Red and White

It might actually be coming home 🏴󠁧󠁢󠁥󠁮󠁧󠁿

WeChat has been a little quiet on AI front & perhaps even falling into being considered a laggard. But this week, Pony Ma presented a new vision on how to turn "mini-apps" (still no real equivalent in US) into AI handshakes. Manny partners announced. Could be a powerful move. Read more below.

you either die a frontier lab or live long enough to see yourself sell compute

China’s Demographic Crisis Is Accelerating China’s demographic headwinds are no longer a future problem—they are happening now. The country’s population has declined for four consecutive years, with the latest annual drop reaching approximately 3.3 million people, the largest decline on record. Even more concerning, annual births have fallen to just 7.92 million, down dramatically from well above 20 million during the 1990s. The population peaked around 1.426 billion before beginning a sustained decline. Fewer births today mean fewer workers, fewer homebuyers and slower long-term consumption tomorrow. This demographic contraction will increasingly weigh on China’s labor force, housing demand, fiscal sustainability and long-run GDP growth, making structural economic challenges significantly harder to overcome.

Housing affordability in China’s top cities is completely broken. Shenzhen now tops the list at 26x income. Beijing: 22x. Shanghai: 21x. Hong Kong: 16.7x. That means even compared with famously expensive cities like Sydney (13.8x), San Jose (11.4x), Vancouver (11.8x), and London (8.1x), China’s biggest urban centers look far more stretched. This is what happens when housing stops being shelter and becomes the core speculative asset of an entire economic model. The real story is what this says about distorted capital allocation, crushed household balance sheets, and why the property downturn is such a structural threat to China’s economy.

EUROPEAN LEADERS HELD a closed-door game to see what would happen if they started a trade war with China, the FT’s Alan Beatie revealed yesterday. Beijing won. “China really has thought this through very well,” Beatie said. . SIMULATION The table-top simulation was played with people from think-tanks playing the roles of the EU Commission, the EU Council, individual European nations, plus China, the US, and Japan. As the game progressed, it became evident that the Europeans’ best bet for demanding a deal that was advantageous for themselves was by threatening to refuse to allow China to have the chipmaking machines made only by ASML of the Netherlands. But the Europeans were disunited on how powerfully they should make the threats. (Also, the coercive bullyboy US had already ordered the Dutch company to stop sales of all recent models to China, so the Chinese could only buy older machines.) The Chinese player said such European actions between trading partners were unfriendly, and they would have to retaliate by stopping the sale of rare earth elements. This worried the Europeans, who needed a constant supply for their car factories. . LIMITED TRADE WEAPONS The session ended with no resolution except for China agreeing to trade talks a couple of months later—or basically, kicking the can down the road. The Europeans had achieved nothing. The game enabled EU players to realize just how limited their trade weapons were, how powerful China’s was, and how difficult it was for Europeans to unite on anything. “But even if consensus is achieved, Europeans should learn from Donald Trump’s experience and refrain from aggressive actions likely to lead to escalation,” Beatie concluded. His suggestion: Europeans will be better off not starting a fight with the Chinese. The game was not just for fun -- Europeans are meeting at the moment to decide how they should react to China's success in manufacturing and the import-export trade.