Good evening. Have you heard the term “drone swarms”? Basically, military observers expect the next generation of armed drones to be powered by artificial intelligence and capable of descending on targets en masse, like an army of flying robots. And since China is currently the world’s largest armed drone exporter, this week’s cover story explores how the country may have a significant head start on the future of war. Elsewhere, we have an interview with Lillian Li about understanding Chinese tech on its own terms; a story about how China helps North Korean hackers; an op-ed about how the digital renminbi will change China; and infographics about China’s gold rush. If you’re not already a paid subscriber to The Wire, please sign up here.
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The Drone Dealer
China’s armed drone business is booming. The country now exports to more countries than anyone else. Perhaps more surprisingly, its customers include everyone from pariah states like Turkmenistan to close U.S. defense partners like Iraq, and its sales allow the People’s Liberation Army to essentially look over other militaries’ shoulders. While the U.S. maintains an edge in drone hardware, Chinese drones have a head start on artificial intelligence software. And as Eli Binder reports this week for The Wire, when it comes to the future of war, this may present a problem for the United States.
The Big Picture: China’s Gold Rush
Gold prices did what they often do in times of economic turmoil in 2020, surging to a record high above $2,000 an ounce by August. China leads the world in gold production, with the country’s reserves concentrated in eastern Shandong province. Starting from 2015, Chinese companies have also made significant investments in gold mines overseas. This week, The Wire’s infographics look at China’s role in the global gold market, including its top producers and who backs them.
A Q&A with Lillian Li
Lillian Li is the writer of ‘Chinese Characteristics,’ a longform newsletter analyzing Chinese tech’s design philosophies, business strategies and product idiosyncrasies. Before returning to China in 2020, Li was a venture capital investor with Salesforce Ventures and Eight Roads Ventures investing across Europe. In this week’s interview with James Chater, she talks about understanding Chinese tech on its own terms and explains why ‘super apps’ are not a bug of the Chinese system but a feature of it.
Illustration by Kate Copeland
The Hackers Next Door
In recent decades, China has emerged as a critical enabler of North Korea’s cyber operations, which include the hacks of Japan’s Sony Entertainment in 2014 and the Bangladesh central bank in 2016. As Katrina Northrop reports this week, this assistance is not all explicitly state-sanctioned, but experts say Chinese authorities have displayed little willingness to crack down on North Korea’s activities. For the U.S. government, however, China’s role in these attacks is a concern.
How Will the Digital Renminbi Change China?
China’s digital currency won’t help the renminbi to challenge the U.S. dollar’s global dominance, says Shang-Jin Wei, a professor at Columbia University, in this week’s op-ed. Instead, its true significance lies in its potential to alter the competitive balance of power between China’s technology giants and traditional majority state-owned banks — thus indirectly enhancing the banks’ international competitiveness.
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