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China's Politburo met in Beijing this week to set economic priorities for the second half of 2026. Chaired by Chinese President Xi Jinping, the meeting acknowledged that the country's economy continues to face "difficulties and challenges" and called for faster fiscal spending, more effective implementation of existing measures, stronger countercyclical adjustments, and the introduction of "practical and effective incremental policies."

The measures point to a targeted expansion of policy support rather than a sweeping new stimulus package, with leaders emphasizing domestic demand, employment, business confidence, financial stability and the property market. The Politburo also announced that the Fifth Plenary Session of the 20th Central Committee will be held in October, and will examine major issues related to Party discipline and governance.

Meanwhile, U.S. Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer held a high-level video call yesterday with Chinese Vice Premier He Lifeng ahead of a potential September meeting between Presidents Donald Trump and Xi. The discussions addressed trade commitments, including rare earths and U.S. agricultural products, as well as broader economic issues between the two countries. Bessent emphasized that the U.S. "expect[s] Beijing to fully meet its commitments," reflecting ongoing U.S. concerns over the implementation of trade agreements.

On the technology front, China continued its push to shape global artificial intelligence standards at the World Artificial Intelligence Conference (WAIC) in Shanghai earlier this month, where Xi called for greater international cooperation on AI governance and open-source AI development. During the conference, representatives from 29 countries signed an agreement to establish the World Artificial Intelligence Cooperation Organization (WAICO), which will be headquartered in Shanghai and serve as a new multilateral platform for collaboration on AI policy.

These developments come amid ongoing debates in Washington on how to respond to China's rapid AI advances. Trump administration officials recently accused Beijing-based Moonshot AI of improperly using distillation techniques involving U.S. AI systems, while Bessent said the administration could consider sanctions or Entity List designations against Chinese AI firms.

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