Good evening. And happy new year. One of the most interesting litmus tests for advanced economies is the ability to build a commercial airplane. And, as this week’s cover story shows, China is having a hell of a time passing. Elsewhere, we have explorations of how AI companies in the U.S. and China stack up, an analysis of what Goldman Sachs’s recent doubling down in China means for Wall Street, a conversation on the South China Sea with Bill Hayton, and an argument for the U.S. to think more critically about the appeal of China’s foreign lending practices. If you’re not already a paid subscriber to The Wire, please sign up here.
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The Industrial Dream
Beijing has invested heavily in COMAC’s C919, which is supposed to be China’s answer to the Boeing 737 and the Airbus A320. If it takes off, so does China. But rather than a soaring symbol of China’s ascent, the story of the C919 exposes the challenges the country faces in reaching superpower status as well as the dangers of simplistic assumptions about China’s inevitable conquest of the global economy. As Michael Schuman reports for The Wire, the airplane should raise doubts that the increasingly state-led direction of President Xi Jinping’s economic policy can elevate China to new heights.
The Big Picture: AI Revs Up
Artificial intelligence is at the center of the increasingly contentious digital arms race playing out between the U.S. and China. But it’s not nations that are leading the charge to innovate, but businesses and entrepreneurs — in the U.S., China, Israel and elsewhere. This week, The Wire’s data graphics look at the world’s most valuable artificial intelligence companies to see how China and the United States match up and what the top 50 enterprises do. We also zoom in on one A.I. startup, a chip firm co-founded by a pair of talented brothers who in less than four years, with backing from the Communist Party, have built a $9 billion enterprise.
Goldman’s Big Bet
Foreign financial services firms have operated in China for decades, but they have largely been restricted to advising on outbound deals, such as initial public offerings (IPOs) in New York or Hong Kong, buying stakes in Chinese firms or helping Chinese companies acquire overseas assets. Now, after more than a decade of aggressive lobbying by Wall Street and the U.S. government, China is granting foreign firms greater access. As The Wire’s Eli Binder reports, global firms like Goldman Sachs are scrambling to take advantage of the long awaited opening — even amid growing tensions between the U.S. and China.
A Q&A With Bill Hayton
Bill Hayton is an associate fellow with the Asia-Pacific Programme at Chatham House and a Fellow of the Royal Geographical Society. His latest book, The Invention of China, came out of his research into China’s territorial claims in the South China Sea. In this week’s interview with The Wire’s Katrina Northrop, he talks about China’s origins story, how bad mapmaking gave rise to the South China Sea dispute, and why some Sinologists were upset by his book.
Illustration by Kate Copeland
Inside China’s Empire of Debt
For the last three years, senior Trump administration officials have crisscrossed the world chiding other countries for joining Xi Jinping’s One Belt One Road initiative (OBOR) and calling “predatory” Chinese debt diplomacy a threat to the national interest. But, as Eyck Freymann argues in this week’s op-ed, this misdiagnoses the challenge. OBOR is not just a vehicle for China to peddle cheap financing, but the promise of a geopolitical patronage relationship that pays off for elites on both sides. If Washington wants to compete effectively, it needs to see that China is attracting willing partners.
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