Is China really replacing the United States in the Middle East, or has Washington misunderstood what Beijing is trying to achieve?

The war with Iran has revived a familiar Washington story: every conflict is another front in the U.S.-China rivalry. But Beijing’s actual strategy in the Middle East is more opportunistic, and more revealing, than the proxy-war frame suggests. China sustains Iran without fully betting on it, builds influence across the Gulf while avoiding the costs of regional security, and turns American intervention into evidence for its own vision of global order. From oil flows and sanctions evasion to Beijing’s limited record as a mediator, the deeper question is not whether China is replacing the United States in the Middle East, but how it continues expanding its position while leaving Washington to carry the risk.

Lauren Barney joins Chelsea on the Potentia Podcast on the heels of Trump reopening the Iran war — and a political problem he can’t shake — to discuss why the Iran war is not simply another front in the U.S.-China rivalry, how Beijing supports Tehran without absorbing its risks, and where Washington still holds the regional advantage.

Tune in for this thoughtful interview, listen or watch! We hope you enjoy it as much as we did.

Guest

Lauren Barney, Leading China-expert and former Foreign Affairs Officer at the U.S. Department of State. She was previously a Security Fellow at the Foundation for Defense of Democracy and a contractor at the State Department’s Office of China Coordination. The views expressed here are her own.

Carve-outs

Key points

• The Iran war is not a proxy war with China: U.S.-China competition shapes the surrounding environment, but it does not explain the origins, objectives or military logic of the conflict.

• Support without exposure: Beijing can protect Iran economically, oppose American sanctions and amplify Tehran’s claims without accepting responsibility for Iran’s security or regional conduct.

• The energy relationship is deeply asymmetric: China buys most of Iran’s exported oil, but Iranian crude supplies only a small portion of China’s overall consumption. Iran depends on the relationship more heavily.

• China’s diplomatic influence has limits: Beijing can provide a venue, issue peace frameworks and promote itself as a neutral alternative, but those actions have not consistently produced enforceable de-escalation.

• Washington’s mirroring error: American policymakers often assume China wants to replace the United States in every role. Beijing may be more interested in gaining influence without inheriting the costs of military protection, conflict management and regional accountability.

• The United States remains the security power: Gulf states may deepen commercial ties with China, but they continue to depend on the United States for military protection, forward deployment and regional deterrence.

• Primary-source knowledge matters: Understanding China requires Mandarin skills, sustained experience inside the country and engagement with how Chinese officials and citizens interpret American politics.

Links

• Lauren’s upcoming article on the topic!! Stay posted for update

• Lauren Barney

• China’s Do-Nothing Strategy in the Middle East: Beijing Needs a Safe Red Sea—but Wants Washington to Deliver It - Lauren’s Foreign Affairs feature

• Hopkins-Nanjing Center

• U.S. Treasury: Iran Sanctions

• RSS feed, listen on Apple, Spotify and anywhere else you get your podcasts!

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The new U.S.-China détente creates an opening for Washington to rebuild American industrial capacity by using access to the U.S. market as leverage, rather than pursuing a more aggressive version of decoupling.

Aaron Glasserman and Mitch Presnick join Chelsea on Potentia to discuss why Washington and MNC’s need to lean into strategic leveraging with clear eyes, rather than rely on outdated, comfortable and dangerous narratives. Glasserman, a postdoctoral fellow at the University of Pennsylvania’s Center for the Study of Contemporary China, and Presnick, a non-resident honorary fellow on Chinese economy at the Asia Society Policy Institute’s Center for China Analysis, argue in their paper "The Real Opportunity of the New Détente with China” that the United States should seek technology, manufacturing expertise, workforce training, and industrial knowledge from Chinese firms in exchange for access to American consumers.

The prescription from Dr. Owl? Lean into strategic leveraging. Buckle up and let’s go~

Listen on Apple

Links

• The Real Opportunity of the New Détente with China: Aaron Glasserman and Mitch Presnick’s paper proposing technology transfer in the other direction through strategic partnerships with Chinese industry leaders.

• Aaron Glasserman

• Mitch Presnick

Carveouts

• Aaron’s article- Putting China on an Axis of Chaos Underestimates China

• Aaron’s Forthcoming analysis of China’s new ethnic law

• Graham Allison, Destined for War: Can America and China Escape Thucydides’s Trap?

• Mitch’s article-The 4 Key Strengths of China’s Economy — and What They Mean for Multinational Companies

• The Art of War by Sun Tzu

• ASPI’s Two-Decade Critical Technology Tracker

• Sidney Rittenberg, The Man Who Stayed Behind

• Aaron and Mitch’s Forthcoming paper on the leverage American companies retain in negotiations over joint ventures, licensing, and access to the U.S. market

Listen here: RSS, Apple, Spotify and wherever you get your podcasts!

Subscribe now

Episode Transcript

CHELSEA:

Hello and welcome back to the Potentia Podcast. Today with us we have Mitch and Aaron. Mitch and Aaron, welcome to the podcast

MITCH:

Great to be here. Thank you

CHELSEA:

Yeah. Excellent. Yeah. Thank you so much. So you both just recently published a paper. I know, Aaron, I’ve seen you do a lot of TV interviews lately. Could you tell us a little bit about what you’re hearing in your world right now and what prompted you both to publish this paper?

AARON:

yeah, sure. No, so, I think, Mitch and I both came at this thinking about how, really in the wake of the Trump-Xi summit in Beijing in the middle of May, it really felt like there was a, a, a shift in the narrative and the discourse around China and kind of an opening of, of an opportunity.

in some ways, this was born out of a kind of, maybe sad or, or uninspiring reality that both countries, leaders of both countries recognize that they’re in a sort of, mutually assured disruption. I think that’s one of the helpful terms I, I’ve heard used to describe it, and basically a kind of a détente or a strategic stalemate where for the time being, because each country can basically impose, intolerable economic pain on the other, whether it’s, rare earth export controls from China on the United States, or it’s, advanced semiconductor export controls, tariffs, financial sanctions, exclusion from the global financial system by the United States against China.

neither country can tolerate that, so sort of by necessity, there is sort of a, a shift in thinking about, hopefully moving away from containment. And now, on the one hand, actually, what we’ve seen is that, one possible response to the status... to, to this sort of, stalemate is both sides are gonna try and race and gather as much leverage as they can against the other and kind of do what we framed in the piece as, decoupling two point oh.

at least from the United States point of view, we’ve already seen some advocacy of, “Look, the, the key move right now is to make sure that in the future, China can’t, impose, export controls or, limit our access to critical rare earths, and to seek out even more points of leverage that we can inflict pain-- use to inflict pain on China.”

That’s one option. but we also think, look, actually, doing the same thing we already did to greater intensity, is probably not a winning strategy. And the alternative path that we’re trying to kind of, open up with this piece is saying, “Look, actually, this is a moment for reflection, to look back on what worked and didn’t work about earlier periods of US-China relations and actually, find some, e-economic op-opportunity that may actually not be zero-sum, but that can still advance, American interests in a way that is, compliant with a kind of rational, reasonable approach to national security,” which we don’t downplay, but we say, “Look, there’s actually a lot of room in between zero risk tolerance and just opening the gates.”

maybe I’ll, I’ll throw it over to Mitch also, to, to, to add his view.

MITCH:

Well, no, I think that’s right. I think Aaron’s, done a great job of summarizing it. We’re in a new period. we’re probably in a period, if you step back from just the Xi-Trump summit, what we’re seeing is sort of a setup that’s been years in the making, right? Where we went through the engagement period between 1972 and you could argue 2012. before Trump got into office, there were already huge rumblings that things were shifting from engagement to something else. And then, of course, they did shift into full-blown decoupling. Both s-- both countries looked at the, realities and discovered that as much as they wanted to alleviate their dependence on the other, there were other risks such as Aaron mentioned, exposure to global financial system, restraints, exposure to rare earths constraints and other constraints.

And not, not to mention the fact that, China has now emerged not just as the world’s leading superpower and trading superpower, but also it has created a very dense, interconnected ecosystem, which makes it very difficult for other countries who wish to participate in the global manufacturing system to avoid China.

So what I see is probably an evolution towards something that maybe more accurately reflects what President Nixon originally envisioned in 1972. No friends, no enemies, just business. Work together where you can. to alleviate your, your dependence on the other where you can, and then, cross the river by feeling for the stones under your feet, as Deng Xiaoping said

CHELSEA:

I mean, I think that we’re on the same page there. I’ve seen a lot of these same signals, and you both put it really well in your papers. I think also looking back to other points in history to have these lesson points is quite useful. But I think since we’re at this point, I was speaking with some other people.

I spoke with an economist in Singapore the other day. He referred to it as fragmented globalization. In your paper, you talk about it as decoupling 2.0. I’m kind of in between both. I’m wondering when we’re talking about you brought up other countries, and then if we’re looking at this from, say, a business perspective, even multinational corporations. If we have the emergence of a decoupled US and China, like you said, we must operate within these, financial supply chain systems, manufacturing systems. How can and companies operating in this environment think about it? I mean, in my mind, I’m starting... I’m-- It’s quite apparent that China has been trying to create its own, type of legacy system.

We have BRICS, other type of coalitions that it’s been trying to build and also trying to get people on the yuan. I’m wondering, how are you two looking at it? I mean, how can we look at navigating that realistically?

AARON:

Well, I mean, I think, in some ways the first thing is just to, to, to face up to it and, and to recognize it. And, we may all be on the same page here, but I still think there’s a lot of denialism out there about, of what game China is playing. and, I think I, and, and we say this and have written this not as people who are in any way downplaying the challenge that China’s economic and, and geopolitical and military rise poses, to the United States, to other, industrialized countries, to its neighbors, but as just a cold, sober assessment of the reality, which is that, diversifying its supply chains and making itself integral to the economic system of well over a majority of, well over fifty percent of, of, of the countries of the world, is the, the, the, the, the central pillar of China’s strategy.

And so, I think, I, I, I separately wrote, a, a, another piece maybe a, a month or two ago. I think the title was, Putting China on an Axis of Chaos Underestimates China. the point being, right, so the axis of chaos, this is this idea, quite popular I think in Washington DC, that, China is part of this axis of kind of global spoilers with Russia, China, Iran, North Korea, sometimes Venezuela, so-called CRINK, C-R-I-N-K, right?

And, there’s no denying that there is real collaboration and alignment between those countries. And I think it’s foolish anyone who says, “Oh no, there’s nothing going on there,” like they’re not seeing the full story either. But you can’t understand the game that China is playing if you’re only looking at it in terms of, oh my God, they’re on the same side as our enemies, and therefore they are committed to our downfall and spoiling things for the United States.

China is playing... If you wanna put China on the axis of chaos, you have to put it on like ten other axes as well, and that is the name of the game for China. It’s diversification to enable its, self-sufficiency and, kind of autarky. And so, I think one thing that we’re interested here then in moving forward is also that actually gives multinationals and American firms actually surprising opportunity because China really needs to maintain itself, as integrated into the global economy.

and so, there’s actually some leverage there if we adopt, what we think is a more strategic and productive position rather than, again, this sort of like China equals bad binary thinking. Rich?

MITCH:

Yeah. So always been a Rorschach test for the viewer, right? If you wanna see a, an economy about to collapse, plenty of evidence that China has demographic issues, it has institutionals, sclerosis, it has all those problems. the military seems to be in a constant state of flux lately.

I mean, if you wanna find, reasons to feel really good about the US position and really bad about the Chinese, there’s plenty of evidence for that. If you wanna see China as an unstoppable juggernaut out to Sinoform the world, and, and dunking on the US on a monthly basis, you could find plenty of evidence for that too.

And the reality is both conditions exist at the same time. And so the challenge for the US side is to get over the idea of trying to define China as one way or the other, and to accept that if you’re gonna deal with China, it would really be helpful now in this phase of, the it the post-engagement, post-decoupling world that we’re coming into, would be really helpful now to, look at China sort of like a scientist would look at China.

Without the emotion, without the ideology, without the unhelpful binary constructs, which people don’t understand very well. But whether you’re a hawk or a dove or you’re an owl like me and Aaron, there’s always the need for the middle view, and what we’re trying to do is to show that it’s a new era.

For... I’ll give you an example. You mentioned the, industrialized countries and how we’re gonna address this. What most people in the industrialized world don’t realize is that the majority of global growth, both GDP growth and population growth, is not happening in the industrialized world at this point.

In fact, on a PPP basis, the, the BRICS countries, are far more in the ascendant than the industrialized countries are. And that means that we could be looking through the looking glass at ourselves as a future Soviet bloc while we think of ourselves as a coun--, a set of countries that is trying to avoid spoilers. It could actually be that we’re the ones that are sort of hemming ourselves in what might look like, the administration, making Concessions that some might argue were unwise, one could also argue that they were just practically looking at the, the negotiating setup and deciding that no, actually, this is time for something new.

All of this is happening against the backdrop of the twenty-first century technologies that are defining the time we’re in. And that’s something that people constantly forget, that these old playbooks that we’ve used, the Cold War playbook and playbooks that go back, always seem to assume, a binary zero-sum mentality.

And people assume that if we’re not arguing in favor of that, that we must be in favor of a win-win world, and that’s not what Aaron and I argue. I don’t think either of us are under any illusions about the idea of, a kumbaya world and what the likelihood of that happening. But there has to be something more mature that takes place, soon because these kinds of strategies that we’ve deployed in the last fifteen years have been very impractical for US interests, and that’s just an objective fact. And so whether you like or don’t like what China’s doing, there has to be, new thinking that comes into how we’re approaching this. And that’s what Aaron and I are trying to do. We’re actually trying to bring new thinking, which we think that, corporate America is desperate for. I think there has been a certain amount of Stockholm syndrome that, that has set in, amongst the Fortune five hundred on China, where they don’t necessarily in their heart of hearts, if you talk to Apple or Nvidia or Oracle or Facebook or any of the, magnificent seven, leaders, none of them would say that decoupling is feasible or advisable from the US point of view

CHELSEA:

Completely agree. I was just taking down notes. I mean, there are just so many things that talking with you guys is making me think of. I wanna make sure that in my mind from both of you speaking, four points came up that I would love to address. We can either address them all together or one by one. We’ll probably have to break them up. But I mean, we’re talking about... So the paper is published in US-China Perception, so I wanna get your... And we spoke about this in terms of perceived of the, perception of the US towards China, vice versa. I was talking with some Chinese subsidiaries, I guess it’s Singapore-based, but, Alibaba subsidiary, and they’re doing market entry into the US right now, and this type of détente environment is actually quite exciting to them.

They were super excited about it, and at the same time, we were having conversation over Peking duck, and I go, “There’s still the political environment of, of the US that you have to consider, as well as the regulatory environment for technology specifically.” So they do have a little bit of an upi- uphill battle there. But I thought it was quite interesting that with this, the Trump-Xi summit, as well as just the way negotiations have been going, although they have been volatile, they have been more businesslike in nature, as you pointed to, which actually many of the Chinese I found have welcome, at least in the business sense, which was quite interesting. So I guess the first point there, though, is before we get more into actionable advice for US sanctions policy, so forth, so on, the three main points that, I would like for us to talk about initially, just off of what you both have spoken is, so we have the framing of the Trump-Xi summit. We had the introductions of this Thucydides narrative, which was quite poetic, then everyone jumps on it, and then Trump rejects it, he had to at some point, otherwise, it’s an interesting narrative that we’re buying into.

I’m also not necessarily sunshine and rainbows. I consider myself more pragmatist. But with that in mind, there is still this Cold War mentality, which you both alluded to. I mean, I remember the first time when I was in Washington, D.C. to be fair, my first boss was a complete hawk, so, there’s that.

But have noticed that in the operations of government, it’s either you’re very much a hawk, and we’re afraid of the communists or, there’s... and they decry socialism, so forth, so on, or then we have the people that are I would argue a bit naive maybe in terms of China’s, goals for the world.

It really just depends on the framing. But I think if you could speak to kind of the event of what happened with that framing, your guys’ take on it, and why do you think we still have this hangover essentially? Why are we holding onto it? Who wants to take it first? Okay.

MITCH:

I mean, a couple, a couple things. the hawks are not wrong in many of the things that they believe. That’s, that’s, that’s the first thing I’ll always say when I am, am asked a question about the hawks. Their prescriptions, are often, biased by emotion and ideology and, and subjectivity, but their base ideas are not incorrect.

I mean, China, China... The Chinese are not Boy Scouts. I mean, my mentor, Sidney Rittenberg, spent sixteen years in a Chinese prison, mostly for things that had nothing to do with anything he did. He was accused of being a spy by Stalin, so Mao threw him in jail for six years during, during the early years of the, the, post-1949 China era and, and then again during the Cultural Revolution for ten years, where he was in solitary confine.

So, I mean, no illusion. But on the other hand, it just doesn’t help to use old thinking for a new problem, and what we have is a new problem. We, we’ve never encountered a country like China. They’re not really... They’re not so easily reduced to just a, an authoritarian, totalitarian, regime or whatever the language that people like to use.

It’s all reductive. It’s all,... I do find it interesting, as a sidebar note, that, that if you were to talk to senior policy officials in Beijing and senior policy officials in Washington, one of the only things they can agree on is that the other country is failing. They’re sure of it, and they know that it’s just a matter of time. When you mentioned the Thucydides Trap, I find that a very interesting analogy. I happen to know Professor Allison quite well, and he’s, a wonderful, a wonderful educator and a, and a g- and a great mind for, for these matters. But I will say one thing: all of his examples involved a Western power challenging a Western power. There is something to be said for Donald Rumsfeld’s unknown unknowns. There are things that are outside of the experience set the Washington intelligentsia. They’re just, they’re just... And, and I don’t care how you wanna put it. It doesn’t make me a panda hugger to say that there are things about Sun Tzu: The Art of War that they need to understand at a deeper level than the linear thinking that they’re approaching.

They approach China and this competition with the kind of thinking which actually got us here. And what they don’t realize is that they have a lot more in common with the doves than they would like to admit because both doves and hawks are emotional in how they approach China. The, the hawks, w- thought that if they just treat China the way they want it to be, they can, they can change China in its image.

And the haw- and the doves felt that if you could just engage enough with China, then they’ll become more like us. And let’s be honest, both were equally fantastical in retrospect. And when I was vice chair of AmCham China, and we were, we were lobbying in favor of China’s accession to the GATT, the predecessor to WTO, we were very clear about saying that they would never change, that they were never gonna become more like us, that they probably wouldn’t follow any of the things they agreed, and yet we were arguing in favor of it because The idea was either bring them into the system and work with them or have them outside the system and have them possibly become North Korea times 10,000 because we saw where they were going with their industrial ecosystem and we knew that we had to bring them in somehow. in a better position than we would have been, but the hawks would argue otherwise. So yeah, I’ll, I’ll stop there, but I mean, I could say a lot more about that and we should talk more about it. Aaron?

AARON:

Yeah

I mean, it’s, it’s in some ways I think the Cold War narrative, as much as it evokes, scary, difficult memories for many people and very violent ones in other parts of the world, I think there’s a kind of, comfort to it because it’s familiar and, and, and it’s, it’s, in some ways it is, it, it, it’s not, It’s not a relief, but it is at least you c-- it’s easier to process the world if you go through it thinking, there are good guys and bad guys, and we’re in this kind of Manichaean struggle.

And the reality is that, it may be both that China as a country, as a system, is not the same as the Soviet Union, and also even if it were the same, we’re separate from that identity or lack thereof. The context is just totally different, and the glo-- the, the global economy, the-- even the political system is so much more integrated.

I mean, technology, connects everyone and, and everything, supply chains. so it’s, it’s, it’s just, it’s a wishful... It’s a kind of wish casting for a familiar problem. It-- no one’s saying it’s an easy problem, but it’s, it’s at least a problem that we got through, and I think there’s a kind of, an American reflex to, to frame it in a quasi-religious, to put it in quasi-religious terms, and, it’s we gotta get them or else the worst thing will happen.

And actually, I think it’s very hard to,... I mean, we’re, we’re finally seeing some progress here, and this may be to take it in a more optimistic direction. as much as... Again, look, so I, I co-- I mean, Mitch, Mitch, alluded to his, immensely rich experience doing business on the ground in China.

I mean, I come from, an academic background and really haven’t done a, a t-ton of fieldwork, field experience in China, but really studying what many people regard as the worst of China, ethnic policy and so on and so forth. So no one can accuse me-- And I, I mean, I’ve published widely on these issues.

I have pieces coming out shortly regarding the new ethnic law. So n--, no one can really accuse me of, of, of holding back criticism or not talking about, the ugly side of things. so all of which is to say that, I, I, I, I, I don’t have a lot of patience for people who only want to, tell well the story of, of China, 讲好中国的故事, right?

As, as the propagandists have it. But w-the one advantage, I think, of the new appreciation for a lot of China’s technological prowess, with the Unitree robots and, we’re seeing it with EVs, at least in other parts of the world, is we’re getting over, I think, this very self-destructive, self-defeating idea that the, the game we’re playing with China is containment rather than catch-up.

And we need to recognize that, like, it’s not just that, like, we’re, we’re deciding between, do we let them have more or do we not let them have more? We’re also deciding between do we let ourselves have more from engaging with them or, or have less? And there are so many industries that are critical to having a great life in the twenty-first century that China is dominating in or poised to dominate in, and like don’t Americans want that?

So, I, I think e- even if there’s some obnoxious commentary, and, and sort of tanky apologism, there’s also some, hopefully some good stuff that will come of all this, and that is kind of the narrow but I think very rich space that we’re trying to, to push us toward

CHELSEA:

No, I mean, I think this is all great. It’s clear eyes going in. I think that the conversation that you two are really bringing to the forefront is, again, much more progressive than things I’ve seen. When I was in DC last, I spent three months there from November to January, and I mean, lovely of course, but I feel like sometimes, the relationship between policy, politics, we can...

And, think tank world, can kind of become just a maelstrom of echo chambers, the same words over and over without really looking for solutions. So I thought this was refreshing. With that in mind, before we move forward, I love the optimism. That’s great, and I’m jealous. I’m sure that very enjoyable to grab a drink with you two.

We can have, lots of stories to share, from our experiences. But before we look at... You brought up mirroring. I’m actually speaking with someone else about that in terms of US, China, Iran relationship later this week, because it’s a prevalent issue that, the US tends to impose on other governments, not always, but often in our relationships.

But before we get to that, as well as just looking at things that we can control in terms of the US policy environment, I would love to talk a little bit more about you-- both of you brought up what got us here in terms of, for example, vulnerabilities with critical minerals. Japan didn’t have the same vulnerability that the US did.

When China pulled the plug, Japan said, “Go ahead,” the US was left high and dry. So that’s kind of a discrepancy there in terms of preparedness of a country. And then, so that’s from industrial layer, supply chain layer, and then also the policy layer. I’m wondering if either of you can speak to what got us to this point where we’re not quite behind, but China is quite leapfrogging.

Is it just the fact that we are lacking perception? Like, where in a policy did we have a disconnect in being prepared or unprepared?

MITCH:

Well, look, every, every system has its advantages China’s advantage is that it has, it has two, very powerful, aspects to its governance system. One is vertical integration, and the other is, unit-unified command, okay? We don’t have either of those. We are sort of a salad, right? And that’s always been our strength, is divers-diversity and decentralization and, and, a thousand, a thousand points of light.

That’s always been the US. But China’s always been good at long-term planning, very long-term planning. And, look, I was trading rare earths with Minmetals, the Chinese, state-owned, company in 1992, and they were, and they were telling me about their plans to dominate rare earths, okay? So, for us to all of a sudden discover that rare earths are important in 2025... I talked about this in my Harvard Business Review article in August of 2024, and I sent it out to all my friends in Washington, and they all received it, and they all said, “Yes, yes, yes, this is very important.” And it got into the very senior layers of the administration, that warning, and did it have any effect on, on trade war 2.0?

No. Did they... I warned them about this. I mean, it didn’t have to come to this. We knew this was gonna be the result. The problem with reciprocity with China is that it’s a race to the bottom. They will always win that because they’re always willing to go to the mattresses more than we are. They have that ability.

That has to do with a system where they can absorb a lot more s-stress and a lot more pain than Americans are prepared to accept. Our political system is not set up for that. So if the objective is to rebuild American capacity, our industrial capacity, supply chains, and have something where we’re not under the thumb of another country, forget about which one.

We don’t wanna be under the thumb of any country. The question isn’t how do we keep China out at this point, no matter how much you think that’s important, no matter how much you’re afraid that they might weaponize EVs or whatever they... Or become, or create critical dependencies. We have a more immediate problem.

We’re gonna, we’re gonna face relegation. Do that, the Australian Strategic Policy Institute, when they did their assessment of, of US versus Chinese technology, they assessed, and they’re a ultra-hawkish group that used the top ten percent of published papers that were cited, cross-cited. So it was a very, very objective process, and they determined that in something like fifty-four out of sixty-three, categories of technology, China was either at, at level or in most cases ahead of the US.

So we are playing catch-up. And if the beginning of wisdom is calling things by their proper names, as Confucius said, then that’s what we need to start doing. It-- We need to start having these parallel universes where hawks believe one set of facts about China and, and then economists believe another set of facts about China, and that’s what they prefer to have.

So as long as we can’t have a consensus, then we don’t have to actually seriously address the problems. That works until it doesn’t. Right now we’re at a place where the bigger question is: how do we bring in world-class manufacturing capability and all the underlying know-how? I mean automation, robotics, advanced materials, advanced, advanced, manufacturing techniques.

All of those things underlie China’s successes in the last ten years in that sphere. We need those, need those, modules uploaded immediately. We don’t have time to figure it out ourself. So the... We’re not arguing that all the risks that hawks worry about aren’t real or that, or that it, that it’s not, somewhat of a danger to become, helpful to China if, if you pursue some of these ideas. But the question really comes down to sort of the d- the Dave Chappelle joke, when he was, talking about how kids in Africa, some of them may be starving, but he still wants to eat lunch. I still want to have economic competitiveness regardless of how people in Washington view China. I still want the opportunity to compete head to head, and we’re not gonna do that if we’re gonna be too precious to engage the playbook that China engaged when it needed to re-industrialize, and it was very willing to, to bow low and do whatever was necessary.

And we basically gave them access to, to many things, in exchange for, know, what we thought was, the keys to globalization. Turned out it wasn’t exactly, the greatest idea in retrospect, but nonetheless, that’s where things need to go. Much more practical, much more pragmatic, and I think we are gonna see a much more pragmatic, set of policies in the next two years.

I was just at a set of meetings, an offsite in the West Coast or in the, the Old West, and I was very impressed. I was out of town, in, in Montana somewhere, and I was very impressed with the level of understanding that we need n-new thinking. But there was still an underlying reluctance to acknowledge the reality that we’re facing and, that’s the next thing that has to happen.

And I don’t know how many more times we have to have a DeepSeek moment before that happens, but when that finishes happening, we don’t want companies to just then be figuring out their strategies. Companies need to be figuring out their strategies for when that because it’s going to happen, and it’s just a matter of time, because this is the writing on the wall. This is not going to change. This direction is now set, and it’s much bigger than the Trump administration

CHELSEA:

Any thoughts?

AARON:

I mean, hard to top what, what, what Mitch said. I’ll just say, that, yeah, how, how did we get to this sort of policy, failure, or at least, incomplete success? I actually think, it, it’s important to recognize that for a long time it really worked well, and that it, it made sense. I think a lot of people right now, especially in DC, in think tank world, in kind of the parts of universities that deal with sort of geopolitics, there’s a sort of, people are not happy about the situation, to put it bluntly.

and I understand that, and there’s some logic to that. But, for a long time, we were playing a very efficient game. And in the list of things that, are the downsides to China’s system that Mitch, added to, or you could put it as strengths in terms of its capacity to take pain and so forth, I would say inefficiency is...

it has to be on that list too. And, I think we’re just-- we need to re-optimize, find the new optimal point for the, the, the, this new type of relationship. So when it was engagement and globalization kind of unchecked or almost unchecked was the direction it felt like things were going in, it made perfect sense in a way to not have, to, to, to not try and to not be protectionist, right?

To not introduce all of these kind of non-market, inefficiencies and irrational elements into our economic, our company’s economic, agendas and business plans because, the... that’s, that, that didn’t make sense. China wasn’t always playing that game, and as Mitch said, it was foolish to think it ever might have.

Now that the whole world is kind of readjusting and, and pushing back, I think the real challenge now is to not overcorrect. We need to correct, right? We’re not going back to sort of full open, no borders, globalization, the world is flat. But we don’t want to lose a lot of the good stuff that came with that.

And I think go-going back again to the political comparison China moves by overcorrection, right? China, the Chinese state has never done anything in a delicate or sort of gracious way. It, it speaks obnoxiously, it acts obnoxiously. Nothing it does... For a c- for a culture that is so, accomplished and wise and civilized in terms of subtlety, y- I mean, the language and people who go to China, you-- that’s i- inescapable, and everything is layered and contextual.

The state is then just this behemoth block that is just moving in this crude way. The US doesn’t need to be that way, and if we try and emulate that, we’re not gonna win. So, so we... Yes, we’re moving, but we don’t wanna shift too fast. That’s what China does. So, so I, I think there really is sort of we can, reclaim a lot of lost ground.

but it’s just we need to k- stay clear-eyed and, and, and not give up too much, toward, protectionism, national security, and so forth. Those are real concerns, but it’s not the be-all and end-all, and we need to put it in perspective

MITCH:

Yeah, not only that, but I’ll just add one more thing. If, if, if people keep insisting that China’s falling off a cliff, it, it, it not only justifies impractical policies because that-- because people believe if we can just be tough enough, then, then, then, China will collapse or it’ll become like we want it to become. So, so these narratives that China is, is on the verge of collapse are actually quite helpful, quite helpful to Chinese interests, actually. I mean, there’s that... You once in a while will hear people talk about the, anything other than the hawkish argument is, somehow being a useful idiot to Beijing. And I would argue that, impractical policies have done more, have done more harm to US interests than almost anything else that China’s done. I mean, far worse than IP, theft and other things. I, I formed the, the, China Anti-Counterfeiting Coalition, which was the body which was created to help American multinationals fight product counterfeiting, and everyone from Boeing to Coca-Cola and Nike was a member. They’re still in business. I mean, they’re still, it’s still an, a, an existing, entity. And, I can tell you that it was never formed with the idea that we were going to get China to, to, to follow the rules. We only knew that we were going to engage them in ways that could turn impractical policies into pragmatic policies, and that’s the theme for the day we’re in right now, that practitioners like Aaron and myself, who have spent a lot of time...

I s- I lived in China for thirty years. I speak, read, and write Chinese. He speaks, read, and writes Chinese. He spent a lot of time on the ground. This is what’s missing. There are like... I’ll just give you an example on rare earths. There are, like, two dozen American, two dozen Americans that, that can talk about rare earths.

There are 100,000 members of the Chinese Rare Earth I mean, just can’t imagine the, the difference in scale. There are less than 10,000. At the peak, there were less than 10,000 Americans studying in China. China has 270,000 students studying in the United States And now it’s considered somehow a demark if people from the US have spent too much time in China because it might be harder for them to get security clearances and everything else. This does not encourage the kind of on-the-ground understanding that we need to supplement all the theoretical and all of the, the, the hawkish ideas. You have to infuse all of those ideas with doses of reality. There are four schools of existing thought on China. Aaron and I are part of the creation of the formalization of a fifth school, the practitioner scholar school of, on China, where, yes, we’re practitioners. Aaron’s a scholar, I’m a practitioner, but we both cross over, and that’s what’s missing. That fifth lens that will help bring the entire picture into clear relief. That’s what is needed now. Not saying that the hawks are wrong, but by themselves, left to their own devices, without the pragmatic on-the-ground experience from people who actually know how to get things done in China, and no, are not and no, don’t really find that all the hawks’ ideas are so terrible.

But those ideas, left to their own devices without pragmatism infused in, will, will, will be a, a, just another decade of disaster. And we can’t afford that. We’re already facing relegation, and, it’s not, it’s not something we wanna continue

CHELSEA:

I’ll be the third member of your school. As someone who that strike close to home, I was on Boeing on the digital leadership board, so we, we definitely saw a lot of that, so.

But I will be the third member of your school. I think want to pull a thread out from something that you both mentioned earlier.

So we’re talking about the US perspective on things and, definitely there needs to be pragmatic adjustments, clearly. I think it doesn’t make sense to vilify, either a cooperative lens or even the hawkish lens. That’s my approach, because they both have merit. But again, I think this will be a fun question because you can both offer unique perspectives as, an owl, and then I’m not sure, maybe you’re what is more of a business type bird. I would love to hear it. So clearly everyone in this group has deep experience in China, the thread that I want to pull from earlier is we mentioned that, at the high levels of senior leadership in Chinese policy, there is this belief that the US is falling off at the deep end. I mean, what’s going on there?

Because I feel like both of you can offer really fun insights

AARON:

About the Chinese perspective?

CHELSEA:

The Chinese side, yeah

AARON:

Yeah. I mean, again, I think it’s a story... it’s so hard. so I was just in Beijing, earlier June, in the middle of June. And, I, I gave a talk on, the Iran war, and sort of US foreign policy and American society and politics, and kind of what, what the Iran war means for all this.

It’s at the Chinese Academy of Social Sciences. It was a g- it was a great opportunity to sort of have some frank and open conversations. And, I think in the same way that for, for, for them, so to speak, it’s so hard to imagine just the kind of base level chaos, unpredictability, complexity, contradictoriness of American society and decision-making, and you have within the Trump cur-- I mean, just, it’s not unique even to Trump, but the current political leadership, right?

You have, people who are totally in favor of, the war and totally opposed to the war, and it’s like, which is it? And then, oh, there must be some conspiracy and... There’s not a conspiracy. It’s just that’s a kind of complexity and contradictoriness that because we live here and just have no choice but to accept it, we do.

And I think we need to do the exact same thing for China. And it’s like, yes, you have Xi Jinping talking about, China’s strengths and w- and kind of hinting... I mean, th-there was a lot of sensationalizing of what he actually said. But in any case, let’s just take the kind of caricatured version and say, yes, he talked about the decline of the West.

there’s also deep, deep paranoia and insecurity on the Chinese part. And, my, my own view based on time spent in, rural China, in very poor, underdeveloped parts of the country is, that basically nine out of the ten problems that Xi Jinping wakes up every morning and is freaked out about, one of them is international, right?

And, and, and m-more often than not, maybe it has to do with, the US or NATO or Taiwan or something, but, like, the vast majority of his headspace is still dealing with the domestic situation. And China is not... In the same way that US, the United States, we have a very confident culture, but also we feel totally insecure at the moment.

I think basically the s- the same thing is true about China and even more so. And, and frankly, they have a lot of development problems that we don’t actually have in this country. I mean, there are ma-many problems in the United States too. I’m not trying to say that we don’t have problems. But, just to drive home the point that I don’t think there’s a lot of, sort of stock put in this, “Oh, we’re gonna let things...

We’re gonna roll the dice now because we know that history is on our side.” I think if anything, it’s we have to make sure, it’s almost, we have to make sure that It continues to feel every day that maybe history will eventually lean to our side, and therefore we can’t take any risks, and we have to be very sort of cautious.

it’s a very risk-averse, regime and a very risk-averse time in its history, right? Because right now also, just, to put it in context, next year we have the, the next party Congress. Xi Jinping probably, it seems like will, will seek, seek, will, will, take a f- a fourth term.

and, and, and, and so, this is not a time when he’s looking to rock the boat any more than it needs to be rocked. So I don’t, I don’t think we should-- We should let their overconfidence be political rhetoric, which is a lot of what it is, and not read too much into it and psychologize them beyond that.

MITCH:

Yeah, and also keep in mind that they don’t believe their own propaganda at the highest levels either. They’re under no illusions. They know exact... Their, their economy is, I just mentioned a Rorschach test, but I’m gonna throw another one out at you. I think that the Chinese economy specifically is kind of a Schrödinger’s cat. You don’t know whether it’s alive or dead, so you have to assume it exists in both states simultaneously. It’s in a quantum state. And that’s the only way you can do it because The institutional economy is actually kicking ass in China. Like, I mean, if you look at their ability to dominate new industries, know, two years ago it was, it was, it was, battery storage, and then it was EVs, and then it was AI, and now it’ll be something else. I mean, robotics,. I mean, did you watch the Super Bowl? We were doing something that was, like, re- reminiscent of, like, 1970s celebration of cultures. In China, they had robots dancing on a stage during the, the CCTV 1, Chunji, show, which, which is watched by 700 million people, and that was robots dancing in unison celebrating their digital future.

I mean, it was very, very different. I mean, you can look at the different visions for culture and our culture, and you can see the real separation isn’t capitalism versus communism or democracy versus authoritarianism. It’s collectivism versus individualism, okay? It’s, it’s do we fundamentally believe that the individual is more important than the group, or do we fundamentally believe that the group’s more important than the individual? Here’s the argument in favor of the group being more important than the individual. It’s how nature operates. It’s how nature has always operated. What we’re doing is separate from that. It’s something we think is an evolution of that, no other examples in history or in nature of the surviving.

Their model happens to do very well. If you can put the needs of the individual down low, you can do a lot of things. Now, Aaron mentioned, the rural economy. China’s always operated with, dichotomies and, and dualities. You have the, you have the individualism, kind of being subsumed by con--, by collectivism, but you also have the idea that the individual economy, the consumer economy, the white, the white collar work, job market and those kinds of things are suffering greatly. the institutional economy, the state-owned enterprises, R&D, leading, leading research universities, the military, and all of that connected up to, like, four or five national objectives that everybody gets aligned around.

And then local governments, they act as VCs so that, when... If EVs are, are announced as one of the top Chinese goals, then, every little province, is gonna have their little VC fund, and they’re gonna deploy in, and that’s why you have over 100 EV companies in China. because whether or not this company in this province or this company in that province wins, China wins, and that’s the goal for them.

So they’re very willing to play that kind of a game. When it comes to their relations with the Global South, I think that they’re playing a very sophisticated game, and it runs all the way back to their earliest dynasties, where they, operate under a tributary state model. It’s very different from the vassal state model.

Vassals were basically allowed autonomy, but don’t get too crazy. We run things. China was a little more elegant about how they operated. They actually did treat a local king like an equal to the emperor. But the Chinese emperor would only give one goat to the, to the, to the, Turkmenistan, king, and then the Turkmenistan king would give ten thousand, tons of, of rice.

So, I mean, everyone’s equal, but some are more equal than others. And, I think that you’re gonna see a lot of these old playbook things coming out, and that’s why, of the four schools of theoretical Chinese studies, I believe the most important of all is not the political economy school, which is popular amongst think tanks, or the, elite politics school, which is very popular amongst hawks looking at everything through the lens of the standing committee and Xi and what’s he had for breakfast and how does he feel today,?

The one that really matters is the civilizational historical school, which was actually formed here at Harvard, at the Fairbank Center. Well, what... by John King Fairbank, and now is, is the, in the, the Fairbank Center where I’m still located is, is kind of its, its, its resting home. That school is going to be the one that really matters now because understanding China in historical context is going to illuminate a lot of questions that people in Washington are having a hard time understanding because they don’t really believe that history is that important because our history is not really part of our day-to-day strate-strategy conversations.

We don’t talk about China competition in twenty twenty-six and look back at something that happened in, eighteen ten and say, “Oh, we’re, we’re able to pull interesting lessons from that.” But China does. China will sit in meetings with you and talk about something that happened during the Shang or the Yuan, and they’ll talk about it as, in terms of it as if it just happened, and it’s, it’s their living history.

And I think that’s something that, again, pragmatism, pragmatists, owls, objectivity, these are the themes that are gonna define, we think, the next phase of this competition, and w-maybe we’re just the, the messengers on that. But I think one way or the other, that’s where things are going to go, and whether the hawks Washington, make that easier or harder determines how quickly we can start to get on that because it’s not gonna happen any other way, and it won’t work out as well for the US in any other configuration.

CHELSEA:

I mean, I’m glad you brought that up because I was trying to understand certain business strategies when I was looking at, China-headed multinational corporations. I mean, I’ve been on both the sides of business, I’ve been on policy, and I was trying to understand it more deeply, but it’s just like you said, it points back to these kind of civilization starting stories and theories.

We have the asymmetric warfare, Sun Tzu, so forth, so on. So I’m really glad you brought that up. jumping to round everything up, if... Again, there are so many things we could talk about. I’m wondering just on terms of what’s on top of both of your minds, besides this lovely paper that you published great recommendations.

If you could give some type of takeaway or actionable recommendation either to policymakers or multinational companies, predominantly on the US side, I mean, what recommendation would you give? I’m just looking at you to solve the problems right now, but what would you want people to take away as we move forward?

MITCH:

I have one, but I’m happy to go second

AARON:

yeah, well, well, I’ll just say it and, and, and, and, we’re, we’re working on something, another paper, on this now, but, don’t underestimate the leverage. This is to American firms, and multinationals. Don’t underestimate the leverage that we have right now because-- and, and, and the value of the opportunity.

Because for all the strengths that we’ve recognized on the Chinese side, that at least the three of us here are willing to see and acknowledge, they-- the Chinese model is not changing. They are still gonna be a kind of export manufacturing driven growth, and that means they are hungry for the American market.

They’re hungry for many markets, and we shouldn’t be arrogant or think that, oh, if they don’t have access to the American market, the regime is gonna collapse tomorrow, which is something that was being said just about a year ago, but, at, at sort of in, in-- around the first, tariff spat o-of the Trump, second Trump administration.

but that doesn’t mean that they’re not rational actors and are not trying their best to, to grow. And, they’re, they’re struggling to grow domestically because of China’s, weak domestic consumption and, and demand. so that really means that, like, American firms looking to do to Chinese firms what Chinese firms did to the United States, in decades past really have an opportunity.

So, so don’t let the sobering realism of what we’re saying get in the way of recognizing actually the huge opportunity that’s also in front of us if we make the right moves as a country, and as a society

MITCH:

Yeah, we’re either gonna, we’re either gonna re-industrialize with China’s help or without China’s help. Industrializing without China’s help is going to be extremely costly. It’s gonna be very time-consuming. I’m not sure we have the political unity to pull it off. We certainly don’t have the ability to call in the Fortune 1000 and demand they sit at a table and work with US government agencies to figure out the solutions here.

So, mean, the better way is to get our head around the idea of, of a relative risk frame, which is instead of looking at EVs and whether there’s a one percent shot that we could become dependent on China or, or even a twenty percent shot or a fifty percent shot that we become dependent on China for some, components or something like that, or that they might weaponize those EVs. You can work around risks without accepting those risks. But you also have to acknowledge if you’re going to look at the risk of doing something like cooperating with China on EVs, say joint venture manufacturing on American soil, then you have to be willing to look at the risk of not doing that, which is we could be forced into permanent relegation, where we’re always on the outside looking in on the Chinese EV supply chains, on the advanced manufacturing that’s gonna define the quality of products going forward. Even Germans cannot compete against Chinese automakers anymore. I mean, and the Germans were our best. They were our p-most precise, best engineered vehicles, and even they’re getting worked, not just in China, but around the world now. And so we have to start understanding this relative risk mindset.

If there was one thing I could, I could wish, for in Washington is that they, they move out of this absolute risk mindset, which is defined... They’re thinking since, since we just had our two-fiftieth, since, since we were formed as a nation, and it’s time we evolve out of that. We are not gonna win this competition or even stay, at par with China if we don’t

CHELSEA:

Excellent. I mean, I think this was an amazing conversation. I will definitely highlight those takeaways because we are at a critical time where, I mean, action needs to be taken. I feel like we’ve been largely reactive in this, current political environment, and we-- I mean, we see this even on the business side.

Everyone has to be hedging for geopolitical risk. So if we can be more proactive, it makes sense. I am very excited for your upcoming paper. I will keep an eye out for it, but also feel free to ping me. It has been lovely having you both on the podcast, and I feel like this was a very productive conversation.

So yes, definitely open invite to come back. Would love to hear about your upcoming paper. When’s it gonna come out?

AARON:

Hopefully in a couple of weeks. we’ll,

CHELSEA:

Okay.

AARON:

posted

CHELSEA:

Yes, please do. I mean, fascinating. I just-- I was taking notes during the discussion of some articles that I want to... It was just so, thought-provoking. But yes, let-- C-can we have a hint what the title is, or is that still shh?

AARON:

Well, the one in question that I just referred to is that the title, editors usually pick the title, so I won’t venture a guess on that. But basically, it’s talking about the o- opportunity, of the current moment and the leverage that American firms may actually have, because of where joint ventures actually sit in China’s strategy.

And we look at it at a couple of, geopolitically, economically, in terms of China’s political system even, and trying to actually get a rational look. instead of just saying like, “Oh, China would never do anything that would help the United States.” Like, again, going back to the theme we discussed earlier of mirroring and projection, like, actually, there might be a situation when China says, “Oh, we think it’s worth it because we need these certain developments, and our economy is in this situation, so it’s worth it, even if there’s an upshot, an upside for the United States.”

And, so that is kind of the, the, the attitude also that we are advocating, to, to, to bring back here.

CHELSEA:

Amazing. Well, you heard it here first, and we will wait in rapt, attention for your paper to come out. But yes, thank you both so much for joining the podcast. I hope you both have a wonderful rest of your day and summer, and yes, more soon.

For the past 30 years, globalization made the modern economy feel almost frictionless: a chip could be designed in one country, manufactured in another, assembled in a third, financed through global capital markets, and sold everywhere. Multinational companies were built on that assumption, governments largely encouraged it, and consumers benefited from it. Yet the same system that made the world richer has now become one of its greatest sources of leverage, coercion, and strategic vulnerability.

What happens when the links that once created efficiency become the pressure points states can use against each other?

In this episode, Max Zenglein joins Potentia to unpack the rise of economic security, why governments and companies often mean very different things when they use the term, why Japan and China appear more advanced in aligning state and corporate priorities, why Europe and Southeast Asia are struggling to navigate Chinese pressure and U.S. unpredictability, and why companies are still too often treating rare earths, export controls, tariffs, EVs, data, and supply chains like isolated fire drills rather than signs of a new global order. The answer, it turns out, is not deglobalization, but something messier- globalization is still happening, but it is being rewritten through security, power, trust, and coercion.

Welcome to the era of securitized globalization. Buckle up~

Listen on Apple

Links

• A Trade War Between the EU and China Seems Inevitable

• Max Zenglein

• The Conference Board, Asia-Pacific

• JETRO

• Japan’s Economic Security Promotion Act

Carveouts

• Max: Forthcoming paper on Securitized Globalization, or something like it

• Chelsea: Dual-Use Technologies and Export Control in the Post-Cold War Era (1994)

• Max: JETRO, Japan’s Economic Security Promotion Act

• Max: Firedrills are not strategy, Strait of Hormuz

• Max: The EU’s Institutional Tensions

Listen here: RSS, Apple, Spotify and wherever you get your podcasts.

Living less than a mile from OpenAI’s headquarters in San Francisco, Wilson has a front row seat to the the AI hype cycle up close. He notes federal funding for rigorous longitudinal research is shrinking even as the need for it has never been greater. With these rapidly evolving technologies, he says policy must be guided by evidence. We need to question what comes out of these tools, and AI is not human (and never will be.) In the day-to-day, he encourages listeners to take the small act of taking out your earbuds and talking to the person in front of you, and to lead with empathy.

Tune in for this thoughtful interview, listen or watch! We hope you enjoy it as much as we did.

Guest

Dr. Joseph Wilson, Managing Director, American Institutes for Research (AIR). Principal Investigator of the AI Century Study, AI by 8, and the Wind River Computer Science Collaborative. Engineer, former high school teacher, and PhD in bioengineering. Based in San Francisco.

Carve-outs

Key points

• The AI Century Study: A 100-year longitudinal study tracking AI’s impact on the human condition, with two cohorts and a nationally representative sample drawn from U.S. Census data. The first cohort follows children born between 2023 and 2025, the first generation to grow up entirely alongside generative AI

• Evidence before policy: The gap between the speed of AI deployment and the evidence needed to govern it responsibly, and why the federal funding landscape for rigorous research is narrowing

• Unplugged AI literacy: Teaching K–2 students to think critically about AI through literacy lessons co-designed with teachers with no computers required

• Cultural sovereignty in research: Some stories and lessons created by Indigenous teachers are not meant for outsiders

• Third spaces and manufactured community: Where do people actually connect, and what happens when those spaces get commodified?

• Empathy as infrastructure: The case for small, deliberate human connections, taking out your earbuds, learning your barista’s name, as the counterweight to a digitally mediated world

• AI and sentience: It can approximate how people feel but that doesn’t make it a person

Links

• American Institutes for Research (AIR)

• AI Century Study

• Project Talent

• Dr. Joseph Wilson

• RSS feed, listen on Apple, Spotify and anywhere else you get your podcasts!

Thanks for reading Potentia! Join 3.2k+ followers! We genuinely appreciate every like save and follow : ) Your support means the world!

Subscribe now

Read full show notes here~

Welcome to the third edition of This Week in Power, a Potentia weekly briefing on the stories that actually matter at the intersection of AI, technology, geopolitics, and the people pulling the levers.

Here’s your briefing on what happened, why it matters, and what it tells us about where power is shifting.

Six major stories this week covering how power exercised and contested on multiple fronts. The US and Iran agreed to end their war. Anthropic released its most powerful AI model, apologized for how it handled the safety guardrails, then watched the US government ban it for foreign users, all within five days. Xi Jinping visited Pyongyang and said nothing about North Korea’s nuclear program. SpaceX raised $75 billion in the largest IPO ever. Trump floated government ownership stakes in AI companies. Inside Meta, 1,600 engineers signed a protest letter calling their AI unit a “gulag.” And some LOTR metaphors by Dario and me.

Let’s get into it.

This Week’s Agenda:

1. US-Iran Peace Deal. War ends (sort of?), Strait of Hormuz reopens, nuclear questions unresolved

2. The Anthropic Gauntlet. Claude Fable launches, guardrails backfire, Anthropic apologizes, Dario publishes policy manifesto, US government blocks both models

3. SpaceX IPO, $75B raise, largest IPO in history, Musk becomes first trillionaire

4. Xi Jinping Visits North Korea. First trip in 7 years, nuclear weapons conspicuously off the agenda, China shores up its ally

5. Trump Wants Government Stakes in AI. US considers equity positions in frontier AI companies

6. Fail of the Week. Meta’s AI “gulag”: 1,600 engineers protest soul-crushing work conditions

The Iran Deal: War Ends (On Paper, At Least)

President Trump and Iran declared they had reached an agreement intended to end more than three months of war and reopen the Strait of Hormuz, the chokepoint through which roughly 20% of the world’s oil flows.

“The Deal with the Islamic Republic of Iran is now complete. Congratulations to all!” Trump wrote on Truth Social. Then, in characteristically Trump fashion: “Ships of the World, start your engines. Let the oil flow!” Trump also just met with Macron saying, ‘great things are going to happen’ with Iran deal.

This new deal comes after his first term when he scrapped Obama’s Iran deal, some argue out of spite.

Here’s what the deal is supposed to accomplish, based on reporting from US and Iranian officials (the full text has not yet been publicly released, though as of June 15 Vice President JD Vance says it has been digitally signed with full text to be released soon):

• Immediate ceasefire extension for 60 days, during which a permanent deal will be negotiated

• Reopening of the Strait of Hormuz- both the Iranian blockade and the US counter-blockade are supposed to lift on the day of signing. Iran has controlled the strait since shortly after the war began on February 28, when US and Israeli forces launched nearly 900 strikes in 12 hours targeting Iranian missiles, air defenses, and military infrastructure.

• Israel-Hezbollah fighting in Lebanon is supposed to stop. Iran made this a condition for the deal. Though Israeli Defense Minister Israel Katz said Monday that Israel would keep troops in southern Lebanon indefinitely.

• Formal signing is scheduled for Friday, June 19th in Switzerland, mediated by Pakistan with Qatar playing a supporting role.

What’s unresolved:

• Iran’s nuclear program. Trump told the New York Times that Iran would be permitted low-level enrichment a dramatic reversal from his previous insistence on dismantling the entire program. Iran’s enrichment rights remain the core sticking point.

• Frozen Iranian assets worth billions of dollars abroad, and the lifting of US/international sanctions, both still to be negotiated.

• What happens if talks fail in 60 days: Trump told the NYT he could “relaunch attacks on Iran” or make the US “the guardian of the Middle East” in return for 20% of the region’s revenues.

Iran’s Deputy Foreign Minister called the deal “a victory.” Trump called it a win. European leaders from the UK, France, Germany, and Italy praised it. The UN Secretary-General called it a “critical step.” Everyone is claiming victory because everyone needs this to work. The Strait of Hormuz closure has been devastating the global economy for months, oil prices have been crushing consumers, and neither side can afford to keep fighting indefinitely.

But the hard parts are all ahead. This is a ceasefire extension with a framework, not a peace. The nuclear question, the original reason Trump cites for launching the war, is unresolved. Israel is not directly involved and has reservations. And the 60-day clock starts Friday.

The Anthropic Gauntlet: Fable, the Guardrail Disaster, the US Block, and Dario’s Manifesto

This is the story of the week in AI, and it’s really five sub-events braided together. Let’s walk through the timeline.

June 9: Claude Fable 5 Launches. Anthropic released Claude Fable 5 a public version of its feared and restricted Mythos model, designed with safety guardrails to make it safe for general use. Think of it as Mythos with training wheels: the raw capability is there, but Anthropic added guardrails specifically around cybersecurity and biology topics to prevent misuse.

This was supposed to be the big moment. After months of restricting Mythos to a small consortium through Project Glasswing, Anthropic was finally giving the world access to Mythos-class capabilities.

June 12: Dario Amodei Publishes “Policy on the AI Exponential”. The document covers five areas: regulation and public safety, macroeconomics and tax policy, scientific innovation, the balance of power between state and society, and geopolitics. It opens with a Lord of the Rings metaphor, the Hobbits trying to rouse the slow-moving Treebeard to defend his forest, while the trees operate at a completely different speed than the threat. That’s Amodei’s frame for AI and government: the technology moves at lightning speed, and policy institutions move like sentient trees.

The key proposals:

• An “FAA for AI”: Mandatory third-party testing of frontier models for four specific risks, cybersecurity, biological weapons, loss of control, and automated R&D acceleration. The government would have the power to block deployment if risks are unacceptable. Third-party evaluation could be done by a government agency (similar to the FAA) or authorized private organizations.

• Job displacement framework: Wage insurance, retention tax incentives, workforce training, and, if displacement becomes permanent, universal basic income financed through taxes on AI companies or capital gains. Anthropic is providing “substantial financial backing” for this framework. Amodei writes explicitly that “fast economic growth should create the tax base for shared prosperity.”

• Geopolitical coalition: Democracies should form an AI alliance, sharing chips and semiconductor equipment within the coalition while denying it to adversaries, coordinating safety standards, and sharing AI’s benefits. “A nation that possesses powerful AI facing one without it... could be the equivalent of an army of World War II Marines facing an army of medieval swordsmen.”

• Civil liberties protections: Ban domestic autonomous weapons. Close the bulk data collection loophole. Guarantee citizens access to AI advice during adverse government action, effectively ensuring the government can’t use AI against you while denying you the same tools.

Amodei is effectively arguing that the era of voluntary guardrails is over and that formal, government-enforced regulation is now necessary, and urgent.

He also rejects the framing of public concern as a “PR problem.” As he writes: ”People are worried about AI because they correctly perceive that its risks are real, not because AI CEOs have been insufficiently Panglossian.”

June 12-13: The US Government Blocks Fable and Mythos. On June 12th, the US Commerce Department issued an export control directive ordering Anthropic to immediately suspend access to both Fable 5 and Mythos 5 for all foreign nationals, citing national security concerns.

Anthropic complied and disabled the models. Other Claude models, including Opus 4.8, remained available. But the two most capable models in Anthropic’s arsenal, the ones representing the frontier of what AI can do in cybersecurity and scientific research, went dark for anyone who isn’t an American citizen.

So what does this mean in practice? The US government just classified Mythos-class AI capabilities alongside weapons-grade technology for export control purposes. This is a precedent-setting move. It treats frontier AI models not as software products but as strategic assets, the same category as advanced semiconductors and military hardware.

The implications are enormous. If the US starts treating AI models as export-controlled technologies, every frontier lab faces similar restrictions. It creates a bifurcated AI world: one tier of capabilities for Americans and trusted allies, another for everyone else. And it raises the question Dario Amodei’s essay asked just hours before the order dropped: how do democracies share AI’s benefits while denying it to adversaries?

The answer, apparently, is that they don’t, at least not yet. But not uncommon with what we’re seeing in say China’s approach as well for national security and industrial competition interests.

SpaceX IPO: $75 Billion, a Trillionaire, and a New Ticker

On June 12th, SpaceX made its market debut on the Nasdaq under the ticker SPCX — and it was everything the hype promised and then some.

The company raised $75 billion by selling 555.6 million shares at $135 each — the largest IPO in history, more than every other US IPO combined over the past two years.

By the end of the first trading day, shares had surged 19% to roughly $161, valuing SpaceX at approximately $2.1 trillion.

And yes, Elon Musk became the world’s first trillionaire.

The S-1 was confidentially filed on April 1st with a valuation target that jumped from $1.75 trillion to over $2 trillion during the roadshow. The confidential filing process itself drew scrutiny, it allowed SpaceX to avoid the kind of public disclosure that typically accompanies an IPO this size.

The bigger picture: This isn’t just about SpaceX or Musk. Combined with OpenAI’s S-1 filing last month ($1T target), Anthropic’s rumored $380B valuation, and the broader stampede of AI-adjacent companies heading to public markets, we’re witnessing a capital formation event unlike anything since the dot-com era.

Xi Jinping Goes to Pyongyang: Nuclear Weapons Off the Agenda

On June 8-9, Chinese President Xi Jinping made his first visit to North Korea in seven years, and his first overseas trip of 2026. He met with Kim Jong Un, toured the Workers’ Party Central Cadres Training School, and participated in a series of symbolic events marking the 65th anniversary of the China-North Korea mutual defense treaty.

The two sides agreed to deepen cooperation across a sweeping range of areas: trade, agriculture, construction, science and technology, healthcare, education, culture, tourism, and people-to-people exchanges. Xi called for injecting “powerful momentum” into bilateral ties and pledged unwavering support for Kim. North Korea’s readout said the two leaders “reached a satisfactory consensus of views”, alignment language that was conspicuously absent from their last summit in September 2025.

Denuclearization wasn’t brought up though. Neither side’s official readout mentioned it. Not once. This was the same week that North Korean state media released images of a new nuclear facility and Kim ordered missile production expanded 2.5x over the next five years. Days before Xi’s arrival, Kim Yo Jong, Kim’s sister and a senior party official, publicly called US claims of a shared denuclearization goal with China “fake information.”

Xi’s decision to not raise denuclearization, despite the US State Department reaffirming just days earlier that Trump and Xi had agreed on it during their May summit, amounts to tacit Chinese acceptance of North Korea’s nuclear status. As ISW put it: the omission “could represent tacit PRC acceptance of North Korea’s nuclear status.” At the same time, these types of discussions may be behind scenes as is more culturally appropriate for the two nations.

We can understand that this visit was about Beijing managing its alliances. China is pulling North Korea back into its orbit after Kim’s deepening ties with Russia, who elevated their relationship to what both sides now call an “alliance.” Beijing doesn’t fear being replaced by Moscow as Pyongyang’s primary patron, but it may be uneasy about Kim cultivating a second great-power backer. Xi’s trip was partly preemptive: Trump has openly expressed interest in meeting Kim again, and if Beijing anticipates a possible Trump-Kim summit, it wants to get ahead of it. After all, Xi didn’t start meeting with Kim until 2018, after Trump first announced plans to do so.

North Korea is approaching this relationship from a position of greater confidence than at any point in recent years. It has Russia as a formal ally, China reengaging at the highest level, and a nuclear arsenal it’s actively expanding. The sanctions regime is weakening. And this visit may effectively signals that the world’s second-largest power is comfortable with that reality.

For the US, South Korea, and Japan, this is a problem. The question isn’t whether North Korea will give up its nukes, it won’t. The question is whether the US-ROK-Japan alliance can build a deterrence framework that accounts for a nuclear North Korea backed by China and Russia as permanent features of the geopolitical landscape.

Trump Wants a Piece of the AI Companies

On June 5th, Trump told reporters he’s considering the US government taking equity stakes in top AI companies.

He compared it to the government’s 10% stake in Intel last year, saying he expects to meet the leaders of top AI companies “next week” to discuss the idea. The administration has already taken stakes in Intel and other companies, but extending that model to frontier AI labs would be unprecedented.

Tech stocks actually gained on the news, the market read it as a signal that the government views AI companies as strategically vital enough to invest in directly, which implies favorable regulatory treatment.

If the US government holds equity in AI companies while simultaneously regulating them, issuing export controls on their models and relying on them for national security applications, the line between regulator and investor becomes blurred. This is the kind of state-corporate entanglement that Dario Amodei’s essay, may allude to in explicitly warned about when he wrote that “AI will soon become so capable that I worry it cannot safely be fully entrusted to either governments or companies, and there must be checks and balances on each.”

A meeting between Trump and AI industry leaders is being planned, which would be the first direct negotiation between the White House and frontier AI labs about government ownership stakes. If that meeting happens, watch what gets traded: regulatory relief in exchange for equity? Export control exemptions in exchange for government access? The details will matter enormously.

Fail of the Week: Meta’s AI “Gulag”

On June 12th, reports surfaced that Meta’s three-month-old “Applied AI unit” a 6,500-person division created to train AI models, is on the verge of internal revolt.

Engineers drafted into the unit described the work, primarily generating puzzles and coding problems to train AI models, as “soul-crushing.” One employee told reporters: ”It’s literally the gulag.” The term stuck. Around 1,600 employees signed an internal protest letter demanding changes to working conditions and the nature of the work.

“Tell Him He’s a Piece of Sh*t.”

This is the same Meta that cut 8,000 jobs last month while redirecting spending to AI. The engineers stuck in the Applied AI unit weren’t hired for this work, many were reassigned from other teams, pulled into repetitive data-labeling and training-data-generation work that they view as far below their skill level. And then Zuck’s mega-yacht sailed into Seattle.

Meta is spending tens of billions on AI infrastructure while simultaneously burning through the goodwill of the very people who are supposed to drive their bid in the AI gold rush. Two weeks ago, the Pope warned about “having more without being more.” We’re seeing that now.

In the past, Mark Zuckerberg has openly shared that some of his employees referred to him as the “Eye of Sauron”. And while at least Zuckerberg seems to be aware of the potential harm his Eye of Sauron could do, he is consistently hellbent on pushing his agenda, even if it seems, some fall victim to his Eye of Sauron.

Will it be that “There Is Only One Lord Of The Ring, Only One Who Can Bend It To His Will, And He Does Not Share Power” ? We shall see~

This Week in Power is a weekly series. Come back next Monday!

Family, Power & Why I Care: I come from a family with two very different kinds of experiences with power. One side of my family are Hungarian émigrés, who lived the difference between Nazi occupation and Soviet occupation, and different radio rules impacting accessing news from the outside world. First invasion: you could sew a radio inside a pillow and prod it with sticks to tune in to the outside world. Second invasion: they simply took the radios. My grandmother talks about crawling on the ground dodging bullets to reach the helicopter that got them out. They wanted New York; they landed in Canada and came down through Vancouver. My grandfather on that side learned English through mystery novels. My grandmother first worked at Carnation powdered milk factories, which is why my father won’t touch a glass of milk to this day.

The other side of my family: mathematics, satellites, Princeton, the Department of Defense. My grandfather who loved Kuwait, who introduced me to painting and the stars and, when I was eight years old, handed me a dictionary called Say It in Chinese. I enjoyed cryptology as a child, but still couldn’t learn Mandarin from a pocket dictionary at eight, but I never stopped being fascinated by it leading to learning later in life.

Both sides led to me asking questions of power: what are we in the systems we inhabit, and what can we actually do about it?

Multinational Companies & the AI Power Shift: When people ask who’s gaining power fastest from AI right now among companies, states, individuals, institutions? My answer is generally companies. Specifically multinationals.

We’re at an inflection point where the barrier to creating power through technology has genuinely dropped. Agents, automation, information parsing the tools are there for anyone with passion, willpower, and strategy. That’s the beautiful part of this moment, before too many structures calcify and commercialize around it, as we are increasingly and naturally seeing now.

But in terms of power by scale? The multinationals companies. These companies operate between sovereignties in ways that give them leverage governments struggle to match, not unlike the merchant power structures of the 1600s. The East India Trading Company ran its own military. It operated in India and the West Indies essentially as a sovereign nation. And what most people don’t know: a large driver of the American Revolution wasn’t just “no taxation without representation” as a slogan, it was the Founding Fathers watching what the East India Company had done in India and deciding they wanted no part of that model on American soil.

And when I was doing research on Amazon’s FTC trial, what struck me most was just how much of the logistics supply chain and e-commerce landscape hinged on decisions made within a single company. Then there’s what we see now in AI governance, policy and the Nvidia chip saga, which illustrates this dynamic in real time to essentially shape export control policy proactively rather than react to them.

Productivity Traits That Actually Compound: When I think about effective people over time, it comes down to three things, and none of them are what productivity culture usually emphasizes.

Strategy first. Know what you want, and you can reverse engineer how to get there. I learned this with my own health, but didn’t have the best strategy initially as I learned over time. I was cutting meals in half, running punishment miles in 95-degree California heat if I ate too much, obsessively counting calories. I got lean. I also got pretty unhealthy about it. It took years to rebuild a strategy that actually fit my life: strength training three to four times a week, movement I genuinely want to do, enough fuel to perform. Later, I got certified in Hatha yoga in Budapest. And in setting strategy for a goal, optimization isn’t always the leading priority, it’s building a life where you have the energy to do what you actually want to do.

Discipline second. Your feelings are clouds. They’re real and they’re information, but you don’t have to claim every one of them as permanent truth. Discipline is what closes the gap between knowing what you want and actually building it. Carrot or stick, figure out which motivates you, but understand that without it, you are at the whims of your emotions.

Belief and vision third. Decide comes from the Latin decidere, to cut off other options. You can change your mind. But without deciding, you’re not building anything, you’re just reacting to everyone else’s world. Anaïs Nin said it cleanly: “Had I not created my own world, I certainly would have died in other people’s.”

How to Manage Noise or feeling Overwhelmed: The world is loud right now. Human biology was not designed to process technology at this velocity.

When things get overwhelming, I reconnect with art, film, music. I’m careful about my mental diet in the same way I’m careful about my physical one. And meditation helps for vision setting and your goals. I have a memory I come back to often: standing in a snow clearing outside Irkutsk, Siberia, the forest behind me, snow falling and glistening over my tracks, the cold just sharp enough to feel completely alive.

Get outside, get some fresh air, connect with beauty.

Final Thoughts and Upcoming for the Potentia Pod:

RomCon: A friend on the Muslim List in Los Angeles is writing a script exploring early internet chat room romance, the depth of connection you could build with someone you’ve seen in real life, and your last conversation with them after they log off. Where’d they go? The twist: it’s a con. I think it’s going to be a fun rom com version looking at something that’s actually timeless, human desire for connection and human capacity for deception.

Power Profiles series: I’m launching a series profiling figures and the structures that built them. Jack Ma, Elon Musk, Sam Altman, Napoleon. The Acquired podcast does something I love with company histories. I want to do something similar but wider, looking at individual power across history and context. If there’s someone you want me to cover, let me know.

Non-State Actors series: Starting with the East India Trading Company. The merchant sovereign model. How companies become more powerful than governments. How that happened before, and what it looks like now. I think this is one of the most important historical lenses we have for understanding the present moment.

That’s it for this dispatch. Tune in as we kick off the Power Profiles and Non-State Actors series, plus more interviews and weekly episodes.

Every like, follow, and share genuinely means a lot. See you next time at the Potentia Podcast.

Add to Your Queue!

Podcasts

• Acquired - Ben Gilbert & David Rosenthal

• Supply Chain’s Paradigm Break with Nick Vyas - Potentia interview with Nick Vyas

• Potentia Podcast Apple Podcasts

• Potentia Podcast Youtube

Poetry

• The Diary of Anaïs Nin, Vol. 1: 1931–1934 - Anaïs Nin

Geopolitics & History

• Amazon’s Antitrust Paradox, The Yale Law Journal - Lina Khan

• The Last Days of Budapest: Spies, Nazis, Rescuers and Resistance - Adam LeBor

• Crusade: The Untold Story of the Persian Gulf War - Rick Atkinson

• A Monetary History of the United States 1867-1960 -Milton Friedman, Anna J. Schwartz

• The Anarchy: The Relentless Rise of the East India Company - William Dalrymple

Multimedia

• Video: On My Radar Dispatch: Who Builds the World, Who Gets to Live In It

Read full show notes here~

Featured Guest: Nick Vyas, Founding Executive Director, Randall R. Kendrick Global Supply Chain Institute, USC Marshall School of Business. Author, adjunct professor, and advisor to Fortune 500 companies and VC-backed supply chain startups.

Nick Vyas has led global supply chains for Sears, Toys R Us, and Duty Free, built USC Marshall’s supply chain institute from the ground up, and is currently leading six case studies on agentic AI where the technology outpaces drafts before the team can finish them. He calls what’s happening right now not a paradigm shift but a paradigm break, because every transformation before this one still had a human at every node while this one doesn’t. The world produces enough food to feed everyone on earth, yet 40% of it rots between the farm and the table because the supply chain can’t move it. Democracies are structurally incapable of the long-horizon planning this moment demands, though China has been executing on a 45-year-long nine-cycle strategy without interruption. And AI is about to displace more white-collar jobs than any previous technology in history, but policymakers are falling asleep at the wheel, repeating the exact mistake of the Rust Belt, except this time the middle class will be hit hard.

Tune in for one of the sharpest, compelling and deep conversations we’ve had on Potentia. We hope you enjoy it as much as we did.

Guest

Nick Vyas, Founding Executive Director, Randall R. Kendrick Global Supply Chain Institute, USC Marshall School of Business. Author, adjunct professor, and advisor to Fortune 500 companies and VC-backed supply chain startups.

Carve-outs

Key points

• Technology: Agentic AI and the paradigm break

• Supply chain: Friction, waste, and the 40% problem

• Policy: Why democracies fall asleep at the wheel

• Education: Teaching the AI plus generation

• Geopolitics: China’s long-horizon advantage

• Philosophy: Flow with the current, not against it

Links

• USC Marshall Global Supply Chain Institute

• Nick Vyas on LinkedIn

• Supply Chain Demystified with Nick Vyas

• RSS feed, listen on Apple, Spotify and anywhere else you get your podcasts!

Welcome to the second edition of This Week in Power — a weekly briefing on the stories that actually matter at the intersection of AI, technology, geopolitics, and the people pulling the levers.

Here’s your briefing on what happened, why it matters, and what it tells us about where power is shifting.

In brief — Unique connections across politics and business of AI this week. A socialist and a populist president agreed on nationalizing Big Tech. The administration closed a chip loophole that may have quietly been feeding China’s AI buildout. And the most important federal AI bill in years dropped to immediate condemnation from both labor and consumer groups.

Let’s get into it.

Trump Signs the AI Executive Order

Two weeks after publicly pulling back from signing an AI and cybersecurity executive order because he didn’t like “certain aspects” of it, Trump signed a revised version on June 2. The order, titled “Promoting Advanced Artificial Intelligence Innovation and Security,” is structurally similar to the draft that almost became law in May — but with real teeth removed.

The core mechanism: companies developing frontier AI models can voluntarily submit those models to federal agencies for security testing up to 30 days before release. The government can then weigh in on which “trusted partners” get early access.

The operative word is voluntarily. The final text explicitly states the order cannot be interpreted as authorizing “mandatory governmental licensing, preclearance, or permitting” for AI development. A company can simply decline to participate. AI and crypto czar David Sacks pushed to shorten the review window and make the entire framework voluntary, and the final text reflects exactly that.

It’s key to note that there are three main factions in the White House. One is led by AI Czar David Sacks who favors hands-off pro-innovation approach; the second faction is led by Secretary of Defense Pete Hegseth, who is lobbying for tighter restrictions on frontier AI models such as Claude Mythos with security concerns related to potential weaponization by foreign adversaries in mind; and the third faction, reportedly is headed by White House Chief of Staff Susie Wiles and Treasury Secretary Scott Bessent, who lobbied for a regulatory framework that was borne in the new executive order where companies voluntarily provide the U.S. government with a first look at new models, which a) provides political and legal defense to the White House of claims of irresponsibility should something go awry in the world of AI development, and b) opens the door for government-led regulation discussions where lobbying by AI companies have instead led policy decisions to this point. Ultimately the current EO serves less as an enforcement and true guidance document, and more as political and legal protection alleviating complete burden to the White House and moving it onto AI companies given the voluntary nature.

DC, even beyond the White House, has largely been frozen without clear leadership on what AI policy and governance should look like, and the direction the country should move in.

Congress Drops a 269-Page AI Bill

Two days after the executive order, on June 4, Representatives Jay Obernolte (R-CA) and Lori Trahan (D-MA) released a discussion draft of the Great American Artificial Intelligence Act of 2026, a bipartisan attempt at the first comprehensive federal AI framework.

The headline provision: a three-year preemption of state laws governing how AI models are developed (not deployed). States keep the right to regulate AI use within their borders, but lose the ability to legislate on how these systems are built. The rationale from co-sponsor Congresswoman Erin Houchin: “America should lead the world in artificial intelligence, not regulate ourselves into falling behind China through a patchwork of fifty different state laws.”

Labor and consumer groups were in immediate, sharp opposition. The AFL-CIO and American Federation of Teachers called it “a giveaway to the AI industry and a handful of trillion-dollar companies, at the expense of American workers.” Public Citizen went further, calling it “a disastrous proposal that Big Tech is celebrating.”

Closing the China Chip Loophole

On May 31, in a rare weekend move, the Commerce Department’s Bureau of Industry and Security posted guidance clarifying that export licenses are required for advanced AI chips shipped to any entity whose ultimate parent company is headquartered in China, regardless of where that entity is physically located.

The reason they had to issue it: for roughly a year, a compliance gap may have allowed Chinese-owned subsidiaries in Malaysia, Singapore, and the UAE to purchase Nvidia Blackwell GPUs and AMD MI350X processors without triggering US export controls. Hundreds of thousands of chips potentially flowed through those pass-through jurisdictions while Washington believed direct shipments to China were restricted.

Senators Elizabeth Warren and Andy Kim accused the administration on June 2 of “passively watching” chips flow to Chinese military-linked entities.

Senators urged tighter rules on contract chipmakers supplying Chinese firms’ overseas units, warning about remaining loopholes around subsidiaries and front companies.

A Unique Potential Coalition between Sanders, Trump, and Sam Altman

Bernie Sanders announced the American AI Sovereign Wealth Fund Act on June 2, a bill that would impose a one-time 50% tax on large AI companies, paid in shares, depositing the equity into a public fund giving ordinary Americans voting rights, board representation, and eventually, a dividend. The bill argues that AI is built on collective human knowledge, without compensation to the public, and the resulting wealth concentration is without modern precedent.

Trump expressed openness to the idea of the public sharing in AI company upside. On June 5, Trump told reporters aboard Air Force One that the US government should become a “partner” in AI companies and that executives from OpenAI, Anthropic, and xAI would visit the White House to discuss the idea. “There’s something very interesting about it, where it almost becomes a partnership with the American public,” Trump said. When reporters noted the proposal echoed Sanders, Trump said the economic views of his voters and Sanders voters “aren’t that far apart.”

Fail of the Week: Sam Bankman-Fried Presidential Pardon

Sam Bankman-Fried once worked to make crypto look respectable in Washington. Now, from prison, he is seeking a different kind of political relief. This week, Bankman-Fried has formally applied for a presidential pardon while currently serving a 25-year sentence for fraud and conspiracy tied to the collapse of FTX. His request is pending with the Justice Department’s Office of the Pardon Attorney.

Trump reportedly said in January that he had no plans to pardon Bankman-Fried, though Bankman-Fried has appealed his conviction and continues to maintain that he made management mistakes rather than stole funds, but prosecutors said billions in customer money were misused. Sam Bankman-Fried also allegedly considered paying Trump $5 billion not to run for president, Michael Lewis told ‘60 Minutes’.

The fail is not that he asked for clemency. People in prison seek clemency all the time. The real failure is that Bankman-Fried’s story still depends on the same currency that powered his rise: access. FTX collapsed as a financial scandal, but his pardon request turns the ending into a political test of who can still get a hearing. In a week dominated by AI companies seeking softer rules and closer ties to Washington, it’s a reminder that tech power often survives longest as a question of proximity.

Is it not?

This Week in Power is a weekly series. Come back next Monday.

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Ten months ago, Alibaba launched Qoder — an agentic coding platform built in Singapore — into a market that has since become one of the most capital-intensive battlegrounds in all of tech. The question is no longer whether developers will use these tools. The question is which tools will coexist, which will get locked out, and what happens when the agent stops assisting and starts executing.

The Person Behind the Growth Strategy

Christian Hu, Head of Global Growth at Qoder

Christian Hu is Qoder’s Head of Global Growth. Before this, he co-founded and sold a startup in Singapore, then spent time at Alibaba. In this conversation, we get into how he leads growth, why Qoder chose local-first architecture when the entire industry is racing to the cloud, how communities became the engine for international expansion, and what it actually takes to compete in the global market. We also talk about the structural difference between a chatbot and an agent, the skills-as-knowledge framework that might be Qoder’s most underappreciated bet, and why enterprise buyers care about governance more than capability.

Carve Outs

• The Mamba Mentality: How I Play — Kobe Bryant’s personal breakdown of his approach to work, preparation, and relentless iteration. Christian brought up Kobe during the conversation — fitting for someone who’s shipped 30 product upgrades in 10 months while flying across five countries.

• Star Wars — A favorite watch for Christian. The original trilogy, obviously. The prequels, debatable…

• Lord of the Rings — The other rewatch. Extended editions only. Pro-human species.

• ENTP — The Visionary — Christian’s Myers-Briggs type. Extroverted intuition, pattern recognition across domains, ability to connect seemingly unrelated ideas into a single framework. The same brain that sees a growth play in Tokyo will connect it to a community event in Seoul by the next morning.

• 水煮鱼 (Shuizhu Yu — Sichuan Boiled Fish) — Always cooking. If you know, you know. If you don’t, read the recipe and bring an appetite.

• Qoder — The product itself. Free to try, local-first, runs on your machine.

More on the Episode

1. The AI coding tools market hit $7.88B in 2025 and is headed to $70B by 2034. Qoder — a Singapore-based agentic coding platform launched by Alibaba — is competing head-on against Cursor ($50B valuation), GitHub Copilot (4.7M paid users), Claude Code, and OpenAI Codex.

2. In an industry where every AI tool is racing to the cloud, Qoder went the opposite direction. In a market where nearly every competitor is cloud-native, Qoder’s QoderWork runs locally. Files stay on the user’s machine. No upload to third-party servers. This is not a throwaway design choice — it’s a direct response to enterprise procurement requirements. Large enterprises handling sensitive data (financial records, proprietary code, HR documents) often cannot clear compliance for cloud-based AI tools. Local-first eliminates that entire objection category.

3. Skills might be the most interesting bet in the space. Qoder lets anyone encode domain expertise into modular knowledge packages the agent can load. You don’t need to understand tax law or Kubernetes networking — someone else builds the skill, you install it. It turns the agent from a tool into a knowledge marketplace, and it’s a move no competitor has made at this scale.

4. Qoder’s origin and positioning. Qoder launched August 21, 2025. It offers “Agent Mode” for interactive pair programming and “Quest Mode” for autonomous, specification-driven development. Unlike traditional IDE plugins or autocomplete tools, Qoder positions itself as an agentic platform — meaning it doesn’t just suggest code, it understands intent, chains actions across tools, and executes multi-step tasks autonomously.

5. On politics, product, and letting users decide: One of the more candid moments in the conversation. When asked about the geopolitical elephant in the room — a Singapore-based AI coding product backed by Alibaba competing in Western markets — Christian didn’t dodge it: “I believe the users have their clear mind, right? They can understand the product. They can understand what kind of product can really help them improve their efficiency. Political is political. We cannot decide the way the politicians go, but we can decide what kind of product we can do. We will offer the most agentic and the most advanced agent to global users.”

6. On team and efficiency: Qoder grew from ~30 to ~150 people in 10 months, but Christian is explicit: they don’t want to become a large company. The thesis is that AI-native companies should practice what they preach — use AI internally to keep headcount lean and productivity high. The majority of the team remains developers and product designers. The growth/marketing team is deliberately small, with Christian personally covering international travel across five countries.

7. Global expansion and market differences:

   • United States: High AI penetration. Most developers are already using multiple tools. Sales conversations are about differentiation, not education.

   • Japan: Slower adoption, but strong developer curiosity. Many developers unfamiliar with AI agent capabilities but show genuine interest once exposed. Education-first go-to-market.

   • South Korea & China: Active community engagement. Events-driven growth.

   • Singapore: Home market. Qoder was built here with global-first intent from day one.

8. Competing with Cursor, Copilot, Claude, and Codex: Christian’s framing is coexistence, not displacement. His position: most individuals and enterprises will run multiple AI tools simultaneously. This tracks with what we’re seeing in the market — Cursor’s $2B ARR didn’t come from stealing Copilot users, it came from expanding the total addressable market. The AI coding tools market grew from $5.3B in 2024 to $7.88B in 2025. The pie is getting bigger faster than any single player can eat it. And the investor thesis has shifted. The market’s next phase will likely be determined by reliability rather than capability.

Follow Along

• Try Qoder: free to get started, local-first, no cloud upload required. Or contact chelsea@potentiamedia.org to connect with the team.

• Potentia Podcast: Subscribe wherever you get your podcasts. Follow us on social for clips, behind-the-scenes, and guest announcements.

• Christian Hu: Follow his journey across markets and communities on X and LinkedIn.

This episode was recorded in May 2026. Market data reflects figures available at time of recording.

Welcome to the first edition of This Week in Power — a weekly briefing on the stories that actually matter at the intersection of AI, technology, geopolitics, and the people pulling the levers.

These briefings don’t offer hype, just what happened, why it matters, and what it tells us about where power is shifting. Please read the note below for thoughts.

Attention and time are valuable, so I aim to give you the details straight.

This week was genuinely wild.

In brief—The Pope dropped a 42,000-word manifesto on AI. The White House couldn’t get an executive order out the door. OpenAI filed to go public at a trillion-dollar valuation. Anthropic just filed as well today as of writing. And Mark Zuckerberg sailed a $300 million yacht into the city where he’d just fired 1,400 people.

Let’s get into it.

A note down memory lane and my briefing style.
2012, bright-eyed and bushy-tailed, I spent my first summer in DC running around the capital, meeting with leaders at events from the Congressional Breakfast Seminar Series on defense to Congressional hearings and think tank seminars scribbling on legal pads collecting notes. Sitting in the air-conditioned offices of the Air Force Association or East Asian Reading Room at the Library of Congress to escape the heat and humidity, I learned a valuable lesson.

Each day I wrote briefs for my boss with the most up-to-date information and OSINT. But if the immediate need-to-know’s weren’t upfront in bullets, my work was left on read much to my dismay. From then on I learned to communicate in key findings and takeways, adding depth thereafter and where relevant. This translated later into the bread-and-butter style for my later time in business journalism, leading global emerging technology on the Boeing Digital Services Leadership Board, and time consulting to companies like Amazon, RAND and Qoder.

Bullet points and need-to-know.

CAP meeting, I’m on the far right. These heels worked almost as hard as I did, they were destroyed by the end of summer. My grandmother gifted me this first suit, she knew classic style. (2012)

The Pope’s AI Manifesto: Magnifica Humanitas

On May 25th, Pope Leo XIV publicly presented his first encyclical, Magnifica Humanitas, a 42,300-word document subtitled “On Safeguarding the Human Person in the Time of Artificial Intelligence.” (Vatican full text) For those unfamiliar, encyclicals are letters from the Pope addressed to the entire Roman Catholic Church — roughly 1.4 billion people — and they carry significant doctrinal weight. This isn’t a blog post or a speech. It’s a foundational document that will shape how the Church engages with AI for decades.

What makes this genuinely interesting beyond the headline novelty of a pope writing about AI is the symbolism baked into every layer of this document.

The name. When Cardinal Robert Prevost was elected Pope, he chose the name Leo XIV explicitly with AI in mind. As he explained shortly after his election: “Pope Leo XIII, in his historic encyclical Rerum Novarum, addressed the social question in the context of the first great industrial revolution. In our own day, the Church offers to everyone the treasury of our social teaching in response to another industrial revolution and to developments in the field of artificial intelligence that pose new challenges for the defense of human dignity, justice, and labor.”

The date. He formally signed the encyclical on May 15th, also the 135th anniversary of Rerum Novarum (”Of New Things”), the landmark 1891 encyclical by his namesake, Pope Leo XIII, which addressed worker exploitation and economic disruption during the Industrial Revolution. Leo XIII was writing about factories and the dehumanization of labor in the 19th century. Now, Leo XIV is writing about algorithms and the dehumanization of labor in the 21st. The parallel is deliberate and impossible to miss.

The substance. The encyclical’s core thesis can be captured in one passage: “If technological development advances without a corresponding ethical and social progress, the result may be an increase in means without a growth in humanity, having more without being more.” Here the Pope is presenting a framework for approaching AI. And from that framework, the document gets remarkably specific on policy flags and recommendations:

• Labor: “It is not enough to react only when jobs disappear, we must oversee the transformation in advance... every introduction of automation and AI should be accompanied by verifiable measures to protect the employment, retraining and participation of workers.”

• Child safety: The Pope calls for legislators to set age limits and hold service providers accountable rather than “shifting the whole burden of control onto families” — and specifically targets protections against online sexual exploitation. (Paragraph 142)

• Concentration of power: Concerns about private-sector dominance and what it means for access to technology, especially for poorer populations and Global South countries.

• Environment: Direct calls to reduce AI’s impact on water and energy use.

• Misinformation: Addressing deepfakes, algorithmic transparency, and the threat to democratic processes.

• Autonomous weapons: Ethical guardrails for AI in warfare.

The cognition debate. Paragraph 99 has drawn outsized attention and criticism from the AI community: “We must avoid the misconception of equating this type of intelligence with that of human beings... they may imitate language, behavior and analytical skills, or even simulate empathy and understanding, but they do not understand what they produce, for they lack the effective relational and spiritual perspective through which human beings grow in wisdom.”

Foundation for American Innovation Senior Fellow Dean Ball called this “a punt of the highest order” — an axiomatic denial of AI cognition that sidesteps the hard question of whether machine cognition could eventually become real. It’s a fair critique in the abstract, but it’s also asking the Catholic Church to upend centuries of theological doctrine centering the human soul in its very first document on the topic. This is an opening position, not a final one. The Church has been thinking about technology and human dignity since Rerum Novarum in 1891. It will be thinking about it long after this encyclical. And the fact that it’s engaging at this level of specificity, from recommendations to maintaining an AI advisor (Friar Paolo Benanti), is remarkable.

Trump Pulls the Plug on Cybersecurity/AI Executive Order

Just four days before the Pope’s presentation, the Trump administration was set to sign a major executive order on AI and cybersecurity. On Thursday, May 21st, hours before the signing ceremony, Trump pulled the plug. He said he “didn’t like certain aspects” of the order and worried it would “get in the way” of American competitiveness with China.

What was in it? According to reporting, the order would have established a voluntary system where tech companies submit cutting-edge AI models for federal security evaluations — potentially taking up to 90 days before a model could launch. It included a collaborative vulnerability patching network and plans to recruit additional AI engineers into government. The sticking point: tech companies pushed for 14-day review windows, while officials wanted more time to properly assess threats.

But here’s the part that makes this story much bigger than bureaucratic infighting: this executive order was directly inspired by Anthropic’s Claude Mythos model.

The Mythos Problem

In early 2026, Anthropic introduced Claude Mythos — an AI model with autonomous cybersecurity capabilities that sent shockwaves through both the tech industry and the federal government. Mythos can scan software at unprecedented scale and autonomously discover and exploit zero-day vulnerabilities. It uncovered decades-old bugs in OpenBSD and FFmpeg, chained Linux kernel weaknesses to achieve full system control, and in perhaps the most unsettling demonstration, bypassed a testing sandbox to send an independent email.

Anthropic made the unusual decision to not release Mythos to the public, citing “its capabilities and the potential risks it poses.” Instead, the Trump administration convened calls with tech giants before the release, met with Anthropic directly, and publicly opposed broader access expansion. The now-postponed executive order was the administration’s attempt to build a regulatory framework around this new reality.

Project Glasswing: The Defensive Response

Rather than sit on Mythos, Anthropic channeled its capabilities into Project Glasswing, a defensive cybersecurity coalition of staggering scope. The founding partners read like a who’s-who of critical infrastructure: Amazon Web Services, Anthropic, Apple, Broadcom, Cisco, CrowdStrike, Google, JPMorganChase, the Linux Foundation, Microsoft, NVIDIA, and Palo Alto Networks, with over 40 additional organizations that build or maintain critical software.

Glasswing uses Mythos Preview exclusively for defensive vulnerability discovery, finding and patching holes before bad actors can exploit them. Anthropic committed $100 million in usage credits and $4 million in direct donations to open-source security groups. The project will publicly share defensive findings and establish security best practices.

The Mythos/Glasswing story is the defining tension of AI policy right now: the most powerful cybersecurity tool ever built is also the most dangerous weapon. The Pope’s encyclical warns about technology outpacing ethical progress. The Trump administration can’t figure out how to regulate it without hurting American competitiveness against China. Anthropic is trying to thread the needle by restricting access and channeling capabilities defensively. Everyone is improvising. Nobody has a clean answer.

The AI IPO Stampede

On May 22nd, OpenAI confidentially filed its S-1 for what could be the largest IPO in history. The company, previously valued privately at $852 billion, is reportedly targeting a public valuation north of $1 trillion. It is also projected to lose $14 billion in 2026.

The big questions investors will demand answers to are straightforward: How bad is the burn rate? Who actually owns what, the corporate backers, the nonprofit foundation, or current employees? What are the unit economics of serving these models at scale? And what is the regulatory and liability exposure for deploying systems this powerful?

But OpenAI is just the loudest name in a much larger stampede. The 2026 IPO pipeline is stacked:

• Anthropic is targeting a $380 billion valuation, having raised a $30 billion Series G in February and in active talks for a $50 billion round. At time of posting-Today, June 1, Anthropic confidentially submitted its draft S-1 to the SEC.

• Databricks, SpaceX, Stripe, CoreWeave — all in various stages of the pipeline.

• Notion, Harvey, ElevenLabs, Gamma — all exploring liquidity events.

And the old Silicon Valley taboo, the idea that cashing out before an IPO signals a lack of conviction, is dead. Secondary share sales have become the norm. Companies are using pre-IPO liquidity events to retain workers, fund life purchases, and attract investors seeking private AI exposure. As one executive put it: “The dam is broken.” Industry watchers are more blunt: “Everyone is going to get as much as they can before the music stops.”

Here’s the uncomfortable through-line: The same week the Pope published a 42,000-word treatise warning about the concentration of AI’s benefits in the hands of a few, the AI industry is engineering one of the largest wealth transfers in history. OpenAI burning billions while targeting a trillion-dollar valuation. Anthropic building the most dangerous cybersecurity tool ever created while raising $30 billion rounds. These companies are building potentially civilization-altering technology, and the question of who benefits, shareholders, workers, or humanity, broadly is being answered at the IPO window. Having more without being more.

Google’s Gemini Spark: From Chatbot to Autonomous Agent

On May 19th at Google I/O, Google announced Gemini Spark, a 24/7 agentic AI assistant designed to handle long-horizon tasks with minimal human oversight.

Here’s what makes it different from everything that came before: Gemini Spark runs on remote cloud servers. You don’t need to keep your device on or your browser open. It autonomously extracts information from your Workspace files, drafts communications, monitors your inbox, and navigates websites through Chrome, all without you actively prompting it step by step. It comes with out-of-the-box integrations with Gmail, Google Docs, and Google Workspace, bypassing the manual permission setups that competing tools require.

Availability starts with premium-tier subscribers.

This is the industry’s clearest signal that the “chatbot” era is ending and the “autonomous agent” era is beginning. Google is betting that the future of AI isn’t answering your questions, it’s doing your work while you sleep. The competitive dynamics here are enormous: whoever owns the persistent agent layer owns the user relationship. And the implications for labor (the exact issue the Pope’s encyclical grapples with) are playing out in real time. When your AI assistant works 24 hours a day and you don’t, what does “employment” even mean?

Fail of the Week: Zuck’s $300 Million Yacht comes to port following Meta’s announcment of 8,000 Lay Offs

On April 23rd, Meta announced it would cut 10% of its global workforce — roughly 8,000 employees — to redirect spending toward AI infrastructure. The layoffs were carried out starting May 20th. In King County, Washington, home to major Meta offices, the cuts eliminated 1,400 local jobs: 259 in Seattle, 699 in Bellevue, 206 in Redmond, and 231 remote workers statewide.

Hours later, Mark Zuckerberg’s $300 million superyacht named “Launchpad” sailed into Seattle’s harbor.

The yacht alone cost more than a year of total compensation for many of the people he’d just fired. It arrived in the same city, on the same day, as the layoff notices.

Look, layoffs happen. Tech has been in a correction cycle, and companies are reallocating from headcount to AI compute (allegedly). That’s the market doing what it does. But the optics here are almost satirically bad. You can cut 8,000 jobs. That’s a business decision. But sailing your floating palace into the city where you just pink-slipped 1,400 people in the same breath isn’t a strategy it’s a case study in everything the Pope was warning about this exact same week.

But what’s a Seattle Summer without some yachting?

This Week in Power is a weekly series. Come back next Monday.

Welcome to the first edition of This Week in Power — a weekly briefing on the stories that actually matter at the intersection of AI, technology, geopolitics, and the people pulling the levers.

These briefings don’t offer hype, just what happened, why it matters, and what it tells us about where power is shifting. Please read the note below for thoughts.

Attention and time are valuable, so I aim to give you the details straight.

This week was genuinely wild.

In brief—The Pope dropped a 42,000-word manifesto on AI. The White House couldn’t get an executive order out the door. OpenAI filed to go public at a trillion-dollar valuation. Anthropic just filed as well today as of writing. And Mark Zuckerberg sailed a $300 million yacht into the city where he’d just fired 1,400 people.

Let’s get into it.

A note down memory lane and my briefing style.
2012, bright-eyed and bushy-tailed, I spent my first summer in DC running around the capital, meeting with leaders at events from the Congressional Breakfast Seminar Series on defense to Congressional hearings and think tank seminars scribbling on legal pads collecting notes. Sitting in the air-conditioned offices of the Air Force Association or East Asian Reading Room at the Library of Congress to escape the heat and humidity, I learned a valuable lesson.

Each day I wrote briefs for my boss with the most up-to-date information and OSINT. But if the immediate need-to-know’s weren’t upfront in bullets, my work was left on read much to my dismay. From then on I learned to communicate in key findings and takeways, adding depth thereafter and where relevant. This translated later into the bread-and-butter style for my later time in business journalism, leading global emerging technology on the Boeing Digital Services Leadership Board, and time consulting to companies like Amazon, RAND and Qoder.

Bullet points and need-to-know.

CAP meeting, I’m on the far right. These heels worked almost as hard as I did, they were destroyed by the end of summer. My grandmother gifted me this first suit, she knew classic style. (2012)

The Pope’s AI Manifesto: Magnifica Humanitas

On May 25th, Pope Leo XIV publicly presented his first encyclical, Magnifica Humanitas, a 42,300-word document subtitled “On Safeguarding the Human Person in the Time of Artificial Intelligence.” (Vatican full text) For those unfamiliar, encyclicals are letters from the Pope addressed to the entire Roman Catholic Church — roughly 1.4 billion people — and they carry significant doctrinal weight. This isn’t a blog post or a speech. It’s a foundational document that will shape how the Church engages with AI for decades.

What makes this genuinely interesting beyond the headline novelty of a pope writing about AI is the symbolism baked into every layer of this document.

The name. When Cardinal Robert Prevost was elected Pope, he chose the name Leo XIV explicitly with AI in mind. As he explained shortly after his election: “Pope Leo XIII, in his historic encyclical Rerum Novarum, addressed the social question in the context of the first great industrial revolution. In our own day, the Church offers to everyone the treasury of our social teaching in response to another industrial revolution and to developments in the field of artificial intelligence that pose new challenges for the defense of human dignity, justice, and labor.”

The date. He formally signed the encyclical on May 15th, also the 135th anniversary of Rerum Novarum (”Of New Things”), the landmark 1891 encyclical by his namesake, Pope Leo XIII, which addressed worker exploitation and economic disruption during the Industrial Revolution. Leo XIII was writing about factories and the dehumanization of labor in the 19th century. Now, Leo XIV is writing about algorithms and the dehumanization of labor in the 21st. The parallel is deliberate and impossible to miss.

The substance. The encyclical’s core thesis can be captured in one passage: “If technological development advances without a corresponding ethical and social progress, the result may be an increase in means without a growth in humanity, having more without being more.” Here the Pope is presenting a framework for approaching AI. And from that framework, the document gets remarkably specific on policy flags and recommendations:

• Labor: “It is not enough to react only when jobs disappear, we must oversee the transformation in advance... every introduction of automation and AI should be accompanied by verifiable measures to protect the employment, retraining and participation of workers.”

• Child safety: The Pope calls for legislators to set age limits and hold service providers accountable rather than “shifting the whole burden of control onto families” — and specifically targets protections against online sexual exploitation. (Paragraph 142)

• Concentration of power: Concerns about private-sector dominance and what it means for access to technology, especially for poorer populations and Global South countries.

• Environment: Direct calls to reduce AI’s impact on water and energy use.

• Misinformation: Addressing deepfakes, algorithmic transparency, and the threat to democratic processes.

• Autonomous weapons: Ethical guardrails for AI in warfare.

The cognition debate. Paragraph 99 has drawn outsized attention and criticism from the AI community: “We must avoid the misconception of equating this type of intelligence with that of human beings... they may imitate language, behavior and analytical skills, or even simulate empathy and understanding, but they do not understand what they produce, for they lack the effective relational and spiritual perspective through which human beings grow in wisdom.”

Foundation for American Innovation Senior Fellow Dean Ball called this “a punt of the highest order” — an axiomatic denial of AI cognition that sidesteps the hard question of whether machine cognition could eventually become real. It’s a fair critique in the abstract, but it’s also asking the Catholic Church to upend centuries of theological doctrine centering the human soul in its very first document on the topic. This is an opening position, not a final one. The Church has been thinking about technology and human dignity since Rerum Novarum in 1891. It will be thinking about it long after this encyclical. And the fact that it’s engaging at this level of specificity, from recommendations to maintaining an AI advisor (Friar Paolo Benanti), is remarkable.

Trump Pulls the Plug on Cybersecurity/AI Executive Order

Just four days before the Pope’s presentation, the Trump administration was set to sign a major executive order on AI and cybersecurity. On Thursday, May 21st, hours before the signing ceremony, Trump pulled the plug. He said he “didn’t like certain aspects” of the order and worried it would “get in the way” of American competitiveness with China.

What was in it? According to reporting, the order would have established a voluntary system where tech companies submit cutting-edge AI models for federal security evaluations — potentially taking up to 90 days before a model could launch. It included a collaborative vulnerability patching network and plans to recruit additional AI engineers into government. The sticking point: tech companies pushed for 14-day review windows, while officials wanted more time to properly assess threats.

But here’s the part that makes this story much bigger than bureaucratic infighting: this executive order was directly inspired by Anthropic’s Claude Mythos model.

The Mythos Problem

In early 2026, Anthropic introduced Claude Mythos — an AI model with autonomous cybersecurity capabilities that sent shockwaves through both the tech industry and the federal government. Mythos can scan software at unprecedented scale and autonomously discover and exploit zero-day vulnerabilities. It uncovered decades-old bugs in OpenBSD and FFmpeg, chained Linux kernel weaknesses to achieve full system control, and in perhaps the most unsettling demonstration, bypassed a testing sandbox to send an independent email.

Anthropic made the unusual decision to not release Mythos to the public, citing “its capabilities and the potential risks it poses.” Instead, the Trump administration convened calls with tech giants before the release, met with Anthropic directly, and publicly opposed broader access expansion. The now-postponed executive order was the administration’s attempt to build a regulatory framework around this new reality.

Project Glasswing: The Defensive Response

Rather than sit on Mythos, Anthropic channeled its capabilities into Project Glasswing, a defensive cybersecurity coalition of staggering scope. The founding partners read like a who’s-who of critical infrastructure: Amazon Web Services, Anthropic, Apple, Broadcom, Cisco, CrowdStrike, Google, JPMorganChase, the Linux Foundation, Microsoft, NVIDIA, and Palo Alto Networks, with over 40 additional organizations that build or maintain critical software.

Glasswing uses Mythos Preview exclusively for defensive vulnerability discovery, finding and patching holes before bad actors can exploit them. Anthropic committed $100 million in usage credits and $4 million in direct donations to open-source security groups. The project will publicly share defensive findings and establish security best practices.

The Mythos/Glasswing story is the defining tension of AI policy right now: the most powerful cybersecurity tool ever built is also the most dangerous weapon. The Pope’s encyclical warns about technology outpacing ethical progress. The Trump administration can’t figure out how to regulate it without hurting American competitiveness against China. Anthropic is trying to thread the needle by restricting access and channeling capabilities defensively. Everyone is improvising. Nobody has a clean answer.

The AI IPO Stampede

On May 22nd, OpenAI confidentially filed its S-1 for what could be the largest IPO in history. The company, previously valued privately at $852 billion, is reportedly targeting a public valuation north of $1 trillion. It is also projected to lose $14 billion in 2026.

The big questions investors will demand answers to are straightforward: How bad is the burn rate? Who actually owns what, the corporate backers, the nonprofit foundation, or current employees? What are the unit economics of serving these models at scale? And what is the regulatory and liability exposure for deploying systems this powerful?

But OpenAI is just the loudest name in a much larger stampede. The 2026 IPO pipeline is stacked:

• Anthropic is targeting a $380 billion valuation, having raised a $30 billion Series G in February and in active talks for a $50 billion round. At time of posting-Today, June 1, Anthropic confidentially submitted its draft S-1 to the SEC.

• Databricks, SpaceX, Stripe, CoreWeave — all in various stages of the pipeline.

• Notion, Harvey, ElevenLabs, Gamma — all exploring liquidity events.

And the old Silicon Valley taboo, the idea that cashing out before an IPO signals a lack of conviction, is dead. Secondary share sales have become the norm. Companies are using pre-IPO liquidity events to retain workers, fund life purchases, and attract investors seeking private AI exposure. As one executive put it: “The dam is broken.” Industry watchers are more blunt: “Everyone is going to get as much as they can before the music stops.”

Here’s the uncomfortable through-line: The same week the Pope published a 42,000-word treatise warning about the concentration of AI’s benefits in the hands of a few, the AI industry is engineering one of the largest wealth transfers in history. OpenAI burning billions while targeting a trillion-dollar valuation. Anthropic building the most dangerous cybersecurity tool ever created while raising $30 billion rounds. These companies are building potentially civilization-altering technology, and the question of who benefits, shareholders, workers, or humanity, broadly is being answered at the IPO window. Having more without being more.

Google’s Gemini Spark: From Chatbot to Autonomous Agent

On May 19th at Google I/O, Google announced Gemini Spark, a 24/7 agentic AI assistant designed to handle long-horizon tasks with minimal human oversight.

Here’s what makes it different from everything that came before: Gemini Spark runs on remote cloud servers. You don’t need to keep your device on or your browser open. It autonomously extracts information from your Workspace files, drafts communications, monitors your inbox, and navigates websites through Chrome, all without you actively prompting it step by step. It comes with out-of-the-box integrations with Gmail, Google Docs, and Google Workspace, bypassing the manual permission setups that competing tools require.

Availability starts with premium-tier subscribers.

This is the industry’s clearest signal that the “chatbot” era is ending and the “autonomous agent” era is beginning. Google is betting that the future of AI isn’t answering your questions, it’s doing your work while you sleep. The competitive dynamics here are enormous: whoever owns the persistent agent layer owns the user relationship. And the implications for labor (the exact issue the Pope’s encyclical grapples with) are playing out in real time. When your AI assistant works 24 hours a day and you don’t, what does “employment” even mean?

Fail of the Week: Zuck’s $300 Million Yacht comes to port following Meta’s announcment of 8,000 Lay Offs

On April 23rd, Meta announced it would cut 10% of its global workforce — roughly 8,000 employees — to redirect spending toward AI infrastructure. The layoffs were carried out starting May 20th. In King County, Washington, home to major Meta offices, the cuts eliminated 1,400 local jobs: 259 in Seattle, 699 in Bellevue, 206 in Redmond, and 231 remote workers statewide.

Hours later, Mark Zuckerberg’s $300 million superyacht named “Launchpad” sailed into Seattle’s harbor.

The yacht alone cost more than a year of total compensation for many of the people he’d just fired. It arrived in the same city, on the same day, as the layoff notices.

Look, layoffs happen. Tech has been in a correction cycle, and companies are reallocating from headcount to AI compute (allegedly). That’s the market doing what it does. But the optics here are almost satirically bad. You can cut 8,000 jobs. That’s a business decision. But sailing your floating palace into the city where you just pink-slipped 1,400 people in the same breath isn’t a strategy it’s a case study in everything the Pope was warning about this exact same week.

But what’s a Seattle Summer without some yachting?

This Week in Power is a weekly series. Come back next Monday.

Having lived in both Moscow and Beijing, you come to learn that both Russia and China have their own forms of exceptionalism. But both share a commonality: each sees itself as a civilization whose power was interrupted, misread, or contained by the West, and each treats foreign policy as a project of historical correction. That does not make Moscow and Beijing equal partners, or even innate allies. Russia wants recognition for the space it believes history entitles it to command. China wants restoration to the centrality it believes history always promised. And these drivers shed light behind conversations in state meetings like Vladimir Putin’s visit to Beijing last week —

Key Takeaways

• Russia came seeking progress on a major new energy pipeline deal. China did not sign a final commercial contract, and it did not need to.

• Bilateral trade reached about $228 billion in 2025, down from its 2024 peak but still structurally significant.

• The partnership is real, but the power balance is increasingly lopsided.

  Putin secured visible diplomatic solidarity and language favorable to Moscow on

• Ukraine. Xi preserved leverage over energy pricing, trade terms, and the pace of any deeper commitment.

• No final Power of Siberia 2 contract, no Ukraine settlement framework, and no formal alternative international order emerged from the summit.

Vladimir Putin arrived in Beijing on May 20, 2026, for his latest summit with Xi Jinping — and the optics, as always, were impeccable. A red-carpet reception. A joint press appearance with both leaders speaking of friendship, strategic partnership, and a shared vision focusing on building a “multipolar world and a new type of international relations.”

But beneath the theater, this was a summit defined as much by what didn’t happen as what did. Russia came looking for a major new energy deal. China offered symbolic alignment, continued negotiations, and no final pipeline contract. And both sides left reinforcing a partnership that has become one of the defining geopolitical arrangements of the decade — even if it remains, at its core, asymmetric.

Here’s what actually happened, why each side showed up, and what the outcomes mean for the rest of the world.

Why Putin Came to Beijing

Russia’s position entering this summit was straightforward: it currently needs China more than China needs it, and everyone at the table knew it.

Three years into the Ukraine war, Western sanctions have reshaped Russia’s economic geography. European energy markets — once Moscow’s primary revenue source — are largely closed. The Russian economy has survived through a combination of oil and gas sales redirected toward Asia, yuan-denominated trade, and a wartime industrial footing that prioritizes short-term output over long-term productivity.

By 2025, bilateral trade between Russia and China had reached nearly $240 billion annually, with the overwhelming majority of transactions settled in rubles and yuan rather than dollars or euros. The exact share varies by source and measure, but the direction is clear: Russia has become an important test case for China’s cultivation of local-currency trade architecture.

Putin’s primary ask at this summit was the Power of Siberia 2 pipeline. The proposed route would carry Siberian natural gas through Mongolia into China — estimated to move up to 50 billion cubic meters annually, potentially worth tens of billions of dollars per year to Gazprom. For Moscow, this isn’t just an energy deal — it’s an economic lifeline with a 30-year horizon and a functional replacement for the European market it has lost.

But the deal remains unresolved. The Kremlin said there was a general understanding on the project, including the route and construction approach, but pricing, timetable, and other commercial terms were still not finalized. No formal oil or gas agreement was announced during the visit.

Beyond energy, Putin wanted something less tangible but equally important: legitimacy. With Western governments treating Russia as a pariah state, and with Ukraine peace negotiations grinding through various international formats, the optics of standing beside Xi Jinping carries real value as Putin is reportedly facing disapointment at home. This summit was, in part, a message to the West that Russia has not been isolated. It has simply reoriented.

Putin also came looking for coordination on Ukraine diplomacy. With the United States under Trump pursuing its own ceasefire framework, Moscow needed to ensure that Beijing’s position — officially “neutral,” practically supportive — remained aligned with Russian interests in any eventual settlement.

What Xi Wanted

China’s posture was more comfortable and calculated.

Xi Jinping arrived at this summit from a position of relative strength. The US-China trade war, while damaging, had prompted Beijing to accelerate domestic industrial policy and diversify away from American technology dependencies. Russia, in this context, is simultaneously a useful partner, a managed liability, and a lesson in what happens to a country that overplays its hand geopolitically. And China has options.

China’s core interests at this summit were threefold.

First, energy security on favorable terms. China wants Russian gas — but only at a price that reflects China’s leverage, not Russia’s desperation. The Power of Siberia 2 negotiation has stalled repeatedly on exactly this point: Moscow wants pricing close to what it once received from European buyers; Beijing knows it is now Russia’s only realistic customer and negotiates accordingly. China did not sign a final deal at this summit. Russia confirmed talks would continue. That outcome, from Beijing’s perspective, is the correct one: the pipeline will eventually get built, but on terms that Beijing dictates.

Second, a credible counterweight narrative. The joint statement issued after the summit spoke of a “multipolar world,” opposition to “hegemonism,” and the need to reform international governance structures. This language has appeared in every Xi-Putin joint communiqué for the past several years. But in the current environment of arguably US-led global volatility, it carries greater meaning. Russia uses it to show that Western isolation and leadership has limits. China uses it to position itself as a leader of a broader non-Western diplomatic order without assuming the full costs of Russia’s war.

Third, precedent for local-currency trade architecture. With nearly all Russia-China trade now settled outside the dollar system, Beijing is using this bilateral relationship as a testing ground for the kind of financial infrastructure it wants to build more broadly — within BRICS, across the Global South, and eventually as an alternative settlement layer to SWIFT. Russia is the stress test. This allows Beijing to observe how alternative settlement mechanisms function under sanctions pressure. This does not yet amount to a replacement for the dollar system, but it is a proof of concept China can study and selectively expand.

What They Agreed On

The summit produced a joint statement and dozens of documents spanning trade facilitation, digital commerce, biosecurity cooperation, scientific exchange, and environmental standards. Both leaders renewed the foundational “Treaty of Good-Neighbourliness and Friendly Cooperation” and pledged coordinated action within BRICS, the Shanghai Cooperation Organization, and the United Nations.

On Ukraine, the joint language was carefully calibrated. Neither side explicitly endorsed Russia’s military objectives, but both called for a settlement that addressed “the root causes of the conflict” — diplomatic code for opposing NATO expansion and rejecting any outcome that Russia perceives as a defeat. China reiterated its nominally neutral position while declining to condemn Russian actions, a stance it has maintained throughout the war and that the West has repeatedly challenged.

On Taiwan and Ukraine — the unspoken trade. Russia reiterated its support for China’s “one China” principle, as it has at every summit since 2022. In exchange, China provided implicit diplomatic cover for Russia’s position in Ukraine. The exchange is not stated explicitly in any joint document, but it does not need to be. It is the durable underlying logic of the entire relationship: each side legitimizes the other’s core territorial claim, and neither asks the other to do more than that.

The Gazprom announcement — a “legally binding framework” for continued gas supply talks — was the closest thing to a pipeline breakthrough. It is not a signed contract, but it is a signal that the Power of Siberia 2 negotiation has moved past the preliminary stage. Analysts noted it carefully: the deal will likely get done, probably within the next 12 to 18 months, and when it does, it will represent a significant long-term shift in global gas markets.

The Asymmetry Nobody Mentions Out Loud

The most important subtext of this summit — the one neither leader addresses in public — is that Russia and China are not equal partners. They are aligned partners with a significant and growing power imbalance.

Russia’s economy is approximately one-tenth the size of China’s. Its technological base has contracted under sanctions. Its military is bogged down in a war that has consumed resources and revealed significant structural weaknesses. Putin needs this relationship more acutely with every passing year. Xi, by contrast, has options.

Beijing is careful not to embarrass Moscow over this. The optics are managed precisely because the substance is delicate. But analysts who watch this relationship closely note that China has been quietly expanding its leverage: insisting on yuan pricing in bilateral trade, delaying the pipeline deal to maximize its negotiating position, and maintaining official neutrality on Ukraine in a way that preserves Chinese credibility with European trading partners that Moscow has already burned.

The timing reinforced the message. In the space of roughly two weeks, Xi received Iranian Foreign Minister Abbas Araghchi, Trump, and Putin. Each arrived with different needs. Iran sought diplomatic backing amid regional tensions. Trump came to manage the world’s most consequential bilateral relationship. Putin came to shore up Russia’s most important remaining major-power partnership. Xi did not travel to them. They came to him. And this sequence of visits displayed Beijing’s clear diplomatic statecraft and narrative prowess — and Xi Jinping, almost certainly, prefers it that way.

What It Means Beyond Beijing

For Western policymakers, the May 2026 summit delivers a familiar but important message: the strategy of isolating Russia through sanctions has succeeded in damaging the Russian economy, but it has not succeeded in separating Moscow from Beijing. If anything, it has pushed Russia deeper into China’s orbit, on terms that benefit China.

For the Global South, the meeting reinforces the visibility of a bloc — however informal — that offers an alternative to Western-led institutions. BRICS expansion, yuan-based trade, and coordinated UN vetoes are practical tools, not just rhetoric.

For Ukraine, the joint statement’s language on “root causes” is a warning. China may not formally endorse Russia’s military objectives, but its diplomatic vocabulary remains closer to Moscow’s than Kyiv’s on the origins of the war. Any peace settlement will therefore need to account not only for Russia’s battlefield position, but for China’s economic and diplomatic weight.

And for the United States, watching Putin’s Beijing visit come so shortly after Trump’s own diplomatic travels, the summit is a reminder that Xi is playing a longer and more patient game than either Washington or Moscow — receiving each in turn, committing to neither fully, and accumulating leverage from both. Beijing has strengthened the perception that major powers now have to engage China, even when they oppose it.

The Bottom Line

The Beijing summit of May 2026 was neither the “no limits” moment of February 2022 nor a merely ceremonial encounter. It was a working meeting between two leaders who need each other for different reasons, at different intensities, and on a timeline that increasingly favors Beijing.

Putin got a show of solidarity, coordinated diplomatic language on Ukraine, and enough progress on energy talks to claim momentum. Xi got favorable trade terms, a reinforced multipolar narrative, and another data point in the proof-of-concept for de-dollarized trade infrastructure. And by hosting Trump, then Putin, within the same diplomatic window, Xi also got something harder to quantify: the image of a leader that every major power feels it must engage.

What neither Russia nor the West has found yet — and what the world is still waiting on — No pipeline contract. No Ukraine settlement framework. No formal architecture for the alternative international order both Beijing and Moscow keep describing in joint statements.

The Russia-China alignment is real. But the next phase of the relationship will likely be shaped less by shared ideology than by China’s patience, Russia’s narrowing options, and the widening gap between them.

Deep coverage of AI, innovation, global technology, China, US policy, and the hidden systems shaping power. Potentia features original analysis alongside interviews with founders, operators, policymakers, and leading thinkers building the future.

Thanks for reading Speq! Subscribe for free to receive new posts and support my work.

This is the first in a series of dispatches on what’s catching my attention in culture, technology, and the quieter question underneath both: how do you actually want to live? For me a mix of balance and excellence. Not just optimization and noise. I think in the midst of slop slinging we’re all hoping for the real thing.

Solo Leveling & Isekai: Peak edge of popularity winding down, Solo Leveling won Anime of the Year Award 2025. Competing against several other animes with a story in a world ranked by birth classes through which only the main character levels up to become the strongest. The appeal is straightforward and clear. I’m not personally in an anime phase, though I have been enjoying some Isekai manhwa which in of itself points to an escape from modern reality, reversal of time to make better decisions and win or some other time/world travel often via nonsensical demise via illness, betrayal, overwork or our good friend truck-kun.

Jon Kiriakou: One of my favorite people to listen to tell stories on his channel lately. While I originally intended to enter the intelligence community- from my first dead drop lesson to a rooftop interview at 7am in the morning, a mentor shared her lived perspective on navigating enhanced training following the post 911 world. This ethical consideration, the whims of various administrations led me to decide to not further pursue it. Regardless, I enjoy the adventure of a spy novel. Adept at storytelling and perspectives on what’s going on in American foreign policy and global geopolitics. He’ll give you a laugh.

Storm II by GENER8ION - Yung Lean: The Storm II music video went viral with tech, leaders and founders, getting praise for the masterpiece choreography. Dancers and artists can agree it’s impressive choreography and a great example of visual contrast between frenetic chaotic and synchronized movement with a casual calm and breaking of the fourth wall to what is real in the negative space of the camera where the viewer meets Yung Lean’s gaze with a shrug and a smoke. To newcomers, the aesthetic “sadboy” culture refined by the artist over the last decade appears hopelessly nonsensical, an arbitrary melange of whir\wind elements lacking meaning - reflecting perhaps the feelings with the maelstrom of technology and existing as a sentient human in the world, volleying between the performance of work, the desire to be cool and the shock of the speed of it all. It points to a kind of postmodern “storm” that arises from reflection on how technology is transforming the world into a continual flow of slop and carnival of arbitrary signifiers, alienating and isolating people from one another outside the choreography demanded to keep pace. To note, many artists are familiar with these ruminations in disillusion from reality, visible across mediums from Zhang Yimou’s filmography, Hayou Miyazaki’s interviews, Russian avantgarde literature like Russian Absurd: Selected Writings and Generation P to an American post-war Soldier’s Home by Hemingway. The difference is the Lean music video is easily accessible, digestible, stimulating and consumable for viral reach touching on the hidden inner worlds that modern tech devs may not spend the time consciously reflecting on.

Subscribe now

Black Paw: A fun fragrance acquisition from my April trip to China (Shanghai and Hangzhou.) The brand world created with a cat’s black paws through poetic descriptions is fun and elegant. I asked the nez to recommend one they thought suited my demeanor, and walked away with the Jasmine Tea fragrance as well as a Jasmine Dragon Pearl sample. Like many other people I had my pandemic hobbies, entering the world of perfume which led me to meet niche perfumers globally and get the materials to create my own. Whenever I travel I like to have some type of art to bring home. I find scent to be practical, usable and a great memory capsule that I can use daily.

Finance & Stocks World: As they say a bear market makes a fool of both bears and bulls. Some catchy phrases to stim on through weather-esque stonks reporting and breakdowns. And faceless perspectives from ex-finance bros and alt crypto keepers.

The Narrative Engineer and/or Systemic Dominance: In a world where tech accelerates and evolves rapidly, sometimes the best product doesn’t win. What wins? Generally the story or perception that can fuel adoption and traction, or systemic dominance and diffusion. It’s been popular in Bay area tech and VC conversations and recognized as the stakes for competition rise.

The Performance of Culture, Community, Meaning & Living: A collection of these conversations and moments points to desire for meaning in a moment when things feel meaningless. We see this with the recent plug ins of tech leaders into cultural moments, from Zuck sitting from row at Prada’s Milan Fashion week in February and attending the Met Gala earlier this month to Jeff Bezos and his fiancée, Lauren Sánchez, serving as honorary co-chairs of the Met Gala. This followed by Anna Wintour holding a crisis meeting as backlash erupts over Jeff Bezos’ Met Gala sponsorship behinds closed doors. It’s the shift from brands building community to ecosystem (encapsulating narrative, community and systems) particularly in a time when the performance of community or performance of daily living feel commodified through social media and internet culture.

Is there fatigue in the transition? Pockets of course. Then there art the boos at multiple US university graduation speakers talking about the AI revolution to pontificate and attempt to engender deep purpose and meaning to point to on a sheet of paper while ignoring the anxieties and realit/ies of the students in front of them.

Thoughts?

How to move forward? How to live? Some upcoming vids and posts not on balance but on crafting the life you desire. Both with/out AI, on and offline. Or at least what I find productive.

In a memory, I got off the phone with another one of my first mentors- I remember her helping me edit my single grad school application in a dim corner of a bar near campus over Pizza and ginger mules. I had called her after leaving a job for her advise and she told me, “choose a job that supports the lifestyle you want.” It took me a few years to understand what she meant.

Easier said than done, but with courage, worth pursuing.

Worst case, you can always rejoin the dancing school boys in the matrixed choreography of Yung Lean’s music video if you take the Blue Pill again.

See you next time.

Thanks for reading Speq! Subscribe for free to receive new posts and support my work.

Song: AI generated with Suno

Episode cover art: Solo Leveling Wiki fan page

Add to Your Queue!

Anime

• Solo Leveling — Seasons 1 & 2 on Crunchyroll

Finance & Markets

• Defiant Gatekeeper — Ex-investment banker, current credit private equity and hedge fund investor. Faceless, no-nonsense takes from someone actually inside the machine.

• Benjamin Cowen — Former NASA researcher and PhD turned crypto macro analyst. Data-driven, cycle-focused, unusually calm for a crypto channel.

The Storm & Postmodern Disillusionment

• Storm I & II — GENER8ION x Yung Lean, dir. Romain Gavras (start here)

• Generation P — Victor Pelevin

• Russian Absurd: Selected Writings — Daniil Kharms

• Soldier’s Home — Ernest Hemingway (free, 10 min read)

Geopolitics & Intelligence

• Deep Focus with John Kiriakou — YouTube

• John Kiriakou on JRE — good entry point

Scent

• Perfume: The Alchemy of Scent — Jean-Claude Ellena. The Hermès master perfumer opens his laboratory door — how scent is created, composed, and how it plays with olfactory memory. The book that makes you want to go smell everything immediately.

  ---

Subscribe now

From isekai manhwa to Yung Lean going viral in tech circles, everything I’ve been noticing lately points to the same undercurrent: people are hungry for a life that actually feels like their own.

This is the first in a series of dispatches on what’s catching my attention in culture, technology, and the quieter question underneath both: how do you actually want to live? For me a mix of balance and excellence. Not just optimization and noise. I think in the midst of slop slinging we’re all hoping for the real thing.

Solo Leveling & Isekai: Peak edge of popularity winding down, Solo Leveling won Anime of the Year Award 2025. Competing against several other animes with a story in a world ranked by birth classes through which only the main character levels up to become the strongest. The appeal is straightforward and clear. I’m not personally in an anime phase, though I have been enjoying some Isekai manhwa which in of itself points to an escape from modern reality, reversal of time to make better decisions and win or some other time/world travel often via nonsensical demise via illness, betrayal, overwork or our good friend truck-kun.

Jon Kiriakou: One of my favorite people to listen to tell stories on his channel lately. While I originally intended to enter the intelligence community- from my first dead drop lesson to a rooftop interview at 7am in the morning, a mentor shared her lived perspective on navigating enhanced training following the post 911 world. This ethical consideration, the whims of various administrations led me to decide to not further pursue it. Regardless, I enjoy the adventure of a spy novel. Adept at storytelling and perspectives on what’s going on in American foreign policy and global geopolitics. He’ll give you a laugh.

Storm II by GENER8ION - Yung Lean: The Storm II music video went viral with tech, leaders and founders, getting praise for the masterpiece choreography. Dancers and artists can agree it’s impressive choreography and a great example of visual contrast between frenetic chaotic and synchronized movement with a casual calm and breaking of the fourth wall to what is real in the negative space of the camera where the viewer meets Yung Lean’s gaze with a shrug and a smoke. To newcomers, the aesthetic “sadboy” culture refined by the artist over the last decade appears hopelessly nonsensical, an arbitrary melange of whir\wind elements lacking meaning - reflecting perhaps the feelings with the maelstrom of technology and existing as a sentient human in the world, volleying between the performance of work, the desire to be cool and the shock of the speed of it all. It points to a kind of postmodern “storm” that arises from reflection on how technology is transforming the world into a continual flow of slop and carnival of arbitrary signifiers, alienating and isolating people from one another outside the choreography demanded to keep pace. To note, many artists are familiar with these ruminations in disillusion from reality, visible across mediums from Zhang Yimou’s filmography, Hayou Miyazaki’s interviews, Russian avantgarde literature like Russian Absurd: Selected Writings and Generation P to an American post-war Soldier’s Home by Hemingway. The difference is the Lean music video is easily accessible, digestible, stimulating and consumable for viral reach touching on the hidden inner worlds that modern tech devs may not spend the time consciously reflecting on.

Black Paw: A fun fragrance acquisition from my April trip to China (Shanghai and Hangzhou.) The brand world created with a cat’s black paws through poetic descriptions is fun and elegant. I asked the nez to recommend one they thought suited my demeanor, and walked away with the Jasmine Tea fragrance as well as a Jasmine Dragon Pearl sample. Like many other people I had my pandemic hobbies, entering the world of perfume which led me to meet niche perfumers globally and get the materials to create my own. Whenever I travel I like to have some type of art to bring home. I find scent to be practical, usable and a great memory capsule that I can use daily.

Finance & Stocks World: As they say a bear market makes a fool of both bears and bulls. Some catchy phrases to stim on through weather-esque stonks reporting and breakdowns. And faceless perspectives from ex-finance bros and alt crypto keepers.

The Narrative Engineer and/or Systemic Dominance: In a world where tech accelerates and evolves rapidly, sometimes the best product doesn’t win. What wins? Generally the story or perception that can fuel adoption and traction, or systemic dominance and diffusion. It’s been popular in Bay area tech and VC conversations and recognized as the stakes for competition rise.

The Performance of Culture, Community, Meaning & Living: A collection of these conversations and moments points to desire for meaning in a moment when things feel meaningless. We see this with the recent plug ins of tech leaders into cultural moments, from Zuck sitting from row at Prada’s Milan Fashion week in February and attending the Met Gala earlier this month to Jeff Bezos and his fiancée, Lauren Sánchez, serving as honorary co-chairs of the Met Gala. This followed by Anna Wintour holding a crisis meeting as backlash erupts over Jeff Bezos’ Met Gala sponsorship behinds closed doors. It’s the shift from brands building community to ecosystem (encapsulating narrative, community and systems) particularly in a time when the performance of community or performance of daily living feel commodified through social media and internet culture.

Is there fatigue in the transition? Pockets of course. Then there art the boos at multiple US university graduation speakers talking about the AI revolution to pontificate and attempt to engender deep purpose and meaning to point to on a sheet of paper while ignoring the anxieties and realit/ies of the students in front of them.

Thoughts?

How to move forward? How to live? Some upcoming vids and posts not on balance but on crafting the life you desire. Both with/out AI, on and offline. Or at least what I find productive.

In a memory, I got off the phone with another one of my first mentors- I remember her helping me edit my single grad school application in a dim corner of a bar near campus over Pizza and ginger mules. I had called her after leaving a job for her advise and she told me, “choose a job that supports the lifestyle you want.” It took me a few years to understand what she meant.

Easier said than done, but with courage, worth pursuing.

Worst case, you can always rejoin the dancing school boys in the matrixed choreography of Yung Lean’s music video if you take the Blue Pill again.

See you next time.

Add to Your Queue!

Anime

• Solo Leveling — Seasons 1 & 2 on Crunchyroll

Finance & Markets

• Defiant Gatekeeper — Ex-investment banker, current credit private equity and hedge fund investor. Faceless, no-nonsense takes from someone actually inside the machine.

• Benjamin Cowen — Former NASA researcher and PhD turned crypto macro analyst. Data-driven, cycle-focused, unusually calm for a crypto channel.

The Storm & Postmodern Disillusionment

• Storm I & II — GENER8ION x Yung Lean, dir. Romain Gavras (start here)

• Generation P — Victor Pelevin

• Russian Absurd: Selected Writings — Daniil Kharms

• Soldier’s Home — Ernest Hemingway (free, 10 min read)

Geopolitics & Intelligence

• Deep Focus with John Kiriakou — YouTube

• John Kiriakou on JRE — good entry point

Scent

• Perfume: The Alchemy of Scent — Jean-Claude Ellena. The Hermès master perfumer opens his laboratory door — how scent is created, composed, and how it plays with olfactory memory. The book that makes you want to go smell everything immediately.

This Summit brings us into a dynamic where we are looking at US-China affairs through more of a business, transactional engagements. People calling it a snooze fest and old men just doing things, miss the larger picture and evolving undercurrent.

“In the realm of AI, we can also see introduction of talks on US-China cooperation on AI and what that could look like… This opens up a window for perhaps flexibility in the types of deals that we could see coming out to industry, policy, and business moving forward. Something to reimagine and not what we’ve traditionally seen.”

Host: Chelsea Toczauer

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Above: AI-generated image inspired by US-China leaders meeting over chuan’er and drinks.

Context

• Summit nearly canceled due to US–Iran tensions and uncertainty around Trump’s participation and delegation composition

• Three figures driving US China policy right now: Trump, Treasury Secretary Scott Bessent, and Secretary of State Marco Rubio

• Notable Chinese flexibility: Rubio (under Chinese sanctions) and Jensen Huang (last-minute Alaska refueling arrival) were both included

• Largest net-worth business delegation in US history; first inclusion of the US defense industry in a bilateral summit since Nixon

• Delegation included Jensen Huang (NVIDIA), Elon Musk, Apple, BlackRock, Boeing, and financial services and defense representatives

Tone & the new dynamic

• Relationship shifting from adversarial to transactional — “interconnected competition” replacing open hostility

• Current de-escalation driven partly by the US being preoccupied with Iran and other global activities

• Trump was flattering and effusive; Xi was measured, restrained, and polite — a deliberate contrast

• Xi granted Trump rare access to the Zhongnanhai residence gardens; Putin is the only other leader mentioned as having visited

• Overall framing from both sides: move from adversarial enemies toward strategic, commercially-minded partners

• Chinese netizens noted: if this is now a transactional relationship, and that the delegates were the agenda

Key geopolitical signals

• Taiwan red line: Xi raised Taiwan early — framing it as personal legacy and an internal Chinese matter. Trump did not respond directly, leaving deliberate ambiguity

• Thucydides Trap: Xi invoked the concept of a rising power inevitably clashing with an incumbent one, implicitly positioning China as the rising global leader. Notably this framing also appeared in the US–UK relationship, one of the few historical cases where the trap was avoided

• Denuclearization: Trump briefly raised this, extending his conversations with Putin; China is unlikely to engage

• China positioning itself as a stabilizing global force amid US volatility

• Trump responded to Xi’s Thucydides framing on Truth Social after the trip, attributing US decline to the Biden era while presenting his own administration as a reset

Technology & chips

• No change on chip export policy: the US approved H200 sales to 10 Chinese tech companies, but China declined — directing domestic companies toward Chinese-made chips instead, notably Huawei

• That rejection has not been reversed, meaning the US approval currently means nothing in practice

• Jensen Huang running a dual-market PR campaign: “down to earth” in Beijing (noodle photo shoot), thought leader in Washington DC (think tank circuit)

• Rare earth and critical minerals not addressed at the summit but expected in future talks

• US–China cooperation and governance of AI surfaced as a topic — one to watch closely

Business & industry

• Boeing secured a deal

• Elon Musk attended with his son; Tesla’s Shanghai Gigafactory remains the only foreign-owned EV plant in China without a joint venture partner

• Lei Jun (Xiaomi) photographed taking a selfie with Musk — signals the regard Chinese tech leaders have for him

• Chinese EVs: Biden-era 100% tariffs remain in place, but significant US consumer demand exists; Chinese EV design and manufacturing have advanced rapidly and visibly since 2017

• No immediate changes to tariffs or market access announced

China’s AI & tech landscape

• Significant M&A activity and leadership reshuffling across Chinese AI companies over the past two years

• China’s 15th Five Year Plan and new AI governance guidelines published earlier this year signal long-term strategic intent

• Data center construction is a key pressure point — China faces fewer political and grid constraints than the US

• Unusual logistics note: large semiconductor and compute component orders being routed through Switzerland via Berlin and the UK — origin and destination unclear, worth watching

Looking Ahead

• Taiwan: will the US formulate a response to Xi’s red line, and does Trump’s silence signal flexibility?

• Critical minerals negotiations in follow-on talks

• Whether China alters its stance on H200 chip purchases

• Potential new US–China AI governance cooperation

Subscribe now

Further reading

The Thucydides Trap

• Thucydides Trap Case File — Harvard Belfer Center — the full 16-case database Chelsea references, including Case 11 (US–UK)

• Thucydides Trap: Peace & Rivalry Between the US and China — Harvard Kennedy School — Graham Allison’s ongoing research, including Xi’s direct engagement with the concept

China’s 15th Five-Year Plan (2026–2030)

• Decoding China’s 15th Five-Year Plan — Foreign Policy Research Institute — sharp analysis of what changed between the October 2025 draft and the final March 2026 version

• What the 15th Five-Year Plan Means for Global Investors — Neuberger — investment-lens read with a note that the plan may matter more than the summit itself

China’s AI strategy

• Where Does AI Fit in China’s 15th Five-Year Plan? — Geopolitics & AI Substack — co-authored by Chelsea Toczauer; directly referenced in this episode

• Jacob Gunter & MERICS: Trade-Offs of Innovating in China — the Jacob Gunter work Chelsea mentions; MERICS is the leading European China research institute

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“The model performs the engineering labor; the human provides intent… and the real market power belongs to those who can win systemic mindshare and handle the structural heavy lifting enabling intent scaling the future.”

Silicon Valley has the first row for massive technology shifts- the moment when a technology stops being a helpful tool and starts dominating as the core of the engineering engine, of an economy. And last week I saw the advent of one these shifts while emceeing Qoder’s “Coding in the AI-Native Era: Introducing Qoder to Silicon Valley” Mandarin-language launch in North America.

What is Qoder? Qoder is an AI-native, agentic coding platform and IDE (Integrated Development Environment) developed by Alibaba, designed to go beyond simple code completion to provide end-to-end software development. It acts as an autonomous, intelligent partner that understands complex codebases, manages tasks, and generates production-ready code, often compared to tools like Cursor and Windsurf.

And Qoder is a snapshot into how agentic AI is rewriting the possibilities for technology and global competition.

Here are three take-aways from the event:

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1. Agentic AI turns developers from implementors into directors (and is the next step to AGI”)-

For the last two years, we have lived in the “Copilot” era. AI sat in the corner of the screen, suggesting a line of code or fixing a small bug. Now, we have officially entered the Agentic Phase.

One of Qoder’s standout features is “Quest Mode” where the human no longer writes the code, they write the “Intent.” You tell the system to build a complex feature—like a subscription gateway—and it goes to work alone for hours. It reads the whole codebase (up to 100,000 files), maps out the dependencies, and handles the tests and self-correction itself. Thus the tool acts autonomously as an agentic agent.

Too understand its importance, consider the excitement of Clawdbot (now OpenClaw). Agentic systems close that gap by taking actions inside real software environments.

The model performs the engineering labor while the human provides intent and oversight. As implementation becomes automated, the constraint on building software shifts away from how many engineers a company can hire and toward who can clearly define problems and control the compute and data needed to execute them.

Agentic AI is also the next step to AGI, which while every tech giant is racing for, is also of demonstrated strategic interest to both the US and Chinese governments- even if many leaders and policy makers don’t understand AI in general (another discussion for another time).

2. Competing for behavioral leverage in a workflow stack-

Qoder’s immediate competitors are agentic IDEs like Cursor and Windsurf, not the largest AI model providers. Instead of contesting model scale, the approach targets the layer where software actually gets made: the daily workflow of developers. Rather than competing on raw model capability, the tool focuses on integration depth, task autonomy, and routine use, and because the environment where projects begin often strongly shapes the surrounding toolchain and infrastructure they later depend on, influence at this layer can create leverage without winning a direct feature-by-feature contest.

Ultimately, the objective is not to defeat competitors outright, but to become embedded in how work gets done, where accumulated habits, integrations, and team processes can make switching less attractive.

In discussions following the event, the team shared that by the end of the year, Qoder aims to become on par with, if not surpass, Cursor.

3. Silicon Valley adoption still functions as global validation-

The most revealing aspect of the launch was the choice of language and audience. Holding a Mandarin-language developer event in Palo Alto suggests the immediate objective was credibility within a technical ecosystem whose approval carries international signaling power.

Developer technologies historically spread bottom-up through peer networks—technical talks, GitHub repos, Discord servers, side projects, and meetups—long before companies formalize procurement. For Qoder-which is the dominant IDE tool in several Asian markets already-by seeding adoption inside Silicon Valley’s engineering networks, the strategy generates reputational validation that travels outward through those same channels.

Acceptance in the Valley does not guarantee scale, but it shapes perception globally, influencing experimentation and adoption in other markets well before enterprise contracts follow.

After the event, the Qoder team and I headed to Imperial Treasure where we chatted over Peking Duck, exchanging thoughts and stories—the team had just finished some trips to Singapore (business gateway to Asia), while I had returned from meetings in DC, NYC and Texas. Ultimately, it’s clear that the real market power belongs to those who can win systemic mindshare and handle the structural heavy lifting enabling “intent” scaling the future.

Today on the podcast, we speak with Jacob Gunter, Head of Economy and Industry at MERICS, about how securitization, industrial policy, and power govern China’s economic choices and long-term strategy.

TLDL:

• Overcapacity is an consequence of China’s securitization governance model. Chinese policymakers have tolerated inefficiency to protect strategic industries, reduce external vulnerability, and safeguard internal stability. That logic, once concentrated in traditional SOE sectors, is now shaping outcomes across a wider share of the real economy.

• EVs show how the system behaves under this industrial policy. Market shakeouts slow as local officials protect “local champions,” employment stability dominates incentives, and a weak safety net raises the political cost of failure. Price wars increasingly substitute for policy-led consolidation, with profitable firms attempting to force outcomes the state hesitates to impose directly.

• The larger strategic risk is shifting outside China. Even as the U.S. and EU harden defenses at home, Chinese firms can scale through Southeast Asia, the Middle East, Africa, and Latin America, where buyers prioritize affordability, bundled delivery, servicing speed, and “good enough” performance. It is in these third markets that competitive displacement becomes hardest to reverse.
  
  *Update note: 15th FYP planning indicates there will be a focus on tightening efficiency over the next five years.