China This Week: $5 Military Chips, Honda’s Shock Warning; Japan the ‘Israel of Asia'.

Unfiltered weekly briefing on China's economy, tech breakthroughs, and geopolitical moves.

Key developments in China this week: ultra-cheap military chips, auto industry shockwaves, iron ore pricing power, and remarkably strong words on Japan.

Science & Technology

$1500 military-grade infrared chips now cost $5. Conventional manufacturing and materials > cheaper, more numerous defensive missiles—in China, which sells containerized hypersonic missiles for $95,000.

First two-dimensional integrated circuits, ICs, come off the pilot line. The impact is 2-3 years away.

China’s 0.1-Second Blackout Recovery Tech Revolutionizes Global Power Grids

Trade & Finance

How big is China’s economy, really? Both production and consumption are multiples of US levels, how can China’s GDP be a mere 125% of America’s?

BYD and KFC solve a problem we didn’t know we had: the boundaries between charging your car and eating chicken, which used to be two completely different things.

‘We Have No Chance Against This’:.— Honda’s CEO after touring Shanghai auto factory.

Standardized, built in parallel, economies of scale, local supply chain, skilled reactor workforce, short build times = $2,500–$3,000/kW, 30% of U.S., France.

Spend 90 enjoyable, amusing, informative minutes with Adam Tooze and Kaiser Kuo. Highly recommended!

China is taking on the iron ore giants to gain bargaining power in a $190B market. The world’s largest iron ore consumer wins market pricing power.

China’s home-brewed fermented pig feed cuts $12.5 billion off soy imports.

Coal-based urea insulates China’s farmers from global fertiliser turmoil.

“People who dine at this restaurant might find themselves having loose stools, this is a normal phenomenon,” says notice in the restaurant where 200 customers wait for a table.

Diplomacy & Geopolitics

No one wants to see Taiwan’s next generation sent to the battlefield,” says KMT Chair Cheng Li-wun, to President Xi Jinping.

Beijing Is Not Rushing Reunification. The real news from Xi’s meeting with Cheng Li-wun is the mainland’s signal on peace, patience, and step-by-step progress.

“China will never allow Japan to become the ‘Israel of Asia’ and terrorize the region again.. China does not care whether Tokyo flatters itself. It only demands that Japan stop causing trouble, stop provoking, and stop mistaking borrowed power for national courage”—Foreign Ministry.

If Beijing place at risk the inputs required for American military production, grid expansion, AI systems, and industrial continuity.. Once a state concludes that the foundations of its economy and war machine are being closed off, the urgency of decisions change. Stability stops being the governing aim.

China has been looking for a ceasefire. Chinese strategists see a U.S. quagmire. Official stances and elite perspectives on the Iran war.

BRI Came Roaring Back in 2025: Total engagement reached $213.5 billion, up 74% from 2024. African Central Asia saw explosive growth, while green energy broke records..

“Regulations on Industrial Chain and Supply Chain Security. Article 14. Discriminatory prohibitions, restrictions, or similar measures in the industrial or supply-chain sphere—or implements or assists conduct that harms China’s industrial and supply chain security—may trigger a supply chain security investigation, following which, authorities may prohibit or restrict imports and exports of goods and technology, restrict international services trade, impose special fees, and place involved organizations and individuals onto China’s anti-sanctions list under the Anti-Foreign Sanctions Law”. That is a countermeasure architecture.

Defense & Security