25 Sep SITREP: A Couple of Weeks in Review in September. China: Which Way Is Up? Or Is It Down?
By,
Octavio Pérez, Co-Founder & Senior Fellow, MSI²
Whether you want to start with the military achievements, the internal economic issues, or what is happening geopolitically, you have more than a three-course meal…
Let’s start with today’s news: the military achievements.
The starship of the PLA Navy, CV-18 Fujian, successfully catapulted three different fixed-wing aircraft for the first time. Add to that the first passage of the Fujian through the Taiwan Strait on September 11–12 of this month. So, Fujian is blazing headlines in ten days.
All three aircraft —the J-35 fifth-generation stealth fighter, J-15 attack jet, and KJ-600 airborne early warning and control aircraft, which we had already associated as part of Fujian’s complement— were successfully catapulted.
Tie that to the fact that they were all presented at the 80th-anniversary parade in Beijing, which is like the consummation of what was forecasted at the September 3 parade. The Chinese love to present a story as it develops and walk you through to its fruition.
So, there you have it: the largest aircraft carrier built in Asia since WWII, within three years of being launched, is on trials, accomplishing a feat that only one U.S. carrier has done before it (USS Gerald Ford CVN 78), which is to operate and launch using EMALS (Electromagnetic Aircraft Launch System) catapults. Both have stealth fighters and are at the forefront of aircraft carrier evolution.
But all of this has not gone on without regional reactions. India is upgrading its aircraft carriers with French Rafale fighters to enhance their range in the Indian Ocean; Japan is also converting two helicopter destroyers to accommodate F-35B jets; and Indonesia is pursuing the purchase of an Italian retired aircraft carrier to convert it into a drone mothership equipped with Turkish drones.
So, call this the appetizer, and let’s move on to another story. Who do you believe? What can we take out of the double discourse?
The defense minister renewed his threats to take over Taiwan during his welcome speech at the Beijing Xiangshan Forum. This annual event brings in over 500 academics and military personnel from 60 countries to a so-called regional security conference.
His opening statement included: “…the restoration of Taiwan to China is part of the post-war international order…” So, if that set the tone for this year, it is something Xi Jinping mentioned during the parade. Again, China tells us a story and reiterates it throughout.
He continued by saying: “…Taiwan has been governed separately from China since 1949 — it is a breakaway province, and the use of force to bring it under its control has not been ruled out…”
He then shifts and says: “…The Chinese military stands ready to work with all parties to serve as a force for global peace, stability, and progress,” and comes back again to say: “…just naming the action and not the behaviors such as external military interference, seeking spheres of influence, and coercing others into taking sides.” Hello? Who are you talking about? He continued by calling those actions a means to “plunge the international community into chaos and conflict.”
He concluded by saying: “…China would never allow any separatist attempts for Taiwan independence to succeed” and that it is ready to thwart “any external military interference…” So, consider the second course: the soup.
Let’s get some antipasto before we go to the main course:
Xiaomi, a major electric sedan manufacturer, has recalled 117,000 SU7 electric sedans to fix a potential safety flaw in its driver-assistance system. This becomes its largest recall ever for the manufacturer. Basically, almost 1/3 of the total production since March of 2024 — just 18 months ago.
Their way of solving this issue is by sending OTA (over-the-air) software updates to fix the risk, avoiding parts replacement. So, compare that to a recall in the USA.
Europe’s first rare-earth magnet plant just opened in Estonia, and according to its CEO, it is expected to rev up production threefold within the first decade. Just like the U.S., Europe is also looking to reduce its dependence on Chinese supply chains. The Canadian conglomerate that opened the plant has already aligned with major German auto suppliers (Schaeffler & Bosch).
Even with all this happening, China’s August sales of rare-earth magnets rose 21% between July and August, while on the other hand losing 5% to the U.S. Just as a reminder, these minerals are used for electric vehicles, wind turbines, and military hardware.
So, on one hand, China recovers 1/3 of the market demand lost by the U.S. market and increases sales to Europe. For what? A year? Two? The plant in Estonia may eventually fill the gap within three years.
Now getting into a topic close to the heart of the Chinese people… unemployment has hit hard among the younger generations. Industry-wide, China’s largest solar firm has dropped more than a third of its staff, and Citibank over 3,500 of its staff in Shanghai. Like in many other parts of the world, college grads are entering the market with little hope of finding a job. This year, they expect some 12.2 million to enter the workforce.
For those who love AI, watch over your shoulder; you may be replaced too. And yes, many industries are doing so. The youth feel very uncertain about a prosperous future.
As one thing rolls into another, birth rates are expected to go down. Manufacturing is even being robotized, and automation is eating up entry-level jobs all around the economy. So, not a bright future when every year you add another 12.2 million young graduates with very little hope. Recent unemployment rates for the youth are hovering over 18.9%, and they know things are not getting any better. And no, there is not a quick turnaround in the economy anytime soon.
And now to the main course, the actual meal:
Xi and Trump had a phone call, in which they addressed a wide gamut of subjects, including arriving at a settlement over TikTok, and consequently, meeting in South Korea in October, where they would have a face-to-face conversation.
U.S. President Donald Trump said he and Chinese leader Xi Jinping made progress on a TikTok agreement and would meet face-to-face in six weeks in South Korea to discuss trade, illicit drugs, and Russia’s war in Ukraine.
This is an obvious attempt to lower tensions between two superpowers that have the largest trade deals and are in serious disagreements over several trade, tariff, and geopolitical subjects.
So, the next face-to-face encounter at the Asia Pacific Economic Cooperation Forum in South Korea next month would be ideal to reach an agreement on some of these key items. If that goes well, Trump would visit China next year, and Xi would also visit the U.S. later.
Needless to say, Trump did not mention raising tariffs on China as he has done to India for buying Russian oil, but he had mentioned earlier that if European countries raised tariffs on China, it would help end Russia’s war in Ukraine.
And in order to reach this summit in late October with something to agree on, U.S. and China officials had discussions this week on some of the many issues facing the two countries in Madrid.
U.S. lawmakers were also visiting China to seek to improve military cooperation, a bipartisan congressional delegation said Monday in a meeting with China’s defense minister in Beijing. This is the first official visit from the House of Representatives since 2019, prior to the COVID pandemic. The Senate had sent a delegation in 2023. The intent has been to smooth tensions over trade, drugs, technology, and defense communications.
The group met with Chinese Defense Minister Dong Jun and separately with Vice Premier He Lifeng after holding talks with Premier Li Qiang. The U.S. and China had a military hotline prior to August 2022, when Nancy Pelosi, then Speaker of the House, visited Taiwan. That hotline was cut off and re-established by November 2023.
The intent of the visit is also to prevent close encounters, as seen in the South China Sea and the Taiwan Strait.
U.S. and Chinese officials have held four rounds of trade talks between May and September. Both sides have paused high tariffs and pulled back from harsh export controls. Much more remains to be done on tech export restrictions.
As a product of the drug war and the apparent failure to curtail exports of precursor chemicals to fentanyl, which are predominantly made in China and shipped to Mexico, the final 20% additional tariff also comes into play.
China did not stay idle and responded by levying an additional 10–15% tariffs on U.S. farm goods. This has impacted American agricultural sales to China, where more than half of all sales fell as a consequence of this tariff war. It is vital to deal with the fentanyl precursor chemicals issue since the final outcome has impacted U.S. farm sales.
So, there you have a four-course meal with elements of two weeks’ worth of geopolitical activity, negotiations, and posturing. The dessert and cordial are up to you when you get to hear the outcome as we enter into autumn and see whether these negotiations lead to actual progress in trade, tariffs, and how successful the face-to-face meeting between Trump and Xi will be.
References
AP News. (2025, September 18). China’s defense minister renews threats to take over Taiwan as he opens security forum. https://apnews.com/article/china-taiwan-xiangshan-forum-dong-jun-5d82126b58ad660a9b901f62372beeb0
AP News. (2025, September 22). Trump says he and Xi will meet in South Korea in coming weeks and he’ll later go to China. https://apnews.com/article/trump-xi-tiktok-china-united-states-e6b6334aef2946b5b8c809be4240cad1e
AP News. (2025, September 22). US lawmakers visiting China seek to improve military cooperation. https://apnews.com/article/china-us-military-congressinal-smith-8fbe82995c6c58b8cb07fb293c2ca884
AP News. (2025, September 23). US and China are ‘talking past each other’ on key issues, says US lawmaker visiting Beijing. https://apnews.com/article/us-china-visit-house-representatives-2f9d4f1568ce62f8af9e21fc47cc3e01
China Economic Review. (2025, September 19). Movement… but where. https://chinaeconomicreview.substack.com/p/movement-but-where?utm_campaign=email-half-post&r=5qpmj4&utm_source=substack&utm_medium=email
China Economic Review. (2025, September 22). Europe’s first rare-earth magnets plant opens…Trump, Xi hold call…Xiaomi recalls 117,000 SU7 EVs in China. https://chinaeconomicreview.substack.com/p/europes-first-rare-earth-magnets?utm_source=post-email-title&publication_id=2674446&post_id=174230626&utm_campaign=email-post-title&isFreemail=true&r=5qpmj4&triedRedirect=true&utm_medium=email
Newsweek. (2025, September 22). China achieves major aircraft carrier breakthrough. https://www.newsweek.com/china-achieves-major-aircraft-carrier-breakthrough-2133580
South China Morning Post. (2025, September 22). Landmark launch for China’s J-35 stealth jet from Fujian aircraft carrier. https://www.scmp.com/news/china/military/article/3326424/landmark-launch-chinas-j-35-stealth-jet-fujian-aircraft-carrier?module=top_story&pgtype=homepage
USNI News. (2025, September 22). Chinese aircraft carrier Fujian launches stealth jet, early warning aircraft in catapult tests. https://news.usni.org/2025/09/22/chinese-aircraft-carrier-fujian-launches-stealth-jet-early-warning-aircraft-in-catapult-tests
The opinions expressed in this article are those of the author and do not necessarily reflect the views of the Miami Strategic Intelligence Institute (MSI²).