The Red and Expert Dilemma

Cautionary Tale from the Chinese Communist Party

Friends,

It looks like President Trump’s decision to wage an economic assault on the entire world… simultaneously… is going to do significant damage. He put a pause on the majority of the “reciprocal tariffs,” but the confusion and loss of credibility that resulted from the April 2 announcement in the Rose Garden, may have lasting effects.

While many have criticized the President for not having a strategy, I think that is wrong. President Trump has a strategy, but it is likely infeasible.

It appears that President Trump’s “strategy” is based on his own strongly-held impressions of how the global economy works, a desire to “move fast and break things,” and a dynamic in which disagreement with the President, or even pointing out facts that contradict his worldview, is viewed as disloyalty or treason.

Economic Outlook Dives Just Three Months into Trump’s Term, WSJ, April 12, 2025

These internal dynamics within the Administration means that even if they can correctly diagnose a problem, they will have a very hard time doing effective problem solving.

While I hope that the United States can change course, it is going to be difficult given a dilemma that the Chinese Communist Party has wrestled with for decades and has cost their nation, dearly.

This commentary is a call to avoid the political pathology that has devastated China for decades and to focus on pragmatic problem-solving over political loyalty.

The Red and Expert Dilemma…

ChatGPT’s take on the Red and Expert problem.

During the Anti-Rightist Campaign of 1957, a year before Mao launched his disastrous Great Leap Forward, the slogan “Red and Expert” emerged to describe the difference between those who were politically loyal (“Red”) and those with the knowledge to perform their jobs (“Expert”). Ideally for the Party, its members would be both “Red” and “Expert.” But as Mao pushed the People’s Republic to solve the problems he diagnosed as holding the country back, a gulf opened between those who were deemed politically reliable (aka politically correct) and those who had the expertise to perform the tasks to run the nation.

The Party said it wanted to have individuals that were both “Red and Expert” (又红又专), but in reality, Mao Zedong favored the former over the latter. He desired confirmation that “his ideas” were the right ideas. That his position of power would be unquestioned. Mao created the circumstances in which the incentives of his subordinates overwhelming favored political loyalty. Telling the boss what he wanted to hear, providing him with evidence that reinforced, rather than challenged, his worldview. This inexorably led to horrible decision-making. It is a classic pathology of unaccountable leadership.

In the immediate aftermath of the Great Leap Forward, senior Party members understood what had taken place and sought to push Mao into semi-retirement. These Party members sought to downplay political ideology and focus on pragmatic results (ideological purity does not guarantee food production). Mao’s Cultural Revolution, a decade-long civil war with a death toll in the millions, was his effort to reverse his subordinates attempts to sideline him.

During the decades of “Reform and Opening,” the Party sought to create a new cadre of leaders that were both Red and Expert, even as it failed to examine critically how the country’s political system had failed so spectacularly. Party members were encouraged to pursue education in technical specialties, but the seeds of this dilemma remained. The old dilemma re-emerged as Xi Jinping favored his conceptions of “Redness” (i.e. unquestioning loyalty to “Xi Jinping Thought on Socialism with Chinese Characteristics in a New Era”) over independent forms of expertise and knowledge. For Xi, these “experts” placed too much faith in their own experiences and training, and not enough faith in his position as the Party’s leader. A 12-year and counting “anti-corruption cum party rectification campaign” has made it absolutely clear that Party loyalty (aka loyalty to Xi Jinping) is the most important attribute of any Party member.

The sidelining of Li Keqiang, Xi’s first Premier (China’s #2) embodies this dynamic of favoring Red over Expert in the Xi-era. Li Keqiang received his doctorate in economics from Peking University in 1995 and was seen by many as a brilliant economist who would help guide his nation through an economic transition.

I see outlines of this today in what we might call a “MAGA and Expert Dilemma.” I’m not predicting a Great Leap Forward-level disaster of 30-45 million deaths, but a nation that places political loyalty to a leader, above the accountability of that leader, is flirting with disaster.

Jordan Schneider and Tanner Greer discussed this in an episode of the China Talk podcast last week and it is worth considering some of the lessons learned from the PRC’s experience with this political pathology.

Problem Diagnosis vs Problem Solving

The skills that a political leader uses to identify a problem and then mobilize masses around focusing on that problem are often different skills from those that are necessary to direct governance capacity towards solving those problems.

In Mao’s case he astutely identified fixing China’s relative backwardness following the Chinese Civil War as the main “problem” around which he would mobilize the Chinese people politically. He portrayed China as being the victim of the 19^th Century’s bogymen of imperialism and capitalism, and rallied the Chinese people to follow his agenda. In this problem diagnosis, Mao was exceptionally skilled. But when it came to actually solving that problem (lifting China back to a position of great power status), Mao failed miserably. Instead of learning from his own failures or sharing power with those who had the skills to solve complex problems, Mao attacked his domestic rivals, blamed them for creating the main “problem,” and set about mobilizing the masses to tear those rivals down.

For President Trump, he has been incredibly effective in identifying a main “problem” around which he could mobilize the American people politically. He tapped into the frustration of those who have not benefited as much from the era of post-Cold War Globalization, blamed those forces for the frustrations of the common American, and mobilized sufficient electoral numbers around addressing that “problem.” He effectively painted his domestic political opponents (across the political spectrum) as the causes of that “problem” and portrayed himself as the only one who could solve it. But like Mao, President Trump lacks the problem-solving and team-building skills necessary to address the problem he has effectively identified.

Fundamentally, he seems incapable of solving the problem himself and is unwilling to share power, in such a way, as to assemble the team of individuals who could.

As LTG (ret) H.R. McMaster pointed out in his book, At War With Ourselves, President Trump finds it very difficult to practice the “politics of addition,” bringing multiple groups and individuals together, sharing power, and focusing them on achieving a common goal. He prefers the “politics of subtraction and division” as a way to center all power on himself.

Power-sharing and pragmatism

Avoiding the kinds of disasters that the Chinese Communist Party has imposed on the Chinese people requires embracing both power-sharing and pragmatism. These concepts have deep roots in American political culture and deserve pride of place today.

The separation of political powers, or power-sharing, is at the heart of the American political experiment. It was designed to slowdown decision-making and to prevent the concentration of power. While this creates inefficiency and frustrates those who believe they have the simple solutions for complex, societal problems, power-sharing is meant to improve outcomes over the long-term. A self-correcting system that may not be the most efficient in the immediate sense, but guards against huge mistakes that are unrecoverable.

By pragmatism, I mean both the common definition (adopting pragmatic policies that temper ideology), as well as the philosophical concept of pragmatism that arose in late 19^th Century America. The horrors of the American Civil War, which was fought over deep ideological divisions, encouraged thinkers like Charles Sanders Peirce, William James, John Dewey, and Oliver Wendell Holmes to look on ideology skeptically and demand that ideas should be judged by their practical effects, rather than fitting into some abstract ideal or aligning with a powerful figure’s worldview.

We need more Oliver Wendell Holmes’s…

Oliver Wendell Holmes, the thrice wounded Civil War Union officer and Justice of the Supreme Court appointed by Teddy Roosevelt, provides a template for how we might approach the problems we face today:

"The best test of truth is the power of the thought to get itself accepted in the competition of the market ... That, at any rate, is the theory of our Constitution. It is an experiment, as all life is an experiment."

In other words, one must be constantly testing one’s beliefs and beliefs are only worthwhile if they result in some sort of practical and beneficial effect. That requires the freedom of speech and the ability to speak truth to power.

There is a lot more to pragmatism as a philosophical concept, but that is enough to be dangerous during a cocktail discussion (You’re welcome!).

I know this is a Substack about the Chinese Communist Party’s activities, but it is also broader political concepts and ways to organize societies.

For more, read Louis Menand’s The Metaphysical Club: A Story of Ideas in America (winner of the 2002 Pulitzer Prize for history) and Stephen Budiansky’s 2019 biography, Oliver Wendell Holmes: A Life in War, Law, and Ideas. Each of these books gets a fair bit of criticism, but they are worth reading as we grapple with the challenges we face today.

If you think that stuff is too intellectual… well, get over it.

The world is complex and anyone who tries to tell you it is simple is either trying to rip you off or is a fool.

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This Substack is free for anyone who wants to subscribe, but if you’re willing to contribute with a paid subscription, I would appreciate it.

Thanks for reading!

Matt

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MUST READ

1. Hong Kong firm did not uphold Panama Canal ports contract: Panama audit
   Channel News Asia, April 7, 2025

The Hong Kong firm in charge of two key Panama Canal ports has flouted the terms of its contract, according to a Panamanian audit released on Monday (Apr 7), as US and Chinese firms fight for business on the waterway after President Donald Trump threatened to seize it.

The audit found "many breaches" of the concession awarded to a subsidiary of logistics giant CK Hutchison to operate the two ports, and concluded that Panama did not receive US$1.2 billion it was owed under the contract.

The subsidiary, called Panama Ports, benefited from many tax exemptions and also had irregularities in a previous audit that was used to justify an extension of the concession first awarded in 1997, said state comptroller Anel Flores.

"This is a very delicate issue," Flores told reporters, adding that he would file a complaint with prosecutors in the coming days over the unpaid concession fees.

The release of the audit results came hours before US Defense Secretary Pete Hegseth arrived in Panama, which has come under strong pressure from Trump to reduce Chinese influence on the US-built canal.

The US has said it is a threat to its national security - and the region as a whole - for a Hong Kong company to operate ports at either end of the canal connecting the Atlantic and Pacific, through which 5 per cent of all global shipping passes.

Hegseth will meet Panamanian President Jose Raul Mulino on Tuesday and visit the canal, which opened in 1914.

He will also participate in a security conference with Central American officials.

Although the waterway has been under Panamanian control since 1999 under international treaties, Trump has threatened to take it back, by force if necessary, arguing that it is effectively controlled by Beijing.

COMMENT – This battle of control and influence over the Panama Canal will likely continue and escalate. I think ultimately the stage is set for Panama to void the contracts that CK Hutchinson has, which Hong Kong billionaire and CK Hutchinson owner, Li Ka-shing, rightly foresaw and sought to unload the assets in a sale to BlackRock.

Beijing will fight this, and the situation will escalate.

I think Beijing is in a weak position here and they would have benefited had they allowed the CK Hutchinson sale to go through.

2. A senior Chinese official linked intrusions to escalating U.S. support for Taiwan

   Dustin Volz, Wall Street Journal, April 10, 2025

A senior Chinese official linked intrusions to escalating U.S. support for Taiwan.

Chinese officials acknowledged in a secret December meeting that Beijing was behind a widespread series of alarming cyberattacks on U.S. infrastructure, according to people familiar with the matter, underscoring how hostilities between the two superpowers are continuing to escalate.

The Chinese delegation linked years of intrusions into computer networks at U.S. ports, water utilities, airports and other targets, to increasing U.S. policy support for Taiwan, the people, who declined to be named, said.

The first-of-its-kind signal at a Geneva summit with the outgoing Biden administration startled American officials used to hearing their Chinese counterparts blame the campaign, which security researchers have dubbed Volt Typhoon, on a criminal outfit, or accuse the U.S. of having an overactive imagination.

U.S. officials went public last year with unusually dire warnings about the uncovered Volt Typhoon effort. They publicly attributed it to Beijing trying to get a foothold in U.S. computer networks so its army could quickly detonate damaging cyberattacks during a future conflict.

The Chinese official’s remarks at the December meeting were indirect and somewhat ambiguous, but most of the American delegation in the room interpreted it as a tacit admission and a warning to the U.S. about Taiwan, a former U.S. official familiar with the meeting said.

In the months since the meeting, relations between Washington and Beijing have sunk to new lows, locked in a historic trade war. Top Trump administration officials have said the Pentagon will pursue more offensive cyber strikes against China. Beijing has continued to mine its extraordinary access to U.S. telecommunications networks enabled by a separate breach, attributed to Salt Typhoon, U.S. officials and lawmakers say.

The administration also plans to dismiss hundreds of cybersecurity workers in sweeping job cuts and last week fired the director of the National Security Agency and his deputy, fanning concerns from some intelligence officials and lawmakers that the government would be weakened in defending against the attacks.

Officials say Chinese hackers’ targeting of civilian infrastructure in recent years presents among the most troubling security threats facing the Trump administration.

In a statement, the State Department didn’t comment on the meeting but said the U.S. had made clear to Beijing it will “take actions in response to Chinese malicious cyber activity,” describing the hacking as “some of the gravest and most persistent threats to U.S. national security.” The Trump White House National Security Council declined to comment.

The Chinese embassy in Washington didn’t respond to specific questions about the meeting, but accused the U.S. of “using cybersecurity to smear and slander China” and spreading disinformation about “so-called hacking threats.”

During the half-day meeting in Geneva, Wang Lei, a top cyber official with China’s Ministry of Foreign Affairs, indicated that the infrastructure hacks resulted from the U.S.’s military backing of Taiwan, an island Beijing claims as its own, according to current and former U.S. officials familiar with the conversation.

Wang or the other Chinese officials didn’t directly state that China was responsible for the hacking, the U.S. officials said. But American officials present and others later briefed on the meeting perceived the comments as confirmation of Beijing’s role and was intended to scare the U.S. from involving itself if a conflict erupts in the Taiwan Strait.

About a dozen representatives from both countries, including senior officials from the State Department, the National Security Council, the Pentagon and U.S. intelligence agencies, attended the high-level meeting, which hasn’t been previously reported. It was led by Nate Fick, then the ambassador-at-large for cyberspace and digital policy in the Biden administration, officials said.

In Geneva, Wang’s comments came after the U.S. stressed that China didn’t appear to understand how dangerous prepositioning in civilian critical infrastructure was, and how much the U.S. would view it as an act of war, the former U.S. official said. Additionally, the Biden administration wanted to convey doubts that China’s political and military leadership, including President Xi Jinping, were fully aware of the activities of the hackers, the official said.

Both the Biden White House and the Trump transition team were briefed about the meeting and provided detailed summaries afterward, the people said.

COMMENT – PLA leaders and senior CCP members are convinced that they will need to make preemptive military strikes against the United States, if and when, Xi Jinping directs his military to annex Taiwan by force.

These will involve cyber-attacks against critical infrastructure and likely kinetic attacks and sabotage as well.

This is why it is critical to remove PRC influence and control over critical infrastructure like the Panama Canal.

It will be important for the United States and others to examine vulnerabilities across their infrastructure and prepare themselves.

3. China Tries to Downplay the Trade War’s Effects on Its Economy
   David Pierson, Claire Fu, and Vivian Wang, New York Times, April 7, 2025

Faced with economic disruption, Beijing is presenting itself as too powerful to succumb to U.S. pressure. It is also censoring criticism at home.

China’s leaders have sent a clear message about the effects of the Trump administration’s sweeping tariffs: Things will be painful, but it is nothing that the country cannot handle.

A commentary on Sunday in the Communist Party mouthpiece, the People’s Daily, said Beijing had prepared for a trade war with the United States and that China could potentially come out stronger as a result.

“The abuse of tariffs by the United States will have an impact on China, but ‘the sky will not fall,’” it said. “China is a super economy. We are strong and resilient in the face of the U.S. tariff bullying.”

The commentary highlighted how China hopes to position itself as the tariffs cause growing economic disruption. It wants to be seen as a responsible champion of fair trade that is too powerful to succumb to U.S. pressure.

China also sought to project solidarity with other nations targeted by U.S. tariffs in another state media commentary on Sunday.

In that piece, China accused the United States of trying to “subvert the existing international economic and trade order” by putting “U.S. interests above the common good of the international community.” Washington was also advancing “U.S. hegemonic ambitions at the cost of the legitimate interests of all countries,” it said.

China’s projection of relative strength belies the grave harm the Trump administration’s tariffs could potentially inflict on the country.

Mr. Trump is bidding to transform a global trading system that China currently dominates. And exports remain the strongest engine for growth at a time when China is trying to dig itself out of a property crisis and tackle other major economic problems.

Despite that, the People’s Daily commentary argued that China was prepared to weather Mr. Trump’s tariffs because it was no longer as reliant on the U.S. market for its exports. It also said China’s banks were well capitalized and had room to inject more money into the domestic economy. And it argued that it can hit back at the United States with an array of new regulatory tools.

COMMENT – Beijing will make substantial investments to persuade its citizens and the rest of the world that the United States is at fault for economic disruptions and that the Chinese economy is a safe haven from chaos.

The United States does not seem well positioned to offer its own narrative, nor does it possess the channels to distribute its message and narrative to the world. The Administration seems to be focused solely on influencing the domestic debate and will to concede the international stage.

4. ‘The Tsunami Is Coming’: China’s Global Exports Are Just Getting Started
   Keith Bradsher, New York Times, March 24, 2025

A staggering $1.9 trillion in extra industrial lending is fueling a continued flood of exports that could be spread even wider across the world by the Trump tariffs.

For decades, the world’s largest car factory was Volkswagen’s complex in Wolfsburg, Germany. But BYD, the Chinese electric carmaker, is building two factories in China, each capable of producing twice as many cars as Wolfsburg.

Recent data from China’s central bank shows that state-controlled banks lent an extra $1.9 trillion to industrial borrowers over the past four years. On the fringes of cities all over China, new factories are being built day and night, and existing factories are being upgraded with robots and automation.

China’s investments and advances in manufacturing are producing a wave of exports that threatens to cause factory closings and layoffs not just in the United States but also around the globe.

“The tsunami is coming for everyone,” said Katherine Tai, who was the United States trade representative for former President Joseph R. Biden Jr.

President Trump’s steep tariffs announced on Wednesday, which have caused stocks in Asia and elsewhere to plunge, were the most drastic response yet to China’s export push. From Brazil and Indonesia to Thailand and the European Union, many countries have already moved more quietly to increase tariffs as well.

Chinese leaders are furious at the recent proliferation of trade barriers, and particularly Mr. Trump’s latest tariffs. They take pride in China’s high savings rate, long work hours and abundance of engineers and software programmers, as well as its legions of electricians, welders, mechanics, construction workers and other skilled tradesmen.

On state television Saturday night, an anchor solemnly read a government statement condemning the United States: “It is using tariffs to subvert the existing international economic and trade order” so as “to serve the hegemonic interests of the United States.”

Five years ago, before a housing bubble burst, cranes putting up apartment towers dotted practically every city in China. Today, many of those cranes are gone and the ones that are left seldom move. At Beijing’s behest, banks have rapidly shifted their lending from real estate to industry.

China is using more factory robots than the rest of the world combined, and most of them are made in China by Chinese companies, although some components are still imported. After several years of rapid growth, overall installations of new factory equipment have already jumped another 18 percent this year.

When Zeekr, a Chinese electric carmaker, opened a factory four years ago in Ningbo, a two-hour drive south of Shanghai, the facility had 500 robots. Now it has 820, and many more are planned.

COMMENT – I walked past a Zeekr showroom in Stockholm, Sweden this week… it looked very impressive. Hard to say what their success has been in the European market, but it is conceivable that Chinese exports are going to flood into the European market and European leaders are going to be too divided to respond effectively, causing even further damage to European economies as they are negotiating with Washington.

All of this was predictable.

5. Trump trade war escalates as China raises retaliatory duties on U.S. goods

   NBC News, April 11, 2025

Beijing signaled that this is likely to be its last increase for the moment as tit-for-tat tariffs reach levels that make trade between the world’s two biggest economies unfeasible.

What to know today: China raised its total retaliatory tariff on U.S. imports to 125% today after the Trump administration clarified the previous day that U.S. duties on Beijing are now 145% because of earlier fentanyl-related levies.

COMMENT - Those are big numbers.

6. Trump spares smartphones, computers, other electronics from China tariffs

   David Lawler and Jeff Mason, Reuters, April 13, 2025

U.S. President Donald Trump's administration granted exclusions from steep tariffs on smartphones, computers and some other electronics imported largely from China, providing a big break to tech firms like Apple that rely on imported products.

China said it was evaluating the impact of the exclusions. In a statement on Sunday, the Ministry of Commerce called the move a "small step by U.S. to correct its wrong practice of unilateral 'reciprocal tariffs'."

"The bell on a tiger's neck can only be untied by the person who tied it," the ministry said, urging the U.S. to make a major step in correcting what it called its wrongdoing and cancelling the tariffs completely.

In a notice to shippers late on Friday, the U.S. Customs and Border Protection agency published a list of tariff codes excluded from the import taxes, with retroactive effect from 12:01 a.m. EDT (0401 GMT) on April 5.

It featured 20 product categories, including the broad 8471 code for all computers, laptops, disc drives and automatic data processing. It also included semiconductor devices, equipment, memory chips and flat panel displays.

COMMENT – Presumably, these are some of the products that the United States is most dependent on the PRC for and which are strategically important to the United States, which means by removing the tariffs, the Administration is removing the leverage they had over companies to NOT manufacture in the PRC, while they keep the threat to impose steep tariffs on these products manufactured in places other than the PRC.

This does not seem to be well thought out.

7. Forget tariffs — Beijing is already choking off US exports on the sly

   Phelim Kine, Ben Lefebvre, and Marcia Brown, Politico, April 12, 2025

Beijing is showing the Trump administration that tariffs aren’t the only weapon in a trade war.

Long before President Donald Trump fired the opening shots of a new U.S.-China trade war from the White House Rose Garden last week, Beijing had been working to perfect its stealth campaign blocking key U.S. agriculture and energy exports. The Chinese government over the past four months has halted or significantly curtailed direct exports of major U.S. commodities including beef, poultry and liquified natural gas through an array of bureaucratic blocks and tricky third-party sales deals.

The so-called nontariff barriers to trade are even stickier than the escalating tariffs rippling across the global economy, analysts said. All together, the moves are an escalation of the curbs China has been honing since its bans on genetically modified foods a decade ago. And they provide Beijing added firepower in the ongoing U.S.-China trade war by targeting exports from Trump-friendly, deep-red states — think Iowa and Nebraska — with restrictions immune to possible workarounds for tariff barriers.

“A tariff, you can just pay it, and things just get more costly,” said Ben Lilliston, director of rural strategies and climate change at the Institute for Agriculture and Trade Policy. “But this is a full restriction on your ability to send product to that country.”

The Chinese government knows where it can pinch U.S. exporters hardest. It has already declined to renew export licenses for hundreds of meatpacking plants, alleged that some U.S. chicken products contain unwanted drugs and stopped importing U.S. natural gas. Those industry targets also happen to be some of the president’s most ardent political supporters.

Such tactics underscore the dexterity of Beijing’s response to rising U.S.-China trade tensions — and its years of preparation for a new trade war. What began as an additional 50 percent tariff that raised levies on Chinese imports to north of 104 percent Wednesday turned into a 145 percent tariff level a little over 12 hours later. That second increase came after Beijing upped its own tariffs on U.S. goods to a total levy of 84 percent. Beijing’s counter-tariff reprisal pushed levies on U.S. imports to 125 percent Friday.

The playbook is one that the Chinese government has finessed since entering the World Trade Organization in 2001. Beijing almost immediately beat back a flood of foreign imports of commodities, including soybeans, through questionable claims that they contained insect infestations or genetically modified organisms.

After the Canadian government detained a senior executive of Chinese telecom giant Huawei in 2018, Beijing suspended a large percentage of Canadian canola oil seed imports, alleging that they contained pests. The Chinese government only lifted that import block after Ottawa allowed the executive, Meng Wanzhou, to return home.

And a strategy of alleging that U.S. goods are unsanitary — which is sometimes a legitimate complaint — can be arduous to reverse.

“You don’t want to see health and safety turned into political bargaining,” said Darci Vetter, who was chief agricultural negotiator in the Office of the U.S. Trade Representative in the Obama administration. “It turns carefully considered barriers based on science into a political issue.”

But it’s a tried-and-true tactic for Beijing, according to specialists in trade regulation mechanisms.

“This is what China does — trade action masquerading as legit public policy based on science,” said Marc Busch, who has advised both USTR and the Commerce Department on technical trade barriers and is now a professor of international business diplomacy at Georgetown University. Such technical trade barriers give Beijing “two bangs for the buck — plausible deniability and lethality,” Busch added.

COMMENT – This will escalate on both sides.

8. China and America Fight for the Twenty-First Century

   Matt Pottinger and Liza Tobin, The Free Press, April 10, 2025

As Donald Trump gave much of the world on Wednesday a 90-day reprieve from his global trade war, he singled out China for a knuckle sandwich. While he dropped “reciprocal” tariffs on dozens of trading partners, he hiked tariffs on Chinese imports to a sky-high 125 percent, “effective immediately.”

“At some point, hopefully in the near future, China will realize that the days of ripping off the U.S.A., and other countries, is no longer sustainable or acceptable,” Trump declared on Truth Social.

Welcome to the Great Divorce: a messy breakup between the world’s two largest economies—with the rest of the world up for grabs as part of the settlement. What began mainly as a trade beef for Trump is, for Xi Jinping—Chinese president and general secretary of the Chinese Communist Party—nothing less than a contest for mastery of the 21st century.

Xi is right. This is about much more than trade. And like it or not, the competition is pretty much zero-sum. While Trump has seized the upper hand in the trade war, Xi is gaining ground in areas that may be even more consequential: artificial intelligence, advanced manufacturing, and the military might required to seize the most important piece of real estate in the world—Taiwan.

The moment when China would be singled out from the rest of the world as the primary target of Trump’s ire was a long time coming—but it was always coming.

COMMENT – Great piece by Matt and Liza.

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Authoritarianism

8. Fitch Downgrades China to 'A'; Outlook Stable
   Fitch Ratings, April 4, 2025

9. Fitch downgrades China’s sovereign debt over spending and tariffs
   Arjun Neil Alim and Cheng Leng, Financial Times, April 3, 2025

10. While China derides U.S. tariffs, others seek to de-escalate tensions
    Kelsey Ables, Washington Post, April 5, 2025

11. Trump’s Trade War Escalates as China Retaliates With 34% Tariffs
    Keith Bradsher and David Pierson, New York Times, April 4, 2025

12. Trump Blocked America’s Front Door to China. Now He’s Closing Back Doors.
    Keith Bradsher, New York Times, April 4, 2025

13. The Rest of the World Is Bracing for a Flood of Cheap Chinese Goods
    Jason Douglas and Rebecca Feng, Wall Street Journal, April 3, 2025

14. Many U.S. Companies Plan to Keep China Ties, Survey Finds
    Lingling Wei, Wall Street Journal, April 8, 2025

15. Zelensky Claims Capture of 2 Chinese Citizens Fighting for Russia
    Maria Varenikova and David Pierson, New York Times, April 8, 2025

16. China Urges Shein to Halt Supply-Chain Shift After Tariffs
    Bloomberg, April 7, 2025

17. Chinese companies rush to serve up sunny news in rocky markets
    Kenji Kawase, Nikkei Asia, April 8, 2025

18. Microsoft venture Wicresoft to halt China operations, lay off staff, report says
    Reuters, April 7, 2025

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Environmental Harms

19. Half of Global CO2 came from these 36 Companies

    Visual Capitalist, April 1, 2025

20. China coast guard is escorting more illegal fishing boats

    Taipei Times, March 22, 2025

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Foreign Interference and Coercion

21. US reclaims spot as South-east Asia’s preferred superpower amid concerns of China’s sway: Survey
    Lin Suling, Straits Times, April 3, 2025

The US has reclaimed its pole position as the superpower that South-east Asia would pick if the region is forced to choose a side, a new survey found.

This marks a pendulum swing back after China edged out the US for the first time in the 2024 edition of the same study.

The findings, captured in the annual flagship The State of South-east Asia study by the ISEAS – Yusof Ishak Institute in Singapore released on April 3, revealed a shift in regional sentiment as concerns over Chinese influence in the region mount.

While South-east Asian countries have often said they do not want to choose sides, the poll suggests a preference for a strong US presence to hedge against worries over growing Chinese dominance in the region.

Walking the US-China tightrope

About 52.3 per cent of those polled said they would choose the US if Asean was forced to align with one side; the proportion stood at 52.9 per cent for those respondents based in Singapore.

More than half of those polled (51.6 per cent) ranked aggressive behaviour in the South China Sea as their top geopolitical concern, citing apprehension over Chinese encroachment into exclusive economic zones and fears of an accidental conflict between an Asean member state and China as their chief worries.

The results suggest that countries in South-east Asia see the US as a needed offshore balancer amid anxieties about rising Chinese assertiveness.

The study was conducted from Jan 3 to Feb 15, straddling the inauguration of a new US president on Jan 20 after Mr Donald Trump won the presidential election in November 2024.

The 2,023 respondents polled online included representatives from the private sector, academia, civil society, governments, as well as regional and international organisations.

In 2025, more have expressed confidence in the US’ role as a strategic partner and in regional security, up 10 percentage points to 44.9 per cent compared with 2024.

Unclear, however, is how South-east Asia views Mr Trump’s series of tariffs unleashed since, including a framework of reciprocal tariffs on April 2 (April 3 in Singapore).

Respondents have viewed China as the most influential country – politically, strategically and economically – in the region consistently over the past six years since the study’s inception in 2019, although the gap between China and the US appears to be narrowing.

COMMENT – It will be interesting to see what happens with these polls over the next few years.

22. China ‘optimistic’ about deeper UK financial co-operation
    Lucy Fisher, Financial Times, April 3, 2025

23. China assures Tesla, other U.S. companies over tariff retaliation
    Ck Tan, Nikkei Asia, April 7, 2025

24. Trump’s TikTok Plan Upended by Chinese Objections Over Tariffs
    Stephanie Lai, Kurt Wagner, and Annmarie Hordern, Bloomberg, April 4, 2025

25. Southeast Asians embrace Chinese minidramas as Beijing expands influence
    Belinda Yohana and Apornrath Phoonphongphiphat, Nikkei Asia, April 6, 2025

26. Chinese factories in Vietnam hammered by US tariffs: ‘where can I go now?’
    Mia Nulimaimaiti, South China Morning Post, April 8, 2025

27. Key Brazil Port Bustles as China Poised to Shift Away From US
    Peter Millard and Dayanne Sousa, Bloomberg, April 8, 2025

28. Prince Andrew and alleged Chinese spy prepare for more court disclosures
    Dominic Casciani and Sean Coughlan, BBC, April 4, 2025

29. The 'Chinatownification' of Japan's pop culture hot spots
    Naoki Asanuma, Nikkei Asia, April 6, 2025

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Human Rights and Religious Persecution

30. China: Free Imprisoned Taiwan Publisher
    Human Rights Watch, April 7, 2025

31. China arrests three Filipinos suspected of spying
    Straits Times, April 3, 2025

China said it had “destroyed” an intelligence network set up by the Philippine espionage agency and arrested three spies from the country.

The announcement on April 3 came as the two countries continue to confront each other over disputed territory in the South China Sea and tensions mount over the Philippines’ security ties with its ally, the US.

At least five Chinese nationals were arrested on suspicion of espionage in January and another two in February by Philippine law enforcers.

The latest arrests in China come two days after the Chinese embassy in Manila issued a travel warning to its citizens about frequent “harassment” from Philippine law enforcement agencies.

On April 3, state broadcaster CCTV reported that the Chinese authorities identified one of the suspected spies as a Philippine national who has lived and worked in China for a long time and has been found conducting espionage near military facilities.

The CCTV report included a video of his arrest and what appeared to be a recorded confession.

COMMENT – Typical hostage diplomacy by the PRC. When its spies get captured, the Party orders nationals from that country rounded up and accuses them of espionage.

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Industrial Policies and Economic Espionage

32. Chinese Stocks Suffer ‘Panic Selling’ as Tariff War Escalates
    Bloomberg, April 6, 2025

33. CATL in talks to buy controlling stake in Nio's power unit, sources say
    Reuters, April 7, 2025

34. Donald Trump’s trade onslaught imperils chance of China ‘grand bargain’
    Financial Times, April 3, 2025

35. Trump’s De Minimis Order Poised to Upend E-Commerce
    Danielle Kaye and Peter Eavis, New York Times, April 3, 2025

36. Investors react to China's retaliatory tariffs on US goods
    Reuters, April 4, 2025

37. Section 301 and China: Mature-Node Semiconductors
    Congressional Research Service, April 8, 2025

38. Levies on Chinese goods have created worst three-day rout for iPhone maker in about 25 years
    Yang Jie and Rolfe Winkler, Wall Street Journal, April 7, 2025

39. China puts pressure on western producers of electric car battery materials
    Camilla Hodgson, Financial Times, April 7, 2025

40. China’s megaconstellations take off, government backs commercial space
    Andrew Jones, Space News, March 28, 2025

41. China’s Rare Earths Curbs Put Multiple US Industries at Risk
    Joe Deaux and Arvelisse Bonilla Ramos, Bloomberg, April 4, 2025

42. Elizabeth Economy on What the U.S. Should Want from China
    Bob Davis, The Wire China, April 6, 2025

43. Is DJI Done?
    Brent Crane, The Wire China, April 6, 2025

44. Trump’s Trade Broadside Puts Chinese Economy Under Heavy Pressure
    Hannah Miao, Wall Street Journal, April 5, 2025

45. ‘The Tsunami Is Coming’: China’s Global Exports Are Just Getting Started
    Keith Bradsher, New York Times, March 24, 2025

46. China's 'Shein Village' dims amid country's economic shift
    Yuri Momoi, Nikkei Asia, April 5, 2025

47. How Trump’s TikTok Negotiations Were Upended by China and Tariffs
    Lauren Hirsch, David McCabe, and Sapna Maheshwari, New York Times, April 7, 2025

48. COMAC delivers China-made C909 jet to Lao Airlines
    Shizuka Tanabe, Nikkei Asia, April 8, 2025

49. Trump’s Tariffs and China Collide to Shock the $115 Trillion Global Economy
    Shawn Donnan, et al., Bloomberg, April 7, 2025

50. Limited options push China into trade 'war of attrition' with Trump
    Laurie Chen, Reuters, April 8, 2025

51. China’s Rare Earths Riposte
    Noah Berman, The Wire China, April 8, 2025

52. China's CNOOC sells off U.S. oil and gas interests in Gulf of Mexico
    Shunsuke Tabeta, Nikkei Asia, April 4, 2025

53. China’s Biotech Advances Threaten U.S. Dominance, Warns Congressional Report
    Jared S. Hopkins, Wall Street Journal, April 8, 2025

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Cyber and Information Technology

54. How the Pentagon is adapting to China’s technological rise
    Caiwei Chen, MIT Technology Review, April 7, 2025

55. PwC China plans to spin off cyber security arm
    Stephen Foley, et al., Financial Times, April 3, 2025

56. World’s first 1-nanometre RISC-V chip made in China with 2D materials
    Zhang Tong, South China Morning Post, April 4, 2025

57. China's BGI Genomics loses access to Microsoft's office software
    Stella Yifan Xie and Cissy Zhou, Nikkei Asia, April 4, 2025

58. TSMC could face $1 billion or more fine from US probe, sources say
    Karen Freifeld, Reuters, April 8, 2025

59. Samsung turns to China to prop up ailing chip business
    Christian Davies, et al., Financial Times, April 2, 2025

60. China unveils planetary exploration roadmap targeting habitability and extraterrestrial life
    Andrew Jones, Space News, March 27, 2025

61. Chinese Tech Stocks Plunge on Escalating Trade War
    Sherry Qin, Wall Street Journal, April 7, 2025

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Military and Security Threats

62. US Satellites Risk Attack in a War with China, Space Chief Says
    Dasha Afanasieva and Amanda L Gordon, Bloomberg, April 3, 2025

63. China-leased Port of Darwin to return to 'Australian hands': Albanese
    Shuan Turton, Nikkei Asia, April 4, 2025

Australian Prime Minister Anthony Albanese on Friday vowed to return a strategic port in the country's north leased by a Chinese-owned company to "Australian hands," as the country's ongoing election campaign heats up.

Albanese said his Labor Party government had been putting out feelers with private buyers, including Australia's superannuation funds, but was prepared to intervene directly if needed.

64. China launches classified TJS-16 spacecraft, companion object emerges alongside earlier TJS-15 satellite
    Andrew Jones, Space News, March 29, 2025

65. Military Mobility Depends on Secure Critical Infrastructure
    Annie Fixler, et al., FDD, March 27, 2025

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One Belt, One Road Strategy

66. Road to Nowhere: China’s Debt Trap and Lies under the BRI

    Julieta Pelcastre, Dialogo Americas, April 7, 2025

67. China’s Belt and Road credibility collapsing fast in Thailand

    Richard Ehrlich, Asia Times, April 6, 2025

68. Halting the BRI Won’t Be Enough to Stop China’s Spreading Influence in Central America

    Cesar Eduardo Santos, The Diplomat, April 10, 2025

69. To secure exports to Europe, China reconfigures its rail links
    The Economist, April 6, 2025

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Opinion

70. Donald Trump’s tariffs will fix a broken system
    Peter Navarro, Financial Times, April 7, 2025

71. There’s a Method to Trump’s Tariff Madness
    Jennifer Burns, New York Times, April 7, 2025

President Trump’s imposition of high tariffs on friend and foe alike has stunned the world and stumped economists. There is no economic rationale, experts say, for believing these tariffs will usher in a new era of American prosperity.

But there is order amid the chaos, or at least a strategy behind it. Mr. Trump’s tariffs aren’t really about tariffs. They are the gambit in a more ambitious plan to smash the world’s economic and geopolitical order and replace it with something intended to better serve American interests.

This plan is often referred to as the Mar-a-Lago Accord. Apparently devised by Mr. Trump and two of his top economic advisers, Treasury Secretary Scott Bessent and Stephen Miran, the chairman of the White House Council of Economic Advisers, it seeks to improve the United States’ global trading position by using tariffs and other strong-arm tactics to force the world to take a radical step: weakening the dollar via currency agreements. This devaluation, the theory goes, would make U.S. exports more competitive, put economic pressure on China and increase manufacturing in the United States.

There is genuine economic, social and political discontent driving this plan. Given the demise of U.S. manufacturing and the post-Cold War development of a technologically interconnected world shaped by new geopolitical rivalries, some sort of reset of the economic order probably makes sense for the United States.

But the slash-and-burn approach of the Mar-a-Lago Accord isn’t the answer. For one thing, it is hard to find an economist outside Mr. Trump’s inner circle who thinks it is a good idea. But even if, despite all the chaos it will unleash, the United States eventually prospers as a result, we will have traded away the core economic and political values that make America truly great.

This is not the first time that concerns about an overly strong U.S. dollar have prompted a major policy response. In more than just its name, the Mar-a-Lago Accord echoes the Plaza Accord of 1985, an agreement among the G5 nations, signed at the Plaza Hotel in New York City, to devalue the dollar through a series of coordinated moves.

The Plaza Accord was a response to two seismic developments. First, with the collapse in the 1970s of the postwar international monetary system known as Bretton Woods — which had pegged the value of the dollar to gold at a fixed price — the dollar was set free on an unregulated currency market. Second, in the 1980s, after Paul Volcker, the Federal Reserve Board chairman, set high interest rates to fight inflation, the dollar became irresistible to foreign governments and private investors alike. Foreign capital poured into the United States.

The result was a strong dollar — too strong. American-made goods became some of the most expensive in the world, creating a large trade deficit and accelerating the flight of manufacturing from the United States. It is no coincidence that Mr. Trump’s early public complaints about other countries “ripping us off” date from this time.

The Plaza Accord reduced trade deficits, as it was intended to do, but the basic trends continued. In the decades since, the dollar has remained the world’s reserve currency. Today gold and oil are demarcated in dollars, facilitating global trade; foreign nations hold U.S. Treasury bonds in their official accounts as a store of value, a hedge against uncertainty and a way to stabilize their currencies.

72. Stop Freaking Out. Trump’s Tariffs Can Still Work.
    Oren Cass, New York Times, April 8, 2025

Last week’s “Liberation Day” marked a kind of D-Day in the effort to reorder the international economic system. That reordering is desperately needed to address the system’s imbalances, which have led to deindustrialization and annual trillion-dollar trade deficits for the United States. But remember, far from striking World War II’s decisive blow, D-Day was just the start of the European campaign. Eleven months of vicious fighting followed, with more than 100,000 Americans killed before victory was secured. With the tariffs, too, success or failure depends on what happens next, and the nation will have to bear real costs while the outcome hangs in the balance.

The breadth, speed and severity of President Trump’s actions, which he finalized only shortly before the Rose Garden announcement, sparked immediate panic across markets and among allies. The airwaves filled with dire predictions as people scrutinized the sources and sizes of the numbers, the strategy and even the legal authority. Amid the hysteria, fair concerns have also emerged about what the plan lacks: time for companies and governments to respond, permanence for those tariffs intended to shift investments and a clear vision of the goals and how to reach them. But there are simple steps the administration could take now to correct course and move from its embattled beachhead into a sustainable forward position.

The 10 percent global tariff — a foundational permanent policy, which has already taken effect, and which carries a tolerable cost — is the right starting point. Congress should vote it into law as soon as possible. That would confirm its permanence and also provide substantial tax revenue that could help Capitol Hill solve some of its budget math problems. A bill to this effect, the Built USA Act (which I have championed), was introduced in January by Representative Jared Golden, a conservative Democrat.

For the higher, country-specific tariffs that Mr. Trump calls “reciprocal,” the first priority should be to scale them up more gradually, to give markets and allies time to adapt. Throwing supply chains into maximal disarray and imposing the highest burdens faster than companies could possibly move to avoid them leads to excessive costs with few attendant benefits. A second priority for the White House should be communicating the president’s ultimate vision and his plan for getting from here to there, so that everyone can have confidence in the direction and act accordingly. Some opacity may help in preserving leverage, but America’s core demands of its allies should be plain for all to see.

73. A Strategy to Protect Taiwan from China

    Michael Sobolik, Wall Street Journal, April 9, 2025

Military action isn’t the only tool the U.S. can use to deter Beijing from attacking the island.

China staged the latest in a series of large-scale military and coast guard exercises around Taiwan last week. A Chinese aircraft carrier penetrated Taiwan’s military response zone and sailed closer to the island’s coastline than in previous drills. Beijing’s coast guard also patrolled around Taiwan, ostensibly with a mission to inspect, intercept and detain “unwarranted vessels.” The People’s Liberation Army said that its air, naval, ground and missile forces were training for “seizing comprehensive control, strikes on sea and land targets and blockade operations.”

These drills aren’t mere shows of strength. They’re practice sessions. Taiwanese Admiral Tang Hua told the Economist last fall that China’s military forces “are ready to blockade Taiwan at any time they want.” Mr. Tang said Beijing is “using an ‘anaconda strategy’ to squeeze the island.” The Chinese military’s recent actions bear this out. From January to August 2024, the number of Chinese air incursions crossing the median line—the border in the middle of the Taiwan straight—jumped more than fivefold. The number of Chinese naval vessels operating around Taiwan doubled in same time frame. The size mismatch favors the Chinese: Taiwan needs to deploy anywhere from a fourth to half of its combat vessels to match China’s patrols.

China is angling to bait Taiwan into making a mistake that would give it a pretext to blockade the island. Meantime, the Chinese military is perfecting its ability to cut off the island’s maritime and air traffic, sever Taipei from global connectivity and force to a halt daily life for the Taiwanese people. Strategically, Xi Jinping’s goals are broader: demoralize, isolate and ultimately subsume Taiwan.

These ambitions aren’t new. From Mao Zedong to Hu Jintao, Mr. Xi’s communist predecessors have all viewed Taiwan’s de facto independence as a Cold War relic and an affront to China’s sovereignty. In Mr. Xi’s mind, the Chinese nation can’t be rejuvenated until Taiwan is “reunified.” That doublespeak conceals a grim reality: The democratic freedoms that the Taiwanese people have enjoyed for three decades are threatened by the Chinese Communist Party’s appetite for conquest.

At any moment, the Chinese could escalate by turning a military exercise into a blockade mission. U.S. policymakers are aware of Taiwan’s tenuous situation, but they’ve been slow to respond. Over the past decade, the Chinese Communist Party has exposed America’s inability to compete effectively in the “gray zone”—a national-security term meaning the contested arena that falls somewhere between routine statecraft and open warfare. Straddling the line between peace and war, gray-zone tactics test an adversary’s red lines with carefully calibrated escalations designed to gain ground without provoking a response. Beijing mastered this gambit in the South China Sea by constructing and militarizing artificial islands to enforce its illegal territorial claims. By the time Washington sounded the alarm, it was too late.

Mr. Xi is making a calculated bet: If Washington doesn’t stop him from redrawing the map in the South China Sea, then it won’t deter him from subsuming Taiwan—as long as he escalates incrementally. The Trump administration needs to use gray-zone tactics to interdict Mr. Xi’s strategy in real time, deter further escalation and compel Beijing to cease its aggression. Thus far, real fears about military escalation have made Washington policymakers hesitant to take such moves. They’re right to urge caution. Symmetrical escalation would implicate the U.S. military and could spiral into a conflict neither the U.S. nor Taiwan wants.

But there’s another way to think about deterrence. Instead of climbing up the escalation ladder and risking a military confrontation, the Trump administration could impose costs in nonmilitary arenas. Consider student visas, which Communist Party elites cherish for their children and which Mr. Xi values for espionage purposes. Mr. Trump could present Mr. Xi with a choice: For every sea or naval incursion the Chinese military commits against Taiwan, Washington will reduce the number of eligible Chinese student visas by 100. Doing so would make Beijing pay for its aggression and yield information about Mr. Xi’s value calculus.

U.S. policymakers need to identify and exploit whatever Chinese leaders care about more in the short term than incremental gains in the Taiwan Strait. Weapons sales would help Taipei, but dialing down the temperature would help even more. Washington has options so long as policymakers steel their resolve to go toe-to-toe with Mr. Xi. If he’s strategic in his approach, Mr. Trump can succeed where Presidents Obama and Biden failed.

74. I Just Saw the Future. It Was Not in America.
    Thomas L. Friedman, New York Times, April 2, 2025

75. China intends to crush the trade war
    George Magnus, New Statesman, April 7, 2025

76. How Trump’s Tariffs Play Right into China’s Hands
    Thomas L. Friedman, New York Times, April 7, 2025

After two trips to China in the last four months, I’ve been trying to say this every way I know how: Folks, you just don’t understand.

Covid had terrible effects on human health and mortality, but it also had a terrible effect on our ability to understand China. American and European business executives left China in droves at the start of the pandemic. Very, very few of them ever went back afterward. They entrusted their China businesses to local managers. While they were gone, Beijing took a great leap forward in advanced manufacturing that the world missed. It has created a manufacturing engine the likes of which may never have been seen in history.

China already controls one-third of all global manufacturing (up from 6 percent in 2000), and whether you are talking about cars or robots or phones, what is coming out of China today is not just cheaper and faster. It is cheaper, faster, better and smarter — and it is all about to be dramatically supercharged by China’s headlong rush to put artificial intelligence into everything it makes.

This engine is the product of decades of massive government investments in education, infrastructure and research, behind walls of protection — in a society where people are ready to work from 9 a.m. to 9 p.m., six days a week. While China was building that, America’s biggest new industry was political polarization and getting its children addicted to TikTok and Instagram.

Read my newsroom colleague Keith Bradsher’s article from China on Monday:

Recent data from China’s central bank shows that state-controlled banks lent an extra $1.9 trillion to industrial borrowers over the past four years. On the fringes of cities all over China, new factories are being built day and night, and existing factories are being upgraded with robots and automation. China’s investments and advances in manufacturing are producing a wave of exports that threatens to cause factory closings and layoffs not just in the United States but also around the globe. “The tsunami is coming for everyone,” said Katherine Tai, who was the United States Trade Representative for former President Joseph R. Biden Jr.

That is why President Trump’s strategy is so foolish. Instead of putting tariffs on the whole world, we should be looking to line up all our industrial allies in a united front to say to China: You cannot make everything for everyone. While China is one-third of global manufacturing production, it accounts for only 13 percent of global consumption. That is not sustainable — and it is not just freaking out the U.S. and Europe but also Brazil, Indonesia, India and others; even Russia has suddenly cut back on auto imports from China.

Instead of making our strategy America against the whole world on tariffs, Trump should have made it all the industrial democracies, led by America, against China.

The purpose would be to effectively negotiate a way forward that both compels China to redirect its energies inward — to investing in its meager social safety net and health care system and stimulating its domestic demand — while inviting China to build new factories, not in Hanoi but in Hamtramck, Mich., and to transfer its technologies and supply chains to us in 50-50 joint ventures.

Unfortunately, our president and vice president were so busy flexing their muscles in Greenland, firing our top generals for not being sufficiently slavish to our Dear Leader and insulting our European allies for being too woke that they have squandered the leverage we needed to deal effectively with this formidable Chinese engine.

But here is what America’s business leaders really don’t understand: Trump and JD Vance have freaked out China and the E.U. by their erratic behavior. When they see a U.S. president just ignore a trade agreement with Mexico and Canada — U.S.M.C.A. — that he himself negotiated, they ask themselves: How can we trust any deal we cut with him? This could drive China and the E.U. closer together.

I hear my fellow Americans say: We just have to get to the midterms and have the Democrats regain the House, and we will be OK. Sorry, folks, we cannot wait that long. Another 20 months or so of this erratic leadership, and our country will be irredeemably broken. We need a handful of Republicans in the House and the Senate — right now — to cross the aisle and put a stop to this devastating man-made economic disaster.

77. Unlike China’s flotilla, the Great White Fleet came in friendship
    Justin Bassi, The Strategist, April 5, 2025

78. China's consumption tax reform is a race against time
    David Tingxuan Zhang, Nikkei Asia, April 8, 2025