Price controls coming for EVs?; Nvidia CEO in Beijing; Trump to delay US-China tariff deadline?
“There’s so much opportunity, so much confidence in the China market” - Nvidia CEO Jensen Huang in Beijing.
Summary of today’s top items:
1. State Council signals rectification ahead for EV sector - Premier Li presided over a State Council Executive Meeting on Wednesday. According to the official readout the agenda of the meeting was:
to discuss the implementation of key policy measures for strengthening the domestic economic circulation, to hear reports on the preliminary rectification of problems found in the audit of the 2024 central budget execution and other fiscal revenue and expenditure, to hear a report on standardizing competition order in the new energy vehicle (NEV) industry, and to deliberate and approve the Decision of the State Council on Amending the Regulations of the People's Republic of China on the Administration of the Entry and Exit of Foreigners (Draft).
The language on the new energy vehicle (NEV) industry was tough, in another sign that the government is going to intervene to rectify the “irrational competition” in the industry:
The meeting emphasized the need to focus on promoting the high-quality development of the new energy vehicle (NEV) industry. In response to various forms of irrational competition emerging in this sector, a combination of near- and long-term measures must be adopted to effectively regulate the competitive order of the NEV industry. There must be stronger cost investigations and price monitoring, enhanced supervision of product consistency in production, and oversight to ensure key vehicle manufacturers fulfill their commitments on payment terms. Emphasis must be placed on improving long-term mechanisms for fair competition, strengthening industry self-discipline, better leveraging standards to guide industrial upgrading, and encouraging enterprises to improve competitiveness through technological innovation and quality improvement.
2. Trump to delay US-China tariff deadline? - Bloomberg has an interesting story Wednesday on President Trump and his views towards China, in a story that may give fuel to the hope some of the possiblity of a broader US-China deal. I am still skeptical of that, but the report jibes with what I have been hearing about the loss of appetite at the top for a protracted struggle with the PRC, and the desire for more of a Trump 1.0-like deal with the PRC. The Bloomberg reporters write that “US officials are preparing to delay an Aug. 12 deadline when US tariffs on China are set to snap back to 145% after the expiration of a 90-day truce”. There is also the calming effect of the likely Trump-Xi meeting in the next 2-3 months, as officials on both sides usually try to create the conditions for a constructive meeting. We will see, if we have learned anything from five four and a half years of President Trump it is that he can change his mind any time, but barring any sort of crisis or egregious action by either side, the US-China relationship may be in a bit of a glide path into the summit.
3. Nvidia CEO in Beijing - Jensen Huang, as he does wherever he goes, is getting the rock star treatment in Beijing. He spoke at the third China International Supply Chain Expo, ditching his leather jacket for more traditional Chinese fashion, and in a press conference had nothing but praise for PRC talent and tech firms.
4. NDRC on accelerating the “formation of the new development pattern” - The Party Leadership Group of the National Development and Reform Commission has an essay in the latest issue of Qiushi titled “Accelerate the Formation of the New Development Pattern”. It is a good reiteration of how the system views the “new development pattern” that Xi first articulated in April 2020, and a good reminder that as hard as Jensen Huang and Nvidia try to stay in Beijing’s good graces while generating massive amounts of revenue from the PRC, the goal is to replace them:
The most essential feature of building a new development pattern is achieving a high level of self-reliance and self-strengthening. General Secretary Xi Jinping emphasized: "We must accelerate scientific and technological self-reliance and self-strengthening. This is the key to ensuring the smooth operation of the domestic economic cycle and creating new advantages for China in the international cycle." Looking back at modern world history, countries that have led in comprehensive national strength and international competitiveness at various stages have all possessed strong capabilities in independent technological innovation. Today, technological innovation is entering an unprecedentedly intensive period. The new scientific and technological revolution and industrial transformation are among the most difficult uncertainties to manage, yet they must be confronted. Seizing them means opportunity; failing to do so brings challenge. Without mastery of key core technologies, control over supply chains will lie in others' hands—it is like building a house on someone else’s foundation: no matter how large or beautiful, it may not withstand storms and could even collapse under pressure. Only by winning the tough battle over key core technologies and achieving independent, controllable, and secure supply and industrial chains can we truly realize high-level scientific and technological self-reliance and self-strengthening, and thereby lay a solid technological foundation for the new development pattern....
Promote deep fusion of technological and industrial innovation to achieve high-level self-reliance. We need to intensify efforts in internationally critical fields, accelerate self-innovation, and enhance national strategic innovation capabilities. This includes overcoming barriers in semiconductors, machine tools, foundational software, and core seeds; advancing next-gen IT, AI, quantum technology; and implementing “AI+” initiatives to enhance key industries. We will empower enterprises as innovation leaders—encouraging participation in national tech projects, supporting venture investment, and fostering high-quality venture capital. Science-driven industry will bring new momentum. We will accelerate approvals for cultivating new productive forces, launch innovation projects in humanoid robots and future energy, and expedite translating tech breakthroughs into practical output.
5. Win-win outcomes in global industrial, supply chains - The third China International Supply Chain Expo opened in Beijing. How does the messaging from this Expo square with the themes of the NDRC Qiushi essay?
6. “Open the doors and windows” while also installing “screens” - Minister of Commerce Wang Wentao also has an essay in the latest issue of Qiushi, this one titled "Vigorously Advance High-Level Opening-Up to the Outside World".
Wang highlights “moral leadership” as one of China’s advantages:
Moral leadership in international affairs is another key advantage. China has always stood on the right side of history, firmly committed to being a force for peace, stability, and progress in the world. Its international influence and appeal have significantly increased, creating a favorable public opinion environment for advancing high-level opening-up. At present, unilateralism, protectionism, and the overextension of national security concepts are severely disrupting the global economic and trade order and harming the legitimate rights and interests of many countries. China advocates for inclusive and beneficial economic globalization, firmly upholds the multilateral trading system, promotes solidarity and cooperation, and defends fairness and justice—gaining broad praise from the international community.
In a twist on Deng Xiaoping’s supposed saying that “if you open the window for fresh air, you have to expect some flies to blow in”, Wang writes:
Focusing on coordinating development and security, we must strengthen safeguards for opening-up. Opening-up is not a one-time action. The more we open up, the more we must prioritize security. We must “open the doors and windows” while also installing “screens.” We should accelerate the improvement of the export control system, establish dialogue mechanisms, revise and enact supporting departmental regulations, and prudently list controlled items. Precision in licensing and law enforcement must be enhanced. We will improve early-warning mechanisms for industrial damage and trade frictions, refine the trade remedy system, and strengthen interim and post-event supervision, including national security reviews of foreign investment. Platforms for overseas enterprise liaison and outbound investment services should be fully utilized to provide timely risk alerts and appropriately respond to overseas emergencies, safeguarding overseas assets and personnel. We will also improve the effectiveness of international communication, strengthen positive messaging, stay true to facts, resolutely counter disinformation, and strive to tell China’s story well and spread China’s voice effectively, maintaining a favorable international public opinion environment for open development.