The Peking order: Can China’s army surpass the US?

China's Military Modernization and the Zhuhai Airshow

• New Hardware Debut: The Zhuhai Airshow featured the official launch of the J-35A stealth fighter and a new "killer whale" drone ship.
• Strategic Shift: China is transitioning from a strategy based on military quantity (missiles, ships, troops) to one emphasizing quality and capability.
• 2035 and 2049 Goals: Beijing aims to modernize its armed forces by 2035 and achieve parity with the United States by 2049.
• Naval Expansion:
  • China now possesses the world's largest navy.
  • Vertical Launch System (VLS) cell ratios have shifted from 200:1 (US to China in 2004) to approximately 2:1 as of last year.
  • Analysts project the VLS advantage will tip in favor of China by 2026–2027.
  • Chinese warships are now considered comparable in design and quality to American vessels, though US ships remain larger and better armed on average.
• Air Power Developments:
  • While the J-35A likely remains inferior to the US F-35, China has narrowed a two-decade gap in jet engine production.
  • The PL-15 air-to-air missile is deemed benchmark-equal to NATO standards.
  • The PL-17 is a long-range missile capable of striking rear-echelon American radar posts.
• Hypersonic Superiority: China has deployed hypersonic missiles (traveling at Mach 5+ with maneuverability), whereas the US remains in the testing phase.
• US Advantages:
  • The US retains superior aircraft carrier experience (70+ years of operations).
  • The US leads in fundamental technologies, including artificial intelligence.
• Operational Weaknesses:
  • Integration: China faces significant challenges in joint operations between the Army, Air Force, and Navy, including interoperable radios and shared operational concepts.
  • Logistics: Logistics capabilities remain a critical unknown and potential vulnerability, as demonstrated by Russian struggles in Ukraine.
  • Experience: China lacks modern high-intensity combat experience, raising questions about the effectiveness of its forces in a potential Taiwan Strait conflict.
• Geopolitical Context:
  • The US faces "overstretch" due to commitments in Europe and the Middle East (e.g., carrier deployment to the Mediterranean).
  • The incoming Trump administration reportedly plans to reduce European and Middle Eastern commitments to prioritize the Indo-Pacific theater.
  • AUKUS Pact: Nuclear submarine capabilities from the US-UK-Australia pact will not be operational until the 2040s, leaving a long window for China to expand.

Luxury E-Commerce Sector Contraction

• Market Contraction: Post-pandemic revenge spending has faded, leading to financial distress for major luxury e-commerce operators.
• Key Failures and Acquisitions:
  • Farfetch: Sold for approximately 2% of its peak valuation.
  • MatchesFashion: Acquired at a bargain price before entering administration.
  • Yusuke/Net-a-Porter Group: Richemont (the world's second-largest luxury house) sold the group, including Net-a-Porter, Mr. Porter, and outlet brands (The Outnet, Yoox), to MyTheresa.
• Drivers of Decline:
  • Macro Economics: Inflation and job insecurity have reduced consumer spending on non-essential luxury items.
  • Structural Shifts: Consumers increasingly prefer in-store experiences to "see and touch" items.
  • Choice Overload: Excessive inventory options on platforms have caused boredom among younger consumers.
  • Platform Overstocking: Major operators over-invested during the pandemic boom, forcing price cuts that alienated designers.
  • Direct-to-Consumer Competition: Brands have launched their own online stores, competing directly with third-party platforms.
• MyTheresa's Strategy:
  • Curated Inventory: Unlike competitors stocking 1,000+ brands, MyTheresa focuses on 250 high-end, established brands.
  • Customer Experience: The platform offers exclusive "money-can't-buy" events, such as private boat tours and designer picnics.
  • Logistics: A warehouse located near an airport enables next-day delivery for European customers.
  • Integration Plan: MyTheresa intends to merge back-end logistics with Net-a-Porter while separating the discount outlet business to create a profitable high-end entity within four to five years.

Obits: Baltazar Úsca (1943–2023)

• Profile: Baltazar Úsca was Ecuador's last ice harvester, riding to Mount Chimborazo for decades until his death at age 80.
• Method: He trekked 16 miles (7 hours) to old glaciers, clearing 0.5 meters of dirt to harvest 27kg blocks of ice with an ice pick, often without gloves or crampons.
• Cultural Context: Úsca viewed Mount Chimborazo as a deity ("father and master") and prayed to it before climbing; he believed natural ice was superior to factory ice for its taste and air bubbles.
• Economic Obsolescence: By the end of his career, blocks sold for only $5, as households switched to factory ice and refrigerators.
• Environmental Impact: Climate change has reduced the glacier's surface area by 20% in 20 years, forcing Úsca to harvest higher up where rockfall and avalanche risks are increased.