China Market Intelligence

Exports from China are facing a new threat to their competitiveness: carbon border taxes. The EU’s carbon border adjustment mechanism, which took effect in January, requires the bloc’s importers to pay for the carbon emissions of the goods they purchase. Similar legislation is set to take effect next year in the United Kingdom, and Canada, Japan, Australia, and South Korea all have carbon import taxes in the legislative pipeline.

Beijing is systematically executing its AI+ Action Plan across specific industries, with the energy sector its most recent focus. On May 8, four Chinese government agencies jointly issued the Action Plan for Promoting the Mutual Empowerment of AI and Energy, offering an early glimpse into how Beijing will operationalize its AI ambitions. In explicitly linking AI development and energy security, the document solidifies China’s strategy of embedding AI in existing industrial systems rather than treating AI as its own separate industry.

On June 1, China’s State Council released the Regulation on Outbound Investment, elevating the issue to the State Council level and expanding oversight to factor in national security, technology transfer, capital flows, and data. The new rules will take effect on July 1.

China continues to expand its retaliatory toolkit as geopolitical and trade tensions with the United States and, increasingly, the EU intensify. The tools vary in scope and severity, each with its own specific impacts on multinational companies operating in China. This primer covers the tools at China’s disposal to counter actions it perceives as inappropriate or unfair, starting with those most overtly retaliatory.

On May 11, the Standing Committee of China’s National People’s Congress and the State Council released their 2026 legislative plans, outlining lawmaking priorities for the first year of the 15th Five-Year Plan period. This year, Beijing is moving to codify broad priorities, particularly in finance, economic security, market regulation, and technology governance.

Following the Trump-Xi summit, both countries addressed several agricultural concerns. However, tariffs and non-tariff barriers continue to hinder US agricultural exports. Furthermore, official readouts are not fully aligned; China kept its recounting vague on agricultural commitments.

China has seen a series of high-level personnel changes at both the central and provincial levels in recent months, driven by appointments made around the national and local Two Sessions as well as developments in the ongoing anti-corruption campaign.

Just six days after issuing the Regulations on Industrial and Supply Chain Security (Doc. 834), China’s State Council released the Regulations on Countering Foreign States’ Improper Extraterritorial Jurisdiction (Doc. 835), another expansion of Beijing’s retaliatory toolkit. Unlike Doc. 834, which governs sectoral and commercial supply chain security and is triggered by a demonstrable harm or threat, Doc. 835 targets foreign legal pressure itself regardless of commercial impact and can therefore be invoked under a lower evidentiary threshold.

In a pivot toward greater flexibility for public healthcare institutions, central government regulators recently introduced a series of measures to provide patients with differentiated, tiered products and services based on factors like clinical value, patient segmentation, and local fiscal capacity. The shift incentivizes innovation by driving more promising returns on R&D investments.

According to official government data, China’s real GDP grew 5% year-on-year in the first three months of 2026 to 33.42 trillion yuan ($4.9 trillion), beating expectations and reversing the downward trend seen in the second half of 2025. Strong industrial output and foreign trade drove growth, but weak demand weighed on overall activity and clouds the outlook for the rest of the year.