[Morning Post] China and the US to Hold First Meeting of Economic and Trade Consultation Mechanism; Ministry of Commerce Speaks Out on Rare Earth Exports

Macro News

1. A spokesperson for the Ministry of Foreign Affairs announced that He Lifeng, Member of the Political Bureau of the CPC Central Committee and Vice Premier of the State Council, will visit the UK from June 8 to 13 at the invitation of the UK government. During the visit, he will hold the first meeting of the China-US Economic and Trade Consultation Mechanism with the US side.

2. In response to a reporter's question about China's export control measures on medium-heavy rare earth, a spokesperson for the Ministry of Commerce stated that rare earth-related items have both military and civilian applications, and implementing export controls on them is in line with international common practices. With the development of industries such as robotics and NEVs, the demand for medium-heavy rare earth in civilian applications is growing across countries. As a responsible major country, China fully considers the reasonable demands and concerns of various countries in civilian applications and reviews export license applications for rare earth-related items in accordance with laws and regulations. It has approved a certain number of compliant applications in accordance with the law and will continue to strengthen the review of compliant applications. China is willing to further strengthen communication and dialogue on export controls with relevant countries to facilitate compliant trade.

3. According to PBOC data, China's gold reserves stood at 73.83 million ounces (approximately 2,296.37 mt) at the end of May, up 60,000 ounces (approximately 1.86 mt) MoM, marking the seventh consecutive month of gold purchases.

4. Data shows that the PBOC conducted reverse repo operations totaling 930.9 billion yuan in the open market last week, while reverse repos totaling 1,602.6 billion yuan matured in the open market last week. Consequently, the PBOC achieved a net withdrawal of 671.7 billion yuan from the open market on a full-caliber basis last week. This week, reverse repos totaling 930.9 billion yuan will mature in the PBOC's open market operations.

5. According to statistics from the State Administration of Foreign Exchange, as of the end of May 2025, China's foreign exchange reserves stood at $3,285.3 billion, up $3.6 billion from the end of April, representing an increase of 0.11%.

6. In response to a reporter's question about Minister Wang Wentao's talks with European Commission Executive Vice President Valdis Dombrovskis, responsible for Trade and Economic Security, during his visit to France, the Ministry of Commerce stated that Minister Wang Wentao and Executive Vice President Dombrovskis held professional and in-depth discussions on the EV case, making significant progress towards a proper resolution of the case. Currently, price commitment negotiations between China and the EU on the EV case have entered the final stage, but efforts from both sides are still needed.

Industry News

1. On June 6, Li Lecheng, Minister of the Ministry of Industry and Information Technology, chaired a meeting of the Ministry's Leading Group for the Integration of Informatization and Industrialization. The meeting called for the implementation of the "AI + Manufacturing" initiative to accelerate the intelligent upgrading of key industries and create an "upgraded version" of smart manufacturing. By focusing on industrial intelligence, the meeting aimed to deepen the industrial application of AI and drive the innovation and iteration of industrial datasets and large industrial models.

2. The State-owned Assets Supervision and Administration Commission of the State Council (SASAC) issued the "Administrative Measures for the Development Planning of Central State-owned Enterprises", placing greater emphasis on industrial orientation. A three-tier planning system has been established, comprising the "Overall Development Plan for Central State-owned Enterprises + Key Task Planning + Enterprise Planning". Industrial optimization and adjustment have been identified as the key focus of this three-tier planning, with the aim of channeling state capital into critical industries and key sectors vital to national security and the lifeline of the national economy, as well as into public services, emergency response capabilities, and public welfare sectors that are crucial to the national economy and people's livelihoods, and further into forward-looking and strategic emerging industries.

3. The Shanghai Stock Exchange (SSE) held a symposium on high dividends, significant returns, and enhancing the value of publicly listed firms. Relevant officials from the SSE stated that in the future, the SSE will encourage publicly listed firms to further increase dividend payouts and frequency, and effectively utilize market value management tools such as share buybacks, mergers and acquisitions, and investor communications to continuously enhance the investment value of companies.

4. Last Saturday, a Boeing 737 MAX aircraft took off from Seattle, US, and landed in Hawaii before continuing its journey to China. This aircraft, originally a new plane awaiting delivery at Boeing's Zhoushan factory, was returned to the US in April. This marks the first time since April that Boeing has resumed aircraft deliveries to China.

5. The People's Bank of China (PBOC) and the Hong Kong Monetary Authority (HKMA) are actively promoting the interconnection of the two regions' fast payment systems. The project is progressing smoothly, with some services expected to be launched by mid-year. Details will be announced in due course.

6. Cui Dongshu, Secretary General of the China Passenger Car Association (CPCA), wrote that with the strengthening of national sales promotion subsidies for scrappage and renewal, the market has rebounded, significantly boosting the automotive market. Consequently, the pressure from price wars has relatively eased from January to mid-May. Due to competitive differentiation, the promotional efforts for new energy vehicles (NEVs) in May have rebounded significantly. In May 2025, the promotional discounts for NEVs dropped to a mid-to-high level of 11%, representing an increase of 1.3 percentage points compared to the same period last year and a 1.6 percentage point increase MoM.

7. Hong Kong SAR Chief Executive John Lee Ka-chiu attended and delivered a speech at the opening ceremony of the 16th Cross-Strait and Hong Kong-Macao Economic and Trade Cooperation Symposium hosted by the Chinese Manufacturers' Association of Hong Kong last Saturday. Lee stated that Hong Kong is actively developing the artificial intelligence (AI) industry and will establish a "Technology and Innovation Industry Guidance Fund" with a scale of HK$10 billion to strengthen the guidance of market funds and promote the development of strategic emerging and future industries such as AI and robotics.

8. Amidst the 618 shopping festival promotions, national subsidy policies for home appliances in multiple regions, including Jiangsu, Chongqing, Hubei, and Guangdong, have been suspended or adjusted to a limited supply model. A reporter from Cailian Press learned through on-site visits that in Jiangsu Province, consumers wishing to use national subsidies offline need to queue up at merchants to "snatch" quotas, with digital products being in high demand and quotas hard to come by. Similarly, consumers in Guangdong Province also need to compete for coupons for redemption. According to data from the Ministry of Commerce, sales from trade-in policies have exceeded 1 trillion yuan. Industry analysts believe that the main reason for the current policy adjustment is the rapid depletion of national subsidy funds, which is a temporary phenomenon, and a new round of subsidies may be reintroduced.

9. Recently, a team led by professors Peng Jun and Zhang Xiaohong from Soochow University, in collaboration with the University of New South Wales in Australia and the White Horse Lake Laboratory in Zhejiang Province, achieved a significant breakthrough in the field of single-junction perovskite solar cells. The certified steady-state efficiency of their 0.1 cm² single-junction perovskite cell reached 27.3%, while that of the 1 cm² single-junction perovskite cell reached 26.9%, both setting new world records for their respective sizes.

Corporate News

1. LONGi Green Energy announced that shareholder HHLR plans to reduce its stake by no more than 0.5% of the company's shares.

2. Desay SV announced that shareholders Huichuangtou and Shenhua Investment plan to reduce their stakes by 3% and 1.45% of the company's shares, respectively.

3. Royo announced that Langzi plans to reduce its stake by no more than 3% of the company's shares.

4. LB Group announced that it plans to repurchase between 500 million and 1 billion yuan worth of the company's shares.

5. Roborock announced that it plans to issue H shares and list them on the Hong Kong Stock Exchange.

6. *ST Haiyue announced that it has been investigated by the China Securities Regulatory Commission for suspected violations of information disclosure regulations. On the same day, the company also announced that it has received a decision to delist its shares, with the expected last trading date being July 4.

7. Vanke A announced that Shenzhen Metro Group plans to provide the company with a loan of no more than 3 billion yuan.

8. Sinowealth Electronics announced that its controlling shareholder is planning changes to the company's control, and trading in its shares has been suspended.

9. BlueFocus announced that it is planning to issue H shares and list them on the main board of the Hong Kong Stock Exchange.

10. Honghui Fruits & Vegetables announced that its controlling shareholder is planning changes to the company's control, and trading in its shares has been suspended.

11. Canadian Solar announced that shareholder Yuanhe Chongyuan plans to reduce its stake by no more than 3% of the company's shares.

12. Jiechuang Intelligence announced that it plans to purchase servers worth no more than 600 million yuan for its intelligent computing cloud services.

Global Markets

1. The three major U.S. stock indexes closed higher collectively last Friday, with the Dow Jones Industrial Average rising 1.05% and gaining 1.17% for the week; the Nasdaq Composite rising 1.2% and gaining 2.18% for the week; and the S&P 500 rising 1.03% and gaining 1.5% for the week. Popular tech stocks generally rose, with Google and Tesla gaining over 3%, Amazon rising over 2%, and Nvidia, Apple, and Meta each rising over 1%, while Broadcom fell 5%. Cryptocurrency and automobile manufacturing sectors led the gains.

2. Starting on the morning of the 6th, federal agencies such as the U.S. Immigration and Customs Enforcement (ICE) deployed a large number of law enforcement officers to carry out operations targeting illegal immigrants in multiple locations across Los Angeles County, California, leading to numerous street confrontations, chaos, and clashes. On the 7th local time, law enforcement officers clashed with local residents for the second consecutive day. The most intense conflict on the 7th occurred in Paramount, approximately 30 kilometers south of downtown Los Angeles, an area predominantly inhabited by Latino immigrants. Hundreds of heavily armed federal law enforcement officers confronted and clashed with several hundred protesters.

3. According to a June 7 report by The Washington Post, the US State Department notified embassies and consulates worldwide on June 6 to resume visa processing for international students planning to study at Harvard University. This decision overturned the visa rejection order issued just the day before. Currently, no relevant information has been published on the US State Department's official website.

Investment Opportunities Reference

1. Intelligent driving has become a focal point of competition among major automakers, with the demand for such core hardware continuously rising.

Samsung has formed partnerships with Infineon and NXP to jointly develop next-generation automotive chip solutions. This collaboration will be based on Samsung's 5-nanometer process, with a focus on optimizing the co-design of memory and processors, and aims to "enhance chip security performance and real-time processing capabilities." Samsung is reportedly developing highly integrated SoC solutions in this field to achieve better energy efficiency ratios.

Everbright Securities pointed out that in the era of domain controllers, heterogeneous SoC chips with high computing power, high performance, and high integration will become the core components of intelligent driving. In addition to domain controllers, intelligent driving SoC chips are also core components of front-view integrated machines. By 2025, the penetration rate of urban NOA in car models priced below RMB 150,000 will rapidly increase, driving up the demand for medium-to-high computing power chips. Additionally, from a technological perspective of intelligent driving, by 2025, new end-to-end technologies will focus on VLA and world models, with "parking lot to parking lot" intelligent driving functions becoming a focal point of competition among major automakers, posing higher requirements for chip computing power, solution provider capabilities, and OEM self-research capabilities. Against the backdrop of automotive OEMs such as BYD and Geely implementing "intelligent driving equity" strategies, third-party SoC producers are expected to benefit first, with the trend of "chip pre-embedding" bringing high growth certainty to the industry.

2. Another low-orbit satellite successfully launched, with institutions stating that China's commercial aerospace industry has completed the "from 0 to 1" phase.

Recently, China successfully launched the Internet of Satellites Low-Orbit Group 04 satellites into their predetermined orbits using a Long March 6A carrier rocket at the Taiyuan Satellite Launch Center, with the launch mission achieving complete success.

Western Securities stated that the progress of the satellite Internet industry is accelerating, with potential for valuation expansion. The satellite Internet industry is a core component of new quality productive forces. From a policy perspective, policies and regulations in areas such as terminal-to-satellite direct connectivity, satellite network coordination, and access for private satellite enterprises have been successively introduced in the past two years, with a relatively complete top-level policy framework for the satellite industry now in place. From the product and user perspectives, the number of Tiantong package subscribers has exceeded 2 million, with over 16 million terminal devices in use. Moreover, Huawei's public testing of satellite internet is expected to commence in the second half of 2025 (H2), with the user base for satellite internet access in China gradually being established. Fu Chenshuo from CITIC Securities stated that with breakthroughs achieved in satellite manufacturing, rocket launches, ground equipment, and operational services, China's commercial aerospace industry has completed the "0 to 1" phase and is on the verge of entering a rapid development stage.

3. Indonesia Considering Procurement of China's J-10 Fighter Jets: Institutions Say China's Military Trade Ushers in a New Cycle

According to media reports, on June 5 local time, the Indonesian military announced that the Indonesian government is conducting a feasibility assessment on the procurement of China-made J-10 fighter jets. Taufanto, the Deputy Minister of Defense of Indonesia, stated that this move aims to enhance the modern combat capabilities of the Indonesian Air Force while also considering cost-effectiveness within the national defense budget. Taufanto pointed out that the performance of China's J-10 fighter jets in the India-Pakistan conflict is one of the key factors influencing Indonesia's consideration of this model. Additionally, compared to similar Western fighter jets, the J-10 is more competitively priced and its technical configuration meets Indonesia's demand for "cost-effective advanced equipment." Taufanto revealed that Indonesia is currently focusing on reviewing the compatibility of the J-10 with its existing national defense system, after-sales maintenance support, and specific procurement terms. The procurement scope may not be limited to fighter jets but could also include China-made warships, frigates, and other weaponry.

Shenwan Hongyuan stated that amid geopolitical conflicts, the attention on China's military trade will continue to rise. The intense conflict between India and Pakistan has drawn significant attention to China's military-industrial foreign trade products, with their maturity expected to gain high international recognition, thereby continuously promoting the opening up of the international market for China's military trade products and ushering in a new cycle for China's military trade, thus expanding the market space and valuation of the entire industry.

4. Volcano Engine's Motive Power Conference to Be Held, ByteDance Recently Launches Multiple AI Products

The 2025 Volcano Engine Motive Power Conference - Spring will be held from June 11 to 12, focusing on cutting-edge fields such as large models and AI cloud-native technologies. Topics include agent development, multimodal understanding, deep thinking, AI cloud-native, and more.

Recently, there have been continuous advancements in ByteDance's AI sector. On May 20, Volcano Engine launched the Doubao Voice Podcast Model, enabling the instant conversion of text content into a two-person dialogue-style podcast without complex editing, allowing hot topics to be instantly transformed into engaging podcasts. On the same day, Volcano Engine unveiled the Large Model Ecosystem Square - MCPServers. On May 8, Volcano Engine released the DiskANNRaBitQ vector algorithm engine, which, through the deep integration of the DiskANN algorithm and the ExtendedRaBitQ vector quantization technology, achieves an 115% improvement in query performance compared to the HNSW algorithm in high-performance vector retrieval scenarios, reduces memory resource consumption by 90%, and lowers the overall cost of the user's vector database by 75%, accelerating the application of AI technology across various industries. On May 7, Volcengine launched China's first intelligent database assistant, DBCopilot, which covers three core scenarios of data storage, management, and acquisition through AI technology. Guotai Haitong Securities stated that ByteDance has become a leading force in China's AI development, with its models and applications advancing in tandem, continuously bringing fresh blood to the development of China's AI ecosystem, and also reflecting the current vibrant state of AI development in China.