So… what do we do now?

Accommodating to the post-RBIO and Beijing’s No Leaf Clover

Friends,

This week Pope Francis passed away. While I did not agree with his outreach to the Chinese Communist Party, which abandoned Catholics in China who had remained loyal to the Vatican, Pope Francis was a deeply compassionate leader and someone worthy of emulation.

Watching the Pontiff’s funeral left me with the impression that the Bishop of Rome is still a critical figure, who can bring together people and their in ways that no one else can.

From Zelenskyy, Trump speak in Rome in first meeting since Oval Office bust-up, Politico, April 26, 2025

We lost an important voice for peace, and I mourn Pope Francis’ passing.

***

Speaking mourning for something that is lost, I think we can now admit to ourselves that the Rules-based, International Order (RBIO) is gone. In its place, an international order predicated on power is emerging. To varying degrees, countries, investors, and companies are coming to grips with this new order.

My commentary this week will try to analyze these dynamics. Love it or hate it, the RBIO is gone… what emerges will have different winners and losers.

Multinational Corporations and their investors will need to change the most.

The biggest impact on the passing of the RBIO will be on the entire concept behind multinational corporations and the behavior of their investors and the financial industry.

I just finished reading Niall Ferguson’s 2010 book High Financier: The Lives and Time of Siegmund Warburg. It is a biography of the German, turned British, financier Siegmund Warburg, who could be called the grandfather of globalization.

The book covers the post-World War II period of transatlantic cooperation and the converging of business and financial practices across the West. The collapse of the Soviet Union and the ending of the First Cold War brought about the conditions to transform what had largely been a transatlantic set of trends into a global set of trends.

This meant that American and European convergence expanded to include the rest of the world. Drawing the PRC into this grand effort and opening its markets and productive capacities became a major organizing principal for financial and business leaders.

Those financial and business leaders adapted their corporations from ones that had been organized along national lines, creating supply chains and markets in their home countries, to corporations organized to span multiple countries, creating supply chains and markets that spanned regions and the world.

Adapting national companies into multinational companies aligned with, and reinforced, the geopolitical ambitions to create a globalized set of rules and norms to make interstate relations more peaceful and to enable development in poorer parts of the world.

Business leaders and their investors now face some very different geopolitical conditions. Regionalization and nationalization will likely override globalization, as countries seek to protect themselves from those who don’t play by the rules (and since they don’t have an authority who can enforce those rules… sorry Geneva, no one listens to you).

This change in geopolitical conditions will create opportunities for new business models to disrupt the existing multinational incumbents. Perhaps some of those multinational incumbents will successfully adapt to the new geopolitical conditions, but what is more likely is that new firms (ones who lack the cultural and financial burdens of being multinational) will disrupt the incumbents and replace them.

This won’t happen immediately or in the same way in every industry sector, but those investors who perceive when and where these changes will take place, and then make bold bets to capitalize on these changes, will become very wealthy.

Those who cling to the old order and refuse to adapt will suffer huge losses.

The Chinese Communist Party should be very proud of themselves…

Rather than the RBIO forcing them to adapt both economically and politically, the Party has withstood the twin pressures of “Engagement” and “Globalization” to maintain their nationalistic model. Given their size and importance inside the global trading system, their refusal to adapt both economically and politically has brought down the rules-based system. The United States, Europe, and others wanted the PRC to be a “responsible stakeholder” and they offered a very good deal… but that “deal” entailed political reforms that would have mortally wounded the CCP, so they rejected it.

It has been nearly two decades since then Deputy Secretary of State Robert Zoellick gave his famous responsible stakeholder speech at a gala of the National Committee on U.S.-China Relations. Reading that speech now seems like something from an entirely different era.

But what looks like the soothing light at the end of the tunnel may be a freight train.

(cut to Metallica’s No Leaf Clover)

The problem for Beijing is that their economic model, with its dependence on exports, focus on heavy industry and technology, and extremely low consumption by Chinese citizens, is built on the continued existence of a rules-based, international order.

By refusing to make the economic and political reforms required of being a responsible stakeholder in the RBIO, Beijing has saved the Party from one threat, but the Party has opened itself up to another potent threat: frustration by the Chinese people over the economic incompetence of their leaders.

By destroying the RBIO, Chinese Communist Party leaders have made their own task of the “Great Rejunvenation of the Chinese Nation” much more difficult given how dependent the Chinese economy is on the rules they have so flagrantly undermined.

Europe will be hard pressed to adapt.

Just like those Multinational corporations who optimized themselves for a particular set of geopolitical conditions, believing that “the world is flat” or that we had reached the “end of history,” Europe’s economic and political model is premised on the geopolitical conditions of the RBIO. Given the nature of European politics and the need to achieve unanimity for changes, it is difficult to see how they will adapt effectively to these new conditions. Like incumbent Multinational corporations, they will likely cling too long to the hope that a political change in Washington will rescue them from having to make costly decisions. Others will move faster and take advantage of the opportunities that come from the end of one era and the beginning of another.

I wish there was a way for the Europeans to avoid this fate, but I’m increasingly skeptical that they can.

India is relatively well positioned to adapt.

The political and economic conditions of the RBIO were difficult for India to adapt to. While the country certainly made impressive strides over the past three decades, India did not do as well as the PRC and it struggled to open itself to the rest of the world. With the ending of the RBIO and domestic political leadership that is well-positioned to implement changes, India seems like it stands to be the biggest winner from this new era.

If India can hammer out a political consensus across its parties to enable Indian citizens to become larger and larger consumers of what they produce, then Delhi will likely avoid the challenges that will get worse for their counterparts in Beijing.

The United States is relatively well positioned to adapt.

On one level the United States has an Administration that is philosophically capable of imagining this change and engineering a new system that is purpose-built for the existing conditions. The United States is also relatively less dependent on exports to drive its economy than others.

But on another level, the level of governing capacity, the Trump Administration is not well suited.

We can see these two competing strains across Departments and Agencies, but I want to focus on one.

Ben Domenech wrote this piece in The Spectator this week that deserves some attention from the Trump Administration, lest the leadership problems in the Department of Defense metastasize into something that our adversaries interpret as an opportunity to use military force to achieve their goals.

• What Pete Hegseth and his warfighters learned about Washington

  Ben Domenech, The Spectator, April 23, 2025

“The DoD team may have a surplus of military bros who come across as crass and unprofessional, but that’s little different from a DoGE team of incredibly accomplished people whose brilliant minds also make it difficult to see the human side of their work as something more than just moving around so many cogs. It’s not enough to be on the team, which these dismissed aides insist they still are. You also have to be good at your job – a job which currently requires a completely different set of skills than the ones used on the battlefield or in Silicon Valley.

Economist Steven Levitt has a line that comes to mind: “Just because you’re great at something doesn’t mean you’re good at everything.” Being excellent at engineering or operations can make you a billionaire or a badass. No matter how impressive the background, it doesn’t automatically grant you the necessary knowledge to navigate the swamps of Washington. That requires people who possess a different set of skills, and finding them soon could be the difference between success and failure for the government reform mission of this administration.”

My sense is that it will be very difficult for the Trump Administration to overcome these pathologies.

My piece on the Red and Expert Dilemma two weeks ago points to this problem. Leaders in the Trump Administration feel under siege and it is difficult, if not impossible, for them to build strong bonds with the individuals who possess the kind of expertise that Domenech rightly points out that they need. They may hate the swamp, but ultimately, they need to do the thing that Elon Musk claims is most important: the ability to build.

Building requires governing capacity and that is something they are in short supply of right now.

The problem works in both directions because in most cases these cabinet secretaries and agency leaders were chosen specifically because they do NOT have strong, existing bonds of trust with individuals who possess capabilities to govern. And the individuals who do possess those capabilities, are unwilling to put themselves forward because they see how the current Administration loathes those who devote themselves to government service, the demonstrated lack of loyalty that the President and his appointees have shown to their own subordinates, and a ruthless drive to punish anyone who is perceived as disloyal (which could just mean telling the boss what he doesn’t want to hear).

The outcome is that capable people “sit this one out.”

It takes time for leaders build trust and loyalty with their subordinates and staff. That is not something that can be flipped like a switch. To work effectively, they must know and understand each other’s thinking, worldview, and weaknesses. The revelation of the second Signal Group Chat that Defense Secretary Hegseth shared classified information on, seems to show that it is his wife and family members who he “trusts,” even though there is little evidence to suggest that those individuals are suited to assisting a Secretary of Defense with his duties.

Domenech’s story about General Stanley McChrystal is instructive here. The bonds of trust and loyalty formed between him and the individuals that Rolling Stone reporter Michael Hastings wrote on, were formed over years of intense operations together. Each one of those folks on the General’s staff who attended his fateful 33^rd wedding anniversary party at the Irish pub in Paris back in 2010 had known McChrystal for years, if not decades. They almost certainly understood how each other thought about problems and were a well-oiled team at accomplishing the General’s responsibilities.

Appointing someone as a Cabinet Secretary or head of an agency, means appointing that individual’s cadre of trusted advisors and staff. If that individual lacks the circle of folks who can fill critical skill sets, then that individual cannot be effective as a leader. Particularly if that leader distrusts those career officials responsible for assisting that leader. That trust and confidence cannot be manufactured overnight. Some might observe that they could simply learn to trust the career folks around them, but that ignores the political and human realities that come with filling such an important position.

The Trump Administration is going to be severely hamstrung and that is a bad thing for all Americans and our allies.

***

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Thanks for reading!

Matt

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MUST READ

1. Philippines loosens decades-old ban on official visits to Taiwan

   Alan Lu, RFA, April 23, 2025

Manila’s move came as South China Sea disputes with Beijing escalate.

The Philippines lifted a decades-old policy that tightly restricted official engagement with Taiwan in a move an expert says signals a recalibration of its China policy as tensions simmer.

Under the new policy, introduced on April 15, Philippine government officials – except for the President, Vice President, Foreign Affairs Secretary and Defense Secretary – can now visit Taiwan for economic, trade or investment-related activities, provided they travel on regular passports and do not use their official titles.

Previously, Philippine officials were barred from visiting Taiwan or meeting with Taiwanese officials without prior government approval.

The amendment is “to further maximize opportunities for the development and expansion of the Philippines’ priority areas of investment,” the state-run Official Gazette said in a memorandum released on Monday.

In response, Taiwan’s foreign ministry highlighted that the democratic island is the Philippines’ ninth biggest trading partner and praised the decision for “strengthening Taiwan-Philippines relations” and “advancing substantive cooperation.”

China has not commented.

J. Michael Cole, a Taipei-based senior fellow at the Global Taiwan Institute, believes Manila’s move reflects its realization that the Philippines and Taiwan, as neighbors facing similar security challenges, stand to gain from closer collaboration.

“Growing ties between Taiwan and the Philippines are indeed related to the deteriorating security environment in the South China Sea and Beijing’s belligerence towards Manila,” Cole said.

COMMENT – Beijing’s aggression against its neighbors has consequences.

Here are some more consequences:

• US approves sale of 20 US F-16 fighter jets to Philippines as Washington tightens key Asian alliance

  Brad Lendon, CNN, April 2, 2025

• China's Neighbor [Vietnam] Could Buy F-16s in Blow to Xi

  Micah McCartney, Newsweek, April 21, 2025

2. Trump Misunderstands the ‘China Shock’
   William A. Galston, Wall Street Journal, April 15, 2025

Beijing, not free trade more generally, is the reason America’s factories declined.

When the history of this generation is written by the next, two dates in 2001 will stand out. Everyone knows the first: Sept. 11, which sparked nearly two decades of wars that squandered American blood, treasure and attention. The second is Dec. 11, the date that China entered the World Trade Organization on terms that proved disastrous for many American workers, companies and communities.

Between 2001 and 2007—before the financial crash and the Great Recession—the U.S. lost 3.4 million manufacturing jobs, almost 20% of the 17.2 million manufacturing jobs we had at the end of 2000. During the recession, another 2.2 million manufacturing jobs disappeared. In the ensuing 15 years, the economy regained barely one-fifth of the manufacturing employment lost during that first decade of the 21st century. This was the famous “China shock,” which helped trigger the populist revolt that later brought Donald Trump to power.

Economists continue to debate the relative contributions of China versus productivity-enhancing technology in destroying so many manufacturing jobs. Technology certainly made a difference; manufacturing productivity increased significantly between 2001 and 2010. But productivity increased almost as much between 1991 and 2000, when the number of manufacturing jobs was generally increasing. The major difference between these decades was China.

Some would argue that the real difference came from the North American Free Trade Agreement, a historic treaty that reduced trade barriers and integrated the economies of Canada, Mexico and the U.S. This treaty took effect on Jan. 1, 1994. From then until the end of 2000, manufacturing jobs increased by about 300,000, from 16.9 million to 17.2 million. Although Nafta shifted some production away from the U.S., it also contributed to a period of growth in manufacturing that more than made up for the losses. Only after China entered the World Trade Organization did manufacturing jobs fall dramatically.

Nor did Nafta lead to declines in factory workers’ earnings. Between 1994 and 2000, manufacturing wages increased more quickly than inflation, generating real income gains.

The bottom line: Blaming our manufacturing ills on North American economic integration flies in the face of the facts. The Trump administration’s assault on our northern and southern neighbors makes no sense. It is a self-inflicted wound that will yield few benefits at enormous cost—confusion, disrupted supply chains and loss of trust.

Our peaceful, mutually productive relations with our neighbors have been a source of geopolitical strength that Mr. Trump and his team of enablers have been doing their best to undermine. A question for them: What has changed since the president’s first term, when he renegotiated Nafta and celebrated its replacement, the U.S.-Mexico-Canada Agreement, as the “fairest, most balanced and beneficial trade agreement we have ever signed into law”?

To be sure, we have real problems in manufacturing. Over the past decade, our manufacturing output has stagnated, as has the sector’s productivity. And in some respects, our manufacturing sector’s decline affects our national security. As we learned during the pandemic, the U.S. is highly dependent on other countries, including China, for drugs and other essential medical supplies. Nor can we hope to keep pace with China’s rapidly growing navy without regaining our lost shipbuilding capacity. Further, as we’ve seen since Russia’s invasion of Ukraine, our defense industrial base has weakened dangerously since the fall of the Soviet Union. But the remedy for these ills is a set of targeted policies, not a global trade war. The chainsaw isn’t an appropriate tool for restructuring the international economic order any more than it is for reforming government.

Antagonizing our friends around the world is a poor strategy for solving the heart of our trade problem—our asymmetrical relationship with China. Xi Jinping suppresses purchasing power and social benefits for his country’s citizens while subsidizing exports, allowing Chinese products to undercut those produced in other industrialized countries. China then uses the proceeds from artificially elevated export sales to direct investment to favored industries and new technologies while funding a massive military buildup.

In response to prior U.S. efforts to stem this flood, Chinese manufacturers have relocated significant production to countries such as Vietnam, whose cooperation the U.S. will need if it hopes to shut off this Chinese escape valve. Any way you look at it, imposing huge tariffs on every country with which the U.S. has a bilateral trade deficit makes no sense. We’re left hoping that during the 90-day tariff “pause” business leaders can persuade Mr. Trump that his current course risks a punishing recession and weakening confidence in U.S. government debt.

3. Cutting Off Chinese Companies Risks a US Policy Own Goal

   Samm Sacks, Bloomberg, April 25, 2025

In May 2019, the US Department of Commerce added China’s Huawei Technologies Co. and 68 affiliates to the Bureau of Industry and Security Entity List ― a catalogue of companies subject to strict limits that effectively cut them off from the US technology sector. The government had been concerned about espionage and sabotage risks associated with Huawei for more than two decades, but the advent of 5G cemented the urgency to act as more devices and critical infrastructure would be connected to Huawei hardware. Unsatisfied with blocking Huawei at home, American officials launched a global effort to convince other countries to block it, too.

The impact was immediate: Huawei’s revenue fell by more than a quarter over the next two years. But then something unexpected happened. Exiled from the world’s largest economy, Huawei refused to die. Its financial results picked up and last year Huawei’s revenue came close to its peak before the US restrictions.

The company’s recovery shows how US efforts to kneecap China can backfire, undermining both American competitiveness and the very national security that measures like the Huawei ban aim to protect.

Before the US blacklisting, Huawei had become the world’s largest telecommunications equipment maker, and the largest manufacturer of smartphones globally. After it was stripped of access to US technology, Huawei worked on developing HarmonyOS, its own operating system that closely resembled Google’s Android. By 2024, the Chinese company had taken another step with the launch of HarmonyOS Next, dubbed “Pure Blood” by fans because it is built entirely in-house.

Today, Harmony is only offered in China, where it already runs on 1 billion devices, from smartphones to cars and home appliances. The operating system comes pre-installed on Huawei phones and PCs, and has been running on Huawei laptops in China since its license to run Microsoft Windows expired earlier this month. In March, BMW announced a partnership with Huawei to integrate HarmonyOS Next into new electric vehicles set to roll out in China next year. And thanks in part to Harmony OS, Huawei recently dethroned Apple Inc. as China’s leading smartphone-maker by sales.

Huawei is not satisfied with winning at home — the firm now hopes to challenge the global dominance of Android and Apple iOS. Huawei Chairman Eric Xu has said the company wants HarmonyOS to become “a third mobile operating system for the world” and last year outlined plans to build up its app ecosystem in China before “gradually pushing it out” to other countries.

The company has a long way to go to catch the competition. It’s one thing to have Huawei smartphones, cars and smart-home appliances in China offering Chinese apps like Alipay or Baidu maps. But the Pure Blood operating system doesn’t allow users to install or run apps unless they are specifically built for Harmony. That’s fine for users in China, who live in a world of popular Chinese apps like WeChat and Douyin (the Chinese version of TikTok). But it’s a severe limitation in other parts of the world. Users who rely on WhatsApp, for example, likely won’t want to buy a Huawei phone.

Credible Challenge

Huawei has had some early wins: McDonald’s, Grab (a ride-hailing app popular in Southeast Asia), and Emirates Airline have all built apps for Harmony. To entice more developers, especially outside China, Huawei is offering tools to convert Android apps to be compatible with HarmonyOS as well as financial incentives for developers. It’s also getting help from Chinese authorities. In early March, the Shenzhen municipal government unveiled a plan to boost development of apps native to HarmonyOS, including subsidies for firms to join a bigger Smart City platform integrating government services, finance, healthcare, and more.

If the company succeeds, Harmony could become a credible challenge to Android, iOS and Windows. While the battle for supremacy in semiconductors and AI has received more attention, the race to become the dominant mobile operating system has big implications beyond smartphones given the proliferation of connected devices. The spread of Harmony outside China would also be a boon for China’s position in AI. Huawei’s mobile assistant app, Xiaoyi, uses DeepSeek; its personal computers also come loaded with DeepSeek large language model applications.

All of this should give American officials pause. The Trump administration wants the US to “dominate new technologies,” Vice President JD Vance told the American Dynamism Summit last month. At the Paris AI Action Summit in February, Vance said that the US plans to maintain its lead in AI by controlling all components, including “advanced semiconductor design, frontier algorithms, and, of course, transformational applications.”

There is also a risk that wider adoption of HarmonyOS could result in users outside of China finding themselves subject to Chinese government restrictions on apps and content, in effect extending the reach of the Great Firewall. While Huawei has not yet started offering HarmonyOS outside of China, in 2021 Huawei internet equipment called middleboxes were found to be blocking news and other websites in at least 18 countries (up from seven countries when researchers first began tracking in 2019).

Security Risks

Wider global adoption of HarmonyOS would also undermine US efforts to strengthen data security by eliminating Huawei equipment from network infrastructure around the world. Under the “Rip and Replace” initiative, American officials launched a campaign to convince other countries to excise Huawei hardware from their telecom infrastructure, citing the company’s history of cyber vulnerabilities. HarmonyOS’s success in markets outside of China would introduce a new set of data security risks as Huawei laptops, wearables, cars, home appliances and phones — all seamlessly integrated — would be running on top of networks where billions of dollars had been spent to remove Huawei equipment.

The lessons here go well beyond a single Chinese company. American officials view the rise of Chinese tech as an existential threat to US national security, and see maintaining a lead over China as an objective distinct from countering espionage. Curbing Chinese firms, they reason, will ensure that Beijing does not gain strategic advantages in technology. But the Huawei example ought to be a clear indication of the limits of policies that restrict China, and how those policies can spur Chinese firms to innovate and grow.

Similarly, the US’s recently announced export controls on Nvidia’s H20 chips could cause China near-term pain, but are likely to accelerate the country’s own AI chip capabilities. Huawei is already stepping in to fill the vacuum, with plans to ship its Ascend 910C AI chip as soon as next month.

Amid deep division in Washington, fear of the rise of China is one of the few things that Democrats and Republicans agree on; another is that economic security is national security. But the case of Huawei suggests sweeping trade restrictions are an ineffective policy that is fueling — not foiling — advances in China’s domestic technology in ways that could shift the global market.

COMMENT – I had to read Samm Sacks’ argument a couple times to figure out her thesis.

Here is what I surmise it is: Huawei would have been doing worse in 2025 had the United States not placed Huawei on the Entity List in May 2019.

She argues that since Huawei is nearing the valuation it had in 2019, this is proof that American efforts backfired and that trying to restrict Huawei has undermined American competitiveness because it makes entities like Huawei, and the PRC Government, try harder.

Hmmm…

It seems likely to me that Huawei would be doing even better had the U.S. Government not taken those actions in 2019. The desire to create an alternative mobile operating system, an indigenous chip industry, and its own champions in information technology pre-date the U.S. listing of Huawei.

I find her argument very curious. It is an argument that I read and hear on a routine basis, along with some other talking points that seem to fit together in a package… or a “consensus” among certain individuals and organizations.

As one colleague (who will go unnamed) put it: “This is a perfect summary of the Yale consensus.”

What is the “Yale consensus”, you ask?

It is a set of assumptions and talking points deployed by folks who advocate for a more cooperative relationship between the United States and the People’s Republic. Those individuals often acknowledge that the PRC poses a threat to American interests and that we should “compete” (though that competition should be narrowly bound and carefully managed).

For the most part, this group sees Washington as primarily responsible for the deterioration of the Sino-American relationship and want us to “just get along” with Beijing.

This might be too harsh, but I tend to think this group’s main point can be summed up with just one line:

How did this become the “Yale Consensus”?

Well, it comes from the Paul Tsai China Center at Yale Law School.

Generously funded by the billionaire Joe Tsai (Executive Vice Chairman of the PRC internet company, Alibaba) in honor of his father who moved from Shanghai to Taiwan in 1948 and went to Yale Law School, becoming the first graduate from Taiwan.

Joe was born and grew up in Taiwan, but skipped out on his mandatory military service and made his wealth helping the PRC become wealthy and technologically advanced by leveraging his connections in the United States, Canada and Europe.

Joe’s funding of the Paul Tsai China Center (as well as the substantial funding of the 21^st Century China Center at the University of California San Diego) has created academic centers focused on shaping U.S. policies. In my opinion, the direction these groups seek to shape U.S. policy on China, align closely to the policies that would be beneficial to the People’s Republic of China and the Chinese Communist Party.

This is the same Joe Tsai, who shortly after becoming the owner of the Brooklyn Nets, tried to get Daryl Morey fired as general manager of the Houston Rockets when Daryl tweeted his support of Hong Kong protesters who were being brutally suppressed by the Chinese Communist Party.

Given the pressure that Alibaba is under from the Chinese Communist Party (and the ways in which Jack Ma was punished), one can understand why Joe Tsai has committed significant chunks of money and has used his position of influence to further efforts that assist the Chinese Communist Party.

The main themes and arguments of the “Yale Consensus” go something like this:

• The bipartisan consensus on China policy isn’t real

• Anti-China “hawks” in the United States are responsible for the deterioration Sino-American relations, not the Chinese Communist Party

• Efforts to block technology transfer to China are futile and do more harm to the United States

• Questioning the legitimacy of the Chinese Communist Party is tantamount to calling for regime change and forever war

• Washington should focus on cooperation with Beijing, not competition

The third bullet is what we see in this Bloomberg opinion piece, but it fits within this wider narrative.

4. India Has a Golden Opportunity to Capture U.S. Business from China
   Tripti Lahiri, Wall Street Journal, April 19, 2025

World’s most-populous nation has often frustrated foreign companies, but Trump’s tariffs push change in mindset.

When President Trump opened his first trade war on China in 2018, a company called Zetwerk was just beginning to connect global customers with Indian suppliers of things like sheet metal and precision parts.

Today, it has a network of more than 10,000 suppliers and seven of its own electronics factories. Its latest facility, making parts for washing machines and other appliances, opened in March.

The first trade war helped India rise—and Trump’s second one could be transformative, said Josh Foulger, the head of Zetwerk’s electronics business.

“Is this India’s moment?” said Foulger. “Yes.”

With most Chinese exporters cut off for now from U.S. consumers by high tariffs, companies are looking for alternative places to produce and export to the U.S.—adding up to a golden opportunity for India.

That doesn’t mean India will take its chance. The world’s most populous nation has long trailed not just China but also smaller countries with nimbler governments. The number of people working in agriculture dwarfs the number employed in manufacturing.

Global high-tech firms and retailers say India is a harder place to do business than China or Vietnam, owing to government red tape, restive labor groups and an often-punitive approach to compliance and taxation. Vietnam, a country of 100 million people, exports $50 billion more in goods to the U.S. than India, whose population is 1.4 billion.

Indian officials in New Delhi are signaling they plan to be more open to Western businesses and are moving for a quick trade deal with the U.S. The country wants to emulate what has made China the world’s unparalleled manufacturing powerhouse by offering not just manual assembly of goods but also design, parts and other knowhow.

“We are looking at building the entire value chain in India itself,” said Ekroop Caur, the secretary for electronics and information technology in the southern state of Karnataka.

For the moment, most Indian goods face only the 10% tariff Trump has imposed globally, and certain exempted electronics such as iPhones have no tariff. The tariff on most Chinese goods is 145% while those electronics items are subject to a 20% rate.

Apple is already moving to export more iPhones to the U.S. from India, and the country currently accounts for about 20% of iPhone final production, according to market research estimates.

India’s election last year, in which Prime Minister Narendra Modi’s ruling Bharatiya Janata Party lost its outright majority, sent a clear message that many voters were dissatisfied with job prospects and low wages.

India now has a critical window for opening up with no national election and only one state election on the horizon for about a year, said Tanvi Madan, an expert on India at the Brookings Institution.

The moment could be as important for India as the end of the Cold War, when it fell into a financial crisis caused by the collapse of the Soviet Union, then India’s largest trading partner. In response, India opened up to foreign investment and cut a plethora of rules and regulations known as the “license raj,” sparking faster growth.

“India has always worried about what opening up to the world will do to it,” said Madan. “It should be thinking about what the world can do for it.”

India’s foreign minister, S. Jaishankar, said this month that the upending of global trade had “focused our own minds on the need for correcting what I would call a certain skewed nature of our openness to the global economy.”

Still, companies find India remains prone to regulatory flip-flops and head-scratching interpretations of tax laws, leading to penalties or lengthy legal disputes.

COMMENT – Beijing is going to do all it can to kneecap India (investment restrictions, export controls, threats to companies in the PRC that might move manufacturing to India, political interference in Indian politics, stir up military confrontations between Pakistan and India).

The sooner Delhi takes its opportunity seriously, the better.

The next article highlights how this will be difficult.

6. Deadly Kashmir attack threatens new escalation between India and Pakistan

   Karishma Mehrotra, Washington Post, April 23, 2025

The nuclear-armed rivals, which both claim Kashmir and administer separate parts of it, are at a dangerous crossroad after Tuesday’s militant attack, analysts said.

This Himalayan town, known locally as “mini-Switzerland,” would normally be bustling with tourists at this time of year, photographing fields of wildflowers and riding ponies beneath snowcapped peaks.

But on Wednesday, Pahalgam was eerily still. Schools and markets across Indian-administered Kashmir were shuttered. Cabs once packed with vacationers were stopped at security checkpoints on their way out of town. The violence of the previous day was still in the air.

On Tuesday, gunmen emerged from the forest with assault rifles and opened fire on tourists who had gathered in a popular meadow. At least 26 people — 25 Indians and one Nepalese citizen — were killed, police said. It was the deadliest attack on civilians in India in more than a decade.

Indian media blamed the attack on the Resistance Front, a militant group banned by New Delhi in 2023 as a terrorist organization, but there was no verifiable claim of responsibility.

The suddenness of the violence, and the gruesome nature of the killings, sent shock waves across the country, rekindling painful memories from the 1990s, when Kashmir was gripped by a bloody insurgency — and civilians often bore the cost.

6. Indian and Pakistani Soldiers Briefly Exchange Fire Along Kashmir Border

   Anupreeta Das, New York Times, April 25, 2025

The clash took place just days after a terror attack killed 26 people on the Indian side of the disputed region, raising tensions between the two nuclear-armed nations.

India and Pakistan have exchanged fire along their heavily patrolled and contested border in the Kashmir region, escalating tensions between the two nuclear-armed neighbors just days after a terror attack killed 26 people on the Indian side of the disputed region.

Pakistani solders fired at an Indian position first and India responded in kind, according to local news reports, which said that the exchange was brief and that there were no casualties. Indian and Pakistani officials did not immediately respond to requests for comment.

Tensions between the two countries, archrivals for decades, shot up swiftly this week after militants gunned down 26 people, mostly tourists, in a picturesque meadow near Pahalgam, a popular destination in Kashmir, on Tuesday.

India has called the shooting a terror attack without blaming a specific group, but it has taken a series of punitive measures against Pakistan, with India’s foreign secretary saying there were “cross-border linkages.” India announced on Wednesday that it would downgrade diplomatic ties and pull out of a decades-old water-sharing treaty that is especially critical to Pakistan, among other measures.

COMMENT – This horrendous attack and the escalation in tensions between Delhi and Islamabad has one clear beneficiary: Beijing.

This map is from the Washington Post article but helps demonstrate the overlapping claims and great power fault lines that run through Kashmir.

It is important to remember that up until 1991, there was a fourth great power in the mix on this map, the Soviet Union.

Between the period of the Sino-Soviet split, 1961, and the collapse of the Soviet Union, 1991, the standoff in Kashmir pit India and its ally, the Soviet Union, against Pakistan and its ally, the PRC. Then between 2002 and 2021, with the United States in Afghanistan, America had a steadying role.

Now with the United States out of Central Asia (and unlikely to ever return) and with Moscow consumed by Ukraine and dependent on the PRC, there is an opportunity for the Sino-Pakistani alliance to “fix” the Kashmir problem in ways that Islamabad and Beijing would prefer.

From Beijing’s perspective, if Delhi is consumed by a deteriorating situation in Kashmir, then it will be much more difficult for Delhi to seize the “golden opportunity” of replacing the PRC as the hub of manufacturing (see #4 above, “India Has a Golden Opportunity to Capture U.S. Business From China”).

How might these dynamics change in the future?

If the war in Ukraine were to come to some sort of negotiated end, resulting in some sort of U.S.-Russia relationship, then Moscow and Washington *could* team up to help India.

In August 2024, I published a post called “The Blocs are Back in Town” and I want to go back to that argument.

The end of the RBIO means a return of geopolitics by blocs. The flashpoints of those blocs are along the seams, Kashmir is one of those seams.

Here’s the map I created for that August post, and I think it still holds today.

One point I would amplify is that the main antagonists of this geopolitical struggle would like to split the blocs of their adversaries. For the Biden Administration and Europe, they wanted to pull Beijing away from supporting Moscow. The Trump Administration judges that approach as infeasible and prefers to pull Moscow from Beijing by compromising on Ukraine. The Europeans reject this approach, but it is almost certainly the approach that Delhi would prefer as it would align the United States and Russia, the two powers that Delhi relies on to balance against Beijing.

Beijing, and Moscow, see an opportunity to split the Global West and achieve an outcome that has alluded them for nearly a century: fracture the transatlantic alliance.

The Trump Administration is not sensitive enough to this potential split and does not appreciate how damaging it would be to American interests and prosperity. With that said, European and Canadian leaders have been incredibly irresponsible for decades in fulfilling their responsibilities as allies and that has destroyed trust between the two sides.

Fracturing the other side’s bloc has become the top geopolitical priority for Beijing, Moscow, and Washington. In my experience, European leaders are completely oblivious to these dynamics and continue to cling to a rules-based international order that they, themselves refuse to protect, instead trusting that either the RBIO will maintain itself or the United States will save them.

These are dangerous times.

Speaking of being oblivious and naïve…

7. China urges UK and EU to uphold multilateral trade in face of US tariffs
   Reuters, April 22, 2025

Chinese Foreign Minister Wang Yi urged Britain and the European Union on Tuesday to safeguard multilateral trading systems, as Beijing seeks to rally support from trading partners to counter U.S. tariff measures.

China and the United States have remained locked in a deepening trade war, with tit-for-tat tariff hikes that have significantly disrupted bilateral commerce.

"The United States has weaponised tariffs to launch indiscriminate attacks on countries, openly violating WTO rules and undermining the legitimate rights and interests of others," China's foreign ministry cited Wang as saying in a phone call with British Foreign Secretary David Lammy.

China and Britain had a responsibility to uphold international order in the face of "rampant unilateral bullying", Wang told Lammy.

China was ready to work with Britain to "eliminate all distractions", Wang said, adding that the onus was on both countries to safeguard multilateral trading systems.

In a separate call with Austrian Foreign Minister Beate Meinl-Reisinger, Wang called on the EU to defend multilateral trade and said China was willing to further strengthen high-level exchanges with the bloc.

Washington has raised tariffs to 145% on Chinese goods, prompting Beijing to retaliate by slapping duties of 125% on items imported from the U.S.

Wang's phone calls came after Beijing on Monday warned countries against striking a broader economic deal with the U.S. at its expense, and threatened countermeasures if they did so.

Chinese President Xi Jinping earlier this month appealed directly to the EU, telling Spanish Prime Minister Pedro Sanchez in Beijing that China and the bloc should join forces to defend globalisation.

Beijing and Brussels have quietly intensified coordination, establishing several economic working groups after EU trade chief Maros Sefcovic's visit late March, including on EV supply chain investment and agri-food market access issues.

The two sides also revived minimum pricing negotiations on Chinese-made electric vehicles, a solution that Beijing has long advocated to the bloc's tariffs imposed last year.

COMMENT – This would be incredibly funny if I weren’t so worried that European and UK leaders might fall for this.

One would think that folks would see through the hypocrisy of Xi’s claims to “defend globalization,” but I fear that folks like Spanish PM Pedro Sanchez, the UK Chancellor of the Exchequer, Rachel Reeves, and plenty of officials across Brussels are apt to believe it.

Of course, there are plenty of folks across Europe and the UK who fully understand that Beijing is NOT a defender of globalization and has done more to destroy the WTO than any other country. The PRC’s predatory trade practices are well documented.

But other leaders and officials are so desperate to hold on to the RBIO that they will believe anyone who tells them they will defend it.

8. Router Maker TP-Link Faces US Criminal Antitrust Investigation

   Josh Sisco and Kate O’Keeffe, Bloomberg, April 24, 2025

The US is conducting a criminal antitrust investigation into pricing strategies by TP-Link Systems Inc., a California-based router maker with links to China whose equipment now dominates the American market, according to people familiar with the matter.

Beyond pricing, a focus of the inquiry is also whether the company’s growing US market share represents a threat to national security, said the people, who asked not to be named discussing a confidential matter. The scrutiny began in late 2024 under the Biden administration and has continued under President Donald Trump.

US officials have in recent years been increasing their focus on risks presented by technology companies with a large US presence and ties to foreign adversaries such as China and Russia. In addition to the probe by prosecutors, the US Commerce Department is investigating whether TP-Link’s China ties pose an unacceptable risk to national security, Bloomberg News reported earlier.

Prosecutors in the Justice Department’s antitrust division are investigating whether TP-Link engaged in predatory pricing, according to the people. Such a pricing strategy involves selling goods below cost in order to gain market share before raising prices once competitors have either been hobbled or eliminated.

In addition to examining the company’s pricing practices, Justice Department officials are also scrutinizing the company’s corporate structure, the people said.

The antitrust enforcers are concerned that TP-Link’s pricing practices could hurt the ability of other companies that don’t present a potential national security threat to sell routers in the US market, the people said.

In a statement, TP-Link said it hadn’t received any inquiry from the Justice Department, but that it stands ready to cooperate fully if it does. The company also denied selling products below cost and said it maintains “a policy of transparency in our business practices, ensuring fair pricing for our valued customers.”

The Justice Department declined to comment.

The DOJ hasn’t accused TP-Link or any of its executives of wrongdoing. Criminal antitrust probes can take years to complete and may not result in charges. The DOJ can fine companies as much as $100 million for criminal antitrust violations and individuals can face up to 10 years in prison and be fined as much as $1 million.

TP-Link last year completed a split into two separate entities, an American unit headquartered in Irvine, California, and a Chinese unit based in Shenzhen. The US-based entity being scrutinized by Justice and Commerce Department officials still has substantial operations in mainland China, Bloomberg News reported this month.

Before the split, TP-Link was the world’s largest provider of consumer Wi-Fi equipment, according to market research firm IDC. Its routers, which relay information from the internet to devices such as computers and smartphones, are widely sold through retailers such as Amazon.com Inc. and Best Buy, and can be found in homes and small businesses across the country.

TP-Link routers were among the various brands — including American ones — exploited by Chinese state-sponsored hackers who launched the massive Volt and Salt Typhoon attacks that targeted US critical infrastructure, US officials have said.

There’s no evidence that TP-Link was complicit in any of the attacks and the company has said that it hasn’t been able to verify how its devices were affected, if at all.

COMMENT – I wish that the Biden Administration had acted with the authorities granted under the Information Communications Technology and Services Executive Order and blocked TP-Link from selling their products in the United States.

Hopefully the Trump Administration will act, but I fear that we will continue to muddle along, act indecisively and further open ourselves to manipulation.

9. Transparency Regarding Foreign Influence at American Universities

   Executive Office of the President, April 23, 2025

By the authority vested in me as President by the Constitution and the laws of the United States of America, it is hereby ordered:

Section 1. Purpose and Policy. Section 117 of the Higher Education Act of 1965, 20 U.S.C. 1011f, requires institutions of higher education to report significant sources of foreign funding. But, because section 117 has not been robustly enforced, the true amounts, sources, and purposes of foreign money flowing to American campuses are unknown. From 2010 to 2016, according to one study, universities failed to disclose more than half of reportable foreign gifts. Even when foreign funding is reported, its true sources are often hidden.

Protecting American educational, cultural, and national security interests requires transparency regarding foreign funds flowing to American higher education and research institutions. During my first term, the Department of Education opened investigations on 19 campuses from 2019-2021, which led universities to report $6.5 billion in previously undisclosed foreign funds. Yet the prior administration undid this work, moving the Department of Education’s specialized investigatory work on foreign funds to a unit ill-equipped to perform it, undermining investigations, and hindering public access to information on foreign gifts and contracts.

It is the policy of my Administration to end the secrecy surrounding foreign funds in American educational institutions, protect the marketplace of ideas from propaganda sponsored by foreign governments, and safeguard America’s students and research from foreign exploitation.

Sec. 2. Robust Enforcement to Prevent Harm to American Interests. The Secretary of Education (Secretary) shall take all appropriate actions to enforce the requirements of section 1011f of title 20, United States Code, including by working with the Attorney General and the heads of other executive departments, agencies, and offices, where appropriate, to require complete and timely disclosure by higher education institutions of foreign funding. These actions shall include the following:

(a) the Secretary shall take appropriate steps to reverse or rescind any actions by the prior administration that permit higher education institutions to maintain improper secrecy regarding their foreign funding;

(b) the Secretary shall take appropriate steps to require universities to more specifically disclose details about foreign funding, including the true source and purpose of the funds;

(c) the Secretary shall provide the American people with greater access to information about foreign funding to higher education institutions; and

(d) the Secretary and the Attorney General shall hold accountable higher education institutions that fail to comply with the law concerning disclosure of foreign funding. In furtherance of this directive, the Secretary shall work with the heads of other executive departments, agencies, and offices, where appropriate, to conduct audits and investigations as appropriate and where necessary to ensure compliance with the law concerning disclosure of foreign funding and shall seek enforcement through appropriate action by the Attorney General.

Sec. 3. Compliance by Federal Funding Recipients. The Secretary of Education and the heads of other appropriate executive departments and agencies shall take appropriate action, as consistent with applicable law, to prospectively ensure that certification of compliance by higher education institutions with 20 U.S.C. 1011f and any other applicable foreign funding disclosure requirements is material for purposes of 31 U.S.C. 3729 and for receipt of appropriate Federal grant funds, which shall not be provided in cases of noncompliance with 20 U.S.C. 1011f and any other applicable foreign funding disclosure requirements.

COMMENT – For years, the PRC has sought to obscure its funding of U.S. and other foreign universities to “tell China’s story well,” gain access to advanced research that they would otherwise face export restrictions on, and to ensure that Chinese students on foreign campuses are surveilled and controlled.

I’m very glad to see the Trump Administration forcefully carry out laws that have been on the books for over a half century but have been ignored by our most elite universities who see themselves as “Global institutions” who just happen to be located in America, rather than “American institutions.”

These institutions are going to howl loudly, particularly as other cuts are made to their very generous taxpayer funding. But I suspect that large swaths of the American people will have little sympathy for institutions that look down on them as “deplorables.”

---

Authoritarianism

10. VIDEO – Fireside Chat with Stephen Kotkin & US House Select Committee on China
    John Moolenaar, Raja Krishnamoorthi and Professor Kotkin, Hoover Institution, April 12, 2025

11. Satellites show new Chinese structure in waters disputed by US ally
    Micah McCartney, Newsweek, April 17, 2025

New satellite imagery has revealed for the first time a hulking steel rig in the Yellow Sea between China and South Korea that has inflamed tensions between the two nations.

The photographs, supplied exclusively to Newsweek, ​show the latest of several large steel platforms that China has installed in the Provisional Measures Zone (PMZ), a jointly managed stretch of the Yellow Sea, known in Korea as the West Sea, where the Chinese and South Korean exclusive economic zones (EEZs) overlap.

Newsweek reached out to the Chinese Embassy in Seoul and the South Korean Embassy in Washington with emailed requests for comment.

Rising Tensions

An EEZ extends 200 nautical miles (230 miles) from the coast, granting claimant states sole access to its underwater natural resources, including fishing grounds, according to international maritime law.

The PMZ, established under a 2000 agreement, permits only fishing-related activities and navigation in the disputed area until a formal maritime boundary is agreed upon. South Korea, a U.S. treaty ally, says the structure—installed without its knowledge or consent—is viewed by Seoul as violating that agreement.

Unlike earlier platforms reportedly deployed and later removed following protests from Seoul last year, China is doubling down on the presence of its latest jackup rig, named for three long legs that can be lowered to the sea floor for stabilization.

"This issue is highly likely to be a perennial source of contention between the two countries," said Dong Gyu-lee, a research fellow at Seoul-based think tank the Asan Institute for Policy Studies.

COMMENT – It is worth watching the political interference that the PRC is doing in South Korea in the run up to the June 3rd elections. Beijing’s preferred candidate is Lee Jae-myung, the head of the Democratic Party of Korea. A political leader who has been at the center of numerous corruption, bribery and other schemes to funnel money to North Korea.

Lee and his Democratic Party of Korea increasingly lean Anti-American and Pro-China. If he is elected, expect to see the collapse in Korea-Japan relations, an end to Korea’s push back against the PRC, and an opening of Korean technology and capital to the PRC.

The lasting impact of President Yoon Suk Yeoi’s short-lived martial law declaration will likely be the opening of South Korea to Beijing and the fracturing of the budding trilateral relationship between Japan, South Korea, and the United States.

12. The Programmable State: The e-CNY and China’s Quest for Smarter Surveillance
    Yaya J. Fanusie and Emily Jin, LawFare, April 17, 2025

China’s digital yuan could set a global precedent for programmable money—and for state-controlled financial surveillance.

The e-CNY, China’s central bank digital currency, has significant implications for both Chinese domestic surveillance and U.S. national security. In this new research report, we explore how the e-CNY’s architecture—specifically its two-tiered system and programmability—enables smart contracts and enhanced tracking of financial transactions. The Chinese government promotes e-CNY adoption through incentives and integration with essential services, aiming to create a more “intelligible” and controllable economy.

We argue that the e-CNY carries substantial risks, including increased state surveillance, compromised privacy, and economic retaliation against foreign firms. While the e-CNY is currently focused domestically, it could influence global digital financial norms and reduce China’s reliance on U.S.-dominated financial infrastructure. U.S. policymakers should respond by prohibiting U.S. entities from using e-CNY, influencing standards for foreign CBDCs, and encouraging domestic digital finance innovation.

COMMENT – U.S., European, and Japanese Governments *should* prohibit their companies and banks from participating in e-CNY transactions, along with participation in CIPS (Cross-Border Interbank Payment System), the PRC’s alternative to SWIFT (Society for Worldwide Interbank Financial Telecommunication).

But I suspect that won’t happen.

13. Alert! Chinese hackers are actively exploiting an Ivanti Connect Secure vulnerability
    David Hollingworth, Cyber Daily, April 4, 2025

Exploitation of the newly disclosed remote code execution bug CVE-2025-22457 may have been occurring since mid-March.

Just a day after software firm Ivanti disclosed a critical vulnerability in several of its gateway products, the Mandiant Incident Response team has revealed that hackers – most likely with links to China – have been exploiting the bug to deploy two newly discovered forms of malware.

Ivanti disclosed CVE-2025-22457 on 3 April, explaining that a stack-based buffer overflow in Ivanti Connect Secure, Policy Secure, and ZTA Gateways could lead to remote code execution.

“This vulnerability has been remediated in Ivanti Connect Secure 22.7R2.6 (released February 11, 2025) and was initially identified as a product bug,” Ivanti said in its advisory.

However, Ivanti said it was aware that customers were continuing to use Pulse Connect Secure 9.1x, which went end-of-life in December 2024, and that these devices were being actively exploited.

“At the time of disclosure, we are not aware of any exploitation of Policy Secure or ZTA gateways, which have meaningfully reduced risk from this vulnerability,” Ivanti said.

The following product versions are currently vulnerable:

• Ivanti Connect Secure 22.7R2.5 and prior

• Pulse Connect Secure (End-of-Support) 9.1R18.9 and prior

• Ivanti Policy Secure 22.7R1.3 and prior

• ZTA Gateways 22.8R2 and prior

Mandiant’s 4 April update goes into more detail on the nature of the exploitation, which it believes is being carried out by Chinese advanced persistent threat UNC5221.

“This latest activity from UNC5221 underscores the ongoing targeting of edge devices globally by China-nexus espionage groups,” Charles Carmakal, Mandiant Consulting’s chief technology officer, said in a 4 April statement.

“These actors will continue to research security vulnerabilities and develop custom malware for enterprise systems that don’t support EDR solutions. The velocity of cyber intrusion activity by China-nexus espionage actors continues to increase, and these actors are better than ever.”

The two new malware that Mandiant has observed are being tracked as Trailblaze and Brushfire, which are being used alongside the Spawn malware family.

Trailblaze is a small in-memory dropper designed to fit within a shell script in Base64. Its function is to inject the Brushfire backdoor, which is capable of running further malicious shellcode.

SpawnSloth can disable local and remote logging, while SpawnSnare can extract an uncompressed Linux kernel image before encrypting it.

The Google Threat Intelligence Group has observed UNC5221 targeting similar vulnerabilities in the past, and its tooling matches that observed in the current campaign.

“GTIG assesses that UNC5221 will continue pursuing zero-day exploitation of edge devices based on their consistent history of success and aggressive operational tempo,” Mandiant said in a blog post.

“Additionally, as noted in our prior blog post detailing CVE-2025-0282 exploitation, GTIG has observed UNC5221 leveraging an obfuscation network of compromised Cyberoam appliances, QNAP devices, and ASUS routers to mask their true source during intrusion operations.”

According to cyber security firm Rapid7, Ivanti customers “should apply the available Ivanti Connect Secure patch immediately, without waiting for a typical patch cycle to occur”.

“Ivanti’s advisory notes that ‘Customers should monitor their external ICT and look for web server crashes. If your ICT result shows signs of compromise, you should perform a factory reset on the appliance and then put the appliance back into production using version 22.7R2.6.’ Notably, ICT results may vary; a factory reset should be performed if exploitation is suspected, regardless of ICT results,” Rapid7 said.

The Australian Signals Directorate's Australia Cyber Security Centre has also issued a Critical Alert regarding the vulnerability.

COMMENT – These persistent cyber-attacks by the PRC against countries like Australia continue to go under-reported and fail to break out of obscure cybersecurity reporting and into the mainstream discussions of voters and political leaders.

14. Chinese activist jailed for attending dinner marking inauguration of Taiwan’s leader
    Lian Qian, Radio Free Asia, April 3, 2025

15. Television in Crisis
    Yu Xiaobai, Lingua Sinica, April 9, 2025

Chinese TV stations face irrelevance and insolvency as propaganda overtakes content and viewers flee. Insiders know the solution, but Beijing's grip makes reform impossible.

Every morning at 8 o'clock, as she steps through the television station's doors, the previous day's ratings for all programs across the entire network appear before Chen Jiaqi's eyes. The numbers are displayed more prominently even than the time clock.

"The gargantuan screen is impossible to avoid,” says Chen. “Apart from occasionally displaying banners welcoming visits from certain leaders and promoting some self-produced programs, its daily function is to broadcast the ratings rankings." Each time she sees this screen, she says, pressure mixed with anxiety surges within her. "My heart rate also accelerates, a constant pounding."

Why is this? Because once ratings falter, the corresponding program production team could face budget cuts, and could have difficulty getting approval for projects down the line, be forced to accept salary downgrades — or even be fired.

Chen Jiaqi works at a well-known provincial broadcasting and television group in China. Since 2023, the company has undergone several rounds of layoffs. Those who managed to hang on to their jobs had their wages cut by at least one-third. The official explanation from television station leadership went: "Times have changed, and broadcasting and television units also have to reduce costs and increase efficiency."

Times have indeed changed.

In China today, there are 389 broadcasting and television stations at the prefecture-level and above, according to early 2024 data from China's National Radio and Television Administration (NRTA). There are 2,099 county-level television stations, and 33 educational television stations. Each television station broadcasts across several channels, and some operate 10 or more. But in 2024, as rumors circulated on social platforms that "nearly 2,000 local television stations are on the verge of collapse", the veneer of viability seemed to slip.

Regarding this figure, an individual working in a propaganda management department of a central government institution told Initium Media that while the above statement may to some extent be exaggerated, the fact that numerous local television stations face financial difficulties is undeniable. "Everyone is living like beggars, including China Central Television and leading provincial satellite TV stations," they said.

The source shared an internal document showing that several institutions, including several provincial television stations, have shut down channels under their jurisdiction to cope with the financial crisis. This includes music broadcasting, public channels, livelihood channels, and foreign language channels — and the result has been a wave of unemployment across the industry.

Those fortunate enough to keep their jobs during this downturn are hardly less miserable. Li Ming was formerly a reporter at a county-level city television station. In 2022, responding to a reform plan from relevant departments, the television station completed a merger with party media and new media under the supervision of the municipal propaganda department. The result was a new type of media unit called an "integrated media center". Created across the country by the thousands, these are multimedia hubs that the leadership has pushed actively in the Xi Jinping era in a bid, it says, to modernize content production and maintain the party’s public opinion dominance. Currently, this integrated media center format covers almost all radio and television channels in China except for China Central Television (CCTV) and provincial satellite TV stations.

As a reporter for an integrated media center, Li Ming must, in addition to filming, write articles and coordinate with local government propaganda priorities. At the same time, he must fulfill his formal job description, supplying materials to provincial satellite TV stations. In his view, however, all these tasks are supplementary to the true overriding priority: "My primary job seems more like that of a salesperson," he says.

The gradual "salesification" of reporters has become a trend for television station workers in China, including at major state-run outfits like China Central Television (CCTV). To alleviate financial pressure, many television stations assign business tasks to their staff, meaning that directors, editors, and reporters must actively solicit advertisements. This, in fact, has become the primary standard for assessment when it comes to key performance indicators, or KPIs.

"This is why many local television stations occupy large amounts of airtime repeatedly broadcasting advertisements for liquor, fake medicines, and health supplements,” Li Ming says. “These are among their few remaining ways to make money."

In stark contrast to the threadbare and constantly distressed situation of local television stations in China, CCTV, the country’s central-level broadcasting behemoth, appears more sophisticated and at ease as it leverages its inherent national influence to sell credibility. "At the end of the day, we have so many professional producers, editors, and reporters,” says one producer who has worked for the broadcasting for two decades told Initium Media. “We know how to package content so viewers can't even tell it's an advertisement."

However, unlike this producer who calmly accepted the identity transformation, when initially being "salesified," Wang Mengkai chose eventually to resign from the city-level television station where he worked. "If a reporter can no longer do news but instead shamelessly sings praises under the banner of the ‘reporter’ or the 'media professional' while feeling self-gratified, this is something ultimately shameful,” he says. “I feel sorrowful for having once been part of this. I will forever feel a debt to my former readers and viewers.”

COMMENT - So Chinese citizens are particularly interested in consuming a torrent of propaganda from the Chinese Communist Party… who could have guess?

16. Massive banners demanding political change were hung
    Human Rights in China, X (Twitter), April 15, 2025

Massive banners demanding political change were hung from an elevated bridge in Chengdu China, reading "Without political system reform, there will be no national rejuvenation."

“The people do not need a political party with unchecked power”

"China does not need anyone to point out the direction. Democracy is the direction."

The protester behind this bold act shared a photo of the scene before he was forcibly disappeared. He revealed that he had spent an entire year preparing for this moment, determined that it be seen and remembered—no matter the cost. His final words before all contact was lost were: “All I wish for is democracy in China.”

This act required extraordinary courage and careful planning. Like Fang Yirong in Hunan in July 2023, he is following in the footsteps of Peng Lifa, the “Bridge Man” who captured the world’s attention on Beijing’s Sitong Bridge in October 2022.

COMMENT –

• “No rejuvenation without political reform”

• “People deserve a party with restrictions of power”

• “We don’t need anyone to point out direction. Democracy is the direction.”

These are NOT unreasonable requests from Chinese citizens.

But this is what terrifies the Chinese Communist Party.

If Chinese citizens begin to question whether they might be better off with a more competitive political system, then the Party’s monopoly hold on power would weaken. That would open up opportunities for Chinese citizens to question other things.

The Party’s response is to blame “hostile foreign forces” (aka the “black hand” of the United States) for these spontaneous outbursts, portraying regular Chinese citizens who question the Party as traitors or insane.

17. Australian judge Robert French becomes latest foreign judge to quit Hong Kong's Court of Appeal
    ABC, April 11, 2025

An Australian judge has resigned from Hong Kong's highest court amid a years-long exodus of overseas jurists following Beijing's imposition of a sweeping national security law on the Chinese finance hub.

The city's judiciary said on Friday, local time, that Robert French had cut short his term, which was meant to expire in May 2026, adding that the court's operation would not be affected.

Judge French, a former Chief Justice of Australia's High Court, said he respected Hong Kong and the "integrity and independence" of the remaining foreign judges but that the "role of the non permanent justices on the Court of Final Appeal has become increasingly anachronistic and arguably cosmetic".

Hong Kong is a common law jurisdiction separate from mainland China and invites overseas judges to hear cases at its Court of Final Appeal.

Their presence has been seen as a bellwether for the rule of law since the former British colony was handed back to China in 1997.

A Hong Kong government spokesperson "expressed regret" at Judge French's resignation and thanked him for his contributions.

Judge French first joined the Hong Kong bench in 2017.

National security law prompts exodus

Beijing passed a national security law in the former British colony in 2020, following huge and often violent pro-democracy protests the year before.

The national security law, which criminalises secession, subversion or terrorism with up to life in prison, has led to hundreds of arrests.

Since 2020, six overseas judges have quit the top court without finishing their terms.

Four others have not renewed their appointments.

On Friday, Judge French reportedly declined to comment on the national security law but said he would "reject the proposition that [overseas judges] are somehow complicit" in how the government applied that law.

British judge Jonathan Sumption resigned last year after saying Hong Kong's "rule of law is profoundly compromised", shortly after 14 pro-democracy activists were convicted of subversion.

Hong Kong's chief justice is allowed to select one foreign judge — typically retired top jurists from Britain, Australia and Canada — to serve on the five-person Court of Final Appeal at any one time.

Cases at Hong Kong's top court are typically heard by a panel of four local judges and a fifth ad hoc member, who may be a foreign judge.

The line-up of overseas judges has gone from 15 at its peak down to five.

In January, Hong Kong's chief justice said recruiting suitable overseas judges "may be less straightforward than it once was" given geopolitical headwinds.

The government has defended the security law as necessary to restore order after the 2019 protests and said the city remains a well-respected legal hub.

COMMENT – What took Judge Robert French so long to cut his ties? The National Security Law passed back in 2020.

18. Breakdown in U.S.-China Relations Raises Specter of New Cold War
    Lingling Wei, Wall Street Journal, April 20, 2025

19. Beijing Stokes Patriotic Fervor and Blames U.S. for Trade War
    Brian Spegele, Wall Street Journal, April 18, 2025

20. How China’s model of internet censorship is getting traction in Asia: Interview with ARTICLE 19 researchers
    Filip Noubel, Global Voices, April 12, 2025

Cybersecurity is reframed as regime security under the banner of sovereignty.

While the internet developed exponentially from the late 90s as a tool to enable largely universal, borderless and free flow of information across languages and countries, that concept started being challenged by a number of governments in the early 2000s by the opposite idea of internet sovereignty: the right to limit that free flow as it contradicts efforts by illiberal governments to delay, control, censor or delete content deemed a threat to their ideological discourse.

One of the earliest proponents of leaving the global internet was China which rapidly built in the mid-2000s its own intranet, isolated from the global one by a powerful censorship filter, known as the Great Firewall. From the perspective of Chinese authorities, this decision proved to be successful as over a billion users surf the net inside China daily, are provided all sorts of tools and platforms to interact privately and publicly, be informed and entertained, and conduct business, while Beijing filters and removes effectively, now with the help of AI, any content or accounts deemed undesirable.

China has thus demonstrated it is possible to have a modern society and economy and yet a strong censorship tool — something that other non-democratic states, such as Russia, are eager to emulate. Elsewhere in Asia, this model is also considered as attractive to balance economic development and political control. ARTICLE 19, a British human rights organization established in 1987 and taking its name from Article 19 of the Universal Declaration of Human Rights, recently released a report in which it describes the importance of digital security norms increasingly imposed by China in the larger Asia-Pacific region, and contrasts them with Taiwan’s practice in this regard.

21. Article 23 security law: Hong Kong man jailed for 1 year over publishing 145 seditious comments online
    Hans Tse, Hong Kong Free Press, April 9, 2025

22. Hong Kong nat. security police take in parents of wanted US-based activist Frances Hui for questioning
    James Lee, Hong Kong Free Press, April 10, 2025

23. British MP refused entry in Hong Kong on family visit
    Eliza Gkritsi, Politico, April 13, 2025

24. Pro-Beijing Group That Pushed Erin O’Toole’s Exit Warns Chinese Canadians to “Vote Carefully”
    Sam Cooper, The Bureau, April 17, 2025

Group that triggered 2021 anti-O'Toole campaign now campaigning for Liberal candidates—while warning against criticism of China and India.

COMMENT – Canada has done next to nothing to protect its democracy from political manipulation by the Chinese Communist Party. Because if they were to do so, it would open up a can of worms about the Liberal Party’s victories in the 2019 and 2021 national elections.

With Trudeau gone, Mark Carney is happy to sweep this under the rug.

25. Zelenskiy says Chinese citizens working at drone production site in Russia
    Reuters, April 23, 2025

26. US urging allies to cease talks with Chinese satellite industry
    David DiMolfetta and Audrey Decker, Next Gov FCW, April 21, 2025

27. US places sanctions on Chinese refinery over Iran oil purchases
    Demetri Sevastopulo and Guy Chazan, Financial Times, April 16, 2025

28. Censors Dampen Online Commentary on Spiraling U.S.-China Trade War
    Arthur Kaufman, China Digital Times, April 13, 2025

29. Beijing Stokes Patriotic Fervor and Blames U.S. for Trade War
    Brian Spegele, Wall Street Journal, April 18, 2025

30. China Warns Against Trade Deal with U.S. at Beijing’s Expense
    Wall Street Journal, April 21, 2025

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Environmental Harms

31. China’s Yellow Sea fish farms stoke anger in South Korea
    Christian Davies and Kathrin Hille, Financial Times, April 21, 2025

Anger is building in South Korea over Chinese fish farming installations in the Yellow Sea, opening another front in Beijing’s tensions with its neighbours over its assertive conduct in disputed maritime territory.

South Korean lawmakers held a rare bipartisan parliamentary hearing last month to condemn steel structures installed by Chinese companies in the Yellow Sea, between China and the Korean peninsula.

Beijing insists the structures are intended for fishing, but officials and experts in South Korea see them as the latest example of China’s “grey zone” tactics, which critics say Beijing uses to bully countries including the Philippines, Vietnam and Taiwan in their territorial waters.

“This is a clandestine tactic to claim our waters inch by inch and restrict the operations of the US-South Korea alliance,” said Jaewoo Choo, head of the China Research Center at the Korea Research Institute for National Security think-tank in Seoul.

Na Kyung-won, a lawmaker from South Korea’s ruling conservative People Power party, accused China of using “gangster tactics” to “block other countries’ access by force” from the South and East China seas.

“A firm and stern response . . . is needed to address China’s unfair attempts to change the status quo,” she wrote on social media.

Beijing has tried to downplay the tensions. The Chinese embassy in Seoul last week defended the steel structures as “reasonable use [of] offshore waters” in line with domestic and international law and did not violate a bilateral fishing agreement between the countries.

China’s foreign ministry spokesperson Mao Ning last month said the situation in the Yellow Sea was “stable” and noted the sides maintained smooth communication through a dialogue mechanism on maritime affairs as well as between their respective maritime law enforcement agencies.

Chinese companies started building large-scale deep-sea fish farms in 2016 for Norwegian companies raising salmon in the Atlantic Ocean.

Construction on the first Yellow Sea installation, the Shenlan 1, began in 2018 in the “provisional measures zone”, a disputed area in the Yellow Sea where Chinese and South Korean exclusive economic zones overlap. It was built by Wanzefeng Group, a fisheries company based in eastern Shandong province.

A second structure, the Shenlan 2, was installed last year in the PMZ by a joint venture between Wanzefeng and state-owned Shandong Marine Group, despite Seoul’s protests.

32. Analyzing the Impact of the U.S.-China Trade War on China’s Energy Transition
    Ilaria Mazzocco, CSIS, April 22, 2025

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Foreign Interference and Coercion

33. Nvidia CEO stresses importance of China market in Beijing visit, Chinese state media reports
    Yahoo Finance, April 17, 2025

34. Nvidia CEO Visits Beijing After US Bars Chip Sales to China
    Olivia Tam and Felix Tam, Bloomberg, April 17, 2025

35. Canadian Police Raid Sophisticated Vancouver Fentanyl Labs, But Insist Millions of Pills Not Destined for U.S.
    Sam Cooper, The Bureau, April 10, 2025

Mounties say labs outfitted with high-grade chemistry equipment and a trained chemist reveal transnational crime groups are advancing in technical sophistication and drug production capacity.

COMMENT – Perhaps the Trump Administration has a reason to be concerned that Canada fails to take fentanyl seriously.

36. ‘Strait Thunder-2025A’ Drill Implies Future Increase in PLA Pressure on Taiwan
    Tai-yuan Yang and K. Tristan Tang, Jamestown Foundation, April 11, 2025

37. Palau’s president vows to stand with Taiwan ‘til death do us part’
    Nic Fildes, Financial Times, April 20, 2025

38. Ex-aide of top Taiwan security official accused of spying for China
    Matthew Strong, Taiwan News, April 12, 2025

39. Military couple gets more than 40 years in prison for spying
    Taipei Times, April 11, 2025

40. Majority of espionage cases involve active, ex-military personnel: NSB
    Focus Taiwan, April 8, 2025

41. Taiwan prosecutors indict Chinese boat captain over severed undersea cable
    NHK World, April 11, 2025

42. Beijing adviser Yan Anlin on why a timetable for Taiwan reunification has disadvantages
    Amber Wang, South China Morning Post, April 21, 2025

43. China to sanction US Congress members and others who ‘acted egregiously’ on Hong Kong
    Hayley Wong, South China Morning Post, April 21, 2025

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Human Rights and Religious Persecution

44. Serbia: Thousands protest demanding justice for victims of collapse of newly renovated railway station roof that killed 16
    Business & Human Rights Resource Centre, April 24, 2025

On November 1, the roof of a newly renovated train station in Novi Sad collapsed, killing 15 people and critically injuring two. The Novi Sad railway station had been under renovation for three years by a Chinese consortium as part of China’s massive Belt and Road Initiative, aimed at accelerating the transport of Chinese goods to Europe.

The incident sparked huge protests across Serbia, with demonstrators blaming the tragedy on corruption. In response, the government agreed to release certain documents related to the station’s renovation, pardon protesters arrested during demonstrations, increase funding for higher education, and initiate criminal proceedings against those accused of attacking demonstrators. Prosecutors have already indicted 13 people in connection with the collapse.

On March 21, another person who had been injured in the tragedy died, raising the death toll to 16.

During the latest protests in March, protesters claimed that the Serbian security forces had used a sonic weapon again them and demanded an independent investigation. Government denied the allegations.

45. The Novi Sad Railway Station Collapse: The Cost of Sino-Serbian Infrastructure Deals
    Stefan Vladisavljev, China Observers, February 6, 2025

46. The Chinese who built the collapsed solitaire in Bangkok also worked on the collapsed canopy in Novi Sad
    Vreme, March 31, 2025

47. China muzzles online debate on construction standards after Bangkok building collapse
    Alan Lu, Radio Free Asia, April 1, 2025

48. Man accused of spying on Uyghurs in Sweden was exiled group’s spokesman
    Radio Free Asia, April 10, 2025

49. Tibetan exile govt seeks probe into death of Tibetan Buddhist abbot in Vietnam
    Radio Free Asia, April 16, 2025

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Industrial Policies and Economic Espionage

50. China Stocks to Face $800 Billion US Selling in Extreme Case: GS
    Bloomberg, April 16, 2025

US investors could be forced to offload around $800 billion of Chinese equities “in an extreme scenario” of financial decoupling between the world’s two largest economies, Goldman Sachs Group Inc. estimates.

US institutional investors currently own about $250 billion worth of Chinese companies’ American Depositary Receipts, or 26% of the total market value, Goldman analysts including Kinger Lau wrote in a note dated Wednesday. Their exposure to Hong Kong stocks amounts to $522 billion and they own about 0.5% of China’s onshore equities. Together, that amounts to more than $800 billion worth of Chinese shares.

Goldman is joining a group of global banks that have started assessing the worst outcome for investors as the once-unthinkable prospect of a financial divorce between the US and China grows with an escalating trade war. Concerns about American stock exchanges kicking Chinese firms out, which became an issue during President Donald Trump’s first term, have resurfaced after Treasury Secretary Scott Bessent’s recent comment that all options are “on the table” in trade talks with China.

“The extreme levels of uncertainty in the global trading system have led to extraordinary volatility in the global capital markets, and concerns about global recession and decoupling risks between the two largest economies globally in other strategic cohorts,” the analysts wrote. They estimate that in a forced delisting scenario, ADRs and the MSCI China Index could see 9% and 4% valuation drawdown from current prices, respectively.

It may take just one day for US investors to complete sales of their A shares, while it may require 119 and 97 days to exit Hong Kong stocks and ADRs, respectively, Goldman estimates.

Meanwhile, in the same extreme scenario, Chinese investors might need to unload their US financial assets, which could amount to US$1.7 trillion, they wrote, adding that around US$370 billion of which would be in equities and US$1.3 trillion in bonds.

Among US passive funds, the Kraneshares CSI China Internet Fund, the largest China-focused exchange-traded fund in the US, could be more impacted in the event of forced liquidation due to ADR delisting, Goldman said. The fund has the highest weighting of ADRs at 33%, half of which do not carry Hong Kong listings, as well as a 72% ownership by US investors, the bank’s analysts added.

Earlier, JPMorgan Chase & Co. estimated that ADR delistings could lead to removal from global indexes, resulting in aggregate passive outflows of around $11 billion.

COMMENT – Don’t interpret this as some sort of official investment advice… but… you might want to check your portfolios.

Institutional investors have been warned for years now that the CCP’s unwillingness to cooperate with SEC transparency rules risks a delisting of PRC entities on U.S. exchanges.

The Biden Administration negotiated a weak compromise on this topic, and it is again open as an area of tension.

IMO it is pretty stupid for U.S. investors to be invested in PRC entities given the risks.

Here is more on the risks…

51. Chinese Stocks Trading in the US Face an Old Foe: Delisting

    Yiqin Shen and Lydia Beyoud, Bloomberg, April 15, 2025

The trade showdown between Washington and Beijing is spilling over to Chinese stocks listed in the US, with analysts war-gaming a scenario where they’re booted off American exchanges.

US Treasury Secretary Scott Bessent, asked about delisting companies, said all options are “on the table” in trade negotiations with China. While no further details have been floated, strategists and analysts at JPMorgan Chase & Co., Morgan Stanley, Jefferies Financial Group Inc. and UBS Group AG have published notes assessing the risk for the more than 200 Chinese companies listed in the US, with a total market capitalization of $1.1 trillion.

PDD Holdings Inc., the owner of discount e-commerce platform Temu, as well as the likes of Vipshop Holdings Ltd. and TAL Education Group could be hardest hit by such a move. These companies are among the relatively few US-traded Chinese firms with no Hong Kong-listed shares for their US stock to convert into.

In the event of delisting, these firms could be removed from global indexes, leading to about $11 billion worth of passive outflows, according to JPMorgan estimates — $9.4 billion of which would come from PDD alone.

The Nasdaq Golden Dragon China Index, a cap-weighted index of US-listed Chinese firms, has so far largely shrugged off the threat. It is down 0.5% in the year to date, outperforming the S&P 500 Index’s 8% drop over the same period.

Delisting Revisited

The scenario is familiar to investors in US-listed Chinese firms, which came under scrutiny during President Donald Trump’s first term when Beijing and Washington were locked in a dispute over the audit practices of Chinese companies. The issue was effectively resolved in 2022 and lay dormant until early in Trump’s second term, when he issued an executive order directing the government to step up scrutiny of US investment into Chinese companies.

The administration has numerous tools to implement delisting. The US Securities and Exchange Commission could order exchanges to delist Chinese or Hong Kong-based firms, or deregister those firms from trading in the US at all — even over-the-counter, where Didi Global Inc. and Luckin Coffee Inc. still trade despite leaving US exchanges. The SEC could also invoke an emergency power to order a trading suspension, though such a move might be bolstered if it were initiated by the White House.

Another option would be to require the SEC to issue a final rule prohibiting the use of variable interest entities, the business structure most Chinese and Hong Kong firms use to facilitate trading in the US, and which Trump cited in his executive order. All of those options would likely work faster than using the Holding Foreign Companies Accountable Act, the legislation underlying the previous auditing conflict.

With the flaring up of the trade war, Bessent’s comment is a reminder that the delisting threat remains part of Trump’s approach to managing the overall conflict between the two powers.

“The US has two powerful cards: ADR delisting and US investment ban,” according to a note from Jefferies analysts led by Edison Lee. “The US reciprocal tariffs are not just about trade, but more about competition between the US and China, and making sure the US wins.”

Valuation Risk

Delisting would raise liquidity concerns. Trading volume for some American depositary receipts, the structure often used by Chinese companies for their US-traded stock, has been much higher than for the firms’ Hong Kong listings, Jefferies wrote. The average daily trading volume of Alibaba Group Holding Ltd.’s and JD.com Inc.’s respective ADRs is about 80% higher than their Hong Kong shares, Morgan Stanley data showed.

If all ADRs were to be removed from US exchanges at the same time, “the entire Chinese equity market would face valuation downside risk” based on the ramping up of US-China geopolitical tensions, Morgan Stanley’s Laura Wang wrote in a note. Over the long run, however, the Hong Kong market should be able make up for the volume, especially for larger names, Wang added.

In the short term, forced delisting would be disruptive if shareholders find converting US ADRs into Hong Kong shares challenging, or they simply don’t want to hold them.

The risk is lower for most US-listed Chinese companies, according to Jerry Wu, a London-based fund manager at Polar Capital LLP. Alibaba and JD.com’s investor base was once primarily US backers, but now China domestic investors have become a key part of the owners of these shares, he said.

PDD is the exception, Wu said, citing its lack of a Hong Kong listing. “The roadmap is there, right? Alibaba and JD’s boards have done it in the last few years and if PDD wants to do it, I think it will be a simple enough process. But in the short term, I think it does create some volatility for shareholders.”

COMMENT – My perspective… you have been warned.

52. BYD, Geely and EV peers face tariff dilemma as Beijing delays go-global plans
    Yujie Xuein and Daniel Ren, South China Morning Post, April 17, 2025

53. Five-Minute EV Charging Is Here, but Not for U.S.-Made Cars
    Yoko Kubota, Wall Street Journal, April 23, 2025

54. China Tech Firms Eye US Listings Despite Widespread Ructions
    Pei Li, Julia Fioretti, and Dong Cao, Bloomberg, April 22, 2025

55. China’s Aluminum Makers Say Tariffs Won’t Deter Overseas Growth
    Bloomberg, April 16, 2025

56. The Hidden Risk of Rising U.S.-PRC Tensions: Export Control Symbiosis
    Philip Luck, CSIS, April 14, 2025

57. The H20 Problem: Inference, Supercomputers, and US Export Control Gaps
    Tao Burga, Arushi Gupta, and Tim Fist, Institute for Progress, April 15, 2025

58. FinCEN Issues Analysis of Fentanyl-Related Threat Patterns and Trends in Bank Secrecy Act Reports
    Financial Crimes Enforcement Network, April 9, 2025

59. China bans Boeing in targeted trade war shot
    Ross Clark, The Spectator World, April 16, 2025

60. Shein suppliers closing 'all over the place' in this China garment district
    Kentar Shiozaki, Nikkei Asia, April 18, 2025

61. China warns countries against making trade deals with the US unfavorable to Beijing
    AP News, April 21, 2025

62. China Shadow Bank’s Collapse Shows Wealth Wipeout Is Deepening
    Bloomberg, April 16, 2025

More than a year after one of China’s biggest trust companies collapsed, hopes for a recovery in the $3.7 trillion industry are quickly fading.

Zhongrong International Trust Co., which managed about $108 billion in 2022 before the government stepped in the following year after steep losses on real estate and other investments, was recently deemed insolvent by state-appointed custodians who submitted a winding-up proposal to regulators, Bloomberg reported this week.

The assessment is the latest indication of protracted pain in a key segment of China’s shadow banking system — as well as confirmation of Beijing’s unwillingness to bail out rich investors. While the industry’s woes show few signs of spiraling into a broader financial crisis, they’ve weighed heavily on the confidence of China’s biggest spenders. That could undermine a consumer revival the government is counting on to support the world’s second-largest economy as its trade war with the US intensifies.

“The confidence in the system among many in China’s elite has been shattered,” said Henry Zhang, an individual investor who lost 16 million yuan ($2.2 million) from trust products. He’s considering selling his family home in Beijing for a smaller apartment to raise cash.

Besides Zhongrong, at least 162 high-yielding trust products have defaulted since the beginning of 2024 with the majority of those related to soured property loans, according to data compiled by Use Trust. After being restructured again and again since its inception in 1979, the sector currently has more than 600 billion yuan of assets at risk of souring, according to Dacheng Law Offices.

When Zhongrong’s parent Zhongzhi Enterprise Group Co. collapsed in late 2023, analysts expected more than three quarters of investor cash would be lost. Zhongrong defaulted on about 250 billion yuan of trusts sold to more than 30,000 individuals and 2,000 institutions, according to investors citing Zhongrong executives. Zhang said he hasn’t got any money back.

While Chinese authorities have stepped up efforts to stabilize the property market, there’s scant signs of the trust products receiving a government backstop. That would leave investors on the hook for money they can no longer access.

Regulators published revised draft rules governing trust firms last week, insisting that buyers shoulder the losses, with sellers only compensating for any dereliction of duty.

Zhongrong and the National Financial Regulatory Administration didn’t reply to requests for comment.

Trusts typically take deposits from wealthy individual investors and companies to make investments in stocks, bonds and others assets, including loans to firms that can’t access traditional banks.

The sector’s combined profit peaked at 82.4 billion yuan in 2017 as officials tightened rules on the asset management industry, before falling in recent years as defaults jumped amid the property downturn and as trust firms struggled to find new growth drivers. Earnings slumped to 19.6 billion yuan in the first half of last year, down 41% from a year earlier, according to the latest data from the China Trustee Association.

Trust firms are also struggling to develop new growth areas to break away from a past of serving as a funding channel for developers and local governments. Shareholders like those in Tianjin Trust Co. have repeatedly failed to find buyers for their stakes through auctions.

The industry’s deterioration threatens to deal another blow to China’s economy that’s battling a tariff war from the US and anemic consumer spending at home.

‘Money Is All Gone’

Victoria Shen can hardly forget how her nightmare started on Aug. 8, 2023. The family, which had moved to the Chinese capital from southern China, were gathering at a police station to collect their permanent residence permits. Then her financial advisor called from Zhongrong.

Shen, who runs an internet-related company, had just moved more money into Zhongrong products — about 18 million yuan. Attractive returns of around 5.3% were not wildly high, but better than she could find elsewhere. The firm was a top player that was backed by a state-owned enterprise and had a solid track record of risk management, she said.

“Many of the short-term products were so popular you had to move fast before they were snapped up by others,” she said. Yet when the news broke, “the first reaction was — my money is all gone.”

Many of Zhongrong’s investors are private business owners like Shen and Steven Wang, who has a design company in Beijing and has invested 160 million yuan with Zhongrong. Some of the fellow investors’ businesses are struggling to survive, highlighting the spillover impact, he said.

“It’s not just our own families’ lives. When people don’t dare to raise money and don’t dare to invest, you can hardly have active markets,” Wang said in an interview in Beijing. “It has nothing to do with whether I have money or or not. I just have no confidence.”

Property Sale

While Zhongrong is unlisted and doesn’t have any outstanding public debt, a potential wind-down and ensuing lengthy bankruptcy proceedings would diminish hopes for tens of thousands of its wealthy customers to recoup their investments.

For Michael Ding, in the eastern Shangdong province’s city of Weifang, those trapped investments have changed his life. The soil-improvement technician who is in his thirties was plunged into chaos in 2023 when his savings, properties and work all came under threat. He invested around 6.2 million yuan in what he thought were safe products from Zhongrong and Zhongzhi since 2021, including rental income and gift money from his wedding. Now he can’t access any of it.

Meantime, local officials have cordoned off his downtown storefronts worth tens of millions of yuan after he rejected their offer to buy the real estate at a price about one tenth of their market value. That dispute, coupled with his trust product investment losses, have prevented him from normal work, he said.

“Now I’ve lost all my sources of income,” Ding said, adding that his tenants of storefronts have left and stopped paying rent. “Having experienced all this, how can you still have confidence in the government?”

Lee Li, who works at a local asset management company, said sleepless nights reduced his weight by 25 kilograms in six months and he’s faced repeated episodes of anxiety. His family has cut spending and stopped going on overseas trips. His risk appetite has been sapped after earlier investing around 17 million yuan.

“If I can get any of the money back, I’ll just put it all in bank deposits,” he said. “I don’t want any more risk.”

COMMENT – Yet more evidence that the Chinese economy is much weaker than the Chinese Communist Party portrays it as.

63. Retaliatory tariffs have raised Chinese duties on vehicle imports from the U.S. to 150%
    Mike Colias, Wall Street Journal, April 18, 2025

64. If Trump Delisted Chinese Stocks, Here’s How It Would Work
    Hannah Erin Lang, Wall Street Journal, April 19, 2025

65. Spending has slowed since 2017 peak but Beijing retains significant investments across the UK
    Amy Borrett, Financial Times, April 19, 2025

66. China Warns Countries Not to Team Up with U.S. Against It on Trade
    Vivian Wang, New York Times, April 21, 2025

Curbing trade with China to curry favor with the United States would be “selfish and shortsighted,” the government said, promising to retaliate.

The Chinese government on Monday warned other countries against curbing trade with China in order to win a reprieve from American tariffs, promising to retaliate against countries that do so.

The Chinese Ministry of Commerce said it was responding to foreign media reports that President Trump’s administration was trying to pressure other countries on their trade with China as a negotiating tactic.

“Appeasement will not bring peace, and compromise will not earn respect,” the ministry said in a statement. “Seeking so-called exemptions by harming the interests of others for one’s own selfish and shortsighted gains is like negotiating with a tiger for its skin. In the end, it will only lead to a lose-lose situation.”

China “firmly opposes any party reaching a deal at the expense of China’s interests,” it said, adding that China would “resolutely take countermeasures.”

The Trump administration has not officially said it would pressure countries to limit trade with China in return for relief from tariffs. But Mr. Trump has signaled that he is open to the idea. Last week on a Spanish-language Fox News program, the host asked Mr. Trump whether Latin American countries should be forced to choose between Chinese and American investment.

“Maybe, yeah, maybe,” Mr. Trump responded. “They should do that.”

The United States was the biggest single-country market for Chinese goods before the latest tariffs, but the Chinese government had been working for years to diversify its export markets, in part to hedge against rising tensions with Washington.

Since the latest escalation, China has been working furiously to shore up those ties with other countries, both to send a message that it will not be isolated, and to cast itself as a reliable alternative to an unpredictable America.

China’s leader, Xi Jinping, hosted the prime minister of Spain earlier this month, and he toured several Southeast Asian countries last week. In Vietnam, Mr. Xi called on other countries to join with China in defending free trade and “an open and cooperative international environment.” In Malaysia, he urged the region to “reject decoupling, supply disruption” and “tariff abuse.”

Chinese state media on Monday also highlighted remarks from Britain’s top budget official who said that cutting ties with China would be “foolish.” And Chinese officials have been reaching out to officials from the European Union, Japan and South Korea.

At stake for China is not only its direct trade ties with other countries, but also a potential route for its goods to continue reaching the United States. Chinese manufacturers in recent years have built factories in countries like Vietnam and Mexico, enabling them to continue selling to the United States without the “Made in China” label. If those countries limit trade with China, those back doors would be endangered.

Already, there are signs that some countries may offer China-related concessions to the United States. Vietnamese officials have pledged to crack down on transshipment, a practice where goods are shipped through a third country with a lower tariff rate. American officials have accused China of transshipping through Vietnam.

Other countries have also stopped short of endorsing China’s calls to team up against the American tariffs. After a social media account affiliated with Chinese state media said China, Japan and South Korea had agreed on a joint response, a Korean official said the claim was “somewhat exaggerated.”

But countries are also wary of offending China. Vietnam, for example, has not explicitly mentioned China in its promises to crack down on trade fraud.

And even before the Commerce Ministry statement on Monday, China had made clear it would not shy away from harsher tactics, in addition to its diplomatic overtures. In March, China imposed tariffs of up to 100 percent on canola oil and canola meal, pork and other foods from Canada. The tariffs were ostensibly a response to Canadian tariffs on Chinese goods. But Chinese state media also said they were a warning to Canada not to make nice with Mr. Trump at China’s expense.

Many countries would likely be wary of giving in to Washington’s demands, said Bert Hofman, a former World Bank official and now an adjunct professor at the National University of Singapore.

“The erratic style of policymaking of the Trump administration would make an anti-China trade pact a perilous venture, as the U.S. could change its mind overnight,” he said.

But some countries, such as Vietnam, likely had little choice but to prioritize the United States, said Zhiwu Chen, a professor of finance at the University of Hong Kong. He noted how Vietnam had reoriented its economy around attracting American and other foreign brands to manufacture there.

“They don’t really have a lot of leeway to take China’s side and offend the U.S.,” he said.

COMMENT – The United States will need to walk a tightrope, maintaining enough pressure on recalcitrant allies and partners, while simultaneously leaving enough hope that they can get a better deal with Washington than with Beijing.

67. China halted orders for U.S. soybeans and corn before tariff escalation
    Kentaro Shiozaki, et al., Nikkei Asia, April 21, 2025

68. US miner halts rare-earth exports to China due to tariff war
    Kenji Kawase, Nikkei Asia, April 21, 2025

69. China’s Export-Led Growth Exposes Economy to Steeper Tariff Hit
    Bloomberg, April 21, 2025

70. India to put 12% temporary tariff on steel to curb cheap China imports, source says
    Neha Arora, Reuters, April 21, 2025

71. China will struggle to survive a protracted battle with the US and the West
    Michael Sobolik, New York Post, April 20, 2025

72. U.S. Slaps Steep Tariffs on Southeast Asian Solar Imports
    Kimberley Kao, Wall Street Journal, April 22, 2025

73. From Fake Eyelashes to Care Bears, U.S.-Bound Goods Are Stuck in Tariff Limbo
    Jeanne Whalen, Wall Street Journal, April 21, 2025

74. China Trade Immune So Far to Tariffs with Growth Pickup in April
    Bloomberg, April 22, 2025

75. For our country': China's patriots are buying the dip
    Tom Westbrook, Reuters, April 22, 2025

76. China's cutthroat EV revolution leaves little margin for profit
    Victoria Waldersee, Reuters, April 22, 2025

77. How companies are responding to Trump's tariffs
    Reuters, April 22, 2025

78. China Track' bank netting system shields Russia-China trade from Western eyes
    Reuters, April 22, 2025

79. VW Group pitches comeback in China with new models, in-house assisted driving
    Victoria Waldersee, Reuters, April 22, 2025

80. China asks Korea not to export products using rare earths to US defense firms
    The Jerusalem Post, April 22, 2025

81. China Signals Openness to U.S. Trade Talks—but Not Under Duress
    Brian Spegele, Wall Street Journal, April 23, 2025

82. USTR Proposes 100% Tariffs on Chinese Ship-to-Shore Cranes and Cargo Handling Equipment
    Mike Schuler, gCaptain, April 18, 2025

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Cyber and Information Technology

83. China’s Chip Problem that Money Can’t Solve
    Arrian Ebrahimi and Lizzi C. Lee, The Wire China, April 16, 2025

84. Nvidia blindsided by Trump’s curbs in multibillion-dollar blow to China sales
    Zijing Wu, Cheng Leng and Michael Acton, Financial Times, April 16, 2025

85. AMD expects $800M charge due to US’ license requirement for AI chips
    Kyle Wiggers, Tech Crunch, April 16, 2025

86. Nvidia Is Now the Biggest U.S.-China Bargaining Chip
    Dan Gallagher, Wall Street Journal, April 16, 2025

87. Washington Takes Aim at DeepSeek and Its American Chip Supplier, Nvidia
    Tripp Mickle, et al., New York Times, April 16, 2025

88. U.S. Tries to Crush China’s AI Ambitions with Chips Crackdown
    Liza Lin and Amrith Ramkumar, Wall Street Journal, April 17, 2025

89. Grading Day
    Eliot Chen, The Wire China, April 13, 2025

90. NCSC Warns of Spyware Targeting Chinese and Taiwanese Diaspora
    Phil Muncaster, Infosecurity, April 9, 2025

91. DeepSeek’s “Outstanding Results in the Field” of Public Security and Public Opinion Response
    Samuel Wade, China Digital Times, April 9, 2025

92. Brass Typhoon: The Chinese Hacking Group Lurking in the Shadows
    Lily Hay Newman, Wired, April 14, 2025

93. U.S. Chipmakers Fear They Are Ceding China’s A.I. Market to Huawei
    Tripp Mickle, New York Times, April 18, 2025

94. Huawei readies new AI chip for mass shipment as China seeks Nvidia alternatives, sources say
    Fanny Potkin, Reuters, April 21, 2025

95. Yahoo will give millions to a settlement fund for Chinese dissidents, decades after exposing user data
    Eileen Guo, MIT Technology Revies, April 21, 2025

96. TSMC Warns of Limits of Ability to Keep Its AI Chips from China
    Jane Lanhee Lee, Bloomberg, April 20, 2025

97. Promethean Rivalry
    Bill Drexel, CNAS, April 22, 2025

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Military and Security Threats

98. US says Chinese firm is helping Houthis target American warships
    Demetri Sevastopulo, Financial Times, April 17, 2025

99. Silicon Valley’s Military Drone Companies Have a Serious ‘Made in China’ Problem
    David Jeans, Forbes, April 16, 2025

100. How China’s Boeing Ban Threatens to Backfire on Its Own Plane Maker
     James T. Areddy, Wall Street Journal, April 17, 2025

101. The Origin
     The White House, April 16, 2025

102. Boeing Begins Flying Back Planes Destined for Chinese Airlines
     Julie Johnsson, Siddharth Vikram Philip, and Danny Lee, Bloomberg, April 18, 2025

103. China Warns US Over F-16 Sales
     Ryan Chan, Newsweek, April 10, 2025

104. Sweden concludes that it cannot rule out sabotage over subsea cable break
     Alexander Martin, The Record, April 16, 2025

105. Amid a trade war, Xi Jinping may be purging China’s military
     The Economist, April 22, 2025

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One Belt, One Road Strategy

106. Collapsed Beijing Belt and Road Station in Serbia Triggers Revolution Against 'Mafia State' Corruption
     Sam Cooper, The Bureau, April 16, 2025

107. Taking the fast train back to imperialism
     Sean Thomas, The Spectator World, April 11, 2025

108. Battle lines of U.S.-China trade war sharpen in Southeast Asia
     Rebecca Tan, Washington Post, April 20, 2025

109. Africa is the new front in Trump’s trade war against China
     James Tidmarsh, The Spectator World, April 11, 2025

110. Pakistan still long way off China Belt and Road goals after 10 years
     Adnan Aamir, Nikkei Asia, April 20, 2025

111. China woos trade war 'circle of friends' as Kenya, Azerbaijan leaders visit
     Ck Tan, Nikkei Asia, April 22, 2025

112. Trump’s Tariffs Risk Pushing Cambodia Further into China’s Embrace
     Josh Xiao, Bloomberg, April 22, 2025

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Opinion

113. Five Signs That the US and China Will Go to War
     James Stavridis, Bloomberg, April 16, 2025

114. China is wary of America’s intentions
     Rana Mitter, The Spectator World, April 7, 2025

115. The Once and Future China, How Will Change Come to Beijing?
     Rana Mitter, Foreign Affairs, April 22, 2025

116. Taiwan: the sponge that soaks up Chinese power
     Nathan Attrill, The Strategist, April 16, 2025

117. What Trump Isn’t Telling You About His Trade War with China
     Nicholas Kristof, New York Times, April 19, 2025

118. Trump’s Tariffs Will Pay Off, for China
     Max Guther, New York Times, April 22, 2025

119. China looks beyond the US with new chief trade negotiator
     Hao Nan, Nikkei Asia, April 22, 2025