GOOD MORNING FROM LONDON
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#1 TRUMP CONCEDES ON CHIP SALES TO CHINA.
THE FINANCIAL TIMES
#2 CHINA TURNING THE CORNER ON PROVINCIAL DEBT.
NIKKEI ASIA
#3 CHINA AND JACK PERRY – PART 8
“WE WANT YOU TO FORM A COMPANY TO TRADE WITH CHINA”
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#1 TRUMP CONCEDES ON CHIP SALES TO CHINA
THE FINANCIAL TIMES
| “President Donald Trump said yesterday that he might allow Nvidia to sell a more advanced artificial intelligence chip in China, after confirming he had “negotiated a little deal” to give the US a share of the chipmaker’s revenues from the country.
As part of the unprecedented agreement, which the US would take 15 % of Nvidia’s revenue on Chinese sales of its H20 processor, which the company introduced to comply with Biden-era controls on AI semiconductors. AMD, another chipmaker, would also provide the same percentage from revenues for its MI308. The H20 is based on Nvidia’s older architecture, but Trump said yesterday that he planned to discuss a new deal with chief executive Jensen Huang to allow the company to sell chips based on its latest Blackwell models to China. That could unlock billions of dollars in sales for Nvidia, which has been lobbying for years for greater access to the Chinese market despite Washington’s national security concerns” GRAHAM PERRY COMMENTS; – Recall the context. China’s Rare Earths exports to China v U.S. Semiconductor exports to China. This is about leverage and power and, it has been a long time coming. In 2018 the U.S. announced the end of semiconductors chip sales to China. The columns of Foreign Affairs made it clear with articles written by leading members of Trump’s Team that the U.S. would no longer sell items to China that China needed to grow its economy. China took note and quietly went about its business of building up its Rare Earths capacity. Rare earth elements and metals are key ingredients for glass, lights, magnets, batteries, and catalytic converters, and used in everything from cell phones to cars. To make the magnet for one wind turbine, you need about 300 kilograms of neodymium. China has the highest reserves of rare earths at 44 million metric tons. The country was also the world’s leading rare earths producer in 2024 by a long shot, producing 270,000 MT. The U.S. went to sleep. They took their eye off global world trade until China announced in their London trade negotiations with U.S. chief tariff negotiator, Besant, that they would be responding to Trump’s Tariffs with export controls on their sales of Rare Earths to the U.S. Trump had stumbled – big time. The alarm bells are ringing in Washington. Arrogance had lulled U.S. politicians and businessmen into a false sense of security. Day-by-day China was pursuing a long term plan to acquire a dominant position in the Rare Earths sector. And day-by-day Washington’s superpower pretensions were being eroded. From Uni-Polar to Multi-Polar. ————————————- |
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#2 CHINA TURNS THE CORNER ON PROVINCIAL DEBT
SOUTH CHINA MORNING POST
“Concerns over China’s local-level debt have long loomed large in international discourse, with a mountain of “hidden” debt viewed as a “ticking time bomb” that threatens to trigger a cascade of defaults while posing a risk to financial stability. But some experts now contend that, after a sweeping debt-restructuring campaign, the outlook for China is shifting.
“After years of effort, the overall debt risks of local governments in China have been brought under control and are gradually being resolved,” said Zhao Xijun, a finance professor at Renmin University in Beijing.
He added that China’s debt is largely held by local governments, giving the central government room to step in and assist with repayment. Late last year, China rolled out a 12 trillion yuan (US$1.67 trillion) debt swap – a move that significantly eased repayment pressure on local authorities, with the Ministry of Finance identifying 14.3 trillion yuan in hidden local government debt by the end of 2023, much of it accumulated through local government financing vehicles (LGFV’s)
The swap has enabled local governments to extend repayments, with the weighted average maturity of bond issuance lengthening by 3.18 years, year on year, to 15.88 years in the first half of 2025, Beijing-based China Chengxin International Credit Rating (CCXI) said in a note last month.
Beijing’s efforts to rein in such off-the-books liabilities predate last year’s action. In 2018, the Ministry of Finance asked local governments to clean up such hidden debt within five to 10 years. And at the end of 2022, former finance minister Liu Kun disclosed that those hidden debts had shrunk by more than one-third in the span of five years.
These efforts are increasingly bearing fruit, as Inner Mongolia was announced this week as the first region to exit the central government’s “high-risk” list – a designation introduced in September 2023 for 12 province-level regions with heavy debt burdens, requiring them to curb borrowing and restructure debt within two years while receiving targeted support.
GRAHAM PERRY COMMENTS;-
The news that Inner Mongolia has been removed from the Central Government’s “high-risk” list is either a one-off or a sign of things to come. One swallow does not make a summer – so we need to wait and see If, and when, any of the remaining 11 Provinces will join Inner Mongolia and be removed from the China High-Risk list of Provinces. These Provinces were listed by the Central Government because heavy debt burdens required them to curb borrowing and to restructure debt within two years.
If Inner Mongolia is just a one-off and the remaining eleven Provinces remain in dire straits then China has significant economic and financial problems. If, however, the contrary is true and other Provinces are removed from the List then China will be able to approach the future with renewed vigour and enthusiasm. And what does that say about the future of China and the future of the world?
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#3 CHINA AND JACK PERRY – PART 8
APRIL 1952 AT THE MOSCOW INTERNATIONAL ECONOMIC CONFERENCE
Part 7 ended with the following;-
“Lu Hsuchang continued with his comprehensive analysis of the big challenges that faced China and then said “I now come to the main purpose of this meeting. We wish to propose that you set up a company in London for the prime and exclusive purpose of trading with China. We want to see an important, significant company performing substantial trade – independent and profitably. This is not a sudden thought on our part. We have considered this idea since we met together in the preparation for this Conference.”
Jack drew breath. He was taken aback. He had sensed from his conversations with Dr Ji that something was afoot but what was being proposed left him quite open-mouthed.
He regained his composure and expressed his appreciation of the initiative thereby giving himself time to consider his response. His autobiography records his reaction;-
“Since leaving school I have always been in the same kind of business – manufacturing women’s wear. I know nothing else. I am now managing director of a group of fairly successful manufacturers. I am not especially wealthy but I am economically secure with a large family and responsibilities. To leave all this to enter something entirely new and somewhat venturesome needs careful consideration”.
Lu Hsuchang said in response that the Chinese side realised that it was a significant proposal and would require careful consideration. He added that the Bank of China in London would provide full support and that all the delegation members on the Chinese side had full confidence in the proposal.
Dr Ji Chaoting added words of significance “I have watched you carefully since we met at Joan Robinson’s dinner party all those months ago. I took you to Copenhagen because I wanted you to meet some Chinese friends. Joan asked you to become the organiser of the British delegation on my recommendation. I suggested you become a member of the organising bureau of the Conference. So our proposal does not come out of the air. We do not think we are taking any chances. I would like to convince you that you will build a new career with the Chinese government and the Chinese people as your friends.”
Ji continued “I realise that you know very little about China, but I am confident that should you feel able to accept and implement our proposal it will be a decision you will never have cause to regret.”
PART 9. JACK PERRY RESPONDS TO CHINA’S INVITATION – 1952
GRAHAM PERRY
