China is embedding into Zurich's financial core, Plus Trump's new tariff blitz escalates trade war -- China Boss News 7.11.25
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What happened.
Switzerland has long cultivated a reputation for neutrality, discretion, and confidential competence.
But in an era of hybrid power, even the most apolitical institutions are being drawn into geopolitical realignments.
Last week, China Construction Bank (CCB) announced a major expansion of its Swiss operations—reaffirming Zurich’s role as a central clearing hub for the renminbi (RMB) in Europe.
Backed by the People’s Bank of China and attended by senior Swiss officials, the event had all the hallmarks of economic diplomacy.
But its implications run deeper than capital flows or cross-border trade.
It marked another move in China’s strategy to entrench financial infrastructure inside Europe’s institutional core—advancing its broader geostrategic ambitions.
Why it matters.
Currency as statecraft
CCB’s presence in Zurich is a deliberate act of strategic positioning.
Since 2015, Zurich has served as one of Europe’s earliest renminbi clearing hubs. But this latest move signals a more ambitious phase—one designed to promote RMB-denominated financial products, streamline bilateral transactions, and offer European firms an alternative settlement route that bypasses the dollar and euro.
And that’s where the trouble begins.
Because China is not just facilitating trade; it is laying the foundations for a parallel financial system—one anchored in its own currency, governed by its own rules, and increasingly insulated from Western pressure.
For Beijing, Zurich offers a uniquely advantageous platform. Switzerland’s financial center is independent by design, globally connected by habit, and cloaked in the enduring mystique of neutrality.
But when capital flows from certain authoritarian states—China, and yes, Russia—it rarely arrives light-handed.
It comes infused with the logic of realpolitik and revisionism, not the polite risk-speak of liberal norms handed down from in-house counsel.
As China’s economic footprint expands, so too does its political leverage: subtle, legal, and increasingly hard to unwind.
Consider Zurich—population under two million.
Into this discreet hub steps one of China’s financial giants: China Construction Bank (CCB). With total assets nearing RMB 40.6 trillion (about USD 5.5 trillion) at the end of 2024, CCB ranks as the third-largest bank in the world, behind only its Chinese siblings, ICBC and Agricultural Bank of China.
That scale now gives Beijing a commanding foothold in one of Europe’s most consequential financial centers.
The timing, too, is telling, since China’s Zurich push comes as relations with Brussels are rapidly deteriorating.
In recent months, Beijing has retaliated against EU tariffs on Chinese EVs with restrictions on European medical firms, a WTO challenge, and informal curbs on French goods.
Diplomacy has frayed. Climate cooperation has stalled. Xi Jinping may skip the July 2025 EU-China summit entirely.
But rather than escalate confrontation, Beijing is adapting—shifting its engagement to the subnational level.
It’s a strategy that has served Beijing well—many times before.
Divide, localize, embed
China has long excelled at splitting local protons from their central nuclei.
The tactic dates back to the Chinese Communist Party’s earliest battles.
It’s how the early Communist movement gained traction—by winning over regional power centers in a deeply Confucian, hierarchical and filial piety system. Ironically, after 1949, the same party pivoted to contain those very fractures in the name of national unity.
Today, in the United States, China courts governors, mayors, and state-level trade offices. Programs like the Sister Cities Initiative and regional investment forums are primary entry points for Chinese state-linked firms and diplomats.
Such ties—framed as cultural or economic exchange—are used to shape local narratives, gather intelligence, and sidestep federal scrutiny.
In Europe, the fragmentation of power across EU institutions and member states makes the subnational terrain even more attractive.
From Chinese port investments in Greece to battery plant deals in Hungary and Spain, Beijing has selectively targeted local governments and business hubs willing to accept capital—sometimes at odds with broader EU strategy.
Outside the EU but inside the system, Switzerland offers the best of both—flexible in law, formidable in finance, and relatively immune to Brussels’ grip.
Yet those same traits leave it exposed to third-country heavyweights like China, which are actively probing for the soft underbelly of Europe’s financial system.
And Zurich is far from insulated. Its banks, investment firms, and fintech corridors are increasingly intertwined with Chinese industrial supply chains and Belt and Road infrastructure.
The risks are not theoretical. Swiss intelligence has repeatedly warned of Chinese and Russian influence networks operating within Zurich’s financial and academic institutions.
Often masked as commercial attachés or research partners, these actors collect regulatory intelligence, monitor capital flows, and shape policy debates to Beijing’s advantage.
The expansion of a major state-backed Chinese bank, then, is not a benign development.
It’s a test—of Europe’s capacity to navigate systemic influence without surrendering institutional integrity.
But what’s unfolding in Zurich reflects a deeper shift.
As the post–Cold War financial order fragments, third-party jurisdictions are becoming contested ground.
The U.S. and EU may still set global standards, but China is building a parallel system—not to replace the dollar overnight, but to anchor influence through clearinghouses, supply chains, and legal frameworks.
The real question isn’t whether the renminbi goes global. It’s whether China can embed enough institutional gravity to make its financial architecture indispensable.
For Europe, the stakes go beyond capital markets. As Washington turns inward and Brussels grapples with strategic autonomy, financial centers like Zurich will face growing pressure to choose—or at least clarify—their alignments.
That’s why CCB’s Zurich expansion, while it may seem trivial, is anything but.
This Week's China News
The Big Story in China Business
TRUMP’S TARIFF BLITZ SPARKS NEW CLASH WITH CHINA: In a dramatic escalation of the US-China trade war, President Donald Trump announced sweeping new tariffs this week targeting not just China, but its regional partners.
Starting August 1, Asian economies such as South Korea, Japan, Malaysia, and Thailand will face punitive duties of 25% to 40%—unless they strike individual deals with Washington.
Trump’s message was blunt: if goods are being rerouted through other countries to dodge existing China tariffs, they’ll be hit just as hard.
Beijing’s reaction was swift. State mouthpiece The People’s Daily denounced the move as “unilateral bullying,” while China’s Foreign Ministry warned of “resolute countermeasures.”
Translation: Beijing won’t tolerate an economic siege—especially one that fractures its supply-chain reach.
Transshipment in the crosshairs: What Trump is targeting is transshipment: Chinese goods rerouted through countries like Vietnam or Malaysia before landing in U.S. ports, often after slight reassembly.
It's a long-standing global practice—but under Trump’s trade hawks, it’s now recast as evasion.
The fallout is immediate. Regional partners must choose: decouple from China or risk U.S. penalties.
Vietnam has already agreed to a partial deal, trimming tariffs on some exports from 46% to 20%—but accepting a harsh 40% rate on Chinese-origin goods.
Japan called the tariffs “regrettable.” South Korea says it’s accelerating talks. Malaysia and Thailand are scrambling for clarity.
Meanwhile, U.S. tariffs on Chinese goods now average over 51%, according to the Peterson Institute; China’s countermeasures hover near 33%, meaning Washington and China’s trade battles are metastasizing across Asia.
U.S. allies are uneasy. The Washington Post framed the tariffs as a nationalist cudgel disguised as policy, warning of deeper fractures with key partners. Reuters echoed themes of “economic coercion.” The Guardian called the tariffs “punitive,” designed to isolate China by turning its neighbors into enforcement proxies.
What Washington sees as accelerated decoupling, Beijing perceives as strategic encirclement.
But across Asia, trade ministries are scrambling to rethink what it means to be caught between the United States and China.
New deflationary pressures: Even as the rhetoric heats up, China faces stronger economic headwinds at home.
Producer prices in June dropped 3.6%—the sharpest fall in nearly two years—driven by slumping exports and brutal price wars in overbuilt sectors like solar, EVs, and consumer electronics.
With global demand weakening, Chinese firms are undercutting each other in a race to survive.
The result is a self-destructive cycle that even Beijing now acknowledges. Xi Jinping has warned against “involution”—a slang term for economic cannibalism—now adopted in official discourse to describe China’s hypercompetitive stagnation.
Stimulus hasn’t worked. Household consumption is tepid, property markets are still shaky, and big tech firms are slashing prices just to keep users from defecting.
The People’s Bank of China can loosen credit, but the real problem is structural: too much supply, not enough demand.
Starbucks retreats: Meanwhile, Starbucks, once a golden child of American consumer power in China, is reassessing its bet.
Faced with rising competition from homegrown rivals like Luckin Coffee and Cotti, the Seattle-based coffee chain has confirmed it’s exploring a partial sale of its China business.
With up to 30 private equity firms expressing interest, some reportedly seeking a controlling stake, the deal could value the unit at $10 billion.
For Starbucks, it’s a test of investor appetite. For everyone else in the market, it’s a warning.
What was once a premier growth engine is now a minefield—strung with rising local players, falling margins, and regulatory crackdowns.
For foreign firms still bent on owning a piece of Xi Jinping’s Chinese market, the rules of engagement have changed: success now means localizing operations, sharing equity, and accepting less control.
Law and International Xi
THE PLATINUM PLAYBOOK: CHINA’S NEXT MINERAL POWER MOVE: Shanghai Platinum Week opened with fanfare, but the message beneath the surface gleamed with strategic intent.
Once prized mainly for its beauty and catalytic properties, platinum is now being positioned as a pillar of China's industrial and geopolitical ambitions.
Declared a “strategic resource” under Beijing’s New Energy Vehicle plan, platinum has quietly become essential to China’s hydrogen push—fueling the country’s fleet of over 28,000 fuel cell vehicles and more than 400 hydrogen refueling stations.
The target is one million vehicles by 2030. To get there, China has been stockpiling platinum group metals (PGMs) far beyond immediate demand since 2019.
What it lacked was a market architecture to match its material dominance.
But that may soon change.
New rules for GFEX: A centerpiece of this strategy is the Guangzhou Futures Exchange (GFEX), which is expected to launch the world’s first platinum and palladium contracts that allow delivery in sponge form—the preferred state for automakers and fuel cell manufacturers.
It’s a radical departure from how these metals have traditionally been traded. No other exchange offers such flexibility.
If GFEX succeeds, it will influence global benchmarks, cushion China’s industries from price volatility, and draw trading flows into China’s orbit.
That takes the move beyond metals policy and into industrial statecraft.
A mineral buying spree: But the ambition doesn’t end with platinum. Across Kazakhstan, Brazil, and Africa, Chinese mining firms have resumed an aggressive buying spree not seen since the early Belt and Road era.
With U.S. and EU scrutiny mounting, Beijing is moving fast—often into jurisdictions where others won’t tread. Even in states like Mali, where military regimes have tightened control over resource access, Chinese firms are still striking deals.
Meanwhile, inside China, strategic stockpiling continues. Nickel is the latest case in point.
Since late 2024, Beijing has reportedly added up to 100,000 tonnes of high-purity Class 1 nickel to its reserves—taking advantage of a global glut triggered by oversupply from Indonesia.
A fortress with cracks: Nickel, like cobalt and rare earths, is critical for everything from EV batteries to aerospace alloys.
Rare earths, however, remain the most potent weapon in Beijing’s mineral arsenal. In April, China imposed new controls on rare earth magnet exports in retaliation for U.S. tariffs. The result: a 75% plunge in outbound shipments and a shock to global auto and defense supply chains.
While a late June deal between Washington and Beijing has nominally reopened the tap, industry analysts see the new licensing regime as permanent—and politically weaponizable.
Still, China’s mineral fortress is not without its fissures.
Beijing dominates processing and it may stockpile, but it doesn’t control all the mines themselves. Nor does it control the sea lanes or the diplomatic currents now shifting in Brussels, Tokyo, and Washington.
And the environmental cost of this mineral ascendancy is mounting.
Last week, The New York Times published a stellar piece about Baotou, in China’s Inner Mongolia—the site of the world’s largest rare earth operation—a toxic legacy of radioactive waste which continues to poison groundwater and pollute surrounding communities.
Despite official pledges and partial cleanups, much of the damage endures.
The China Boss rundown: Platinum, nickel, and rare earths aren’t just commodities anymore. They’ve become tools of statecraft—currency in a fractured trade order, and levers of power in a world shifting from globalization to bloc competition.
In that light, China’s mineral strategy doesn’t look like mere insurance. It looks like ambition.
But even in Beijing, control is never complete.
For all its central planning, China still misfires. Ghost cities exist for a reason—and just because Beijing builds doesn’t mean it commands outcomes.
Take antimony, for example. U.S. imports of the metal—a critical input for batteries and flame retardants—have recently surged from Thailand and Mexico. Neither country produces much of it. But both sit outside Beijing’s shadow.
In other words, workarounds aren’t just a Chinese specialty when it comes to tariffs and sanctions. The West is adapting, too.
Geopolitics
CHINA’S RED SEA LASER ESCALATION TESTS NATO FAULT LINES: Earlier this month—only now coming to light—a Chinese warship aimed a military-grade laser at a German reconnaissance aircraft over the Red Sea.
The plane, part of the EU’s Aspides mission to protect commercial shipping from Houthi attacks, was forced to abort its patrol and return to base in Djibouti.
Berlin summoned China’s ambassador, Beijing denied everything.
But in NATO capitals, the incident landed as deliberate signalling.
Two theaters, one pattern: Earlier this week, Ukraine’s Security Service announced the arrests of two Chinese nationals—a 24-year-old former student and his father—on charges of espionage linked to the Neptune missile system, a key pillar of Ukraine’s coastal defense.
According to authorities, the younger man remained in Ukraine after being expelled for academic failure and attempted to recruit a Ukrainian engineer. He was caught receiving classified schematics. His father, apprehended after visiting the Chinese embassy, now faces similar charges.
From Berlin to Kyiv, officials are reaching the same conclusion: China is no longer merely expanding its presence—it is strategically probing the West’s vulnerabilities.
And, whether through lasers or leaked schematics, Beijing is testing NATO’s reflexes and resolve.
Europe’s restraint: Germany’s response was diplomatic. But Bundestag critics say it was inadequate. The laser wasn’t a misunderstanding—it was a calculated act of presence in a maritime zone long assumed to fall within the West’s sphere of control.
And it fits a broader playbook: China supplies Russia with dual-use technologies, offers sanctions relief through trade, and signals—intentionally—that if conflict erupts in the Indo-Pacific, Moscow will keep NATO busy in Europe.
As NATO Secretary General Mark Rutte recently warned, Beijing is watching Ukraine closely—not just to assess weapons systems or logistics, but to prepare for a two-theater contest that could stretch the alliance to its breaking point.
The China Boss view: Beijing sees a West distracted, divided, and inward-looking. Trump’s return has revived transatlantic anxiety. European burden-sharing remains fragile as the war in Ukraine drags on.
In that context, China presses forward—less driven by ideology than by opportunity.
As historian Peter Frankopan noted last week in the Financial Times, the Dragon-Bear axis is not a marriage of values, but of intent. Shared goals, not shared beliefs: disrupt the U.S.-led order, rewrite the rules, and exploit the seams.
The laser incident was no accident.
It aligns with what China’s Foreign Minister Wang Yi recently told EU counterpart Kaja Kallas that Beijing doesn’t want Russia to lose in Ukraine.
That admission only confirms what many already suspected.
Now the question is whether—and how—Europe responds.
IRAN RECEIVES CHINESE-MADE MISSILES AFTER CONFLICT WITH ISRAEL: According to regional intelligence sources, Iran has received Chinese-made surface-to-air missile (SAM) systems following its 12-day conflict with Israel, during which much of its air defense infrastructure was crippled.
The SAMs are reportedly being paid for with Iranian oil—over 90% of which is exported to China, often through transshipment hubs designed to evade U.S. sanctions.
The shipments signal a deepening of China–Iran military ties, even as Beijing publicly strikes a neutral tone.
The same can’t be said of Russia or North Korea, however, which remained silent during the fighting and offered no material support when U.S. strikes hit Iranian nuclear sites.
Cracks in the CRINK axis: Despite frequent talk in Washington of an emerging authoritarian “axis”—linking China, Russia, Iran, and North Korea—some analysts say the Iran-Israel conflict exposed its cracks.
China and Russia condemned U.S. actions rhetorically but offered no tangible aid. As experts note, CRINK is a transactional alignment, not a defensive pact.
China’s hesitance is strategic. It maintains strong energy ties with Saudi Arabia and the UAE, both of which are Iran’s rivals.
A wider war would imperil Chinese oil flows, so Beijing favors stability over solidarity. Iran may receive weapons—but not alliances.
France accuses Beijing of smear campaign against jets: China’s sale of weapons to Iran comes as it seeks to undercut Western influence in the region—and outmaneuver rivals like France.
After the India–Pakistan conflict in May, French intelligence accused Beijing of spreading disinformation to damage the reputation of Rafale jets and promote Chinese alternatives.
China’s broader strategy is clear: leverage arms sales, economic ties, and neutral diplomacy to position itself as the indispensable power in a multipolar Middle East—without getting dragged into its wars.
Yet Iran’s theocratic leadership and strategic volatility limit how far Beijing is willing to go.
Best Reads
China is building a new data empire (The Economist): China is building a sweeping, state-controlled data regime that treats information as a core economic asset—integrating personal, industrial, and government data into a national system designed to fuel AI, economic growth, and surveillance.
China’s Got Big Plans for AI — In the Desert (K Oanh Ha, Yang Yang, and Naomi Garyan Ng, Bloomberg’s Big Take Asia Podcast): The Big Take Asia Podcast explores how Chinese firms are building massive data centers powered by over 115,000 banned Nvidia chips in the deserts of Xinjiang.
Elon Musk Is Running Out of Road in China (Raffaele Huang, Lingling Wei, Yoko Kubota, Wall Street Journal): While Beijing still values Tesla for its green economy goals, it increasingly favors homegrown champions—leaving Musk caught between political tensions in Washington and waning leverage in China.
China’s Post-Xi Succession Problem Has Global Implications (Mary Gallagher, World Politics Review): As Xi Jinping ages, the lack of a clear succession plan raises growing risks for both domestic stability and global policymaking.
How China Got Its Name (James Palmer, Foreign Policy): Originally referring to the central plains, "Zhongguo" or “Middle Kingdom” became a unifying national identity only in the late Qing era, as Chinese reformers sought coherence amid internal collapse and foreign threats.
Middle Kingdom Surreal
TRUMP RESTARTS TIKTOK TALKS 🙄AS U.S. AND EU TURN UP PRESSURE ON CHINESE TECH: President Trump says a deal to force TikTok’s U.S. operations into American hands is “pretty much” done—but there’s one catch: China still has to sign off.
Speaking aboard Air Force One, Trump said talks with Beijing would begin as early as Monday, possibly involving Xi Jinping himself.
TikTok, owned by China’s ByteDance, has 170 million users in the U.S. and has faced a ban unless it’s sold to U.S. investors.
Trump has now extended the deadline three times, with the latest cut-off set for September 17. A deal was nearly sealed this spring, but China balked after Trump slapped tariffs on Chinese goods.
Now, the clock is ticking again.
“I’m not confident,” Trump admitted, “but I think (they’ll agree). It’s good for them. It’s good for us.”
Europe opens fire on data front: Across the Atlantic, TikTok is facing a different kind of reckoning.
Ireland’s Data Protection Commission has launched a fresh investigation into ByteDance after the company admitted it had stored European user data in China—directly contradicting earlier testimony during a probe that led to a €530 million fine.
The EU has no data transfer agreement with China, and any such storage breaches GDPR, the bloc’s flagship privacy law.
Regulators are now questioning whether TikTok misled them—and whether deeper systemic violations are hidden beneath.
TikTok claims the discovery came through its own monitoring system and that the data was quickly deleted. But European regulators aren’t satisfied. With its EU headquarters in Ireland, TikTok faces mounting legal jeopardy—possibly across the entire continent.
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It’s peak tourist season here in Portugal, so my husband and I tend to skip the trendier spots in favor of quieter, lesser-known streets and hidden gems. Fortunately, Portugal has no shortage of those. Have a great weekend. 😎
