Friends,
Before we jump into last week’s news, I want to remind everyone that Wednesday is the 36th anniversary of the Tiananmen Massacre, in which the Chinese Communist Party ordered the People’s Liberation Army to end the peaceful protests in Beijing and other Chinese cities by killing protesters.
As the Party ramps up its annual efforts to memory-hole June 4th, you should resist by seeking out the history of what happened that night.
Pick up Louisa Lim’s 2014 book, The People’s Republic of Amnesia: Tiananmen Revisited, or watch her interview about the book here.
For some recent reporting on horrendous human rights abuses, I recommend reading the series of reports below on the continued abuse of Uyghurs as forced labor across hundreds, if not thousands, of comapnies manufacturing in the PRC. This isn’t just an oversight by the Chinese Communist Party, it is a calculated policy to suppress and destroy an ethnic minority. (See articles #41, #42, #43, and #44).
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The Collapse of the ‘Spirit of Geneva’
It appears that the interim deal that American and PRC trade negotiators worked out in Geneva on May 12, has collapsed.
One perspective is that the PRC refused to ease the export controls on rare earths and other critical minerals and magnets, which stood to disrupt manufacturing in the United States. The Administration thought they had an agreement with Beijing to permit those exports, but Washington became convinced over the past week that Beijing was purposefully dragging its feet in an effort to harm those companies and the U.S. economy even as Washington threw Chinese manufacturers a lifeline.
Treasury Secretary Bessent alluded to this when he said on Friday in an interview that talks between the two sides had “stalled” and that Xi and Trump would need to speak directly to overcome the differences.
Another perspective holds that the collapse in Sino-American trade negotiations was due to the so-called ‘TACO Trade.’
For those of you who aren’t familiar, the ‘TACO trade’ is a term coined by a Financial Times reporter and amplified by Wall Street traders and bankers.
From Instagram
On Wednesday, Trump was asked by a Wall Street Journal reporter what he thought about being called TACO and he became visibly agitated and called the question “nasty.”
From ABC News, “Trump lashes out at viral ‘TACO trade’ meme. What does it stand for?” (May 29, 2025)
Cue the flood of memes…
Within a day of this content exploding across the internet, we got this post on Truth Social:
A third perspective is that the ruling by the U.S. Court of International Trade against a central plank in the Administration’s global reciprocal tariffs, undercut the Administration’s negotiating position, which forced the Administration to initiate a flurry of actions against the PRC, lest Beijing believe that Washington’s leverage was gone.
Of note, the court ruling only concerned those tariffs imposed under the International Emergency Economic Powers Act (IEEPA)… not the tariffs associated with other statutory authorities, which cover many of the tariffs on the Chinese economy. An Appeals Court allowed the IEEPA tariffs to stay in place while the Administration puts its arguments together… this will undoubtably end up at the Supreme Court.
I suspect the explanation for the collapse of the ‘Spirit of Geneva’ is a mixture of these three reasons (and perhaps a few more). After all, important geopolitical developments are almost always multi-causal.
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Insights into domestic politics in the PRC
Bill Biship at Sinocism highlighted a great interview with Victor Shih, I recommend watching it (#6 below).
Dwarkesh Patel had some really insightful questions and Victor Shih was excellent as usual. Victor runs an exceptional China program at the University of California, San Diego and I’m looking forward to attending his annual China Conference in August.
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What’s holding Europe back?
Two weeks ago, the Wall Street Journal did a report about tech Industry dynamics across the United States, the PRC, and Europe.
I thought this chart illuminates a lot.
From “The Tech Industry Is Huge—and Europe’s Share of It Is Very Small,” WSJ, May 19, 2025.
What is the impediment that prevents Europeans from starting and growing new businesses in the technology field? It appears that there is something structural holding them back. Mario Draghi’s report on EU Competitiveness from September 2024 does a good diagnosis of the problem and recommends some solutions, but Brussels (and Member states) have an awful lot of work to do.
If you find this newsletter helpful, please consider supporting it with a paid subscription.
Thanks for reading!
Matt
MUST READ
Scott Bessent says U.S.-China trade negotiations are 'stalled'
Catherine Baab, Quartz, May 30, 2025
Just weeks after a dramatic tariff rollback, negotiations are at a standstill. And as legal uncertainty mounts, 83% of CEOs expect a recession.
U.S. Treasury Secretary Scott Bessent said Thursday that trade negotiations with China are “a bit stalled,” just weeks after both sides declared a 90-day tariff truce.
In an interview with Fox News, Bessent suggested that actual progress may hinge on a direct call between President Trump and Chinese President Xi Jinping. “Given the magnitude of the talks… this is going to require both leaders to weigh in,” he said.
The comments underscore how quickly optimism over the May breakthrough has faded and the ongoing policy whiplash making it difficult for investors and business leaders to tell which way is up. The temporary truce had seen both countries drastically slash reciprocal tariffs — cutting U.S. rates on Chinese goods from 145% to 30%, and Chinese tariffs from 125% to 10% — in what Bessent described as a shared effort to avoid “de facto economic decoupling.”
But the legal and diplomatic terrain since then has only grown more complex
To recap: On Wednesday of this week, the U.S. Court of International Trade ruled that many of Trump’s tariffs were unlawfully enacted, threatening to roll back large portions of his trade agenda, including aspects of his China-specific initiatives. Then, on Thursday, a federal appeals court issued a temporary stay, allowing the tariffs to remain in place while it reviews the case. The administration now has until June 9 to make its arguments, with the White House vowing to escalate the battle all the way to the Supreme Court if needed.
Donald Trump orders US chip software suppliers to stop selling to China
Demetri Sevastopulo, Zijing Wu, and Michael Acton, Financial Times, May 28, 2025
The Trump administration has told US companies that offer software used to design semiconductors to stop selling their services to Chinese groups, in the latest attempt to make it harder for China to develop advanced chips.
Several people familiar with the move said the US Department of Commerce had told so-called electronic design automation groups — which include Cadence, Synopsys and Siemens EDA — to stop supplying their technology to China.
The Bureau of Industry and Security, the arm of the US commerce department that oversees export controls, issued the directive to the companies via letters, according to the people. It was unclear if every US EDA company had received a letter.
The move marks a significant new effort by the administration to stymie China’s ability to develop leading-edge artificial intelligence chips, as it seeks a technological advantage over its geopolitical rival. In April, Washington restricted the export of Nvidia’s China-specific AI chips.
On its second-quarter earnings call on Wednesday, Synopsys chief executive Sassine Ghazi said: “We are aware of the reporting and speculation, but Synopsys has not received a notice from BIS. So, our guidance that we are reiterating for the full year reflects our current understanding of BIS export restrictions, as well as our expectations for a year-over-year decline in China [revenue].”
An official from the commerce department said it was “reviewing exports of strategic significance to China. In some cases, [the department] has suspended existing export licences or imposed additional licence requirements while the review is pending.”
The directive comes at a delicate time as the US and China try to reach a trade deal after both sides recently agreed in Geneva to pause tit-for-tat tariffs for 90 days.
The Financial Times reported last month that the Trump administration intended to put a number of Chinese chipmakers on a blacklist that would make it extremely difficult for US companies to provide them with American technology. But some officials pushed for a delay to avoid jeopardising the two countries’ trade talks.
Christopher Johnson, a former CIA China analyst, said the new export controls underscored the “innate fragility of the tariff truce reached in Geneva. With both sides wanting to retain and continue demonstrating the potency of their respective chokehold capabilities, the risk the ceasefire could unravel even within the 90-day pause is omnipresent”.
Johnson, who heads China Strategies Group, a risk consultancy, said that China had successfully leveraged its stranglehold on rare earths to bring the US to the negotiating table in Geneva, which “left the Trump administration’s China hawks eager to demonstrate their export control weapons still have purchase”.
While it accounts for a relatively small share of the overall semiconductor industry, EDA software allows chip designers and manufacturers to develop and test the next generation of chips, making it a critical part in the supply chain.
Synopsys, Cadence Design Systems and Siemens EDA — part of Siemens Digital Industries Software, a subsidiary of Germany’s Siemens AG — account for about 80 per cent of China’s EDA market. Synopsys and Cadence did not immediately respond to requests for comment.
In fiscal year 2024, Synopsys reported almost $1bn in China sales, roughly 16 per cent of its revenue. Cadence said China accounted for $550mn or 12 per cent of its revenue.
Synopsys shares fell 9.6 per cent on Wednesday, while those of Cadence lost 10.7 per cent.
Siemens said in a statement the EDA industry had been informed last Friday about new export controls. It said it had supported customers in China “for more than 150 years” and would “continue to work with our customers globally to mitigate the impact of these new restrictions while operating in compliance with applicable national export control regimes”.
In 2022, the Biden administration introduced restrictions on sales of the most sophisticated chip design software to China, but the companies continued to sell export control-compliant products to the country.
In his first term as president, Donald Trump banned China’s Huawei from using American EDA tools. Huawei is seen as an emerging competitor to Nvidia with its “Ascend” AI chips.
Nvidia chief executive Jensen Huang recently warned that successive attempts by American administrations to hamstring China’s AI ecosystem with export controls had failed.
Last year Synopsys entered into an agreement to buy Ansys, a US simulation software company, for $35bn. The deal still requires approval from Chinese regulators. Ansys shares fell 5.3 per cent on Wednesday.
On Wednesday the US Federal Trade Commission announced that both companies would need to divest certain software tools to receive its approval for the deal.
The export restrictions have encouraged Chinese competitors, with three leading EDA companies — Empyrean Technology, Primarius and Semitronix — significantly growing their market share in recent years.
Shares of Empyrean, Primarius and Semitronix rose more than 10 per cent in early trading in China on Thursday.
COMMENT - We should have been doing this years ago. The whole “Small Yard, High Fence” philosophy failed to deny the PRC the tools (software and hardware) to flood the market with legacy chips, which will undermine all the semiconductor companies we are trying to support.
U.S. Pauses Exports of Airplane and Semiconductor Technology to China
Ana Swanson, New York Times, May 28, 2025
President Trump has stopped some critical products and technologies made only in the United States from flowing to China, flexing the government’s power over global supply chains.
The Trump administration has suspended some sales to China of critical U.S. technologies, including those related to jet engines, semiconductors and certain chemicals and machinery. The move is a response to China’s recent restrictions on exports of critical minerals to the United States, a decision by Beijing that has threatened to cripple U.S. company supply chains, according to two people familiar with the matter.
The new limits are pushing the world’s largest economies a step closer toward supply chain warfare, as Washington and Beijing try to flex their power over essential economic components in an attempt to gain the upper hand in an intensifying trade conflict.
A growing standoff over critical supply chains could have significant implications for companies that depend on foreign technologies, including makers of airplanes, robots, cars and semiconductors.
It could also complicate efforts to negotiate an end to a trade fight over the administration’s tariff policies. On May 12, negotiators from the two countries agreed to reduce the punishing tariffs they have imposed on each other for 90 days while negotiators sought a longer-term resolution.
Scott Bessent, the Treasury secretary, said at the time that “the consensus from both delegations is that neither side wanted a decoupling.” Yet the administration continues to target China with punitive measures. Secretary of State Marco Rubio also announced on Wednesday that the United States would “aggressively revoke” visas for Chinese students who study in critical fields or who have connections to the Chinese Communist Party.
Since their agreement to roll back tariffs in May, U.S. officials had expected the Chinese to relax restrictions they had imposed on critical minerals. The Trump administration does not appear to be pleased with China’s efforts. In recent days, the Chinese have restarted some shipments of rare earth minerals and magnets, but they have been limited, one of the people said. American companies remain concerned about their access to critical Chinese supplies.
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In April, China suspended exports of a range of critical minerals and magnets, which are essential for automakers, aerospace manufacturers, semiconductor companies and military contractors around the world. The Chinese government said it had halted the shipments while drafting a new regulatory system.
Beijing’s moves were in response to Mr. Trump’s decision to sharply increase tariffs on China in early April, to a minimum of 145 percent, after Beijing retaliated against his earlier tariffs. Mr. Trump had imposed levies on dozens of countries globally, citing their unfair trade practices, and warned other countries not to respond in kind.
The new U.S. restrictions appear to be part of a broader review within the Commerce Department of exports of strategic goods to China. The Bureau of Industry and Security, a division within the department, is in charge of granting companies licenses that allow them to export products that have military value or other strategic importance to the United States.
One person familiar with the matter, who declined to be named to discuss private conversations, said the Commerce Department had suspended some licenses that allowed American companies to sell products and technology to COMAC, a Chinese state-owned aerospace manufacturer, for use in its C919 aircraft.
The Commerce Department did not immediately respond to a request for comment.
The C919, a plane comparable in size to the Boeing 737 or the Airbus A320, carried paying passengers for the first time in 2023. Many of the plane’s parts, including its engines and components necessary to power and control the aircraft, come from U.S. and European suppliers.
China is a long way away from producing enough planes to meet its needs and, analysts say, will continue to be dependent on Boeing and Airbus for planes, and companies like GE Aerospace for jet engines, for many years to come.
The Trump administration also appears to have paused exports of software, sold by companies like Cadence, Synopsys and Siemens, used to design computer chips.
The Financial Times earlier reported that the Trump administration was restricting exports of chip design software to China. The Biden administration had placed some limits on sales to China of software for the most advanced chips, but most sales were not affected by those restrictions.
China has accelerated its efforts to develop its own advanced chips, particularly since the United States and its allies started restricting exports of advanced chips and the equipment used to make them to curb China’s progress in artificial intelligence. But it remains dependent on foreign countries for software and machinery used to make advanced chips.
Representatives for GE, Honeywell, Cadence and Siemens did not immediately respond to requests for comment. Synopsys declined to comment.
China remains one of the United States’ largest trading partners, but both countries have increasingly viewed the other as an unreliable source of critical products.
The United States has steadily expanded its restrictions on sharing advanced technology with China and put restrictions on U.S. investments in Chinese tech firms. In recent months, the Trump administration has blocked more sales of artificial intelligence chips to China, and it is weighing further blacklisting of Chinese semiconductor firms.
Chinese leaders have long sought to reduce their country’s reliance on foreign resources and products, to allow China to better withstand embargoes, armed conflict and other threats. Beijing has set about subsidizing and dominating certain industries, like electric vehicles, mineral processing and wind turbines. Its exports of huge amounts of low-priced goods have put competing manufacturers in the United States and other countries out of business.
China’s rare earth restrictions have further raised alarms among politicians and executives about America’s dependence on China for a variety of products and potential vulnerability in case of conflict. While China has flexed its control over supply chains in conflicts with countries before — including banning exports of rare earths to Japan in 2010 amid a political dispute — it has never before cut off such a significant commodity to the United States.
China has criticized U.S. export controls and sought to portray itself as a defender of global trade rules. On Tuesday, the Chinese government met with Chinese and European chip companies to discuss deeper collaboration and brief them on how to request licenses for rare earths, according to Chinese state media.
In a statement, the Chinese commerce ministry said that the security and stability of the global chip supply chain was “facing severe challenges” and that it “resolutely” rejected “unilateralism and bullying.”
COMMENT - Again, this is something we should have been doing years ago.
Synopsys Suspends Guidance After US Notice on Export Curbs
Nick Turner and Ian King, Bloomberg, May 29, 2025
Synopsys Inc. suspended its financial guidance for the current quarter and the full fiscal year after receiving word from the US government of new restrictions on exports to China.
The company said it got a letter from the Commerce Department’s Bureau of Industry and Security informing it of the new curbs on Thursday. “Synopsys is currently assessing the potential impact of the BIS Letter on its business, operating results and financial condition,” the company said in a statement.
The stock fell as much as 5.2% following the announcement, wiping out an early gain of more than 5.5%.
Bloomberg News reported on Wednesday that the Trump administration was moving to restrict the sale of chip design software to China. BIS sent letters to some of the leading providers of electronic design automation, or EDA, last Friday telling them to halt shipments to Chinese customers, said people familiar with the matter. Top makers of the technology include Synopsys, Cadence Design Systems Inc. and Germany’s Siemens AG.
COMMENT - I have very little sympathy for Synopsys and others who spent enormous energy lobbying the last Administration to prevent this from happening.
Trump orders could end Chinese drone sales in the U.S.
Gerrit De Vynck, Warren Strobel, and Ellen Nakashima, Washington Post, May 31, 2025
The White House is finalizing multiple executive orders on drones that could lead to Chinese companies being barred from selling new models in the United States, potentially upending the consumer drone market while escalating the growing conflict between the U.S. and China over technology and trade.
The draft orders, which President Donald Trump is expected to sign as early as next week, also call on the federal government to invest in the U.S. domestic drone industry, which has struggled to compete with the Chinese drone makers that currently dominate, people familiar with the matter said. They spoke on the condition of anonymity because the orders are still being finalized.
The new policies also would seek to update federal regulations on where commercial drones can be legally flown after unauthorized incursions over U.S. military bases in recent years, the people said. Politico first reported on the orders Friday.
COMMENT - Hard to see how the U.S. could build a non-PRC drone industry without this action.
VIDEO – Xi Jinping’s paranoid approach to AGI, debt crisis, & Politburo politics — Victor Shih
Dwarkesh Patel and Victor Shih, Dwarkesh Podcast, May 29, 2025
On this episode, I chat with Victor Shih about all things China. We discuss China’s massive local debt crisis, the CCP’s views on AI, what happens after Xi, and more.
Victor Shih is an expert on the Chinese political system, as well as their banking and fiscal policies, and he has amassed more biographical data on the Chinese elite than anyone else in the world. He teaches at UC San Diego, where he also directs the 21st Century China Center.
COMMENT – Great interview with Victor Shih, who has forgotten more about the PRC’s domestic politics than the rest of us will ever know.
Prague accuses China of hacking Czech foreign ministry
Antoaneta Roussi, Politico, May 28, 2025
EU also slams Beijing for “malicious cyber campaign.”
The Czech government on Wednesday condemned China for carrying out a cyberattack against its foreign ministry exposing thousands of unclassified emails.
Czechia said that the Chinese state-sponsored group Advanced Persistent Threat 31 (APT31) targeted the foreign ministry from 2022 — the year the country held the rotating EU presidency — and was able to read unclassified emails sent between embassies and EU institutions.
The Czech foreign minister, Jan Lipavský, said he would summon the Chinese ambassador immediately to explain the findings and tell him this would damage the countries' bilateral relations.
"With today’s move, we have exposed China, which has long been working to undermine our resilience and democracy,” Lipavský said. “Through cyberattacks, information manipulation, and propaganda, it interferes in our society — and we must defend ourselves against that.”
It is the first time the Czech government has attributed a national cyberattack to a state-backed actor.
An investigation conducted by the Security Information Service, Military Intelligence, Office for Foreign Relations and Information, and National Cyber and Information Security Agency (NUKIB) provided Czech authorities with a high degree of certainty about who was behind the targeting of the ministry.
APT31 is run by China’s ministry of state security from the city of Wuhan, according to the U.S. justice department.
The group has been accused of high-profile attacks in the past, including targeting the personal emails of campaign staff working for U.S. presidential candidate Joe Biden in 2020. In 2024, the U.K. and U.S. imposed sanctions on individuals tied to APT31.
The alleged Chinese hack sparked outrage in Brussels, among the EU's top brass and at NATO headquarters.
“The European Union and its Member States, together with international partners, stand in solidarity with Czechia regarding the malicious cyber campaign that targeted its Ministry of Foreign Affairs,” the EU’s top diplomat, Kaja Kallas, said in a statement.
“We call upon all states, including China, to refrain from such behavior, to respect international law and to adhere to the UN norms and principles, including those related to critical infrastructure," Kallas added.
"Cyber threat actors persistently seek to destabilize the Alliance. We remain committed to expose and counter the substantial, continuous and increasing cyber threat, including to our democratic systems and critical infrastructure. We are determined to further improve our capabilities and resilience and to employ the necessary capabilities in order to deter, defend against and counter the full spectrum of cyber threats to support each other," the NATO military alliance said in a statement Wednesday.
COMMENT - Unsurprising… hopefully some of the other EU Member states will start to pay attention (side-eye at you Madrid).
The Fed Economist Accused of Espionage for Beijing
Chun Han Wong and Nick Timiraos, Wall Street Journal, May 24, 2025
John Rogers voiced admiration for China before U.S. prosecutors alleged that he sent secrets to Beijing.
John Rogers was visiting Shanghai in May 2013, attending a business forum as a Federal Reserve economist, when he first received an email from an alleged Chinese intelligence agent.
The man described himself as a Chinese graduate student who was interested in learning about the Fed. Rogers says he refused the man’s offer to pay him. But they stayed in touch, and later, the man invited Rogers to visit China again, all expenses paid.
This time, Rogers made the trip, setting off a chain of events that led to espionage charges against him in the U.S.—and exposed new details about China’s alleged efforts to recruit informants inside U.S. government institutions.
Prosecutors allege Rogers handed over sensitive information to Chinese operatives, who posed as students and who offered to cover travel expenses to China. Rogers met his Chinese handlers in hotel rooms and in some cases shared internal Fed reports, including information prepared for discussions by the rate-setting Federal Open Market Committee, according to an indictment unsealed in January that accused Rogers of conspiring to commit economic espionage.
Federal Bureau of Investigation officers arrested Rogers in January and found $50,000 in cash at his Washington-area apartment—money that his wife said belonged to her.
Rogers, who left the Fed in 2021, has denied all charges against him, including that he knowingly assisted Beijing. People who know him, and his role at the Fed, say his value to China would have been limited because he wasn’t privy to high-level decision-making.
An attorney for Rogers said the government’s indictment lacks context and relevant facts that would undercut its implication of impropriety. For example, Rogers doesn’t speak Chinese, the attorney said.
The indictment “presents an overly-simplistic, one-sided, and skewed version of events,” said the lawyer, who added that Rogers’s legal team would provide a detailed rebuttal in court “where we will prove Dr. Rogers’s innocence.”
COMMENT – I could see this as adding fuel to the argument that the Fed needs to fall under executive authority more than it is. If the Fed is the target of nation-state intelligence services and potentially open to manipulation, that could clearly trigger greater Presidential control over the Federal Reserve.
U.S. Aims to Keep Chinese Navy Guessing with New Missile System
Gabriele Steinhauser, Wall Street Journal, May 25, 2025
As China dominates swaths of Pacific, U.S. looks for ways to push back, with Nmesis a key part of that.
The Air Force C-130 transport plane dipped down on the sun-baked airfield of this remote island in the northern Philippines, delivering a weapon system designed to give the U.S. an edge in the intensifying superpower standoff in the Pacific.
The Navy-Marine Expeditionary Ship Interdiction System, or Nmesis, is an antiship missile launcher mounted on a remote-controlled truck. The dumbbell-shaped islet where it landed lies just 120 miles south of Taiwan.
For the Marines, the Nmesis’s flight to Batan was a key test in a high-stakes retooling aimed at readying the military’s rapid-response force for a war with China in some of the world’s most strategic, but increasingly tense, waterways.
The prospect of an armed conflict with China—whether over Taiwan, the self-governed democracy Beijing claims as its own, or the contested shipping lanes of the South China Sea—has the U.S. playing catch-up. While American forces were bogged down in Iraq and Afghanistan, China built up the world’s biggest navy and a formidable arsenal of missiles aimed at making swaths of the Pacific off-limits to its adversaries.
The Nmesis—pronounced “nemesis”—was designed to erode that lead. It takes advantage of natural chokepoints like Batan to raise the cost of access for Chinese warships. Initially built to be launched from ships, the Norway-made Naval Strike Missiles the Nmesis fires can sink vessels some 115 miles away, skimming the water and adjusting their trajectory to follow and hit a moving target.
With the Nmesis, Marines can now shoot these high-precision missiles from land, including from remote, mountainous islands like Batan, where launchers are far easier to conceal than on the open water. The main vehicle carrying the missiles is unmanned. Its operators work from a distance, based in two support vehicles that place them outside the line of fire of anyone trying to take out the launchers.
The Nmesis’ mere presence on strategic islands in the Pacific complicates decision-making for adversaries, who have to weigh the threat it poses for any vessel that may find itself within striking distance, said Col. John Lehane, the commander of the Hawaii-based Marine regiment that deployed the system to Batan late last month as part of an annual exercise.
“Once you put it on the ground, it is there. It can move around. It is hard to find,” Lehane said.
COMMENT – Along with the Army’s Typhon, the Marine Corps’ Nmesis imposes a form of Anti-Access, Area-Denial (A2AD) on the PLA.
I recommend going back and reading my piece on the Typhon back in September 2024, “Behold, the Typhon! Ode to the humble HEMTT”.
Poorest 75 nations face ‘tidal wave’ of debt repayments to China in 2025, study warns
Helen Davidson, The Guardian, May 27, 2025
Vulnerable countries to pay record $22bn this year, mostly relating to loans issued under Xi Jinping’s belt and road initiative.
The most vulnerable nations on Earth are facing a “tidal wave” of debt repayments as a Chinese lending boom starts to be called in, a new report has warned.
The analysis, published on Tuesday by Australian foreign policy thinktank the Lowy Institute, said that in 2025 the poorest 75 countries were on the hook for record high debt repayments US$22bn to China. The 75 nations’ debt formed the bulk of the total $35bn calculated by Lowy for 2025.
“Now, and for the rest of this decade, China will be more debt collector than banker to the developing world,” the report said.
The pressure to repay was putting strain on local funding for health and education as well as climate change mitigation.
“China’s lending has collapsed exactly when it is needed most, instead creating large net financial outflows when countries are already under intense economic pressure,” it said.
The loans were largely issued under President Xi Jinping’s signature belt and road initiative (BRI), a state-backed global infrastructure investment programme which has underwritten national projects from schools, bridges and hospitals to major roads and shipping and air ports.
The lending spree turned China into the largest supplier of bilateral loans, peaking with a total of more than $50bn in 2016 – more than all western creditors combined.
The BRI focused primarily in developing nations, where governments struggled to access private or other state-backed investment. But the practice has raised concerns about Chinese influence and control and drawn accusations that Beijing was seeking to entrap recipient nations with unserviceable debt. Last month another analysis by the Lowy Institute found that Laos was now trapped in a severe debt crisis, in part because of over-investment in the domestic energy sector, mostly financed by China.
COMMENT - Remember these are grants or development aid, Beijing’s largesse to the Global South are loans… and many of those loans weren’t made with an economic plan to repay them.
The lessons from China’s dominance in manufacturing
Joe Leahy, Nian Liu, and Ryan McMorrow, Financial Times, May 28, 2025
Beijing’s aggressive investments in domestic production have strained trade relations with western partners. But can the world learn from it?
For anyone seeking to gauge the success of Beijing’s flagship “Made in China 2025” industrial policy, German automaker Audi’s new electric vehicle plant in northern China provides a vivid example.
Industrial robots from Chinese-owned companies — one of the key targets of the policy — dominate the production line, starting with an automated press that stamps metal sheets into door panels.
Next, more than 800 robots from Chinese-owned Kuka weld pieces into car frames, while another Chinese supplier has automated the wheel installation process. The robots outnumber the humans on each shift.
“We weren’t expecting to automate so many processes in China, but the Chinese suppliers’ pricing is very low,” says Tobias Liebeck, Audi’s head of manufacturing engineering at the Changchun plant. China now has more robots per 10,000 workers than Germany.
Launched by Beijing a decade ago with the aim of dominating 10 advanced industries, the Made in China plan sought to achieve 70 per cent domestic market share across Chinese manufacturing in “core basic components and key basic materials” by this year.
In addition to robots, the other target sectors ranged from advanced rail equipment, high-tech maritime vessel manufacturing, and aerospace and aviation equipment to electric vehicles and next generation information technology.
The policy marked a historic turning point not only for Chinese manufacturing but for the global economy. The Made in China plan helped create a massive rupture in Beijing’s trade relations with western partners and has shaped how modern governments think about industrial policy.
Trading partners criticised its market share targets as mercantilist. US President Donald Trump used the plan to help justify his trade war with China during his first term, levying $50bn of tariffs directly targeting sectors benefiting from Made in China. His successor Joe Biden also pursued a more active US industrial policy, especially around microchips and green technology.
Beijing’s targeting of industries in which the EU specialised, from machine tools to automotives and advanced shipping, directly contributed to growing trade tensions with Europe. The plan has also been criticised for creating overcapacity in the world’s second-largest economy.
But despite the political controversy, two recently released reports on the Made in China programme, from the European Union Chamber of Commerce in China and the Washington-based Rhodium Group on behalf of the American Chamber of Commerce, suggest Beijing has achieved its key goal — modernising a manufacturing sector that once relied entirely on cheap labour.
Using a unique combination of industrial policy, subsidies and other state support coupled with private sector entrepreneurialism and ferocious competition in China’s vast market, the country was able to sharply increase the share of Chinese producers domestically and internationally in many of the sectors, in some cases matching or exceeding foreign competitors’ technology.
The strategic aim of China’s industrial policies — to build supply chain self-reliance to resist western interference while encouraging foreign dependencies on China — was put to the test this month when President Xi Jinping stood his ground against Trump in their tit-for-tat trade war. The US president ultimately backed down, reducing tariffs that had risen to as high as 145 per cent. In the view of many analysts, the US perhaps realised that it needed Chinese imports too much to risk an embargo.
“It was Chinese exports that were the weapon,” says Gerard DiPippo, acting associate director of the Rand China Research Center. “[China] was able to arguably fight the US to a draw through . . . export dominance. From a national security perspective, that very much feeds into Xi’s worldview.”
This export dominance means that governments around the world are closely examining Made in China’s legacy. They are trying to understand the extent of resources that Beijing has put into its plans and whether the sorts of tools and measures used can be replicated elsewhere.
The world is waking up to the competitiveness concerns that the US was maybe the first to recognise
They also want to assess whether they need to take more steps to defend themselves from the growing competitive threat of Chinese manufacturing, including through protectionist measures.
This is particularly true given that Beijing is now trying to use the same formula to target the technologies of the future, from advanced semiconductors and artificial intelligence to AI-enabled machines and humanoid robots.
“The world is waking up to the competitiveness concerns that the US was maybe the first to recognise,” says DiPippo. “I think there is a backlash coming.”
“There’s no one now that compares to China when it comes to manufacturing,” says Jens Eskelund, EU Chamber of Commerce in China president, noting that it accounts for 29 per cent of global manufacturing value added.
“So if the goal of ‘Made in China 2025’ was to establish China as the globally leading manufacturing nation, it is mission accomplished. But we need to realise that this success has not come without problems.”
Powerful countries must have strong manufacturing sectors — that was the message from Beijing when the country’s former premier Li Keqiang launched Made in China 10 years ago.
“The history of the rise and fall of world powers and the history of the struggle of the Chinese nation has repeatedly proved that without a strong manufacturing industry, there will be no country and no nation,” the official notice of the plan said in its introduction.
Its purpose, says Li Menggang, dean of the National Economic Security Research Institute at Beijing Jiaotong University, was to drive China’s transformation from a “large manufacturing country” to a “strong manufacturing country”.
Not only was the plan more comprehensive than earlier industrial policy programmes, it came with detailed targets for market share, domestic self-sufficiency and technological development.
The strategy marshalled many of the tools easier to mobilise in an authoritarian Communist party-led state like China. Nearly 800 state-guided funds, with a combined value of Rmb2.2tn by 2017, were established to support favoured industries.
Tax benefits for innovation rose by an average annual rate of 28.8 per cent between 2018 and 2022, and the proportion of companies enjoying additional deductions and tax reductions more than quadrupled between 2015 and 2023, Rhodium says. State investment through government guidance funds increased more than fivefold between 2015 and 2020.
Chinese companies received state support to buy out overseas companies to tap foreign technology, state-owned enterprises were combined to form national champions in telecommunications, aviation and smart manufacturing while smaller firms with innovative potential received heavy government funding.
Authoritarianism
Peak repayment: China’s global lending China’s transition from lead bilateral banker to chief debt collector of the developing world
Riley Duke, Lowy Institute, May 24, 2025
Soaring debt repayments and a sharp reduction in lending have transformed China’s role in developing country finances from capital provider to debt collector. Mounting pressures from Chinese debts are especially severe for many of the world’s poorest and most vulnerable countries. A retrenchment in Western aid and trade is compounding these challenges while undermining any geopolitical advantage for the West.
Key findings
In 2025, the world’s poorest and most vulnerable countries will make record high debt repayments totalling $22 billion to China. Beijing has transitioned from capital provider to net financial drain on developing country budgets as debt servicing costs on Belt and Road Initiative projects from the 2010s now far outstrip new loan disbursements.
China continues to finance strategic and resource-critical partners despite a broader collapse in its global lending. The largest recipients of new lending include immediate neighbours, Pakistan, Kazakhstan, and Mongolia, and developing countries that are critical mineral or battery metal exporters, such as Argentina, Brazil, Congo DR, and Indonesia.
China is grappling with a dilemma of its own making: it faces growing diplomatic pressure to restructure unsustainable debt, and mounting domestic pressure to recover outstanding debts, particularly from its quasi-commercial institutions. But a retrenchment in Western aid and trade is compounding difficulties for developing countries while squandering any geopolitical advantage for the West.
Political Discourse, Debate, and Decision-making in the Chinese Communist Party
Howard Wang, RAND, May 12, 2025
The Chinese Communist Party (CCP) employs a system of coded speech to communicate policy directives to its implementing bureaucracy. This coded speech is governed by rules and exists in a specific cultural context, potentially confounding those unfamiliar with that context. CCP leaders deploy these codes through the party propaganda system to issue policy directives, and the codes take the form of slogans, linguistic formulations, or key phrases, collectively called tifa.
In this report, the author analyzes tifa by providing an overview of the role and relative authority of the information systems the CCP uses to develop, build consensus around, and promulgate tifa. He also identifies four essential characteristics of tifa. The author concludes that, although tifa analysis has specific limitations, it can produce authoritative determinations of what the CCP tells itself it is doing and why and could yield valuable insights into CCP leader perceptions.
Lucy Hornby, China Review of Books, May 29, 2025
China’s official Party press has published a series of oral histories about Xi Jinping’s career, from sent-down youth in Shaanxi to Party Secretary of Shanghai. They read more like hagiography than history.
It was July, 1989, and Xi Jinping was a prefectural party chief in Fujian province. Motivated by his abiding concern for The Masses, he decided to visit one of the poorest, least developed places in his district. There were no roads so — staff in hand, wearing a straw hat — he led a delegation of Chinese Communist Party (CCP) officials in an arduous, five-hour hike to the remote village. Peasants hailed them joyfully as they trudged past, and Xi’s fellow officials marveled at his endurance. Once in Xiadang village, they heard reports by the yokels, ate a rustic lunch and trekked back out. Moved by the village’s impoverished isolation, Xi authorized a road to be built there, in one of the earliest examples of his enlightened vision to lift the Chinese people out of poverty.
This vignette is one of many related by provincial officials in Xi Jinping in Ningde (习近平在宁德), part of a ten-volume “oral history” series published in China from 2017-2022 for the edification of the cadre corps. The books would be standard official propaganda, extolling the virtues of General Secretary Xi Jinping, if not for the kaleidoscope of perspectives between their covers that bring the reader closer to Xi’s career in the provinces than the propagandists may have intended.
Take the same visit to Xiadang, retold from the perspective of plucky township secretary Yang Yizhou. Annoyed that a promised road was taking too long to complete, Yang invited Xi to come visit his village. He was worried that a two-hour walk in the summer heat would be too much for his city visitors, so he stationed his people along the path from the highway to offer tea and cool sweet soup. In Xiadang, he prepared a special standing shower for Xi to rinse off, and fêted him with a feast of the village’s very best delicacies, served on a historic bridge that had been scrubbed clean of ox manure by teams of soldiers and local women. The officials could have taken the same path out of the village but Xi insisted on a five-hour route instead, leaving his hot and weary entourage very glad when they reached their hotel that evening.
Hong Kong leader says subsidiary security law ‘imperative’ to tackling threats
Edith Lin and Willa Wu, South China Morning Post, May 20, 2025
Hong Kong police stop journalists from taking photos, videos of ‘prohibited places’ linked to national security office
Hong Kong Free Press, May 15, 2025
Explainer: 6 new offences, 6 ‘prohibited places’ – what to know about Hong Kong’s Article 23 security law update
Hans Tse, Hong Kong Free Press, May 18, 2025
A Wall Behind a Wall: Emerging Regional Censorship in China
Mingshi Wu, et al., Great Firewall Report, May 11, 2025
‘Alarming’ rise in regional internet censorship in China, study finds
Amy Hawkins, The Guardian, May 24, 2025
CK Hutchison navigates rough waters in sale of Panama Canal ports
Kensaku Ihara, Nikkei Asia, May 26, 2025
Major Hong Kong conglomerate CK Hutchison Holdings is facing mounting pressure from Beijing to cancel the sale of two ports near the Panama Canal.
With Chinese authorities stepping up the pressure on the company, CK Hutchison has indicated it will not move forward against Beijing's objections. The outcome will likely be swayed by ongoing tariff negotiations between the U.S. and China.
Behind Xi’s Strongman Image, a Demanding Father Always Loyal to the Party
Chun Han Wong, Wall Street Journal, May 24, 2025
‘Never right’: why there’s a war of words over Beijing’s English translations
Jane Cai, South China Morning Post, May 28, 2025
The West is recycling rare earths to escape China’s grip — but it’s not enough
Evelyn Cheng, CNBC, May 28, 2025
As China tightens its grip on the global supply of key minerals, the West is working to reduce its dependence on Chinese rare earth.
This includes finding alternative sources of rare earth minerals, developing technologies to reduce reliance, and recovering existing stockpiles through recycling products that are reaching the end of their shelf life.
“You cannot build a modern car without rare earths,” said consulting firm AlixPartners, noting how Chinese companies have come to dominate the supply chain for the minerals.
In September 2024, the U.S. Department of Defense invested $4.2 million in Rare Earth Salts, a startup that aims to extract the oxides from domestic recycled products such as fluorescent light bulbs. Japan’s Toyota has also been investing in technologies to reduce the use of rare earth elements.
According to the U.S. Geological Survey, China controlled 69% of rare earth mine production in 2024, and nearly half of the world’s reserves.
Analysts from AlixPartners estimate that a typical single-motor battery electric vehicle includes around 550 grams (1.21 pounds) of components containing rare earths, unlike gasoline-powered cars, which only use 140 grams of rare earths, or about 5 ounces.
How China Stands in the Way of a U.S.-Vietnam Trade Deal
Alexandra Stevenson and Tung Ngo, New York Times, May 24, 2025
The problems with China’s efforts to patch things up with Europe: ‘there are limits’
Finbarr Bermingham, South China Morning Post, May 26, 2025
Chinese ambassador criticises plan to return Darwin Port to Australian ownership
Kirsty Needham, Reuters, May 26, 2025
How China Captured Apple
Bob Davis, Foreign Policy, May 23, 2025
A giant firm and a superpower have become deeply entangled.
Environmental Harms
Chinese solar billionaire steps back as industry turmoil deepens
Edward White, Financial Times, May 26, 2025
Chinese EV shares tumble as BYD sparks ‘rat race’ price war fears
Gloria Li, Financial Times, May 26, 2025
Tax Bill to End US Reliance on China Solar Will Slow Green Shift
Jennifer A Dlouhy, Bloomberg, May 27, 2025
Fusion and China’s Quest for Energy Independence
Jimmy Goodrich, IGCC, May 27, 2025
Foreign Interference and Coercion
Czech Republic blames China for cyberattacks against its foreign ministry communication network
Karel Janicek, AP News, May 28, 2025
The Czech Republic has accused China of being “responsible” for cyberattacks against a a communication network of its Foreign Ministry, officials said on Wednesday.
The Foreign Ministry in Prague said the malicious activities started in 2022 and targeted the country’s critical infrastructure, adding it believed the Advanced Persistent Threat 31, or APT31, hacking group, which is associated with the Chinese Ministry of State Security, was behind the campaign.
It was not immediately clear what specific information were seized or what damage was caused by the attacks. The Czech ministry said a new communication system has already been put in place.
Foreign Minister Jan Lipavský said in a separate statement that his ministry summoned China’s ambassador to Prague to make it clear to Beijing “that such activities have serious impacts on mutual relations.”
“The government of the Czech Republic strongly condemns this malicious cyber campaign against its critical infrastructure,” the statement said. “Such behavior undermines the credibility of the People’s Republic of China and contradicts its public declarations.”
The Chinese Embassy dismissed the Czech accusations as “groundless.” It said China fights “all forms of cyber attacks and does not support, promote or tolerate hacker attacks.”
The United States denounced the Chinese activities and called on China to stop it immediately, the U.S. Embassy in Prague said in a statement. It said ATP31 previously targeted U.S. and foreign politicians, foreign policy experts and others.
“APT31 has also stolen trade secrets and intellectual property, and targeted entities in some of America’s most vital critical infrastructure sectors, including the Defense Industrial Base, information technology, and energy sectors,” the embassy said.
NATO and the European Union also condemned the attack and expressed solidarity with the Czechs.
“We observe with increasing concern the growing pattern of malicious cyber activities stemming from the People’s Republic of China,” NATO said.
“This attack is an unacceptable breach of international norms,” Kaja Kallas, the EU’s foreign policy chief, said. “The EU will not tolerate hostile cyber actions.”
In a separated cyberattack in 2017, the email account of then Czech Foreign Minister Lubomír Zaorálek and the accounts of dozens of ministry officials were successfully hacked. Officials said the attack was sophisticated, and experts believed it was done by a foreign state, which was not named then.
India's alarm over Chinese spying rocks the surveillance industry
Aditya Kalra, Reuters, May 28, 2025
China improves ability to launch sudden attack on Taiwan, officials say
Kathrin Hille and Demetri Sevastopulo, Financial Times, May 25, 2025Senators Bash Nvidia’s Plans for Facility in China
Olivia Beavers and Amrith Ramkumar, Wall Street Journal, May 29, 2025
Lawmakers accuse chip maker of undercutting national security.
Nvidia is facing fresh accusations from U.S. lawmakers that the company is too close to China, criticism that could signal new challenges for the richly valued chip maker.
Recent plans for an Nvidia facility in Shanghai risk giving China access to cutting-edge technology, Sen. Jim Banks (R., Ind.) and Sen. Elizabeth Warren (D., Mass.) wrote in a recent letter to Chief Executive Jensen Huang, a copy of which was viewed by The Wall Street Journal.
The facility “raises significant national security and economic security issues that warrant serious review,” they said in the letter. The senators demanded that Nvidia provide a comprehensive timeline and description of its plans for the facility, including details on specific research and engineering projects and any financial incentives.
An Nvidia spokesman said in a statement that the company “is simply leasing a new space for existing employees, who need the room in the post-Covid return to work. The scope of work will remain unchanged.” The company has said no advanced chip designs will be sent to the facility.
Nvidia CEO says Trump's tariff plan is 'utterly visionary'
Mark Tyson, Tom’s Hardware, May 29, 2025
Nvidia boss also says rescinding the AI diffusion rule was ‘completely visionary.’
Nvidia CEO Jensen Huang made himself available for media interviews in the wake of the publishing of its record $44 billion revenue financials and the traditional analysts' call. Bloomberg has shared its on-air Q&A session with Huang, in which the Nvidia boss was questioned about the impact of U.S. policy on his company's recent revenue. However, when specifically addressing President Trump’s tariffs and decision to rescind the AI Diffusion Rule, Huang couldn’t have been more extravagant with his personal praise.
After Huang’s gentle criticism of U.S. policy regarding exports of technologies that could accelerate AI, the Bloomberg journalist got more specific about the U.S. administration’s policies. Specifically, he asked the Nvidia CEO about his trust of President Trump, and the direction things were going in.
“Obviously, I don’t know all of his ideas, but let me tell you about two that are incredible,” answered Huang. "The first one is utterly visionary. The idea of tariffs being a pillar of a bold vision to re-industrialize to onshore manufacturing and motivate the world to invest in the United States is just an incredible vision. I think this is going to be a transformative idea for the next century for us, explained the Nvidia CEO. "We're all in on the idea. We're setting up plants and encouraging our partners from around the world to invest in the United States, and we have a lot of stuff going on, and so I'm very excited about that."
COMMENT – I suspect that Jensen and I differ on the definition of “utterly visionary.”
WeChat denounced for complicity in US fentanyl crisis by North Carolina official
Igor Patrick, South China Morning Post, May 28, 2025
Tensions rise as superpowers scrap for a piece of the Arctic
Katya Adler, BBC, May 24, 2025
PLA attack on Taiwan ‘unlikely’ but ‘not impossible’ with Trump in White House
Seong Hyeon Choi, South China Morning Post, May 28, 2025
After kill switches in Chinese solar panels in U.S, Denmark finds suspicious parts in East Asian circuit boards
Economic Times, May 23, 2025
Human Rights and Religious Persecution
China’s economy runs on Uyghur forced labour
Daniel Murphy, The Bureau of Investigative Journalism, May 29, 2025
More than 100 global brands are linked to a scheme that ships Xinjiang ethnic minorities to work in factories thousands of miles away.
A traditional song in the Uyghur language plays over the video of a man feeding bits of car chassis into a machine. “Who is going to the city to be a stranger? Who can no longer stand it?” a nasal voice croons. The workshop belongs to a company that supplies parts to Tesla.
Another young man snaps a picture of his overalls and hardhat and titles the picture: “Everyone’s slave is his own master.” The plastics factory where he works has supplied Midea, the white goods brand that sponsors Manchester City football club.
In a third video, posted in May last year, a man at an electronics factory wears a red jacket emblazoned with the name of a local government division – the very department that has sent men and women from Xinjiang, China’s most western region, 2,500 miles away to work at the factory supplying parts for Samsung laptops. “In life there are no worthless people, only those unlucky before fate,” comes the voiceover.
The videos capture scenes from the new reality of China’s economy. More than a hundred global brands are linked to factories using Uyghur and other ethnic minority workers recruited through a system international authorities call forced labour, an extensive investigation has revealed. Many of those brands risk breaching a US law meant to sanction businesses that contribute to the repression of Uyghurs in Xinjiang.
By trawling tens of thousands of videos posted on Douyin, TikTok’s Chinese sister app, the Bureau of Investigative Journalism (TBIJ) has uncovered a largely hidden force that is helping to fuel China’s economic expansion. Geolocating the videos and reviewing Chinese state media reports allowed TBIJ, The New York Times and Der Spiegel to identify Xinjiang minority workers in 75 factories across 11 regions.
International responses to the oppression of ethnic minorities in Xinjiang have tended to focus on products grown or made within the province, particularly cotton. But this investigation demonstrates that the problem of forced labour goes well beyond the borders of Xinjiang.
The investigation establishes the most detailed picture to date of how China’s programme to move tens of thousands of people from Xinjiang to work in eastern factories has become an inescapable facet of its export economy. The Uyghur, Kazakh and Kyrgyz workers make everything from keyboards to cars, as well as components that end up in products shipped around the world, including to the UK.
The link to forced labour pervades entire swathes of the Chinese economy. More than a hundred consumer brands – from Apple to Volkswagen– can be tied to the tainted trade and, for the first time, evidence shows factories directly owned by big brands themselves, like those run by Midea and LG Electronics, have participated in the Chinese government programme. The products implicated include everything from shoes like Skechers to KFC chicken.
Apple and Samsung said its suppliers are regularly independently audited and that recent audits found no instances of forced labour. However, Apple said it is investigating the alleged link to forced labour. Volkswagen also said it was investigating but couldn’t comment until this was completed and “against the background of the contractually agreed confidentiality obligations”. Skechers and KFC didn’t respond to TBIJ’s questions.
However, the mass transfer of mostly Muslim minority workers constitutes state-imposed forced labour according to researchers, human rights watchdogs, North American and European governments and the United Nations. This type of forced labour involves authorities recruiting targeted populations who — living in a police state-like environment — are coerced to work in key industries.
“When a government official knocks on the door of a Uyghur person and says they should take a job far from home, the person knows this is not merely a request,” said Laura Murphy, a former senior policy adviser to the Biden administration on Xinjiang forced labour.
“They know there are directives that say refusal is punishable by detention. And they know how horrible detention is. Every Uyghur in Xinjiang has either been in detention themselves or has someone close to them who has been. This is not a choice. This is not consent.”
The world sanctioned Xinjiang cotton. China turned it into chicken feed
Daniel Murphy, The Bureau of Investigative Journalism, May 30, 2025
Forced labour in Chinese cotton fields can now be linked to the supply chains of KFC and McDonald’s
“It’ll be fine. As long as we have two hands and a big bag. We'll get this cotton picked in no time. But in the evening, when we get home, only we ourselves know our suffering,” a Uyghur man’s voice says over a video of a dozen people picking cotton by hand in Xinjiang, China.
At one point the young woman filming the video turns the camera on herself: gloves, heavy coat, hat and a facemask. She posted the clip to Douyin – Chinese TikTok. A couple of months later, her reel shows, she moved almost 2,000 miles away to work in a factory in Hubei.
Cotton has long been the focus of international responses to human rights abuses in Xinjiang. About a fifth of the world’s cotton originates from the region. In 2021, US customs banned the import of Xinjiang cotton and anything made with the raw material, such as clothes or shoes.
But Chinese advances in biotechnology mean Xinjiang cotton is being transformed into animal feed, which food multinationals and some of China’s biggest farmers are using to raise billions of chickens, pigs, cattle, fish and other animals. The breakthrough also helps China reduce its heavy dependence on US imports of protein, strengthening its hand in the rivalry between the two superpowers.
The Bureau of Investigative Journalism (TBIJ) has traced supply chains from Xinjiang all the way to the UK, and to factories that supply major international brands, including KFC and McDonald’s in China.
Some supply chains even involve forced labour and human rights abuses at multiple points. In at least one case, a company sources tainted cotton, makes poultry feed with a sanctioned paramilitary arm of the Xinjiang government, and then slaughters and processes its chickens in a factory using transferred ethnic minority workers.
Did coerced labour build your car?
Daniel Murphy, The Bureau of Investigative Journalism, May 31, 2025
Chinese factories tied to Xinjiang forced labour feed supply chains for practically every major carmaker – and tariffs won’t stop that.
Nothing epitomises Chinese dominance over global industry more than its car sector.
Outside Wuhan – yes, that Wuhan – in Hubei, central China, a 500 km2 industrial zone christened ‘Car Valley’ can pump out a million vehicles a year.
Wuhan is a key node in China’s tech and electric car revolution and a testing ground for driverless fleets of suspended skytrains, buses and taxis. Parts manufactured in Hubei are linked to everything from one of Europe’s favourite electric vehicles to London’s black cabs. Thousands of cars ship out of factories every day.
But at the other end of the production line, workers are shipped in – thousands of Uyghurs, Kazakhs, and Kyrgyz every year – from Xinjiang, the western region at the centre of a long-running human rights crisis.
This story was produced in partnership with the Pulitzer Center
Moved as part of a labour transfer scheme that experts call forced labour, these ethnic minorities are coercively recruited by the Chinese state to travel thousands of miles and fill the manufacturing jobs that recent Chinese graduates have spurned. An investigation by the Bureau of Investigative Journalism has found more than 100 brands whose products have been made, in part or whole, by workers moved under this system.
At least 30 major car manufacturers are potentially implicated – including heavyweights in electric vehicles like Tesla and BYD. Even supply chains for quintessentially European brands are tainted. From touchscreens to engines, car parts made by coerced workers in Hubei, Shandong and other manufacturing hubs across China have ended up in some of the world’s most famous car brands: Mercedes, BMW, Volvo and Citroen.
Cars have been a focus of President Trump’s new tariffs regime, which has escalated the trade war he kicked off with China during his first administration in 2018. But across the globe, carmakers have come to depend on Chinese manufacturing chains, many riddled with forced labour. Tariffs may add to the costs of cars, but seem unlikely to protect China’s most vulnerable workers.
Far From Home: Uyghur Workers in Factories Supplying Global Brands
David Pierson, Vivian Wang, and Daniel Murphy, New York Times, May 29, 2025
China’s mass detention and surveillance of ethnic Uyghurs turned its far western region of Xinjiang into a global symbol of forced labor and human rights abuses, prompting Congress to ban imports from the area in 2021.
But the Chinese government has found a way around the ban — by moving more Uyghurs to jobs in factories outside Xinjiang.
A joint investigation by The New York Times, the Bureau of Investigative Journalism and Der Spiegel found that state-led programs to ship Uyghur workers out of Xinjiang are much more extensive than previously known.
Redacting History
Alex Colville, China Media Project, May 19, 2025
Documentary on Hong Kong journalist Ronson Chan withdrawn from overseas screenings, citing ‘pressure’
Irene Chan, Hong Kong Free Press, May 14, 2025
A documentary on Hong Kong journalist Ronson Chan has been withdrawn from screenings in Taiwan, Canada, the US, and the UK, citing “pressure on the interviewee.”
The documentary, titled A Single Spark A Little Blaze, was scheduled to be screened overseas alongside 11 other short films to showcase this year’s Hong Kong Indie Short Film Award finalists. Taiwan-based independent filmmaking organisation Ying E Chi organised the film award and the screenings.
“Due to the pressure on the interviewee, the director of ‘A Single Spark A Little Blaze’ decided to withdraw from all screenings,” the organiser said in a statement on Facebook on Tuesday.
“We sincerely regret it, but we respect the decision of the director and the interviewee,” the statement also read.
HKFP understands that the documentary features Chan as the sole interviewee.
A Single Spark A Little Blaze, a short film directed by Hong Kong independent journalist Cheng CC, follows Chan’s experience over the past few years.
Chan told HKFP over the phone on Wednesday that he could not reveal the source of the pressure.
“Of course, I can’t say who gave me the order or the reminder… It’s a kind reminder, nevertheless,” Chan said in Cantonese.
Cheng told HKFP that she had no comments on the matter.
The documentary was scheduled to be shown in five cities – New Taipei City in Taiwan, Toronto and Vancouver in Canada, Los Angeles in the US, and Manchester in the UK – from late June to early July.
Ying E Chi also said A Single Spark A Little Blaze would continue to participate in the film award’s final competition.
Thirty years since it disappeared Gedhun Choekyi Nyima, the Chinese government must be made to provide the truth about his whereabouts
FoRB in Full, May 15, 2025
Unbearable suffering': Australian writer pens letter from Chinese jail
Koh Ewe, BBC, May 15, 2025
Mass protest by parents prompts reversal of private school closure in China
Qian Lang, Radio Free Asia, May 15, 2025
Hong Kong High Court grants bail to father of wanted activist Anna Kwok pending his nat. sec trial
Hans Tse, Hong Kong Free Press, May 20, 2025
Pope prays for Chinese Catholics to be in communion with Rome in first comments on thorny issues
Nicole Winfield, AP News, May 25, 2025
Industrial Policies and Economic Espionage
The Self-Driving Truck Startup That Siphoned Trade Secrets to Chinese Companies
Heather Somerville, Wall Street Journal, May 26, 2025
TuSimple shared with Beijing best-in-class autonomous driving system—and became example of Washington’s shortcomings in keeping critical technology in U.S.
A week after one of America’s largest self-driving truck companies promised the U.S. government it would stop sharing sensitive technology with Chinese partners, TuSimple transferred a trove of data to a Beijing-owned firm.
“They want a lot of details,” Xiaoling Han, a U.S.-based TuSimple Holdings employee, said to a colleague. A leading Chinese commercial-truck manufacturer, Foton, sought the data from TuSimple’s many test drives around Texas. “It is pretty time consuming,” Han wrote in a February 2022 chat exchange seen by The Wall Street Journal.
TuSimple was a leader in the global race to develop self-driving trucks that could solve chronic driver shortages, make freight hauling cheaper and bolster military operations. Founded by two Chinese entrepreneurs with money from a Chinese business mogul, the San Diego-based company set a record when its truck traveled 80 miles in Arizona without a human driver.
It shared that technical feat and others achieved on American highways with its partners in China, according to hundreds of pages of previously unreported company correspondence viewed by the Journal.
Within a year and a half, TuSimple voluntarily shut down its U.S. operations, auctioned off its trucks and delisted from the Nasdaq. Its leaders moved hundreds of millions of dollars raised from U.S. investors from the company’s accounts to China, according to legal documents, and started new business ventures.
The story of TuSimple’s technology transfer and the political imbroglio that followed laid bare the weaknesses in U.S. laws aimed at facilitating foreign investment while protecting American know-how. It is now informing a transformation of how the U.S. polices companies with Chinese ties.
China’s New Private Economy Promotion Law: Good Intentions Meet Weak Government Accountability
Jamie P. Horsley, NPC Observer, May 22, 2025
China’s First Law to Promote Private Enterprise: What Does It Mean?
Catherine Tai and Andrew Wilson, The Diplomat, May 19, 2025
New Guidelines for Implementing China’s Anti-Foreign Sanctions Law: What Foreign Companies Need to Know
China Briefing, May 15, 2025
The State Council has released new regulations detailing the implementation of China’s Anti-Foreign Sanctions Law, expanding countermeasures and clarifying consequences for non-compliance. The regulations heighten legal and financial risks for multinationals operating in both China and foreign jurisdictions that have imposed sanctions against Chinese entities, underscoring the need for comprehensive risk assessments and legal guidance.
On March 23, 2025, the State Council released a new set of regulations guiding the implementation of China’s Anti-Foreign Sanctions Law (AFSL).
The AFSL, which came into effect on June 10, 2021, was formulated to provide the Chinese government with a legal toolkit to counter what it deems discriminatory or restrictive economic measures taken against its companies or citizens. The law has been widely interpreted as a mechanism to counter economic sanctions and restrictions imposed by the US in the wake of the Trump administration’s aggressive economic policies, as well as similar actions taken by the EU and other regions.
The new regulations introduce specific guidelines on how the AFSL will be implemented, clarifying procedural aspects, expanding the scope of countermeasures, and specifying consequences for non-compliance.
How the Trade War Shaped a Chinese Battery Giant’s Hong Kong Debut
Alexandra Stevenson, New York Times, May 19, 2025
Xi Mulls New Made-in-China Plan Despite US Call to Rebalance
Bloomberg, May 25, 2025
EU threatens to walk away from trade showdown with China over lack of progress
Finbarr Bermingham and Laura Zhou, South China Morning Post, May 23, 2025
China Turns to Consumers to Boost Growth, but Households Are Wary
Hannah Miao, Wall Street Journal, May 26, 2025
Shein Breaking EU Consumer Protection Rules, Watchdog Says
Edith Hancock, Wall Street Journal, May 26, 2025
China pushes for mergers to create global banking and securities giant
Cheng Leng and Haohsiang Ko, Financial Times, May 25, 2025
China’s Soft Spot in Trade War with Trump: Risk of Huge Job Loss
Daisuke Wakabayashi, Meaghan Tobin, and Amy Chang Chien, New York Times, May 27, 2025
China’s mega bridges: build smarter, build higher, build where others won’t dare
Victoria Bela, South China Morning Post, May 26, 2025
ASEAN tilts toward China and Gulf states as Trump tariffs bite
Tsubasa Suruga and Norman Goh, Nikkei Asia, May 27, 2025
Malaysia Stirs ‘Hotpot Diplomacy’ With Palm-Based Fat for China
Anuradha Raghu, Bloomberg, May 27, 2025
Chinese savers decry falling deposit rates but still won't spend more
Reuters, May 27, 2025
Stimulus helps drive China's industrial profits as trade risks loom large
Joe Cash, Reuters, May 27, 2025
Mining giant puts new spin on China resource push
Ka Sing Chan, Reuters, May 27, 2025
The lessons from China’s dominance in manufacturing
Joe Leahy and Nian Liu and Ryan McMorrow, Financial Times, May 27, 2025
Doing Business in China Is Getting Harder, but Its Exports Are Hard to Resist
Keith Bradsher, New York Times, May 28, 2025
China rare-earth controls could starve EU factories in days, chamber warns
Wataru Suzuki, Nikkei Asia, May 28, 2025
China Deflation Worry Is Eclipsing Trade War Thaw for Economists
Peter Martin and William Clowes, Bloomberg, May 28, 2025
Xiaomi Delivers Another Earnings Beat on Strong Phone, Car Sales
Jiahui Huang, Wall Street Journal, May 27, 2025
China’s Industrial Profit Growth Accelerated in April
Wall Street Journal, May 27, 2025
Cyber and Information Technology
Chinese Mobile App Encryption is Suspiciously Awful
Tom Uren, Lawfare Media, May 16, 2025
A new paper, from researchers at Princeton and the Citizen Lab, has found that apps from the Xiaomi's Mi Store, which services mainland China, are an encryption horror show. Compared to apps found in Google's Play Store, Mi Store apps send significantly more unencrypted traffic. And the encrypted traffic they do send is typically vulnerable to decryption by eavesdroppers.
The researchers examined the top 1,699 apps from the Google Play Store and the Mi Store (more than 800 from each store) and ran them through a measurement pipeline they called WireWatch. The researchers developed WireWatch to automatically identify nonstandard encryption.
It found that nearly half of the top Mi Store apps used proprietary encryption. Only 3.51 percent of the top Google Play Store apps do the same. The authors then reverse-engineered the nine most popular cryptosystems identified by WireWatch. They found that eight of them sent network traffic that was vulnerable to decryption by adversaries.
These eight systems suffered from a variety of faults including using hard-coded symmetric keys whereby anyone with the key can decrypt any communication; flaws in key generation that allow them to be brute-forced; and the use of vulnerable implementations of standard encryption algorithms. Almost half of the apps did not properly validate TLS certificates, making them vulnerable to man-in-the-middle attacks.
China’s corruption busters eye key tech sectors as Beijing gears up to challenge US
Meredith Chen, South China Morning Post, May 25, 2025
China chipmaker Hygon, server maker Sugon agree to merger
Wataru Suzuki, Nikkei Asia, May 26, 2025
China Wins in the Clouds but Loses on Earth
Tobin Harshaw, Bloomberg, May 25, 2025
Nvidia to launch cheaper Blackwell AI chip for China after US export curbs, sources say
Liam Mo, Reuters, May 26, 2025
Huawei-linked chip chemical supplier aims to replace Shin-Etsu, JSR, DuPont
Cheng Ting-fang, Nikkei Asia, May 28, 2025
US vs China: Who's leading the race to make AI agents a reality?
Yifan Yu and Cissy Zhou, Nikkei Asia, May 28, 2025
Military and Security Threats
Giant 'white streak' appears over multiple US states as Chinese rocket dumps experimental fuel in space
Harry Baker, Live Science, May 22, 2025Hegseth warns of Chinese threat to Taiwan, urging allies to upgrade defenses
Gabriel Dominguez and Jesse Johnson, Japan Times, May 31, 2025
U.S. Defense Secretary Pete Hegseth warned Saturday of the imminent and “real” threat posed by China to democratic Taiwan, urging Washington’s regional allies and partners to ramp up defense spending — possibly to as high as 5% of gross domestic product.
“Beijing is credibly preparing to potentially use military force to alter the balance of power in the Indo Pacific,” Hegseth said in a speech before a packed house as defense chiefs, military brass and senior diplomats gathered in Singapore for Asia’s premier regional security conference, the Shangri-La Dialogue.
“We cannot look away and we cannot ignore it. China's behavior toward its neighbors and the world is a wake up call and an urgent one,” he added, pointing to what he said were “destabilizing actions” in the disputed South China Sea and elsewhere.
Guam governor visits Taiwan, US territory would play key role in China invasion scenario
AP News, May 26, 2025
Ukraine confirmed Chinese supplies to 20 Russian military plants, intelligence chief says
Reuters, May 26, 2025
Ukraine has confirmed information that China is supplying a range of important products to Russian military plants, the chief of Ukrainian foreign intelligence was quoted on Monday as saying.
"There is information that China supplies tooling machines, special chemical products, gunpowder, and components specifically to defence manufacturing industries," Oleh Ivashchenko told Ukrinform state news agency.
"We have confirmed data on 20 Russian factories," he said.
Reuters has requested a comment from the Chinese foreign ministry.
China, the world's second-largest economy, has forged even closer trade and other economic relations with Russia since Moscow sent tens of thousands of troops into Ukraine in February 2022, triggering Western sanctions on the Russian economy.
Ukrainian President Volodymyr Zelenskiy said last month that China was supplying weapons and gunpowder to Russia, the first time he had openly accused Beijing of direct military assistance for Moscow.
China dismissed the accusation as "groundless" but Kyiv imposed sanctions on three Chinese entities.
Ivashchenko said Ukrainian intelligence also had information on at least five cases of Russian-Chinese cooperation in the aviation sector in 2024-2025, including the supply of equipment, spare parts and documentation.
China’s Lessons from the Russia-Ukraine War
Howard Wang, Brett Zakheim, Rand, May 22, 2025
China's most advanced bombers seen on disputed South China Sea island
Greg Torode, Reuters, May 28, 2025
One Belt, One Road Strategy
Clouds of Competition—China’s Rise in the Middle East Cloud Market
Yuval Less, INSS, May 26, 2025
The cloud market in the Middle East is emerging as a battleground in the global struggle for technological influence, where the United States and China are competing for control over digital infrastructure, the setting of technological standards, and the shaping of the rules that will govern the flow of information and data. China’s technological expansion in the region may gradually pose increasing challenges for Israel—necessitating the development of a strategic and technological policy to safeguard Israeli interests amid evolving trends in both the technological and geopolitical arenas.
In May 2025, US President Donald Trump conducted a diplomatic visit to the Gulf states—Saudi Arabia, Qatar, and the United Arab Emirates. The visit focused on strengthening the United States’ strategic partnerships in the Middle East and advancing economic deals, particularly in defense and technology, totaling hundreds of billions of dollars. A special emphasis was placed on artificial intelligence, including an agreement between the United States and the UAE to establish a new AI campus in Abu Dhabi—expected to be the largest of its kind outside the United States. The Emirati company G42 will build the campus, together with leading American tech companies, and will provide infrastructure for data centers and cloud services in the region.
These American investments aim to reinforce the US technological position in the Middle East, while China is concurrently working to strengthen its regional and global presence in advanced technologies—AI, big data, and cloud computing. A prominent example of this is the announcement in February 2025 by the Chinese company Tencent Cloud regarding the launch of its first cloud region in the Middle East, located in Saudi Arabia. A cloud region is a geographic location where a cloud provider operates separate data centers, ensuring service continuity and high performance. The choice of region affects speed, reliability, and regulatory compliance. The announcement was made at the LEAP 2025 technology conference—supported by Saudi Arabia’s Ministry of Communications and Information Technology (MCIT)—where Tencent Cloud pledged over $150 million in future investments to support the country’s digital transformation in sectors such as media, gaming, commerce, finance, and communications. Tencent Cloud now joins Chinese tech giants Alibaba Cloud and Huawei Cloud, which already operate cloud regions in Saudi Arabia and continue to expand their technological presence in the region. These developments reflect the intensifying competition between the United States and China for technological leadership in the Middle East, with both superpowers committing extensive resources to advanced technologies, AI applications, and cloud infrastructure.
China's premier says China and Indonesia will promote 'true multilateralism'
Reuters, May 24, 2025
Time for China’s belt and road partners to pony up as debt comes due, think tank finds
Kandy Wong, South China Morning Post, May 26, 2025
Opinion
The Case for a Pacific Defense Pact
Ely Ratner, Foreign Affairs, May 26, 2025
The time has come for the United States to build a collective defense pact in Asia. For decades, such a pact was neither possible nor necessary. Today, in the face of a growing threat from China, it is both viable and essential. American allies in the region are already investing in their own defenses and forging deeper military bonds. But without a robust commitment to collective defense, the Indo-Pacific is on a path to instability and conflict.
Tactical shifts aside, Beijing’s geopolitical aspirations for “the great rejuvenation of the Chinese nation” remain unchanged. China seeks to seize Taiwan, control the South China Sea, weaken U.S. alliances, and ultimately dominate the region. If it succeeds, the result would be a China-led order that relegates the United States to the rank of a diminished continental power: less prosperous, less secure, and unable to fully access or lead the world’s most important markets and technologies.
After decades of pouring resources into its armed forces, China could soon have the military strength to make that vision a reality. As CIA Director William Burns revealed in 2023, Chinese President Xi Jinping has instructed his military “to be ready by 2027 to invade Taiwan.” But as Burns went on to note, China’s leaders “have doubts about whether they could accomplish that invasion.” To sustain those doubts—concerning Taiwan but also other potential targets in the region—should be a top priority of U.S. foreign policy. That requires convincing Beijing that any attack would ultimately come at an unacceptable cost.
With that objective in mind, the United States has invested in advanced military capabilities and developed new operational concepts. It has moved more mobile and lethal military forces to strategic locations across Asia. Crucially, it has overhauled its security partnerships in the region. In past decades, Washington’s principal focus was to forge close bilateral ties. In recent years, by contrast, the United States has pursued a more networked approach that gives U.S. allies greater responsibilities and encourages closer ties not just with Washington but among the allies themselves. These changes are creating novel military and geopolitical challenges for Beijing, thereby reinforcing China’s doubts about the potential success of aggression.
COMMENT - Ely is spot on, as usual!
China must rein in overcapacity to avoid a global backlash
Yoosuk Kim, Nikkei Asia, May 26, 2025
The path forward lies not in fueling new rivalries, but in forging a sustainable, shared prosperity.
Mounting concerns have emerged around China's industrial overcapacity. Yet this is not a conventional case of supply exceeding demand. It reflects a structural imbalance of global proportions -- one that threatens the industrial viability of many nations and calls for a fundamental recalibration of China's growth model.
China Has Special Access to Rare Earths — From Myanmar
Mihir Sharma, Bloomberg, May 25, 2025
Allowing warlords to funnel critical minerals straight to Beijing is not in the world’s interest.
When China announced that it would increase restrictions on the export of rare earths or the specialized products that contain them, it obscured an important truth. A significant chunk of its supply chain is sourced from Myanmar, ruled since a 2021 coup by a widely condemned military junta.
The US, along with most of the world, fears Beijing’s control of rare earths, which are vital for tech from batteries to drones. But both the West and India are missing opportunities to stabilize the supply chain — because, unlike China’s leadership, they shy away from dealing with unstable polities.
Beijing has become deeply involved in the complicated and violent politics of north Myanmar in order to keep the trucks of critical minerals moving. According to some academic studies, the quantity of rare earths mined in that country and moved across the border is double the amount licensed for mining in all of China. For some crucial heavy minerals, insurgent-ridden Myanmar provides two-thirds of the global supply.
It is not entirely surprising, therefore, that Myanmar is being courted by Beijing, although Naypyidaw’s closest ally today is probably Russia. The junta’s leader has visited Moscow twice since the beginning of the year, and met Vladimir Putin on the sidelines of Russia’s May 8 victory parade. That was also his first opportunity to have a formal discussion with fellow guest Xi Jinping.
China is spending time and diplomatic capital to stabilize northern Myanmar — on its own terms, of course. In recent months, it has hosted multiple meetings in the southern city of Kunming between its own emissaries, the Myanmar government, and various rebel groups. This long-running, many-sided civil war may seem distant to many of us, but for Beijing it is a major priority.
And it should be for everyone else, as well. A volatile Myanmar, run entirely by unaccountable warlords who extract vital resources and hand them over wholesale to Beijing, is not in the world’s interest. Few countries are as vital for the green transition and global economic security.
Its other vast neighbor, India, has been particularly short-sighted. New Delhi likes to pretend its diplomacy in Myanmar is pragmatic and distinct from the idealistic naivete of the West, particularly the US. Perhaps. But it is also stuck in the past.
Officials mainly think of Myanmar as a source of turbulence in India’s northeast, which has a similar ethnic makeup. India’s policy has, therefore, been mainly reactive. New Delhi worries about cross-border insurgencies that kill citizens — and, more recently, about Rohingya refugees. The United Nations’ special rapporteur on human rights in the region called this week for an investigation of recent, unverified claims that some refugees were inhumanely deported. And recently, India scrapped an agreement on free movement across its border with Myanmar that had held since 1970.
Much of this may make political sense in New Delhi, given India’s sectarian anxieties. But these can’t be the sole axes along which the country engages its troubled neighbor.
The only long-term undertaking India has invested in is a project centered on Myanmar’s Sittwe port. It sees this as a way to connect its vulnerable northeast to the sea without going through an increasingly unfriendly Bangladesh. That’s important, but it can’t be all. India has one of the greatest mineral reserves in the world on its borders, and has done little to stop China from gaining a monopoly on access.
New Delhi must step up and pay some attention to this forgotten frontier. It needs to start engaging a larger set of stakeholders. It’s already doing that in western Myanmar, to minimize cross-border tensions and to ensure safety for its infrastructure projects — that effort needs to be expanded.
China Talks of Unity, But Beijing Always Comes First
Karishma Vaswani, Bloomberg, May 28, 2025
Xi Jinping boasts about the “Asian Family.” The nation’s actions tell a different story.
For all China’s pledges of unity with Asian nations on trade, its actions in the South China Sea tell a different story — one where Beijing’s interests always come at the expense of its neighbors.
The world’s second-largest economy regularly positions itself as the champion of the rules-based order. That argument has been easier to make in the face of Donald Trump’s trade war. The US president’s “Liberation Day” tariffs hit Southeast Asia particularly hard, with Vietnam and Cambodia seeing rates of 46% and 49%, respectively.
The implementation of Trump’s duties have been postponed till July. Still, they dominated the discussion at Monday’s gathering of the 10-member Association of Southeast Asian Nations in Kuala Lumpur. On Tuesday, they were joined by China and the Gulf Cooperation Council, an alliance made up of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.
China is driving closer ties with Gulf nations, framing the meeting as a platform for the Global South to counter American protectionism. It’s a powerful group: Collectively, these economies have a combined GDP worth $24 trillion. The summit comes on the heels of Trump’s visit to the Middle East, underlining how the geopolitical contest between Beijing and Washington is playing out. The talks also focused on Israel’s offensive in Gaza, which has drawn condemnation from nations with sizable Muslim populations like Indonesia, Malaysia and Brunei, and provides another point of commonality with the GCC.
Chinese President Xi Jinping has consistently praised the strong relationship with the region, saying during a Southeast Asia tour earlier this year: “Together, we will safeguard the bright prospects of our Asian family.” To signal its commitment, China dispatched Premier Li Qiang, fresh from a visit to Indonesia. But the bonhomie masks a troubling reality. In April, the Commerce Ministry warned against striking trade deals with the US “at the expense of China’s interests.”
That warning carries weight. Beijing has been Asean’s top trading partner for over a decade, far outpacing the US. It remains heavily reliant on Chinese demand, leaving countries exposed to any volatility.
The South China Sea is where tensions are at a boiling point. It’s one of the world’s busiest waterways, with more than $3 trillion in goods passing through every year. China’s claims over the body of water, and its estimated 11 billion barrels of oil and 190 trillion cubic feet of natural gas have antagonized other countries, including Asean nations like Brunei, Malaysia, the Philippines and Vietnam, notes the Council on Foreign Relations.
Hostilities between Beijing and Manila are the most acute. China defied a 2016 ruling from the Permanent Court of Arbitration in The Hague that sided with the Philippines, which found Beijing has no legal basis under international law to historic rights over the waters.
Instead, China’s coast guard ships now routinely harass Manila’s fishing boats, and regularly make incursions into Indonesian waters. It’s also clashed with Vietnam, evoking diplomatic censure. Hanoi accused Beijing’s law enforcement personnel of assaulting its fishermen, damaging their gear, and seizing about four tons of fish catch near the disputed Paracel Islands.
America’s Digital Iron Curtain Needs an Urgent Overhaul
Mike Kuiken and Randall Schriver, The Wire China, May 25, 2025