For more than a decade, the yuan’s international use has expanded mainly through cross-border trade settlement. But settlement alone has been seen as insufficient: unless yuan liquidity can circulate more freely through global investment and financing channels, the currency’s broader international role is likely to remain limited.

Geopolitical fragmentation and weakening confidence in dollar assets are creating new momentum for the yuan to evolve beyond a settlement currency into a financing, pricing and reserve currency.

Yuan’s growing appeal

Former People’s Bank of China Governor Zhou Xiaochuan said the current transformation of the international monetary system is being driven largely by the U.S., citing tariffs, sanctions and geopolitical conflicts that have eroded global trust in the dollar.

The shift is visible in capital flows and investor sentiment. A recent survey by the Association of German Chambers of Commerce and Industry found German companies’ willingness to invest in the U.S. had weakened due to tariff uncertainty, while attention shifted toward China and other Asian economies.

At the same time, experts see a growing opportunity to position the yuan as a low-cost financing currency, as China’s interest rates remain comparatively low among major currencies.

That advantage is visible in cross-border financing markets. The yuan has become one of the world’s top three trade financing currencies, while issuance of yuan-denominated bonds by foreign entities has accelerated sharply. In the first four months of 2026 alone, issuance of panda bonds on the Chinese mainland exceeded 100 billion yuan ($14.7 billion), while Hong Kong dim sum bond issuance topped 310 billion yuan.

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The air-intake and pedestrian inclined shaft at the Liushenyu coal mine in Shanxi province on May 24. Photo: CCTV

A deadly gas explosion at a coal mine in Shanxi province has cast a spotlight on persistent safety lapses and hazardous working conditions in China’s coal industry.

The blast occurred on May 22 at the Liushenyu Coal Mine in Qinyuan county, killing at least 82 people and injuring more than 120, making it the country’s deadliest coal mine gas incident in more than a decade.

The tragedy has exposed what industry insiders describe as a long-running open secret: the use of hidden, illegal mining zones — often referred to as “black faces” — that allow operators to exceed permitted output while evading safety rules and taxes.

The mine is controlled by Tongzhou Group, a private enterprise engaged in coal mining, washing, coking, and chemical production, which reported more than 4,000 employees in its 2025 annual report.

The group’s ultimate controller is Ren Tiezhu, who rose from humble beginnings as a shepherd and coal miner to become a prominent business figure. He has now been caught up in the fallout of the disaster, with local authorities taking control measures against the company’s de facto controller and other responsible individuals.

On Monday, China’s top procuratorate ordered local prosecutors to work with police to investigate the cause of the blast and pursue legal accountability. A central government-level investigation team led by the Ministry of Emergency Management was also formed to investigate the blast.

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The Hong Kong Monetary Authority issued a regulatory circular requiring Hong Kong-registered banks to implement the same additional control measures when opening investment accounts for clients from the Chinese mainland. Photo: VCG

Hong Kong’s banking regulator has told locally incorporated banks to impose stricter controls when opening investment accounts for Chinese mainland clients, extending compliance requirements already imposed on licensed brokerages.

The move suggests Hong Kong banks are being drawn into a broader regulatory campaign aimed at curbing illegal cross-border securities, futures and fund activity involving mainland investors.

The Hong Kong Monetary Authority (HKMA) recently issued a circular requiring banks registered in the city to adopt additional controls similar to those mandated for Hong Kong-licensed securities firms. Under the measures, mainland clients opening new investment accounts must submit written declarations confirming that all funds used for investment activity and settlement originate from lawful sources outside the mainland.

Caixin learned from people familiar with the matter that some banks have adopted even stricter practices in implementation.

On Tuesday, some mainland customers said Bank of China (Hong Kong) Ltd. discouraged them from opening investment accounts. Another Chinese joint-stock bank has suspended investment-account openings for customers holding only mainland identification documents, according to people familiar with the matter. Some mainland investors, however, said they were still able to open investment accounts at HSBC Hong Kong through compliant procedures.

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On May 20, 2026, local time, the U.N. General Assembly adopts a resolution at its headquarters in New York City, U.S., welcoming the International Court of Justice’s advisory opinion on states’ obligations regarding climate change. Photo: IC Photo

* Globalization is slowing as “America First” replaces “Pax Americana” in the global order.

* Governments are shifting toward narrower defense, trade, and supply-chain pacts.

* Rejected by the U.S. in 2013, a relationship of equals with China has now arrived.

In the years when globalization seemed to be racing ahead, the story the world told about itself was flatter and more linear.

At the turn of the century, Thomas Friedman captured the mood in his bestseller The Lexus and the Olive Tree: Understanding Globalization. The book described globalization as a struggle between two forces: the pursuit of prosperity and modern development, symbolized by the Lexus luxury car, and the desire to preserve older identities and traditional ways of life, represented by the olive tree.

From that framework came ideas such as the “Golden Arches Theory,” which held that middle- and high-income countries linked by commerce were less inclined to fight one another, and the theory of “democratic peace,” which argued that democracies tend to resolve disputes with one another by means short of war. Together, they offered a vivid explanation for a post-Cold War international order in which peace and development appeared to be the dominant themes.

That set of theories, grounded in wealth accumulation and material prosperity, has become less convincing as globalization has slowed and the international order has shifted from “Pax Americana” to “America First.”

The world’s story today has more layers, more complexity and more detours.

Start with the layers. The World Trade Organization and the annual conferences of the UN Framework Convention on Climate Change once reflected the world’s ambition to marshal humanity’s collective resources to address crises and spread prosperity. I reported on the UNFCCC summit in Copenhagen in 2009, when leaders of most major countries gathered in what felt like an unprecedented moment. China’s entry into the WTO in 2001 was likewise widely seen as one of the most important events in the organization’s history, helping create a period in which China and the world developed together and benefited from each other.

In recent years, however, the grand multilateral narrative has nearly stalled, and in some areas gone into reverse. The WTO is struggling. The annual U.N. climate meetings have produced limited progress and draw far less attention than they did a decade ago. Perhaps the biggest blow to this multilateral story has been the faltering of the once-ambitious U.N. 2030 Sustainable Development Goals.

The World Health Statistics Report 2026, released May 13, showed that global health development is uneven and slowing, with some areas moving backward. The report indicates the world is no longer on track to achieve any of the health-related sustainable-development targets by 2030. As countries increase defense spending in part by cutting international aid, indicators for global development and health could deteriorate further.

In place of sweeping multilateral frameworks, governments are turning to bilateral and plurilateral arrangements focused on defense, trade and supply-chain security. Australia offers one example. To protect its export-oriented economy, it has signed bilateral free-trade agreements since 2020 with India, the United Arab Emirates, Indonesia, Hong Kong SAR and Peru. It has also joined the China-led Regional Comprehensive Economic Partnership and recently completed a bilateral free-trade agreement with the European Union.

Since signing a free-trade agreement with neighboring New Zealand in 1983, Australia has concluded only 20 such deals in total. Canada Prime Minister Mark Carney’s call for middle powers to band together is another stress response among ‘like-minded’ countries at a time when the global narrative is losing momentum.

The second feature of today’s narrative is complexity. It isn’t only developing countries that worry about traditional culture and identity while pursuing growth and climbing the value chain. People in developed countries, which long dominated the global narrative, increasingly worry about losing their own central status.

The “take back control” message of Brexit a decade ago and the recent right-wing “Unite the Kingdom” demonstration in London were both filled with anxiety over immigration and fears that white majorities are losing their place. U.S. Vice President JD Vance has repeatedly said that European countries risk “civilizational suicide” because of their departure from traditional Christian values. Across major European countries, far-right parties have been leading in more opinion polls. The olive tree has been replaced by Victorian architecture.

The third feature is the detour. Europe, facing the rapid advance of China’s new-energy industries, including electric vehicles, is now pressing Chinese EV makers to build factories in Europe and transfer technology. Jake Sullivan, the former U.S. national security adviser, recently used Chinese-style terms such as “industrial policy” and “patient capital” in an essay in Foreign Affairs. Such language can make the world feel as if it has shifted into another era. Similarly, Beijing’s emergence over the past half year as a center of global diplomacy inevitably recalls Washington’s K Street narrative, shorthand for the lobbying corridor of the U.S. capital.

During U.S. President Donald Trump’s just-concluded state visit to China, the two sides affirmed a constructive strategic-stability relationship. In my view, that means the U.S., the world’s largest developed country, has for the first time agreed to define its most important bilateral relationship on an equal footing.

In 2013, Washington declined to accept China’s proposed concept of a “new type of great-power relations,” in part because it was seen as possibly ceding Asia-Pacific leadership to Beijing. Thirteen years later, what once seemed out of reach has returned: a relationship of equals.

A cottage industry of intermediary agencies is exploiting gaps in the system to skim government funds dedicated to helping recent college graduates start their own businesses.

When a student we’ll call Yu Dongdong returned to China to launch a jewelry design startup, she did what many young entrepreneurs do: she turned to social media for information about government subsidies available to recent graduates.

What she found were promises of “nearly 100% passing rates” for subsidy applications under “professional guidance” from specialized agencies. After signing a contract with one, she spent the next year discovering that the help she had paid for amounted to little more than template modifications and superficial packaging. The agency had also pressured her into renting office space from them — a requirement, they said, for qualifying for the subsidy — and assured her that a separate venue subsidy that never materialized would cover the cost.

By the time she tallied up service fees, commissions, and more than 34,000 yuan ($5,007) in rent, almost all of the startup subsidy she had worked over a year to obtain ended up in the agency’s pocket.

Yu’s story is no outlier. Across China, the rapid growth of government subsidies designed to encourage recent graduates to start businesses has spawned a shadow industry of intermediary agencies that insert themselves between young entrepreneurs and the funds meant to help them. The agencies typically market themselves on social media with promises of high success rates and professional guidance, but deliver little in exchange for fees and commissions that can consume a substantial portion of the subsidies.

As a record 12.7 million college graduates prepare to enter China’s job market this summer, the growth of this intermediary industry — which has already drawn the attention of regulators — has sparked concerns about whether it is taking advantage of graduates with dreams of starting their own business. It also raises a pointed question: how much of the government money dedicated to youth entrepreneurship is ending up in the hands of middlemen instead of the entrepreneurs it was meant to help?

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The perpetrator covers their face in court.

German courts have begun handing down lengthy prison terms in a series of drug-facilitated rape cases targeting Chinese women, exposing what investigators and court records describe as an international criminal network built around encrypted chat groups, anesthetic drugs, cross-border shipping and digital payments.

The cases, broken open through cooperation between German and Chinese police in late 2024, centered on a Telegram group whose members used coded language to discuss victims, drugs and sexual assaults. Women were referred to as “cars,” sedatives as “fuel,” and rape as “driving,” according to court records.

Most of the victims were Chinese women living in Germany, China or elsewhere in Europe. Some were unaware they had been assaulted until police contacted them after finding photos and videos on suspects’ devices.

“Only after the police called did she realize she had been raped,” said Magdalena Gebhard, a Berlin lawyer representing one of the victims.

A Telegram group becomes evidence

The main defendant, Dapeng Zhang, 44 years old, was sentenced by a Frankfurt court in February to 14 years in prison after being convicted of offenses including aggravated rape, dangerous bodily harm, attempted murder and possession of child sexual-abuse material. The court also ordered preventive detention after his sentence. Zhang has appealed.

Tong Zhou, 26, was sentenced by a Berlin court to five years and nine months in prison. Zhongyi Jiang, 28, was sentenced in Munich to 11 years and three months. A fourth defendant, Zhiting Shao, a medical student accused of giving drug-use advice to members of the group, is expected to be sentenced in Berlin in June.

Judges in the cases said the victims’ survival was largely a matter of chance. The defendants used combinations of powerful sedatives and anesthetics, sometimes in doses far beyond clinical use and without medical monitoring, creating risks of suffocation, respiratory failure and death.

The cases recall the French trial involving Gisèle Pelicot, who was repeatedly drugged by her then-husband and raped by dozens of men over nearly a decade. A German judge in the Munich case told local media that the Chinese-German cases were not isolated.

“This is not a Chinese phenomenon, nor a German or French phenomenon,” the judge said. “It is a global phenomenon.”

How the network worked

Court records describe Zhang as one of the central figures in the German cases. A Harbin Institute of Technology graduate who later studied computer science in Germany, Zhang had worked in corporate IT and, according to his LinkedIn profile, most recently at sports-car maker Lotus.

Friends described him as educated, restrained and helpful. Prosecutors described a different life online. Zhang had joined numerous Telegram groups where men exchanged videos, instructions and encouragement for drugging and assaulting women. He later became an administrator of one group that distributed sedatives and anesthetics to others.

Over more than three years, the Frankfurt court found, Zhang committed 12 attacks. His methods escalated from targeting acquaintances to posing online as a female renter seeking housing, then arranging apartment viewings and attacking women when he arrived. In one case, he left behind emergency contraception, intimate photos and a written threat that the images could be spread online if the victim resisted.

Police arrested Zhang in November 2024 in a supermarket parking lot near his workplace. Searches of his home and office found sedatives, anesthetics, wigs allegedly used in impersonation schemes and seven hard drives containing more than 170,000 image and video files, the court found.

Zhou, a mechanical-engineering student in Berlin, was convicted of sexually assaulting two women and secretly filming several others. Police found women’s underwear, syringes, sedatives and as much as two terabytes of video content at his residence, according to the Berlin judgment.

In online chats, Zhou boasted about filming victims and threatening them later, though his lawyer argued some statements were exaggerations intended to win approval from other men. The court rejected a defense effort to treat him under juvenile law, finding that his conduct reflected criminal intent rather than immaturity.

Jiang’s case showed how quickly the alleged online encouragement could turn into repeated attacks. Munich court records said he joined drug-facilitated assault chat groups as early as 2020 and later posted messages seeking “cars” in Europe. When police arrested him in December 2024, a female neighbor was asleep beside him. The court found he had assaulted her seven times.

Drugs, payments and shipping

Investigators said the network depended on access to drugs including triazolam, midazolam and sevoflurane. In China, triazolam and some midazolam products are strictly controlled psychiatric drugs; sevoflurane, an inhaled anesthetic used in hospitals, has drawn calls for tighter controls.

Court records said Zhang and others referred to a three-drug kit in coded terms. “Three” or “base” meant triazolam, “energy water” meant midazolam and “seven” meant sevoflurane. Members discussed dosing based on a victim’s weight and alcohol tolerance, according to the records.

Chinese cases reviewed by Caixin show a similar supply chain. In one 2020 case in Nanjing, Jiangsu province, defendants made and distributed GHB-laced liquids through a pyramid-style sales network. One producer sold 63,900 yuan ($9,380) worth of the drugs, while an intermediary collected 94,500 yuan, according to court records.

Chinese prosecutors have also cited a case in which an employee bought midazolam through overseas chat tools and obtained sevoflurane from inside a hospital. A hospital assistant later admitted stealing and selling 144 bottles of sevoflurane and 15 ampules of midazolam, earning 120,000 yuan, prosecutors said.

Lawyers and investigators say more recent trafficking often involves cross-border parcel delivery. Drugs are disguised as cosmetics, hair-care products, supplements or household goods and paid for through cryptocurrency or ordinary mobile-payment channels. In one case handled by Beijing lawyer Tang Jianbin, drug kits allegedly shipped from Germany to China sold for about 1,500 yuan to 2,500 yuan each.

Caixin also observed a Telegram channel with more than 15,000 subscribers openly advertising sedatives and hidden cameras. The channel listed pills at 78 yuan to 98 yuan each and claimed shipments came from Thailand. Some payments were routed through a WeChat mini-program disguised as betel-nut purchases.

Chinese judicial authorities have repeatedly warned that the combination of online transactions, parcel delivery and electronic payments has created loopholes for drug trafficking. Logistics checks are often weak, and sellers advise buyers to delete records after each purchase.

Victims left to rebuild

The German judgments said victims suffered severe psychological trauma. Some developed sleep disorders, panic attacks or fear of strangers. Others worried that images of the assaults had been shared online. Several had no memory of the attacks and learned what happened only after police recovered videos.

Gebhard, the Berlin lawyer, said her client was badly shaken when she first sought legal help with a social worker. After hospitalization, the woman’s condition improved, but she continued to struggle with sleep, panic and distrust of men.

The evidence also shocked court personnel. Gebhard said judges, prosecutors and police were stunned by the contempt for women shown in chat logs and videos. German media reported that several interpreters withdrew from one trial because of the material.

For investigators, the cases illustrated how online groups can turn violent fantasies into organized criminal practice. In the Frankfurt judgment, the court said the chat groups created a “group dynamic” that affirmed offenders’ fantasies, connected them with like-minded men and weakened their awareness of wrongdoing.

Tang, the Beijing lawyer, said that dynamic helps explain why the crimes can spread across borders. “Where there is demand, there is incentive,” Tang said.

U.S. business representatives, including Nvidia CEO Jensen Huang, Apple CEO Tim Cook and Citigroup CEO Jane Fraser, arrive at the Great Hall of the People in Beijing on May 14. Photo: VCG

U.S. President Donald Trump’s summit with his Chinese counterpart Xi Jinping in Beijing last week highlighted how deeply intertwined major American companies remain with the world’s second-largest economy despite years of geopolitical and trade tensions.

The business executives accompanying Trump came from industries at the center of U.S.-China competition — including finance, semiconductors, artificial intelligence (AI), consumer technology, biotechnology and aerospace.

Among the most closely watched were Nvidia Corp. CEO Jensen Huang, Apple Inc. CEO Tim Cook, Tesla Inc. and SpaceX CEO Elon Musk, Qualcomm Inc. CEO Cristiano Amon, BlackRock Inc. CEO Larry Fink, Goldman Sachs Group Inc. CEO David Solomon, Boeing Co. CEO Kelly Ortberg and Illumina Inc. CEO Jacob Thaysen, whose companies have immense stakes in China.

For some firms, the trip offered a chance to deepen access to a market that is opening its doors wider to foreign participation in areas like finance and payments. For others, it was an opportunity to revive businesses battered by export controls, regulatory scrutiny or safety concerns.

Taken together, the delegation reflected a broader reality: Even as Washington and Beijing remain locked in a strategic rivalry, many of America’s largest companies still view China as indispensable — whether as a lucrative market, a manufacturing base, a growth engine or a vital link in global supply chains.

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President Xi Jinping welcomes U.S. President Donald Trump outside the Great Hall of the People on May 14. Photo: Xinhua

Donald Trump’s recent state visit to China was his second trip to the country as president, last visiting during his first term in office in 2017. The face-to-face meeting between Trump and President Xi Jinping — tackling bilateral relations alongside pressing issues of global peace and development — has rightfully captured the world’s attention.

In an era of intensifying global turbulence, the strategic significance of the U.S.-China relationship has never been more pronounced. Bilateral interactions at the highest level provide an irreplaceable strategic framework. Beijing’s stance remains clear and consistent: It is ready to work with Washington in a spirit of equality, respect, and mutual benefit to expand cooperation, manage differences, and inject much-needed stability and certainty into a chaotic world.

During their encounter in October in Busan, South Korea, Xi made it clear that the world’s two biggest economies should be “partners and friends” — a mandate driven by both historical precedent and practical necessity. As the world’s leading economies navigating differing national conditions, friction and disagreements are inevitable.

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File photo: (From left) Sanae Takaichi, Donald Trump, and Lee Jae-myung. Photo: VCG

U.S. allies Japan and South Korea raced to arrange phone calls with Donald Trump immediately following the U.S. president’s three-day visit to China, eager to gauge the outcome of high-stakes talks between Washington and Beijing.

On May 15, the day Trump concluded his trip, Japanese Prime Minister Sanae Takaichi sought a call to discuss the summit. From aboard Air Force One en route to the U.S., Trump spoke with Takaichi for about 15 minutes, briefing her on the details of his meetings in Beijing.

Japan has long harbored anxieties over “Japan passing” — a scenario in which the U.S. bypasses Tokyo to engage directly with China on strategic issues that affect Japanese interests.

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Workers operate robots at an intelligent robotics industrial base in Qinhuangdao, Hebei province, on April 28. Photo: VCG

Generative artificial intelligence (AI) is rapidly reshaping the global economy, but economists warn the technology could widen inequality and disrupt labor markets before broad productivity gains emerge.

The growing tension between AI’s uneven productivity gains and its immediate impact on jobs is increasingly forcing policymakers to rethink how monetary policy, labor markets and social safety nets should function in an AI-driven economy.

Governments and companies have poured billions into AI on expectations it could boost long-term growth. Yet economists say evidence of economy-wide productivity improvements remains limited because adoption is still uneven.

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Sany Heavy Industry Co. Ltd. (600031.SH -4.30%), XCMG Construction Machinery Co. Ltd. (000425.SZ -6.66%) and Guangxi Liugong Machinery Co. Ltd. (000528.SZ -2.21%) have announced price hikes of 3% to 5% across their excavator lineups, taking effect between mid-May and early June.

The coordinated price increases signal an end to a bruising domestic price war as Chinese equipment makers shift their focus to restoring profitability amid sluggish downstream demand and rising global commodity prices.

Sany and Liugong plan to raise prices for all excavator models by 5% on May 15 and May 20, respectively. XCMG will increase prices for various models by 3% to 5% starting June 1.

In its notice, Sany cited significant cost pressures on manufacturers and suppliers driven by surging prices for steel, oil, rubber, copper and aluminum. Steel is a critical raw material for excavators. According to Mysteel, China’s composite average steel price index rose about 5.35% from early March to early May.

An industry association source told Caixin that excavators are the first products to see price hikes because intense competition had previously severely compressed profit margins, leaving manufacturers unable to absorb the rising costs.

The domestic excavator market became increasingly crowded in early 2026 as new entrants exacerbated the price war. Zoomlion Heavy Industry Science and Technology Co. Ltd. (000157.SZ -2.79%), traditionally focused on cranes, ramped up its excavator business.

The company said during its first-quarter earnings call that its new smart factory for micro and small excavators began operations in 2025, with products hitting the market in the first quarter of 2026. This prompted rival machinery makers to slash prices to defend their market share.

The aggressive discounting stimulated sales, with major manufacturers selling more than 73,000 excavators in the first quarter of 2026, a 19.5% year-on-year increase, according to the China Construction Machinery Association. Domestic sales rose 8.25%, while exports jumped 36.1%.

Despite the sales rebound, downstream demand faces significant headwinds. The domestic real estate sector is still adjusting. Data released by the National Bureau of Statistics on April 16 showed that national new housing construction fell 20.3% year-on-year to 104 million square meters in the first quarter, with residential starts dropping 22% to 74.2 million square meters.

Additionally, high oil prices following the outbreak of conflict in the Middle East have driven up operating costs for construction and outsourcing companies, suppressing equipment utilization rates and new procurement demand. The industry association source said higher oil prices have already put noticeable pressure on downstream construction activity.

The domestic price adjustments follow similar moves by global industry leaders Caterpillar Inc. and Komatsu Ltd. earlier in the first quarter of 2026. In a May 11 report, Century Securities noted that Chinese manufacturers are following the lead of their global peers, indicating the industry is gradually moving away from pure price wars.

The new round of price adjustments is sustainable, supported by high raw material prices and the foreign leaders’ hikes, and will help repair corporate earnings, the brokerage said.

Chinese President Xi Jinping holds a welcome ceremony for U.S. President Donald Trump at the plaza outside the east gate of the Great Hall of the People in Beijing on May 14, 2026. Photo: Xinhua

International relations experts and former diplomats are actively dissecting the newly minted “constructive strategic stability” framework emerging from U.S. President Donald Trump’s high-stakes summit with Chinese President Xi Jinping in Beijing Thursday. While the grand scale of the state visit drew immediate global attention, leading political scholars emphasize that the summit’s true weight lies in its long-term strategic implications.

For Jia Qingguo, a professor at Peking University’s School of International Studies and a Standing Committee member of the Chinese People’s Political Consultative Conference, the Beijing summit is about more than just risk management. It sets the tone for the long-term trajectory of bilateral ties.

“The key phrase is ‘constructive strategic stability,’ Jia explained. “‘Constructive’ indicates we will actively promote cooperation and make it the main aspect of U.S.-China relations. ‘Strategic’ shows China is adopting a broad, long-term perspective. ‘Stability’ means the two sides need to manage differences and avoid miscalculations and conflicts to achieve lasting peace.”

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Vessels sail in waters near the Strait of Hormuz on May 5, 2026. Photo: VCG

* The U.S. wants global buyers for American oil paid in American dollars.

* Some in Washington see leaving the Middle East as a chance to reset security and boost U.S. energy.

* Central banks are diversifying, opening space for the petro-yuan.

The evolution of the global monetary system is the history of shifting credit anchors. From the gold standard to the petrodollar, every transition is born of crisis. Today, the escalating conflict in the Middle East is quietly driving the next great monetary realignment.

In early 2026, the eruption of conflict between the U.S. and Iran led the Islamic Revolutionary Guard Corps to effectively blockade the Strait of Hormuz. Traffic plummeted, and the vessels that do pass are reportedly paying tolls to Tehran. The traditional energy corridor — safeguarded by the U.S. Navy and priced in dollars — is fracturing.

This placed U.S. President Donald Trump in a bind. Military intervention risked severe casualties and a spike in oil prices that could crash capital markets, while a retreat risked a crisis of confidence in the petrodollar.

In his April 2 national address, Trump effectively announced a loosening of the old monetary order. By noting that the U.S. relies little on Middle Eastern oil and suggesting allies buy abundant American crude instead, the administration signaled a pivot: Washington is no longer willing to unconditionally guarantee Middle Eastern shipping lanes. The U.S. wants the world to buy American oil with American dollars.

This is a political gamble to replace the Middle Eastern petrodollar with an Americas petrodollar.

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In the golden midday light of early summer on May 14, Chinese President Xi Jinping and visiting U.S. President Donald Trump stood shoulder to shoulder before the Hall of Prayer for Good Harvests at Beijing’s Temple of Heaven, capturing a moment laden with historical symbolism.

The carefully staged meeting marked the 13th visit by a sitting U.S. president to China since Richard Nixon’s landmark trip in 1972, and Trump’s second visit as president. Against a backdrop of intensifying global turbulence — including a prolonged trade war and mounting geopolitical tensions — the summit underscored the strategic weight of the U.S.-China relationship.

The three-day state visit, described by both leaders as “historic,” produced a new framework for bilateral ties. Xi and Trump agreed to pursue what they called a relationship based on “constructive strategic stability,” one aimed at stabilizing interactions between the world’s two largest economies while expanding cooperation in areas ranging from trade to technology and managing deep-seated differences.

The stakes are high. The U.S.-China relationship, often compared by officials to a massive ship navigating rough seas, is emerging from another year of difficult trade negotiations and tariff disputes. The geopolitical backdrop has become increasingly complicated, shaped in part by U.S. actions in Venezuela, Cuba and the Middle East, including the conflict with Iran that briefly delayed Trump’s Beijing trip.

As the world’s two largest economies, China and the United States face intertwined challenges spanning technology competition, geopolitical rivalry and critical economic exchanges. The relationship between Beijing and Washington has long extended beyond the bounds of a traditional bilateral relationship, becoming one of the defining variables shaping the global order.

U.S. President Donald Trump departs Beijing aboard Air Force One on the afternoon of May 15, 2026, following the conclusion of his state visit to China. Photo: VCG

“This is the most important bilateral relationship in the world today,” Xi said during a state banquet at the Great Hall of the People on May 14. “China and the U.S. both stand to gain from cooperation and lose from confrontation. We should be partners, not rivals.”

Trump echoed the sentiment, toasting “the deep and lasting friendship between the American and Chinese people” and describing the bilateral relationship as “very special.”

A high-profile return

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Students enter the school grounds on the first day of the new semester in September 2022 in Guangzhou, South China’s Guangdong province. Photo: VCG

China is attempting to dismantle one of the most entrenched hierarchies in its schools: sorting students into academically ranked classes.

Under new policies rolled out in 2026, education authorities are mandating “sunshine class placement,” which requires students be assigned to classes randomly and teachers to be distributed evenly. The rules explicitly prohibit the creation of “key classes,” elite streams that have long concentrated top students and teaching resources.

The reforms are part of a broader push to reduce inequality in compulsory education, which includes primary and junior high school. But they are colliding with a deeply embedded system that has for years shaped how families compete for advantage, and how schools manage students.

A hidden hierarchy

So-called key classes function as internal academic tiers.

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Chinese President Xi Jinping holds talks with U.S. President Donald Trump at the Great Hall of the People in Beijing on Thursday morning during Trump’s state visit to China. Photo: Xinhua News Agency

Chinese President Xi Jinping and U.S. President Donald Trump agreed to recast the relationship between the world’s two largest powers under a new banner of “constructive strategic stability,” according to the state-run Xinhua news agency, signaling an effort to manage fierce competition and expand economic cooperation following talks Thursday in the Chinese capital.

Meeting at the Great Hall of the People, Xi told Trump that the two nations must determine whether they can avoid the Thucydides Trap — a historical tendency toward conflict between a rising power and a ruling one — and forge a new paradigm for major-power relations.

Xi said the new designation of a “constructive strategic stability relationship” will serve as a strategic guide for bilateral ties over the next three years and beyond.

“Constructive strategic stability is not merely a slogan, but requires actions of moving toward each other,” Xi said. He defined the concept as “sound stability with moderate cooperation, a constant stability with manageable differences, and an enduring stability with promises of peace.”

Business leaders join the diplomatic push

Emphasizing the economic stakes, the summit featured an unusually direct role for American corporate chieftains.

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The shift marks a potential inflection point for an economy that has faced prolonged deflationary pressure, though the durability of the recovery remains uncertain.

Data released by the National Bureau of Statistics (NBS) showed that the producer price index (PPI) rose 0.5% year-on-year in March, ending 41 consecutive months of decline. Month-on-month, the PPI has risen for six straight months, with March recording the fastest increase in four years.

The pickup has narrowed the gap between nominal and real growth, with nominal GDP rising 4.94% year-on-year in the first quarter, close to the 5% real growth rate.

The turnaround has been driven in part by external factors. Following the outbreak of conflict in the Middle East, global commodity prices, particularly crude oil, rose sharply, feeding into China’s industrial price system. Domestic factors have also contributed, including an improvement in supply-demand dynamics and policy efforts to curb excess capacity in key industries.

Mao Shengyong, a deputy head of the NBS, noted at an April 16 press conference that improvements in domestic demand linked to industrial upgrading, particularly in areas such as artificial intelligence and green transformation, have supported price increases in some sectors.

Capacity controls in industries such as photovoltaics and new-energy vehicles have also helped stabilize pricing after prolonged periods of intense competition.

Even so, the recovery remains uneven. The recent rise in prices has been concentrated in upstream sectors, particularly energy and raw materials, while downstream industries and consumer prices have yet to see a comparable improvement. Consumer price data for March came in below expectations, with declines in both food and service categories.

This divergence reflects a broader challenge. While supply-side shocks can lift prices in the short term, sustained inflation requires stronger demand and the transmission of price gains downstream.

At present, that transmission remains limited. Rising input costs are being absorbed by midstream and downstream companies, many of which lack the pricing power to pass increases on to consumers. This has created a gap between production and consumption prices and placed pressure on corporate margins.

The underlying issue is that domestic demand has yet to recover sufficiently. Despite steady economic growth, income expectations remain subdued, and consumption has been slow to pick up. The labor market has shown signs of strain, with the surveyed urban unemployment rate rising to 5.4% in March. Meanwhile, growth in household income has lagged overall economic expansion, and consumers’ willingness to spend has declined.

The ongoing adjustment in the real estate sector has affected household balance sheets and local government finances, limiting both consumption and investment. At the same time, the services sector, which has significant potential for job creation, remains constrained by regulatory and structural barriers.

Policy discussions have increasingly focused on how to sustain the current price recovery. Some economists have emphasized the need for stronger fiscal support, employment stabilization and measures to boost income expectations.

In the near term, external factors may continue to support producer prices. Market expectations suggest that commodity prices will remain elevated, keeping the PPI in positive territory. However, without a corresponding improvement in domestic demand, the broader price environment is unlikely to shift decisively.

Nearly 20 prominent U.S. business executives are joining President Donald Trump on his state visit to China this week, seizing a rare high-level diplomatic opening to advance business priorities in a market that has become harder to navigate amid rising geopolitical tensions.

The delegation spans the technology, finance, aerospace and agriculture sector. But for several companies including Nvidia Corp., Meta Platforms Inc., Boeing Co., Apple Inc., Tesla Inc., Illumina Inc. and Micron Technology Inc., the trip comes at a crucial moment as each faces a different China challenge.

China’s foreign ministry announced Monday that Trump will make a state visit to China from Wednesday to Friday at the invitation of Chinese President Xi Jinping. Trump is scheduled to meet with Xi on Thursday and Friday.

Nvidia: A closely watched late addition

Nvidia CEO Jensen Huang was not on earlier versions of the reported business delegation list.

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U.S. Secretary of State Marco Rubio (right) and European Commissioner for Trade and Economic Security Maros Sefcovic (left) attend the signing ceremony for the U.S.-EU Memorandum of Understanding on a Strategic Partnership on Critical Minerals at the State Department in Washington, D.C., on April 24, 2026. Photo: VCG

On April 24, the U.S. and the European Union signed a memorandum of understanding in Brussels on critical minerals cooperation. This move is not merely an economic and trade coordination effort; it marks a crucial step across the Atlantic in the realm of resource security, attempting to reshape the global critical mineral supply chain landscape through institutionalized partnership.

That day, Secretary of State Marco Rubio and EU Trade Commissioner Maros Sefcovic co-signed the MOU on producing and protecting critical minerals, simultaneously unveiling a more operational trade action plan. In truth, critical minerals have long ceased to be a simple resource issue — they are now the strategic fulcrum embedded in high-end supply chains, from semiconductors and electric vehicles to advanced weapons systems.

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Employees rush to complete export orders in the chip testing workshop of a semiconductor company. Photo: VCG

Since the start of 2026, major economies have posted export figures that broadly beat market expectations. But peel back the aggregate data, and a stark reality emerges: global trade is not experiencing a broad-based recovery. Instead, it is being single-handedly propelled by the artificial intelligence boom.

AI-related products have become the core engine of China’s export growth. In the first quarter of 2026, AI exports accounted for more than half of the country’s unexpected export surge. During this period, AI-related export growth rebounded to 40.2% compared to the fourth quarter of 2025. This robust performance lifted China’s total export growth to 17.1%. If we strip out AI-related goods, that overall growth figure drops dramatically to a mere 9.8%. Consequently, AI products now make up nearly 22% of China’s total exports.

This is not an exclusively Chinese phenomenon;

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