Progress on a broad front
Tech
Of 68 semiconductor companies that have released H1 financial reports, 40 gained more than 50%. There are 157 A-share listed companies on China’s semiconductor industrial chain. Companies making storage chips, contact image sensor chips and system-on-a-chip products posted impressive gains. [Intel posted massive losses].
Huawei persuaded 2.54 million developers to build the HarmonyOS independent of Windows and Android, because consumer electronics products from China mostly run on American OS . The operating system is the pinnacle of high value-added industry that has allowed America to grow faster than Europe and Japan. China’s move up to the highest value added fields threatens the source of America’s economic growth for 30 years.
BYD has 5,000 engineers in its Intelligent Driving team, with 1,000 of them in its core algorithm team and a $150 million monthly payroll. While others focus on narrow-sense autonomous driving, BYD is striving for a more comprehensive approach to deliver advanced driving assistance that surpasses human capabilities and to install them on BYD’s mid-to-low-end models within two years.
$50 Billion Subsidy Drives Hydrogen Vehicle Growth.“A friend just returned from China. He reports that hydrogen-powered vehicles are everywhere to be seen.”
Tianmushan One, a new hydrogen-powered drone, can carry 6 kg for 60 miles in ultra-low temperatures and has an eco-friendly design. Powered by hydrogen fuel cells and storage with an energy density of 1,000 Wh/kg, several times more than lithium batteries. It carries an integrated parachute that automatically deploys the parachute to minimize risk.
Kunlun Tech’s SkyReels platform integrates script generation, character customization, storyboarding, plot development, dialogue/BGM, and film synthesis into one. Creators can create a play with one click; users input a simple idea, and this tool can complete the entire process from script to finished short film.
BYD has 5,000 engineers in its Intelligent Driving division, 1,000 of them in its core algorithm team and all for $150 million monthly payroll. While others focus on narrow-sense autonomous driving, BYD is striving for a more comprehensive approach to deliver advanced driving assistance that surpasses human capabilities and to install them on BYD’s mid-to-low-end models within two years. [BYD’s net profit for FY2023 rose 105% YoY]
Cathode material gives solid lithium batteries 1,000x conductivity of traditional cathodes, smoothly charges and discharges without additives. Its 1.2% charge/discharge volume change beats traditional materials’ 2.6%. Its 390 Wh/Kg energy density supports a 1.3x longer battery life than the most advanced lithium-ion batteries. After 5,000 charge/discharge cycles, the new battery retains 80% of its initial capacity.
In 1997 China paid RMB 700 million for 2 used German tunnel boring machines, TBM. China couldn’t make the machines itself because TBMs have 30,000 precision parts, so spent $1000/day for German maintenance engineers when Chinese engineers made $100. In 2008 the first TBM with independent IP was completed and tested against an imported one and it was as good or better. Today China has 70% of the international TBM market and their machines cost only $4-7 million.
27 humanoid robot manufacturers and 30 companies from the humanoid robot industry supply chain are showcasing products at Beijing’s 2024 World Robot Conference.
Baidu’s AI training system helped China’s national diving team. “The AI system allows timely playback and scoring, it can be used to refine a diver’s movements during daily training as an additional coaching support. The system understands complex instructions from coaches, records athletes’ diving posture and actions, scores their real-time movements and provides precise quantitative assessment and scientific guidance for training and competition.”
Economy
Aerospace vehicles, electronic and communication devices, computers and office equipment saw double-digit growth last month. Production of civilian UAVs rose 85% and NEV output rose 28%.
Consumer retail sales rose 2.7% YoY to $529 billion in July.
The country’s total catering revenue hit $60 billion in July, up 3% YoY.
Retail sales rose 3.5% YoY to $4 trillion.
Online retail sales rose up 9.5% YoY.
Services consumption rose 7.2%.
Industrial output rose 5.1% YoY in July
Non-financial outbound direct investment (ODI) increased 16.2% to $83.55 billion.
That growth rate was lower than the 16.6 percent increase recorded in the first half of ODI into BRICS rose 7.7% YoY to $18 billion.
Existing overseas projects hit $86 billion, up 6.6%; new contracts rose 25% to $134 billion.
Chip exports rose 26% to hit a record $90 billion.
Power generation capacity grew 14% YTD to 3.1 bn total. Solar rose 50% to 740 mkW, wind rose 20%. $58 billion invested in power supply projects, up 2.6%. Power use climbed 7.7% to 5.6 Tn. kWh. 11 more nuclear reactors approved. 9 of the 10 reactors approved in 2022 are under construction, as are 4/10 of the 2023 batch. Within 12-18 months of approval, they’re pouring concrete…(!).
China’s incremental 5% annual growth in this decade alone beats the combined GDP of India, Indonesia, and Japan. Accounting for 17% of global GDP like the European Unio, China’s economic trajectory poses significant implications for global commerce. Moreover, China already constitutes 25% to 40% of global revenues in key industries like cars, luxury goods and industrial equipment.
Big Three telecoms announce higher dividends, lower capital investments, as the government focuses on SOEs’ stock performance and shareholders’ returns. The dividend increases exceeded net profit, which had risen 8.2% to $3 billion YTD. CEO Ke Ruiwen pledged to increase the payout ratio from 40% in 2020 to 75% by 2027.
Q2 exports grew 7.6%, vs 6% expected (Reuters). Imports rose 1.8%, missing the Reuters’ forecast for 4.2% growth. Trade volumes with ASEAN, Russia and Latin America rose, while exports to the EU, the US, Japan and Australia decreased.
Beijing’s aspirations for a low-altitude economy in the air would grant cost advantages and market influence that far exceed any lost drone sales to the US. Targeting DJI but not the system of which it is part risks missing the swarm for the drones. The same can be said for China’s internet satellite efforts. Yes, they may be a bid to rival Elon Musk’s Starlink. But as we wrote recently, “the simple head-to-head comparison belies a more complex set of dynamics…China is not simply looking to rival the US with its own satellite internet constellation. Rather, ‘China’s Starlink’ will plug into a wider telecommunications infrastructure, positioning Beijing to establish a dominant lead in the emerging 6G era.”
China accounts for 35% of global manufacturing but 29% of value added. America produces 12% but accounts for 16% of value added. China’s goal is to get both 35% of manufacturing and value added.
Trade
Western airlines canceled flights to China since Russia revoked their overflight permits, requiring a long, expensive detour. Hainan Airlines flies Zaventem – Beijing 7x/week), Shanghai (4x/week) and Shenzhen (3x/week). Budget Juneyao Airlines flies 3x weekly Brussels – Shanghai. New Airbuses and excellent service, for $600 return. German FDI into China rose 134% YoY so fully packed planes leave Frankfurt for China hourly, en route to a dozen Chinese cities.
Xinjiang textile exports increased to record levels despite US legislation banning imports over forced labor risks in the region which produces a fifth of the world’s cotton.
The world’s premier container ports handled 690.3m TEU in 2023, up 0.8% from 2022, edging closer to the 700m TEU mark. That subdued growth figure hides the fact that, once again, the Chinese majors and ports in the Middle East captured most of the growth.
Blocking Chinese investment cost Indian manufacturers $15 billion in production losses and 100,000 jobs in the past four years, the electronics industry told the government, and India had lost out on export opportunities worth $10 billion as well as $2 billion in value addition. India then cleared 56 investments in electronics manufacturing, which include some pure-play Chinese companies.
Business
Black Myth: Wukong was released at 10 am and was hosting 2.2 million concurrent Steam players by 10 pm, an all-time peak on the Steam platform. The first AAA game developed in China has already generated $220m revenue, selling 4.5 million copies. Chinese developers contributed 47% of global mobile games revenue in 2023.
GM lost $106 million in Q1 in China, its third quarterly loss there in 15 years and the largest outside of the coronavirus pandemic during that time.
Huawei’s car business valued at $16 billion in share sale. Telco/tech giant Huawei’s automotive business unit is worth $16 billion, after it struck a deal to sell a 10% stake to Changan Automobile.
US automakers, plus VW et al., are doomed. They’ve already lost their big cash cow
The content below was originally paywalled.
– the China market (look it up). Whether or not the US prevents consumers from buying the Chinese EVs that they want, Detroit’s profit model has been severely compromised. People just haven’t realized it yet.
At least one NIO swapping station in each of China’s 2,300 counties by the end of 2025. Today, they have 2,480 stations clustered in the higher tiered cities.
This year’s work report floated the concept of ‘AI Plus’, a phrase with profound strategic implications. Scenario applications, generative AI and integrated computing power network were among the priorities set in the policy documents introduced in recent years. A guideline on building a standard system for AI vows to develop more than 50 national and industrial AI standards by 2026. AI is now deemed fundamental infrastructure and core capacity, essential for social and economic development. China ranks first globally in the number of generative AI patent applications over the past decade and its core AI industry generated $81 billion in 2023, up 14% YoY.
Decades of experience in strategy formulation, policy design, R&D, resource allocation, and social mobilization can help many countries advance their green moves.
