Analysis

The Chinese Communist Party (CCP) released its 15th Five-Year Plan for Economic and Social Development, a crucial planning document that outlines the party’s vision for China’s political, economic, and social development through 2030. Besides affirming Xi Jinping’s undisputed role as General Secretary, the plan underscored the CCP’s vision for its leadership, which is that China should be strong, capable of innovating ahead of other countries, and not reliant on other countries.  

One key comment on this five-year plan from Xi Jinping was that China’s system permits the “pooling of resources to accomplish major tasks” (集中力量办大事) as a major strength compared to other countries. China’s capacity to fuse political priorities with China’s economy, including steering innovation, corporate decision-making, and trade, is indeed a key feature of the CCP’s capacity, which makes it a far more powerful entity than any other political party. As we detail below, it also means that export controls, company bans, and other capital restrictions are all part of a broader attempt to control China’s economy and its exposure to the outside world. 

Xi is also saying the quiet part out loud: the CCP has ultimate control over the economy, and therefore over every corporation–state-owned or otherwise–to align with the party’s goals. In other words, if the CCP wants a Chinese company to do something, that company has no choice but to comply, even if companies maintain some flexibility in precisely how they do so. This increased fusion of the party and economy also means that Chinese firms have potentially unprecedented political support for both capital-intensive research and development, and in terms of finding trading partners or facilitating other business engagements. All Chinese enterprises, whether formally state-owned or putatively private, are therefore not only important to the CCP as they are vital to maintain economic growth, they are also effectively cells of the party. The new five-year plan reinforces this view. Businesses that continue to engage with Chinese partners need to be aware that they are effectively engaging with an extension of the CCP, with all of the policy, political, legal, regulatory, and reputational risks that this entanglement entails. 

The tech sector, in particular, is increasingly subject to this kind of political attention, especially semiconductors, quantum computing, and AI innovation. Evidence that the CCP is investing heavily in emerging technologies–and their national security implications–is also not limited to policy. Recent Chinese regulatory probes of US semiconductor companies in China, including sensitive information about sales, points to the party’s increasing attention towards key technologies, particularly when US or other foreign corporations are involved. Technology and innovation are crucial to ensuring not only market dominance and economic gains, but also national security. 

Technology that is not reliant on the US or foreign companies reduces potential external leverage. Indeed, having other countries reliant on Chinese technology and components dramatically increases China’s global standing, not in the least because it positions China as a global model for tech standards. This is particularly important for companies that use Chinese technology–like Airbnb–or that engage with Chinese technology companies. In both cases, these companies will face increasing pressure to extract as much as they can from foreign partners because tech advantage, however that manifests, is the CCP’s priority.  

While the five-year plan reinforces, rather than challenges, our ongoing analysis of the Chinese economy, it does underscore the party’s increasing interest in its drive for Chinese businesses to become effectively wings of the party. US businesses need to take note: Chinese companies, whether they want to or not, will likely increase their engagements with the CCP to survive, with US businesses likely first on the firing line.

Analysis

US-China relations are entering a louder, more volatile stretch in the lead up to a Trump–Xi meeting at the late October APEC summit in South Korea. President Trump has alternated between confirming a “pretty long” session with Xi and hinting it may not happen, using ambiguity as leverage amid US threats of sweeping 100% tariffs and Beijing’s tightening curbs on rare earths. Beijing, meanwhile, is taking a page out of the US government’s negotiation playbook to match the US with similar pre-negotiation brinkmanship to heighten China’s negotiating power ahead of the two leaders’ meeting. 

In the background to these negotiations is an understanding that China is flexing a much stronger position compared to previous negotiations with the United States. For rare earths, in particular, markets are reacting to price fluctuations as investors attempt to weigh how deeply and quickly different negotiation outcomes could affect supplies. At the same time, Washington is racing to build non-China rare earths capacity even as Beijing still dominates key midstream steps. Notably, the United States and Australia just unveiled a critical minerals framework that touts a $8.5 billion US defense and industrial backing for producers outside China. None of this re-routes supply chains overnight, but it signals that policy will keep picking winners long after any photo op. 

From Beijing’s side, the calculus has shifted since Trump’s first term and the Biden era expansion of export controls. As mentioned above, the Fourth Plenum of the 15th Five-Year Plan elevates technological self-reliance in AI, semiconductors, and quantum as a top task. Chinese policymakers view indigenous innovation and the home market as the primary long run goal for China’s economy. This means that a deal with the US is helpful, but not essential to achieving this plan. Moreover, Beijing believes that China is on the ascent amid US decline, which removes a key incentive for reaching a bilateral deal soon. 

Consequently, hard bargaining is likely to continue, involving likely continued export controls from both sides, pricing power signaled via rare earths, and summit uncertainty used as pressure ahead of the meeting. In this scenario, the most valuable outcome is a stable framework, not a single tariff headline. Predictability requires clear rules that do not change; revised cabinet level talks; a durable yet elevated tariff plateau, and fewer surprise alterations to tech controls. Each of these is unlikely to prevail from a single Trump-Xi meeting. 

This choreography points to continued high-level contact through 2026. Expect mutual leadership visits, fentanyl cooperation as a pragmatic lane, and ritual reaffirmations around One China, while both sides continue to treat trade as a national security issue. The message for multinational companies, especially those outside both blocs, is to assume compliance, not cost, is the binding constraint on production decisions. The summit drama is the headline. The structural shift to managed, security-first trade is the story.

Analysis

In the lead-up to the much-touted meeting between President Trump and Chinese General Secretary Xi Jinping–to be held on the sidelines of the Asia-Pacific Economic Cooperation (APEC) meeting at the end of the month–both sides are looking to consolidate their negotiation leverage by reigniting the trade war. 

Beijing kicked off this series of escalations by clamping down further on rare earth exports. The new regulations will require export permissions for any international shipments of products in which as little as 0.1 percent of the value consists of rare earths from China; the law is set to take effect on December 1, with restrictions on an additional five rare earth metals set to come into effect on November 8. 

While it is unclear how that level of value can or will be determined in practice, the meaning of the political gesture is much clearer: Beijing understands the value of its monopoly on the global rare earth supply chain–controlling upward of 60 percent of raw materials (with some estimates much higher) and upward of 80% of all processing and refining plants–and is willing to use its position to achieve China’s policy goals. While China has chosen a strategic moment to inflict this new pain on global markets, it has been preparing to make such a move since the US first placed export controls on advanced tech and chips to China in 2021. While manipulating industrial policy has been a long-standing feature of Chinese regulatory practices, political pundits interpret this recent and more aggressive move as China’s attempt to assert equality with the US by dealing with it in equally punitive terms.

In response to Beijing’s gambit, President Trump threatened an immediate 100% increase in tariffs on all Chinese goods, although he quickly walked back those remarks. Instead, Washington has adopted a two-pronged response. First, the Senate approved further tightening of export controls on semiconductors and AI chips to China, completing another of the tit-for-tat cycles that have come to characterize US-China relations since April of this year. Second, President Trump met with Australian Prime Minister Anthony Albanese to negotiate US access to Australian rare earths. Their talks resulted in a non-binding verbal agreement that, if implemented, could produce more than $50B worth of critical minerals in the coming years. This bilateral agreement also hints at possible outcomes of the  upcoming meeting of the G7 ministers in late October, where a coordinated response to Chinese rare earth controls will be top of the agenda.

As Beijing and Washington throw the fragile trade equilibrium  into disarray, companies need to rethink how they evaluate risk and plan for future operational costs. This is especially true given the fact that these reciprocal measures do not just affect rare earths and semiconductors, but have extended to shipping and port tariffs, which affect nearly all products. As a result, companies need to start thinking about raw materials as not merely inputs, but as vital to company security. Companies should assume that chokepoints have become features of the system, not bugs, and should as a consequence build governance that can absorb policy whiplash, technological substitution, and moral hazard in their supply chains.

Analysis

A foundational shift in Europe’s approach to strategic industry is creating a parallel regime for technology control and signaling a new era in which operational governance and supply security–not just ownership–determines who gets to control critical assets. Whereas Washington has leaned on export controls and alliance pressure, The Hague has unveiled a more surgical instrument of state power: emergency operational guardianship. The Dutch state’s move to assume control of Chinese-owned Nexperia under the Goods Availability Act—citing acute governance failures tied to the availability of essential goods—introduces a precedent in which governments can step into the boardroom to stabilize production, protect IP, and fence supplies without shuttering the plant. For multinationals, this is not a review at the border but an assertion of authority inside the enterprise.

What looks like a case-specific action is better read as new doctrine. By suspending senior leadership and subordinating corporate control to the public interest in the name of supply continuity, the Netherlands is signaling that direct influence over means of production now outranks formal ownership when governance, related-party flows, or IP mobility threaten resilience. Firms with Chinese control rights, variable interest entity (VIE) structures, or cross-border command chains will feel the heat first, but the logic is sector-agnostic: anything upstream and hard to substitute—power electronics, sensors, specialty materials—can be deemed essential. This narrows the space for “politically neutral” capital structures and elevates board composition, data locality, and tooling custody from compliance checkboxes to national-security variables.

Beijing’s response, in turn, relies on calibrated market leverage rather than legalistic rebuttal. State media hypocritically cast the Dutch move as predatory. Regulators signaled “necessary measures” would be taken in response. The policy toolkit—procurement preferences, licensing slow-rolls, informal inspections—reminds foreign firms that market access to China can be conditioned on alignment. Collectively, these responses from Beijing point to a double standard for foreign firms entering China compared to how Beijing expects Chinese firms to be treated overseas. 

The bigger story is acceleration toward a bifurcated global tech economy in which legal ownership is less decisive than where operational control, IP, and decision rights reside. If the Netherlands can take over a Chinese-owned chipmaker to safeguard supply, other governments can and will adapt similar tools; and because China will weaponize access and procurement to punish those moves, sector spillovers will extend beyond semiconductors. For global companies, the era of optimizing for cost and scale alone is ending, replaced by one in which corporate governance is designed for geopolitical audit: fence IP and data in host jurisdictions, install independent directors with explicit authority over export control and related-party risk, embed “regulatory step-in” clauses in key contracts, and plan narratives for both European supply assurance and Chinese fairness claims. The firms that institutionalize these guardrails will be the ones still operating at scale when politics, not price, determines location and other factors of production.

Analysis

The UK’s Chinese spy scandal continues to plague the ruling Labour Party. At its heart, the scandal concerns two British civil servants, who seemingly pressured the government to permit a massive new Chinese embassy building in London–a site that would be used to expand Chinese espionage efforts across Europe–and whom the government is unwilling to prosecute, despite damning evidence. Key to this ongoing saga is the double speak around the UK’s position on China: is it a key trading partner, an adversary, and can it be both? 

Add to the mix the Chagos Islands, a British archipelago in the Indian Ocean that the UK has agreed via a treaty to transfer to Mauritius. China maintains a strong interest in this transfer. The main reason is that China already operates a major port on Mauritius, and the potential that Mauritius–rather than the UK–will now control islands will benefit China both strategically and economically. China will gain an exclusive economic zone that stretches almost the entirety of the central Indian Ocean. While the UK will maintain a lease on the military base on the island of Diego Garcia, China will almost certainly pressure Mauritius to end this lease after the territory is formally handed over. Added to the mix, India is already pursuing Mauritius for a potential military base in the territory. Indian Ocean maritime maneuvering or subsea infrastructure is therefore about to get a lot messier, a fact that makes the US extremely unhappy.

While there does not appear to be evidence linking the spying scandal to the Chagos handover, some in the UK have raised concerns that it might be part of a broader attempt to appease China, despite intense security implications. Collectively, the spying scandal, the Chinese embassy hoopla, and now the Chagos Islands handover points to a British government seemingly intent on forging foreign policy in the dark and with extreme short sightedness. What the UK government fails to understand is that China will take everything it can from the UK, while at the same time the US will likely seek to punish the UK for the latter’s pro-China behavior. In pursuing short-term trade benefits, the UK may therefore likely find itself with neither China nor the US as long-term partners. 

The challenge for US businesses is twofold. First, if the UK has indeed decided that trade with China trumps security concerns, then US companies operating in the UK will face increased potential exposure to Chinese intelligence officers. Second, if the White House decides that the UK is becoming too friendly with China, it could pressure US and UK businesses to mutually divest. Considering London’s status as a major financial hub, this could have dramatic consequences for global businesses. While the case might be about two individuals accused of spying for China, the implications for US businesses are therefore far broader.