Gavekal Technologies: Briefing

In 2025, the world learned to take China’s tech power seriously: the DeepSeek moment, the increased dominance of Chinese electric vehicles, a biotech boom and a trade surplus of over US$1trn all went to show that China is now a technological leader. Yet just as many used to underestimate China’s tech prowess, we are now at risk of exaggerating it. China’s strengths are real, but not unlimited. The theme of our final Briefing for this year is the constraints on Chinese technology power, in semiconductors, new energy and a wide range of sectors where catch-up is slow and global incumbents still enjoy many advantages.

China’s technology companies face two big external obstacles to progress. Semiconductor companies and AI developers have to deal with US export controls while electric vehicle and green energy companies are up against protectionist barriers. But how effective are these barriers really?

Nearly three weeks after Presidents Donald Trump and Xi Jinping made nice in South Korea, the details of the US-China trade ceasefire are still being worked out. The main sticking point is Beijing’s licensing terms for exports of rare earth and other critical materials. Also in today’s Gavekal Technologies Briefing, we consider the possibility that the US might be able to break China’s rare-earths chokehold sooner than expected, and report on the Chinese pharma industry’s struggle to generate profits.

The Xi-Trump meeting October 31 in South Korea left a wake of positive vibes, but also a lot of unanswered questions: exactly how much the US and China will really roll back their respective export controls on semiconductors and rare earths, whether the dispute over Nexperia's ownership will be resolved, and most important, how long this latest truce in the US-China tech competition will last. In this webinar, Arthur Kroeber and Gavekal Technologies research director Laila Khawaja discussed the latest twists and turns.

Netherlands-based and Chinese-owned chip firm Nexperia recently became collateral damage in the US-China tech rivalry, and the Dutch government’s seizure of the company is a belated effort to regain control of a strategic technology asset. After repeated false dawns, it now seems that China is on the verge of peaking its coal consumption, thanks largely to its investments in renewables. And Chinese biotech firms are racing ahead in trialing innovative new cell and gene therapies for cancer.

The tensions over China’s new rare earth export controls may be abating, as Beijing and Washington try to get their trade talks back on track. But the fundamental problem remains: China has a lock on rare earth elements, and there is no easy way to break its chokehold. In this Briefing we revisit the reasons why. We also explain why China is the only country likely to solve the trilemma of making energy green, cheap and secure, and examine its aspirations in biomanufacturing.