Travelers walk past an advertisement for Doubao, ByteDance’s AI assistant platform, on display alongside Volcano Engine, the company’s cloud and AI services brand, at Shenzhen Bao’an International Airport in Shenzhen, Guangdong Province, China, May 16, 2026.
Chen Xin | Getty Images News | Getty Images
Hello, I’m Evelyn. I am writing to you from Beijing. Welcome to the latest edition of The China Connection. This is a snapshot of what I’ve seen and heard from local businesses.
After a rocky start to the year, what certainty are businesses looking for, and what will drive the economy beyond the summer?
big story
During a short trip to Shenzhen last week, I noticed that the airport was unusually busy for an early weekday morning. While people were rushing about, advertisements were plastered on multiple walls promoting various artificial intelligence tools and their technological capabilities.
The AI craze and its economic impact has swept through much of China over the past six months. From the AI chatbot wars of February’s Lunar New Year, to the ensuing craze of the OpenClaw AI agent, to the widespread AI-generated videos that captured the public’s imagination and, ultimately, the rise of the stock market, this technology is forming an increasingly bigger part of life in China today.
That’s not to mention the back-and-forth policy in the US that temporarily shut down Anthropic’s Mythos and Fable models and helped pump in newly listed models. knowledge atlas Its market capitalization has soared to the HK$1 trillion club. The Chinese company, also known as Z.ai, released an open-source GLM 5.2 model that maintained the top coding performance rankings while Fable was offline.
Crucially, the rally in tech stocks, which make up about 30% of mainland China’s A-share market, is helping to bottom out the sluggish real estate market in major Chinese cities, said Ting Lu, Nomura’s chief China economist.
More IPOs are on the calendar, including self-driving company Momenta in Hong Kong on Wednesday, reflecting U.S. excitement for major listings.
But are animal spirits getting too high? Summer vacation, which officially began in China on July 1, may just represent the lull before the storm.
The most anticipated event of the first half of this year was US President Donald Trump’s visit to Beijing, which was scheduled for May after being postponed due to the Iran war.
President Trump’s visit helped maintain a thaw in U.S.-China tensions. U.S. companies have rushed to increase orders from Chinese suppliers ahead of a tough tariff regime that kicks in later this month.
However, a pre-set schedule can keep the relationship stable for a while.
Chinese President Xi Jinping is scheduled to visit the United States in late September. After the US midterm elections, President Trump and President Xi are scheduled to meet during the APEC summit in Shenzhen in November.
With just four months to go, the city is already preparing for the event, with promotional banners posted and whispers of a technology showcase. After all, it’s China’s Silicon Valley.
tourist season
Meanwhile, according to Chinese state media, the number of rail trips this summer is expected to increase by about 60 million compared to last year, out of a total of 1.01 billion passenger travelers. Social media posts drum up excitement for sold-out summer events such as Bilibili World, which features merchandise based on popular characters on the streaming and gaming company’s app.
It’s less clear whether that will be enough to reverse the retail sales slump.
“Holiday spending remains constrained by the weak labor market,” Robin Xin, chief China economist at Morgan Stanley, and his team said in a June 28 report.
“We expect the Chinese government to step up its fiscal focus on capital spending from the third quarter, primarily focusing on aluminum and the power grid rather than consumption,” analysts said.
China’s parade of high-tech achievements will accelerate in the meantime.
Shanghai will host the state-sponsored World AI Conference in mid-July, where Xi is expected to speak, said George Chen, a partner at Asia Group. Event organizers did not respond to requests for comment. The World Robotics Conference will be held in Beijing in late August.
“While the overall AI growth story remains the same and the narrative has evolved over the past few years, we are still in the early stages of the AI revolution,” said Perris Lee, Head of Asia Pacific Equity Capital Markets at Merger Markets, noting how the strong listing activity in Hong Kong reflects the fact that “investors remain enthusiastic.”
“Geopolitical tensions remain a major risk,” Lee said. “It remains unclear whether the full impact of the oil price hike has been fully reaped, and ongoing conflicts and broader geopolitical uncertainty are likely to continue to impact investor sentiment and capital market activity in the second half of the year.”
As money flows into AI and the rest of the economy tries to boom with exports and tourism, the question remains: when will the music stop?
need to know
Europe wants to readjust its trade balance with China, but cannot stop using Chinese-made air conditioners
The city of Brussels aims to reduce its trade deficit with China by October, as a historic heatwave sends locals rushing to buy Chinese-made air conditioners. Meanwhile, the Chinese government has expanded export restrictions to Japan, targeting drone manufacturers, nuclear power companies, and defense agencies.
Alibaba’s Ant Group begins developing humanoid robots, closing more than a dozen deals in 18 months
In its latest sector bet, Ant Group led a 500 million yuan ($73.58 million) funding round in Zeroth. In the stock market, PopMart’s short interest rate stood at 12.67% of outstanding shares as of June 30, up from 11.3% in April, according to S&P Global Market Intelligence data. This is despite an 8% increase from the year-to-date low in April.
President Xi emphasizes the Chinese Communist Party’s global influence in speech commemorating the 105th anniversary of the founding of the People’s Republic of China
According to a CNBC translation from Chinese, Xi Jinping said the Chinese Communist Party “has significantly changed the trend and trajectory of world development through constant struggle.”
very soon
July 9: June CPI, PPI
July 10-12: Bilibili World in Shanghai
July 14: China trade statistics for June
