Good evening. Two years ago, the U.S. blocked exports of advanced chips to China — dealing a significant blow to the country’s AI ambitions. But while the physical chips are controlled, China can still access to the chips’ computational power through “the cloud.” Our cover story this week explores why this loophole might actually be an advantage — and one the U.S. could more actively exploit.
Elsewhere, we have infographics showing the massive advantages of Chinese ports over U.S. ports; an interview with Sara Castro about the U.S.’s first encounters with the Chinese Communist Party; an op-ed on what U.S. interest-rate cuts mean for China; and an op-ed about whether Beijing’s surprise economic pivot is built to last. If you’re not already a paid subscriber to The Wire, please sign up here.
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The Cloud Conundrum
The world’s AI ambitions are currently tethered to the U.S.-built cloud. Can the U.S. keep it that way? Eliot Chen reports.

The Big Picture: China’s Ports Edge
As U.S. dockworkers struggle against automation, Chinese ports continue to outperform their American counterparts. This week’s infographics by Noah Berman show a raft of statistics on how China has pulled ahead.

A Q&A with Sara Castro

Sara Castro is an Associate Professor of History at the United States Air Force Academy and the author of Mission to Mao: US Intelligence and the Chinese Communists in World War II. The book chronicles the origins and fate of the first official contact between the U.S. government and the Chinese Communist Party: the so-called “Dixie Mission” to Yan’an by a small group of American military personnel, diplomats, and intelligence officers. Earlier in her career, Castro worked as an intelligence analyst at the CIA, focusing on East Asia. In this interview with Alex Palmer, she discusses the Dixie Mission’s resonances today.
Sara Castro
Illustration by Kate Copeland

What U.S. Interest-Rate Cuts Mean for China
For China, the U.S. Federal Reserve’s interest-rate cuts create an opportunity to address deflation and revive domestic market confidence, thereby buying more time for structural reform. Fortunately, argue Andrew Sheng and Xiao Geng, this is not lost on China’s leaders, who have introduced an ambitious economic stimulus package.

Is Beijing’s Surprise Pivot Built to Last?
The Chinese government’s stimulus package has sparked a huge stock market rally, but it has much more to do to shift the economy into a higher gear, argues Lizzi Lee.
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