Trump China visit; China’s Next Generation Industrial Policy; Standardizing and developing AI agents; No more deflation?; Ding Xuexiang visits Huawei
There will be no newsletter Tuesday, May 12 as I will be attending the first day of the US Chamber of Commerce’s China Business Conference.
Today’s top items:
1. Trump China visit - The PRC confirmed that President Trump will meet with Xi this week. He will arrive May 13 and depart after lunch Friday. According to the PRC, “Chinese President Xi Jinping and U.S. President Donald Trump will have an in-depth exchange of views on major issues concerning China-U.S. relations and world peace and development.”
Vice Premier He Lifeng will lead a delegation to South Korea on May 12-13 to hold economic and trade consultations with Treasury Secretary Bessent. Such a meeting on the eve of the Trump-Xi summit is a sign that they are still working on deliverables for the visit. Expectations should be low for this visit, but you never know what Trump may decide to announce. I am of the view that the “China has the upper hand” takes about the upcoming Trump visit to Beijing are overblown, or at least that is not at all how the US side views the situation, but we shall know soon enough when we learn what significant, credible outcomes there are, if any.
The US continues to announce Iran-related sanctions affecting PRC firms, with the Friday entity listing of three satellite firms and today’s announcement by the Department of the Treasury’s Office of Foreign Assets Control (OFAC) that it is “designating 12 individuals and entities for their roles enabling the Islamic Revolutionary Guard Corps’ (IRGC) sale and shipment of Iranian oil to the People’s Republic of China.”
A small group of CEOs will join Trump in China:
I believe this is the list of CEOs invited; it is not clear all will attend. Nvidia’s CEO surprisingly did not make the cut, so that probably means there will be no deal to sell more Nvidia chips to China.
Bessent will be in Japan Tuesday and meet with Prime Minister Takaichi, but I think the Japanese are disappointed Trump is flying all the way to Asia without stopping in Tokyo given all the pressure the PRC is exerting on the country.
2. China’s Next Generation Industrial Policy - A new report, prepared for the U.S. Chamber of Commerce by the Rhodium Group, analyzes the evolution of Chinese industrial policy a decade after the “Made in China 2025” initiative. The authors argue that Beijing is entering a more systemic and pervasive phase of state intervention, shifting toward an “industrial policy of everything” that spans raw materials, mature industries, and frontier technologies like AI and quantum computing. Despite domestic fiscal constraints, the Chinese government is recentralizing resources and utilizing state-directed financing to maintain its manufacturing edge. This strategy has resulted in a “China Shock 2.0,” characterized by a massive manufacturing trade surplus and deepening global dependencies on Chinese inputs. The sources highlight that China’s growing trade dominance is often masked by price deflation, making its actual market share gains in volume even more significant than value-based data suggests. Ultimately, the report warns that the window for international policy responses is closing as China further entrenches its position in global value chains.
The report provides extensive detail on how China is actively working to bind global supply chains to its domestic manufacturing base and prevent other countries from diversifying their reliance away from China. By making alternative supply chains nearly impossible to develop, China can incentivize foreign firms to relocate production inside China, further concentrating global dependence and increasing its geopolitical leverage.
You can read the report here.
3. State Council Executive Meeting - Li Qiang chaired a State Council Executive Meeting on Saturday “to study and implement the spirit of General Secretary Xi Jinping’s important remarks on the current economic situation and economic work, as well as his important remarks at the symposium on strengthening basic research.” Strengthening domestic circulation, expanding and upgrading the service sector, planning and construction of the “six networks” - the water network, the new power grid, the computing power network, the new-generation communications network, urban underground pipe networks, and the logistics network, and “continued advancement of risk resolution in real estate, local government debt, small and medium-sized financial institutions, and other areas”, were among the agenda items. I have posted a full translation of the readout here.
4. Standardizing and developing AI agents - On Friday the Cyberspace Administration of China, National Development and Reform Commission, and Ministry of Industry and Information Technology jointly released the “Implementation Opinions on the Standardized Application and Innovative Development of Intelligent Agents”. I have posted a translation of the document here, and a translation of the accompanying Q&A with a “relevant official from the CAC” here. That official explains why they issued the “Opinions”:
In recent years, AI agent products represented by mobile phone assistants, terminal-side intelligent stewards, and cloud-based agents have emerged at an accelerating pace, taking on the form of large-scale deployment and greatly facilitating people’s work and lives. At the same time, characteristics of AI agents such as high autonomy and elevated permissions have also brought security risks including privacy leakage, unauthorized actions, and behavioral loss-of-control. It is necessary to coordinate development and security, and to promote the standardized application and innovative development of AI agents.
答：近年来，以手机助手、终端智能管家、云端智能体等为代表的智能体产品加速涌现，呈现规模化应用态势，极大便利人们工作生活。同时，智能体高自主性、高权限等特性也带来了隐私泄露、越权操作、行为失控等安全风险，需要统筹发展与安全，促进智能体规范应用和创新发展。
The Party Central Committee and the State Council attach great importance to the development of artificial intelligence. At the 20th collective study session of the Politburo of the CCP Central Committee, General Secretary Xi Jinping stressed the need to grasp the trends and laws governing AI development; to accelerate the formulation and improvement of relevant laws and regulations, policies and institutions, application standards, and ethical norms; and to build systems for technical monitoring, risk early warning, and emergency response, so as to ensure that artificial intelligence is safe, reliable, and controllable. In August 2025, the State Council issued the “Opinions on Deepening the Implementation of the ‘AI+’ Initiative,” which—focusing on areas including science and technology, industrial development, consumption upgrading, people’s livelihoods and welfare, and governance capacity—set a phased target of being the first to achieve broad and deep integration of AI with key sectors by 2027, with adoption rates for new-generation intelligent terminals, AI agents, and similar applications exceeding 70 percent.
党中央、国务院高度重视人工智能发展。习近平总书记在中共中央政治局第二十次集体学习时强调，要把握人工智能发展趋势和规律，加紧制定完善相关法律法规、政策制度、应用规范、伦理准则，构建技术监测、风险预警、应急响应体系，确保人工智能安全、可靠、可控。2025年8月，国务院印发《关于深入实施”人工智能+”行动的意见》，以科学技术、产业发展、消费提质、民生福祉、治理能力等领域为重点，提出到2027年，率先实现人工智能与重点领域广泛深度融合，新一代智能终端、智能体等应用普及率超70%的阶段性目标。
The formulation and issuance of the Implementation Opinions is a concrete measure for carrying out the “Opinions on Deepening the Implementation of the ‘AI+’ Initiative.” Oriented toward driving technological innovation, enhancing governance capacity, building an industrial ecosystem, and improving people’s livelihoods and welfare, it seeks to create a sound policy environment, leverage the demonstration effect of model use cases, and coordinate the high-quality development, high-level security, and high-efficiency governance of AI agents.
制定出台《实施意见》是贯彻落实《关于深入实施”人工智能+”行动的意见》的具体举措，以推动科技创新、提升治理能力、构建产业生态、提升民生福祉为导向，营造良好政策环境，发挥典型场景示范效应，统筹推动智能体高质量发展、高水平安全、高效能治理。
5. No more deflation? - April CPI (1.2%) and PPI (2.8%) both increased in April from a year earlier, and more than forecast. The Iran war and rising energy prices are helping end deflation, though perhaps not in the way the authorities prefer. The anti-involution campaign may also be starting to have an impact.
6. Ding Xuexiang basic research inspection tour - Last week Ding Xuexiang made an inspection tour about basic research in Fujian, Shanghai, and Beijing. This follows the April 30th symposium on strengthening basic research. According to the readout of Ding’s trip, he
pointed out that General Secretary Xi Jinping attended the symposium on strengthening basic research and delivered an important speech, issuing a call to further consolidate the foundations of building a strong country in science and technology on the new journey of the new era. We must thoroughly study and implement the spirit of General Secretary Xi Jinping’s important speech, give play to the advantages of the new whole-nation system, and comprehensively raise the level of basic research and the capacity for original innovation with the perseverance and resolve of “sharpening one sword over ten years.”
Ding visited the Chinese Academy of Sciences, the Huairou National Laboratory, Shanghai Jiao Tong University, the University of the Chinese Academy of Sciences, CATL and Huawei’s Lianqiu Lake R&D Center. The CCTV report on Ding’s visits shows him meeting Ren Zhengfei at Huawei’s Chip Fundamental Technology Research Laboratory.
