Tariff pause a positive sign, says Lenovo
BEIJING: China's Lenovo said yesterday the tariff pause between Washington and Beijing was positive and growth in China's artificial intelligence (AI) infrastructure remained strong despite United States-China tech tensions.
"The truce is a positive situation," said Lenovo chief executive officer Yang Yuanqing in an interview after the world's largest maker of personal computers (PCs) released its fiscal first quarter results.
"We feel better than the previous quarter — it brings us more certainty rather than uncertainty."
The US and China have extended a tariff pause for another 90 days to November, averting triple-digit duties on each other's goods and offering temporary relief to businesses on both sides.
Lenovo's overall revenue for the three months ended June 30 (1:03) climbed 22 per cent year-on-year to US$18.8 billion, exceeding analysts' expectations of US$17.4 billion, according to LSEG data.
Yang attributed the performance to strong AI demand in its three major business segments, each scoring double-digit growth in the first quarter, and said US tariffs on Chinese goods had so far not had much impact.
Chinese exports to the US, including PCs, currently face a 30 per cent levy, despite the tariff truce.
Yang said the US accounted for less than 20 per cent of its total revenue.
Net profit attributable to shareholders increased 108 per cent year-on-year to US$505 million, well ahead of the consensus estimate of US$307.7 million. Reuters
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- The Star
China's Wing Loong-2 is a UAV workhorse with an overseas advantage
From Nigerian raids on Boko Haram hideouts to Saudi strikes at Houthi positions along the shores of the Red Sea; from Pakistani sorties across the Iranian frontier to Libyan missiles in the civil war, one constant presence emerges – China's Wing Loong-2 (WL-2), showcasing the reach of Chinese drone technology across multiple conflict zones. At the same time, a variant of the same platform – the GJ-2 or 'Attack 2' – is conducting live-fire exercises around Taiwan and patrolling the South China Sea, serving as the backbone of the People's Liberation Army's (PLA) uncrewed reconnaissance and combat capabilities. This medium-altitude, long-endurance reconnaissance and strike unmanned aerial vehicle (UAV) was developed by Chengdu Aircraft Corporation, a subsidiary of China's state-owned Aviation Industry Corporation of China. It was first unveiled at the 2016 Zhuhai air show, with its maiden flight the following year. The WL-2 has been acquired by buyers in the Middle East, Africa and Asia and deployed in multiple combat theatres, establishing it as one of China's most commercially successful military drone exports. Domestically, the system went into service in the PLA in 2018, designated as the GJ-2. The weapon, minus the winglets from the WL-2 prototype, made its debut at China's 2019 National Day military parade. Aside from military applications, the platform is also used for surveillance and communications in civilian disaster rescue operations. The WL-2/GJ-2 is China's answer to the General Atomics MQ-9 drones from the United States. Its conventional aerodynamic design bears many similarities to the MQ-9 Reaper, including its dimensions: 11 metres (36 feet) long and 20.5 metres wide. The aircraft's maximum take-off weight is 4,200kg (9,260lbs) – almost 500kg lighter than the Reaper – but its external weapons payload capacity is much smaller at 480kg compared to the Reaper's 1,400kg. The Chinese drone's maximum speed of 370km/h (230mph), a service ceiling of 9,000 metres, and 1,500km combat range are also all notably lower than the Reaper's, which are 480km/h, 15,000 metres and 1,900km, respectively. These weaknesses are largely due to an inferior engine. The WL-2 is the first Chinese drone to be powered by a turboprop aircraft engine – the domestically developed WJ-9, which has a maximum output of 500 to 600 shaft horsepower. In comparison, the Reaper's Honeywell TPE331-10 turboprop engine delivers up to 900 shaft horsepower, offering significantly greater power and performance potential. In terms of endurance, the WL-2 can operate for 20 hours with standard payload configurations and up to 32 hours with reduced weapon loads. The Reaper's operational endurance is 27 hours. Despite its unremarkable specifications, the WL-2 boasts unique features that make it a key asset at home and a top seller abroad. To navigate, the drone employs China's own BeiDou satellite navigation network, a design that provides redundancy against potential signal denial by the US-operated GPS system in contested environments. The truck-mounted ground station can operate multiple drones with a control radius of 200-300km beyond visual line-of-sight mode, and the satcom mode enables remote control via satellite link from up to 3,000km away – though reportedly few foreign users have the satcom configuration. For reconnaissance missions, the UAV is equipped with a stabilised electro-optical/infrared sensor pod under the fuselage for day and night vision, as well as a synthetic aperture radar for all-weather operation. An airborne data link can share real-time battlefield information obtained by its radar, camera and sensors directly with distance combat units via system terminals. As for combat, its six underwing hardpoints support a range of munitions, such as the YJ-9E anti-ship cruise missile, the LS-6 satellite-guided bomb, TL-2 air-to-ground missiles, AG-300M laser-guided air-to-ground missiles, and the FT series of satellite-guided bombs weighing between 15 and 130kg. In 'beast' mode, the drone can carry up to 12 missiles or bombs, and as many as 18 16kg-grade TL-2 lightweight air-to-ground missiles mounted on triple-ejector racks. The drone's inventory also includes the laser-guided Blue Arrow-7 (BA-7) air-to-ground missile, which is benchmarked to the Reaper's AGM-114 Hellfire in weight, size and range. Besides reconnaissance and strike capabilities, the developers have equipped the WL-2 with an electronic warfare (EW) module, transforming it into an unmanned electronic reconnaissance, active jamming and communication countermeasures platform. The EW configuration is distinguished by a disc-shaped antenna fairing, with multiple extended antennas. The modular design also allows the WL-2 platform to be reconfigured for more extensive applications, such as weather detection and telecommunication relays. The civilian model – the WL-2H – has often been deployed to fly into typhoons and earthquake zones in China to inspect disaster damage while establishing emergency mobile connections for residents. The WL-2 is also capable of autonomous take-offs and landings, along with simplified manoeuvres for detection, tracking and target engagement – all of which can be controlled through easy 'point-and-click' commands by a single operator. Additionally, the UAV is equipped with artificial intelligence (AI) algorithms that enable it to check its own status and identify friends or foes, while autonomously assessing the threat level and taking action accordingly. 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With lighter economic burdens, faster income growth and greater confidence in the future, consumers in such areas have stronger purchasing power and a greater willingness to spend, becoming a new engine for consumption growth as China seeks to shift its economy towards a consumption-driven model and away from one relying on exports and investment. 'Lower-tier cities have been overlooked in the past, with their consumption potential untapped, while the disposable consumption capacity of first-tier city residents is more affected by the slowing economy,' said Professor Liu Xuexin, who heads a consumer data research institute at Capital University of Economics and Business in Beijing. In China's governance hierarchy, county-level cities sit below prefecture-level ones, covering smaller urban and rural areas, including townships and villages, and serving as regional hubs for commerce, education, healthcare and local government. 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In terms of retail sales, about 97 per cent of the 171 non-first-tier cities across China that publish such data reported positive year-on-year growth last year, with third- and fourth-tier cities outperforming, according to statistics compiled by Chinese news app in March. Yuxi, a fourth-tier city in Yunnan province, reported the highest growth rate at 8.8 per cent. In contrast, official figures showed that Shanghai's total retail sales of consumer goods fell 3.1 per cent last year, while those in Beijing declined 2.7 per cent. Lily Huang, a housewife who moved from Beijing to Haiyan, a county-level city in Zhejiang, several years ago with her family, said she now buys the same kinds of products she used to buy in Beijing, despite the bad macroeconomic environment in recent years and its effects on incomes. 'We don't feel a lot of pressure, most probably because we don't have a large loan to repay since home prices are much cheaper here,' she said. A lower housing price-to-income ratio than in high-tier cities is one reason lower-tier cities are experiencing faster consumption growth, according to a research note issued by China International Capital Corporation in June. Higher proportions of handed-down properties, greater family financial support for home purchases and lower overall debt burdens have also contributed, it said. Besides, market penetration rates in many consumer sectors in high-tier cities have nearly reached saturation point, leaving little room for further expansion. Using ready-to-drink coffee as an example, the frequency of consumption among consumers in China's first- and second-tier cities is approaching that of Japan, South Korea and Western countries, analysts from Puyin International said in a note issued in June. However, the overall penetration rate in China remained significantly lower than in high-tier cities, they said. Consumers in higher-tier cities, who are generally wealthier, are less sensitive to policy stimuli Well aware of this trend, Starbucks entered 166 new county-level markets in China in the 2024 financial year. In its second-quarter business update this year, Starbucks China said there were Starbucks stores in more than 1,000 county-level markets. A series of government policies has also boosted consumption confidence in such regions, according to the Puyin International note. 'In contrast, consumers in higher-tier cities, who are generally wealthier, are less sensitive to policy stimuli, and meanwhile they face greater employment pressures, more severe asset depreciation due to falling housing prices, and a higher potential impact from tariff wars,' it said. A nationwide consumer goods trade-in programme has been in place in China since March last year as the authorities work to drive spending and boost the economy. Fu Longcheng, vice-president of the China General Chamber of Commerce, told a news conference in January that the consumption structure in county-level markets is being optimised and upgraded, with increased spending on developmental and experiential consumption, as well as service-oriented consumption, and clear trends towards more consumption for personal gratification. 'Entertainment formats such as cinemas, along with new tea drinks, fast fashion and maternity chains are continuously entering county markets, while new consumption models like live-streaming e-commerce and instant retail are rapidly integrating, boosting the momentum for quality enhancement and expansion of county-level consumption,' Fu said. Products in hot demand not only include trendy milk tea and artisanal baked goods, once exclusively found in first- and second-tier cities, but also Boston lobsters and Sam's Club speciality products on dining tables and tickets for music festivals and concerts. More spending by affluent rural residents is also contributing as the country's top leadership pushes forward with an urbanisation drive, reiterating its determination over the past few years to make it easier for farmers to settle in urban areas. Data from the National Bureau of Statistics said that rural retail sales of consumer goods grew by 4.3 per cent last year, outpacing urban growth by 0.9 of a percentage point. In line with that, the McKinsey survey found that the proportion of rural consumers who were optimistic rose by 6 percentage points last year to 73 per cent. Members of Gen Z – those born between 1996 and 2010 – from high-income families in rural areas stood out as the most confident, with 88 per cent having an optimistic outlook, 11 percentage points higher than in 2023. Meanwhile, county tourism is emerging as a vital contributor to efforts to increase consumption's role in the Chinese economy, attracting young people from first-tier cities seeking cost-effective, experiential getaways and at the same time fostering sustainable growth in lower-tier regions. Reports from several travel platforms have highlighted it as a hot trend this year, with posts on RedNote, China's leading lifestyle app, touting the middle-class appeal and affordability of horse riding and tennis lessons in county-level cities. The ITB China Travel Trends Report 2024/25 noted that rural counties are increasingly popular destinations among younger travellers drawn to authentic experiences such as ecotourism and cultural festivals. Huang said she had welcomed several batches of friends from Beijing who had visited Haiyan for sightseeing in the past couple of years. 'They really enjoyed the stay here as it is cheap and relaxing,' she said. In a plan aimed at revitalising rural areas during the period from 2024 to 2027, the State Council, China's cabinet, outlined measures to 'fully promote rural consumption', including the development of county-level commercial systems, providing a key focus for unleashing rural consumption potential. But researchers remain cautious about whether the rise of consumption in lower-tier markets is sufficient to revitalise overall consumer activity. Liu, the Beijing professor, noted that compared to big cities, lower-tier cities lag behind in infrastructure and the overall consumption environment, including consumer rights protection, limiting their consumption potential. 'Whether the consumption boom in these regions can sustain China's shift to a consumption-driven economy is hard to answer, but it is undoubtedly a crucial supplement,' he said. Fudan University economist Shi Lei said that while growth is evident, county-level consumption still faces constraints, primarily due to insufficient local financial resources, with many areas, including regions mainly populated by ethnic minorities, relying on fiscal transfer payments from higher-level governments to sustain development. 'In the long term, the potential arising from underdevelopment should be recognised,' he said. 'But short-term performance should not be overestimated.' -- SOUTH CHINA MORNING POST
The Star
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China's early South American soybean buys squeeze US out of peak export window
China has moved early to lock in soybean supplies from Brazil for September and October, sidelining US exporters from what is traditionally their most lucrative selling period. The shift underscores Beijing's growing trade reliance on South America and comes amid renewed political and commercial tensions with Washington. According to market analysis from Brazil's Safras & Mercado, traders reported Chinese purchases of roughly 8 million tonnes of soybeans for September and 4 million tonnes for October, about half of the country's projected demand for the two months. All volumes are sourced from South America, with Brazil capturing the lion's share. The move effectively shortens the US 'window' for soybean shipments to China, which typically runs from September to January before the Brazilian harvest arrives. Last year, China imported 105 million tonnes of soybeans, 22.13 million of them from the US, illustrating how pivotal this early-season slot has been for American farmers. The decision to buy more soybeans from South America comes as Chicago Board of Trade soybean futures hover near five-year lows, with reduced Chinese buying expected to keep prices under pressure. When asked about the soybean purchases and their impact on US producers, Liu Pengyu, a spokesperson for the Chinese embassy in Washington, did not directly address the trade volumes. Instead, he said Bejing hoped 'the US side will work with China to implement the important common understandings reached by our heads of state' and called for dialogue 'on the basis of equality, respect and mutual benefit' to promote sustainable bilateral relations. The Chinese embassy in Brasilia did not respond to requests for comment. On Monday, US President Donald Trump publicly urged Beijing to quadruple its soybean purchases from the United States, a dramatic call just days before a tariff truce between the two countries was set to expire. Posting on social media, Trump claimed China was concerned about soybean shortages and said he expected 'quick' orders from Beijing. The remarks briefly sent Chicago futures higher, but market watchers quickly questioned whether such a deal was realistic. Meeting the request would require China to source most of its soybean imports from the United States, an unprecedented shift that would displace established Brazilian volumes. It remains unclear whether increased Chinese agricultural purchases would be a condition for a lasting trade deal between Beijing and Washington. In the meantime, China has not booked any US soybeans for the fourth quarter, and some feed manufacturers are reportedly testing alternative suppliers, including Argentina, to secure cheaper South American protein meals. In Brazil, the news of both the early Chinese commitments and Trump's gambit was met with quiet confidence among exporters. In a statement, the Brazilian Soybean Producers Association said on Monday that it was monitoring the impact of a potential trade deal on crops, but that the combination of strong September and October sales could be an opportunity to further cement Brazil's role as China's primary supplier. As the US risks losing ground in the Chinese market, Brazil and China are also working on longer-term trade integration. On Sunday, the Brazilian newspaper Folha de S. Paulo reported that officials from both countries were said to be drafting a bilateral protocol to recognise environmental certifications and traceability systems for key agricultural exports, particularly beef and soybeans. The plan would align methodologies for measuring emissions, land use and animal welfare, allowing Chinese authorities to formally recognise Brazilian sustainability seals such as 'Carbon Neutral Meat' and 'Low Carbon Soy'. Measures include integrated digital tracking, QR codes linking to environmental data and shared databases. The protocol aims to smooth trade flows, add value to certified products and pre-empt future non-tariff barriers. A Chinese technical delegation is expected in Brazil later this year to inspect systems on the ground before finalising the deal. The talks come against a backdrop of US tariff hikes on Brazilian goods and growing political friction between Washington and Brasília, even as China expands its list of authorised Brazilian exporters in other sectors, from coffee to processed foods. -- SOUTH CHINA MORNING POST
