US-China Deal?; Rare earths; Xi and the propaganda tea leaves; DeepSeek needs Nvidia; Gold diggers
President Trump said earlier today that the US and China have signed a deal. He gave no details; so far I am hearing it is like the Geneva agreement from a few weeks ago but with more detail. I assume we will learn more soon.
Commerce Secretary Lutnick told Bloomberg:
“That deal was signed and sealed two days ago,” Lutnick said Thursday in an interview with Bloomberg Television.
The agreement codifies the terms laid out in talks between Beijing and Washington in Geneva earlier this month, Lutnick said.
This should mean that US non dual-use rare earth magnets customers should start getting their licenses and shipments processed imminently, no matter the alleged bureaucratic sclerosis. If those licenses do not start flowing and in quantity then the risks of the deal falling apart are high.
Summary of today’s Essential Eight:
1. More rare earth export licenses for EU - It sounds like the PRC is opening the tap a bit more, and the Ministry of Commerce spokesperson said today in response to a question about rare earth export licenses to the EU that “China is accelerating the review of applications for rare earth-related export licenses. A certain number of compliant applications have already been approved according to law, and the review of compliant applications will continue to be strengthened.” So that may be good news, though “compliant application 合规申请” is an important term, as in an article today on the slow approval of licenses, the Wall Street Journal writes:
When companies skip certain questions on their magnet applications to avoid disclosing sensitive intellectual property or details of commercial arrangements, their applications languish or are denied. In some cases, the applicants have then been told to start over and include all of the required information in a new application, which takes 45 days to process
2. Graham Allison predicted a deal soon - On a panel at Summer Davos, the Harvard Professor said there may be a US-China deal in the next week. Bloomberg in their report on his comments wrote “US administration officials do not share Graham’s outlook, according to a person familiar with their thinking”, and I heard plenty of skepticism today about his prediction. Allison also met with Wang Yi. Wang told him that “that China and the U.S. now need to construct a new narrative that can guide future interactions between the two major powers 中美当下就需要构建能够规范未来两个大国交往互动的新叙事”. I wonder what Wang thinks that narrative should be.
3. Xi and the propaganda tea leaves - As I have discussed repeatedly recently, there has been a spate of rumors that Xi has lost power. And I have said repeatedly I am very skeptical of both the sourcing and the substance of those rumors, while acknowledging that the ongoing turmoil in the PLA, including perhaps another round of detentions last week, are a sign that all is not well inside the elite politics black box. The excellent China Media Project, which among other things tracks mentions of top politicians in official propaganda, looked at mentions of Xi in this year compared to previous years and concluded “at least in the headlines, China’s most powerful leader in generations looks just fine.”
That is not dispositive, but there are lots of “propaganda tourists” among the rumor amplifiers who claim that an alleged absence means he is in trouble. That observable evidence does not exist, so far.
The Politburo should meet in the next few days, I assume/hope we will get a public readout. The June 2024 Politburo meeting announced that the Third Plenum would be held less than three weeks later. I doubt the Fourth Plenum will be held so soon given all the work that needs to go into the 15th Five-Year Plan, but if we do get a June readout perhaps we will learn more about the fate of CMC vice chair He Weidong, as increasing chatter I am hearing suggests.
4. Discord at the SCO Defense Ministers meeting - India did not sign a joint statement because “India wanted concerns on terrorism reflected in the document which was not acceptable to one particular country”. That one country would be Pakistan. And for all the talk of warning PRC-India ties, Indian media reports that “China has halted shipments of specialty fertilisers used to increase the yields of fruits, vegetables and other remunerative crops to India for the last two months” even as it ships them to other countries.
5. Opinion on Comprehensively Advancing River Protection and Management - The General Office of the State Council released the “Opinion on Comprehensively Advancing River Protection and Management”. The document states:
The main objectives are: by 2035, to have a basically complete modern river basin flood control and disaster mitigation system, significantly improved flood security capacity, enhanced water conservation and intensive utilization, and significantly improved urban and rural water supply security. Ecological and environmental quality of rivers should be comprehensively improved, water ecosystems healthy and stable, water culture thriving and influential, and river governance systems more complete—with more harmonious relations between people and water...
6. DeepSeek hobbled by lack of access to Nvidia chips? - The Information reports that DeepSeek may be runing into challenges around adoption of its next LLM R2 “due to a shortage of Nvidia server chips in the country”.
7. Chinese Modernization and Building a Culturally Strong Nation - He Yiting, Chairman of the China Reform Forum and former Executive Vice President of the Party School of the CPC Central Committee (National Academy of Governance has a long article in Study Times titled “Chinese Modernization and Building a Culturally Strong Nation”. The themes are familiar, but it is always illuminating to hear them articulated so clearly:
China modernization is a modernization that coordinates material civilization and spiritual civilization. It asserts that material abundance and spiritual richness are fundamental requirements and lofty pursuits of socialist modernization. A key goal of China modernization is the comprehensive enrichment of material goods and the full development of individuals—a contrast to Western modernization, which centers on capital rather than people, pursuing maximum profits rather than serving the vast majority. This Western path has led to values distorted by materialism, such as worship of money and hedonism. In contrast, China modernization adheres to a dual-pronged strategy—building material civilization while fostering moral and cultural growth. It aims to deepen the material base of modernization and elevate conditions for the people’s well-being, while vigorously promoting advanced socialist culture, reinforcing ideological education, inheriting Chinese civilization, and fostering harmony between material prosperity and spiritual progress.
Those influencers who are applying for the “China-Global Youth Influencer Exchange Program” this summer might want to read it, though honestly I doubt they care. This is what they are signing up for:
To establish a positive image of contemporary China and present a true, multidimensional, and comprehensive picture of the country, it is essential to restructure the international communication framework, deepen reform and innovation of mainstream media’s international communication mechanisms, and strengthen overall coordination in external propaganda work. Innovative approaches to online external communication must be adopted, using precise and audience-specific methods tailored to different regions, countries, and groups to globalize, regionalize, and segment the storytelling of China’s narratives and voices, thereby enhancing the appeal and effectiveness of international communication. Efforts must be made to accelerate the development of China’s discourse and narrative systems, improve methods of international communication, actively shape the global agenda, seize the moral and discursive high ground, and enhance professionalism and penetration in external messaging. This will ensure that China’s viewpoints, solutions, and image become deeply rooted in global public perception.
8. Revenge on Gold Diggers - The simulation game “Revenge on Gold Diggers 情感反詐模擬器” looks nuts, and it is now the top game on in China for the Steam online gaming platform. As we discussed in yesterday’s Sinocism Live about the China online game market, the global Steam platform has surprisingly remained unblocked in China. It would be ironic if this game, which is arguably an example of the claim that the “Western path has led to values distorted by materialism, such as worship of money and hedonism”, caused problems for Steam.