Amidst the chaotic turbulence across the Northern Hemisphere in recent days, outbursts from US President Donald Trump and the sudden arrival of Chinese warships in the Tasman Sea, you could be forgiven for overlooking a monumental U-turn in Beijing’s vision for the future.
This time last week, in the Great Hall of the People, President Xi Jinping strode across the floor with a new-found sense of confidence as he greeted an array of business leaders.
It was a marked change from just four years ago, where many of those same people were left quivering and fearful of what the future may hold, including for their personal safety.
For some, the spectacle conjured up visions of Trump’s recent inauguration where a gaggle of tech billionaires took centre stage.
“Now is the perfect time for private enterprises and entrepreneurs to thrive,” Xi told the assembled throng.
All of them, he said, had “immense potential and promising prospects”.
In from the cold was Jack Ma, the Alibaba founder who largely has been missing in action since 2020 after he launched a blistering tirade against Beijing’s regulatory regime, a speech that resulted in the partial break-up of his organisation and a heavy-handed crackdown on China’s billionaires.
President Xi and Alibaba founder Jack Ma were seen shaking hands during the meeting. (Reuters: Florence Lo)
The intervening years haven’t been kind to China.
Whacked by COVID-19 and Beijing’s regulatory overstep with its heavy-handed lockdowns, its economy has laboured under the weight of a self-inflicted property market meltdown that has stripped households of investment wealth, slowed growth and caused sharp rise in unemployment, particularly amongst the youth.
While the West has struggled to rein in the first inflation outbreak in half a century, China has battled to avoid a deflationary spiral that threatened to cripple its economy.
That was reflected on its stock markets, which headed south into an ever-deepening winter.
Last September, however, just as Donald Trump’s campaign to return to the White House began to gather momentum, China’s fortunes turned, at least on financial markets.
Faced with the prospect of an old adversary in the White House, it hatched a stimulus plan to encourage new investors that, after years of failure, finally found some traction.
And then, a month ago, China’s race towards an Artificial Intelligence future suddenly began threatening Wall Street’s technology titans.
Who’s on one?
Jack Ma may have been the symbolic face of Beijing’s policy about face.
But the other cast members in this reconciliation were every bit as important.
In addition to Huawei founder Ren Zhengfei and Tencent chief Pony Ma was the new breed in China’s global business hopefuls. Car company BYD’s chief Weng Chuanfu and AI sensation, DeepSeek boss Liang Wenfeng, also were in attendance.
The re-acceptance of leaders across such a broad range of industries is in stark contrast to the business purges that began with real estate tycoons five years ago that quickly moved on to technology, food delivery and even education services.
At the time, there was speculation that President Xi saw the emerging billionaire class as a threat to Beijing’s authority and civil order.
Exactly what drove the sudden reunification is open to conjecture. But the Trump administration’s threat of wide-ranging trade penalties including tariffs against China’s already reeling economy and the turmoil in global geopolitics are difficult to ignore.
Perhaps too, was the stark realisation that China’s moribund and hugely indebted state owned enterprises are grossly inefficient and that the focus needed to shift back to a more free enterprise system to generate growth and employment.
Huawei founder Ren Zhengfei, BYD boss Wang Chuanfu and New Hope founder Liu Yonghao all attended the business leaders meeting last week. (Reuters: Florence Lo)
The new Pacific battleground
The White House hasn’t spared the criticism. Its most loyal allies, including Canada and Europe have come under fire, and it has roundly rejected Ukraine for having fought against an invading Russia all within a little more than a month.
They were developments that would have been keenly watched in Beijing.
At the very least, Washington has signalled a dramatic shift in its relationship with long-standing partners and allies that will create opportunities and challenges in diplomatic, trade and defence arrangements far into the future.
Diminished are the links in culture, history and democratic values.
These have been supplanted by transactional interests which, given our region is dominated by Washington’s great rival, makes our future far less certain and stable than it has been for the past four decades.
Like most other countries in the region, our economy is hugely dependent upon trade with China both for export income and imports. But our diplomatic and defence ties have been firmly linked to the US and the western alliance.
For years, People’s Liberation Army ships have been engaging with vessels in the South China Sea from neighbours Vietnam, the Philippines and Indonesia, which have become more frequent as it ramps up territorial claims.
Vietnam — which calls the region the East Sea — maintains the dispute is not regional but global, given the amount of vital shipping that passes through the area and is determined to thwart its neighbour’s ambitions.
There also have been numerous examples of People’s Liberation Army aircraft intercepting RAAF flights with dangerous mid-air manoeuvres, including one just over a week ago.
But its live fire exercises in the Tasman Sea over the weekend, while legal under international law, could only be interpreted as a statement to Canberra and Wellington about the capability and reach of China’s navy and about where future allegiances may want to lie.
Subtle, it wasn’t.
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Intelligence, artificial and otherwise
Is Donald Trump looking to bring China to the table or to send it packing?
Perhaps even he doesn’t know.
What we do know is that on Friday, he issued a new round of Executive Orders that will block Chinese investment in American technology, food supplies, farmland, minerals, natural resources, ports and shipping.
The White House will also try to block money heading into Chinese military and industrial development which, as Rabo Bank’s global strategist Michael Every notes, “given the latter’s civil-military fusion policy covers a lot — and this is just as Wall Street started to get bullish on Chinese tech stocks.”
Wall Street knows no boundaries when it comes to earnings. And since September last year, when China’s markets found their footing, money has been pouring in.
That only accelerated after DeepSeek, the Chinese AI firm that managed to produce a highly competitive product to ChatGPT at a fraction of the cost, rattled the idea of American tech dominance and global superiority.
It was achieved despite, or perhaps because of, a US imposed ban on the all-important Nvidia chips that has driven Silicon Valley’s $US450 billion a year splurge on AI.
While there has been talk that DeepSeek has a secret stash of Nvidia chips, others believe that the shortage in China prompted the Chinese company to take a different path.
The Hang Seng Index is now sitting at a three-year high as western money shifts from overblown American tech stocks and into more modestly valued Chinese firms.
That may be at an end. Or it all could change again next week.
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