Welcome to Red Thread, Euractiv’s weekly newsletter on the EU’s relationship with China and the wider Asia-Pacific.

I’m Christina Zhao in Oceania, joined by Anupriya Datta in Europe.

This week, we meet China’s busiest fictional economist and examine the very real slowdown behind his return...

Who is Zhong Caiwen?

Since Saturday, People’s Daily, the Chinese Communist Party’s official newspaper, has published four articles under the name in a rare campaign to reassure citizens that China’s economy remains resilient and its slowdown manageable despite a spell of poor performance.

Zhong is not a real person but a collective pen name associated with the Communist Party’s Central Financial and Economic Affairs Commission, the powerful economic policy body headed by Xi Jinping. According to the China Media Project, a leading independent Beijing-focused media research group, the articles are jointly produced by writing teams at the commission and the party’s propaganda department.

The byline was wheeled out last October across eight articles as Beijing sought to shore up confidence in its lacklustre economy. “A bad feeling does not mean a bad situation,” Zhong advised at the time. “Feelings are subjective, while the situation is objective.”

The name is a clue. “Zhong Caiwen” sounds like a shortened form of “Central Financial and Economic Affairs Commission commentary,” following a party tradition of disguising institutional messaging as the work of industrious columnists.

And Zhong has been busy. Across the latest four articles, Zhong praised China’s “resilience and vitality,” defended its 4.7% first-half growth rate and cast the country as a “powerful anchor” for the world economy.

Growth in industrial output slowed to 4.5% year on year in July, retail sales rose just 0.6% and fixed-asset investment contracted 6.7% in the first seven months. All three readings fell short of economists’ expectations.

The property slump continues to depress household confidence, while second-quarter growth slowed to 4.3%, its weakest in three and a half years. Zhong encouraged readers to look past the discouraging data, arguing that technological innovation and industrial upgrading were replacing older sources of growth.

Europe is experiencing the other side of the slowdown. Chinese exports to the EU rose 14% year on year in July, while imports fell 2%, according to the South China Morning Post. China’s surplus widened in 24 of the bloc’s 27 countries, with Germany’s bilateral deficit surging 86.5% to about €8.3 billion.

Brussels has given Beijing until October to show progress on rebalancing trade. But while EU officials describe subsidised production and mounting exports as dangerous overcapacity, Zhong celebrates them as proof that China’s strategy is succeeding.

Zhong even had a message for Europeans sweltering through this summer’s heatwave, deploying the continent’s much-loved language of puns. Chinese air conditioners had brought them relief, Zhong declared, demonstrating China’s “cool power” – a play on soft and hard power.

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Beijing resists EU’s JD probe

China has ordered companies and individuals not to assist in an EU investigation into JD.com’s €2.2 billion bid for German electronics retailer Ceconomy, escalating a clash with Brussels over Chinese state subsidies.

Beijing called the probe an “improper extraterritorial jurisdiction measure” and threatened retaliation if it continued, Maximilian Henning reported. The European Commission opened an in-depth investigation in May into whether foreign subsidies distorted the transaction and has until 2 October to decide.

Beijing invoked regulations introduced in April to counter what it considers unlawful extraterritorial jurisdiction. Read Maximilian’s full story.

Born of a pandemic: JD, China’s largest retailer by revenue, became an ecommerce giant after Covid-19 emptied its Beijing electronics shops and pushed the company online in 2003.

Australia warns EU deal on the rocks

Australia’s Trade Minister Don Farrell said on Wednesday that Canberra’s support for the EU-Australia trade agreement was not guaranteed after the opposition stepped up its campaign against the deal, Sofia Sánchez Manzanaro reports.

Farrell accused the opposition of embracing populism. The opposition has called for the deal to be renegotiated, objecting particularly to the final quotas for red meat. Read Sofia’s full story.

The ultimate situationship: Eight years of negotiations have survived a submarine feud and two Australian walkouts, only for parliament to threaten the wedding.

The humanoid necessities

China’s industry ministry has proposed creating at least 100 humanoid robot standards by 2028, covering everything from body parts and interfaces to intelligence, industrial tasks, safety and ethics. The push could strengthen Beijing’s influence over international rules as Europe updates its own standards for AI-powered robotics.

Faster than Bolt: China’s fastest humanoid ran 100 metres in 8.64 seconds on Wednesday, nearly a second quicker than Usain Bolt’s record.

China tightens investment oversight

Beijing has proposed extending its oversight of outbound investment to individuals as well as companies.

The draft rules would require investors to report large projects and foreign demands to transfer technology or data, or sell overseas assets, giving authorities greater scope to scrutinise and potentially block deals.

The trophy years: Football clubs were among the overseas investments it branded “irrational” and restricted in 2017, after Chinese buyers snapped up Inter Milan, AC Milan and Aston Villa.

Berlin and Beijing spar

German Finance Minister Lars Klingbeil called for a “firmer stance” towards China, accusing Beijing of “not playing by the rules” and distorting trade through subsidies, overcapacity and joint-venture requirements, as pressure mounts on the country’s car and steel industries.

Sebastian Lechner, the CDU leader in Volkswagen’s home state of Lower Saxony, also urged Brussels to extend trade protection to Chinese plug-in hybrids. Volkswagen recently warned that another 50,000 jobs could be lost, blaming Chinese competition, US tariffs and weak European demand.

China's state-run Global Times accused Berlin of scapegoating Beijing for homegrown competitiveness problems, warning that protectionism would damage bilateral ties without reversing Germany’s industrial decline.

EU walls rise

Existing and proposed EU trade measures could affect about 27% of China’s annual nominal exports to the bloc, according to Goldman Sachs. They include possible tariffs on plug-in hybrid vehicles and expanding the carbon border levy to include other products downstream.

Goldman said an expanded carbon levy could cover another €50 billion of Chinese exports, although implementation was unlikely before 2028.

Asia charts an Arctic shortcut

Chinese shipping company Sea Legend has launched the first scheduled container service between Asia and Europe through the Arctic Ocean.

The Dubai Tower left Ningbo on 15 August and is expected to reach Felixstowe in about 20 days, roughly half the time required via the Suez Canal. The company plans eight voyages between August and October, carrying goods including batteries, solar modules and EV components.

South Korea has also sent its first commercial container ship to Europe through the Arctic, while India is exploring greater use of the route.

The passage offers Asian exporters a shorter alternative to the Suez Canal and other maritime chokepoints but remains costly, seasonal and reliant on Russian permits and assistance.

Brussels quotas hit Korean steel

South Korean steel exports to the EU fell 41.2% year on year to $188 million in July – their lowest level for that month since 2013, according to the Korea International Trade Association. Shipments by volume dropped 44.8% to about 181,000 tonnes after Brussels sharply reduced its tariff-free quota and raised the levy on above-quota shipments on 1 July.

Switzerland clinches trade upgrade

Bern and Beijing have concluded negotiations to upgrade their free trade agreement, giving 99.8% of Swiss exports duty-free access to China – up from about 50% under the existing deal.

Announced by Swiss President Guy Parmelin and Chinese Commerce Minister Wang Wentao in Bern, the agreement also covers services and digital trade. It is expected to be signed later this year, subject to legal and domestic approval.