Trade struggle and protracted war; Still no confirmed US-China trade talks; Wang Yi meets Lavrov

The Labour Day holiday starts May 1 and so China will be on holiday from May 1st through May 5th. This will there will be three issues of the newsletters plus an episode of Sharp China.

Summary of today’s Essential Eight:

1. Struggle and protracted war - Beijing Daily’s 长安街知事 social media account posted an article Monday titled Today, it is necessary to revisit On Protracted War. 今天，有必要重温《论持久战》. I have posted the full translation here. It is worth paying attention to given that it is from Beijing Daily, that Cai Qi used to run Beijing, that Cai now oversees propaganda, and it is very much in sync with the constant messaging that the PRC is prepared for a long struggle. But the Chinese side has blinked and created some tariff exemptions, as the US has done, though I am not sure if the tariff exemptions match the list I posted last week. As always it is a challenge to separate the propaganda from reality, but I would bet this article from 长安街知事 is a good indicator of both the seriousness of the resolve as well as an official assessment of increasingly adversarial US-China relations.

There was a phrase in the readout of Friday’s Politburo meeting that I do not think has gotten enough attention. In the Friday Sinocism I wrote that the meeting referred to the trade war as a “struggle:

coordinate domestic economic work with international economic and trade struggle [国际经贸斗争], unwaveringly manage our own affairs well, firmly expand high-level opening-up, focus on stabilizing employment, enterprises, markets, and expectations, and use the certainty of high-quality development to cope with the uncertainty of drastic changes in the external environment.

Xinhua English translated 国际经贸斗争 as “endeavors in the international economic and trade field”. "Struggle" for the audience that matters, "endeavors" for external propaganda...

2. Still no confirmed US-China trade talks - The PRC side said again Monday that “China and the U.S. are not engaged in any consultation or negotiation on tariffs”. US Treasury Secretary Bessent did not confirm or deny President Trump’s claims that he recently spoke with General Secretary Xi, and in an interview with CNBC Monday morning he said “I do have an escalation ladder in my back pocket, and we’re very anxious not to have to use it”.

3. Post-Politburo press conference to explain policies - Officials from the National Development and Reform Commission, Ministry of Human Resources and Social Security. Ministry of Commerce. and the People's Bank of China “ attended a press conference held by the State Council Information Office to introduce policies and measures to stabilize employment and the economy and promote high-quality development”. It was not particularly exciting.

4. Politburo study session on AI - The Politburo held its April study session on Friday. The theme, as conveyed by the CCTV News headline, was “uphold self-reliance and self-strengthening, maintain an application-oriented approach, and promote the healthy and orderly development of artificial intelligence 坚持自立自强 突出应用导向 推动人工智能健康有序发展.” This meeting is more evidence that the US and China have reached the point of no return in building bifurcated AI systems, no matter how much the US might pull back on export controls. The meeting signals more bad news for Nvidia in China:

Xi Jinping emphasized that to seize the initiative and gain the advantage in the AI field, breakthroughs must be achieved in fundamental theories, methods, tools, and more. We must continuously strengthen basic research, concentrate resources to overcome challenges in core technologies such as high-end chips and foundational software, and build an independent, controllable, and collaboratively functioning AI foundational hardware and software system [集中力量攻克高端芯片、基础软件等核心技术,构建自主可控、协同运行的人工智能基础软硬件系统]. We should use AI to lead a paradigm shift in scientific research and accelerate technological innovations and breakthroughs across various fields.

I published a full translation of the readout along with some commentary on Saturday.

5. Private sector promotion law should pass this week - The Standing Committee of the National People's Congress is now in session and it sounds like the draft private sector promotion law will be passed during this session.

6. Wang Yi meets Russian Foreign Minister Lavrov - Wang Yi met with Russian Foreign Minister Lavrov in Rio de Janeiro. Xi is going to Moscow next week. According to the Xinhua readout Wang told Lavrov that:

there have been many new changes in the international situation recently. Change is the norm of this era, but what remains unchanged is the mutual trust and support between China and Russia. The strategic guidance of President Xi Jinping and President Vladimir Putin has always been the fundamental guarantee for the high-level operation of China-Russia relations. Both sides should work together to continuously transform the important consensus of the two heads of state into cooperation results in various fields.

Wang Yi stated that currently, the game between unilateralism and multilateralism is intensifying, and the struggle between hegemony and anti-hegemony is unfolding globally. The unity and cooperation of BRICS countries are showing increasingly important strategic value.