Weekly Significant Activity Report - September 6, 2025
OPFOR leaders assembled in China, Beijing pivots against US chips and takes the lead in a return to the moon, the Kremlin gives an optimistic outlook for the Russian economy in Vladivostok.
This week's analysis highlights some of the most significant news concerning America's adversaries between August 30, 2025 - September 6, 2025.
Summary:
The leaders of China, Russia, Iran and North Korea convened in China this week in a show of unity against the West.
Beijing is pressing top Chinese technology companies to use domestic chips after long demanding access to advanced US semiconductors.
China is poised to pull off a manned mission to the moon before the US due to a more consistent government focus on the operation and greater progress on developing moon lander technology, experts tell Congress.
Russia hosted the 10th annual Eastern Economic Forum where Putin touted the significance of Moscow’s economic ties in Asia, an assertion belied by the absence of top Chinese officials.
Ukraine’s intelligence suggests Russia is making a push for a major breakthrough in Donetsk near the city of Pokrovsk, but is producing less long-range drones than previously forecasted.
The UN releases an alarming report suggesting widespread abuse of people with disabilities in North Korea.
1. CHINESE, RUSSIAN, IRANIAN, NORTH KOREAN LEADERS GATHER IN CHINA IN SHOW OF UNITY AGAINST THE WEST
This week, the leaders of China, Russia, Iran and North Korea united in China along with 20 other heads of state from Eurasia for the 2025 Summit of the Shanghai Cooperation Organization (SCO) from August 31 to September 1, followed by the 80th anniversary commemoration of victory over Japan in the Second World War on September 3.
Takeaways:
This week’s events are covered in a special September 3 Situation Report linked below:
2. CHINA PIVOTING ON PREVIOUS PUSH FOR US CHIPS
A September 4 report by Reuters suggests that top Chinese technology companies such as Alibaba, ByteDance, and Tencent are interested in buying modified versions of Nvidia’s most advanced chips, but are facing pressure from the Chinese state to use domestically produced chips.
Takeaways:
The current turn of events is quite remarkable as only months earlier Chinese officials and business leaders had lobbied hard to get the US to lift export restrictions on advanced US semiconductors. The lobbying worked and the Trump administration, at Nvidia’s suggestion, offered to lift restrictions on Nvidia’s highly sought after H20 chips. Not only that but a deal appeared to be in the works to sell a scaled down version of its most advanced Blackwell AI chip. A chip that Chinese firms had established elaborate smuggling networks through Southeast Asia to get a hold of. It is truly ironic that the approval of the Chinese government—rather than that of the US—has become the main obstacle for Chinese companies to access the world’s most advanced semiconductors.
Chinese companies can’t just phase out Nvidia’s chips at the request of the Chinese Communist Party. It’s not simply a matter of Nvidia chips having more transistors than chips designed by Chinese companies such as Huawei. The reason for Nvidia’s dominance is its broader platform for application programming called the Compute Unified Device Architecture (CUDA). CUDA is by far the market-leading platform for programming Graphics Processing Units (GPUs), the specialized chips that power artificial intelligence systems. This software platform gives Nvidia a crucial advantage that goes far beyond hardware specifications alone.
Huawei has developed its own competitor software ecosystem called Compute Architecture for Neural Networks (CANN) that is compatible with its Ascend AI chips. CANN differentiates itself from CUDA through an open source code base, which it hopes will increase its appeal for developers. It remains to be seen whether this will work, Nvidia’s other competitors such as AMD have tried similar gambits. As of right now the CANN ecosystem lacks the network effects Nvidia has built into CUDA over more than 20 years.
Another possible explanation for China’s sudden pivot away from Nvidia chips is that it is part of a broader campaign of hard ball negotiating tactics the country is using to squeeze additional concessions in trade talks. Beijing seems to recognize that Nvidia is both very eager to do business in the country and effective at lobbying the Trump administration for policy changes. It may be focusing additional pressure on the company to convince the White House to further ease export restrictions or alter its trade policy in other areas.
3. CHINA COULD WIN THE RACE BACK TO THE MOON, EXPERTS TELL CONGRESS
This week Senator Ted Cruz, Chairman of the Senate Committee on Commerce, Science, and Transportation hosted a hearing on the state of the US-China space race entitled: “There’s a Bad Moon on the Rise: Why Congress and NASA Must Thwart China in the Space Race.” Four experts testified: Allen Cutler, President and Chief Executive Officer of the Coalition for Deep Space Exploration, Michael Gold, President of Civil and International Space for Redwire Corporation, Jim Bridenstine, Managing Partner of the Artemis Group and Former Administrator for the National Aeronautics and Space Administration, Lieutenant General John Shaw, Former Deputy Commander of the U.S. Space Command.
Takeaways:
The testimony (while influenced by domestic political posturing) contained interesting insights into progress China has made in its space program. Witnesses suggested that China was currently ahead of the US in both an integrated space strategy and in technical progress on lunar landers.
LTG John Shaw:
“It is clear to me that the Chinese Communist Party is already employing its own integrated grand strategy for the earthmoon system, with only superficial distinction between civil, commercial, and national security activities, and all focused on a common purpose. I believe if we do not unify and synchronize our efforts, we will find ourselves, rather than the space leaders we are today, instead in a position of increasing disadvantage in space as we progress further into this century.”
Allen Cutler:
“Recent tests of their lunar infrastructure demonstrate the systematic process they are following to accomplish a crewed landing on the Moon. In June, China conducted a test of its crew vehicle launch abort system. In August, the Long March 10 rocket successfully conducted a static test fire, paving the way for a test launch, and China also conducted a simulated takeoff and landing of its two-person lunar lander. These are the hallmarks of a space program that is progressing towards its goals.”
Jim Bridenstine:
“While the United States should celebrate orbiting the Moon in 2026, the United States does not have a lander. Unless something changes, it is highly unlikely the United States will beat China’s projected timeline to the Moon’s surface.”
China’s Lanyue Moon Lander conducting takeoff and landing testing in August 2025. Source: CCTV
4. RUSSIA HOSTS EASTERN ECONOMIC FORUM: PUTIN PROJECTS OPTIMISM ABOUT RUSSIAN ECONOMY; TOP CHINESE OFFICIALS SKIP
From September 3-6, Russia held the 2025 Eastern Economic Forum in the Far Eastern city of Vladivostok. It was the 10th iteration of the event that the Russian government describes as “a major platform that aims to develop the economy of the Far East and expand international cooperation in the Asia-Pacific region.”
While several deputies from China’s National People’s Congress were in attendance at the Eastern Economic Forum, no senior officials from the Chinese Ministry of Finance, Chinese Ministry of Commerce, Chinese Foreign Ministry, and People’s Bank of China were reported to have attended the event.
Severstal CEO Says Steel Industry in Most Dire Position Since End of Soviet Union
Alexander Shevelev, the CEO of Severstal, one of Russia’s largest steel producers, said in a September 4 interview with RBC.ru that Russia’s steel and metallurgy industries face a crisis comparable to the turbulent 1990’s. The steel industry is facing a dual crisis of limited demand caused by sanctions restricting exports, and high interest rates.
Putin Admits Russia is Facing a Gas Crisis
During a presentation at the Eastern Economic Forum on September 4, Russian President Vladimir Putin acknowledged that regions in the Russian Far East were facing gas shortages.
"We know that the overall energy situation is being resolved, but there are many issues that require special attention: for example, we are facing a gas shortage, we do not have connections between the various components of the energy infrastructure, and our grid economy requires development."
Putin Says Growing Budget Deficit is No Big Deal
During his remarks at the Eastern Economic Forum on September 4, Putin sought to calm concerns over a growing budget deficit, which had reached five trillion rubles (approximately $61B and 2.5% of total GDP) in July, due to declining oil revenues and growing spending. Putin suggested the climbing deficit was not a problem because Russia has a low-debt-to-GDP ratio.
“Some of our colleagues in the government believe that this deficit can be increased. There is nothing wrong with that. Why? Because the level of our debt burden — both external debt and internal debt — is not just acceptable, it is low. And this guarantees the stability of the entire credit and financial system, including the budget system.”
Takeaways:
The absence of senior Chinese economic policy makers from an event that featured remarks by Vladimir Putin should be viewed as a snub to Moscow that belies the supposed strength of economic ties between the two countries. Xi Jinping had previously attended the Eastern Economic Forum in 2018.
Despite Putin’s optimistic depictions of Russia’s debt burden, the reason Russia has a low-debt-to-GDP ratio is because Russia’s credit is terrible—literally rated as “junk”. So the Kremlin doesn’t have the same ability to raise debt in global financial markets like the US government.
Russia’s total state debt may actually be much higher than is currently reported, as the Kremlin has raised billions of dollars indirectly through loans from corporations that the state has a controlling stake in like Gazprom. This financial engineering has helped Russia withstand economic pressure so far but has created systemic risks which could trigger a banking crisis in months to come if central bank interest rates remain high.
Statements by one of Russia’s top steel industry leaders about the fragility of the industry heighten worries about the structural risk the country has assumed in extracting corporate debt to fund its war in Ukraine. Steel, like mining and railroads, are industries that are key to the Russian war effort. Despite high domestic demand, these industries find themselves struggling under export restrictions and high interest rates.
Putin’s acknowledgement that Russia faces gas shortages underscores the effectiveness of Ukraine’s recent strikes on Russia’s oil refineries. Hours after Putin’s remarks Ukraine struck and disabled parts of the Ryazan Oil Refinery operated by Rosneft. The Ryazan Oil Refinery is one of the five largest in the country.
5. UKRAINIAN MILITARY INTELLIGENCE PROVIDES AN ASSESSMENT ON THE STATE OF RUSSIA’S WAR EFFORT
In a September 5 interview with Novyny.Live, Andrii Yusov, spokesman for Ukraine’s Military Intelligence Service (HUR), announced that the Russian military currently had 700,000 troops deployed in Ukraine and was currently preparing to attempt a breakthrough in the Donetsk region near the city of Pokrovsk. Yusov also stated that Ukraine assesses that the Russian military currently produces approximately 2,700 Shahed-type long-range strike drones each month, and is dependent on North Korea for 40% of its artillery ammunition.
Takeaways:
Any public assessment of Russian capabilities by Ukrainian military intelligence should naturally be cross-referenced against independent analysis. However, their estimates that Russia can produce 2,700 Shahed-type drones (also known as Geran drones) is notably conservative compared with previous projections by the Ukrainian government. President Zelensky had announced in May that Russia was scaling production to 300-350 drones per day, with a goal of over 500 daily. This suggests that Russia is struggling to scale production, a possibility supported by a plateauing in the frequency and size of Russian drone attacks since early summer.
6. UN REPORT ACCUSES NORTH KOREA OF SYSTEMATIC ABUSE OF PEOPLE WITH DISABILITIES
The United Nations Committee on the Rights of Persons with Disabilities released a report on September 3 that accuses North Korea of performing forced sterilizations and abortions, clinical trials of medicines without consent, and in some cases euthanasia on people with disabilities. The abuses were most common in rural areas with underfunded medical systems.
Takeaways:
The report's disturbing findings indirectly help to explain North Korea's recent strategic pivot toward Russia and participation in the war with Ukraine. The country's moribund economy cannot sustain humane long-term care for its most vulnerable citizens. This creates conditions where medical professionals make decisions that are unthinkable in more developed countries to reduce suffering and conserve vital resources.
This economic dysfunction reflects the fundamental tension at the heart of the North Korean state. The market-oriented reforms necessary to generate growth and improve basic social services would inevitably threaten to destabilize the Kim regime's grip on power. The regime is similarly suspicious of foreign public health assistance, viewing such aid as another potential threat to its control over its citizens.
Faced with these constraints, North Korea has increasingly turned to its military and defense industries as the most effective and politically safest means of creating economic value without compromising the regime’s authority. This dynamic helps provide one explanation for the country's willingness to deepen military cooperation with Russia, and use that cooperation as a bargaining chip it can use to extract concessions from China, South Korea, and the US.
The results of Kim Jong-un’s meetings with Xi Jinping in Beijing this week suggest the strategy continues to work, with China hinting that it would provide increased economic assistance to Pyongyang.