China Morning Missive #Shocking and by “shocking” I mean not even a little bit. What should be expected is a rather manic period - heightened volatility - between now and the APEC meeting at month’s end. Perhaps not an exact replay of the massive back and forth in tariffs we witnessed earlier in the year, More aggressive posturing and strongly worded memos than anything else. What is rather certain though is there’ll be no Chinese purchases of soybeans anytime soon. Government will need to cut a decent sized check to bail out the farmers. Next week could be a very ugly for markets. Trump puts extra 100% tariff on China imports, adds software export controls

CNBC

Trump puts extra 100% tariff on China imports, adds export controls on 'critical software'

President Trump retaliated against China's export controls on rare earths after suggesting he also would cancel a meeting with Chinese President Xi...

I just published a new read on Nostr! “It is only after a contract is signed when the real negotiations begin” A common complaint I hear is how Chinese counterparties move the goalposts in a relationship. My response; there simply aren't any goalposts to begin with. Check it out: https://highlighter.com/a/naddr1qvzqqqr4gupzqgfre3ug0gn6vffsuqwnfa2gmmryttfuruxtw5fhlva7d47zwn2eqpx5japdd9ej6mmwd3uj6ctxw3jhyttp943k7mn5wfskxapdd9ej6umfvahx2epdwa5x2m3dw35x2ttjv4skcttwv4nk7arfv96xjmmwwvkkyet8d9hz6em2vfchgwgfpha8j View article → https://highlighter.com/a/naddr1qvzqqqr4gupzqgfre3ug0gn6vffsuqwnfa2gmmryttfuruxtw5fhlva7d47zwn2eqy2hwumn8ghj7un9d3shjtnyv9kh2uewd9hj7qzdf96z66tn94hkumre94skvar9wgkkzttrdah8gunpvd6z66tn94ekjemwv4jz6amgv4hz6argv5khyetpdskkuet8da6xjct5d9hkuuedvfjkw6tw94nk5cn3wsus4hgf77

A fantastic week away with family. Left the world behind and just ate, drank and laughed. Watching my two sons living life on their own terms is probably the greatest gift. Well, that and spoiling my granddaughter. Truly put so much into perspective. Love to all.

#priorities #family Still hard to conceive being a grandfather.

Going offline for a week. Priorities. Family. Granddaughters first birthday.

Ok, for those who have seen this content below, and with the greatest respect to @HODL, this information is patently false. Moreover, this trope - all of what Peterson claims - has been promlagated by more podcast hosts and guest than I can recall. I jaywalk all the time and there’s been no consequence and there’s certainly been no deduction of any cash from my bank account. And having your face plastered in public? Are you serious. First off, there aren’t that number of screens and whatever screens are out there are a blaze with commercials and marketing. Here is what I can share. If you do happen to share “sensitive” content on any of the various social media platforms you will receive a message to refrain from any such future commentary. If you continue, then your social media account will be suspended. I believe that this has happened more than a few times in the US and, well, just look at the UK at the moment. When it comes to third party commentary on China, my recommendation is to always question whether than commentator has been to China at any point in the recent past. I’ve found that most people haven’t been to China in at least six years, pre-Covid times. What we have is an ecosystem where errant tropes, that so beautifully align with hardened biases, are picked up and then repeated over and over again to the point that, well, it is all taken as truth. My suggestion to everyone is to tread skeptically when consuming content on China by individuals who, themselves, are only passing on second hand information. Do the same too, have a raised eyebrow with people like myself. Just don’t take what you see as gospel. The only way to know with the utmost confidence is to get on a plane and come to China to see for yourself. Make up your own mind. View quoted note →

China Morning Missive This, the Taiwan issue, is where the concept of a fourth communique comes into play. It’s also high time that the traditional media outlets finally began connecting what have been very obvious dots. With each passing day, those at the levers of power in DC are coming to the realization that China has a stranglehold on the “Grand Bargain” negotiations. Frankly, this has been the dynamic ever since both parties slapped triple digits tariffs on each other. No matter the overwhelming evidence, the Beltway simply ignored this reality. You can even see this on display when Sec Bessent noted China had made “aggressive asks” during the recent Madrid round of talks. Taiwan was undoubtedly one of those asks. The same, too, for a lifting of certain tariffs and export controls. The American side sought to hold firm on its positions. The Chinese side would have just shrugged and played for time with the complete knowledge that there is nothing the Trump team can actually do. Access to rare earths remain a sticking point. Now there’s daily handwringing over China’s refusal to purchase soybeans. Understand that these are just the tip of the spear. There are dozens of pressure points China can apply. American capitulation is simply a matter of time. But China isn’t just asking for well choreographed speeches and platitudes. This is where a fourth communique comes into play. American administrations come and go and the policies of one can be reversed by another. Beijing knows this all too well and for any material agreement to be reached will require a codified (fourth communique) agreement. The politics for the Trump team are abysmal. Then again, so is a cascade of farmer bankruptcies not to mention a host of other second and third order effects. Pick your poison, right? What this WSJ piece does highlight is (finally) a recognition of just how strong China’s position is in these negotiations. The end game is know. All that remains is how Washington will end up spinning the outcome. https://www.wsj.com/world/china/trump-xi-talks-china-taiwan-8ed82d1b?st=o3Hnq4&reflink=article_copyURL_share

China Morning Missive Enough already. America needs to return to its competitive roots. A clarion call must be made. Last night I stumble upon a few reviews of the latest Xiaomi 17-series smartphones. They are, unquestionably, a better value and experience than Apple’s latest iPhone iteration. My mind immediately went to the US auto industry of the 70s and 80s. Now, my expectation is that anyone who’ll read this will immediately jump to the argument that Xiaomi has done nothing more than “steal” Apple’s IP. Probably. For me, that was nothing more than the inevitable outcome of the Apple decision to centralize its entire production in the Mainland. The real point is the irrelevancy of this argument. Ignoring reality will not address the core issue. This Xiaomi example is nothing but another chink in the American armour of supposed technological exceptionalism. The China tech threats aren’t just accelerating, they are expanding in scope. Real world implications are just around the corner and AI is the Hemingway whale with more than a few harpoons already lodged in its mid section. The American business media headlines need to be fully dismissed. Seek out all LLM community commentary. The AI user base. Do so and you’ll quickly find just how precarious the American AI ecosystem is from China’s relentless advances. The competitive threat from China isn’t insurmountable. Far from it. Still, what’s required is a return to raw competitive forces. Enough with share buy backs. Invest. Enough with regulatory capture. Build better products. Deliver better services.

China Afternoon Missive And there we have it. To my note from this morning, it’s a soybeans for the lifting of “unreasonable” tariffs trade off. I suppose this was the cleanest quid pro quo. There is also the point that a Chinese trade delegation was just in the American midwest. Pressure is being applied on all fronts. Now that we have formal confirmation means the proverbial ball is in Trump’s court. Somewhat of a tough corner. It’s harvest season and if the Chinese don’t come in soon then the farmers will need a decent sized government bailout. What I do enjoy is just how “Chinese” this is all playing out. There is never a conclusion only a never ending series of “talks”. I’ve found in my experience that the foreign side almost always capitulates. They just get worn down. https://www.reuters.com/world/china/china-signals-that-purchases-us-soybeans-hinge-tariff-removal-2025-09-25/

China Morning Missive It is beginning to look as though there’s already been a bit of a breakdown after last week’s bilateral talks in Madrid. It all centers on soybeans, and I’ve been surprised up to this point that China has not announced any purchase from American farmers. This is always the go-to tactic when it comes to a specific Chinese deliverable anytime Beijing seeks to “make nice” with Washington. Well, not only are the Midwest farmers now scrambling, but China also announced yesterday that it would be purchasing soybeans from Argentina. Granted, it’s only around a $1bn order, but the message is clear at least in how I’m reading these particular tea leaves. Not as well that this announcement was made just as the United States was preparing to provide the Milei government a $20bn in financial support. There’s no question in my mind that the Chinese made a verbal agreement to restart purchases of soybeans during last week’s Madrid round of talks. It would have been a conditionally made agreement though. There is a sort of dance going on if you will. Step one, the parties agree to a TikTok deal. Step two, the Americans then formally/publicly deliver on whatever key issue China demanded but that had only been privately agreed to in the talks. Step three, the Chinese reciprocate and begin buying American soybeans. It is now clear that there has been a breakdown. You can see this from the fact that the purchase of Argentina soybeans is small compared to the typical $10bn to $15bn worth of American soybeans around this time of year. It’s meant as a signal to Washington that there are other markets where China can source its raw material needs. Not yet clear to me how this will all play out, but the entirety of all this sparing between China and the United States is far from over. https://www.reuters.com/world/china/chinese-buyers-book-least-10-argentine-soybean-cargoes-sources-say-2025-09-23/

The Chinese game MahJong, specifically the Shanghai version, provides some unique cultural insights. Uploading the video below for those interested.

China Morning Missive There is always more that hides behind the public veil. Recall when the US and China met in London in June. The parties left the talks and the entire conversation centered on China’s agreement to resume exports of rare earth materials. There was zero commentary as to what the US side would deliver in return. Within a matter of a single week the quid pro quo became known. The US would begin lifting certain technology related export controls. This very same dynamic is at play with the recent trade talks in Madrid. While the focus has centered on China approving the sale of the US TikTok platform, there’s been zero focus on what the US would deliver in return. Now we have the highly expected move by China to begin purchases of American soybeans. As background, China is the single largest export market for American soybeans with, for reference, $13bn in exports, or roughly 20% of all production, in 2024. For this year, China has purchased zero American soybeans. The harvest has now arrive and the farmers are desperate. China has now returned to the table and it is highly likely for a large purchase agreement to be announced in the coming weeks. That then means China has “delivered” for American twice. All of this begs the question. What is it that the Trump team has delivered which would be of an equitable value. I will say it again. The deliverable is Taiwan.

Bloomberg.com

US Crop Markets Rise as Chinese Trade Envoy Meets US Delegation

Most US crop markets traded higher following an announcement from China that a trade envoy from the nation met with a delegation of US political an...

I don’t know about you, but all the Nvidia and Jensen Huang throwing money at the entire AI ecosystem is giving me the same vibes when SBF pulled the same shit in 2022. That now infamous Fortune cover story “The Next Warren Buffett” https://www.wsj.com/tech/ai/how-nvidia-is-backstopping-americas-ai-boom-875c1346?st=tqTEPm&reflink=article_copyURL_share

China Morning Missive The PBoC just announced no change to its interest rates. To most, this will be viewed as an errant move given all the arguments over deflation and the recent cut made by the Fed. The decision, however, makes perfect sense. The deflation argument aside, which I view as being poorly understood by macro traders, there’s been a clear rebound in both consumer and investor sentiment locally. Even though we are far from aggressive optimism, there is a deep desire among the policy players in Beijing to refrain from supporting old economic drivers which are heavily dependent on interest rates. The play over the past 18 months, and which remains firmly intact, is to hold the focus on deleveraging the economy. Yes, as I’ve noted in the past, China has issued a massive number of government bonds. There are also countless articles discussing China operating this year with a budget deficit of nearly 10%. Where are all those funds going? That is the question I’ve found none to be asking, and it is a vitally important question. Left pocket, right pocket. The majority of funds raised by the central government are being redirected to local governments for the expressed purpose of debt restructuring. Net-net, this supposed “fiscal bazooka” provides zero, or at least minimal, stimulus. China is working to put its fiscal house in order. So whenever you see those clickbait titles which includes “China’s money printer”, go into the content with a great degree of skepticism. China leaves benchmark lending rates unchanged as expected, despite Fed rate cut

CNBC

China leaves benchmark lending rates unchanged as expected, despite Fed rate cut

The People's Bank of China kept the one-year loan prime rate unchanged at 3.0% while the five-year LPR at 3.5%, respectively, according to a statem...

Call schedule at 9am EST less than an hour from now. Expecting Trump and Xi to announce a TikTok deal and even a sizable buy of soybeans by China. Question remains …. What does China get in return? An announced trip to China by Trump at the end of October is my best guess. Behind the scenes though, China will get a recommitment of the One China policy. TikTok for Taiwan essentially.

Bloomberg.com

Trump, Xi to Hold Call as TikTok, Tariffs and Nvidia Loom Large

A call between US President Donald Trump and Chinese President Xi Jinping is underway, in a discussion that promises to determine the fate of TikTo...

Here’s a fun fact. Enemy of the State - the movie - came out in 1998. And look where we are as a society today.