This episode contains segments on:
- State Council Regulations on Outbound Investment;
- China’s May 2026 Purchasing Managers’ Index (PMI);
- RatingDog China General Manufacturing May 2026 PMI; and
- European Commission College of Commissioners debate on EU-China relations.
Listeners are also invited to join the European Chamber’s Midsummer Business Reception on 12th June in Beijing.
Contact:
We’d love to hear your feedback. Contact us at website@europeanchamber.com.cn.
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Read more:
State Council Regulations on Outbound Investment
https://www.news.cn/20260601/e39cc163c50c448ea60a1fe3bffde296/c.html
https://www.ndrc.gov.cn/xwdt/xwfb/202606/t20260601_1405611.html
China’s May 2026 PMI
https://www.stats.gov.cn/sj/zxfb/202605/t20260531_1963824.html
https://www.stats.gov.cn/sj/zxfbhjd/202605/t20260531_1963825.html
RatingDog China General Manufacturing May 2026 PMI
https://www.pmi.spglobal.com/Public/Home/PressRelease/8537e35754134e47b49b20cb288ead9c
European Commission College of Commissioners debate on EU-China relations
https://ec.europa.eu/commission/presscorner/detail/en/read_26_1201
The European Chamber’s 12th June Midsummer Business Reception
https://www.europeanchamber.com.cn/en/upcoming-events/29178
Transcript:
Francesca: Hello and welcome to China ShortCuts,
XINHE: The European Chamber’s weekly catchup on China’s business landscape.
Francesca: This episode was recorded on 3rd June 2026.
(MUSIC)
Francesca: On 1st June, the State Council released the Regulations on Outbound Investment, or State Council Decree 837, which will come into force on 1st July 2026. The regulations provide the State Council with legal means to “take measures to adjust relevant country-specific investment policies, prohibit or restrict the import and export of goods, technology, or international trade in services” in instances when Chinese investors encounter trade-related investment barriers or obstacles when investing overseas.
XINHE: Published shortly after the State Council’s Regulations on the Security of Industrial and Supply Chains, or Decree 834;and the State Council’s Regulations on Countering Improper Extraterritorial Jurisdiction by Foreign States, or Decree 835, Decree 837 appears to be an additional piece of legislation that provides China with a legal framework for taking retaliatory measures against actions it perceives as damaging the rights and interests of its companies.
As is the case with the two previous decrees, the inclusion of vague language in key provisions contained in the Regulations on Outbound Investment raises the risk that legitimate commercial decisions could be interpreted as violating the legislation. In a worst-case scenario, the decree could be used as a coercive instrument to pressure those subject to its enforcement into complying with political mandates that sit outside the domain of commercial logic.
Francesca:To ensure FIEs can comply, the European Chamber strongly recommends the Chinese authorities publish policy interpretation guidelines in a timely manner that specify if and under what circumstances FIEs doing business in/with China are within the scope of the legislation, as well as definitions for key terms contained within.
This is particularly important at a time when global tensions are increasing, and there is an opportunity for China to demonstrate to companies that it can provide a transparent and predictable investment environment.
(MUSIC)
Francesca: Data released by the National Bureau of Statistics on 31st May showed that manufacturing activity growth in China stagnated in May. The official manufacturing purchasing managers’ index, or PMI, slipped to 50 points, down 0.3 percentage points from the previous month. The reading sits at the threshold between expansion and contraction.
Xinhe: The Bureau’s production index came in at 51.2 points—staying in expansion territory—while all other subindices covered by the PMI showed contraction. Notably, the new orders index stood at 49.9 points, down 0.7 percentage points compared to April’s reading, indicating that demand for manufactured products had declined.
Francesca: China’s official non-manufacturing PMI, which gauges services and construction business activity, stood at 50.1 points in May, up by 0.7 percentage points from the previous month. The service business activity index registered 50.3 points, with rail transportation; telecommunications, radio, television, satellite transmission services; and insurance services all registering strong expansion of above 55 points.
(MUSIC)
Francesca: Findings of a private survey released on 1st June suggest that operating conditions in China’s manufacturing sector remained robust in May. The RatingDog China General Manufacturing PMI stood at 51.8 points in May, down from 52.2 points recorded in the previous month. This marks the sixth consecutive month that the index had stayed above the 50-point threshold, which indicates an overall increase in the manufacturing segment of China’s economy, compared to the previous month.
Xinhe: Commenting on the data, Yao Yu, Founder of RatingDog—one of the companies responsible for the survey—attributed the positive finding to the fact that inflationary pressures on firms had eased, noting this had provided some relief to businesses when it comes to costs and pricing. At the same time, Yao also warned that softening demand growth and external orders both warrant attention.
(MUSIC)
Francesca: On 29th May, the European Commission College of Commissioners met to debate EU-China relations. An official read-out of the meeting noted that the Commission’s overarching approach to EU-China relations will continue to centre on the notion of de-risking, not decoupling, while also stating that although “China remains a critical partner, the current state of the trade and investment relationship is not sustainable.”
It is expected that the outcomes of the debate will feed into upcoming discussions at the G7 Leaders’ Summit, set to take place from 14th to 16th June, as well as European Council meetings scheduled to take place this month.
Xinhe: The European Chamber has been long highlighted the need for China to achieve a more equitable trade and investment relationship with the EU, warning that the current direction of travel is unsustainable.
In this regard, it is a positive that recent major Chinese policy documents, including the Premier’s 2026 Report on the Work of the Government—published at this year’s Two Sessions—and the country’s 15th Five-year Plan, have included measures aimed at boosting domestic consumption and addressing ‘involution-style’ competition within the country.
If successfully implemented, such actions could reduce pressure on the Chinese authorities to rely on exports as a driver of economic growth, and help the country to achieve more balanced trading relationships with key partners, including the EU.
(MUSIC)
Francesca: On 12th June, the European Chamber’s signature annual Midsummer Business Reception will take place in Beijing.
XINHE: The event will be attended by senior members of the European business and diplomatic community based in the city, including standing Ambassador of the Delegation of the European Union to China, HE Jorge Toledo Albiñana, who will soon conclude his tenure in the country.
Francesca: Join us at Rosewood Beijing to meet industry leaders, entrepreneurs and partners, as we bid farewell to Ambassador Toledo. To ensure your attendance, we encourage advance online registration and payment by 5th June.
(MUSIC)
XINHE: Thanks for listening, and don’t forget to tune in again next week.
Francesca: In the meantime, please find useful links in the episode notes.