China Morning Missive Going with another quote this morning. The old reliable Macbeth, “it is a tale told by an idiot full of sound and fury signifying nothing.” Thing is, while there is certainly found and fury, this time is does signify (inadvertently) something. Enormous fissures in the American led rules based international order. As I was saying just the other day. Recent moves made by the Trump team have ultimately played directly into the hands of the Chinese. While it may be the aim for Trump to take direct aim at the leaders of the BRICS organization, doing so – at this point in time – will be utterly fruitless. Much as is discussed on this platform, the only product America produces is currency, US dollars. A commodity that we all know is being debased at an ever-increasing rate. Countries such as China and Brazil produce actual commodities or critical end products all of which are in demand across the United States. The thinking in Washington is that, somehow, the American market is so valuable that it can be used to weaponizing trade to achieve non-economic geopolitical ends. The reality is now becoming quite clear. The Global South has seen this movie numerous times before. Only America’s “allies” have demonstrated a willing to bend the knee and capitulate. Those countries deemed “adversaries” have found a voice and are announcing to the world that they are unwilling to submit. You should all expect to see more of these sorts of moves in the coming weeks, and – quite frankly – throughout the course of the Trump presidency.

Bloomberg.com

Modi Speaks With Lula, Plans Xi Meeting as Ties With US Sour

Modi plans first China trip in 7 years and will call Brazil’s Lula amid rising US tariffs.

China Evening Missive Well, actions have consequences. Trump goes to the paint on India. In return, Modi announces a first trip to China in seven years. Expect more of these sorts of developments as the US maintains a “you’re either with us or with the terrorists” and China sits back and laughs. https://www.reuters.com/world/india/indias-modi-visit-china-first-time-7-years-tensions-with-us-rise-2025-08-06/

China Afternoon Missive “A person often meets his destiny on the road he took to avoid it." - Jean de La Fontaine. This would be a very apropos quote based upon a series of geopolitical decisions made by Trump over the past week. We need no reminder, too, how overly obsessed Trump has been when it comes to the BRICS organization. I’d also just add that there is no such thing as a coincidence when it comes to geopolitical maneuvering. (B)razil: An executive order levying 50% tariffs on imports plus political demands placed on Lulu (R)ussia: Rather self-explanatory. Russia bad. Threats of additional sanctions now imminent. (I)ndia: The threat of 25% tariffs and a not so thinly veiled condemnation of ongoing ties with Russia. (C)hina: The Main Event …. and the recent Stockholm meeting ends in a stalemate. A deadline looms large. (S)outh Africa: The Oval Office clash and now Trump signaling that he won’t be attending the G20 meeting. For each of the points raised above, there have been individual media reports highlighting the details of each. I’ve yet to see any reporting that connects what are, to my eye, very obvious dots. With a number of announced trade deals (frameworks?), Trump is now clearly emboldened and with that has made the decision to shift focus and take on the BRICS. In doing so, however, what these individual actions actually achieve is the full vindication of the entire raison d'être of both the BRICS organization and, more informally, the Global South. These groups were created to build a community of nations aligned in the purpose of countering increased American intimidation, primarily economic coercion. With a few strokes of an Executive Order pen, Trump demonstrated just how prescient that thinking was. Disable access to the dollar SWIFT system. Appropriate hundreds of billions of FX reserves. Now we have the application of tariffs as a pressure tactic on nations to act in ways that are against their own sovereign interest. To mix my metaphors, this is a bridge too far and a bell that cannot be unrung. Honestly, if left alone and not provoked then fissures among the BRICS membership countries would have ultimately surfaced. It is no secret that these nations all have real, not to mention numerous, issues with each other. Patience, if applied, would have won out in the end. Patience, I’m afraid, is just not in the American vernacular. What is it that America can expect? Basically, steely determination by all Global South nations under the guidance and coordination of Chinese leadership. Bravo President Trump. While your aim in targeting BRICS is to maintain USD hegemony, actions such as these only increase the probability of the very outcome you are seeking to avoid.

Bloomberg.com

Trump Vows to Ramp Up India Tariffs in Escalation of Russia Spat

President Donald Trump said he would be “substantially raising” the tariff on Indian exports to the US over the Asian nation’s purchases of R...

China Morning Missive Trump is about to go nuclear on China. Apoplectic rage. Sure, there were comments made by both SecTres Bessent and Trade Rep Greer stating that the parties were on a solid footing to reach a deal. From experience, however, I can tell you that when the foreign party makes such statements publicly, the Chinese return with a requested change of the tentatively agreed to terms. For years I’ve advised clients, very large global companies, to expect last minute changes to deals that were considered all but completed. This is just a very normal practice among the Chinese. And why not. For 30 years this tactic has been applied and for 30 years the foreign parties capitulated rather than push back. Oh, they will complain incessantly, but they capitulate. So, here’s what you should expect. Behind the scenes, the Chinese are pushing for some sort of change in the terms negotiated in Stokholm. I suspect it has to do with the hardline approach Trump and his team are taking on purchases of Russian/Iranian oil. Bessent and Greer would have been operating under the assumption that this was already settled during last week’s meeting. The Chinese will respond by saying, actually we only agreed to consider the American position. All of this will be communicated to the Oval Office and, with the China deadline set for next week – August 12th – expect a tirade from Trump. The threat of massive +100% tariffs returning will be all over the headlines. This will be temporary. Trump and his team know that don’t have even a modicum of leverage in these negotiations. I have honestly seen this all play out before, multiple times. Never did I expect to see it play out on the global stage though. Fascinating to watch.

AP News

China pushes back at US demands to stop buying Russian and Iranian oil

U.S. Treasury Secretary Scott Bessent acknowledges China's position on oil purchases but suggests an overall trade deal remains likely.

Gentle reminder for all you history buffs out there. History is written by the winners. Advise keeping on this in mind while going down any specific rabbit hole.

China Morning Missive Watch this space closely. You know what the Chinese did with EVs. Pure domination in just a handful of years. Expect the very same with the robotics industry. This entire shift to the fourth industrial revolution, with nearly all segments dominated by Chinese players isn’t being nearly addressed in traditional media. For the likes of the States and EU nations, those economies will receive a massive one, two punch. China and AI. Could be a very rough decade ahead.

Bloomberg.com

Robots Emerge as New Driver for China’s Tech Rally With 75% Jump

Chinese robotics stocks are drawing fresh market attention as investors look for new catalysts for the rally sparked earlier this year by DeepSeek�...

It’s spreading now that Bill Gurley has entered the chat.

China V America in the AI space race.

China Morning Missive Called it yesterday. It will be the TikTok for Taiwan trade deal. So transactional, and so transparent, is Trump that the Chinese side knows how badly he wants to acquire the American TikTok platform. There’s also the issue of all the political contributions made to Trump by the very same American investors which actually own TikTok. If there were any proof needed, here it is. The Taiwanese President has just ben denied a stop over visa to the United States. This will be framed as a decision made to ensure smooth negotiations which are ongoing in Stockholm. There is some truth to that. Still, what I am all but certain is underway is an agreement whereby Trump agrees to the Chinese terms of publicly recommitting to the original – and still in place – 1979 normalization of relations “One China” policy. In return, Trump gets TikTok. The talking heads in Washington are already up in arms over Trump’s decision to permit Nvidia to resume sales of the H20 chips into China. Somehow this has been viewed as an egregious short sightedness by Trump. The fact of the matter, however, is that Trump had no choice. No Nvidia chips, no rare earths. And it was the American side that was suffering acute dependencies on access to rare earths. The Chinese would definitely want the H20 chips but were doing just fine without access. I can’t even begin to imagine the outcry when this TikTok for Taiwan agreement is made.

Client Challenge

China Evening Missive Well, if it’s a Monday then let’s just have yet another open source AI model release out of China. Z.ai …. Never even heard of this group before. And, again, the team has stated that the compute issue was sorted out. No details or an explanation of how exactly. Altman and Zuck are out there throwing money everywhere. The Chinese are going the opposite direction. Building the most cost efficient without compromising on results. Seriously, is there any debate how this movie - USA versus China - will end? China's latest AI model claims to be even cheaper to use than DeepSeek

CNBC

China's latest AI model claims to be even cheaper to use than DeepSeek

Startup Z.ai, formerly known as Zhipu, announced Monday a new, low-cost AI model as Chinese companies race to stay at the frontlines of the tech.

China Morning Missive And then there was one. The main event is here. TikTok for Taiwan. With the US and EU having reached a trade agreement in principle, the entirety of focus will now shift to the China negotiation. A third round of talks is set to take place today in Stockholm. To be completely honest, I’ve no idea what it is that the American side wants from the Chinese side, outside of the entire fentanyl issue. The American trade surplus is far more driven by the insatiable demand of American consumers. There is just no possible way that it can be addressed simply through the Chinese buying more soybeans and energy. Then there’s the argument made by the Chinese side. They’d be more than open to reducing the trade surplus, but what it is that the Chinese want to buy (chips and the like), the American side refuse to allow on the basis of “national security”. And then there’s this fun fact. What, exactly, is the largest American export industry? Well, that would be arms and weapons systems. Can’t see the Chinese buying any of that. So, much as I half-jokingly noted at the start of this Note, it really all just comes down to TikTok and Taiwan. Trump desperately wants the social media platform and China desperately wants Trump to fully recommit to the 1979 normalization agreement. There’s only one China. My outlook right now is that both parties are set to get exactly what it is they want. In fact, I’m now of the mind that it is only the fine print that is being hammered out by the parties and it will conclude with Trump traveling to Beijing in the next month of two. There’ll be a host of China hawks loosing their minds in Congress, that I can guarantee. https://www.reuters.com/world/china/china-us-extend-tariff-pause-sweden-talks-by-another-90-days-scmp-reports-2025-07-27/

Lot of talk about the 80k BTC sale. It’s missing some critical context. Go back a decade ago and recall the lore that is the the epic “BearWhale” battle. If you aren’t familiar read the article linked below. Point being ….. been there. done that. We are a fucking resilient community no matter what any of the detractors might say. 'BearWhale' rattles bitcoin world

CNBC

Bitcoin's 'BearWhale' and the future of a cryptocurrency

Artwork and theories have proliferated after an unknown trader caused a major dip in the bitcoin market with a huge limit order.

China Morning Missive “Methinks the lady doth protest too much.” Trump has kicked this TikTok can three times. If you were on the other side of the negotiating table how seriously would you take Lutnick? Besides, I’ve held the position that the Chinese are of the mind to just let the American TikTok platform burn. Did you know that the parent - ByteDance - is 60% owned by foreign PE and VC groups. There’s no way that General Atlantic or BlackRock - Jess Yass at Susquehanna - would allow that much value to just disappear. This entire episode is all the evidence you need to fully understand just how poorly positioned the American side is when it comes to navigating some sort of Grand Bargain.

CNBC

Commerce Sec. Lutnick says TikTok will go dark if China won't agree to U.S. control of the social media app

President Donald Trump extended the deadline for Chinese divestiture for a third time, giving ByteDance until Sept. 17.

Hey @preston @HODL Listened to the Mastermind pod yesterday and on the subject of AI, really needed to send the following through. You can also read through my other Notes here for greater clarity. China isn’t just winning the AI war, its also increasingly likely that the war is already over. As a quick aside, too, China is doing to robotics what it did to EVs. Anyway, back to AI. It’s been six months since DeepSeek hit the world straight in the face. In that time – just six months! – there has been a rapid, iterative process of competitive Chinese model after model. Ten days ago, all the talk was on Kimi K2 and just yesterday Qwen announced a new model that has the LLM community in palpable shock. All open-source models . All applying lessons learned from competitors to aggressively iterate and improve. But that’s not the most significant achievement. All these models were able to hit their operational aims while hamstrung by compute. Unlike the closed American models that just piss away CAPX at Nvidia and AMD for chips, the Chinese required a work around. Brute force innovation combined with other very Chinese tactics solved the issue. And this was all achieved before the H20 was approved for sale into China once again. And what is it that litters the business media headlines? A war for talent where Zuch and Altman are going to the mattresses. Meta and OpenAI are the current day equivalent of America Online and Yahoo. Walled gardens run by leaders who don’t even know that the competition is at the gates and set to take over. This is akin to Mehmed the Conqueror taking Constantinople and ending the thousand-year reign of Rome. I know that America is fiscally boxed in, but it is quite worrisome that there remains this fixation on American AI models and a fervent belief that the likes of OpenAI or xAI will dominate the stack. Christ, just last week Altman called an audible to announced that their open-source alternative would be postponed indefinitely. That is going backwards. None of this should be construed as “praise of China”. I am a red-blooded American who just so happens to live in Shanghai. This is all just a slow motion train crash. Moreover, those commenting on China Shock 2.0 have neither the true understanding of just how impactful it will be AND the speed at which it is playing out. Shock 1.0 was a slow burn. Shock 2.0 will make the Palisade fires look like a backyard cook out.

Few things are better than providing much needed counter programming on CNBC. Have to give the Asia bureau props for continuing to have me on.

Fun fact. Robert Frost is often quoted with the line “the only way out is through.” But did you know there’s a second part of that quote? “Together” is such an important point to Frost’s overall them in that poem.

China Morning Missive Just a quick note to point out the obvious. The Chinese achieved all key objectives from their American counterparts during the Swiss meetings the other week. Contrary to the talking points, China is, once again, allowed access to high end chips and chip related technology. While there was Nvidia and AMD, expect more announcements from other companies (ASML, Tokyo Electron) in the coming week or two. This outcome demonstrates clearly just how dependent America is for access to rare earth minerals and battery technology. It should also be noted that this is but one, single area where China can apply pressure. The nuclear option, which now doesn’t look likely, is on the pharmaceutical front. There are a host of other areas as well. Perhaps a better way of summarizing the situation is as follows. America has decided that TikTok is more important that AI supremacy. While not yet publicly announced, it should expected that a deal for TikTok will take place in a matter of months, if not sooner. I’d also suspect that there is a slowly growing consensus that China, through its aggressive moves to build open-sourced AI models, will displace the various closed-sourced silos operating in the United States (OpenAI, Meta, et al). For myself, the key takeaway is the recognition of just how poorly American policy makers understand the process of engagement with China. I would add that this isn’t solely a Trump issue. The same was on display throughout the Biden administration as well.

Bloomberg.com

ASML Says Easing China AI Chip Controls Would Boost Demand

ASML Holding NV Chief Financial Officer Roger Dassen said it will be positive for chip demand if Washington lifts restrictions on the sale of some ...

China Morning Missive Mark Rutte is a genuine menace. We are, after all, speaking of the general secretary of the North Atlantic Treaty Organization. These comments are nothing more than blatant mission creep driven by abject fear. Last I looked, Brazil, India and China are nowhere near the North Atlantic. Comments such as these achieve only one goal. The further conviction of building systems and partnerships outside the traditional “rules based international order”. What is that great quote? “The more you tighten your grip, Tarkin, the more star systems will slip through your fingers.” All China needs to do is sit back and let the natural course of events play out. There is much to critique China for, but forcing its world view on others isn’t one. https://www.reuters.com/world/china/nato-says-brazil-china-india-could-be-hit-hard-by-sanctions-2025-07-15/

Watching this “number go up” technology in action is the purest of joy.

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 ...