China Two Sessions and more

This is the first time we’ve ever focused nine consecutive briefings on the same topic (Iran) and, while that war keeps shaping history, the rest of the world ain’t slowing down.

So let’s catch you up on three other stories worth your attention this week:

1. Two Sessions 

China’s annual political-legislative Two Sessions (lianghui in Mandarin 💅) just wrapped. While it’s not Beijing’s most important political gathering (that’s more the Politburo), it’s…

• the largest (3,000 members of the National People’s Congress + 2,000 members of the Chinese People’s Political Consultative Conference)
• the most visible (key reports and speeches are broadcast widely), and so maybe
• the most symbolic: while largely a rubber-stamping exercise, it aims to signal the Party’s “whole-process people’s democracy” and broader unity under Xi.

Fun fact: it’s also incredibly, shockingly boring (we attended in our previous diplomat life).

The main takeaways this year? China revealed…

• Its slowest and most flexible growth target in decades (4.5-5%): that reflects caution abroad, few options at home, and a shift from sugar hits to structural fixes
• A big emphasis on ‘New Quality Productive Forces‘ (backed by $190B): ie, China’s next five-year plan (2026-30) leans even more into AI and AI-adjacent sectors, including via industrial modernisation (good news for copper and lithium)
• More attempts to boost household consumption as a source of growth, though it’s still all via targeted, indirect, and controlled measures (think subsidies/rebates) to boost spending without eroding state dominance. But that also means…
• China again just recorded its largest fiscal deficit, repeating last year’s 4% of GDP: ie, the Party’s debt tolerance remains high but stable as it plays next steps.

The main loser this year? Apart from the 19 delegates who inexplicably disappeared from the guestlist (purged?), it’s China’s beleaguered property sector. With (for example) Vanke reporting another $11B loss, plus ~80 million vacant homes still on the market, the Two Sessions made only vague references to stabilising the sector, with no bailout in sight.

2. Cars

What happens in the world’s second-largest economy rarely stays there — and the global auto industry is a prime example. Beijing’s historic bet on EVs now means…

• Its auto exports keep soaring, with a 67% value surge (yoy) just in Jan-Feb, and
• Its home demand for foreign brands keeps collapsing (halving from 62% in 2020)!

Legacy automakers are getting crushed as a result: Volkswagen Group just expanded its earlier job cuts to 50,000 by 2030 after reporting a 54% drop in pre-tax profits, blaming not just China but Trump’s tariff whiplash. Apparently even our loaded Intriguers are feeling the burn too — Porsche just saw a 98% collapse in net profit!

Meanwhile across a few oceans in Japan, Honda is now warning it’s on track for its first annual loss since going public in the 1950s! The culprit? Beyond the above, it’s also warning US EV demand is now less than half what it expected (similar trend in Europe), with legacy players eating massive losses from EV project cancellations and write-downs.

Of course, part of the issue might be legacy brands failing to offer the same quality-cost combo as China’s slate (which is effectively banned in the US), plus $100+ oil prices might force more households to rethink their gas-guzzlers, but still — brutal time for carmakers.

3. Leaders.

Chile’s conservative new president (José Antonio Kast) took office this week, and China is already featuring in his inbox. Why? His left-leaning predecessor quietly approved China’s vast proposed 20,000km undersea fibre optic cable to the Chilean port of Valparaíso, in the last presidency’s dying days before Kast.

Where’s the drama?

The US argues this cable would risk hemispheric security because it’d ultimately be controlled by China’s ruling communists via a 30-year concession: think espionage, network compromise, and China’s intel law (which insists firms must help its spooks).

The US took it all so seriously, it even curbed visas for three Chilean officials until Santiago quietly rescinded its approval within days! It’s now all in limbo, and puts Kast in a tough spot:

• China is (by far) Chile’s top trade partner, but
• The US is (by far) Chile’s top security partner, and a key investor.

Welcome to the 2026 dilemma for much of the world, mister president.

Intrigue’s Take

So there you have it, dear Intriguer. While Iran dominates the headlines, China is still doubling down on tech self-reliance, Western industries are still flailing in response, and Chile and others are still getting caught in the crossfire. Wars might tilt the Earth, but that Earth still spins.

Yet one of the most critical questions to explore is still what this Iran war means for US-China competition. And one of the most interesting debates is actually playing out within China itself (to the extent open debate is allowed).

China has a declinist camp with names like Hu Xijin (former Global Times editor), who all see this Iran war as further proof of US decline. One of Hu’s comments on Weibo went particularly viral this week, arguing “after the Cold War, the US claimed it could win two wars at the same time. Now it is mobilizing global resources just to win a half-war”.

But while that kind of view flourishes in China’s nationalist circles, it’s interesting to see pushback from China’s pragmatic camp, with names like Shi Yinhong (professor) and Zheng Yongnian (think tanker) out there urging caution amid proof the US can still project overwhelming force when it wants.

Anyway, while that debate plays out, today’s briefing is maybe a reminder that Xi still seems to be doubling down on whatever he can control: tech, supply chains, and politics.

Sound even smarter:

• If you’d like to dive a little deeper into the Iran war, take a listen to our chat with Carnegie nuclear expert Ankit Panda! It’s dropping shortly.