SCO summit + Himalayan glacier collapse + “Hacking-for-hire”

SCO summit + Himalayan glacier collapse + “Hacking-for-hire”

c.bianchedi
Wed, 09/02/2026 - 16:20

picture alliance / newscom | Iranian Presidency

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MERICS Briefs

MERICS China Essentials

Sep 03, 2026

11 min read

SCO summit + Himalayan glacier collapse + “Hacking-for-hire”

Top Story

China sticks with Iran, but downplays top-level contact at SCO summit

The Shanghai Cooperation Organization (SCO) summit in Bishkek this week put China’s balancing act over Iran on full display: While the ten-country group again expressed its “condemnation of the military strikes” against fellow member Iran, Xi Jinping avoided a formal bilateral meeting with President Masoud Pezeshkian. While Iranian media reported that both leaders did speak briefly in Kyrgyzstan, the Chinese government released no details. This suggests a careful choreography to avoid further confrontation with Washington and limit the risk of alienating important commercial partners like the United Arab Emirates and Saudi Arabia in the Gulf region – while at the same time maintaining Beijing’s support for its strategically and economically useful partner, Iran.

China in recent weeks has strongly rejected Washington’s threats to sanction Iran’s trading partners, saying it will “firmly defend” its interests. But the latest developments in Bishkek suggest that China wants to maintain its relationship with Teheran without unnecessarily raising its profile as a geopolitical irritant – especially as Xi is expected to meet US President Donald Trump in Washington in late September. The Chinese government’s readout at the SCO summit only recorded meetings with Russian President Valdimir Putin, Kyrgyz President Sadyr Japarov and counterparts from Mongolia and Uzbekistan. The Iranian president was nevertheless visibly present in Bishkek, appearing alongside Xi, Putin, Indian President Narendra Modi and other regional leaders.

China’s tiptoeing over Iran was only one aspect of a summit that underscored the SCO’s growing identity as a forum for non-Western co-operation – a development that many members, including Iran, have been keen to advance. The Bishkek meeting marked the SCO’s 25th anniversary and ended with around 30 agreements on security, economic and cultural cooperation. Among the more concrete outcomes were progress on the SCO Anti-Drug Centre and the SCO Development Bank, the establishment of both having first been agreed at last year’s summit in Tianjin. Since these projects have been long in the making – and key details continue to remain unresolved – the familiar criticism that the SCO produces more diplomatic declarations than tangible results remains valid.

"China’s approach to Iran reflects a careful balancing of interests. Beijing wants to preserve the strategic and economic benefits of the relationship, but it has little interest in being drawn into Iran’s conflict with the United States.”
Eva Seiwert , Senior Analyst, MERICS

Media coverage and sources:

- Chinese MFA (CN Xi Jinping's Speech at the 26th Meeting of the SCO Council of Heads of State
- Russian government website (RU Bishkek Declaration on the Twenty-Fifth Anniversary of the Shanghai Cooperation Organization
- Akashvani News: PM Modi stresses freedom of navigation, civilian protection in meeting with Iran President
- IRNA: Pezeshkian, Xi hold brief talks on sidelines of SCO summit
- IDCPC: Xi, Japarov chart new course for China-Kyrgyzstan ties

METRIX

460%

This is how much Unitree Robotics shares gained during their first trading day on the Shanghai STAR Market on August 19. The robot and humanoid maker raised CNY 6.1 billion (USD 905 million) by allocating a little over 40 million shares to investors at an initial public offering (IPO) price of CNY 150.80. The stock then opened at CNY 1,110, briefly valuing Unitree at USD 66 billion. The IPO was hugely oversubscribed by retail investors, driven by a mix of tech hype, huge government support for this nascent industry and limited investment alternatives. The share price has fallen about 45 percent from its opening high, fueling concerns about a speculative bubble. But with shares trading at around CNY 615 on September 3, Unitree’s market cap was still four times its IPO valuation – USD 37 billion compared with USD 9 billion. (Source: Reuters )

TOPICS

Deadly glacier collapse puts China’s development plans for Tibet to the test

The Himalayan glacier collapse that triggered devastating flash floods in Nepal and China’s Tibet Autonomous Region has dealt a blow to Beijing’s plans develop the area as an economic corridor towards South Asia under its Belt and Road Initiative. The Gyirong Port border crossing and the road leading to it were destroyed, with Chinese authorities so far reporting 21 dead and 541 missing and difficult rescue conditions due to floodwaters and bad weather. Both the 14th and 15th five-year plans for Tibet identify Gyirong as a strategic economic and transport hub to develop, while also calling for tighter security in a strategically sensitive border area. These are part of Beijing’s broader efforts to integrate Tibet, including the “Sinicization” of the region.

The disaster was not entirely unforeseen. China and Nepal have identified glacier collapse among major risks, and established systems to monitor glacial lakes and provide early warnings of geological hazards – yet the August 26 disaster still caught officials off guard. Nepalese Foreign Minister Shisir Khanal said his country was “paying the ultimate price for a global crisis we did not create” and called on China, the US and India, the world’s top three greenhouse gas emitters, “to compensate vulnerable nations.” The events highlight the limits of Beijing’s ability to manage climate-related hazards in a changing Himalayan environment. For Beijing, the disaster exposes the tension between mounting environmental risks and its drive to develop and “securitize” its western frontier.

"This tragedy will hinder plans for the development of Tibet. But it also raises questions about Beijing’s system of prioritizing political stability above all else in its border regions – and about the extent of local decision-making power when it comes to economic development championed by the central government.”
Daria Impiombato , Senior Analyst, MERICS

Media coverage and sources:

- Reuters: Chinese rescue work in Tibet flood disaster zone still trudging along days later
- Telegraph India: Nepal targets India | Nepal seeks climate compensation for deadly flood; says it is 'moral liability', 'not charity'
- Stimson Center: Investigating an Emerging Climate Hazard: Transboundary Glacial Floods on the China-Nepal Border
- Reuters: Hit by deadly floods, Nepal renews push for Chinese data and early warnings

US internet domain seizures expose scaling up of China’s “hacking-for-hire” model

US authorities’ recent announcement about the seizure of internet domains to disrupt a Chinese espionage pipeline has raised concerns about the ever greater scale of China’s “hacking-for-hire” industry, in which private companies are paid by government agencies to conduct cyber operations on their behalf. The US Department of Justice said that “a state-sponsored group known as ‘QTFY’”, operating through a Chinese company called Nanjing Xinjiuwei Network Technology Co., used its so-called QScan and QRouter platforms to automatically discover and compromise internet-connected devices worldwide and then to conceal subsequent attacks using them.

Chinese hacking-for-hire was exposed by an online document dump in 2024, which showed how a company called i-Soon sold hacking capabilities and stolen data to government agencies. But whereas i-Soon appeared to solicit commissions for specific operations or data, QTFY seems to have scaled up the provision of such services by developing reusable tools that automate parts of the hacking process. Its clients allegedly included China’s Ministry of State Security and the People’s Liberation Army – and it targets “critical infrastructure” such as NASA, the Federal Reserve and the US Senate.

"The QTFY case should send a few alarm bells ringing in the West about China’s ‘hacking-for-hire’ sector. Commercial providers appear to be automating an increasing number of hacking functions, enabling large-scale operations, while maintaining ‘plausible deniability’ for Beijing.”
Ru-Tung (Elizabeth) Sun , Analyst, MERICS

Media coverage and sources:

- IC3: China-Linked Hacking Group QTFY Targets Military and Critical Infrastructure
- US Department of Justice: Justice Department and FBI Seize Platforms Operated and Used by China State-Sponsored Hackers to Target U.S. Critical Infrastructure
- SCMP: US seizes Chinese hacking platforms targeting Nasa, Fed and Senate

China braces for renewed trade clashes with hardline defense of economic model

China is girding itself for new confrontations with the EU and the US over its trade policy, signaling to audiences both domestic and foreign that it will not back down from looming challenges to its manufacturing-intensive and export-oriented economic model. In a series of articles published late August by the People’s Daily, Zhong Caiwen, a pen name used to convey the thinking of the Central Financial and Economic Affairs Commission headed by Xi Jinping, emphasized the resilience of China’s economy and argued that “the dividends of Chinese manufacturing benefit consumers and partners worldwide.”

With Xi Jinping and US President Donald Trump expected to meet in late September and an EU-imposed deadline for progress on re-balancing trade approaching in October, Beijing seems keen to put its citizens on a trade-war footing, while dismissing foreign worries about a “China Shock 2.0.” This reinforces the line China’s Ministry of Commerce defined in its recent position paper on the “so-called issue of overcapacity.” A sign of the renewed public pressure Beijing appears to expect came at this week’s meeting of G20 finance ministers. US Treasury Secretary Scott Bessent accused Beijing of blocking a joint statement criticizing China’s export dependency, adding that “non-market-based economies pushing out a never-ending stream of cheap exports is not sustainable.”

"Ahead of key meetings with the US and EU, China is keen to demonstrate its confidence in its economic model. Beyond posturing, the message is clear: China will retaliate against any foreign restrictions it perceives as unfair.”
Sophia Pradels , Analyst, MERICS

Media coverage and sources:

- People’s Daily (CN 钟才文四连发！读懂下半年中国经济发力方向 (Zhong Caiwen’s Four-Part Series! Understanding the Directions of China’s Economic Growth in the Second Half of the Year)
- China’s MOFCOM (CN 关于所谓“产能过剩”问题的中方立场 (China’s Position on the So-Called Issue of “Overcapacity”)
- Bloomberg: China Puts Brave Face on Growth in Rare Defense of Economy
- Caixin: China Signals No ‘Bazooka’ Stimulus in Key State Media Commentaries
- New York Times: China Rejects G20 Criticism of Its Export Strategy

MERICS CHINA DIGEST

Hong Kong democracy activist Joshua Wong faces longer prison sentence after second national security guilty plea (CNN World)

Joshua Wong was accused of conspiring with fellow activists to call for foreign sanctions against China and Hong Kong in 2020. The former teenage activist, who became a leader of Hong Kong’s democracy movement, is already serving a near-five-year sentence. He faces the prospect of many more years in prison after pleading guilty on Wednesday to the latest national security case brought by prosecutors. (26/09/02)

China highlights advanced wartime tech in defence mobilisation law update (South China Morning Post)

China has passed the first amendment to its national defense mobilization law in 16 years. It includes a focus on new technologies, with experts saying it could cover AI, drones, cyberspace, biotechnology and quantum technology. The law for the first time formally defines national defense mobilization as a rapid transition from peace to war by putting the country’s economic and social resources at the service of national defense. (26/09/01)

China warns of ‘consequences’ over Taiwan presence at Pacific Islands Forum (The Guardian)

China said it had serious concerns about Taiwan’s presence as a “development partner” at the annual Pacific Islands Forum on the Pacific island of Palau, warning of consequences. In response, Australian Prime Minister Anthony Albanese told reporters: “The Pacific Islands Forum determines what happens here, not any other country”, a stance later echoed by New Zealand’s foreign minister. (26/09/01)

Xi Jinping’s Cairo trip marks ‘best ties in history’ as Egypt seeks to balance West (South China Morning Post)

Following the Shanghai Cooperation Organisation (SCO) summit, Xi Jinping visited Egypt, his second trip in a decade and exactly 70 years after Beijing and Cairo began diplomatic relations. The two countries’ economic and military ties have expanded rapidly in recent years. With Egypt looking to diversify its defence relationships and advance its industrialization, and China viewing Egypt as a regional “pivot,” the meeting looks set to reaffirm their comprehensive strategic partnership. (26/08/31)

Career finance official moves into pole position to become Shanghai’s next mayor (South China Morning Post)

Zhu Zhongming, a finance official, has been appointed secretary of the Shanghai municipal government’s Communist Party group, positioning him to become the city’s next mayor. The move comes a year ahead of the next national party congress, which is expected to create vacancies at the top of Shanghai’s leadership and potentially allow him to rise through the ranks. (26/08/30)

China’s actors written out of dramas as AI doubles ready to take their roles (Financial Times)

Cost-effective advanced AI video generation programs, such as the Seedance 2.0 model, are now competing with Chinese actors and online influencers. In the first quarter of 2026, 95% of the 128,000 short dramas that were released on the Chinese internet were AI generated. The economic consequence of the trend could be dramatic. The traditional video industry employs 690,000 workers, but a three- to five-minute drama production now takes only a single person to produce it instead of five. (26/08/2

Taiwan parliament rejects government military drone plan, passes own version (Reuters)

Taiwan's opposition rejected the government’s T$210 billion ‌plan to buy new military drones and passed their own instead, which caps annual spending at T$40 billion. Ongoing conflicts showed Taipei the importance of uncrewed weapons in modern warfare amid a rising threat from China. Premier Cho Jung-tai said the question is not whether the government is satisfied, but whether this will be enough for national defense. ($1 = 31.7340 Taiwan dollars) (26/08/27)

China’s Industrial Profit Growth Slows to Weakest This Year (Bloomberg News)

For the third month, growth in China’s industrial profits slowed to the weakest pace this year. This shows that companies are coming under pressure as domestic demand weakens and the earlier surge in oil prices fades, outweighing some benefits from the soaring global demand for AI-related goods. Consequently, companies could become more cautious, adding downward pressure on the economy. (26/08/27)

Cash-Strapped Chinese Cities Turn to Fines for Revenue, Study Shows (Caixin Global)

Local governments are increasingly relying on fines and asset confiscations to ease mounting fiscal pressures. Data from 279 prefecture-level cities from 2015 to 2023 show that confiscations grew steadily, averaging 14.7% of local non-tax revenue over the period. This reliance on punitive income harms the business environment by deterring new businesses from entering vulnerable sectors. (26/08/25)

China’s Youth Jobless Rate Climbs to 17.9% in July (Caixin Global)

China’s youth unemployment rate rose to 17.9% in July, its highest July reading in three years. While the rate typically peaks during the summer graduation season, unemployment among non-students aged 16 to 24 climbed 3 percentage points from June, exceeding the July readings of 17.1% in 2024 and 17.8% in 2025. (26/08/20)

China hits out at EU probe into JD.com bid for German retailer (Financial Times)

China has hit out at an EU anti-subsidy probe as “undue extraterritorial jurisdiction” and threatened retaliation if the EU persists. JD.com, China’s largest ecommerce retailer by sales, launched a €2.2bn bid for German electronics retailer Ceconomy in July last year. In May, the European Commission launched an in-depth investigation under its Foreign Subsidies Regulation into whether unfair subsidies were involved. (26/08/20)

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