Xi really has done a good job navigating the first year of the Trump Administration, and there are more things he can probably get from Trump between now and a likely April visit to Beijing. As I asked in a Sinocism chat earlier today, what would the ramifications be of Trump acceding to Xi’s desire that the US explicitly state that it opposes Taiwan independence, which is something I hear is under consideration and could be part of the April visit package? If the Trump Administration does agree to make that change, what should it ask for in return, and how would it try to spin the shift as really no big deal?

Just days before the Central Economic Work Conference (CEWC), China International Capital Corp chief strategist Miao Yanliang, who previously was chief economist at the State Administration of Foreign Exchange, told Bloomberg that “the present moment may indeed be a window of opportunity to allow for yuan appreciation”. Perhaps the timing is coincidental, but would someone Like Miao be so vocal about potential RMB appreciation if he didn’t either know something or at least believe some in the leadership were seriously considering it?

Listen now | This episode of Sharp China is outside the paywall. On today’s show Andrew and Bill begin with the call between Trump and Xi last week, a subsequent call between Trump and Japanese Prime Minister Sanae Takaichi, and the PRC’s ongoing tensions with Japan. Topics include: Conflicting reports surrounding both calls last week, PRC rhetoric that continues to escalate, contested history surrounding Okinawa, and PRC behavior that may be clarifying for the rest of the world. From there: Various points of emphasis at the Politburo study session on strengthening internet governance, DeepSeek’s new AI model, and a recent Crowdstrike investigation that appears to highlight the risks of building on Chinese models. At the end: More bad news in the real estate sector as Vanke struggles make international news, waiting for the Central Economic Work Conference later this month, an FT op-ed makes Europe’s trade problems clear while solutions remain elusive, and a note from a NASA employee adds context to a previous discussion on space rescues.

Maintain the basic stability of the RMB exchange rate at a reasonable and equilibrium level. Promote the internationalization of the RMB, improve the level of capital account opening, and build an independent and controllable RMB cross-border payment system. Actively participate in and promote the reform of global financial governance

The November Politburo study session, convened on November 28, focused on “strengthening the governance of the Internet ecosystem”. The meeting signals a distinct evolution in how Beijing approaches digital control. A critical takeaway from the readout is the marked shift in the leadership’s stance on artificial intelligence, moving beyond viewing it merely as a frontier industry to be regulated and instead positioning it as a functional instrument of social control and state capacity. Xi Jinping framed AI not only as a challenge but as a vital “support condition” for the regime. This phrasing suggests a strategic directive to harness these technologies to bolster governance capabilities, explicitly tasking officials with utilizing AI to better “understand public opinion” and enhance “forward-looking” or predictive governance. The call to “promote application scenarios” within a governance context implies a mandate for the Cyberspace Administration of China and security apparatus to accelerate the deployment of AI-driven censorship and surveillance tools.

On Monday the Wall Street Journal reported that Xi initiated the call, based on “people close to Beijing”, but on Tuesday the Ministry of Foreign Affairs spokesperson said “as far as I know, the call was initiated by the US side”, and US Treasury Secretary Scott Bessent told CNBC “to set the record straight, President Trump initiated the call 30 days after the historic meeting in Busan, South Korea, between the two leaders”. The New York Times also reported that Xi asked for the call in two different stories, though neither cited a source for that claim. It matters because the narrative was set early Monday that Xi had requested the call in the context of the current crisis with Japan, when if it turns out that Trump requested it then it is more likely because the Chinese side has been slow walking parts of the trade deal and Trump wanted to remind Xi to fulfill what was promised, especially as the US side has said they expect to sign the deal this week.

Trump made no mention of Taiwan or the “post-war international order” in his Truth Social post about the call, saying that “we discussed many topics including Ukraine/Russia, Fentanyl, Soybeans and other Farm Products, etc.” He also said Xi invited him to visit Beijing in April, and that Xi will come to the US on a state visit later in 2026. US officials should understand that signing on to Xi’s vision of “the post-war international order” would be a trap.Taiwan and Japan leaders may be justified in being nervous about this discussion, in the absence of more information about what the two leaders really said about Taiwan, and Japan, assuming the current PRC tempest over Prime Minister’s Takaichi’s comments came up. Xi asking for this call could be a sign he is trying to shape Trump’s reaction to the growing PRC-Japan crisis. So far Trump and the White House have not weighed in publicly on the current PRC-Japan tensions.US officials have said repeatedly they expect to sign the latest US-China trade deal by Thanksgiving, which is this Thursday, and the PRC is behind on its promised purchases of soybeans. Perhaps Xi also wanted to squeeze Trump for a little more before closing that deal, say around Nvidia H200 chips for soybeans?

Reuters reports that President Trump’s promised 100% tariff on semiconductors may now not be happening. This should not be a surprise, all new major actions that would impact China are on hold because of the recent deal, and the fear of China getting mad and cutting off rare earths. So legacy semiconductor manufacturers are heading for a world of pain as the PRC ones scale up production and flood markets with much cheaper chips. And the mooted pharma tariffs, in part to address the over-reliance on PRC supplies of active pharmaceutical ingredients (APIs) are also unlikely to happen any time soon, out of fear of upsetting the tenuous US-China deal.

Watch now | China’s Foreign Police Training: A Global Footprint Global outreach by China’s internal security agencies is expanding. As China’s Global Security Initiative externalizes a concept of security focused on domestic stability and regime protection, the People’s Republic of China (PRC) has increased its efforts to train and build capacity among foreign law enforcement and internal security forces around the world, including across Asia, Africa, and Latin America. Foreign police training is one of the most concrete and measurable outcomes associated with the Global Security Initiative, as President Xi Jinping and other Chinese leaders have publicly committed to training thousands of foreign security officers in multiple high-profile appearances.

The seafood, beef and tourism industries will not be happy with China’s measures, but the real pain for Japan will come if the PRC decides to once again restrict the flow of rare earth magnets and other critical minerals, including tungsten. The Chinese side is not offering any obvious off-ramp other than a complete walk back by Prime Minister Takaichi of her comments about Taiwan and her policies to expand Japan’s defense capabilities, which seems politically impossible.

On today’s show Andrew and Bill begin with a week of escalating rhetoric in response to Japanese Prime Minister Sane Takaichi’s comments about a Taiwan contingency. Topics include: Memories of Senkakku Islands tensions in 2012, why protests in the streets are unlikely this time, possibilities to escalate and de-escalate from here, and possible PRC motivations for reacting so forcefully. From there: A new round of disappointing real estate data while Lou Jiwei predicts prolonged contraction, “phantom loans” at banks, and a rescue mission for the Shenzhou 21 crew at Tiangong space station. At the end: A leaked White House memo alleges Alibaba is cooperating with the PLA, Hasan Piker’s viral travels spawn thoughts on Western influencers touring China, and a BBC journalist is reportedly under investigation for espionage in Brussels.

Kanai Masaaki, Director-General of the Japanese Foreign Ministry’s Asian and Oceanian Affairs Bureau met with Liu Jinsong, Director-General of the Department of Asian Affairs of China’s Ministry of Foreign Affairs in Beijing Tuesday. There appears to have been no breakthrough, and the Ministry of Foreign Affairs spokesperson “seriously urged” Japan to “retract Sanae Takaichi’s wrongful remarks, stop making provocations on issues concerning China, take practical steps to admit and correct the wrongdoing, and uphold the political foundation of China-Japan relations”. According to CCTV’s “Yuyuan Tantian”. Liu Jinsong took the meeting in “May Fourth Youth attire 五四青年装”

The crisis in the wake of Prime Minister Takaichi’s comments about Taiwan continues to expand. The Ministry of Culture and Tourism has urged Chinese tourists to temporarily avoid traveling there, the Ministry of Education has issued a 2025 Study Abroad Alert advising Chinese students and applicants to closely track the security situation, reassess risks, and be cautious about making or continuing study plans in Japan, and the release of at least two Japanese films has been postponed. Japan has sent Masaaki Kanai, director-general of the Asian and Oceanian affairs bureau, to Beijing to try to defuse the crisis, but so far the PRC maintains the maximalist demands that “Japan immediately reflect on and correct its wrongdoing, retract the wrongful remarks and stop making provocations on China-related issues”. Various propaganda organs are threatening countermeasures (see item 2), and rare earths would be an obvious area, though that might cause problems with the US-China deal. So absent an unlikely total cave by the Japense side, something which seems politically impossible, expect this mess to drag out. I can understand why the Chinese is so upset, because Japan intervening in a Taiwan contingency means that if the PRC attacks any Japanese vessls/assets/territory then because of the US-Japan treaty then they will also be at war with the US. And they were very worried about Prime Minister Takaichi given her previous statements about Taiwan and Japan’s past, and probably think this was not a “mistake” of a new leader but rather an intentional statement. However, if Takaichi did do this on purpose, then the CHinese side may have fallen into a trap, because the extreme response will probably increase support for Japan for bigger defense budgets, more national security-related legislation, and efforts to reduce reliance on the PRC.

He also said that “the Japanese side must correct its wrongdoing at once and retract the unjustified remarks. Otherwise, all the consequences arising therefrom must be borne by the Japanese side”. I am not sure how it is politically feasible for the new Prime Minister to retract her remarks, even if she wanted to. As to what the consequences may be if she does not walk them back, the usual playbook includes things like investigating Japanese business, blocking certain exports and/or imports, harassing/arresting Japanese nationals. Might this also be used as part of a pretext, not that Beijing needs one, to launch the “Strait Thunder–2025B” rehearsals/exercises around Taiwan?

The propaganda system has intensified attacks on Prime Minister Takaichi after her comments last week that the PRC’s use of force against Taiwan could constitute a “survival-threatening situation” for Japan, a legal trigger that would allow Tokyo to exercise its right to collective self-defence.A CCTV commentary wrote that “Japanese leaders crossing the line and provoking on the Taiwan question is extremely egregious in nature and impact…Such reckless words and deeds will have profoundly harmful consequences…Those who ignite the fire will be burned by it. Any attempt by Japanese leaders to act as spoilers of the Taiwan Strait and regional situation is doomed to dig their own graves.”The CCTV WeChat account “Yuyuan Tantian” asked “How could she dare to say ‘a contingency in Taiwan is a contingency for Japan’ out loud? Did she get kicked in the head by a donkey?”Former Global Times editor Hu Xijin called her an “evil witch

On today’s show Andrew and Bill begin with the implementation of this month’s deal between the US and China, including a variety of early indications that both sides intend to follow through with commitments made in South Korea, the PRC’s clarification on its December 2024 export controls, and a report on the PRC implementing VEU system for rare earth exports to the US. From there: A variety of news and notes including a new textbook on Xi Jinping Economic Thought, Xi’s visit to the Fujian aircraft carrier, a crackdown on improper asset seizures, and a flare-up with Japan’s new PM after her comments on Taiwan contingencies inspire caustic language from a PRC diplomat. At the end: A pair of reports highlight questions about the AI future in China and elsewhere, while the New York Times reports on transnational censorship of a film festival in New York City.

From the perspective of practical logic, developing new quality productive forces is an inherent requirement for promoting high-quality development and gaining the strategic initiative in major-country competition.

Xi Jinping used his recent inspection tour of Guangdong to restate the province’s role as the “front-runner” of China’s reform era and to align it closely with the agenda set by last month’s fourth plenum. Travelling to Meizhou and Guangzhou on 7-8 November, the Chinese leader told provincial officials to “thoroughly” implement the plenum’s decisions, draw up a five-year plan of targets and measures, and use deeper reform and opening to sustain growth. He also told them that with only weeks left in the year they must stabilize jobs, firms, markets and expectations to meet 2025 targets.Xi told Guangdong leaders to upgrade the province’s industrial base through tighter fusion of technology and manufacturing; expand institutional opening, including through the pilot free-trade zones and the Belt and Road; and narrow regional and urban–rural gaps as part of Beijing’s “common prosperity” drive. A notable emphasis was on the Guangdong–Hong Kong–Macao Greater Bay Area, which Xi called both a “major responsibility” and a “rare opportunity”. He urged faster cross-border infrastructure, regulatory “soft connectivity” and closer legal and judicial cooperation to raise market integration and create a “high-quality living circle”, while pressing Guangdong to act as the locomotive and to draw in businesses, universities and research institutes.Xi also paid tribute to veteran revolutionary leader Ye Jianying.

US-China deal implementation - Both sides are moving to fulfill the agreement reached last week, with the US reducing the fentanyl-related tariffs and the PRC suspending some tariffs and removing some US firms from the export control and entity lists. As we discussed in this week’s episode of Sharp China - The US-China Deal One Week Later: Why Short-Term Stability Is Likely, Costs and Benefits of Escalation, and More Adventures with Nvidia - one of the biggest benefits of the deal for the PRC is that the Trump Administration has agreed to stand down on any additional export controls, entity listings, or Section 232 investigations, like the ones related to semiconductors and pharmaceuticals, as the rare earths sword hangs over any new actions that might be seen as breaking the deal.

On today’s show Andrew and Bill break down the latest deal between the US and China, beginning with details from the White House over the weekend, why the PRC is likely happy with a tactical retreat and the new status quo, and why stability is likely at least through April. From there: Why the PRC was motivated to deal despite its goals of eliminating tariffs and export controls, clarity about American pain points, questions about Congress and what comes next, and the costs of China’s strategy for the past month. At the end: Reporting on a doomed push from Nvidia to sell Blackwell chips to China, new subsidies for China’s AI leaders, a potential Nexperia resolution, and questions the forthcoming fentanyl cooperation between the US and China.

The Financial Times reports that some local governments are offering subsidies for electricity of up to 50% for data center operators who use domestic chips only. That is a smart subsidy that leverages China’s electricity wealth and incentivizes switching to domestic alternatives that are not as powerful and less energy-efficient than Nvidia chips. It is more bad news for Nvidia, and today the White House spokesperson said “as for the most advanced chips, the Blackwell chip, that’s not something we’re interested in selling to China at this time”, just hours after Treasury Secretary Bessent told CNBC that maybe Nvidia could sell its current most advanced chips to China in 12-14 months, once they are not longer the most advanced chips.

Nvidia almost got Trump to approve Blackwell sales to China - Late Wednesday word was going around that President Trump was going to tell Xi Jinping he would approve Nvidia’s request to sell the B30A, a modified version of Blackwell, to China. There was quite a scramble by those opposed to such a concession, and today the Wall Street Journal reports that Secretary of State Rubio, Secretary of Commerce Lutnick, and USTR head Greer intervened to convince the President it was a bad idea. The fact that there needed to be a Principals-level intervention is another sign of how process has completely down in the Trunp Administration, and how Nvidia’s CEO has been exploiting that. Jensen Huang may not have succeeded this time, but there is not doubt he will keep working Trump directly.

This is a recording of my October 31, 2025 discussion with Ruixue Jia and Hongbin Li about their excellent and important new book The Highest Exam - How the Gaokao Shapes China.From a synopsis of the book:In The Highest Exam, authors Ruixue Jia, Hongbin Li, and Claire Cousineau present a sweeping, data-rich account of China’s exam-centered education system — a “centralized, hierarchical tournament” culminating in the Gaokao, a grueling three-day college entrance exam. Drawing on decades of empirical research and lived experience, Jia and Li — both leading economists who took the Gaokao and later taught at top universities in Beijing, Hong Kong, and the U.S. — reveal how this state-managed system shapes education, labor markets, political legitimacy, and social values.You can buy the book here: The Highest Exam - How the Gaokao Shapes China. It is well-written and priced like a normal, not an academic one. You can not understand China without understand the education and Gaokao system, so this is an important and very useful book.

The Trump-Xi meeting in South Korea went as well as could have been hoped, both sides pulled back some of their recent actions and threats, with the most meaningful move a PRC suspension in enforcing the expanded rare earths-related export controls for a year, in exchange for the US pulling back on the expanded BIS 50% Entity List. That I believe is the first time that the US has agreed to concede on its export controls in a trade negotiation with the PRC, in a sign of just how effective those rare earths-related export controls are. President Trump agreed to reduce the 20% fentanyl-related tariffs to 10% so I believe the effective US tariff rate on PRC goods is somewhere around 47%, still very high but more manageable for the PRC.

Rush Doshi was deputy senior director for China and Taiwan on President Joe Biden’s National Security Council (NSC), where he served from 2021 to 2024 and helped manage the NSC’s first China directorate.During his time in the Biden Administration he worked on multiple Biden-Xi engagements, so I thought he would be a great guest to help us parse through the Trump-Xi meeting in South Korea and what it means for US-China relations. He did not disappoint.