Welcome back to China Insights Weekly. Here are some of the key takeaways from this edition:
The share of new energy vehicles reached 63%, and even 81% for domestic brands.
World Cup merchandise is booming, from Labubu dolls to Messi jerseys.
Xiaomi is automating EV charging using a robotic arm.
Yangtze River will receive $11 billion in upgrades thanks to the "water ladder" project.
Top News
China's exports, driven by the AI boom, exceeded expectations and grew by 20% (link)
In May, China's exports jumped 19.4% year-on-year, exceeding expectations and accelerating from April's 14.1% growth. The main driver was the global AI boom: memory chip prices rose 20% month-on-month, helping to boost integrated circuit exports by 111%. High-tech products jumped 50.9%, and car exports rose 39%. Imports also rose by 27.4%, and the trade surplus widened to $105.4 billion. However, exports of furniture, toys, and shoes are weakening, and imports of oil fell 29% to an eight-year low. Nevertheless, the trend is clear. China's massive manufacturing base, deep supply chains, and dominance in chips and clean technologies are transforming AI demand into a trade superpower. Exports remain the main engine of economic growth. The world is still buying what China makes, especially when it's smart.
The boom in Chinese biotech outlicensing is expected to reach $240 billion by 2026, 76% more than last year (link)
Chinese biotechnology is no longer just a supplier of cheap research. The value of licensing agreements with Western pharmaceutical companies is expected to reach $240 billion in 2026, compared to $136 billion in 2025. Analysts are now asking: which local company will be the first to sell its own branded drugs abroad? The main contenders include Hengrui, the largest Chinese pharmaceutical company by market capitalization, CSPC, and Hansoh. Hengrui recently signed an oncology agreement worth $15.2 billion with Bristol Myers Squibb, and CSPC signed an agreement for weight loss drugs worth $18.5 billion with AstraZeneca. U.S. tariffs of up to 100% on imported patented drugs are pushing European buyers to look for cheaper alternatives, which opens up opportunities for Chinese quality at competitive prices. Analysts say it may take 10 to 15 years, but the race to become the "Chinese Pfizer" has already begun. The prize is a share of the world's most profitable pharmaceutical market.
General Mills is transferring its Häagen-Dazs ice cream business in China to a local tea chain (link)
General Mills has granted a license for its Häagen-Dazs ice cream stores in mainland China to a consortium led by Ningji, a rapidly growing tea chain backed by ByteDance and Tencent. Ningji, founded in 2021, already has 1799 branches across China, while Häagen-Dazs has only 262. The number of stores for the premium brand has been declining for years; competitors, such as DQ, already have over 1800 branches. Foot traffic has plummeted by double-digit percentages, and profit margins are low. General Mills will retain ownership of the broader Häagen-Dazs retail and food service operations, but the licensing agreement transfers the network of brick-and-mortar stores to local operators. This is a clear signal that foreign consumer brands are losing ground to more agile domestic rivals, and that Chinese chains are moving into the premium segment by acquiring established names.
The share of new energy vehicles in China reached a record high of 63% in May (link)
In May, the retail share of new energy vehicles (NEVs) in China reached a record high of 62.9%, even though overall NEV sales declined year-on-year by 7.5% to 950,000 vehicles. This paradox is explained by the rapid collapse of the internal combustion engine (ICE) market: total passenger vehicle sales plummeted by 22.1% to 1.51 million, with sales of conventional ICE cars falling by 39%. For domestic Chinese brands, the NEV share rose to 81.4%. Battery electric vehicles bucked the trend, increasing by 3.9% to 637,000 vehicles, while plug-in hybrids and extended-range electric vehicles declined. Overseas demand is growing rapidly: NEV exports jumped by 112.6% to 424,000 vehicles, accounting for a record 54% of all passenger vehicle exports. BYD remained the undisputed leader with 207,372 domestic retail sales. The Chinese automotive market is no longer in a transitional phase; it is dividing into two parts, and gasoline cars are disappearing faster than anyone expected.
China is profiting from the World Cup frenzy thanks to specialized merchandise (link)
Sales of World Cup merchandise in China surged just before the kickoff. Collaborations between Pop Mart's "The Monsters" series and the tournament turned Labubu dolls, vinyl plush keychains, blind-box accessories, and other products into instant hits; the best-selling item is the "Catch the Win" plush toy in a special jersey. Domestic Argentina jerseys are disappearing from shelves due to speculation that this may be Lionel Messi's last World Cup. Hotels with rooms equipped with large screens saw a 47% increase in bookings on the opening day, with weekend occupancy exceeding 90%. However, Chinese beer brands largely missed out on the tournament: matches are played from midnight to late morning Beijing time, which dampens demand for beverages. Breweries are instead pouring money into popular local leagues. While the World Cup is a global event, the Chinese consumer landscape is becoming increasingly localized.
China is rewriting the rules for its $3 trillion global capital (link)
Beijing issued its first comprehensive regulation on foreign investment on June 1st, which will take effect on July 1st. The rules formalize the national security review system, prohibit the use of foreign projects to export prohibited goods or technologies, and for the first time extend oversight to individual investors. The framework aims to balance China's accumulated foreign direct investment of three trillion dollars by the end of 2024 with growing concerns about technology leakage and geopolitical tensions. The battery factory in Michigan, supported by Ford and CATL, illustrates how new structures are emerging, such as licensing and royalty models, designed to help navigate a complex environment. In May, Beijing blocked the acquisition of the AI startup Manus by Meta, citing regulatory arbitrage. The message is clear: Chinese capital must go abroad, but according to Beijing's rules, with stricter oversight and harsher penalties for non-compliance.
Chinese company Xiaomi has unveiled a robotic arm for remote and automated home charging of electric vehicles (link)
The Chinese electric vehicle ecosystem is rapidly automating the last hurdle to ownership: plugging in the charging cable. Xiaomi has unveiled a robotic charging arm ready for mass production and designed for home use, with a commercial launch planned for the fourth quarter of 2026. The arm is designed to integrate with smart parking systems, automatically recognizes the vehicle's position, connects the cable, and disconnects it when charging limits are reached, all controllable via a smartphone. The demonstration, filmed in a real-world environment, not a laboratory, suggests that wireless charging is approaching market reality. Xiaomi is not alone in this race to eliminate the inconvenience of "fueling." Competitors are aggressively developing similar integrations; Li Auto is testing its own charging robot, while the Harmony Intelligent Mobility Alliance demonstrated a comparable system with the Aito M8 model last August. As the Chinese electric vehicle market matures, the battleground is shifting from battery range to seamless, AI-driven convenience for customers.
China wants to eliminate a bottleneck on the Yangtze River with an $11 billion "water staircase" project (link)
The Three Gorges Dam has become a victim of its own success. The volume of cargo passing through its aging locks reached 173 million tons in 2025, significantly exceeding the designed capacity of 100 million tons. Therefore, China has launched a project worth 77.2 billion yuan, or 11.4 billion US dollars, to alleviate the transportation bottleneck by building a new, two-way, five-stage ship lock. It will be 6.68 kilometers long and will allow vessels with a carrying capacity of 10,000 tons to pass through, doubling the annual throughput to 336 million tons. The construction will take 112 months, or 9.3 years. The project, included in the fifteenth five-year plan, aims to facilitate logistics along the longest waterway in Asia, which connects inland industrial clusters with the coast. For an economy built on connectivity, relieving the Yangtze River is not just a technical achievement; it is a growth imperative.
Chinese independent film "Dear You" is heading for a global theatrical release (link)
“Dear You,” a family drama in the Teochew dialect, became one of the biggest Chinese hits of 2026, grossing over 1.5 billion yuan, or 222 million US dollars, and ranking second only to the film “Pegasus 3.” Its rating of 9.2 on Douban from over 700,000 users is among the highest for a domestic film in the past decade. The film, which incorporates the tradition of qiaopi, or remittance letters recognized by UNESCO, will be released worldwide starting June 18. Distribution is being handled by Damai Entertainment, formerly Alibaba Pictures, and will begin in Hong Kong, Macau, Singapore, Malaysia, and Brunei, followed by the United States, Canada, Australia, the United Kingdom, France, Japan, South Korea, Thailand, and Vietnam. The film was made on a very low budget of just 10 million yuan, or 1.5 million US dollars, and it is unusual for an independent regional drama with such a budget to reach this far. It shows that Chinese storytelling rooted in the history of the diaspora can find an audience far beyond the borders of mainland China.
Kimi and a state-owned bank are launching the world's first AI-native credit card (link)
```Kimi, from Moonshot AI, has partnered with a major state bank and an international card network to create the Kimi Credit Card, the first physical credit product that converts everyday spending into credits for AI computing power. Each transaction generates credits proportional to the amount spent, which can be directly applied to usage quotas for the Agent and premium features within the Kimi ecosystem. Cardholders also gain priority access to beta versions of new models. The card can now be reserved. For Moonshot AI, this is a new way to monetize beyond API subscriptions; for the bank, it's about integrating AI into everyday finances. This move signals a broader trend: tokenized access to AI is entering mainstream consumer finance as naturally as airline miles or cashback. The Chinese AI and fintech sectors are converging.
Tomáš Kučera & Yereth Jansen
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