Weekend reading links

1. China is rising up the ladder on higher education and research.

In 2010, only one mainland Chinese institution ranked in the top 50 of the QS World University Rankings, a closely watched global league table. By 2025, that number had risen to five, and they were positioned higher up the table... A report by the US-based Center for Security and Emerging Technology found that in 2019, a group of 10 elite Chinese universities each had a budget exceeding $5bn a year... Holden Thorp, editor-in-chief of the Science family of journals, says 14 per cent of papers accepted in Science in 2025 were from China, the second-largest share after the US, at 45 per cent... As China has climbed the rankings, many critics have pointed to the industrial scale of fraudulent or poor-quality research, driven in part by incentives that reward publication volume in tenure and promotion decisions... In 2025, Ivan Oransky, co-founder of Retraction Watch recorded nearly 3,000 retractions of Chinese-authored papers from journals, compared with 177 for US authors.

And this on R&D spending

China is close to surpassing the US in total expenditure on R&D, with China spending $781bn and the US $823bn in 2023, according to data from the OECD. By contrast in 2007, China spent $136bn compared with $462bn by the US. The OECD also calculates that China spends, on average, $305,000 on R&D costs per researcher, which is more than the European average of $268,000.

2. Ed Luce has a good description of the war in Middle East.

The war threatens to turn into a contest over which can hold up longer — Iran’s ability to produce drones versus America’s capacity to intercept them.

3. Emmanuel Macron has outlined a new more aggressive and collaborative nuclear strategy for France.

Laying out a new concept, “forward deterrence”, he offered to extend French protection “into the depth of our continent”. Successive French presidents since Charles de Gaulle have consistently alluded to the “European dimension” of France’s “vital interests” covered by its independent force de frappe. Macron has now suggested concrete steps to materialise this. These include the temporary deployment of French nuclear-armed aircraft, the Rafale, to allied countries, as well as participation in deterrence exercises. The conventional forces of allies may also take part in France’s nuclear activities. Macron mentioned seven — Germany, Poland, Sweden, Denmark, Greece, Belgium and the Netherlands — with whom this strategic dialogue has already started. This is all new and quite remarkable. Together with the Northwood Declaration, which committed France and the UK in July 2025 to an unprecedented level of co-ordination in nuclear policy, Macron’s speech signals a major development in the history of European defence.

4. Insurance premiums rocket 12-fold on ships sailing through the Strait of Hormuz. 

Premiums jumped as high as 3 per cent of the cost of a ship on Wednesday, up from about 0.25 per cent before the war... Typical prices in the high-risk region now ranged from 1 to 1.5 per cent of the cost of a ship, while ships linked to the US, UK and Israel had been quoted prices as much as triple those rates, Marsh broker Dylan Mortimer told the FT.

5. On Nvidia's staggering 75% gross profit margin.

Nvidia makes its money selling physical chips that must be manufactured in fabrication plants the company does not own. Nvidia’s most advanced AI chips rely heavily on fabrication by Taiwan Semiconductor Manufacturing Company. Its most profitable products, including the H200, Blackwell and the next-generation Rubin architecture, are made on TSMC’s advanced 4 and 3 nanometre production processes. There is currently no alternative capable of manufacturing those designs at the same scale, performance and yield. In chipmaking, whoever controls advanced manufacturing has the greatest leverage. TSMC decides how much it charges for each wafer and how much advanced production capacity each customer receives... Nvidia designs the architecture and the software. TSMC builds the chips and spends more than $40bn each year expanding and upgrading fabrication capacity. Nvidia enjoys software-like margins without bearing the cost of constructing and upgrading factories. TSMC keeps its most advanced factories running at full capacity. For now, that balance has held. Nvidia’s valuation, however, assumes it will continue to hold... At current revenue levels, every one-point move in gross margin would represent about $2bn in annual gross profit, which would be enough to move earnings forecasts... Today, the chip industry revolves around two critical bottlenecks: ASML in advanced lithography equipment and TSMC in advanced chip manufacturing. Credible alternatives are rare and the barriers to entry are vast. Nvidia’s advantage sits above manufacturing, in chip design and in the software ecosystem built around its processors.

6. Brilliant essay by Dean Ball, a former White House policy adviser who wrote the Trump administration’s A.I. strategy, on the consequences of the US Government's decision to cancel the Department of War's contract with Anthropic to use its AI system Claude in classified contexts and designate the firm a "supply chain risk". Specifically, the US DoW objected to two restrictions in the contract with Anthropic (a contract that was renegotiated with these restrictions by the current Trump administration) that Claude could not be used for mass surveillance on Americans and it could not be used to control lethal autonomous weapons which are can identify, track and kill targets with no human in the loop at any point in the process. 

The Department of War’s rational response here would have been to cancel Anthropic’s contract and make clear, in public, that such policy limitations are unacceptable... War Secretary Pete Hegseth has gone even further, saying he would prevent all military contractors from having “any commercial relations” with Anthropic... Essentially, the United States Secretary of War announced his intention to commit corporate murder... the message sent to every investor and corporation in America: do business on our terms, or we will end your business. This strikes at a core principle of the American republic, one that has traditionally been especially dear to conservatives: private property...

This threat will now hover over anyone who does business with the government, not just in the sense that you may be deemed a supply chain risk but also in the sense that any piece of technology you use could be as well... No entity with meaningful ties to government business would use DeepSeek, simply because the regulatory risk was too high. Now that the government has applied this regulation to an American company, the regulatory risk simply exists for all software... this could end up making AI less viable as a profitable industry... Simply for having different ideas, expressing those ideas in speech, and actualizing that speech in decisions about how to deploy and not deploy one’s property. Each of these things is fundamental to our republic, and each was assaulted.

7. The economics of Iran-Israel/US war.

The United States is dominating the skies above Iran. But math is not necessarily on America’s side. Iran is using low-cost drones for precision attacks in the Middle East. The United States and its allies have air defense systems capable of intercepting a vast majority of Iranian ballistic missiles and drones, which are sophisticated yet costly... The cost ratio per shot, per interception, is at best 10 to one. But it could be more like 60 or 70 to one in terms of cost, in favor of Iran... Iran’s Shahed drones are triangle-shaped loitering munitions, roughly 11 feet long... They are small enough to be launched from the back of a truck, making them relatively easy to hide and tough to hunt down. The long-range version of the Shahed drone, known as the 136, can travel roughly 1,200 miles... Built with off-the-shelf commercial electronics, each Shahed is said to cost $20,000 to $50,000 to manufacture, depending on the model... The gold standard in missile defense, the Patriot air defense system, uses interceptors that can cost more than $3 million per shot and are in limited supply. For instance, Lockheed Martin delivered just 620 PAC-3 interceptors in 2025, which broke a record for production.

8. One of the biggest casualties of the war is UAE, Dubai and Abu Dhabi. This about Dubai.

Since the US and Israel launched the war a week ago, the United Arab Emirates, which for years has enjoyed spectacular success as a global entrepot, has been the target of about two-thirds of all ordnance fired by Iran across the Gulf. For years, the UAE’s brand — and that of Dubai in particular — was underpinned by its claim to be an island of stability in a dangerous neighbourhood. Tech billionaires, influencers and holidaymakers alike were pulled in by factors ranging from favourable tax treatment to winter sunshine and a location where east meets west, convenient for Europe, Africa and Asia alike... Iranian attacks have also peppered military, infrastructure and energy targets in Saudi Arabia, Bahrain, Kuwait and Oman, confirming long-held fears that Tehran would lash out at its US-allied neighbours if the regime’s survival was at risk... The UAE’s multi-layered defence system’s interception of 93 per cent of more than 1,100 incoming missiles and drones has limited casualties and damage...

Transforming itself from fishing village to regional trade hub in the 1970s, the rise of Emirates airline — linking cities across the continents through its ever-expanding airport — kick-started a tourism industry that made Dubai the world’s sixth most visited city last year. In the aftermath of the 9/11 attacks in the US, funds from Muslim-majority nations flowed to the Gulf. Dubai opened its property market to foreigners, fuelling the city’s first real estate boom. The global financial crisis rattled the region in 2009, shrinking Dubai’s debt-strewn economy and prompting bailout loans underpinned by Abu Dhabi. But the influx of money and people precipitated by the Arab popular uprisings of 2011 boosted its economy further. When the coronavirus pandemic struck in 2020, the government locked down harder and reopened faster than others, fostering a relaxed, safe environment that attracted a new generation of newcomers: social media influencers, cryptocurrency investors and hedge fund managers. The war on Ukraine in 2022 brought Russians seeking sanctuary, while higher UK taxes lured a wave of wealthy residents and long-term residency programmes incentivised all foreigners to put down roots.

9. Formula 1's spectacular growth since its takeover by Liberty Media.

F1’s accounts for 2025 show a sport in rude health. Annual operating profit rose 28 per cent to $632mn as revenues — across media rights, sponsorship, fees from promoters and hospitality — increased by 14 per cent to $3.9bn. In 2017, when Liberty Media acquired the sport, F1 made a $37mn operating loss on revenues of $1.8bn. Big brands continue to flock to Formula 1... F1 now has 10 global partners, versus four only four years ago. Sponsors are also flooding to racing teams... The most lucrative partnerships can make more than nine figures for F1 teams. Global appetite for attending races is stronger than ever. Tickets for this weekend’s opening race in Melbourne sold out in minutes when they went on sale in September, setting the tone for the rest of the season. Last year, 6.75mn fans attended races, up 4 per cent from the year before... Bankers and financial analysts think there is still plenty of room for further growth. According to data from sports news group Sportico and investment bank Houlihan Lokey, F1 teams were valued at around 6.1 times revenues last year, compared to 10.3 times for franchises in the NFL and 11.9 for those playing in the NBA.

This comes at a time when Formula 1 has introduced sweeping changes to the cars from this year.

Owing to new rules introduced by the sport’s governing body, cars this year will all be shorter, narrower and lighter, wings will be simpler and aerodynamic redesigns will result in flatter vehicle floors, which F1 says will increase the scope for different driving styles. While engines have been hybrid for years, the balance of power between petrol and battery has been altered significantly, meaning that cars will now rely on electric power around 50 per cent of the time. The changes have been brought in for two main reasons. One is to shift F1’s approach to sustainability by leaning more into battery power and using so-called e-fuel made from carbon capture, municipal waste and non-food biomass or a combination. The other is to attract more car companies into the sport. The new engines will be “more road-relevant”, F1 says, pointing out that Ford, Audi and, from 2029, General Motors have all been enticed into producing engines as a result of the reforms.

Two new teams, Cadillac and Audi, are entering the race this year.