GOOD MORNING FROM LONDON
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EXTRACTS
#1 CHINA-U.S POWER BALANCE POST SEOUL
#2 CORRUPTION IN CHINA’S MILITARY
#3 U.S. PROFESSOR ON U.S. TARIFFS
#4 U.S PROFESSOR ON CHINA OVERTAKING U.S.
#5 “RESOURCE NATIONALISM”
#6 CHINA AND JACK PERRY – PART 24
WHY DID PROFESSOR JI CHAODING CHOOSE JACK PERRY?
EXTRACT #1
BEIJING GAMBLES + REAPS REWARD
PROFESSOR JONATHAN CZIN
FOREIGN AFFAIRS
“In the aftermath of the South Korean summit, it is difficult to discern where and on what issues, if any, the United States is competing with China in any meaningful way. The administration deserves some credit for taking long-overdue steps to mitigate U.S. exposure to China’s chokehold on rare-earth elements and processing. But weaning Washington off its reliance on Chinese-refined critical minerals will likely be a longer and more arduous process than the administration admits. Beijing’s agreement to pause its restrictions on some rare-earth exports for a year could lull the United States, its allies, and the private sector back into complacency in the meantime.
In fact, the tactical concessions Beijing has made to Washington have simply returned bilateral relations to their pre–Liberation Day status quo ante, a tolerable, if not entirely comfortable, position for Beijing. China has demonstrated flexibility in the implementation of its export control regime, realized just how much leverage it has over Washington and global supply chains, and lost little by employing its new export controls. The cost of this bounty was negligible. The Trump administration’s decision to defer enforcement of a U.S. law mandating the sale or ban of TikTok and instead include its fate in trade negotiations further enhanced Beijing’s position, giving China a bargaining chip it could trade away at little cost to its own interests.
GRAHAM PERRY COMMENTS;-
It is good to read how U.S. political commentators are viewing the U.S.-China contest – for contest it is. They are all U.S. loyalists so when they concede that China has gained the upper hand in its relationship with the U.S. it should make us all sit up and take note. Something very significant is taking place and the World has moved into a new balance. China has the upper hand.
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EXTRACT #2
CORRUPTION AND CHINA’S MILITARY
SOUTH CHINA MORNING POST
“Even for the anti-graft era of President Xi Jinping, the wave of investigations into alleged corruption in the Chinese military over the past three years has been exceptional. Last month, nine senior People’s Liberation Army (PLA) officers were expelled from the Communist Party and the military including He Weidong formerly China’s second-highest-ranking military officer.
They are accused of having “violated party discipline and allegedly committed serious crimes related to their duties” – both euphemisms for corruption. “The amounts involved are particularly huge, the nature of the offences is extremely severe and the impact is exceptionally negative,” the defence ministry said.
He Weidong is the highest-ranking general to fall in the anti-corruption storm in recent years and the first serving member of the Politburo – the party’s inner circle – since 2017 to face an investigation while in office. He is also the third general from the current Central Military Commission (CMC) – which started off with seven members in 2022 – to be disgraced.
Yet, there are signs all around that China’s hunt for corrupt generals is here to stay. The biggest is the party’s rare recommendation last month that the next five-year plan, covering the years 2026 to 2030, prioritise “political rectification” in the military, a phrase that means both fighting corruption and upholding political loyalty”.
GRAHAM PERRY COMMENTS;-
Graham Allison, founding dean of Harvard University’s John F. Kennedy School of Government commented;-
“Xi’s demonstrated ability to purge even the most influential and powerful ‘tigers’ is evidence he is in control and shaping the PLA into a military he can trust – a difficult task that will take time,”
Allison noted that the removal of He Weidong might be “the beginning of a new round of anti-corruption investigations”, with the general’s colleagues and subordinates potentially becoming new targets.
Many of the top generals brought down in the past three years were promoted after Xi took the helm of the party and the military in 2012. These include two consecutive former defence ministers who fell from grace in 2023: Wei Fenghe and his successor.
In the absence of more details there will be conjecture that Xi’s focus is less on corruption and more on his priority of ensuring a smooth accession to power of whoever is selected by the Party to be its new General Secretary – the most powerful position in China because it brings with it the Chairmanship of the Party’s Military Commission.
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EXTRACT #3
PROFESSOR NICHOLAS LARDY
SOUTH CHINA MORNING POST
Nicholas Lardy is a Senior Fellow at the Peterson Institute for International Economics and a member of the Council on Foreign Relations, both Washington-based think tanks. He has studied the Chinese economy extensively, publishing several books on its growth and development since the late 1970s.
He poses the question – Will U.S. tariffs restore manufacturing jobs and win back market share from China?
“No, I think the answer is no. Manufacturing jobs in the US as a share of total employment have been shrinking for about 70 or 80 years. We’ve already seen Trump put a huge emphasis on this, but manufacturing jobs in 2025 are shrinking, partly because of tariffs.
The President had this idea, if you put on big tariffs, that manufacturing will return to the United States. Maybe some companies will start producing in the United States to avoid tariffs, but there are a lot of manufacturing companies in the United States that use imported inputs like steel and other things, and as the cost of those goes up, then these firms become less productive. They lose market share, and eventually they start laying off workers.
So you have two forces. Maybe some new firms will come in through reshoring or other sources that you mentioned, but you’ve got to think about the existing manufacturers, what will happen to them. What’s happening so far is they’re shrinking. Employment is shrinking. So I think tariffs are not going to be a mechanism for bringing back a significant number of manufacturing jobs.”
GRAHAM PERRY COMMENTS;-
Trump talk is – More Tariffs will bring manufacturing jobs back to the U.S. Wrong, says Prof Lardy. It won’t happen. The Trump rationale for world-wide Tariffs will not wash. Production in China will not be transferred to the U.S. The U.S. will take a hit – and the effect will be felt in the U.S. long after Trump has left the world stage.
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EXTRACT #4
PROFESSOR NICHOLAS LARDY
Professor Lardy poses a second question;-
Will China will fall into a middle-income trap or will China continue to grow fast and overtake the US to become the world’s No 1 economy.
“I think China will continue to grow more rapidly than the US. The potential growth of the US is something in the neighbourhood of 1.5 to 2 per cent – the precise number doesn’t really matter. China’s potential growth is probably something in the range of 4.5 to 5 per cent. Five years from now, it would be a little bit less.
China is still growing, for the next three to five years, at least twice as fast as the United States. So I am of the view that convergence – that is, China approaching the US’ level of total output – is continuing”.
GRAHAM PERRY COMMENTS;-
Prof Lardy observes that if China’s growth continues for a few more years, it will be reclassified as an upper-income country, and will join a handful of countries that have moved from very poor to upper income.
Western observers continue to make the mistake of assuming that the PRC will follow the same journey made by Stalin and the USSR. This thinking leads to flawed strategies and wrong conclusions. The scales have to fall from their eyes if they are to see the world as it is rather than as they would wish.
China is new and different. No country has been so far advanced along the path of change and if you are not up with China then you fall behind China. Prejudice plays a big role here. People do not like change – much as they may say the opposite. And this leads to big policy mistakes as prejudices of the past continue to dominate.
EXTRACT 5
RESOURCE NATIONALISM
NIKKEI ASIA
“Prakash Sharma, vice president in charge of scenarios and technologies for Wood Mackenzie, said the concentration of the supply chain in China has given Beijing leverage over its trading partners. “Critical minerals have become the new strategic battleground: Their availability and affordability will shape not just technology costs but also the balance of power in a new energy landscape. Resource nationalism is shifting from fossil fuels to critical minerals,” he said.
GRAHAM PERRY COMMENTS;-
“Leverage” is the one word. It means a country has the power to compel its foreign nation counterpart to comply with its trade policy. China is very strong in critical minerals and the U.S. is very weak. China has “leverage” over the U.S. There will be a post-mortem in the U.S. as to how this state of dependency has arisen. Why were the bells of alarm not ringing loud and clear 15/20 years ago. Why did the U.S. Military not see this coming? Ditto the Pentagon, the State Department, the White House and the Brookings Institute.
This is “Resource Nationalism”. China is in a strong position but it will play its hand carefully and responsibly. China’s goal is not to heap humiliation on the U.S. but to manoeuvre the U.S. into a position of compliance and co-operation. The U.S. is not going to fold but it will have to adjust to a new and equal opponent. The World is Changing.
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CHINA AND JACK PERRY
PART 24
WHY DID PROFESSOR JI CHAODING CHOOSE JACK PERRY?
Part 23 concluded as follows;-
“Ji’s career is covered at length for two reasons;- first, it is an important part of modern China’s history and, second, for its significance in the reach-out to Jack and the formation of London Export Corporation. Part 24 will return to Jack’s transformation from manufacturer of ladies’ clothing to trader in international commodities and behind the change in business focus lay Jack’s opportunity to view the development of China from the earliest days of the People’s Republic of China. What were the mechanics of trade? How was business conducted? And how did the Great Leap Forward and the Cultural Revolution affect the development of trade and business between China and the UK?
Ji Chaoding was on a mission. Since his early 20s, he had been a member of the Chinese Communist Party. He concealed his membership at the specific request of Premier Zhou Enlai because he was to engage in work that required him to get close to the decision makers within the Party’s opponents – the Kuomintang (KMT). He went “underground” at an early age. He travelled to the U.S. where he studied economics at Chicago and Columbia Universities. He became a Professor of Economics at Chicago University and made friends with prominent Economists in the U.S. and in Europe. He also developed close links with leading members of the KMT – his long term opponents. He penetrated their hierarchy and made himself indispensable as an economic adviser sitting at the KMT Top Table. All the time his real boss was the soon-to-be Premier of China.
Come 1949 and Dr Ji was charged by the now Premier Zhou to develop long term trade with foreign countries. Specifically, he was instructed to avoid any companies that had played a role in supplying China with Opium which at a stroke eliminated the foremost UK trading houses. They eventually came to play a role but their links with British Imperialism relegated them to a minor role in the early years of China-UK Trade.
Come 1949 and Dr Ji was charged by the now Premier Zhou to develop long term trade with foreign countries. Specifically, he was instructed to avoid any companies that had played a role in supplying China with Opium which at a stroke eliminated the foremost UK trading houses. They eventually came to play a role but their links with British Imperialism relegated them to a minor role in the early years of China-UK Trade.
Ji spread his net to include U.S. opinion formers academics Edgar Snow and Owen Lattimore and UK academics including Prof Needham and Professor Joan Robinson and the name that kept re-appearing was Jack Perry who was coming to prominence in the organisation of the Embargo-Busting Moscow International Economic Conference. It was Prof Robinson who persuaded Jack to take her place on the International Preparatory Committee formed in late 1950 to organise the Conference. The Conference General Secretary, Robert Chamberlain called the first meeting of the Preparatory Committee which took place at a small seaside resort outside Copenhagen in Denmark.
As Jack wrote in his autobiography From Brick Lane to the Forbidden City;-
“I was crossing another threshold, this time meeting personalities of international repute, many of them holding high office in their own countries. I felt exhilarated but very nervous. How would I acquit myself? Seeking reassurance I cautioned myself. Don’t try too hard. Be natural and don’t pose. You have a good story to tell, keep it factual and informative.
Imbued with a certain degree of false courage, I set off determined to be factual and informative.
I flew to Copenhagen on an SAS flight arriving as dusk was falling. I proceeded smoothly through customs and passport control I stepped into the public lounge and was met by a tall young Chinese man, Mr Li, who was the secretary to Dr Ji. He escorted me to a waiting car and a drive to the countryside beyond the suburbs of Copenhagen. Dr Ji stood at the hotel entrance with a broad smile and introduced me to the then legendary Professor Oskar Lange. Joan had already told me much about Lange. He was a renowned internationally acclaimed economist and was fluent in numerous European languages, including Hungarian which does not belong to the Indo-European linguistic family and is considered notoriously difficult to learn. He was now in the process of learning Chinese and Japanese. He proceeded to introduce me to a variety of people – bankers, manufacturers, politicians and economists. I felt overwhelmed by my sudden entry into international high society that their names were to remain fresh in my mind in the ensuing decades.
Fourteen of us sat down to dinner. In the hall outside there was a hubbub and into the dining room sprang the solid figure of Maxim Nesterov, the chairman of the All-Union Soviet Chamber of Commerce. Dr Ji whispered to me “He is the top man and a powerhouse in the Soviet hierarchy.” Dinner followed and then the first session of the International Preparatory Committee commenced.
Lange took the chair and provided a political overview – in English. The international political situation had continued to deteriorate. Thee Korean War, he continued was now a stalemate. Relentless international propaganda led by Washington accused the North Koreans the USSR and China of seeking world domination and ensured that international hostility remained at a high level. Attempts to abort and sabotage the International Conference were meeting with only limited success. The critical nature of East-West relations added impetus and purpose to the Conference.
Lange reminded us that the aim of the Conference was to bring together economic circles economic circles from all countries, East and West, for mutual cooperation.
He was followed by the Conference Secretary, Robert Chambeiron, who reported that approximately 450 delegates representing almost fifty countries would attend the Conference in Moscow. Dr Ji spoke and confirmed that the Chinese delegation would be 26 in number headed by the President of the People’s Bank of China – Nan Hancheng. Nesterov then spoke and said that the USSR delegation would also be 26 strong including Politburo member V Kuznetsov. Jack then spoke and confirmed that the leader of the British delegation would be Lord Boyd Orr, Nobel Prize Winner and the first General Secretary of the Food and Agricultural Organisation of the United Nations. The delegation would consist of eight economists, thirteen businessmen, five MPs and four Trade Union leaders.
Jack had concerns that the Conference would become a talking shop and spoke up. It needed business. It needed contracts. Jack had touched a chord. Dr Ji encouraged him. The conference needed a dynamic purpose. The Soviet delegation confirmed that air travel to Moscow would be provided free of charge. Hotel rooms too. Finally, a decision was made to entrust the arrangements for the Conference to a Preparatory Committee of five persons comprising Lange, Chambeiron, Dr Ji, a Soviet nominee – and Jack. He had arrived. He had come through his baptism of fire. And all the time Dr Ji was watching, assessing and reviewing.
In Moscow in April 1952 Jack noticed that Dr Ji was becoming more active and the two engaged in social and political discussions. The Cold War was at its height. The Korean War was ongoing. The 1948 Berlin Airlift had marked a new stage in East-West confrontation and McCarthyism was injecting strong anti-Communism attitudes into world affairs. The Cold War was very Cold.
Jack was a dress manufacturer. He was an entrepreneur. He had pulled himself up alone, without training or school achievements or a university degree. An Assistant Warehouseman at the age of 14, now aged 36 he was the Managing Director of his own firm. He was the epitome of the self-made man. It was a big decision by Dr Ji to identify Jack as the long-term trade partner for China. He was taking a leap into the unknown and he was conscious that he was responsible to Premier Zhou Enlai to make sure that his decision was well researched, well prepared and capable of making a significant contribution to the long-term development of trade with China.
Ji was looking beyond one or two contracts or three or four years. China was on a journey. It was a Long March and twenty-five years was the minimum. Ji was putting his faith in Jack but Jack did not know a Bill of Lading from a Letter of Credit; nor UK £ from a US $, nor tea or wool tops or animal hairs or feeding stuffs. He was a novice; a greenhorn; an innocent unfamiliar with the ways of international trade. Ji had to assess whether Jack could make the change from dresses to commodities; from London to international trade; from dressers and cutters to traders and financiers. It was a tall order. Was Jack the man? Could Ji afford to make a mistake?
GRAHAM PERRY