Hello Readers,
The past week has underscored just how tightly interlinked technology, security, and geopolitics have become across the Indo-Pacific. Washington is holding firm on restricting China’s access to advanced AI chips, Beijing is pushing back against what it calls “politicized interference” in the semiconductor supply chain, and Taiwan is once again feeling the downstream effects — this time in delayed fighter jet deliveries. The competition is no longer abstract or theoretical. It is reshaping supply chains, trade diplomacy, and military preparedness in real time. Here’s what you need to know.
Washington Blocks Nvidia’s China Chip Access as Tech Rivalry Sharpens
The Wall Street Journal reports that Nvidia’s CEO sought approval for exporting the company’s next-generation “Blackwell” AI chips to China ahead of the Trump–Xi summit in South Korea. Senior U.S. national security officials advised against raising the issue, arguing that the chips would significantly accelerate China’s artificial intelligence and military capabilities. As a result, the request was not discussed during the meeting, effectively blocking Nvidia’s ability to sell its most advanced hardware into the Chinese market for now.
This episode highlights how semiconductor technology has become the core battleground in the U.S.–China strategic rivalry. Washington is trying to slow China’s access to cutting-edge computing power, while Beijing is pushing to replace foreign chips with domestic alternatives. China is simultaneously criticizing allied moves such as the Dutch government’s seizure of Nexperia and expanding subsidies to encourage its tech firms to use domestic chips, even though they currently consume more energy and deliver lower performance.
China now says it will allow automotive chip exports from Nexperia to resume, easing fears of global car production shutdowns. The move follows Dutch government control of the Chinese-owned chipmaker, which led Beijing to suspend shipments. After the Trump–Xi meeting last week, China said companies can apply for exemptions to receive the parts, though Beijing continues to criticize the Netherlands for “interference” in the company and warns that broader supply-chain risks remain.
APEC Trade Truce Moves Into Implementation Phase — But Fault Lines Still Showing
The temporary U.S.–China trade truce announced in Busan is now moving into the implementation stage this week. Officials on both sides have begun outlining timelines for tariff suspensions and regulatory adjustments, though neither government has released a full public schedule.
According to people familiar with the negotiations, Washington has started the internal review process to pause the next round of tariff hikes on Chinese imports, while U.S. trade officials are drafting guidance on how certain Chinese firms may regain access to export-controlled goods under “case-by-case licensing.” Beijing, meanwhile, has signaled to rare-earth producers that export quotas will be relaxed gradually rather than in one large adjustment, citing “market stability” considerations. Chinese regulators have also intensified checks on chemical suppliers in Liaoning and Guangdong provinces—an early sign of the promised clampdown on fentanyl precursor production.
However, negotiations have already run into familiar friction points. U.S. officials continue to press for greater transparency on China’s industrial subsidy programs, while Chinese negotiators are pushing back against what they call “politicized technology controls.” There is no movement on the semiconductor export ban, and neither side appears willing to compromise on critical-technology security.
Analysis:
This is not a reset in relations. It is a managed pause with tactical benefits. The mood in both capitals remains competitive, not conciliatory. Markets will treat the tariff suspension as relief, but the fundamental picture—decoupling in high-tech supply chains, distrust in investment screening, and persistent military signaling in the Western Pacific—remains unchanged. The question is not whether the truce holds, but how long each side believes it still serves their strategic interests.
China and Russia Deepen Cooperation at Hangzhou Meeting
Chinese Premier Li Qiang and his Russian counterpart Mikhail Mishustin chaired the 30th regular heads‑of‑government meeting in Hangzhou. They called for greater alignment of development strategies, increased trade and investment, expanded energy cooperation and enhanced cultural exchanges. A joint communique and several agreements—including on customs and satellite navigation—were signed, underscoring high mutual trust and a desire for a “multipolar world.”
Commentary: The meeting reflects the resilience of the Sino‑Russian partnership despite Moscow’s struggles in Ukraine and Beijing’s economic slowdown. Both governments frame their cooperation as a counterweight to Western “unilateralism.” Expect more symbolic gestures and modest projects rather than dramatic breakthroughs, but the persistence of this partnership complicates U.S. strategic planning in Eurasia.
India to Reinstate Chinese Imports After Nearly Four-Year Block
India has decided to reopen its market to a range of Chinese goods, ending a near four-year freeze on import clearances that followed a sharp deterioration in India-China relations after border clashes. According to the Times of India, the government is expediting the certification process for products such as electronics, household appliances, footwear, steel and raw materials, to ease supply‐chain pressure during the upcoming festive season.
The blockage of Chinese imports began in early 2020, when India started withholding mandatory factory certifications for many Chinese manufacturers under its Bureau of Indian Standards (BIS) rules, while clearing domestic plants more quickly. That pause has now been reversed amid slipping inventories and surging demand triggered by recent goods and services tax (GST) rate cuts and strong consumer sales.
The decision also coincides with a subtle diplomatic thaw: trade officials are reportedly working more closely, and China has resumed certain exports to India such as heavy rare-earth magnets after a six-month interruption, helping ease constraints on India’s electric-mobility and electronics sectors.
While the move signals a pragmatic shift, caution remains. India continues to emphasize domestic manufacturing and value-addition, and all imports from China will still undergo certification on a case-by-case basis.
Lockheed Martin Moves to Speed Delayed F-16V Deliveries to Taiwan
Lockheed Martin says it is working to accelerate delayed deliveries of new F-16V fighter jets to Taiwan, after Taipei confirmed the program has slipped due to supply chain disruptions and production line adjustments. Taiwan was originally expecting all 66 of the new aircraft to arrive by the end of 2026, but the defense ministry told lawmakers this week that the schedule has now been pushed back.
Taiwan has repeatedly raised concerns about delays affecting U.S. arms sales, at a time when the island faces growing military pressure from Beijing. The United States remains Taiwan’s most critical security partner and weapons supplier.
In a statement, Lockheed Martin said it remains committed to delivering “mission-critical capabilities” to support Taiwan’s air defense posture. The company noted that the new F-16Vs are part of a broader effort that included the completion of Taiwan’s F-16 Viper upgrade program in late 2023.
Lockheed added that it is coordinating with the U.S. government to accelerate the delivery schedule “where possible,” while ensuring safety and compliance in the manufacturing process.
China Steps Up Subsidies To Cut Data Center Energy Costs and Boost Domestic AI Chips
China is rolling out significant new subsidies to reduce electricity costs for major data centers, aiming to accelerate the shift from US-made AI chips to domestically produced alternatives. Tech giants including ByteDance, Alibaba, and Tencent have faced higher operational costs since Beijing restricted purchases of Nvidia’s advanced chips, pushing them toward local suppliers such as Huawei and Cambricon — whose processors currently require 30–50% more power for equivalent compute.
To offset these higher energy demands, provincial governments in data-center hubs such as Gansu, Guizhou, and Inner Mongolia are offering subsidies that can cut electricity bills by up to half — but only for facilities running on Chinese-made chips. Data centers using Nvidia hardware are not eligible.
The policy reflects Beijing’s broader strategy to reduce reliance on US technology and build a competitive domestic semiconductor ecosystem, especially in AI. Huawei has attempted to close performance gaps by clustering large numbers of its Ascend 910C chips together, though this increases total power consumption.
Despite these challenges, China retains several structural advantages: its more centralized grid provides electricity that is both cheaper and, in some regions, greener than in the US. Remote provinces with abundant energy resources have become data-center hotspots and are competing aggressively with subsidies and incentives to host expansion projects.
With AI demand surging, China is betting that supporting homegrown chips at scale — even at a short-term efficiency cost — will pay off in global competitiveness over time.
Vietnam and U.S. Prioritize Post-War Recovery in Defense Cooperation
Vietnam’s Defense Minister Phan Van Giang met U.S. Secretary of War Pete Hegseth and signed a memorandum of understanding on post‑war remediation, focusing on clearance of unexploded ordnance and dioxin contamination, with Washington pledging US$130 million for remediation at Biên Hòa air base. The two sides also committed to training, peacekeeping, disaster relief and cyber‑defense cooperation.
Analysis: Thirty years after normalization of relations, Vietnam is leveraging U.S. support to tackle war legacies while cautiously expanding defense ties. The remediation projects have both humanitarian and strategic benefits, easing domestic anti‑American sentiment and enhancing Vietnamese capacity in areas like cyber security. However, Hanoi will continue to balance its relations with China and Russia even as it deepens partnerships with the U.S.
Thank you for reading!