So there’s this …..

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China Morning Missive First there was the announcement that President Trump would be permitting Nvidia to sell H200 chips to China. Then came the news of China’s trade surplus clocked in at $1.0trillion over the first 11 months of the year. The reaction out of the Beltway to these two developments was apoplectic. Just wait for the reactions once the ASML restrictions are lifted. That’s what China really wants, and it’ll happen sooner than most observers expect. To the reactions, it is all very understandable, but I would point out that these are just two outcomes reflective of a fundamental shift in global power. It isn’t that this is a new trend either. All that is slowly underway is a realization among the Washington powerbrokers that this is no longer just a philosophical debate. For a decade there was analysis by “Senior Fellows” and lengthy diatribes throughout Foreign Affairs magazine and elsewhere. China was said to be an existential threat to the American way. I agreed. A constructure form of engagement, beginning with a harsh acceptance of the threat posed, was required. And yet, nothing was done, beyond talking and op-eds to wax poetically on the geopolitical threat. Now here we are and America now finds itself well past the point of no return. All that these two events highlighted above indicate is a direction of travel. There will be more public consternation and, unfortunately, greater externalizing of the issue. Rather than seeing the world as it is and sifting energies towards hyper competition, China will be labeled an enemy of the State and with that will come far greater aggressive tendencies. Finally, and just as a quick update, the current TikTok “ban/divest” deferment expires next Tuesday, December 16th. This will have been the fourth such deferment and the entire affair is coming up on a full year since the Supreme Court ruling. No matter the political posturing by the Trump team, the TikTok divestiture remains outstanding. https://www.reuters.com/world/china/us-china-hawks-say-trump-approved-nvidia-chip-sales-china-will-supercharge-its-2025-12-09/

China Morning Missive Well, there is certainly a great deal of positivity (again) from the latest round of bilateral talks between China and the United States. From what is being made public, the two sides have reached a “framework” of a deal with Trump and Xi signing off when they meet on Thursday this week. As Brad Pitt said in the move Seven though, “What’s in the box? WHAT’S IN THE BOX?” What concessions did the American side make? Up to this point what we know is the following. The TikTok deal is set to “close” on Thursday. China is preparing a “substantial” purchase of soybeans. Rare earth controls are to be postponed by a year. These are just the three larger key issues that we know of and are said to have been concluded. If China had all the leverage (which it did) and China has agreed to basically all terms, what has the American side agreed to? Thus far, Bessent is playing the game that China made concessions and with that America won’t be moving forward on the additional 100% tariffs which Trump had threatened. Nonsense. That’s Bessent providing cover to the media so that the actual details of what real concessions were made don’t need to be raised publicly. The obvious candidate would be China’s access to key technology. While I suspect that technology will be part of the American deliverable, the focus needs to remain on Taiwan. It’s always been Taiwan. I’ll also be paying close attention to the Typhoon missile systems in the Phillipines and the second installation that was placed just last month in Japan. I’m also expecting the two parties to publicly make an agreement over the future of nuclear nonproliferation. Just keep in mind that the Chinese don’t trust any verbal agreement with an American President (ironic tough that may be). All of what’s been agreed to, and I mean the real issues and not TikTok, will have had the Chinese press for a Fourth Communique. That takes time. My ongoing thesis is for Trump to travel to China in early 2026 and for Xi to travel to the States in early 2027. It will be on that US trip when the parties would sign a new communique laying out an agreement over how best to divvy up the Asia-Pac region.

US Treasury chief Bessent says ‘substantial’ trade framework with China reached — TradingView News