According to Chinese astrology, the fire horse year, which comes around once every 60 years, is one of intense change with dynamism, instability and creativity at the fore. But you don’t have to be a Chinese astrologist to be able to predict that given the current state of the world. In nearly all areas, there seems to be a sense of impending inflection points. Different points in different places, but that same sense of changes on the way can be very clearly felt in each quarter.

Coming up next month, we have a meeting in Beijing between the CCP and a delegation from the opposition party on the island, the KMT. This will be significant and will have been mapped out in great detail ahead of time by both sides. If there is a Trojan horse that can prepare the ground for a change, it is the KMT. That meeting will also be a prelude to the expected visit by Mr. Trump to Beijing in April, an event that for sure is going to be a reflection of at least dynamism in the field of geopolitics. Meanwhile, the United States is becoming inward-looking, focusing more and more on the great battle between the two visions for the country which will culminate in the midterm elections in November. This is going to create a vacuum in international affairs for the coming months, which is going to provide an opportunity for all sorts of other actors to take various steps. It might also, as part of that US process, result in all sorts of initiatives and changes around the world.

In China, we have an economy which is clearly going through a rough phase although with quite a few shiny spots in the mix. The property market, debt, unemployment and consumer confidence, are all problematic, but batteries and EV’s are doing okay, and China’s overall positioning in the global geopolitical jigsaw is still benefiting overall from the chaotic American situation and the general wobbly trend of the global economy. Quite a few messages from the center in recent weeks have focused on the relationship between the party and military, with the latter coming firmly under the control of the former. The Central Military Commission of the party, which is in charge of China’s military, puzzlingly now has only one member apart from the commission’s chairman, and this has raised all sorts of questions which, as we head into Chinese New Year info vacuum, remain shrouded in mist.

Strange times all round. The wood snake, preparing to slither away, was unprecedented in so many ways and I guess all we can do is hope that the horses are happy and benevolent.

Have a great lunar new year break, for however many days you can manage. Whatever is coming up is beyond our control and we simply watch as history unfolds.

The Shanghai Integrated Circuit Industry Investment Fund, backed by the municipal government, has expanded one of its three funds more than 11-fold, reports the South China Morning Post. The move aims to pump more capital into the city’s chip firms as part of China’s broader pursuit of tech self-reliance.

The third phase of the fund, also known as Shanghai IC Fund III, recently increased its registered capital by RMB 5.5 billion ($794 million) to RMB 6 billion, according to business registry database Aiqicha. It added two new equity investors, namely Shanghai State-owned Capital Investment Leading IC Private Equity Investment Fund, which is set to inject RMB 4.5 billion and Pudong Venture Capital, owned by the district government of Pudong, which is contributing RMB 500 million.

The Shanghai IC Fund has invested in more than 20 local chip companies, including wafer foundries Semiconductor Manufacturing International Corp (SMIC) and HLMC, which is a subsidiary of Hua Hong Group, as well as ACM Research Shanghai, a semiconductor cleaning tool manufacturer.

The Chinese government is dramatically pumping up its investment in the development of semiconductors. The state-run Shanghai Integrated Circuit Industry Investment Fund has expanded one of its three funds more than 11-fold to RMB 6 billion in a move aimed at injecting more capital into more than 20 semiconductor firms. 

Semiconductors are clearly the link to the future and both China and US are racing for the lead. There is a sense of confusion in the market over the Trumpist position regarding semiconductors and China: if semiconductors are so crucial to staying ahead in the tech war, then why was Nvidia was given the go ahead to sell the H200 chips (Nvidia’s second-most powerful) to Chinese companies, including—according to Reuters—DeepSeek, ByteDance, Tencent and Alibaba.

Meanwhile, on this side of the Pacific, there is a clear sense of mission. Shanghai and the surrounds appear to be where much of the work on semiconductors is taking place, and this injection of capital from the state looks to accelerate that. But Private enterprise is playing its part too. Alibaba has developed a new “brain” for robots and also new a AI image-creation tool, while ByeDance revealed its own tool in competition to Google’s Nano Banana on the same day.

The EU has announced tariffs of 79% on all ceramic table and kitchenware from China, up from a range between 13.1-36.1% previously. This follows an investigation by the European Commission that it said found Chinese ceramics were owned, controlled or guided by “authorities”, receiving preferential financing, land and raw materials. The result of this was artificially low prices, the commission said.

Both national and local governments in China regularly uses subsidies in a wide range of areas, for example automobiles. These subsidies and benefits are a significant advantage for Chinese producers. In order to deal with the tariff backlash that has become almost inevitable, one Chinese automobile producer Chery has announced it is starting production of electric vehicles in Spain later this year. BYD, which has been the subject of US tariffs are also suing the Trump administration to claim back the tariffs they have paid to import their vehicles.

Tariffs are becoming ever-more normalized in global trade, and the dream of free and fair trade is becoming ever-more distant. Protectionism is growing and deglobalization is gathering in momentum. 

For nearly a year, two ports, one on either end of the Panama Canal, have been the center of a fascinating geopolitical tussle. Last March, the owner and operator of the ports, Hong Kong’s CK Hutchison, announced it would sell them along with lots of other ports it owns around the world to a US consortium led by BlackRock. This fit in with the Trumpian demand that the US have full control over the Canal, and indeed hegemony over all the Americas. Beijing protested strenuously, saying this was a matter of national security for China and put pressure on Li to cancel the deal. And so it was left in limbo. There was a suggestion six months ago that the Panamanian authorities were planning to void the Hutchison contracts, but to whose benefit was not clear. It now is.

This week the Panama Supreme Court ruled that Hutchison’s contracts were unconstitutional and therefore void, and that Li Ka-shing’s company needs to give up the ports, which Hutchison has been running since 1997. Then on Thursday, Beijing told state-owned firms to stop all talks on new projects in Panama, told Chinese ships to avoid the canal if at all possible and moved to restrict imports from Panama, says Bloomberg. That has to mean that the move to void the contracts is a step towards the sale of the ports to US interests. Or maybe direct Panama an ownership? Less likely but possible. The control of the Panama Canal has huge strategic significance and Beijing’s reaction is reflective of its global perspective.

The other associated element is the expected visit by Trump to Beijing in April. Mr T spoke to Mr X this week on topics including Taiwan, it was announced. And no doubt Panama will also be a part of discussions. These next few months, as we have suggested before, are full of risk and uncertainty. If the world can make it through to the US mid-term elections with something close to the status quo still in place, then it would be somewhat extraordinary. Fingers crossed.

Have a good weekend.