May 31 – June 06
Highlights: China issues sweeping new outbound foreign investment regulations that mandate a nation security review of China-connected transactions even if they take place entirely offshore; Hong Kong police turn out in force on June 4 to prevent any public commemoration of the 1989 Chinese military attack on peaceful protesters in Beijing’s Tiananmen Square; Japan advances a bill that would criminalize desecrating the national flag; South Korea advances draft legislation to foster the country’s defense semiconductor industry; Taiwan’s political opposition proposes to limit how long acting agency heads can serve, potentially escalating the appointment standoff between the executive and legislative branches; US Secretary of State Marco Rubio says a proposed US $14 billion arms sale to Taiwan is under review, not paused.
China
The State Council issued Outbound Investment Regulations (国务院关于对外投资的规定) that will require all Chinese companies to undergo a national security review and obtain government approval for not only outbound direct investment but a wide range of cross-border collaborations, including technology exports, personnel transfers, data transfers, and offshore dealmaking by companies registered outside China but with some original Chinese DNA. For example, holding companies that Chinese tech entrepreneurs establish in the Cayman Islands for the purpose of issuing shares on US stock exchanges also will be subject to government review of their transactions outside China. Companies in Hong Kong, Macau, and Taiwan are also made subject to the review and approval process, although Chinese authorities do not control Taiwan. The comprehensive regulations are the latest in a series of new rules intended to strengthen government control over key resources and technologies where China competes with the West.
The Chinese government barred four New Zealand lawmakers from traveling to China, Hong Kong, and Macau for one year as punishment for visiting Taiwan in May. Beijing claims that Taiwan is rightfully part of China. New Zealand officials expressed surprise, as their legislators have visited Taiwan for years without retaliation. The Chinese Embassy in New Zealand said in a statement that the lawmakers had disregarded China’s “repeated prior warnings” about visiting Taiwan.
The State Council released a five-year plan calling for wider use of artificial intelligence and gene editing in agriculture to shore up food security, a constant concern for a country that feeds a fifth of the world on less than a tenth of its arable land. The plan also calls for China's first nationwide survey of farmland and other resources in over four decades.
The State Council Information Office reported that a year-long campaign to stop local governments from engaging in predatory law enforcement actions against businesses identified more than 66,000 cases and recovered 30.7 billion yuan (US$4.5 billion) for companies that were targeted. The collapse of China’s real estate sector in 2021 deprived local governments of their major source of revenue and many began using irregular fines and asset seizures to cover costs. The central government feared this behavior could discourage new investment.
The National Radio and Television Administration began a two-month campaign to scrub online micro dramas of materialistic, sexual, and violent content, as well as what the government calls distorted views on marriage. The crackdown extends Xi Jinping's drive to reshape social values. Apps offering short serial videos of billionaire romance and revenge has become a booming business estimated to be worth 100 billion yuan ($14.8 billion).
The Communist Party’s Central Commission for Discipline Inspection announced that a long-retired senior anti-graft official is himself under investigation for “serious violations of discipline and law.” Li Xiaohong was director of the CCDI-based Office of the Central Leading Group for Inspection Work from 2013-2017, when he retired. Li spent the first part of his career in the state finance sector, including holding top positions at Huaxia Securities and Citic Securities, and the second half in corruption-fighting positions, including head of discipline inspection at the China Securities Regulatory Commission.
An American man pleaded guilty in a US federal court to acting as an illegal agent for China. Prosecutors said that while he was living in China and working for state media organizations, Thomas Pauken II provided written reports to a person whom he believed was working for China's security apparatus. Between 2019 and 2025, Pauken received US$100,000 and paid trips to the United States in return for his reports. He also tried to recruit others to leak classified material to China.
Hong Kong
Police detained but later released seven people for public actions commemorating the thirty-seventh anniversary of the 1989 Chinese military attack on peaceful protesters in Beijing’s Tiananmen Square. Those detained included Chan Po-ying, a feminist and labor rights activist who led the League of Social Democrats before the party dissolved in 2025 under political pressure. Authorities have banned the city's once-massive June 4 vigils since the 2020 National Security Law took effect. This year, carrying a single yellow flower near the site of the former vigils drew police intervention.
The Competition Commission is considering criminalizing bid-rigging, which Hong Kong law currently punishes only with civil fines. The proposal was prompted by a high-rise fire last year that killed 168 people at Wang Fuk Court. Investigators have tied at least two bid-rigging syndicates to the estate's maintenance contract.
LGBT activists expressed concern after yet another long-running event in the community calendar was forced to cancel under mysterious circumstances. Pink Dot, an outdoor carnival that had been Hong Kong’s largest LGBTQ event, was planned for mid-June, which is celebrated as Pride Month. Brian Leung, co-director of Hong Kong’s Pink Dot, told the Hong Kong Free Press that Link REIT, the venue operator, informed the organizers that it could not rent the site because it had heard of problems with the event’s application to the Food and Environmental Hygiene Department for a temporary entertainment license.
Japan
The Supreme Court finalized a ruling that employers cannot reduce pay to permanent workers merely by categorizing them as “contract employees.” The plaintiff was hired on a permanent contract and worked a full-time schedule but received a significantly lower base salary and benefits than so-called “regular” employees doing the same work. The decision closes a gap in Japan's 2018 “equal pay for equal work” reforms, which barred unreasonable pay disparities between part-time or fixed-term workers and regular staff, but did not address disparities among permanent employees doing the same work under different titles.
The ruling Liberal Democratic Party approved a draft bill that would make desecrating the national flag a crime punishable by up to two years in prison. The draft goes next to the Diet. Passing such legislation has long been a goal of Prime Minister Sanae Takaichi. However, some opposition lawmakers have called the bill clearly unconstitutional for restricting free speech and defining the offense in vague terms.
The Japan Fair Trade Commission searched five major staffing agencies to investigate allegations that the agencies were illegally fixing the fees companies pay for dispatched temporary workers. The commission is investigating whether the firms exploited a labor shortage to raise fees in lockstep while passing less than half of the increase on to workers.
The Nagoya District Court sentenced a former elementary school teacher to three years and six months in prison for possessing nude images of girls that an AI tool generated from real students' photos. It was the first time that a Japanese court applied the child pornography law to AI-made material. The defendant was among seven teachers accused of sharing secretly filmed images of students.
An expert panel of the Ministry of Internal Affairs and Communications proposed draft guidelines for regulating children's social media use that include stricter age checks and platform self-evaluation for risks to children. The panel rejected a blanket ban of social media use by children under age sixteen, saying this would ignore differences among online services.
The ruling Liberal Democratic Party approved a draft program to promote public knowledge about gender and sexual diversity through schools, local communities, households and workplaces. The program, which now goes to the Cabinet for approval, would be the first effort to implement the 2023 LGBT Understanding and Enhancement Act, which passed after the LDP rejected legalization of same-sex marriage.
Koreas
The National Election Commission promised an investigation after running out of paper ballots at dozens of polling stations during local elections on June 3. Some voters waited hours for more ballots to arrive, and voting times were extended at affected polling places. The commission said turnout exceeded expectations but rejected demands by the opposition People Power Party to rerun some races, saying that a court order would be needed to hold a new vote. Protests continued into the weekend. The ruling Democratic Party swept most of the races but lost the Seoul mayoral race.
The Cabinet approved South Korea's first bill specifically to foster the industry that produces semiconductors used in advanced weapons systems. The bill would fund domestic research, testing, and procurement in an effort to reduce reliance on foreign suppliers.
The South Korea National Intelligence Service released for public comment a decree that sets out new responses to a range of transnational crimes including including drug trafficking, scams and cyber gambling, which it said threaten national security. The draft decree also calls for establishing an International Crime Intelligence Center to oversee policy planning, overseas intelligence cooperation, and information sharing.
The Ministry of Justice announced a new Migrant Human Rights and Interests Team will operate within the Korea Immigration Service to address persistent abuses of migrant workers, including unpaid wages, illegal brokerage, and poor housing. The team will take complaints, investigate violations, and coordinate relief with the Ministry of Employment and Labor and local governments.
The South Korean Ministry of Justice imposed an exit ban on a Korean American scholar, Morse Tan, in connection with an allegation that he defamed South Korean President Lee Jae Myung. Tan, a professor at Liberty University in Virginia and US ambassador for global criminal justice during the first Trump administration, was visiting South Korea to monitor the June 3 local elections. Tan reportedly falsely said during a June 2025 press conference in Washington, D.C., that Lee had been detained in a juvenile facility as a youth in connection with a rape and murder case. Tan also has alleged that South Korea’s last presidential election was rigged.
Taiwan
Nationalist Party (Kuomintang or KMT) legislator Wen Hsiao-ling (翁曉玲) proposed setting a six-month limit on how long acting appointees may lead government agencies, potentially escalating the appointment standoff between the executive and legislative branches. President Lai Ching-te has resorted to appointing acting heads at many government agencies because the KMT-led opposition coalition in the legislature has repeatedly rejected his nominees to permanently fill the positions.
The KMT and Taiwan People's Party blocked a Democratic Progressive Party bill calling for spending NT$550 billion (US$17.47 billion) over five years to support the domestic drone industry and integrate it into the defense supply chain. The opposition coalition sent the bill back to the Procedure Committee, preventing it from advancing to substantive committee review. The opposition backs the drone industry but said it opposes a special budget that bypasses Budget Act debt limits and sets no spending ceiling.
The opposition also blocked a bill that would have established stricter oversight of lawmakers traveling to China and proposed amendments to the Act Governing the Allocation of Government Revenues and Expenditures.
The Executive Yuan said it will establish an inter-ministerial review procedure to restrict imports of goods made with forced labor. The move comes after the Office of the United States Trade Representative (USTR) announced that Taiwan was among sixty economies found to have failed to impose or effectively enforce a ban on imports of goods produced with forced labor. The USTR proposed adding an additional 10 percent tariff on imports from Taiwan.
The Legislative Yuan substantially revised Taiwan’s recycling law, renaming the statute the Resource Circulation Promotion Act (資源循環推動法) and extending it from managing waste to regulating products across their entire life cycle. The shift commits Taiwan to a circular economy, in which goods are designed to be reused rather than discarded.
US Secretary of State Marco Rubio told a US Senate hearing that a proposed US$14 billion arms sale to Taiwan is still under review, not paused, and that US policy toward Taiwan is unchanged. He spoke to quiet doubts about Washington's support for Taiwan after President Donald Trump reportedly called the arms sale a “negotiating chip” that he could use when dealing with Chinese leader Xi Jinping.