Trump’s tariffs hand China a free-trade opportunity – Asia Times

Donald Trump’s subsequent phrase is off to a aggressive start, and the first casualty may be America’s personal influence. &nbsp,

His broad tax increase, including 25 % duties on imports from Mexico and Canada, a 10 % tax on American power and new tariffs on Chinese goods, underscores a US shift towards extreme economic nationalism. &nbsp,

He has also indicated that the EU will soon face taxes, which will rattle the world’s markets even more. While Trump asserts financial leverage, China appears well-positioned to profit.

The example of Colombia’s reaction is one. Gustavo Petro, the country’s president, next year formally challenged the United States over the treatment of deported workers. &nbsp,

Shortly after, Trump imposed tariffs on Chilean exports, imposed banking restrictions, and prohibited government officials from traveling to the US. The walk was a hard power switch in Washington’s strategy, one that could have broader repercussions for global partnerships.

However, its effects remain to be seen if the White House considers this to be a necessary strong position. &nbsp,

The event highlights the unpredictable nature of American relationships abroad under Trump. Others may try to diversify their alliances if one nation that has historically been associated with Washington is suddenly subject to unexpected financial abuse. &nbsp,

And Beijing, with its growing economic relationship in Latin America, is watching attentively.

For decades, China has positioned itself as an alternative to US monetary management. Its Belt and Road Initiative, which offers infrastructure money with fewer social requirements than Western loans and help, has significant investment in Latin America, Africa, and Southeast Asia. &nbsp,

In Latin America only, Beijing’s trade and financial relationships have expanded greatly. Then, as Trump reintroduces price threats and financial pressure, China’s part as a stable trading partner becomes more attractive.

This move isn’t simply economic. Washington has long relied on its reputation for uniformity and adhering to international treaties. &nbsp,

Institutions like the WTO provided some security even when Trump stifled international commerce during his first term. Some nations may reevaluate their dependence on US trade now that punitive economic measures are being put under renewed scrutiny.

Denmark and Panama, two nations already drawing Trump’s attention, offer more insight into these interactions. Trump’s desire to purchase and threaten to buy Greenland and problems over the Panama Canal serve as examples of how financial liquidity is increasingly being used as a political tool. &nbsp,

Beijing, which has already built financial alliances in both countries, could gain if tensions with Washington rise. After US Secretary of State Marco Rubio criticized the government during his Sunday visit, Panama pledged free passing for US ships through the Panama Canal and said it did not renew its involvement in China’s Belt and Road Initiative.

Finally there’s Mexico and Canada, America’s closest buying lovers. With Trump following through on rocky 25 % taxes, the consequences will extend beyond North America. Under NAFTA and its heir, the USMCA, years of economic integration may be challenged. &nbsp,

China, constantly expanding its business relationships worldwide, may be a more beautiful partner for manufacturers and governments seeking long-term stability.

None of this, to be sure, will cause a significant transition apart from the US and toward China. Some nations are careful about Beijing’s investment plans, especially those that have had trouble with debt and concerns about influence. &nbsp,

But Trump’s method does make China look more repetitive by comparison. Unlike Washington, Beijing tends to prevent placing social conditions on business or repeated tariff escalations. For nations afraid of plan uncertainty, that regularity carries weight.

For the US, the dangers of this technique are important. China is now viewed as a significant financial spouse by an increasing number of Latin American nations. &nbsp,

Washington was experience trade reversals as well as a deterioration of its local impact if Trump’s guidelines push them even further toward Beijing. The more America’s friends feel uncertain about their position, the more likely they are to observe other alliances.

China doesn’t need to get aggressive steps to profit, it may simply need to give a firm option. &nbsp,

As Trump continues asserting his economic perspective, the broader question remains: did these policies strengthen America’s place, or did they create openings for competitors like China to get ground?

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Mitsubishi Electric doubles down on China supply chains – Asia Times

To improve the effectiveness of its domestic market competition and prevent issues that may come from US trade restrictions, Mitsubishi Electric, a Chinese manufacturer of programmable logic controllers and other business automation equipment, plans to establish full supply chains in China.

Initial steps are anticipated to result from Mitsubishi Electric’s regional partnerships and purchasing, with investments and other arrangements beginning in the upcoming year. More cutting-edge products are likely to observe, but at a rate that won’t derail Japan’s production, employment, and industrial leadership.

Kuniaki Masuda, the company’s CFO, told the Nikkei that Mitsubishi Electric will be able to satisfy demand by sourcing products solely from China in the future, even though the company now exports items to China from Japan and other nations.

This is consistent with Western businesses like ABB, Volkswagen, and Bosch, which have all established or are expanding their operations in China.

In programmable logic controllers ( PLCs ), Mitsubishi Electric competes with Siemens and Fanuc in computerized numerical control ( CNC ) systems, as well as Siemens and Rockwell Automation. It also makes industrial robots, human-machine interfaces ( interactive screens ), servomotors, inverters, power distribution and control equipment, and other products used in factory automation.

Mitsubishi Electric is well established in China, with a office in Beijing, income offices in other major cities, factories producing business automation technology, elevators and escalators, air conditioners and energy silicon devices, R&amp, D centers in Beijing and Shanghai, and a research collaboration in electricity systems and environmental technologies with Tsinghua University.

In 2018, Mitsubishi Electric announced a” strategic partnership” between two of its group companies, Mitsubishi Electric ( China ) and Mitsubishi Electric Automation ( China ), and China’s state-owned Instrumentation Technology and Economy Institute ( ITEI ) to support Beijing’s” Made in China 2025″ initiative:

The Chinese government released its Made in China 2025 roadmap in 2015, stating that it would help China become a global manufacturing powerhouse. Mitsubishi Electric Group built its Smart Manufacturing Comprehensive Test Platform [which ] in order to support standardized intelligent manufacturing…

In a joint effort to support Made in China 2025, the strategic partnership [with ITEI] will concentrate on promoting defined intelligence production. Mitsubishi Electric will continue to support the… Platform with the company’s most recent FA components and technologies and verify the use of cutting-edge technologies like edge computing and artificial intelligence ( AI ) for intelligent manufacturing. The company hopes that with these efforts, it can promote standard, smart manufacturing for use in China.

In 2025, Mitsubishi Electric will expand its strategic relationship with China and more integrate its business automation business with the world’s largest manufacturing nation.

In China, it’s competing with it. They include Fanuc, Yaskawa Electric, Kawasaki Heavy Industries, Denso, Epson Robots and Nachi-Fujikoshi from Japan, ABB and Kuka ( now owned by China’s Midea Group ) from Europe, and Rockwell Automation from the US.

All of these businesses have regional colleagues and produce some goods in China. In Shanghai, ABB runs one of the most technologically advanced and largest technology companies in the world. It has participated in Belt and Road activities as well as Made in China.

Rockwell Automation, which entered the Chinese market in 1988, has facilities around the nation that serve a wide range of companies. The US government was reportedly looking into the possibility that the business was “exposing important US system, military, and other state assets to a potentially severe cyberattack through one of its China-based services” in 2023, according to The Wall Street Journal.

Rockwell Automation stated at the time that it hadn’t been informed of any inquiries but that it would work with it whenever needed. Bloomberg wrote that an analysis” did show US anxiety on China.”

However, US officials are now more concerned and willing to impose sanctions on both China and their supporters. In this scenario, Mitsubishi Electric’s decision to isolate its supply chains for business automation in China makes sense both politically and economically.

Mitsubishi Electric’s two main industrial automation products are programmable logic controllers ( PLCs ) and computerized numerical control ( CNC ) systems. The firm has a number of well-known rivals in each item and a long list of Chinese rivals trying to succeed.

As defined by Israeli robotics company Unitronics“, A Programmable Logic Controller, or PLC, is a rugged machine used for commercial technology. These controllers can manage a particular method, system work, or even an entire generation line. The PLC receives information from connected sensors or input devices, processes the data, and triggers outputs based on pre-programmed parameters. PLCs are employed to operate industrial robots.

Computer numerical control ( CNC ) is a manufacturing technique that automates the control, movement, and precision of machine tools through the use of pre-programmed computer software, according to the technology website Informa TechTarget. CNC systems are also employed with other types of industrial equipment.

Other top producers of PLCs include Siemens ( Germany ), Rockwell Automation ( USA ), ABB ( Switzerland/Sweden ), Schneider Electric ( France ), Omron ( Japan ) and Delta ( Taiwan ). Chinese PLC producers include HollySys, Wecon, Inovance Technology, Chint, Kinco and Xinje. Fatek ( Taiwan ) and LS Electric ( South Korea ) also have a presence in China.

Other top producers of CNC systems besides Mitsubishi Electric include Fanuc ( Japan ), Siemens ( Germany ), Haas Automation ( USA ), Heidenhain ( Germany ), Okuma ( Japan ), DMG Mori ( Germany/Japan ) and Bosch ( Germany ).

Chinese producers of CNC systems include Guangzhou CNC, Shenyang Machine Tool, HuazhongCNC, Shenzhen Inovance, Nanjing Estun Automation, and close to a dozen other companies identified by DeepSeek, which notes that” …the industry is dynamic, with rapid advancements in smart manufacturing and Industry 4.0 technologies.”

The world’s largest industrial robot market is China. China accounted for 51 % of the total number of industrial robot installations worldwide and 41 % of the total stock in 2023 ( the most recent year for which complete data is available ), according to the International Federation of Robotics.

Mitsubishi Electric has an estimated 5-10 % of the Chinese industrial robot market, according to industry and market research sources, ranking below only Fanuc, ABB and Yaskawa. Its market share for CNC systems in China is thought to be 10-15 %, with a high end concentration.

According to various market research firms, China currently accounts for more than 30 % of the world’s machine tool market, and Chinese demand is projected to increase by as much as 50 % by 2030. The Chinese market for CNC systems accounts for between 10 % and 10 % of Mitsubishi Electric’s.

China accounted for 22 % of Mitsubishi Electric’s factory automation revenues in the fiscal year to March 2024, 15 % of its total sales, and 27 % of its operating profit. The Chinese market for industrial automation equipment is very large, expanding rapidly, and fiercely competitive. Both Mitsubishi Electric and its rivals cannot afford to lose it.

Follow this writer on&nbsp, X: @ScottFo83517667

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Do Trump and Netanyahu see eye to eye on Gaza’s endgame? – Asia Times

Given the depth of hostility and enmity between the warring factions, the weak Gaza ceasefire between Israel and Hamas continues against all odds.

In exchange for some 400 Arab captives from Israeli jails, Hamas has released more than a few Jewish hostages since its enactment almost three weeks ago. More captives and prisoners are scheduled to be released during the majority of the first step of the truce if the procedure proceeds as easily as it has so far.

This is reason for a level of enthusiasm. However, negotiations over the size, words, and application of the second and third stages of the peace will turn out to be quite difficult.

Israeli Prime Minister Benjamin Netanyahu, for example, has already declared the ceasefire to become “temporary”.

In exchange for lots of prisoners, all Jewish hostages, both alive and dead, are supposed to be freed during the next level. As a precursor to the restoration of the coastal area in the final stages of the ceasefire, Israel is also anticipated to remove all of its causes from Gaza.

There are many problems that may disrupt the process, two of which are important:

  • Israel’s unattainable goal of putting an end to Hamas and establishing Gaza as a security for itself
  • Hamas’s steadfast desire to restore its supremacy over Gaza.

Another issue is the effect of the new US president, Donald Trump. While Trump has allies with Netanyahu, it’s not clear how eager the US president is to escalate Middle Eastern hostility.

A meeting between the two in Washington this year may be crucial to the resolution of the ceasefire’s second stage or the restart of the Gaza battle.

This year, Palestinians pass the wreckage of ruined buildings on a street in Gaza City. &nbsp, Photo: Mohammed Saber / EPA

Hamas ‘ life at conflict with Israel’s war seeks

Over the past 15 months of Hamas ‘ scorched-earth operations in Gaza, which Israel launched in response to Hamas ‘ attacks on October 7, 2023, Israel has undoubtedly degraded it. But, it has not eliminated the party.

The team’s survival is demonstrated by the well-armed and well-composed Hamas soldiers ‘ appearance during the choreographed three rounds of captive transfers in the regions Israel has destroyed.

It effectively indicates that Netanyahu and his radical supporters are unable to accomplish their main objectives, which are establishing a defense for release of the hostages.

The folly of using power as the only way to retaliate against Hamas is clearly demonstrated by Netanyahu’s approval of the ceasefire at this time.

He may have accepted the ceasefire much earlier, allowing for a quicker captive launch without more lives lost or more harm to Israel’s already tarnished reputation.

Hamas ‘ success means it is still a dangerous power, according to previous US Secretary of State Antony Blinken in the middle of January. He claimed that the organization has “recruited almost as many fresh insurgents as it has lost” during the conflict.

In Gaza City, Hamas militants gather. &nbsp, Picture: Mohammed Saber / EPA via The Talk

In addition, reviews claim that Hamas has continued to have control over Gaza’s security forces despite Israel’s attempts to wrest control of it.

If that is the case, Jewish citizens have the right to seriously question the leadership of the prime minister, who have been greatly divided between those who want the hostages to be freed through a ceasefire and those who support Netanyahu’s administration to continue the war.

The same applies to Israel’s inside supporters, especially the United States.

However, this may not occur. The war-makers does get over the serenity candidates. For Netanyahu and his backers, the task is not finished. Some experts believe that Hamas’s very existence will only increase their motivation to rekindle the conflict once all of the victims have been freed.

What does Trump want?

The future of the peace now seems to pivot on Netanyahu’s conference with Trump in Washington. The Jewish leader is interested to know where Trump stands on the second phase of the agreement before the conversations begin, according to reports in the media.

Trump just rebuffed his proposal to” certain out” the 2.3 million people of Gaza by moving them to Egypt and Jordan, despite a number of 1.5 million. Nothing more would please the extremists in Netanyahu’s fragile partnership, given the past claims of its leaders, than a depopulated and annexed Gaza.

Cairo and Amman, as well as other Muslim countries, have strongly rejected the idea. Hamas and the ailing Arab Authority in the West Bank have unwaveringly condemned it.

Trump has argued that the Egyptian and Syrian leaders will ultimately change because of US support, probably because they rely heavily on American aid each year.

If this scenario were to occur, it may lead to more hostilities and bloodshed in the Middle East as well as more international support for the Palestinian cause and the two-state option.

While there is still hope for the continuation of the peace and the completion of the next phase of the stalemate, it is still possible that Netanyahu will engage in military action to annihilate Hamas and annex Gaza in the manner that Trump has suggested.

The Jewish leader might even be able to declare West Bank independence because of the strong relationship between Trump and Netanyahu.

Given these risks, the next phase of the stalemate regarding the restoration of Gaza, which is estimated to be upward of&nbsp, US$ 80 billion, is, at this point, nothing more than thoughts on a piece of paper.

At the Australian National University, Professor Amin Saikal is retired teacher of Middle Eastern and Central Asian research.

This content was republished from The Conversation under a Creative Commons license. Read the original post.

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Jevons paradox debunks DeepSeek’s clean, green claim – Asia Times

Artificial fires through a lot of tools. Perhaps a more energy-efficient AI is likely to result in more energy being used over the long run, as a conundrum was first discovered in the 1860s.

For most consumers, “large speech models” such as OpenAI’s ChatGPT function like instinctive search engines. However, AI models return information they’ve created from scratch, in contrast to traditional online searches that locate and retrieve data everywhere along a worldwide network of servers. Like powering up a nuclear furnace to use a computer, this designed process is quite wasteful.

One study suggests the AI industry will be consuming somewhere between 85 and 134 terrawatt-hours ( TWh ) of electricity by 2027. That’s the same amount of energy that the Netherlands consumes annually. One well-known researcher predicts that over 20 % of US electricity will be used to power AI data centers ( huge warehouses stuffed with computers ) by 2030.

Big tech companies have often vowed to be significant investors in wind and solar energy. However, most people are developing their own atomic options due to AI’s desire for 24/7 energy. Microsoft also plans to revive&nbsp, the legendary Three Mile Island&nbsp, power flower, the image of America’s worst-ever legal radioactive accident.

Despite Google’s ambitious goal of being carbon neutral by 2030, the agency’s AI improvements mean its emissions have climbed 48 % in the past few years. Additionally, each month, the processing power required to train these concepts increases tenfold.

Nevertheless, Chinese start-up DeepSeek claims to have created a fix: a design that fits the effectiveness of established US foes like OpenAI, but at a fraction of the cost and carbon footprint.

An environmental game changer?

DeepSeek has created a powerful open-source, relatively energy-lite model. The company claims it spent just US$ 6 million renting the hardware needed to train its new R1 model, compared with over$ 60 million for Meta’s Llama, which used 11 times the computing resources.

DeepSeek uses a “mixture-of-experts” architecture, a machine-learning method that allows the model to scale up and down depending on the complexity of prompts. The manufacturer claims that its model can train and store more data without using sizable amounts of pricey processor chips.

deepseek logo on phone screen
Compared with its US rivals, DeepSeek promises to do more with less. Image: Chitaika / Shutterstock via The Conversation

Following investor concerns that AI companies would reevaluate their energy-intensive data center developments, US chip manufacturing and energy stocks fell. As the world’s largest supplier of specialist AI processors, Nvidia saw its share price fall by$ 589 billion, the biggest one-day loss in Wall Street history.

Paradoxically, as well as upsetting the performance of US tech stocks, improving the energy efficiency of AI platforms could actually worsen the industry’s environmental performance as a whole.

With tech stocks crashing, Microsoft CEO Satya Nadella tried to bring a longer-term perspective:” Jevons paradox strikes again”! he posted on X. ” As AI gets more efficient and accessible, we will see its use skyrocket, turning it into a commodity we just can’t get enough of”.

The Jevons paradox

For more than a century, people have been saying that using less energy isn’t always beneficial to Earth’s resources. In his book” The Coal Question” in 1865, a young Englishman named William Stanley Jevons argued that Britain’s position as an industrial superpower might soon be ended as a result of its rapidly dwindling coal reserves.

But to Jevons, frugality was not the solution. He claimed that” the idealism that the sparse use of fuel is equivalent to a decreased consumption is completely confounds all other ideas. The very contrary is the truth”.

According to Jevons, any increase in resource efficiency generates an increase in long-term resource consumption, rather than a decrease. Higher energy efficiency has the effect of lowering energy’s implicit price, which in turn raises the rate of return and demand.

Jevons gave an example of the British iron industry. If advances in technology enabled a blast furnace to produce iron with less coal, profits would increase and new investment in iron production would be drawn. Price reductions would also encourage higher demand. He concluded:” The greater number of furnaces will more than make up for the diminished]coal ] consumption of each”.

Since the dawn of human civilization, the economist William Nordhaus has used this concept to improve lighting efficiency.

In a paper published in 1998, he came to the conclusion that the typical worker in ancient Babylon might need to work for more than 40 hours to buy enough fuel to generate the same amount of light as a typical lightbulb for an hour. However, an average American would need to produce the same amount of work by 1992.

Throughout time, efficiency gains haven’t reduced the energy we expend on lighting or shrunk our energy consumption. We now, in contrast, produce so much electric light that areas without it have turned into tourist attractions.

Warming and lighting our homes efficiently, driving our cars, mining Bitcoin and, indeed, building AI models are all subject to the same so-called rebound effects identified in the Jevons paradox. And because of this, it will be impossible to guarantee that an energy-use reduction in the overall industry is achieved.

A Sputnik moment

In the 1950s, the US was horrified when the Soviets launched Sputnik, the first space satellite. America spent more money on the space race, not less, as a result of the development of a more effective rival.

DeepSeek is Silicon Valley’s Sputnik moment. In an arms race that is no longer limited to US tech giants, more distributed and powerful models will likely mean more distributed and powerful models.

AI offers superpower status, and the floodgates may now be fully open for the UK and other global competitors, as well as China. What’s for certain is that in the long term, the AI industry’s appetite for energy and other resources is only going to increase.

Peter Howson is assistant professor in international development, Northumbria University, Newcastle

This article was republished from The Conversation under a Creative Commons license. Read the original article.

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Trump’s path to Ukraine peace becoming more apparent – Asia Times

Trump’s Special Envoy for Ukraine and Russia Keith Kellogg told&nbsp, Reuters&nbsp, that he’d like to see Ukrainian President Volodymyr Zelensky hold legislative and presidential primaries, though that site’s resources in Kyiv say that Washington has yet to officially make the request.

Ukrainian law requires that elections be held during times of conjugal union rules, requiring the need to first uphold it. That didn’t happen without a peace, yet, but therein lies the problem since Russia’s ceasefire conditions are also unethical to Ukraine.

Vladimir Putin, the leader of Russia, stated in a statement last June that Russia would stop hostilities once Ukraine withdrawn from all the country it now claims as its own and declares that it no longer wants to join NATO.

Negotiations may continue soon afterwards, but he&nbsp, specified at the time&nbsp, that they would have to be held with the parliamentary listener instead of Zelensky, whose constitutional term expired at the end of May per Putin’s checking of the Ukrainian Constitution. He then&nbsp, reiterated this position&nbsp, past week but with an additional spin.

According to Putin, Zelensky could also potentially participate in discussions, but he’d be useless to signal anything. This followed Zelensky ‘s&nbsp, claim&nbsp, that October 2022’s prohibition on talks with Russia applied to everyone but himself.

He therefore told the&nbsp, Associated Press&nbsp, over the weekend, around the same day as Kellogg’s interview with Reuters, that he is interested in resuming talks with Russia but doesn’t think that it wants a peace. Amidst these remarks from Kellogg, Putin and Zelensky were Trump’s.

He&nbsp, claimed&nbsp, that” We’re having very serious discussions ( with Russia ) about that war, trying to get it ended”, but said that he hadn’t yet talked to Putin about it, thus implying that talks are only taking place at the embassy level. Russian Deputy Foreign Minister Sergey Rybakov&nbsp, confirmed&nbsp, on the same day that” there is no development” on organizing those leaders ‘ future visit.

However, their unavoidable talk will likely be about a peace and, specifically, the agreement Trump hopes to agent.

In order to ensure compliance with the ceasefire, he might ask: 1 ) Ukraine withdraws from Kursk and Donbas, the latter of which is at the center of the territorial dispute with Russia, but stays where it is everywhere else; 2 ) neither side rescinds its territorial claims to the other; 3 ) Ukraine holds its next elections; and 5 ) the new government begins peace talks with Russia after taking office.

Ukraine can be coerced into all this by threatening to withhold military aid&nbsp, while&nbsp, threats of maximally disbursing such to Ukraine alongside the imposition of maximum secondary sanctions against Russia’s top energy clients ( China&nbsp, and&nbsp, India ) could coerce it into compliance as well.

As an opportunity to Russia, which has been continuously advancing for the past two years, the US might consent to mobilise the” trans-Dnieper” place and place it under the command of non-Western soldiers.

That request forms one of the two hundred concessions that were analyzed on these pages&nbsp, these &nbsp, and elaborated on in detail&nbsp, around.

In order to convince Russia to accept a peace, its full implementation or some other variant thereof may prove crucial in terms of achieving this goal without Ukraine initially fully adhering to Putin’s demands from last June regarding its claim to all the place that Russia claims as its own. Trump’s diplomats had, so, do well to seriously consider this plan.

The previously mentioned threats could still be used as compulsions to encourage compliance if they can persuade Ukraine and Russia to accept a ceasefire, while carrots may involve more Ukrainian aid for reconstruction and gradual sanctions relief, increasing the chances that it will be implemented.

The US may yet consent to the US allowing the EU to resume pipeline fuel imports from Russia, whether through the last intact portion of Nord Stream or across Ukraine if Kyiv agrees. As part of the benefits of Russian compliance, the US may also agree to do so.

In terms of the successive election step in this process, the US might like that Zelensky never work for re-election; in addition, it may support one of his possible rivals as part of a “phased leadership transition” to facilitate a peace deal, which is premised on Putin wanting him out of the way.

Between the hypothetical ceasefire and Ukraine’s next elections, Zelensky might still participate in talks, but Russia wouldn’t allow him to sign anything, so he’d only take part in them for self-serving political reasons.

In any case, the legal changes that Russia’s stated objectives of restoring Ukraine’s constitutional neutrality and “denazifying” its society entail can only be advanced once the elections establish a new parliament, which could then bring these changes under US pressure ( the second goal perhaps only partially ).

Prior to that, the size of the armed forces could be curtailed in partial compliance with Russia’s demilitarization goal as a trust-building measure, but Russia ‘s&nbsp, spring 2022 demands&nbsp, might not ever be met in full.

Trump’s strategy to broker a ceasefire between Russia and Ukraine mostly depends on the latter’s agreement because the former can be much more coerced, necessitating pragmatic compromises that meet some of Putin’s ceasefire demands from last June.

This might include imposing sanctions on Russia on Ukraine, seriously considering a demilitarized” Trans-Dnieper” region under the control of non-Western peacekeepers, and promising gradual sanctions relief.

Putin might agree to these conditions if they are followed by threats to provide Ukraine with the most military aid and the enactment of the most severe secondary sanctions against China and India, two of Russia’s top energy clients.

Putin’s continually proven his preference for avoiding escalations, notably reaffirmed last November through&nbsp, Russia’s unprecedented use of the hypersonic Oreshniks &nbsp, for de-escalation purposes vis-a-vis the US, while a sizeable share of Russia’s budgetary revenue is dependent on Asian energy imports.

If Trump agrees to the ceasefire terms that were discussed as well as the threatened consequences if Putin rejects them, these things will work in his favor.

A ceasefire will undoubtedly lead to peace, which will likely require some territorial concessions from Ukraine in order for Russia to agree to a compromise on Putin’s demands. Then new elections can be held to validate peace negotiations. The most likely scenario is to diplomatically end the conflict.

This&nbsp, article&nbsp, was first published on Andrew Korybko’s Substack and is republished with kind permission. Become an Andrew Korybko Newsletter subscriber&nbsp, here.

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Questioning China’s ability to actually fight – Asia Times

China’s government may be modernizing quickly, but its ability to fight on the front lines in a possible battle with the US and its allies may be hampered by deep-rooted architectural flaws, political power, and a lack of battle experience.

Last month, the RAND Corporation think tank released a report questioning the combat readiness of China’s People’s Liberation Army ( PLA ) despite its breakneck modernization.

RAND contends that while the PLA boasts world-class weapons and the largest navy in the world, it prioritizes upholding Chinese Communist Party (CCP ) rule over actually preparing for war.

The report makes attention to structural issues, such as promotions based on merit over loyalty, intellectual training over combat realism, and unified decision-making that prevents battlefield adaptability.

RAND uses the Russo-Ukrainian War, which is ongoing, and the Sino-Vietnamese War from 1979 to compare the PLA’s development to historic examples of military might failing to ensure battlefield success. The document suggests China’s military reforms remain sluggish and imperfect, emphasizing deterrence and social control over functional effectiveness​.

A split RAND statement examines the PLA’s double issue of demographic change and development. The PLA has a considerably larger children pool than the US, despite China’s declining population raising long-term issues. However, efforts to get wealthy talent are hampered by poor selection incentives, insecure service conditions, and competitors from the private market.

Social restrictions, such as military company’s low social status and a conscription-based unit, further aggravate China’s military development. Despite significant assets, the PLA struggles to match Chinese President Xi Jinping’s perception for a world-class war. RAND suggests that China may need to reevaluate its military theory and power structure if recruitment issues persist.

While RAND criticizes the PLA’s unified command structure, Chinese military doctrine emphasizes philosophical cohesion and social oversight, which the Constitution views as a plus as a plus.

Payton Rawson explains that China’s two command structure in the PLA combines military and political management to maintain State control in a November 2023 article for The Strategist.

According to Rawson, the structure includes a party committee, political commissar, and political organizations to support party leadership, stop corruption, and ensure alignment.

He points out that the advantages include a stronger political base, a lower chance of military coups, and a unified command that coordinates military actions with party objectives. However, he notes that this system may hinder decision-making speed and innovation.

However, emphasizing the PLA’s dual command system’s perceived shortcomings, lack of combat experience and recruitment problems risks underestimating China’s military modernization.

The PLA compensates using advanced simulators, provides realistic Blue Force ( BLUFOR ) opposition in training scenarios and integrates AI into military decision-making processes.

Despite these advancements, using technology as a substitute for combat experience could only lead the PLA so far, as simulations can never fully recreate a combat zone. AI is no substitute for human judgment as it lacks self-awareness and accountability. The institutions and processes that make up the PLA must be used to convert that experience into operational and strategic advantages.

Those challenges may stymie the development of a professional non-commissioned officer (NCO ) corps, which provides experienced, independent lower-level leadership in Western militaries.

In response, China is developing a “made-to-order” NCO corps focusing on technical skills essential for the PLA. It offers a stable career path and invites young people with the appropriate qualifications to enroll in the program. China’s military may train NCOs with technical expertise, but whether they can lead under fire is another question.

China has also hired outside talent, notably former NATO fighter pilots, to train its air force. These former NATO service members can still teach their Chinese counterparts sensitive tactics, techniques, and procedures ( TTP ) despite not piloting the most recent Western combat aircraft.

They still think like their active-duty counterparts and may help refine Chinese pilots ‘ on-the-fly decision-making skills and mission planning.

China uses cognitive and information warfare to achieve “victory without gun smoke,” in addition to using technology, focusing on technical skills, and employing outside talent.

Josh Baughman describes how China’s cognitive warfare strategy focuses on controlling perception and decision-making in a January 2023 article for the China Aerospace Studies Institute ( CASI) to avert direct military hostilities.

Baughman points out that China’s cognitive warfare strategy works both during and during wartime, utilizing psychological flaws like fear and misinformation to undermine the resolve of its allies. He says it integrates military, political, economic, and technological tools, using AI and social media to shape narratives and public perception.

He points out that China prefers to win conflicts through psychological means rather than purely military force by controlling events and defining events.

However, China’s cognitive warfare may have a limited effect on a population inoculated against such, as shown by the results of Taiwan’s 2024 Presidential elections, where state and civil society actors worked effectively to “pre-bunk” and discredit such efforts.

Additionally, Koichiro Takagi mentions that the ongoing Russo-Ukrainian War supports kinetic combat arms like airpower, infantry, artillery, and armor in a July 2022 War on the Rocks commentary. Takagi also contends that decisive physical battles determine wars, not just cognitive positioning or positioning of forces.

While cognitive warfare shapes adversary perceptions, its limitations in actual conflict underscore the PLA’s reliance on external military observations, such as the Russo-Ukrainian War, for operational insights.

Being able to observe others ‘ trials and errors without being directly involved in a conflict, allows China to learn from them. This approach can result in mature, ready-to-absorb TTPs and operational and strategic lessons that could be contextualized according to China’s unique requirements.

M. Taylor Fravel mentions that China’s assessment of the Russo-Ukrainian War teaches important military lessons for a potential Taiwan conflict in an October 2023 article for The Washington Quarterly.

First, Fravel says Russia’s failure to achieve a swift victory underscores the difficulties of large-scale operations, especially in complex joint-force engagements like an amphibious assault on Taiwan.

Second, he notes that Russia’s battlefield failures reveal the dangers of centralized command and rigid leadership structures, pushing China to refine decision-making flexibility.

Third, Fravel says Ukraine’s resilience suggests Taiwan may not capitulate easily, forcing China to prepare for prolonged conflict.

Fourth, Fravel points out that the US’s involvement in Russian intelligence cooperation and coalition-building raises doubts about a similarly retaliatory military exercise, which might give China a sense of strategic surprise.

Lastly, he says Western sanctions on Russia reveal China’s economic vulnerabilities, incentivizing efforts to insulate its economy.

Despite its high-tech ambitions, China’s military remains unproven in actual combat. If war comes, it won’t be China’s gadgets determining the outcome—but rather the soldiers controlling them.

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Chinese crime gangs holding Thai tourism hostage – Asia Times

Beijing and Bangkok are attempting to stop Chinese citizens from conniving and kidnapping them in Thailand, which is making Foreign citizens anxious to cancel their travels to this increasingly violent and dangerous country.

In January, Thai Prime Minister Paetongtarn Shinawatra said,” I have instructed safety companies to raise the level of protection for visitors.” Two prominent Chinese disappeared in Thailand and emerged from Myanmar. ” Tourism is the region’s main source of income. I don’t want it to become affected”.

In a failed attempt to persuade Ms. Paetongtarn to give money to Hong Kong, scammers also imitated President Donald Trump’s words.

Organized crime gangs from China reportedly influence Thailand’s interior ministry, police, and immigration department to find long Thai visas, invest in property, work nightclubs, marriage Thais, smuggle drugs, and use this somewhat easygoing Southeast Asian country as a sensual sanctuary, officials said.

Americans are estimated to have lost US$ 3.5 billion to” China-origin criminal networks” operating internet scams from Southeast Asia during 2023, the Washington-based US Institute of Peace ( USIP ) said.

In a report on Southeast Asian transnational crime with a focus on Chinese-dominated transnational crime, USIP stated that” the United States and China are ] the two most severely affected victims of the online scamming industry.”

To people the unlawful computer call centres in Myanmar, innocent Chinese and other countries are lured to Thailand by offers of high-paying work including accommodation, food, and other perks, according to Chinese officials.

After the survivors arrive, they are supposedly grabbed, smuggled over the frontier, and enslaved in heavily guarded materials, they say.

In Myanmar, people are forced to use the internet to steal people abroad through elaborate “pig butchering” schemes known as” sha zhu pan,” which are carried out in length, elaborately, “pig butchering” schemes.

Scammers con people into giving them money to gangs by luring them to simple profits, genuine passionate love, or different rewards.

Most scam locations are in Myanmar, a war-torn region also known as Burma, but some are even in Cambodia, Laos and abroad.

In Myanmar, they are hard to shut down because swindlers are based in places held by minority cultural rebels fighting for independence or freedom along France-sized Myanmar’s eastern, northern, and western boundaries.

They are supposedly protected by crime and bribes in Cambodian cities like Sihanoukville and Poipet, and they are based there.

According to prosecutors and safety personnel, the majority of the operations are carried out by Chinese groups with bases in China. The figures of swindlers and victims are astounding.

” Over 70, 000 suspects were arrested and more than 160 patients were rescued during the joint Activity Seagull by Cambodia, China, Laos, Myanmar, Thailand, and Vietnam between August and December 2024″, China’s government-controlled Global Times reported on January 21.

In Myanmar,” the 30-some-odd compounds which are there, are all trafficking people and keeping people enslaved”, USIP Burma ( Myanmar ) country director Jason Tower said in an interview in July.

Prime Minister Paetongtarn, however, declined to name the unusual leader’s speech which scammers faked in a January telephone call to her.

Her parents, former Prime Minister Thaksin Shinawatra, said the group cloned President Trump’s tone. ” The tone was very clear, and I recognized it immediately”, Paetongtarn said according to CNN. The scammers “probably used Iot to fake the words”, she said.

” They second sent a message tape, saying anything like,’ How are you? I want to work up,’ and so on. They sent another speech message asking for a payment, saying,’ You are the only state in ASEAN that hasn’t donated still,’ emphasizing it. I was taken aback for a moment before I realized something was wrong.

Online scams are now a serious threat to both individuals and the public’s confidence in the digital economy, which necessitates concerted efforts to combat, she said following the phony phone call.

A charming female scammer allegedly demanded money from Thailand’s deputy prime minister and interior minister Anutin Charnvirakul by claiming that he had exhausted his credit card and needed to transfer funds to maintain its validity.

” She had a nice voice, so I talked with her for about an hour. I guess she didn’t know who I was,” Anutin, who also oversees the police, said on January 16.

When Chinese actor Wang Xing vanished across the border into Myanmar on January 3 and fled to Thailand, his well-known case frightened fans and Chinese tourists, giving Thai and Chinese security officials a new urgency.

They found Wang four days later appearing gaunt, with his head freshly shaved, along the Thai-Myanmar border at Mae Sot town. He reportedly told authorities that he voluntarily flew from China to Bangkok to meet a Chinese man who had promised Wang an acting position in Myanmar.

Instead, he was forcibly trafficked to Myanmar, and he allegedly faced enslavement at a con artist’s house before being freed in vain.

The]Thai] prime minister said on January 13 that despite the discovery of the Chinese actor who vanished in Myanmar, this incident had an impact on Chinese tourists ‘ confidence, according to a spokesman for the government of Thailand Jirayu Huangsub.

” Following Wang’s rescue…a group of over 400 netizens in a WeChat]app] group in China were also discussing how to rescue their relatives,” Global Times reported on January 9.

Yang Zeqi, a Chinese model, vanished on December 29 while on a trip to Tak province in western Thailand, where he had been offered a job in a movie production along the Thai-Myanmar border. Yang reappeared to China a month later without giving a formal account of his ordeal.

” The general public must be vigilant, strengthen their own safety precautions, and avoid blindly trusting offers of high-paying jobs overseas to avoid falling into scams and telecom fraud traps,” China’s Public Security Ministry warned.

Chinese robberies or disappearances in Thailand also result in significant financial losses for Thais.

Tourism accounts for almost a fifth of all employment in this Southeast Asian nation, which suffers from uneven development and income inequality, and accounts for about 12 % of gross domestic product ( GDP ).

In January, senior Thai police met with Thai Embassy officials in Bangkok to plan searches for their fugitives in Southeast Asia.

The problem of Chinese scammers using Thai territory is also being tackled by Thailand’s Anti-Money Laundering Office, the National Cyber Security Agency, the Thai Bankers ‘ Association, mobile telephone operators and others.

Beijing has spent years offering economic, military, and diplomatic support to Bangkok, and the two nations share close multi-generational bonds.

” We will handle this issue with care to minimize impact on tourism,” Thailand’s Tourism Minister Sorawong Thienthong said.

Thai tourism officials have been tasked with monitoring Mandarin-language social media for news, gossip, and chatter about Chinese tourists in Thailand and their experiences.

The Association of Thai Travel Agents reported that the news has been significant in China.

Due to recent safety concerns involving Chinese citizens and fans visiting Thailand, Hong Kong singer Eason Chan Yik-shun canceled his February 22 Bangkok concert, according to his management.

Chinese criminals who travel to Thailand have also committed significant, audacious robberies.

For example, a Chinese man and woman flew into Thailand on last year, stole a US$ 28, 000 diamond and gold bracelet from a Bangkok shop, and flew out of Thailand two-and-a-half hours later.

A wealthy Chinese businessman was targeted by a gang of Chinese armed with knives and weapons in August, tied him up in his lavish Bangkok residence, and forced him to deposit$ 2 million in cryptocurrency into their account.

A Chinese crime thriller film titled” No More Bets “in 2023 portrayed a Chinese couple trafficked to an unnamed Southeast Asian country’s scam center to commit cybercrimes.

Due to the horror of the film, there were only 3.5 % of Chinese tourists to Thailand in the year due to a real decline in the number.

Thai officials expressed their concern about” No More Bets” to the Chinese ambassador to Thailand, Han Zhiqiang, emphasizing none of the crimes depicted in the film occurred in Thailand.

Cambodia and Myanmar banned the movie over fears that it would damage their respective nations ‘ reputation among tourists and foreign investors because Cambodia and Myanmar have many of the most illegal connivancement locations.

Chinese criminals, meanwhile, are diversifying and experimenting with artificial intelligence and other high-tech.

According to the state news agency China Daily,” The fraudsters have sped up creating new schemes to trick people of all ages, engaging in different professions, and having different academic backgrounds.”

” They are using emerging technologies, such as blockchain, virtual currency, and artificial intelligence to upgrade their tools, “it said, reporting an international crackdown by China’s Public Security Ministry.

Since 1978, Richard S. Ehrlich has been a foreign correspondent reporting from Asia from Bangkok. Excerpts from his two new books”, Rituals. Killers. Wars. &amp, Sex. — Tibet, India, Nepal, Laos, Vietnam, Afghanistan, Sri Lanka &amp, New York “and” Apocalyptic Tribes, Smugglers &amp, Freaks “are available here.

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China building world’s biggest military base in prep for US war – Asia Times

China’s People’s Liberation Army ( PLA ) is reportedly building a new command center in the capital, Beijing, that, upon completion, will be at least 10 times larger than the US Pentagon.

Financial Times&nbsp, said&nbsp, that the design of the mega-sized service, which has been widely reported in&nbsp, mainstream&nbsp, advertising, has raised concern among American intelligence firms, which think Beijing is preparing for a large-scale or perhaps nuclear conflict. &nbsp,

The initiative under development is on a 1, 500-acre page 30 kilometers south of Beijing, according to the FT report, newly-analyzed dish images revealed. The photographs showed at least 100 crane operating over a five-square-kilometer place.

According to the report, military experts believe the facility will house high-level bunkers to protect the Chinese Communist Party (CCP)’s ( CPP ) leaders in the event of a major conflict. It claimed that midway through the 20th century the hospital had been constructed.

According to some, the project’s name,” Beijing Military City,” may eventually become the largest military command centre in the world. &nbsp,

FT reported that security guards blocked writers who attempted to travel near the building site. The blog is a military-related place, according to a local business owner. &nbsp,

The document coincided with US President Donald Trump’s contact for building an wide, next-generation” Iron Dome” missile defence weapon for the island US. The weapon, which will cover many more ground than Israel’s, may be designed to deflect intercontinental ballistic missiles and hypersonic missiles. &nbsp,

As China observes the Chinese New Year on January 28 through February 4, the country’s Foreign Ministry has yet to respond to the FT review and Trump’s Iron Dome system. &nbsp,

It is no mystery, however, that China now has nuclear tanks and underwater military command centers. In 2017, China Central TV reported that the PLA’s control office in Xishan in west Beijing is 100 feet beneath. According to the statement, PLA soldiers have been directing military exercises that since 2013.

” Our land adopts an active security strategy”, Qian Qihu, a Taiwanese military expert, told CCTV in an interview in August 2022. ” As we don’t fire the first shot, we need to protect ourselves from our enemy’s first attack, then we can fight back”.

” Our corporate arms must be fully protected. We may be able to keep ourselves safe from any of the enemy’s problems, including nuclear hits”, Qian said. ” As the army’s methods of attacks continue to evolve, our protection techniques also need to develop. And we shouldn’t rely on just one security tactic.

After graduating from Harbin Engineering University in 1961, Qian was transferred to the Soviet Union’s Kuybyshev Military Engineering Academy, which is now known as the Combined Arms Academy of the Russian Federation, to analyze military architecture and geography.

In Kuybyshev ( also known as Samara before 1935 and after 1991 ), Qian learned how the Soviet Union constructed a vault in 1942 for its supreme leader Joseph Stalin.

The service, 37 meters below the surface, was aimed to get Stalin’s other military command offices. However, it was never used by Stalin, and it even served as a 1990s visitor attraction.

After China successfully tested its first hydrogen weapon in June 1967 with the help of the Soviet Union, Qian led China’s growth of nuclear-resistant properties. &nbsp,

As the West developed large artillery projectiles ( MOP) capable of destroying targets hundreds of meters below the surface, Qian led a team of researchers to style underground tanks in the 1980s.

Today, the United States ‘ GBU-57A/B MOP may reach 60-meter-thick plaster and as far as 200 feet underground. &nbsp, &nbsp,

Hsu Yen-chi, a researcher for the Taipei-based Council on Strategic and Wargaming Studies, told the media that the Beijing construction project is more like an operational body or a sizable training facility than a radioactive basement.

In fact, the Army has previously located a location close to where it would build its atomic basement. &nbsp,

In January 2018, Qin Dajun, a lieutenant scientist at the Institute of Geology and Geophysics, Chinese Academy of Sciences, told the South China Morning Post that Chinese analysts found a solutional bunker suitable for building a nuclear-resistant basement.

He said the large stone cave, located at the Xishan Forest Park, 20 km southwest of Beijing, has a healthy water supply. He said the grotto is 2, 000 feet beneath, compared with the degree of 2, 200 feet of Krubera Cave in Georgia.

Qin made his remarks after North Korea defied Beijing’s orders to examine its nuclear weapons in 2017. &nbsp,

Even if the CCP has the resources and a heavy cave to construct a nuclear basement, according to some observers, it would not be wise to cover all gathering leaders in a single location during a war. &nbsp,

Canada-based Chinese critic Wen Zhao&nbsp, says&nbsp, on his YouTube channel that when a war breaks out, CCP officials may disguise in different areas to improve their success chances. He claims that a mega-military command center will trigger more enemy military assaults than usual. &nbsp,

In fact, some other observers predicted that CCP General Secretary Xi Jinping would relocate to Xian in Shaanxi during the war because the city’s high mountains and missile systems make it safe for the city. &nbsp,

In 1900, when the troops of the Eight-Nation Alliance, led by the US, France and Germany, marched into Beijing, Qing Empress Cixi fled to Xian, where she claimed to enjoy hunting, and stayed there for a year.

Yong Jian contributes to the Asia Times. He is a Chinese journalist who specializes in Chinese technology, economy and politics. &nbsp,

Read: Why China’s Ice Silk Road has Trump up in Arctic arms

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Will DeepSeek deep-six the US economy? – Asia Times

By selling technology companies to immigrants, America has financed a current account deficit that soared to US$ 1.2 trillion in 2024. Tech stocks, however, are trading at valuations not seen since 2000, when the NASDAQ Composite began a descent that wiped out 75 % of its market capitalization by 2002.

If expectations deteriorate regarding synthetic intelligence’s ability to generate revenue, was a technology crash lead to a financing crisis for the United States? The question of the January 27 collision in AI-related stocks in response to less expensive and more effective Chinese rivals still lingers. Every capital investment in the world pays close attention to these issues.

Graphic: Asia Times

Europeans stopped buying US debts of all kinds – Treasury, loan, and business – after the post-Covid prices of 2021 and the Federal Reserve’s subsequent rise in interest rates. That signaled the end of a 40-year bulls industry in US securities. From a 1981 peak of 15 %, the US 30-year bond yield fell in a nearly straight line to an August 2020 low of just 1.41 %.

The inflationary wave of 2021-2022 put an end to this bull work. In March 2022, moreover, the US and its allies seized half of Russia’s$ 600 billion in foreign exchange reserves, prompting other central banks to shift away from US Treasury securities to gold and other assets.

However, the world’s appetite for American tech stocks has been stagnant for the past ten years, which was rekindled by the development of Large Language Models ( LLMs) last year. Are raised valuations for AI-related shares justified? Which two aspects affect how quickly and which industries are most likely to make money from AI?

China’s DeepSeek R1 type appears to have made a model performance discovery: tale layout and related improvements reduce the amount of processing required by one or two orders of magnitude.

DeepSeek, also, offers its unit at a small fraction of the price that its US competitors then charge. That is not always detrimental to the overall US tech sector. If China has a better systems, US companies may choose it speedily, and lower costs for AI simulation does benefit the users of AI models.

US and China compete in seven distinct subcategories of AI uses. China leads most of them, and its Artificial skills are likely to strengthen it. They are

  1. Manufacturing: China has poured huge resources into stock technology. One test is the number of companies outfitted with devoted 5G systems, which support AI applications. China claims 10, 000 for installations, while the US has only a few hundred, concentrated in the automobile industry. The benefit is enormously advantageous for China, and breakthroughs in AI are likely to help. However, US production has had a small influence on equity valuations.
  2. Internet of Things: China is back in simplifying vehicles and warehousing, with entirely mechanical stores now in operation.
  3. China is now a major manufacturer of professional computers, installing more industrial computers each year than the rest of the world combined.
  4. China leads the so-called low level market, which was first cited by federal planners in a December 2024 working papers. Drone taxis, drone deliveries, and other applications are currently a$ 100 billion industry in China, and they are projected to double by 2026.
  5. Autonomous cars: We’ll call this a toss-up between the US and China, although China now has autonomous car companies operating on a smaller scale.
  6. Huge Language Models: afterwards, a toss-up. The Philippines ‘$ 40 billion call center business, which saw the most potential gain from AI systems, includes the gains made by LLMs. However, at this point, there are no guarantees that Bachelor applications will be approved for all of their possibilities because they are so varied and extensive.
  7. Biotech: The US has a distinctive advantage with a powerful medical development system. China has a direct in health statistics, but America’s advanced of large pharmaceutical companies, businesses and venture entrepreneurs give it an edge.

The big question is about LLM’s timing. Although the payoff might be significant, it may not be as quick as anticipated.

LLM deployment in the enterprise still has little to do with organizational performance and human adaptation ( management buy-in, workflow adjustments, etc. ). seems to be years away. Cost savings for specific categories of expenses, such as call centers or repetitive coding tasks, may be easily realized. However, the development of AI for higher-skill work is still in its infancy.

What does this mean for Nvidia’s chipmakers? On the assumption that Nvidia GPUs will provide a lot of this activity, one could argue a bullish case for Nvidia based on all of the AI sectors listed above. However, this hypothesis requires closer scrutiny of Nvidia’s competitive advantages.

Nvidia has a greater advantage in computation when training language and vision models, but less so when inference ( running the resulting models to get useful results ) is at its disposal. Notably, Huawei’s Ascend AI chips already perform fairly well with the new DeepSeek models, with comparable or even better cost performance than the weakened Nvidia H800s ( the weakened Nvidia chip that was cleared for export to China ) &nbsp.

Additionally, the case that the top US tech companies ( the so-called Magnificent Seven ) will control equity returns going forward is much weaker than the market is currently perceptive of it. If we are right, and tech market valuations shrink to some significant extent, what are the macroeconomic implications? Key capital flows are more dependent on a small number of very large companies than at any other time in US history.

Let’s say foreigners reduced their purchases of tech stocks as the value of the stocks declines. The United States would need to sell more bonds to both domestic and foreign investors to pay off its current account deficit and federal budget deficit. The chart below shows the amount of new Treasury debt bought by US banks, US households, foreign official institutions, and foreign private investors, respectively.

Banks stepped in and reabsorbed the$ 4 trillion in Covid subsidies that were funded by the Treasury debt, but by 2023 they had exhausted their savings deposits. Households, who were drawn to the higher interest rates on Treasuries, saw the biggest increase in new investment in Treasury securities. Additionally, foreign private investors decreased their Treasury holdings. &nbsp,

A full-blown financial crisis is most unlikely. The cash-burning dotcoms of 2000 have been replaced by cash-rich monopolies like Microsoft, Google, Apple, Amazon and Meta. By offering higher bond yields to domestic and international investors, the United States can adjust to an air-pocket in the demand for its tech stocks.

However, the DeepSeek shock exposes flaws in Big Tech’s core strategies as well as in the stratospheric valuation of its best-performing stocks. The outcome is likely to be a combination of persistently higher interest rates, slower growth, a decline in wealth, and strong economic headwinds.

Graphic: Asia Times

The S&amp, P’s technology sector, correspondingly, trades at a P/E of 37, compared to an overall P/E for the S&amp, P 500 of 26. That accounts for the largest portion of the difference between the lofty valuations of American stocks and those of European, Japanese, and Chinese stocks.

Graphic: Asia Times

A brass-tacks gauge of equity valuation is the free cash flow (FCF ) yield, namely the ratio of cash income to market price. Investors accept less current income because they anticipate higher income in the future, the higher the FCF is expected to be. For the S&amp, P 500 as a whole, FCF is below 3, a level not seen since the eve of the tech stock crash of 2000.

Graphic: Asia Times

For a monopoly like Microsoft, the free cash flow yield has fallen to just 2, the lowest on record.

Graphic: Asia Times

Between 2020 and 2024, Big Tech invested more than double in capital expenditures, and it is still investing heavily in AI-supporting data centers. The DeepSeek shock raises questions about the viability of these plans economically: If Chinese developers can create cutting-edge models using innovative model architecture designs, the raw computing power under development could be significantly overvalued.

Graphic: Asia Times
Graphic: Asia Times

To entice price-sensitive buyers into the Treasury market, the US government—still running a record peacetime non-recession deficit of 6 % to 7 % of GDP—probably will have to offer higher yields. That’s a problem for the economy and also a problem for the Treasury, which is already paying$ 1 trillion a year in interest, nearly quadruple the service cost of America’s national debt in 2020.

It also puts a headwind in front of the US economy for interest-sensitive activity, particularly housing. Longer-term, the US runs the risk of an Italian-style spiral, in which the rising cost of debt service eats away at the budget and limits what the federal government can do to support the economy.

Steve Hsu is professor of theoretical physics and of computational mathematics, science, and engineering at Michigan State University, and the founder of several AI startups. Follow him on X at @hsu_steve. David P. Goldman serves as Asia Times ‘ deputy editor. Follow him on X at @davidpgoldman

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The profundity of DeepSeek’s challenge to America – Asia Times

The DeepSeek artificial intelligence ( AI ) system from China poses a significant challenge for America, which raises questions about the US’s overall strategy in dealing with China. DeepSeek offers creative alternatives that begin from a strong point of origin.

America believed that by monopolizing the use and development of complex computers, it would always ruin China’s technological progress. In fact, it did not happen. The creative and resourceful Chinese discovered engineering solutions to cross British restrictions.

It set a law and something to consider. We will see why it may happen with any upcoming American technologies. That said, American tech remains the opener, the force that opens fresh borders and perspectives. &nbsp,

Difficult straight competitions

The issue is rooted in the modern “race.” If the contest is purely a straight game of modern catch-up between the US and China, the Chinese—with their brilliance and vast resources — may maintain an almost overwhelming benefit.

For instance, China produces nearly four million engineering graduates annually, which is nearly twice as many as the rest of the world combined, and has a large, semi-planned economy that you concentrate resources on pressing needs in a way that America can’t even compare. &nbsp,

Beijing has thousands of engineers and billions of dollars to spend without the need for quick financial results (unlike US businesses that have market-driven responsibilities and expectations ). Therefore, China will probably always catch up to and overtake the latest National improvements. It does near the technology gap that the US creates. &nbsp,

Beijing is not required to look for advances anywhere in the world or use resources to promote development. In America, all the empirical work and economic spend have already been completed.

The Chinese you see what works in the US and invest money and top talent in specific projects while putting a rational bet on minor improvements. Even without taking into account potential industrial espionage, Chinese innovation will take care of the rest. &nbsp,

China will always have to get up, though America may continue to be the inventor of new discoveries. The US might complain,” Our technology is superior” ( for whatever reason ), but the price-performance ratio of Chinese products could keep winning market share. This could lead to a push on US businesses ‘ markets, and America could find itself struggling to compete as a whole, even to the point of losing. &nbsp,

It is not a comfortable situation, one that might just change drastically on either side. In horizontal terms, there is already a “more smash for the buck” active, similar to what caused the USSR to fail in the 1980s. Nowadays, however, the US dangers being cornered into the same hard place the USSR when faced. &nbsp,

In this framework, easy modern “delinking” does not suffice. It does not suggest that the US should abandon its delinking guidelines, but something more detailed might be required. &nbsp,

Tried technology detachment&nbsp,

In other words, the concept of natural and straightforward scientific detachment may not work. America and the West are more in need of China. There must be a 360-degree, defined strategy by the US and its friends toward the world—one that incorporates China under certain circumstances. &nbsp,

If America succeeds in crafting such a technique, we may see a medium-to-long-term platform to avoid the risk of another world battle. &nbsp,

China has perfected the Japanese&nbsp, kaizen&nbsp, type of progressive, marginal changes to existing systems. Through&nbsp, kaizen&nbsp, in the 1980s, Japan hoped to beat America. Due to poor business choices and Japan’s firm development model, it failed. But with China, the story may vary.

China is no Japan. It is larger ( with a population four times that of the US, whereas Japan’s was one-third of America’s ) and more closed. The Japanese yen was fully convertible ( though kept artificially low by Tokyo’s central bank’s intervention ) while China’s present RMB is not.

But the historical parallels are impressive: both Japan in the 1980s and China now have Earnings about two-thirds of America’s. Also, Japan was a US military alliance and an open society, while nowadays China is both.

For the US, a distinct effort is then required. To expand world markets and proper spaces, which are the focus of US-China conflict, it may create integrated alliances. China now recognizes the value of bilateral and international space, in contrast to Japan’s 40 years ago. Beijing is attempting to establish its own ally with the BRICS.

While it struggles with it for many causes and having an alternative to the US dollar global position is farfetched, Beijing’s new global focus—compared to its history and Japan’s experience—cannot get ignored. &nbsp,

A new, included growth model that expands the population and workforce are in line with the United States may be proposed by the US. It may strengthen connectivity with allied nations to create a area “outside” China—not obviously angry but distinct, porous to China only if it adheres to clear, clear rules. &nbsp,

This wider scope would help counteract America’s socioeconomic and human resource imbalances, increase British power in general, and foster international cohesion.

It may change the individual and financial resources used to support the current technological race, influencing its outcome in the end. &nbsp,

Bismarck inspiration&nbsp,

For China, there is another traditional law —Wilhelmine Germany, devised by Bismarck, in the late 19th and early 20th centuries. Back then, Germany imitated Britain, surpassed it, and turned” Made in Germany” from a mark of shame into a symbol of value.

Germany became more educated, free, forgiving, democratic—and even more intense than Britain. Without the anger that precipitated the demise of Wilhelmine Germany, China had the freedom to choose this course. &nbsp,

Does it? Is Beijing prepared to be more accepting and open-minded than the US? In theory, this could allow China to beat America as a modern greeting. However, for a design clashes with China’s traditional legacy. The Chinese empire has a tradition of” conformity” that it struggles to escape. &nbsp,

Is the US bring friends closer together without alienating them, in the US’s case? In principle, this way aligns with America’s advantages, but concealed problems exist. The American dynasty now feels betrayed by the globe, particularly Europe, and reopening relationships under new guidelines is complicated. A revolution president like Donald Trump might want to try it. Did he? &nbsp,

The US, China, or both must change in this manner for the sake of peace. If the US unites the world around itself, China may be isolated, dried up and turn inside, ceasing to be a danger without damaging battle. If China opens up and democratizes, a core reason for the US-China conflict dissolves.

If both reform, a new global order could emerge through negotiation. &nbsp,

This article was originally published on Appia Institute, and it is now licensed for resale. Read the original here.

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