China Decode: Apple Doubles Down on China as Trump Blinks

23:19James Kynge:So China, over the last few years, has been working with the major central banks of Hong Kong, Thailand, UAE, and Saudi Arabia, so some of these Gulf states in the Middle East, to increase trade settlements via these central bank bridges, you know, digital tokenized cross-border transactions. And since 2022, we've seen a 2 ,500-fold increase in the use of these tokens through these Enbridges, so to speak. It's about$55 billion. And around, I think, 95 % of that settlement of that sum is in yuan because China's been the big proponent of it diplomatically and through these financial institutions.

23:58James Kynge:And in the last couple of days, we've seen China announce that they've expanded the number of commercial banks that are going to use ECNY. I think that one of the longer term themes maybe from this crisis is that the Gulf states will become more and more like Russia. So if we think about the increase in yuan settlement between Russia and China since 2022 when Russia invaded Ukraine, that has been very favorable to CNY usage. We know we don't have the exact data on the ground, but there has been an increase in CNY usage in cross-border trade settlement, notably for oil and gas. I believe a couple of years ago, there was a Gazprom deal agreed by Putin and Xi in which there would be a 50-50 yuan ruble split in terms of settlement.

24:39James Kynge:So I could foresee China actually benefiting from the morass and quagmire that the U.S. has gotten itself into financially by increasing CNY usage in global trade settlement. Currently, according to SWIFT, it's about 8 % of global trade settlement. That number could easily rise, I think, a couple of percentage points in the next couple of years, helped along by, you know, concerns about U.S. hegemony, concerns about U.S. instability and the instability it's causing in other regions around the world. I'm curious if you have a view on this, James, because I certainly am seeing more chatter about this in financial markets.

25:15Alice Han:Yeah, I mean, I think you're dead right there, Alice. I think China is using this crisis in Iran, and obviously the conflict is spreading beyond Iran now, to damage US credibility on the global stage, to portray the US as a global wrecking ball, and, as you rightly say, Alice, to make commercial capital. And one area that they're trying to make commercial capital, it's not immediate, but in the longer term, is to slowly replace the dominance of the US dollar with the renminbi. And, you know, these movements are kind of tectonic in nature. They happen slowly. But once they do change, then the whole global economic and geopolitical system changes in their wake.

26:03Alice Han:It really does matter a great deal what the world uses to, you know, to transact its trade and investment flows. At the moment, it's the US dollar, but the renminbi is rising fairly, fairly strongly. And I think we can now envisage a future in which the renminbi has a much greater share of global settlement, both for trade and for investment. So, yeah, I mean, these are very big forces that have been unleashed. China is, I wouldn't say enjoying the U.S.'s misfortune, but it is certainly capitalizing on the U.S.'s misfortune and the damage that the U.S. is doing to its reputation.

26:44James Kynge:Yeah, you know, it goes without saying, on the oil and energy front, it is also at a disadvantage, China is, right? On the oil and energy front, you know, if WTI goes north, continues to go north of 100, that is going to cause pressure. If supply chains in oil continue to be constricted, that is going to cause pressure for Beijing. But you're right, geopolitically and diplomatically, if we look at it from that vector purely, I think this has been an unforced error by the Americans in which that has caused an opportunity for China to gain leverage, not only just in the Middle East, but also in potentially US-China trade talks that are still ongoing.

27:20James Kynge:Because, you know, the more that the US is distracted and bogged down in the Middle East, the less likely they're going to be firing shots at China in trade and technology export controls. It seems, and this is, I'm just citing a Global Times piece that was really interesting that came out, I think about March 15, that one op-ed in the Global Times says, the US has set the fire, now they're asking the world to help put it out and split the bill. I thought that that was an interesting image and it sort of goes to the heart of how the Chinese perceive this is a mess of the American making and that the Chinese do not want to get involved in any collaborative effort.

27:56James Kynge:And it reminds me to some extent what happened in 56 of the Suez Crisis. You know, you had Britain, France trying to, you know, take control of the Suez Canal, another major choke point in Egypt. And they did not get the approval of then U.S. President Eisenhower, who decided to not back, you know, old imperial regimes, but back the Egyptian President Nasser. I think a similar thing is happening now with the Chinese deciding that they're not going to back the Americans and collaborating to demine the strait or to unblock the strait and put pressure on the Iranians. So that's been interesting. Thus far, I haven't seen the Americans really react.

28:35James Kynge:I think that they're very much bogged down in what is happening in the Middle East.

28:39Alice Han:Yes, I think so. And I think this gives China an opportunity to act as the statesman, the peacemaker. According to Wang Yi, China's foreign minister, he said that the urgent priorities now are firstly to curb the spread of the conflict and prevent other countries from becoming involved. Other countries like Saudi Arabia and the UAE, both of which are friendly nations with China, and both of which have been struck by missiles from Iran. And China has also called for a unified international push for an immediate ceasefire and further mediation efforts. And this goes back to what you were saying earlier, Alice.

29:22Alice Han:I think that China will portray itself as the mediator to end this conflict, or perhaps after the conflict has ended, to step in as a mediator between the nations in the region. And thereby, it will portray itself even more as the peacemaker, whereas the U.S., as I said earlier, it will want to be portraying as a kind of a wrecking ball. So I think China's strategy is pretty clear. Trump, of course, called on China to help assure the shipping through the Straits of Hormuz. And I think that the idea that China would cooperate directly with the U.S. to further the U.S.'s objectives in anything to do with this war in Iran is completely pie in the sky.

30:12Alice Han:China will not want to do that because it wants to portray itself as separate and in opposition to what it calls an unjust war, which has been started by the US. I think, you know, for China, they are keeping their eye on the propaganda gains that they can make from the US war in Iran. Yeah.

30:31James Kynge:And just to back up your point of China being a peacemaker in the region. There is a history of this, right? China back in 2023 was responsible for the rapprochement between the Saudis and the Iranians that led to a diplomatic detente and a rapprochement. So they have a track record. I am on the side, you are on James, is that they will play a part in any peace negotiation in the region, given the outsized commercial, economic, and diplomatic influence they have with a lot of the Gulf and Iranian players. You know, if I'm looking at this from a realist perspective, you know, Allah, John Mishima or Graham Allison, I am worried that the wrecking ball analogy that you used has actually empowered the axis of ill will.

31:12James Kynge:If you think about the countries, the original countries within that nomenclature were Russia, China, Iran, and North Korea, you know, with oil prices going up for the conceivable future, that benefits Russia. Iran is hard to decapitate. We've probably replaced one liter with a more hardline leader. And China, to your earlier point, James, looks to be benefiting diplomatically. I'd be worried if I were Kissinger come back from the grave and looking at what Washington's doing.

31:42Alice Han:Yeah, I mean, you know, I think it's too early to say because we don't know what the end of this war will be. It could be that the US wins and then the US gets to set the terms of whatever peace may follow that or whatever situation may follow that. And under those circumstances, maybe the U.S. emerges from this looking slightly better than it does at the moment. If the U.S. can restore shipping in the Straits of Hormuz, the price of oil comes down, Trump gets to sound more like a statesman on the world stage, then maybe the pendulum swings back again in the U.S. favor in terms of international opinion on this action.

32:22Alice Han:But at the moment, I think there's no doubt that China is making propaganda capital from this.

32:29James Kynge:Great point. And to your point, a lot can change in the next week or two. So we will stay braced for the news. OK, let's take one last quick break. Stay with us.

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35:05When you think of the most influential American politician of the 21st century, you probably think of a man. But there's one woman who might fit the bill. She never thought she'd be in politics, but went on to break what she calls the marble ceiling.

35:20James Kynge:Then they'd say, well, why don't you all just make a list of things that the women want and we'll do those? What? This was in this century. Really? So the marble ceiling, it's not a glass ceiling, it's a marble ceiling. And they all had it lined up, you go next and I'll go next and I'll go next. And we're like, well, you know what? We've been waiting over 200 years for breaking in line. Nancy Pelosi, the longtime Democratic Speaker of the House, live on stage at South by Southwest in Austin. Today explained every weekday and now on Saturdays, too.

36:00James Kynge:Welcome back. China's museum boom is rewriting the nation's cultural story from just a handful of museums in 1949. to over 6 ,800 today, the expansion of galleries, libraries, archives, and museums reflect a deliberate strategy to link heritage, urban development, tourism, and soft power. State-backed cultural districts now dominate the landscape, shaping what histories are told, what art is seen, and how China projects itself globally. Even private and contemporary art spaces operate within this structured ecosystem, highlighting a shift from independent experimentation to curated national storytelling.

36:41James Kynge:James, are you an avid museum goer? And tell me, what's your favorite museum in China?

36:46Alice Han:I am actually. You know, I really do enjoy going around a museum. I thought you would.

36:51James Kynge:I bet you do too, Alan. Yeah, I do too.

36:54Alice Han:I didn't know the extent of this trend. It seems to be the case that in China, there's a new museum opening almost once every two days. And these days, there are perhaps, you know, more than 7 ,000 museums and about 1.5 billion annual visits as of late 2025. So whatever numbers you're using, this is a huge, huge trend in China. And I've been looking at some of the eye-catching museums that there are in China. Well, you know, some of them are fairly mainstream, like the Zugong Dinosaur Museum, which is in a southern province of China. And the point of differentiation is that it's a museum, obviously, of dinosaur bones or fossils that are built right over the pit where the fossils were actually first found.

37:48Alice Han:Going to another end of the spectrum, there is also a museum in China for mental illnesses. It's called the Black Museum, and it has sort of immersive displays, like you can sort of feel what it's like to be going through a hallucination. And of course, there's a sex museum in China. This museum used to be in Shanghai, but it became a bit too sensitive, and it had to move to a smaller town, the town of Tongli in Jiangsu province. And it has over a thousand exhibits, including erotic paintings and ancient sex toys and Ming Dynasty sexual furniture. I also heard that there's a paper airplane museum.

38:34Alice Han:I mean, of all the things to have a museum about, this is in Wuhan, and it shows off about 200 plastic paper planes, those that can fly a long way, those that spin around, stunt gliders, etc. And of course, because we're in the digital age, there's a Chinese meme museum as well. But I just think this is a fascinating topic, partly because I kind of get the feeling that there is a cultural aspect to this. Chinese are big collectors. And I think this is a culture that goes back millennia. If you look at the use of grave goods in graves across the centuries in China, there's all kinds of collections.

39:18Alice Han:Of course, the most famous is the terracotta army, which was built for the first emperor of China, Qin Shi Huang, which has about 8 ,000 life-size clay warriors and countless bronze weapons. And of course, it hasn't even been fully excavated yet. So, you know, there is this sense that, you know, collecting things, it's very deeply in Chinese culture. What would you say about that, Alice? Have you noticed that?

39:47James Kynge:I love the way you said that. I completely agree. I've never actually thought about it that way. But I think that that is a big part of Chinese culture. It's interesting when, you know, you hear talk about what Chinese leadership is like, is that they have an acute sense of history. They're obsessed with history. I remember the story that, you know, back in the day, the top Chinese leadership were being asked to read by Wang Qisan, who was, remember for a time, the anti-corruption minister, you know, really the fire brigade men right next to Xi Jinping, to read history books, including Tocqueville's Democracy in America.

40:24James Kynge:So I think it's very much in the DNA of Chinese people to be obsessed with history and to be obsessed with learning, but in particular learning about the past. I remember as a kid going to museums in Taiwan and in Beijing, where not only is there great historical relics, but great artistic relics. I remember this obsession, especially in the Taiwan National Palace Museum. This one, probably the most expensive thing there is this jade cabbage, you know, that looks exactly like cabbage, but it's completely made out of jade. These sort of curiosities, I think, is a big focus in a lot of these museums.

41:02James Kynge:And as you were talking, I was thinking about some of my favorite museums. And interestingly enough, I find that in China, I see a lot more of these, although I would say in the UK, you do see this too. these houses, former houses of famous people being turned into museums or memorials, as you say. So one of my favorites is actually Song Qingling's house in Shanghai. She's the former wife. She was the former wife of the father of modern China, Dr. Sun Yat-sen. And her house is really beautiful. You get to see the interior of the space and how they lived while seeing, you know, the historical moments and chapters in her life.

41:40James Kynge:You know, another museum that I really love is the Shanghai History Museum. And apparently they've got a new Qipao Museum that's just come up. So an exhibition dedicated to a very traditional Chinese style dress that was really popular from the 20s onwards and that you also see in the West. Yeah, it's interesting to me how in the last few years, we've had an expansion of different types of museums beyond what we've been discussing, beyond just the historical and the curiosities, to some of these cultural elements that you're discussing, you know, planes and sex, but, you know, paper planes and sex and cheap hours.

42:14James Kynge:But I want to bring it back to another point, which is the party's role in history making. But curious what you have to say about this, because certainly there is the more benign aspect of museums, but there also is more of an ideological aspect to it. And I'm curious if you have thoughts on that.

42:30Alice Han:Yes. I mean, you know, there are endless numbers of expressions that you could cite. There's a traditional Chinese expression, examine the past to understand the present. And then there's the more kind of foreboding non-Chinese phrase from, I think it was 1984, the George Orwell novel, he who controls the past controls the future. And so I think there are two overtones there that both are valid, actually. And, you know, we've spoken about the cultural interest that Chinese people have in the past. And we've spoken about the number of collections and museums there are throughout China. I'd like to bring it around to the money side of this, because this is also really considerable.

43:22Alice Han:I used to collect a few things when I was in China, a bit of furniture here and there. None of it was worth very, very much money. But I've been reading about some of the top collectors in China. There's Liu Yichian and Wang Wei. They're often cited as China's top collecting power couple, and they've spent billions of renminbi on art. They spent 36 million U.S. dollars on a Ming Dynasty chicken cup. It's not, it's, I mean, you mentioned the cabbage, which I've actually seen in Taiwan's National Museum. You know, this is a rather nondescript cup, if you ask me, but they bought it for 36 million U.S.

44:08Alice Han:dollars. And they also spent 45 million U.S. dollars on a Tibetan tapestry. So, you know, there are lots of collectors all throughout China, and some of them are spending huge amounts of money. And, you know, it's quite surprising on the number of different things that Chinese people collect and the number of different things in which a market is now being created. There's a market even for those Mao badges, you know, those badges that everybody used to have to wear during the period of Chairman Mao, particularly during the Cultural Revolution. I think many Chinese people hate to look back at that part of their history, but others are now collecting those badges and there is a bit of a market in that kind of thing as well.

44:53Alice Han:Do you collect any Chinese stuff, Alice?

44:56James Kynge:I don't as of yet, but I do have some pieces that have been gifted to me. And at some point, I probably will be a collector of Chinese Taiwan, like teacups that are used in tea ceremonies. And then the other thing, because my parents are Buddhist, you know, some Buddhist artwork that has been given to me or that my father has as well. But I'm not yet a collector, but at some point I think I will. What about you, James?

45:21Alice Han:Yeah, I mean, I'm afraid I don't have the financial resources to be called any kind of a collector. But I got a few things here and there. You know, I got a couple of bits of porcelain from my time in China and a couple of bits of furniture, which I rather like, but they're not worth that much.

45:36James Kynge:All right. James, you know what time it is. It is prediction time. What do you see in your crystal ball for the future this week?

45:43Alice Han:OK, last week, my prediction was about Chinese AI emotional companions. So this week, I thought I'd go to the other end of the spectrum and give a political prediction. I guess we're a broad church here, aren't we? I think that at some point, China will emerge from whatever it's doing behind the scenes on both the Iran conflict and on the Ukraine conflict to take a more public role. And I think this role will be to use its powers to mediate some aspects of the peace that follows each of these conflicts. And I think it will do this partly as a conduit to help it invest and subsequently rebuild, I mean physically rebuild, construct infrastructure and buildings in both of these countries.

46:35Alice Han:So I guess that's a fairly bold prediction, given where we are, both in the Ukraine conflict and in the Iran conflict. But at some point, these conflicts have to end. And I think that China will be focusing on the after game already.

46:51James Kynge:Really, really interesting. So mine is surprisingly about AI. So we're sort of reversing roles as opposed to geopolitics. I would say that even although some of the Tencent announcement was negative about the integration of agentic AI, that China is going to be at the forefront globally of agentic AI adoption and integration because it already has this strong super app ecosystem. When you think about the use of Alibaba or Tencent every day, people's lives as these super apps, I think we're going to see China really be the first and the fastest to adopt and integrate these agentic AI personal assistants in day -to-day life.

47:32James Kynge:So, for instance, and I know this is already happening, getting your agent to book flights, trains, set your meetings and agenda, text somebody, give you dating advice, everything. I think that that will be much more heavily integrative in everyday people's lives in China versus the rest of the world. And I think that we'll start to see a boom in apps doing agentic AI in China, but in particular, the Tencent and Alibabas being the front runners of the pack because they have those embedded super app ecosystems.

48:06Alice Han:Very interesting.

48:07James Kynge:All right. Before we go, some big news. China Decode is now available on Substack. Subscribers will get ad-free episodes, our exclusive newsletter, and a place to engage with James and me and other listeners. find us at china decode.profgmedia.com that's all for this episode thank you for listening to China Decode make sure to follow us wherever you get your podcasts so you don't miss an episode and talk to you again next week