Deadly Leverages

The fortnight ended on October 24, 2025, interesting news items to look at from the past two weeks are:

1. Deadly Leverages: In my previous Blog I mentioned China has now moved on the offensive and for the past two weeks, news of US and China crossing swords had really made our heads spin. As far as my understanding goes, China would not abruptly legislate new “hostile” measures without first intimating to US negotiators what China’s response to new attacks by US. The reason, China does not want to be a Hegemon like the Anglo American Empire with the associated costs and responsibilities. History and experience had taught the Chinese that empires do not last. When one sheds blood, a cycle of revenge and animosity can span multiple generations.  Hence the Chinese negotiators repeatedly use the phrase “打,奉陪到底,談,大門敞開” (Chose Fight - we will see who last, Talk - the door is always wide open). (Fig. 1).

So let’s see in chronological order recent sparks in the US-China conflict:

(i) April 17, 2025 US imposed port levies against Chinese linked vessels effective from October 14, 2025. This was part of the extreme pressure tactics arising from Chinese counter measures on Liberation Day Reciprocating Tariffs. (Fig. 2)

(ii) July 3 2023 China announced new export licensing requirement for gallium and germanium, effective from August 1 2025. (Fig. 3)

(iii) September 19 2025 Trump proposal to meet Xi in APEC in South Korea.

(iv) September 30, 2025 US Bureau of Industry  and Security published an interim final rule which explicitly impose export-control restrictions to foreign entities that are 50% or more owned by parties on the Entity List, MEU List (Military End User List) or SDN list (Specially Designated Nationals and Blocked Persons list). (Fig. 4)

(v) October 9, 2025 China announced further export control of rare earth & critical minerals effective December 1, 2025

(vi) October 10, 2025 China retaliate on US linked ships with Port levies arising from US April 17 levies on Chinese linked vessels.

(vii) October 12-14, the Dutch government takes control of Nexperia, a wholly owned subsidiary of Wingtech Technology, listed in Shanghai. The Dutch government used an antiquated national security law from the Cold War era to seize Nexperia on grounds of national security. Netherlands Court papers showed the Dutch government was following the prompting of the US Government. Nexperia is the former Standard Products business unit of NXP Semiconductors (previously Philips Semiconductors). The company's product range includes bipolar transistors, diodes, ESD protection, TVS diodes, MOSFETs, and logic devices. Nexperia is a key supplier to the car industry but does not have cutting edge technologies per se. In 2017, Chinese interests at arms length and market value acquired Nexperia in a near bankrupt state from its Nasdaq listed parent NXP Semiconductors. (Fig. 5)

(viii)  October 19 2025 US Cyber attack on China National Time Service Centre. Once the fixing of National Time is interrupted, most systems using time as a reference will fail such as navigation, military, power, banking and e-commerce. (Fig. 6)

(ix)  October 22 2025, The China-based subsidiary of embattled Dutch semiconductor maker Nexperia said it now operates as an independent company defying Dutch government sponsored management control and making the attempted takeover ineffective as substantive operations and assets of Nexperia are in China. Nexperia

To understand where all of the above will lead to, one must appreciate China is welding rare earth as the ultimate “Tai Chi” leveraged throw and knock out blow to bring the West to compromise. The total value of Chinese annual rare earth metal sales is only $2.5 to $5 billion but with it, the destiny of $7 trillion high tech industry is at stake. Rare earth is actually not rare so the ore part can easily be found. It is the Chinese refinement process and technique that makes it impossible to replace. In particular, some rare earth metals like gallium is a by-product of of aluminium refining, germanium is a byproduct of zinc and coal processing and with it, industry scale and low cost electricity comes into play. Signing a minerals deal with Australia is for show and students of geom-politics all know too well. China is using a mirror tactic of the US Foreign Direct Product Rule (FDPR) to force the Western alliances to the negotiation table. In the absence of trust and good faith, both sides can only resort to power and resiliency as bargaining chips. Where as FDPR leverages on US technology, software or equipment in upstream industrial process to put a choke hold on Chinese applications, China has now gone further upstream to apply the ultimate choke hold to render US technology, software and equipment redundant by resource control. In the days, weeks and months to follow, we will witness first hand all 7 stages of grieve that the Anglo American Empire will display before they come to terms the uni-polar world is finished. These 7 stages are shock, denial, anger, bargaining, depression, testing, and acceptance. Officially the Chinese FDPR does not come into effect until December, that means China will allow time for US to understand and work out what fortification and sacrifices is necessary for an orderly retreat. Once the rare earth sword is unsheathed, Western posturing and threats would not add weight in negotiations. China will not use rare earth to strike the civilian economy but will hang like a Sword of Damocles as a safe guard against treachery and aggression.   

There is a world of difference between US and China in their Methods and Tactics. Methods are the overall plans or approaches to achieve a goal, while tactics are the specific, short-term actions taken to implement those methods. For China to stand tall after the hundred year humiliation and a ruined economy, Mao Tsetung forbore a US embargo of 22 years and sacrificed over 300,000 Chinese volunteers in the Korean War to stop advances of the mighty and well equipped US Military. Subsequent Chinese leaders suffered the disgrace and threats of two mere Aircraft carriers in the Taiwan Strait  in 1996 to silence China’s protest against a Taiwan pro-independence movement. Then in 1999 the US bombing of Chinese embassy in Belgrade just to bury the wreckage of a US stealth bomber so that China may not reverse engineer the stealth technology. It is decades in the making for China to rejuvenate her industries, economy, technology and military with contingency plans for sanctions, embargoes and blockades. For US, the belief in her own power projection means she has frugal against a possible peers challenge in her industries, economy, technologies and military because she thinks taking down opponents is easy so long as the Dollar Hegemony remains intact. At the end of the day all that is left in US is a money printing machine, a narrative driven stock market, empty threats and posturing without the support of infrastructure, industry, technology and military hardware. The once proud General Electric, Boeing and Intel are a ghost of her former self. The Magnificent 7 is only magnificent  in stock prices and the virtual space without any ability to make physical products they design. China has a reserve of resources and industrial and intellectual capital, US has a reserve of digital promissory notes and electronic blue prints. When integrity and trust is gone, the result of the conflict is very predictable.

2. Anglo American Deadly Leverage in Financial Markets: On October 15 2025 the Federal Reserve published the true extent of synthetic demand for US Treasuries in a paper titled “The Cross-Border Trail of the Treasury Basis Trade. Of the $6.6 trillion new net issue between January 2022 and December 2024, over 50% were absorbed by Foreign Private buyers in derivative backed trades of which in excess of $1 trillion by Cayman Island based Hedge Funds and another $ trillion by UK and the rest of BLICS entities. (Fig. 7).

These round robin synthetic demand are funded on an overnight bases in the interbank market called Secured Overnight Funding where Treasury papers are pushed around for a spread of a few basis points hight in and night out.  As at October 23 2025, SOFR amounted to $3.002 trillion. (Fig. 8).

If that overnight trading volume signifies liquidity and depth of the US financial market, then I need to be re-educated concerning my understanding of risks and fraud.  

Across the Atlantic the London Bullion Merchant Association which purportedly is the authoritative hub of precious metals has again failed to deliver.  (Fig. 9).

Since the London Big Bang in 1986, it has been extremely profitable for London LBMA/ New York Comex Bullion Bankers to pocket customer payments for gold and silver purchases and issue pieces of paper called certificate of deposits without actually having physical precious metal in their vaults. As few customers actually bother to build their own secured vaults, most settlement is satisfied by a transfer of paper certificates of deposits. One estimate is for every ounce of physical gold in a bullion bank possession, there are outstanding claims of 100 ounces from customers. The equivalent ratio for silver is 1 to 400. As Global South Central Banks swap their US Treasuries in favor of gold and silver and take physical delivery, western financial institutions are scrambling to honor their certificate of deposits with metals that they never bought. (Fig. 10).

A fierce battle is ongoing to see if a flesh crash in prices for gold and silver will scare buyers off from viewing gold and silvers as a safe heaven asset or cause bullion bankers more pain with investors BTFD. My prognosis is the vampire bullion bankers will eventually meet their fate by a silver bullet. (Fig. 11).

Act 3:1  Now Peter and John went up together to the temple at the hour of prayer, the ninth hour. 2  And a certain man lame from his mother's womb was carried, whom they laid daily at the gate of the temple which is called Beautiful, to ask alms from those who entered the temple; 3  who, seeing Peter and John about to go into the temple, asked for alms. 4  And fixing his eyes on him, with John, Peter said, "Look at us." 5  So he gave them his attention, expecting to receive something from them. 6  Then Peter said, "Silver and gold I do not have, but what I do have I give you: In the name of Jesus Christ of Nazareth, rise up and walk." 7  And he took him by the right hand and lifted him up, and immediately his feet and ankle bones received strength. 8  So he, leaping up, stood and walked and entered the temple with them—walking, leaping, and praising God. 9  And all the people saw him walking and praising God. 10  Then they knew that it was he who sat begging alms at the Beautiful Gate of the temple; and they were filled with wonder and amazement at what had happened to him.