The Trivium China Podcast

On October 8, the PBoC published an essay – in both English and Chinese – defending China’s exchange rate policy and pushing back on foreign calls for the RMB to appreciate.
Just like MofCom’s July essay on overcapacity, the piece takes aim at the fundamental premise of Western policymakers’ complaints rather than answering them directly.
Beijing has now taken two key economic issues that advanced economies keep raising – the currency and overcapacity – and essentially said “suck it up, we’re not changing.”
The upshot: China is going to press this model until something breaks.
On this episode, Trivium China Podcast host Andrew Polk sits down with Dinny McMahon (Trivium’s Head of Markets Research) to unpack:
The PBoC’s three arguments defending its currency policy – from competitiveness to the lack of any agreed way to value a currency – and why Dinny thinks there’s some truth in each, while the essay as a whole “misses the wood for the trees”
Why capital controls complicate the case for a stronger RMB: with deposit rates thin and property and stocks sagging, how much money would leave if China let it?
The PBoC’s proposed fix: adjusting global imbalances by having deficit countries (read: the US) tighten their budgets while surplus countries like China boost consumption, and why Dinny calls this a pie-in-the-sky solution
Why Beijing’s playbook with Europe looks like buying time, trading small concessions for room to keep its model intact

Back in July, when the Politburo met to discuss economic policy, officials signaled little more than incremental policy tweaks were on the horizon.
But fast forward to early October, and Beijing has rolled out a slate of support measures, including a fresh debt quota for local governments, more policy bank lending, and new interest subsidies for mortgages.
Dinny McMahon calls it a clear pivot – Beijing is now more concerned about the economy than it was a couple of months ago.
That said, the recent moves largely amount to a familiar Q4 policy top-up.
Meanwhile, deleveraging – Dinny argues – is still on.
On this episode, Trivium China Podcast host Andrew Polk sits down with Dinny (Trivium’s Head of Markets Research) to unpack:
Why the most important measure in the latest suite of moves was letting local governments tap part of their stockpile of unused debt quotas – and why an RMB 550 billion release is still consistent with deleveraging
How policy bank lending is being revived to fund Beijing’s investment in the “six networks,” and why local governments are struggling to find infrastructure projects that clear Beijing’s own bar for financing
Why Beijing is subsidizing loan interest payments instead of cutting interest rates directly – and Dinny’s argument that the subsidies are partially a disguised method of recapitalizing the banks
Why this support package won’t fix weak demand, but how it could still help by boosting infrastructure investment and helping overdue payments to firms land just before the critical Chinese New Year holiday period

For the first time in recent memory, a senior Chinese economic official is really pushing the idea that China needs to control its debt-to-GDP ratio.
In a recent Qiushi essay, central bank (PBoC) Governor Pan Gongsheng laid out why credit growth has to slow.
Trivium made this call back in July, when deleveraging sounded like a wild idea given how weak the economy is.
Dinny McMahon’s take: “We feel quite validated.”
On this quick-reaction episode, Trivium China Podcast host Andrew Polk sits down with Dinny (Head of China Markets Research) to unpack:
The three conditions Beijing needs to enable deleveraging, and why the Iran war and the export boom checked two of them
Where Beijing is already pulling back on borrowing: policy bank bonds, bankers’ acceptances, and special-purpose bonds
Why Beijing cares so much: a debt-to-GDP ratio of 305%, up more than 50 points since 2021, and an aging population that will require borrowing capacity in the future
The “sprint and reset” theory: Beijing is ratcheting investment down to a new base while exports hold up, and Dinny’s verdict that it’s making hay while the sun shines

When Anthropic CEO Dario Amodei called on US labs to pace the AI frontier, Washington said no – and so did Beijing.
In fact, Chinese state media outlet China Daily went further, calling Amodei’s suggestion a “self-serving bid for profit.”
The back-and-forth has led to an ongoing debate around whether China takes AI safety seriously.
Kendra Schaefer’s take: China does take AI risk seriously – but what it won’t accept is the premise that its own progress is the problem.
On this episode of the Trivium China Podcast, host Andrew Polk sits down with Kendra (Trivium’s Head of Tech Policy Research) to unpack:
Why China’s response to the “pacing the frontier” debate looks dismissive on the surface, and why that reading misses how much AI regulation Beijing is already planning
How pursuing open-weight models has become a geopolitical position for China, with roughly 70% of derivative models on Hugging Face now built on Chinese base models
China’s new argument in the distillation fight: that banning it is an unfair trading practice and proof of US efforts to assert technological hegemony
The one thing that could flip Beijing’s calculus on managing open-weight releases, a major security incident, and how China’s COVID-19 playbook suggests it would shut the door rather than share what happened
Whether the new US-China AI safety dialogue, set to kick off in November, has any path forward
Give it a listen and let us know what you think.

From ports to lithium mines to diplomatic battles over Taiwan, China has spent two decades persistently building influence across Latin America and the Caribbean – one contract, one relationship, one chamber of commerce at a time.
Leland Lazarus’s new book – Dragon in the Americas: China’s Power, Presence, and Regional Influence – argues this isn’t simply a trade story.
It’s a long game, and China is getting more strategic and deliberate about how it plays it.
On the latest episode of the Trivium China Podcast, host Andrew Polk sits down with Leland – Founder and CEO of Lazarus Consulting and author of Dragon in the Americas – to unpack:
Why ports are the “lungs” of a country, and why 37 of them across Latin America and the Caribbean are now funded, financed, or operated by Chinese firms
Why the region’s own answer to the US-China rivalry mirrors an old Cold War approach from Barbados: “a friend to all, but a satellite of none”
The story behind the Panama Canal controversy, and why it’s just the most visible example of a much bigger pattern
How Chinese mining firms quietly bypassed national governments and went straight to local officials to lock up 60% of the world’s lithium reserves
Why Taiwan’s remaining diplomatic allies in the region matter so much, and how far China is willing to go to flip them
The darker edge of China’s presence in the region: Chinese criminal networks that have laundered an estimated $312 billion through the US financial system, with Latin America and the Caribbean becoming a central node
You won’t want to miss this wide-ranging discussion – and make sure to check out Leland’s book while you’re at it!