China bans four New Zealand MPs over Taiwan visit (BBC)

Following their trip to Taiwan in May, four New Zealand Members of Parliament were banned to travel to China for one year. This is the first time that Beijing retaliates beyond rhetoric against New Zealand’s regular exchanges with Taiwan. According to the Chinese embassy, an official apology would lift the restrictions. The MPs in question, however, consider the ban as foreign interference and refuse to apologize. (2026/06/04)

China restructures Taiwan Affairs Office (AsiaToday)

The government in Beijing recently restructured the State Council’s Taiwan Affairs Office by renaming the 12 functional bureaus and establishing one additional department. The new 10th Bureau is exclusively designated for overseeing education and employment for Taiwanese residents in mainland China. It is part of a larger effort to attract young talent and skilled professionals to the mainland. (2026/05/29)

Young Chinese are learning about the Tiananmen protest in unexpected ways (Washington Post)

Despite China’s highly sophisticated internet censorship, traces of the Tiananmen massacre still surface from time to time in unexpected ways and trigger discussions, particularly among younger Chinese. A recent example are reports about US figure skater Alysa Liu and her Chinese parents who fled to the US after the 1989 protests. The case sparked renewed interest in the crackdown of the protests among young netizens on the mainland who learned about the incident for the first time. (2026/06/04)

Xi Jinping’s right hand man Cai Qi becomes head of Central Party School (Reuters)

Cai Qi’s appointment as head of the Central Party School suggests that he might be Xi’s most trusted ally among the current top leadership. As member of the Politburo Standing Committee and Xi’s de facto chief of staff, Cai is one of the most powerful officials in China. The position as head of the Central Party School had served as a stepping stone to both Xi Jinping and Hu Jintao in the past. While 70-year-old Cai will probably not climb up much further in the hierarchy due to his age, the appointment signals the level of trust in him by the top leadership. (2026/06/05)

Chinese researchers develop autonomous drone swarms (SCMP)

A team of Chinese scientists has developed a new algorithm that allows drones to act autonomously even when communication to drone pilots or vision is blocked. Unlike conventional drones, the new algorithm can allegedly distinguish between friend, enemy or terrain. Large drone swarms could therefore independently scan vast areas and eliminate targets within seconds. (2026/05/30)

US companies prefer China’s DeepSeek over pricey Silicon Valley AI (SCMP)

Chinese artificial intelligence start-up DeepSeek replaced its more expensive US rivals OpenAI and Anthropic at the top of a major US business spending index. DeepSeek’s rising popularity is part of a broader trend among US companies to use more affordable open-source models that offer services at a fraction of the cost compared to proprietary models. (2026/06/04)

Li Qiang warns against excessive investment in future industries (Trivium)

At a State Council meeting on China’s future industries initiative, Premier Li Qiang encouraged local governments to invest into future industries. At the same time, he voiced concerns about herd-like investment behavior and warned against excessive investment into just a small number of industries, which leads to overcapacities and waste in sectors including EVs, solar, and embodied AI. However, issuing warnings might not be enough to solve structural issues in investment incentives for local governments. (2026/06/08)

Companies in China receive eight times more subsidies than OECD average (Financial Times)

A new OECD report finds that Chinese companies in key sectors such as automotive, shipbuilding and solar receive eight times more state support on average than their competitors in OECD countries. The report also attributes around 60 percent of Chinese companies’ gains in global market share during the past 20 years to these subsidies. The researchers’ concerns about unfair competition might fuel further defensive measures by the EU as well as retaliation by Beijing. (2026/06/01)

First female becomes financial regulator’s Party Secretary (Reuters)

Veteran banker Ding Xiangqun is the first female to be appointed Party Secretary of the National Financial ‌Regulatory Administration (NFRA). After several high-ranking financial officials were removed from their positions in recent months based on corruption charges, Ding’s appointment is meant to stabilize the NFRA. China’s top financial regulatory body overseas a financial sector worth $79 trillion. (2026/05/29)

Acknowledgements

We would like to thank MERICS interns Pau Garcia and Clara Groth for their contributions to this issue of MERICS China Essentials.