The news was met with cheers across the Chinese internet. Then a new meme appeared and poured cold water on the celebration: “Li Shufu blasts the 5-million export figure.” Online summaries boiled his supposed comments down to three sharp accusations: either manufacturers are colluding with domestic used-car dealers to push excess inventory overseas through foreign ports; or they’re gaming the 13% export tax rebate with fake shipments; or they’re shipping batteries disguised as complete cars, then stripping them out for overseas energy projects.

       Three cuts, each aimed at the heart of the record. Let’s walk through what actually sits behind those 5 million cars.

1. First, did Li Shufu even say it?

       The circulating version claims Li made these remarks during a keynote at a Chongqing forum in June. Public records show he talked mainly about Geely’s restructuring and succession planning — not these three points. Whether he said something similar in a closed-door session without cameras is impossible to verify. It’s equally possible that media mixed earlier comments from Li with last year’s “auto-industry Evergrande” warning from Great Wall’s Wei Jianjun.

       So the attribution remains uncertain. What is certain is the number itself: 5.096 million cars really did leave China. And the official role those cars played is spelled out clearly in a mid-year review by the China Automobile Dealers Association — “exports supporting domestic demand.”

       In plain language: the home market could no longer carry the weight, so exports had to hold it up from below.

2. Why couldn’t the domestic market hold?

       In 2024 and 2025 China ran large-scale trade-in subsidy programs. Real money was spent to pull forward car-replacement demand that many families would otherwise have delayed.

       But cars are durable goods. A household doesn’t replace its vehicle every year, and the pool of households that can afford to is finite. Once that demand was pulled forward and exhausted, the domestic market cooled sharply. New-energy vehicle sales fell 20–30% year-on-year. As the clear industry leader, BYD felt the drop first and hardest — when you sell 200,000–400,000 cars a month, even a modest percentage decline hits the absolute numbers hard.

       So the cars had to go somewhere else.

       Of the 5.09 million exported in the first half, roughly 54% were still gasoline vehicles, many of them from joint-venture or foreign brands. SAIC’s MG badge is the clearest example — large volumes of China-built MGs are shipped back to Europe. That is also why the EU slapped SAIC with the highest countervailing duty. The remaining 46% were new-energy vehicles, but fluctuating oil prices, clogged ports, and incomplete local after-sales networks all make it hard to claim pure overseas demand is the full story.

       The real pressure remains at home: trade-in subsidies burned through replacement demand while the production lines kept running.

3. What the three cuts actually hit

• Cut one: zero-kilometer used cars and the tax rebate

       A “zero-kilometer used car” is a brand-new vehicle that a manufacturer pushes onto dealers, 4S shops, or affiliated financiers purely to inflate sales figures. The car is registered, then sits in a lot without ever being driven. Some even collect national, provincial, and local subsidies along the way.

       These cars do get exported, but usually not to tightly regulated markets like Europe. They tend to head for Southeast Asia, the Middle East, South America, or Russia. That helps explain why some overseas buyers complain that Chinese cars lack proper after-sales support — a portion may have come through channels with no real overseas service network.

       Until recently these zero-kilometer cars could still claim the 13% export VAT rebate. Authorities have now tightened the rules: a vehicle must be registered for 180 days before a normal export application, or the original manufacturer must issue a formal after-sales confirmation. The goal is not only to close a loophole but to clear space for legitimate manufacturers to sell new cars through proper channels.

       Rebate fraud has also occurred. A common tactic is to declare a car actually worth 150,000 yuan at 250,000 or even 350,000 yuan, because the rebate is calculated on the declared value. The current priority, however, is simply to slow the zero-kilometer pipeline so regular exports can move first.

• Cut two: payment terms under pressure

       Suppliers who delivered parts to BYD used to receive an internal instrument called “Di-Chain” rather than cash. Payment could be delayed two, three, or even four months. Anyone who needed money sooner had to discount the instrument, losing part of its face value as financing cost.

       After the government required large firms to settle with suppliers within 60 days, BYD switched to commercial acceptance bills. “Acceptance” does not mean immediate cash; the bills still carry their own maturity periods. By the end of 2025 BYD’s commercial acceptance bills had surged 727%. Many people assume a bill is backed by a bank. In reality a commercial acceptance bill is ultimately backed only by the issuing company’s own credit. The payment delay never disappeared — it just changed its name.

       As the biggest seller, every industry-wide pressure is magnified on BYD.

• Cut three: the economic logic of shipping batteries inside car shells

       China tracks a figure called the “installation rate” — the share of power batteries that actually end up in vehicles. In 2021 it was still 70%. By 2025 it had fallen to 44%. In May 2026 it stood at just 38%. More than 60% of the batteries produced never go into cars.

       At the same time the export tax rebate on complete vehicles remains 13%, while the rebate on batteries has already dropped to 6% and will fall to zero on 1 January next year. On a car priced around 150,000 yuan the battery can account for two-thirds of the cost. The arithmetic creates an obvious incentive: install the battery in a car shell, claim the higher vehicle rebate, ship it overseas, then remove the battery for other uses.

       No solid public evidence has yet confirmed that any company is doing this at scale. The economic motive, however, is clear. BYD already operates plants in Hungary, Brazil, and Thailand and therefore has the physical capability. The point is only that the logic exists, not that it has been proven.

4. The world is becoming a reservoir for Chinese overcapacity

       On the surface BYD looks formidable. Three days before this writing it took delivery of its seventh car carrier, the Zhengzhou. These ships are named after cities where BYD has factories and sail the world with giant red BYD logos. The Hungarian plant is already running; Brazil and Thailand are expanding. This is the glossy face of a globalizing champion.

       Underneath sit weak domestic replacement demand, the cleanup of zero-kilometer cars, tighter payment rules, and a 727% jump in commercial acceptance bills. Every industry ailment is amplified on the market leader.

       What the government is doing now is putting those problems on the table one by one. BYD looks less like a company about to collapse and more like a strong patient wheeled into the operating room. The surgery will hurt and there will be blood, but the underlying constitution is robust enough that recovery remains likely.

       The simplest conclusion is this: domestic demand has stalled while production lines keep turning out cars and batteries. The surplus has to go somewhere, so the rest of the world is being asked to serve as China’s reservoir. Cars are pushed outward; batteries travel inside car shells. Policy is simultaneously closing the gray channels and clearing space for the legitimate manufacturers. All of it amounts to drilling extra floodgates in an overflowing capacity pool.

       Whether those gates will eventually drain the pool, only time will tell.

       Most people think the way capital takes over a foreign company is simple: just buy enough shares. After the 1997 Asian Financial Crisis, Samsung was a clear example — yet even then, American capital never fully took control. Thirty years later, the playbook has been upgraded. It is no longer just about buying stocks.

       Let’s look at the full path through Samsung and SK Hynix. These two Korean companies control the most critical part of the AI industry — HBM (think of it as the “heart” of AI chips). Without it, even the most expensive AI chips cannot run. Together they hold nearly 80% of the global market. In theory, an asset this important should stay firmly in Korean hands. Capital, however, is taking a quieter and far more thorough route.

Step 1: Wash the shares out of local hands first

       In 2024, when HBM was in severe shortage and Samsung and Hynix were making record profits, their stock prices suddenly plunged 40%. Wall Street quietly bought during that period. Almost no one noticed.

Then in 2025, global media suddenly began shouting in unison: “AI memory is the golden decade,” “Missing Hynix is like missing Nvidia in its early days.” Ordinary Korean office workers, retirees, and newly married couples poured in. Many borrowed heavily from banks and brokers — in simple terms, they had 1 million of their own money but borrowed enough to buy as if they had 2 million or more.

       When prices fell, those who borrowed could not hold on. In just half a year, Korea’s major banks had already lent out 85% of their entire annual lending capacity. Retail investors could no longer borrow to cover losses. They were forced to sell their shares at rock-bottom prices to repay the debt. 300,000 accounts were wiped out. 1.2 million people were left with debts.

       The real goal of this step was never simply to crash the stock price. It was to force the shares that had been scattered among ordinary Koreans back onto the market through panic and forced liquidation. American capital slowly picked them up at the bottom.

       Note that the 1997 crisis already proved that simply holding shares is not enough to truly control a company. That is why U.S. holdings were deliberately spread across hundreds of funds, each owning less than 5%. Real voting power still sat with the Korean founding families, who held more than 20% in concentrated blocks. On the surface, the companies remained Korean-controlled.

       But capital had completed the first step: it had stripped the chips out of local hands.

Step 2: Move the “pricing power” to its own home ground

       Owning the shares is still not enough. The more important question is: who gets to decide how much the company is actually worth?

       In July 2026, SK Hynix listed in the United States. By then its share price had already fallen 43%, and the Korean won had depreciated 30% against the dollar. Americans could buy the stock at roughly a 60% discount.

       Previously the stock could only be traded in Korea, so its price was set by Korean money. Korean retail investors buying $65 billion in a whole year was already their limit. The U.S. stock market, by contrast, turns over $200 billion in a single day. Once global capital starts trading the same stock in the United States, the price is decided where the trading volume is deepest.

       A simple analogy: Imagine you used to sell fruit in your own neighborhood wet market. You and the local residents set the price. Now the same fruit is sold in the city’s largest supermarket. The price is set by the supermarket and the entire city’s buyers. Even if you are still the farmer, you have to follow the supermarket’s lead.

       That is the transfer of pricing power. From now on, when Hynix wants to raise new capital, issue new shares, or borrow money, it must watch the reaction of the U.S. market. Capital does not need to buy the entire company. It only needs the place where the price is discovered to be its own home ground.

Step 3: Physically move the factories and production capacity

       Once the shares and the pricing power are in hand, the final step is to move the actual production lines onto its own soil.

       The United States put a clear choice on the table using subsidies and tariffs: Want to keep selling chips to the world? Either build factories in the U.S., take the subsidies and tax breaks, or face a 100% tariff. A 100% tariff means your chips instantly become twice as expensive and no one will buy them. Samsung went to Texas. Hynix went to Indiana.

       Once the factories are on the ground, the subsidies become new leverage. Intel has already shown how this works: it received billions in government subsidies to build plants. When construction was only halfway done, the government suddenly said, “Give us a portion of the company’s shares so we become a shareholder.” Refuse? The subsidies would be cancelled and the half-finished factories would become ruins. In the end, Intel signed.

       When the real factories, equipment, and workers are all on American soil, even the strongest technology becomes increasingly constrained by American rules. At that point, the company’s nominal nationality no longer matters much.

The real method capital uses

       Capital does not take foreign core assets through a single forced acquisition overnight. It works through three progressive layers:

1. Use market swings and leverage to wash the shares out of local retail investors’ hands;
2. Through a U.S. listing and a deeper market, move pricing power to its own home ground;
3. Use subsidies and tariffs to physically relocate factories and production capacity onto its own soil.

       Koreans still hold the surface-level voting rights. Americans already hold the real control over price and future production capacity. This is capital operating at a higher dimension — it does not rush to change the company name. It simply peels away control, layer by layer.

       The next company or country that holds critical technology and keeps capital awake at night — will it walk the same path? Worth watching closely.

       This set of numbers is like a mirror, clearly reflecting how China’s high-end manufacturing is responding to the worldwide AI boom. Let’s break it down in a simple, straightforward way.

1. Export Side: AI Demand Accelerates High-End Product Exports

       Exports simply mean Chinese-made goods being sold overseas. In June, the standout story is that high-end manufacturing and high-tech products took center stage.

• Electromechanical products (machinery, electrical equipment, electronics, and industrial components) grew 34% year-on-year and 8% month-on-month, accounting for nearly half of total exports.
• Integrated circuits (chips — the “brain” inside every electronic device) saw export value surge 122%, effectively doubling.
• High-tech products rose 52%.
• Automobile exports jumped nearly 73%, with new energy vehicles (NEVs) performing especially well.
• Rare earth exports also more than doubled in value.

       The main driver is the explosive global demand for AI infrastructure. Countries are racing to build data centers and train large AI models, which require massive amounts of servers, advanced chips, and sophisticated electronic components. As the world’s largest electronics manufacturing base, China naturally became a key supplier.

       On the auto side, strong NEV exports show that more countries are accepting and even preferring Chinese new energy vehicles for their quality and value.

       Where are these exports heading? The United States remains the largest single market at $43.4 billion (up ~14%). However, the fastest growth came from exports to Taiwan region (+44%) and South Korea (+43%) — increases closely tied to the AI chip and semiconductor supply chain.

2. Import Side: Domestic Tech Buildout Drives Component Demand

       Imports rose 36% year-on-year. Electromechanical products grew 47% and high-tech products grew 57%, with both still rising month-on-month.

       This directly reflects China’s rapid expansion of AI computing power and smart hardware assembly lines. The country needs to import large volumes of core components and production equipment to support its own high-end manufacturing upgrade. In short, China is both “selling out” high-end goods and “buying in” critical parts — building a complete industrial chain from both ends.

       Energy and bulk commodities showed a different pattern. Crude oil import volume fell year-on-year, while natural gas imports rose but at higher prices. Grain and soybean imports continued to increase, partly to replenish national reserves and company inventories.

3. What These Numbers Really Tell Us

       The clearest signal from the data is that global technological restructuring — especially the AI wave — is delivering real benefits to China’s high-end manufacturing sector. China’s stable and resilient supply chains stand out even more clearly against rising global geopolitical uncertainty. The country is accelerating its shift toward AI hardware, chips, new energy vehicles, and other high-tech, high-value areas — what policymakers call “new quality productive forces.”

       At the same time, as a major energy importer, China faces external disruptions and needs to plan ahead: diversify supply routes (both sea and land pipelines) and maintain bottom-line options such as coal-to-oil and coal-to-gas technologies for extreme scenarios to safeguard energy security.

       Additionally, volatile international energy prices could create imported inflation pressure, directly affecting domestic companies’ production costs, profits, and hiring. It’s worth watching how the central bank and other policymakers respond in the coming months.

       Trade data is never just cold numbers — it’s the economy’s “weather report.” June’s figures highlight both the upgrading potential of Chinese manufacturing and the need to balance global opportunities with solid security foundations.

1. How Manus Reached a $2 Billion Valuation So Fast

       Manus started as Beijing Butterfly Effect Technology. Its founder, Xiao Hong (born in 1993 and a Huazhong University of Science and Technology graduate), had already built earlier tools like Monica and Yiban Assistant. In March 2025 the product launched publicly as the “world’s first general AI Agent” — basically an AI that can automatically handle complete workflows, such as writing code or managing repetitive tasks with minimal human input.

       Money came in quickly. ZhenFund joined the earliest seed round. In November 2024 Sequoia China led the A round with Tencent following. In April 2025 Silicon Valley’s Benchmark led the B round with $75 million, pushing the valuation to $500 million. That fast climb set the stage for what happened next.

2. Meta Wanted It — Then Regulators Blocked the Deal

       In December 2025 Bloomberg and CNBC reported that Meta planned to spend over $2 billion to acquire Manus and fold it into its super-intelligence lab. Mark Zuckerberg reportedly got personally involved and the deal was reportedly wrapped up in just ten days. It was called one of Meta’s biggest AI moves at the time.

       Chinese regulators saw it differently. In January 2026 the Ministry of Commerce began reviewing the deal. By late April the National Development and Reform Commission’s foreign investment security review office blocked it outright. The clear reason: Manus was founded by a Chinese team, serves many Chinese users, and holds local data and usage scenarios. Regulators did not want that technology and data moving directly to a foreign company. In May Meta agreed to cancel the transaction, started refunding money, cut off data sharing, and removed Manus employees from its internal systems.

3. Old Investors Now Want to Buy It Back at the Same Price

       By mid-June reports surfaced that early Chinese investors were planning to repurchase the company from Meta at the original $2 billion price. In early July the Financial Times and Bloomberg reported that Tencent is now leading the effort, bringing in ZhenFund, Sequoia China and other original backers to form a new consortium. They would buy Meta’s shares at the unchanged $2 billion valuation and prepare the company for a Hong Kong listing after reorganization.

       The valuation stayed frozen the entire time — from Meta’s attempted purchase through the rumored domestic buyback. That single unchanged number is the most telling clue in the whole story.

4. The Real Driver: Keeping the Investment “Alive” on Fund Books

       Venture capital funds don’t treat every investment the same way regular people might expect. They know most startups fail, but for the fund itself, a company going out of business and the investment being completely written off on paper are two different things. As long as the company isn’t formally liquidated, the investment can still sit on the books at a high value.

       Here’s how it works in plain language: A fund’s managers (called GPs) raise money from outside investors (called LPs — think pension funds, university endowments, or wealthy individuals). When a startup exits at a high price, the managers receive a performance bonus (called “carry”). They can also use the big exit story to raise their next fund from new LPs. Later, when the fund reaches its exit phase, it needs to return money to the original LPs — and a high-value exit makes those numbers look much better.

       When regulators killed the Meta deal, the funds suddenly faced a problem: bonuses already paid out, fundraising stories already told, and money already returned to LPs would all look bad if the investment dropped to zero. The cleanest solution was to keep the valuation exactly where it was by having the original Chinese investors buy the company back among themselves. That way the $2 billion number stays on the books and everyone’s accounting stays tidy — at least for now.

5. Why Is Tencent Leading the Buyback? It’s Probably Not Mainly for Internal Use

       Tencent has plenty of cash on hand (it recently sold a large chunk of Kuaishou shares for roughly $1.6 billion and continues investing in AI, including a stake in Kling). But buying an external AI team isn’t always straightforward inside a big company.

       Tencent had just finished an internal competition between its WorkBuddy and QClaw AI tools — QClaw lost and WorkBuddy became the main internal product. Adding another external team like Manus could easily create conflicts over resources, direction, and credit. A previous example shows the pattern: Tencent invested in the Windsurf team (project name Antigravity) with plans to integrate it, but it clashed with the internal CodeBuddy team and has remained separately operated ever since. Big companies often prefer to keep external teams at arm’s length rather than force integration that disrupts existing groups.

6. Does Manus Still Have Strong Technology?

       Before tools like Claude Code, Codex, and xAI’s Grok Build appeared, Manus had a genuine edge — it could automatically connect AI agents to real-world workflows. That originality helped it stand out early.

       Its biggest limitation, however, is the lack of its own foundational AI model. Companies that control their own models (such as Zhipu’s Zcode, MiniMax’s code model, or Tencent’s CodeBuddy) have more leverage and can build their own agents on top. Startups without their own model often find their valuation already high while later investors become reluctant to pay more, and much of the long-term value ends up captured by the model owners instead. Similar agent-focused companies — Perplexity, Cursor, Windsurf, and Character.AI — have each followed different paths, with varying degrees of success.

7. Who Might Actually Be Taking the Risk?

       Right now this looks less like a traditional business acquisition and more like a coordinated effort to keep a nearly written-off investment looking valuable on paper at the original $2 billion level. Tencent, Meta, and the regulators are all playing roles in that larger story.

        If the company eventually lists on the Hong Kong stock exchange, everyday retail investors would be the ones deciding whether the technology can actually support that valuation going forward. As long as the project stays “not dead,” the high number can remain on fund balance sheets. Once public shareholders are involved, the judgment shifts to whether the product can keep leading in a fast-moving field.

        Capital narratives sometimes move faster than the underlying technology. Paying attention to the incentives behind the numbers helps us read these headlines with clearer eyes.

        These past couple of days, two big things happened in the worlds of crypto and blockchain. One involves Circle, the company behind the stablecoin USDC. The other involves SWIFT, the backbone of global cross-border payments. Both announcements came out around the same time, and it doesn’t feel like pure coincidence. It looks more like two worlds that used to run on parallel tracks — traditional finance and blockchain technology — are finally starting to move toward each other.

       Let’s break it down one by one, in plain language.

1. Circle’s Federal Trust Bank Charter: From “Wild West” to Regulated Custody

       First up is Circle. It issues USDC, one of the biggest stablecoins out there. A stablecoin is simply a type of cryptocurrency designed to stay steady in value — usually pegged 1:1 to the U.S. dollar. So when you buy 1 USDC, Circle is supposed to hold $1 in cash (or equivalent U.S. Treasuries) in reserve.

       Until now, Circle wasn’t a bank itself, so it had to keep those reserves at third-party traditional banks. That’s changing. Circle just received approval from the U.S. Office of the Comptroller of the Currency (OCC) to set up its own national trust bank.

       Important note: this isn’t a regular bank license. You can’t go there to deposit money, withdraw cash, or take out loans. Its main job is asset custody — safely looking after the reserves with full federal-level compliance.

Why does this matter?

• Crypto companies used to be seen as operating outside the traditional financial system — kind of the “wild path.” Now a top U.S. federal banking regulator has given Circle official recognition. That’s a meaningful step toward blockchain technology joining the mainstream financial world.
• The rules are clearer and the oversight is higher, which actually gives Circle more room to grow.
• Big Wall Street players (think JPMorgan) have wanted to use stablecoins for cross-border payments but held back because of compliance worries. With this federal charter, they’ll likely feel more comfortable partnering with Circle. That should speed up real-world use of blockchain in everyday business and finance.

2. SWIFT’s Blockchain Shared Ledger: Traditional Banks Fighting Back — the Compliant Way

       Now let’s look at SWIFT. It’s the global messaging network that almost every bank uses for international wire transfers and payments. If you’ve ever sent money overseas, chances are SWIFT was involved behind the scenes.

       SWIFT just announced it will launch a blockchain shared ledger and run a pilot program with 17 major banks to test tokenized deposits for cross-border use.

       What does “tokenized deposits” mean? Think of it this way: the money sitting in your bank account is technically a liability the bank owes you. Tokenization turns that deposit into a digital token that can move freely on a blockchain — while still staying under bank regulation.

       Right now, different banks have their own separate blockchains (HSBC has one, Citibank has another, etc.) and they don’t easily talk to each other. SWIFT’s shared ledger acts like a translator. It doesn’t replace existing payment rails — it connects the different tokenized systems so they can work together.

What changes if this works?

• Much faster cross-border payments. Right now, if you send money to a supplier overseas on a Friday evening, it often sits until Monday or Tuesday because banks are closed on weekends. With tokenized deposits on a shared blockchain ledger, companies could send payments 24/7, 365 days a year — with near-instant settlement.
• Traditional banks striking back. Companies like Circle have been eating into the cross-border payments market (hundreds of billions of dollars) by offering always-on service. Banks noticed. By offering their own regulated tokenized deposits, they’re telling customers: “You don’t need to switch to risky private crypto. Keep your money in a real bank, turn it into a token when you need speed, and you still get full regulatory protection.” It’s traditional finance’s compliant counter-move against stablecoins.
• Blockchain’s image is shifting. Many people still associate blockchain only with speculation and trading. SWIFT’s move is sending a different message to regulators and users worldwide: blockchain can be integrated into modern finance without breaking existing rules or risk controls.

3. Two Big Announcements on the Same Day — What Does It Really Mean?

       These two stories landing almost simultaneously feels deliberate. New players in crypto are moving closer to tradition, while big traditional institutions are speeding up their adoption of new technology.

Here are a few thoughts:

1. In the future, we might see two different kinds of compliant digital money co-existing. Stablecoins like USDC are flexible and more decentralized — great for everyday people and smaller transactions. SWIFT’s system connects a huge global banking network and is better suited for massive cross-border trade and institutional settlements worth hundreds of millions. It’s a bit like choosing between a nimble mobile payment app and a full-service bank app — both useful, just for different situations.
2. Not long ago, many mainstream financial institutions and regulators viewed blockchain mainly as a tool for speculation or money laundering. Now the OCC has granted Circle a serious federal charter, and SWIFT is actively bringing banks onto blockchain pilots. This suggests blockchain is no longer operating outside the financial system as some kind of “lawless zone.” It’s gradually becoming part of the core financial infrastructure.
3. Modern finance’s need for faster, more efficient cross-border payments has clearly gotten SWIFT’s attention. Its actions are, in a way, also giving Web3 a helpful push forward.

       Overall, what we’re seeing is traditional finance embracing on-chain technology while the on-chain world is rapidly becoming more compliant and regulated.

       Thirty years ago, the internet changed how information moves. These developments may end up changing how value moves. In the past, managing money relied heavily on people and rules. Going forward, it will rely more on technology, networks, and code. Money used to be mostly static numbers. In the future, it could become always-on, borderless, programmable technology.

       Have you ever wondered what happens when two companies team up to build electric cars, the cars keep selling, yet one partner reports a massive loss while the other keeps making money hand over fist? That’s exactly the situation with Seres (the company behind the AITO / Wenjie brand) and Huawei right now. Seres just dropped its half-year earnings warning: an expected loss of 1.5–1.8 billion RMB. Last year at the same time it made 2.94 billion RMB profit. Meanwhile, Huawei’s smart vehicle solutions business is still growing fast and collecting revenue from multiple streams with almost no inventory risk.

       Let’s break this down like we’re chatting over coffee — what really caused the loss, how Huawei structured the deal so it almost always wins, and what it means when a carmaker hands over too much of its “soul.”

1. Seres’ Loss Breakdown: It’s Not Simply “Sales Collapsed”

       First, clear up the biggest misconception. Seres’ cars are still selling. First-half volume was actually up a bit. The pain comes from three places: raw material costs, asset write-downs, and the removal of a big government subsidy cushion.

        In Q1 Seres still showed a 754 million RMB profit — but 600 million of that came from government subsidies. These subsidies go straight into the profit line with no matching cost. Strip them out and Q1 operating profit was only around 100 million RMB, already down 74% year-on-year and barely above break-even.

       For the full first half the company now expects a 1.5–1.8 billion RMB loss (or 2.2–2.5 billion RMB after removing all non-recurring subsidy income). The official reasons given are rising raw material prices and asset impairment.

Raw materials matter, but not equally. Lithium carbonate (the key battery material) really did push costs up — roughly several thousand RMB per car. Storage chips and industrial metals (copper, aluminum) added far less — maybe a few hundred to a thousand RMB per vehicle. A normal car doesn’t carry nearly as much memory as an AI server, so the chip story is mostly a distraction.

       The bigger chunk is asset impairment. Companies don’t expense the full cost of machines and molds in year one; they depreciate them over several years. When technology moves fast or old tooling won’t generate future profits, management can choose to write the remaining book value down immediately and book the loss now. Many listed companies prefer to dump all the bad news into one already-ugly quarter rather than spread it out. That’s likely where a large part of Seres’ extra loss came from.

2. The Two Hidden “Cash-Flow Reservoirs” That Got Drained at the Same Time

       Even before raw materials and write-downs, Seres (and many other carmakers) lost two important sources of breathing room.

       One was supplier payment terms. In the past, car companies could stretch payments to suppliers for three to six months — essentially using other people’s money as free working capital. New rules now require payment within 60 days. For a company that buys a lot of parts, that sudden loss of float hurts cash flow badly.

       The second was “zero-kilometer used cars.” These are brand-new vehicles that have already been registered but haven’t reached end customers yet. Dealers used to hold them in inventory or quietly export some through parallel channels. That channel has now been tightened. Previously these cars made up roughly 12% of volume; now the inventory and cash pressure lands squarely on the carmaker.

       Seres also has a harder time exporting than peers like BYD or Geely. Because so many core components come from Huawei, which faces U.S. sanctions, many overseas markets are reluctant to accept the vehicles. Other “界” brands have alternative export routes through their parent groups; Seres has fewer options.

       Faced with all this pressure, Seres chose to recognize as much loss as possible in this single reporting period. If sales pick up in the traditional “Golden September–Silver October” season, it can book profits later. That’s one legitimate accounting approach — but it makes the headline number look brutal.

3. Huawei’s Three “Pockets”: A Business Model Designed to Collect, Not to Risk

       Huawei, on the other side of the street, structured the relationship so it has three reliable ways to take in money while bearing almost none of the inventory or market risk.

• Pocket 1 – Selling core components.

• Pocket 2 – Taking a cut of every car sold.

• Pocket 3 – Occasional big-ticket deals.

       Huawei’s smart vehicle solutions revenue reached 45.018 billion RMB in 2025, up 72.1%. That figure doesn’t even include most of the store commissions or the brand/equity transactions. Crucially, Huawei never has to hold finished car inventory or worry about unsold stock.

4. Handing Over the “Soul” – What Does It Really Cost?

       Seres spent years learning from Huawei and reached heights it probably couldn’t have reached alone. But the core intelligence (driving algorithms, cockpit software, key chips) now sits with the partner. Once that gap in capability and talent density opens, it becomes very hard to close. Internal teams struggle to get the same resources or priority when the “partner” is seen as the expert.

       It’s a bit like the Microsoft–OpenAI relationship: Microsoft has enormous resources, yet it still finds itself largely iterating around someone else’s leading model because “we can just use OpenAI’s.” The same dynamic can appear when a carmaker treats its tech partner as the permanent “soul” of the product.

       Seres is not a pure victim. Before the Huawei partnership it was a small van maker (formerly Sokon) that had already received government support but was struggling to move upmarket. The collaboration genuinely lifted it into the premium EV conversation. Now it must live with the consequences of that strategic choice.

       SAIC’s former chairman once famously said he didn’t want Huawei to become the “soul” while SAIC became just the “body.” Five years later SAIC also partnered with Huawei on the Shangjie brand. The point wasn’t that Chen Hong was wrong — it was that giving away too much core control carries long-term costs.

5. Apple’s Asset-Light Model vs Huawei’s — Two Very Different Flavors

       People often compare Huawei to Apple because both are relatively asset-light. The differences are telling.

       Apple designs its own products, owns the brand, pays suppliers up front, holds inventory, and maintains a clear, non-competing product roadmap. Huawei goes further: it sells complete solutions to multiple competing car brands, takes a percentage of revenue regardless of the carmaker’s profit, carries almost no finished-vehicle inventory, and lets the various “界” brands sort out their own positioning.

       When the market is hot, everyone grows together. When price wars and inventory pressure hit, almost all the pain lands on the carmakers. It’s closer to a hub-and-spoke model where the center collects steadily while the spokes absorb the shocks.

6. A Final Thought

       The Seres–Huawei story isn’t a simple morality tale. Huawei brought real technology and market access that helped Seres grow fast. At the same time, the partnership was structured so one side bears heavy fixed costs, inventory risk, and market cyclicality while the other side enjoys multiple protected revenue streams.

       For any company considering a deep “borrow the ship to sail” partnership, the lesson is clear: keep enough independent capability and bargaining power that you can still steer when the weather turns. Cooperation is powerful — but handing over the entire soul rarely ends well for the one doing the handing.

       On July 10, 2026, Apple filed a lawsuit in a California federal court accusing OpenAI of systematically stealing its trade secrets. The defendants include OpenAI itself, the hardware company io Products (founded by former Apple design chief Jony Ive and later acquired by OpenAI), OpenAI’s Chief Hardware Officer Tang Tan, and former Apple engineer LiuChang.

       Apple is asking for five things: a jury trial, an immediate injunction to stop the alleged infringement, destruction of all confidential materials, redesign of any unreleased hardware products to remove Apple technology, and damages. The most painful demand is the forced redesign — in past cases, Apple has used similar rulings to force deep audits of a company’s entire technical roadmap, exposing secrets and dragging out timelines for years.

       The case quickly grabbed attention across Silicon Valley. Elon Musk jumped in with a jab at his longtime rival Sam Altman: “You stole my open-source charity OpenAI, and now you’re stealing from Apple too?” Altman fired back that Musk’s public company would face SEC trouble if his big promises on compute centers didn’t materialize. Musk replied he would begin “test launches” next year and might even invite Altman — if his parole officer allowed it.

1. The central figure: Tang Tan

       At the heart of the case is Tang Tan. A Malaysian-Chinese engineer who studied at Imperial College London and MIT, he joined Apple around 1999 and spent 25 years there. He rose to vice president of iPhone product design, with his name on over 270 Apple patents. He played a key role in the design of the iPod, multiple iPhone generations, and the Apple Watch.

      In 2024 he left Apple to co-found io with Jony Ive. OpenAI acquired io for roughly $6.4 billion in 2025, and Tang became OpenAI’s Chief Hardware Officer. Apple’s lawsuit treats him as the key link — not just another departing employee, but someone in a senior position who allegedly helped turn knowledge transfer into a repeatable process.

2. The evidence trail

       Apple’s complaint lays out a timeline. In January 2026, LiuChang left Apple after eight years and joined OpenAI. He kept a company-issued laptop that could still access Apple’s internal network. He messaged a colleague still at Apple: “Haha, I can still get into the company storage — so funny.” The finally reply came back: “I’m ready.”

       The two later switched to the Line app to communicate, but Apple’s systems still captured the activity. Liu allegedly downloaded dozens of confidential files covering technical specs, hardware designs, manufacturing details, and testing processes.

       Apple says this alone could be treated as individual misconduct. The bigger problem, according to the lawsuit, is what it claims Tang Tan did:

• During job interviews with Apple employees, he allegedly used internal project codenames that only insiders would know and asked candidates to bring physical parts (batteries, system-in-package chips, motherboards) to the interview for him to examine.
• He reportedly coached people planning to leave Apple on how to “leave gracefully” — advising them not to announce their departure immediately so they could gather more information while they still had access, before devices and permissions were revoked.
• Even before leaving Apple, Tang allegedly emailed sensitive supplier information to his personal account.

      Taken together, Apple argues these actions show a pattern originating from the top of OpenAI’s hardware team rather than isolated employee behavior.

       There is also a separate but damaging claim about the supply chain. Former Apple engineers reportedly approached Apple’s long-time manufacturing partners (the so-called “fruit chain” companies in China) and suggested they could continue working together — sometimes claiming they had “Apple authorization” to use proprietary processes or materials. Some suppliers reportedly agreed to informal arrangements. For Apple, this strikes at the heart of its quality advantage, which has always depended on tight control over specialized manufacturing know-how.

3. Why Apple and OpenAI fell out

       Apple and OpenAI used to cooperate. In 2024 Apple integrated ChatGPT into Siri. Apple expected the usual revenue-sharing model it has with partners: it provides the huge base of iPhone users and the App Store platform, and takes a cut (30% in the first year, dropping to 15% in the second).

       OpenAI saw it differently. It complained that conversion to paid ChatGPT subscriptions ($20/month) was too low and that serving millions of Apple users was expensive because every AI response consumes significant computing power. Unlike Google Search — where adding more users costs almost nothing extra — OpenAI’s marginal cost rises with every additional query.

       OpenAI reportedly pushed back hard and even threatened legal action. Apple responded by switching Siri’s AI partner to Google’s Gemini in the latest iOS versions. The partnership was over.

4. What Apple is really afraid of

       Apple’s premium pricing has long rested on three pillars: superior build quality, distinctive design, and a tightly controlled ecosystem. The lawsuit suggests OpenAI’s talent raid and alleged information gathering threaten all three.

       Quality comes from Apple setting strict standards and working with its supply chain partners to execute them. With reportedly hundreds of Apple hardware engineers now at OpenAI (and supply chain relationships shifting), that knowledge edge is leaking.

       Design appeal is not entirely separate — it depends on the overall experience of quality and software. Without a clear quality or ecosystem advantage, aesthetic differences alone are harder to maintain.

       The biggest long-term threat is the ecosystem. Traditional iOS apps run in “sandboxes” — isolated environments where each app can only access its own data. This protects privacy and security, and has been a core reason Apple’s ecosystem feels more controlled than Android’s.

       AI Agent phones work differently. Instead of opening multiple apps, users speak to a single AI that can pull together data from many sources to complete complex tasks (for example, planning a trip that involves navigation, restaurant booking, food delivery, and hotel reservations). If this model succeeds, the value of Apple’s traditional app sandbox system could shrink dramatically.

       OpenAI is reportedly accelerating its own AI phone plans, aiming for a 2027 launch with annual sales targets in the tens of millions. Other players are exploring similar hardware. For Apple, this is not just another competitor — it is a potential shift in how people interact with their devices.

5. How the case might play out

       Some individuals will likely face consequences, possibly including criminal liability for the most serious leaks. OpenAI is unlikely to accept a court-ordered full audit of its code and hardware designs.

       The more probable path is a negotiated settlement: cutting ties with certain people while offering Apple concessions such as licensing, equity, revenue sharing, or cash. Similar past disputes in Silicon Valley have often ended this way rather than in total victory for either side.

       Whatever the legal outcome, the larger story is the arrival of AI-driven hardware. This lawsuit is Apple’s attempt to slow down a fast-moving competitor during a critical transition. The technology itself — AI agents that can actually get things done across services — is not going to wait for court rulings.

       The real question going forward is not just who wins this case, but what kind of devices we will all be using in a few years.

       But here’s the important clarification: the photo showing a drone carrying two people is AI-generated. It’s simply too dangerous and physically impossible for current drones to safely lift two adults. Real rescues that happened involved lifting just one person, and only in truly life-or-death situations where someone was about to be swept away.

       The real story took place on July 7 in Yunbiao Town. A truck driver was trapped on top of an oil tanker in the middle of the flood. A rescuer in an orange-red suit flew in on a drone, landed on the vehicle, and then both were lifted out together. The whole operation took less than 20 minutes.

       This wasn’t some hobby drone from the park. It was a coordinated effort by ordinary pilots from across China who rushed to the disaster zone on their own.

1. An Old Dam Couldn’t Withstand the Storm

       The disaster started with Typhoon Misaak. Between July 5–6, parts of Nanning and Guigang in Guangxi saw torrential to extremely heavy rain. Binyang County recorded 713 mm in 24 hours, and Shitang Town in Hengzhou saw 565 mm — basically a full year’s rainfall for many northern regions dumped in a single day.

       On the morning of July 6, Liulan Reservoir in Hengzhou experienced overtopping. This 60-plus-year-old homogeneous earth dam (built in 1958–1960 by compacting soil) simply couldn’t hold back the water. Once water flowed over the top, it rapidly eroded the back side of the dam, and the structure gave way.

       By July 9, the floods had caused 39 deaths and 9 people missing. Roads and bridges were destroyed. Even assault boats sometimes couldn’t reach the trapped areas because the current was too strong.

2. Drone Pilots Showed Up on Their Own — Hundreds of Aircraft

       At this critical moment, a special group of people drove in from all over the country.

       Pilots came from Guangxi, Sichuan, Guizhou, Hunan, Guangdong, and even as far as Heilongjiang. They loaded their own drones and generators into their vehicles, paid for their own gas, food, and lodging, and asked for zero payment or subsidies. They just headed straight to Hengzhou.

       Because everyone came spontaneously, exact numbers are hard to track, but reports mentioned WeChat groups with hundreds of members and several hundred drones operating on site.

       By July 8, these drones had delivered more than 1,000 tons of relief supplies. At one distribution point in Dutian Village, five drones worked non-stop around the clock. In Yunbiao Town, single drones covered a 4–5 km radius, reaching multiple trapped villages.

       They couldn’t always pull people out, but they could drop water, instant porridge, and instant noodles — giving trapped residents something to hold onto.

3. DJI Stepped Up: Free Repairs for All Rescue Damage

       One of the most heartwarming details came on July 8. DJI Agriculture issued a notice: any plant-protection or cargo drone used in the Guangxi rescue that got water damage, crashed, or had parts broken during the operation would receive completely free repairs — no labor fees, no parts charges, no inspection costs.

       Normally, water damage or crashes are not covered under warranty. But this time DJI said: just provide your flight logs from the rescue period and report the drone’s serial number, and authorized stores would handle it immediately. Local DJI stores even switched to 24-hour operation to service the pilots overnight.

       For many pilots, a good drone plus accessories and a vehicle can cost 200,000–300,000 RMB. DJI’s policy removed the biggest financial fear — “what if I crash my expensive machine?” — and gave them the confidence to go all in.

4. These Aren’t Toy Drones — They’re Serious Work Machines

       The drones used in the rescue are very different from the small consumer drones people fly in parks for fun.

      These are professional plant-protection drones and cargo drones.

• Plant-protection drones (T series):
  Built for agriculture — spraying pesticides and spreading fertilizer. The common T200 model can carry dozens of kilograms per flight.
• Cargo drones (FlyCart series):
  Designed specifically for lifting and transporting goods. The FC200 can lift up to 200 kg by itself, and multiple units can work together to lift 600 kg.
• Hybrid VTOL / compound-wing drones:
  These take off and land vertically like a multi-rotor drone but fly long distances like a fixed-wing aircraft. Some were used in the disaster zone as temporary flying 4G/5G base stations to restore mobile signals.

      These machines normally work in farmland. This time they went straight into emergency rescue.

5. China’s Drone Industry Grew 100× in Just Ten Years

       Most people don’t realize how big this industry has become.

       Around 2015, DJI’s agricultural drone shipments were only about 2,000 units per year. By 2020 it reached 40,000 units. In 2025 it hit 200,000 units annually. In just ten years, yearly sales grew roughly 100 times.

       By 2025, China had around 500,000 of these agricultural and cargo drones operating nationwide. They covered more than 3.2 billion mu (about 213 million hectares) of farmland in a single year. Roughly one-third of China’s cultivated land now relies on drones for pesticide application.

       DJI holds about 55% of the domestic plant-protection drone market and around 59% globally. These drones are now used in over 100 countries, with especially fast growth in places like Brazil and Mexico.

6. A Brand-New “Atomized” Job: The Agricultural Version of Didi

      This is an entirely new type of work.

       Most pilots are independent individuals or very small teams — no big company, no boss, no formal employment. They connect loosely through WeChat groups and order platforms (one popular one is called “Nongtian Guanjia” or Farmland Steward — basically the agricultural version of Didi). Farmers place orders on an app for spraying or transport, and the platform assigns the job to the nearest qualified pilot.

       Pilots must hold a CAAC drone pilot license issued by China’s Civil Aviation Administration. There are three levels: Visual Line of Sight operator, Beyond Visual Line of Sight Captain (the main one used for real work), and Instructor. Getting certified costs money — roughly 4,000+ RMB for the basic license and 8,000–12,000 RMB for the captain level.

       A complete setup (drone + vehicle + fuel generator + chargers) usually costs 200,000–300,000 RMB. Many pilots took loans to buy their equipment.

       Earnings: Spraying pesticide typically pays about 20 RMB per mu. For cargo lifting, a drone can move around 10 tons in a good day, generating roughly 2,400 RMB in gross revenue before fuel (~300 RMB) and helper labor (~300 RMB). Net daily income can reach over 1,000 RMB under good conditions. It’s real work, though — weather, order volume, and equipment wear all matter. Most pilots say they can break even in about two years, but the market is gradually becoming more competitive, similar to what happened with ride-hailing.

       These pilots are also very good at shooting and editing videos. They post daily on Douyin (Chinese TikTok), which helps them promote their services and sometimes recruit students.

7. Why Did Drones Stand Out So Much This Time?

       Professional rescue teams, government, and military are still the main force in disaster response. So why did the drones get so much attention?

Two main reasons:

       First, the pilots are naturally skilled at content creation. Drone footage has great visual angles, and the videos look dramatic and hopeful — perfect for going viral.

       Second, after a disaster, people need both facts and hope. The drone pilots delivered positive, concrete stories of technology and ordinary people taking action, which felt especially valuable when everything else felt heavy.

8. The Truly Moving Part

       When you connect all the pieces: a group of young people who returned to rural areas to make a living spent 200,000–300,000 RMB (often with loans) on drone equipment. On normal days they post videos, take orders, spray fields, and transport fruit — basically running a small business one job at a time.

       They are scattered, independent operators. Then the flood hit. These strangers, with no central organization, used just their phones and a few WeChat groups to gather into a fleet of over a hundred drones within two or three days.

       No one was directing a grand plan from above. There was no strict hierarchy. It was simply the kindness of ordinary individuals combined with China’s world-leading drone technology and existing digital platforms that allowed them to connect and act so quickly.

       In the past, we often assumed that big things require big, tightly organized systems with top-down commands. What we saw here was something different: countless independent people, normally connected loosely through social media and service platforms, suddenly becoming a capable rescue force when it mattered most.

       The organization was loose. The hearts were kind. Technology did something remarkable — not just lifting a person out of danger, but amplifying and connecting the goodwill of thousands of ordinary people for the first time.

       Life has to go on. Stories like this remind us that even in difficult moments, there are more sources of warmth and possibility than we sometimes realize.