Peter Alexander

How to change the path of what increasingly looks to be an inevitable repeat of ancient (and modern as well) history? It is a question I struggle with each and every day.

China Morning Missive You’ll have to accept my apologies. In my note the other day I made the claim that in response to American action over Venezuela, Beijing would do nothing and sit idly by awaiting the expected, and dire, second and third order effects of said action. With that outlook a very amateur mistake on my part, as it pertains to China, was made. Not a mistake, mind you, in terms of the original outlook. It remains the case that Beijing will “do noting” in direct response. You’ll notice here, however, that there’s a vital distinction this time around with the inclusion of the world “direct” and that is what should have been expected and, we now know, was carried out. Shortly after the weekend’s Latin American activities, China announced that it would be targeting Japan with a series of rare earth export controls. To the uninitiated, the two events would look to have very little connective tissue. There’s been an ongoing, and increasingly heated, exchange between the two Asian nations over the issue of Taiwan. Any decision by Beijing to scale up the fight shouldn’t be seen as a surprising development and the same, too, in deciding to deploy rare earth export controls. What hasn’t been asked, however, is why would Beijing take such action now? This latest episode of regional saber rattling began back last November and only now is the decision to apply leverage made. If we look back to the events of 2010 when China and Japan were also entangled in a territorial dispute, Beijing had first used rare earth export controls as a point of pressure and did so almost immediately. I would argue that the difference, today, comes down to a material shift in geopolitical dynamics over the past 15 years. The gamesmanship here is for this move to act as an application of indirect pressure on America. It might even be a not-to-subtle signal as well. As is readily known, access to rare earths remains an issue for America and, while there is a delicate truce currently in place, China has various vested interest in Venezuela that are now threatened. Placing export controls on Japan might very well be an artfully telegraphed message to Washington. Beijing will be seeking some form of negotiated settlement over a host of Venezuelan related issues and the move on Japan could indicate that rare earth access remains firmly on the table. It could also be far simpler. The act of escalation would require at least some level of attention out of Washington and attention is in very short supply at the moment. The art of forced distraction on a rival is an often applied tactic by China. Whatever the case might be, it is, at least from my vantage point, clear that the placement of export controls on Japan is an indirect response to events from this past weekend. Furthermore, albeit depending on how events transpire over the coming weeks and months, additional indirect pressure applied by China should be expected. Finally, and keeping in mind China’s ever present strategic aim of embedding optionality throughout all decision making, the direct pressure on Japan serves to meet the objective of driving Prime Minister Takaichi from power. An objective I do believe that Beijing views as distinctly possible before the end of this year. https://www.reuters.com/world/asia-pacific/china-curbs-rare-earth-exports-japanese-companies-after-dual-use-ban-wsj-reports-2026-01-08/

China Morning Missive If rare earth minerals, and China’s stranglehold over the refinery process, was the topic of 2025, you should all expect to see at some point a similar heated discussion over LiDAR. This critical technology used in everything from EVs to weapon systems (you know, all that hyped up precision targeting) is dominated by Chinese players and now, with the latest application, robotics, the subject looks to be finally gaining the attention of various American interested parties. The reason for bringing this topic up today is in relation to the news that Nvidia has selected a Chinese company – Hesai Technology – to provide LiDAR sensors to its recently announced autonomous driving platform. A rather sharp shift from the American conventional wisdom (ie Elon Musk) which viewed LiDAR as a luxury and which favored a camera-centric system for autonomous driving. Hesai is currently the single largest supplier of LiDAR sensors globally and is a company I’m fairly certain virtually no one has ever heard of. It is also a company which has been uniquely responsible for obliterating the cost to manufacture. From sensors priced in the thousands of US dollars, Hesai built an in-house production facility and is now selling sensors at just US$500. Not only is the company now beginning to shift focus towards the robotics industry, but it is also in the process of doubling its manufacturing capacity with the stated aim of reducing the price point to US$200. A well-worn tactic among Chinese companies over the past three decades: Build a competitive product and then scale production aggressively to price out the competition. Just think back on the entire solar panel industry and, I would highlight, the example of Sunnova and with it the limitations laid bare of an American industrial policy. Dozens of American industries are reliant on LiDAR systems and while it isn’t all that clear the degree of sourcing from China given both cost and availability of supply it would be reasonable to conclude that there is an industrial dependence. Then there is the “national security threat”. Even the most minimal reliance on Chinese LiDAR would be looked upon as concerning. It is, after all, Chinese tech and Washington has made it quite clear that Chinese tech is to be avoided at all costs. For myself, the actual issue isn’t about LiDAR or rare earth minerals for that matter. I’ve stressed for the lonest time that China produces everything and America produces nothing. Perhaps a gross exaggeration, but the point still holds. For the foreseeable future there is little that can change this dynamic. The leverage in the geopolitical relationship is owned by China and, it is now increasingly clear, both sides understand this to be true.

South China Morning Post

Nvidia chooses China’s Hesai for lidar in Hyperion autonomous driving platform

Hesai will supply lidar sensors for Nvidia’s Drive Hyperion, targeting L4 self-driving, as the firm accelerates global expansion.

It’s official. 2026 in China. Be well all. Find peace and the goal for the New Year is to be happy for all successes be they yours or be they others.

China Morning Missive Well, there is certainly a great deal of positivity (again) from the latest round of bilateral talks between China and the United States. From what is being made public, the two sides have reached a “framework” of a deal with Trump and Xi signing off when they meet on Thursday this week. As Brad Pitt said in the move Seven though, “What’s in the box? WHAT’S IN THE BOX?” What concessions did the American side make? Up to this point what we know is the following. The TikTok deal is set to “close” on Thursday. China is preparing a “substantial” purchase of soybeans. Rare earth controls are to be postponed by a year. These are just the three larger key issues that we know of and are said to have been concluded. If China had all the leverage (which it did) and China has agreed to basically all terms, what has the American side agreed to? Thus far, Bessent is playing the game that China made concessions and with that America won’t be moving forward on the additional 100% tariffs which Trump had threatened. Nonsense. That’s Bessent providing cover to the media so that the actual details of what real concessions were made don’t need to be raised publicly. The obvious candidate would be China’s access to key technology. While I suspect that technology will be part of the American deliverable, the focus needs to remain on Taiwan. It’s always been Taiwan. I’ll also be paying close attention to the Typhoon missile systems in the Phillipines and the second installation that was placed just last month in Japan. I’m also expecting the two parties to publicly make an agreement over the future of nuclear nonproliferation. Just keep in mind that the Chinese don’t trust any verbal agreement with an American President (ironic tough that may be). All of what’s been agreed to, and I mean the real issues and not TikTok, will have had the Chinese press for a Fourth Communique. That takes time. My ongoing thesis is for Trump to travel to China in early 2026 and for Xi to travel to the States in early 2027. It will be on that US trip when the parties would sign a new communique laying out an agreement over how best to divvy up the Asia-Pac region.

US Treasury chief Bessent says ‘substantial’ trade framework with China reached — TradingView News

My new mantra “Fuck You! Make me!”

China Morning Missive There seems to be a new term flying around the social media universe. “Escalation dominance”. Basically, it’s just a fancy way of saying China has far greater negotiating leverage as compared to the United States. Well, this bilateral imbalance has been at the core of the Notes I’ve been putting out for the past six months. My very succinct summary is this. China produces everything and America produces nothing. I’m not here to beat on America and China is most certainly working through its own issues. When you step back though and look at both parties on a net-net basis there is no other conclusion to draw than that of trade terms being dictated by China. Here is the best real-world example that I can give. To start, the current imbalance is the result of a three-decade period where multinational groups aggressively outsourced production to China. You hear this all the time. China hollowed out middle America. What doesn’t seem to get enough attention is that this entire imbalance was loudly telegraphed back in 2018 during Trump 1.0 and yet no corrective action was taken at that time. Just consider Apple as one example. Tim Cook knew at the time the precarious nature of Apple’s manufacturing dependence on China. Did he decided to marshal the company’s ample cash hoard and take aggressive steps to diversify away from China? Of course he didn’t. Such action would have tanked the stock. All that Time Cook did was accelerate the company’s share buyback program. For those who may doubt, I am a Red-Blooded American. There is, however, a reality that cannot be ignored. Like it or not, a very deep hole has been dug, and the first order of business is to stop digging. This then means that a collaborative relationship with China is the only option …. for now. A system based on financialization must shift aggressively to one centered on reindustrialization. It’ll take time, but as the old Chinese adage goes, “The best time to plant a tree is twenty years ago. The second best time is today.” https://www.politico.com/news/2025/10/12/china-defiance-trump-100-tariff-00605499

Ok, for those who have seen this content below, and with the greatest respect to @HODL, this information is patently false. Moreover, this trope - all of what Peterson claims - has been promlagated by more podcast hosts and guest than I can recall. I jaywalk all the time and there’s been no consequence and there’s certainly been no deduction of any cash from my bank account. And having your face plastered in public? Are you serious. First off, there aren’t that number of screens and whatever screens are out there are a blaze with commercials and marketing. Here is what I can share. If you do happen to share “sensitive” content on any of the various social media platforms you will receive a message to refrain from any such future commentary. If you continue, then your social media account will be suspended. I believe that this has happened more than a few times in the US and, well, just look at the UK at the moment. When it comes to third party commentary on China, my recommendation is to always question whether than commentator has been to China at any point in the recent past. I’ve found that most people haven’t been to China in at least six years, pre-Covid times. What we have is an ecosystem where errant tropes, that so beautifully align with hardened biases, are picked up and then repeated over and over again to the point that, well, it is all taken as truth. My suggestion to everyone is to tread skeptically when consuming content on China by individuals who, themselves, are only passing on second hand information. Do the same too, have a raised eyebrow with people like myself. Just don’t take what you see as gospel. The only way to know with the utmost confidence is to get on a plane and come to China to see for yourself. Make up your own mind. View quoted note →

The Chinese game MahJong, specifically the Shanghai version, provides some unique cultural insights. Uploading the video below for those interested.

China Morning Missive There is always more that hides behind the public veil. Recall when the US and China met in London in June. The parties left the talks and the entire conversation centered on China’s agreement to resume exports of rare earth materials. There was zero commentary as to what the US side would deliver in return. Within a matter of a single week the quid pro quo became known. The US would begin lifting certain technology related export controls. This very same dynamic is at play with the recent trade talks in Madrid. While the focus has centered on China approving the sale of the US TikTok platform, there’s been zero focus on what the US would deliver in return. Now we have the highly expected move by China to begin purchases of American soybeans. As background, China is the single largest export market for American soybeans with, for reference, $13bn in exports, or roughly 20% of all production, in 2024. For this year, China has purchased zero American soybeans. The harvest has now arrive and the farmers are desperate. China has now returned to the table and it is highly likely for a large purchase agreement to be announced in the coming weeks. That then means China has “delivered” for American twice. All of this begs the question. What is it that the Trump team has delivered which would be of an equitable value. I will say it again. The deliverable is Taiwan. https://www.bloomberg.com/news/articles/2025-09-23/us-crop-markets-rise-as-chinese-trade-envoy-meets-us-delegation