Xi-Putin Chat; Trump gone soft on China?; TikTok’s US challenge; DeepSeek; Ding at Davos; Manufacturing industry stimulus?

Thanks for your patience Monday, and your kind notes. Tashi is doing much better.

Summary of today’s Essential Eight:

1. Xi-Putin video chat - Xi and Putin spoke by video chat on Tuesday. According to the Russian side Xi was invited to Victory Day celebrations in Moscow on May 9, and Putin was invited to the PRC’s events to commemorate the 80th anniversary of victory over Japan in Beijing on September 3. According to the PRC readout:

Xi Jinping stressed that in the new year, he is willing to work together with President Putin to continue guiding China-Russia relations in seeking lofty goals and far-reaching prospects, thus using the stability and resilience of the bilateral relationship to address the uncertainties in the external environment and jointly promote the development and rejuvenation of the two countries while safeguarding international fairness and justice. Both sides must further deepen strategic coordination, resolutely support each other, and safeguard their legitimate interests. The two sides should consolidate and expand their bilateral relationship and advance practical cooperation. This year marks the 80th anniversary of the victory of both the Chinese People’s War of Resistance against Japanese Aggression, the Soviet Union’s Great Patriotic War, and the World Anti-Fascist War, as well as the 80th anniversary of the founding of the United Nations. China and Russia should use this occasion to jointly uphold the international system with the United Nations at its core and the outcomes of World War II, urge all countries to adhere to the purposes and principles of the UN Charter and the universally recognized basic norms governing international relations, and practice true multilateralism

2. Trump gone soft on China? - On Monday President Trump signed the “America First Trade Policy” Executive Order (EO). The EO has a section titled “Economic and Trade Relations with the People’s Republic of China” which outline the studies to be undertaken. As I wrote yesterday, these studies will take months, giving the PRC perhaps more breathing room expected from economic pressure from the US, at least for much of 2025, as well as a window to try to negotiate some sort of a broader deal with the Trump administration. However, the language in the EO about China should be seen as a clear warning to Beijing that significant increased pressure is under consideration.

3. TikTok’s US challenge - President Trump issued his promised Executive Order suspending enforcement of the The Protecting Americans from Foreign Adversary Controlled Applications Act “for a period of 75 days from today to allow my Administration an opportunity to determine the appropriate course forward in an orderly way that protects national security while avoiding an abrupt shutdown of a communications platform used by millions of Americans”. In comments around the signing he also said the US should get half the value of TikTok, without specifying what that actually means, and that if China does not agree then “that’s a certain hostility and we’ll put tariffs of 25, 30, 50%, even 100%”.

In the Executive Order suspending enforcement, President Trump also appears to open the door to some version of the version of the rejected Project Texas, something that the law does not allow:

I have the unique constitutional responsibility for the national security of the United States, the conduct of foreign policy, and other vital executive functions. To fulfill those responsibilities, I intend to consult with my advisors, including the heads of relevant departments and agencies on the national security concerns posed by TikTok, and to pursue a resolution that protects national security while saving a platform used by 170 million Americans. My Administration must also review sensitive intelligence related to those concerns and evaluate the sufficiency of mitigation measures TikTok has taken to date.

Apple has not restored TikTok to the app store, so that may be a sign their lawyers do not think the EO is enough to protect them from massive liability for breaking the law. Will the PRC try to pressure Apple to restore the app? Will TikTok users not upgrade their iPhones if they can’t get TikTok on the new devices?

Someone with standing has to sue to challenge this EO but so far no one has come forward. This is a real test of Republicans in Congress who voted overwhelmingly in support of this legislation, including the National Security Adviser Waltz and Secretary of State Rubio. Are they just going to sit and watch the President ignore this law?

4. DeepSeek’s new AI models - Does DeepSeek founder Liang Wenfeng’s presence at a symposium with Premier Li to hear opinions and suggestions on a draft government work report signal that he is now seen as the leading AI developer in the PRC? How significant are DeepSeek’s recent breakthroughs, and could they indicate that the US chip controls have failed? Or are they the result of brilliant work to maximize what they have, but absent access to large numbers of advanced AI chips there is a ceiling? How might they compete with the new “Stargate Project” in which OpenAi and partners will “invest $500 billion over the next four years building new AI infrastructure for OpenAI”?

We have an interesting chat underway: