NVIDIA's CEO has publicly stated the company has "largely conceded" the Chinese AI chip market to rival Huawei. This reflects Huawei's capture of ~50% of the domestic market and signals a major power shift in the global semiconductor industry, accelerated by U.S. export controls.
Huawei is shifting from shrinking transistors (Moore's Law) to optimizing data flow via advanced chip stacking and interconnects. This "tau scaling law" is an innovative workaround to physical limits, aiming to create competitive AI compute power without access to the most advanced manufacturing processes.
Chinese companies are circumventing potential EU tariffs by establishing manufacturing plants within Europe, particularly in the auto and green tech sectors. This FDI strategy, mirroring Japan's 1980s U.S. expansion, bypasses import duties, intensifies local competition, and renders traditional trade barriers less effective.
Despite tightening political controls, Beijing is intentionally safeguarding Hong Kong's economic freedoms. China understands Hong Kong's value as a critical gateway to global capital and is careful not to kill the "golden goose" that allows mainland companies and wealth to connect with international markets.
China compensates for less powerful domestic AI chips by leveraging cheaper energy. By placing data centers in regions like the Gobi Desert with abundant, low-cost solar power, it can economically operate more hardware to achieve the necessary compute scale, turning an energy advantage into a technological workaround.
A full-blown EU-China trade war is unlikely because Germany's largest multinationals are heavily dependent on the Chinese market. These powerful companies are lobbying the German government to prevent aggressive tariffs, creating an internal brake on EU policy to protect their significant business interests from Chinese retaliation.
Fueled by a massive influx of capital from Mainland China, Hong Kong has surpassed Switzerland as the world's leading offshore wealth management center. According to Boston Consulting Group, this trend is set to accelerate, with Hong Kong's lead projected to widen to nearly $600 billion by 2030.
An EU trade war with China could backfire by shielding inefficient domestic industries. Protectionist measures may prevent urgent reforms needed to address Europe's high energy costs, restrictive labor laws, and low productivity, ultimately weakening its long-term global competitiveness.