1 00:00:02,720 --> 00:00:16,960 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:18,880 --> 00:00:22,480 Speaker 2: Hello and welcome to another episode of the Odd Lots Podcast. 3 00:00:22,600 --> 00:00:24,079 Speaker 2: I'm Tracy Alloway. 4 00:00:23,760 --> 00:00:24,960 Speaker 3: And I'm Joe Wisenthal. 5 00:00:25,520 --> 00:00:27,920 Speaker 2: Joe, do you realize it's almost the end of twenty 6 00:00:27,960 --> 00:00:28,520 Speaker 2: twenty four? 7 00:00:29,840 --> 00:00:31,760 Speaker 3: Yeah? Well, yeah, it's crazy. 8 00:00:31,800 --> 00:00:32,000 Speaker 4: You know. 9 00:00:32,000 --> 00:00:33,880 Speaker 3: It's been a really warm month in October. 10 00:00:34,120 --> 00:00:34,560 Speaker 5: Yeah, I know. 11 00:00:35,000 --> 00:00:36,600 Speaker 3: So I feel like we got this free month of 12 00:00:36,640 --> 00:00:39,680 Speaker 3: summer and so yeah, like we're basically almost here and 13 00:00:39,720 --> 00:00:41,959 Speaker 3: we sort of like got a free, one less month 14 00:00:41,960 --> 00:00:42,280 Speaker 3: of winter. 15 00:00:42,320 --> 00:00:44,400 Speaker 2: It feels like I feel like the warm weather is 16 00:00:44,400 --> 00:00:48,479 Speaker 2: also throwing everyone's sense of time off. Yeah, but anyway, 17 00:00:48,800 --> 00:00:51,479 Speaker 2: we're almost done with twenty twenty four. Who knows what 18 00:00:51,560 --> 00:00:53,400 Speaker 2: the rest of the year is going to look like, 19 00:00:53,600 --> 00:00:56,639 Speaker 2: but that means that twenty twenty five is coming up. 20 00:00:56,840 --> 00:00:59,200 Speaker 2: And you know what I think of When I think 21 00:00:59,240 --> 00:01:00,160 Speaker 2: of twenty twenty five. 22 00:01:00,920 --> 00:01:02,920 Speaker 3: You and I think of the same thing. And we're 23 00:01:02,960 --> 00:01:05,520 Speaker 3: the only two journalists in America that don't think of 24 00:01:05,560 --> 00:01:06,400 Speaker 3: Project twenty. 25 00:01:06,200 --> 00:01:09,080 Speaker 2: Twenty Oh yeah, of course. Okay, So Joe and I 26 00:01:09,120 --> 00:01:12,520 Speaker 2: are thinking of Made in China twenty twenty five, which, 27 00:01:12,520 --> 00:01:15,319 Speaker 2: of course was the big program that China launched ten 28 00:01:15,400 --> 00:01:18,199 Speaker 2: years ago. Almost ten years ago now back in twenty 29 00:01:18,240 --> 00:01:25,039 Speaker 2: fifteen to bulk out strategically important advanced technology sectors. And 30 00:01:25,120 --> 00:01:28,360 Speaker 2: so I'm kind of curious what exactly happens in twenty 31 00:01:28,400 --> 00:01:32,040 Speaker 2: twenty five, how much progress China has made on this front. 32 00:01:32,200 --> 00:01:34,399 Speaker 2: You know, next year, are they suddenly going to like 33 00:01:34,640 --> 00:01:38,440 Speaker 2: declare victory in advanced technology and that'll be the end 34 00:01:38,480 --> 00:01:42,160 Speaker 2: of it. What criteria are they actually using to judge 35 00:01:42,200 --> 00:01:43,640 Speaker 2: its success. I have a bunch of. 36 00:01:43,680 --> 00:01:46,200 Speaker 3: Questions, you know, I just have to say that I 37 00:01:46,319 --> 00:01:50,760 Speaker 3: appreciate things like made in twenty twenty five initiatives or 38 00:01:50,800 --> 00:01:53,000 Speaker 3: even like you know, five year plans or ten year 39 00:01:53,000 --> 00:01:57,040 Speaker 3: plans or whatever, just because they provide a very convenient 40 00:01:57,360 --> 00:02:00,520 Speaker 3: spot to go back and look, did the goals get 41 00:02:00,560 --> 00:02:03,160 Speaker 3: hit or not. It's one thing to talk about moonshots 42 00:02:03,160 --> 00:02:05,160 Speaker 3: and like, oh, we're going to lead all this, But 43 00:02:05,280 --> 00:02:07,000 Speaker 3: unless you put a date on when you want to 44 00:02:07,040 --> 00:02:10,880 Speaker 3: achieve it by, you don't really know whether you're successful, 45 00:02:10,960 --> 00:02:13,280 Speaker 3: right because you never really know where you are in 46 00:02:13,360 --> 00:02:15,600 Speaker 3: sort of the arc of progress. But if you have 47 00:02:15,639 --> 00:02:17,880 Speaker 3: a system that puts dates on where you want to be, 48 00:02:18,440 --> 00:02:20,919 Speaker 3: at least you can go back and judge, well, were 49 00:02:20,960 --> 00:02:23,000 Speaker 3: we successful or not. And so now we're on the 50 00:02:23,080 --> 00:02:24,880 Speaker 3: verge of being able to look at the start of 51 00:02:24,880 --> 00:02:27,400 Speaker 3: that initiative and the end of that initiative and sort 52 00:02:27,400 --> 00:02:28,880 Speaker 3: of a say whether it worked or not. 53 00:02:29,200 --> 00:02:32,200 Speaker 2: Is that your pitch for All Thoughts World Domination twenty 54 00:02:32,240 --> 00:02:33,040 Speaker 2: twenty five. 55 00:02:33,040 --> 00:02:35,920 Speaker 3: Well, we'd have maybe twenty thirty five, okay, and we 56 00:02:35,960 --> 00:02:38,720 Speaker 3: need some like very specific metrics, you know, we have 57 00:02:38,800 --> 00:02:41,680 Speaker 3: to like really know what that means in advance, and 58 00:02:41,720 --> 00:02:43,160 Speaker 3: then yeah, we'll see if we hit it or not. 59 00:02:43,320 --> 00:02:47,519 Speaker 2: Okay, you're right, though, deadlines are very important. So speaking 60 00:02:47,560 --> 00:02:49,760 Speaker 2: of deadlines, why don't I go ahead and bring in 61 00:02:49,840 --> 00:02:53,639 Speaker 2: our very perfect guests for this particular episode. We're speaking 62 00:02:53,720 --> 00:02:58,720 Speaker 2: with Gerard de Pippo, senior geoeconomics analyst over at Bloomberg Economics, 63 00:02:58,960 --> 00:03:02,400 Speaker 2: as well as Rebecca Ka Chung Wilkins, senior correspondent for 64 00:03:02,480 --> 00:03:05,720 Speaker 2: the Government and Economy Team Asia. I knew her back 65 00:03:05,720 --> 00:03:08,639 Speaker 2: when I was in Hong Kong and she covered China 66 00:03:08,720 --> 00:03:11,480 Speaker 2: credit and she was so good at it. So who 67 00:03:11,520 --> 00:03:15,800 Speaker 2: better to kind of draw the connection between technology and 68 00:03:15,840 --> 00:03:19,560 Speaker 2: finance and economics than these two. So Girard and Rebecca, 69 00:03:19,720 --> 00:03:22,160 Speaker 2: thank you so much for coming back on our lots. 70 00:03:22,120 --> 00:03:23,839 Speaker 4: Thank you for has such a pleasure to be here. 71 00:03:24,880 --> 00:03:28,000 Speaker 2: Let's start with the beginning. I guess twenty fifteen, China 72 00:03:28,120 --> 00:03:31,840 Speaker 2: decides to launch this Maid in China twenty twenty five program. 73 00:03:32,120 --> 00:03:34,320 Speaker 2: What was the thinking behind it, what were the goals? 74 00:03:35,520 --> 00:03:37,640 Speaker 4: Well, I think one thing to remember is this sort 75 00:03:37,680 --> 00:03:41,240 Speaker 4: of a hole Made in China industrial policy. This comes 76 00:03:41,320 --> 00:03:44,600 Speaker 4: just a couple of years into President She's in pain 77 00:03:44,720 --> 00:03:47,800 Speaker 4: getting his leadership underway in China. So this is also 78 00:03:48,000 --> 00:03:52,080 Speaker 4: very much President She's vision for the Chinese economy, his 79 00:03:52,200 --> 00:03:55,640 Speaker 4: idea that these key sectors, these key industries are sentially 80 00:03:55,720 --> 00:03:59,640 Speaker 4: going to underpin the national development. So this is not 81 00:03:59,680 --> 00:04:03,840 Speaker 4: sort of, I suppose, just a discussion about china strategic ambitions, 82 00:04:03,880 --> 00:04:08,520 Speaker 4: but also specifically She's own vision for the direction for China. 83 00:04:09,080 --> 00:04:12,000 Speaker 5: Also that in the context of Chinese industrial policy, so 84 00:04:12,360 --> 00:04:14,400 Speaker 5: Made in China twenty five is an example of an 85 00:04:14,440 --> 00:04:17,159 Speaker 5: iterative process and also sort of a reflective process with 86 00:04:17,160 --> 00:04:19,400 Speaker 5: the rest of the world. So there obviously were other 87 00:04:19,400 --> 00:04:22,680 Speaker 5: industrial policies before, and that would include something like the 88 00:04:22,720 --> 00:04:24,800 Speaker 5: Medium Long Term Plan from two thousand and five, which 89 00:04:24,839 --> 00:04:27,000 Speaker 5: is a fifteen year plan. There are of course five 90 00:04:27,080 --> 00:04:29,680 Speaker 5: year plans, but also mad in China twenty five was 91 00:04:29,720 --> 00:04:33,080 Speaker 5: partially inspired by Germany's Industry four point zero plan, which 92 00:04:33,120 --> 00:04:36,400 Speaker 5: is much less detailed than ambitious. But there's a sort 93 00:04:36,440 --> 00:04:38,680 Speaker 5: of a reactive effect there which ends up having knock 94 00:04:38,720 --> 00:04:40,640 Speaker 5: on effects because then the US reacts to Made in 95 00:04:40,680 --> 00:04:43,279 Speaker 5: China twenty five, and so it's just part of the cycle. 96 00:04:43,320 --> 00:04:46,320 Speaker 5: I think what makes Made in China twenty five different 97 00:04:46,360 --> 00:04:48,200 Speaker 5: than other plans that China had is that it was 98 00:04:48,240 --> 00:04:52,240 Speaker 5: more comprehensive, more ambitious, and much more focused on not 99 00:04:52,360 --> 00:04:56,279 Speaker 5: just catching up, but actually leading in ten strategic sectors. 100 00:04:56,560 --> 00:04:59,000 Speaker 5: Previous plans have been more about say lower value added 101 00:04:59,240 --> 00:05:01,880 Speaker 5: or megaproject right, and this is basically they want to 102 00:05:01,880 --> 00:05:04,440 Speaker 5: be the world leader and all the technologies that circut 103 00:05:04,480 --> 00:05:07,160 Speaker 5: twenty fifteen they had identified as being the most important. 104 00:05:07,480 --> 00:05:10,440 Speaker 3: That's interesting. So one way of thinking about development is like, Okay, 105 00:05:10,480 --> 00:05:13,400 Speaker 3: we're going to build lots of bridges and rail and 106 00:05:13,480 --> 00:05:16,719 Speaker 3: housing and hospitals and other sorts of things, but this 107 00:05:16,880 --> 00:05:20,560 Speaker 3: is about really leading the technological frontier. And of course 108 00:05:20,640 --> 00:05:24,400 Speaker 3: this is what is the source of tremendous angst in Washington, 109 00:05:24,480 --> 00:05:27,599 Speaker 3: d C. And various US industrial giants and so forth. 110 00:05:27,920 --> 00:05:29,080 Speaker 3: I mean I don't know if we need to like 111 00:05:29,120 --> 00:05:31,800 Speaker 3: list all fifteen, but what are the big areas that 112 00:05:31,920 --> 00:05:33,560 Speaker 3: China felt it had to pursue. 113 00:05:33,839 --> 00:05:37,159 Speaker 5: Sure, so they have ten strategic sectors, but then within 114 00:05:37,279 --> 00:05:40,279 Speaker 5: that there's any number of technologies. So the big ones 115 00:05:40,279 --> 00:05:43,880 Speaker 5: would be like information technology, which includes things like semiconductors, 116 00:05:44,279 --> 00:05:48,240 Speaker 5: five G artificial intelligence, and then things like aviation and 117 00:05:48,279 --> 00:05:51,840 Speaker 5: space technology, Energy equipment whichuld include things like solar panels, 118 00:05:51,880 --> 00:05:54,279 Speaker 5: and then new energy vehicles, things like electric vehicles. So 119 00:05:54,440 --> 00:05:57,680 Speaker 5: it spans pretty much everything, but it's skews towards the 120 00:05:57,720 --> 00:06:02,000 Speaker 5: industrial sector, and it's really a manufacturing based view of development. 121 00:06:02,320 --> 00:06:05,200 Speaker 2: So one thing that was interesting, Jared is you said 122 00:06:05,240 --> 00:06:09,120 Speaker 2: that it was an iterative process. How has it changed 123 00:06:09,240 --> 00:06:12,640 Speaker 2: in your mind from like twenty fifteen to now. Has 124 00:06:12,640 --> 00:06:15,120 Speaker 2: there been maybe more of a focus or a shift 125 00:06:15,279 --> 00:06:16,320 Speaker 2: in direction. 126 00:06:17,000 --> 00:06:21,279 Speaker 5: A few things the original made in China twenty five Blueprint, 127 00:06:21,440 --> 00:06:23,600 Speaker 5: which is what people treat as being the plan that 128 00:06:23,680 --> 00:06:26,520 Speaker 5: was announced in early twenty fifteen, But then actually when 129 00:06:26,560 --> 00:06:29,839 Speaker 5: people talk about all the targets, those mostly come from 130 00:06:29,960 --> 00:06:32,919 Speaker 5: something that's commonly called the Green Book, which was published 131 00:06:32,960 --> 00:06:35,760 Speaker 5: by the Chinese Academy of Engineers, and that's where you 132 00:06:35,800 --> 00:06:37,800 Speaker 5: have the two hundred and fifty plus targets that are 133 00:06:37,839 --> 00:06:41,359 Speaker 5: looking at specific technologies over time. It is sort of 134 00:06:41,400 --> 00:06:43,880 Speaker 5: like an authoritative addendum. But then on top of that, 135 00:06:44,120 --> 00:06:47,280 Speaker 5: there are something like four hundred plus other authoritative documents 136 00:06:47,480 --> 00:06:50,480 Speaker 5: going through technologies, going through different levels of government. So 137 00:06:50,640 --> 00:06:52,880 Speaker 5: it's not just one thing, and that's part of the 138 00:06:52,920 --> 00:06:55,680 Speaker 5: fact that those other plans don't come out at exactly 139 00:06:55,760 --> 00:06:58,200 Speaker 5: the same time. That makes it iterative. The other thing 140 00:06:58,200 --> 00:07:00,920 Speaker 5: that I think is really important is the Chinese government 141 00:07:00,960 --> 00:07:05,200 Speaker 5: realized around twenty nineteen that the phrase mid in China 142 00:07:05,320 --> 00:07:09,159 Speaker 5: twenty five was provoking antibodies in the West, particularly in 143 00:07:09,200 --> 00:07:12,200 Speaker 5: the US. I would say that, along with Belton Road 144 00:07:12,240 --> 00:07:14,520 Speaker 5: Initiative or the two slogans ended up having the biggest 145 00:07:14,520 --> 00:07:17,120 Speaker 5: effect in a discourse. But BRI is, you know, more 146 00:07:17,160 --> 00:07:19,080 Speaker 5: favorably viewed in a lot of parts of the world, 147 00:07:19,200 --> 00:07:21,440 Speaker 5: whereas been at China twenty five was considered more of 148 00:07:21,440 --> 00:07:23,640 Speaker 5: a threat by a lot of industrial economies. So what 149 00:07:23,720 --> 00:07:25,800 Speaker 5: did China do. They actually tamp down on it, so 150 00:07:25,960 --> 00:07:28,320 Speaker 5: you will struggle to find any direct references to it 151 00:07:28,360 --> 00:07:32,240 Speaker 5: now in Chinese official documents, at least publicly, But it's 152 00:07:32,280 --> 00:07:34,520 Speaker 5: not dead, So a lot of the key goals are 153 00:07:34,520 --> 00:07:37,520 Speaker 5: now incorporated into the fourteen to five year plan, which 154 00:07:37,560 --> 00:07:39,239 Speaker 5: is the one that we're currently in going through twenty 155 00:07:39,280 --> 00:07:41,560 Speaker 5: twenty five. The other thing to keep in mind is 156 00:07:41,600 --> 00:07:47,000 Speaker 5: that the targets were what they thought circa late twenty fifteen, right, 157 00:07:47,280 --> 00:07:50,160 Speaker 5: So I would think that within the Chinese government they 158 00:07:50,200 --> 00:07:52,840 Speaker 5: actually have adjusted some things or realized that maybe that 159 00:07:52,920 --> 00:07:55,720 Speaker 5: wasn't the right forecasts. Some of them were actually quite vague, 160 00:07:55,720 --> 00:07:59,200 Speaker 5: for things like what nanometer technology would semi conductors be 161 00:07:59,240 --> 00:08:01,360 Speaker 5: circa twenty third, because of course they didn't actually know. 162 00:08:01,960 --> 00:08:05,480 Speaker 5: But my strong suspicion is that this framework still remains 163 00:08:05,480 --> 00:08:07,880 Speaker 5: in place, but it's sort of an evolution because the 164 00:08:07,920 --> 00:08:11,200 Speaker 5: point is not necessarily to hit all those individual targets. 165 00:08:11,520 --> 00:08:14,480 Speaker 5: It's are you basically fulfilling the plan in the broad sense? 166 00:08:14,520 --> 00:08:17,560 Speaker 5: Are you actually achieving leadership and all those key technologies. 167 00:08:18,240 --> 00:08:19,840 Speaker 4: I just add there that, you know, some of that 168 00:08:19,920 --> 00:08:23,720 Speaker 4: antipathy among Western powers around the idea, and even the 169 00:08:23,760 --> 00:08:26,080 Speaker 4: phrase of made in China twenty twenty five is still 170 00:08:26,080 --> 00:08:28,520 Speaker 4: sort of quite live. I was at a meeting with 171 00:08:28,560 --> 00:08:32,199 Speaker 4: some policymakers think tankers at university recently, and there was 172 00:08:32,240 --> 00:08:36,199 Speaker 4: still this quite lively discussion I call it politely discussion 173 00:08:36,720 --> 00:08:41,760 Speaker 4: between a visiting European political advisor and Hong Kong officials 174 00:08:41,800 --> 00:08:44,920 Speaker 4: and Chinese officials about precisely what made in China is, 175 00:08:44,960 --> 00:08:47,640 Speaker 4: whether it's just an industrial policy or in the view 176 00:08:47,679 --> 00:08:50,560 Speaker 4: of this particular visitor, something much more sort of malign. 177 00:08:51,559 --> 00:08:54,000 Speaker 3: I just got to say, so weird to be the 178 00:08:54,080 --> 00:08:58,920 Speaker 3: idea of like technological development along these lines being malign. 179 00:08:59,000 --> 00:09:02,160 Speaker 3: I mean, you know, this is human progress, right, technology 180 00:09:02,200 --> 00:09:06,120 Speaker 3: advances and countries want to be technological leaders, and I 181 00:09:06,240 --> 00:09:10,760 Speaker 3: understand why governments and companies around the world feel threatened 182 00:09:10,760 --> 00:09:15,360 Speaker 3: by it. But anyway, just one of the main storializing right. 183 00:09:15,440 --> 00:09:18,079 Speaker 2: Because for instance, the US will say, well, we want 184 00:09:18,120 --> 00:09:22,720 Speaker 2: to develop more clean energy technology domestically because it's important 185 00:09:22,800 --> 00:09:25,400 Speaker 2: for the environment. But on the other hand, you could 186 00:09:25,440 --> 00:09:28,920 Speaker 2: probably have more progress on the clean energy front if 187 00:09:28,960 --> 00:09:31,280 Speaker 2: you just imported a bunch of stuff from China. 188 00:09:31,360 --> 00:09:34,600 Speaker 4: Right now, one of the challenges here are the differences 189 00:09:34,640 --> 00:09:38,080 Speaker 4: here is precisely over what it means when Beijing says 190 00:09:38,120 --> 00:09:41,079 Speaker 4: it's going to back a certain sector. Right. The idea 191 00:09:41,160 --> 00:09:44,760 Speaker 4: that if Beijing identifies let's say, electric vehicles or solar 192 00:09:44,800 --> 00:09:47,360 Speaker 4: panels as a sector to back. It really can throw 193 00:09:47,400 --> 00:09:50,240 Speaker 4: its weight behind it. It can ask banks to provide 194 00:09:50,320 --> 00:09:53,640 Speaker 4: cheap credit, it can ask local governments to provide land 195 00:09:53,720 --> 00:09:56,160 Speaker 4: at cheap or no cost. It can get state owned 196 00:09:56,240 --> 00:10:01,280 Speaker 4: enterprises to pour there's significant resources, talent, innovation into those industries. 197 00:10:01,600 --> 00:10:04,640 Speaker 4: It really has sort of a huge machinery that it 198 00:10:04,720 --> 00:10:08,520 Speaker 4: can redirect, which you know other countries feel is quote 199 00:10:08,600 --> 00:10:11,320 Speaker 4: unquote unfair, and in some ways that's sort of behind 200 00:10:11,320 --> 00:10:15,200 Speaker 4: the whole accusation around unfair use of subsidies. For instance. 201 00:10:15,920 --> 00:10:19,319 Speaker 5: I will try to channel both Beijing and Washington to 202 00:10:20,040 --> 00:10:23,240 Speaker 5: address your comment. So from Beijing's perspective, I think they 203 00:10:23,240 --> 00:10:26,520 Speaker 5: would say it's a bit ridiculous that the WES was 204 00:10:26,760 --> 00:10:28,840 Speaker 5: more or less fine with China moving up the value 205 00:10:28,880 --> 00:10:30,679 Speaker 5: chain as long as it wasn't in sectors that are 206 00:10:30,679 --> 00:10:35,160 Speaker 5: too high value added or too competitive with advanced economy industry. 207 00:10:35,240 --> 00:10:37,680 Speaker 5: So textile is fine, but when you say, oh, we 208 00:10:37,679 --> 00:10:40,160 Speaker 5: want to have our own jet airliners, that becomes a problem. 209 00:10:40,400 --> 00:10:41,960 Speaker 5: And I think there's actually truth to that, right, So 210 00:10:42,040 --> 00:10:44,480 Speaker 5: what changes that China went from lower to higher value 211 00:10:44,480 --> 00:10:47,839 Speaker 5: added and now it's companies are direct competitors in many 212 00:10:47,920 --> 00:10:51,360 Speaker 5: cases with like G seven companies On the US side, 213 00:10:51,360 --> 00:10:53,719 Speaker 5: I think part of the response would be, well, the 214 00:10:53,760 --> 00:10:56,600 Speaker 5: threat part of it is it's not development per se, 215 00:10:57,040 --> 00:11:00,640 Speaker 5: It's that the Chinese government, particularly of late, is quite 216 00:11:00,720 --> 00:11:05,040 Speaker 5: clear that self reliance or self sufficiency are the maybe 217 00:11:05,120 --> 00:11:07,240 Speaker 5: primary goal. This is clear in the third Planum that 218 00:11:07,320 --> 00:11:10,040 Speaker 5: came out in July that it's about self reliance, and 219 00:11:10,080 --> 00:11:13,640 Speaker 5: self reliance has a heavy national security undertone. So I'll 220 00:11:13,679 --> 00:11:16,040 Speaker 5: go back to what I was saying earlier that I 221 00:11:16,080 --> 00:11:18,679 Speaker 5: think both sides sort of feed off each other. So 222 00:11:19,120 --> 00:11:21,400 Speaker 5: why is China so worried about self reliance? Well, part 223 00:11:21,440 --> 00:11:25,199 Speaker 5: of that is a response to Western tariffs and US 224 00:11:25,360 --> 00:11:28,360 Speaker 5: export controls. But the fact is they are basically saying 225 00:11:28,679 --> 00:11:31,080 Speaker 5: we want to be free to the extent they can 226 00:11:31,120 --> 00:11:35,800 Speaker 5: be from the Western technological supply chain. And they're doing 227 00:11:35,840 --> 00:11:38,040 Speaker 5: that because they're worried about national security. So of course 228 00:11:38,040 --> 00:11:40,360 Speaker 5: in Washington they would think, why are you worried about 229 00:11:40,400 --> 00:11:42,560 Speaker 5: national security? Right, So it sort of goes in both directions. 230 00:11:58,679 --> 00:12:02,520 Speaker 3: I guess I could see this sort of malign angle 231 00:12:02,679 --> 00:12:06,760 Speaker 3: also if it's like this is not real technological development, 232 00:12:07,120 --> 00:12:10,640 Speaker 3: this is just loss making companies that are backed by 233 00:12:10,679 --> 00:12:14,199 Speaker 3: the government that are going to then bankrupt and destroy 234 00:12:14,280 --> 00:12:17,000 Speaker 3: the industrial base of the West and not actually make 235 00:12:17,040 --> 00:12:19,360 Speaker 3: any progress. I guess I get all of these debates 236 00:12:19,360 --> 00:12:22,960 Speaker 3: and nuances and why people talk about China overcapacity as 237 00:12:22,960 --> 00:12:26,320 Speaker 3: a problem and all that stuff. But Okay, the other 238 00:12:26,440 --> 00:12:29,600 Speaker 3: thing that happened over the last several years is, in 239 00:12:29,600 --> 00:12:34,040 Speaker 3: addition to these ominous sounding phrases and slogans like made 240 00:12:34,040 --> 00:12:36,560 Speaker 3: in twenty twenty five and the Belton Road initiative that 241 00:12:37,040 --> 00:12:40,960 Speaker 3: created anxiety in the West, the US like actively started 242 00:12:41,280 --> 00:12:45,120 Speaker 3: to try to suppress Chinese technological development, starting under the 243 00:12:45,160 --> 00:12:49,600 Speaker 3: Trump administration and then obviously continuing under the Biden administration, 244 00:12:49,679 --> 00:12:51,800 Speaker 3: and it may get ratcheted up even further under the 245 00:12:51,800 --> 00:12:55,880 Speaker 3: next administration. Whoever that is, what's that done? How would 246 00:12:55,920 --> 00:12:59,160 Speaker 3: you describe specifically what the US has tried to do 247 00:12:59,280 --> 00:13:03,240 Speaker 3: in terms of constraining China's technological development and what's the 248 00:13:03,240 --> 00:13:05,679 Speaker 3: basics of the impact that these efforts have had. 249 00:13:06,040 --> 00:13:09,480 Speaker 5: What the US is trying to do is somewhat subject 250 00:13:09,480 --> 00:13:12,840 Speaker 5: to debate. The official line is that the United States 251 00:13:12,920 --> 00:13:16,000 Speaker 5: is not trying to stop China's development. It's not about 252 00:13:16,440 --> 00:13:20,640 Speaker 5: overall delinking of the economies. Is just about select de risking. 253 00:13:21,040 --> 00:13:25,199 Speaker 5: It's about remaining ahead in the strategic and critical technologies 254 00:13:25,240 --> 00:13:27,840 Speaker 5: of the future. But it's not about sort of stifling 255 00:13:27,840 --> 00:13:31,280 Speaker 5: the macro economy of China. In Beijing, the view is 256 00:13:31,280 --> 00:13:34,240 Speaker 5: that it's all around containment and that the United States 257 00:13:34,280 --> 00:13:37,760 Speaker 5: mostly but some other Western countries are trying to encircle 258 00:13:37,880 --> 00:13:40,120 Speaker 5: China and basically prevent it from moving up the ladder 259 00:13:40,200 --> 00:13:44,120 Speaker 5: economically and technologically. Is it working. It's complicated because there's 260 00:13:44,120 --> 00:13:48,000 Speaker 5: a series of policies. So when we talk about what started, 261 00:13:48,080 --> 00:13:50,200 Speaker 5: the thing that people mostly focus on is, of course 262 00:13:50,240 --> 00:13:53,480 Speaker 5: the trade war, which effectively started in twenty eighteen in 263 00:13:53,480 --> 00:13:56,800 Speaker 5: a Trump administration. The purpose that the trade war is complicated. 264 00:13:56,880 --> 00:14:00,400 Speaker 5: It wasn't really to stunt China's growth, though there were 265 00:14:00,480 --> 00:14:03,320 Speaker 5: people in the Trump administration would have hoped that it 266 00:14:03,440 --> 00:14:06,640 Speaker 5: was actually for the president, for President Trump's perspective, to 267 00:14:06,640 --> 00:14:08,880 Speaker 5: try to balance trade and get a deal, which we 268 00:14:08,960 --> 00:14:11,360 Speaker 5: got in the form of the Phase one deal, whatever 269 00:14:11,400 --> 00:14:13,560 Speaker 5: you think of that. But the other thing that happened 270 00:14:13,559 --> 00:14:16,000 Speaker 5: that I think was actually a bigger deal from the 271 00:14:16,080 --> 00:14:19,920 Speaker 5: Chinese perspective was when the US added Huawei to the 272 00:14:20,000 --> 00:14:24,400 Speaker 5: Commerce Department's entity list in early twenty nineteen, because what 273 00:14:24,520 --> 00:14:27,520 Speaker 5: that signal was that the United States was effectively trying 274 00:14:27,560 --> 00:14:31,720 Speaker 5: to kill what was arguably China's best global technology company. 275 00:14:32,000 --> 00:14:33,640 Speaker 5: The US would say, we're not trying to kill it, 276 00:14:33,720 --> 00:14:36,920 Speaker 5: but the restrictions are pretty draconian, and there's very much 277 00:14:36,960 --> 00:14:39,960 Speaker 5: that vibe, And so what it did was convinced not 278 00:14:40,040 --> 00:14:43,480 Speaker 5: just Beijing but the local governments and Chinese companies that 279 00:14:43,560 --> 00:14:46,480 Speaker 5: otherwise would it prefer to just use sometimes cheaper or 280 00:14:46,520 --> 00:14:49,880 Speaker 5: better foreign inputs, like for semiconductors, that actually what Beijing 281 00:14:49,960 --> 00:14:53,440 Speaker 5: was saying about self sufficiency was indeed a national security imperative. 282 00:14:53,760 --> 00:14:57,000 Speaker 5: Is it working. It's complicated, but our basic take is 283 00:14:57,000 --> 00:14:59,480 Speaker 5: that at the macro level, what's happening in a Chinese 284 00:14:59,520 --> 00:15:03,480 Speaker 5: economy is primarily due to the property sector. You could 285 00:15:03,520 --> 00:15:06,000 Speaker 5: call it a meltdown, because it's pretty dramatic. That Chinese 286 00:15:06,040 --> 00:15:08,760 Speaker 5: government arguably started that with the three Red Lines policy. 287 00:15:09,120 --> 00:15:11,440 Speaker 5: But I would be careful about conflating the idea that 288 00:15:11,520 --> 00:15:15,800 Speaker 5: Chinese economic weakness is due to basically industrial policy, when 289 00:15:15,800 --> 00:15:19,480 Speaker 5: really there's clearly a more obvious macro phenomenon that explains it. 290 00:15:19,760 --> 00:15:22,480 Speaker 5: On the technology side, the export controls, I think are 291 00:15:22,520 --> 00:15:24,880 Speaker 5: really the crux of the question of are they slowing 292 00:15:25,120 --> 00:15:27,640 Speaker 5: China's development? I think they're The focus on the US 293 00:15:27,680 --> 00:15:31,120 Speaker 5: side is primarily on semiconductors, and there's even recent news 294 00:15:31,160 --> 00:15:35,280 Speaker 5: as Bloomberg has reported that, for example, TSMC, the famous 295 00:15:35,320 --> 00:15:39,240 Speaker 5: semiconductor foundry in Taiwan, might have been sending some Nvidia 296 00:15:39,320 --> 00:15:42,440 Speaker 5: chips to Huawei through some indirect body. Maybe they didn't 297 00:15:42,480 --> 00:15:44,600 Speaker 5: know about it, But there's all this debate about how 298 00:15:44,640 --> 00:15:47,760 Speaker 5: far ahead is China really and are they actually able 299 00:15:47,800 --> 00:15:50,000 Speaker 5: to make the most advanced chips on their own, And 300 00:15:50,040 --> 00:15:51,720 Speaker 5: I think that is really the question of when you 301 00:15:51,760 --> 00:15:54,280 Speaker 5: get to how effective are the export controls, it looks 302 00:15:54,320 --> 00:15:56,440 Speaker 5: like they are having some effect, but not a lot. 303 00:15:56,480 --> 00:15:57,560 Speaker 5: At a macro perspective. 304 00:15:58,360 --> 00:16:02,520 Speaker 4: We also sort of discovering in real time precisely the 305 00:16:02,520 --> 00:16:06,600 Speaker 4: sort of miscalculation the idea of export controls. Initially, the 306 00:16:06,640 --> 00:16:09,120 Speaker 4: belief was that it would help the US stay ahead 307 00:16:09,160 --> 00:16:12,480 Speaker 4: by eight to ten years. But last year we saw 308 00:16:12,640 --> 00:16:15,960 Speaker 4: Huawei launch their Mate sixty smartphone, which included a seven 309 00:16:16,040 --> 00:16:21,000 Speaker 4: nanometer chip that suggested actually that Huawei's chip making partner, Smick, 310 00:16:21,200 --> 00:16:24,120 Speaker 4: was actually somewhere between sort of four or five years behind. 311 00:16:24,520 --> 00:16:26,800 Speaker 4: So there have been these sort of series of nasty 312 00:16:26,880 --> 00:16:31,880 Speaker 4: surprises and led to recalibrations of precisely where Chinese tech 313 00:16:32,000 --> 00:16:33,160 Speaker 4: advancement actually is. 314 00:16:34,280 --> 00:16:37,280 Speaker 2: So just on the idea of what the US needs 315 00:16:37,360 --> 00:16:40,080 Speaker 2: to do here, I mean, one of the criticisms of 316 00:16:40,240 --> 00:16:42,960 Speaker 2: some of its response is that the problem really is 317 00:16:43,360 --> 00:16:46,400 Speaker 2: the cost of these technologies. So in order to make 318 00:16:46,440 --> 00:16:50,920 Speaker 2: them domestically and maybe internationally competitive, the US really needs 319 00:16:50,920 --> 00:16:53,040 Speaker 2: to bring down the cost curve. And that's hard to 320 00:16:53,040 --> 00:16:56,120 Speaker 2: do when you're competing with China and it has maybe 321 00:16:56,160 --> 00:17:00,880 Speaker 2: fewer regulations and certainly cheaper labor. Is there anything that 322 00:17:00,960 --> 00:17:06,200 Speaker 2: can be done on that front to make American technology 323 00:17:06,359 --> 00:17:09,720 Speaker 2: more competitive, for instance, via more tariffs. 324 00:17:10,440 --> 00:17:13,399 Speaker 5: In theory, if the US erects tariff falls, which we 325 00:17:13,440 --> 00:17:16,600 Speaker 5: already have, but if Trump is re elected, he's promising 326 00:17:16,640 --> 00:17:19,879 Speaker 5: sixty percent tariffs on China, which would be huge and 327 00:17:20,080 --> 00:17:23,680 Speaker 5: might shut off eventually a good share of direct US 328 00:17:23,800 --> 00:17:26,680 Speaker 5: China trade. His theory, as he explained recently on his 329 00:17:26,760 --> 00:17:30,120 Speaker 5: Bloomberg interview with John Micklethwaite, is that essentially that will 330 00:17:30,160 --> 00:17:34,560 Speaker 5: compel all these companies to reshore or onshore production back 331 00:17:34,600 --> 00:17:37,240 Speaker 5: in the United States to sell in the United States. 332 00:17:37,280 --> 00:17:40,760 Speaker 5: Now generally speaking, import substitution has a pretty bad track 333 00:17:40,800 --> 00:17:44,080 Speaker 5: record internationally. But the US has the advantage of being 334 00:17:44,080 --> 00:17:45,520 Speaker 5: the largest economy in the world, right and it's the 335 00:17:45,560 --> 00:17:49,040 Speaker 5: largest consumer market, and so there is some feasibility to it. 336 00:17:49,080 --> 00:17:51,439 Speaker 5: But I think something that might be under emphasized in 337 00:17:51,440 --> 00:17:54,959 Speaker 5: a general discourse is that the tariffs, particularly as they 338 00:17:54,960 --> 00:17:58,000 Speaker 5: are constituted now, but especially if they increase them, also 339 00:17:58,080 --> 00:18:00,760 Speaker 5: hit a lot of intermediate goods right, actually makes it 340 00:18:01,240 --> 00:18:04,600 Speaker 5: more expensive to import things like steel or all the 341 00:18:04,640 --> 00:18:07,640 Speaker 5: components you need to build a factory or inputs for whatever, 342 00:18:07,920 --> 00:18:09,639 Speaker 5: And so you have to sort of decide. So the 343 00:18:09,720 --> 00:18:12,640 Speaker 5: US wants to protect at steel sector, Okay, we can 344 00:18:12,680 --> 00:18:14,920 Speaker 5: do that. We do do that, but that also means 345 00:18:14,920 --> 00:18:16,560 Speaker 5: it's steel costs more in the US, and it means 346 00:18:16,600 --> 00:18:19,639 Speaker 5: construction costs than or up, which means making a factory 347 00:18:19,680 --> 00:18:22,560 Speaker 5: and say Taiwan or China or whatever is cheaper. So 348 00:18:22,640 --> 00:18:25,280 Speaker 5: there are trade offs there. In my personal view, I 349 00:18:25,320 --> 00:18:27,240 Speaker 5: don't think tariffs are a good way to go about it. 350 00:18:27,280 --> 00:18:30,000 Speaker 5: I think industrial policy, which is a much wider set 351 00:18:30,000 --> 00:18:32,440 Speaker 5: of tools as some promise, but tariff to me are 352 00:18:32,520 --> 00:18:33,440 Speaker 5: like a sledgehammer. 353 00:18:34,359 --> 00:18:36,879 Speaker 3: I think there's a really interesting point about intermediate I mean, 354 00:18:36,920 --> 00:18:39,560 Speaker 3: I imagine that even if you were to go into 355 00:18:39,680 --> 00:18:42,879 Speaker 3: an Intel factory or fab somewhere in the United States, 356 00:18:42,880 --> 00:18:45,800 Speaker 3: they are just numerous imported goods of all sorts. So if 357 00:18:45,760 --> 00:18:49,080 Speaker 3: we want Intel to be a powerhouse, the idea of 358 00:18:49,160 --> 00:18:51,520 Speaker 3: tariffs are going to make that much easier. I think 359 00:18:51,600 --> 00:18:53,919 Speaker 3: it's complicated, And then of course there's all the questions 360 00:18:53,960 --> 00:18:56,000 Speaker 3: about like how do you know it's coming from China, 361 00:18:56,160 --> 00:18:58,920 Speaker 3: or what if the final assembly is somewhere else, et cetera. 362 00:18:59,160 --> 00:19:02,159 Speaker 3: Let's get into civics. Both of you talk about some 363 00:19:02,280 --> 00:19:05,880 Speaker 3: key industries where China was in twenty fifteen and where 364 00:19:05,880 --> 00:19:08,159 Speaker 3: they are today in twenty twenty five, and what kind 365 00:19:08,200 --> 00:19:09,320 Speaker 3: of progress has been made. 366 00:19:10,000 --> 00:19:13,520 Speaker 4: Well, I think the sort of really obvious consumer ones 367 00:19:13,560 --> 00:19:16,840 Speaker 4: where we've seen these kind of extraordinary leaps in evs 368 00:19:17,359 --> 00:19:20,680 Speaker 4: and solar panels. I mean, I think a company like BYD, 369 00:19:20,960 --> 00:19:23,840 Speaker 4: which is basically unheard of. I think globally a couple 370 00:19:23,840 --> 00:19:29,640 Speaker 4: of years ago, now a Chinese leader outpacing its global competitors. 371 00:19:29,680 --> 00:19:32,280 Speaker 4: It thinks it's going to sell half of its products 372 00:19:32,400 --> 00:19:36,000 Speaker 4: overseas in the future, so certainly also doesn't really see 373 00:19:36,320 --> 00:19:40,880 Speaker 4: tariffs or potential tariffs as an impediment to its expansion overseas, 374 00:19:41,320 --> 00:19:43,680 Speaker 4: and I think in a way it's sort of unimaginable. 375 00:19:43,720 --> 00:19:46,560 Speaker 4: I remember reporting in China about a decade ago around 376 00:19:46,600 --> 00:19:49,439 Speaker 4: the time that Made in China was actually announced, and 377 00:19:49,520 --> 00:19:52,040 Speaker 4: officials OCA Gunment officials are very excited to take me 378 00:19:52,240 --> 00:19:55,960 Speaker 4: to a lithium battery factory which batteries were going to 379 00:19:56,000 --> 00:19:58,359 Speaker 4: be used for electric vehicles, and it seemed to have 380 00:19:58,440 --> 00:20:00,720 Speaker 4: to say, like something of a pipe dream, Like I said, 381 00:20:00,880 --> 00:20:05,760 Speaker 4: totally misunderestimated the future of this sector and the future 382 00:20:05,800 --> 00:20:08,320 Speaker 4: of the company. But even at that time, it was 383 00:20:08,359 --> 00:20:11,560 Speaker 4: something that you know, local officials were really had this 384 00:20:11,640 --> 00:20:14,480 Speaker 4: sort of razor sharp focus. 385 00:20:14,000 --> 00:20:18,080 Speaker 5: On evs are probably the best example, because they are 386 00:20:18,160 --> 00:20:22,800 Speaker 5: the technology where China has exceeded the plan, so to speak, right, 387 00:20:22,840 --> 00:20:25,840 Speaker 5: they've done much better than their internal forecasts would have 388 00:20:25,840 --> 00:20:28,800 Speaker 5: suggested in the twenty fifteen documents. But there are other 389 00:20:28,840 --> 00:20:31,920 Speaker 5: sectors where they've also done well, so unmanned area vehicles, 390 00:20:32,080 --> 00:20:34,800 Speaker 5: which is to say drones like that DJI makes China 391 00:20:34,840 --> 00:20:36,560 Speaker 5: is clearly the world's leader, and that the US tries 392 00:20:36,640 --> 00:20:38,480 Speaker 5: to restrict imports and use of that in the US, 393 00:20:38,520 --> 00:20:41,320 Speaker 5: but elsewhere they're dominant. There are other things like solar 394 00:20:41,359 --> 00:20:45,520 Speaker 5: panels that China clearly has dominance in other areas, they're 395 00:20:45,520 --> 00:20:47,879 Speaker 5: not exactly their world leader, but they're clearly starting to 396 00:20:47,920 --> 00:20:49,800 Speaker 5: catch up, and they're better off than they would have been, 397 00:20:49,920 --> 00:20:53,160 Speaker 5: say circa twenty fifteen. So semiconductors are one area where 398 00:20:53,200 --> 00:20:55,159 Speaker 5: they're not the world's leader, but they are on a 399 00:20:55,200 --> 00:20:59,440 Speaker 5: relative basis stronger than they were five years ago. Industrial robots, 400 00:20:59,600 --> 00:21:02,080 Speaker 5: things like that, machine tools. There are other sort of 401 00:21:02,200 --> 00:21:05,359 Speaker 5: you know, maybe more obscure things like large tractors. So 402 00:21:05,400 --> 00:21:07,960 Speaker 5: part of the plan talks about things like agricultural equipment 403 00:21:08,200 --> 00:21:11,280 Speaker 5: and pharmaceuticals. They're also making gains. So really in all 404 00:21:11,320 --> 00:21:16,280 Speaker 5: areas except arguably for maybe commercial aircraft, they're making relative gains. 405 00:21:16,520 --> 00:21:18,640 Speaker 4: I guess the other element in China in some ways 406 00:21:18,680 --> 00:21:20,720 Speaker 4: China sort of had set itself up to succeed because 407 00:21:20,760 --> 00:21:23,080 Speaker 4: there are some areas right JO where you know, China 408 00:21:23,160 --> 00:21:24,480 Speaker 4: was already a global leader. 409 00:21:25,400 --> 00:21:28,160 Speaker 5: Yeah. Well, so that's a good point because the new 410 00:21:28,320 --> 00:21:31,159 Speaker 5: energy vehicle plans go back to I believe two thousand 411 00:21:31,160 --> 00:21:33,840 Speaker 5: and nine, right, so when they're deciding in twenty fifteen, 412 00:21:33,840 --> 00:21:36,600 Speaker 5: whereas it's going to go some of those technologies, they 413 00:21:36,600 --> 00:21:39,879 Speaker 5: already had plans in place that were underway, and so 414 00:21:40,080 --> 00:21:42,639 Speaker 5: they could sort of project, Okay, we already know how 415 00:21:42,720 --> 00:21:46,840 Speaker 5: this is starting to work, whereas other things like artificial intelligence. Yeah, 416 00:21:46,840 --> 00:21:49,119 Speaker 5: it was a thing people spoke about in twenty fifteen, 417 00:21:49,160 --> 00:21:52,280 Speaker 5: but it wasn't nearly as real as it is now, right, 418 00:21:52,280 --> 00:21:53,639 Speaker 5: so that was much more speculative. 419 00:22:09,200 --> 00:22:13,240 Speaker 2: Can we maybe talk about semiconductors specifically, because this obviously 420 00:22:13,359 --> 00:22:16,280 Speaker 2: has been a very hot button area for both the 421 00:22:16,400 --> 00:22:19,040 Speaker 2: US and China and maybe one of the areas where 422 00:22:19,040 --> 00:22:22,359 Speaker 2: we've seen a lot of money pouring in. How's that 423 00:22:22,440 --> 00:22:23,280 Speaker 2: shaking out? 424 00:22:23,880 --> 00:22:26,520 Speaker 4: I mean, by and large, semi conductors is probably the 425 00:22:26,800 --> 00:22:29,280 Speaker 4: one area where the US has had most success in 426 00:22:29,359 --> 00:22:32,920 Speaker 4: rolling out export controls and curbing China's access to these 427 00:22:33,000 --> 00:22:36,840 Speaker 4: really key strategic technologies. And part of that is down to, 428 00:22:37,400 --> 00:22:41,080 Speaker 4: you know, the success of the Biden administration enlisting support 429 00:22:41,160 --> 00:22:44,280 Speaker 4: from its allies. It's just a handful of companies that 430 00:22:44,320 --> 00:22:47,840 Speaker 4: are involved in making these types of chips. And you know, 431 00:22:47,880 --> 00:22:50,520 Speaker 4: there's an argument you made that unless Biden had sort 432 00:22:50,520 --> 00:22:54,240 Speaker 4: of convinced Japan and the Netherlands to come on site, 433 00:22:54,320 --> 00:22:57,560 Speaker 4: that actually the controls that he rolled out would have 434 00:22:57,560 --> 00:23:01,200 Speaker 4: been far, far less effective. And one key area here 435 00:23:01,320 --> 00:23:06,720 Speaker 4: is actually preventing China from accessing the manufacturing equipment that's 436 00:23:06,800 --> 00:23:10,280 Speaker 4: needed to actually make these types of really advanced chips 437 00:23:10,320 --> 00:23:13,000 Speaker 4: that are used in AI and quantum computing. 438 00:23:13,640 --> 00:23:17,359 Speaker 5: There's an interesting and I think quite important counterfactual to 439 00:23:17,359 --> 00:23:19,280 Speaker 5: be discussed, which is that you know, what if the 440 00:23:19,320 --> 00:23:22,520 Speaker 5: US had not done the export controls. In essence, what 441 00:23:22,560 --> 00:23:25,639 Speaker 5: the US is doing is imposing import substitution on China 442 00:23:25,880 --> 00:23:28,080 Speaker 5: in a way that China hadn't preferred. But we can 443 00:23:28,119 --> 00:23:30,600 Speaker 5: also see in the data, including for filings for Smick, 444 00:23:30,880 --> 00:23:33,840 Speaker 5: their main foundry, that they upped the amount of subsidies 445 00:23:33,840 --> 00:23:36,520 Speaker 5: they were getting after twenty nineteen. Right, So it means 446 00:23:36,520 --> 00:23:39,240 Speaker 5: that China sort of turned the industrial policy dial from 447 00:23:39,320 --> 00:23:42,080 Speaker 5: ten to eleven. You could debate how much effect it has, 448 00:23:42,440 --> 00:23:45,160 Speaker 5: but it seems clear that that is the overriding priority 449 00:23:45,200 --> 00:23:47,600 Speaker 5: now more than anything else, actually semic conductors, right, because 450 00:23:47,640 --> 00:23:50,000 Speaker 5: they know that is the keynode both sides except that 451 00:23:50,520 --> 00:23:53,640 Speaker 5: is it working. I mean, clearly it has slowed down 452 00:23:53,880 --> 00:23:57,000 Speaker 5: their ability to get the most advanced chips, but China's 453 00:23:57,040 --> 00:24:00,800 Speaker 5: clearly making gains on so called legacy nos or mature nodes, right, 454 00:24:00,880 --> 00:24:03,560 Speaker 5: so sort of slightly older technology, and they're building out 455 00:24:03,560 --> 00:24:05,600 Speaker 5: a lot of capacity there and that's something that they 456 00:24:05,640 --> 00:24:08,280 Speaker 5: still have access to a lot of the lithography equipment 457 00:24:08,280 --> 00:24:12,760 Speaker 5: to do. So other areas like packaging, they've improved it's design, 458 00:24:12,960 --> 00:24:15,200 Speaker 5: maybe some improvement, but that they're still lagging the West, 459 00:24:15,200 --> 00:24:18,040 Speaker 5: so qualcomm and video, et cetera. I think, really, as 460 00:24:18,040 --> 00:24:21,400 Speaker 5: Rebecca said, it's the equipment, so specifically, the most advanced 461 00:24:21,400 --> 00:24:24,400 Speaker 5: lithography machines that China as far as we know, has 462 00:24:24,440 --> 00:24:26,480 Speaker 5: not been able to make on its own, and that 463 00:24:26,640 --> 00:24:27,760 Speaker 5: is the current roadblock. 464 00:24:28,200 --> 00:24:33,080 Speaker 3: But like whatever the most advanced lithography machine that China 465 00:24:33,200 --> 00:24:36,320 Speaker 3: is able to make today on October twenty fourth, twenty 466 00:24:36,359 --> 00:24:40,280 Speaker 3: twenty four, is it substantially higher than the most advanced 467 00:24:40,359 --> 00:24:43,399 Speaker 3: lithography machine that China was able to make at some 468 00:24:43,480 --> 00:24:46,320 Speaker 3: point in twenty fifteen, And is the number of years 469 00:24:46,400 --> 00:24:50,200 Speaker 3: gap between that most advanced machine versus the one that 470 00:24:50,480 --> 00:24:53,560 Speaker 3: ASML makes is it perceived to have narrowed? 471 00:24:54,080 --> 00:24:57,600 Speaker 4: I actually don't know the narrowing of the generations Gerardine, Okay. 472 00:24:57,680 --> 00:24:59,680 Speaker 5: Well, first of all, this is something where I think 473 00:25:00,040 --> 00:25:02,680 Speaker 5: would be subject to debate. Right, So there's the fact, 474 00:25:02,880 --> 00:25:05,640 Speaker 5: as Rebeca already mentioned, the Mate Pro, the Huawei phone 475 00:25:05,640 --> 00:25:08,640 Speaker 5: that had the seven animeter chip. When that came out, 476 00:25:08,800 --> 00:25:10,640 Speaker 5: there was a debate, and I don't think it's been 477 00:25:10,680 --> 00:25:13,040 Speaker 5: conclusively settled as far as I know, as exactly what 478 00:25:13,119 --> 00:25:15,439 Speaker 5: happened how they got those chips. The fact that we 479 00:25:15,480 --> 00:25:18,920 Speaker 5: have news recently saying that maybe actually Huawei is kitting 480 00:25:19,000 --> 00:25:22,840 Speaker 5: chips from TSMC indirectly as a wrinkle, because if that's true, 481 00:25:23,040 --> 00:25:24,840 Speaker 5: then it would suggest that actually they don't have their 482 00:25:24,880 --> 00:25:27,280 Speaker 5: own technology. They're essentially just finding a way around the 483 00:25:27,280 --> 00:25:29,679 Speaker 5: export controls, which is a problem for the US in 484 00:25:29,680 --> 00:25:31,480 Speaker 5: one sense, but it also means that maybe the export 485 00:25:31,480 --> 00:25:34,280 Speaker 5: controls are working in that China doesn't have the indigenous 486 00:25:34,280 --> 00:25:37,720 Speaker 5: capacity to make those things on lithography. I'm not an 487 00:25:37,720 --> 00:25:40,439 Speaker 5: expert on that, which is a super technical topic, but 488 00:25:40,480 --> 00:25:43,359 Speaker 5: my strong suspicion is that the quality of China's domestic 489 00:25:43,400 --> 00:25:46,840 Speaker 5: capacity has increased, but the gap is still there. And 490 00:25:46,920 --> 00:25:50,480 Speaker 5: so TSMC, I believe, is still pretty confident in SML 491 00:25:50,680 --> 00:25:52,600 Speaker 5: that they're, you know, the world's leader, and there's there's 492 00:25:52,640 --> 00:25:53,919 Speaker 5: going to be a gap going forward. 493 00:25:54,280 --> 00:25:56,800 Speaker 4: I just had you, the gap that we know of 494 00:25:57,080 --> 00:26:01,359 Speaker 4: now between Smick and the industry leaded to TSMC is 495 00:26:01,440 --> 00:26:05,560 Speaker 4: about two generations, so that's roughly four years. But as 496 00:26:05,640 --> 00:26:08,439 Speaker 4: Gerard says, there is actual sort of still life debate 497 00:26:08,680 --> 00:26:13,800 Speaker 4: over precisely where that gap might be. Something it's bigger, 498 00:26:13,800 --> 00:26:14,720 Speaker 4: something it's smaller. 499 00:26:15,359 --> 00:26:18,880 Speaker 5: So I think semiconductors are also. They're interesting for many reasons, 500 00:26:18,880 --> 00:26:21,840 Speaker 5: but one of them is that the technological race is 501 00:26:21,920 --> 00:26:26,440 Speaker 5: very much ongoing. So if More's law hasn't been exhausted yet, 502 00:26:26,480 --> 00:26:28,640 Speaker 5: so if there's still the ability to get to lower 503 00:26:28,640 --> 00:26:33,040 Speaker 5: and lower nanometers, then you could imagine that TSMC or 504 00:26:33,040 --> 00:26:35,760 Speaker 5: the West or whatever is able to stay ahead. But 505 00:26:35,840 --> 00:26:37,800 Speaker 5: if that slows, if at some point in a not 506 00:26:37,840 --> 00:26:41,520 Speaker 5: too distant future, that innovation is not moving as quickly, 507 00:26:41,840 --> 00:26:44,480 Speaker 5: I would imagine that with enough resources, the odds of 508 00:26:44,560 --> 00:26:47,200 Speaker 5: China catching up is higher. So there are other areas, 509 00:26:47,280 --> 00:26:51,160 Speaker 5: like say commercial aircraft right where there's clearly an innovative field, 510 00:26:51,160 --> 00:26:53,919 Speaker 5: but it's not as cutting edge as semiconductors, and yet 511 00:26:54,119 --> 00:26:56,960 Speaker 5: COMAC China is struggling. I think that is more of 512 00:26:57,000 --> 00:26:59,400 Speaker 5: a function of the sort of dualopoly nature of that 513 00:26:59,440 --> 00:27:02,560 Speaker 5: market and the difficulty of having sort of product integration 514 00:27:03,040 --> 00:27:06,520 Speaker 5: and then sort of market share. But from a technological perspective, 515 00:27:06,720 --> 00:27:09,080 Speaker 5: they're getting there and they eventually will catch up. 516 00:27:09,640 --> 00:27:12,240 Speaker 2: So the other thing I was wondering is the role 517 00:27:12,480 --> 00:27:16,919 Speaker 2: of foreign investment, and I don't just mean foreign direct investment, 518 00:27:17,000 --> 00:27:20,280 Speaker 2: but also companies that come into China and set up 519 00:27:20,520 --> 00:27:25,359 Speaker 2: factories and then workers learn some of those techniques for 520 00:27:25,520 --> 00:27:29,080 Speaker 2: advanced manufacturing and things like that. Obviously there's a debate 521 00:27:29,160 --> 00:27:32,199 Speaker 2: over intellectual property and things like that as well. But 522 00:27:32,359 --> 00:27:38,000 Speaker 2: what role does FDI, foreign investment, foreign expertise play in 523 00:27:38,119 --> 00:27:39,720 Speaker 2: China's technological progress? 524 00:27:39,760 --> 00:27:42,600 Speaker 5: Now, I would say a lot less than the ease 525 00:27:42,640 --> 00:27:46,480 Speaker 5: to So it would vary by sector and technology, right, 526 00:27:46,560 --> 00:27:49,399 Speaker 5: But generally speaking, if you look at, for example, the 527 00:27:49,440 --> 00:27:52,320 Speaker 5: trade data that China Customs puts out, they actually break 528 00:27:52,359 --> 00:27:54,879 Speaker 5: down whether the entity that's doing the trading is a 529 00:27:54,920 --> 00:27:57,840 Speaker 5: state on enterprise, is a foreign funded enterprises which is 530 00:27:57,840 --> 00:28:01,760 Speaker 5: basically an FDI company, or actually a private Chinese company. 531 00:28:01,800 --> 00:28:05,160 Speaker 5: And what you see is that China's exports are now 532 00:28:05,240 --> 00:28:10,280 Speaker 5: overwhelmingly dominated by private Chinese companies. So in the two thousands, 533 00:28:10,359 --> 00:28:13,840 Speaker 5: during the sort of peak China Shock years, a lot 534 00:28:13,840 --> 00:28:16,960 Speaker 5: of that growth and exports were actually foreign invested firms 535 00:28:16,960 --> 00:28:19,440 Speaker 5: in China that had set up factories. Over the past 536 00:28:19,440 --> 00:28:22,159 Speaker 5: decade that it's shifted, it's really just private firms, and 537 00:28:22,200 --> 00:28:24,840 Speaker 5: so I think more and more, at least in terms 538 00:28:24,880 --> 00:28:28,640 Speaker 5: of brands and manufacturing, it's really indigenous companies that are 539 00:28:28,640 --> 00:28:30,439 Speaker 5: doing the work. Now. There are some things like AI 540 00:28:30,960 --> 00:28:34,240 Speaker 5: where I think having some of the research links might 541 00:28:34,280 --> 00:28:36,840 Speaker 5: still matter, but by and large, I think China is 542 00:28:36,960 --> 00:28:40,080 Speaker 5: moving closer towards indigenous innovation, as they call it. 543 00:28:40,440 --> 00:28:43,760 Speaker 4: One area that we really see that transition that Gerard 544 00:28:43,840 --> 00:28:47,160 Speaker 4: is talking about is about ten years ago, if you're 545 00:28:47,160 --> 00:28:49,560 Speaker 4: a foreign investor in China setting up a factory, you 546 00:28:49,600 --> 00:28:53,760 Speaker 4: were deeply concerned about IP and about you know, information 547 00:28:54,040 --> 00:28:57,320 Speaker 4: leakage and all of those sort of issues. And now actually, 548 00:28:57,320 --> 00:29:00,800 Speaker 4: as we see for example, more Chinese going to set 549 00:29:00,880 --> 00:29:04,600 Speaker 4: up their own factories overseas in part in response to 550 00:29:04,680 --> 00:29:08,640 Speaker 4: issues around tariffs, we actually see state owned enterprises and 551 00:29:08,720 --> 00:29:12,680 Speaker 4: private businesses. Chinese private business is concerned about that same problem, 552 00:29:12,760 --> 00:29:17,720 Speaker 4: concerned that you know, their international competitors and local workers 553 00:29:17,760 --> 00:29:21,360 Speaker 4: will actually be picking up sort of technological skills and 554 00:29:21,440 --> 00:29:24,520 Speaker 4: be picking up on potential company secrets and they're worried 555 00:29:24,520 --> 00:29:26,440 Speaker 4: about information leakage the other way. 556 00:29:26,840 --> 00:29:29,080 Speaker 3: One big question. You know, we're obviously in the US 557 00:29:29,160 --> 00:29:32,800 Speaker 3: doing our own industrial policy of various sorts. One thing 558 00:29:32,800 --> 00:29:35,320 Speaker 3: we haven't really gotten into in the Maid and twenty 559 00:29:35,360 --> 00:29:40,960 Speaker 3: fifteen specific conversation is the operationalization of a goal. Okay, 560 00:29:40,960 --> 00:29:43,440 Speaker 3: so it's one thing to say in ten years we 561 00:29:43,520 --> 00:29:45,800 Speaker 3: want to be leaders in all these areas. And I 562 00:29:45,840 --> 00:29:49,240 Speaker 3: think you know clearly they've made extraordinary strides. And I'm 563 00:29:49,280 --> 00:29:52,240 Speaker 3: sure this is a very long, separate question, but I'd 564 00:29:52,280 --> 00:29:54,400 Speaker 3: be curious from both of you, you know, maybe start 565 00:29:54,400 --> 00:29:56,840 Speaker 3: with Rebecca, Like, you know, you went to that factory 566 00:29:56,880 --> 00:29:58,680 Speaker 3: ten years ago and it seemed like a pipe dream, 567 00:29:58,680 --> 00:30:02,400 Speaker 3: and now it's extraordinary. How would you characterize what the 568 00:30:02,440 --> 00:30:05,320 Speaker 3: government did, or what the government did along with banks 569 00:30:05,320 --> 00:30:08,200 Speaker 3: and other et cetera and private companies to make these 570 00:30:08,520 --> 00:30:09,480 Speaker 3: dreams of reality. 571 00:30:10,000 --> 00:30:13,240 Speaker 4: Well, just the scale of resources that were poured into 572 00:30:13,360 --> 00:30:16,040 Speaker 4: these sectors. I mean, the sort of two key parts 573 00:30:16,040 --> 00:30:17,760 Speaker 4: of the MAID. In China, on the one hand, there 574 00:30:17,800 --> 00:30:20,840 Speaker 4: was this idea of self sufficiency, that China should be 575 00:30:21,000 --> 00:30:23,680 Speaker 4: less reliant on other countries, and it wanted to essentially 576 00:30:23,720 --> 00:30:26,000 Speaker 4: to stand on its own. Two feet and that was 577 00:30:26,080 --> 00:30:29,320 Speaker 4: clearly linked fundamentally to a national security goal. The other 578 00:30:29,440 --> 00:30:32,280 Speaker 4: part of it was this drive for innovation that China 579 00:30:32,360 --> 00:30:36,080 Speaker 4: wanted to create these sectors that became global competitors, that 580 00:30:36,120 --> 00:30:39,520 Speaker 4: they were able to export high value added goods into 581 00:30:39,560 --> 00:30:41,200 Speaker 4: the rest of the world. So there was these sort 582 00:30:41,240 --> 00:30:45,160 Speaker 4: of dual ambitions that were also feeding into the sort 583 00:30:45,160 --> 00:30:49,479 Speaker 4: of raison detre for supporting all of these industries. And 584 00:30:49,520 --> 00:30:52,240 Speaker 4: I think there's also this sort of prevailing issue too 585 00:30:52,360 --> 00:30:57,640 Speaker 4: for Beijing about the idea of needing to really shore 586 00:30:57,760 --> 00:31:01,160 Speaker 4: up its own security. So, for example, Beijing officials are 587 00:31:01,480 --> 00:31:05,200 Speaker 4: increasingly sort of concerned about making sure that has access 588 00:31:05,240 --> 00:31:08,320 Speaker 4: to its own sources of energy, particularly in any kind of, 589 00:31:08,640 --> 00:31:11,840 Speaker 4: you know, potential wartime scenario, and that is part of 590 00:31:11,880 --> 00:31:14,320 Speaker 4: a whole ethos that we see also for example, in 591 00:31:14,360 --> 00:31:18,320 Speaker 4: food security in China too, but really an increasing focus 592 00:31:18,360 --> 00:31:22,440 Speaker 4: on trying to make sure that Beijing isn't unnecessarily exposed 593 00:31:22,440 --> 00:31:26,400 Speaker 4: and perhaps even exposed in any way to oversee supply 594 00:31:26,480 --> 00:31:28,040 Speaker 4: chains for these key areas. 595 00:31:28,600 --> 00:31:33,200 Speaker 5: In terms of policy instruments, quantifying what China's doing is 596 00:31:33,280 --> 00:31:38,080 Speaker 5: actually very difficult, except for things like rebates for electric 597 00:31:38,200 --> 00:31:40,600 Speaker 5: vehicles or things that show up in listed firm data, 598 00:31:40,960 --> 00:31:44,040 Speaker 5: but things like state linked credit or even totally in 599 00:31:44,080 --> 00:31:48,240 Speaker 5: government guidance fund allocations is quite difficult. I would say, 600 00:31:48,280 --> 00:31:51,360 Speaker 5: you know, in China's case, subsidies are not new, so 601 00:31:51,400 --> 00:31:54,600 Speaker 5: subsidies are not the secret sauce. What is different now? Well, 602 00:31:55,080 --> 00:31:58,720 Speaker 5: generally speaking, around really twenty thirteen twenty fourteen, they tried 603 00:31:58,720 --> 00:32:02,360 Speaker 5: to pivot to more market orientation. The big policy innovation 604 00:32:02,480 --> 00:32:06,000 Speaker 5: at that time was the reinvigoration of government guidance funds, 605 00:32:06,000 --> 00:32:08,960 Speaker 5: which are essentially state owned private equity funds or venture 606 00:32:08,960 --> 00:32:12,200 Speaker 5: capital funds. Those played a very large role in the 607 00:32:12,240 --> 00:32:15,080 Speaker 5: first say five ish years of the plan. My sense 608 00:32:15,160 --> 00:32:18,240 Speaker 5: is they've slowed in part because they weren't having the 609 00:32:18,280 --> 00:32:20,840 Speaker 5: market oriented return so they were hoping to have. But 610 00:32:21,120 --> 00:32:24,160 Speaker 5: in general, the state's essential ownership of much of the 611 00:32:24,160 --> 00:32:28,160 Speaker 5: financial sector matters a lot, and you see private investors 612 00:32:28,200 --> 00:32:30,920 Speaker 5: in the stock market, for example, where if Beijing says 613 00:32:31,240 --> 00:32:34,040 Speaker 5: this sector is a priority, then people invest in it. 614 00:32:34,160 --> 00:32:35,720 Speaker 5: Or on the other side, when they said, you know, 615 00:32:35,760 --> 00:32:38,040 Speaker 5: five or so years ago that ed tech was not 616 00:32:38,080 --> 00:32:40,520 Speaker 5: a priority, that tanked, and so there's a way of 617 00:32:40,560 --> 00:32:43,880 Speaker 5: sort of allocating all the market resources towards priority sectors. 618 00:32:43,880 --> 00:32:45,720 Speaker 5: The other thing I would flag is that there are 619 00:32:45,760 --> 00:32:48,280 Speaker 5: some technologies I think EV is the best example of 620 00:32:48,320 --> 00:32:53,360 Speaker 5: this where they really got the market orientation right in 621 00:32:53,400 --> 00:32:57,440 Speaker 5: a sense that they allowed consumers to adjudicate. So every 622 00:32:57,880 --> 00:33:01,760 Speaker 5: EV company, if actually eligible, could get the credits for 623 00:33:01,960 --> 00:33:05,280 Speaker 5: purchases to reduce the price of their evs. Their localities 624 00:33:05,320 --> 00:33:07,800 Speaker 5: might have been helping them in different ways, but ultimately 625 00:33:08,160 --> 00:33:11,200 Speaker 5: the best cars from a consumer perspective, one out like 626 00:33:11,240 --> 00:33:14,760 Speaker 5: so vyd why is byd great. It's not just subsidies. Yes, 627 00:33:14,840 --> 00:33:17,080 Speaker 5: they benefited from somethings, but a lot of other companies 628 00:33:17,080 --> 00:33:19,120 Speaker 5: did too. I think the hard part now for China, 629 00:33:19,120 --> 00:33:20,800 Speaker 5: and this is what their system is less good at, 630 00:33:21,160 --> 00:33:23,240 Speaker 5: is while they might have fixed the problem of picking 631 00:33:23,240 --> 00:33:25,600 Speaker 5: winners so to speak, by having the market do it, 632 00:33:25,880 --> 00:33:29,480 Speaker 5: they're less bad at eliminating losers. And there's a consolidation 633 00:33:29,560 --> 00:33:31,280 Speaker 5: that now has to happen. That you look at areas 634 00:33:31,320 --> 00:33:34,920 Speaker 5: like solar panels where a lot of these companies they 635 00:33:34,960 --> 00:33:38,120 Speaker 5: have negative margins actually, right, so how do you address that? 636 00:33:38,320 --> 00:33:39,800 Speaker 5: So it's sort of like the tide goes in and 637 00:33:39,840 --> 00:33:42,000 Speaker 5: goes out, But as long as it's market oriented it's 638 00:33:42,040 --> 00:33:43,000 Speaker 5: generally more effective. 639 00:33:43,760 --> 00:33:46,160 Speaker 2: Yeah, I think it's interesting. A lot of people forget 640 00:33:46,200 --> 00:33:49,280 Speaker 2: the sort of volatility that we've seen, especially in EV 641 00:33:49,480 --> 00:33:52,760 Speaker 2: funding specifically because a few years ago we had lots 642 00:33:52,800 --> 00:33:55,680 Speaker 2: of Chinese EV makers that were going bankrupt, and there 643 00:33:55,680 --> 00:33:58,200 Speaker 2: are still some going bankrupt now, but there are also 644 00:33:58,280 --> 00:34:02,120 Speaker 2: those that are sort of getting I guess, revived from 645 00:34:02,160 --> 00:34:05,400 Speaker 2: the dead with new funding. So it's interesting to see 646 00:34:05,440 --> 00:34:09,640 Speaker 2: that flow kind of go back and forth. But what 647 00:34:09,719 --> 00:34:13,560 Speaker 2: happens in twenty twenty five? So the Maid in China 648 00:34:13,800 --> 00:34:20,200 Speaker 2: label brand is being downplayed somewhat, So what exactly does 649 00:34:20,239 --> 00:34:23,839 Speaker 2: that anniversary the end of the timeframe actually mean. 650 00:34:24,360 --> 00:34:26,480 Speaker 4: I kindly add one more for Geral, which I'm also 651 00:34:26,480 --> 00:34:28,760 Speaker 4: curious about, which is what happens in twenty thirty. 652 00:34:29,840 --> 00:34:32,680 Speaker 5: Well, in both cases, I would say the fifteenth and 653 00:34:32,760 --> 00:34:35,680 Speaker 5: sixteenth five year plans respectively, Right, I think it's iterative. 654 00:34:35,880 --> 00:34:39,480 Speaker 5: So Made in China twenty twenty five, somewhat misleadingly, actually 655 00:34:39,560 --> 00:34:41,880 Speaker 5: has a lot of targets to go out to twenty thirty. 656 00:34:42,239 --> 00:34:45,640 Speaker 5: They're typically vaguer than the twenty twenty five targets, but 657 00:34:45,680 --> 00:34:48,279 Speaker 5: the plan doesn't end in twenty twenty five, and so 658 00:34:48,520 --> 00:34:50,560 Speaker 5: I think they will as part of the five year 659 00:34:50,600 --> 00:34:52,840 Speaker 5: plan that will be coming out in early twenty twenty 660 00:34:52,960 --> 00:34:56,560 Speaker 5: six will probably essentially incorporate some of that. And as 661 00:34:56,560 --> 00:34:58,840 Speaker 5: I said up front, there are so many documents that 662 00:34:58,840 --> 00:35:01,480 Speaker 5: are associated with this one blueprint. It's like think of 663 00:35:01,520 --> 00:35:03,959 Speaker 5: it as the phrase I prefer as someone that's coined 664 00:35:04,000 --> 00:35:06,279 Speaker 5: as cascade of plans. Right, It's not just one plan. 665 00:35:06,600 --> 00:35:08,520 Speaker 5: It's a plan that then begets a whole bunch of 666 00:35:08,520 --> 00:35:11,239 Speaker 5: other plans, and it is iterative and requires a lot. 667 00:35:11,280 --> 00:35:12,440 Speaker 5: It actually, I think eats up a lot of the 668 00:35:12,480 --> 00:35:14,680 Speaker 5: bureaucracy is time because they have to assess and reassess 669 00:35:14,880 --> 00:35:17,359 Speaker 5: and come up with new targets. But the bottom line 670 00:35:17,400 --> 00:35:20,560 Speaker 5: is China's definitely not giving up an industrial policy. The 671 00:35:20,600 --> 00:35:23,160 Speaker 5: signals coming out of Beijing in recent years, if anything, 672 00:35:23,520 --> 00:35:26,319 Speaker 5: suggests there's an even greater urgency in part to the 673 00:35:26,400 --> 00:35:30,480 Speaker 5: national security concerns. And so whatever the successor to Made 674 00:35:30,520 --> 00:35:33,120 Speaker 5: in China twenty twenty five is, it's going to happen. 675 00:35:33,120 --> 00:35:35,040 Speaker 5: It probably won't be called Made in China twenty forty 676 00:35:35,120 --> 00:35:37,440 Speaker 5: or whatever, but it's going to exist. 677 00:35:37,760 --> 00:35:40,360 Speaker 4: Part of the question is, I guess over that packaging 678 00:35:40,560 --> 00:35:44,080 Speaker 4: precisely because of all of the responses and suspicions that 679 00:35:44,120 --> 00:35:47,720 Speaker 4: were provoked by the made in China twenty twenty five label, 680 00:35:47,800 --> 00:35:50,320 Speaker 4: and it's no longer advantageous. In fact, it's sort of 681 00:35:50,360 --> 00:35:55,279 Speaker 4: geopolitically disadvantageous to be advertising your industrial policy in this way. 682 00:35:55,360 --> 00:35:59,759 Speaker 2: If you're Beijing and Gerard, you read all of those plans, right, 683 00:36:00,040 --> 00:36:03,120 Speaker 2: the hundreds and hundreds of pages, thousands of pages. 684 00:36:03,400 --> 00:36:05,640 Speaker 5: There are plenty of people around the world to do 685 00:36:05,680 --> 00:36:08,399 Speaker 5: that work for us. Even reading just the so called 686 00:36:08,440 --> 00:36:11,240 Speaker 5: green Book of the targets is quite a slog. 687 00:36:11,960 --> 00:36:13,880 Speaker 2: All right, we're going to have to leave it there, 688 00:36:13,920 --> 00:36:16,160 Speaker 2: but thank you so much to both of you for 689 00:36:16,320 --> 00:36:17,360 Speaker 2: coming on all thoughts. 690 00:36:17,400 --> 00:36:32,759 Speaker 5: That was great, Thank you, Thank you so much. Joe. 691 00:36:32,840 --> 00:36:35,720 Speaker 2: I thought that was a fantastic overview of what China 692 00:36:35,840 --> 00:36:37,719 Speaker 2: is doing and to some extent, what the US is 693 00:36:37,719 --> 00:36:38,439 Speaker 2: trying to do too. 694 00:36:38,960 --> 00:36:40,920 Speaker 3: I did too. I had a lot of thoughts, and 695 00:36:41,040 --> 00:36:44,719 Speaker 3: obviously anyone who listens to the podcast knows that we're 696 00:36:44,760 --> 00:36:47,919 Speaker 3: both extremely interested in this specifically and all the other 697 00:36:48,040 --> 00:36:50,279 Speaker 3: things related to it. Can I say, you know one 698 00:36:50,320 --> 00:36:54,000 Speaker 3: thing at the end, and Gerard was talking about like 699 00:36:54,440 --> 00:36:57,000 Speaker 3: I think he called it a cascade of plans and 700 00:36:57,200 --> 00:37:00,480 Speaker 3: all I've been reading, you know, a lot of Chinese history, 701 00:37:00,840 --> 00:37:04,760 Speaker 3: twentieth century history. They love meetings and planted They always 702 00:37:04,800 --> 00:37:06,960 Speaker 3: have all these like work groups and study groups and 703 00:37:07,040 --> 00:37:09,200 Speaker 3: random people or it's like I'll get appointed to a 704 00:37:09,239 --> 00:37:11,960 Speaker 3: new study group. I don't know if that's good or bad, 705 00:37:12,000 --> 00:37:13,400 Speaker 3: but they love a study group. 706 00:37:13,800 --> 00:37:16,840 Speaker 2: I think it's funny that you're just discovering this. Actually, 707 00:37:16,920 --> 00:37:20,240 Speaker 2: you know, one of the interesting books just speaking of bureaucracies, 708 00:37:20,400 --> 00:37:22,239 Speaker 2: One of the interesting books I read when I moved 709 00:37:22,280 --> 00:37:26,880 Speaker 2: to Abu Dhabi was about Saudi Arabian government ministries and 710 00:37:26,920 --> 00:37:29,120 Speaker 2: what it was actually like to work there, and it 711 00:37:29,200 --> 00:37:31,279 Speaker 2: was sort of a similar thing. There were lots of 712 00:37:31,320 --> 00:37:34,239 Speaker 2: meetings and people kind of getting paid to not do 713 00:37:34,480 --> 00:37:36,120 Speaker 2: very much. But it was super interesting. 714 00:37:36,239 --> 00:37:39,520 Speaker 3: As a meeting hater myself, I guess whenever I read 715 00:37:39,680 --> 00:37:41,719 Speaker 3: I note when they're like, it rings a bell in 716 00:37:41,760 --> 00:37:44,120 Speaker 3: my head. When I see another study group or work 717 00:37:44,160 --> 00:37:47,439 Speaker 3: committee or something like that getting formed, I'm like, oh God, 718 00:37:47,480 --> 00:37:49,560 Speaker 3: that sounds so awful. But no, I thought that was good. 719 00:37:49,600 --> 00:37:52,160 Speaker 3: And look, I mean, you know, this gets back to 720 00:37:52,239 --> 00:37:55,480 Speaker 3: many of our big themes, and I get why the 721 00:37:55,640 --> 00:37:58,240 Speaker 3: US and the West is anxious and all this stuff. 722 00:37:58,320 --> 00:38:00,560 Speaker 3: But on the other hand, I would just say things 723 00:38:00,600 --> 00:38:05,000 Speaker 3: like economic development is technological development. This goes back to 724 00:38:05,120 --> 00:38:08,440 Speaker 3: Ricardo Houseman and the ability to make complex machines. That 725 00:38:08,680 --> 00:38:11,560 Speaker 3: is what it means to get wealthier, or that seems 726 00:38:11,560 --> 00:38:14,399 Speaker 3: to be the ability to do complicated things and move 727 00:38:14,480 --> 00:38:17,920 Speaker 3: up the value chain. And when we look at Boeing 728 00:38:17,960 --> 00:38:20,640 Speaker 3: and we look at what our own manufacturing like a 729 00:38:20,640 --> 00:38:24,040 Speaker 3: lot of the issues I get the impression are projecting 730 00:38:24,160 --> 00:38:28,360 Speaker 3: our own problems abroad. Like, you know, one way for 731 00:38:28,600 --> 00:38:31,960 Speaker 3: China to close the gap on aircraft to make better 732 00:38:32,000 --> 00:38:34,840 Speaker 3: and cheaper airplanes, But another way for China to close 733 00:38:34,840 --> 00:38:36,840 Speaker 3: the gap on aircraft is for the US to not 734 00:38:36,920 --> 00:38:39,640 Speaker 3: be able to make planes. And we can converge in 735 00:38:39,680 --> 00:38:42,879 Speaker 3: two directions, and one way of maybe if we want 736 00:38:42,880 --> 00:38:45,439 Speaker 3: to avoid that divergence would be getting better at making 737 00:38:45,440 --> 00:38:46,480 Speaker 3: airplanes ourselves. 738 00:38:46,600 --> 00:38:49,120 Speaker 2: Well, the other thing I was thinking about, and this 739 00:38:49,239 --> 00:38:52,160 Speaker 2: is sort of speculative or kind of fuzzy, but the 740 00:38:52,280 --> 00:38:56,279 Speaker 2: socioeconomic I guess aspect of this, which is, you know, 741 00:38:56,320 --> 00:38:59,919 Speaker 2: a lot of the jobs in advanced technology they might 742 00:39:00,239 --> 00:39:03,960 Speaker 2: pay well relative to other manufacturing jobs, but like some 743 00:39:04,000 --> 00:39:07,399 Speaker 2: of them aren't very much fun. Right, It's like if 744 00:39:07,400 --> 00:39:10,360 Speaker 2: you're working in a fab or something, you're wearing like 745 00:39:10,440 --> 00:39:13,160 Speaker 2: one of those suits and you're staring at tiny chips 746 00:39:13,200 --> 00:39:17,520 Speaker 2: all day and you're indoors, et cetera. But at the 747 00:39:17,520 --> 00:39:19,839 Speaker 2: same time, in China, you know, we've seen a lot 748 00:39:19,840 --> 00:39:25,240 Speaker 2: of like popular dissatisfaction. Yeah, you have the live flat 749 00:39:25,280 --> 00:39:28,160 Speaker 2: movement where people are like, why should I even bother 750 00:39:28,320 --> 00:39:30,800 Speaker 2: trying because my life is never going to get better? 751 00:39:31,280 --> 00:39:33,400 Speaker 2: And so I kind of wonder like how all of 752 00:39:33,440 --> 00:39:35,680 Speaker 2: that plays into some of this as well. 753 00:39:35,760 --> 00:39:39,080 Speaker 3: There's a really good video by Asianometry that people should watch. 754 00:39:39,120 --> 00:39:42,000 Speaker 3: It's basically what does someone who work in a fab 755 00:39:42,360 --> 00:39:44,640 Speaker 3: actually do? And it's an issue here. I mean they 756 00:39:44,640 --> 00:39:47,640 Speaker 3: talk about, you know, this is not a job. I mean, 757 00:39:47,920 --> 00:39:51,439 Speaker 3: there are jobs in engineering and tech and hard tech 758 00:39:51,480 --> 00:39:53,600 Speaker 3: in the US that many people would find to be 759 00:39:53,600 --> 00:39:58,680 Speaker 3: an extraordinary, challenging and interesting and highly remunative career. But 760 00:39:58,719 --> 00:40:01,120 Speaker 3: there are also a lot of jobs in engineering and 761 00:40:01,200 --> 00:40:04,160 Speaker 3: hard tech in the United States that I think or anywhere, 762 00:40:04,160 --> 00:40:06,640 Speaker 3: that people would find to be quite miserable, et cetera. 763 00:40:06,920 --> 00:40:09,040 Speaker 3: But this is why we need humanoid robots. 764 00:40:09,520 --> 00:40:11,600 Speaker 2: That's right, Okay, shall we leave it there? 765 00:40:11,680 --> 00:40:12,399 Speaker 3: Let's leave it there. 766 00:40:12,560 --> 00:40:15,320 Speaker 2: This has been another episode of the Odd Lots podcast. 767 00:40:15,400 --> 00:40:18,360 Speaker 2: I'm Tracy Alloway. You can follow me at Tracy Alloway. 768 00:40:18,640 --> 00:40:21,560 Speaker 3: And I'm Jill Wisenthal. You can follow me at the Stalwart. 769 00:40:21,800 --> 00:40:25,600 Speaker 3: Follow our guests Gerard de Pippo He's at GDP nineteen 770 00:40:25,680 --> 00:40:30,360 Speaker 3: eighty five and Rebecca Chung Wilkins, She's at our Chun Wilkins. 771 00:40:30,520 --> 00:40:34,160 Speaker 3: Follow our producers Carman Rodriguez at Kerman armand Dashel Bennett 772 00:40:34,160 --> 00:40:37,560 Speaker 3: at Dashbot and Kelbrooks at Calebrooks. Thank you to our 773 00:40:37,600 --> 00:40:40,719 Speaker 3: producer Moses Ondam and from our Odd Lots content. Go 774 00:40:40,760 --> 00:40:43,480 Speaker 3: to Bloomberg dot com slash odd Lots. We have transcripts, 775 00:40:43,520 --> 00:40:46,120 Speaker 3: a blog, and a daily newsletter, and you can chat 776 00:40:46,160 --> 00:40:48,759 Speaker 3: about all of these topics twenty four to seven in 777 00:40:48,880 --> 00:40:52,240 Speaker 3: our discord Discord dot gg slash odd Lots. 778 00:40:52,320 --> 00:40:55,040 Speaker 2: And if you enjoy add lots, if you like it 779 00:40:55,080 --> 00:40:58,960 Speaker 2: when we check in on China's industrial and technological plans, 780 00:40:59,080 --> 00:41:01,720 Speaker 2: then please leave us a positive review on your favorite 781 00:41:01,760 --> 00:41:05,279 Speaker 2: podcast platform. And remember, if you are a Bloomberg dot 782 00:41:05,320 --> 00:41:08,239 Speaker 2: com subscriber, you can listen to all of our episodes 783 00:41:08,360 --> 00:41:12,120 Speaker 2: absolutely ad free. You'll also get our new daily newsletter. 784 00:41:12,600 --> 00:41:14,840 Speaker 2: In order to connect your accounts, just go to the 785 00:41:14,880 --> 00:41:18,520 Speaker 2: Bloomberg channel on Apple Podcasts and follow the instructions there. 786 00:41:18,960 --> 00:41:22,960 Speaker 2: And as a bonus, we are running a special introductory 787 00:41:23,040 --> 00:41:26,160 Speaker 2: offer right now. You can find that at bloomberg dot 788 00:41:26,200 --> 00:41:29,880 Speaker 2: com Forward Slash Podcast offer, or you can click the 789 00:41:29,920 --> 00:41:32,440 Speaker 2: link in our show notes and if you do that 790 00:41:32,640 --> 00:41:36,360 Speaker 2: you will get those ad free episodes plus that newsletter. 791 00:41:36,760 --> 00:42:03,720 Speaker 2: Thanks for listening. In eight