China Update provides viewers with the most up to date political, economic, and geostrategic analysis on China - so that you are on top of the world's number 2 economy.
I am originally a lawyer who later studied Chinese foreign policy in Beijing, and now do consulting work for China analysis. These videos are based on hundreds of articles, think tank reports, government statements and other resources in English and Chinese every week. The views and analysis are all my own and I produce the videos.
Disclaimer: China Update is not a financial advisory channel. While I take great care in researching everything discussed in these videos, nothing I say should be taken as investment advice. Please speak to a professional before making any investment decisions.
China Update
I’m thrilled to share that I have launched a new channel: @TonyTalksAsia
This new project explores stories across Asia through deep dive mini-doc style investigations – if you enjoy China Update, I think you’ll really like this new channel. I’ve also teamed up with a pro editor, Sam, to achieve a much higher visual production quality.
Check out the first video here: https://youtu.be/7qOykxAphfU
Let me know what you think!
There are some very interesting, and frankly, just plain crazy videos coming up, so make sure you’re subscribed
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China Update
I'm thrilled to say that today I started on a new project which I think China Update viewers will really enjoy once it's released - I'm very excited about it. More information coming soon...
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What do China's terrible May numbers today signal for the economy?
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Infographic on this week's Trump-Xi Summit, China's external posturing vs internal reality, from our coverage over at China Update
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Just got back from a wonderful China Update subscriber meetup in Taipei, Taiwan this evening. Always a pleasure to sit down and chat with folks from the community.
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China Update
📬 China Update — End of Week Newsletter
Date: October 19, 2025
Your essential wrap-up on Chinese Political, Economic & Geostrategic developments
Let’s Jump In!
HEADLINE: Trade War Implications — Truce Frays, Markets Jolt, Leverage Tested
The uneasy pause in U.S.–China tensions snapped over the last week. After Beijing unveiled sweeping export controls over rare-earths and magnets, the White House threatened a 100% blanket tariff on all Chinese imports from Nov 1, prompting a $2T risk-off sell-off. On The next day, USTR Jamieson Greer said Beijing “deferred” a requested call—fueling concern that channels are closing just as both sides reach for maximum leverage.
Beijing insists its measures are “licensing,” not a ban, and claims partners were informed. Washington says it was blindsided and views the rules as a de-facto choke on inputs that sit inside everything from EVs and wind turbines to missiles and smartphones—where China controls ~90% of global processing. Trump tried to calm nerves—“Don’t worry about China, it will all be fine!”—but mixed signals (threats + reassurance) leave allies and investors guessing.
Why this matters now
Leverage math: China’s rare-earth dominance is real, but the U.S. still holds cards (aviation, upstream software/IP, capital markets). If both move from tariffs to component-level vetoes, expect production stoppages, not just price spikes.
China’s macro backdrop: Domestic demand remains soft; youth unemployment elevated; property fragile. Sept exports to the U.S. fell >15% YTD even as overall exports rose ~6%, highlighting reliance on global demand and transshipment to third markets.
Property’s false dawn: Top-100 developer sales ticked up in Sept (+22% m/m) but Golden Week new-home subscriptions fell 33% y/y across 22 cities. Looser buy rules in big cities juiced a few weeks of activity; the national picture remains weak after a multi-trillion wealth hit.
Factory floor sentiment: Exporters report razor-thin or negative margins to clear inventory; more are scoping moves to Vietnam/Indonesia/Malaysia. If 100% U.S. tariffs land, some coastal clusters could see mass closures by year-end.
What to watch next
Frankfurt prep talks for the next truce window (Nov 10) and whether Xi–Trump still meet at APEC.
Any EU/G7 alignment on counter-measures (rare-earths, ports, shipbuilding).
Signals that Beijing might suspend (not scrap) parts of the regime to keep leverage while easing panic.
North Korea: Li Qiang’s Pyongyang Trip
China’s premier made the highest-level PRC visit since 2019, tying it to the Workers’ Party 80th anniversary and a military parade. Messaging: tighter “strategic coordination” and a shared front as U.S.–China frictions deepen. Read as Beijing buttressing its periphery while great-power competition widens.
South China Sea: Another Collision Near Thitu
Vessels from China and the Philippines collided near Sandy Cay/Thitu after water-cannoning and close-quarters maneuvering. Beijing says Manila intruded; Manila calls it deliberate ramming. The U.S. condemned “aggressive actions.” With China now layering “nature reserve” claims over control tactics, expect more frequent, riskier encounters.
China Exports: Strong Topline, Weak Profits
September exports +8.3% y/y to a 2025 high, despite –27% to the U.S. Gains came via EU/ASEAN/Africa/LatAm and suspected transshipping (e.g., via Vietnam). But industrial profits remain under pressure—price competition + dumping accusations are rising in Europe and Japan. Resilience may be misread as strength: volumes up, margins down.
Europe Moves: Netherlands Seizes Nexperia
The Dutch government invoked the Goods Availability Act to take control of Nexperia (Chinese-owned via Wingtech), citing “serious governance shortcomings.” Production continues under oversight. Wingtech vows to sue. Signal: Europe is ready to intervene in strategic nodes—especially with rare-earths weaponized and shipbuilding/ports under probe.
London’s Biggest Phone Theft Ring Busted
UK police dismantled a network that moved ~40,000 stolen iPhones to China in a year—~40% of London’s reported thefts. Devices were foil-wrapped to defeat tracking and shipped via Heathrow. Expect tighter export checks and more cooperation with Hong Kong/Shenzhen resellers.
Taiwan: “T-Dome” Integrated Air Defense
President Lai Ching-te unveiled T-Dome, a multi-layered, integrated air-defense architecture knitting Tien-Kung, Patriot, sensors, and C2—explicitly aimed at drones/cruise/ballistic threats. Concept mirrors Iron Dome–style integration and reportedly includes deeper U.S. linkages. Beijing warns it raises tensions; Taipei frames it as peace through strength.
China Prices: Deflation Eases, Zombification Spreads
PPI –2.3% y/y (36th month of factory-gate deflation); CPI –0.3%, but core CPI 1.0% (19-month high).
Relief looks administrative, not demand-led. The share of loss-making industrial firms is at a two-decade high, pointing to overcapacity, price wars, weak cash flow despite stable input costs.
Policy choice ahead: shift investment to infrastructure (temporary lift to nominal growth) or to new manufacturing, which risks re-importing deflation next year.
Transnational Crime: Cambodia’s “Pig-Butchering” Empire Hit
The U.S. and U.K. designated Chen Zhi’s Prince Group a transnational criminal organization, alleging vast romance-investment scams, trafficking, and money laundering run from Cambodian compounds. Sanctions span 100+ entities; DOJ seized $15B in bitcoin. The case highlights an ugly nexus of forced labor + online fraud and raises awkward questions for regional governments (and Beijing’s quiet tolerance as Chinese nationals are victimized/ensnared abroad).
UK–China: Spy Case Fallout, Engagement Continues
A headline espionage case collapsed over whether China legally counted as an “enemy” under the Official Secrets Act at the time. MI5 says PRC activity is a daily threat; Parliament wants answers from prosecutors. Yet London proceeds with ministerial visits and delays a decision on China’s Royal Mint Court embassy, reflecting security concerns and economic pragmatism.
China’s Debt: TSF Surges Faster Than GDP
Total social financing +8.7% y/y to RMB 437T (~312% of expected 2025 GDP), while nominal GDP ~4%. Bank lending growth hit a record-low 6.6%, but the baton passed to bond-financed government borrowing. Implied: ~17% of GDP in new debt to add ~4% nominal GDP—a worsening efficiency picture and shrinking runway for painless rebalancing.
China’s Industrial Play: EVs Go Global as Margins Crack
EV exports doubled y/y in Sept to 222k units; China is on track for ~7M vehicle exports in 2025 (1M in 2020). Capacity > 50M/yr vs U.S. ~10M.
Europe bears the brunt: BYD’s UK sales +880%; Chinese brands hit ~13% share and could reach 30% in two years (ex-Ford China CEO projection).
Strategy arc: Scale Up → Flood In → Starve Out (control of magnets, battery inputs). Western OEMs downshift; EU/US/Canada roll out tariffs and probes.
At home, price wars crush dealers; inventories high; even leaders (e.g., BYD) wobble month-to-month. Beijing urges industry “self-discipline” and faster payments to suppliers, but overcapacity remains the core problem.
See you next time!
Tony
11 months ago | [YT] | 73
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