Analysis

China’s 15th Five-Year Plan, the CCP’s blueprint for national development through 2030, demonstrates how the party sees itself as the undisputed managers of an economic giant and a new superpower. For US companies, even those without direct engagements in China, this plan is an important signal for how the global economy will likely change over the next five years. In terms of foreign access to the Chinese economy, China is turning inwards. Since at least Xi Jinping’s assumption of power, the CCP has seen reliance on foreign companies as threatening. Prioritizing Chinese companies and technologies over foreign competitors is therefore as much a calculation about security as it is about supporting Chinese firms and national development. 

For the global economy, this has two important implications. First, access to Chinese markets will likely constrict in the coming years for firms selling to Chinese customers. Second, and more threatening to US companies, Chinese firms will enjoy immense state support to not only dominate China’s domestic market, but also to “go out” or “open wider” (越开越大) to global markets. This means that US companies will likely not only face restricted market access in China; they will also likely face intensifying and fundamentally unfair competition from Chinese firms–particularly manufacturers–around the world. China’s global manufacturing expansion, backed and coordinated by the Chinese state, will reshape world markets to rely on Chinese firms at the expense of US competitors. Chinese tech, particularly in AI and green technologies, will likely drive industrial innovation with the intention of supplanting current US market leaders. 

US companies face an existential threat. The US government cannot back US companies the same way that the CCP backs Chinese firms. US companies cannot compete in markets from Latin America to Asia in the face of Chinese competitors with subsidized R&D, coordinated export mechanisms, and preferential trade arrangements all provided by the Chinese state. While it may sound exaggerated to those who have not noticed the resuscitation of mercantilism, the 15th Five-Year Plan is clear about the CCP’s ambitions to put the United States out of business not only in China, but around the world. 

Questions about US competitiveness will need to become necessarily prominent in discussions between the US government and private sector if the latter is to survive. JP Morgan’s announcement last month, for example, that it will coordinate a public-private partnership to secure US access to rare earth metals may prove to be a model for other critical industries facing threats from China. Yet unlike China, where the state drives the private sector, a US approach will likely need to be driven by the private sector. Companies will need to think carefully about how to drive such engagements to maximize their competitiveness against Chinese firms, while maintaining the agility advantage that comes from a private sector-centric approach to the global economy.

Analysis

The most recent spate of US-China trade talks concluded with mixed results. President Trump and General Secretary Xi Jinping both claimed wins. The results of the negotiations appear both purposefully obscure and in flux, which allows both sides to sell their negotiating prowess back home while leaving room for future talks. The big takeaways, according to the US side, included China’s suspending additional export controls on rare earth metals and ending investigations into US chip companies, while the US will pause “reciprocal tariffs” on China (see "Business Matters” below). This is simply more or less a return to the status quo before the trade war. (See the next story below.)

Ahead of negotiations, China took US attempts to up the ante seriously. State media reported a “special meeting” to adjust proposals for the forthcoming Five Year Plan in response to increased US tariffs on Chinese imports by an additional 34% on top of a previous 84% raise. Key areas that China has found most effective in squeezing the US’s pressure points, ranging from soy beans, tech access, and rare earth export controls, each point to Beijing’s attempts to strengthen its hand. For China, the current end goal is to eliminate new tariffs, export controls, and sanctions that restrict short-term economic growth or technological innovation while China builds its self-reliant system. But the ongoing back-and-forth of raised stakes, often involving announcements that surprised industry leaders, means that the unpredictable pattern of behavior–designed to shock the other side into additional concessions–is likely to continue ahead of future negotiations. 

US companies should therefore see these negotiations as part of a much longer process that will likely lead to additional uncertainty, trade restrictions, and tit-for-tat measures from both sides. The challenge for the US side is that the administration faces elections–and a potential Supreme Court ruling–that may curtail executive authority to respond to China. Beijing does not have to worry about such domestic pressures, although the CCP bureaucracy can often be a clunky decision maker that lacks the direct efficiency of US executive orders. 

Moreover, these negotiations proved that China has learned the US’s sore points and has the time to develop an expansive export control regime that goes beyond rare earths to cover a broad range of critical industries and components. With neither side in a particularly better negotiating position than at this point last year, but with China in a much stronger position to turn on future export controls, it seems as if the long-term winner from all this will be Beijing. US businesses should take the reprieve from the most recent round of negotiations to plan for how best to insulate themselves against inevitable future export controls that China will weaponize each time it needs something from the United States.

One additional major risk that companies need to be aware of is the growing trend for the US and China to pressure other countries to trade exclusively with one partner (back to mercantilism again). Recent negotiations between the US government and Malaysia, for example, point to Washington’s willingness to coerce partners to choose US partners and exclude Chinese entities. While governments around the world will likely attempt to maintain a trade balance between the two, the willingness of the US government to coerce other countries on trade suggests that Washington and Beijing both understand the high stakes of their ongoing trade dispute. Companies will certainly face the fallout from these geopolitical tussles. No one knows how, precisely, but those that make themselves resilient to political volatility will do better than those who assume stability.

Analysis

President Trump and General Secretary Xi Jinping both walked away from their recent APEC meeting optimistic about the future of US-China trade. In many regards, the outcome of their negotiations are good for everyone: the dramatic escalation of tariffs and export controls has been averted. However, the cycle of brinksmanship-and-detente does not inspire long-term confidence, and businesses should expect volatility to continue as an inherent feature of the global trade landscape.  

The US made several important concessions: the additional 100% tariffs threatened in the lead-up to negotiations have been dropped; a 10% reduction on Fenatyl-related tariffs will be implemented; and the expanded controls against certain Chinese entities that were set to take effect on Nov 10 have been delayed for one year. China, in turn, has agreed to similar de-escalation measures. These include a one-year pause on additional export controls for rare earth metals and an agreement to begin issuing export licenses on currently controlled metals; the guaranteed purchase of US soybeans at expected rates (back purchasing sufficient quantities for this year and guaranteed through 2026).

But what has the net change actually been, and how should business understand these changes? For example, while China has promised to buy US soybeans for the next three years, it will not equal the level of purchases from years’ past and, even with the reduced Chinese tariffs on US goods, it is still cheaper for Chinese vendors to buy soybeans from Brazil or Argentina. In the long-run, US farmers are still going to come up short. Moreover, while the US has reduced Fenatyl-related tariffs by 10%, it still leaves an effective tariff rate on Chinese goods arriving in the US of at least 40%. This means that US businesses and consumers are still facing a significantly increased, year-on-year cost that shows no signs of going away. This is the danger of the brinksmanship model, which raises the stakes so much before the negotiations that, even if the two sides make progress the trade environment has not undergone a net change.

What is more concerning for market stability is that these are promises and not policy. Washington has valid concerns that China may renege on its guarantees. When Beijing promised to begin issuing export licenses for rare earths after this summer’s negotiations in London, they never followed through. Hence why the same issue was on the table again in Seoul. So, while both sides made additional promises and adjusted tariffs, nothing prevents this same cycle from recurring. This is the new normal, and companies would be wise to account for a base-level of tariff-related expenses in their long-term business plans.

Analysis

China and the Netherlands moved from seizure to standoff, then to a fragile supply reprieve. On Nov 4, Beijing publicly accused The Hague of failing to cooperate after the Dutch state assumed operational control of Nexperia on Sept 30, warning that inaction would deepen damage to the semiconductor supply chain. The European Commission the same day described partial flows resuming and said a worst case had been avoided, which buys time and space for a longer settlement. Considered together, the message is clear: Beijing raises the stakes, Brussels tempers the fallout.

Markets signaled relief one day earlier. On Nov 3, China said companies could apply for exemptions to restart exports of Nexperia parts packaged in China. European automakers rallied as production-halt risk eased, and at least one German supplier sought a waiver. The bounce is conditional. Roughly 70 percent of Nexperia’s European-made chips are packaged in China, and any waiver regime is a policy lever that can be tightened again. The White House has also flagged resumption of shipments from China facilities, but implementation details matter for plant-level scheduling. 

Operational friction remains the binding constraint. Nexperia suspended wafer shipments to its Dongguan assembly plant in late October amid a payments dispute, compounding export curbs and keeping back-end bottlenecks in place even as exemptions open a lane. Courts in the Netherlands removed former CEO Zhang Xuezhen during the intervention, underscoring that governance, IP custody and related-party flows are central to the remedy. The near-term playbook is to segment test data and tooling by jurisdiction, mirror critical packaging in the EU and keep “regulatory step-in” clauses ready across key contracts until normal governance is restored. 

The challenge for global businesses is twofold. First, Europe can step inside firms to secure supply, so companies must segregate IP and data by jurisdiction and be ready for regulatory step-ins and rapid site shifts. Second, China can toggle export exemptions with little notice, turning China-based packaging and assembly into a single point of failure. Given how many sectors depend on mature-node components and back-end capacity in China, the implications reach far beyond semiconductors: contracts, inventory strategy, and board-level risk governance will determine who can keep operating when policy, not price, dictates the flow of parts.

Analysis

It may have taken longer than the US hoped, but a slew of Western countries are now coming to realize that China’s value as a trading partner does not outweigh its risk to national security. (The US goes back and forth on this itself, as policies toward TikTok and chip sales show.) Seeing China as a vital partner has been embraced in countries like the UK and Germany since the 1990s, with the US government imposing tariffs on its partners seemingly reinforcing these countries’ views on China as a balance to the seemingly mercurial US. Despite this, recent moves by China to undermine Western state security, ranging from alleged spying cases to accusations of cyber attacks and sabotage against critical infrastructure, have triggered a reckoning. China is not just an autocratic state that is nevertheless an attractive trading partner, like Singapore. Rather, as Western countries are discovering, China is more akin to the Soviet Union during the Cold War: a key adversary that is intent on undermining the US and its allies wherever possible. 

In Europe, this realization–facilitated by a constant drip of stories about Chinese spies–has met a stark reality in China’s continued support for Russia’s war in Ukraine. The EU, for example, recently called out China’s sustained engagement with Russia’s continued attacks against Europe, naming China “as a decisive enabler of the Russian war of aggression against Ukraine.” This realization is causing issues for states like Norway, whose recent purchase of fleets of EV buses from China is now grappling with the realization that its Chinese supplier can switch off the vehicles remotely from China, a potential major issue for public safety. 

Similarly in Australia, Chinese maritime vessels are increasingly encroaching on naval drills and training operations to scoop up signals intelligence. As Australia’s spy chief recently noted, China’s “wholesale” approach to IP theft and political meddling comes from the CCP’s demand to know everything it can about foreign states to maximize Beijing’s advantage in case of a future conflict. However, China’s activities are part of its current effort to degrade democratic states without resorting to traditional war. Espionage, particularly against regional maritime powers like Australia, is therefore key to Chinese military and non-military strategies. Yet while the Australian government is slowly realizing that China is not their friend, state governments in Victoria appear to be late to the realization, instead announcing a “new golden era” of Victoria-China relations. It is these divergences between national and state or local governments that China exploits: states keen on improving trade are frequently engaged at the expense of national-level governments that may prioritize security. 

As news of Chinese espionage attacks continue to percolate in the West, the US will find itself in a position to reengage its global partners that have questioned their support in the face of tariffs.