WEBVTT - Dan Wang on China's Breakneck Economic Growth 0:00:02.720 --> 0:00:17.720 Bloomberg Audio Studios, Podcasts, radio News. 0:00:18.560 --> 0:00:21.480 Hello and welcome to another episode of the Authoughts podcast. 0:00:21.560 --> 0:00:22.880 I'm Tracy Alloway. 0:00:22.600 --> 0:00:24.600 And I'm Joe. Wasn't thal Joe. 0:00:24.640 --> 0:00:28.120 We are recording this on August twenty seventh. Did you 0:00:28.320 --> 0:00:30.960 catch the Trump Cabinet meeting yesterday? 0:00:32.880 --> 0:00:35.159 I saw your tweets and they looked like some of 0:00:35.159 --> 0:00:40.199 the most obsequious. I mean a lot of these unusually obsequious. 0:00:40.240 --> 0:00:42.239 But even yes, I. 0:00:42.200 --> 0:00:45.040 Saw your tweets, you could just say yes. So there 0:00:45.040 --> 0:00:47.440 are a bunch of things that stood out, But one 0:00:47.600 --> 0:00:52.040 in particular was Donald Trump talking about building out new 0:00:52.159 --> 0:00:57.200 energy capacity and he said specifically, I'm going to quote here. 0:00:57.600 --> 0:01:00.319 You know, in China they do it very quickly. They 0:01:00.320 --> 0:01:02.480 have one person that says do it, and that's it. 0:01:02.640 --> 0:01:05.040 But essentially, we have one person that says do it, 0:01:05.440 --> 0:01:06.960 and we've given that order. 0:01:07.400 --> 0:01:10.959 Yeah, you know, like he's very abundance coded. He wants 0:01:11.000 --> 0:01:13.319 to like he wants to get rid of all of 0:01:13.360 --> 0:01:15.920 the uh or he seems to have this impulse to 0:01:15.959 --> 0:01:19.080 get rid of all of the myriad checks and balances 0:01:19.200 --> 0:01:21.440 and all these things that stand in the way of 0:01:21.480 --> 0:01:24.679 developing things. So it sounds like Trump is abundance pilled. 0:01:24.720 --> 0:01:26.640 I assume that's the direction you're going on. Yes. 0:01:26.760 --> 0:01:29.200 If there's one thing I think you could say about 0:01:29.319 --> 0:01:32.480 China's economy and it's political economy, it is that China 0:01:32.640 --> 0:01:35.640 is pretty good at building things, yes, right, And we've 0:01:35.680 --> 0:01:38.959 seen various examples of that over time. Back when I 0:01:39.040 --> 0:01:40.920 was living in Hong Kong, I took the high speed 0:01:41.000 --> 0:01:44.560 rail from Hong Kong to Beijing and that was absolutely amazing. 0:01:44.600 --> 0:01:46.640 You get to Beijing in less than a day. The 0:01:46.760 --> 0:01:49.960 US is nowhere near having anything like that, and I 0:01:50.000 --> 0:01:53.160 speak as someone who takes Amtrak in the Northeast regularly. 0:01:53.880 --> 0:01:58.320 On the other hand, China at various times has produced 0:01:58.360 --> 0:01:58.840 too much. 0:01:59.000 --> 0:01:59.200 Right. 0:02:00.800 --> 0:02:03.960 It's accused as such, right. I know that people say. 0:02:03.720 --> 0:02:08.080 This, okay, But for instance, you think back to the 0:02:08.120 --> 0:02:10.480 Ghost City, Sure bridges to nowhere. 0:02:10.800 --> 0:02:12.960 Sure at they were bridges to nowhere at the time. 0:02:13.280 --> 0:02:15.000 Amusement parks that no one goes to. 0:02:15.200 --> 0:02:17.720 Definitely, although we have amusement parks here that no one 0:02:17.760 --> 0:02:18.600 goes to. 0:02:18.639 --> 0:02:23.560 Disagree or disagree hard. But this has sparked a new 0:02:23.680 --> 0:02:28.120 movement in China by policymakers called involution yes, which is 0:02:28.160 --> 0:02:32.240 basically an attempt to reduce over capacity in terms of 0:02:32.240 --> 0:02:32.799 building things. 0:02:32.919 --> 0:02:36.440 There's definitely no question that there does seem to be 0:02:36.520 --> 0:02:40.959 this phenomenon which the government in Beijing seems highly cognizant of, 0:02:41.320 --> 0:02:44.960 which is this sort of like profitless competition, much of 0:02:44.960 --> 0:02:47.680 it driven by the incentive structure that is borne by 0:02:47.720 --> 0:02:51.280 the provinces promoting their local champions, and so far as 0:02:51.400 --> 0:02:53.720 much like sort of success as some of these companies 0:02:53.760 --> 0:02:56.440 have on some metrics, there's no money to be made 0:02:56.520 --> 0:02:58.640 in many cases. It sounds sort of nice from the 0:02:58.680 --> 0:03:01.760 consumer perspective, you know, it's like Zurbier twenty tens when 0:03:01.800 --> 0:03:03.920 we were all getting like, you know, cheap ubers and 0:03:03.919 --> 0:03:07.040 stuff like that. But you know, there's a seems to 0:03:07.080 --> 0:03:09.160 be a risk of certain internal imbalances on that. 0:03:09.440 --> 0:03:10.840 I think the issue is you have a lot of 0:03:10.880 --> 0:03:14.799 companies who are basically producing all the same thing and therefore, 0:03:15.000 --> 0:03:17.280 you know, racing to the bottom in terms of price, 0:03:17.440 --> 0:03:19.560 and no one can actually make money. And I don't 0:03:19.560 --> 0:03:22.000 know about you, but if I was a startup founder, 0:03:22.120 --> 0:03:24.480 I would probably want to make money right at some point. 0:03:24.520 --> 0:03:27.360 I would not want to be locked in a forever 0:03:27.520 --> 0:03:31.600 competition in terms of who could drive the absolute lowest cost. 0:03:31.720 --> 0:03:33.880 Well, what if you were just a normal consumer who 0:03:33.919 --> 0:03:34.640 wasn't a founder? 0:03:35.120 --> 0:03:38.920 Sadly, that is what I am. Okay, Well, on this note, 0:03:39.160 --> 0:03:41.520 we have the perfect guest. We're going to be speaking 0:03:41.600 --> 0:03:44.720 with Dan Wong, friend of the Pod and who has 0:03:44.840 --> 0:03:48.920 just written a new book called Breakneck China's Quest to 0:03:49.000 --> 0:03:51.840 Engineer the Future. He's also a research scholar at the 0:03:51.840 --> 0:03:54.320 Hoover Institution. So Dan, welcome back to the show. 0:03:54.600 --> 0:03:57.720 Thanks so much, Tracy, really glad to talk about moby 0:03:57.760 --> 0:03:58.920 Dick with my friends. 0:04:00.360 --> 0:04:02.480 Why do coach trouble? Why do you coble? 0:04:02.560 --> 0:04:04.400 You know, I was actually wondering if you were going 0:04:04.440 --> 0:04:06.840 to bring up the Moby Dick reference. 0:04:06.640 --> 0:04:09.560 The problem Joe, I've been a ket for a very 0:04:09.600 --> 0:04:11.480 long time. Maybe this is the way needs to be 0:04:11.520 --> 0:04:12.720 getting into That's. 0:04:12.640 --> 0:04:16.320 Right, okay, simple question to start. Why does China like 0:04:16.360 --> 0:04:17.080 building stuff? 0:04:17.320 --> 0:04:20.520 China likes building stuff because it is made up of 0:04:21.240 --> 0:04:25.880 leadership that is very heavily engineering pilled. Many of them 0:04:25.960 --> 0:04:30.960 have been engineer's trained of a very Soviet sort, hydraulic engineers, 0:04:31.000 --> 0:04:34.760 electrical engineers, thermal engineers, which is kind of a termine China. 0:04:34.800 --> 0:04:39.440 That means producing coal and processing coal, they treat the 0:04:39.880 --> 0:04:44.080 megaproject as the solution to every problem. They are building 0:04:44.279 --> 0:04:47.640 enormous dams. They're building a big new dam now that 0:04:47.760 --> 0:04:50.000 is going to use sixty times more concrete than the 0:04:50.040 --> 0:04:53.039 Hoover dam. They're it's going to produce I think, three 0:04:53.040 --> 0:04:55.839 times as much power as the three gorgeous dam. But 0:04:55.960 --> 0:04:58.760 this is a lot of their solutions to a lot 0:04:58.800 --> 0:05:01.839 of different economic problems and social problems as well. That 0:05:02.400 --> 0:05:06.080 new highways, new homes, coal plants, hyperscalers. It's what they 0:05:06.120 --> 0:05:07.880 know how to do, and it's what they're going to do. 0:05:08.360 --> 0:05:09.880 First of all, Before we go any further, I just 0:05:09.920 --> 0:05:12.599 want to say it, like, having spoken to for years, 0:05:12.640 --> 0:05:15.799 I'm thrilled of all the recognition you're getting for this book. 0:05:16.320 --> 0:05:18.640 I know we weren't like the first to discover Dan Wong. 0:05:18.680 --> 0:05:22.080 I think Tyler Cowen got there first, but it's been 0:05:22.160 --> 0:05:24.920 fantastic talking to you over the years, and there's sort 0:05:24.920 --> 0:05:27.920 of like a vindication I think of your career, et cetera, 0:05:27.960 --> 0:05:30.720 because now everyone wants to see the world through the 0:05:30.800 --> 0:05:34.280 Dan Wong lund. So think I just wanted to say 0:05:34.279 --> 0:05:35.960 how exciting it is and happy for you that you're 0:05:35.960 --> 0:05:36.360 getting all. 0:05:36.279 --> 0:05:38.159 This is channeling the Trump cabinet. 0:05:38.720 --> 0:05:44.599 Oh wow, I'm being am I Trump. Yeah, yeah, I guess, okay, good, Okay. 0:05:45.000 --> 0:05:47.640 As Tracy mentioned, Trump talked about you know if someone 0:05:47.640 --> 0:05:49.799 says do it and then they do it. But I'm curious, 0:05:49.880 --> 0:05:52.400 like how much is it? Would you say, like the 0:05:52.440 --> 0:05:57.480 political system really allows for that versus the actual like 0:05:57.839 --> 0:06:01.400 breadth of labor and just engineering knowledge, Like how would 0:06:01.400 --> 0:06:04.520 you tilt the sort of political structure versus the skills. 0:06:05.040 --> 0:06:05.760 I think it's both. 0:06:06.240 --> 0:06:10.600 So China has a lot of economic ministries like the NDERC, 0:06:10.839 --> 0:06:14.560 the National Development and Reform Commission, and the MIIT, the 0:06:14.560 --> 0:06:18.839 Ministry of Industry and Information Technologies. You have all of 0:06:18.880 --> 0:06:21.719 these planners that are making new plans all the time, 0:06:21.839 --> 0:06:25.800 and they have exactly great plans to know where the 0:06:25.839 --> 0:06:29.080 next subway station in Beijing or Shinjin or quimming On 0:06:29.200 --> 0:06:32.280 to go. And so there's plenty of shovel ready projects 0:06:32.360 --> 0:06:35.279 because people have already been planning for these things for years. 0:06:35.720 --> 0:06:39.160 And every time China's economy has any sort of a wobble, 0:06:39.440 --> 0:06:42.520 then the Communist Party says, okay, well we're going to 0:06:42.560 --> 0:06:44.880 build another really big dam, or we're going to build 0:06:44.920 --> 0:06:47.400 more highway systems. So you have a lot of shovel 0:06:47.400 --> 0:06:50.240 ready projects in place, and then you have the government 0:06:50.360 --> 0:06:53.280 thinking that while pouring more concrete is still going to 0:06:53.320 --> 0:06:55.680 be the solution to a lot of our different problems. 0:06:56.040 --> 0:06:58.640 And on top of that, you have a very skilled 0:06:58.839 --> 0:07:02.880 manufacturing workforce. You have a very skilled public sector that 0:07:03.000 --> 0:07:05.160 has been building a lot of high speed trains, that 0:07:05.200 --> 0:07:06.840 have been building a lot of big ships, that have 0:07:06.960 --> 0:07:10.040 been building subway systems. They know how to do this stuff, 0:07:10.080 --> 0:07:12.120 and so it just comes really naturally. You have the 0:07:12.160 --> 0:07:15.280 system plus the politics all favoring a lot of construction. 0:07:15.720 --> 0:07:19.520 When you say Chinese policy makers are made up of engineers, 0:07:20.040 --> 0:07:22.600 I have two questions. So one, how did that come 0:07:22.640 --> 0:07:24.960 to be? And then secondly, could you maybe give us 0:07:25.000 --> 0:07:30.000 some specific examples of how that manifests in actual policy. So, 0:07:30.040 --> 0:07:34.280 for instance, does having an engineering background make you perhaps 0:07:35.000 --> 0:07:38.800 better at making strategic decisions about economic priorities? Like how 0:07:38.840 --> 0:07:41.440 does that background actually come into play? 0:07:42.040 --> 0:07:46.280 I think China's engineering state has deep roots, but the 0:07:46.480 --> 0:07:51.000 modern manifestation really took shape after the nineteen eighties when 0:07:51.080 --> 0:07:54.440 dunzhel Peing took over from the total mayhem of the 0:07:54.480 --> 0:07:58.720 mal Years and dounzheal Peing thought, well, Mao was kind 0:07:58.760 --> 0:08:02.120 of this poet. He was a warlord, he was a romantic, 0:08:02.200 --> 0:08:03.120 he was a murderer. 0:08:03.440 --> 0:08:05.080 What is the opposite of all of that. 0:08:05.440 --> 0:08:08.520 Well, we're going to put mechanical engineers within the polit bureau, 0:08:08.600 --> 0:08:11.119 and that is exactly what Deng Xiaoping did. So throughout 0:08:11.160 --> 0:08:14.200 the nineteen eighties and the nineteen nineties, don't put a 0:08:14.240 --> 0:08:16.520 lot of engineers in the polit bureau, such that by 0:08:16.560 --> 0:08:19.040 the year two thousand and two, every single member of 0:08:19.080 --> 0:08:22.320 the Standing Committee, all nine people, especially Hu Jintao and 0:08:22.360 --> 0:08:25.720 Buen Jabal, the General Secretary and the Premier at the time, 0:08:25.880 --> 0:08:28.760 everyone had degrees in engineering, and that. 0:08:28.720 --> 0:08:30.160 Has fluctuated a little bit. 0:08:30.360 --> 0:08:32.880 By the time that Seizing Pain came to office, who's 0:08:32.960 --> 0:08:36.319 undergrad was a chemical engineer, I think he saw the 0:08:36.400 --> 0:08:40.000 light and his doctorate was Marxist economics, so you know, 0:08:40.000 --> 0:08:42.920 we have a pseudo economist up there. By the time 0:08:42.960 --> 0:08:46.280 that he came into office, his Premier, He Kutiang, was 0:08:46.320 --> 0:08:49.360 trained in I believe law in the economics. But now 0:08:49.520 --> 0:08:53.319 in the twentieth Party Congress after twenty twenty two, China's 0:08:53.600 --> 0:08:56.560 engineers are really dominant again, which you have a lot 0:08:56.640 --> 0:09:00.360 of people from the military industrial complex in the top 0:09:00.520 --> 0:09:03.200 of the politbureau. But I also want to suggest, but 0:09:03.280 --> 0:09:07.160 playfully and lightly, that there are ancient roots of China's 0:09:07.160 --> 0:09:10.520 engineering state as well. This is famously the state that 0:09:10.720 --> 0:09:16.080 administered a vast exam nation system, which people became mandarins 0:09:16.080 --> 0:09:18.880 by doing these exams administered by the court. 0:09:19.440 --> 0:09:20.920 You had a lot of. 0:09:21.120 --> 0:09:25.240 Chinese emperors that didn't hesitate to conscript people to build 0:09:25.280 --> 0:09:28.520 great walls or grand canals. So these are fortifications and 0:09:28.640 --> 0:09:31.120 waterway systems, and so I don't want to take this 0:09:31.160 --> 0:09:33.760 too literally, but you can sort of see how a 0:09:33.760 --> 0:09:37.280 lot of emperors never really hesitated to completely restructure a 0:09:37.320 --> 0:09:40.160 person's relationship to our land. And so that's a little 0:09:40.160 --> 0:09:40.800 bit deeper too. 0:09:41.360 --> 0:09:44.880 So, you know, Tracy mentioned that, and I have no 0:09:45.000 --> 0:09:46.920 doubt that it is true that there's you know, these 0:09:46.960 --> 0:09:49.880 various like white elephant projects are things that get built 0:09:49.880 --> 0:09:52.439 that aren't necessary. In your book talks about them. All 0:09:52.480 --> 0:09:54.800 that being said, it seems like one of the objective 0:09:54.800 --> 0:09:58.320 facts in the world is that Chinese living standards and 0:09:58.679 --> 0:10:02.080 the economy has dramatically in the last ten twenty years, 0:10:02.080 --> 0:10:05.840 like to an extraordinary degree. Does the success of all 0:10:05.880 --> 0:10:09.959 these Chinese planning boards? Do you think it strikes a 0:10:10.040 --> 0:10:13.679 heart in certain conventionalism, planning isn't supposed to work. Economists 0:10:13.720 --> 0:10:18.120 are very skeptical of planning, the hi Ekian idea that 0:10:18.160 --> 0:10:21.200 the market and prices are the best signals for these things. 0:10:21.360 --> 0:10:24.200 What kind of challenge does China's success opposed to some 0:10:24.240 --> 0:10:25.040 of these ideas. 0:10:25.320 --> 0:10:30.280 I don't want to think that China's success strikes at 0:10:30.360 --> 0:10:33.679 the very heart of planning in economics. I think that 0:10:33.760 --> 0:10:36.959 China has not demonstrated the success of central planning a 0:10:37.160 --> 0:10:41.640 large I think I would defend a narrower case that 0:10:42.120 --> 0:10:45.200 a lot of construction has been good for a lot 0:10:45.200 --> 0:10:48.319 of people. So I think that China is what other 0:10:48.360 --> 0:10:51.080 tests is there? Well, maybe there are other tests, which 0:10:51.120 --> 0:10:53.760 is that whether people are happy. I think that is 0:10:53.840 --> 0:10:56.800 a decent test, whether they feel the ability to have 0:10:56.920 --> 0:11:00.360 creative expression, whether they feel that their lives are going 0:11:00.400 --> 0:11:03.000 to be better because they're able to save some money. 0:11:03.360 --> 0:11:06.199 I think not just about the physical living standards, although 0:11:06.200 --> 0:11:08.840 I think that is really important because I've spent plenty 0:11:08.840 --> 0:11:11.760 of time in China's rich re zones. I was living 0:11:11.800 --> 0:11:15.000 in Hong Kong, Beijing, and Shanghai, where you can see 0:11:15.040 --> 0:11:17.280 that these cities get better and better every year. You 0:11:17.320 --> 0:11:20.160 have new subway stations. Shanghai this year will have a 0:11:20.240 --> 0:11:24.120 thousand parks, up from five hundred in twenty twenty. All 0:11:24.160 --> 0:11:27.000 of these cities are really highly functional. I've been in 0:11:27.080 --> 0:11:30.960 China Southwest and Gwaijo Province, China's fourth poorest province, and 0:11:31.000 --> 0:11:34.079 you have these enormous bridges that are bridges to nowhere 0:11:34.080 --> 0:11:36.920 when they start, but then to nowhere has become maybe 0:11:36.960 --> 0:11:40.120 two somewhere, so after it is built, and people actually 0:11:40.160 --> 0:11:42.400 feel a lot of pride about all of these things. 0:11:42.600 --> 0:11:44.760 And so I think that a lot of construction, a 0:11:44.760 --> 0:11:47.400 lot of home building, a lot of electricity production through 0:11:47.520 --> 0:11:50.400 coal as well as hydro and solar, these things are 0:11:50.440 --> 0:11:52.840 all really good. I think you can definitely point to 0:11:52.880 --> 0:11:55.240 a lot of costs. There's a lot of material waste 0:11:55.280 --> 0:11:58.320 and all of this concrete that's very carbon intensive. There's 0:11:58.360 --> 0:12:01.360 a lot of financial problems. Squadjo can't really pay a 0:12:01.360 --> 0:12:03.480 lot of its debts right now. There's a lot of 0:12:03.520 --> 0:12:06.360 displacement of people. Three gorgious scam display something like a 0:12:06.360 --> 0:12:09.960 million people. I would say that physical construction is mostly 0:12:09.960 --> 0:12:11.720 pretty good, though there are plenty of costs. 0:12:12.000 --> 0:12:14.800 We talk more about financial problems from all of this, 0:12:14.840 --> 0:12:18.880 because obviously the local government debt situation has been much discussed. 0:12:18.920 --> 0:12:21.080 But you point out in the book, for instance, that 0:12:21.160 --> 0:12:24.439 you can see evidence of some of this impact in 0:12:24.559 --> 0:12:28.719 things like Chinese stocks. So because you have all these 0:12:28.720 --> 0:12:31.200 companies who are basically racing to the bottom in terms 0:12:31.240 --> 0:12:33.720 of price, it's difficult for them to produce a profit, 0:12:34.240 --> 0:12:37.800 and so the stock price basically has traded sideways for 0:12:37.880 --> 0:12:40.360 like a decade. I guess part of that would also 0:12:40.400 --> 0:12:43.400 be capital controls and the impact from that. But how 0:12:43.400 --> 0:12:45.440 does this manifest in terms of finances. 0:12:45.840 --> 0:12:48.160 Well, let's take a look at something like the solar industry, 0:12:48.200 --> 0:12:51.040 which I think is kind of an emblematic Chinese success. 0:12:51.120 --> 0:12:54.400 You have China producing something like ninety percent of the 0:12:54.480 --> 0:12:58.160 solar PV modules in the world. But China isn't only 0:12:58.200 --> 0:13:01.080 producing the final product, it is also producing all of 0:13:01.120 --> 0:13:04.559 the polysilicon as well as all the tools to produce solar. 0:13:05.080 --> 0:13:08.880 And in the solar industry, you have basically zero differentiation 0:13:09.120 --> 0:13:11.880 between most of the big solar producers. You know, something 0:13:11.920 --> 0:13:14.320 like the third largest solar producer in China is not 0:13:14.480 --> 0:13:17.400 that different from the fifteenth largest, and maybe not even 0:13:17.400 --> 0:13:20.360 that different from the thirtieth largest. They're all making pretty 0:13:20.440 --> 0:13:25.120 undifferentiated products. And what this has represented is kind of 0:13:25.120 --> 0:13:28.240 a strategic trium for the Chinese government that they have 0:13:28.320 --> 0:13:30.720 a lock on one of these critical industries of the 0:13:30.720 --> 0:13:33.640 future that a lot of countries will need. It is 0:13:33.920 --> 0:13:37.520 awesome for consumers everywhere. So if you are trying to 0:13:37.679 --> 0:13:41.199 build a solar panel onto your roof, either in China 0:13:41.360 --> 0:13:43.960 or in the US, you know, solar costs have plunged 0:13:44.080 --> 0:13:47.040 something like ninety four percent since the year two thousand 0:13:47.160 --> 0:13:49.600 or so. I think that's about the right figure. And 0:13:49.640 --> 0:13:52.440 it's been total misery for these companies as well as 0:13:52.440 --> 0:13:56.040 their investors. And maybe this is what socialism with Chinese 0:13:56.120 --> 0:13:58.960 characteristics means, which is a lot of state power, a 0:13:58.960 --> 0:14:02.880 lot of consumer power, but not very much financial investor's benefit. 0:14:19.360 --> 0:14:22.600 So, speaking of her novelle this is not about Moby Dick, 0:14:23.080 --> 0:14:27.080 I'm actually thinking about his novella Bartleby, in which you know, 0:14:27.120 --> 0:14:29.920 the famous character Bartleby decides I would prefer not to. 0:14:30.000 --> 0:14:32.480 He's working on Wall Street and then one day he 0:14:32.480 --> 0:14:34.640 would prefer not to, and the people around him are 0:14:34.680 --> 0:14:37.640 completely exasperated at this person. And of course we saw 0:14:38.080 --> 0:14:39.960 a few years ago people were talking about the live 0:14:40.040 --> 0:14:43.480 flat movement, And so when you talk about, oh, you know, 0:14:43.640 --> 0:14:46.040 like perhaps it's come at the cost of happiness, Like 0:14:46.320 --> 0:14:49.520 how wide spread is this? How much of this success 0:14:50.080 --> 0:14:52.280 in China? I mean one of the other aspects of 0:14:52.320 --> 0:14:55.320 you know, unions aren't legal in China. I presume striking 0:14:55.400 --> 0:14:58.200 isn't legal in China, and so forth, Like how much 0:14:58.200 --> 0:15:03.000 of this material success that everyone enjoys to some extent 0:15:03.440 --> 0:15:06.920 in your view, has come down to sort of extracting 0:15:07.160 --> 0:15:10.200 the worker surplus. And how big do you think is 0:15:10.520 --> 0:15:13.000 there like a larger brewing impulse to fight against that. 0:15:13.640 --> 0:15:16.200 Well, when I first read bartle B the Scrivener, I 0:15:16.600 --> 0:15:20.240 saw some commentary that it's actually a lot about homo eroticism. 0:15:20.360 --> 0:15:22.160 I thought that maybe that's where we were going to go, 0:15:22.200 --> 0:15:24.120 but maybe we'll take a look at that later. I 0:15:24.160 --> 0:15:28.520 think that whether people in China are happy is always 0:15:28.520 --> 0:15:31.640 a very interesting and excessively broad question, and I always 0:15:31.720 --> 0:15:33.080 wonder about things like. 0:15:33.040 --> 0:15:35.400 That, if anyone's happy in the world, but keep going. 0:15:35.240 --> 0:15:38.040 You know, Bhutan, with something like four traffic lights in 0:15:38.080 --> 0:15:41.000 the country is supposed to be super happy. We don't 0:15:41.000 --> 0:15:43.880 really get that. Certainly, we can observe that there are 0:15:43.960 --> 0:15:48.080 a lot of Chinese, mostly elites, who are interested in 0:15:48.160 --> 0:15:53.240 creative expression. Many of them have become deeply unsatisfied. So 0:15:53.560 --> 0:15:57.320 they are moving to the Netherlands, They're moving to New York, 0:15:57.560 --> 0:16:00.800 They're moving to Chang Mai. I've seen some of their 0:16:00.840 --> 0:16:03.240 events here in New York. There's a feminist stand up 0:16:03.280 --> 0:16:06.240 comedy which is, you know, having a lot of comedy 0:16:06.280 --> 0:16:09.720 shows in Chinese. That is pretty active of a scene 0:16:09.760 --> 0:16:12.560 here in Manhattan actually, And so there's a lot of 0:16:12.560 --> 0:16:16.760 people journalists who have had their pieces completely censored Six 0:16:16.800 --> 0:16:20.320 Ways to Sunday who are pretty dissatisfied. There's plenty of 0:16:20.320 --> 0:16:24.400 people dissatisfied in Shanghai who had a horrible time throughout 0:16:24.400 --> 0:16:27.400 the lockdown. And we had these astonishing numbers of something like, 0:16:27.640 --> 0:16:30.720 at its peak, forty thousand Chinese flying to Ecuador where 0:16:30.720 --> 0:16:33.240 they don't have to get a visa to walk up 0:16:33.240 --> 0:16:36.200 to the southwestern border in the United States because they 0:16:36.200 --> 0:16:39.280 are so upset with a seizing pain. But it's the 0:16:39.320 --> 0:16:42.760 broader mass of Chinese unhappy, well pretty hard to say. 0:16:43.120 --> 0:16:45.480 I think there are plenty of people who are working 0:16:45.480 --> 0:16:48.840 for state don't enterprises and you know, not really enjoying 0:16:48.920 --> 0:16:51.200 much of their time there. You could be working for 0:16:51.240 --> 0:16:53.720 one of these big tech companies and working nine ninety 0:16:53.720 --> 0:16:56.840 six hours nine am to nine pm, six days a week, 0:16:57.000 --> 0:16:59.800 and that's not very happy. You could be living with 0:16:59.800 --> 0:17:00.440 your parents. 0:17:00.480 --> 0:17:02.920 Because which, by the way, is the same Silicon Valley. 0:17:03.240 --> 0:17:05.640 Well, I thought it was the same as Bloombergley, but yeah. 0:17:05.440 --> 0:17:07.320 It's probably nine nine to seven in Stilicon Valley. 0:17:07.320 --> 0:17:09.399 But do you get equity in the company in return 0:17:09.440 --> 0:17:10.200 for your hard work? 0:17:10.600 --> 0:17:12.199 Maybe some of them do, but it's probably not to 0:17:12.280 --> 0:17:15.160 the same extent in Silicon Valley. But at the same time, 0:17:15.280 --> 0:17:18.720 you know, if you're a young Chinese living in Shanghai, 0:17:19.240 --> 0:17:21.480 perhaps your cause of living is not super high because 0:17:21.480 --> 0:17:23.320 they're living with your parents. You get to save some 0:17:23.400 --> 0:17:26.280 money by working at a state owned enterprise. You have 0:17:26.400 --> 0:17:29.879 excellent cafes popping up all the time. A lot of 0:17:30.040 --> 0:17:32.199 things are pretty cheap. You can get a bowl of 0:17:32.200 --> 0:17:35.359 noodles really cheaply. And you know, for people who are 0:17:35.440 --> 0:17:37.720 debating whether they want to try to make a career 0:17:37.840 --> 0:17:40.560 in London or New York and try to be really 0:17:40.600 --> 0:17:44.440 ambitious or just have a thumping lifestyle life flat lifestyle 0:17:44.800 --> 0:17:47.600 in Shanghai. Maybe that's kind of a wash. So I 0:17:47.600 --> 0:17:51.720 don't see simmering discontent that threatens the top older gem, 0:17:52.040 --> 0:17:54.360 but certainly there are plenty of people dissatisfied. 0:17:54.760 --> 0:18:00.000 There's also arguably a sort of existential dread hanging over 0:18:00.280 --> 0:18:04.560 certain sectors or certain entrepreneurs, which is that at any time, 0:18:05.000 --> 0:18:08.160 the Chinese government could change its mind about what industry 0:18:08.200 --> 0:18:11.040 it actually wants to promote and nurture. And we saw 0:18:11.080 --> 0:18:13.440 that happen. I think when you and I were both 0:18:13.440 --> 0:18:16.680 in Hong Kong in twenty twenty slash twenty twenty one, 0:18:17.480 --> 0:18:19.840 and this was a big deal. So this idea that 0:18:19.920 --> 0:18:22.520 China all of a sudden kind of turned its back 0:18:22.720 --> 0:18:28.439 on more consumer oriented technology companies, how big of a 0:18:28.520 --> 0:18:31.480 legacy did that have or how big of an impact 0:18:31.480 --> 0:18:35.000 did that have on the sort of entrepreneurial spirit of China. 0:18:35.640 --> 0:18:39.320 There's plenty of data to suggest that VC funds in 0:18:39.440 --> 0:18:42.560 China are having a hard time actually raising funds and 0:18:42.600 --> 0:18:45.840 also having a hard time deploying their capital. Certainly, it's 0:18:45.880 --> 0:18:48.399 become pretty difficult for a lot of startups to exit 0:18:48.520 --> 0:18:51.000 because they can't necessarily list in the US, and they 0:18:51.000 --> 0:18:54.720 can't necessarily list very easily in China as well. China's 0:18:54.760 --> 0:18:57.480 consumption over the last few years has been pretty limp 0:18:57.560 --> 0:19:01.040 after the COVID crackdowns. A lot of companies had to 0:19:01.080 --> 0:19:05.399 have pretty extensive layoffs, and they're just not having a 0:19:05.440 --> 0:19:08.800 really easy time given the limp consumption, spending really large 0:19:08.840 --> 0:19:10.960 in China. I think this goes to a kind of 0:19:11.000 --> 0:19:15.520 a broader point within authoritarian systems, which is that no 0:19:15.560 --> 0:19:19.639 one feels very safe in a lot of authoritarian systems. 0:19:19.640 --> 0:19:22.320 You can be an elite in Beijing, and what is 0:19:22.359 --> 0:19:25.400 your life going to be? Your life could be working 0:19:25.600 --> 0:19:29.120 in the financial industry, which is a definite elite everywhere, 0:19:29.280 --> 0:19:32.919 including in Beijing. And two years ago, Beijing announced that 0:19:32.960 --> 0:19:34.960 it was going to have a salary cap of three 0:19:35.000 --> 0:19:38.600 hundred thousand dollars roughly for people working in state owned banks. 0:19:38.880 --> 0:19:41.640 And if you made over that figure the last couple 0:19:41.680 --> 0:19:43.440 of years, you may have to give some money back 0:19:43.480 --> 0:19:46.080 to the government. Maybe you're working for a tech company 0:19:46.119 --> 0:19:48.560 and you think that online education is going to be 0:19:48.600 --> 0:19:51.720 totally safe, because Chinese love education and they're always going 0:19:51.760 --> 0:19:53.960 to be spending more money on their kids, and then 0:19:54.160 --> 0:19:57.600 that worked until the government declared everything must be a nonprofit. 0:19:57.960 --> 0:20:00.280 If you're working for the military, if you're working for 0:20:00.280 --> 0:20:03.280 the government, your life could be subject to either a 0:20:03.280 --> 0:20:06.959 corruption crackdown or some sort of the political wins changing 0:20:07.000 --> 0:20:09.360 and your patron is no longer in place, and then 0:20:09.400 --> 0:20:11.919 your whole network of patronage has to fall. And so 0:20:12.080 --> 0:20:14.320 this is one of these things where there is kind 0:20:14.359 --> 0:20:17.920 of this apocalyptic sense that hangs over you if you're 0:20:17.960 --> 0:20:21.200 living in Beijing, Shanghai, perhaps even in Hong Kong, where 0:20:21.520 --> 0:20:23.359 a lot of your life could fall apart and there's 0:20:23.440 --> 0:20:26.119 no one really to protect you, no lawyers that you 0:20:26.119 --> 0:20:28.720 can turn to, the court system to really turn to. 0:20:29.320 --> 0:20:31.280 You know, one of these things that comes up a lot, 0:20:31.359 --> 0:20:33.120 and I don't really find it to be that interesting 0:20:33.160 --> 0:20:36.560 with a conversation. Look, oh, is China a communist or capitalist? 0:20:36.640 --> 0:20:39.520 And it seems like a very tedious conversation. I mean, 0:20:39.560 --> 0:20:43.120 it has a you know, a leninist system of government. 0:20:43.200 --> 0:20:46.520 I think that fact says to say, is it going 0:20:46.560 --> 0:20:49.040 in the direction of something that we could call socialist? 0:20:49.119 --> 0:20:51.160 I think Doung Choupang said the goal was to have 0:20:51.440 --> 0:20:54.600 a modern socialist state by year twenty forty nine, So 0:20:54.920 --> 0:20:58.480 twenty four years from now, is it going into direction 0:20:58.680 --> 0:21:01.480