Just wanted to mention that when I post Notes they will be far lengthier than is probably deemed “socially acceptable” here on Nostr. The reason for the length is due to my core belief that when addressing any current event issue, it is the responsibility of the author to provide adequate context for the points being made. I suspect that this sort of thinking reflects my age as well. Thought I’d make mention given the feedback I’ve received.

Next open source project? What did I miss? Did OpenAI go “open source” already? I’m any event, if it weren’t for DeepSeek there is no way that Altman would be moving at speed in this new “open” direction. He is a man truly stuck between a rock and a hard place.

Second Nostr Anniversary. Where did all that time go? For all out there interested in following what’s happening in #China, I’ll keep plugging away. Much love to all.

China Afternoon Missive Here we have RAND as the latest to weigh in on rationalizing why it is China is working aggressively to modernize its military. Most who weight in on this subject focus on claims that Beijing is seeking to move militarily on Taiwan in 2027. If you can actually recognize how it was that Hong Kong was ultimately brought to heel by the Chinese leadership, then you know that all the talk of “2027” is pure American war mongering. Now we have RAND stating that the build up is for the expressed purpose of ensuring the Communist Party’s internal control through pure might. I’d say that this goal has already been achieved thanks to technology. Allow me to provide a third option for why Beijing has decided to rapidly accelerate the modernization of its military. To fortify its national defensive position. If you simply look at a map of the East China Sea, you’ll quickly find that China is surrounded by a multitude of American assets. Deployed in South Korea and Japan to the north all the way down to the Philippines with specific attention on Luzon Island. Then we need to take into account the continued unilateral moves by Washington DC to “move the goal posts” on the issue of Taiwan. Over the past 25 years American hegemonic state craft has forced to bended knee more allies and adversaries than I can count. This China knows and Beijing is certainly not willing to wait idly by. https://amp.cnn.com/cnn/2025/02/16/china/china-military-readiness-rand-report-intl-hnk-ml

China Morning Missive This week, much of the #China focus will be on a meeting between the country’s tech leaders and the Beijing political class including Xi Jinping. It would be very accurate to say that this meeting looks to have been hastily thrown together. Yet another outcome of the entire DeepSeek development. Even China’s prodigal son Jack Ma will be attending. There’s a great story there I’ll need to share at some point. Suffice it to say that the western media coverage of the Ant Financial IPO being derailed by Beijing, and Jack Ma’s fall from grace was selective in what was and was not included. This meeting, however, could prove to be a much needed catalyst to reinvigorate household sentiment. While economic activity in China isn’t anywhere as bad as you may be reading elsewhere, it most certainly isn’t great. Then again, such should have been expected given a five year campaign to aggressively recentralize control throughout the country. https://www.reuters.com/world/china/xi-chair-symposium-attended-by-jack-ma-other-chinese-business-leaders-sources-2025-02-14/

China Weekend Missive Been a number cultural developments out of #China over the past month. It all kicked off with the whole “TikTok refugee” migration over to RedNote. That was then quickly followed by DeepSeek bursting into the scene and BYD introducing “God Eye” self driving. Now we have the cinema and Ne Zha 2. So far the movie has pulled in over $1.5bn on ticket sales, granted primarily in China. Not at all what I had expected and who knows what might come next.

IMDb

Chinese Sensation ‘Ne Zha 2’ Has Just Surpassed ‘The Avengers’ and ‘Top Gun: Maverick’ at the Global Box Office - IMDb

IMDb, the world's most popular and authoritative source for movie, TV and celebrity content.

Shanghai. Cold. Rain. Perfect night for hotpot with friends.

China Evening Missive In what can assuredly be described as “of course this would be the American policy play” I present Exhibit A If you can’t actually compete, well then just shut down the “threat”. This is not the America where I grew up. JD Vance says U.S. will defend American AI and block efforts to weaponize the tech

CNBC

JD Vance says U.S. will defend American AI and block efforts to weaponize the tech

Vice President JD Vance said the U.S. will safeguard American artificial intelligence and chips and block efforts to "weaponize" the critical tech...

China Morning Missive The greatest benefit from the throngs of Americans jumping on RedNote is how quickly errant tropes of #China have been blown apart. The perfect example is the “social credit score”. I can’t even begin to tell you all how many times I’ve had to explain to clients and others that this simply doesn’t exist. And yet, how many times have you seen headlines and social media commentary on Twitter or elsewhere making the claim that a Chinese social credit score runs the lives of all everyday Chinese. Between RedNote and DeepSeek, there’s been a genuine awareness that most of what the American media covers in regards of China is just articulated fabrications.

Might the public tides be turning? Surprised to find that CNBC posted my #China interview clip on YouTube. Doesn’t always happen. Came in this morning and noticed there were a fair number of comments.  This is just a small sample. Message might be getting through and off just a 90 sec clip.

China Evening Missive Well, Xi Jinping didn’t accept Trump’s invitation to the inaugural, but he has accepted Putin’s May 9th invitation to the 80th anniversary of the “Victory in the Great Patriotic War” AKA the defeat of the Nazis. Perhaps not an apples-to apples comparison, but it is also rare for a Chinese President to publicly accept any invitation months in advance of an event. No question that there’s a host of pieces on the board of the Great Game being played here at the same time. If, and it is a big IF, this gets picked up by the American press you can be assured that there’ll be a message. Rather than see this as it is, leaders of the very broad coalition against the Rules Based International Order meeting, the dangerous meeting of America’s enemies. For me, this is just a very smart geopolitical move by Moscow and Beijing. https://www.reuters.com/world/chinas-xi-accepts-invitation-attend-moscows-victory-day-may-tass-reports-2025-02-10/

The Economist never fails nor disappoints. Cover here is from 2015. The road to calling the collapse of #China is littered with more dead bodies than I can count. View quoted note →

Saying the quiet part out loud. Not that anyone in Trump World is listening.

CNBC

China has 'the upper hand' against U.S. tariffs, says consultancy

Peter Alexander, founder and managing director at Z-Ben Advisors, says "the Chinese are just extremely, extremely well prepared for what the Trump ...

Having to hit the ground running here in #China first thing on Monday. Already feel like I’ve run a marathon and haven’t even had my second coffee yet. A great week ahead to you all.

China Afternoon Missive I had mentioned in a previous Note that there are a number of pressure points China can apply in a retaliatory trade conflict with America. Specifically, I mentioned that China manufactures 50% of the world’s antibiotics. I also mentioned that China had learned its lesson during Covid and the blowback that came when limits were placed on exporting PPE to the United States. For the time being, such an approach – direct pain to the American populace – is to be eschewed. Come to find out even the minimal tariff of 10% on all Chinese imports has elicited a quick reaction from America’s medical and hospital communities. Quoting from this Reuters article “The American Hospital Association wrote in a letter to Trump on Tuesday that the tariffs will affect cancer and heart medicines as well as antibiotics like amoxicillin from China.” As we can clearly see here, China maintains a sizeable market share in various medicines and apparently nothing was done to correct this overreliance even after accounting for the PPE shortage during Covid. Now think about just how many American industries are facing the exact same issue. We aren’t talking about import bans mind you. This, right here, is only a reaction simply to the levying of a 10% tariff meaning higher prices. Seems as though profit margins are about to be squeezed hard across a number of industries, or higher prices will be passed along to consumers meaning stickier inflation. Anyway, it has been one hell of a busy week. https://www.reuters.com/world/us/trump-faces-pressure-us-industry-over-china-tariff-medicines-2025-02-06/

The War for TikTok in America - #5 This, slow rolling the sale, was expected and yet should be viewed as just one front in the war over this dominate social media platform. Leverage. It is that simple. With numerous parties vying over buying the American TikTok platform, the Chinese know the value of this platform and the role it can play in gaining a real advantage in the much larger trade conflict with America. A point that I’ve not seen mentioned in all the media coverage is that TikTok parent ByteDance is 60% owned by foreign investors. Susquehanna Capital alone owns 15% of ByteDance. There’s real money at stake and incentives, you would think, are more than a little aligned. In the end, however, any deal will need to be approved by the Beijing ministerial powers. Then there is the issue of the ByteDance “Golden Shares” A 60% ownership stake might be irrelevant at least when it comes to “control”. The Chinese government began a process three years ago whereby “critical enterprises” were required to issue Golden Shares. Essentially these are a separate form of equity, akin to Preferred Shares. The aim of these Golden Shares, typically 1% of all outstanding equity, is to provide control over key board level decisions. Basically, Golden Shares allow the Chinese government to veto any vote deemed to go against the interests of China. So, there remains a ton of moving parts, and I’ll just reiterate that China has all of the leverage. https://www.reuters.com/technology/tiktoks-chinese-owner-appears-be-slow-rolling-negotiations-sale-washington-post-2025-02-05/

China Morning Missive Very surprised to see an actual story on #China that matches with the reality on the ground. For a number of years all we’ve seen in the Western media are claims that Beijing has strangled the entire private sector. While a number of individuals have seen their wings clipped, there remains a highly vibrant community of small companies developing a host of new products and services. DeepSeek is just one of thousands of examples. Much as the author states, and a point I’ve been hammering on for quite some time (Keynes is Dead in China!!) “The Chinese economy is in the process of massive structural change and change on a scale and pace that inevitably creates dislocations”. American leadership needs to quickly learn that China isn’t in a period of decline. Beijing leadership simply recognized that the economic model driven by real estate and infrastructure wasn’t sustainable. Exiting that system and moving to a new system based on high value add manufacturing and consumption is underway. Will it be a successful shift? That remains to be seen. Still, the pain trade was needed and the pain trade is the choice that was made. @Lyn Alden @James Lavish

DeepSeek is a sign of a deep structural shift in China’s economy, especially in the data-dependent tech sector

China (very late) Evening Missive Why? This just isn’t necessary. Contrary to the US talking points, the escalation of tensions in the South China Sea centers on American forces deploying several missile batteries on the upper north tip of Luzon island in the Philippines. A short distance to Taiwan. There continues to be a policy of poking and prodding which I can only surmise is an attempt by America to have China “react”. Perhaps not exactly the same comparison, but I do find it similar to how the US played games with Russia over Ukraine. Honestly, I’ve been surprised at the relatively subdued response to all of this by China.

Newsweek

US sends bombers to South China Sea in warning to Beijing

The training involved three Philippine FA-50 fighters and drills to enhance air domain awareness and joint combat capabilities.

More evidence of a full reversal of the American “socially acceptable” pendulum swing. Hot girl Carls Jr ads are back!!

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/