1 00:00:10,720 --> 00:00:14,360 Speaker 1: Hello, and welcome to another episode of the All Thoughts Podcast. 2 00:00:14,440 --> 00:00:19,040 Speaker 1: I'm Tracy Alloway and I'm Joe. Wi isn't thal so Joe. 3 00:00:19,440 --> 00:00:24,960 Speaker 1: It's been a pretty eventful summer here in Hong Kong. Yeah, 4 00:00:25,040 --> 00:00:27,800 Speaker 1: I mean that's my impression. I guess sort of like 5 00:00:28,160 --> 00:00:34,240 Speaker 1: here too. But every everywhere that Chinese money has touched 6 00:00:34,800 --> 00:00:38,280 Speaker 1: this summer, whether it's China itself, whether it's Hong Kong, 7 00:00:38,440 --> 00:00:42,440 Speaker 1: or whether it's US markets, has been quite a wild ride, 8 00:00:42,479 --> 00:00:45,920 Speaker 1: to say the least. Yeah, so obviously, um, being in 9 00:00:45,920 --> 00:00:50,479 Speaker 1: the Bloomberg news room, it's been kind of NonStop this summer. 10 00:00:51,040 --> 00:00:55,400 Speaker 1: So we're talking about the crackdowns of course that um, 11 00:00:55,440 --> 00:01:00,600 Speaker 1: the Chinese Party has announced on various sectors of its economy. Uh. 12 00:01:00,680 --> 00:01:07,000 Speaker 1: It started with targeting at financial back in October. There 13 00:01:07,080 --> 00:01:10,120 Speaker 1: was a lot of theorizing about why ant lots of 14 00:01:10,160 --> 00:01:14,080 Speaker 1: people focusing on the data that AT controls. But then 15 00:01:14,240 --> 00:01:18,880 Speaker 1: the summer it kind of just spun into a new 16 00:01:19,080 --> 00:01:22,800 Speaker 1: level of intensity and we saw China cracking down on 17 00:01:22,880 --> 00:01:28,160 Speaker 1: for profit education companies. We saw it coming after d D, 18 00:01:28,400 --> 00:01:31,800 Speaker 1: the ride hailing app, saying that they had to you know, 19 00:01:31,840 --> 00:01:35,440 Speaker 1: improve their labor laws and also that Beijing, the City 20 00:01:35,480 --> 00:01:38,360 Speaker 1: of Beijing might actually take them over and kind of 21 00:01:38,360 --> 00:01:40,680 Speaker 1: make them a state owned enterprise or something like that. 22 00:01:41,400 --> 00:01:44,560 Speaker 1: It's it's basically been NonStop and everyone is trying to 23 00:01:44,560 --> 00:01:49,600 Speaker 1: figure out why now and what exactly is China trying 24 00:01:49,640 --> 00:01:53,360 Speaker 1: to do. Yeah, that is sort of like the I 25 00:01:53,360 --> 00:01:56,000 Speaker 1: mean you just sort of listed all of these things, 26 00:01:56,080 --> 00:01:58,200 Speaker 1: and each one of them on their own have been extraordinary. 27 00:01:58,280 --> 00:02:00,880 Speaker 1: Like the d D thing was crazy. It's of course 28 00:02:00,960 --> 00:02:03,880 Speaker 1: that's like they're there like uber type company, And wasn't 29 00:02:03,920 --> 00:02:06,000 Speaker 1: that like that was like it like three days of 30 00:02:06,040 --> 00:02:07,760 Speaker 1: their U S I p O. Wasn't it like it 31 00:02:07,800 --> 00:02:09,800 Speaker 1: was literally the I p O like out of Tuesday 32 00:02:09,919 --> 00:02:12,680 Speaker 1: or something, and then the following one day there was like, oh, 33 00:02:12,760 --> 00:02:15,320 Speaker 1: we're cracking down. And then some of the companies like 34 00:02:15,400 --> 00:02:19,120 Speaker 1: these online are these uh private education companies, some of 35 00:02:19,160 --> 00:02:21,720 Speaker 1: which are listening to us, like their business models are 36 00:02:21,760 --> 00:02:24,000 Speaker 1: like basically going to zero right there, like your band, 37 00:02:24,200 --> 00:02:26,160 Speaker 1: there's you can't do what you do. I don't know 38 00:02:26,200 --> 00:02:28,800 Speaker 1: if it's total zeros, but it has been extraordinary. But 39 00:02:28,840 --> 00:02:31,640 Speaker 1: I still don't feel like I understand, like what is 40 00:02:31,760 --> 00:02:35,440 Speaker 1: the the end goal here? Yeah, so I guess two 41 00:02:35,480 --> 00:02:38,680 Speaker 1: things on that topic. So you know you mentioned, Um, 42 00:02:38,720 --> 00:02:41,040 Speaker 1: the d D crackdown happens soon after the I p O. 43 00:02:41,400 --> 00:02:43,760 Speaker 1: A lot of people are pointing out that the seems 44 00:02:43,840 --> 00:02:46,160 Speaker 1: like China is sort of shooting itself in the foot. 45 00:02:46,240 --> 00:02:50,040 Speaker 1: It's going after some of its most successful companies. But 46 00:02:50,240 --> 00:02:52,280 Speaker 1: on the other hand, you know, a lot of what 47 00:02:52,440 --> 00:02:56,480 Speaker 1: China says it's doing is about improving quality of life. 48 00:02:56,560 --> 00:03:00,120 Speaker 1: So it doesn't want people to spend loads of money 49 00:03:00,160 --> 00:03:04,359 Speaker 1: on their education and have to be you know, really competitive. Um, 50 00:03:04,400 --> 00:03:07,400 Speaker 1: it doesn't want well, it wants to protect workers rights, 51 00:03:07,560 --> 00:03:10,600 Speaker 1: um for for d D drivers and things like that. 52 00:03:11,200 --> 00:03:15,799 Speaker 1: It wants to protect user data, you know, similar comments 53 00:03:15,800 --> 00:03:17,480 Speaker 1: that we've heard in the West when it comes to 54 00:03:17,600 --> 00:03:20,600 Speaker 1: Facebook and Google. Right. So, but of course people are 55 00:03:20,680 --> 00:03:24,519 Speaker 1: very distrustful of those messages. Um. There's lots and lots 56 00:03:24,520 --> 00:03:27,200 Speaker 1: of theories going around about what exactly is going on. 57 00:03:27,639 --> 00:03:30,160 Speaker 1: And today I am very happy to say that we 58 00:03:30,200 --> 00:03:33,200 Speaker 1: are going to be bringing back a long time odd 59 00:03:33,240 --> 00:03:35,920 Speaker 1: lots guests. We're going to be speaking with Dan Wong. 60 00:03:36,120 --> 00:03:39,600 Speaker 1: He's a technology analyst over at Gavicale drab Eck Economics, 61 00:03:39,720 --> 00:03:41,840 Speaker 1: and of course he's been on the show a couple 62 00:03:41,840 --> 00:03:44,800 Speaker 1: of times, one of the best commentators in my opinion 63 00:03:44,920 --> 00:03:47,960 Speaker 1: when it comes to China's tech sector. So really the 64 00:03:48,000 --> 00:03:53,680 Speaker 1: perfect person can't wait? Okay, uh Dan, welcome back. Well 65 00:03:53,720 --> 00:03:56,840 Speaker 1: it's not for nothing, Tracy that Odd Lots is my 66 00:03:56,920 --> 00:04:00,640 Speaker 1: favorite podcast and Tracy my Joe my favorite podcast host. 67 00:04:01,240 --> 00:04:05,400 Speaker 1: Too kind. And so I'm trying to think, Um, where 68 00:04:05,440 --> 00:04:08,640 Speaker 1: to begin? Um, why don't we start? Well, why don't 69 00:04:08,680 --> 00:04:11,840 Speaker 1: we begin at the beginning? Um, you know the crackdown 70 00:04:11,880 --> 00:04:16,920 Speaker 1: on Aunt Financial in October. What was your initial thought 71 00:04:17,040 --> 00:04:20,560 Speaker 1: about that one? Because I remember when when it happened, 72 00:04:20,800 --> 00:04:24,279 Speaker 1: people kind of thought this was an idiosyncratic event. Um, 73 00:04:24,320 --> 00:04:29,000 Speaker 1: you know, there was something specific about and Financial, an 74 00:04:29,080 --> 00:04:32,480 Speaker 1: offshoot of Ali Baba and which is of course founded 75 00:04:32,480 --> 00:04:35,400 Speaker 1: by Jack Ma and so people thought this was all 76 00:04:35,440 --> 00:04:39,280 Speaker 1: about that one company and maybe that one person. But 77 00:04:39,440 --> 00:04:43,400 Speaker 1: you know, almost a year later, it seems that there's 78 00:04:43,400 --> 00:04:47,960 Speaker 1: a wider message here. I think the narrative has evolved 79 00:04:48,360 --> 00:04:52,480 Speaker 1: since the early days of h and Financial, when about 80 00:04:52,960 --> 00:04:57,800 Speaker 1: just before the US election, the financials I p O 81 00:04:58,360 --> 00:05:02,360 Speaker 1: was halted by the Chinese authorities. And so if we 82 00:05:02,480 --> 00:05:06,640 Speaker 1: draw the line from late October through to June and 83 00:05:06,680 --> 00:05:10,520 Speaker 1: now presently we're speaking in September. The first big shock 84 00:05:10,839 --> 00:05:14,040 Speaker 1: was the financial I p O and then the second 85 00:05:14,080 --> 00:05:16,760 Speaker 1: big shock was the d D I p O. Has 86 00:05:16,839 --> 00:05:21,320 Speaker 1: Joe mentioned, UM, you know, facing a fairly severe regulatory 87 00:05:21,320 --> 00:05:23,960 Speaker 1: crackdown in terms of having its app pulled from app 88 00:05:24,000 --> 00:05:27,719 Speaker 1: stores about a couple of days after its I p O. 89 00:05:28,200 --> 00:05:30,520 Speaker 1: And so I think when we thought about those two 90 00:05:30,560 --> 00:05:34,640 Speaker 1: events in isolation, um it was a really big shock 91 00:05:34,720 --> 00:05:37,360 Speaker 1: and we wondered, you know, what exactly was going on. 92 00:05:37,920 --> 00:05:43,760 Speaker 1: But as this regulatory campaign escalated, as we saw more 93 00:05:43,880 --> 00:05:48,680 Speaker 1: industries get taken on, I think paradoxically, I think I 94 00:05:48,720 --> 00:05:51,839 Speaker 1: am at least a little bit more aware that there 95 00:05:52,000 --> 00:05:58,200 Speaker 1: is um more of a regulatory theme around governing these 96 00:05:58,480 --> 00:06:02,359 Speaker 1: internet giants. And so if I wanted to, um, you know, 97 00:06:02,440 --> 00:06:06,359 Speaker 1: put things into different buckets, I would put the first bucket. 98 00:06:07,000 --> 00:06:09,240 Speaker 1: The first bucket would be made up of UH and 99 00:06:09,480 --> 00:06:12,120 Speaker 1: financial and the D D I p O s in 100 00:06:12,120 --> 00:06:15,560 Speaker 1: which the Chinese authorities were highly reactive, in which they 101 00:06:15,560 --> 00:06:19,200 Speaker 1: couldn't really control the timelines because these timelines were controlled 102 00:06:19,240 --> 00:06:20,960 Speaker 1: by the companies in terms of the I p O s, 103 00:06:21,320 --> 00:06:23,680 Speaker 1: and so they had to crack down pretty quickly and 104 00:06:23,680 --> 00:06:27,159 Speaker 1: pretty hard. And then I would cite something like, um, 105 00:06:27,240 --> 00:06:30,160 Speaker 1: you know, a second bucket made up of items, um, 106 00:06:30,279 --> 00:06:34,400 Speaker 1: that are much better studied. Uh, and so in terms 107 00:06:34,400 --> 00:06:38,080 Speaker 1: of something like the online education crackdown. But we've read 108 00:06:38,160 --> 00:06:42,080 Speaker 1: from the Chinese Ministry of Education is that the Ministry 109 00:06:42,120 --> 00:06:47,680 Speaker 1: of Education surveyed around nineteen education firms, around seven hundred 110 00:06:47,720 --> 00:06:52,159 Speaker 1: thousand children and then over hundred and fifty thou parents 111 00:06:52,640 --> 00:06:57,360 Speaker 1: before they issued these pretty traconian regulations that more or 112 00:06:57,400 --> 00:07:01,240 Speaker 1: less decapitated the online education sect. Or we can also 113 00:07:01,320 --> 00:07:05,760 Speaker 1: think of other antitrust issues here that have affected companies 114 00:07:05,800 --> 00:07:08,760 Speaker 1: like Ali Baba. We might also be able to think 115 00:07:08,760 --> 00:07:12,200 Speaker 1: of some things like video games, in which President season 116 00:07:12,240 --> 00:07:15,600 Speaker 1: Paying has been talking about video games for over the 117 00:07:15,680 --> 00:07:18,600 Speaker 1: last four to five years. So I think there is 118 00:07:18,760 --> 00:07:20,840 Speaker 1: a little bit of, you know, maybe two or three 119 00:07:20,840 --> 00:07:24,680 Speaker 1: different buckets here. The first bucket are the purely reactive stuff. 120 00:07:24,720 --> 00:07:28,840 Speaker 1: There's a second bucket of antitrust issues prominently faced by 121 00:07:28,880 --> 00:07:32,160 Speaker 1: Ali Baba and mayelon camping. And then there's a longer 122 00:07:32,280 --> 00:07:36,200 Speaker 1: term issue with video games and online education, in which 123 00:07:36,240 --> 00:07:39,440 Speaker 1: the party state has decided, well, maybe we don't like 124 00:07:39,720 --> 00:07:43,640 Speaker 1: these things very much. So already this was really helpful, 125 00:07:43,800 --> 00:07:47,080 Speaker 1: and you know, obviously coming at this, looking at this 126 00:07:47,160 --> 00:07:51,640 Speaker 1: from an American American perspective, it's always tempting to try 127 00:07:51,640 --> 00:07:54,280 Speaker 1: to draw analogies. And when you look at sort of 128 00:07:54,320 --> 00:07:57,280 Speaker 1: big tech in the US, you see a lot of 129 00:07:57,320 --> 00:08:00,320 Speaker 1: politicians on both sides of the aisle with their plants 130 00:08:00,320 --> 00:08:04,400 Speaker 1: about Facebook and Amazon, they're kind of the complaints are different, 131 00:08:04,600 --> 00:08:07,239 Speaker 1: some overlap, but there's, you know, complaints about the power 132 00:08:07,280 --> 00:08:09,160 Speaker 1: that they have. And then you have a lot of 133 00:08:09,200 --> 00:08:12,760 Speaker 1: regulatory actions that take place in the US and Europe, 134 00:08:12,960 --> 00:08:16,360 Speaker 1: and these lawsuits that never seek to that never really 135 00:08:16,400 --> 00:08:18,520 Speaker 1: seemed to amount to anything, like maybe there'll be a 136 00:08:18,520 --> 00:08:21,160 Speaker 1: big fine or a bunch of state's attorneys general like 137 00:08:21,240 --> 00:08:23,600 Speaker 1: to one of the companies, and then four years later 138 00:08:23,640 --> 00:08:25,440 Speaker 1: they have to make some change whatever, but it doesn't 139 00:08:25,440 --> 00:08:28,600 Speaker 1: really seem to do anything. Is the angst about the 140 00:08:28,720 --> 00:08:33,760 Speaker 1: power of tech slash big tech in China comparable, with 141 00:08:33,920 --> 00:08:36,960 Speaker 1: the difference being that, well, they could do something about it, 142 00:08:37,040 --> 00:08:40,360 Speaker 1: whereas politicians and regulators here can't get their act together. 143 00:08:40,880 --> 00:08:44,400 Speaker 1: Or is the angst something different? I think it is 144 00:08:44,640 --> 00:08:49,079 Speaker 1: more a question of degrees. So first I agree with you, 145 00:08:49,520 --> 00:08:53,440 Speaker 1: that's the ferocity that the Chinese Party state um brought 146 00:08:53,480 --> 00:08:58,400 Speaker 1: to bear on against these companies is you know, nothing 147 00:08:58,520 --> 00:09:01,520 Speaker 1: like but the West, do you know? As best as 148 00:09:01,559 --> 00:09:04,760 Speaker 1: I can tell, there are some irritating lawsuits that big 149 00:09:04,800 --> 00:09:08,439 Speaker 1: tech is facing in the US, and then some minor finds, 150 00:09:08,760 --> 00:09:11,280 Speaker 1: you know, somewhat big finds that they are challenging in 151 00:09:11,320 --> 00:09:14,760 Speaker 1: the European Union. But there hasn't been a really really 152 00:09:14,800 --> 00:09:20,800 Speaker 1: substantial actions here, whereas the Chinese have acted much more severely. Now, 153 00:09:20,960 --> 00:09:23,880 Speaker 1: I think I would cite, you know, um, you know, 154 00:09:23,920 --> 00:09:26,800 Speaker 1: in terms of the type of ankst that the Chinese have. 155 00:09:27,360 --> 00:09:31,200 Speaker 1: I would want to put a framework of maybe four 156 00:09:31,559 --> 00:09:35,880 Speaker 1: big slogans of the moment as well as one theme 157 00:09:36,160 --> 00:09:38,840 Speaker 1: of the moment. And here I'm really drawing on the 158 00:09:38,880 --> 00:09:42,640 Speaker 1: work of my Dragonomics colleagues, and I think the four 159 00:09:42,880 --> 00:09:48,560 Speaker 1: big slogans that we've identified our first building the rule 160 00:09:48,600 --> 00:09:51,319 Speaker 1: of law, that this is something President se Jingping has 161 00:09:51,360 --> 00:09:54,880 Speaker 1: talked about over the last three or four years, requires 162 00:09:54,920 --> 00:09:59,640 Speaker 1: a pretty comprehensive regulatory framework for dealing with a different 163 00:09:59,679 --> 00:10:04,160 Speaker 1: company needs. Second, I would cite dual circulation, which is 164 00:10:04,440 --> 00:10:10,280 Speaker 1: includes a theme to improve the functioning of domestic markets. Third, 165 00:10:10,400 --> 00:10:13,920 Speaker 1: I would say, um, there's something of family values here. 166 00:10:13,960 --> 00:10:17,920 Speaker 1: In which the country just really want UM families to 167 00:10:18,000 --> 00:10:22,000 Speaker 1: have many more children. And then the big theme that 168 00:10:22,320 --> 00:10:24,839 Speaker 1: we have been thinking about, the fourth slogan that we've 169 00:10:24,880 --> 00:10:29,439 Speaker 1: been thinking about right now is something called common Prosperity, 170 00:10:29,520 --> 00:10:32,560 Speaker 1: which has really exploded in the pages of state media, 171 00:10:33,000 --> 00:10:37,720 Speaker 1: which is, in our view, something reduce inequality as well 172 00:10:37,760 --> 00:10:40,800 Speaker 1: as social division. And so, you know, if you think 173 00:10:40,840 --> 00:10:45,360 Speaker 1: about these broad interlocking programs trying to make it easier 174 00:10:45,520 --> 00:10:49,559 Speaker 1: for families to have children, trying to make the marketplace 175 00:10:49,800 --> 00:10:55,400 Speaker 1: that are regulated arguably more fair, to reduce these antitrust issues, UM, 176 00:10:55,520 --> 00:11:00,560 Speaker 1: to have a common prosperity, which is uh means to 177 00:11:00,880 --> 00:11:04,120 Speaker 1: you know, stop the wealthy from getting more wealthy, UM, 178 00:11:04,160 --> 00:11:06,520 Speaker 1: and then to improve I think what they call it 179 00:11:06,600 --> 00:11:10,840 Speaker 1: is an olive shaped distribution and economic distribution that's shaped 180 00:11:10,880 --> 00:11:13,400 Speaker 1: like an olive UM. You know. I think the tech 181 00:11:13,400 --> 00:11:17,720 Speaker 1: companies are all implicated by each of these slogans, but 182 00:11:17,800 --> 00:11:19,840 Speaker 1: it doesn't mean that tech companies are the will be 183 00:11:19,880 --> 00:11:22,800 Speaker 1: the only companies that will be implicated by each of 184 00:11:22,800 --> 00:11:25,160 Speaker 1: these slogans. I think right now the focus is on 185 00:11:25,240 --> 00:11:28,680 Speaker 1: tech because tech companies are implicated by all four of 186 00:11:28,720 --> 00:11:32,680 Speaker 1: these slogans. Now, one more big theme is the idea 187 00:11:32,760 --> 00:11:36,320 Speaker 1: that I think Beijing has decided that, well, we are 188 00:11:36,360 --> 00:11:41,520 Speaker 1: going to prioritize certain technologies over others. Now, I previously 189 00:11:41,640 --> 00:11:45,080 Speaker 1: worked in California, and I haven't always bought into the 190 00:11:45,160 --> 00:11:50,880 Speaker 1: idea that consumer internet companies like Facebook or Snap really 191 00:11:50,920 --> 00:11:54,520 Speaker 1: represent the peak of our technological civilization, that they are 192 00:11:54,720 --> 00:11:57,200 Speaker 1: the shortest signs that we live in some sort of 193 00:11:57,200 --> 00:12:03,160 Speaker 1: technologically accelerating civilization. Sort of lamented that among my smartest 194 00:12:03,240 --> 00:12:07,480 Speaker 1: peers who have graduated from very good schools are much 195 00:12:07,559 --> 00:12:12,560 Speaker 1: more keen work in hedge funds or asset allocation or 196 00:12:12,960 --> 00:12:17,240 Speaker 1: the consumer internet companies instead of much harder technologies. And 197 00:12:17,240 --> 00:12:20,880 Speaker 1: I think this is something that has upset Beijing as well. 198 00:12:21,280 --> 00:12:24,439 Speaker 1: You know, one very key line from a major speech 199 00:12:24,559 --> 00:12:27,959 Speaker 1: that Presidency gave last year was that, well, we can 200 00:12:28,000 --> 00:12:33,040 Speaker 1: tell that digitization is really important, as we've seen over COVID, 201 00:12:33,400 --> 00:12:35,679 Speaker 1: but what we must never do is to lose our 202 00:12:35,720 --> 00:12:40,600 Speaker 1: manufacturing sectors because the real economy is absolutely paramount. And 203 00:12:40,640 --> 00:12:44,000 Speaker 1: as I've said multiple times on hot lots before, the 204 00:12:44,080 --> 00:12:50,880 Speaker 1: Chinese government really wants semiconductors, semiconductors, white body aircraft, life sciences. 205 00:12:50,920 --> 00:12:55,080 Speaker 1: These are much more the technologies that Beijing is targeting, 206 00:12:55,400 --> 00:12:58,280 Speaker 1: and I think Beijing has sent this a signal, and 207 00:12:58,760 --> 00:13:02,640 Speaker 1: US in this case initiated a very severe cracknown to say, 208 00:13:02,760 --> 00:13:06,120 Speaker 1: online education. While we're not sure that's as important as 209 00:13:06,160 --> 00:13:11,520 Speaker 1: technology as for something, for example, something like chemicals video games. 210 00:13:11,960 --> 00:13:14,319 Speaker 1: Children really shouldn't be playing too many of those, Um, 211 00:13:14,320 --> 00:13:17,480 Speaker 1: they should be working in clean rooms for semi conductors instead. 212 00:13:17,679 --> 00:13:20,120 Speaker 1: I'm exaggerating a little bit there, but I think that 213 00:13:20,320 --> 00:13:23,280 Speaker 1: is a little bit more of the theme that China 214 00:13:23,320 --> 00:13:25,560 Speaker 1: wants to do regulate the market better and then to 215 00:13:25,640 --> 00:13:29,679 Speaker 1: prioritize the right source of technologies. Yeah, and I remember, UM, 216 00:13:29,720 --> 00:13:32,280 Speaker 1: a couple of days after one of the crackdown announcements, 217 00:13:32,360 --> 00:13:33,840 Speaker 1: or maybe it was on the day, we did see 218 00:13:34,040 --> 00:13:38,800 Speaker 1: Chinese listed semiconductor stocks just absolutely spiking, So there was 219 00:13:38,880 --> 00:13:44,000 Speaker 1: almost a rotation out of consumer tech and into semiconductors. UM. 220 00:13:44,040 --> 00:13:47,240 Speaker 1: And I have more questions about what exactly China is 221 00:13:47,280 --> 00:13:49,440 Speaker 1: trying to do when it comes to its tech industry 222 00:13:49,440 --> 00:13:52,320 Speaker 1: and overall economy. But before we get there, you know, 223 00:13:52,400 --> 00:13:56,599 Speaker 1: you mentioned some of the key phrases from party speeches. 224 00:13:57,040 --> 00:14:01,880 Speaker 1: Common prosperity, disorderly spansion of capital has been another one 225 00:14:01,920 --> 00:14:05,120 Speaker 1: that's come up a lot, And I know you're on 226 00:14:05,160 --> 00:14:08,600 Speaker 1: the record saying that you read a lot of the 227 00:14:08,640 --> 00:14:11,800 Speaker 1: party speeches, probably all of them, and you also go 228 00:14:11,920 --> 00:14:15,680 Speaker 1: through like all the party the official party reading materials, 229 00:14:15,720 --> 00:14:18,720 Speaker 1: like you know, the magazines they produce and things like that, 230 00:14:19,440 --> 00:14:23,400 Speaker 1: and a lot of investors don't tend to do that. 231 00:14:23,520 --> 00:14:26,440 Speaker 1: So I guess my question is, like, should we be 232 00:14:26,680 --> 00:14:30,360 Speaker 1: paying attention to party speak? Were there hints of this 233 00:14:31,080 --> 00:14:34,920 Speaker 1: in party speeches or things that she had said previously? 234 00:14:35,040 --> 00:14:37,320 Speaker 1: And do you think that the crackdowns are sort of 235 00:14:37,400 --> 00:14:41,120 Speaker 1: changing the behavior of investors in the sense that they're 236 00:14:41,120 --> 00:14:45,000 Speaker 1: going to be paying more attention going forward? Cracy doesn't 237 00:14:45,000 --> 00:14:50,360 Speaker 1: everyone read the party's main theory magazine, till Translation Seeking 238 00:14:50,400 --> 00:14:54,840 Speaker 1: Truth as many of us do. Um Seeking Truth is 239 00:14:55,160 --> 00:14:59,360 Speaker 1: a magazine that comes out twice a month. UM. Last year, 240 00:14:59,400 --> 00:15:01,880 Speaker 1: I've read every issue and right now and still continuing 241 00:15:01,920 --> 00:15:06,400 Speaker 1: the exercise. It's a beautifully laid out of magazine. It 242 00:15:06,560 --> 00:15:11,040 Speaker 1: is features these thick pages, well printed pictures, uh, and 243 00:15:11,360 --> 00:15:14,400 Speaker 1: a lot of the best writers in the party state. 244 00:15:14,840 --> 00:15:17,400 Speaker 1: And every time I flipped through it, UM, you know, 245 00:15:17,480 --> 00:15:21,800 Speaker 1: it's always led by a major speech or major essay 246 00:15:21,880 --> 00:15:24,680 Speaker 1: by the General Secretary of the Communist Party C. Kinking 247 00:15:25,120 --> 00:15:28,440 Speaker 1: in a fund that's distinct the rest of the h 248 00:15:28,760 --> 00:15:31,320 Speaker 1: in the magazines. And so if you haven't had the 249 00:15:31,360 --> 00:15:33,320 Speaker 1: pleasure of holding one of these things, you know, I 250 00:15:33,360 --> 00:15:37,400 Speaker 1: recommend it just for the tactile experience alone. UM. So 251 00:15:37,600 --> 00:15:39,920 Speaker 1: you know I did read, um, you know, every one 252 00:15:39,960 --> 00:15:44,840 Speaker 1: of MS speeches um Gintilshire last year, which isn't as 253 00:15:44,960 --> 00:15:47,760 Speaker 1: arduous and exercise as you might think. You know, one 254 00:15:47,880 --> 00:15:52,120 Speaker 1: speech every two weeks, which usually isn't terribly long. He 255 00:15:52,280 --> 00:15:55,880 Speaker 1: mixes a great deal of party speak along with some 256 00:15:56,280 --> 00:16:00,360 Speaker 1: pretty straightforward and frank phrases that are easily compared priscible 257 00:16:00,840 --> 00:16:03,200 Speaker 1: and so you know that is the signature style. It's 258 00:16:03,200 --> 00:16:06,080 Speaker 1: not actually that much work, I think to engage with 259 00:16:06,160 --> 00:16:08,480 Speaker 1: one speech every two weeks, and I think this is 260 00:16:08,480 --> 00:16:11,960 Speaker 1: something that more of us should be doing. And really 261 00:16:12,080 --> 00:16:14,760 Speaker 1: for me, the exercise that um, you know, for me, 262 00:16:14,840 --> 00:16:17,680 Speaker 1: the meaning of the exercise is that it's really important 263 00:16:17,800 --> 00:16:22,640 Speaker 1: to see what the party state engages as priorities at 264 00:16:22,640 --> 00:16:25,040 Speaker 1: the moment. So for example, you know, if they have 265 00:16:25,160 --> 00:16:28,720 Speaker 1: five issues dedicated on party history, well you know, maybe 266 00:16:28,720 --> 00:16:31,560 Speaker 1: they're not thinking about for example, you know, some other 267 00:16:31,600 --> 00:16:34,840 Speaker 1: big projects related to the environment, for example, and so 268 00:16:34,920 --> 00:16:37,760 Speaker 1: getting a sense of what the major priorities are. You know, 269 00:16:37,800 --> 00:16:40,240 Speaker 1: I think that is a decent way of getting there. 270 00:16:40,680 --> 00:16:44,200 Speaker 1: It would be very reluctant to say that, you know, 271 00:16:44,320 --> 00:16:48,280 Speaker 1: reading all of the party documents, reading Kosha, reading the 272 00:16:48,320 --> 00:16:52,080 Speaker 1: People's Daily is an effective way to do uh investing. 273 00:16:52,160 --> 00:16:54,960 Speaker 1: I think, you know, there are millions of these articles 274 00:16:55,240 --> 00:16:59,120 Speaker 1: a day, can't possibly read them all. And there's also 275 00:16:59,200 --> 00:17:03,040 Speaker 1: a lot of noise, um mixed in with these signals now, 276 00:17:03,160 --> 00:17:05,560 Speaker 1: you know, when it comes to online education. I think 277 00:17:05,600 --> 00:17:08,960 Speaker 1: what we found noteworthy was that President Senior Ping has 278 00:17:09,440 --> 00:17:11,640 Speaker 1: mentioning this a couple of years ago. In fact, it's 279 00:17:11,960 --> 00:17:16,040 Speaker 1: published in his big compendium, The Governance of China, Volume three, UM. 280 00:17:16,080 --> 00:17:18,119 Speaker 1: And so you know, this has been a signal for 281 00:17:18,119 --> 00:17:21,560 Speaker 1: a while, and the signals really started to escalate over 282 00:17:21,600 --> 00:17:24,520 Speaker 1: the last couple of months. And so I think that 283 00:17:24,720 --> 00:17:27,560 Speaker 1: is a place where we could have had a bit 284 00:17:27,600 --> 00:17:31,160 Speaker 1: of a fairer warning. The state media gave us fair warning, um, 285 00:17:31,200 --> 00:17:33,760 Speaker 1: if we only chose to engage it. But that's not 286 00:17:33,800 --> 00:17:35,760 Speaker 1: to say that, um, you know, we have to be 287 00:17:35,960 --> 00:17:39,280 Speaker 1: pouring over every People's Daily article. UM. But I think 288 00:17:39,359 --> 00:17:42,720 Speaker 1: you know, it is worth keeping keeping in mind what's 289 00:17:42,760 --> 00:17:44,800 Speaker 1: going on, what the party is saying, what the party 290 00:17:44,880 --> 00:17:47,919 Speaker 1: is saying to itself, it's cadres UH and um, you 291 00:17:47,960 --> 00:18:07,040 Speaker 1: know the broader world. I think there's something interesting you said. 292 00:18:07,040 --> 00:18:08,960 Speaker 1: You mentioned that they took the survey. I think you 293 00:18:09,000 --> 00:18:12,199 Speaker 1: said like seventeen thousand education companies and that hundreds of 294 00:18:12,200 --> 00:18:16,160 Speaker 1: thousands of UH students. You know, the US is characterized 295 00:18:16,200 --> 00:18:19,280 Speaker 1: as a democracy where there is a sort of direct 296 00:18:19,280 --> 00:18:22,320 Speaker 1: feedback mechanism between the voters and the government and theory, 297 00:18:22,640 --> 00:18:26,560 Speaker 1: and obviously China is not characterized as such. But these things, 298 00:18:26,600 --> 00:18:29,080 Speaker 1: these actions that they take, such as going after the 299 00:18:29,160 --> 00:18:32,159 Speaker 1: education companies or such as going after video game playing, 300 00:18:32,640 --> 00:18:36,320 Speaker 1: say various things like that to improve like family values, 301 00:18:36,400 --> 00:18:38,960 Speaker 1: as you put it, is there like this basic like 302 00:18:39,040 --> 00:18:42,159 Speaker 1: sort of like feedback mechanism where even though there aren't 303 00:18:42,200 --> 00:18:45,280 Speaker 1: elections per se as we understand them in the US, 304 00:18:45,640 --> 00:18:48,480 Speaker 1: you still have this sort of like either direct or 305 00:18:48,520 --> 00:18:53,200 Speaker 1: indirect response from the impulses that parents and families expressed 306 00:18:53,200 --> 00:18:57,640 Speaker 1: towards what gets UH turned into government law. There are 307 00:18:58,280 --> 00:19:04,200 Speaker 1: two mains of feedback mechanisms, UM that the party state 308 00:19:04,320 --> 00:19:08,800 Speaker 1: are really engages. UM. So First, it maintains these open 309 00:19:09,400 --> 00:19:13,159 Speaker 1: channels of petitioning where you can see um, you know, 310 00:19:13,240 --> 00:19:16,800 Speaker 1: people usually elderly people lining up to know, voice their 311 00:19:16,840 --> 00:19:20,119 Speaker 1: grievances and then tell you know, the government, UM what 312 00:19:20,240 --> 00:19:23,160 Speaker 1: they're they're they're they're mad about. I mean usually these 313 00:19:23,200 --> 00:19:26,000 Speaker 1: things are higher prices of hects or higher prices of 314 00:19:26,040 --> 00:19:28,080 Speaker 1: gas or something. But you know that is you know, 315 00:19:28,119 --> 00:19:30,440 Speaker 1: one of these things that are out there. And then 316 00:19:30,480 --> 00:19:35,560 Speaker 1: the other is UM that the party maintains these active 317 00:19:35,960 --> 00:19:39,200 Speaker 1: uh you know, groups of people that are actively soliciting 318 00:19:39,560 --> 00:19:42,679 Speaker 1: people's opinions. And so this is UM. The survey was 319 00:19:42,760 --> 00:19:45,560 Speaker 1: something that the Ministry of Education announced, UM, you know, 320 00:19:45,640 --> 00:19:49,320 Speaker 1: surveying seven thousand different parents. You know, I think it 321 00:19:49,440 --> 00:19:53,520 Speaker 1: is something that's logistically possible by the Chinese bureaucracy to do. 322 00:19:54,160 --> 00:19:57,160 Speaker 1: I'm also aware that you know, for example, I currently 323 00:19:57,240 --> 00:19:59,959 Speaker 1: live in Shanghai, and I know that the Shanghai government 324 00:20:00,160 --> 00:20:05,120 Speaker 1: regularly hosts these grievance sessions just to tell them what's 325 00:20:05,160 --> 00:20:08,359 Speaker 1: going on and UM, you know what the problems are. Now, 326 00:20:08,600 --> 00:20:12,640 Speaker 1: whether this can be UM an effective replacement for democracy, 327 00:20:12,800 --> 00:20:16,520 Speaker 1: I think absolutely not. Uh, you know, there's no mechanism 328 00:20:16,640 --> 00:20:20,119 Speaker 1: for poor leaders to be removed by the people. This 329 00:20:20,280 --> 00:20:24,760 Speaker 1: is all done, uh, certainly all done by a party basis, 330 00:20:24,800 --> 00:20:27,399 Speaker 1: But I think, um, you know, I would suggest that 331 00:20:27,440 --> 00:20:30,879 Speaker 1: there is a lot of very active surveys of public 332 00:20:30,880 --> 00:20:34,640 Speaker 1: opinion done by the party state, as well as active 333 00:20:34,640 --> 00:20:39,359 Speaker 1: solicitation of views by different people. This actually leads to 334 00:20:39,760 --> 00:20:42,159 Speaker 1: the other big question about all of this, which is 335 00:20:42,680 --> 00:20:47,160 Speaker 1: why now. So you know, there are these different explanations 336 00:20:47,240 --> 00:20:51,920 Speaker 1: for why China is embarking on these various crackdowns. Um, 337 00:20:51,960 --> 00:20:56,560 Speaker 1: you know, perhaps quality of life explanations, perhaps solidifying control. 338 00:20:57,400 --> 00:21:01,160 Speaker 1: But at first clients, it doesn't seem to make much 339 00:21:01,240 --> 00:21:04,400 Speaker 1: sense to be doing this in the middle of a 340 00:21:04,440 --> 00:21:09,520 Speaker 1: global pandemic, um, when the economy is relatively fragile. Um, 341 00:21:09,640 --> 00:21:13,119 Speaker 1: China just sort of emerged from the trade war with 342 00:21:13,200 --> 00:21:15,760 Speaker 1: the US, although plenty of people would say that under 343 00:21:15,880 --> 00:21:19,280 Speaker 1: President Biden relations have actually gotten worse between the U. 344 00:21:19,320 --> 00:21:22,800 Speaker 1: S And China. So what's your take on why now? 345 00:21:22,880 --> 00:21:26,679 Speaker 1: Because they could have gone after these respective industries, um, 346 00:21:26,720 --> 00:21:33,320 Speaker 1: presumably at any time in history. That's a great question, 347 00:21:33,359 --> 00:21:36,760 Speaker 1: and that's something I scratched my head a bit as well. 348 00:21:37,080 --> 00:21:40,240 Speaker 1: And so I think the first thing to note is that, um, 349 00:21:40,280 --> 00:21:44,360 Speaker 1: I think but the government realized last year over COVID 350 00:21:44,480 --> 00:21:47,800 Speaker 1: was that, my goodness, a lot of people are using 351 00:21:48,000 --> 00:21:52,480 Speaker 1: online services, for example, for food delivery or for online education. 352 00:21:53,160 --> 00:21:58,400 Speaker 1: And for the most part, the Chinese internet space has 353 00:21:58,440 --> 00:22:02,560 Speaker 1: been I would say, pretty minimal regulated until basically the 354 00:22:02,640 --> 00:22:05,840 Speaker 1: last two three years. I think the over the last 355 00:22:06,080 --> 00:22:09,160 Speaker 1: five years. Um. You know, when I visited a bunch 356 00:22:09,160 --> 00:22:12,080 Speaker 1: of tech companies when I was living in Beijing, you know, 357 00:22:12,160 --> 00:22:16,000 Speaker 1: they would often say that they are are fewer regulations 358 00:22:16,400 --> 00:22:19,000 Speaker 1: relative to the US and relative to every other industry 359 00:22:19,040 --> 00:22:21,200 Speaker 1: in China. And so I think, you know, I think 360 00:22:21,200 --> 00:22:25,520 Speaker 1: the most important impetus is that the government realized how 361 00:22:25,600 --> 00:22:29,760 Speaker 1: much more online everyone became last year in China. Probably 362 00:22:29,800 --> 00:22:32,600 Speaker 1: something like this happened in the US as well, um, 363 00:22:32,640 --> 00:22:35,359 Speaker 1: and so they can't let this be, you know, U 364 00:22:35,480 --> 00:22:39,600 Speaker 1: governed space for much longer. The other um, you know 365 00:22:39,680 --> 00:22:42,680 Speaker 1: why now issue is that I think, much more broadly, 366 00:22:43,400 --> 00:22:46,560 Speaker 1: my view is that China will not open its borders 367 00:22:47,240 --> 00:22:52,040 Speaker 1: for at least twelve more months, potentially for many years. 368 00:22:52,960 --> 00:22:56,920 Speaker 1: And I think that's because COVID is still ravaging quite 369 00:22:57,200 --> 00:23:01,200 Speaker 1: a few parts of the world and to Chinese don't 370 00:23:01,200 --> 00:23:05,000 Speaker 1: want to leave China right now, and so there's sort 371 00:23:05,040 --> 00:23:09,119 Speaker 1: of not that many costs to China for maintaining its borders. 372 00:23:09,119 --> 00:23:11,919 Speaker 1: Shots hit more or less fields. It can manage a 373 00:23:11,960 --> 00:23:15,080 Speaker 1: lot of these problems. Um, you know, it's certainly not ideal, 374 00:23:15,119 --> 00:23:17,320 Speaker 1: but it can manage them. And it's better than letting 375 00:23:17,359 --> 00:23:21,240 Speaker 1: COVID run free in Beijing, Shanghai and everywhere else. And 376 00:23:21,280 --> 00:23:24,640 Speaker 1: so you know, if you remove this idea that um, 377 00:23:24,680 --> 00:23:28,560 Speaker 1: this constraint that you know, things can only be regulated 378 00:23:28,560 --> 00:23:30,720 Speaker 1: after things are really good, well, I'm not sure that 379 00:23:30,760 --> 00:23:33,240 Speaker 1: they believe that there is going to be a much 380 00:23:33,320 --> 00:23:38,000 Speaker 1: better time than this. So again, you know, I'm lazily 381 00:23:38,119 --> 00:23:41,199 Speaker 1: reaching for the U S analogies here, but um, you 382 00:23:41,200 --> 00:23:44,119 Speaker 1: know you mentioned the first sort of the anti trust 383 00:23:44,400 --> 00:23:46,280 Speaker 1: aspect of all this and going after like the really 384 00:23:46,280 --> 00:23:49,200 Speaker 1: big companies, and I think like one of the sources 385 00:23:49,320 --> 00:23:53,240 Speaker 1: of anxiety in the US is just simply that like 386 00:23:53,680 --> 00:23:57,000 Speaker 1: there are the big internet tech companies in the US, 387 00:23:57,080 --> 00:24:00,639 Speaker 1: and consumer tech companies represent a major or some power, 388 00:24:01,160 --> 00:24:03,879 Speaker 1: and a company like Facebook, I mean it's kind of 389 00:24:03,920 --> 00:24:06,480 Speaker 1: like a government. They have like a Supreme Court and 390 00:24:06,840 --> 00:24:09,520 Speaker 1: uh an internal checks and balances of what can get published. 391 00:24:09,520 --> 00:24:11,600 Speaker 1: I don't know how well, it works, but it exists, 392 00:24:11,960 --> 00:24:14,720 Speaker 1: and there's a perception that, say, like Mark Zuckerberg is 393 00:24:14,720 --> 00:24:18,280 Speaker 1: as powerful as any other politician in the US. And 394 00:24:18,320 --> 00:24:22,480 Speaker 1: I'm curious if in that bucket of regulation, that too 395 00:24:22,720 --> 00:24:25,879 Speaker 1: is a source of the impulse in China, which is 396 00:24:25,960 --> 00:24:29,800 Speaker 1: just that whether it's Ali Baba, or and Financial or 397 00:24:29,840 --> 00:24:32,520 Speaker 1: some of these other big ones, that this sort of 398 00:24:32,560 --> 00:24:35,880 Speaker 1: pure political power or pure power that gets accumulated by 399 00:24:36,000 --> 00:24:39,919 Speaker 1: some of these companies becomes big enough to rival the 400 00:24:40,000 --> 00:24:44,520 Speaker 1: state of the party. I think that's definitely underlying motivations 401 00:24:45,040 --> 00:24:48,439 Speaker 1: for this crackdown as well. What I wonder about is 402 00:24:48,480 --> 00:24:52,320 Speaker 1: that I don't feel that there is a broad sense 403 00:24:52,480 --> 00:24:56,480 Speaker 1: among the Chinese people that the CEOs of the major 404 00:24:56,640 --> 00:25:01,720 Speaker 1: tech companies are as powerful as the politicians. UM. But 405 00:25:01,840 --> 00:25:05,919 Speaker 1: it's certainly worth acknologying that the Communist Party cannot suffer 406 00:25:06,000 --> 00:25:11,120 Speaker 1: any perception that major business leaders are able to challenge 407 00:25:11,119 --> 00:25:13,880 Speaker 1: its authority. And you know, I think it was certainly 408 00:25:13,880 --> 00:25:17,280 Speaker 1: offended that Jack mob was so impudent as to insult 409 00:25:17,359 --> 00:25:22,160 Speaker 1: the regulators UH Future Financial Forum. The positioning here is, 410 00:25:22,240 --> 00:25:26,160 Speaker 1: I think this is one of these underlying motivations. UM. 411 00:25:26,160 --> 00:25:30,399 Speaker 1: Perhaps these tech companies are UM you know, sort of 412 00:25:30,400 --> 00:25:34,480 Speaker 1: the ponds of internal political struggles based on whose family 413 00:25:34,880 --> 00:25:39,400 Speaker 1: homes which firm. These are some things that we understand 414 00:25:39,760 --> 00:25:42,919 Speaker 1: not at all about UM. And I think from my 415 00:25:43,040 --> 00:25:47,080 Speaker 1: perspective from having lived in China for the last few years, 416 00:25:47,640 --> 00:25:50,160 Speaker 1: is that this has been UM one of the main 417 00:25:50,240 --> 00:25:53,680 Speaker 1: narratives from UM, you know, foreign media about how why 418 00:25:53,720 --> 00:25:56,439 Speaker 1: there's been a tech crackdown, and I see a pretty 419 00:25:56,800 --> 00:26:00,280 Speaker 1: considerable discrepancy here. I think for those of us who 420 00:26:00,359 --> 00:26:03,280 Speaker 1: live in China are able to see the excesses of 421 00:26:03,320 --> 00:26:07,240 Speaker 1: these companies on a daily basis, companies like may Twin 422 00:26:07,480 --> 00:26:12,560 Speaker 1: or the online education companies or Ali Baba. Meanwhile, these 423 00:26:12,600 --> 00:26:16,800 Speaker 1: companies are celebrated elsewhere as UH having their crime as 424 00:26:16,840 --> 00:26:19,879 Speaker 1: being only being too beloved, and so I think, you know, 425 00:26:19,920 --> 00:26:23,240 Speaker 1: that's one of these underlying factors opera. From a lot 426 00:26:23,280 --> 00:26:27,320 Speaker 1: of people's perspectives, these companies have sort of been getting 427 00:26:27,359 --> 00:26:30,679 Speaker 1: out of hand, and they should be regulated quite a 428 00:26:30,680 --> 00:26:34,119 Speaker 1: lot more extensively, which the party state is doing. And 429 00:26:34,200 --> 00:26:37,439 Speaker 1: to offer an example, I think, UM, a lot of 430 00:26:37,480 --> 00:26:40,640 Speaker 1: the people, a lot of the parents UM I've spoken 431 00:26:40,680 --> 00:26:43,040 Speaker 1: to a lot of the people around me would say 432 00:26:43,080 --> 00:26:45,720 Speaker 1: that parents around them have been pretty happy about this 433 00:26:45,920 --> 00:26:51,560 Speaker 1: online education crackdown. These online education firms have become really 434 00:26:51,600 --> 00:26:55,040 Speaker 1: good at playing parents off of each other to engage 435 00:26:55,080 --> 00:26:58,280 Speaker 1: in a zero status game to pay more for their 436 00:26:58,359 --> 00:27:01,840 Speaker 1: children while making um of children more miserable. I think 437 00:27:01,880 --> 00:27:04,160 Speaker 1: a lot of them. What I see the government's efforts 438 00:27:04,920 --> 00:27:09,159 Speaker 1: is to do a coordination game UM to stop parents 439 00:27:09,240 --> 00:27:12,480 Speaker 1: from competing with each other, and then to coordinate parents 440 00:27:12,520 --> 00:27:15,200 Speaker 1: against their own children to make sure that they don't 441 00:27:15,200 --> 00:27:18,120 Speaker 1: play too many video games because now they can say, um, 442 00:27:18,119 --> 00:27:20,440 Speaker 1: this is against the law. And so these are I 443 00:27:20,520 --> 00:27:23,720 Speaker 1: thinks some some of the other backdrops that are going on. 444 00:27:25,040 --> 00:27:31,560 Speaker 1: So when the crackdown on education or education tech um 445 00:27:31,800 --> 00:27:34,439 Speaker 1: came out during the summer, I remember there was a 446 00:27:34,480 --> 00:27:37,479 Speaker 1: bunch of commentary from people saying like this is so 447 00:27:37,600 --> 00:27:42,640 Speaker 1: unexpected and so extreme, you know, China basically coming out 448 00:27:42,680 --> 00:27:46,320 Speaker 1: and saying that for profit education firms are no longer 449 00:27:46,800 --> 00:27:49,919 Speaker 1: will no longer be able to generate profits. That it 450 00:27:50,000 --> 00:27:54,720 Speaker 1: meant all of the China market was uninvestable. So I'm 451 00:27:54,760 --> 00:27:58,560 Speaker 1: curious to get your take about what all these crackdowns 452 00:27:58,600 --> 00:28:03,919 Speaker 1: actually mean for investment in various China sectors. And also, 453 00:28:04,040 --> 00:28:08,320 Speaker 1: you know you mentioned semiconductors earlier. And we know that 454 00:28:08,440 --> 00:28:14,119 Speaker 1: China is very focused strategically on building up its semiconductor industry, 455 00:28:14,160 --> 00:28:16,040 Speaker 1: and you've come on the show and talked about that 456 00:28:16,119 --> 00:28:19,720 Speaker 1: quite a lot. But I can't imagine that it needs 457 00:28:19,880 --> 00:28:24,320 Speaker 1: to squeeze capital out of consumer tech in order to 458 00:28:24,440 --> 00:28:29,159 Speaker 1: get it into semiconductors. Um there must be plenty of 459 00:28:29,560 --> 00:28:32,440 Speaker 1: money sort of going into that already. So I guess 460 00:28:32,480 --> 00:28:35,040 Speaker 1: the question is what does this mean for investment overall, 461 00:28:35,440 --> 00:28:39,960 Speaker 1: and is this the best way to get more investment 462 00:28:40,000 --> 00:28:46,120 Speaker 1: into strategically important sectors. Probably not, is my gut answer, 463 00:28:46,680 --> 00:28:50,560 Speaker 1: but it's the way that the party state has decided 464 00:28:50,880 --> 00:28:54,160 Speaker 1: to do things. I guess the best way I can, 465 00:28:54,600 --> 00:28:57,400 Speaker 1: you know, think about that action is, you know, if 466 00:28:57,400 --> 00:29:01,520 Speaker 1: you sort of just signal two investors online education, you know, 467 00:29:01,600 --> 00:29:03,960 Speaker 1: you should not be deploying any more capital there. But 468 00:29:04,040 --> 00:29:07,920 Speaker 1: maybe more importantly, I'm signaling to the country's best and 469 00:29:08,040 --> 00:29:12,120 Speaker 1: brightest in terms of the fresh grads. Now, I mentioned that, 470 00:29:12,240 --> 00:29:15,360 Speaker 1: you know, at least when I was graduating from college 471 00:29:15,840 --> 00:29:19,320 Speaker 1: some years ago, a lot of people still wanted very 472 00:29:19,400 --> 00:29:23,880 Speaker 1: much to work in finance as well as a consumer internet. 473 00:29:24,240 --> 00:29:27,200 Speaker 1: And I think, you know, on the margin if the 474 00:29:27,240 --> 00:29:30,760 Speaker 1: party leaders UM, if the government is thinking well for 475 00:29:30,800 --> 00:29:36,040 Speaker 1: the marginal student who can move from BETA and uh 476 00:29:36,120 --> 00:29:40,560 Speaker 1: teeing quiversities China's best university and UM to stop them 477 00:29:40,560 --> 00:29:43,400 Speaker 1: from going into consumer internet because they know that we 478 00:29:43,520 --> 00:29:46,440 Speaker 1: Embijing don't like it anymore, and to go work on 479 00:29:46,520 --> 00:29:50,520 Speaker 1: much harder technologies like life sciences and semiconductors and aviation. 480 00:29:51,120 --> 00:29:54,160 Speaker 1: Maybe I think that is another one of their motivations. 481 00:29:54,440 --> 00:29:58,280 Speaker 1: You know. Michael Lewis in Liars Poker said that, you know, 482 00:29:58,440 --> 00:30:01,920 Speaker 1: he thought he would get the marine biology students from 483 00:30:01,920 --> 00:30:06,320 Speaker 1: Ohio State to pursue marine biology instead, but instead, after 484 00:30:06,400 --> 00:30:09,240 Speaker 1: he wrote Liars Poker, a bunch of marine biology students 485 00:30:09,240 --> 00:30:11,480 Speaker 1: at Ohio State wrote to him and said, how do 486 00:30:11,520 --> 00:30:13,360 Speaker 1: I get off to Wall Street? Well, you know, I 487 00:30:13,360 --> 00:30:16,840 Speaker 1: think this is a little bit of what the government 488 00:30:16,960 --> 00:30:20,480 Speaker 1: is trying to fight back against with respect to what's 489 00:30:20,480 --> 00:30:23,959 Speaker 1: going on with investors, and I think certain types of 490 00:30:24,080 --> 00:30:29,240 Speaker 1: VC funds could be facing pretty considerable challenges to their 491 00:30:29,520 --> 00:30:33,760 Speaker 1: how they deploy capital going forward. But actually that that's 492 00:30:33,800 --> 00:30:37,479 Speaker 1: been one of the questions I've been UM investigating, and 493 00:30:37,600 --> 00:30:40,520 Speaker 1: in general, when I speak to these earlier stage funds 494 00:30:40,800 --> 00:30:43,800 Speaker 1: dcs and PE s They would say, well, you know, 495 00:30:44,120 --> 00:30:47,240 Speaker 1: the crackdown has been severe, but so far it has 496 00:30:47,280 --> 00:30:51,720 Speaker 1: been limited to these UM segments, and the Chinese consumer 497 00:30:51,760 --> 00:30:53,720 Speaker 1: market is still very big. You know, there are things 498 00:30:53,840 --> 00:30:57,080 Speaker 1: like healthcare, there are things like fashion, there are things 499 00:30:57,120 --> 00:31:01,280 Speaker 1: like manufacturing of different goods that don't necessarily how to 500 00:31:01,320 --> 00:31:04,880 Speaker 1: fall a foul of party directives. And more importantly, for 501 00:31:05,160 --> 00:31:08,880 Speaker 1: folks involved in the industrial sector or the high technology sector, 502 00:31:09,040 --> 00:31:12,000 Speaker 1: they're very pleased. Indeed, So I think these signals are 503 00:31:12,480 --> 00:31:15,520 Speaker 1: doing something to show, well, you know, stop the point 504 00:31:15,600 --> 00:31:18,880 Speaker 1: capital in UM technologies. We don't like, I'll go do 505 00:31:18,920 --> 00:31:38,600 Speaker 1: it in semi conductors instead. Do you think there's going 506 00:31:38,640 --> 00:31:42,840 Speaker 1: to be a sort of broader macro impact? Okay, so 507 00:31:43,240 --> 00:31:46,120 Speaker 1: you know you mentioned the sort of sectoral potential rotation. 508 00:31:46,560 --> 00:31:52,720 Speaker 1: Maybe some VC money reallocated towards the harder tech out there. 509 00:31:53,120 --> 00:31:56,560 Speaker 1: Is there any sort of macro implication with trade flows? 510 00:31:56,560 --> 00:31:59,120 Speaker 1: I mean, it's interesting that the d D i p 511 00:31:59,280 --> 00:32:01,800 Speaker 1: O or the d D crackdown was right after a 512 00:32:02,320 --> 00:32:04,960 Speaker 1: I believe that was the US listed i p O. 513 00:32:05,400 --> 00:32:07,840 Speaker 1: So there's gonna be some change in terms of like 514 00:32:07,880 --> 00:32:10,600 Speaker 1: where the money potentially comes from. Are you thinking about 515 00:32:10,920 --> 00:32:14,440 Speaker 1: how this could affect China from that perspective. Yes, Um, 516 00:32:14,640 --> 00:32:16,480 Speaker 1: for now, I think it's a little bit too early 517 00:32:16,520 --> 00:32:20,160 Speaker 1: to tell. But we've had someone like UM soft Bank 518 00:32:20,400 --> 00:32:24,160 Speaker 1: UM publicly wondering whether they should still continue to put 519 00:32:24,200 --> 00:32:27,440 Speaker 1: capital into China. And I think this is UM, you know, 520 00:32:27,520 --> 00:32:29,840 Speaker 1: on the margin, one of these other things that are 521 00:32:30,000 --> 00:32:33,720 Speaker 1: making people much more hesitant to deploy capital into China 522 00:32:33,800 --> 00:32:38,120 Speaker 1: going forward. We have pretty regular pads from George sorrows 523 00:32:38,160 --> 00:32:41,000 Speaker 1: now and the pages of the Journal or the Financial 524 00:32:41,000 --> 00:32:45,040 Speaker 1: Times to talk about why investors should be legally barred 525 00:32:45,160 --> 00:32:49,000 Speaker 1: from investing. You know, there is this ongoing Holding Foreign 526 00:32:49,000 --> 00:32:53,720 Speaker 1: Companies Accountable Act in the United States, which might dealist 527 00:32:54,440 --> 00:32:58,120 Speaker 1: all Chinese companies who don't comply with p c a 528 00:32:58,160 --> 00:33:00,440 Speaker 1: O b audits. So I think this is one of 529 00:33:00,480 --> 00:33:07,360 Speaker 1: these additional factors that are weighing on investor sentiment in China. So, Um, 530 00:33:07,400 --> 00:33:09,920 Speaker 1: this is something else that I wanted to ask you. 531 00:33:09,960 --> 00:33:14,240 Speaker 1: But one of the um things that keeps getting brought 532 00:33:14,360 --> 00:33:18,480 Speaker 1: up when talking about the crackdowns and China's macro economy 533 00:33:18,720 --> 00:33:23,280 Speaker 1: is this idea of the German model, and maybe China 534 00:33:23,400 --> 00:33:27,160 Speaker 1: is trying to pursue something like the German way. In 535 00:33:27,200 --> 00:33:31,680 Speaker 1: the sense that there's particular German regulation UM that sort 536 00:33:31,720 --> 00:33:38,000 Speaker 1: of tries to boost UM its manufacturing export sector UM 537 00:33:38,080 --> 00:33:41,480 Speaker 1: and maybe limit some of its financial sector, although you 538 00:33:41,520 --> 00:33:45,160 Speaker 1: can argue they've done that with varying degrees of success. 539 00:33:45,200 --> 00:33:48,200 Speaker 1: But anyway, UM, when it comes to the economic model 540 00:33:48,440 --> 00:33:51,719 Speaker 1: that China is targeting out, like how do you see it? 541 00:33:52,960 --> 00:33:56,920 Speaker 1: I think the German model is a pretty good um yardstick. 542 00:33:57,720 --> 00:34:01,680 Speaker 1: Came across a new term to me recently, Rhineland capitalism, 543 00:34:02,200 --> 00:34:04,840 Speaker 1: which is, you know, sort of this biddle way um 544 00:34:04,920 --> 00:34:07,920 Speaker 1: that the Germans were promoting in the past, and I 545 00:34:08,000 --> 00:34:12,080 Speaker 1: definitely see that China wants to do more with Germans. 546 00:34:12,400 --> 00:34:15,080 Speaker 1: You know. I think at this point Germany is one 547 00:34:15,120 --> 00:34:18,680 Speaker 1: of the very few Western countries today that have any 548 00:34:18,760 --> 00:34:23,840 Speaker 1: semblance of you know, positive, um warm feelings towards China, 549 00:34:24,040 --> 00:34:27,920 Speaker 1: mostly because there's a very big autos and industrial sector 550 00:34:28,320 --> 00:34:30,799 Speaker 1: making quite a bit of money here now, you know. 551 00:34:30,840 --> 00:34:32,759 Speaker 1: Being based in Shanghai, I spent quite a bit of 552 00:34:32,800 --> 00:34:37,760 Speaker 1: time talking with Germans. The German industry here really is massive, 553 00:34:37,840 --> 00:34:39,880 Speaker 1: and they've taught the Chinese to do a lot of 554 00:34:39,920 --> 00:34:43,640 Speaker 1: different things, and the Chinese, i think, have repaid some 555 00:34:43,719 --> 00:34:46,960 Speaker 1: of the favor in terms of you know, outright talking 556 00:34:47,000 --> 00:34:49,400 Speaker 1: about how they want to be more like Germans, in 557 00:34:49,480 --> 00:34:52,560 Speaker 1: terms of having more of an industrialized economy, in terms 558 00:34:52,600 --> 00:34:56,280 Speaker 1: of having more mittel stand companies, which are smaller, medium 559 00:34:56,280 --> 00:35:00,600 Speaker 1: sized companies that are really great at certain industrial aisha uh, 560 00:35:00,600 --> 00:35:03,239 Speaker 1: and then in terms of trying to build these vocational 561 00:35:03,280 --> 00:35:06,400 Speaker 1: schools to make sure that kids can still work for 562 00:35:06,719 --> 00:35:11,560 Speaker 1: great technology companies like fox Con instead of terrible technology 563 00:35:11,600 --> 00:35:14,279 Speaker 1: companies like ten cents and so I think there is 564 00:35:14,560 --> 00:35:17,560 Speaker 1: a little bit more of that sense going on, and 565 00:35:17,640 --> 00:35:20,839 Speaker 1: especially with common prosperity, maybe we have a bit more 566 00:35:20,960 --> 00:35:24,120 Speaker 1: of a more even income distribution like how they do 567 00:35:24,200 --> 00:35:26,879 Speaker 1: in Europe. So what are you watching for next? I mean, 568 00:35:27,080 --> 00:35:29,720 Speaker 1: you know, that's sort of the question. Every It seems 569 00:35:29,760 --> 00:35:32,600 Speaker 1: like every week or every day there's something new, some 570 00:35:32,719 --> 00:35:35,239 Speaker 1: new regulatory crackdown. I mean that was sort of what's 571 00:35:35,239 --> 00:35:37,560 Speaker 1: been striking about the last few months, just how it 572 00:35:37,600 --> 00:35:42,279 Speaker 1: just seemed to keep snowballing. What are the signpost or 573 00:35:42,400 --> 00:35:46,120 Speaker 1: areas that you're curious we might see further action. I 574 00:35:46,200 --> 00:35:52,279 Speaker 1: suspect that we won't have any more um sectoral decapitations. 575 00:35:53,160 --> 00:35:55,600 Speaker 1: Maybe there will still be on some more things on 576 00:35:55,640 --> 00:35:59,239 Speaker 1: the margin with video games. UM. It's possible that they 577 00:35:59,280 --> 00:36:02,879 Speaker 1: will cracked down further on things like real estate or 578 00:36:02,920 --> 00:36:05,759 Speaker 1: with healthcare. But this is UM getting I think a 579 00:36:05,800 --> 00:36:09,680 Speaker 1: little bit more speculative. I think at this point the 580 00:36:09,719 --> 00:36:14,480 Speaker 1: framework for a lot of regulations is now UM fairly complete. UH. 581 00:36:14,520 --> 00:36:17,719 Speaker 1: They passed the Data Security law in June and the 582 00:36:17,800 --> 00:36:21,880 Speaker 1: Personal Information Protection Law in Hoggat A lot of this 583 00:36:21,960 --> 00:36:25,960 Speaker 1: framework is mostly complete. And I think crucially for investors, 584 00:36:26,480 --> 00:36:29,319 Speaker 1: now that we know UM what to UM that there 585 00:36:29,440 --> 00:36:32,720 Speaker 1: is this you know, common prosperity, dual circulation, family values 586 00:36:33,239 --> 00:36:35,799 Speaker 1: and rule of law initiative going on, you know, I 587 00:36:35,800 --> 00:36:39,000 Speaker 1: think we are we do have our expectations set a 588 00:36:39,000 --> 00:36:42,799 Speaker 1: little bit further now. For me, the biggest uncertainty is 589 00:36:43,120 --> 00:36:48,040 Speaker 1: what's going to go next with the Cyberspace Administration. This 590 00:36:48,120 --> 00:36:51,359 Speaker 1: is the c a C. And to me this is UM. 591 00:36:51,400 --> 00:36:54,360 Speaker 1: This is to me the most remarkable story of the 592 00:36:54,440 --> 00:36:57,000 Speaker 1: last UM while in which UM the c a C, 593 00:36:57,239 --> 00:36:59,880 Speaker 1: which is a relatively new regulator and I know to 594 00:37:00,000 --> 00:37:05,240 Speaker 1: crucially a UM party organization that has arrogated to itself 595 00:37:05,440 --> 00:37:10,399 Speaker 1: a great deal of regulatory powers. Now that Cyberspace Administration 596 00:37:10,640 --> 00:37:13,520 Speaker 1: UM c C is governed by the State Council, but 597 00:37:13,600 --> 00:37:16,560 Speaker 1: it is a party organization that is a dual party 598 00:37:16,600 --> 00:37:19,960 Speaker 1: and state organization, And the director of the c a 599 00:37:20,040 --> 00:37:23,120 Speaker 1: C is a vice director at the Propaganda Department, which 600 00:37:23,160 --> 00:37:26,719 Speaker 1: is one of the most important party institutions there are. 601 00:37:27,200 --> 00:37:30,600 Speaker 1: And so I think investors, now, are you know, dealing 602 00:37:30,640 --> 00:37:35,120 Speaker 1: with this very novel regulatory instrument that is now regulating 603 00:37:35,200 --> 00:37:38,120 Speaker 1: I p O s, that is now regulating financial media, 604 00:37:38,440 --> 00:37:41,760 Speaker 1: that is now regulating algorithms, And I have no idea 605 00:37:41,880 --> 00:37:44,640 Speaker 1: what is going to regulate X. And I think this 606 00:37:44,719 --> 00:37:47,560 Speaker 1: is one of these big uncertainties. You know. I think foreigners, 607 00:37:47,840 --> 00:37:51,200 Speaker 1: foreign businesses, foreign investors are a bit more used to 608 00:37:51,280 --> 00:37:55,640 Speaker 1: the sort of wildly state institutions like the National Development 609 00:37:55,640 --> 00:37:59,960 Speaker 1: Reform Commission, the People's Bank of China or the Securities 610 00:38:00,680 --> 00:38:04,319 Speaker 1: Regulatory Commissions c src UM. But you know, to be 611 00:38:04,440 --> 00:38:08,120 Speaker 1: directly regulated by a party institution, this is to me 612 00:38:08,360 --> 00:38:10,759 Speaker 1: very new and novel, and I don't know how to 613 00:38:10,800 --> 00:38:13,839 Speaker 1: think about it. So this is another thing I wanted 614 00:38:13,880 --> 00:38:16,960 Speaker 1: to ask you about, which is, you know, as the 615 00:38:17,239 --> 00:38:21,279 Speaker 1: tech crackdowns were unfurling, we did see a lot of 616 00:38:21,320 --> 00:38:24,399 Speaker 1: people talking about what this means for the future of 617 00:38:24,480 --> 00:38:28,719 Speaker 1: the industry. So China is going after these big companies 618 00:38:28,840 --> 00:38:33,160 Speaker 1: that are extremely well known, considered to be massive success stories, 619 00:38:33,680 --> 00:38:36,959 Speaker 1: and then suddenly they're sort of, um, you know, being 620 00:38:37,040 --> 00:38:41,600 Speaker 1: villainized by the state. What does that actually mean for 621 00:38:42,560 --> 00:38:45,840 Speaker 1: tech in the sense of entrepreneurial spirit and whether or 622 00:38:45,880 --> 00:38:48,920 Speaker 1: not people are going to want to go into that 623 00:38:49,000 --> 00:38:53,640 Speaker 1: sector in the future. That's such an important point to Tracy, 624 00:38:53,880 --> 00:38:56,239 Speaker 1: And you know, I think what, um, you know, the 625 00:38:56,880 --> 00:39:01,799 Speaker 1: worst outcome of this ongoing tech crackdown is that it 626 00:39:02,160 --> 00:39:07,920 Speaker 1: completely destroys the innovative and entrepreneurial spirit in China. Right now, 627 00:39:07,960 --> 00:39:10,799 Speaker 1: I think it is too soon to say on UM 628 00:39:10,840 --> 00:39:14,399 Speaker 1: what exactly will happen UM. You know, I would note that, 629 00:39:14,760 --> 00:39:17,120 Speaker 1: you know, so far, when I talked to you know, 630 00:39:17,680 --> 00:39:21,040 Speaker 1: friends who are entrepreneurs UM you know, certainly not big 631 00:39:21,080 --> 00:39:24,719 Speaker 1: success UM like on the scale of jack Ma. What 632 00:39:24,800 --> 00:39:26,759 Speaker 1: some would tell me is that they would love to 633 00:39:26,800 --> 00:39:29,640 Speaker 1: have the problems of jack Ma. UM. You know, that 634 00:39:29,719 --> 00:39:33,680 Speaker 1: means that they've made it really, really big. And for now, 635 00:39:34,320 --> 00:39:39,360 Speaker 1: China's UM crackdown has whenever it comes to a personal level, 636 00:39:39,680 --> 00:39:43,880 Speaker 1: it's really targeted the most elite you know, dozen or 637 00:39:43,960 --> 00:39:47,720 Speaker 1: two dozen UM figures that a lot of people can 638 00:39:48,000 --> 00:39:53,520 Speaker 1: identify on a billboard and that hasn't really destroyed. I think, um, 639 00:39:53,560 --> 00:39:56,680 Speaker 1: a lot of the will by people to you know, 640 00:39:56,800 --> 00:40:01,400 Speaker 1: still a billionaire. I although um that that that they 641 00:40:01,719 --> 00:40:03,640 Speaker 1: may not be able to have any confidence in the 642 00:40:03,719 --> 00:40:07,360 Speaker 1: near term of what to do going forward. And again 643 00:40:07,400 --> 00:40:09,760 Speaker 1: I think I would situate a lot of these things 644 00:40:09,800 --> 00:40:12,840 Speaker 1: as a sort of a spiritual you know, almost a 645 00:40:12,920 --> 00:40:17,600 Speaker 1: civilizational values question in which I think the Chinese government 646 00:40:17,719 --> 00:40:23,680 Speaker 1: is accepting that not all types of entrepreneurial hustle is good. 647 00:40:24,400 --> 00:40:26,839 Speaker 1: I think now that you know, China is sort of 648 00:40:26,880 --> 00:40:30,640 Speaker 1: living through its own guilded age. Um. Many people have 649 00:40:30,680 --> 00:40:33,000 Speaker 1: said this. Uh. And in the guilded age, you know, 650 00:40:33,080 --> 00:40:36,239 Speaker 1: there were a lot of hucksters and fraudsters out there. 651 00:40:36,360 --> 00:40:38,239 Speaker 1: And I think that is a little bit of what 652 00:40:38,640 --> 00:40:42,279 Speaker 1: Beijing wants to control. And so if it has to 653 00:40:42,320 --> 00:40:48,400 Speaker 1: suffer some erosion of general entrepreneurialism, well, I think it 654 00:40:48,480 --> 00:40:52,000 Speaker 1: is saying that you can't make profits by uh say, 655 00:40:52,000 --> 00:40:56,200 Speaker 1: creating financial risks as financial and P two P loans. 656 00:40:56,239 --> 00:41:00,880 Speaker 1: We're doing, in its view, monetizing status and anxiety and 657 00:41:01,080 --> 00:41:05,960 Speaker 1: miserating students through online education, or by destroying the eyesight 658 00:41:06,160 --> 00:41:12,160 Speaker 1: and UM the free time of children through video games. Now, 659 00:41:12,200 --> 00:41:15,200 Speaker 1: I think that is a lot more of what Beijing 660 00:41:15,280 --> 00:41:18,759 Speaker 1: is trying to do to lay down UM guardrails or 661 00:41:18,800 --> 00:41:21,839 Speaker 1: these no go zos, UM you know, go play everywhere else, 662 00:41:22,280 --> 00:41:27,440 Speaker 1: but these things are off limits. Well, Dan, you've given 663 00:41:27,520 --> 00:41:30,879 Speaker 1: us another excellent overview of all the things that are 664 00:41:30,880 --> 00:41:32,799 Speaker 1: going on in China, and of course it is quite 665 00:41:32,840 --> 00:41:35,080 Speaker 1: a lot at the moment. So thank you so much. 666 00:41:35,719 --> 00:41:51,560 Speaker 1: Thanks Dan, that was great. Always joy, Thank you so Joe. 667 00:41:52,280 --> 00:41:54,720 Speaker 1: It's always really great to have down on the show. 668 00:41:54,760 --> 00:41:57,680 Speaker 1: And there's so much to take away from that conversation. UM. 669 00:41:57,680 --> 00:41:59,480 Speaker 1: One of the things that sort of stuck out to 670 00:41:59,560 --> 00:42:02,879 Speaker 1: me is this idea, and I don't think a lot 671 00:42:02,920 --> 00:42:08,680 Speaker 1: of people outside of UM Asia necessarily understand this point, 672 00:42:08,800 --> 00:42:13,279 Speaker 1: but like the degree to which big consumer tech is 673 00:42:13,320 --> 00:42:18,560 Speaker 1: actually embedded in China is just on a different scale 674 00:42:18,680 --> 00:42:21,279 Speaker 1: to where it is in the US and the UK. Like, 675 00:42:21,480 --> 00:42:25,600 Speaker 1: I know, everyone uses Facebook, everyone uses Google and Amazon 676 00:42:25,680 --> 00:42:27,719 Speaker 1: and things like that, but you know, in China, like 677 00:42:28,400 --> 00:42:33,680 Speaker 1: we Chat, um and financial like these apps are basically 678 00:42:33,760 --> 00:42:37,759 Speaker 1: like one stop shops for living to the extent that 679 00:42:37,800 --> 00:42:42,320 Speaker 1: like the government has to work with them. UM quite extensively, 680 00:42:42,840 --> 00:42:45,480 Speaker 1: and and so from that perspective you can kind of 681 00:42:45,520 --> 00:42:50,360 Speaker 1: see why the CCP would view this as a problem. 682 00:42:50,400 --> 00:42:56,399 Speaker 1: It's almost like de facto privatization of government functions. Yeah, 683 00:42:56,400 --> 00:42:58,680 Speaker 1: I thought that was a pretty interesting question, and I 684 00:42:58,719 --> 00:43:01,120 Speaker 1: hadn't thought that about that. Oh when you said, like, well, 685 00:43:01,200 --> 00:43:02,799 Speaker 1: this is sort of a weird type of correct out 686 00:43:02,840 --> 00:43:05,680 Speaker 1: in the middle of still, you know, an ongoing pandemic. 687 00:43:05,760 --> 00:43:08,560 Speaker 1: And Dan's point, it's like this was kind of a 688 00:43:08,560 --> 00:43:11,920 Speaker 1: wake up call perhaps to the government of just how 689 00:43:12,200 --> 00:43:15,759 Speaker 1: just how online the population is. I mean, obviously the 690 00:43:16,680 --> 00:43:18,560 Speaker 1: size of these companies have been sort of known for 691 00:43:18,600 --> 00:43:21,200 Speaker 1: a while, but perhaps it was driven home or greatly 692 00:43:21,200 --> 00:43:23,759 Speaker 1: appreciated the degree to which, and you know, it's kind 693 00:43:23,800 --> 00:43:25,880 Speaker 1: of the same here, you know, the degree to which 694 00:43:25,920 --> 00:43:30,240 Speaker 1: some of these mega tech companies become the best arms 695 00:43:30,280 --> 00:43:32,200 Speaker 1: for services. I mean, I think, you know, it's like 696 00:43:32,280 --> 00:43:35,360 Speaker 1: I think back to last April or March, there were 697 00:43:35,360 --> 00:43:37,399 Speaker 1: a lot of things you couldn't get, but you could, 698 00:43:37,480 --> 00:43:40,640 Speaker 1: like you could always order something from Amazon throughout the 699 00:43:40,760 --> 00:43:43,480 Speaker 1: entire pandemic. And so the degree to which large tech 700 00:43:43,520 --> 00:43:45,840 Speaker 1: company has become like this sort of like lifeline is 701 00:43:45,840 --> 00:43:49,040 Speaker 1: a pretty sort of fascinating thing totally. Well, the other 702 00:43:49,080 --> 00:43:50,960 Speaker 1: thing that just struck me is I found it very 703 00:43:51,040 --> 00:43:53,520 Speaker 1: useful his like bucketing of these like different things. So 704 00:43:53,560 --> 00:43:56,839 Speaker 1: there's like the anti trust aspect, but also just this 705 00:43:56,920 --> 00:44:00,239 Speaker 1: idea of like family values. And you know, it was 706 00:44:00,280 --> 00:44:03,560 Speaker 1: interesting to hear him describe some of the feedback mechanisms 707 00:44:03,600 --> 00:44:05,799 Speaker 1: that they get. And I remember it was like a 708 00:44:05,840 --> 00:44:08,560 Speaker 1: few years ago. It was like one of those like 709 00:44:08,600 --> 00:44:11,520 Speaker 1: five year plans or something. It was like, wasn't it 710 00:44:11,600 --> 00:44:15,000 Speaker 1: like better growth not faster growth something like that. Wasn't 711 00:44:15,000 --> 00:44:18,359 Speaker 1: that some cliche that was going around? Yeah, And I 712 00:44:18,400 --> 00:44:20,319 Speaker 1: feel like some of the things you talked about, like 713 00:44:20,360 --> 00:44:22,960 Speaker 1: making it easier to have families, or making it easier 714 00:44:23,000 --> 00:44:24,919 Speaker 1: for parents to tell their kids to not play video 715 00:44:24,920 --> 00:44:27,600 Speaker 1: games on Monday through Thursday because it's against the law 716 00:44:27,719 --> 00:44:30,120 Speaker 1: or it's going to damage their eyesight or whatever. It's 717 00:44:30,160 --> 00:44:33,319 Speaker 1: like feels like perhaps in keeping with some of these 718 00:44:33,360 --> 00:44:36,440 Speaker 1: other like sort of like promises and priorities that the 719 00:44:36,480 --> 00:44:41,920 Speaker 1: government has laid up, Right, So those promises and priorities, 720 00:44:42,040 --> 00:44:45,440 Speaker 1: you know, if they were being taken on in the West, 721 00:44:45,600 --> 00:44:48,040 Speaker 1: like you know, if you saw the United States government 722 00:44:48,360 --> 00:44:53,080 Speaker 1: really tackling the antitrust issues with big tech, or if 723 00:44:53,120 --> 00:44:56,160 Speaker 1: you saw the government actually cracking down on the high 724 00:44:56,280 --> 00:45:00,440 Speaker 1: cost and competitive nature of education, you could see like 725 00:45:00,640 --> 00:45:04,240 Speaker 1: they might actually get some support. But the difference between 726 00:45:04,400 --> 00:45:07,320 Speaker 1: China and the U S system seems to be about 727 00:45:07,400 --> 00:45:10,319 Speaker 1: how these things are actually getting rolled out. So you know, 728 00:45:10,360 --> 00:45:13,240 Speaker 1: in China, you can wake up um on a summer 729 00:45:13,320 --> 00:45:17,440 Speaker 1: day and suddenly the government is declaring that education firms 730 00:45:17,440 --> 00:45:20,040 Speaker 1: are no longer going to be able to generate profits. 731 00:45:20,360 --> 00:45:24,920 Speaker 1: Whereas in the States, if you actually got something like that, 732 00:45:25,000 --> 00:45:26,839 Speaker 1: and of course you know you would never get something 733 00:45:26,880 --> 00:45:29,319 Speaker 1: as extreme, but if you had a measure that was 734 00:45:29,360 --> 00:45:32,319 Speaker 1: sort of targeting education cost, it would be going through 735 00:45:32,400 --> 00:45:36,160 Speaker 1: layers and layers and layers of government bureaucracy and and 736 00:45:36,200 --> 00:45:39,000 Speaker 1: so you would have it sort of well flagged in advance. 737 00:45:39,040 --> 00:45:42,279 Speaker 1: And I think that's probably one of the key differences here, 738 00:45:42,320 --> 00:45:46,480 Speaker 1: Like it's not necessarily what they're cracking down on, but 739 00:45:46,680 --> 00:45:50,120 Speaker 1: it's the extremity and the way they're doing it. Yeah, 740 00:45:50,160 --> 00:45:53,800 Speaker 1: the speed and ease and the sort of unilateral decision making, 741 00:45:53,880 --> 00:45:56,239 Speaker 1: because right you could never do it Affen And I 742 00:45:56,280 --> 00:45:59,040 Speaker 1: really do wonder whether there are people in the US 743 00:45:59,040 --> 00:46:01,080 Speaker 1: on either the right the left, and I think there 744 00:46:01,120 --> 00:46:03,520 Speaker 1: are who look at what China has done, especially with 745 00:46:03,560 --> 00:46:05,759 Speaker 1: some of the big tech companies. It's sort of like 746 00:46:06,160 --> 00:46:09,719 Speaker 1: admiringly thinking like, oh, you know, we've been wanting to 747 00:46:09,719 --> 00:46:12,040 Speaker 1: do this forever. There's no mechanism because we could never 748 00:46:12,080 --> 00:46:13,759 Speaker 1: agree on passing a law and there would be like 749 00:46:13,880 --> 00:46:16,759 Speaker 1: a million layers of courts and regulations. Has sort of 750 00:46:16,800 --> 00:46:21,120 Speaker 1: like wishing they could emulate the ease with which China 751 00:46:21,160 --> 00:46:23,200 Speaker 1: can do some of these things. Yeah, I'm sure there 752 00:46:23,239 --> 00:46:25,480 Speaker 1: are some parents out there who think that limiting the 753 00:46:25,480 --> 00:46:28,719 Speaker 1: amount of time people or kids can actually play video 754 00:46:29,239 --> 00:46:32,200 Speaker 1: is a good thing. All right, shall we leave it there? 755 00:46:33,080 --> 00:46:36,000 Speaker 1: Let's leave it there. Okay. This has been another episode 756 00:46:36,040 --> 00:46:38,759 Speaker 1: of the All Thoughts Podcast. I'm Tracy Alloway. You can 757 00:46:38,760 --> 00:46:42,560 Speaker 1: follow me on Twitter at Tracy Alloway and I'm Joe 758 00:46:42,560 --> 00:46:44,960 Speaker 1: Why Isn't All? You can follow me on Twitter at 759 00:46:45,000 --> 00:46:48,200 Speaker 1: the Stalwork. Follow our guest on Twitter, Dan Wong, He's 760 00:46:48,360 --> 00:46:52,959 Speaker 1: at Dan w Wong. Follow our producer Laura Carlson, She's 761 00:46:53,000 --> 00:46:56,440 Speaker 1: at Laura M. Carlson. Followed the Bloomberg head of podcast, 762 00:46:56,440 --> 00:47:00,160 Speaker 1: Francesca Levi at Francesca Today, And check out All our 763 00:47:00,239 --> 00:47:04,560 Speaker 1: podcast at Bloomberg, under the handle at podcast. Thanks for listening.