State of Emergency.

Where’s the gas going to go?

---

1. Beijing’s challenge to the technological leadership that the United States has held since World War II is evidenced in China’s classrooms and corporate budgets, as well as in directives from the highest levels of the Communist Party. A considerably larger share of Chinese students major in science, math and engineering than students in other big countries do. That share is rising further, even as overall higher education enrollment has increased more than tenfold since 2000. Spending on research and development has surged, tripling in the past decade and moving China into second place after the United States. Researchers in China lead the world in publishing widely cited papers in 52 of 64 critical technologies, recent calculations by the Australian Strategic Policy Institute reveal. Last month, China’s leaders vowed to turn the nation’s research efforts up another notch. A once-a-decade meeting of China’s Communist Party leadership chose scientific training and education as one of the country’s top economic priorities. That goal received more attention in the meeting’s final resolution than any other policy did, except strengthening the party itself. China will “make extraordinary arrangements for urgently needed disciplines and majors,” said Huai Jinpeng, the minister of education. “We will implement a national strategy for cultivating top talents.” (Source: nytimes.com)

---

2. The Economist:

Most news on China’s manufacturers is bad news for rivals around the world. Foreign governments fear their domestic champions will be pummelled by low-cost Chinese rivals. But on August 5th the world got a small reminder that China’s producers face big problems of their own. Hengchi, an electric-vehicle (EV) maker owned by Evergrande, a failed property developer, told investors that two of its subsidiaries had been forced into bankruptcy. The group originally aimed to sell 1 million EVs a year by 2025; amid feverish competition it sold just 1,389 last year.

The glut in industrial production is not limited to EVs. About 30% of industrial firms were loss-making at the end of June, rising above the previous recorded peak during the Asian financial crisis in 1998, according to the National Bureau of Statistics (see chart). Its survey of more than 500,000 companies shows a startling deterioration in the conditions for industrial firms in the first half of the year, during which the number of loss-making companies surged by 44%. Read the rest. (Source: economist.com)

---

3. Ukrainian troops battled for a third day yesterday in Russia’s Kursk region, occupying villages and part of a town, in what has become the Western-backed military’s largest cross-border incursion since the Kremlin’s invasion in 2022. U.S., Ukrainian and Russian officials all acknowledged the ongoing attack, which stunned Moscow and appeared to involve the use of armored fighting vehicles donated to Kyiv by the United States and its European partners — a development that drew no immediate objection from the Biden administration despite its past restrictions on such use of American weaponry. The surprise assault on Kursk, about 330 miles south of Moscow, seemed designed to bring the war home to Russia, where many do not feel any direct impact of a conflict that has destroyed many Ukrainian cities and towns and displaced millions. It also may be intended to divert Russian troops from other locations along the front, where Ukraine’s military has steadily lost ground in recent months. Analysts suggested Kyiv could be trying to gain leverage for any future negotiations with the Kremlin. (Source: washingtonpost.com)

---

4. Russia declared a federal state of emergency in the Kursk region earlier today as Ukrainian troops continued a cross-border incursion for a fourth day. The order came as Russia’s defense ministry said its forces “continue to repel” a Ukrainian attempt to break into the Kursk region, the most substantial incursion into Russian territory of the war so far. In his Thursday evening address, Volodymyr Zelensky, Ukraine’s president, without directly referencing the offensive, said: “Russia brought the war to our land and should feel what it has done.” He added: “Ukrainians know how to achieve their goals. And we did not choose to achieve our goals in the war.” Reports by pro-Kremlin bloggers suggested that Ukrainian forces had advanced as far as 13 miles north of the border. (Source: thetimes.com)