GOOD MORNING FROM LONDON
11 FEBRUARY 2026. CHINA POST #612
CHINA AND THE FOREIGN MEDIA
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EXTRACTS
#1 U.S. FIGHTS BACK ON RARE EARTHS BUT…
SOUTH CHINA MORNING POST
#2 CHINA’S MILITARY – BIG CHANGES
THE ECONOMIST
#3 CHINA’S FOREIGN INVESTMENT UP NOT DOWN
NIKKEI ASIA
#4 CHINA AND JACK PERRY – PART 33
CHINA’S BIGGEST CONCERN
#1 U.S. FIGHTS BACK ON RARE EARTHS BUT…
SOUTH CHINA MORNING POST
“Seeking to blunt China’s dominance over critical minerals that underpin hi-tech manufacturing, the administration of US President Donald Trump is rolling out a slate of measures this week aimed at reducing US reliance on Beijing.
A White House official confirmed to the South China Morning Post that Trump has launched a US$12 billion public-private initiative to build a large commercial stockpile of critical minerals titled “Project Vault”.
The project is being billed as a strategic reserve designed to shield US manufacturers from supply disruptions and price volatility in materials essential for electric vehicles, semiconductors, jet engines and consumer electronics.
The initiative is anchored by a US$10 billion, 15-year loan from the US Export-Import Bank, the largest in the agency’s history, alongside US$1.67 billion in private capital from participating companies, the official confirmed.”
GRAHAM PERRY COMMENTS;-
As this Column has previously commented, Seoul 2025 was a significant moment in time. China went head-to-head with Trump and won. This was a First and a Big Blow to U.S. Prestige. Trump’s Big Talk about Tariffs fell away as China stood firm and counter-punched with vigorous effect. Rare Earths did it for the U.S. It was, and remains, its #1 weak spot. The U.S. needs Rare Earths desperately for computers, cars, military equipment and the rest. And it is very short on domestic supply.
With typical Trump bellicose fanfare, he has just announced “a US$12 billion public-private initiative to build a large commercial stockpile of critical minerals titled “Project Vault”. But the U.S. will need much bigger initiatives before it can begin to consider any form of parity with China. And China has a head start and will make every effort to remain significantly ahead of the chasing pack.
According to the Department of Engineering Management and Systems Engineering at George Washington University, a strategic reserve would do “little to combat China’s dominance on the actual supply chain… But the length of time needed to develop an alternative supply is on the order of years if not decades, so such a stockpile is not necessarily a huge help if China decided to restrict or tariff outgoing supply to the US,” added the Department’s Head, Mr Helveston, whose work focuses on China’s manufacturing system.
And the problem for the U.S. is two fold – Extraction and Processing. It is one thing to access rare earths – and China has up to 70% of the world’s supply . It is a much bigger problem to process the earths into usable critical minerals and China at present is responsible for 90% of the world’s processing on the rare earths.
China is alert. It has a significant advantage and it will be determined to strengthen, and not weaken, its dominant role. China will use its position to establish economic, trade and investment parity with the U.S.
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#2 XI JINPING AND THE GENERALS
THE ECONOMIST
The Economist has noted “Mr Xi has now hollowed out his entire military leadership in a purge unmatched since an alleged coup attempt in 1971.”
Zhang Youxia was the most senior uniformed officer on the Central Military Commission, the country’s top military decision-making body. He was a friend of Mr Xi and one of the few leaders in the People’s Liberation Army (PLA) with personal experience of its last serious fight, with Vietnam in the 1970s. Now he, along with General Liu Zhenli, has been sacked, ostensibly for “discipline and law violations”.
GRAHAM PERRY COMMENTS
Reliable news is in short supply. On matters of this nature China is never forthcoming. This is frustrating for those of us used to round the-clock updates on key personnel changes in Western Governments. In the absence of hard news speculation is rife.
Is this a problem of China’s own Military-Industrial Complex?
Has Xi taken the action that President Eisenhower wished he had taken during his second Presidency to curb the growing alliance of of the Military with Industry?
Is Xi clearing the decks in readiness for a military move against Taiwan?
Is Xi preparing the ground for a fourth term as President and Party Secretary
Is Xi removing rivals for the succession ahead of his retirement?
Is Xi merely ensuring that the military are in a state of readiness ahead of confrontations in the South China Sea
Is Xi focusing on the corruption issue and concerned that people at the top of the Armed Forces have succumbed to bribes in return for orders for military equipment?
If Trump had made wholesale changes to the U.S Joint Chiefs of Staff similar to the changes Xi has made in Beijing, the media would be camped on the White House lawn ready to ask questions and demand answers. China is different. It is secretive and it means speculation dominates in the absence of hard news.
John Garnaut was foreign policy adviser to former Australian Prime Minister. He suggests that Xi making room for a new generation of more disciplined generals capable of mastering advanced technologies such as artificial intelligence and drones, as well as space, undersea and cyberwarfare. The ultimate aim is to create a military force capable of prevailing in a potential confrontation with the United States.
This narrative suggests that General Zhang’s removal is intended to achieve the renewal and rebirth of the People’s Army. This has echoes of the Long March and the importance of Yan’nan in the mid 1930’s, when Mao rallied the Red Army and turned it into the disciplined fighting force that went on to defeat the Nationalist government of China and seize control of the country.
Garnaut writes “General Zhang is not only a highly respected veteran who was second in command to Mr. Xi; he was long considered one of Mr. Xi’s closest military advisers. Their fathers fought together in the revolution If someone of General Zhang’s stature can be vilified as a source of rot, it underscores that the overhaul by Xi — arguably the most strategically patient, calculating and globally ambitious leader in the world today — is about something far larger than corruption or factional balance.”
Since 2022, Mr. Xi has removed five of the six generals in his Central Military Commission. As many as 34 of the 44 Generals in the party’s Central Committee have been ousted or were conspicuously missing from official appearances without explanation — a deeper purge than anything Mao ever conducted.
Garnaut concludes that Xi believes he can cultivate a new generation of leaders in short order for the world’s largest standing army. A devoted student of Soviet and Chinese Communist Party history, he knows that in just three years Stalin had reconstituted his top brass, led by Georgy Zhukov, who eventually turned back invading Nazi forces.
It may be no mere coincidence that General Zhang’s downfall was announced just one day after the Trump administration published a new National Defense Strategy, which focuses on U.S. dominance of the Western Hemisphere while moving away from the longtime goal of countering China. As Garnaut observes “If Mr. Trump continues with an accommodative approach to China and further destabilizes U.S.-anchored alliance systems, the strategic consequences two years from now could be profound.”
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#3 CHINA’S FOREIGN INVESTMENT SURGES
NIKKEI ASIA
“Chinese investment overseas jumped 18% in 2025, driven by energy and basic materials, as the world’s second-largest economy accelerated a shift away from Western nations and toward Africa and the Middle East.
New foreign direct investment hit $124 billion, according to the China Cross-Border Monitor run by independent research provider Rhodium Group. The figure marked the highest FDI level since 2018, although it remained well below the 2016 peak.
“Energy and basic materials investment will continue [this year], partly because these sectors are naturally high-value and long-term in nature,” said Danielle Goh, a senior research analyst at Rhodium. “Commodities like these tend to attract follow-on investment over time.”
Major investments last year included;-
- the Simandou Iron Ore Mine in Guinea in Guinea
- two major lithium processing plants in Nigeria
c a $5.9 billion joint venture investment in a refining and chemical complex in Indonesia, making it one of the largest transactions of the year.
GRAHAM PERRY COMMENTS;-
Also bear in mind Carney and Starmer recently visited Beijing and Trump is due in this April. China is a fact of life. De-Coupling is not happening. The world needs China and won’t turn its back. China embraces ebb and flow, optimism and realism. There will be progress and there will be setbacks in the development of the world economy.
China needs trade and business and investment. That was the message in 1951 when my father, Jack Perry, first discussed the future with leading representatives of the new PRC. China has always been a long term project – for centuries not decades. China has a long term macro perspective. It also has a short term micro perspective. The two are always uppermost in the minds of the strategically inspired architects of China. They focus on 2049 and 2099 as well as 2027 and 2030.
So many people miss the significance of China. They lack a perspective even a concept of time and evolution. The future is not the next four years in the U.S nor the next five years in Europe. It is the next one hundred years.
Its always good to take a step back and to view the overall trend. China is here to stay and Western governments will accept its reality, whilst they continue forever to seize the initiative and try to “change” China and make it more accommodating. Dream On.
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#4 CHINA AND JACK PERRY
PART 33 – THE CULTURAL REVOLUTION
A PLUS OR A MINUS?
Part 32 concluded as follows;-
Uppermost in the minds of China’s leaders today is the possibility of a return to the turbulent days of the early 1970’s when “Politics Was In Command” and The Little Red Book became a mistaken badge of honour. The Left was beaten. The Gang were imprisoned for life. Mao’s reputation took a justified knock but Leftists remain alert and alive in China and they have an agenda which warns of the influence of the Billionaires, the 9-9-6 work hours, and the widening wage differentials. They may be biding their time but they will be hoping for a second chance to blow present-day China off course.
A final word – why does Mao’s portrait still appear prominently in Tiananmin Square in Beijing. I quote again the brief but tidy summary of recent Chinese History. “Mao saved the Country; Deng saved the Economy and Xi saved the Party”.
Mao’s role in the Cultural Revolution is a Big Negative but his role in leading the Revolution to success with the creation of the People’s Republic of China in 1949 is a Big Plus and for that considerable achievement he is accorded prominence and respect – if not love”.
Uppermost in the minds of the leadership of the Communist Party of China is the need to ensure there is no repetition of the Cultural Revolution. China needs stability, continuity, development and expansion. The goal is to turn China, by 2049, into a “prosperous country”. At present it is only a “moderately prosperous country” and the challenge for the Party is to ensure that China is able to continue along the its chosen path of building a Socialist Country with Chinese Characteristics.
China broke with the Gang of Four and its egalitarian Left agenda when the Gang were arrested in 1976. The re-emergence of Deng Hsiaoping signalled a break with the chaos of perpetual class war and its replacement with a system of government that took as its long term aim the creation of prosperity. Stability not instability. Economic growth and development and the challenge of consolidating a society which would create well-being instead of political posturing. The Little Red Book was no more. The pursuit of Egalitarianism was replaced with the pursuit of Prosperity. A Better Life for All is the measure of success and China is making real progress.
Two numbers underline the improvements that have been achieved – 800 million Chinese citizens have risen out of poverty and in the year 2030 it is estimated that 200 million Chinese tourists will visit overseas and enjoy their vacations. There is much more – solar energy, accelerated Artificial Intelligence, and an increase in the average per capita income from $12.000 per annum to $30,000 per annum.
Is it all plain sailing? Can China relax and await the increasing evidence of prosperity? A firm “No”. Life is not plain sailing. There is unemployment and corruption and crime. China is not A Perfect Society. It will continue to encounter problems as China continues to adopt new norms of behaviour. China is not smug or complacent or arrogant. Economic growth may be maintained at around the 5% per annum level but the failings in the property sector remain to be overcome. But the Cultural Revolution is an ever present reminder of the need to avoid a highly politicised society.
China will fail if it re-embraces the politics of the Left but the danger remains and Xi’s leadership is aware of the problems if China reverts to the empty slogans of the Left policies of the Cultural Revolution. TLeft have not gone away. They are in retreat but there are groups in China who see the Billionaires and the widening wage differentials as evidence of a China embracing Capitalism at the expense of Socialism.
The Party’s position is clear. “Chinese Characteristics” does have a specific meaning and significance and it does mean the embrace of aspects of thinking which is motivated by profit and personal gain. And there is a danger that China increasingly resembles A Big Olive. Small at the bottom and Small at the top but with an increasing number of people falling within the middle range of increasing prosperity. There will be the wealthy who have gained from the opportunity to participate in a big way in the growth of China and its economy. There will also be the less fortunate who have slipped through the net and who do not enjoy the fruits of work that has come the way of the burgeoning middle section of the Big Olive. There are losers whose prosperity advances at a slower rate than those in the middle section. The “losers” missed out on an education due to the Cultural Revolution and the welfare system focuses on bringing them within the range of opportunities available for self-advancement. The challenge is to reduce the number of people at the bottom of the Big Olive and provide them with support to improve their lot and bring them within range of the middle section.
The Party wants stability not instability. It does not want street protests and political challenge. It wants to continue the progress that has led the Chinese people to enjoy a better life – economically and socially. It does not want to be blown off course by a Left challenge that reinstates political posturing and empty sloganizing. China does want to accelerate growth in China and raise the well-being of all the people. Socialist Prosperity is the Target – not Mindless Egalitarianism.
CHINA AND JACK PERRY- PART 34
HOW WOULD JACK VIEW CHINA TODAY?
