| Hi, I'm Rebecca Choong Wilkins in Hong Kong, where I'm asking the same question every political leader around the world must be thinking right about now: What is Donald Trump going to do? As far-reaching as the incoming American president's actions are sure to be, there are few places outside the US where the stakes are higher than they are in China. That's because Trump's first presidency transformed Washington's relationship with Beijing from one of engagement to one of preventing China from overtaking America as the world's preeminent economic and technological powerhouse. The Biden administration doubled down on that strategy, with an emphasis on stopping Beijing from advancing its most sophisticated military capabilities. But as Trump prepares for his return to the White House, there's a big problem he'll need to address early. Some of those US efforts to stall China's technological rise have failed to hit the mark. New research by my colleagues at Bloomberg Economics and Bloomberg Intelligence shows that Beijing's push to climb up the industrial value chain — as benchmarked against President Xi Jinping's "Made in China 2025" plan — has been largely successful, despite all those American sanctions. Read about that research here, listen to the podcast here and watch Bloomberg Original's short documentary on Trump's China challenge. Unveiled a decade ago, Made in China 2025 identified 13 key sectors in which Beijing wanted to lead the world. It has done so in five of those and is catching up fast in another seven. China has a clear lead in EVs, automotive software and lithium battery technology, while the one sector it's still a laggard in is commercial aircraft. When it comes to semiconductors, the main focus of US export controls, the country has also struggled to manufacture the most advanced chips but is competitive.  Trump and his running mate JD Vance on election night. Photographer: Evan Vucci/AP The question is how much does Trump — the self-proclaimed "Tariff Man" — care about these efforts. During the campaign, at least, he was focused primarily on trade levies rather than tech restrictions. The answer will really begin to get interesting if Trump's tariffs ultimately lead to in-depth negotiations between the world's biggest economies. That's when the value that Trump, and what seems like his single-minded focus on the US-China trade deficit, places on hampering Chinese access to cutting-edge technology could really start to matter. What We're Reading, Listening to and Watching: China's luxury goods market has been hurting pretty much since the end of the pandemic. One very visible reminder of that is a five-story building in a luxury shopping compound in Beijing that is set to be a flagship store for LVMH's top brand, Louis Vuitton. The store was expected to open in the first half of 2024 but the building remains fenced off and the launch may not happen until next year.  LVMH's project in Beijing in October. Photographer: Na Bian/Bloomberg The slow progress of the project underscores the challenges that European luxury firms now face in China. Part of the reason for the slide that has wiped billions off the stock market value of these brands in recent months is the troubles besetting the world's second-largest economy. For one, there's a slump in the property market, which serves as a store of wealth for Chinese families. Then there's also high unemployment and weak consumer confidence. On top of that, Xi has made it clear he's not a fan of ostentatious displays of bling. In years gone by, fine hotels in Beijing might have a handful of shiny Lamborghinis parked out front. No longer. Public displays of wealth like a gaudy Gucci shirt are not just passe to some people but potentially dangerous as Xi hunts down dirty officials. Even Hermes, which has shown resilience to economic downturns in the past, is coming under pressure. Its sales people in China have slashed how much shoppers must spend before they buy the iconic Birkin or Kelly bags, something that rarely happened in the past. (A Hermes spokesperson said the company doesn't impose a spending threshold to purchase its products.) Other firms, including Kering and Burberry, are resorting to discounts of as much as 50% to clear stock.  Shoppers on Nanjing East Road in Shanghai during a holiday last month. Photographer: Qilai Shen/Bloomberg Swire Properties, which runs the shopping complex that's home to the Louis Vuitton flagship store in the Chinese capital, says work on the project is on schedule. Yet there's signs the headwinds confronting the luxury industry will blow longer. Take Zhang Tong, a 24-year-old who used to spend thousands of dollars a year buying designer clothes and accessories. She's now switching to plain T-shirts and Crocs. That's emblematic of China's Gen-Z consumers, for whom cool no longer means being a fashion plate. They'd rather have a good time and a story to tell on social media. Luxury brands are going to have to get real creative if they're going to profit off that shift. | 
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