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Chinese President Xi Jinping says China-Russia relations has entered a new stage of greater achievements and faster development.
Beijing and Washington have reached preliminary trade outcomes and Chinese localities are racing to build token factories.
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Chinese President Xi Jinping says China and Russia should advance their development and revitalization through comprehensive strategic coordination of even higher quality.
During talks in Beijing, President Xi and Russian President Vladimir Putin agreed to extend the Treaty of Good Neighborliness and Friendly Cooperation.
On the Middle East, the Chinese president stressed that an immediate ceasefire is the top priority and emphasized the importance of dialogue and negotiations.
Earlier, President Xi held a welcome ceremony outside the Great Hall of the People for the Russian president, who is on a state visit to China.
So for more on this, let's bring in Dr Wang Xinsong, associate professor at Beijing Normal University School of Government.
Professor, this is President Putin's 25th trip to China, and he and President Xi Jinping have now met more than 40 times.
President Putin even used the Chinese saying One day apart feels like three autumns to describe their ties.
So what does this kind of high-level, frequent interaction tell us about today's China-Russia relationship?
Well, I think the frequent head of state diplomacy shows that China-Russia relations are both highly personalized at the top but at the same time increasingly institutionalized beneath the surface.
And in international relations, this level of direct contact is unusual.
You can tell from Putin's quotation that one day apart feels like three autumns, that the relationship is built on familiarity, not just a formal protocol.
But the two sides also use the leader level diplomacy not just for consolidating personal relationship but also for strategic coordination on a lot of areas such as energy, trade security, et cetera.
I think that during the current meeting, the two sides also have had both narrow and broad talks, followed by signing of numerous documents covering those areas.
So the deeper significance is that a turbulent international environment, In such an environment, both countries see regular top-level contact as a way to maintain predictability and stability.
Professor.
To be more specific, during the talks, President Xi stated that China and Russia should advance their national development and revitalization through comprehensive strategic coordination of even higher quality.
What does this shift, you know, from comprehensive strategic coordination to higher quality coordination signify, and where could we see this relationship upgraded in practical terms?
Well, I would read the phrase higher quality coordination as meaning that China and Russia want to move beyond, simply saying that their relationship is strong, but they want to make the cooperation more effective, more resilient and more connected to the respective national development goals.
In the past, China and Russia coordination was often described in broad strategic terms like mutual support, multipolarity and so on and so forth.
But higher quality suggests that there is a more demanding agenda.
It probably means that coordination should not only be frequent, but should also produce better outcomes.
I think that's why President Xi called for using higher quality coordination to drive the development and revitalization of both countries.
Now, in practical terms, I think, the existing areas of cooperation without the upgraded, such as energy cooperation we're probably going to see upgrading of existing infrastructure and the discussion of, you know, adding more gas pipeline is still under discussion, but the upgrading of infrastructure might be possible.
And then industrial cooperation is another area where both sides can take more advantage of each other's featured areas for their own gains.
So higher quality cooperation.
It can mean moving from simple trade to deeper industrial links and so on and so forth.
And in global governance even.
I think both countries can do more to promote the existing communities or organizations like the SCO and BRICS.
Then, building on that, we know bilateral trade between China and Russia reached about 228 billion last year, marking the third consecutive year above the 200 billion threshold.
So, going forward, do you expect the two sides to seek breakthroughs in trade, higher value-added areas such as high technology, local currency settlement and industrial chain integration?
Yes, I do expect both sides to look for breakthroughs in higher value-added areas.
Because if you look at the existing trade, the figure looks pretty promising, right?
But when you look at the trade in details, what kind of trade is it?
Is that a relationship based on taking full advantage of each other's strengths.
So there's more to do obviously, to upgrade the existing cooperation, and i think the first area to watch is local currency settlement right.
Since 2022, russia has sharply increase the use of yuan in trade and financial transactions, because you know the dollar and pressure and the international financing settlement and pressure and restrictions and all that.
So this helps both sides to reduce vulnerability But at the same time, there are obstacles.
Obviously, Chinese banks, for example, remain cautious about secondary sanction risks.
So these issues got to be discussed further by both sides so that obstacles can be further removed.
And I talk about industrial chain integration, but let me also speak a few words about technology.
And China's 15 five-year plan features high quality development and promotion of green energy, and high technology and emerging technologies.
So these are Chinese strengths.
I think from the Russian side they can certainly take more advantage of the Chinese strength in also upgrading their own manufacturing and technological development.
Professor, we see that China and Russia also extended their China-Russia Treaty of Good Neighborliness and Friendly Cooperation against the backdrop of profound changes in the international landscape.
What continuing relevance and strategic value does this treaty, which you signed 25 years ago, still hold today?
Well, I think the treaty still matters a lot, because it provides the legal and political foundation for long-term strategic trust, just as President Xi Jinping mentions.
The treaty was signed.
The previous treaty that just expired was signed 25 years ago, but its core ideas remain relevant, right.
Good neighborliness, mutual respect and non-confrontation and so forth.
We have to realize that China and Russia share a very long border and, to be frank, a complicated historical relationship.
So this treaty really helped institutionalize the relationship by removing the barriers and distrust sources so that both sides can continue to work with each other to benefit from the cooperation.
So today, I think the value of sending such a treaty, or extending the treaty, is even greater, because international environment has become more unstable right.
And Western sanctions, military conflicts and all that have put pressure on Russia particularly.
To some extent, China is also facing external pressure.
But the treaty reassures that both sides can withstand the crisis and pressure by working more closely with each other.
Earlier, you mentioned the turbulent world we are facing today.
The two leaders also exchanged views on major international and regional issues, including the Middle East.
President Xi emphasized the need to promote a more just and equitable global governance system.
So, amid rising unilateralism and hegemonic pressures, How can China and Russia play a stabilizing role?
First of all, let me say I think that China and Russia can absolutely act as a stabilizing force, mainly by supporting multi-polarity, defending the role of international institutions and opposing the idea that global affairs should be decided by unilateral pressure.
But what does stabilizing force really mean in practice?
I think a few things.
First, it's the United Nations Security Council, where China and Russia are both permanent members.
So their coordination can affect major international debates, especially in scenarios or circumstances where international matters are not dealt with on a fair and just basis.
Second, I think the alternative multilateral institutions like BRICS and SEO, which were led by both China and Russia, can also play a bigger role in having a greater representation of global South countries in a more multipolar world.
And then on issues like Middle East, energy routes, global supply chains and all that, both parties.
Again, they do share an interest in preventing escalation of conflicts.
They also share interest of not disrupting the supply chain.
So both parties can contribute through the United Nations, through ICO and BRICS and other channels, to play a bigger role in global governance issues.
But there is even nuance over here, obviously because both parties share many similarities, but they do have different situations.
They're faced with right
And so, for example, Russia probably is more confrontational toward the West than China, because China, after all, is depending a lot on the exports and it means a stable and predictable existing global system to work rather than displacing it.
But despite the differences, both sides share a lot of similarities in promoting a peaceful and more stable world order.
Professor.
Finally, during the visit, the two sides also launched the China-Russia Years of Education Initiative for 2026 and 2027.
Beyond trade and energy, how important are cultural and educational exchanges to the long-term future of this relationship?
Yeah, that's a good question.
And, like you said, trade and energy ties can grow real big, but social understanding takes much longer time, right.
So it is very important to build the social foundation beneath the existing political and economic partnership and relationship.
And in fact, if you look at the education statistics, both sides are sending more students to each other for the purpose of better understanding each other.
So international education definitely helps reduce misunderstanding.
If young people know each other's language, history and society and the relationship becomes less vulnerable.
But second, I think it's also very important for the existing cooperation.
You need engineers, energy specialists diplomats, researchers and so on and so forth to play a medium role in facilitating the cooperation.
And third, I think education supports practical cooperation in fields like engineering AI, aerospace and so on and so forth.
These are the high technologies I highlighted earlier that are being targeted as top agenda in China's development plan.
At the same time, I think on the Russian side, these are also areas where they're thinking of upgrading their own sectors by having more cooperative relationship with China.
So again, education is very important in cultivating the next generation of engineers, software experts and AI experts who are going to build the bridge between China and Russia, so that both sides can benefit from each other's technology infrastructure, as well as technological development and policy plans in the future.
Thanks, Professor, for those insightful analysis.
That was Wang Xinsong, Associate Professor at Beijing Normal University School of Government.
Coming up, Beijing and Washington have reached preliminary trade outcomes.
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Let's move to China-U.S. trade.
Beijing and Washington have agreed to discuss a reciprocal reduction framework on US30 billion of goods after consultations in South Korea last week.
An official from China's Commerce Ministry says the two sides also reached consensus on resolving issues related to non-tariff barriers and market access for certain agricultural products.
The two sides also discussed rare earth export control and establishing councils on trade and investment.
So for more on this, joining us on the line is Dr Zhou Mi, a senior research fellow with the Chinese Academy of International Trade and Economic Cooperation.
Thanks for joining us, Dr. Zhou.
Thanks for having me.
First of all, it's now been a year since the China-US trade talks in Geneva.
So looking back, tariffs still is the top keyword of bilateral economic relations.
So how would you assess the trajectory of China-US economic ties over the past year?
And what do you see as the biggest change during this period, especially when it comes to the attitudes and positions of China and the United States toward each other?
Well, it is true that China and the United States have a wide range of relations based on the trading goods, trading services and the investment.
So in the past one year we have seen that the structure of the trade between our two countries has changed a lot.
We know that the resources and advantages of both countries are not the same.
If you're looking at the trade structure, I will say that China has exported too many things to the United States, while we only imported a certain kinds of products from the United States.
So when there are some tariffs, no matter from the reciprocal tariffs or the retaliate tariffs, we can find that the cost of doing business is getting higher.
In this regard, I can find that there are still so many demands from US side to import from China because we have so many products to supply for the United States market.
While on the other hand, I don't think that China has depended too much on the import from the United States.
So for the trade volume, it's actually decreased a lot in the past year.
I would say that is definitely what the market has reacted, according to the tariffs and more barriers.
And that is really a matter for both countries and the rest of the world.
Given such a dynamic background, some reports describe the past year as a transition from one-off negotiations to a normalized mechanism and from a tariff war to a framework of reciprocal tariff reduction.
But others also argue that tariffs remain the elephant in the room and there has been limited breakthrough on the core structural obstacles.
Which view do you agree with more?
In my understanding.
I would say that maybe it is a strategy of the United States at this moment about the tariffs, to trying to use a tariff as a weapon or as a tool to force other countries, not only China, but also other countries, to trying to give more concessions to United States.
But I think that China is doing a pretty different compared with other countries.
So I prefer that we are doing a lot of more negotiations on the mechanism.
But In my understanding, the process is not that short.
So we almost took one year to try to get in touch with each other and try to start the topics, choose the topics and then try to reach some consensus by different kinds of areas.
So the process is not just a one off.
I would agree that we are establishing some mechanism, but I need to say that in the previous one year, most of this work is trying to establish a mechanism.
The mechanism is a very important one for both countries to discuss about the possibilities.
So as a result, I can find that for the talk in South Korea, maybe we have some progress.
And if everything goes well, I would say this mechanism is starting to be functional, started by, you know, from just the kind of occasionally discussion or negotiation into a more normalized mechanism.
And that is really one very important achievement that both countries have reached.
Then, building on that, one of the most closely watched outcomes of the latest consultations were the agreement to establish an Intergovernmental Trade Council and Investment Council.
China's Ministry of Commerce described this as a shift from crisis management to institutionalized management.
So what's your take on this?
How could it help stabilize China-U.S. economic ties going forward?
You know in the past, we have many rounds of negotiation but nobody knows when the next round of negotiation starts and where will that start?
So you can find that most of this time, it's happened in the third country.
So it's not just our regular mechanism for both countries to discuss about what's the their concerns are.
Based on these two cultures.
I would say that it's more important to be open in these two countries so we don't have to choose another countries.
We have a regular mechanism.
Everybody is able to make that schedule uh, what kind of things we we are going to and what time would be the next rounds of the you know meeting.
So these are really important, As we know that the relation between these two countries are so complicated.
They're covering many issues, but the trade and investments are the most important ones.
With these councils, I think that we have more room to discuss about our concerns and also help for the enterprises to make better decisions.
Dr. Zhoumi, let's shift the gear to the market access for certain agricultural products.
The latest talks also produced several concrete outcomes in agriculture.
The US agreed to lift automatic detention measures on certain Chinese dairy and seafood products, while China restored registration access for US beef exports.
So how meaningful are these developments in practical terms?
Does this suggest China-U.S. agricultural cooperation is gradually returning to normal?
Yeah, I think that it's really very interesting if you're looking at the list.
Both countries are doing different products.
The different agricultural products are representing the different advantages of these two countries.
US is good at the beefs and China is good at the seafood.
So if we are able to exchange our advantages, I think that both markets will have a better outcome.
And these actions are really giving very important signal to the world and also to the market.
If we really want to have a stable and sustainable development, we should take care about the people, especially the people of a very wide range.
We know that agriculture, no matter in which country it, is the industry with most of these related stakeholders.
So I believe that if we are able to produce better and less restricted market access for The agricultural products, we can benefit a lot of people, and also, not only the consumers will benefit from them, but also the companies, the manufacturers who depend on the raw materials of these agricultural products will also benefit from that.
That is really a good thing.
Looking forward, both sides say they are still working out the details.
Which agreements do you think can move forward quickly and which ones could run into political resistance, especially in Washington?
Could U.S. domestic politics become a major obstacle?
I think that it may happen, especially this year is a midterm election year, so normally some of the politicians will try to raise some very extreme topics and try to accuse other countries as an excuse for their economy's development.
Not so good.
So perhaps there will be some kind of this reflection in the United States this year, but I think that the function of the leaders are really important.
So if they are able to support the development, to support what we have promised by doing something towards the promises, I would say that we don't have to worry too much about this period, because it's not that long.
So compared with the past several years, I would agree that we do have a long way to go.
We have to go back to what we have started.
And I would say that $30 billion, as you mentioned, about the power of reduction will be the priority for both sides to decide what kind of products should be input or included in that kind of deal.
And that is crucial for the market to have a better reaction.
Thanks, Dr. Zhou Mi, for those insightful analysis.
That was Dr Zhou Mi, Senior Research Fellow with the Chinese Academy of International Trade and Economic Cooperation.
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A spokesperson on the Chinese mainland says a speech by the Taiwan leader Lai Ching-de is filled with lies and hostility.
Zhu Fenglian from the State Council Taiwan Affairs Office called Lai a disruptor of cross-strait peace and creator of crisis in the region for his remarks on independence.
She stressed that Taiwan was never a country and never will be one.
No matter who is elected in the region, it will not change the fact that Taiwan is a part of China.
Zhu also voiced opposition to any attempt at independence under any pretext.
To delve into this, let's have Dr Zhou Wensheng, an associate professor at School of International Studies at Nanjing University.
Thanks for joining us, Professor.
Thank you for having me here.
Beijing says Lai Ching-to's May 20 speech is full of separatist remarks and hostile words against the mainland.
How do you assess this apparent contradiction in advocating cross-strait exchanges while clinging firmly to the Taiwan independence stance?
Lai Chin-te's remarks reveal a clear contradiction.
On the one hand, he talks about dialogue, exchanges and peace.
On the other hand, he continues to promote a separatist narrative that the two sides of the Taiwan Strait are not subordinate to each other.
So this is not sincerity, this is political packaging.
And real cross-strait exchanges must be based on the common political foundation that both sides of the strait belong to one China.
If Lai refuses this foundation, while claiming to support exchanges, then what he wants is not genuine dialogue.
So in my view, this is not the biggest hypocrisy.
He wants the benefits of peace, trade and communication, but he refuses the political basis that makes peace possible.
I think that's quite a popular opinion, because recent public opinion polls on the island show that Lai Chin-te's approval rating has been declining.
What do you make of his disapproval rate?
And what do you think is driving the growing skepticism among people in Taiwan?
Yes, I have noticed this.
The foreign approval rating shows that more people in Taiwan are becoming skeptical of the 19-20 confrontation approach.
I think there are several reasons for this skepticism.
First, many people in Taiwan do not want war or constant tension.
Second, nine authorities have focused heavily on ideological confrontation, while livelihood issues, industrial pressure, energy concerns and also social divisions remain unresolved.
The third reason is that people increasingly see that relying on external forces is unreliable.
And Taiwan's future should not be gambled away by politicians who use confrontation to serve party interests.
So the disapproval rate is not only about Lai personally.
I think it reflects public anxiety over the DPP's risky path.
Professor, after the China visit, U.S.
President Donald Trump explicitly stated he doesn't want to see Taiwan go independent and rejected being a backer for Taiwan independence.
What signal does this send to Lai and DPP?
How does this statement expose the limits of Lai's strategy of, you know, leaning on external factors for the so-called Taiwan independence?
Donald Trump's statement sends a very direct signal to Lai and also the DPP that the United States will not give them a blank check for Taiwan independence.
So this exposes the limits of Li's strategy.
The DPP has long tried to seek independence by relying on the United States, but major powers make decisions according to their own interests.
Taiwan is not the decision maker in Washington's strategic calculations.
It is often treated as a card.
For Lai, this should be a wake-up call.
External forces may encourage the DPP when it serves their interests, but they will not bear the consequences for ordinary people in Taiwan.
I think the real path to security is not provocation, by returning to the political foundation of the one China principle and improving cross-strait relations.
Professor, speaking of damages made by the so-called Taiwan independence Taiwan Affairs Office, says this is the biggest destroyer of cross-strait peace.
What tangible harms have Lai's continued provocative actions caused, or could they cause, for people on both sides of the Taiwan Strait?
Taiwan independence is indeed the biggest threat to peace across the strait because it directly challenges China's sovereignty and territorial integrity.
Leicester's continued provocations have several tangible consequences.
The first one is they increase military tension and the risk of miscalculation.
Second, they damage cross-strait economic and social exchanges which ordinary people business, students and their families all depend on.
The third one is that they create fear within Taiwan society, forcing people to live under the shadow of confrontation.
And the last one is that they invite external interference, turning Taiwan into a home in geopolitical competition.
So for people on both sides, the harm is real.
You know, fewer exchanges, less trust, more instability and greater risk.
Peace across the street cannot coexist with separatist provocation.
Professor, one last question from a broader perspective.
Recent reports show the WHA World Health Assembly has blocked Taiwan-related observer proposals for 10 consecutive years.
As international consensus on the One China principle continues to strengthen?
How do you assess global support for the one China principle today?
I noticed that the 79th WJ again rejected a Taiwan-related proposal, marking the 10th consecutive year that such proposals have been blocked.
Well, I think this case just once again showed that global support for the one China principle still remains firm and continues to strengthen.
I think it is important to stress that Taiwan's participation in international organizations must be handled under the one China principle.
So this is the key point.
Beijing has also stated that Taiwan medical and health experts can actually participate in WHO technical activities through proper arrangements and that Taiwan has channels for health-related information exchanges.
So the issue is not health.
The issue is political manipulation by the TPP authorities.
The international communication community has repeatedly shown that attempts to use WHA or other platforms to create two China's or one Taiwan will not succeed.
The one China principle is not only China's position.
It is a basic norm widely recognized in international relations.
That's my point.
Thank you.
Thanks for those valuable insights.
That was Dr Zhou Enxing, Associate Professor at the School of International Studies Nanjing University.
China's AI race is entering a new phase.
It's not just about building smarter models, but building the infrastructure to power them.
From the manufacturing hubs of Jiangsu to the renewable energy-rich plants of Gansu, local governments across China are rushing to build token factories.
Those are massive computing centers designed to generate and process the core units of AI activity.
Backed by companies like Huawei, China Mobile and DeepSeek.
These projects reflect China's broader push to commercialize computing power, strengthen technological self-reliance and turn AI into a new engine of economic growth.
For more on this, my colleague Zhao Yang spoke with Li Lun, Assistant Professor of Economics at Peking University.
So Professor Li Lun, first of all, what exactly is AI token?
And why are local governments across China racing to build token factories now?
Yeah, so the token in principle is the basic unit that an AI model is going to process.
So usually these model providers are going to use tokens as a billing unit.
So it can be a word, a number, a symbol.
So anything that we input into these large language models are converted first into tokens and then processed by AI and also built by the model providers.
So, as you mentioned, a token factory.
It basically is a large computing center that can convert all of the electricity and all of the computing powers, including chips, models and data, into these AI output.
So the AI is going to output text code images, videos or whatever the AI model is able to provide as a service provider?
So the key point of this token factory is that it's an infrastructure industry that can convert the electricity and infrastructure into the software service that the AI provider can provide us.
And local governments across China are racing into this because the demand for token has exploded in China.
So China's average daily token costs have exceeded 140 trillion by march of 2026, which is up by more than 40 from the end of last year and over a thousand times compared with early 2024 levels.
So this is basically, um you know, creating a big gap into the between the demand and supply and also a huge potential for commercial use for more computing infrastructure.
And companies like Huawei, China Mobile and DeepSeek are heavily involved in it.
So what role do these companies play in China's AI ecosystem?
Yeah, so you mentioned a good combination of companies.
So Huawei's role is mainly the hardware and also the infrastructure provider.
So, for example, it provides AI chips and also the computing clusters.
They are part of China's effort to reduce the reliance of foreign made GPUs.
And also we can make it more self-sufficient.
AI computing centers.
So, for example, the DeepSeq v4 was adapted to run Huawei chips and also the, you know, the Huawei's Ascend 950 supernode clusters will can fully support deep six model.
And talking about deep seek, deep seek is the model provider.
It's basically an open source and low cost, competitive large language model and it's being, you know, deployed on huawei supported infrastructures that could lower the barrier for china's developers and enterprises to use these AI models to build applications on domestic infrastructure.
And finally, companies like China Mobile is the network and platform provider.
So the telecom operators.
They operate using the communication networks to allow, for example, we could move some of the computation in the western area of China and to actually compute the computing needs in the eastern part.
So this also supports of cloud systems, the billing systems, also customer service for enterprises, making all of the AI ecosystem into a very widely available and accessible model for everyone in China.
And as computing demand grows rapidly, it requires a large amount of energy.
So how is China coordinating its digital and energy resources to ensure that AI services remain affordable and sustainable?
Yeah so, as you mentioned, AI computing is very energy intensive and China is doing a great job by linking these computing infrastructure with this energy geography.
So, as I mentioned, this East data West computing strategy is going to shift some of the computing task that's generated from the Eastern area to the Western regions where they have more land, more a source of renewable energy and also lower electricity cost.
So, for example, in gansu, you know, there's one of the china's computing hubs and data center clusters in qingyang, and basically this region had wind and solar resources and cheap electric electricity, but they can, you know, generate 10000 petaflop data center basically every year.
So China is also expanding the power grid to move a more effective and cleaner power into the future.
So we're expanding our renewable power base in a very fast pace.
So the affordability in the future of AI will depend not only on the chips and models, but also on cheaper electricity.
And I think China's advantage is that it can coordinate such a computer network and energy network at a national scale.
And China says the investment in the six networks could exceed 7 trillion yuan this year.
So what kind of economic effect could this generate?
So the six networks you mentioned refer to water networks, new type power grids, computer power networks and communication networks, urban underground pipeline networks and logistics networks.
So these are systems for a more digital, also greener and more resilient, more efficient economy.
So I think the short run effect of these investments are going to have basically creates orders and jobs in these construction equipment chips and also logistic related area.
So investments, as you mentioned, is going to exceed 7 trillion yuan in 2026.
And the short run effect is going to bring a lot of local jobs and local demand.
And the long-run effect is definitely productivity growth.
So computing powers, as we can see, they can lower the cost to AI adaption.
Power grids, for example, can reduce energy bottlenecks and also reduce the cost for electricity.
Logistic networks can lower the transaction cost and communication networks.
They can support all of the industrial network, or sorry, the industrial internet, autonomous driving, autonomous systems and smart cities.
So they all work together to generate an economic effect that's not only measured by GDP.
They're also measured by the quality of life.
If everything is well coordinated, they could be the operating system for China's next stage of industrial upgrading.
And as you mentioned, we've seen a surge of token calls in China.
So are we witnessing the rise of an entirely new smart economy built around AI and tokens?
Yeah, so we have seen a surge, but right now I think we're still in the early stage of the commercial adoption of AI.
So the surge is reflecting a cheaper and more accessible AI.
So for the adoption.
The Chinese users are very exposed to AI, including a wide range of models to choose from.
Token usage is going to rise when models become cheaper and also easier to use.
But it can also reflect in the future a shift from simple chatbots to agents and to robots.
The National Data Administration have described AI moving from simply conversational level to decision-making and execution level.
So these AI agents, they consume far more tokens than chatbots, because they not only talk to you, they also can plan and call different tools and also work on different coding in your laptop and revise these outputs and complete tasks in multi-step kind of way.
So these multi-modal applications are going to be another driver, because simply chatting, use text, are going to use relatively few tokens.
But if you generate AI video, if you generate images, they can consume far more.
So in the future.
I think this surge is definitely suggesting that AI is also moving beyond a simple chat box or a simple niche technology to a more you know, to a more capable and more you know relevant technology in not only in the workflow of everyone's life, but also in the production systems, in the industrial system and also in consumer services as well.
That was Li Lun, assistant professor of economics at Peking University, speaking with Zhao Yang.
US EV giant Tesla has officially abandoned its plans to build an electric vehicle factory in India.
The two sides remain divided over import tariffs, with Tesla pushing for tax cuts before setting up a factory in India.
While India insisted on local production first, instead of manufacturing locally, Tesla has focused on expanding its retail operations, opening four showrooms and several supercharger stations across India.
For more on this.
My colleague Lian Qingxuan spoke with Gao Xirui, political science PhD candidate, Department of Politics and Public Administration at the University of Hong Kong.
Tesla and the Indian government negotiated for roughly four years but failed to reach a deal.
So what is the core disagreement?
Is it mainly about tariffs, as reported?
So tariffs are.
One is one of the most important reason, at least at the state level, because you know, President Donald Trump has complained during the February 2025 is that India still have a too high tariff, although some have been lowered compared to what they had before the India American negotiation.
But still, overall, they have very high tariff protection.
So that's why Trump thinks Elon Musk should never manufacture Tesla models in India.
That's at the state level.
And there are some business-related reasons.
For example...
In India, Tesla has to be successful.
Tesla has to make several non-minor revisions to their car models in order to be successful.
In India, for example, India is quite hot.
So they have to remove the heating function and India charge extra money for use their fully automated direction capability, FSD.
And Tesla also have to make some other revisions, such as the windows, to adapt to the local environment.
And you know, the India, the basic infrastructure, for example, the condition of the road.
So they have to devote extra cost to update and localize the models, which means that they are harder to make a profit.
So that's one of the primary concern why they fail to reach a deal at the time point.
After entering India, Tesla has delivered only 383 vehicles in its first eight months of operation through last month, far below its original annual target of 2500 units.
So what has driven its performance so far below expectations?
I think one of the major reasons is price.
You know, in the Indian market, the consumers are quite sensitive to prices.
And, for example, average Tesla model in India would cost around 70000 US dollars, which is almost twice of the price which you get elsewhere.
So it's quite expensive. let alone compared to other local Indian automobile cars.
So the price is one main constraint.
And another constraint would be the infrastructure.
For example, the charging networks, but that would be mainly constraints.
India still lacks in EV infrastructure, and that also includes power reliability and charging networks, etc.
So how critical is infrastructure maturity for scaling EV adoption?
I think it's very crucial.
For example, China has been operating for over 2 million public charging points, with nearly half of them featuring ultra-fast charging capabilities, meaning that When you drive a car on the highway, you don't need to wait a lot of time to get it recharged.
However, in India, I think the infrastructure still has a lot of room to improve.
And, for example, you have to first connect the metropolitans together, for example, New Delhi and Mumbai.
And that means you have to build much more charging networks than what India has now.
And what supports China's charging infrastructure is that China generates about more than 33 of global electricity and leads the world in renewable energy.
So that India have to first generate much more stable and reliable electricity, build infrastructure networks, and then they can think about which are the primary routes and the primary metropolitans that want to have more EV coverage first, and then they can set off.
Apple and Samsung have expanded manufacturing in India, while automakers such as General Motors and Ford have struggled.
So why is the automotive industry much harder to localize than electronics manufacturing?
I think this is a very good question, because I think it is somehow counterintuitive, because people tend to think that high end Mobile phones are more harder to make than ordinary automobiles.
There are some political reasons and local concerns from India inside this phenomenon.
For example, India don't have large local mobile phone manufacturing.
However, it has a very strong market. automobile industry that it wants to protect.
For example, India still relies a lot on the Tata Group and the core business group of the Tata Group is automobiles.
How strong is the Tata Group?
It is actually quite strong to the extent that it actually bought the Land Rover and Jaguar from the British.
So India still relies a lot on these automobile industry.
And that means they will be less friendlier to other foreign automobile industries because they want to protect their own industry to make sure that they are still strong in automobile manufacturing.
To look into a bigger picture from the perspective of global EV competition, what kind of ripple effects could Tesla's decision to abandon its India factory plans have on India's Make in India strategy and its future ability to attract foreign investment?
I think there are many perspectives, at least three effects.
So first, overall on the make.
In India, the EV industry will be very crucial if you want to move forward with scaling up your manufacturing.
So if Tesla's decision to abandon, that means it's upstream manufacturers, for example, who manufacturing those hardwares for the Tesla models, will suffer,
And they have to either transform or they have to find other suppliers who want their hardwares that are designed for Tesla.
So that would be a bad news for India's making India.
And the second, let's look at the environment.
And India is one of the key country that want to transform its energy components and want to rely more on renewable energy.
And this Tesla's decision.
If they cannot land in India and probably India's efforts will be India will find a harder time to promote EV transition and transfer from fossil fuels to clean energy.
And last but not least, because Tesla's negotiation was with one of the most developed regions in India, that's the Maharashtra, I mean, the state where Mumbai locates in.
So that would be signaling some kind of confidence for other third-party observers, because Maharashtra is already one of the most developed regions in terms of starting a business.
And if they fail to reach a deal even in these regions, it's less likely for other investors to invest in other parts of India.
And how do you assess India's overall business environment for foreign companies?
Overall, India is very ambitious in terms of developing its own manufacturing, as well as attracting FDI.
And India indeed has lowered some of its tariffs because they have been putting some efforts into building more reliable, friendlier business environment.
However overall, especially for foreign companies, the bar is still quite high and tariffs are still higher, to the extent that many foreign companies would rather abandon the large market of India instead of entering it.
And there were some other problems within India's boundaries is that for each state in India they might have different regulations and different interests and in different rates.
So it actually become harder for foreign companies to set multiple office within India and for them to connect with each other and to do business across a lot of states over India.
So in the future, if India still wants to develop its economy and fully fulfill its making India plan, They have to first remove the high tariffs and then they have to somehow settle with the internal boundaries that prevent other foreign companies from flourishing.
That was Gao Xirui, political science PhD candidate from the University of Hong Kong, talking with my colleague Lin Qingxuan.
That's all the time for this edition of World Today.
I'm Guiana in Beijing.
Thank you so much for listening.
Bye for now.
