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Gavekal Technologies: Briefing
The Tech Truce Starts To Fray
Arthur Kroeber, Laila Khawaja, AJ Cortese, Tom Hancock
10 Aug 2026
In May, presidents Donald Trump and Xi Jinping promised a new era of “constructive strategic stability.” What we have seen since then is a simmering tension, as the US has tried to restrict Chinese tech imports through a series of measures by a new actor, the Federal Communications Commission. China finally responded in early August with a calibrated set of its own restrictions, designed to respond to the US but not to escalate.
Gavekal Technologies: New Energy
China’s Export Engine Meets Europe’s Carbon Rules
AJ Cortese
3 Aug 2026
Europe’s desire to limit imports of carbon-intensive goods is leading to changes in industrial China. Beijing has launched a set of zero-carbon industrial parks that will tightly link factories with renewable energy sources, helping them cut their carbon footprint and comply with new EU regulations that will tax carbon-intensive steel and aluminum imports and bar entry to batteries that fail to meet carbon limits.
More research
What Just Happened, Kimi?
The US tech world spent much of the past 10 days freaking out over the latest high-performance Chinese AI model release, Moonshot AI’s Kimi K3. This once again conjured the specter of cheap open-weight Chinese models blowing up the revenue engines for their more costly American competitors. Shortly afterwards, Chinese open models went from villain to hero, as the US-based developer community Hugging Face used a Chinese model to fend off a rogue cyber attack by an OpenAI model.
EVs’ Year Of Living Dangerously
China’s passenger car market is having a terrible 2026, and electric vehicles for once are no exception. Prices and margins are under pressure. Yet despite all that, the market is not consolidating—quite the opposite. What makes it all possible is exports, which now account for a third of Chinese EV makers’ unit sales. The question is how long international markets will be willing to absorb the rising tide of Chinese imports.
Five Questions On China Biotech
Investors have cooled on China’s biotechnology sector, after a spectacular run-up in Hong Kong biotech stocks in early 2025. This is a needed correction: China’s biotech companies are technologically strong, but commercially immature. Also in today’s China Tech Brief: drones and EVs.
The New Energy System Takes Shape
China’s latest five-year plan for energy disappointed many analysts because of its unambitious targets for scaling back fossil fuel use. This misses the point. The plan is important because for the first time, Beijing is formally committing to an energy system based mainly on non-fossil fuels, with traditional coal, oil and gas as backup stabilizers. Achieving this goal will take another couple of decades, but policymakers are already starting to look beyond brute additions of renewables capacity to the efficiency measures that will be required for success.
Tesla’s Two Way Bet In Physical AI
Tesla’s market capitalization is by far the biggest among global automakers, mainly because it has sold itself as a leader in AI—not just in cars, but for humanoid robots as well. To turn its AI vision into reality, it needs China. Its Shanghai gigafactory enabled Tesla to scale up electric vehicle production; to scale up robotaxis and humanoids, it will have to figure out how to operate in both the US and China even as the two countries wall off their AI ecosystems from each other.
How The US Can Meet AI Energy Demand
Conventional wisdom has held that while China’s AI buildout is constrained by lack of access to advanced chips, the US will be slowed by the scarcity and cost of electricity. Solving the power constraint is indeed a problem: AI data centers are suddenly adding a lot of new electricity
demand on a system that has not grown in two decades. But aside from building new power plants and transmission lines—a long slog—there is a lot the US can do to squeeze more juice out of the current infrastructure.