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America-China Watcher

Nov 23

https://x.com/PandemicTruther/status/1992321025800081698

"China directly or indirectly makes about 3.5% of the goods Americans buy."

The Dangerous Illusion of the 3.5%

Why a low statistic hides a massive strategic vulnerability.

At first glance, the claim that "China directly or indirectly makes only about 3.5% of the goods Americans buy" feels reassuring. It suggests that despite the geopolitical noise, the two economies are relatively distinct and that US reliance on Chinese manufacturing is manageable—a minor feature of a vast economy rather than a structural pillar.
However, relying on this figure to measure dependency is a dangerous mistake. It confuses economic value with strategic criticality. By focusing on the final price tag of goods, US leaders mask two profound vulnerabilities: an addiction to artificially cheap consumption and a fragility in US critical supply chains that no GDP statistic can capture.

The "Welfare" Trap of Cheap Consumption
The primary reason the 3.5% figure is so low is that Chinese manufacturing is incredibly efficient and inexpensive. When an American buys a toaster or a smartphone, the vast majority of that purchase price stays in the US to pay for branding, logistics, retail real estate, and marketing. Only a sliver flows back to the factory in Shenzhen.

Economically, this looks like low dependence. In reality, it is a form of consumer welfare.

Because Chinese production effectively subsidizes the cost of living for the American working and middle classes, it provides a "standard of living surplus" that allows Americans to buy more with less.

The US has effectively outsourced the suppression of inflation. To "liberate" the US economy from this dynamic would not just mean shifting factories; it would mean accepting a sudden, sharp decrease in purchasing power. The reliance isn't measured in dollars spent, but in the lifestyle those dollars can afford. The US is not just buying goods; it is importing a subsidy that holds its consumer economy together.

The 0.000001% That Matters

The second, and more lethal, flaw in the "it’s not a lot" argument is the assumption that all dollars are created equal. They are not.
In a complex system, a $10 billion import of plastic toys counts the same as a $10 billion import of advanced pharmaceuticals or rare earth magnets. But if the toys stop arriving, Americans are merely annoyed. If the magnets stop arriving, industries collapse.

This is the Rare Earth Paradox. The strategic minerals required to build F-35 fighter jets, EV batteries, and medical MRI machines represent a microscopic fraction of the US GDP—perhaps 0.000001%. Yet, they are the indispensable "vitamins" of the industrial body. A human body can survive without thousands of calories of starch, but it will shut down without a tiny amount of iron or B12.

China’s dominance in the processing of these elements means they hold the keys to the entire high-tech ecosystem. The low dollar value of these imports is actually what makes them so dangerous: because they were cheap, the US ignored them. Because they represented a rounding error on the balance sheet, the US allowed a geopolitical rival to monopolize the choke points of the future.

Further, this "only 3.5% claim" underscores the fragile symbiosis between the two nations. While the US economy retains the high-value service functions—branding, logistics, retail real estate, and marketing—these sectors are entirely contingent upon the continuous, low-cost flow of Chinese manufactured goods. If this supply stops, billions in US logistics capital and millions of related jobs are instantly rendered obsolete, triggering a massive, domestic economic contraction.

https://x.com/PandemicTruther/status/1992321025800081698

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Moreover, this dependency extends to critical national sectors like healthcare. The US health industry represents nearly 20% of GDP, and its stability is highly vulnerable. While US firms still hold the patents and conduct the R&D (even losing this ground at a fast pace to China), the manufacturing of Active Pharmaceutical Ingredients (APIs) and core intermediate chemicals for many essential generic drugs is overwhelmingly sourced from China. This creates an extreme supply chain choke point.

Furthermore, this vulnerability is compounded by the rapid shift where China is quickly moving from being a mere manufacturing source to a global innovation competitor, challenging US dominance in Pharmaceutical R&D and novel drug patents, meaning US dependence is expanding from goods on the shelf to the future knowledge that determines which medicines are available a decade from now.

It is not an exaggeration to state that a complete, sudden cutoff of the Chinese supply chain would not merely cause a recession; it would trigger an unprecedented economic depression, effectively paralyzing critical industries and rendering large portions of the US service economy non-functional..

Conclusion: The Fragility of Efficiency
The claim that China represents "not a lot" of the US economy is technically accurate but strategically blinding.

The US has built an economy where the lowest-value but critical strategic components—the cheap screws, the raw minerals, the basic PCBs. the rare earths are the foundation for its highest-value outputs. By judging US dependence solely on the final receipt, US leaders miss the reality: the 3.5% isn't just "stuff." It is the keystone that holds up the arch. Removing it doesn't just lower the GDP by a few percentage points; it threatens to bring the structure down.

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The Economic Paradox of Zero Value

The claim that China’s direct contribution to the US economy is only around 3.5% calls for a shocking thought experiment: what if China chose to supply this critical share of goods for free, effectively driving its recorded economic value towards 0%?
This scenario highlights the Paradox of Zero Value, exposing the fundamental inadequacy of using traditional metrics like GDP or Personal Consumption Expenditures (PCE) to assess strategic dependency.

China supplying its critical goods at 3. 5% Is almost like free welfare.

If China were to supply its essential components and finished goods for free, its value would disappear from the economic ledgers. Yet, the US economy would remain entirely dependent, cementing the structural vulnerability in three key ways:

Contingency of Domestic Value:

The vast majority of the US service economy—the trillions of dollars generated by US logistics, retail, marketing, and real estate—is contingent upon the continuous, low-cost (or in this case, zero-cost) flow of imported physical goods. If the supply of these zero-value inputs ceased, the entire domestic distribution and retail infrastructure would be paralyzed.

Infinite Consumer Surplus: The free supply would dramatically inflate the US standard of living, creating an infinite consumer surplus—the ultimate "welfare" trap. This would deepen the US consumer's lifestyle dependency, making the eventual withdrawal of the free supply politically and economically catastrophic.

Strategic Collapse: Critical sectors, including the US health industry (reliant on APIs) and high-tech manufacturing (reliant on Rare Earths), would have their foundations built on a service that, while costing nothing, cannot be substituted. The absence of these inputs would cause systemic failure in vital areas of national interest.

In short, the thought experiment demonstrates that the US economy is structurally dependent on the availability and stability of China’s supply chain, not merely on the monetary cost of its components. The very cheapness of the supply is what allowed this indispensable dependency to form, proving that a zero-cost input can be a 100% strategic vulnerability.

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America-China Watcher

@PandemicTruther

Nov 20

#nexperia

The Nexperia Saga: How a Small Dutch Chipmaker’s “Security Review” Accidentally Handed China a Strategic Superweapon

In recent months, the behavior of several small European states has taken on a strangely theatrical tone, as if reenacting scenes from old imperial tales, assigning themselves roles far larger than reality allows. The Netherlands, convinced that history still answered to its old maps, stepped forward with misplaced certainty. By launching an abrupt “security review” of Nexperia, it tried to reclaim a company it had long since lost.

For small powers, one rule never changes: either you wield real leverage, or you understand your limits. Lose both, and strategy becomes sleepwalking.

The Nexperia case isn’t a simple corporate dispute—it is a textbook example of how a small misjudgment at the margins of the chip industry can trigger a continental crisis.

And the spark originated in Washington.

In September 2025, the United States unveiled its “50% penetration rule,” a sweeping mechanism declaring that if Washington sanctioned a company, all connected entities—subsidiaries, affiliates, partners—would inherit the same fate. More than a sanction, it was a fragmentation grenade thrown into the global supply chain.

The next day, The Hague awoke with a jolt. Dusting off a Cold War–era law from 1952, it struck Nexperia with surgical force: freezing assets, suspending management, and stripping the CEO of authority. Pure robbery in broad daylight.

The justification was European supply chain security. Beneath that veneer lay a far more provincial impulse: a belief that, under American cover, the Netherlands could simply reclaim Nexperia, sold years earlier to a Chinese company. What The Hague failed to grasp was that Nexperia’s real body was not in Europe.

The logo may be Dutch. The headquarters may be Dutch. But the lifeblood of the company—production, packaging, testing, logistics—is firmly rooted in China.

An estimated 70–80% of Nexperia’s output comes from Chinese facilities, especially Dongguan. European capacity is symbolic. Believing that an administrative move in The Hague could command a company physically anchored in China was an extraordinary misread of reality.

Reality responded immediately. Chinese management treated the Dutch seizure as expropriation. Operational links to headquarters were severed. Backup systems activated. Settlements shifted entirely to RMB. Overseas orders halted. The Chinese arm began running autonomously.

The Dutch headquarters became a shell overnight:

No authority.

No production.

No compliance.

No leverage.

Factories ignored commands. Systems froze. Personnel aligned with China. Control did not fade—it inverted.

The Netherlands tried to retaliate by cutting wafer supplies, imagining a chokepoint still existed. But China had long built reserves, localized wafer supply, and fortified weak links. The supposed chokepoint collapsed instantly.

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Europe soon understood the scale of the mistake. Volkswagen estimated that two weeks without Nexperia chips would halt production and burn €2 billion. BMW, Mercedes, Renault, Toyota, Nissan—all signaled costly disruptions. European automotive associations descended on The Hague demanding immediate correction.

Media asked the humiliating question openly: How did Europe allow its industrial arteries to end up inside China’s borders?

Even ASML—the jewel of Europe’s tech crown—watched Beijing nervously as murmurs of rare earth adjustments circulated. If the Netherlands attacked Nexperia, China could retaliate against ASML. Insurance premiums spiked. The tremor rippled across the continent.

Meanwhile, the Chinese government did nothing. Europe fragmented politically. Germany’s foreign minister flew to Beijing—no meeting granted. French automakers emphasized they wanted no part of The Hague’s gamble. Brussels repeated only one message: restore production, avoid escalation.

Because in the semiconductor world, power does not reside in headquarters on paper. Power belongs to the factories. And the factories are in China.

Phase two of the disaster unfolded: believing it was squeezing China, the Netherlands had inadvertently unplugged Europe’s industrial core. Then, with the dark humor of geopolitics, Washington quietly suspended its 50% rule for a year—without warning, without explanation. European capitals called Washington in panic; the U.S. stepped back, leaving its smaller ally to absorb the consequences.

In that moment, the Netherlands realized it was not a partner. It was a buffer. A shield.

Domestic politics imploded. Ministries contradicted each other publicly. Courts were dragged into the crisis. The Economy Minister insisted he had acted correctly, even as Europe braced for industrial shutdown. The far-right declared it proof of national treason.

The pattern was unmistakable:

Washington set the direction.

Washington applied pressure.

The Netherlands executed.

Washington retreated.

Europe revolted.

The Netherlands bore the blame.

A lesson in how sovereignty erodes when strategic decisions are outsourced.

The miscalculations were painful:

Automakers bypassed the Netherlands entirely—buying wafers in Europe and shipping them to China for packaging.

China revealed it had already replaced European wafers.

The Netherlands discovered it was a pawn, not a player.

When the dust settled, Dutch Nexperia was gutted, the Chinese operation ran independently, and Europe learned that supply chains move faster than political narratives.

III/

The Real Flag: A Crisis Too Perfect for China

From China’s vantage point, the incident is almost too good to be true. It’s not a false flag—it’s a real flag handed to China to realize all of its geopolitical goals. An accidental stress test revealed China’s dormant leverage with clarity no strategist in Beijing or Washington intended. China didn’t engineer the confrontation. It didn’t sabotage Nexperia. It simply absorbed the shock while European auto industry trembled.

The contrast is devastating: without a single threat, China could push Europe’s automotive sector to the edge of paralysis simply by letting a self-incurred supply-chain disruption run its natural course. No rare-earth announcements. No sanctions. No statements.

One small trigger—an old Dutch law from 1952—and Europe’s industrial base confronted the quiet architecture of its own dependency. China only needed to let the incident run its course.

Here lies the revelation: China is not only more powerful than Western analysts believe—it is more powerful than China itself fully recognizes.

For years, rare earths were seen as China’s loudest choke point. Now China has discovered its silent one.

A single, low-margin automotive chip—used in window motors, mirror controllers, seat sensors—froze billion-euro factories from Munich to Turin. If something so mundane can cripple a sector already weakened by competition, the implications stretch beyond civilian industries.

The principle applies to the Western military–industrial complex. The Pentagon relies on more than 25,000 China-linked suppliers. A few missing subcomponents—not exotic materials, just basic items—could halt weapons production as surely as it froze Europe’s automakers. This incident became an inadvertent simulation: proof that small disruptions at the base of a supply chain can strand entire systems, from electric vehicles to fighter jets.

The awakening was real. A small country’s overreach peeled back the curtain on modern power: it no longer rests in headquarters, boards, or legal ownership. Power lies in factories, logistics, and the mastery of industrial flow.

The Netherlands thought it was pulling a lever. Instead, it pulled a fire alarm. And China suddenly saw the building’s wiring.

No analyst could have scripted a more revealing scenario. A crisis too neat, too consequential, too revealing—so beneficial to China’s understanding of its leverage that an inattentive observer might assume orchestration. But it wasn’t. That is what makes it significant.

Europe accidentally exposed what Washington has tried to obscure: Europe’s industrial system is not merely connected to China. It is dependent on China. From base components to rare earth magnets to advanced materials, China is the backbone of thousands of Western civilian and defense suppliers.

The West imagined this dependency was manageable. The Nexperia affair proved otherwise.

This saga will be remembered not as China cornering Europe, but as Europe cornering itself. A “security review” meant to punish a rival became a global warning: when a small state misreads power, it doesn’t harm its opponent. It harms itself.

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America-China Watcher

@PandemicTruther

Sep 3

The Financial Logic Behind the Parade of the World's Most Powerful Military

China Beckons Global Capital -
A Strategic Display for the World’s Investors

China’s September 3rd grand military parades are far more than spectacles for domestic and world audiences—they are meticulously orchestrated broadcasts to the world’s capital markets. Beneath the orchestrated marches and thunder of steel lies a financial logic, one attuned to the instincts of global capital.

The Real Message to Global Capital

What do investors see beyond the flags and formations? Not sentiment, not ideology, not the thunder of the crowd. They see security—a clear signal that, in a world roiled by pandemics, war in Ukraine, Middle Eastern conflict, shipping disruptions, and ballooning Western debt, there is a place of stability.

Capital cares about only one thing: safety. Money lost can be earned again, but when security vanishes, all assets become bubbles. Militaries worldwide grow their budgets and speak of peace, but markets remain jittery—seeking havens resilient to shock.

So when Beijing unveils its missile arrays, naval assets, drone swarms, and integrated systems on live television, Wall Street and City analysts take notice. This is not just a show of strength for the public—it’s a public safety manual for capital: “Place your assets here; they will be protected.”

War, if it comes at all, will be short. The balance is no longer in question. Against all of its adversaries combined, China’s advantage is systemic and overwhelming—rooted in industrial scale, electronic dominance, and logistical reach that no coalition can match. Modern war is not won by individual platforms but by networks that see farther, strike faster, and replace losses instantly. In such an environment, the first hours would decide the outcome; within days, the conflict would be over—not through attrition, but through paralysis of the opponent’s entire command, supply, and economic lifelines.

Industrial Power as the Ultimate Moat

The true foundation of national strength is industrial power. Modern conflict is a contest of supply chains, technology, and resilience. The parade is a window into decades of accumulation: green energy materials, rare earth reserves, advanced chip production, and self-sustaining manufacturing chains.

What was once imported or controlled by others—gallium nitride, rare earths, satellite navigation—has become domestically mastered.

“Made in China” was expected to falter; instead, the supply chain underwent a decisive reshuffle and upgrade. EVs conquer export markets, shipbuilding leads the world, robotics and high-end machine tools rapidly close the gap. This resilience is the true strategic moat—one that global capital cannot ignore.

Weaponry is the manifestation of this industrial might. A deindustrialized nation can neither innovate nor defend. Each missile, tank and drone at the parade signals the health of the wider industrial ecosystem.

II/

China’s Ascendance in the Arms Market

The arms trade reflects capital’s vote of confidence. In just a decade, China’s share of global arms exports has surged to 10%. Its competitive edge? Reliable, affordable equipment, free from political strings and with flexible financing.

Clients span from Pakistan (the largest, accounting for over half of exports) to Algeria, Nigeria, Saudi Arabia, Thailand, and Bangladesh. Growing demand in Africa and Latin America stems from a simple capitalist logic: proven cost-effectiveness, reliability, and practical results.

Battlefields themselves serve as advertisements. When Pakistani JF-10Cs bested Indian Rafale fighters, capital watched not only the dogfight but the systems behind it—early warning, data links, integrated weapons. This shattered the stereotype of Chinese arms as mere “budget alternatives.”

China now exports not just hardware but complete combat solutions: aircraft, missiles, and data networks as unified systems. The value multiplies, and the cash flow becomes stable—an asset class in itself, prized by capital for its resilience to volatility.

The Parade as an Economic Signal

Thus, the September 3rd spectacle is a strategic economic message: China is more than the world’s factory—it is the safest harbour for global assets. The real broadcast is not the roar of engines but the promise of secure, stable, RMB-denominated investments, underpinned by an unbreakable supply chain and industrial capability.

Capital, ever unsentimental, measures risk and return. As the Federal Reserve signals rate cuts and global hot money seeks new ground, the parade emits a clear beacon: “Here lies certainty. Here your capital will not just be safe—it will grow.”

This is not mere showmanship; it is a calculated layout. A robust defence industry means a stable foundation for the currency, assets protected from external shocks, and a supply chain that will not be easily broken, even in times of crisis.

In the past, capital trusted the dollar, undergirded by US military and a relatively stable global order. Now, as China’s industrial moat deepens, investment flows are shifting. From Europe to Africa, the Middle East to Southeast Asia, funds are moving—into RMB, into Chinese supply chains, into defence-linked tech. They follow certainty and resilience, not slogans.

History is clear: without protection, wealth is but a lamb for slaughter. From the bruisings of the late Qing to Ukraine’s capital flight, the lesson endures. Today, China’s parade lays its cards on the global table—China is not only a place to create wealth, but to guarantee its safety. That is what capital craves. That is the real future.

I get these annoying comments all the time — people painting the United States as the eternal warmonger while insisting China must be this gentle, Confucian, humble giant. Let me tell you the biggest secret: China has not risen peacefully. China has risen militaristically. Because no nation is allowed to rise peacefully if it challenges U.S. supremacy. The only way for China to rise is through its military.

For a non-Western nation to develop on its own terms — to stand up and say, “We are as intelligent as you, and we are more technologically advanced than you” — it must rise through military strength. Not as a future deterrent. Not as a distant plan. China’s military is already fully deployed.

A war has been ongoing for almost a decade. Since Obama’s “Pivot to Asia” in 2012, 70,000 U.S. Marines have been stationed near China’s coast. Thousands of missiles are aimed at Chinese cities. U.S. carrier strike groups patrol the South China Sea every single day. F-35s and F-22s roar off U.S. bases, reconnaissance ships linger just outside Chinese waters.

It is already violent — but you don’t hear about it. The region looks calm only because of China’s fully deployed military might. Chinese warships are on constant patrol. Skirmishes happen daily. The United States keeps trying to provoke open conflict, using proxies like the Philippines or India to stir trouble and push China toward war.

However, a war can never be provoked into existence, not because the U.S. hasn't tried hard enough, but because Chinese military power makes it impossible. An intense electronic war has been going on for years — and in that domain, China has the upper hand.

When you hear about a U.S. submarine smashing into a seamount, or an F-35 crashing, or a stealth jet simply dropping out of the sky, you’re likely seeing the invisible consequences of that electronic war.

Why do you think the recent U.S.-led military exercise with 19 countries had to be held near Australia? Why not in the South China Sea, the very theater they claim to dominate? Because they’re afraid. Even there, China’s Type 815A reconnaissance ship sailed straight into the middle of the drills. The exercise stalled — because the moment it continued, every signal, every frequency, every tactical secret would be captured and recorded by that single Chinese vessel.

They couldn’t drive it away. They couldn’t stop it. It just stayed there, in the middle of the combined might of 19 nations, and there was nothing they could do. That’s how overwhelming China’s military dominance has become — a Chinese warship can appear right inside a U.S. combat strike group and remain untouched.

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America-China Watcher

@PandemicTruther

Aug 27

🧵

Beyond Chips and Sanctions: Why the US is Losing the AI War to China

The stakes are enormous if the US loses the AI race to China — and all signs suggest that’s exactly what’s happening.

Wall Street’s worst nightmare just came true. A bombshell MIT study reveals that a staggering 95% of AI investments are generating zero returns. And if that wasn’t enough—DeepSeek just announced its next-gen model will run entirely on homegrown Chinese chips. So how long can the U.S. AI bubble keep inflating? Let’s break it down.

Two brutal truths are shaking American investors to the core.

First: the sheer scale of the AI froth. U.S. firms have poured hundreds of billions into artificial intelligence—a historic frenzy fueled by private capital chasing mythical future returns. But MIT researchers sliced through the hype, analyzing 30 major companies. What did they find? Despite colossal investment, 95% of organizations see no ROI. Zero. Returns aren’t just low—they’re nonexistent.

Think back to last month: Meta dangled hundred-million-dollar packages to lure AI talent. To some, it signaled an industry on the verge of explosion. But behind the glitter, it reeked of desperation—the kind of last-gasp euphoria that screams bubble. Sure enough, weeks later, Meta slammed the brakes on all AI hiring.

Meanwhile, DeepSeek is Already Profitable – A Rare Feat in AI

While American AI giants like OpenAI and Google are burning billions with no clear path to profitability, DeepSeek stands out as a remarkable exception. According to recent financial disclosures, DeepSeek has achieved profitability with an estimated $200 million in annual revenue, driven by its scalable open-source model offerings and strategic partnerships across industries including manufacturing, healthcare, and fintech. Its R&D ROI is estimated at 35%.

The profitability of an AI firm like DeepSeek is not just a metric; it is a seismic signal to the global market. While Western AI giants hemorrhage cash in a speculative race for scale, DeepSeek’s reported 35% profit margin demonstrates a sustainable, commercially viable path. This divergence will inevitably redirect the flow of capital. There will be a fundamental reallocation of the financial and talent resources necessary to win the AI race, decisively tilting the competitive balance of the AI race in China’s favor.

But here’s the second, even darker reality: even among American big companies actively deploying AI, there’s no evidence of transformative impact. Projects aren’t scaling. Efficiency gains? Mostly theoretical. This isn’t just a correction—it’s a direct challenge to Wall Street’s belief in AI’s inevitability.

The MIT report doesn’t dismiss AI’s potential—it exposes a fatal flaw in America’s approach. Success isn’t about who spends the most. It’s about strategy, execution, and real-world application. And that’s where China’s AI ascendancy begins.

Four structural advantages set China apart—and no one else can replicate them.👇

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1. Talent Dominance

Jensen Huang isn’t shy about it: China produces nearly 50% of the world’s top AI researchers. Data from MacroPolo’s AI Talent Tracker shows China’s share of elite researchers surged from 29% in 2019 to 47% in 2022. At top AI conferences, Chinese-authored papers jumped from 10% to 26% in just three years. The numbers vary—but the trend is unmistakable. China is overtaking the U.S. in the brain race.

Patents tell the same story. In generative AI, Google leads with 560 applications—but Zhejiang University is right behind with 480. Among the top 10 patent filers, six are Chinese. Talent translates into tangible output.

And then there’s the Trump effect. The China Initiative, a U.S. Department of Justice program launched in 2018 to counter Chinese economic espionage - spectacularly caused mass flight of top Chinese scientists out of U.S. institutions and back home. Professor Zhou Ming, a key architect behind software used in Boeing and Airbus jets, left his U.S. post last month to return to China. Now, with U.S. research funding in free fall—NIH slashed $8 billion in R&D, NSF is cutting staff by up to 50%—America is practically gift-wrapping its talent advantage to China.

2. The Open-Source Revolution

Today, the top three open-source general-purpose AI models are all Chinese: DeepSeek, Minimax, and Qwen. In video generation, the best open-source tools also come from China.

Why does open-source matter? It bridges academia and industry, creating a feedback loop where research meets real-world application. It’s free, customizable, and since the model can be downloaded and run locally, it's secure—no risky data uploads, no black-box algorithms. Open-source dismantles monopoly. It denies giants like OpenAI the luxury of recouping massive losses—$5 billion last year, $14 billion projected this year—through locked-in user bases. China’s open-source ecosystem is draining their moats.

III/

3. Data—The Unfair Advantage
It’s not just about volume. China’s edge lies in industrial data—high-quality, real-world, production-level information generated by its vast manufacturing base. This isn’t scraped web content; it’s structured, problem-specific, and incredibly valuable for training AI. Robust 5G infrastructure enables seamless collection—without it, that data would vanish.

The U.S. campaign to cripple Huawei was merely a preview of this technological conflict—an initial, failed attempt to sever China's ascent in a domain now recognized as fundamental. While the political frenzy over 5G has subsided, its strategic role has only intensified, particularly as a catalyst for artificial intelligence. This is because high-speed, low-latency 5G networks form the essential circulatory system for AI: they are required to aggregate the massive, real-time datasets from IoT devices and sensors that train advanced algorithms, and to deploy those AI models instantaneously across smart grids, autonomous factories, and urban infrastructures. The battle wasn't just about faster phones; it was about who controls the foundational infrastructure that will power the next generation of intelligent technologies.

And there’s no ideological baggage. When OpenAI retreated from China to keep its models “aligned with democratic values,” it walked away from one of the richest data landscapes on earth. Chinese firms have no such constraints. They leverage domestic data, global data, and unique industrial data—creating a training corpus no one else can match.

These advantages are already paying off. Look at Yushu Technology’s R1 humanoid robot—priced at just $5,900. It isn’t selling at a loss; it’s profitable, high-quality, and scalable. Meanwhile, Tesla is cutting production of its own robot. Why? U.S. robotics teams often lack factory experience, real-use feedback, and cross-disciplinary depth. They operate in silos, burning cash on isolated projects with no path to deployment.

America is permanently brainstorming while China's AI is already mass deployed in industrial application.

By extension, the notion that AI and robotics will effortlessly repatriate manufacturing to the West is a pervasive myth. This fantasy suggests that with labor costs eliminated by automation, production will naturally return to the United States. However, this ignores the fundamental fuel of the AI revolution: vast, high-quality, industrial data. AI models and robots cannot learn complex manufacturing tasks in a vacuum; they require immense datasets generated by real-world production lines, supply chains, and operational environments—the very ecosystems that have largely migrated to or been built in China over the past decades. The West cannot resurrect a robust manufacturing base out of thin air because, without that existing industrial foundation, there is no data to train the AI systems meant to run it. The machines, in essence, have nothing to learn from.

As a result, the United States faces a fundamental paradox: it cannot rebuild a self-sustaining manufacturing ecosystem on its own. The dearth of industrial data, specialized talent, and integrated supply chains—all systematically eroded over decades of offshoring—creates an insurmountable barrier. AI and robots are tools for optimization, not genesis; they cannot conjure a complex production landscape from scratch.

China has become the gravitational center of global manufacturing—a black hole from which entire supply chains and industrial ecosystems cannot escape. The depth of its infrastructure, the integration of its networks, and the sheer volume of production data create a vortex of efficiency that is virtually impossible to replicate. Once manufacturing enters this orbit, the cost of leaving is existential.

Read 6 tweets

America-China Watcher

@PandemicTruther

Aug 22

🧵

India: Once the West’s Trump card against China; today, an object for Trump’s disdain

In Trump’s eyes, India has lost all value. Now it’s just a liability Washington is eager to discard — even shove into the arms of Russia and China. Whoever takes in India inherits a burden.

On July 30, 2025, Trump managed to humiliate India from head to toe in the span of 48 hours — four consecutive posts, each sharper than the last.
First came the announcement: a 25% tariff on Indian goods, the highest rate ever imposed on a so-called U.S. “quasi-ally.”
Then, he dug up old grievances — accusing India of buying Russian oil to fund the war.
Next, he proudly declared a new U.S.–Pakistan oil deal, sneering that India might as well go buy its fuel from Pakistan in the future.
Finally, with maximum sarcasm, he called India a “dead economy.”

The U.S. Treasury Secretary, Bessent, quickly picked up the baton, declaring to the effect that India was an insignificant country with no real role in shaping the global order. For a proud nation obsessed with becoming a permanent member of the UN Security Council, that was a dagger straight to the heart.

Inside India, the outrage was instant. Tens of thousands of Indian netizens flooded Trump’s accounts, calling him everything from a pedophile to a dog.
Celebrity anchor Palki Sharma dedicated a full 15-minute morning segment to tearing into the unreasonable Trump. Members of parliament demanded that Prime Minister Modi issue a strong response.

But Modi stayed silent. Instead, he repeated — over and over — that India would one day become the world’s third-largest economy.

Why the silence? Because Modi is cornered.

For nearly a decade, India has basked in the warm glow of Western — especially American — strategic attention, hailed as a pillar of the “Indo-Pacific” strategy against China. But look closely at the Quad — the U.S., Japan, Australia, and India — and it’s clear who is the intruder. Japan is Washington’s adopted son, hosting U.S. troops. Australia is the younger cousin, also home to American bases. India has neither sentimental ties nor military dependence.

So why choose India? Not for its cow dung as fuel and medicine or the taste of its curry. The reason is simple: since the U.S.–China trade war, Washington has been desperate to reduce reliance on Chinese goods. Full decoupling proved impossible — it might collapse the U.S. before China. So “de-risking” became the new mantra: shift supply chains, replace Chinese products step by step. India is key to this decoupling/derisking from China strategy. India is central to this strategy. The U.S. urged multinationals to relocate manufacturing there. Yet reality quickly set in: India is not up to the mark. Multinationals soon realize that India will never replace China.

Under Biden, relations with India warmed rapidly. New factories, Apple’s supply chain moving south, arms sales — even talk of selling the F-35. Washington bankrolled Modi’s allies, financing Adani Group's Colombo port project in Sri Lanka with $553 million. The goal was clear: turn India into a heavyweight capable of making trouble for China — economically, militarily, politically.

And how did India repay this generosity? By reselling Russian oil to Europe for massive profits. By snatching oil contracts from American companies. By wrecking U.S. plans for the Indo-Pacific Economic Framework. By passing laws that hiked compliance costs for Apple and Google, and squeezed American NGOs out of 40% of their operating space. Even plotting assassination of Gurpatwant Singh Pannun, a U.S.-Canadian dual citizen and Sikh separatist leader on U.S. soil during Modi’s state visit on June 22, 2023.

In short — a partner in name, a spoiler in practice.

II/

The breaking point came in the air. Despite U.S. and Israeli intelligence, French Rafales, and Australian electronics, India lost the air battle 0–6 to Pakistan on May 7, 2025. The defeat exposed systemic failures in coordination, equipment, and command — shattering the expensive deterrence image built on overpriced arms imports. Washington was wondering: if India couldn’t even match Pakistan’s export version of the Chinese warfighting system, how could it challenge China itself? The US has counted on India to wage a proxy war with China like Ukraine. Obviously India is impossible to draw China into a long war of attrition like Ukraine.

For years, India played the coquette — luring the U.S. with mixed signals and half-promises, reaping benefits while giving little back. But when the charm wears off, the tragedy writes itself. And a country stripped of its geopolitical value to Washington ends up in only one place: on the menu.

The Americans have always lived by a simple rule: if you can’t sit at the table, you’re served on it. India didn’t make the cut — so now it’s the main course.

Relations with the West have turned on a dime. Trump broke precedent to host Pakistan’s army chief for lunch at the White House — the first time a U.S. president has welcomed a non-head of state from Pakistan. Soon after, Trump publicly claimed Pakistan had shot down five Indian fighters — right after India’s “victory tour” ended. At the G7 in June, Modi didn’t even get an invitation, ending a six-year streak as observer.

A lost battle cost India more than just Rafales — it cost its strategic utility as a “must-have” ally. The red carpet is gone; the closed door is back.

India’s fall from “indispensable ally” to “dispensable background actor” has been swift — and brutal. Which is why both Trump and Bessent can mock India without restraint, without fear of retaliation, without worrying about breaking U.S.–India relations. The truth is simple: now that India is useless, Washington looks down on India and doesn’t care about its feelings.

And when India’s “united front value” evaporates, a hard-nosed Trump administration has no hesitation in putting India on the menu. The target? That $45 billion annual trade surplus India runs with the United States — year after year.

On July 30, Trump announced that starting August 1, all Indian goods would face a 25% tariff, plus an unspecified fine. A week later, on August 6, Trump doubled down — literally — announcing another 25%, pushing total tariffs to 50%. If implemented, Indian exports to the U.S. will crater.

And this hits India where it hurts most — the jugular. Without that surplus, the Indian economy suffocates.

Here’s the little-known fact: India is one of the most foreign-exchange-starved major economies in the world. Its forex reserves have always been stretched thin. In 2024, India’s GDP was $3.91 trillion, but its external debt reached $2.1 trillion — roughly 54% of GDP. Repayments can’t be made in rupees; creditors demand hard currency. And India’s total foreign reserves? Barely $49 billion — less than 3% of its debt. After covering essential imports, it doesn’t even have enough left to pay interest.

This isn’t just a theoretical risk. In 2019, after its reserves were nearly depleted, India had to literally fly its gold reserves to London as collateral, then accept the IMF’s harsh reform terms.

Why is India always short on dollars? Mainly because its manufacturing base is weak. It has to import huge amounts of industrial raw materials — oil alone costs $56 billion a year. On the export side, India has very few globally competitive products. The result? Chronic trade deficits and constant forex leakage.

III/

Its one big dollar-earner has been IT services. But the AI revolution is gutting that too.

For decades, Western software companies relied on India’s cheap, skilled coders to deliver projects for global clients. But now, AI can handle structured coding faster and cheaper. Assisted by AI, a person with basic programming knowledge can produce complex code that once took a team of engineers.Industry insiders predict that with specialized AI coding models being fine-tuned, the Indian IT sector could lose 100,000–300,000 jobs. Less work means less foreign exchange.

Moreover, recent allegations suggest that Indian software developers, when handling IT contracts for Middle Eastern clients, have inserted backdoors at the request of Israeli intelligence. Whether true or not, the revelation has severely damaged trust in Indian IT services in the region, leading to drastically fewer contracts.

And as if that weren’t enough, India’s two other major forex lifelines are cracking.

First is remittances — money sent home by Indians working abroad. Over 8.5 million work in Gulf oil states like Saudi Arabia, the UAE, and Qatar. Paid in dollars, their remittances flow into the Reserve Bank of India in exchange for rupees — making India the world’s largest remittance recipient at around $100 billion annually.

But India’s credibility in the Middle East is collapsing. Its open alignment with Israel during the Gaza war — and now, the fact that most of the foreign spies Iran caught in the Israel–Iran conflict turned out to be Indian — has poisoned perceptions. Gulf states are quietly tightening labor contracts, refusing renewals, even restricting visas. That pillar of dollar inflows is wobbling.

The second is foreign investment — which India has treated like a fattened pig to be slaughtered (杀猪盘). Foreign companies — Chinese, Western, even British — have all been hit with punitive fines and asset seizures. In 2023, New Delhi seized $670 million from Xiaomi alone. Over time, word got out. India earned a global reputation as a tax-and-regulation predator, the graveyard of multinationals, scaring away investors.

The numbers are stark. In May this year, net FDI inflow was just $35 million — a collapse of over 98% year-on-year. In the first half of the year, net inflows were barely $200 million, down 90% from last year. The tap has effectively run dry. For a decade, India could rely on $10 billion a year in net inflows; now, that lifeline is gone.

With AI crushing IT exports, Middle Eastern trust evaporating, and FDI frozen, what’s left? Only that fragile U.S. trade surplus. And with Trump’s tariffs at 50%, even that will vanish.

Can India negotiate the tariffs down? Theoretically, yes. But only if it meets Trump’s demands. And those are twofold: stop importing Russian oil, and open India’s market to U.S. agricultural products.

For Modi, both are poison pills. India cannot stop buying Russian oil. And it’s not like this is a new habit — India’s been doing it for years. The reason Washington didn’t object before is because under Biden, it actually tolerated it.

In January 2020, Treasury Secretary Janet Yellen even said that as long as India avoided Western shipping and insurance, the U.S. was happy to see India buy “as much Russian oil as possible” to keep global prices down.

In May last year, U.S. Ambassador Eric Garcetti openly admitted that letting India buy Russian oil was a deliberate policy to prevent price spikes. Without that political cover, India could never have scaled up purchases so dramatically — from just 68,000 barrels a day in 2021 (2% of imports) to 2.15 million barrels a day by May 2023.

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America-China Watcher

@PandemicTruther

Aug 20

🧵

Russia’s staggering war corruption (on the same level as Ukraine) and Putin's purge

The scale of corruption within Russia’s military and political elite is staggering: billions embezzled, frontline troops left with expired rations and improvised body armor, and defensive fortifications collapsing under pressure.

What began as a plan for a swift conquest has devolved into a drawn-out slaughter. What should have been, in Putin’s mind, a lightning strike on Kyiv within seventy-two hours has turned into a grinding war of years — with over a million casualties and nearly a trillion dollars burned.

At the heart of this failure lies corruption: oligarchs, defense contractors, and state officials feeding off the war machine while starving soldiers of training, food, and equipment. Their theft hollowed out Russia’s military from within. While elites were siphoning off wealth, Russian soldiers had to steal food to survive on the front.

And when the rot became too visible, Putin’s answer was a brutal purge—quiet “suicides” and arrests to remove the rot.

Since the war began, Russia has witnessed a grim wave of “suicides” among government officials, oligarchs, and members of the elite. Each death carries the mark of a system cracking under its own corruption.

For Ukraine and Russia, both countries operate on almost the same pattern. The oligarchs, the corruption, the money flowing through the same channels of power — it’s all there on both sides. The only real difference is the source of the money and the volume of funds to be embezzled. In Ukraine it comes from the United States and NATO countries, while in Russia it comes directly from government spending and the volume of funds is 3 times bigger. Strip away the flags and slogans, and you see the same machine running in both places.

What caused the extraordinary casualties of one million on the Russian side? They are a direct consequence of rampant systemic corruption. Russia’s corruption has destroyed its own war effort.

Consequences of Russian elite corruption:

Little or no training for mobilized men: Russians are being sent to the front with minimal or no training because the funds for training have been embezzled. Russian soldiers were told to buy their own gear. Novaya Gazeta Europe and summaries collated by reputable outlets traced this to chaotic mobilization and missing equipment (1.5 million uniform sets “disappeared,” per Duma deputy Andrei Gurulyov).

Expired/insufficient rations and widespread looting for food: Early-war reporting and verified CCTV showed Russian soldiers looting grocery stores and banks; Ukrainian officials said many units entered with only a few days’ rations.

Shoddy fortifications & materials diversion (2024–2025): Popov’s conviction for embezzling materials intended for frontline defenses is a courtroom-proven link between graft and compromised battlefield readiness.

Defective or improvised body armor (2025 case): The new embezzlement probe alleges troops received makeshift armor while money was siphoned off—another case of procurement corruption causing heavy Russian battlefield casualties.

II/

The case of Roman Starovoit

In Russia’s war, corruption has claimed as many lives as Ukrainian artillery. The story of Roman Starovoit, the former governor of Kursk, tells it all.

Not long ago, he was celebrated. After hurriedly building new border defenses, the Interior Ministry awarded him a pistol of honor, and Putin himself elevated him to Minister of Transport in May 2024. Starovoit spoke proudly to the press: “I'm proud to serve Russia.” For a brief moment, it looked like he would be the next Prime Minister of Russia.

But war stripped away the mask. In August that same year, Ukraine struck Kursk and tore through its defenses in days, exposing them as shoddy and half-built. The media soon reported investigations into Starovoit’s role in embezzling funds earmarked for fortifications. By July 2025, he was dismissed. Sitting in his car with the same pistol once given to him as an honor, he remembered his promise to serve Russia—then pulled the trigger. From ministerial office to suicide on the roadside within a few months, his fall could not have been more revealing of the current state of Russia.

He was not alone. Since the “Special Military Operation” began, at least 27 oligarchs, executives, and dozens of politicians have “fallen from windows” or been found dead in staged accidents and suicides. Some deaths were almost ritualistic: in January 2023, Colonel Vadim Boiko, involved in planning the invasion, shot himself five times in the chest inside his office—a grotesque and awkward attempt at honor. Major General Vladimir Makarov also shot himself after being dismissed by Putin. The message was clear: failure meant death whether due to corruption or incompetence, whether voluntary or forced.

Kursk became the showcase of systemic rot. Moscow had poured billions of roubles into its defenses, with emergency decrees giving local officials free rein to hand out contracts. Those contracts came with a 25% kickback “tax”—contractors had to pay to play. Insiders say 19.4 billion roubles were allocated; 4.5 billion simply vanished into private pockets. Defensive walls were left unfinished, others crumbled at first contact: tank traps made with cheap M20 concrete collapsed under the weight of armored vehicles. The paperwork said the fortifications were complete; the battlefield proved otherwise.

When the Ukrainian counteroffensive shattered Kursk in weeks, seizing towns and driving deep into Russian soil, prosecutors opened sweeping corruption probes. The Kursk Development Company, senior officials, and the acting governor himself were all arrested. As a direct consequence of the setback on the war front, the Kremlin turned to North Korea, paying dearly in oil and aid to bring foreign soldiers into the fight—an astronomical price to cover a 4.5 billion rouble theft.

Starovoit’s suicide was only one chapter in this wider tragedy. In the name of honor, some Russian officials chose a pistol. For others, “accidents” and poison did the work. The phenomenon has become so common that Russians joke about it: with so many oligarchs leaping from high-rise apartments, the price of ground-floor flats in Moscow has soared. The punchline is that the joke is true—the price of ground-floor apartment really has gone up in Moscow.

But there is nothing funny here. The war has made suicide “fashionable” among Russia’s ruling class, because corruption, failure, and betrayal have left them no other way out. Kursk’s collapsed defenses and Starovoit’s final shot stand as a warning: in Russia’s war, the thieves may profit for a moment, but the reckoning is always fatal.

III/

The case of Lukoil: Lukoil is one of Russia’s largest and most prominent oil and companies.

When Lukoil’s board publicly opposed Russia’s war in Ukraine, it showed just how deep the cracks had become.

Even children of oligarchs dared to speak out against the war. Sofia Abramovich, daughter of Roman Abramovich, shared an image on social media: “Russia wants to go to war with Ukraine.” The word “Russia” was crossed out and replaced with “Putin.” That was the initial Western information war in a nutshell — separating the Putin government from the Russian people.

At the time, Foreign Affairs ran a piece predicting exactly this: Western sanctions would hit the oligarchs hardest, and those losing wealth and influence would eventually form an anti-Putin, anti-war bloc to pressure Moscow into concessions. After all, people will betray their values, but never their interests. And since many oligarchs own media outlets and digital platforms, their potential for damage only grows.

On June 3 this year, a Moscow court announced charges of “extremism” against Victor Kislyi, head of the international gaming company Wargaming, and Marik Khatazaev of Lesta Studio. Their crime? Wargaming had run a promotion on World of Tanks selling Ukrainian army-themed game packs, with proceeds pledged to buy ambulances for Kyiv. For Russian prosecutors, this was proof of direct ideological sabotage within a military-themed game. Kislyi had also fired pro-SMO (Special Military Operation) staff in the early days of the war, including the chief producer of World of Tanks. Moscow framed this as oligarch-led “soft resistance” to the state.

And this “soft resistance” isn’t confined to media. Energy is the other battlefield. German company Wintershall had co-invested with Gazprom in a massive Siberian gas field. After Germany imposed sanctions, Putin seized Wintershall’s €5.3 billion stake. But then came the twist: Russia announced compensation — €7.5 billion, more than the seized value. Immediately afterward, prosecutors froze that payout, and a new criminal case was opened against the firm.

Soon after, one of Russia’s top gas barons, Sergei Protosenya, was found dead in Spain with his entire family. Protosenya was hanged, while his wife and daughter had been stabbed to death.

Protosenya's son disputed the murder-suicide theory and suggested that the deaths may have been staged .

Days later, Vasily Melnikov, head of a medical conglomerate, in a similar fashion, killed his wife and two children before taking his own life. Investigators found a knife marked with SOBR on the scene, Russia’s rapid-response police unit, but shrugged: “It’s suicide.”

The strangest wave hit Lukoil. In just three years, a general director, two chairmen, a vice president, and a board member all died — suicides, accidents, mysterious collapses. Each “self-inflicted” tragedy sent a message to Russia’s non-cooperating elite: if you refuse to exit gracefully, others will make you exit gracefully.

Opposition media inside Russia have framed these suicides as extrajudicial executions disguised as personal despair. Whatever the case, they highlight something else: the state’s inability to keep its elites aligned during wartime. The case of Transport Minister Starovoit is instructive. A protégé of Arkady Rotenberg, Putin’s longtime ally, Starovoit rose quickly through road construction projects, oversaw the Crimean Bridge, and eventually became governor of Kursk. For oligarch clans, this is the standard playbook: build a loyal cadre in ministries, ship them to the provinces for experience, then bring them back to Moscow as ministers — securing influence from the inside.

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