US and China officials had discussions this week on some of the many many issues facing the two countries in Madrid, and Mr. Trump is expected to have a call with the Chinese leader Mr. Xi today. As a start, talking is definitely good. There are also some indications of the results of these interactions but it is in no way clear yet as to where this is all heading. The first indication is that an investigation of Google by the Chinese authorities into unfair competition related to its Android OS, has been canceled. The second is that an agreement appears to have been reached on the sale of TikTok to US investors with the base Chinese algorithm used by TikTok to remain in place. This TikTok algorithm has huge power in terms of creating stickiness for young viewers, and who knows, it may also include some means by which China remains in the loop. But both of these decisions are basically playing around on the edges of what is a much more significant set of bilateral problems. To choose just one, the US tariffs are having an impact on the Chinese economy in a wide range of ways and so far we have no indication that that has been addressed in any meaningful way. There are all sorts of other issues, both obvious and no doubt not obvious which need to be addressed, the island being one of those. The problem with this set of interactions and the statements and promises and threats that are made along the way, is that everything can be rescinded and reversed at any time.
Meanwhile, the reported youth unemployment rate has shot up to 18.9%, which is high, and reflective of the atmospheric feeling of the economy and the prospects for companies, large and small, taking on extra staff any time soon. One hears more and more about companies laying people off, and there is little or no sense of confidence in conversations about a turnaround in the economy anytime soon.
But the heat of summer is receding, the skies above most of China are blue, and AI is charging ahead, that’s for sure. Have a great weekend.