NPC concludes without Zhao Leji; Dalai Lama; Robots and embodied AI; US-China

Summary of today’s top items:

1. NPC concludes - All the draft reports passed at the concluding session, and the government work report passed with 2,882 votes in favor, 1 vote against, and 1 abstention. The most interesting part of the closing session was the absence of NPC Standing Committee chairman Zhao Leji. He missed the meeting because of a “respiratory infection” according to Li Hongzhong, vice chairman of the National People's Congress Standing Committee who was “entrusted” by Zhao to oversee today’s proceedings. At this point I don't see why we should question the official explanation of Zhao Leji’s absence due to illness. If he does not reappear in media in the next 10 days or so then maybe something else is up. Based on the official list of propaganda reports on his appearances, he has had gaps of up to fourteen days in the last year, so we may have to wait a while in the absence of any other credible information. But I doubt that will stop the rumors from flying…

2. Trump-Xi talks seem far away - Bloomberg has an interesting story, with no byline and seemingly written from Beijing, that says the PRC is frustrated by the lack of clarity about what the Trump Administration wants. I think they will have to wait until the tariff and export controls-related studies ordered in the January 20th America First trade Policy Executive Order are done in April. According to Bloomberg one US request is that the People’s Daily newspaper trun a front-page article condemning the fentanyl trade. I am really curious who came up with that request.

3. Legal campaign to prepare for Taiwan takeover - War on the Rocks has a useful article by “military lawyers from the U.S. and Taiwanese armed forces” on the ways the PRC has been preparing for a takeover of Taiwan. It is grim reading, and a reminder that most countries in the world would see a takeover as an internal matter and would do nothing to support Taiwan.

4. Dalai Lama on succession - The Dalai Lama, who turns 90 later this year, has a new book - Voice for the Voiceless: Over Seven Decades of Struggle with China for My Land and My People. In it he says that the next Dalai Lama should be born in the “free world”. In response to a question about his book, the Foreign Ministry spokesperson said:

The Chinese government issued Regulations on Religious Affairs and Measures on the Management of the Reincarnation of Living Buddhas, and respects and protects this method of succession. The reincarnation of Living Buddhas including the Dalai Lama must comply with Chinese laws and regulations as well as religious rituals and historical conventions, and follow the process that consists of search and identification in China, lot-drawing from a golden urn, and central government approval.

So we may end up with two Dalai Lamas, just like there are now two Panchen Lamas, one official and one missing?

5. Expect the PRC to dominate in robots too - Alongside the DeepSeek/AI frenzy there is also a robot frenzy, and for good reason. The PRC is pouring massive resources and policy support into the development of robots, and “embodied AI” - robots with AI to be simplistic - got a mention in Premier Li’s government work report last week:

We will establish a mechanism to increase funding for industries of the future and foster industries such as biomanufacturing, quantum technology, embodied AI, and 6G technology

Semianalysis just issued a sobering report - America Is Missing The New Labor Economy – Robotics Part 1

Automation and robotics is currently undergoing a revolution that will enable full-scale automation of all manufacturing and mission-critical industries. These intelligent robotics systems will be the first ever additional industrial piece that is not supplemental but fully additive– 24/7 labor with higher throughput than any human—, allowing for massive expansion in production capacities past adding another human unit of work. The only country that is positioned to capture this level of automation is currently China, and should China achieve it without the US following suit, the production expansion will be granted only to China, posing an existential threat to the US as it is outcompeted in all capacities.

This is the manufacturing playing field that China has dominated for years now. The country has one of the most competitive economies in the world internally, where they will naturally achieve economies of scale and have shown themselves to be one of most skilled in high-volume manufacturing, at the same time their engineering quality has grown to be competitive in several critical industries at the highest level. This has already happened in batteries, solar, and is well underway in EVs.

Thanks for reading, and look out tomorrow for this week’s episode of Sharp China in which we dig into the NPC and its key policy signals.