Latest US-China "framework"; EU's rare earths stress; 80th Anniversary of Taiwan’s Restoration; Financial Street Forum; PLA; B30A chips
President Xi Jinping and President Trump are world-class leaders [世界级领袖] who have interacted over a long period and respect each other” - Wang Yi to Marco Rubio
Summary of today’s top items:
1. Another US-China framework deal - US and PRC negotiators met in Kuala Lumpur on October 25, the 75th anniversary of the Chinese People’s Volunteers going abroad to fight in the War to Resist U.S. Aggression and Aid Korea. Both sides said they had once again reached a consensus over the trade frictions, and will take it to their respective leaders, who will meet in South Korea on Thursday. Details of the latest consensus framework are light, though the US side has said among other actions that they expect the PRC to delay implementation of the expanded rare earths-related export controls by a year and buy soybeans, and that the US will not be imposing the additional 100% tariff. Markets were happy, PRC propaganda organs are making positive statements, and so perhaps we are back at some sort of 2019 deal that stabilizes things for a bit but does not address the fundamental issues in the relationship.
Foreign Minister Wang Yi and US Secretary of State Marco Rubio had a call in what looks a step in preparing for the Trump-Xi meeting later this week. Wang Yi said that “President Xi Jinping and President Trump are world-class leaders [世界级领袖] who have interacted over a long period and respect each other”:
Wang Yi said that China–U.S. relations influence the course of the world, and that a healthy, stable, and sustainable bilateral relationship serves the long-term interests of both countries and is the common expectation of the international community. President Xi Jinping and President Trump are world-class leaders who have interacted over a long period and respect each other; this has become the most valuable strategic asset in China–U.S. relations. Recently, China–U.S. economic and trade relations encountered new twists. Through the Kuala Lumpur economic and trade talks, the two sides clarified their positions, enhanced mutual understanding, and reached a framework consensus on reciprocally resolving the current urgent economic and trade issues. This once again proves that as long as both sides fully implement the important consensuses reached by the two heads of state, uphold the spirit of equality, respect, and reciprocity, persist in resolving differences through dialogue, and abandon the practice of resorting to pressure at every turn, it is possible to stabilize and move the relationship forward. He expressed the hope that both sides would move toward each other, make preparations for high-level interactions, and create conditions for the development of bilateral relations.
2. EU rattled by rare earths controls - The expanded rare earths-related export controls have also hit the EU hard, and I do not think the US-China discussions included an extension for any country other than the US. The PRC is sending a team to Brussels this week to talk about the export controls.
3. Commemoration Day of Taiwan’s Restoration - October 25 was designated on October 24 by the Standing Committee of the 14th National People’s Congress (NPC) as the Commemoration Day of Taiwan’s Restoration. On Saturday the 25th there was a conference “Commemorating the 80th Anniversary of Taiwan’s Restoration” at which Wang Huning gave a speech. Wang said:
We will adhere to the guideline of “peaceful reunification and One Country, Two Systems,” and are willing, on the basis of the one-China principle and the “1992 Consensus,” to conduct dialogue and consultations on cross-Strait relations and national reunification with people of insight from all sectors in Taiwan. With utmost sincerity and maximal efforts, we will strive for the prospect of peaceful reunification. We will fully take into account Taiwan’s realities and fully look after the interests and feelings of Taiwan compatriots, but we will never leave any space for any form of “Taiwan independence” separatist activities…
After peaceful reunification, with the strong motherland as a backing, Taiwan’s economic development will be better, its energy and resource security will be better, its infrastructure construction will be better, its security guarantees will be better, and its external exchanges will be better. The livelihoods and well-being of Taiwan compatriots will be better, and their spiritual and cultural life will be richer. Together with their compatriots on the mainland, Taiwan compatriots will share the dignity and glory of our great country and embrace a bright future of prosperity and stability
On the 26th and 27th Xinhua ran signed commentaries by “Zhong Taiwen 钟台文”, a pen name that likely is for authoritative, very high-level commentaries about Taiwan. The October 27 commentary makes nice-sounding promises and offers plenty of carrots:
The reunification we seek is not merely formal reunification; more importantly, it is spiritual affinity between compatriots on both sides. On the premise of safeguarding national sovereignty, security, and development interests, after peaceful reunification, Taiwan’s current social system and way of life will be fully respected; “patriots administering Taiwan” and a high degree of autonomy will be implemented; the broad masses of Taiwan compatriots will truly be masters of their own home; and private property, religious beliefs, and lawful rights and interests will be fully protected, with deep consideration given to Taiwan compatriots’ love for their homeland...
After reunification, Taiwan will break through economic development bottlenecks and further share the dividends of national development. The deeper and broader cross-Strait economic cooperation becomes, the more hopeful Taiwan’s economy will be for sustainable growth and leapfrog development. Taiwan’s long-standing structural problems will be resolved; traditional sectors such as agriculture and tourism can harness the influx of mainland tourists and the mainland consumer market to gain new vitality. After a cross-Strait common market is established, all Taiwan goods entering the mainland will be tariff-free. Taiwan companies can leverage the mainland’s abundant capital, vast market, complete industrial system, and the opportunities brought by the Belt and Road Initiative to grow stronger, allowing Taiwan compatriots to reap tangible benefits from cross-Strait trade. Industrial chains on both sides will be deeply integrated; Taiwan’s advantageous sectors such as integrated circuits, precision machinery, and biotechnology can complement the mainland’s industrial strengths. Enterprises on both sides are fully capable of developing together and going global hand in hand...
After reunification, Taiwan’s public finances can be dedicated entirely to the people, fully enjoying national resources as a whole. Taiwan will no longer be poisoned by “Taiwan independence” forces and internecine political strife, removing root problems that seriously damage the people’s well-being. Fiscal revenues can be devoted to improving livelihoods; the current defense budget will no longer foot the bill for “Taiwan independence,” and substantial resources can be invested in healthcare, education, elderly care, and other livelihood sectors, truly doing practical, beneficial, and problem-solving work for the people.
4. More on the Fourth Plenum - Over the weekend Xinhua published the customary backgrounder on the preparatory work for the Fourth Plenum. I have translated it in full here. According to Xinhua:
Xi Jinping personally served as the head of the drafting group for the Fourth Plenary Session documents, providing direction and quality control for the drafting of the 15th Five-Year Plan proposals, pouring in immense effort, and playing a decisive role. Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era is the “guiding thread” and the “soul” running through the draft proposals…
The goals are very clear — achieving notable results in high-quality development; making major strides in the level of self-reliance and self-strengthening in science and technology; securing new breakthroughs in further comprehensively deepening reform; making marked improvements in the level of social civility; continuously improving the quality of people’s lives; achieving new and major progress in building a Beautiful China; and further consolidating the national security shield
5. PLA political rectification - PLA Daily has started a new commentary feature titled “Carry Forward Fine Traditions, Deepen Political Rectification 弘扬优良传统 深化政治整训”. Given the ongoing purges it is clear the political rectification needs a lot more work. On Friday, PLA Daily published another editorial in the wake of the He Weidong, Miao Hua et al announcement, writing that:
The military wields the gun, and there must be absolutely no hiding place for corrupt elements within it. Currently, the world situation, national conditions, Party conditions, and military conditions are all undergoing complex and profound changes. The “four major tests” and “four types of dangers” facing our Party persist over the long term. The political tests facing our military are intricate and complex, and various factors that affect the Party’s absolute leadership over the military and erode the political character of the people’s army still exist in reality. Thoroughly investigating and prosecuting corrupt individuals like He Weidong and Miao Hua represents a continuation of the anti-corruption efforts since the 18th Party Congress and a deepening of the reshaping of the people’s army. This has effectively eliminated major political hazards and consolidated the purity and glory of the people’s army. We must fully recognize that our military is forever the Party’s army and the people’s army, fundamentally incompatible with corruption; fully recognize that the anti-corruption struggle relates to the Party’s absolute leadership over the military, to the nature and purpose of the people’s army, and to the long-term stability of the Party and country, making it a major political struggle that we cannot afford to lose and must never lose; fully recognize that seriously punishing corrupt individuals is an important manifestation of the strength of the Party and people’s army, and that the more the people’s army fights corruption, the stronger, purer, and more combat-effective it becomes. We must unwaveringly carry the anti-corruption struggle through to the end and firmly defend the political character of the people’s army.
Also on Friday, I hosted a Sinocism Live discussion with Chris Johnson to talk about the PLA purges and the Fourth Plenum.
6. Highlights from day 1 of 2025 Financial Street Forum - On opening day of the 2025 Financial Street Forum, top regulators outlined a coordinated agenda to steady growth and upgrade China’s financial system. PBOC Governor Pan Gongsheng reaffirmed a supportive, appropriately accommodative stance, pledging flexible use of short-, medium- and long-term tools to keep financing conditions easy. With bond-market conditions improved, he said the central bank will resume secondary-market government bond trading—paused earlier this year amid supply-demand imbalances—to strengthen policy transmission and the yield-curve benchmark role. Pan also advanced the digital yuan, aiming to optimize its management framework and monetary-tier positioning while authorizing more commercial banks as operating institutions, while vowing that “the PBOC will, together with law-enforcement authorities, continue to crack down on the operation and speculation of virtual currencies within China, maintain economic and financial order, and at the same time closely monitor and dynamically assess developments in overseas stablecoins”.
Pan also said the PBOC is “studying and implementing policy measures to support individuals in repairing their credit”, as “iIn recent years, due to force majeure such as the COVID-19 pandemic, some individuals experienced overdue debts; although they later repaid in full, the related credit records have continued to affect their economic lives”.
National Financial Regulatory Administration chief Li Yunze called for a healthier relationship between finance and the public, emphasizing that balancing the real economy and finance is vital for sustained, high-quality development. He previewed a new service model integrating direct and indirect financing, designed to balance “investment in assets” with “investment in people” and broaden inclusion.
CSRC Chairman Wu Qing announced deeper ChiNext reforms to better fit innovative, entrepreneurial firms in emerging fields and deliver more precise, inclusive financing. He also introduced an optimization plan for qualified foreign investors to streamline access, boost operational efficiency, and widen investable scope.
7. Will Trump approve sale of Nvidia B30A chips to China? - We still do not know any of the details of what else beyond tariffs the US side conceded in this latest round of a US-China trade framework. We also do not know if the Chinese would even buy them these powerful Nvidia chips if allowed to. But in the event that there is movement to approve the sale of the B30As, a new paper from the Institute for Progress (IFP) is an excellent primer on why it is a bad idea.
Thanks for reading.