Feel the need to share the following. "Never interrupt your enemy when he is making a mistake." This is a quote from Napoleon Bonaparte and NOT Sun Tzu.

Well, it is just another Monday morning here in Shanghai.

Strongly advise reading this book. The only edition you should read. This specific book. Fantastic examples provided throughout. And I can say it has allowed me to properly assess much of the thinking out of Beijing when it comes to world affairs. Moreover, it has provided insight into how it is Beijing has operated over the past 30 years.

China Morning Missive The Taiwan Issue Back behind the desk after a much needed Chinese New Year break. My goal for this Year of the Horse is to get to those of you interested more updates and insights into what is actually transpiring here on the ground in Shanghai. And you can help with this endeavor. If there are topics where you’d like my perspective, just let me know. For today, the topic is Taiwan and is being raised due to a recent NYT article which highlighted the “impending” military move by Beijing on Taiwan in 2027. The construct of the story centered on messages conveyed to American tech firms that rely heavily, if not exclusively, on chips made in Taiwan. A summary of that article is linked below. Allow me to stress that the probability of China moving on Taiwan next year is zero. Zero. That is both a strong opinion and one that is strongly held. The reason for such confidence comes from an actual understanding of Chinese history and experience with how it is that decisions such as these are made in Beijing. There is a basic premise which needs to be taken into account. If the peace cannot be won, then instigating war is to be avoided. It is all very Sun Tzu. Allow me to provide some historical context, specifically the two examples of when China, itself, was invaded and defeated. There were the Mongols in the early 1200s and then the Manchus in the mid 1600s. Why these data points matter when assessing the Taiwan issue is that, and in both instances, the end result had the ethnic Han Chinese fully assimilating the invaders over time. The Mongols ruled as the Yuan Dynasty for one thousand years and the Manchus ruled as the Qing Dynasty for 200+ years. For China, to conquer means to assimilate. Allow me to provide a more recent example, Hong Kong in 2019. Begin with an understanding that at the formal handover in 1997, Hong Kong was basically as an extremely British enclave. Once Beijing reassumed control, however, the borders were opened and over the next 20 years Mainland Chinese entered the city to live and work and became the dominate ethnic group. Hong Kong became just another Chinese city. It was fully assimilated and with it made the move by Beijing to assume full control relatively easy. None of these dynamics are at play when it comes to Taiwan. Most importantly, these dynamics are known by the Beijing leadership. If a move were made, and even if that move were successful, there would be no way that stability after-the-fact could be achieved. The objective is to maintain the status quo, and I am expecting an agreement along these lines to be reached in the next year or two. A formula that is supposedly being discussed would have the current status quo hold for the next 50 years. That means Taiwan would not unilaterally declare its independence and Beijing would commit to no military intervention. The two sides would codify this relationship in some sort of formal declaration, and the two sides would go back to doing what they do best. Commercially engage and make money. So what is with all the fear mongering out of Washington? Well, I’ll get to that tomorrow.

Tom

US gov

A new report reveals that tech CEOs were cautioned in 2023, yet haven

Back to providing an installment of my recent “Deconstructing Rivalry” Essay. Many of you will find today’s update of particular, even very specific, interest. It centers on diplomatic subterfuge via the IMF along with America’s original decision to debase its currency. In short, there is an important event that is too often overlooked when it comes to China’s motivations to build a parallel set of global systems, the nearly two-decade long process to reform IMF voting rights. It was, however, the policy response by Washington to the Global Financial Crisis, putting at risk China’s significant exposure to US Treasuries and GSEs, that demonstrated the length at which America would go to safeguard its unipolar primacy. Power, whenever required, would be wielded (weaponized) using the dominance of the US$ system. It would be the combination of these actions that would, ultimately, lead to the formal establishment of the BRICS block. View article → View article →

Ok. It is now official. I’ve lived in China for 30 years. Where did all that time go? Been a wild ride for sure and wouldn’t change a single thing about this journey.

And if there wasn’t enough going on in the entire AI space, we just had Qwen 3.5 officially dropped. China - be it good or bad - is the accelerant here. If US markets are on shaky ground over the effects from a small number of siloed closed source players in Silicon Valley, just wait until PicoClaw, Seedance and, now, Qwen permeates the business media.

It would be hysterical to know how much Sam Altman paid this individual for what is, honestly, an already borderline obsolete AI model. I can’t even think of the rationale for making this move. OpenClaw creator Peter Steinberger joining OpenAI, Altman Says

CNBC

OpenClaw creator Peter Steinberger joining OpenAI, Altman says

OpenClaw, the open source AI agent that's surged in popularity in recent weeks, will live within OpenAI, according to a post on X from Sam Altman.

Any American Transcendentalists out there? Devoured the greats back in my youth and find myself returning to their teachings once again. For my American compatriots, I believe that this is a solution to what ails our great nation.

So am still working out the bugs with the “long post” functionality here on Nostr. Ended up posting this installment of the “Deconstructing Rivalry” essay twice for some reason. Anyway, for today we begin getting into the meat of the matter. @lemon a bit later than I had hoped but here you go. View article →

Believe I’ve finally sorted out this “long post” issue and can now return to posting sections of the recent essay detailing the 30 year path to China & American rivalry. @Connie thank you for the assist @lemon more to chew on if interested. View article →

Hey all. Need assistance if possible. For whatever reason Reads isn't working for me to upload long posts. Is there another option where I can post a long form content other than Reads?

Just for good measure we ended the week here in China with more “we are serious. Crypto is banned” news. Doesn’t seem as though anyone cares anymore. https://www.reuters.com/world/asia-pacific/china-vows-tighten-virtual-currency-restrictions-2026-02-06/

I strongly recommend taking up YOGA. It is the perfect anecdote to the chaos of the daily world. And you men out there …. This message is directed especially in your direction.

China Morning Missive “Begun, the Robot Wars have” Forced technology transfers and an overreliance on China for intermediate inputs to final production. If there were ever to be an honest to God conversation in Washington over Chinese leverage it begins and ends with these two issues. The issue of forced technology transfers would be easy to address if difficult to execute. To start, there was never all that much “force” applied. American corporations spent three decades willingly engaging with Chinese contractors and in that process IP was aggressively extracted. So, Chinese steal IP. Ok. To address the technology transfer and theft issues, you just stop making those transfers in the first place. This would, however, require management to accept a degree of impairment to both top and bottom-line results. Like I said, difficult to execute. Addressing the issue of intermediate goods will take time and a great deal more commitment. In 2023, the latest data available, these inputs represented 47% of China’s total export value. Basically, China exports nearly as much finished goods as they do intermediate goods. China is no longer simply supplying final product to Walmart or Costco. China is now the primary supplier to a countless number of America manufactures. This issue, right here, lays at the core of last year’s rare earths episode. And yet, for all the talk and posturing, it is very clear that there’s been no change in corporate behavior on either of these two fronts and there is no better example than that of Elon Musk’s Optimus robotics program. Not that there is much need for confirmation, but reports are now surfacing that the Optimus production process will be reliant on “hundreds” of China suppliers. The rationale behind this decision is borderline delusional. Somehow, there’d be a market segmentation where America would lead in the robotic “brain” (software) and China would lead in the “body” (hardware). After this past year, with DeepSeek, QWEN, Kimi-K2.5 et al, it is beyond naive to even consider that China will be solely relegated to hardware. As for Musk, he simply knows that sourcing from America just isn’t an option, especially given his aggressive timeframe. Over the past year I’ve been vocal in stating that the die is cast and that what China achieved with EVs will be fully replicated, and at tremendous speed, in the realm of humanoid robotics. It is already playing out when you consider the installation of industrial robotics. In 2024, China had total new installs of 295,000 versus America at 34,200. Worse, in the first nine months of last year, China’s new installs nearly doubled to 595,000 or 470 units per 10,000 workers. Now that I think on it, the robot wars might already be over.

Interesting Engineering

Chinese parts challenge Optimus humanoid robot production goals in US

Elon Musk is exploring the possibility of manufacturing the Tesla Optimus entirely in the US while facing multiple challenges.