Fake it till you make it

The CCP's 2025 Government Work Report

Friends,

This week the PRC began their annual Two Sessions (the National People’s Congress (NPC) and the Chinese People’s Political Consultative Conference (CPPCC)). These meetings are meant to portray the illusion of ‘democracy’ where alleged representatives of the Chinese people meet and vote on what their government has done over the past year as well as their plans for the coming year.

At the macro-level, there is nothing particularly new to report from this running of the Two Sessions.

Photo of thousands of NPC delegates frantically taking notes on the 2025 Government Work Report… I’m sure that was tons of fun.

The CCP leadership is desperate to reassure Chinese and foreign businesses, as well as Chinese citizens, that ‘everything is fine.’ The economy will continue to grow (at the completely fictious rate) of “around 5%,” just as the Party pretended it grew at 5% last year, and the year before.

And even as ‘everything is fine’, the Party announced that it will issue nearly seven times the special treasury bonds this year beyond what they issued last year (2.1 trillion yuan in 2025 vice 300 billion yuan in 2024), along with another 4.4 trillion yuan in local government special-purpose bonds, an increase of 500 billion yuan over 2024.

Nothing says, ‘don’t worry,’ quite like massive increases in spending even as the country experiences deflation.

Aside from a few cheerleaders, foreign investors largely interpreted the big announcements out of the 2025 Government Work Report (GWR) as inadequate to address the big challenges facing the PRC economy.

While the Party acknowledged (for the first time in an annual GWR) that consumption was a problem, the CCP’s announcement of 300 billion yuan in bonds to support trade-in programs for consumer goods was largely viewed as too little, too late.

The Party seems unwilling to face the reality that their own economists have recognized for nearly two decades: unless and until Chinese citizens control more of their own economic decisions, the PRC economy will continue to sputter. Instead of facing this reality head-on, the Party-State seeks to fabricate growth numbers and hide statistics. In essence, the Party has adopted the classic, ‘fake it till you make it’ approach to economic management.

But the problem is that Party-State control over economic decisions is straggling the future prosperity of Chinese citizens, which in turn, makes Chinese citizens even less confident about the future.

Instead of enabling Chinese citizens with greater spending power (i.e. higher pay, the ability to make greater demands on their employers, decide what they want to spend their money on, protect durable property rights over arbitrary state power), which would give them confidence and boost consumption, Xi Jinping is obsessed with high-tech solutions to boost economic growth.

This means that the Party-State takes even more money away from its citizens to pour it into the latest technological fad. If the past is prologue, then we should be pretty confident that this technique will be incredibly wasteful, with huge amounts of corruption, and produce only modest results in terms of economic growth.

Close observers of the PRC economy saw signals last September and December that the Communist Party had finally understood that they faced significant challenges and that simply more of the same would not be good enough. Some believed that this Two Sessions would see an announcement of a series of policies that would address these challenges.

So far, that doesn’t seem to be the case. Perhaps there will be a surprise out of the Two Sessions in the final day (the CPPCC is scheduled to end on March 10 and the NPC on March 11), but I doubt it.

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To follow up on last week’s commentary about the Great Power Triangle, I recommend watching this 22-minute discussion between the late Henry Kissinger and the Financial Times’ U.S. national editor, Edward Luce:

‘We are now living in a totally new era,’ Henry Kissinger and Edward Luce, May 22, 2022, watch here.

It is worth considering Kissinger’s points about the triangular nature of the U.S.-PRC-Russia relationship and the options available to the United States.

In his typically round-about manner, Kissinger recommends that we (the United States… and Europe) should not permanently lump Russia and China together as our adversaries.

KISSINGER (from 4:36):

I think the geopolitical situation globally will undergo significant changes after the Ukraine war is over.

It is not natural for China and Russia to have identical interests on all foreseeable problems.

I don’t think we can generate possible disagreement, but I think circumstances after the Ukraine War, Russia will have to reassess its relationship to Europe at a minimum, and its general attitude towards NATO.

And so will America, and especially Europe have to do, when the lessons of this period sink it.

And so, I think it is unwise to take an adversarial position to two adversaries in a way that drives them together.

And once we take aboard this principle in our relationships with Europe and in our internal discussions, I think history will provide opportunities in which we can apply the differential approach.

It doesn't mean that either of them will become intimate friends of the West. It only means that on specific issues, as they arise, we leave open the option, that may be a different approach.

We are prepared to explore differences in approach in terms of our own relationship, without discussing in the abstract what their relationship with each other would be, because that will be determined by their own interests and by their own domestic situation.

But in view of general strategy, in the period ahead of us, we should not lump Russia and China together as an integral element.

What Kissinger leaves unsaid is that the United States and Europe might have different preferences on which of the two rivals to pursue a “different approach” with. Diplomatically, Kissinger keeps the options open, but in listening to him closely, he clearly thinks that Moscow is the rival to pursue a compromise with, as Russia is the weaker of the two rivals.

This presents a serious challenge to the transatlantic relationship in ways that weren’t present when Kissinger and Nixon pursued their approach to Mao in the early 1970s. Making compromises with the weaker rival (the PRC) to isolate the stronger rival (the Soviet Union) strengthened the transatlantic alliance in the 1970s and 1980s because those compromises benefited the security of European allies (and reinforced their efforts to build relationships with the PRC).

But that is not the case now.

If the United States seeks to make compromises with the weaker rival (the Russian Federation) to isolate the stronger rival (the PRC), those compromises will not benefit European allies and will most likely be at their expense.

This is the dilemma that has been lurking beneath the surface since at least the Pivot to Asia (Rebalance to Asia) was announced during the Obama Administration.

Of note, the Kissinger/Nixon approach of the 1970s did not benefit ALL U.S. allies either…

The compromise with the PRC resulted in the abandonment of Taiwan with the cancelation of the Mutual Defense Treaty between the United States and Republic of China. Signed just after the Korean War in December 1954, and ratified by the Senate in February 1955, the Mutual Defense Treaty (MDT) obliged the United States to defend the island of Taiwan and the Pescadores (though not Kinmen and Matsu) and stationed several thousand U.S. troops on the island. On December 31, 1979, the United States terminated the MDT and withdrew U.S. troops and official recognition in order to fulfill the compromises it made with Beijing.

Those decisions in the 1970s reflected the fact that America’s interests were not identical to its ally, and I think that dynamic should be front of mind today. The decision to terminate the MDT did not mean that the United States wanted Taiwan to collapse or be invaded, just that Washington was willing to make compromises at Taiwan’s expense.

The interests of the United States are not identical to the interests of its European allies (it is also true that the interests of individual European nations are not identical to each other… but that’s worth its own essay). This doesn’t mean that the United States wants to see the collapse of Europe or harm to European citizens, just that Washington is willing to make compromises at Europe’s expense.

Thanks for reading!

Matt

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MUST READ

1. China’s Two Sessions 2025: Key Takeaways from the Government Work Report

Qian Zhou, Arendse Huld, and Giulia Interesse, China Briefing, March 5, 2025

The PRC’s Premier Li Qiang delivered the 2025 Government Work Report at the opening of the Two Sessions, presenting a detailed policy roadmap for the year ahead.

…

The 2025 GWR offers a candid assessment of the hurdles confronting China’s economy. On the international front, the report warns that rapid global changes and an increasingly complex external environment could have a significant impact on its trade and technology sectors. The report notes that sluggish global economic growth, rising unilateralism and protectionism, and escalating tariff barriers are disrupting global supply chains and economic cycles. Heightened geopolitical tensions further dampen market expectations and investor confidence, contributing to increased volatility in international markets.

Domestically, the report points to a fragile recovery marked by subdued consumer demand and operational challenges faced by some enterprises, including issues with overdue payments. Persistent pressures on employment and income growth, coupled with shortcomings in public services and financial strains at the local government level, add to the complexity of the recovery process. The report also highlights the need for improvements in social conflict resolution, risk prevention, and overall administrative efficiency, noting that policy coordination and implementation have sometimes lagged behind expectations. Additionally, instances of inefficiency and corruption within certain government departments remain a concern.

Despite these challenges, the report conveys a cautious optimism. The Chinese government remains confident in the country’s significant institutional advantages, vast market size, comprehensive industrial system, and abundant human resources. These strengths, it asserts, will underpin the long-term stability and growth of the Chinese economy, even as it navigates both domestic pressures and a shifting international landscape.

2. China vows to ‘fight till the end’ as Trump escalates trade war

Simone McCarthy and Nectar Gan, CNN, March 4, 2025

China has vowed to “fight till the end” after US President Donald Trump escalated his trade war by doubling tariffs on all Chinese imports to 20%.

Beijing hit back at Trump’s levies by imposing retaliatory tariffs of up to 15% on selected American goods, expanding export controls to a dozen US firms and filing a lawsuit at the World Trade Organization.

“Pressure, coercion and threats are not the right ways to engage with China. Trying to exert maximum pressure on China is a miscalculation and a mistake,” Lin Jian, a spokesperson for China’s Foreign Ministry, told a regular news briefing Tuesday afternoon. “If the US insists on waging a tariff war, trade war, or any other kind of war, China will fight till the end.”

The barrage of retaliatory measures and fiery exchanges came as Chinese leader Xi Jinping is preparing to hold a major political gathering designed to project confidence in his country’s ability to stay the course and weather external headwinds.

COMMENT – Some have interpreted the MFA spokesperson’s comments on “waging a trade war, or any other kind of war” as escalatory. I don’t see it that way. This is the week of the Two Sessions and the PRC Government had to use fairly strong rhetoric to respond to the additional tariffs levied this week even if their actions were carefully crafted to be reciprocal.

3. After Trump Applies Pressure, Wall Street Giant Moves into Panama

Peter Eavis and Maureen Farrell, New York Times, March 4, 2025

President Trump had been hammering Panama for weeks over its most valuable asset, the Panama Canal, saying, without evidence, that China operated the waterway. There seemed to be no way Panama could get Washington off its back.

CORRECTION – Despite the best efforts of the New York Times to hide its head in the sand, there is plenty of evidence that the PRC had control and influence over critical operations at the Panama Canal.

I understand that the NYTs editors and reporters want to discredit President Trump’s initiatives, but the PRC’s influence over Panama since its switch in recognition from Taiwan to the PRC in 2017 has been obvious to anyone who cared to look (Panama switches diplomatic recognition from Taiwan to China, Associated Press, June 13, 2017).

Panama’s former president, Juan Carlos Varela, was bought and paid for by Beijing (Panama president cheers China’s ‘Belt and Road’ initiative, Associated Press, April 2, 2019), but that influence over Panamanian domestic politics has been largely ignored by American media outlets who have spent decades turning a blind eye to corruption across Latin America.

A simple Google search of “PRC influence over Panama” would have revealed this May 21, 2021 interview with Dan Runde at CSIS, early in the Biden Administration… let me quote that interview at length:

Q2: What is China’s influence in the Panama Canal?

A2: Chinese companies have been heavily involved in infrastructure-related contracts in and around the Canal in Panama’s logistics, electricity, and construction sectors. These projects fit naturally with China’s BRI vision, onto which Panama was the first Latin American country to sign in 2018. This, along with Panama’s recognition of China, boosted China’s already existent footprint in the Canal, and Chinese companies have since positioned themselves at either end of the Panama Canal through port concession agreements. In 2016, in a $900 million deal, the China-based Landbridge Group acquired control of Margarita Island, Panama’s largest port on the Atlantic side and in the Colón Free Trade Zone, the largest free trade zone in the Western Hemisphere. The deal established the Panama-Colón Container Port (PCCP) as a deep-water port for megaships, and the construction and expansion was carried out by the China Communications Construction Company (CCCC), a company also active in China’s island-building initiatives in the South China Sea, and the China Harbor Engineering Company (CHEC). The location of the port on the Canal has since allowed China to capitalize on Canal expansion. Additionally, in March 2021 the Panamanian government began the process of renewing the lease of Hutchison Ports PPC, a subsidiary of Hong Kong–based CK Hutchison Holdings, which serves as operator for the ports of Balboa and Cristobal, two major hubs of the Canal’s Pacific and Atlantic outlets, respectively.

Furthermore, in 2018, a Chinese consortium led by CHEC and CCCC announced it was awarded a $1.4 billion contract for the Canal’s fourth bridge, which then-president Varela called “the fifth most important project in the history of the country.” More recently, China Construction Americas finished the Amador Convention Center along the Pacific side of the Canal, a project contracted under the Varela government and funded by Chinese loans. China has also invested in energy-related facilities along the Canal. For example, the Chinese group Shanghai Gorgeous invested $900 million to build a natural gas–fired electricity generation facility. As an economic foothold into Latin America, the Panama Canal is no doubt an important gateway for China’s bid for broader presence and a logistical hub for Chinese goods entering the region.

Aside from infrastructure projects, water management efforts are also a key source of entry for Chinese players. A plan announced in September 2020 would establish a water management system to combat against drought, which threatens the operation of the Canal, but also would impact local access to water for the next 50 years. This presents another opportunity for Chinese investors to increase their presence in Panama beyond the Canal.

In the first and second quarters of 2020, China strayed from traditional infrastructure and business investments to focus on supporting Panama’s fight against the Covid-19 pandemic. Between February and June 2020 alone, Panama received almost $2 million of aid in the form of healthcare-related supplies from China. This interest in Panama’s healthcare resources likely stemmed from the way that the onset of the pandemic in March 2020 brought multiple infrastructure projects, including the Canal’s fourth bridge, to a halt. Some work restarted in late 2020, but progress generally remains delayed.

Q3: What happens on January 16, 2022?

A3: A major concession agreement grantee is Hutchison Ports PPC. Its 25-year contract for the Port of Cristobal is set to expire on January 16, 2022, and Hutchison submitted a request for an extension in March 2021; the Panamanian government now faces the critical decision of whether to continue the extendable concession contract or pursue an open bidding process. In 1997, when Hutchison first won the contract, a report from the Senate Foreign Relations Committee concluded that Hutchison’s development of the Canal ports was not a direct national security threat. However, following clampdowns by China on Hong Kong’s autonomy in 2020, having two major ports managed by a Hong Kong–based holding is a greater security concern today than it was two decades ago.

The continuity of Hutchison Ports PPC’s contract will strengthen Chinese presence in the Canal. In recent years, Chinese investors have expanded their participation in Hutchison Ports PPC. Additionally, due to the growth in Canal activities of Chinese state-owned enterprise China Overseas Shipping (COSCO) as well as China-allied investment groups and construction companies, Hutchinson Ports PPC could be vulnerable to influence from fellow China-based companies in coming years.

The expiration of the Port of Cristobal contract represents a valuable opportunity for the United States and interested ally parties to encourage a competitive bidding process with transparent bids on the contract from U.S. and allied firms. Panama’s critical decision regarding the renewal of Hutchison Port’s contract could shape the Canal’s geopolitical players for years to come.

Q4: What are the implications for the United States?

A4: China’s BRI expansion into port-related facilities has stirred alarm for the United States over ambitions seen as endangering the neutrality of the Canal. Of those goods transiting the Canal, over 60 percent originate in or end up in U.S. markets, intrinsically tying free and fair Canal access to U.S. national security and economic interests in the country. Accordingly, the Canal is a major commercial asset, acting as gateway between the Atlantic and Pacific Oceans and a provider of lower shipping costs for U.S. and global trade.

With the expansion of Chinese influence in the waterway, the Canal will likely continue to be a point of tension in U.S.-China relations. China does not operate the Canal, it only manages the two ports on either end, meaning it does not interact or influence all goods transiting the Canal. However, the increase of Chinese companies’ control over transshipment cargo operations bound for the United States and other countries is a point of contention.

China’s expanded reach in the Panama Canal has slowed recently, mostly due to U.S. pushback and the Covid-19 pandemic. For example, the Panama Ministry of Public Works' plans for the announced fourth bridge over the Canal was scaled back in 2020. In 2018, U.S. and domestic pressure ended China’s plans to construct a large embassy at the mouth of the Canal. In fact, numerous initiated projects have been canceled, postponed, or scaled back during the current administration of President Laurentino Cortizo. This scaling back of Chinese projects by the Cortizo administration indicates that there not only exists a desire to maintain open relations with the United States, as embodied by Panamanians’ access to “Global Entry international trusted traveler” status for entering the United States, but also an opportunity for the United States to take the lead in the geopolitical competition surrounding the Panama Canal.

Q5:How can the U.S. government integrate the Panama Canal into a broader Central America strategy?

A5: The Panama Canal remains a central piece of the U.S.-Panama bilateral relationship. While the United States’ strategy toward Central America remains focused on the Northern Triangle, it also provides support to other Central American nations, including Panama, to address economic, security, and governance challenges. Through this policy framework, the Panama Canal can be tied into a broader Central America strategy, due to its deep ties to Panamanian economic prosperity as well as security and rule of law elements. A strategy that seeks to increase U.S. investment and broad-based economic and infrastructure engagement in the Canal fits into the broader U.S. goal of utilizing economic and political influence for countering Chinese influence in the region.

Given that large fractions of Chinese economic profits, and thus business relations, are driven by a select few families, the United States will need to craft a unique approach to reinforcing its own presence in Panama and particularly around the Canal. Using the Biden administration’s strategy toward Central America as a framework, investment in the Panama Canal can fall under efforts to enhance security and strengthen regional transparency to bolster strong governance and the rule of law. The United States can work with the ACP to counter corruption in public contract awards related to Canal infrastructure projects, strengthening the Canal’s operational transparency. Here too, the United States can engage on security issues, supporting inspections training and anti-trafficking operations in the Canal to combat ongoing drug trafficking and smuggling. The integration of the Panama Canal into a broader Central America strategy will require increased U.S. engagement with Panama itself, with the added benefit of rivaling China not only in the Canal but in the broader region.

Be better New York Times.

4. How China came to dominate the world in renewable energy
   Jinpeng Li, Washington Post, March 4, 2025

China now eclipses every other country in the world — including the United States — in the green technologies of the future. Here’s how it achieved this lead.

China’s takeover of nearly every technology needed for the green energy revolution happened gradually — then all at once.

China now eclipses every other country when it comes to installations of wind and solar power, a striking transformation from 15 years ago. It was fueled by a gold rush of entrepreneurship and unwavering government support, including through hundreds of billions of dollars in subsidies.

In the race to master technologies of the future, green energy is one arena where many analysts agree that China has pulled ahead of the United States in almost every key area, from electric vehicles to solar panels.

COMMENT – Perhaps we shouldn’t run head long into an energy transition until after we’ve addressed these underlying dependencies… just a thought.

5. Loved one missing in China? New guide is here to help
   Kitty Wang, Radio Free Asia, February 27, 2025

Chinese police are increasingly arresting foreign nationals amid an ever-tightening focus on ‘national security.’

So many foreign nationals have gone “missing” in China in recent years, later found to be detained by the authorities, that a rights group has issued a handbook for loved ones dealing with similar situations.

The detentions of U.S. citizen Kai Li, Canadians Michael Kovrig and Michael Spavor, Taiwanese citizens Morrison Lee and Lee Ming-cheh, Hong Konger Simon Cheng, Japanese nationals Iwatini Nobu and Hideji Suzuki, and Australians Yang Hengjun and Cheng Lei have all hit global headlines in recent years, but they are the tip of the iceberg, according to the Spain-based rights group Safeguard Defenders.

“After Xi Jinping became leader in 2012, the country has slowly been closing its doors to outsiders,” the group — which also runs a legal center for overseas Chinese nationals facing forced repatriation or “long-arm” enforcement by agents of the Chinese state — said in its new guide for the families of foreigners missing in China.

“It has also become increasingly emboldened at detaining foreigners for politically motivated reasons, [including] cases of hostage diplomacy, where Beijing aims to pressure or punish a foreign government,” the handbook said, adding that detentions are often framed as part of an expanding focus on national security.

Such arrests and disappearances can leave loved ones “feeling helpless in the face of the country’s opaque justice system,” it said, offering a set of practical tips on how to deal with a loved one who goes missing in China.

“This handbook is practical and thus describes the situation as it is in China, including the absence of rule of law or an independent judiciary,” Safeguard Defenders Advocacy Director Laura Harth told RFA Mandarin in written comments.

COMMENT – Much like debt-trap diplomacy, hostage diplomacy is another method the CCP uses to shape decisions in other countries.

6. Lawmakers Probe Alleged China Abuse of US Programs for Startups
   Kate O'Keeffe, Bloomberg, February 26, 2025

The Republican leaders of three US House committees have begun an investigation into what they called China’s “systematic exploitation” of two federal funding programs that the Pentagon and other agencies use to tap innovation by American startups and small businesses.

“Due to inadequate oversight and weak due diligence measures, it appears that China has become one of the largest beneficiaries of these programs — turning what should be a pillar of American innovation into a tool for the CCP’s technological and military advancement,” according to a letter from the committee leaders, referring to the Chinese Communist Party.

COMMENT – It would be helpful if DOGE and DoD were to spend some of their efforts rooting out the PRC’s influence over defense technology research in the United States.

Despite efforts during the first Trump Administration to address this problem, too many officials in the various grant-making bodies in DoD failed to take this problem seriously or exercise effective oversight.

7. Nvidia's unofficial exports to China face scrutiny after arrest of silicon smugglers in Singapore
   Kristina Partsinevelos, CNBC, March 3, 2025

Authorities in Singapore detained three people on charges of deliberately misrepresenting the final destination of U.S.-manufactured servers.

The servers likely contained Nvidia’s highly sought-after chips.

Singapore accounted for 18% of Nvidia’s revenue in the fiscal year ended Jan. 28, based on “customer billing location,” but less than 2% of revenue in terms of products shipped to the country.

Alarm bells went off in 2024 when Singapore unexpectedly emerged as Nvidia’s

second-largest revenue source. The disclosure fueled widespread speculation that Nvidia’s artificial intelligence chips were being channeled to China.

Those concerns intensified in January after China’s DeepSeek burst onto the international AI scene due to the sophistication and reported cost-effectiveness of its model. DeepSeek’s AI is trained on Nvidia’s graphics processing units despite export restrictions designed to keep the technology out of China.

Singapore has been working to dismantle a shadow network trafficking Nvidia’s cutting-edge AI chips, and late last week, authorities there detained three people on charges of deliberately misrepresenting the final destination of U.S.-manufactured servers, likely containing Nvidia’s highly sought-after chips.

Singapore’s Home Affairs and Law Minister K Shanmugam revealed Monday that servers from Dell and Super Micro Computer were shipped to Malaysia, raising the critical question: Was Malaysia truly the final destination?

Nvidia declined to provide comment on any of these developments.

Nvidia shares tumbled almost 8% on Monday and are now down 14% in 2025, a slide that’s pushed the company’s market cap below $3 trillion. Super Micro shares fell 11% on Monday, and Dell’s stock was down about 6%.

While Singapore has firmly rejected allegations of serving as a conduit to China, Nvidia highlighted a crucial distinction in what it means to be a customer in its annual report filed last week.

Singapore accounted for 18% of Nvidia’s total revenue, approximately $24 billion, in the fiscal year ended Jan. 28, based on “customer billing location,” but less than 2% of revenue, about $473 million, in terms of products shipped to the country.

“Customers use Singapore to centralize invoicing while our products are almost always shipped elsewhere,” Nvidia said in its annual report.

The arrests in Singapore demonstrate that a sophisticated network of resellers continues to operate despite increasing scrutiny.

COMMENT – I think it is pretty clear that Nvidia knew exactly what was happening and preferred to maintain plausible deniability that large numbers of their chips were being diverted to the PRC.

I’m glad to see Singaporean officials taking it seriously, but if American companies like Nvidia continue to create the conditions for diversion, we shouldn’t be surprised if this happens again.

This is why the Biden Administration’s Artificial Intelligence Diffusion framework is so important as it holds companies like Nvidia more responsible for their actions. I just wish they had instituted it in 2022 rather than waiting until the final five days they were in office.

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Authoritarianism

8. Tightly choreographed Two Sessions opens in Beijing as the world order roils

Amy Hawkins, The Guardian, March 4, 2025

As thousands of delegates from across China arrive in Beijing this week to participate in the annual parliamentary session, there is a barely perceptible shift in the mood in the capital. Though few ordinary Chinese pay much attention to goings-on inside the Great Hall of the People, the imposing 1950s modernist building that flanks the western edge of Tiananmen Square, the ripple effects of this week’s conclave can be felt across the city.

Security is heightened. Extra uniformed personnel have been deployed to stand guard on Beijing’s bridges – lest anyone attempt a stunt inspired by Peng Lifa’s protest at Sitong Bridge ahead of the 20th party congress in 2022. Guards at busy subway stations subject commuters to random scans of their identification cards.

Virtual private networks – apps used to tunnel through the firewall of internet censorship – slow down, as the authorities try to tighten their grip on the exchange of information with the outside world. It is imperative to the Communist party that the parallel sessions of the “Chinese People’s Political Consultative Conference”, an advisory body, and the National People’s Congress (NPC), China’s rubber-stamp parliament, run smoothly. Put together, the meetings are known as the Two Sessions, and represent the most important annual event in China’s political calendar.

From Beijing, the outside world appears to be in flux. China’s claim to be the beacon of stability in a chaotic world is being bolstered by events. The presidents of the US and Ukraine are trading verbal blows live on television; the US-backed ceasefire deal in Gaza is on the brink of collapse.

China, save for a few headlines about tariffs, is staying out of the news. The tariffs themselves are generally far from the public consciousness, despite the fact that China imposed another round of countermeasures on the US on Tuesday, after Donald Trump doubled duties on Chinese goods to 20%.

The trade war “won’t influence me”, said Wang Zichen, an 18-year-old salesperson working in Beijing’s upmarket Chaoyang district. The US and China “are just having some problems and need a solution … [the US] is a friendly country”. Wang is more interested in hustling for his next customer. Business is slow. Total sales of consumer goods in Chaoyang dropped by 4% in 2024, while sales of commercial and residential property fell by 10% and 13% respectively, when measured in square metres.

China was supposed to roar back from the pandemic as consumer spending was unleashed, but most people on the street agree that hasn’t happened. Real estate prices are falling. Millennials and Gen-Z workers are struggling to find work and even the middle-aged, including people with their own young children, are sitting at home without jobs. They, like the younger generations, are tangping, or “lying flat”: choosing passivity in a society that doesn’t feel like it is rewarding hard work. Young parents even talk of kenlao, or “eating the old” – living off their elders who have healthy state pensions.

This kind of economic nihilism is exactly what Beijing wants to combat. High on the agenda for this week’s NPC will be fiscal stimulus. In December, the Central Economic Work Conference, an economic planning session convened by the CCP politburo, stressed the need to stimulate consumption and stabilise economic growth.

When the Chinese premier, Li Qiang, delivers the government work report at the NPC’s opening session on Wednesday, analysts will be watching closely for the GDP target for 2025, expected to be 5%, and for details on the directions set by the CCP at the end of last year.

With the first shots of the US-China trade war fired since that December meeting, Beijing is under pressure to find ways to shield its economy from the impact of tariffs. In 2024, China’s economy reached its GDP target with the help of an end-of-year export boom. Exports to the US in December increased by 15.6%. With tariffs back on the menu, economic growth built on exports will be harder to pull off in 2025.

China’s economic boom was built on infrastructure and policies that prioritised GDP growth above all else. Then it turned to manufacturing, becoming the “factory of the world”. Now China’s leaders want to pivot the economy towards “new quality productive forces”, a phrase coined by China’s leader, Xi Jinping, in 2023. That means focusing on investment in innovation and hi-tech sectors.

9. The Making of the Chinese Working Class
   Teemu Ruskola, New Left Review, February 18, 2025

10. China Tells Its AI Leaders to Avoid U.S. Travel Over Security Concerns
    Yoko Kubota, Wall Street Journal, March 1, 2025

11. China’s defence ministry warns Taiwan ‘we will get you, sooner or later’
    Helen Davidson, The Guardian, February 28, 2025

12. China will work to firmly advance 'reunification' with Taiwan, premier says
    James Pomfret, Reuters, March 4, 2025

Chinese Premier Li Qiang said on Wednesday China would "firmly advance" the push for "reunification" with Taiwan while opposing external interference, and strive to work with regular Taiwanese to realize the rejuvenation of the Chinese nation.

China claims democratically governed Taiwan as its own territory, despite the objection of the government in Taipei, and has ramped up its military pressure against the island in recent years, including holding several rounds of major war games.

"We will firmly advance the cause of China's reunification and work with our fellow Chinese in Taiwan to realise the glorious cause of the rejuvenation of the Chinese nation," Li wrote in his annual work report to China's parliament.

In his work report last year, Li reiterated a call for "reunification" with Taiwan, but added emphasis that it wants to "be firm" in doing so and dropped the descriptor "peaceful", which had been used in previous reports.

Beijing has consistently pushed for reunification with Taiwan, and again said it would "resolutely oppose" separatist activities pushing for Taiwan independence. But its appeal to work with "fellow Chinese in Taiwan" to help rejuvenate the Chinese nation wasn't mentioned in the work report last year.

COMMENT – Second year in a row that the Chinese Premier has dropped the word “Peaceful” when describing the Chinese Communist party’s desire to annex Taiwan.

13. The ‘Leniency’ Trap: How China’s Plea System Gives Prosecutors More Power
    Joy Dong and Daisuke Wakabayashi, New York Times, March 3, 2025

China has embraced a plea deal system, but lawyers and scholars fear that it is being abused to further erode individual rights — and for shakedowns.

When Son Jun-ho, a key midfielder for South Korea’s World Cup soccer team, signed with a Chinese club, he was an indication of China’s ambition to dominate the world’s most popular sport.

But after Chinese police officers detained him two years later, accusing him of bribery and match-fixing, he became a symbol of a different sort: the ruthless efficiency of China’s legal system.

Mr. Son had insisted to his interrogators that he was innocent. He asked for a lawyer, but the police told him, through a Korean translator, that one was unnecessary. The police threatened to bring his wife in and asked how his children would fare if both parents were detained.

After months in detention, he was offered a deal in which he was promised a lighter punishment in return for signing an admission of guilt. He took it.

It was a move he would later regret, saying that he had signed only under duress. “Fear overtook me, and without fully understanding the charges, I confessed, hoping to return to my family,” Mr. Son told reporters at a news conference in South Korea, fighting back tears. “It was a naïve mistake.”

The arrangement Mr. Son was offered, known as plea leniency in China, is a legal tactic that scholars say has further eroded the rights of the accused in a judicial system that has long been stacked against them.

The courts and police in China answer to the Communist Party and the conviction rate is more than 99 percent. Still, the party has tried in recent years to create a more equitable justice system, including by introducing the “plea leniency” system.

That system has now transformed how justice is carried out in China by enabling the authorities to process cases more quickly. But it has also made the system less fair, lawyers and experts say, by giving prosecutors more power to determine who gets punished and for how long.

In the last few years, as Xi Jinping, China’s top leader, has waged crackdowns on corruption across society, the plea tactic has become a critical tool used by prosecutors. It has been used in investigations into officials, the military, the financial industry, and, as in Mr. Son’s case, sports, as well as in campaigns to stamp out organized crime and so-called evil forces.

COMMENT – The lesson is, don’t do business in the PRC if you can avoid it.

14. What to Watch for at China’s Major Political Event This Week
    Emily Wang Fujiyama, Time, March 3, 2025

15. Censorship as a Service: Leak Reveals Public-Private Collaboration to Monitor Chinese Cyberspace
    Alex Delamotte, Aleksandar Milenkoski, and Dakota Cary, Sentinel One, February 21, 2025

Executive Summary

• SentinelLABS has analyzed a data leak containing infrastructure details and work logs from employees of a state-affiliated private sector security firm in China.

• The leaked data contains references to web content monitoring services used to enforce censorship for public and private sector customers.

• Work logs reveal that the firm provided bespoke monitoring services to a state-owned enterprise when a corruption scandal impacted this organization, providing insights into how the state and CCP coordinate with some cybersecurity companies to manage fallout from corruption scandals.

16. Netizen Voices on Mass Censorship of Beijing’s $6.5 Million Annual Support for Olympian Eileen Gu
    Cindy Carter, China Digital Times, February 27, 2025

17. Cybersecurity with Chinese characteristics: Digital governance in the Indo-Pacific and the Taiwanese alternative
    Article 19, February 28, 2025

18. Former Hong Kong lawmaker gets 3 more years after being injured by mob
    Radio Free Asia, February 28, 2025

19. Case of man charged with sedition under Hong Kong’s Article 23 security law adjourned to May
    Hillary Leung, Hong Kong Free Press, February 27, 2025

20. Two Small Adversaries of Russia and China Are Swapping Notes to Survive
    Daniel Michaels, Wall Street Journal, March 2, 2025

21. China’s tech minister removed from office
    Ryan McMorrow and Demetri Sevastopulo, Financial Times, February 28, 2025

22. IBM shuts China research arm after lay-offs and revenue decline
    Coco Feng, South China Morning Post, February 19, 2025

23. A Guide to China’s Role in the Fentanyl Crisis as Trump Targets Beijing
    Brian Spegele, Wall Street Journal, March 1, 2025

China denies it is at fault for the crisis, instead attributing the problem to the U.S.’s failure to curb domestic addiction.

But U.S. officials and many experts say that China bears significant responsibility. For years, Chinese firms sold the black-market fentanyl that reached U.S. drug users. More recently, their role has been as the main suppliers of the ingredients used to make fentanyl.

U.S. frustration with China on the issue runs deep. Secretary of State Marco Rubio questioned in recent days whether Beijing was intentionally working to flood the U.S. with drugs.

“You have to wonder in some cases, is this a deliberate thing, like are they flooding us with fentanyl?” Rubio said in an interview on Fox News.

Chinese Foreign Ministry spokesman Lin Jian responded on Friday that Rubio’s comments were “full of Cold War thinking.”

On the U.S. president’s coming tariffs, Lin said the U.S. was using fentanyl as an excuse to impose tariffs on China and promised that Beijing would respond to protect itself.

Chinese officials have said in recent weeks that U.S. tariffs make them less likely to help solve the fentanyl problem—framing their willingness to cooperate on counternarcotics as a matter of goodwill that can be turned on and off.

“Beijing sees fentanyl cooperation as a favor to the U.S. that they are willing to offer when there is an understanding in place that both sides seek stability in the relationship,” said Amanda Hsiao, director of the political-risk consulting firm Eurasia Group’s China practice.

COMMENT – The CCP’s culpability in the fentanyl crisis will continue to undermine the bilateral relationship. If Beijing was interested in win-win outcomes it would have taken strong action on this years ago. Instead, it has festered due to Beijing’s unwillingness to cooperate.

24. Economic Statecraft: The Need for an Integrated Approach
    H.R. McMaster and Andrew Grotto, Hoover Institution, March 4, 2025

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Environmental Harms

25. EU ambassador to China urges Beijing to stop building coal-fired power plants

Amy Hawkins, The Guardian, March 5, 2025

The EU’s ambassador to China has urged Beijing to stop building coal-fired power plants, saying that its rapid approval of new projects was increasingly at odds with its green ambitions.

Speaking at an EU-hosted event in Beijing, Jorge Toledo said the war in Ukraine had underlined the need for energy security, but that the EU had managed to navigate the issue without reverting to fossil fuels.

Toledo lamented the increase in China’s in coal approvals in the second half of last year. Beijing approved 66.7GW of new coal-fired power capacity in 2024, the majority in the final months of the year. One gigawatt is the equivalent of a large coal power plant.

There was also strong momentum in building new coal power. A report published last month by the Global Energy Monitor and the Centre for Research on Energy and Clean Air said China accounted for 93% of global construction starts for coal power in 2024. The report also noted that long-term power purchase agreements, which set minimum quotas for coal power bought by local governments, were slowing the integration of renewable energy into the power grid.

Toledo said such trends were unnecessary and that China could quit coal while safeguarding its energy security. “Commentators outside China are increasingly puzzled at the continued containment of domestic renewable generation in future stranded coal assets,” he said.

COMMENT – Hmmm… urging Beijing to cooperate, I doubt that will work.

26. China could blackmail Germany via wind turbines, report warns
    Victor Jack, Politico, March 3, 2025

27. North Korean forced labour used by China’s tuna fleet in the Indian Ocean, finds new EJF investigation
    Environmental Justice Foundation, February 23, 2025

28. Argentina Deploys Military as China Leads Fishing Swarm Near Waters
    Newsweek, February 25, 2025

29. Chinese fishermen advance in Argentine waters: group
    Radio Free Asia, March 3, 2025

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Foreign Interference and Coercion

30. Cook Islands China deal riles allies as West's grip loosens
    Katy Watson, BBC, February 28, 2025

31. Alleged Chinese spies gave Philippine city and police cash and motorbikes
    Poppy Mcpherson, Reuters, February 28, 2025

32. The AfD’s unusual China connection
    The Economist, February 27, 2025

There are many things that make Alice Weidel an unconventional leader for a German political party on the hard right. Though her marriage to a Sri Lankan-born woman draws most attention, many in government and business circles are equally intrigued by the time she spent in China before entering politics.

Ms. Weidel lived there for about six years from around 2006, and learned to speak Mandarin before moving home and joining the Alternative for Germany (AfD) party in 2013.

COMMENT – Strange bedfellows.

33. Concern grows in Washington, Seoul about China's disinformation campaign
    Christy Lee, Voice of America, February 28, 2025

34. British energy secretary to visit China in March to restart energy talks, sources say
    Joe Cash, Reuters, February 28, 2025

35. US Congress introduces bipartisan resolution condemning transnational repression against Hong Kong activists
    Hong Kong Watch, February 25, 2025

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Human Rights and Religious Persecution

36. Thailand Deports Uyghur Detainees to China Over U.S. Objections
    Austin Ramzy and Gabriele Steinhauser, Wall Street Journal, February 27, 2025

37. Canada and US offered Uyghurs in Thailand asylum before deportation to China, sources say

Panu Wongcha-um, Reuters, March 4, 2025

Group of 48 Uyghurs detained in Thailand sent back to China last week. No concrete offer to resettle the Uyghurs prior to deportation, says Thai minister. US, China and Australia made offers to Thai authorities to resettle group – sources. Thai government did not take action to avoid upsetting China, says former diplomat

Canada and the United States offered to resettle 48 ethnic Uyghurs held in detention in Thailand over the past decade, sources told Reuters, but Bangkok took no action for fear of upsetting China, where they were covertly deported last week.

Thailand has defended the deportation, which came despite calls from United Nations human rights experts, saying that it acted in accordance to laws and human rights obligations.

38. U.K. neighbors offered a bounty to turn in a Hong Kong pro-democracy activist to Chinese officials
    Henry Austin, NBC News, March 1, 2025

39. I've finally spoken to my mum after seven years'
    Gem O'Reilly, BBC, February 28, 2025

40. The Chinese migrants hoping for a new life in Germany
    Chi-hui Lin, The Guardian, February 25, 2025

41. Uyghur linguist's presentation dropped at UNESCO summit, igniting fears of Beijing's sway
    Kasim Kashgar, Voice of America, February 28, 2025

42. Kazakhstan man detained, ‘drugged’ in China had planned to petition in Beijing
    Qian Lang, Radio Free Asia, February 28, 2025

43. Conversations With Chinese Feminists
    Christina Q. Knight, The Diplomat, February 27, 2025

44. Languages in Tibet Struggle for Survival
    Arthur Kaufman, China Digital Times, February 25, 2025

45. Advocacy groups warn of challenges policing China-dominated supply chains
    Nithin Coca, Nikkei Asia, February 28, 2025

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Industrial Policies and Economic Espionage

46. Mercedes-Benz China Confirms Layoffs in a Changing and Challenging Market
    Yu Cong and Denise Jia, Caixing Global, February 28, 2025

47. ‘Gloves off’ in US-China trade war with Trump’s surprise tariff spikes
    Ralph Jennings, Kandy Wong, and Sylvia Ma, South China Morning Post, February 28, 2025

48. China opens up its vast telecoms sector to 13 foreign companies
    He Huifeng, South China Morning Post, February 28, 2025

49. Advocacy groups warn of challenges policing China-dominated supply chains
    Nithin Coca, Nikkei Asia, February 28, 2025

Pressure that worked against Western companies has yet to succeed with Chinese firms.

International advocacy groups are warning that it is becoming increasingly difficult to ensure supply chains fueling clean technology industries are sustainable as the largest producers are Chinese and they are mostly impervious to external pressure.

Chinese companies dominate not only nickel and rare earth mineral processing, but also the production of electric vehicles, solar panels, batteries and wind turbines. Unlike their Western and North Asian counterparts, they have proven difficult to engage with, according to campaigners such as Global Witness and Survival International.

COMMENT – It’s not just “difficult,” it is for the most part illegal for PRC entities to cooperate with the kinds of due diligence that is required for these efforts.

50. Chinese EV Makers’ European Sales Stuck in Post-Tariff Plateau
    Anthony Palazzo, Bloomberg, February 28, 2025

51. Chinese banks heed PBOC call to cut dollar deposit rates, say sources
    Reuters, February 28, 2025

52. China urged to think big, go hard on reviving battered consumption
    Kevin Yao, Reuters, February 27, 2025

53. Look to ‘Two Sessions’ for Signals from Beijing
    Jiahui Huang, Wall Street Journal, February 27, 2025

54. HSBC cutting staff numbers by 900 at China Pinnacle unit, sources say
    Selena Li, South China Morning Post, February 28, 2025

55. TSMC, the Chip Giant, Is to Spend $100 Billion in U.S. Over the Next 4 Years
    Tripp Mickle, New York Times, March 3, 2025

56. Singapore probes suspected fraud in sales of US-controlled Nvidia chips
    Owen Walker, Financial Times, March 2, 2025

57. The Countries Driving America’s $1.2 Trillion Trade Deficit in Goods
    Anthony DeBarros and Peter Santilli, Wall Street Journal, March 1, 2025

58. China’s small exporters look for plan B as Trump quashes trade loophole
    William Langley, Tina Hu and Gloria Li, Financial Times, March 1, 2025

59. Xi Prepares to Unveil China Stimulus Plan as Trade War Heats Up
    Bloomberg, March 2, 2025

60. China trade surge poses challenge for Trump's South America influence
    Adam Jourdan, Reuters, March 3, 2025

61. China Retaliates Against U.S. With Tariffs, Controls on U.S. Companies
    Hannah Miao and Liza Lin, Wall Street Journal, March 4, 2025

62. Despite Trump Tariffs, Economic Bazooka Is Unlikely at China’s Political Conclave
    Lingling Wei, Wall Street Journal, March 4, 2025

63. China eyeing U.S. farm exports for retaliation, report says, as importers rush to beat tariffs
    Elaine Kurtenbach, Associated Press, March 3, 2025

64. China hits US agriculture, says it won't be bullied by fresh Trump tariffs
    Joe Cash, Mei Mei Chu, and Nicoco Chan, Reuters, March 4, 2025

65. China’s Economic Plan Is Light on Detail as Trade War Intensifies
    Alexandra Stevenson and Keith Bradsher, New York Times, March 5, 2025

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Cyber and Information Technology

66. Nvidia is fighting off two threats
    The Economist, February 25, 2025

67. Unitree Robots That Dance, Fight Earn Founder Beijing’s Acclaim
    Bloomberg, February 28, 2025

68. China tech startups race to capitalise on DeepSeek fever, Xi's meeting
    Reuters, February 27, 2025

69. Why TikTok’s Legal Purgatory Is a Tech-Sector Nightmare
    John Herrman, New York Magazine, February 28, 2025

70. Microsoft Urges Trump to Overhaul Curbs on AI Chip Exports
    Amrith Ramkumar and Tom Dotan, Wall Street Journal, February 27, 2025

71. Huawei, Vivo, Xiaomi lead China’s smartphone sales surge fueled by government subsidies
    Iris Deng, South China Morning Post, February 27, 2025

72. Chinese Buyers Are Ordering Nvidia’s Newest AI Chips, Defying U.S. Curbs
    Raffaele Huang and Liza Lin, Wall Street Journal, March 2, 2025

73. IBM shuts China research arm after lay-offs and revenue decline
    Coco Feng, South China Morning Post, February 28, 2025

IBM (China) Investment was established in 1992 to oversee local research and development operations.

US computing giant IBM is shutting down one of its major entities in China, 32 years after it was established to manage local research and development operations.

The decision follows last year’s lay-offs of over 1,000 employees at the IBM China Development Lab and China Systems Lab across several cities.

IBM (China) Investment Company Limited had “completed its mission” of carrying out development in China and would cease operation, a company representative said by email on Friday.

Known by its nickname Big Blue, IBM will continue its operations in China through another entity, IBM (China) Company Limited. “Our priority remains helping local clients seize opportunities in hybrid cloud and artificial intelligence with our deep technology and consulting expertise,” the representative said, stressing that the change would not affect the company’s ability to support clients in the country.

Western tech giants have been trimming their Chinese businesses amid geopolitical uncertainties.

IBM (China) Investment, registered in 1992, and IBM (China), established eight years later, are owned by Hong Kong-based IBM China/Hong Kong Limited, according to corporate information provider Aiqicha.

A former employee laid off in October said around 1,600 employees at IBM’s Chinese research labs were made redundant last year. The person expressed little surprise at the business entity’s closure.

According to Chinese media outlet Jiemian, which first reported the shutdown on Friday, IBM plans to close IBM (China) Investment by the end of March. The report, citing an unnamed employee, indicated that the entity had laid off 1,600 of around 1,800 workers last year. Most of the remaining staff already left earlier this year, while a few dozen have yet to sign termination agreements.

Some former staff have already embarked on new careers.

Xie Dong, former chief technology officer at IBM Greater China Group, is serving as technology chief at state-owned Beijing Electronic Digital and Intelligence, a local provider of computing power and cloud infrastructure for AI applications. Xie was previously vice-president at IBM China Systems Lab and director of the IBM China Research Lab.

IBM’s revenue from China dropped 5 per cent in the first half of 2024, compared with a 1 per cent growth in global sales, according to its financial report.

COMMENT – Despite the public assurances by PRC officials that foreign investments and foreign businesses are welcome, this decision by IBM reflects the reality on the ground: foreign firms are not welcome even in the sectors that the Party has identified as the most critical.

74. China’s ‘Fantastic Four’: the new breed of entrepreneurs reshaping the global tech landscape
    Ben Jiang, South China Morning Post, March 1, 2025

75. China's Honor to invest $10bn in AI over next 5 years
    Chen Ting-Fang, Nikkei Asia, March 3, 2025

76. China Targets San Diego Biotech Firm in Broadening Blacklist
    Alexandra Stevenson, New York Times, March 4, 2025

77. China to publish policy to boost RISC-V chip use nationwide, sources say
    Brenda Goh, Reuters, March 4, 2025

78. Chinese hackers siphoned off Belgian state security emails
    Antoaneta Roussi, Politico, February 26, 2025

79. Apple’s Developer service comes to China’s WeChat
    Sarah Perez, Tech Crunch, February 25, 2025

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Military and Security Threats

80. Alex Wang on why China can’t be allowed to dominate AI-based warfare
    The Economist, March 4, 2025

81. Inside the FBI’s Lab Leak Investigation
    Katherine Eban, Vanity Fair, February 27, 2025

As bird flu spreads, and Team Trump begins dismantling America’s public health apparatus, a former FBI scientist and investigator speaks out about the evidence that led the bureau to suspect that COVID-19 was sparked by an incident at the Wuhan Institute of Virology.

In the five years since the COVID-19 pandemic erupted in Wuhan, China, a bitter international debate has raged among scientists, politicians, and journalists over the virus’s origin and who is to blame for the more than 7 million deaths it’s caused worldwide.

It’s a debate in which legitimate scientific arguments vie for attention with partisan attacks and wild conspiracy theories. But so far, there is no smoking-gun evidence to definitively resolve whether COVID-19 spilled over naturally from animals at a market in Wuhan or whether it resulted from a laboratory accident in the city, where one of the world’s foremost coronavirus research facilities had amassed a vast repository of virus samples.

A key part of the puzzle has to do with the conflicting assessments made by US intelligence agencies. The FBI’s “moderate confidence” assessment that a lab origin is more likely is especially notable. The bureau, which built a deep bench of scientific expertise when it led the investigation into the post-9/11 anthrax attacks, reached its conclusion in mid-2021, with the strongest confidence of any intelligence agency, and has not wavered since. But the reason for its assessment has remained unknown.

Now, the lead scientist for the bureau’s investigation is speaking out. Microbiologist Jason Bannan served as the senior scientist of the FBI’s forensic response section within the laboratory division for 11 years. He retired in 2022, and he spoke to VF in his capacity as a concerned citizen, not as a representative of the bureau. A portion of the FBI’s analysis is based on classified materials, but over numerous months he shared exclusively with Vanity Fair some of the open-source information that played a strong role in the bureau’s assessment. In December, he was featured in a Wall Street Journal article that enumerated deep divisions within the intelligence community but did not delve into the reasons for the bureau’s assessment.

Vanity Fair can now report that FBI scientists closely scrutinized the research activities of a group of graduate students and researchers who worked under Shi Zhengli, the lead coronavirus scientist at the Wuhan Institute of Virology (WIV). For at least three years prior to the pandemic, those scientists performed risky research on a group of viruses that included one of the closest known relatives to SARS-CoV-2, which causes COVID-19. The FBI found that Shi’s researchers, in their publications, were not candid about the inventory of viruses in their possession and the true breadth of their work, which was conducted in labs with a low biosafety level. The intelligence community also determined that, in the autumn of 2019, three of Shi’s researchers fell ill with COVID-like symptoms.

WIV scientists, Bannan says, had “thousands of samples in their lab” that they’d collected from bats in Yunnan Province in southern China. The WIV had been researching them “for years,” he says. Among them were viruses closely related to SARS-CoV-2. Intelligence agencies still don’t have a complete picture of which virus samples were housed at the WIV. But the scientists’ “lack of candor” about their inventory, as well as their years of work manipulating coronaviruses to determine the changes necessary to infect humans, added to the circumstantial evidence indicating that the outbreak might have started among the WIV’s researchers. Shi Zhengli and a WIV administrator did not respond to requests for comment.

The FBI declined to answer specific questions from Vanity Fair, but said in a statement, “The FBI has long assessed that the origin of the COVID pandemic was likely a laboratory incident in Wuhan. Led by the FBI’s Weapons of Mass Destruction Directorate, work began in early 2020 when FBI experts in such fields as virology, immunology, microbiology, biochemistry, and forensics began examining this issue. FBI agents and analysts studied intelligence and conducted over 200 interviews of more than 80 people since the beginning of the pandemic.”

82. Dropping the Act: China’s Militia in 2024
    CSIS, February 27, 2025

83. Hong Kong’s ‘superman’ billionaire and the battle over the Panama Canal
    Chan Ho-him, Financial Times, February 27, 2025

84. China’s Military Puts Pacific on Notice as U.S. Priorities Shift
    Chris Buckley and Damien Cave, New York Times, February 28, 2025

85. Military delegates lose sway at China’s signature political gathering
    Kathrin Hille and Joe Leahy, Financial Times, February 28, 2025

86. China is working on an enormous aircraft carrier that rivals the biggest in the U.S. fleet
    Matthew Bodner and Keir Simmons, NBC News, March 2, 2025

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One Belt, One Road Strategy

87. Is China’s growing Zimbabwe alliance key to its bigger plans for southern Africa?
    Jevans Nyabiage, South China Morning Post, February 28, 2025

88. Local fishing community, NGOs express concern over Chinese-built fishing port in Ghana
    Mark Godfrey, Seafood Source, February 26, 2025

89. Is China Winning Europe Thanks to Trump?
    Philippe Le Corre, The Wire China, March 5, 2025

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Opinion

90. Trump’s reverse-Nixon manoeuvre: He's prising Putin from Beijing
    Edward Luttwak, Unherd, March 4, 2025

91. Going it Alone
    Edward Fishman, The Wire China, February 26, 2025

92. Containment Can’t Win the U.S.-China Tech Race Alone
    Stefanie Kam Li Yee, Foreign Policy, March 3, 2025

Washington needs to foster innovation to beat Beijing.

As U.S.-China tech competition heats up, Washington is slowly recognizing that gaining a first-mover advantage in critical technologies may be more vital than protecting its existing edges. At present, the U.S. national strategy aims to slow down its competitors and look to the effectiveness of stronger export controls, stricter enforcement, and measures to block strategic transfers to rivals. Yet as supply chains become more diverse and complex, the range of options to evade such sanctions grows—and the role of third-party intermediaries becomes more critical.

Since 2018, under both the Trump and Biden administrations, the United States has imposed sweeping restrictions on China, including Commerce Department “entity list” designations on certain companies (Huawei, SMIC, etc.); semiconductor export controls (announced in October 2022); and bans on some of the advanced chips needed for artificial intelligence technology, such as Nvidia’s A100 and H100 (imposed in October 2023).

On Jan. 15, just days before President Donald Trump took office, the U.S. Department of Commerce’s Bureau of Industry and Security released two rules: one that updates export controls on advanced computing semiconductors and another that places additional companies based in the People’s Republic of China and Singapore on the entity list.

Just days later, the “America First” trade policy—released on Jan. 20, the first day of the Trump administration—called for key officials, including the secretaries of state and commerce, to review the U.S. export control system in light of developments involving “strategic adversaries.”

The recent success of Chinese AI company DeepSeek has sparked calls for further measures. The U.S. House select committee on China has called for a review and strengthening of controls on chips, making specific reference to DeepSeek’s “extensive use” of Nvidia’s H800 chip, which lawmakers said was deliberately designed to fall outside of the scope of U.S. controls.

Nvidia’s H800 chips—which were modified to operate at around half the peak chip-to-chip bandwidth of Nvidia’s more powerful chips—were designed to comply with the U.S. export controls released in October 2022. Since then, Nvidia has announced plans to introduce new AI chips for Chinese market following U.S. bans on A800 and H800, with scaled-back computing power to navigate around the increased U.S. restrictions.

In February, U.S. officials launched an investigation into whether DeepSeek bypassed export restrictions by acquiring Nvidia semiconductors via Singaporean intermediaries. A Jan. 31 report published by leading semiconductor research and consultancy firm SemiAnalysis contained a comparative analysis of DeepSeek’s model vs. Anthropic’s Claude 3.5 Sonnet large language model—which, according to publicly disclosed data, the researchers found cost “$10s of millions to train.” Surprisingly, though, SemiAnalysis estimated that DeepSeek invested more than $500 million on Nvidia chips. In addition, SemiAnalysis reported that DeepSeek had access to 50,000 Hopper GPUs—graphic processing units, a type of chip—including the H800 and H100 chips, despite the company’s low-cost AI claims.

If DeepSeek has access to such a large number of Hopper GPUs, then the company has significant computational resources at its disposal. So far, DeepSeek has not released any public statement about SemiAnalysis’ claims, although it has released statements regarding its mission to promote open-source AI and its commitment to advancing the field of general artificial intelligence.

In response, the Singaporean Ministry of Trade and Industry denied that export-controlled Nvidia chips were being diverted to China and said that the country is in compliance with U.S. export laws and local regulations.

These worries are just part of broader concerns about the effectiveness of export controls in limiting China’s AI progress. The Chinese government has been supportive of the technology’s development, with national initiatives such as the Next Generation AI Development Plan, published in 2017, which aims to make China a global AI leader by 2030. Other than DeepSeek, Chinese firms such as Baidu, Tencent, Alibaba, SenseTime, and iFlytek are leading the charge by working on a range of AI applications, including facial recognition, natural language processing, and computer vision. These firms are independently advancing AI projects backed by state-led bank financing—whether by circumventing export restrictions, accelerating AI development, or finding alternative means to acquire critical technologies for their high-tech ambitions.

Third-party countries have played a significant role here. Reuters reported in early February that Chinese firms have reportedly obtained restricted chips via hubs such as Singapore, the United Arab Emirates, and Malaysia, which serve as reexport points. During my research, I found concerns about GPU restrictions in several countries, including Malaysia and Taiwan. Although concrete evidence is scarce, Taiwan’s geographical proximity to China has sparked worries about potential smuggling, particularly given the country’s relatively lax GPU restrictions.

Additionally, in July 2024, the Wall Street Journal reported on the existence of informal markets leveraging supply-chain blind spots to bypass US export controls. Another approach has been stockpiling chips before U.S. bans take effect. Tech giants such as Huawei and SMIC had acquired significant reserves of U.S. chips before tighter export controls were implemented in 2022 and 2023. Firms that produce AI products—such as ByteDance and Alibaba—also rushed to secure Nvidia’s A100 and H100 GPUs in anticipation of restrictions.

China is also advancing domestic alternatives, a strategy that has long been pushed by Chinese President Xi Jinping as part of the “Made in China 2025” policy program. Huawei, in collaboration with SMIC, developed the 7 nm Kirin 9000s chip. Compared to its predecessor, the Kirin 9000s falls behind in power efficiency and graphics workloads, with a 33 percent deficit in GPU performance. This means that it may not be as competitive as other flagship chips on the market. While SMIC still lags behind TSMC and Samsung, it is making strides in reducing Chinese reliance on foreign semiconductors.

To circumvent restrictions, Chinese firms have also turned to acquiring older-generation chips by ramping up investment in the production of these legacy chips. This could have significant implications for countries in the European Union, which are competing in parallel with China to revitalize their own tech industries. The need to compete with these heavily subsidized Chinese players could derail the EU’s plans and make European companies dependent on older-generation Chinese processors.

China has also launched tit-for-tat measures to defend itself from export controls and restrictions unleashed by the United States and its allies on its access to semiconductors. In September 2024, China warned of economic retaliation against Japan if it further restricted sales and servicing of chipmaking equipment to Chinese firms. The Chinese Foreign Ministry has spoken out against what it called the United States’ “overstretching of the concept of national security, abuse of export control measures, and malicious blockade and crackdown on China.”

China is not the only player in this game. Middle and smaller powers are responding to supply chain risks and vulnerabilities by diversifying. Singapore plays a strategic role in the U.S.-China tech rivalry due to its neutrality and position as a global trade hub. The city-state facilitates trade and collaboration between the two countries in both the AI and cloud computing industry. Major semiconductor companies, such as GlobalFoundries and Micron, operate in Singapore, which also serves as a crucial transit point for chip exports, including Nvidia’s hardware.

Chinese firms may further pursue backdoor channels to gain strategic access to chips. The Singapore-China Smart City Initiative could serve as a bridge between China’s tech ambitions and the global market, potentially rivaling Shenzhen, dubbed China’s Silicon Valley, and positioning Singapore as a new center for global innovation in AI, semiconductors, and digital economies in the region.

An often-overlooked middle power is India, which is emerging as a nascent semiconductor powerhouse. Unlike China, which has invested heavily in building its own domestic industry, India has focused on design and software development, becoming a hub for global tech companies such as Texas Instruments, Nvidia, and AMD.

India’s trade agreements with both the United States and China also make it an attractive location for countries looking to diversify their supply chains. The country is also taking bold steps to build its semiconductor market, which the India Electronics and Semiconductor Association estimates is expected to grow from $52 billion in 2024 to $103.4 billion by 2030.

India is also ramping up efforts to develop foundational models focusing on AI applications in critical sectors such as agriculture and climate change. According to Information Technology Minister Ashwini Vaishnaw, six major developers are expected to build AI models by the end of the year, aiming to position India’s AI capabilities among the world’s best.

To support this push, India plans to establish computing capacity exceeding 18,000 GPUs, with companies such as E2E Networks and businessman Mukesh Ambani’s Jio Platforms competing to develop this infrastructure using Nvidia’s H100 chips. According to Vaishnaw, the average cost per AI compute unit (CU) is $1.31 per hour.

The number of CUs required to power AI software is influenced by several factors, including the type of AI application, the complexity of the model, the volume and velocity of data, and the desired performance level. For small-scale AI applications, typically 1 to 10 CUs are sufficient. Medium-scale AI applications usually need between 10 and 100 CUs, while large-scale AI may require anywhere from 100 to 1,000 CUs or more. High-performance AI systems, designed for demanding tasks, often require 1,000 to 10,000 CUs or even more.

India’s reliance on Nvidia’s technology is similar to that of other countries. New Delhi anticipates $30 billion in private investment for data centers over the coming years, with the government planning to subsidize 40 percent of computing costs for selected AI projects. India’s reliance on Nvidia’s technology will likely provide the backbone for an AI-driven economy.

Rather than viewing third-party countries as undercutting its efforts, the United States can work with them for mutual benefit. To gain a competitive edge in the AI race to the top, Washington should strengthen cooperation with Singapore. This could include enhanced monitoring of AI chip exports, stricter compliance, and joint cybersecurity initiatives, as well as increased U.S. investment in Singapore’s tech sector, particularly in AI research and semiconductor manufacturing, and will deepen bilateral ties.

The United States could leverage Singapore’s role in the Indo-Pacific Economic Framework for Prosperity to promote transparent AI governance and digital trade standards. Balancing security concerns with support for Singapore’s neutrality will ensure a stable and resilient tech ecosystem in the region. The United States may also wish to work with the Quadrilateral Security Dialogue (which also comprises Japan, Australia, and India) to build resilient supply chains for semiconductors.

The United States may also find greater strategic success by prioritizing domestic innovation rather than solely focusing on restricting China’s technological advancements. While export controls can slow China’s access to cutting-edge semiconductor and AI technologies, they are not a long-term substitute for strengthening the United States’ own innovation ecosystem.

There are other reasons why containment does not work. First, export controls, especially on semiconductors and AI, have spurred innovation in China. Despite restrictions, Chinese companies have found ways to adapt and innovate—particularly since 2017-2018, when AI competition intensified. U.S. sanctions have encouraged companies in China to build a semiconductor ecosystem.

This includes capital investment in companies such as SMIC and other suppliers, which strengthens the broader semiconductor and smartphone industries. The latest AI diffusion rule, which limits GPU purchases for countries outside tier-one nations, could have negative consequences. It may strain the Washington’s relations with other countries and could be seen as overly restrictive, especially for countries not involved in smuggling.

By fostering conditions conducive to indigenous technological breakthroughs, Washington can maintain its competitive edge in AI, semiconductors, and other critical industries. This requires increased investment in research and development, robust public-private partnerships, and an industrial policy that supports emerging tech start-ups. Additionally, it will be essential to ensure a steady pipeline of skilled talent through STEM education and immigration policies that attract top global researchers.

The U.S. STEM industry is facing a significant overhaul, as the Trump administration’s budget proposals have consistently called for cuts to funding for STEM education programs and the National Science Foundation. But one silver lining might be Trump’s plans to invest in AI infrastructure in the country with the announcement of Stargate. Under the proposed $500 billion project, OpenAI will teaming up with SoftBank and Oracle to build multiple data centers for AI in the United States, with the goal of creating hundreds of jobs and securing U.S. leadership in the technology. The data centers could house chips designed by OpenAI as the tech firm aggressively builds out a team of chip designers and engineers.

The United States might need to take a long-term approach to not only slow down the competitor, but also to look beyond advancing its own domestic industrial policy to lead on the AI front. This might include the diversification of chip supply chains; seizing on the opportunity to coordinate with like-minded partners to preempt China from defining the rules and standards for regulating platforms and technological integration; securing funding for open-source projects; and driving secure research to maintain AI leadership. But all these must be done while promoting openness and mitigating misuse, fostering a competitive edge and aligning with national priorities.

A critical area for growth is investing in digital and technological infrastructure in the global south. The United States has made some progress through initiatives such as its Smart Cities Partnership with the Association of Southeast Asian Nations, an initiative that promotes ethical AI use, sustainable urban development, and collaboration on technological innovation across Southeast Asia. This partnership has been particularly welcomed by countries such as Singapore, reflecting its value in the region. Capitalizing on the slower rollout of 5G in Southeast Asia compared to other regions, the United States can invest in these areas to solidify its position as a reliable partner in the Indo-Pacific in the digital age.

As the AI race accelerates, the United States must pivot to a strategic long game, deftly balancing its Indo-Pacific engagement with domestic priorities and acknowledging that the quest for AI supremacy is a marathon, not a sprint—a decadeslong contest of innovation, perseverance, and ambition that will define the future of global leadership.

COMMENT – I’m sure this Assistant Professor is insightful, but I find her argument unconvincing.

Point #1 – Competing over the long term requires both gaining advantages in critical technologies AND taking steps to ensure that your rival doesn’t do so, or at least ensuring that it costs a lot for one’s rival to succeed. To portray the U.S. effort as “solely focusing on restricting China’s technological advancements” is simply untrue. The United States has been both advancing technology innovation AND seeking to restrict the PRC’s technological advancements.

Point #2 – Since releasing this article, it appears that Singaporeans were involved in diverting advanced semiconductors to the PRC. The arrest of numerous individuals and the ongoing probe make this clear. This should raise serious questions in the United States on whether a country like Singapore, which has sought to sit on the fence between Beijing and Washington can really be a reliable partner in a long term technology competition. (See Article #7 above… Nvidia's unofficial exports to China face scrutiny after arrest of silicon smugglers in Singapore, CNBC, March 3, 2025). It also suggests that it is wise for the United States to place Singapore in the Tier 2 of countries within the AI Diffusion framework.

Point #3 – She asserts that “investing in the digital and technological infrastructure of the global south” is a critical area of growth and that the United States should expand its initiatives across Southeast Asia to “solidify its position as a reliable partner.” That seems somewhat backwards to me. The growth prospects across Southeast Asia in these technologies aren’t really that great (same with the rest of the global south as they lack the wealth to make their own investments), but if countries in the region what access to the most advanced technology, then perhaps they should figure out how they portray themselves as “reliable partners” to the United States.

93. America Is Dangerously Ignorant of What’s Going on in China
    Yanzhong Huang, New York Times, March 2, 2025

In December 2022, China’s government abruptly ditched its strict Covid-19 pandemic controls after thousands of citizens protested against the social and economic pain they were causing. It was a complete surprise: Despite closely tracking the situation from afar, I and many other China watchers had failed to anticipate this sudden and major shift in government policy, which deeply affected life in China and the country’s openness to the rest of the world.

Anticipating what China’s government will do has gotten even more difficult since then, as relations with the United States have deteriorated and as Beijing treats information that was once readily available like state secrets. This means that significant decisions on U.S. policy are being made based on diminishing insight into China’s internal dynamics, raising the risk of miscalculations.

It’s a dangerous time to be flying blind. Misinterpreting China’s technological capabilities could endanger America’s competitive edge. Misreading Chinese domestic social pressures leaves us unprepared for major policy changes such as the sudden end of the Covid restrictions, and miscalculating Beijing’s intentions on Taiwan could inadvertently lead to a major global conflict.

For Western scholars of China, the era before the pandemic now feels like a distant golden age. Despite always tight Chinese information controls and opaque policymaking, academics could still visit the country, navigate archives, cultivate relationships with their Chinese counterparts and pursue research. The resulting academic findings were good for America: For decades, U.S. government agencies regularly called on scholars — and still do — to provide briefings and testimony and to mine their research for insights that were vital to informing American policy decisions.

Then came the pandemic. China sealed itself off from the world, slamming the door on academic fieldwork in the country by foreign scholars, as well as in-person exchanges with Chinese officials and other contacts. The Covid restrictions were finally lifted, but the landscape for scholars had been transformed: There were fewer commercial flights to China, new restrictions on access to archives and interview subjects, heightened difficulties researching sensitive topics such as the pandemic and the slowing Chinese economy and a generally more closed-off environment.

Beijing’s jealous guarding and systematic manipulation of sensitive data, which have only increased under Xi Jinping, the Chinese leader, compound the challenge. The Chinese government hasn’t published a white paper on its defense strategy, which used to be issued every two or three years, since 2019; has restricted a range of key data, including information that might offer clues into how many Chinese lives were taken by the pandemic; and in 2023 began restricting international access to a critical database of Chinese academic papers, statistics and other information.

Unlike during the Cold War, when the United States preserved scholarly exchanges with Moscow, academic and other engagement with China has fallen out of favor owing to geopolitical and national security concerns. The Fulbright academic exchange program in China, which sent thousands of American and Chinese students between the two countries for decades until President Trump suspended it in his first term, remains inactive, and American universities are scaling back partnerships with China. Only about 1,100 American college students are studying in China these days, compared with 15,000 a decade ago. The resulting information fog forces China scholars in the West to rely on remote analysis and open sources, such as official Chinese media and social media, the very methods that proved inadequate in anticipating the change in Covid policy in late 2022.

In this climate, researchers are forced to cite one another’s work heavily, which adds little new insight. Some are retreating to historical topics for which archival materials remain available. The frustrating shortage of information can lead to sharp disputes among scholars, such as when a recent report by the RAND Corporation triggered heavy criticism from other China experts for concluding that the Chinese military was not yet ready to wage war. Some researchers are simply avoiding sensitive topics because of the limited data available on them or out of concern that they could be denied access to China if their findings are unflattering to the Chinese government. When I submitted a grant proposal last year for research in China, one of the project’s reviewers, citing safety concerns, suggested I redirect my study to Hong Kong instead — a throwback to the Cold War, when China watchers had to piece together an inadequate understanding of the country from the relative safety of Hong Kong.

Leaders in Washington should recognize that in-depth scholarly understanding of China is a strategic necessity for the United States, arguably rivaling even military preparation or intelligence gathering in importance. Yet our window on China is clouding up. Miscalculations are inevitable: Just before leaving office, President Joe Biden made the sweeping declaration that China’s economic strength “will never surpass us — period.” Two weeks later, the unexpected revelation of the Chinese start-up DeepSeek’s artificial intelligence breakthrough shattered assumptions about U.S. technological supremacy and caused a global rout in tech stocks. Yet the Trump administration is further obscuring America’s view of China: Its suspension of foreign aid threatens the work of nonprofits that track a wide range of developments in China, including business trends, human rights and social unrest, as well as Chinese cybersecurity threats and other potentially malicious activities overseas.

There are important steps the United States can take. Besides preserving the information sources that already exist, it should begin major China-focused research initiatives. One good example already exists in the Soviet Interview Project, a cooperative effort between U.S. academia and government that interviewed Soviet émigrés in the early 1980s and added to our understanding of life in the Soviet Union at the time. Similar information could be gleaned from the record numbers of Chinese immigrants entering the United States in recent years and made accessible to all scholars. China researchers also need to develop different ways of working with the often patchy information at their disposal, such as through artificial intelligence tools, an effort that would require concerted support from research foundations and, ideally, government funding.

It is also more important than ever for the United States to rebuild American interest in China studies and the institutional bridges on which it depends. At minimum, this must include a resumption of the Fulbright program in China and similar initiatives while securing robust Chinese government commitments to protect authorized academic research and the scholars carrying it out.

But Washington should go even further by seeking a wider diplomatic agreement on cultural, educational and technical exchanges similar to one that existed between the United States and the Soviet Union and was widely credited with building the mutual trust that helped hasten the Cold War’s end. China has signaled interest in more academic exchange: Mr. Xi pledged in late 2023 to host 50,000 American students over the ensuing five years, but safety concerns and the tense climate have so far limited the U.S. response.

In “The Art of War,” the Chinese military strategist Sun Tzu counseled that if you know your enemy and yourself, you’ll be victorious in 100 battles. That ancient wisdom has never been more relevant for the United States than it is today.

COMMENT – I sympathize with Yanzhong’s frustration on not being able to do his research, but I’m not convinced that actions by Washington can change this dynamic, nor am I convinced that a return of academic exchange would improve our ability to anticipate decisions by the Chinese Communist Party.

Arguably, academic ties between the United States and the PRC were at their strongest just over a decade ago… but were researchers like Yanzhong able to anticipate Xi’s efforts to drag the PRC backwards?

I think the United States has a pretty strong foundation for understanding the PRC and the actions of the Chinese Communist Party and while it might be nice to expand academic ties, those exchanges carry their own risks (which Yanzhong doesn’t mention). I suspect that we are going to be in a long period of hostile rivalry. For academics that want to focus on the PRC, they would be well served to develop research methodologies which don’t require direct contact with the PRC or are dependent on the release of Chinese data by the PRC Government.

For researchers that can develop those new methodologies, the U.S. Government and philanthropic organizations should be rewarding them with funding. For those researchers that refuse to adapt (or demand a geopolitical change for their research to be successful), then I suspect they will not receive funding.

94. Neither India nor China are equipped to lead the Global South
    Henny Sender, Nikkei Asia, March 3, 2025

95. China’s Naval Moves Show the Scale of Its Ambition
    Karishma Vaswani, Bloomberg, March 2, 2025

96. Britain’s Coming Kowtow to Beijing
    William McGurn, Wall Street Journal, March 3, 2025

Will Keir Starmer get anything in return for approving a huge new embassy for China?

It’s a long slide down from Lord George Macartney to Prime Minister Keir Starmer. In 1793 Macartney led the first British diplomatic mission to China. He is remembered by history for refusing to perform the kowtow—a ritual act of supplication—to the Chinese emperor on the grounds that it would be an acknowledgment of Britain’s inferior status.

More than two centuries later, Mr. Starmer is about to perform what one Conservative member of Parliament calls “the biggest kowtow in British history.” The Chinese are angling to build Europe’s largest embassy in London, which ought to be a national-security concern. They seek the U.K.’s approval while holding a sham trial for British citizen Jimmy Lai, a Hong Kong newspaperman, on trumped-up charges of foreign collusion. They’ve also frozen the pensions of Hong Kongers who moved to the U.K.

Mr. Starmer seems determined to push the embassy development through. If he gets nothing in return, it will only confirm Britain’s diminished status in the world.

Enter Donald Trump.

Messrs. Trump and Starmer have each called for Mr. Lai’s freedom. In Rio de Janeiro in November, with China’s President Xi Jinping in the room, Mr. Starmer said he was “concerned” about Mr. Lai’s “deterioration in health in prison.” Earlier he had said getting Mr. Lai out of prison is a “priority.”

Mr. Trump has been characteristically blunter. Asked in October whether he was willing to help Mr. Lai, he was unequivocal: “100%. I’Il get him out. He’ll be easy to get out.”

The words underscore the irony that the U.S. is more committed to freeing Mr. Lai than the British are about one of their own. Mr. Lai didn’t come up during Thursday’s Oval Office meeting between Mr. Trump and Mr. Starmer. But in a sign of the dynamics, Mr. Lai’s son Sebastien visited 10 Downing Street Monday to deliver a personal plea to Mr. Starmer. Sebastien will be in Washington next week to discuss his father’s case with Mr. Trump’s diplomatic and national-security team.

Then there are the bipartisan efforts in Congress. After the 2019 public protests that roiled Hong Kong, the U.S. imposed sanctions on Hong Kong leaders—including John Lee, who is now chief executive. For a city selling itself as an international business center, sanctions are humiliating. Because of them, Mr. Lee didn’t attend the Asia-Pacific Economic Cooperation forum in San Francisco in November 2023.

Mr. Trump and Congress could squeeze even more. Rep. Young Kim (R., Calif.) has introduced the Hong Kong Sanctions Act, which would direct the Trump administration to identify Hong Kong judges who should be subjected to sanctions. Given that the rule of law is essential to any world finance center, casting illegitimacy on Hong Kong judges would be a tremendous blow.

All this gives the U.S. and U.K. leverage. Mr. Starmer can’t make a deal on his own but he can with Mr. Trump’s help. The alternative is what we have now: British expressions of “concern” backed up with . . . nothing.