This should be fun. Trump administration looking at ways to curtail access to Chinese open source models. My thinking is that they’re not though through all the second and third order effects from such a move.

Last week as insane here with China delivering a series of body blows to the American “tech stack”. Xi Jinping, the Chairman of the Communist Party of China gave his full throated support to open source AI development. Never in my wildest dreams would I have expected “The Party” to take such position. Moonshot releases Kimi K3 and the model quickly becomes the center of everyone’s attention. And not only is there a consensus that the performance is just shy of the American frontier models, but there aren’t any guardrails. Just use Kimi to do what you need to do. It was only a month ago with Zhipu released GLM 5.2. The iteration process in just instance. Finally, there was the listing of CXMT which is now the largest IPO of a Chinese company in a decade. The company is set to raise some $8billion all of which will be deployed to aggressively expand DRAM production capacity. The impact has been immediate if you just look at the price action of Samsung, SK Hynix and Micro. I have no idea what to expect sitting here first thing on yet another Monday Morning.

Um, there would appear to be some chatter that Trump is about to go Medieval on China during his speech tonight.

CBS News

Trump gives primetime speech on elections as White House alleges Chinese access to voter data

President Trump gave a primetime address on elections tonight, as he remains focused on the 2020 race.

Knowing something about how the IPO process here in China is run has me highly doubtful of a Deepseek listing this year, but it’s the messaging that counts. Same, goes for CXMT going public this week. A maximum pressure campaign. Sowing the seeds of doubt as to the economic efficacy (ie valuations) among those companies operating the American “stack” Will now be paying even closer attention to Xi’s speech on Friday.

The Straits Times

DeepSeek IPO plans: Filing by end-2026 for 2027 debut

Chinese AI pioneer DeepSeek is preparing for an IPO filing as early as 2026, targeting a 2027 debut in the burgeoning Chinese tech industry. Read m...

Well, this is certainly an unexpected development. The question now is what the message will be. Back in 2018 Xi gave a keynote speech at the inaugural Import Expo here in Shanghai. He announced the launch of the STAR market. I’d wager the message this time around will be directed far further than AI. A presentation of the need for global cooperation and coordination. There’s the ongoing trade friction with Europe that will need to be sorted out and China just released trade data for June. The surplus remains on course for yet another massive record, potentially up 25% YoY to $1.5tr. Back to AI. What I am fairly certain of is that the Xi speech will be accompanied by the American commentariat finding yet another excuse to raise the “national security” alarm.

Free Press Journal

Xi Jinping To Make First Appearance At China

Chinese President Xi Jinping will attend and deliver the keynote at the World AI Conference in Shanghai for the first time on July 17. His appearan...

Damn! This was a massive typhoon in terms of size.

Ahhh the good ol’ days.

Happy 250th all from Shanghai. Only flag that officially flies here.

IYKYK

For those of you monitoring the AI pitched battle between China and the United States, I would strongly advise watching this very short clip. This is Frank Dikotter and from his comments you will find how supposed China scholars continue to dismiss outright how formidable China is as a rival. He is also a Senior Fellow at the Hoover Institute which, for me, remains a primary platform that continues to errantly downplay China’s ability to not just compete but its ability to successfully wage unconstrained warfare. The hubris and conceit that permeates throughout the American Think Tank and policy communities infuriates me to no end. China needs to be take both literally and seriously.

Let’s see if I can upload this video.

Gold accumulation funds are gaining traction here in Shanghai. Had a unique conversation over dinner on the weekend. Topic came up and I asked about taking physical ownership. Many there said you could do so. I asked if anyone had tried to get the gold from the bank. No one had tried. The next day (a Sunday I might add) several of those people went to the bank and took delivery. Then sent me the pic below on WeChat. A 10 grab bar with certification.

The weekend Shanghai breakfast lines. If you see people gathering then you know you found the right spot.

To maintain the conviction of one’s beliefs, no matter the intensity of external pressure applied, I find isn’t present in much of the world today.

Here’s a problem I have with the business media coverage of China. There’s zero ability to connect even the most obvious of dots. Granted, the reporters aren’t incentivized to do so. Here we have a story of the ever increasing hoard of gold held by China.

The Business Times

China’s gold imports surge to most in more than two years

China has implemented a new import licensing regime for gold from Jun 1 Read more at The Business Times.

Then earlier today the FT did a piece explaining why the RMB can’t challenge the USD. That is true as a currency but errant as a reserve asset. And yet this is the quote from that FT story. “Yet for now, it lacks a fundamental aspect of what made the petrodollar so important, and remains far from threatening the US currency’s role as a reserve asset.” Never is the question raised, why then is China hoarding so much gold??!!

Should be interesting to watch how this unfolds. Not yet deployed across the entire WeChat platform. https://www.investing.com/news/stock-market-news/tencent-begins-testing-ai-assistant-for-wechat-users-in-china-4751738

Random pic while walking around Shanghai today.

Happy Dragon Boat Festival to all who celebrate. Late lunch and fun fact. Been coming here for years. Six months ago they started including English to the menu.

Since I’ve been challenged with uploading videos am posting this note here. A tad long but highly relevant to the current AI discourse. Also @gladstein tagging you as I believe Chinese open source models is a focus of yours. Hit me up if you want to have a conversation. China Morning Missive Another DeepSeek “Moment” Well, here we are. Last week ends with Anthropic pulling Fable 5. Now, just hours ago, the Trump administration confirms that DeepSeek and dozens of other Chinese firms will not be added to the Entity List. Much will be obviously made of that decision and yet this decision wasn’t even the most consequential announcement made today when it comes to the ongoing AI rivalry between American and China. What could prove to be a major breach is the Microsoft announcement that it will be shifting its AI enabled assistant, Copilot, from flat-rate subscriptions to usage-based pricing. An obviously necessary move for a platform whose users were burning through compute faster than any subscription fee model could absorb. Expected. What was not expected came next: Microsoft stated that it was exploring the adoption of DeepSeek V4 to support a lower-cost option for users. There was no commitment mind you, but the mere admission that a lower cost option was required and that a Chinese open source LLM was being considered defines where the AI contest between American and China now stands. Benchmark rankings among the American frontier models are no longer the primary variable in driving global adoption. Price for performance is now the priority and on that measure the hyperscalers, not only their users, are adjusting behavior in real time. If Microsoft is having to reach for a Chinese open-source model to maintain adoption for its flagship assistant, the benchmark wars may have already been settled. None of this should surprise anyone who watched the two countries diverge in how AI ambitions were defined. America set out to build God in a box, indifferent to the cost to meet the buildout of infrastructure or the demand for compute, so long as the markets keep funding the activity. No one asked whether a scalable product-market fit existed. No one, at least so far, has cared. China set a different objective: not scalability alone but applicability and – critically – how AI could be deployed across industry to widen the manufacturing moat. What isn’t discussed enough is the degree to which China’s models have already been integrated throughout the economy. Even the decision to remain committed to an open-source strategy has delivered the competitive advantage of iterative speed. Each of the various players in China are leveraging the gains achieved by one model to advance their own model. It is for this very reason why there seems to be a new and improved Chinese LLM coming to market every single week. The American obsession continues to produce models that myopically measure success through benchmarks even if their models are cash infernos with no end in sight. The Chinese discipline produces models cheap enough to support global adoption that is so attractive as to pull the attention of a leading American hyperscaler. Here, however, is the message which needs to be conveyed. You cannot be a little bit pregnant, and China is winning the race for global AI adoption. American policymakers and corporate executives either take on China with serious intention or admit there is no political courage (or financial bandwidth) to do what is necessary and be done with the façade. Make no mistake, the capability to address the challenge is well within American reach. The question is whether anyone has the stomach to do what is necessary and make the hard choices.

Was extremely confident that Beijing was playing a leading role in the US/Iran process ever since Islamabad was anointed as intermediary. This MOU demonstrates just how heavy a hand Beijing has played in the process and, critically, the structure of the outcome. Here 2 — The United States of America and the Islamic Republic of Iran undertake to respect each other's sovereignty and territorial integrity, and to refrain from interfering in each other's internal affairs. And here 14 — The final deal will be endorsed by a binding UNSC resolution