Ceasefires and CELAC | The weekly recap
This week’s recap is going to be a little shorter than usual.
That’s because the week’s key development came on Monday, when the US and China both officially confirmed a temporary reduction in tariffs – and in some non-tariff trade restrictions – for 90 days.
- The various takes on this development have been thorough and multitudinous over the past seven days, so there’s really not a lot to add.
What’s more, I’ve already laid out my own thinking in a couple of podcasts this week:
- First was a brand new live pod, called China Talking Points, that I’ll be joining fortnightly with Kaiser Kuo of Sinica and Eric Olander of the China-Global South Project – with frequent guest appearances by Lizzi Lee at ASPI’s Center for China Analysis.
- Check out the inaugural episode here or here.
- I also spoke with my Trivium co-founders Trey McArver and Ether Yin about the topic on this week’s Trivium podcast.
On the Trivium pod, we also discussed the biggest development inside China this week, which was the China-CELAC Forum, comprised of China and 33 countries from Latin America.
The big takeaway: While China’s leaders see the US-China trade and tech war as an issue to be managed, they view building relations with the Global South as a strategic imperative.
- Xi Jinping has been pouring his efforts into these relationships for many years, and the fruits of that labor are now really starting to show.
It’s a testament to the idea that sustained, concerted diplomacy pays off – and China is hoping to leverage those relationships as a ballast against increasingly fraught relations with the West.
That’s it for this week – I’ll be back in your inboxes next weekend.
Andrew Polk, Co-founder, Trivium China
What you missed
Econ and finance
Per data released by the customs bureau (GAC) on Friday, China’s April trade data smashed expectations.
- Exports rose 8.1% y/y in April, down from 12.1% the previous month – but far surpassing the consensus forecast of 1.9% growth.
- April’s trade surplus hit USD 96.2 billion, up a whopping 33.6% y/y.
- Meanwhile, Chinese exports to the US fell 21% y/y in April – a significantly smaller decline than we expected given the astronomical 145% tariff rate.
Xinyang – a third-tier city in Henan province – may become the first city to completely ban housing presales.
- In China, most new home builds are presold, requiring upfront payment years before delivery – but in many cases developer defaults have delayed the completion of presold properties.
- Per a local government policy proposal, Xinyang would require construction to be finalized before properties built on newly acquired land can be sold.
Tech
On Wednesday, the State Council’s General Office released its annual legislative agenda – notably, the upcoming AI Law did not advance on the priority ladder.
- The law has appeared in the work plan since 2023, but has never made it onto the key list of bills to draft during the period.
- This year, the State Council said only that “legislative work on the healthy development of artificial intelligence will be promoted.”
On Tuesday, the market regulator (SAMR) sat down with Chinese food delivery platforms JD, Meituan, and Ele.me, urging them to knock off their cutthroat price competition.
- JD recently entered the food delivery space with a splash, launching a massive RMB 100 billion subsidy program aimed directly at undercutting market leader Meituan.
- Meituan and Ele.me – which together previously held 98% of the market – were forced to respond with their own subsidies to defend market share.
Corporates
CATL – the world’s leading battery maker – is planning a secondary listing on the Hong Kong Stock Exchange on May 20.
- The company aims to raise up to USD 5.3 billion by offering 117.9 million H-shares at a maximum price of HKD 263 each.
- This would make it Hong Kong’s largest share sale since 2021.
Business environment
On Thursday, the European Chamber of Commerce in China (EUCCC) released its flash survey on the impact of the US-China trade war on EU companies in China.
- Imports from the US have been hit harder than exports to the US – 44% of surveyed companies import US goods affected by Chinese tariffs, while only 31% export goods to the US that are subject to American duties.
- Confidence is the biggest casualty – 59% of companies said doing business had become harder since January.
Foreign affairs
On Tuesday, Xi Jinping held talks with Brazilian President Luiz Inacio Lula da Silva, who was in Beijing for a five-day state visit and to attend the China-CELAC Forum.
- The meeting readout was a love fest, with Xi describing the relationship as being in “a 50-year golden era” and Lula referring to the partnership as “indestructible.”
- Brazil-China relations have blossomed in recent years, with the two leaders officially elevating the relationship last November in Rio de Janeiro.
On Wednesday, the foreign ministry (MoFA) signaled that it’s none too pleased with the recent US-UK trade deal.
- MoFA officials told the Financial Times, “Cooperation between states should not be conducted against or to the detriment of the interests of third parties.”
- That could spell trouble for Britain – just last week China slapped soaring anti-dumping duties on Indian chemical exports as a warning against “using [China] as a bargaining chip” in trade.
US-China
On Tuesday, the Trump administration officially rescinded the interim “AI diffusion” rules adopted by the Biden administration in January.
- Biden’s rules aimed to plug a loophole that allowed China to purchase banned Nvidia chips by rerouting them through third countries.
- Washington is now walking those rules back and intends to release replacement rules that better align with the new administration’s priorities in the coming months.
As always, it was a busy week in China.
- Thank goodness Trivium China is here to make sure you don’t miss any of the developments that matter.