Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2: Hello and welcome to another episode of the Odd Lots podcast.
Speaker 3: I'm Joe Wisenthal and I'm Tracy Alloway.
Speaker 2: Tracy, we talk a lot about the tech competition between
Speaker 2: the US and China, but I still think we talked
Speaker 2: about it in sort of broad strokes. We talked about
Speaker 2: some of the policies obviously made in twenty twenty five,
Speaker 2: but actually how the process of tech innovation in China
Speaker 2: still seems like important. There's more to learn about there.
Speaker 3: I totally agree. And actually we have a really good
Speaker 3: example recently in the form of deep Seek, right, and
Speaker 3: this thing that people acted like it came out of nowhere,
Speaker 3: but actually a lot of the papers had been published
Speaker 3: over the course of months, but it seemed to surper right.
Speaker 2: I don't know if it's true, you know, the story that, oh,
Speaker 2: is just the side project of a quantitative hedge fund,
Speaker 2: Like that's such a good story. I'm not entirely sure
Speaker 2: if that's true. And they made it so like, oh yeah,
Speaker 2: well they were doing this quant fun they built deep
Speaker 2: Seek on the side, like such a it's such an
Speaker 2: alluring story.
Speaker 3: Well, not just a quant hedge fund. Isn't the story
Speaker 3: supposedly that the founder decided to go into AI after
Speaker 3: she Shinping was kind of complaining, Yeah, how much talent
Speaker 3: and resources is being wasted on finance in various ways.
Speaker 4: Yeah, heard that.
Speaker 2: People like these are like great stories, right, and of
Speaker 2: course there is a lot of truth to them in
Speaker 2: the particularly in the broad sense that we know that
Speaker 2: and we talked about this at the time. Several years
Speaker 2: ago there was this sort of announced hard pivot away
Speaker 2: from the sort of like consumer internet tech and they
Speaker 2: sort of had their legs cut out from under them
Speaker 2: towards these more like serious capital t tech hardware, hardware,
Speaker 2: things like that, things that have more stakes than say
Speaker 2: social networking or something like that. So like, how do
Speaker 2: you actually do that?
Speaker 4: Though?
Speaker 2: How do you actually like direct talent in certain ways?
Speaker 2: You know, I think that if President Trump came out
Speaker 2: tomorrow and said, we want people to and you guys
Speaker 2: actually talked about this, but then we want to do
Speaker 2: more hard tech, I don't think there's like a real easy,
Speaker 2: straightforward mechanism and how do you transmit certain ambitions into
Speaker 2: the actual landscape. I think there's more to be learned
Speaker 2: on that well.
Speaker 3: I think also We in America are very used to
Speaker 3: thinking about technology as this like very creative process and
Speaker 3: the outcome of Jeff Bezos working in his garage, Yeah,
Speaker 3: something like that, And it's hard to imagine often the
Speaker 3: same environment existing in China. I think that's just like
Speaker 3: a cultural difference perhaps between Americans and Chinese.
Speaker 2: So we should talk about it totally. Well, I'm really
Speaker 2: excited to say we're gonna be talking to one of
Speaker 2: the best China watchers there is who has a lot
Speaker 2: of interesting thoughts on this time topic, someone we've never
Speaker 2: had on the podcast. We're going to be speaking with
Speaker 2: Kaiser quote. He is the host of the Seneca Podcast,
Speaker 2: which has been around since twenty ten.
Speaker 4: Wow.
Speaker 2: Yeah, we've been doing this for about little less than
Speaker 2: ten years, so it's very impressive this sort of longevity.
Speaker 2: Someone who spent a lot of time in China, splits
Speaker 2: his time between the US and China, lived there for
Speaker 2: several years. Kaiser, thank you so much for coming on Outlocks.
Speaker 4: Hi Joe, and Hey Tracy, This is a huge honor
Speaker 4: for me. Thanks, thanks so much for having me.
Speaker 2: Thank you for coming on. What is the Seneca podcast?
Speaker 2: What has been your project in the last fifteen years.
Speaker 4: Yeah, So Sinica is an hour longer, sometimes much longer,
Speaker 4: interview format show. We bring on academics and policymakers occasionally.
Speaker 4: I've had a number of the former assistant Secretaries of State,
Speaker 4: Free Stasia Pacific on. I've had no ambassadors and so
Speaker 4: forth on. But it's changed the mission. It initially started
Speaker 4: off as being sort of more here's what's in the news,
Speaker 4: and here's a couple of people who can talk about
Speaker 4: it intelligently having to do with China. Since twenty sixteen,
Speaker 4: when I moved to the States, the focus has really
Speaker 4: been on US China relations, and it's got more American
Speaker 4: guests on than previously. We're but we tuckle everything under
Speaker 4: the sun. I mean US China relations, China, India, China, Russia, China, India, China,
Speaker 4: what have you, and the Chinese macroeconomy. Technology. Lots on
Speaker 4: technology and culture. But the idea is that it's it's
Speaker 4: supposed to look at the way that we think and
Speaker 4: talk about China. Now it's really evolved into something with
Speaker 4: which I think has a longer shelf life.
Speaker 3: Wait, why did you decide to start it? Because you
Speaker 3: were in a band, right, that was your main gig.
Speaker 4: Yeah, that's correct. Something for some reason, everyone knows about me.
Speaker 4: I mean I transitioned. I went out. I left that
Speaker 4: band in nineteen ninety nine, and like other people who
Speaker 4: didn't have many marketable skills, I.
Speaker 3: Went into podcasting.
Speaker 4: Well not right away. I mean I worked for internet
Speaker 4: companies for a number of years, and I worked as
Speaker 4: a reporter for quite number of years, and then in
Speaker 4: twenty ten it was just sort of on a lark.
Speaker 4: I was about to start a job at bay Do
Speaker 4: as they're head of international comms, and a very good
Speaker 4: friend of mine in Beijing. We've gotten conversation about what
Speaker 4: podcasts we're listening to, and I, you know, I said, oh,
Speaker 4: you know, the usual, this American Life and Radio Lab
Speaker 4: and whatnot, and he had a few, and then we
Speaker 4: just sort of said, why don't we start a podcast.
Speaker 4: We're both talkers, we both know everybody. Let's just do
Speaker 4: one and see what happens. And we did and it
Speaker 4: took off. It did pretty well. We got acquired in
Speaker 4: twenty sixteen, right around the time I was moving to
Speaker 4: the States, and the company that bought us folded in
Speaker 4: twenty twenty three, and I just sort of struck out
Speaker 4: on my own doing a sub stack, and I've stuck
Speaker 4: with it, managed to find a little bit of support
Speaker 4: and those few and hopefully after this more subscribers. But
Speaker 4: we're continuing to put them out every week. It's just
Speaker 4: me solo, but it's a group effort.
Speaker 2: I'm in a band. I'm trying to go the other direction.
Speaker 2: I have a country music band, and maybe one day
Speaker 2: I'll leave casting. No, no, no, I've never got to
Speaker 2: leave podcasting behind.
Speaker 4: You know, I'm actually not going to leave podcasting, but
Speaker 4: I've gotten back into my old band Reform when I
Speaker 4: was back in China recently. So are you on Spotify
Speaker 4: as of this summer? We are. Yeah, you can look
Speaker 4: up Twins show C h U and Qiu. You've got
Speaker 4: to put a space in between them for okays. It's
Speaker 4: springing autumn in English.
Speaker 2: I'm going to start with like a really super broad
Speaker 2: based question that maybe it's not even really that it's
Speaker 2: probably a full hour long or too our long episode,
Speaker 2: but in your years of covering China from a journalistic
Speaker 2: perspective or at least from a sort of conversational perspective,
Speaker 2: and watching American media or American pundit to talk about China,
Speaker 2: is there like a persistent blind spot or a thing
Speaker 2: that stands out to you as something that people talk
Speaker 2: about China that does not accord with your experience of
Speaker 2: having lived there and having reported on it yourself.
Speaker 4: Are There's so many I don't even know where to
Speaker 4: start one that I would usually focus on. I mean,
Speaker 4: and it's a whole cluster of issues that are related
Speaker 4: to this. But I think that people aren't mindful of
Speaker 4: just how compressed and how rapid China's transformation has been,
Speaker 4: what has happened in the course of one working lifetime.
Speaker 4: I mean, I like to tell people that if you
Speaker 4: can imagine graduating junior high or high school in nineteen
Speaker 4: seventy nine on the eve of reform and opening, and
Speaker 4: then forty years later, at the end of your life,
Speaker 4: the end of your working life, you're thinking about retiring,
Speaker 4: and you've seen the per capitaal GDP go from about
Speaker 4: one hundred and seventy five dollars at the beginning of
Speaker 4: your working life till thirteen thousand dollars. Now, that transformation
Speaker 4: is just profound and it's just so quick. So I
Speaker 4: think that what people get wrong is that they don't
Speaker 4: see that the hardware that's visibly advanced has done so,
Speaker 4: just at a much faster pace than the software. People
Speaker 4: don't change overnight. I mean, I like to that movie
Speaker 4: I don't know, Joe, if you and Tracy have seen Big.
Speaker 2: With Ti Hang with My kids, keep going, yeah.
Speaker 4: Yeah, great movie. It's actually aged well. But you know,
Speaker 4: Tom Hanks makes a wish and goes to bed at
Speaker 4: what he's like eleven, and he wakes up and he's
Speaker 4: in his thirties, right, And that's kind of China, right.
Speaker 4: It's like the mind is still out of that eleven
Speaker 4: year old in a lot of ways, but it's in
Speaker 4: the body with thirty. So we look at this fully
Speaker 4: grown adult and expect it to behave as a fully
Speaker 4: grown adult.
Speaker 3: That's what people get wrong, you know how I measure
Speaker 3: China's technological progress go on. So I remember in the
Speaker 3: early two thousands, I was on a trip in the
Speaker 3: countryside and I experienced one of the worst toilets I've
Speaker 3: ever experienced in my entire life, like basically just a
Speaker 3: hole in the ground. And then I went back in
Speaker 3: twenty nineteen to Beijing and I went to one of
Speaker 3: the nicest bathrooms that I've ever been in in like
Speaker 3: a luxury shopping mall, and I thought, wow, things have changed.
Speaker 4: Yeah, Yeah, that's a good measure. It's a good propit.
Speaker 3: Yeah, I should do that all the time. Okay, So
Speaker 3: I guess I'll just jump into the technology aspect of this.
Speaker 3: But does technology come from a different place in China
Speaker 3: versus the US? Kind of getting back to the intro,
Speaker 3: there's this sense in America that technology is the product
Speaker 3: of freedom and creativity, and you have the ability to
Speaker 3: start a new company in your garage, whereas in China
Speaker 3: maybe there's a different sense of how tech actually gets started.
Speaker 4: Yeah, so there's that American myth about the loan genius
Speaker 4: toiling inbscurity in his garage, either in Menlo Park, New
Speaker 4: Jersey or Menlo Park, California. Right. I think there's some
Speaker 4: of that's definitely that mythology in China, but I think
Speaker 4: the reality is very, very different. I think China does
Speaker 4: place a premium on that kind of ex nilo kind
Speaker 4: of from scratch zero to one innovation, but I think
Speaker 4: it places more of a premium on the scaling up
Speaker 4: of technology and the diffusion of technology in a way
Speaker 4: that I think the American mythology has sort of blinded
Speaker 4: us to Yeah, we're constantly caught off guard by Chinese
Speaker 4: technological advances.
Speaker 2: Yeah.
Speaker 4: I think we keep seeing this tech momentum despite all
Speaker 4: the decoupling, despite the chip bands, in spite of all
Speaker 4: the economic headwinds that China is obviously facing. And I
Speaker 4: think that the reasons are pretty deep. They're actually societal
Speaker 4: and even cultural, so that I think that gets to
Speaker 4: part of the way that technology is conceived of in China.
Speaker 4: You'll find pockets, of course, in America where people are
Speaker 4: still really really techno optimistic. There's still very solutionists, they're
Speaker 4: still very accelerationist, right, but it's incredibly common in China,
Speaker 4: whereas it's only here in pockets. I think American society now,
Speaker 4: and I think the West more broadly has for some
Speaker 4: time now had a fear. If you look at our
Speaker 4: science fiction, if you look at the way technology is
Speaker 4: thought about broadly in society, there's a real anxiety over it. Right.
Speaker 4: Our leading technologists, are leading natural scientists talk all the
Speaker 4: time about the existential threat that AI pose is. I
Speaker 4: don't want to diminish that threat, but I have to
Speaker 4: say that in China, you just do not hear that conversation,
Speaker 4: certainly not nearly as frequently, and not coming from the
Speaker 4: leading technologists themselves. So it's very different.
Speaker 2: Why is it different? You know, I'm thinking about your
Speaker 2: big analogy. Actually I'm going to extend the metaphor a
Speaker 2: little bit too far. But you know, my phone. I
Speaker 2: have a love hate relationship with my phone. I'm on
Speaker 2: it all the time, but I also think it's doing
Speaker 2: significant damage to my mental health. Whereas if I were to, like,
Speaker 2: you know, my daughter wants a phone, and if I
Speaker 2: were to give her one, she would probably be thrilled
Speaker 2: for a long time. I'm not going to let her
Speaker 2: have a phone for a long time, but she would
Speaker 2: be like thrilled, and this is an incredible addition to
Speaker 2: my life that she would be very excited about. Again,
Speaker 2: do people have the same love hate relationships with gadgets
Speaker 2: and new technologies that we seem to have here?
Speaker 4: I mean, there are some people, of course who have
Speaker 4: anxieties over it, but no, I think broadly speaking, you know,
Speaker 4: when I've sat on the sidelines of a soccer game
Speaker 4: watching our kids play, and I'm trying to talk to
Speaker 4: the other parent about how they limit screen time he's
Speaker 4: there scrolling on his device, going, hey, I secon let
Speaker 4: me asker this email. What we're saying just now about
Speaker 4: screen time? What I mean, It's like the question doesn't compute.
Speaker 4: They don't see it as such a threat. I think
Speaker 4: part of that, of course, is because the social media
Speaker 4: environment in China is a lot more sanitized. There isn't
Speaker 4: the threat that Junior is going to be scrolling porn
Speaker 4: all day, right, That's part of it. But I think
Speaker 4: really more to the point is that for these many
Speaker 4: years now, ordinary Chinese people have seen their lives, their
Speaker 4: material lives just improve pretty much in lockstep with the
Speaker 4: quality of the technology they have in their hand or
Speaker 4: in their purse or in their pocket. Right. Their bandwidth
Speaker 4: at home, how fast their network speed is, and how
Speaker 4: powerful their handheld device is basically tracked with their livelihood. Right.
Speaker 4: So there's not that reason for suspicion. Now, that isn't
Speaker 4: to say that everyone in China has experienced It's certainly not,
Speaker 4: but I think for the vast majority, and not just
Speaker 4: of urbanites, but the vast majority of people have seen
Speaker 4: this correlation.
Speaker 3: Wait, but there is some negative feeling towards some technology
Speaker 3: in China and I'm thinking specifically of She shin ping
Speaker 3: and his big crackdown on consumer online tech. And he's
Speaker 3: not a fan of video games precisely because he thinks
Speaker 3: it's a waste of time and kids are staring at
Speaker 3: the screen too much. So there is an element.
Speaker 4: Of that that also tracks with the Chinese parent thing, right,
Speaker 4: they all want us to be really good on computers,
Speaker 4: but not to waste our time playing video games or
Speaker 4: just chatting up people. Yeah, I think you were saying
Speaker 4: it in your intro, and I thought that was really
Speaker 4: interesting how Donald Trump he wouldn't be able to just
Speaker 4: simply order everyone, the physicists to start doing physics and
Speaker 4: not go work for quantitative hedge funds in China, you
Speaker 4: kind of can, It's not. I mean, again, that's an exaggeration.
Speaker 4: There isn't a way. I mean, there are still plenty
Speaker 4: of people who go to school and study the social sciences,
Speaker 4: or who graduate with engineering degrees and then go to
Speaker 4: work for a major social media company or go to
Speaker 4: work designing complicated financial derivatives or whatever. But he doesn't
Speaker 4: like that. He thinks that that's been one of the
Speaker 4: pathologies of the United States is that it's over financialized,
Speaker 4: and that our best and brightest here in the US
Speaker 4: have gone to work for these companies that basically don't
Speaker 4: make anything and just suck at people's time and create
Speaker 4: polarization in the country. So they're worried about that and
Speaker 4: they have more wherewithal to direct people. It's not coercive, though,
Speaker 4: let me be clear about that. They have ways to
Speaker 4: incentivize it. And I think that this again, this is
Speaker 4: part of the popular culture. There's all sorts of reasons.
Speaker 4: I mean, we can start at the top. If you
Speaker 4: look at the composition of the Chinese leadership, I mean,
Speaker 4: what do we have in Congress, Who do we have
Speaker 4: heading major agencies. It's almost all lawyers, people with illegal training.
Speaker 4: And that's good in a country that really prizes rule
Speaker 4: of law, and it's good for many reasons. But in China,
Speaker 4: the analogy is that you look at the senior leadership.
Speaker 4: If you look at you know, who runs the provinces,
Speaker 4: whether the party or the state. You look at who
Speaker 4: are the mayors or the party secretaries of cities of
Speaker 4: a million people or more, and you're almost all going
Speaker 4: to find engineers. They're going to be like seventy eighty
Speaker 4: percent engineers. If the ladder of success, if the people
Speaker 4: who are top it all did one thing in common,
Speaker 4: they did a four year degree in the natural sciences
Speaker 4: or in engineering, there's a good chance that you're going
Speaker 4: to tell your kids to do the same, or your
Speaker 4: kid is the case, maybe yeah, to do the same.
Speaker 4: So I think there's a lot of pressure that way
Speaker 4: in terms just of social mobility, in terms of what
Speaker 4: the perceived path of mobility is.
Speaker 2: By the way, this point about engineers and lawyers or
Speaker 2: regular odd law I guess. Dan Wong has a book
Speaker 2: coming out August twenty sixth, twenty twenty five. It's up
Speaker 2: for sale on Amazon right now. You can pre order
Speaker 2: it about exactly this dimension of a sort of lawyer
Speaker 2: society versusn engineering society. I'm looking forward to reading that.
Speaker 2: I'm looking forward to having this.
Speaker 4: Dan Wong is great. So I interviewed him for this
Speaker 4: Nova documentary that I did called Inside China's Tech Boom,
Speaker 4: and the whole thesis of it was really, I mean,
Speaker 4: in many ways inspired by some of Dan's ideas about
Speaker 4: the importance of process knowledge. How the fact that China
Speaker 4: has not stopped manifacted there was not for a maker's
Speaker 4: movement to China because they didn't need to be one.
Speaker 4: They are always making stuff right the fact that they
Speaker 4: still have all the hardware there. It creates this sort
Speaker 4: of frictionless ecosystem of innovation where you know, if you're
Speaker 4: a guy with an idea for some gadget and you're
Speaker 4: in Shinjin, you can have your designer just send you
Speaker 4: over on we Chat his latest design. You can take
Speaker 4: it to your ODM, which is just a quick bike
Speaker 4: ride down the street. They can have you a proto
Speaker 4: type by the afternoon. You can make some tweaks and iterate,
Speaker 4: and they'll just keep changing the thing over tight and
Speaker 4: it's practically frictionless. And I think that's a huge piece
Speaker 4: of China's innovation success as well.
Speaker 2: But what happens when hesion ping comes out and says,
Speaker 2: you know what, we're not as into social networking anymore,
Speaker 2: We're not as into video games. We really want to
Speaker 2: focus on other areas of hard tech, important tech, something
Speaker 2: like that. What is the process of here is this
Speaker 2: national priority and then the transmission and diffusion of these
Speaker 2: priorities into choices that maybe students make or technologists make.
Speaker 4: That's a great question. I think it's actually one that
Speaker 4: I can answer with three letters KPI. Right. What happens
Speaker 4: when you have these kind of abstract directives the will
Speaker 4: of the leader from on high is that they get
Speaker 4: translated not into specific policies, not right away certainly, but
Speaker 4: into this expectation set you know, from the leadership on
Speaker 4: down that this is how I'm going to score my
Speaker 4: brownie points, this is how I am going to get
Speaker 4: promoted within the party, is if I tick these boxes,
Speaker 4: if I do these things. Let's say, you know, we
Speaker 4: decide that the thing is we all need to have
Speaker 4: data centers. So suddenly every municipality in every province is
Speaker 4: going to want to build data centers. They're going to
Speaker 4: fight each other for it. They're going to figure out,
Speaker 4: here's the best place for us to build ours, and
Speaker 4: here's all this money that we're going to put into that.
Speaker 4: I mean, they're going to want to tick that box.
Speaker 4: This is the sort of the way that everything gets
Speaker 4: done in China. When recently, when She'sing Ping announced that
Speaker 4: they were going to be and this is director that
Speaker 4: came not out of just the State Council but out
Speaker 4: of the party as well, that they were going to
Speaker 4: boost consumption. A lot of people just sort of sneered
Speaker 4: and said, yeah, I don't see a lot of policy
Speaker 4: here in place to do that. But you can bet
Speaker 4: your bottom dollar that every one on down they took
Speaker 4: this very very seriously, and they're all figuring out ways
Speaker 4: where in their little patch of dirt they're going to
Speaker 4: figure out how we can boost consumption because that's the
Speaker 4: way that I'm going to get promote. They did the
Speaker 4: same thing with cleaning up air pollution. They do the
Speaker 4: same thing with cleaning up rivers. They make it part
Speaker 4: of your KPI. That's what they're going to do with
Speaker 4: this as well. That's what they did. I mean the
Speaker 4: question that you asked about how they made sure these
Speaker 4: physicists were doing physics. It's much the same.
Speaker 3: There's also, I feel like a sense of clarity in
Speaker 3: some of these policy directives. So China very often explicitly
Speaker 3: will say where it's investing.
Speaker 1: Right.
Speaker 3: So when we have the consumer tech crackdown, it came
Speaker 3: with a simultaneous announcement that everyone should go into hardware basically,
Speaker 3: and we saw that repeated in various ways. I remember
Speaker 3: Chairman Rabbit was tweeting that people should go to the
Speaker 3: industries that actually fit the central government's general policies. So
Speaker 3: I feel like it's just very clear as well, and
Speaker 3: the messaging is kind of on point.
Speaker 4: We have a word in Chinese phone call which literally
Speaker 4: means sort of wind mouth. It's the place where the
Speaker 4: wind will be will be blowing. It's like that little
Speaker 4: wind tunnel, and they telegraph that. They tell you, you know,
Speaker 4: well in advance, here is where we're going to. This
Speaker 4: in the fourteenth five year plan. This you know, in
Speaker 4: the fifteenth five year Plan they say exactly which industries
Speaker 4: are going to not only receive a lot of government investment,
Speaker 4: but where the paths are going to be cleared. There's
Speaker 4: going to be removal of a lot of regulatory hurdles,
Speaker 4: there's going to be favorable policy for you if you
Speaker 4: get into this, and if you're an investor, that's where
Speaker 4: you're going to put your money. That's what you're going
Speaker 4: to do. You're going to you know, it doesn't take
Speaker 4: a genius. You need to read the important documents and
Speaker 4: you figure out exactly what their priorities are. Just as
Speaker 4: you say, there's that clarity.
Speaker 2: I have to admit, you know, like when I say
Speaker 2: a sheson ping speech translated into English, or maybe I
Speaker 2: just have a chat GPT translated Like, there is often
Speaker 2: not a lot of like specifics or arguably even substance
Speaker 2: in them. There's a lot of like really sort of
Speaker 2: high level grand things. But this sort of makes sense now. Granted,
Speaker 2: the leaders around the world often don't get into a
Speaker 2: lot of specifics, but it makes a little bit more
Speaker 2: sense to me in the context of Okay, these priorities
Speaker 2: are announced and immediately on down I have to you know,
Speaker 2: imagine provincial leaders, leaders of school systems, universities then immediately
Speaker 2: get the message that their futures and their success in
Speaker 2: their careers will be about who can show the best
Speaker 2: results on what maybe sounds like some sort of vague priority.
Speaker 4: And you're missing the biggest piece of it, which is parents. Oh,
Speaker 4: they're getting this message as well. They're the ones who
Speaker 4: are ultimately deciding, No, you're not going to be in
Speaker 4: a life actual historian if you're going to study yeah,
Speaker 4: you know, you're going to study engineering physics, Sorry, buddy,
Speaker 4: because you're going to get a job at ten Center,
Speaker 4: at UID or at Huawei when you graduate. Yeah. So
Speaker 4: I think that's the thing. A friend of mine once
Speaker 4: joked that a lot of people in the West have
Speaker 4: a great deal of difficulty imagining how the leader of
Speaker 4: an authoritarian nation can do all these things that seem
Speaker 4: so apparently cruel, arbitrary, but actually have your best interests
Speaker 4: in mind. But for anyone who grew up with Chinese parents,
Speaker 4: they know exactly how it works.
Speaker 3: Wait, so, just on the authoritarian point, I know you
Speaker 3: touched on this already, but just to press on this,
Speaker 3: would you say authoritarianism is a net positive or a
Speaker 3: net negative for technological development?
Speaker 4: I think it's a wash in most stays. I mean, look,
Speaker 4: maybe this is my upbringing talking, but you know, I
Speaker 4: am not willing to discard the idea that a lack
Speaker 4: of intellectual freedom, of academic freedom, of freedom to query
Speaker 4: into to experiment without any ideological fetters, that if you
Speaker 4: don't have that, in the long run, you are hobbled.
Speaker 4: I think that's probably still the case. But I think
Speaker 4: in America we've taken it too far. We have this idea.
Speaker 4: I mean, do you remember back in twenty thirteen, twenty fourteen,
Speaker 4: when Joe Biden and even Carly Fiorina, who really ought
Speaker 4: to have known better. I mean, she was the see
Speaker 4: of a major technology company. They were going around and
Speaker 4: they were making these speeches. You know, Biden was making
Speaker 4: these graduation speeches. Furina was on the campaign trail and
Speaker 4: she was talking about that Biden was talking about. They
Speaker 4: said the same talking point. It's like, show me one
Speaker 4: thing that China's ever innovated. You know, as long as
Speaker 4: we have freedom, we will always be in the lead
Speaker 4: of innovation. And I mean I think that takes it
Speaker 4: from a necessary condition, which I even have quibbles with.
Speaker 4: In fact, I don't believe that it's a necessary Freedom
Speaker 4: is a necessary condition for technological innovation, but it even
Speaker 4: elevates it to sufficient condition. Yeah, where you know, it's
Speaker 4: like just because we're free, we're always going to be
Speaker 4: ahead in innovation. So I mean that's part of the
Speaker 4: reason why we're constantly just being just sideswiped, just completely
Speaker 4: just blindsided by Chinese tech advances.
Speaker 2: It's you hear that to this day. I think you
Speaker 2: hear less of it, but it is less remarkable the
Speaker 2: degree to which you still hear that. What's your version
Speaker 2: of deep seek? Where did it come from? And how
Speaker 2: much does it fit this story of like, oh, they
Speaker 2: were doing quant stuff and then suddenly they're like, oh,
Speaker 2: we should pivot to AI, Like, what's the deep Seek story?
Speaker 4: Well, I mean the biography of Young one film is
Speaker 4: not in question. I mean he ran a quant fund
Speaker 4: called high Flyer, right, and he pivoted. Now to what
Speaker 4: extent they were just developing this as a sideline hobby
Speaker 4: or I mean I think more likely they were developing
Speaker 4: AI that would help them in trades, right, help them
Speaker 4: in high frequency, high velocity trading. Right. But the pivot
Speaker 4: being you know, attributed to Seizing making this policy changed.
Speaker 4: It makes that totally tracks. I don't know the precise details,
Speaker 4: but it totally tracks. It doesn't seem suspicious to me.
Speaker 4: I have no reason to doubt that that's the case.
Speaker 4: I mean, plenty of people have made that kind of
Speaker 4: a pivot. I mean, maybe not all of them have
Speaker 4: enjoyed the kind of world striding success that Deep Sea has,
Speaker 4: but it certainly tracks.
Speaker 2: I want to talk.
Speaker 3: About the export controls from the Biden administration. So what
Speaker 3: role would you say those have played in China's technological progress?
Speaker 3: Because one thing I sometimes hear people used to use
Speaker 3: the analogy of the three body problem. I don't know,
Speaker 3: did you ever read that joke.
Speaker 2: I never read.
Speaker 4: I did.
Speaker 3: Yeah, oh sorry, Amfeizer, Yeah, oh yeah, for sure.
Speaker 4: Neil Ferguson actually used that at Davos a few years ago.
Speaker 4: I was there. I was, you know, working this little
Speaker 4: side hustle on. It's kind of a note taker for
Speaker 4: the World economic for him. But he actually, without explaining anything,
Speaker 4: he just simply said, you know, what the United States
Speaker 4: is trying to do to China right now is exactly
Speaker 4: what the Tri Solarians were trying to do earthbody help,
Speaker 4: and without explaining what he meant, but just don the
Speaker 4: assumption that when the audience had read it, and probably
Speaker 4: most people had, but yeah, trying to basically stemy technological advance, right.
Speaker 3: Right, So I feel like we should explain it now.
Speaker 3: But I guess it's the idea that in the three
Speaker 3: body problem, Earth is threatened by this alien species and
Speaker 3: because of that, humanity kind of reorganizes itself and technological
Speaker 3: progress thrives, at least for a while.
Speaker 4: Yeah, And I think that that's kind of what we've
Speaker 4: seen happen. I mean, I use a more Quotitian metaphor,
Speaker 4: the one that I think not everyone has have read
Speaker 4: this really really long turgid science fiction classic form. But
Speaker 4: I think we've basically compelled the frog to leap again.
Speaker 4: And it was happy enough just sort of hopping along
Speaker 4: well behind the US when it came to cutting edge semiconductors.
Speaker 4: But now it may leap the United States as the frog,
Speaker 4: you know, our metaphoric frog did in five G or
Speaker 4: in renewable energy like solar and and electric vehicles. Right,
Speaker 4: So we have now given China both the kind of
Speaker 4: urgency and the sense of imminent threat that was needed
Speaker 4: to light a fire to that that frog's posterior and
Speaker 4: now it's you know, it's in the air.
Speaker 5: It's maybe directly over our heads, maybe gon't land in
Speaker 5: front of us.
Speaker 2: One of the things that's really elemental to us tech
Speaker 2: is the vision in dreams of gigantic monopoly profits. This
Speaker 2: is sort of like the Peterteel idea. It's like the
Speaker 2: goal is to like build a monopoly and get insanely
Speaker 2: rich doing it, and the people who go into tech
Speaker 2: dreams of fortunes, et cetera. There is this huge liquid
Speaker 2: stock market that becomes the destination either for I pos
Speaker 2: or acquisitions. Talk to us about the capital markets component
Speaker 2: of Chinese tech is it the same like path to
Speaker 2: getting super rich that American technologists see here? Like what
Speaker 2: incentivizes and motivate the technologists in China.
Speaker 4: Well, I think that they're exactly the same. I think
Speaker 4: that there's very little daylight between. Well, first of all,
Speaker 4: I mean in the nineties, in that first technology boom
Speaker 4: in China came right on the heel of what you
Speaker 4: saw in the United States. All these people Charles Jong
Speaker 4: who left MIT and went back to China, and I
Speaker 4: think it was like ninety seven or ninety eight to
Speaker 4: start this company. So who all these other entrepreneurs, Robin
Speaker 4: Lee who I used to work for it by do,
Speaker 4: A lot of them were returneys from the United States,
Speaker 4: and they had the same glint in their eye. And
Speaker 4: you have to remember these guys, they had American business
Speaker 4: business models. Essentially, they went to American vcs from Sandhill
Speaker 4: Road to raise their money. They went to American capital
Speaker 4: markets right when they wanted to list. Their exits were
Speaker 4: always on Nasdaq or on New York Stock Exchange, only
Speaker 4: in rare exceptions where they actually not ten cents. An exception,
Speaker 4: Ali Baba is a little bit of an exception. But
Speaker 4: most of them, I mean, hundreds of them went to
Speaker 4: the United States forces, right, And yeah, I think it's
Speaker 4: it's the same, it's the same motivating force. The cultures
Speaker 4: are remarkably or were remarkably similar. So that was like
Speaker 4: the only thing I felt comfortable working. I mean, as
Speaker 4: a guileless American who just had my I would just
Speaker 4: have my my, my posterior handed to me in any
Speaker 4: kind of corporate setting except in the Internet, where you know,
Speaker 4: the same kind of Silicon Valley egalitarianism and that kind
Speaker 4: of enterprise culture prevailed. So that was like one of
Speaker 4: the only safe places for people who you know, were
Speaker 4: clueless like me. Since you mentioned so, I think they're
Speaker 4: the same. I think they're the same.
Speaker 3: Since you mentioned culture, can I ask a slightly random question,
Speaker 3: but I think I think you're a good person to
Speaker 3: ask about it, given your background as a musician. But
Speaker 3: China kah has been very successful in exporting technology, so
Speaker 3: you know, whether it's byd cars or TikTok or whatever,
Speaker 3: I think we can all agree that it's come from
Speaker 3: nowhere basically and is now certainly a major player. Meanwhile,
Speaker 3: in sort of pop cultural exports, the lack of Chinese
Speaker 3: pop culture exports has been a sort of long running
Speaker 3: discussion point now, and if you compare China to a
Speaker 3: place like Japan where there's jpop, or Korea where there's
Speaker 3: k pop, it does feel like something is kind of
Speaker 3: lacking there. I guess my question is is it fair
Speaker 3: to say that China has fallen down on cultural exports
Speaker 3: at least compared to technology, and then b why is that?
Speaker 4: Yeah, No, that's a great question. It's something I've pondered
Speaker 4: for a very long time too. I mean, I think
Speaker 4: there's no arguing that China's got a gigantic gap. It's
Speaker 4: not punching at its weight. But let's figure out how
Speaker 4: we calculate that way. Because you know, when you look
Speaker 4: at when did we all start eating sushi and watching
Speaker 4: the Cure Kurosawa films like in the eighties? Right, So
Speaker 4: that's when Japan's soft power starts to really really peak, right,
Speaker 4: we all start driving Japanese cars. This is at a
Speaker 4: point where Japan's per captain GDP was about seventy five
Speaker 4: percent of what the United States was at that time,
Speaker 4: and Koreas similarly, around the time where we start all
Speaker 4: listening to Gongnam style and then you know, all our
Speaker 4: daughters or whatever posters of bts on their walls, as
Speaker 4: mon still does. This was at a time when South
Speaker 4: Korea's per capita GDP it's like seventy two, seventy three
Speaker 4: percent of America's GDP per capita. I think that has
Speaker 4: something to do with it. I think that per capita
Speaker 4: GDP kind of shows what a nation's priorities are going
Speaker 4: to be. When it's low, it's still going to be
Speaker 4: in that stage of we've got to work really, really hard.
Speaker 4: Just this is why I mean in China. I mean,
Speaker 4: I play music, so I'm constantly frustrated by the fact
Speaker 4: that for most people, for the overwhelming number of people,
Speaker 4: it is just entertainment. There's nobody who thinks of it
Speaker 4: as an art form anymore, I mean, or if there
Speaker 4: ever was. I think that it has to do with that.
Speaker 4: But I think there's also and it's obvious to me
Speaker 4: that the first rule of soft power should just be
Speaker 4: don't talk about soft power. That China's government's obsession with
Speaker 4: trying to create soft power is one of the big
Speaker 4: impediments to it actually having soft power. Again, let me
Speaker 4: let me be very very clear, it has plenty of
Speaker 4: soft power in the developing world. I mean, if you
Speaker 4: look in Southeast Asia, a lot of people are watching
Speaker 4: these insufferable costume dramas about you know, the palace intrigue
Speaker 4: in the Qing.
Speaker 3: Dynasty ones, a bunch of them nowadays.
Speaker 4: Yeah, yeah, I guess the Thai ones are really popular
Speaker 4: these days.
Speaker 2: That's interesting, so that that's actually popular content in Southeast Asia.
Speaker 4: Yeah, it's huge. It's absolutely huge all over Southeast Asia,
Speaker 4: in Indonesia and Malaysia and Thailand and the Philippines, even
Speaker 4: in Vietnam anyway where in Southeast Asia, Ego, there's a
Speaker 4: lot of this stuff. But yeah, but no, to your point,
Speaker 4: in Europe and the United States, no, it's not really registering.
Speaker 4: And I think there's that's one of the reasons. But
Speaker 4: I think ultimately the reason is, well, soft power tends
Speaker 4: to be created on the periphery. It creeps in through
Speaker 4: the cracks, you know. It's a grassroots thing. It's not
Speaker 4: supposed to be created top down. And yeah, you can
Speaker 4: look at South Korea and say there was a lot
Speaker 4: of government, you know, and a lot of these gigantic
Speaker 4: conglomerates who created Korean soft power boy bands and stuff,
Speaker 4: But that may be sort of the anomaly Kaiser.
Speaker 2: We could go on a long time. There are just
Speaker 2: so many questions, but I think that's a good spot
Speaker 2: to ramp it. Thank you so much for coming on, Odlocks.
Speaker 2: We'll have to have you back on again soon.
Speaker 4: I would love to come back on. Thank you so
Speaker 4: much for having me than you.
Speaker 3: That was fun.
Speaker 2: I thought it was really interesting. I like the point
Speaker 2: about everyone getting the message and then everyone doing their
Speaker 2: own thing to sort of prove that they're getting a message.
Speaker 2: And we talked about this on our episode with Sam Damico,
Speaker 2: the Impulse Labs guy. This idea of Okay, there's some priority,
Speaker 2: and then all the different provinces compete on how well
Speaker 2: they're doing and fulfilling their priority. It makes a lot
Speaker 2: of sense that that's a very broadly applicable lesson to
Speaker 2: like different sectors and different parts of the economy.
Speaker 3: Totally, I really think the messaging is kind of key here. Yeah,
Speaker 3: the message is very clear. It's if you choose this
Speaker 3: route that the Chinese government is encouraging you to take,
Speaker 3: your life is going to be a lot easier than
Speaker 3: if you take another route. And I think that's kind
Speaker 3: of different to the way industrial policy, I guess works
Speaker 3: in the States, where you know, even if a president
Speaker 3: stands up and says we want a lot more semiconductors
Speaker 3: in the US, there's still a lot of bureaucracy, a
Speaker 3: lot of uncertainty, a lot of paperwork attached to getting
Speaker 3: support from the government for a semiconductor project. And so
Speaker 3: I think that uncertainty like still feeds into the US certainly.
Speaker 2: Yeah. Prisident Trump recently gave a speech at University of Alabama,
Speaker 2: I think it was their graduation ceremony, and he said
Speaker 2: that he was like, to the business students here, don't
Speaker 2: just think about your portfolios, think about your country. And
Speaker 2: I like that message, but I don't know, like, what
Speaker 2: are the levers that actually get towards that. And so oh, also, Tracey,
Speaker 2: I have a take?
Speaker 3: Oh oh really, just one?
Speaker 2: Yeah, just one take?
Speaker 3: Okay, hit me.
Speaker 2: This is something I've been workshopping, and so I'm leaving
Speaker 2: it to the end.
Speaker 3: I can't believe you're not tweeting it. Are you going
Speaker 3: to tweet it? Are you workshopping for a tweet?
Speaker 2: I'm workshopping it for you here. I figured a lot
Speaker 2: of people aren't listening by this point, so I can
Speaker 2: drop it here, which is I'm kind of coming around
Speaker 2: to this idea that like complex financial products, that they
Speaker 2: have a bad rep.
Speaker 3: They have a bad they are bad.
Speaker 2: Know that they have a bad rep. That actually, this
Speaker 2: is like a sort of contra to a lot of
Speaker 2: popular thing. It's like, oh, complex semiconductor is good, complex
Speaker 2: financial products bad. I'm just throwing it out there that
Speaker 2: maybe we should talk more about why people get paid
Speaker 2: so much to design complex financial products in a market
Speaker 2: economy and why they're so highly valued. I'm just throwing
Speaker 2: it out there.
Speaker 3: We should do an episode on Ray Dalio and the
Speaker 3: chicken nugget again.
Speaker 2: That's exactly right. That's exactly right. Derivatives gave us the
Speaker 2: chicken nugget. Anyway, talking to Kaiser about this just reminded
Speaker 2: me of that that I want to explore this idea,
Speaker 2: and I'm saying it here now kind of as a
Speaker 2: remind myself, reminder of myself to think about this one.
Speaker 3: Chicken nuggets is the ultimate example of American technological and
Speaker 3: financial supremacy.
Speaker 2: We do great, complicated things in the United States, but
Speaker 2: because we have this bias against finance as being extractive
Speaker 2: or or something, I think we don't sufficiently recognize where
Speaker 2: we're at the cutting edge.
Speaker 3: It is true that in China finance and industry are
Speaker 3: often working hand in hand. And if the government says that,
Speaker 3: for instance, hardware is now very important, you will see
Speaker 3: the banks start to loosen up on lending standards and
Speaker 3: things like that. So a valid point, Joe.
Speaker 2: What is a supply chain but a payment chain in reverse?
Speaker 3: That's Sultan Posar's line.
Speaker 2: Oh he said, stole that, Yeah, I stole it from Sultan.
Speaker 2: All right, that's right, Yeah, credit to Sultan. But you know,
Speaker 2: maybe we should think about this a little more.
Speaker 3: Yeah, all right, shall we leave it there?
Speaker 2: Let's leave it there.
Speaker 3: This has been another episode of the Odd Lots Podcast.
Speaker 3: I'm Tracy Alloway. You can follow me at Tracy Alloway and.
Speaker 2: I'm Joe Wisenthal. You can follow me at the Stalwart.
Speaker 2: Check out our guest, Kaiser Quote. He's at Kaiser Quo,
Speaker 2: and check out the Cineca podcast and substack. Follow our
Speaker 2: producers Kerman Rodriguez at Kerman Ermann, dash Ol Bennett at
Speaker 2: Dashbot and Kale Brooks at Kale Brooks. For more Oddlots content,
Speaker 2: go to Bloomberg dot com slash Odd Lots where we
Speaker 2: have a daily newsletter and all of our episodes, and
Speaker 2: you can chaut about all of these topics twenty four
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Speaker 3: Thanks for listening
Speaker 1: And