While many focus on RE, China's development in high-end fiber is what has powered its new energy industries & AI robots.
Big 3 fibers are Carbon, Aramid & UHMWPE.
UHMWPE is lightest & has excellent wear & chemical corrosion resistance + very strong
Ideal for defense protection, marine engineering, biomedicine, aerospace, auto & now humanoid robot. A simple look at China's UHMWPE fiber industry show its production has increased from ~10k ton in 2016 to 39.8k ton in 2023.
@ same time, theoretical demand has risen from 24k to 72.4k ton.
Mkt size increased from 2.23B to 6.65B RMB
Huge demand growth as it became better known

Imagine 1 country dominating the full Semi supply chain including Silicon, wafer, all chemicals, all equipments, fabs, design studio & advanced pkg.
China has that in Rare Earth & ppl are finding out now it is used in everything.
Thread on just how much China controls RE supply chain. The initial Chinese dominance in RE supply chain was mostly in upstream mining as lower Chinese environmental standards encouraged other countries to close down their production.
Recent yrs, mining production rose in US, Australia & Myanmar, but much of that is exported to China.

MSM continues to be clueless abt what makes China's mfg tick. While industrial robots, precision mfg, 3D printing & AI are important, the supply chain buildup - especially in basic & advanced materials that really solidified its position in mfg.
I will 1st talk abt Carbon Fiber & its importance in "new productive forces", electrification & AI application. Kitech Advanced Materials supply High-end CFRP products for NEVs, low altitude economy & robots.
In fact, it supplies BYD's high end models like YangWang & Denza Z
Lighter + higher strength material for EVs, drones & robots -> faster, more efficient & longer endurance.

Recently, Jilin Fiber (China's largest Carbon Fiber producer) raised prices across the board due to exploding demand in low altitude economy, drones & exports.
It also reported rising demand from humanoid robot & other sectors, so this is a look at what's driving CF demand. I list several projects below including carbon fiber composite material for civilian aerospace. Significant increase in unmanned transport aircraft.
Also major 1 million auto part CF projects.
Wind turbines continue to get larger -> need lighter & stronger CF material to match

In Air warfare, PLAAF has developed kill chain where aircraft A can guide missile fired off by aircraft B until B gets closer to target & turn on radar for weapon grade tracking.
Recent exercise show PAF has also achieved this capability.
Thread on PAF learning from PLAAF

https://twitter.com/tphuang/status/1921743765640749529

Since late 2000s, PLA has introduced a wide array of special mission platforms including AWACS, EW aircraft, ELINT aircraft, PSYOP aircraft, comm jamming aircraft & specialized EW fighter in J-15/16D + built up multiple constellations
w/ goal of winning modern air warfare.

From recent PAF briefing of its IAF encounter, it identified 72+ IAF aircraft (India reported 80 in total) w/ 14 Rafales & showcased very competent operational control, situation awareness & battlefield mgmt.
I will talk abt why PAF description of event is very troubling for IAF Some good Weibo analysis:
PAF AWACS operated 300km behind border & fighters stayed inside airspace also ->
IAF fighters likely too far away to be detected by airborne radar upon takeoff.
PAF said it identified IAF aircraft thru ELINT ->
IAF pilots undisciplined in emission mgmt.

China has become the leading producer for many foreign delicacies like Caviar, Black truffles, matcha, foie gras, eel & Wagyu beef.
Due to its vast geography & varying climates + China's industrial+tech, many products found ideal growing environment in different parts of China. Now China produces 60% of world's caviar w/ 90% of its Kaluga caviar being exported.
Using "live egg extraction technique" + ultrasounds of sturgeon, it can extract eggs 3m after anesthesia & extract each fish 8 times.
Lowering px of Chinese caviar to just $150/30g.

Time will reveal more of what happened last night, but it appears that J-10C/PL-15 combo shot down multiple IAF fighters.
Old assumption in miltech:
US > French > Russian > Chinese
Despite civilian tech showing this is completely untrue
-> J-10C downing Rafale surprised ppl
Access to PL-15 seeker won't help India.
You need fabs that can produce miniaturized MMIC that go into these AESA seekers.
This separates PL-15 from other BVRAAM in service.
It allows PL-15 to lock on to fighter jet w/ lower RCS from further out & resist CM more effectively.

1 thing catching my eyes today is the 500kV line from China to Laos which will allow power to be transmitted bw 2 countries.
+ China is building wind/solar projects in Laos & plenty of hydro.
85% of hydro power expect to be exported.
To Thailand, Vietnam & even to Singapore.
Laos -> Thailand -> Malaysia -> Singapore
so Singapore can get clean energy to fulfill its net-zero obligations
Once China builds out 500kV line, it can supply to Laos, & Vietnam, which can then supply rest of ASEAN.
Projects use Chinese expertise in grid, renewables & transport

China spent 7 yrs planning/war-gaming a decoupling scenario + likely studied all consequences
Wall Street Ghoul here thinks China wants to remain the low value assembly plant
vs reality of what probably will actually happen
Chinese plants move offshore & continue to make profits
Will China suffer blue collar displacement?
Sure, but remember that China has a huge blue collar shortage issue coming up.
Labor intensive industries have been automating
Young ppl want white collar jobs, so more service sector jobs & higher valued design jobs need to be created.

Chinese ppl love to eat pork. It consumes half of pork globally as diet improved in past 30 yrs.
How did they keep pork cost down while massively increasing its intake during this time?
-> fed the 435m strong pig industry w/ growing soybean from Brazil
How did import 2x in 8 yrs? China transferred smart farming tech to Brazil:
Including tractors, drones, smart irrigation system & remote sensing sat (for RT monitoring)
Raising yield & efficiency significantly
COFCO Group introduced 0 deforestation initiative in Brazil since 2019, using satellites to verify

Due to TechInsight identifying SMIC 7nm chip back in early 2022 & Eric Schmidt's intense lobbying in 2021/22, Biden Admin started chip war against China back in Oct 2022.
ChatGPT was launch a month later.
OpenAI seemingly had 3 yr lead vs China
What's happened since bw US/China? HW launched Ascend-910 in 2019, it was most powerful at the time, but then lost access to TSMC.
Tech war allowed HW to promote Atlas-900 cluster using Ascend chips domestic customers, but they still preferred H800 which had 989 TFLOPS, CUDA support, higher interconnect & HBM3.

Is US's consumer economy really that much larger than China?
Out of $19T, $12.7T are for services (bloated due to high service sector salaries + health care cost) & just $6.1T in consumer goods.
Even $6.1T is bloated bc products are priced higher to account for high retail/sales cost, transportation, servicing cost & everything else that comes in a high salary society.
Think about large box store having to markup 2x to 3x good cost to be profitable. What is China's comparable consumption total?
Well, it reported 2024 total consumer goods retail of 48.8T RMB (~$6.8T), of which restaurant/dining was ($770B), so good consumption was abt $6T

In Q1, China spent $1.76T, up 4.6% YoY. So right in line w/ expected growth vs last yr

China has spent 7 yrs making "bad economic choices" to prepare itself for decoupling it has anticipated since 2018.
It has diversified trade partners.
Deflated stock & real estate bubble
Punished big tech & encouraged new startups
Drove industrial policy in new emerging sectors. Due to 2022 tech war, it accelerated de-risking from US supply chain, especially choke pts.
Breakdown of China's import from US
High end tech was 23% (7% IC & 4.6% engines)
Next highest are farming 16% & energy 14%
Chemical 13%, cars/planes 9%
Most of this is easily replaceable.

We are in 3rd economic period since China opened up.
1st period 1980-2005
Advanced economies invested in China, taught China how to make stuff to lower cost
2nd 2006-2020
China became world's factory, US moved from mfg to design.
3rd 2021-
China competes on top end in design.
See graph for foreign export vs private/others Use shipbuilding as an example:
Until 2006, China was still learning how to build ships.
It was competing mostly on low cost for simpler ships like container ships.
It used mostly foreign supply chain like engines, propellers & more.
Other heavy industries also like this.

Back 15 yrs ago, Chinese development faced 2 distinct problems:
1) Energy dependence on Indian Ocean sea lane w/o Navy to defend it
2) Over dependence on Mkt access & Tech from Western countries.
Focusing on 1) today, let's discuss what China is doing for energy independence. WCF saw that China was facing this energy issue when building BYD. He saw China had huge solar potential w/ vast amount of Arid, lowly inhabited land.
Solar required battery to deal w/ intermittency issues.
By electrifying cars, buses & trucks, China reduces its oil dependence.

USN Readiness based on USNI Fleet & Marine Tracker from 2017 - now
1st available from 20170710 in aftermath of GWOT show reduced fleet of 276 w/ 81 ships underway (at sea) & 104 deployed.
3 deployed CSG & many ARG/ESG
None in East Asia
This is b4 start of great power competition Next 2 from 20180904 & 20191216 show a growth in fleet size during Trump-1 term to 293 over 2.5 yrs.
Under way ships remain in the 80s, but fewer deployed ships.
Larger fleet doesn't mean more deployable ships.
By 201912, 3 deployed CSG + 2 more available CVN
1 CSG in East Asia

Huge shift in WestPac wrt underwater fleet, long considered America's biggest military advantage over PLA.
1st batch of 8 Type 093B have been launched & build rate continues to be 3-4/yr.
Each carrying what looks to be 21 VLS tubes able to fire YJ-18B LACM.
Thread on 093 & more
While USN has huge advantage in SSNs, they are aging rapidly & suffering thru high unavailability.
There was 8 yr gap from last LA class to 1st VA class where only 2 Seawolf commissioned.
Build rate much higher in 80s vs now
-> expect decline in sub force size as LA subs retire

A thread on how DeepSeek pushed fwd AI adoption in China & globally by looking @ 5 areas:
Chinese OEM adoption
Global adoption
Chinese Cloud adoption
Chinse AI h/w stack adoption
ByteDance taking lead in DS/AI adoption
DS has ignited a techmovement in China w/ deep consequences DeepSeek adoption in China across all OEMs is swift.
All major phone makers added deep DS integration (Xiaomi last to do so)
All EV maker except for Li/XPeng/Nio/HW have joined
AIPCs by Honor & Lenovo
AI TV by Changhong & Hisense
AI projectors
Alipay, QQ music, govt, education + more

IC/Semi has become China's 2nd largest export item by value w/ $159.5B (up 17% YoY, 7.5% of all mechanical/electrical export).
IC remains top import item w/ $385.6B in total value (up 10% YoY)
China's Semi Capex continue to grow to $24.72B in 2024H1, far away highest globally.
2024 saw huge growth in Chinese WFE imports.
Mostly SME import grew by > 20% vs 2023 as fabs stocked up significantly ahead of new export restrictions.
Lithography import led the way, but Deposition & Etching also increased.
-> Huge growth in Domestic Etch/Deposition WFE sales.

Is China becoming dominant in Biotech?
Article on China Inc moving up value chain & now making new Drug discoveries
28% of trial starts are from Chinese companies now, surpass Europe & just behind America
Similar trend in Drug discoveries
Also in share of global deals
+ total Amt paid upfront to Chinese Biotech R&Datelfo.github.io/2024/12/20/wil…


Partly, this Is CFDA shifting to an "implied license" approval system in 2018 where approval time dropped from 501 to just 87 days.
But it also mirrors China's growth in other industries where China moving from low cost mfg to innovation as seen in growth in out-licensing deals