The irony of all ironies. The decision is made to ban Tik Tok (or 抖音 in Chinese) and what is it that you end up with? American content creators rabidly migrating over to the even larger social media platform in China (小红书）

Who says #China doesn’t innovate anything. One thing I can share with complete confidence is how quickly the Chinese can (1) identify a market need and (2) rapidly meet - even saturate - the market demand in record time. Always a danger to underestimate the Chinese. Not the government, the people. They operate on a whole different level. View quoted note →

This is how I would describe those who are still on Twitter. And it is why we Nostr….

Looks like people took “burn it to the ground” literally.

China Morning Missive This, right here, is what occurs when a government makes the decision to starve an economy of leverage. Bitter medicine, and why it is the Xi Jinping has been telling his people for two years that it is necessary to “eat bitterness”. Hard choices were needed, and hard choices were made. Watching the western business media lose its mind during this period has shown me that the G7 nations aren’t anywhere close to taking the same measures. Largess from the governments will continue. Fiscal dominance appears to be the only way out. What remains to be seen is whether this Chinese policy of aggressive, systemwide deleveraging will, ultimately, prove successful. There is pain throughout. Small and medium sized businesses are closing at an accelerated rate while household sentiment remains at very low levels. Will China be able to power through and get to the other side? That is the question. In fact, that is the only question that matters. 2025 could be highly consequential.

China Morning Missive As a strategy, this just won’t work. Then again, the targeting of both Tencent and CATL is just more of the same approach to “containing” China which the Biden administration has followed for years. Am also not entirely certain how Tencent, a gaming and social media platform (WeChat) is working with the Chinese military in a way that harms American interests. Maybe it’s along the lines of how FaceBook and the old Twitter (plus Google and Apple) aligned with various Washington agencies over the past decade. Then there’s CATL. The company dominates the battery market for all electric vehicles. Suspect that the move to restrict the company in the United States is more about regulatory capture than anything else. If you can’t compete, then simply block your competitor from accessing your market. The same tactic was used to ban drones from DJI for the expressed, albeit unstated, aim of assisting Skydio. America needs to do better. Putting up barriers in the name of “national security” is nothing but weak and reflects – at least to me – some very late state Empire antics. https://www.reuters.com/world/us-adds-tencent-catl-list-chinese-firms-allegedly-aiding-beijings-military-2025-01-06/

Well, it looks as though the “China as a new virus” headlines will be spreading like wildfire this week. Up to only a few hours ago all of the media coverage was on the fringe. Now we have the Guardian picking up the story. Public Service Announcement. It’s the seasonal flu. Full stop. Suspect that this won’t prohibit score of traditional and social media outlets from pushing out a story line that this is the new Covid 19. Again, this time five years ago everyone here in China was talking about the “mystery illness”. Today, no one is talking about this HMPV.

the Guardian

HMPV: What is human metapneumovirus, are cases surging in China, and should we be worried?

An outbreak of the virus in northern China has prompted some online alarm but experts say the risk of another Covid-like pandemic is low

China Morning Missive Stange one here, but there’s been an uptick in media coverage, primarily out of India oddly, on a flu strain out of China labeled HMPV (Human Metapneumovirus). Unlike the Covid outbreak back in late 2019/early 2020, there’s zero – and I mean none whatsoever – chatter about this anywhere here locally. I do find the timing of the headlines to be more than a little suspicious. It just looks to be nothing more than your average seasonal flu. Just thought I’d send out a quick note on the off chance any of you were seeing the same headlines. Will, of course, keep you all abreast if anything changes. Have a great week everyone!!!

Newsweek

HMPV: China's new virus outbreak explained

As reports of a new virus outbreak circulate, here is everything you need to know about human metapneumovirus (HMPV).

Looks like I put a jinx on the Chinese Renminbi. No sooner did I comment on the PBoC holding hard on the $/7.30 level and it quickly broke down soon thereafter. Next week will be very interesting.

China Afternoon Missive It’s been a brutal two days and start to the year here in #China. Stocks have been absolutely battered and a policy that has continued to starve the system of fiscal liquidity is having the expected results. Bond yields continue to fall further. Very, very reminiscent of what went down the same time in 2024. There’s been commentary from certain public groups that policy makers may expand the size of this year’s “ultra-long term” bond issuance. It’s just talk though. It is also now clear that public statements attempting to support markets have lost virtually all their desired effects. China stocks extend declines with bond yields hitting record lows

CNBC

Chinese stock market slump deepens with bond yields hitting record lows as PBOC reportedly signals rate cuts

Economic data on tap appeared thin on Friday, while investors in Asia continue to assess China's monetary easing policy, political chaos in South K...

No question that the Chinese central bank is taking aggressive steps to keep the currency, the Renminbi, hammered in place at $/7.30. This chart shown here is the stuff of managed economies. Unclear, however, how long this will be maintained or if the PBoC ends up deciding to let the dam break. Unlikely though as any material push through above 7.30 could result in heightened capital flight. I do have the conviction that nothing will change in the FX pairing prior to the upcoming Chinese New Year holiday (kicking off on Jan 28th). Stability, wherever possible, is the name of the game for the very near term.

This is the real “number go up” technology. #impressive

This is a fantastic video. Well worth the full 20 minutes. “If you wish to understand the secrets of the universe, think in terms of energy, frequency and vibration.” Nicola Tesla And a very Happy New Year all!!

Here’s my litmus test for America ….. When we return to trolling in the unrelenting way we did by taking “God Save the King” and changing the lyrics into the banger we all know as “My County, ‘Tis of Thee” aka “America”.

Wife and I just arrived in Egypt. Happy Christmas to all and I’ll be back blathering on about #China in the New Year.

Decent way to start the weekend. A shout out from Luke Gromen in his weekly FFTT newsletter.

China Morning Missive This is how the “Grand Bargain” process begins and Trump inviting Xi to the inauguration is genuine brilliance. This invitation goes to a core issue for the Chinese. Very high on the list of what is sought is the acknowledgment of America and China being equals on the world stage. Having Xi Jinping attend a Presidential inauguration simply delivers. I cannot stress enough how critically important this point of “equals” is to the Chinese leadership. The invitation will also give Beijing a clear indication that America’s policy towards China has demonstrably shifted. The tone is shifting away from containment to that of peer competitors. This message will, once again, be very welcomed not just among Xi and his team, but across China. I’ve noted before that the Trump Team has an intense domestic agenda to address once in office. That agenda is the priority. Having to prioritize China as well during the first six months or year would complicate matters. The simple act of inviting Xi to Trumps’s swearing-in ceremony takes the entire issue off the boil. Moreover, it would also allow for parties on both sides to begin an engagement process, one which could deliver a far more substantive agreement. The “Grand Bargain” that I speak of. Now the question turns to whether Xi will RSVP. I am extremely confident that he will. Do not underestimate just how consequential, and positively so, this overtly diplomatic act by Trump could end up being.

Just another example of how #China operates. I’ve tried for years to explain to others that, for the Chinese, there’s a material difference between lying and not telling the truth. There are agendas at play. There have always been agendas at play. @Carl B Menger View quoted note →

China Morning Missive This is just the beginning. China has at its disposal more points of pressure on the American economy than I can count. The example of drones is just the clearest example. Several months ago, Congress passed a law banning the worlds largest maker of drones, DJI Technologies. Probably the best drone maker, too, in terms of price and quality. That law was the brainchild of Skydio CEO Adam Bry. His thinking was that, through regulatory capture, Skydio could “own” the domestic drone market. Several weeks after the Congressional ban of DJI the harsh reality hit. Skydio discovered that they could no longer access the batteries needed to power their drones. Where did Skydio source the batteries? China, of course. There will be more such actions by China is the choice by America is to continue with unilateral sanctions on trade. 2024 is a very different environment than 2017 during the Trade War 1.0. The folks in the Trump team better get with the program and come up with a better plan.

China Evening Missive So there was, in the end, a Politburo meeting held in advance of the Central Economic Work Conference. Now we have everyone feverishly trying to dissect exactly what the wording of the official statement means. Here’s my take; increased optionality. What do I mean by this? Well, it should be no surprise that the Politburo centered on the applicability of both monetary and fiscal tools to support the economy. Commentary will latch on to words like “proactive” and “loose” as some sort of indication of what is intended. Honestly, it could mean just about anything. It’ll all depend on how overall economic activity trends in the coming months. The overall aim is to widen HOW monetary and fiscal tools could be applied with the operative word here being “could”. In true Chinese fashion the details are left to the imagination. I should add that the statement did, and for the first time I believe, specifically addresses stabilizing the property and stock markets. This would align with the growing consensus outlook of an indirect household stimulus via the “Wealth Effect”. Maybe, but there remains an over abundance of caution. This all looks great on paper as we say. From what I can gather, the policy priority remains unchanged. System-wide deleveraging. Expectations for nearly two years centered on some sort of large fiscal stimulus response. It’s not yet happened, and I remain doubtful that it will in 2025. Having said that, the Politburo – this time around – did give itself greater optionality.