China just took the lead for the first time in modern history.
The AI race isn't being won in headlines. It's being won in research budgets. Source: Rand Group
China’s real residential property prices crashed to their lowest level on record hitting 20 year low
Data from the Bank for International Settlements shows the index dropped to 86.79 in Q4 2025, down from 88.85 in the previous quarter. The index has now declined steadily from its peak of 112.99 in September 2021 marking a 21.5% correction in China’s housing market. The latest reading is also the lowest level since records began in 2005 signaling continued weakness across the property sector. Real estate has been the primary repository of life savings for hundreds of millions of Chinese households. Yet roughly 85 percent of the price gains that underpinned that wealth creation have evaporated since 2021. Sales and prices continue to slide, while an estimate of 80 Million unsold or vacant homes clog the market and many of the country’s largest private developers have defaulted on debts Source: Bull Theory
For anyone wondering whether the fossil fuel crisis in the Middle East is driving interest in clean energy technologies:
China's exports of batteries, EVs and solar products shot up in March to $21.9 billion! This is an all-time record and a 70% increase over March 2025. Source: Nicolas Fulghum
The dream of China surpassing the U.S. as the world’s largest economy is fading.
In 2021, China’s GDP was about 78% of the U.S.; by 2024, that share had fallen to roughly 64%, back to around 2017 levels, with the gap between the two economies doubling in just a few years. Note that we are talking about NOMINAL GDP. Over the last few years, the US has been generating inflation while China has been facing deflation or low inflation. This matters when you consider nominal GDP growth. Source: Terence Shen
China’s economy gathered steam in the first quarter
Robust exports offset sluggish domestic consumption, though an energy shock stemming from the Iran war threatens to sap global demand and undercut that momentum. ➡️ Gross domestic product grew 5% in the three months to March, accelerating from 4.5% in the prior quarter. ➡️ Urban fixed-asset investment climbed 1.7% in the first quarter from a year earlier. ➡️ China’s retail sales grew 1.7% in March from a year earlier. Industrial output expanded 5.7%. ➡️ The urban survey-based unemployment rate in March was 5.4%, picking up from 5.3% in February. In the first quarter, China’s exports grew 14.7% from a year earlier in terms of U.S. dollars, the fastest pace since early 2022, according to EUI. That said, that growth has stalled as the Middle East conflict rages on. As the world’s largest oil importer and a heavily export-reliant economy, China is vulnerable to an oil shock that’s already slowing trade, pushing up factory costs, and darkening the outlook for the rest of the year. Source: CNBC
China's oil supply pre-war:
29% Other Middle East, Hormuz blocked 26% Rest of world , scrambling 20% Russia, back to sanction as US just confirmed 14% Saudi Arabia , 700K bpd offline 11% Iran, blockaded⚠️ That's 54% of China's oil either blocked, sanctioned or disrupted. Source: Jack Prandelli on X, Bloomberg
Trump said China had allegedly agreed not to supply weapons to Iran as part of deal tied to keeping the Strait of Hormuz open.
- Says he is opening the strait "for China too, and the World" - He expects to meet Xi soon. Claims Xi Jinping will give him "a big, fat, hug" when he visits in a few weeks - Says both countries are "working together smartly and very well" - Adds the U.S. remains "far better than anyone else" at fighting if needed - "This situation will never happen again"
Forget US Treasuries, Chinese bonds are the new safe-haven trade
Since the start of the war, foreigners have: - Dumped $82B of Treasuries - Piled into panda bonds And this has nothing to do with China paying higher yields… - US 10-year yield: 4.4% - China 10-year yield: 1.8% In the midst of the biggest energy crisis, foreigners are choosing panda bonds over USTs. Source: Bloomberg, Lukas Ekwueme
