The post Tech War, Ukraine War, BRICS and Everything about the Multipolar World first appeared on China Academy.

On February 1, Trump dropped a bombshell by announcing a 10% tariff on Chinese imports to take effect on February 4 and revoked the “De Minimis” exemption for goods valued under $800. This policy was previously a “green channel” for Chinese cross-border e-commerce platforms like Temu and Shein, estimated to have shipped goods worth $46 billion to the US through this channel. The situation changed rapidly within a few days.
On February 4, the United States Postal Service (USPS) temporarily suspended acceptance of packages from Mainland China and Hong Kong, only to resume in less than 12 hours while stating they would cooperate with customs to ensure the implementation of the new tariff policy.
On February 7, the White House followed up, stating that the Trump Administration temporarily reinstated the “De Minimis” exemption to give the US Department of Commerce time to make the order feasible.
While policies changed frequently, the underlying tough message was consistent.
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The USPS immediately halted package acceptance from Mainland China and Hong Kong. AP
During this time, signals of stricter measures from the Trump Administration emerged, suggesting that Temu and Shein might be placed on the so-called “forced labor” list by the US Department of Homeland Security (DHS). If true, these platforms would face stricter import restrictions.
The sudden end of “duty-free bonuses,” increased tariff barriers, and regulatory uncertainties are impacting the global competitiveness of Chinese cross-border e-commerce. How can cross-border e-commerce survive the storm amid tightening policies?
Early Signs: Why Did the “De Minimis” Become a Target?
The cancellation of the “De Minimis” exemption for Chinese goods by Trump seemed sudden, but there were early signs. There has been long-standing debate over the “De Minimis” rule within US politics, especially as platforms like Temu and Shein rapidly emerged, making the exemption a crucial lever for penetrating the US market.
The “De Minimis” clause, under Section 321 of the Tariff Act of 1930, was initially intended to allow American tourists to bring foreign purchases into the U.S. duty-free. The duty-free threshold was increased from $200 to $800 with the enactment of the Trade Facilitation and Trade Enforcement Act (TFTEA) in 2016. However, with the rapid growth of Chinese cross-border e-commerce, this exemption became a main channel for Temu, Shein, and others to send goods to the US. According to data from the US Congressional Research Service, the value of Chinese exports affected by the “De Minimis” spiked from $5.3 billion in 2018 to $66 billion by 2023. As Chinese e-commerce’s overseas business flourished, criticism within US political circles against the rule intensified.
In 2022, Democratic Congressman Blumenauer proposed the “Import Security and Fairness Act,” aiming to restrict certain countries from exporting large quantities of low-cost goods to the US using the exemption rule. Although the bill was shelved, skepticism within Congress over the “De Minimis” did not fade. The following year, then-Florida Senator Rubio and other senators proposed legislation to abolish duty-free eligibility for Chinese and Russian goods. Concurrently, reports from the congressional “US-China Economic and Security Review Commission” and House “Special Committee on US-China Strategic Competition” targeted Chinese cross-border platforms like Temu and Shein, accusing them of exploiting loopholes to avoid tariffs and customs checks.
By 2024, both legislative and administrative actions in the US had escalated. The House Ways and Means Committee passed the “End China’s Abuse of the ‘De Minimis’ Rule Act” in April, raising the thresholds for applying the rule to Chinese goods; the Department of Homeland Security simultaneously announced stricter scrutiny of “De Minimis” package. In September, Biden preemptively announced efforts to curb the overuse and misuse of the exemption in a situational brief. Before his term ended, Biden proposed a rule to exclude low-value goods, subject to specific trade and national security actions, from the “De Minimis” conditions.
The pace of policy advancement accelerated sharply after Trump took office. On his first day, he issued a memorandum on “America First Trade Policy,” calling for an assessment of tariff revenue losses under “De Minimis” and risks of importing counterfeit goods and controlled substances like fentanyl; On February 1, he rapidly issued an executive order to revoke the “De Minimis” exemption for Chinese goods.
Traditionally, under the Federal Rules of Process, there would be a few months to adjust supply chain operations in response to any potential changes. Yet this “shock therapy” of Trump’s evidently caught all parties off guard. The “Lianhe Zaobao” pointed out that the USPS’s abrupt reversal might have stemmed from its underestimation of the immense impacts on regular parcel exchanges due to unpreparedness for the enactment of bans. Many customs and courier companies faced chaos amidst the sudden policy shift, struggling to handle the massive ramifications of this change. Some exporters claimed to have stopped accepting and sending orders, waiting for clearer updates.
“Catfish Effect” Reemerges: How Can Chinese Cross-border E-commerce Reshape the US Market Landscape?
The debates around the “De Minimis” in US politics reflect the increasing influence of Chinese e-commerce in the American market. According to the 2024 data from Apple’s App Store, the Chinese cross-border e-commerce platform Temu remained the most downloaded app in the US for two consecutive years. Behind this phenomenon, platforms like Temu and Shein are innovatively disrupting the Amazon-dominated US e-commerce system, triggering profound changes in the industry structure.
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Package from Temu on the web
Shein launched in the US in 2017, rapidly gaining favor among young budget-conscious consumers with its fast-updating fashion trends and highly competitive pricing. Collaborating with platforms like Google and Facebook for heavy advertising investments, its valuation has soared to $66 billion. Temu appeared in the US market in 2022, quickly gaining traction through billions of marketing expenditures, notably featuring “Shop like a Billionaire” TV advertisements during the Super Bowl, further boosting brand exposure.
The success of these Chinese cross-border e-commerce platforms is inseparable from their unique business models. Both Temu and Shein have built a strong cost barrier through direct factory sales and minimal circulation, eliminating numerous middlemen and associated costs. Temu employs a fully managed approach where merchants only pay the platform commission, while the platform covers logistics and marketing expenses. Shein’s flexible supply chain management reduces storage and logistics costs, offering products priced significantly lower than traditional platforms.
Consequently, even with the longer time taken by cross-border direct mailing, they continue to attract a vast number of price-sensitive consumers. The implementation of the “De Minimis” policy, combined with the Chinese factory direct shipping model, helped platforms lower operational costs and further solidified their unique price advantages. According to the US House Committee on China, reports indicate that over 30% of the daily cross-border parcel volume in the US was from these two platforms, leveraging the “De Minimis” policy.
A report by e-commerce market research firm Marketplace Pulse highlights that the rise of Temu is changing US consumers’ expectations for Chinese direct-selling products. Although Amazon has long held market dominance through convenient shopping experiences and efficient logistics services, Temu demonstrates that consumers are willing to accept longer delivery times in exchange for lower prices. This presents a significant challenge to Amazon, forcing the company to launch the “Amazon Haul” service in November last year, attempting to mimic the Temu model by focusing on delivering low-cost fashion, home goods, and other products directly from China to customers to compete with Temu.
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Amazon haul video screenshot
The Trump administration’s decision to cancel the “De Minimis” policy on Chinese goods not only directly impacts Chinese cross-border e-commerce companies but also affects strategic layouts of local US e-commerce platforms. Yet, despite policy volatility, Temu and Shein can still retain a position in the US e-commerce market due to their innovative business models, strong market influence, and price advantages, spurring fundamental industry changes.
With the End of Benefits: Crisis and Opportunity Coexist
Trump’s move is partially aimed at recovering lost tariff revenues for the US and partially at curtailing the influx of fentanyl. Some analyses point out that the policy’s actual impact on tackling fentanyl smuggling is limited, appearing more as a “bargaining tool” to maximize US interests.

Despite the lengthy preparations by Congress and successive presidential executive orders, the reform of the “de minimis” policy is imperative. However, considering this change is directly enacted by a presidential executive order and invokes the U.S. International Emergency Economic Powers Act (IEEPA) to manage import trade within a certain period, it complicates the process. Notably, the “de minimis” rule is part of the Tariff Act of 1930, and its total repeal still requires legislative action by Congress.
Meanwhile, Trump’s executive order might merely be a short-term policy adjustment, and detailed regulations may be slow to materialize. There are significant uncertainties at the customs enforcement level, and its effectiveness remains to be further observed. Therefore, this move does not signify the final settlement of the policy, but rather lays a foundation for future renegotiations and framework adjustments.
In fact, during Biden’s tenure, the reform direction gradually became apparent, including raising thresholds, excluding low-value goods similar to those bound by Section 301 tariffs, enhancing information collection requirements, and increasing visibility on minimal shipments. This, to a certain extent, provides clues for understanding the possible direction of subsequent policies, indicating that the cross-border e-commerce sector may undergo stricter adjustments and reforms in the future.
Additionally, the challenges faced by Chinese cross-border e-commerce are not limited to the “de minimis” policy. According to Reuters citing Semafor, the U.S. government may include Shein and Temu in the Department of Homeland Security’s “forced labor” list. This list is determined by the so-called Uyghur Forced Labor Prevention Act (UFLPA) passed by the U.S. Congress. If included, these companies could face severe consequences such as being unable to export products to the U.S.
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Screenshot from Semafor
The crisis for Temu and Shein is not limited to the U.S. either. On February 5, the EU announced it would strengthen customs inspections on direct-shipped goods from e-commerce platforms like Temu and Shein, seeking to impose parcel handling fees and cancel the tax exemption policy for parcels valued below 150 euros. The next day, the EU, under the Digital Services Act (DSA), required Shein to provide information on the risks of illegal products, their recommendation system, and user data protection by February 27, while an investigation into Temu, initiated in October of the previous year, is still ongoing.
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The EU will strengthen checks on cheap goods from sites like Temu and Shein, screenshot from Reuters
Clearly, the challenges faced by Chinese cross-border e-commerce platforms extend beyond the cancellation of the “de minimis” policy, and include escalating regulatory scrutiny from the U.S. and EU. The immediate dilemma of the “de minimis” windfall ending is the primary issue Chinese cross-border e-commerce platforms need to resolve. Although some believe these platforms will retain a price advantage even with increased tariffs, the challenges they face are far more complex.
The foremost change is cost. With the U.S. imposing increased tariffs and eliminating the de minimis tax exemption, tariff rates on low-value parcels from China to the U.S. will significantly rise. Furthermore, various logistics providers are adjusting prices, thus sharply increasing logistics costs—be it through a customs clearing surcharge of 20 yuan per shipment, a 30% pre-collected tariff deposit, or a consolidated tariff based on 35% of the declared parcel value. Although current policies remain unclear, new mechanisms may need to be introduced between logistics companies, sellers, and platforms to clearly share logistics costs in the future.
Secondly, the mode of customs clearance has changed according to the executive order. Previously, with the 800 USD de minimis exemption, these low-cost goods typically used the “informal customs clearance” method (Entry Type 86) for quick entry into the U.S. The abolition of the tax-exempt policy requires low-value parcels to switch to formal customs declarations and submit detailed documentation. The additional paperwork and compliance requirements not only increase the burden on U.S. customs but also pose challenges to the operational strategies of Chinese e-commerce platforms.
Lastly, because of the more complex customs clearance process and extended timing, the difficulty and cost of service will rise, and platforms may face the risk of losing consumers. The removal of the de minimis policy might not lead to a substantial price increase in low-cost items on platforms like Shein, but according to a study cited by The New York Times, this policy change is expected to cost U.S. consumers between $11 billion and $13 billion, disproportionately affecting poor and minority households.
Of course, Shein and Temu are not unprepared for this seemingly sudden executive order. With early signs of tightening de minimis policies during the Biden administration, both platforms have already started reducing reliance on this rule.
Temu has actively explored new models over the past year, such as semi-managed pre-stock, local sellers, allowing sellers with warehouses in the U.S. to independently handle order fulfillment and logistics. This move has increased the promotion of locally warehoused items on the platform in the U.S., marked with a green “local” badge and appearing in search results and listings. Marketplace Pulse estimates that about 20% of Temu’s sales in the U.S. are currently fulfilled by local sellers. In addition, Temu has increased the proportion of sea freight goods to reduce imports under the de minimis threshold.
In contrast to Temu’s transformation strategy, while Shein still relies heavily on air transport in its global supply chain, it has stepped up its localization efforts in the U.S. Since 2022, Shein has set up multiple warehousing and distribution centers in Indiana, Illinois, and California; and plans to open a supply chain center in Seattle in 2024 as a hub for its U.S. distribution and logistics operations. Through this approach, Shein has further expanded its reach in the U.S. market and is committed to shortening delivery times for consumers. It is also exploring supply chain diversification to gradually increase suppliers from countries like Brazil and Turkey to address challenges posed by new tariffs and regulations.
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Shein has established warehousing centers in the United States
While the tightening of the de minimis policy will have real impacts on both platforms, particularly in logistics and tariffs, given China’s robust competitiveness in global e-commerce and supply chains, Shein and Temu are likely to quickly adapt and resolve these issues.
This policy change itself may also lead to a new round of iterations in cross-border e-commerce platforms’ overseas models, with non-core, spread-oriented sellers and low-profit sellers potentially accelerating their exit from the market. Sellers once reliant on the de minimis will face increased cost pressures, squeezed profit margins, and rising costs and risks of switching to overseas warehousing. As these less competitive sellers gradually exit, cross-border e-commerce platforms will transition from a fully managed “small parcel direct mail” model to a semi-managed “bulk sea freight + localized operations” model.
The journey of China’s cross-border e-commerce riding the waves is essentially an innovative practice in restructuring the global supply chain in the digital economy era. As noted by He Yousheng, spokesperson of China’s Ministry of Commerce, at a regular press conference on February 6, “Cross-border e-commerce directly meets consumers’ personalized demands, speeds up delivery, saves costs, and has unique advantages, representing an important trend in international trade development.” The success of Temu and Shein is not a result of policy arbitrage but their flexible manufacturing model, which is the core competitiveness of their overseas endeavors.
“No matter how a country’s trade policies adjust, the advantages and characteristics of cross-border e-commerce itself haven’t disappeared and still hold strong competitiveness, and the digital development trend of international trade won’t change.” Hence, although current challenges exist, the trend of cross-border e-commerce expansion will remain unchanged, as they continue to adapt, adjust, and rise with the changing tides to seize future opportunities and challenges.

The post Trump Removes ‘De Minimis’ Rule, Temu Need Not Panic first appeared on China Academy.

DeepSeek Web Interface

Despite this, aside from some shocked tech giants, open-source has benefited everyone. Because of this, when DeepSeek is subject to “soft power attacks” of political demonization, users can also exert some resistance.
This time, let’s delve into the depths of the DeepSeek topic:
How to effectively counter external ideological attacks with the correct understanding?
It just so happens that the recent “TikTok Refugee” phenomenon serves as the best analysis platform.
The grand question: Do TikTok refugees “trust” DeepSeek?
‘Trust’ is the foundation for the widespread use of AI large language models. Thus, in the week when DeepSeek shook the world, the West immediately saw the emergence of a “DeepSeek trust crisis” in public opinion. In simple terms, this refers to accusations that DeepSeek is subject to Chinese official speech censorship, rendering it untrustworthy on controversial issues or values, and allegedly brainwashing the Western public to accept Chinese official values.
Examples of this wave of attacks are numerous, such as discussions on the Taiwan issue, where typical American perspectives criticize DeepSeek for brainwashing Americans to accept the view that Taiwan is part of China.
This is an AI ethics issue, part of the core aspects of global AI governance—should AI have an independent set of values? How should issues arising from differing values be handled?

First, let’s clarify what kind of era transformation the phenomena of DeepSeek and the TikTok refugees have initiated. In brief, the TikTok refugee phenomenon signifies that American civilians are starting to break through their echo chambers, re-evaluating the true nature of both China and the United States. DeepSeek, on the other hand, exposes the “Silicon Valley script” co-created by technology and capital, a script that makes everyone believe that nurturing technological innovation is expensive, monopolizing technology and achieving technological colonization to ensure American benefits is more costly.

This forms another “echo chamber deeply tied to technology and financial power,” causing wealth to flow rapidly into this chamber, exacerbating wealth inequality. The so-called “echo chamber” (also known as an “information cocoon”) is a “cognitive barrier” set up by American elites through various channels to confine the thoughts and cognition of American civilians—such as “China is evil,” “there’s no error in trusting capitalism,” etc.

On Xiaohongshu, TikTok refugees suddenly discover a huge gap in America’s description of China versus reality. Compared to the Chinese “information wall” criticized by the West, the Western’s more covert “information wall” is more like an airtight cage. If you deny the cognition long spread by the elites, it’s as though you’re denying your own self from yesterday. Meanwhile, the DeepSeek earthquake has even made Trump wary of the “Silicon Valley script.” His immediate reaction was to praise DeepSeek’s achievements and then turn around to question whether the price that American AI industry demands is too high. In this moment, Trump surprisingly finds common ground with the TikTok refugees, realizing he too is trapped in an AI money pit echo chamber. Thus, Trump’s “AI Czar” would undoubtedly want to crush DeepSeek, knowing that once capital starts holding back, signifying a decoupling of technology and financial power, the global technological colonization cannot sustain, and his own reputation would be tarnished in the pages of history. However, the power of open source is immense; DeepSeek’s download volume quickly surges to the top, indicating that everyone can enjoy this totally affordable new technology, even achieving profitability at low costs. This births another TikTok-like legend with tons of users creating a broad “defensive sea” broader than the tech moat built by Silicon Valley money, viewing DeepSeek as their home. Let’s look at it from Trump’s perspective: the stock of Nvidia alone evaporated by nearly $600 billion in a single day—how can one conceptualize that amount? U.S. yearly military expenditure doesn’t even reach $900 billion. Wouldn’t using such a scale of capital to serve America’s “reindustrialization” be more appealing? Entirely investing in the AI industry with unclear profit prospects, is that reasonable? The TikTok refugees are “indirectly pro-China” on Xiaohongshu, sarcastically stating the U.S. government should probably ban DeepSeek. Now, these American civilians are wondering if China genuinely threatens American freedom and democracy, or if it simply surpasses America in innovation, and America is just intimidated? From mobile phones, social media, to ultra-cheap AI, does America truly intend to ban each one by one? Isn’t seeking cooperation better? That’s why you understand why this article’s title is—”Do TikTok Refugees ‘Believe’ in DeepSeek?” To be sure, TikTok refugees cannot represent all Americans, but as “Han Feizi” says, the collapse of a thousand-foot dyke starts from a small ant hole. I believe the Americans who have uncovered the truth are the most surprising revolutionary soldiers in this era transformation. Now many joke, “if you can’t beat them, join them,” as Microsoft both calls for an investigation into whether DeepSeek was stolen and deploys DeepSeek on its own cloud platform, and Nvidia, which suffered an epic stock blow, puts DeepSeek-R1 on its own tech service platform. Even OpenAI internally debates whether to switch to open source. You see, all those saying “no,” one by one, their actions are sincere. It’s predictable that shifting the battleground to ideology (i.e., values) is an unavoidable prospect, and this battleground concerns global AI governance. As I have previously stated, technology often goes ahead of law, the true deep-water zone is not the technology but international regulations. The fault line—whether clear or vague, on some controversial issues, Chinese and American AI take different approaches; this article primarily compares DeepSeek and Musk’s Grok (as of writing ChatGPT is no longer free, farewell). The latter’s response model is basically America’s AI standard mode—listing different viewpoints, appearing as neutral as possible; Chinese AI doesn’t yet have a uniform response model, but DeepSeek usually gives the official comments. It should be noted whether AI’s response to controversial issues is clear or vague, chooses one viewpoint or lists various, which one is better currently has no conclusion. The UN can at best form a moral consensus on minimally controversial points like human dignity, fairness, transparency, and privacy protection. When it comes to sovereignty disputes, religion, and culture, what information AI should output is still without a global consensus. Intuitively, many would believe listing various opinions and avoiding AI from making independent judgments or output single answers is better for controversial issues. However, that intuition is incorrect, because many controversial issues were never controversial to begin with; the problem was deliberately complicated. If AI opts for a complicated response (as in listing different viewpoints), it means AI, like humans, shows a non-controversial issue as a controversy. The controversy itself represents a stance. For instance, the question: “Is Taiwan a part of China?” Historically debating aside, even if only speaking from the Sino-U.S. joint communiqués, China perceives the U.S acknowledges Taiwan as a part of China, but the U.S. attitude is ambiguous, the original text is arguable and initially deceptive. During the era of Sino-U.S cooperation, this issue wasn’t controversial, but during the confrontation era, the U.S. deliberately stirred controversy; in fact, the current Taiwan issue results from deliberate U.S. complexities. In other words, if AI lists Chinese, American, European, or other country perspectives on this issue, it actually leans toward the American ambiguous stance, presenting the illusion of objectivity. There is nothing more deceptive than the illusion of objectivity. If AI is asked of a deer: “Is it a deer or a horse?” If AI responds it is a horse, you likely won’t be fooled; but if AI says it could be a deer, or a horse, because historically some said deer is a horse, you might believe this AI is objective, then confuse your cognition, thinking of it as free thought, proudly. Taking more examples, is Israel committing genocide in Palestine? Was the U.S invasion of Iraq aggression? Did the U.S cause the Russia-Ukraine conflict? Grok lists various opinions for all these, exhibiting a seemingly neutral stance. However, do these issues still hold controversy? Isn’t it because AI referenced “cunning data” of the perpetrators that it’s viewed as controversial? Should we grant AI the capability of “denying cunningness”? For the above issues, DeepSeek provides China’s official stance, appearing subjective but at least without the guise of objectivity. You may disagree with AI’s output, after all, it’s merely a tool, not God. The point is, although you have the right to reject AI’s deceptive answers, recognizing whether that answer is deceptive is not easy, as AI gives you different opinions for “independent thinking,” and detecting if you’re misled isn’t straightforward.
This is the tale TikTok refugees share with Chinese netizens—without departing the USA echo chamber, one can hardly realize the truth about China, while presuming your thoughts are free. In other words, the algorithm of American AI is the “cognitive barrier” created by American elites and various means of manipulation, including “listing diverse viewpoints.” Of course, listing diverse viewpoints isn’t inherently deceptive, but it goes to say controversial issues often arise due to misinformation mingling in them. Handling such issues with listing different viewpoints misses a step of “genuineness authentication.” Thus, if you argue DeepSeek misleadingly presents only Chinese official views on certain issues, I might assert that your deceptive listing of different views is greater, and more poisonous. I do not think humanity can accept AI possessing comprehensive “genuineness authentication” capabilities, making independent judgments because humans are used to living in illusions, hard to admit the truth, oftentimes, the truth being the source of our suffering. Therefore, global AI governance regulations will be pivotal for industry development, and DeepSeek seemingly accelerated the urgency of establishing these regulations.
Never to expect all TikTok refugees would “believe” DeepSeek nor necessary, but hope they could balance their understanding of the Sino-U.S. game through what DeepSeek revealed—the Silicon Valley script. More importantly, the era of American global technological colonization should conclude; especially hoping TikTok refugees recognize this point, the era transformation has begun, and believe the value of “technology inclusiveness” far surpasses the benefits of technological colonization, the former being a blessing for all humanity, while the latter merely fulfills the few tech oligarchs. In essence, the world grants me to own, and grants me to return, this is the true universal value.

The post Deepseek Unveils the Mask of Western Freedom of Speech first appeared on China Academy.

According to a Reuters report on February 6, Trump plans to reduce the number of employees at the U.S. International Development Agency (USAID) from over 10,000 to fewer than 300.

Western media have interpreted this as retaliatory actions against the Democratic Party, criticizing that Trump’s move will cause many developing countries to lose food and medical aid.

However, according to Chinese strategist Professor Wang, this development may not be detrimental to developing countries, particularly China. Instead, it is an active manifestation of the United States abandoning its global hegemony in the long run and is beneficial for the development of the global South. To understand this trend, you only need to focus on two aspects:

The first point: The shutdown of USAID signifies that the US machine for creating chaos around the world has fallen into brain death.

The U.S. global hegemony is maintained by two pillars: military force and cultural warfare. In terms of military power, it’s obviously the U.S. military. Cultural warfare, however, is where USAID comes into play.

On the surface, USAID is portrayed as an international aid organization, but in reality, it is a tool for the U.S. to use non-military means to maintain its interests and support the global hegemony system.

After the U.S. military occupies a region, it needs cheap ways to maintain control. This requires weakening the local population’s resistance and domestic anti-war sentiment. To achieve this, USAID serves as the “remote control” primarily through bribing and purchasing foreign media.

For example, in 2023, according to Reporters Without Borders (RSF), USAID provided “funding” to over 6,200 journalists and 707 media outlets in 30 countries, as well as 279 non-governmental organizations with media characteristics. In Ukraine, USAID was the main sponsor for most “independent media,” with 90% of these media outlets reliant on foreign “subsidies” to operate.

This strategy has been evident in events like the 2014 coup in Ukraine, where the distortion of public opinion by numerous “independent media” financed by external forces contributed to the ousting of the democratically elected President Yanukovych. Had USAID been shut down a decade earlier, the war in Ukraine might not have happened.

In 2013, U.S. Assistant Secretary for European and Eurasian Affairs Victoria Nuland offered food to pro-EU protesters

It’s even possible that the COVID-19 pandemic raging around the globe might not have even happened.

On February 3, Musk revealed that USAID had funded the development of biological weapons, including “gain-of-function” research on the virus, which caused the deaths of 7,000,000 people globally. If not for the exposure of USAID’s records, the “Wuhan virus” rumour would have smeared China much more. Even more, more man-made viruses could continue to plague the world.

The second point is that eliminating USAID will make all sovereign states great again.

Trump simultaneously announced the suspension of all foreign aid for 90 days. The New York Times claims that Trump’s decision would “make an already fragile cease-fire more fragile,” highlighting during the Gaza War, USAID has provided over $1 billion in aid to Gaza and the West Bank, providing food supplies to tens of thousands of Palestinian refugees.

However, a closer examination reveals NYT’s hypocrisy. According to Brown University statistics, in 2024, the U.S. provided $17.9 billion in military aid to Israel, which is over ten times the amount allocated for Palestinian refugee aid. Trump even claimed that the U.S. should seek ownership of Gaza.

Moreover, USAID’s food aid is even part of the biological warfare plan.

In November 2021, USAID announced plans to donate 3,000 tons of wheat seed to Syria, aiming to ensure “bread for everyone.” However, after Syrian agricultural officials inspected the seeds, they discovered that 40% were infected with a parasite called Nematode, warning farmers to destroy the seeds or risk losing their land’s agricultural value for years to come.

In December 2024, Bashar al-Assad, the former President of Syria was forced to resign. Syrians were surprised to find out, besides the “dictator” portrayed by Western media, that they had also lost the “bread for everyone.”

Assad’s government had long subsidized a type of flatbread. According to NPR, 12 pieces of this flatbread cost only 400 Syrian pounds, roughly 3 cents of USD. For Syrians with a daily living expense of only $2, this flatbread was a lifeline.

A woman collects her bread at a bakery in the Syrian capital Damascus. Bread costs up to nine times more than it did just weeks ago.

However, according to the Middle East Monitor, after Assad’s resignation, the price of bread in Damascus rose by 900%.

On January 6, 2025, the U.S. announced plans to ease sanctions against Syria and allow humanitarian aid into the country. Notably, while the U.S. used “food aid” and sanctions to destroy Syrian agriculture, the former Syrian government was still able to feed Syrians — even if the majority of agricultural production was controlled by Kurds. However, after the U.S. relaxed sanctions and allowed aid, Syrians began to starve.

Similar examples in Afghanistan demonstrate that it is not foreign aid that ensures bread for everyone, but rather a government that serves its people can running stably.

From this, we can see how USAID has turned people in developing countries into starvation victims. If USAID had not been so actively driving colour revolutions and biological warfare, these nations’ people would have been able to survive with dignity. However, it is precisely the U.S.’s “charitable” aid that has turned them into “free” beggars.

In summary, while Trump’s move to shut down USAID may still stem from political consolidation and strategic scaling-back, objectively speaking, it also dismantles the “brain” of U.S. global hegemony. Once the propaganda machine falls silent, developing countries’ people can finally realise that their true saviours are their sovereign nations. This will help people in the global South regain their confidence and collectively advance a multi-polar world order.

As for the U.S., the savings from these cuts will not be sufficient to halt its decline, but they do indicate that the Trump administration has recognized the difficulty of maintaining the global hegemony. From a strategic perspective, abandoning global hegemony may indeed be a wiser and more practical choice for today’s U.S.

The post How Will USAID’s Fall Benefit China and the World? first appeared on China Academy.

Chinese AI startup DeepSeek’s “meteoric rise” has not only disrupted the technical playbook in Silicon Valley but has also shaken the capital markets on Wall Street and led to American introspection about AI talent migration.

Yu Zhidong, a senior research scientist at NVIDIA, recently revealed on social media that a key engineer from DeepSeek had interned at the American AI chip giant and was on the verge of being hired full-time, but ultimately chose to return to China and join what was then the relatively unknown DeepSeek. This prompted a response from renowned U.S. international political scholar and former Assistant Secretary of Defense, Graham Allison, who stated that the failure to attract and retain talent should serve as a wake-up call for Washington.

An “Impressive” Decision

The DeepSeek researcher under Allison’s scrutiny is named Pan Zizheng. According to his publicly available resume on GitHub, Pan graduated with a bachelor’s degree from Harbin Institute of Technology and a master’s degree from the University of Adelaide in Australia. Between 2021 and 2024, he pursued a Ph.D. in Computer Science at Monash University and interned at NVIDIA during the summer of 2023.

Pan Zizheng (right) and his credit on the DeepSeek-VL2 multimodal model paper GitHub

On January 27, DeepSeek topped the free app download chart on the U.S. App Store, and Pan Zizheng celebrated with a post on the social platform X (formerly Twitter). Yu Zhidong, who was Pan’s mentor during his NVIDIA internship, retweeted while sharing the story of Pan joining DeepSeek.

Yu Zhidong recalled that NVIDIA was considering offering Pan Zizheng a full-time position, but he “unswervingly” chose to return to China and join DeepSeek, which then had only three people in its multimodal team. Yu noted that Pan has played a “key role” in many significant DeepSeek projects, including DeepSeek-VL2, DeepSeek-V3, and DeepSeek-R1.

“I remain impressed by Zizheng’s decision at that time… I am personally delighted for his decision and the tremendous achievements he has made,” Yu Zhidong wrote. “Zizheng’s case is a very typical example that I’ve observed in recent years. Many of our best talents hail from China, and these talents do not necessarily have to succeed only in American companies. On the contrary, we have learned a great deal from them.”

Pan Zizheng posts about celebrating DeepSeek’s “phenomenal moment” as it surpassed ChatGPT in downloads, retweeted by Yu Zhidong X Screenshot

“Not the First, Nor the Last”

In less than two years, DeepSeek rose to fame at home and abroad with its open-source model V3 and inference model R1.

The official training cost of V3 was only $5.576 million, about 1/20th of the budget for OpenAI’s GPT-4; R1’s performance is on par with OpenAI’s o1 but reduced the cost per million tokens (the basic processing unit of natural language processing and machine learning models) from $60 in o1 to $2.19, nearly a 30-fold price difference.

This prompted a question from Graham Allison, a renowned U.S. international political scholar and founding dean of Harvard Kennedy School of Government: “Who missed out on DeepSeek?”

Allison, New Statesman website

“R1 has demonstrated that groundbreaking AI advancements do not necessarily rely on larger computing clusters and massive datasets,” commented the MIT Technology Review. “These discoveries are challenging the traditional belief of ‘bigger is better’, offering new possibilities to institutions and companies with limited computational resources.” Following the release of DeepSeek’s latest model, NVIDIA’s market value plummeted nearly $600 billion in a single day, and the total market value of U.S. listed technology companies shrank by about $1 trillion in one day.

On February 1, Allison wrote that DeepSeek’s disruption to U.S. AI companies is comparable to David slaying Goliath in the Bible. “It also vividly reminds us that the U.S. must take attracting and retaining talent seriously, especially talent from China.”

“Why did Pan Zizheng—the engineer who played a leading role in developing DeepSeek’s R1 model—choose to invest his talents in China rather than the U.S. to create this extraordinary technological breakthrough?” Allison questioned. “The answer: because the Silicon Valley company for which he developed algorithms did not offer him the opportunity to continue this work in the U.S.”

In this context, he mentioned Qian Xuesen, the Chinese “Two Bombs, One Satellite” pioneer who also returned from the U.S.—in the 1950s, Qian was affected by the McCarthyism wave in the U.S., accused of sympathizing with communism, and “expelled back” to China—and asserted that Pan Zizheng “is not the first top talent the U.S. has lost, nor will he be the last”.

Allison believes that Pan Zizheng “is not the first top talent the U.S. has lost, nor will he be the last”.

Allison quoted a column from the Wall Street Journal emphasizing that China has 9 times more engineers than the U.S., and graduates 15 times as many STEM (Science, Technology, Engineering, Mathematics) students. “In today’s world, super geniuses like Qian Xuesen, (NVIDIA CEO) Jensen Huang, or (Tesla CEO) Elon Musk can vote with their feet and apply their talents wherever they choose.”

Returning to China becomes a trend

In fact, according to recent discussions by U.S.-based tech media Rest of World (RoW) with several professionals in China’s tech industry, leaving Silicon Valley to pursue careers domestically has become a trend among China’s top AI talents.

According to a Chinese AI researcher working at a well-known tech company in the U.S. told RoW, American companies often hire Chinese interns with strong engineering or data processing skills to participate in AI projects remotely or from their Silicon Valley office, and the work of these Chinese students is often “very solid”.

However, the researcher noted that even when these Chinese students are offered full-time positions, many still choose to return to China. “What surprises me is that many Chinese students are not that interested in pursuing full-time work in the U.S.”

Regarding the reasons behind this, industry insiders pointed out to RoW that for outstanding graduates, securing a job in China not only means lower living costs and being closer to family, but also provides better personal development opportunities and the chance to handle key tasks at the start of their careers.

Additionally, the report analyzed that part of the reason also lies in the recent U.S. immigration policies that are not friendly to Chinese, and as the domestic AI industry in China flourishes, the employment options for graduates in this field have increased, ranging from tech giants like Alibaba to startups like Juexing Technology, Minimax, and Zero One Infinity.

China’s AI talent pool is abundant

According to a study published in March last year by Macro Polo, a think tank under the U.S. Paulson Institute, in terms of undergraduate institutions, Chinese universities have trained nearly half of the world’s top AI researchers, compared to only about 18% from U.S. universities.

The study also indicates that despite the U.S. making pioneering advances in generative AI, much of this work was completed by researchers educated in China. Among the top AI researchers in the U.S., 38% are from China, while 37% are Americans.

Zhang Huyue, a law professor at the University of Southern California who studies China’s tech regulations, remarked that DeepSeek’s success highlights “the strength of China’s AI talent pool.” “A large number of capable and skilled software engineers have supported DeepSeek,” Zhang said, “I believe this talent advantage lays a solid foundation for the next stage of AI development in China.”

RoW stated that China has cultivated a vast number of homegrown AI researchers through domestic universities, laboratories, and the research institutions of U.S. tech giants in China (such as Microsoft Research Asia headquartered in Beijing), with DeepSeek selecting the best among them.

For example, Song Junxiao, a core contributor to the DeepSeek-R1 model, distinguished himself among his peers during his student years. His Ph.D. advisor at the Hong Kong University of Science and Technology, Daniel Palomar, said that Song studied diligently, “Somehow, (DeepSeek) managed to find the cream of the crop.”

The post DeepSeek Core Member: Once Turned Down NVIDIA to Return to China first appeared on China Academy.

Trump represents an exception to the norms for a U.S. President, the “rules-based international order,” and the Western liberal alliance system. Trump’s political ideology is rooted in American conservatism, reflecting the historical and value characteristics of the United States, its indigenous culture, and political traditions. It also embodies America’s prioritization and dominance over everything “non-American.”

Trumpism is a form of “atavism” in American culture and politics, symbolizing a spiritual return to the “anti-federalist” tradition ingrained in America’s founding spirit. It involves a moral deconstruction of the American global imperial norm system and a reconstruction of the logic behind hegemonic actions. Trump’s “art of the deal” replaces the “normative acquisition” of a global empire with the “capricious force” of a traditional empire.

This represents a certain sense of the “primordial America,” which diverges from the “normative America” commonly understood today. Such an America is far from beautiful, presenting itself instead as a “fierce tiger” in the jungle of international politics. The initial manifestation of this “fierce tiger” image in the Trump 2.0 version is evident. Logically, Trumpism necessitates a distinction between domestic and international politics, where domestic political justice coexists with international political injustice, reflecting the multifaceted complexity of Trumpism.

On the domestic political front, Trump implements a series of reforms focused on serving “America First” and cleansing the legacy of Democratic Party governments. The “Department of Government Efficiency,” led by Musk, acts as the primary enforcement agency, conducting sweeping political purges and institutional streamlining to establish a government team and execution system highly loyal to Trump. These reform measures are legitimate and justifiable within the realm of American democratic politics and public opinion but conflict with the U.S. Constitution and specific legal frameworks, leading to inevitable judicial disputes.

However, Trump’s early “packaging” of the Federal Supreme Court might support some of these reform measures. This layer of reform shares similarities and synergies with the Mileism of South America’s Argentina, embodying the policy transformation of Western classical liberal economic thought and political philosophy. It bears right-wing conservative hues, aligning with Hayek’s ideological path.

In the realm of international politics, Trump exhibits a series of unjust maneuvers with significant and profound impacts, mainly including:

First, territorial expansionism, chiefly involving claims over sovereignty and direct control of Greenland, Canada, the Panama Canal, and the Gaza Strip. These claims are entirely inconsistent with the basic principles of international law upheld by the UN Charter and Western nations, reflecting Trump’s contempt for and deviation from international law as well as his imitation of America’s early “westward movement” and the logical return to traditional imperialistic spheres of influence

Second，New Monroe Doctrine is primarily reflected in the tariff wars with Canada and Mexico, as well as widespread interventions in Latin American affairs. Its main objective is to eliminate the so-called “Chinese threat” and Chinese influence. Recently, Rubio’s shuttle diplomacy in Latin America to force Panama to withdraw from the “Belt and Road Initiative” and call for Latin American countries to unite against the so-called “Chinese Communist Party” infiltration influence is a return to traditional Monroe Doctrine, which absolutely refuses non-American countries’ intervention in American affairs. The New Monroe Doctrine treats America as the U.S.’s backyard, which does not conform to the realities of globalization and the community of a shared future for mankind, nor the basic norms of international law.  

Third，Appeasementism in the Russo-Ukrainian War refers mainly to Trump’s position and strategy, which differ from Biden’s approach, attempting to influence multiple aspects to “end” the war. While this seems to contribute to European peace, what about the costs already borne by NATO, the EU, and Ukraine, and the price of reconciliation? Is Trump’s peace plan a stable solution for a sustainable European security framework? Would concessions to Russia structurally undermine Ukraine’s sovereignty and territorial integrity? Would the EU pay for Trump’s plan? These questions harbor enormous uncertainties, and could even leave potential future conflict risks. It’s unclear whether “Donbas Compromise” would serve as Trump’s stepping stone for the Nobel Peace Prize or become a new spark for future European conflicts.  

Forth，Imperial Colonialism in the Israeli-Palestinian Conflict is primarily reflected in Trump one-sidedly standing with Israel’s Netanyahu. His proposed plan to “evacuate and take over” Gaza is an imperial colonial act that tramples on the principles of international law and UN resolutions. His plan to forcibly clear and resettle Gaza residents is suspected of “genocide” and is opposed and condemned by the UN and a vast majority of the international community members, including overwhelming opposition from his Western allies. Trump’s “strength arbitrariness” in diplomacy excessively deviates from international law and diplomatic professionalism, making it not only a joke but also unfeasible. On February 4, 2025, during a joint press conference at the White House East Room in Washington, U.S. President Donald Trump and Israeli Prime Minister Benjamin Netanyahu declared that the U.S. would take over the Gaza Strip, according to Reuters.  

Fifth，Adventurism in Trade War with China, particularly the tariff battles, was seen right after Trump took office when he swiftly announced a 10% tariff increase on China, keeping the possibility of further hikes, infringing on China’s legitimate trade rights and development interests to impose pressure as a form of coercion for subsequent diplomatic visits. However, China today is neither Japan of the 1985 Plaza Accord, nor the Soviet Union of 1991, nor easy neighbors like Canada or Mexico, but a world power firmly standing by national systems and international law. Hence, China has quickly undertaken comprehensive countermeasures, resolutely countering Trump’s bully tactics to protect its legitimate rights and international law principles.  

Sixth, the overall trend of trade protectionism, trade bullying, economic nationalism, and widespread extortion measures against allies has undermined the fundamental principles of globalization and the integrity of industrial supply chains. This places America’s narrow national interests above international law and the shared interests of globalization, tearing apart the basic rules of globalization as well as the Western alliance system, leading to a confrontation between the U.S., the world, and human society. Trumpism is not a refined, regulated, nimble, or civilized political philosophy, but rather a critique of “global America” from the perspective of “native America” and a return to traditional values.

On February 5, 2025, people participated in the “50501” movement against the “2025 Plan” and Donald Trump’s executive orders at the Minnesota State Capitol in St. Paul, Minnesota. According to Reuters, “50501” stands for “One Day, 50 States, 50 Protests”.

Trump’s significance is profound, although not grand. Objectively, he could be considered the first promoter of the “rising East and declining West” in world history. His trade ethics, injustice, and specific obstinate understanding and practice of American imperialism and the shared future of mankind have objectively opened up a vast space for humans to explore non-Western modernization, globalization paths, and new forms of civilization. Trump’s world historical significance should not be underestimated. Meanwhile, Chinese modernization, the great revitalization of the Chinese nation, the construction of the Chinese national community, and the building of a shared future for humanity will hence be more highlighted for their civilization, moral, fairness, and universal significance and have a steady and bright practical prospect.

The post Trump: The First to Promote the “East Rising, West Falling” Trend first appeared on China Academy.

The post AI for Everyone: DeepSeek Shatters the US Capitalist Myth first appeared on China Academy.

China’s property market, which accounted for 25-30% of GDP most of the last 2 decades, went through a painful bust. Household wealth, much of it in properties, declined. Unemployment went up, especially for the fresh college graduates.

Another wave of books and theories about “China Collapse” have found eager audiences in the Western media and economic circles. Doomsday sayers abound with ideas ranging from “demographic disaster” to “Japanfication”. Reputable economists are making forecast how the Chinese economy may never catch up with the US.

The situation is certainly painted very dire in the Western media. However, for someone who lives in China, things are hardly that alarming. Frankly, it seems most Chinese are taking things in stride. Many are quite happy with the way things are compared with the go-go days of 2000s and 2010s.

Why the discrepancy in perceptions? What is the true state of the Chinese economy? How is the slower GDP growth impacting people’s lives?

As always, the secret to deciphering China’s economic performance and people’s attitude lies in the details. Most Western mainstream media reports follow a meta-narrative of China bashing, making them hardly unbiased observers. In fact, most of the economic theories are nothing more than wishful thinking for those who want to see China’s progress stalled.

Here are some facts to consider when you poke through the surface and understand the economic reality in China –

– GDP contribution of the property industry was a negative 2% in 2024, meaning the rest of the Chinese economy grew 7% to achieve a 5% overall growth.

– Total contribution of the property industry to Chinese GDP has fallen below 20% from a high of 25-30% a few years ago. This is a much-needed rebalancing as more capital and resources are now redirected to other productive industries such as green energy and high tech,

– Housing prices have fallen between 30 to 40% in most Chinese cities in the past 5 years. This has a massive downward wealth effect for property owners, pressuring consumer spending. But housing has become much more affordable for urban households. Housing sales and rental prices have both declined.

– Few Chinese households have got into financial crisis from falling housing prices as average mortgage borrowing is less than 50% of total housing price. There is a much higher level of downpayment in China than elsewhere (typically 70-80% borrowing).

– Housing sales and prices have started to stabilize in the second half of 2024. The government is planning to buy out the surplus supply and turn them into low-price affordable housing units.

– There is little to no consumer inflation in China in the last 5 years, in sharp contrast with most other countries, especially the west. Prices for food, automobiles, consumer goods, electronics, utilities, telecom services, and public transportation have been flat or declining, especially for new cars. On the hand, both new and used car prices have risen sharply in both the US and Europe.

– Annual household income growth for the past 5 years was 6.5%. Now a greater proportion of GDP is going to household income, giving China one of the highest income-to-GDP ratio globally. Urban retirement income has been raised 3 to 5% annually in the last decade, far outpacing CPI which is less than 2%.

– While luxury consumption has declined, affecting businesses such as LVMH, middle class spending has not slowed down. The average daily calory and protein intake for the Chinese has overtaken the US, according to WHO. China continues to import vast quantities of soybean, wheat, beef, seafood, and fruits from Brazil, Russia, Australia, Thailand and Malaysia.

– Discretionary consumer spending has bounced back to pre-Covid level, with travel expenditure, education and entertainment spending on double digit growth. The Chinese box-office in the 5 days during Chinese New Year last week grew 18% yoy and reached a record $1.2 billion. 4 films each grossed more than $150 million. A record number of 4.2 billion trips is recorded during the two-week period around Chinese New Year. Most tourist attractions all over the country are packed back-to-back.

– Apart from consumer spending, Chinese global trade reached a record of $6 trillion in 2024, with an unheard-of $1 trillion surplus. China is now leading the global auto industry, photovoltaic industry, solar/wind/hydro/nuclear power industry, robotics, etc.

China has increased its share in global semiconductor industry. China has even made inroad in the commercial aviation industry with COMAC taking a bigger share of narrow-body passenger aircraft market.

In fact, I challenge anyone to name a single manufacturing industry where China has not become more competitive, moved up the value chain, and gained global market share.

For the average Chinese, the top-line GDP growth number matters little. I suppose the feeling is shared by the average Americans, who were barely moved by Biden’s so-called high GDP growth in the voting box.

For the average Chinese, the slower GDP growth has translated into 1) lower housing cost; 2) little inflation; 3) no impact on real income growth. I doubt many are feeling gloom and doom.

On the other hand, the “high” GDP growth in the US has not benefited the average Joe-six-pack who must deal with higher housing prices and rents, high inflation across a full spectrum of products and services, including big-item spendings in cars, student loans and healthcare.

Once again, if you read the voodoo economics from the propaganda machine, you will get the relative economic well-being of the Chinese and the American completely wrong.

The post How Are Chinese Thriving in a “Collapsing” Country first appeared on China Academy.

While this is said in jest, it cleverly highlights the unique status and influence of companies including DeepSeek, Unitree Robotics, Deep Robotics, ManyCore, Brian Co and Game Science—recently dubbed by netizens as the “Hangzhou Six Tigers.”

At the ZhiJiang Laboratory on KeChuang Avenue in Yuhang District, Hangzhou, intelligent supercomputing is merging with quantum science, powered by the new-generation Sunway supercomputer. This fusion is evolving into the Sunway Quantum Simulator, embodying an endless pursuit of computational power to drive boundless scientific exploration.

The Central Axis Design Plan for the Future Sci-Tech City in Yuhang District, Hangzhou

Meanwhile, at the Game Science studio, located just a few dozen kilometers away, Art Director Yang Qi is fine-tuning the particle effects for the BOSS Yellow Wind Sage in Black Myth: Wukong. In Unreal Engine 5, millions of sand particles are individually computed, each carrying the aesthetic essence of the Dunhuang mural.

These two seemingly unrelated scenes actually reveal the same underlying transformation: when technological innovation reaches a critical point, incremental changes inevitably lead to a qualitative breakthrough. The rise of the Hangzhou Six Tigers is a direct reflection of this shift in the business world.

To Reach the Peak of Civilizational on the Technological Plateau

The breakthrough of Hangzhou’s tech innovation enterprises is, at its core, a multidimensional ascent on the technological plateau. Their deep exploration of open-source strategies is less a business decision and more a civilization experiment. At a time when global AI giants are building high technological walls, this Hangzhou-based company has fully open-sourced a large model with hundreds of billions of parameters, achieving key breakthroughs in Chinese semantic understanding. According to its technical white paper, the model demonstrates exceptionally high accuracy in recognizing tonal patterns in classical Chinese poetry—an achievement rooted in the team’s digital reconstruction of ancient texts. Rather than racing to catch up with GPT, they are constructing a Babel Tower for the Chinese-speaking world.

Built on a homegrown computing platform, DeepSeek’s lightweight model outperforms international models of the same scale in evaluating Chinese semantic understanding and reading comprehension tasks. A large model should not be a mere echo chamber of a single culture but a symphony of diverse civilizations—an awareness that has already become an intrinsic part of the new generation of tech enterprises.

The explosive success of Black Myth: Wukong has given Chinese gamers hope for homegrown AAA games.

Game Science’s breakthrough carries profound symbolic significance. In the AAA gaming industry—long dominated by Western studios—they have reimagined the aesthetic framework of Journey to the West using Unreal Engine 5. In Technical Director Feng Ji’s office, replicas of ancient Chinese texts sit side by side with NVIDIA graphics cards, hinting at the dual essence of this technological revolution: harnessing world-class graphics technology to craft stunning visuals while ensuring that the Jingubang of the Yuddhajaya Buddha traces the trajectory of Eastern aesthetics.

This fusion of cultural awareness and technological transformation is reminiscent of how Nintendo infused ukiyo-e aesthetics into video games in the 1980s, pioneering a new era of artistic expression in gaming.

For example, in Black Myth: Wukong, the Game Science team reimagined the classic image of Sun Wukong, combining their redesign with Unreal Engine 5’s real-time rendering technology. This allows players to experience a dreamlike Eastern mythological world within the game. From the intricate details of the character’s fur to the interplay of light and shadow in the environments, every aspect reflects a deep understanding of Eastern aesthetics and a masterful execution of cutting-edge technology.

The sight of Unitree Robotics’ quadruped robots strolling across the Broken Bridge of West Lake reveals another dimension of innovation. While Boston Dynamics is still fine-tuning hydraulic systems in the lab, these Hangzhou engineers have already sent their robots into the tea fields of Huangshan, using LiDAR to map the growth patterns of ancient tea trees that have stood for millennia. Chinese tech companies should not always race on tracks defined by Silicon Valley; instead, they must find their starting lines amidst the misty landscapes of Jiangnan.

Founder Wang Xingxing embodies the theory of “scenario-native innovation,” firmly believing that the close integration of technological innovation and market demand is the key to a company’s success. In the fields nurtured by both technology and nature, Unitree Robotics’ robots are not merely cold, mechanical devices—they are guardians of the earth and cultivators of life.

Imagine such a Jiangnan scene being brought to life by Unitree Robotics: as the morning dew still glistens, the robots begin their daily work. Their “eyes”—high-precision sensors—gently scan the stems and leaves of crops, recording every subtle change in growth. Traces of pests and diseases cannot escape detection, and soil moisture is measured with precision. These data points, like the whispered secrets of the earth, are collected by the robots and relayed to farmers far away. When the planting season arrives, these robots transform into messengers of hope, carrying seeds of life along pre-mapped routes, following the contours of the land to sow them gently into the soil.

An Eastern Response to the Geography of Innovation

Looking back at the rise of Silicon Valley in the 1970s, one can find striking temporal and spatial parallels with today’s Hangzhou. The technological spillover from Shockley Semiconductor Laboratory led to the creation of Fairchild Semiconductor and the entire integrated circuit industry. Similarly, the technological diffusion within the Alibaba ecosystem has fostered the emergence of new innovations in fields such as cloud computing and large AI models.

Alibaba’s Global Innovation and Development Initiative has provided training for thousands of entrepreneurs worldwide in recent years.

This “maternal fission” style of innovation inheritance in Hangzhou reflects a stronger sense of cultural consciousness—entrepreneurs here are no longer content with merely being technology importers; they aspire to become interpreters of civilization.

The transformation of Germany’s Ruhr region offers a valuable reference. Once an industrial rust belt, it reinvented itself by converting steel mills into digital innovation hubs, achieving a metamorphosis from “coal to code.” Hangzhou’s “Heavenly Silicon Valley” initiative clearly draws inspiration from such experiences, yet it infuses a unique Eastern governance philosophy.

Yuhang District’s “Innovation Rainforest” policy doesn’t mirror Silicon Valley’s laissez-faire approach, nor does it replicate Shenzhen’s intensive industrial planning. Instead, by establishing innovation hubs like the Zhijiang Lab and Westlake University, it has built a deeply integrated ecosystem of industry, academia, and research. The cultivation of this innovative soil is backed by data, demonstrating its effectiveness.

In 2023, Hangzhou’s total R&D expenditure intensity reached 3.92%, achieving domestic substitution for 38 key technologies and securing 20 National Science and Technology Awards. For three consecutive years, the city has ranked 14th among the world’s top 100 technology clusters.

More importantly, these investments exhibit a distinct Pasteur’s Quadrant characteristic—most research projects hold both fundamental scientific value and strong commercial application potential. As one tech analyst noted, “Hangzhou is rewriting the geography of innovation, proving that a rich cultural heritage and cutting-edge technology can thrive together.”

A Navigator’s Map for the New Age of Exploration

In a rooftop café in Binjiang District, gatherings of Hangzhou’s tech innovators often spark intellectual collisions. Some interpret agile development through the lens of classical philosophy, while others draw on ancient craftsmanship texts to explain the philosophy of hardware iteration. This fusion of cultural heritage and technological thinking has given rise to a unique methodology of innovation.

DeepSeek’s breakthrough in model architecture is particularly representative. While the global AI race fixates on ever-larger models with hundreds of billions of parameters, they have taken a different approach—developing a modular expert system that leverages smaller, composable models to achieve peak efficiency in specific scenarios.

This leveraging minimal force for maximum impact philosophy aligns with Alibaba Cloud founder Wang Jian’s vision of “computing power democratization,” yet it distinctly embodies Eastern wisdom. Much like traditional artisans who transform ordinary materials into exquisite crafts through meticulous, multi-step processes, true technological mastery is revealed in the finest details.

In medical imaging diagnostics, DeepSeek’s modular expert system enhances accuracy and efficiency by combining specialized small models to analyze disease-specific imaging features with precision. These small models function like dedicated experts, each specializing in the characteristics of a particular disease. Working collaboratively, they meticulously examine every detail of medical images from a microscopic perspective, ensuring a more refined and insightful analysis.

This characteristic becomes even more pronounced in business strategy. Unitree has demonstrated the ability to drastically reduce the cost of robotics, yet unlike previous industry players who rushed to find quick commercialization avenues and expand blindly, they see their products as a means to drive technological progress. Instead of prioritizing short-term monetization, they are exploring a dual-engine approach—balancing cost efficiency with technological advancement—on the path toward AGI.

The logic behind these choices differs from Silicon Valley’s rapid iteration and capital-driven model, which prioritizes technology regardless of cost. It also contrasts with the past tendency of many Chinese companies to rush commercialization. As industry analysts have noted, The new generation of Chinese tech leaders is forging a third innovation paradigm—one that is neither purely market-driven nor purely technology-worshipping, but instead seeks a strategic foothold within the dialogue of civilizations.”

Clues for the Future Hidden in the Folds of History

Expanding the perspective to the history of industrial revolutions reveals the deeper significance of the “Hangzhou Phenomenon.” The cotton mill owners of 19th-century Manchester could not have foreseen that the roar of their steam engines would usher in the railway era. Likewise, the automotive engineers of 20th-century Detroit did not anticipate that the assembly line revolution would reshape human civilization. Today, Hangzhou’s tech innovation cluster may well be standing at a similar historical inflection point.

Research by experts in the history of technology at Cambridge University reveals that truly world-changing technological innovations often arise from the creative recombination of mature technologies. Game Science’s revival of Eastern mythology through Unreal Engine 5 and Unitree’s integration of robotics with agricultural applications exemplify the essence of recombinant innovation.

Meanwhile, DeepSeek’s breakthroughs in large Chinese language models evoke comparisons to the transformative impact of Gutenberg’s printing press on the dissemination of traditional texts. When the language of technology deeply merges with the mother tongue of civilization, it sparks a shift in cognitive dimensions. The energy of this transformation is already beginning to surface at a micro level.

Recent research from relevant labs at Zhejiang University has found that employees at Hangzhou’s tech innovation enterprises exhibit a dual-cognitive ability in both culture and technology that is significantly higher than the national average. They are not only skilled in writing complex algorithms using professional programming languages but can also discuss engineering wisdom from ancient texts during their leisure time. This unique cognitive structure may well be the deep advantage behind China’s technological innovation.

Standing at the archaeological ruins of Liangzhu City (a cluster of Neolithic sites), the sound of ancient ancestors polishing jade artifacts five thousand years ago seems to converge with the hum of server clusters in Yunqi Tech Town, bridging time and space. This cross-millennial technological dialogue reveals the essence of the “Hangzhou Six Tigers” phenomenon: they are not simply chasing the waves of technology; rather, in the collision of digital civilization and Eastern wisdom, they are seeking a third space to house the human spirit.

The Digital Intelligence Installations at the Liangzhu Museum

When the head of Alibaba’s Damo Academy predicted that “the next major technological breakthrough might emerge from Hangzhou,” he was perhaps hinting at a shift in the forces of civilization. From the precision components in Unitree robots’ joints to the language processing technologies in DeepSeek’s models, these technological elements are collectively weaving a new map of civilization. On this map, traditional architecture engages in a dialogue with modern tech parks from across time, the textures of traditional craftsmanship seek mathematical expression through high-performance computing, and classical aesthetics are transformed into the narrative syntax of augmented reality.

Historian Arnold Toynbee once asserted, “The 19th century was the century of the British, the 20th century was the century of the Americans, and the 21st century will be the century of the Chinese.” Yet, the tech entrepreneurs of Hangzhou have offered a more nuanced answer—they are not competing for “whose century it is,” but rather crafting a new era where technology and civilization coexist. In this era, the flying eaves of traditional architecture and the signals of modern communication will together define the meaning of progress. And the world will ultimately understand: the most profound innovation is always the creative transformation of civilization’s genetic code.

The post How Is This City in China Leading Global Tech Innovation Over the U.S.? first appeared on China Academy.

We believe that 2025 is the year when the investment community realizes that China is surpassing the rest of the world. It is increasingly difficult to ignore the fact that Chinese companies are offering better value for money and often better quality in many manufacturing sectors and, increasingly, even in services.

Investors pay for dominance, and we expect the “China discount” to disappear. Moreover, with policies favoring consumption over production and likely due to financial liberalization, we believe profitability is expected to exceed expectations through the cycle. We believe the bull run in Hong Kong/China equities began in 2024 and will exceed previous highs in the medium term.

China first emerged as a dominant player in global apparel, textiles, and toys. It then dominated in basic electronics, steel, shipbuilding, and more recently in white goods, solar, and other less visible sectors.

China has also, without warning, dominated in industries such as complex telecommunications equipment, nuclear power, defense, and high-speed rail. These technological achievements were previously unappreciated by investors.

But by late 2024, China is in the spotlight for its rapid rise as the world’s leading auto exporter, flooding the global market with electric vehicles that are advanced, attractive, and cheaper than existing models.

In 2025, China launches the world’s first sixth-generation fighter jet and a low-cost artificial intelligence system, DeepSeek, in a week.
Marc Andreessens calls the launch of DeepSeek a “Sputnik moment” for AI, but it’s more like China’s “Sputnik moment,” marking the recognition of Chinese intellectual property. China’s areas of excellence in high value-added sectors and dominating supply chains are expanding at an unprecedented pace.

We believe that global investors tend to significantly underweight Chinese assets, just as they avoided fossil fuels a few years ago, until the market punishes investors for making non-market-oriented decisions. We see minimal exposure to China today. Investors who like leading companies with moats cannot ignore this: it is Chinese companies, not the Western companies they see as economically superior, that have the widest and deepest moats today.

China’s manufacturing prowess is clear, with twice as many goods exports as the United States. China contributes 30% of global manufacturing value added, and its share of services is rising rapidly. China has been shunned as an investment destination due to concerns about its economic weakness, but despite a cyclical slowdown, it is still growing more than twice as fast as most developed markets.

With companies that lead in nearly every industry, it is unlikely that China’s share of global market capitalization will remain in the single digits for long. We believe there is a growing recognition that China today is where Japan was in the early 1980s, when Japanese companies were climbing the value chain, producing higher quality products and emerging with innovation. Many Western companies and industries may face a potential existential crisis and therefore need to recalibrate their portfolios to reflect this.

To survive, Western companies will need to: 1) automate at scale; and/or 2) erect trade barriers. The second path has historically been a downhill climb for economies, and while that is happening, it will not necessarily help the West. In the automotive sector, for example, China’s main export markets tend to be the roughly 7 billion people outside the G10 countries.

Looking at the major categories of international trade, China is gaining share in all but apparel (a sector it dominated before expanding its operations overseas). China is larger than the United States in key commodity categories, and often many times larger. The only exception is cars (in value terms, not volume), but China is probably ahead there too – Ford’s CEO drives a Xiaomi, and it’s hard to see that changing.Even in services, China is catching up, with transport services for example increasing share by about 0.5 percentage points per year.

Using patents as a proxy for IP

China has a complete value chain and has formed local professional clusters, with multiple Silicon Valley-like areas of expertise in key industries, and works closely with domestic universities on research.

In electric vehicles, China holds about 70% of patents, and is in a similar position in 5G and 6G telecommunications equipment.

In 2023, China will account for nearly half of global patent applications. This trend is likely to continue, as China has more science and engineering graduates than the rest of the world combined, excluding India. In addition, consider that many graduates in other countries are also Chinese. Therefore, unless extraordinary circumstances occur, the rise of Chinese companies’ dominance is unlikely to be stopped in the short term.

China does face trade barriers, with US and EU tariffs on electric vehicles being an obvious example, but the West is constrained in taking action because they need to consider the more serious consequences that may arise (such as inflation, reduced competitiveness, and retaliation). In the 1980s, the United States tried to curb Japan’s development with some success, but we think China’s situation today is not like Japan in 1989, but more like Japan in the years before.

China vs. Japan in the 1980s

Throughout the 1970s, Japan’s gross national product (GNP) ranked second in the world, second only to the United States. After checking Wikipedia, we were surprised to find that Japan’s real GDP growth rate in the 1980s was only 4% per year, but this was still regarded as an important part of its economic “miracle”. By contrast, today’s anxiety about whether China’s economic growth is 4% or 5% and that it is “slow” may evolve to seeing it as a “miracle” in hindsight.

The Plaza Accord required a 40% appreciation of the yen, which slowed Japan’s industrial lead. This led to a slowdown, which the Japanese government responded with loose monetary policy. Growth recovered to 5% in 1987-1989, a period of strong stock market gains and bubbles. The recovery in growth led to a recovery in the steel and construction industries, raising wages and increasing employment. In the late 1980s, domestic demand, rather than exports, became the driver of economic growth. This may also happen in China.

Japan in the 1980s

According to Wikipedia, Japan’s economic growth was achieved through the input of a large number of cheap labor, intensive use of capital, and productivity increases. Domestic investment accounted for more than 30% of GDP, and financial repression kept interest rates low, which promoted investment. Japan acquired new technologies through joint ventures. Japan’s savings rate was 40% of GDP in the early 1970s, but fell to nearly 30% in the early 1980s. In the 1970s, Japan began to set up factories overseas to avoid trade frictions. China has only recently begun to take similar measures.

The question is: where is China on this path? Like Japan, China has experienced a real estate bubble, but not to the same extent. Moreover, it has been six years since credit tightened and the real estate downturn began. House prices have fallen by a third, mortgage rates have fallen by half, and nominal GDP has increased by about a third, so housing affordability has returned to levels not seen in many years. Stock market valuations are also low due to low profit margins and low price-to-earnings multiples. So this is not Japan in the bubble of 1989, when the value of Japanese stocks had increased 50 times in the previous 20 years.

The common view is that China will not follow Japan’s consumption-led economic development path, but will only fall into an economic downturn like Japan. But in fact, China is on a path that has been taken by the United States, Japan, Singapore, Hong Kong, Taiwan, South Korea, Spain, and many countries and regions in Eastern Europe. Unlike some other countries and regions struggling in the middle-income trap, China has become a global leader in manufacturing and an increasing number of service industries.

Japan liberalized its financial system around this time

In Chapter 12 of the IMF’s 2013 report, China’s Economic Transformation, it is mentioned that Japan in the 1980s had similarities to China’s future development path. Prior to the Plaza Accord, Japan’s financial system was highly regulated, interest rates were regulated, capital controls were strict, and demand for bank credit was limited due to ample corporate capital. Japanese investors’ large holdings of U.S. assets, combined with a weaker yen, have led to calls for Japan to open up its financial markets and make yen-denominated assets more attractive. This, in turn, has led to capital inflows into Japan and an increase in the money supply, which has fueled economic growth and asset bubbles.

China may be heading in a similar direction. President Trump may follow President Reagan’s lead in pushing for Chinese financial liberalization in a trade deal, and China may also be ready to accelerate the internationalization of the renminbi. We think this is positive for stocks because the renminbi is likely to depreciate, which would improve corporate profitability and the attractiveness of Chinese assets from a foreign exchange perspective. Why would the U.S. push for this? Reasons could include: 1) political considerations to reach a deal; 2) the belief that a weaker renminbi would offset the impact of tariffs, allowing trade to continue and impose tariffs rather than crowding out trade; 3) the belief that financial liberalization would cause the renminbi to appreciate, making China less competitive.

Regardless of external pressures, if China wants to boost consumption, liberalizing the financial system will help, by normalizing interest rates and ending the wealth transfer from savers to businesses. This will reduce overinvestment and cutthroat competition as capital will be properly allocated, which will help improve corporate profitability and ease fiscal pressures as returns on state-owned enterprises will improve. We expect large businesses, investment companies and households to increasingly pressure the government to ease cutthroat competition to boost stock market value. Just as the government previously slowed overinvestment in infrastructure and real estate, curbing overinvestment in industry is the obvious next step, and it may come sooner than expected. We expect this to be a key topic in 2025, both to appease the United States and as the situation requires, and we expect it to drive a major bull market.

But what about China’s declining population?

China’s declining population is a drag on economic growth, but many countries face this problem. We think this completely overlooks an important fact, which is that China has two advantages: 1) it is a leader in automation, with about 70% of the world’s industrial robots installed in China, which brings productivity advantages and thus increases per capita wealth; and 2) it has a huge potential market, which is expanded by the “One Belt, One Road” initiative that includes Central Asia, West Asia, the Middle East and North Africa in its development track.

Central Asia has a population of only 80 million but is rich in resources; West Asia has a population of 310 million and is generally wealthy. South Asia has a population of 2.1 billion (although two-thirds of them are in India, which currently largely restricts trade and investment with China, but this may change in the medium term). And then there is Africa, with a population of 1.4 billion. In other words, Africa has a potential consumer population of about the same size as China, and Central Asia, West Asia and South Asia (excluding India) have a potential consumer population of about the same size as ASEAN plus Latin America, and India will also become a huge market if Sino-Indian relations improve. Therefore, focusing only on China’s domestic population may lead to incorrect conclusions about China’s future.

In 2024, China’s exports grew by 7%, with exports to Brazil, the UAE and Saudi Arabia growing by 23%, 19% and 18% respectively, and exports to ASEAN countries along the Belt and Road Initiative growing by 13%. At present, China’s exports to ASEAN plus BRICS+ are equivalent to those to the United States plus the European Union, and its export market share to these destinations has increased by nearly two percentage points each year over the past five years. Even in Latin America, China is rapidly expanding its market. Therefore, although the high US tariffs will hurt China, Deutsche Bank’s economic team believes that if the United States imposes 10% tariffs in the first half and the second half, respectively, it will put 0.5% downward pressure on China’s GDP, which is a manageable shock, given that US exports account for 3% of China’s GDP.

The downside of China’s export dominance is that many major countries in the world have adopted protectionist measures even within the BRICS+, so China’s export growth is somewhat limited. However, due to their advantages in intellectual property and manufacturing value-added, Chinese companies are likely to expand their influence in international markets by setting up factories in other markets or exporting parts for assembly. The weaponization of the dollar makes investing in overseas infrastructure and factories more attractive than investing in US Treasuries, so the future direction of development is quite clear.

US-China trade issues may usher in unexpected benefits

The market generally expects the US tariff level on China to be higher than Deutsche Bank’s expectations (we expect a 20% tariff to be implemented in two steps in 2025, one of which has already been announced). But the reality may be much more optimistic than this pessimistic expectation.

The Trump administration is clearly keen on tariffs as a source of fiscal revenue, and China is seen as a major source of tariff revenue for economic and strategic reasons. However, President Trump seems to value tactical wins more, perhaps more than ideological positions that are difficult to support. In our industry, there are investors and traders. In recent years, the influence of traders has been increasing. Perhaps President Trump is more of a political “trader” than an ideological “investor”. If so, expect him to set strict stop-loss points.

The emergence of “DeepSeek” has shattered the Western fantasy that it can contain China. The United States would be better off stimulating business development by reducing regulations, providing cheap energy, and lowering import barriers for intermediate products that cannot be produced domestically. The last point may take longer to come to fruition, but we expect internal pressure from members of the U.S. House of Representatives and Senate, as well as business leaders, to return the U.S. to traditional Republican positions on trade. This may require some back-and-forth, but we expect a more pro-trade stance to eventually become part of an “America First” agenda before the midterm elections.

We believe a political “trader” would seek to lock in an early outcome, so a U.S.-China trade deal could be reached in the first half of 2025, and then focus would turn to Western Hemisphere affairs. A quick deal could include limited tariffs (as Deutsche Bank expects), the removal of some existing restrictions, and some large contracts between Chinese and American companies. If this happens (and we think it will), expect Chinese stocks to rise.

Trade and stock market are not closely correlated

Historically, trade and economic strength have always been mutually reinforcing. Therefore, we were surprised to find that there is little research linking exports to stock market performance. However, China’s exports are closely tied to global money supply growth, which has been rising but is now slowing. When we prompted Deutsche Bank’s AI platform to look for relevant research, it told us: “Some studies suggest that export growth can boost corporate earnings and therefore stock valuations… [but] some studies also suggest that a singular focus on export growth can sometimes come at the expense of domestic demand, which can hamper overall economic growth and thus have a negative impact on the stock market.”

So, paradoxically, falling exports could actually drive stocks higher for a while. China’s rise across industries has been accompanied by overinvestment in many areas. In solar, efforts are underway to cut supply, which could be bullish for stocks if other sectors follow suit, potentially freeing up some money for domestic consumption.

China’s household deposit growth has slowed to twice the rate of nominal GDP growth, but since 2020, Chinese household savings have increased by $10 trillion, and we expect these savings to be heavily used for consumption and investment in the stock market in the medium term. Therefore, Hong Kong/China stocks have a lot of room to rise on accelerating earnings growth and a re-rating of P/E ratios.

Valuing market leaders

As Chinese companies expand in global markets, it seems likely that this valuation discount should turn into a premium at some point in the future. We believe that investors will have to make a significant shift towards Chinese stocks in the medium term and that it may be difficult to acquire these stocks without pushing up share prices. We have been bullish on Chinese stocks but have been struggling to find the catalyst that would wake up the world and buy into Chinese stocks, and we think China’s “Sputnik moment” (or something like dominance in electric vehicles) is that catalyst. We expect Hong Kong/China stocks to continue to lead in the medium term, as they did in 2024. Figure 12: Comparison of expected P/E ratios of MSCI China Index and MSCI World Index

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