China-EU Summit to Test Frayed Relations

Tensions between China and the European Union are running high ahead of a summit in Beijing on July 24th, which was initially intended to celebrate 50 years of diplomatic ties but now appears likely to be a disappointment. The trade war between the US and other countries has not led to increased collaboration between China and the EU as some had speculated; instead, their relations are strained.

China's exporters have remained resilient despite ongoing trade tensions with the US, with exports growing 5.8% year-on-year in June. The country's ports, such as Qingdao, remain busy, and GDP growth is on track to meet its annual target. However, the article notes that this resilience may not last, hinting at potential future challenges.

China's local governments are facing a severe fiscal crisis due to widespread misappropriation of funds, including state pension funds, with over 40 billion yuan diverted in 13 provinces. The misuse of funds has sparked public outrage on social media platforms like Weibo. The article highlights the ugly numbers lurking in the books of China's local governments and questions whether provincial governments can avoid a fiscal black hole.

The article discusses speculation about Chinese President Xi Jinping's grip on power, particularly during his annual summer retreat to Beidaihe. It suggests that while there may be external speculation about Xi's leadership, it is more likely that his leadership is entering a new stage rather than being in trouble.

A Chinese student faced backlash for having a tryst with a Ukrainian gamer, Danylo Teslenko, who shared intimate videos of her online without her permission. The incident has sparked outrage in China, with many viewing it as an insult to China's 'national dignity'.

The article discusses the rising household debt in China, which has been fueled by the growth of a property-owning middle class and government promotion of borrowing. This has led to increased consumption, but also created new risks, with many Chinese individuals struggling with debt.

China is taking a tough stance in its trade and geopolitical disputes with Europe ahead of a summit between Chinese leader Xi Jinping and European leaders. China has retaliated against European trade curbs, slowed exports of critical minerals, and further aligned itself with Russia, causing concerns in Europe about China's support for Russia's war in Ukraine and its dumping of cheap products that could undermine local industries. The European Union is caught between wanting to cut a trade deal with the US and maintaining stable ties with China. The summit is expected to be tense, with low expectations for concrete results.