Good day, that is Kenji from Hong Kong.
Like in lots of different components of the world, the information right here this week has been dominated by President Donald Trump. The impacts of his return to the White Home are merely unavoidable, for each the city and China as a whole, most likely for the following 4 years. The extremely anticipated tariffs on Chinese language items — which have been introduced not on Day 1 as anticipated however on Day 2 — dragged stock prices southward in Hong Kong and mainland China alike on Wednesday.
Despite the fact that the modifications Trump has launched have been largely anticipated, the beginning of his second time period has additionally been full of surprises and drastic turnarounds, introduced by his half-hour lengthy inaugural tackle, first batch of govt orders and different actions.
From a #techAsia perspective, what stands out to date are his coverage reversals and reinforcements on vehicles, vitality, manufacturing and commerce, and they’re additionally intertwined. His declaration revoking the Biden administration’s electric vehicle mandate got here in tandem with the re-withdrawal from the Paris local weather settlement and his “sacred pledge” to avoid wasting the US auto trade and people jobs for “our nice American autoworkers”.
The emphasis on American manufacturing, in the meantime, is immediately tied to extracting extra oil — “liquid gold”, as he calls it — whereas he additionally needs to “export American vitality everywhere in the world” to deliver extra wealth to the nation. There appears to be minimal consideration for the ecological penalties and environmental destruction of this strategy, as mirrored in his motto “Drill, child, drill.”
This coverage, if totally applied, might presumably profit sure industries and customers within the US, however Zhou Xinhuai, vice-chair and CEO of Chinese language state-owned oil main Cnooc, on Wednesday expressed “uncertainty” over the implications, because it might put strain on oil costs.
Trump additionally referred to his nation’s proud historical past and previous accomplishments, which is par for the course in any politician’s speech. What shouldn’t be regular is infringing on the rights of others, which he did together with his calls to broaden “our territory” and “take again” the Panama Canal, which belongs to a sovereign Central American nation.
Panamanian President José Raúl Mulino instantly and forcefully rejected Trump’s phrases and even appealed to the United Nations. The entire of Canada and Denmark’s Greenland are equally on Trump’s radar, although they weren’t talked about in his speech on Monday.
Trump mentioned he has launched into “the revolution of widespread sense”, as he defines it. We’ve had a glimpse of that sense in his first few days again in workplace. There’ll doubtless be much more of it to return within the subsequent 4 years.
The opposite Chinese language app
The destiny of TikTok within the US was arguably one of the carefully monitored points that Trump had vowed to take up as soon as again in workplace. Whereas he granted the social media platform a 75-day grace period on Day 1 and a full reprieve may very well be in sight, so-called “TikTok refugees” are rushing to Xiaohongshu.
Nikkei Asia’s Cissy Zhou explains this attention-grabbing phenomenon: Washington’s political strain on TikTok spurred the app’s American customers to flock to a different Chinese language various within the title of “free speech”. This is among the points Trump took up in his Monday tackle, slamming his predecessor and vowing to “instantly cease all authorities censorship”.
In response to a number of staff, nevertheless, Xiaohongshu “had no concept find out how to deal with” the inflow, because it had no capability for censoring English content material.
Aside from TikTok, Zhou additionally regarded into the questions surrounding the influence of Elon Musk — Trump’s largest marketing campaign donor and the world’s richest particular person — within the new administration.
The billionaire behind Tesla has vital enterprise pursuits in China and has beforehand described himself as “type of pro-China”. He may very well be at odds with plenty of China hawks within the second Trump administration, and will even be labelled a nationwide safety danger attributable to his connections to the second-largest economic system on the planet.
Chipping in
Chinese language tech firms have a voracious urge for food for synthetic intelligence chips as they search to meet up with US rivals. So when Washington stopped AI chipmaker Nvidia from promoting its strongest silicon to China, Huawei stepped in to fill a niche.
The sanctioned Chinese language tech large is seeking to take market share by encouraging native firms to undertake its rival processors for “inference” duties, writes the Monetary Instances’ Eleanor Olcott.
Trade insiders report that Huawei’s Ascend chips don’t work nicely for mannequin coaching attributable to technical glitches when the chips are put collectively into a big cluster. As an alternative, Huawei helps prospects use their chips for inference, the method of calling upon a skilled mannequin to generate a response.
The corporate is betting that inference might be a much bigger supply of future demand if the tempo of mannequin coaching slows and AI functions reminiscent of chatbots develop into extra widespread.
With sturdy authorities help and spectacular chip design, Huawei is seen internally by Nvidia as its most severe competitor in China.
A divided world
Even earlier than Trump’s return to the presidency, China appears to have been nicely ready for a doubtlessly more durable line by Washington, because it was already allocating its investments away from the US and its allies.
Nikkei Asia’s Stella Yifan Xie took a deep dive into numerous information factors to point that China has regained momentum by way of abroad funding in 2024, as it’s on monitor to hit an eight-year excessive, behind solely the 2016 peak, when Chinese language cash was gobbling up trophy belongings within the US. However in the present day, the primary locations are in south-east Asia, India and the Center East, whereas slicing reliance on the superior economies within the west.
Elevated Chinese language investments within the world south ought to assist keep away from tariffs beneath the Trump administration, however the development can also be about coping with its personal problems with extra capability. As Chen Dong, chief Asia strategist and head of Asia analysis at Pictet Wealth Administration, factors out, “the main target has shifted in direction of tapping into new markets for development”.
Nevertheless, Trump’s tariff on international locations apart from China might nonetheless disrupt firms’ relocation plans. Solely time will inform on that entrance.
A courtroom case and an earthquake
Whereas Trump 2.0 dominates world headlines, Taiwan’s tech trade has loads of nonpresidential information to supply. Nikkei Asia’s chief tech correspondent Lauly Li is following a courtroom case by which Foxconn and its founder Terry Gou have been sued by former govt Tai Jeng-wu over a pay dispute. The difficulty is expounded to his efficiency as president and CEO of Foxconn unit Sharp, the Japanese electronics producer.
Tai, who led the ailing Osaka-based firm between 2016 and 2022, argues he was entitled to incentives and bonuses if he achieved sure benchmarks, together with bringing Sharp again to the primary part of the Tokyo Inventory Change, which he did. In response to one in all Li’s sources, the compensation settlement was made between Tai and Gou, who was Foxconn chair on the time. Neither facet has commented on the matter, as authorized procedures are beneath approach.
Staying in Taiwan, one other large-scale magnitude-6.4 earthquake hit the island on Tuesday, hanging close to town of Chiayi. The southwestern metropolis is near Tainan, the place Taiwan Semiconductor Manufacturing Co operates a cluster of its most superior chip vegetation. Whereas employees have been briefly evacuated, no materials disruption to manufacturing has been reported to date.
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#techAsia is co-ordinated by Nikkei Asia’s Katherine Creel in Tokyo, with help from the FT tech desk in London.
Join here at Nikkei Asia to obtain #techAsia every week. The editorial group may be reached at techasia@nex.nikkei.co.jp.
