US-China Geneva"détente" may be breaking; US to start revoking PRC student visas; China-PIC meeting; EV sector bloodbath coming?
The Geneva “détente” may be breaking.
Late Wednesday afternoon the US State Department announced a crackdown on visas for PRC students:
Under President Trump’s leadership, the U.S. State Department will work with the Department of Homeland Security to aggressively revoke visas for Chinese students, including those with connections to the Chinese Communist Party or studying in critical fields. We will also revise visa criteria to enhance scrutiny of all future visa applications from the People’s Republic of China and Hong Kong.
I doubt the Trump administration will narrowly define “connections to the Chinese Communist Party or studying in critical fields”, and so this move will likely have massive repercussions and unintended consequences, some of which may benefit the PRC and harm the US, not to mention the personal cost for those students already studying at US schools who will now be kicked out of the country.
On Wednesday the Financial Times reported that the US has banned the sale of EDA (Electronic Design Automation) software to PRC users, and the New York Times reported that US will suspend export licenses for some products and technologies used by COMAC for its C919 plane, probably in response to frustration over the lack of movement by the PRC in issuing export licenses for rare-earth magnets for US companies.
The '“détente” is not really a détente and whatever it is it is very fragile.
Summary of today’s top items:
1. C919 and rare earths - It looks like the Trump Administration is responding to the lack of expected new licenses for exports of rare-earth magnets as part of the Geneva agreement by suspending some export licenses for sale of US technology and products to COMAC, the developer of the C919 commercial aircraft. Blocking US technology and components for that plane will likely cripple the program in the near-term, at least for international sales.
2. US bans EDA software sales to China? - The Financial Times reports that the US has banned the sales of EDA (Electronic Design Automation) software, which is used to design chips. I believe PRC firms need to use US EDA software to be able to get chips fabbed at TSMC, so this could cause some serious problems for some Chinese firms. However the CEO of Synopsys, one of the leading US EDA firms, told CNBC that they have not received any notice about this ban.
3. PRC tries to assuage EU rare earths concerns - China Daily reports that MOFCOM held a briefing with “Chinese and European semiconductor-related enterprises on rare earth export control procedures, indicating a potential relaxation of restrictions for EU-linked supply chains so as to better stabilize global industrial chains”. This comes as the EU Chamber of Commerce president warned that “China's export controls on rare-earth minerals threaten to halt production at European manufacturers within days”.
4. EU business sentiment towards China worsening - On Wednesday the EU Chamber of Commerce released the European Business in China Business Confidence Survey 2025 (BCS). The chamber in its release said:
The key finding is that European business confidence currently sits at or around record low levels for many key metrics, despite several policy initiatives geared towards strengthening the economy and the improving business environment for foreign investment having been launched over the past two years. Nevertheless, an increasing share of respondents report onshoring of activities into China, demonstrating the continued competitiveness of Chinese supply chains in this regard.
5. China-ASEAN-GCC Summit - Li Qiang has returned to Beijing from Malaysia, where he attended the first China, the Association of Southeast Asian Nations (ASEAN) and the Gulf Cooperation Council (GCC). The Global Times in an editorial summed up the thrust of the meeting:
The successful convening of the ASEAN-China-GCC Summit in Malaysia has been widely recognized as a "landmark" event of major significance. The Joint Statement of the ASEAN-China-GCC Summit adopted at the summit marks the transition of cooperation among the parties from concept to reality. This summit not only showcased the surging momentum of Global South solidarity but also expanded the horizon of cross-regional cooperation and inter-civilizational integration. The three parties view their differences as opportunities for cooperation and promote development through unity, which not only responds to the common aspirations of Global South countries but also provides a new model of cooperation for the world.
6. Third China-Pacific Island Countries (PIC) Foreign Ministers' Meeting - This PIC Foreign Ministers’ meeting convened in China for the first time. All PIC countries that recognize the PRC were invited. Marshall Islands, Palau and Tuvalu did not attend, nor did Australia or New Zealand. The meeting issued a joint statement and the PRC announced an “Initiative on Deepening Cooperation with Pacific Island Countries on Combating Climate Change”, Climate change is understandably the top issue for these island nations.
7. Do BYD price cuts mark the start of EV sector consolidation? - BYD’s shocking price cuts over the weekend may mark the beginning of the end for many EV firms in the PRC. There are far too many and maybe only a handful have a shot at competing with BYD on price, quality and scale. There is a lot of chatter about unsustainable debt loads in the industry, and which firms are going to go under, and last week the chairman of Changan Automobile raised the idea that there may be an Evergrande-like disaster ahead in the EV sector.