Here’s a peak into the real China. And I’m here to tell you that fundamentally nothing has changed in 30 years. And that’s good! Good friends. Good food. And laughter. The people all over the world have far more in common than what separates us. A message that isn’t shared enough these days.

Downtown Shanghai has truly been gentrified. Am right now about 40 min outside downtown and the food and environment has taken me back decades. The food tonight I didn’t expect. It’s awesome.

This is going to be a ton of fun. Haven’t done a proper OG Chinese dinner like this in years.

Saturday morning walks here are the best. The city is quiet and at peace.

CNBC interview clip from this morning here for those interested. “Peter Alexander of Z-Ben Advisors discusses reports of the Shanghai Futures Exchange planning for an AI token futures market. He said it is about “burying the U.S. in electricity”. Highlighting China’s massive surge in token usage, Alexander argues that while the U.S. focuses on compute constraints, China is leveraging its vast electrical grid to scale adoption.”

Been a busy week for sure.

China Morning Missive Well, there would appear to be a whole new battlefield in the ongoing competitive AI war between China and the United States. China is now looking to bury the American AI models via rapid global adoption and will seek to do so through the deployment of the country’s ample power generation. AI tokens are how China is approaching the fight where the American’s are still focused solely on compute and this article does a great job explaining the difference. The upper hand has to go to China given that the base layer is open source, open weight models and as Deepseek demonstrated just this week, those models are being priced at insanely low levels. This will result in quicker global adoption of Chinese models. Mind you, the Chinese models remain behind the American frontier models when it comes to efficacy. I am also well aware that AI token usage isn’t the single best metric to apply when attempting to measure adoption, but it certainly provides insight into the current direction of travel. All said, on a price-to-performance measurement, China wins – at least for now. This is the very same strategy China has deployed across countless industries in the past. Build a substitute that might be slightly lower in performance than an American offering but provide that option at a radically lower price point. This entire development also shows just how critical access to power/electricity is when pursuing a dominate position in AI. https://www.reuters.com/world/china/china-works-ai-token-futures-market-sources-say-race-with-us-2026-05-28/

China never misses an opportunity. Taobao is flooded with anything you can think of branded with America’s 250th.

Short segment on CNBC. First time back on NY on a very long time. Source: CNBC

CNBC

Treasury Secretary Bessent needs better advisors on China, says Z-Ben Advisors' Peter Alexander

Peter Alexander, Z-Ben Advisors founder and managing director, joins 'Squawk Box' to discuss the state of U.S.-China relations, takeaways from the ...

Here’s an odd thought. What percentage of all these macro geo strategy folks were even born before the fall of the Berlin Wall? Not that they aren’t entitled to their opinion, just, well, the lived experience of the world in the 1980s does provide for an entirely unique lens on current events. Anyway, back to my scotch.

This Prof Jiang bloke is playing the Icarus card. Wings, I suspect, are beginning to melt. Or as the Chinese say 树大招风, the big tree attracts the wind. Let’s see if he’s anywhere to be found in three months time.

China Morning Missive If you are following anything about China, you know that the topic of rare earth minerals has sucked the air out of the room for the past year. Well, let me share with you that rare earths is a complete MacGuffin. Yes, access is vitally important to American industry, especially the defense sector. The focus, obsession really, on rare earths does miss the much larger issue at hand. Rare earths are but one of hundreds, probably thousands, of inputs with which American (and Europe) are dependent on China. There’s been some talk of the potential risk from China’s dominate market position in pharmaceutical APIs. The most often raised example is how 70%, perhaps more, of the active ingredients in antibiotics are sourced from China. The same holds for virtually all other medications used throughout the world with the exception of insulin and there’s a lesson to be learned there. Expect to be reading a lot more in the media about specialty chemicals in the months ahead. China already dominates the market for basic and petrochemicals and is now redoubling efforts to move up the value chain. Yet another critical layer of production inputs. These are just two examples. For me, however, the American response to all of this can best be demonstrated by an event from last week. The Department of Justice indicted four Chinese groups and six individuals for price fixing and – crucially here – restricting the supply of shipping containers. The groups in question are Chinese owned and operated and five of the six individuals are PRC nationals. I’ll leave the merits of the case to the lawyers, but what you sure as hell can’t litigate your way to solving a physical world constraint. This is Dan Wang’s entire thesis wrapped up cleanly. American lawyers versus Chinese engineers. There’s more for me to share on this topic, but let me just leave it here for now. Just know, the issue at hand isn’t as simple as “China is an unfair competitor”. There is truth to that claim, for sure, but it isn’t the core of the issue. American and Europe spent 30 years outsourcing production so corporations could improve financial results with China picking up the slack, quite willingly I might add.

CNBC

U.S. indicts four Chinese container manufacturers alleging pandemic-era price-fixing cartel

China International Marine Containers, Singamas Container Holdings, Shanghai Universal Logistics Equipment, and CXIC Group Containers colluded to c...

Did you know that there are no property taxes in China?

Started raining. Parked our bikes for a classic’s Shanghainese (late) lunch.

There are still those times when I can return to what it was like when I first arrived in Shanghai.

For those affected by the ongoing supply shock in memory chips (DRAM), expect one Chinese company - CXMT - to arrive and begin to drive down prices (and devour market share). A fantastic article here providing some detailed background as the company is set to IPO here in Shanghai. Then will come another group - YMTC - with a core focus on SSDs. If you ask me, Samsung, SK Hynix and Micron are about to face a major threat to their chips business lines.

Gasgoo Auto News

CXMT Unveils the Aggressive Expansion of Domestic Memory Chips

img:-moz-broken {-moz-force-broken-image-icon:1;min-width:24px;min-height:24px} ...

China Morning Missive Need to get back to doing these more regularly. Just far too much on the docket of late. Need to prioritize more China commentary moving forward. For today, I wanted to share a few comments on reports that the UAE is driving hard with the construction of the West-East pipeline which will fully circumvent the Hormuz chock point. The UAE leadership has been touting the project and in the past day stated that construction is now 50% completed and will go into full production beginning in 2027. What isn’t raised in the media coverage or even from the UAE comments is that the Chinese are the primary contractor for the project as (tangentially) part of the Belt and Road initiative. In contrast, there were also reports in the past several days of the British government revising its plans for the High Speed Phase 2 rail line meant to traverse the entirety of England. First introduced in 2009, the project was meant to be completed by 2026 at a cost of 36 billion pounds. Now, the project is expected to cost over 100 billion pounds and won’t be operational until 2040. All developed nations, with perhaps the exception of Japan, no longer have the capabilities to build infrastructure. This will prove to be a critical issue especially for those countries that are calling for a new re-industrial age.

CNBC

UAE says new pipeline that will bypass Strait of Hormuz is nearly 50% complete

The UAE has redirected some oil exports through an existing pipeline to Fujairah, which has a maximum capacity of 1.8 million barrels per day.

Good morning from Shanghai. Always makes me laugh a bit when seeing a car such as this randomly while out for a morning stroll.

It was bound to happen. After being ignored for the better part of a decade, the business media has finally “discovered” China’s alternative to SWIFT. Not a replacement. An alternative and one that operates completely outside the prying eyes of the New York correspondent bank network. Highly recommend reading this article which, I should add, is actually from the Financial Times. https://www.dimsumdaily.hk/renminbi-use-surges-as-iran-war-boosts-cips-yuan-nears-three%E2%80%91year-high/

Putin arrives into Beijing later today. Expect there to be a great deal of commentary of the Power of Siberia 2 pipeline. The project has been under negotiation for years. Expect those negotiations to be concluded this time around. It is a massive project.