Board of Trade, Ahoy!
How old ideas reemerge
Friends,
In my never-ending quest to connect U.S.-China relations to the cannon of popular (and often times obscure) music, it is sometimes tough to find a song to fit my commentary.
This was one of those weeks and I was forced to dig pretty deep.
Over the past few months, U.S. negotiators have proposed to their PRC counterparts the establishment of a “Board of Trade” to serve as the mechanism for “managed trade” between the two countries. We will get into the details of that below, but I was interested in where this term, “Board of Trade” originated from.
Starting in the 16th Century, England created a commission of aristocrats to manage trade with its colonies as a way to resolve supply chain disruptions, market failures, and national security concerns that arose from conducting trade through commercial enterprises in an era of great power rivalry (sound familiar?).
This commission went through multiple interpretations, but by the middle of the 19th Century the United Kingdom had settled on calling it the “Board of Trade.” This was one of the mechanisms that London used to manage its system of “Imperial Preference.” Of note, a young Winston Churchill served as the President of the Board of Trade from 1908 to 1910 during the premiership of the Liberal Party leader, Herbert Henry Asquith.
Asquith and Churchill, April 14, 1911
In the 1870s, Alexander Hay, a cabinet maker and sailor from the northern English city of Newcastle wrote the song, “Board of Trade, Ahoy!” In 1883, the song’s lyrics showed up in Sailor’s Language by William Clark Russell, a popular American writer of nautical-themed books. According to Russell, American merchant sailors would sing the song whenever their captain came on deck during long voyages across the Pacific to China. The song criticized the conditions that sailors had to work under and at least one ship’s captain threatened to put sailors in chains if they kept singing it.
After a bit of searching (as well as asking Claude where I might find obscure books from the late 19th Century), I found the lyrics.
Thanks to Hathi Trust Digital Library, which has one of the largest collections of 19th Century books in the public domain.
I’m only a sailor man – tradesman would I were,
For I’ve ever rued the day I became a tar;
Rued the rambling notion, ever the decoy
Unto such an awful life. Board of Trade, ahoy!
I snubb’d skipper for bad grub, rotten flour to eat,
Hard tack full of weevils; how demon Chandlers cheat!
Salt junk like mahogany, scurvying man and boy.
Says he, ‘Where’s your remedy?’ Board of Trade, ahoy!
Can ye wonder mutiny, lubber-like, will work,
In our mercantile marine, cramm’d with measly pork?
Is it wonderful that men lose their native joy,
With provisions maggoty? Board of Trade, ahoy!
Oh had we a crew to stand by when we’re ashore,
Show this horrid stuff that pigs even would abhor!
Sue the swindling dealer who’d our health destroy.
What say ye, oh sailor friends? Board of Trade, ahoy!
Dutchmen here before the mast, and behind it too!
Dutchmen mate and carpenter, Dutchmen most the crew!
Foreigners to man our ships, horrible employ!
What’s old England coming to? Board of Trade, ahoy!
When I asked Claude to recommend a tune for these lyrics, as in how these sailors might have sung it in the 1880s, it recommended singing it in the air of the song “A Life on the Ocean Wave” which was first written by Epes Sargeant while walking along The Battery in New York City in 1838. The song would go on to become an iconic Regimental March for the UK’s Royal Marines (here is a performance by the Band of HM Royal Marines in 2023).
I think it is fascinating that the issues of trade management, supply chain vulnerabilities, and the hardships endured by labor are perennial. Ideas and concepts of dealing with these challenges have a tendency of reemerging.
Board of Trade
We are just a few days away from the Trump-Xi Summit. As of Sunday morning, it looks like the meeting will go ahead.
Last Wednesday at FPRI in Philadelphia, I discussed my analysis of how this summit would go with Neysun Mahboubi, who directs the Penn Project on the Future of U.S.-China Relations at the University of Pennsylvania. You can watch our discussion here, “The Trump-Xi Summit in Beijing” or here on YouTube.
Based on interviews with the U.S. Trade Representative, Ambassador Jamieson Greer, and Treasury Secretary Scott Bessent, as well as reporting from a number of journalists who are following this closely, it appears that the U.S. has proposed or will propose two boards to manage trade and investment between the two countries: a Board of Trade and a Board of Investment.
Bloomberg reported a week ago that Ambassador Greer raised this with PRC Vice Premier He Lifeng and later told reports that the mechanism of a Board of Trade could be used to “optimize bilateral trade in on-sensitive goods.” Two months ago, Ana Swanson at the New York Times detailed some of what we know about the negotiations. Each government would represent the interests of its companies in non-sensitive sectors and then negotiate directly so that each side could make mutually beneficial concessions. This is in line with Ambassador Greer’s concepts around managed trade.
Some have compared this Board of Trade to the Strategic Economic Dialogue of the Bush Administration and the Strategic AND Economic Dialogue of the Obama Administration, but I think that is an ill-suited comparison. The SED and S&ED had much broader goals and sought to address structural problems between the two countries. The U.S. used those mechanisms to push for systemic change in China, domestic Chinese economic reforms, so that the PRC would conform itself to the WTO’s rules and America’s expectations for Free Trade. Under the Obama Administration, the S&ED expanded to include a “strategic” track which included topics like the South China Sea, climate, and human rights. Under this arrangement, the U.S. Secretary of State joined the American delegation as a co-led with the U.S. Treasury Secretary. By 2016, the S&ED had spawned over a 160 working groups across nearly every U.S. Department and Agency.
In contrast, the Board of Trade seems much more narrowly focused and is being set up under the assumption that the PRC will not change or reform its domestic economic system, nor will it comply with its obligations under the World Trade Organization. Xi Jinping and his cadres are committed to Socialism with Chinese Characteristics and have rejected the idea that the PRC should become a market economy in which the government acts as a referee for internationally accepted rules and norms. The Chinese Communist Party is committed to leading and manipulating its commercial and state-owned firms to achieve strategic goals, as opposed to being focused on shareholder profits. The Board of Trade would recognize this reality and treat trade between the U.S. and the PRC as something that must be managed by the two governments least U.S. companies and U.S. exporters be placed at a perpetual disadvantage to CCP, Inc.
Bod Davis, the former Wall Street Journal reporter who co-authored Superpower Showdown: How the Battle Between Trump and Xi Threatens a New Cold War with Lingling Wei in 2020, made this point about the changing nature of what Washington is trying to achieve in a piece he wrote in The Wire China last week. Davis analyzes this in his piece, “Trump’s Board of Trade Move Signals the U.S. has Given Up on Changing China,” and I generally agree with him. The Trump Administration genuinely sees the persistent trade deficit with the PRC as a significant problem and the Federal Government must address and mitigate.
If you want to listen to an Administration representative explain what the United States is trying to achieve, then watch this discussion with the Deputy U.S. Trade Representative Ambassador Rick Switzer from last month at the Council on Foreign Relations.
We still don’t know the full concept of what a Board of Trade will do and we likely won’t know that even after the Summit, but it appears this will be something very different from what the George W. Bush and Obama Administrations set up with their CCP counterparts. Whether it achieves the goal of balancing or even stabilizing the broader U.S.-PRC relationship, remains to be seen.
Personally, I’m skeptical, I think the United States would benefit from pursuing a clear set of policies to disentangle itself from the PRC and reduce its dependence on trading with a hostile regime.
On Tuesday, two days before the Summit, the Asia Society Policy Institute will hold a panel discussion with former trade negotiators, a journalist, and someone who represented U.S. businesses, to discuss the concepts around this Board of Trade idea and relate those to the experience of managing trade between the United States and Japan in the 1980s and 1990s. I recommend watching it, Wendy Cutler, Stephen Vaughn, Craig Allen and Bob Davis will undoubtably have some important insights.
Board of Investment
There is a second “board” being considered, a board of investment. In theory this might focus on finding and managing areas of non-sensitive investment between both countries.
Whether this concept takes shape over the next week is a question mark.
I do think there should be some further examination of what enabling this kind of cross-border investment would bring. As it stands right now, there are few barriers to foreign direct investment into the United States and PRC companies and investors “can” invest in the U.S. There have been some high-profile examples of pushback, whether that is Chinese battery investments or even the controversy that surrounded the Nippon Steel acquisition of U.S. Steel in 2024.
The main existing barrier for investment into the country is CFIUS (Committee on Foreign Investment into the United States), an interagency committee that examines and provides recommendations to the President on foreign investment that impacts U.S. national security. For example, CFIUS and the President’s authorities from the Defense Production Act of 1950, is what allows the U.S. Government to prohibit a Chinese state-owned enterprise like AVIC from simply purchasing Lockheed Martin and therefore gaining the knowledge and capacity to make F-35 fighters for the PLAAF. So, the United States already has the mechanism to prevent investment in sensitive sectors of the economy, so it isn’t completely clear what a Board of Investment would do.
For many, a Board of Investment might be the mechanism to overcome challenges in both the United States and in the PRC of having Chinese companies invest in the United States to build electric vehicles and advanced batteries.
On Friday, Oren Cass wrote an OpEd in the New York Times making the case against this kind of Chinese investment (“Is Trump About to Invite in the Biggest Predator in the World?” Oren Cass, New York Times, May 8, 2026). I’m sympathetic to Oren’s argument, but the Administration may see this as a method to bringing about the kind of technology transfer that benefited the PRC economy over the last 30 years.
I think there is a lot more to consider with regards to the Board of Investment idea, and I would be genuinely surprised if both sides announced an agreement on how one might operate.
Congress is Missing in Action
What strikes me the most about the Administration’s approach to resolving these issues of trade and investment is the lack of Congressional involvement.
There seems to be a belief inside the Administration that they can negotiate arrangements with foreign governments and then either implement those agreements entirely through Executive action and/or present the arrangements to Congress as a fait accompli and expect Members to rubber stamp these arrangements with their approval.
As an American historian, this doesn’t seem like a particularly sustainable approach.
Statutes, not executive orders, are what we need in order to create a new and sustainable trading system. The business models and investment plans we have today were formed from an understanding of the advantages and disadvantages of the existing statutes and trade agreements that had come into force over the past five or six decades. If we expect American business leaders and investors to spark a new era of re-industrialization and/or appreciate the value of the U.S. market, then those leaders must believe that there will be a degree of consistency and logic in the new set of rules, no matter who gets elected to the White House. They must also believe that those rules will survive review by the Judiciary.
That requires Congress to act and put those new rules in place.
I wish the Administration had a Congressional strategy for achieving this new set of statutes and were working to place their changes into the U.S. Code, but I haven’t really seen that yet.
Perhaps we need a House and Senate Select Committee to examine and develop the new set of statutes that will bring this new trading system into being. Maybe something like: the Senate and House Select Committee on Trade and Reindustrialization. It could bring together members from the various committees of jurisdiction to examine the current situation, determine options for the future of the U.S. economy, and enable other committee to bring forward legislation in areas as diverse as immigration, tax policy, permitting reform, trade barriers and subsidies, and the role of the Executive branch in managing trade and investment.
It’s a bold idea and there will be plenty of folks on both sides of the aisle who doubt that Congress could do this kind of important work, but that doesn’t mean we should dismiss it out of hand. Unless and until, Congress exercises its Constitutional responsibilities, I fear we will continue to drift. The President cannot make the kinds of reforms that are necessary alone.
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Thanks for reading!
Matt
MUST READ
I’m Leaving China After 8 Years. Suspicion of Outsiders Is Rising.
Yoko Kubota, Wall Street Journal, May 5, 2026
Our Journal correspondent shares her experience as a Japanese woman reporting for an American newspaper in China.
It was one of my first times riding in a new BYD electric car, and as a Wall Street Journal reporter, I was excited. China’s BYD was the talk of the car world, and the ride-hailing vehicle I was in had buzzy features, including a large digital display.
I asked the driver what its map was showing. Realizing I was a foreigner, he said he couldn’t tell me. “It’s a national secret,” he said.
The driver went on to lecture me about how Japan—the country of my birth—shouldn’t interfere with Beijing’s ambitions in Taiwan, the democratically self-ruled island that the government in Beijing views as part of China.
The unexpected turn in the conversation is emblematic of how much has changed in the eight years since I moved to China. Over that time, tensions between China and the U.S. have grown—driving the two countries toward a new Cold War. Ties between China and Japan are at their worst in many years, too.
Since taking the helm in 2012, Chinese leader Xi Jinping has worked to solidify his country’s position as a global superpower. And the intensifying competition with the U.S. has hardened his resolve to set China on a course of self-sufficiency from energy to semiconductors and to limit foreign influence.
Both countries have been placing tariffs on each other’s goods. Washington has restricted shipments of certain technology to China. China withheld rare earths and other critical minerals that the U.S. needs for everything from cars to missiles.
As for Japan, Beijing criticized remarks made by Japan’s prime minister, Sanae Takaichi, who suggested that Chinese military action against Taiwan would pose a serious threat to Japan’s security. Beijing viewed the comments as an unwelcome intrusion into its domestic affairs.
Attitudes were hardening around the time of my BYD ride after Xi launched a new, nationwide anti-espionage campaign. Video messages in the Beijing subway urged the public to take care in interacting with foreigners. At the library, signs reminded users that citizens are responsible for protecting state secrets.
Concerns grew among foreign businesses that their activities would come under an expanded anti-espionage law. Some offices of foreign businesses, including an American due-diligence firm, were raided. At least one Japanese executive, with a Japanese drugmaker and a leading figure in Japan’s business community in Beijing, was sentenced for espionage.
Lately, Beijing has eased those campaigns, trying to project a more positive and friendlier image of China as the U.S. pressures many countries by raising tariffs and questions the value of alliances. Its charm offensive includes permitting visa-free arrivals for some tourists, and touting the popularity of Chinese brands abroad and China’s futuristic cities in state media.
Even so, I can’t shake the sense that something fundamental in China has changed. An era of openness to international cultures that peaked in years of “reform and opening” in the 1990s and early 2000s is gone. As nationalist sentiments sweep the world, in China, distrust of foreigners has come to permeate more of everyday life.
COMMENT – I really don’t think they have enough surveillance cameras in Tiananmen Square.
Global China, China-Shedding and Southeast Asia’s Regulatory Challenge
Stefanie Kam, RSIS, May 4, 2026
On 27 April, Beijing’s top state planner, the National Development and Reform Commission, issued a notice requiring that Meta reverse its US$2 billion acquisition of the AI startup Manus, citing national security concerns. Chinese regulators ordered the deal “unwound” to prevent the transfer of home-grown AI technology and talent to a US competitor. Meta made a commercial law argument, stating that the transaction “complied fully with applicable law” and that it anticipated “an appropriate resolution”. Beijing, on the other hand, applied a national security argument: in frontier AI, legality is not just about paperwork, it is about whether the transaction transfers strategic capability.
In January, after Meta had completed its acquisition of Manus, China’s commerce ministry announced an investigation into the sale. Two months later, Beijing warned the founders of AI firms against talent transfer, signalling that it treats AI capability as a non-portable asset. MicoMind, another Chinese AI start-up, has since distanced itself from US businesses after such warnings.
Beijing’s decision to block the Meta-Manus deal highlights a fundamental tension in its global strategy: while China encourages firms to expand internationally, it remains determined to anchor strategic AI talent and “dual-use” intellectual property within its own 15th Five-Year Plan ecosystem to ensure technological self-reliance.
Beijing’s Rationale for the Manus Ban
Beijing’s rationale for the ban is that Manus was not just a company being sold; it was a Chinese-origin AI capability potentially moving into a US Big Tech platform. The first concern is provenance. Manus presented itself as Singapore-based, but Chinese regulators appear to be asking deeper questions: where did the early R&D take place, who built the product, what data and infrastructure supported it, and whether the transaction would shift control out of Chinese hands and allow Chinese-origin AI know-how to be absorbed into Meta’s ecosystem.
The second concern is control. In an AI firm, control is not just about who owns the shares; it is about who controls the technical core and the way the technology is integrated into a larger platform. If Meta absorbed Manus, Beijing could view that as the transfer of strategic capability, not just a commercial acquisition.
The third concern is talent. In frontier AI, people are often part of intellectual property. Founders, scientists and engineers are carriers of knowledge transfer.
The fourth concern is regulatory-arbitrage risk. Companies may internationalise for legitimate reasons – to attract customers, gain talent, increase capital, diversify risk or comply with foreign regulations. Beijing’s narrower concern is that in strategic technologies, a transaction can make the China connection less visible commercially – through ownership, branding, customer relationships or integration into a foreign platform – while the asset’s core value may still depend on Chinese-origin AI talent, R&D, models, data, infrastructure or know-how. This is where Beijing views the Manus sale as a national security concern.
China-Origin AI Firms as Strategic National Assets
To be sure, not all cases of Chinese firms moving or establishing headquarters overseas are the same. In early 2026, TikTok and its parent company ByteDance successfully established a majority American-owned joint venture, TikTok USDS Joint Venture LLC, to avoid a US ban on the popular video-sharing app. Shein, the fashion e-commerce platform, moved its headquarters to Singapore in 2022. Temu, another e-commerce platform, lists Dublin as its principal office. Both Shein and Temu run on Chinese supply chains, merchants, logistics and consumer data.
But unlike e-commerce firms, the sensitive asset for AI firms like Manus and MicoMind is not a finished product but research capacity itself, which includes scientists and engineers, model know-how, access to computing resources, and intellectual property.
Singapore and ASEAN Exposure
For the ASEAN countries, especially Singapore, opportunities to attract Al firms and investment pose regulatory challenges and geopolitical pressure. Singapore’s various strengths make it attractive to such firms: it is legally predictable, English-speaking, globally connected, credible to Asian and Western investors, and increasingly visible as an AI hub. For Chinese-origin AI firms trying to appear global rather than China-based, Singapore offers neutrality and legitimacy. But neutrality is not insulation for the island-state as Singapore firms can become unwitting conduits for Chinese firms to access restricted chips, cloud services, models, data, or intellectual property from the United States and other Western countries.
The risk is uneven across ASEAN. In Singapore, the issue is whether a firm with headquarters in the country, its capital structures, and the existence of compliance teams reflect real independence. In Malaysia, the concern may be centred around the growing number of data centres established by Chinese firms, their cloud infrastructure, access to computing resources, and chip procurement. In Vietnam, the establishment of manufacturing plants by Chinese firms may mask their reliance on China-based inputs. In Thailand and Indonesia, Chinese-origin platforms may depend on China-linked logistics, fintech, merchants, and data systems. In the Philippines, alliance politics make foreign-controlled digital systems more sensitive because data access, disinformation, cybersecurity, and infrastructure dependence can acquire security significance.
Policy Response
Southeast Asia should adopt a trusted investment checklist for AI and digital firms. Such a checklist should ask who ultimately owns, controls, finances, and can direct the firm; whether founders, investors or board members retain veto power or informal influence; how the firm’s core technology was created, moved and controlled; how chips and cloud services are procured; where data flows; whether cybersecurity controls are auditable; what export-control obligations may be triggered; and whether personnel, assets or affiliates remain subject to foreign legal or reporting duties. This should apply to any firm whose structure obscures strategic control or sensitive technology transfer, not only Chinese-origin firms.
Xi’s Forever Purge: The Real Goal Behind China’s “Self-Revolution”
Neil Thomas and Shengyu Wang, Foreign Affairs, May 4, 2026
Since becoming China’s leader in 2012, Xi Jinping has carried out stunning assaults on both the Chinese Communist Party and its People’s Liberation Army, purging millions of cadres and even senior leaders who were once thought untouchable. Rooting out corruption was an early focus of Xi’s tenure, but he has intensified the effort in recent years: in 2025, the CCP’s “discipline inspection” authorities filed more than one million cases, an almost sevenfold increase from the year Xi took office. In January, Xi abruptly removed top generals Zhang Youxia and Liu Zhenli, which hollowed out a Central Military Commission already depleted by years of investigations. And in early April, Ma Xingrui, the former party secretary of Xinjiang Province, was placed under investigation. It was the first time since the aftermath of the tumultuous Mao Zedong era that three Politburo members had fallen during the same five-year term.
The standard explanation for these purges is that Xi, China’s most powerful ruler in generations, seeks to sideline rivals and consolidate power. There is much truth in that. The takedown of crooked senior leaders tied to his predecessors Jiang Zemin and Hu Jintao helped Xi win public support and centralize decision-making, eventually setting him up to rule for life. From this perspective, he now keeps purging because he has made so many enemies within the party that he must continue striking to stay secure. Some interpretations of Zhang’s ouster, for example, suggest that Xi was responding to a political challenge from within the top brass.
But that explanation is not enough. Xi’s discipline campaign is not merely a military cleanup or a settling of political scores. Indeed, focusing only on dramatic top-level purges risks missing the larger story. What began as an anticorruption push has evolved into an extensive apparatus for managing cadres, enforcing political priorities, and supervising policy implementation. Xi’s discipline campaign should thus be understood as a sweeping effort to transform the CCP itself.
Although Mao told the party to make revolution, Xi, the princeling son of a revolutionary hero, is now guiding what he calls the party’s “self-revolution.” He is using discipline not only as an instrument of control but also as a theory of governance: internal rules define priorities and acceptable conduct, ideological education produces more dedicated officials, inspections improve compliance, and high-level purges deter wrongdoing. If self-revolution succeeds, and it well might, it could make the CCP a more effective and durable institution—one capable of ruling China indefinitely irrespective of who is at the helm. In that sense, self-revolution is Xi’s effort to render China’s succession concerns moot.
The project, however, remains unfinished. Xi has ramped up calls for self-revolution in recent speeches, stressing that internal discipline and China’s economic and social development are “closely linked, mutually reinforcing, and mutually enhancing.” More purges are therefore likely—especially ahead of next year’s 21st Party Congress, when Xi will seek to secure a record fourth five-year term as general secretary and elevate a new cohort of clean, loyal lieutenants. The deeper he embeds self-revolution into the regime’s operating logic, however, the more real its inherent risks become, including bureaucratic paralysis, a depleted elite, and the possibility that a highly centralized discipline system will prove untenable once Xi himself is gone.
Nvidia’s Jensen Huang says China should not have its most advanced chips
Yifan Yu, Nikkei Asia, May 5, 2026
Nvidia CEO Jensen Huang said China should not have the company’s most advanced chips but urged Washington to allow U.S. semiconductor companies to continue competing in global markets, including China.
Speaking Monday evening at the Milken Institute Global Conference in Los Angeles, Huang said U.S. technology companies help maximize American exports as they compete globally.
“By increasing our tax revenues, we improve our economic security and [that] contributes to national security,” Huang told the conference, which drew thousands of bankers, investors, policymakers and business executives to Beverly Hills.
Asked whether China should have the “latest and greatest chips,” Huang replied, “No,” adding that the U.S. should maintain a lead in artificial intelligence.
China’s Rare Sanctions Pushback Leaves Banks Caught in Crossfire
Bloomberg, May 3, 2026
China has ordered its companies to ignore US sanctions, an unprecedented act of defiance that threatens to trap a vast banking sector in the crossfire as tension rises between the world’s largest economies.
Beijing has often railed against unilateral sanctions and pronounced them illegitimate, but it has also quietly allowed its largest companies to comply with them, in order to avoid blowback on its own economy and to preserve access to the US financial system.
Zambia Helped Chinese Miner Cover Up Pollution Disaster, House Committee Finds
Nicholas Barlyo, Wall Street Journal, May 1, 2026
Zambia is relying on China to grow its copper-mining industry and owes Beijing $6.6 billion.
Saddled by billions in crushing debt owed to Beijing, the Zambian government helped a Chinese-owned mining giant cover up one of the worst mining pollution incidents in the country’s history, according to an investigation by a U.S. House Select Committee on China.
More than a year after a tailings dam owned by Sino-Metals collapsed and unleashed toxic sludge into the Kafue River, farmlands along the river valley are scorched, hundreds of people lack a source of clean drinking water and residents continue to live on land contaminated with heavy metals.
The Zambian government, which owes $6.6 billion to the Chinese government and Chinese lenders, has held back from pressing Sino-Metals over the disaster, fearing retaliation from China, the committee said in a report reviewed by The Wall Street Journal. Sino-Metals is a subsidiary of state-owned China Nonferrous Mining.
Inside China’s massive $3tn overseas acquisition spree
Toby Nangle, Financial Times, May 3, 2026
China’s lightspeed economic rise is the global economic story of the last half century. And as MainFT’s China Shock 2.0 series has showcased, they’re not done yet. Last week a paper quietly dropped co-authored by a group of academics and policy types that helps put data meat on the bone as to how exactly technology transfers might have helped China’s latest step up.
Luc Laeven, director general of the ECB’s research department, along with co-authors professor Jenny Bai of Georgetown, and Hong Ru and Yaojun Ke of Nanyang Technological University, assembled a micro-level dataset of 161,773 firms across 159 countries. They then built multi-layered ownership chains to trace capital through offshore tax havens to its ultimate origin — which they reckon account for over 80 per cent of global assets of non-financial firms.
What they found were Chinese investors with around $3.3tn of global corporate assets skewed heavily to Europe (42 per cent of outbound investment) and North America (38 per cent).
Investments were concentrated in knowledge-intensive sectors, and the knowledge-intensity of investment targets intensified following the release of the Made in China 2025 government initiative.
Fine, but don’t we know all this stuff already? Actually no. Almost two-fifths of this investment flowed through at least one tax haven, and standard foreign direct investment statistics just aren’t up to working out that these flows come from China. The authors estimate that almost $800bn of Chinese ownership is taken via the Cayman Islands, accounting for almost half the country’s non-financial corporate assets in the dataset.
So the extent and location of this outbound investment — “a global footprint that is substantially larger and more strategically concentrated than indicated by official FDI statistics” — looks like genuinely new news.
But much much more interesting is what the authors do next.
They interrogate their dataset longitudinally, looking at the behaviour of target firms in the period following their purchase by Chinese private and state-owned enterprises.
And they find that post-acquisition, these firms generally boosted research and development and become more capital intensive. However, this R&D bump was rewarded with a patent bump that was not only infinitesimally small, but also statistically insignificant.
Moreover, profits at the target firms took a hit: average return on assets fell by 1.1 percentage points compared with the control group of non-Chinese owned firms over the same period. Given an average return on assets across non-Chinese owned firms the dataset of only 4 per cent, this hit to profits looks big.
Are Chinese owners just really really bad at managing western firms? Perhaps.
Maybe Chinese head offices were systematically smooth talked into greenlighting western researchers’ passion projects that the firms’ previous owners had effectively resisted? Or maybe Chinese owners shifted research agendas to projects that had much longer pay-offs, denting both short-term patent filings and ROA? Either is possible.
But the authors found something else going on at the Chinese parent that suggests an alternate explanation:
… we find evidence of innovation ‘spillbacks’: while target firms exhibit no increase in patenting, the Chinese parent firms experience a sharp increase in granted patents following their first developed-economy acquisition.
Professor Bai, when Alphaville contacted her, caveated the spillback section of the paper as a work in progress. Duly warned, let’s plug on and look at the data.
By the end of the reporting year in which Chinese firms acquired their first overseas developed market subsidiary, the average number of patents the Chinese parent companies filed had more than trebled. For Chinese state-owned enterprises, the average number of patents filed quadrupled.
America’s Pacific Allies Train to Face Down China Together
Mike Cherney, Wall Street Journal, May 3, 2026
Seven nations, 17,000 personnel participate in Philippines exercise that has angered Beijing
U.S. and Philippine Marines shared foxholes covered in palm leaves, machine guns pointing toward the sea off this tropical Pacific island. Australian and New Zealand soldiers were dug into the sand nearby.
The troops faced an imagined enemy attempting to land from the South China Sea, the disputed maritime thoroughfare that has become a hotspot in the confrontation between China and America’s allies.
To fend off the amphibious assault, U.S. troops launched missiles from the truck-based High Mobility Artillery Rocket System, or Himars. Philippine aircraft soared overhead. The troops on the beach shot their weapons.
“This was an amazing show of firepower,” U.S. Army Maj. Gen. James Bartholomees told the troops after they were deemed to have repulsed the invaders from the beach. “I’m incredibly impressed with what we saw today.”
The counterlanding drill was part of the annual Balikatan exercise, in which the U.S. and Philippine militaries showcase their combined capabilities. The exercise, whose name translates as “shoulder-to-shoulder” from the local Tagalog language, has also become the prime testing ground for expanded cooperation among America’s allies in the Pacific.
COMMENT - I was pretty happy to see this test firing of the mid-range anti-ship capability off the Typhon system in the Philippines for the first time last week.
Just a reminder to our PLA friends: you aren’t the only ones who can impose “Anti-Access, Area Denial” (A2AD) on the Western Pacific.
Taiwan Passes Key $25 Billion Defense Budget to Deter China
Yian Lee, Bloomberg, May 8, 2026
Taiwanese lawmakers approved a special defense budget proposed by President Lai Ching-te that is intended to help the democracy build a state-of-the-art system to counter aerial threats from China.
The legislature voted to provide NT$780 billion ($24.8 billion), Speaker Han Kuo-yu said after the vote Friday. That is less than the NT$1.25 trillion Lai’s government had sought but more than the NT$380 billion initially proposed by the opposition Kuomintang.
AUTHORITARIANISM
China Sentences 2 Former Defense Ministers on Bribery Charges
Chris Buckley, New York Times, May 7, 2026
Two former Chinese defense ministers have received death sentences with two years’ reprieve — meaning they will probably spend the rest of their lives in prison — after being convicted on bribery charges, military courts announced on Thursday.
The two men, both generals, are the most senior officers so far to have been publicly sentenced in China’s latest campaign to root out corruption and disloyalty in the armed forces.
A brief report from the official Chinese news agency Xinhua said that one of the two former ministers, Gen. Wei Fenghe, had taken bribes, while the other, Gen. Li Shangfu, had both taken and given bribes. The announcement gave no further details about the allegations. In China, judges usually reduce death sentences with two years’ reprieve to life in prison if those convicted demonstrate good behavior.
The two generals were among the first senior officers to be removed from their posts and arrested as the latest drive by Xi Jinping, China’s leader, to clean up the military’s top brass was gaining momentum a few years ago. Since then, around 100 senior officers have been dismissed or have disappeared from public view, suggesting that they are under investigation, according to a recent estimate from the Center for Strategic and International Studies, a research group in Washington.
COMMENT – I would be willing to bet that every PLA General and Admiral is guilty of essentially the same level of “corruption” as these two… which means every one of them is vulnerable to this kind of punishment (death sentence with a reprieve).
Let me tell you what PLA leaders are now inclined to do: avoid taking risks or telling the boss things he doesn’t want to hear.
Chinese dissident Li Ying: ‘Our work is about being ready for the tipping point’
Leo Lewis, Financial Times, May 1, 2026
The activist known as Teacher Li on the dangerous work of cataloguing everyday life in China — and why he wants to change the CCP, not destroy it.
A hustle of bankers, lawyers and other office workers are streaming into the Roppongi Hills branch of McDonald’s to beat the Friday noon rush. Tables across the big, glass-walled restaurant in central Tokyo are filling fast but I have reserved one behind a pillar, using a notebook, a pencil case and a copy of the FT.
Wearing black and standing at a bank of self-service ordering machines near the entrance is a man some consider one of China’s most powerful voices of opposition to the government — a figure with the rare capacity to marshal broad-based grassroots criticism of the country under Xi Jinping.
This is a man whom China’s formidable apparatus of censorship has been specifically engineered to silence. And he is, temporarily, silent. Brow furrowed, Li Ying swipes fiercely at the chest-height digital screen. For all the calculated, universal familiarity of the McDonald’s menu, he cannot find his usual order.
At the 33-year-old’s touch, the display slides through the different options. “They don’t have wraps?” he asks, working out an alternative. After a couple more swipes, Li prods in his order and returns to the table, scanning constantly for covert or overt threats in the room. I enter my order, pay for us both, and rejoin him.
We hunch over a table in chairs designed so that people will eat fast and leave. But Li — known to the wider world by his online handle “Teacher Li” — has a great deal to say, and will take his time doing so.
“Influencers sell their image as a product. The lens is only on what they are as a product, never on what is behind the camera where life is hard,” he begins. “In China, that is scaled at a national level. It is a state influencer economy, which doesn’t show you the bad stuff . . . My work is about bringing to light the voices of ordinary people who are saying how things really are.”
The nature of Li’s work, which centres on a social media account on X that daily publishes dozens of uncensored images and videos of real life in Xi’s China, has made him something much more fearsome to the regime than your usual dissident. Li is a normaliser of dissent by others. Many, many others.
“China is a low-trust society. Even among dissidents there is mistrust. The point of my work is to build trust — that is why we do everything. I think that makes me a new species of dissident,” he says.
Li is leading a movement that seeks the permanent, healthy and reliable exposure of reality in the world’s second-biggest economy. The submissions he curates, and the trust he has built in the material he filters on to his account, mean that others rely on him as a primary source of information. People outside China, including academics, journalists and government officials who have worked with Li, acknowledge that a level of scepticism is always necessary in the complex ecosystem of dissidents and the infowars. Many agree on the importance and legitimacy of Li, though.
“The work of Li and his team has become a crucial central hub of info coming out of China and info trickling back into China,” said one senior EU official who specialises in the country and has met Li on multiple occasions.
Xi Jinping wants China to read more—as long as it’s the right books
The Economist, April 27, 2026
US official says China is ‘funding’ Iran, urges Beijing to help open Hormuz
Al Jazeera, May 4, 2026
Scott Bessent says US has ‘absolute control’ of Hormuz, but calls on China to ‘step up’ with diplomacy to reopen strait.
United States Treasury Secretary Scott Bessent has accused China of “funding the largest state sponsor of terrorism”, referring to Iran, saying that Beijing should help Washington in efforts to reopen the Strait of Hormuz.
Bessent’s blunt criticism of China’s relations with Iran on Monday comes ahead of US President Donald Trump’s expected visit to Beijing next week, where he is set to meet with his Chinese counterpart Xi Jinping.
U.S. Warns China Over Iranian Oil as Sanctions Fight Intensifies
Alan Rappeport, New York Times, May 4, 2026
Bessent Calls on China, Allies to Join US Operation in Hormuz
Daniel Flatley, Bloomberg, May 4, 2026
US Treasury Secretary Scott Bessent called on US allies and on China to join an American operation to escort ships through the Strait of Hormuz even as he claimed the nation has total control of the vital waterway for the global oil trade.
“Let’s see if China — let’s see them step up with some diplomacy and get the Iranians to open the strait,” Bessent said Monday on Fox News. “Iran is the largest state sponsor of terrorism, and China has been buying 90% of their energy, so they are funding the largest state sponsor of terrorism.”
The Treasury chief was speaking little more than a week before President Donald Trump is scheduled to meet with his Chinese counterpart Xi Jinping on a high-profile trip to China.
“The threat of attacks from Iran has closed the strait — we are reopening it,” Bessent said. “So I would urge the Chinese to join us in supporting this international operation.”
COMMENT – For Secretary Bessent, who has been leading the negotiations with the PRC, to call on Beijing to aid with opening the Strait of Hormuz a week before the Summit suggests that the Admin feels confident to add demands on the PRC.
Chinese-owned oil tanker hit near Hormuz as US pauses ship-protection plan, report says
Reuters, May 7, 2026
COMMENT – That’s a shame.
The Split Between China and Silicon Valley Just Got Wider
Meaghan Tobin and Erin Griffith, New York Times, April 29, 2026
Beijing’s insistence that Meta unwind its deal with a Chinese A.I. start-up escalates the geopolitical fight over advanced tech.
Manus, an artificial intelligence start-up, began with an idea among three engineers in Wuhan, China, united by an obsession with A.I. and a shared ambition to build a global venture. From the outset, they looked beyond China.
Their big break came in March last year. Manus had drawn the attention of Silicon Valley investors with an A.I. agent capable of carrying out tasks on its own. By year’s end, Meta had agreed to acquire Manus.
It looked like a clean breakout from China’s crowded, tightly regulated market and a path to the world stage. Then, on Monday, the Chinese government stepped in and demanded that the $2 billion deal be undone.
A decade ago, Silicon Valley investors raced to back Chinese start-ups. Today, few do. Deals like Meta’s acquisition of Manus were already rare, as China’s tech sector drifted from American capital. Beijing’s intervention sharpens the split.
Yuan payments soar as currency of last resort for Iran, Russia
Kentaro Shiozaki, Nikkei Asia, May 4, 2026
China Seeks an Advantage with Both Trump and Iran as War Evolves
Edward Wong, New York Times, May 3, 2026
No Party, No Party: Beijing’s campaign to foment loneliness abroad and good vibes at home
Irene Zhang and Jordan Schneider, China Talk, May 3, 2026
China’s Sanctions Hit Europe’s Emerging Drone Doctrine
Antoni Łukasik, The Diplomat, April 29, 2026
Several European countries have been quietly developing a new drone doctrine built on both Ukraine’s battlefield experience and Taiwan’s high-tech components. China is trying to sever that link.
Beijing Deploys Long-Threatened Economic Arsenal Against U.S. Pressure
Lingling Wei, Wall Street Journal, May 5, 2026
In a single week, Beijing killed a U.S. tech deal and ordered Chinese companies to defy American sanctions on domestic oil refiners—two unprecedented moves, both terse, both wielding tools that had been advertised for years but never used.
Welcome to the era of Chinese regulatory aggression, one Beijing has spent the better part of a decade promising.
Since the trade war Donald Trump opened in 2018, during his first presidency, Beijing has been quietly building a counter-sanctions arsenal: a blacklist for foreign firms it deems hostile, a law authorizing punishment of any company that helps enforce U.S. sanctions on Chinese targets, a rule ordering Chinese parties to ignore those sanctions outright, and expanded powers for its antitrust regulators to kill cross-border merger deals on national-security grounds.
China Fights Back Against US’ Iran Oil Sanctions
Micah McCartney, Newsweek, May 4, 2026
China Asks Banks to Pause New Loans to US-Sanctioned Refiner
Bloomberg, May 7, 2026
Cai Qi may be China’s second-most powerful man
The Economist, April 30, 2026
World Cup viewing in doubt for millions of fans in India and China
Aditya Kalra, Munsif Vengattil, and Amlan Chakraborty, Reuters, May 4, 2026
…
In past World Cups, including 2018 and 2022, Chinese state broadcaster CCTV secured the rights well in advance and began airing promotional content and sponsor-driven advertisements weeks before the tournament.
CCTV, which has extensive reach across television and digital platforms, did not immediately return a request for comment.
China accounted for 17.7% and India 2.9% of the global linear TV reach of the 2022 tournament. The two countries together accounted for 22.6% of total global digital streaming reach for that World Cup.
The 2026 tournament kicks off on June 11, leaving barely five weeks for a deal to be finalised, broadcast infrastructure to be set up and advertising inventory to be sold.
COMMENT – Is it because the World Cup is taking place in the United States?
China’s ‘common prosperity’ push faces reality check as inequality rises: study
He Huifeng, South China Morning Post, May 4, 2026
Mainland Chinese students turn to Hong Kong universities amid gaokao, US visa worries
Jane Cai, South China Morning Post, May 4, 2026
The city has overtaken the US to become the second most popular study-abroad destination for mainland students in 2026, a report finds.
COMMENT – Hong Kong isn’t a “study abroad destination,” it is the PRC.
Defying the Censors Was Easy. Being a Good Comedian Is Harder.
Li Yuan, New York Times, May 4, 2026
Having gotten into trouble for making jokes critical of the Chinese government, the standup comic Chizi now lives in self-imposed exile. He’s finding that freedom imposes its own constraints.
China’s Surveillance Fantasies, Accidentally Published Online
Tan Liwei, Bitter Winter, May 6, 2026
ENVIRONMENTAL HARMS
South Africa Cracks Down on IUU Fishing by Foreign Trawlers
Eurasia Review, May 5, 2026
Four Chinese fishing vessels in late February were found operating illegally inside South Africa’s exclusive economic zone (EEZ) and territorial waters without the required permits. The vessels repeatedly switched off their automatic identification system (AIS) transponders, a common practice among illegal fishing offenders.
COMMENT – Funny how being the CCP’s closest ally in Africa doesn’t protect South Africa from this kind of abuse of its sovereignty and prosperity.
Korea JoongAng Daily, May 4, 2026
After a Chinese Mine Spill Poisoned Zambia’s Lifeline River, Locals Are Suing for $80 Billion
Madeline Higgins, McGill International Review, April 4, 2026
More than a year after one of the worst mining pollution incidents in Zambia’s history, hundreds of residents still remain uncompensated by Sino Metals, a subsidiary of the Chinese state-owned Nonferrous Metals Mining Group. In September 2025, 176 Zambian farmers filed a $80 billion USD lawsuit against the company after a dam collapse last February, which caused waste from the Sino Metals Leach Zambia copper mine to flow into Zambia’s Kafue River, allowing toxins to enter the river. More than half of Zambia’s 21 million people rely on the Kafue for drinking water or to irrigate crops.
According to the South African environmental company Drizit, the spill resulted in the release of 1.5 million tons of toxic material, more than 30 times the amount Sino Metals admitted at the time. In August, a travel advisory from the Finnish Ministry of Foreign Affairs found that water samples from the area still contained 24 different heavy metals, while the US government warned that even breathing air in areas surrounding the mine posed a potential health threat.
The lawsuit alleges that Sino Metals has gone to extensive lengths to prevent Zambian locals from reporting the impacts of the spill to officials. According to the lawsuit, the company “has been detaining and arresting” activists and civil society representatives who have visited impacted residents. Last September, Sino Metals began making interim compensation payments to certain Zambian residents, subject to recipients signing legal agreements releasing the company from all liability for harm caused by the spill. According to Malisa Batakathi, one of the lawyers representing 47 impacted households, “most of them did not know the implications of what they were signing.”
Business and Human Rights Centre, February 10, 2026
FOREIGN INTERFERENCE AND COERCION
Taiwan president defiant as he begins Eswatini trip; China calls him a ‘rat’
Reuters, May 2, 2026
Taiwan’s president makes it to Eswatini, in spite of Beijing
J.D. Capelouto, Semafor, May 3, 2026
Taiwan’s president made it to Eswatini, much to Beijing’s chagrin.
The island’s leader, Lai Ching-te, had planned to visit his lone African ally last month but said he canceled his trip because China had pressured neighboring countries to close their airspace.
Berlin and Prague also reportedly denied Taiwan’s requests to transit through Europe. But on Saturday, Lai announced he was in Eswatini following a clandestine, unspecified maneuver.
Taiwan, which China views as a breakaway province, is determined to “not let Beijing have a de facto veto” over its international presence, an Atlantic Council scholar said.
Taiwan Outfoxes China in Test of Wills Over Tiny African Country
Joyu Wang, Wall Street Journal, May 3, 2026
COMMENT – I wonder how many members of the PRC Ministry of Foreign Affairs will be purged for this failure.
Taiwan won’t give in to pressure, president says of Africa trip China denounced
Fabian Hamacher and Ann Wang, Reuters, May 4, 2026
Solomon Islands PM ousted after losing confidence vote
Lucy Craymer and Alasdair Pal, Reuters, May 7, 2026
Solomon Islands Prime Minister Jeremiah Manele was ousted from power on Thursday after losing a confidence vote in the country’s parliament.
Manele lost the vote by a margin of 26 votes to 22, with two abstentions, the speaker of the country’s parliament, Patterson Oti, said.
“I hope as leaders, we will continue to work for the betterment of this country,” Manele told lawmakers after the vote.
“It is important for both sides of the house to continue to work together to deliver goods and services for people going forward.”
He will remain in position until he is removed by the Governor General, who acts as a representative of the country’s head of state, Britain’s King Charles.
Located 1,600 km (1,000 miles) northeast of Australia, the strategic importance of Solomon Islands has been in focus in recent years due to its strengthening ties with China. In 2022, it signed a security pact with China that prompted concern from the United States and South Pacific neighbours.
Manele’s ouster stems from a dozen government ministers defecting to the opposition in March. Manele then refused to recall parliament, avoiding a confidence vote, but was later ordered to do so by two courts.
COMMENT – Of all the Pacific Island leaders, Prime Minister Jeremiah Manele was probably Beijing’s closest thing to a client…
Here is the May 2024 BBC report on Jeremiah Manele becoming Prime Minister of the Solomon Island.
Here he is in July 2024, just weeks after becoming Prime Minister and on his first international trip to meet with Xi Jinping.
And here he is touting the close relationship he developed with the PRC as Prime Minister.
Just one more loss for Beijing as its closest “friends” get removed.
Niclas Maduro of Venezuela
Ayatollah Ali Khamenei of Iran
Viktor Orban of Hungary
Jeremiah Manele of the Solomon Islands
Who is next? Miguel Diaz-Canel of Cuba? Vladimir Putin of Russia?
It could be Spain’s Prime Minister, Pedro Sanchez whose wife, Begoña Gómez, is facing multiple corruption scandals, including bribery, embezzlement, money laundering, and manipulation of public contracts. On April 13, 2026 (as Prime Minister Sanchez and his wife were in Beijing), a Spanish judge formally charged Sanchez’s wife with multiple crimes.
I’m sure there is no connection at all between being a “friend of China” and being a corrupt politician.
[Notice the photo in the Le Monde article is of Spanish Prime Minister Sanchez and his wife clapping at Tsinghua University in Beijing on the same day she was charged with corruption by a Spanish judge]
Quick Question: Have you heard that the Spanish Prime Minister was in this kind of trouble? That his wife faces years in prison or that Sanchez is facing increasingly loud demands that he resign? Or have you just heard that Sanchez was the only European leader bravely standing up to Trump?
Might it be possible that Sanchez’s grandstanding against the United States and desperate attempts to ingratiate himself to Beijing are simply attempts to distract the public from his own legal troubles? I’ll let you answer those questions yourself.
Fake Press, Real Spies: How China Tried to Infiltrate Taiwan’s Civil Society
Silva Shih, Commonwealth, April 28, 2026
Taiwanese baristas to compete as ‘Chinese Taipei’: Association
Focus Taiwan, April 29, 2026
The Taiwan Coffee Association said Wednesday Taiwanese competitors will compete under the name “Chinese Taipei” in events organized by the World Coffee Championships (WCC), calling the change an unavoidable condition to safeguard participation rights.
In a statement, the association said it had been informed by WCC organizers, based in the U.S., that all future entries must use “Chinese Taipei,” instead of “Taiwan.”
The group noted that Taiwanese competitors have participated under the name “Taiwan” since 2007, but stressed the change was not its own decision and must be followed to ensure continued participation in international events.
The association said the adjustment is guided by three principles: protecting competitors’ rights to compete, maintaining consistency with international competition rules, and promoting professional exchange and industry development.
Paraguay president lauds friendship with Taiwan, China tells him to sever ties
Ben Blanchard and Yi-Chin Lee, Reuters, May 7, 2026
Paraguay and Taiwan share a friendship based on freedom and democracy that extends beyond diplomatic formalities, Paraguayan President Santiago Pena said on Thursday, as China told him to sever ties with Taipei.
His visit comes as China steps up efforts, opens new tab to draw the South American nation away from its longstanding support for Taipei.
The trip is Pena’s second visit as president to Taiwan. Paraguay is one of 12 countries that still maintain formal diplomatic relations with the democratically-governed island that is claimed by Beijing.
Speaking in English to university students in Taipei after receiving an honorary doctorate, Pena said Paraguay and Taiwan have an alliance that is based on freedom.
“Paraguay and Taiwan share a friendship built on a solid foundation, democracy, freedom, confidence in institutions, the dignity of hard work,” he said.
“Our bilateral relationship extends far beyond diplomatic formality. It is manifested in concrete actions, tangible achievements, and real opportunities for both of our nations.”
Addressing Pena at the same event, Taiwanese Vice President Hsiao Bi-khim mentioned how she had first met and been impressed by him in Washington before he was elected president.
“And I am still extremely impressed by President Pena’s passion for serving the people of Paraguay,” she added. “President Pena, passion, people, Paraguay, five P’s. And plus, a principled partnership with Taiwan makes it ‘perfecto.’”
Neither mentioned China in their public remarks.
In Beijing earlier on Thursday, Chinese Foreign Ministry spokesperson Lin Jian said Paraguay should “stand on the right side of history” and “sever so-called diplomatic relations with the Taiwan authorities.”
“The ‘One China’ principle is a fundamental norm of international relations and the universal consensus of the international community,” Lin said, referring to Beijing’s stance that both sides of the Taiwan Strait are part of a single country.
Paraguay is Taiwan’s last diplomatic ally in South America.
The two established diplomatic relations in 1957, in the early days of the rule of Paraguay dictator Alfredo Stroessner, a fervent anti-communist.
Pena has a good relationship with the U.S. and in February visited Washington for U.S. President Donald Trump’s new board of peace, where Trump called him a “young, handsome guy.”
China says Taiwan is one of its provinces, a position rejected by President Lai Ching-te and his government.
COMMENT – Amazingly, it doesn’t look like Paraguay’s President is about to be driven from power like the friends of Beijing.
Taiwan offers condolences over deadly China fireworks factory blast
Focus Taiwan, May 5, 2026
Taiwan’s Mainland Affairs Council (MAC) on Tuesday expressed condolences over a deadly explosion at a fireworks factory in Hunan Province, central China, while saying that no Taiwan nationals are known to have been killed or injured.
The blast occurred Monday afternoon at a fireworks factory in Liuyang, a county-level city under Changsha, the capital of Hunan, killing 26 people and injuring 61, according to China’s state-run Xinhua News Agency.
Taiwan’s government extended its condolences to the Chinese authorities, MAC said in a news release, adding that it hoped “the victims will rest in peace, the injured will recover soon, and losses from the disaster will be minimized.”
COMMENT – This is what responsible and decent governments do when their neighbor suffers a tragedy.
Inside the collapse of the Canada-US trade deal
Mickey Djuric, Politico, May 5, 2026
Prime Minister Mark Carney left the White House in early October with Canada and the United States in reach of a trade deal.
Inside the meeting, senior U.S. officials were enthusiastic about a possible agreement covering steel, aluminum, uranium and energy.
Canadian and American negotiators were told to put the framework on paper, with the goal of finalizing an interim deal before American Thanksgiving.
“It was an awesome meeting,” Pete Hoekstra, U.S. ambassador to Canada, recently told POLITICO.
It went so well that President Donald Trump invited Carney and his delegation back into the Oval Office to show off his White House ballroom plans, even asking the prime minister for advice on the design. The Canadians were then ushered into a nearby office and offered Trump-branded memorabilia.
Sixteen days later, the talks collapsed.
Trump blamed a C$75 million anti-tariff ad campaign launched by Ontario Premier Doug Ford, calling it “egregious” and “fake.” But interviews with officials on both sides of the border suggest the ad, which featured comments from Ronald Reagan, was just “a pretext.”
Behind the scenes, the North American auto sector was growing frustrated about being left out of the agreement. Tensions escalated after Carney’s Liberal government threatened Detroit automakers and raised the cost of importing vehicles into Canada, eroding the goodwill from that Oval Office meeting.
COMMENT – Ottawa’s decision to embrace PRC EVs over the last six months should be viewed through the lens of Canadian Industry Minister Melanie Joly’s actions against U.S. automakers who had been pushing Washington and Ottawa together on a deal until she started to coerce Detroit. The agreement fell apart, largely due to Minister Joly, who then went to Beijing to negotiate with Chinese EV makers to set up shop in Canada.
Office of the Prime Minister of Canada, January 16, 2026
Canada’s Industry Minister Meets Auto Giants BYD, Chery in Beijing
Cláudio Afonso, EV, January 18, 2026
Canada told U.S. it planned to drop Chinese EV tariffs: source
Annie Bergeron-Oliver, BNN Bloomberg, January 17, 2026
It seems that Ottawa wanted to destroy USMCA as well as the cross-border auto industry so that Canada could partner with the PRC in making EVs.
When USMCA collapses this summer, and everyone blames Washington, come back and read this again.
Stephanie Taylor, National Post, May 4, 2026
Canada’s industry minister says the federal government will “always follow” findings from the United Nations when it comes to the issue of forced labour in China, as she declined to say directly whether she believed it was taking place herself.
Melanie Joly testified Monday before a parliamentary committee about Prime Minister Mark Carney’s policies toward electric vehicles, which Conservative MPs used to press the minister on the deal Canada struck with China earlier this year to allow a portion of Chinese-made electric vehicles to enter the market in exchange for Beijing reducing tariffs on products like canola seed.
Chinese envoy warns Canada against sending MPs to Taiwan or warships through Taiwan Strait
Steven Chase, The Globe and Mail, April 30, 2026
China tells Canada not to cross “red line” on Taiwan
Clayton DeMaine, Juno News, May 3, 2026
Chinese Ambassador to Canada Wang Di is warning Canada against sending MPs to Taiwan or warships through the Taiwan Strait as Prime Minister Mark Carney deepens ties with the dictatorship.
Canada, China sign pledge in Beijing to deepen financial-sector ties
Bill Curry, The Globe and Mail, April 5, 2026
China seeks Canada’s help in joining Indo-Pacific trade pact, Senator says
Robert Fife, The Globe and Mail, April 8, 2026
Chinese consulate met Vancouver official in bid to stop event critical of communist rule
Jeff Semple and Stewart Bell, Global News, May 4, 2026
Chinese consular officials met with a Vancouver city hall employee last month and urged her to cancel an arts event that highlighted communist party repression, sources told Global News.
At the meeting, representatives of China’s consulate told a staff member of the city’s civic theatres branch that they wanted a series of performances by the Shen Yun dance group to be stopped, the sources said.
The event, a celebration of Chinese cultural traditions lost under Communist rule, also received bomb threats, but went ahead anyway April 8-12 at the city-owned Queen Elizabeth Theatre.
But the incident suggests that China continues to use its diplomatic missions to silence dissent in Canada, even as Prime Minister Mark Carney pursues a detente with Beijing.
Canada’s intelligence agencies have alleged that China uses both diplomatic and foreign interference tactics, such as threats and harassment, to advance its interests overseas.
According to Public Safety Canada guidelines, “targeting any level of government to influence public policy or decision-making in a way that is clandestine, deceptive or threatening, and is contrary to Canadian interests” constitutes foreign interference.
Global News is not naming the city employee who met the consulate officials due to potential safety concerns.
Approaching Canadians in the diaspora, and who may have family members in China vulnerable to reprisals, is a common foreign interference tactic.
Beijing has long targeted Shen Yun, a New York-based performing arts group that has toured the world for the past two decades, and uses the banner “China before Communism.”
Study exposes Chinese organised crime threat in the UK, state links, and student involvement
UK-China Transparency, May 5, 2026
Police officer David Wilson’s PhD thesis was based on interviews with 25 investigators, analysis of police data, and a survey of more than 900 Chinese students.
Dalia Parete, Lingua Sinica, May 5, 2026
From content-sharing deals to diaspora media linked to the PRC party-state, China has built a layered media presence in Greece, exploiting a landscape weakened by years of financial crisis.
Rights summit in Zambia is canceled after Chinese pressure to exclude Taiwanese activists
Gerald Imray, Associated Press, May 2, 2026
The U.S.-based organizers of an international human rights conference said they canceled it days before it was due to open because China pressured the African host country to exclude Taiwanese activists.
Access Now, the New York-based advocacy group that organizes the annual gathering, said late Friday it had canceled the RightsCon summit in Zambia that was due to take place next week after the Zambian government initially said it was postponed.
Access Now said it had been informed by Zambian officials that the government had been pressured by China over the conference “because Taiwanese civil society participants were planning to join us in person.” Access Now said it pushed back on any move to exclude delegates from Taiwan.
“We believe foreign interference is the reason RightsCon 2026 won’t proceed in Zambia,” Access Now said in a statement.
COMMENT - This is the same country where a Chinese State-owned Enterprise poisoned the largest freshwater source last year.
Philippines says China vessel conducting ‘illegal’ research near gas-rich Reed bank
Nestor Corrales, Reuters, May 7, 2026
The Philippine Coast Guard has accused China of conducting illegal marine scientific research near the oil and gas-rich Reed bank within Manila’s exclusive economic zone in the South China Sea, according to a statement on Thursday.
“We will continue to challenge any illegal activities that undermine our sovereignty and sovereign rights,” PCG commandant Admiral Ronnie Gil Gavan said.
COMMENT – It must be really annoying to have the PRC continuously violating your country’s sovereignty and interfering in your country’s internal affairs.
Italy’s parliamentary intelligence committee reopens China investment file
Gianluca Zapponini, Decode 39, May 6, 2026
Former Malaysian Deputy Minister: ASEAN Doesn’t Want to Depend on China Alone
Silva Shih, Commonwealth, May 4, 2026
Two men found guilty of spying on Hong Kong dissidents in UK for China
Michael Holden and Sam Tobin, Reuters, May 7, 2026
Two men, including a British immigration officer, were found guilty in a London court on Thursday of spying on behalf of Hong Kong and ultimately China, targeting prominent pro-democracy dissidents now based in Britain.
Chung Biu “Bill” Yuen, 65, and Chi Leung “Peter” Wai, 40, who worked for the UK Border Force, were convicted of assisting a foreign intelligence service by carrying out surveillance on targets between December 2023 and May 2024.
UK to summon Chinese Ambassador after spying convictions
William James, Reuters, May 7, 2026
Britain will summon the Chinese ambassador following the conviction of two men for spying on behalf of Hong Kong and ultimately China, Security Minister Dan Jarvis said in a statement on Thursday.
“The activities carried out by these men, on behalf of China, are an infringement of our sovereignty and will never be tolerated,” Jarvis said.
…
“We will continue to hold China to account and challenge them directly for actions which put the safety of people in our country at risk.
“That is why the Foreign Office will summon the Chinese Ambassador to make it clear activity like this was, and will always be, unacceptable on UK soil.”
COMMENT – Alright Labour Party, now is your chance to PNG some PRC spies and kick them out of your country.
You can do it!
Don’t just settle for a strongly worded demarche.
HUMAN RIGHTS AND RELIGIOUS PERSECUTION
Human Rights Watch, May 4, 2026
Repression of Uyghurs persists as the world moves on
Yalkun Uluyol, ABC News, April 19, 2026
“Sinicizing” Islam: How the Communist Party Is Rewriting the Legacy of Ha Decheng
Ma Wenyan, Bitter Winter, May 4, 2026
INDUSTRIAL POLICIES AND ECONOMIC ESPIONAGE
Two worlds collide: the regulatory battlefield hanging over the EU’s ties with China
Finbarr Bermingham, South China Morning Post, May 4, 2026
In an abandoned Norwegian mine last year, an unusual experiment produced results that drew scrutiny in boardrooms and government offices across Europe and helped to spark new regulations pouring fuel on already fiery EU-China relations.
Ruter, the public transport authority for greater Oslo, drove new and used electric buses made by Chinese manufacturing conglomerate Yutong into a decommissioned mineshaft inside a mountain.
There, cybersecurity tests revealed that the buses could be remotely deactivated and that even from within the mine the Chinese supplier had remote access to the vehicles for software updates and diagnostics.
The experiment helped trigger a chain of events illustrating an increasingly combative legislative landscape that is elevating what the European Union sees as its “systemic rivalry” with China to new levels.
Welcome to the era of accelerating georegulatory statecraft.
COMMENT – Do you know who doesn’t appear to be doing tests like this? Canada.
Tim Cook Built Apple in China, but Beijing Owns the Keys
Geoffrey Cain, Commonplace, May 3, 2026
Apple’s new CEO inherits a company that cannot escape the Communist Party of China.
Tim Cook stood inside Apple’s newest Shanghai store, the second-largest Apple Store in the world, and was explicit about the company’s bargain with China. “There’s no supply chain in the world that’s more critical to us than China,” he told China Daily. Apple’s relationship with Chinese suppliers, Cook said, was almost 30 years old. “We’ve been building up and investing more and more.” That was in March 2024.
Two years later, in April 2026, Apple announced that Cook will hand the CEO title to John Ternus on September 1. As executive chairman, Cook will, in Apple’s words,
“assist with certain aspects of the company, including engaging with policymakers around the world.”
Cook was right about the supply chain. Every multinational operates by some government’s permission. Apple’s problem, under Cook, is that it became entirely dependent on China’s goodwill. The Chinese Communist Party has declared technology a national project, not a market handled by private companies alone: at the 2022 Party Congress, President Xi Jinping told delegates that China must “resolutely win the battle in key core technologies.” Apple sits at the center of that battle.
The result is that Apple now operates as two different companies—one in the United States, where it speaks freely and uses every lever that democracy allows, and one in China, where it complies, stays silent, and ships what Beijing approves.
Chinese firms suspend US expansion as business climate worsens
Pak Yiu, Nikkei Asia, May 5, 2026
Chinese Officials Speak to Bessent, Rubio About Taiwan, Trade
Felix Tam and Foster Wong, Bloomberg, April 30, 2026
Jennie Bai, Luc Laeven, Yaojun Ke, and Hong Ru, NBER, April 2026
EU blocks funds for key Chinese solar energy parts
Ian Johnston, Financial Times, May 4, 2026
Brussels cites security concerns in latest crackdown on sensitive China-made imports.
The EU has blocked public funding for Chinese providers of a key technology used to install solar panels and other energy infrastructure, citing security concerns in Brussels’ latest crackdown on sensitive China-made imports.
The European Commission said imported inverters used to control solar panel installations and other energy technology represented one of “the most pressing threats” to the EU’s critical infrastructure and that any funding would be stopped from November 1.
Siobhan McGarry, a Commission spokesperson, said foreign actors could use inverters to manipulate energy networks across the bloc and gain “unauthorised access to operational data”.
“In practice, this could mean a remote shutdown of member states’ networks leading to countrywide blackouts. Given the gravity of these threats, the Commission is taking action,” she said.
Europe has taken an increasingly hardline approach to Chinese technology imports that it judges to be a security risk or likely to undermine key industrial sectors such as the car industry.
The Commission has recently outlined its Industrial Accelerator Act, which will exclude China from public funding for other clean technologies such as electric vehicles. Meanwhile, its cyber security act will exclude Chinese companies such as Huawei from telecommunications networks and solar energy systems.
COMMENT – I’m very glad to see Brussels take these actions!
EU sounds out industry over new trade weapon against China’s overcapacity
Finbarr Bermingham, South China Morning Post, May 5, 2026
China ‘strongly opposes’ EU move to bar funding for projects using Chinese inverters
Reuters, May 7, 2026
China’s commerce ministry on Thursday expressed strong opposition after the European Commission recommended restricting the use of EU funds for projects involving power inverters from “high-risk suppliers” that include China.
“China refuses to accept and firmly opposes it,” a spokesperson for the ministry said in a statement, adding that China will monitor and assess the EU policy and take measures to safeguard Chinese firms’ interests.
COMMENT – It pleases me when the PRC “strongly opposes” something, it usually means a country is standing up for its own interests and is resisting the CCP’s coercion and bribery.
Estee Lauder reaches $210 million settlement over China sales practices
Jonathan Stempel, Reuters, May 7, 2026
Estee Lauder has reached a $210 million settlement of a lawsuit accusing the cosmetic giant of defrauding shareholders by concealing its overdependence on improper gray-market sales in China.
A preliminary all-cash settlement of the proposed class action was filed on Thursday in Manhattan federal court, and requires approval by U.S. District Judge Arun Subramanian.
Trump administration invites Nvidia, Boeing CEOs for China trip, report says
Reuters, May 7, 2026
COMMENT – This is a bad idea.
CYBER AND INFORMATION TECHNOLOGY
The U.S. Wants to Break China’s Drone Dominance. Here’s Where It Will Struggle.
Josh Chun, Merrill Sherman, Jason French, Ievgeniia Sivorka, Wall Street Journal, May 2, 2026
U.S. and China Pursue Guardrails to Stop AI Rivalry from Spiraling into Crisis
Lingling Wei, Wall Street Journal, May 6, 2026
MILITARY AND SECURITY THREATS
Warning Signs: How China Normalizes Its Military Presence
Rajeswari Pillai Rajagopalan, Joe Keary, and Linus Cohen, The Diplomat, April 30, 2026
As its presence becomes more normal, China’s aggressive and illegal behavior will attract less opposition.
Tong Zhao, China Books Review, May 7, 2026
In 1964, China joined the nuclear weapons club. For decades after, China maintained a small nuclear arsenal and cultivated a reputation for restraint in its nuclear ambitions. In recent years, though, China has embarked on a historic nuclear buildup. According to U.S. government assessments, its arsenal grew from about 200 warheads in 2019 to 600 by 2025, and will exceed 1,000 warheads by 2030. The opacity of China’s nuclear buildup has heightened anxiety among other states. This risks igniting a global arms race — or worse, nuclear war — and is one of the most consequential and least understood developments in world politics.
History illuminates murky futures. To understand the dangers of China’s nuclear expansion, we must understand its origins. Three recent books — a study of China’s advanced weapons posture by an Australian scholar in the United States; a technical history of China’s weapons program from a Chinese-American nuclear scientist; and a rare autobiographical novel from a Chinese scientist who participated in the program — offer distinct windows into the roots and trajectory of China’s nuclear program, and the dangers that lie ahead. Collectively, these books offer a nuanced understanding of China’s nuclear evolution, and make it clear that the country’s approach to nuclear weapons has not been as philosophically unique as once thought.
The belief in China’s special wisdom regarding the sufficiency of a small arsenal does not, in the end, hold up. Instead, its nuclear trajectory has consistently been shaped by material constraints, copycat stratagems, the pull of China’s own military-industrial complex, and the intuition of leaders like Mao Zedong and Xi Jinping. China’s recent nuclear acceleration marks a convergence with the practices — and pathologies — of other major nuclear powers, particularly the United States, and is rendered more troubling by the scale of its consequences and a striking lack of public reflection.
Japan offers Indonesia and the Philippines lethal muscle to counter China
Maria Siow, South China Morning Post, May 5, 2026
Frigate and submarine sales are reportedly on the cards as Tokyo’s defence minister tours the region.
Japan’s defence minister is touring Southeast Asia this week with what analysts describe as a clear, if diplomatically understated, mission: turning Indonesia and the Philippines into harder targets for Chinese maritime ambition.
Shinjiro Koizumi landed in Jakarta on Monday to sign a defence cooperation pact with his Indonesian counterpart Sjafrie Sjamsoeddin, coming hot on the heels of Tokyo’s landmark decision to lift a decades-old ban on the export of lethal weapons last month.
He heads next to the Philippines, where Japanese forces are currently training alongside US troops in the annual Balikatan military exercise.
Japan’s policy reversal on arms exports now permits weapons transfers to 17 defence partners, in a substantial break from its post-World War II pacifist doctrine.
COMMENT – The ChiComs shouldn’t be surprised by this at all… after more than two decades of coercing and threatening its neighbors, those neighbors are joining together in collective security structures and relationships against the PRC.
Draft amendments aim to combat cognitive warfare
Chen Yu-fu, Taipei Times, May 4, 2026
China’s War Wolves: From Commercial Tech to Combat Power
Craig Singleton and Jack Burnham, FDD, May 3, 2026
China Fighter Jet Giant’s Sales Surge After India-Pakistan Clash
Josh Xiao and Rachel Yao, Bloomberg, April 29, 2026
America’s Air Superiority Is Losing Altitude
Ted Budd and Jeanne Shaheen, Wall Street Journal, May 4, 2026
China, focused on beating the U.S., is on pace to build the first sixth-generation stealth fighters.
U.S. Special Forces sink a ship with Ukrainian-designed drone boats
Dylan Malyasov, Defense Blog, May 2, 2026
Green Berets from 1st Special Forces Group (Airborne) remotely launched and controlled unmanned surface vessels during Exercise Balikatan 2026, using them to deliver shaped charges against a target vessel off the western coast of Itbayat, Philippines, on April 24 — and the drone boats they operated bear a close visual resemblance to systems associated with the Magura family of naval drones.
The event, designated Maritime Strike-North, was a combined live-fire training operation conducted by U.S. and Philippine special operations forces in the Batanes archipelago, a chain of islands in the Luzon Strait roughly 100 miles south of Taiwan.
Charo Wu, Commonwealth, May 6, 2026
Has China given the first sign it’s ready to export its J-35A fighter jet to Pakistan?
Seong Hyeon Choi and William Zheng, South China Morning Post, May 5, 2026
ONE BELT, ONE ROAD STRATEGY
Chinese firm shuts Gwadar plant in Pakistan, lays off workers amid losses
Economic Times, May 3, 2026
A Chinese company operating in Pakistan’s Gwadar Free Zone shut down its factory and terminated all employees, citing an unworkable business climate and mounting financial losses on Friday, according to The Express Tribune.
Hangeng Trade Company announced the closure on International Labour Day, saying in an official statement that “non-commercial factors” and operational difficulties had made continued business operations impossible.
Developing an Africa-focused tech agenda for the United States to outcompete China
Conrad Tucker, Ginger Matchett, Samantha Wong, and Peter Engelke, Atlantic Council, May 1, 2026
Why Hungary’s China Bet on Batteries Faces Voter Backlash
David Shen, Commonwealth, May 6, 2026
Mozambique Weighs Swapping Dollar Debt for Yuan in China Talks
Tavares Cebola, Bloomberg, May 5, 2026
Mozambique is considering converting the $1.4 billion it owes China into renminbi loans as part of a debt restructuring with its biggest bilateral creditor, in line with similar moves by other African sovereign borrowers.
“This is usually a possibility that the cooperation partner raises,” the finance ministry said in response to questions at the weekend. “In this specific case, it was a valid possibility that was put on the table.”
Mozambique is facing a worsening liquidity crunch. The International Monetary Fund and World Bank warned in recent weeks that the government’s debt was unsustainable, with growing payment arrears. Fitch Ratings last month cut its assessment of the nation’s creditworthiness, saying a default was probable.
Moving dollar debt into yuan would be the latest African example of China’s efforts to internationalize its currency and make inroads into the dollar’s dominance.
Kenya last year converted three loans from the Export-Import Bank of China — which originally totaled $5 billion — into renminbi, curbing debt-service costs and easing currency pressures. Ethiopia is considering a similar deal. And Zambia, which recently started accepting mine-tax payments in yuan, held talks with China for a currency swap.
COMMENT – This is what we routinely call “debt trap diplomacy.” When a poor developing country gets into financial trouble because it can’t pay back loans from China that were made under coercive and non-economic conditions, we shouldn’t be surprised to see this kind of demand.
The Chinese renminbi (RMB) is NOT a freely convertible currency, meaning it is a terrible idea for these countries to do this.
Let’s all keep this episode in mind the next time Beijing calls itself a “friend” of the Global South.
Belt and Road Initiative: Is China Calling the Shots in Malaysia?
Silva Shih, Commonwealth, May 4, 2026
OPINION PIECES
Hong Kong’s Spy Campaign Is Exposed
Wall Street Journal Editorial Board, May 7, 2026
The city used an economic office to stalk dissidents in the U.K.
Hong Kong dissidents have long warned that the Chinese city uses its economic outposts for nefarious purposes abroad. Their vindication came this week as a British court convicted two men in a spying plot, and American lawmakers can act to prevent similar Chinese harassment in the U.S.
The Hong Kong Economic and Trade Office (HKETO) in London ostensibly exists to promote commerce. But the office organized and funded a campaign to stalk “dissidents living in the UK who were referred to by individuals linked to the Hong Kong authorities as ‘cockroaches,’” the Crown Prosecution Service said in a news release Thursday.
A British jury heard that Billy Yuen, a former Hong Kong cop who worked at the London HKETO, oversaw the spying campaign. Peter Wai, a British border force officer and police constable, helped with information-gathering and surveillance.
Both men were found guilty Thursday of assisting a foreign intelligence service in violation of the U.K.’s National Security Act. Mr. Wai was also found guilty of misconduct in public office for misusing government computer systems to search for sensitive information.
The targets of the HKETO’s spying campaign included Nathan Law, Finn Lau and Christopher Mung, who sought refuge in the U.K. after fleeing Hong Kong under threat of arrest for promoting democracy. Hong Kong has placed bounties of more than $127,500 each for their capture, and Hong Kong Chief Executive John Lee, a Beijing factotum, has vowed that they’ll be “pursued for life.”
Other critics-in-exile face the same bounties and threats from Hong Kong authorities, including the U.S.-based Anna Kwok, Frances Hui, Joey Siu and Dennis Kwok. A trial began this week in a federal court in Brooklyn of a man accused of establishing a Chinese police station in New York City to harass and surveil exiled dissidents. Defendant Lu Jianwang has pleaded not guilty.
Despite Beijing’s transnational repression, Britain this year approved a new Chinese mega-embassy in London that the Communist Party can use for malign purposes. The U.S. Congress can do better by moving forward with a bipartisan bill giving the Secretary of State authority to shut down HKETO offices in New York City, San Francisco and Washington, D.C.
COMMENT – It is time to end Hong Kong’s special status in foreign countries. Hong Kong is just another PRC city, it should no longer get special diplomatic status, no longer get special financial status, and it should no longer get to act as its own customs jurisdiction.
China thinks America is declining but still uniquely dangerous
The Economist, May 4, 2026
KMT Risks Missing the Lessons of the Wars in Ukraine and Iran
Matt Pottinger and Seamus Boyle, Commonwealth, May 7, 2026
Taiwan’s opposition Kuomintang has the chance to prove to voters – and to skeptical partners in Washington and beyond – that they take Taiwan’s national security seriously and can pass a meaningful defense budget. They are uncomfortably close to blowing this opportunity in a pivotal vote tomorrow.
The KMT leadership this week advocated to limit funding to NT$380 billion in already-announced arms sales and told legislators to fall in line. A larger, NT$800 billion package promoted by KMT legislator Hsu Chiao-hsin and others represents a better alternative. But even that one fell short of including key items for domestic drone manufacturing, missile defense, and AI-enabled command and control – capabilities that are of critical importance to Taiwan’s defense, as the wars in Ukraine and Iran should have made clear.
If it fails to pass a budget for U.S. Foreign Military Sales, the Legislative Yuan risks sacrificing capabilities such as the HIMARs long-range missile system that has been so useful to Ukraine. This and other items would instead flow to other U.S. partners, depriving Taiwan of needed capabilities for years.
In the spirit of the ongoing debate, we would like to explore a few lessons Taiwan should take to heart from the wars in Ukraine and the Middle East. If Taiwan’s legislature – and especially its divided opposition – can apply these lessons when they cast votes tomorrow, they will enhance Taiwan’s ability to deter aggression and to deal with Beijing from a position of strength.
China is building soft power as Trump burns bridges
Gideon Rachman, Financial Times, May 4, 2026
As I write, the World Snooker Championship is coming to a climax in Sheffield — with 22-year-old Wu Yize battling Britain’s Shaun Murphy for supremacy. If Wu wins he will be the second Chinese player to be crowned world champion, following the victory of Zhao Xintong last year.
In a surprising twist of fate, China and Britain have emerged as the two centres of world snooker excellence. Sheffield, once the steelmaking capital of the world, has become the snooker capital. Wu moved there aged 16 with his father and lived in a windowless flat, as he honed his game. There are now said to be some 150mn snooker fans in China. Peter Wilson, the UK ambassador in Beijing, has installed a snooker table in his living room as a tribute to this unlikely bond.
China’s emergence as a snooker superpower is a small sign that the country is beginning to develop “soft power” — the cultural cachet that can burnish a nation’s global image.
For many years, modern forms of soft power have eluded China. Japan had manga. South Korea had K-pop. These phenomena emerged from within society rather than by government decree — which may be one reason why China, under the suffocating rule of the Communist Party, struggled to compete. But things are changing. It is not just the snooker. TikTok is a wildly successful Chinese app that has helped to create cultural memes with international resonance. The city of Chongqing is now gaining global attention because of its “cyberpunk” architecture, with railways passing through buildings. The phrase “a very Chinese time in my life” has gone viral on TikTok and Instagram. It can mean anything from wearing slippers indoors to drinking hot water.
The relationship between soft power and geopolitics is hard to pin down — but it definitely exists. The US and the west triumphed in the cold war, partly because American society seemed so much more attractive and dynamic than its Soviet rival. The yearning for Levi’s jeans and rock music behind the Iron Curtain was real and it mattered. So, it is potentially significant that China is developing soft power, just as Donald Trump is burning through America’s stock of global goodwill.
A survey of elite opinion in south-east Asia, released last month, asked respondents who south-east Asian nations should align with, if forced to choose between America and China. For the second time in the eight-year history of the survey, a slim majority opted for China. A poll taken earlier this year showed significant majorities in Germany, France, Britain and Canada saying that it is “better to depend on China than the US” — a remarkable result for traditional American allies.
COMMENT – Only a Brit would think that winning the World Snooker Championship marks a country for having “soft power.”
I’m reminded of that scene from the first session of Ted Lasso.
Ted: “So, Rupert, y’all take your darts over here pretty seriously, huh? This and… uh… what’s the billard game y’all do that sounds like a brand of cookies?”
Rupert: “Snooker?”
Ted: “That’s it. That’s the one, yup. Boy, I’d love to curl up on a couch under a weighted blanket, watch You’ve Got Mail and devour a box of Snookers.”
My advice to Gideon: If you want to be persuasive to an American audience don’t intentionally sound like a pompous Brit.
Trump’s China Trap: Why Xi Keeps Winning the Summitry Game
Michael Kovrig, Foreign Affairs, May 5, 2026
In January, after weeks of threats by U.S. President Donald Trump to annex Canada as the “51st state,” Canadian Prime Minister Mark Carney stood in Beijing’s Great Hall of the People, radiating cordiality toward the leaders of a country he had called Canada’s greatest geopolitical threat less than a year earlier. In a meeting with Chinese Premier Li Qiang, he said that “the progress that we have made in the partnership sets us up well for the new world order.” It was not a great moment for the United States. Yet that scene—a leader anxious about Washington, rushing to Beijing with a newfound urgency—has played out again and again since Trump’s return to the White House.
In 2025, the leaders of Australia, France, Georgia, New Zealand, Portugal, Serbia, Slovakia, Spain, and the European Union all traveled to China. In January, the pace of visits accelerated, with the leaders of Finland, Ireland, South Korea, and the United Kingdom arriving in quick succession, followed in February by Uruguay’s president and Germany’s chancellor. In April, Spain’s prime minister cemented the pattern with his fourth visit in four years. They walked red carpets, shook hands with senior Chinese Communist Party officials, and signed memorandums to shore up relations. The accumulating spectacle—what Chinese state media has called a “wave” of visits—reinforced the CCP’s narrative of a rising China and a declining United States.
Now these and other leaders are likely watching with trepidation as Beijing prepares to receive the president of the United States next week. For Canada and other U.S. allies and partners, the primary impetus for deepening ties with China is Trump himself. Under pressure from a United States behaving like a predatory hegemon, these politicians feel that they have no choice but to hedge. Meeting Chinese President Xi Jinping sends a signal to Trump that they have other options and will not be subordinated into all-or-nothing allegiances or unfair trade agreements. In this way, the growing distance between Washington and its partners is a diplomatic gift for Beijing.
COMMENT – I gotta disagree with my friend Michael on this one… leaders have been flocking to Beijing to see Xi Jinping for years, particularly after COVID. This did NOT start in January 2025.
Here is an incomplete list of “summits” in 2024 when the American President presumably wasn’t “behaving like a predatory hegemon.”
German Chancellor Scholz visit to Beijing April 13-16, 2024
French President Macron hosts Xi in Paris May 6, 2024
UAE leader Sheikh Khaled bin Mohamed bin Zayed Al Nahyan visit to Beijing May 29-30, 2024
Italian Prime Minister Giorgia Meloni visit to Beijing July 27-31, 2024
Spanish Prime Minister Pedro Sanchez visit to Beijing September 9-11, 2024
Indonesian President Prabowo Subianto visit to Beijing, November 9, 2024
China’s role in enabling Iran’s Shahed drone supply lines
Anushka Saxena, Nikkei Asia, May 7, 2026
Beijing’s intermediaries, tech transfers and networks sustain Tehran’s effective low-cost weapon.
In the early days of the war by the U.S. and Israel on Iran, Chinese foreign ministry spokesperson Mao Ning was asked to confirm the claims of a Reuters report that Beijing is planning to transfer its CM-302 anti-ship missiles to Iran. Mao said the claims were untrue, and that Beijing had always fulfilled its “international obligations” -- that is, adhering to United Nations-backed embargoes on arms sales to Tehran.
And while those claims may indeed be untrue, China has, in many novel ways, backed the supply lines and life cycle of one of Iran’s most critical arsenals in the war -- the Shahed family of one-way attack drones.
Shahed is measurably successful because it is built on economies of scale rather than on technological superiority, and can sustain an attritional campaign against superior adversaries like the U.S. Their production costs are estimated at just $20,000 to $50,000 per unit. By some estimates, Iran began the war with a stockpile of 80,000 drones and a daily production capacity of around 400.
Vital details of a Shahed’s composition come from teardowns conducted by Kyiv and Washington. The conclusions have been striking. As many as 40 out of 52 components came from 13 different American companies, including Texas Instruments, NXP, Analog Devices and Onsemi, according to the Ukrainian Defense Ministry’s Main Directorate of Intelligence (GRU).
Per another GRU study on the 136-MS001 variant, 55 of its 75 components originate from the U.S. Other vital components, such as the global navigation satellite system module, accelerometers and microprocessors, come from Switzerland, Taiwan, Japan or China.
Further, German Infineon transistors, available for about $20 on eBay, are purchased off the shelf and integrated. Most alarmingly, a recent teardown found aboard a Shahed-136 an NVIDIA Jetson “Orin” AI compute kit. The kit, commercially available to students for $249, can support “machine vision” and reduce the need for visible imaging.