PROJECTION UPDATE (13 May 2025)

• In a surprise U-turn by China, after strong words of not talking to USA or negotiating with USA without USA first eliminating their tariffs on China, China delegation met with USA delegation at Geneva, Switzerland between 10-12 May 2025.
• China and USA both agree to drop reciprocal-retaliation tariffs to 10% for 90 days - effectively setting the minimum tariff on each sides to 10% vs 30%. Read more about the deal here.
• The softening stance by China may be a signal of prioritization over stabilizing internal economic problems over challenging US hegemony - thus signaling possibilities that at least certain factions within the CCP have interests to try to fix/reform its economic system.
• DPA assess the risk to drop from 75% to 50% - given the trade war respite is only for 90 days - and with the nearly insurmountable economic challenge facing China internally, China may not necessarily be able to offer a deal that USA want, and the high tariffs may return after the end of the 90 days.
• USA's Economic War strategy remains unchanged and is still on course, to either force China into an "economic surrender" by going into economic reform and opening up of its currently semi-closed economy; or to cut China entirely out of the US-led economic/trading ecosystem.
• As such risk of the majority of the world cutting China off remains the same at 15%, as the economic system of China remains largely a threat to most countries' economic development and welfare.