China’s policy direction will to a large extent be clarified, or not, at the Third Plenum, scheduled for next month. People are reading tea leaves between the lines and trying to figure out what’s coming, and the best indicator this week was an article in the People’s Daily from a senior official named Qiu Jin whose description of the balance between national security and economic development very much indicated security up, economy subsidiary. The goal, he said, is to “achieve high-level security to serve high-quality development, and ensure the new security pattern to guarantee the new development pattern.” Extraordinary—China watching has returned to the same exact methods of the 1960s and 1970s, trying to divine the meaning of obscure phraseology in People’s Daily articles.
In other news, some Chinese AI chip companies are now designing less powerful processors to retain access to Taiwan Semiconductor Manufacturing Co (TSMC) production in the face of US sanctions, Reuters said, yet again stressing the crucial role played by this company on the island. Meanwhile, China’s ocean freight rates rose sharply this week as exporters push out shipments early due to concerns about US tariffs and disruptions to container traffic near the Red Sea. And finally, PwC’s business in China seems to be seriously in danger after news of an alleged financial fraud tied to China Evergrande.
But basically, we’re waiting for direction from the Center as the economy apparently continues to wallow. Have a pleasant weekend in the meantime.