Friends,
Hopefully everyone had an enjoyable Independence Day break.
I’ve been traveling so my commentary will be condensed this week, but figured you all deserved some Fourth of July spirit delivered by “the Hardest-Working Man in Show Business,” the “Minister of New New Super Heavy Funk,” and the Godfather of Soul… the great James Brown.
There is some irony in using this music video as we wrestle with a new Sino-American Cold War. James Brown performed it at the start of Rocky IV, as the walk-out song for Apollo Creed’s (Carl Weathers) ill-fated boxing match with Ivan Drago (Dolph Lundgren).
As you may remember, Rocky IV is a 20th Century morality play and an icon of 1980s pop culture in which a strutting America is humbled by the Soviet Union in the first act, requiring our hero to undergo psychological and physical struggle to triumph in the end over his Soviet opponent.
James Brown’s own story is an important piece of American history. Born to a mother of Asian and African-American descent and a father of Native American and African-American heritage, Brown grew up in the Jim Crow South and bounced around homes. He pioneered a brand of music that shaped the industry and the country, becoming one of the first ten inductees into the Rock and Roll Hall of Fame when it first started in 1986.
Brown is credited with preventing riots in Boston just after the assassination of Martin Luther King Jr. in April 1968. Instead of canceling the show the night after King’s death, as the Boston mayor wanted, Brown insisted it be televised free to the city. That concert at Boston Garden played a pivotal role in calming tensions and bringing about a degree of unity.
James Brown was far from perfect (like the country he loved), but his spirit, resourcefulness, originality, and courage is something to be admired.
Thanks for reading!
Matt
MUST READ
Xi Has Spent Decades Preparing for a Cold War with the U.S.
Lingling Wei, Wall Street Journal, July 4, 2025
Chinese leader Xi Jinping’s strategy draws on his understanding of Soviet failures
In the U.S.-China conflict, President Trump is waging an economic assault. But Chinese leader Xi Jinping is fighting a Cold War.
Xi is entering trade negotiations with a grand strategy he has prepared for years—one that, according to policy advisers in Beijing, is inspired by his understanding of what the Soviet Union got wrong during the first Cold War.
Well aware of the U.S.’s continued economic and military superiority, the advisers say, Xi is seeking to avoid direct confrontation, while holding China’s ground in a protracted, all-encompassing competition.
Xi aims to achieve what Mao Zedong used to call a “strategic stalemate”—an enduring equilibrium where American pressure becomes manageable and China buys time to catch up to the U.S.
“For China, ‘strategic stalemate’ is the most realistic and preferred outcome in the foreseeable future,” said Minxin Pei, a Claremont McKenna College professor and editor of the quarterly journal China Leadership Monitor. “Strategic patience, conservation of resources and tactical flexibility will all be critical in achieving this stalemate.”
In some ways, Beijing is pursuing a sort of guerrilla warfare, sparked by Henry Kissinger’s analysis of the nature of asymmetric conflicts: “The conventional army loses if it does not win. The guerrilla wins if he does not lose.”
One key pillar of the lessons Xi has drawn from the Soviet collapse is economic: The Soviets put all their economic bets on heavy industry, focused on energy and weaponry. Beijing by contrast is trying to produce everything, fortifying the Chinese economy against trade and technological restrictions from the U.S. while still leveraging world markets’ appetites for its goods.
Another pillar is geopolitical, where the goal is to avoid Soviet-style isolation. This involves weakening U.S. alliances while promoting what Beijing calls “multialignment,” where countries engage with multiple global powers rather than choosing a single side.
Also key to the strategy is to continue China’s military buildup but without a costly arms race with the U.S. The country’s official defense budget has grown at a stable rate of about 7.2% over the past three years. While that exceeds China’s overall economic growth, it is below 1.5% of its gross domestic product.
And crucially, the main pillar involves further strengthening Communist Party control over all aspects of society.
Xi often talks about the Soviet fall as a lesson for China. “Why did the Soviet Union disintegrate? Why did the Communist Party of the Soviet Union fall to pieces?” Xi said in a closed-door speech to senior party officials in January 2013, shortly after he took the reins of the party. “An important reason is that in the ideological domain, competition is fierce.” Translation: The party must allow no challenges to its authority.
Turning point
China has a long history of studying the Soviets. In 1953, the year Xi was born, Mao launched a campaign to promote the Soviet model for China’s political, economic and military systems. Xi’s father, Xi Zhongxun, a party revolutionary who fought alongside Mao, went to Moscow in the late 1950s, when China had almost no industry, to visit industrial sites and learn about their operations and technology.
That profoundly shaped Xi’s youth, leading to a deep-rooted admiration for Soviet values, history and culture. His “Russia complex,” as some party insiders called it, was so deep that nearly three decades of a Soviet-China split didn’t shake it.
But by the time Xi was a rising political star in the late 2000s, the Soviet Union had collapsed and his view had shifted. As head of the Central Party School, an elite party academy, he used the Soviet unraveling as a cautionary tale, highlighting ideological decay and a loss of political control as the key reasons for the collapse.
After taking power in 2012, Xi commissioned a documentary about the end of the Soviet Union that portrayed Mikhail Gorbachev, the last Soviet leader, as a villain who abandoned the party.
But even then, Beijing’s study of the Cold War focused on how China could avoid a similar demise; Xi didn’t yet see China as a contender in a superpower clash with the U.S.
The turning point was Trump’s first-term trade war with China in 2018 and 2019. His “Make America Great Again” motto demonstrated to Xi the U.S.’s resolve to maintain its supremacy. Often caught off guard by Trump’s pressure tactics, the Xi leadership started a reassessment of the Cold War, according to the Chinese advisers. The new focus: how to fight and ultimately win a Cold War against the U.S.
In 2020, when the Covid-19 pandemic all but severed bilateral relations, Xi trotted out the first major piece of his new Cold War strategy: Under the vague label of “dual circulation”—produce domestically what China needed and send goods overseas—he kick-started an all-out effort to better insulate China from outside shocks, in particular from the U.S.
When former President Joe Biden continued with Trump’s tough-on-China policies, Xi’s determination to fight a protracted conflict with the U.S. became even more urgent.
That’s when Beijing more forcefully made clear it wanted to be treated as an equal of the U.S. and also, crucially, when it further cozied up to Russia. In early 2022, right before the Russian invasion of Ukraine, Beijing and Moscow declared their friendship had “no limits.”
Yet, Xi was careful to not copy the Soviet playbook of fostering a largely isolated Eastern bloc. While he realized China might need to disentangle from the U.S., he was making sure the country wasn’t closed off from the rest of the world, keeping it integrated in the global economy, particularly with lower-income countries.
To counter accusations China has been buying influence by trapping countries such as Sri Lanka and Zambia with predatory lending, Xi and his team has overhauled the trillion-dollar Belt and Road infrastructure program to make its lending more sustainable for recipients of Chinese financing.
“China’s economic and diplomatic policies are all oriented toward positioning themselves for a long-term struggle against the U.S.,” said Evan Medeiros, a former senior national-security official in the Obama administration and now a professor at Georgetown University.
Buying time
Xi’s counsel to the party apparatus, the Chinese advisers say, is one of patience, convinced that the global balance of power will inevitably tilt in China’s favor.
The steady calm is intended to contrast with what Xi sees as U.S. chaos and the Trump administration’s ever-shifting posture toward China. In just a few months, the White House has gone from applying maximum tariff pressure on China and trying to isolate the world’s second-largest economy to now seeking a broad deal with concessions on both sides.
It is an environment Beijing uses to its advantage, setting the terms for future competition.
The Trump administration has dismantled the U.S.’s foreign-assistance agency, giving Beijing a chance to try to swoop in at a time of heightened geopolitical competition. And while the U.S. has targeted Chinese student visas and is slashing operations such as Voice of America, the Chinese government is offering all-expenses-paid trips to American social-media influencers they hope will help promote a “cooler China.”
American content creator IShowSpeed, who has more than 120 million social-media followers, handed Beijing a soft-power win when he visited China for 10 days in April. His widely viewed videos, which showed him marveling at the country’s high-speed trains and ubiquitous electric cars, became a global sensation.
In addition to trade talks, Beijing wants to restore the kind of recurring “dialogue” Washington sees as a waste of time. To Xi, it’s a ploy to buy time.
“They have every intention of playing hardball and dragging it out,” said Pei of Claremont McKenna College.
Whether China can prevail in its strategy is far from certain.
Xi’s policies to further China’s great-power competition threaten to exacerbate its economic struggles. The party’s command-and-control is stifling private-sector activities, and the policy aimed at producing everything, notably, is leading to a deepening cycle of deflation.
To Xi, however, all that may be tolerable side effects of the longer-term goal of tiring the U.S. out.
“Xi’s goal is to achieve technological pre-eminence and play an even more influential role in this long-term competition,” said Robert Hormats, Kissinger’s senior economic adviser in the 1970s.
COMMENT – Lingling Wei did a great job with this piece, I found myself nodding along in agreement. Xi Jinping and his fellow leaders in Zhongnanhai are obsessed with the First Cold War and see themselves as the successors to the Communist Party of the Soviet Union. They see themselves as the ones who will reverse Moscow’s mistakes and achieve the dreams of Marx and Lenin.
The challenge for Beijing, which Xi Jinping seems reluctant to face, is that Leninist systems have a major vulnerability: leadership succession. By abandoning the collective leadership and routine succession of two five-year terms for the Party leader set up by Deng, Xi has reintroduced all the pathologies of the Maoist system which nearly destroyed China.
I hope Lingling’s piece finally puts to rest the debate about whether we are in a new cold war with the PRC… Xi Jinping and his cadres definitely think so. And one of their main strategies for winning that cold war is ensuring that its rival doesn’t recognize that fact until it is too late.
As if to make Lingling’s point about the PRC viewing itself in a cold war with the United States, Wang Yi said the quiet part out loud this week during his meetings with his European Commission counterpart, Kaja Kallas… see next article.
China tells EU it does not want to see Russia lose its war in Ukraine: sources
Finbarr Bermingham, South China Morning Post, July 4, 2025
Wang Yi speaks of concern that US could shift whole focus in China’s direction in talks with top EU diplomat Beijing.
Chinese Foreign Minister Wang Yi told the European Union’s top diplomat on Wednesday that Beijing did not want to see a Russian loss in Ukraine because it feared the United States would then shift its whole focus to Beijing, according to several people familiar with the exchange.
The comment, to the EU’s Kaja Kallas, would confirm what many in Brussels believe to be Beijing’s position but jar with China’s public utterances. The foreign ministry regularly says China is “not a party” to the war. Some EU officials involved were surprised by the frankness of Wang’s remarks.
However, Wang is said to have rejected the accusation that China was materially supporting Russia’s war effort, financially or militarily, insisting that if it was doing so, the conflict would have ended long ago.
During a marathon four-hour debate on a wide range of geopolitical and commercial grievances, Wang was said to have given Kallas – the former Estonian prime minister who only late last year took up her role as the bloc’s de facto foreign affairs chief – several “history lessons and lectures”.
Some EU officials felt he was giving her a lesson in realpolitik, part of which focused on Beijing’s belief that Washington would soon turn its full attention eastward, two officials said.
One interpretation of Wang’s statement in Brussels is that while China did not ask for the war, its prolongation may suit Beijing’s strategic needs, so long as the US remains engaged in Ukraine.
US President Donald Trump has repeatedly threatened to abandon Kyiv and is seen in Europe, at times, to have taken a staunchly pro-Russian position on the conflict. On Monday, the Pentagon halted shipments of some air defence missiles and other precision munitions to Ukraine, Politico reported, over fears that the US’ stockpile was running low.
The three-year conflict remains one of the biggest sources of friction between China and the bloc, which has long criticised Beijing for supplying dual-use items to Russia. Beijing has denied the charge and positioned itself as a peacemaker that considers both Moscow and Kyiv to be partners.
Nonetheless, it has never criticised Russia’s invasion and has maintained close diplomatic and economic ties with Moscow, a constant frustration to the Europeans.
The tone of Wednesday’s dialogue was said to be respectful, if tense. Nonetheless, some insiders were surprised by the harshness of Wang’s message, just three weeks out from an important summit in China. Any appearance of a charm offensive is seen to have evaporated.
The sources said Wang told Kallas the two-day summit itself could be cut short – in a hint that Beijing is not happy with how the EU is positioning itself ahead of the event.
The bloc is set to blacklist two small Chinese banks for flouting its sanctions on Russia, in its 18th package of measures against Moscow, which is awaiting final approval from its 27 member states. On this point, Wang repeatedly vowed to retaliate if the lenders were ultimately listed.
The EU continues to take Beijing to task on trade matters, with dozens of investigations into subsidies, dumping and other market-distorting practices under way or in the works.
More recently, the sides clashed on Chinese restrictions on the export of rare earth elements and magnets, which have caused some European companies to stop manufacturing lines.
The bloc relies almost entirely on Chinese supply, without which it cannot make anything from planes and advanced weapons to cars and refrigerators.
The Europeans got no reassurances from Wang that a structural end to the crisis was in the works. Instead, he said the Ministry of Commerce had reduced processing time for licences from nearly six weeks to three, and that individual companies could always raise their complaints with the government.
On rare earths, the EU feels it has been unfairly caught in the crossfire of a US-China tech war and there is some surprise that Wang was not more forthcoming with a solution. One source described his position on the matter as “dismissive”.
The view in Brussels is that the gruelling encounter – interrupted by a dinner of stuffed chicken, sweet potato mousse and cheesecake – does not bode well for the summit on July 24 and 25 in Beijing and Anhui province. The main hope for concrete deliverables is on the climate front.
Earlier on Wednesday, Wang met European Council President Antonio Costa and European Commission President Ursula von der Leyen. EU sources said the two presidents were “on the same page” with each other and Kallas on all the major issues.
From Brussels, he travelled to Berlin for a first meeting with Germany’s new foreign minister, Johann Wadephul.
According to the German daily Handelsblatt, Chancellor Friedrich Merz was also planning to meet Wang briefly as a “protocol gesture”. Later in the week, he will meet French Foreign Minister Jean-Noel Barrot in Paris.
China’s own version of the meeting with Kallas, meanwhile, makes little reference to the many bones of contention.
“There is no fundamental conflict of interests between China and the EU, and they have broad common interests,” the foreign ministry said in a statement.
“Europe is currently facing various challenges, but none of them came from China in the past, present and future. The two sides should respect each other, learn from each other, develop and progress together, and make new contributions to human civilisation.”
COMMENT – Soooo… the CCP admits to the Europeans that they are supporting the Russians in their war of aggression against Ukraine, so that the United States is spread thin across the globe.
Of course, we all knew this was the case, but rarely does a senior CCP official say the quiet part out loud… the Party must really have a low regard for their European counterparts, essentially signaling that Beijing is confident that Brussels is all talk, no action.
For my European friends, could you please start carrying your fair share of the burden? Our common adversaries are working together to ensure that our collective security arrangements fail. If Europe fulfills its obligations and prioritizes geopolitical rivalry, we will deal a devastating blow to Beijing and Moscow.
Also, it appears that Wang Yi spent the four-hour meeting mansplaining to Kallas. It all sounds true to form for Wang Yi.
Dealing with Wang Yi (and Yang Jiechi before him) is a miserable experience. The word “pompous” does not quite do justice to their demeanor.
Wang Yi and Yang Jiechi, perhaps the two individuals I would least like to be stuck in an elevator with.
Qin Gang, the guy who held the office of Foreign Minister for about a year before being purged, was of the same breed.
It’s as if the PRC Ministry of Foreign Affairs grooms their diplomats to be self-important buffoons.
Don’t get stewed up about Xi Jinping
Charles Parton, Observing China, June 26, 2025
He is alive and kicking – hard.
Rumours of the imminent or actual political demise of Xi Jinping, General Secretary of the Chinese Communist Party (CCP), have been cooking these past weeks. Leadership politics in the People’s Republic of China (PRC) are always obscure, lending aid to conspiracy in its perennial battle against sober analysis.
In the gallimaufry of ‘evidence’, every rumour has been diced and thrown into the pot. Thus, Xi disappeared for two weeks in May. Omnipresent and omnicompetent, Xi almost never leaves the front pages of party media, yet references to him tailed off. Party elders have been ‘making a comeback’ or ‘out on manoeuvres’ (never mind that those cited – Hu Jintao, former General Secretary of the CCP and President of the PRC, and Wen Jiabao, former Premier of the PRC – have a combined age of 164, and the former is clearly senile). The ‘Princeling’ and ‘Shanghai’ factions are emerging from their comas. The May politburo meeting did not take place, and other economic commissions led by Xi have met only sporadically. He did not chair a recent Central Military Commission (CMC) meeting. Military leaders appointed by Xi have been removed, and ‘elements within the army’ are among those ‘moving against Xi’. A meeting with Aleksandr Lukashenko, President of Belarus, did not follow normal protocol: it was held in Xi’s house, not official buildings, and photographs were few.
This stew has been seasoned by comments from Taiwanese, dissidents, YouTube (clicks often earn more advertising money than truth) and other disaffected commentators. It smacks of comfort food: Xi has made the PRC a threat, and if he goes, things will get better. But Xi is not going soon.
Nevertheless, the stew or slew of ‘evidence’ does need explanation – or at least contradiction, since the obscurity of CCP top level politics prevents certainty. A more likely guess is that Xi underwent a medical procedure in May. It happens. He is 72 years old, and in the last nearly 13 years of power, his punishing schedule allows him only a short break by the seaside in August. Leaders, like cars, sometimes need to go into the garage for servicing.
This would explain much of the ‘evidence’, such as why there was no May politburo meeting (nor, by the way, was there one in May 2023, so it is not unprecedented), or why Xi did not chair the CMC meeting. If he was recovering from an operation, a home meeting with Lukashenko would be medically wise. Moreover, Xi’s appearances in the People’s Daily, the party’s newspaper, have been no fewer than during the same period last year.
Talk of factions and party elders is outdated. There is only one faction in the PRC: Xi’s faction. Xi has taken down both actual and potential political opponents. The elders, now out of power for over 12 years, are doddery, their networks atrophied or destroyed. Every year in August they go to the seaside resort of Beidaihe. It was no coincidence that as early as August 2015, their stay was marked by a prominent article in the People’s Daily, which emphasised the theme of ‘not reheating cold tea’; a warning to retired leaders to steer clear of politics. Or else.
COMMENT – A number of readers have sent me questions about the rumors of Xi being sidelined or even under house arrest. While it is difficult to pierce the veil of secrecy the Party erects around its internal dynamics, I tend to agree with Charles Parton (and others) who don’t think that Xi is being sidelined.
That assessment could be wrong, but I have a high confidence that these rumors of Xi’s demise are just that, rumors.
One of the reasons why I’m confident of that goes to Lingling’s article above. Xi has successfully transformed the Party into one that sees itself in an existential struggle with the United States. In that existential struggle, I think it is highly unlikely that some faction would emerge to push Xi out and potentially open the Party and the nation up to division.
The Party’s cold war with the United States only strengthens Xi’s grip on power.
WHO Scientific advisory group issues report on origins of COVID-19
World Health Organization, June 27, 2025
The WHO Scientific Advisory Group for the Origins of Novel Pathogens (SAGO), a panel of 27 independent, international, multidisciplinary experts, today published its report on the origins of SARS-CoV-2, the virus responsible for the COVID-19 pandemic.
SAGO has advanced the understanding of the origins of COVID-19, but as they say in their report, much of the information needed to evaluate fully all hypotheses has not been provided.
“I thank each of the 27 members of SAGO for dedicating their time and expertise to this very important scientific undertaking over more than three years,” said Dr Tedros Adhanom Ghebreyesus, WHO Director-General. “As things stand, all hypotheses must remain on the table, including zoonotic spillover and lab leak. We continue to appeal to China and any other country that has information about the origins of COVID-19 to share that information openly, in the interests of protecting the world from future pandemics.”
In its report, SAGO considered available evidence for the main hypotheses for the origins of COVID-19 and concluded that “the weight of available evidence…suggests zoonotic spillover…either directly from bats or through an intermediate host.”
WHO requested that China share hundreds of genetic sequences from individuals with COVID-19 early in the pandemic, more detailed information about the animals sold at markets in Wuhan, and information on work done and biosafety conditions at laboratories in Wuhan. To date, China has not shared this information either with SAGO or WHO.
SAGO published its initial findings and recommendations in a report on 9 June 2022. Today’s report updates that evaluation based on peer-reviewed papers and reviews, as well as available unpublished information and field studies, interviews, and other reports including audit findings, government reports and intelligence reports. SAGO convened in various formats 52 times, conducted briefings with researchers, academics, journalists, and others.
“As the report says, this is not solely a scientific endeavour, it is a moral and ethical imperative,” said Dr Marietjie Venter, Chair of the group and Distinguished Professor and One Health Research Chair in Vaccines and Surveillance for Emerging viral threats at the University of the Witwatersrand, South Africa. “Understanding the origins of SARS-CoV-2 and how it sparked a pandemic is needed to help prevent future pandemics, save lives and livelihoods, and reduce global suffering.”
COMMENT – It is telling that in the statement accompanying this latest WHO report on the origins of COVID, the WHO Director-General had this to say:
“As things stand, all hypotheses must remain on the table, including zoonotic spillover and lab leak. We continue to appeal to China and any other country that has information about the origins of COVID-19 to share that information openly, in the interests of protecting the world from future pandemics.”
Essentially, the world doesn’t know for certain the cause of the most consequential pandemic in a century because the Chinese Communist Party refuses to cooperate with the international community. If being transparent “proved” that it came from a zoonotic spillover, you can bet that the CCP would be transparent… the fact that they refuse to do so, after more than five years, should be all the proof necessary to conclude the Party is covering up a lab leak.
For the Chinese Communist Party, it is far more important to protect their own reputation than it is for humanity to be prepared for an event that could kill millions. This is the kind of selfishness that causes catastrophes.
China left off toughest tier of UK regime tracking ‘covert foreign influence’
Jim Pickard, George Parker and David Sheppard, Financial Times, July 1, 2025
Firs register is designed to offer assurance on activities of overseas powers seen as posing a national security risk.
China has been left off the top tier of the British government’s new register to track “covert foreign influence” as UK ministers seek to rebuild relations with Beijing in their pursuit of growth.
Britain’s new foreign influence registration scheme (Firs), which comes into effect on Tuesday, is designed to give the UK public greater assurance around the activities of foreign powers seen as posing a national security risk.
The Russian and Iranian states have been placed in the top tier because of “the serious threats they pose to our interests”, according to the UK government.
Under the lower “political tier”, those involved in lobbying on behalf of any foreign power in the UK — including at Westminster — will have to identify themselves. In most cases the entry will be made available on a public register.
The more stringent “enhanced tier” applies to foreign powers considered to pose a risk to the UK’s “safety or interests” and covers a much wider range of activities.
This top tier requires the registration by an individual of any activities within the UK at the direction of a specified power or entity. Specified foreign power-controlled entities will have to register activities in the UK.
The Conservatives had called for China to be added to the enhanced tier of the register, which was set up as part of the National Security Act in 2023. Britain’s relationship with Beijing has recently been the subject of an official “audit” by the Labour government.
The government said in that audit last week that “instances of China’s espionage, interference in our democracy and the undermining of our economic security have increased in recent years”.
The Financial Times revealed in February that Britain’s security services were taking part in a review into China’s growing role in the UK’s energy system amid concerns over Beijing’s influence in strategic national infrastructure.
A UK government official said there had been “discussion over many years” on whether China should be put on the top tier but said there were “no immediate plans” to add China or any other countries to the list.
The Chinese embassy in London did not immediately respond to a request for comment.
Chancellor Rachel Reeves, who in January led a delegation of leading bankers to Beijing to seek closer ties across a range of financial services, led cabinet opposition to China’s inclusion in the “enhanced tier” of the new register, according to government officials.
Reeves, along with business secretary Jonathan Reynolds, had argued that including Chinese nationals in the scheme would hobble business ties with the country. Yet confirmation that Beijing will not be on the enhanced tier angered some China hawks, particularly in the opposition Conservative party.
The register is loosely modelled on the US Foreign Agents Registration Act. The scheme’s introduction has been delayed as Prime Minister Sir Keir Starmer grappled with the question of whether to include China in the more stringent level.
COMMENT – How does the UK Government one week issue a report that says “instances of China’s espionage, interference in our democracy and the undermining of our economic security have increased in recent years” and then not include them on the “enhanced tier”?
I know it is a cheap shot to accuse a center-left government of this, but the Labour Government’s refusal to classify the PRC correctly (based on the government’s own public assessments of risks) only confirms suspicions that they are weak and unserious.
By pulling their punches (in hopes for some sort of economic benefit), London is simply inviting more coercion and malign interference.
VIDEO – Why China is Building a ‘Military City’ 10 Times the Size of the Pentagon
Wall Street Journal, July 1, 2025
China is building what is believed to be the world’s biggest military command center. WSJ explains how this new base could reshape the global security landscape.
Journal reporters use satellite imagery to reveal a new command complex under construction outside Beijing—roughly ten times the Pentagon’s floor area.
Analysts say the self-contained “military city” will centralize People’s Liberation Army Rocket Force, cyber- and space-command functions, housing thousands of personnel, hardened bunkers, a sub-terranean data center and dedicated high-speed rail link.
COMMENT – Note to political leaders in Tokyo, Taipei, and Canberra, the Chinese Communist Party is taking its military preparations seriously, maybe its time you do so as well.
US lets GE restart jet engine shipments to China's COMAC, source says
Karen Freifeld, Reuters, July 4, 2025
The U.S. told GE Aerospace on Thursday that it can restart jet engine shipments to China's COMAC, according to a person familiar with the matter, in a further sign of de-escalating U.S.-Sino trade tensions that included concessions from Beijing over rare earths.
The United States this week also lifted restrictions on exports to China for chip design software developers and ethane producers, suggesting trade talks between the two countries are moving forward.
License suspensions and new license requirements on the different exports had been issued several weeks ago as part of the ongoing trade war between the world's two biggest economies.
GE did not respond to an email request for comment, nor did the Commerce Department, which notified GE it could restart shipments.
Licenses for GE Aerospace affect engines sold to China's state-owned aerospace manufacturer COMAC, which wants to compete internationally against dominant plane makers Airbus and Boeing.
A spokesperson for China's Ministry of Commerce said in a statement that "Dialogue and cooperation are the right path forward, while threats and coercion lead nowhere," adding that the U.S. should "continue to meet China halfway."
COMMENT – I predict that we will regret this decision to lift these restrictions on jet engine sales to COMAC, the civilian aircraft subsidiary of the PRC’s defense aerospace giant, AVIC.
I’m pretty sure that the 37th Stratagem goes something like: Never, ever, enable your enemy to build an advanced aerospace industry.
And the 38th Stratagem likely says: don’t make your defense industrial base dependent on your pacing threat.
Nearly one in 10 ‘Tier 1’ subcontractors to defense primes are Chinese firms: Report
Sydney J. Freedberg Jr., Breaking Defense, June 26, 2025
The new study of 2024 data also warns that the Pentagon remains over-reliant on a small number of traditional prime contractors and a supplier base rife with potential bottlenecks.
Despite a bipartisan push to disentangle the US economy from China, the military-industrial base still relies heavily on Chinese suppliers, a new study from analysis software firm Govini warns. And, the company’s leader says, that’s not the only weak link.
“Defense supply chains today are incredibly brittle. They’re not resilient. They’re very, very intricately tied to foreign suppliers,” Govini CEO Tara Murphy Dougherty told reporters Thursday. “We try to quantify that.”
Bottom line up front, Western defense firms have struggled just to meet the intense surge of demand from years of large-scale combat in Ukraine. A war with China would be much worse — and Murphy Dougherty doesn’t think that US defense production, stockpiles and supply chains are up to the task.
“The data is unequivocal: The United States is not prepared for the war that we may have to enter if China said, ‘today is the day,’” she said. “It’s not that I think we would automatically lose — by no means do I think that’s the case — but I do not believe that the industrial base is prepared to support the material demands of the Department of Defense.”
Drawing on its proprietary database of Defense Department spending and using its flagship analytics toolkit, Ark, Govini recently published its annual “National Security Scorecard.” The study looks at the previous year’s data on not only DoD’s prime contractors — which, Murphy Dougherty notes, remain a small and exclusive group despite ambitious startups like Anduril and Palantir knocking on the door — but also on their principal subcontractors, known as “Tier 1 suppliers.”
COMMENT – It’s as if we are trying to lose… perhaps the acquisition community and Congress could maybe fix this.
The Department of Defense spends a massive amount buying things from prime contractors and those same prime contractors build supply chains with dependencies on our principal adversary.
Instead of fixing these vulnerabilities, we get leaders like Greg Hayes.
Two years ago, Hayes, the CEO of RTX (formerly Raytheon) urged the Biden Administration to limit its actions against Beijing because he had made his company (one of the country’s most important defense contractors) dependent on the PRC.
A year later, Hayes retired… did he bother fixing these vulnerabilities?
Nope.
Apparently, some future CEO will have to spend “many many years” moving those supply chains.
In the Chinese system, executives of these prime contractors would be removed and prosecuted for such incompetence. And those that had retired would have their assets stripped from them.
Authoritarianism
VIDEO – Rise of the Patriots: Hong Kong
BBC, May 8, 2025
In Hong Kong’s new “patriots-only” era, anonymous informing is now the norm. #BBCEye investigates how the security law reshaped the city after mass calls for democracy.
The rise of “patriots-only” rule in Hong Kong is marked by arrests of opposition figures, the silencing of critical media, and a growing culture of surveillance and anonymous reporting. Beneath the surface, critics warn the city is drifting toward a climate reminiscent of the Cultural Revolution.
BBC Eye meets Hongkongers who identify as patriots, including Innes Tang, who talks about how he reported around 100 people to the authorities for suspected national security violations. Bookstore owner Pong Yat-ming describes how anonymous complaints have triggered repeated government inspections, whilst veteran journalist Ronson Chan - arrested whilst reporting - tells of how he is now facing trial. The film also explores the significance of schools promoting “national identity” classes under the new education agenda.
COMMENT – The Chinese Communist Party loves these kinds of “patriots.”
Building a ‘Patriots Only’ Hong Kong
Human Rights Watch, June 29, 2025
China’s Communist Party Now Has 100 Million Members. Many Are in It for the Paycheck.
Chun Han Wong, Wall Street Journal, June 30, 2025
Chinese publishing thrives in Tokyo as Hong Kong freedom narrows
Kenji Kawase, Nikkei Asia, June 30, 2025
Hong Hong's relative freedom once made it a center for publishing and selling books that were considered "sensitive" or banned in mainland China. But with dissent severely curtailed under the national security law imposed exactly five years ago Monday, another hub of Chinese-language publication is emerging: Tokyo.
While democratic and Mandarin-speaking Taiwan remains a natural alternative, a rapid increase in immigrants and visitors is turning Tokyo into a new hub for Chinese-language literature and scholarship.
The latest newcomer to Tokyo's Chinese-language book scene is Nowhere Bookstore, which opened recently in a small rented room in the cozy suburban neighborhood of Koenji -- known for its bars and secondhand clothing shops.
The owner is Annie Zhang Jieping, a Taiwan-based journalist who spent many years in Hong Kong. After opening her first store in Ximending in central Taipei in April 2022, she expanded to Chiang Mai in northern Thailand and The Hague in the Netherlands, and now Tokyo. Her major motivation is to "spread the richness of Chinese culture" to the world.
According to Zhang, starting a bookstore happened "accidentally."
The security law prompted many Hong Kongers to flee overseas, including to Taiwan, as it enabled a sweeping crackdown on activists, journalists and others. Hundreds have been arrested in the city, while pro-democracy organizations have been pushed to fold.
In 2021, Zhang learned that a Taipei bookstore owner who had come from Hong Kong was closing down and relocating to the U.K. for visa reasons. To her, this felt like "a metaphor of Hong Kong people's fate."
She said she made up her mind within 48 hours to enter the bookstore business, thinking, "At least, it will not end here." She opened her shop in the same location.
According to its official homepage, her store's English name can be read two ways: It expresses hope for those who have lost their place and been forced to disperse (nowhere), but also represents a place of safety (now here). The Chinese name Feidi, meaning "enclave," is meant to evoke the "spirit of Hong Kong" -- unique, open and tolerant, set apart from the mainland.
It was those characteristics that had made Hong Kong a haven for publishing. Until the 1990s, when Taiwan fully democratized, the city was virtually the only place in the Chinese-speaking world where freedom of expression could be exercised.
Taiwan's former President Tsai Ing-wen once reflected on how she would travel to Hong Kong to browse the shelves, in the years before her homeland embraced democracy. She wrote on Facebook, "For me and a lot of people, Hong Kong was 'the place to buy books.'"
But times have changed. Chinese President Xi Jinping has tightened the central government's grip on the former British colony since taking office over a decade ago. Books and booksellers became a target: In 2015, five people who owned and ran the city's Causeway Bay Bookstore, which sold titles that were banned on the mainland, disappeared. It turned out that they had been detained by mainland authorities.
The store manager, Lam Wing-kee, was allowed to return to Hong Kong temporarily to pick up customer data stored in his PC. But rather than return to the mainland as instructed, he eventually fled to Taiwan, where he opened a store under the same name in Taipei in April 2020.
While Lam found a home in Taiwan, others from China have found refuge in Japan and taken the opportunity to enter the books business.
Zhao Guojun is one of them. In December 2023, he opened the Outsider Bookstore in Tokyo's Jimbocho district, renowned as the home of the world's largest cluster of used book shops.
He had fled Beijing in April 2022 with his singer wife Hu Cuibo and their two daughters. Zhao had been under strict surveillance for four years due to his activism for civil and human rights. The couple decided to leave, he said, because their "breathing space was getting smaller and smaller."
COMMENT – It has to bother Chinese intellectuals that true Chinese culture seems to be thriving in Tokyo because it cannot thrive within the PRC.
New rules to set boundaries for China’s top decision-making bodies
William Zheng, South China Morning Post, June 30, 2025
The Rise and Fall of China’s ‘Fentanyl King’ in Corruption-Fueled Bankruptcy
Wang Juanjuan and Denise Jia, Caixin Global, June 30, 2025
The Iran-China-Russia Axis Crumbles When It Matters
Leon Aron, The Atlantic, June 29, 2025
Beijing likes allies who needle the U.S., but it values stability even more.
As Israel and then the United States battered Iran this month, the reaction from China and Russia was surprisingly muted. For years, shared antagonism toward the U.S. has been pushing China, Russia, and Iran together. All three benefit from embarrassing the West in Ukraine and the Middle East, and widening the gaps between Washington and Europe. So after Israel’s first strike, on June 13, China—the strongest partner in the anti-America triad—could have been expected to rush short-range missiles and other air-defense equipment to Iran.
Surely, Beijing would use its growing diplomatic muscle to isolate Israel and the U.S., demand an emergency session of the United Nations Security Council, and introduce a resolution deploring the two governments that were attacking China’s ally.
Instead, recent events in Iran have revealed that anti-Americanism can bind an alliance together only so much.
After ritually denouncing Israel’s first strike as “brazen” and a “violation of Iran’s sovereignty,” Beijing proceeded cautiously, emphasizing the need for diplomacy instead of further assigning blame. Chinese Foreign Minister Wang Yi refrained from condemning Israel’s actions, in a call with his Israeli counterpart on June 14, and President Xi Jinping waited four days before calling for “de-escalation” and declaring that “China stands ready to work with all parties to play a constructive role in restoring peace and stability in the Middle East.”
After Iran’s parliament voted to close the Strait of Hormuz, Beijing’s foreign-affairs spokesperson stressed—in what looked like a warning to Iran—that the Persian Gulf is a crucial global trade route for goods and energy, and called for partners to “prevent the regional turmoil from having a greater impact on global economic growth.”
In calmer times, China, like Russia, is happy to use Iran as a battering ram against the U.S. and its allies. But when tensions turn into military confrontation and global stability is at risk, backing Iran looks like a far less sensible investment to Beijing than preserving its own economic and diplomatic relations with the West. China’s mild reaction isn’t just a blow to Iran; it may also suggest that the much ballyhooed “no limits” partnership between Xi and Russia’s President Vladimir Putin might not be as sturdy as Moscow and Beijing advertise.
China’s Go-Local Vision for Global Messaging
David Bandurski, China Media Project, June 30, 2025
Xi Jinping’s multi-stakeholder strategy aims to coordinate government, media, enterprises and social forces to reshape China’s global communication. But lofty hype about the strategy presents its own challenge to progress.
Since he came to power in late 2012, one of Xi Jinping’s core objectives internationally has been to stage a revolution in perceptions of China abroad — notching up victories in what he characterized early in his first term as a global “public opinion struggle”.
This project, centering on the concept of “telling China’s story well”, responds to what the Chinese Communist Party (CCP) leadership perceives as a detrimental gap with the West of what it terms “discourse power”. Mainstreaming a hardline notion that emerged in the late 2000s, Xi has set out to resolve China’s historical “third affliction” — the contemporary experience of international criticism following earlier periods of military defeat and economic poverty.
Xi’s vision of returning China — for that is how the Party conceives of history — to its rightful place in global public opinion has evolved beyond traditional national-level state-led messaging to an international communication strategy more actively involving Party-state coordination of voices across locales and administrative levels. It involves leveraging local and regional media and coordinating the production of local multimedia stories through “convergence media centers”. It also envisions the participation of businesses, educational institutions and all other aspects of society.
Mapping Two Decades of China’s Industrial Policies
Hanming Fang, Ming Li, and Guangli Lu, SCCEI China Brief, June 2025
Insights
Analysis of nearly all public industrial policy documents in China from 2000 to 2022 reveals a complex and adaptive system shaped by both local initiative and political hierarchy.
China’s local governments have driven most industrial policy in China (80% of policies), but top-down influence has strengthened since 2013, reflecting growing central influence over local policy priorities.
The central government (13% of all industrial policies) mainly plays an agenda-setting role, prioritizing strategic sectors and using regulatory tools (40% of central policies).
Cities tend to support industries where they enjoy local advantages (e.g., existing specialization), especially in more developed regions with stronger administrative capacity.
Policy tools evolve as industries mature, shifting from entry subsidies and land discounts to R&D, labor training, and supply chain coordination.
Policy imitation is common and costly — “follower” cities see lower firm revenues, profits, and productivity, and are less likely to use advanced tools like R&D support or tailor policies to local conditions.
Industrial policy is most effective when locally tailored and well coordinated, but risks inefficiency and duplication when driven by imitation or political incentives.
Decoding China's Industrial Policies
Hanming Fang, Ming Li & Guangli Lu, NBER, May 2025
We decode China’s industrial policies from 2000 to 2022 by employing large language models (LLMs) to extract and analyze rich information from a comprehensive dataset of 3 million documents issued by central, provincial, and municipal governments. Through careful prompt engineering, multistage extraction and refinement, and rigorous verification, we use LLMs to classify the industrial policy documents and extract structured information on policy objectives, targeted industries, policy tones (supportive or regulatory/suppressive), policy tools, implementation mechanisms, and intergovernmental relationships, etc.
Combining these newly constructed industrial policy data with micro-level firm data, we document four sets of facts about China's industrial policy that explore the following questions: What are the economic and political foundations of the targeted industries? What policy tools are deployed? How do policy tools vary across different levels of government and regions, as well as over the phases of an industry's development? What are the impacts of these policies on firm behavior, including entry, production, and productivity growth? We also explore the political economy of industrial policy, focusing on top-down transmission mechanisms, policy persistence, and policy diffusion across regions. Finally, we document spatial inefficiencies and industry-wide overcapacity as potential downsides of industrial policies.
COMMENT – This kind of research could only be done, at scale, with generative artificial intelligence. I’m glad to see this happening.
Environmental Harms
Namibia Struggles to Contain Illegal Fishing by Foreign Trawlers
Eurasia Review, July 5, 2025
It is around midnight and a Namibian vessel’s radar detects a foreign trawler notorious for illegal, unreported and unregulated fishing entering Namibian waters. The Namibian vessel communicates with the country’s fisheries monitoring center in Walvis Bay and the Navy and fisheries department are alerted.
However, there are no law enforcement vessels near the Namibia-Angola maritime border and the foreign vessel evades authorities.
This scenario unfolds routinely and no suspicious vessels have recently been apprehended and prosecuted in Namibia, reported senior researcher Carina Bruwer of Enhancing Africa’s Response to Transnational Organized Crime project.
Namibian waters are regularly targeted by foreign fishing vessels, particularly Chinese, that engage in illegal activities to plunder valuable horse mackerel and other species, such as hake, kingklip and dentex. The country loses more than $83.7 million annually to illegal, unreported and unregulated fishing, driving food insecurity and threatening the jobs of more than 18,000 people who work in Namibian fisheries.
China is the world’s worst illegal fishing offender, according to the IUU Fishing Risk Index. Of the top 10 companies engaged in illegal fishing globally, eight are from China.
COMMENT – If the CCP cared about this problem, they could do something about it, but it is clear that they don’t.
China Has Paid a High Price for Its Dominance in Rare Earths
Keith Bradsher, New York Times, July 5, 2025
Dust and groundwater contaminated with heavy metals and radioactive chemicals pose a health threat that the authorities have been trying to address for years.
Chinese mines and refineries produce most of the world’s rare earth metals and practically all of a few crucial kinds of rare earths. This has given China’s government near complete control over a critical choke point in global trade.
But for decades in northern China, toxic sludge from rare earth processing has been dumped into a four-square-mile artificial lake. In south-central China, rare earth mines have poisoned dozens of once-green valleys and left hillsides stripped to barren red clay.
Achieving dominance in rare earths came with a heavy cost for China, which largely tolerated severe environmental damage for many years. The industrialized world, by contrast, had tighter regulations and stopped accepting even limited environmental harm from the industry as far back as the 1990s, when rare earth mines and processing centers closed elsewhere.
In China, the worst damage occurred in and around Baotou, a flat, industrial city of two million people in China’s Inner Mongolia, on the southern edge of the Gobi Desert. Baotou calls itself the world capital of the rare earth industry, but the city and its people bear the scars from decades of poorly regulated rare earths production.
An artificial lake of sludge known as the Weikuang Dam, four square miles in size, holds the waste left over after metals are extracted from mined ore. During the winter and spring, the sludge dries out. The dust that then blows off the lake is contaminated with lead, cadmium and other heavy metals, including traces of radioactive thorium, according to technical papers by Chinese scholars.
During the summer rainy season, the sludge becomes coated with a layer of water that mixes with poisons and thorium. This dangerous mix seeps into the groundwater underneath the lake.
COMMENT – The Party will always choose market dominance over environmental protection and the interests of individuals citizens.
Since the Party prioritizes market dominance by pushing down the price on these critical minerals, they are all but guaranteeing that no one in the industry can afford to put in place the kinds of environmental protections necessary to prevent widespread pollution.
Over the past 15 years the Party has crushed independent reporting inside the PRC, so don’t expect to see anyone other than foreign news outlets reporting on this trend.
China is using pollution as a geopolitical weapon, and the US must respond
Robert O’Brien, The Hill, July 1, 2025
The U.S. and China are locked in a strategic rivalry across multiple domains. While much attention has been paid to semiconductors, artificial intelligence and military capabilities, an overlooked component of geopolitical competition is China’s pollution.
China intentionally bypasses or ignores environmental regulations to gain economic and strategic advantages that threaten American power. Meanwhile, the U.S. plays by the rules with industries that are among the cleanest in the world, only to be undermined by dirty Chinese industries. By targeting pollution as a domain of competition, the U.S. can hold China accountable, leveling the playing field and safeguarding our industrial and geopolitical edge.
China’s environmental footprint is abysmal. As the world’s largest polluter, China’s coal-heavy energy grid, which operates with virtually non-existent industrial standards, produces pollution that transcends borders and pollutes our air and water. This environmental recklessness is a strategic weapon for the state-driven Chinese economy.
By prioritizing short-term economic gains over responsible business practices, China floods global markets with low-cost products to gain a competitive edge. Beijing’s relentless expansion of its industrial base in core sectors like steel and aluminum has been fueled by a deliberate strategy of unabated pollution and lax environmental enforcement, coupled with heavy state subsidies. This approach allows Chinese firms to undercut American manufacturers, eroding the U.S. industrial base that is critical to our economic strength and national security.
Economically, China’s pollution-driven model distorts global trade. Its steel and aluminum sectors, for instance, benefit from state-subsidized energy and minimal oversight, allowing Chinese firms to dump products at prices that U.S. competitors can’t match. In 2024, Chinese steel exports hit a multi-year high, capturing markets and squeezing American producers. A weakened manufacturing base limits America’s ability to produce critical goods, from infrastructure components to defense material, at a time when supply chain vulnerabilities are a growing concern.
China's emissions reductions could be the biggest climate story of the year
Tim Daiss, Nikkei Asia, July 1, 2025
There’s a Race to Power the Future. China Is Pulling Away.
David Gelles, New York Times, June 30, 2025
Foreign Interference and Coercion
Czech Intelligence Reveals China Plan to Crash into Taiwan Vice President-Elect
Micah McCartney, Newsweek, June 27, 2025
China’s Italian Job
David Bandurski, China Media Project, June 30, 2025
Beijing launched a grandiose television series promoting Xi Jinping across dozens of Italian networks. Why did Italy’s media welcome such blatant propaganda?
Il Guardiano del Patrimonio, “The Guardian of Heritage,” was the grandiose title of a television series promoting President Xi Jinping’s cultural philosophy as it was broadcast last month across more than 30 Italian media outlets — one of the more ambitious and expansive examples of how China enlists apparent cultural cooperation to advance its political narratives and foreign policy objectives.
The grand launch ceremony in Rome last month was attended by key Chinese officials including Shen Haixiong, deputy head of China’s Propaganda Department and president of CMG, and Chinese Ambassador to Italy Jia Guide. Top Italian attendees included Giuseppe Valditara, the minister of education and merit in Giorgia Meloni’s current administration, former Deputy Prime Minister and Culture Minister Francesco Rutelli, and Italian Football Federation President Gabriele Gravina.
Ex-New York official facing Chinese agent charge indicted for US$35 million in kickbacks
Mark Magnier, South China Morning Post, June 27, 2025
Former High-Ranking New York State Government Employee and her Husband Charged with Accepting Kickbacks in PPE Fraud Scheme
U.S. Department of Justice, June 26, 2025
Former Hochul Aide Tied to China Got Kickbacks for COVID Gear, Feds Charge
Yoav Gonen, The City, June 26, 2025
A former staffer in the governor’s office accused of working as an agent for China allegedly steered contracts for personal protective equipment during the COVID pandemic to a firm co-owned by her husband and another that belongs to a second cousin, federal prosecutors announced Thursday.
The prosecutors allege that former Deputy Chief of Staff Linda Sun, who worked for Gov. Kathy Hochul after being hired years earlier in the administration of former Gov. Andrew Cuomo, and her husband, Chris Hu, reaped millions of dollars from the deals — some in the form of kickbacks.
“When masks, gloves, and other protective supplies were hard to find, Sun abused her position of trust to steer contracts to her associates so that she and her husband could share in the profits,” said Brooklyn U.S. Attorney Joseph Nocella. “We demand better from our public servants, and this office will continue to hold accountable public officials who enrich themselves at the expense of the New York taxpayers.”
In September 2024, a grand jury indicted Sun on charges that she worked as an unregistered foreign agent for the Chinese government, for which prosecutors claim she sought to influence the state government toward pro-China stances, in exchange for payments and perks from representatives of the country.
This included restricting access to the governor’s office for Taiwanese government officials and massaging statements made by Cuomo and Hochul to be more favorable to China, prosecutors alleged.
Sun’s husband was charged with money laundering and other crimes in September, and hit with additional money laundering counts in a superseding indictment brought in February.
Canada orders China's Hikvision to close Canadian operations
Kanishka Singh, Reuters, June 28, 2025
Ottawa orders Chinese company Hikvision to shut down operations over national security concerns
Kanishka Singh and Ismail Shakil, The Globe and Mail, June 26, 2025
Drifting From the West’s Orbit, Russians Find a New Role Model in China
Ivan Nechepurenko, New York Times, June 30, 2025
‘It’s not Chinese assistance’: Australia accuses China of taking undue credit for aid projects in the Pacific
Ben Doherty, The Guardian, June 29, 2025
Minister Pat Conroy says Chinese ‘branding’ of multilateral development projects to bolster its influence in the region is a consistent frustration.
China is bolstering its geopolitical influence in the Pacific by “branding” Asian Development Bank projects – funded in significant part by Australian taxpayer dollars – as Chinese projects, the Australian government says.
On the island of Bougainville, an autonomous region of Papua New Guinea to Australia’s north, the state-owned China Railway Construction Corporation has begun work to strengthen the runway at Kieta-Aropa, on the outskirts of the largest city.
When the government of Bougainville announced the upgrade of the airport, there was no mention of the Asian Development Bank – who is funding the project – only the state-owned China Railway Construction Corporation.
And when an inauguration ceremony was held last month at the airport’s runway, the president of Bougainville and the prime minister of Papua New Guinea broke the ground with a shovel wearing hard hats adorned with the name and logo of the CRCC. An ADB sign was visible in the background.
Australia’s minister for the Pacific, Pat Conroy, said the “branding” of multilateral development projects had been a consistent frustration for the government.
“It’s not Chinese assistance. A Chinese state-owned enterprise won a contract under the Asian Development Bank … that project is funded by the ADB.
“The largest donors to the ADB are countries like Japan and Australia, which is part of my frustration … because people driving past would assume it’s funded by China because you see Chinese state-owned enterprise branding everywhere, but it’s funded by the taxpayers of countries like Japan and Australia.”
Conroy said he had lobbied the ADB to improve its procurement processes – “to make sure they go for quality rather than the cheapest bid” – and to limit nationalised “branding” of projects, reforms to which it has agreed.
The ADB is a major development backer across the Pacific. Australia is the fund’s second-highest contributor after Japan.
Asked if he felt China was seeking to bolster its influence through multilateral organisations like the ADB, Conroy told the Guardian: “I think that’s a reasonable conclusion.
COMMENT – Gee, it’s almost as if the PRC was trying to surround Australia and reduce its influence in the region.
Taiwan Looks to New Sea-Drone Tech to Repel China
Joyu Wang, Wall Street Journal, June 28, 2025
China is quietly supplanting Russia as Cuba's main benefactor
Dave Sherwood, Reuters, June 30, 2025
Taiwan’s President Takes on China, and His Opponents, in Speaking Tour
Chris Buckley and Amy Chang Chien, New York Times, June 30, 2025
Human Rights and Religious Persecution
China Steals Language and Home Life from Tibetan Kids as Young as 4
Josh Chin and Niharika Mandhana, Wall Street Journal, June 28, 2025
Beijing is building a broad network of preschools across Tibetan areas, seeking to inculcate loyalty to the Chinese Communist Party early in life.
China has for at least two decades directed children in Tibet to state-run boarding schools at ever-younger ages, trying to gut Tibetan culture and blunt generations of opposition to Communist Party rule.
It didn’t work as well as Chinese leaders hoped.
Authorities frustrated by continued resistance to Beijing are now prying children as young as four years old from their homes—before they have a chance to fully absorb the Tibetan language and way of life.
Across Tibet, a mountainous region rich in natural resources where many people harbor dreams of independence, China is spending hundreds of millions of dollars to build schools, recognizing how social identity forms early in life. The education project includes a network of daylong preschools, where children are taught in Mandarin, and lessons emphasize Chinese culture.
The preschool classes offer a familiar menu of games, crafts, songs and stories. Yet beyond teaching basic skills, the lessons glorify the Communist Party and Chinese identity. Campus signs read, “I am a Chinese child, I love speaking Mandarin.” Teachers stage skits telling children their clothes, shoes and well-being are gifts from the party.
From there, most Tibetan students graduate into an expanded system of primary boarding schools, spanning grades one through six, which keep them away from home for weeks or months at a time. They study almost entirely in Mandarin and live under the supervision of teachers and wardens, including Han Chinese who don’t speak Tibetan.
Chinese officials in some Tibetan areas are experimenting with funneling children into boarding schools at the start of preschool, according to government documents, social-media posts and independent researchers.
The campaign reflects the convictions of Chinese leader Xi Jinping, who said the country needs to reach children as babies “so that the red gene seeps into their blood and permeates their hearts.”
The resistance of the Tibetan people, a religious and culturally distinct minority, has persisted under the influence of the current Dalai Lama, the spiritual leader of Tibetan Buddhism since the mid-20th century. He remains a potent force despite decades of propaganda, political crackdowns and education drives aimed at undermining his authority.
Beijing views the religious leader, who lives in exile in India, as a dangerous separatist. The Dalai Lama, who turns 90 in July, recently declared his reincarnation will take place outside China “in the free world,” setting the stage for a hearts-and-minds battle for the future of Tibet. That has added to the urgency of Chinese leaders racing to cultivate a generation of Tibetans loyal to Beijing rather than the religious leader’s successor.
Several Tibetans in their 20s lamented in interviews that China’s ongoing indoctrination of young children seems to be working.
One 21-year-old woman, who attended a Tibetan-language elementary school and went to boarding school in seventh grade, said her younger relatives entered Chinese boarding school as early as age 6. At the school, they learn entirely in Mandarin, she said, straining communication with their parents and grandparents, who understand very little of the language.
The woman, who left China last fall, said she has scolded younger children for speaking to one another in Mandarin. “Even if they speak Tibetan,” she said, “the first language that comes to their mind is Mandarin.”
Such experiences point to a remarkable change, said Tenzin Dorjee, a political scientist at Columbia University who studies Chinese ethnic policy. “This has never happened in Tibetan history,” he said. “Tibetans have never spoken to each other in Chinese.”
COMMENT – It was wrong when other countries tried to erase the cultural heritage of their minority populations and its equally wrong now for the PRC to be doing that against Tibetans and others.
Chinese Police Detain Dozens of Writers Over Gay Erotic Online Novels
Vivian Wang, New York Times, June 28, 2025
China, National Crackdown on Master Di Shen’s Buddhist Group
Dong Deming, Bitter Winter, June 30, 2025
Cheng Lei rediscovers her voice after 'cruelty' of Chinese detention
Sophie Mak, Nikkei Asia, June 29, 2025
Rights Defenders Criticize Upcoming Rollout of National Internet ID System
Arthur Kaufman, China Digital Times, June 30, 2025Xi’An Church of Abundance: Trial Against Pastors Starts with Fabricated “Victims”
Tao Niu, Bitter Winter, July 1, 2025
Devotees allegedly defrauded by the leaders insist they are not victims and that there was no fraud. The court refuses to hear them.
“Bitter Winter” has reported over the years on the persecution of the Church of Abundance (Fengsheng), a historical house church in Xi’an, Shaanxi, which has managed to survive and operate for around thirty years.
On June 20, 2022, the homes of several believers were raided. The church was accused of being a xie jiao or a “cult,” despite its mainstream theology. Authorities claimed that it had fraudulently collected donations. It has become routine for Chinese officials to assert that any donations gathered for a religious organization not affiliated with one of the five authorized religions are inherently obtained through fraudulent means.
On August 19, the Church of Abundance was officially dissolved, not as a xie jiao but as an “illegal social organization.” The church was instructed to stop its activities, or its members and pastors would risk arrest and detention. Pastor Lian Changnian, his son Pastor Lian Xuliang, and Sister Fu Juan were placed under “residential surveillance at a designated location.”
Relatives were later informed that the prisoners had been involved in activities that endangered national security, which led to restrictions on lawyers visiting them. In the meantime, Pastor Lian Changnian’s mental and physical health seriously deteriorated. After being committed for trial, the defendants were released on bail on April 12, 2025.
On June 24, 2025, the Baqiao District Court began the trial for the case. The individuals identified as “victims” of the alleged “fraud” requested the opportunity to testify, asserting that they are not “victims” and that no “fraud” has occurred. Their request was denied, prompting them to send a statement to the court and several human rights organizations.
COMMENT – The Chinese Communist Party is sworn to “protect” China from the harmful effects of foreign ideologies and cults…
… unless of course, that foreign ideology comes from a bunch of Germans and Russians in the form of Marxism-Leninism-Stalinism, then that foreign ideology and cult religion must be proselytized everywhere!
Industrial Policies and Economic Espionage
Hong Kong’s bull market leaves China behind
William Sandlund and Haohsiang Ko, Financial Times, July 1, 2025
As Debt Piles Up, Countries See Fiscal Relief as Political Leverage
Patricia Cohen, New York Times, July 1, 2025
At a summit meeting in Rome last month, Prime Minister Giorgia Meloni of Italy announced that the European Union was working on a multimillion-dollar plan to provide Africa with some debt relief. The move followed a $15.5 million bailout of Syria by Saudi Arabia and Qatar, erasing the war-torn country’s debt to the World Bank and helping a regional neighbor rebuild.
The steps are small given the magnitude of the crushing $8.8 trillion debt that weighs on poor and middle-income countries. Many of these nations spend more on interest payments than on schools and medical care.
Ideas for a more coordinated approach to debt and development financing will be discussed at a United Nations conference this week in Spain. But the outlook for comprehensive action is bleak. Twenty-five years ago, wealthy nations, including the United States, struck an extraordinary agreement to forgive hundreds of billions of dollars in debt owed by poor countries.
Today, President Trump’s retreat from multilateral organizations and relief programs, in addition to rising tensions between the United States and China, is hampering joint efforts to address the deepening sinkhole of debt.
But as the world’s wealthiest country withdraws, China could do more to relieve the strain on struggling economies, experts say.
No other country has lent more to Africa, Asia and Latin America than China. After a lending binge that began in the mid-2000s and gained momentum in the 2010s, China now accounts for nearly a third of loan repayments made by nations in these regions.
COMMENT – One of the reasons why the United States has withdrawn from these negotiations is that increasingly debt relief benefits the PRC, which refuses to be transparent about its lending and pursues deals in the Global South for geopolitical leverage, often using bribes to “purchase” elites in these countries.
Russia Base Metals Sales to China Surge, Signaling Deep Reliance
Bloomberg, June 30, 2025
One American’s Two-Year Quest to Move His Business Out of China
Hannah Miao, Wall Street Journal, June 29, 2025
Hong Kong on Track to Reclaim Global IPO Crown
Sherry Qin, Wall Street Journal, June 30, 2025
China PMI Signals Continued Decline in Manufacturing
Wall Street Journal, June 29, 2025
China’s manufacturing activity declined for the third straight month in June as trade frictions with the U.S. continued to weigh on the world’s second-largest economy.
The official manufacturing purchasing managers index for June–the first full month after the China-U.S. trade truce was reached in London–came in at 49.7, edging up from May’s 49.5 and matching the 49.7 tipped by a Wall Street Journal poll of economists, according to data released by the National Bureau of Statistics on Monday.
A reading above 50 suggests an expansion in manufacturing while a reading below that suggests a contraction.
Monday’s print followed a run data suggesting the Chinese economy had lost some momentum in May amid the remaining U.S. tariffs slapped on Chinese goods despite the trade detente.
China’s manufacturing activity shrinks for third straight month
Thomas Hale, Financial Times, June 30, 2025
China’s tighter export controls squeeze wider range of rare earths
Edward White, Financial Times, June 30, 2025
US shoppers ditch Shein and Temu as Trump closes tax loophole
Laura Onita, Financial Times, June 30, 2025
Why Rare Earths Are China’s Trump Card in Trade War With US
Joe Deaux, Bloomberg, June 27, 2025
India's Sona Comstar plans domestic magnet production to cut China imports
Aditi Shah, Reuters, June 30, 2025
‘A billion people backing you’: China transfixed as Musk turns against Trump
Amy Hawkins, The Guardian, June 30, 2025
Cyber and Information Technology
Trump plans executive orders to power AI growth in race with China
Valerie Volcovici and Jarrett Renshaw, Reuters, June 28, 2025
DeepSeek faces ban from Apple, Google app stores in Germany
Hakan Ersen and Miranda Murray, Reuters, June 28, 2025
China Shows Off Tech Resilience in Face of Trump Export Controls
Bloomberg, June 30, 2025
China's Evolving Industrial Policy for AI
Kyle Chan, et al., Rand, June 26, 2025
AI is controversial in Hollywood. For China’s film business, it’s no holds barred
Wendy Lee, L.A. Times, June 30, 2025
China's AI Sweep Fizzles
Alex Colville, China Media Project, July 2, 2025
Military and Security Threats
Chalmers hits China-linked companies with landmark lawsuit over crucial military minerals
Mike Foley and Nick Bonyhady, Sydney Morning Herald, June 26, 2025
No Safe Harbor, Evaluating the Risk of China's Port Projects in Latin America and the Caribbean
Henry Ziemer, et al., CSIS, June 26, 2025
Iran war and 'Trump doctrine' blur China's multipolar vision
Ken Moriyasu and Stella Yifan Xie, Nikkei Asia, June 27, 2025
Key US Ally Quietly Prepares for China's Pacific War with America
John Feng, Newsweek, June 26, 2025
China removes senior General, naval chief and top scientist in major purge in military
Deccan Herald, June 27, 2025
China steps up deep-sea science role with UN-backed oceans exploration project
Edith Mao, South China Morning Post, June 30, 2025
One Belt, One Road Strategy
China Spares No Expense for Latin America and Caribbean Ties
Matthew Fulco, James Town, June 21, 2025
Losing the Long Game: China Advances as U.S. Refocuses on the Middle East
Anthony Quitugua, Real Clear Defense, June 30, 2025
Ghana at loggerheads with China over rampant illegal gold mining
Jevans Nyabiage, South China Morning Post, June 29, 2025
Opinion
Watching China in Europe—July 2025
Noah Barkin, GMF, July 1, 2025
An Emboldened China
When EU leaders agreed back in April to hold a late-July summit with China, it looked like Brussels would be speaking to Beijing from a position of unusual strength. The United States and China were in an escalating trade war that would push American tariffs up to dizzying heights of 145%. Europe had been granted a 90-day reprieve from Donald Trump’s “Liberation Day” duties, leaving the bloc in a far more comfortable position than Beijing. By the time EU leaders would sit down with their Chinese counterparts, the thinking went in the spring, Beijing would be humbled by the Trump trade war and Europe would have finalized a deal with the US administration to reduce transatlantic tariffs. The expectation in Brussels was that joint action against China would be part of that deal.
Three months later, the picture looks very different. The United States and China, after meetings in Geneva and London, have agreed to a shaky trade truce that has pushed down bilateral tariffs and left Beijing feeling emboldened. It was Trump, after all, who flinched (not once but twice) when the trade war got hot. By imposing curbs on rare earth exports, China demonstrated an ability and willingness to inflict economic pain on Washington and its allies. No one knows how long the latest US-China détente will last, but Trump, according to Nikkei Asia, is now planning a trip to China with dozens of American CEOs in tow. If the trip happens, it would be another symbolic victory for Beijing.
Flailing About
Europe, meanwhile, has yet to reach a trade agreement with the United States. In recent weeks, Brussels has come around to the view that any deal with Washington will be limited in scope, leaving US tariffs of 10%-20% in place. European leaders just endured humiliating G7 and NATO summits, where they were forced to pander to a preening Trump. Neither summit produced a statement condemning China by name for its support of Russia or its predatory economic policies. Unlike Joe Biden, whose administration spent years pressing allies to call out China, Trump doesn’t seem to care.
This is the challenging situation in which Europe finds itself with the EU-China summit looming on July 24-25. The transatlantic front against China, which was a work in progress under Biden, has crumbled under Trump, leaving Europe rudderless and flailing for a strategy. In one camp, there is Trade Commissioner Maroš Šefčovič, who appears open to a package deal under which Brussels would remove its tariffs on Chinese electric vehicles (EVs) in exchange for the withdrawal of Beijing’s retaliatory measures (targeting European cognac, pork, and dairy), guarantees on the flow of rare earths, and Chinese pledges to make value-added investments in Europe.
Coercion and Blackmail
In the other camp are veteran EU trade negotiators and diplomats. They believe that the bloc would be caving in to Chinese coercion by accepting such a deal and are opposed to any agreement that rewards Beijing for its weaponizing of rare earths through European concessions in other areas. “We are not going to give the shop away. We are not going to throw our signature defensive trade measure out the window,” said a senior EU official, referring to the EV tariffs. This camp believes the summit is unlikely to produce more than a modest joint statement on combating climate change. “We have entered a period in which we will be rebalancing the relationship with China through unilateral measures,” the senior EU official said. “Our response will be asymmetric. They won’t like it.”
Where on this is European Commission President Ursula von der Leyen, whose stance will ultimately determine where the EU lands? Back in January, as Trump was moving into the White House, she opened the door to closer cooperation with Beijing. But since then, she and her team have (with little success so far) prioritized trade negotiations with Washington. At the G7 summit in Canada last month, in Trump’s presence, she issued one of her strongest rebukes of China to date, accusing Beijing of “coercion” and “blackmail” in restricting exports of rare earths. The remarks drew a sharp response from China.
Business Roundtable
Despite the tensions, I understand that Brussels has dropped its long-standing opposition to holding a business roundtable on the margins of the EU-China summit. On July 25, in the city of Hefei, von der Leyen and Chinese Premier Li Qiang are expected to participate in the first such meeting since 2018, when their predecessors Jean-Claude Juncker and Li Keqiang met with European business executives. The hope in Brussels is that the meeting will give the European business community an opportunity to air its concerns about market conditions in China directly to Li. The EU has insisted, for example, that the European Chamber of Commerce in China, which has been openly critical of the business environment, participate. The risk, as one German business representative told me, is that individual companies will clam up out of fear of retaliation.
There are other risks. The Chinese, I am told, are trying to turn the meeting into a feel-good celebration of EU-China business ties, replete with a signing ceremony. They have proposed a visit to Volkswagen’s new production and development hub in Hefei, a poster child for the German auto industry’s high-risk bet on China. But as VW pours billions of euros into Hefei, it is slashing jobs at home. This is not the kind of backdrop that Brussels had in mind, and EU officials are pushing back. “Holding a business meeting like this comes with significant risks,” a European diplomat acknowledged. “China is on its home turf. They will be doing all they can to turn this into a win-win affair.”
Deep State
Brussels is not the only European capital sending mixed messages on China. In Berlin, German Chancellor Friedrich Merz is talking a tough game about reducing German dependencies and protecting critical infrastructure. But it is unclear, months into his new government, who will be leading this economic security push. Nor is it clear whether hundreds of billions of euros in new public funds for defense, infrastructure, and cybersecurity will be used to address some glaring China-related vulnerabilities. A former Deutsche Telekom and Vodafone executive has been tapped to run a new digital ministry, dimming hopes that the government could accelerate the phaseout of Huawei from its 5G telecommunications network. The company’s role as a key supplier for state-owned rail operator Deutsche Bahn also seems secure after one of the company’s longtime defenders in Berlin, Stefan Schnorr, was retained in a senior position at the transport ministry.
Economic Affairs and Energy Minister Katherina Reiche has asked staff to come up with proposals for a national economic security strategy, a policy promise set out in the German coalition agreement. Her ministry has been organizing industry workshops on sensitive technologies, from artificial intelligence and biotech to quantum and semiconductors. But some of Reiche’s key appointments have unsettled officials in other Berlin ministries who were hoping for new blood, and for new thinking on Germany’s economic model and continued reliance on China. “So far, we have not seen a clear strategic line from Reiche’s ministry on China,” one official lamented.
Wind Farm Test
That won’t matter if Merz, who is planning to make his first trip to China as chancellor in the autumn, provides German ministries with clear marching orders. A key test looms with a decision to approve the deployment of Chinese turbines in a major North Sea wind farm project. A report commissioned by the defense ministry earlier this year warned against the use of Chinese suppliers, arguing that they could hand Beijing “considerable blackmail potential”, including an ability to shut down turbines remotely. The Federal Maritime and Hydrographic Agency, an obscure government office in Hamburg, is expected to make its recommendation soon. The decision will say a lot about whether the government takes its own rhetoric about critical infrastructure seriously. “Will they have the guts to take a political decision?” one official asked. “The risk is that we have a repeat of the 5G saga, where the politicians look for technical solutions and push decisions down to the bureaucrats.”
There are also positive signs in Berlin. Foreign Minister Johann Wadephul has made it clear internally that his ministry should focus on implementing Germany’s 2023 China strategy, rather than revising it, as the coalition agreement foolishly promised. The German and French foreign ministries are coordinating more closely on China policy, including on the messages that will be transmitted to Chinese Foreign Minister Wang Yi when he passes through Berlin and Paris this week, following a first stop in Brussels. This is encouraging, but more is needed. The European Commission has been left to do much of the heavy lifting on China in recent years. Regardless of how the EU-China summit plays out, it is time for the big European member states to step up.
Iran Strike Was a Triumph That Showed American Weakness
Hal Brands, AEI, July 2, 2025
It’s useful to be reminded, occasionally, that there’s only one superpower. Operation Midnight Hammer, the globe-spanning strike against Iran’s nuclear program, was a demonstration of power projection that America’s rivals can only envy. Unfortunately, the operation is also testament to how badly US military power is being strained, and how unserious the nation’s debate on defense strategy has become.
That debate has featured, in recent years, two warring camps. In the first are those who warn that the threat of war with China is rising and that interventions elsewhere make it harder to prepare for that fight. In the second are those who argue that the US has vital stakes outside the western Pacific and that a global power can’t simply quit crucial regions such as the Middle East and Eastern Europe. Oddly, recent events show that both groups have a point.
President Donald Trump may style himself a peacemaker. But in just five months, he managed to fight two Middle Eastern wars. In the spring, he ordered a vicious bombing campaign to halt Houthi attacks in the Red Sea. Last month, the US supported, and ultimately joined, Israel’s war against Iran.
Those decisions caused controversy within a Make America Great Again movement that is often skeptical of Middle Eastern interventions. Yet the attacks nonetheless occurred because the US does have important interests there — preventing an Iranian bomb, beating back grievous challenges to global trade — and no other country can vindicate them when they are challenged.
Trump thus joins that long, bipartisan line of presidents who tried and failed to deprioritize the Middle East. This probably isn’t the last time he’ll send forces surging there. If Iran quickly reconstitutes its nuclear program, the next crisis could be just weeks or months away. But if it’s foolish to think that the Middle East will leave the US alone, it’s also foolish to think that American interventions there come cheap.
Since taking office, Trump has sent extra aircraft carriers and warships to the region. He has used scarce sea- and air-launched missiles against the Houthis and Iran. Dating back to Joe Biden’s presidency, the Pentagon has flooded the region with additional air and missile defenses. In May, the US also carried out one of the largest airstrikes in the Navy’s history against extremists in Somalia, just across the Gulf of Aden. Middle Eastern wars consume real capabilities and impose real costs.
An aircraft carrier rushed to the region now may not be available for the next crisis. Missiles fired today may not be replaced by the time the next war breaks out. The Navy’s top admiral recently warned that the US is blowing through missile interceptors, one of the most crucial capabilities in modern warfare, at an “alarming rate.”
Secretary of Defense Pete Hegseth declared, several weeks ago, that a Chinese assault on Taiwan could be imminent. The Chinese military regularly carries out complex, aggressive exercises — US officials term them “rehearsals” — for a blockade or invasion. Beijing is ramping up pressure on Japan and the Philippines; its navy is conducting drills and demonstrating capabilities from the Miyako Strait in southern Japan to the Tasman Sea south of Australia.
Underpinning this activity is a continuing, pell-mell buildup of conventional and nuclear forces. “The trajectory must change,” says Admiral Samuel Paparo, the head of US Indo-Pacific Command: the US and its allies are running out of time.
Perhaps unexpected decisiveness will buy extra deterrence. Midnight Hammer probably made Chinese leader Xi Jinping wonder how fierce a response he might get to some provocation in the Taiwan Strait. But deterrence requires capabilities, not just credibility, and the balance of the former is changing in a dangerous way.
The US defense debate is afflicted by two deadly illusions. The first is that the US can simply decide to stop engaging outside the Pacific. The second is that America has enough military power for a rivalrous, war-prone world.
There is, theoretically, an answer: Significant, sustained spending increases. These would allow the US to expand munitions stockpiles, rebuild defense industrial capacity and narrow the commitments-to-capabilities gap. But for too long leaders of both parties have declined to make the requisite hard choices, involving taxation or entitlements. They have frittered away priceless, irretrievable years.
The prospects for an outbreak of seriousness are mixed, at best. The Senate has passed a welcome bump of more than $150 billion in defense spending. But the vehicle is a one-time reconciliation bill that leaves future levels of spending uncertain — and includes deficit-expanding provisions that will squeeze long-term budgetary room for defense.
Nearly a decade ago, former under secretary of defense Eric Edelman and I wrote that the US was sliding toward a strategy of bluff: trying to do too much with too little, and thereby leaving itself vulnerable to catastrophe if the bluff is ever called. Midnight Hammer is an impressive display of US muscle. It’s also a warning of how badly overstretched the sole superpower has become.
Australia Can’t Have Its Geopolitics Both Ways
James Curran, Foreign Policy, July 1, 2025
At last week’s NATO meeting in The Hague, U.S. President Donald Trump declared that the United States’ European partners had pledged to raise their defense spending to 5 percent of GDP by 2035. Irrespective of whether the leaders of these countries can now marshal the popular and fiscal will to make that commitment a reality, Washington under Trump has forced its NATO partners to step up and at least appear to take a stronger line in defending themselves.
The stakes are arguably even higher for American allies in Asia, because they are much closer to an assertive China. The Trump administration has already clarified that what it demanded of Europe it now expects from its Asian partners. For one ally in particular, Australia, that higher defense ask is ushering in a period of discomfort in relations with Washington. For a long time, Canberra has walked a tightrope strung delicately between a trading relationship with China and a security alliance with the United States. Now, though, the debate over Australia’s strategic options is becoming more urgent and more fraught. Can Australia still have it all—or will it finally be forced to choose between its biggest trading partner and its security guarantor?
Since its election in May 2022, Prime Minister Anthony Albanese’s Labor government has touted its alliance credentials through its fervent commitment to AUKUS, along with further force posture measures aimed at deepening the integration of its armed forces with the United States’. Arguably not since World War II has the American military footprint in Australia been so big; the country has made itself critical to U.S. warfighting capacity in Asia.
At the same time, Canberra has adopted a policy of “stabilization” with China after a rocky period in relations. In return, China has lifted punitive trade restrictions it had placed on key Australian export industries such as lobster, barley, wine, and coal. High-level meetings and exchanges between Australian and Chinese leaders have also resumed. It now looks as if Albanese will meet with Chinese President Xi Jinping before he sits down with Trump.
But Washington now looks to be asking Australia to pick sides. During a major speech at the Shangri-La Dialogue in Singapore in late May, U.S. Defense Secretary Pete Hegseth started to lay out the Trump administration’s geopolitical cards for Asia. His message was blunt: Washington no longer buys the historic hedge. Countries like Australia who balance economic ties with China and defense relationships with the U.S. are apparently a potential drag on decision-making in a time of military crisis. A long-standing American frustration with Australia—that it relies too heavily on China for its economic prosperity—is once more out in the open.
On the sidelines of that gathering, Hegseth also told his Australian counterpart, Defense Minister Richard Marles, that he expects Canberra’s defense spending to reach 3.5 percent of GDP. As if to make sure the message was heard, the Pentagon then initiated a 30-day review of the AUKUS agreement, a move on which interpretations are divided. Either the administration is preparing to back away from transferring two to three Virginia-class submarines to Australia in the early 2030s, as foreshadowed in the agreement, or it will use the review to prod Australia to contribute even more financially to the United States’ submarine industrial base.
Meanwhile, Albanese is sticking to his government’s promise to increase defense spending to just 2.3 percent of GDP by 2032. For the moment, the United States will have to accept that Albanese can’t be kicked around, if for no other reason than they need the American installations and intelligence facilities on Australian soil. Marles’s recent statement that Australia’s geography is now more important than ever to a possible U.S.-China conflict might have been made specifically to divert the attention of Washington away from percentages of GDP and onto the brass tacks of how much Australia’s real estate is worth in any future military contingency with China.
Washington would likely prefer a return to the Australia of only a few years ago, which proclaimed itself to be a model for the rest of the world in standing up to Xi’s China. Canberra’s aggressive stance was not only noticed, but it was also rewarded. In early 2021, Trump’s deputy national security advisor, Matt Pottinger, publicly credited Australia for stiffening Washington’s approach in the crafting of its own strategy for confronting China in Asia. In June that year, then-Australian Prime Minister Scott Morrison attended a G-7 summit in Cornwall where he distributed to leaders a list of demands that the Chinese Embassy in Australia had made about the changes it sought to some of the nation’s democratic institutions and practices. He was, in effect, displaying Australia’s credentials as the frontline state for taking on China. By this time, too, Morrison had already set in train the secret discussions which would result in Australia cancelling a deal with France to build its new class of diesel-powered submarines. But it was at that same summit in Cornwall where he and British prime minister Boris Johnson gained agreement from then-U.S. President Joe Biden that the United States would, for the first time since 1958, share sensitive nuclear technology with a close ally, enabling Australia to eventually acquire a nuclear submarine capability under AUKUS.
Four years later, however, Australian China policy is transformed. Albanese, recently elected to a second term in office with a vastly increased majority in the Australian parliament, regularly points to the success of stabilizing relations with Beijing. And almost every time he mentions China, Albanese stresses that it is Australia’s largest trading partner. At its core, stabilization indicates a certain civility and common sense between the two countries. Albanese, alongside Foreign Minister Penny Wong and Trade Minister Don Farrell, have put down the megaphone of their predecessors and stated, almost in unison, that Australia will “cooperate [with China] where we can, disagree where we must, and engage in the national interest.” The phrase is an adaptation of the language the Biden administration used on China when it first came to office, but the Australian government has adopted it as its own.
Consequently, when Chinese Premier Li Qiang visited Australia in June last year, the joint leaders’ statement was a blizzard of new memoranda of understandings (MoU), along with continued or expanded joint dialogues on trade, climate change, energy and the environment, and border enforcement, among others. An MoU on defense and maritime affairs will result in the two countries agreeing to improve military communication following dangerous incidents in the East China and Yellow seas in recent years. These MoUs may represent the new barometer for movement in the relationship, but they are merely diplomatic cladding around the two countries’ ongoing economic complementarity. Even during the period when ties sunk to their lowest political ebb, from 2017 to 2023, Canberra’s exports to China nearly doubled from AUD$116 billion to AUD$219 billion.
Washington’s call for a higher defense spend is not the only new pressure on stabilization. In Singapore, Hegseth also appeared to imply that Asian allies’ outward trade should be limited with China. That’s as much a red line for Australia as it is for other key American allies and partners. If that is the pattern the Trump administration is establishing, Australia will need a rebuttal. The prime minister and his negotiators might point to how the United States took advantage of Chinese restrictions on beef to expand American market share during China’s economic coercion of Australia.
So far, the Australians—like another Indo-Pacific ally, the Japanese—are not budging. In response to Trump’s decision to raise the tariff on Australian steel from 25 percent to 50 percent, Farrell has ruled out retaliation but made clear Australia’s resolve. He emphasized to journalists that “Chinese trade is almost 10 times more valuable to Australia” than Canberra’s trade with the U.S., which in 2023 sat at about $34 billion. And he added that Canberra “doesn’t want to do less business with China, we want to do more business with China.” Just in case his American interlocutors had not heard the message, he then declared, “We’ll make decisions about how we continue to engage with China based on our national interests and not on what the Americans may or may not want.” This is strong language from an ally that still expects America to come to its assistance in a time of military need.
Even the appearance of a group of Chinese naval vessels, and later a Chinese research vessel, off the Australian coastline earlier this year showed that the government was sticking to its stabilization line. Speaking about the presence of the research vessel, Albanese told reporters he “would prefer that it wasn’t there,” but added that “we live in circumstances where, just as Australia has vessels in the South China Sea and vessels in the Taiwan Strait and a range of areas, this vessel is there.” If a Japanese prime minister made a similar comment, it would likely provide grounds for resignation.
Stabilization was never intended as a synonym for detente. But it does appear as if the policy is going to prove difficult to sustain: not only beneath the glare of Washington asking much harder questions of its allies, but with China more prepared to brandish its military reach into Australian waters. Perhaps the greater paradox is between what Australia seeks to achieve at the level of bilateral relations and what is occurring in the wider world.
Calls by Canberra for China to pursue a “stable order” in the region and the world are rendered less effective since Australia assumes it can set the point of where that stability lies: namely, with the preservation of U.S. primacy in Asia. That is clearly unacceptable to China. Only with the perspective of time, then, will it be clear whether stabilization was part of a system of off-ramps to avoid military conflict, or a temporary hiatus in a climate of ongoing strategic febrility and contest.
In its first term, the Albanese government committed to the search for regional “strategic equilibrium” and the emergence of a multilateral Asia, provided the U.S. remained at its center. That was code for Washington maintaining its trade, military, and investment protection and influence among all the East and Southeast Asian allies. But the Trump shocks bring new pressures and problems to this approach and the assumptions driving it. Canberra’s first priority has to be to join with Japan, South Korea, Indonesia, and other members of the Association of Southeast Asian Nations, and to forge with Europe, Canada, and developing nations a path to restore a rules-based trading regime—even if the United States absents itself. And if Trump becomes totally untrustworthy, Australia’s national security establishment will also have to contemplate the possibility that this island continent in the South Pacific may well find itself home alone.
COMMENT – The Albanese government portrays its unwillingness to listen to Washington about increasing its defense spending as an act of independence (Prime Minister Albanese proclaimed as much on Saturday in a speech celebrating John Curtin, Australian Labour’s WWII hero). But Albanese has independence all wrong… by refusing to fund Australia’s own defense (and hence make Australia even more vulnerable to coercion), Albanese undermines Australian independence.
The irony is that Prime Minister John Curtin understood this dynamic completely as he spearheaded a massive effort to prepare Australia’s defenses… Australia’s defense spending reached 34% of GDP during his premiership.
I bet had Curtin survived the war (like FDR, Curtin died in 1945 before the war against Japan ended), he would have advocated for greater defense spending on deterrence, rather than the massive outlays that Australia was forced to make once deterrence failed.
I understand that it is politically popular in Australia to be seen as giving the finger to the Trump Administration… but what the Trump Administration is advocating would make Australia more, NOT less, independent. Greater Australian defense spending protects Australian sovereignty, even if Washington is the one asking Canberra to do it.
By refusing to act responsibly in the face of growing geopolitical threats, the Albanese Government is willfully undermining the legacy of John Curtin.
The vulnerabilities holding back Chinese industry
Edward White, Financial Times, July 1, 2025
China’s threat to Tibet’s future should be a global concern
Brahma Chellaney, The Hill, June 27, 2025
Humanoid Robots Need to Avoid Chinese Domination
Thomas Black, Bloomberg, June 30, 2025
The US can’t afford to repeat the mistake it made in allowing China to take over the drone industry.
Several US makers of humanoid robots designed for general purposes are testing them in real-life settings, improving them and preparing for mass production. As this technology progresses and begins to populate factory and warehouse floors, authorities should make sure the US doesn’t make the same mistakes it did with the drone industry.
Producers of these machines, such as Agility Robotics, Apptronik and Tesla Inc., are at about the same stage as drones were about 15 years ago. Drones were being built and tested, and people were trying to figure out the use cases, when the industry was blown away in 2013 by the Phantom 2 Vision drone made by a Chinese company known as DJI. This drone came with a built-in camera, a ready-to-fly ease of operation, and a low price.
While DJI’s drones were sweeping the US market, it wasn’t yet clear that they would become essential on the battlefield, and the alarm had not sounded over China’s aggressive military buildup. These concerns became crystalized after Russia invaded Ukraine and China backed Russia; a pandemic originating in China swept the globe, exposing US dependence on Chinese goods; a Chinese spy balloon that drifted across the US symbolized a nation emboldened by a massive military expansion; and a tariff war tipped China’s hand that it would use the supply chain as a cudgel in areas such as rare-earth products.
What should the US have done differently to support its drone makers and supply chain? How could drone companies have been protected from enormous Chinese government subsidies that allow prices to be undercut? Whatever the answers are, they should be applied to humanoid robots.
This industry needs a shield as broad as the one that is protecting domestic automakers from the inexpensive Chinese electric vehicles that are flooding the globe. These robots — often called Physical AI or Embodied AI — will play a key role in the economy whether unions or luddites like it or not.
The startups that are poised to begin mass production shouldn’t be left undefended against the Chinese government’s playbook of subsidizing its manufacturers and robot purchasers to jump-start the industry and then unleashing this overcapacity onto the world. That has been the blueprint for everything from steel and ships to EVs and drones.
A Chinese state-backed venture capital fund plans to raise $138 billion over 20 years to fuel the growth of AI-related areas, such as robots and embodied intelligence, according to a RAND report.
These imported drones will be controlled by Chinese AI, such as DeepSeek, and collect copious data. Europe is already protecting itself. German authorities warned Apple Inc. And Google’s Android that having DeepSeek’s app on their stores is illegal content because DeepSeek ignored a request in May to either withdraw its apps in Germany or put in place safeguards when collecting local users’ data and transmitting it to China, according to a Bloomberg News report.
Chinese companies such as Unitree Robotics are already building and selling humanoid robots. The price for the G1 — which stands 4 feet, 4 inches tall — starts on its website at $16,000. At the online RoboShop, one of its US retail partners, the same robot sells for $27,300. Unitree also make a headless, four-legged version that costs $2,790 at the RoboShop. This canine robot must be popular in the US because RoboShop’s website says it’s “re-stocking soon.”
Although these machines seem like novelties now, this is how the drone onslaught began. The stakes are higher because the potential addressable market is much larger. If these machines work out, they will spread from factories to more public places, such as the kitchen of fast-foot restaurants — and even the home.
This is an opportunity for domestic companies to build manufacturing and supply-chain capabilities for these versatile robots. Agility Robotics has opened a plant in Salem, Oregon, to assemble the 5,000 parts that make up its Digit robot. Apptronik raised $350 million earlier this year and has teamed up with the contract manufacturer Jabil Inc. to make its Apollo robot, which will be used in some of Jabil’s manufacturing operations.
Agility sources about 80% of its components from the US; the rest come from Europe and Asia, said Melonee Wise, chief product officer. “We don’t see scaled humanoid production in the US as a challenge at all,” she said in an e-mail response to questions.
Industrial robotics was invented in the US with the first Unimate robot prototype installed in a General Motors Co. plant in 1959. Unimation Inc., the maker of that robot, began mass-producing them in 1961, and the clunky, hydraulic-powered robots became popular at auto plants for tasks like spot welding.
Europe, mostly Germany and Switzerland, and Japan embraced robots more enthusiastically, and those countries came to dominate industrial robot manufacturing and supply chains, giving rise to companies such as Fanuc Corp. and ABB Ltd. Unimation was bought by Westinghouse in 1983 and then sold about five years later to a Swiss company.
The supply chain for humanoid robots is distinct from the high-precision actuators required for industrial-robot production, which must repeat an exact motion for thousands of hours. Austin-based Apptronik is seeking to tap into suppliers for automotive and other industries in the US and Mexico to assemble its robots and hold costs down.
“The Texas-Mexico corridor and the supply chains that already existed there could be leveraged to build a robotic supply chain,” Chief Executive Officer Jeff Cardenas said in an interview.
Adam Bry, the co-founder and CEO of US drone-maker Skydio, can attest to the difficulties of trying to wrestle back market share after the Chinese drones dominated the US market. The San Mateo, California, company is one of the few startups that survived and is targeting as customers the military and government agencies that are trying to wean themselves off Chinese drones, also known as Unmanned Aircraft Systems. That effort got a boost from an executive order earlier this month that said “all agencies shall prioritize the integration of UAS manufactured in the United States.”
After Skydio sold drones to Taiwan’s National Fire Agency, China last year cut supplies of batteries to Skydio. In an October blog post to customers, Bry said his company was targeted because it’s the largest drone company outside of China. “If there was ever any doubt, this action makes clear that the Chinese government will use supply chains as a weapon to advance their interests over ours,” Bry wrote. “This is an attempt to eliminate the leading American drone company and deepen the world’s dependence on Chinese drone suppliers.”
Let’s hope the lesson of the drone industry has been learned and that history won’t repeat itself with humanoid robots.
COMMENT - My sense is that dominance in drones and electronics manufacturing will give the PRC a huge head start in this field.
An Industrial Policy with American Characteristics
Damien Ma and Lizzi C. Lee, Foreign Affairs, July 1, 2025
A resurgent China should do the hard work now
Eswar Prasad, Financial Times, July 1, 2025
CRINK rethink: China, Russia, Iran, North Korea are no 'axis of evil'
William Matthews, Nikkei Asia, July 1, 2025
Just when Trump thought he was out, Iran pulls him back in
Richard Heydarian, Nikkei Asia, June 30, 2025
Is Xi’s Grip Holding?
David Bandurski, China Media Project, June 26, 2025