🇨🇳 China surprised everyone

What’s going on here?

China’s economy picked up by a perkier-than-predicted 5.4% last quarter, but economists expect a crash to follow.

What does this mean?

China has been collecting US tariffs like they’re going out of style. So, eager to ship stuff to customers before those increased costs set in, the country’s industrial sectors have been pushing production lines into overdrive. And everyday folk have shown some energy, too. Chinese shoppers spent 5.9% more with retailers this March than last, far above the 4.2% analysts predicted, helped by government assistance in the form of appliance trade-in incentives and dining vouchers. That said, economists think those figures will settle down once the shopping and shipping spurts stop. So much so, in fact, that they’ve downgraded their forecasts for China’s economy this year.

Why should I care?

For markets: Spot the difference.

China exported far more than it imported last year, with a gap of nearly $1 trillion between the two. Even if you look at just its trade with the US, China exported nearly $300 billion more than it imported. That cash has been making up for economic problems at home – but without a successful negotiation, tariffs stand to take such sums out of this year’s books. China has said it’s open to talks with the States, but investors seem to be preparing their just-in-case strategies: they’ve invested in enough gold to send the precious metal’s price to record heights.

The bigger picture: If you want to win the war, learn TikTok dances.

China is taking the trade war to a new battleground: America's TikTok feeds. Chinese suppliers have been pumping out content this week, urging the US’s chronically online to skirt tariffs by buying directly from their factories. It’s shaping into a case study for the power of modern marketing: Chinese wholesale clothes store DHgate reached the silver spot on Apple’s US App Store, and OG ecommerce site Taobao is sitting at number seven.

What’s going on here?

One of the world’s biggest semiconductor companies reported worse-than-expected orders for last quarter, after tariffs put the “L” in ASML.

What does this mean?

ASML logged nearly $4.5 billion in orders last quarter – more than $1 billion shy of expectations. That’s a big deal: the firm’s top-of-the-line chip-making machines have attracted a roster of famous clients, so those results suggest a pullback from the likes of Nvidia, Intel, and TSMC. ASML pinned the blame on US tariffs, which are disrupting international supply chains and threatening demand for already expensive chips. And you can bet the company’s bracing for more: the US just launched a national security probe into semiconductor imports, likely preparing for specific tariffs. Investors seem to see the writing on the wall: they dragged ASML’s stock down over 5% on Wednesday.

Why should I care?

Zooming out: Thanks for nothing.

The US was complicating international trade before these tariffs, mind you, banning certain chip exports from the States to China. That’s challenged American standout Nvidia. After designing the “H20” chip specifically to comply with previous restrictions, updated rules – effective immediately – will likely keep it from being sent to China going forward. That’s a kill shot: the chip is one of Nvidia’s fastest-growing products, bringing in around 70% of the $17 billion Nvidia makes from China. No wonder investors initially sent the stock down by over 6%.

The bigger picture: Let’s not keep this between the two of us.

In a bid to isolate China from global trade networks, the US is pushing trade partners to limit their interactions with the world’s second-biggest economy. The dangling carrot: access to American markets. And if that doesn’t work, the US has hinted at delisting Chinese stocks from American exchanges.