ExclusiveHow US Midterms Affect US–China Relations | China in Focus

Welcome to China In Focus. I'm Cary Dunst. I know what you're thinking. Where's Tiffany Meyer? Well, she'll be back tomorrow. Until then, we'll have to get through this one together. Our top story, a big win for Democrats in the U.S. midterms. They win control of both the House and the Senate. What impact could it have on U.S.-China relations? And how about Taiwan? Do you have Chinese stocks in your portfolio? You may not know what you're actually investing in or what Chinese companies are concealing from American investors. An AI deal worth billions of dollars between a U.S. company and a Chinese tech giant has now been canceled. Oracle scrapped its $7 billion deal with Tencent under pressure from the U.S. government. Another key sector where China is expanding its dominance, potentially gaining another major source of leverage in its competition with the West. Democrats have won the 2026 US midterm elections. They are now poised to control the House and the Senate, leaving President Trump with many more constraints domestically. But how does this affect U.S.-China relations? Did the U.S. midterm elections change anything? On the one hand, some in China think the U.S. midterm elections put China in a better position in negotiations if Democrats challenge President Trump on certain aspects of his China strategy, especially tariffs. For China and Russia, they are dealing with a weak Trump, political weakened at home. So, we may find ourselves. in a better position in the bargaining with him. China will be in a better position to get the Trump administration to accommodate China's concern about the Taiwan issue and also the Japan issue. Some experts also believe Democrats will weaken Trump's pressure on U.S. allies to better align with his strategies on trade and security related to China. However, not everybody believes things are going to change all that much. Bernd Lange, the chair of the Trade Committee in the European Parliament, believes, quote, U.S. protectionism won't simply disappear. Meanwhile, Rajiv Bhatia, former Indian diplomat and distinguished fellow at Gateway House, he says a democratic victory will not necessarily make President Trump more accommodating towards any country. Even the Chinese state-run outlet The Paper put out this piece arguing that the midterm elections would not change the overall situation between the U.S. and China. Speaking with the paper, the president of the Shanghai Institute for International Studies, Chen Dongshou, he argued that the midterm elections would not considerably disrupt U.S. policy on China since the executive branch still has broad autonomy for foreign affairs. He added both Republicans and Democrats broadly agree on U.S. policy toward China. Chen also pointed to Trump holding off on completing a $14 billion arms sale to Taiwan that he approved last year and argued that the midterms may empower Republicans and Democrats to push Trump into helping Taiwan more and sooner at that. Over in Taiwan, Chen Fengyu, political science associate professor at Taipei's Suchao University, shared a similar sentiment. For the relationship between Taiwan and the United States, I don't think so. As for U.S.-Taiwan relations, I believe there would be even less change. The reason is that both Democrats and Republicans in Congress share a high degree of consensus regarding Taiwan. Furthermore, I do not anticipate major changes within the Trump administration. Chen Fong-yu in Taiwan also believes that a more empowered Democratic Party may actually push Trump to support Taiwan even more with arms sales. So, in fact, the two major parties in Congress, the Republican Party and the Democratic Party, Both Republicans and Democrats in Congress support accelerating arms sales. If Democrats were to gain the majority, they would likely push even harder, perhaps by passing resolutions or taking other measures to pressure the executive branch to move more quickly. Some other experts say that Democrat pressure on Trump extends to other aspects of the U.S.-China policy, such as by promoting tighter tech export controls and more scrutiny on supply chains for AI as well as semiconductors. In response to the U.S. midterm results, China put on a business-as-usual face, saying that it's looking forward to continue cooperating with the U.S., all while the U.S. and China continue their ongoing great power competition. China's stock market is in crisis. Foreign investors are hurting, and China may intentionally be keeping foreign investors in the dark to keep them from making more informed decisions. Chinese companies are tailoring their annual reports for different audiences depending on whether they're in English or Chinese languages. That's according to the Accounting Review. That's a leading academic journal that specializes in financial disclosure. While the Chinese language reports give much more detail on things like operations in Xinjiang, as well as Chinese Communist Party ties, English versions of those same reports are more likely to avoid any mention of these things. This is a move likely meant to avoid scaring off foreign investors at a time when Western governments are scrutinizing companies for links to Xinjiang, forced labor, as well as the CCP. The study also found that Chinese companies are much less likely to to respond to those that they see as foreign investors and even withdraw information from Mandarin speakers if they work for foreign firms. This would explain why even Chinese speaking professional analysts at foreign brokerages make less accurate forecasts compared to their Chinese counterparts. China's economy depends hugely on foreign capital to keep afloat. That's why it keeps promoting itself as a foreign-friendly investment opportunity. At the same time, China doesn't want to share information. Beijing has made it illegal for foreign companies to obey foreign laws by conducting due diligence gathering on Chinese supply chains. In other words, exposing links to Xinjiang forced labor. And under Chinese law, Beijing can impose exit bans even on foreigners in the name of defending national security. U.S. tech giant Oracle recently scrapped its $7 billion AI deal with the Chinese tech company Tencent. The deal, signed by Oracle co-founder Larry Ellison in September, was supposed to be Tencent's largest overseas lease deal. Had this deal gone through, Oracle would have leased its Southeast Asian data centers to Tencent for five years and given the Chinese company access to about 100,000 advanced AI chips that aren't available in China thanks to those U.S. export controls. But then U.S. officials met with Oracle executives. They raised the concerns, and then Oracle walked back. This comes as the U.S. seeks to curb Chinese access to U.S. tech in the U.S.-China AI race. China is currently unable to create chips as advanced as the U.S. at scale. That's why it seeks these leases, business acquisitions, and technology theft spanning across the world. Southeast Asia is especially popular for Chinese AI, and it's through this region that Oracle supplies other Chinese tech giants like ByteDance. As the U.S. scrutinizes U.S. chip exports to China, other giant U.S. tech companies are keeping a close watch. NVIDIA, which has gotten a lot of flack for promoting chip sales to China, has recently been putting out restrictions it hadn't demanded before. It told its clients that they must sell at least 51% of their services to non-Chinese companies in its future contracts. Measures like these are making data centers outside of the U.S. scramble to find these non-Chinese clientele. China's dominance in the chemicals industry is threatening to destroy global competitors and make the world even more reliant on it. According to the Rhodium Group, Chinese chemical output grew 18-fold in the past quarter century. China now represents over 45% of the world's basic chemicals and plastic resins. In the past five years alone, China's capacity for chemicals like styrene, ethylene, polyethylene, and polypropylene nearly doubled. Europe's chemical industry, meanwhile, is in decline. From 2022 to 2025, European chemicals capacity marked for closure increased sixfold. They blame cheap Chinese chemicals for their own downfall. This is a commonly known pattern of how China uses industrial policies and subsidies to export these cheap Chinese products to outcompete their rivals in other countries, drive them out of business, and then dominate entire industries to create further dependence on China in this vicious cycle. China is a surveillance state that monitors everybody, but it especially pays a lot of attention to Tibet, Xinjiang, Inner Mongolia, and Hong Kong, where anti-CCP sentiment is the strongest. So how does it work? C4ADS. C4ADS, which is a non-profit that seeks to dismantle illicit networks that threaten global peace and security, shows this in a new report. It's based on Chinese government and corporate records and shows how Chinese public security bureaus procure equipment, including AI-enabled biometric tech, to carry out surveillance programs. The data shows that China is relying largely on domestic distributors, including China's largest telecom companies, China Mobile, China Telecom, and China Unicom. And continuing to use U.S. sanctioned manufacturers like Uniview, Hikvision, and Tiandi, China is also found to be using certain companies that are not sanctioned by the U.S., but are nonetheless doing business with these sanctioned companies. In Hong Kong's case, the police force even uses a subsidiary of a French tech company. The main takeaway from this report is that China's government data proves there are gaps in the way the international community is holding China accountable for its human rights violations. It's a lesson of how China's domestic supply chains are becoming more sophisticated and making China less dependent on foreign tech. This in turn reduces China's exposure to foreign sanctions and export controls. And over in Tibet, C4ADS noticed that there's been a spike in biometric data collection contracts in 2020, which happens to coincide with the time COVID came around. But it also noticed that such contracts seemingly disappeared after 2023, likely suggesting that Chinese companies are self-censoring to keep biometric data collection contracts hidden from the public, or China simply didn't need more contracting. Since it established the main infrastructure needed for that ongoing biometric data collection. And China continues boosting its military might. A new image circulating on Chinese social media platform Weibo shows China testing what appears to be a new trimaran hull. South China Morning Post reported on it. This is yet another one of China's many trimaran vessels it's experimenting with. Now, trimaran hulls, in other words, ships with one central hull and two side hulls. And it offers several advantages, such as increasing speed, stability, and fuel efficiency, helping to operate helicopters in bad weather, as well as reduced thermal signature for stealth. The U.S. Navy has been creating trimaran vessels like the unmanned Sea Hunter. China wants to out-compete the U.S. with this tech. China has been testing a variety of these trimaran vessels on its own, including the Jari USVA, also known as the Orca or the Killer Whale. These kinds of vessels would be useful for China in patrolling the waters in the Pacific and in the event of a kinetic conflict, it would serve as support for much larger vessels as well as possible drone naval swarms. Coming up, U.S. midterm elections just wrapped up. Is Beijing trying to meddle in it this time? And what are the changes in Beijing's strategy against America in recent months? Gordon Chang weighs in. More on that after the break here on China In Focus. Welcome back to China In Focus. I'm Cary Dunst, in for Tiffany Meyer. Did Beijing try to meddle in the 2026 midterm elections here in America? How has Beijing's strategy against America changed in recent months? Yanni Kellek with American Thought Leaders sat down with China analyst Gordon Chang. Chang is author of Plan Red, as well as The Coming Collapse of China, for more insights. In 2020, as the election was proceeding, we knew the Chinese were deeply involved in trying to influence the outcomes. So for instance, in the Democratic Party primaries, they were clearly on Joe Biden's side over Bernie Sanders. And during the general election, they were supporting Biden over Trump. The New York Times was reporting China's use of bots, text messages, to try to disrupt the Trump campaign. They were floating those false rumors that President Trump was going to invoke the Stafford Act and, you know, basically to try to take over the country. Clearly he wasn't going to do that, but they were there. Now, in 2024, it appears that the Chinese really weren't involved in the presidential contest, but they were heavily involved and they deployed their resources for state and local races. Right now in these midterms, we're only going to know later on, but I think that they're involved because they've been consistently meddling in our elections because they realize how important they are in terms of determining American policy towards China. So I'm sure they're there, but we'll only know a little bit later about exactly what these guys were doing this time around. There's been a whole bunch of different questions I've had, both about what's happening in China, the reality of the Chinese economy and its impact on us, Yes. Um, and actually some of the US policies that have emerged over the last while. CNMI, My, uh, uh... Mariana Islands, that was the only place where Chinese nationals could travel to the US without a visa, and that loophole has now been closed. A quick comment from you on this. That loophole has been closed only because there was a Canadian who continually pointed this out to the American public and to Congress. And eventually, she prevailed. And that's Cleo Pascal. If it weren't for her, that that visa exemption would still be there. The story is not that they did this, that they closed it, which is great, of course, but that it took so long. And clearly, we've got a political system that is not moving with the vigor and determination necessary. So bravo to Clio and not so bravo to Congress. What about the current realities of the Chinese economy? It's actually quite concerning to me at many levels. I have a few things we could bring up, but why don't we just start there? I mean, the impact on America could be significant. The impact is significant because there's two Chinese economies right now. There's an internal one, which is imploding, and there's the external export machine, which is doing very well right now. Overall, China did not grow at 4.5% in the third quarter, as was reported. It was probably somewhere around zero, maybe a little bit above, maybe a little bit below. But that's an average of two very different Chinese economies. The reason why this is important for Americans is because Xi Jinping has turned his back on the property market, which once was the core of the Chinese economy. He's turned his back on consumption. Consumption contributes something like 38, maybe even less, percent of the Chinese economy. That's among the lowest in the world, and it's getting lower. The only way Xi Jinping can maintain China is to export more, which means he is flooding the U.S. and other markets with his goods. You know, China's export... Performance has been nothing short of stellar. I mean, last year, the export surplus, as officially reported, was $1.19 trillion. It was really smaller than that because of Chinese export subsidies. Exporters were faking sales. But nonetheless, it was a world record. And that means China has sought to save itself by decimating everybody else's economy. President Trump gets credit for identifying the problem. His execution has been botched, as we all know. And Trump is going to have to do a lot more to protect the American market from these predatory and criminal trade practices. There is quite a bit less export, though, now than there was even a few years ago, from what I've seen, unless I'm wrong here. Well, China is... I mean, to the U.S. To the U.S. They've been flooding other markets, though, yeah. It's declining. Our trade with China is declining. They're no longer our number one trade partner, which is a good thing. But the decline in the U.S.-China trade is less than is officially reported because China is washing its sales through other countries. And I don't mean Chinese factories in Vietnam. That's a real Vietnamese export. I'm referring to fake invoices, which... Um, show and stuff coming from other places, but in fact, manufactured in China with false invoices and bills of ladings and all of that. So, um, yeah, there is progress, but there needs to be a lot more. And that's all for today's China In Focus. I'm Cary Dunst. If you have any feedback on the show or have something you'd like to see us cover, send us an email at ChinaInFocus at NTD.com. We'd love to hear from you. And for Around the Clock original news, visit us at NTD.com, or better yet, use our NTD app. Thanks for tuning in. Good night.