Shein, the fast-fashion online retailer, launched its Hong Kong IPO on Monday, August 24, 2026, and is set to start trading on September 1. The much-anticipated IPO follows Shein’s decision to abandon plans for listings in New York and London after both attempts failed to secure approval from Chinese authorities. The move to a Hong Kong IPO reflects the long journey Shein has made to embrace its identity as a Chinese company, Reuters reports in a story published August 28, How Shein Had to Make Peace with China to Finally Go Public.

Before deciding to debut in Hong Kong, Shein had spent four years trying to present itself as a global player. "Shein tried to portray itself as cosmopolitan, and it engaged in what is today known as Singapore-washing to try to distance itself from its Chinese roots – but I think that failed because it is so closely linked to its Chinese supply chain," says Curtis Milhaupt, the William F. Baxter-Visa International Professor of Law and APARC faculty affiliate.

"Having failed in the cosmopolitan strategy, I think they saw no choice but to embrace their Chinese roots," Milhaupt tells Reuters.

China’s strong political leadership often drives the perception that its governance is monolithic and highly centralised. In this episode of East Asia Pulse, a podcast produced by the East Asian Institute (EAI) at the National University of Singapore, Jean Oi, the William Haas Professor in Chinese Politics, a senior fellow at the Freeman Spogli Institute for International Studies, and director of the China Program at APARC, speaks to EAI Director Alfred Schipke about the complexities of China’s local governments and the role they play in China’s economic landscape. Over the past year, while on academic leave from Stanford, Oi has served as EAI’s Goh Keng Swee Professor in China Studies.

While they have played an outsized role in China’s economic development by spurring innovation and experimentation, local governments have also in recent years been associated with debt and the misallocation of resources. Among other issues, Oi weighs in on the need for fiscal reform to address the inconsistencies in local governments’ responsibilities and revenue sources and examines the role of local government financing vehicles (LGFVs) in generating revenue.

Key Highlights: 

00:00 Defining the central-local government relationship and key challenges faced in this dynamic 

08:10 Challenges in balancing growth with the management of local government debt   

15:10 How incentive structures for local governments lead to overcapacity and misallocation of resources 

23:40 Local government financing vehicles (LGFVs) and their role in generating revenue through land sales and equity investments. 

27:10 The need for fiscal reform to address inconsistencies in local governments' responsibilities and revenue sources

Chinese President Xi Jinping is embarking on his biggest push to recover corporate tax revenue in a shift after a decade of supporting businesses through tax cuts. Now, many companies are being hit with clawback bills that far exceed their first-half earnings, Bloomberg reports in an article titled Xi’s Unprecedented Tax Clawback Hammers Chinese Listed Firms, published August 25, 2026. Moreover, the crackdown signals a break from a decades-old growth model built on provinces using generous tax subsidies to hit economic targets, forcing local provinces to rely more on the national government to meet their day-to-day spending needs. 

In the absence of tax subsidies to spur growth, local governments are “in a difficult bind” as they search for new revenue sources, explains Stanford political scientist Jean Oi, the director of the China Program at APARC. While Beijing understands fiscal reforms are needed to boost local governments' revenue-earning potential, little progress has been made, she notes.

“Both the central and local governments have an interest in getting more taxes,” says Oi. “They’re trying to get everybody to pay up and follow the rules, but is it enough? I really worry," she tells Bloomberg.

In China, which consumes roughly half the world’s cigarettes and where local smoking bans are rarely enforced, friction between smokers and a younger, largely smoke-free generation is rising. This younger cohort increasingly confronts smokers and uses social media to amplify its grievances.

Smoking in China also demonstrates a stark gender divide: half of Chinese men smoke compared to fewer than 2 percent of women. This disparity reflects a long history of social stigma directed at female smoking in official propaganda. “Nationalist trailblazers began tarring female smoking as 'Western humiliation' in the early 1900s,” Stanford anthropologist Matthew Kohrman, a faculty affiliate with APARC who studies China’s tobacco industry and gender issues, tells the New York Times. When the Communist Party took over in 1949, it “excoriated female smoking anew but also rebuilt the country’s war-torn tobacco industry” as a source of revenue, he said. Read the article >

This essay first appeared in The Diplomat.

For decades, South Korean strategy rested on a stable hierarchy within the international order. The alliance with the United States provided security; Seoul then managed relations with Japan, Europe, China, and regional institutions around that anchor. The alliance remains indispensable, but Seoul can no longer assume that this foundation will stay stable.

The evidence is visible in the way Washington now deals with allies. In 2025, the United States initially announced sharply differentiated “reciprocal” tariffs on South Korea, Japan, and the European Union. Negotiations later produced a 15 percent baseline framework for all three, but the process mattered as much as the final rate. Trade access, industrial investment, defense procurement, and alliance politics were increasingly handled as one bargaining package. Allies were not exempt from economic pressure because they were allies.

At the same time, Europe and Asia have been building connections that would have seemed highly ambitious a decade ago. The European Union signed security and defense partnerships with Japan and South Korea in November 2024. This year, the EU and Japan launched a defense-industry dialogue, while the EU and South Korea signed a digital trade agreement and began implementing cooperation on maritime security, cyber and hybrid threats, information manipulation, space, and the defense industry. The strategic map is becoming more networked. 

The network, however, remains uneven. Japan already has a mature economic partnership with the EU and rapidly expanding defense-industry ties. EU-South Korea relations are deepening, but they still lack the density and regular strategic consultation found in EU-Japan ties. A trilateral format would therefore do more than add another meeting: it would reduce asymmetry among three partners whose capabilities are increasingly complementary.

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South Korea, Japan, and the EU now face four converging challenges and pressures.

The first is demographic. South Korea is aging faster than any other OECD society; Japan’s working-age population has been shrinking for decades; and the EU’s fertility rate reached a new low in 2024. Demography is not a social-policy sidebar. It affects defense recruitment, industrial capacity, fiscal room, technological adoption, and the ability to sustain long-term commitments. Each actor is experimenting with immigration, automation, workforce policy, and welfare reform, but the security implications remain largely compartmentalized.

The second is concentrated economic dependence. None of the three can or should decouple from China. Yet South Korea’s experience after the THAAD deployment, Europe’s debates over economic coercion, and China’s export controls on gallium, germanium, and other strategic inputs have shown that interdependence can be converted into leverage. De-risking therefore requires more than national stockpiles. It requires shared risk maps, compatible certification, co-investment in alternative suppliers, and advance consultation before export controls or industrial subsidies create collateral damage among partners.

The third challenge is U.S. volatility. The United States is still the only actor capable of providing extended nuclear deterrence to South Korea and Japan, and NATO remains central to European defense. But dependence on U.S. power now coexists with uncertainty about U.S. policy. The classic alliance dilemmas of abandonment and entrapment are no longer opposite ends of a spectrum. Today, U.S. allies fear both being left out and being drawn into bargains or contingencies they did not shape.

The fourth pressure is the collapse of the old geographic separation between European and Asian security. North Korean munitions, missiles, and troops have supported Russia’s war against Ukraine. Moscow, in turn, has provided Pyongyang with political cover, economic support, and the prospect of military know-how. What happens on a European battlefield is changing the military balance on the Korean Peninsula. A regional response to a cross-regional threat is structurally inadequate.

This is the case for an EU-Japan-South Korea strategic dialogue. This framework should not be described as strategic autonomy, equidistance, or a hedge against the United States. A better term would be institutionalized hedging: risk diversification through standing, rule-based consultation among allies and partners that remain anchored in the broader U.S.-led system.

The proposal is more feasible than ever before. Japan-South Korea relations have improved significantly in recent years. The January 2026 summit in Nara and the reciprocal summit in South Korea in May demonstrated continuity across leadership changes in both countries since June 2025. The EU already has free-trade, digital, green, and security frameworks with both countries. The task is not to invent three new bilateral relationships; it is to connect existing ones.

The dialogue should begin modestly, through a Track 1.5 process involving officials, experts, and industry. Its early agenda must be concrete and specific: a joint critical minerals and supply chain risk assessment; consultation on export controls and investment screening; cooperation on AI, cyber resilience, and digital standards; exchanges on demographic and defense workforce adaptation; and shared monitoring of North Korea-Russia military cooperation. Successful projects could then be elevated to ministerial working groups.

Two design choices are essential. First, the initiative must remain function-driven. It is not NATO, not the Quad, and not an anti-China coalition. Its purpose is to reduce vulnerability without demanding economic separation. Second, it should be complementary to relations with Washington and transparent about that purpose. Horizontal networks strengthen alliances when they help allies absorb shocks, coordinate positions, and arrive at consultations with greater capacity.

For South Korea, the need is particularly acute. Japan already has the G7, a mature economic partnership with the EU, and expanding European defense ties. Seoul’s international weight has grown faster than its institutional depth. An EU-Japan-South Korea dialogue would help close that gap.

Horizontalizing alliances is not a vote of no confidence in the United States. It is insurance for the moments when the United States wavers, overreaches, or changes course. The postwar hierarchy cannot simply be preserved by demanding more reassurance from Washington. Its resilience will depend on whether allies can build connective tissue among themselves before the next crisis forces them to improvise.