October 26, 2026
Overview
Domestic
China's Declining Housing Market
By Contributor Lily Rabb
The six year housing slump in China continues to threaten it's national growth, with little sign of improving.
Visual interpretation of China’s slumping economy (via. Newsweek)
Overview: In September, China's new home prices fell again, extending a more than three year slump that began in 2023. Home prices have dropped .1% month by month, turning into one of China’s biggest economic challenges. The housing market accounts for over 30% of all economic activity in China, and so loss of trust in the market curbs national growth. Real estate makes up nearly 70% of China's household wealth. In contrast, in the US it makes up barely 35%. The value of housing has cut household spending by 1.5-2.3%, combined with China's 20% (official) to 40% (unofficial) property price declines, creating a loss of 2-4% in GDP. Falling home values make households feel poorer, which makes them spend less even if income hasn’t changed. Finally, China's fast aging population and low starting income level could make the transition out of the decline even harder.
What China is doing: One way the Chinese government is combating it is by instructing authorities to prioritize completed home sales on newly sold land. While this is effective in large like Shanghai, smaller cities still remain weak. Bigger cities are likely to bounce back, as they have eased home buying restrictions and introduced incentives such as subsidies, which the Central Bank introduced in late September. The policy capped the purchase price of eligible homes at 1.5 million yuan ($224,417), this is hardly enough to acquire a small apartment in a large city, but is a potential step forward. ‘We anticipate nationwide home prices will stabilize over the next one to two years’ Zhu Lu stated, chief economist at Soochow Securities.
What experts say: Global investment banks, like Goldman Sachs and Citi state they expect the sector to pivot as soon as 2027. This is supported by the robust sales over the National Day golden week (the week from October 1-7 where China experiences extended public holidays). According to the national bureau of statistics, Shanghai is on a growth track with prices rising .8% yearly. Goldman Sachs shared the positive stance, with the bank predicting four pivot points for the housing market through 2035.
Trade
EU-China Trade Tensions
By Contributor Donald Webster
Image from SCMP
Tumoltuous relationship: The European Union (EU) and China have found themselves in a heated trade battle over the fate of European Automotive Manufacturing in the face of Chinese expansion into the market. The EU has fallen into line with the United States in combatting the global growth of Chinese automotive manufacturing. While not putting full restrictions on Chinese automotive exports the EU has chosen to put quotas on China’s industry hoping to protect its core industry.
A tale of two industries: Over the past 20 years China has made massive advancements in its EV market. Through massive pushes by national and local governments China used subsidies, credits, and priority perks to supercharge its transition to EV manufacturing. This took China from being 1% of global automotive production to 33%. The subsidies made Chinese automobiles surprisingly cheap undercutting petrol-powered alternatives. With the plateauing of its domestic market many Chinese auto manufactures have looked towards international markets to sell their cars. Comparatively, the EU has seen a stark decline in its automotive industry over the past 20 years. While being a historic staple of the European market, automotive giants such as Volkswagen and Renault have not been able to keep up with the market changes towards EV. Volkswagen, being hit particularly hard, had to close its first factory in its history. The decline of its automotive industry has caused the EU to respond cautiously to China’s push for Chinese cars in the European market.
The tightrope of trade and sovereignty: The EU has attempted to be diplomatic with China, while not completely banning Chinese EV’s, as has effectively happened in the US. Through pursuing a quota policy the EU is giving time for its automotive industry to catch up to China. China is of course not happy with this outcome, as it hopes for full access to the European market. This reveals a tightrope the Europeans must walk to simultaneously protect its national interests and not anger key trading partners. Europe does not want to lose one of its most important staple industries, however the question becomes what are Europeans willing to concede to continue their relationship with China?
Diplomacy
A Rising Sun Flag in Moscow Reopens Old Wounds
By Contributor Lila Bates
Student Wears Japanese Imperial Flag (via South China Post)
Background: Moscow State University has reportedly launched an investigation into a Chinese student who allegedly wore the Japanese Rising Sun flag to class. The flag is a symbol widely associated with Japan’s aggressive, militaristic past. A photo of the student’s back circulated online, and it also shows a military cap on the desk beside him.
The student, surnamed Chen, has a troubling online presence. Classmates shared screenshots of his WeChat account that reveal an intense fascination with the Japanese military. His profile photo shows him in traditional Japanese clothing, and his status quotes lyrics from the school song of the former Imperial Japanese Naval Academy. The academy trained many notorious Japanese war criminals during the Second World War.
Historical Relevance: This public admiration is in poor taste for several reasons. Chen is from Nanjing, where Imperial Japanese troops carried out a horrific massacre in 1937 as they invaded China. Authorities put the death toll above 300,000, and historians estimate that tens of thousands of women were raped. Anger over Nanjing still strains Chinese-Japanese relations today. Governments around the world have disputed and exploited the massacre’s true nature for propaganda, and some people claim the numbers were inflated while others deny that it happened at all. The Japanese government acknowledges that noncombatants were killed, but it has never issued a formal apology specifically for Nanjing.
Diplomacy: Chen’s actions are also damaging to Sino-Japanese diplomacy. Relations between the two countries already rest on fragile, unresolved historical grievances. When a Chinese citizen from Nanjing glorifies the symbols of the army that devastated his own hometown, he inflames public anger in China and hands ammunition to nationalists on both sides. He also gives Japanese revisionists a convenient way to deflect criticism, since they can point to the incident as proof that the controversy over wartime symbols is overblown.
Most troubling of all, his behavior further complicates the question of Japanese
accountability. For decades, Japan has avoided fully confronting its wartime atrocities. Textbook disputes, visits by politicians to the Yasukuni Shrine, and the absence of a specific apology for Nanjing have all fueled Chinese frustration. Chen’s actions trivialize the suffering of victims and their descendants, and they muddy a moral argument that already struggles to gain traction. Accountability requires honest reckoning, and treating the symbols of aggression as a fashion statement or fascinating point in history undermines it.
Real reconciliation between China and Japan will not come from provocations like this one. It will come from honest acknowledgment of the past, especially by the government that has long avoided it. Until that happens, the Rising Sun flag will remain more than a piece of fabric draped around a student’s back.
Economics
China's Third Quarter Economic Growth Increases to 4.5%
By Contributor Max Low
China’s GDP growth rate on the year rose to 4.5% this fiscal quarter, thanks to China’s booming export sector. However, continued domestic economic weakness makes some observers wary.
China’s artificial intelligence industry was a major contributor to sustained export growth. (via. South China Morning Post)
A Much-Needed Win: Last Monday, China’s National Bureau of Statistics released national economic data for the third fiscal quarter of 2026, reporting a 4.5% GDP growth rate between July and September. This came as a significant bounce back from the prior quarter’s growth rate of 4.3%, which was a three-year low for China. Much of this success can be attributed to China’s flourishing export sector. Strong export demand for electronics, AI-related equipment and automobiles helped China’s monthly trade surplus climb to a record high of $133.5 billion, acting as a buoy for GDP growth even as domestic economic problems persist. This quarter also moved China’s average economic growth on the year back up to 4.6%, keeping them on track to hit their target growth rate of 4.5-5%.
The Export Boom: The growth experienced by China’s export sector last month marks its largest in 16 years, largely driven by increasing international demand for technology amid a global AI boom. Though China has long been a manufacturing powerhouse, only recently have they become a giant in the international tech trade. Over the last ten years, China’s central leadership has made massive investments in hi-tech manufacturing industries in an attempt to help China achieve technological self-sufficiency and climb the so-called “value-added ladder.” These policies have catapulted China to the very frontier of global technological development. In fact, in key industries it is now the West looking to China for technology—not the other way around, as it once was.
Domestic Issues Linger: Though this quarter’s GDP growth rate represents a significant win for China, other economic data released last Monday paints a more mixed picture. Namely, many of the domestic economic problems that stagnated last quarter’s growth rate were still present, including low consumer spending, weak investment levels, and a prolonged housing crisis. These problems are nothing new. China has long been faced with low consumer spending, and the current housing crisis is entering its fifth year. In response to these less-inspiring revelations of Monday’s report, China’s top economic planner, Zuo Gang, promised to redouble efforts to boost domestic demand.
Domestic Affairs
An Era of Indoctrination: The Politics of China's New Textbooks
By Contributor Peter Huang
Since the start of China’s fall semester in September, internet users have drawn attention to revisions and existing contents in textbooks published by People’s Education Press (人民教育出版社), a major Chinese publisher of compulsory primary and secondary school teaching materials. The changes include the omission of key passages from the Declaration of Independence, and the addition of an essay by Xi Jinping.
A page of the 2022 edition of Morality and the Rule of Law (道德与法治), the fifth-grade textbook for the first semester. (via. X)
Textbook Revisions: Comparison Circulating online show two notable changes published by People’s Education Press. In the ninth grade world history lesson on American independence, the earlier excerpt of The Declaration of Independence included a translated Chinese quote “That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government”. The revised excerpt skips this quote and discussion of consent of the governed, using an ellipsis to transition to the colonies’ declaration of independence from Britain.Additionally, the table of contents of a high-school Chinese-language textbook shows that the first unit now includes Xi Jinping’s “Deeply Understanding the Significance of the ‘Two Integrations’” (深刻理解“两个结合”的重大意义), in which he talks about the integration of Marxist ideology with traditional Chinese culture to promote China’s modernization. Rousseau’s “Compassion Is Human Nature,” previously included in the same unit, no longer appears there, while readings by Engels, Mao Zedong, Zhang Dainian, and Plato remain.
Who Gets to Judge Whom: The omitted quote of the Declaration of Independence in the history textbook explains where legitimate political power comes from, and when people have the right to take it back. Students learn that the American colonies rejected British rule, but not the equally important idea that rulers, no matter if they are British or Chinese, are accountable to the people they govern. The Chinese-language textbook makes a different choice with a similar effect. Xi Jinping’s political doctrine takes over the place of Rousseau’s discussion of compassion. These choices point to an educational system that gives communist party doctrine pride of place while leaving students less room to question how political power should be used.
Making Loyalty Unquestionable: These examples fit a broader pattern: school materials increasingly treat loyalty to the Party as a primary component to student education. The 2022 edition of the fifth-grade textbook Morality and the Rule of Law, for instance, devotes its first-semester volume to Communist Party history, victories in the civil wars, reform and opening up, and the progressing reunification. In one illustrated classroom exercise, a student says that the Party has kept its promises and won the people’s affection. That framing blurs three different things: China, the Chinese people, and the party that rules them. When national achievements are repeatedly offered as proof of the Party’s legitimacy, criticizing the government can begin to look like betraying the country. The underlying issue, therefore, is whether students are being taught to criticize or praise the authority, or to repeat its preferred story about itself.
Diplomacy
China-North Korean Border Bridge Opens
By Contributor Andrea Tseng
The New Yalu River Bridge connecting Dandong and Sinuiju (via New York Times)
Long Delayed:A new 3026-meter, four-lane bridge connecting China and North Korea across the Yalu River is poised to open after more than a decade of delays. Although China completed its side of the bridge in 2014, North Korea’s unfinished customs and immigration facilities stalled the project. The bridge is designed to facilitate trade and transport heavy equipment, raw materials, and energy products in North Korea, while improving border clearance procedures. Its opening would also provide a boost to Dandong, China’s primary trade gateway to North Korea, which has been affected by the prolonged delay.
Growing Ties: The bridge’s anticipated opening reflects renewed diplomatic and economic engagement between the two countries. High-level exchanges resumed following Kim Jong Un’s September visit to Beijing, after President Xi visited North Korea in June. Xi has called for the full reopening of border trade crossings, while China’s Foreign Ministry has emphasized the need to “facilitate economic trade and people exchanges.” The two countries could explore expanded imports of N. Korean products, employment opportunities, and arrangements allowing firms to process goods for Chinese companies. These developments come as China remains N. Korea’s largest trading partner, despite UN sanctions imposed over Pyongyang’s nuclear and missile programs.
Cost:Despite the potential benefits, deeper trade ties could leave N. Korea increasingly dependent on China. While the new bridge would improve logistical efficiency, it could also accelerate the influx of Chinese goods into N. Korea’s economy that is already facing a trade deficit of $1.85 billion with China. International sanctions have restricted N. Korean exports like coal, seafood, and textiles, while imports of Chinese raw materials and goods have increased. There is no guarantee that improved infrastructure will enable N. Korea to expand its exports enough to offset this imbalance. Therefore, Pyongyang may have limited incentive to accelerate the bridge’s opening or deliberately allow the project to stall to preserve leverage in negotiations with Beijing. Ultimately, the bridge represents both an opportunity for economic cooperation and a potential source of strategic vulnerability for N. Korea.
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