We continue part two of this topic with the first two paragraphs of the early 2025 Wall Street Journal article, which act as a summary of the piece: “Chinese hackers had gained the ability to shut down dozens of U.S.ports, power grids, and other infrastructure targets at will,” Jake Sullivan told telecommunications and technology executives. This statement was delivered during a secret meeting at the White House in the fall of 2023, according to people familiar with it. The attack could threaten lives, and the government needed the companies’ help to root out the intruders. What no one at the briefing knew, including Sullivan: China’s hackers were already working their way deep inside U.S. telecom networks, too. Why China’s remarkable cyber skills had been hidden from the public is anyone’s guess. Why the article appeared more than four years after Nicholas Challan had quit the Pentagon is also a guess. But if we were forced to bet, I’d say it was meant to signal that it’s time to stop hating Russia and focus instead on China, which is the real enemy. Unfortunately, that horse left the barn more than four years ago, and the barn has disappeared from sight.
In a recent blog, we argued that China had positioned gold to replace the dollar as the center of the world’s – or at least the bulk of the world’s – trading infrastructure. The problem was that they did not want to turn the switch too fast for fear of cratering the U.S. economy – an event that would likely harm all world economies. As a result, while Chinese gold vaults have been appearing major trading centers, including Hong Kong, Singapore, and very likely Saudi Arabia, the rhetoric around gold has been toned down. Indeed since we penned those words, the gathering of BRICS countries came and went in Brazil. If you can find gold mentioned even once during those several days, you are a better word spotter than we are. China can also play the omissions game – and they play it very well.
Trump’s Retreat and the Quantum Edge
Further, The Financial Times recently gave President Trump the sobriquet “TACO” in reference to Trump always chickening out. Maybe so…but maybe that’s because the president is no longer on the omissions list and has come to know that military confrontation with the Greater South puts U.S. military shortcomings on full display. From cyber skills to hypersonic missiles, the race for military supremacy has been lost. The pragmatic – indeed – only course is cooperation. And we believe that the president – despite his bluster – is not a man of war; especially wars that in the end could only bring shame upon our country.
China no doubt is aware of Trump’s new knowledge. His tough talk about uber tariffs on China has softened dramatically. Still – though hard to believe – there are still many Washington heavy weights that just don’t get it and are insisting that the president stand firm against China. Our strong guess is that the Microsoft outage was a shot across the bow to wake up those who refuse to give up on the idea that America rules the world and that the only path to take involves all out confrontation.
We conclude with comments about an interview with Huawei chief Ren Zhengfei, which was
recently published in Asia Times. Yet the same web letter that published that peculiar interview about why the yuan could never replace the dollar and seems to be necessary reading for decoding China’s subliminal messages to the U.S. Reading through the interview you get the impression that Huawei is just another company trying to keep up in AI with other Chinese companies. Moreover, China itself is still a generation behind the U.S. in chip technology and has to work especially hard in mathematical workarounds to keep up. But if you go back to the beginning of the article you find a comment that stands in marked contrast with the rest of the article. Ren notes:
“There’s actually no need to worry about the chip issue. By leveraging methods such
as superposition and clustering computational results can match the most advanced global
standards.”
The word superposition is not a word that applies to classical physics but is foundational in the the quantum realm. We will save a full discussion for another blog, but if they are leveraging superpositioning, their skills in this area are well beyond those of Nvidia and others in the U.S. This may answer the vexing question of why the head of Nvidia is spending so much time in China. He is no doubt keenly aware the road to further gains in AI will be through cooperation with China, not in confrontation.
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