In July 2008, the first Apple Store in China opened in Beijing’s Sanlitun entertainment district, one month ahead of China’s traffic-stopping arrival as a global power with its spectacular hosting of the Summer Olympics. Since then, the nation and the tech giant have become utterly intertwined. Apple became the world’s most valuable company for years because of China. China became the world’s second-largest economy in no small part because of Apple. Apple’s FDI brought millions of jobs to China, and the most alluring and indispensable of Western technological wizardry to a vast consumer market that hadn’t even fully learned the civility of queues. But as the years passed and China came to represent 95% of Apple’s production base and a quarter of the company’s sales, the relationship began to change. Michael Enright details how Apple began to give in to China more and more on principles it held firm elsewhere in the world: on which companies Apple could negotiate with, on promises to help advance Chinese software, train Chinese engineers, then censor apps, then cooperate with state security apparatus. Apple now has to reckon with a question: At what point will China decide it doesn’t need Apple as much as Apple needs it? In January, DeepSeek’s arrival upended the global AI race. DeepSeek isn’t as much a scientific achievement as it is a cost achievement. But DeepSeek does underline a lesson to American tech companies and regulators: Beijing has a far greater edge over the US in encouraging efficiency innovation and scalability. As much as US tech denial remains essential, US policy must understand its weaknesses in shaping incentives to cut costs at home and make friends globally, Nate Picarsic and Emily de la Bruyère write. In South Korea, the intensifying techno-rivalry is reshaping the high-tech economy’s strategy on free trade agreements and statecraft, Min Gyo Koo writes. Plus, check out our Trade Outlook recap, our roundtable with Singapore’s Temasek Foundation, and all that we’ve been reading on Trump’s reciprocal tariffs.
FDI ESSAY
Will Apple and China untie the knot?
Michael Enright 25 February 2025
Heavy is the head. As China and the world’s major economies adopt ever more stringent regulations on data acquisition, storage, and use, no company has had to think harder and worry more than Apple. For years, the world’s once-most valuable company brought indispensable FDI to China. Millions of jobs, tech know-how, and the ultimate symbol of Beijing’s mastery over globalization. Now Apple’s sales are shrinking. It’s losing turf to Chinese rivals that it was prodded by Beijing to help. It has made concession after concession to Chinese regulators. It is now squarely in the middle of the US-China crossfire. As FDI expert Michael Enright writes in an essay for the Hinrich Foundation: What happens when China decides it no longer needs Apple as much as Apple needs it?
DeepSeek was a win for Chinese tech and its American rivals have something to learn from it – but perhaps not quite in the way they think. DeepSeek upended the global AI contest using export control-compliant technology and readily available technology to deliver large language model (LLM) capabilities at least equal to Western peers at 1% of their cost. This reflects a critical reality, Horizon Advisory’s Nate Picarsic and Emily de la Bruyère write: China’s edge is in applied technology, cost efficiency, and scalability. It’s a workaday approach that might not make Beijing a first mover in bleeding-edge breakthroughs, but it is likely to keep China a leader in operationalizing and profiting from breakthroughs no matter where they are developed. As the US mulls tightening its tech denial strategy worldwide, American tech might want to consider the blind spot in its focus on exquisite technology.
Few countries are having it easy in the rising US-China contest. South Korea, the high-tech economy clapped between China, the US, and Japan, is finding that it needs to draw deeply on skillful strategic navigation. It's had to use free trade agreements and industrial policy to profit from China, align with the US, fend off its rival Japan, draw closer to ASEAN, and still keep its lead in global technology. The democratic nation is now facing difficult times amid domestic political instability, but what’s worked for South Korea? Seoul National University’s Min Gyo Koo explains Seoul’s deft use of trade and statecraft in an essay for the National Bureau of Asian Research sponsored by the Hinrich Foundation.
Trump’s aggressive trade policy in the opening weeks of his administration are upending global trade and the world order. So far "America First" has meant unilateral tariffs, dismantling the multilateral trading system, evisceration of key global geostrategic alliances, and that’s just the first two weeks. Check out the Hinrich Foundation Trade Outlook 2025, moderated by Head of Trade Policy Deborah Elms, and featuring DLA Piper’s Partner Nathan Bush and The Economist’s Asia Correspondent Ethan Wu.
Temasek Foundation-Hinrich Foundation roundtable on trade and resilience
Singapore’s Temasek Foundation and the Hinrich Foundation co-organized a roundtable last week on the nexus between trade, resilient societies, sustainability, and philanthropy. Our two foundations have for some months been mulling together on ways to help spur the convergence of these issues. The foundations held a closed-door roundtable to drive a conversation on how to help reshape public-private partnerships to strengthen the underpinnings of exchange and mutual benefit that will help many in the region thrive into the future. Catch up on some snaps here.
Trump’s executive orders on reciprocal tariffs and America First investment policies are far more complicated than they seem and could undermine the most favored nation principle. Meanwhile, new tariffs on autos, drugs, chips, and lumber add to concerns about disrupted supply chains. As WTO members and global markets grapple with these shifts, the stability of the international trade system faces growing uncertainty. Check out what we’ve been reading.
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