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China Decode: Why China Keeps Selling U.S. Treasuries (Transcript)

Editor’s Note: In this episode of China Decode, hosts Alice Han and James Kynge examine the shifting realities of global economics and technology as China rapidly alters its strategic playbook. They unpack the motivations driving China’s massive sell-off of U.S. Treasuries amid shifting alliances with Russia, alongside the implications of China becoming the first nation to commercially approve a medical brain-computer interface chip. From pipeline politics to the cutting edge of biotech, the duo maps out how Beijing is intentionally accelerating its independence from the West. (May 26, 2026)

TRANSCRIPT:

ALICE HAN: I just think that it’s super interesting at a macro level that these two countries, because of trade and strategic alignment, have come closer and closer. And it’s sort of Kissinger’s nightmare, right? We are living in a kind of reverse 1970s where Russia and China are getting closer together rather than the US getting closer to both Russia and China individually.

Welcome to China Decode. I’m Alice Han.

JAMES KYNGE: And I’m James Kynge.

ALICE HAN: In today’s episode of China Decode, we’re discussing the future of a gas pipeline between Russia and China, China’s massive sell-off of US Treasuries, and the world’s first commercially approved brain chip. All right, let’s get right into it.

Putin’s Visit to China and the Power of Siberia 2 Pipeline

ALICE HAN: Russian leader Vladimir Putin visited China just days after President Trump left his own bilateral summit in the country. A centerpiece of the agenda was the long-stalled Power of Siberia 2 pipeline, a proposed 1,615-mile pipeline that would carry up to 40 billion cubic meters of natural gas annually from Russia into the industrial heartlands of China.

So far, no deal has been announced post-summit, but a spokesperson says a general understanding between the two leaders was reached. James, this obviously happened right after Trump’s own trip to China. We knew this from the get-go. Obviously, the two leaders, Putin and Xi, have a very strong relationship that dates back decades. This is Putin’s 25th visit, which is hard to believe, to the country. No other leader at the world stage has met with Xi Jinping as many times as Putin, and vice versa.

What was your readout on the meeting between these two leaders, and why, more importantly, has this gas pipeline, which should be strategic to both sides, been stalling?

The Axis of Authoritarianism: Russia and China Draw Closer

JAMES KYNGE: Yeah, I’ll come to the gas pipeline in a minute. It’s a monster. It’s a huge deal. But I think the big picture here is that what we’re seeing is the axis of authoritarianism in action. This kind of bromance between Putin and Xi is really striking. And I’ve been looking at the fact that since Russia’s invasion of Ukraine, we’ve seen these two big powers draw together much, much more closely. That includes diplomatically, economically, but also militarily. And that’s why it really matters for the world.

I would say actually that the sort of closeness that we’ve seen between Russia and China since the Russian invasion of Ukraine is probably the most consequential geopolitical shift that we’ve seen in the world over the last decade. I mean, I know there are several competitors for that title, but this one is really big. On the one hand, we have a superpower, China. On the other, a big power, Russia. Their combined population is about 1.55 billion people, vast territories. It’s the second and the ninth largest economy, and both of these countries are nuclear weapons powers.

So this is really important for the US. I think it’s particularly key because China used to be a rival, perhaps an adversary of the US, but now China and Russia together makes a much bigger adversary to the US. And China and Russia have not attempted to hide their opposition to the US. As you mentioned, just a few days after President Trump left, Xi Jinping and Vladimir Putin were warning that a global return to “the law of the jungle” would be a risk for the world. And this is a clear reference to the US attack on Iran and Venezuela.

So this is an axis of authoritarianism in my view, and it’s clearly oppositional to the United States. For Europe, obviously, this has been a major problem. Russia casts such a long shadow over Europe in terms of its economic politics as well as its military threat, that China and Russia together creates a much more formidable player for Europe to conjure with.

And now I get back to the Power of Siberia 2 pipeline, because the key glue in the Russia-China relationship is effectively hydrocarbons. And among hydrocarbons, natural gas is probably the most important. We’ve seen Russia and China build the Power of Siberia 1 pipeline that’s taking natural gas from Russia to China. But this Power of Siberia 2 pipeline, if it is built, would be 2,600 kilometers long, cost up to $34 billion US to build. It’s an absolute monster.

And what it would mean is that China would be the customer of up to 50% of Russia’s exports of natural gas. That’s equivalent to what Russia was exporting to Europe before the Ukraine war. But now the exports to Europe have sharply declined. And so we can see in these pipeline politics the real shift in orientation of Russia from a Europe-facing power before the invasion of Ukraine to what is now the case. It is now a China-facing power.

So that’s why this Power of Siberia pipeline, I think, is so crucial. It shows the fundamental geopolitical shift of one of the most important European and Asian powers, that’s Russia, away from Europe and towards China. But what did you make of it, Alice? What did you make of the big bromance between Xi and Putin in Beijing?

Trade Coupling Between Russia and China

ALICE HAN: Well, it was clear as soon as Putin landed that he’s very well-liked in China.