China Lunch Time Missive And here we go again. After the London meeting, the Trump team agreed to allow chip software companies to resume commercial activities with China. Today we have Nvidia receiving approval to restart China sales of its H20 chips. This chip, by the way, required the company to preannounced a $5.5billion write off. That revenue is now firmly back on the table. Clearly, rare earth access was vital to American interests. That said, the degree of back peddling on China by Trump is not at all surprising. For the longest time I’ve stressed that China is the party with the leverage in all negotiations. This is just more evidence in support of that point. There will be more to come be to be sure.

CNBC

Nvidia says it will resume H20 AI chip sales to China 'soon,' following U.S. government assurances

The U.S. government in April told Nvidia it would require a license to sell the chips to China, the company said in a filing, effectively halting ...

Again on the AI competitive front, someone really needs to tell Zuck and Altman that Walled Gardens in a digital world are impossible to sustain. The Chinese are going full bore on open source and iterating models at lightning speed. I give it 12 to 18 months before these American AI silos learn the lesson of America Online. Keep models closed and usage will inevitably gravitate to the Chinese open source models. Game. Set. Match. America needs to do better.

China Morning Missive For those following the pitched battle over AI, this update out of Meta is so very telling. After first deciding to prioritize an open architecture, it is now looking increasingly likely that the new team will shift to a closed model. Quote from the linked TechCrunch article sums it all up. “Top members of Meta’s new Superintelligence Lab discussed pivoting away from the company’s powerful open source AI model, Behemoth, and instead developing a closed model, reports the New York Times.” The reason for bringing this shift by Meta up is given other developments in the AI space. There’s been yet another open source model released out of China over the weekend – Kimi K2 – released by a group called Moonshot (perfect name!). From the commentary, it would appear as though Kimi K2 has leaned heavily on the DeepSeek model. This! This! And This! The key feature of open source, as we here all know, is that you take what it is that others have created and then make the models perform better. Competition in it rawest form. Demand and usage will only gravitate to the model that is iterative in the overall development. American AI platforms are seeking a walled garden and I am old enough to remember how that turned out of America Online (AOL) Chinese AI platforms see the threat posed by the American closed models and simply made the decision to commoditize the entire industry. Go big. Build strong. Make the American AI models obsolete in short order. There was evidence of this approach with the launch of DeepSeek. Today, however, the writing is clearly on the wall. So long as the American AI players work within corporate silos, the Chinese are destined to win the global AI race. That fact is now far more evident than ever.

TechCrunch

Meta built its AI reputation on openness -- that may be changing | TechCrunch

Top members of Meta’s new Superintelligence Lab discussed pivoting away from the company’s powerful open source AI model, Behemoth, and instead...

China Morning Missive While this news did hit my radar yesterday, the idea of #China even considering easing up on the current policy position isn’t - for me - in the realm of possible. That said, the populace remains overly keen on gaining access to crypto and specifically the King. Demand remains present from the calls I made yesterday. https://www.reuters.com/business/retail-consumer/major-shift-shanghai-regulator-mulls-policy-responses-stablecoins-2025-07-11/

GM from Shanghai. I never tire of this city. The contrast on display wherever you look always puts a smile on my face.

Vanguard will ultimately bend the knee. It is only a matter of time. And this here below is now 18 months old.

Investments and Finance - Perspectives and commentary

Vanguard's thought leaders share timely insights about international financial markets, investor behavior, and the investment industry.

Here we have another “deflation is ravaging China’s economy” headline. Buried in the data has CPI actually rising slightly over the period. I’ll just comment once again that what it is you are seeing from the Chinese data is what you should expect when the world’s second largest economy makes the policy decisions to deleverage on a system wide basis. China’s producer prices see worst drop in nearly two years

CNBC

China’s producer prices fall 3.6% in June, biggest drop in nearly two years as deflation deepens

The deflation in producer prices came worse than the expected 3.2% drop in a Reuters poll, marking the biggest fall since July 2023, according to L...

What’s Next for TikTok? The Chinese aren’t just threading the needle, they are – to mix metaphors – finding a solution whereby they get their cake and eat it as well. A sale to a consortium of American investors will likely occur later this year. It is now rather clear that a host of parties are working diligently in the background to acquire the American TikTok platform. The operative work there is “American”. The sale will not be for the entire international TikTok platform, at least in my estimation. The ex-American platform is simply too valuable. Moreover, there is now credible evidence that Bytedance is working overtime to create a standalone app which tailored for the American market. Fun fact. This is exactly what China did itself with Douyin available in China and TikTok available in all other market. What should be expected though is that this new American-only app will end up dramatically underperforming. The “special sauce” that is the current TikTok algorithm will be fully ripped out. There will clearly be a period of integration and there won’t be much of a difference, again at the earliest of stages. Fast forward out a year after a deal is completed and TikTok America is live and I am expecting that overall user engagement will fall off a cliff. With a poor performing TikTok America platform, I then wonder if we will – once again – witness a deluge of “refuges” flooding back to RedNote. That would be the ironies of all ironies.

Los Angeles Times

TikTok reportedly prepping new app in the U.S. as potential sale looms

TikTok is planning to release a new app in the U.S., according to media reports. President Trump has said a deal is near.

China Morning Missive Will fully admit, China going full “visa on arrival” was something I never expected. Then again, it has been a brilliant move. Tourists from all over are making their way to the Mainland. Shanghai is essentially fully back to the pre-Covid days of foreigners roaming the streets. What has been interesting to watch are the reactions. So far this year I’ve had a half dozen friends and/or family travel through and each – to the man and woman – have left completely flabbergasted. The make the point of there being an obvious disconnect between what was expected and reality. Again, everyone made the point that China isn’t at all how it is presented in the American or European media. Most will also comment that China feels like living in the future. Suspect that is more a case of a massive lack of investment by American and Europe. None of this is a surprise to me, but I am very thankful that more and more people are making their way to China and getting a first hand look for themselves. Highly recommend a trip for all of you out there. And if you do make it to Shanghai, be sure to let me know.

AP News

Citizens of more than 70 countries can now visit China without a visa

China now allows citizens from 74 countries to enter visa-free for up to 30 days. This policy aims to boost tourism, the economy, and China's globa...

For the longest time, I’ve made the point that all critiques of #China are warranted. At the same time though, it has also been obvious that those critiques have been woefully incomplete. Selective in how they are presented. What has been far more evident to me is a G7 leadership that is increasingly feeling cornered. Debt is weighing down the system all over. If the only way out is through, then NATO sees that the only way through as WAR. As an act of screaming into the void here I am making the point that when the head of NATO publicly states that his outlook isn’t just for Russia to expand farther with its aggression and directly attack Europe but that this will be done at the behest of China. The quote below comes from Mark Rutte, the current head of NATO. “There’s an increasing realization, and let’s not be naive about this: If Xi Jinping would attack Taiwan, he would first make sure that he makes a call to his very junior partner in all of this, Vladimir Vladimirovich Putin, residing in Moscow, and telling him, ‘Hey, I’m going to do this, and I need you to keep them busy in Europe by attacking NATO territory,'” Rutte told the New York Times Again, this is the Secretary General of NATO going on the record expecting war. #madness.

NATO chief predicts how China could set off World War III: 'Let's not be naive about this'

China Morning Missive Are you, at all, interested in the development of the Chinese AI stack? Well, this recent piece by RAND does a rather decent job of laying out all of the specifics. Full disclosure, I am not a fan of RAND, but props are due for the rather comprehensive assessment of the Chinese Ai stack. It is rather balanced, but RAND being RAND, the piece is littered with more than its fair share of cope. The final assessment is that China is building a competitive AI ecosystem although not a likely competitor to what is being built in the US. From what I’ve witnessed this is an errant conclusion to make. What confounds me to no end though is how American policy makers, and those on bended knee in the Beltway (such as RAND) continue to underestimate the ability of China to exceed expectations. In fact, I would place this error as being the single most critical point when it comes to why China continues to outpace America year in and year out.

China

China wants to become the global leader in artificial intelligence by 2030. Beijing is deploying industrial policy tools across the full AI technol...

Posting a second video on China. Another short musing of an American who has lived in Shanghai for 30 years. If any of you out there have a specific topic that you’d like for me to address, send it through. Far more interested in addressing issues raised by others. Quick note. Wanted to just directly upload the video to Nostr but continues to run into uploading issues with Damus and Primal. Will hopefully have those issue ironed out when I post the next video.

Coming fast and furious now. Synopsys also back in business with %China. Tokyo Electron and ASML I would expect are set to join the fray in the next day or two. Perfect timing given that it's July 4th and the Big Beautiful Bill is sucking the air out of all conversations. Is anyone really going to pay attention to tis development? U.S. lifts chip software curbs on China amid trade truce, Synopsys says

CNBC

U.S. lifts chip software curbs on China in sign of trade truce

The U.S. government has rescinded its export restrictions on chip design software to China, U.S.-based Synopsys announced.

China Morning Missive Very much as expected. While details remain limited, the quid pro quo for China agreeing to resume rare earth exports was that America would lift the export controls of advance chip and chip related technologies. No wonder the Trump team refused to release any details from the recent London meeting and the details need to come from Siemens of all sources to confirm what pretty much everyone expected. Limiting China’s access to these sorts of “national security” inputs is a very much bipartisan issue throughout Congress. Give it a week and then expect a blow back from various corners of the Beltway. For myself, the writing was clearly on the wall the moment China hastily agreed to reconvene with Bessent and his team in London the other week. Rare earths restrictions were having a direct and immediate impact on a swath of American industries. Trump had to deal. Moreover, Trump had to deal on the terms set out by China. Finally, the parties not just agreeing to terms over a short two day period, and then “inking” that deal roughly a week later was further evidence, at least to me, that China ended up getting pretty much everything it asked for. The Chinese NEVER enter and conclude negotiations that quickly unless they do get what they want. Moving forward, this should be a clear example of how the bilateral relationship will operate. When China squeezes, and they have a plethora of areas where they can squeeze, the American side will have no choice but to capitulate regardless of what Trump posts on social media or what the headlines might read. https://www.reuters.com/world/china/siemens-says-us-has-lifted-chip-software-curbs-china-bloomberg-news-reports-2025-07-03/

Speaking of Huawei, just stumbled upon this classic US govt tactic. If you can’t compete or are looking to kneecap a global competitor go with Extrajudicial reach. Criminal charge? Trading with Iran https://www.reuters.com/legal/government/chinas-huawei-must-face-us-criminal-charges-judge-rules-2025-07-01/

China Morning Missive Not a week goes by, it seems, without a Chinese tech group announcing some new AI development. This time we have Huawei and the announced open-sourcing of its AI models. What’s particularly interesting about this development is that the Huawei models were built using the company’s own Ascend chips which I believe is a first. It is yet to be seen how the performance of these AI models will compare to all of the others now in the market, both from China and those developed in America. The fact remains; the ongoing American policy of containment is continuing to demonstrate a lack of any real teeth. All that has been achieved through this policy of containment is to incentivize Chinese industry to pick up the mantle and brute force its way to innovate around all obstacles. And China has an excess of brainpower to throw at all such problems. All I will share is that DeepSeek entered the zeitgeist FIVE months ago. Since then it has been nothing but rapid forward progress. The Little Dutch Boy only has so many fingers and the Chinese dam of technological innovation continues to flow forward.

CNBC

China's Huawei open-sources AI models as it seeks adoption across the global AI market

Huawei has open-sourced more of its AI models. Tech experts say it'll help the U.S.-blacklisted company continue to expand throughout the AI ecosys...