China Morning Missive There seems to be a new term flying around the social media universe. “Escalation dominance”. Basically, it’s just a fancy way of saying China has far greater negotiating leverage as compared to the United States. Well, this bilateral imbalance has been at the core of the Notes I’ve been putting out for the past six months. My very succinct summary is this. China produces everything and America produces nothing. I’m not here to beat on America and China is most certainly working through its own issues. When you step back though and look at both parties on a net-net basis there is no other conclusion to draw than that of trade terms being dictated by China. Here is the best real-world example that I can give. To start, the current imbalance is the result of a three-decade period where multinational groups aggressively outsourced production to China. You hear this all the time. China hollowed out middle America. What doesn’t seem to get enough attention is that this entire imbalance was loudly telegraphed back in 2018 during Trump 1.0 and yet no corrective action was taken at that time. Just consider Apple as one example. Tim Cook knew at the time the precarious nature of Apple’s manufacturing dependence on China. Did he decided to marshal the company’s ample cash hoard and take aggressive steps to diversify away from China? Of course he didn’t. Such action would have tanked the stock. All that Time Cook did was accelerate the company’s share buyback program. For those who may doubt, I am a Red-Blooded American. There is, however, a reality that cannot be ignored. Like it or not, a very deep hole has been dug, and the first order of business is to stop digging. This then means that a collaborative relationship with China is the only option …. for now. A system based on financialization must shift aggressively to one centered on reindustrialization. It’ll take time, but as the old Chinese adage goes, “The best time to plant a tree is twenty years ago. The second best time is today.” https://www.politico.com/news/2025/10/12/china-defiance-trump-100-tariff-00605499

The definition of delusional. Thinking that the deal for TikTok will actually move forward.

President Trump posts first TikTok since approving sale:

President Trump has a message for Gen Z. He posted a video on TikTok, telling young users, "I saved TikTok, so you owe me big." Last week, he signe...

Call it serendipity, but was talking to a reporter yesterday prior to the Trump meltdown over China. The quotes are even more salient now than when I shared them with the reporter.

For those interested. China DGAF

China Morning Missive #Shocking and by “shocking” I mean not even a little bit. What should be expected is a rather manic period - heightened volatility - between now and the APEC meeting at month’s end. Perhaps not an exact replay of the massive back and forth in tariffs we witnessed earlier in the year, More aggressive posturing and strongly worded memos than anything else. What is rather certain though is there’ll be no Chinese purchases of soybeans anytime soon. Government will need to cut a decent sized check to bail out the farmers. Next week could be a very ugly for markets. Trump puts extra 100% tariff on China imports, adds software export controls

CNBC

Trump puts extra 100% tariff on China imports, adds export controls on 'critical software'

President Trump retaliated against China's export controls on rare earths after suggesting he also would cancel a meeting with Chinese President Xi...

I just published a new read on Nostr! “It is only after a contract is signed when the real negotiations begin” A common complaint I hear is how Chinese counterparties move the goalposts in a relationship. My response; there simply aren't any goalposts to begin with. Check it out: https://highlighter.com/a/naddr1qvzqqqr4gupzqgfre3ug0gn6vffsuqwnfa2gmmryttfuruxtw5fhlva7d47zwn2eqpx5japdd9ej6mmwd3uj6ctxw3jhyttp943k7mn5wfskxapdd9ej6umfvahx2epdwa5x2m3dw35x2ttjv4skcttwv4nk7arfv96xjmmwwvkkyet8d9hz6em2vfchgwgfpha8j View article → https://highlighter.com/a/naddr1qvzqqqr4gupzqgfre3ug0gn6vffsuqwnfa2gmmryttfuruxtw5fhlva7d47zwn2eqy2hwumn8ghj7un9d3shjtnyv9kh2uewd9hj7qzdf96z66tn94hkumre94skvar9wgkkzttrdah8gunpvd6z66tn94ekjemwv4jz6amgv4hz6argv5khyetpdskkuet8da6xjct5d9hkuuedvfjkw6tw94nk5cn3wsus4hgf77

A fantastic week away with family. Left the world behind and just ate, drank and laughed. Watching my two sons living life on their own terms is probably the greatest gift. Well, that and spoiling my granddaughter. Truly put so much into perspective. Love to all.

#priorities #family Still hard to conceive being a grandfather.

Going offline for a week. Priorities. Family. Granddaughters first birthday.

Ok, for those who have seen this content below, and with the greatest respect to @HODL, this information is patently false. Moreover, this trope - all of what Peterson claims - has been promlagated by more podcast hosts and guest than I can recall. I jaywalk all the time and there’s been no consequence and there’s certainly been no deduction of any cash from my bank account. And having your face plastered in public? Are you serious. First off, there aren’t that number of screens and whatever screens are out there are a blaze with commercials and marketing. Here is what I can share. If you do happen to share “sensitive” content on any of the various social media platforms you will receive a message to refrain from any such future commentary. If you continue, then your social media account will be suspended. I believe that this has happened more than a few times in the US and, well, just look at the UK at the moment. When it comes to third party commentary on China, my recommendation is to always question whether than commentator has been to China at any point in the recent past. I’ve found that most people haven’t been to China in at least six years, pre-Covid times. What we have is an ecosystem where errant tropes, that so beautifully align with hardened biases, are picked up and then repeated over and over again to the point that, well, it is all taken as truth. My suggestion to everyone is to tread skeptically when consuming content on China by individuals who, themselves, are only passing on second hand information. Do the same too, have a raised eyebrow with people like myself. Just don’t take what you see as gospel. The only way to know with the utmost confidence is to get on a plane and come to China to see for yourself. Make up your own mind. View quoted note →

China Morning Missive This, the Taiwan issue, is where the concept of a fourth communique comes into play. It’s also high time that the traditional media outlets finally began connecting what have been very obvious dots. With each passing day, those at the levers of power in DC are coming to the realization that China has a stranglehold on the “Grand Bargain” negotiations. Frankly, this has been the dynamic ever since both parties slapped triple digits tariffs on each other. No matter the overwhelming evidence, the Beltway simply ignored this reality. You can even see this on display when Sec Bessent noted China had made “aggressive asks” during the recent Madrid round of talks. Taiwan was undoubtedly one of those asks. The same, too, for a lifting of certain tariffs and export controls. The American side sought to hold firm on its positions. The Chinese side would have just shrugged and played for time with the complete knowledge that there is nothing the Trump team can actually do. Access to rare earths remain a sticking point. Now there’s daily handwringing over China’s refusal to purchase soybeans. Understand that these are just the tip of the spear. There are dozens of pressure points China can apply. American capitulation is simply a matter of time. But China isn’t just asking for well choreographed speeches and platitudes. This is where a fourth communique comes into play. American administrations come and go and the policies of one can be reversed by another. Beijing knows this all too well and for any material agreement to be reached will require a codified (fourth communique) agreement. The politics for the Trump team are abysmal. Then again, so is a cascade of farmer bankruptcies not to mention a host of other second and third order effects. Pick your poison, right? What this WSJ piece does highlight is (finally) a recognition of just how strong China’s position is in these negotiations. The end game is know. All that remains is how Washington will end up spinning the outcome. https://www.wsj.com/world/china/trump-xi-talks-china-taiwan-8ed82d1b?st=o3Hnq4&reflink=article_copyURL_share

China Morning Missive Enough already. America needs to return to its competitive roots. A clarion call must be made. Last night I stumble upon a few reviews of the latest Xiaomi 17-series smartphones. They are, unquestionably, a better value and experience than Apple’s latest iPhone iteration. My mind immediately went to the US auto industry of the 70s and 80s. Now, my expectation is that anyone who’ll read this will immediately jump to the argument that Xiaomi has done nothing more than “steal” Apple’s IP. Probably. For me, that was nothing more than the inevitable outcome of the Apple decision to centralize its entire production in the Mainland. The real point is the irrelevancy of this argument. Ignoring reality will not address the core issue. This Xiaomi example is nothing but another chink in the American armour of supposed technological exceptionalism. The China tech threats aren’t just accelerating, they are expanding in scope. Real world implications are just around the corner and AI is the Hemingway whale with more than a few harpoons already lodged in its mid section. The American business media headlines need to be fully dismissed. Seek out all LLM community commentary. The AI user base. Do so and you’ll quickly find just how precarious the American AI ecosystem is from China’s relentless advances. The competitive threat from China isn’t insurmountable. Far from it. Still, what’s required is a return to raw competitive forces. Enough with share buy backs. Invest. Enough with regulatory capture. Build better products. Deliver better services.

China Afternoon Missive And there we have it. To my note from this morning, it’s a soybeans for the lifting of “unreasonable” tariffs trade off. I suppose this was the cleanest quid pro quo. There is also the point that a Chinese trade delegation was just in the American midwest. Pressure is being applied on all fronts. Now that we have formal confirmation means the proverbial ball is in Trump’s court. Somewhat of a tough corner. It’s harvest season and if the Chinese don’t come in soon then the farmers will need a decent sized government bailout. What I do enjoy is just how “Chinese” this is all playing out. There is never a conclusion only a never ending series of “talks”. I’ve found in my experience that the foreign side almost always capitulates. They just get worn down. https://www.reuters.com/world/china/china-signals-that-purchases-us-soybeans-hinge-tariff-removal-2025-09-25/

China Morning Missive It is beginning to look as though there’s already been a bit of a breakdown after last week’s bilateral talks in Madrid. It all centers on soybeans, and I’ve been surprised up to this point that China has not announced any purchase from American farmers. This is always the go-to tactic when it comes to a specific Chinese deliverable anytime Beijing seeks to “make nice” with Washington. Well, not only are the Midwest farmers now scrambling, but China also announced yesterday that it would be purchasing soybeans from Argentina. Granted, it’s only around a $1bn order, but the message is clear at least in how I’m reading these particular tea leaves. Not as well that this announcement was made just as the United States was preparing to provide the Milei government a $20bn in financial support. There’s no question in my mind that the Chinese made a verbal agreement to restart purchases of soybeans during last week’s Madrid round of talks. It would have been a conditionally made agreement though. There is a sort of dance going on if you will. Step one, the parties agree to a TikTok deal. Step two, the Americans then formally/publicly deliver on whatever key issue China demanded but that had only been privately agreed to in the talks. Step three, the Chinese reciprocate and begin buying American soybeans. It is now clear that there has been a breakdown. You can see this from the fact that the purchase of Argentina soybeans is small compared to the typical $10bn to $15bn worth of American soybeans around this time of year. It’s meant as a signal to Washington that there are other markets where China can source its raw material needs. Not yet clear to me how this will all play out, but the entirety of all this sparing between China and the United States is far from over. https://www.reuters.com/world/china/chinese-buyers-book-least-10-argentine-soybean-cargoes-sources-say-2025-09-23/

The Chinese game MahJong, specifically the Shanghai version, provides some unique cultural insights. Uploading the video below for those interested.