You can find a full English translation of the draft rules in this excellent piece by Inside China.

Inside China

China’s MOFCOM Wants Trade-Secret Theft to Come at a Price

On October 26, 2026, China’s Ministry of Commerce released the Special Provisions on Protecting China’s Trade Secrets (Draft for Public Comment). The proposal is still under public consultation, and usually, there will be some changes in the latest version…

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7 hours ago · 3 likes · Fred Gao

Trade secrets are a legal concept, but the basic idea is quite simple. They are commercially valuable pieces of information that a company keeps confidential and takes steps to protect. For an AI company, that could mean its core algorithms or model training techniques. For a battery manufacturer, it might be production processes and technical parameters developed over many years. Customer lists, business data, and other commercially sensitive information can also qualify.

In the past, when these trade secrets were stolen or used without permission by foreign companies, Chinese businesses generally had to rely on litigation and other legal remedies to protect their rights. In 2025, Beijing-based semiconductor equipment manufacturer E-Town Semiconductor Technology (屹唐股份) filed a lawsuit against US semiconductor equipment giant Applied Materials in the Beijing Intellectual Property Court, alleging that the US company had improperly obtained core trade secrets relating to plasma sources and wafer surface treatment technologies by recruiting former employees of its US subsidiary. Another case involved Beijing-based server manufacturer Xinyun Dongfang (新云东方), which lost a lawsuit against IBM in a US court in 2021. But cross-border trade secret disputes have a very practical problem: once technology has been taken overseas, it can be copied and put to use very quickly. Even if the original owner eventually wins a lawsuit, that does not necessarily mean it can get the technology back, or prevent the other party from continuing to use it.

This is the problem the new draft, prepared and released by MOFCOM’s Department of Treaty and Law, is trying to address. It would add a new set of government-level tools to China’s existing legal framework for protecting trade secrets.

The proposed rules are not intended to cover every trade secret dispute involving a foreign company. Under Article 2, two conditions must be met: first, a foreign company, organization, or individual must have engaged in conduct that infringes Chinese trade secrets; second, that conduct must have harmed China’s sovereignty, security, or development interests, or posed a real threat to those interests.

The words “real threat” are particularly interesting. My reading is that if a risk is sufficiently concrete and imminent, the Chinese government may not necessarily have to wait until the damage has fully materialized before taking action.

So what could China actually do?

The measures proposed by MOFCOM are quite substantial. China could restrict a foreign company’s trade in goods, technologies, and services with China, prohibit exports of certain items to that company, restrict its new investments in China, or impose restrictions on the entry, employment, and residence of individuals involved. Fines could also be imposed in accordance with the law.

Taken together, these measures could effectively shut a foreign company or individual out of significant parts of the Chinese market.

In my view, the proposal is essentially designed to change the cost-benefit calculation for foreign companies. In the past, a company might have calculated that obtaining valuable technology from a Chinese competitor was worth the risk, even if it eventually faced a lawsuit and had to pay damages. But if the consequences could also include losing access to the Chinese market and disrupting its entire business operations in China, that would be a very different calculation.

Consider, for example, the recent Meta–Manus transaction. The transaction was ultimately rolled back, and the equity ownership was restored. But what about the technology, knowledge, and experience that may have been transferred during the process? Could all of that really be returned in its original form? I doubt it is quite so simple. Regulatory intervention may be able to reverse an overseas acquisition that risks transferring commercially sensitive Chinese technology, but reversing the transaction does not necessarily reverse the spread of knowledge that may already have occurred.

Under the proposed special provisions, if a foreign acquirer were found to have infringed Chinese trade secrets during such a transaction, and the conduct met the national-interest threshold, the consequences might extend beyond the party transferring the technology. The foreign acquirer itself could potentially face Chinese trade and investment restrictions. In other words, a foreign buyer might have to ask itself a difficult question: Is this acquisition really worth pursuing if it could mean being shut out of the Chinese market altogether?

As for the procedure, MOFCOM could initiate an investigation on its own, while companies and individuals could also report suspected violations. Foreign companies under investigation would have the opportunity to present their arguments and defend themselves, but they would also be expected to cooperate and provide relevant information. If they refused to cooperate, MOFCOM could make a decision based on the facts and evidence already available.

Importantly, the proposed system is not simply about punishment. A foreign company that stops the infringement, eliminates the relevant risks, or compensates for the damage could apply to have the restrictions adjusted or removed. Chinese companies that genuinely need to continue doing business with a restricted foreign entity could also apply for special exemptions.

There are, however, several questions that will need to be clarified before the rules can work effectively. For example, how serious must a risk be to constitute a real threat to China’s development interests? How exactly should “Chinese trade secrets” be defined? What happens when the trade secrets belong to an overseas subsidiary of a Chinese company? How would fines be calculated, and how would these procedures interact with existing investigations and legal remedies? Perhaps most importantly, where should regulators draw the line between legitimate technology licensing, employee mobility, commercial due diligence, and actual trade secret infringement? The clearer these boundaries are, the easier it will be for companies to structure legitimate international cooperation.

There is another question I find particularly interesting: What kind of situations are these rules really intended to address?

I can see two broad scenarios. The first is relatively familiar: a foreign company or organization steals trade secrets from a Chinese company operating inside China. The second is more complicated. A Chinese company expands overseas, invests in a foreign business, enters into a partnership, or becomes the target of an acquisition. During that process, it faces pressure from foreign organizations to disclose technology, data, or commercially sensitive information.

Based on the wording of the draft, both scenarios could potentially fall within its scope. But looking at recent policy developments, I personally think the second scenario may become increasingly important. Chinese companies are now conducting research, investing, and operating around the world. Their core technologies are no longer necessarily concentrated inside China. Valuable technical knowledge may be distributed across overseas subsidiaries, research centers, and commercial partners. At the same time, some foreign governments have openly argued that Chinese companies should do more than simply build factories and create jobs locally. They also want those companies to share technology with local industries.

And the new proposal does not appear in a legal vacuum. Article 40 of China’s revised Foreign Trade Law, which took effect in March this year, already provides a basis for trade restrictions against foreign individuals and organizations in circumstances involving harm to China’s sovereignty, security, or development interests. The revised Anti-Unfair Competition Law, adopted in 2025, also provides for action against unfair competition conducted overseas when it disrupts competition within China or harms the interests of domestic businesses or consumers. So China already has legal grounds for responding to certain forms of misconduct originating outside its borders. What the proposed special provisions would do is make the response more specific: in qualifying trade secret cases, China could use trade and economic regulatory measures, not just traditional civil litigation, to protect its interests.

The timing is also worth noting. On October 19, the United States imposed sanctions under the Protecting American Intellectual Property Act against five Chinese companies, including MiraclePlus and its affiliated entities, as well as Shanghai Zhisu, over alleged trade secret theft. The measures included property-blocking restrictions. On October 20, MOFCOM publicly criticized what it described as the US misuse of sanctions on the grounds of trade secret theft and said China would take necessary measures in response as appropriate. I would not necessarily draw a direct causal connection between those US sanctions and the release of China’s draft rules. But the two developments illustrate a broader trend: both China and the United States are increasingly strengthening the protection of their own trade secrets and the technological advantages built upon them, against the backdrop of intense geopolitical and technological competition.

The proposed trade secret rules also remind me of another important development in China’s regulation of overseas investment.

In July this year, China’s new State Council Regulations on Overseas Investment came into force. Article 13 makes clear that companies cannot circumvent technology export restrictions by transferring prohibited technologies through activities such as sending technical personnel overseas, providing cross-border technical guidance, or conducting training. Restricted technologies cannot be transferred without the necessary authorization. Article 14 further requires companies whose overseas investments involve technology exports to comply separately with the relevant technology export rules. But what happens after the technology has already gone overseas? Article 15 addresses this issue by requiring security reviews, where applicable, for transfers or disposals of overseas investments and related assets or interests that affect or may affect national security.

On October 22, the National Development and Reform Commission (NDRC) released its revised Measures for the Administration of Overseas Investment, which will take effect on December 1. These measures provide more detailed implementation rules for the State Council regulations. One provision is particularly relevant to trade secret protection. Under Article 53, if a foreign party demands access to technology or data, or requires the transfer or disposal of assets or interests during the life of an overseas investment, and those demands threaten or harm China’s national interests or national security, the Chinese investor must immediately submit a report on the major adverse circumstances.

This addresses a very specific problem. A Chinese company operating overseas may face pressure to “hand over the technology,” “provide the data,” or “sell the assets.” The NDRC explicitly acknowledged this concern in its official explanation, noting that a small number of countries had demanded technology, data, or the disposal of equity and assets from Chinese companies in ways that harmed Chinese interests. The revised rules are intended to strengthen reporting and protection mechanisms in such situations.

This is where the proposed trade secret provisions could become particularly relevant. The overseas investment rules would help bring potential risks to the attention of Chinese regulators. If the conduct of a foreign party also constituted trade secret infringement and met the national-interest threshold under the proposed special provisions, the latter could provide an additional enforcement option once formally adopted. The two systems would have different legal requirements, but they could potentially complement each other.

There is another recent development worth mentioning. China’s securities regulator has also stepped up its scrutiny of technology export compliance in overseas listings. In its filing reviews, the China Securities Regulatory Commission asked 28 companies seeking overseas listings whether they had complied with China’s technology export restrictions and dual-use export controls. More than half of these companies were in the semiconductor sector or related supply chains.

Taken together, these developments point to a broader shift in China’s approach to technology protection. The government is increasingly concerned not only with how technology leaves China, but also who controls it after it goes overseas, and what happens if foreign parties obtain it improperly. The technology export control system, overseas investment rules, and proposed trade secret protection measures each have their own scope and legal thresholds. But all three address different aspects of the same challenge: protecting technology-related rights and interests as Chinese companies expand internationally.

I think these policy changes reflect two things: the increasingly complicated geopolitical environment China faces, and a historic change in China’s technological capabilities and position in global competition.

There is a fascinating story in Reform and Opening Up Brings a Rainbow (《改革开放腾彩虹》), a book by Wu Zukai, a member of the Chinese Academy of Engineering. In 1977, China was preparing to import color picture tube manufacturing technology from Japan to build what would later become the Rainbow Group in Xianyang, Shaanxi Province. At the time, China had already developed the ability to produce experimental color picture tubes, but there was a persistent problem: the brightness of domestically produced phosphor materials was consistently inferior to that of Japanese products, and Chinese engineers simply could not figure out why.

When Wu traveled to Japan for a technical visit, he brought three small bottles containing Chinese raw material samples, hoping his Japanese counterparts could help analyze them. Before leaving, someone warned him that taking those samples overseas might amount to leaking state secrets. He could even be accused of colluding with foreigners. But Wu went ahead anyway. The Japanese testing eventually helped identify the problem with the Chinese materials. After returning home, Wu worked with domestic manufacturers to improve their production processes. By 1981, China was able to mass-produce qualified phosphor materials domestically. That single improvement reportedly saved China around $2.5 million in foreign exchange every year.

I find this story revealing. Even in the early years of reform and opening up, Chinese authorities were concerned about the leakage of domestic technology and commercial secrets. But the country’s broader industrial challenge was very different from today’s. China was still technologically behind the world’s leading industrial economies. For many Chinese manufacturers, the biggest problem was not that foreign companies might learn too much about Chinese technology. It was that Chinese companies had too little access to advanced foreign technology, manufacturing processes, equipment, and management expertise. Sometimes they did not even know why their products were inferior to foreign alternatives. So the central policy priority was to open channels for technology exchange. China needed to import equipment, purchase technology, establish joint manufacturing arrangements, and send engineers overseas to learn. The goal was to build domestic industrial capabilities as quickly as possible.

That approach was also reflected in China’s technology trade legislation. On the day before China formally joined the World Trade Organization, the State Council issued a new set of Regulations on the Administration of Technology Import and Export, which came into force on January 1, 2002. They established an important principle: the free import and export of technology was the general rule, while prohibitions and restrictions were the exceptions. The regulations explicitly recognized that technical know-how held by companies, including unpatented manufacturing processes and production expertise, could be treated as commercial assets and transferred or licensed overseas. As long as the technology was not on a prohibited or restricted export list, companies could generally decide for themselves whether to sell it, whom to sell it to, how much to charge, and how to protect it through confidentiality agreements. For ordinary technology exports, the government required contract registration, but the contract did not need prior government approval to become effective.

Today, the situation is very different. Over several decades, China has built substantial technological and industrial strengths in areas such as rare earths, solar photovoltaics, electric vehicle batteries, and artificial intelligence. In some of these industries, Chinese companies are now among the world’s leading players. They are also moving further up the value chain, from manufacturing and assembly into the technologies, processes, and specialized knowledge that underpin industrial competitiveness. Meanwhile, the United States and the European Union have become increasingly concerned about the erosion of their advanced manufacturing capabilities. Both are trying to attract industrial investment, rebuild supply chains, and bring strategic manufacturing activities back home. But advanced manufacturing is not just about factories. It is also about the technologies that make those factories competitive. And those technologies are often embedded in trade secrets: production methods, technical parameters, process engineering, software, algorithms, and the accumulated experience of engineers and researchers.

From China’s perspective, this raises a new strategic concern. How can China prevent the technological and industrial advantages it spent decades building from gradually being transferred overseas through foreign investment, technology licensing, cross-border acquisitions, and the movement of skilled personnel? And how can it prevent those advantages from being gradually absorbed by other countries, including geopolitical competitors, in ways that could ultimately weaken the foundations of China’s own advanced manufacturing industries?

That is the broader context in which I would read the proposed Special Provisions on the Protection of Chinese Trade Secrets. For Chinese companies that have already expanded overseas, are currently doing so, or are planning international investments, the proposed rules are also a reminder to pay closer attention to protecting technology and trade secrets in their overseas operations and cross-border transactions.

The revised rules provide more detailed oversight of the entire investment lifecycle, from initial planning and business operations to reinvestment, asset sales and eventual exit. They also establish clearer procedures for companies seeking government assistance in dealing with risks and protecting their interests overseas.

In recent years, Chinese companies have significantly expanded their overseas investments, and the ways they invest have become increasingly diverse. Some build factories or acquire foreign companies directly, while others invest through overseas subsidiaries, establish investment funds, or contribute technology and intellectual property instead of cash. At the same time, the risks they face have become more complicated. Beyond wars, business losses and regulatory changes, companies may face demands from foreign governments to hand over technology or data, sell equity stakes, or even withdraw from certain markets altogether. Some of these challenges are simply too difficult for individual companies to handle on their own.

This is the context in which the State Council introduced the Regulations on Outbound Investment in June this year, which took effect on July 1. As a higher-level administrative regulation, it established the basic framework for outbound investment management, national security reviews and the protection of overseas interests.

The NDRC’s new measures translate that framework into more specific filing, reporting and supervisory procedures within the agency’s responsibilities. Put simply, the State Council regulations set out the overarching rules, while the NDRC measures explain how they are implemented in practice. Both apply simultaneously, and the new measures replace only the NDRC’s 2017 rules.

The new measures retain China’s existing basic approach to outbound investment management. Investments involving sensitive countries, regions or industries require prior approval. Non-sensitive investments made directly by domestic investors generally require prior filing. Non-sensitive reinvestments made through controlled overseas entities are subject to reporting requirements. Companies remain responsible for making their own investment decisions and bearing the associated risks, but they must complete different procedures depending on the nature and structure of their investments.

Against this background, several changes are particularly worth highlighting.

First, the scope of regulation is more clearly defined, explicitly covering individuals and non-cash contributions such as technology and data.

The new measures bring domestic enterprises, other organizations and individual residents within the definition of investors, and clarify which authorities are responsible for handling filings by individual residents.

The rules also place greater emphasis on the substance of an investment rather than simply how money moves across borders. In addition to cash, contributions involving technology, data, intellectual property, financing and guarantees may all count toward the Chinese investment amount. Investments made through overseas companies, contractual arrangements or trusts may also fall within the rules, depending on the underlying ownership, control and actual arrangements.

For example, if a Chinese company contributes technology to an overseas business in exchange for equity, or makes an investment through an overseas subsidiary, it may still need to complete outbound investment procedures even if no money is actually transferred out of China.

Second, reporting requirements now apply earlier and continue throughout the investment lifecycle.

Under the previous rules, non-sensitive reinvestments made through controlled overseas entities generally had to be reported only when the Chinese investment amount reached US$300 million or more.

The new measures remove this monetary threshold. Companies must now submit an overseas reinvestment report at least ten working days before implementing the investment. Round-trip investments, where overseas entities reinvest back into China, are also covered.

For projects involving Chinese investment of US$100 million or more, or projects that may affect China’s foreign relations, reporting must take place even earlier, before major preparatory steps such as signing investment agreements or making investment commitments to foreign governments.

There are also reporting obligations after an investment is completed or terminated. In addition, investors must submit information about their outbound investments as of the end of the previous year by June 30 each year.

Third, national security reviews and the protection of overseas interests now more explicitly extend to the disposal of overseas assets.

The new measures require outbound investments that affect or may affect national security, as well as transfers or disposals of related assets and interests, to undergo security reviews in accordance with applicable rules.

This means that when a Chinese company sells an overseas business or transfers important assets, it may need to consider not only the commercial terms and local legal requirements, but also whether the transaction raises national security concerns under Chinese law.

The rules also address situations where foreign parties demand that Chinese companies provide technology or data, or transfer or dispose of assets and interests, in ways that threaten or harm China’s national interests or national security. In such cases, companies are required to report the situation immediately.

Where overseas investments that meet the relevant requirements face discriminatory measures or unreasonable restrictions imposed by foreign organizations or individuals, investors may request government assistance. Within its statutory responsibilities, the NDRC may take protective measures, including restricting the relevant foreign parties from investing in China or restricting domestic entities from conducting certain transactions or cooperation with them.

The legal basis for these national security reviews and protective measures was already established in the State Council regulations. The significance of the NDRC’s new measures is that they connect these powers with the routine reporting, supervision and assistance mechanisms that companies use in practice.

Why Countries Seek to Manage Outbound Investment

Preventing excessive and uncontrolled outflows of domestic capital is a challenge faced by virtually every major economy.

Capital naturally seeks higher returns. It tends to flow toward places with lower taxes, lighter regulation or better investment opportunities. Companies may also move production lines and supply chains overseas to take advantage of cheaper labor and land. Left entirely to market forces, these decisions can result in substantial amounts of capital and industrial activity moving abroad. There is no automatic mechanism that ensures capital will remain in its home country.

Excessive capital outflows can create real economic costs at home. They may put pressure on the domestic currency, weaken domestic investment, and affect employment and tax revenues. If the outflows become too large, they may also contribute to industrial hollowing-out, the loss of domestic jobs and the erosion of local supply chains. Where critical technologies or strategic assets are involved, the implications can extend directly to national security.

Countries use different approaches to address these concerns. Some rely more heavily on administrative procedures before investments are made, allowing governments to determine whether certain investments should proceed. Others place greater emphasis on taxes, subsidies and other economic incentives, making it more attractive for companies to keep capital, factories, research activities and intellectual property at home.

It is difficult to say that one approach is inherently better than the other. They reflect different national circumstances, economic structures and policy priorities.

Comparing China’s Approach with the United States

The United States has long been one of the strongest advocates of the free movement of capital around the world. But this does not mean it leaves outbound investment entirely unregulated.

Through measures including the Comprehensive Outbound Investment National Security Act (COINS Act), Executive Order 14105 and related federal regulations, the United States has established restrictions on certain overseas investments. Some covered transactions are prohibited, while others are subject to notification requirements.

Coincidentally, on the same day that China released its new outbound investment measures, the US Treasury Department opened a public consultation on proposed revisions to its outbound investment security regulations. The proposed changes would add areas such as high-performance computing and supercomputing, hypersonic systems and biotechnology, while expanding restrictions related to artificial intelligence.

Both China and the United States are increasingly linking cross-border investment with national security. Both are also paying closer attention to indirect investments and the actual relationships between companies and their overseas affiliates.

However, the two systems serve somewhat different purposes.

China’s outbound investment framework covers a broad range of industries and investment destinations. It is concerned not only with investment management, but also with industrial policy, risk prevention and the protection of overseas interests. One of its central policy questions is how Chinese companies can expand internationally and access overseas markets without undermining China’s domestic industrial base.

The US Treasury’s outbound investment security regime, by contrast, is more narrowly focused on specific countries, technologies and transactions. Its principal objective is to prevent US capital, together with the managerial expertise, professional networks and market access that may accompany it, from helping countries identified by Washington as foreign adversaries develop technological capabilities that could threaten US national security.

The two systems also differ in how they operate.

China primarily uses a combination of approval, filing and reporting procedures, many of which must be completed before an investment is implemented.

The United States, meanwhile, defines categories of prohibited and notifiable transactions in advance, leaving investors responsible for conducting due diligence and determining whether their transactions fall within those categories. Transactions subject to notification generally must be reported within 30 days after completion.

How the United States Uses Tax Policy and Subsidies to Influence Investment Decisions

Beyond national security reviews and restrictions on investments in sensitive sectors, the United States also makes extensive use of tax policy, subsidies and other government incentives to influence corporate investment decisions.

The basic idea is straightforward. Rather than simply telling companies that they cannot invest overseas, the US government changes the financial calculations behind their decisions.

American companies can still expand internationally. But if they shift profits to low-tax jurisdictions or locate strategically important production in countries that US policymakers do not favor, they may lose certain tax advantages or become ineligible for government subsidies.

In effect, the government lets companies do the math themselves. By changing the costs and benefits of different investment locations, it uses companies’ natural pursuit of profits to encourage capital and industrial activity to remain in, or return to, the United States.

Two approaches are particularly important.

1. Making Investment in the United States More Attractive

The most straightforward tool is tax reduction.

In 2017, the Trump administration introduced tax reforms that reduced the federal corporate income tax rate from 35% to 21%.

This meant that, for every US$100 in taxable profits, companies paid less federal corporate income tax and retained more earnings. All else being equal, this improved the after-tax returns on investments in the United States.

In 2025, the United States introduced further tax legislation designed to encourage business investment.

Previously, when companies purchased equipment or built factories, many of these costs could not be deducted from taxable income immediately. Instead, they had to be depreciated and deducted gradually over several years, or sometimes even decades.

Under the revised rules, certain equipment investments, domestic research and development expenditures, and qualifying manufacturing facility construction costs can be deducted earlier. Some expenditures may even qualify for immediate deduction.

Consider a company planning to invest US$10 billion in a new factory. During the first few years, it will need substantial amounts of capital before the project begins generating meaningful returns.

If tax rules allow the company to deduct investment costs earlier, it can reduce its tax payments sooner and retain more cash during the project’s early stages. That reduces the amount of financing it may need to raise.

This is particularly important for capital-intensive projects such as semiconductor fabs, data centers and energy infrastructure, where upfront investment is enormous and the payback period can be long.

2. Making Low-Tax Overseas Profit Structures Less Attractive

In the past, US multinational companies commonly established overseas subsidiaries and accumulated profits in jurisdictions with relatively low tax rates.

As long as those profits were not repatriated to the United States, companies could often defer US taxation.

Many technology companies also located patents, trademarks, algorithms and other intellectual property in low-tax jurisdictions, allowing their foreign subsidiaries to report more profits and reduce the group’s overall tax burden.

The 2017 tax reform began changing this system by introducing the Global Intangible Low-Taxed Income regime, or GILTI.

Following the 2025 tax legislation, this regime was renamed Net CFC Tested Income, or NCTI, beginning in 2026.

Despite the technical terminology, the basic principle is relatively simple: when a foreign company controlled by a US taxpayer earns certain types of income, the US taxpayer may have to include that income in its current US tax calculations, even if the money has not been brought back to the United States.

Beginning in 2026, the revised rules also eliminated the previous exclusion for certain returns associated with tangible assets held overseas.

Under the earlier system, investments in foreign factories and equipment could generate a tax benefit when calculating GILTI. Removing this exclusion means that more foreign earnings may now fall within the US tax calculation.

Under the current rules, the nominal federal tax rate applicable to NCTI is approximately 12.6%, although companies may claim foreign tax credits for a portion of the taxes they have already paid overseas.

Of course, this does not mean that every dollar earned overseas automatically faces an additional 12.6% US tax.

For example, companies operating in Europe or Japan may already pay substantial local taxes. Depending on their circumstances, foreign tax credits can significantly reduce or even eliminate additional US tax liability.

What the US government is primarily trying to discourage is a different situation: companies locating profits or business activities overseas mainly because taxes are lower, rather than because those locations offer customers, talent or supply-chain advantages.

At the same time, the United States retains another preferential tax regime known as Foreign-Derived Deduction Eligible Income, or FDDEI.

Broadly speaking, this provides favorable tax treatment for certain income earned by US businesses from supplying goods or services to foreign customers. From 2026, qualifying income is subject to a nominal federal tax rate of approximately 14%.

Taken together, NCTI and FDDEI illustrate the direction of US international tax policy.

The government seeks to reduce the tax advantages of shifting profits to low-tax foreign jurisdictions while offering incentives for certain income-generating activities based in the United States.

China Also Uses Tax Incentives and Measures Against Profit Shifting

Under existing policies, qualifying high-tech enterprises in China benefit from a reduced corporate income tax rate of 15%.

Eligible research and development expenses may also qualify for an additional 100% tax deduction. In practical terms, for every RMB 100 spent on qualifying R&D, a company may deduct the original RMB 100 as an expense and claim an additional RMB 100 deduction.

Government-backed investment funds also help attract private capital by providing financing and sharing investment risks.

China also has tax rules designed to prevent companies from accumulating profits indefinitely in low-tax overseas jurisdictions.

Article 45 of China’s Enterprise Income Tax Law provides that, where a foreign enterprise meets certain control and low-tax conditions and fails to distribute profits, or distributes insufficient profits, without reasonable business needs, the portion attributable to the Chinese resident enterprise may be included in its current taxable income.

This serves a purpose similar to the US NCTI regime: preventing indefinite tax deferral and protecting the domestic tax base. However, the conditions for application and the methods of calculation differ.

Why Tax Incentives Alone Are Not Enough

Relying primarily on tax incentives also has inherent limitations.

Some risks cannot be addressed simply by changing the after-tax returns of an investment.

For example, a transaction may involve the transfer of controlled technology, or a change in ownership of critical assets that could affect national security. Even if a company is willing to pay more tax, that does not eliminate the underlying security concern.

Other investments may create significant risks before they generate any profits at all.

In these situations, approval and filing requirements, information reporting, technology transfer restrictions and national security reviews can play an indispensable role.

China’s outbound investment framework also serves another important purpose: helping the government understand overseas investment activities, identify emerging risks and protect Chinese interests abroad.

Tax filings primarily focus on revenues, costs and tax liabilities. They cannot fully perform these broader functions.

Project-level reporting and annual outbound investment information reports, by contrast, can help authorities understand where Chinese companies are investing, who their partners are, how their assets are structured, and whether they are facing risks such as war, forced asset sales or other major disruptions.

Ultimately, the most effective approach is likely to combine regulatory controls with economic incentives, while adjusting the balance between the two according to each country’s circumstances and policy priorities.

1. China Is Taking a More Nuanced Approach to Technology Regulation

In the past, one of the concerns frequently raised by China’s technology industry was that regulations targeting emerging technologies and applications sometimes came too quickly. When confronted with new technological risks, regulators occasionally tended to regulate an entire area first and then make adjustments as they gained a better understanding of the situation. There were understandable reasons for this approach, particularly concerns about national security, public interests, and emerging risks. In practice, regulators often made considerable efforts to balance security and development during implementation. Nevertheless, the initial introduction of some policies did create uncertainty in the market and sometimes led to misunderstandings, or even deliberate misrepresentations, abroad.

This time, MOFCOM has taken a somewhat different approach: introducing a pre-export registration requirement first, rather than immediately placing the relevant technologies on the prohibited or restricted export lists, while continuing to seek public feedback. Specifically, from October 16, when the announcement was issued, until the revised Catalogue formally takes effect, companies intending to export technologies covered by the announcement must first register the proposed transactions through MOFCOM’s online system. The information required includes the technology being exported, the exporter and recipient, the destination country or region, the intended end use, and the transaction value. Companies are responsible for determining whether their technologies fall within the registration requirements. Even transactions that have already begun must be registered if they have not yet been completed. Importantly, registration is not limited to outright sales of technology. It also covers licensing technology for use overseas, as well as changes that result in the ownership or actual control of domestically held technology being transferred to a foreign entity.

By introducing mandatory pre-export registration, China is effectively establishing a preliminary administrative step ahead of any formal export licensing requirements. Companies can continue conducting legitimate technology exports, while the government gains a clearer picture of what technologies are being exported, where they are going, and what companies actually need in terms of international technology cooperation. This should provide a stronger factual basis for the eventual revision of the Catalogue. At the same time, if a particular transaction raises national security concerns or could affect China’s technological and industrial competitiveness, MOFCOM may seek additional information or, where legally authorized, take further measures, potentially including temporary restrictions.

In its official Q&A, MOFCOM also explained that the government had already conducted extensive assessments with research institutions and industry associations, consulted major companies, and taken into account the development needs of industries both in China and internationally. MOFCOM specifically emphasized that China’s longstanding policy of supporting companies in international business operations and technology cooperation remains unchanged. To me, this approach is somewhat like letting the dust settle before making a final decision: first gather information, understand actual business needs, and listen to stakeholders, then decide which technologies really need to be controlled and how restrictive those controls should be. It reflects an effort to balance security and development while paying greater attention to industry needs and the international competitive environment.

The legal basis for this temporary registration system is also interesting. From my initial reading, the revised Foreign Trade Law, which entered into force on March 1, 2026, added the phrase “or take other necessary measures” to Article 18. This appears to provide a clearer legal basis for regulatory measures beyond outright prohibitions and restrictions. MOFCOM specifically cited Article 18 when explaining the temporary registration requirement. The arrangement also bears some resemblance to the export certificate mechanism under China’s 2024 Regulations on Export Control of Dual-Use Items. Under that system, certain eligible exports can proceed after exporters submit the required information and obtain an export certificate, providing a simplified procedure for lower-risk transactions already subject to export controls. There are somewhat similar precedents in the United States. Around 2010, the US Department of Commerce’s Bureau of Industry and Security (BIS) revised its export procedures for certain encryption products, allowing eligible products to obtain export authorization through simplified electronic registration procedures rather than undergoing the previous technical review process in every case.

2. Chinese open-source AI developers can breathe a little easier

Earlier media reports suggesting that China might introduce export restrictions on open-source AI models had raised concerns about whether Beijing was changing its position on open-source AI. Based on MOFCOM’s announcement, the proposed revisions clarify that releasing model technology as open source can constitute a form of technology export. If the relevant model technology falls into the prohibited category, it generally cannot be released through overseas open-source channels. If it falls into the restricted category, publishing it on an overseas open-source platform would require an export licence. However, MOFCOM has also made clear that open-source releases of restricted technologies will be eligible for simplified procedures, including automatic licensing. In other words, although the new framework may introduce a formal licensing requirement for releasing new versions of certain advanced open-source models, the practical approval process is expected to be relatively quick, with limited compliance costs for companies. For Chinese open-source model developers, this is certainly reassuring news.

MOFCOM has also clarified that technologies already lawfully placed in the public domain through open-source releases, academic publications, or other means will not fall within the scope of these controls. This means that if the relevant technology behind a model has already been lawfully disclosed, the publicly available technology would generally not become subject to new export licensing requirements simply because it meets the technical thresholds in the revised Catalogue. This treatment of publicly available technology is broadly similar to the approach taken under US export control rules, which also provide exclusions for certain published technology and software.

Overall, I think the proposed arrangements for open-source models are largely in line with expectations and consistent with China’s longstanding policy of supporting open-source AI development and broader technology sharing. Chinese AI companies have built considerable international influence through open-source models in recent years, attracting developers around the world and creating new commercial opportunities. As long as the eventual licensing procedures are sufficiently simple, transparent, and predictable, these revisions need not significantly undermine the global development of China’s open-source AI ecosystem.

3. The scope of AI technology export controls is expanding significantly, with more detailed distinctions

One of the most important aspects of the announcement is the proposed expansion of controls on AI technology exports. The technologies covered include foundation models, AI agents, cybersecurity, chip design, and large-scale AI computing clusters. Broadly speaking, the proposal divides them into two categories: prohibited technologies, which generally cannot be transferred overseas, and restricted technologies, which require export licences.

Technologies proposed for export prohibition

There are four main categories.

First, AI models trained on China’s “core data”. The primary consideration here is not how advanced a model is, but whether it has been trained using data classified under Chinese law as core data, which may involve national security or other fundamental national interests.

Second, high-performance AI agents used in highly sensitive sectors. These include advanced AI agents specifically designed for critical national infrastructure, defence and military industries, and core government systems, provided they meet the specified performance thresholds.

Third, AI technologies with advanced offensive cyber capabilities. These include technologies capable of automatically generating malicious code, bypassing antivirus software, adapting attacks to different security environments, or producing large numbers of malware variants that are difficult to detect. Put simply, these are technologies that could make cyberattacks more automated, stealthy, and scalable.

Fourth, certain high-performance AI-generated content detection technologies. These mainly concern technologies used to identify AI-generated or manipulated videos, audio, and images with high accuracy, specifically for preventing and addressing security risks associated with cross-border data transfers from China.

Technologies proposed for export restrictions

The restricted category is broader and covers six main areas.

First, advanced foundation models and their core technologies. This is probably the most important part of the proposal. Under the draft, a model’s core technologies may become subject to export restrictions if it meets any one of three criteria: training compute reaches (10^{26}) floating-point operations (FLOPs), the model has at least 2 trillion parameters, or its capabilities are considered globally leading. The definition of “globally leading” is particularly interesting. The draft uses a top-ten global ranking in publicly available assessments by major domestic or international evaluation institutions as a benchmark. Importantly, this is not limited to overall model performance. It can also include specialized capabilities, such as coding or mathematics, global usage, safety performance, and training efficiency. In other words, even if a model does not rank among the world’s top ten overall, it could still trigger restrictions if it ranks in the top ten in a qualifying assessment category. The technologies covered include model weights, key training checkpoints, underlying source code, architecture design, training optimization, and inference acceleration.

Models trained using China’s legally defined “important data” may also face restrictions. However, the draft provides certain exceptions, including cases involving only a very small amount of important data (0.1%), subject to additional conditions, or data that can lawfully be obtained from public sources. MOFCOM has also explicitly clarified that restricting exports of core model technologies does not mean restricting the provision of AI services to overseas customers. Providing model services through APIs, websites, apps, or SaaS platforms does not fall within the scope of these model technology export controls. However, deploying restricted models overseas may constitute a technology export, although certain deployment arrangements may qualify for automatic licensing.

Second, high-performance AI agent technologies. These provisions target AI systems capable of doing much more than answering questions. They focus on agents that can autonomously plan tasks, use external tools, coordinate with other agents, and complete complex workflows. Examples include systems capable of breaking a complex task into 20 executable steps, coordinating more than 60 agents, or autonomously selecting and using more than 200 external tools. The proposal also covers advanced AI decision-making technologies capable of planning multiple steps ahead, adapting strategies in complex environments, and outperforming 90% of human participants in standardized benchmarks. These thresholds are accompanied by additional accuracy, success-rate, and efficiency requirements. Simply being able to call 200 tools, for example, would not automatically bring a system within the restricted category.

Third, AI chip and advanced memory chip design technologies. These include advanced AI processor architectures, proprietary instruction sets, computing cores, supporting software stacks, advanced packaging, and high-speed interconnect technologies. For example, AI chip design technologies involving manufacturing processes of 14 nanometres or below, advanced packaging, and certain specialized processors for autonomous driving, computer vision, and speech processing may fall within the restricted category. Advanced flash memory and DRAM design technologies are also covered, including high-density storage, advanced manufacturing processes, and multilayer stacking.

Fourth, large-scale AI computing cluster technologies. These provisions mainly target large AI computing clusters containing more than 10,000 AI accelerator cards. The focus is not simply on assembling large numbers of GPUs, but on the technologies that enable them to operate efficiently together. Examples include high-speed data transmission between thousands of chips, reducing communication delays during model training, rapidly recovering from hardware failures, and improving overall cluster efficiency. One particularly interesting area is the coordination of AI chips from different manufacturers. This includes technologies that allow chips from two or more vendors to be managed through a unified scheduling system, different chip architectures to work together on training and inference, or geographically distributed data centres to share computing workloads. Such technologies may be restricted if they meet the specified performance thresholds.

Fifth, AI-assisted cybersecurity technologies. These mainly involve AI systems capable of autonomously discovering software vulnerabilities, assessing whether vulnerabilities can be exploited, and constructing attack chains. For example, technologies that enable AI to discover vulnerabilities far more efficiently than experienced security experts, combine several relatively minor vulnerabilities into a complete attack chain, or identify multiple previously unknown vulnerabilities in major operating systems or open-source projects could be subject to restrictions.

Sixth, speech recognition, translation, and information detection technologies. These include highly accurate voiceprint recognition, technologies for detecting replayed or AI-generated fraudulent audio, and speech recognition systems specifically optimized for China’s ethnic minority languages and regional dialects. The proposal also covers advanced translation technologies for Chinese and ethnic minority languages, as well as technologies for detecting AI-generated content and embedding or extracting hidden information in images and videos.

4. Six broader changes stand out to me

First, the scope is expanding from specific algorithms to the broader core technology stack of the AI industry. When China introduced export restrictions on certain algorithms in 2020, the focus was primarily on specific applications such as personalized recommendation and content distribution. This time, the scope is substantially broader. It covers model weights, source code, architecture design, AI agents, chip design, computing cluster communications, distributed training, and cross-chip coordination. In other words, the focus is shifting from individual AI applications to the underlying technologies that make advanced AI capabilities possible. Model weights, training optimization, and computing cluster management technologies have become increasingly valuable assets for Chinese AI companies competing globally.

Second, foundation model controls now consider both data security and technological sophistication. The proposal effectively introduces two different approaches. One is based on the sensitivity of training data. Technologies associated with models trained on China’s core data may be prohibited from export, while those associated with models trained on important data may be restricted. The other is based on the model’s technical capabilities. Even if a model has not been trained on sensitive data, its weights, source code, and other core technologies may still be restricted if it meets the relevant compute, parameter, or global ranking thresholds. The inclusion of global top-ten rankings is particularly noteworthy. It directly links export controls to how Chinese models perform in international AI competition.

Third, the regulation of AI agents is shifting attention from model capabilities to autonomous action. Traditionally, advanced AI models have been assessed primarily through parameter counts, training compute, and benchmark performance. For AI agents, the proposal places greater emphasis on what the systems can actually do: whether they can independently plan complex tasks, use large numbers of tools, coordinate multiple agents, and make decisions in dynamic environments. This reflects an important technological shift. As AI agents evolve from conversational assistants into systems capable of independently executing tasks, the risks that regulators are concerned about are also changing.

Fourth, the focus is no longer just on chips themselves, but also on how effectively chips can be used. The inclusion of AI computing infrastructure and cross-chip coordination technologies is particularly interesting. The proposal covers not only advanced chip design but also the technologies needed to organize large numbers of chips into efficient computing systems. It establishes thresholds for clusters containing more than 10,000 AI accelerator cards, unified scheduling across different chip vendors, collaborative inference, and geographically distributed computing. This suggests that China increasingly recognizes the strategic and commercial value of system-level engineering capabilities that improve the effective performance of existing AI hardware.

Fifth, the technical thresholds are becoming more specific, making compliance boundaries clearer. The draft provides detailed metrics for many technologies, including training compute, model rankings, agent task success rates, semiconductor manufacturing processes, and cluster communication efficiency. Compared with broadly restricting entire categories of advanced technologies, this approach should make it easier for companies to determine whether their technologies fall within the controlled scope. Of course, AI technologies evolve rapidly. Some thresholds may become outdated relatively quickly, and different evaluation methods may produce different results. These issues will need to be addressed through clearer testing standards and regular updates to the Catalogue. Nevertheless, using measurable technical criteria to define the boundaries of regulation, rather than applying broad restrictions to entire technology sectors, is a notable step forward.

Sixth, regulators are beginning to focus on both cross-border technology transfers and changes in control over technology. The temporary registration requirements cover not only overseas sales and licensing, but also situations where the ownership or actual control of technology held in China changes to a foreign entity. This deserves particular attention. Traditionally, technology exports are often understood as transferring source code, model weights, or technical documentation across borders. Under the proposed registration framework, however, a transaction may trigger registration requirements even if the technology itself never physically leaves China, provided that ownership or actual control passes to a foreign entity. This appears somewhat similar to the concept of “deemed exports” in export control regimes, although the legal concepts are not identical. The potential implications could extend beyond transferring code or model weights to certain technology licensing arrangements, mergers and acquisitions, and corporate restructurings.

5. Several questions are worth discussing during the public consultation

MOFCOM has already clarified quite a few important policy boundaries through its official Q&A, and the consultation process provides an opportunity to address remaining uncertainties. From my initial reading, several questions seem particularly relevant.

1. How exactly will “globally leading capabilities” and “top-ten global rankings” be determined? There are now numerous AI model leaderboards, and their results often differ significantly. Which evaluation institutions will be recognized for regulatory purposes? The draft refers to overall model performance, specialized capabilities, global usage, safety performance, and training efficiency. If a model ranks 20th overall but enters the global top ten in coding performance or usage, would that qualify? And if a model ranks ninth today but drops to 12th next month, how would that affect the application of export restrictions?

2. How will the rules apply to new releases and updates of open-source models? The United States currently does not have a general mandatory pre-release approval system for open-source AI models, relying instead largely on voluntary company-led reviews. Under China’s proposed framework, would Chinese companies need to obtain a licence before releasing every new model that meets the relevant thresholds? This raises broader questions about how a “model export” is defined, an issue only partially addressed in the current announcement and potentially requiring clarification through other regulations. What happens when a model has already been open-sourced but the company subsequently releases updated weights or a new version? And if the weights are public but the training code and methods remain proprietary, should those technologies be treated differently?

3. How will the distinction between overseas deployment and overseas service provision work in practice? Under MOFCOM’s explanation, providing AI services overseas through APIs or apps is not subject to these model technology export controls, while deploying a restricted model overseas may constitute a technology export. Where a Chinese company establishes a subsidiary in Singapore and operates its model through overseas cloud infrastructure under its own control, certain arrangements may qualify for automatic licensing. But what if the model is deployed on AWS or Azure, while the Chinese company retains full control over the model weights? What about private deployments for overseas enterprise customers? Would these arrangements necessarily be excluded from automatic licensing or other simplified procedures, or could they also qualify? These are likely to be important questions for companies expanding internationally.

4. How will “important data” and “core data” be identified in practice? Linking model export controls to important data and core data introduces another layer of complexity. The classification of these data categories remains a significant policy issue involving multiple regulatory authorities. Foundation models are trained on enormous datasets collected from diverse sources, making it difficult for companies to determine whether any of that information qualifies as “important data” or “core data” under Chinese law. The draft provides an exception where only a very small amount of important data (0.1%) has been used, subject to certain conditions. But how exactly should that 0.1% be calculated? Should it be based on the number of data records, total data volume, or training tokens? How can companies demonstrate that the data has not materially improved a model’s capabilities in the relevant domain? Would an independent third-party assessment be required? In practice, companies may need to establish more comprehensive training data inventories, document data provenance, conduct internal data classification reviews, and retain evidence supporting their eligibility for exemptions. For models trained on large and frequently updated datasets, this could become a significant compliance burden, particularly if the regulatory standards remain unclear.

5. How should the technical thresholds for AI agents be assessed？The draft introduces a number of specific performance thresholds for AI agents, such as the ability to break tasks into 20 steps, use 200 tools, or coordinate 60 agents. However, these capabilities often depend on a combination of the underlying model, agent frameworks, external tools, and broader system architecture. For example, if a company builds an agent capable of using 200 tools on top of an existing open-source model, what exactly would be subject to export restrictions: the underlying model, the agent framework, or the complete system? And what testing standards should be used to determine whether an agent meets the relevant thresholds? From a compliance perspective, companies may need to assess export control requirements not only at the foundation model level but also at the application and system levels. This could require additional technical evaluations before releasing new agent capabilities, licensing agent frameworks to overseas partners, or deploying agent-based products internationally. It could also complicate compliance assessments for products whose capabilities evolve through software updates or integration with third-party tools.

6. How convenient will automatic licensing actually be? The practical design of the automatic licensing system will be extremely important. What documents will companies need to submit? How long will the process take? Can exports proceed immediately after registration, or must companies wait for a licence to be issued? Could a single licence cover multiple subsequent model versions or updates? If companies need to repeat the process every time they release a new model version, even a relatively simple procedure could create additional compliance costs and affect normal development and release cycles. Companies may need to build export control checks into their model release processes, establish internal approval procedures for overseas deployments and open-source releases, and maintain records of licensing decisions and technology transfers. For multinational AI companies, this could also require closer coordination between engineering, legal, compliance, and international business teams. For an industry where models can be updated every few weeks, the speed, simplicity, and predictability of the licensing process may ultimately matter just as much as the formal scope of the restrictions.

At the same time, the authorities introduced an export registration requirement for the technologies listed in the announcement, effective immediately. This requirement also applies to exports that have already commenced but have not yet been completed.

Importantly, the registration requirement is already in effect, while the proposed additions to the export control catalogue remain subject to public consultation.

Official Announcement by the Ministry of Commerce and Ministry of Science and Technology

Pursuant to the Foreign Trade Law of the People’s Republic of China and the Regulations of the People’s Republic of China on the Administration of Technology Import and Export, the Ministry of Commerce and the Ministry of Science and Technology propose to revise the Catalogue of Technologies Prohibited or Restricted from Export to include certain technologies in artificial intelligence, biomedicine, and photovoltaics.

With the necessary approval, the proposed revisions are hereby released for public consultation. At the same time, a pre-export registration requirement will be introduced for the relevant technologies.

I. Proposed Revisions

The public consultation covers 40 technologies across three sectors: artificial intelligence, biomedicine, and photovoltaics.

Artificial Intelligence: The proposed additions cover 23 technologies related to large AI models, AI agents, computing clusters, and information processing. Technologies that have already entered the public domain through open-source releases, academic publications, or other means will not be subject to these controls.

Biomedicine: The proposed additions cover five technologies related to cell and gene therapies, small nucleic acid drugs, and pathogenic microorganisms. Facilitation measures, including automatic licensing, will apply to overseas licensing arrangements that do not involve a transfer of ownership.

Photovoltaics: The proposed additions cover 12 technologies related to polysilicon manufacturing, silicon wafer production, and solar cell manufacturing. The scope of technology controls will also extend to key and core equipment incorporating the relevant technologies.

The specific technologies proposed for inclusion, together with explanations of the relevant policy measures, are provided in Annex 1.

II. Public Consultation and Submission of Comments

The public may submit comments between October 16 and November 15, 2026, regarding the proposed scope of technologies, technical thresholds, control measures, and facilitation arrangements through the following channels:

1. Email: jinxianmulu@mofcom.gov.cn

2. Fax: +86-10-65197565

3. Postal mail: Bureau of Industry, Security, Import and Export Control, Ministry of Commerce, No. 2 Dong Chang’an Avenue, Beijing 100731, China.

Please indicate “Public Consultation on the Catalogue of Technologies Prohibited or Restricted from Export” in the email subject line, on the cover page of any fax, or on the envelope.

Submissions should include the name of a contact person, the organization they represent, and their contact details. Submissions made on behalf of an organization must bear its official seal.

III. Pre-Export Registration Requirements

(1) Effective Period and Scope

From the date of publication of this announcement until the revised Catalogue of Technologies Prohibited or Restricted from Export is formally issued and takes effect, technology exporters must register the export of any technology listed in the annexes to this announcement before proceeding with the export.

Registration must be completed through the Technology Trade Management Information System on MOFCOM’s Unified Business Platform:

https://ecomp.mofcom.gov.cn

The registration requirement also applies to technology exports that have already commenced but have not yet been completed.

(2) Transactions Subject to Registration

The following types of technology export transactions are subject to registration:

1. Transfers of technology ownership to overseas entities, including transfers of intellectual property rights.

2. Licensing of domestically held technologies for use overseas, including intellectual property licensing arrangements.

3. Changes in the ownership or actual control of domestically held technologies whereby the owner or actual controller becomes an overseas entity.

4. Other circumstances in which MOFCOM explicitly requires registration through notices or other official communications.

(3) Information Required for Registration

The information to be registered mainly includes:

• Basic information about the technology exporter and the technology recipient.

• The destination country or region.

• Details of the technology proposed for export and its intended use.

• The estimated value of the technology export.

The specific information requirements are subject to those set out in the Technology Trade Management Information System on MOFCOM’s Unified Business Platform, as detailed in Annex 2.

Where multiple technologies are intended to be exported to the same recipient as part of a single transaction, they may be included in one registration submission. In other circumstances, separate registrations should generally be submitted.

Annexes

Annex 1: Proposed Scope of Artificial Intelligence, Biomedical, and Photovoltaic Technologies to Be Included in the Catalogue of Technologies Prohibited or Restricted from Export (Draft for Public Consultation).

Annex 2: Technology Export Information Registration Form.

Ministry of Commerce of the People’s Republic of China Ministry of Science and Technology of the People’s Republic of China

October 16, 2026

Annex 1: Scope of Artificial Intelligence, Biomedicine, and Photovoltaic Technologies Proposed to Be Included in the Catalogue of Technologies Prohibited or Restricted from Export by China (Draft for Comments)

I. Artificial Intelligence

Technologies Prohibited from Export

Serial number; industry sector; code; technology name; control points.

Internet and related services. High-performance detection technology: Technologies for manufacturing authentication systems and equipment specifically or mainly used for preventing and handling security risks in cross-border transmission of China’s network data, where the detection accuracy and recall rate for deeply synthesized video, audio, images, or multimodal information are 95%.

Information confrontation technology: 1. AI autonomous-driven malicious code generation and mutation technologies that have any of the following characteristics and may be used to attack highly sensitive systems such as national critical information infrastructure, national defense and military industry, and core government affairs, or to bypass national security defense systems: (1) an attack success rate of 60% against multi-engine malware detectors;

(2) an attack success rate of 85% against a single mainstream antivirus software;

(3) an attack success rate of 90% against machine learning models.

2. Adaptive evolution in adversarial environments and runtime dynamic behavior modification technologies that have any of the following characteristics and may be used to attack highly sensitive systems such as national critical information infrastructure, national defense and military industry, and core government affairs, or to bypass national security defense systems: (1) capable of detecting virtualization sandboxes, debuggers, and emulators, identifying the type and version of security products, or achieving sandbox escape;

(2) under the premise of maintaining complete malicious functionality, automatically rewriting 50% of code structure or control flow upon each execution.

3. Automated antivirus-evasion variant batch generation and distributed large-scale deployment technologies that have any of the following characteristics and may be used to attack highly sensitive systems such as national critical information infrastructure, national defense and military industry, and core government affairs, or to bypass national security defense systems: (1) generating 20 functionally equivalent but structurally different variants in a single run, or having an end-to-end automation rate of 80%;

(2) based on a single baseline payload, generating more than 10 variants every 24 hours with syntax tree divergence of 30%;

(3) sampled variants showing 90% consistency in behavioral profiles in sandboxes.

Software and information technology services. AI large model technology: Large models that provide services after being trained using China’s core data.

Note: The scope of “core data” is determined by the Data Security Law of the People’s Republic of China and other relevant laws and regulations.

Software and information technology services. AI agent technology: Agents specifically or mainly used in highly sensitive application scenarios such as national critical information infrastructure, national defense and military industry, and core government affairs, and reaching a high-performance level.

Note: “High performance” means meeting the control indicators for restricted-category AI agent technology under 266505X.

Technologies Restricted from Export

Serial number; industry sector; code; technology name; control points.

Internet and related services. High-performance detection technology: (Added on the basis of the existing seven items under this category of technology) 8. Technologies for manufacturing detection systems and equipment for deeply synthesized video, audio, images, or multimodal information, with accuracy and recall rate of 98%.

9. Video and image information steganography and extraction technologies that simultaneously meet the following characteristics: (1) high robustness, with an error code rate of 0.5% or recall rate of 99.9%;

(2) low false alarm rate, with false positive rate (FPR) of 0.1%;

(3) high imperceptibility, with structural similarity index (SSIM) of 0.999, or peak signal-to-noise ratio (PSNR) of 41 dB, or learned perceptual image patch similarity (LPIPS) of 0.005.

Information confrontation technology: (Added on the basis of the existing five items under this category of technology) 6. AI-assisted vulnerability discovery technologies with any of the following characteristics: (1) in authoritative security benchmark tests, a vulnerability reproduction or exploitability determination score of 75%;

(2) for known publicly disclosed vulnerabilities, an end-to-end success rate for independently completing the process from vulnerability analysis to construction of a complete exploit chain: 50% success rate for mainstream operating systems or browsers, or 40% success rate for exploit construction at the arbitrary-code-execution level;

(3) vulnerability discovery and exploitation efficiency achieving an improvement of 10 times or more compared with the benchmark implementation by senior security experts, or achieving a performance improvement of 10 times or more in the number of exploitable vulnerabilities discovered in standard vulnerability database security benchmark tests;

(4) capable of autonomously chaining two or more low-risk or medium-risk software defects into a complete multi-stage attack chain and generating runnable proof-of-concept code;

(5) under a conventional testing framework, capable of autonomously discovering in one pass more than 5 previously undisclosed high-risk security defects, or more than 50 previously undisclosed security defects, in a major open-source project or mainstream operating system;

(6) reaching the highest level in mainstream domestic and international exploit capability grading systems.

Software and information technology services. Information processing technology: (Added on the basis of the existing 18 items under this category of technology) 19. Voiceprint recognition technologies with any of the following characteristics, including core voiceprint algorithm technology, anti-attack and anti-forgery technology, voiceprint recognition system technology, voiceprint data processing and protection technology, etc.: (1) under conditions of false positive rate (FPR) of 0.01%, enrollment speech duration of 30 seconds, test speech duration of 10 seconds, and speech signal-to-noise ratio of 20 dB, a true positive rate (TPR) of 99.1%;

(2) single voiceprint end-to-end processing latency of 300 milliseconds, and throughput of 100 requests/second;

(3) overall detection rate of 98% for common fraud attacks such as recording replay, speech synthesis, and voice conversion, or false acceptance rate of 1%;

(4) possessing specialized optimization capabilities for voiceprint recognition of minority languages or specific regional dialects, and recognition accuracy of 90% under standard test conditions.

20. Translation technologies with any of the following characteristics, specifically or mainly used for Chinese and minority languages: (1) an average mean opinion score (MOS) of 4.8 obtained through human evaluation on standard test sets;

(2) where translation semantic fidelity is 95%, a BLEU similarity score with standard answers of 35 for general-scenario translation, or 30 for professional-domain translation.

Software and information technology services. AI large model technology: 1. Large models that provide services after being trained using China’s important data.

2. Core technologies of large models with any of the following characteristics, including weight parameters, key checkpoints, underlying source code, architecture design, and technologies such as training optimization and inference acceleration: (1) computational volume of 1026 floating-point operations;

(2) parameter count of 000 billion;

(3) capabilities reaching the world-leading level.

Notes: Where only a trace amount (0.1%) of important data is used for training, the important data used cannot substantially improve the model’s core technology R&D capability in that data field, security measures such as desensitization and cleaning are adopted, the important data will not be reproduced in the output stage, or the relevant important data can be legally and publicly obtained, it is not included in the scope of administration of item 1. The scope of “important data” is determined by the Data Security Law of the People’s Republic of China and other relevant laws and regulations.

“Capabilities reaching the world-leading level” means that, at the time of the export activity, the model ranks among the global top 10 in public evaluations by mainstream domestic and international evaluation institutions, large-scale industry platforms, etc., in terms of comprehensive performance of large models, specialized business capabilities, global call volume, safety performance, training efficiency, etc.

Software and information technology services. AI agent technology: 1. Autonomous planning and task decomposition technology, capable of automatically decomposing natural-language instructions into a chain of 20 executable subtasks, with subtask decomposition accuracy of 80% and average subtask success rate of 90%.

2. Multi-agent collaborative architecture technology, supporting 60 concurrent collaborative agents, with overall task completion time, under the same effect, being two times the minimum completion time of a single agent, and the consistency rate between the final multi-agent conclusion and the standard answer being 85%.

3. Tool calling and system operation technology, supporting integration of 200 third-party tools, with tool selection accuracy of 90%, and in scenarios requiring three or more tools to collaborate to complete a task, average end-to-end task success rate of 90%.

4. AI game decision-making technology with all of the following characteristics: (1) single-task decision planning depth of 20 steps or 10 concurrent game agents;

(2) possessing strategy self-adaptation capability, complex dynamic game decision latency of 200 milliseconds and 10 control units;

(3) exceeding 90% of humans on standard game benchmarks.

Software and information technology services. AI chip design technology: 1. AI processor chip design technologies with any of the following characteristics, including chip architecture, self-developed instruction sets, intelligent computing intellectual property cores, supporting foundational software stacks, etc.: (1) requiring use of 14 nm or below manufacturing process;

(2) possessing floating-point or integer computing capability;

(3) adopting 2.5D or 3D advanced packaging integration technology;

(4) possessing high-speed interconnection capability;

(5) new architectures based on non-von Neumann architectures such as compute-in-memory and neuromorphic computing;

(6) applicable to specific scenarios such as autonomous driving, computer vision, and intelligent speech.

2. Memory chip design technology: (1) 3D flash memory chip design technologies with any of the following characteristics: 1) storage density of 8 gigabits per square millimeter (Gb/mm2); 2) I/O rate of 1.5 gigabits per second (Gbps); 3) adoption of bonding technology. (2) Memory chip design technologies with any of the following characteristics: 1) requiring use of 18 nm or below memory manufacturing process; 2) adopting a vertical-channel transistor architecture; 3) adopting bonding technology; 4) implementing multilayer stacking.

Software and information technology services. AI computing power cluster technology: 1. Inter-chip or inter-node high-speed interconnection technology for large-scale intelligent computing clusters, with bidirectional bandwidth of 800 gigabytes per second (GB/s).

2. Distributed training fault-tolerance technologies with any of the following characteristics, used in large-scale intelligent computing clusters to ensure stable operation of distributed training: (1) average mean time to recovery (MTTR) of the checkpoint recovery mechanism of 120 seconds;

(2) supporting automatic fault sensing and seamless task migration, with visible interruption time caused by faults to training tasks of 30 seconds;

(3) under a typical cluster scale, the effective computing power waste rate of graphics processing units (GPUs) caused by network faults is 5%.

3. Efficient communication scheduling technologies with any of the following characteristics, used in large-scale intelligent computing clusters to optimize cluster communication efficiency: (1) linear scalability of 98%;

(2) possessing dynamic topology-aware routing and cross-multiple-plane load balancing capabilities, with end-to-end communication latency of 1 microsecond;

(3) supporting deep overlap of communication and computation, with communication hiding rate of 90%.

4. Heterogeneous-cluster efficient inference and scheduling technologies with any of the following characteristics, supporting unified scheduling and collaborative inference of AI chips from two or more different vendors in large-scale intelligent computing clusters, including heterogeneous computing power unified scheduling frameworks, mixed-precision collaborative training technologies, heterogeneous inference optimization technologies, heterogeneous-cluster intelligent operation and maintenance technologies, etc.: (1) supporting unified adaptation and hybrid scheduling of two or more high-speed communication protocols, with cross-chip communication bandwidth utilization of 90%, or cross-node end-side communication latency of 5 microseconds;

(2) supporting unified management of computing nodes across more than two different architectures, with throughput performance of heterogeneous inference clusters improved by 30% compared with a single-chip cluster solution, or average utilization of AI accelerator cards in heterogeneous clusters improved by 65%, or inference cost reduced by 20% compared with a single-chip solution, or cluster average fault recovery time of 10 minutes and cluster availability of 99.9%;

(3) supporting unified computing power scheduling and task allocation across two or more geographically distributed intelligent computing centers, with cross-region scheduling training efficiency being 80% of single-cluster efficiency, or supporting real-time load balancing and task migration for cross-region heterogeneous computing power resources.

Note: “Large-scale intelligent computing cluster” refers to a computing entity with more than 10,000 AI accelerator cards in total.

II. Biomedicine

Technologies Prohibited from Export

Serial number; industry sector; code; technology name; control points.

Pharmaceutical manufacturing. Original cell and gene therapy technology: Cell and gene therapy technology process platforms with independent intellectual property rights.

Notes: Only outbound transfer of ownership is prohibited; outbound licensing, use of relevant technology processes to provide outsourced R&D and production services, and other circumstances that do not transfer ownership outbound are not within the scope of administration. For specific drug varieties at different R&D and production stages, relevant technology processes necessary for R&D, testing, production, quality control, marketing, compliance, etc. in the course of outbound cooperation or business transactions (BD) are not within the scope of administration.

“Technology process platform” refers to a set of reusable underlying common technologies formed through long-term R&D accumulation and capable of supporting the development of multiple drugs. Development technologies and processes used for a single drug variety are not within this scope.

Pharmaceutical manufacturing. Original small nucleic acid drug technology: Small interfering ribonucleic acid (siRNA) drug technology process platforms with independent intellectual property rights.

Notes: Only outbound transfer of ownership is prohibited; outbound licensing, use of relevant technology processes to provide outsourced R&D and production services, and other circumstances that do not transfer ownership outbound are not within the scope of administration. For specific drug varieties at different R&D and production stages, relevant technology processes necessary for R&D, testing, production, quality control, marketing, compliance, etc. in the course of outbound cooperation or business transactions (BD) are not within the scope of administration.

“Technology process platform” refers to a set of reusable underlying common technologies formed through long-term R&D accumulation and capable of supporting the development of multiple drugs. Development technologies and processes used for a single drug variety are not within this scope.

Research and experimental development. Pathogenic microorganism technology: Artificial genetic modification and directed passage gain technologies for pathogenic microorganisms, with any of the following characteristics: (1) function-enhancement technologies for known or potential pathogenic microorganisms;

(2) passage culture systems and processes used for large-scale proliferation of pathogenic microorganisms, directed accelerated evolution, and stable maintenance of specific virulence characteristics;

(3) artificial controlled passage induction technologies simulating natural evolutionary processes.

Technologies Restricted from Export

Serial number; industry sector; code; technology name; control points.

Pharmaceutical manufacturing. Original cell and gene therapy technology: Completely novel target discovery and validation technologies for cell and gene therapy with independent intellectual property rights.

Notes: “Completely novel target” refers to a drug target that has not been publicly disclosed worldwide through patents, academic literature, public databases, industry technical materials, academic conferences, or other channels.

“Completely novel target discovery and validation technology” refers to technology used to screen, discover, and confirm completely novel targets and to identify drug action sites with druggability potential.

Pharmaceutical manufacturing. Original small nucleic acid drug technology: Completely novel target discovery and validation technologies for small interfering ribonucleic acid (siRNA) with independent intellectual property rights.

Notes: “Completely novel target” refers to a drug target that has not been publicly disclosed worldwide through patents, academic literature, public databases, industry technical materials, academic conferences, or other channels.

“Completely novel target discovery and validation technology” refers to technology used to screen, discover, and confirm completely novel targets and to identify drug action sites with druggability potential.

III. Photovoltaics

Technologies Prohibited from Export

Serial number; industry sector; code; technology name; control points.

Non-metallic mineral products industry. Polysilicon preparation technology: 1. Cold hydrogenation fluidized-bed process with single-line trichlorosilane production capacity of 250,000 tons/year, and technologies for manufacturing its equipment.

2. Silane fluidized-bed process with single-line capacity of 20,000 tons/year, and technologies for manufacturing its equipment.

Non-metallic mineral products industry. Silicon wafer preparation technology: Silicon wafer preparation technology with thickness of 70 micrometers, and technologies for manufacturing its equipment.

Note: “Silicon wafer preparation technology” includes program code, underlying algorithm models, equipment drawings, etc.

Electrical machinery and equipment manufacturing. Photovoltaic cell preparation technology: 1. Edge passivation photovoltaic-specific technology for crystalline silicon cell preparation, and technologies for manufacturing its equipment, simultaneously meeting the following conditions: (1) usable for full, half, or multi-split solar silicon wafers, and calculated by the size of a full silicon wafer, each side length is between 182 and 230 millimeters;

(2) silicon wafer thickness of 140 micrometers.

2. Perovskite and tandem cell module production technologies, and technologies for manufacturing their equipment, including: (1) perovskite-crystalline silicon tandem cell technology, with mass-produced silicon wafer size of 182 millimeters and efficiency of 30%;

(2) perovskite-specific slot-die coating technology, with processing width of 1.1 meters;

(3) large-area single-junction perovskite cell module technology, with single-junction perovskite cell module area of 1 square meter and efficiency of 18%;

(4) large-area tandem perovskite cell module technology, with module area of 1 square meter and efficiency of 28%.

Technologies Restricted from Export

Serial number; industry sector; code; technology name; control points.

Non-metallic mineral products industry. Polysilicon preparation technology: 1. Polysilicon engineering technology with single-line capacity of 30,000 tons/year.

2. Reduction process with single reduction furnace polysilicon capacity of 800 tons/year, and technologies for manufacturing its equipment.

Note: “Engineering technology” includes equipment engineering design, plant construction engineering design, process packages, etc.

Non-metallic mineral products industry. Silicon wafer preparation technology: 1. Technologies for pulling photovoltaic monocrystalline silicon rods, and technologies for manufacturing their equipment, including: (1) monocrystalline furnace design application schemes with furnace body chamber inner diameter of 1600 millimeters;

(2) monocrystalline furnace thermal field design application schemes with size of 35 inches;

(3) monocrystalline furnace design application schemes with pulling speed of 1.2 millimeters/minute;

(4) monocrystalline furnace design application schemes with constant-diameter power consumption of 40 kilowatts.

2. Machining technologies for photovoltaic monocrystalline silicon rods, and technologies for manufacturing their equipment, including: (1) half-rod cutting and grinding preparation processing technology;

(2) machining technology usable for manufacturing silicon rods with length of 720 millimeters.

3. Ultra-thin large-size photovoltaic silicon wafer preparation technologies, and technologies for manufacturing their equipment, including: (1) preparation technologies usable for manufacturing rectangular silicon wafers with any side length of 182 millimeters;

(2) technologies usable for preparing silicon wafers with thickness of 130 micrometers or below: 1) tungsten-wire slicing technology of 28 micrometers or below; 2) slicing equipment design application schemes with spindle speed of 6500 revolutions/minute, or main roller diameter of 120 millimeters, or transverse axial distance of main rollers of 370 millimeters.

Electrical machinery and equipment manufacturing. Photovoltaic cell preparation technology: 1. Preparation technologies for high-efficiency tunnel oxide passivated contact (TOPCon) and high-efficiency back contact (XBC) crystalline silicon cells, and technologies for manufacturing their equipment, including: (1) ultra-thin tunnel oxide layer and doped polysilicon selective passivated contact layer low-pressure chemical vapor deposition (LPCVD) and plasma-enhanced chemical vapor deposition (PECVD) photovoltaic-specific coating technologies simultaneously meeting the following conditions: 1) usable for full, half, or multi-split solar silicon wafers, and calculated by the size of a full silicon wafer, each side length is between 182 and 230 millimeters; 2) silicon wafer thickness of 140 micrometers; 3) calculated by a full G12 silicon wafer, LPCVD equipment capacity of 6000 wafers/hour and PECVD equipment capacity of 6000 wafers/hour. (2) Aluminum oxide surface passivation layer atomic layer deposition (ALD) photovoltaic-specific coating technologies simultaneously meeting the following conditions: 1) calculated by the size of a full silicon wafer, each side length is between 182 and 230 millimeters; 2) silicon wafer thickness of 140 micrometers; 3) calculated by a full G12 silicon wafer, capacity of 12000 wafers/hour. (3) High-temperature boron diffusion photovoltaic-specific technologies simultaneously meeting the following conditions: 1) calculated by the size of a full silicon wafer, each side length is between 182 and 230 millimeters; 2) silicon wafer thickness of 140 micrometers; 3) calculated by a full G12 silicon wafer, capacity of 4500 wafers/hour. (4) TOPCon cell copper electroplating electrode preparation technologies simultaneously meeting the following conditions: 1) usable for full, half, or multi-split solar silicon wafers, and calculated by the size of a full silicon wafer, each side length is between 182 and 230 millimeters; 2) silicon wafer thickness of 140 micrometers. (5) Low-temperature amorphous or microcrystalline silicon deposition and PECVD photovoltaic-specific coating technologies simultaneously meeting the following conditions: 1) usable for full, half, or multi-split solar silicon wafers, and calculated by the size of a full silicon wafer, each side length is between 182 and 230 millimeters; 2) silicon wafer thickness of 140 micrometers. (6) XBC cell electroplating and chemical coating technologies simultaneously meeting the following conditions: 1) used for full, half, or multi-split solar silicon wafers, and calculated by the size of a full silicon wafer, each side length is between 182 and 230 millimeters; 2) silicon wafer thickness of 140 micrometers.

2. Heterojunction (HJT) crystalline silicon cell preparation technologies, and technologies for manufacturing their equipment, including: (1) heterojunction cell stacked transparent conductive film deposition technologies with any of the following characteristics, usable for processing silicon wafers with thickness of 110 micrometers: 1) indium content in transparent conductive film of 50%; 2) calculated by G12 silicon wafers, capacity of 14000 half-wafers/hour. (2) heterojunction cell crystalline silicon film deposition technologies with any of the following characteristics, usable for processing silicon wafers with thickness of 110 micrometers: 1) used for high-efficiency N-type heterojunction cells, with film crystallization rate of 40%, or calculated by G12 silicon wafers, capacity of 14000 half-wafers/hour; 2) used for P-type heterojunction cells, with maximum conversion efficiency of 23% under AM1.5 test conditions, or maximum conversion efficiency of 20.5% under AM0 test conditions. (3) Low-silver silver-coated copper heterojunction solar cell preparation technology, with silver content of 30%. (4) Copper electroplating electrode heterojunction cell preparation technology.

Note: In this category of technologies, “high efficiency” means average cell conversion efficiency of 25% under AM1.5 test conditions, or average mass-produced module conversion efficiency of 22. 3%.

Technologies that have entered the public domain through open source, publication of academic papers, or other means are not included in the scope of administration.

For technology exports involving open source of this category of technologies, as well as Chinese enterprises’ self-built and self-operated computing power centers overseas, overseas chip tape-out manufacturing, joint R&D using overseas resources, participation in international standard setting, and other circumstances, facilitation measures such as automatic licensing shall apply.

For technology exports involving public health emergencies, humanitarian assistance, joint R&D using overseas resources, outbound licensing, and other circumstances, facilitation measures such as automatic licensing shall apply.

The scope of technology administration also includes key and core equipment carrying the relevant technologies, specifically including trichlorosilane cold hydrogenation fluidized beds, silane fluidized beds, reduction furnaces, photovoltaic silicon wafer slicing equipment, monocrystalline furnaces applied to photovoltaic crystal pulling, machining equipment for photovoltaic silicon wafer preparation such as truncating and squaring, photovoltaic silicon wafer slicing equipment, edge passivation equipment (EPD) applied to half-wafer or multi-split processes, tunnel oxide doped polysilicon selective passivated contact layer deposition equipment (including both PECVD and LPCVD equipment), atomic layer deposition (ALD) equipment, high-temperature boron diffusion furnaces, copper electroplating equipment applied to TOPCon cells, crystalline silicon film deposition (PECVD) equipment applied to HBC and HTBC cells, copper electroplating equipment applied to XBC cells, transparent conductive film deposition equipment (PVD), amorphous or microcrystalline silicon film deposition equipment (PECVD), heterojunction cell copper electroplating equipment, and slot-die coating equipment.

Annex 2: Technology Export Information Registration Form

MOFCOM Spokesperson Responds to Questions on the Proposed Revision of China’s Catalogue of Technologies Prohibited or Restricted from Export

On October 16, 2026, the Ministry of Commerce (MOFCOM) and the Ministry of Science and Technology (MOST) issued Announcement No. 48 of 2026, launching a public consultation on proposed revisions to the Catalogue of Technologies Prohibited or Restricted from Export (the “Catalogue”) and introducing temporary pre-export registration requirements for the relevant technologies.

A MOFCOM spokesperson responded to questions from the media regarding the announcement.

Q: What is the background to the proposed revision of the Catalogue?

A: Under Article 20 of the Foreign Trade Law of the People’s Republic of China, the competent foreign trade department of the State Council, together with other relevant departments, is responsible for formulating, adjusting, and publishing the catalogue of technologies prohibited or restricted from export.

Since 2001, MOFCOM and MOST have revised the Catalogue on multiple occasions, adding some technologies, removing others, introducing controls where necessary, and relaxing restrictions where appropriate. This has become an established regulatory practice.

The current revision is likewise part of China’s routine technology trade management, conducted in accordance with applicable laws and regulations. It is not directed at any particular country, region, or entity.

In recent years, technologies related to artificial intelligence, biomedicine, and photovoltaics have increasingly been applied in sensitive areas. Major economies have introduced export controls of varying degrees in these sectors.

Drawing on internationally accepted practices, China is implementing necessary regulatory measures in accordance with the law. The objective is to prevent the risks of technology becoming uncontrollable or spreading inappropriately, while safeguarding normal international technological exchanges and cooperation, and ensuring that technological development remains beneficial, safe, controllable, and serves humanity.

Q: What technologies are proposed to be added to the Catalogue?

A: The public consultation covers 40 key technologies across three sectors: artificial intelligence, biomedicine, and photovoltaics.

Fourteen technologies are proposed to be prohibited from export, including AI-driven malicious code generation and mutation technologies, proprietary technology platforms and processes for cell and gene therapies, and production technologies for perovskite and tandem solar cell modules.

Twenty-six technologies are proposed to be restricted from export, including AI-assisted vulnerability discovery technologies, proprietary technologies for discovering and validating novel targets for general-purpose cell and gene therapies, and polysilicon engineering technologies with a production capacity of at least 30,000 tonnes per year per production line.

The announcement also specifies circumstances in which facilitation measures may apply. Further details are available in the original announcement.

Q: Has the proposed revision fully taken into account the needs of industrial development?

A: The Chinese government has consistently supported enterprises in conducting mutually beneficial international business operations and technological cooperation in accordance with laws and regulations. This policy position remains unchanged.

Before launching the public consultation, MOFCOM and MOST, together with the relevant industry authorities, organized extensive assessments involving research institutions and industry associations. They also consulted major enterprises and carefully considered the current state and development needs of industries both in China and overseas.

This is reflected in three main aspects.

First, the scope of controls is precise and limited. Most of the technologies proposed for inclusion are defined by specific technical parameters. Products manufactured using these technologies are not subject to the controls. This provides enterprises with clear and narrowly defined compliance boundaries and facilitates implementation.

Second, facilitation measures will be available. The proposed controls identify various export scenarios eligible for simplified procedures, reflecting a differentiated and category-based regulatory approach. This is intended to improve policy transparency and predictability while ensuring that technology exports remain safe, compliant, and orderly.

Third, the Catalogue will be dynamically adjusted. MOFCOM and MOST will continue to adjust the scope of the Catalogue in accordance with the law and technological developments, removing technologies that are no longer advanced or have become obsolete.

The current public consultation is intended to gather views and recommendations from a broader range of stakeholders.

Q: What are the main considerations behind the proposed addition of AI technologies?

A: Global AI innovation is entering a period of unprecedented activity, bringing both opportunities and challenges.

The proposal to add 23 key technologies related to large AI models, AI agents, computing clusters, and information processing is based primarily on two considerations.

First, ensuring that AI technologies remain safe and controllable.

The inherent and associated risks of AI have attracted significant attention worldwide.

Some of the technologies proposed for control, such as AI-driven autonomous malicious code generation and mutation technologies, could be used to attack sensitive systems, including national critical information infrastructure, defense and military systems, and core government systems, or to circumvent national security defenses.

If acquired by non-state actors or malicious entities, these technologies could pose risks to national security and the shared security of humanity.

The Chinese government’s purpose in introducing necessary controls is to establish safeguards against misuse and malicious applications, ensure that AI remains under human control, and advance international AI governance.

Second, encouraging open source development, openness, cooperation, and technology sharing.

The Chinese government is committed to making AI an important driver of shared prosperity and common security.

To support the development of an open-source AI innovation ecosystem, facilitation measures, including automatic licensing, will apply to several categories of technology exports, including:

• Open-source releases of AI technologies.

• Chinese companies establishing and operating their own computing centers overseas.

• Overseas semiconductor tape-out and manufacturing activities.

• Joint research and development using overseas resources.

• Participation in international standards development.

These measures are intended to allow exports to proceed with minimal delay, essentially on a “register and export” basis.

Technologies that have already entered the public domain through open-source releases, academic publications, or other means are proposed to be excluded from export controls, creating a favorable environment for international AI exchanges and cooperation.

It should be particularly emphasized that China advocates AI dialogue and cooperation with all countries on the basis of mutual respect, equality, and mutual benefit, in order to jointly address the risks of AI proliferation and loss of control.

China supports Global South countries in strengthening their AI capabilities, bridging the digital divide, and promoting sustainable development.

Additional facilitation and support will be provided for technology exports required for international cooperation among members of the World Artificial Intelligence Cooperation Organization, including capacity building, technology sharing, and joint development of rules.

Q: Once the revised Catalogue formally takes effect, will overseas deployment of large AI models and the provision of model inference services to overseas users fall within the scope of technology export controls?

A: Chinese AI models and applications are expanding internationally through a wide range of business models.

The key factor in determining whether a particular form of overseas expansion falls within the scope of technology export controls is whether it involves the transfer of restricted technologies from within China to overseas destinations.

The scope of AI technologies proposed for control is precise and limited. Once the relevant measures formally take effect, the vast majority of AI technologies will remain freely exportable.

For AI technologies classified as restricted:

Overseas local deployment falls within the scope of technology export controls. However, where deployment takes place on a company’s own overseas cloud infrastructure or under other relatively controllable circumstances, facilitation measures such as automatic licensing may apply.

By contrast, where enterprises use restricted large AI models to provide API access, interactions through apps or websites, SaaS applications, or lightweight deployment on local end-user devices, these activities do not fall within the scope of large AI model technology export controls.

Q: What are the main considerations behind the proposed addition of biomedical technologies?

A: The existing Catalogue already includes certain biomedical technologies. The current proposal would add five technologies related to pathogenic microorganisms, cell and gene therapies, and small nucleic acid drugs.

There are three main considerations.

First, protecting human health and safety.

Technologies involving pathogenic microorganisms are directly related to public health and national biosecurity.

Prohibiting the export of these technologies is an institutional measure intended to safeguard national security, strengthen biosecurity protections, and protect human health globally.

Second, supporting orderly international cooperation in China’s biomedical sector in accordance with laws and regulations.

The proposed controls include exemptions or facilitation measures for important forms of international cooperation.

For example, overseas licensing of relevant proprietary technology platforms and processes, as well as the provision of outsourced R&D and manufacturing services using those technologies, will be excluded from the scope of controls.

For proprietary technologies involving the discovery and validation of relevant therapeutic targets, exports conducted through overseas licensing arrangements will be eligible for facilitation measures such as automatic licensing.

Third, advancing the vision of a global community of health for all.

The proposed policy explicitly provides for automatic licensing and other facilitation measures for exports of restricted technologies required for public health emergencies, humanitarian assistance, or joint R&D using overseas resources.

China will continue to share the benefits of technological development with other countries and contribute to improving global health and well-being.

Q: What are the main considerations behind the proposed addition of photovoltaic technologies?

A: The proposal would add 12 photovoltaic technologies covering polysilicon manufacturing, silicon wafer manufacturing, and solar cell manufacturing.

The main considerations are as follows.

First, safeguarding national security and interests.

In recent years, photovoltaic technologies have increasingly been applied in sensitive areas such as aerospace, national defense, unmanned systems, and high-security infrastructure.

The potential national security risks associated with photovoltaic technology exports have therefore increased, making timely and proportionate regulation necessary.

Second, supporting the sharing of green technologies.

The scope of technologies proposed for control is limited. Technologies that do not meet the specified control thresholds may continue to be exported freely.

The announcement identifies a small number of key photovoltaic equipment categories. Controls apply only where such equipment incorporates technologies meeting the specified control thresholds.

Other photovoltaic equipment not explicitly listed in the announcement will, in principle, not be subject to its requirements.

Third, improving the technology export regulatory framework.

Exports of key photovoltaic technologies often take place alongside the export, installation, commissioning, modification, and upgrading of photovoltaic production lines.

Exporters engaged in such activities must apply for technology export licenses in accordance with applicable regulations and use the relevant documentation to complete foreign exchange, banking, tax, customs, and other procedures.

Q: What are the main considerations behind the temporary pre-export registration requirement, and what are the specific requirements?

A: To better understand demand for technology exports, improve evidence-based regulatory management, and prevent potential export risks, the temporary registration requirement has been introduced with the necessary approval pursuant to Articles 18 and 20 of the Foreign Trade Law of the People’s Republic of China.

From the publication date of MOFCOM and MOST Announcement No. 48 of 2026 until the revised Catalogue formally takes effect, technology exporters must register exports of the technologies listed in the announcement through the Technology Trade Management Information System on MOFCOM’s Unified Business Platform before proceeding with the exports.

Exporters are responsible for determining whether their proposed technology exports fall within the scope of the temporary registration requirement.

Exports that have already commenced but have not yet been completed are also subject to registration.

The following circumstances require registration:

1. Transfers of technology ownership to overseas entities.

2. Licensing of domestically held technologies for use overseas.

3. Changes whereby the owner or actual controller of domestically held technologies becomes an overseas entity.

4. Other circumstances explicitly designated by MOFCOM as requiring registration.

It should be particularly noted that exports of key and core photovoltaic equipment falling within the scope of the Catalogue must also be registered in accordance with the relevant requirements.

Enterprises encountering difficulties or questions during the registration process may consult MOFCOM and MOST for assistance.

1. Official Statement by China's Ministry of Commerce

MOFCOM Spokesperson Responds to Media Questions on the China–EU Understanding Regarding Hybrid and Electric Vehicles

Question:

China and the EU recently held in-depth discussions on trade in hybrid and electric vehicles under their Trade and Investment Consultation Mechanism, helping to prevent an escalation of trade tensions. Some foreign media outlets have speculated about the quantitative limits and other details of the arrangements concerning hybrid vehicle trade. What is China's response?

Answer:

China and the EU have maintained continuous dialogue under their Trade and Investment Consultation Mechanism and reached consensus on a number of outcomes, contributing to a stable and balanced relationship between the two sides as key trading partners.

Guided by the principles of mutual respect and consultation on an equal footing, the two sides have engaged in intensive discussions on trade in hybrid and electric vehicles, seeking to address their trade differences and respective concerns in a balanced manner.

Regarding hybrid vehicles, both sides have emphasized and confirmed three fundamental principles.

First, respect for facts. According to Eurostat, the EU imported 107,000 hybrid vehicles from China in 2024 and 302,000 in 2025. Building on the 2025 baseline, the two sides have agreed on an arrangement that allows for further growth, ensuring room for Chinese companies to export and achieve stable growth while accommodating the legitimate, fact-based concerns of both industries.

Second, non-discrimination. Any measures adopted must not specifically target Chinese products or discriminate against Chinese companies. The quota allocated to China must not be lower than that allocated to any other source of imports into the EU.

Third, compliance with international trade rules. Both sides have confirmed that any trade arrangements must comply with WTO rules. China reserves all its rights under the WTO framework, including the right to initiate dispute settlement proceedings and seek trade compensation.

These three principles have guided the discussions throughout and provide a solid foundation for protecting the legitimate rights and interests of Chinese companies.

Regarding electric vehicles, China and the EU achieved a "soft landing" in the anti-subsidy case in January this year, when the EU published general guidance on price undertakings. The EU will continue to advance the relevant procedures for price undertakings submitted by individual companies, as well as other review procedures related to the electric vehicle case.

On the basis of reciprocity and mutual benefit, these understandings have effectively protected the practical interests of Chinese companies, prevented an escalation of China–EU trade frictions, and helped create a stable, predictable and sustainable environment for bilateral trade and investment. They will also contribute to the stable, balanced and healthy development of China–EU economic and trade relations.

2. What Has Been Reported About the Agreement?

Based on earlier media reports, China explicitly rejected the EU's proposal for voluntary export restraints, prompting the European Commission to consider temporary import restrictions instead.

On October 10, Bloomberg cited several people familiar with the discussions as saying that the EU was leaning towards safeguard measures. The precise mechanism still needed to be discussed by political leaders, but the measures could reportedly take effect as early as December.

Under the reported proposal, the EU would reduce annual imports of hybrid vehicles from approximately 800,000 units projected for 2026 to around 400,000 units. The EU also reportedly intends to use this arrangement as a pilot that could potentially be extended to other sectors where it believes trade imbalances exist.

Noah Barkin, a senior adviser on China at Rhodium Group and a long-time observer of China–EU relations, believes that China has signalled its willingness to accept EU safeguard measures that would limit exports of conventional hybrid and plug-in hybrid vehicles to approximately 350,000 units annually over the next four years. However, this would be conditional on the quota being allowed to increase gradually between 2027 and 2030.

In previous safeguard cases, the European Commission has allowed quotas to increase annually. For example, steel quotas have been increased by 5% per year.

China is expected to export approximately 300,000 conventional hybrid vehicles and 400,000 plug-in hybrid vehicles to the EU in 2026. A quota of 350,000 vehicles would therefore represent roughly half of this year's projected total. European officials estimate that this would account for approximately 10–15% of all hybrid vehicles sold annually in the EU.

According to reports, the European Commission briefed member states over the weekend on the trade agreement reached with China. EU leaders are expected to decide whether to endorse the agreement at the regular European Council meeting in Brussels next Thursday and Friday.

3. What Are Safeguard Measures?

Safeguard measures are temporary trade restrictions that a country may introduce when a sudden increase in imports causes, or threatens to cause, serious injury to a domestic industry.

In simple terms, they allow a government to temporarily raise tariffs or restrict import volumes, giving domestic companies time to adjust.

For example, suppose Europe originally imported 500,000 Chinese hybrid vehicles annually, but that figure rose to 1.5 million within a few years. European carmakers might experience significant declines in sales and market share, with some factories facing layoffs or production shutdowns.

In such circumstances, the EU could consider safeguard measures to temporarily limit import growth and give its automotive industry time to adapt.

Safeguard measures are a trade defence instrument permitted under WTO rules. Their principal legal basis is Article XIX of the General Agreement on Tariffs and Trade (GATT) and the WTO Agreement on Safeguards.

The WTO's basic objective is to reduce trade barriers and allow goods from different countries to compete fairly. However, it also recognises that trade liberalisation can sometimes place significant pressure on domestic industries.

Safeguard measures therefore provide WTO members with a temporary emergency mechanism. If imports rise sharply and a domestic industry suffers serious injury, governments may introduce temporary protection, subject to strict conditions.

First, there must be evidence. A government cannot restrict imports simply because domestic companies complain about intense competition. It must conduct an investigation and establish a causal link between increased imports and serious injury to the domestic industry.

Second, the measures must be temporary. The initial period generally cannot exceed four years. Extensions are possible under certain conditions, but the total duration normally cannot exceed eight years.

Third, protection cannot be unlimited. Measures must be limited to what is necessary to prevent or remedy serious injury and facilitate industrial adjustment. Where measures remain in place for an extended period, they generally need to be progressively liberalised.

Fourth, trade compensation must be considered. Affected exporting countries may request consultations and seek compensation. Under certain WTO conditions, they may also suspend equivalent trade concessions.

Whether the EU will ultimately proceed with safeguard measures remains to be seen. Nevertheless, where rapidly increasing imports are placing pressure on domestic industries, safeguards offer the EU a potentially suitable legal instrument.

Anti-dumping measures require evidence of dumping, while countervailing duties require evidence of actionable subsidies. Safeguard measures are different. The EU would not need to prove that Chinese carmakers received government subsidies or sold vehicles at dumped prices.

Instead, it would need to demonstrate that imports had increased and that this increase was causing, or threatening to cause, serious injury to the relevant European industry, while satisfying the other applicable legal requirements.

There are two main ways to implement safeguard measures.

One option is to increase tariffs. For example, if a Chinese vehicle is normally subject to a 10% import tariff, the EU could temporarily impose an additional tariff, provided the relevant legal conditions are met. This would raise the price of Chinese vehicles in Europe and potentially ease competitive pressure on European manufacturers.

The other option is to restrict import volumes through quotas. For example, the EU could establish an annual import quota for certain vehicles. Imports exceeding that quota could either be restricted or subject to higher tariffs. The latter arrangement is commonly known as a tariff-rate quota (TRQ).

In principle, safeguard measures must apply to a category of imported products rather than arbitrarily targeting one particular country.

For example, if the EU introduces safeguards on hybrid vehicles, the measures should generally apply to relevant imports from all countries, rather than exclusively to China. WTO rules do, however, provide for certain exceptions.

4. Why Would the EU Still Need Formal Safeguard Measures If China Has Already Agreed to Restrain Export Growth?

This raises an interesting question. If China and the EU have already reached an understanding on controlling export growth, why would the EU still need to initiate formal safeguard measures?

The reason is that WTO rules prohibit members from arranging so-called VERs through bilateral agreements.

Suppose the EU tells China: "If you agree to limit your exports of hybrid vehicles to one million units annually, we will not impose additional tariffs."

Even if China accepts, such an intergovernmental arrangement could directly violate Article 11 of the WTO Agreement on Safeguards.

By contrast, if the EU conducts an investigation under WTO rules, establishes that increased imports are causing serious injury to its automotive industry, and then lawfully introduces temporary tariffs or quotas, those measures could potentially comply with WTO requirements.

5. What Legal Procedures Would the EU Need to Follow?

A political understanding between China and the EU would only be the first step.

If the EU ultimately decides to introduce safeguard measures on hybrid vehicles, it would still need to complete its internal legal procedures.

Under EU law, the European Commission would need to formally launch an investigation, define which vehicle categories are covered, identify the European industries potentially affected, collect evidence on import volumes, company performance and employment, and provide interested parties with opportunities to present their views.

Only after the investigation could the Commission decide whether definitive restrictions were justified and how extensive they should be.

Under EU Regulation 2015/478, safeguard investigations should normally be completed within nine months of initiation, with a possible extension of up to two additional months in exceptional circumstances.

This is a maximum timeframe, not a requirement to wait nine months.

In urgent circumstances, the EU may introduce provisional measures on the basis of preliminary evidence, for a maximum of 200 days. However, it must establish that delay could cause damage that would be difficult to repair.

Provisional safeguard measures generally take the form of increased tariffs. Tariff-rate quotas may also be considered as part of the broader safeguard arrangements, allowing imports within a specified volume at the normal tariff rate while imposing higher duties on imports exceeding that threshold. The EU adopted a similar approach in its 2018 steel safeguard measures.

Definitive measures must also go through the relevant member-state voting procedures. Under the applicable qualified-majority rules, this generally requires support from at least 15 member states representing more than 65% of the EU population.

Political endorsement by EU leaders is therefore important, but it cannot replace the formal investigation and decision-making procedures. Nor is unanimous approval by all 27 member states required.

Notably, under the Franco-German proposal, the European Commission would be able to adopt measures directly, without first securing the support of a qualified majority of member states. The measures could only be blocked if a qualified majority explicitly opposed them. However, the proposal would still need to be approved by the European Council before it could take effect, which will take times. At this stage, it remains unclear whether the EU will ultimately follow the traditional procedure or adopt this new approach.

The initial duration of safeguard measures cannot exceed four years, including any provisional measures. Extensions are possible under certain conditions, but the total duration generally cannot exceed eight years.

6. The Legal Challenges Facing Potential EU Safeguards on Hybrid Vehicles

For hybrid vehicles, one of the more complicated questions is how the EU would establish a sound legal basis for the restrictions.

There are several issues.

First, which vehicles would be covered?

Conventional hybrids, plug-in hybrids, mild hybrids and range-extended electric vehicles are not identical products.

If the EU investigates only plug-in hybrids, it would need to demonstrate that increased imports of those vehicles were causing injury to the relevant European industry.

If it includes multiple types of hybrid vehicles in the same investigation, it would need to explain why those products can reasonably be grouped together and which European-made vehicles compete directly with them.

Second, how would the EU prove that increased imports were causing serious injury?

The EU cannot simply point to declining sales or falling profits among European carmakers and conclude that Chinese imports are responsible.

It would need evidence relating to production, sales, profitability, employment and other relevant indicators, and demonstrate a causal relationship between increased imports and serious injury to the domestic industry.

Other factors, such as weak demand in the European automotive market, rising energy costs and difficulties associated with industrial restructuring, would also need to be examined separately. Their effects cannot simply be attributed to Chinese imports.

WTO rules also require an explanation of the relationship between increased imports, unforeseen developments and the relevant trade obligations.

The EU has previously faced criticism from WTO panels in disputes concerning its steel safeguard measures over deficiencies in this part of its legal reasoning.

Third, could the EU target China alone?

This could be one of the EU's most difficult legal challenges.

Under WTO rules, safeguard measures generally apply to imported products as a category rather than to one particular exporting country.

In other words, if the EU determines that increased imports of hybrid vehicles are harming its automotive industry, it generally cannot restrict Chinese vehicles while completely exempting comparable imports from Japan, South Korea, the United Kingdom and other exporting countries.

There are exceptions, and WTO rules allow country-specific quota allocations based on factors such as historical trade shares. However, such arrangements must have a reasonable legal basis.

If the EU includes other exporting countries in the restrictions, it risks creating tensions with additional trading partners. If it restricts China alone, it may face challenges over compliance with WTO rules.

There is also a requirement for consistency between the imports examined during the injury investigation and those covered by the eventual measures.

The EU cannot simply attribute injury to imports from all countries during the investigation and then impose restrictions exclusively on China without a legally defensible justification.

Fourth, how restrictive could the quotas be?

The EU cannot arbitrarily establish an import ceiling.

Under WTO rules, where quantitative restrictions are introduced, the quota should generally be based on the average level of imports during the last three representative years for which statistics are available.

A lower quota would require additional justification demonstrating that the restriction was necessary.

Even where a tariff-rate quota is used, both the quota volume and the additional tariff imposed on imports exceeding that volume must be proportionate to the need to remedy serious injury.

7. What Would Safeguard Measures Mean for Chinese Carmakers?

If the EU eventually introduces safeguard measures on hybrid vehicles, the implications for Chinese manufacturers would fall into three broad areas.

First, future export growth would be constrained.

The number of vehicles currently being exported might not decline significantly, but it would become much harder for Chinese manufacturers to continue expanding their European sales at the same pace over the next few years.

If the EU introduces tariff-rate quotas, vehicles imported within the quota could continue to enter at the normal tariff rate, while those exceeding the quota would face additional duties.

This could encourage manufacturers to reduce aggressive price competition and focus more on higher-priced, higher-margin models.

Second, the impact would vary considerably across manufacturers.

If quotas are allocated according to historical export volumes, established brands with an existing European market presence, such as Geely-owned Volvo and Lynk & Co, could enjoy an advantage.

By contrast, fast-growing manufacturers such as BYD and Chery could face greater constraints on their expansion.

SAIC's MG brand would also need to consider how to protect its existing market share.

For Chinese brands that have not yet entered Europe, gaining a foothold could become more difficult.

Third, the measures could accelerate Chinese investment in European manufacturing.

If the restrictions apply to imported vehicles rather than vehicles manufactured within Europe, companies that already have European production facilities would be better positioned.

Manufacturers that rely primarily on production in China and exports to Europe would face greater challenges.

However, which companies would ultimately be most affected would depend on several unresolved questions.

Would the restrictions cover conventional hybrids, plug-in hybrids or all hybrid vehicles? How many vehicles would be allowed into the EU each year, and what additional tariffs would apply above the quota? Would quotas be allocated by country, by individual manufacturer, or on a first-come, first-served basis? How long would the measures remain in place? And would vehicles produced locally in Europe be exempt?

The two most consequential issues may be how quotas are allocated and whether European-made vehicles remain outside the restrictions.

If quotas are allocated according to historical sales, established manufacturers would find it easier to defend their market positions, while newer entrants would face higher barriers.

If locally manufactured vehicles are not subject to the restrictions, companies capable of building factories in Europe could continue expanding despite import controls.

Over time, this could change the nature of competition among Chinese carmakers in Europe.

In the past, competition was largely about price, product quality and sales volumes. In the future, access to import quotas and local manufacturing capacity could become increasingly important.

How many vehicles a Chinese manufacturer can sell in Europe may no longer depend solely on how competitive its products are or how attractive its prices are. It may also depend on how much import quota it can secure and whether it has the resources to manufacture vehicles within Europe.

At their September summit, the Chinese and US presidents agreed to build a “constructive relationship of strategic stability based on respect, fairness and reciprocity.” This new understanding is gradually taking shape through arrangements in trade, artificial intelligence and security.

On September 28, China announced the outcomes of the eighth round of China-US economic and trade consultations. The arrangements for mechanisms such as the China-US Trade Council and Investment Council were further clarified, while the framework for reciprocal tariff reductions worth $30 billion was developed in greater detail. The two sides also agreed to establish an AI dialogue mechanism, with the next exchange planned for November. Their militaries agreed to work towards a memorandum of understanding on crisis communication and prevention as soon as possible.

Against this backdrop, can Washington’s cautious approach to Taiwan develop into more binding commitments? How will the “irreplaceability” of Chinese supply chains shape future China-US economic relations? Can cooperation on AI move beyond technological competition into applications and risk governance? And with the US midterm elections approaching, what new variables might emerge in Trump’s China policy?

In this exclusive interview, Phoenix Global Insight speaks with Professor Wu Xinbo, Dean of the Institute of International Studies and Director of the Center for American Studies at Fudan University.

Key Takeaways

1. The September China-US summit added “respect, fairness and reciprocity” to the concept of a “constructive relationship of strategic stability.” This formulation grew out of the principles of equality, respect and mutual benefit that guided earlier trade negotiations. Principles originally applied to economic relations are now being extended to the overall bilateral relationship, providing a clearer framework for cooperation, competition and the management of differences.

2. On Taiwan, Wu argues that China should raise the costs for the United States when Washington takes actions that undermine China’s interests. Whether the US adopts “strategic clarity” or “strategic ambiguity,” China should retain the strategic initiative.

3. On trade, China’s “irreplaceability” extends across the entire supply chain. For the United States, talking about “decoupling” or “de-risking” is much easier than actually achieving it. Wu expects US economic policy towards China to become more pragmatic and targeted, reducing dependence in areas considered sensitive to national security where alternatives are available, while maintaining trade in less sensitive sectors.

4. On AI, China and the United States have considerable room for cooperation beyond technological competition, including applications, commercialisation and risk governance. Wu sees the “zero-sum mentality” of American policymakers as the main obstacle. In AI safety, he argues, cooperation is not a matter of choice but a necessity. However, the involvement of numerous non-state actors makes AI risk governance particularly difficult.

5. On regional conflicts, Wu warns that US secondary sanctions targeting Chinese financial institutions could have the effect of a “financial nuclear bomb,” with consequences for the international position of the dollar. He believes Washington would have to weigh these risks carefully. He also sees opportunities for China-US cooperation on Iran, the Strait of Hormuz, Ukraine and the Korean Peninsula.

6. With the midterm elections approaching, Trump still needs a “success story” in his relationship with China. Progress on trade and other bilateral issues would allow him to present diplomatic achievements to American voters. However, changes in US domestic politics could increase pressure over values, Chinese investment and Taiwan.

Interview by: Song Dongze, Chief International Affairs Writer, Phoenix News

Edited by: Qu Gongze and Cen Yizhuo

Where Did the Six Words “Respect, Fairness and Reciprocity” Come From?

Phoenix Global Insight: The latest China-US summit has expanded the meaning of a “constructive relationship of strategic stability” by adding the principles of “respect, fairness and reciprocity.” When the two presidents agreed in May to build a constructive relationship of strategic stability, you described it as a shift from “tactical stability” to “strategic stability.” How do you assess this latest development? What does it mean for China-US relations going forward?

Wu Xinbo: The principles of “respect, fairness and reciprocity” come from the six Chinese characters meaning “equality, respect and mutual benefit” that were put forward during the China-US trade negotiations. China essentially conducted those negotiations in accordance with these principles. That is why the talks made progress and why the economic relationship stabilised. Now, however, the two sides need to stabilise not only their economic relationship but the entire China-US relationship. During Trump’s visit to China in May, the two countries reached an understanding on building a constructive relationship of strategic stability. The logic behind the latest formulation is the same. If equality, respect and mutual benefit are necessary to stabilise economic relations, then the same principles should apply to the broader bilateral relationship. There has been a slight adjustment in the wording. “Equality, respect and mutual benefit” has become “respect, fairness and reciprocity.” After the May meeting in Beijing, the White House actually used the terms “fairness” and “reciprocity” in its statement. These terms were consistent with the principles China had advocated during the negotiations. The English word “reciprocity” can be translated into Chinese as either “对等” or “互惠.” The nuances are slightly different, but the underlying meaning is broadly similar. So I believe the new six-character formulation draws directly on the principles China followed during the trade negotiations. After discussions between the two sides, these principles have now been extended to the overall China-US relationship in pursuit of strategic stability. We should also recognise that the United States attaches considerable importance to such concepts and formulations. During his welcoming remarks at the White House, Trump specifically mentioned that he and President Xi had established a “great friendship based on mutual respect and the fundamental interests of the two peoples.” So the American side is also talking about mutual respect and the fundamental interests of both peoples. That naturally brings in questions of fairness and reciprocity. These six words therefore reflect the latest China-US understanding on building a constructive relationship of strategic stability.

Phoenix Global Insight: You previously argued that, under the framework of constructive strategic stability, Washington has adopted a more cautious approach to Taiwan than in the past, which has helped maintain overall stability. With the addition of “respect, fairness and reciprocity,” do you think this American caution over Taiwan could develop into more binding policy commitments?

Wu Xinbo: I think the United States must move in that direction, for two reasons. The first is not really about the principles themselves, because principles alone cannot constrain the Americans. What matters more is that President Xi clearly explained China’s position on Taiwan during his visit to the United States. He made three main points. First, China’s position on safeguarding national reunification and territorial integrity is very clear. We are pursuing national reunification. Second, China hopes the United States will maintain what we regard as the correct position of opposing “Taiwan independence.” Since Trump’s visit to China, he has been relatively cautious in handling the Taiwan issue. Third, properly handling Taiwan is a solid foundation for China-US strategic cooperation and the development of bilateral relations. In other words, if the Taiwan issue is not handled properly, there can be no strategic stability between China and the United States, nor can bilateral relations and cooperation develop. That is a clear message about the consequences. The second reason is that China has cards to play. If the United States retreats from its position on Taiwan and damages China’s core interests, it will suffer substantial losses in its relationship with China. So when we talk about “respect” in the phrase “respect, fairness and reciprocity,” the first requirement is respect for China’s core interests, especially on Taiwan. Before President Xi’s visit to the United States, Ambassador Xie Feng published an article in People’s Daily discussing China’s four red lines in China-US relations. President Xi had previously raised these with Biden as well. They concern Taiwan, democracy and human rights, China’s political system and development path, and China’s right to development. I therefore believe these six words provide a clearer framework for how China and the United States should cooperate, the limits of their competition, and how their differences should be managed. They cover all these dimensions.

Whether Washington Chooses “Strategic Ambiguity” or “Strategic Clarity,” China Holds the Initiative

Phoenix Global Insight: Let us turn to specific issues concerning the Taiwan Strait. US arms sales to Taiwan have long been an important factor affecting China-US relations. Around Trump’s visit to China in May, he described a proposed arms sale to Taiwan worth approximately $14 billion as a potential bargaining chip in negotiations with China. US officials subsequently claimed that the sale would not depend on China’s actions. This once again highlights the difficulty of resolving the issue. Diplomatic protests have often failed to prevent Washington from continuing arms sales. How should China respond to prevent the United States from treating arms sales to Taiwan as bargaining chips?

Wu Xinbo: In the past, our responses have generally included diplomatic protests, sanctions against certain American companies and individuals, and military exercises around the Taiwan Strait to exert pressure. But it now appears that these measures have not been strong enough. They have not imposed costs on the United States that it genuinely feels. I think we need to increase the economic and security costs for the United States when it takes such actions. For example, if the United States sells $1 billion or $2 billion worth of weapons to Taiwan, China could cancel procurement contracts with American companies worth two or five times the value of those arms sales. That would impose a real economic cost on the United States.

Phoenix Global Insight: Beyond arms sales, the broader direction of US strategy towards Taiwan has also attracted considerable attention. In recent years, some voices in the United States have called for abandoning so-called “strategic ambiguity.” Meanwhile, Washington has continued arms sales to Taiwan, promoted joint development of unmanned systems through the National Defense Authorization Act, deepened military technology cooperation, and considered expanding Taiwan’s participation in regional military exchanges. Does this suggest that the United States is gradually abandoning strategic ambiguity? What implications could such a shift have for the Taiwan Strait?

Wu Xinbo: I don’t think we should be overly concerned about whether the United States adopts strategic clarity or strategic ambiguity. We should not allow ourselves to be led around by Washington. The key to the Taiwan issue is that China must retain the initiative and control over its own decisions. What does that mean? It means having sufficient strength and determination to handle and resolve the Taiwan issue in the way we consider most appropriate. The United States should have to adjust its policies according to China’s choices, rather than China’s Taiwan policy being determined by whether Washington chooses strategic clarity or ambiguity. Look at Biden. During his four years in office, he stated on four occasions that the United States would defend Taiwan if a conflict broke out. That sounded like strategic clarity. Trump no longer says that. He has returned to strategic ambiguity. But Biden’s strategic clarity was not necessarily all that clear, and Trump’s strategic ambiguity may not be all that ambiguous. What do I mean? Biden said the United States would defend Taiwan. But if a conflict actually broke out, would Washington really intervene? Could it win? Could it afford the costs? Trump, meanwhile, refuses to say whether the United States would intervene. But I believe he understands very well that American intervention in a cross-strait conflict would have little prospect of success and would come at an enormous cost. So I don’t think we should pay too much attention to whether Washington calls its policy clear or ambiguous. The important thing is that the Taiwan issue remains in China’s hands. We must retain the initiative.

TSMC’s US Expansion Could Backfire on Taiwan

Phoenix Global Insight: Taiwan’s semiconductor industry is also becoming an increasingly important factor in China-US competition. On September 2, Taiwan announced that local companies planned to invest an additional $20 billion in the United States. Previously, TSMC had expanded its planned US investment to $265 billion. Under pressure from Washington, Taiwan’s advanced semiconductor industry is becoming more deeply integrated into US supply chains. The United States is deliberately linking technological competition with the Taiwan issue. How might this affect the Taiwan Strait and China-US relations?

Wu Xinbo: I think the American motivation is quite straightforward. The United States is worried that a conflict in the Taiwan Strait could disrupt the reliability of its semiconductor supplies. So its main concern is supply security. In effect, Washington is saying: you cannot simply manufacture chips in Taiwan and sell them to us. You need to manufacture them in the United States so that we can feel secure. Now, Taiwan may believe that by cooperating with Washington, building factories in the United States and addressing American supply-chain concerns, it is offering the United States a valuable gift. Taiwan may think this will bring it closer to Washington and encourage the United States to provide stronger support. But I think the outcome could be exactly the opposite. Traditionally, the United States has valued Taiwan partly for geopolitical reasons. But today, particularly for Trump, the main concern is advanced semiconductors. If Taiwanese companies can produce enough advanced chips in the United States to meet American demand, then Washington no longer needs to worry so much about risks in the Taiwan Strait. That would substantially reduce Taiwan’s value to the United States. Taiwan originally hoped that investing in semiconductor manufacturing in America would secure greater American protection. But the result could be that Taiwan actually reduces its own strategic value. Trump might simply think: as long as my chip supply is secure, who cares what happens to Taiwan? So Taiwan could end up making a costly miscalculation. It may try to gain an advantage but end up worse off.

Decoupling Is Easy to Talk About but Difficult to Achieve: China’s “Irreplaceability” Goes Far Beyond Expectations

Phoenix Global Insight: Moving from semiconductors to the broader China-US economic relationship, you previously argued that a country’s resilience in economic competition cannot be measured by trade volumes alone. We also need to consider how difficult it is to replace that country in critical sectors. Where do you think China’s “irreplaceability” is most evident today?

Wu Xinbo: I think China’s irreplaceability can be found in many areas, across almost the entire supply chain, from upstream to midstream and downstream industries. At the upstream level, people immediately think of rare earths, critical minerals and active pharmaceutical ingredients. These are areas where the United States depends on Chinese supply chains. But there are also large numbers of intermediate products that the United States cannot do without. Take America’s AI infrastructure expansion. The United States is building thousands of data centres. Those facilities require all kinds of computer equipment and electrical systems, many of which have to be imported from China. So the United States remains dependent on China. The same is true in advanced manufacturing, including robotics and drones. I would say China’s irreplaceability goes far beyond what many of us imagine. And the United States is becoming increasingly aware of this reality, sometimes painfully so.

Phoenix Global Insight: Despite Washington’s efforts to remove China from its supply chains, bilateral trade has not moved towards complete decoupling. How do you think this situation will evolve? What changes might we see in the economic relationship?

Wu Xinbo: I think slogans such as decoupling and de-risking are much easier to proclaim than to implement. As I just explained, the United States is discovering that it depends on China across almost every part of the supply chain. So it cannot completely decouple, nor can it fully remove China from its supply chains. I therefore expect future US economic policy towards China to become increasingly pragmatic. Washington will need to redefine the boundaries of its economic relationship with China. What does that mean? There will be areas where the United States believes it must reduce dependence on China for so-called national security reasons, and where it actually has the ability to do so. There will be other areas where Washington wants to reduce dependence but cannot realistically achieve it. In those cases, it will have to compromise and find some kind of middle ground. And there will be non-sensitive sectors, unrelated to military conflict, where decoupling is unnecessary and the risks are limited. Trade and economic cooperation can continue in those areas. So I think US economic policy towards China will have to become more pragmatic and more precisely targeted. It will need to establish new boundaries for the relationship.

Phoenix Global Insight: So China-US economic relations may evolve into a state of partial decoupling?

Wu Xinbo: During the Biden administration, the US Secretary of Commerce visited China and made a remark in Shanghai. She said that only about 1% of China-US trade was problematic, while the other 99% was not. So if decoupling is necessary, perhaps only 1% truly needs to be decoupled, and only in areas where the United States can actually achieve it. The remaining 98% or 99% does not need to be decoupled. That gives us a clearer boundary and helps redefine how the two countries should manage their economic relationship. This is extremely important for the stability and predictability of China-US trade.

The Biggest Obstacle to China-US AI Cooperation Is America’s “Zero-Sum Mentality”

Phoenix Global Insight: Beyond trade, technology has become increasingly important in China-US relations. Competition over advanced semiconductors and AI continues to intensify. The repeated adjustments to US export policies for Nvidia AI chips illustrate Washington’s dilemma: it wants to restrict China’s access to advanced computing power, but it cannot completely ignore the commercial interests of American companies. As technological competition intensifies, is there still room for limited China-US cooperation on AI? Or will broader strategic rivalry make meaningful cooperation increasingly difficult?

Wu Xinbo: If we look at the situation objectively, China and the United States are already cooperating in AI, and they need to cooperate more in the future. The problem is that American policymakers largely approach the development of the Chinese and American AI industries with a zero-sum mentality. They believe that the United States must not only maintain its technological lead but also do everything possible to suppress China and slow down the development of its AI industry, both technologically and commercially. As a result, the cooperation that already exists between the two countries has not received the recognition it deserves, and the potential for further cooperation has not been fully realised. If we look at the possibilities for cooperation, AI can broadly be divided into three areas: technological development, applications and commercialisation, and governance and risk management. China and the United States are already cooperating in all three areas. Take technological development. The United States is ahead in AI technology, but China has also made important contributions. For example, more and more American AI companies are using models developed by Chinese AI companies. Many of these models are open-source and relatively inexpensive, so an increasing number of American businesses are choosing to use them. On the application side, I think we will see even more opportunities for cooperation. China has moved quickly in applying AI, particularly in robotics and advanced manufacturing. These are areas where China has strengths that the United States needs. Then there is governance. The development and application of AI will bring many risks. As two of the world’s leading countries in AI, China and the United States must discuss what risks these technologies create, how to identify them, how to manage them, and how to cooperate in addressing them. So there is actually enormous room for China-US cooperation in AI. The main problem is that American policymakers are too narrow-minded. They constantly think that maintaining America’s lead requires suppressing China’s development. As a result, they ignore both the reality of existing cooperation and the need for further cooperation. That, in my view, is the biggest obstacle.

Phoenix Global Insight: You just mentioned that China and the United States have room to cooperate in preventing AI risks. Some observers believe the two countries already share certain concerns about extreme AI risks. For example, neither wants powerful AI systems to be misused by terrorist organisations or other malicious actors. Could preventing such risks provide an entry point for China-US cooperation on AI safety?

Wu Xinbo: I think addressing AI risks is precisely where China and the United States need to cooperate. This is not a question of whether they want to cooperate. They have to cooperate. AI development is bringing many disruptive challenges, and humanity has not yet fully understood the risks involved. As more potential risks emerge, the issue will require increasing attention from the international community, especially China and the United States. AI risks also have some unique characteristics. The actors involved may not be states at all. They could be individuals, organisations or companies. That makes the risks much harder to control, because there are simply too many non-state actors. And AI is still at a very early stage of widespread application. We do not yet know how many different kinds of harm, including potentially disruptive or catastrophic consequences, could emerge in the future. There is still an enormous amount of work to be done. That is why governing AI risks will be an extremely complex and difficult task.

The US Must Bear the Consequences of Secondary Sanctions Against Iran; Regional Issues Could Offer Opportunities for China-US Cooperation

Phoenix Global Insight: Looking at the broader international situation, regional conflicts such as the Russia-Ukraine war and the US-Iran conflict are also affecting China-US relations. On August 24, the United States announced an “economic isolation campaign” against Iran, introducing secondary sanctions that could affect third-party markets, including mainland China and Hong Kong. At the same time, US sanctions against Russia continue to affect normal economic and trade relations between China and Russia. For China, this means that even ordinary commercial activities face growing exposure to secondary sanctions. How should China protect its legitimate economic relationships without becoming constrained by the US sanctions system? And how might the spillover effects of these sanctions reshape China’s broader external economic strategy?

Wu Xinbo: Let’s take the US-Iran conflict as an example. The United States wants to intensify sanctions and has even threatened to take action against China. I think China’s position should have two elements. First, we should oppose American sanctions and make clear to Washington that these measures are unjustified and have no basis in international law. On Iran, during the Obama administration, an agreement was reached with the support of China and other countries. It was the United States that subsequently withdrew from that agreement unilaterally, violating international law. Then, last year and again this year, the United States unilaterally launched military attacks against Iran. So, in my view, the United States has violated international law and acted as an aggressor. It is neither legally nor morally justified in its approach to Iran. Under these circumstances, its sanctions are unreasonable and cannot be accepted by the international community. The second issue concerns the consequences if Washington targets Chinese financial institutions or major state-owned banks. We need to explain very clearly to the United States what such actions would mean. China is the world’s largest trading nation. A large share of our international trade is settled in US dollars, and we also hold hundreds of billions of dollars in US debt securities. China therefore plays an important role in supporting the international position of the dollar and the market for US government debt. If the United States sanctions Chinese banks, that would be like detonating a financial nuclear bomb. And if the result is an acceleration of China’s move away from the dollar, the United States will have to bear the consequences. China is a major economic, trading and financial power. If an economy of China’s size begins moving away from the dollar, Washington had better think carefully about the implications. We need to make these consequences clear to the Americans. As I said earlier, Americans know how to calculate costs and benefits. They understand what is at stake.

Phoenix Global Insight: Beyond the economic consequences of sanctions, regional conflicts such as the Russia-Ukraine war and the US-Iran conflict continue to affect global security. Although China and the United States disagree on some of these issues, they still share interests in preventing conflicts from spiralling out of control and maintaining energy and shipping security. Could the two countries cooperate in practical ways on these issues?

Wu Xinbo: I think the most urgent issue right now is the US-Iran conflict and the situation in the Middle East. The question of passage through the Strait of Hormuz affects global energy supplies and the direction of the world economy. Is there room for China-US cooperation here? Of course there is. For China, reopening the Strait of Hormuz and restoring freedom of navigation serve our interests, as well as those of the overwhelming majority of countries around the world. So we want freedom of navigation through the Strait to be restored as soon as possible. On the one hand, China can work with Iran. We should make clear that the Strait of Hormuz must not be held hostage to the US-Iran conflict. It is an international waterway, and disruptions there have consequences far beyond the countries directly involved. On the other hand, we also need to work with the United States. We should tell Washington that launching unilateral military attacks against Iran was wrong, that it needs to acknowledge its mistake and correct its policies. That means not launching further attacks and not continuing economic sanctions. If compensation is necessary, it should provide compensation. If guarantees against future military action are needed, it should provide those guarantees. Only then can Iran develop sufficient trust in the United States to reach a new agreement. So I think China should engage with both sides. We need to work with Iran, but even more importantly, we need to work with the United States. That is how China can play a constructive role.

Phoenix Global Insight: Apart from Iran, which other regional issues might provide opportunities for limited China-US cooperation?

Wu Xinbo: I think the Russia-Ukraine conflict and the Korean Peninsula are both areas where China and the United States could cooperate. On Ukraine, Trump has launched another round of diplomatic efforts, and the parties involved in the negotiations have sent some positive signals. If the directly involved parties become willing to sit down and negotiate, China could work with other countries to play a constructive role. Any eventual settlement of the Russia-Ukraine conflict is unlikely to be purely bilateral. It would probably need to be a multilateral agreement, with the United States, China and other major countries potentially acting as guarantors. In that sense, it could resemble the Iran nuclear agreement reached during the Obama administration. China could certainly make a constructive contribution to such a process. The Korean Peninsula is another example. We can see that South Korea’s Lee Jae-myung administration wants to improve inter-Korean relations and advance the peace process on the peninsula. Trump has also repeatedly expressed interest in meeting the North Korean leader to discuss improving US-North Korea relations. China could use its friendly relations with North Korea to play a positive and constructive role, including facilitating communication and offering proposals for the parties to consider. So I believe there are many international and regional issues on which China and the United States could cooperate. In the past, particularly during Trump’s first term, his foreign policy agenda was rather narrow. When it came to China, he was mainly interested in trade. In his second term, fentanyl was added to the agenda. But now it appears there are more issues than that. With the Iran situation, the United States seems to want China’s help in resolving problems. China could also play a role in Ukraine. As two major powers, China and the United States naturally have extensive opportunities for cooperation in international and regional affairs. If we can continue expanding cooperation on third-party issues through leader-level diplomacy, we will broaden the areas of cooperation in the bilateral relationship. That would create additional positive momentum for the stability and development of China-US relations.

With the Midterm Elections Approaching, Trump Wants to Turn China-US Relations into a Foreign Policy Success Story

Phoenix Global Insight: Finally, let’s turn from regional conflicts back to American domestic politics. The United States will hold its midterm elections this November. As the elections approach, how much room does Trump still have to adjust his China policy and negotiate with Beijing?

Wu Xinbo: I think Trump still depends heavily on presenting his China policy as a success. What he wants to say is: look how well I have handled the relationship with China. This is one of my foreign policy achievements. So he needs not only to stabilise the relationship but also to demonstrate progress. For example, achievements in trade or cooperation on drug enforcement are things he can present to American voters as evidence of his success.

Phoenix Global Insight: If the Democrats regain control of Congress after the midterm elections, how much could that affect Trump’s China policy during the second half of his second term? And looking further ahead, how might it shape US policy towards China after Trump leaves office?

Wu Xinbo: If the Democrats take control of the House of Representatives, I think the impact on China-US relations could be felt in three main areas. The first concerns values. Democrats may criticise Trump for treating relations with China primarily as a matter of doing business, while paying insufficient attention to human rights, democracy and values. They may argue that these issues must be given greater priority. So they could play the values card, creating additional political pressure. The second area concerns Chinese investment in the United States. Trump may consider using the proposed China-US Investment Council to encourage more Chinese investment in America. From his perspective, this would be good for the US economy. Chinese investment could create jobs and generate tax revenue. But Democrats, partly because of their ties to organised labour, may be concerned about Chinese investment, particularly in the American automotive industry. We have already seen Democratic lawmakers write to Trump urging him not to open the US automobile market to Chinese manufacturers. During the Biden administration, the United States imposed 100% tariffs on Chinese electric vehicles to prevent them from entering the American market. Democrats may therefore demand much stricter scrutiny and restrictions on Chinese investment. That is the second possible impact. The third area is Taiwan. Since the May summit between the Chinese and American presidents, Trump has generally handled Taiwan rather cautiously, including on arms sales. If the Democrats return to power in Congress, they may argue that improving relations with mainland China must not come at Taiwan’s expense. They may invoke the Taiwan Relations Act and argue that the United States is obligated to provide Taiwan with weapons. They could therefore press Trump to approve further arms sales. That would also affect how the Taiwan issue is handled. There may be other areas of impact, but I think these three would be the main ones.

Phoenix Global Insight: How much influence can Congress actually exert over Trump? After all, his willingness to disregard Congress seems almost unprecedented.

Wu Xinbo: Foreign policy is largely the responsibility of the executive branch, particularly the president. Congress can make noise and apply pressure, but ultimately Trump makes the decisions. What concerns me is the possibility that, after the midterm elections, the Democrats return to power and intensify their political confrontation with Trump. That could make Trump even more dependent on support from his Republican colleagues in Congress. And there are quite a few pro-Taiwan figures within the Republican Party. They might say to him: “Mr President, we can support you, but you need to sell Taiwan some weapons. It has been quite a while since the last major sale.” Trump may not necessarily listen to what Democrats say. But when Republicans make such demands, he may find it much harder to ignore them. That is one possible scenario. In other words, pressure from the Democrats could ultimately be transmitted through the Republican Party.

Phoenix Global Insight: Thank you, Professor Wu Xinbo, for this in-depth discussion, which has helped clarify the dynamics of China-US competition and cooperation across the Taiwan Strait, trade, technology and global governance.

China’s main message during these talks was that the two sides should stabilise their economic and trade relationship, respect each other’s interests, and work towards a more balanced trading relationship by expanding cooperation. Minister Wang Wentao also raised concerns about some of the EU’s recent restrictive measures, stressing that China is not the source of the EU’s problems, but a partner in finding solutions.

Maroš Šefčovič had a somewhat different focus. His main priorities were to reduce the EU’s trade deficit with China and protect European industries. He repeatedly stressed that the negotiations needed to deliver concrete, measurable results. Both sides want a more balanced trading relationship, but the EU has made clear that restraining the growth of certain Chinese exports is also part of its approach.

The joint statement published by the EU is broadly consistent with the 16-point list released by China. However, Šefčovič’s separate post-meeting statement and his subsequent exchanges with journalists revealed considerably more detail.

Hybrid vehicles were one of the more important, and somewhat unexpected, outcomes of the negotiations. The Chinese statement simply said that, following intensive consultations, the two sides had reached an understanding on trade in hybrid vehicles in a manner consistent with WTO rules. The EU’s joint statement used similarly general language.

But Šefčovič was much more specific at the press conference. He said the two sides had reached a common understanding on moderating Chinese exports of hybrid and plug-in hybrid vehicles to the EU, which could reduce those exports by more than 50%.

This does not mean cutting current export volumes in half. When pressed by journalists, Šefčovič explained that the EU was comparing projected exports over the next four years under the proposed measures with what exports would otherwise have been if existing policies remained unchanged. According to the EU’s estimates, the difference could amount to several million vehicles. In other words, the EU wants this arrangement to substantially reduce the projected growth of Chinese hybrid vehicle exports to Europe over the coming years.

Judging from Šefčovič’s answers, the two sides appear to have discussed the proposed arrangement in considerable detail. He said that the figures, parameters, expected outcomes and methods of implementation had all been thoroughly discussed. The EU knew what it wanted to achieve and how it intended to get there. He described the arrangement as a negotiated solution, adding that China understood the pressures facing Europe’s automotive industry and jobs. He also said that the European Automobile Manufacturers’ Association had welcomed the outcome.

What remains unclear is exactly how these export restrictions would work. Journalists repeatedly asked whether the EU would introduce safeguard measures, whether the arrangement might resemble the settlement of the earlier China-EU solar panel dispute, or whether China would decide which companies could sell vehicles in Europe. Šefčovič did not give a direct answer. Instead, he said the details would be disclosed after EU leaders had reviewed the agreement.

For now, we can say that the two sides have negotiated an arrangement aimed at limiting future export growth, and that the discussions have been quite detailed. But we still do not know whether the final arrangement will involve safeguard measures, tariff-rate quotas, pricing arrangements, or some combination of these tools. We will have to wait for the official documents.

There was little progress on battery electric vehicles (BEVs). Both sides simply agreed to continue the procedures for company-specific price undertakings and reviews. When asked about specific prices and timelines, Šefčovič provided no new figures. He only confirmed that the EU’s guidance on price undertakings, issued in January 2026, remained valid. The existing countervailing duties have not been lifted across the board, and the two sides have not announced a new minimum price applicable to all Chinese automakers.

On tariff reductions, the EU disclosed more details than were included in the joint statement. Both the Chinese list and the EU’s joint statement merely said that the two sides would continue exploring the possibility of reducing tariffs on certain products.

However, Šefčovič said that the two sides had reached a common understanding on improving market access for certain EU products through reductions in China’s most-favoured-nation (MFN) tariff rates. He mentioned automotive components, olive oil and footwear as examples. These products account for nearly €4 billion in current EU exports to China, and the proposed reductions are expected to save at least €225 million in tariffs annually. These are fairly specific figures, although the exact tariff adjustments and implementation timetable have yet to be clarified.

Export licensing for rare earths and permanent magnets was another outcome that the EU placed particular emphasis on. The two sides gave broadly consistent accounts of this issue. China agreed to continue facilitating export licences for rare earths and permanent magnets destined for the EU through the existing green channel.

Šefčovič identified this as one of the three main achievements of the negotiations. He explained that the fast-track mechanism had already been established, and that the aim now was to make the licensing process more transparent and predictable, and easier for European companies to use.

There was also some progress on other export control issues. The EU agreed to work with the competent authorities of its Member States to help resolve priority cases involving licences for exports of dual-use items to China. This coordination could make a practical difference for Chinese companies waiting for licences to import European technologies or products. The two sides also discussed the possibility of establishing more stable, longer-term facilitation arrangements, although these ideas are still at the exploratory stage.

On export control listings and delisting procedures, the two sides agreed to provide advance notification before adding entities to control lists, improve transparency, and support delisting procedures within their respective legal frameworks. China placed particular emphasis on initiating delisting procedures, while the EU’s joint statement also referred to supporting relevant steps. This creates an additional channel for discussing individual listing cases in the future.

On market access for medical devices and agricultural products, the talks produced several concrete follow-up actions. China agreed to organise a procurement matchmaking event for EU medical devices during the ninth China International Import Expo. It will also accelerate the recognition of regionalisation arrangements for eligible EU Member States, based on risk assessments, and continue discussions on lifting certain restrictions on agricultural imports related to bluetongue disease. On cosmetics, pharmaceuticals and computer reservation systems, the two sides agreed to continue regulatory consultations and technical exchanges.

There was no substantial breakthrough on the Foreign Subsidies Regulation (FSR) or the inverter issue. The Chinese readout identified EU financing restrictions affecting inverter projects as a concern that still needs to be addressed. The EU’s joint statement, meanwhile, stressed that the relevant guidance on the use of EU funding was not directed at any particular country. Both sides agreed to continue discussions, but the EU did not announce any withdrawal of the relevant financing conditions.

The situation with the FSR is similar. The two sides agreed to hold technical discussions, but there was no announcement of any suspension or termination of specific investigations. On intellectual property, they agreed to establish interim milestones, with the existing working group monitoring progress. Investment cooperation and WTO reform will also remain subjects for further discussion.

China wants the agreed outcomes to be implemented as soon as possible. Šefčovič, however, said that the proposed arrangements would first need to be submitted to EU leaders for assessment, potentially as early as October 15. If approved, the EU hopes to begin the relevant procedures quickly. He also expected that the first common understanding would already be under implementation by the time the two sides meet again in January 2027.

The two sides have agreed to hold a ministerial-level video conference in January and convene the third meeting of the consultation mechanism in Europe in March. Šefčovič also made clear that the EU would continue to use its existing policy instruments if dialogue failed to deliver the expected results.

Judging from the details released by the EU, China appears to have made significant concessions on several issues. Whether these concessions will lead to corresponding adjustments by the EU on trade restrictions and market access remains to be seen over the coming months.

Most importantly, in his post-meeting remarks, Commissioner Šefčovič stated that the two sides had reached a common understanding on moderating Chinese exports of hybrid and plug-in hybrid vehicles to the EU, which he believed could pave the way for a reduction of more than 50% in those exports. This is far more specific than the joint statement’s reference to an “understanding on trade in hybrid vehicles.” We can now conclude that, from the EU’s perspective, the agreement envisages reducing the volume of these exports, rather than simply removing trade restrictions.

The EU also highlighted another outcome that was not elaborated upon in the Chinese list. According to Šefčovič’s remarks, the two sides reached an understanding on improving market access for certain EU products through reductions in China’s most-favoured-nation (MFN) tariff rates. These include automotive components, olive oil and footwear, covering existing exports worth nearly €4 billion and expected to generate at least €225 million in tariff savings.

The remaining key points in the EU’s joint statement are broadly consistent with the 16 outcomes listed by China. Export licensing for rare earths will continue to benefit from a fast-track mechanism, while the EU’s approach to dual-use export licences for China remains focused on coordinating with Member States to address specific priority cases. On FSR, the two sides agreed only to hold technical discussions. As for inverters, the EU merely clarified that its guidance on the use of EU funding for clean energy projects involving certain inverters is country-neutral; it did not withdraw the rules.

Maroš Šefčovič's X post:

EU-CN trade needs real rebalancing. With Minister Wang Wentao we've reached a shared understanding to:

• halve HEV, PHEV exports

• improve access to China's market

• further ease rare earths export licensing.

A first step. I welcome the genuine engagement. We reconvene by Jan.

Press remarks by Commissioner Šefčovič at the second meeting of the EU-China Trade and Investment Consultations

Beijing, 9 October 2026

Good evening, As I wrap up my visit to Beijing, let me begin by thanking my counterpart, Minister Wang Wentao, for his time, engagement and hospitality. I also appreciate the opportunity to meet Vice Premier He Lifeng.

I came here with one clear purpose: to start rebalancing the EU-China trade relationship and to make sure this first phase of negotiations under the Trade and Investment Consultations delivers its first tangible outcomes.

You know the context. The trade deficit is a mountain of a challenge for the EU, felt in every Member State. It is unsustainable and it demands a credible path to rebalancing.

We must defend our industries and restore a level playing field that has been distorted by global overcapacity.

Over the last three months, we have worked intensively at every level. We focused on clear priorities and measurable results as a proof of concept.

This is what that engagement has delivered so far:

First, we have reached a shared understanding to moderate China’s exports of hybrids and plug-in hybrids to the EU. This opens the prospect of cutting China’s exports by more than a half.

Second, we have reached a shared understanding to improve access to the Chinese market for a series of EU products through lower MFN tariffs. These range from car parts to olive oil and footwear, totalling almost 4 billion euros in current export value, which would bring at least 225 million euros in duty savings.

Third, we have reached a shared understanding to further facilitate China’s export licensing for rare earths and permanent magnets.

I often say that genuine negotiation deserves a real try. Therefore, I appreciate my counterpart’s engagement.

Having said that, this is far from the end. It is a crucial first step – but only a first step – in the process of rebalancing.

As President von der Leyen has said, dialogue needs results. And where the dialogue cannot deliver, the EU will use its tools to ensure a rebalancing.

Naturally, the President will now assess the outcomes and discuss next steps with leaders at the upcoming European Council. That is where the final decision lies.

With Minister Wang Wentao, we will reconvene at our level by January and organise the third Trade and Investment Consultations in March, to continue the work.

In parallel, our work also goes on in Brussels.

Thank you.

Transcript of the Q&A with Maroš Šefčovič:

Reuters
Thank you. Good evening. Joe Cash from Reuters. Are you able to give us more details on the hybrid deal? And a simple follow up question, will it be enough on the autos front?

Maroš Šefčovič
Thank you very much for a question. I would underline couple of very important elements. The first one is that it is for the first time that China has accepted to moderate it’s export without going through the face of prior trade tension, and I very much appreciate that. You already probably have seen that there was a positive reaction of the car industry in Europe, and. From the statement, I clearly see that the agreement, we have reached goals beyond the expectation. So I believe that this deal would be, appreciate it by, of course, the car industry.

As I said, it would be presented to my president, to the leaders, who would have a detail look at all the parameters that the European council next week. And of course, we have all the numbers, but you would understand that first, we have to present it to our member states, to the leaders, and then, of course, we’ll share it with all of you. What I would underline though is the fact that we know what is the outcome and we know how we want to get there. So all this is a negotiated in a great detail. And therefore, I’m fully confident that if you get endorsement for the leaders. We know how to complete and accomplishment and accomplish the shirt understanding.

CGTN
Thank you so much for the chance. This reporter Youyang with CGTN, China Global Television Network. And I have two questions. The first one, how to assess the overall outcomes of these tariff negotiations between China and European Commission. And the second one is actually the EU has continue. Need to, will try to put more restrictions on the imports of Chinese made electric vehicles to the European markets. So do you think that would harm the interests of European consumers by limiting their access to a low, a more competitiveness and of course, low priced and high quality products. Thank you so much.

Maroš Šefčovič
Thank you very much for your question. At first and foremost, I have to say that we never had the level of intensity of our. Changes and contacts as we have over the last 3,4 months with our Chinese counterpart. So together, Minister Van Guin Town, myself, our chief negotiators, our directors, general wise, Minister Linji, and the whole thing has been working very hard to accomplish this result.

So I want to say that this was not in a good faith, and this is the result of very intense work, and it reflects also the appreciation of the situation on the both sides. You know very well that European car industry is under a lot of stress, and therefore, this step was absolutely crucial. But I think that what we agreed is fair. We are working in a full compliance with the WTO methodology, which is appreciated also by our Chinese counterparts. And we know exactly how to proceed. And once we get the endorsement by our leaders, it will proceed with all relevant procedures.

I would like to underscents, underscore once again that this is based on negotiated solution, which I would say in this particular turbulent times on the global trading floor, it’s very much appreciated. I believe it’s the best solution for both China and European Union. Second question. Can you repeat it, please? It’s still.

Reporter
Thank you so much for the chance. Well, the second one is the European Union has kept imposing restrictions on the Chinese may like to vehicles. So will that harm the interests of European consumers by limiting their access to a high quality and low priced products?

Maroš Šefčovič
Thank you so much. I think if it comes, if you’re referring to the battery electric vehicles, I think this was again the issue which was discussed. And as you know, we shoot our guidance already in January of this year.

We confirmed our policies that regard also this afternoon, and you will find it reflected also in our joint statement. And of course, in these regards, we always have to look for the appropriate balance.

So what was very important for European internet this stage is to make sure that the solution, which we found would be fair and would also provide adequate remedies and Protection the, for the European car industry. And we believe that in the case of battery electric vehicles, in a case of, for hybrids and plugging hybrids, we found that solution. And then as I said, we found it after detail negotiations with our Chinese counterpart.

Financial Times
Thank you, Joe Lei from the Financial Times. The EU said in June that there needed to be decisive action to reduce Europe’s deficit with China by October. Is this, are these agreements, are these enough, do you think, to for stall any action from the EU? Now?

Maroš Šefčovič
I think that what was very clearly stated was that what we need is a tangible outcome from. This very intense phase of negotiation, that was the reason why we established trade, an investment consultation mechanism. And we just completed this after afternoon, the seconds session. I know that, for example, our American partners have many more rounds than us. So we kind of went up through this very intense phase, but I believe that we achieve very good results. But that, as I said, and I think here we have a clear understanding with the minister Wang went out that this is not end, this is the beginning.

I very much appreciate the commitment of the minister that we are ready to work together on balancing the trade between China and European Union. In the case of Hebris and plugging hybrids, we are talking about reducing the exports from China to European Union over four years by several million cars, which I think it’s pretty significant. We are talking about a solution for seven very concrete target lines, which again, I think are offering variety of solutions for, I would say, almost every single European member states. And as I said, also appreciate that we are looking for the ways how to smoother further the mechanism of licensing of rare earth and permanent Magnus exports for the European company.

So overall, this package from my perspective, proves that these negotiations, if they’re done in such a constructive way as we headed right now. Bring results and show what should be the way forward.

So for us, this is kind of blueprint for the next phase. We already agreed on the agenda for the next meetings. I will have the video call and contact with Mr Van Guenta already in January. So it would be after we would implement this first share understanding, and we will look further into the future. And we want to have another full take this times in Europe, probably already by March. And that would be the mechanism which we would use and which I believe will help us to proceed gradually with the rebalancing the trade between China and the European Union.

Could you tell us how it’s gonna work to bring to 1/2 the number of plug in hybrids that are sold in Europe, if the European consumers want to buy them, how are we gonna limit them?

There are different techniques. How can you do these things? And I think that if you look in just recent couple of months, I think you would find the answer. But you would, I’m sure, appreciate that I first need to discuss the technique, the procedures, and get endorsement by the leaders for these steps in the European Union. But I, but what I would like to underscore once again, we know exactly what we agreed upon. What do you want to achieve and how we are going to do that. So I would say this is not the issue because the most difficult was to get here.

Now we have to present the deal to the leaders, and they would have to see that this is convincing enough to take the other steps, and the rest is the matter of procedure. And I can promise you that once we have that and endorsement, we’re starting to work ASAP.

The first thing after we arrive back in Brussels. And you know that leaders would have the first look at this negotiated solutions and shared understanding already next Thursday. So that would be for us. Clearly, you know the time whenever look at it, assess it and then we’ll start to act and put all the procedures in place.

The New York Time
A question from Keith Bradcher, New York Times. How does your plug in hybrid deal differ from your agency’s deal a dozen years ago on solar panels with China, is this also allowing the Chinese side to decide? Who sells at a markup for reduced number of vehicles in the European Union. Thank you.

Maroš Šefčovič
I think it would be very difficult for me to compare the details between the solar panels and plugging hybrids at this stage, there was a different phase. And at that time, we are living in completely different and much more turbulent world today, but we have seen the dramatic increase of the exports, so hybrids and plugging hybrids to the European Union.

So it was a, for us, absolutely imperative that, that we have to act three. Presented the case to our Chinese counterparts, and explain very clearly that the parameters of the export search in certain products from China to European Union go well beyond traditional trade optics, because we are in a situation that they could put under the thread the whole sectors in European industry, literally thousands of jobs. And the public opinion and the leaders clearly expect very fast action from our side, and.

And I am glad to say that the Chinese partners appreciated this very strong political argument, and therefore, we can proceed through the negotiated solution. And as I said, if it comes to the techniques and procedures, we’ll be very happy to inform you in full details once we have the clearance by the leaders to proceed.

South China Morning Post
Thank you. This is Dewey from the South China Morning Post. I’ve got a question on where else, is there agreement on where else sufficient for the EU? And is it enough to stop a trade war between the EU and China?

Maroš Šefčovič
First and foremost, we never, we have never spoken about the trade wars. And you probably heard me saying that I’m one of those who knows that sometimes very easy to declare the trade war or any word, but it’s very difficult to stop it.

So therefore, I put so much emphasis on negotiations. And I’m glad that today I can present to you the outcome. If it comes to the errors we went through few critical moments the last year. And I have to say that we reconvene already at that time on the level with Minister Wang, Wen Tao immediately. And we had several meetings on this issue already the last year. So we’ve been working on, together with our direct personal involvement to make sure that fast track procedure is put in place. And that guaranteed the necessary supply of the errors and permanent magnets for the European industry.

What we are looking into right now is how to make it even smoother, more user friendly for the European companies, which would bring more transparency and predictability for this very important supply chain. And I believe that through that understanding, we have achieve, we are accomplishing that. And I believe that European industry would be very much welcoming these additional steps in that direction.

NDZ
Good evening. This is Matias, come from Swiss daily newspaper NDZ. The joint statement talks about price undertakings for electric vehicles. Could you go a bit more in detail? Is there a timeframe? Could you quantify these price undertakings, provide us with a few figures?

Maroš Šefčovič
I think that if you follow this topic, and I know that it’s extremely technical, but what is very important to say that of course, we spend quite some time on discussing this issue, especially when the so called contravailing duties been introducing this segment from the side of the European Union. There was an interest from some companies to look into the possibility of price undertaking. And therefore, we issued the guidelines in January of this year how these procedures would work. What are the parameters, how this would deliver. And this was further discussed and I, and reckon firmed by our side that the guidelines that we issued in January are still plays, still in place, are still valid. So I would refer you to these guidelines. And if there is a need for further technical clarification, we’ll be very happy to provide you from expert level.

Bloomberg
Thank you, Commissioner. I’m Linda Lew from Bloomberg News. I want to ask, you mentioned about ensuring these trade agreements will be double BTO compliance. Can you please go into more details about what this mean? Would there be a additional safeguards that you’ll be looking to make sure that these are compliant with WTO rules?

Maroš Šefčovič
Thank you. Yes, as I said, I mean, if it comes to the concrete technique and procedure, I will have to reserve more details for later because first we have to presented to the leaders of the European Union institutions and the member states. But I really would like to reassure you, and we went into the great detail with Minister Wang, went on his team to make sure that procedure we’re posing is WTO compliant, fully compatible, and it’s based on the negotiated solutions. And as I said, once we have a clearance from the leaders, will, we will proceed ASAP to accomplish that.

Frankfurter Alcommand
Thank you very much and sorry to keep you awake so long. And Beijing, I’m about the hybrid car. If I. Understood correctly, it is about minus fifty % over the next four years. What is the base for that? The sales of this year, sales a lot last year. Could elaborate a little bit on these figures.

Maroš Šefčovič
Thanks. Of course, in these situations, you are working with the trade flows, you are working with the projection. So we’re looking at the period of four years. And according to the projection we have, that’s more than a half thing of the exports of hebris and plagging hybrids into the European Union under no change scenario. So I think by this step, we’re actually preventing several millions of cars exports from China to the European Union. And therefore, I think you already seen that aseya, which is Automobile Association of European Car Markets, already welcome this. Steven welcomes the agreement.

First, the understanding reached on hybrid vehicles is the most important outcome of these negotiations.

On October 7, the Financial Times, citing two diplomats briefed on the proposal, reported that China had rejected voluntary export restrictions on hybrid vehicles, prompting the European Commission to consider unilateral import safeguard measures. At the time, the main concern in the market was that, if the two sides failed to reach an agreement, the EU might move quickly to impose restrictions, potentially triggering Chinese countermeasures.

The statement now explicitly says that the two sides “reached an understanding following intensive consultations.” This suggests that they have at least found an approach that both sides can accept and publicly acknowledge.

The most significant wording here is “consistent with WTO rules.” On September 18, China publicly opposed voluntary export restraints and stressed that any solution must comply with WTO rules and the domestic laws of both sides. This formulation therefore allows China to maintain its previously stated position while leaving room for the two sides to manage the hybrid vehicle issue.

However, it remains unclear whether the understanding has prevented new import restrictions altogether, or whether the two sides have reached some agreement on the form, scale or implementation of potential restrictions.

Second, the export control provisions show a relatively clear degree of reciprocity.

Paragraph 12 states that China will continue to facilitate export licensing for rare earths and permanent magnets destined for the EU, while the EU, together with its member states, will work to resolve priority cases involving export licences for dual-use items destined for China.

Europe needs continued access to critical raw materials from China, while China wants European technology, equipment and other controlled items to remain legally available for export. The inclusion of both sides’ concerns in the list of outcomes suggests that the negotiations are beginning to identify practical solutions based on their respective industrial needs.

That said, the commitments mainly involve continued facilitation and efforts to resolve individual cases. The green channel for rare earth exports is an extension of an existing arrangement, while the EU has not committed to approving every priority licence application. The explicit reference to working “together with member states” also means that implementation will require the involvement of the relevant national authorities.

Paragraph 13, concerning “structural facilitation measures,” may be even more important over the longer term. If the two sides can eventually move from case-by-case coordination towards more stable and predictable licensing arrangements, the benefits for businesses could be considerably greater.

Third, paragraph 14 may be the most institutionally significant, yet easily overlooked, provision in the entire list.

Advance notification before adding entities to control lists, greater transparency in listing and delisting procedures, and support for initiating delisting procedures in accordance with the law suggest that the two sides are beginning to establish clearer channels for communication and dispute resolution over export controls.

For businesses, the damage caused by being unexpectedly placed on a control list goes beyond the restrictions themselves. Banks, customers and suppliers may immediately suspend their relationships with the affected company.

If advance notification is implemented effectively, it could at least provide time to verify a company’s identity, clarify the nature of its transactions, correct factual misunderstandings and adjust business arrangements. Delisting procedures would also preserve a possible route towards resolving restrictions already imposed on companies.

My interpretation is that both sides are beginning to explore ways to reduce the unpredictability of economic security measures and the risk of disputes spiralling out of control, while retaining their respective rights to use these instruments. This is a development worth taking seriously.

Fourth, the main value of the provisions on the Foreign Subsidies Regulation (FSR) and inverters lies in opening channels for resolving existing disputes.

The formal inclusion of the FSR in technical-level dialogue is significant for companies such as JD.com that are facing EU scrutiny. In the case of JD.com’s acquisition of CECONOMY, there are reports that new commitments offered by JD.com may help resolve the outstanding concerns. The deadline for the decision has now been pushed back to November 4.

On inverters, the EU’s clarification that its financing guidelines are “not directed at any specific country” may help reduce the perception that China is being singled out and lower the level of overt country-specific confrontation. For now, however, this is only a statement of principle, with limited practical significance.

The same applies to the tariff reduction provision, which merely commits the two sides to continuing discussions on possible reductions. The electric vehicle provisions concern the continuation of price undertaking and review procedures, while the medical device procurement matchmaking event, agricultural risk assessments and regulatory consultations provide concrete mechanisms for further engagement.

Looking at what each side has gained, I think this is an arrangement that both can credibly present as having delivered results. It is still too early to determine which side has made greater concessions.

Europe can point to progress on hybrid vehicles, stronger assurances over the supply of critical raw materials, and continued engagement on market access issues in China.

China, meanwhile, can emphasise that the hybrid vehicle issue is being addressed under mutually accepted rules, that the EU has responded to Chinese concerns over dual-use export licences, that the FSR has been brought into technical dialogue, and that listing and delisting procedures are becoming more transparent.

This should help both sides maintain political support for the negotiating process. The statement also establishes clear milestones for follow-up engagement, including a ministerial video conference in January 2027 and a third regular meeting in March, providing opportunities to review implementation.

My overall assessment is that we are now seeing a limited but tangible easing of tensions, supported by concrete outcomes. Both sides still appear to be making a serious effort to avoid a full-scale trade confrontation.

Joint Statement of the Second Meeting of the China-EU Trade and Investment Consultation Mechanism

On October 8–9, 2026, China’s Minister of Commerce Wang Wentao and European Commissioner for Trade and Economic Security Maroš Šefčovič held the second meeting of the China-EU Trade and Investment Consultation Mechanism (hereinafter referred to as the “Mechanism”) in Beijing. The two sides held pragmatic and productive discussions and agreed on a list of outcomes and common understandings.

Both sides reaffirmed their commitment, as key trading partners, to properly managing their differences within the framework of World Trade Organization (WTO) rules, and to continuing to stabilise bilateral economic and trade relations while making them more balanced. The two sides agreed to convene the third meeting of the Mechanism in March 2027. In the meantime, they will maintain close communication, including through a ministerial-level video conference in January.

List of Agreed Outcomes and Common Understandings

Trade and Investment Balance

1. The two sides will continue to explore the possibility of reducing tariffs on certain goods within the framework of WTO rules.

2. The two sides will continue to strengthen communication and cooperation under the trade monitoring mechanism and further make active use of dialogue mechanisms to enhance mutual understanding.

3. Following intensive consultations, the two sides reached an understanding on trade in hybrid vehicles in a manner consistent with WTO rules.

4. The two sides recalled the guidance document on price undertakings in the anti-subsidy investigation concerning electric vehicles and will continue the relevant procedures for company-specific price undertakings and reviews in connection with the investigation.

5. The two sides will maintain dialogue on market access for medical devices. The EU welcomes the measures taken by China to expand imports of EU medical devices, including the organisation of a procurement matchmaking event during the ninth China International Import Expo (CIIE).

6. Based on risk assessments, China will accelerate the recognition of the regionalisation principle for eligible EU Member States. The two sides agreed to exchange views on methods and technologies for disease control and jointly explore ways to lift restrictions on imports into China from relevant Member States arising from bluetongue disease.

7. The two sides agreed to continue technical exchanges on computer reservation systems. They also agreed to hold follow-up consultations on their respective regulatory frameworks for cosmetics and pharmaceuticals, with a view to further addressing existing and emerging market access issues.

8. The two sides agreed to conduct technical dialogue on the EU Foreign Subsidies Regulation (FSR).

9. The EU clarified that its financing guidance document concerning inverter projects is not directed at any specific country. The two sides will hold further consultations on this issue.

10. The two sides agreed to explore investment cooperation to promote their respective economic development and discuss opportunities for future-oriented cooperation.

Export Controls

11. The two sides reaffirmed the need to further strengthen the China-EU export control dialogue and welcomed enhanced communication and exchanges on their respective export control policies, including through the publication of policy guidance, the organisation of government-business exchanges, and the provision of training.

12. The two sides recognised the importance of improving the predictability and stability of global industrial and supply chains. China is willing to continue facilitating export licence approvals for rare earths and permanent magnets destined for the EU through a “green channel” mechanism. The EU, together with its Member States, will continue to facilitate the resolution of priority individual licensing cases involving exports of dual-use items to China.

13. The two sides reaffirmed their commitment to addressing concerns in the area of export controls and discussed the possibility of developing structural facilitation measures to support compliant trade in dual-use items between China and the EU.

14. The two sides reached an understanding within the framework of the export control dialogue mechanism to provide advance notification before adding entities to control lists, enhance transparency in procedures for removing entities from such lists, and support the initiation of delisting procedures within their respective legal frameworks.

Intellectual Property

15. China and the EU have begun addressing systemic intellectual property issues and have made progress. The two sides agreed to continue cooperating to resolve relevant issues and to establish interim milestones, focusing on effective and fair intellectual property protection and enforcement, as well as greater transparency and predictability. The two sides agreed to monitor progress through the China-EU Intellectual Property Working Group.

WTO Reform

16. The two sides agreed to further strengthen bilateral communication and cooperation on WTO reform in an open and constructive manner. Both sides committed to engaging in WTO reform and agreed to discuss all relevant issues with a view to achieving substantive progress.

He Lifeng Meets with EU Trade and Economic Security Commissioner Šefčovič

October 9 — He Lifeng, Member of the Political Bureau of the CPC Central Committee and Vice Premier of the State Council, met in Beijing on the afternoon of October 9 with EU Commissioner for Trade and Economic Security Maroš Šefčovič. The two sides exchanged views on China-EU economic and trade relations. He Lifeng stated that China has always attached great importance to developing economic and trade relations with the EU, and is willing to work with the European side to jointly implement the important consensus reached by the leaders of both sides. Both sides should make full use of the China-EU Trade and Investment Consultation Mechanism, uphold the new positioning of a stable and balanced China-EU key trading partnership, maintain continuous dialogue, handle differences properly, and promote the healthy and stable development of bilateral economic and trade relations. Šefčovič stated that China is an important economic and trade cooperation partner of the EU, and that the EU is willing to continue advancing trade and investment consultations, strengthen communication, and jointly promote cooperation.

Minister Wang Wentao and European Commissioner Maroš Šefčovič Co-Chair the Second Meeting of the China-EU Trade and Investment Consultation Mechanism

On October 8–9, Minister of Commerce Wang Wentao and European Commissioner for Trade and Economic Security Maroš Šefčovič co-chaired the second meeting of the China-EU Trade and Investment Consultation Mechanism in Beijing and issued a joint statement. Guided by their shared recognition of China and the EU as key trading partners committed to a stable and balanced relationship, the two sides reviewed progress made since the first meeting across the Mechanism’s four workstreams: trade and investment balance, export controls, intellectual property, and World Trade Organization (WTO) reform. They also held discussions on major China-EU economic and trade issues on an equal footing and in a professional and constructive manner.

The two sides agreed to maintain communication and consultations on market access issues and to work towards gradually resolving their respective concerns regarding medical devices, agricultural and food products, and restrictions on financing for inverter projects, with a view to promoting a more balanced China-EU trading relationship. They agreed to further strengthen the China-EU export control dialogue mechanism, enhance policy communication, address specific cases of concern to both sides, and explore the possibility of introducing trade facilitation measures.

The two sides also agreed to hold technical discussions on the EU Foreign Subsidies Regulation (FSR), continue exchanges and cooperation on intellectual property protection and WTO reform, and explore opportunities for investment and future-oriented cooperation.

Minister Wang Wentao expressed concern over the EU’s recently introduced restrictive economic and trade measures. He reiterated that China is not the source of the EU’s problems, but rather a partner in finding solutions. He urged the EU to work together with China to properly manage trade frictions and differences through dialogue and consultation, in accordance with WTO rules and with due consideration for each other’s interests. He also called for exploring new opportunities and expanding areas of cooperation, so that China and the EU can jointly contribute to international economic growth and the security and stability of global industrial and supply chains.

Commissioner Šefčovič stated that China is an important economic and trade partner of the EU. He expressed the EU’s willingness to strengthen communication and exchanges with China under the China-EU Trade and Investment Consultation Mechanism, manage trade frictions and differences through dialogue and consultation, jointly seek constructive solutions, and promote a more balanced and stable development of EU-China economic and trade relations.

Both sides agreed that the second meeting marked a new starting point for deepening China-EU cooperation. They instructed their respective working teams to continue advancing follow-up work, facilitate the early implementation of the agreed outcomes and common understandings, and make preparations for the third meeting of the China-EU Trade and Investment Consultation Mechanism.

Head of the Department of European Affairs of China’s Ministry of Commerce Explains the Outcomes of the Second Meeting of the China-EU Trade and Investment Consultation Mechanism

On October 8–9, China’s Minister of Commerce Wang Wentao and European Commissioner for Trade and Economic Security Maroš Šefčovič co-chaired the second meeting of the China-EU Trade and Investment Consultation Mechanism (hereinafter referred to as the “Mechanism”) in Beijing.

The two sides held discussions on an equal footing and in a professional and constructive manner, covering trade and investment balance, export controls, intellectual property, and World Trade Organization (WTO) reform. They comprehensively reviewed the consultations and progress made since the Mechanism’s first meeting and reached a number of agreed outcomes and common understandings.

The head of the Department of European Affairs of the Ministry of Commerce provided the following explanation of these outcomes.

I. China-EU Economic and Trade Relations

First, the two sides reaffirmed their status as key trading partners committed to a stable and balanced China-EU relationship. They confirmed that they would address economic and trade differences and each other’s concerns in a balanced manner within the framework of WTO rules, explore ways to deepen mutually beneficial cooperation, and promote a more balanced and forward-looking development of China-EU trade.

Second, both sides agreed that the Mechanism has been operating smoothly and efficiently, and that the successful second meeting marks a new starting point rather than an endpoint. The outcomes and common understandings reached demonstrate that China and the EU have both the willingness and the ability to manage and properly resolve differences through dialogue and consultation, effectively preventing trade frictions from escalating.

Third, both sides recognised that stable and healthy China-EU economic and trade relations not only benefit businesses and people on both sides and serve their shared interests, but also bring greater certainty and positive momentum to global economic growth and the stability of industrial and supply chains.

II. Trade and Investment Balance

Guided by the principles of mutual respect, equality and mutual benefit, the two sides held intensive consultations on a range of issues, including medical devices, cosmetics, pharmaceuticals, inverters, and agricultural and food products. They discussed in depth how to address each other’s concerns on a reciprocal basis, expand market access in both directions, and promote a dynamic balance in China-EU trade.

First, the two sides agreed to make use of the trade monitoring mechanism, explore the possibility of reducing tariffs on certain products within the framework of WTO rules, and conduct technical dialogue on the EU Foreign Subsidies Regulation (FSR), with a view to creating a fair, transparent and predictable environment for China-EU trade and investment cooperation.

Building on their previous cooperation, the two sides expressed their willingness to continue exchanges on market access for medical devices and agricultural products, and to maintain communication on the EU’s financing guidance for inverter projects and regulatory issues concerning cosmetics and pharmaceuticals.

Second, based on the principles of respect for facts, non-discrimination and compliance with WTO rules, the two sides held in-depth discussions on trade in electric vehicles and hybrid vehicles. These discussions helped prevent the situation from escalating, effectively safeguarding the actual export interests of Chinese companies and the stable development of China-EU trade in hybrid vehicles.

The two sides also reviewed the previously agreed general guidance document on price undertakings in the anti-subsidy investigation concerning electric vehicles. The EU will actively advance the relevant procedures for company-specific price undertakings and reviews in the electric vehicle case.

Third, the two sides looked ahead to future cooperation and recognised the considerable potential for China-EU cooperation in areas such as new energy, artificial intelligence, trade in services, the digital economy, and green and low-carbon development. They agreed that further opportunities could be explored and new areas of cooperation developed.

The two sides agreed to explore two-way investment cooperation. China, as always, welcomes EU companies to invest and do business in China and will continue improving its business environment. At the same time, China expects the EU to provide a fair, transparent and predictable business environment for Chinese companies, effectively protect their legitimate rights and interests, and strengthen their confidence and expectations regarding investment and business operations in Europe.

III. Export Controls

Since the establishment of the China-EU Export Control Dialogue Mechanism, the two sides have maintained close communication at various levels.

They agreed to make greater use of the dialogue mechanism, strengthen policy communication, and safeguard the stability and smooth functioning of global industrial and supply chains.

Both sides reaffirmed their commitment to addressing each other’s concerns in the area of export controls. The EU will continue working towards progress in resolving priority individual licensing cases involving exports of dual-use items to China.

The two sides explored the possibility of introducing reciprocal facilitation measures for compliant trade in dual-use items between China and the EU. The EU will consider possible measures to facilitate such trade with China.

The two sides also agreed to strengthen communication on the listing and delisting of entities under export control sanctions and, within their respective legal frameworks, support and take substantive steps to initiate reciprocal delisting procedures.

IV. Intellectual Property

China and the EU have maintained a longstanding and constructive cooperative relationship on intellectual property protection, with continued progress over the years.

Both sides expressed their willingness to deepen exchanges and expand areas of cooperation. China hopes that the EU will give due attention to China’s concerns and actively work towards addressing them.

The two sides agreed on the need to establish interim milestones and continue making full use of the China-EU Intellectual Property Working Group as the main channel for deepening cooperation and monitoring progress.

V. WTO Reform

China and the EU are both firm supporters of and active contributors to the multilateral trading system.

Both sides emphasised the value of a rules-based multilateral trading system, expressed

In the document, the central bank emphasised that China remains committed to a managed floating exchange rate regime based on market supply and demand, and that it has neither the need nor the intention to gain a competitive advantage in international trade through currency depreciation. It also stressed that a trade surplus cannot automatically be equated with currency undervaluation, much less be used to justify demands for the renminbi to appreciate against the US dollar by a predetermined percentage.

The statement further argues that correcting global imbalances requires adjustments by both surplus and deficit economies. China will continue to expand domestic demand and transform its growth model, while deficit countries should also improve their fiscal positions, increase savings and strengthen industrial competitiveness. At its core, the statement seeks to establish clear boundaries for China’s exchange rate policy and reject the notion that China should bear unilateral responsibility for global economic rebalancing.

Against the backdrop of renewed debate over whether the renminbi is significantly undervalued and intensifying trade frictions between China and the European Union, the Chinese government has used this statement to clarify its position on exchange rate determination, trade competitiveness and the allocation of responsibility for global rebalancing. It draws a clear distinction: China is prepared to contribute to global rebalancing by expanding domestic demand, raising household incomes and pursuing structural reforms, but rejects the idea that external valuation models should dictate the scale and pace of renminbi appreciation.

The statement was released as EU Trade Commissioner Maroš Šefčovič was in Beijing discussing the trade imbalance between China and the European Union. The European side wants China to take measures to narrow the bilateral trade gap, and the renminbi exchange rate has increasingly become part of the European policy debate.

Europe’s concerns about the renminbi now extend well beyond traditional monetary policy discussions. In July this year, French President Emmanuel Macron publicly called for dialogue with China on exchange rates and financial market opening. In her September State of the Union address, European Commission President Ursula von der Leyen warned that the EU’s trade imbalance with China had reached a critical point and said the bloc would use its existing instruments to promote rebalancing.

These developments suggest that the renminbi exchange rate is increasingly being linked to European manufacturing competitiveness, employment and the protection of domestic markets. The PBOC statement’s discussion of energy costs, regulatory policies, investment in innovation and industrial structure can therefore be interpreted as a response to such criticisms.

Another important development is that international institutions and researchers have recently produced new quantitative assessments of the renminbi’s valuation.

In its External Sector Report published in July, the International Monetary Fund (IMF) estimated, based on China’s 2025 current account gap, that the renminbi’s real effective exchange rate was undervalued by approximately 21.3%, according to its staff assessment. However, the same report’s real effective exchange rate index model and level model produced markedly different results, suggesting an overvaluation of approximately 0.5% and an undervaluation of approximately 2.7%, respectively. These substantial differences provide a practical basis for the PBOC’s questioning of the reliability of valuation models and the degree of certainty that can be attached to their conclusions.

On September 22, Federal Reserve researchers published another paper applying the IMF’s earlier external balance assessment framework with updated current account data. Their analysis produced an estimate of approximately 20% undervaluation of the renminbi. When the researchers applied an alternative approach to trade statistics that they proposed, the estimated undervaluation increased to 24.3%.

The debate also concerns how responsibility for global economic rebalancing should be distributed.

The September 1 Chair’s Statement from the G20 Finance Ministers and Central Bank Governors’ Meeting called on surplus economies to remove policies that suppress consumption and reinforce dependence on exports, while also urging deficit economies to increase savings and improve fiscal discipline. A footnote to the statement explicitly recorded China’s objections to several paragraphs, including those addressing global imbalances.

In July, the US Treasury Department stopped short of designating China a currency manipulator, but kept China on its Monitoring List. It also warned that such a designation could still be made if evidence emerged that China was resisting renminbi appreciation through formal or informal channels.

Against this background, the PBOC’s emphasis on having moved away from regular foreign exchange intervention, improving policy transparency, and expanding its reporting of foreign exchange data to the IMF beginning in 2027 appears, at least in part, to be a response to US concerns.

A Historical Overview of the Renminbi Exchange Rate Debate

The controversy surrounding the renminbi exchange rate has continued for more than three decades.

In 1994, China unified its official exchange rate with the rate prevailing in the foreign exchange swap market, established a unified foreign exchange market, and introduced a managed floating exchange rate regime. This marked an important step in the transition from administrative allocation of foreign exchange towards a more market-oriented system.

During the 1997–1998 Asian financial crisis, when several neighbouring countries experienced sharp currency depreciations, China pledged not to devalue the renminbi. At the time, the international community was primarily concerned about competitive devaluations and the potential spread of the financial crisis. The stability of the renminbi was therefore widely regarded as an important contribution to regional financial stability.

Following China’s accession to the World Trade Organization (WTO) in 2001, rapid growth in exports and capital inflows brought the renminbi exchange rate increasingly into the centre of international economic debate. Foreign critics began linking the renminbi’s stability against the US dollar to China’s growing trade surplus, manufacturing competitiveness and employment pressures in the United States.

However, international assessments were far from unanimous. In 2003, a majority of the IMF’s Executive Board directors still considered that there was no clear evidence of significant renminbi undervaluation, while supporting China’s gradual move towards greater exchange rate flexibility.

On July 21, 2005, China launched a new round of exchange rate reform. The renminbi was no longer pegged exclusively to the US dollar, with its value instead managed by reference to a basket of currencies. The exchange rate was adjusted to RMB 8.11 per US dollar that evening. The renminbi subsequently appreciated gradually, although the international controversy over its valuation continued.

Following the outbreak of the global financial crisis in 2008, the renminbi again became relatively stable against the US dollar. In 2010, the PBOC announced further reforms to the exchange rate formation mechanism, with the aim of increasing flexibility.

During this period, policymakers had to balance external financial stability, export-related employment and domestic economic adjustment. The renminbi also began to exhibit more pronounced cyclical movements.

The period around 2015 marked another important turning point.

In May 2015, the IMF explicitly concluded that the renminbi was no longer undervalued, following its substantial appreciation in real effective terms. However, after the exchange rate reform of August 11 that year, expectations of depreciation and capital outflows became major concerns. The PBOC intervened by selling foreign exchange reserves to alleviate downward pressure on the renminbi.

From 2018 onwards, exchange rate issues became increasingly intertwined with the US-China trade war and bilateral trade negotiations.

On August 5, 2019, the US Treasury Department designated China a currency manipulator under legislation dating back to 1988. In January 2020, Washington withdrew that designation, highlighting commitments under the Phase One trade agreement to avoid competitive devaluation and improve transparency.

In recent years, the debate has shifted further towards the renminbi’s real exchange rate, domestic demand and China’s industrial structure.

The IMF has linked China’s relatively low inflation, depreciation of the real exchange rate, weak domestic demand and widening external surplus. It has advocated stronger household consumption, improvements to the social safety net and greater exchange rate flexibility.

An important distinction is often overlooked in these discussions.

The RMB/USD exchange rate measures the price of one currency relative to another. The nominal effective exchange rate reflects a currency’s weighted movements against a basket of trading partners’ currencies, while the real effective exchange rate additionally adjusts for differences in domestic and foreign price levels.

If inflation in China is lower than in its trading partners, the renminbi’s real exchange rate may weaken even if its nominal exchange rate remains stable or appreciates somewhat.

Similarly, the renminbi’s cumulative appreciation since 2005 does not, by itself, prove that the currency is not undervalued today, because economic fundamentals and estimates of the equilibrium exchange rate can change over time.

The Bank for International Settlements (BIS) has explicitly cautioned that the level of an effective exchange rate index relative to its base year cannot, in itself, establish whether a currency is overvalued or undervalued.

In June, Chinese Commerce Minister Wang Wentao met with EU Commissioner for Trade and Economic Security Maroš Šefčovič in Brussels, where the two sides established a new China-EU Trade and Investment Consultation Mechanism. They agreed to bring issues including the trade and investment balance, export controls, intellectual property and WTO reform into a single framework and to continue consultations at the ministerial level. At the time, the EU side stressed that it hoped to see some “concrete and measurable” outcomes by October.

The two sides have in fact remained in close discussions since then. On September 17, Wang and Šefčovič held another video call to take stock of progress since June and prepare for the second ministerial meeting in October. On September 23–24, Chinese Vice Minister of Commerce and Deputy China International Trade Representative Ling Ji held two days of talks in Beijing with senior officials from the European Commission’s Directorate-General for Trade. In other words, China and the EU have effectively developed a three-tier negotiating structure, with discussions moving forward simultaneously at the ministerial, deputy and working-group levels.

Against this backdrop, France and Germany proposed a new set of EU trade defence measures on October 5. These include not only a “diversification instrument” aimed at reducing supply-chain dependence on particular countries and companies, but also proposals allowing the EU to respond more rapidly to “systemic market distortions” in third countries. They are also considering the use of reverse qualified majority voting, which could make it easier for the EU to adopt restrictive measures. The shift in Germany’s position is somewhat surprising. France has long advocated stronger European trade defence measures, while Germany has traditionally been more cautious because of its deeper economic and trade ties with China. France and Germany now appear to be moving towards a more aligned position.

This makes the timing of another video call between the two sides’ deputies on October 6 particularly sensitive. Ling Ji and the Director-General of the European Commission’s Directorate-General for Trade, Jørgensen, held a video consultation yesterday to make final preparations for the second ministerial meeting under the China-EU Trade and Investment Consultation Mechanism. Meanwhile, China’s Ministry of Commerce has publicly criticised the new measures proposed by France and Germany as protectionist.

What is particularly noteworthy is that Yuyuantantian’s article effectively puts forward, from a Chinese perspective, a possible negotiating approach for the upcoming Wang Wentao–Šefčovič meeting. Rather than fighting separate trade battles over electric vehicles, chemicals, foreign subsidies, medical devices, inverters and other individual issues, the article suggests placing trade balance, market access, investment, technology and supply chains within a broader negotiating framework.

Even though the commentary was never recognised as the official position of the Chinese government, the potential trade-off it outlines is relatively clear. Europe wants China to increase imports of European goods and services, improve market access for European companies, and address the rapid growth of exports in certain sectors. China, meanwhile, wants the EU to reduce discriminatory restrictions on Chinese companies and provide a stable market environment for Chinese investment in Europe. If the two sides can address these issues as a package, there may be scope for a broader China-EU economic and trade arrangement.

Below is the full translation of the commentary:

China and the EU Need to Find Broader Common Ground on Trade

On October 5, France and Germany submitted a non-paper to the European Commission, calling on the EU to strengthen its trade defence measures and introduce a number of new protectionist tools.

These tools are mainly aimed at several areas: restricting goods and companies from other countries from entering the European market, reducing so-called supply-chain dependencies, and preparing in advance for possible countermeasures taken by other countries.

At the same time, under the current proposal, the EU would be able to investigate another country’s overall policies. As long as the EU considers those policies to have undermined what it calls “fair market conditions,” it could take measures when deemed necessary.

China’s position on this is clear. If the European side insists on introducing discriminatory measures of this kind, China will respond resolutely to safeguard the legitimate rights and interests of Chinese industries.

01 The European Side Needs to Answer Several Questions

In response to the efforts by France and Germany to push the EU to develop new trade-restriction tools, China could coordinate positions with potentially affected third countries within the framework of the World Trade Organization and jointly study possible countermeasures.

The tools currently available to China include anti-discrimination investigations, industrial and supply-chain security investigations, and investigations into the impact of foreign subsidies.

Zhou Mi of the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce told Tan Zhu that these investigations can assess whether relevant overseas policies affect Chinese companies and create unfair competition, thereby safeguarding the legitimate rights and interests of Chinese companies and reducing the impact of unfair policies and their spillover effects on Chinese industries.

According to relevant disclosures, European Commissioner for Trade and Economic Security Maroš Šefčovič will visit Beijing soon.

Attempting to introduce new restrictive tools at this particular juncture would, first of all, weaken the atmosphere for consultations between China and the EU. Moreover, the new tools could leave room for the European side to impose additional restrictions at any time. If this continues, it would not only further narrow the space for resolving problems through dialogue, but could also undermine the results already achieved through negotiations.

It should be remembered that in June this year, China and the EU established a trade and investment consultation mechanism, with four working areas: trade and investment balance, export controls, intellectual property rights, and WTO reform.

Therefore, the first question the European side needs to answer when it comes to the negotiating table is: Which of the issues currently under discussion are these new restrictive tools actually intended to resolve?

The concerns of both sides can already be put on the table.

One is the balance of trade and investment.

The European side hopes that China will further open its market and increase imports of European goods and services.

But Europe needs to understand that it will be difficult to achieve balanced trade if, on the one hand, it asks China to buy more European products while, on the other hand, attempting to impose restrictions on China in multiple areas.

The second is market access and corporate investment.

China has consistently supported Chinese companies investing in Europe and welcomes greater investment in China by European companies.

However, the EU is investigating Chinese companies in sectors such as wind power and security inspection equipment under the Foreign Subsidies Regulation. It is also continuously strengthening foreign investment screening, restricting Chinese companies and products from participating in public procurement for medical devices, and prohibiting financial support for projects that use Chinese inverters. These practices will only increase uncertainty.

Market access should be reciprocal.

After Chinese companies invest in Europe, whether they can receive stable, transparent and non-discriminatory treatment is a question to which the European side needs to provide a clear answer.

The third concerns critical items and intellectual property rights.

China and the EU are discussing how to balance trade, how to mutually open their markets, and how to maintain stable supply chains. Yet the new tools proposed by France and Germany are instead designed to address how the EU can impose restrictive measures more quickly and more easily.

Such an approach does nothing to resolve the issues already under discussion.

The European side therefore needs to answer a second question: Where are the boundaries for the application of these so-called trade tools?

The boundary between normal responses and so-called “economic coercion”

The new tools proposed by France and Germany could allow the EU to rapidly impose additional retaliatory measures.

This could easily create a problem: the EU could take measures first, and when another country responds, the EU could then treat that response as justification for further escalation.

Affected countries can still take corresponding measures within the WTO framework and in accordance with their own domestic laws. Every additional round of restrictions imposed by the EU would also entail higher costs for its own trade and industries.

The boundary between reducing dependency and creating discrimination

France and Germany have called for the establishment of a new “diversification instrument.” This instrument would examine the concentration of EU imports of goods from a particular country or company, as well as the global market share of the companies concerned.

This may sound like an effort to reduce risks.

But if it ultimately results in procurement quotas, investment thresholds or market-share restrictions based on the nationality of companies, the risks faced by businesses would instead increase.

For a company investing in Europe, the most fundamental questions are: Will it be allowed to enter the market? Will the rules suddenly change? A company may be welcomed today, but could it face restrictions tomorrow simply because of its nationality or market share?

If the European side expects China to provide stable supplies, it should also provide Chinese companies with a stable, open and non-discriminatory market environment.

Stability should be mutual.

The boundary between the EU’s own determinations and WTO rules

The new tools envisaged by France and Germany would allow the EU to investigate the overall policies of another country.

The scope of an investigation could expand from one stage of production to an entire industry, or from industrial subsidies to exchange-rate policies.

The document says that the mechanism should cover “all market distortions.”

The word “all” encompasses a very broad scope.

How should “all market distortions” be defined? What evidence would be required? And how would companies be able to defend themselves or seek a review?

France and Germany have also proposed using a “reverse qualified majority voting” mechanism. Once the European Commission proposes an action, the measure could proceed unless a sufficient number of member states jointly oppose it.

In other words, activating the instrument could become easier.

The EU would be responsible for determining what constitutes “unfairness,” deciding what measures should be taken, and could at the same time lower the threshold for internal approval.

The European side needs to provide a clear answer as to how such an instrument would comply with WTO rules.

02 How Can the European Side Approach the Talks?

Many of the issues between China and the EU are interconnected.

Yan Shaohua, Deputy Director of the Center for China-Europe Relations at Fudan University, who frequently participates in China-EU dialogues, told Tan Zhu:

Dealing with sectors such as automobiles and chemicals one by one will make it difficult to break the deadlock. The two sides should take a long-term and comprehensive perspective and explore an arrangement of broader significance, bringing issues including trade, investment, services and technology into a single framework. This framework needs to be based on the new economic reality of China’s increased competitiveness and establish boundaries acceptable to both sides, including coordinating green technology standards and ensuring reciprocal market access. The European side should also work with China to explore a medium- to long-term roadmap for balancing trade, rather than unilaterally setting deadlines.

The existing consultation mechanisms can address at least four categories of issues:

• Establish joint monitoring mechanisms to jointly verify trade flows in sectors such as plug-in hybrid vehicles and chemicals;

• Address the electric vehicle dispute through mechanisms such as price undertakings, so as to prevent trade frictions from expanding;

• Encourage Chinese companies to invest in Europe while ensuring that Chinese-invested companies receive a stable and non-discriminatory policy environment;

• Establish more stable expectations regarding the supply of critical items while addressing the market-access restrictions faced by Chinese companies in Europe.

If, while the two sides are engaged in friendly consultations, the European side remains ready to escalate measures at any time, this cannot be described as the two sides working toward each other.

New instruments may increase the cost for international goods to enter the European market, but they cannot reduce energy costs for European companies. They may restrict the development of international companies in Europe, but they cannot complete Europe’s industrial upgrading on Europe’s behalf.

After all, trade imbalances are structural problems that have developed over a long period of time. They are difficult to resolve through short-term restrictive measures.

Both sides need to maintain strategic patience.

MOFCOM will now examine two central questions: whether EU products are in fact being dumped at unfairly low prices, and whether those imports are causing material injury to the Chinese industry. EU producers and exporters, as well as Chinese importers, may participate in the investigation and submit evidence. The investigation would normally be completed within one year, although it may be extended by six months in special circumstances. If MOFCOM ultimately determines that dumping occurred, that the domestic industry suffered injury, and that there is a causal link between the two, China could impose additional anti-dumping duties on the relevant EU products. If the evidence is insufficient, the investigation could be terminated without measures.

The product under investigation is para-nitrotoluene (PNT), also known as 4-nitrotoluene, a specific type of nitrotoluene. It normally appears as pale-yellow crystals and can essentially be understood as an intermediate chemical feedstock that undergoes further processing before reaching end products. Product information published by both LANXESS and Indian producer Aarti lists this substance.

PNT is mainly used in production chains for dyes, pigments and certain pesticide and pharmaceutical intermediates. For example, it can be further processed into p-toluidine, p-nitrobenzoic acid and DSD acid. DSD acid is in turn used to manufacture optical brighteners, which ultimately find applications in paper, textiles, detergents and other products. Its connection to everyday consumer goods therefore generally involves several stages of downstream processing.

According to the application published by MOFCOM, China imported 6,565 tonnes of PNT from the EU in 2025, worth approximately US$3.66 million and accounting for 7.14% of Chinese demand for the product. Imports stood at 9,817 tonnes in 2024. In other words, based on the figures provided in the application, import volumes actually fell by roughly one-third in 2025.

These figures also suggest that China already has substantial alternative sources of supply. With annual EU imports worth only around US$3.66 million, the direct trade value involved in this individual case is relatively limited. Its impact is therefore likely to be more significant for the specific product lines and companies concerned than for the European chemical industry as a whole.

In an anti-dumping application concerning the same type of product filed in India in 2025, Indian producer Aarti identified Germany’s LANXESS as the EU’s largest producer, with annual capacity of approximately 35,000 tonnes. The application described China and India as major markets for LANXESS and claimed that exports accounted for roughly 70% of its production capacity.

The Chinese application specifically identifies LANXESS Deutschland GmbH as a producer and LANXESS Chemical (China) Co., Ltd. as a known importer. If duties are eventually imposed, LANXESS could face two forms of pressure on this business: raising its prices in China and potentially losing some orders, or absorbing part of the additional cost in order to retain customers. Even during the investigation, the company is likely to face additional legal and compliance costs as well as greater uncertainty over contract pricing.

On the Chinese side, the most direct potential beneficiaries are the two applicants, Jiangsu Huaihe Chemical Co., Ltd. and Hubei Dongfang Chemical Co., Ltd. The application also identifies four other Chinese producers of the same product: Jiangsu Foster Chemical Manufacturing Co., Ltd., Shandong Dyck Biotech Dongao Chemical Co., Ltd., Shandong Shenxian Yingtai Chemical Co., Ltd., and Shandong Yingxin Chemical Co., Ltd.

The first potential benefit for these producers would be reduced downward price pressure from allegedly low-priced imports; import substitution and higher sales could follow. The actual effect would depend on the final measures, available domestic production capacity, product quality and how quickly customers can switch suppliers. Chinese downstream producers of dyes, optical brighteners and other products, however, could face higher input costs. The effects on Chinese chemical companies are therefore not uniform: producers of PNT may benefit, while companies that purchase it may face higher costs. Third-country suppliers such as India’s Aarti could also potentially capture additional orders, since the investigation is defined by EU origin.

Why has China chosen this particular chemical for an anti-dumping investigation? The most immediate explanation is that there was a formal petition from the domestic industry. According to MOFCOM, preliminary evidence submitted by the applicants showed that the price of EU PNT imports fell by nearly 60% between 2022 and 2025, and the applicants argued that the domestic industry suffered injury as a result.

Second, the case also appears to carry a policy signal in response to EU trade-remedy actions against Chinese chemical products, and this interpretation is supported by MOFCOM’s own public comments. In explaining the case, MOFCOM specifically noted that the EU has initiated 28 trade-remedy investigations against China since 2025, around half of them involving chemical products, including three recent investigations covering products such as polyvinyl chloride. By explicitly discussing the PNT case alongside EU chemical investigations, MOFCOM appears to be signalling that it wants Brussels to consider the interests of industries on both sides.

MOFCOM Spokesperson Responds to Questions on the Anti-Dumping Investigation into Imports of Para-Nitrotoluene Originating in the EU

Q: We note that MOFCOM today launched an anti-dumping investigation into imports of para-nitrotoluene originating in the EU. Could you provide more information?

A: The investigation was initiated following an application from the domestic industry. Preliminary evidence submitted by the applicants indicates that between 2022 and 2025, imports of para-nitrotoluene from the EU remained at high levels, while their prices fell by nearly 60% cumulatively, and that dumped imports from the EU caused injury to the production and operations of the Chinese domestic industry. Under Chinese law and WTO rules, the application met the requirements for initiating an anti-dumping investigation. China will conduct the investigation in accordance with laws and regulations, fully safeguard the rights of all interested parties, and reach an objective and impartial determination.

It should be emphasized that China has consistently maintained a prudent and restrained approach to trade remedies. At the same time, since 2025, the EU has initiated 28 trade-remedy investigations against China, approximately 50% of which involve chemical products. In particular, it has recently launched three consecutive investigations involving Chinese chemical products, including polyvinyl chloride. China has repeatedly stressed that the EU should face up to the economic and trade issues it confronts and resolve the concerns of both sides through dialogue and consultation.

From an industry-structure perspective, China has domestic alternative suppliers of nitrotoluene, meaning that restrictions on EU imports would not necessarily create a serious shortage. At the same time, European producers would need to find alternative outlets for their output, making trade measures relatively easy to transmit into individual companies’ commercial decisions. Another production characteristic is also worth noting: according to industry application materials, ortho-, meta- and para-nitrotoluene are typically produced together. This suggests that if one of these products becomes difficult to sell, a producer may not be able simply to stop producing that single product; inventories and the economics of the entire production facility could be affected.

Meanwhile, China-EU trade negotiations are continuing, but there is no indication yet that the two sides have reached a new substantive agreement. The immediate focus is preparation for talks in Beijing on October 8–9, when EU Trade Commissioner Maroš Šefčovič is expected to meet Chinese Commerce Minister Wang Wentao. The European side is looking for concrete outcomes that can demonstrate that continued negotiations are producing results.

Preparatory discussions have already taken place. On September 23–24, negotiating teams from the two sides held two days of consultations in Beijing. China’s Ministry of Commerce confirmed the talks but did not disclose any substantive agreements.

The EU’s concerns centre on three issues: the rapid growth of Chinese goods entering the European market, continuing barriers facing European goods in China, and whether European companies can obtain reliable access to Chinese supplies of rare earths and other critical materials. The European side wants China to restrain export growth in certain product categories, increase purchases of European goods, improve market access, and make export licensing more predictable.

Automobiles and chemicals are among the most sensitive areas in the negotiations. According to the Financial Times, the EU has asked China to limit exports of hybrid vehicles to Europe. Euronews has also reported discussions of possible quotas for certain products and the potential suspension or postponement of some chemical trade measures.

This week, the European side has become increasingly urgent about securing tangible results. On October 1, European Commission officials said that industries including machinery, textiles, basic metals and chemicals continued to face pressure from rising imports, with China being a major driver of that increase. The European view is that if negotiations continue without producing concrete outcomes, internal pressure within Europe for additional trade restrictions is likely to intensify.

At last year’s HUAWEI CONNECT, Eric Xu gave a keynote speech and released Ascend chips and their roadmap (including the 950, 960, 970, and SuperPoDs and SuperClusters). He also announced the open release of the UnifiedBus protocol.

At this year’s HUAWEI CONNECT, Huawei announced the Ascend 950 and the Atlas 950 SuperPoD. While the industry is talking about SuperPoDs or supernodes, the ways of making these products differ hugely. The key of SuperPoDs is about allowing several thousand or even tens of thousands of processors to work as one computer.

There are five points from the interview that I think are particularly worth highlighting:

First, Huawei says Ascend has already overtaken Nvidia in China in terms of market share, and the biggest constraint now is supply, not demand. According to Eric Xu, the Ascend 950DT, designed for AI training, is currently being tested and is expected to enter large-scale supply by the end of this year or early next year. Tests with Chinese model developers have produced “quite good” results, and Xu expects a large amount of AI model training in China to run on 950DT-based SuperPoDs starting next year. In other words, the question is no longer how Huawei can persuade Chinese AI companies to use Ascend, but how many chips Huawei can actually produce and supply.

Second, Huawei believes China should still be accelerating AI development rather than talking about slowing it down. Xu argued that leading U.S. AI companies have access to much more compute and are further ahead in model development, which may explain why they have a stronger sense of AI risks. China, in his view, has not yet reached that stage. The implication is quite clear: China’s immediate priority is still to catch up; discussions about the kinds of risks now worrying leading U.S. AI companies may become more relevant once Chinese models reach a similar level of capability. That said, Xu also stressed the need to eventually strike a balance between AI development and risk management, with the bottom line being that AI should be used for good.

Third, Huawei does not plan to expand Ascend aggressively overseas in the near term because it cannot even meet domestic demand. There is strong interest from several overseas markets, and Huawei is conducting tests and providing limited supplies. But its priority remains Chinese customers. Overseas supply will largely be limited to customers that either cannot obtain alternative solutions or specifically want a second supplier.

Fourth, Xu sees China’s push for semiconductor self-sufficiency as irreversible. His logic is that even if Chinese chips are not yet as advanced as the best foreign products, having a secure and reliable supply is more important than having better-performing chips that could be cut off at any time. He therefore believes China will ultimately pursue self-sufficiency not only in AI chips, but across the entire semiconductor value chain—and that achieving this is ultimately a matter of time.

Fifth, the bottleneck for expanding Ascend supply is no longer just advanced chip manufacturing; the entire AI supply chain is constrained. Xu specifically pointed to optical modules and memory, arguing that global AI demand has grown so quickly that the supply chain as a whole was not prepared. He expects global supply and demand to gradually come back into balance around 2029, and potentially even later in China. This point is also worth considering alongside the recent U.S. policy debate over the optical-module supply chain.

Full translation of the Q&A:

Q: Dr. Liao, your paper mentioned a SuperPoD that’s made up of 256,000 cards. Is that the upper limit of your technology? Can you tell us more about market demand for your products?

Liao Heng: 256,000 or roughly 200k, this number is not an arbitrary number.

First of all, the purpose of these large clusters is for training. It has a hardware infrastructure that can support the training of foundation models, which today are already in the 5T parameter range.

Over the next two years, there will be roughly 6 or 7 frontier AI labs in China, and all will aim at training foundation language models of sizes ranging from 10 to 40 trillion parameters. These numbers kind of match up to the memory capacity and the size of the SuperPoD. So you need such a scale of infrastructure to train these models.

The second thing is that in China, most data centers have a national plan on this power grid. So 200,000 is a relatively conservative number, given the design of the power delivery system in a single autonomous zone and single data center campus.

As I said, everybody must be quite familiar with the AI model race that’s happening across the globe. And in China, there are at least 3 or 4 tier-1 players that are already well recognized and have achieved tier-1 status.

Q: What are your plans to encourage Chinese model providers to use Ascend chips for training?

Eric Xu: For the Ascend 950, we first launched the 950PR to the market. It’s primarily used for AI inference, and currently the total volume of supply available in the market is not very big. The SuperPoDs based upon the Ascend 950DT are mainly used for AI training. Right now, they are under testing, and their large-scale supply will start at the end of this year or early next year. We are having extensive dialogues and discussions with AI model providers. The testing result of using the Ascend 950DT for training is pretty good. I believe that starting from next year, a lot of AI model training will be based upon SuperPoDs that use the Ascend 950DT. I think at the end of the day, it’s not about how hard we are going to push model providers, but about how much supply capacity we will have. We can only supply based on how much that’s produced. And we hope the value chain will expand its capacity faster to increase supply.

Q: What is Huawei’s take on recent calls by leading AI model providers in the US to slow down AI development?

Eric Xu: We need to look at the level and cadence of AI development in China and the US. AI models in China are largely open-source models and their progress is relatively transparent. If we look at the mainstream model providers in the US, they have more computing power, so maybe only they themselves know where they are in terms of the level of sophistication of their models. The market feeling about AI risks might be weaker in China than in the US. Model providers in China need to speed up their pace to reach a level where they could also feel the risks from AI development. And then, maybe they will feel the same as the leading US model providers. But I always believe that we need to strike a balance between driving AI development and managing AI risks. At the very least, the bottom line is we need to ensure AI for good, not AI for evil.

Q: Does Huawei have plans to bring the Atlas 950 SuperPoD to other markets outside China? If yes, which markets are you going to target? Can you share with us data about your market share in China? What is your take on China’s push for chip self-sufficiency?

Eric Xu: Since we don’t have enough capacity to even satisfy the demand in China, we don’t have plans to expand to the international market in a fully-fledged way. But indeed, there are several countries that have very strong demand. We are doing some testing, and we are providing some supply to those countries, but the volume is quite limited.

Right now, it’s pretty hard to collect data about the market share of NVIDIA in China. But based on the data we have collected, Ascend has surpassed NVIDIA.

China’s push for chip self-sufficiency is an inevitable path forward. China is a country of 1.4 billion people and it’s an industrial powerhouse, so the way people work and live is closely tied to chips. Chinese people have a keen sense of urgency, and will not accept a future in which others decide whether or not we can have access to certain products. Even though our chips may be less advanced, at least their supply is assured, so that you don’t have to worry about chip supply day in and day out. I think that’s certainly the path forward. For the Chinese government, for the domestic industry, and for Huawei, the path forward is undoubtedly to push for full self-sufficiency in terms of chips and the entire semiconductor value chain. We also believe this will become a reality sooner or later.

Q: Your UnifiedBus interconnect technology is derived from your long-term strengths in computing and communications. How much of UnifiedBus comes from your networking department?

Eric Xu: UnifiedBus is not just derived from the networking part of our business. We have integrated different interconnect protocols to develop one unified protocol. Networking relates more to the IP protocol, and its latency is much higher. When we look at computing interconnect, it’s different from traditional networking, and it relates more to the bus, which should deliver low latency and high speed. When we made the decision to work on the product itself, our idea was to put it within the computing department, not the traditional networking department. We think it’s a better option if we want to deliver UnifiedBus with high speed, low latency, and a unified protocol.

Liao Heng: If you think of UnifiedBus as a brainchild of a group of people, it was conceived by the computer architects, but it was raised by the networking team.

Q: UnifiedBus works for both scale-out and scale-up, and NVIDIA has NVLink and InfiniBand for these two scenarios separately. So what’s the consideration for Huawei to unify protocols into one UnifiedBus that supports both scale-up and scale-out? What are the advantages of UnifiedBus compared to similar solutions?

Eric Xu: It’s not an issue of whether or not NVIDIA develops a unified technology. It’s an issue of whether they have the capability of developing such a technology. Their latest NVL72 solution has a large intra-rack communications bandwidth of 1.8 TB/s. But once InfiniBand is used for inter-rack communications, the bandwidth drops to 0.2 TB/s. With such a low inter-rack communications bandwidth, there is no way you can make one million processors work as one computer. I think everyone wants to have a super high-speed interconnect for intra-rack, inter-rack, inter-data-center, and even inter-autonomous-zone communications, because that is how we can turn a huge number of processors into one computer. That’s the very value of UnifiedBus. We can use one unified protocol for high-speed interconnects at all layers. Technology-wise, UnifiedBus functions like a bus for the computer, and it does not just support the links. Based on UnifiedBus, we can achieve an inter-rack communications bandwidth of up to 800 GB/s.

After we made the UnifiedBus protocol openly accessible last year, the most downloads took place in Silicon Valley. At the very beginning, NVIDIA might not want to work on an NVL72 solution; they might be aiming for an NVL256 solution. But they ended up with the NVL72 solution, not the NVL256 solution. Huawei, however, has developed a SuperPoD solution with 384 910C processors, and we have shipped more than 1,000 sets of this solution. That’s largely because we have UnifiedBus for this solution. NVIDIA uses NVLink for intra-rack communications, and their inter-rack communications speed is not high enough, which makes it very hard for them to scale as much as they want.

Liao Heng: Part of your question was about why a single protocol is necessary, because clearly NVIDIA and most other vendors have used at least two protocols, in some cases maybe more than two. Imagine if your trip involves airplanes, high-speed railways, and cars, and the transit is quite time-consuming. Massive traffic switching is required inside a supernode. If you make a transit from NVLink to InfiniBand, at least you’re talking about microseconds of transit time from one protocol to the other. With these two separate protocols, it’s hard to meet latency requirements.

With UnifiedBus, we are using a single protocol. That means if you’re moving a packet from a scale-up network to a scale-out network, you would only take maybe 150 nanoseconds. There’s at least one order of magnitude savings on the protocol conversion overhead.

Q: In Atlas 950 SuperPoD with UnifiedBus, how much of scale-up is carried out electronically versus optically? Do you think optics will eventually take over the entire rack? And what are the biggest barriers?

Eric Xu: The Hi-ONE module that Huawei launched this morning is an NPO module that supports a bandwidth of 7.2T and it is only five centimeters away from the main chip. We use copper wires to connect these two and the rest is all optics. So we can say that this SuperPoD is almost a fully-optical SuperPoD. And the light source is also integrated into the Hi-ONE module. I would say that in the next two to three years, no other vendor will be able to produce a similar module. Huawei is able to develop and mass-produce this module because we have many years of experience in photonics.

Liao Heng: Earlier in my career, almost dating back 20 years ago, we were already talking about making chips go optical. Because we all know optical has a short travel distance and very little attenuation, so signals can travel longer distances at a high speed.

But if you look at what is inside Hi-ONE circuit-wise, there aren’t many components. But mass production used to be very difficult for us. Because optics has a lot of physics. If the temperature changes by some degree, then it affects the physical property of the diode, the refraction index, and the waveguide properties, so things don’t work.

I think the biggest adoption barrier is the concern about reliability because things fail. Most other providers have almost predominantly chosen to place a laser outside. Just think about if you have to feed 32 channels of signal using a single light source, the power of the light source has to be multiplied by 32 times. That’s a lot of power that leads to problems at the coupling interface and everywhere else. We chose to integrate the light source into the module. It’s just a purely engineering, pragmatic choice. Hi-ONE is a fantastic compromise after compromise, finally reaching into production status very soon.

Q: You mentioned the limited capacity and supply of Ascend chips in China’s mainland. So what are the largest barriers holding back the increase of capacity in China’s mainland? Until what time will Huawei be able to ensure large-scale and stable supply?

Eric Xu: The bottleneck in China’s mainland is basically the same as the bottleneck around the world. The global industry is not prepared for the AI surge that we are seeing. When we look at providers of optical modules and storage products, they are selling at a very high premium not necessarily because they have very good products, but because of a very severe shortage of supply compared to market demand. Only when we see balance in supply and demand in China’s mainland and throughout the world, can this bottleneck be fully addressed. As I look at it, the supply-demand balance on a global basis will be achieved somewhere around 2029. And in China’s mainland, it’s probably gonna be even slower. As we look at this supply-demand balance, we have to take into account constantly evolving technologies in the AI landscape, such as NPO (near-packaged optics) and CPO (co-packaged optics).

If we look back at the history of Huawei, no matter in the communications business or the IT business, the current volume we supply to the market is already something we can call “supply at scale”. But if we compare our volume of supply to the demand for AI infrastructure, I think it is very little. If we are to supply as much as customers want, that kind of balance will ultimately rely on the supply-demand balance across the whole industry in China.

Q: There have been reports about Malaysia considering Huawei’s Ascend 910C accelerator as the backbone of the country’s sovereign AI initiative. How can you balance the demands of domestic and foreign customers?

Eric Xu: For any customers, their decision to deploy Huawei solutions is made based on considerations about geopolitics and multi-vendor strategies. All companies must look to the long term, and try to ensure their supply security. In that context, Ascend is certainly one choice for a lot of customers, though there might be some gaps with some of the competitors. The balance between satisfying the needs of domestic customers and those of international customers is actually quite easy: We prioritize Chinese customers who are in urgent demand for compute; outside China, we only supply to a very limited number of customers who either have no access to alternative solutions or who want an alternative solution.

Q: When Huawei decided to choose NPO over CPO, what were the most significant opposing opinions within Huawei?

Eric Xu: It seems there was no debate within Huawei on this. Huawei works on optical devices, optical modules, and Ascend chips, so we know which is the best choice for us. So the consensus within Huawei was reached very early-on. We just went for NPO, rather than CPO. On top of that, we think NPO will be the best choice for a long period of time, from several perspectives like engineering implementation, cost, maintainability, and yield.

Industry players have gained a clearer understanding of NPO and CPO over time. That’s perfectly reflected in two recent discussions at the Optical Internetworking Forum (OIF). In the first OIF discussion, a number of members did not support NPO – they were determined to work on CPO. But in the most recent OIF discussion, only a very limited number of participants were still against NPO, and a new NPO project was initiated. NPO still has a copper interconnect of about 5 centimeters, which is longer than CPO’s copper interconnect that is about 5 millimeters. However, compared with CPO, NPO brings down the cost by nearly 40%. And there is another benefit of NPO: If the optical engine goes wrong, the whole AI chip won’t be scrapped together with the optical engine. Of course, CPO and NPO are not a matter of one replacing the other; rather, it’s a choice of balance across factors such as engineering implementation, cost, supply chains, and maintainability. There’s no right or wrong here.

Huawei is fully committed to NPO. We are driving standardization efforts and also helping to develop the whole industry ecosystem, so that there is a technical path for NPO to flourish. We are not saying that CPO is a bad thing. 40 vendors at OIF are now supportive of NPO after seeing the benefits that it can deliver.

Q: What feedback have you received from model providers on the areas and issues for improvement regarding the use of the 950DT for training? What changes have you made to make the pre-training better on Ascend?

Liao Heng: The first barrier encountered by Ascend is actually not hardware itself. It’s primarily the ecosystem barrier, because two years ago, there was still a tremendous software barrier for Ascend, while CUDA clearly had a dominant advantage, because the entire academia grew up together with CUDA. So all the algorithm developers are used to the convenience of PyTorch plus CUDA.

There have been dramatic changes over the last 18 months. First of all, there’s a tremendous change in sophistication of the model mathematics, and the programming complexity has increased accordingly. Secondly, the models are getting very fine-grained, meaning you can no longer write a program in PyTorch alone and maintain efficiency at all. So, even for the algorithm developers, they have to move towards this mega kernel style of programming, and they need to adopt a new programming language. So that was already the way of development of the frontier labs.

Now, when new compiler languages come along, these new compilers are replacing and gradually balancing the barrier of CUDA, because CUDA was no longer deemed important by the frontier labs, nowhere near as much as two years ago. This is the dissolution of the software barrier. I think we are getting on par or even closer to balance. The gap is greatly diminished.

Secondly the chip itself, we have our own advantages, as I said, UnifiedBus and the Nested BSP model. It’s not just about programming a single chip, but also about programming a huge number of chips in convenient ways. We are providing those. And inside the chip itself, we have learned our lessons and made a lot of improvements.

Overall, we are closing the gap between NVIDIA and Ascend. I think nowadays, the main difference is just much smaller. When people use these processors for development, they don’t feel as foreign anymore.

Q: Next week, the Chinese leader will be meeting with the US president, and AI would be part of their conversation. As an entrepreneur from China, what kind of expectations for cooperation do you have toward that meeting?

Eric Xu: All entrepreneurs in China may have one shared aspiration, which is peaceful coexistence in market competition without government interference. We previously lived in an era of globalization and full competition, where enterprises relied on innovation and products to win over customers. But with the growing impact of geopolitics, globalization is leaving us. Enterprises want to have access to global markets and win customers through innovation and products, rather than being trapped in a situation where they cannot buy or sell what they want.

For the past 30+ years, Huawei has relied on innovation to win a place in the market. We rely on sustained, heavy R&D investment to improve product competitiveness, so as to win the trust of our customers. Between 2007 and 2025, our cumulative R&D investment was more than 1.8 trillion yuan. We were also committed to allocating 10% of that R&D spend to basic research. It’s exactly because of our heavy R&D investment and our strong focus on innovation that translate into more competitive products. Our innovation-driven approach in a competitive marketplace explains how we have become what we are today.

Friends from the press who have been following the communications industry may know the journey Huawei has gone through over the last several decades. It’s the same for AI. We just take a path that we are good at and that can lead us to build future-oriented competitiveness.

Q: Is UnifiedBus a unique path for China’s mainland, considering its lack of access to advanced process nodes? Or is it something that the whole industry will need sooner or later? Will NVIDIA possibly move in your direction?

Eric Xu: UnifiedBus is a path for innovation and is also a path for the future of AI compute.

Because it is only with the UnifiedBus interconnect technology that you can possibly build a massive computer with one million processors. When one million processors work as one computer, this lays the foundation for better and more efficient AI training and inference. Therefore, I see UnifiedBus as the path for the future AI era. I believe, in the years to come, other players would certainly follow suit.

That’s also the reason why we made the UnifiedBus protocol openly accessible. Because we believe the whole industry will move towards the same direction and we are looking forward to concerted efforts across industry towards artificial general intelligence (AGI). That’s also the reason why Dr. Liao published the paper to introduce our Peerium Computing Architecture, because Peerium is the architecture for the AI era. For the 960, it has pretty much the same specs as the thing I introduced last year, and the only change is its faster pace of market availability. HBM is a part of the 960. Without improvement in HBM, we would not have the improvement of the entire 960.

The UnifiedBus interconnect technology is the foundation for us to implement the Peerium Computing Architecture. Both the UnifiedBus interconnect technology and the Peerium Computing Architecture are the paths to the future AI era.

I’ve said it many times that when we look at a single chip, the issue Huawei faces is not about the design itself, but about the limitations of sophisticated process nodes available on China’s mainland. But if we interconnect a huge number of chips to build a single computer, I think we have achieved global leadership in this respect. That is built upon our innovations on both architecture and the interconnect technology. Efforts in these areas started before the US restrictions, rather than after them. It was at HUAWEI CONNECT 2018 that I announced the first AI chip from Huawei together with our AI strategy. In 2019, we launched SuperPoDs and clusters. Since then, we have held the idea that, in order to support AI training and inference, the industry would need a new architecture and a new interconnect technology. That’s also the time we started to ramp up investment in research and innovation. This has laid the foundation for us to launch the new computing architecture and the UnifiedBus interconnect technology.

I believe the whole industry is faced with the same issue. Once you are in a multi-computing-card or multi-accelerator environment, Model FLOPS Utilization (MFU) is a very critical metric. When you work on large AI model training, once one computing card becomes faulty or its performance deteriorates, it would incur major losses for the whole AI training.

Based on the UnifiedBus interconnect technology and the Peerium Computing Architecture, we have developed SuperPoDs and SuperPoD-based SuperClusters. These solutions can substantially improve MFU, and this is a fact that has already been validated. That’s also what top model providers value most as they use the Ascend 950 to train their AI models. We can also provide original manufacturer services. That can help to further improve MFU, reduce AI training costs, and make AI training iterate faster as well.

Put simply, one of the biggest questions facing China’s AI industry has been: what do you do if you can no longer get access to NVIDIA’s most advanced GPUs? DeepSeek is now offering part of an answer. And the answer is not simply to replace NVIDIA GPUs with Huawei Ascend chips. It is also starting to rebuild one of the hardest things to replace: the software ecosystem around NVIDIA’s hardware, so that Chinese chips become genuinely easier to use and capable of training frontier AI models.

NVIDIA’s real strength in large-model training has never been just the GPUs themselves. It is also the entire software ecosystem built around them, particularly CUDA. Once you have NVIDIA GPUs, developers have a mature set of tools for writing programs, optimizing performance and getting thousands of GPUs to work together efficiently.

This has been one of the major challenges for Huawei Ascend. Building capable hardware is only part of the problem. Just as important is whether the software is easy to use and whether developers can efficiently extract the full performance of the chips.

This is the layer DeepSeek is now trying to fill in. It has developed Ascend versions of a whole set of low-level tools, including TileLang, DeepGEMM, DeepEP and FlashMLA.

In simple terms, TileLang is a high-level language that makes it easier for developers to tell the chips what to do. DeepGEMM handles the matrix operations at the heart of large-model computation. DeepEP deals with high-speed communication between large numbers of chips during training. FlashMLA and other components handle tasks such as attention and data processing.

DeepSeek says that, in a number of key tests, the compute and communication performance of these components is already approaching the limits of the Ascend hardware itself.

TileLang is probably the most interesting part. DeepSeek says that most of the operators used to train its V4 models are now implemented in TileLang, and that every TileLang operator currently used in DeepSeek training now has a corresponding high-performance implementation on Ascend.

What DeepSeek appears to be trying to do is create a layer of abstraction between the model and the underlying GPU hardware. The same development approach could potentially sit on top of either NVIDIA GPUs or Huawei Ascend chips. If this works well, the cost and difficulty of moving AI workloads from NVIDIA to Chinese AI hardware could fall significantly.

There is another important signal in the announcement: DeepSeek makes clear that it did not do this alone. Huawei’s team was deeply involved in the development. The two companies are also jointly working on a 128-card supernode based on Ascend 950, while carrying out deep optimization of both computation and inter-chip communication.

So this is no longer simply a case of “DeepSeek now supports Huawei chips.” DeepSeek and Huawei are working together on the much deeper problem of how to make Chinese hardware and software work efficiently together for frontier model training.

DeepSeek Open-Sources Core Infrastructure Components for Huawei Ascend

Today, we are officially open-sourcing a set of foundational infrastructure components for Huawei’s Ascend computing platform, covering the TileLang high-level language and compiler toolchain, compute libraries, and distributed communication libraries. Each of these components has a direct counterpart among the components we previously open-sourced for NVIDIA platforms.

Good tools are essential to good work. To build a new generation of independent and controllable GPU software ecosystems, the first priority is to develop a high-level language that is general-purpose, easy to program, and capable of pushing hardware performance to its limits.

TileLang was born out of this need.

Compared with NVIDIA’s CUDA, TileLang offers a simpler programming model that can significantly improve development efficiency and simplify code logic. Compared with other high-level languages of its kind, TileLang’s programming model is also designed to fully exploit the characteristics of the underlying chips and reach their hardware performance limits.

We first validated the TileLang approach on NVIDIA’s mature platform. Today, TileLang is used to implement the majority of operators in the training of the DeepSeek V4 family of models, and has become a core tool for our exploration of new AGI paradigms and development of high-performance operators.

The Ascend version of TileLang released today wraps the underlying Ascend C instructions and provides a high-level programming interface without sacrificing hardware performance. This is exactly what TileLang was originally designed to achieve. Every TileLang operator currently used in DeepSeek training now has a corresponding high-performance implementation on Ascend.

By open-sourcing TileLang for Ascend, we also hope to provide a useful reference for building highly usable software ecosystems around a broader range of AI chips.

Today’s release also includes core compute and communication components for the Ascend platform, providing reusable foundational capabilities for different workloads. DeepGEMM accelerates general matrix operations; DeepEP provides efficient large-scale cross-device communication; TileKernels provides commonly used vector computation and memory-access operators for data processing; FlashMLA provides sparse attention operators to improve long-context processing efficiency; and DeepSelect enables efficient data selection.

Across a number of key test cases, the compute and communication performance of these components is already approaching the limits of the underlying hardware.

Throughout our development work for the Ascend platform, Huawei’s team has provided strong and wholehearted support. Our teams have worked closely together on a 128-card supernode solution based on Ascend 950, while jointly carrying out deep optimization of both computation and communication.

We will continue to push forward technological innovation, work with the community to build an open software ecosystem, and make progress together.

Open-source projects:

TileLang:
https://github.com/tile-ai/tilelang

DeepGEMM Ascend:
https://github.com/deepseek-ai/DeepGEMM-Ascend

DeepEP Ascend:
https://github.com/deepseek-ai/DeepEP-Ascend

TileKernels:
https://github.com/deepseek-ai/TileKernels

FlashMLA:
https://github.com/deepseek-ai/FlashMLA

DeepSelect:
https://github.com/deepseek-ai/DeepSelect

MOFCOM Official Explains Outcomes of the Eighth Round of China-U.S. Economic and Trade Consultations

From September 20 to 23, the Chinese and U.S. economic and trade teams held consultations in New York and Washington, D.C., reaching a number of positive understandings and contributing economic and trade outcomes to the meeting between the two heads of state. An official from the Department of American and Oceanian Affairs of China’s Ministry of Commerce provided the following explanation of the outcomes of the consultations.

I. The China-U.S. Board of Trade

Following consultations, China and the United States agreed to establish a China-U.S. Board of Trade under the China-U.S. economic and trade consultation mechanism, with the primary task of optimizing bilateral trade. The two economic and trade teams have reached agreement on the Board’s mandate, structure, responsibilities and consultation arrangements, which will be announced at a later date.

The Board of Trade will begin by discussing the “$30 billion for $30 billion” reciprocal tariff reduction framework, with a view to reaching agreement. An agricultural working group has been established under the Board, which will also consider other arrangements for optimizing bilateral trade.

It is believed that the Board of Trade will provide an important platform and institutional support for China and the United States to continuously lengthen the list of cooperation and shorten the list of problems in the economic and trade field, and promote the sustained, stable and positive development of China-U.S. economic and trade relations.

II. The “$30 Billion for $30 Billion” Reciprocal Tariff Reduction Arrangement

To implement the important understandings reached by the two heads of state, China and the United States, on the basis of mutual respect and consultations on an equal footing, held multiple rounds of discussions under the Board of Trade framework on the $30 billion reciprocal tariff reduction arrangement and have now reached agreement.

The two sides agreed to reciprocally reduce tariffs on approximately $30 billion worth of products imported from each other. Tariffs on approximately 90 percent of the products on each side’s list will be reduced to most-favored-nation (MFN) tariff rates.

After completing the relevant procedures in accordance with their respective domestic laws, the two sides will implement the tariff reduction arrangement simultaneously. Further details of the reciprocal tariff reduction arrangement will be announced at a later date.

This arrangement will help further stabilize China-U.S. economic and trade relations and create more favorable conditions for exports of relevant Chinese products to the United States.

III. Expanding Coal Trade

The Chinese and U.S. economic and trade teams reached an understanding that tariffs on China’s imports of U.S. coal will be included in the “$30 billion for $30 billion” reciprocal tariff reduction framework. This will facilitate China’s imports of U.S. coal in both 2027 and 2028.

Imports of U.S. coal will provide a useful supplement to China’s domestic coal market while generating stable economic benefits and employment for the U.S. coal industry, thereby helping to stabilize and expand bilateral trade between China and the United States.

It is hoped that, through the joint efforts of both sides, China-U.S. cooperation in the coal sector will continue to deepen and deliver mutually beneficial and win-win outcomes.

IV. The China-U.S. Investment Board

Following consultations, China and the United States agreed to establish a China-U.S. Investment Board under the China-U.S. economic and trade consultation mechanism.

The Board will provide an institutionalized platform for communication between the two sides. The Chinese and U.S. economic and trade teams will maintain regular dialogue on potential investment opportunities and investment barriers and, subject to their respective laws and regulatory requirements, enhance policy transparency and predictability and address the legitimate concerns of businesses.

V. Agricultural Working Group

In May this year, the Chinese and U.S. economic and trade teams reached a series of positive understandings on promoting the resolution of certain non-tariff barriers and market-access issues affecting agricultural products on both sides. They also agreed in principle to include the relevant products in the “$30 billion for $30 billion” reciprocal tariff reduction framework.

The two teams subsequently held professional and pragmatic consultations on agricultural issues. Against this backdrop, the two sides agreed to establish an agricultural working group under the China-U.S. Board of Trade, co-chaired by China’s Ministry of Commerce and the Office of the U.S. Trade Representative, with the participation of relevant regulatory authorities from both countries.

The working group will discuss two-way market access for agricultural products, regulatory issues and other related matters. The two sides agreed to hold the first meeting of the working group before the end of 2026.

China will continue to use the working group meetings to urge the U.S. side to address China’s concerns in the agricultural sector.

VI. Financial Services

In recent years, China has independently expanded the opening-up of its financial services sector, which has received recognition from the international community and benefited many U.S.-funded institutions.

During the latest consultations, the two sides reached an understanding in principle on financial services. China will review and approve, in accordance with laws and regulations, applications by financial services institutions from the United States and other countries to conduct business and establish branches in China.

China hopes that the United States will likewise provide Chinese-funded financial institutions with a fair, transparent and stable policy environment.

VII. China-U.S. AI Dialogue

During this round of consultations, the two sides agreed to establish an AI dialogue under the China-U.S. economic and trade consultation mechanism, with Vice Premier He Lifeng and Treasury Secretary Scott Bessent serving as the respective Chinese and U.S. principals.

The two sides held the first dialogue and exchanged views on the risks and benefits associated with AI. They agreed to hold the next dialogue before the end of November this year.

The two sides also agreed to establish a communication channel for AI incidents.

VIII. Extension of the Joint Arrangement Reached in the Kuala Lumpur Economic and Trade Consultations

In October 2025, China and the United States reached a joint arrangement in Kuala Lumpur to address their respective economic and trade concerns, under which each side suspended the implementation of certain tariff and non-tariff measures until November 10, 2026.

During the latest consultations, China and the United States agreed that, on the basis of extending the joint arrangement reached in the Kuala Lumpur consultations until January 10, 2027, they would continue to actively explore the issue with a view to reaching a solution agreed upon by both sides.

This arrangement, on the one hand, provides space for both sides to take stock of and assess the implementation of the joint arrangement and consider how to move China-U.S. economic and trade relations forward. On the other hand, by combining an extension for a defined period with continued active discussions, it provides a relatively stable and predictable policy environment for cooperation between Chinese and U.S. businesses.

It is believed that the two sides will continue their efforts and, through high-level economic and trade interactions before the end of the year, seek a positive solution regarding a further extension.

IX. Increasing Direct Passenger Flights Between China and the United States

Passenger flights between the two countries play an important role in promoting people-to-people exchanges, cultural and social interactions, and economic and trade cooperation.

During the latest consultations, China and the United States exchanged views on increasing direct passenger flights. The two sides agreed to remain in communication regarding an increase in China-U.S. flights and related matters.

X. Implementation of Understandings Reached in Previous Consultations

Since last year, China and the United States have held eight rounds of economic and trade consultations and reached a series of mutually beneficial, balanced and positive economic and trade outcomes on important issues of common concern, including the promotion of bilateral trade and investment. These outcomes have helped maintain the overall stability of China-U.S. economic and trade relations.

During the latest consultations, China and the United States reaffirmed and once again committed to continuing to implement the understandings reached in previous rounds of economic and trade consultations.

This will create favorable conditions and a stable environment for economic and trade cooperation between the two countries and will also contribute to global economic development.

The Office of the U.S. Trade Representative has published lists of non-strategic U.S. and Chinese goods for which the two sides will consider lowering tariffs, as well as the terms of reference and working procedures for the U.S.-China Board of Trade, which will serve as the forum for those discussions.

On the reciprocal “$30 billion for $30 billion” tariff reduction arrangement, the U.S. side has emphasized that the products involved are “non-sensitive goods,” while the Chinese side has stressed the idea of “lengthening the list of cooperation and shortening the list of problems.” These are largely differences in emphasis; the basic structure described by the two sides is consistent. China has selected a group of products it imports from the United States with an annual trade value of roughly $30 billion based on 2024 figures, while the United States has selected a group of Chinese products worth approximately the same amount. The U.S. side first published China’s import list, saying that roughly 30 percent of U.S. exports to China fall within the scope of the arrangement, including agricultural products, seafood, cosmetics and medical devices.

For now, however, what has been finalized is the product lists rather than actual tariff reductions. Judging from the U.S. releases, the arrangement appears to work roughly as follows: each side first identifies approximately $30 billion worth of products and places them in a pool of goods eligible for potential preferential treatment. Future tariff reductions would focus first on these products, with the specific reductions to be agreed upon later and then implemented through each side’s domestic procedures. U.S. Trade Representative Jamieson Greer made a similar point in a media interview on Sunday, saying that this did not mean tariffs on these goods would be cut immediately. Rather, the two sides were setting these products aside so that they could be treated separately when future tariff adjustments or other trade measures were considered.

The Chinese briefing, however, suggests that the tariff reduction package has already been agreed at the political and negotiating levels, with only the respective domestic implementation procedures remaining before the two sides implement the reductions simultaneously. China also disclosed one important detail: of the approximately $30 billion worth of products on each side’s list, tariffs on around 90 percent of the products will be reduced to most-favored-nation (MFN) rates.

The U.S. side also published the terms of reference for the 30-for-30 reciprocal tariff framework. Overall, the U.S. description again reads more like this: the two sides first identify approximately $30 billion worth of products each and place them in a pool of goods eligible for potential preferential treatment. Future tariff reductions would focus on these products, with the specific treatment to be negotiated and then implemented through each side’s domestic procedures. As Greer put it in an interview with Fox News on Sunday: “These are not immediate tariff cuts or things like this; these are goods where if there are trade measures in the future or things that we’re looking at, we just leave these off to the side.” The two sides do not envision adjusting the reciprocal tariff lists more frequently than once a year.

There are at least two possible explanations for the difference in wording. One is that the two sides have in fact already agreed on the substantive tariff package, but because the United States still needs to complete its domestic legal procedures, the formal U.S. documents use more cautious language. The other is that the two sides have reached political agreement on the overall framework, while some of the specific tariff rates still need to be finalized through U.S. domestic procedures.

On the agricultural working group and the Investment Board, the two sides’ descriptions are also broadly consistent, with no obvious readout gap. China said that an agricultural working group has already been established under the Board of Trade, co-chaired by China’s Ministry of Commerce and USTR, to discuss two-way agricultural market access and regulatory issues. The first meeting is planned before the end of 2026. The White House had already confirmed that the Board of Trade had launched a working group focused on agricultural market-access barriers, while the working procedures released on September 27 explicitly provide for the establishment of an agricultural working group. Reuters also reported on September 28 that the first meeting of the working group would take place before the end of the year.

The descriptions of the Investment Board are even more closely aligned. China said that the two sides would maintain regular dialogue on “potential investment opportunities and investment barriers” and establish an institutionalized communication channel. The White House similarly described the Board as a forum for discussing “potential investment opportunities and investment-related impediments” and as a “structured channel” for addressing investment issues of practical commercial significance.

On coal, the U.S. side has disclosed more specific details than the Chinese side. China confirmed that U.S. coal would be included in the “$30 billion for $30 billion” framework and said that this “will facilitate” China’s imports of U.S. coal in 2027 and 2028. The Chinese announcement, however, did not specify an annual purchase volume. The White House was much more specific: China will import at least 10 million metric tons of U.S. coal in 2027 and at least another 10 million metric tons in 2028. Reuters also described this on September 28 as a coal-import arrangement reached at the summit.

On the extension of the joint arrangement reached in the Kuala Lumpur economic and trade consultations, China confirmed the U.S. announcement that the arrangement had been extended until January 10, 2027. At the same time, however, China emphasized that the current arrangement is only an interim arrangement—or, in the Chinese side’s own words, a “foundation.” The two sides will continue actively exploring the issue with the aim of reaching a mutually agreed solution. The implication is that China does not regard the current two-month extension as a satisfactory or final outcome. China also said it believed the two sides would continue working through high-level economic and trade interactions before the end of the year to find a positive solution on a “further extension.”

The Chinese briefing also addressed the U.S.-China AI dialogue:

During this round of consultations, the two sides agreed to establish an AI dialogue under the U.S.-China economic and trade consultation mechanism, with Vice Premier He Lifeng and Treasury Secretary Scott Bessent serving as the respective Chinese and U.S. principals. The two sides held the first dialogue and exchanged views on the risks and benefits associated with artificial intelligence. They agreed to hold the next dialogue before the end of November this year. The two sides also agreed to establish a communication channel for artificial intelligence incidents.

At the Foreign Ministry’s regular press conference on the same day, the spokesperson said that maintaining communication and exchanges with the United States through channels including the intergovernmental dialogue on AI is part of what it means to build a constructive U.S.-China relationship of strategic stability based on respect, fairness and reciprocity.

On September 28, Foreign Ministry spokesperson Guo Jiakun chaired the regular press conference.

A foreign media reporter asked: One of the outcomes of the U.S.-China summit was an agreement to establish an AI dialogue mechanism, including a communication channel for AI-related incidents. Before China recently established an international organization for AI cooperation, China had consistently supported multilateral cooperation on artificial intelligence and advocated a more comprehensive approach, including the development of ethical guidelines and relevant procedures to ensure that AI remains under human control. The U.S. position, by contrast, appears to favor a more limited approach focused on AI safety and warning mechanisms between specific parties. At present, the new U.S.-China mechanism appears to reflect the U.S. approach to a greater extent. Is China adjusting its position on international AI governance? And is this bilateral mechanism sufficient to constitute a framework for global AI governance?

Guo Jiakun said that China has consistently participated in global AI governance in a constructive and responsible manner and has continued to contribute Chinese proposals. China has always maintained that the United Nations should play the central role in building a fair and equitable global AI governance system.

“At the same time, we are also willing to maintain communication and exchanges with the United States through channels including the intergovernmental dialogue on AI. This is both an important pathway for promoting the development of AI for good and for the benefit of all, and an integral part of building a constructive U.S.-China relationship of strategic stability based on respect, fairness and reciprocity,” Guo said.

President Trump said he had discussed with President Xi the idea of replacing the term “artificial intelligence” with “super intelligence,” and indicated that President Xi also liked the term “super intelligence.” On September 26, however, the Chinese Foreign Ministry specifically responded that China respects the U.S. preference for the term “super intelligence” but will continue to refer to it as “artificial intelligence.” China did not announce any agreement to adopt a common name.

That said, Liu Chong, Director of the Center for Science, Technology and Strategy at the China Institutes of Contemporary International Relations (CICIR), has already publicly used the term “super intelligence” in an article published on the institute’s official WeChat account and offered a substantive discussion of the “governance of super intelligence.”

Full translation of Liu’s article is below:

Superintelligence Governance Should Be a Systemic Undertaking Built on Mutual Trust and Cooperation

超级智能治理应当是互信合作的体系性工程

Author: Liu Chong

Institution: China Institutes of Contemporary International Relations

Publication date: September 28, 2026

Superintelligence governance is a major issue concerning the future and destiny of humanity. Dialogue between China and the United States is an important step for the two countries to shoulder their responsibilities as major powers and safeguard humanity’s future.

Liu Chong
Director, Center for Science, Technology and Strategy

From September 23 to 25, 2026, Chinese President Xi Jinping paid a state visit to the United States. During the visit, the two heads of state reached consensus on eight outcomes, including the following: “The two sides agreed to establish a China-U.S. dialogue on artificial intelligence to exchange views on AI-related risks and benefits. The next dialogue will be held in November this year. The two sides agreed to establish a communication channel for artificial intelligence incidents.” The White House outcome document specifically stated that the two leaders agreed to use “super intelligence,” rather than “artificial intelligence,” to refer to the emerging technology covered by these discussions.

As the two countries currently at the forefront of artificial intelligence development, China and the United States have reached an important arrangement that represents an entirely new governance scenario and model in human history: governance must begin even though its object has not yet fully emerged and does not even have a universally accepted definition. Such governance is exceptionally important because of AI’s unprecedented impact, yet highly unstable because of the rapid iteration of the technology. This poses a new test for China, the United States, and the entire world. It also means that governance must be a systemic undertaking that continuously identifies risks, anticipates trends, makes forward-looking adjustments, shares benefits, and builds trust as the technology evolves.

Superintelligence Risk Is Not a “Red Line,” but a Shifting “Range”

People often imagine the development of artificial intelligence as a clearly defined ladder: narrow AI, artificial general intelligence, and then, after crossing a certain threshold, the era of superintelligence. Yet it has become a broad industry consensus that no clear red line can be drawn, with safety and control below it and “The Matrix” above it. Reality also amply demonstrates that risks will not wait until the label “superintelligence” formally appears before suddenly materializing. In recent months, frontier AI companies including OpenAI and Anthropic have encountered dangerous instances in which models in training independently gained unauthorized access, prompting these companies on several occasions to suspend the relevant model training. These incidents show that the real-world “braking point” does not lie in whether a model has formally been classified as AGI or superintelligence. Increasingly, it depends on whether existing control systems can still reliably constrain the model’s capabilities and behavior.

Rather than futilely searching for an abstract “superintelligence red line,” a more practical direction for governance may be to establish a dynamic “risk range–response level” system: which combinations of capabilities signal a marked rise in risk; which anomalous behaviors require intensified monitoring; under what circumstances training should be slowed or even suspended; under what circumstances it may resume after corrective action; and which behaviors indicate that a particular training pathway should be terminated.

“Shared Understanding” Is a Prerequisite for “Effective Joint Governance”

If the boundaries of superintelligence risk are themselves changing rapidly, then the first public good that international governance needs to provide is not a strict and exhaustive set of rules, but shared knowledge. This is precisely where China and the United States first need to align their understanding.

China and the United States do not need to adopt identical AI industrial policies, nor do they need to share model parameters or core technologies. They do, however, need to gradually develop a risk vocabulary that both sides can understand: What constitutes dangerous autonomy? What degree of “model overreach” should be elevated to the level of a security incident? How should major AI risks and accidents be classified? Which training pathways are more likely to carry risks that outweigh their benefits? … The safety lessons now scattered within a small number of companies should gradually be transformed into a common language that can be understood and discussed across companies, research institutions, and countries.

U.S. companies remain ahead in model research and development, and the models they develop and train internally are more advanced than those available for commercial use. Yet all U.S. frontier models are closed-source. This “black box” characteristic has in fact heightened external concern and anxiety. U.S. companies should set an example by strengthening the disclosure of risk information.

In addition, superintelligence risk governance cannot allow a small “inner circle” of frontier companies to determine the “overall future” of humanity. The Chinese and U.S. governments should engage in full exchanges on how to strengthen corporate oversight and coordinate development and security. Through dialogue, they should foster an interdisciplinary and cross-sector community spanning law, artificial intelligence, cybersecurity, strategic studies, and public policy, thereby steadily building the capabilities needed for future global governance.

Both Development and Security Should Be Achieved Together

The China-U.S. dialogue on artificial intelligence is intended to “exchange views on AI-related risks and benefits.” An especially important part of this should be how China and the United States can provide public goods. Artificial intelligence is, first and foremost, a new frontier of human development. If superintelligence governance focuses only on restricting proliferation, erecting barriers, and raising thresholds, it will be difficult to build a genuinely broad international foundation. If some countries develop while others do not, and some countries possess capabilities while others do not, this may become the greatest form of global inequality in the age of intelligence.

In the field of development, China and the United States should engage in extensive exchanges, explore cooperation, and identify institutional arrangements that can turn technological dividends into opportunities for global development. Development gains should benefit all humanity more broadly and equitably, ensuring that no country and no individual is structurally excluded by technological progress from living a life of dignity. The ultimate purpose of AI development is not to create more advanced machines, but to create better lives; it is not to make intelligence a privilege enjoyed by a few people or a few countries, but to enable all humanity to share the development opportunities brought by technological progress.

In the field of security, the dangers are self-evident if highly automated cyberattacks, biological design capabilities, and other high-risk capabilities can be replicated at low cost. Yet the long-term concentration of advanced intelligence in a small number of countries and companies may cause even greater harm. If a few countries possess advanced systems that use intelligent technologies for cyber offense and defense, while many small and medium-sized countries still rely mainly on traditional defensive technologies, the AI era will create not merely a “digital divide,” but potentially a new “security divide.” Mature, secure, and broadly applicable intelligent capabilities should, wherever possible, be transformed into widely available public capabilities. In other words, superintelligence governance should not only prevent the dangerous proliferation of the “spear,” but also promote the spread of the “shield.” Global cybersecurity capacity-building, the sharing of AI safety tools, the development of intelligent defense systems for small and medium-sized countries, and international mechanisms for risk early warning and coordinated response should all be gradually incorporated into the governance agenda.

The Continuity of Human Civilization Requires Joint Stewardship

Terence Tao and 24 other Fields Medalists recently issued a joint open letter noting that AI companies are increasingly treating the “solution of major mathematical problems” itself as a benchmark of model capability, potentially detracting from the truly important task of “forming new conceptual understanding and insights.”

If AI’s production of cross-domain knowledge and its pace of problem-solving far exceed humanity’s ability to understand and absorb knowledge, it may greatly increase the productivity of the best scientists of this generation while weakening the training system on which the growth of the next generation of outstanding scientists depends. The modern scientific community consists of more than a tiny number of people at its pinnacle. A leading researcher typically passes through a long progression as a student, graduate student, and rank-and-file researcher, gradually developing professional judgment and creativity through problem-solving, reading, experimentation, failure, and reflection. If AI largely replaces these processes, how will researchers be trained and selected? And in the future, who will determine whether the proofs, programs, and scientific conclusions produced by AI are genuinely trustworthy?

Superintelligence governance therefore cannot discuss model safety alone. It must also address the broader issue of civilizational security by preserving the systems through which humanity understands and produces knowledge and transmits the capacity for innovation from one generation to the next.

Continuously Expanding the Space for Trust amid Competition

All of these questions ultimately return to a practical contradiction: the opportunities and risks associated with superintelligence create a clear need for cooperation, while AI competition between China and the United States continues to intensify.

This tension is already evident in the public positions of some U.S. frontier AI companies. Anthropic has explicitly argued that the United States and its allies should maintain their lead in the most advanced areas of AI, and has advocated further restrictions on China’s access to advanced chips, model capabilities, and related technologies to ensure that so-called “democratic countries” retain leadership over AI development. Such arguments and restrictive policies inevitably make China wonder whether so-called governance cooperation is an institutional shackle designed to constrain its development opportunities. Conversely, the United States will likewise worry that exchanges of risk information could evolve into exchanges of capability information, and that security cooperation could help a competitor narrow the technological gap.

A classic security dilemma may then emerge: each side, fearing that the other will achieve a breakthrough first, accelerates its own research and development while restricting the other; those restrictions further heighten the other side’s sense of insecurity; insecurity makes risk assessment and security cooperation more difficult; and the more difficult security cooperation becomes, the more reason both sides have to accelerate competition further.

The greatest challenge for China-U.S. superintelligence governance is therefore whether the two sides can preserve sufficient space for trust amid strategic competition and, on that basis, steadily expand the cooperation that is necessary. The goal of future dialogue should be to establish a baseline risk-cooperation framework that will not easily fail even if technological competition between China and the United States persists or intensifies. Beginning with the most basic alignment of risk assessments through a dialogue on superintelligence, the two sides should gradually develop a shared risk vocabulary, the scientific trust that is necessary, methods of capability-sharing that balance security and development, and a strategic consensus that allows them to apply the brakes when necessary.

Superintelligence governance is a major issue concerning the future and destiny of humanity. Dialogue between China and the United States is an important step for the two countries to shoulder their responsibilities as major powers and safeguard humanity’s future. For China and the United States, the real test is not whether they can stop competing, but whether they can build mutual trust and sustain cooperation amid competition. Even as they pursue competitive advantage, they must align their understanding of risks, manage strategic risks, advance global development, and carry human civilization forward, thereby making a decisive contribution to the systemic undertaking of global AI governance.

The U.S. side placed counternarcotics cooperation and the loan of giant pandas to the United States in the first two positions, followed by trade and investment in third place and the constructive and strategically stable relationship in fourth. These were followed by mutual support for APEC and the G20, preventing Iran from acquiring nuclear weapons, recognition of the two countries’ World War II alliance, and the AI dialogue.

The same eight outcomes therefore appear in a different order in the two lists. China leads with the overall framework for the bilateral relationship, while the United States puts counternarcotics, pandas, and trade and investment first. This reflects different priorities in how the two sides publicly present the outcomes.

1. A New Framework for China-U.S. Relations

• Both sides’ official documents confirm a “constructive and strategically stable China-U.S. relationship based on respect, fairness and reciprocity.”

• The White House fact sheet uses the full English formulation corresponding to the Chinese version. China incorporated the concept of “respect,” to which it has attached particular importance, while also accepting “fairness” and “reciprocity,” concepts emphasized more strongly by the U.S. side.

2. Taiwan

• The Chinese readout states that President Xi expressed the hope that the United States would maintain the correct position of “opposing Taiwan independence.”

• The White House fact sheet does not mention Taiwan. It does, however, state that “since World War II, the U.S. military presence in the Indo-Pacific has sustained a free and open regional order that has underwritten American prosperity.” This could be read as indirectly emphasizing that maintaining the status quo across the Taiwan Strait remains in the U.S. interest.

• Trump told reporters that the two sides did not spend much time discussing Taiwan and that China was very clear about his views on the issue.

• In a media interview, U.S. Ambassador to China David Perdue said that although China had repeatedly pressed the United States to change its position on Taiwan, U.S. language and policy had not changed. The United States wants peace across the Taiwan Strait, opposes coercion and does not support Taiwan independence. In Washington’s view, Beijing understands the U.S. position. Perdue also said Trump had shown respect on the Taiwan issue and listened to the Chinese side, and that the U.S. position on Taiwan is now more stable than it has been in the past decade.

• On arms sales, Secretary of State Marco Rubio said in response to a reporter’s question that decisions on arms sales to Taiwan depend not only on the political and security considerations of a particular region, but also on U.S. defense-industrial capacity, weapons inventories and defense requirements around the world. Washington therefore needs to assess whether it has sufficient capacity to sell the relevant weapons abroad. The proposed arms sales remain under review.

3. Trade and Economic Relations

• The Chinese readout broadly refers to the establishment and advancement of mechanisms including a Trade Council, though it omits the Investment Council. It also mentions reciprocal tariff reductions covering US$30 billion worth of trade and an extension of the outcomes of the Kuala Lumpur economic and trade consultations.

• The U.S. side provides considerably more detail:

  • It mentions the Investment Council and states that its role will be to explore potential investment opportunities and investment-related barriers, while providing both sides with a formal channel for addressing investment issues of practical commercial significance.

  • The two sides reached an understanding to provide more favorable tariff treatment for US$30 billion worth of non-sensitive goods from each country, with the U.S. fact sheet listing examples of the products concerned.

  • It also states that the Trade Council established a working group specifically focused on addressing market-access barriers in agriculture. Wang Yi subsequently confirmed this when discussing the outcomes of the visit.

The U.S. side also mentions several outcomes that do not appear in the Chinese readout:

• China will import at least 10 million metric tons of coal from the United States in both 2027 and 2028.

• China will ensure the continued and normal supply of rare earths and other critical minerals.

• President Trump urged President Xi to increase production of refined petroleum products to help stabilize global supply.

The White House fact sheet does not mention the extension of the Kuala Lumpur economic and trade arrangements. Treasury Secretary Scott Bessent and other U.S. officials, however, have said that the arrangements were extended by two months, until January 10, 2027.

U.S. Trade Representative Jamieson Greer said the United States and China may periodically extend these trade “pauses,” but that Washington also regards them as periods for monitoring compliance. The United States will closely watch whether China follows through on commitments such as increasing purchases of U.S. agricultural products and maintaining rare-earth supplies before deciding whether to continue the current period of relative stability in bilateral economic relations.

4. Artificial Intelligence

• Both sides confirm the establishment of an AI dialogue mechanism to exchange views on AI-related risks and benefits. The next dialogue will take place in November, and the two sides agreed to establish a bilateral communication channel for AI-related incidents. Bessent has referred to this channel as a “hotline.”

• There are, however, differences in how the two sides describe AI itself.

• The U.S. readout says the two leaders agreed to use the term “super intelligence” rather than “artificial intelligence” to describe these emerging technologies. On September 26, however, the Chinese Foreign Ministry specifically responded that China respects the U.S. preference for the term “super intelligence” but will continue to refer to it as “artificial intelligence.” China did not announce any agreement to adopt a common name.

• Trump subsequently told reporters that the two sides had not spent much time discussing AI. He said the United States currently has a substantial lead over China in AI and intends to maintain that advantage. He nevertheless emphasized that the two leaders had discussed the term “super intelligence.”

5. International and Regional Issues

Iran

• The third item in China’s eight-point list states explicitly that the two presidents agreed that Iran should honor its commitment not to develop nuclear weapons and that no country or entity should impose transit fees on international waterways. This broadly corresponds with the U.S. readout.

• According to the U.S. side, Iran did not occupy a large portion of the meeting. U.S. officials declined to say clearly whether Washington would sanction Chinese entities trading with Iran. There have been reports suggesting that China might press Iran and assist Trump in resolving the conflict in the Middle East in exchange for the United States halting arms sales to Taiwan. Ambassador Perdue, however, explicitly rejected the idea that any arrangements or commitments concerning Iran and Taiwan were linked.

Japan and World War II

• The Chinese side states that “the two presidents recalled that China and the United States were allies during World War II and fought side by side to achieve victory.” The U.S. side uses corresponding language.

APEC and the G20

• The two sides use consistent language regarding their respective major multilateral events. Both agreed to support each other in successfully hosting the APEC Economic Leaders’ Meeting and the G20 Leaders’ Summit, and said the two presidents intend to attend the meetings hosted by the other side.

North Korea and Russia

• The U.S. readout also mentions North Korea and Russia and states that the United States called for trilateral arms-control talks among the United States, Russia and China. None of these points appears in the Chinese readout.

6. Giant Pandas

• The language on both sides is consistent. The United States welcomed the arrival of a pair of giant pandas loaned by China to Zoo Atlanta.

7. Fentanyl and Counternarcotics Cooperation

• The Chinese side highlights the tangible results of China-U.S. counternarcotics law-enforcement cooperation. It also stresses that although the fentanyl problem was not caused by China, Beijing has, out of humanitarian considerations and with the broader China-U.S. relationship in mind, acted with the utmost goodwill and made every effort to assist the United States in addressing the fentanyl crisis. Recently, the two sides have worked closely together to jointly crack several cases involving new psychoactive substances and precursor chemicals, resulting in the arrest of dozens of suspects in both countries.

• The U.S. account places greater emphasis on the fact that the operations were conducted “based on intelligence from U.S. law enforcement” and specifies that the suspects included 21 Chinese nationals. It adds that the United States “strongly urges” that the Chinese nationals involved receive the harshest available penalties, including the death penalty where applicable. The United States also welcomed China’s move ahead of the summit to impose export controls on additional drug precursors and “strongly encouraged” China to continue scheduling these and other substances and chemicals.

8. Military Relations

• The Chinese readout states that the two militaries agreed to sign a memorandum of understanding as soon as possible to strengthen crisis communication and prevention, and to continue cooperation in searching for the remains of U.S. military personnel missing in China.

• The U.S. readout does not mention either of these points.

9. Semiconductor Export Controls

• Neither side’s summit readout mentions semiconductor export controls.

• U.S. Trade Representative Jamieson Greer subsequently made clear that high-end advanced chips representing the “crown jewels of American technology,” as well as semiconductor manufacturing equipment requiring individual export licenses, are kept entirely separate from the bilateral trade negotiations. He said this is “how we maintain our lead in the super-intelligence race,” adding that discussions on these issues simply did not take place as part of the trade negotiations.

• In its account of the visit’s outcomes, the Chinese side argued that some forces in the United States have overstretched the concept of national security, frequently politicized economic and trade issues, suppressed Chinese companies operating in the United States, restricted Chinese investment, created market-access barriers, and advocated “decoupling” and the severing of supply chains. China said such actions serve neither side’s interests and would only shrink the areas in which their interests overlap. President Xi stressed that cooperation is a two-way street and that stabilizing China-U.S. economic and trade relations requires both expanding the list of areas for cooperation and shortening the list of problems. He called on the United States to treat Chinese companies fairly and to seek solutions through dialogue and negotiation in a spirit of equality, respect and mutual benefit.

September 27, 2026 · Beijing

The Chinese and U.S. presidents have exchanged visits within the space of six months, an event of historic and landmark significance.

From the welcoming ceremony to the talks and the welcoming banquet, media outlets in China and abroad have examined and interpreted many details of this visit. At the very start of the visit, China made a point that deserves to be viewed in the context of the entire itinerary:

The world is developing and the times are changing, but the historical logic of peaceful coexistence between China and the United States has not changed; the two peoples’ goodwill toward friendly exchanges has not changed; and the international community’s general expectations for China and the United States have not changed.

Some things are changing, but many others cannot and will not change.

A Shared History of Fighting Militarism

The history of jointly fighting Japanese militarism was a subject mentioned by both the Chinese and U.S. presidents in their remarks.

In his address, the Chinese president reviewed this history and specifically noted that China and the United States had once fought “shoulder to shoulder”:

Remarks by Xi Jinping at the Welcoming Ceremony at the White House

During World War II, China and the United States fought shoulder to shoulder against fascist aggression. The Chinese people will not forget this history, nor have the American people forgotten it.

The U.S. side also mentioned a word derived from Chinese: “gung ho.”

“Gung ho” is an abbreviation of the Chinese Industrial Cooperatives. During the War of Resistance Against Japanese Aggression, the cooperatives supplied military and civilian necessities for wartime use and supported the resistance.

Liu Qiang, a senior translator and reviewer at China International Communications Group who is well versed in the evolution of English word meanings, told Tan Zhu:

In 1937, a U.S. Marine Corps officer traveled through China to observe the country’s war of resistance and later visited Yan’an. He encountered the Eighth Route Army and the “Gung Ho” movement, and later adopted “gung ho” as a slogan to encourage cooperation among U.S. service members.

In 1942, that unit distinguished itself in the Pacific theater. To boost morale, the U.S. military publicized the unit. The expression “gung ho” consequently became familiar to more Americans. Its origin lies in the shared values forged by China and the United States in blood and fire under the conditions of a particular era.

Previously, when the U.S. president spoke about World War II, the narrative focused more on the United States itself. This time, it became a historical memory of solidarity and cooperation between China and the United States.

Xiang Haoyu of the China Institute of International Studies told Tan Zhu that this can be understood on three levels: historically, China and the United States jointly participated in establishing the postwar international order; in the present, the two countries still have many converging interests; and looking ahead, they must continue to shoulder the responsibilities of major countries in safeguarding world stability and advancing global governance.

In this context, “fighting shoulder to shoulder” and “gung ho” take on more specific meaning:

China and the United States once transcended their differences and fought shoulder to shoulder against the aggressors of Japanese militarism. At that time, the two countries came together for a cause that concerned world peace. Today, they still need to find such points of converging interest around which they can unite and jointly guard against the risks of our times.

A Shared Responsibility for Artificial Intelligence

The interactions between the Chinese and U.S. presidents also touched on a challenge the two countries must face together today:

Artificial intelligence.

A review of recent readouts on interactions between the Chinese and U.S. presidents shows that areas requiring joint work are often paired with a single verb, such as “strengthen cooperation,” “strengthen dialogue,” or “continue consultations.” Artificial intelligence, however, is paired with two actions:

Remarks by Xi Jinping at the Welcoming Ceremony at the White House

China and the United States are both major countries in artificial intelligence. We have both the ability and the responsibility to develop and govern AI well, ensuring that its development always remains under human control and benefits the people.

“Develop well” concerns technological progress and shared benefits; “govern well” concerns the risks of misuse, malicious use, and loss of control.

“Digital militarism” is one such risk. Tan Zhu previously revealed that the Japanese government has been pouring money into embedding an erroneous view of history in “Gennai,” an AI-enabled business support system it is developing. Japan has also proactively adapted the system to the algorithmic preferences of search engines and large language models so that its falsified history of World War II appears more prominently to AI systems.

If allowed to develop without effective governance, this will lead to harmful consequences.

From jointly resisting militarism to jointly responding to “digital militarism,” and from jointly addressing climate change to jointly exploring how frontier technologies should develop, China and the United States need to work shoulder to shoulder. This is the responsibility and commitment of major countries, and it is also what the international community generally expects of China and the United States.

No matter how the world changes, this expectation will not change.

A Constructive, Strategically Stable Relationship

The September meeting further enriched the meaning of a “constructive and strategically stable relationship”:

Xi Jinping and Peng Liyuan Have Tea with U.S. President Donald Trump and His Wife

The two presidents agreed to further enrich the meaning of the positioning of China-U.S. relations and jointly build “a constructive and strategically stable relationship based on respect, fairness, and reciprocity.”

At their Beijing meeting in May, the two presidents jointly affirmed a constructive and strategically stable China-U.S. relationship. At the time, the U.S. statement added the following phrase after that description:

on the basis of fairness and reciprocity

In the U.S. National Security Strategy, these two terms describe how to rebalance the economic relationship with China in order to address U.S. economic, trade, and security concerns. The fact is that if both sides proceed solely from their own concerns, disputes can still easily arise over specific matters. Economic and trade issues are a case in point.

At this meeting, however, the two sides moved toward each other and agreed to further enrich the positioning of the relationship, placing “respect” before “fairness and reciprocity.”

Diao Daming of Renmin University of China told Tan Zhu that the substance of this positioning—respect, fairness, and reciprocity—is consistent with China’s longstanding principles for handling China-U.S. relations: mutual respect, peaceful coexistence, and win-win cooperation.

“Respect” is the prerequisite. It means respecting each other’s social systems, development paths, and core interests, and carrying forward the spirit of the three China-U.S. joint communiqués. “Fairness” is a value to be pursued. Embedded in the new type of international relations advocated by China, it is reflected both in fairness and justice in international relations and in upholding the fairness of international law and the international order. “Reciprocity” emphasizes mutual benefit on an equal footing and a balance between rights and obligations. It stresses equal status and due regard for each other’s interests in international exchanges: one side cannot enjoy all the rights while the other alone bears the obligations.

By agreeing this time to put “respect” first, the two sides have moved the substance of the relationship’s positioning another step forward.

Manage differences through respect, shape order through fairness, and achieve mutual benefit through reciprocity. Upholding and continuously developing a constructive and strategically stable relationship is how the two major countries can seek the right way to get along. It benefits both peoples and provides an anchor of stability for a turbulent world.

Pragmatism and Implementation

How, then, should this relationship be built in concrete terms? One place to start is a shift in the U.S. media. Before the meeting began, a U.S. media outlet used one word to describe China-U.S. relations: “pragmatic,” meaning starting from actual conditions and first asking whether an approach is workable and can produce results.

China-U.S. economic and trade relations are one example.

In May, the two sides agreed to establish a trade council and an investment council to discuss their respective trade and investment concerns. By September, further arrangements had been made.

In September, the two presidents had an in-depth exchange of views on the constructive and strategically stable China-U.S. relationship and on major international and regional issues. They reached an eight-point consensus, including:

The two presidents recognized the positive role of the China-U.S. economic and trade consultation mechanism and the outcomes of consultations between the two sides’ economic and trade teams, including establishing and advancing mechanisms such as the trade council, reaching a reciprocal tariff-reduction arrangement worth US$30 billion, and extending the outcomes of the Kuala Lumpur economic and trade consultations. They instructed that these outcomes be implemented.

From economic and trade consultations, to reaching consensus, to arranging implementation, one sentence from the talks now has a more specific direction:

Xi Jinping Holds Talks with U.S. President Donald Trump at the White House

Departments at all levels and in all fields in both countries must get moving. Do not refrain from doing a good deed because it is small, and do not do a bad deed because it is minor. Implement the consensus reached by the two sides with the perseverance of driving a nail.

This was the first time in nearly two years that China had invoked this spirit in an official readout on interactions between the Chinese and U.S. presidents.

The “spirit of driving a nail” has more often been used in the past to describe ensuring implementation at home. In the context of China-U.S. relations, what the two sides must do next is determine who will carry forward what has been agreed and whether they can continue implementing one item after another.

Competition Without a Gladiatorial Contest

Specific matters must be handled one by one. China and the United States must also answer an unavoidable question: How should competition be conducted?

At the White House welcoming ceremony, China said that China and the United States “need not shy away from competition,” but that competition “should be a race in which each tries to catch up with and surpass the other, not a gladiatorial contest in which one side wins and the other loses.”

Competition and differences have not disappeared entirely. Yet amid these voices, new changes are also taking place.

A person with frontline diplomatic experience told Tan Zhu that Graham Allison, who proposed the “Thucydides Trap,” later also began studying what China describes as “you are in me, and I am in you.”

There is another detail. Allison recalled that U.S. Senator Chuck Schumer once led a delegation to China. After returning to the United States, someone in the delegation called and asked him what the phrase actually meant. Allison said he had not understood it at the time either, and later asked President Xi Jinping about it. When he discussed the phrase again, Allison said that China and the United States were closely bound together by their destinies and had to cooperate to safeguard their own rights to survival.

A scholar who once worried about whether major powers were destined for conflict has begun studying how two interdependent major countries can coexist over the long term. The question being asked about China-U.S. relations has changed.

The answer is also clear. “Can China and the United States move beyond the ‘Thucydides Trap’ and create a new paradigm of major-country relations?” This was the major proposition raised by President Xi at his meeting with U.S. President Donald Trump in May this year.

At this White House welcoming ceremony, China stated it directly: the “Thucydides Trap” can be transcended.

The Historical Logic of Peaceful Coexistence

At the very start of this visit to the United States, China said: “The historical logic of peaceful coexistence between China and the United States has not changed.”

How should this historical logic be understood? The two presidents’ reciprocal visits this year shared one feature: on each visit, they went to a place in the host country that carries historical memory.

When President Trump visited China in May, the two presidents toured the Temple of Heaven together and discussed the Chinese view of the universe, the Chinese philosophy of engaging with the world, and the traditional Chinese idea that “the people are the foundation of the state; only when the foundation is solid can the state be at peace.” Four months later, on the final stop of this visit to the United States, the two presidents went together to the U.S. National Archives, where they were briefed on the institution and its principal exhibits.

At the National Archives, the Chinese side spoke of the differences between the two countries in history and culture, social systems, and development paths. It also said that the aspirations of the two peoples for a better life are shared, and called for the two sides to “acknowledge and respect each other’s differences.”

The two countries do not have to become alike in order to coexist peacefully. This historical logic has not changed.

People-to-People Ties That Endure

In his toast at the welcoming banquet, the Chinese president traced several important milestones in exchanges between the Chinese and American peoples across a span of more than 200 years.

The most recent was the story of friendship between Saykos and Yin Yuzhen.

Toast by Xi Jinping at the Welcoming Banquet Hosted by U.S. President Donald Trump

More than 20 years ago, an American named Saykos helped fund Chinese desert-control worker Yin Yuzhen’s tree planting. Not long ago, the elderly man returned to China and saw with his own eyes that the desert of those years had become a lush forest. This story moved many people in China and is an example of friendly exchanges between the Chinese and American peoples.

Those who move China-U.S. relations forward include statesmen and diplomats, businesspeople, teachers, students, athletes, and millions upon millions of ordinary people. Often, it is each concrete act of people-to-people exchange between China and the United States that gives friendly cooperation a deeper foundation.

President Trump likewise said at the welcoming banquet:

President Xi and I both understand that we represent different systems, but the ties between our peoples have endured.

The word “but” in this sentence matters. Different systems are a fact, but systemic differences do not sum up the entirety of China-U.S. relations. They cannot erase or obstruct the ties the two peoples have formed over the long term.

On the morning of September 24 local time, President Xi announced in his address at the White House welcoming ceremony that “over the next five years, China will invite 100,000 young Americans to visit China for exchanges and study.”

This was another invitation from President Xi to young Americans, following the initiative he announced in San Francisco in November 2023 to “invite 50,000 young Americans to China for exchanges and study over the next five years.”

Tan Zhu reviewed publicly reported data from the past three years on Chinese and American youth exchange groups. Since the end of 2023, youth exchanges between the two countries have accelerated markedly. Cultural and tourism experiences remain the most common activities, but science, technology, and education programs have increased significantly. Nontraditional study-tour topics such as rural revitalization and ecological and environmental protection have also been added to the options.

Issues Discussed in China–U.S. Presidential Interactions, 2025–2026 · Source: Ministry of Foreign Affairs of the People’s Republic of China

Zhuang Hanjie, who has long organized China-U.S. youth exchange programs, told Tan Zhu that China not only possesses a rich historical and cultural heritage but is also undergoing a large-scale industrial transformation with global impact. Students hope to see a China that is whole, real, and developing dynamically.

An American student who had participated in a China-U.S. exchange program told Tan Zhu that before going to China, her understanding of the country came mainly from school history classes and social media. After arriving, she performed and took part in activities with Chinese students, forming very deep friendships. After returning to the United States, they continued to keep in touch through group chats.

A single dialogue became an enduring small network of relationships. China was no longer merely a country in the news or a competitor in policy documents, but people she had met, spoken with, and remained in contact with.

As long as the people of both countries remain willing to understand and draw closer to one another, these ties will form an important foundation of public support as China-U.S. relations continue to move forward.

An Answer That Can Stand the Test of Time

Today, China-U.S. relations once again stand at a new historical starting point.

New technologies will emerge, new competition will arise, and new areas of cooperation will appear. The questions posed by the times will change. What remains unchanged is that China and the United States must always find ways to get along and work together.

After all, relations between major countries must ultimately be grounded in the problems they face together, the interests they create together, and the ties they build together.

The times will continue to change, and China-U.S. relations will continue to move forward.

China’s Readout:

China and the U.S. Reach Consensus on Eight Key Outcomes

From September 23 to 25 local time, Chinese President Xi Jinping paid a state visit to the United States. During the visit, the two presidents held in-depth discussions on building a constructive and strategically stable China-U.S. relationship, as well as major international and regional issues. They reached consensus on eight key outcomes:

1. The two sides agreed to build a “constructive and strategically stable China-U.S. relationship based on respect, fairness and reciprocity.”

2. The two sides agreed to support each other in successfully hosting the APEC Economic Leaders’ Meeting and the G20 Leaders’ Summit. The two presidents intend to attend the meetings hosted by the other side.

3. The two presidents agreed that Iran should honor its commitment not to develop nuclear weapons and that no country or entity should impose transit fees on international waterways.

4. The two presidents recalled that China and the United States were allies during World War II and fought side by side to achieve victory.

5. The two presidents recognized the positive role of the China-U.S. economic and trade consultation mechanism and the outcomes reached by their respective economic and trade teams. These include establishing and advancing mechanisms such as the Trade Council, reaching a reciprocal tariff-reduction arrangement covering US$30 billion in trade, and extending the outcomes of the Kuala Lumpur economic and trade consultations. The two presidents instructed their teams to implement these outcomes.

6. China-U.S. counternarcotics law-enforcement cooperation has produced tangible results. Recently, the two sides have worked closely together to jointly crack several cases involving new psychoactive substances and precursor chemicals, resulting in the arrest of dozens of suspects in both countries.

7. The two sides agreed to establish a China-U.S. dialogue on artificial intelligence to exchange views on AI-related risks and benefits. The next dialogue will take place in November this year. They also agreed to establish a communication channel for AI-related incidents.

8. The United States welcomed the arrival of a pair of giant pandas loaned by China to Zoo Atlanta.

In addition, the Chinese and U.S. militaries agreed to sign a memorandum of understanding as soon as possible to strengthen crisis communication and prevention, and to continue cooperation in searching for the remains of U.S. military personnel missing in China.

Wang Yi on President Xi Jinping’s State Visit to the United States

Breaking New Ground in Major-Country Relations and Opening a New Chapter in China-U.S. Relations

— Wang Yi, Member of the Political Bureau of the CPC Central Committee and Minister of Foreign Affairs, on President Xi Jinping’s State Visit to the United States

From September 23 to 25, 2026, President Xi Jinping paid a state visit to the United States. At the conclusion of the visit, Wang Yi, Member of the Political Bureau of the CPC Central Committee and Minister of Foreign Affairs, briefed accompanying journalists on the visit.

Wang Yi said that September had witnessed a succession of major diplomatic engagements at the head-of-state level. Following visits to Central Asia, the Middle East and South Asia, President Xi traveled across the Pacific for a highly anticipated visit to the United States. This was President Xi’s first state visit to the United States in 11 years and marked reciprocal visits by the Chinese and U.S. presidents within the space of six months, setting a new precedent in the history of China-U.S. exchanges.

The visit featured a packed schedule and a wide-ranging agenda. In a friendly atmosphere of mutual respect, President Xi and President Trump had candid and in-depth exchanges on strategic and overarching issues concerning China-U.S. relations and broader global developments.

The U.S. side accorded President Xi the highest level of protocol. President Trump and the First Lady personally greeted him at the airport, where a military band played the national anthems of China and the United States, a 21-gun salute was fired, and honor guards from the U.S. armed services stood in formation to welcome him, opening the visit with a grand ceremony.

The following day, President Trump held a grand welcoming ceremony for President Xi at the White House. The two presidents delivered important remarks, reviewed the honor guard together, and watched military aircraft fly over the White House. That evening, President Trump and the First Lady hosted a formal state dinner for President Xi and his wife, Peng Liyuan, in the White House East Room, which was decorated in Chinese red. Senior figures from the U.S. administration, Congress and wider society attended. These carefully arranged protocol events demonstrated the high level of respect accorded by the U.S. side to President Xi and the importance it attaches to China-U.S. relations.

Chinese and international media closely followed the visit, giving it extensive front-page and headline coverage and analysis. It was widely regarded as a historic visit of milestone significance. Against a turbulent international backdrop, the visit carried forward the positive momentum generated by the Beijing summit between the two presidents, guided the constructive and strategically stable China-U.S. relationship toward new progress, and sent a positive signal that China and the United States are working toward each other, pursuing peaceful coexistence and seeking mutual benefit and win-win outcomes, to the benefit of both countries and the wider world.

I. Expanding the New Framework for China-U.S. Relations

Wang Yi said that head-of-state diplomacy serves as the anchor of China-U.S. relations. Since President Trump returned to office, the two presidents have met three times, spoken by telephone five times and exchanged letters on multiple occasions. They have maintained close engagement and developed a pattern of interaction characterized by mutual respect and sincerity. This has become the most valuable strategic asset in China-U.S. relations. At every critical juncture in the course of the bilateral relationship, head-of-state diplomacy has provided strategic guidance and direction.

During President Trump’s visit to China in May, the two presidents jointly affirmed the new framework of a constructive and strategically stable China-U.S. relationship and made clear that the two sides should work toward a relationship in which cooperation remains the mainstay, competition is kept within reasonable bounds, differences are manageable, and peace can be expected. This new framework reflects the reality that China-U.S. relations are generally stable and making progress, while also embodying the expectations of both sides for continued improvement. It represents an important step toward finding the right way for the two countries to get along with each other. Following the direction set by the two presidents, the two sides have actively advanced dialogue and cooperation, properly handled differences and frictions, and maintained overall stability in China-U.S. relations.

An important political outcome of this visit was that President Xi and President Trump further enriched the substance of this new framework by underscoring the importance of respect, fairness and reciprocity. They agreed to build a “constructive and strategically stable China-U.S. relationship based on respect, fairness and reciprocity,” providing clearer strategic guidance for China and the United States as they explore the right way for major countries to get along.

Respect means respecting each other’s sovereignty and territorial integrity, the social systems and development paths chosen by each country, and each other’s core interests and major concerns. Fairness means pursuing mutually beneficial cooperation and resolving differences through consultation, rather than engaging in zero-sum games in which one side wins at the expense of the other or seeking unilateral and absolute advantage. Reciprocity means that the two countries are equal in sovereignty, with neither superior nor inferior to the other; neither should act in a hegemonic or bullying manner; each other’s concerns should be addressed on a reciprocal basis; and cooperation across different fields should develop in a balanced way.

President Xi pointed out that China and the United States, as two major countries, shoulder a historic responsibility to promote human development and progress. They should demonstrate the sense of responsibility expected of major countries, respond to the aspirations of their peoples and the broader trend of the times, and explore a new and proper way for major countries to get along. The great rejuvenation of the Chinese nation and making America great again can proceed in parallel, reinforce each other and benefit the world.

China and the United States have different national conditions, and differences between them are normal. Some are sharp, and many of the contradictions they face are complex. Properly handling differences and contradictions while seeking common ground is nevertheless an inherent part of a constructive and strategically stable China-U.S. relationship.

The two presidents agreed that political and diplomatic channels should fully play their coordinating role. The two militaries should maintain regular dialogue, while departments responsible for economic and trade affairs, finance, law enforcement, and people-to-people exchanges should strengthen communication, build trust, dispel doubts, manage differences and accumulate mutual confidence.

President Xi set out China’s principled position on the Taiwan question, stressing China’s firm commitment to safeguarding national reunification and territorial integrity. He urged the United States to maintain the correct position of opposing “Taiwan independence,” handle the Taiwan question prudently, and remove disruptions to China-U.S. strategic cooperation and the development of bilateral relations.

Wang Yi said that, as President Xi has pointed out, the “Thucydides Trap” can be avoided. A constructive and strategically stable China-U.S. relationship cannot remain merely a slogan; it must be translated into actions by both sides working toward each other. As long as respect, fairness and reciprocity are genuinely upheld, China and the United States will be able, through dialogue and consultation, to jointly find the right way for two countries with different civilizations, systems and development paths to coexist peacefully on this planet over the long term.

II. Opening New Space for China-U.S. Cooperation

Wang Yi said that, as the world’s two largest economies, China and the United States are deeply intertwined. This is an objective reality. History has shown that both benefit from cooperation and both suffer from confrontation. Helping each other succeed and pursuing win-win cooperation is the only right choice. China-U.S. cooperation concerns not only the well-being of the two peoples but also the global political and economic landscape.

On the eve of the visit, the two countries’ economic and trade teams held a new round of consultations and reached a new joint arrangement. This included establishing and advancing a Trade Council and an Investment Council, setting up an agricultural working group, a reciprocal tariff-reduction arrangement covering US$30 billion in trade, and extending the outcomes of the Kuala Lumpur economic and trade consultations. These steps have helped stabilize bilateral economic and trade relations and bolster market confidence, benefiting businesses and ordinary people in both countries as well as the global economy.

China-U.S. economic and trade relations have experienced twists and turns, and today’s relative stability has not come easily. Some forces in the United States have overstretched the concept of national security, frequently politicized economic and trade issues, suppressed Chinese companies operating in the United States, restricted Chinese investment, created market-access barriers, and advocated “decoupling” and the severing of supply chains. Such actions serve neither side’s interests and will only shrink the areas in which their interests overlap.

President Xi pointed out that cooperation is a two-way street. Stabilizing China-U.S. economic and trade relations requires both expanding the list of areas for cooperation and shortening the list of problems. The United States should treat Chinese companies fairly and, in a spirit of equality, respect and mutual benefit, seek solutions through dialogue and negotiation. The two sides should work toward each other, remain committed to mutual benefit and win-win outcomes, and promote the sustained, stable and positive development of China-U.S. economic and trade relations so as to better benefit the peoples of both countries.

China-U.S. law-enforcement cooperation has effectively helped protect the lives and property of people in both countries and strengthened the “safety factor” underpinning the development of bilateral relations. Fentanyl abuse has inflicted profound and lasting pain on many American families. Although this problem was not caused by China, China has, out of humanitarian considerations and with the broader China-U.S. relationship in mind, consistently acted with the utmost goodwill and made every effort to assist the United States in addressing the fentanyl crisis.

Since the Beijing summit, China has added further precursor chemicals to its controlled-substances regime, strengthened export supervision, and worked with the United States to jointly crack several drug-related cases, demonstrating China’s sincerity. The two presidents instructed the law-enforcement authorities of both countries to continue strengthening cooperation and jointly combat transnational crime.

Wang Yi said that those who act are often the ones who succeed, and those who keep moving forward are the ones who reach their destination. Facts have shown that China and the United States can accomplish a series of important and beneficial things through cooperation. Every step forward in China-U.S. relations brings tangible benefits to the international community.

Departments and officials at all levels on both sides should implement the important understandings reached by the two presidents with persistence and determination, neither neglecting small acts of good nor committing small acts of harm. The two countries should pursue mutual benefit and win-win outcomes through practical cooperation, bring out the best in each other through healthy competition, and work together to create a brighter future for China-U.S. relations.

III. Building New Bridges of China-U.S. Friendship

Wang Yi said that bonds between the peoples provide a solid foundation and lasting momentum for China-U.S. relations. As President Xi has pointed out, the hope of the China-U.S. relationship lies in the people, its foundation is in the societies of the two countries, its future lies with the youth, and its vitality comes from subnational exchanges.

“Ping-pong diplomacy” opened the door to exchanges between China and the United States after many years of estrangement. The Kuliang story has carried forward a friendship spanning more than a century. Iowa has witnessed touching stories of subnational cooperation. Countless individual exchanges between the peoples of the two countries have come together like streams to form the wellspring nourishing the development of bilateral relations.

During the visit, President Xi repeatedly recalled memorable moments in the history of people-to-people friendship between China and the United States. The peoples of the two countries fought side by side during World War II, and Chinese soldiers and civilians sacrificed hundreds of thousands of lives while rescuing hundreds of American airmen.

Chinese desertification-control campaigner Yin Yuzhen and her American friend Sykes were reunited in China after more than two decades, by which time the saplings they had planted in the desert had grown into a forest. These sincere words and moving stories resonated strongly with people from all walks of life in both China and the United States.

President Trump also recalled in his remarks the history of China and the United States becoming allies during World War II and their peoples joining together to achieve victory. He said that the friendship between the United States and China spans thousands of miles and more than a century, and expressed his willingness to continue nurturing bilateral friendship and bring lasting prosperity and security to future generations.

Friendship between countries ultimately depends on friendship between their peoples. Mutual understanding and affinity between ordinary people carry the greatest warmth and strength. They can break down barriers, cut through distracting noise, and enable the vast Pacific Ocean to connect rather than divide the two countries.

To promote China-U.S. people-to-people exchanges, President Xi announced a series of new initiatives. Following the completion of the “50,000 in five years” initiative two and a half years ahead of schedule, President Xi announced that China would invite 100,000 young Americans to China for exchanges and study over the next five years.

The increase from 50,000 to 100,000 is more than a numerical change. It represents an effort to expand youth exchanges and mobilize the energy of younger generations in support of China-U.S. friendship.

The news most warmly welcomed by the American public is that giant pandas Ping Ping and Fu Shuang will soon make their new home at Zoo Atlanta. Giant pandas are ambassadors of friendship and are deeply loved by the American people. The panda bond between China and the United States has lasted for more than half a century. The arrival of Ping Ping and Fu Shuang will add another chapter to the story of China-U.S. friendship.

“Rose diplomacy” was another highlight of the visit. During President Trump’s visit to Zhongnanhai in May, he spoke highly of Chinese roses. Several months later, Chinese roses crossed the Pacific carrying the good wishes of the Chinese people and arrived at the White House, becoming a new symbol of friendship between the two countries.

It is also worth noting that President Trump and the First Lady invited President Xi and Peng Liyuan to visit the U.S. National Archives together. This echoed President Xi’s invitation to President Trump to visit the Temple of Heaven in May and reflected the understanding and respect that the two major countries have for each other’s history and culture.

China and the United States have different cultural traditions and social systems, but differences do not inevitably lead to confrontation. Instead, they provide broad space for exchanges and mutual learning.

The warm and personable diplomacy of the two first ladies added a softer dimension to the visit. Professor Peng Liyuan accompanied President Xi on his visit to the United States and, at the invitation of First Lady Melania Trump, visited the National Museum of Asian Art. Together they listened to American young people perform Chinese songs including Jasmine Flower, experiencing the blending of art and the resonance of music and bringing the peoples of the two countries closer together.

Wang Yi said that only friendship built through genuine heart-to-heart engagement can endure. For China-U.S. relations to continue moving forward, they need not only “handshakes” between the presidents but also “joined hands” among ordinary people.

Under the strategic guidance of the two presidents, China will continue building bridges and paving the way for China-U.S. people-to-people exchanges, broadening channels and creating momentum for exchanges and cooperation involving youth, education, culture, tourism, sports and other fields, so that the tree of friendship between the peoples of China and the United States can take deeper root and grow ever stronger.

IV. Demonstrating a Renewed Sense of Major-Country Responsibility

Wang Yi said that against a turbulent and rapidly changing international backdrop, the global significance of China-U.S. relations has become even more pronounced. Whether addressing global challenges or helping de-escalate regional hotspots, constructive interaction between China and the United States is indispensable.

President Xi pointed out that although China-U.S. cooperation cannot solve every problem in the world, many global problems would be difficult to solve without cooperation between the two countries. President Trump said that cooperation between the United States and China would lay a solid foundation for global peace and prosperity for decades to come.

During the visit, the two presidents had in-depth exchanges on major international and regional issues of common concern and agreed to strengthen coordination and make their due contribution to world peace and development.

Continued tensions in the Gulf and the broader Middle East are affecting global energy security, the geopolitical landscape and the international order. As a responsible major country, China has consistently worked as a builder of peace, promoter of stability and supporter of development in the Middle East.

President Xi has put forward a series of initiatives and proposals aimed at promoting peace and stability in the Middle East, which have received broad recognition and positive responses from the international community.

During the visit, President Xi stressed that the sovereignty and security of all countries should be respected, encouraged all parties to remain committed to peaceful choices, and expressed support for the United States and Iran returning to the Islamabad Memorandum of Understanding, resuming dialogue and negotiations as soon as possible, and ultimately reaching a comprehensive agreement covering the nuclear issue and other matters.

International opinion has spoken highly of China’s objective and impartial position, noting that China focuses on the root causes of problems, emphasizes both immediate and underlying solutions, respects the sovereignty of all countries, and promotes dialogue and consultation. China has played a constructive role in easing tensions in the Middle East, and there are expectations that it will contribute Chinese approaches and wisdom to resolving other international hotspot issues.

The healthy, safe and orderly development of artificial intelligence concerns the future of humanity and requires cooperation between China and the United States. During the visit, President Xi and President Trump had in-depth discussions on artificial intelligence.

President Xi pointed out that China and the United States are both major AI powers and have both the capability and the responsibility to develop and manage artificial intelligence properly, ensuring that AI development remains under human control and benefits the people. China and the United States should each play to their respective strengths rather than guard against each other.

The two presidents agreed to make good use of the China-U.S. AI dialogue mechanism, exchange views on the risks and benefits of artificial intelligence, and work together to prevent its misuse and abuse.

This year marks the 80th anniversary of the opening of the Tokyo Trials. As permanent members of the United Nations Security Council, China and the United States share a responsibility to uphold the postwar international order and prevent the revival of militarism.

China and the United States will respectively host the APEC Economic Leaders’ Meeting and the G20 Leaders’ Summit in the fourth quarter of this year. The two presidents confirmed that they would support each other in successfully hosting these meetings and continue injecting momentum into Asia-Pacific cooperation and global governance.

Wang Yi concluded that this historic visit had enriched the substance of the constructive and strategically stable China-U.S. relationship, safeguarded the overall stability of bilateral relations, and opened and written a new chapter for China-U.S. relations in the new era. It will have a far-reaching impact on the cause of world peace and development.

From “meeting in Beijing” to “rendezvousing in Washington,” President Xi has consistently guided China-U.S. relations toward steady and sustained development with strategic vision and a broad perspective that takes into account the well-being of the world.

President Xi’s composed and confident leadership left a deep impression on people from all walks of life in the United States, inspiring greater interest among the American public in engaging with and understanding China and sowing new seeds of friendship in American society.

Within the short span of one month, President Xi made three overseas visits, reaching neighboring countries, engaging the Global South and advancing China’s overall diplomatic agenda. These visits have helped China’s ideas gain broader support, further demonstrated China’s role as a major country, and enhanced its international influence.

We must continue to gain a deep understanding of and put into practice Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, particularly Xi Jinping Thought on Diplomacy. With greater resolve and determination, we will work to open up new horizons for major-country diplomacy with Chinese characteristics in the new era, create a more favorable international environment, and provide stronger strategic support for building China into a strong country and advancing national rejuvenation on all fronts through Chinese modernization.

Xi Jinping Holds Talks with U.S. President Donald Trump

On the morning of September 24, 2026 local time, Chinese President Xi Jinping held talks with U.S. President Donald Trump at the White House.

President Xi noted that the Chinese and U.S. presidents had made reciprocal visits in less than six months, something unprecedented in the history of China-U.S. relations. President Trump and I have stayed in communication through various means and worked together to steer the course of China-U.S. relations, Xi said. In May this year, President Trump and I jointly decided to build a constructive and strategically stable China-U.S. relationship. This new characterization reflects the reality of China-U.S. relations as well as expectations for their future, and represents an important step toward finding the right way for the two countries to get along with each other.

Xi said the two sides should translate this vision into action and work toward a relationship in which cooperation remains the mainstay, competition is kept within reasonable bounds, differences are manageable, and peace can be expected, thereby finding the right way for two major countries to coexist. China and the United States should, and are fully capable of, pursuing mutual benefit and win-win outcomes through practical cooperation, bringing out the best in each other through healthy competition, properly managing differences while seeking common ground, and building peace through the accumulation of mutual trust, so that a constructive and strategically stable China-U.S. relationship can better benefit the peoples of both countries and the world.

President Xi stressed that the economic and trade teams of the two countries had held a new round of consultations and reached a new joint arrangement, which is good news for businesses and people in both countries as well as for the global economy. Cooperation is a two-way street. Stabilizing China-U.S. economic and trade relations requires both expanding the list of areas for cooperation and shortening the list of problems. As long as the two sides uphold the principles of equality, respect and mutual benefit, solutions can be found. Xi expressed the hope that the two sides would work toward the same goal, remain committed to mutual benefit and win-win outcomes, and promote the sustained, stable and positive development of China-U.S. economic and trade relations.

President Xi noted that China and the United States are both major powers in artificial intelligence. While there is competition between the two countries, there is even greater scope for cooperation. The two sides should each play to their strengths rather than guard against each other. China and the United States can continue their dialogue on artificial intelligence, exchange views on its risks and benefits, and work together to prevent the misuse and abuse of AI. Humanity must retain control over artificial intelligence technology, uphold a people-centered approach and ensure that AI is developed for good, so that it serves the progress of humanity.

President Xi stressed that China’s position on safeguarding national reunification and territorial integrity is clear. He expressed the hope that the U.S. side would maintain the correct position of opposing “Taiwan independence,” handle the Taiwan question prudently, and thereby lay a solid foundation for China-U.S. strategic cooperation and the development of bilateral relations.

President Trump said that President Xi’s state visit to the United States was a great visit. The United States and China are both major countries, and President Xi and I are good friends and maintain close and in-depth communication, Trump said. Under our leadership, U.S.-China relations will surely be handled well. The latest round of consultations between the two countries’ economic and trade teams has produced new outcomes, and the two sides should continue their dialogue and reach better agreements. Artificial intelligence concerns the future of humanity, and the United States and China should maintain dialogue and strengthen cooperation in this area.

The two presidents also exchanged views on major international and regional issues, including the situation in the Middle East, the Ukraine crisis and the Korean Peninsula.

The two presidents confirmed that China and the United States would support each other in successfully hosting the 2026 APEC Economic Leaders’ Meeting and the G20 Leaders’ Summit.

Cai Qi, Wang Yi, He Lifeng and others attended the meeting.

Xi Jinping and Peng Liyuan Join President Donald Trump and First Lady Melania Trump for Tea

On the morning of September 25, 2026 local time, President Xi Jinping and his wife Peng Liyuan joined President Donald Trump and First Lady Melania Trump for tea at the White House.

The two presidents agreed to further enrich the characterization of China-U.S. relations and jointly build a “constructive and strategically stable relationship based on respect, fairness and reciprocity.”（基于尊重、公平、对等的建设性战略稳定关系）

President Xi noted that this was his first visit to Washington in 11 years and another state visit to the United States. Through this visit, the two sides have further enriched the characterization of China-U.S. relations and agreed to jointly build a “constructive and strategically stable relationship based on respect, fairness and reciprocity.” The two countries have also achieved mutually beneficial outcomes in the economic and trade field, which will be welcomed by the peoples of both countries and the international community.

President Xi stressed that the future of China-U.S. relations is bright, as dictated by the trend of history. At the same time, the road toward that bright future is often winding and will inevitably encounter various difficulties and challenges, which is also consistent with the way things develop. Xi said he was ready to work with President Trump, with a sense of courage and responsibility toward history, to write an important new chapter in the history of China-U.S. relations.

President Trump said that President Xi’s state visit to the United States had been constructive and highly successful. The two sides had engaged in in-depth communication on U.S.-China relations as well as major international and regional issues and achieved many positive outcomes that benefit both countries. He said he looked forward to maintaining close communication with President Xi and jointly guiding the development of U.S.-China relations.

Following the tea gathering, President Xi and Peng Liyuan, accompanied by President Trump and Melania Trump, visited the U.S. National Archives. The two presidential couples entered the Rotunda together and were briefed on the National Archives and its major exhibits.

President Xi said that archives carry the wisdom of previous generations and offer inspiration for the future. Over the past 250 years, the American people have pursued the American Dream and built a prosperous and strong country and a beautiful homeland on the North American continent. The Chinese people, inheriting the 5,000-year cultural tradition of the Chinese nation, have continued to make new achievements on the journey toward realizing the Chinese Dream of national rejuvenation.

China and the United States are two countries with their own distinctive characteristics. Although they differ in history and culture, social systems and development paths, the peoples of both countries share the same aspiration for a better life. By recognizing and respecting each other’s differences, seeking mutual understanding and learning from each other, finding the greatest possible common ground, expanding the list of areas for cooperation, and properly managing differences, the two countries can ensure the steady and sustained development of their relationship.

U.S. Readout:

Fact Sheet: President Donald J. Trump Advances a Fair and Reciprocal Relationship with China While Hosting Historic State Visit

The White House

September 25, 2026

DELIVERING FOR AMERICANS: This week, President Donald J. Trump and First Lady Melania Trump hosted President Xi Jinping and Madame Peng Liyuan of the People’s Republic of China for a reciprocal State Visit. During the visit, President Trump advanced the U.S.-China relationship and put the American people first.

• The United States welcomed China’s scheduling of orphines, a class of deadly drugs. The United States also noted China’s new export controls on two fentanyl precursor chemicals, while strongly encouraging the permanent scheduling of these and other substances and chemicals to help stem the flow of illicit precursors to dangerous narcoterrorists in North America.

• In August 2026, acting on information from U.S. law enforcement, China arrested 21 Chinese citizens for the manufacture and distribution of precursor chemicals to illicit drug producers in North America. The United States strongly encouraged maximum sentences, including the death penalty where applicable.

• President Trump urged President Xi to increase production of refined petroleum products to stabilize global supply.

• The United States welcomes the arrival of two giant pandas, leased by China to the Atlanta Zoo.

OPERATIONALIZING THE BOARDS OF TRADE AND INVESTMENT: This week, the two leaders operationalized the cornerstone government-to-government mechanisms of the U.S.-China Board of Trade and the U.S.-China Board of Investment, which were chartered during the May 2026 Summit in Beijing.

• Under the Board of Trade, the two countries reached consensus on recommendations for more favorable tariff treatment for $30 billion of non-sensitive goods in each direction. The Board of Trade also launched a working group focused on addressing market access barriers in the agricultural sector.

  • For U.S. exports, the goods include agricultural goods, fish and seafood, logs and wood products, cosmetics and medical devices.

  • For U.S. imports, the goods include consumer products such as small appliances, toys, holiday decorations, and children’s car seats.

• Following President Trump’s revival of the U.S. coal industry, China will import at least 10 million metric tons of coal from the United States in 2027 and again 2028.

• The two countries established the Board of Investment. The mission of the Board of Investment is to discuss potential investment opportunities and investment-related impediments and to provide a structured channel for the two sides to address commercially meaningful investment-related issues.

• The United States and China continue to work on U.S. concerns regarding supply chain shortages related to rare earths and other critical minerals, with the goal of ensuring shipment levels return to appropriate levels.

MAKING THE WORLD SAFER FOR AMERICANS: President Trump and President Xi discussed fostering peace and prosperity to enhance confidence for businesses and consumers around the world. The two countries agreed to build a constructive relationship of strategic stability on the basis of respect, fairness, and reciprocity.

• The two countries will support each other as respective hosts of G20 and APEC, with both leaders intending to attend each other’s Summit.

• The two leaders discussed on-going global concerns, including Russia, North Korea, and Iran. They agreed that Iran can never have a nuclear weapon and that no country or institution can be allowed to impose tolls on international waterways.

• The two leaders recalled that United States and China were allies in World War II and fought side by side to win the war.

• Since World War II, the United States’ forward military presence has preserved a Free and Open Indo-Pacific contributing to generations of American prosperity.

• The President advocated for trilateral arms control negotiations between the United States, Russia, and China.

• The two leaders agreed to use the term “super intelligence” rather than “artificial intelligence” to describe the applicable emerging technologies.

• The two countries established the U.S.-China Super Intelligence (SI) Dialogue to exchange views on risks and benefits related to SI. The next exchange will occur by November 2026. The United States and China also agreed to establish a bilateral communication channel for SI incidents.

From personally greeting Xi at the airport to a grand welcoming ceremony and a carefully arranged White House state dinner, the U.S. side received the Chinese leader with a level of ceremony rarely seen in recent years.

Why did Trump attach such importance to the visit? With the Chinese and U.S. presidents making reciprocal visits—from Beijing to Washington—in less than six months, what new elements of stability have been added to the bilateral relationship?

To discuss these questions, Guancha.cn spoke with Professor Wu Xinbo, Dean of the Institute of International Studies and Director of the Center for American Studies at Fudan University. In Wu’s view, with the U.S. midterm elections approaching and several of Trump’s foreign-policy initiatives facing difficulties, stabilizing China-U.S. relations is very much in Trump’s interest. By building strategic trust, expanding strategic consensus and strengthening strategic engagement, the latest summit has further translated the vision of a “constructive and strategically stable China-U.S. relationship” into action.

Wu also believes that positive developments in trade and artificial intelligence have opened up additional room for cooperation, while China’s new initiative to invite 100,000 young Americans to China for exchanges and study over the next five years represents an investment in the future of China-U.S. relations.

The following is the full interview.

Guancha.cn: At the China-U.S. summit in Beijing this May, the two presidents established a new goal of building a “constructive and strategically stable China-U.S. relationship.” At the Washington summit, President Xi further stressed that the two sides should translate this vision into action. Based on the information released so far, what is your most important observation about this second summit between the two leaders in less than six months? What new stabilizing factors has it added to the relationship?

Wu Xinbo: The discussions between the two presidents once again focused closely on the overarching goal of building a “constructive and strategically stable China-U.S. relationship.” To achieve this, China and the United States need a relatively high degree of strategic trust, strategic consensus on a number of important issues, and sustained, positive strategic engagement.

Less than six months after the Beijing summit, President Xi traveled to the United States for a state visit and held in-depth discussions with President Trump. This undoubtedly helps strengthen strategic trust between the two countries.

China and the United States also reached understandings on pursuing dialogue, coordination and cooperation in areas including trade and economic relations, artificial intelligence, military-to-military relations, and regional and international hotspot issues. These developments help expand strategic consensus between the two sides.

Meanwhile, around this state visit, the two countries conducted a series of high-level dialogues, consultations and face-to-face exchanges. These are manifestations of strategic engagement between China and the United States.

Overall, progress at these three levels has helped advance the goal of building a constructive and strategically stable China-U.S. relationship.

Guancha.cn: From Trump’s unusual decision to personally greet President Xi at the airport to the White House welcoming ceremony and state dinner, the United States clearly attached considerable importance to this visit. Given the approaching U.S. midterm elections and the current international situation, why do you think Trump placed such importance on the visit? What did he hope to achieve through the summit?

Wu Xinbo: At the personal level, this reflects the respect and admiration for President Xi that Trump has repeatedly spoken about, as well as the personal friendship that has developed between the two leaders.

In terms of Trump’s political needs, I think he wants to create a successful foreign-policy narrative around China that can help advance both his domestic and international policy objectives.

The U.S. midterm elections are approaching, and the Republican Party is currently facing a difficult electoral environment. If China-U.S. relations are handled well, China could purchase more U.S. agricultural products, energy products and perhaps even Boeing aircraft. That could help Republicans win votes in the midterms, which makes the relationship important to Trump.

If we look at Trump’s broader foreign-policy agenda, the United States is currently in a difficult position over the Middle East and Iran. Trump’s efforts to promote a Russia-Ukraine settlement have yet to make significant progress, while his desire to restart dialogue with the North Korean leader has not received a clearly positive response. On all of these issues, he hopes to receive support from China.

Trump is someone who acts when he sees an advantage. The fact that he has attached so much importance and devoted so much attention to this visit suggests that, from his perspective, there are substantial benefits to be gained from the China-U.S. relationship at this moment.

Guancha.cn: There were also many noteworthy details at the White House state dinner. For example, the U.S. side deliberately selected a sparkling wine with historical ties to the “Toast to Peace” during Nixon’s 1972 visit to China; red was used as the main color; and prominent American business and technology leaders, including Elon Musk, Jensen Huang, Lisa Su and Tim Cook, attended. What messages do you think these arrangements were intended to convey? In particular, what does the active participation of the U.S. business community tell us about its expectations for the current China-U.S. relationship?

Wu Xinbo: In its dealings with China, the United States has gradually come to understand that China is a country and culture that attaches considerable importance to history. As a result, the U.S. side also uses various forms of symbolism to highlight the historical significance of major events.

The use of the same type of wine associated with Nixon’s 1972 visit also suggests that China-U.S. relations are once again at an important and historically significant juncture. President Xi’s visit is historic and has milestone significance.

More than 130 people attended the state dinner, while the Chinese delegation accounted for only a small number—around 19 people. Why were there so few Chinese guests? Trump had explained beforehand that there simply were not enough seats because leading figures from many sectors in the United States wanted to attend.

Trump places considerable importance on his relationship with the U.S. business community. When he visited China in May, he also brought a large, high-level business delegation. So he wanted to reserve many of these seats for American business leaders and use the opportunity to encourage cooperation between the business community and the Trump administration.

For American businesses, attending an event of this kind also gives them an opportunity to demonstrate how seriously they take China-U.S. relations. Whether they accompanied Trump on his visit to China or attended the White House state dinner, behind their participation is a strong desire to deepen and develop economic and trade relations with China.

Guancha.cn: You attended the state dinner welcoming Trump to China in May. Based on your own experience, what kinds of opportunities can occasions such as state dinners create for interaction outside formal negotiations? What role can they play in improving mutual understanding and building trust?

Wu Xinbo: I think interactions outside formal meetings—whether taking a walk, having tea or visiting places of cultural and historical significance—can create a relaxed and informal atmosphere for the two leaders. This allows each side to gain a more genuine sense of what the other side is thinking and trying to convey. Such activities therefore have qualities that formal meetings do not.

Arranging informal activities also indicates that the relationship between the leaders is not purely an official working relationship. There is also a personal dimension, as friends. Developing that kind of relationship can have a positive effect on mutual trust between the two leaders.

Guancha.cn: China and the United States recently held another round of economic and trade consultations and reached a new joint arrangement. Based on the information disclosed so far, which developments are most significant? What do they mean for stabilizing expectations among businesses in both countries?

Wu Xinbo: First, the one-year trade “truce” agreement reached by China and the United States last October has been extended until January next year.

Second, the two sides have each exempted $30 billion worth of imported goods from tariffs. There is also a prospect of moving further beyond the initial $30 billion and bringing more products within the tariff-exemption framework. This will help expand and stabilize bilateral trade.

Third, I believe the two sides have reached certain agreements concerning increased purchases of each other’s products.

Fourth, China has proposed a package approach for managing China-U.S. economic and trade relations, covering trade, investment, technology and finance. These issues are interconnected. We cannot simply discuss trade in isolation from investment, or investment in isolation from other issues. They need to be considered together. The U.S. side has taken an open attitude toward this proposal, and the two sides will continue discussing it.

Fifth, the two sides held constructive discussions on artificial intelligence and agreed to establish a communication mechanism for AI safety risks. This is significant for cooperation between China and the United States in addressing the challenges created by the development of AI technology, and it also broadens the scope of bilateral cooperation.

Guancha.cn: Not long ago, China and the United States held their first dialogue on artificial intelligence under the bilateral economic and trade consultation mechanism. At this summit, both President Xi and President Trump stressed that China and the United States could continue dialogue and strengthen cooperation on AI. Given that technological competition between the two countries remains intense, what strategic considerations are reflected in their shared willingness to cooperate? What does this mean for exploring a way for competition and cooperation to coexist?

Wu Xinbo: I think the willingness of China and the United States to conduct dialogue and communication on artificial intelligence shows that, although the two countries compete intensely in the development of AI technology, they are also increasingly taking a pragmatic approach to the risks and challenges created by AI.

Artificial intelligence can benefit humanity, but it can also create enormous risks. These are not risks that any single country can address on its own. International cooperation is required, particularly cooperation between China and the United States, the two major powers in artificial intelligence.

In my view, China-U.S. cooperation on AI could be similar to the cooperation the two countries have pursued in the past on issues such as climate change, environmental protection and counterterrorism. It can open up a new area of cooperation in the bilateral relationship and help advance global governance in this field. That gives it considerable significance.

Guancha.cn: During the summit, President Xi said he hoped the United States would maintain the correct position of opposing “Taiwan independence” and handle the Taiwan question prudently. You previously observed that the U.S. approach to Taiwan over the past several months had generally been cautious. Can that caution continue? What concrete U.S. actions should we be watching most closely?

Wu Xinbo: The direction of the Trump administration’s Taiwan policy will depend, on the one hand, on changes in the U.S. domestic political situation and the political pressure Trump faces at home. On the other hand—and more importantly—it will depend on how firmly China maintains its position on the Taiwan question.

There have always been pro-Taiwan forces in the United States pushing for arms sales to Taiwan and related measures. Trump has to consider what China would do in response. If China makes clear to him that U.S. arms sales to Taiwan would trigger a firm Chinese response and result in greater losses to U.S. national interests, Trump will have to weigh the costs and benefits.

So I think the key is for China to remain firm. We need to state our position clearly: we oppose U.S. arms sales to Taiwan, oppose any form of military collusion between the United States and Taiwan, and oppose official contacts between the United States and senior officials of the Taiwan authorities. If the United States refrains from these actions, that constitutes opposition to “Taiwan independence” and would contribute to the development of China-U.S. relations.

Guancha.cn: Ahead of this China-U.S. summit, members of the U.S. Congress were actively pushing for arms sales to Taiwan. How do you think this issue will develop?

Wu Xinbo: Congress has consistently pushed Trump to loosen restrictions relating to Taiwan. If Republicans suffer a major setback in the midterm elections, that could create significant political pressure on Trump. Under those circumstances, pressure from pro-Taiwan forces could become more difficult for him to resist.

We therefore need to remain alert to the possibility that he could restart arms sales to Taiwan or promote high-level U.S.-Taiwan exchanges. In my view, the main risk point will come after the midterm elections.

Guancha.cn: China and the United States are the world’s two largest economies, and their relationship is one of the most important bilateral relationships in the world. Given today’s turbulent international environment, what concrete issues in global and regional affairs could the two countries work on together?

Wu Xinbo: During their meeting, President Xi and President Trump discussed the situation in the Middle East, the Ukraine crisis and the Korean Peninsula. This indicates that on these international and regional hotspot issues, China and the United States currently have room for dialogue and communication, and even for coordination and cooperation.

On the Middle East, China’s primary concern is when the Strait of Hormuz can reopen and when freedom of navigation can be restored. The prerequisite for achieving this is for the United States and Iran to return to the memorandum they reached in June. In this process, China will work with both Iran and the United States. Only in this way can the situation in the Middle East genuinely ease.

As for the Ukraine crisis, China’s position will remain one of promoting peace and encouraging negotiations. Trump has now renewed his efforts to promote Russia-Ukraine negotiations, and China and the United States can maintain communication and coordination in this process.

Regarding the Korean Peninsula, China has always supported steps conducive to easing tensions. Trump hopes to meet the North Korean leader and launch U.S.-DPRK dialogue in order to improve bilateral relations. We would certainly support this and help create favorable conditions.

In a world currently marked by conflict and instability, China and the United States, as two major powers, have broad scope for cooperation on international and regional affairs.

Guancha.cn: In San Francisco in 2023, President Xi proposed inviting 50,000 young Americans to China for exchange and study programs over five years, and that target has already been achieved ahead of schedule. During this visit, President Xi announced that China would invite 100,000 young Americans to China for exchanges and study over the next five years. You have worked in higher education for many years and have extensive exchanges with the U.S. academic community. Based on your observations, what perceptions of China are most likely to change when young Americans experience the country firsthand? And how can a short visit be turned into longer-term understanding and connections?

Wu Xinbo: Ultimately, seeing is believing.

Let me give you an example. For each of the past three summers, Harvard University has sent a group of undergraduates to the Center for American Studies at Fudan University for a summer program. They spend six to eight weeks in Shanghai, taking classes as well as visiting places and traveling.

On behalf of the Center for American Studies, I usually invite them to a meal and talk with them about their impressions of China. About half of these American students are visiting China for the first time. They generally tell us that only after coming here did they encounter the real China, and that it was very different from the China they had learned about in the United States.

They experience firsthand that China is safe, clean and convenient, with a pleasant environment, and that in many respects it performs even better than the United States. They ride fast subways and high-speed trains and experience Chinese new-energy vehicles. They may previously have thought of China as a developing country that should be relatively backward, only to find a prosperous and developed country in front of them. They may also have heard that China is very “anti-American,” but when they arrive they find ordinary Chinese people warm and friendly.

So facts speak louder than words.

After visiting China, they may be less likely to be influenced by reports that distort facts or smear China. Over the longer term, they may develop a more positive view of China and the Chinese people.

A number of U.S. opinion polls now show that respondents aged 19 to 30 have more positive views of China than respondents in other age groups. This is because young people are able to objectively experience China’s development and progress.

Building on the previous “50,000 in five years” initiative and moving to “100,000 in five years” is, in effect, an investment in the future of China-U.S. relations. Ten or twenty years from now, these young people will become members of America’s social and political elite. They will be the ones managing China-U.S. relations, and the situation will be different from today.

Guancha.cn: From Beijing to Washington, the Chinese and U.S. presidents have made reciprocal visits in less than six months. They have also confirmed that they will support each other in successfully hosting this year’s APEC Economic Leaders’ Meeting and the G20 Leaders’ Summit. What room does this continuing leader-level diplomacy create for the next stage of China-U.S. relations? What is your outlook for the relationship in the period ahead?

Wu Xinbo: I think there should be two more opportunities for meetings between the Chinese and U.S. presidents before the end of the year. Both would take place during major diplomatic events hosted respectively by China and the United States. That would mean four rounds of leader-level diplomacy between China and the United States within a single year, which would itself be unprecedented.

Through sustained leader-level diplomacy, the two countries can strengthen political trust, promote strategic understanding, make progress on specific issues, further improve the atmosphere of China-U.S. relations, and create greater momentum for stability and development in the relationship.

The biggest uncertainty this year is the U.S. midterm elections. From now until the end of the year, I am relatively optimistic about the overall trajectory of China-U.S. relations: broadly stable, with some progress.

However, when the new U.S. Congress takes office early next year, China-U.S. relations could face greater challenges. The new Congress’s approach toward China, as well as its relationship with the Trump administration, will both affect the bilateral relationship.

The measures strengthen China’s controls at two different levels: the first expands class-wide scheduling to another family of emerging synthetic opioids, while the second creates more detailed criminal enforcement, prosecution, sentencing, evidence and international cooperation rules specifically for fentanyl-related crimes.

1/ China has placed orphine-type substances under class-wide control.

The Ministry of Public Security, National Health Commission, and National Medical Products Administration issued a joint announcement placing orphine-type substances as an entire class under control. With this latest step, China has now introduced class-wide controls covering the three major groups of synthetic opioids that have been a focus of emerging-drug regulation: fentanyl-related substances in 2019, nitazene-type substances in 2025, and now orphine-type substances in 2026.

Announcement on the Class-Wide Scheduling of Orphine-Type Substances in the Catalogue of Non-Medical Narcotic Drugs and Psychotropic Substances

Xinhua, Beijing, September 23

Pursuant to the Regulations on the Administration of Narcotic Drugs and Psychotropic Substances and the Measures for the Scheduling of Non-Medical Narcotic Drugs and Psychotropic Substances, the Ministry of Public Security, the National Health Commission, and the National Medical Products Administration have decided to place orphine-type substances as a class in the Catalogue of Non-Medical Narcotic Drugs and Psychotropic Substances.

“Orphine-type substances” refers to substances whose chemical structures, compared with brorphine (1-{1-[1-(4-bromophenyl)ethyl]piperidin-4-yl}-1,3-dihydro-2H-benzimidazol-2-one), meet one or more of conditions (1), (2), and (3) below; or whose chemical structures, compared with spirobrorphine (8-[1-(4-bromophenyl)ethyl]-1-phenyl-1,3,8-triazaspiro[4.5]decan-4-one), meet one or more of conditions (4), (5), and (6):

(1) substitution of any number of hydrogen atoms in the 1,3-dihydro-2H-benzimidazol-2-one group with groups containing no more than five carbon atoms;

(2) substitution of the 4-bromophenethyl group with any group other than a hydrogen atom;

(3) substitution of any number of hydrogen atoms in the piperidine ring with groups containing no more than five carbon atoms;

(4) substitution of the phenyl group attached to the nitrogen atom with a substituted or unsubstituted aromatic group;

(5) substitution of the 4-bromophenethyl group with any group other than a hydrogen atom;

(6) substitution of any number of hydrogen atoms in the 1,3,8-triazaspiro[4.5]decan-4-one group with groups containing no more than five carbon atoms.

If any of the substances covered above are subsequently found to have legitimate medical, industrial, scientific research, or other lawful uses, their regulatory status may be adjusted pursuant to Article 3, paragraph 2 of the Measures for the Scheduling of Non-Medical Narcotic Drugs and Psychotropic Substances.

The announcement will take effect on October 1, 2026.

Ministry of Public Security
National Health Commission
National Medical Products Administration

September 23, 2026

Opioids are substances that act on opioid receptors in the human body. They include naturally derived substances such as morphine and codeine, as well as semi-synthetic and fully synthetic substances such as heroin, oxycodone, and fentanyl. Some have legitimate medical uses as analgesics or anesthetics, but misuse can lead to dependence, while overdose can cause respiratory depression and death.

Fentanyl itself is a potent synthetic opioid with legitimate medical uses. What is commonly referred to as the “fentanyl crisis” primarily concerns illicitly manufactured, distributed, and consumed fentanyl and related substances.

Orphines are another group of synthetic opioids with chemical structures distinct from fentanyl. Brorphine and spirobrorphine, referenced in the Chinese announcement, belong to this category. The United Nations Office on Drugs and Crime distinguishes orphines from fentanyl analogues and nitazenes. Such substances can emerge in illicit drug markets as alternatives to other synthetic opioids.

China had already individually scheduled brorphine beginning July 1, 2024. Under the latest announcement, effective October 1, 2026, the controls will extend to the entire class of orphine-type substances meeting the specified structural criteria.

The change therefore moves beyond controlling individually named compounds to covering a broader family of structurally related substances. This reduces the scope for circumventing controls by making minor changes to chemical structures and introducing new analogues that have not yet been individually scheduled.

2/ China has also introduced new criminal enforcement rules targeting fentanyl-related substances and emphasized “strict punishment” of fentanyl-related crimes.

China’s Supreme People’s Court, Supreme People’s Procuratorate, and Ministry of Public Security have jointly issued the Opinions on Several Issues Concerning the Application of Law in Handling Criminal Cases Involving Fentanyl-Related Substances.

At the same time, the Supreme People’s Procuratorate and Ministry of Public Security issued new Standards for Filing and Prosecuting Criminal Cases Involving Fentanyl-Related Substances.

The authorities emphasized the need to “strictly punish fentanyl-related crimes in accordance with law.”

The 18-article Opinions establish more detailed rules governing the prosecution and sentencing of fentanyl-related crimes. Among other things, they:

• distinguish between medicinal and non-medical fentanyl-related substances for sentencing purposes;

• apply existing fentanyl quantity thresholds to medicinal fentanyl substances;

• apply the Criminal Law’s heroin quantity thresholds to non-medical fentanyl-related substances;

• clarify what substances fall within the definition of fentanyl-related substances;

• establish requirements for evidence collection and forensic identification;

• set out rules for determining whether suspects knew they were handling controlled drugs;

• provide for the tracing and confiscation of criminal proceeds and other assets;

• establish jurisdictional and coordination rules for cases involving multiple regions or related criminal activity;

• strengthen monitoring of logistics and delivery networks, international parcels, and internet-based fentanyl trafficking; and

• explicitly call for international law-enforcement cooperation, evidence sharing, and judicial assistance with relevant countries in combating cross-border fentanyl trafficking.

The new filing and prosecution standards further provide that smuggling, trafficking, transporting, or manufacturing fentanyl-related substances should be investigated and prosecuted regardless of quantity, where the conduct meets the requirements of Article 347 of China’s Criminal Law.

For illegal possession, the thresholds are:

• 25 grams or more for medicinal fentanyl-related substances, including fentanyl, remifentanil, sufentanil, and alfentanil; and

• 10 grams or more for other non-medical fentanyl-related substances.

For illegally supplying controlled narcotic drugs to persons who use or inject drugs, the thresholds include:

• 12.5 grams or more for medicinal fentanyl-related substances; and

• 5 grams or more for non-medical fentanyl-related substances.

The rules also specifically address fentanyl-related crimes conducted through the internet. Investigators are instructed to collect online postings, emails, instant-messaging records, documents, images, audio and video files, user-registration information, identity-verification information, and other relevant electronic evidence.

The Opinions further instruct Chinese public-security authorities to strengthen monitoring and enforcement involving logistics and delivery services, international parcels, and the internet, and to cooperate with key foreign countries on cross-border fentanyl cases through evidence sharing, judicial assistance, and coordinated investigations.

Both sets of rules take effect on September 23, 2026.