It’s getting harder to navigate U.S.-China competition. We should instead welcome

Faced with lackluster consumer spending and a property crisis, Beijing continues to double down on investing in high-tech and green manufacturing. As the world’s largest polluter, emitting about a third of all global greenhouse gases, transitioning to a low-carbon economy in a fair way should be encouraged.

Yet while increased production in electric vehicles and solar energy is welcome, state subsidies are not. U.S. Treasury Secretary Janet Yellen doesn’t like them, nor do many in the private sector. The fear, of course, is that a weak domestic market will encourage China to dump state-subsidized inventory elsewhere, harming foreign competitors. It’s a familiar fear and one that’s dogged China since it was granted entry to the World Trade Organization in 2001. (China has complained to the WTO about subsidies in the U.S. Chips Act and Inflation Reduction Act, too.)

Add in the growing pile of U.S. moves against China—a proposed TikTok ban, sanctions, and fierce criticism of Hong Kong’s new Article 23 security law—and one wonders how Chinese leaders view the competition.

Cathay Pacific CEO Ronald Lam, for one, told Fortune editor-in-chief Alyson Shontell that he welcomes a chance to buy from China’s state-backed Commercial Aircraft Corporation of China—especially in light of Boeing’s challenges. China venture capitalist Kai-Fu Lee believes Chinese AI firms are well positioned to radically narrow the gap with U.S. competitors, in part because of their open-source and more energy-efficient approach. On big-picture challenges like AI, green energy, and promoting human health and longevity, there’s a compelling case for more coordination.

To be sure, it doesn’t help when governments violate human rights and free speech. But let’s welcome opportunities to talk. As former U.S. Treasury Secretary Larry Summers told Fortune executive editor Clay Chandler, the U.S. and China are like “two guys who don’t like each other much, don’t know each other terribly well, and find themselves in a lifeboat that requires two oars, in a very turbulent sea, a long way from the shore.”

Things are much more friendly on the company level, as many multinationals have colleagues in both countries. On the latest episode of Leadership Next, Otis Elevator CEO Judy Marks talks about the 15,000 employees in China who downloaded an app to ring a bell for her on FaceTime to mark its spinoff from United Technologies because the real bell-ringing wasn’t possible during the pandemic. (Check out her full conversation with Fortune CEO Alan Murray here.)

More news below.

Diane Brady
@dianebrady
diane.brady@fortune.com

TOP NEWS

‘A sling and a stone’

Cristóbal Valenzuela, the cofounder and CEO of Runway, a $1.5 billion startup that makes AI tools for video, isn’t worried about OpenAI’s video-generating tool Sora. “We have battled a few other Goliaths before,” Valenzuela says. “Sometimes a sling and a stone is all you need.” The film industry is already using Runway’s tools to save production time. Fortune

Country Garden misses a deadline

Chinese developer Country Garden announced late Thursday that it would not be able to deliver its annual results on time. The developer, which had $190 billion in liabilities at the end of June 2023, said it needed more time to collect data as it restructures its debt. The missed deadline means that Country Garden’s shares will likely be suspended from trading on Tuesday, after Hong Kong’s Easter holiday weekend. CNN

The family of Boeing whistleblower fights on

The mother and brothers of John Barnett, the Boeing whistleblower who died March 9, are vowing to continue his lawsuit against the U.S. planemaker. Barnett accused Boeing of retaliation after he raised concerns about production safety issues with the 787 jet.  “We’re bringing the case to show that my brother was right on with his allegations from the start,” Rodney Barnett, John’s brother, says. Fortune

AROUND THE WATERCOOLER

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How a 173-year-old law created for wooden ships could complicate rebuilding the Francis Scott Key Bridge in Baltimore by María Soledad Davila Calero

Commentary: The U.S. and its allies want to bring the entire chip supply chain in-house—and that could create an OPEC-style cartel for the digital age by Jaemin Lee

Stanford economist says forcing people back to the office full time is a costly mistake: ‘They want to learn, they want to socialize—they just don’t want to go in five days a week’ by Jane Thier 

It pays to be mean: A 40-year behavioral study confirms your worst fears—kids who bully go on to make the most money by Ryan Hogg

This edition of CEO Daily was curated by Nicholas Gordon. 

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