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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

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Speaker 2: Hello and welcome to another episode of the Authoughts podcast.

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Speaker 2: I'm Tracy Alloway.

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Speaker 3: And I'm Joe. Wasn't thal Joe.

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Speaker 2: We are recording this on August twenty seventh. Did you

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Speaker 2: catch the Trump Cabinet meeting yesterday?

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Speaker 3: I saw your tweets and they looked like some of

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Speaker 3: the most obsequious. I mean a lot of these unusually obsequious.

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Speaker 3: But even yes, I.

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Speaker 2: Saw your tweets, you could just say yes. So there

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Speaker 2: are a bunch of things that stood out, But one

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Speaker 2: in particular was Donald Trump talking about building out new

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Speaker 2: energy capacity and he said specifically, I'm going to quote here.

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Speaker 2: You know, in China they do it very quickly. They

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Speaker 2: have one person that says do it, and that's it.

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Speaker 2: But essentially, we have one person that says do it,

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Speaker 2: and we've given that order.

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Speaker 3: Yeah, you know, like he's very abundance coded. He wants

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Speaker 3: to like he wants to get rid of all of

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Speaker 3: the uh or he seems to have this impulse to

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Speaker 3: get rid of all of the myriad checks and balances

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Speaker 3: and all these things that stand in the way of

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Speaker 3: developing things. So it sounds like Trump is abundance pilled.

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Speaker 3: I assume that's the direction you're going on. Yes.

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Speaker 2: If there's one thing I think you could say about

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Speaker 2: China's economy and it's political economy, it is that China

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Speaker 2: is pretty good at building things, yes, right, And we've

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Speaker 2: seen various examples of that over time. Back when I

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Speaker 2: was living in Hong Kong, I took the high speed

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Speaker 2: rail from Hong Kong to Beijing and that was absolutely amazing.

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Speaker 2: You get to Beijing in less than a day. The

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Speaker 2: US is nowhere near having anything like that, and I

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Speaker 2: speak as someone who takes Amtrak in the Northeast regularly.

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Speaker 2: On the other hand, China at various times has produced

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Speaker 2: too much.

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Speaker 4: Right.

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Speaker 3: It's accused as such, right. I know that people say.

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Speaker 2: This, okay, But for instance, you think back to the

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Speaker 2: Ghost City, Sure bridges to nowhere.

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Speaker 3: Sure at they were bridges to nowhere at the time.

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Speaker 2: Amusement parks that no one goes to.

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Speaker 3: Definitely, although we have amusement parks here that no one

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Speaker 3: goes to.

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Speaker 2: Disagree or disagree hard. But this has sparked a new

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Speaker 2: movement in China by policymakers called involution yes, which is

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Speaker 2: basically an attempt to reduce over capacity in terms of

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Speaker 2: building things.

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Speaker 3: There's definitely no question that there does seem to be

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Speaker 3: this phenomenon which the government in Beijing seems highly cognizant of,

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Speaker 3: which is this sort of like profitless competition, much of

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Speaker 3: it driven by the incentive structure that is borne by

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Speaker 3: the provinces promoting their local champions, and so far as

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Speaker 3: much like sort of success as some of these companies

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Speaker 3: have on some metrics, there's no money to be made

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Speaker 3: in many cases. It sounds sort of nice from the

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Speaker 3: consumer perspective, you know, it's like Zurbier twenty tens when

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Speaker 3: we were all getting like, you know, cheap ubers and

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Speaker 3: stuff like that. But you know, there's a seems to

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Speaker 3: be a risk of certain internal imbalances on that.

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Speaker 2: I think the issue is you have a lot of

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Speaker 2: companies who are basically producing all the same thing and therefore,

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Speaker 2: you know, racing to the bottom in terms of price,

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Speaker 2: and no one can actually make money. And I don't

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Speaker 2: know about you, but if I was a startup founder,

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Speaker 2: I would probably want to make money right at some point.

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Speaker 2: I would not want to be locked in a forever

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Speaker 2: competition in terms of who could drive the absolute lowest cost.

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Speaker 3: Well, what if you were just a normal consumer who

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Speaker 3: wasn't a founder?

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Speaker 2: Sadly, that is what I am. Okay, Well, on this note,

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Speaker 2: we have the perfect guest. We're going to be speaking

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Speaker 2: with Dan Wong, friend of the Pod and who has

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Speaker 2: just written a new book called Breakneck China's Quest to

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Speaker 2: Engineer the Future. He's also a research scholar at the

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Speaker 2: Hoover Institution. So Dan, welcome back to the show.

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Speaker 4: Thanks so much, Tracy, really glad to talk about moby

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Speaker 4: Dick with my friends.

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Speaker 3: Why do coach trouble? Why do you coble?

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Speaker 2: You know, I was actually wondering if you were going

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Speaker 2: to bring up the Moby Dick reference.

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Speaker 4: The problem Joe, I've been a ket for a very

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Speaker 4: long time. Maybe this is the way needs to be

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Speaker 4: getting into That's.

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Speaker 2: Right, okay, simple question to start. Why does China like

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Speaker 2: building stuff?

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Speaker 4: China likes building stuff because it is made up of

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Speaker 4: leadership that is very heavily engineering pilled. Many of them

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Speaker 4: have been engineer's trained of a very Soviet sort, hydraulic engineers,

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Speaker 4: electrical engineers, thermal engineers, which is kind of a termine China.

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Speaker 4: That means producing coal and processing coal, they treat the

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Speaker 4: megaproject as the solution to every problem. They are building

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Speaker 4: enormous dams. They're building a big new dam now that

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Speaker 4: is going to use sixty times more concrete than the

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Speaker 4: Hoover dam. They're it's going to produce I think, three

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Speaker 4: times as much power as the three gorgeous dam. But

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Speaker 4: this is a lot of their solutions to a lot

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Speaker 4: of different economic problems and social problems as well. That

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Speaker 4: new highways, new homes, coal plants, hyperscalers. It's what they

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Speaker 4: know how to do, and it's what they're going to do.

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Speaker 3: First of all, Before we go any further, I just

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Speaker 3: want to say it, like, having spoken to for years,

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Speaker 3: I'm thrilled of all the recognition you're getting for this book.

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Speaker 3: I know we weren't like the first to discover Dan Wong.

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Speaker 3: I think Tyler Cowen got there first, but it's been

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Speaker 3: fantastic talking to you over the years, and there's sort

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Speaker 3: of like a vindication I think of your career, et cetera,

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Speaker 3: because now everyone wants to see the world through the

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Speaker 3: Dan Wong lund. So think I just wanted to say

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Speaker 3: how exciting it is and happy for you that you're

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Speaker 3: getting all.

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Speaker 2: This is channeling the Trump cabinet.

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Speaker 3: Oh wow, I'm being am I Trump. Yeah, yeah, I guess, okay, good, Okay.

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Speaker 3: As Tracy mentioned, Trump talked about you know if someone

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Speaker 3: says do it and then they do it. But I'm curious,

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Speaker 3: like how much is it? Would you say, like the

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Speaker 3: political system really allows for that versus the actual like

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Speaker 3: breadth of labor and just engineering knowledge, Like how would

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Speaker 3: you tilt the sort of political structure versus the skills.

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Speaker 3: I think it's both.

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Speaker 4: So China has a lot of economic ministries like the NDERC,

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Speaker 4: the National Development and Reform Commission, and the MIIT, the

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Speaker 4: Ministry of Industry and Information Technologies. You have all of

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Speaker 4: these planners that are making new plans all the time,

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Speaker 4: and they have exactly great plans to know where the

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Speaker 4: next subway station in Beijing or Shinjin or quimming On

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Speaker 4: to go. And so there's plenty of shovel ready projects

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Speaker 4: because people have already been planning for these things for years.

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Speaker 4: And every time China's economy has any sort of a wobble,

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Speaker 4: then the Communist Party says, okay, well we're going to

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Speaker 4: build another really big dam, or we're going to build

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Speaker 4: more highway systems. So you have a lot of shovel

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Speaker 4: ready projects in place, and then you have the government

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Speaker 4: thinking that while pouring more concrete is still going to

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Speaker 4: be the solution to a lot of our different problems.

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Speaker 4: And on top of that, you have a very skilled

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Speaker 4: manufacturing workforce. You have a very skilled public sector that

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Speaker 4: has been building a lot of high speed trains, that

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Speaker 4: have been building a lot of big ships, that have

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Speaker 4: been building subway systems. They know how to do this stuff,

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Speaker 4: and so it just comes really naturally. You have the

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Speaker 4: system plus the politics all favoring a lot of construction.

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Speaker 2: When you say Chinese policy makers are made up of engineers,

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Speaker 2: I have two questions. So one, how did that come

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Speaker 2: to be? And then secondly, could you maybe give us

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Speaker 2: some specific examples of how that manifests in actual policy. So,

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Speaker 2: for instance, does having an engineering background make you perhaps

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Speaker 2: better at making strategic decisions about economic priorities? Like how

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Speaker 2: does that background actually come into play?

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Speaker 4: I think China's engineering state has deep roots, but the

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Speaker 4: modern manifestation really took shape after the nineteen eighties when

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Speaker 4: dunzhel Peing took over from the total mayhem of the

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Speaker 4: mal Years and dounzheal Peing thought, well, Mao was kind

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Speaker 4: of this poet. He was a warlord, he was a romantic,

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Speaker 4: he was a murderer.

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Speaker 3: What is the opposite of all of that.

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Speaker 4: Well, we're going to put mechanical engineers within the polit bureau,

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Speaker 4: and that is exactly what Deng Xiaoping did. So throughout

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Speaker 4: the nineteen eighties and the nineteen nineties, don't put a

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Speaker 4: lot of engineers in the polit bureau, such that by

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Speaker 4: the year two thousand and two, every single member of

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Speaker 4: the Standing Committee, all nine people, especially Hu Jintao and

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Speaker 4: Buen Jabal, the General Secretary and the Premier at the time,

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Speaker 4: everyone had degrees in engineering, and that.

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Speaker 3: Has fluctuated a little bit.

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Speaker 4: By the time that Seizing Pain came to office, who's

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Speaker 4: undergrad was a chemical engineer, I think he saw the

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Speaker 4: light and his doctorate was Marxist economics, so you know,

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Speaker 4: we have a pseudo economist up there. By the time

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Speaker 4: that he came into office, his Premier, He Kutiang, was

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Speaker 4: trained in I believe law in the economics. But now

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Speaker 4: in the twentieth Party Congress after twenty twenty two, China's

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Speaker 4: engineers are really dominant again, which you have a lot

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Speaker 4: of people from the military industrial complex in the top

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Speaker 4: of the politbureau. But I also want to suggest, but

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Speaker 4: playfully and lightly, that there are ancient roots of China's

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Speaker 4: engineering state as well. This is famously the state that

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Speaker 4: administered a vast exam nation system, which people became mandarins

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Speaker 4: by doing these exams administered by the court.

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Speaker 3: You had a lot of.

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Speaker 4: Chinese emperors that didn't hesitate to conscript people to build

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Speaker 4: great walls or grand canals. So these are fortifications and

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Speaker 4: waterway systems, and so I don't want to take this

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Speaker 4: too literally, but you can sort of see how a

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Speaker 4: lot of emperors never really hesitated to completely restructure a

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Speaker 4: person's relationship to our land. And so that's a little

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Speaker 4: bit deeper too.

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Speaker 3: So, you know, Tracy mentioned that, and I have no

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Speaker 3: doubt that it is true that there's you know, these

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Speaker 3: various like white elephant projects are things that get built

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Speaker 3: that aren't necessary. In your book talks about them. All

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Speaker 3: that being said, it seems like one of the objective

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Speaker 3: facts in the world is that Chinese living standards and

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Speaker 3: the economy has dramatically in the last ten twenty years,

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Speaker 3: like to an extraordinary degree. Does the success of all

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Speaker 3: these Chinese planning boards? Do you think it strikes a

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Speaker 3: heart in certain conventionalism, planning isn't supposed to work. Economists

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Speaker 3: are very skeptical of planning, the hi Ekian idea that

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Speaker 3: the market and prices are the best signals for these things.

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Speaker 3: What kind of challenge does China's success opposed to some

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Speaker 3: of these ideas.

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Speaker 4: I don't want to think that China's success strikes at

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Speaker 4: the very heart of planning in economics. I think that

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Speaker 4: China has not demonstrated the success of central planning a

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Speaker 4: large I think I would defend a narrower case that

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Speaker 4: a lot of construction has been good for a lot

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Speaker 4: of people. So I think that China is what other

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Speaker 4: tests is there? Well, maybe there are other tests, which

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Speaker 4: is that whether people are happy. I think that is

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Speaker 4: a decent test, whether they feel the ability to have

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Speaker 4: creative expression, whether they feel that their lives are going

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Speaker 4: to be better because they're able to save some money.

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Speaker 4: I think not just about the physical living standards, although

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Speaker 4: I think that is really important because I've spent plenty

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Speaker 4: of time in China's rich re zones. I was living

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Speaker 4: in Hong Kong, Beijing, and Shanghai, where you can see

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Speaker 4: that these cities get better and better every year. You

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Speaker 4: have new subway stations. Shanghai this year will have a

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Speaker 4: thousand parks, up from five hundred in twenty twenty. All

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Speaker 4: of these cities are really highly functional. I've been in

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Speaker 4: China Southwest and Gwaijo Province, China's fourth poorest province, and

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Speaker 4: you have these enormous bridges that are bridges to nowhere

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Speaker 4: when they start, but then to nowhere has become maybe

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Speaker 4: two somewhere, so after it is built, and people actually

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Speaker 4: feel a lot of pride about all of these things.

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Speaker 4: And so I think that a lot of construction, a

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Speaker 4: lot of home building, a lot of electricity production through

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Speaker 4: coal as well as hydro and solar, these things are

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Speaker 4: all really good. I think you can definitely point to

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Speaker 4: a lot of costs. There's a lot of material waste

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Speaker 4: and all of this concrete that's very carbon intensive. There's

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Speaker 4: a lot of financial problems. Squadjo can't really pay a

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Speaker 4: lot of its debts right now. There's a lot of

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Speaker 4: displacement of people. Three gorgious scam display something like a

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Speaker 4: million people. I would say that physical construction is mostly

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Speaker 4: pretty good, though there are plenty of costs.

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Speaker 2: We talk more about financial problems from all of this,

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Speaker 2: because obviously the local government debt situation has been much discussed.

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Speaker 2: But you point out in the book, for instance, that

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Speaker 2: you can see evidence of some of this impact in

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Speaker 2: things like Chinese stocks. So because you have all these

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Speaker 2: companies who are basically racing to the bottom in terms

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Speaker 2: of price, it's difficult for them to produce a profit,

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Speaker 2: and so the stock price basically has traded sideways for

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Speaker 2: like a decade. I guess part of that would also

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Speaker 2: be capital controls and the impact from that. But how

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Speaker 2: does this manifest in terms of finances.

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Speaker 4: Well, let's take a look at something like the solar industry,

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Speaker 4: which I think is kind of an emblematic Chinese success.

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Speaker 4: You have China producing something like ninety percent of the

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Speaker 4: solar PV modules in the world. But China isn't only

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Speaker 4: producing the final product, it is also producing all of

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Speaker 4: the polysilicon as well as all the tools to produce solar.

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Speaker 4: And in the solar industry, you have basically zero differentiation

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Speaker 4: between most of the big solar producers. You know, something

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Speaker 4: like the third largest solar producer in China is not

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Speaker 4: that different from the fifteenth largest, and maybe not even

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Speaker 4: that different from the thirtieth largest. They're all making pretty

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Speaker 4: undifferentiated products. And what this has represented is kind of

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Speaker 4: a strategic trium for the Chinese government that they have

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Speaker 4: a lock on one of these critical industries of the

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Speaker 4: future that a lot of countries will need. It is

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Speaker 4: awesome for consumers everywhere. So if you are trying to

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Speaker 4: build a solar panel onto your roof, either in China

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Speaker 4: or in the US, you know, solar costs have plunged

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Speaker 4: something like ninety four percent since the year two thousand

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Speaker 4: or so. I think that's about the right figure. And

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Speaker 4: it's been total misery for these companies as well as

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Speaker 4: their investors. And maybe this is what socialism with Chinese

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Speaker 4: characteristics means, which is a lot of state power, a

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Speaker 4: lot of consumer power, but not very much financial investor's benefit.

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Speaker 3: So, speaking of her novelle this is not about Moby Dick,

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Speaker 3: I'm actually thinking about his novella Bartleby, in which you know,

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Speaker 3: the famous character Bartleby decides I would prefer not to.

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Speaker 3: He's working on Wall Street and then one day he

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Speaker 3: would prefer not to, and the people around him are

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Speaker 3: completely exasperated at this person. And of course we saw

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Speaker 3: a few years ago people were talking about the live

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Speaker 3: flat movement, And so when you talk about, oh, you know,

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Speaker 3: like perhaps it's come at the cost of happiness, Like

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Speaker 3: how wide spread is this? How much of this success

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Speaker 3: in China? I mean one of the other aspects of

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Speaker 3: you know, unions aren't legal in China. I presume striking

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Speaker 3: isn't legal in China, and so forth, Like how much

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Speaker 3: of this material success that everyone enjoys to some extent

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Speaker 3: in your view, has come down to sort of extracting

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Speaker 3: the worker surplus. And how big do you think is

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Speaker 3: there like a larger brewing impulse to fight against that.

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Speaker 4: Well, when I first read bartle B the Scrivener, I

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Speaker 4: saw some commentary that it's actually a lot about homo eroticism.

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Speaker 4: I thought that maybe that's where we were going to go,

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Speaker 4: but maybe we'll take a look at that later. I

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Speaker 4: think that whether people in China are happy is always

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Speaker 4: a very interesting and excessively broad question, and I always

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Speaker 4: wonder about things like.

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Speaker 3: That, if anyone's happy in the world, but keep going.

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Speaker 4: You know, Bhutan, with something like four traffic lights in

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Speaker 4: the country is supposed to be super happy. We don't

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Speaker 4: really get that. Certainly, we can observe that there are

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Speaker 4: a lot of Chinese, mostly elites, who are interested in

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Speaker 4: creative expression. Many of them have become deeply unsatisfied. So

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Speaker 4: they are moving to the Netherlands, They're moving to New York,

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Speaker 4: They're moving to Chang Mai. I've seen some of their

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Speaker 4: events here in New York. There's a feminist stand up

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Speaker 4: comedy which is, you know, having a lot of comedy

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Speaker 4: shows in Chinese. That is pretty active of a scene

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Speaker 4: here in Manhattan actually, And so there's a lot of

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Speaker 4: people journalists who have had their pieces completely censored Six

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Speaker 4: Ways to Sunday who are pretty dissatisfied. There's plenty of

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Speaker 4: people dissatisfied in Shanghai who had a horrible time throughout

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Speaker 4: the lockdown. And we had these astonishing numbers of something like,

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Speaker 4: at its peak, forty thousand Chinese flying to Ecuador where

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Speaker 4: they don't have to get a visa to walk up

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Speaker 4: to the southwestern border in the United States because they

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Speaker 4: are so upset with a seizing pain. But it's the

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Speaker 4: broader mass of Chinese unhappy, well pretty hard to say.

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Speaker 4: I think there are plenty of people who are working

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Speaker 4: for state don't enterprises and you know, not really enjoying

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Speaker 4: much of their time there. You could be working for

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Speaker 4: one of these big tech companies and working nine ninety

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Speaker 4: six hours nine am to nine pm, six days a week,

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Speaker 4: and that's not very happy. You could be living with

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Speaker 4: your parents.

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Speaker 3: Because which, by the way, is the same Silicon Valley.

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Speaker 4: Well, I thought it was the same as Bloombergley, but yeah.

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Speaker 3: It's probably nine nine to seven in Stilicon Valley.

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Speaker 2: But do you get equity in the company in return

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Speaker 2: for your hard work?

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Speaker 4: Maybe some of them do, but it's probably not to

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Speaker 4: the same extent in Silicon Valley. But at the same time,

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Speaker 4: you know, if you're a young Chinese living in Shanghai,

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Speaker 4: perhaps your cause of living is not super high because

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Speaker 4: they're living with your parents. You get to save some

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Speaker 4: money by working at a state owned enterprise. You have

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Speaker 4: excellent cafes popping up all the time. A lot of

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Speaker 4: things are pretty cheap. You can get a bowl of

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Speaker 4: noodles really cheaply. And you know, for people who are

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Speaker 4: debating whether they want to try to make a career

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Speaker 4: in London or New York and try to be really

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Speaker 4: ambitious or just have a thumping lifestyle life flat lifestyle

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Speaker 4: in Shanghai. Maybe that's kind of a wash. So I

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Speaker 4: don't see simmering discontent that threatens the top older gem,

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Speaker 4: but certainly there are plenty of people dissatisfied.

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Speaker 2: There's also arguably a sort of existential dread hanging over

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Speaker 2: certain sectors or certain entrepreneurs, which is that at any time,

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Speaker 2: the Chinese government could change its mind about what industry

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Speaker 2: it actually wants to promote and nurture. And we saw

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Speaker 2: that happen. I think when you and I were both

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Speaker 2: in Hong Kong in twenty twenty slash twenty twenty one,

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Speaker 2: and this was a big deal. So this idea that

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Speaker 2: China all of a sudden kind of turned its back

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Speaker 2: on more consumer oriented technology companies, how big of a

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Speaker 2: legacy did that have or how big of an impact

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Speaker 2: did that have on the sort of entrepreneurial spirit of China.

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Speaker 4: There's plenty of data to suggest that VC funds in

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Speaker 4: China are having a hard time actually raising funds and

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Speaker 4: also having a hard time deploying their capital. Certainly, it's

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Speaker 4: become pretty difficult for a lot of startups to exit

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Speaker 4: because they can't necessarily list in the US, and they

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Speaker 4: can't necessarily list very easily in China as well. China's

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Speaker 4: consumption over the last few years has been pretty limp

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Speaker 4: after the COVID crackdowns. A lot of companies had to

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Speaker 4: have pretty extensive layoffs, and they're just not having a

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Speaker 4: really easy time given the limp consumption, spending really large

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Speaker 4: in China. I think this goes to a kind of

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Speaker 4: a broader point within authoritarian systems, which is that no

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Speaker 4: one feels very safe in a lot of authoritarian systems.

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Speaker 4: You can be an elite in Beijing, and what is

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Speaker 4: your life going to be? Your life could be working

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Speaker 4: in the financial industry, which is a definite elite everywhere,

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Speaker 4: including in Beijing. And two years ago, Beijing announced that

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Speaker 4: it was going to have a salary cap of three

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Speaker 4: hundred thousand dollars roughly for people working in state owned banks.

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Speaker 4: And if you made over that figure the last couple

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Speaker 4: of years, you may have to give some money back

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Speaker 4: to the government. Maybe you're working for a tech company

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Speaker 4: and you think that online education is going to be

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Speaker 4: totally safe, because Chinese love education and they're always going

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Speaker 4: to be spending more money on their kids, and then

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Speaker 4: that worked until the government declared everything must be a nonprofit.

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Speaker 4: If you're working for the military, if you're working for

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Speaker 4: the government, your life could be subject to either a

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Speaker 4: corruption crackdown or some sort of the political wins changing

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Speaker 4: and your patron is no longer in place, and then

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Speaker 4: your whole network of patronage has to fall. And so

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Speaker 4: this is one of these things where there is kind

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Speaker 4: of this apocalyptic sense that hangs over you if you're

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Speaker 4: living in Beijing, Shanghai, perhaps even in Hong Kong, where

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Speaker 4: a lot of your life could fall apart and there's

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Speaker 4: no one really to protect you, no lawyers that you

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Speaker 4: can turn to, the court system to really turn to.

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Speaker 3: You know, one of these things that comes up a lot,

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Speaker 3: and I don't really find it to be that interesting

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Speaker 3: with a conversation. Look, oh, is China a communist or capitalist?

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Speaker 3: And it seems like a very tedious conversation. I mean,

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Speaker 3: it has a you know, a leninist system of government.

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Speaker 3: I think that fact says to say, is it going

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Speaker 3: in the direction of something that we could call socialist?

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Speaker 3: I think Doung Choupang said the goal was to have

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Speaker 3: a modern socialist state by year twenty forty nine, So

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Speaker 3: twenty four years from now, is it going into direction

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Speaker 3: that would be described this is so well, there.

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Speaker 4: Are a bunch of Marxists over there, and they would

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Speaker 4: always tell you that history is the most important and

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Speaker 4: we are marching towards socialism. So their answer is yes.

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Speaker 4: I have my doubts. I took a look at China

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Speaker 4: today and I think it is the most right wing

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Speaker 4: major country in the world. This is a country that

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Speaker 4: really prizes manufacturing above all else. It doesn't really have

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Speaker 4: much by way of immigration. You have a state that

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Speaker 4: enforces totally traditional gender roles, and you have a pretty

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Speaker 4: minimal welfare safety net. Where taxes in China are not

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Speaker 4: actually that high. It is pretty regressively funded on consumption taxes.

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Speaker 4: This is a country that arrests union organizers and that

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Speaker 4: has busted up certain Marxist reading groups in universities. And

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Speaker 4: I take a look at that, and I think, doesn't

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Speaker 4: this look kind of like Eisenhower's America? You know?

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Speaker 3: This is it certainly doesn't soun liberal.

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Speaker 4: It doesn't sound very liberal at all, and I'm not

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Speaker 4: even sure if it sounds very socialist. There is absolutely

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Speaker 4: a Leninist aspect in which state control of public enterprises.

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Speaker 4: You know, public ownership of production is very much real.

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Speaker 4: Many important sectors telecommunications, aviation, energy are state owned, and

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Speaker 4: you have some redistribution between the provinces. But you know,

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Speaker 4: kind of my handy snapshot is not to think of

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Speaker 4: China as socialists or autocratic. I think these are pretty

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Speaker 4: limited terms that don't really offer much anymore. My simple

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Speaker 4: formulation of China is that it is a Lendinness technocracy

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Speaker 4: with grand Opera characteristics, pretty rational most of the time,

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Speaker 4: but then every so often we'll do something pretty preposterous

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Speaker 4: and then kind of collapse in something really ridiculous.

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Speaker 2: That said, we have seen recently China make some moves

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Speaker 2: to boost social safety nets. So they've said they're going

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Speaker 2: to you know, do more for seniors, and they're also

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Speaker 2: going to try to boost consumer spending. One thing that

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Speaker 2: I thought was kind of amusing was they basically rolled

436
00:22:50,880 --> 00:22:54,920
Speaker 2: out a cash for clunkers equivalent. And again, I think

437
00:22:54,960 --> 00:22:59,840
Speaker 2: of all those things focus on consumer spending, social safety nets,

438
00:23:00,080 --> 00:23:03,920
Speaker 2: though arguably in the US those are perhaps declining cash

439
00:23:03,920 --> 00:23:05,760
Speaker 2: for clunkers, that sort of thing. I think that is

440
00:23:05,920 --> 00:23:09,080
Speaker 2: very American in many ways in terms of the political economy.

441
00:23:09,359 --> 00:23:12,720
Speaker 2: And meanwhile in the US, you know, Trump is talking

442
00:23:12,720 --> 00:23:16,000
Speaker 2: about how he wants to be more efficient in terms

443
00:23:16,000 --> 00:23:19,359
Speaker 2: of controlling the economy. Like China. We've also had some

444
00:23:19,560 --> 00:23:24,160
Speaker 2: instances of the US government taking stakes in companies recently

445
00:23:24,680 --> 00:23:29,480
Speaker 2: that seems very Chinese in certain respects. Is the US

446
00:23:29,560 --> 00:23:32,920
Speaker 2: starting to emulate China and China emulate.

447
00:23:32,560 --> 00:23:36,800
Speaker 4: The US tracy? When I first heard of the tariffs

448
00:23:36,880 --> 00:23:40,760
Speaker 4: on Liberation Day, I thought that liberation doesn't sound very

449
00:23:40,880 --> 00:23:43,240
Speaker 4: much like an American word. It sounds much more like

450
00:23:43,240 --> 00:23:45,119
Speaker 4: a Chinese word to my ears.

451
00:23:45,640 --> 00:23:47,240
Speaker 3: Now five liberations campaign.

452
00:23:47,560 --> 00:23:51,040
Speaker 4: Yes, right, we're going to liberate Taiwan into socialism. You know,

453
00:23:51,119 --> 00:23:54,200
Speaker 4: this is what they're up to. And certainly there are

454
00:23:54,320 --> 00:23:57,240
Speaker 4: a lot of aspects in which the US and Trump

455
00:23:57,240 --> 00:24:00,920
Speaker 4: in particular, is copying China. We are making Intel a state,

456
00:24:00,960 --> 00:24:05,240
Speaker 4: don't enterprise with American characteristics. There's a lot of questions

457
00:24:05,280 --> 00:24:09,320
Speaker 4: now with data probity and whether the unemployment figures are

458
00:24:09,320 --> 00:24:13,080
Speaker 4: going to be well reported, And there is kind of

459
00:24:13,160 --> 00:24:17,480
Speaker 4: just this you visiting stochastic terror on the downtrodden, especially

460
00:24:17,840 --> 00:24:22,679
Speaker 4: undocumented immigrants, and all of these things are not very

461
00:24:22,760 --> 00:24:25,400
Speaker 4: nice things that I think that Trump is learning from

462
00:24:25,440 --> 00:24:28,080
Speaker 4: c and right now, I think what we have is

463
00:24:28,600 --> 00:24:31,520
Speaker 4: authoritarianism without the good stuff, and the good stuff of

464
00:24:31,600 --> 00:24:34,600
Speaker 4: actually building quite a lot of mass transit and clean

465
00:24:34,640 --> 00:24:39,600
Speaker 4: technology generation, clean energy generation. Rather, we don't really have

466
00:24:40,240 --> 00:24:44,000
Speaker 4: the Port Authority bus terminal being built and renovated on time.

467
00:24:44,640 --> 00:24:46,960
Speaker 4: You don't have California high speed rail. We don't have

468
00:24:46,960 --> 00:24:49,800
Speaker 4: smoothly functional cities that have a lot of public order.

469
00:24:50,240 --> 00:24:52,560
Speaker 4: And I don't think that the US should try to

470
00:24:52,560 --> 00:24:54,480
Speaker 4: emulate a lot of these things. But I think there

471
00:24:54,520 --> 00:24:56,439
Speaker 4: are better things to emulate, because a lot of what

472
00:24:56,520 --> 00:25:00,440
Speaker 4: Trump is building are gilded ballrooms and detention centers. I had,

473
00:25:00,720 --> 00:25:03,359
Speaker 4: you know, we're getting quite a lot of just I

474
00:25:03,359 --> 00:25:05,840
Speaker 4: think many of the worst aspects of authoritarianism.

475
00:25:06,200 --> 00:25:08,840
Speaker 3: You know, I'm curious, I say, at the beginning, you've

476
00:25:08,840 --> 00:25:11,520
Speaker 3: had this huge rise. Everyone is obsessed with this story

477
00:25:11,600 --> 00:25:14,560
Speaker 3: right now. Everyone, it's just every every day I wake up,

478
00:25:14,960 --> 00:25:19,240
Speaker 3: it's on social media, it's coming from DC, it's et cetera.

479
00:25:19,359 --> 00:25:22,320
Speaker 3: Everyone is sort of maybe miles of gate, but the

480
00:25:22,359 --> 00:25:25,199
Speaker 3: capacity of China to build that, damn Or you know,

481
00:25:25,440 --> 00:25:29,120
Speaker 3: you open uh Instagram and it's some crazy drone show

482
00:25:29,240 --> 00:25:32,400
Speaker 3: or something like that that shows the technical prowess there.

483
00:25:32,680 --> 00:25:35,480
Speaker 3: You know, this wasn't the case the sort of popularization

484
00:25:35,520 --> 00:25:38,760
Speaker 3: of all this when you started your book, or certainly

485
00:25:38,800 --> 00:25:40,960
Speaker 3: not the first time we had you on this show.

486
00:25:41,280 --> 00:25:44,280
Speaker 3: What do you make of that, Like, how has perceptions

487
00:25:44,359 --> 00:25:47,560
Speaker 3: of China changed, or maybe even your own perception of

488
00:25:47,680 --> 00:25:51,159
Speaker 3: China changed since you started really focusing on this stuff.

489
00:25:51,200 --> 00:25:55,359
Speaker 4: Well, Joe, maybe Chinese industrialism has been my white whale

490
00:25:55,400 --> 00:25:56,520
Speaker 4: for a lot of time.

491
00:25:56,600 --> 00:25:59,600
Speaker 3: I'm sorry, I'm sorry, I'm sorry.

492
00:25:59,760 --> 00:26:03,119
Speaker 4: I moved to Hong Kong at the start of twenty

493
00:26:03,200 --> 00:26:06,320
Speaker 4: seventeen from Silicon Valley, where I used to be working,

494
00:26:06,680 --> 00:26:09,560
Speaker 4: in part because I was feeling that a lot of

495
00:26:09,600 --> 00:26:13,159
Speaker 4: the technologies that was important in Silicon Valley at the

496
00:26:13,200 --> 00:26:16,240
Speaker 4: time were not so interesting. It was a lot of cryptocurrencies,

497
00:26:16,640 --> 00:26:19,879
Speaker 4: was a lot of consumer platforms. We hadn't even gotten

498
00:26:19,960 --> 00:26:22,639
Speaker 4: to SaaS for business yet, and so it was just

499
00:26:22,800 --> 00:26:26,439
Speaker 4: not that interesting. And so when I had lunch with

500
00:26:26,600 --> 00:26:29,600
Speaker 4: Arthur Kroeber and you told me about something called Made

501
00:26:29,600 --> 00:26:32,520
Speaker 4: in China twenty twenty five, I thought that ultra high

502
00:26:32,560 --> 00:26:36,160
Speaker 4: voltage transmission, electric vehicle batteries, memory trips, these were far

503
00:26:36,160 --> 00:26:39,120
Speaker 4: more interesting. But I felt that it was actually making

504
00:26:39,160 --> 00:26:44,240
Speaker 4: a distinctively popular decision among my Silicon Valley peers because

505
00:26:44,280 --> 00:26:46,120
Speaker 4: they thought that they were the center of the universe,

506
00:26:46,160 --> 00:26:48,639
Speaker 4: which is a view they still hold. And what are

507
00:26:48,680 --> 00:26:51,080
Speaker 4: we doing if we're not being in San Francisco and

508
00:26:51,160 --> 00:26:53,879
Speaker 4: not pursuing some aspect of tech? And so when I

509
00:26:53,920 --> 00:26:57,280
Speaker 4: moved to China, it definitely didn't feel like the elitist

510
00:26:57,720 --> 00:27:00,080
Speaker 4: popular thing to do. But I was really glad to

511
00:27:00,200 --> 00:27:02,639
Speaker 4: go take a look at what China was building. And

512
00:27:02,680 --> 00:27:05,600
Speaker 4: I think that there is a broader sense in Silicon

513
00:27:05,720 --> 00:27:09,640
Speaker 4: Valley that tech is important, but non tech is also important.

514
00:27:10,280 --> 00:27:11,800
Speaker 4: Right now, I feel like a lot of folks in

515
00:27:11,920 --> 00:27:14,280
Speaker 4: Silicon Valley, where I spend a lot of time as

516
00:27:14,359 --> 00:27:16,640
Speaker 4: a fellow at Hoover, you know, a lot of folks

517
00:27:16,680 --> 00:27:19,000
Speaker 4: are trying to build God in a box, and that

518
00:27:19,080 --> 00:27:21,359
Speaker 4: attention has shifted to AI, and I feel like that

519
00:27:21,440 --> 00:27:24,359
Speaker 4: has become a totalizing aspect once more, and I feel

520
00:27:24,359 --> 00:27:26,800
Speaker 4: like part of my task is still to remind people

521
00:27:26,840 --> 00:27:30,840
Speaker 4: that drones are important and bridges are important, and we

522
00:27:30,880 --> 00:27:33,160
Speaker 4: live in a material world, and you know, let's build

523
00:27:33,240 --> 00:27:34,560
Speaker 4: up a manufacturing base as well.

524
00:27:50,160 --> 00:27:52,520
Speaker 2: So with the focus shifting to AI, you could make

525
00:27:52,520 --> 00:27:55,680
Speaker 2: an argument that the US has the lead there still,

526
00:27:55,760 --> 00:27:59,000
Speaker 2: even though we've seen moments of panic with the deep

527
00:27:59,040 --> 00:28:01,639
Speaker 2: Seek model early this year and things like that. But

528
00:28:01,760 --> 00:28:03,919
Speaker 2: on the other hand, I suppose you could argue that

529
00:28:03,960 --> 00:28:08,360
Speaker 2: AI also needs vast amounts of physical infrastructure, including data centers,

530
00:28:08,560 --> 00:28:12,240
Speaker 2: energy chips. Who has the upper hand when it comes

531
00:28:12,280 --> 00:28:12,639
Speaker 2: to AI.

532
00:28:13,119 --> 00:28:15,159
Speaker 4: I don't have a super strong view on this, but

533
00:28:15,200 --> 00:28:19,200
Speaker 4: I could outline a potential scenario in which China is

534
00:28:19,400 --> 00:28:22,760
Speaker 4: going to be leading on AI based on a few factors.

535
00:28:23,200 --> 00:28:25,639
Speaker 4: First and most important, as you point out, Tracy, that

536
00:28:26,000 --> 00:28:29,320
Speaker 4: China has a lot of electrical power. So the US

537
00:28:29,400 --> 00:28:31,760
Speaker 4: may have all of the computing because it has all

538
00:28:31,800 --> 00:28:35,400
Speaker 4: of the advanced chips from Nvidium. As Howard Letnik says,

539
00:28:35,520 --> 00:28:38,520
Speaker 4: China has a best the fourth best chips in terms

540
00:28:38,560 --> 00:28:41,720
Speaker 4: of AI, and that is a pretty substantial constraint. But

541
00:28:41,760 --> 00:28:45,040
Speaker 4: what is a bigger US constraint, maybe right now going forward,

542
00:28:45,160 --> 00:28:48,640
Speaker 4: is that there just isn't enough electrical power, especially if

543
00:28:49,120 --> 00:28:53,360
Speaker 4: Trump is taking winterbines offline and being very discriminatory about

544
00:28:53,360 --> 00:28:57,600
Speaker 4: certain types of energy. And China I think has organized

545
00:28:57,600 --> 00:29:02,280
Speaker 4: itself as a civilization to nine nothing towards heavy industry

546
00:29:02,400 --> 00:29:05,320
Speaker 4: whatever heavy industry wants it is going to get and

547
00:29:05,360 --> 00:29:08,000
Speaker 4: that could be powered by solar, could be powered by wind,

548
00:29:08,040 --> 00:29:09,920
Speaker 4: it could be powered by coal, it could be powered

549
00:29:09,920 --> 00:29:13,240
Speaker 4: by nuclear. But China will not have this issue that

550
00:29:13,480 --> 00:29:16,840
Speaker 4: META faced earlier in the end of last year, in

551
00:29:16,840 --> 00:29:19,840
Speaker 4: which a rare species of be prevented META from building

552
00:29:19,920 --> 00:29:22,640
Speaker 4: a giant new power facility, and China will definitely not

553
00:29:22,680 --> 00:29:25,160
Speaker 4: do that. So China has a lot of electrical power.

554
00:29:25,440 --> 00:29:27,760
Speaker 4: China may not have a lot of advanced chips, but

555
00:29:27,800 --> 00:29:29,520
Speaker 4: it has a lot of mature chips which are going

556
00:29:29,520 --> 00:29:32,680
Speaker 4: to be necessary for inference. So if we do invent

557
00:29:32,800 --> 00:29:34,360
Speaker 4: God in a box, you know, we're going to be

558
00:29:34,480 --> 00:29:37,080
Speaker 4: running queries all the time to figure out how to

559
00:29:37,600 --> 00:29:40,440
Speaker 4: automate and shop and whatever else. And that is going

560
00:29:40,440 --> 00:29:42,560
Speaker 4: to require a lot of processing power. And I think

561
00:29:42,600 --> 00:29:45,920
Speaker 4: this is where China's mature chips are going to have

562
00:29:46,000 --> 00:29:49,440
Speaker 4: a pretty good advantage. And China also has I think

563
00:29:49,680 --> 00:29:53,760
Speaker 4: another unique advantage, which is that training data might be

564
00:29:53,840 --> 00:29:58,400
Speaker 4: more strategically valuable. China has most of the manufacturing capacity

565
00:29:58,520 --> 00:30:01,440
Speaker 4: in the world, or about thirty percent of manufacturing value

566
00:30:01,480 --> 00:30:04,240
Speaker 4: add but that is quite a large chunk. And you

567
00:30:04,280 --> 00:30:06,280
Speaker 4: know what does the US have, Well, we have a

568
00:30:06,280 --> 00:30:09,000
Speaker 4: lot of consulting companies and a lot of healthcare companies.

569
00:30:09,360 --> 00:30:12,680
Speaker 4: So maybe the US will automate something on the scale

570
00:30:12,760 --> 00:30:16,800
Speaker 4: of McKinsey, and China will automate something on the scale

571
00:30:16,840 --> 00:30:19,280
Speaker 4: of fox Con. And you know, they're going to have

572
00:30:19,280 --> 00:30:21,440
Speaker 4: a lot more manufacturing production and we're going to have

573
00:30:21,480 --> 00:30:23,000
Speaker 4: a lot more better consultants.

574
00:30:23,120 --> 00:30:25,960
Speaker 2: Yeah, I suppose there's a synergy here where you could

575
00:30:26,080 --> 00:30:28,960
Speaker 2: use AI to make your manufacturing more efficient.

576
00:30:29,080 --> 00:30:32,280
Speaker 3: Right, No, totally, And we talked to Cameron Johnson about that,

577
00:30:32,320 --> 00:30:35,400
Speaker 3: the diffusion of AI within it, and right, like a

578
00:30:35,440 --> 00:30:39,880
Speaker 3: factory that's monitored properly is brimming with fresh training data

579
00:30:40,040 --> 00:30:42,920
Speaker 3: all the time, and that has a compounding effect and

580
00:30:42,920 --> 00:30:46,880
Speaker 3: the accelerating effect and so forth potentially widening that gap.

581
00:30:47,040 --> 00:30:48,920
Speaker 3: I want to ask actually another AI question. It's not

582
00:30:48,960 --> 00:30:52,920
Speaker 3: even about US China per se, maybe more US question.

583
00:30:53,400 --> 00:30:56,280
Speaker 3: Use the word totalizing. And I've been thinking about this

584
00:30:56,440 --> 00:30:59,000
Speaker 3: exactly in a couple of different ways. Like one is,

585
00:30:59,360 --> 00:31:02,520
Speaker 3: like I wonder about whether people have lost interest in

586
00:31:02,640 --> 00:31:06,160
Speaker 3: things like say, drug discovery in part because of this

587
00:31:06,240 --> 00:31:09,800
Speaker 3: implicit assumption, Well, once we achieve AGI in two years,

588
00:31:10,040 --> 00:31:11,800
Speaker 3: that will do all the drug discovery, So why are

589
00:31:11,840 --> 00:31:16,240
Speaker 3: we even bothering with working on that in the meantime?

590
00:31:16,600 --> 00:31:19,280
Speaker 3: And also it feels like much of culture strikes me

591
00:31:19,320 --> 00:31:22,440
Speaker 3: in the US as sort of disappearing and other things

592
00:31:22,480 --> 00:31:25,040
Speaker 3: like that. People are just sort of losing interest in

593
00:31:25,120 --> 00:31:29,440
Speaker 3: lots of things because AI is crowding out in the

594
00:31:29,480 --> 00:31:33,400
Speaker 3: psychological space everything else. And I'm curious if, in your

595
00:31:33,440 --> 00:31:35,880
Speaker 3: time in Bay Area think about these things, whether that

596
00:31:35,960 --> 00:31:36,640
Speaker 3: rings sure or not.

597
00:31:36,840 --> 00:31:41,320
Speaker 4: Definitely, I hear the craziest when I'm in California, and

598
00:31:41,400 --> 00:31:44,040
Speaker 4: I hear, you know, I think a lot of people

599
00:31:44,120 --> 00:31:49,840
Speaker 4: are very smart Stanford kids who are very smart, and

600
00:31:49,920 --> 00:31:53,080
Speaker 4: yet they could be very narrow minded and not have

601
00:31:53,200 --> 00:31:56,840
Speaker 4: a very broad view. I heard some things like people say, well,

602
00:31:56,840 --> 00:31:59,120
Speaker 4: maybe you don't need to think so much about climate change,

603
00:31:59,120 --> 00:32:01,960
Speaker 4: for example, anymore, And I say, oh, well, why don't

604
00:32:01,960 --> 00:32:04,800
Speaker 4: we have to think about climate change because AI will

605
00:32:04,920 --> 00:32:06,800
Speaker 4: figure out what we need to do with climate change

606
00:32:06,800 --> 00:32:10,320
Speaker 4: and implement everything. Maybe we don't need to be so

607
00:32:10,720 --> 00:32:13,080
Speaker 4: careful about teaching kids how to read the great books

608
00:32:13,160 --> 00:32:15,640
Speaker 4: or maybe even to read at all, because AI will

609
00:32:15,720 --> 00:32:19,920
Speaker 4: just help us get there. And they're trying to manifest

610
00:32:19,920 --> 00:32:23,280
Speaker 4: the eskaton in Silicon Valley. And there is also this

611
00:32:23,440 --> 00:32:26,520
Speaker 4: bit of an apocalyptic error in which maybe the world

612
00:32:26,560 --> 00:32:29,320
Speaker 4: will end in twenty twenty seven because AGI will be

613
00:32:29,360 --> 00:32:31,200
Speaker 4: out there and it's not going to be aligned, and

614
00:32:31,320 --> 00:32:35,080
Speaker 4: all of our world will kind of just end. I

615
00:32:35,120 --> 00:32:37,840
Speaker 4: really don't buy that view. I believe that we have

616
00:32:37,920 --> 00:32:41,200
Speaker 4: to have a longer term view about everything. There is

617
00:32:41,280 --> 00:32:44,880
Speaker 4: kind of this sense often in DC. This is not consensus,

618
00:32:44,880 --> 00:32:46,920
Speaker 4: but every so often when we'd hear that, oh, the

619
00:32:46,920 --> 00:32:49,800
Speaker 4: Communist Party is so weak, their legitimacy is so thin

620
00:32:50,280 --> 00:32:52,480
Speaker 4: and that might topple over at any moment, and we

621
00:32:52,480 --> 00:32:54,960
Speaker 4: don't really have to treat it serious like that feels

622
00:32:55,040 --> 00:32:57,200
Speaker 4: very much like cope. And there is also a Silicon

623
00:32:57,280 --> 00:33:00,520
Speaker 4: Valley variant which is not really the same about China,

624
00:33:00,640 --> 00:33:03,160
Speaker 4: but there is the sense that, well, you know, we're

625
00:33:03,160 --> 00:33:06,000
Speaker 4: all going to ascend into utopia in twenty twenty seven

626
00:33:06,080 --> 00:33:09,520
Speaker 4: when we know invent all the AI and the superintelligence.

627
00:33:09,920 --> 00:33:13,160
Speaker 2: I like how binary everything is. It's either utopia or

628
00:33:13,360 --> 00:33:17,760
Speaker 2: you know, the apocalypse. On the note of potential own goals,

629
00:33:18,360 --> 00:33:20,400
Speaker 2: one of the things we've had now is years and

630
00:33:20,440 --> 00:33:24,440
Speaker 2: years and years of US export controls on semiconductors going

631
00:33:24,480 --> 00:33:27,880
Speaker 2: into China, and I remember you were very early in

632
00:33:28,240 --> 00:33:32,760
Speaker 2: describing this as a sort of Chinese Sputnik moment, this

633
00:33:32,880 --> 00:33:36,360
Speaker 2: idea that this was the moment when China really realized

634
00:33:36,360 --> 00:33:39,280
Speaker 2: that it actually had to produce these things itself and

635
00:33:39,360 --> 00:33:42,400
Speaker 2: try to regain or get the lead over the US

636
00:33:42,480 --> 00:33:47,120
Speaker 2: when it comes to crucially strategic technology. Now that the

637
00:33:47,200 --> 00:33:51,080
Speaker 2: dust has kind of settled, although clearly things are happening

638
00:33:51,120 --> 00:33:52,960
Speaker 2: on the tariff side, but now that we've had years

639
00:33:52,960 --> 00:33:55,520
Speaker 2: and years and years of export controls, does it look

640
00:33:55,560 --> 00:33:58,120
Speaker 2: like that spurred China's technological development.

641
00:33:58,520 --> 00:34:01,880
Speaker 4: I think that it definitely spurred Kina technology development. If

642
00:34:01,920 --> 00:34:06,200
Speaker 4: we take a look at some of these sanctioned companies today, Smick,

643
00:34:06,280 --> 00:34:08,960
Speaker 4: which was on the entity list in twenty twenty, now

644
00:34:09,000 --> 00:34:12,120
Speaker 4: has double the revenues of that level. Huawei, which had

645
00:34:12,160 --> 00:34:14,719
Speaker 4: the most severe export controls, it was kind of like

646
00:34:14,760 --> 00:34:19,239
Speaker 4: a new export control invented specifically to heard Huawei has

647
00:34:19,360 --> 00:34:22,600
Speaker 4: by now recovered its revenues back to the twenty nineteen

648
00:34:22,640 --> 00:34:26,160
Speaker 4: pre sanctioned levels. And I being in China was just

649
00:34:26,200 --> 00:34:30,280
Speaker 4: this really stark reminder that US export controls really accelerated

650
00:34:30,400 --> 00:34:34,160
Speaker 4: a lot of Chinese efforts to do better. Now Beijing

651
00:34:34,200 --> 00:34:37,040
Speaker 4: has always had this ambition to be a technology power.

652
00:34:37,040 --> 00:34:39,319
Speaker 4: It's had this ambition for a very long time, but

653
00:34:39,440 --> 00:34:41,360
Speaker 4: for the most part, it didn't have a lot of

654
00:34:41,440 --> 00:34:44,880
Speaker 4: China's most dynamic companies willing to sign on. Because a

655
00:34:44,880 --> 00:34:47,839
Speaker 4: lot of China's most dynamic companies, let's say Huawei, by

656
00:34:47,920 --> 00:34:51,759
Speaker 4: Dance Dji, they were able to say to Beijing, well,

657
00:34:51,800 --> 00:34:54,760
Speaker 4: we need to make the most efficient five G equipment,

658
00:34:55,000 --> 00:34:58,400
Speaker 4: or the most efficient drones, or the most efficient short

659
00:34:58,400 --> 00:35:01,680
Speaker 4: form video, whatever it is, products that we should export

660
00:35:01,760 --> 00:35:03,960
Speaker 4: around the world, and therefore we need to be buying

661
00:35:04,000 --> 00:35:06,279
Speaker 4: the best products in the world. And that was overwhelmingly

662
00:35:06,320 --> 00:35:09,359
Speaker 4: things like Qualcom chips or Nvidia chips or whatever else.

663
00:35:09,800 --> 00:35:12,680
Speaker 4: And what the US government did was that it recapped

664
00:35:12,680 --> 00:35:15,920
Speaker 4: their ability to access US equipment at a stroke, and

665
00:35:15,920 --> 00:35:20,080
Speaker 4: that fully aligned them into Beijing's goals of technology pursuit.

666
00:35:20,480 --> 00:35:24,160
Speaker 4: And now you have Huawei being all sweetness and light

667
00:35:24,320 --> 00:35:27,279
Speaker 4: to Chinese domestic vendors to say, well, why don't we

668
00:35:27,320 --> 00:35:30,160
Speaker 4: work together. We really have a lot of common interests here.

669
00:35:30,520 --> 00:35:35,400
Speaker 4: Huawei was not super big into semiconductors in twenty nineteen

670
00:35:35,440 --> 00:35:38,120
Speaker 4: in terms of their production, but now Huawei is one

671
00:35:38,120 --> 00:35:42,000
Speaker 4: of the biggest spenders in semiconductors R and D, and

672
00:35:42,040 --> 00:35:44,319
Speaker 4: I believe I just saw a Bloomberg piece saying that

673
00:35:44,400 --> 00:35:47,440
Speaker 4: Huawei's chips are now rolling off the production line, and

674
00:35:47,480 --> 00:35:50,480
Speaker 4: that was something I think entirely created by the US government,

675
00:35:50,600 --> 00:35:54,520
Speaker 4: that all of these fiercely competitive companies really were fighting

676
00:35:54,520 --> 00:35:58,080
Speaker 4: for their lives solving seven problems a day before breakfast

677
00:35:58,360 --> 00:36:01,000
Speaker 4: because they had to solve all of these problems, and

678
00:36:01,040 --> 00:36:04,880
Speaker 4: I think that probably wasn't necessary. Over the broader strokes.

679
00:36:05,320 --> 00:36:10,680
Speaker 3: One of the things that causes alarm for DC regarding China.

680
00:36:10,719 --> 00:36:13,160
Speaker 3: I mean, look, it's great that countries are getting richer

681
00:36:13,200 --> 00:36:17,080
Speaker 3: and the technological frontier is being pushed, and innovation anywhere

682
00:36:17,280 --> 00:36:21,600
Speaker 3: theoretically can help anyone everywhere. But this question, and it's

683
00:36:21,680 --> 00:36:26,279
Speaker 3: more sort of political, perhaps geopolitical, than economic, is does

684
00:36:26,400 --> 00:36:29,640
Speaker 3: China have ambitions outside of its borders?

685
00:36:29,719 --> 00:36:29,839
Speaker 1: Right?

686
00:36:29,880 --> 00:36:33,160
Speaker 3: We know the US is we have military positions all

687
00:36:33,200 --> 00:36:35,759
Speaker 3: over the place, and we clearly have ambitions outside of

688
00:36:35,760 --> 00:36:39,759
Speaker 3: its borders. China has no formal alliances, I believe, with

689
00:36:39,880 --> 00:36:42,920
Speaker 3: any country, etc. But there's always this concern what do

690
00:36:42,960 --> 00:36:45,600
Speaker 3: you think about China's interest in the rest of the

691
00:36:45,640 --> 00:36:48,719
Speaker 3: world beyond sort of export destinations.

692
00:36:49,360 --> 00:36:53,640
Speaker 4: I think that China is very deeply interested in Taiwan

693
00:36:53,719 --> 00:36:56,080
Speaker 4: and the South China Sea, and which it defines as

694
00:36:56,160 --> 00:36:59,120
Speaker 4: within its own borders, and so that is a matter

695
00:36:59,160 --> 00:37:03,680
Speaker 4: of dispute. I think that China is very keenly interested

696
00:37:03,680 --> 00:37:06,600
Speaker 4: in dominating most of Southeast Asia, and.

697
00:37:06,800 --> 00:37:07,880
Speaker 3: What is dominating me.

698
00:37:08,239 --> 00:37:11,240
Speaker 4: I think that they would really like for the leaders

699
00:37:11,320 --> 00:37:15,680
Speaker 4: of Malaysia and Vietnam and the Philippines to come regularly

700
00:37:15,760 --> 00:37:19,320
Speaker 4: to Beijing, to Kawtel for the emperor's pleasure, and maybe

701
00:37:19,320 --> 00:37:21,680
Speaker 4: that is a pretty big threat to US interests. I

702
00:37:21,680 --> 00:37:24,440
Speaker 4: think that is something that we can debate. I would

703
00:37:24,440 --> 00:37:29,160
Speaker 4: be skeptical that China has broader goals to seize Japan.

704
00:37:29,360 --> 00:37:32,640
Speaker 4: I think that would be pretty fanciful. I think that

705
00:37:32,960 --> 00:37:37,600
Speaker 4: China's success right now is building a lot of advanced manufacturing.

706
00:37:38,080 --> 00:37:38,400
Speaker 3: You're right.

707
00:37:38,440 --> 00:37:40,120
Speaker 4: I've been tracking this for a very long time. I

708
00:37:40,160 --> 00:37:43,640
Speaker 4: remember my first appearance on odd Lass in twenty seventeen

709
00:37:43,680 --> 00:37:46,400
Speaker 4: to talk about Made in China twenty twenty five, and

710
00:37:46,440 --> 00:37:49,120
Speaker 4: I was pretty constructive that China was going to figure

711
00:37:49,120 --> 00:37:51,239
Speaker 4: out a lot of these technologies, and I think that

712
00:37:51,360 --> 00:37:53,440
Speaker 4: was fairly out of consensus at the time, and I

713
00:37:53,480 --> 00:37:57,960
Speaker 4: think that was fairly. China has made incredible strides beyond

714
00:37:58,040 --> 00:38:02,000
Speaker 4: my expectations of and I has been pretty bullish about

715
00:38:02,160 --> 00:38:04,440
Speaker 4: a lot of that. And something I worry about is

716
00:38:04,480 --> 00:38:09,320
Speaker 4: that I think that China's success in advanced manufacturing will continue.

717
00:38:09,360 --> 00:38:11,560
Speaker 4: I just wrote a piece with Arthur Kroeber and Foreign

718
00:38:11,560 --> 00:38:14,720
Speaker 4: Affairs pointing out that even though China's economy is slowing,

719
00:38:14,760 --> 00:38:16,719
Speaker 4: and even though there's all sorts of problems with the

720
00:38:16,719 --> 00:38:19,440
Speaker 4: economy and the political system, they're going to keep advancing

721
00:38:19,440 --> 00:38:23,240
Speaker 4: on manufacturing and technology because they have the manufacturing process

722
00:38:23,280 --> 00:38:26,080
Speaker 4: knowledge and they have the investments really to push them forward.

723
00:38:26,480 --> 00:38:29,880
Speaker 4: And I think that we're already seeing that China is

724
00:38:29,920 --> 00:38:33,080
Speaker 4: de industrializing Germany. Brat Setzer has great charts on this

725
00:38:33,200 --> 00:38:36,359
Speaker 4: all the time, especially in the automotive sector. I think

726
00:38:36,360 --> 00:38:38,920
Speaker 4: that China will continue to de industrialize the rest of

727
00:38:39,000 --> 00:38:41,600
Speaker 4: East Asia Europe as well, and that will move on

728
00:38:41,800 --> 00:38:44,600
Speaker 4: to the United States as well. And I don't have

729
00:38:44,680 --> 00:38:48,000
Speaker 4: too many great views about the security threat or what

730
00:38:48,120 --> 00:38:51,040
Speaker 4: is going to happen with military, but I think this

731
00:38:51,320 --> 00:38:54,239
Speaker 4: the clear and present danger is that China's technology keeps

732
00:38:54,280 --> 00:38:57,360
Speaker 4: advancing and that will further de industrialize parts of the

733
00:38:57,400 --> 00:39:00,239
Speaker 4: Midwest as well as many parts of Europe, and I

734
00:39:00,239 --> 00:39:02,120
Speaker 4: think that is going to create all sorts of political

735
00:39:02,120 --> 00:39:04,200
Speaker 4: problems in the West as well, And that is the

736
00:39:04,320 --> 00:39:06,240
Speaker 4: big danger that I'm nervous about.

737
00:39:06,719 --> 00:39:08,920
Speaker 2: What does the US need to do in order to

738
00:39:08,960 --> 00:39:13,240
Speaker 2: preserve its own manufacturing capacity, and I guess ideally build

739
00:39:13,239 --> 00:39:13,640
Speaker 2: it out.

740
00:39:13,800 --> 00:39:15,640
Speaker 4: I think there has to be a lot more investment

741
00:39:15,840 --> 00:39:19,400
Speaker 4: in manufacturing process knowledge, which is all of the TACIT

742
00:39:19,480 --> 00:39:21,600
Speaker 4: knowledge that we can't really write down that we have

743
00:39:21,719 --> 00:39:24,759
Speaker 4: to have be a lot better at producing things like

744
00:39:25,160 --> 00:39:28,960
Speaker 4: not only semiconductors, but also electric vehicle batteries and broader

745
00:39:29,000 --> 00:39:31,880
Speaker 4: sets of electronics as well. I think it would be

746
00:39:31,920 --> 00:39:35,080
Speaker 4: a good idea for the US to invite more Chinese

747
00:39:35,120 --> 00:39:39,560
Speaker 4: companies to build factories in Michigan and Ohio Wisconsin find

748
00:39:39,600 --> 00:39:42,560
Speaker 4: put some controls on them. But if China's Force technology

749
00:39:42,640 --> 00:39:45,759
Speaker 4: program worked against let's say, Apple and Tesla and all

750
00:39:45,800 --> 00:39:48,080
Speaker 4: of these other American companies, why don't we do it

751
00:39:48,120 --> 00:39:51,239
Speaker 4: to them and learn from the best. In terms of manufacturing.

752
00:39:51,600 --> 00:39:54,480
Speaker 4: I'm really skeptical that everything that the Trump administration right

753
00:39:54,520 --> 00:39:57,719
Speaker 4: now is doing has been good for manufacturing. As best

754
00:39:57,719 --> 00:40:00,160
Speaker 4: as we can tell, the US has lost forty fives

755
00:40:00,360 --> 00:40:03,439
Speaker 4: manufacturing jobs since Liberation Day, and that was the last

756
00:40:03,520 --> 00:40:06,920
Speaker 4: data reading that we have forty thousand jobs lost. I

757
00:40:06,960 --> 00:40:10,239
Speaker 4: think that it doesn't make sense to pursue technology while

758
00:40:10,320 --> 00:40:14,440
Speaker 4: decapping the NSF and the NIH, doesn't make sense tonecap

759
00:40:14,960 --> 00:40:17,879
Speaker 4: top universities. It doesn't make sense to deport a lot

760
00:40:17,920 --> 00:40:21,719
Speaker 4: of lower skilled labor that are really important for construction

761
00:40:21,960 --> 00:40:24,480
Speaker 4: as well as manufacturing. And it doesn't make sense to

762
00:40:24,480 --> 00:40:27,960
Speaker 4: try to intimidate higher skilled people researchers to be in

763
00:40:28,000 --> 00:40:30,520
Speaker 4: the US as well. Now, maybe there's something good to

764
00:40:30,560 --> 00:40:34,040
Speaker 4: be said for energy production in the US. There's probably

765
00:40:34,040 --> 00:40:36,919
Speaker 4: something good to be said for the deregulatory agenda under

766
00:40:36,960 --> 00:40:39,319
Speaker 4: Trump to build a little bit more, But right now

767
00:40:39,360 --> 00:40:44,479
Speaker 4: I'm not seeing much energy and further to build more

768
00:40:44,520 --> 00:40:48,360
Speaker 4: than let's say, detention centers, coal plants, skilled ballrooms, not

769
00:40:48,520 --> 00:40:51,680
Speaker 4: really the sort of you know, advanced manufacturing that America needs.

770
00:40:51,800 --> 00:40:56,400
Speaker 3: It's funny to think about coal powered electric vehicles in

771
00:40:56,440 --> 00:40:59,400
Speaker 3: the future, coal powered AI data centers or whatever, but

772
00:41:00,239 --> 00:41:04,000
Speaker 3: seems like a plausible thing that we'll see at one point.

773
00:41:04,480 --> 00:41:07,719
Speaker 3: One area where the US is clearly dominant, and we've

774
00:41:07,719 --> 00:41:11,120
Speaker 3: already touched on this is like global Internet services, and

775
00:41:11,400 --> 00:41:13,400
Speaker 3: obviously you have what I guess now we'd call the

776
00:41:13,480 --> 00:41:16,760
Speaker 3: legacy ones like your metas and Microsoft's and Amazon. But also,

777
00:41:17,000 --> 00:41:18,799
Speaker 3: you know, open Ai is still you know, it's the

778
00:41:18,800 --> 00:41:21,560
Speaker 3: biggest in the world, and it could be on scale

779
00:41:21,600 --> 00:41:24,279
Speaker 3: and have a footprint as big as some of these

780
00:41:24,360 --> 00:41:27,800
Speaker 3: other giants. It seems like the world is very happy

781
00:41:27,840 --> 00:41:33,239
Speaker 3: to buy bid cars and other built things. But we

782
00:41:33,320 --> 00:41:37,799
Speaker 3: saw the UK di Juae itself several years ago. Will

783
00:41:37,840 --> 00:41:41,279
Speaker 3: the rest of the world adopt Chinese core tech or

784
00:41:41,320 --> 00:41:44,080
Speaker 3: do you think there's still an anxiety about this, maybe

785
00:41:44,080 --> 00:41:47,560
Speaker 3: because of perceptions of the influence that the party would

786
00:41:47,600 --> 00:41:51,200
Speaker 3: have over these companies, et cetera. Does the US still

787
00:41:51,320 --> 00:41:55,640
Speaker 3: enjoy a relative advantage in the comfort that around the

788
00:41:55,680 --> 00:41:59,960
Speaker 3: world people have with using sort of US digital service.

789
00:42:00,640 --> 00:42:03,600
Speaker 4: Certainly, I think there's a lot of governments that are

790
00:42:03,640 --> 00:42:08,120
Speaker 4: really nervous about Chinese technologies the UK, there's all sorts

791
00:42:08,160 --> 00:42:12,280
Speaker 4: of restrictions on Huawei products kind of globally, and we've

792
00:42:12,320 --> 00:42:16,400
Speaker 4: seen even countries really friendly towards China really complain about

793
00:42:16,400 --> 00:42:18,800
Speaker 4: how much it is flooding their markets. We've seen Brazil

794
00:42:18,840 --> 00:42:21,799
Speaker 4: complain about this, We've seen Russia complain about this, and

795
00:42:21,880 --> 00:42:24,560
Speaker 4: so I think governments all over the world are trying

796
00:42:24,560 --> 00:42:27,759
Speaker 4: to have some measure to block Chinese goods. On the

797
00:42:27,760 --> 00:42:30,799
Speaker 4: other hand, I think consumers really don't care, you know what.

798
00:42:31,120 --> 00:42:33,040
Speaker 3: I mean, like for a car or you know, I

799
00:42:33,080 --> 00:42:35,640
Speaker 3: would I'd like to show me phone. No, I don't know,

800
00:42:35,800 --> 00:42:39,560
Speaker 3: maybe they look they look pretty cool, or a zte

801
00:42:39,719 --> 00:42:40,319
Speaker 3: phone or.

802
00:42:40,719 --> 00:42:43,680
Speaker 4: Powerful show that's a national security threat we are reporting you.

803
00:42:44,080 --> 00:42:46,040
Speaker 4: But I think, yeah, definitely, there's a lot of people

804
00:42:46,040 --> 00:42:49,520
Speaker 4: who camera. The cameras seem great, and the BYD cars

805
00:42:49,520 --> 00:42:51,480
Speaker 4: and the Salami cars seem to be also really good

806
00:42:51,480 --> 00:42:53,239
Speaker 4: as well. People want to buy these things, and I

807
00:42:53,239 --> 00:42:55,800
Speaker 4: think the Chinese attitude is, Okay, if you want to

808
00:42:55,920 --> 00:42:59,279
Speaker 4: terrify us, we'll challenge you in wto if that's still

809
00:42:59,280 --> 00:43:02,240
Speaker 4: a thing or will you know, try to push back diplomatically,

810
00:43:02,480 --> 00:43:04,680
Speaker 4: but we're not going to restrain our own exports. What

811
00:43:04,760 --> 00:43:06,640
Speaker 4: we need to do is, you know, if you want

812
00:43:06,640 --> 00:43:09,080
Speaker 4: to block our exports and make good it's more expensive

813
00:43:09,080 --> 00:43:11,759
Speaker 4: for your consumers, that's on you. So, you know, I

814
00:43:11,760 --> 00:43:13,680
Speaker 4: think that's kind of its attitude, and I think there's

815
00:43:13,680 --> 00:43:18,520
Speaker 4: also some nervousness now among European governments from buying American Cloud.

816
00:43:18,800 --> 00:43:20,920
Speaker 4: I don't know if that is going to necessarily lead

817
00:43:20,960 --> 00:43:23,800
Speaker 4: to your purchases, but maybe.

818
00:43:23,600 --> 00:43:25,760
Speaker 3: Tracy, do you have the show me dog feeder?

819
00:43:26,000 --> 00:43:28,200
Speaker 2: No, that I wasn't even aware of that.

820
00:43:28,360 --> 00:43:30,480
Speaker 3: Yeah, there's the thing. There's incredible showing with me. It's

821
00:43:30,520 --> 00:43:32,640
Speaker 3: not just oh's the phone company? Then when cars? You know,

822
00:43:32,640 --> 00:43:35,080
Speaker 3: there's a Shelby rice cooker. There's a shell me TOAs.

823
00:43:35,000 --> 00:43:36,080
Speaker 2: What does the dog feeder do?

824
00:43:36,239 --> 00:43:38,040
Speaker 3: I think it's like a smart dog feeder and it

825
00:43:38,120 --> 00:43:41,319
Speaker 3: knows when to release more food into the bowl using

826
00:43:41,360 --> 00:43:42,040
Speaker 3: all these centers.

827
00:43:42,280 --> 00:43:44,319
Speaker 2: No, I'm old school. I just have a bowl that

828
00:43:44,400 --> 00:43:45,040
Speaker 2: I feel.

829
00:43:44,800 --> 00:43:46,839
Speaker 3: That might be my Christmas present too, if I can

830
00:43:46,840 --> 00:43:47,439
Speaker 3: acquire one.

831
00:43:47,840 --> 00:43:51,320
Speaker 2: Thank you. You're getting an autograph copy of Herman Melville's

832
00:43:51,320 --> 00:43:54,080
Speaker 2: movie Deck if I can find one. Wait, I shouldn't

833
00:43:54,080 --> 00:43:55,600
Speaker 2: say that because people will be like, oh, don't you

834
00:43:55,640 --> 00:44:00,200
Speaker 2: know he's dead. You're getting a first edition of the

835
00:44:00,719 --> 00:44:02,640
Speaker 2: Moby Dick if I can find.

836
00:44:03,360 --> 00:44:04,960
Speaker 3: The Rockwell Kent illustration.

837
00:44:05,120 --> 00:44:08,080
Speaker 2: Okay, all right, noted, I just want to go back

838
00:44:08,080 --> 00:44:10,239
Speaker 2: to what we were talking about in the intro for

839
00:44:10,320 --> 00:44:15,600
Speaker 2: a second, which is the new Involution campaign. Again, it

840
00:44:15,719 --> 00:44:17,960
Speaker 2: seems like China is trying to get a handle on

841
00:44:18,000 --> 00:44:21,439
Speaker 2: some of these overcapacity issues. Is it going to work,

842
00:44:21,480 --> 00:44:24,919
Speaker 2: and what are your general thoughts on this fresh attempt.

843
00:44:25,120 --> 00:44:28,759
Speaker 4: I was living in China when China first announced this

844
00:44:28,880 --> 00:44:33,960
Speaker 4: big supply side reform effort back in twenty seventeen, when

845
00:44:33,960 --> 00:44:37,640
Speaker 4: I tried to reduce a lot of its expansions in steel,

846
00:44:37,840 --> 00:44:40,359
Speaker 4: and this was kind of the big effort. What's really

847
00:44:40,400 --> 00:44:43,279
Speaker 4: different right now is that China's trying to control not

848
00:44:43,520 --> 00:44:47,200
Speaker 4: really the activities of the say, own enterprise sector, is

849
00:44:47,200 --> 00:44:49,560
Speaker 4: trying to control more of the activities of the private sector,

850
00:44:49,600 --> 00:44:51,640
Speaker 4: and I think that is much more difficult as well.

851
00:44:52,040 --> 00:44:54,120
Speaker 4: And I think, you know, it's going to be too

852
00:44:54,120 --> 00:44:56,520
Speaker 4: early to say, but there may be a future in

853
00:44:56,560 --> 00:45:00,000
Speaker 4: which China actually consolidates a lot of the solar production

854
00:45:00,239 --> 00:45:03,000
Speaker 4: to bigger firms, but then all of them become much

855
00:45:03,040 --> 00:45:07,600
Speaker 4: more capable, and they become much bigger threats to foreign

856
00:45:08,000 --> 00:45:10,120
Speaker 4: solar makers to the extent that there are any. But

857
00:45:10,520 --> 00:45:14,279
Speaker 4: consolidation is probably going to help raise quality because there

858
00:45:14,320 --> 00:45:16,520
Speaker 4: are going to be fewer firms earning more profit that

859
00:45:16,560 --> 00:45:19,320
Speaker 4: are going to be able to reinvest more in expansion

860
00:45:19,360 --> 00:45:22,360
Speaker 4: in R and D. So I think that overproduction is

861
00:45:22,440 --> 00:45:25,120
Speaker 4: kind of endemic to China, which is partly why it's

862
00:45:25,160 --> 00:45:27,680
Speaker 4: the engineering state. This is what they're really good at.

863
00:45:27,800 --> 00:45:31,680
Speaker 4: They're just not thinking enough about services, and so I'm

864
00:45:31,760 --> 00:45:34,200
Speaker 4: skeptical that they're going to be able to really tamp

865
00:45:34,239 --> 00:45:35,960
Speaker 4: down overproduction a little longer run.

866
00:45:36,360 --> 00:45:39,480
Speaker 2: All right, Dan Wong, The book is breakneck. It's a

867
00:45:39,480 --> 00:45:43,080
Speaker 2: fantastic read. Joe and I make a very brief appearance,

868
00:45:43,160 --> 00:45:46,279
Speaker 2: so if anyone's interested in that as well, definitely pick

869
00:45:46,320 --> 00:45:48,440
Speaker 2: it up. But d yeah, thank you so much for

870
00:45:48,480 --> 00:45:51,319
Speaker 2: coming back on and for being on the Pod repeatedly

871
00:45:51,520 --> 00:45:53,000
Speaker 2: over almost a decade.

872
00:45:53,040 --> 00:45:55,120
Speaker 4: Now I want to be a friend of the Pod

873
00:45:55,200 --> 00:45:56,439
Speaker 4: for the next decade as well.

874
00:45:56,800 --> 00:46:10,840
Speaker 3: Thank you, Joe.

875
00:46:10,880 --> 00:46:13,840
Speaker 2: Always good to have Dan on, and I'm so glad

876
00:46:13,920 --> 00:46:17,120
Speaker 2: he's sort of like synthesized and laid out all of

877
00:46:17,120 --> 00:46:21,360
Speaker 2: his thoughts because again, like Dan has been watching Chinese

878
00:46:21,360 --> 00:46:24,680
Speaker 2: technology and analyzing the Chinese economy for years and years

879
00:46:24,719 --> 00:46:27,680
Speaker 2: of fear was before it was cool, and really in

880
00:46:27,719 --> 00:46:30,080
Speaker 2: many respects had a front row seat do some pretty

881
00:46:30,200 --> 00:46:34,680
Speaker 2: big developments like the tech crackdown, like COVID zero policies

882
00:46:34,719 --> 00:46:37,600
Speaker 2: in China. So it's really good to read his narrative

883
00:46:37,600 --> 00:46:38,279
Speaker 2: and get his thoughts.

884
00:46:38,400 --> 00:46:40,520
Speaker 3: No, Dan's the best. I love him. You know what's

885
00:46:40,560 --> 00:46:43,040
Speaker 3: interesting I was thinking about and I saw some discussion

886
00:46:43,040 --> 00:46:45,560
Speaker 3: of this online. I forget who. But one thing we

887
00:46:45,600 --> 00:46:49,120
Speaker 3: didn't talk about is, you know, there isn't the persistent

888
00:46:49,200 --> 00:46:52,239
Speaker 3: real estate slump right in China. They have not there

889
00:46:52,280 --> 00:46:54,160
Speaker 3: has not yet been a bottom. It's not the end

890
00:46:54,160 --> 00:46:57,399
Speaker 3: of the world. And actually cheaper housing. Many people would

891
00:46:57,400 --> 00:46:59,120
Speaker 3: say that would be a nice problem they have in

892
00:46:59,160 --> 00:47:02,160
Speaker 3: this perspective right now. But if you think about the

893
00:47:02,160 --> 00:47:06,760
Speaker 3: combination of consolidating the private sector, if you say, okay,

894
00:47:06,760 --> 00:47:09,840
Speaker 3: there's overproduction in the private sector, what that means is

895
00:47:09,880 --> 00:47:11,880
Speaker 3: that there's a lot of people employed who shouldn't be

896
00:47:12,160 --> 00:47:15,560
Speaker 3: or who are it's unsustainable. If you think about that shrinking,

897
00:47:15,600 --> 00:47:18,440
Speaker 3: that's going to be a contributor to a softening in

898
00:47:18,480 --> 00:47:20,640
Speaker 3: the real estate. That's fewer people of jobs, that's fewer

899
00:47:20,640 --> 00:47:23,080
Speaker 3: people who can buy homes. See, when you think about

900
00:47:23,120 --> 00:47:25,919
Speaker 3: the internal balances, there's some real attentions because it's like, yeah,

901
00:47:25,920 --> 00:47:28,960
Speaker 3: of course, let's consolidate. But then you add to the

902
00:47:29,000 --> 00:47:31,560
Speaker 3: woes of one of the biggest sectors in the economy.

903
00:47:31,600 --> 00:47:33,640
Speaker 2: And I mean, we have seen the youth unemployment rate

904
00:47:33,760 --> 00:47:35,960
Speaker 2: pick up recently, and I think that's where you start

905
00:47:36,000 --> 00:47:39,480
Speaker 2: to get into some interesting questions around the social contract

906
00:47:39,600 --> 00:47:42,319
Speaker 2: that the party has with people and this you know,

907
00:47:42,840 --> 00:47:46,040
Speaker 2: expectation that living standards are going to continue to improve

908
00:47:46,480 --> 00:47:49,359
Speaker 2: forever like that is the pressure on the party right,

909
00:47:49,480 --> 00:47:52,400
Speaker 2: and to some extent, as you point out, it's intention

910
00:47:52,719 --> 00:47:55,960
Speaker 2: with the idea of having very efficient companies that are

911
00:47:56,200 --> 00:47:58,440
Speaker 2: operating at scale and at low cost.

912
00:47:58,840 --> 00:47:59,000
Speaker 1: You know.

913
00:47:59,080 --> 00:48:00,960
Speaker 3: One of the things too, it comes up I think

914
00:48:00,960 --> 00:48:03,799
Speaker 3: in a lot of the China conversations is this sort

915
00:48:03,800 --> 00:48:06,560
Speaker 3: of uselessness of a lot of political terms that we

916
00:48:06,680 --> 00:48:09,080
Speaker 3: use here. It came up with Joseph Triggan when we

917
00:48:09,080 --> 00:48:10,960
Speaker 3: were talking about a look, what is the right, you know,

918
00:48:11,040 --> 00:48:14,200
Speaker 3: the the ultra left within the party, mean the ultra right,

919
00:48:14,200 --> 00:48:17,839
Speaker 3: et cetera. But even hearing Dan talk about well it's

920
00:48:17,880 --> 00:48:21,520
Speaker 3: a sort of right wing Leninist country, et cetera. Like

921
00:48:21,600 --> 00:48:25,480
Speaker 3: these words that we use to describe politics, I think

922
00:48:25,480 --> 00:48:29,440
Speaker 3: they maybe they detract more than they clarify when we're

923
00:48:29,440 --> 00:48:30,200
Speaker 3: talking about China.

924
00:48:30,239 --> 00:48:31,920
Speaker 2: I don't believe in political labels.

925
00:48:32,000 --> 00:48:34,360
Speaker 3: Joe, No, that's good. That's good, all right. I respect that.

926
00:48:34,480 --> 00:48:36,040
Speaker 3: Shall we leave it there, Let's leave it there.

927
00:48:36,239 --> 00:48:38,480
Speaker 2: This has been another episode of the aud Thoughts podcast.

928
00:48:38,520 --> 00:48:41,360
Speaker 2: I'm Tracy Alloway. You can follow me at Tracy Alloway.

929
00:48:41,440 --> 00:48:44,240
Speaker 3: And I'm Joe Wisenthal. You can follow me at The Stalwart.

930
00:48:44,600 --> 00:48:47,239
Speaker 3: Follow Dan Wong He's at Dan w Wong, and of

931
00:48:47,280 --> 00:48:50,640
Speaker 3: course check out his new book Breakneck. Follow our producers

932
00:48:50,680 --> 00:48:54,000
Speaker 3: Carmen Rodriguez at Carman armand Dashill Bennett at Dashbot and

933
00:48:54,120 --> 00:48:57,000
Speaker 3: kill Brooks at Kilbrooks. For more Odd Loots content, go

934
00:48:57,080 --> 00:48:59,479
Speaker 3: to Bloomberg dot com slash odd Lots with the daily

935
00:48:59,560 --> 00:49:02,040
Speaker 3: news letter and all of our episodes, and you can

936
00:49:02,120 --> 00:49:04,160
Speaker 3: chat about all of these topics twenty four to seven

937
00:49:04,239 --> 00:49:07,719
Speaker 3: in our discord Discord dot gg slash hotlines.

938
00:49:08,000 --> 00:49:10,239
Speaker 2: And if you enjoy odd Lots, if you like it

939
00:49:10,440 --> 00:49:12,400
Speaker 2: when we have Dan Wong on the show, then please

940
00:49:12,480 --> 00:49:15,320
Speaker 2: leave us a positive review on your favorite podcast platform.

941
00:49:15,880 --> 00:49:18,440
Speaker 2: And remember, if you are a Bloomberg subscriber, you can

942
00:49:18,480 --> 00:49:21,640
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943
00:49:21,680 --> 00:49:23,719
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944
00:49:23,840 --> 00:49:27,320
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