China Policy

Forty technologies. A new check on the know-how leaving the PRC. Beijing's 16 October proposal targets 23 AI, five biomedical and 12 solar technologies. Pre-export registration is already in force, covering technology transfers, licensing and changes in ownership or control. We had been tracking this shift for months. Zhang Yansheng 张燕生 flagged biopharma and new energy as potential fronts in US-led tech decoupling. Our 3 June commentary cited lawyers who expected Beijing to focus on AI, new energy vehicles, rare earths and biopharma to prevent key technologies and production lines moving offshore. The earlier rules cover outbound investment; the latest proposal covers tech exports. Together they bring capital, technology and know-how leaving the PRC under closer scrutiny. link to our commentaries: https://buff.ly/C2LkaQU, https://buff.ly/6j6XI0w source: https://buff.ly/1PNsQNG

Why is Beijing putting ‘offshore finance’ at the heart of its RMB and ‘financial great power’ push? I think the graph we created below explains it well. The strategy comes down to building a two-way capital recycling loop—a loose parallel to the US ‘dollar-recycling' setup. Beijing’s own twist here is to do this inside a ringfenced zone in Shanghai, so the capital account stays under close control. It matters more now because China appears to be leaning increasingly on pairing current account surplus (net exports) with a financial account deficit (outward investment). That model needs channels for offshore RMB liquidity to flow back into investable assets inside the PRC, before being deployed abroad again. The initiative is still early-stage, and the targets are cautious. Nevertheless, it points to several things worth watching: - RMB internationalisation is increasingly advanced by improving the plumbing, not by broad-based convertibility - a new transmission channel in Shanghai could see the offshore RMB managed more directly than before -more offshore RMB assets may emerge, but their appeal still depends on market confidence and conditions Some commentary asks whether Shanghai will take over Hong Kong’s business. But the bigger geoeconomic takeaway here may be that Beijing is now hedging its bets: one hub, it seems, is not enough. Read our full article here - https://buff.ly/IQLZM9i #China #RMB #YuanInternationalisation #CapitalAccount #RMBinternationalisation #ChineseEconomy #GlobalFinance #Geopolitics #CapitalFlows #MacroEconomics #USChina #Dedollarisation #ForeignExchange #EconomicPolicy #Beijing #InternationalFinance #Finance #EmergingMarkets #PolicyAnalysis #ChinaPolicy #HongKong #Shanghai

Wide income gaps hold back household spending. Making income distribution more equal has become an economic imperative, argues Jiang Xiaojuan 江小涓. Her latest essay makes the case for ‘inclusive reform’: stronger social protection, equal access to urban public services and broader sharing of the returns from technology. She also examines where existing policies pull against these goals, including local tax breaks for high earners and support that keeps less efficient firms in business. A veteran trade economist and former State Council deputy secretary-general, Jiang brings long experience across policymaking and academia. She is a voice we track closely for her considered treatment of difficult economic choices. This essay connects common prosperity with some of the hardest questions facing the next stage of reform. Read our context note and summary: https://buff.ly/JbRxXDT original article: https://buff.ly/zptAcOD #JiangXiaojuan #PRCEconomy #EconomicReform #CommonProsperity #IncomeDistribution #Consumption

Land can stay on the farmland register while poor soil, weak irrigation and ageing drains cut its yield. The PRC’s new farmland law puts quality and upkeep alongside land-loss controls. That creates demand for irrigation equipment, soil improvement, farm machinery and services to design, check and care for projects. It also raises the bar for spending: roads and waterworks must meet farmers’ needs and remain useful after construction. Farmland upgrades can create jobs and add to GDP before their gains for farming are clear. Our analysis, ‘putting farmland quality into law’, asks whether stricter rules, funding and checks can turn protected acreage into lasting farm output. link to brief: https://buff.ly/oKMgBoo #China #Agriculture #FoodSecurity #Farmland #RuralDevelopment

Studying abroad is no longer a ticket to a high paying job and a hukou in Shanghai. 'Haigui privilege’ is declining and the domestic job market is tougher than ever for recent grads, all while the percentage of PRC nationals who search for employment at home after getting degrees abroad has risen substantially.

Days after EU–China talks on hybrid vehicle trade and EV prices, Beijing cut in NEV export VAT rebates from 13 to 9 percent, effective 1 April 2027. NEV exports topped 4 million in January–September 2026, up 130 percent y-o-y. Our August brief on Beijing’s trade surplus identified export tax rebates as the leading candidate for adjustment, with PRC economists favouring cuts in fast-growing sectors marked by overcapacity and fierce price competition. The NEV rebate cut now puts that approach into practice. Export rebates are also a domestic industrial policy lever. By making low-price exports less profitable, Beijing can influence its own manufacturers. August guidance had already called on carmakers to base overseas prices on costs and market demand, avoiding frequent, sharp price swings. Cui Dongshu 崔东树 China Passenger Car Association, expects the greatest pressure on low-margin models and sees the change as a way to ease trade friction. The cut follows similar moves on solar products and batteries. Carmakers are also expanding overseas production, with Leapmotor starting B10 production in Spain. Technology, brands and local operations will count for more as rebate support shrinks. link: https://buff.ly/NxYpldB

The PRC trade surplus continues to fuel claims of undervaluation. In an 8 October statement, the PBC rejected that link, arguing that exchange rates reflect capital flows and market expectations as well as trade. The PBOC says it sets no exchange rate target and has stopped routine intervention since 2017, stepping in mainly to prevent sharp short-term swings. With around 30 percent of trade settled in RMB and firms hedging roughly 30 percent of their foreign exchange exposure, exporters are also less exposed to currency moves. Lu Feng 卢锋 Peking University National Development Institute argues that the RMB’s weak real exchange rate reflects several factors, including high Western inflation and weak PRC consumption. Forced appreciation could deepen weak demand and deflationary pressure without correcting global imbalances. He instead advocates reviving domestic demand to match strong supply, as envisaged in the 15th 5-year plan, allowing the real exchange rate to rise gradually over time. source: https://buff.ly/drl0GPR #RMB #ExchangeRate #PBC #MonetaryPolicy #ChinaEconomy #CurrencyValuation #GlobalTrade #TradeImbalances #DomesticDemand #15thFiveYearPlan

An overseas degree once brought PRC graduates who had studied abroad a salary premium, easier social security benefits and state subsidies. Those advantages have narrowed sharply. A 2026 audit study of 4,500 fictitious résumés found that applicants with a mid-ranked US master’s degree were 16.2 percent less likely to receive a callback than those with a domestic equivalent. Beijing is narrowing preferential treatment for haigui (海归, graduates returning from overseas study) to graduates from elite universities and those with skills in priority fields. Shanghai offers immediate hukou to graduates of the world’s top 50 universities, while Beijing’s 2026 Youpei plan requires returnees to hold both a top-100 overseas master’s and a degree from a leading domestic university. Most returnees now compete on equal footing with domestic graduates. Our latest brief examines how the returnee premium has faded as domestic universities catch up and more students come home. Miao Lu 苗绿 Centre for China and Globalisation argues that returnees should be steered towards sectors where overseas training remains scarce. He Haoran 何浩然 Beijing Normal University, whose team conducted the audit, sees an information gap: employers struggle to judge unfamiliar qualifications and fear returnees will not stay. Full brief: https://buff.ly/TYcuWEQ #RMB #ExchangeRate #PBC #MonetaryPolicy #ChinaEconomy #CurrencyPolicy #TradeImbalances #GlobalTrade #15thFiveYearPlan

New quality productive forces (NQPF) has been Beijing’s shorthand for growth beyond property and infrastructure since 2023. It had no dedicated policy document until 9 October, when Beijng issued the document with one core benchmark: a substantial rise in total factor productivity. The document widen the scope and tightens the standards at the same time. ‘AI+’ features prominently, from AI retrofits of traditional industry to connected vehicles and humanoid robots. Mining, metallurgy, chemicals, textiles and machinery are written in through digital and green upgrading. Counting traditional industry as fertile ground for NQPF breaks with the view that only frontier sectors qualify, says Su Jian 苏剑 Peking University’s School of Economics. NDRC officials stress that NQPF cannot be equated with particular industries, and domestic commentators expect the document to stop ordinary upgrading from being relabelled as NQPF. The tighter definition is aimed at local spending. NDRC rules against homogeneous, duplicate construction, and the document promises accountability for blind investment that causes major losses. The question is whether that makes local governments more selective about where capital goes. Regions strong in emerging industries should concentrate on frontier clusters, while those dominated by traditional sectors upgrade existing capacity, according to Wei Qijia 魏琪嘉 State Information Centre. The test is whether these rules change how local officials choose projects. source: buff.ly/u0U9ILO

With investment shrinking and local governments short of money, more of the cost of propping up growth fell on Beijing. It put capital into infrastructure projects, shored up state banks and began subsidising mortgages. Also in this issue: a cost rulebook to police price wars, a trade surplus heading for US$1tn for a second year, the Xi–Trump summit in Washington, and Party governance at the top of the October plenum agenda. link: https://buff.ly/u6SVX4Y