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Data Sheet—Why CEOs Who Don’t Visit China Will Be Sorry

As my colleagues and I prepare to leave Guangzhou and return home, we’re taking time to reflect on the magnitude of our experience in China this week. The scale of China can’t properly be described; it needs to be experienced. In fact, Cisco CEO Chuck Robbins spoke Thursday about a conversation he had recently with a fellow Silicon Valley CEO who doesn’t see the need to visit China because he doesn’t have any business there. Robbins’ conclusion: This CEO will be sorry.

Robbins has been traveling frequently to China and is working closely with various government entities to deploy Cisco technologies in brand-new “smart cities,” municipalities built with sensors, cameras, and other potentially spooky possibilities. The interconnected world, particularly in China, is a massive business opportunity. Ericsson CEO Borje Ekholm told a morning session on Friday about how the coming 5G wireless standard will change the very nature of manufacturing in China and the world.

An overarching theme of the week has been how China has ceased to be a copycat and instead has become an innovation leader. Jerry Yang, the Yahoo co-founder, presented an interesting thesis as to what changed. Yang has a unique perspective. A pioneer of the U.S. web industry, Yang also led Yahoo’s investment in Alibaba, securing his fame as a crossover U.S.-China business personality. He notes that Chinese Internet companies certainly were imitating their U.S. counterparts until the 2008-2009 financial crisis, which hit the Internet advertising market hard. Chinese leaders like Alibaba and Tencent pivoted their business and never looked back.

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That said, it’s possible to get overly giddy and forget that China remains a developing country. (President Xi Jinping made this point recently at the Communist Party’s congress, a speech nearly every Chinese government official and business executive references each time they speak publicly.) Ning Tang, CEO of Chinese peer-to-peer lender CreditEase, noted that while China has been a pioneer of mobile payment and lending, the market for services like “robo” advisory, mass-affluent asset management, and event “insurance tech” is completely underdeveloped.

There are plenty of risks on the horizon, of course. Common sense suggests the Chinese sharing economy is headed for a painful consolidation, for example. The leading candidate for pain is the bike-sharing business, where multiple players have raised a combined many billions of dollars and simply can’t all flourish. Moreover, the Chinese economy itself faces massive challenges. Michael Pettis, a finance professor at Peking University, presented a compelling and frightening scenario whereby China’s gargantuan public and corporate debt levels eventually will crater the economy as sure as night follows day. The only reason the economy stays afloat, he believes, is that the government maintains a closed system that doesn’t require bad debts to be written down. That can last a long time, but not forever.

It was a stimulating week in a fascinating country. I’ll come back to you with some final thoughts on Monday. Have a great weekend.

Adam Lashinsky
@adamlashinsky
adam_lashinsky@fortune.com

NEWSWORTHY

If at first you don’t succeed… Google’s YouTube is apparently making a third attempt to create a subscription-based music service, Bloomberg reports. Called “Remix” internally, the rejiggered premium service would have Spotify-like streaming plus video content from YouTube. Sounds an awful lot like the current Google Play Music service. Competitor Amazon Music said Friday it was expanding to 28 more countries, mostly across Europe and Latin America.

That’s a lot of zeroes. Graphics titan Nvidia introduced its latest desktop supercomputer disguised as a graphics card, aptly named the Titan V. The $3,000 graphics card, which is designed for AI and machine learning tasks, not playing video games, has 21 billion transistor and can reach speeds of 110 teraflops, or 110 trillion operations per second, a.k.a. 110,000,000,000,000.

The people united. Protestors in favor of keeping the Federal Communications Commission’s 2015 net neutrality rules took to the streets on Thursday. The protests targeted hundreds of Verizon stores around the country, highlighting the former employer of FCC chairman Ajit Pai, who is spearheadng the rollback.

No soup for you. The automation revolution is starting to scare some government officials. San Francisco’s Board of Supervisors voted this week to restrict the use of delivery robots that can travel by themselves around the city. Companies can only have three such robots and they must be restricted to traveling in industrial neighborhoods under the new rules.

Too risky. Not everyone wants to climb aboard the bitcoin hype train. J.P. Morgan Chase and Citigroup will not help customers trade in the new bitcoin futures contracts, the Financial Times reports. The banks are worried that even with customers putting up collateral, big swings in the value of the cryptocurrency could lead to losses (Just in the past 24 hours, bitcoin has swung between $14,000 and $17,000, according to Coindesk, though some exchanges say it reached almost $20,000). At the same time, the Coinbase app for buying and selling digital currencies hit the #1 download spot on iTunes on Thursday.

IN CASE YOU MISSED IT

Peter Thiel’s Unusual Bet on Magic Mushrooms for Treating Depression Is About to Be Tested By Verne Kopytoff

The One Skill Employees Need to Survive the AI Revolution By Polina Marinova

Hollywood’s Coveted New Audience? Young, Digital…and Chinese By Andrew Nusca

Apple’s 2018 iPhone Could Have This Design Change By Don Reisinger

Elon Musk Dares Boeing CEO to Beat Him to Mars By Tom Huddleston Jr.

Bitcoin’s Crazy Run Is Crushing All Other Digital Currencies By Jeff John Roberts

Commentary: The Largest-Ever Tech IPO Is Coming—And It’s Not From Silicon Valley By Arthur Dong

FOOD FOR THOUGHT

It’s not just the new iPhone X. Biometric security measures based on fingerprints, facial scans, iris scans, and other physical aspects of the body are spreading quickly. To Eduard Goodman, global privacy officer at CyberScout, that’s a good thing for improving security. But the privacy implications could be dire if we don’t pass some laws to limit the use of biometric data by marketers and other commercial entities, he warns.

Unfortunately, it would be naïve to believe that a self-regulating approach to these types of data collection behaviors will work. The information to be gained from a marketer’s perspective is just too juicy. The only way to ensure that businesses and government, as well as the public they serve, can move to the next stage in identification and security is to legislate restrictive uses of these types of authentication data and the information gleaned from it. While general consensus under privacy regimes in North America and Europe is that biometric data is personal information, the restrictive use of that data under both current and pending regulations is opaque at best.

FOR YOUR WEEKEND READING PLEASURE

A few interesting longer reads I came across that are suitable for your weekend reading pleasure.

What Happens When the Government Uses Facebook as a Weapon? — Bloomberg Businessweek

“At the beginning I actually loved it because I felt like this was untapped potential,” Ressa says. “Duterte’s campaign on social media was groundbreaking.” Until it became crushing. Since being elected in May 2016, Duterte has turned Facebook into a weapon. The same Facebook personalities who fought dirty to see Duterte win were brought inside the Malacañang Palace. From there they are methodically taking down opponents, including a prominent senator and human-rights activist who became the target of vicious online attacks and was ultimately jailed on a drug charge.

The Future Is Here – AlphaZero Learns Chess — Chess News

Imagine this: you tell a computer system how the pieces move — nothing more. Then you tell it to learn to play the game. And a day later — yes, just 24 hours — it has figured it out to the level that beats the strongest programs in the world convincingly! DeepMind, the company that recently created the strongest Go program in the world, turned its attention to chess, and came up with this spectacular result.

Maria Sebregondi, Moleskine Founder, Takes Note of the Digital Age — Financial Times

Over the past 20 years Moleskine notebooks have achieved a cult appeal. “There are collectors, addicts even,” Sebregondi says. And while the digital revolution continues to threaten paper industries, Moleskine has successfully bucked the trend. Since 2011, the company has made hardware devices in partnership with Evernote, which enable notes and sketches to be uploaded and shared, and iPad covers in the characteristic low-key Moleskine style; but those same e-devices show no sign of killing off the brand’s core business.

Bookstores Escape from Jaws of Irrelevance — Boston Globe

The full study won’t be published until next year, but in a newly released overview, Raffaelli notes what he calls the “three C’s” of his findings: community, curation, and convening. Independent bookstores early on embraced the community-oriented “localism” wave that has inspired the proliferation of craft brewers, farmers’ markets, and the like. Small bookstores carefully curate the books they sell to reflect their clientele’s interests and concerns. And in recent years they have repositioned themselves as “intellectual centers,” hosting events and convening people and ideas in shared spaces.

BEFORE YOU GO

It’s still a long way from the vision of instant learning presented in The Matrix, but researchers at the University of Rochester have figured out a way to “teach” monkeys how to play a game by beaming small electrical pulses directly into the monkeys’ brains. So maybe there’s hope for improving your knowledgebase, too.

This edition of Data Sheet was curated by Aaron Pressman. Find past issues, and sign up for other Fortune newsletters.