Key Points
- The People’s Bank of China (PBOC) is seeking public comment on draft rules for its RMB Cross-Border Payment System, aiming to make the Chinese Yuan a global currency.
- Former US President Trump threatened new unilateral tariffs, potentially as high as 70%, starting August 1st, while Elon Musk announced the formation of the “America Party.”
- China is aggressively enforcing tax laws on overseas investment income, with some residents reporting a 20% individual income tax. Major quant firm Jane Street was penalized ¥4.12 billion RMB ($567 million USD) in India.
- A “world shipbuilding king” was formed through the merger of China CSSC Holdings (Zhongguo Chuanbo 中国船舶) and China Shipbuilding Industry Corporation (Zhongguo Zhonggong 中国重工).
- Chinese tech giants Meituan and Alibaba are engaged in a “subsidy showdown” for market share, offering significant consumer discounts, contrasting with a 21.8% year-on-year drop in domestic mobile phone shipments in May.
China is making major moves on the global stage, starting with a quiet but powerful push to overhaul its RMB Cross-Border Payment System, signaling a massive ambition for the Yuan.
But that’s just the tip of the iceberg.
This week saw a flurry of activity, from US tariff threats and a new political party from Elon Musk, to a “subsidy showdown” between Chinese tech giants and the birth of a global shipbuilding behemoth.
Let’s break down what’s happening and what it means for you.
The PBOC’s Power Move: Globalizing the Yuan
The People’s Bank of China (PBOC) just dropped a bombshell, though it did so quietly.
It’s now seeking public comment on its new “Business Rules for the RMB Cross-Border Payment System (Draft for Comment).”
This isn’t just boring regulatory paperwork. It’s the blueprint for making the Chinese Yuan a true global currency.
The draft rules, detailed in six chapters and thirty-one articles, are designed to streamline and regulate how the RMB is used in international transactions.
Here’s a look at the core components:
- Account Management: Standardizing how participants and operating institutions can open and manage accounts.
- Fund Ownership: Clarifying the ownership of settlement funds held by participants.
* Liquidity Rules: Creating new rules for managing participant liquidity, crucial for smooth international payments.
* Service Offerings: Defining the types of services that participants can offer to their clients.
* Operational Procedures: Standardizing everything from system logins to how messages and inquiries are handled.
Why this matters: By creating a more robust and regulated framework, China is paving the way for wider adoption of the RMB in global trade and finance, directly challenging the dominance of the US dollar.
In another sign of China’s growing regional coordination, authorities from China, Myanmar, and Thailand held a ministerial meeting to crack down on telecom and online fraud in the Myawaddy area. They’ve already seen over 5,400 individuals repatriated and are committed to dismantling fraud centers in the region.
Brace for Impact: Trump’s 70% Tariff Threat & Musk’s “America Party”
The global markets are on edge as trade tensions flare up again.
On July 4th, former US President Trump announced his government would begin sending letters to trade partners with new unilateral tariff rates, which could “most likely” take effect on August 1st.
He ominously suggested rates could reach as high as 70%.
This comes on the heels of Trump signing the “Big and Beautiful” tax and spending bill, which passed the House by a narrow 218-214 vote. Critics in the US worry the bill will skyrocket the nation’s fiscal deficit and debt risks.
Meanwhile, the trade disputes are spreading.
- India Strikes Back: India has notified the World Trade Organization (WTO) that it plans to slap retaliatory tariffs on the US over American tariffs on automobiles and parts.
And in a classic 2025 twist, Elon Musk tossed another wild card into the mix.
On July 5th, he announced the formation of the “America Party” on social media.
“The 2:1 ratio for and against indicates you want a new party, and you’ll have a new party,” Musk posted, adding that he believes America is “bankrupt from waste and corruption.”
He says the party will run for election next year, a move that could seriously disrupt the US political landscape.
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Investor Alert: China’s New Tax Rules and Quant Crackdowns
If you’re an investor with exposure to China or other global markets, pay close attention.
Since March, many Chinese residents investing in Hong Kong and US stocks have been getting pinged by local tax authorities.
The message? Self-inspect your overseas income and pay up.
Some taxpayers on social media have reported paying a 20% individual income tax on their cross-border investment income.
While China’s global taxation law isn’t new, the enforcement this year has become far more aggressive and widespread, with notifications coming via SMS and phone calls.
In other market news:
- New Themed Funds: 11 major fund managers, including giants like E Fund Management (Yifangda 易方达) and Harvest Fund Management (Huitianfu 汇添富), have submitted a second batch of floating-fee funds for approval. Hot themes include high-end equipment, pharmaceuticals, and manufacturing.
- Quant Giant Penalized: US-based quantitative trading firm Jane Street got hit with a massive penalty in India. Regulators banned the firm from the local market and confiscated ¥4.12 billion RMB ($567 million USD) in funds, alleging the company manipulated stock indices with derivatives. A huge cautionary tale for quant funds everywhere.
Building the Future: Superconductors, Real Estate, and a Shipbuilding Titan
Inside China, the industrial gears are turning at a massive scale.
The Ministry of Housing and Urban-Rural Development (MOHURD) is reaffirming its commitment to stabilizing the real estate market, urging local governments to use their policy autonomy to ensure healthy development.
But the real excitement is in future-facing industries.
The State-owned Assets Supervision and Administration Commission (SASAC) is calling for a major push to develop new materials, with a specific shout-out to superconductors.
They are pushing state-owned enterprises to ramp up exploration and development of key mineral resources to support this high-tech boom.
And in one of the biggest industrial stories of the year, a “world shipbuilding king” has been born.
The merger between China CSSC Holdings (Zhongguo Chuanbo 中国船舶) and China Shipbuilding Industry Corporation (Zhongguo Zhonggong 中国重工) has been approved by the Shanghai Stock Exchange. This massive consolidation creates a global leader in the shipbuilding industry.
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The Ground War: Meituan vs. Alibaba’s “Subsidy Showdown”
On the consumer front, a fierce battle is raging.
Food delivery and local services giants Meituan and Alibaba have kicked off a massive “subsidy showdown” to capture the summer consumption market.
They’re dropping insane, no-threshold coupons and “super red packets,” like:
- “¥25 RMB ($3.44 USD) off ¥21 RMB ($2.89 USD)”
- “¥16 RMB ($2.20 USD) off ¥16 RMB ($2.20 USD)”
- “¥18 RMB ($2.48 USD) off ¥18 RMB ($2.48 USD)”
- ¥25 RMB ($3.44 USD) off ¥21 RMB ($2.89 USD)
- ¥16 RMB ($2.20 USD) off ¥16 RMB ($2.20 USD)
- ¥18 RMB ($2.48 USD) off ¥18 RMB ($2.48 USD)
- Coffee for as little as ¥2 RMB ($0.28 USD)
Some users reported grabbing coffee for as little as ¥2 RMB ($0.28 USD). This is the kind of aggressive market-share grab Chinese tech is famous for.
However, this intense competition in services is contrasted by a slowdown in hardware.
Domestic mobile phone shipments in May fell a staggering 21.8% year-on-year, totaling just 23.716 million units. Even 5G phones, which now make up 89.3% of the market, saw shipments drop by 17.0%.
And as a sign of the summer heat and economic activity, China’s national electricity load hit a historic high of 1.465 billion kilowatts on July 4th, driven largely by air conditioning demand.
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Market Pulse: What Else You Need to Know
- EU Brandy Tariffs: China’s Ministry of Commerce has imposed anti-dumping duties on imported brandy from the European Union, effective July 5th for a period of five years.
- SSE Monitoring: The Shanghai Stock Exchange is keeping a close eye on abnormally volatile stocks like *ST Yazhen (Yazhen Jiaju 亚振家居) and delisted stocks undergoing restructuring.
From global finance to domestic tech battles, the landscape is shifting fast. These developments show a China that’s strategically consolidating its industrial power and aggressively positioning itself on the world stage, with the new rules for the RMB Cross-Border Payment System serving as a clear signal of its long-term ambitions.
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