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Sean Fu, a market analyst focused on China, says China is “done with US Treasuries,” citing that in the last month China “dumped around forty billion or forty-one billion,” and arguing China sees “no point in coupling their economies too tightly with the United States” going forward. He frames recent geopolitical events—including wars not only involving Russia but also Iran—as part of an effort that, in his view, helps contain China’s economy. He points to compromised oil flows from Hormuz to China, noting that China buys a lot of Iranian oil, while arguing it is less exposed because “ninety to ninety-five percent of” power generation is not from oil and gas, and many supply chains China controls itself.
Fu also describes the Trump-Xi summit as failing to produce pressure on China, describing an intimidation attempt around Iran and Venezuela that “didn’t happen at all.” He claims the Trump administration did not push the Chinese on anything and accepted Chinese phrasing that they would “look into rare earths,” implying China would keep “their hands on the tap.” He reiterates that China will not “recouple” with the US, including by buying more Treasuries.
Turning to the American side, Fu argues that higher US energy prices raise revenues for oil companies, but because oil is a global market, prices also rise for “everyday Americans.” He links rising energy prices to worsening inflation, saying inflation moved from “two point four percent” to “two point eight percent,” and is “around three point eight percent,” and argues that higher gas costs (said to be “between five hundred to maybe a thousand dollars more a year”) will eventually reduce consumption, with Americans cutting discretionary spending. He adds that bond yields are likely to stay high and contends that attempts to sustain an “AI economy” via financing and data-center buildouts are constrained by finite money and high interest rates. He characterizes US conditions as being driven by confusion around market-moving statements about war being “on” or “off,” and says the US cannot isolate itself.
Fu then emphasizes the “chip wars,” arguing the strategy of cutting China off from American chips has backfired. He cites Huawei’s claim of a breakthrough and says that by “twenty thirty-one” Huawei chips could compete with Nvidia and TSMC, arguing that pushing China into a corner forces innovation. He describes Chinese workarounds, including creating lower-end versions and “string[ing] a bunch of chips together,” such as using “a thousand Huawei chips” instead of “a hundred Nvidia chips,” and he connects the feasibility of brute-force approaches to China’s lower energy costs, stating energy prices are “a quarter” of the US (and “at least fifty percent cheaper”). He says Nvidia leadership has indicated China is unlikely to import lower-end chips and that China may “leapfrog” the technology instead of inviting Nvidia market entry. Fu also asserts that during Trump’s visit to Beijing, an RTX Nvidia gaming chip was banned that some companies use for AI, and describes “ring fencing” of the market.
He adds that Gulf investment behavior may be influenced by the Middle East war and points to Scott Bessent announcements about confiscating Iranian assets, including “around one billion dollars worth of illegal crypto.” Fu says this undermines the assumed anonymity of cryptocurrencies by asserting the US can trace funds on public blockchains, freeze them, and seize them. He argues Gulf states will respond with uncertainty, potentially diversifying into gold, and potentially “adversary economies of the US,” including China, to spread risk away from US assets.
Fu links economic and military dynamics, saying the US has used up weapons in Ukraine and diverted systems from Europe and East Asia toward the Gulf, with Israel prioritized there, which he says signals that the US cannot protect everyone. He argues this will push allies toward rearmament financed by borrowing, predicting “money printing” and rising debt, and describing a “dangerous age” where currencies lose more value to fund weapon buildouts.
Regarding financial stability, Fu says “true market financial stability is now More or less officially gone,” with low interest rates finished and rates “sticky” and rising. He argues the US is trapped: issuing more bonds raises yields and the national debt, while cutting rates increases inflation and leads to higher rates later. He says the Fed may need to buy bonds to flood the market with liquidity, describing scenarios including AI or semiconductor “bubble” implosions or confidence collapsing if the Iran war drags on.
On solutions and China’s path forward, Fu says China and Russia are consolidating closer together and that China is slowly decoupling its financial economy from the US. He cites capital controls on mainland Chinese savings leaving for Hong Kong and then to other Western economies, describing ring-fencing of capital flows and concentrating investments toward allies, BRICS, Belt and Road partners, and more focus within Asia. He also says capital outflows from the Gulf may be shifting toward East Asia.
In Europe, Fu says China may reduce its position if the EU ramps up a trade war with China, but he argues China does not want to decouple from the EU entirely because Europe remains an important tech/consumer market. Finally, Fu advises diversification due to widespread bubbles across US stocks, tech, and semiconductors, arguing that oil-market disruptions from Hormuz can worsen energy shortages later (said to show up in July and August), pushing oil prices up and potentially popping bubbles through reduced consumption. He says cash bonds lose value via inflation, while gold remains a long-term purchase, and he recommends holding a mix including gold, international stocks, and exposure to China/RMB. He concludes that the “variables” in ongoing conflicts make predictions difficult.