The fast-fashion giant sold 280 million shares, raising about HK$13.6 billion (US$1.7 billion) and valuing the company at approximately US$26.5 billion, a dramatic reduction from its private market peaks of nearly US$100 billion in 2022.

The offering is supported by a formidable list of cornerstone investors, who play a critical role in underpinning demand and absorbing the float. The key cornerstones include existing investors such as Boyu Capital, Tiger Global, General Atlantic, Tencent Holdings, and UBS. Market sources indicate that existing shareholders may subscribe for roughly half of the newly offered shares, which would significantly reduce the immediate supply of new equity available to the public.

Historically on the HKEX, cornerstone investors are typically subject to a standard 6-month lock-up period to ensure price stability.

About Shein

Shein is a juggernaut in the global online fast-fashion industry, currently holding an estimated 18% of the global fast-fashion market share. The company completely bypassed traditional retail constraints by pioneering a proprietary operational model known as the Large-scale Automated Test Reorder (LATR) system which acts as the digital nervous system of the company.

How the LATR works is instead of guessing what people will buy and making thousands of items upfront, a company makes tiny test batches of 100 to 200 items. If customers buy them quickly online, a computer program automatically orders a massive restock.

It uses algorithms to identify micro-trends in real-time, ordering minuscule batches of clothing from thousands of third-party suppliers. If an item goes viral, production scales up instantaneously; if it flops, production stops, minimizing unsold inventory. Furthermore, its revenue streams have diversified beyond direct-to-consumer apparel to include third-party marketplace commissions, advertising platforms, and owned-brand sales.

Shein’s journey to the public markets has been one of the most protracted and geopolitically fraught in recent history. The company declared Singapore and Los Angeles as its headquarters and hubs and initially explored a US IPO in New York in early 2022, but those plans were repeatedly derailed by volatile capital markets, escalating US-China tensions, and immense pushback from U.S. lawmakers over forced-labor allegations in its supply chain.

Recognising the hurdles in the US, Shein pivoted to the London Stock Exchange in late 2023. Despite securing approval from the UK’s Financial Conduct Authority in April 2025, the London float was ultimately aborted due to delays in securing Chinese regulatory sign-offs and intense pushback from British lawmakers.

Finally, in May 2025, Shein pivoted to Hong Kong in a home coming, filing confidentially in July 2025 and paving the way for this September 2026 debut.

Financials and Growth Opportunities

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1. China Had Enough Of Its Own Subsidies. Now It Claws The Money Back

2. Alibaba Raised HK$80B While PDD Sits On RMB456B Cash

3. Dividend Stocks in China Continue To Shine

4. CNOOC Profits Jumped 23%, Thanks To High Oil Prices

5. Nongfu: From King of Water to King of Tea

#1 China Had Enough Of Its Own Subsidies. Now It Claws The Money Back

China’s tax crackdown signals a structural change in how companies there earn a living. For years, local governments dangled tax rebates, subsidies and preferential treatment to attract investment, fueling China’s industrial expansion. But land sale revenues are drying up, property remains under pressure, and local fiscal deficits are widening. Beijing’s response is to push for stricter, more standardised tax collection. Companies can no longer assume that yesterday’s tax breaks carry into tomorrow, which makes reported earnings less reliable wherever profitability leaned heavily on government incentives.

The impact is already showing up in the numbers. More than 100 listed companies received back tax notices totalling around RMB7.7 billion in the first half of 2026, exceeding the combined total of corporate back taxes collected during the 14 years since Xi Jinping took power in 2012.

Heilongjiang Agriculture is the standout case. During more than two decades as a public company, it never once reported a first half loss. That run ended this year. Authorities ordered it to repay tax benefits equivalent to 120% of last year’s net profit, and the stock shed a fifth of its market value in three trading days.

It is not an isolated case, and the mechanisms differ from company to company, which is worth seeing.

Shenzhen Aisidi ran a self inspection and found it owed RMB184.6 million in corporate income tax plus RMB123.2 million in late payment penalties, RMB308.8 million combined, all paid in full. That single charge ran to more than eight tenths of its 2025 full year profit.

Hunan Valin Steel took the largest hit of the group. It disclosed RMB452 million in back taxes and RMB244 million in late fees, RMB696 million in total, charged entirely to second quarter earnings. The trigger was a recalculation of VAT additional deduction benefits it had claimed since 2023, which were reduced and repaid accordingly. Half year profit guidance dropped more than 80% as a result, though the steel cycle itself was already doing plenty of damage.

Yunnan Copper shows a different mechanism again. Its subsidiary lost its high tech enterprise status, revoked retroactively to 2022, which invalidated tax breaks it had already booked. The repayment came to RMB512 million, made up of VAT from a manufacturer’s input tax deduction, city construction tax and education surcharges, and late fees, cutting 2026 net profit by roughly RMB203 million.

Aier Eye Hospital self reported and repaid RMB348 million in tax and RMB176 million in late fees, and separately added RMB232 million to its 2025 corporate income tax settlement.

Four companies, four different triggers. A land tax benefit clawed back, an income tax self inspection, a VAT deduction recalculated, a tax status revoked years after the fact. That range is the real story. This is not one loophole closing. It is the entire architecture of local tax incentives being re-examined, sector by sector, with penalty interest that often runs half the size of the principal owed, a cost most investors never think to model.

It is no surprise that these stocks took a beating this year:

The crackdown works because the tooling behind it has improved. The Golden Tax IV system links tax records with banking, customs, market regulator and payment data, while nationwide electronic invoicing gives tax authorities a much clearer view into company transactions. Given that roughly 64% of A share companies have benefited from preferential corporate tax rates, the potential exposure is broad. Investors should look past headline earnings and check effective tax rates, free cash flow and how dependent a company has been on government support. Companies with unusually low historical tax expenses, thin cash balances or high leverage are the ones most exposed if past benefits get clawed back.

Step back and this is part of a bigger shift. Beijing is moving away from a model where provinces compete for investment through tax concessions and subsidies, toward one where it allocates capital more centrally and expects companies to compete on productivity, technology and genuine operating efficiency. Support has not disappeared. It has become more selective. Strategically important sectors like semiconductors, AI and advanced manufacturing will likely keep receiving substantial state backing, while less strategic businesses are increasingly left to stand on their own.

That is arguably a good thing. A more market-oriented system is closer to what made China rich in the first place.

#2 Alibaba Raised HK$80B While PDD Sits On RMB456B Cash

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Trip.com operates an asset-light, two-sided marketplace that connects travellers with more than 1.7 million accommodation listings, 680 airlines, and approximately 60,000 travel ecosystem partners worldwide. The company’s portfolio consists of four major brands: Ctrip, the dominant domestic platform in China; Trip.com, its international booking platform; Skyscanner, a global flight metasearch engine; and Qunar, a budget-focused domestic travel platform. Mobile usage has become central to the business, with more than 90% of bookings completed through mobile devices.

Unlike traditional travel operators, Trip.com does not assume hotel or airline inventory risk. Instead, it generates revenue primarily through commissions and referral fees. Accommodation reservations remain the company’s largest profit driver, generating RMB 26.1 billion in 2025, or approximately 42% of total revenue. Transportation ticketing contributed RMB 22.5 billion, representing 36% of revenue, while packaged tours, corporate travel management through Trip.Biz, advertising, and financial services accounted for the remaining 22%.

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1. China’s Net New Loans Turned Negative in July. Should Investors Worry?

2. Alibaba’s Profits Fell 75% On CAPEX But Cloud Revenue Surged 45%

3. Ping An’s Profits Jumped 36%, Fueled by a Market Rally and Better Insurance Business

4. Evergrande Founder Gets Life Imprisonment While HK Developers Ride Recovery

5. Unitree IPO Pops 460% On Day One. Humanoid Leadership Or Hype?

#1 China’s Net New Loans Turned Negative in July. Should Investors Worry?

China’s July credit data looked alarming at first glance. New yuan bank loans contracted by RMB 340 billion, the largest monthly decline on record and a sharp reversal from June’s RMB 1.61 trillion increase. Household borrowing fell by RMB 460 billion, corporate lending dropped RMB 130 billion, and outstanding loan growth slowed to a record-low 5.1% year over year.

It’s the second negative print this year alone, after April, which is rare enough to take seriously. But the headline number says less about a credit crisis than about a structural shift in how China’s economy is being financed.

Part of the weakness is simply seasonal. Chinese banks typically front-load lending before the end of the June quarter, which makes July look soft by comparison. But this year’s decline also points to something more persistent, weak private-sector demand for borrowing even as lending rates keep falling. Households continue deleveraging through a prolonged property downturn. Businesses remain cautious about expanding, even with financing getting cheaper.

The year-to-date numbers back that up. New yuan loans totaled RMB 10.38 trillion over the first seven months of 2026, down nearly 20% from RMB 12.87 trillion a year earlier, a gap of roughly RMB 2.5 trillion in lending that simply did not happen.

Yet broader financial conditions have stayed relatively loose. Total Social Financing, China’s widest measure of credit, grew 7.4% year over year. M2 money supply expanded 7.7%. Liquidity is still moving through the system, just not through the traditional bank-loan channel.

That divergence is the real story. In July alone, TSF rose by roughly RMB 1.4 trillion, driven almost entirely by government bond issuance rather than bank credit. The PBOC has deliberately steered attention toward aggregate financing instead of bank loans alone, and for good reason. Bond and equity financing accounted for 47% of new social financing in 2025, overtaking bank loans for the first time, and that shift has carried into 2026. The central bank has acknowledged the weakness directly too, saying it would roll out “practical, effective measures” while keeping monetary policy “appropriately loose.”

For China’s banks, this cuts both ways. Slower household borrowing caps mortgage growth, soft corporate demand limits balance-sheet expansion, and falling lending rates keep squeezing net interest margins. But large state-owned banks remain central to financing strategic industries, infrastructure, and government priorities, and stronger bond issuance opens up new fee income. Credit is increasingly flowing toward technology, green development, advanced manufacturing, and the digital economy, sectors growing faster than lending as a whole. Major bank stocks were unaffected and gained more than 2% this week. This is probably helped by PBOC’s decision to hold rates steady, which protects bank margins.

#2 Alibaba’s Profits Fell 75% On CAPEX But Cloud Revenue Surged 45%

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Its business runs on two models. Under leased-and-owned (L&O), H World signs the lease, fits out the hotel, employs the staff, and keeps the room revenue. Under manachised-and-franchised (M&F), the franchisee funds construction while H World licenses the brand, appoints the general manager, and supplies the booking system, loyalty program, and quality control, for an upfront fee plus a running percentage of revenue. The company is deliberately shifting weight from the first model to the second.

As of June 30, 2026, H World had 13,539 hotels and 1.335 million rooms worldwide, up from 12,858 hotels and about 1.26 million rooms at the end of 2025. China accounts for the large majority of revenue and effectively all of the group’s profit. The international arm, mostly the old Deutsche Hospitality business, is small and currently loses money at the segment level.

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1. Tencent Loses China’s Most Valuable Company Crown To CXMT

2. Lenovo Reported 176% Earnings Growth. Stock Soared 21% This Week.

3. SMIC Posts 262% Profit Growth as YMTC Becomes World’s Third-Largest NAND Supplier

4. JD.com Fell 15% This Week As Revenue Dips

5. Unitree IPO Oversubscribed 8,000 Times. Speculative Fever In China Remains Rife.

#1 Tencent Loses China’s Most Valuable Company Crown To CXMT

Tencent has lost its crown. Memory-chip maker ChangXin Memory Technologies (CXMT) has overtaken it as China’s most valuable listed company. This is more than a shift in market capitalisation. It reflects a broader change in investor priorities, away from the platform economy and consumer internet, toward artificial intelligence infrastructure and semiconductor self-sufficiency.

Tencent’s second-quarter earnings looked strong on the surface. Revenue rose 11% year on year to RMB204.8 billion, helped by a 22% jump in marketing-services (advertising) revenue and 17% growth in domestic gaming. But net profit rose just 0.7% to RMB56 billion and missed expectations.

The real concern was the cost of Tencent’s AI transition. Capital expenditure, or capex, the money spent on data centres, chips and AI infrastructure, surged to RMB52.8 billion. Free cash flow, the cash left over after running and investing in the business, turned negative at RMB13.8 billion as Tencent accelerated its purchases of computing capacity.

That spending is simultaneously Tencent’s greatest weakness and its greatest opportunity. AI is already improving the existing businesses. AI-powered advertising helped drive marketing growth, and cloud demand is benefiting as customers deploy AI services. Tencent is also building its own AI ecosystem around the Hy3 model, WorkBuddy and CodeBuddy, while weaving AI into WeChat. WorkBuddy alone recorded more than 20 million monthly visits in June, making it China’s leading AI productivity agent.

Tencent has a credible path back to the top. Unlike CXMT, it already owns enormous, recurring cash-generating businesses, including gaming, advertising, payments, cloud and WeChat. Its 1.4 billion-plus Weixin/WeChat user base gives it a distribution advantage no semiconductor company can replicate. If Tencent converts AI from a capex burden into higher advertising yields, cloud revenue, gaming engagement and new AI-agent services, earnings growth could accelerate just as AI infrastructure spending normalises.

The real test now is monetisation, turning AI usage into profit. Tencent does not need to build the world’s best foundation model. It needs to turn AI into a profitable layer across its existing ecosystem. If Hy3 becomes competitive, WorkBuddy and CodeBuddy keep scaling, and an AI-native WeChat lifts user engagement and advertising value, Tencent could rebuild investor confidence. Its core businesses are already showing this is possible.

CXMT’s rise nevertheless marks a profound shift in China’s technology hierarchy. The market is effectively saying that chips are becoming as strategically important as clicks. For now, CXMT has captured investors’ imagination because it represents China’s AI hardware ambitions and semiconductor independence. Tencent, however, has something CXMT lacks, a diversified, mature ecosystem capable of generating enormous cash flows.

The likely outcome, then, is not necessarily a permanent replacement of Tencent by CXMT. We see CXMT as a cyclical business. It stays ahead only as long as the global memory cycle holds up and its technology and capacity gains justify an extraordinary valuation. Tencent, on the other hand, is a long-term compounding business currently being punished for an AI investment whose payoff is not yet clear. Our bet is on Tencent to outlast CXMT and compound its way back to the top.

#2 Lenovo Reported 176% Earnings Growth. Stock Soared 21% This Week.

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The trigger was a Caixin report that mainland tax authorities in Beijing and Hangzhou had begun applying a 20% personal income tax on returns from Hong Kong insurance policies, specifically dividend payouts and interest earned on prepaid premiums. A day later, both China’s State Taxation Administration and Hong Kong’s own Insurance Authority pushed back. Their message was that the requirement for mainland residents to pay tax on offshore investment income was not new and was not aimed at Hong Kong specifically. The market barely reacted to the clarification. The damage was already done.

This was actually the second scare in two weeks, and it’s worth separating the two. On 24 July, China’s Ministry of Finance and State Taxation Administration rolled out a much more specific rule taxing offshore trusts at 20%, at every stage, when assets go in, while income accrues inside the trust, and when the trust pays out or winds up. That rule is retroactive to January 2023, with a 90-day window to declare and settle by 22 October.

So there are two different stories being priced as one. Story one is about trusts, a real and fairly narrow risk that mainly hits ultra-high-net-worth succession structures. Story two is about ordinary insurance policies, which authorities themselves now say is old law being enforced, not a new tax. The market treated both as the same bad news.

Why Mainland Money Matters So Much Here

Hong Kong’s insurance industry runs on a specific customer, the mainland visitor who wants a policy in US or Hong Kong dollars, sold under Hong Kong law, backed by an insurer with global capital. In 2024, mainland visitors bought HKD62.8 billion of new individual policies in Hong Kong, up 6.5% year on year and close to 29% of the entire individual new-business market. Most of it was whole life, critical illness and medical cover, bought as regular premium rather than a single lump sum. That’s not the profile of someone parking a fortune in a trust. It looks much more like ordinary protection and savings demand.

2025 was even stronger. Total Hong Kong long-term new premiums rose 50.6% to HKD330.9 billion, a record year set before any of this tax news landed.

Things can slow growth from here. Mainland buyers may hold off on new policies altogether, and high net worth clients may put off universal life purchases specifically until there’s clarity on the tax treatment.

We’ll only see the impact, or the lack of one, in next year’s Hong Kong visitor premium numbers.

How To Analyze Insurance Companies

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1. US Ban On Chinese Optical Chips Was Supposed To Hurt Innolight and Eoptolink. Their Stocks Say Otherwise.

2. AIA, Prudential, HSBC and StanChart Fall After China Taxes Offshore Insurance Policies

3. China Continues To Cut EV Subsidies. Carmakers Are Heading Abroad, and BYD Is Betting On Robotics

4. Haidilao Launches Burger Chain. We Think It’s a Mistake.

5. WuXi AppTec Stock Jumps 20% This Week After Showing 39% Revenue Growth in 1H26

#1 US Ban On Chinese Optical Chips Was Supposed To Hurt Innolight and Eoptolink. Their Stocks Say Otherwise.

The US Federal Communications Commission is drafting a ban on imports of new Chinese optical transceivers, the latest move in its push to cut America’s reliance on China’s AI supply chain. The stated aim is national security. The likely near term effect is disruption, because Chinese manufacturers dominate global production of these modules.

Zhongji Innolight and Eoptolink alone account for a substantial share of global 800G and 1.6T transceiver shipments (industry shorthand for modules that move data at 800 gigabits and 1.6 terabits a second), and that gives them a scale, engineering expertise and cost advantage that Western suppliers still can’t match.

In the near term, the pain is more likely to land on US hyperscalers than on Chinese manufacturers. Amazon, Microsoft and other AI infrastructure builders rely heavily on Chinese optical modules to wire together the thousands of GPUs inside their data centres. Western suppliers simply don’t have the production capacity to close that gap for the next one to two years. A sudden ban could trigger supply bottlenecks, push up component costs, hurt GPU utilisation and delay data centre rollouts.

The restrictions could also spill into broader networking gear such as switches, co-packaged optics (CPO) and near-packaged optics (NPO), the next generation designs that mount the optical engine directly on or near the switch chip to save power and space. That pushes the disruption well beyond standalone transceivers.

China isn’t losing much sleep

For Chinese optical companies, demand remains enormous regardless. Beijing and state linked funds have also poured significant capital into propping up these strategically important businesses. On top of that, the US now accounts for a much smaller share of China’s optical module exports than it once did, with demand shifting toward Southeast Asia, particularly Malaysia, where AI data centre investment is accelerating. Chinese suppliers are also expanding manufacturing in Southeast Asia, both to diversify production and to get ahead of future US sourcing rules.

Over the longer run, these restrictions look more likely to accelerate a bifurcation, or split, of global AI supply chains than to eliminate China’s role. Chinese firms may lose share in the US, but expect them to deepen their presence in China and other markets while continuing to expand capacity. US cloud providers, meanwhile, will diversify suppliers and build alternative manufacturing bases outside China. Full supply chain independence, though, will take years and a lot of capital.

Net effect, the policy is unlikely to meaningfully weaken China’s optical industry in the near term. What it will do is raise costs, fragment global supply chains, and reinforce the broader technological decoupling between the world’s two largest economies.

The market shrugs it off

This week, Chinese optical stocks climbed alongside their Western counterparts Coherent and Lumentum. The two US names gained far more, likely on hopes of a wave of new orders once Chinese parts are banned. But Innolight and Eoptolink rose too, just by smaller margins. The market’s message is that Chinese players won’t get hurt by the ban nearly as much as the headlines suggest.

#2 AIA, Prudential, HSBC and StanChart Fall After China Taxes Offshore Insurance Policies

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A name that is synonymous with Traditional Chinese Medicine (TCM).

It has an illustrious history, going back to the Qing Dynasty, founded in 1669 by Yue Xianyang, a senior physician at the Qing imperial court. That makes it over 350 years old today.

He named his pharmacy “Tong Ren,” meaning “just and fair to everyone.” He believed medicine was the ultimate way to cultivate noble morality, benevolence, and do good for society.

The medicine hall was opened to the public, but it also served as the sole supplier of medicinal herbs to the royal court. Tong Ren Tang served the royal families for 188 years across the reigns of eight different emperors without losing its exclusive status. Even after the Qing Dynasty ceased to exist, Tong Ren Tang remains standing today as a reputable TCM brand.

Look at the listed Tong Ren Tang entities and you’ll find three of them. It’s important to know the differences, which are mainly geographic.

• Beijing Tong Ren Tang (SSE:600085) runs the whole China business, including retail shops and clinics, and owns 46.85% of 1666.

• Tong Ren Tang Technologies (SEHK:1666) is the factory business. It makes finished medicines in China and sells them wholesale, and owns 38.05% of 3613.

• Tong Ren Tang Chinese Medicine (SEHK:3613) covers everything outside mainland China, with factories, shops and clinics in Hong Kong, Macao and 13 other countries.

More importantly, which one is the Tong Ren Tang worth investing in? Let’s dive deeper.

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1. US Bans Chinese Robots. The Bigger Threat Is At Home.

2. China’s Aircons Are Hotter Than Europe’s Summer

3. Trip.com Fined RMB5.2B. Investors Think It’s Fine.

4. You Can Actually Invest In China’s Trust Companies. Beijing Just Made Them More Interesting.

5. China’s Bald Men Built This Company. Its Women Customers Will Grow It.

#1 US Bans Chinese Robots. The Bigger Threat Is At Home.

The U.S. has banned new imports of foreign made humanoid, quadruped and other advanced robots. It is another escalation in the technology decoupling between the U.S. and China, and it lands squarely on China, which dominates the humanoid robotics market. The FCC’s stated reason is national security and cybersecurity. Connected robots, it argues, could collect sensitive data, enable surveillance or be commandeered remotely. Models already approved can still be sold. But the pipeline is now closed.

The immediate impact is negative for Chinese robotics companies, particularly UBTech, Unitree and AgiBot, three of the industry’s leading manufacturers. Unitree and AgiBot both have IPOs coming. Component makers such as Estun Automation and Leaser Harmonious Drive Systems are caught indirectly.

The timing is what stings. These companies are only now moving from R&D into commercial scale deployment, and the ban removes a high value overseas market at exactly that moment. That lowers long term revenue expectations and stamps a geopolitical discount onto valuations.

At least that is the theory. Look at the share prices and the market has decided this barely matters. Most of these stocks are up this week.

Why the damage is smaller than it looks

The fundamental impact should be manageable, because these companies are still standing on China’s enormous manufacturing base and domestic demand.

China accounted for the majority of global humanoid shipments in 2025. Unitree and AgiBot each shipped more than 5,000 units. Leading U.S. competitors managed a few hundred.

So the ban does little to constrain China’s robotics development overall. The expansion simply gets redirected, into Chinese factories and into Europe, Southeast Asia and the Middle East. Losing U.S. access may even do the opposite of what it intends, accelerating a more self contained Chinese robotics ecosystem and pulling in heavier government support.

What it means for investors

The bigger risk is not Washington. It is domestic competition.

No one knows who wins the robotics race. And we already have a template for how this can go badly, which is China’s EV industry. A burgeoning field, adoption climbing fast, and almost nobody making decent money at the end of it, because capacity ran ahead of demand and a price war killed margins. Robotics could face the same fate.

Geopolitics is the second layer. Beijing has already threatened countermeasures, with rare earths and market access for U.S. companies such as Tesla and Nvidia the obvious pressure points. And each round of this pushes the two technology stacks further apart.

Getting the theme right is the easy part. Making good investment returns from this theme is the hard part.

#2 China's Aircons Are Hotter Than Europe's Summer

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Well, well, well.

China’s answer was to build it itself. And over the past few weeks, three separate developments suggest the gap is a lot narrower than anyone wanted to admit.

CMXT IPO

Let’s start with memory.

ChangXin Memory Technologies, better known as CXMT, is China’s answer to memory chips. On its first day of trading, the stock rallied 465.82%.

I have seen plenty of IPO pops. I have never seen one like that. More than 5x in a single session. Either the bankers priced it nowhere near where the market was, or demand was beyond anything they modelled.

The gains caused a commotion in the West too. Investors were already nervous about memory stocks, and CXMT hands them a credible new competitor to worry about. Probably part of what dragged down Micron and gang.

Then there is Apple. It is facing soaring memory component costs as data centre AI demand soaks up supply. It is now testing DRAM from CXMT and lobbying Washington for approval to use those chips in devices sold in China.

Read that again. One of the largest memory buyers in the world is unwilling to pay what Micron, SK Hynix and Samsung are charging, and is actively shopping in China. That should scare the big three.

CXMT is not alone either. Yangtze Memory Technologies Corp, China’s NAND flash leader, is also seeking a listing. CXMT is the champion in DRAM, YMTC in NAND.

To be realistic, CXMT is not taking over the world tomorrow. It is the smallest of the group, with a mere 8% market share according to Counterpoint’s research, though rising.

It also remains a few years behind its U.S. and Korean peers technologically. Strict export controls mean it cannot easily acquire extreme ultraviolet lithography equipment, forcing it to rely on less efficient domestic workarounds to push into advanced 10 nanometre class processes.

But Apple is willing to consider its chips. That tells you the quality is already good enough.

Mass Producing DUV Machines

The hardest part of the self sufficiency drive is building the lithography machines themselves.

Be specific about which kind. China has already scaled production of older dry lithography machines at 90nm and 28nm resolutions. That was never the bottleneck.

The new machines use immersion lithography, where a liquid sits between the lens and the silicon wafer to bend light and print finer patterns. That is the critical baseline for manufacturing 7nm class chips.

Yes, it is comparable to ASML technology from 2008. Sounds ancient. But 7nm is still impressive, and the vintage is not the point. The point is that China used to need ASML for this. Now it builds its own, mostly with domestic parts and some Japanese components.

Scale is the catch. The target is roughly 5 units in 2026 and around 20 in 2027. ASML expects to ship about 130 comparable immersion systems this year alone. China will still be buying ASML machines to fill the gap in the meantime.

SMIC has reportedly been testing the machines since late 2025, and the first units are being delivered to major domestic chipmakers like SMIC, Hua Hong and CXMT this year.

Still, I would call this the biggest progress in the entire self sufficiency drive. Building DUV and EUV machines is one of the hardest engineering problems on the planet.

Kimi K3

The third piece is software.

Moonshot AI’s Kimi K3 is the next Chinese name to make a splash in Western media. It ranks alongside the frontier models from Claude and ChatGPT, and that alone is a feat.

The naysayers say it was achieved through distillation and the like. Maybe. But if it were that easy, every lab would be doing it and every model would be frontier class. Moonshot figured out something the rest did not.

Being frontier is one thing. Cost is another. Claude is known to be expensive. ChatGPT has managed to bring its costs down. Kimi K3 still comes in more than 50% cheaper than ChatGPT. As good as the West, at a fraction of the price. For cost conscious users, that is reason enough to switch.

And there goes the challenge. If a Chinese model can match the frontier at half the price, will the expensive models and all the AI infrastructure built around them ever pay back? Investors are starting to ask questions.

Memory, Machines, Models

The pattern is the same across all three. Cut off the supply, and China builds the supply.

Three fronts, all moving at once, and all far ahead of the ten year gap everyone was quoting a few years ago.

Don’t write off China. Especially not when an entire country has put its mind behind one thing.

1. Tencent Fell 7% On Gaming Slowdown Nobody Has Confirmed Yet

2. China’s National Team Is Back, Now Buying Up AI Stocks

3. Zhongji Innolight Is HK’s Largest IPO Since Alibaba In 2019

4. Zhipu Completed A 1GW Data Centre Powered By Domestic Chips As China Weans Off Nvidia

5. Alibaba Fined €550 Million By EU. The AI Bill Matters More.

#1 Tencent Fell 7% On Gaming Slowdown Nobody Has Confirmed Yet

Tencent and NetEase, the two giants of Chinese gaming, both fell more than 6.9% this week.

The trigger was a fear, not a fact. Investors worried that Tencent’s mobile gaming revenue is slowing ahead of second quarter earnings. No official figures were released. But sentiment towards China internet names has been fragile for a while, and in that mood any whiff of bad news is enough. Sell first, ask questions later.

So analysts turned to third party data to piece the story together. Sensor Tower data released on 16 July showed Honor of Kings slipping from the world’s highest grossing mobile game in May to third place in June. Global mobile game spending also fell 7% month on month.

Around 20 to 22 July, Bernstein reportedly estimated that Tencent’s mobile gaming revenue fell 2.6% year on year. Billings from its three largest titles, Honor of Kings, Peacekeeper Elite and PUBG Mobile, fell about 13%.

Citi then pushed back, arguing the market had misread the tracking data. It still expects Tencent’s second quarter domestic gaming revenue to grow around 8% year on year, even if it declines 3.9% from the previous quarter.

Does it matter? Gaming makes up almost a third of Tencent’s revenue, so a real slowdown would be significant enough to drag on overall growth.

But here is the catch. Tencent’s reported revenue can look quite different from what the trackers show, because some game spending is recognised over the expected consumption period or player life rather than upfront. So the final figures are yet to be confirmed. For context, in 1Q2026 Tencent reported domestic games growth of 6% and international games growth of 13% year on year.

And when big brother sneezes, everyone else catches a cold. Tencent is one of the largest gaming companies in the world, so investors assume weakness there is industry wide rather than an isolated case. That is why NetEase went down with it.

#2 China’s National Team Is Back, Now Buying Up AI Stocks

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Meanwhile, dividend stocks kept trudging higher while tech swung wildly up and down.

Our observation is that a dividend strategy tends to work better in China than in the US. We reckon there are at least two reasons behind this.

First, tax. Dividends are taxed at 10% in China versus 30% in the US. So US management teams lean toward share buybacks instead of dividends. China has gone the other way. The government has been nudging companies to pay more dividends to shore up investor confidence, and many have raised their payouts.

Second, structure. The US is a bottom up economy where entrepreneurs fight to make their mark. There is no shortage of startups and innovation, and a culture that does not punish failure is exactly what breeds the biggest companies in the world. China is still largely planned from the top down. Yes, it has ambitious entrepreneurs and plenty of successful enterprises. But the government tends to get wary once a company grows too powerful. We saw it when Jack Ma said the wrong things and the entire tech sector got hit with crackdowns. In the US, reining in a corporate means going through the courts, and even then the government often loses. In China, it does not need to. It simply does what it pleases. The result is a ceiling on how big companies are allowed to get.

On the other hand, many state owned enterprises are mature companies that pay dividends. The government already owns them, so they do its bidding. There is no fear of them growing too powerful.

Put the two together and the conclusion follows. In China, dividend stocks are a better bet than growth or tech.

We have covered a few China dividend ETFs before. Here, here and here. Now let’s stack their performance against the Hang Seng Tech and MSCI China ETFs.

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1. 1 China’s Growth Slows To 4.3% in Q2 2026. Property Investment Down 18% While Exports Rose 27%.

2. China AI Stocks Down With The World. Sector Rotation Underway and Biotech is One Beneficiary.

3. Alibaba and Baidu Chosen to Power Apple Devices in China

4. This AI Biotech Just Turned Its First Profit. The Stock Is Up 80% Since IPO in Feb.

5. CATL’s First Large-Scale Sodium-Ion Deal Outside China. 5GWh Across Western Europe.

#1 China’s Growth Slows To 4.3% in Q2 2026. Property Investment Down 18% While Exports Rose 27%.

China posted 4.3% GDP growth in the second quarter of 2026, capping a first half that ran at 4.7%. The headline number holds up. What’s underneath it does not. This is a two speed economy, with exports far outpacing domestic demand.

Household consumption rose just 2.7% even though disposable income climbed 4.2%. That gap matters. If income is rising faster than spending, households are saving the difference rather than putting it to use. The clearest sign of this is the household propensity to consume, the share of income that actually gets spent, which slid to 64.6%, one of the lowest readings since the pandemic. Precautionary saving, weak income expectations, and the wealth hit from falling property prices are all feeding into it. Property investment itself fell 18% in the first half of the year.

Exports Are Doing the Heavy Lifting

On the export side, artificial intelligence hardware and semiconductors are leading the charge, with integrated circuits growing more than 121% year on year. AI exports have driven a broader lift in manufacturing activity, with industrial production rising, factory gate prices improving, and profits at electronics and semiconductor companies posting triple digit growth.

China’s regional influence grew too. Exports to ASEAN stayed robust, and electricity exports to the region rose sharply, another sign of China’s deepening role in regional supply chains and energy security.

But there’s a catch. Much of this export strength comes from higher prices rather than higher shipped volumes. And because China still depends on imported high end chips and computing infrastructure, AI’s near term contribution to overall GDP growth is more limited than the headline figures suggest.

This also exposes a deeper problem. The AI boom is creating a K shaped economy, where the gains flow mostly to technology firms, capital owners and highly skilled workers, while lower income households, younger workers and smaller cities benefit far less. That widening gap suppresses consumption, since the wealth being generated is concentrated among groups with a lower propensity to spend it. AI is expanding China’s productive capacity without a comparable expansion in domestic demand, which makes Beijing’s shift toward a consumption driven economy harder to achieve.

This is partly the outcome of Beijing’s own policy choices. The government prioritised growth in AI and semiconductor self sufficiency, and on that front the policy has succeeded, arguably to the point of concentrating wealth among a narrow group while consumption support delivered only temporary gains. Seen the other way, exports are the reason growth held up at all. Strip them out and rely solely on domestic consumption, and China’s GDP growth last quarter would have come in below 4.3%.

What Comes Next

Policymakers are unlikely to shift direction. The approach remains targeted rather than broad based stimulus. Fiscal support is expected to continue flowing into infrastructure, technological innovation and consumption incentives, while the People’s Bank of China keeps expanding structural tools aimed at technology, small businesses and household demand. There is also growing recognition within policy circles that income distribution reform, stronger social safety nets and worker retraining will be needed to offset AI driven inequality.

China’s economy will likely continue growing within its official target range of 4.5% to 5%. But more sustainable growth will depend less on exports and investment, and more on rebuilding household confidence and addressing the structural imbalances underneath.

#2 China AI Stocks Down With The World. Sector Rotation Underway and Biotech is One Beneficiary.

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It is not a bank, not a property trust, and not some fragile high yield stock that is one bad quarter away from cutting the payout. It sits on a mountain of cash worth more than five years of dividends, and it carries almost no debt at all. If its business earned nothing for the next five years, it could keep paying you the same dividend simply by reaching into the bank.

It does not make anything you can hold. It runs paperwork. Every time goods move in or out of Hong Kong, someone has to file the customs documents electronically, and the government requires those filings to pass through a small, approved set of operators. This company is the biggest among them. It is, in effect, one of the toll booths on Hong Kong trade.

Goods have to move, the paperwork has to be filed, and a large share of it flows through its system. That single activity brings in about two thirds of its revenue. And that is why this is really a quiet bet on the flow of trade between China and the rest of the world. Hong Kong is one of the great gateways to the mainland, and this company sits right at the gate.

When trade is busy, filings rise and the coins drop into the box. You can see it in its own history. Back in 2019, when the U.S. and China were deep in their tariff fight, companies rushed to move goods before the next round of duties landed. All that scrambling meant more paperwork, and the company had a record year. The trade war was chaos for most. For the toll booth it was a boom.

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1. China’s Big Policy Week: Carbon, Helium, E-Commerce, Medicine and Wages

2. AI Agents Are a Battleground in China, Xiaowei Is Our Pick

3. 102 HK IPOs in 2026: 59 Winners, 41 Losers, and One Stock Up 1,311%

4. Xiaomi’s Third EV Is a Reconfigurable SUV That Doubles as a Living Room

5. Han’s CNC Records 104% Revenue Growth Thanks To AI Boom

#1 China's Big Policy Week: Carbon, Helium, E-Commerce, Medicine and Wages

Beijing has been busy. Over the past stretch, China rolled out a cluster of policies spanning energy, trade, e-commerce, healthcare and wages. None of them are small. Here’s what changed and why it matters.

China’s 2026 to 2030 Dual Carbon Action Plan sets a target to cut carbon emissions per unit of GDP by 17% from 2025 levels within five years. The policy pushes non fossil energy to 25% of total energy consumption through large investments in wind, solar, nuclear, energy storage and long distance power transmission lines built to carry electricity with minimal loss. It also promotes zero carbon industrial parks, zero carbon factories and greener data centres, alongside faster adoption of electric vehicles. Taken together, the plan confirms that energy security and industrial decarbonisation remain a long term priority for Beijing, not a passing initiative.

China has also placed a temporary ban on helium exports to strengthen supply chain resilience. The goal is to keep domestic supply flowing to strategic industries such as semiconductors, aerospace and healthcare, after global helium shortages caused by geopolitical disruption. Helium is a critical input in advanced chip manufacturing, so this move fits Beijing’s broader push for technological self sufficiency and its strategy to localise semiconductor production.

China released draft revisions to its E-Commerce Law to modernise how the digital economy is regulated. The proposed reforms introduce stricter oversight of platform operators, impose fines of up to 5% of revenue for serious anti competitive conduct, formally bring gig workers under legal protection, and create a coordinated mechanism across government agencies. The draft also expands Beijing’s authority to respond to discriminatory foreign trade measures with reciprocal action, another sign that China wants tighter digital governance while shielding domestic firms.

China updated its National Essential Medicines List for the first time in eight years, expanding it from 678 to 794 medicines. The 116 additions include innovative treatments such as semaglutide, bevacizumab, olaparib and RemeGen’s lupus drug telitacicept. Public hospitals are now required to stock these medicines, which widens patient access and opens up sales opportunities for pharmaceutical companies. The update also expands treatment options for chronic diseases including diabetes, hypertension and chronic obstructive pulmonary disease, adds 31 paediatric medicines to address a shortage of child specific formulations, and gives more weight to traditional Chinese medicine. By aligning the essential medicines list with the national medical insurance catalogue, Beijing ensures these drugs are both available and affordable, while signalling that future updates will come more frequently.

Finally, China introduced a new wage reform blueprint under its 15th Five Year Plan to support employment, raise household incomes and stimulate consumption. The policy promotes collective bargaining over wages, improves how minimum wages are adjusted, expands vocational training in AI, advanced manufacturing and other strategic industries, and aims to grow the middle income population while protecting frontline workers. The reforms are also designed to keep inflation on a steady, moderate path, a notable goal given how weak China’s inflation has been recently.

Taken as a whole, this is Beijing playing offence and defence at once. Locking down critical resources and tightening digital governance on one hand, while opening up healthcare access and trying to lift household incomes on the other. Investors watching China exposure, whether through semiconductors, healthcare or consumption plays, have several threads to track from this single stretch of policy.

#2 AI Agents Are a Battleground in China, Xiaowei Is Our Pick

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Here’s the investing angle. China is stuck in deflation, and its consumer stocks have been lacklustre for years. Lacklustre enough that many now trade at low valuations and pay chunky dividends.

We’ve been tracking them. We don’t know how long the slump lasts, but at some point the value you get versus the price you pay becomes too good to ignore. So here are five Chinese brands you can find on supermarket shelves, each yielding 5% or more. See if any catch your eye.

#1 ChaCha (SZSE:002557)

You might not recognise the name, but you’ve probably seen the packaging. ChaCha (洽洽) is the sunflower seed brand that supermarkets like to stack in a wall of flavours.

It isn’t new. The brand has been around since 1999. Before ChaCha, sunflower seeds in China were dry-roasted in giant woks. That method left your hands covered in black dust, and the shells came out hard and tough on the teeth.

Founder Chen Xianbao boiled the seeds instead. He simmered them in a broth of traditional herbs and spices, which cleaned the shells, softened them, and pushed the flavour deep into the kernel. The name is a nod to two things, the Cha Cha dance and the water radical 氵 in 洽, which points back to that boiling method.

Don’t expect fast growth or fat margins, not in China’s current consumption climate. Revenue grew at just 4% CAGR over the past five years, and net margin is thin at 5.7%.

It does pay a 5% dividend yield. But be careful. The dividend per share was cut in FY2025 and the payout ratio topped 100%. That’s because revenue fell 7.82% year on year and net profit plunged 62.51%.

FY2026 looks better. In Q1 2026, ChaCha posted revenue of 2.22 billion RMB, a hefty 41.46% jump year on year, with net profit of 168 million RMB.

Chen also put his own money in, buying 466,000 shares for over 8.3 million RMB, and pledging to buy up to 60 million RMB more over the next six months.

Does he know something we don’t?

#2 Tingyi (SEHK:322)

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1. New Tech Drives One Third of China’s Economy Now. The Old Economy Is Still Sluggish

2. UBTech Surge 18% In One Day After Launching Ultra-Realistic Humanoid For Consumers

3. Meituan Turns Its Super App Into an AI Agent That Books For You. It’s Selling Access To It Too.

4. China Biotech Stocks Just Had Its Best Week In Months

5. Autonomous Driving Software Maker Momenta Gets Its IPO Oversubscribed 414 Times

#1 New Tech Drives One Third of China's Economy Now. The Old Economy Is Still Sluggish

China’s economy is in the middle of an awkward, long handover from the old playbook of factories and property to a new one built on tech, AI and innovation. It’s not a clean transition. It’s messy, uneven, and honestly, still a work in progress. But the direction of travel is becoming harder to ignore.

The Caixin BBD New Economy Index climbed to 34.1 in June. In plain terms, new economy industries now make up 34.1% of China’s total economic inputs. That’s up, and it’s being driven by capital investment, tech innovation and labor, with IT and biomedicine doing the heavy lifting.

Patents are up. R&D spending is up. Beijing clearly wants the story to be “China moved on from being the world’s factory.” And to be fair, the data backs that ambition up, at least directionally.

But there’s always a but. One index climbing doesn’t mean the old economy gets to check out gracefully.

Manufacturing PMI ticked up to 50.3 in June. Composite PMI hit 50.6. Technically that’s expansion. Barely.

Here’s the less flattering part. Factories are still making more than anyone wants to buy. Hiring is cautious at best. And producer prices have slipped back into contraction, which is a polite way of saying deflation is still gnawing at corporate margins.

So yes, stimulus and easing trade tensions are helping. But “stabilization” is doing a lot of work in that sentence. This isn’t a boom. It’s a patient being kept comfortable while the new economy tries to grow into the role.

Whether that works is a different question. But you can’t accuse them of not trying to control the narrative.

China’s also doubling down on resource security and decarbonization. New carbon peaking initiatives are getting baked into the upcoming 15th Five Year Plan, more renewables, tighter industrial emissions standards, the usual.

The more interesting number here is the resource recycling target. 8 trillion yuan by 2030. That’s not a small side project. Recycling EVs, batteries, electronics and renewable energy equipment isn’t just an environmental play, it’s a critical minerals strategy in disguise. China’s essentially trying to build a supply chain that doesn’t need to ask anyone else’s permission.

At the same time, Beijing is gradually pulling back direct subsidies for EVs, and vehicle tax breaks for several hybrid and commercial new energy vehicles are set to phase out from 2027. Trade in incentives will still be around, but the training wheels are coming off. We have seen the impact to EV players. Their revenue growth have slowed and margins compressed. China’s EV makers have been expanding aggressively overseas, to get away from the involution situation back home.

Takeaway

The pattern is consistent. Less reliance on subsidies, more reliance on innovation. Less “build more factories,” more “build better technology.”

None of this adds up to a clean growth story. The old economy is stabilizing, not roaring. Deflation is still a drag. And the new economy, for all its momentum, is still only a third of total inputs. It’s not big enough yet to pull the whole machine forward on its own.

#2 UBTech Surge 18% In One Day After Launching Ultra-Realistic Humanoid For Consumers

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Hong Kong-listed Chinese stocks are facing multiple headwinds

Technology and internet platform companies, including Xiaomi, Alibaba, Tencent, Meituan, and Baidu, have experienced sharp corrections as slowing consumption, weaker advertising demand, intensifying competition, and concerns over slowing earnings growth prompted investors to reassess previously high valuations. Although regulatory pressure has eased, the sector continues to face challenges as growth matures.

Consumer discretionary stocks such as Laopu Gold, Li Ning, Haidilao, Sands China, and Shenzhou International have also declined amid China’s weaker-than-expected post-pandemic recovery and subdued consumer spending, particularly in discretionary and premium segments.

Healthcare companies including JD Health, Ali Health, CSPC Pharmaceutical, and Hansoh Pharmaceutical have remained under pressure due to ongoing healthcare reforms, drug price negotiations, and persistent pricing pressure across China’s pharmaceutical industry.

Property developers and cyclical industries have continued to face significant headwinds despite favourable long-term themes. China’s property sector remains under pressure from weak housing demand, financing constraints, and skepticism over a sustained recovery, weighing on developers such as Longfor Group. Meanwhile, electric vehicle and renewable energy companies, including BYD, BYD Electronic, Li Auto, and Xinyi Solar, have corrected amid price wars, slowing growth, margin pressure, and industry overcapacity. Commodity producers such as Zijin Mining, CMOC, and Chalco have fared relatively better due to long-term demand for critical minerals, but their shares have also pulled back as investors took profits and reacted to concerns over global economic growth and commodity price volatility.

A-shares are telling a very different story

However, the A shares stocks tells a different story. We will illustrate this by examining 4 ETFs and understand if China remains an investible space for now.

Four China ETFs, four very different outcomes

With all four of above exchange-traded funds (ETFs) providing exposure to Chinese equities, their year-to-date (YTD) performance has diverged significantly due to their underlying market exposure, sector composition, and structural positioning. As of June 2026, the iShares Core CSI 300 ETF (2846) is the only fund to have generated positive returns, rising 8.58% YTD, while the Tracker Fund of Hong Kong (2800) declined 13.04%, the iShares Core MSCI China ETF (2801) fell 18.86%, and the iShares Hang Seng TECH ETF (3067) recorded the weakest performance with an 25.33% decline. These contrasting performances highlight the growing divergence between China’s onshore A-share market and offshore Hong Kong-listed Chinese equities.

The difference begins with each fund’s investment universe. The iShares Core CSI 300 ETF (2846) provides pure exposure to mainland China’s largest A-share companies listed on the Shanghai and Shenzhen stock exchanges. In contrast, the Tracker Fund of Hong Kong (2800) tracks the Hang Seng Index and is primarily composed of Hong Kong-listed blue-chip companies, H-shares, and red chips. The iShares Core MSCI China ETF (2801) offers the broadest exposure by investing across mainland A-shares, Hong Kong-listed H-shares, and overseas-listed Chinese companies including American Depositary Receipts (ADRs). Finally, the iShares Hang Seng TECH ETF (3067) focuses exclusively on Hong Kong-listed technology companies, making it the most concentrated and growth-oriented fund among the four.

Why the CSI 300 has outperformed

The strongest structural advantage has belonged to the CSI 300 ETF, whose portfolio has gradually shifted toward sectors benefiting directly from China’s industrial upgrading strategy. Information Technology represents its largest sector allocation at approximately 31.7%, reflecting Beijing’s emphasis on semiconductor self-sufficiency, artificial intelligence infrastructure, and advanced manufacturing. Its largest holdings include optical networking leaders Zhongji Innolight and Eoptolink Technology, domestic AI chip designer Cambricon Technologies, and battery giant CATL, all of which are positioned to benefit from China’s long-term investment in AI infrastructure, electric vehicles, and high-end manufacturing. The portfolio also contains structural winners outside technology, including mining company Zijin Mining, which provides exposure to copper and gold—two commodities supported by electrification and global infrastructure demand. This combination gives the CSI 300 exposure to multiple secular growth themes that have remained relatively insulated from weakness in China’s internet economy.

In contrast, the offshore-focused ETFs remain heavily dependent on China’s internet platform economy and consumer discretionary spending. The MSCI China ETF allocates more than 23% of its portfolio to just Tencent and Alibaba, while Consumer Discretionary is its largest sector at nearly 25% of assets. Similarly, the Hang Seng TECH ETF is highly concentrated, with its ten largest holdings accounting for almost 69% of the portfolio. Major positions include SMIC, NetEase, Meituan, Alibaba, Tencent, JD.com, Baidu, and Xiaomi, creating substantial exposure to a relatively narrow segment of China’s technology ecosystem.

While many of these companies remain industry leaders with attractive long-term prospects, their share prices continue to be influenced by several offshore macroeconomic factors. Regulatory uncertainty surrounding internet platforms, weaker domestic consumer spending geopolitical tensions, and fluctuations in international capital flows have all weighed disproportionately on Hong Kong-listed Chinese technology stocks. Consequently, funds with heavier exposure to these companies have experienced significantly larger valuation declines during the year, explaining why the iShares Hang Seng TECH ETF has fallen 25.33% YTD and the iShares Core MSCI China ETF declined 18.86% YTD despite maintaining exposure to many of China’s most prominent technology companies.

The CSI 300 ETF’s outperformance can therefore be attributed to two important structural advantages. First, it has minimal exposure to internet platform companies such as Tencent, Alibaba, PDD Holdings, and Meituan, allowing it to avoid much of the valuation compression experienced by China’s internet sector. Instead, its portfolio is tilted toward domestic industrial champions, semiconductor supply chains, AI hardware, and advanced manufacturing businesses that have attracted increasing policy support and investor interest.

Second, the fund benefits from pure onshore A-share exposure. Mainland China’s equity market often behaves differently from offshore markets because it is driven primarily by domestic institutional investors, local liquidity conditions, and Chinese monetary policy rather than global investor sentiment. Policy easing, targeted fiscal stimulus, and government initiatives promoting technological self-sufficiency have provided additional support for mainland-listed companies, enabling the CSI 300 to decouple from periods of weakness affecting offshore Chinese equities.This has resulted in an increase in A shares premium over H shares as seen in picture below.

China is not uninvestible, but investors need to be more selective

Overall, the performance gap among these four ETFs reflects the increasingly distinct investment narratives emerging within China’s equity market. Onshore A-shares have increasingly become vehicles for investing in China’s strategic priorities. Meanwhile, offshore Hong Kong-listed equities remain highly volatile and have a higher downside. As China’s economic model continues to shift toward technology self-sufficiency and advanced manufacturing, this divergence between onshore and offshore equity performance may persist, making portfolio construction and market selection increasingly important for investors seeking exposure to China.

1. China’s 15-Point Plan to Attract Foreign Capital

2. Bank of China Evaded Tax and the Rest of China’s Banks Have Questions to Answer Too

3. Trip.com Tumbled More Than 10% After Q1 2026 Results on Soft Guidance

4. Two Apple Suppliers Are Lining Up for Hong Kong IPOs

#1 China’s 15-Point Plan to Attract Foreign Capital

China just dropped a fresh 15-point action plan to court foreign investors. Released on June 22, 2026 and jointly issued by three of the most powerful economic ministries (Commerce, the NDRC, and Finance) it’s the clearest signal yet that Beijing is serious about reversing a troubling trend where Foreign Direct Investments (FDI) into China fell 8.6% in the first five months of 2026.

So let’s go through what’s actually in the plan, and what it means.

Area 1: Expanding Market Access

The first three points all deal with opening doors that have historically been hard to crack.

On services, Beijing is expanding pilot programs for foreign participation in vocational training institutions, universities, and higher education, specifically science, engineering, agriculture, and medicine. Hong Kong and Macau investors get priority early access. Beijing’s own national services demonstration zone gets a push to pilot new openings in digital economy and healthcare first.

On finance, foreign institutions can now use a wider range of risk management tools including treasury bond futures. They can also conduct fund investment advisory business, something previously off-limits. For large foreign firms, cross-border financing is getting easier, and those that qualify can now pursue domestic listings in China.

On pharmaceuticals, the plan addresses something foreign drug companies have long complained about, the inability to do cross-border segmented production. That’s now being unlocked, meaning an overseas drug license holder can split the manufacturing process across borders. Pilot regions for wholly foreign-owned hospitals and biotech firms are being expanded, and commercial insurers are being pushed to cover more innovative drugs and medical devices.

Area 2: Improving Investment Facilitation

Points four through seven deal with the mechanics of actually getting money in and working.

The foreign M&A rules are getting a long-overdue overhaul. The current rules date back to 2006. The revised version promises cleaner procedures and clearer payment terms. Qualified foreign private equity firms can also now participate as strategic investors in listed companies, a notable shift.

On data, this is the point that will matter most to tech companies. Free trade zones and pilot cities can now draft their own sector-specific negative lists for outbound data transfers, essentially creating clearer rules for what data can and cannot leave China. National standards for identifying important data will be developed across industries including automobiles, medicine, civil aviation, and telecoms. For foreign companies that have been paralysed by data localisation uncertainty, this is meaningful progress.

On reinvestment, the tax incentive for foreign companies reinvesting their China profits rather than repatriating them will be fully enforced. More reinvestment projects will also qualify for the major and key foreign investment project list, unlocking additional government support.

On R&D centres, Beijing is doubling down on its push to attract foreign innovation capacity. Support policies are being improved for hiring senior foreign talent, setting up open innovation platforms, and commercialising research results. Imported research equipment also gets tax relief.

Area 3: Upgrading Investment Promotion

Points eight and nine are about making China easier to navigate and harder to ignore.

The “Invest in China” brand is getting a digital makeover. A new integrated portal is being built to combine information, consultation, professional support, and feedback in one place. Promotional campaigns will run both domestically and overseas, with a deliberate narrative push around China opportunity and global cooperation. Make of the messaging what you will. The infrastructure behind it is real.

On project recruitment, local governments are getting clearer rules on what they can and cannot offer foreign investors. A list of encouraged and prohibited practices is being published. Critically, the plan says governments must honour policy commitments made in accordance with law. This is a direct response to a long-standing complaint. Foreign companies were promised incentives by local officials that were later quietly withdrawn.

Area 4: Service and Support for Foreign Enterprises

Points ten through thirteen address the day-to-day frustrations of operating in China.

National treatment, the principle that foreign firms should be treated the same as domestic ones, is being more aggressively enforced. Except where restricted by law or national security, all enterprise support policies must apply equally to foreign companies. Government procurement and bidding processes will be subject to stricter fair competition review.

Foreign brands will also be able to participate fully in China’s consumer stimulus campaigns, trade-in programs, green consumption initiatives, and international consumer city schemes. Local governments cannot exclude foreign products from these just because they are foreign-made. That sounds obvious. It apparently needed to be spelled out.

On the online environment, there’s a new complaint mechanism for foreign enterprises facing intellectual property infringement or other online rights violations. Whether this has teeth remains to be seen.

For major foreign investment projects, the government is promising end-to-end case management from complaint collection through resolution and feedback, with periodic public reporting of how cases were handled.

Area 5: Optimising Foreign Investment Administration

The final two points are about plumbing. Less glamorous, but important.

On regional coordination, eastern provinces and border areas are being encouraged to pair up and cooperate on attracting investment, sharing industrial transfers, and splitting revenue. Border economic cooperation zones get support to co-develop industrial parks with domestic partners and neighbouring countries. The aim is to spread foreign investment beyond the coastal cities where it has traditionally concentrated.

On information systems, the foreign investment reporting framework is being upgraded. A direct reporting channel is being set up to ensure investment data flows cleanly to the relevant agencies covering foreign exchange registration, administrative approvals, and fixed asset investment management. Unglamorous? Yes. But bad data plumbing has been a real headache for foreign firms navigating China’s regulatory maze.

The Part the Plan Doesn’t Mention

Even as China opens one door to foreign capital, it’s directing significant state investment through another. The National Integrated Circuit Industry Investment Fund, the so-called Big Fund, has been consolidating positions in domestic semiconductor companies, tightening its grip on SMIC, and redirecting capital toward AI chips, advanced packaging, and next-generation manufacturing. The message is clear. In sectors where geopolitical risk is highest, Beijing isn’t relying on foreign investment. It’s deploying state capital.

China wants foreign investment, just in the sectors it chooses, on terms it controls, while simultaneously making sure the industries that matter most don’t depend on anyone else.

Whether it works depends on execution and willingness of foreign firms to trust China. The impact will depend on effective implementation at both national and local levels.

#2 Bank of China Evaded Tax and the Rest of China’s Banks Have Questions to Answer Too

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