Why Chinese President Xi Jinping won’t just ‘hop on a call’ with Donald Trump
How investors can harness Trump-induced volatility
Welcome to this issue of The China Brief. Today is Feb 7, 2025. Here at The China Brief, we bring you the latest news on China's politics, economy, and society from global media sources, along with exclusive expert analysis. If you find our content helpful, please subscribe to our newsletter.
Why Chinese President Xi Jinping won’t just ‘hop on a call’ with Donald Trump
South China Morning Post
Donald Trump has shown uncertainty about speaking with Chinese leader Xi Jinping, reflecting cautiousness from Beijing. As tariffs on Chinese goods took effect, Trump shifted from suggesting imminent talks to claiming no urgency. Experts note that China prefers detailed agendas before high-level calls, contrasting Trump's spontaneous style. Beijing seeks clarity on Trump's objectives and is wary of offering concessions. Analysts suggest that any future call could indicate China's willingness to engage, but delays may signal escalating tensions. Ultimately, both sides aim for productive discussions rather than reiterating their positions.
https://www.scmp.com/news/china/diplomacy/article/3297656/why-chinese-president-xi-jinping-wont-just-hop-call-donald-trump?utm_source=rss_feed
How investors can harness Trump-induced volatility
Financial Times
The article discusses the impact of volatility in financial markets, particularly in the context of recent events and statements by Donald Trump regarding trade tariffs. His unpredictable pronouncements have contributed to market fluctuations, which can be both alarming for investors and present opportunities for those with a clear strategy. Professional portfolio managers have differing approaches to managing volatility, with some opting for hedging strategies while others prefer to remain fully invested, highlighting the complexity of navigating market unpredictability.
For average investors, managing volatility may involve simple actions like holding cash or more complex strategies involving derivatives like options and futures. The article emphasizes that while volatility can create fear, it can also provide avenues for profit. Understanding risk tolerance is crucial for investors, as one's comfort level during market downturns can dictate investment strategies. Some investors may seek to protect their holdings through options, which can offer a way to hedge against potential losses, though they come with their own risks and complexities.
The article also explores various investment products and strategies designed to capitalize on or hedge against volatility, including the use of volatility indices like the Vix and VSTOXX. Innovations in the market, such as Defined Outcome ETFs and the upcoming DSPX index, suggest a growing focus on managing volatility and its implications for investment portfolios. Ultimately, the article suggests that sophisticated investors may consider incorporating volatility-related instruments into their portfolios, as these can serve as non-correlated assets that provide diversification during uncertain market conditions.
https://www.ft.com/content/25193997-02cd-4463-bf3d-0dba031b1584
What’s next for CK and Tommy Hilfiger after parent’s inclusion on Chinese blacklist?
South China Morning Post
Calvin Klein and Tommy Hilfiger stores in Beijing are experiencing a slowdown in consumer traffic, reflecting broader trends in China's consumption. Their parent company, PVH, was added to China's Unreliable Entity List due to trade tensions following US tariffs related to fentanyl concerns. This blacklist could lead to fines and restrictions on PVH, impacting its operations in China. While the immediate effects on brand perception are unclear, analysts suggest that Chinese manufacturers may sever ties with PVH, similar to reactions seen in other markets. PVH generated 6% of its revenue from China in 2023.
https://www.scmp.com/economy/china-economy/article/3297710/whats-next-ck-and-tommy-hilfiger-after-parents-inclusion-chinese-blacklist?utm_source=rss_feed
US cedes ground to China with ‘self-inflicted wound’ of USAid shutdown, analysts say
Guardian
Donald Trump's suspension of USAid funding has disrupted global humanitarian aid and development programs, creating chaos and increasing risks of famine, death, and disease. Analysts argue this move presents China with an opportunity to expand its influence, particularly in the developing world, as it bolsters its own aid initiatives. The merger of USAid into the state department diminishes America's soft power and bargaining leverage in foreign aid, allowing China to position itself as a more attractive partner for recipient nations. The long-term effects could erode trust in US assistance, diminishing its role in global development.
https://www.theguardian.com/world/2025/feb/07/donald-trump-usaid-shutdown-impact-china-relationship-funding
Trump and Rubio sued by government workers over ‘catastrophic’ USAid cuts
Guardian
The American Federation of Government Employees and the American Foreign Service Association have filed a lawsuit against the Trump administration, aiming to halt its dismantling of the U.S. Agency for International Development (USAID). The plaintiffs argue that the administration's actions, including a foreign aid freeze and halting projects, have caused a global humanitarian crisis. The lawsuit claims these actions are unconstitutional and lack congressional authorization, with devastating impacts on health initiatives and food relief worldwide. It seeks to restore USAID's funding and operations, asserting that the agency's dissolution exceeds Trump's authority.
https://www.theguardian.com/us-news/2025/feb/06/trump-rubio-sued-usaid-cuts
Thailand and China Should Deepen Relations Amid ‘Unprecedented Changes’, Xi Says
Diplomat
During a meeting in Beijing, Chinese President Xi Jinping urged Thailand's Prime Minister Paetongtarn Shinawatra to enhance their economic and political ties amid global uncertainties. Paetongtarn's visit marks the 50th anniversary of bilateral relations, during which 14 agreements were signed, focusing on the digital economy, electric vehicles, and cooperation against online scams. Xi commended Thailand's efforts to combat scams affecting Chinese nationals and emphasized the importance of mutual trust and strategic support. Paetongtarn assured Xi of Thailand's commitment to ensuring safety for visitors while addressing cross-border crime.
https://thediplomat.com/2025/02/thailand-and-china-should-deepen-relations-amid-unprecedented-changes-xi-says/
China-focused NGOs reel from U.S. foreign funding freeze
Nikkei Asia
China-related research is facing significant challenges due to the Trump administration's freeze on foreign aid, impacting numerous NGOs that monitor human rights abuses and censorship in China. Following the funding suspension, organizations like China Labor Watch are forced to furlough staff and halt projects, with many reliant on U.S. government support. Analysts warn that this funding loss could lead to an information blackout, exacerbating the already limited access to information in China. The situation threatens to weaken U.S.-China relations and enhance China's global influence.
https://asia.nikkei.com/Spotlight/Trump-administration/China-focused-NGOs-reel-from-U.S.-foreign-funding-freeze
Could US-China communications be another victim of Trump’s budget cuts?
South China Morning Post
Donald Trump's proposed cuts to the U.S. federal government may complicate communication with China, according to diplomatic observers. The CIA has offered resignations to employees, raising concerns about disruptions in government activities. Despite these changes, experts suggest that the U.S. will maintain its focus on China as a primary rival. The Trump administration has yet to clarify its strategy toward China, and while the cuts may limit engagement, they might not lead to significant policy shifts. Analysts recommend that China strengthen ties with U.S. states and other Western partners to navigate the situation effectively.
https://www.scmp.com/news/china/diplomacy/article/3297669/could-us-china-communications-be-another-victim-trumps-budget-cuts?utm_source=rss_feed
China can detect US Seawolf-class submarine with magnetic wake tracking: study
South China Morning Post
Researchers at Northwestern Polytechnical University in Xian have developed a method to detect submarines by analyzing the magnetic fields generated by their wakes. This discovery suggests that US submarines may no longer operate with absolute stealth, particularly in shallow waters near China. The study reveals that factors like submarine speed, depth, and size influence the magnetic signatures produced. This detection method could significantly impact naval warfare, as it integrates into China's broader tracking systems, raising concerns about the stealth capabilities of advanced submarines like the Seawolf-class. The findings were published in the Journal of Harbin Engineering University.
https://www.scmp.com/news/china/science/article/3297575/china-can-detect-us-seawolf-class-submarine-magnetic-wake-tracking-study?utm_source=rss_feed
From Labubu to Ne Zha: toy craze powers Pop Mart market-beating stock rally
South China Morning Post
Pop Mart International is experiencing significant success with its Ne Zha 2 toys, which sold out shortly after their release on January 30, coinciding with the film's record-breaking box-office performance. Morgan Stanley has recognized Pop Mart as a top stock pick, noting the company's effective IP strategy, which has driven a 441% stock increase over the past year. Despite a recent decline in share prices, analysts predict strong earnings growth and highlight the company's expanding international revenue. Pop Mart continues to adjust production to meet high demand and maintain brand accessibility, with a growing retail presence.
https://www.scmp.com/business/china-business/article/3297662/labubu-ne-zha-toy-craze-powers-pop-mart-market-beating-stock-rally?utm_source=rss_feed
Frenzy for new Nvidia gaming chips causes chaos in Tokyo
CNN
An electronics store in Tokyo, PC Koubou, apologized after chaotic scenes ensued when hundreds of Chinese buyers sought Nvidia's latest gaming chips, the GeForce RTX 50 series. The overwhelming turnout in Akihabara, driven by demand for these chips, which are unavailable in China due to US export restrictions, forced the store to cancel the sale. The RTX 5090 and 5080 models promise superior gaming performance, but Chinese gamers face a modified, less powerful version. The incident highlights the impact of the US-China tech war on gaming markets and the lengths gamers go to access advanced technology.
https://edition.cnn.com/2025/02/06/tech/tokyo-nvidia-gaming-chips-buy-frenzy-chaos-intl-hnk/index.html
Taiwan Strait: Chinese military branches share resources in joint air training
South China Morning Post
The People's Liberation Army (PLA) has improved joint air training under the Eastern Theatre Command, which oversees operations around Taiwan. The military branches now share airports and resources, with nearly 70% of personnel at one airbase trained in multi-aircraft support. Joint operations include coordinated takeoffs and landings across different aircraft types. The PLA aims to enhance its capabilities for potential conflicts in the Taiwan Strait by overcoming command and resource-sharing barriers. Recent initiatives focus on developing new combat tactics and integrating information networks to achieve operational superiority.
https://www.scmp.com/news/china/military/article/3297633/taiwan-strait-chinese-military-branches-share-resources-joint-air-training?utm_source=rss_feed
DeepSeek’s AI models give fresh boost to China’s smart glasses sector to take on Meta
South China Morning Post
DeepSeek's open-source AI models are revitalizing China's smart glasses industry by enabling developers to integrate advanced features at lower costs. Companies like Rokid are leveraging DeepSeek's technology to enhance their AR glasses, which offer capabilities like real-time translation and messaging. The affordability of DeepSeek's models, compared to competitors like OpenAI's GPT-4, allows for significant savings in research and development. As a result, the demand for AI glasses is expected to rise, with shipments projected to reach 12.8 million globally by 2025, particularly in China, where sales may surge by 107%.
https://www.scmp.com/tech/tech-trends/article/3297806/deepseeks-ai-models-give-fresh-boost-chinas-smart-glasses-sector-take-meta?utm_source=rss_feed
As US and China dominate AI race, where is Europe’s answer to DeepSeek and ChatGPT?
South China Morning Post
Europe lags behind the US and China in AI development, exemplified by China's DeepSeek, which has introduced competitive language models at lower costs. Despite a failed French chatbot, there are signs of progress in countries like Germany and France. Open-source initiatives, such as Mistral AI's new model and the European Commission-backed OpenEuroLLM project, aim to enhance Europe's AI landscape. Experts suggest that Europe must balance regulation with innovation to remain competitive, as the global AI landscape evolves and opportunities arise for nations to catch up.
https://www.scmp.com/news/china/diplomacy/article/3297790/us-and-china-dominate-ai-race-where-europes-answer-deepseek-and-chatgpt?utm_source=rss_feed
Hong Kong to take US to WTO over Trump tariffs
South China Morning Post
The Hong Kong government has announced plans to file a complaint with the World Trade Organization (WTO) in response to the United States imposing a 10% tariff on products from Hong Kong. A government spokesman criticized the US measures as inconsistent with WTO rules and disregarding Hong Kong's status as a separate customs territory from mainland China. The government emphasized its support for a rules-based trading system and urged the US to correct its actions. The tariffs were implemented following an executive order by President Trump on February 1, shortly after he began his second term. Additionally, the US Postal Service recently resumed international package services that had been temporarily suspended, while Hongkong Post will continue to refuse items destined for the US.
https://www.scmp.com/news/hong-kong/politics/article/3297795/hong-kong-challenge-trump-tariffs-complaint-wto?utm_source=rss_feed
Shanghai aims to reclaim China’s top carmaking crown with 100,000-unit Toyota plant
South China Morning Post
Shanghai is set to reclaim its status as China's largest vehicle production hub with Toyota's announcement to manufacture electric vehicles (EVs) in the city starting in 2027. The plant in Jinshan district will have an annual capacity of 100,000 units. This move highlights Shanghai's attractiveness to foreign investors and strengthens its automotive sector, which has faced declines. Last year, the city produced 1.81 million vehicles, trailing behind Shenzhen, Chongqing, and Guangzhou. The Yangtze River Delta region, where Shanghai is located, is home to many car component manufacturers, enhancing its competitive edge in the market.
https://www.scmp.com/business/china-business/article/3297606/shanghai-aims-reclaim-chinas-top-carmaking-crown-100000-unit-toyota-plant?utm_source=rss_feed
Can India and China Turn the Corner?
Foreign Policy
In 2022, India and China commemorated 75 years of diplomatic relations marked by collaboration and longstanding disputes. The Sino-Indian relationship has been strained since the 1962 war, exacerbated by recent border tensions following India's 2019 revocation of Jammu and Kashmir's special status, leading to military clashes in 2020. In response, India restricted Chinese investments and banned several Chinese apps, fostering a sense of mistrust that has persisted despite recent discussions aimed at reconciliation.
Despite the historical tensions, there are signs of a thaw in relations, as evidenced by the completion of military disengagement in Ladakh and a meeting between Prime Minister Modi and President Xi Jinping, where both leaders emphasized mutual trust and cooperation. However, the complex dynamics of their geopolitical ambitions, particularly in South Asia, and competing interests complicate prospects for lasting peace. Both nations have fortified their borders and engaged in extensive infrastructure projects to bolster troop mobilization, highlighting the fragility of their relationship.
As India continues to strengthen ties with the United States and participate in regional security dialogues like the Quad, it faces the challenge of balancing its strategic interests against economic reliance on China, which remains its largest trading partner. The increasing presence of China in South Asia through initiatives like the China-Pakistan Economic Corridor raises concerns in New Delhi, prompting India to enhance its diplomatic and economic engagements with neighboring countries. The ongoing rivalry will shape the geopolitical landscape of South Asia, with smaller nations caught between India’s regional leadership and China’s expanding influence.
https://foreignpolicy.com/2025/02/06/india-china-relations-2025-border-tensions-modi-xi-trump/
Trump pick for US trade envoy suggests he would try to revive 2020 phase-one China deal
South China Morning Post
Jamieson Greer, Donald Trump's nominee to lead the Office of the US Trade Representative, plans to revive the phase-one trade deal with China to secure fair market access for American producers. During his Senate confirmation hearing, Greer emphasized the importance of the 2020 agreement, where China committed to purchasing over $502 billion in US goods. He also indicated a need to review the duty-free treatment of small parcels from China and restructure the international trading system to favor US interests. Greer, who previously worked on US tariffs against China, expressed that a healthy economic relationship with China is possible but must be based on fair access for American exporters. He aims to collaborate with Congress to reconsider China's trade status and reduce US dependency on Chinese goods. Amid rising tensions, including new tariffs imposed by Trump, Greer acknowledged concerns from farmers and small businesses about losing markets due to trade policies linked to issues like immigration and drug trafficking. He aims for a pragmatic trade approach that balances various sectors while addressing broader economic challenges.
https://www.scmp.com/news/china/article/3297690/trump-pick-us-trade-envoy-suggests-he-would-try-revive-2020-phase-one-china-deal?utm_source=rss_feed
Did Biden Get China Right?
Foreign Policy
Two months into President Joe Biden’s administration, U.S. officials engaged in a high-profile meeting with Chinese diplomats in Anchorage, Alaska, aimed at addressing the deteriorating relationship between the two nations. During the summit, Secretary of State Antony Blinken and National Security Advisor Jake Sullivan expressed serious concerns regarding China's actions, including human rights abuses in Xinjiang and military assertiveness in the Taiwan Strait. They articulated that the U.S. approach to China would be competitive, collaborative, and adversarial as necessary. In response, Chinese diplomat Yang Jiechi criticized the U.S. stance, arguing that it did not represent international consensus and declaring that the U.S. lacked the standing to engage with China from a position of strength.
As Biden's term progressed, the administration solidified its strategy toward China, focusing on outcompeting the rising superpower. Biden's policies mirrored some of those from the Trump era, emphasizing a competitive stance by investing in domestic industries, forming strategic alliances, and implementing technology restrictions against China. The administration launched initiatives like the CHIPS and Science Act to bolster semiconductor manufacturing in the U.S. and the Inflation Reduction Act to promote clean energy production, aiming to reduce dependency on China in critical technology sectors. This strategy, dubbed "invest, align, compete," sought to elevate American competitiveness while simultaneously addressing domestic economic renewal.
Despite the administration’s efforts, there were ongoing debates regarding the effectiveness and future of the U.S.-China strategy. Critics on the right argued that Biden’s approach lacked sufficient aggression, while those on the left expressed concerns that the competitive focus overshadowed pressing issues such as climate change. As Biden exited office, there were unresolved tensions in U.S.-China relations, with ongoing discussions about the balance between competition and cooperation. With the new Trump administration potentially altering the course of U.S.-China policy, the future of this strategic rivalry remains uncertain, with implications for both nations and global stability.
https://foreignpolicy.com/2025/02/06/biden-china-policy-competition-trade-semiconductors-trump/
US sanctions network that helps ship Iranian oil to China
Associated Press
The U.S. Department of Treasury has imposed sanctions on a network of individuals and companies associated with the shipment of Iranian oil to China. This includes sanctions on over a dozen people and firms in China, India, and the UAE, targeting Iranian and Indian citizens, crew management firms, and ships. Treasury Secretary Scott Bessent emphasized that the Iranian regime is using oil revenues to support its nuclear program, ballistic missile development, and regional terrorism. In a recent executive order, President Trump mandated maximum pressure on Iran, expressing a desire to negotiate but firmly stating that Iran must not obtain nuclear weapons. He also warned of severe consequences if Iran were to threaten him. Iranian officials are reportedly waiting for communication from Trump regarding negotiations on their nuclear advancements.
https://apnews.com/article/treasury-sanctions-trump-iran-china-oil-289cebd72b0586ab72e6b8f968b90197
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