China This Week: Trade Wars, Tech Wins: Is China Winning the 21st-Century Cold War?
In this issue, we map the power transition unfolding through EV stats, AI ambition, preservation pitfalls, and global diplomacy—with the U.S. often a step behind.
China Quote 🗩
“Many of these agitators are foreign students. Harvard’s leadership further facilitated, and engaged in coordinated activity with the CCP, including hosting and training members of a CCP paramilitary group complicit in the Uygur genocide”
Department of Homeland Security while banning the Harvard University from SEVIS
Trump’s Tariff Tunnel Vision Lets China Take the Lead?
In the early months of President Donald Trump's second term, a shift in global power dynamics might be unfolding. While the American administration intensifies its focus on trade tariffs and short-term economic gains, China is strategically investing in long-term technological and industrial dominance.
What we are witnessing is a textbook case of geoeconomic statecraft where economic tools are wielded to achieve strategic power objectives; intertwined with a broader “power transition” dynamic. Power transitions occur when a rising challenger threatens to overtake an established hegemon. But unlike historical confrontations marked by military build-up, today’s struggle is being waged through supply chains, silicon chips, and artificial intelligence.
China, maybe not following the Soviet model, is not opposing the liberal economic order frontally. It is outcompeting it from within, using markets, scale, and state-led coordination to methodically redraw the contours of global influence. America, by contrast, is reacting with tactical instruments to a strategic game, retreating into tariff walls while the future is being designed elsewhere.
The Red Dragon’s rise is evident across multiple sectors. China is statistically projected to account for 45% of global manufacturing by 2030, a substantial increase from 27% in 2024 . This growth is not merely quantitative but also qualitative. China leads in advanced industries such as electric vehicles, artificial intelligence, and robotics.
In the electric vehicle (EV) market, Chinese company BYD has surpassed Tesla in both sales and revenue. In the first quarter of 2025, BYD sold over one million EVs. This marks a 59.8% year-over-year increase, while Tesla experienced a 13% decline in deliveries . BYD's diversified line-up and global expansion underscore China's growing influence in the EV sector. BYD vehicles are now a fixture at almost every traffic signal in Delhi, where this piece is being written.
China's advancements in artificial intelligence are equally noteworthy. The launch of DeepSeek's R1 chatbot in January 2025 signalled a significant milestone. Although it failed to impress in some of the tests, it was praised by industry leaders like Nvidia's CEO Jensen Huang and Microsoft's CEO Satya Nadella. DeepSeek R1 demonstrated China's capability to develop AI models at the fraction of a cost rivalling those from Silicon Valley.
Furthermore, China's commitment to technological innovation is exemplified by its $138 billion national venture capital fund aimed at investing in emerging technologies, including quantum computing and robotics . This strategic investment positions China to lead in future technological breakthroughs.
However, some caveats must temper any linear reading of China’s rise. The Chinese model of governance is characterised by decentralised experimentation, policy piloting, and feedback-driven adjustment. This system thrives on flexibility rather than fixed blueprints. While this approach has enabled rapid advances in technology and industry; it also produces inefficiencies, resource duplication, and internal contradictions. In sectors like artificial intelligence and semiconductors, fragmented local initiatives and overlapping state funding have at times led to overcapacity and diminished returns.
In contrast, the U.S. approach under President Trump emphasizes protectionist trade policies and tariff implementations. While these measures aim to bolster domestic industries, they may inadvertently hinder access to global markets and supply chains, potentially stifling innovation and economic growth.
China's trajectory which is characterized by strategic investments and technological advancements, suggests a reorientation of global power. If current trends persist while economists debate the effectiveness of tariffs—the early 2020s may be remembered as the period when China decisively pulled ahead reshaping the international economic and technological landscape.
Collapse of the Drum Tower in Fengyang County: A Wake-Up Call for Heritage Preservation
On the 21st May 2025, a structural collapse was reported at the Drum Tower building in Fengyang County, Anhui Province, China, when roof tiles fell from the higher parts of the building on the ground close to tourists. The accident happened around 18:30 local time and was witnessed in videos shared extensively on social media sites. In a statement released by the Fengyang County Bureau of Culture and Tourism, there were no reports of injuries, and tourists were evacuated from the scene immediately. The affected area is now closed to the public, and local authorities are investigating. While short-term measures aim to shut off the site to secure safety and avoid any further degradation, the collapse has posed questions about the larger issues regarding the preservation of China's historical architectural heritage in the long run.
Historical Importance of the Site
Rooted within the political and cultural environment of the Ming dynasty (1368–1644), the Fengyang County Drum Tower reflects the grandeur and ambition of one of the most important periods of Chinese rule. Constructed in 1375 by order of the Hongwu Emperor, Zhu Yuanzhang, the tower was a key part of a grand plan to create a new imperial city at his birthplace, Fengyang. The Hongwu Emperor, founder of the Ming dynasty, aimed to legitimise his rule by introducing the idea of Confucian doctrine into the city and architectural space. Placed at the centre of the planned city of Zhongdu, the tower was symbolic and administrative in connotation, reflecting the emperor's wish to centralise power, reassert Han Chinese dominance, and stabilise a moral social order. Architecturally, drum towers served in a dual capacity: they were practical devices for timekeeping and communication and also had a ceremonial function, representing civic pride and state power. Classified as China's largest of its kind, the Fengyang Drum Tower is not merely a building of architectural and historical significance but of ideological significance, as a singular material manifestation of imperial ambition.
Concerns around Construction and Preservation
The standard of construction has long been a problem in China, particularly in the early decades of rapid economic growth. One such big incident was in 2007 with the collapse of a Ming dynasty gate in Fengyang County, with surrounding construction work going on; this was attributed to unauthorised activities and poor workmanship. The devastating aftermath of ineffective supervision was exposed by the 2008 Sichuan earthquake, which was responsible for the deaths of hundreds of schoolchildren in the collapse of the poorly constructed buildings. Although since then, regulations have changed, incidents still happen, which reveals a gap in the enforcement and highlights the ongoing struggle to balance rapid development with heritage preservation.
Against this backdrop, the recent collapse of the Drum Tower has brought renewed scrutiny. Officials in the tourism and heritage departments had reported issues of weathered cornice boards and loose roof tiles as early as 2017; however, large-scale restoration work started only in September 2023. The project, costing about 3.4 million yuan (about Rs 39.5 lakh), included the replacement of cracked eaves and rafters, the tightening of loose tiles, repainting, and reinforcement of safety railings. Even though the repairs were officially finished by March 2024, mere months before the tower fell, the current incident raises questions around the quality of materials used and project management. A drone survey in December 2023 detected cracks in the roof and recommended further work, but no follow-up was undertaken, as the danger was felt to be not immediate. The tower's wooden pavilion, which was rebuilt in 1995 after a fire in 1853, rests upon a largely intact brick foundation, which draws over half a million tourists annually. Factors such temperature changes and supervision lapses are also being looked into.
A wake-up call for better measures of preservation
This incident serves as a harsh reminder that there is an urgent need to strengthen preservation work for the heritage buildings across the world. It calls for routine structural assessments, which also make use of new technologies like drone surveys, 3D scanning and sensor-based monitoring to find early signs of damage. Equally important is the imposition of rigorous conservation practices and the guarantee of transparent project management, so that repair work utilises high-quality materials and follows best practices. Furthermore, trained heritage professionals should be consulted at all stages, which can help maintain authenticity while enhancing durability. As environmental and urban pressures increase, this event reminds us that preservation needs to be an ongoing, properly funded exercise and not an occasional activity. Only through ongoing commitment and inter-disciplinary collaboration, supported by global information sharing, can we properly preserve cultural icons for generations to come.
Economic Activity🏦
China’s factory output grows more than forecast despite tariffs
CNBC TV18 reports that China’s industrial output rose 6.1% year-on-year in April, beating expectations despite ongoing US tariffs. Exports to Southeast Asia and Europe offset weaker US demand. However, slowing retail sales and investment suggest fragile consumer sentiment, prompting economists to call for more policy support. The urban jobless rate fell slightly to 5.1%.
China’s Developers at Risk as Young Home Buyers Walk Away
Lex writes in the Financial Times that despite signs of stabilisation in China’s housing market, a structural crisis looms as younger buyers withdraw amid urban youth unemployment and demographic decline. The traditional presale model is collapsing, with new home sales down 9% in April. Developers face prolonged pain as the recovery remains limited to existing home markets.
Inside China🐉
Abstract of white paper on China's national security in new era
Xinhua reports that China’s new white paper outlines a holistic approach to national security under Xi Jinping, prioritising political stability, development, and global peace. It frames national rejuvenation as inseparable from security reform, supports the Global Security Initiative, and emphasises modernising China's national security architecture by 2035 through institutional innovation and coordinated development-security planning.
In Taiwan and China, Young People Turn to AI Chatbots for ‘Cheaper, Easier’ Therapy
The Guardian reports that young people in China and Taiwan are increasingly turning to AI chatbots like ChatGPT and Ernie Bot for mental health support due to cost, stigma, and accessibility barriers. While AI offers immediate comfort, experts caution against over-reliance, warning that chatbots can miss critical cues and cannot replace the depth and judgement of trained professionals.
China and the World🌏
Pakistan, China Agree to Deepen Trade, Maintain Close Communication
Reuters reports that Pakistan and China have agreed to strengthen trade and investment ties and maintain close diplomatic coordination following the recent India-Pakistan ceasefire. China reiterated support for Pakistan’s sovereignty and called for peaceful dialogue. Both sides also pledged to extend the China-Pakistan Economic Corridor to Afghanistan under the Belt and Road Initiative.
China to Donate $500 Million to WHO, Replacing U.S. as Top State Donor
Lily Kuo and Vic Chiang write in the Washington Post that China will contribute $500 million to the World Health Organization, overtaking the United States as its largest state donor. Chinese officials framed the move as a stand against “unilateralism,” as the U.S. retreats from multilateral institutions. The donation underscores Beijing’s growing influence in global health governance.
Trump’s $175 Billion ‘Golden Dome’ Plan Draws Chinese Backlash Over Space Weaponisation Risks
ABC News reports that China has condemned President Trump’s proposed “Golden Dome” missile defence system, warning it could spark a space arms race and destabilise global security. The $175 billion shield, designed to intercept threats from anywhere—including space—has raised alarms for violating the Outer Space Treaty’s peaceful-use principles. Beijing urged the U.S. to abandon the initiative.
US Envoy Holds ‘Candid’ First Talks with Senior Chinese Official as Trade Tensions Persist
South China Morning Post reports that newly appointed US ambassador David Perdue met Chinese Vice-Foreign Minister Ma Zhaoxu in Beijing for his first high-level exchange. Both sides called for mutual respect and stable ties amid ongoing trade tensions, even as the US cracked down on Huawei’s chip use. Perdue reiterated alignment with Trump’s priorities, while China condemned Washington’s “unilateral bullying.”
China Slams New US Chip Curbs as 'Bullying', Vows Countermeasures
France 24 reports that Beijing has condemned new US semiconductor export controls targeting Chinese AI chips, including Huawei’s Ascend series, labelling them as “unilateral bullying”. China’s commerce ministry warned the restrictions threaten global supply chains and vowed legal retaliation against firms that assist in enforcing the curbs. The move escalates tensions in the ongoing US-China tech rivalry.
Israel Mistakenly Fires Warning Shots at EU, UK, China, Russia Diplomats
Fadwa Hodali and Alisa Odenheimer write in Bloomberg that Israeli soldiers accidentally fired warning shots at diplomats from the EU, UK, China, Russia, and others visiting Jenin in the West Bank. The IDF stated the group had entered an active combat zone without clearance. No injuries occurred, and the IDF expressed regret for the “inconvenience caused.”
Taiwan Says China Using Cash to Sway Poor Nations on Island’s Status
Euronews reports that Taiwan’s foreign minister accused China of using economic inducements to pressure developing countries into supporting its claim over Taiwan. While offering no direct evidence, Lin Chia-lung said Beijing’s tactics include infrastructure gifts and diplomatic deals. Taiwan now has just 12 formal allies, as China steps up its global isolation campaign against the island.
Jensen Huang blasts U.S. curbs on the sale of Nvidia chips to China: ‘Export control was a failure’
Stuart Dyos writes in Fortune that Nvidia CEO Jensen Huang criticised U.S. export controls on AI chip sales to China, calling them counterproductive. He said the restrictions spurred China’s AI sector rather than hindering it, while Nvidia lost market share—from 95% to 50%. Huang warned that China’s self-reliance in AI may accelerate due to these policies.
Nvidia to work with TSMC and Foxconn on AI supercomputer for Taiwan
Cheng Ting-Fang and Lauly Li write in Nikkei Asia that Nvidia CEO Jensen Huang announced a collaboration with TSMC, Foxconn, and the Taiwanese government to build an AI supercomputer. The initiative aims to bolster Taiwan’s “sovereign AI” capabilities, reflecting the island’s central role in global AI supply chains amid intensifying geopolitical and technological competition.
Huawei Bribery Scandal: Belgium Asks European Parliament to Lift MEP Immunities
Politico reports that Belgian authorities have requested the lifting of immunities for five Members of the European Parliament over alleged involvement in a Huawei-linked cash-for-influence scandal. Eight people, including a senior Huawei executive, have already been charged. The probe centres on hospitality, meetings, and letters supporting 5G development, raising concerns over corruption and foreign influence in EU policymaking.
PLA Helicopter in Close Encounters with Foreign Aircraft Over East China Sea
South China Morning Post reports that China’s PLA aviation corps conducted 11 intercept missions over 10 days in the East China Sea, with one incident involving a foreign military helicopter approaching within 10 metres. Although the “foreign force” was not named, visuals suggest a US Navy Seahawk. The PLA described the encounters as “provocations” near Chinese waters.
Germany Targets Visa Network Aiding Wealthy Chinese Nationals
VisaVerge reports that German police raided 38 locations across nine states, arresting three suspects involved in a visa fraud ring that charged wealthy Chinese nationals up to €230,000 for fake skilled worker visas. The operation uncovered forged documents, bribery, and misuse of legal migration channels, prompting Germany to tighten visa checks and reaffirm its commitment to safeguarding immigration integrity.
How China became cool
The Economist reports that livestreamers like IShowSpeed and viral Chinese tech innovations are transforming China’s global image, especially among youth. While state propaganda has long struggled, bottom-up appeal through gaming, AI, and pop culture is working—helped by declining US favourability. Yet, scepticism remains in Asia and Europe over China’s authoritarianism, posing limits to its soft power gains.
Tech in China🖥️
China-CEEC expo's tech feast unveiled
CGTN reports that the 4th China-Central and Eastern European Countries (CEEC) Expo opened in Ningbo with a strong focus on smart manufacturing, AI, and EV partnerships. Highlights include humanoid robotics, Hungarian VR exhibits, and Slovakia’s showcase of electric vehicle ambitions, reinforcing bilateral cooperation amid broader EU-China trade tensions.
De/Cypher Data Dive📊
The rapid advancement of Artificial Intelligence (AI) has significant energy implications, particularly due to the substantial power demands of the data centers where AI models are trained and deployed. In China alone, power consumption by data centers is expected to increase 171% to 277 terawatt-hours (TWh) by 2030 compared to 2024 levels.
Image of the Week📸
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Microessays By Manashjyoti & Khushi
Data By Bhupesh
Edited By Aurko
Produced by Decypher Team in New Delhi, India