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Grüezi!

China has published one of those earnest papers on global governance that set the China hawks worrying that the world’s future is being mapped out in a meeting room in Zhongnanhai.

Yu Jie, at Chatham House, made the case for reading it more carefully. The paper, she argues, bundles Beijing’s long-standing themes – a multipolar order, the UN at its centre, a louder voice for the global South – into a single bid to reshape how the world is governed, whilst quietly exposing the gap between that ambition and the money China has to spend on it. She is right on both – it’s not a Marshall Plan, and it is a serious document.

But like almost everyone, she is also reading China’s strategy off its paperwork, and that isn’t where the strategy lives. It lives in the choices engineers and firms make — which models to build on, which suppliers to buy from – not in government policy documents.

And so Beijing is benefitting from its firms’ success through mechanisms it never engineered, and is credited with a foresight its planners never had.

1 The wrong units

China is rising into the space the United States is leaving, and the white paper is yet another sign of it.

The people paid to track that rise watch China’s announcements – the chips it buys, the budgets it sets, and – of course – the declarations it issues.

But the real rise is in the adoptions: in defaults, toolchains and bills of materials, one download at a time. Repositories, not Confucius Institutes, are what’s growing China’s reach.

2 The default

A year ago DeepSeek, a Hangzhou firm, released a model close to the frontier which, on its telling, had been trained for a few million dollars. It turned out that figure covered only the final run, but that wasn’t really the point.

The point was the licence. The weights were free to download, run and alter. Nothing was asked in return, and so the model spread like wildfire through a cost-conscious community of students, developers, and ultimately big enterprises.

The results show up in two numbers from Hugging Face, the field’s main repository. Over the past year, Chinese models passed American ones in downloads, and Alibaba’s Qwen is the starting point for roughly two in every five new models built on top of an existing one.

Qwen, DeepSeek, Zhipu’s GLM and Moonshot’s Kimi are the open families developers reach for first. America’s closed labs still hold the frontier, but in AI everything open is increasingly Chinese.

It has reached real products. Airbnb leans heavily on Qwen to answer its customers – its chief executive, who had found OpenAI’s tools not yet up to the job, called it fast and cheap.

Cursor’s own coding model, used by a great many developers, was built by training further on Moonshot’s Kimi.

These are Chinese models doing daily work inside Western firms. The question is – how tightly does that bind them to China?

3 State-spun, not state-run

None of these were state labs. None were quite private, either.

DeepSeek began as a side hustle inside a quant hedge fund, High-Flyer, run by its founder, Liang Wenfeng.

Qwen came out of China’s answer to Amazon, Alibaba.

Zhipu spun out of Tsinghua University, took money from Tencent, and sat close enough to the state that the US Commerce Department put it on the Entity List – its trade blacklist – in January 2025 for, it claimed, helping China’s military.

For China hawks, somewhere behind all of them stood the government, offering cheap capital, subsidised computing power, and naming open models a national priority.

People who have no faith in government to achieve anything in the West, are quick to attribute progress to state intervention in China.

But none of that tipped the balance in making models spun out of a hedge fund’s experiment and a university lab the base that the rest of the world fine-tunes on.

People downloading weights decided that, and they didn’t ask Beijing for permission.

The Party didn’t start it.

4 What walking away costs

China dependencies run deep in a global economy.

China makes almost all the world’s polysilicon, ingots and wafers – near 95 per cent, by the IEA’s reckoning – so a plant in Texas assembling its own panels still buys its wafers from China, because at that scale and price there is nowhere else to go. The only real alternative to Chinese solar is not building solar.

Huawei is also hard to dislodge. It is still the world’s biggest maker of telecoms equipment – 31 per cent of the market in the first half of 2025. Ericsson and Nokia could supply the alternative, so there is a possible Western option. It just costs a fortune to take.

When Washington made small rural phone companies tear out the Huawei kit they had installed, the bill went from an estimate of $700m to almost $5bn, and seven years on, the FCC reported back in June, only 53 of 126 projects were complete.

Apple’s chip problem is easier but also illustrative. For a month Apple has been pressing Washington to let it buy memory from ChangXin, a firm on the Pentagon’s list of Chinese military companies flagged for a possible Commerce blacklist.

But Samsung and SK Hynix make the same memory, and Apple has so far bought none of ChangXin’s. This is price pressure, not dependence: a glimpse of where a Chinese supplier might one day be hard to refuse. And also where the costs of shutting down globalisation are exactly that – costs.

The AI cases aren’t yet as embedded, so leaving is easier. Cursor’s coding model was trained on top of Kimi, so to change bases it would have to retrain its own product – costly, but possible, and a Western open model might do as the replacement.

Qwen answers Airbnb’s customers today, but it is one hosted model among several the firm could use.

But blocking open source will raise costs for US firms forced to shop at home.

5 What it buys, and for whom

So what does China gain from this shallow AI adoption?

Alibaba gets reach, and no fee – the weights are free. Broader Chinese industry gets something more durable: as more software is built on Qwen and Kimi, they become the defaults everyone else works to. That’s the power of standards-setting, and it accrues with a kind of invisible inevitability.

A firm that has built deeply on a Chinese input acquires a stake in the status quo, and turns, without meaning to, into another voice against rules that would make it change. Apple, lobbying for its ChangXin licence, is one minor instance – although it’s asking to be “let in” to dependency.

The more the world runs on what China controls, the less America’s export controls will bite. That provides a shield rather than a sword for Beijing. It makes China harder to sanction without – yet – giving it the kind of control it can use to throw its weight around.

With free weights taking the price of a model to zero, all that remains is running it. That means chips and electricity — and China has cheap answers for both. Its chips still lag, but if they catch up, near-zero power costs would let frontier-grade intelligence run at a fraction of what American suppliers could charge.

Lower cost, not low cunning, is changing the global AI arena, one price decision at a time.

6 The limits of the off-switch

American controls work where the engineering is hardest – the fast memory that feeds AI chips, the latest production nodes, the machines that print the finest detail – which is why the memory Apple wants from China is the commoditised kind and not cutting edge.

If the frontier is where AGI will be discovered and frontier capability decides who gets there first, then the open models everyone else is building on are a sideshow.

But what if it isn’t?

And also that openness cuts both ways. What’s out there now can’t be called back: Washington tried to keep it out and couldn’t, Beijing built it and can’t reclaim it.

Beijing’s trap is the sharper one – models are taken up because they’re cheap and come without political baggage. The moment they are instrumentalised by the Chinese state they cease to be either. Beijing would risk doing what the old Chinese parable warns against: pulling at the seedling to make it grow faster, and tearing it dead from the soil.

Washington has the opposite trouble. This month it pulled up the drawbridge on the newest US frontier models – shutting out friends and allies. A reminder to the rest of the West that there will be no place in the citadel when – or if – the AI storm comes.

And elsewhere, each restriction on a closed American model nudges the next builder towards an open Chinese one that so far no government can recall.

7 What follows

China’s global strategy may be in its white paper, but its global power is building in the dependencies it is creating.

The questions are plain: for each Chinese model a firm runs, where does it run, who hosts it, who sees the prompts, who ships the updates, what would moving cost, and what is the substitute if the answer turns bad.

Few firms can answer those questions today. Congress has started asking by subpoena – in April two House committees demanded that Airbnb and Cursor account for their use of Chinese models – but a subpoena is a blunt tool for a question that belongs in every company’s risk report.

Businesses have already run the audit in reverse. Coinbase swapped Claude and GPT for open models from Zhipu and DeepSeek, and cut its AI bill by roughly half. It’s not a Chinese lock-in — the models are swappable, which is the whole point — but proof that the price floor has dropped out from under the American labs. Anthropic could find itself the Audi of AI: an up-market name undercut by cheaper Chinese models that get the job done.

Running the same enterprise workload through Anthropic’s Claude was nine times more expensive than through Zhipu’s GLM 5.2, for the same results.

Every company doing a year-end budget review is looking at the same numbers. Weighed against the security risk, the saving will win nearly every time.

China is inside the world’s systems at a depth that changes case by case: entrenched in the ones with no substitute, barely dug in to the ones with many. And the white paper is a poor guide by which to judge where that power is headed.

The more honest guide to China’s global reach is the more boring one – what runs on what, what would leaving cost – and in AI that is America’s to draw, company by company.

Beyond America it is also a simpler question for the so-called middle powers. In the AI future, would you rather be eaten by Godzilla or ripped apart by King Kong?

So far no one wants to come up with an answer to that.

Thanks for reading!

Bis bald,

Adrian

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Keir was the last person I saw before I ended my last job. Known him on and off (very tangentially) since university politics.

In office, he made a foolish ambassadorial appointment was and a bad mistake on winter fuels.

He didn’t manage the Parliamentary Labour Party, least of all its huge, unruly new intake.

But abroad, he repaired Britain’s relationships — with Europe, and with Ireland.

The visceral public hatred is largely a product of a press and a feed that run on contempt. But perhaps also of disappointment.

He was a cautious Messiah, taunted by Trump, silent on Gaza. He turned a massive majority into a mandate for the modest and mundane.

His government did many small, decent things to improve Britain. But no really big ones.

And he was neither a curator of public anger nor a performer for the people’s amusement.

His resignation speech reminded me of the well-intentioned village policeman in The Wicker Man, realising he is to be brutishly sacrificed by islanders whose beliefs he never understood.

I wish him well. And a happier life out of office.

Best,

Adrian

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Grüezi!

1 Rules. Based.

When Charlemagne died, he handed his son an empire that stretched from the Atlantic to the Elbe. His grandsons broke it to pieces. The Holy Roman Empire was neither holy, Roman, nor an empire, goes the old joke.

The rules-based order is heading the same way, breaking apart not because of dynastic squabbles but because its proprietor would rather rent it than run it.

Under Donald Trump it is neither rules-based nor an order, and – on the evidence of the Iran settlement – no longer America’s to dispose of as it wishes.

The reckless spending of American primacy is not leading to a smooth dynastic succession to a single heir – this is not Athens passing the baton to Rome, or Westminster to Washington. It is partition. Separate settlements, region by region, each underwritten by a power that is not the United States.

No one has felt that shift more keenly, or misread it more completely, than Shimon Riklin. He fronts a nightly hour on Channel 14, Israel’s reliably pro-Netanyahu broadcaster. Before he found television, he founded settlements.

Riklin was an enthusiastic backer of the war and thanked God on air the night Trump won in 2024. This week, before American and Iranian negotiators were due to sign, he spoke with the New Yorker’s Isaac Chotiner in shock.

Trump had lifted the blockade, dropped the sanctions and offered to help rebuild a country Israel had spent the spring trying to break – all on terms far milder than the 2015 deal he had spent a decade deriding.

Why? Reaching for a reason, Riklin settled on astrology – the President is a Gemini, and Geminis cannot be counted on: “How did [Israel] become the bad guy, and the Ayatollah is the good guy?”

What Riklin saw was a daring Israeli plan against an implacable Iranian enemy, thwarted at the last by America’s loss of nerve.

Israel had meant to do to the Islamic Republic what no one had dared since 1979: not contain it but end it, dismember and disable it, and stand something pliable in its place.

The plan was bold, and it rested almost entirely on hope.

It needed crowds to fill the streets of Tehran the moment the Supreme Leader fell. It needed a government-in-waiting with enough standing to be believed. It needed militias to march in from Iran’s neighbours – Kurds out of the Turkish and Iraqi borderlands, Baloch out of Pakistan.

But none of it could happen without an American president who would want all of it as badly as Netanyahu did.

And getting Trump to say “yes” was Netanyahu’s biggest mistake.

2 What actually happened

Trump took the plan, and he took it fresh from Caracas, where an American operation had just removed a sitting president and seemed to show that toppling a country’s leader could be quick and clean.

In Venezuela, Washington got its prisoner and restored a compliant oil supplier, chavismo shed the one man it could no longer afford and kept everything else.

Within weeks the sanctions had eased, the oilfields had opened for industry executives to visit and a president no one had elected had Washington’s blessing.

But Caracas also offered a warning. America did the dirty work; the regime kept the state. Maduro – the figurehead, and the trophy Trump wanted – was the prize, and the apparatus beneath him closed ranks and raised his vice-president, Delcy Rodríguez, into his place.

That was exactly what happened in Tehran. Except there was no deal.

Trump basked in the spectacle and mistook the operation’s success for vindication. It would cost him.

3 The Mistake

His own people did not believe Iran would follow suit. We know that from the Situation Room accounts leaked to Maggie Haberman and Jonathan Swan. Advisers called Israel’s regime-change scenario farcical and said so, the chairman of the Joint Chiefs warned the campaign had been oversold, but the President overrode them – “I’m the President. You’re not.”

The opening blow landed exactly as intended. Iran’s Supreme Leader, Ayatollah Khamenei, was killed in a strike of real audacity – the single most spectacular thing either side managed in the entire war.

Then nothing happened. Crowds didn’t gather under air attacks. Reporters who reached Kurdish militia commanders found them where they had always been, on their own side of the border, waiting.

Erdoğan did not want emboldened Kurds on the march anywhere near his own south-east, and Pakistan did not want fighters from its Baloch minority drawing the lesson that armed secession could pay.

Reza Pahlavi, the exiled prince the plan had cast as Iran’s next ruler, kept to the sidelines.

In Tehran the regime did what its counterpart in Caracas had done, only without the American deal: the Revolutionary Guard closed ranks and raised the dead man’s son, Mojtaba, into his father’s place.

4 The Intaglio Imbroglio

With no one willing to cross a border, there were no fighters to do in Iran what had been done in Syria.

And then there was the question any junior analyst might have raised at the very outset: Would Iran’s neighbours actually welcome its violent dismemberment?

It quickly became clear they would not. And they said so by refusing to let boots appear on the ground.

Once the ground operation failed to materialise, the gamble had nowhere left to go. What remained was a war of attrition that was never going to run Washington’s way: America’s expensive ordnance and missile stocks diminishing by the week, and the oil price climbing as Iran did what every intelligence assessment had forecast since the 1970s and shut the Strait of Hormuz.

And the war’s pain did not fall on Iran alone. It fell on every nation from Europe to East Asia that takes oil, gas or chemicals through the strait, which is almost all of them.

There’s a printer’s word for what the war kept out of view. On banknotes the authenticating marks are not the portrait raised off the surface but the lines cut down into the plate beneath – the intaglio, incised rather than embossed, holding ink no forger can lift clean.

The fighting and its protagonists were the raised relief. The peace was the intaglio, cut with its carefully recessed lines, and they tell you the real story.

5 The Deal

Trump had promised the deal dozens of times; deal-making being the one accomplishment he never tires of claiming.

But the terms of this one were not set in Jerusalem, nor in Gulf capitals, nor in Washington. They were negotiated in Islamabad, by a syndicate of interests that took in Saudi Arabia, Qatar, Turkey, China and Pakistan – and all the United States had to do was sign.

It was a kind of syndicate, but of vetoes rather than aims. What bound it was not a common purpose but a common refusal.

Turkey would not have an armed Kurdish movement emboldened on any border of its own. Pakistan would not have the Baloch unleashed, nor a failed state at its western edge.

Saudi Arabia and Qatar would not have their cities and their oilfields left under an open-ended exchange of missiles.

China would not have the Gulf supply that feeds Asian industry made a hostage of someone else’s war.

These were the interests that Israel’s war party had overlooked. The same interests it had assumed that American support could brush aside.

They turned out to be the ones whose consent was needed to end it.

The groundwork for the new Middle Eastern security order had been laid a year earlier, and not by anyone in Washington.

In September 2025 Israel tried to kill Hamas’s negotiators in Doha – on the territory of a Gulf state that hosts the largest American base in the region – and though it missed the leaders and killed a Qatari officer instead, Gulf states drew the lesson about what America’s security guarantee was worth, and where each of them stood in the queue for one.

Eight days later, on 17 September, Saudi Arabia and Pakistan signed a mutual-defence pact – the first binding of a Gulf state’s security to a nuclear-armed power, the umbrella itself left deliberately unspoken, hinted at by one Pakistani minister and promptly walked back.

When the Iran war came, Pakistan made good on its promise. Fresh from showing off its Chinese-built fighters in a spring clash with India, it arrived in the kingdom with troops, aircraft, drones and Chinese air-defence systems, set over the oilfields against whatever Iran sent.

Pakistan is not China’s client; it doesn’t take its orders from Beijing. But it is China’s customer.

And Trump, for his part, had asked Beijing for help reopening the strait back in March, which speaks to incompetence or desperation or both.

6 Turkey and India

Turkey helped kill the Kurdish march before it began – one veto among the forces that finished it, but the one that Washington could not ignore, Erdoğan taking his objection to Trump directly until the President called the operation too dangerous.

It is a NATO member, an American ally on paper, and it moved against the American-Israeli plan without apology, because Erdoğan had read two things the plan had not: that there is a hierarchy among Washington’s allies, and that under Trump that hierarchy is set by what each can do for him this week.

Turkey could do a great deal – hold post-Assad Syria together, broker on Ukraine, anchor the corridor that carries Central Asian energy past Russia and Iran – so its defiance was bought rather than punished, with the movement on F-35s and sanctions Ankara had wanted for years. Europeans lectured Trump, Erdoğan flattered him, worked the back channel and never said his name.

India chose to hedge. Washington needs Islamabad to hold the peace together; it also cannot afford to lose Delhi while it leans on Islamabad.

So it pays India in the coin India prizes most: the engine technology to build its own fighters, intellectual property Washington had shared with no one, now passing into Indian hands – the radar and missile electronics to follow.

India banks the technology and keeps every other door ajar, working BRICS and the G20 and its doctrine of multi-alignment, even as the war it is hedging around leaves its farmers short of fertiliser and its cities short of gas.

7 Where it leaves America

So consider what the United States is left holding. A settlement it did not write and cannot enforce on its own, propped up by a state whose former prime minister sits in a Rawalpindi jail cell in failing health, and whose stability is one medical emergency from the streets erupting.

Stockpiles have been run down in a war it did not win. But hardest of all to replace, the respect and fear that used to do the work for it. After the first Gulf War, American power swept the field and left a dread behind that kept rivals careful for a decade.

That dread was not fear of weaponry alone. In 1991 Washington had set a limited aim, gathered a broad coalition, massed overwhelming force, pushed Iraq out of Kuwait and stopped on the line it had drawn.

Force, diplomacy, industry and political purpose moved as one, and what frightened rivals was not the punishment but the machine: the belief that America could assemble the world around a war and decide what came after it.

This “war” took that apart, piece by piece. American air power still works. The rest of it?

The pattern is neither new nor flattering. The United States was pushed out of Afghanistan under Biden much as the Soviet Union had been pushed out before it.

Now it has tried to bend Iran to its will and failed, and contrived in the same campaign to estrange the one ally it has long prized above all others. If Riklin wondered at the mood in Washington, JD Vance said the quiet part out loud:

“Donald J. Trump is the only head of state in the entire world who is sympathetic to the nation of Israel at this moment in time.”

Managing to make support sound like an admonishment.

America can still destroy almost anything it chooses – a president in Caracas, a Supreme Leader in Tehran. What it can no longer do is turn that destruction into an order it controls. The breaking is what America does. The settling up has been left to others.

Which leaves two questions.

The first is what becomes of a Middle East whose security is now too loose to govern and too important to leave alone.

The second is the bigger one, the one Riklin half-saw. If the power to destroy things no longer brings with it the power to shape what follows, then the question is no longer who inherits the mantle of the United States.

It’s whether anyone does.

Thanks for reading,

Bis bald,

Adrian

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