On July 5th, at 7.30pm, in Beijing’s Liaoning Mansion, Tsinghua University’s Institute of International Relations will again hold its International Relations Basic Knowledge Proficiency Test. The elementary level is open to the general public. The intermediate and advanced levels are reserved for those who have passed the previous stage. The exam is closed-book, written, multiple-choice, and free of charge. A score of 60 or above earns a certificate from the institute. The syllabus is austere: basic concepts, research design, modern and contemporary international history, and, at higher levels, theory and methods.

China is hardly short of exams. To many Chinese, the word carries both civilisational weight and modern fatigue: the old prestige of the imperial examination, and the daily irritation of credential-chasing. When the notice was mentioned to a friend, her first reaction was perfectly Chinese: “What is this exam useful for?”

Probably not very much, at least by the usual Chinese measure of usefulness. It will not get anyone into a university, secure a job, bring a promotion or confer a professional licence. Nor will it stop bad commentary about America, Europe, Ukraine, Japan, or the “changing world order” from circulating online. The loudest voices in the public arena are not waiting to be certified by the institute's founder and one of China’s best-known international-relations scholars. The exam cannot regulate the pundit market. It can only signal, to those still willing to learn, that this field has a minimum vocabulary and a minimum discipline.

Still, usefulness may be the wrong way to judge it. The exam looks more like a small act of resistance.

The first such test was held in 2023. According to the institute, 337 people registered. Its stated purpose was to help students, teachers, practitioners and interested members of the public test their grasp of basic international-relations knowledge, and to promote the “scientification” of the discipline. The word is ungainly in English, but the intention is clear enough. International relations should have some resistance to mood, slogan, gossip, vanity and traffic-seeking speculation.

There is a deeper reason this matters. International relations is a serious business. It is about war and peace, human lives, national fortunes, and the choices that can shape entire regions for decades. A society that talks about the world carelessly may end up understanding its own position carelessly.

Yan has been making a related point for years. In 2021, at a large academic conference attended by political scientists and international-relations scholars from across China, he warned that public visibility should not be allowed to stand in for academic merit. Clicks, views, and wanghong status—even notoriety earned through provocation—are not measures of scholarly ability. A WeChat post with 100,000 views might be influential. That does not make it good scholarship.

In a memorable scene, the applause was loud. Somewhere in the audience sat a well-known Shanghai-based university employee and internet personality who had made his name commenting on politics and international affairs. One wonders whether he felt personally addressed.

The unease is not about public interest in foreign affairs. A country as large and internationally exposed as China is bound to debate the world around it. The problem is the deterioration of that debate. Some people with titles and institutional affiliations have become increasingly casual with facts and extravagant in their claims. Alongside them is a large class of online personalities with little basic training but enormous confidence. Together they have made discussions of geopolitics noisier, cruder, and easier to mistake for entertainment.

This is why the old comparison with Beijing taxi drivers keeps returning. For years, they have been a minor institution in foreign reporting: voluble, patriotic, cynical, worldly, sometimes perceptive, sometimes wildly wrong, and always quotable. The joke is that some experts do not sound much better. This may be unfair to taxi drivers. It is not always unfair to experts.

No country has a monopoly on bad geopolitical analysis. America, with its think tanks, cable panels, podcasts, and X warriors, produces plenty of confident nonsense of its own. But China should not afford to treat others' errors as permission for its own. A country trying to understand its changing place in the world needs a clearer view of facts, power, risk, and consequence. When basic facts are handled casually, when certainty becomes theatrical, and when logic gives way to mood, the result is not only bad analysis. It makes it harder for Chinese readers—especially young ones—to understand China’s actual strengths, weaknesses, and choices.

Yan’s criticisms over the years can be read as one connected argument. Inside the discipline, he has warned against the weakening of theoretical research, the lowering of professional thresholds, the overproduction of current-affairs commentary, and the chase for online attention. In the classroom, he has worried about students who reach conclusions before acquiring enough facts. In public debate, he has objected to the habit of treating popularity as proof and stance as analysis.

That concern became sharper as a new generation came of age. Chinese students born after 2000 grew up after China became the world’s second-largest economy, and many have known only a rising China and a troubled West. Such an experience can produce ambition and confidence. It can also produce a sense of superiority that is more inherited than earned. Yan has warned them against a crude “China versus foreign countries” frame, in which all good values are assumed to be Chinese and all bad ones foreign. He has also criticised the habit of mistaking online rhetoric for common sense, treating influencers as authorities, and reducing complex realities to conspiracy theories, economic determinism or wishful thinking about Taiwan and China’s future power.

There is an old-fashioned teacherly quality to this criticism. It is stern, sometimes unfashionably so, but not cynical. If China matters, it should be studied seriously. If the world is changing, the change should be understood with care. Young people who may inherit a larger international role deserve something better than slogans delivered as analysis.

In an influential video addressing the younger students a few years ago, Yan described the problem with unusual bluntness. In international-relations analysis, he said, there had emerged a tendency to “set facts aside first and discuss stance.” The sentence is memorable because it exposes a common temptation in discussions of foreign affairs: to decide first what should feel patriotic, correct or emotionally satisfying, and only then look for evidence. For China, resisting that temptation is not a matter of intellectual taste. It is part of seeing the country and the world as they are.

Seen in this light, the exam tries to establish a floor. Before talking about the international order, one should know some history. Before using a concept, one should know what it means. Before declaring a trend inevitable, one should know what evidence would count for or against it. Phrases such as “the West” and “since ancient times” should not be allowed to do more work than they can bear.

Responding to the age of influencers with a closed-book test may seem quixotic. Against the speed of social media, Yan’s institute offers multiple-choice questions. The gesture is almost comically modest. Yet it also reveals a stubborn faith in standards that the market has little reason to protect.

A one-hour exam will not rescue public debate. Some people will still prefer the thrill of stance to the discipline of facts. But public intellectual life is also shaped by small rituals that signal what a community still values. A multiple-choice test on international relations may be a modest instrument, but it carries a serious hope: that public discussion of the world can begin with facts, methods and the humility to learn the basics; that a grave subject can be treated with the gravity it deserves; and that China’s conversation about the world can become a little more disciplined, a little less reckless, and ultimately more useful to China itself.

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In Lin’s view, this amounts to a “structural revolution” in modern economics. By taking seriously the differences among countries’ economic structures and the ways those structures evolve, New Structural Economics seeks to challenge the universalising assumptions of mainstream theory and offer a framework better suited to China and other developing countries.

Lin also issued a challenge to younger scholars. If Chinese economists merely use Chinese data to test Western theories, he warned, they may publish papers but miss the larger historical opportunity. As China’s economic weight grows, he argued, the centre of global economic research and theoretical innovation will also shift towards China. But that shift will require original theory, not simply the adaptation of imported frameworks.

Professor Justin Yifu LIN is Dean of the Institute of New Structural Economics, Dean of the Institute of South-South Cooperation and Development, and Professor and Honorary Dean of the National School of Development, Peking University. He also served as Senior Vice President and Chief Economist of the World Bank, 2008-2012.

Lin delivered the following speech at Peking University on 14 May 2026. It is titled “Building an Autonomous Knowledge System for New Structural Economics and Expectations for Young Scholars”, lightly edited for clarity by New Economist Think Tank. The Chinese original was published on the New Economist Think Tank’s WeChat blog on 14 May.

—Yuxuan Jia

林毅夫最新主题演讲实录：新结构经济学将掀起对现代主流经济学的“结构革命”

Transcript of Justin Yifu Lin’s Latest Keynote Speech: New Structural Economics Will Launch a “Structural Revolution” in Modern Mainstream Economics

Welcome to this morning’s Seminar on Building an Autonomous Knowledge System for New Structural Economics. I would like to thank the previous speakers for recognising the efforts of the Institute of New Structural Economics in advancing autonomous theoretical innovation and building the knowledge system of New Structural Economics.

As we know, autonomous theoretical innovation is the core of an autonomous knowledge system, and an autonomous knowledge system is the systematic integration of such innovation. As someone who has promotes autonomous theoretical innovation in New Structural Economics and advocates the construction of its autonomous knowledge system, I would like to use today’s opportunity to explain why I have pursued this endeavour since 1988. I will also discuss how to further deepen theoretical innovation in New Structural Economics, build its autonomous knowledge system, and share a few expectations with the young friends present today.

Why promote autonomous theoretical innovation in New Structural Economics?

As we know, the function of theory is to help us understand the world and transform it. From the perspective of economics, mainstream economics has developed a highly sophisticated body of knowledge. Yet whether any theory is applicable depends on whether its premises and assumptions match the context in which it is applied.

Since Adam Smith, Western economics has largely been built on the experience of developed countries such as the United Kingdom and the United States. These theories therefore take, as their implicit premises, the economic, social, political, and other conditions of the developed countries in which they were produced. As a developing country, China differs markedly from those countries in both economic structure and level of development. Applying these theories directly to China therefore creates the problem captured by the Chinese saying: “An orange grown south of the Huai River is sweet, but when grown north of it, it turns bitter.” This is something we must clearly recognise. I came to this understanding in 1988.

In 1988, China experienced inflation of 18.5 per cent, the first such high inflation since the founding of the People’s Republic of China. According to mainstream Western theory at the time, inflation should be tackled by raising interest rates. This would reduce investment demand, lower consumption demand, bring down aggregate demand, and thereby affect inflation expectations. It was also seen as an efficient approach: once interest rates rose, only highly profitable projects would survive, and low-return projects would be eliminated. In theory, this would both curb inflation and improve the efficiency of resource allocation. The logic seemed highly persuasive.

Yet in 1988, China adopted a policy of “governance and rectification”, using administrative measures to cut back investment projects. From the standpoint of mainstream Western theory, this was highly irrational and inefficient. But then I faced a contradiction: if the Chinese government was truly as irrational as mainstream Western theory suggested, how had China maintained an average annual growth rate of 9.9 per cent from 1978 to 1987, with only limited fluctuations?

For a developing country, even several percentage points of growth in a single year is no easy achievement. China at the time was not only a developing country, but also an economy in transition. Sustaining 9.9 per cent growth for nine consecutive years showed precisely that the Chinese government was highly rational and had a deep understanding of the country’s conditions.

It was this intellectual conflict that led me to reflect on the so-called mainstream theories we had studied and applied. Theories from developed countries take their own development stage and conditions as implicit premises. This made me realise that every theory, in a sense, carries the risk of fighting the last war, for it starts from the specific conditions under which it was first developed.

When those premises do not fit developing countries, those of us who wish to contribute our knowledge and wisdom to national progress must develop a deep understanding of our own national conditions and put forward new theories. I am particularly pleased that New Structural Economics began to take shape in 1988, using factor endowments and their structure, which reflect the characteristics of China’s development stage, as the starting point for analysing China’s development. The first article that emerged from this line of thinking was written with Li Zhou and examined the institutional causes of China’s 1988 inflation. Since then, we have developed a distinctive perspective on China’s transition and development based on factor endowments and their structure, which gradually evolved into the analytical framework of New Structural Economics.

In 1994, Cai Fang, Li Zhou, and I published The China Miracle. In that book, the analytical perspective and framework of New Structural Economics were already largely in place. The analytical paradigm was: factor endowments determine industrial structure, which in turn requires corresponding infrastructure and compatible institutional arrangements.

Because our perspective and analytical approach differed from mainstream theory, many of our judgements and arguments were controversial. But the vitality of a theory lies in whether the inferences it produces can be borne out by later practice.

For example, as discussed in The China Miracle, the dominant international view at the time held that because China had not followed mainstream shock therapy or the “Washington Consensus”, its collapse was inevitable despite its strong performance. The “China collapse” thesis was then highly fashionable. In response, we predicted that if China continued with its pragmatic, gradual, dual-track transition, its economy would surpass that of the United States in purchasing power parity terms by 2015, and in market exchange-rate terms by 2030.

This was an extremely bold judgment at the time, but practice confirmed it: China surpassed the United States in purchasing power parity terms in 2014. As for market exchange rates, I believe China is very likely to surpass the United States by 2030.

Later, in 2007, I was invited to give a lecture at the University of Cambridge. I applied this analytical framework, derived from China’s experience, to examine the successes and failures of developing economies around the world after the Second World War. This allowed me to identify the fundamental reasons why a small number succeeded while the overwhelming majority failed, and to develop a fuller analytical framework and set of theoretical propositions.

As China’s economy continued to grow, I had the opportunity in 2008 to serve as Chief Economist and Senior Vice President of the World Bank, becoming the first economist from a developing country to hold that position. My colleagues at the World Bank, as well as the economic research team I led, which comprised more than 1,000 outstanding professionals from both developing and developed countries, were all deeply committed to promoting development in developing countries. The World Bank also had extensive project resources and should have been the world’s most influential development institution. Yet the reality was that, despite the World Bank’s ambitious goal of building a world free of poverty, and despite the fact that China’s reform and opening-up had lifted more than 800 million people out of poverty, the number of poor people in the rest of the world had not fallen, but risen.

These World Bank elites had mastered the most advanced theories and had development projects designed to put those theories into practice. Yet they failed to achieve the expected results. The reason was exactly what I had realised in 1988: they were applying mainstream theories derived from developed countries to developing countries with very different conditions. Their intentions were good, but the outcomes diverged sharply from what the theories predicted.

That is why, on the first anniversary of my appointment as Chief Economist at the World Bank, I proposed the term “New Structural Economics”. The central point was this: countries at different stages of development have different material conditions, and therefore different industrial and institutional structures. We must incorporate the heterogeneity and endogeneity of structures across countries at different development levels into our theoretical thinking, and develop new theories to guide development practice. Only then can we achieve the noble goal of helping developing countries escape poverty.

In 2011, I was invited to deliver the Kuznets Lecture at Yale University, one of the world’s most important economics lecture series. There, I spoke for the first time on “New Structural Economics: A Framework for Rethinking Development”. I later turned the lecture into an article published in The World Bank Economic Review, formally announcing the birth of New Structural Economics to the economics community.

I am also honoured that, as Director Zhao Chuandong, Deputy Director of the National Office for Philosophy and Social Sciences under the Publicity Department of the Communist Party of China Central Committee, mentioned earlier, I was invited to speak at the 2016 Symposium on Philosophy and Social Sciences Work. Nearly ten years have passed since then. Autonomous theoretical innovation has taken on new vitality, and I, like many colleagues here today, have been greatly encouraged by this development.

Next, I would like to discuss how to deepen autonomous theoretical innovation in New Structural Economics and build its autonomous knowledge system.

Any economic phenomenon can be explained by multiple theories. Western economics, in the nearly 250 years since Adam Smith, has built a highly comprehensive body of knowledge. For almost any phenomenon in China, one can find ready-made theories to explain it, and those explanations often appear quite convincing.

Take state-owned enterprise (SOE) reform during China’s transition, for example. It became a major issue because state-owned enterprises were widely seen as inefficient. At the time, the most influential framework was the property-rights theory of new institutional economics, which holds that the most efficient corporate arrangement is one in which ownership and management are unified—that is, where property rights belong to the operator. Otherwise, a divergence of interests between owners and managers will inevitably produce inefficiency. Managers, as employees rather than owners, have no residual claim on operating returns. On this basis, the theory concludes that SOEs are inherently inefficient. If firms are simply divided into state-owned and private enterprises in a regression analysis, private firms appear more efficient by almost any statistical measure. This argument was, therefore, particularly intuitive within the American economics discourse.

For those of us engaged in autonomous theoretical innovation, the first requirement is to adopt a mindset of “changwu” [constant non-presupposition]. When faced with any phenomenon, we should not immediately ask what existing theory says about it. We must first examine the phenomenon itself in depth and on its own terms.

As I noted earlier, many theories can be brought to bear on the same phenomenon. In the case of SOEs, mainstream property-rights theory appears rigorous, and it has been embraced by many leading Chinese scholars in related fields. Yet closer observation shows that state-owned and private enterprises differ in more than ownership. SOEs are often concentrated in capital-intensive sectors linked to national security and the commanding heights of the economy. They also help prevent private capital from using control over scarce resources to extract excessive profits. Private enterprises, by contrast, are mostly found in competitive sectors. Only by observing these differences can we see that mainstream theory is inadequate in distinguishing between industries with different characteristics, or between enterprises that serve different objectives.

Therefore, if we wish to seize the opportunities of our time and engage in genuine theoretical innovation, we must approach reality with a mindset of “changwu”. Every economic phenomenon contains implicit premises, and every theory is produced in a specific context. This means that any theory, if applied mechanically, carries the risk of fighting the last war. Only with such a mindset of “changwu” can we discern the essence of a phenomenon and the factors that truly shape it.

This is a point I have consistently emphasised in advocating autonomous theoretical innovation in New Structural Economics. I also published a book titled Benti and Changwu: Dialogues on Methodology in Economics, [the ontological object of inquiry and a mindset of non-presupposition]. In my exchanges with teachers and students, I have encouraged them to free themselves from the constraints of existing theories and look at the world again with their own eyes, like newborn infants. Only in this way can we understand the essence of phenomena and their determining factors. In the language of traditional Chinese philosophy, looking at the world through existing theories is a “second-order” mode of observation. What we need is a “first-order” mode of observation: to observe the essence and determining factors of phenomena directly, without theoretical prejudice or presupposition. This is what it means to view phenomena through “changwu”.

But if we are to maintain this mindset and directly observe the essence and determining factors of real-world phenomena, how should we observe them? Broadly speaking, there are two worldviews for analysing the essence of phenomena and their determining factors: idealism and materialism.

Since I began exploring the construction of my own theoretical system in 1988, I have fully endorsed and consistently upheld historical materialism. This position also accords with the spirit of the General Secretary’s speech at the Symposium on Philosophy and Social Sciences Work: Marxism reveals the essence, internal connections, and laws of development of things. It is a great tool of cognition and a powerful intellectual weapon for observing the world and analysing problems.

The views that New Structural Economics has gradually developed since 1988, often in departure from mainstream theory, are grounded in a materialist standpoint. They take factor endowments—a material condition—as the starting point for observing development and transition in China and elsewhere in the world. Why insist on historical materialism? Both my own practice and my reading of philosophy have shown me that historical materialism can reveal the essence of phenomena. Factor endowments offer an especially useful entry point.

As is well known, historical materialism holds that the economic base determines the superstructure, while the superstructure in turn acts upon the economic base. The economic base consists of the productive forces and the relations of production shaped by those productive forces. Relations of production are important, but they are ultimately conditioned by the productive forces. It is therefore the productive forces that play the primary role in driving social progress.

When proposing “new quality productive forces”, the General Secretary also emphasised that industries are an important carrier of these forces. New Structural Economics recognised relatively early how industries are determined: the industries of each country and society are determined by the comparative advantages arising from their factor endowments and their structure.

Thus, if the economic base determines the superstructure, and the economic base is primary; if productive forces determine the relations of production, and productive forces are primary; if productive forces are carried by industries, and industries are in turn determined by factor endowments, then within the entire Marxist chain of analysis, factor endowments and their structure are the primary factor.

New Structural Economics further concretises the primacy of material conditions. It holds that factor endowments and their structure are the primary existence and the primary determining force. Its theoretical innovation begins from factor endowments and their structure as the primary material condition, and uses them to observe the country, society, and development. From this come a series of propositions: production structure is endogenous to factor-endowment structure; infrastructure must be compatible with production structure; and the institutional arrangements within the superstructure should also be compatible with production structure. This is the first basic standpoint of New Structural Economics.

In the process of economic development, however, different structures change at different speeds and with different degrees of difficulty, creating time lags. Because of the internal frictions of structural change, institutional structures and production structures are often not fully aligned. This is normal. At times, the state may also pursue goals other than efficiency, such as security, and therefore promote production structures that differ from those determined by comparative advantage. This creates distortions. Structures are endogenous, distortions are endogenous, and the operation of the economy reveals this endogeneity. This is the perspective of New Structural Economics: “one centre, three basic points”.

If New Structural Economics is to pursue theoretical innovation, it should begin from this perspective, observe the phenomena of development and transition in China and other developing countries, and develop theory on that basis. If we have a consistent perspective to guide theoretical innovation, the theories we develop can be linked together through a coherent logical chain and integrated into an autonomous knowledge system.

New Structural Economics was first proposed as the third generation of development economics. Later, we realised that every branch of modern mainstream economics—macroeconomics, monetary economics, public finance, business cycles, industrial organisation, spatial layout, international trade, and so on—takes the structures of developed countries as its implicit premise. Yet countries at different stages of development have different structures.

If we introduce the structural heterogeneity and endogeneity of countries at different levels of development into the various fields of modern mainstream economics, we can in effect launch a “structural revolution” in each of those fields. Therefore, although New Structural Economics was first proposed as the third generation of development economics, this realisation has made our understanding clearer: it is in fact a “structural revolution” in modern economics. Introducing the endogeneity of material structures into modern mainstream economics is, in essence, a Marxist transformation of modern mainstream economics.

Modern mainstream economics takes the structures of developed countries as its implicit premise and neglects the differences in structure, institutions, and economic operation that arise from different material conditions across countries at different stages of development. From a Marxist perspective, since the economic base determines the superstructure, and the superstructure acts back upon the economic base, we must start from the primary determining role of the economic base. This is, in effect, a Marxist revolution in modern economics.

Finally, I would like to share a few expectations with young friends. As mentioned earlier, modern economics began with Adam Smith’s The Wealth of Nations in 1776. Nearly 250 years have passed since then. If we count 25 years as one generation, it has taken the efforts of ten generations to build such a complete system.

Frankly, it is difficult to find a phenomenon that modern mainstream theory cannot explain. These explanations may not always grasp the essence of the problem, but the knowledge system is highly complete, the logical chain is clear, and the arguments are extremely persuasive. New Structural Economics, by contrast, has existed for only 38 years since its beginnings in 1988. If we count from the 2011 Yale lecture, when it was formally introduced to the academic community, it has existed for only 15 years. Compared with the powerful and well-established mainstream theoretical system, the autonomous theoretical innovation represented by New Structural Economics remains at an early and fragile stage. It urgently needs the young scholars here today to devote themselves to it, generation after generation, just as scholars in the Western mainstream academic community have done. Only through sustained collective effort and deeper theoretical innovation can we ultimately build an autonomous knowledge system of New Structural Economics originating in China. This is a task that will require the joint efforts of several generations.

We often say that young people are the hope of the country. Likewise, young people are the hope of building an autonomous knowledge system for New Structural Economics.

I am particularly pleased to see so many young friends participating today, both in person and online. If you can truly start from the materialist perspective of New Structural Economics and summarise the experience of development and transition in China and other countries, this will be a once-in-a-lifetime opportunity.

As I boldly predicted in 1995, at the 40th anniversary of the Economic Research Journal, the 21st century will belong to Chinese economists. It will be an era in which China produces, in significant numbers, leading scholars capable of shaping the theoretical direction of global economics. Since Adam Smith, the centre of the world economy has also been the centre of economic research, theoretical innovation, and the emergence of great economists.

In purchasing power parity terms, China’s economy surpassed that of the United States in 2014. Looking ahead to 2049, I believe China’s economy could reach twice the size of the U.S. economy or even more. The centre of the world economy is shifting towards China, and the research centre of world economics will inevitably shift towards China as well. If you wish to seize this historic opportunity, you must first adopt a mindset of “changwu”: you must not simply use Chinese data to verify Western mainstream theories. If you apply Western mainstream theory whenever you encounter a Chinese phenomenon, you may well be able to publish papers, but you will not grasp the opportunity of this era. Worse still, you may mislead society, because you will have failed to identify the real problem behind the Chinese phenomenon. Would that not make you like the economists I saw at the World Bank, who were sincerely committed to helping developing countries, but who, armed with inappropriate theories, spent large sums of money on many projects with very little effect?

The purpose of economic research is to understand the world and, more importantly, to transform it. Taking the transformation of the world for the better as the goal of research is the only way to seize this opportunity and advance theoretical innovation.

The opportunity of the times is right before us, but whether we can seize it depends on having the right worldview. We can no longer mechanically apply theories that largely belong to the superstructure and fall within the category of idealism. Instead, we must begin from materialism and from the material foundations of each country. We must uphold the Marxist perspective, namely the perspective of New Structural Economics: “one centre, three basic points”.

At the same time, researchers must have the right outlook on life. The purpose of research is to understand the world and, through that understanding, help people transform the world for the better and promote social progress. This is the most important goal, perhaps even the only goal. Whether a paper can be published is not the main concern.

I emphasise this because, while it is undeniable that the nearly ten years since the General Secretary’s speech at the Symposium on Philosophy and Social Sciences Work have given fresh momentum to autonomous theoretical innovation, such innovation remains, overall, at an early stage. New Structural Economics started relatively early, but it has existed for only 38 years. If you search the literature today, there is still not much related research. Moreover, the editors and reviewers of current journals still largely adhere to the mainstream paradigm, making it difficult to publish articles that put forward original theoretical innovations.

If what you are aiming for is publication, you are very likely to give up on autonomous innovation. And if that is your starting point, it will be difficult for you to seize the theoretical opportunities created by China’s rise as one of the world’s major centres of economic research.

Therefore, to meet the demands of this era, you must have both the right worldview and the right outlook on life. You must be clear about the purpose of research: to understand the world yourself, and then to help others change it for the better and advance social progress. This is the most important goal—perhaps even the only one.

I believe that, as China’s national strength continues to grow through reform and opening up, and as the centre of the world economy shifts towards China, the research centre and direction of innovation in world economics will inevitably shift towards China as well. The great masters who lead the development of world economic theory will also gather in China. We live in an extremely fortunate era. The General Secretary’s call for autonomous innovation ten years ago has created a favourable external environment for us.

I am also particularly pleased that the journal New Structural Economics has been approved for formal publication. This channel will provide all colleagues and young friends committed to autonomous theoretical innovation in New Structural Economics with a platform to publish their work, exchange ideas, and learn from one another.

Finally, allow me to conclude with the General Secretary’s words at the Symposium on Philosophy and Social Sciences Work: “This is an era that needs theory and will certainly produce theory; this is an era that needs thought and will certainly produce thought. We must not fail this era.”

Let us take this as mutual encouragement. Thank you.

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At 11 p.m., the whole city sank into a deathly silence. A citywide curfew had been imposed, and the power had been cut to avoid missile strikes. Kyiv lay in total darkness. Now and then, a bomb tore across the sky, leaving behind a brief, piercing flash, before everything slipped back into the endless dark. From time to time, the rumble of armoured vehicles could be heard in the distance, dull, oppressive, like the breathing of some enormous beast.

It was in this darkness that, in Mariinsky Park, just beyond the wall from where we were, fierce gunfire suddenly broke out.

Machine guns, submachine guns, grenades—the sounds of every kind of weapon blended together, punctuated by screams and shouted commands. The gunfire crackled in rapid succession. Bursts of explosive light flickered in the dark, throwing the outlines of the trees into sudden relief. The exchange lasted for more than forty minutes, and then stopped all at once, as if nothing had happened. Only the night wind went on blowing, carrying with it the smell of gunpowder and blood.

That night, all of us listened tensely to every movement outside the window. Fearing stray bullets, no one dared turn on a light, still less go near the window. We could only judge the course of the fighting by the direction of the gunfire—now close, now distant, now seeming to close in from every side. Every second felt stretched without end.

Only later did our Ukrainian friends tell us what had really happened in that battle.

As it turned out, on the very first day of the war, a Russian special forces unit had successfully landed on the outskirts of Kyiv. This elite detachment of several dozen men slipped quietly into the city under cover of night. Their objective was unmistakable: to head straight for the Ukrainian Presidential Office and carry out a decapitation strike.

Under the plan, they were to cross Mariinsky Park at night, since the park lies less than one kilometre from the presidential office. Once they had passed through that belt of greenery, the presidential compound would have been right before them.

But as they entered the park, Ukrainian guards posted around the Verkhovna Rada, the Ministry of Health, and the Central House of Officers spotted them. A fierce firefight followed immediately. The Russian special forces were highly trained, but the Ukrainian guards, using the buildings inside the park as cover, held them off with stubborn resistance. The battle lasted nearly an hour. In the end, the entire Russian special forces unit was wiped out.

It was that close.

Had that unit made it across Mariinsky Park; had they broken through the defence line a little faster; had the Ukrainian guards failed to spot them in time—the history of the war might have been written differently. Had the Presidential Office fallen, the consequences would have been too grave to contemplate. The whole course of the war might have taken another turn.

Afterwards, many Ukrainians said, “God saved Kyiv.”

Behind those prayer-like words lay the relief of having survived catastrophe, and the aftershock of fear that came with realising how narrowly disaster had been averted. That night, Kyiv was only one kilometre from falling. That night, the war stood on the edge of a very different ending.

The war has now lasted more than four years. Looking back, people may remember the great counteroffensives that shifted the course of the fighting, the fierce debates at international summits, and the events that shook the world. Yet sometimes, history is turned by a single night, a single park, and a small detachment that never made it through.

History is often like this. Beneath the great tide lie countless moments of “almost”. And it is precisely these almosts that, in the end, converge into the outcome we see today.

That night, the gunfire in Mariinsky Park woke Kyiv, and it woke the world. It reminded everyone that in war, victory is never written in advance. Between defeat and survival, there may be only a wall, a grove, a timely discovery, or a desperate stand.

Whether God truly saved Kyiv, no one can truly say. But one thing is certain: that night, the ordinary Ukrainian guards posted around the Verkhovna Rada, the Ministry of Health, and the Central House of Officers used their flesh and blood to stop a blade aimed straight at the city’s heart. They were the true guardians of Kyiv.

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Pekingnology

Inside China’s Embassy in Kyiv as War Broke Out

The two following essays were published on the WeChat blog 永久的心路 on 26 and 28 April 2026, respectively. They remain accessible on May 1, 2026…

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a month ago · 83 likes · 14 comments · Yiyang Xu, Yuxuan JIA, and Zichen Wang

In his latest interview, Liu placed this argument within a broader critique of overreliance on investment-led stimulus. The transcript of the interview was published on the official WeChat blog of Tencent Finance on 8 May 2026.

Liu has agreed to this translation and publication.

经济学家刘世锦：给1.8亿农民涨养老金 比大搞投资管用

Economist Liu Shijin: Raising Pensions for 180 Million Rural Residents Would Be More Effective Than Investment-Led Stimulus

“To address weak final demand, policy must start from a first principle: resources should be concentrated, and both policy priorities and funding should be directed squarely at boosting final demand,” Liu Shijin said.

Liu also cautioned against the view that China can rely on ever-larger macroeconomic stimulus to lift growth, calling it a misunderstanding of what policy can achieve. “If growth could be restored simply by making macro policy loose enough, and if it were really that straightforward, then the whole economic problem would be very easy to solve,” he said.

On 16 April, the National Bureau of Statistics released China’s Q1 economic data. GDP reached 33.42 trillion yuan, up 5.0 per cent year on year, a clear improvement from the 4.5 per cent recorded in Q4 last year. Stronger-than-expected exports, robust industrial data, and the early rollout of macroeconomic policy support were among the main factors behind the better Q1 performance.

But behind the 5.0 per cent growth figure, the structural imbalance of “strong supply and weak demand” has not been fundamentally resolved. Where, then, should China’s growth momentum come from? And where should macro stimulus funds be directed?

In an interview with Tencent Finance’s Elite’s Talk, Liu Shijin, former Vice President of the Development Research Centre of the State Council, said that any assessment of the current economy must be based on “a holistic or systemic perspective”. It is essential, he said, to distinguish “which problems are derivative and which are root causes”.

In his view, problems such as nominal growth falling below real growth and persistently weak prices are all “secondary effects”. There is only one true root cause: insufficient final demand.

What is the key to breaking this deadlock? Liu’s answer is clear: raise the incomes of middle- and low-income groups, especially rural residents.

He cited one set of estimates. China’s basic old-age insurance scheme for urban and rural residents currently covers 550 million people, more than 95 per cent of whom are rural residents. Among its 180 million recipients, the average monthly pension is only 249 yuan. That is far below the “more than 6,000 to 7,000 yuan [887-1,034 U.S. dollars]” received by retirees from urban Party and government organs and public institutions, and the “more than 3,000 yuan [443 U.S. dollars]” received by retired urban enterprise employees.

“If the pension could first be raised to 600 yuan, which is roughly the current level of the Rural Minimum Living Standard Guarantee (Rural Dibao), and then to 1,000 yuan, the demand generated would lift GDP growth that year by about 0.8 to 1 percentage point,” he said.

Liu suggested accelerating the transfer of part of state-owned capital into social security funds, or allocating a relatively large share of the annual fiscal stimulus package to raising the incomes of low-income groups.

For Liu, social welfare is never merely a welfare issue. Raising the incomes of middle- and low-income groups, he said, is both a long-term social policy issue and a short-term macroeconomic growth issue. If progress is too slow, short-term growth will be affected.

On macroeconomic policy, Liu stressed that money must be “put in the right place”. “The effectiveness of stimulus policy will vary greatly,” he said, depending on whether it is used at the end of the chain, in intermediate links, or at the source—namely, final demand.

For this reason, Liu remains cautious about calls for investment-led stimulus. The precondition for expanding effective investment, he argued, is first to raise the level of final demand.

The following are highlights from Liu Shijin’s interview.

I. Insufficient Final Demand Is the Root Cause

Elite’s Talk: China’s economy grew by 5.0 per cent year on year in the first quarter, marking a solid start to the year. But Mao Shengyong, Deputy Commissioner of the National Bureau of Statistics, also said frankly that “the domestic imbalance of strong supply and weak demand remains pronounced.” How do you assess the current economic situation?

Liu Shijin: To analyse the current economic situation, we need a holistic or systemic perspective. We must be clear about which problems are derivative and which are root causes.

In my research over the past few years, I have put forward the concept of “final demand”. What does final demand mean? GDP, or gross domestic product, refers to the sum of value added across the economy over the course of a year. It is also known as final output.

Strictly speaking, however, it is not truly final, because part of it consists of productive investment, which then re-enters the production process. This portion therefore needs to be excluded. What remains after that is goods consumption, services consumption, and another category of non-productive investment, which we may call consumption-oriented investment. Together, these make up final demand.

There are many links in the operation of the national economy, but final demand is the most important outlet. It is both the starting point and the destination of economic activity.

In previous years, China’s non-productive investment, or consumption-oriented investment, mainly consisted of livelihood-related real estate, infrastructure, and parts of the services sector. For a long time, as is well known, China’s real estate sector expanded rapidly, as did infrastructure investment. Over the past couple of years, however, the picture has changed. The property sector has slowed sharply, and infrastructure investment is also struggling to maintain its previous pace of growth.

Against this backdrop, the gap between China’s consumption share of GDP and the international average—about 20 percentage points—has become much more apparent. In the past, this gap was not easy to see. In a sense, it was masked by the expansion of the property sector. Once real estate slowed, however, the gap was inevitably exposed. Once exposed, the growth of final demand in the national economy slowed markedly. In effect, this amounts to a relative contraction.

A series of phenomena and problems in the current economy—nominal growth falling below real growth, persistently weak prices, overcapacity in some sectors, rising debt burdens, and consumption downgrading among urban white-collar groups—are all secondary effects. Insufficient final demand is the root cause. Many other problems are derived from it.

II. Raising Rural Pensions to 1,000 Yuan Could Lift GDP Growth by Around 0.8 to 1 Percentage Point

Elite’s Talk: You said that insufficient final demand is a “root cause”. Where, then, is the key breakthrough point?

Liu Shijin: To address weak final demand, policy must start from a first principle. What does that mean? It means resources should be concentrated, and both policy priorities and funding should be directed squarely at boosting final demand.

A large part of the problem lies with China’s middle- and low-income groups, especially rural residents, whose incomes remain relatively low. Weak consumption ultimately reflects weak income growth. Raising their incomes, therefore, requires measures to strengthen social protection, including one issue that has attracted considerable discussion: rural pensions.

China has a basic old-age insurance scheme for urban and rural residents, covering 550 million people, more than 95 per cent of whom are rural residents. At present, around 170 million to 180 million people are receiving pensions under that scheme. How much do they receive each month? The figure is 249 yuan [36.8 U.S. dollars].

By comparison, retirees from urban Party and government organs and public institutions receive more than 6,000 to 7,000 yuan [887-1,034 U.S. dollars] per person on average, while retired urban enterprise employees receive more than 3,000 yuan [443 U.S. dollars] per person on average. The gap between farmers and these groups is very large.

The low level of the basic old-age insurance scheme for urban and rural residents affects not only the living standards of pension recipients. It also directly and indirectly constrains the consumption of more than 300 million employed people who are still working. According to preliminary estimates, it affects the consumption level of roughly half of China’s population.

If this pension level were raised, the boost to economic growth would be very significant. We have done some research and estimates. For example, if the current level of just over 200 yuan were raised in two steps—first to 600 yuan, which is roughly the current level of the Rural Minimum Living Standard Guarantee (Rural Dibao), and then to 1,000 yuan, the demand generated would lift GDP growth that year by about 0.8 to 1 percentage point.

Several proposals are already being discussed. One option is to transfer part of state-owned capital into social security funds. Another is to use a portion of the annual fiscal stimulus package for this purpose. For example, allocating 1 trillion yuan would raise rural residents’ monthly pensions from just over 200 yuan to more than 400 yuan. That would provide a clear boost to domestic demand and, in effect, raise the level of final demand.

III. Social Welfare Is Also a Short-Term Growth Issue

Elite’s Talk: Some people argue that farmers’ pensions cannot be raised too quickly. How would you respond?

Liu Shijin: There are indeed different views on this issue. But it is important to recognise that this is both a social welfare issue and an urgent question of economic growth.

On one level, the government and society should care for vulnerable groups, help low-income people raise their incomes, and improve their access to basic public services.

On another level, it is also an immediate growth issue. Last year, China’s real GDP growth was 5 per cent, yet nominal growth was only 4 per cent—1 percentage point lower. Why? Because demand was insufficient. And where did that shortfall in demand come from? From the insufficient final demand I just discussed.

Improving social welfare and raising the incomes of low-income groups will, at the macro level, translate into higher aggregate demand. Once aggregate demand rises, it can help achieve the planned growth target. On the one hand, economic growth needs to reach 5 per cent. On the other hand, nominal growth should be equal to, or even higher than, real growth.

IV. Bigger Stimulus Is Not Necessarily Better; Money Must Be Put in the Right Place

Elite’s Talk: When it comes to macroeconomic policy, there is a great deal of discussion in the market about the size of stimulus measures and where the money should go. How do you view the role and limits of macro stimulus?

Liu Shijin: Macroeconomic stimulus is meant to address short-term economic balance and stability. It cannot solve the problem of growth momentum.

At the current stage, China’s relatively low consumption rate has much to do with the structure of household demand. If households are grouped into ten income deciles, the gaps between those deciles are quite large. That is what is usually meant by a high Gini coefficient. In such circumstances, both the overall marginal propensity to consume and the average propensity to consume tend to be low.

Solving this problem requires reform of the income distribution system. But it is difficult to make major progress in the short term. That is why macroeconomic policy should be used, at least in the short term, to ease or partially address the problem of insufficient consumption.

Given a certain amount of stimulus funding, where exactly should it go? Should it be used at the end of the chain, in intermediate links, or at the source—namely, final demand? The effectiveness of stimulus policy will vary greatly depending on this choice.

There are two points here.

First, when it comes to stimulus, bigger is not necessarily better. If growth could be restored simply by making macro policy loose enough, and if it were really that straightforward, then the whole economic problem would be very easy to solve.

Macroeconomic policy, whether monetary or fiscal, can boost overall economic activity by injecting additional stimulus. But that only helps stabilise the economy and restore short-term balance. It does not create the ultimate drivers of long-term growth.

Second, when the size of the stimulus is fixed, the key question is where the money should go. The same first-principles logic still applies: funds should be directed towards final demand. That is where they can generate the strongest demand effect and deliver relatively high efficiency.

This, I think, is the issue we need to focus on now.

V. Avoid Ineffective Investment and Invest Where There Are Returns

Elite’s Talk: Another widely debated view is that investment-led growth remains more effective in the short term. How do you see the relationship between investment and consumption?

Liu Shijin: The central authorities have repeatedly stressed the need to prevent ineffective investment. What we need is investment backed by demand and capable of generating returns.

Investment does play a major role in supporting overall economic growth. But the precondition is that there must be demand.

Where does that demand come from? As I said earlier, final demand must first be raised. Only after that can investment truly expand. Much of the current debate still shows a strong bias towards investment, driven by the belief that it produces quick results. But if final demand does not rise and consumption remains weak, further investment will only worsen overcapacity and increase the associated debt burden.

So, to truly expand investment, the first step must be to raise final demand. Once final demand rises, capacity utilisation will improve as well. In some sectors, capacity may then become insufficient, creating a need for additional investment. Only then will investment be backed by genuine demand and capable of generating returns.

From the perspective of the national economic cycle, this is the basic logic behind expanding effective investment. This point must be made clear. In practice, the relationship between investment, consumption, and growth must be managed properly, and China’s various sources of growth potential should be better identified and put to use.

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China’s Farmers’ Pensions and the Politics of Waiting

In 2025, the worst post I wrote was a speculative one: I guessed that the Communist Party of China Central Committee might use its recommendations for the 15th Five-Year Plan to signal a substantial increase in the urban and rural residents’ pension, a benefit received mainly by elderly farmers. That did not happen…

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2 months ago · 15 likes · 5 comments · JINGYUAN JIANG, Yuxuan JIA, and Zichen Wang

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Investing in people, in Rmb20 instalments

At China’s annual Two Sessions, discontent is usually filed down into ceremony. Delegates praise, endorse, and occasionally offer carefully padded suggestions. They are not meant to look as though they are rebelling against the headline promises of the…

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3 months ago · 56 likes · 4 comments · Zichen Wang

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Calls to address pension inequality grow

A retired top financial regulator has lent his support to the growing calls for the Chinese government to significantly increase pension payouts for its farmers. In a high-profile national forum, he advised that Beijing should bridge the gap between the pensions of farmers and urban retirees…

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a year ago · 25 likes · 1 comment · Zichen Wang

Trump has buried liberal world order but what comes next could be better

The US and China have an opportunity to move beyond ideological confrontation towards coexistence, strategic stability and managed competition

The two terms of US President Donald Trump have shaken the old style of US liberal internationalist leadership. Yet, as some doors close, others open. The summit between President Xi Jinping and Trump in Beijing last month suggests that the United States and China might now have an opportunity to move beyond ideological confrontation and towards a more realistic framework of coexistence, strategic stability and managed competition.

For decades, Washington has held global primacy and pursued a liberal internationalist foreign policy of promoting democracy, open markets and stewardship of global institutions. Trump’s more realist foreign policy has been more transactional, sovereignty-centred and more openly sceptical of the post-war order.

Its focus on tariffs, alliance burden-sharing and resistance to Western progressive social values has changed the narrative that American power serves a universal project larger than itself. Further, even if Trump left office tomorrow, his tenure has made any future attempt to re-embrace old-style liberal internationalism less credible.

Nowhere is this clearer than in the transatlantic partnership. The Trump administration’s criticism of Europe’s reliability, defence posture and direct interference in European politics has weakened the idea that the Atlantic alliance can remain the unquestioned core of global order. Europe’s pursuit of strategic autonomy is now part of a wider reassessment of a world no longer disciplined by US-led blocs.

Multipolarity has also arrived. Middle powers are hedging, alliances are looser, regional institutions matter more and countries across the Global South increasingly resist fixed ideological camps. That creates an opening: with strategic stability newly recognised, the US and China can work to avoid the Thucydides Trap and the Kindleberger Trap.

Avoiding the Thucydides Trap – describing the potential danger when a rising and an established power come into conflict – requires both changing the narrative and de-securitising the relationship. Yet, this trap is by no means an ironclad law that cannot be crossed but, rather, is a subjective construct.

And, while national security concerns are real, they cannot justify cutting every commercial, technological, educational and diplomatic link. Thankfully, the recent Xi-Trump summit has started to move things in the right direction, with three more in-person high-level meetings planned for this year. If the two nations can keep the momentum going, a mutually destructive and pointless war can be avoided.

One priority is establishing a dialogue between these leading powers on the global governance of artificial intelligence (AI). This is vital to reduce the risks of AI weaponisation and misuse, and to get to grips with the upheavals in daily life that AI could bring.

There is also space for selective security cooperation. China and the US have overlapping interests in preventing an escalation of the Iran war, advancing a political settlement to Russia’s war with Ukraine, denuclearising the Korean peninsula and preserving stability across the Taiwan Strait.

China’s relations with Iran and Pakistan give it channels Washington lacks, as demonstrated by the high-level exchanges involving Islamabad and Tehran last month. The US should also avoid using Taiwan as a bargaining chip, support peaceful cross-strait dialogue and reaffirm that it does not support secessionism.

The second danger is the Kindleberger Trap. Named after Charles Kindleberger’s account of the disastrous 1930s, it describes the breakdown of the global order when the established power no longer provides public goods, while the rising power is not yet ready, accepted or empowered to do so. If the US retreats from global governance and China’s contributions are treated as threats, the result will be a governance vacuum.

Beijing has made it clear it is willing to do more. Its five major initiatives – which span the Belt and Road Initiative, development, security, civilisation and global governance – form part of a broader effort to supply development finance, security dialogue, cultural exchanges, infrastructure connectivity and institutional reform.

Last year, China pledged an additional US$500 million over five years for the World Health Organization as global health financing comes under strain. At the World Trade Organization, it has supported the Multi-Party Interim Appeal Arbitration Arrangement, helping to preserve rules-based dispute settlement while the body’s appellate mechanism remains paralysed.

Beijing has also moved to institutionalise mediation as a tool of global governance. In May last year, China and more than 30 other countries signed the Convention on the Establishment of the International Organisation for Mediation in Hong Kong.

Tariff-free treatment for exports from 53 African nations and regional summits with nations from Africa, Latin America, Central Asia, the Gulf states and Southeast Asia all point in the same direction: China is offering the world new development opportunities, market access and a fresh institutional voice.

Instead of engaging in competition, a better direction would be to embrace the narrative of human security and the concerns of human development to transcend the overextension of national security concerns. All countries can benefit in a world where global public goods are supplied by more than one power and through more than one institutional pathway. A system that excludes either will be unstable; a system that allows both to contribute will be more resilient and more prosperous.

The US and China must continue to move away from disordered competition and towards more managed competition and the Olympic ideal of competition that drives us towards self-improvement, to go “faster, higher, stronger – together”. In this way, the world can avoid the Thucydides Trap and the Kindleberger Trap and instead embrace the alternative of a more prosperous and secure world.

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Henry Huiyao Wang: From Strategic Rivalry to Strategic Stability

Below is the latest comment by Henry Huiyao Wang, Founder of the Center for China and Globalization (CCG), on the outcome of U.S. President Donald Trump’s meeting with President Xi Jinping…

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21 days ago · 14 likes · 1 comment

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Henry Huiyao Wang on building mechanisms for managed interdependence

Below is the latest comment by Henry Huiyao Wang, Founder of the Center for China and Globalization (CCG), on U.S. President Donald Trump’s upcoming visit to China…

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a month ago · 21 likes · 3 comments

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Henry Huiyao Wang on How China’s patient diplomacy can help secure peace in Iran

Henry Huiyao Wang, founder and President of the Center for China and Globalization (CCG), wrote on Wednesday, April 22 in his opinion column in the South China Morning Post…

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2 months ago · 24 likes

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Henry Huiyao Wang: Middle powers are taking up the mantle of multilateral leadership

Henry Huiyao Wang, founder and President of the Center for China and Globalization (CCG), wrote in his opinion column in the South China Morning Post on Wednesday, March 25…

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3 months ago · 18 likes · 3 comments

The most visible fallout came at Tongji University, a leading Shanghai university, which removed the dean of its School of Life Science and Technology after finding academic misconduct in a Nature paper the blogger had challenged. Nankai University, Sun Yat-sen University, and Shanghai University have also opened investigations into scholars he questioned.

The blogger, known online as “Geng Tongxue Tells Stories,” is a former doctoral candidate at Beihang University in Beijing. He left the programme in 2025, citing growing disillusionment with a publish-or-perish research culture that, as he put it, rewarded flashy papers more than meaningful science.

From April 9 to May 12, Geng publicly questioned papers involving five prominent scholars at four universities. Some of those named hold some of China’s most coveted academic titles, including recipients of the National Science Fund for Distinguished Young Scholars.

The videos quickly spread far beyond academic circles. By 14 May, his Bilibili account had more than 1.8 million followers and about 230 million total views, while his Douyin [China’s equivalent of TikTok] account had 1.34 million followers. What might once have remained a narrow dispute over figures, images, and laboratory data has become a public reckoning over how Chinese academia rewards papers, grants, titles, and institutional prestige.

The controversy has since reached China’s state media, a sign that the issue has moved beyond a handful of disputed papers and is increasingly being treated as a symptom of deeper problems in the academic system. Xinhua News Agency, China’s official news agency, gave Geng a platform, publishing an interview that appeared supportive of his efforts to expose academic misconduct. People’s Daily Online also weighed in, pointing to weaknesses in academic oversight, pressure from rankings, project targets, opaque review procedures, and some institutions’ tendency to protect their own reputations.

In China’s academic system, papers, journal rankings, and grants often decide who wins elite labels such as Distinguished Young Scholar or Cheung Kong Scholar, with election to the Chinese Academy of Sciences or the Chinese Academy of Engineering standing at the top of the hierarchy. Those “talent hats” can then bring larger laboratories, more public funding, greater institutional status, and wider control over academic resources—but often, too, less scrutiny.

The same concern has echoed in the Chinese public debate. One influential expression of that view came from Wang Mingyuan, a researcher at the Beijing Reform and Development Research Association, who published a commentary on 21 May on the WeChat account Fuchengmen No. 6 Courtyard (阜成门六号院). In Wang’s view, once universities are run like factory production lines, academic life is reduced to a bureaucratic ledger of papers, projects, grants, and titles—a system that compacts the soil of academic life and drains it of the nourishment needed for originality.

Lastly, an update on Geng Tongxue. In a video released on 27 May, he made fresh allegations of misconduct involving papers by prominent academics, among them Distinguished Young Scholar recipients, university deans, and a candidate for membership in the Chinese Academy of Engineering. He said he had reviewed only about one-tenth of Distinguished Young Scholar recipients and had already found, in his words, a “bumper harvest” of problems. But he also said he would stop reporting alleged misconduct directly to the scholars’ institutions, citing concerns over his family’s safety.

—Yuxuan Jia

中国学术的泡沫化、绩效网格化和板结化

The Publication Bubble, Bureaucratic Metrics, and the Stifling of Chinese Academia

Strip away the thick froth of inflated academic rankings, and a harder truth emerges: despite China’s extraordinary progress over the past two decades, the country still trails the United States by a wide margin in basic research, frontier technologies, and top-tier scientific achievements. In many respects, China remains in the second tier of global science, alongside countries such as Britain, Germany, and Japan.

The greatest value of academic and intellectual work lies in originality, not in the sheer volume of output. By nature, it resists precise measurement and is especially ill-served by fixed quantitative indicators. An overly bureaucratic, metric-driven evaluation regime risks compacting the soil of academic life, stripping it of the nutrients needed for intellectual growth.

The blogger “Geng Tongxue Tells Stories” has criticised prominent professors at elite universities, including recipients of the National Science Fund for Distinguished Young Scholars, for padding papers and fabricating data. His criticism exposes academic corruption and the “Great Leap Forward” in paper production. Judging from close observation of people around me, as well as from my broader analysis of China’s science and technology data over the past two years, these concerns feel deeply familiar.

Over the past two or three decades, treating academia like a factory production line and reducing scholarship to the manufacture of papers has become a common malaise in global higher education. In 1990, the world produced roughly 620,000 SCI-indexed papers. By 2024, that figure had risen to more than 2.3 million. The number of papers published over the past fifteen years exceeds the total output of the previous five thousand years of human civilisation. The number of papers included in Nature Index journals rose from around 56,000 in 2014 to about 100,000 in 2024, nearly doubling in just a decade.

Needless to say, this does not mean that science and technology have advanced dramatically in such a short period, or that humanity has suddenly discovered far more truths and created far more knowledge. It means, rather, that the academic factory has produced more standardised parts to bureaucratic specifications, many of them with little real novelty. Indeed, genuinely original and intellectually substantive work may have become much less common. The attacks on universities by American conservative politicians, along with repeated calls by some entrepreneurs to do away with universities, especially the humanities, are in part a reaction to the corruption and declining quality of global academia.

In China, this distortion has reached an extreme. During the Cultural Revolution, the country swung to the opposite pole, denouncing academic publishing as part of the “bourgeois white expert line”—a label used to attack technically competent but politically unreliable intellectuals. Most academic journals in the country were shut down, and China went an entire decade without publishing a single international paper. After reform and opening up, China became acutely aware that it had fallen behind. To improve university rankings, it began actively encouraging faculty members to publish papers. Over time, this turned into publishing for the sake of publishing and ranking for the sake of ranking. Backed by China’s enormous pool of human resources, the number of papers then expanded explosively.

Take SCI-indexed journal articles. In 1992, China published just over 6,200 of them. By 2024, the figure had reached 867,000, an almost 140-fold increase, far outpacing GDP growth. To be fair, China’s publication output was unusually low in the early reform period, and part of this rise reflected a genuine process of catch-up, until around 2010. But by 2015, China was already publishing 229,700 SCI papers a year. In the next nine years, that figure nearly tripled, adding about 640,000 papers, roughly equivalent to the entire annual publication output of Europe. This does not mean that the research capacity of Chinese universities tripled, nor that China produced, in just nine years, scientific progress equivalent to the output of the whole European research system.

In the CWTS Leiden Ranking Traditional Edition, Chinese universities take 16 of the world’s top 20 spots when institutions are ranked by the number of publications among the top 50 per cent most cited in their field and year. This is an unparalleled quantitative advantage, even greater than the dominance enjoyed by American universities in the second half of the twentieth century. Zhengzhou University, for example, already ranks 25th globally by publication volume, ahead of Stanford and Oxford. And this ranking is based on data from 2020 to 2023. If the latest data were used, China’s advantage would likely appear even more pronounced.

The same ranking also shows that Jiangsu University, hardly regarded as one of China’s elite universities, has already surpassed long-established global institutions such as the University of Chicago, McGill University, Purdue University, and the University of Hong Kong in terms of publication volume. Jinan University, little known even in Shandong Province, ranks only one place below the Chinese University of Hong Kong internationally. One might ask whether those top-scoring students from Shandong who chose to study in Hong Kong should now regret their decision.

Looking at the Nature Index, which tracks higher-quality papers, from 2014 to 2024, China’s publication count rose from 5,022 to 32,122. In 2024, 892 universities in the Chinese mainland published papers included in Nature Index journals, accounting for 17 per cent of all institutions globally and more than 30 per cent of total papers. Among the world’s top 100 universities in the Nature Index, 42 were from the Chinese mainland. The rankings produce revolutionary scenes: Sichuan University ranks above Stanford, Jilin University above MIT, South China University of Technology above Oxford, and Nantong University appears broadly comparable to National Taiwan University and Northeastern University in the United States.

Global university ranking organisations and leading academic publishers have also profited handsomely from the Chinese market. Web of Science established a consulting company in China, Clarivate Analytics Information Services (Beijing) Co., Ltd. Nature has set up a dedicated Chinese-language website. In the first half of 2025 alone, Chinese authors reportedly paid around RMB 140 million in article processing charges to Nature Communications. China has become both the most obedient participant in this academic evaluation system and its richest market.

Yet if one adjusts the parameters in scientific publication databases even slightly, the true quality behind China’s supposed status as the “world’s No. 1 research power” becomes much clearer. Measured by the proportion of SCI papers ranked in the global top 10 per cent by citation impact, the top five institutions are all American universities. Among the global top 20, 11 are American and four are British. From the Chinese-speaking world, only Hong Kong Polytechnic University and City University of Hong Kong enter the global top 50, while the Chinese University of Hong Kong and the Hong Kong University of Science and Technology rank between 50th and 60th. Tsinghua University ranks 73rd globally, while Peking University ranks 164th. This is also one reason many outstanding students still choose to study in Hong Kong.

If the standard is made stricter still, and only papers in the global top 1 per cent are counted, Chinese universities and research institutions remain far behind their American and European counterparts. Between 2020 and 2023, the Chinese Academy of Sciences published more than 100,000 SCI papers, but only 1,525 entered the global top 1 per cent, a rate of just 1.4 per cent. Stanford University, by contrast, had a top-1-per cent rate of 3.8 per cent. Although Stanford published only 47,168 papers in total, 1,813 of them reached the global top 1 per cent. Among the world’s top 20 institutions by the number of top-1-per-cent papers, 11 are American and four are British.

Measured by the proportion of top-1-per cent papers, the performance of Chinese universities and research institutions becomes even more sobering. Only Bohai University enters the global top 100, but this is largely due to statistical distortion. Bohai University publishes relatively few papers overall, ranking outside China’s top 350 institutions, and its small base artificially raises the probability of a high top-1-per cent ratio. In practical terms, the highest-ranked institution from the Chinese-speaking world is the Chinese University of Hong Kong, which ranks 109th globally with a rate of 2.7 per cent. Tsinghua ranks 204th, Peking University 327th, and the Chinese Academy of Sciences—the world’s largest producer of papers—ranks only 765th.

Among the global top 20 by this metric, 10 are American universities and five are British. The top three are MIT, Stanford, and Princeton.

Take papers published in Nature itself. To generate commercial value, Springer Nature has in recent years promoted the so-called Nature Index, an expanded ranking system in which China’s position has risen rapidly. China’s Nature Index score has now exceeded 60 per cent of the U.S. level and is roughly four times that of the United Kingdom. But if one looks only at Nature itself, China still trails far behind the United States and remains below Britain. Last year, U.S. researchers published 1,431 papers in Nature, compared with 506 by British researchers and 471 by Chinese researchers, only slightly ahead of Germany’s 422.

Strip away the thick froth of inflated academic rankings, and a harder truth emerges: despite China’s extraordinary progress over the past two decades, the country still trails the United States by a wide margin in basic research, frontier technologies, and top-tier scientific achievements. In many respects, China remains in the second tier of global science, alongside countries such as Britain, Germany, and Japan.

The basic structure of global scientific competitiveness has not fundamentally changed. That is a reality China should confront with more sobriety.

Over the past couple of years, some scholars and experts have repeatedly claimed that the global centre of science and technology has shifted from the United States to China. The claim does not stand up to reality. Thanks to its vast market and dynamic technology companies, China has indeed become one of the world’s major centres for industrial R&D and technological application. But in science and technology research, the gap with developed countries remains large. Industrial rise depends on economic-system reform, which China has managed remarkably in the past. The rise of basic research and original innovation, however, depends on reforming the education system and the governance institutions of scientific research. On that front, China has made little progress over the past two decades.

No country in history has possessed scientific human resources on the scale that China does today. In 2025, China admitted more than 170,000 new doctoral students, roughly equal to the combined total of the United States, the European Union, and Japan—about 60,000, 100,000, and 12,000, respectively. To fundamentally overcome technological chokepoints, China must reform its university hiring systems, evaluation mechanisms, and student training models to genuinely encourage originality.

Academic and intellectual work, by nature, resists precise measurement and is especially ill-served by fixed quantitative indicators. Laozi produced the roughly 5,000 characters of the Tao Te Ching over a lifetime. Goethe spent forty years completing Faust. Several Japanese Nobel laureates over the past decade did not speak English fluently and had not published papers in international journals. Under today’s academic evaluation system, they would all have been filtered out.

The deepest value of academic and intellectual work lies in even the smallest measure of originality, not in piles of standardised papers and monographs. But originality needs unhurried time, independent thought, and an open intellectual and social environment in which it can take root.

If academia is managed like a factory assembly line or a bank-teller system, with bureaucratic indicators covering project rankings, funding, publication counts, titles, and countless other metrics, the result is a profound distortion of scholarship and a serious insult to intellectual creativity. Applied to teachers, researchers, and graduate students, such a box-ticking, metric-driven evaluation regime risks compacting the soil of academic life, stripping it of the nutrients needed for intellectual growth.

The current evaluation and training system will only reduce the efficiency with which China uses its intellectual resources. China may train more than three times as many PhDs as the United States, but its capacity for research, invention, and original creation will hardly rise by anything like the same multiple. Such a system only produces “professional practitioners of academic and research activities”—people skilled at managing relationships, chasing research grants, winning national projects, and accumulating titles. It does not help truly gifted minds emerge. Under such a system, figures such as Qian Sanqiang [father of the Chinese nuclear programme] and Chen Jingrun [Chinese mathematician] would very likely have been buried.

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Inside China

Wang Mingyuan: Rethinking Meritocracy in China

For decades, meritocracy has been regarded as the core engine driving China’s leapfrog development. Within the economic system, this mechanism rewards diligence, competence, and efficiency, tightly linking individual effort to material reward and ensuring that the public’s pursuit of an abundant material life is fulfilled…

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a month ago · 13 likes · 2 comments · Fred Gao

Speaking at the 2026 Conference on EU-China relations on 12 May 2026, Zhou said Europe and China have different but potentially complementary strengths in development cooperation. Europe can contribute institutional frameworks, standards, financing structures, and long-term policy support, while China brings capabilities in infrastructure delivery, renewable energy deployment, manufacturing, engineering implementation, and South-South cooperation.

Zhou received her PhD in economics from the University of California, Berkeley, in 1999, specialising in new institutional and development economics. From 1999 to 2020, she worked at the World Bank, advising leaders in Africa and South Asia, managing the Fragility, Conflict and Violence Group, and co-directing the 2017 World Development Report.

Zhou has kindly provided the transcript of her remarks.

Rebuilding Multilateralism for Development: Rebuilding Trust, Coordination, and Collective Action in a Fragmented World

The global development community often frames today’s challenge as a financing gap. Indeed, development financing pressures are real. Many countries face rising debt burdens, slowing aid flows, increasing climate costs, and widening infrastructure and energy deficits.

But the deeper challenge facing multilateralism today is not merely a funding issue.

It is whether the international system can still mobilize trust, coordination, and collective action to address increasingly complex global challenges such as climate change, pandemics, fragility, energy transition, and industrial transformation.

Many countries — particularly in the Global South — increasingly question whether existing multilateral arrangements adequately reflect their priorities, distribute development opportunities fairly, or give them meaningful voice in shaping global rules. At the same time, geopolitical tensions and inward-looking policies are making international cooperation more difficult precisely when cooperation is most needed.

Yet despite growing strategic competition, Europe and China remain indispensable actors in addressing many global development challenges because of their respective technological, financial, institutional, and industrial capabilities.

The future of multilateralism may therefore depend less on defending institutional architectures in the abstract and more on whether different actors can combine complementary capabilities around practical development challenges defined by developing countries themselves.

Energy Access and the Coordination Challenge

Energy access provides one important example.

For the past two decades, global energy governance attempted to balance four goals simultaneously: energy security, development, sustainability, and equity. Today, that balance is increasingly under strain.

The United States has signaled that climate commitments can shift with domestic political cycles. Europe, after the Ukraine war, understandably placed greater emphasis on energy security and industrial competitiveness. Meanwhile, AI and the digital economy are rapidly increasing demand for electricity and data-center infrastructure.

Yet globally, around 730 million people still lack access to electricity, most of them in Sub-Saharan Africa.

As a result, global energy governance increasingly operates through two parallel conversations. One focuses on AI, strategic industries, data infrastructure, and technological competition. The other focuses on whether rural clinics, schools, and small businesses have reliable electricity at all.

Many developing countries increasingly worry that global energy governance discussions are becoming less connected to the immediate development realities they still face, particularly energy access, affordability, and industrialization needs.

Recalibrating global energy governance therefore requires re-establishing energy access as a central development issue while strengthening multilateral coordination around this agenda.

The World Bank’s “Mission 300” initiative, which aims to help provide electricity access to 300 million additional people in Africa by 2030, is important not only because of the scale of its ambition, but also because it creates a platform for coordinating governments, private developers, concessional finance, and development institutions around a shared objective.

At a time when parts of the international system are becoming more fragmented and some traditional multilateral commitments less predictable, European actors have remained important anchors within many multilateral institutions — sustaining support for climate cooperation, development finance, technical standards, blended finance mechanisms, and rules-based coordination frameworks.

China, meanwhile, has become increasingly important through its strengths in infrastructure delivery, renewable energy deployment, manufacturing ecosystems, engineering implementation, and South-South cooperation.

The central question for multilateralism is therefore not whether one model replaces another, but whether these different capabilities can be mobilized in complementary rather than fragmented ways.

DARES and the Logic of Complementary Capabilities

Nigeria’s Distributed Access through Renewable Energy Scale-Up project, or DARES, supported by the World Bank, illustrates how such complementary cooperation architectures could potentially work in practice.

DARES is helping expand decentralized electricity access through mini-grids and Solar Plus models that combine decentralized solar with battery storage, digital payment systems, or energy-as-a-service models for clinics, schools, and small businesses.

These Solar Plus models are attractive because they can sometimes bypass weak legacy systems and expand access more quickly and flexibly.

What makes DARES particularly interesting is not the technology alone, but the way it creates a coordination platform linking governments, multilateral development banks, concessional finance, private developers, and local implementation actors around a shared development objective.

From a financing perspective, DARES also illustrates the growing importance of blended finance approaches.

In simple terms, blended finance means using public or concessional financing to reduce risks that private investors often cannot absorb on their own in difficult markets. The goal is not to replace private investment, but to mobilize it toward development objectives that markets alone may underprovide.

In this sense, blended finance is fundamentally a coordination tool — using public resources strategically to mobilize broader pools of private capital and implementation capacity toward development objectives.

Chinese firms have developed strong capabilities relevant to Solar Plus ecosystems, ranging from solar manufacturing and installation to battery systems, smart system management, and technical training.

At the same time, European institutions and multilateral organizations often contribute strengths in regulatory frameworks, safeguards, standards-setting, financing structures, and long-term institutional support.

The challenge to the multilateral system today is whether it can make such cooperation platforms work — allowing complementary capabilities to reinforce one another around priorities defined by developing countries themselves.

Vocational Education and Industrial Capability

Similar coordination challenges arise in vocational education and workforce development.

Many developing countries aspire to industrial upgrading, green transition, and digital transformation, but often lack sufficiently skilled technical workforces. This is not simply an education problem. It is fundamentally an ecosystem problem linking firms, institutions, incentives, financing systems, and industrial strategy.

Chinese firms and financing institutions often have strong practical capabilities connected to real production ecosystems — including industrial parks, manufacturing supply chains, factory-linked training, and apprenticeship systems closely tied to operational demand.

Multilateral institutions, meanwhile, often bring strengths in teacher development systems, qualification frameworks, certification portability, monitoring systems, financing sustainability, and long-term institutional capacity building.

Many of these functions also have strong public goods characteristics. Firms alone may underinvest in them because the benefits extend far beyond any single company and contribute to broader national capability and long-term productivity growth.

This is precisely where governments and multilateral institutions can play an important role — through co-financing, incentive structures, and institutional partnerships that help align private sector participation with broader public development objectives.

In this context, parallel financing arrangements may prove more realistic than fully integrated financing models in a geopolitically fragmented environment.

The real challenge is not simply coordinating financing flows. It is coordinating different institutional logics, implementation cultures, and time horizons.

Rebuilding Practical Multilateralism

The future of multilateral development governance will depend less on abstract declarations and more on whether institutions can rebuild trust, coordination, and collective action around concrete shared challenges.

This is particularly important in a more fragmented and multipolar world, where no single actor possesses all the capabilities needed to address complex development problems at scale.

Europe, China, multilateral institutions, private firms, and developing-country governments each bring different but potentially complementary strengths. Some contribute institutional frameworks, financing systems, technical standards, and long-term policy support. Others contribute industrial capabilities, implementation experience, manufacturing ecosystems, technological innovation, or deep local knowledge of development priorities and political realities. The challenge is whether these diverse capabilities can be organized in ways that reinforce rather than fragment one another.

Practical cooperation around issues such as energy access, green transition, and long-term capability building may therefore matter not only for development outcomes themselves, but also for rebuilding confidence in multilateral cooperation more broadly.

In this sense, effective multilateralism today is not simply about preserving existing institutions. It is about creating workable coordination mechanisms in a world of increasingly diverse actors, interests, and development pathways.

China’s contribution may matter not only because of its financing or technology, but because it can help push global governance toward a more development-centered and inclusive logic—one in which developing countries’ priorities, constraints, and voices are taken seriously.

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Pekingnology

Zhou Yongmei: The World Bank remains central to reconstruction finance—but in Gaza, it no longer sets the rules.

Zhou Yongmei, a former World Bank official who led the Fragiles States Group of the World Bank, examines how the Bank’s role in post-conflict reconstruction is evolving. Drawing on first-hand experience, she compares earlier cases such as Afghanistan and Iraq—where the Bank acted as a “gatekeeper” of governance standards—with the emerging Gaza model, in…

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2 months ago · 16 likes · 1 comment · Junyan Zhao, Yuxuan JIA, and Yongmei Zhou

Since the 1980s, bride prices have risen sharply in many parts of rural China, driven by a skewed sex ratio rooted partly in long-held son preference, rising wedding and housing costs after market reforms, and the movement of young women from villages to richer regions. What was once a local custom has become a costly barrier to marriage, especially for young, unmarried men from rural areas who earn their living in low-paid and insecure urban jobs.

The government has tried to rein it in. “Sky-high bride prices” have appeared in China’s No. 1 Central Document—the year’s first major policy statement issued by the Communist Party leadership and the State Council—every year since 2021. In 2022, eight central bodies, including the Ministry of Agriculture and Rural Affairs, the Ministry of Civil Affairs, and the All-China Women’s Federation, launched a campaign against high bride prices, lavish weddings, and competitive gift-giving.

From the legal side, the Supreme People’s Court has moved to standardise how bride-price disputes are handled, clarifying rules on when bride price should be returned. State media have also criticised excessive bride prices, portraying them as a burden on rural families and a distortion of marriage customs.

A new paper by Minhee Chae and Dandan Zhang, published in February 2026, focuses on young male migrant gig workers in manufacturing, a group often caught between rural marriage expectations and insecure urban work. The authors estimate the average bride price in the workers’ hometowns at 127,300 yuan. That was about six times what the workers had saved, on average, in the previous year, even before housing and other marriage costs were included. Coming from a place with that level of bride price was associated with a perceived chance of marriage about 7.5 points lower than in places with no bride price. The effect becomes sharper after 25, when marriage pressure typically rises, and is strongest among men with less education.

Together, the findings give sharper form to a broader social question: What happens when the cost of marriage rises beyond what young men at the bottom of the labour market can realistically afford?

Dandan Zhang has kindly reviewed the translation.

—Yuxuan Jia

Minhee Chae is an Assistant Professor at the School of Economics, Nankai University. Dandan Zhang is a Professor in Economics (with tenure) and Deputy Dean (in research, internal and international cooperation) at the National School of Development (NSD), and Deputy Dean of the Institute of South-South Cooperation and Development, Peking University.

The paper, “Bride Price, Marriage Expectations, and Intentions among Young Male Migrants in China: Evidence from Manufacturing Gig Workers”, was published in Economic Modelling in February 2026. A Chinese summary was posted by the NSD’s official WeChat blog on 12 May 2026. The text below is an English translation of that summary, lightly edited for clarity and consistency with the original paper.

Bride Price, Marriage Expectations, and Intentions among Young Male Migrants in China: Evidence from Manufacturing Gig Workers

Abstract:

This study explores how regional bride price norms shape family formation attitudes among young, low-income male migrants in China, focusing on manufacturing gig workers. Demographic challenges in this vulnerable population are critical, yet research is limited due to scarce, recent data. Using unique surveys on manufacturing gig workers and bride prices, we analyse the relationship between these financial burdens and attitudes towards marriage. Results show that men from high bride price regions are less likely to expect marriage or parenthood and exhibit lower marriage intentions, especially in their late 20s. These associations are stronger for less-educated migrants, suggesting financial barriers are disproportionately linked to those with lower socioeconomic status. Evidence also shows that such pressures may extend migration and push men into riskier informal employment, further delaying family formation and career development. These findings highlight the role of financial constraints in shaping family formation among low-income groups in China.

Research Background

Surging bride prices.

Since the 1980s, the bride price has surged sharply, driven by a highly imbalanced sex ratio resulting from family planning policies and the rapid increase in marriage-related expenses following market-oriented reforms. Moreover, the migration of unmarried women from rural to wealthier regions further exacerbates the challenges faced by rural men and contributes to rising bride price levels.

According to calculations using the China Health and Retirement Study (CHARLS) data, the average bride price between 2013 and 2018 was 46,861 yuan (≈ 6600 USD), while the average annual per capita income in the surveyed sample was 20,723 yuan, which may lead to significant financial stress, especially among low-income populations.

Growing marriage difficulties among low-income groups.

Low-income young men with rural backgrounds face intense competition and rising financial demands in the marriage market, which makes it increasingly difficult for them to form families. Although these financial demands are a consequence of underlying demographic imbalances rather than their cause, they exacerbate in-equality in marriage prospects, as elevated bride prices may delay marriage and reduce the likelihood of parenthood among economically disadvantaged men. Rural migrants have long been among the most economically vulnerable groups in China’s labour market, often concentrated in low-wage jobs.

Over the past decade, digital automation in manufacturing has further displaced low-skilled migrant labour, leading many of these workers into gig economy employment characterised by flexible, short-term, and often informal arrangements. These jobs typically lack formal contracts and social protections, deepening migrants’ economic insecurity and further con-straining their ability to meet the rising financial demands of marriage and family formation.

Research gap.

Despite the importance of this issue, existing research remains limited due to data constraints. A key challenge is the lack of recent, in-depth surveys focused on young rural migrants, and reliable regional-level data on bride prices are also scarce. Little is known about how bride price burdens shape marriage and fertility expectations or intentions among economically disadvantaged youth in contemporary settings.

Research Question

Based on the above research background, this study explores how regional bride price norms shape family formation attitudes among young, low-income male migrants in China.

Research Design

Data sources

1. The 2024 survey on manufacturing gig workers in China

The survey covers 3,732 workers, providing detailed personal, household, employment, marriage, and fertility information, in addition to their future intentions and expectations regarding these matters.

2. The 2025 survey on regional bride price in China

The survey covers 3914 respondents from 289 prefectures, of whom 50.97% were male. It collected information on perceived bride price levels in respondents’ hometowns. The bride price survey question is stated as follows: “Based on your understanding, how much is the typical betrothal gift (bride price) in your hometown in recent years? The betrothal gift here refers to the money or goods given by the man to the woman. If goods are included, please convert their value into RMB. This does not include the housing for marriage.” The survey also asked questions about dowries and housing contributions as part of marriage arrangements. Reported values of bride price ranged from 0 to over 300,000 yuan, with 4.39% reporting that the bride price is zero in their hometowns.

Main sample

Our main sample consists of 1338 never-married male migrants aged 16 to 29 at the time of the survey in March–April 2024, after excluding missing or ineligible data.

Variables and methods

Dependent variables: self-assessed marriage and fertility expectations or intentions.

Independent variable: the average bride price in a respondent’s hometown prefecture.

Method: Regression analysis.

Findings

Descriptive statistics

Marriage and fertility intentions. Among 1338 never-married male migrant workers in our sample, 76% report an intention to marry, and 81% of them express fertility intentions. However, their expectations of getting married are notably lower: they see the chance of marrying by age 30 as only 62% and the chance to have at least one child before turning 30 as 55%. These figures are concerning, given that marrying after the age of 30 is generally considered non-ideal in rural China.

Bride price and education. The average bride price is 127,300 yuan (≈ USD 17,700), with a range from 0 to 270,000 yuan. Only 18% of individuals in our sample hold a college degree or higher. In contrast, 33% completed middle school or less, 21% graduated from an academic high school, and 25% attended vocational school.

Employment and savings. The average savings from the previous year is 21,096 yuan, with a standard deviation of 26,133 yuan and a maximum of 125,000 yuan. A rough calculation sug-gests that, on average, it would take a migrant worker approximately six years to accumulate the bride price amount (=127,300/21,096), even before accounting for additional costs such as housing.

Stable relationship status. About 20% of respondents report being in stable relationships with their partners; in other words, 80% of them do not have stable partners.

Bride Price and Marriage/Fertility Intentions

The overall results suggest that male migrant workers from prefectures with higher bride price levels are less optimistic about their chances of marrying and becoming fathers by age 30. A 100,000 yuan increase in the hometown bride price (≈ USD 14,000) is associated with a 5.88 percentage point decline in the self-perceived likelihood of marrying by age 30. This means that men from regions without any bride price customs and those from regions with an average bride price of 127,300 yuan differ in perceived marriage likelihood by approximately 7.5 percentage points (=-0.588 × 12.73). In addition, a 100,000 yuan increase in bride price is associated with a 5.37 percentage point decrease in self-assessed likelihood of having a child by age 30.

Further analysis finds that the negative association becomes more pronounced particularly from age 25 onward. This implies that financial pressures associated with bride prices increasingly discourage marriage intentions as men approach the socially expected age of marriage. At age 29, a 10,000 yuan increase in the hometown bride price is associated with a 1.3 percentage point reduction in the probability of intending to marry.

Moreover, even among those who intend to marry, higher marriage payment customs in their hometown are associated with lower expectations of achieving marriage in the near future.

The Role of Education

The negative association is more pronounced among men with lower education, a high school degree or below. This suggests that individuals with lower socioeconomic status face greater difficulty in coping with elevated marriage-related expenses.

Bride Price and Labour Market Choices

Men from regions with higher bride prices tend to extend their stay in urban areas. A 100,000 yuan increase in bride price is associated with extending their migration by 4.27 months. Workers from higher bride price regions are more likely to engage in informal or non-permanent employment, such as day labour, despite the increased risks and absence of benefits, as this arrangement often provides higher hourly wages than factory jobs with fixed long-term contracts.

Conclusion and Discussion

This paper examines how marriage-related financial burdens shape marriage and fertility expectations and intentions, as well as labour market choices, among low-income male migrant workers in China. The analysis focuses on migrant gig workers in urban manufacturing areas, a group characterised by insecure employment and high rates of remaining unmarried, making them particularly vulnerable to the financial pressures associated with marriage.

The study finds that higher bride prices are associated with significantly lower expectations and intentions of marriage and childbearing. The pattern is particularly strong among less-educated men and those in their late twenties.

The study also finds that men from higher bride price regions are more likely to extend their stay in destination areas and take informal jobs with limited labour protections. This pattern indicates that high financial expectations towards men may hinder long-term career development and further delay family formation.

This study provides up-to-date evidence on marriage and fertility issues among migrant gig workers in China and highlights the importance of addressing financial barriers to marriage.

However, the analysis mainly relies on provincial fixed effects and province-specific time trends to mitigate potential omitted variable bias. In other words, this approach may not fully address the disentangling the effects of local marriage customs from the main estimates. More research is needed to overcome these challenges and further clarify the causal mechanisms linking bride price to individual demographic and labour market outcomes.

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In the days that followed, he gave a series of interviews to China Central TeleVision News, Zhengshier (a WeChat blog run by The Beijing News), and Buyidao, a Global Times-affiliated commentary platform, offering firsthand readings.

Across the interviews, Wu argued that the most important change since Trump’s 2017 visit is China itself: stronger, more confident, and more experienced in dealing with Washington. He described the new positioning of “a constructive China–U.S. relationship of strategic stability” as the central political outcome of the meeting. But whether it endures, he suggested, will depend largely on execution: building mechanisms to expand cooperation, manage competition, contain differences, and preserve peace. Above all, he identified Taiwan as the decisive test. Only if the United States stops arms sales to Taiwan and makes clear its opposition to “Taiwan independence” can peace across the Taiwan Strait and stability in China–U.S. relations be sustained. —— Yuxuan Jia

Interview with CCTV News

吴心伯教授接受央视新闻频道访谈：“中美关系新定位，如何相向而行？”

Broadcast 15 May 2026

CCTV News: What impact will the new positioning of “a constructive China–U.S. relationship of strategic stability” have on the future development of China–U.S. relations?

Wu Xinbo: I think that, under the guidance of this new positioning, cooperation should first be made the main feature of China–U.S. relations. The two sides should work together to expand the pie of China–U.S. cooperation.

Second, competition between China and the United States is unavoidable. But this competition should be healthy, not destructive. It must also be managed so that it does not spiral out of control and damage the overall relationship.

Third, China and the United States will continue to have differences in many areas. These differences cannot be resolved in the short term, but they can be well managed. The key is to prevent them from developing into crises or even conflicts.

Finally, and most importantly, China and the United States must maintain peaceful relations.

So, in my view, this new positioning sets out what needs to be done in different areas going forward. In essence, it answers the question of how China and the United States should get along in the right way.

CCTV News: What mechanisms are needed to implement the new positioning of China–U.S. relations?

Wu Xinbo: In the past, China–U.S. relations have also had constructive positionings and visions. But whether these positionings and visions can truly be translated into action is a test for both sides.

That is why I think it is entirely right for both sides to emphasise implementation and execution. Under these circumstances, an important task for China and the United States is to establish a series of working mechanisms to promote cooperation, manage competition, control differences, and maintain peace.

This means setting up dialogue, working, and exchange mechanisms across a range of areas, including trade and the economy, diplomacy, people-to-people exchanges, and security. Institutionalising China–U.S. relations is an important guarantee for the steady and long-term development of bilateral ties.

CCTV News: How should China’s renewed emphasis on the Taiwan question be understood under the new positioning of China–U.S. relations?

Wu Xinbo: Whether the new positioning of China–U.S. relations can truly be implemented depends, to a large extent, on how the Taiwan question is handled. For a long time, Taiwan has been a serious point of disagreement in China–U.S. relations. It concerns China’s core interests and allows no room for concession.

The U.S. side has had geopolitical calculations and domestic political considerations on the Taiwan question. For this reason, China should state directly and firmly to the United States that, if the new positioning of China–U.S. relations is to be realised, the Taiwan question must be handled properly.

Specifically, on arms sales to Taiwan, the United States should change its policy and stop such sales. It should also make clear its opposition to “Taiwan independence.” Only this would be conducive to peace across the Taiwan Strait and stability in China–U.S. relations.

CCTV News: In which areas is China–U.S. economic and trade cooperation most likely to achieve breakthroughs next?

Wu Xinbo: I think the first area is trade. In the past, the U.S. side tried to address trade imbalances by launching unilateral tariff wars. Going forward, I think the usefulness of tariffs in managing China–U.S. trade relations will gradually decline.

The problems in China–U.S. economic and trade relations can only be solved by expanding the pie of trade. That is why trade is the area where breakthroughs are most likely.

In science and technology, as China makes technological progress, U.S. companies have also come to realise that if they do not sell high-tech products to China now, they may lose the Chinese market permanently in a few years’ time. That would not be good for U.S. development. Many visionary people in the United States, including in the business community, have been making this argument.

In investment, Chinese companies are willing to invest in the United States, and U.S. companies are also willing to expand investment in China. So long as the relevant policies are adjusted, this potential can be released. Across all the major areas of China–U.S. economic and trade relations, there is enormous potential and room for cooperation.

CCTV News: Under the new positioning of China–U.S. relations, will there be new changes in science and technology cooperation?

Wu Xinbo: I hope science and technology will become one of the main areas where China–U.S. economic and trade relations achieve breakthroughs in the next stage.

At present, many visionary people in the United States, including business leaders, are calling on Washington to adjust its unreasonable and ineffective policies of technology suppression and control against China. The presence of so many leading figures from the technology sector at this China–U.S. meeting reflects the importance they attach to the Chinese market. It also shows that the Trump administration takes their concerns seriously.

What comes next will depend on how the two sides use cooperation mechanisms to restart economic and trade cooperation, and whether they can turn science and technology cooperation into a highlight of bilateral economic and trade cooperation.

Interview with Zhengshier 政事儿

专访吴心伯，谈特朗普访华

Published 16 May 2026

On the Background to Trump’s Visit to China

“The biggest change is…China today is stronger, more confident, and more experienced in handling relations with the United States.”

Zhengshier: Compared with 2017, what fundamental changes have taken place in the broader context and global environment surrounding President Trump’s visit to China this time?

Wu Xinbo: I think the biggest change is China itself. In interviews with foreign media over the past few days, I have made the same point: compared with nine years ago, when Trump last visited China, China today is stronger, more confident, and more experienced in handling relations with the United States. It is also more assured, both strategically and tactically.

In conversations with American friends, I have heard some of them say things like, “How should our two superpowers handle this?” I found this quite surprising. In China, people often describe the country as a major power, but rarely as a superpower. Yet in their eyes, China is clearly seen as one. I feel that more and more Americans are beginning to see it that way.

Zhengshier: Compared with nine years ago, how has Trump changed?

Wu Xinbo: Since beginning his new term, Trump has gone through a process of reassessing China and China–U.S. relations. After several rounds of back-and-forth last year, he has come to realise that China is no longer the China it once was — or, more precisely, not the China of his first term. He has recognised China’s strength and strategic resolve. I remember him saying last year that “[China is] a very strong adversary, and they only respect strength.”

Second, Trump has also rethought his understanding of China–U.S. relations. In the past, he tended to see the relationship in zero-sum terms. He often complained that China had taken advantage of the United States in trade and economic affairs. But last year’s exchanges, especially after China took relevant countermeasures, changed that perception. The U.S. imposed high tariffs, Chinese exports to the U.S. fell sharply, and daily necessities began to run short in American supermarkets. At that point, he started to realise that China–U.S. relations were not the zero-sum game he had imagined.

China needs the United States, and the United States also needs China. That is why, after Trump met President Xi Jinping in Busan last October, he said in an interview after returning home that, “I think we can be bigger, better, and stronger by working with them as opposed to just knocking them out.”

I believe that, based on his reassessment of China and China–U.S. relations over the past year or so, Trump now sees better relations with China as serving U.S. interests and also his own political interests. Of course, some people worry about the unpredictability of Trump’s policies. But in my view, if he were to return to the old approach, he would only be hurting himself. Trump has learned lessons from his first term. One cannot step into the same river twice.

On the Significance of the China–U.S. Leaders’ Meeting

“This provides strategic guidance for China–U.S. relations over the next three years and beyond.”

Zhengshier: What is the most important significance of this meeting for China–U.S. relations?

Wu Xinbo: At this particular moment, whether China–U.S. relations can move forward is crucial. Since his first term, Trump has defined China–U.S. relations through the lens of great-power competition. U.S. policy towards China has become increasingly negative and confrontational. The Biden administration, over its four years, largely inherited that approach.

After a period of economic and trade friction last year, followed by the China–U.S. leaders’ meeting in October, bilateral relations entered a period of relative stability. But that stability was temporary. China and the United States lacked consensus on major issues and cooperation in important areas to support it. Moreover, even during this relatively stable period, the U.S. side continued to challenge China’s interests.

This time is different. This meeting was historic. The two heads of state agreed to define a “constructive bilateral relationship of strategic stability” as the new framework for bilateral ties. This provides strategic guidance for China–U.S. relations over the next three years and beyond. It is also the most important political consensus reached at the meeting. It means that this stability is not temporary, but strategic and sustainable.

On a “Constructive China–U.S. Relationship of Strategic Stability”

“The two countries could find the right way for major countries to get along and create a new paradigm for major-country relations.”

Zhengshier: At the beginning of the two leaders’ talks, President Xi Jinping raised “three questions” about China–U.S. relations. How do you understand them?

Wu Xinbo: At the formal talks, President Xi Jinping opened with three profound questions rooted in deep concern: “Transformation not seen in a century is accelerating across the globe, and the international situation is fluid and turbulent. Can China and the United States overcome the Thucydides Trap and create a new paradigm of major-country relations? Can we meet global challenges together and provide greater stability for the world? Can we build a bright future together for our bilateral relations in the interest of the well-being of the two peoples and the future of humanity?”

I believe President Xi approaches China–U.S. relations with historical depth, strategic vision, and a global perspective. China does not look only at its immediate interests. It has a sense of history, strategic thinking, and concern for the well-being of humanity. The United States is different. It is only focused on its own interests. During Trump’s term, it withdrew from many international arrangements.

President Xi’s “three questions” reflect China’s vision and sense of responsibility as a major country.

Zhengshier: A “constructive China–U.S. relationship of strategic stability” has been defined as the new framework for bilateral ties. How should “strategic stability” be understood?

Wu Xinbo: During the Cold War, the United States and the Soviet Union, as two nuclear powers, also pursued strategic stability. But that stability was based on mutually assured destruction: if you dared to attack me, I could destroy you. Strategic stability was maintained by deterrence, by making the other side afraid to act. That was a negative stability.

What is being proposed now is “constructive strategic stability.” President Xi explained its core meaning from four dimensions: positive stability with cooperation as the mainstay, healthy stability with competition within proper limits, constant stability with manageable differences, and lasting stability with expectable peace.

Cooperation as the mainstay means that China and the United States should continue to strengthen the resilience of their relationship through exchanges and cooperation, and expand the pie of shared interests. Competition within proper limits means avoiding a zero-sum game in which one side’s gain is the other side’s loss. Manageable differences mean the relationship cannot swing up and down like a roller coaster. Expectable peace means there must be no conflict, confrontation, or war. This is what makes it “constructive”: these elements together support strategic stability.

Zhengshier: What long-term impact would a constructive China–U.S. relationship of strategic stability have on the development of the two countries?

Wu Xinbo: If China and the United States can realise such a relationship over the next three years, then for China, it will extend our period of strategic stability and give us more time and space for development. For China–U.S. relations, it would explore a new paradigm of peaceful coexistence and win-win cooperation between an emerging major power and an established major power, or superpower.

For the United States, this would also be a good thing. If America wants to be great again, it cannot do so without China or without sound cooperation with China. The United States needs to improve its economy and people’s livelihoods through a mutually beneficial approach. In international affairs, it can also draw on China’s strength to help achieve stability.

The United States is gradually moving away from the China policy that dominated Trump’s first term and the first year of his second term—one centred on competition and pressure—towards a policy that places greater emphasis on stability, cooperation, and the management of differences.

If the new vision and new framework of a constructive China–U.S. relationship of strategic stability can be implemented, and if both sides use it as a guide for pragmatically handling bilateral affairs, then the pattern of great-power competition, and even confrontation, seen in recent years could be reversed. The two countries could find the right way for major countries to get along and create a new paradigm for major-country relations. Years from now, when we look back on this visit, it may well be seen as a turning point in China–U.S. relations. I believe the significance of Trump’s visit to China will become clearer over time.

On the Taiwan Question

“China’s position was direct, and its tone was firm.”

Zhengshier: The Taiwan question was one of the key issues at this meeting. How do you view the future situation across the Taiwan Strait?

Wu Xinbo: On the Taiwan question, President Xi stressed that the Taiwan question is the most important issue in China-U.S. relations. If it is handled properly, the bilateral relationship will enjoy overall stability. Otherwise, the two countries will have clashes and even conflicts, putting the entire relationship in great jeopardy. “Taiwan independence” and cross-Strait peace are as irreconcilable as fire and water. Safeguarding peace and stability across the Taiwan Strait is the biggest common denominator between China and the U.S.

China’s position was direct, and its tone was firm. I believe this was intended to send several signals to the U.S. side. First, it reaffirmed that the Taiwan question lies at the very core of China's core interests and is the “red line of red lines” in China–U.S. relations. Second, it expressed dissatisfaction with recent U.S. moves, including arms sales to Taiwan, and served as a warning. Third, it emphasised that if the United States wants peace across the Taiwan Strait, it must clearly oppose “Taiwan independence,” and it must handle the Taiwan question with the utmost caution.

Stopping U.S. arms sales to Taiwan and taking a clear and unequivocal position against “Taiwan independence” are the specific demands China has put forward to the United States.

On China–U.S. Economic and Trade Cooperation

“The U.S. side has remained optimistic about the Chinese market. The resilience and momentum of China’s economy have exceeded their expectations.”

Zhengshier: Another major highlight of Trump’s visit to China was the business delegation accompanying him. Jensen Huang, Elon Musk, Tim Cook, and others all expressed confidence in China’s long-term development and market opportunities. How do you assess this?

Wu Xinbo: Since last year, through my contacts with the American business community, I have sensed that their expectations for China’s economic growth have been improving. In particular, after the Fourth Plenary Session of the 20th CPC Central Committee and the release of China’s vision for the 15th Five-Year Plan, the U.S. side has remained optimistic about the Chinese market. The resilience and momentum of China’s economy have exceeded their expectations. Businesspeople follow business logic. These entrepreneurs are optimistic about China’s vast market and hope to share in the dividends of China’s economic development.

Of course, their main concerns are still geopolitical. They worry that if China–U.S. relations are not handled well, and if political disputes between the two countries continue, those tensions will spill over into economic and trade relations and affect their dealings with China. From the China–U.S. leaders’ meeting last October to Trump’s visit this time, bilateral relations have generally shown a trend of improvement. That has given American businesspeople greater confidence to increase their investment in the Chinese market.

China has shown its willingness to further open its market. Of course, the United States should also open up further to Chinese investment. It is foreseeable that, in the coming period, China–U.S. economic and trade relations will stop declining and stabilise, and may even gradually enter an upward phase.

Zhengshier: In which areas do you think China–U.S. economic and trade cooperation is most likely to see breakthroughs?

Wu Xinbo: The most likely breakthrough is in trade. Going forward, I do not think we need to worry too much about the United States playing the tariff card against China. U.S. courts have already ruled that such tariffs lack legal legitimacy. Moreover, judging from last year’s China–U.S. trade war, the tariffs did not achieve the results Trump had expected. China’s overall exports last year still reached a historic high. So I believe the effectiveness of the U.S. tariff card is limited.

On technology, China will of course rely primarily on its own innovation and step up investment to accelerate breakthroughs. But there is also a sense of anxiety within the U.S. technology sector. Many have come to realise that Washington’s technology restrictions have not held China back. On the contrary, they have prompted China to invest more heavily in domestic innovation and make further progress. That could mean U.S. technology companies losing opportunities in China’s huge market.

This will, in turn, put pressure on the U.S. to ease some of its technology restrictions on China. Otherwise, the Chinese market may increasingly move beyond the reach of U.S. firms, which would ultimately hurt America’s own technology sector. In fact, there are already discussions within the Trump administration about how to strike a better balance between national security concerns and market competition.

So far, the two economic and trade teams have reached a broadly balanced and positive set of outcomes. These include continuing to implement the understandings reached in earlier consultations, setting up the Board of Trade and Board of Investment, addressing each other’s concerns over agricultural market access, and expanding two-way trade under a reciprocal tariff-reduction framework. I believe the two sides will work out more detailed arrangements in the next stage.

On Attending the Welcoming Banquet

“The atmosphere was relaxed and friendly…It was something I had not seen for many years.”

Zhengshier: You attended the welcoming banquet on the evening of May 14. What was your impression?

Wu Xinbo: The atmosphere was relaxed and friendly. To be honest, I had not experienced that kind of atmosphere in China–U.S. relations for many years. The last time I attended a similar event was in June 2016, during the final round of the China–U.S. Strategic and Economic Dialogue under the Obama administration. I was also invited to the dinner held at the Diaoyutai State Guesthouse.

This year marks the second year of Trump’s second term. Over the past nine years, China and the United States have gone through many turns and turbulences. At this banquet, the leaders of the two countries spoke highly of bilateral relations, including their personal rapport. Chinese and American guests were seated alternately, and there was a great deal of interaction between the two sides.

I was seated between John Hiller, Deputy Assistant to the President at the White House, and Bret Baier, Fox News’ chief political anchor. We talked about a wide range of issues. Overall, the atmosphere in the room felt quite relaxed and pleasant, and the conversations flowed naturally. It was something I had not seen for many years.

Zhengshier: What did you talk about most?

Wu Xinbo: They were quite surprised to see a university professor at an occasion like that. In their mind, such banquets are usually attended by government officials and business leaders.

When they heard that I was from Shanghai, Bret Baier said Shanghai was a wonderful place. His mother had told him that he must visit Shanghai because it was an amazing city. I asked Baier how the U.S. media would cover the meeting. He gave me three key words: strength, stability and cooperation, and friendship—especially the personal friendship between President Xi Jinping and President Trump. He said those would be the main focus of the coverage.

After John Hiller learned that I knew the United States well, he told me that his daughter works at the Center for Strategic and International Studies and hosts a podcast, and that she might invite me to join the programme.

We also talked about the U.S. midterm elections and how to understand President Trump’s interactions with the Chinese side during this visit. The conversation ranged from food and U.S. domestic politics to China–U.S. relations. Americans are warm, outgoing, and enjoy conversation. When Chinese and American people sit down together, it is quite easy for them to get along.

Zhengshier: Were there any other details that left a strong impression on you?

Wu Xinbo: One detail at the dinner stood out to me. The musical programme included classic Chinese and American pieces such as Yulin Folk Tune, China in the Lights, As Wished, and Edelweiss. But the finale was Y.M.C.A., the American song familiar to many Chinese internet users and often described as Trump’s campaign anthem.

The moment the American guests heard it, they became visibly excited. Many took out their phones to film the band, and some began imitating Trump’s signature moves. After Trump finished his remarks, U.S. business representatives and others stood up and applauded. That was not something we would have seen in the past. In a way, it also reflected changes in American political culture.

Interview with Buyidao 补壹刀

独家！我们对话了亲历中美国宴的中国学者

Published 18 May 2026

Buyidao: You attended the China–U.S. state banquet. What were your personal impressions?

Wu Xinbo: At the state banquet on the evening of May 14, the two heads of state delivered warm and enthusiastic remarks on bilateral relations. Guests from various sectors in both countries had friendly exchanges, and the atmosphere was relaxed and pleasant.

One detail stood out to me. At the welcoming banquet, when Y.M.C.A. began to play, the American guests immediately lit up. Hearing what has often been described as Trump’s “campaign anthem,” they seemed to relax instantly. Some even began imitating Trump’s signature dance moves to the rhythm of the music.

In terms of seating, apart from the main table, Chinese and American representatives were seated alternately at the other tables. This created convenient conditions for close interaction between the two sides.

For example, I was seated with a Deputy Assistant to the President at the White House on my left and a Fox News anchor on my right. Guests from China and the United States were able to have direct conversations throughout the banquet. The event created opportunities for dialogue and communication, which is precisely what China–U.S. relations need at this moment: more exchanges and more conversations.

This positive atmosphere between China and the United States gave me a feeling I had not had for a long time. It also helped me appreciate the historical significance of this leaders’ meeting: after a period of turbulence and setbacks, bilateral relations are moving towards a more stable new stage.

Buyidao: How do you view this “more stable new stage”?

Wu Xinbo: The agreement between China and the United States to build “a constructive China–U.S. relationship of strategic stability” is the most important political consensus reached at this leaders’ meeting.

During Trump’s first term, U.S. policy towards China was shaped by a narrative of competition. Under that framework, Washington’s China policy shifted sharply towards toughness and pressure, and China–U.S. relations were marked by constant friction and a steady downward slide.

During the Biden administration, China tried to consult with the United States on a new guiding principle for bilateral relations, one that could move beyond the conceptual framework of “great-power competition.” But the U.S. side continued, in the name of “competition”, to contain and suppress China. Friction and conflict became recurring features of the relationship.

Against this backdrop, the consensus reached this time on building a constructive China–U.S. relationship of strategic stability offers a new vision for bilateral ties.

Buyidao: How do you understand a “constructive China–U.S. relationship of strategic stability”? How is it different from the past?

Wu Xinbo: First, there is the idea of “strategic stability.” After the China–U.S. leaders’ meeting last October, bilateral relations entered a period of relative stability. The reason was that the U.S. side, after waving the “big stick” of tariffs and sanctions against China and encountering strong countermeasures from China, had no choice but to call a truce and seek some breathing space.

But that kind of short-term stability was neither sustainable nor solid. It was a sort of “tactical stability.”

Strategic stability, by contrast, means that both sides are prepared to build major consensus on important issues or pursue active cooperation in key areas, so as to manage competition and differences effectively and provide real support for the stability of bilateral relations.

Moving from tactical stability to strategic stability means that the substance of stability becomes richer, the period of stability can extend over the next three years or even longer, and the foundation of stability becomes more solid.

The second keyword is “constructive.” During the Cold War, the United States and the Soviet Union also sought strategic stability. But that stability was mainly based on each side’s capacity for “mutually assured destruction”—their vast nuclear arsenals. Strategic stability based on mutual deterrence was negative and non-constructive.

The strategic stability that China and the United States have agreed to advance this time relies mainly on constructive means. On the one hand, the two sides can strengthen cooperation and expand the pie of shared interests. On the other hand, they can manage competition and differences effectively. This is strategic stability with a positive orientation.

The new positioning of a constructive China–U.S. relationship of strategic stability will help soften the competition narrative and improve expectations for bilateral relations. If both sides work together to sustain this goal, it will mean that the two countries have found a new paradigm for major-country relations in the 21st century and can move beyond the so-called “Thucydides Trap.”

Buyidao: Could you tell us more specifically what important outcomes were achieved at this China–U.S. leaders’ meeting?

Wu Xinbo: I believe this leaders’ meeting produced a series of important outcomes in improving and developing bilateral relations, and in expanding cooperation and exchanges.

First, the economic and trade field. The experience of the past turbulent period shows that economic and trade ties remain the ballast stone of China–U.S. relations. They cannot guarantee that the giant ship of bilateral relations will always sail smoothly, but they can help prevent it from being overturned by heavy waves.

The understandings reached this time in the economic and trade field include continuing to improve bilateral trade conditions, reducing tariff and non-tariff barriers, and promoting growth in two-way trade. The two sides will also explore ways to expand two-way investment: the U.S. side will allow Chinese companies to increase investment in non-sensitive sectors, while China will open more areas to U.S. investment. In addition, the two sides agreed to establish two working mechanisms—the Board of Trade and the Board of Investment—to help address problems in trade and investment.

These important understandings will help stabilise bilateral economic and trade relations and may put them back on a growth track.

Second, the Taiwan question. Taiwan was one of the key issues at this meeting. When U.S. media figures interviewed me, they said they were surprised by how directly China spoke about Taiwan and by the firmness of its tone.

I told them that the message China conveyed to the United States was very clear: the Taiwan question concerns China’s core interests, holds a priority position on China’s national security agenda, and is extremely important and extremely sensitive. U.S. arms sales to Taiwan and similar moves send the wrong signal to “Taiwan independence” forces, and China firmly opposes them. If the United States wants to stabilise China–U.S. relations and maintain peace across the Taiwan Strait, it must take a clear and unequivocal position against “Taiwan independence.”

I believe that, through in-depth and effective communication, the U.S. side can gain a clearer and more comprehensive understanding of China’s position, attach greater importance to China’s concerns, and neither endorse nor accept any move towards “Taiwan independence.” This engagement with the United States on the Taiwan question will help encourage Washington to handle arms sales to Taiwan and contacts with Taiwan more cautiously in the coming period, thereby helping preserve the strategic stability of China–U.S. relations.

Third, the two sides agreed to broaden dialogue, exchanges, and cooperation across many areas, including diplomatic contacts, military-to-military exchanges, law-enforcement cooperation, and people-to-people exchanges.

At the beginning of President Trump’s second term, his China policy was, to a large extent, problem-oriented. It focused only on narrow issues such as trade and fentanyl. It showed little interest in many other important issues in China–U.S. relations and was reluctant to establish multi-level dialogue and communication mechanisms with China.

At this leaders’ meeting, the U.S. side agreed to engage with China in a wide range of areas. This reflects the practical needs of the bilateral relationship. It will also help expand the positive side of China–U.S. relations and provide stronger support for a constructive China–U.S. relationship of strategic stability.

Fourth, cooperation and coordination on international and regional issues. As two major countries in the international system and the world’s two largest economies, China and the United States bear important responsibilities for world peace and security, as well as for the stability and prosperity of the global economy. And both have a significant influence in these areas.

That is precisely why this China–U.S. summit drew attention from around the world. During the meeting, the two leaders did not focus only on bilateral relations. They also discussed a range of important international and regional issues, expressed their respective positions and concerns, and explored possible ways to coordinate and cooperate.

Stronger China–U.S. coordination and cooperation in international affairs will help uphold world peace and stability. It will also provide an important driving force for the development of bilateral relations.

Buyidao: Some people may still worry that, given the repeated shifts in the U.S. leader’s China policy during his first term, new twists and turns may emerge after this visit. What is your view?

Wu Xinbo: I believe we should have full confidence in the future development of China–U.S. relations.

First, China is no longer the China it was nine years ago. Compared with that time, China today has stronger national power, greater confidence, richer experience in dealing with the United States, and more sophisticated strategic and tactical planning. Frankly speaking, the current stability and improvement in China–U.S. relations did not come about because the U.S. side suddenly showed kindness or goodwill. It is something China has secured through hard work and struggle. As China’s strength grows and its strategic will is further tested and strengthened, China’s ability to shape China–U.S. relations will only increase.

Second, President Trump himself, during his second term, has also gone through a process of reassessing China and China–U.S. relations. From the intense China–U.S. contestation in 2025, he came to recognise China’s strength and the firmness of its strategic resolve. He also realised that China–U.S. relations are not a zero-sum game in which one side wins and the other loses. The United States has to respect China and seek the right way to deal with China.

Against this background, U.S. policy towards China now places greater emphasis on maintaining stability in bilateral relations and on reciprocity. These changes will continue to affect China–U.S. relations, both now and in the future.

Third, this leaders’ meeting achieved many important outcomes and understandings. Next, both sides need to act actively in accordance with the requirements of the two leaders and implement those outcomes. At the same time, President Xi will pay a state visit to the United States this autumn, and both sides need to create favourable conditions and a positive atmosphere for the next summit.

This means that, in the coming period, exchanges between China and the United States will increase significantly, the benefits of cooperation will be released one after another, and the atmosphere in bilateral relations will further improve. This is an important opportunity for the development of China–U.S. relations.

Of course, twists and turns are unavoidable on the road ahead. U.S. hegemonic thinking and domestic politics are the two main factors shaping its China policy, and they are also the main sources of volatility in China–U.S. relations. President Trump himself is very satisfied with this trip to China, but American conservatives and China hawks are not. They will certainly continue to influence U.S. policy towards China and obstruct the development of China–U.S. relations.

The results of this year’s U.S. midterm elections will also bring new challenges to China–U.S. relations. Even so, China has both sufficient sincerity to meet the United States halfway and promote the opening of a new stage in bilateral relations, and sufficient intellectual and policy preparation to properly respond to sharp fluctuations in the relationship.

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The joke works because the number appears in real recruitment settings. Many civil-service posts are closed to applicants above 35. Corporate job advertisements, especially for junior and mid-level roles, often use the same cut-off. In practice, age can be screened before a candidate’s skills, work record, or productivity are considered.

The number also reflects how employers often assess workers in their mid-thirties. By 35, many Chinese workers have a salary history, a mortgage, children, ageing parents, and less tolerance for unpaid overtime presented as commitment. And failure to have achieved a managerial promotion or a notable career milestone by 35 is often read as a signal of low professional ability. These factors contribute to a negative framing of mid-career employees and make them less attractive to employers seeking to control labour costs and maintain a highly compliant workforce.

Yet despite numerous jobseekers’ complaints, screenshots of recruitment advertisements, and bitter memes about being pushed out in mid-career, evidence for the “35-year-old crisis” remained largely anecdotal. Now, Lin Wenlian, Assistant Professor at the School of Business, Sun Yat-sen University, gives the claim firmer empirical ground. Using age-requirement information from 59.69 million corporate job postings, Lin’s study finds that employers are especially likely to set 35 as an age limit. Using census data and a regression-discontinuity design around that threshold, it further finds that workers just above 35 face a higher risk of unemployment for employer-related reasons.

The paper was originally published in China Economic Quarterly, Vol. 25, No. 1, 2025. The following summary appeared on China Economic Quarterly’s official WeChat blog on 21 July 2025.

The following figures and tables are drawn from the original paper and its appendix, with the text rendered in English. Lin has agreed to this translation.

—Yuxuan Jia

林文炼：年龄歧视导致了失业？

Lin Wenlian: Has Age Discrimination Led to Unemployment?

In theory, employment discrimination refers to situations in which workers are denied equal employment opportunities and income levels due to non‑productivity‑related preferences (Becker, 1957). In recent years, age-based employment discrimination has become one of the issues of greatest concern in Chinese society. The “35-year-old crisis” examined in this study was listed by Workers’ Daily among the top ten labour-related buzzwords of 2023.

The term refers to age discrimination by employers against workers aged 35 and above, who often encounter difficulties in securing employment and face elevated risks of unemployment. In response, several members of the Chinese People’s Political Consultative Conference (CPPCC) have called for legislation to curb labour market discrimination against workers over 35 during recent Two Sessions [annual plenary sessions of the National People’s Congress (NPC) and the National Committee of the CPPCC].

Although age discrimination is widely acknowledged, empirical research on this phenomenon remains scarce. Existing discussions and surveys on the “35-year-old discrimination” and “35-year-old crisis” suggest that such discrimination may be linked to age restrictions in the civil service recruitment system, and that employers’ hiring decisions are often influenced by subjective assumptions that workers above 35 have diminished enthusiasm and energy. While some studies have identified 35 as a critical turning point in earnings for Chinese workers (Fang & Qiu, 2023; Ye Di et al., 2023; Dong Zhiqiang et al., 2023), these works do not directly examine age discrimination and therefore provide no direct evidence confirming its existence.

This study focuses on unemployment beyond 35 caused by age discrimination and interprets the phenomenon through the lens of heuristic decision-making in behavioural economics. When evaluating the probability of uncertain events, people tend to rely excessively on a specific reference point (anchor) to conserve cognitive resources (Tversky & Kahneman, 1974). Anchoring heuristics are commonly observed in corporate decision-making (Chen Shihua & Li Weian, 2016; Zhu Jigao et al., 2017). If employers’ assessments of worker productivity and hiring decisions are influenced by such heuristics, discrimination against workers over 35 and related unemployment may occur.

The study addresses the following empirical questions: Does age discrimination in China’s labour market contribute to unemployment among workers over 35? If so, is employers’ age discrimination associated with anchoring heuristics, and are statistical discrimination and age-based stereotypes the primary mechanisms?

To answer these questions, the study first extracted age requirement information from 59.69 million corporate job postings and found that employers are most likely to impose an age limit of 35. It then implemented a regression discontinuity design centred on age 35 using data from the 2015 population census.

Research Findings and Contributions

Empirical results show that age discrimination contributes to unemployment among workers over 35. Holding productivity constant, the proportion of respondents unemployed due to employer-related reasons rises from 0.3970% to 0.5373% immediately after turning 35. Age 35 serves as the principal anchor for employer discrimination.

Analysis of recruitment data indicates that the main driver of 35-year-old unemployment is employers’ negative age stereotypes, such as beliefs that older workers are less healthy, less attractive, more likely to complain, less proactive, and slower to adopt new technologies. Positive stereotypes, by contrast, can mitigate age discrimination. Additional analyses reveal that the impact of age discrimination at 35 varies across regions, individuals, and time periods.

This study makes the following contributions:

First, it enriches the literature on labour market discrimination in China. Existing research has extensively examined discrimination in China’s labour market based on gender, household registration (hukou), educational attainment, physical appearance, and body shape, but has paid comparatively little attention to age discrimination. By providing empirical evidence on the relationship between age discrimination and unemployment, this study offers an important supplement to the existing literature.

Second, the discussion of anchoring heuristics helps deepen the understanding of how age discrimination is formed. Existing experimental studies suggest that employers’ age discrimination mainly arises from statistical discrimination caused by a lack of information, which is often manifested in age stereotypes. This study further finds that, under the influence of anchoring heuristics, employers’ age stereotypes and age discrimination exhibit a form of “psychological discontinuity.”

Third, the regression discontinuity design proposed in this study expands the methodological toolkit for research on age discrimination. As Neumark et al. (2019) point out, résumé experiments typically compare job-search outcomes among workers with relatively large age gaps, making it difficult to control for productivity-related factors that vary with age. By comparing workers with only small age differences, the regression discontinuity design developed in this study can better address this problem.

Fourth, this study encourages scholars to make greater use of corporate recruitment data in China to examine a wider range of labour market issues. By using textual information from job requirements, this paper reveals the statistical characteristics of the “35-year-old phenomenon” and tests the stereotype-based mechanism through which age discrimination leads to unemployment at age 35. Because employers’ age discrimination is difficult to observe directly, scholars have found it hard to conduct effective research on its causes, consequences, and possible remedies. This study shows that corporate recruitment data can help advance research on age discrimination.

Policy Implications and Future Research Directions

This paper offers the following policy implications:

First, policy design should take into account the dual effects of age discrimination on both employment and unemployment.

Second, efforts should be made to reduce negative age stereotypes among employers and reinforce positive ones, thereby alleviating unemployment caused by age discrimination.

Third, measures should be taken to weaken the anchoring effect around age 35 and mitigate discrimination against workers over 35.

Fourth, given that age discrimination is difficult to observe, age-limit information in corporate job postings can be used to assess its prevalence in the labour market.

Future research on age discrimination may proceed in several directions:

First, the causes of age discrimination. This paper finds evidence of an anchoring effect in age discrimination, but there is still a lack of direct evidence on whether this effect mainly originates from age limits in civil service recruitment.

Second, the economic consequences of age discrimination. Beyond its direct effects on employment and unemployment, age discrimination may also affect firm productivity, household consumption, and investment decisions, and individuals’ willingness to invest in human capital.

Third, the factors shaping age discrimination. This paper finds temporal heterogeneity in age discrimination and its impact on unemployment, but the factors driving such variation remain unclear. Further research on these issues would help clarify the formation process and economic consequences of age discrimination, and provide more effective policy recommendations for achieving high-quality and full employment in China.

[References are available here.]

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The authors of the research are

GUO Kai, Executive President and Senior Fellow of the CF40. Before joining the CF40, he was an economist at the International Monetary Fund in Washington DC and then worked at the People’s Bank of China in various capacities, including leading positions in the Monetary Policy Department and the International Department. His main research areas include the Chinese economy and its macroeconomic policies as well as international finance. He is the author of three popular Chinese economics books and multiple academic papers in various English and Chinese journals. He holds a PhD degree in economics from Harvard University.

WANG Jiankun, Research Fellow at China Finance 40 Institute. Before joining CF40, he worked as a consultant at the World Bank. His research interests include international trade and investment. He holds a Master of Public Policy degree from Georgetown University and a bachelor’s degree from Zhejiang University.

Founded in 2008, China Finance 40 Forum (CF40) is a leading independent think tank focused on policy research in macroeconomics and finance. Its core membership consists of 40 leading experts from government, financial institutions and academia around the age of 40. In 2021, the CF40 Institute was established to strengthen CF40’s research capacity. In 2024, the CF40 Institute introduced an original research product, CF40 Research, aimed at providing independent insights into China’s macroeconomy, policy trends, financial market dynamics, and global affairs. CF40 Research currently features English product series, including Policy Brief, Commentary, and Podcast.

Below is a full translation of the policy brief. The original Chinese document is also available for download.

CF40 中欧贸易失衡为何扩大

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中欧贸易失衡为何扩大

Why Has the China–EU Trade Imbalance Widened?

WANG Jiankun, GUO Kai

CF40 Institute

Abstract: The widening China–EU trade imbalance has become one of the main concerns in bilateral economic relations in recent years. The dominant explanations point to spillovers from overcapacity in China, trade diversion caused by China–U.S. trade frictions, a price advantage stemming from a weak renminbi, and weaker Chinese domestic demand reducing EU exports to China. This article finds that these explanations are not supported by the sectoral and trade data.

On the EU import side, the rise in China’s exports to the EU has not been broad-based. It has been highly concentrated in the “new trio” (electric vehicles, lithium-ion batteries, and photovoltaic products) and in chemicals. Volume and price data do not support the assessment that Chinese goods have been dumped at low prices, either. The export growth of the new trio and chemicals reflects, to a greater degree, structural changes within the EU itself: The green transition has raised demand for new energy products, while the energy crisis has increased production costs in sectors such as chemicals and strengthened reliance on external supply.

On the EU export side, Chinese domestic demand in the sectors where EU exports are concentrated continued to expand between 2021 and 2024. The weakness in EU exports to China was not primarily due to an overall contraction in the Chinese market. The main driver was faster import substitution in a context of declining import dependence.

The widening EU trade deficit with China is essentially the combined result of China’s industrial upgrading and Europe’s energy constraints. Trade protection measures such as tariffs alone are unlikely to address its structural roots.

I. Why has the China–EU trade deficit widened sharply over the past five years?

In 2025, the EU’s goods trade deficit with China widened to EUR 359.3 billion, up by nearly 15% from EUR 312.2 billion in 2024, and more than double the deficit of EUR 165.0 billion recorded in 2019. In fact, the rapid widening of the deficit is mainly a recent development rather than a long-running trend over the past decade. Between 2016 and 2019, the EU’s trade deficit with China remained broadly stable at around EUR 160 billion (Figure 1). The turning point came after 2020, when the deficit began to widen rapidly and persistently, driven by both imports and exports. This has made the China–EU trade imbalance a main concern in bilateral economic relations.

On China’s export side, exports to the EU rose markedly after the pandemic in 2020. In 2022, against the backdrop of the Russia–Ukraine conflict, they surged to a record high of EUR 628.9 billion (Figure 1). Exports fell temporarily to EUR 520.5 billion in 2023, but that did not alter the broader upward trend. In 2024, China’s exports to the EU recovered to EUR 525.7 billion. In 2025, they rose further to EUR 558.8 billion, an increase of 6% year on year and about 54% relative to 2019.

On China’s import side, EU exports to China continued to weaken. They peaked at EUR 231.0 billion in 2022 and then declined for three consecutive years. In 2025, EU exports to China fell to EUR 199.5 billion, down 7% from EUR 213.5 billion in 2024 and 14% below the 2022 peak. The pace of decline also accelerated year by year.

This pattern of rising Chinese exports and falling EU exports is even clearer in market shares (Figure 2). China’s share in the EU’s extra-EU imports rose from 18.7% in 2019 to 22.2% in 2025, showing that China’s position among the EU’s external suppliers continued to strengthen. Over the same period, China’s share of the EU’s global exports fell from 10.5% in 2020 to 7.5% in 2025, indicating that the Chinese market became less important for EU exporters.

It is also worth noting that, from China’s own export perspective, the EU’s share in China’s total exports declined from 17.2% in 2019 to 14.8% in 2025. This suggests that China’s export destinations have become more diversified and that its export dependence on the EU market has also fallen.

The widening gap between exports and imports shows that the China–EU trade imbalance is no longer a short-term fluctuation. It has become increasingly structural.

Figure 3 shows that the EU as a whole continued to record a trade surplus and a current account surplus vis-à-vis the rest of the world. Both weakened temporarily during the 2022 energy crisis, but then recovered quickly and returned to high levels. This means that the widening bilateral deficit with China did not coincide with a broader deterioration in the EU’s external trade and current account position. The widening deficit with China is therefore a specific bilateral imbalance, rather than part of a general weakening in the EU’s external position. To understand why it widened, we need to look at the bilateral trade relationship more closely.

In current European policy debates, four explanations are most often used to account for the widening China–EU trade imbalance.

The first argues that Chinese industrial policy has led to large-scale capacity expansion, with overcapacity flooding overseas markets, including the EU, with low-priced goods.

The second holds that, after China–U.S. trade tensions escalated, goods originally destined for the U.S. market were redirected to the EU, amounting to low-price dumping.

The third points to the renminbi, arguing that its persistent weakness has given Chinese manufacturing a systematic price advantage in export markets.

The fourth focuses on the demand side in China. Since 2021, the property downturn has persistently weighed on domestic demand, weakening China’s capacity to absorb imports and directly narrowing the space for EU exports.

However, this article finds that sectoral and trade data do not support these explanations.

China’s exports to the EU have not expanded across the board, nor has low-price competition been the main feature. Export growth in recent years has been concentrated in a small number of sectors. Meanwhile, the weakness in EU exports to China has reflected lower Chinese import dependence and faster import substitution, rather than an overall contraction in the Chinese market.

This article argues that the widening trade imbalance reflects the combined effect of changes in EU demand and changes in China’s supply structure. On the one hand, the EU’s energy transition has raised industrial costs and increased demand for China’s new trio and chemicals. On the other hand, China’s industrial upgrading has accelerated import substitution, reduced demand for imported products, and narrowed the room for EU exports to China. At the same time, the widening bilateral imbalance has not altered Europe’s broader external surplus position. As the EU’s deficit with China increased, its surplus with other trading partners also rose.

II. China’s Export Side: Driven by the EU’s Energy Transition Rather Than Low-Price Dumping

2.1 Volume and price data do not support the low-price dumping narrative

Looking at the overall trend in China’s exports to the EU from 2016 to 2025, price data do not support the argument that exchange rate movements led to low-price dumping. This section uses China, Japan and Korea as a benchmark group, since all three export broadly similar product categories to the EU, with machinery and electronics, chemicals, and transport equipment accounting for a large share. Measured in euro prices actually paid by EU buyers, export price indices for all three countries moved closely together and remained broadly flat in the 110–120 range after 2023 (Figure 4).1

The reason for these similar trends is that the yen and the won depreciated sharply over the same period. Once converted into euro terms, domestic inflation in Japan and Korea was offset by exchange rate depreciation, making price trends for EU buyers broadly similar across the three countries. At the same time, the renminbi strengthened in nominal terms against the euro between 2019 and 2022, and only weakened visibly by 2025. In other words, the expansion of China’s exports to the EU took place during a period when the renminbi was relatively strong rather than weak. Although the euro-denominated price index of Chinese goods declined somewhat from 2025 onwards due to exchange rate movements, widening the price gap with Japan and Korea, this looks more like a recent development than a persistent driver of market share gains since 2020.

From 2016 to 2024, China did not show a steadily widening price advantage. If the exchange rate had been the main driver of exports, the euro prices of Chinese products should have diverged clearly from those of Japan and Korea from 2020 onwards. Yet the data show that the three moved broadly in step. This suggests that China did not gain a price advantage through exchange-rate movements and that the exchange rate explanation lacks support from the price data. In fact, in 2022, when China’s exports to the EU jumped sharply, the increase in the price of Chinese goods was much larger than for Japan and also larger than for Korea.

Volume data also do not support the view that China gained market share through low prices. If price competitiveness had been the main driver, export volumes in Chinese manufacturing should have risen strongly as prices weakened over the past five years. However, the export volume and unit value indices shown in Figure 5 do not support that conclusion.2

Miscellaneous manufactures and material-based products are the most telling. Miscellaneous manufactures include clothing, footwear, furniture, and toys, the sectors most readily associated with “low-cost Chinese manufacturing.” Material-based products include traditional industrial goods such as steel, non-ferrous metals, rubber, and plastics, another major base of China’s industrial exports. If low-price competition had been the general mechanism driving export growth to the EU, these two sectors would have been the most likely to show sustained volume expansion. Yet Figure 5 shows that, apart from temporary fluctuations during the 2020 pandemic, their export volume indices remained within a relatively narrow range from 2016 to 2025, with no sustained upward trend. This suggests that even in the sectors most closely associated with “low-cost shock”, there was no clear volume expansion.

By contrast, machinery and transport equipment, and chemicals, were the sectors where export volumes increased more clearly. Their export volume indices rose overall after 2021, but their unit value indices did not fall as volumes increased. On the contrary, prices also remained on an upward path. In other words, export growth in these sectors was not driven by persistent price cuts. Volumes rose while prices remained sustained. This suggests that export growth in these two sectors is better explained by changes in EU demand and in China’s supply structure than by price advantages.

2.2 70% of the increase in market share came from the new trio and chemicals

Building on the volume and price analysis, a closer look at sectoral export developments shows even more clearly that this expansion was not evenly distributed. Figure 6 shows that between 2019 and 2025, changes in China’s share of EU imports varied widely across 21 HS chapters and the separate category of the “new trio”.3 Only eight sectors recorded increases of more than 5 percentage points. These were the new trio, chemicals, transport equipment, plastics and rubber, stone, ceramics and glass, pulp and printed products, leather products, and wood products. The new trio stood out most, with China’s share in EU imports rising by around 26 percentage points. The remaining sectors changed only modestly, and some even recorded declines. This shows that the rise in China’s market share in the EU was not a broad-based acceleration across sectors. It was concentrated in selected industries.

Structurally, the sectors with the fastest gains in imports share were strongly concentrated in specific industrial groups. Of the eight sectors with the largest gains, four are classified by the EU as “Energy-Intensive Industries”, including “pulp, paper and printing”, “chemicals”, “stone, ceramics and glass”, and “plastics and rubber”. Together with the new trio and the related automotive component chain, this shows that the sectors where China penetrated the EU market most rapidly in recent years were concentrated in two broad groups: 1) new energy-related products, 2) chemicals and certain energy-intensive industries. This pattern is not random. It reflects a clear industrial structure.

At the same time, some sectors evolved in ways that do not fit the usual stereotype. Machinery and electrical equipment is the largest category in China’s exports to the EU, yet China’s share in EU imports in this sector did not continue to rise between 2019 and 2025. It fell slightly, by 0.3 percentage points. Export value increased by nearly EUR 58 billion over the six-year period, but this was mainly absorbed by overall growth of the EU market and did not translate into additional market share. Textiles recorded only a small increase, much weaker than in energy-intensive industries, and showed no sustained upward trend.

These are precisely the sectors most often associated with the narrative that Chinese exports were redirected to Europe after China–U.S. trade tensions escalated. Since 2018, the United States has imposed four rounds of Section 301 tariffs on Chinese goods, covering a very broad range of products, from industrial machinery and semiconductors to apparel and footwear. If trade diversion had been the main driver of China’s export expansion to the EU, one would expect a more even acceleration across sectors under such broad tariff coverage. The EU market does not show such a pattern. At a minimum, this shows that describing recent China–EU trade changes simply as broad-based trade diversion triggered by the China–U.S. trade war is inconsistent with the sectoral evidence.

There are also sectors where China’s share increased rapidly within the sector, but whose contribution to overall export growth and to the widening trade deficit was limited. Leather and wood are examples. China’s share in EU imports in these sectors rose by 9.6 and 6.3 percentage points respectively, but the increase in export value was only around EUR 0.7 billion in each case. Their market share gains mainly reflected a contraction in the EU’s total imports in these sectors, which lifted China’s relative position compared with other suppliers, rather than a large increase in China’s exports in absolute terms. In other words, a rise in sectoral market share does not necessarily mean that it matters equally in aggregate value.

Sectoral market share changes alone are therefore not sufficient to identify which sectors actually drove the increase in China’s overall share in EU imports. Once the focus shifts back from within-sector market shares to China’s overall share in EU extra-EU imports, the driving forces become much more concentrated.

Between 2019 and 2025, China’s share in EU extra-EU imports rose from 18.73% to 22.25%, an increase of 3.52 percentage points. Of this, the new trio accounted for 1.45 percentage points and chemicals for 1.05 percentage points. Together, they contributed 2.5 percentage points, or around 70% of the total increase (Figure 7). The other 20 sectors together contributed only around 1 percentage point, spread across transport equipment, plastics and rubber, machinery and electrical equipment, and base metals, with no single sector contributing more than 0.35 percentage points. Some of these gains were also partly offset by declines in sectors such as textiles and footwear & headgear.

The same concentration is visible in absolute export values. In Figure 8, the three lines represent total Chinese exports to the EU, exports excluding chemicals, and exports excluding both the new trio and chemicals. The three lines nearly overlapped before 2019, and then gradually diverged. By 2025, the new trio and chemicals together accounted for about EUR 95 billion of additional exports. Excluding these two groups, the increase in China’s exports to the EU broadly followed the pre-2019 trend and did not show a clear acceleration.

The concentration is even clearer in share terms (Figure 9). The solid line, covering all products, rose from around 19% to 22%, an increase of more than 3.5 percentage points. The dashed line, excluding the new trio and chemicals, rose only from around 20% to 22%, with an increase of less than half that size. This means that, without the new trio and chemicals, China’s share in EU imports would have increased only moderately. The rest of the export basket did not show a marked acceleration in market share gains.

2.3 The EU’s energy transition and the contraction of domestic capacity were the real drivers

The increase in China’s exports of the new trio and chemicals has a common background: major changes in the EU’s energy landscape. Since the second half of 2021, Europe’s energy situation has changed sharply. This has both raised domestic production costs and reshaped the EU’s demand for external goods.

Figure 10 shows this relationship clearly. Electricity and natural gas prices in the EU started to rise rapidly in the second half of 2021.

At the same time, China’s exports of the new trio and chemicals to the EU also increased significantly. When the energy crisis peaked in 2022, exports in both product groups jumped further. This suggests that recent growth in China’s exports to the EU was not an isolated trade phenomenon. It was closely linked to broader macro-level factors, including Europe’s energy crisis and green transition.

This link mainly worked through two channels.

The first was cost-driven substitution. The energy crisis not only changed the EU’s demand structure. It also sharply raised production costs in the European industry, especially in chemicals. In 2025, the EU non-household electricity price reached EUR 0.19 per kilowatt-hour, nearly 50% higher than the EUR 0.13 recorded in 2021. For the chemicals industry, which relies heavily on natural gas and electricity, this cost shock was direct and severe. The economics of producing many chemical products in Europe deteriorated markedly. Firms, therefore, became more inclined to cut output, suspend production, and turn to external sourcing. The increase in China’s chemical exports to the EU is better understood as a shift toward imports after European domestic supply contracted. The parallel rise in chemical exports and energy prices between 2021 and 2025 shown in Figure 10 is consistent with this explanation.

The second channel was demand created by the energy transition. After the outbreak of the Russia–Ukraine conflict, the EU sharply reduced its imports of Russian energy. Before that, around 40% of the EU’s imported natural gas came from Russia. Against this backdrop, reducing dependence on external fossil energy, strengthening energy autonomy, and accelerating the green transition quickly became EU policy priorities. One direct consequence was a marked rise in EU demand for products such as photovoltaic products, batteries, and electric vehicles. As the world’s largest producer of photovoltaic products, batteries, and electric vehicles, China has the most complete supply chains and the strongest capacity for large-scale manufacturing in these industries. It naturally became the primary external source of this new demand. The expansion of the new trio was driven mainly not by price competition, but by the rapid emergence of EU demand associated with the energy transition, which China’s upgraded industrial supply capacity was well placed to meet.

Figure 11 further shows that this shift in demand was not merely a short-term emergency response. It formed part of the EU’s longer-term energy-transition path. Since 2017, the share of wind and solar power in EU electricity generation has continued to rise, reaching 31% by 2025. The share of clean energy in total power generation has also increased to around two-thirds. EU demand for new energy equipment and related supply-chain products rests on a clear policy and structural foundation. That is why exports of the new trio remained at a high level even after European energy prices retreated from their crisis peaks after 2023.

In fact, Chinese firms have already built strong advantages in costs, industrial organisation, and complete supply chains. The increase in European imports of electric vehicles, batteries, and photovoltaic products reflects not just low prices but also the real competitiveness of these products in performance, delivery capacity, and scale. Subsidies may have affected the pace of development in some industries, but they cannot by themselves explain why the EU has continued to import these products in large volumes even as tariffs have risen and scrutiny has tightened. The main reason is that Chinese firms have already developed market-tested price-performance advantages in these industries, while the EU itself has generated real and sustained demand in the course of the energy transition.

III. China’s Import Side: Faster Import Substitution, Not Weak Domestic Demand

The previous section explained why China’s exports to the EU increased. This section turns to the question of why EU exports to China weakened.

The decomposition results show that, in the sectors where EU exports to China are concentrated, China’s apparent consumption continued to expand overall. The main reason for the decline in EU exports was not shrinking Chinese demand, but rather China’s industrial upgrading and faster import substitution, which systematically reduced the Chinese market’s dependence on imported EU products.

3.1 Analytical framework

This section applies a four-factor multiplicative decomposition to changes in EU exports to China. The four factors are Chinese domestic demand, import penetration, EU share in China’s total imports, and the bilateral exchange rate. The full method and variable definitions are set out below.

For any given sector, EU exports to China can be expressed as the product of three factors:

EU exports to China = China’s domestic demand × (China’s total imports / China’s domestic demand) × (EU exports to China / China’s total imports) = China’s domestic demand × import penetration × EU share

After cancelling the numerator and denominator terms, the left-hand side is simply EU exports to China. Taking natural logarithms on both sides of the identity and differencing over time (2024 minus 2021) gives an additive decomposition of growth rates:

Δln(EU exports to China) = Δln(domestic demand) + Δln(import penetration) + Δln(EU share)

This identity holds under any currency denomination, but the choice of currency affects the economic interpretation of the factors. If all values are measured in U.S. dollars, the roughly 8.5% depreciation of the euro against the U.S. dollar between 2021 and 2024 would reduce the dollar value of EU exports and exaggerate the decline. This article measures China’s domestic demand in renminbi, which is the natural currency for the Chinese market, while keeping EU exports to China on the left-hand side in euro, which reflects the actual revenue of European exporters. The EUR/RMB exchange rate is then introduced as a separate fourth term so that exchange-rate movements can be distinguished from underlying changes in market structure:

EU exports to China (EUR) = China’s domestic demand (RMB) × import penetration × EU share (RMB) ÷ (EUR/RMB)

Δln(EU exports to China, EUR) = Δln(China's domestic demand, RMB) + Δln(import penetration) + Δln(EU share, RMB) − Δln(EUR/RMB)

The four factors are defined as follows:

In this identity, China’s domestic demand is measured by apparent consumption, defined as total output + imports − exports. It captures the total volume of goods in a sector absorbed by the Chinese market, including both final use and intermediate inputs used in other sectors.

This article uses apparent consumption rather than value added or final demand because it corresponds more closely to the denominator of import penetration: both are intended to measure total domestic absorption of sectoral products. Value added captures only newly created value within the sector and does not measure total domestic use. In import-intensive sectors, imports may even exceed value added, making value added a poor gauge of the share of imports in domestic absorption. Final demand is also too narrow. Many goods, such as machinery components, are not consumed directly by final users but enter production as intermediate inputs. Using final demand as the denominator would therefore systematically understate domestic absorption and overstate import penetration.

To construct apparent consumption at the sector level, the analysis uses total output from the ADB MRIO input-output tables and combines it with China’s trade data from UN Comtrade to calculate apparent consumption and import penetration for each sector. The ADB MRIO uses the 35-sector ISIC Rev.3 classification, of which c1 to c16 are goods sectors. Because the ADB has not published official data for 2025, the analysis covers 2021 to 2024.

EU exports to China are taken from Eurostat, while China’s import data come from UN Comtrade. Because trade data and input-output tables use different classification systems—HS for products and ISIC for industries—they cannot be matched directly. The HS2 data are therefore mapped into 15 IOT goods sectors. Eurostat applies statistical confidentiality to some HS2 sub-items, so the sum of the sectoral details is smaller than the published total. After the mapping, this residual is combined with the items that originally belong to c16, “other manufacturing”, and c16 is defined residually as c16 = total − Σ(c1–c15).

As defined here, c16 includes both “other manufacturing” in the usual sense and the portion of the trade data not disclosed in the detailed breakdown. The mapping between IOT goods sectors and HS2 chapters is shown in the Appendix.

It should be noted that apparent consumption is appropriate for within-sector analysis, but it should not be summed directly across sectors. Upstream products can reappear as intermediate inputs in downstream sectors, which would create double counting in cross-sector aggregates. For this reason, the aggregate results in this article are not obtained by simply adding up sectoral apparent consumption. Instead, the sectoral decomposition results are aggregated using weights based on the structure of EU exports to China. In this way, double counting in apparent consumption does not affect the identification of the sources of change in EU exports.

At the aggregation stage, this article uses Törnqvist weights, defined as the arithmetic average of each sector’s share in total EU exports to China in the base year and the end year. This reflects the importance of each sector in the EU export basket while reducing the influence of any single year’s weights. Because logarithmic decomposition involves an inherent aggregation error, the weighted sum of sectoral log changes does not exactly match the log change calculated directly from the aggregate total. In this article, the gap is 0.16 percentage points, which does not affect the identification of the dominant factor. The reason for using the structure of EU exports to China as weights is that the question under study is why EU exports to China declined. The aggregate decomposition should therefore reflect the structure of the EU export basket, not the structure of China’s imports or China’s domestic demand. The weighted “change in China’s domestic demand” should be understood as the average change in China’s domestic demand faced by the sectors where EU exports are concentrated, rather than as a change in China’s economy-wide domestic demand.

3.2 Sectoral results

Table 1 reports the sectoral results of the four-factor decomposition and the weighted aggregate. Structurally, the four largest sectors in EU exports to China—machinery, electronics and optical products, transport equipment, and chemicals—together account for more than 70% of the total. Of these, only electronics and optical products saw a slight decline in domestic demand. In the other three sectors, China’s domestic demand expanded between 2021 and 2024. In other words, weaker EU exports were not caused by a general contraction in the sectors where EU exports are concentrated. What changed instead was the divergence in import penetration and EU share across sectors. The most illustrative sector groups are discussed below.

Transport equipment (weight: 16.8%) was the largest negative contributor in absolute terms. EU exports to China fell from EUR 42.2 billion in 2021 to EUR 31.5 billion in 2024, a decline of EUR 10.7 billion—the largest absolute drop of any sector. The total log change in exports was −29.2%, of which the −22.6% change in import penetration was the dominant component, marking a far steeper fall than in other categories. This shows that import substitution in China’s automotive sector and related supply chains was the main reason for the decline in EU exports. EU share also fell by 9.0%, which means that even in the part of transport equipment that China still relied on imports, the EU’s relative position weakened. By contrast, China’s domestic demand in RMB still increased by 4.4%, which means that the Chinese market itself did not shrink. What changed was that a larger share of demand was met by domestic producers. Transport equipment provides the clearest illustration of the article’s main argument: EU exports to China fell not because China’s demand contracted, but because China’s industrial upgrading and import substitution eroded the EU’s previous position.

Electronics and optical products (weight: 21.8%) carry the largest weight in the export basket. EU exports to China fell from EUR 48.4 billion in 2021 to EUR 46.7 billion in 2024, a decline of EUR 1.7 billion. The total log change in exports was only −3.6%, but because of the sector’s size, it still had a significant drag on the aggregate value. The decomposition shows that the main driver was the decline in import penetration of 4.6%, suggesting that China’s domestic supply capacity in areas such as semiconductors and optical instruments was improving and that dependence on imports was easing. At the same time, domestic demand also fell slightly, by 1.1%, indicating some weakness on the demand side. However, EU share increased by 4.2%, which suggests that even in a context of slowing demand and rising import substitution, the EU remained competitive in some higher-end segments. The decline in this sector, therefore, does not mean that EU products “lost the market”. It looks more like a case where the overall scope for imports narrowed in a market with slower growth and faster substitution.

Machinery (weight: 20.1%) was the strongest-performing sector. EU exports to China rose from EUR 40.4 billion in 2021 to EUR 47.0 billion in 2024, an increase of EUR 6.6 billion—the largest positive contribution and the biggest increase in absolute value. The total log change in exports was +15.1%. Domestic demand rose by 5.4%, EU share increased by 7.3%, and import penetration also increased slightly, by 4.5%. All three components were positive. In a context where import dependence declined in most sectors, machinery was an exception. The rise in import penetration suggests that China’s demand for imported machinery, especially higher-end equipment, was still increasing. The increase in the EU share further indicates that European firms were not being displaced in this sector. On the contrary, they continued to benefit from China’s industrial upgrading and investment demand for equipment. Machinery shows that the recent weakness in EU exports to China was not a broad-based loss of competitiveness. In selected areas such as higher-end equipment, the EU still held a clear advantage.

Chemicals (weight: 13.4%) present a more complex picture and illustrate sectoral differentiation particularly well. EU exports to China increased from EUR 27.7 billion in 2021 to EUR 30.8 billion in 2024, a rise of EUR 3.1 billion. The total log change in exports was +10.7%. Domestic demand rose by 7.9%, and EU share rose by 10.2%, showing that demand in the Chinese market continued to increase and that the EU’s competitive position improved at the same time.

However, import penetration fell by 5.3%, indicating that domestic supply capacity in China’s chemicals sector was also strengthening and that import dependence did not rise. EU exports still increased because the gain in EU share was larger than the fall in import dependence. In other words, although China’s chemical industry was also undergoing import substitution, the EU continued to hold an advantage in higher value-added and more technology-intensive segments. The case of chemicals shows that stronger manufacturing capacity in China does not necessarily imply a broad-based decline in EU exports. The key is whether the EU still occupies higher-end positions within each sector.

The smaller sectors show more varied patterns, but they do not alter the main conclusion. In agriculture, mining and petrochemicals, food, beverages and tobacco, paper and printing, and metals, the main drag came from a decline in EU share. This suggests that China still had import demand in these sectors, but the EU’s relative position in China’s imports weakened. In non-metallic minerals, rubber and plastics, and other manufacturing, the main constraint came from lower import penetration, indicating that import substitution was also advancing in a wider range of manufacturing sectors. At the same time, a small number of light-industry sectors, such as textiles and leather and footwear, still recorded export growth, mainly because EU share increased. This suggests to some extent that the Chinese market continued to show solid demand for higher-end European consumer products such as branded clothing and leather goods. Overall, however, these sectors carry relatively small weights. Their patterns differ, but their influence on the aggregate result is limited. The broad structure is still dominated by transport equipment, electronics and optical products, machinery, and chemicals.

3.3 Weighted aggregate: domestic demand was still expanding, while import substitution was the main driver

Once the four factors are aggregated using sectoral weights, the results show that between 2021 and 2024, the weighted average of Chinese apparent consumption in the sectors where EU exports are concentrated increased by 4.1%. This means that the total amount absorbed by the Chinese market in these sectors did not contract. What actually narrowed the room for EU exports was the 5.1% decline in import penetration. In other words, a rising share of demand was met by domestic Chinese producers.

Between 2021 and 2024, the weighted average of Chinese domestic demand in the sectors where EU exports are concentrated increased by 4.1%. This shows that the Chinese market targeted by major EU exports did not contract. The weakness in EU exports to China cannot therefore be explained simply by lower domestic demand.

The 5.1% fall in import penetration was the dominant factor behind the decline in EU exports. Although domestic demand in the relevant Chinese sectors was still increasing, import penetration was falling even faster. That is, a larger share of domestic demand was being met by domestic production, and the expansion of domestic demand was not enough to offset this shift. EU exports, therefore, still declined.

The 1.5% fall in EU share suggests that the relative competitive position of EU products also weakened within China’s total imports. The exchange rate term, at −2.1%, is only a valuation effect and was not the main driver.

Overall, the main reason EU exports to China fell between 2021 and 2024 was a systematic decline in China’s dependence on imports from the EU, rather than a general contraction in the Chinese market. For the EU, this means the issue is not merely cyclical. China is advancing import substitution more quickly in several key industries.

IV. Germany: A Microcosm of the Two Channels of Impact

Germany is both a microcosm of the widening EU trade imbalance with China and the clearest case of the dual impact of Europe’s energy constraints and China’s industrial upgrading. In 2025, Germany’s exports to China fell by about EUR 8 billion year on year, accounting for roughly 60% of the EU’s net decline in exports to China of about EUR 14 billion (Figure 12). Over a longer period, the change in Germany’s trade with China was not a short-term anomaly. Between 2015 and 2021, Germany generally maintained a sizeable trade surplus with China, supported mainly by manufacturing exports such as machinery and transport equipment. Since 2021, that advantage has weakened markedly, and by 2025, Germany had moved into a trade deficit with China (Figure 13).

Figure 14 decomposes the change in Germany’s trade balance with China between 2021 and 2025 by HS2 category. Germany recorded a trade surplus of EUR 6.3 billion with China in 2021. By 2025, this had turned into a deficit of EUR 21.4 billion, implying a deterioration of about EUR 27.7 billion in total.

Vehicles (HS87) accounted for EUR 16.1 billion of this deterioration, while electrical equipment (HS85) accounted for EUR 7.3 billion. Together, the two categories explained 84% of the total decline.4 Only pharmaceuticals and miscellaneous chemical products showed improvement, and their gains were far too small to offset the drag from the main categories.

The transmission mechanisms in these two categories were fundamentally different. They map onto the two channels discussed earlier: one operating through Germany’s exports to China, the other through Germany’s imports from China.

Vehicles: a sharp contraction in Germany’s exports to China. The left panel of Figure 15 breaks Germany’s vehicle trade with China into passenger cars (HS8703) and parts and accessories (HS8708). Passenger car exports alone fell sharply from EUR 17.2 billion in 2021 to EUR 6.2 billion in 2025, a decline of EUR 11 billion. Exports of parts and accessories fell from EUR 9.7 billion to EUR 6.7 billion, a decline of EUR 3 billion. By contrast, Germany’s imports of vehicles from China increased only modestly, from EUR 3.3 billion to EUR 5 billion, an increase of just EUR 1.7 billion. Of the EUR 16.1 billion deterioration in the vehicle trade balance, around 90% came from lower German exports and only around 10% from higher imports.

The core driver was a shift in demand within the Chinese market toward domestic brands. Since 2021, the penetration of new energy vehicles in China has risen rapidly. Domestic brands have replaced imports in the lower and middle segments and have also put significant competitive pressure on German brands in the upper-middle and higher-end segments. Demand for imported combustion cars declined steadily, directly narrowing room for German exports of vehicles and components. This is the sectoral manifestation of the import substitution process discussed in Section III. The Chinese car market did not shrink, but a larger share of new demand was met by domestic producers.

Electrical equipment: a strong rise in Germany’s imports from China. The right panel of Figure 15 presents the other channel. Germany’s imports from China in this category rose from EUR 27.2 billion to EUR 33.8 billion, an increase of EUR 6.6 billion. A more detailed breakdown shows that almost all of this increase came from one sub-category alone: batteries (HS8507). Imports of batteries rose from EUR 2.6 billion in 2021 to EUR 10 billion in 2025, an increase of EUR 7.3 billion. It exceeded the increase for HS85 as a whole. This means that imports of other HS85 subcategories, such as mobile phones, computers, and other traditional consumer electronics, actually declined and were masked by the explosive growth in battery imports.

The widening deficit in electrical equipment therefore did not reflect a broad-based increase in imports of electrical products. It was highly concentrated in batteries. This corresponds to the rapid expansion of China’s new energy supply chain, especially its exports of energy-storage batteries. As Europe’s largest market for electric vehicles and industrial energy storage, Germany became a major destination for Chinese battery exports. This is a concrete example of the energy-transition demand discussed in Section II. Germany’s energy transition and rising investment in energy storage created strong battery demand, and China, with its mature and large-scale battery supply chain, became the primary external supplier.

Comparing the two channels makes the contrast clear. Both widened the trade deficit, but through very different mechanisms. In vehicles, the impact came mainly through Germany’s exports to China: the Chinese market became much less dependent on imported German vehicles, and demand shifted to domestic brands. In electrical equipment, the impact came through Germany’s imports from China: Chinese battery capacity met demand created by Germany’s energy transition. The first reflects China’s earlier import demand being replaced by Chinese domestic production. The second reflects Chinese supply matching the EU’s demand. Different as they look, both point to the same conclusion: What lies behind the widening deficit is China’s industrial upgrading in new energy industries and structural change in EU demand, not simply subsidies or the exchange rate.

However, the sharp decline in Germany’s vehicle exports to China does not necessarily mean that German firms have “lost the Chinese market”. A further explanation is that part of the decline in exports may have been offset by local production by German firms in China. If German firms have shifted more production and sales to China, then lower exports do not necessarily imply a reduced presence in the Chinese market. Data on foreign affiliates statistics (FATS) show that between 2020 and 2022, the sales and employment of German subsidiaries in China remained high and continued to grow (Figure 16). This suggests that Germany’s participation in the Chinese market has not disappeared. Rather, it has shifted from a model based on cross-border exports to one based more on local production and local sales. In that case, even if the actual business scale of German firms in China has not contracted, Germany’s goods trade surplus with China would still shrink because production in China replaces imports from Germany.

fDi Markets data shows that Germany’s greenfield investment in China remained above EUR 4 billion per year (Figure 17), and data from the German Economic Institute (IW) shows that investment in China rose to more than EUR 7 billion between January and November 2025, the highest level in four years and 55.5% above the EUR 4.5 billion recorded in 20245. It is reasonable to infer that German firms are increasingly using local production in China to serve demand in China and around the world. This means that German firms have not lost the Chinese market. Rather, returns that were previously realised through exports to China are being generated through the profits and investment income of affiliates located in China.

V. Concluding Remarks

First, the widening China–EU trade imbalance does not reflect a broader macroeconomic imbalance. It reflects structural changes on both sides. In recent years, while China’s overall external surplus increased, Europe’s external surplus also rebounded towards more normal levels. This is not what one would expect in the case of a broad macroeconomic imbalance. If that were the case, Europe’s surplus should have fallen rather than recovered.

Instead, the increase in China’s surplus with Europe has had a clear structural pattern and can be traced to specific causes. The rise in China’s exports to the EU was concentrated in the new trio and in chemicals. The main reason was that the EU reduced its dependence on Russian energy and accelerated the green transition, which raised energy costs in Europe, weakened domestic supply capacity in related industries, and increased dependence on Chinese supply in these products. At the same time, weaker EU exports to China were not due to a shrinking Chinese market. They reflected continued industrial upgrading in China and accelerating import substitution, which reduced China’s structural demand for EU products.

Second, since the widening bilateral imbalance is driven by structural factors,short-termpolicytoolstargetingprices,theexchangerate,or subsidies are unlikely to change the broader pattern. The imbalance may continue to widen. Whether China’s external surplus is thought to reflect industrial policy or an undervalued exchange rate (which, in our view, it does not), China’s competitiveness and price advantages in new energy industries and chemicals will continue to strengthen regardless of EU trade policy. Nor will the EU’s actual demand for Chinese new energy products and chemicals disappear because of tariffs. Import substitution in China, including in vehicles, is also unlikely to stop. In a context where domestic supply in the EU remains insufficient, the energy transition is incomplete, and energy supply from the Middle East is increasingly fragile, the structural imbalance may widen further. Trade protectionism is unlikely to reverse the broader pattern.

Third, a narrow focus on the trade deficit understates the actual gains that the EU derives from its economic and trade relationship with China. China’s exports of new energy products have helped the EU advance the green transition and reduce transition costs. Europe’s imports of large volumes of Chinese chemical products essentially amount to imports of cheaper energy. These imports appear as a deficit in the trade account, but Europe benefits from them. At the same time, EU firms continue to record growth in sales in China, while also using supply chains and cost advantages in China to strengthen their global competitiveness. These gains do not show up in bilateral goods trade accounts, but they do appear on European companies’ balance sheets. A narrow focus on the bilateral trade balance no doubt risks missing the mutual benefits embedded in China–EU economic and trade relations.

Fourth, understanding the causes of the widening trade imbalance means that both sides need a more pragmatic response. For the EU, the real priority is not to reduce the bilateral trade deficit as such, but to strengthen energy resilience and enhance domestic supply capacity during the green transition. In highly competitive industries such as electric vehicles, the EU should welcome Chinese direct investment and face up to the reality of its own declining competitiveness. For China, industrial upgrading will continue, but further expansion of domestic demand would help ease the political pressure created by a widening trade surplus and generate more goodwill in the bilateral relationship. Structural factors cannot be resolved quickly, but misunderstandings and frictions can be eased. The key question is whether both sides can strengthen coordination and cooperation in a more pragmatic way.

5

Rene Wagner and Christoph Steitz, “Exclusive: German firms’ China investments driven to four-year high by US trade wars”, Reuters, 27 January 2026.

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a year ago · 47 likes · 8 comments · Zichen Wang

The article below, originally published on the WeChat blog 时政国关分析 on 10 January 2026, is Yan’s own summary of one of the book’s central arguments: China-U.S. strategic competition will remain intense, but the risk of direct war will be low.

The real contest, Yan argues, will increasingly move to cyberspace, digital technology, AI, and artificial general intelligence. China and the United States may compete for dominance in these fields while also developing rules to prevent technological rivalry from producing catastrophic consequences for humankind.

Yan also predicts that by 2035, the United States’ international strategic credibility may be lower than China’s, while China’s international political and economic influence may be comparable to that of the United States. Brazil and Russia may move closer to China, France and Germany may hedge more neutrally, and Japan, India, and Britain may remain closer to the United States but become less willing to actively join U.S. containment of China.

—Yuxuan Jia

This translation has been reviewed by Yan himself before publication.

阎学通：中美战争风险小，但真正较量在这个新战场

Yan Xuetong: The Risk of China-U.S. War Is Low, but the Real Contest Is in a New Arena

China-U.S. strategic competition may become very intense, but a relatively effective mechanism for managing competition may already have been established, leaving little risk of direct war. The United States will lose its obvious advantage over China in strategic relations among major powers.

China’s strategic relations with Brazil and Russia will be better than those of the United States with these two countries. Germany and France will adopt relatively neutral hedging strategies in the China-U.S. competition. India, Japan, and the United Kingdom will have better strategic relations with the United States than with China, but their willingness to take the initiative in joining U.S. containment of China will decline. By then, the United States may have lost its international leadership.

Even if U.S. administrations after Donald Trump adjust his unilateralist strategy, the United States may still be unable to restore its advantage over China in global strategic competition to the level it had in 2022, when the Russia-Ukraine conflict brought Washington strategic gains. China-U.S. strategic competition may remain intense after Trump’s second term, but the two countries may establish a new mechanism to manage it, thereby forming a long-term, stable, and war-free competitive relationship.

1. A New China-U.S. Strategic Equilibrium

By 2035, the United States’ international strategic credibility may be lower than China’s. Trump’s isolationism and trade protectionism will not only weaken other major powers’ trust in his current administration but also weaken their trust in future U.S. administrations over the next decade. If Trump changes U.S. political rules and seeks to remain in power after his current term, other major powers will have to guard against his unpredictability. They may move closer to China and adopt a clearer hedging strategy.

Even if he leaves office on schedule, a new U.S. leader may be able to reduce other major powers’ suspicions, but will still find it difficult to restore US strategic credibility to the level of the Biden period. During the Biden administration, U.S. allies and strategic partners regarded the first Trump administration as an exception, believing that the United States would become reliable again after Trump. Trump’s re-election made these countries realise that, over the next decade, the return of Trump-type political figures to power in the United States will no longer be a low-probability event.

The U.S. political system has no mechanism to prevent such leaders from taking power. If such leaders appear repeatedly, U.S. foreign policy will be unable to maintain continuity. A change of leadership may lead to a 180-degree change in foreign policy.

By 2035, no matter which party’s politician are in power in the United States, U.S. allies and strategic partners may no longer believe that the continuity of U.S. foreign policy can last for more than four years. By contrast, regardless of their relations with China, all countries will be able to see that China’s foreign policy has stronger continuity than that of the United States, and that cooperation with China is more continuous and reliable than cooperation with the United States.

By 2035, China’s international political and economic influence may be comparable to that of the United States. The unilateralist foreign-policy concept of “America First” may continue to influence U.S. decision-makers. “America First” unilateralism is based on populist thinking. Although populism may begin to decline by 2035, the inertia of this mindset may still influence some people in U.S. decision-making circles. During Trump’s second term, the gap in power and status between China and the United States is likely to narrow. This may make subsequent US administrations even less willing to undertake international responsibilities, and they may continue to follow unilateralist foreign-policy principles.

By 2035, whether Republicans or Democrats are in power, U.S. decision-makers are more likely to continue deglobalisation than to return to globalisation as a foreign-policy strategy. Trump’s first term initiated the policy shift towards deglobalisation. Under Biden, U.S. government documents gradually reduced the use of the term “globalisation.” A second Trump term will reinforce deglobalisation policies for another four years, making it difficult for later U.S. administrations to restore globalisation as a strategic principle.

In contrast, Chinese decision-makers believe that China’s rise has benefited from economic globalisation. Over the next decade, the Chinese government is therefore likely to continue to uphold economic globalisation as a foreign-policy principle. If China upholds this principle for another decade while the United States continues deglobalisation, then by 2035, other major powers may adopt strategies of economic cooperation with China in order to benefit from the rapid growth of China’s digital economy. Their trade with China may then exceed their trade with the United States.

By 2035, the United States may no longer have an obvious advantage over China in international political appeal. Mutual imitation is common in great-power competition because decision-makers often believe that copying another country’s successful methods can produce similar results.

For example, as China continued to narrow the gap with the United States in digital technology, the Biden administration imitated China’s research and development strategy under the new type of whole-nation system, namely a strategy that combines government support with market incentives. The U.S. government introduced policies to support American technology and innovation companies and provided government subsidies to the semiconductor industry through the CHIPS and Science Act.

After Trump returned to office, the U.S. government also began to imitate China in some areas of social governance. According to the logic of mutual imitation among major powers, the more China narrows the gap in comprehensive national power with the United States over the next decade, the more U.S. decision-makers will imitate Chinese government practices.

By 2035, the domestic policies of China and the United States may be more similar than they are today. Some call this “homogeneous development.” Compared with China, the United States may no longer have an obvious advantage in international political appeal.

By 2035, the United States may still have more military partners than China, but its cooperation with them may be looser than in 2024. Only a few countries may take the initiative in cooperating with the United States to contain China militarily.

After the outbreak of the Russia-Ukraine conflict in 2022, U.S. military allies actively cooperated with the United States in containing China because China did not condemn Russia. By 2035, even if the Russia-Ukraine conflict has not formally ended, it may only remain a low-intensity conflict. By then, U.S. military allies will have grown tired of the prolonged war and adjusted their overall foreign policies, placing greater emphasis on economic cooperation with China.

By 2035, China’s imports of goods and services from U.S. allies may be much larger than they are today. For economic reasons, these countries may become less involved in China-U.S. strategic conflicts in East Asia. China may continue to uphold the principle of non-alignment. Without strategic allies, China’s influence in international security affairs may still be weaker than that of the United States.

China-U.S. Strategic Competition Will Be Intense, but the Risk of War Will Be Low

By 2035, the China-U.S. arms race may be relatively intense, but the two sides may still maintain a state of no war. Over the next decade, the gap between the scale and quality of Chinese and U.S. military equipment may narrow further. This would strengthen mutual deterrence and make both sides more cautious about preventing war.

In theory, the closer competitors are in military capability, the stronger their desire to increase their own military advantages, and the more intense their arms race is likely to become. Weapon intelligentisation is a basic trend in the digital age. As military equipment becomes more intelligent, new demands for military reform will inevitably emerge.

By 2035, the China-U.S. arms race may focus not only on upgrading intelligent military equipment, but also on major reforms of military organisational structures. The more intense the arms race becomes, the more concerned both sides will be about the outbreak of war. As a result, preventing direct war and preventing escalation may become the core issues of military dialogue. However, such dialogue may still be limited to the senior level, and the two sides may still lack multi-level military exchanges.

By 2035, intense China-U.S. cyberspace competition may become normal, and some bilateral norms for managing this competition may have taken shape. At present, there are few international norms constraining behaviour in cyberspace. Over the next decade, China-U.S. strategic competition in cyberspace will become increasingly intense and may exceed their competition in physical domains. To prevent cyberattacks from escalating into military conflicts in physical domains, China and the United States may have developed some norms for managing cyberspace competition by 2035. While competing for dominance in cyberspace, the two sides may also work together to prevent competition from getting out of control and causing a catastrophe for humankind.

Today, AI is moving towards AGI, or artificial general intelligence, and there is a possibility that AGI may act against human will and cause a catastrophe for humankind. Researchers believe that the negative effects of AGI include misuse, misalignment, mistakes, and structural risks. The catastrophic consequences of AGI risks may be no less severe than nuclear winter.

By 2035, China and the United States may reach international norms on the innovation and application of AI and AGI technologies, including their use in cyberspace and physical domains. The digital technology capabilities of China and the United States may far exceed those of other countries. The two countries may adopt a strategy that relies mainly on bilateral efforts, with multilateral efforts playing a complementary role, to formulate cyber norms as well as AI and AGI norms. In other words, they may use the outcomes of bilateral negotiations as a model to be promoted globally and seek multilateral support. This may be similar to the path taken by the United States and the Soviet Union in promoting nuclear non-proliferation norms.

By 2035, China and the United States may adopt similar strategies in their strategic competition, with both sides attaching importance to the prevention of direct war. The greater the power gap between competitors, the more their competitive strategies tend to differ. The stronger side tends to seek a quick victory, while the weaker side tends to favour a protracted struggle as a way to defeat a stronger opponent. Competitors of comparable strength, by contrast, tend to respond in kind.

In 2018, Trump launched a trade war against China, and China responded with proportionate countermeasures. In 2025, when Trump launched another trade war against China, he did not expect China to adopt firm reciprocal countermeasures. By 2035, the gap in comprehensive national power between China and the United States may be much smaller than it is today, and the similarity between their competitive strategies may increase.

Similarity in competitive strategies means that the two sides have a common understanding of the goals of the same strategy, as well as of its principles and specific tactics. The risk of direct war caused by misunderstanding each other’s strategic intentions may be relatively low.

Historical experience shows that U.S.-Soviet strategic competition was more likely to lead to war in the early Cold War than in the later Cold War. In the early period, both sides worried about the outbreak of a third world war; later, such concerns declined. In fact, once the United States and the Soviet Union reached a relative strategic balance, the risk of war became much lower.

This does not mean that China-U.S. strategic competition in 2035 will become moderate. Rather, it means that the competition will remain highly intense, but more certain and predictable, and its risk of escalation into war will be lower.

By 2035, neither China nor the United States may continue to cite ideological differences as a reason for strategic competition. Since the founding of the People’s Republic of China, severe ideological conflict between China and the United States has occurred mainly in the 1950s, the 1960s, the early 1990s, and the period from 2015 to 2024. This shows that, even when ideological differences remain unchanged, the two countries can either engage in ideological confrontation or choose to ignore such differences.

The experience of great-power competition since the end of World War II shows that ideological differences do not automatically lead to ideological confrontation. The key lies in whether decision-makers use them as a basis for confrontation. By 2035, pragmatism may have a stronger influence on Chinese and U.S. decision-makers than political ideology. They may prefer to pursue greater national interests at lower cost, rather than spend enormous national resources in the name of ideologies. China-U.S. strategic competition will have a stronger realist character and a weaker ideological character.

By 2035, China-U.S. economic competition may resemble that of 2024 and become more rational than it was in 2025. The gangster-style extortion tactics adopted by Trump in his second term risk causing China-U.S. economic competition to escalate into military conflict.

The reason Trump dares to use such dangerous methods is that the gap in comprehensive national power between China and the United States remains large. By 2035, this gap, especially in military equipment, may have narrowed significantly. At that point, the U.S. government may not dare to follow Trump’s dangerous competitive approach and instead return to managed economic competition. This would reduce the risk of economic competition escalating into military conflict. China-U.S. competition is comprehensive, and politics cannot be separated from economics. However, it is possible to prevent economic conflict from becoming military conflict.

Strategic Alignment Between China and the United States

Over the next decade, most countries may face the long-term problem of choosing sides between China and the United States. By 2035, choosing sides on specific issues may become a normal international phenomenon. In terms of overall strategic relations, however, Brazil and Russia may become China’s strategic partners, France and Germany may adopt relatively neutral hedging strategies, and India, Japan, and the United Kingdom may adopt hedging strategies leaning towards the United States.

Brazil

By 2035, Brazil may firmly choose China’s side rather than hedge between China and the United States. This would make China-Brazil cooperation more solid and reliable than in 2024. The two countries are geographically far apart, have no strategic contradictions, and both face strategic pressure from U.S. hegemony. Their current strategic cooperation may continue beyond 2035.

By 2035, Brazil’s greatest cybersecurity threat will most likely come from the United States. In both cybersecurity and digital economic development, Brazil will need Chinese technological support and is therefore likely to choose China’s technological standards. Its economic and technological cooperation with China may far exceed that with the United States.

China-Brazil cooperation in cyberspace may also promote cooperation in multilateral affairs. By 2035, BRICS countries may account for a larger share of the global economy than in 2024, and Brazil may attach greater importance to cooperation with China within the BRICS framework. Brazil will most likely become China’s firmest supporter among major Global South powers, while China may become Brazil’s most important strategic partner.

Brazil’s strategic relationship with the United States may be worse in 2035 than in 2024. Regardless of which party is in power, the decline of U.S. global leadership may push U.S. decision-makers towards retrenchment. A U.S. retreat from global engagement to the American continent may intensify its strategic contradictions with Brazil in Latin America. If the United States seeks to strengthen its dominance over South America, it will inevitably squeeze Brazil’s regional leadership.

The cybersecurity threat posed by the United States to Brazil may escalate. Cybersecurity concerns not only national security, but also the regime security of those in power. The Brazilian government has long been alert to U.S. interference in its internal affairs. By 2035, hostility between Brazil and the United States may be greater than in 2024.

Russia

By 2035, Russia may side with China, but its strategic antagonism with the United States may be weaker than in 2024. Having drawn lessons from the Russia-Ukraine conflict, the Russian government may become more cautious about getting involved in wars and shift the focus of national strategy towards economic development.

As the digital economy becomes the most important source of world wealth, Russia will need international support to improve its seriously underdeveloped digital economy. Because of the Russia-Ukraine conflict, however, Russia may still find it difficult by 2035 to conduct substantive technological cooperation with the United States, Germany, or Japan. Although Russia will worry about excessive dependence on Chinese digital technology, cooperation with China may remain its most beneficial option. To accelerate wealth growth and improve cybersecurity capacity, Russia may make China its principal strategic partner.

Russia’s strategic relationship with the United States in 2035 may be one of mutual vigilance rather than strategic competition or confrontation. By then, the gap in comprehensive national power between the two countries will have widened further. Even Russia’s strongest area, military power, may no longer be at the same level as that of the United States. This means Russia will lack the power foundation to compete with the United States, while the United States may pay less attention to its strategic relationship with Russia.

Drawing lessons from the Russia-Ukraine conflict, Russia will need to focus its efforts on advancing digital technology. The United States, however, will not want Russia to improve the intelligentisation of its military equipment and may continue to contain its technological progress. By 2035, neither side may have the will to develop strategic cooperation, nor the motivation to further worsen bilateral relations. Their relationship may be one of mutual vigilance rather than comprehensive confrontation. Since bilateral relations will not be a zero-sum strategic competition, and since the impact of the Russia-Ukraine conflict will have declined, their strategic confrontation may be weaker than in 2024.

Japan

Japan’s strategic relationship with China in 2035 may still be weaker than its relationship with the United States, but Japan may adopt a more balanced hedging strategy: relying on China economically and on the United States for security. Since military security interests take precedence over economic interests, Japan’s strategic relationship with the United States may still be much closer than its relationship with China. In military cooperation, Japan may cooperate more closely with the United States than France and Germany do.

Because Japan relies heavily on U.S. military protection, it will likely choose U.S. technological standards in the China-U.S. digital technology competition. Technological standards are closely related to economic transactions. Shared digital technological standards may mean that Japan-U.S. digital economic transactions exceed those between Japan and China. Japan may remain highly dependent on the United States in cybersecurity and the digital economy, and leaning towards the United States may remain its basic national policy. However, to guard against sudden changes resulting from a change of U.S. administration, Japan may become less willing than in 2024 to take the initiative in joining U.S. containment of China.

Although Japan-U.S. strategic relations in 2035 will still be based mainly on cooperation, their reliability may decline. By then, Japan’s economy may not only fall further behind China’s, but also become smaller than India’s. As Japan’s economic importance to the United States declines, Washington may treat Japan more unequally and increasingly see it as an unimportant follower. This will inevitably affect Japanese public perceptions of the United States and may even generate resentment.

In the 1970s, China-U.S. relations shifted from confrontation to strategic cooperation. Japanese diplomatic circles regarded this as “over-the-head diplomacy,” in which the United States bypassed Japan, leaving a long-term political shadow. By 2035, Japan’s hedging strategy between China and the United States may move closer to the middle than in 2024, with Japan handling its relations with both countries in a more balanced way.

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2 years ago · 6 likes · Haokai Li and Zichen Wang

The essay translated below is one such rare attempt. It does not deny that policymaking is political: policy involves power, interests, institutional authority, and the allocation of resources. But it argues that policy research itself should not be excessively politicized. Specific disagreements over policy should not be casually elevated into questions of political attitude or political loyalty. Otherwise, serious discussion becomes impossible; mistakes become harder to correct; and policy research degenerates into empty praise for decisions already made.

Zhao Shukai, a Director-General-level official before his retirement, drew on China’s own historical experience to make a broader point: good policy cannot depend merely on officials, intellectuals, or theorists claiming to represent the people. It requires institutional channels through which the people affected by policy can speak for themselves.

Zhao Shukai (赵树凯; b. 1959) is a Chinese official of rural policy and governance. From 1982 to 1989, he worked at the Rural Policy Research Office of the Communist Party of China (CPC) Central Committee’s Secretariat. Starting in 1990, he served at the Development Research Center of the State Council, holding roles including the Director General of its Information Center.

The following article was published on 10 August 2024 on the WeChat blog 九号院时刻 (No. 9 Courtyard Moment). The name refers to the former site of the CPC Central Committee's Rural Policy Research Office and to an important intellectual and policy hub for China’s rural reform in the 1980s.

Zhao has authorized the translation.

—Zichen Wang

赵树凯：政策研究的政治反思

Zhao Shukai: Political Reflections on Policy Research

Political questions in policy research begin with a basic issue: who takes part in policymaking? For a long time, the real participants in policymaking were leaders and “scholars”. Here, “scholars” refer to so-called theoreticians within the Party: people well versed in the classics, gifted with the pen, and trusted by the leadership.

At times, some farmers were also consulted, but their views could not directly influence the formal policy agenda. Policymaking is a closed system of power that has no place for farmers. Whether a policy embodies the will of farmers or claims to represent them was often a self-serving assertion by those in power and has little to do with farmers’ own wishes. Farmers could not participate in judging or choosing policy. Bringing farmers into the power structure of policymaking is therefore an important part of political reform and political transformation.

The policy process involves the distribution of interests and the structure of power. In that sense, it is naturally a political process. But policy research itself should not be over-politicised. Differences over specific policy proposals should not casually be elevated into questions of political attitude or political position. Policy research should not be subjected to political litmus tests, where support for a policy makes one a political friend, while opposition makes one a political enemy. Otherwise, there can be no fact-based policy discussion, only unprincipled praise, and policy mistakes will have no way of being corrected.

During the People’s Commune era, rural governance was conducted through “political movements”. Farmers’ attitudes toward the commune system, grain procurement, communal dining halls, and the Dazhai experience were all elevated into political questions. They were treated as indicators of one’s attitude toward socialism and the Communist Party, and used as criteria for identifying “class enemies”. This manufactured enemies, damaged the economy, and undermined farmers’ confidence in the system. The historical lessons are profound and abundant.

The policy process should not be monopolised by a small elite, nor should it remain highly closed. It should be highly open, allowing all stakeholders to participate. Such openness and participation should be institutionalised and guaranteed by the political system. In the early years of reform, senior policy research departments were sharply divided over the household responsibility system, but there was no disagreement over the question of establishing farmer associations. Some leaders who clearly opposed the household responsibility system also believed that, had ordinary farmers been able to make their voices heard during the Great Leap Forward and the commune movement—especially had farmers had their own organisations through which to express their views—erroneous policies would not have gone so far as to produce the historical catastrophe of the Great Famine. Therefore, although they opposed the household responsibility system, they supported the establishment of farmer associations.

For a long time, farmers were not the only group unable to express their views on policy; other social groups also lacked channels of expression, and could only sing the praises of mistaken policies. Even today, these historical lessons have not been properly reviewed. The core foundation of policy research does not lie in whether a particular individual, school of thought, theoretician, or political figure claims to represent the people. What matters is allowing the people to speak. Letting farmers represent themselves is the real way to respect their initiative and their right to choose.

Historically, outstanding politicians have not necessarily been thinkers with systematic theories. In American history, Theodore Roosevelt and Ronald Reagan are both highly regarded leaders, yet “Like Roosevelt, Reagan was not a systematic thinker. Like Roosevelt, Reagan saw no need to make all parts of his philosophy or his program consistent.” [See E. J. Dionne Jr., Why Americans Hate Politics: Republican Toughs, Democratic Wimps, and the Politics of Revenge.] Fundamentally, politicians do not need to be thinkers. What they need most is the ability to listen to public opinion. A politician’s grasp of political opportunity should mainly rest on insight into the needs of the people, while political wisdom is chiefly reflected in the process of balancing and integrating the interests of different social groups. In national governance, no theory is suited to all circumstances forever.

Policy research must, of course, “speak politics”. But the highest form of speaking politics is to reflect public opinion, not the will of superiors. How, then, should public opinion be reflected? Most importantly, it requires starting from real life, respecting reality, and respecting common sense. During the Cultural Revolution, “politics first” was everywhere. Even the allocation of work points among commune members had to put politics first. In Dazhai, these were called “political work points”, to the point that whoever could recite Mao Zedong’s writings better would receive more work points.

At a national conference on learning from Dazhai in agriculture, one case was reported: a sturdy farmer in his forties burst into tears on the spot because, having performed poorly in recitation, he received fewer work points than his seventeen- or eighteen-year-old daughter. At the time, there was also a resounding political slogan: “Better the socialist weeds than the capitalist seedlings.”

In the summer of 1977, when Wan Li became First Secretary of the Anhui Provincial Party Committee, this slogan was still admired by many. Wan Li pushed back: “Whether grain comes from collective fields or private plots, it keeps people from going hungry.” “If you would rather have socialist weeds than capitalist seedlings, why don’t you go and eat grass? You eat grain yourself, but tell farmers to eat grass. What kind of socialism is that? What kind of politics is that?” “Letting farmers have enough to eat is the best politics; leaving them hungry is the worst politics.” Here, when Wan Li spoke of politics, he was speaking from the logic of ordinary life, from common sense, and in plain human language. This, too, should be a principle of policy research.

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Pekingnology

Zhao Shukai: Pluralism powered China’s rural reform

Zhao Shukai (赵树凯; b. 1959) is a Chinese official of rural policy and governance. From 1982 to 1989, he worked at the Rural Policy Research Office of the Communist Party of China Central Committee’s Secretariat (later reorganised as the State Council’s Rural Development Research Centre and subsequently the…

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7 months ago · 17 likes · 2 comments · Yuxuan JIA and WEI Lai

Pekingnology

China’s Rural Reform: A History Not Designed but Discovered

Zhao Shukai (赵树凯; b. 1959) is a Chinese official of rural policy and governance. From 1982 to 1989, he worked at the Rural Policy Research Office of the Communist Party of China Central Committee’s Secretariat (later reorganised as the State Council’s Rural Development Research Centre and subsequently the…

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6 months ago · 31 likes · 1 comment · Yuxuan JIA and YIRUI LI

Pekingnology

Wen Jiabao and Domestic Migrant Workers

Zhao Shukai (赵树凯; b. 1959) is a Chinese official of rural policy and governance. From 1982 to 1989, he worked at the Rural Policy Research Office of the Communist Party of China Central Committee’s Secretariat (later reorganised as the State Council’s Rural Development Research Centre and subsequently the…

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9 months ago · 16 likes · Yuxuan JIA and Zhao Huiyi

Pekingnology

Inside China’s Embassy in Kyiv as War Broke Out

The two following essays were published on the WeChat blog 永久的心路 on 26 and 28 April 2026, respectively. They remain accessible on May 1, 2026…

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a month ago · 74 likes · 13 comments · Yiyang Xu, Yuxuan JIA, and Zichen Wang

Four years later, the retired Chinese diplomat argues that the conflict is unlikely to end soon and will probably remain a prolonged war of attrition along largely fixed front lines. Its outcome, he says, will depend on which side can better develop counter-drone and long-range air-defence systems, hold its current lines, and secure a favourable security-guarantee framework.

Ding Jianwei served in Chinese missions in Kazakhstan, Tajikistan, and Ukraine between 2005 and 2023, according to his own account. He was working in the Chinese embassy in Kyiv on 24 Feb, 2022, as Russia’s attack began.

Ding is now retired from diplomatic service. Publicly available records as recently as December 2025 identified him as a researcher at the Eurasian Social Development Institute under the Development Research Centre of China’s State Council.

Ding studied Russian literature at the PLA Nanjing Institute of Foreign Languages, now the College of International Studies at the National University of Defense Technology, before completing two years of military service in 1987. He also appears to hold a doctorate in law.

The following essay was published on the WeChat blog 永久的心路 on 7 May 2026.

—Yuxuan Jia

俄乌冲突四年复盘:战场格局演变及未来发展前瞻

The Russia–Ukraine Conflict Four Years On: Battlefield Evolution and Future Trajectories

More than four years have passed since Russia launched its special military operation in February 2022. This largest land conflict in Europe since the Second World War has completely overturned traditional modes of land warfare. It has displayed multiple features: the frustration of large-army blitzkrieg, the impairment of maritime dominance, the normalisation of precision strikes on bridges and interdiction operations, the rapid entrenchment of front lines, prolonged positional tug-of-war, the centrality of drones to battlefield operations, and the routine use of long-range strikes against targets in depth. The form of war and the structure of geopolitical contestation have been comprehensively reshaped.

At the beginning of the conflict, Russia sought a rapid victory through a combined airborne assault plus ground blitzkrieg. On the first day of the war, they sent elite airborne troops to rush Hostomel Airport near Kyiv, attempting to establish a strategic bridgehead that could support a direct advance on the Ukrainian capital. However, Ukrainian regular forces, National Guard units, and local militias coordinated their resistance. Relying on airport buildings and wooded field fortifications, they held out tenaciously and encircled the isolated Russian airborne troops. Russia’s plan for a quick victory in Kyiv collapsed almost as soon as it began.

In the first phase of the war, Russian forces used cruise missiles and tactical missiles to suppress Ukrainian airfields, ammunition depots, and command hubs in advance, while committing tank and mechanised groupings to multi-directional deep penetrations towards Kyiv, Chernihiv, and Kharkiv. Because Russia gravely underestimated the Ukrainian people’s will for resistance, the rapid collapse it had anticipated did not materialise. Ukrainian forces relied on rivers, lakes, forests, villages, and towns to build layered defensive lines, and made precision bridge demolition and road destruction core means of obstruction. They blew up trunk-road bridges and key railway bridges, cutting off Russian armoured manoeuvre and logistical supply routes. Civilian territorial defence battalions cooperated in ambushes, interdiction operations, and urban combat, forming a three-dimensional pattern of regular defence plus nationwide resistance, which effectively slowed the tempo of Russia’s advance.

The naval theatre also saw a disruptive reversal. In April 2022, the Russian Black Sea Fleet’s flagship, the cruiser Moskva, was sunk by Ukrainian anti-ship missiles, marking Russia’s largest naval combat loss since the war began. This engagement dealt a severe blow to the Black Sea Fleet’s air-defence system, forcing Russia’s main warships away from the northwestern Black Sea. Its capabilities for near-sea blockade and fire support against shore targets declined sharply. Over the past four years, Ukrainian forces have continuously harassed Russian forces with drones, uncrewed surface vessels, and cruise missiles. Multiple Black Sea Fleet warships have been damaged, their overall combat power has been seriously degraded, and the strategic landscape in the Black Sea has been thoroughly rewritten.

Among these cases, the repeated attacks on the Crimean Bridge became emblematic. As Russia’s only land lifeline connecting it to Crimea, the bridge was attacked three times, in October 2022, July 2023, and 2025, by explosions, uncrewed surface vessels, and underwater demolition. Its road deck was damaged, rail transport was interrupted, and traffic capacity was sharply reduced. These attacks directly severed a key Russian supply line on the southern front, dealt a major blow to Russia’s sense of strategic security in the rear, and became a classic example of Ukraine using asymmetric means to constrain the battlefield.

On land, Russia’s northern offensive stalled after its advance was blocked and roads and bridges were destroyed. Its only major highlight was the capture of Kherson in March 2022. Ukraine, relying on Western air-defence equipment and intelligence support, wove a low-altitude air-defence fire network, repeatedly intercepting Russian missile attacks and inflicting heavy losses on Russian Aerospace Forces aircraft and helicopters, thereby depriving them of close air support capabilities. Just over a month after the outbreak of war, Russian forces, facing overstretched lines, repeated disruption of supplies caused by bridge demolitions, and persistently high casualties, were forced to withdraw across the board from northern and northeastern Ukraine and concentrate their forces in Donbas. Ukrainian troops relied on fortified defensive lines to resist step by step and continued destroying key transport bridges, restricting Russian mobility and redeployment. Russian forces could only slowly nibble forward village by village and trench by trench, never managing to open a strategic breakthrough.

In the summer and autumn of 2022, Ukraine seized the opportunity created by the dispersion of Russian forces and launched counteroffensives in Kharkiv and Kherson, retaking key towns such as Izium and Kupiansk, as well as the urban area of Kherson. Russian forces retreated to the left bank of the Dnipro River. The entire front line stretching along rivers, strongholds, and the Russia–Ukraine border had basically taken shape by the end of 2022 and has seen no fundamental change in the four years since.

The Battle of Bakhmut, which began in late 2022, marked the conflict’s formal shift from mobile warfare and manoeuvre warfare into brutal trench attrition. Tens of thousands of elite troops from both sides fought street by street and building by building. The city was reduced to ruins. Trenches and minefields covered the battlefield. Both sides sank into a prolonged and meaningless positional war of attrition. In June 2023, Ukrainian forces massed Western-supplied heavy equipment and launched their summer counteroffensive. But shortages of ammunition, Russia’s layered defences, and vast minefields prevented it from tearing open the main defensive line. The deadlock remained.

After traditional ground operations reached a bottleneck, drones rose forcefully and rewrote the rules of modern warfare. Ukrainian forces, on the one hand, normalised deep strikes into Russia’s interior, precisely targeting energy facilities such as oil refineries, oil storage tanks, and oil and gas hubs, severely damaging Russia’s energy production and export chains. On the other hand, they relied on drones to conduct long-range sabotage and interdiction operations, precision bridge strikes, and sustained pressure on rear supply lines.

Operation Spiderweb, planned by the Security Service of Ukraine in June 2025, became a benchmark case in long-range unmanned operations. After long-term covert preparation, Ukrainian forces secretly delivered more than 100 FPV drones deep into Russian territory and carried out synchronised raids on five major strategic air bases, severely damaging high-value targets including Tu-160 and Tu-95 strategic bombers and airborne early-warning aircraft. The operation shattered the myth of absolute security in Russia’s interior and pioneered a new mode of operations featuring long-range drone swarms concealed in depth and synchronised multi-point strikes.

In 2023, Ukraine established specialised drone units. In 2024, it created an independent Unmanned Systems Forces branch, incorporating frontline operations, long-range strikes on energy facilities, and sabotage-and-interdiction operations against transport hubs such as the Crimean Bridge into a normalised system. Russia, meanwhile, mass-produced drones such as Lancet and Geran and formed counter-drone units. At present, more than 70 per cent of personnel casualties and armoured losses on the battlefield are directly caused by drone operations.

The deep integration of drones with satellite intelligence and the Starlink system has rendered traditional large-scale formation assaults completely ineffective. Both sides have instead turned to small elite teams of three to five soldiers for covert infiltration, night operations to seize strongpoints, and gradual positional attrition. Rain, snow, and heavy fog can reduce drone effectiveness and allow traditional infantry tactics to play a role once again. Russia’s local breakthrough in the Pokrovsk direction in autumn 2025 was achieved precisely by exploiting such a weather window.

Overall, the four-year battlefield has settled into a steady state of fixed front lines and localised tug-of-war. Russian forces have only made slow tactical gains in places such as Avdiivka, Marinka, and Zaporizhzhia, and have been unable to change the overall situation. Ukraine’s cross-border operation into Kursk, continued destruction of bridges and supply lines, strikes on Russian energy facilities, Operation Spiderweb, and attrition of the Black Sea Fleet are all tactical containment and asymmetric sabotage-and-interdiction operations. They are unlikely to fundamentally reverse the strategic balance.

The conflict has now entered a phase of fighting while negotiating, with military attrition and geopolitical contestation unfolding in parallel. A comprehensive ceasefire is unlikely in the short term. Territorial status and security guarantees have become the two central deadlocks. Russia insists on retaining the territories currently under its effective control and demands that Ukraine remain permanently neutral and refrain from joining NATO. Ukraine insists on restoring its 1991 borders, rejects territorial concessions, seeks long-term Western security guarantees, and aims to join NATO and the European Union. The two sides’ bottom lines are fundamentally opposed, and the conditions for political compromise are not yet in place.

In the future, the most likely scenario is a frozen front line and a prolonged low-intensity tug-of-war. Militarily, the conflict will continue to centre on long-range drone strikes, precision bridge destruction and supply-line disruption, harassment by uncrewed surface vessels, and the slow attrition of fortified positions. Diplomatically, mediation efforts by multiple parties will continue, with prolonged bargaining over territorial demarcation, neutrality, security guarantees, and related issues. Whichever side first succeeds in improving its counter-drone and long-range air-defence systems, stabilising its line of effective control, and securing a favourable security-guarantee framework will gain the initiative and determine the endgame of the Russia–Ukraine conflict and the future security order of Eastern Europe.

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Inside China’s Embassy in Kyiv as War Broke Out

The two following essays were published on the WeChat blog 永久的心路 on 26 and 28 April 2026, respectively. They remain accessible on May 1, 2026…

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a month ago · 73 likes · 13 comments · Yiyang Xu, Yuxuan JIA, and Zichen Wang

The following article can be read as an explanation of what this shift requires in practice. It argues that Belt and Road projects should no longer treat training, maintenance, and governance as add-ons after construction is completed. Instead, job-specific skills supply, operation and maintenance systems, and governance capacity should be written into feasibility studies and project plans from the outset. At the policy level, evaluation, financing, and resource allocation should give greater weight to operational continuity, employment quality, skills upgrading, and risk-governance performance, rather than focusing only on delivery speed or investment scale.

This article, originally published on Guangming Online on 31 December 2025, is written by Wang Jinjie, a Research Assistant Professor at Peking University’s National School of Development (NSD) and Institute of South–South Cooperation and Development (ISSCAD), and Deputy General Secretary of the Peking University Center for African Studies.

Wang Jinjie has kindly authorised and reviewed the translation.

—Yuxuan Jia

以人力资本与能力红利推动共建“一带一路”高质量发展

Driving High-Quality Development of the Belt and Road Cooperation Through Human Capital and Capability Dividends

The 2025 Central Economic Work Conference placed high-level opening up and the high-quality development of the Belt and Road cooperation high on next year’s economic agenda. It made clear that China will stabilise foreign trade and foreign investment, and expand the space for international cooperation, by advancing institutional opening up and improving the quality of external cooperation. It also positioned Belt and Road cooperation as a key vehicle for promoting open growth and mutually beneficial cooperation across multiple sectors. As Belt and Road cooperation enters a deeper stage, the focus of external cooperation is shifting from a sole emphasis on project construction and capital input towards greater attention to rule alignment, long-term operation, and overall performance improvement.

Against this backdrop, human capital and the capability dividend provide crucial support and deep-seated momentum for the high-quality development of the Belt and Road cooperation. Human capital focuses on skills and learning capacity at the individual level, influencing the local workforce’s ability to perform their duties and support the operation of production and service systems; the capabilities dividend, meanwhile, corresponds to the sustained output capacity at the organisational and institutional levels. It determines whether cooperation projects can transform physical assets into sustainable industrial and public service carrying capacity. It is necessary to incorporate skills supply, operation and maintenance systems, and governance capacity into the project’s full lifecycle planning. This can turn a one-off investment into long-term capability accumulation, allowing economic and livelihood benefits to be continuously converted into real outcomes during operation, and thereby supporting the high-quality development of Belt and Road cooperation.

Human Capital Gaps and Bottlenecks in Cooperation Performance

In the early stage of Belt and Road cooperation, infrastructure connectivity served as a breakthrough, effectively easing hard constraints in transport, energy, communications, and other sectors, and providing important support for the development of partner countries. However, as project scale continues to expand and cooperation chains extend further, the main constraints facing many projects no longer lie solely in construction capacity. They increasingly concern whether completed projects can remain stable, usable, sustainable over the long term, and capable of continuous optimisation.

In some countries, even after roads, ports, power stations, and other facilities have been built, problems may still arise, including high equipment downtime, slow service response, frequent supply-chain disruptions, and inefficient management. These challenges manifest primarily in three types of gaps. First, an insufficient supply of job-specific skills and grassroots management capacity, meaning that facilities may be completed but not used efficiently. Second, spare parts, maintenance, and service networks remain underdeveloped, leading to unstable availability and rising life-cycle costs. Third, standardised procedures and governance systems are weak, leading to a lack of institutional support for quality control, accountability, and performance improvement. Hardware improvements do not automatically translate into better development performance. For projects to truly deliver economic and social benefits, they must complete the transition from construction delivery to operational governance.

Industrial cooperation projects are even more sensitive to these capability gaps. Industrial parks and manufacturing investment offer a clear example. In the early stage of production, the difficulties faced by enterprises are often not limited to market conditions. They also include practical constraints such as shortages of skilled labour, weak grassroots management and quality-control systems, and reliance on expatriate staff for equipment maintenance and process debugging. Many enterprises are forced to act as both the demand side and the supply side of the labour market. On the one hand, they need large numbers of front-line skilled workers and junior managers. On the other hand, local vocational education and training systems often struggle to provide a matching skills supply quickly enough. As a result, enterprises have to invest in training themselves, establish operating standards, and build on-site management and safety systems.

This can lead to high learning and adjustment costs in the early stage, restrict the pace of scaling up, and slow the development of supporting industrial chains and service networks. The spillover effects of projects are weakened, and the sustainability of cooperation is reduced. Capacity building, therefore, cannot remain at the level of advocacy. It must be brought forward to the very beginning of project design, and run through the entire process of construction, implementation, operation, and maintenance.

The Generation of Capability Dividends and the Mechanism for High-Quality Belt and Road Cooperation

The core of the capability dividend does not lie in increasing investment. Rather, it lies in transforming projects from one-time deliveries into long-term, sustainable public goods and industrial capacity through institutionalised operational structures, talent pipelines, supply networks, and governance mechanisms.

The capability dividend is first reflected in improved operational performance, enabling project assets to move from being merely completed to being used over the long term. The localisation of operation and maintenance in railway cooperation is a representative case. Public information shows that the construction and operation of the Mombasa–Nairobi Railway has created local employment and formed a relatively high level of localised staffing. At the same time, greater participation by local suppliers helps gradually embed the spare parts, maintenance, and services required for operation into local market networks, thereby improving the continuity and maintainability of project operations.

Another example is the China-aided Laos National Seismic Monitoring Network project, which established Laos’s first national seismic information centre. The project also trained technical personnel on the Lao side in network operation and maintenance, data processing, and information release. This strengthened Laos’s capacity for independent seismic monitoring and rapid reporting, turning an engineering network into a capacity for disaster prevention, mitigation, and emergency response. As long as operation and maintenance systems and talent training are incorporated into project design at the same time, project assets can continue to generate public service capacity and form replicable pathways for capacity building on a broader scale.

The capability dividend extends beyond the stable operation of individual projects. Through institutionalised arrangements for industry-education integration, it can also spill over into replicable talent supply and technology diffusion. The Luban Workshop is a useful example. China has worked with partners across Asia, Europe, and Africa to establish more than 30 Luban Workshops, providing academic education and vocational training, and forming platforms for cultivating technical and skilled personnel in partner countries. The governance logic behind this model is to link enterprise job standards, practical training equipment, and curricula; promote school-enterprise collaborative training; and connect trainees effectively with enterprise job systems through practical training and internships. In this way, the model serves enterprises’ labour and operational needs while facilitating the local transfer of technical solutions and process standards.

Against changing external rules and public opinion environments, the capability dividend is also reflected in stronger risk resilience, which transforms external uncertainty into governable costs. In today’s international cooperation environment, green standards, labour norms, supply-chain compliance, data governance, and community relations are increasingly becoming key determinants of a project’s long-term viability. For cooperation projects, the absence of auditable environmental and social governance systems, as well as stable community communication and dispute-prevention mechanisms, means that even smoothly constructed projects may come under pressure during the operational stage because of disputes, shutdowns, or policy fluctuations.

More importantly, many partner countries still face a relatively weak skills supply and insufficient investment in training. If capacity building is not front-loaded and institutionalised, then the deeper projects go and the more complex their technologies become, the more likely they are to encounter a new bottleneck: facilities expand quickly, but governance capacity remains weak. This, in turn, can magnify compliance and social risks. Conversely, if capacity building is used to address gaps in skills supply and governance, external uncertainty can be transformed into governable costs, and regulatory pressure can be turned into long-term competitiveness.

Full Life-Cycle Capacity Building and the Implementation of Policy Tools

To turn the concept of capability dividends into concrete results, the key is to embed capacity building into the full life cycle of projects, forming project governance arrangements that are verifiable, replicable, and sustainable. At the pre-investment assessment and project design stage, job-specific skills supply, operation and maintenance systems, and governance capacity should be incorporated into feasibility studies and project plans. Training plans, teaching staff and practical training conditions, spare parts and maintenance arrangements, and management should all be treated as critical elements. This can reduce, from the outset, the institutional costs of retrofitting capacity after the project is completed.

Bringing capability elements to the very beginning of project design can reduce downtime risks and quality fluctuations during the operational stage, while also reserving sustainable space for local employment and industrial carrying capacity. During the construction and implementation stage, localised employment organisation, on-site management, and quality-control systems should be advanced at the same time. Operational logic should be institutionalised through practical standards, procedures, and chains of responsibility, so that capability formation proceeds in step with engineering progress, rather than being delayed until after production begins. During the operational stage, stable operation and maintenance organisations and performance-management mechanisms should play a guiding role. Continuous improvement should focus on key indicators such as equipment availability, service-response efficiency, local job coverage, and the effectiveness of training and job transfer. This can help shift projects from one-off delivery towards sustained operation and capability accumulation.

Embedding capacity-building throughout the project life cycle also requires macro-level policy instruments that provide incentives, constraints, and public-service support, so that such projects can be replicated and scaled. Cooperation evaluation and resource allocation should be reoriented towards capability-building, with greater weight given to operational continuity, employment quality, skills upgrading, and risk-governance performance. Funds, finance, and policy instruments should be directed towards training, operation and maintenance, and governance-system development, encouraging all parties to convert short-term delivery pressure into long-term operational responsibility.

At the same time, comprehensive overseas service systems and risk-governance tools should be improved around legal compliance, green standards, data governance, community communication, and dispute prevention. This would create accessible professional support and coordinated response mechanisms, reducing social risks caused by unfamiliarity with local institutions, insufficient communication, or weak governance. Only by linking capability-oriented evaluation incentives, job-oriented skills supply, and replicable governance tools can the capability dividend be released at scale. Only then can high-quality Belt and Road cooperation move beyond the accumulation of individual projects towards a broader leap in capability.

Human capital is the micro-level foundation of capability formation, while the capability dividend is the long-term return on systemic capacity. Only by front-loading and institutionalising skills supply, operation and maintenance systems, and governance mechanisms through full life-cycle capacity-building can completed assets be turned into durable services, project returns into industrial capabilities, and external risks into governable costs. In this way, high-level opening up can generate more inclusive, sustainable, and replicable outcomes for common development.

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Slogan Politics: Understanding Chinese Foreign Policy Concepts (Book excerpt)

Trust me when I say I have read enough discussion of “Belt and Road Initiative” (BRI), “New Type of Great Power Relations,” and “Community of Shared Future for Mankind” in both Chinese and English. So also trust me when I say the book Slogan Politics: Understanding Chinese Foreign Policy Concepts…

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4 years ago · 22 likes · 3 comments · Zichen Wang

Today, though, the conditions are very different. The WTO is weakened, and the U.S. has turned more protectionist, shifting Beijing towards “autonomous and unilateral opening up”. Yet Tu argues that this approach has so far delivered only modest results, precisely because it lacks the external pressure and institutional reference points that once helped make reform effective.

His message is clear: despite tensions with the West, China still has a strong interest in preserving the WTO system—and in playing a larger role in shaping the fragmented trade rules of the post-globalisation era.

The reflection was delivered at a book seminar for Open to the Outside World, the latest book by Sang Baichuan, Professor of Economics and Dean of the Institute of International Economy at the University of International Business and Economics. The event was held at Peking University’s National School of Development (NSD) on 8 April 2026, and Tu’s remarks were later published on the NSD’s official WeChat blog on 28 April.

Tu reviewed the translation before publication.

—Yuxuan Jia

屠新泉：从中国入世25周年探究开放的本质与未来选择

Tu Xinquan: Exploring the Essence and Future Choices of Opening Up from the Perspective of the 25th Anniversary of China’s WTO Accession

Congratulations to Professor Sang Baichuan on the publication of his new book, Open to the Outside World, by People’s Daily Press. I have known Professor Sang for many years. In 1996, after graduating from Peking University and starting work at the University of International Business and Economics, I met him for the first time. He is not only a senior colleague, old friend, and peer, but also someone I regard as a teacher. Over the years, we have had many exchanges, so I am very familiar with his views and intellectual framework.

I know very well that, in Professor Sang’s thinking, opening up is not a tool, but an idea; one could also say it is a value. In academic circles, we like to give certain economists nicknames, such as “Wu Market” for Wu Jinglian and “Li Shares” for Li Yining. Professor Sang could be called “Sang Opening Up.” His thinking on opening up has been consistent throughout.

The University of International Business and Economics has a deep tradition of research on opening up. In the past, the university was affiliated with the Ministry of Foreign Trade and Economic Cooperation, and was naturally oriented toward promoting opening up as its mission. Professor Sang and I are highly aligned in our intellectual frameworks.

Understanding the Essence of Opening Up Through China’s WTO Accession

My main area of research is the World Trade Organization, and I have studied it for many years. This year marks the 25th anniversary of China’s accession to the WTO. I would therefore like to discuss the relationship between China and the WTO, mainly from the perspective of the active and passive dimensions of opening up.

China began reform and opening up in 1978. There was certainly a passive element to that decision, as both domestic and international conditions at the time created considerable pressure. Fundamentally, however, China’s reform and opening up was also an active choice. It was a reform led by China itself, rather than the implementation of a plan or roadmap set by any other country or international organisation. China’s opening up was also unilateral and autonomous. No international organisation or foreign country forced China to open up. Under the visionary leadership of that generation of Chinese leaders, China actively chose the path of reform and opening up.

In this sense, reform and opening up was a revolution in ideas. Compared with the past, it marked a profoundly transformative break.

China began applying for “GATT resumption” in 1986, seeking to restore its status as a contracting party to the General Agreement on Tariffs and Trade. In 1995, the WTO was formally established, replacing the GATT. The original contracting parties automatically became WTO members, so China’s application shifted from “GATT resumption” to “WTO accession,” meaning a formal application to join the WTO.

This process was very different from China’s earlier opening up, which had been advanced independently and autonomously. The negotiations over GATT resumption and WTO accession were always accompanied by considerable external pressure. To join a mature international organisation and accept a set of established international rules, a country must make corresponding adjustments to its own institutional arrangements in line with that organisation’s requirements and operating logic. In many respects, China could no longer decide entirely on its own.

From 1986 to 2001, China’s negotiations over GATT resumption and WTO accession lasted 15 years, and the process was extremely difficult. Although China made every effort in the negotiations to defend its own rights and interests, it ultimately accepted most of the demands put forward by the other side. Whether in intellectual property protection, tariff reductions, or the opening up of trade in services, even China’s WTO accession protocol was largely drafted by the WTO. China could only make limited adjustments to certain details, such as tariff rates.

The fundamental reason China found itself in such a passive position was that it was a latecomer to the rule system. As the party applying to join, China had little choice but to accept the established body of rules if it wanted to obtain the “entry ticket” to the WTO. It had no say in the formulation of those rules, so it naturally occupied a very passive position in the negotiations.

From the perspective of that time, China inevitably felt a sense of humiliation during the WTO accession negotiations, especially in the face of intense pressure from the United States and its consistently forceful posture. The 15-year negotiation process was not easy for China who was always in a passive position.

Interestingly, however, from the perspective of long-term development outcomes, WTO accession brought highly positive results for China. In the negotiations, China did everything it could to secure rights and development space for itself. Although it ultimately accepted the relevant rules in full, this also enabled a major breakthrough in opening up and created opportunities for rapid development. Today, the United States has long regretted allowing China to join the WTO. But for China, WTO accession has indeed continued to play a very important role in the country’s development and opening up.

An important experience of China’s reform and opening up is incrementalism. China’s 15-year WTO accession process was, in fact, a practical process of incremental reform and opening up. Because of the requirements for WTO accession, China’s reform and opening up during those 15 years had a complete and clear set of reference indicators. Although WTO rules were also being adjusted, China’s overall direction was to move forward according to an internationally established coordinate system.

China did not achieve the goal overnight. Instead, it spent 15 years gradually moving towards it. This can be seen clearly in the changes to China’s tariff levels. From 1994 to 2001, tariffs were reduced substantially. Before WTO accession, China’s tariff level was around 17 percent. After accession, it fell to 10 percent. This process fully reflected the characteristics of incremental opening up.

What I want to emphasise is that WTO rules formed an institutional system jointly accepted at the time by more than 140 members. This system was highly comprehensive. It covered not only trade rules, but also rules in areas such as trade in services, investment, intellectual property rights, and customs. It was an internationally recognised institutional system for a market economy. Therefore, what WTO accession brought to China was not only opening up, but also reform.

In my view, China’s accession to the WTO was the country’s largest instance of top-down institutional opening up. The WTO’s international rule system was a mature achievement formed through decades of practice by many countries. It provided China with a direct reference model and a clear coordinate system for reform, so that China did not have to explore everything entirely on its own.

From the perspective of opening up, therefore, although the WTO accession negotiations were difficult, they greatly simplified China’s reform process and reduced the costs of reform, especially internal transaction costs and coordination costs. Reform and opening up involved adjustments to different domestic interest structures, and was inherently difficult to advance. Against the background of WTO accession, there was a simple and effective way to resolve the coordination costs of reform: “These are WTO rules, and China must comply with them.”

This provided an important basis for the central leadership and the Ministry of Commerce in advancing related reforms. Since China had already made international commitments, it had to comply with them strictly. There was no room for arbitrary bargaining or compromise. Otherwise, China would be seen as violating international rules. This also confirmed the idea of “promoting reform through opening up”: the external pressure generated by WTO accession played a very positive role in China’s internal reform process.

Looking back, China has not joined another international rule system of such a high standard since its accession to the WTO. It can therefore be said that WTO accession was the only comprehensive construction of a market-economy system in the more than 40 years of China’s reform and opening up that was systematic, top-down, and advanced with reference to international rules. It was an extremely rare opportunity.

This opportunity brought many positive outcomes for China’s development.

First, it locked in China’s path towards marketisation and liberalisation. The WTO has always emphasised that opening up can only move forward and not backward. The constraints of international rules made it impossible for China to change direction at will.

Second, it stabilised the confidence of foreign enterprises and capital in the Chinese market. Before China joined the WTO, foreign investment in China was relatively limited and came mainly from overseas Chinese capital. After WTO accession, large amounts of capital from Western countries flowed into China.

This shows that the external pressure created by WTO accession had a significant driving effect on China’s opening up process.

The New Environment and a New Model of Opening Up: Autonomous and Unilateral

However, the current international situation is completely different. The WTO has fallen into stagnation, even paralysis. This year, I attended the WTO’s 14th Ministerial Conference in Cameroon, and the meeting produced no substantive results. This is enough to show the extent of the WTO’s current dysfunction.

For China, a new task has now emerged. Whether in the 15th Five-Year Plan or in policy documents released in recent years, autonomous opening up and unilateral opening up have been repeatedly emphasised. On the one hand, there are no longer new, unified international rules at the global level. On the other hand, although China has applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the chances of a successful application are extremely low due to political factors. Therefore, at the current stage, China’s opening up needs to rely more on autonomous and unilateral opening up.

This model of opening up demonstrates China’s posture as a major country amid deglobalisation. However, judging from actual performance and outcomes over the past few years, autonomous opening up is not easy, and its overall effects have been limited. The problems are mainly reflected in the following areas.

First, although China has internal motivation to open further, and although the national leadership and government departments at all levels attach great importance to opening up, the objective incentives are weaker than before. There is less external pressure, and internal discipline is not yet strong enough. Field visits to pilot free trade zones discover that the work is energetic and active, but the overall results remain limited.

Second, autonomous opening up lacks a clear reference point. During the WTO accession process, WTO rules gave China a ready-made benchmark. China could engage in imitative innovation, and the path forward was relatively clear. Today’s autonomous opening up is closer to original innovation. China must explore on its own, without a clear external guide. Some international rules still exist, but their global legitimacy and acceptance are much weaker. The CPTPP is a case in point. Although it was initially shaped under U.S. leadership, the United States itself has abandoned it, making its international recognition even more uncertain. Some Chinese regions are experimenting with reforms based on CPTPP rules, but the process remains full of uncertainty.

Third, China is now a major world power, and when a major power opens unilaterally, it risks giving away future bargaining leverage. Recent policy shifts by the Trump administration and the European Union follow a clear logic: by raising their own trade barriers through tariffs and investment restrictions, they regain negotiating leverage and use it to pressure other countries to lower their barriers. If China pushes autonomous opening up too far, it may face a similar problem: in future negotiations, it may have too few concessions left to exchange.

For this reason, the ideal path forward should still be to rebuild international consensus and promote WTO reform. At this year’s 14th WTO Ministerial Conference, all members offered views on WTO reform, but progress remains extremely difficult. One Chinese ambassador to the WTO once described the problem vividly: the WTO’s biggest challenge today is “AI,” meaning America and India. The actions of these two countries continue to disrupt and obstruct the organisation’s operation.

China’s opening up is a strategic choice rooted in its own history and development conditions. Different countries change their attitudes towards openness at different stages of development. The United States, once an extremely open economy, is now moving towards closure. But for China today, the conclusion remains clear: it must continue to advance opening up with firmness and consistency.

Future Pathways for Opening Up

At the current stage, China’s external opening up mainly has two pathways.

First, within the WTO framework, China should actively promote progress in rule-making. For example, China is currently leading efforts within the WTO to advance the Investment Facilitation Agreement. This agreement was first proposed by China and has received broad support. At present, only India opposes it. In addition, China is also an active participant in negotiations on the E-commerce Agreement under the WTO framework, and some participating members have already agreed to implement provisional rules.

This is a very important pathway for opening up: relying on the WTO framework, some members can formulate new rules around specific issues, thereby further improving existing rules. The scale of such progress may not necessarily be very large, but it is real progress nonetheless.

Second, China should rely on regional rules to carry out external cooperation. The Regional Comprehensive Economic Partnership, or RCEP, is a major step forward that China has achieved in trade rules in recent years. However, this agreement still has room for improvement. On the one hand, it needs to expand its membership and include more countries. On the other hand, it needs to raise the standards of its rules. In these respects, China can become a leader.

China has already become the world’s second-largest economy and largest trading nation, while the size of its domestic market continues to expand. Looking ahead, China’s external opening up needs to give greater consideration to the idea of “exchanging opening up for opening up.” Autonomous and unilateral opening up are one feasible pathway. But I believe China should rely more on the advantage of its ultra-large domestic market, use it as bargaining leverage, and secure greater benefits for Chinese enterprises and capital in global markets.

China should also do more to promote the formulation of international rules. For example, since China has already become the world’s second-largest outward investor, it needs to make greater efforts to improve international investment rules. Active exploration is needed, whether in bilateral or regional rules. The WTO Investment Facilitation Agreement mentioned earlier is one example of such practice. Other pathways can also be explored, such as working with a group of relevant countries under the Belt and Road framework to build cooperative rules.

Against the background of the current era, the formulation of international rules is fragmented, and this is unavoidable. Whether rule unification can be achieved in the future remains to be seen. China now already has a certain degree of capability in this area. Although this capability is still not especially strong, the direction of development is clear. Moreover, China’s strength in manufacturing, technology, and other fields is becoming increasingly significant. It is therefore necessary for China to actively exert its own influence and proactively shape the construction of new international rules and trade systems.

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The cable, dated Friday April 24 and sent to diplomatic and consular posts around the world, instructs diplomatic staff to speak to their foreign counterparts about “concerns over adversaries’ extraction and distillation of U.S. A.I. models,” the news agency reported on the same day.

Xiao Qian, deputy director of the Centre of International Security and Strategy (CISS) and vice-dean of the Institute for AI International Governance at Tsinghua University, wrote about the distillation on April 23 in the South China Morning Post. Xiao has kindly agreed to our dissemination of her commentary, a timely intervention.

I first came across her Chinese version at CISS’s blog within WeChat.

US-China AI race must strike a balance between security and openness

Raising barriers to entry in tech in the name of national security could stifle global AI development

The United States House Select Committee on China recently released a report on artificial intelligence. Titled “Buy What It Can, Steal What It Must: China’s Campaign to Acquire Frontier AI Capabilities”, it captures a hardening view in Washington that Beijing’s artificial intelligence rise is closely tied to both market access and security concerns.

Whether fully substantiated or not, such beliefs are increasingly shaping the policy lens through which technology competition between the two countries is understood in the US – less as a matter of innovation, and more as one of national security.

Against this backdrop, recent controversy over model distillation involving leading US firms – including OpenAI, Anthropic and Alphabet – has drawn a great deal of attention. The coordination among these companies, coming soon after Washington’s push to build a “full-stack AI export” system, suggests that what appears to be a technical dispute is in fact part of a broader shift in how AI is governed – and contested – globally.

At first glance, the debate over model distillation concerns technical pathways and intellectual property boundaries. Distillation is a widely used machine learning technique that enables smaller models to approximate the performance of larger ones, reducing computational costs and accelerating adoption. Its legal status remains ambiguous, and even US firms have used similar methods among themselves.

However, in today’s geopolitical environment, the issue has been reframed. Some US policymakers and companies argue that distilled models could be misused for cyber operations, disinformation campaigns or even military applications. What was once a question of optimisation has been elevated to one of national security.

This shift reflects a deeper transformation in AI governance in the US. Over the past few years, Washington has moved from a primary focus on AI safety – including ethical risks and algorithmic harms – towards a more security-driven paradigm centred on strategic competition and technological control. Rhetoric around safety has not disappeared, but it is increasingly fused with national security considerations.

This transformation is also taking place against a changing technological reality. The latest report by the Stanford Institute for Human-Centred Artificial Intelligence provides concrete evidence that the gap between the US and China in AI development is narrowing. The United States still leads in producing frontier large language models, but China remains highly competitive in scale and diffusion – accounting for the largest share of global AI publications and patents, and rapidly expanding real-world deployment. Meanwhile, benchmark gaps between leading US and Chinese models have further compressed in the latest evaluation cycles, particularly in applied and multilingual tasks.

This narrowing gap may help explain the growing sense of urgency – and, in some quarters, anxiety – in Washington. The framing of AI development as a race to be won has become deeply embedded in US policy discourse. As competition intensifies, maintaining technological leadership is no longer seen as sufficient; slowing competitors is becoming an equally important objective.

Institutionally, this shift has reshaped the relationship between the government and industry. Through advisory bodies, export controls and standards-setting initiatives, leading US technology companies are being drawn into a governance framework that aligns closely with national security priorities. The result is a form of embedded coordination: firms remain market actors, but they also function, in part, as instruments of strategic policy.

In this evolving system, firms such as OpenAI, Anthropic and Google are no longer just innovation leaders. They are becoming gatekeepers of frontier AI capabilities. Security is no longer only about managing risks; it is also about defining who gets access to advanced technologies, and under what conditions. In the name of national security, those big tech companies are capable of shaping competitive dynamics, raising barriers to entry for potential rivals.

This shift sits uneasily with the long-standing ethos of democratising technology, which has underpinned much of the digital economy’s expansion. As access becomes more tightly controlled, the diffusion of cutting-edge capabilities risks slowing, potentially limiting broader participation in innovation while also reinforcing asymmetries between those who control core technologies and those who depend on them.

A direct consequence of this shift is the narrowing of strategic options for developing countries. For many in the Global South, access to advanced AI capabilities depends on integration into existing technological ecosystems, often dominated by a handful of firms. Participation in these ecosystems comes with embedded rules and standards. Building independent capabilities, meanwhile, requires significant resources and time. The result is a structural constraint that risks deepening global technological divides.

As for AI global governance, where international discussions once focused primarily on ethics, transparency and safety, they are now increasingly shaped by geopolitical competition. Governance is no longer only about mitigating risks, but also about managing strategic advantage.

Excessive securitisation risks fragmenting the global technology landscape into competing blocs, raising costs for all and slowing innovation. This transformation complicates international cooperation, even as it makes dialogue in critical areas – such as military AI applications and infrastructure security – more urgent.

For China, these developments present both challenges and opportunities. On one hand, tightening external controls are constraining traditional pathways for acquiring advanced technologies. On the other, they are accelerating efforts to strengthen domestic innovation ecosystems.

In the long run, building a comprehensive AI ecosystem – spanning data, computing power, models and applications – will be essential for enhancing technological resilience. At the same time, China has an interest in preserving an open and inclusive international environment for AI development.

China’s policy approach – emphasising both development and risk management – may offer a useful perspective in this context. The challenge is not simply to respond to external constraints, but to contribute to shaping a governance framework that balances security with openness.

Ultimately, the controversy over model distillation is not an isolated incident. It is a reflection of a broader shift in the logic of technological competition, in which security considerations are increasingly embedded into market and innovation strategies.

Thus, the key question for the international community is not only how to govern AI risks, but how to prevent security narratives from becoming tools of exclusion. If standards, regulations and capability controls continue to be used primarily to raise barriers, global AI development may move towards a trajectory of structural fragmentation: leading systems consolidate their advantages by controlling critical capabilities, while others face growing technological and institutional constraints.

The task ahead is not to choose between security and openness, but to find a sustainable balance between the two. How this balance is struck will determine whether AI becomes a shared engine of global progress or another fault line in an increasingly divided technological world. (Enditem)

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Henry Huiyao Wang on How China’s patient diplomacy can help secure peace in Iran

Henry Huiyao Wang, founder and President of the Center for China and Globalization (CCG), wrote on Wednesday, April 22 in his opinion column in the South China Morning Post…

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2 months ago · 24 likes

Yet Dandan Zhang of Peking University argues that the issue is more complicated. For many workers, long hours are simply the price of earning enough. In that context, the more immediate concern is not leisure but income.

That, Zhang suggests, is the central dilemma. China is still at a stage where many households are building up savings and financial security, while firms face intense pressure to upgrade and remain competitive. If the state mandates shorter working hours without protecting workers’ income or providing broader policy support, companies may respond by cutting jobs, outsourcing more work, or replacing labour with machines. Workers could end up with fewer hours, but also less income and less security.

In Zhang’s view, a better approach would be a combination of raising the minimum wage and improving fiscal and tax policies to steer a greater share of social wealth toward workers.

Dandan Zhang is a Professor in Economics and Deputy Dean at the National School of Development (NSD), and Deputy Dean of the Institute of South-South Cooperation and Development, Peking University.

The transcript of the interview was published by Tencent Finance on 5 March 2026. The interview was conducted by 冯彪 (Feng Biao) of the Chinese tech giant's news outlet.

—Yuxuan Jia

张丹丹：零工劳动者工时明显偏长，缩减工时前提是保障工资水平

Dandan Zhang: Gig Workers Put in Too Long Hours, and Any Cut in Working Time Must Be Matched by Protection for Their Pay

Working Hours Are Long Across the Board, and Gig Workers Stand Out Even More

Q1: What is the overall picture of working hours in China today, and what stands out when compared with other countries?

Dandan Zhang: According to 2023 data, average annual working hours in OECD countries are generally below 2,000 hours. Assuming 50 working weeks a year, that comes to no more than 40 hours a week. In some developing countries, however, annual working hours reach 2,300 hours, or about 46 hours per week.

Compared with developed economies, working hours in China are relatively long. Several major household survey datasets, including the Chinese General Social Survey (CGSS), the China Health and Nutrition Survey (CHNS), the Chinese Household Income Project (CHIP), and the China Labour-force Dynamics Survey (CLDS), show that in 2023, non-agricultural workers in China were working more than 50 hours a week on average. That gives a broad picture of overall working hours. Of course, different surveys use different definitions and samples, so there are some variations.

Generally speaking, this kind of household survey covers a relatively low proportion of migrant workers, mobile populations, and gig workers, as many of them live in dormitories or on the urban periphery. Their working hours are also markedly longer than those of local urban workers.

Overall, differences in working hours are mainly shaped by a country’s stage of development, household wealth accumulation, and industrial structure.

Q2: You have spent years tracking migrant populations and gig workers. What do their working hours look like?

Dandan Zhang: Based on my sample survey data, among gig workers, those working in manufacturing plants generally work 10 to 12 hours a day. Even after taking out meal breaks and short rests, their actual working time is still no less than 10 hours, and they work six or seven days a week.

Take food-delivery riders, another segment of gig workers, as an example. My research shows that around 20 per cent of riders, mainly station-managed riders and crowdsourced riders in high-commitment schemes such as “Lepao” and “Youxuan”, complete nearly 80 per cent of all orders. Some of them worked an average of 12.6 days out of 14 days, with average daily working hours of 10.6 hours. Of that, about 6.5 hours were spent delivering orders, while around four hours were spent waiting for the next one.

These riders work at very high intensity and earn relatively higher incomes. In some cities, their monthly earnings can remain steadily above RMB 12,000 [$1,743]. The other 80 per cent are mostly crowdsourced riders. Their work is more sporadic, their income is limited, and their employment is much less stable and continuous. But many of these crowdsourced riders work part-time, so it is harder to calculate their total working hours.

I have also found that the gig sector likewise exhibits a polarisation, where “involution” and “lying flat” coexist. Some people work continuously for months on end, while others switch jobs frequently or work only two days a week. In fieldwork carried out in 2025 in places including Suzhou and Shenzhen, I found that some young workers preferred daily pay. They would work for two days, earn enough to cover a week’s living expenses, and then stop working. They also gave little thought to long-term issues such as social insurance, household registration, or starting a family.

Q3: China moved from a six-day workweek to a five-day workweek in the 1990s, and later introduced statutory holidays. Compared with historical data, what major changes can be seen in working hours?

Dandan Zhang: Broadly speaking, the year 2000 was a turning point. Before 2000, average weekly working hours were in the 40-plus range, still below 50 hours. After 2000, they gradually rose above 50 hours a week, and from 2006 onwards they remained at that relatively high level. One possible explanation is that after China joined the WTO, export orders grew rapidly, which lengthened working hours.

Any Cut in Working Time Must Be Matched by Protection for Workers’ Pay

Q4: At China’s current stage of economic transition, is it necessary and feasible to reduce working hours and increase leave?

Dandan Zhang: Given the current weakness in domestic demand and a low consumption rate, especially in service consumption, and considering workers’ physical and mental health, reducing working hours is certainly necessary.

That said, in terms of practical conditions, I have not studied other sectors, so I cannot make a blanket judgment. But at least for gig workers and food-delivery riders, I think it is very difficult at present to push for shorter hours and more leave.

I have quietly “lurked” in many WeChat groups for delivery riders, and I often see team leaders post messages saying, “There are a few rest slots available tomorrow; anyone willing to take leave can sign up.” Very few riders volunteer. In my fieldwork, the most common demand riders raise is not for more time off. What they want is more orders. The policy they dislike most is compulsory rest.

Some platforms also design their incentives so that riders only get a higher per-order rate once they have worked a certain number of hours. In other words, if they want to earn more, they have to work longer. Otherwise, their income does not go up. So if their earnings are not protected, talk of shorter hours and more leave is simply not very realistic.

Q5: In that case, which do you think is more urgent: raising hourly pay or cutting working hours? What policies would you suggest?

Dandan Zhang: There really is a dilemma here. If we want shorter working hours and more rest time, then workers’ existing income levels must not be allowed to fall.

But if higher wages are borne entirely by businesses or platforms, that raises costs, which could directly reduce employment. And with AI advancing so quickly, it could also accelerate the replacement of people by machines or shrink formal employment and encourage more outsourcing and gig work. If that happens, workers’ social security coverage and leave entitlements may become even harder to guarantee.

At the moment, one measure I can think of is raising the minimum wage, because that is something the government can directly influence. In my field research, I have found that when firms set wage levels, the benchmark they most often refer to is the local minimum wage. This is especially true in manufacturing, where pay for gig workers is highly sensitive to the minimum wage. Around 2010, minimum wages in many places were rising quite quickly, but in recent years the pace of increase has slowed.

At the same time, wage increases cannot fall entirely on firms. They also need fiscal support. At the policy level, there is now greater emphasis on “investing in people”. The recommendations for the 15th Five-Year Plan also state that “Personal incomes should increase in step with economic growth, and remuneration should rise in tandem with labour productivity increases”.

I think that direction is very important. Workers need money before they can have leisure. That also means the distribution of income and the broader flow of wealth in society need to tilt more towards labourers.

Q6: From the perspective of labour laws and regulations, where do you think further refinement is needed?

Dandan Zhang: Compared with the old standard working-time system, today’s gig work is fragmented. This makes overtime harder to define. Existing laws and regulations still lack more detailed standards, which leaves grey areas in enforcement.

I believe one point policy needs to pay particular attention to is this: many measures are introduced with good intentions and are meant to protect workers, but there is always a risk that, in practice, they may end up harming them instead. For example, a policy may be designed to protect workers’ wages and right to rest, but if the end result is unemployment or a further expansion of gig work, that would in fact be detrimental to workers.

Q7: Some firms are now voluntarily reducing working hours or giving workers more flexible schedules. There is also the phenomenon of younger entrants to the workforce—“the post-2000 generation is rectifying the workplace” by refusing to work overtime. How do you see these developments?

Dandan Zhang: I think it still depends on the underlying conditions. Shorter working hours require a certain level of wealth accumulation, whether in the form of a company’s financial strength or a family’s intergenerational wealth. Firms and individuals with those conditions can move first and experiment.

What worries me most is a one-size-fits-all approach. If it were imposed across the board, the negative impact on employment could be significant. Overall, I think China is still at a stage of household wealth accumulation, while also facing intense competition in frontier industries. Under those conditions, cutting working hours will be very challenging in the short term.

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Life as a Migrant Food Delivery Rider in Shanghai

Pekingnology often delved into grand and overarching themes, often navigating the complex terrains of policy and abstract concepts. Today, let’s detour to zoom in on something distinctly more microscopic…

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3 years ago · 22 likes · 3 comments · Xinyi Qu and Zichen Wang

He also argues that resolving overcapacity is not a macroeconomic policy target, that China must preserve the breadth of its industrial system and full-chain independent control, and that stronger expansionary fiscal and monetary policies are needed to reduce external imbalances and stabilise growth.

For readers interested in Yu’s thinking on one of these points in greater depth, we recently published another article explaining his argument that “there is no consumption-driven growth model”.

—Yuxuan Jia

The following article was published on the official WeChat blog of Shanghai Development Research Foundation (SDRF) on 11 April 2026.

余永定：“十五五”期间的中国经济

Yu Yongding: China’s Economy During the “15th Five-Year Plan” Period

On 2 April, 2026, the Shanghai Development Research Foundation held its 200th academic salon. The featured speaker was Yu Yongding, Academician (学部委员) of the Chinese Academy of Social Sciences and the guest at the foundation’s very first salon. In this talk, Yu shared his reflections on the 15th Five-Year Plan and China’s economic trajectory, offering a systematic reading of the plan’s core priorities, clarifying key economic misunderstandings, and advancing a set of pragmatic policy proposals. Drawing on more than two decades of research, he examined the international environment, growth targets, consumption and investment, industrial-chain security, local government debt, and other major issues, providing a clear framework for understanding both the plan and the direction of the Chinese economy.

I. The “15th Five-Year Plan”: Assessments on the International Situation and the Positioning of Growth Targets

(1) Major assessments on the international situation

One of the most notable changes in the 15th Five-Year Plan is that the familiar language of “peace” and “development,” repeated for decades, is absent. That omission reflects the leadership’s grimmer assessment of today’s geopolitical environment. Global conflicts are frequent, geopolitical rivalry is intensifying, and the external environment facing China is more severe than in the first decades of reform and opening up. The drafting of the plan must therefore be highly aligned with the security environment, and the dual focus on development and security has become a core principle.

(2) The reasonable range of economic growth

As for the growth target, the 15th Five-Year Plan does not specify a particular growth rate, but instead proposes doubling per capita GDP by 2035 relative to 2020 and reaching the level of moderately developed countries. Yu Yongding noted that the prevailing academic consensus is that China’s economy needs to maintain an annual growth rate of 4.7% to 5% over the next five years to meet this long-term goal. In his view, the plan should be based on specific “point targets”, arguing that “range targets” complicate the coordination of plans across departments and regions.

(3) The concept of total factor productivity (TFP)

There is a general misunderstanding regarding the concept of total factor productivity (TFP). TFP is the part of output growth that cannot be explained by increases in capital or labour inputs, or the residual left over after the measurable contributions of factor inputs are stripped out. In the early 1980s, reforms such as the household responsibility system in agriculture and enterprise contracting sharply increased output despite limited increases in capital and labour. That unexplained increase was TFP growth.

But the gains from any particular reform are one-off and cannot continue indefinitely. Once these initial gains are exhausted, future output growth will depend primarily on input increases. At that point, the unexplained residual may fall to zero, and TFP growth will also fall to zero. However, that does not necessarily mean a decline in resource allocation or production efficiency. Therefore, TFP should not be treated as a rigid policy target. More practical indicators, such as labour productivity and capital-output efficiency, should be used instead.

II. Consumption and Investment: Breaking the Misconception of a “Consumption-Driven Economy”

Classical growth models and empirical research clearly show that long-term economic growth is driven by capital, labour, and technological progress. Consumption is not an independent variable in the production function, and consumption in the traditional sense is not a driver of growth. From Marx to the Harrod-Domar framework and neoclassical growth theory, the engines of growth have always been investment, labour, and technological advance, not consumption.

Cross-country empirical research also shows that consumption grows only after the economy grows, and consumption grows only after investment grows; the higher the consumption-to-GDP rate, the slower the consumption growth rate tends to be. Major global economies show a weak negative correlation between consumption rates and consumption growth.

Yu emphasised that some Western analysts advocate for China to shift from “investment-driven” to “consumption-driven” growth. However, such a proposition is a strategic trap that China must absolutely not adopt. Consumption (e.g., going to the gym) can serve as a driver of growth only insofar as it improves the supply of effective labour. But in this case, such “consumption” is an investment in human capital and is different from consumption in the usual sense.

III. Correct Understanding of “Vigorously Boosting Consumption”

It is necessary to distinguish between the consumption rate and the level of consumption: the consumption rate is a passive result, while raising the level of consumption is a development objective. In Sub-Saharan African countries, the consumption rate is close to 100%, yet they remain the poorest region in the world. A decline in the consumption rate may result from an increase in investment growth (as seen during China’s 2009 RMB 4 trillion stimulus package) and vice versa.

What China should pursue is a rise in the level of consumption, not an increase in the consumption rate, regardless of actual conditions. The rise or fall of the consumption rate should not be treated as a macroeconomic policy target. Doing so may conflict with the objective of achieving the desired economic growth rate.

At present, China faces insufficient effective demand. Actual GDP growth is lower than potential GDP growth, while consumption growth is lower than actual GDP growth. Under the present circumstances, stimulating consumption is indeed necessary. But the real challenge is not whether to expand consumption, but how to do so. Household consumption is a function of households’ permanent income. If current income and income expectations do not improve, it will be difficult for consumption to rise sustainably.

The key lies in improving household income expectations. Stabilising real estate prices, improving the social security system, refining the tax system, and equalising income distribution are all very important and must be actively advanced. But these tasks basically do not fall within the category of macroeconomic policy, and in the short term, they are unlikely to produce an immediately tangible effect on raising the economic growth rate. Issuing consumption vouchers and subsidising consumers may boost households’ temporary income and certainly can help promote consumption. However, their effect is likely limited and insufficient to reverse the current weakness in consumption.

To break the cycle where “raising growth requires boosting consumption” and “boosting consumption requires increasing growth,” the optimal choice is to increase infrastructure investment and raise its growth rate. In China’s current system, infrastructure investment is a macroeconomic adjustment tool in the government’s toolbox that does not depend on prior increases in household income or household consumption. Increasing infrastructure investment will increase long-term growth potential and address short-term effective demand gaps. Infrastructure investment not only has a significant multiplier effect, but can also generate a “crowding-in” effect that stimulates private investment.

The fundamental problem with distributing money directly or subsidising consumer goods to stimulate consumption is that: if the amount of money distributed is not large enough, the effect will be weak; if a large amount of spending is used to stimulate consumption, it may lead to a rapid rise in inflation. The U.S. experience from 2020 to 2022 offers lessons that should be learned.

The 15th Five-Year Plan mentions infrastructure 19 times, clearly laying out a comprehensive plan for national transportation networks, energy infrastructure, modern water networks, integrated computing power networks, and underground pipeline renovation. Underground pipeline renovation alone amounts to 700,000 kilometres, implying a massive investment opportunity. The 15th Five-Year Plan itself refutes the notion of “overcapacity in China’s infrastructure”.

Yu also pointed out that due to the public, long-term, and foundational nature of infrastructure, short-term profitability should not be overly emphasised with regard to infrastructure. Waste in some local infrastructure projects is indeed serious and must be corrected, but one should not overreact and abandon infrastructure investment altogether.

IV. The Problem of “Overcapacity”

China does indeed face overcapacity at both the industry and firm levels. In the main, overcapacity should be addressed through market mechanisms. If a particular industry or firm has excessive capacity and produces beyond demand, product prices will fall, and corporate profits will shrink. Firms in the affected sector will then close, merge, or restructure, reducing capacity. This adjustment process will continue until supply and demand return to equilibrium and prices stop falling. Industrial policy, such as environmental policy, can also play a role in resolving overcapacity. The persistence of overcapacity is related to deeper causes in the institutional arrangement and also to insufficient effective demand.

“Resolving overcapacity” is not a macroeconomic policy target. At the macroeconomic level, there are only two possible forms of imbalance:

• Aggregate demand exceeds aggregate supply (inflation, economic overheating)

• Aggregate demand falls short of aggregate supply (deflation, economic underheating)

Macroeconomic targets are growth, employment, price stability (2%), etc. There is no separate macroeconomic target of “eliminating overcapacity”, nor does the macro policy toolkit contain instruments specifically designed for that purpose. The fact that the “15th Five-Year Plan” does not mention “overcapacity” is worth reflection.

V. “Building a Modern Industrial System”

Given China’s special geopolitical position, its industrial system must have two features.

(1) Complete sectoral coverage, particularly in key sectors such as food, energy, steel, and information.

China has the world’s most complete industrial system. It is the only country that covers all industrial divisions, groups, and classes under the United Nations’ International Standard Industrial Classification, spanning 41 industrial divisions, 207 groups, and 666 classes. This does not, of course, mean that China must retain every section, division, group, and class.

(2) Complete industrial chains, especially for key products such as the production of central processing units (CPUs).

What households ultimately consume are final goods, but those goods are produced through long and multi-stage processes. Globalisation has fragmented the production of final goods, with different stages distributed across countries according to comparative advantage. Global industrial chains improve efficiency, but they also increase risk.

China should continue to participate actively in the international division of labour, leverage its comparative advantages, and improve resource allocation through trade and two-way investment. However, given China’s special geopolitical position, dependence on foreign sources in key sectors must be reduced as much as possible. For example, China’s external dependence on oil stands at 72%–78%, while that for natural gas exceeds 40%, underscoring the need to accelerate energy security building. In many critical products, including CPUs, operating systems, and industrial software, China must achieve full-chain independent control.

VI. Internal-External Balance and Risk Resolution

China has recorded trade surpluses of more than US$1 trillion for two consecutive years. At present, its current account surplus has risen to 3.7% of GDP (this figure still requires further verification). Dependence on external demand is relatively high, which could easily trigger trade frictions.

China should expand domestic demand, increase the fiscal deficit, and stimulate domestic investment and consumption; optimise export rebate policy to avoid excessive subsidy to overseas markets; and promote industrial relocation to central and western China rather than relying on one-way overseas relocation of capacity. In short, China should implement the central leadership’s strategy of “dual circulation, with domestic circulation as the mainstay.”

Current account surplus = (private savings – private investment) – fiscal deficit + investment income

This identity shows that China’s current account surplus exists because the gap between savings and investment is too large. The ways to balance the current account are:

1. increase consumption,

2. increase investment,

3. increase the fiscal deficit.

Put simply, a stronger expansionary macroeconomic policy would help rebalance China’s external trade. At the same time, export incentive mechanisms such as export tax rebates should also be reformed.

VII. Core Conclusions and Outlook

The 15th Five-Year Plan is firmly centred on both development and security. Its design is sound, and its direction is correct. China should continue to treat investment as the foundation and infrastructure as the stabiliser, reject the misconception of consumption-led growth, uphold manufacturing as the basis of national strength, and maintain full-chain independent control to safeguard national economic security. It should also straighten out the division of fiscal powers and administrative responsibilities between the central and local governments, defuse local government debt risks, seize the current policy window, and boldly implement expansionary fiscal and monetary policies. Provided policies are implemented effectively, and reform and opening up are upheld, China’s long-term growth potential will remain ample, short-term growth stabilisation targets can be successfully achieved, and China can steadily move toward the level of moderately developed countries.

At present, expansionary policy should be used boldly to finance infrastructure investment. Since the RMB 4 trillion stimulus, the contribution of the central government’s general public budget to infrastructure financing has been too low. China remains under deflationary pressure, while its fiscal position is relatively sound, its savings rate is high, and its stock of state-owned assets and net foreign assets is substantial. This means there is ample room for expansionary fiscal and monetary policy. There is no need to place excessive emphasis on “reserving policy space”. Instead, China should seize the current window to step up policy support, rather than risk losing room for manoeuvre once external shocks, such as rising oil prices or stagflation, begin to materialise. Under the leadership of the Party Central Committee and the State Council, China will certainly be able to maintain stable economic growth and successfully realise the second centenary goal of national rejuvenation.

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Hosted by the Center for China and Globalization (CCG), the Forum has, over the past eleven editions, become an important platform for international dialogue on global governance, major-power relations, regional developments, and cross-border cooperation. The 2026 Forum, under the theme “Innovating Globalization: New Drivers and Emerging Challenges”, will continue this tradition by providing a space for substantive exchange on some of the most pressing issues in international affairs today.

Event at a Glance

12th China and Globalization Forum

Host:​ Center for China and Globalization (CCG)

Co-organizers:​ China Association of International Trade

China Society for World Trade Organization Studies

China-US Exchange Foundation

Tsinghua University Schwarzman College

Date:​ April 26, 2026, 9:00 – 21:00

Venue:​ Beijing (Detailed venue information will be provided upon confirmation of registration.)

Participants

The Forum will bring together dozens of Chinese and international participants from government, diplomacy, academia, business, and international organisations.

Confirmed and invited guests include former senior officials from the United Nations and national governments, ambassadors and diplomats based in China, leading scholars from major universities and think tanks, and senior representatives from multinational institutions and enterprises.

Discussions throughout the day will draw on perspectives from public policy, international economics, diplomacy, business, and regional studies, with the aim of fostering informed and forward-looking dialogue across sectors and borders.

Core Themes and Agenda

The Forum is structured around a series of roundtable discussions addressing key issues in global governance and international cooperation.

Opening Roundtable:​

The Global Governance Order: Challenges and the Path Forward

Special Session on China-U.S. Relations:​

Navigating Dialogue and Cooperation in Technology, Trade, and Climate

China-U.S. Youth Dialogue:​

Fostering Exchange and Building the Foundation for Future Relations

China-Europe Relations Forum:​

European Strategic Trajectories and Prospects for China-Europe Engagement

Global South Dialogue:​

Development Cooperation, Regional Connectivity, and Emerging Opportunities

Closed-door Session:

The Prospect for Peace in the Russia-Ukraine War and Implications for China-Europe Relations（Invitation Only）

Gala Dinner Dialogue:​

In-Depth Perspectives on the Middle East Situation and Regional Security

All sessions are designed to prioritize interaction, featuring substantial Q&A segments and opportunities for direct, face-to-face dialogue.

Why Attend

The Forum offers participants a full day of access to high-level discussion on international affairs, global governance, major-power relations, and regional developments.

Participants can expect:

• Access to the opening session, keynote speeches, thematic roundtables, and gala dinner

• Direct engagement with policymakers, diplomats, scholars, and senior practitioners

• Opportunities for discussion during dedicated Q&A sessions and throughout the day’s programme

• A professional platform for exchange with participants working across diplomacy, academia, business, and public policy

• Forum materials, including keynote summaries, selected CCG research outputs, and related publications

• Chinese-English simultaneous interpretation throughout the event

• On-site support, refreshments, lunch, and gala dinner arrangements for confirmed participants

• Participants in this year’s Forum will also receive advance information on selected future CCG dialogues, seminars, and policy events.

Who Should Attend

• Diplomats from foreign embassies in China and representatives of international organisations

• Senior executives at multinational companies and Chinese enterprises with an international outlook

• Scholars, researchers, and think-tank professionals working on international affairs and public policy

• Professionals engaged in international cooperation, global investment, and cross-border exchange

Registration Notes

As seats are limited, registration is subject to review by the organising committee and places will be confirmed on a rolling basis.

Applicants will be asked to provide relevant personal and/or institutional information as part of the registration process. A conference fee will apply to confirmed participants. Detailed participation information, including the final agenda, venue address, and logistical guidance, will be shared upon confirmation.

Registration and Contact

For registration, please click the link below or scan the QR code.

For further enquiries, please contact:

Email: event@ccg.org.cn

Tel: 010-65611038

Appendix: List of Guests(in alphabetic order)

Thomas Biersteker: Emeritus Professor, Graduate Institute of International and Development Studies Geneva; Senior Fellow, United Nations University Centre for Policy Research (confirmed)

Chen Jian: Former Vice Minister of Commerce (to be confirmed)

George Chen: Partner and Co-Head of Digital Business, Asia Group (confirmed)

James Chau: President of the China-United States Exchange Foundation (confirmed)

Renata Dwan: Director of Technology Diplomacy, Simon Institute for Longterm Governance (confirmed)

Vebjørn Dysvik: Ambassador of Norway to China (confirmed)

Jens Eskelund: President of the European Union Chamber of Commerce in China (confirmed)

Victor Gao: Vice President of the Center for China and Globalization (CCG) (confirmed)

Gou Haodong: Former Deputy Representative of China to the African Union (to be confirmed)

Guo Shize: Founder and President of Yingzhong Overseas Consulting (to be confirmed)

Han Bing: Former Deputy Director General of the Department of European Affairs, Ministry of Commerce (confirmed)

Huang Dizhong: Vice President of the China-United States Exchange Foundation (confirmed)

Huang Xuifu: Founder of X Art Museum (to be confirmed)

Hou Shoushan: Chairman of Shenzhen Hanqingda Technology Co., Ltd. (to be confirmed)

Jiang Shan: Former Director General of the Department of American and Oceanian Affairs, Ministry of Commerce (to be confirmed)

Jiang Xipei: Founder and Chairman of Far East Holding Group Co., Ltd. (to be confirmed)

Jiang Yaoping: Former Vice Minister of Commerce (confirmed)

Jin Xu: President of the China Association of International Trade; Former Minister-Counselor for Commercial Affairs, Embassy of the People’s Republic of China in the United Kingdom (confirmed)

Jiang Zhongyuan: Founder of Kangfubao Group (to be confirmed)

William C. Kirby: Harvard University Distinguished Service Professor China Studies (confirmed)

Li Hua: Chief Legal Counsel of Contemporary Amperex Technology Co., Ltd. (to be confirmed)

Lan Lijun: Former Ambassador of China to Canada, Indonesia, and Sweden (to be confirmed)

Li Zhongzi: Chairman of Lisi Holdings and Founder of Lisi G9 International Manor (to be confirmed)

Gordon G. Liu, BOYA Distinguished Professor of Economics, Dean of the Institute for Global Health and Development, Peking University (to be confirmed)

Daniel Levy: President of the U.S./Middle East Project (confirmed)

Roberta Lipson: Honorary Chair of the American Chamber of Commerce in China; Founder of United Family Healthcare (confirmed)

Ma Enduo: Chairman and General Manager of Jinduoduo Food Group (to be confirmed)

Paolo Magri: President of the Italian Institute for International Political Studies (ISPI) (confirmed)

Kishore Mahbubani: Distinguished Fellow, Asia Research Institute, National University of Singapore; Former President of the United Nations Security Council (confirmed)

Ma Jianchun: President of China Society for World Trade Organization Studies; Former Ambassador of China to the Gambia (confirmed)

Ma She: Former Deputy Director General of the Department of European Affairs, Ministry of Commerce; Former Minister Counselor of the Embassy of China in France (confirmed)

David Meale: Head of China Practice, Eurasia Group; Former Deputy Chief of Mission, U.S. Embassy in China (confirmed)

Dario Mihelin: Ambassador of Croatia to China (confirmed)

Miao Lü: Co-Founder and Secretary-General of the Center for China and Globalization (CCG) (confirmed)

Min Hao: President, Dongwu Shian (confirmed)

Mohamed Amersi: Founder and Chairman of the Amersi Foundation (confirmed)

Chandran Nair: Founder and Chief Executive Officer of the Global Institute for Tomorrow (confirmed)

Steve Orlins: President of the National Committee on U.S.-China Relations (confirmed)

Sun Jie: Former Director of the Fund Department of the China Securities Regulatory Commission, former President of the China Securities Investment Fund Industry Association (to be confirmed)

Sun Yongfu: Former Director of the European Department of the Ministry of Commerce (to be confirmed)

Pan Qingzhong: Executive Dean and Professor, Schwarzman College, Tsinghua University (confirmed)

Peng Gang: Minister of the Mission of the People’s Republic of China to the European Union (confirmed)

Philip Pilkington: Senior Research Fellow, Institute of Foreign Affairs and Trade, Hungary (confirmed)

Vesselin Popovski: Professor and Dean, Jindal Global University, India (confirmed)

Qian Jing: Vice President, Asia Society (confirmed)

Susan Shirk: Professor, University of California, San Diego; Former Assistant Secretary of State for East Asian and Pacific Affairs, U.S. Department of State (confirmed)

Tang Haoxuan: Chairman of Feida International (to be confirmed)

Tang Min, Executive Vice Chairman of the YouChange China Social Entrepreneur Foundation, Vice Chairman of CCG, and former Counsellor of the China State Council (to be confirmed)

Tian Deyou: Former Economic and Commercial Counselor, Embassy of the People’s Republic of China in the United States (to be confirmed)

Achilles Tsaltas: President of the Athens Democracy & Culture Foundation (confirmed)

Selçuk Ünal: Ambassador of Turkey to China (confirmed)

Wang Huiyao: Founder and President of the Center for China and Globalization (CCG); Former Counselor of the State Council (confirmed)

Wang Mengyan: President, China, PMI (Philip Morris International) (confirmed)

Wang Qingyuan: Former Minister-Counselor for Economic and Commercial Affairs at the Chinese Embassies in Brazil, Argentina and Mexico (confirmed)

Wang Yiwei: Professor, School of International Studies; Director of the Institute of International Affairs, Renmin University of China (confirmed)

Wu Yanyan: Vice President, BMW Group (confirmed)

Xue Lan: Counselor of the State Council; Dean of Schwarzman College, Tsinghua University (confirmed)

Tan Sri Michael Yeoh: Chairman of KSI Strategic Institute for Asia Pacific (confirmed)

Tian Deyou: Former Economic and Commercial Counselor, Embassy of the People’s Republic of China in the United States (to be confirmed)

Zhang Jingan: Former President of the Science and Technology Daily, President of the China Association for Science and Technology Reform (to be confirmed)

Zhou Yanli: Former Vice Chairman of the China Insurance Regulatory Commission (to be confirmed)

Zhu Hailuan: Vice President of Sanofi China (to be confirmed)

Zhu Hong: Former Commercial Minister, Embassy of the People’s Republic of China in the United States (confirmed)