China Decode: The U.S. Attack on Venezuela is All About China

In this episode of China Decode, Alice Han and James Kynge break down Beijing’s response to Trump’s sudden takeover of Venezuela — a move that hits China’s energy interests, loans, and influence in Latin America, and raises the stakes far beyond oil. Then they turn to the EV race, where BYD has overtaken Tesla for the first time, signaling a potential power shift in the global auto industry. And finally, they look at China’s quieter — but surprising — rise as a luxury food superpower, from caviar to truffles, and what it says about trade, consumption, and state-backed strategy. Learn more about your ad choices. Visit podcastchoices.com/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

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• 1:15Alice Han?

  Even although Venezuela is not Taiwan in terms of China's core interests, it is an important strategic foothold for China in Latin America. I mean, it was described as an all-weather strategic partnership back in 2023. That's sort of the second tier in terms of friendships that China has with the rest of the world. So this was a critical relationship that has, I think, been weakened with the Trump administration's move.

• 1:44Alice Han?

  Welcome to China Decode. I'm Alice Han.

• 1:47James Kynge?

  And I'm James Kynge.

• 1:48Alice Han?

  In today's episode of China Decode, we're discussing how China will respond to Trump's takeover of Venezuela, a turning point in the electric vehicle race and China's luxury food boom. That's all coming up, but first let's do a quick check in with how the Chinese markets are starting the week. On Monday, the Shanghai A-share index rose 1.4% on its first trading day of the year. The Hang Seng H-share index rose less than 0.1%, hovering near a seven-week high. Oil companies PetroChina and China National Offshore Oil Corporation both fell more than 3% due to their ties to Venezuela, but more on this in just a bit. And Minimax, a Shanghai-based AI company backed by both Alibaba and Tencent,

• 2:33Alice Han?

  is expected to begin trading on the Hong Kong Stock Exchange within the week at an IPO valuation of $6.5 billion. All right, let's get right into it. China just watched the US pull off a lightning strike and takeover in Venezuela, removing the leader Nicolas Maduro and threatening to take some control of the nation's oil industry. Now, this happened just hours after Beijing's top envoy was sitting with Maduro himself. Now, this timing could be accidental, or it could be the opposite. But for China, Venezuela isn't just an ideological ally. It is a significant energy supplier, a major debtor, a strategic foothold in Latin America,

• 3:16Alice Han?

  and a test case for pushing against US dominance in the Western Hemisphere. A day after the US operation, the Chinese Foreign Ministry declared itself, quote-unquote, "deeply shocked" and strongly condemned the flagrant use of force by the United States against a sovereign state. So the real question now isn't so much whether China is angry, it's how it will respond. Will Beijing swallow the loss and play the long game? Or does Trump's move force China to harden its posture elsewhere, from Latin America to Taiwan or even the South China Sea? What happens next could tell us a lot about the shape of US-China relations in 2026. James, I want to hear your takes before I dive into mine. What's your view on this?

• 4:01James Kynge?

  Well, Alice, I mean, you know, when it rains, it pours, hey? The new year, starting off like this, there really couldn't be a bigger geopolitical question for China than how it reacts to this. And I think you framed it perfectly. Is it going to play the long game? Or are we going to see some retaliation, pretty much straight off, potentially even military retaliation? Now, I'm not going to duck the question. I'm going to go straight in there. Of course, we can't know the answer. Such things are among China's most closely guarded secrets. But I think that we will not see a military retaliation from China on Taiwan

• 4:46James Kynge?

  or in the South China Sea, at least not in the short term. I think that what you framed as China playing the long game is a much more likely scenario. And the reason I think that is because Taiwan considerations are in the background of China's reaction to this. Venezuela is a long way from China. It's a long way from Taiwan. But just let me try and sketch out why I think Taiwan and China's reaction to Taiwan is crucial in this geopolitical shadow play that we're watching. I think that the way in which the US framed its move on Venezuela as part of its attempts to shore up its backyard,

• 5:32James Kynge?

  to concentrate on what both Trump and Marco Rubio described as the Western Hemisphere, I think that that may give China a ray of hope or at least cause to wait and see whether the US is really serious about concentrating its geopolitical attention onto the Western Hemisphere, which of course doesn't include Taiwan or China, and thereby move away or shift the focus of its geopolitical reach away from China's

• 6:07James Kynge?

  Fear of influence. Um. And so I think if that does turn out to be the case, we may well see China taking a longer view on this. And although, yes, some of China's condemnations have been fairly strong. I also think that other statements by the Chinese so far give the sense that China is really waiting to see. The two pieces of reasoning that I advanced to support my point of view is that the national security strategy which the US released in December last year identifies the Western Hemisphere as the vital interest of the US.

• 6:50James Kynge?

  And it drops language from the Biden presidency that identified China as America's most consequential geopolitical challenge. It also doesn't even mention great power competition at all with China. And it also downgrades the status of Taiwan. Um. In the past, under Biden, it used to say that the US was opposed to a shift in the status quo of Taiwan. But the new national security strategy unveiled in December last year in the US says that it, quote, "does not support a change in the status quo of Taiwan."

• 7:31James Kynge?

  This is seen as a clear downgrading of the importance and sensitivity of the Taiwan question. So I think that China is hopefully waiting to see the US redefine its geopolitical focus to its own backyard, i.e. Latin America and in this case Venezuela in particular, and thereby shift away from Taiwan and those contentious areas, the South China Sea and China itself. And if that happens, it will give China breathing space to advance its biggest priority in terms of geopolitics. But this is really hard to call at the moment, Alice. I'm really interested in your take on it. So how do you see it?

• 8:15Alice Han?

  Well, very quickly on the geopolitical front, before I talk about some of the economic consequences which are worth delving into as well. It's interesting that, uh, you know, we talk a lot about the Trump's approaches, the Roosevelt corollary to the Monroe Doctrine. Uh, to borrow another Roosevelt analogy, I think China's approach to this, after seeing what happened. In Venezuela is going to be to speak softly and carry a big stick. And what I mean by that is, on one hand, it will continue, I think, to pursue some kind of trade détente, to try to soften some of the edges, the rough edges in the relationship. I think that they were heartened by the national security strategy document that you referred to, James, not being a direct attack on China as it had been in previous administrations.

• 9:00Alice Han?

  But at the same time, massively increasing its investments and deployment of its military capabilities, we saw that in full display a couple of months ago at the September parade. So I think we'll have a two-track approach to this relationship and towards China's geopolitical strategy. But it is worth mentioning, James, that even although Venezuela is not Taiwan in terms of China's core interests, it is an important strategic foothold for China in Latin America. I mean, it was described as an all-weather strategic partnership back in 2023. That's the second tier in terms of friendships that China has with the rest of the world. So this was a critical relationship that has, I think, been weakened with the Trump administration's move.

• 9:45Alice Han?

  And if we think about the economic implications as well, it's not so much about oil, because only about 5% of China's seaborne crude imports come from Venezuela. It's more about the debt that's outstanding. So we have still, by some estimates, around $10 billion, if not more, of debt outstanding that Venezuela owes to China. And a lot of that traditionally, from Chavez onwards to Maduro, was in the form of loan for oil deals. That, I think, is going to be subject to debate, whether or not Chinese creditors are going to get a haircut or they're going to have to miss a lot of the debt that's owed. Because fundamentally, Venezuela, I think, is going to have to listen to the Americans, at least in the short term, in terms of some of these debt restructuring and oil developments in the region.

• 10:31Alice Han?

  So I think from China's vantage point, this is a net loss. Certainly, but I agree with you, James. If we broaden it out, I don't think this materially increases China's designs to invade or blockade Taiwan. I think if I'm in Beijing watching this, I would tread carefully because the Trump administration has shown that it has the military muscle to fight in areas that it deems to be in its national core interests, which in this administration is about the Western Hemisphere. So if I'm Xi Jinping sitting in Beijing, I'm going to sit tight a little bit and see what the Trump administration is going to do in its second half of a lame duck presidency. Because remember, we have the midterms coming up.

• 11:13Alice Han?

  A lot can change domestically that can also transform and alter Trump's geopolitical strategy.

• 11:20James Kynge?

  Absolutely. I think one of the first indicators that we're going to get of the trajectory of China-US relations after this move in Venezuela is whether or not Trump's meeting with Xi Jinping, which is supposed to take place in April, actually goes ahead. If we start seeing that, you know, that meeting is called off or people are talking about rescheduling a meeting, then I think it will be a sign that things are going badly wrong in the US-China relationship, perhaps partly because of these tensions and losses that China's going to suffer over Venezuela. But if China gets a sense that there is something to play for on its crucial priority of Taiwan,

• 12:03James Kynge?

  i.e. a softening of the US position on Taiwan, then I would expect China to be pushing full steam ahead for that meeting to go ahead.

• 12:11Alice Han?

  Yeah, I agree. I think that will be the next litmus test in April if the two presidents meet and whether or not Taiwan is on the table, so to speak. And I'm sure that the Chinese will be testing the Americans to see to what extent the Trump administration is willing to sacrifice blood and treasure for a Taiwan campaign, which, at least to my mind, when I think about the Trump clan and the people around Trump... I mean, including frankly Rubio as Secretary of State, it doesn't seem to be a top priority. I think that the focus in this administration is very much on Latin America, on defending the Western Hemisphere as opposed to being embroiled in conflicts overseas. But I wanted to talk a little bit about some of the economic implications

• 12:55Alice Han?

  for some of the players in China, because, you know, we've heard on Monday that the NFRA, the National Financial Regulatory Administration, is telling the banks that it needs to release its exposure to Venezuela. It's still unclear, when I was digging into the data, to the extent to which the policy banks and banks in China are exposed to Venezuelan debt. But when I look at the numbers since 2007, you have over $100 billion in loans that were lent to Venezuela to help with infrastructure, to help with oil. What's your take on this? Have you been following this, James?

• 13:30James Kynge?

  Yeah, I mean, I used to write a lot about China-Venezuela, because Venezuela was the poster child of the Belt and Road Initiative, launched by China around 2012 in Latin America. It was the number one borrower among Latin American countries from China. And China was building all kinds of infrastructure in Venezuela. There were factories, railways, roads. It really was a showcase of what China could do, and China wanted to show the whole region. And I remember back in the days of former President Hugo Chavez in Venezuela, talking about the alliances between China and Venezuela as like a great wall of friendship that, obviously,

• 14:15James Kynge?

  we were supposed to read in, would sort of keep the Americans out. And so, as you rightly say, Alice, Venezuela's been really crucial for China, but less so recently. And as you've already sketched out, I think if we boil it down to brass tacks, I think China stands to lose about $10 billion in US dollars in loans that are not repaid if the deal doesn't go to its advantage. And also, there's Potential that it could lose around two billion in terms of investment that was intended by Chinese companies in the Venezuelan oil sector that may now not go ahead. Those are big numbers, but they're not catastrophic.

• 15:00James Kynge?

  China has lent more than two trillion US dollars as part of its Belt and Road Initiative, according to aid data, a US consultancy, over the last ten or more years. So ten billion, it's a large number, but it's not catastrophic in terms of the general reach of China's development lending around the world.

• 15:22Alice Han?

  Yeah, I'm going to agree with that. I think that the bigger implication is the geostrategic one for China and Latin America and only broaden that to China's allies or partners. You know, I feel very much that the access of oil will has been weakened. Iran has been weakened substantially by Israel over the last few years. This is yet another, I think, ally and partner for China that has been weakened under this administration. So we'll have to see what happens in 2026 with the rest of the players. Okay, we'll be back with more after a quick break and stay with us.

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• 19:15Alice Han?

  Welcome back. Tesla has just lost its crown. The company's sales fell 16% at the end of 2025, hit hard by the rollback of US EV tax credits. And for the first time, China's BYD has overtaken Tesla as the world's top electric carmaker. It's a sharp turn for a company that once aimed to dominate global auto sales and is now betting its future on self-driving tech and robots. James, let's go right into it. I have a lot of opinions, but I want to get your take on why BYD has finally overtaken Elon Musk's Tesla. It's not been a good year for Elon Musk, 2025, I have to say.

• 19:54James Kynge?

  Yeah, I mean, this is one of the great corporate rivalries of our time. I mean, it's rather like the Coca-Cola versus Pepsi, Apple versus Microsoft, McDonald's versus Burger King. But this time, it has an extra twist because this is an American high-tech champion versus a Chinese high-tech champion. And the bare facts are that Tesla has lost its global sales crown to BYD, the Chinese carmaker, after almost a decade as the world's best-selling EV brand. And this is because both BYD's numbers were up very sharply in 2025.

• 20:37James Kynge?

  They got a 28% increase in global sales, and Tesla's sales were down 8.6% for the year. Of course, Tesla's sales are down partly because of tax changes in the US, which removed an incentive for American consumers to buy Tesla cars. But more generally, and this is where I think the main story is, BYD is steamrolling into markets all over the world. Here in Europe, in Southeast Asia, where you are, I think at the moment, Alice, in Australia. And I've actually driven one of the BYD cars as it came off the first shipment to Australia. There was a

• 21:21James Kynge?

  Massive ship transporter and about five thousand BYD cars came off the ship. And I I drove one in twenty twenty four in Bremen. And I have to say it took me a while to understand how to use it. There were so many kind of gadgets and dials. Uh, and the car was talking to me in German, which I speak very poorly. But after I got going, I have to say it was a very smooth ride. So it's a piece of high technology, but I think the crucial point is the BYD car that I was driving, which was the Dolphin Surf, cost about twenty three thousand euros. That's almost half the cost of the Tesla Model Three.

• 22:05James Kynge?

  And I have to say the cars are, you know, comparable in terms of their technology and their look. And I think that fact lies behind why BYD has managed to record a million sales of vehicles outside China last year. That's up an incredible hundred and fifty percent from twenty twenty four. So I think effectively Tesla is being beaten by a cheaper car that looks kind of almost as good and is technologically either on a par with Tesla or even slightly better. What's your opinion, Alice?

• 22:42Alice Han?

  Well, at the risk of being contrarian, James, I'm going to take the other side of it and say that um BYD may have peaked and some of these EV players may have peaked, at least domestically in China. Uh, you know, just to give people a sense of the numbers, BYD sold two point two six million electric vehicles this year. Uh, Tesla sold one point six three million. So that's quite a big delta uh between the two players. But a lot of it, James, I mean, to your point, still is a domestic driven story. I think the majority of EVs sold by BYD is still consumed by Chinese consumers. That trend that in the last few years has shifted, we're seeing more that are going out. Um, but we can also discuss whether or not that is going to be an ongoing trajectory,

• 23:25Alice Han?

  given some of the trade barriers that countries like EU, for instance, are putting on China. But when I look at the domestic outlook, what's interesting to me is that the government, just in the last week or so, has announced that it's gonna get rid of some of the tax waiver for the purchase tax on EVs. So originally, there should be a ten percent purchase tax. There was a full hundred percent exemption of that for a couple of years. As of this year, it's going to be a 50% exemption. So effectively a 5% purchase tax on all EVs. That could have a material impact on whether or not you, as a Chinese consumer, are going to buy a new vehicle. But on the flip side, they've announced at the end of December that they're going to put in

• 24:04Alice Han?

  $8.9 billion ultra-long special treasury bond issuance program to fund trade-in of EVs and subsidies. So it could be that we could see after March at the NPC meeting that there is some more support for existing EV consumers trading in their old vehicles and buying new ones. But you know, we're also seeing an economy that's still trapped in some kind of deflation. Consumers are not spending as much as the government wants them to. So I'm still a little bit skeptical about the growth trajectory domestically in terms of demand for EVs. And then when we factor in some of the headwinds globally to Chinese EV providers, I'm a little bit worried. Yes, BYD has a superior product.

• 24:48Alice Han?

  I was just in a BYD vehicle a couple of days ago in Sydney, Australia. I'm seeing more of them on the streets for sure. But I worry a little bit about how this will be perceived by foreign governments as an influx of cheap Chinese EVs. So I'm a bit skeptical. I'm holding my breath to see if we're going to see major legislation from countries around the world to try to limit the amount of Chinese electric vehicles. Because remember, autos is a huge political issue, not just an economic issue for a lot of countries around the world. So I think this will be an interesting thing to track. Obviously, when we think about the broader Chinese overcapacity issue and China's export engine.

• 25:31Alice Han?

  But one last thing that I wanted to add, which I thought was super interesting, again, tied to Elon Musk, is that he tweeted a couple of days ago that China's silver export controls are not good because silver is needed in many industrial processes. And I think people forget that, given that silver is a precious metal, but it is used in cars, for instance, in electric vehicles, in solar panels, in AI data centers. And you know, we've seen the creation of these export controls to restrict a global supply, more recently of rare earths. Silver's been added to that list. I think this is important and worth tracking. Because this also could have a material impact on Tesla, for instance, on other automakers,

• 26:14Alice Han?

  because silver is still an important input into some of these processes. And when I think about some of the levers that China will use in 2026 when it is unhappy with, say, the Venezuela policy with Trump's tariff policy, I think people should expect more of these precious metals, critical minerals, intermediary inputs being added to some kind of export control list and weaponized by China.

• 26:40James Kynge?

  I think that's really interesting, Alice. I just want to mention one thing. You raised the issue of protectionism. You know, countries here in Europe or elsewhere in the world may see these Chinese EVs steamrolling into their markets and displacing sales of valued domestic brands. And so I definitely think that protectionist pressures will rise. But I don't know whether, here in Europe anyway, the Europeans will actually get it together to have the unity to push forward, you know, greater tariffs or other forms of protectionism against the influx of these Chinese cars.

• 27:21James Kynge?

  And just one other really fascinating aspect that lies in the future. That is that BYD is planning on bringing its so-called flash charging batteries to Europe sometime this year. Now, these flash chargers can charge a car within five minutes. That means that they will significantly reduce the amount of time it takes to charge your EV. The one I drove, I almost missed my plane on the way back to the UK because the charger was so slow that, you know, we were standing there literally biting our nails, looking at the clock, wondering if we had the charge to get us to the airport.

• 28:04James Kynge?

  That will be a thing of the past when you can just draw up alongside a flash charger that will charge your car within five minutes. Now Tesla does not have that technology. It is bringing out technology, but it will be slower than the five-minute charge. What I've been able to read online says that the next Tesla supercharger will charge a battery to within a range of 200 miles within 15 minutes. So China is ahead yet again in this crucial aspect of the whole EV market.

• 28:36Alice Han?

  Yeah, very interesting. All right, let's take one last quick break and stay with us.

• 28:46Speaker 00

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• 29:16Speaker 01

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• 30:53Alice Han?

  Welcome back. China is now exporting more than electronics and EVs. It is exporting luxury food. From caviar to foie gras, truffles to macadamia nuts, China has quietly become a global heavyweight in high-end agriculture, supplying its growing domestic appetite and increasingly reshaping markets overseas. Now, backed by provincial governments and years of investment, China now dominates global caviar production, a shift that's turning what were once niche European delicacies into another front in China's expanding trade power. I mean, this is a topic close to my heart, given that I do love food, James, but...

• 31:34James Kynge?

  Well, you're a tremendous cook as well, which is credentials that I definitely don't have. So, but I would just start by saying how wrong I have been in my thinking on this topic. I never imagined that China would leap to the global forefront of luxury food. I just thought that markets such as caviar, foie gras, macadamia nuts, black truffles, matcha tea would remain the domain largely of premium foreign brands in China. They have a kind of a cachet. Let's say the brand is French or Australian or Japanese or Russian or Iranian when it comes to caviar.

• 32:14James Kynge?

  But no, in this area too, it seems that China has risen to the forefront and is now dominating not only the market inside China, but globally too. I just never imagined that that would happen. The Financial Times has got a really good piece on this phenomenon. And it turns out that the caviar example goes right back to the late 1990s, when some aquaculture scientists decided that you could use sturgeon to breed and it would take about seven to 10 years for a sturgeon to mature, produce eggs. And then you would take those eggs to a breeding center and then the young sturgeon would grow.

• 32:58James Kynge?

  And that's how this market has developed. And so since that time, when China produced almost no sturgeon, to 2024, China produced 43% of the global total. I just find that extraordinary. But tell me, Alice, how are you seeing this whole topic?

• 33:19Alice Han?

  Well firstly, I have to preface this with the fact that I I love European food. And I think there's something special about, you know, Parmesan coming from the region of Italy, Hamon Abricole coming from Spain. There's something that is unique about those flavors and the artisanal nature of how they developed. And when I mention this topic to a couple of European friends of mine, I think they were very upset by this because their their immediate reaction was, well, it's never going to taste as good as what we produce here in Europe. But I think that that defeats the purpose, and I think that that is not seeing this for what it is, which is that China is trying to create more agricultural products.

• 34:01Alice Han?

  It is trying to develop more high technology in agricultural development. Aspects, I think, which will both appear in the five-year plan in March. And this is all part of Xi's broader strategy to have, on the one hand, agricultural self-sufficiency, but also develop agricultural critical technologies that can be developed domestically, but also potentially exported around the rest of the world. I'm thinking particularly of global South countries like Africa, where it would be particularly germane and and of of use. So when I think about this, I think about it more in the context of of China using its export engine and manufacturing engine to the food realm. And I think that there will be a degree of nationalism whereby Chinese people will think,

• 34:44Alice Han?

  well, I don't need to get caviar from Eastern Europe or Russia, I don't need to get truffles from Italy. These truffles domestically have a good enough terroir, you know, to borrow a wine term, and and we want to support domestic producers. So I can see that as a trend domestically within China. I'm not so sure if this is going to be an attractive proposition for foreigners. But, you know, if you're cost-conscious and you're looking to get something that is half the price say of a European premium good, maybe you go for the Chinese one. But I think it'll be harder sell globally. I do think this will do very well domestically for all the reasons I mentioned. And just to drive home a personal story, so I was traveling in Yunnan last year.

• 35:29Alice Han?

  And Yunnan, some people may know, has the most biodiverse range of mushrooms in the world. Most of the world's actually porcini mushrooms come from China, have come from Yunnan specifically. And China accounts for a third of the world's truffles. And exports went up sixty percent since last year. I actually went to an Italians factory in Yunnan. And he was producing porcini mushrooms, portobello mushrooms, truffles, which he was selling in powdered form or dried form to the European market. And apparently, Europe does not have enough porcini mushrooms to make all those risotto sachets.

• 36:09Alice Han?

  So in some ways, China is part of this global industry because it has the ability to produce on mass and at scale. And so I think that there will be errors like this dried mushroom powder that I'm talking about, where China is already being globally accepted. And I don't think people actually even realize that. And one last fun fact that I have about this is that apparently, people in China don't like the taste of truffles. So it's a very easy sell to cultivate that domestically in Yunnan and then sell it to the rest of the world because it's not seen as delicacy in China, which I thought was quite interesting comparative advantage at play.

• 36:42James Kynge?

  Yeah.

• 36:43Alice Han?

  But a super interesting story, and I'm glad F T covered it because I think it shows so many aspects of what's happening in China in terms of taste changing, in terms of domestic alternatives to foreign products. And in terms of China trying to compete at a global scale with some of these premium goods.

• 36:59James Kynge?

  Yeah, and you mentioned Yunnan there, which I'm really glad because I, I think that sometimes maybe people outside China, when they think of China, they've seen all the pictures of the factories and the big cities and the smog and the pollution. But a province like Yunnan, which is right on the southwest, sort of bottom corner of China on the map, bordering Myanmar, is honestly one of the most beautiful places anywhere in the world. And you mentioned Terroir. I would have thought that Yunnan Terroir is superior to many parts of the world. The biodiversity is absolutely off the charts. And in the Financial Times story that I'm quoting from, there's a quote here from one of the growers there,

• 37:42James Kynge?

  who says, "There's a joke that whatever expensive fruit exists in the world, Yunnan will import it, research it, cultivate it, and bring down the price." So I think that sort of sums up this trend. We really shouldn't underestimate, you know, some of the natural underpinnings that China has to grow this stuff and to grow really high quality food.

• 38:08Alice Han?

  Well, I guess we're gonna have to try Chinese caviar next time we're in town. I think you're going to China very soon, James, so you're gonna have to try some for me.

• 38:15James Kynge?

  I have to admit, I don't like caviar.

• 38:19Alice Han?

  All right. Do you like truffles, James?

• 38:23James Kynge?

  Listen, Alice, I I come from North Yorkshire, which is a very set to bottom place. I don't think I've ever had a truffle in my life. What about you?

• 38:31Alice Han?

  I am very partial to truffles. I mean, I was in southwest France a couple of months ago, and they have a particular white truffle. It's quite unique there, so I I am partial to them. But James, we're gonna have to change that for 2026. We're gonna have to get you eating caviar and truffles.

• 38:47Alice Han?

  Living the high life. All right, James, it is prediction time, and we're gonna make our first predictions for 2026. I'm gonna do something a bit left field because I think this is gonna come up in a couple of weeks, you know, when we see on Jan 20, the economic readout in China. I think the economic trajectory of China is still gonna be a top line issue for investors and the and the rest of the world in 2026. But I wanna take it to a prediction that I feel fairly strongly about, which is on the currency side. I think we're gonna see an appreciation of the CNY, a slight appreciation by at least 10%. I think I feel comfortable about the currency ending at 6.8 to 6.9 by the end of the year,

• 39:31Alice Han?

  primarily because I think the Trump administration is going to elect a fairly dovish Fed chair. It could well be Kevin Hassett. And in that case, when we factor in the interest rate differentials between the Fed and the PBOC and the fact that China isn't going to intervene, I think, strongly to defend the currency. I think we could see the currency go up and strengthen against the dollar to around 6.8, 6.9 by the end of the year. And that is materially important because it obviously impacts. US-China trade talks, negotiations. Trump isn't a fan of a weak CNY. He wants to see a weak dollar. And I think this could be an era in which there is some degree of compromise between China and the US.

• 40:15Alice Han?

  But James, what's your prediction for 2026?

• 40:17James Kynge?

  Well, I'm going to go back to what we were talking about at the top, Alice. I think that China will swallow its pride, swallow its humiliation, suffer its losses with regard to Venezuela. And I think it will play the long game. And I think the Trump-Si meeting in April will go ahead. And both sides will try to gain whatever advantage they can in other areas, effectively putting aside what China is currently condemning as this unlawful move by the United States in Venezuela.

• 40:54Alice Han?

  OK, so watch the space. We're going to wait for a Trump-Si meeting in April. That'll be exciting. All right, that's all for this episode. Thank you so much for listening to China Decode. This is a production of Prof G Media. Our producer is David Toledo. Our associate producer is Eric Janikas. Our video editor is Ness Smith-Savadoff. Our research associate is Dan Shalan. Our technical director is Drew Burrows. Our engineer is William Flynn. And our executive producer is Catherine Dillon. Make sure to follow us wherever you get your podcasts so you don't miss an episode. And talk to you again next week.

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