Trade War

Newsletter 311 - Aug. 2, 2026

After a July hiatus for travel in China and Taiwan, Trade War is back!

• Welcome to the 311th edition of Trade War. I hope you’ve all been having a good summer. First off, a note on how I’ve been spending my time.

  I’ve just returned from a three-week trip to Beijing and to Taipei. While there, I got the opportunity to look at how both economies are being propped up by the global AI boom as well as where weaknesses remain, some of them shared by both China and Taiwan (uneven tech booms whose benefits don’t reach down to the less wealthy, for example.)

  I sat down with foreign affairs officials in both cities and heard about how they view each other across the Taiwan Strait, as well as where they put U.S.-China and U.S.-Taiwan relations at this point. I also met professors, business executives, and journalists, including old friends who previously reported from Beijing and now are reporting from Taipei.

  I will get into what I saw and what I heard in much more detail in upcoming editions of Trade War and the weekly Live Video going forward.

On to the news ~

Taiwan’s economy grows 13.72% in the first half, the fastest since 1976. Taiwanese exports to US surpass China’s in first five months. And Chinese Communist Party Politburo holds off on stimulus despite weak GDP.

Prominent market advocate Fang Xinghai investigated in widening finance graft probe. And one from the vault: “we would love to sell to foreign investors,” the Stanford-educated economist Fang said in an interview on debt restructuring in 1999.

Chinese negotiator He Lifeng warns Treasury Secretary Bessent about new US economic and trade controls. And Trump envoy and Montana Senator Steve Daines to visit Beijing before Xi’s Washington visit next month.

Notable/In depth ~

• Around the globe, China viewed more positively than US for first time in decades

• India’s manufacturing sector misses chance to capitalize on US tariffs on China

• Beijing quarantines Taiwan like a boa constrictor constricts its prey

Taiwan economy grows at fastest pace in half century

Propelled by exports for the global AI boom, Taiwan’s economy grew 13.72 percent in the first half, its fastest rate since 1976.

For the second quarter, GDP was up 12.92 percent, beating economist expectations for 10.5 percent growth. The impressive numbers come even as investors fret that companies like Meta are over-investing in AI and stock markets experience a global chip selloff.

“So far, the outlook has remained positive to us,” Taiwan statistics bureau official Chiang Hsin-yi said in a briefing.

“The strong export momentum is prompting companies to accelerate domestic investment and expand production capacity to meet rising demand,” Chiang said.

“Strong exports have boosted imports of capital equipment, while imports of raw materials for production have also surged, signaling that companies are optimistic about future manufacturing activity.”

Taiwan Semiconductor Manufacturing Co. has upped its spending projections for the year anticipating continuing strong demand from Nvidia and Apple, as well costs associated with its $265 billion expansion in Phoenix, AZ.

GDP “going like gangbusters”

“The GDP growth is going like gangbusters,” said Dexter Tiff Roberts, nonresident senior fellow at the Atlantic Council’s Global China Hub, reports Al Jazeera.

With Taiwan producing some 90 percent of the advanced chips used for top AI models, the trend is likely to be “long term,” Roberts said to Al Jazeera.

“That’s not going to go away. We know the world, and the U.S., needs this,” he added.

Still, there are obvious vulnerabilities in Taiwan’s domestic economy, including the poor performance of traditional exports sectors including plastics and textiles. Exacerbating the situation, only a small portion of the Taiwanese are involved in the AI sector, Roberts pointed out.

“A majority of the younger population is not in hi tech, so that’s a real problem,” he said.