China Morning Missive This is the sort of development the Chinese had expected out of the US and why none should expect Beijing to agree to any sort of formal negotiations. It isn’t just that the US Postal Service reversed course on the decision to restrict deliveries from China and Hong Kong. The idea is that there are inconsistencies throughout the various government agencies when it comes to policy and how policy should be executed upon. This is clear signaling of dysfunction and Beijing will eat this up. Reminds me of the art of Tai Chi. Use your opponent’s energy to disarm them and take the fullest advantage. No need to exert your own energy when you can simply flow with an opposing force. https://www.reuters.com/world/us/us-postal-service-suspends-incoming-packages-china-hong-kong-2025-02-05/

Trade War with China #2 The US targets postal deliveries out of China and Hong Kong this morning and China fires back with a thinly veiled threat to probe into the Apple App Store fees. The news on Apple broke just before pre-market trade opened. The stock is down. The Chinese playbook is becoming a bit clearer. Focus retaliatory efforts on those points of leverage which (1) can have the most immediate impact and (2) not be viewed as being overly painful to the American populace. Furthermore, China is clearly unwilling to negotiate like Mexico, Canada, Panama, Colombia. There seems to be a desire to call out Trump’s threat. Cards on the table. Things could turn real ugly, real fast.

CNBC

Apple shares slide after China reportedly considers probe into App Store practices

China's market regulator is considering whether to open a formal probe into the iPhone giant's App Store fees and policies, Bloomberg reported.

Who out there remembers the original Google slogan? “Don’t be evil” And yet, here we are. The slippery slop is dangerous indeed.

CNBC

Google removes pledge to not use AI for weapons, surveillance

The company updated its 'Responsible AI' principles, which no longer includes a pledge to not use AI for weapons or surveillance.

Trade War with China #1 Seems as though I need to create a whole new series of Notes for Nostr and to start, need to give credit where credit is due. The US just announced that it will suspend all inbound postal deliveries from both China and Hong Kong. To the untrained eye this might seem odd. In fact, Temu and Shein have aggressively used the duty-free loophole (very successfully I might add) for US inbound deliveries. This move here cuts both companies off at the kneecaps. What remains to be seen, however, is how this might impact the pricing (aka inflation) of low value-added goods of which the manufacturing remains solidly in the hands of the Chinese. Clearly though, battle lines are being drawn. Now we wait to see how China might respond.

CNBC

USPS temporarily suspends some inbound packages from China, Hong Kong

The change comes after President Donald Trump announced new tariffs that also target a popular trade loophole, called "de minimis."

China Morning Missive First official workday back for us here in #China and the first item on today’s agenda is a complete about-face. First, as I noted yesterday, Trump and Xi were said to have plans to speak this week. Now Trump says he’s in no rush. No matter how this is spun, what this clearly indicates is that Xi and his team called Trump’s tariff bluff over the weekend by refusing to play the Canadian/Mexican game of engagement. China is willing to see how this plays out. The Chinese have seen this coming for a long time and have spent four years preparing. Moreover, and objectively speaking, China – as the world’s manufacturer – has greater leverage than that of the US. What I would add is that optics will play a key role in how China does respond moving forward. Make no mistake. China can inflict real pain on the American people. Thus far, targeting Google or placing an export ban on Tungsten won’t raise the ire of the general population. Cutting off access to, say antibiotics, where China controls half the global market, would illicit a populace reaction. Early days for sure. What you can be certain of is an ungodly deluge of headlines and “hot takes” by people who have no idea what they are talking about. https://www.reuters.com/world/us-tariffs-chinese-imports-take-effect-after-trump-reprieves-canada-mexico-2025-02-04/

Shout out to @James Lavish Amending you Note from last week. Trump: FA China: FO

China Afternoon Missive Now the commentariat shifts focus to #China. No deal was struck with the US, meaning that Xi Jinping was unwilling to take the Trump call, unlike Trudeau and Sheinbaum, and now the 10% tariffs are formally on. For its part, China has followed with 15% tariffs on certain US imports albeit starting next week. Expect there to be an ungodly deluge of headlines and social media commentary. Please take all the “hot takes” with a large grain of salt. The US is operating from a position of bellicosity, nothing more. Moreover, when you take a moment and actually consider all pressure points from both sides, you’ll quickly find that China is equally positioned if not the party with actual leverage. The only certainty is that there’ll be more volatility across all asset classes. Stay safe out there fam China to levy additional tariffs of up to 15% on select U.S. imports starting Feb. 10

CNBC

China retaliates with additional tariffs of up to 15% on select U.S. imports starting Feb. 10

China also announced an investigation into Alphabet's Google alleging the American technology giant had violated the country's anti-monopoly law.

China Morning Missive For all the chatter of Mexico and Canada “caving” to the demands of Trump there’s been shockingly little commentary over #China refusing to engage. It is rather obvious that the Trump team would have made attempts to hold a call with Xi like what went down with Trudeau and Sheinbaum. Those attempts failed. Technically this then means that the 10% tariffs on China are now in place. Expect this bilateral pissing match to escalate and escalate quickly. Before the end of this week. Trump and his people our outmatched, they just don’t know it yet. https://www.reuters.com/markets/trump-warns-tariffs-china-may-increase-2025-02-03/

The War for TikTok in America - #4 I need to update my spreadsheet. The number of announced American bidders is expanding and now includes, it would appear, the US Government. Once again, this is exactly what the Chinese side wants to see. The more groups there are to bid for the platform, the more China can play the game of divide and conquer to arrive at the best deal. And by best deal that doesn’t just mean the highest price. Other concessions will be sought. Areas that the Chinese view a strategically desirable. Will update later on the various groups who’ve announced plans to bid for the platform. Trump signs order to establish sovereign wealth fund he says could buy TikTok

CNBC

Trump signs order establishing a sovereign wealth fund that he says could buy TikTok

The fund would serve as an economic development tool and perhaps be used to buy TikTok.

China Afternoon Missive The Law of Unintended Consequences will play out at least with #China and the moves by Trump to levy tariffs. While America, regardless of which party is in power, projects duality of there being either friend or foe, China’s approach has always been to find transactional opportunities with all. At this juncture the threat is of “America First” quickly turning into “America Alone”. Unlike 2017, the Chinese have gamed out this exact scenario. If you watch carefully, any apparent defensive action taken by China will - in all reality - be an offensive play which will further alienate American policy across the globe.

Trump's antagonism risks pushing U.S. allies closer to China

Trump has played hardball with Canada, Colombia, Denmark, Mexico and Panama — all countries that have traditionally been strong partners with the...

Tariffs??!! Who cares when you have the true “Number Go Up” technology.

The Chinese know how to do a firework show for sure.

Getting ready for the big Hong Kong Chinese New Year fireworks show!!

Nathan Hale gave it everything and paid the ultimate price … at the age of 21 @ODELL @HODL And did it all for his country. We are slowly returning to that time.

For those still following the DeepSeek development, this piece from Toms Hardware is pretty decent. Gets more into the technological accomplishments made by DeepSeek. Not that the findings have stopped so many techbros from coping hard. They’d better just put their heads down and get back to work.

Tom

DeepSeek

Dramatic optimizations do not come easy.

NYT reaches out to discuss the key players running DeepSeek. Apparently the comments I shared didn’t align with the stories message. Not the first time. And not the last time I’m sure

Happy Chinese New Year to those that celebrate. 恭喜发财

Again, it is nothing but cope. OpenAI is having to learn quickly and the hard way that it will need to do better. And as @jack said “open source will win” no matter the origin.

After the mayhem of today, and the final workday before Chinese New Year, out for the night.

We are now talking about a loss of nearly $350bn in market cap.