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The Star
5 days ago
- Business
- The Star
‘Elephants trampling on global trade': EU sidelined by US-China showdown
Over two rounds of high-stakes talks on European soil, Europe has watched from the sidelines as the US and China tried to reach a truce that might stabilise the global trading system on which the continent is entirely reliant. Outcomes in Geneva and London that momentarily steadied the ship have been welcomed, even as officials in European capitals frantically parsed statements, posts and tweets for clues as to how the reverberations of US-China engagement would reshape Europe's trade ties, both with the superpowers and beyond. In Brussels and other capitals, the exchanges served as a reminder of the extent to which Europe's fortunes have become hostage to the whims of giants in Beijing and Washington. 'We are not a beneficiary of any of this [conflict]; we are victims of two elephants trampling on global trade,' said Joerg Wuttke, a partner at DGA-Albright Stonebridge Group, who spent decades as Europe's top business lobbyist in China. On Wednesday evening, European Union officials went to bed after hearing US Treasury Secretary Scott Bessent say it was 'highly likely' that a pause on Trump's 'reciprocal tariffs' of 50 per cent on EU goods would be extended beyond the July 9 deadline. They awoke on Thursday morning to Trump himself saying he would send letters to countries 'in about a week-and-a-half, two weeks ... telling them what the deal is'. 'At a certain point, we're just going to send letters out. And I think you understand that, saying this is the deal, you can take it or leave it,' Trump said. For Europe, the timing matters. A summit with China is set for July 24, and Brussels insiders have long believed that the outcome of Trump's tariff review would help determine what could be achieved during those crunch talks in Beijing. 'I personally wouldn't be shocked if they meet on July 24 and things have gone in reverse, where you have tariffs on Europe at 50 per cent and tariffs on China at 30 per cent. Can you imagine?' said Deborah Elms, head of trade policy at the Singapore-based Hinrich Foundation. 'It could be anything and you cannot expect to have greater clarity, or assume you are going to end up with a better situation in the future. I would say to the Europeans – and this is very hard to do – but you have to detach US policy from your own self-interest. What is it that will work for you?' While a loosening of China's export controls on rare earth elements would be welcomed in Europe, where companies have been hit by punishments designed for the US, there has not yet been any formal indication that this has happened. 'As far as I know, that has not been communicated to us yet in any structured way,' EU trade spokesman Olof Gill said on Tuesday. Anecdotally, EU business groups said licences were starting to be allocated. 'China understands that it is a weapon that they need to be very cautious [about] using, because it forces both America and Europe to invest massively in their capabilities,' said Jens Eskelund, chair of the EU Chamber of Commerce in China. A lowering of tariffs could help reduce the potential for trade diversion, a downstream impact of Trump's policies that has terrified EU companies. But the broader superpower tensions, Eskelund said, gave Europe a stronger hand when dealing with Beijing. 'No matter how much they actually agree in London, China will seek to decouple from the United States. I think there's so much animosity now that for China, as well as the United States, it is all about reducing dependencies right now,' Eskelund said. 'That is where I think there is a fundamentally different relationship with Europe. You need someone to counterbalance what you lose when you decouple yourself from the United States, and that is where I think, for China, there's a role for Europe to play.' In the meantime, the mood music ahead of the EU-China summit continued to confuse. While Beijing was talking up the potential for positive outcomes, EU officials remained gloomy. Ambassadors from the 27 member states discussed the leaders' summit agenda on Wednesday, with far more negative items floated than issues of cooperation. China's ties with Russia and unbalanced trade are expected to be the EU's top priorities in discussions with Chinese President Xi Jinping and Premier Li Qiang. On June 23, meanwhile, EU foreign ministers are scheduled to discuss China in the context of European security. 'Asking for optimism these days is not a small ask, and I think that is important to keep in mind,' the EU's deputy director general for trade, Maria Martin-Prat, said at an event in Brussels last week, adding that there was 'a huge amount of work that needs to be done between now and the summit'. Several EU insiders rejected a recent statement by China's commerce ministry claiming that a deal that would replace the bloc's tariffs on Chinese-made electric vehicles with a complex price undertaking arrangement was in the 'final stages'. One of the sources claimed there had been little movement on the talks this year, while a second recognised it as an effort from Beijing to pressure European Commission negotiators to reach a deal. While open to reaching an agreement on EVs, Brussels has doubled down on its tough approach to Beijing on other fronts. A new package of Russia sanctions proposed this week targets two regional Chinese banks accused of using cryptocurrency transactions to import goods covered by previous EU sanctions, the Financial Times reported. The bloc on Tuesday slapped a 62.4 per cent anti-dumping duty on Chinese shipments of hard plywood. The commission said it was also monitoring soft plywood imports over suspicions that Chinese sellers were camouflaging exports of hard plywood to dodge duties. These add to recent moves to put a flat tax of €2 (US$2.30) on small packages after a flood of deliveries from Chinese e-commerce platforms Temu and Shein threatened to overwhelm the bloc's postage services, and to ban Chinese med-tech companies from lucrative EU procurement tenders. Beijing, on the other hand, continued to look for openings in Europe. Amid reports that it would offer to buy hundreds of Airbus craft ahead of the summit, the Post reported this week that China wanted EU regulators to certify its domestically produced C919 aircraft. Such accreditation would help open the door for international airlines and lessors to start purchasing the aircraft, although Europe's aviation regulator said in April that it needed between three and six years to certify the Comac jet. This week also saw developments in two areas in which China was seen to have retaliated against the EU's tariffs on Chinese-made EVs. Sources in the brandy industry confirmed that a range of minimum prices has been offered to Beijing in a bid to have anti-dumping duties removed from EU cognac imports. This would cover some shipments but leave others unaffected. The proposal comes amid job losses among French drink companies, and as some smaller companies have had to stop selling to China due to the rising costs. An industry source described it as a 'survival strategy' ahead of the summit, where they hoped leaders would resolve the feud. Earlier this week, meanwhile, China extended the deadline for an anti-dumping investigation into EU pork shipments until December, buying Spanish, Danish and Dutch farmers a reprieve. But Brussels is unlikely to be moved by a delay in Beijing's application of retaliation against what the EU sees as a legitimate investigation into China's EV subsidies. The bloc has been holding out for something more meaningful. 'Generally, I think the message with China is that it should not be taking for granted the openness of the EU market,' said Martin-Prat. 'I think China has realised how we have been developing a whole range of autonomous measures, what we refer to as our toolbox, and how we are ready to use those tools.' - SOUTH CHINA MORNING POST
CNBC
12-06-2025
- Business
- CNBC
China's racing to build its AI ecosystem as U.S. tech curbs bite. Here's how its supply chain stacks up
With the U.S. restricting China from buying advanced semiconductors used in artificial intelligence development, Beijing is placing hopes on domestic alternatives such as Huawei. The task has been made more challenging by the fact that U.S. curbs not only inhibit China's access to the world's most advanced chips, but also restrict availing technology vital for creating an AI chip ecosystem. Those constraints span the entire semiconductor value chain, ranging from design and manufacturing equipment used to produce AI chips to supporting elements such as memory chips. Beijing has mobilized tens of billions of dollars to try to fill those gaps, but while it has been able to "brute force" its way into some breakthroughs, it still has a long way to go, according to experts. "U.S. export controls on advanced Nvidia AI chips have incentivized China's industry to develop alternatives, while also making it more difficult for domestic firms to do so," said Paul Triolo, partner and senior vice president for China at advisory firm DGA-Albright Stonebridge Group. Here's how China stacks up against the rest of the world in four key segments needed to build AI chips. Nvidia is regarded as the world's leading AI chip company, but it's important to understand that it doesn't actually manufacture the physical chips that are used for AI training and computing. Rather, the company designs AI chips, or more precisely, graphics processing units. Orders of the company's patented GPU designs are then sent to chip foundries — manufacturers that specialize in the mass production of other companies' semiconductor products. While American competitors such as AMD and Broadcom offer varying alternatives, GPU designs from Nvidia are widely recognized as the industry standard. The demand for Nvidia chips is so strong that Chinese customers have continued to buy any of the company's chips they can get their hands on. But Nvidia is grappling with Washington's tightening restrictions. The company revealed in April that additional curbs had prevented it from selling its H20 processor to Chinese clients. Nvidia's H20 was a less sophisticated version of its H100 processor, designed specifically to skirt previous export controls. Nevertheless, experts say, it was still more advanced than anything available domestically. But China hopes to change that. In response to restrictions, more Chinese semiconductor players have been entering the AI processor arena. They've included a wide array of upstarts, such as Enflame Technology and Biren Technology, seeking to soak up billions of dollars in GPU demand left by Nvidia. But no Chinese firm appears closer to providing a true alternative to Nvidia than Huawei's chip design arm, HiSilicon. Huawei's most advanced GPU in mass production is its Ascend 910B. The next-generation Ascend 910C was reportedly expected to begin mass shipments as early as May, though no updates have emerged. Dylan Patel, founder, CEO and chief analyst at SemiAnalysis, told CNBC that while the Ascend chips remain behind Nvidia, they show that Huawei has been making significant progress. "Compared to Nvidia's export-restricted chips, the performance gap between Huawei and the H20 is less than a full generation. Huawei is not far behind the products Nvidia is permitted to sell into China," Patel said. He added that the 910B was two years behind Nvidia as of last year, while the Ascend 910C is only a year behind. But while that suggests China's GPU design capabilities have made great strides, design is just one aspect that stands in the way of creating a competitive AI chip ecosystem. To manufacture its GPUs, Nvidia relies on TSMC, the world's largest contract chip foundry, which produces most of the world's advanced chips. TSMC complies with U.S. chip controls and is also barred from taking any chip orders from companies on the U.S. trade blacklist. Huawei was placed on the list in 2019. That has led to Chinese chip designers like Huawei to enlist local chip foundries, the largest of which is SMIC. SMIC is far behind TSMC — it's officially known to be able to produce 7-nanometer chips, requiring less advance tech than TSMC's 3-nanometer production. Smaller nanometer sizes lead to greater chip processing power and efficiency. There are signs that SMIC has made progress. The company is suspected to have been behind a 5-nanometer 5G chip for Huawei's Mate 60 Pro, which had rocked confidence in U.S. chip controls in 2023. The company, however, has a long way to go before it can mass-produce advanced GPUs in a cost-efficient manner. According to independent chip and technology analyst Ray Wang, SMIC's known operation capacity is dwarfed by TSMC's. "Huawei is a very good chip design company, but they are still without good domestic chipmakers," Wang said, noting that Huawei is reportedly working on its own fabrication capabilities. But the lack of key manufacturing equipment stands in the way of both companies. SMIC's ability to fulfill Huawei's GPU requirements is limited by the familiar problem of export controls, but in this case, from the Netherlands. While Netherlands may not have any prominent semiconductor designers or manufacturers, it's home to ASML, the world's leading supplier of advanced chipmaking equipment — machines that use light or electron beams to transfer complex patterns onto silicon wafers, forming the basis of microchips. In accordance with U.S. export controls, the country has agreed to block the sale of ASML's most advanced ultraviolet (EUV) lithography machines. The tools are critical to making advanced GPUs at scale and cost-effectively. EUV is the most significant barrier for Chinese advanced chip production, according to Jeff Koch, an analyst at SemiAnalysis. "They have most of the other tooling available, but lithography is limiting their ability to scale towards 3nm and below process nodes," he told CNBC. SMIC has found methods to work around lithography restrictions using ASML's less advanced deep ultraviolet lithography systems, which have seen comparatively fewer restrictions. Through this "brute forcing," producing chips at 7 nm is doable, but the yields are not good, and the strategy is likely reaching its limit, Koch said, adding that "at current yields it appears SMIC cannot produce enough domestic accelerators to meet demand." SiCarrier Technologies, a Chinese company working on lithography technology, has reportedly been linked to Huawei. But imitating existing lithography tools could take years, if not decades, to achieve, Koch said. Instead, China is likely to pursue other technologies and different lithography techniques to push innovation rather than imitation, he added. While GPUs are often identified as the most critical components in AI computing, they're far from the only ones. In order to operate AI training and computing, GPUs must work alongside memory chips, which are able to store data within a broader "chipset." In AI applications, a specific type of memory known as HBM has become the industry standard. South Korea's SK Hynix has taken the industry lead in HBM. Other companies in the field include Samsung and U.S.-based Micron. "High bandwidth memory at this stage of AI progression has become essential for training and running AI models," said analyst Wang. As with the Netherlands, South Korea is cooperating with U.S.-led chip restrictions and began complying with fresh curbs on the sale of certain HBM memory chips to China in December. In response, Chinese memory chip maker ChangXin Memory Technologies, or CXMT, in partnership with chip-packaging and testing company Tongfu Microelectronics, is in the early stages of producing HBM, according to a report by Reuters. According to Wang, CXMT is expected to be three to four years behind global leaders in HBM development, though it faces major roadblocks, including export controls on chipmaking equipment. SemiAnalysis estimated in April that CXMT remained a year away from ramping any reasonable volume. Chinese foundry Wuhan Xinxin Semiconductor Manufacturing is reportedly building a factory to produce HBM wafers. A report from SCMP said that Huawei Technologies had partnered with the firm in producing HBM chips, although the companies did not confirm the partnership. Huawei has leaned on HBM stockpiles from suppliers like Samsung for use in their Ascend 910C AI processor, SemiAnalysis said in an April report, noting that while the chip was designed domestically, it still relies on foreign products obtained prior to or despite restrictions. "Whether it be HBM from Samsung, wafers from TSMC, or equipment from America, Netherlands, and Japan, there is a big reliance on foreign industry," SemiAnalysis said.
Nikkei Asia
26-05-2025
- Business
- Nikkei Asia
Targeting DeepSeek won't fix Washington's flawed AI strategy on China
Paul Triolo is a Partner at DGA-Albright Stonebridge Group and Global Tech Policy Lead of DGA Group. The Trump administration appears poised to take a series of actions targeting DeepSeek, a fast-rising Chinese artificial intelligence startup whose advanced AI models have quickly gained traction among developers and tech enthusiasts worldwide. A recent congressional report called DeepSeek a "profound threat" to national security, citing concerns about potential data transfers to China, censorship applied to model outputs, and allegations that the firm used restricted Nvidia chips to train its models.
Yahoo
12-05-2025
- Business
- Yahoo
After the U.S. and China pause tariffs, rare mineral exports are now in the spotlight for future trade deals
The U.S. wants to maintain access to China's rare earth minerals. While China see its dominance of the market as a way to apply major pressure on the U.S. as the two negotiate a broader trade deal. The U.S. and China reached a détente on what had been an escalating trade war. On Sunday, at the end of this weekend's trade summit in Geneva, both sides agreed to pause the tariffs they had placed on one another. The U.S.'s tariffs on Chinese imports will be 30%, down from 145%, while China lowered its tariffs on U.S. goods from 125% to 10%, according to a joint statement. The agreement foreshadows the possibility of a future, much broader trade deal in the future. Both sides said there was a 'mechanism' in place for them to facilitate more talks. One of the key questions still left to address is China's export controls on its rare-earth minerals. China's outsize role in the global rare-earths market, and the U.S.'s desire to maintain a steady flow of the minerals, make the issue one of the most sensitive parts of the deal. As the leading exporter of rare-earth minerals, China holds massive influence in the global market for these critical materials. 'Dominating this sector is probably one of their most important sources of leverage over the U.S. and over the world,' said Dexter Roberts, nonresident Senior Fellow at the Atlantic Council, a think tank based in Washington, D.C. For that reason, China will be unlikely to relent on its export controls. 'Now that they punished the U.S. with rare earth [export controls], they're not going to take away this economic part of their economic arsenal,' Roberts said. Many of those minerals are key ingredients in advanced manufacturing of products like electric-vehicle batteries, smartphones, and for military applications such as missiles and radar systems. The fact that rare-earth minerals are used in the defense technologies means the exports have national-security implications for both countries, only adding to the complexity and urgency of finding a solution that suits both sides. After the White House announced its global tariff policy on April 2, China ratcheted up its export controls on rare earths as retaliation. Included in those new policies was a requirement that foreign countries would have to apply for licenses to purchase rare-earth minerals. While it does have a tense relationship with the U.S. at the moment, China does not want to close it off entirely from the rare-earth minerals market, according to Jeorg Wuttke, partner at the advisory firm DGA-Albright Stonebridge Group and an expert in Chinese trade. 'The Chinese don't want to cut off the U.S., but they want to threaten it,' he said. Rare earths represent big business for Chinese firms. In 2024, its total exports of rare-earth minerals rose 6% to 55,431 metric tons, according to Reuters. Though, because they are commodities with fluctuating prices, the value of those exports fell 36% to $488 million. During the height of the U.S.-China trade dispute last month, production came to a virtual standstill. The trade war both hit China's rare-earth industry on two fronts, making it both more expensive for foreign buyers and requiring them to get government approval for any purchases they did make. Despite the mounting frustrations between the two countries, China is wary of giving off the appearance of politicizing its rare-earths business because doing so could put off the rest of the world from doing business with it, Wuttke said. 'The Chinese are very aware of the fact they want to come across as reliable supplies to American companies,' Wuttke said. 'As much as they dislike American policies, they still want to be engaged with U.S. companies.' Part of China's additional export controls included a policy that required companies to apply for a license to purchase rare-earth minerals. One of the first companies to apply for such a license was Tesla, which uses them to make batteries for its cars, among other things. There are some indications that as relations thaw, U.S. companies will receive expedited approvals during the process, according to Reuters. Others, however, see China as being unbothered about applying significant pressure to the U.S. over rare earths. 'I don't think China's really worried that if they play too much hardball, they're suddenly no longer going to be relevant in the rare-earth market,' said Dexter Roberts. 'I don't believe that.' The U.S. has begun looking for other sources of rare-earth minerals—namely in Greenland and Ukraine. The U.S. does also have its own deposits of rare-earth minerals, but they are not mined to the extent they are in China. Mining these elements is expensive and bad for the environment, making it difficult work to undertake. Any effort by the U.S. to diversify its supply chains away from China would be considered a medium- or long-term goal. Agreements over minerals with allies would also take years to negotiate and then implement. And the construction of any new entirely new mines takes, on average, 18 years for them to become operational, according to S&P Global. That means the most likely outcome is further reconciliation—however uneasy—with China. Experts said a deal with China over rare earths could be on the horizon. 'They could announce something on rare earths in the coming days,' Roberts said. 'I wouldn't be surprised.' This story was originally featured on
Malay Mail
01-05-2025
- Business
- Malay Mail
Beijing delays US trade talks amid Trump team divisions, eyes tariff fallout in July
BEIJING, May 1 — China is holding off on entering serious trade negotiations with the United States as it waits to see which of former President Donald Trump's advisers will shape his evolving trade policy, according to sources familiar with the matter. Beijing is in no hurry to resolve the tariff deadlock, citing deep divisions within the Trump administration's trade team and ongoing uncertainty about the final direction of US policy, according to a report published in the South China Morning Post. 'There is no clear sign which clique will win,' one source said, referencing the competing views of Trump's key advisers — Peter Navarro and Robert Lighthizer, who favour decoupling, and Treasury Secretary Scott Bessent, who supports a balanced deal. The source said engaging in talks prematurely would risk exposing Beijing's negotiating position without knowing who would ultimately be on the other side of the table. A commentary by a state-linked social media account, Yuyuan Tantian, said while the US had approached China through multiple channels for talks, there was 'no need' for Beijing to respond without substantial moves from Washington. China is expected to watch closely until the end of July, when a 90-day reprieve on tariffs imposed by the US lapses. These tariffs, announced on April 2, apply to most countries except China, which was not granted the grace period. 'The key is to see how much the US market can handle and how it performs around July,' said another source, suggesting tariff increases were likely but should remain moderate. Beijing is also monitoring deals the US might strike with other countries, such as India and Indonesia, during the grace period before determining its next steps. In the meantime, China has intensified efforts to strengthen economic ties beyond the US and advance domestic self-reliance initiatives that have been in place since 2020. Officials say this strategy has boosted China's resilience, making its high-end manufacturing increasingly indispensable and hard to replace in the global supply chain. While acknowledging America's economic strengths, the same source cited unpredictability and internal political constraints as weaknesses that complicate the US' ability to coordinate and maintain a consistent trade strategy. By mid-April, over 75 countries had reached out to the US for trade discussions, including Japan, although progress remains unclear with many reporting a lack of clear proposals from Washington. Asean nations, also affected by the tariffs, face limited options and are reluctant to take sides amid the escalating US-China rivalry, sources said. Joerg Wuttke, a partner at the advisory firm DGA-Albright Stonebridge Group, noted that the US administration lacked cohesion, with Trump's personal decision-making taking precedence over structured policy discussions. Trump adviser Peter Navarro claimed that 90 deals could be completed within the grace period, but Treasury Secretary Bessent is leading the negotiations. Still, Trump's personal preferences are expected to dominate final decisions. Despite public claims by Trump that Chinese President Xi Jinping had reached out, Beijing denied the assertion, labelling it 'fake news' and clarifying that no formal talks had begun. Sources confirmed that communication between both sides has never fully ceased but remains informal and strategic, with no fixed agenda or clear timeline for talks. Observers expect the situation to evolve after summer, when the economic impact of tariffs could trigger rising US consumer prices and possibly shift Trump's stance based on public response and political pressures.
