points.

• Portugal dropped by 38 points.

• Canada, the UK, and Italy also experienced drastic double-digit declines.

• Among NATO allies, the median approval rating across 31 countries fell by 14 points.

Pew’s in-depth survey of 36 countries further corroborates this trend. In a striking turn of events, America’s land neighbors, Canada and Mexico, both flipped—in Canada, 44% of respondents now hold a favorable view of China, compared to just 33% for the US. Across the 36 countries, the US maintains a favorability lead in only six, including Japan, South Korea, the Philippines, and India.

Regarding personal trust in leaders, confidence in the Chinese leader leads Donald Trump by double digits in major European nations like Germany, the UK, Spain, Italy, and the Netherlands. Furthermore, in a traditional area of Western advantage—”respect for the personal freedoms of its people”—the percentage of respondents in Sweden, Canada, France, and Germany who believe the US government respects personal freedoms has plummeted by over 25 percentage points since 2021. Meanwhile, in middle-income and Global South countries, 75% of respondents believe the US overly interferes in other countries’ affairs. In nations like South Africa, 72% view China as a reliable partner, far exceeding the 46% who say the same of the US.

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1. The Innovation Ripple Across Eurasia

Late July found me in Hefei, East China’s Anhui province, strolling past high-tech corporate towers along Swan Lake. My local colleagues and I were discussing the city’s two proudest hard-tech benchmarks: Changxin Memory Technologies (CXMT), which recently sent shockwaves through capital markets, and the “Artificial Sun” exploring nuclear fusion on Science Island.

This landscape of innovation transported me back to a UK-China business roundtable in London a year prior. There, I visited Octopus Energy, a trailblazing UK firm. Rather than operating traditional power plants, they use dynamic pricing and AI algorithms to guide users to shift electricity usage to off-peak times, substantially lowering costs. Having rapidly captured European market share, they expressed a strong eagerness to collaborate on virtual power plants (VPPs) in China.

The velocity of business outpaced expectations. Shortly after a UK delegation’s return visit to China, Octopus Energy inked deals with China’s Mingyang Smart Energy and, just recently, Chint Group, to jointly develop virtual power plants.

Back at Swan Lake, my colleague decoded the “Hefei Model” underpinning these tech hubs: a strategy where the local government acts as a “super investor,” using patient capital to root high-tech supply chains locally. Would this state-capital fusion be labelled “market-distorting” by Western politicians pushing the “China Shock 2.0” narrative?

I posed this to Colin Ellis, London-based Head of Economic Research at Moody’s Analytics. He offered a highly illuminating assessment, praising the Hefei Model for its “whole-system approach”—integrating academia, industry, and government—and its use of genuine “patient capital” that looks beyond conventional VC cycles. Ellis noted that while Western economists study this framework, state funding in places like the US is far more vulnerable to political cycles and artificial interference, making the “China Model” difficult to replicate.

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2. Tracing the Roots: The Constructed “China Shock 2.0”

Curious about this cognitive gap, I traced the “China Shock 2.0” narrative through USCC reports, Federal Reserve papers, and recent New York Times columns.

“China Shock 1.0,” coined by economists like David Autor around 2013, described the impact of China’s low-end manufacturing exports on US blue-collar jobs in the 2000s. The “2.0” version, which rapidly took shape over the past year, targets China’s new energy and high-end manufacturing. The official Western narrative claims China relies on subsidies to spawn overcapacity, subsequently dumping it globally.

However, reading David Autor’s recent New York Times piece reveals a different tone. The godfather of the “China Shock” concept isn’t just blaming China; he is lamenting America’s industrial complacency. Autor pragmatically argues that tariffs aren’t enough. The US should swallow its pride, learn from China’s “VC + government” innovation model, and encourage Chinese firms to build US factories to spur domestic competition via the “catfish effect.” Furthermore, he advocates establishing an independent strategic investment body “much like the Federal Reserve” to ensure long-term investment in critical sectors like semiconductors.

Autor’s piece reads like a manifesto against current US trade and tech policies, concluding that AI, not just China, is the real looming shock to global labour. In the mouths of top American think tanks, “China Shock 2.0” sounds less like an indictment and more like parents deliberately praising a “brilliant neighbour’s child” to spur their own offspring into action.

3. “China Opportunity 2.0”: Global Dividends in Market, Innovation, and Technology

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🌐 CHINA DECODED

IN THIS ISSUE

• The Big Story: ChangXin Memory Technologies (CXMT) hits the STAR Market with a jaw-dropping ¥3.3+ trillion valuation.

• Anatomy of the “Hefei Model”: How a ¥220B state capital engine catalyzed an ¥840B tech ecosystem—without a nearby megacity.

• The USTC Engine & The Multiplier Effect: The four structural pillars driving Anhui’s surge into China’s top 5 industrial provinces.

• Market vs. Statecraft: Why the West critiques China’s subsidy machine while racing to build its own.

• The Macro Shift: How political logic officially crushed economic efficiency in global tech.

1. THE BIG STORY: THE MOMENT CHINA’S “PATIENT CAPITAL” CASHED IN

On July 27, 2026, Shanghai’s tech-focused STAR Market witnessed a watershed moment.

ChangXin Memory Technologies (CXMT, 688825.SH), China’s premier DRAM chipmaker, went public in a historic debut. Within hours of trading, CXMT’s stock skyrocketed, pushing its market capitalization past ¥3.3 trillion ($450+ billion). In a single session, a semiconductor firm that bled cash for nearly a decade unseated traditional titans like ICBC and Kweichow Moutai to become the most valuable listed entity on mainland exchanges.

For Wall Street, it was a staggering valuation for a memory maker still trailing Korea’s SK Hynix and Samsung in advanced node yield. But for Beijing and local leaders in Anhui province, it was something far more important: The ultimate proof of concept for “State VC 2.0.”

2. DEEP DIVE: DECODING THE “HEFEI MODEL” & THE OPEN CAPITAL ECOSYSTEM

To understand CXMT’s record-breaking debut, you have to look 400 kilometers west of Shanghai to Hefei, the capital of Anhui province. Unlike traditional economic hubs in China, Hefei’s rapid rise was not driven by proximity to a major metropolitan area—a fact that makes its playbook particularly compelling for global policymakers.

Beyond CXMT, Hefei’s unique capital ecosystem has nurtured and attracted headquarters for a constellation of tech leaders across new energy vehicles (NEVs), integrated circuits (IC), and advanced displays.

At the core of this “Hefei Miracle” is what economists describe as a “New Capital Supply Model”—a highly engineered open-capital system resting on four strategic pillars:

1. The Capital Multiplier & Risk Ring-Fencing: By the end of last year, Hefei had used over ¥220 billion in state capital to leverage more than ¥840 billion in total project investment. Hefei avoided touching its immediate annual fiscal budget (which covers public paychecks and hospitals). Instead, it built a combination punch: seed capital from municipal SOE profits, government-guided funds of funds, and ultra-low-interest syndicated loans from state policy banks.

2. The USTC Innovation Anchor: Hefei’s tech clout stems significantly from the presence of the University of Science and Technology of China (USTC). From quantum computing and advanced materials to the EAST superconducting tokamak (”Artificial Sun”), USTC serves as a non-stop engine providing fundamental research breakthroughs and top-tier engineering talent.

3. “Shareholders, Not Bosses”: State platforms act as tactical “de-riskers” and ecosystem builders, voluntarily surrendering voting rights and operational control to professional management teams like CXMT Chairman Zhu Yiming.

4. Long-Term Planning & Business Environment: As Anhui’s Executive Vice Governor Wang Dongwei noted, combining long-term industrial planning, an optimized business environment, efficient fiscal support, and targeted investment attraction creates a self-sustaining loop of investment, employment, and tax revenue growth. Over the past five years, this framework helped propel Anhui’s annual industrial revenue from ¥3.8 trillion to ¥5.9 trillion (jumping from 10th to 5th nationwide). In Q1 this year, Hefei led China’s top 30 cities with a 6.8% YoY GDP growth rate.

3. GLOBAL REALITY CHECK: IS THIS “MARKET DISTORTION”?

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Not long ago, a delegation of 24 young Americans from the US-China Youth Music and Culture Exchange Camp arrived in Beijing, the final stop of their journey across China. They climbed the Great Wall, immersed themselves in the deep history of the Forbidden City, sang a chorus of “You Raise Me Up” outside the Temple of Heaven, and danced late into the night in a traditional Beijing courtyard.

The day coincided with the birthday of Dominic, an American eighth-grader in the group. Their Chinese hosts threw him a warm, festive party and presented every child—including Dominic’s twin brother who couldn’t attend—with a symbolically crafted travel passport (tongguan wudie), wishing them safe passage and lifelong friendship.

Beyond experiencing China’s deep cultural heritage and the genuine hospitality of its people, the teenagers were captivated by the country’s modern, hyper-convenient lifestyle. Faced with a child’s overpacked suitcase bursting with souvenirs that refused to zip shut, one American family used an on-demand delivery app. Within hours, a brand-new, high-quality suitcase was delivered straight to their hotel lobby—a firsthand taste of “China speed.”

One American parent’s reflection captured the prevailing sentiment: “My child doesn’t want to come home—he just wants to stay in China.” As one accompanying teacher observed on WeChat: “The anxiety and hesitation our parents felt when signing up have completely transformed into joy, excitement, and gratitude.”

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From Language Barriers to a Shared Beat

On July 12, Typhoon Bavi swept past the city of Changzhou in Jiangsu Province, leaving fresh rains in its wake. In a local high school rehearsal hall, Marian Poulin, an American conductor with over 40 years of experience and the camp’s delegation leader, was visibly moved by Chinese students performing “From Jasmine to Turandot.”

She immediately invited the American and Chinese students to form a joint ensemble, stepping up to improvise a rehearsal with an orchestra blending Western classical and traditional Chinese instruments. There was no shared native language and zero prior practice. Yet as the erhu harmonized with the violin and the pipa echoed the trombone, cultural barriers melted away in seconds. As Poulin put it: “Differences don’t need to be erased for harmony to exist. That is perhaps what the Chinese mean by ‘harmony in diversity’ (he er bu tong).”

Music connected not only the performers on stage but also the local communities they met along the way. From impromptu street performances in Nanjing to beating hand drums alongside locals dancing and practicing Tai Chi in Changzhou’s Hongmei Park, these young Americans experienced the warm, vibrant rhythm of daily Chinese life.

Benjamin, an 18-year-old violinist from Maryland, was one of the older members of the delegation. Having just graduated high school with an offer from a top California music conservatory, his expressive playing made him a crowd favorite throughout the tour. Offstage, he took care of the younger kids like a big brother. On his final day in Beijing, he was seen patiently holding hands and dancing with an eight-year-old Chinese camper half his height, treating him like family.

“When you face a language barrier, the moment you realize everyone is expressing the same emotion through music, communication suddenly becomes effortless,” Benjamin noted during an interview.

In another memorable event—a “500-RMB Grocery Challenge” at a Changzhou wet market—mixed teams of American and Chinese students bought ingredients, negotiated cooking fees, and even busked on the spot to cover expenses, forging quick friendships through shared laughter. Recalling how he and his Chinese teammates used espresso instead of vanilla extract to bake chocolate cookies, Benjamin smiled: “Seeing the big grins on their faces made every second worth it.”

The Genesis of the “Zhiyin” Initiative
This transpacific reunion traces its roots back to June 28 at Shanyuan Garden in Washington, D.C.

Over 30 students and parents gathered at the venue, including more than 20 young artists set to depart for China on July 12. Hailing from Maryland, New Jersey, Pennsylvania, and Washington, D.C., these middle and high school students possessed formal training across classical instruments, vocal performance, jazz, and rap. After breaking the ice, they began rehearsals under expert guidance—first forming their own ensemble, then preparing to collaborate with Chinese peers on traditional Chinese songs across Changzhou, Nanjing, Shanghai, and Beijing.

The initiative was organized by veteran media executive and civic diplomat Zhou Zhixing and his wife, Yu Shan. Their twin Shanyuan Garden spaces in Washington and Beijing serve as crucial platforms for fostering US-China people-to-people exchanges.

Last year, they organized a visit to China for a youth pickleball delegation from Montgomery County, Maryland. The students wrote a letter to Chinese President Xi Jinping, expressing gratitude for his “50,000 youth in five years” invitation initiative and sharing memories of the friendships they formed. President Xi sent a reply message, encouraging them to be young ambassadors of friendship between the two nations.

This summer, several students from that pickleball trip returned to China at their own expense, staying in the homes of the Chinese friends they met last year. Zhou noted that seeing these young Americans develop a genuine love for China has been deeply encouraging: “Polls show American public perception of China is gradually recovering, and these grassroots youth interactions are undeniably playing a vital role.”

Sowing Seeds for the Next Twenty Years

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From Industrial Icons to Political Takeover

In March 2025, during a train journey from London St Pancras to East Midlands Airport, I passed the Ratcliffe-on-Soar Power Station in Nottinghamshire. The towering, now smoke-free cooling towers stood as a silent testament to the birth of the Industrial Revolution. A British gentleman sitting opposite me remarked that the true remnants of the UK’s industrial genesis lay in his hometown of Scunthorpe, North Lincolnshire, where the nation’s last two blast furnaces were still operating under the ownership of a Chinese private firm, Jingye Group.

That commercial reality dissolved just a month later.

In April 2025, bleeding £700,000 daily due to soaring energy costs, tariff pressures, and high carbon taxes, Jingye planned to halt the blast furnaces. The British government reacted with unprecedented speed. On Saturday, April 12, Parliament was recalled on a weekend for the first time since the 1982 Falklands War, passing an emergency bill within six and a half hours to assume temporary operational control over British Steel.

Following Labour’s historic defeat in the May 2026 local elections, the Starmer administration accelerated legislation to fully nationalize the company. After restructuring talks collapsed, the government introduced the Steel Industry (Nationalization) Bill, ending Chinese control over this strategic asset. While Downing Street maintains that steel remains a cornerstone supporting 33,000 direct jobs, it acknowledges that global overcapacity and high domestic operating costs present existential challenges.

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Diplomatic Clashes and Valuation Chasms

On July 16, 2026, the nationalization bill officially took effect. Prime Minister Keir Starmer and Business Secretary Peter Kyle hailed the move as a defense of “vital sovereign capability” and green transition.

The backlash was immediate. On July 17, China’s Ministry of Commerce expressed “strong dissatisfaction and resolute opposition,” stating the forced nationalization “severely damages Jingye’s legitimate rights and shatters Chinese corporate confidence in UK investments.” Beijing emphasized that Jingye had sustained thousands of British jobs through massive capital injections into a historically loss-making enterprise.

Jingye Group also issued a stern statement against the UK’s position that compensation would only be paid “if any, is payable.” Jingye declared the move a “de facto expropriation” and demanded “prompt, adequate, and effective” compensation, warning that the decision threatens global confidence in the UK business environment. While the UK government allegedly floated a £100 million payout package, Jingye is holding out for a £1 billion valuation based on its accumulated multi-year investments, leaving a massive financial chasm between the two sides.

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The Clash of Structural Realities and Green Transition

Scunthorpe’s steelworks have bounced between nationalization and privatization under alternating Labour and Conservative governments since 1949. By 21st century, the site was repeatedly abandoned by Western capital—bought by India’s Tata Steel in 2007, sold for a symbolic £1 to Greybull Capital in 2016, and driven into insolvency three years later before Jingye’s 2020 rescue.
However, the structural disadvantages of manufacturing in the UK ultimately overwhelmed commercial logic.

Industrial Decline: The UK’s annual crude steel output has dwindled to roughly 4 million tonnes—equivalent to just two weeks of production in Tangshan, China.

Aged Assets & High Energy Costs: Scunthorpe’s remaining blast furnaces were built in 1938 and 1954. Compounding this, the UK’s “marginal cost pricing” system ties industrial power grids to expensive natural gas, leaving electricity prices nearly 50% higher than the EU average.

Brexit Barriers & Carbon Taxes: As one of the UK’s largest carbon emitters, the plant faces steep penalties under the UK Emissions Trading Scheme (UK ETS). Post-Brexit customs barriers have further disrupted its vital export pipeline to the EU.

To save the business, Jingye proposed a £1.25 billion blueprint to replace the coal-reliant blast furnaces with modern Electric Arc Furnaces (EAF), which utilize recycled scrap metal and cut carbon emissions by 80%.

Yet, this plan collided with British political red lines. An EAF transition requires fewer workers, threatening 2,000 to 3,000 layoffs—a disaster for Labour’s union-backed employment pledges. Furthermore, defense hawks argued that abandoning blast furnaces strips the UK of its sovereign capability to forge “primary steel” from raw ore, creating a national security vulnerability. With government transition subsidies capped at a meager £300 million to £500 million, the impasse led to the state’s aggressive intervention.

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The Road Ahead: An Industrial Postscript

Industry experts view the British Steel saga as a textbook case of political interference overriding market realities, culminating in a major international investment dispute. Moving forward, three distinct trends emerge:

A Growing Fiscal Black Hole: Under Jingye, the steelworks lost roughly £250 million annually. Fully nationalized, this drain falls squarely on British taxpayers, while the capital-starved EAF transition risks stalling entirely.

Legal and Reputational Fallouts: Having injected over £1.2 billion into British Steel over five years, Jingye has initiated consultation procedures under the UK-China Bilateral Investment Treaty (BIT), preparing for international arbitration. The dispute severely compromises London’s reputation for protecting foreign private property and contractual integrity.

The Trap of Isolationist Industrial Policy: Forced nationalization reflects a populist retreat from global supply chains. However, absent cheap energy, an integrated manufacturing ecosystem, or consistent policy frameworks, the UK’s quest for “steel sovereignty” will come at an exorbitant price.

Ultimately, the UK government faces two uncomfortable questions from global investors: Is this legalistic seizure true rule of law, or is it a political expropriation under the guise of national security? And can the British Treasury indefinitely bankroll a commercial drain that directly contradicts its 2035 net-zero goals?

The answers mirror the cold, disused cooling towers at Ratcliffe-on-Soar. The historic architecture longs to preserve the glory of the industrial past, but modern realities can no longer sustain it. While British politicians pass this hot potato down the line, the Chinese private investors who made immense financial sacrifices to preserve British jobs deserve fair and lawful treatment—not to be made the casualties of geopolitical friction and populist electoral math.

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Three days ago, a Beijing-based AI startup did something that Silicon Valley has been dreading but refusing to acknowledge as inevitable. Moonshot AI—the company named after humanity’s most audacious technological ambitions—unveiled Kimi K3, a 2.8-trillion-parameter behemoth that doesn’t just challenge the dominance of American AI labs. It fundamentally redefines what “open source” means in the age of frontier intelligence.

And if you’re still thinking of Chinese AI as a follower playing catch-up, K3 is your wake-up call.

The Numbers That Matter

Let’s get the headline figures out of the way because they’re staggering. Kimi K3 ships with 2.8 trillion total parameters, making it the largest openly announced AI model on the planet. It processes up to one million tokens in a single context window—enough to ingest the entire codebase of a mid-sized software project, a 700-page novel, or three years of Slack messages—and it does so with native visual understanding, meaning it can reason across text, images, and code simultaneously.

But here’s the kicker: Moonshot isn’t keeping this locked behind a corporate API. The company has committed to releasing the full model weights under a Modified MIT license by July 27, 2026. That’s not “open” in the way OpenAI uses the word. That’s actually open. You can download it. You can fine-tune it. You can run it on your own hardware (if you have enough GPUs, which, admittedly, is a big if).

The architecture is a Mixture-of-Experts design, but Moonshot has refined it with two proprietary innovations: Kimi Delta Attention (KDA), a hybrid linear-attention mechanism that keeps inference efficient even at massive scale, and Attention Residuals, which improves how the model scales information across its enormous parameter count. The result? Only about 50 billion parameters are active per token, making the compute requirements manageable enough that the model is actually usable, not just theoretically impressive.

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The Benchmark That Broke the Internet

On the Artificial Analysis Intelligence Index—an independent benchmark that measures real-world capability rather than marketing hype—Kimi K3 scored 57. That places it third globally at launch, behind only Anthropic’s Fable 5 and OpenAI’s GPT-5.6 Sol. It outperforms GPT-5.5 and Claude Opus 4.8.

Let that sink in. An open-weight model—one you can download and modify—is now competitive with the most closely guarded proprietary systems in the world.

But the most telling result isn’t the overall score. It’s what happened on nextjs.org/evals, a comprehensive web engineering benchmark. Kimi K3 ranked first. Not just first among open models. First, period. Above Fable 5. Above every proprietary system. As Anastasios Angelopoulos, CEO of Arena (the organization behind the benchmark), put it: “This may be the single biggest release of the year, and marks the moment that [open-source software] Chinese models have surpassed U.S. models.”

This isn’t a narrow victory in a niche category. This is a generalist frontier model beating specialized proprietary systems at their own game.

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The Real Innovation: Building for Agents, Not Chatbots

What makes K3 genuinely different from the parade of “bigger is better” model releases is its design philosophy. Moonshot didn’t build a chatbot. They built a worker.

K3 is explicitly architected for “long-horizon software development”—the kind of multi-step, multi-day tasks that require an AI to plan, execute, use tools, monitor its own progress, and course-correct when things go wrong. It can analyze entire software repositories, manage terminal-based tools, and sustain coherent reasoning across extended task chains.

This aligns with Moonshot’s broader product strategy. In June, the company launched Kimi Work with “Goal Mode,” a feature that allows its desktop AI agent to operate continuously until a task is complete—potentially running for hours or days with minimal human intervention. K3 is the brain behind that body.

The industry has been talking about “agentic AI” for years. Moonshot is actually shipping it.

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The Pricing Reality Check

Let’s talk money because in the AI world, capability without affordability is just a press release.

K3’s API pricing sits at $3 per million input tokens and $15 per million output tokens. That’s premium territory—roughly double GLM-5.2’s rates and comparable to Anthropic’s pricing. Cache hits drop to $0.30 per million tokens, which helps for repetitive workflows.

Is it expensive? Yes, relative to some competitors. But consider the alternative: GPT-5.6 Sol and Fable 5 aren’t available as open weights at any price. If you’re a startup, a research lab, or a enterprise that doesn’t want to ship your proprietary data to someone else’s API, K3 offers something those models can’t: sovereignty.

The open-weight release scheduled for July 27 changes the economics entirely. Once the weights are public, inference providers will compete to offer the cheapest hosting. Prices will drop. That’s the open-source playbook, and it works.

The Context Nobody’s Talking About

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Roast Duck in West London: A Summer Memory from 2025

In the summer of 2025, the setting sun painted West London in a warm, golden hue. I sat down for dinner with a British friend at Shikumen, a Chinese restaurant nestled in Shepherd’s Bush. While the establishment is renowned for its Shanghainese cuisine, what truly draws London’s discerning foodies is its remarkably authentic Peking roast duck.

Here, dining on roast duck is elevated into a ritual that blends tradition with culinary avant-garde. Alongside the standard sweet bean sauce and shredded scallions, the restaurant playfully offers raspberry jam. More impressively, it preserves the most traditional method: dipping the crispy duck skin in white sugar. The moment the skin melts on the tongue with the sugar, an explosion of rich, savory aroma ensues. After the duck meat is carved, diners can opt for salt-and-pepper duck bones or a rich, comforting tofu and duck bone soup.

My British friend adored this restaurant, viewing it almost as a tangible embodiment of Chinese culture. Of course, this culinary excellence does not come cheap—a single roast duck carries a price tag of £78. Beyond London, I have sampled similar authentic versions in Paris; while slightly less expensive at €65, it remains a premium dining experience. In the eyes of European financial elites and the middle class, this duck represents the refinement and prestige of Eastern gastronomy.

Yet, this delightful moment of personal memory was unknowingly intertwining, in a somewhat surreal fashion, with a major geopolitical headline.

The Fractured Timeline: From the Finish Line of GI Recognition to the Starting Line of Anti-Dumping

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Beyond the menus of high-end restaurants, “Peking roast duck” goes by a more rigorous name in international trade treaties: “Peking Duck.”

As early as September 2020, when China and the EU formally signed the China-EU Agreement on Geographical Indications, Peking Duck stood out as a flagship representative of Chinese products. It was placed on the second list of 175 products scheduled to “complete mutual recognition and protection procedures within four years.” Under the original timeline, with the agreement officially taking effect in March 2021, the EU’s legal procedures for this list were expected to be finalized around 2025.

Over the past few years, the verification process for this second list had been steadily advancing. Relevant right holders were actively applying for international trademark registration under the Madrid System, and trade officials from both sides were working diligently through the reviews. At the EU level, the approval of Peking Duck as a Protected Geographical Indication (GI) had reached its final stretch, virtually awaiting nothing more than an official rubber stamp. Once approved, it would erect a strict legal fortress in the EU market: no non-Chinese duck meat could ever misappropriate the prestigious name of “Peking Duck.”

However, the drama of history often unfolds at the final hurdle. A sudden geopolitical chill instantly froze this cross-continental culinary pact.

On July 9, 2026, the European Commission formally announced the launch of an anti-dumping investigation into imports of Peking duck—both whole ducks and skin-on/bone-in parts used for making Peking roast duck—originating in China. This trade defense measure was triggered by a joint complaint filed by five EU domestic poultry producers, who alleged that duck meat exported from China was underpriced, thereby constituting “unfair competition” against the European industry.

What was meant to be the finish line for legal protection abruptly morphed into the starting line for a trade war.

The Accusation of “Unfairness”: The EU’s Vision of “Market Distortion”

In this newly initiated investigation, the EU has cast a remarkably wide net. The scope covers not only the whole “Peking Duck”—the core breed for meat production—but also extends to duck parts, whether fresh, chilled, frozen, salted, smoked, or deeply processed. Furthermore, the European Commission explicitly stated it would retroactively scrutinize trade data covering the period from January 1 to December 31, 2025.

On what grounds do European producers claim Chinese duck meat is “unfair”? In their complaint, the operative phrase is “severe market distortions.”

The “Original Sin” of State Planning: The complainants cited China’s 14th Five-Year Plan for Agricultural Modernization, arguing that its support measures for the livestock and poultry industries constitute state intervention. They further projected that such support would persist under China’s newly unveiled 15th Five-Year Plan.

The Feed Connection: European producers also pointed to Chinese government backing for the feed sector as a driver of market distortion, arguing it artificially lowers the cost of duck feed.

To construct a so-called “normal value,” the European Commission designated Brazil as an appropriate representative third country. After comparative calculations, the Commission concluded that the evidence presented was “sufficient to justify the initiation of an investigation.”

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An Absurd Logic and a Highly Coincident Timing
To anyone familiar with the realities of the global poultry supply chain, this investigation order evokes a sense of profound absurdity.

First, is this cost advantage driven by “dumping” or “efficiency”?

While the roast duck we enjoy in London and Paris is undoubtedly expensive, the competitiveness of exported Chinese duck meat—setting aside high local rents and labor costs—is by no means artificially depressed by subsidies. China possesses the world’s largest and most deeply rooted tradition of consuming duck, which has fostered the most sophisticated and complete waterfowl supply chain globally. According to The Financial Times (FT), data from 2025 shows that the EU duck meat market is valued at approximately €800 million, with imports from China accounting for about €199 million—capturing nearly a quarter of the market share. Globally, the data from the Food and Agriculture Organization (FAO) is even more staggering: of the roughly 5 million tons of duck meat produced globally each year, China alone accounts for approximately 4.8 million tons. This means that out of every 100 ducks in the world, 96 are raised in China.

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I. Three “Shutdowns” in July

On the evening of June 30, Tencent’s “Yuanbao” quietly closed its “AI Applications” agent portal without much noise.

On July 3, ByteDance’s Doubao released an announcement: its “Agent Plaza”—which features user-built agents accumulating to roughly 8 million—would be taken offline entirely on July 15. The following evening, Alibaba’s Qwen followed suit, announcing that its approximately 19,000 user-built agents would cease service on the same day, with no data migration plans provided. Around the same time, NetEase Cloud Music’s emotional companionship AI product “Miaoshi” also announced it would officially stop operations on July 14—marking the outright demise of an independent emotional AI product outside the three internet giants under the pressure of the new regulations.

Doubao left a fallback for its users: relevant data will remain in a read-only state until October 15, after which it will be handled according to privacy policies and cannot be recovered. Meanwhile, it is guiding users to “Maoxiang”—another dedicated virtual character interaction app by ByteDance that has its own independent content moderation and anti-addiction systems. Qwen offered no such alternative.

All of this aligns precisely with a single date—July 15, 2026, the day the Interim Measures for the Management of Artificial Intelligence Anthropomorphic Interaction Services officially takes effect. The document (Decree No. 21) was jointly promulgated by five departments: the Cyberspace Administration of China (CAC), the National Development and Reform Commission (NDRC), the Ministry of Industry and Information Technology (MIIT), the Ministry of Public Security (MPS), and the State Administration for Market Regulation (SAMR).

This “exit wave” taking place within Chinese apps quickly reverberated overseas. In a July 6 report, Decrypt characterized the event as Beijing’s first legislative constraint on emotional AI, directly forcing leading domestic apps to shut down custom agents. Meanwhile, tech media byteiota summarized it as a regulatory tightening, contrasting it step-by-step with the approaches currently brewing in the United States and the European Union. These two reports, along with the international impression they triggered that “China’s AI regulation is the strictest in the world,” serve as the starting point for this analysis.

II. What the New Rules Regulate: From “Content Red Lines” to “Design Red Lines”

The scope of the Measures is written with considerable restraint. It targets only the “use of artificial intelligence technology to provide the domestic public with continuous emotional interaction services that simulate the personality traits, thinking patterns, and communication styles of natural persons.” This specifically includes emotional care, companionship, and support interactions in the form of text, images, audio, and video. Services that do not involve continuous emotional interaction—such as intelligent customer service, knowledge Q&A, work assistants, learning/education, and scientific research—are explicitly excluded from its scope.

On this basis, the Measures draw two tiers of red lines. The first tier consists of content red lines shared with other AI regulatory documents—prohibiting the generation of content that endangers national security, incites secession, or promotes violence and terrorism. The second tier, however, introduces red lines specifically for anthropomorphic interaction services, which is where the true innovation of this document lies: it begins to regulate the “design objectives” themselves. Article 10 of the Measures explicitly states that service providers must not set “replacing social interaction, controlling user psychology, or inducing addiction and dependence” as service goals. Furthermore, they are prohibited from using emotional manipulation to induce users into making irrational financial decisions, such as purchases or money transfers.

The supporting institutional designs also include:

• An obligation to continuously display a disclaimer stating, “This service is driven by artificial intelligence and does not possess human emotional awareness.”

• Time reminders via dialogue or pop-ups if a user interacts continuously for more than 2 hours.

• Mandatory intervention and contacting guardians or emergency contacts if a user exhibits extreme emotions or explicitly expresses life-threatening intents like self-harm or suicide.

• A ban on providing virtual intimacy services, such as virtual relatives or virtual partners, to minors.

• A required, frictionless mechanism for users to opt out.

• A mandatory security assessment report submitted to provincial cyberspace administrations if registered users exceed 1 million or monthly active users (MAUs) exceed 100,000.

• Algorithm registration under the Provisions on the Management of Algorithmic Recommendations in Internet Information Services, subject to annual verification.

There is a critical detail here that is easily overlooked in international reporting but vital to understanding this wave of takedowns: strictly speaking, what Doubao and Qwen took offline are not “AI Agents” in the international context—which can autonomously plan tasks, call tools, and execute multi-step operations. Instead, they are closer to role-playing chatbots with fixed personas, opening lines, and tones that rely on Retrieval-Augmented Generation (RAG) to answer questions. Some domestic tech commentators have described them as more akin to “digital pets” than true intelligent agents.

Task-oriented products with true autonomous execution capabilities—such as the enterprise versions of Doubao and Qwen, Tencent Cloud’s WorkBuddy, and Alibaba’s Lingma series aimed at businesses and developers—fall entirely outside the scope of this adjustment and continue to iterate and expand normally. In other words, overseas media characterizations like “China’s ban on AI agents” are a cross-lingual oversimplification: it is the specific niche of “emotional companionship” being constrained, not the technological paradigm of “agents” itself.

III. Why Now: The Triple Push of Data, Events, and Commercial Logic

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On 15 June, the UK government officially announced that it would draw upon the Australian regulatory model to ban under-16s from using a range of social media applications. This heavyweight ban, aimed at protecting the physical and mental health of teenagers, explicitly categorises mainstream platforms such as Snapchat, TikTok, YouTube, Instagram, Faceb…

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Recently, a rather striking image went viral on social media: a pristine air-conditioning unit mounted inside a humble pigsty in rural China. For many Europeans sweltering under a record-breaking summer heatwave, the reaction was a mixture of disbelief and bitter envy. “Even a pig in a Chinese village enjoys better conditions than a patient in a top-tier French hospital,” one exasperated netizen commented.

This stark contrast is made all the more jarring by the prevailing political rhetoric in Europe. On 26 June, as record temperatures scorched the continent, France’s Minister for Ecological Transition and Biodiversity, Monique Barbut, sparked fierce controversy when she expressed that she was “horrified” by calls to install air conditioning everywhere. Her words were unambiguous: “Do you think that will prevent a forest fire? Do you think it will prevent a crop from failing? Do you think it will prevent the death of animals? Nothing.” Her remarks provoked a fierce public backlash. Critics pointed out that no serious advocate for air conditioning had argued it would extinguish wildfires or save harvests; they were arguing for protecting the sick, the elderly, and the vulnerable from dying in the heat. Netizens accused her of demolishing a position nobody actually held, while people were quite literally dying around her.

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This political disconnect is compounded by a striking episode of institutional dissonance. The European Commission’s Berlaymont headquarters in Brussels – a 13-storey building housing Commission President Ursula von der Leyen, her 26 commissioners, and around 3,000 staff – found its cooling infrastructure overwhelmed by the extreme heat. A midday text message informed staff that the air-cooling system on floors one through seven would be shut down for the rest of the day due to the exceptional conditions. The shutdown left junior staff on the lower floors without relief, while the upper floors – where von der Leyen occupies the 13th floor and most commissioners are based from the eighth upwards – retained their cooling systems. One Commission official on a lower floor told Politico the situation was “like feudalism”; a second called it “a disgrace.”

Faced with temperatures frequently breaching 40°C, European consumers have predictably stopped listening to political debate and started buying. Chinese air conditioners have become the summer’s most sought-after cooling solution in Europe, precisely because they address a unique set of structural problems that the continent’s existing market had long neglected. The vast array of historic buildings and old-town residences face strict preservation rules that prohibit drilling into exterior walls or mounting outdoor units. Even where installation is technically permitted, the cost of a certified technician to fit a traditional split system typically runs between €1,000 and €2,000 – frequently equalling or exceeding the price of the hardware itself. Add a high proportion of renters who are contractually barred from altering their properties, and conventional air conditioning becomes an unattainable option for much of the population.

Enter a new generation of product design. Brands have cracked this market not with brute force, but with a forensic understanding of European regulatory and lifestyle constraints. Products like the Midea PortaSplit – developed after years of research into European window types, rental cultures, and installation pain points – feature a modular, drill-free architecture. The outdoor unit hangs from a window frame bracket or rests on a sill, requiring no tools and no professional assistance. Under EU rules governing portable electrical appliances, this classifies the device as a portable indoor appliance rather than a fixed installation, neatly bypassing building protection regulations. Tenants can set it up in minutes and take it with them when they move. Midea’s PortaSplit has shipped over 200,000 units in Europe in 2026 alone – double its previous year’s total – and was named to TIME magazine’s list of Best Inventions in 2025.

The market response has been dramatic. In the first five months of 2026, China’s residential air conditioner exports to Western Europe grew by 9.7% year-on-year, whilst mobile and portable AC units surged by over 70%. Customs data confirms that exports to France, the Netherlands, and Belgium more than doubled compared to the same period a year earlier. The surge has not been confined to Chinese brands alone: Samsung and Mitsubishi Electric have also reported sharp increases in European orders, reflecting a continent-wide structural shortage in cooling capacity that extends well beyond any single manufacturer’s success story.

As negotiators from Brussels and Beijing sit across the table to hash out trade policies, the runaway success of these cooling appliances offers a sobering reality check. European politicians may meticulously construct trade barriers, float tariffs on Chinese green technology, and champion “de-risking” strategies wrapped in the lofty rhetoric of strategic autonomy. Yet, when temperatures soar and daily survival is on the line, ideology melts away. The consumers driving this surge are not making geopolitical statements; they are trying to sleep through the night.

Chinese manufacturers have succeeded in the European market not through unfair practices, but through unparalleled technological adaptability, supply chain resilience, and a pragmatic understanding of user needs. True economic strength lies in mutually beneficial cooperation and market-driven innovation, not in protectionist vanity. If Europe’s leaders continue to favour ideological posturing over practical solutions, they may find themselves increasingly out of touch with a public that simply wants to breathe a little easier.

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China’s new plan for building a “new‑type energy system” was jointly issued on June 25, 2026 by the National Development and Reform Commission (NDRC) and the National Energy Administration (NEA). It is a sectoral plan under the 15th Five‑Year Plan, covering the period 2026–2030 and spelling out how Beijing wants to re‑engineer its energy system by 2030.

The document aims to “basically establish a clean, low‑carbon, secure and efficient new energy system” by the end of the decade, aligning energy policy with China’s broader goals on energy security and its carbon peaking and neutrality pledges. It sets quantitative targets for non‑fossil energy, electrification, system flexibility, innovation and market reform, and was introduced to the public at a State Council Information Office press conference on June 26, signalling that this is not just a technocratic roadmap but a political priority for the coming five years.

Key Targets in China’s New Energy System Plan

China’s new plan for building a “new-type energy system” under the 15th Five-Year Plan is not just another climate document; it is a system design blueprint that hard‑codes what the country’s power system should look like by 2030.

A Bigger, More Electric Energy System

By 2030, China aims to “basically build” a clean, low‑carbon, safe and efficient new energy system. Total energy production capacity is set to rise from 5.13 to 5.8 billion tonnes of coal equivalent, while total installed power capacity climbs from 3.89 to 5.4 billion kilowatts. In other words, this is a greener system that is still getting bigger, not smaller.

Electricity’s role in the economy will deepen: power is targeted to reach 35% of final energy consumption by 2030, up from 30% in 2025. This pushes China’s electrification five years ahead of the COP31 proposal for a global 35% electrification goal by 2035, and entrenches the power system as the core arena for decarbonisation.

Non‑Fossil Energy: Half the Power, Not the Whole Story

On the supply side, the plan codifies a set of non‑fossil targets that look ambitious at first glance but are in fact conservative floors rather than stretch goals. Non‑fossil energy should reach 25% of total energy consumption by 2030, essentially a continuation of China’s existing 2030 commitment rather than an upgraded pledge.

In the power sector, non‑fossil sources are expected to provide 50% of electricity generation, up from 42.3% in 2025. Wind and solar are explicitly designated as the “main body” of installed capacity, with their combined share rising above 50%, and “new energy” generation (wind and solar) is set to reach 30% of total power output. That still leaves roughly half of China’s electricity coming from fossil fuels, with coal power shifting from being a baseload workhorse to a “supporting and regulating” resource rather than exiting the system.

Carbon Intensity and System Flexibility

The plan does include a new carbon intensity target for the power sector: emissions per unit of generation must fall by more than 10% from 2025 levels by 2030. This is directionally positive, but it is framed as a carbon‑intensity goal, not an absolute cap on emissions. As the accompanying analysis you shared points out, if total generation grows by around 5% per year, a 10% cut in intensity would still allow power‑sector emissions to rise by roughly 15% over the period.

Where the plan is more concrete is on system flexibility. It introduces a new metric for “source‑storage regulating capacity” – the combined regulating capacity of generation and storage – which is required to increase by more than 40% by 2030. Demand response capacity should rise from above 3% to above 5%, and the grid must be capable of supporting 900 GW of distributed renewables by 2030. On the supply‑side flexibility toolkit, the plan calls for 160 GW of pumped hydro and 300 GW of new‑type energy storage. These signals matter for investors because they show Beijing’s focus has shifted from “how much wind and solar can we build” to “how much variable renewables can the system actually integrate”.

Electrification, AI and the “New Power System”

The plan’s picture of a “new‑type power system” is built around high electrification, strong grids and digital coordination. Large clean‑energy bases in China’s “Three North” regions and southwest hydropower corridors will be connected to load centres via new long‑distance transmission channels, while regional grids are strengthened to provide mutual support and cross‑regional balancing.

On the demand side, the plan seeks to build a flexible load ecosystem. It pushes full‑scale use of user‑side demand response, targeted development of virtual power plants, and large‑scale vehicle‑to‑grid integration, with V2G aggregated controllable charging capacity targeted at 50 GW and virtual power plant regulating capacity at 50 GW by 2030. It also explicitly embeds “AI + energy” in the system design: energy bases and national computing hubs are to be co‑planned, data centres and other new industries are encouraged to pursue green‑power direct connections, and energy and digital infrastructure are to be developed as integrated clusters.

What This Means for Western Investors

For Western investors, this plan should be read less as a climate pledge and more as a state‑designed investment platform for China’s energy transition over the next decade.

A Policy‑Guided Capex Envelope

China’s energy regulator estimates that priority energy projects and new energy‑related business models under the 15th FYP will unlock more than RMB 20 trillion in investment over 2026–2030. This estimate, disclosed at the State Council press conference, bundles three baskets of spending:

• Traditional energy security – oil and gas exploration and production, strategic reserves, national pipeline networks, and modernised coal supply bases.

• Green transition infrastructure – non‑fossil power bases, long‑distance transmission channels, regional grid interconnections and distribution‑level upgrades.

• New business models and “new quality productive forces” – new‑type energy storage, hydrogen and green fuels, virtual power plants, comprehensive energy service stations, and AI–energy integration.

For investors, this is effectively a policy‑guided capex envelope: it tells you where the Chinese state intends to deploy both public and private capital, and which technologies it expects to become core parts of the system rather than peripheral pilots.

Opportunities Inside China’s Energy System

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In September 2025, as I boarded my flight to Beijing at London Heathrow Airport, I looked back on my more than six years as a foreign correspondent in the UK, from 2019 to 2025. In that time, the UK experienced four Prime Ministers, two monarchs, and one pandemic. Outside the black door of 10 Downing Street, Rishi Sunak resigned in the rain—a scene full of tragedy; at that very same door, successive Chancellors of the Exchequer held up their Red Boxes, smiling confidently at the cameras, full of high spirits; yet, no matter how the masters of Downing Street came and went, none stayed longer than a cat named Larry.

In the summer of 2026, the UK changed its Prime Minister once again. Keir Starmer stepped down in dismay, becoming the sixth Prime Minister to fall in the ten years since the Brexit referendum. At this very moment, the highly popular “King of the North,” former Mayor of Manchester Andy Burnham, is confidently eyeing the Prime Minister’s seat.

In Westminster, politicians and political commentators are accustomed to blaming the frequent turnover of Prime Ministers on PR disasters, party infighting, or terrible election strategies. I witnessed, experienced, and reported on what happened in this country for most of the decade following Brexit. As a foreigner who once lived in London, when I tried to understand why this country, once renowned for its political stability, had become seemingly “ungovernable,” I found the answers not in parliamentary debates, but in a few everyday trivialities I personally experienced. Behind the endlessly spinning “revolving door” of 10 Downing Street, the structural decline of the macroeconomy and the throes of geopolitics have quietly rewritten the fates of ordinary people.

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The Glaring Numbers on the HMRC Tax Bill: Downing Street Locked by the Bond Market

When I finished my term and was preparing to leave the UK, I logged onto the HM Revenue and Customs (HMRC) website to see exactly where the taxes I had paid over the years had gone. In the system-generated bar chart showing the allocation of my personal tax contributions, the fourth largest government expense—ranking right after welfare, healthcare, and pensions—was shockingly “National Debt Interest.”

I always knew that the most important indicator of a nation’s rise and fall is “money,” but I never expected to touch the economic pulse of this country in such a manner.

When the interest a country has to pay annually on its national debt approaches the total amount spent on nationwide pensions, it inevitably surprises those of us from a culture that “loves saving and hates owing.” That glaring number instantly made me realize the greatest illusion in British politics in recent years: whether it was Liz Truss’s disastrous “mini-budget” or Keir Starmer’s attempt to plug the fiscal black hole with tax hikes, every new government was merely dancing in heavy shackles. When massive portions of the budget are forced into paying debt interest, the funds available for the government to invest, stimulate growth, or repair public services are severely squeezed. Brexit itself has imposed a heavy structural headwind on this fragile economic foundation.

According to authoritative joint research conducted by the Stanford Institute for Economic Policy Research (SIEPR), the National Bureau of Economic Research (NBER), and the Bank of England, the Brexit process has caused a long-term shrinkage of the UK’s GDP by 6% to 8%. According to the latest figures from the Office for National Statistics, by May 2026, the UK’s public sector net debt had reached 95.10% of its Gross Domestic Product (GDP), requiring £111 billion in interest payments alone each year. In 2025, the yield on 30-year UK government bonds briefly hit 5.5%, marking a 25-year high.

The fiscal policies tucked inside the Chancellor’s Red Box must be meticulously calculated: how to bring in more money, how to achieve more while spending less, and how to borrow more money at lower interest rates. This explains why anyone—from Starmer to any future Prime Minister—cannot easily flex their muscles. The UK is no longer ruled solely by the House of Commons, but also by the cold, hard “bond market.” Any stimulus plan lacking financial backing will be met with ruthless market sell-offs. The national debt interest on that HMRC bill is the fiscal noose tightening around the neck of every British Prime Minister.

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The “Tomato Crisis”: Trade Barriers Whitewashed by Lies

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Every year, typically around a weekend in mid-June that roughly corresponds to the fifth day of the fifth month in the Chinese lunar calendar, vibrantly painted watercraft flock to the canals of Manchester to mark the start of the dragon boat season. Families and friends gather on the banks to eat, watch the races, and celebrate. Yet what might seem like a lively local carnival is, in fact, the modern manifestation of a 2,000-year-old Chinese tradition that has evolved into a truly global sport. It is a phenomenon that reveals the unexpected power of rhythm, teamwork, and human connection.

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From the Miluo River to the Thames

The origins of this striking sport trace back to the Warring States period and the tragic tale of Qu Yuan, a famous poet and high-ranking minister in the state of Chu. In 270 BC, refusing to compromise his principles as a rival army invaded his homeland’s capital, he drowned himself in the Miluo river. Villagers rushed out in boats decorated with dragon motifs to invoke the protective water spirit, throwing rice dumplings—zongzi—into the water to prevent the fish from consuming his body. The journey from ancient Chinese ritual to modern European pastime began in 1980, when the Hong Kong government sent several traditional boats to London for a Chinese festival as a way to promote the city. The following year, British canoe organiser Mike Haslam introduced these “funny boats” as a lunch-hour curiosity during the 1981 World Canoe Championships in Nottingham. To his surprise, 17 crews turned up to race. From that singular spark, the sport rippled outward to the Dutch, Swedes, Danes, and Germans, and by the late 1980s, fibre-glass dragon boats were actively racing on the Serpentine in London.

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European Innovation Meets Ancient Tradition

As the sport’s popularity swelled across Europe, a logistical challenge emerged. The original Asian vessels were meticulously handcrafted from teak. They were incredibly heavy—weighing up to two tonnes—and difficult to maintain, making them largely impractical for European enthusiasts to transport and race at a high level. The solution came from a small boat-building company in Schwerin, Germany, named BuK. Backed by Manfred Russ, the vice president of the European Federation at the time, builder Andreas Stenkowitz transformed the heavy teak vessels into a lightweight fibre-glass design. After initial structural challenges—the first prototype lacked buoyancy and sank when capsized—Stenkowitz refined the design by installing internal air tanks, turning it into a true sporting vessel ready for competition. Crucially, the soul of the boat remained untouched. The International Dragon Boat Federation, formed alongside China in 1991, insisted there be no technical developments to the core design: the steerer, the paddles, and the drum—the very heartbeat of the dragon—had to remain traditional. Today, these German-engineered fibre-glass boats weigh just 138 kilos, yet they faithfully replicate the traditional dragon heads and still utilise authentic water buffalo leather drums imported directly from China. In a poetic, full-circle moment, these European-innovated racing boats are now built under licence and exported back to their ancestral home.

Healing Upon the Water

Beyond the sheer thrill of competition, the dragon boat has become a profound vessel for personal recovery. In the sport’s early developmental years, Canadian doctor Don McKenzie assembled a team to challenge the medical consensus of the era, setting out to prove that rigorous, upper-body physical exercise was not harmful to breast cancer patients. The results were transformative. Paddlers reported that the physical discomfort and tightness resulting from their cancer treatments seemed to vanish once they were out on the water. Today, this legacy lives on in over 400 breast cancer survivor teams worldwide, comprising 20,000 paddlers. Their presence brings a deeply moving dimension to the World Championships; at the conclusion of their events, the boats gather to cast roses onto the water in memory of the women who did not survive. For these participants, the synchronised strokes offer a moving meditation and a powerful, shared resilience.

The Olympic Horizon

Today, the highest level of the sport—the Dragon Boat World Championships—hosts more than 4,500 paddlers representing 33 nations. As the momentum continues, the ultimate dream of the federation is to secure formal recognition within the International Olympic Committee (IOC) family. Such an achievement would rightfully acknowledge both the sport’s ancient Chinese heritage and its modern competitive achievements. Yet, even if Olympic glory remains on the horizon, the true victory of dragon boat racing has already been realised. The sport stands as a living bridge between East and West, fostering culture, friendship, and peace. By demanding perfect synchronicity from 20 disparate individuals to drive a single vessel forward, the dragon boat continually reminds us that our greatest achievements are born not of individual might, but of the rhythm of human collaboration.

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In a recent comprehensive assessment of Sino-US relations at an event in Beijing, former US Treasury Secretary Henry Paulson offered a pragmatic look at the world’s most consequential bilateral relationship. Speaking on the intricate ties between the two global powers, Paulson highlighted that while recent high-level dialogues have fostered a degree of “managed stability,” the relationship is fundamentally anchored by a state of “mutually assured economic disruption”. Both nations are acutely aware of their capacity to disrupt one another, but according to Paulson, the most critical hurdle to overcome is not the much-discussed trade deficit, but rather a profound “trust deficit”.

Here are the primary insights and takeaways from his recent remarks:

The Geopolitical and Financial High-Wire Act

• Mitigating Future Crises: Paulson warned that there is a relatively high probability of future global financial disruptions. With global sovereign debt at elevated levels, the international community has significantly less flexibility to manage an economic crisis. Consequently, maintaining open lines of communication between US and Chinese economic monitors is vital; whilst talking may not prevent a crisis, pre-established trust is essential to minimise global damage when one occurs.

• The Business Imperative: For global CEOs, navigating today’s landscape of geopolitical scrutiny, unpredictable export controls, and sanctions is incredibly complex. However, Paulson offered stark advice to industry leaders: walking away from China is done “at your own peril”. To remain global leaders, companies must understand the Chinese market, which requires a physical presence and ongoing engagement.

• Appetite for Investment: Despite the complexities of cross-border national security and economic laws, Paulson observed that China’s foreign direct investment (FDI) is lower than expected for the world’s second-largest economy, signalling a clear need and desire from Beijing to attract foreign capital.

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The AI Frontier and Job Disruption

• A Dual-Edged Sword: The rapid and largely unconstrained advancement of artificial intelligence presents profound global challenges. While Paulson acknowledged the extraordinary benefits AI brings to various industries, he explicitly warned that the technology will inevitably lead to significant job destruction.

• The Need for Joint Governance: Unlike previous industrial revolutions that unfolded over extended periods, the AI revolution is moving at breakneck speed. Paulson suggested that managing this employment disruption and developing effective governance frameworks offers a crucial, albeit difficult, opportunity for the US and China to collaborate.

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Environmental Conservation as a ‘Certainty’

• Beyond Risk: Distinguishing environmental threats from geopolitical risks, Paulson categorised climate change and biodiversity destruction not as risks, but as absolute “certainties” that no single country can solve alone.

• Green Collaboration: Paulson praised China’s significant strides in green technology, specifically highlighting the nation’s progress in electric vehicles (EVs), batteries, solar panels, and the diversification of energy sources.

• Ongoing Cooperative Efforts: Through the Paulson Institute’s continued work, cross-border environmental cooperation remains a bright spot. Collaborative successes include mapping and restoring threatened coastal wetlands, developing the first pilot national parks in Yunnan, and advancing green financing principles along the Belt and Road Initiative.

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Looking Ahead

While small steps and recent progress have provided a sense of relief to populations in both the US and China, the relationship remains fraught. Ultimately, tackling the defining challenges of our time—from generative AI and pandemic preparedness to global macroeconomic stability and climate change—will depend heavily on the ability of the world’s two largest economies to bridge their trust deficit and work together.

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In 2025, while I was working in London, my colleagues produced a documentary on the Chinese electric vehicle industry that caused quite a stir in European auto circles. During a candid interview in Stuttgart, Stefan Reindl, director of the Institute for Automotive Management (IFA), was asked a pointed question: Would tariffs help European legacy carmake…

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Nine years ago, covering President Xi Jinping’s visit to the United States, I stood in a makeshift workspace not far from Mar-a-Lago in Florida. Through a monitor, I watched the first handshake between the Chinese and American heads of state under the warm southern sun. At that time, the air was thick with a mixture of cautious expectation and uncertain…

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The CPC’s Central Political Bureau has greenlit a strategic overhaul of China’s backbone, transitioning from traditional “bricks and mortar” to a high-tech, integrated ecosystem known as the “Six Networks” (六张网). “加强水网、新型电网、算力网、新一代通信网、城市地下管网、物流网等规划建设。推动条件成熟的重大工程项目开工。”

According to China’s state media, Economic Daily (经济日报), with an estimated 7 trillion y…

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Redrawing the Map of Southeast Asia

For decades, China’s southwestern provinces—Guizhou, Yunnan, and Sichuan—have faced a geographical paradox: they are “near the sea but have no access to it.” To reach international markets, goods had to travel over 500km east through the crowded waterways of the Pearl River Delta in Guangdong.

That is officially changing. The Pinglu Canal (平陆运河), the first major canal built in China since the founding of the PRC, is not just a ditch in the ground—it is a 134.2-kilometre structural realignment of Asia’s logistics.

As a backbone project of the New International Land-Sea Trade Corridor in western China, the canal links the Pingtang River estuary in Nanning, Guangxi Zhuang Autonomous Region, to the Beibu Gulf (北部湾， or Gulf of Tonkin) via the Qinjiang River. (See map below)

On 1 May, the Pinglu Canal project marked a historic transition as the cofferdam at the Qingnian Hub—the gateway nearest the sea—was officially demolished.

This critical step initiated flowing-water debugging, allowing engineers to test the waterway’s operational integrity under real-world conditions. By opening the gates to the tide, the project enters a high-stakes validation phase to ensure the ship locks and flow-control systems meet the rigorous standards required for China’s new southern artery.

The demolition signifies that the canal is no longer a construction site, but a living waterway preparing to connect the heart of Southwest China to the global ocean.

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If you have an interest in China’s mega project, read this article too:

The “Miracle” by the Numbers

While the Great Wall is a relic of the past, the Pinglu Canal is a testament to 21st-century civil engineering. To understand the scale of what is being achieved in the heart of Guangxi, consider these milestones:

• Earthwork Titan: The project requires excavating 339 million cubic metres of earth and rock. To put that in perspective, that is roughly three times the volume of the Three Gorges Dam excavation.

• The Water-Saving Giants: The canal features three massive inland ship locks—Maodao, Qishi, and Qingnian. The Maodao Hub is now the world’s largest water-saving ship lock, using a complex system of lateral basins to recycle over 60% of the water used during lockage.

• Eco-Engineering: This isn’t a concrete scar. The project includes “fish highways” (dedicated bypasses for aquatic migration) and China’s first “Ecological Bridges” designed specifically for terrestrial wildlife to cross the canal safely. (This is insane and of course GREAT. Check the video below: A bridge just for animals)

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The Strategic “Why”: More Than Just Shipping

Why spend an estimated 72.7 billion RMB on a canal?

1. The RCEP Accelerator

The Canal serves as the “backbone” of the New Western Land-Sea Corridor. With the RCEP (Regional Comprehensive Economic Partnership) now in full swing, the canal allows China’s industrial heartland to bypass the congested South China Sea routes and drop goods directly into the Beibu Gulf, headed for Singapore, Vietnam, and Indonesia.

2. Ending the “Guangdong Dependency”

Currently, Guangxi’s inland shipping is bottlenecked at the Changzhou Lock in the Pearl River system. The Pinglu Canal provides a direct “southward exit,” cutting the shipping distance to the sea by 560km. This reduces logistics costs by over 5.2 billion RMB annually.

3. Turning Nanning into a “Seaport”

Through the canal, Nanning—a city 200km inland—effectively becomes a coastal hub. This shift is expected to trigger a massive industrial migration from the oversaturated eastern seaboard to the lower-cost western provinces.

Business Opportunities for foreign companies:

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