China's Economy, Tech

This week

China’s Olympic innovations

Installed power generation capacity reached 3.0 billion kW, up 14.1% YoY. 38% of that came from wind and solar. America’s total installed capacity is 1.2 billion kW.

State Grid—the world’s single copper user—will spend $83 billion this year, beefing up its UHV network that covers 80% of China and carries power from western deserts to eastern industries. [China consumes twice as much electricity as the USA, where generation capacity is falling–Ed]

Lithium phosphate batteries are $53/kWh, down from $95/kWh last year. There is now parity between ICE vehicles  and EV manufacturing costs. China has cornered the market on LFP.  

China is first to create nuclear fusion plasma, way ahead in the most important race of all.

Apple dropped out of the top five smartphone sellers in China in Q2. Though smartphone shipments grew 8.9%, to 71.6mn units, Apple’s declined 3.1%. [Of Apple's top 187 suppliers, 157 have factories in China].

The Senate National Defense Authorization Act (NDAA) omitted a bill to ban the sale of DJI drones in the United States after it passed in the House. The absence does not yet mean the act is dead, but it is a positive step in the eyes of those who support the Chinese drone company. 

China is building a national pilot testing system of ‘enlarged laboratories or shrunken production lines,’ to support key industries’ connection to the industrial internet, the Internet of Things and 5G technologies, supported by machine vision and industrial AI, to optimize process efficiency “through comprehensive perception, real-time analysis, scientific decision-making, and precise execution.” Chengdu’s proposed $750 million ‘pilot platform construction fund’ aims for 100 key pilot testing platforms and 500 products launched onto the market, and 100 innovative companies incubated by 2025. In Wuhan’s Optics Valley, three key pilot testing platforms are set up, targeting laser processing, drug development, and new display technology. Research suggests that the success rate of industrializing laboratory research is 30% without pilot testing, and 80% with a pilot run.

Ignore China’s share of total global exports and look at their share of manufactured exports, which has been stable at 20% for several years. The headline numbers say Chinese exports to the US have taken a big hit, from 22% of US goods imports now down to 14%. So is China losing a lot of market share? Most of that reduction in value is not real. Chinese solar panel makers can’t ship directly to the US because of tariffs. So they set up a factory in Vietnam and Malaysia and send it there, but it is still a Chinese-made product.

BYD just hired 10,000 recent graduates, 70% of whom have masters or doctoral degrees, 80% of them for R&D. BYD’s research team was awarded 15 patents/day last year. While BYD has been extremely fast at pumping out new products this year, it will be even faster in the future and its additional headcount will allow exploration into new areas. We will have to wait to see what those are. TP Huang

A sunlight-powered MAV drone weighing as much as a sheet of paper, just 4.21 grams, with its 20-centimeter wingspan, represents a dramatic downsizing from previous flying machines, which were typically meter-sized and weighed kilograms. This breakthrough, also published in Nature, opens up exciting possibilities for ultra-long endurance micro aerial vehicles. Such devices could potentially stay aloft indefinitely during daylight hours, making them ideal for applications like environmental monitoring, communication relays, or search and rescue operations in remote areas.

The jobless rate for the 16-24 age group, excluding students, dipped to 13.2% in June from May’s 14.2%. For the 25-29 age group, also excluding students, was 6.4%, a third consecutive month of decline. The rate for the 30-59 age group remained at 4%.

Apollo Go driverless taxis, launched in Wuhan in 2022, has expanded to ten other Chinese cities …. Its service has carried out 6m rides nationwide since launching. It now has more than 400 driverless cars on the road in Wuhan and plans to have 1,000

running by the end of this year. Most of its cars in Wuhan have “level four” autonomy, which means they do not require human intervention in most situations on the road but can get muddled in areas such as parking garages—which might explain why it asks customers to trudge through the city’s sweltering heat. The reason Apollo Go has … gained such favor with riders is that it is astonishingly cheap. Your correspondent’s 11-minute spin cost just 9.84 yuan ($1.35). Such fares are possible thanks to the largesse of Baidu, which is covering around 60% of the cost of a ride. That is not sustainable. But, thanks to plummeting costs, the company reckons its robotaxis in Wuhan will break even by the end of the year and turn a profit in 2025. In May it unveiled its sixth-generation vehicle, which costs less than half the previous model. As the business has expanded the supply chain has matured and Baidu has been able to spread the cost of developing and updating its technology over more vehicles. Last year General Motors, an American carmaker, suspended operations at Cruise, its robotaxi business, after one of its cars injured a pedestrian in San Francisco, leading California to revoke its licence to operate in the state. On July 23rd it said it would relaunch the service in Dallas, Houston and Phoenix, but with a human supervisor in the vehicle. That same day Tesla, America’s electric-vehicle giant, said it would push back the unveiling of its robotaxi from August to October. In May China’s government offered to let the company test its service in the country. If it does, expect more hand-wringing from China’s taxi drivers.

China creates its own money and controls its credit system. It’s also invested in modernizing its high-speed railroads, modernizing its communication system, modernizing its cities, and above all its electronic internet system used for monetary payments. China has liberated itself from debt dependency on the West – and in the process, made the West dependent on it.  This could only have been done by government investment and regulation under a long-term plan. The Western financial model lives in the short run. If you’re going to allocate credit and resources to make fortunes by living in the short run by taking as much as you can as quickly as you can, you will not be able to make the capital investment to develop long-term growth. That’s why American information technology companies have not been able to keep up with their Chinese counterparts. Financialized “market forces” oblige them to use their income for stock buybacks and to pay out of dividends. That is the case with U.S. technology across the board. China’s companies investing in information and internet technology plow their profits back into reinvestment in more research and development. Such innovation has shifted from the West to the East, which has rediscovered the logic of industrial capitalism developed by the 19th century’s classical political economists.

The last time the 'king of the manufacturing hill' got knocked off the throne was when the US surpassed the UK just before WW1. It took the US the better part of a century to rise to the top; the China-US switch took about 15 or 20 years. In 2020, China made up a staggering 35% of global gross manufacturing production. That is more than the combined output of the United States (12%), Japan (6%), Germany (4%), India (3%), South Korea (3%), Italy (2%), France (2%), and the United Kingdom. By 2030, the world will only have two industrial sectors, China and the world.