Setting the Stage for the End Game

The fortnight ended on October 10, 2025, interesting news items to look at from the past two weeks are:

1. Setting the Stage for the End Game: One of the most commonly used concept in framing the clash between Western Hegemony and the rise of the Global South is the Thucydides’s Trap. In the 16 cases cited by author Professor Graham T. Allison at the John F. Kennedy School of Government at Harvard University, 12 ended in war. (a nominal 75% chance of a kinetic war - Fig. 1).

While I give credit to Allison’s insight and work, Allison falls short in only focusing on a short 500 years of history with a Western orientation but missed 90% of the rich record of human civilization and its tragedy and hope found in the changing tides of ancient cultures and empires. Back in the days of my early Blog writing, on February 15 2019, I used the “Chu Han Contention” in BC 207 (楚漢之爭) to describe the end game between the conflict of US and China. (Fig. 2)

Why? Because what we are witnessing today is much more than a two nation contest, typical in a Thucydides narration, but a rivalry between 30-40 nations in the Western Hegemony, 130-140 nations in the Global South and 50-60 Swing States. I depict US as the mighty noble warriors of Chu and China as the grass-root friendly neighbour Han.  In building up my model and a calling out the end game, I believe US will try to encircle China but China will initially show extreme restrain and weather the jabs on a long war of attrition. This calls for China to anticipate, parry and roll along as the opponent dance around with air punches. At a certain point of exhaustion of US, China will use momentum, torque and leverage to throw off the adversary for a knockout. My thesis is simple, since Chairman Mao Tse Tung, the war philosophy of Chinese leadership can be summed up by a couplet hung outside the memorial of the famous Chinese strategist Zhuge Kongming (諸葛孔明) . (Fig. 3)

The supreme art of war is to subdue the enemy without fighting through a conquering of minds (不戰而屈人之兵). After a long 7 years of restraint and judging the times, China has now moved on the offensive.

(i) Technology - On Thursday China announced a further restriction on exports of rare earth and specialist technological equipment used to refine rare-earth metals. The announcement means that foreign companies will need to obtain special approvals from Beijing if they wish to export rare-earth magnets and certain semiconductor materials that have at least 0.1 percent heavy rare-earth metals from China. (Fig. 4).

This move will totally decimate the high end semiconductor lead of the West as the regulation applies to 14 nanometer nodes and below and not just in manufacturing but also related equipment, materials, and even research and development for these advanced semiconductors. In one fell swoop the design in US, the equipment from Europe and the foundries in Taiwan and South Korea are all caught and frozen. China has carefully cultivated this kill shot for decades because it was Deng Xiaoping in 1992 that fleshed the potency of this tool. (Fig. 5).

In retaliation Trump blasted over social media that US will slap 100% tariff on China and impose Export Controls on any and all critical software. (Fig. 6).

The US Stock market reacted with a drop of $1.2 trillion in value within minutes. (Fig. 7).

What goes around comes around, US was merciless to take down Toshiba with regards to its threat on the US semiconductors in 1986 and France’s Alstom in 2013 because of rivalry with General Electric and 2018 with Huawei, China finally pull this card and US will be totally defenseless. What can the administration do but a tweet on social media to tax her own citizens some more. No stealth, no fighter jets and bombers , no missiles, no rockets, no drones no radars, no advanced ammos and no mobile communications.

(ii) Military - China’s 93 Military Parade was a show stopper. Not only was the latest weapon systems on displayed, the embedded message was clear. China would not first employ nuclear weapons but no nation on earth could have a second chance of a nuclear strike against China either. This completely shattered a US delusion that the larger number of US nuclear warheads would deter China from a counter strike against a US preemptive nuclear strike. Pentagon has since revise its pacific doctrine to pivot towards homeland security against the Administration’s namesake change from Department of Defense to Department of War. Behind the recent all Generals and Admirals meeting, is a military retrenchment program to free up resources for weapons upgrade and catch-ups to China. Open source intelligence indicates that out of the 39 active Four Stars Generals, 11 will be retrenched. However the big bucks will be in the withdrawal of military bases. Out of 11 unified combatant commands based on geography and functions,  Africom will likely to the the first on the chopping block. Funding for Eucom will be stuffed down the throat of Europeans among NATO members and as things go in the Middle East, the future of Centcom is anybody’s guess. This is the exhaustion signal that China is waiting for. To rub salt to the wound, China this week show cased yet another black dual use drone tech.  In a single container with 12 automated racks, the system can simultaneously launch all 12 racks each equipped with 54 quadcopters making a total of 648 drones under a single command controller capable of directing a maximum swam of 11,198 drones. Can Ukraine, NATO, Pentagon, IDF, Mossad, MI6 and CIA match that without chips and Chinese drone components. (Fig. 9).

Below is the video on the subject. (Video).

(iii) Alternate International Trade Settlement System: The Shanghai Gold Exchange (SGE) is establishing strategic offshore gold vaults in key global financial centers, including Hong Kong, Singapore, Zurich, and Dubai. This system supports China’s trading settlement system using local currencies and period end net balance settlement using gold as a country’s reserve asset. The Hong Kong facility will be opened in 2025 and its design capacity is 2,000 tons of gold with today’s market value of US$233 billion, quite capable to handle many country’s trade balance with China. (Fig. 10).

(iv) Large Scale Commodity Trade Settlement in CNY: BHP agreed to settle 30% of iron ore shipment to China to be priced and settled in CNY after China suspended all US$ denominated shipment from BHP. (Fig. 11).

The consolidation of purchasing power of Chinese Steel Mills took a decade to accomplish and finally Xi has overcome factional interests and gain an upper hand against the divide and conquer tactic so perfected by the Brits. This is an important move against the derivatives driven pricing power of commodities of the Anglo American Empire. Gold has fallen, then oil, grains and now base metal. We are going to see an accelerated de-dollarization as a result. (Fig. 11)

China has accomplished most of its objectives in the Made in China 2025 plan. This called for China to be near self-sufficiency in medium to high tech manufacturing. The next 10 Years objective will be China Standards 2035 and envisions China to take a leading role in establishing standards for scientific and technological research. We have entered a multi-polar world with or without acquiesce from the existing Western Hegemon. My prayers is that this fourth turning would be smooth and without bloodshed. Only God can determine the fate of mankind in this crossroad. Will you join me in this prayer.

2. First 10 days in October financial market performance as follows (Fig. 12)

Silver (+7.48%), Gold (+4.18%), Ruble (+1.56%), DXY (+1.05%), Bitcoin (+0.03%), Rmb (-0.21%), Copper (-0.46%), GBP (-0.57%), Euro (-0.97%), Shenzhen Composite Index (-1.89%), JPY (-2.15%) S&P 500 (-2.47%) and  Oil (-6.30%).

All signs of a global economic slow down have appeared with major problems in France, UK and Japan as all 3 markets entered a debt death spiral. Gold broke $4000 per ounce and Silver broke $50 in a rapid ascend. This canary in the coal mine is a clear omen of market panic. SOFR Volume broke $3 trillion at the end of September and the first few days in October as the US Federal Government continued to suck liquidity from the private sector through fiscal deficits. The latest Fed minutes released indicates Fed is very troubled by sticky inflation and maintain a more restrictive outlook. All the tariff tantrum and arbitrary supply interruptions would mean no one is optimistic concerning the economy. I maintain my outlook for hyperinflation towards the end of 2026. Trump talked about peace, peace when there was no peace. Venezuelan opposition leader María Corina Machado is the laureate of the Nobel Peace Prize for 2025 in Oslo, Norway. A graduate of Yale University and possibly a stooge for another color revolution in Venezuela.

Jeremiah 6:13  "Because from the least of them even to the greatest of them, Everyone is given to covetousness; And from the prophet even to the priest, Everyone deals falsely. 14  They have also healed the hurt of My people slightly, Saying, 'Peace, peace!' When there is no peace. 15  Were they ashamed when they had committed abomination? No! They were not at all ashamed; Nor did they know how to blush. Therefore they shall fall among those who fall; At the time I punish them, They shall be cast down," says the LORD.