Luckin's comeback—and potential downfall

Plus, risks in Tesla’s China supply chain. |  |   
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#### Weekly newsletter | January 5th, 2025  
  
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|  **Good evening.  **From its blockbuster IPO on the Nasdaq to its wild fraud scandal to its miraculous comeback, the Luckin story has always been full of drama. But as our cover story this week shows, the perhaps juiciest details are playing out now, with Luckin’s comeback story complicated by the rivalry between Luckin’s ousted and current leadership teams. Indeed, China’s coffee wars are entering a decisive year. Elsewhere, we have infographics on Tesla’s China supply chain, including the companies Washington might find concerning; an interview with Barry Naughton on the state of the Xi Jinping economy; a reported piece on Washington’s changing China vernacular; and an op-ed from Stephen Roach on China’s struggles with a consumer society. If you’re not already a paid subscriber to _The Wire_ , please sign up here. _Was this email forwarded to you?_ Sign up to receive our free newsletter.  
  
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_Credit: 小紅書_  
|  **The Great Brew Battle** After its Nasdaq-shaking accounting scandal of 2020, Luckin Coffee has staged a legendary comeback, surpassing even Starbucks in China in terms of revenue and store count. But the bad blood between Luckin’s current and ousted leadership has resulted in a near clone, Cotti Coffee, as well as a brutal price war that is threatening to doom Luckin’s rebound and undermine China’s burgeoning beverage scene. Rachel Cheung reports.  
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Employees work at Tesla’s Shanghai Gigafactory, November 20, 2020. _Credit: Xinhua/Ding Ting via  Getty Images_  
|  **The Big Picture: The Risks in Tesla’s China Supply Chain** Tesla’s local supply chain is vast — and as Noah Berman reports this week, it has contained links to companies sanctioned by the United States.  
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### **A Q &A with Barry Naughton**

Barry Naughton, the So Kwan Lok Chair of Chinese International Affairs at UC San Diego, is one of the world’s leading experts on China’s economy and its transformation over the last half century. His textbook, _The Chinese Economy: Transitions and Growth_ , has long been a must-read for students of China; more recently he has coined the term ‘Grand Steerage’ to describe how Xi Jinping’s government is trying to shape the country’s development. In this week's interview with Andrew Peaple, he discusses Beijing’s current stimulus efforts, the strengths and weaknesses of Xi’s vision for China, and the long-term problems building up. Barry Naughton  
_Illustration  by Lauren Crow_  
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Deputy Secretary Campbell participates in a Q&A with Ambassador Michael Froman at the U.S. Chamber of Commerce China Center in Washington, D.C., May 8, 2024. _Credit: U.S. Department of State via  Flickr_  
|  **Does Washington Have China Groupthink?** America’s foreign policy hands talk tough on China. But are they free to say what they really think? Eliot Chen reports on a new paper about the China debate.  
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People walk along Archway Street, Chaozhou city, Guangdong. _Credit:  Xiangqiao District Publicity and News Center_  
|  **China’s Struggles with a Consumer Society** The tightening of government controls over Chinese society over the past decade is especially at odds with its goal of spurring consumption, argues Stephen Roach in this week's op-ed.  
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