Keyu Jin: China's Economy, Tariffs, Trade, Trump, Communism & Capitalism | Lex Fridman Podcast #477

The following is a conversation with Ku The following is a conversation with Ku Jin, an economist at the London School Jin, an economist at the London School Jin, an economist at the London School of Economics specializing in China's of Economics specializing in China's of Economics specializing in China's economy, international macroeconomics, economy, international macroeconomics, economy, international macroeconomics, global trade imbalances, and financial global trade imbalances, and financial global trade imbalances, and financial policy. She wrote the highly lauded book policy. She wrote the highly lauded book policy. She wrote the highly lauded book on China titled The New China Playbook: on China titled The New China Playbook: on China titled The New China Playbook: Beyond Socialism and Capitalism that Beyond Socialism and Capitalism that Beyond Socialism and Capitalism that details China's economic transformation details China's economic transformation details China's economic transformation since 1978 to Today. and it dispels a since 1978 to Today. and it dispels a since 1978 to Today. and it dispels a lot of misconceptions about China's lot of misconceptions about China's lot of misconceptions about China's economy that people in the west have. economy that people in the west have. economy that people in the west have. This is the Lex Freedman podcast. To This is the Lex Freedman podcast. To This is the Lex Freedman podcast. To support it, please check out our support it, please check out our support it, please check out our sponsors in the description and consider sponsors in the description and consider sponsors in the description and consider subscribing to this channel. And now, subscribing to this channel. And now, subscribing to this channel. And now, dear friends, here's Ku Jin. dear friends, here's Ku Jin. dear friends, here's Ku Jin. What is the single biggest misconception What is the single biggest misconception What is the single biggest misconception the West has about China's economy the West has about China's economy the West has about China's economy today? The biggest misunderstanding is today? The biggest misunderstanding is today? The biggest misunderstanding is somehow that a group of people or even somehow that a group of people or even somehow that a group of people or even just one person runs the entire Chinese just one person runs the entire Chinese just one person runs the entire Chinese economy. It is far from the reality. It economy. It is far from the reality. It economy. It is far from the reality. It is a very complex large economy and even is a very complex large economy and even is a very complex large economy and even if there is an extreme form of political if there is an extreme form of political if there is an extreme form of political centralization, the economy is totally centralization, the economy is totally centralization, the economy is totally decentralized. the role that the local decentralized. the role that the local decentralized. the role that the local mayors, I call this the mayor economy, mayors, I call this the mayor economy, mayors, I call this the mayor economy, plays in reforms, but also driving the plays in reforms, but also driving the plays in reforms, but also driving the technological innovation that we're technological innovation that we're technological innovation that we're seeing right now. It is actually not run seeing right now. It is actually not run seeing right now. It is actually not run by just a handful of people. It's more by just a handful of people. It's more by just a handful of people. It's more decentralized than the US is. And I decentralized than the US is. And I decentralized than the US is. And I think more broadly, a big think more broadly, a big think more broadly, a big misunderstanding is really the

misunderstanding is really the misunderstanding is really the relationship between Chinese people and relationship between Chinese people and relationship between Chinese people and authority. authority. authority. >> Can you elaborate on that? >> Can you elaborate on that? >> Can you elaborate on that? >> Well, you know, people think that >> Well, you know, people think that >> Well, you know, people think that somehow there's almost blind submission somehow there's almost blind submission somehow there's almost blind submission to authority in China. We have a very to authority in China. We have a very to authority in China. We have a very nuanced relationship uh with authority nuanced relationship uh with authority nuanced relationship uh with authority whether it is you know between kids and whether it is you know between kids and whether it is you know between kids and parents or um students and their parents or um students and their parents or um students and their teachers or with your bosses and the teachers or with your bosses and the teachers or with your bosses and the Chinese government. It's kind of the Chinese government. It's kind of the Chinese government. It's kind of the same thing. There's paternalism. Uh they same thing. There's paternalism. Uh they same thing. There's paternalism. Uh they think that they're responsible for you. think that they're responsible for you. think that they're responsible for you. Um but uh deference a certain amount of Um but uh deference a certain amount of Um but uh deference a certain amount of deference to authority is not blind deference to authority is not blind deference to authority is not blind submission. It's been written implicitly submission. It's been written implicitly submission. It's been written implicitly in our contract uh for thousands of in our contract uh for thousands of in our contract uh for thousands of years that in exchange for some years that in exchange for some years that in exchange for some difference uh we are given stability, difference uh we are given stability, difference uh we are given stability, security and peace and hopefully security and peace and hopefully security and peace and hopefully prosperity. prosperity. prosperity. >> So there is some element that we have in >> So there is some element that we have in >> So there is some element that we have in the west of freedom of the individual so the west of freedom of the individual so the west of freedom of the individual so that a little bit of the rebel is that a little bit of the rebel is that a little bit of the rebel is allowed uh in balance with the allowed uh in balance with the allowed uh in balance with the difference to authority. difference to authority. difference to authority. >> Yeah, absolutely. Without that, how can >> Yeah, absolutely. Without that, how can >> Yeah, absolutely. Without that, how can you have this radical dynamic you have this radical dynamic you have this radical dynamic entrepreneurism you see in China if you entrepreneurism you see in China if you entrepreneurism you see in China if you don't have a sense of self, a sense of don't have a sense of self, a sense of don't have a sense of self, a sense of uh the fact that you can find uh the fact that you can find uh the fact that you can find opportunities, you look for opportunities, you look for opportunities, you look for opportunities, you you you drive opportunities, you you you drive opportunities, you you you drive opportunities. Um it's all self opportunities. Um it's all self opportunities. Um it's all self motivated. Is there still a young kid in motivated. Is there still a young kid in motivated. Is there still a young kid in China that's able to dream to be sort of China that's able to dream to be sort of China that's able to dream to be sort of the the stereotypical Steve Jobs in the the the stereotypical Steve Jobs in the the the stereotypical Steve Jobs in the garage, start a business and change the garage, start a business and change the garage, start a business and change the world by doing so?

world by doing so? world by doing so? >> There are millions of young kids like >> There are millions of young kids like >> There are millions of young kids like that in China. They might not be that in China. They might not be that in China. They might not be thinking about changing the world and thinking about changing the world and thinking about changing the world and this is where the Chinese approach to this is where the Chinese approach to this is where the Chinese approach to innovation is very different from the innovation is very different from the innovation is very different from the Silicon Valley one, I'd say. Um, but Silicon Valley one, I'd say. Um, but Silicon Valley one, I'd say. Um, but they see opportunity. They see a country they see opportunity. They see a country they see opportunity. They see a country with a billion consumers. They see with a billion consumers. They see with a billion consumers. They see scale. They see speed. They see that scale. They see speed. They see that scale. They see speed. They see that with their dreams and the team that you with their dreams and the team that you with their dreams and the team that you have in China with engineers and the have in China with engineers and the have in China with engineers and the digital transformation, you can do so digital transformation, you can do so digital transformation, you can do so many things. And this generation of many things. And this generation of many things. And this generation of young people think about transforming young people think about transforming young people think about transforming their local economy. I I think we're their local economy. I I think we're their local economy. I I think we're going to get into this, but it's no going to get into this, but it's no going to get into this, but it's no longer going to just be manufacturing. longer going to just be manufacturing. longer going to just be manufacturing. The young kids are entrepreneurs. The young kids are entrepreneurs. The young kids are entrepreneurs. >> Well, let's uh stay in the big picture a >> Well, let's uh stay in the big picture a >> Well, let's uh stay in the big picture a bit. There's a a perception that China bit. There's a a perception that China bit. There's a a perception that China is a uh communist country. So to what is a uh communist country. So to what is a uh communist country. So to what degree is China a capitalist country and degree is China a capitalist country and degree is China a capitalist country and to what degree is it a communist to what degree is it a communist to what degree is it a communist country? country? country? I've rarely seen a more capitalist uh I've rarely seen a more capitalist uh I've rarely seen a more capitalist uh society than China from the pure society than China from the pure society than China from the pure economic uh uh side. I've rarely seen economic uh uh side. I've rarely seen economic uh uh side. I've rarely seen companies that are as competitive as companies that are as competitive as companies that are as competitive as Chinese companies. uh people as Chinese companies. uh people as Chinese companies. uh people as ambitious and obsessed with making money ambitious and obsessed with making money ambitious and obsessed with making money as Chinese people uh kind of ruthless as Chinese people uh kind of ruthless as Chinese people uh kind of ruthless actually uh and look you know consumers actually uh and look you know consumers actually uh and look you know consumers shop firms invest if you invest well shop firms invest if you invest well shop firms invest if you invest well financially you'll get great returns financially you'll get great returns financially you'll get great returns what is not capitalistic about the what is not capitalistic about the what is not capitalistic about the Chinese economy at the same time the Chinese economy at the same time the Chinese economy at the same time the social fabric is highly socialist first

social fabric is highly socialist first social fabric is highly socialist first of all the state enterprises dominate in of all the state enterprises dominate in of all the state enterprises dominate in many of the sectors the state banks s many of the sectors the state banks s many of the sectors the state banks s control the financial system. Uh we control the financial system. Uh we control the financial system. Uh we often talk about common prosperity, often talk about common prosperity, often talk about common prosperity, about equal opportunity, just and fair about equal opportunity, just and fair about equal opportunity, just and fair society. But even, you know, daily society. But even, you know, daily society. But even, you know, daily stories, a walk in the park behind my my stories, a walk in the park behind my my stories, a walk in the park behind my my parents apartment, you're going to find parents apartment, you're going to find parents apartment, you're going to find at least 50 organized social groups on a at least 50 organized social groups on a at least 50 organized social groups on a daily level, singing, dancing, daily level, singing, dancing, daily level, singing, dancing, exercising, doing whatever these exercising, doing whatever these exercising, doing whatever these fantastic idiosyncratic hobbies they fantastic idiosyncratic hobbies they fantastic idiosyncratic hobbies they have, getting together every single day. have, getting together every single day. have, getting together every single day. And three courses for the elderly and And three courses for the elderly and And three courses for the elderly and retired, right? That sense of retired, right? That sense of retired, right? That sense of communalism, that sense of belonging, communalism, that sense of belonging, communalism, that sense of belonging, uh that strive for harmony at the uh that strive for harmony at the uh that strive for harmony at the societal level is there. societal level is there. societal level is there. >> So, uh just to go back to something you >> So, uh just to go back to something you >> So, uh just to go back to something you said, there is a value for competition said, there is a value for competition said, there is a value for competition culturally. So, on the business side, on culturally. So, on the business side, on culturally. So, on the business side, on the economic side, there is sort of a the economic side, there is sort of a the economic side, there is sort of a cultural value of people competing in a cultural value of people competing in a cultural value of people competing in a meritocratic way. meritocratic way. meritocratic way. Competition is ferocious in China, Competition is ferocious in China, Competition is ferocious in China, especially when it comes to Chinese especially when it comes to Chinese especially when it comes to Chinese companies, but also in education.

companies, but also in education. companies, but also in education. I should be thankful that I'm not, you I should be thankful that I'm not, you I should be thankful that I'm not, you know, born later than I am because I know, born later than I am because I know, born later than I am because I thought China was pretty competitive thought China was pretty competitive thought China was pretty competitive already, uh, going to the schools and already, uh, going to the schools and already, uh, going to the schools and studying for the exams. It is a studying for the exams. It is a studying for the exams. It is a different level today. Competition is different level today. Competition is different level today. Competition is not necessarily in the culture. I'd say not necessarily in the culture. I'd say not necessarily in the culture. I'd say it's driven really by the changing it's driven really by the changing it's driven really by the changing economic and social circumstances of the economic and social circumstances of the economic and social circumstances of the day. The Chinese companies are all day. The Chinese companies are all day. The Chinese companies are all hardworking. They're all going after the hardworking. They're all going after the hardworking. They're all going after the market share. They all kind of want to market share. They all kind of want to market share. They all kind of want to do the same thing. You know, it's not do the same thing. You know, it's not do the same thing. You know, it's not quite like in the US where you open a quite like in the US where you open a quite like in the US where you open a coffee shop. Well, next door I'm going coffee shop. Well, next door I'm going coffee shop. Well, next door I'm going to, you know, open a bagel shop, right? to, you know, open a bagel shop, right? to, you know, open a bagel shop, right? In China, if the coffee shop does well, In China, if the coffee shop does well, In China, if the coffee shop does well, everybody wants to open the same coffee everybody wants to open the same coffee everybody wants to open the same coffee shop. And I think again, I'm sure we're shop. And I think again, I'm sure we're shop. And I think again, I'm sure we're going to get to this, but there's a lot going to get to this, but there's a lot going to get to this, but there's a lot of that kind of competition, which of that kind of competition, which of that kind of competition, which really drives the world sometimes crazy really drives the world sometimes crazy really drives the world sometimes crazy um of replication, but it's because it's um of replication, but it's because it's um of replication, but it's because it's not easy, right? It's not easy to make not easy, right? It's not easy to make not easy, right? It's not easy to make money in education system. There are not money in education system. There are not money in education system. There are not enough jobs for the young people. So how enough jobs for the young people. So how enough jobs for the young people. So how do you get ahead? Uh how as let's say if do you get ahead? Uh how as let's say if do you get ahead? Uh how as let's say if you're part of a lower stratum society, you're part of a lower stratum society, you're part of a lower stratum society, how are you going to make sure that your how are you going to make sure that your how are you going to make sure that your children are going to have a better life children are going to have a better life children are going to have a better life than you? You invest in education. So than you? You invest in education. So than you? You invest in education. So everything is about competition in a everything is about competition in a everything is about competition in a country with 1.3 billion people. That's country with 1.3 billion people. That's country with 1.3 billion people. That's uh somewhat to be expected.

uh somewhat to be expected. uh somewhat to be expected. >> Let's go back to the roots of that. So >> Let's go back to the roots of that. So >> Let's go back to the roots of that. So you described that China's economy model you described that China's economy model you described that China's economy model uh is rooted in its history. So can we uh is rooted in its history. So can we uh is rooted in its history. So can we talk about Confucianism? talk about Confucianism? talk about Confucianism? Can you explain to what degree those Can you explain to what degree those Can you explain to what degree those roots run back to Confucianism and in roots run back to Confucianism and in roots run back to Confucianism and in general to other parts of Chinese general to other parts of Chinese general to other parts of Chinese history? history? history? >> Yeah, Confucianism is more of a moral >> Yeah, Confucianism is more of a moral >> Yeah, Confucianism is more of a moral philosophy uh than let's say religion or philosophy uh than let's say religion or philosophy uh than let's say religion or a belief system. It prioritizes a belief system. It prioritizes a belief system. It prioritizes um social harmony above anything else. um social harmony above anything else. um social harmony above anything else. It's not about metaphysics but more It's not about metaphysics but more It's not about metaphysics but more about ethics and at the individual level about ethics and at the individual level about ethics and at the individual level the responsibility the duties are all the responsibility the duties are all the responsibility the duties are all meant to preserve that social order. So meant to preserve that social order. So meant to preserve that social order. So it's felop piety it's felop piety it's felop piety um it is loyalty it is how to be a um it is loyalty it is how to be a um it is loyalty it is how to be a Chinese gentleman. Um but things like Chinese gentleman. Um but things like Chinese gentleman. Um but things like saving frugality is part of the moral saving frugality is part of the moral saving frugality is part of the moral discipline. Education is part of the discipline. Education is part of the discipline. Education is part of the moral cultivation. So there's a very moral cultivation. So there's a very moral cultivation. So there's a very strong emphasis that you as a citizen strong emphasis that you as a citizen strong emphasis that you as a citizen have a responsibility to contribute to have a responsibility to contribute to have a responsibility to contribute to society as a whole.

society as a whole. society as a whole. >> On the education side, a part of >> On the education side, a part of >> On the education side, a part of confusionism is a is a value for confusionism is a is a value for confusionism is a is a value for meritocracy. So how does that permeate meritocracy. So how does that permeate meritocracy. So how does that permeate the education system in China? You've the education system in China? You've the education system in China? You've already spoken to it a little bit, the already spoken to it a little bit, the already spoken to it a little bit, the value of competition and that it's value of competition and that it's value of competition and that it's already getting more and more intense, already getting more and more intense, already getting more and more intense, but it would be very interesting to get but it would be very interesting to get but it would be very interesting to get your understanding of the education your understanding of the education your understanding of the education system, its history and as it stands system, its history and as it stands system, its history and as it stands today. today. today. >> If China were relatively successful >> If China were relatively successful >> If China were relatively successful economically, economically, economically, a huge part of the reason is by and a huge part of the reason is by and a huge part of the reason is by and large it's been meritocratic. large it's been meritocratic. large it's been meritocratic. That is changing somewhat now, but That is changing somewhat now, but That is changing somewhat now, but the only way that you have still that the only way that you have still that the only way that you have still that many poor people, especially a couple many poor people, especially a couple many poor people, especially a couple decades back, still be in harmony with decades back, still be in harmony with decades back, still be in harmony with society, seeing all these rich people, society, seeing all these rich people, society, seeing all these rich people, you know, make tons of money and you're you know, make tons of money and you're you know, make tons of money and you're still belonging to that lower stratum. still belonging to that lower stratum. still belonging to that lower stratum. The only reason is that you believe that The only reason is that you believe that The only reason is that you believe that your children have a future through your children have a future through your children have a future through meritocracy. meritocracy. meritocracy. And even though it's imperfect, it's And even though it's imperfect, it's And even though it's imperfect, it's highly imperfect. standardized testing, highly imperfect. standardized testing, highly imperfect. standardized testing, all this competition, all of the the the all this competition, all of the the the all this competition, all of the the the hours and the tutorials to studying for hours and the tutorials to studying for hours and the tutorials to studying for standardized exams. Well, that is a very standardized exams. Well, that is a very standardized exams. Well, that is a very realistic um scenario in China because realistic um scenario in China because realistic um scenario in China because there that many people, you know, when I there that many people, you know, when I there that many people, you know, when I was growing up in school, we had 60 was growing up in school, we had 60 was growing up in school, we had 60 people per class and there were 10 people per class and there were 10 people per class and there were 10 classes in one grade. Now, imagine that classes in one grade. Now, imagine that classes in one grade. Now, imagine that many people applying for colleges many people applying for colleges many people applying for colleges uh in the in the American way. how many uh in the in the American way. how many uh in the in the American way. how many essays would have been written and need essays would have been written and need essays would have been written and need to be scrutinized. Also that gives room to be scrutinized. Also that gives room to be scrutinized. Also that gives room for total corruption if you you know if

for total corruption if you you know if for total corruption if you you know if you know what I mean just connection you know what I mean just connection you know what I mean just connection based and actually the standardized based and actually the standardized based and actually the standardized exams as imperfect as it is to select exams as imperfect as it is to select exams as imperfect as it is to select talent is still by and large fair and um talent is still by and large fair and um talent is still by and large fair and um that's how that whole generation of you that's how that whole generation of you that's how that whole generation of you know entrepreneurs but bureaucrats know entrepreneurs but bureaucrats know entrepreneurs but bureaucrats government officials were selected if government officials were selected if government officials were selected if you look at the Chinese premers uh the you look at the Chinese premers uh the you look at the Chinese premers uh the presidents of the past they they all presidents of the past they they all presidents of the past they they all went to great schools you know a lot of went to great schools you know a lot of went to great schools you know a lot of them were engineers years and uh same them were engineers years and uh same them were engineers years and uh same thing for civil servants. It has changed thing for civil servants. It has changed thing for civil servants. It has changed somewhat. You know, the meritocracy I somewhat. You know, the meritocracy I somewhat. You know, the meritocracy I think is is eroding in China. I'm think is is eroding in China. I'm think is is eroding in China. I'm worried about that because it is fine worried about that because it is fine worried about that because it is fine that you get into a good university that you get into a good university that you get into a good university based on your own merit, but finding a based on your own merit, but finding a based on your own merit, but finding a job now becomes much less meritocratic. job now becomes much less meritocratic. job now becomes much less meritocratic. People with connections get jobs more People with connections get jobs more People with connections get jobs more easily than than others. Of course, this easily than than others. Of course, this easily than than others. Of course, this is not just a unique Chinese phenomena. is not just a unique Chinese phenomena. is not just a unique Chinese phenomena. It's actually everywhere. But I guess It's actually everywhere. But I guess It's actually everywhere. But I guess what I'm saying is that that meritocracy what I'm saying is that that meritocracy what I'm saying is that that meritocracy which was so fundamental to the Chinese which was so fundamental to the Chinese which was so fundamental to the Chinese ancient Chinese education system by the ancient Chinese education system by the ancient Chinese education system by the way civil servants were selected based way civil servants were selected based way civil servants were selected based on standardized exams in the past that's on standardized exams in the past that's on standardized exams in the past that's always been throughout Chinese history always been throughout Chinese history always been throughout Chinese history and that relates to Confucianism. Now and that relates to Confucianism. Now and that relates to Confucianism. Now the opportunities and coming back to the the opportunities and coming back to the the opportunities and coming back to the competition point is that the competition point is that the competition point is that the opportunities getting slimmer and opportunities getting slimmer and opportunities getting slimmer and slimmer and again this is not a unique slimmer and again this is not a unique slimmer and again this is not a unique Chinese phenomenon. Jobs where are the Chinese phenomenon. Jobs where are the Chinese phenomenon. Jobs where are the jobs going to be right? So, um, jobs going to be right? So, um, jobs going to be right? So, um, meritocracy has become more of a meritocracy has become more of a meritocracy has become more of a problem.

problem. problem. >> Uh, do you have any memories of your own >> Uh, do you have any memories of your own >> Uh, do you have any memories of your own experience in terms of competition, the experience in terms of competition, the experience in terms of competition, the good and the bad of it? Maybe, uh, from good and the bad of it? Maybe, uh, from good and the bad of it? Maybe, uh, from that, can you, uh, pull out the thread that, can you, uh, pull out the thread that, can you, uh, pull out the thread of of the value of that kind of of of the value of that kind of of of the value of that kind of competition? Basically, you know, uh, I competition? Basically, you know, uh, I competition? Basically, you know, uh, I grew up in the Soviet Union, so there's grew up in the Soviet Union, so there's grew up in the Soviet Union, so there's a kind of brutality to the competition. a kind of brutality to the competition. a kind of brutality to the competition. Um, but I think it ultimately molds Um, but I think it ultimately molds Um, but I think it ultimately molds really interesting people. really interesting people. really interesting people. >> There is a good and bad part of >> There is a good and bad part of >> There is a good and bad part of competition. And I remember when I was competition. And I remember when I was competition. And I remember when I was going into middle school, every single going into middle school, every single going into middle school, every single midterm exam, final exam, you were midterm exam, final exam, you were midterm exam, final exam, you were ranked from number one to number 800 in ranked from number one to number 800 in ranked from number one to number 800 in your entire grade and publicly your entire grade and publicly your entire grade and publicly displayed. displayed. displayed. >> Nice. >> Nice. >> Nice. >> Nice. Right. >> Nice. Right. >> Nice. Right. >> Um, imagine, you know, the majority of >> Um, imagine, you know, the majority of >> Um, imagine, you know, the majority of people and how they feel. people and how they feel. people and how they feel. >> Um, but it it does drive ambition in >> Um, but it it does drive ambition in >> Um, but it it does drive ambition in part and you don't take anything for part and you don't take anything for part and you don't take anything for granted. uh and you work hard, you keep, granted. uh and you work hard, you keep, granted. uh and you work hard, you keep, you know, you keep the spirit up. you know, you keep the spirit up. you know, you keep the spirit up. But, you know, going to the US, I But, you know, going to the US, I But, you know, going to the US, I finally realize that Americans are finally realize that Americans are finally realize that Americans are totally competitive. It's just that they totally competitive. It's just that they totally competitive. It's just that they don't display it. It's not as apparent.

don't display it. It's not as apparent. don't display it. It's not as apparent. I I remember I go I went to a very I I remember I go I went to a very I I remember I go I went to a very competitive high school, but everyone's competitive high school, but everyone's competitive high school, but everyone's like so chill. Oh, I'm not studying. Oh, like so chill. Oh, I'm not studying. Oh, like so chill. Oh, I'm not studying. Oh, you know, they're they're studying. They you know, they're they're studying. They you know, they're they're studying. They are secretly studying. Um when I was are secretly studying. Um when I was are secretly studying. Um when I was doing my PhD at Harvard, people say, doing my PhD at Harvard, people say, doing my PhD at Harvard, people say, "Oh, you know, my parents say don't work "Oh, you know, my parents say don't work "Oh, you know, my parents say don't work too hard." You know, people say, "Don't too hard." You know, people say, "Don't too hard." You know, people say, "Don't say you worked." They're working hard, say you worked." They're working hard, say you worked." They're working hard, right? Just you don't show it. In China, right? Just you don't show it. In China, right? Just you don't show it. In China, it's it's kind of um a noble thing to it's it's kind of um a noble thing to it's it's kind of um a noble thing to show that you're working hard and that show that you're working hard and that show that you're working hard and that you're number one or that you're top of you're number one or that you're top of you're number one or that you're top of the class and you want to display it. the class and you want to display it. the class and you want to display it. You want to let everybody know. But in You want to let everybody know. But in You want to let everybody know. But in the US, everybody's like secretly doing the US, everybody's like secretly doing the US, everybody's like secretly doing it. it. it. >> Yeah. Some of it is the is the signaling >> Yeah. Some of it is the is the signaling >> Yeah. Some of it is the is the signaling the culture emphasizes the signaling of the culture emphasizes the signaling of the culture emphasizes the signaling of is it better to be kind of for is it better to be kind of for is it better to be kind of for everything to come easily thereby everything to come easily thereby everything to come easily thereby showing that you're a genius it comes showing that you're a genius it comes showing that you're a genius it comes naturally or is it better to show that naturally or is it better to show that naturally or is it better to show that you worked extremely hard for the thing you worked extremely hard for the thing you worked extremely hard for the thing but the ultimate result is there's still but the ultimate result is there's still but the ultimate result is there's still competition but I don't know when you're competition but I don't know when you're competition but I don't know when you're visually displaying visually displaying visually displaying and and and uh explicitly stating that it's good to uh explicitly stating that it's good to uh explicitly stating that it's good to be number one and it's bad to be number be number one and it's bad to be number be number one and it's bad to be number 800. I think that permeates throughout 800. I think that permeates throughout 800. I think that permeates throughout the culture to where the culture to where the culture to where >> you understand >> you understand >> you understand uh first of all you understand that hard uh first of all you understand that hard uh first of all you understand that hard work is the only way to uh improve to to work is the only way to uh improve to to work is the only way to uh improve to to to succeed in life and second of all you to succeed in life and second of all you to succeed in life and second of all you just create this framework of uh early just create this framework of uh early just create this framework of uh early on understanding what it means to live a on understanding what it means to live a on understanding what it means to live a good life. And a part of that is to uh

good life. And a part of that is to uh good life. And a part of that is to uh to find the thing you're damn good at to find the thing you're damn good at to find the thing you're damn good at and get even better at it, master it, and get even better at it, master it, and get even better at it, master it, become hopefully the best person in the become hopefully the best person in the become hopefully the best person in the world at that thing. I don't know. world at that thing. I don't know. world at that thing. I don't know. That's a extremely important lesson for That's a extremely important lesson for That's a extremely important lesson for society teach. society teach. society teach. >> That's the right I would say the right >> That's the right I would say the right >> That's the right I would say the right kind of competition or the efficient kind of competition or the efficient kind of competition or the efficient kind of competition. I feel that in the kind of competition. I feel that in the kind of competition. I feel that in the Chinese education system it was not Chinese education system it was not Chinese education system it was not necessarily efficient because it kind of necessarily efficient because it kind of necessarily efficient because it kind of frames you and molds you to be thinking frames you and molds you to be thinking frames you and molds you to be thinking in a certain way uh what's been taught in a certain way uh what's been taught in a certain way uh what's been taught to you. You don't have the bandwidth or to you. You don't have the bandwidth or to you. You don't have the bandwidth or the time or creativ freedom to be more the time or creativ freedom to be more the time or creativ freedom to be more creative and to think outside the box. creative and to think outside the box. creative and to think outside the box. There it's just the box. You maximize There it's just the box. You maximize There it's just the box. You maximize the box and that's it. You don't the box and that's it. You don't the box and that's it. You don't actually know what's outside of the box actually know what's outside of the box actually know what's outside of the box and you never actually go there. That's and you never actually go there. That's and you never actually go there. That's the bad part of Chinese competition. And the bad part of Chinese competition. And the bad part of Chinese competition. And when I got to the US, uh, the high when I got to the US, uh, the high when I got to the US, uh, the high school teachers were asking us to school teachers were asking us to school teachers were asking us to question authority, to question text. question authority, to question text. question authority, to question text. I'm like, wow, really? You can do that? I'm like, wow, really? You can do that? I'm like, wow, really? You can do that? So, I started asking why. So, I started asking why. So, I started asking why. >> All right. So, there there has been this >> All right. So, there there has been this >> All right. So, there there has been this miracle in the Chinese economy from um miracle in the Chinese economy from um miracle in the Chinese economy from um after Mao under uh Deng Xiaoing where after Mao under uh Deng Xiaoing where after Mao under uh Deng Xiaoing where the Chinese economy got transformed and the Chinese economy got transformed and the Chinese economy got transformed and grew incredibly. So can you explain what grew incredibly. So can you explain what grew incredibly. So can you explain what happened the different transformations happened the different transformations happened the different transformations that happened uh the different reforms that happened uh the different reforms that happened uh the different reforms that happened under Deng Xiao Ping?

that happened under Deng Xiao Ping? that happened under Deng Xiao Ping? >> Dang Xiao Ping was by far our most >> Dang Xiao Ping was by far our most >> Dang Xiao Ping was by far our most pragmatic leader and I think everybody pragmatic leader and I think everybody pragmatic leader and I think everybody is grateful to Deng Xiaoing. My father's is grateful to Deng Xiaoing. My father's is grateful to Deng Xiaoing. My father's generation would not have seen generation would not have seen generation would not have seen that amount of prosperity and peace and that amount of prosperity and peace and that amount of prosperity and peace and opportunity without Deng Xiaoing. Uh it opportunity without Deng Xiaoing. Uh it opportunity without Deng Xiaoing. Uh it started in the late 1970s when Dung started in the late 1970s when Dung started in the late 1970s when Dung Xiaoing came out with this open up and Xiaoing came out with this open up and Xiaoing came out with this open up and reform mandate and it was very tough. reform mandate and it was very tough. reform mandate and it was very tough. Again coming back to the big Again coming back to the big Again coming back to the big misunderstanding of China. It's not as misunderstanding of China. It's not as misunderstanding of China. It's not as if one leader decides that that's what if one leader decides that that's what if one leader decides that that's what we're going to do and then everybody we're going to do and then everybody we're going to do and then everybody follows order and does that. No, there follows order and does that. No, there follows order and does that. No, there are tons of political barriers, tons of are tons of political barriers, tons of are tons of political barriers, tons of incentive compatibility problems at the incentive compatibility problems at the incentive compatibility problems at the local level. In the end, you need the local level. In the end, you need the local level. In the end, you need the local provincial governors, the mayors local provincial governors, the mayors local provincial governors, the mayors to do the job. And how many perfeurers to do the job. And how many perfeurers to do the job. And how many perfeurers are there in China, right? A lot. And um are there in China, right? A lot. And um are there in China, right? A lot. And um they have their own interests, right? We they have their own interests, right? We they have their own interests, right? We we know this around the world. we know this around the world. we know this around the world. Politically is the most difficult thing Politically is the most difficult thing Politically is the most difficult thing to do. Um but somehow Dung Xiaoing was to do. Um but somehow Dung Xiaoing was to do. Um but somehow Dung Xiaoing was able to break tradition, break able to break tradition, break able to break tradition, break convention, convention, convention, um come up with this completely new way um come up with this completely new way um come up with this completely new way of thinking about society, life and of thinking about society, life and of thinking about society, life and economy. And it was so transformative. I economy. And it was so transformative. I economy. And it was so transformative. I remember people of that generation remember people of that generation remember people of that generation told me one time that you know society told me one time that you know society told me one time that you know society was going to focus on the economy.

was going to focus on the economy. was going to focus on the economy. Really? Why would they do that? Wasn't Really? Why would they do that? Wasn't Really? Why would they do that? Wasn't it politics? Wasn't it everything about it politics? Wasn't it everything about it politics? Wasn't it everything about politics and struggle and ideology? So politics and struggle and ideology? So politics and struggle and ideology? So for them that the whole country and the for them that the whole country and the for them that the whole country and the government is going to focus on the government is going to focus on the government is going to focus on the economy was just so shocking uh even economy was just so shocking uh even economy was just so shocking uh even though we take it for granted now that though we take it for granted now that though we take it for granted now that that that shows you that breaking that that that shows you that breaking that that that shows you that breaking that that mold was incredibly difficult. Um that mold was incredibly difficult. Um that mold was incredibly difficult. Um but um I think opening up was a really but um I think opening up was a really but um I think opening up was a really momentous thing that China did and it momentous thing that China did and it momentous thing that China did and it wasn't just joining the debut. I mean wasn't just joining the debut. I mean wasn't just joining the debut. I mean they were doing a decade of work in they were doing a decade of work in they were doing a decade of work in preparation leading up to that um uh preparation leading up to that um uh preparation leading up to that um uh what's called you know special economic what's called you know special economic what's called you know special economic zone is really to turn Shenzhen from a zone is really to turn Shenzhen from a zone is really to turn Shenzhen from a fishing village to an export platform fishing village to an export platform fishing village to an export platform now to a Chinese style Silicon Valley now to a Chinese style Silicon Valley now to a Chinese style Silicon Valley right and there was the agricultural right and there was the agricultural right and there was the agricultural reforms in the 1980s that meant that reforms in the 1980s that meant that reforms in the 1980s that meant that farmers could decide what they were farmers could decide what they were farmers could decide what they were going to grow and keep the surplus going to grow and keep the surplus going to grow and keep the surplus whereas it was a collective system whereas it was a collective system whereas it was a collective system before you you know that very well and before you you know that very well and before you you know that very well and then of course the ultim Imate then of course the ultim Imate then of course the ultim Imate transformation was when China actually transformation was when China actually transformation was when China actually joined the WTO in 2001 joined the WTO in 2001 joined the WTO in 2001 and the rest of was history right we're and the rest of was history right we're and the rest of was history right we're still talking about the aftermath but still talking about the aftermath but still talking about the aftermath but reforms was the single biggest impetus reforms was the single biggest impetus reforms was the single biggest impetus to Chinese growth and every time there to Chinese growth and every time there to Chinese growth and every time there was a major reform it was followed by a was a major reform it was followed by a was a major reform it was followed by a good decade long growth every time good decade long growth every time good decade long growth every time growth went down there was a new series growth went down there was a new series growth went down there was a new series of major reforms rolled out and then of major reforms rolled out and then of major reforms rolled out and then oops that you know led to another wave

oops that you know led to another wave oops that you know led to another wave of good growth. But I'd say that reform of good growth. But I'd say that reform of good growth. But I'd say that reform pace has slowed in the last 15 years. pace has slowed in the last 15 years. pace has slowed in the last 15 years. But are there reforms to be done? Yeah, But are there reforms to be done? Yeah, But are there reforms to be done? Yeah, absolutely. You know, has China reached absolutely. You know, has China reached absolutely. You know, has China reached even close to its potential? Not at all. even close to its potential? Not at all. even close to its potential? Not at all. Um, but again, it comes back to Um, but again, it comes back to Um, but again, it comes back to politics. Right now, it's less about politics. Right now, it's less about politics. Right now, it's less about economics. It's more about national economics. It's more about national economics. It's more about national security. It's more about politics. And security. It's more about politics. And security. It's more about politics. And I think that is probably the single I think that is probably the single I think that is probably the single biggest barrier to continued good biggest barrier to continued good biggest barrier to continued good economic growth. economic growth. economic growth. >> Baby, can you speak to what it takes in >> Baby, can you speak to what it takes in >> Baby, can you speak to what it takes in such a large system, in many ways, such such a large system, in many ways, such such a large system, in many ways, such a successful economy to do reform? So a successful economy to do reform? So a successful economy to do reform? So you mentioned pragmatism. Deng shiping you mentioned pragmatism. Deng shiping you mentioned pragmatism. Deng shiping famously said that it doesn't matter famously said that it doesn't matter famously said that it doesn't matter whether the cat is black or white as whether the cat is black or white as whether the cat is black or white as long as it catches mice. So there's that long as it catches mice. So there's that long as it catches mice. So there's that pragmatism. pragmatism. pragmatism. >> Yeah. >> Yeah. >> Yeah. >> That I think underlies a lot of great >> That I think underlies a lot of great >> That I think underlies a lot of great reforms. As a contrast to Soviet Union, reforms. As a contrast to Soviet Union, reforms. As a contrast to Soviet Union, uh the Chinese economy as I mentioned uh the Chinese economy as I mentioned uh the Chinese economy as I mentioned was extremely decentralized. You know in was extremely decentralized. You know in was extremely decentralized. You know in Soviet Union the ministries were in Soviet Union the ministries were in Soviet Union the ministries were in charge. It was a central bureaucracy charge. It was a central bureaucracy charge. It was a central bureaucracy but a lot of the power were given to but a lot of the power were given to but a lot of the power were given to these provincial governors, party these provincial governors, party these provincial governors, party secretaries, mayors of different sorts secretaries, mayors of different sorts secretaries, mayors of different sorts and they were incentivized. That's the and they were incentivized. That's the and they were incentivized. That's the key is that these mayors were key is that these mayors were key is that these mayors were incentivized to do a good job. If I were incentivized to do a good job. If I were incentivized to do a good job. If I were successful on a radical reform, if I successful on a radical reform, if I successful on a radical reform, if I were successful, I'd be a national hero were successful, I'd be a national hero were successful, I'd be a national hero and then that reform would be rolled out and then that reform would be rolled out and then that reform would be rolled out in every single city in in the country in every single city in in the country in every single city in in the country over time and I would be promoted to the over time and I would be promoted to the over time and I would be promoted to the higher run of the central government and higher run of the central government and higher run of the central government and who knows I might even become vice

who knows I might even become vice who knows I might even become vice premier, premier president one day. That premier, premier president one day. That premier, premier president one day. That was how the individual was motivated to was how the individual was motivated to was how the individual was motivated to carry out these really tough reforms. carry out these really tough reforms. carry out these really tough reforms. Now, China has changed a bit, right? Now, China has changed a bit, right? Now, China has changed a bit, right? It's not about being radical and It's not about being radical and It's not about being radical and radically successful. It's being it's radically successful. It's being it's radically successful. It's being it's about being safe, right? So, when you about being safe, right? So, when you about being safe, right? So, when you shift from basically an entrepreneurial shift from basically an entrepreneurial shift from basically an entrepreneurial state to a safe state, then the state to a safe state, then the state to a safe state, then the objective function changes and you see objective function changes and you see objective function changes and you see it in different economic uh outcomes. it in different economic uh outcomes. it in different economic uh outcomes. >> So, maybe can you speak to that? What >> So, maybe can you speak to that? What >> So, maybe can you speak to that? What what are some important things to what are some important things to what are some important things to understand about the structure of the understand about the structure of the understand about the structure of the Chinese state? Chinese state? Chinese state? Well, the central leadership politically Well, the central leadership politically Well, the central leadership politically is extremely powerful and very is extremely powerful and very is extremely powerful and very consolidated, but they hold a very consolidated, but they hold a very consolidated, but they hold a very crucial key to the local governments, crucial key to the local governments, crucial key to the local governments, which is that they decide their fate. Am which is that they decide their fate. Am which is that they decide their fate. Am I going to promote them? Am I going to I going to promote them? Am I going to I going to promote them? Am I going to put them in jail? Am I going to fire put them in jail? Am I going to fire put them in jail? Am I going to fire them? Am I going to reward them? Am I them? Am I going to reward them? Am I them? Am I going to reward them? Am I going to p punish them? They they hold going to p punish them? They they hold going to p punish them? They they hold that crucial key. And I think what was that crucial key. And I think what was that crucial key. And I think what was you know very surprising for most of the you know very surprising for most of the you know very surprising for most of the western audience is that when I western audience is that when I western audience is that when I mentioned about the mayor economy mentioned about the mayor economy mentioned about the mayor economy there's a you know why why don't our there's a you know why why don't our there's a you know why why don't our American mayors in each city do these American mayors in each city do these American mayors in each city do these very radical things and then push for very radical things and then push for very radical things and then push for GDP growth and technology and innovation GDP growth and technology and innovation GDP growth and technology and innovation it's quite different I think this is it's quite different I think this is it's quite different I think this is where China's very unique in the world where China's very unique in the world where China's very unique in the world is that political centralization is that political centralization is that political centralization economic decentralization and the yard economic decentralization and the yard economic decentralization and the yard stick to measure local mayor's stick to measure local mayor's stick to measure local mayor's competence competence competence through in the first stage it was GDP

through in the first stage it was GDP through in the first stage it was GDP growth. So I am a a mayor of you know growth. So I am a a mayor of you know growth. So I am a a mayor of you know the city of Nanjing in Jangu province. the city of Nanjing in Jangu province. the city of Nanjing in Jangu province. I'm going to like peak at my neighbors I'm going to like peak at my neighbors I'm going to like peak at my neighbors mayor's uh uh city's GDP growth and I'm mayor's uh uh city's GDP growth and I'm mayor's uh uh city's GDP growth and I'm going to be very very competitive. By going to be very very competitive. By going to be very very competitive. By the way I forgot about that competition the way I forgot about that competition the way I forgot about that competition is extremely competitive among the local is extremely competitive among the local is extremely competitive among the local government officials because you are government officials because you are government officials because you are competing with other mayor for a top competing with other mayor for a top competing with other mayor for a top job. Right? So you need to do better job. Right? So you need to do better job. Right? So you need to do better than them. And whether that was than them. And whether that was than them. And whether that was efficient um structure or not, I cannot efficient um structure or not, I cannot efficient um structure or not, I cannot comment. But it certainly just fueled comment. But it certainly just fueled comment. But it certainly just fueled this massive and rapid expansion, this massive and rapid expansion, this massive and rapid expansion, economic expansion. Uh first it was economic expansion. Uh first it was economic expansion. Uh first it was industrialization. Everybody wanted to industrialization. Everybody wanted to industrialization. Everybody wanted to do exports. Then they discovered, oh my do exports. Then they discovered, oh my do exports. Then they discovered, oh my gosh, we can have so much fiscal gosh, we can have so much fiscal gosh, we can have so much fiscal revenues coming from land, right? revenues coming from land, right? revenues coming from land, right? Selling land and real estate. Let's Selling land and real estate. Let's Selling land and real estate. Let's let's let's build real estate and let's let's let's build real estate and let's let's let's build real estate and let's urbanize. And then the the money kept urbanize. And then the the money kept urbanize. And then the the money kept coming in to these local governments and coming in to these local governments and coming in to these local governments and that they can spend it on on nurturing that they can spend it on on nurturing that they can spend it on on nurturing more companies or supporting real estate more companies or supporting real estate more companies or supporting real estate or supporting investment and they can do or supporting investment and they can do or supporting investment and they can do a better job. So then it was geared a better job. So then it was geared a better job. So then it was geared towards real estate and that's how the towards real estate and that's how the towards real estate and that's how the property cycle became the big thing.

property cycle became the big thing. property cycle became the big thing. Everything was at double speed because Everything was at double speed because Everything was at double speed because of what the local government's of what the local government's of what the local government's incentives um were designed to do. I I I incentives um were designed to do. I I I incentives um were designed to do. I I I say now that China's biggest challenge say now that China's biggest challenge say now that China's biggest challenge is consumption, right? It's not is consumption, right? It's not is consumption, right? It's not production. We know that China is very production. We know that China is very production. We know that China is very very competitive in production and very competitive in production and very competitive in production and supply. China needs to be a consuming supply. China needs to be a consuming supply. China needs to be a consuming country to be a rich country. Why don't country to be a rich country. Why don't country to be a rich country. Why don't you put consumption as part of the yard you put consumption as part of the yard you put consumption as part of the yard stick for measuring local governments? stick for measuring local governments? stick for measuring local governments? You know, for a while is environmental You know, for a while is environmental You know, for a while is environmental protection. Guess what? Very few of them protection. Guess what? Very few of them protection. Guess what? Very few of them will really want to do it seriously will really want to do it seriously will really want to do it seriously because it goes against the uh because it goes against the uh because it goes against the uh incentives of driving growth, right? incentives of driving growth, right? incentives of driving growth, right? They would suffer on GDP growth if they They would suffer on GDP growth if they They would suffer on GDP growth if they were very serious about environmental were very serious about environmental were very serious about environmental protection. So for a couple years protection. So for a couple years protection. So for a couple years nothing happened in China on that front nothing happened in China on that front nothing happened in China on that front and then the central government got and then the central government got and then the central government got really kind of concerned and even angry really kind of concerned and even angry really kind of concerned and even angry and frustrated. So they decide to put and frustrated. So they decide to put and frustrated. So they decide to put that as a penalizing uh factor and then that as a penalizing uh factor and then that as a penalizing uh factor and then guess what happened? Well actually guess what happened? Well actually guess what happened? Well actually environmental protection um sped up and environmental protection um sped up and environmental protection um sped up and you know in the matter of short short you know in the matter of short short you know in the matter of short short few years I see blue skies every day in few years I see blue skies every day in few years I see blue skies every day in Beijing. That's how it works.

Beijing. That's how it works. Beijing. That's how it works. >> So GDP is a measure of success in >> So GDP is a measure of success in >> So GDP is a measure of success in production. What's uh the measure or production. What's uh the measure or production. What's uh the measure or what does it mean to be successful on what does it mean to be successful on what does it mean to be successful on the consumer side? You said it's the consumer side? You said it's the consumer side? You said it's important to improve that. What does it important to improve that. What does it important to improve that. What does it mean to be a successful consumer nation? mean to be a successful consumer nation? mean to be a successful consumer nation? >> The metrics shouldn't be geared just >> The metrics shouldn't be geared just >> The metrics shouldn't be geared just towards growth alone. GDP growth alone. towards growth alone. GDP growth alone. towards growth alone. GDP growth alone. It was just singular GDP growth and you It was just singular GDP growth and you It was just singular GDP growth and you can borrow uh heavily and just spend on can borrow uh heavily and just spend on can borrow uh heavily and just spend on infrastructure. That's not a productive infrastructure. That's not a productive infrastructure. That's not a productive way to drive the economy. That's what way to drive the economy. That's what way to drive the economy. That's what the local governments were doing for a the local governments were doing for a the local governments were doing for a long period of time. You know, in the long period of time. You know, in the long period of time. You know, in the last few years, innovation unicorns have last few years, innovation unicorns have last few years, innovation unicorns have kind of been an implicit yard stick for kind of been an implicit yard stick for kind of been an implicit yard stick for local governments. That's kind of how local governments. That's kind of how local governments. That's kind of how we've seen these great, you know, EV we've seen these great, you know, EV we've seen these great, you know, EV companies, 80 cities doing EVs. I mean, companies, 80 cities doing EVs. I mean, companies, 80 cities doing EVs. I mean, do we really need 80 cities to do their do we really need 80 cities to do their do we really need 80 cities to do their own EVs, right? Solar panels, now own EVs, right? Solar panels, now own EVs, right? Solar panels, now Deepseek has become, you know, a star. Deepseek has become, you know, a star. Deepseek has become, you know, a star. uh semiconductor companies, you know, uh semiconductor companies, you know, uh semiconductor companies, you know, each local government wants to have each local government wants to have each local government wants to have their own national champion. So their own national champion. So their own national champion. So implicitly technology was part of the implicitly technology was part of the implicitly technology was part of the yard stick competition as well. But if yard stick competition as well. But if yard stick competition as well. But if you can more accurately have a metric you can more accurately have a metric you can more accurately have a metric for consumption measures really focus on for consumption measures really focus on for consumption measures really focus on you know making sure that it's coming you know making sure that it's coming you know making sure that it's coming from consumption this GDP growth rather from consumption this GDP growth rather from consumption this GDP growth rather than from investment or infrastructure than from investment or infrastructure than from investment or infrastructure then I think that it might focus the then I think that it might focus the then I think that it might focus the government's objective a bit more on uh government's objective a bit more on uh government's objective a bit more on uh thinking about how to make people feel thinking about how to make people feel thinking about how to make people feel more secure uh so that they want to save more secure uh so that they want to save more secure uh so that they want to save more for instance creating more jobs for more for instance creating more jobs for more for instance creating more jobs for instance more on social security

instance more on social security instance more on social security spending on health care uh on elderly spending on health care uh on elderly spending on health care uh on elderly care uh because for the longest period care uh because for the longest period care uh because for the longest period of time this political economy model was of time this political economy model was of time this political economy model was brilliant at scaling up supply but it brilliant at scaling up supply but it brilliant at scaling up supply but it was extremely weak at raising personal was extremely weak at raising personal was extremely weak at raising personal consumption because the incentive does consumption because the incentive does consumption because the incentive does not lie in consumption it lies in not lie in consumption it lies in not lie in consumption it lies in production. So you shift the objectives production. So you shift the objectives production. So you shift the objectives a little bit and maybe local government a little bit and maybe local government a little bit and maybe local government will do more to stimulate consumption. will do more to stimulate consumption. will do more to stimulate consumption. >> Okay. You mentioned uh the mayor >> Okay. You mentioned uh the mayor >> Okay. You mentioned uh the mayor economy. That seems like an incredibly economy. That seems like an incredibly economy. That seems like an incredibly powerful idea. And you also mentioned powerful idea. And you also mentioned powerful idea. And you also mentioned that perhaps uh you're not sure exactly that perhaps uh you're not sure exactly that perhaps uh you're not sure exactly how perfectly efficient it is and what how perfectly efficient it is and what how perfectly efficient it is and what efficiency there means. How good are you efficiency there means. How good are you efficiency there means. How good are you at quickly figuring out the best ideas? at quickly figuring out the best ideas? at quickly figuring out the best ideas? That's what an efficient market does. That's what an efficient market does. That's what an efficient market does. There's a kind of component to what There's a kind of component to what There's a kind of component to what you're saying where you're a little bit you're saying where you're a little bit you're saying where you're a little bit critical of do you really need 80 EV critical of do you really need 80 EV critical of do you really need 80 EV companies? But maybe you do. It seems companies? But maybe you do. It seems companies? But maybe you do. It seems like an incredible thing to do, right? like an incredible thing to do, right? like an incredible thing to do, right? So, what are the pros and cons of this? So, what are the pros and cons of this? So, what are the pros and cons of this? Maybe you can speak to it a little bit Maybe you can speak to it a little bit Maybe you can speak to it a little bit more. more. more. >> I think it depends on the timing. If >> I think it depends on the timing. If >> I think it depends on the timing. If you're starting something, starting a you're starting something, starting a you're starting something, starting a new emerging strategic sector like EVs new emerging strategic sector like EVs new emerging strategic sector like EVs or batteries or solar panels, you need or batteries or solar panels, you need or batteries or solar panels, you need the local governments to be involved to the local governments to be involved to the local governments to be involved to mobilize, right? The big push to mobilize, right? The big push to mobilize, right? The big push to coordinate the supply chains. If you coordinate the supply chains. If you coordinate the supply chains. If you wait for the markets to develop over wait for the markets to develop over wait for the markets to develop over time, it's going to take a long time.

time, it's going to take a long time. time, it's going to take a long time. Maybe they don't even want to do it, Maybe they don't even want to do it, Maybe they don't even want to do it, right? Look at the US. the US is very right? Look at the US. the US is very right? Look at the US. the US is very very behind on some of these new very behind on some of these new very behind on some of these new strategic sectors. But once you've strategic sectors. But once you've strategic sectors. But once you've reached a certain level of market reached a certain level of market reached a certain level of market competition, I think the state needs to competition, I think the state needs to competition, I think the state needs to to withdraw or to retreat because to withdraw or to retreat because to withdraw or to retreat because ultimately the state is not the best at ultimately the state is not the best at ultimately the state is not the best at allocating resources, picking winners. allocating resources, picking winners. allocating resources, picking winners. You want the private actors, whether You want the private actors, whether You want the private actors, whether it's the venture funds or the, you know, it's the venture funds or the, you know, it's the venture funds or the, you know, through market competition to ultimately through market competition to ultimately through market competition to ultimately decide who gets the most resources. But decide who gets the most resources. But decide who gets the most resources. But in the beginning that big push is not in the beginning that big push is not in the beginning that big push is not not really in any of the canonical not really in any of the canonical not really in any of the canonical models that I've studied in economics in models that I've studied in economics in models that I've studied in economics in the western school of thought state push the western school of thought state push the western school of thought state push state mobilization state initiation state mobilization state initiation state mobilization state initiation that's not there but I think if you look that's not there but I think if you look that's not there but I think if you look at EVs solar panels even just thinking at EVs solar panels even just thinking at EVs solar panels even just thinking about the idea of reforms in the first about the idea of reforms in the first about the idea of reforms in the first place um that initial state push was place um that initial state push was place um that initial state push was vitally important uh the other negative vitally important uh the other negative vitally important uh the other negative although I think by and large positive although I think by and large positive although I think by and large positive positive aspect is I don't think that we positive aspect is I don't think that we positive aspect is I don't think that we need 80 cities to do their own EV brands need 80 cities to do their own EV brands need 80 cities to do their own EV brands but to get started maybe that's what it but to get started maybe that's what it but to get started maybe that's what it would have taken to drive that incentive would have taken to drive that incentive would have taken to drive that incentive and then ultimately it's up to the and then ultimately it's up to the and then ultimately it's up to the market to decide who are the last five market to decide who are the last five market to decide who are the last five remaining EV companies right through remaining EV companies right through remaining EV companies right through market mechanisms that's Chinese style market mechanisms that's Chinese style market mechanisms that's Chinese style industrial policy um industrial policy industrial policy um industrial policy industrial policy um industrial policy was heavily criticized and again if I was heavily criticized and again if I was heavily criticized and again if I talk to my Harvard professors they will talk to my Harvard professors they will talk to my Harvard professors they will be very very very skeptical

be very very very skeptical be very very very skeptical about the the role of the state about the the role of the state about the the role of the state especially in such a major way. But if especially in such a major way. But if especially in such a major way. But if you look at the Chinese experience, the you look at the Chinese experience, the you look at the Chinese experience, the evidence for success is all there. The evidence for success is all there. The evidence for success is all there. The the cities that have pushed the most on the cities that have pushed the most on the cities that have pushed the most on supporting that particular sector supporting that particular sector supporting that particular sector ultimately did the best in terms of ultimately did the best in terms of ultimately did the best in terms of production but also in terms of production but also in terms of production but also in terms of innovation measured by patents. It's all innovation measured by patents. It's all innovation measured by patents. It's all in the data. Um but the downside is that in the data. Um but the downside is that in the data. Um but the downside is that a lot of the capital is wasted and this a lot of the capital is wasted and this a lot of the capital is wasted and this is what I also discuss in my book is is what I also discuss in my book is is what I also discuss in my book is that it is inefficient although maybe that it is inefficient although maybe that it is inefficient although maybe it's necessary uh the amount of waste of it's necessary uh the amount of waste of it's necessary uh the amount of waste of investment you know plowed into these uh investment you know plowed into these uh investment you know plowed into these uh companies that will ultimately just go companies that will ultimately just go companies that will ultimately just go under. um but also the misallocation of under. um but also the misallocation of under. um but also the misallocation of resources because it's led by the state resources because it's led by the state resources because it's led by the state are some of the downsides. But I guess I are some of the downsides. But I guess I are some of the downsides. But I guess I guess on balance it's been positive guess on balance it's been positive guess on balance it's been positive because look at China's internal because look at China's internal because look at China's internal combustion engine effort nothing right combustion engine effort nothing right combustion engine effort nothing right semiconductors semiconductors semiconductors thanks to Biden thanks to Trump it's thanks to Biden thanks to Trump it's thanks to Biden thanks to Trump it's improved dramatically but all these improved dramatically but all these improved dramatically but all these things that they tried to do before they things that they tried to do before they things that they tried to do before they couldn't do but when it's a new thing couldn't do but when it's a new thing couldn't do but when it's a new thing like something that there's no incumbent like something that there's no incumbent like something that there's no incumbent no particular advantage in any country no particular advantage in any country no particular advantage in any country actually China is really spearheading actually China is really spearheading actually China is really spearheading these sectors these sectors these sectors >> can we linger a little bit more on this >> can we linger a little bit more on this >> can we linger a little bit more on this mayor economy it just seems seems like mayor economy it just seems seems like mayor economy it just seems seems like such a powerful thing where one mayor such a powerful thing where one mayor such a powerful thing where one mayor looks over to the next and looks even looks over to the next and looks even looks over to the next and looks even just a trivially simple number like the just a trivially simple number like the just a trivially simple number like the GDP GDP. Why don't we do that in the GDP GDP. Why don't we do that in the GDP GDP. Why don't we do that in the United States or in the West more? Just United States or in the West more? Just United States or in the West more? Just compete on GDP.

compete on GDP. compete on GDP. >> Well, you you need to be elected and >> Well, you you need to be elected and >> Well, you you need to be elected and reelected, right? Is that what your reelected, right? Is that what your reelected, right? Is that what your electoral base cares about? Right? In electoral base cares about? Right? In electoral base cares about? Right? In China, it's what the central government, China, it's what the central government, China, it's what the central government, your boss, cares about. If you ask the your boss, cares about. If you ask the your boss, cares about. If you ask the consumers, they rather you spend on consumers, they rather you spend on consumers, they rather you spend on social spending, right? The things we social spending, right? The things we social spending, right? The things we talked about that stimulates talked about that stimulates talked about that stimulates consumption, on education, on consumption, on education, on consumption, on education, on healthcare, things that stimulate healthcare, things that stimulate healthcare, things that stimulate demand. demand. demand. So yeah, So yeah, So yeah, >> that's the political it's a difference >> that's the political it's a difference >> that's the political it's a difference of political system. of political system. of political system. >> So maybe can you speak to the >> So maybe can you speak to the >> So maybe can you speak to the difference? Another difference is the difference? Another difference is the difference? Another difference is the longterm multigenerational thinking longterm multigenerational thinking longterm multigenerational thinking uh that permeates Chinese culture. So uh that permeates Chinese culture. So uh that permeates Chinese culture. So how does that differ from the west sort how does that differ from the west sort how does that differ from the west sort of the western style capitalism of uh of the western style capitalism of uh of the western style capitalism of uh quarterly focused thinking? quarterly focused thinking? quarterly focused thinking? >> The Chinese are both the most patient >> The Chinese are both the most patient >> The Chinese are both the most patient and the most and the most and the most short-termist short-termist short-termist um economic actors I met. The patients I um economic actors I met. The patients I um economic actors I met. The patients I don't need to explain because I think don't need to explain because I think don't need to explain because I think the political continuity means that they the political continuity means that they the political continuity means that they can make plans for two decades ahead, can make plans for two decades ahead, can make plans for two decades ahead, right? Even longer. um uh the investment right? Even longer. um uh the investment right? Even longer. um uh the investment of Chinese parents in their children is of Chinese parents in their children is of Chinese parents in their children is a multi-deade long project uh and they a multi-deade long project uh and they a multi-deade long project uh and they they save you know Chinese people love they save you know Chinese people love they save you know Chinese people love to save because they think that they'll to save because they think that they'll to save because they think that they'll have even more money uh if they save have even more money uh if they save have even more money uh if they save that money rather than spend it on a ski that money rather than spend it on a ski that money rather than spend it on a ski vacation. So that I I think it's vacation. So that I I think it's vacation. So that I I think it's patently obvious to uh uh most people patently obvious to uh uh most people patently obvious to uh uh most people around the world. But I think that most around the world. But I think that most around the world. But I think that most of them would not have known that there

of them would not have known that there of them would not have known that there is a very popular motto in China which is a very popular motto in China which is a very popular motto in China which is called short flat fast. That's the is called short flat fast. That's the is called short flat fast. That's the impatient part of the Chinese culture impatient part of the Chinese culture impatient part of the Chinese culture especially with respect to the economy. especially with respect to the economy. especially with respect to the economy. Short flat fast was used to describe a Short flat fast was used to describe a Short flat fast was used to describe a winning volleyball strategy that winning volleyball strategy that winning volleyball strategy that eventually became adapted to describing eventually became adapted to describing eventually became adapted to describing the society as a whole and economic the society as a whole and economic the society as a whole and economic decision-m. If you're an investor, you decision-m. If you're an investor, you decision-m. If you're an investor, you only want to invest in things that you only want to invest in things that you only want to invest in things that you can quickly turn around, make a lot of can quickly turn around, make a lot of can quickly turn around, make a lot of money, and don't need to do much work. money, and don't need to do much work. money, and don't need to do much work. Uh it also applies to marriages. So, a Uh it also applies to marriages. So, a Uh it also applies to marriages. So, a short courtship, a very flat emotional short courtship, a very flat emotional short courtship, a very flat emotional relationship, and a fast divorce. Um relationship, and a fast divorce. Um relationship, and a fast divorce. Um that that is uh how uh you you see these that that is uh how uh you you see these that that is uh how uh you you see these um companies rise, you know, within a um companies rise, you know, within a um companies rise, you know, within a very short period of time. of course very short period of time. of course very short period of time. of course investors are only interested in those investors are only interested in those investors are only interested in those companies that can turn around and exit companies that can turn around and exit companies that can turn around and exit in a very short period of time making in a very short period of time making in a very short period of time making many many multiples and um so in that many many multiples and um so in that many many multiples and um so in that sense people are very very impatient sense people are very very impatient sense people are very very impatient right I I sit on some boards of these right I I sit on some boards of these right I I sit on some boards of these long-standing companies and the values long-standing companies and the values long-standing companies and the values are just so different uh even though a are just so different uh even though a are just so different uh even though a lot of these public companies are lot of these public companies are lot of these public companies are constrained by the quarterly results and constrained by the quarterly results and constrained by the quarterly results and so forth but the values are about so forth but the values are about so forth but the values are about sustaining ing something a company for a sustaining ing something a company for a sustaining ing something a company for a long time thinking about organic growth long time thinking about organic growth long time thinking about organic growth thinking about investments for the thinking about investments for the thinking about investments for the future sustainability um maybe it's that future sustainability um maybe it's that future sustainability um maybe it's that competition maybe it's the speed that competition maybe it's the speed that competition maybe it's the speed that we're used to in China people think

we're used to in China people think we're used to in China people think about short um so you know this about short um so you know this about short um so you know this dichconomy is very very interesting dichconomy is very very interesting dichconomy is very very interesting >> that's surprising to me >> that's surprising to me >> that's surprising to me >> yeah well >> yeah well >> yeah well >> it's a surprising idea right so that >> it's a surprising idea right so that >> it's a surprising idea right so that >> there is a kind of uh in the west >> there is a kind of uh in the west >> there is a kind of uh in the west conception of Chinese culture Chinese conception of Chinese culture Chinese conception of Chinese culture Chinese economy that everything is you say 50 economy that everything is you say 50 economy that everything is you say 50 100 200 years out you have this long 100 200 years out you have this long 100 200 years out you have this long vision but you're basically saying that vision but you're basically saying that vision but you're basically saying that there's a deep there's a deep there's a deep uh in the business sector uh impatience uh in the business sector uh impatience uh in the business sector uh impatience about everything about everything about everything >> that's it's a transitory phenomena I'd >> that's it's a transitory phenomena I'd >> that's it's a transitory phenomena I'd say but if you look at the cheaper stuff say but if you look at the cheaper stuff say but if you look at the cheaper stuff poor quality that's a reflection of that poor quality that's a reflection of that poor quality that's a reflection of that the coping it's the same kind of the coping it's the same kind of the coping it's the same kind of mentality just get ahead quickly but mentality just get ahead quickly but mentality just get ahead quickly but again that is all shifting that is all again that is all shifting that is all again that is all shifting that is all shifting because China is now in a shifting because China is now in a shifting because China is now in a different stage of development. If you different stage of development. If you different stage of development. If you ask the younger generation, they really ask the younger generation, they really ask the younger generation, they really care about quality. They care about care about quality. They care about care about quality. They care about values. Uh and these companies, these values. Uh and these companies, these values. Uh and these companies, these very successful companies, successful in very successful companies, successful in very successful companies, successful in 5 years, 10 years, found themselves in a 5 years, 10 years, found themselves in a 5 years, 10 years, found themselves in a very difficult position after a longer very difficult position after a longer very difficult position after a longer period of time. So that short flat fast period of time. So that short flat fast period of time. So that short flat fast attitude which was so popular especially attitude which was so popular especially attitude which was so popular especially before the pandemic, that's actually before the pandemic, that's actually before the pandemic, that's actually somewhat disappearing. So in some sense somewhat disappearing. So in some sense somewhat disappearing. So in some sense this economic downturn is not that bad this economic downturn is not that bad this economic downturn is not that bad for China because it make it made the for China because it make it made the for China because it make it made the Chinese realize that it's not always Chinese realize that it's not always Chinese realize that it's not always going to go up and uh it made them going to go up and uh it made them going to go up and uh it made them really look down deeper into what they really look down deeper into what they really look down deeper into what they really should be focused on. Uh that really should be focused on. Uh that really should be focused on. Uh that there will be cycles, there will be up there will be cycles, there will be up there will be cycles, there will be up and downs and so these very shorttermist and downs and so these very shorttermist and downs and so these very shorttermist thinking and opportunistic

thinking and opportunistic thinking and opportunistic way of driving business will ultimately way of driving business will ultimately way of driving business will ultimately fail. Um it is it's bad for China that fail. Um it is it's bad for China that fail. Um it is it's bad for China that we're having a sustained economic uh uh we're having a sustained economic uh uh we're having a sustained economic uh uh softness sustained economic softness but softness sustained economic softness but softness sustained economic softness but I think it's also a very very important I think it's also a very very important I think it's also a very very important lesson for the Chinese people to go lesson for the Chinese people to go lesson for the Chinese people to go through. through. through. >> Let's go if we can a bit to the >> Let's go if we can a bit to the >> Let's go if we can a bit to the personal. So you grew up in China. What personal. So you grew up in China. What personal. So you grew up in China. What are some moments from childhood that are some moments from childhood that are some moments from childhood that were maybe defining to your were maybe defining to your were maybe defining to your understanding of Chinese culture and understanding of Chinese culture and understanding of Chinese culture and Chinese economy? Chinese economy? Chinese economy? You know, we look back at those moments You know, we look back at those moments You know, we look back at those moments when everybody in China was very poor when everybody in China was very poor when everybody in China was very poor with a bit of nostalgia. with a bit of nostalgia. with a bit of nostalgia. I remember um no doors were locked. I I remember um no doors were locked. I I remember um no doors were locked. I was I was in Beijing and I remember was I was in Beijing and I remember was I was in Beijing and I remember every day in the summer, everybody just every day in the summer, everybody just every day in the summer, everybody just went downstairs and chatted with went downstairs and chatted with went downstairs and chatted with everybody else. everybody else. everybody else. >> Um uh it was very social. It was very >> Um uh it was very social. It was very >> Um uh it was very social. It was very community- based. Uh the neighbors help community- based. Uh the neighbors help community- based. Uh the neighbors help each other. uh we had very very little each other. uh we had very very little each other. uh we had very very little uh small apartments, very limited access uh small apartments, very limited access uh small apartments, very limited access to certain goods. When I was born, there to certain goods. When I was born, there to certain goods. When I was born, there were even in Beijing there were there were even in Beijing there were there were even in Beijing there were there were you know these these vouchers for were you know these these vouchers for were you know these these vouchers for how many eggs you can buy and even how many eggs you can buy and even how many eggs you can buy and even Beijing there were three or four Beijing there were three or four Beijing there were three or four blackouts per week typically. There was blackouts per week typically. There was blackouts per week typically. There was a sense of community. There was a very a sense of community. There was a very a sense of community. There was a very strong bond between people and within strong bond between people and within strong bond between people and within the family because they were going after the family because they were going after the family because they were going after a common goal, making your life better, a common goal, making your life better, a common goal, making your life better, right? struggling, striving to make your right? struggling, striving to make your right? struggling, striving to make your life better. And I remember being on the life better. And I remember being on the life better. And I remember being on the back of my father's bike, uh, getting

back of my father's bike, uh, getting back of my father's bike, uh, getting up, you know, 6:00 a.m. every day and up, you know, 6:00 a.m. every day and up, you know, 6:00 a.m. every day and going to nursery and, you know, that's going to nursery and, you know, that's going to nursery and, you know, that's that's the typical day. Uh, not a lot of that's the typical day. Uh, not a lot of that's the typical day. Uh, not a lot of material goods, but people had a sense material goods, but people had a sense material goods, but people had a sense of purpose and, uh, that's radically a of purpose and, uh, that's radically a of purpose and, uh, that's radically a different uh, it's completely different different uh, it's completely different different uh, it's completely different now in China. Do you think that if you now in China. Do you think that if you now in China. Do you think that if you go to the human condition, do you think go to the human condition, do you think go to the human condition, do you think that that nostalgia has some truth to it that that nostalgia has some truth to it that that nostalgia has some truth to it or is it just nostalgia like any other? or is it just nostalgia like any other? or is it just nostalgia like any other? Is there some aspect of a intense, Is there some aspect of a intense, Is there some aspect of a intense, competitive, vibrant economy that loses competitive, vibrant economy that loses competitive, vibrant economy that loses some element? some element? some element? >> Absolutely. >> Absolutely. >> Absolutely. >> Of everybody being poor together. >> Of everybody being poor together. >> Of everybody being poor together. >> Well, everybody having a common goal and >> Well, everybody having a common goal and >> Well, everybody having a common goal and a sense of community, right? That that a sense of community, right? That that a sense of community, right? That that is what's missing in these extremely is what's missing in these extremely is what's missing in these extremely individual-based capitalist societies. individual-based capitalist societies. individual-based capitalist societies. And I think what the Chinese government And I think what the Chinese government And I think what the Chinese government is striving to do with Chinese is striving to do with Chinese is striving to do with Chinese socialistic characteristics is to socialistic characteristics is to socialistic characteristics is to somehow try to preserve a bit of that somehow try to preserve a bit of that somehow try to preserve a bit of that socialist character while still relying socialist character while still relying socialist character while still relying on markets, market-based incentives. But on markets, market-based incentives. But on markets, market-based incentives. But if you're an extremely individual-based if you're an extremely individual-based if you're an extremely individual-based society, I think you do you do lose a society, I think you do you do lose a society, I think you do you do lose a lot of that. And I think some of the lot of that. And I think some of the lot of that. And I think some of the backlash that we're are seeing uh from backlash that we're are seeing uh from backlash that we're are seeing uh from society is a reflection of that, right?

society is a reflection of that, right? society is a reflection of that, right? people being alone more and more uh the people being alone more and more uh the people being alone more and more uh the the death of despair in the in the US uh the death of despair in the in the US uh the death of despair in the in the US uh the addiction you know that um it's the addiction you know that um it's the addiction you know that um it's they're lonely right and competition they're lonely right and competition they're lonely right and competition means that you kind of have to be means that you kind of have to be means that you kind of have to be somewhat badass and uh you sometimes put somewhat badass and uh you sometimes put somewhat badass and uh you sometimes put down values and you forsake harmony in down values and you forsake harmony in down values and you forsake harmony in order to get ahead that's certainly the order to get ahead that's certainly the order to get ahead that's certainly the Chinese society now that was not the Chinese society now that was not the Chinese society now that was not the case before case before case before >> you think that's a natural consequence >> you think that's a natural consequence >> you think that's a natural consequence of uh of capitalism almost always that of uh of capitalism almost always that of uh of capitalism almost always that you become more individualized, you become more individualized, you become more individualized, you become lonier, you feel lesser if you become lonier, you feel lesser if you become lonier, you feel lesser if you're not winning and thereby uh you're not winning and thereby uh you're not winning and thereby uh somehow that breaks down society somehow that breaks down society somehow that breaks down society community more and more. community more and more. community more and more. >> I think it's a spectrum, right? And uh >> I think it's a spectrum, right? And uh >> I think it's a spectrum, right? And uh Europe is somewhere in between, I'd say. Europe is somewhere in between, I'd say. Europe is somewhere in between, I'd say. Uh but Europe also is not as Uh but Europe also is not as Uh but Europe also is not as technologically and innovative as the technologically and innovative as the technologically and innovative as the US. But on a social level, there is more US. But on a social level, there is more US. But on a social level, there is more social protection for the people. There social protection for the people. There social protection for the people. There is a stronger sense of community. I I'd is a stronger sense of community. I I'd is a stronger sense of community. I I'd argue it's not perfect. Ultimately, it argue it's not perfect. Ultimately, it argue it's not perfect. Ultimately, it is a choice. And this is what I think is a choice. And this is what I think is a choice. And this is what I think that China has to decide, right? Do you that China has to decide, right? Do you that China has to decide, right? Do you want technological supremacy and radical want technological supremacy and radical want technological supremacy and radical breakthroughs? Well, yes. If you do, breakthroughs? Well, yes. If you do, breakthroughs? Well, yes. If you do, then you have to tolerate that there are then you have to tolerate that there are then you have to tolerate that there are going to be some people who are going to going to be some people who are going to going to be some people who are going to be be be just going to be um uncomfortably rich, just going to be um uncomfortably rich, just going to be um uncomfortably rich, right? like in the United States, you right? like in the United States, you right? like in the United States, you can't say that you detest the financial can't say that you detest the financial can't say that you detest the financial system for its greed uh but then not

system for its greed uh but then not system for its greed uh but then not accept the fact that it is what fuels accept the fact that it is what fuels accept the fact that it is what fuels innovation, right? Um risky capital innovation, right? Um risky capital innovation, right? Um risky capital fuels uh uh uncertain investments which fuels uh uh uncertain investments which fuels uh uh uncertain investments which allows for countries like the United allows for countries like the United allows for countries like the United States to be making these breakthroughs. States to be making these breakthroughs. States to be making these breakthroughs. That's what China wants. But at the same That's what China wants. But at the same That's what China wants. But at the same time, China can't tolerate these time, China can't tolerate these time, China can't tolerate these extremely rich people around and the extremely rich people around and the extremely rich people around and the power that they is acrewed to them. They power that they is acrewed to them. They power that they is acrewed to them. They want to to be a leader in technology. want to to be a leader in technology. want to to be a leader in technology. But then the financial system is not But then the financial system is not But then the financial system is not liberalized. Uh it's highly uh liberalized. Uh it's highly uh liberalized. Uh it's highly uh regulated, but you know there's also regulated, but you know there's also regulated, but you know there's also intervention. Even if we look back at intervention. Even if we look back at intervention. Even if we look back at the French civil law versus the English the French civil law versus the English the French civil law versus the English uh common law, well the former protects uh common law, well the former protects uh common law, well the former protects uh creditors and the latter is more uh creditors and the latter is more uh creditors and the latter is more friendly towards debtors which gives friendly towards debtors which gives friendly towards debtors which gives them more breathing space to innovate them more breathing space to innovate them more breathing space to innovate but also to fail and to innovate again. but also to fail and to innovate again. but also to fail and to innovate again. Uh and that makes a big difference. So Uh and that makes a big difference. So Uh and that makes a big difference. So it's all about a spectrum, right? But it's all about a spectrum, right? But it's all about a spectrum, right? But you can't have it both ways. We don't you can't have it both ways. We don't you can't have it both ways. We don't often enough have that nationwide often enough have that nationwide often enough have that nationwide conversation about what we want to be as conversation about what we want to be as conversation about what we want to be as a country. There's just a group of a country. There's just a group of a country. There's just a group of people yelling we don't want people yelling we don't want people yelling we don't want billionaires and another group saying we billionaires and another group saying we billionaires and another group saying we don't want communists or whatever. It's don't want communists or whatever. It's don't want communists or whatever. It's a very trivialized kind of chanting. But a very trivialized kind of chanting. But a very trivialized kind of chanting. But there is a balance. There's a spectrum there is a balance. There's a spectrum there is a balance. There's a spectrum and you get to decide and you get to decide and you get to decide uh do you like the nice things, the nice uh do you like the nice things, the nice uh do you like the nice things, the nice toys toys toys >> and the power that the US has >> and the power that the US has >> and the power that the US has >> and the power, the geopolitical power,

>> and the power, the geopolitical power, >> and the power, the geopolitical power, the military power, cultural power, the military power, cultural power, the military power, cultural power, influence on the rest of the world. influence on the rest of the world. influence on the rest of the world. Yeah, you get to choose which which do Yeah, you get to choose which which do Yeah, you get to choose which which do you want? you want? you want? Um so the first time you went to US, Um so the first time you went to US, Um so the first time you went to US, what was that like? Mentioned Harvard. what was that like? Mentioned Harvard. what was that like? Mentioned Harvard. How did that change your understanding How did that change your understanding How did that change your understanding of the world? of the world? of the world? Um, well, it's funny that we're talking Um, well, it's funny that we're talking Um, well, it's funny that we're talking about this now because I was able to go about this now because I was able to go about this now because I was able to go to the US on a scholarship to an to the US on a scholarship to an to the US on a scholarship to an American high school because the US at American high school because the US at American high school because the US at that time want was open arms, all open that time want was open arms, all open that time want was open arms, all open arms towards international students. arms towards international students. arms towards international students. They kind of wanted to be the the They kind of wanted to be the the They kind of wanted to be the the country that was going to educate the country that was going to educate the country that was going to educate the future leaders of the world and their future leaders of the world and their future leaders of the world and their elitist in institutions like Harvard was elitist in institutions like Harvard was elitist in institutions like Harvard was really going to be, you know, they're really going to be, you know, they're really going to be, you know, they're the center of the world. So they the center of the world. So they the center of the world. So they welcomed students like me and many many welcomed students like me and many many welcomed students like me and many many others uh to be exchange students to others uh to be exchange students to others uh to be exchange students to study in the US. Um and we thought, study in the US. Um and we thought, study in the US. Um and we thought, "Wow, we've never seen a more generous "Wow, we've never seen a more generous "Wow, we've never seen a more generous country." country." country." Um, and I was able to uh go to high Um, and I was able to uh go to high Um, and I was able to uh go to high school, an American high school and live school, an American high school and live school, an American high school and live with an American family, which was, wow, with an American family, which was, wow, with an American family, which was, wow, can I say a big change uh from from can I say a big change uh from from can I say a big change uh from from China, not only because I was plucked China, not only because I was plucked China, not only because I was plucked from the Communist Youth League uh party from the Communist Youth League uh party from the Communist Youth League uh party and then straight to supporting their and then straight to supporting their and then straight to supporting their Democratic campaign because the host Democratic campaign because the host Democratic campaign because the host family was running for state attorney family was running for state attorney family was running for state attorney general in New York. So, I was kind of general in New York. So, I was kind of general in New York. So, I was kind of >> going to these conventions and handing >> going to these conventions and handing >> going to these conventions and handing out flyers and trying to get votes and I out flyers and trying to get votes and I out flyers and trying to get votes and I don't know in China Chinatown or don't know in China Chinatown or don't know in China Chinatown or something. But, um, but it was it was so

something. But, um, but it was it was so something. But, um, but it was it was so interesting to see that's how the system interesting to see that's how the system interesting to see that's how the system worked. Um, but in the course of doing worked. Um, but in the course of doing worked. Um, but in the course of doing that, I realized that people had a very that, I realized that people had a very that, I realized that people had a very simplistic understanding about China. simplistic understanding about China. simplistic understanding about China. And that's probably um even when I was And that's probably um even when I was And that's probably um even when I was 14, I decided that one thing I wanted to 14, I decided that one thing I wanted to 14, I decided that one thing I wanted to do was to do was to do was to dispel some of these deep myths about dispel some of these deep myths about dispel some of these deep myths about China because the China that they knew China because the China that they knew China because the China that they knew and again it was all the three T's back and again it was all the three T's back and again it was all the three T's back in the late 1990s, in the late 1990s, in the late 1990s, Taiwan, Tibet, and Tamman Square. That's Taiwan, Tibet, and Tamman Square. That's Taiwan, Tibet, and Tamman Square. That's that's they thought about China. They that's they thought about China. They that's they thought about China. They thought about these three things. And I thought about these three things. And I thought about these three things. And I was like, well, that's strange because was like, well, that's strange because was like, well, that's strange because that's not how I'm feeling in China with that's not how I'm feeling in China with that's not how I'm feeling in China with all this, you know, bidding for the all this, you know, bidding for the all this, you know, bidding for the Olympics before 2000 and all these Olympics before 2000 and all these Olympics before 2000 and all these buildings going up and down, all this buildings going up and down, all this buildings going up and down, all this excitement about, you know, joining the excitement about, you know, joining the excitement about, you know, joining the WTO, all these radical reforms that are WTO, all these radical reforms that are WTO, all these radical reforms that are that are that are taking place and then that are that are taking place and then that are that are taking place and then all this effervescence that you feel in all this effervescence that you feel in all this effervescence that you feel in the air. You it's not GDP growth as the air. You it's not GDP growth as the air. You it's not GDP growth as numbers, you actually see it. I said numbers, you actually see it. I said numbers, you actually see it. I said this is really, you know, and they're this is really, you know, and they're this is really, you know, and they're describing China as if it was a place describing China as if it was a place describing China as if it was a place shredded with white terror. And so I shredded with white terror. And so I shredded with white terror. And so I thought this that's interesting. Uh thought this that's interesting. Uh thought this that's interesting. Uh there's a big gap big gap of there's a big gap big gap of there's a big gap big gap of understanding. And even today, that many understanding. And even today, that many understanding. And even today, that many years later, years later, years later, um people know China a little bit more, um people know China a little bit more, um people know China a little bit more, but the sentiment hasn't profoundly but the sentiment hasn't profoundly but the sentiment hasn't profoundly changed.

changed. changed. >> It's still the three T's. I feel like >> It's still the three T's. I feel like >> It's still the three T's. I feel like >> some variation of that. Uh so what what >> some variation of that. Uh so what what >> some variation of that. Uh so what what about the level of misunderstanding of about the level of misunderstanding of about the level of misunderstanding of Chinese people of the west? Is there a Chinese people of the west? Is there a Chinese people of the west? Is there a similar level of misunderstanding the similar level of misunderstanding the similar level of misunderstanding the other direction as well? other direction as well? other direction as well? >> I don't think to the same extent because >> I don't think to the same extent because >> I don't think to the same extent because there's Hollywood uh that you can see there's Hollywood uh that you can see there's Hollywood uh that you can see daily American life although it might daily American life although it might daily American life although it might not be totally realistic. not be totally realistic. not be totally realistic. Um there was a huge amount of admiration Um there was a huge amount of admiration Um there was a huge amount of admiration of US um technology innovation but also of US um technology innovation but also of US um technology innovation but also the American dream. the American dream. the American dream. Uh, I think our newspapers, even though Uh, I think our newspapers, even though Uh, I think our newspapers, even though there's bias everywhere, is not focused there's bias everywhere, is not focused there's bias everywhere, is not focused only on reporting the really bad stuff only on reporting the really bad stuff only on reporting the really bad stuff and portraying a negative side. I think and portraying a negative side. I think and portraying a negative side. I think these few years have been a little bit these few years have been a little bit these few years have been a little bit different, but so many students went to different, but so many students went to different, but so many students went to the US, right? Um, so many people travel the US, right? Um, so many people travel the US, right? Um, so many people travel to the US and this is the interesting to the US and this is the interesting to the US and this is the interesting thing. I've rarely met an American who thing. I've rarely met an American who thing. I've rarely met an American who has been to China and who still goes on has been to China and who still goes on has been to China and who still goes on about how bad China is. I think that about how bad China is. I think that about how bad China is. I think that going to China makes all the difference.

going to China makes all the difference. going to China makes all the difference. >> I feel that's like one of the big gaps >> I feel that's like one of the big gaps >> I feel that's like one of the big gaps of my life that I need to uh alleviate of my life that I need to uh alleviate of my life that I need to uh alleviate is to travel in a real way for a long is to travel in a real way for a long is to travel in a real way for a long time to really experience the people and time to really experience the people and time to really experience the people and the cultures. And China is a big place. the cultures. And China is a big place. the cultures. And China is a big place. >> Go dig deep and don't just go to Beijing >> Go dig deep and don't just go to Beijing >> Go dig deep and don't just go to Beijing and Shanghai. and Shanghai. and Shanghai. Um let's go back to the economics. So Um let's go back to the economics. So Um let's go back to the economics. So can you just can you just can you just uh dig a little deeper on the uh dig a little deeper on the uh dig a little deeper on the relationship in China between the relationship in China between the relationship in China between the government and the companies in the government and the companies in the government and the companies in the private sector? So how much freedom do private sector? So how much freedom do private sector? So how much freedom do companies companies companies have? have? have? >> Another big misunderstanding and a >> Another big misunderstanding and a >> Another big misunderstanding and a fundamental one is that people somehow fundamental one is that people somehow fundamental one is that people somehow think that the state suppresses the think that the state suppresses the think that the state suppresses the private sector. It's not at all as private sector. It's not at all as private sector. It's not at all as simple as that. Um, for the most part, simple as that. Um, for the most part, simple as that. Um, for the most part, if we look at the local government's if we look at the local government's if we look at the local government's incentive system, they want to help the incentive system, they want to help the incentive system, they want to help the best private companies, which are the best private companies, which are the best private companies, which are the most promising because it makes them most promising because it makes them most promising because it makes them look good. It adds to their GDP. It adds look good. It adds to their GDP. It adds look good. It adds to their GDP. It adds to the jobs, investment. They are so to the jobs, investment. They are so to the jobs, investment. They are so helpful to these private companies. helpful to these private companies. helpful to these private companies. Actually, I I I know many of these local Actually, I I I know many of these local Actually, I I I know many of these local government officials working tirelessly government officials working tirelessly government officials working tirelessly day and night, especially in bad times day and night, especially in bad times day and night, especially in bad times uh to coordinate between debtors and uh to coordinate between debtors and uh to coordinate between debtors and creditors and to kind of smooth out and creditors and to kind of smooth out and creditors and to kind of smooth out and define relationships with banks. They define relationships with banks. They define relationships with banks. They want to help these private companies want to help these private companies want to help these private companies because again their incentives are because again their incentives are because again their incentives are aligned. Uh Deepseek is private company aligned. Uh Deepseek is private company aligned. Uh Deepseek is private company by the way. So it has done the country by the way. So it has done the country by the way. So it has done the country proud and why would the state want to go proud and why would the state want to go proud and why would the state want to go and suppress these private companies

and suppress these private companies and suppress these private companies which ultimately is kind of a beacon which ultimately is kind of a beacon which ultimately is kind of a beacon represents a beacon of success for represents a beacon of success for represents a beacon of success for China. Um, China. Um, China. Um, now on how much freedom they have, it's now on how much freedom they have, it's now on how much freedom they have, it's really ranged from too much freedom. really ranged from too much freedom. really ranged from too much freedom. That's part of the problem where you That's part of the problem where you That's part of the problem where you have defense companies buying art have defense companies buying art have defense companies buying art auction houses, real estate companies auction houses, real estate companies auction houses, real estate companies like Everrand, buying soccer clubs, like Everrand, buying soccer clubs, like Everrand, buying soccer clubs, doing EVs, uh, uh, uh, companies uh, uh, doing EVs, uh, uh, uh, companies uh, uh, doing EVs, uh, uh, uh, companies uh, uh, investing in real estate that has investing in real estate that has investing in real estate that has nothing to do with their core business. nothing to do with their core business. nothing to do with their core business. That's how much latitude were given to That's how much latitude were given to That's how much latitude were given to private companies. And there were private companies. And there were private companies. And there were consequences. consequences. consequences. uh they were not reigned in. And then uh they were not reigned in. And then uh they were not reigned in. And then you go to the other extremes where you go to the other extremes where you go to the other extremes where they're scolded, they're reprimanded, they're scolded, they're reprimanded, they're scolded, they're reprimanded, they're reigned in, and they're kind of they're reigned in, and they're kind of they're reigned in, and they're kind of folded into submission. So that that is folded into submission. So that that is folded into submission. So that that is the whole spectrum. You have the whole the whole spectrum. You have the whole the whole spectrum. You have the whole range. But I guess what we're really range. But I guess what we're really range. But I guess what we're really getting at is it is a country that is getting at is it is a country that is getting at is it is a country that is moving from a no rule of law or very moving from a no rule of law or very moving from a no rule of law or very little rule of law, very immature little rule of law, very immature little rule of law, very immature markets to something that is being markets to something that is being markets to something that is being gradually gradually gradually um uh uh uh established bankruptcy laws, um uh uh uh established bankruptcy laws, um uh uh uh established bankruptcy laws, you know, corruption laws, uh rules and you know, corruption laws, uh rules and you know, corruption laws, uh rules and regulations on what's possible. uh one regulations on what's possible. uh one regulations on what's possible. uh one interesting point is that uh in China interesting point is that uh in China interesting point is that uh in China you you ask the companies to innovate you you ask the companies to innovate you you ask the companies to innovate first and then you re regulate after first and then you re regulate after first and then you re regulate after right right right >> so that has led to things like P2P >> so that has led to things like P2P >> so that has led to things like P2P platforms that you know it's led to lots platforms that you know it's led to lots platforms that you know it's led to lots of kind of financial innovations some of

of kind of financial innovations some of of kind of financial innovations some of which has actually been very helpful and which has actually been very helpful and which has actually been very helpful and good some of which have been disastrous good some of which have been disastrous good some of which have been disastrous but the intention to regulate after the but the intention to regulate after the but the intention to regulate after the fact is to really not um slow down or fact is to really not um slow down or fact is to really not um slow down or hinder the innovation. This is a very hinder the innovation. This is a very hinder the innovation. This is a very different approach from Europe. You different approach from Europe. You different approach from Europe. You regulate first and then you know regulate first and then you know regulate first and then you know companies have to work around that. Um companies have to work around that. Um companies have to work around that. Um so the this is why Chinese economy is so so the this is why Chinese economy is so so the this is why Chinese economy is so complex. Uh you cannot reduce it to complex. Uh you cannot reduce it to complex. Uh you cannot reduce it to simply a statement saying the state is simply a statement saying the state is simply a statement saying the state is unhelpful for the private or or unhelpful for the private or or unhelpful for the private or or something like that. Um there are something like that. Um there are something like that. Um there are certain sectors where the suees dominate certain sectors where the suees dominate certain sectors where the suees dominate right when it comes to national security right when it comes to national security right when it comes to national security in terms of energy. But let's not focus in terms of energy. But let's not focus in terms of energy. But let's not focus on these few sectors. By and large, most on these few sectors. By and large, most on these few sectors. By and large, most of the economy, if you actually admit to of the economy, if you actually admit to of the economy, if you actually admit to the fact that China is highly innovative the fact that China is highly innovative the fact that China is highly innovative and highly entrepreneurial, means that and highly entrepreneurial, means that and highly entrepreneurial, means that it must be the private sector that is it must be the private sector that is it must be the private sector that is driving the show. driving the show. driving the show. >> Innovate first, regulate after. Really >> Innovate first, regulate after. Really >> Innovate first, regulate after. Really interesting. Uh I also in my mind am interesting. Uh I also in my mind am interesting. Uh I also in my mind am contrasting it with the way the Soviet contrasting it with the way the Soviet contrasting it with the way the Soviet Union and Russia since operated. That Union and Russia since operated. That Union and Russia since operated. That doesn't sound at all like this model.

doesn't sound at all like this model. doesn't sound at all like this model. And it's interesting that countries that And it's interesting that countries that And it's interesting that countries that at least on the surface had a similar at least on the surface had a similar at least on the surface had a similar cultural communist problems. You know, cultural communist problems. You know, cultural communist problems. You know, the bureaucracies that form inside the the bureaucracies that form inside the the bureaucracies that form inside the communist state. It just seems that um communist state. It just seems that um communist state. It just seems that um China broke away from that somehow that China broke away from that somehow that China broke away from that somehow that don't understand exactly what happened don't understand exactly what happened don't understand exactly what happened >> in the west. They group these economies >> in the west. They group these economies >> in the west. They group these economies together as if they're the same thing. together as if they're the same thing. together as if they're the same thing. No, it's not the same at all. There's so No, it's not the same at all. There's so No, it's not the same at all. There's so many differences, uh so much more many differences, uh so much more many differences, uh so much more flexibility. You can have dynamic flexibility. You can have dynamic flexibility. You can have dynamic entrepreneuralism at the same time have entrepreneuralism at the same time have entrepreneuralism at the same time have socialist characteristics. And I think socialist characteristics. And I think socialist characteristics. And I think this is what China has been able to this is what China has been able to this is what China has been able to shape and mold a unique model that shape and mold a unique model that shape and mold a unique model that balances between government industry, balances between government industry, balances between government industry, between state coordination and market between state coordination and market between state coordination and market mechanisms and between individualism and mechanisms and between individualism and mechanisms and between individualism and communalism. It's not necessarily black communalism. It's not necessarily black communalism. It's not necessarily black and white. You can have all these things and white. You can have all these things and white. You can have all these things at the same time. at the same time. at the same time. >> So what are the pros and cons of being >> So what are the pros and cons of being >> So what are the pros and cons of being an entrepreneur in China versus the an entrepreneur in China versus the an entrepreneur in China versus the west? Like if you get a choice, you have west? Like if you get a choice, you have west? Like if you get a choice, you have a dream, you want to build epic things, a dream, you want to build epic things, a dream, you want to build epic things, what and you get to choose where to what and you get to choose where to what and you get to choose where to start that business. What are the pros start that business. What are the pros start that business. What are the pros and cons of each path?

and cons of each path? and cons of each path? >> In China, the speed is just all >> In China, the speed is just all >> In China, the speed is just all inspiring. You have a good idea, you inspiring. You have a good idea, you inspiring. You have a good idea, you implement it, you realize your dream implement it, you realize your dream implement it, you realize your dream very fast because there's also the very fast because there's also the very fast because there's also the support system, right? The support system, right? The support system, right? The infrastructure there, the digital infrastructure there, the digital infrastructure there, the digital infrastructure there, the engineers are infrastructure there, the engineers are infrastructure there, the engineers are there, the talent is there, and they're there, the talent is there, and they're there, the talent is there, and they're cheap. And the market competition is cheap. And the market competition is cheap. And the market competition is there to keep to keep you going. And the there to keep to keep you going. And the there to keep to keep you going. And the consumers give you a very very fast consumers give you a very very fast consumers give you a very very fast feedback. You know, look at Xiaomi. It feedback. You know, look at Xiaomi. It feedback. You know, look at Xiaomi. It was making phones and now it makes one was making phones and now it makes one was making phones and now it makes one of the world's best EVs. 270,000 cars of the world's best EVs. 270,000 cars of the world's best EVs. 270,000 cars sold in one day a few days ago with a sold in one day a few days ago with a sold in one day a few days ago with a new model. They were phone makers. new model. They were phone makers. new model. They were phone makers. >> So, there's an advantage to that. Okay. >> So, there's an advantage to that. Okay. >> So, there's an advantage to that. Okay. But I would not feel safe. um not But I would not feel safe. um not But I would not feel safe. um not because of danger of expropriation or because of danger of expropriation or because of danger of expropriation or nothing like that but the bank nothing like that but the bank nothing like that but the bank bankruptcy laws are not there right it's bankruptcy laws are not there right it's bankruptcy laws are not there right it's not necessarily always fair competition not necessarily always fair competition not necessarily always fair competition things don't happen necessarily in things don't happen necessarily in things don't happen necessarily in orderly manner if you have a competitor orderly manner if you have a competitor orderly manner if you have a competitor you can have a very evil competitor and you can have a very evil competitor and you can have a very evil competitor and evil competitors are there everywhere in evil competitors are there everywhere in evil competitors are there everywhere in China they would you know call the China they would you know call the China they would you know call the police on you put you in jail uh spread police on you put you in jail uh spread police on you put you in jail uh spread false rumors about you maybe that false rumors about you maybe that false rumors about you maybe that happens also in the US but there's a happens also in the US but there's a happens also in the US but there's a different it's a different level uh in different it's a different level uh in different it's a different level uh in China. Um, and also the mold that you China. Um, and also the mold that you China. Um, and also the mold that you can have to protect yourself, the IP can have to protect yourself, the IP can have to protect yourself, the IP protection, right? That's much weaker in protection, right? That's much weaker in protection, right? That's much weaker in China because the legal system is not China because the legal system is not China because the legal system is not very effective. You have a good idea, very effective. You have a good idea, very effective. You have a good idea, you'll be copied. And there's a lot of you'll be copied. And there's a lot of you'll be copied. And there's a lot of work. You have to you have to dine and work. You have to you have to dine and work. You have to you have to dine and wine with the local governments. I mean, wine with the local governments. I mean, wine with the local governments. I mean, that's not allowed anymore, by the way.

that's not allowed anymore, by the way. that's not allowed anymore, by the way. But you dine and wine, you know, But you dine and wine, you know, But you dine and wine, you know, figuratively speaking, you have to have figuratively speaking, you have to have figuratively speaking, you have to have a very good relationship with them. a very good relationship with them. a very good relationship with them. That's a different kind of work. the That's a different kind of work. the That's a different kind of work. the wine and dine and the evil competitors wine and dine and the evil competitors wine and dine and the evil competitors is an interesting challenge that in some is an interesting challenge that in some is an interesting challenge that in some maybe distant ways akin to the problems maybe distant ways akin to the problems maybe distant ways akin to the problems of the Soviet Union. I think I guess in of the Soviet Union. I think I guess in of the Soviet Union. I think I guess in the United States there's less of that the United States there's less of that the United States there's less of that and I don't even know if that's based on and I don't even know if that's based on and I don't even know if that's based on laws cuz there's a lot of lawyers in the laws cuz there's a lot of lawyers in the laws cuz there's a lot of lawyers in the US that could do the same kind of evil US that could do the same kind of evil US that could do the same kind of evil competitor stuff technically. competitor stuff technically. competitor stuff technically. >> That's true. the potential negative um >> That's true. the potential negative um >> That's true. the potential negative um ramifications are there. But I I I think ramifications are there. But I I I think ramifications are there. But I I I think personal protection is a big difference. personal protection is a big difference. personal protection is a big difference. If you make a mistake, if you your If you make a mistake, if you your If you make a mistake, if you your company is not run well, you know, you company is not run well, you know, you company is not run well, you know, you go to jail. I think that the US is much go to jail. I think that the US is much go to jail. I think that the US is much much more tolerant on entrepreneurship, much more tolerant on entrepreneurship, much more tolerant on entrepreneurship, entrepreneurs on failure. Since we're entrepreneurs on failure. Since we're entrepreneurs on failure. Since we're talking about it, there was a lot of talking about it, there was a lot of talking about it, there was a lot of controversy around Jack Ma disappearing, controversy around Jack Ma disappearing, controversy around Jack Ma disappearing, quote unquote, and uh reappearing a bit quote unquote, and uh reappearing a bit quote unquote, and uh reappearing a bit later, and there's been sort of rumors later, and there's been sort of rumors later, and there's been sort of rumors of some tense relationships that he has of some tense relationships that he has of some tense relationships that he has with the Chinese government. What is with the Chinese government. What is with the Chinese government. What is important to understand about the whole important to understand about the whole important to understand about the whole situation?

situation? situation? Like to what degree is it reflective of Like to what degree is it reflective of Like to what degree is it reflective of the issues entrepreneurs face in China? the issues entrepreneurs face in China? the issues entrepreneurs face in China? In the US, capital controls politics. In the US, capital controls politics. In the US, capital controls politics. One could argue. In China, it has to be One could argue. In China, it has to be One could argue. In China, it has to be the other way around. Capital must be the other way around. Capital must be the other way around. Capital must be reigned in by politics. As part of the reigned in by politics. As part of the reigned in by politics. As part of the capitalist class, do not have the capitalist class, do not have the capitalist class, do not have the ambition to exceed the powers of the ambition to exceed the powers of the ambition to exceed the powers of the political class is really at the core of political class is really at the core of political class is really at the core of it. I'd say the biggest difference it. I'd say the biggest difference it. I'd say the biggest difference between US and China. between US and China. between US and China. Um there are important Um there are important Um there are important details that I think the west has not details that I think the west has not details that I think the west has not fully provided to the public. Um for fully provided to the public. Um for fully provided to the public. Um for instance and financial as innovative as instance and financial as innovative as instance and financial as innovative as it was um was doing banking it was um was doing banking it was um was doing banking jobs without being regulated like a jobs without being regulated like a jobs without being regulated like a bank. Right? So that obviously poses a bank. Right? So that obviously poses a bank. Right? So that obviously poses a host of financial stability questions host of financial stability questions host of financial stability questions and um and rules and regulations and so and um and rules and regulations and so and um and rules and regulations and so forth. So the fact that IPO was halted forth. So the fact that IPO was halted forth. So the fact that IPO was halted uh you could say that there were strong uh you could say that there were strong uh you could say that there were strong economic regulatory grounds uh for that.

economic regulatory grounds uh for that. economic regulatory grounds uh for that. But I think more broadly speaking if But I think more broadly speaking if But I think more broadly speaking if you're an entrepreneur part of the you're an entrepreneur part of the you're an entrepreneur part of the capitalist class capitalist class capitalist class keep your head down make money and keep your head down make money and keep your head down make money and that's fine right? uh do some that's fine right? uh do some that's fine right? uh do some philanthropy. There are also many many philanthropy. There are also many many philanthropy. There are also many many other billionaires that are just fine other billionaires that are just fine other billionaires that are just fine that are actually very much in favor uh that are actually very much in favor uh that are actually very much in favor uh of the political leadership and um they of the political leadership and um they of the political leadership and um they do their thing. Now I'm not saying do their thing. Now I'm not saying do their thing. Now I'm not saying what's right, what's wrong. It's just a what's right, what's wrong. It's just a what's right, what's wrong. It's just a very very different culture and very very different culture and very very different culture and different country. In the US it's great different country. In the US it's great different country. In the US it's great to be colorful. I mean you have a very to be colorful. I mean you have a very to be colorful. I mean you have a very very colorful president. He would never very colorful president. He would never very colorful president. He would never have been able to make it in China. uh have been able to make it in China. uh have been able to make it in China. uh you have the likes of Elon Musk. It's you have the likes of Elon Musk. It's you have the likes of Elon Musk. It's great to be different. It's great to great to be different. It's great to great to be different. It's great to stand out. You do not want to stand out stand out. You do not want to stand out stand out. You do not want to stand out in China. in China. in China. So the moral of the story is that the So the moral of the story is that the So the moral of the story is that the top leadership understands that it needs top leadership understands that it needs top leadership understands that it needs these top entrepreneurs, the likes of these top entrepreneurs, the likes of these top entrepreneurs, the likes of Jackmaw, Jackmaw, Jackmaw, and um they have done so many great and um they have done so many great and um they have done so many great things for the country, even for the things for the country, even for the things for the country, even for the world. But in China, garnering too much world. But in China, garnering too much world. But in China, garnering too much influence and power even through social influence and power even through social influence and power even through social media media media uh doesn't make you look that great.

uh doesn't make you look that great. uh doesn't make you look that great. It's not a good thing for you It's not a good thing for you It's not a good thing for you personally. And and there's a saying in personally. And and there's a saying in personally. And and there's a saying in China that you just don't want to be the China that you just don't want to be the China that you just don't want to be the tallest tree, right? The tallest tree tallest tree, right? The tallest tree tallest tree, right? The tallest tree gets the most wind. So I don't agree at gets the most wind. So I don't agree at gets the most wind. So I don't agree at all with the western conclusion that all with the western conclusion that all with the western conclusion that this anecdote, this story has meant that this anecdote, this story has meant that this anecdote, this story has meant that entrepreneurs don't want to be entrepreneurs don't want to be entrepreneurs don't want to be entrepreneurs anymore. The young kids entrepreneurs anymore. The young kids entrepreneurs anymore. The young kids don't aspire to be people like Jackal. don't aspire to be people like Jackal. don't aspire to be people like Jackal. That's not true at all. The incentives That's not true at all. The incentives That's not true at all. The incentives are still there. It's a different kind are still there. It's a different kind are still there. It's a different kind of rich elite class in China. of rich elite class in China. of rich elite class in China. >> So on on what dimensions do you think >> So on on what dimensions do you think >> So on on what dimensions do you think that the height of the tree is measured? that the height of the tree is measured? that the height of the tree is measured? Uh, is it is it more about just Uh, is it is it more about just Uh, is it is it more about just mouththing off in public? So, can you mouththing off in public? So, can you mouththing off in public? So, can you still be the richest person in China and still be the richest person in China and still be the richest person in China and actually not actually not actually not uh clash with the state? uh clash with the state? uh clash with the state? >> Absolutely. Don't be too outspoken. >> Absolutely. Don't be too outspoken. >> Absolutely. Don't be too outspoken. Don't try to get too much attention and Don't try to get too much attention and Don't try to get too much attention and too much influence. And just, you know, too much influence. And just, you know, too much influence. And just, you know, again, it's a cultural thing, but just again, it's a cultural thing, but just again, it's a cultural thing, but just keep your head down, be humble, uh, you keep your head down, be humble, uh, you keep your head down, be humble, uh, you know, contribute to society, do know, contribute to society, do know, contribute to society, do philanthropy, philanthropy, philanthropy, uh, work, uh, collaborate with the uh, work, uh, collaborate with the uh, work, uh, collaborate with the government, and you're kind of okay.

government, and you're kind of okay. government, and you're kind of okay. >> So, the signal the Jackmaw situation >> So, the signal the Jackmaw situation >> So, the signal the Jackmaw situation sends to the entrepreneurs in China is sends to the entrepreneurs in China is sends to the entrepreneurs in China is is is not don't be an entrepreneur. It's is is not don't be an entrepreneur. It's is is not don't be an entrepreneur. It's more like don't more like don't more like don't >> be too colorful. >> be too colorful. >> be too colorful. >> Don't be too colorful. And colorful >> Don't be too colorful. And colorful >> Don't be too colorful. And colorful means you can be colorful about the means you can be colorful about the means you can be colorful about the technical details of of your technology, technical details of of your technology, technical details of of your technology, but don't be colorful about Xi Jinping but don't be colorful about Xi Jinping but don't be colorful about Xi Jinping and and and politics and just stay out. and and and politics and just stay out. and and and politics and just stay out. >> Yeah. Stay out of politics. But I just >> Yeah. Stay out of politics. But I just >> Yeah. Stay out of politics. But I just want to say that said, Jack Ma was want to say that said, Jack Ma was want to say that said, Jack Ma was really an emblem um of extreme success, really an emblem um of extreme success, really an emblem um of extreme success, right, for China and the Chinese right, for China and the Chinese right, for China and the Chinese entrepreneurs look up to him. That's entrepreneurs look up to him. That's entrepreneurs look up to him. That's really important. It was a signal that really important. It was a signal that really important. It was a signal that unfortunately was misconstrued unfortunately was misconstrued unfortunately was misconstrued by the side and by also outside world. by the side and by also outside world. by the side and by also outside world. Um but it's laid a different path for Um but it's laid a different path for Um but it's laid a different path for what these entrepreneurs should be what these entrepreneurs should be what these entrepreneurs should be doing. doing. doing. >> What do you think happened to him? So >> What do you think happened to him? So >> What do you think happened to him? So he's now I think living in Japan. he's now I think living in Japan. he's now I think living in Japan. >> That's by choice. >> That's by choice. >> That's by choice. >> By choice. No, he's look he's an >> By choice. No, he's look he's an >> By choice. No, he's look he's an extremely fascinating character which extremely fascinating character which extremely fascinating character which you know and if he were in the US he'd you know and if he were in the US he'd you know and if he were in the US he'd thrive funny, witty, smart, wise, uh thrive funny, witty, smart, wise, uh thrive funny, witty, smart, wise, uh creative, uh loves a good life and I creative, uh loves a good life and I creative, uh loves a good life and I think it's by choice that he's roaming think it's by choice that he's roaming think it's by choice that he's roaming around the world um given that he has around the world um given that he has around the world um given that he has more free time.

more free time. more free time. >> You think he loves China? >> You think he loves China? >> You think he loves China? >> All of them do. all of them do because >> All of them do. all of them do because >> All of them do. all of them do because their lives their their destinies were their lives their their destinies were their lives their their destinies were totally changed because of China, totally changed because of China, totally changed because of China, because of the government, because of because of the government, because of because of the government, because of Deng Xiaoing, because of everything. Deng Xiaoing, because of everything. Deng Xiaoing, because of everything. >> So, um you know, I know a lot of people >> So, um you know, I know a lot of people >> So, um you know, I know a lot of people from the the former Soviet Union and from the the former Soviet Union and from the the former Soviet Union and there's a deep resentment there's a deep resentment there's a deep resentment of broken promises, broken dreams. So, of broken promises, broken dreams. So, of broken promises, broken dreams. So, that is not something you see. that is not something you see. that is not something you see. >> That's not how I would describe that >> That's not how I would describe that >> That's not how I would describe that generation and their feelings towards generation and their feelings towards generation and their feelings towards China. Of course, you always get China. Of course, you always get China. Of course, you always get exceptions, right? the ones who have exceptions, right? the ones who have exceptions, right? the ones who have moved to the US and who who who wants a moved to the US and who who who wants a moved to the US and who who who wants a democracy. But by and large, people are democracy. But by and large, people are democracy. But by and large, people are deeply grateful to China, the Chinese deeply grateful to China, the Chinese deeply grateful to China, the Chinese government, the Communist Party, if you government, the Communist Party, if you government, the Communist Party, if you want to label it as that, because want to label it as that, because want to label it as that, because they've seen their lives be totally they've seen their lives be totally they've seen their lives be totally transformed. I mean, Jack Ma went from transformed. I mean, Jack Ma went from transformed. I mean, Jack Ma went from being a school teacher to becoming one being a school teacher to becoming one being a school teacher to becoming one of the most powerful people in the of the most powerful people in the of the most powerful people in the world. I mean, if you didn't have China, world. I mean, if you didn't have China, world. I mean, if you didn't have China, what what how could that have happened, what what how could that have happened, what what how could that have happened, right? Uh can you speak to the thing you right? Uh can you speak to the thing you right? Uh can you speak to the thing you mentioned a few times which is the mentioned a few times which is the mentioned a few times which is the difference in um American versus Chinese difference in um American versus Chinese difference in um American versus Chinese or maybe western versus Chinese or maybe western versus Chinese or maybe western versus Chinese u approach to entrepreneurship the 0 to u approach to entrepreneurship the 0 to u approach to entrepreneurship the 0 to one versus one to n one versus one to n one versus one to n uh maybe can you explain that and uh uh maybe can you explain that and uh uh maybe can you explain that and uh what will it take for China to become a what will it take for China to become a what will it take for China to become a consistent 0ero to one innovator for the consistent 0ero to one innovator for the consistent 0ero to one innovator for the individual entrepreneurs to create individual entrepreneurs to create individual entrepreneurs to create totally new things versus doing the totally new things versus doing the totally new things versus doing the things you mentioned about speed and things you mentioned about speed and things you mentioned about speed and scale.

scale. scale. The US will lead for some time on The US will lead for some time on The US will lead for some time on breakthroughs on disruptive breakthroughs on disruptive breakthroughs on disruptive technologies, the 0ero to one technologies, the 0ero to one technologies, the 0ero to one technologies technologies technologies um that ultimately change the world. But um that ultimately change the world. But um that ultimately change the world. But innovation is a process. It goes from innovation is a process. It goes from innovation is a process. It goes from invention to production and invention to production and invention to production and commercialization and diffusion. commercialization and diffusion. commercialization and diffusion. Diffusing technology throughout all Diffusing technology throughout all Diffusing technology throughout all parts of the economy. And on those two parts of the economy. And on those two parts of the economy. And on those two stages, I think that China has a unique stages, I think that China has a unique stages, I think that China has a unique advantage even if it still can't do the advantage even if it still can't do the advantage even if it still can't do the 0 to1 breakthroughs because in the end 0 to1 breakthroughs because in the end 0 to1 breakthroughs because in the end how much this technology is adopted by how much this technology is adopted by how much this technology is adopted by the countries and by the various parts the countries and by the various parts the countries and by the various parts of the economy is fundamentally crucial of the economy is fundamentally crucial of the economy is fundamentally crucial to how much productivity will be to how much productivity will be to how much productivity will be unleashed and China's unleashed and China's unleashed and China's innovation currently the deepseek is innovation currently the deepseek is innovation currently the deepseek is really one example and I think it's really one example and I think it's really one example and I think it's really the beginning of the scalebased really the beginning of the scalebased really the beginning of the scalebased leading edge technology costcutting leading edge technology costcutting leading edge technology costcutting driven kind of innovation model could be driven kind of innovation model could be driven kind of innovation model could be just as powerful maybe even more just as powerful maybe even more just as powerful maybe even more effective and powerful than the effective and powerful than the effective and powerful than the breakthroughs breakthroughs breakthroughs um and it's a very different approach to um and it's a very different approach to um and it's a very different approach to innovation the Chinese companies focus innovation the Chinese companies focus innovation the Chinese companies focus on solutions problem solving again that on solutions problem solving again that on solutions problem solving again that comes back to the education system right comes back to the education system right comes back to the education system right you're giving a problem I'm going to you're giving a problem I'm going to you're giving a problem I'm going to find the answer the Chinese students can find the answer the Chinese students can find the answer the Chinese students can do it you want them to write their own do it you want them to write their own do it you want them to write their own question they can't do it, right? I'm question they can't do it, right? I'm question they can't do it, right? I'm exaggerating a little bit, but it's a exaggerating a little bit, but it's a exaggerating a little bit, but it's a little like that, right? They see a little like that, right? They see a little like that, right? They see a problem, they're going to go after, and problem, they're going to go after, and problem, they're going to go after, and they're going to find the best solution.

they're going to find the best solution. they're going to find the best solution. Um, and that's really, really useful, Um, and that's really, really useful, Um, and that's really, really useful, right? Because we don't need or right? Because we don't need or right? Because we don't need or developing countries especially don't developing countries especially don't developing countries especially don't need these frontier technologies that need these frontier technologies that need these frontier technologies that they can't use. And China currently has they can't use. And China currently has they can't use. And China currently has this AI plus program which is about this AI plus program which is about this AI plus program which is about pushing AI into every single plausible pushing AI into every single plausible pushing AI into every single plausible sector with the help of the state. So sector with the help of the state. So sector with the help of the state. So adoption diffusion is very important. adoption diffusion is very important. adoption diffusion is very important. why China why China why China can't do breakthroughs or can't do 0ero can't do breakthroughs or can't do 0ero can't do breakthroughs or can't do 0ero to one technologies. I think at the root to one technologies. I think at the root to one technologies. I think at the root of it and there are some deeper uh uh we of it and there are some deeper uh uh we of it and there are some deeper uh uh we talked about the the the approximate uh talked about the the the approximate uh talked about the the the approximate uh reasons the short flat fast for instance reasons the short flat fast for instance reasons the short flat fast for instance right you don't want to spend too much right you don't want to spend too much right you don't want to spend too much time on investigating something that you time on investigating something that you time on investigating something that you don't even know if it's commercially don't even know if it's commercially don't even know if it's commercially viable so basic research is still weaker viable so basic research is still weaker viable so basic research is still weaker than in the US universities but also than in the US universities but also than in the US universities but also this kind of intrinsic motivation it's this kind of intrinsic motivation it's this kind of intrinsic motivation it's very different right in China it's very different right in China it's very different right in China it's driven by exttrinsic motivation you are driven by exttrinsic motivation you are driven by exttrinsic motivation you are rewarded by you know compensation, rewarded by you know compensation, rewarded by you know compensation, financial compensation, all these kind financial compensation, all these kind financial compensation, all these kind of extrinsic motivation is what drives of extrinsic motivation is what drives of extrinsic motivation is what drives you. But intrinsic motivation, pursuit you. But intrinsic motivation, pursuit you. But intrinsic motivation, pursuit of knowledge for knowledge sake, right?

of knowledge for knowledge sake, right? of knowledge for knowledge sake, right? That was deep in the Confucious That was deep in the Confucious That was deep in the Confucious philosophies. But of course, you know, philosophies. But of course, you know, philosophies. But of course, you know, poverty has changed all that. The poverty has changed all that. The poverty has changed all that. The profound commitment to scholarship, to profound commitment to scholarship, to profound commitment to scholarship, to research, which we know is very much research, which we know is very much research, which we know is very much true in the US universities, that's it's true in the US universities, that's it's true in the US universities, that's it's starting. It's starting, but it's not starting. It's starting, but it's not starting. It's starting, but it's not there. Um so I think these two there. Um so I think these two there. Um so I think these two approaches are actually quite compatible approaches are actually quite compatible approaches are actually quite compatible with each other. I don't know what all with each other. I don't know what all with each other. I don't know what all this fuss is about, right? Uh China uses this fuss is about, right? Uh China uses this fuss is about, right? Uh China uses technology very well. It can scale up technology very well. It can scale up technology very well. It can scale up and reduce costs and then it can spread and reduce costs and then it can spread and reduce costs and then it can spread it around and the US you know has makes it around and the US you know has makes it around and the US you know has makes the highest value added by inventing the highest value added by inventing the highest value added by inventing these technologies. Um but you know these technologies. Um but you know these technologies. Um but you know again diffusion matters. Well, yeah, the again diffusion matters. Well, yeah, the again diffusion matters. Well, yeah, the things you mentioned the the scale, the things you mentioned the the scale, the things you mentioned the the scale, the manufacturing, the diffusion manufacturing, the diffusion manufacturing, the diffusion from a sort of economics perspective, from a sort of economics perspective, from a sort of economics perspective, you wonder which is the more important you wonder which is the more important you wonder which is the more important skill to have. And it seems like skill to have. And it seems like skill to have. And it seems like the cost cutting, the efficient large the cost cutting, the efficient large the cost cutting, the efficient large scale fast manufacturer, the diffusion scale fast manufacturer, the diffusion scale fast manufacturer, the diffusion is much more important for the success is much more important for the success is much more important for the success and the growth of the economy. I think and the growth of the economy. I think and the growth of the economy. I think where it ultimately leads to an impact where it ultimately leads to an impact where it ultimately leads to an impact on the economy that's on the economy that's on the economy that's more important it's this persistent more important it's this persistent more important it's this persistent question we have why don't we see the question we have why don't we see the question we have why don't we see the productivity in the numbers right you're productivity in the numbers right you're productivity in the numbers right you're in AI AI we had long periods of in AI AI we had long periods of in AI AI we had long periods of investment right you just don't you investment right you just don't you investment right you just don't you haven't you hadn't seen it in the haven't you hadn't seen it in the haven't you hadn't seen it in the numbers until maybe even recently and numbers until maybe even recently and numbers until maybe even recently and it's still very slow but China's pushing it's still very slow but China's pushing it's still very slow but China's pushing that in the sectors you know robotics um

that in the sectors you know robotics um that in the sectors you know robotics um AI cloud industrial internet of things AI cloud industrial internet of things AI cloud industrial internet of things and even companies like Huawei, I think and even companies like Huawei, I think and even companies like Huawei, I think it's gotten a little bit of too too bad it's gotten a little bit of too too bad it's gotten a little bit of too too bad of a rep in in the US, but American of a rep in in the US, but American of a rep in in the US, but American engineers working for Huawei said that engineers working for Huawei said that engineers working for Huawei said that it's, you know, they're so happy working it's, you know, they're so happy working it's, you know, they're so happy working for Huawei. The intent focus on for Huawei. The intent focus on for Huawei. The intent focus on innovation, but also on solution-driven innovation, but also on solution-driven innovation, but also on solution-driven innovations in Africa, in rural areas, innovations in Africa, in rural areas, innovations in Africa, in rural areas, really changes people's lives. It really changes people's lives. It really changes people's lives. It doesn't change the world, but it changes doesn't change the world, but it changes doesn't change the world, but it changes individuals lives. What's the feeling individuals lives. What's the feeling individuals lives. What's the feeling that Chinese entrepreneurs have about that Chinese entrepreneurs have about that Chinese entrepreneurs have about copying technology? copying technology? copying technology? Because I think one of the cultural Because I think one of the cultural Because I think one of the cultural things in the US is just really not things in the US is just really not things in the US is just really not respected if you copy. respected if you copy. respected if you copy. >> Yeah. >> Yeah. >> Yeah. >> So like that's not seen that's seen as a >> So like that's not seen that's seen as a >> So like that's not seen that's seen as a big problem. big problem. big problem. >> And is there some degree to where in >> And is there some degree to where in >> And is there some degree to where in China that's not? China that's not? China that's not? >> No. Unfortunately, >> No. Unfortunately, >> No. Unfortunately, um this is a big cultural difference. um this is a big cultural difference. um this is a big cultural difference. our our sense of property rights is our our sense of property rights is our our sense of property rights is actually quite different from the US. I actually quite different from the US. I actually quite different from the US. I think that will change over time, but think that will change over time, but think that will change over time, but absolutely you're right. Um they are absolutely you're right. Um they are absolutely you're right. Um they are they have no qualms about copying as they have no qualms about copying as they have no qualms about copying as long as it leads to success, right?

long as it leads to success, right? long as it leads to success, right? That's the difference in values. Uh as That's the difference in values. Uh as That's the difference in values. Uh as we mentioned in the beginning, you asked we mentioned in the beginning, you asked we mentioned in the beginning, you asked why why the level of competition is so why why the level of competition is so why why the level of competition is so fierce. Well, they all do the same thing fierce. Well, they all do the same thing fierce. Well, they all do the same thing once they've seen one successful thing. once they've seen one successful thing. once they've seen one successful thing. Everybody does the same thing. You'd Everybody does the same thing. You'd Everybody does the same thing. You'd have no respect for doing that in the have no respect for doing that in the have no respect for doing that in the US, right? But in China, it's all fine. US, right? But in China, it's all fine. US, right? But in China, it's all fine. But I think that over time it will But I think that over time it will But I think that over time it will change. Just give it a little bit of change. Just give it a little bit of change. Just give it a little bit of time. time. time. >> So do you fundamentally it's a bad >> So do you fundamentally it's a bad >> So do you fundamentally it's a bad thing? thing? thing? >> In the end, if China is all about >> In the end, if China is all about >> In the end, if China is all about innovation technology, you cannot not innovation technology, you cannot not innovation technology, you cannot not have very strict IP protection. have very strict IP protection. have very strict IP protection. >> True. >> True. >> True. >> Right. And ultimately, again, we're >> Right. And ultimately, again, we're >> Right. And ultimately, again, we're still in the short, flat, still in the short, flat, still in the short, flat, >> fast stage, right? When we graduate from >> fast stage, right? When we graduate from >> fast stage, right? When we graduate from that stage, you're going to have very that stage, you're going to have very that stage, you're going to have very different views about these things. you different views about these things. you different views about these things. you know, try to diversify and do different know, try to diversify and do different know, try to diversify and do different things. But again, it's a stage. Chinese things. But again, it's a stage. Chinese things. But again, it's a stage. Chinese people were hungry. They're still a people were hungry. They're still a people were hungry. They're still a little bit hungry. They're not going to little bit hungry. They're not going to little bit hungry. They're not going to be as hungry in the future. be as hungry in the future. be as hungry in the future. >> So, can you describe the Deep Seek >> So, can you describe the Deep Seek >> So, can you describe the Deep Seek moment? And uh Deep Seek because it moment? And uh Deep Seek because it moment? And uh Deep Seek because it represents what China's thinking about represents what China's thinking about represents what China's thinking about in the space of AI and uh does China in the space of AI and uh does China in the space of AI and uh does China have a chance at outrunning US in the AI have a chance at outrunning US in the AI have a chance at outrunning US in the AI race? Deep Seek was a surprise to the race? Deep Seek was a surprise to the race? Deep Seek was a surprise to the world, but I don't think it was that world, but I don't think it was that world, but I don't think it was that much of a surprise to the same degree to much of a surprise to the same degree to much of a surprise to the same degree to the Chinese.

the Chinese. the Chinese. Um, and remember that Deep Seek happened Um, and remember that Deep Seek happened Um, and remember that Deep Seek happened in times of in times of in times of crisis urgency, not in times of comfort. crisis urgency, not in times of comfort. crisis urgency, not in times of comfort. A lot of these technological A lot of these technological A lot of these technological breakthroughs and leaprogging happens in breakthroughs and leaprogging happens in breakthroughs and leaprogging happens in times of crisis. This is called crisis times of crisis. This is called crisis times of crisis. This is called crisis innovation. And you got to thank the US innovation. And you got to thank the US innovation. And you got to thank the US for that, right? When the Chinese were for that, right? When the Chinese were for that, right? When the Chinese were comfortably importing chips from the US, comfortably importing chips from the US, comfortably importing chips from the US, the whole industry stalled for 20 years. the whole industry stalled for 20 years. the whole industry stalled for 20 years. I mean, why would you plow in billions, I mean, why would you plow in billions, I mean, why would you plow in billions, tens of billions, and even more when you tens of billions, and even more when you tens of billions, and even more when you can just import the best, right? You can just import the best, right? You can just import the best, right? You don't want to do your own innovation. don't want to do your own innovation. don't want to do your own innovation. It's because of these export controls, It's because of these export controls, It's because of these export controls, these sanctions on these companies that these sanctions on these companies that these sanctions on these companies that Chinese companies and the Chinese state Chinese companies and the Chinese state Chinese companies and the Chinese state felt an existential crisis a few years felt an existential crisis a few years felt an existential crisis a few years ago on being by being cut off from these ago on being by being cut off from these ago on being by being cut off from these critical components. And guess what critical components. And guess what critical components. And guess what happened in a short amount of time? the happened in a short amount of time? the happened in a short amount of time? the degree of domestic capacity ramping up degree of domestic capacity ramping up degree of domestic capacity ramping up and catchup has been nothing short of and catchup has been nothing short of and catchup has been nothing short of remarkable again thanks to uh US remarkable again thanks to uh US remarkable again thanks to uh US tculence on technology.

tculence on technology. tculence on technology. Now I'm sure there are many aspects of Now I'm sure there are many aspects of Now I'm sure there are many aspects of hypo hyperbole related to deepsek but it hypo hyperbole related to deepsek but it hypo hyperbole related to deepsek but it just shows you that the gap is much just shows you that the gap is much just shows you that the gap is much smaller between the China and the US on smaller between the China and the US on smaller between the China and the US on leading edge technologies than what was leading edge technologies than what was leading edge technologies than what was expected that these export controls were expected that these export controls were expected that these export controls were not effective. They may have even not effective. They may have even not effective. They may have even backfired. And it shows you that China backfired. And it shows you that China backfired. And it shows you that China has this relentless focus on taking some has this relentless focus on taking some has this relentless focus on taking some of the existing technologies and using of the existing technologies and using of the existing technologies and using scale um and um the the advantages to scale um and um the the advantages to scale um and um the the advantages to cut cost and to diffuse. And this is cut cost and to diffuse. And this is cut cost and to diffuse. And this is just the beginning. I think it will just the beginning. I think it will just the beginning. I think it will happen in many other industries as well happen in many other industries as well happen in many other industries as well including in semiconductors. including in semiconductors. including in semiconductors. Um and that's the Chinese approach. Now Um and that's the Chinese approach. Now Um and that's the Chinese approach. Now there's an interesting dilemma here there's an interesting dilemma here there's an interesting dilemma here which is that this is happening at a in which is that this is happening at a in which is that this is happening at a in a time of extreme economic softness a time of extreme economic softness a time of extreme economic softness slowdown slowdown slowdown um and missed uncertainty trade wars uh um and missed uncertainty trade wars uh um and missed uncertainty trade wars uh uh a lack of confidence uh slowdown in uh a lack of confidence uh slowdown in uh a lack of confidence uh slowdown in private investment and consumption a private investment and consumption a private investment and consumption a withdrawal of foreign investment from withdrawal of foreign investment from withdrawal of foreign investment from China especially the US venture um China especially the US venture um China especially the US venture um funding.

funding. funding. Imagine what China would have been like, Imagine what China would have been like, Imagine what China would have been like, let's say, if the economy was doing let's say, if the economy was doing let's say, if the economy was doing better, right? But you could also argue better, right? But you could also argue better, right? But you could also argue that it's because people feel threatened that it's because people feel threatened that it's because people feel threatened that they make more leaves. Now, I wish that they make more leaves. Now, I wish that they make more leaves. Now, I wish the world is not we don't have to, you the world is not we don't have to, you the world is not we don't have to, you know, drive each other to the corners to know, drive each other to the corners to know, drive each other to the corners to do something great, but that is the do something great, but that is the do something great, but that is the reality. And uh I don't think that reality. And uh I don't think that reality. And uh I don't think that there's an easy say between who wins there's an easy say between who wins there's an easy say between who wins because I think the winning idea is part because I think the winning idea is part because I think the winning idea is part of the old playbook, right? You're all of the old playbook, right? You're all of the old playbook, right? You're all kind of part of a network. Different kind of part of a network. Different kind of part of a network. Different countries, different players have countries, different players have countries, different players have different choke points on each other. I different choke points on each other. I different choke points on each other. I don't think it's just about the US and don't think it's just about the US and don't think it's just about the US and China. And what's more, you use your China. And what's more, you use your China. And what's more, you use your leverage once and that leverage has a leverage once and that leverage has a leverage once and that leverage has a halflife. it becomes a lot less halflife. it becomes a lot less halflife. it becomes a lot less effective the second time around because effective the second time around because effective the second time around because other countries other companies are other countries other companies are other countries other companies are going to try to substitute it away. You going to try to substitute it away. You going to try to substitute it away. You know if China uses the rare earth know if China uses the rare earth know if China uses the rare earth leverage which I think it is now a leverage which I think it is now a leverage which I think it is now a little bit little bit little bit um there will be alternatives and um there will be alternatives and um there will be alternatives and substitutes got to be very very careful substitutes got to be very very careful substitutes got to be very very careful of what coercion leverage means. Same of what coercion leverage means. Same of what coercion leverage means. Same thing with the US right so I think this thing with the US right so I think this thing with the US right so I think this is all the old thinking of who wins who is all the old thinking of who wins who is all the old thinking of who wins who dominates. I think we need a new new dominates. I think we need a new new dominates. I think we need a new new playbook. So to you maybe when you refer playbook. So to you maybe when you refer playbook. So to you maybe when you refer to Biden and Trump if you go back to to Biden and Trump if you go back to to Biden and Trump if you go back to Biden it would be the chips act. So the Biden it would be the chips act. So the Biden it would be the chips act. So the export controls created unintended export controls created unintended export controls created unintended unexpected effect where it had the unexpected effect where it had the unexpected effect where it had the reverse reverse reverse geopolitical geopolitical geopolitical >> it was unintentional otherwise I' you'd >> it was unintentional otherwise I' you'd >> it was unintentional otherwise I' you'd be questioning the level of intelligence be questioning the level of intelligence be questioning the level of intelligence of the US administration right but um I

of the US administration right but um I of the US administration right but um I think that the things they laid out did think that the things they laid out did think that the things they laid out did the opposite of what was intended the opposite of what was intended the opposite of what was intended sped up um domestic capacity. It uh uh sped up um domestic capacity. It uh uh sped up um domestic capacity. It uh uh motivated the whole country to do this motivated the whole country to do this motivated the whole country to do this whole venation program to go after whole venation program to go after whole venation program to go after technologies. It's kind of like the way technologies. It's kind of like the way technologies. It's kind of like the way they go after Olympics, right? Olympic they go after Olympics, right? Olympic they go after Olympics, right? Olympic gold medals. They wanted to maximize gold medals. They wanted to maximize gold medals. They wanted to maximize Olympic gold medals and they put the Olympic gold medals and they put the Olympic gold medals and they put the whole nation at work and all the whole nation at work and all the whole nation at work and all the resources and that's what China did. resources and that's what China did. resources and that's what China did. Huawei, another example, they were Huawei, another example, they were Huawei, another example, they were sanctioned. Guess what? They have come sanctioned. Guess what? They have come sanctioned. Guess what? They have come back to life stronger than ever before. back to life stronger than ever before. back to life stronger than ever before. And this is not unique to this episode. And this is not unique to this episode. And this is not unique to this episode. If we look throughout history, these If we look throughout history, these If we look throughout history, these blockades don't work. the continental blockades don't work. the continental blockades don't work. the continental system actually indirectly led to system actually indirectly led to system actually indirectly led to industrial revolution uh in the UK uh industrial revolution uh in the UK uh industrial revolution uh in the UK uh when the the Spanish uh kind of blockade when the the Spanish uh kind of blockade when the the Spanish uh kind of blockade the the Portuguese they came up with a the the Portuguese they came up with a the the Portuguese they came up with a very ferocious forceful naval power um very ferocious forceful naval power um very ferocious forceful naval power um and you're talking about China here they and you're talking about China here they and you're talking about China here they just don't lie down and lie flat and say just don't lie down and lie flat and say just don't lie down and lie flat and say oh we give up right they're more oh we give up right they're more oh we give up right they're more motivated than ever before motivated than ever before motivated than ever before >> so the lesson is >> so the lesson is >> so the lesson is uh don't force people or nations into a uh don't force people or nations into a uh don't force people or nations into a corner.

corner. corner. >> Yeah. You make them have a very >> Yeah. You make them have a very >> Yeah. You make them have a very comfortable situation and they tend to comfortable situation and they tend to comfortable situation and they tend to become complacent and uh and they they become complacent and uh and they they become complacent and uh and they they stagnate. stagnate. stagnate. >> All right. So, uh so can you talk >> All right. So, uh so can you talk >> All right. So, uh so can you talk through the whole saga of the Trump's through the whole saga of the Trump's through the whole saga of the Trump's tariffs is still going on uh especially tariffs is still going on uh especially tariffs is still going on uh especially tariffs on China from your perspective tariffs on China from your perspective tariffs on China from your perspective as an economist? To what degree was it as an economist? To what degree was it as an economist? To what degree was it justified? To what degree was it justified? To what degree was it justified? To what degree was it effective? To what degree is it bad effective? To what degree is it bad effective? To what degree is it bad policy for for US, for the West, for the policy for for US, for the West, for the policy for for US, for the West, for the world, also for China? world, also for China? world, also for China? >> You know, China has been preparing for >> You know, China has been preparing for >> You know, China has been preparing for this for the last 5 years and for the this for the last 5 years and for the this for the last 5 years and for the return of Trump and for and for Trump's return of Trump and for and for Trump's return of Trump and for and for Trump's uh maniac trade policies. You'd think uh maniac trade policies. You'd think uh maniac trade policies. You'd think that Trump also had five years to that Trump also had five years to that Trump also had five years to prepare for this battle with China. It prepare for this battle with China. It prepare for this battle with China. It didn't show. Um, you can say that the didn't show. Um, you can say that the didn't show. Um, you can say that the Chinese, at least this time around, have Chinese, at least this time around, have Chinese, at least this time around, have played their hand pretty well when played their hand pretty well when played their hand pretty well when dealing with Trump's tariff threats and dealing with Trump's tariff threats and dealing with Trump's tariff threats and the trade war. Uh, with a level of the trade war. Uh, with a level of the trade war. Uh, with a level of calibrated assertiveness. They have calibrated assertiveness. They have calibrated assertiveness. They have really thought through everything very really thought through everything very really thought through everything very elaborately. Um, and um, look, you know, elaborately. Um, and um, look, you know, elaborately. Um, and um, look, you know, this is not good for either country.

this is not good for either country. this is not good for either country. Let's just be clear. It's bad for for US Let's just be clear. It's bad for for US Let's just be clear. It's bad for for US and China and it's bad for the world and and China and it's bad for the world and and China and it's bad for the world and every country has a stake in the US every country has a stake in the US every country has a stake in the US China trade war because whether you China trade war because whether you China trade war because whether you trade directly or indirectly with China, trade directly or indirectly with China, trade directly or indirectly with China, you're going to be affected. They are you're going to be affected. They are you're going to be affected. They are one of the largest intermediate one of the largest intermediate one of the largest intermediate exporters in the world and Chinese exporters in the world and Chinese exporters in the world and Chinese manufacturing goods anchor global manufacturing goods anchor global manufacturing goods anchor global manufacturing prices. manufacturing prices. manufacturing prices. the cumulative tariff burdens when you the cumulative tariff burdens when you the cumulative tariff burdens when you get to Canada, when you get to Mexico, get to Canada, when you get to Mexico, get to Canada, when you get to Mexico, when you get to any other final when you get to any other final when you get to any other final destination, destination, destination, these tariffs will affect you, right? these tariffs will affect you, right? these tariffs will affect you, right? So, it's clearly very very bad for the So, it's clearly very very bad for the So, it's clearly very very bad for the world. world. world. um China's core principles and I I think um China's core principles and I I think um China's core principles and I I think that this is not well understood uh from that this is not well understood uh from that this is not well understood uh from the rest of the world towards the US and the rest of the world towards the US and the rest of the world towards the US and something that they have kept up is something that they have kept up is something that they have kept up is equivalence, reciprocity and realism. equivalence, reciprocity and realism. equivalence, reciprocity and realism. China's not going to lower tariffs China's not going to lower tariffs China's not going to lower tariffs unless the US does, right? Uh you can unless the US does, right? Uh you can unless the US does, right? Uh you can kind of stand up to Trump like a man.

kind of stand up to Trump like a man. kind of stand up to Trump like a man. That's the only way, you know, to deal That's the only way, you know, to deal That's the only way, you know, to deal with Trump. That's its view. Um you the with Trump. That's its view. Um you the with Trump. That's its view. Um you the deal has to be realistic. The phase one deal has to be realistic. The phase one deal has to be realistic. The phase one deal of the last time wasn't realistic. deal of the last time wasn't realistic. deal of the last time wasn't realistic. And China thinks, look, the US is going And China thinks, look, the US is going And China thinks, look, the US is going to use this as a leverage, right? That's to use this as a leverage, right? That's to use this as a leverage, right? That's not possible. This can't be seen as not possible. This can't be seen as not possible. This can't be seen as political concession. The deal has to be political concession. The deal has to be political concession. The deal has to be seen as mutual commerce. So, where China seen as mutual commerce. So, where China seen as mutual commerce. So, where China can have room to negotiate is opening up can have room to negotiate is opening up can have room to negotiate is opening up things like services. You know, American things like services. You know, American things like services. You know, American banks, American financial institutions banks, American financial institutions banks, American financial institutions have a lot of business to do in China. have a lot of business to do in China. have a lot of business to do in China. They can buy a limited number of more They can buy a limited number of more They can buy a limited number of more goods. They can discuss about goods. They can discuss about goods. They can discuss about transparency around rules and transparency around rules and transparency around rules and regulations on e-commerce, on data. All regulations on e-commerce, on data. All regulations on e-commerce, on data. All that is fine, but don't confound that is fine, but don't confound that is fine, but don't confound economic issues with political issues. economic issues with political issues. economic issues with political issues. Hong Kong, Taiwan is not part of the Hong Kong, Taiwan is not part of the Hong Kong, Taiwan is not part of the deal, by the way, in case anyone was deal, by the way, in case anyone was deal, by the way, in case anyone was wondering. Um, trying to change China's wondering. Um, trying to change China's wondering. Um, trying to change China's state hybrid private sector model, don't state hybrid private sector model, don't state hybrid private sector model, don't go there. uh anything that challenges go there. uh anything that challenges go there. uh anything that challenges China's technology security China's technology security China's technology security that's not really part of the that's not really part of the that's not really part of the discussion. I think that people have to discussion. I think that people have to discussion. I think that people have to be clear about also what China thinks uh be clear about also what China thinks uh be clear about also what China thinks uh and wants and also the Chinese has to be and wants and also the Chinese has to be and wants and also the Chinese has to be clear about what Trump wants although I clear about what Trump wants although I clear about what Trump wants although I I don't know anybody even Trump himself I don't know anybody even Trump himself I don't know anybody even Trump himself knows exactly what he wants um in order knows exactly what he wants um in order knows exactly what he wants um in order for for these very complex negotiations for for these very complex negotiations for for these very complex negotiations to actually succeed.

to actually succeed. to actually succeed. >> Okay. So, China has a few red lines, so >> Okay. So, China has a few red lines, so >> Okay. So, China has a few red lines, so don't mention Hong Kong or Taiwan. don't mention Hong Kong or Taiwan. don't mention Hong Kong or Taiwan. >> Don't mix the political issues with the >> Don't mix the political issues with the >> Don't mix the political issues with the trade deal, trade deal, trade deal, >> right? And then is there some degree >> right? And then is there some degree >> right? And then is there some degree maybe you can speak to culturally where maybe you can speak to culturally where maybe you can speak to culturally where stylistically stylistically stylistically there's red lines, meaning don't bully there's red lines, meaning don't bully there's red lines, meaning don't bully China, like language- wise China, like language- wise China, like language- wise >> or is that not matter? because there's a >> or is that not matter? because there's a >> or is that not matter? because there's a kind of way of speaking in the United kind of way of speaking in the United kind of way of speaking in the United States States States >> that >> that >> that >> you know I I feel like um in diplomacy >> you know I I feel like um in diplomacy >> you know I I feel like um in diplomacy in general in general in general >> neither side wants to be humiliated >> neither side wants to be humiliated >> neither side wants to be humiliated and in great deals even when one side on and in great deals even when one side on and in great deals even when one side on paper wins you want to make the other paper wins you want to make the other paper wins you want to make the other side especially the side that gets the side especially the side that gets the side especially the side that gets the short end of the stick feel like they've short end of the stick feel like they've short end of the stick feel like they've won and show the rest of the world that won and show the rest of the world that won and show the rest of the world that they're the winner. Well, that's they're the winner. Well, that's they're the winner. Well, that's diplomacy. diplomacy. diplomacy. >> We have an absence of diplomacy. But >> We have an absence of diplomacy. But >> We have an absence of diplomacy. But you're absolutely right. There there you're absolutely right. There there you're absolutely right. There there needs to be respect.

needs to be respect. needs to be respect. >> The Chinese at least really care about >> The Chinese at least really care about >> The Chinese at least really care about respect. respect. respect. And I wish there was just a bit more And I wish there was just a bit more And I wish there was just a bit more cultural fluency. And I think a lot of cultural fluency. And I think a lot of cultural fluency. And I think a lot of things would be so much easier um things would be so much easier um things would be so much easier um between the two countries. Just between the two countries. Just between the two countries. Just understanding that because you can understanding that because you can understanding that because you can actually push China to do a lot of actually push China to do a lot of actually push China to do a lot of things, right? All within reason that things, right? All within reason that things, right? All within reason that would work in favor of the US. But would work in favor of the US. But would work in favor of the US. But understand that respect is vitally understand that respect is vitally understand that respect is vitally important. Face saving is very very very important. Face saving is very very very important. Face saving is very very very important. important. important. >> To what degree what Xiinping says and >> To what degree what Xiinping says and >> To what degree what Xiinping says and what they're putting out there in the what they're putting out there in the what they're putting out there in the world represents the truth. So he has a world represents the truth. So he has a world represents the truth. So he has a whole way of being of like let's whole way of being of like let's whole way of being of like let's deescalate. Let's all make good deals deescalate. Let's all make good deals deescalate. Let's all make good deals together. Let's almost like let's be f together. Let's almost like let's be f together. Let's almost like let's be f like uh Modi a little bit has a similar like uh Modi a little bit has a similar like uh Modi a little bit has a similar way of being like let's just and the way of being like let's just and the way of being like let's just and the implied thing is like uh forgive the implied thing is like uh forgive the implied thing is like uh forgive the French but if you fuck with us we won't French but if you fuck with us we won't French but if you fuck with us we won't be nice but let's just all be nice be nice but let's just all be nice be nice but let's just all be nice together is he speaking the truth together is he speaking the truth together is he speaking the truth >> thing is not Putin right um and uh there >> thing is not Putin right um and uh there >> thing is not Putin right um and uh there is a genuine desire on China's part to is a genuine desire on China's part to is a genuine desire on China's part to deescalate again coming back to the deescalate again coming back to the deescalate again coming back to the level of pragmatism level of pragmatism level of pragmatism uh under economic strain in China, you uh under economic strain in China, you uh under economic strain in China, you don't really want to be picking fights.

don't really want to be picking fights. don't really want to be picking fights. Um they don't agree at all with Trump's Um they don't agree at all with Trump's Um they don't agree at all with Trump's economic views and world vision. Let's economic views and world vision. Let's economic views and world vision. Let's just put it simply. So just put it simply. So just put it simply. So understanding that a lot of this is also understanding that a lot of this is also understanding that a lot of this is also driven by American internal politics driven by American internal politics driven by American internal politics which they are aware of helps a bit. But which they are aware of helps a bit. But which they are aware of helps a bit. But there's a genuine desire to take the there's a genuine desire to take the there's a genuine desire to take the temperature down with the US even if the temperature down with the US even if the temperature down with the US even if the weather doesn't fundamentally change. weather doesn't fundamentally change. weather doesn't fundamentally change. >> What is a good diplomacy look like here >> What is a good diplomacy look like here >> What is a good diplomacy look like here for both sides? What is the best for both sides? What is the best for both sides? What is the best possible on the just strictly on the possible on the just strictly on the possible on the just strictly on the economics on the on the on the trade, economics on the on the on the trade, economics on the on the on the trade, the tariffs? What's the best possible the tariffs? What's the best possible the tariffs? What's the best possible outcome for the world? outcome for the world? outcome for the world? >> I think that Trump can show to the >> I think that Trump can show to the >> I think that Trump can show to the American consumers that he has gotten American consumers that he has gotten American consumers that he has gotten some sort of a deal, right? that the some sort of a deal, right? that the some sort of a deal, right? that the Chinese have bought more American goods Chinese have bought more American goods Chinese have bought more American goods were promised to buy American goods and were promised to buy American goods and were promised to buy American goods and then the American companies can come then the American companies can come then the American companies can come into China and then a lot of the into China and then a lot of the into China and then a lot of the previously restricted investment previously restricted investment previously restricted investment opportunities are now not restricted and opportunities are now not restricted and opportunities are now not restricted and American banks can make in make money in American banks can make in make money in American banks can make in make money in China.

China. China. he can say that and and I think that he can say that and and I think that he can say that and and I think that that is that could be part of a really that is that could be part of a really that is that could be part of a really realistic deal uh that somehow American realistic deal uh that somehow American realistic deal uh that somehow American companies will be better protected companies will be better protected companies will be better protected through IP protection and again that's through IP protection and again that's through IP protection and again that's in China's interest as well. So I don't in China's interest as well. So I don't in China's interest as well. So I don't see a fundamental conflict here and at see a fundamental conflict here and at see a fundamental conflict here and at the same time they lower the tariffs the same time they lower the tariffs the same time they lower the tariffs right not to the rates where they were right not to the rates where they were right not to the rates where they were before but lower and you don't prohibit before but lower and you don't prohibit before but lower and you don't prohibit trade and then for China that would also trade and then for China that would also trade and then for China that would also be a success. So you can actually have be a success. So you can actually have be a success. So you can actually have success for both both places but being success for both both places but being success for both both places but being realistic is is part of the game. realistic is is part of the game. realistic is is part of the game. >> Is tariffs question to you as an >> Is tariffs question to you as an >> Is tariffs question to you as an economist is tariffs a useful uh economist is tariffs a useful uh economist is tariffs a useful uh effective tool for uh uh global trade? effective tool for uh uh global trade? effective tool for uh uh global trade? >> No, I think that there is a real problem >> No, I think that there is a real problem >> No, I think that there is a real problem in global trading system and in global trading system and in global trading system and globalization in general that is not globalization in general that is not globalization in general that is not going to be resolved by tariffs. we do going to be resolved by tariffs. we do going to be resolved by tariffs. we do need to think about need to think about need to think about more harmony more harmony more harmony um between countries um between countries um between countries uh where let's say not one country uh where let's say not one country uh where let's say not one country dominates and here I would I' I'd push dominates and here I would I' I'd push dominates and here I would I' I'd push back on China and say yes you have back on China and say yes you have back on China and say yes you have amazing companies and competitive amazing companies and competitive amazing companies and competitive companies but you just can't dominate companies but you just can't dominate companies but you just can't dominate everything that would not be good for everything that would not be good for everything that would not be good for global harmony you need to give other global harmony you need to give other global harmony you need to give other countries an opportunity countries an opportunity countries an opportunity uh you need to develop your own internal uh you need to develop your own internal uh you need to develop your own internal economy right rely on your consumers as economy right rely on your consumers as economy right rely on your consumers as part of the part of the part of the tariffs. This kind of highly tariffs. This kind of highly tariffs. This kind of highly protectionist method is very

protectionist method is very protectionist method is very distortionary and it's going to be bad distortionary and it's going to be bad distortionary and it's going to be bad for the US. I'd actually argue that both for the US. I'd actually argue that both for the US. I'd actually argue that both China and the US have totally taken China and the US have totally taken China and the US have totally taken advantage and also enjoyed uh uh the advantage and also enjoyed uh uh the advantage and also enjoyed uh uh the global global global economic realm under the US liberal economic realm under the US liberal economic realm under the US liberal order. I think that China quite likes it order. I think that China quite likes it order. I think that China quite likes it actually. you know, US kept a peace and actually. you know, US kept a peace and actually. you know, US kept a peace and during this peaceful times, things were during this peaceful times, things were during this peaceful times, things were working very well economically, working very well economically, working very well economically, technologically. Um, they kept the sea technologically. Um, they kept the sea technologically. Um, they kept the sea lanes open. They did their part to lanes open. They did their part to lanes open. They did their part to preserve preserve preserve peace to the extent they they can, I peace to the extent they they can, I peace to the extent they they can, I guess. But China wants peace, right? guess. But China wants peace, right? guess. But China wants peace, right? Only with peace can they do what they Only with peace can they do what they Only with peace can they do what they can. And actually, US, despite saying can. And actually, US, despite saying can. And actually, US, despite saying they've been victimized, not look, they've been victimized, not look, they've been victimized, not look, they've had a very very good time, they've had a very very good time, they've had a very very good time, right? never have quality of life, right? never have quality of life, right? never have quality of life, standards of living, technology risen as standards of living, technology risen as standards of living, technology risen as much as the US did under its own liberal much as the US did under its own liberal much as the US did under its own liberal order than it has ever before and the order than it has ever before and the order than it has ever before and the amount of influence and power. Yes, of amount of influence and power. Yes, of amount of influence and power. Yes, of course, um you can blame the US for lots course, um you can blame the US for lots course, um you can blame the US for lots of things that happened, but it actually of things that happened, but it actually of things that happened, but it actually had a really good time and China as had a really good time and China as had a really good time and China as well. So now they're going to take this well. So now they're going to take this well. So now they're going to take this apart. They think that they're going to apart. They think that they're going to apart. They think that they're going to be somehow better off, that American be somehow better off, that American be somehow better off, that American people and Chinese people are going to people and Chinese people are going to people and Chinese people are going to be better off under more disorderly, be better off under more disorderly, be better off under more disorderly, fragmented rule of a jungle kind of fragmented rule of a jungle kind of fragmented rule of a jungle kind of world. That's an illusion. That's what world. That's an illusion. That's what world. That's an illusion. That's what politicians tell their people. But politicians tell their people. But politicians tell their people. But that's not the truth.

that's not the truth. that's not the truth. >> So what are if not tariffs ways to >> So what are if not tariffs ways to >> So what are if not tariffs ways to incentivize incentivize incentivize countries like the United States to countries like the United States to countries like the United States to build internally? So to build build internally? So to build build internally? So to build semiconductor ships internally, for semiconductor ships internally, for semiconductor ships internally, for example. example. example. >> Well, exactly. Tariffs is a way to >> Well, exactly. Tariffs is a way to >> Well, exactly. Tariffs is a way to punish foreigners, but what you really punish foreigners, but what you really punish foreigners, but what you really want to do is to strengthen your own want to do is to strengthen your own want to do is to strengthen your own domestic competitiveness. And I want to domestic competitiveness. And I want to domestic competitiveness. And I want to draw um an analogy to the US Japan draw um an analogy to the US Japan draw um an analogy to the US Japan competition in the 1980s. Uh Japan competition in the 1980s. Uh Japan competition in the 1980s. Uh Japan actually took over in many parts of the actually took over in many parts of the actually took over in many parts of the semiconductors industry even though the semiconductors industry even though the semiconductors industry even though the microchip was invented in the US. But microchip was invented in the US. But microchip was invented in the US. But guess what happened? Well, it actually guess what happened? Well, it actually guess what happened? Well, it actually drove more competition and more drove more competition and more drove more competition and more mobilization in the US. actually mobilization in the US. actually mobilization in the US. actually creating this innovation system changed creating this innovation system changed creating this innovation system changed a few really critical laws that helped a few really critical laws that helped a few really critical laws that helped with US innovation and the consumers with US innovation and the consumers with US innovation and the consumers benefited. The US took over again as the benefited. The US took over again as the benefited. The US took over again as the leader of the semiconductors industry. leader of the semiconductors industry. leader of the semiconductors industry. There's no better way than to strengthen There's no better way than to strengthen There's no better way than to strengthen yourself to be competitive because yourself to be competitive because yourself to be competitive because ultimately tariffs have not done ultimately tariffs have not done ultimately tariffs have not done anything to help the US. The trade anything to help the US. The trade anything to help the US. The trade deficits have have widened since Trump, deficits have have widened since Trump, deficits have have widened since Trump, right? they haven't closed uh the right? they haven't closed uh the right? they haven't closed uh the imbalance with with China with the rest imbalance with with China with the rest imbalance with with China with the rest of the world uh because ultimately the of the world uh because ultimately the of the world uh because ultimately the US saves less than it invests and that's US saves less than it invests and that's US saves less than it invests and that's a macro phenomenon. It's not a trade a macro phenomenon. It's not a trade a macro phenomenon. It's not a trade phenomenon. But I I I fear that the US phenomenon. But I I I fear that the US phenomenon. But I I I fear that the US by kind of dropping off of this global by kind of dropping off of this global by kind of dropping off of this global um trading network and system, it will um trading network and system, it will um trading network and system, it will lose more and more of its power. You

lose more and more of its power. You lose more and more of its power. You have power when you're deeply engaged have power when you're deeply engaged have power when you're deeply engaged and embedded with a country. Once you've and embedded with a country. Once you've and embedded with a country. Once you've left it, you actually lose any sort of left it, you actually lose any sort of left it, you actually lose any sort of leverage. leverage. leverage. >> So there there's got to be ways to >> So there there's got to be ways to >> So there there's got to be ways to incentivize industrial policy building incentivize industrial policy building incentivize industrial policy building more stuff in internally without more stuff in internally without more stuff in internally without tariffs, right? So you just invest from tariffs, right? So you just invest from tariffs, right? So you just invest from a federal perspective. You've invest in a federal perspective. You've invest in a federal perspective. You've invest in companies companies companies maybe like car more carrot than carrot maybe like car more carrot than carrot maybe like car more carrot than carrot towards the domestic versus stick versus towards the domestic versus stick versus towards the domestic versus stick versus the foreigner. all kinds of subsidies the foreigner. all kinds of subsidies the foreigner. all kinds of subsidies that are justified for the green that are justified for the green that are justified for the green transition, for innovation, R&D, support transition, for innovation, R&D, support transition, for innovation, R&D, support for the university system. You know, for the university system. You know, for the university system. You know, that the US is the world leader in terms that the US is the world leader in terms that the US is the world leader in terms of attracting talent. It has everything of attracting talent. It has everything of attracting talent. It has everything going for it, but it was a little bit going for it, but it was a little bit going for it, but it was a little bit complacent. Um, and by dropping off of complacent. Um, and by dropping off of complacent. Um, and by dropping off of that global network, uh, it's going to that global network, uh, it's going to that global network, uh, it's going to do itself more disservice. Yeah, tariffs do itself more disservice. Yeah, tariffs do itself more disservice. Yeah, tariffs don't quite make sense to me, but maybe don't quite make sense to me, but maybe don't quite make sense to me, but maybe I'm dumb, but it just doesn't make I'm dumb, but it just doesn't make I'm dumb, but it just doesn't make >> It doesn't make sense to economists >> It doesn't make sense to economists >> It doesn't make sense to economists either, and economists are not all dumb.

>> All right. Um, you did mention >> All right. Um, you did mention immigration a little bit. I think that's immigration a little bit. I think that's immigration a little bit. I think that's a component of it also. a component of it also. a component of it also. You said when your own experience was You said when your own experience was You said when your own experience was that US was much more open to that US was much more open to that US was much more open to immigration in the past. What do you immigration in the past. What do you immigration in the past. What do you think about this on the human side, the think about this on the human side, the think about this on the human side, the protectionism, the the closing of the protectionism, the the closing of the protectionism, the the closing of the borders that the US is doing? Um, is borders that the US is doing? Um, is borders that the US is doing? Um, is that what are the pros and cons of that that what are the pros and cons of that that what are the pros and cons of that from an economics perspective from an economics perspective from an economics perspective >> on US immigration? >> on US immigration? >> on US immigration? Well, you see, I I understand both sides Well, you see, I I understand both sides Well, you see, I I understand both sides of the story to be very honest and I of the story to be very honest and I of the story to be very honest and I also understand a bit of the also understand a bit of the also understand a bit of the protectionist streak, not only coming protectionist streak, not only coming protectionist streak, not only coming from the US, but also from Europe and from the US, but also from Europe and from the US, but also from Europe and various parts of the world, which is various parts of the world, which is various parts of the world, which is going to be a trend. I understand that going to be a trend. I understand that going to be a trend. I understand that before you care about people in the before you care about people in the before you care about people in the rural villages in Indonesia, you really rural villages in Indonesia, you really rural villages in Indonesia, you really care about, you know, the northern Brits care about, you know, the northern Brits care about, you know, the northern Brits in this country and they have not fared in this country and they have not fared in this country and they have not fared well. I understand that your jobs may be well. I understand that your jobs may be well. I understand that your jobs may be under threat because of this under threat because of this under threat because of this uncontrolled uh influx of of you know uncontrolled uh influx of of you know uncontrolled uh influx of of you know illegal immigrants. Uh from a purely illegal immigrants. Uh from a purely illegal immigrants. Uh from a purely economic and rational level, you'd say economic and rational level, you'd say economic and rational level, you'd say immigration is very important because it immigration is very important because it immigration is very important because it keeps the prices down, keeps inflation keeps the prices down, keeps inflation keeps the prices down, keeps inflation down, uh it keeps up the supply, uh down, uh it keeps up the supply, uh down, uh it keeps up the supply, uh which is very important when you have which is very important when you have which is very important when you have that much demand. And look, you know, that much demand. And look, you know, that much demand. And look, you know, the standards of living have also the standards of living have also the standards of living have also improved for many people who can afford improved for many people who can afford improved for many people who can afford it, right? The the lowcost workers being it, right? The the lowcost workers being it, right? The the lowcost workers being able to um sustain the service economy.

able to um sustain the service economy. able to um sustain the service economy. So I understand both sides of the story. So I understand both sides of the story. So I understand both sides of the story. I think that in the end it is a balance I think that in the end it is a balance I think that in the end it is a balance and I do believe even as an economist and I do believe even as an economist and I do believe even as an economist that social harmony and I come back to that social harmony and I come back to that social harmony and I come back to this word harmony repeatedly even though this word harmony repeatedly even though this word harmony repeatedly even though as an economist this thing doesn't even as an economist this thing doesn't even as an economist this thing doesn't even exist. exist. exist. >> Yeah. >> Yeah. >> Yeah. >> Um >> Um >> Um is becoming ever more important. is becoming ever more important. is becoming ever more important. Um and as a as a nation uh you know some Um and as a as a nation uh you know some Um and as a as a nation uh you know some kinds of skilled immigration is actually kinds of skilled immigration is actually kinds of skilled immigration is actually what makes the US the most what makes the US the most what makes the US the most technologically technologically technologically um advanced country in the world. At the um advanced country in the world. At the um advanced country in the world. At the same time you do have to think about same time you do have to think about same time you do have to think about your own citizens the ones that have had your own citizens the ones that have had your own citizens the ones that have had generations and been around and you have generations and been around and you have generations and been around and you have to think about their livelihoods. to think about their livelihoods. to think about their livelihoods. >> Yeah. The puzzle of social harmony is a >> Yeah. The puzzle of social harmony is a >> Yeah. The puzzle of social harmony is a fascinating one because you spoke to the fascinating one because you spoke to the fascinating one because you spoke to the the long history of China how they the long history of China how they the long history of China how they >> Yeah. That was Confucious. >> Yeah. That was Confucious. >> Yeah. That was Confucious. >> Yeah that's Confucious. And then there >> Yeah that's Confucious. And then there >> Yeah that's Confucious. And then there is a kind of social harmony a very is a kind of social harmony a very is a kind of social harmony a very different set of ideologies in the different set of ideologies in the different set of ideologies in the United States and in the west broadly United States and in the west broadly United States and in the west broadly and it's all a puzzle and you do want to and it's all a puzzle and you do want to and it's all a puzzle and you do want to have some cohesion but in the United have some cohesion but in the United have some cohesion but in the United States one of its beautiful aspects is States one of its beautiful aspects is States one of its beautiful aspects is the diversity of humans the diversity of humans the diversity of humans and so the continued influx of diversity and so the continued influx of diversity and so the continued influx of diversity is you know feeds the machine that makes is you know feeds the machine that makes is you know feeds the machine that makes America great also.

America great also. America great also. But too much But too much But too much breaks the fabric of that society. So it breaks the fabric of that society. So it breaks the fabric of that society. So it say such an interesting puzzle and some say such an interesting puzzle and some say such an interesting puzzle and some of it is like we humans can't balance. of it is like we humans can't balance. of it is like we humans can't balance. So you go one extreme the other you just So you go one extreme the other you just So you go one extreme the other you just oscillate back and forth and then um oscillate back and forth and then um oscillate back and forth and then um also politics especially in the United also politics especially in the United also politics especially in the United States there's a red team and and a blue States there's a red team and and a blue States there's a red team and and a blue team and they they when when the when team and they they when when the when team and they they when when the when the red team is at the top the blue team the red team is at the top the blue team the red team is at the top the blue team just pulls all the way to the other just pulls all the way to the other just pulls all the way to the other direction and vice versa. We just kind direction and vice versa. We just kind direction and vice versa. We just kind of oscillate back and forth in this way of oscillate back and forth in this way of oscillate back and forth in this way and hopefully make progress over time. and hopefully make progress over time. and hopefully make progress over time. >> But I want to come back to the point of >> But I want to come back to the point of >> But I want to come back to the point of choice, right? What makes America so choice, right? What makes America so choice, right? What makes America so great is that great is that great is that it tolerates instability. It tolerates it tolerates instability. It tolerates it tolerates instability. It tolerates clashes. It tolerates volatility. Think clashes. It tolerates volatility. Think clashes. It tolerates volatility. Think about the financial crisis, right? The about the financial crisis, right? The about the financial crisis, right? The financial volatility. Again the US financial volatility. Again the US financial volatility. Again the US dollar is where it is because of this dollar is where it is because of this dollar is where it is because of this deep liquid financial system in the US deep liquid financial system in the US deep liquid financial system in the US that no other country has been managed that no other country has been managed that no other country has been managed to build. Um there are clashes to build. Um there are clashes to build. Um there are clashes everywhere in society but it is a very everywhere in society but it is a very everywhere in society but it is a very diverse country with all the benefits to diverse country with all the benefits to diverse country with all the benefits to that. Uh it is a highly highly unequal that. Uh it is a highly highly unequal that. Uh it is a highly highly unequal uh country economically speaking. uh uh country economically speaking. uh uh country economically speaking. uh these the CEO pays, right? The the the these the CEO pays, right? The the the these the CEO pays, right? The the the businessmen being able to be in top businessmen being able to be in top businessmen being able to be in top political positions, you you kind of political positions, you you kind of political positions, you you kind of bulk at that that level of um uh uh bulk at that that level of um uh uh bulk at that that level of um uh uh cronyism, if you will. But, you know,

cronyism, if you will. But, you know, cronyism, if you will. But, you know, the US is the technological leadership the US is the technological leadership the US is the technological leadership and it kind of is able to stomach that and it kind of is able to stomach that and it kind of is able to stomach that volatility and clash without breaking volatility and clash without breaking volatility and clash without breaking apart. and other countries don't have apart. and other countries don't have apart. and other countries don't have the capacity of the institutions the the capacity of the institutions the the capacity of the institutions the culture to be able to tolerate and still culture to be able to tolerate and still culture to be able to tolerate and still maintain maintain maintain uh to keep the society together. So I uh to keep the society together. So I uh to keep the society together. So I think it is a very interesting um but um think it is a very interesting um but um think it is a very interesting um but um yeah it's a puzzle. yeah it's a puzzle. yeah it's a puzzle. >> So we talked about the economic side of >> So we talked about the economic side of >> So we talked about the economic side of tariffs and you mentioned the other red tariffs and you mentioned the other red tariffs and you mentioned the other red line and the three T's. line and the three T's. line and the three T's. Can we talk about Taiwan? So, how Can we talk about Taiwan? So, how Can we talk about Taiwan? So, how important is Taiwan to the Chinese important is Taiwan to the Chinese important is Taiwan to the Chinese economy and the and the global economy? economy and the and the global economy? economy and the and the global economy? >> Taiwan has, among other things, TSMC, >> Taiwan has, among other things, TSMC, >> Taiwan has, among other things, TSMC, which is vitally important for the which is vitally important for the which is vitally important for the global economy. global economy. global economy. It's also very important for the Chinese It's also very important for the Chinese It's also very important for the Chinese leadership and the Chinese people. You leadership and the Chinese people. You leadership and the Chinese people. You don't want to ask what I think, ask the don't want to ask what I think, ask the don't want to ask what I think, ask the Chinese young generation. They would one Chinese young generation. They would one Chinese young generation. They would one day like to see unification.

day like to see unification. day like to see unification. It's part of the patriotic, the dream, It's part of the patriotic, the dream, It's part of the patriotic, the dream, if you will. if you will. if you will. So, and it's it's a chip right between So, and it's it's a chip right between So, and it's it's a chip right between the US and China. So, everybody is the US and China. So, everybody is the US and China. So, everybody is watching Taiwan. But I'd say that this watching Taiwan. But I'd say that this watching Taiwan. But I'd say that this attention is not necessarily good for attention is not necessarily good for attention is not necessarily good for Taiwan because all this uncertainty, all Taiwan because all this uncertainty, all Taiwan because all this uncertainty, all the political risk has meant that the political risk has meant that the political risk has meant that investment there has dramatically been investment there has dramatically been investment there has dramatically been curtailed curtailed curtailed and um mainland China is a very very and um mainland China is a very very and um mainland China is a very very important economic partner to the important economic partner to the important economic partner to the Taiwanese economy. Taiwanese economy. Taiwanese economy. I think that I don't have a lot of views I think that I don't have a lot of views I think that I don't have a lot of views about around this, but I just say this. about around this, but I just say this. about around this, but I just say this. I think there's more political wisdom of I think there's more political wisdom of I think there's more political wisdom of the Chinese government side than we the Chinese government side than we the Chinese government side than we assume outside of China in that assume outside of China in that assume outside of China in that strategic ambiguity but also strategic strategic ambiguity but also strategic strategic ambiguity but also strategic patience especially given China's patience especially given China's patience especially given China's economic situation currently economic situation currently economic situation currently means that more likely or not I think means that more likely or not I think means that more likely or not I think that if China does really well that if China does really well that if China does really well economically economically economically and Taiwan is not doing as well and Taiwan is not doing as well and Taiwan is not doing as well economically as we've seen that over economically as we've seen that over economically as we've seen that over time. This is still the best strategy time. This is still the best strategy time. This is still the best strategy from China's point of view um to resolve from China's point of view um to resolve from China's point of view um to resolve these differences. I think any military these differences. I think any military these differences. I think any military use and action would be use and action would be use and action would be actually quite detrimental to China.

actually quite detrimental to China. actually quite detrimental to China. >> So, what's a way to avoid military >> So, what's a way to avoid military >> So, what's a way to avoid military conflict here? It seems like a red line. conflict here? It seems like a red line. conflict here? It seems like a red line. unification is the red line for um the unification is the red line for um the unification is the red line for um the United States United States United States and it just feels like a very tense and it just feels like a very tense and it just feels like a very tense situation. situation. situation. So is there a path forward here that So is there a path forward here that So is there a path forward here that avoids any military conflict where avoids any military conflict where avoids any military conflict where everybody's happy from an economics everybody's happy from an economics everybody's happy from an economics perspective from a semiconductor perspective from a semiconductor perspective from a semiconductor manufacturer perspective also? manufacturer perspective also? manufacturer perspective also? >> Well, first of all, you have to keep the >> Well, first of all, you have to keep the >> Well, first of all, you have to keep the communication channel open, right? There communication channel open, right? There communication channel open, right? There was a risk of that being shut off during was a risk of that being shut off during was a risk of that being shut off during the Biden administration. And that's the Biden administration. And that's the Biden administration. And that's highly highly dangerous. highly highly dangerous. highly highly dangerous. >> You meaning US China communication. >> You meaning US China communication. >> You meaning US China communication. >> Yeah. There's also something that I >> Yeah. There's also something that I >> Yeah. There's also something that I think people miss um which is that the think people miss um which is that the think people miss um which is that the the soldiers in mainland China that's the soldiers in mainland China that's the soldiers in mainland China that's part of the one child policy generation, part of the one child policy generation, part of the one child policy generation, right? There's only one son. Families right? There's only one son. Families right? There's only one son. Families have only one son. And I think to assume have only one son. And I think to assume have only one son. And I think to assume that the Chinese people desire and would that the Chinese people desire and would that the Chinese people desire and would be able to forsake that generation for be able to forsake that generation for be able to forsake that generation for unification purposes or be able to unification purposes or be able to unification purposes or be able to tolerate lost lives for this I think is tolerate lost lives for this I think is tolerate lost lives for this I think is also a bit of of an exaggeration and also a bit of of an exaggeration and also a bit of of an exaggeration and stress. And I think Chinese people also stress. And I think Chinese people also stress. And I think Chinese people also really really really um um um they really care about peace and they really care about peace and they really care about peace and stability.

stability. stability. chaos is just not part of what they chaos is just not part of what they chaos is just not part of what they think is good for them. Um the role that think is good for them. Um the role that think is good for them. Um the role that TSMC plays is so critical given the TSMC plays is so critical given the TSMC plays is so critical given the choke point they have on the rest of the choke point they have on the rest of the choke point they have on the rest of the world um in the semiconductors industry world um in the semiconductors industry world um in the semiconductors industry which we know is one of the most which we know is one of the most which we know is one of the most important industries uh sustaining the important industries uh sustaining the important industries uh sustaining the economy not to mention things like AI economy not to mention things like AI economy not to mention things like AI and um technologies. and um technologies. and um technologies. Look, you know, the US has been trying Look, you know, the US has been trying Look, you know, the US has been trying to to build another uh TSMC outside of to to build another uh TSMC outside of to to build another uh TSMC outside of Taiwan. It's very very very slow, right? Taiwan. It's very very very slow, right? Taiwan. It's very very very slow, right? Um there are a lot of cumulative uh uh Um there are a lot of cumulative uh uh Um there are a lot of cumulative uh uh knowledge, experience, knowledge, experience, knowledge, experience, and skills that are involved. It's not and skills that are involved. It's not and skills that are involved. It's not that easy. The Chinese don't want to see that easy. The Chinese don't want to see that easy. The Chinese don't want to see an eruption of TSMC either. um because an eruption of TSMC either. um because an eruption of TSMC either. um because again it's vitally important for again it's vitally important for again it's vitally important for everybody. Uh whilst I don't think that everybody. Uh whilst I don't think that everybody. Uh whilst I don't think that this is really necessarily a bargaining this is really necessarily a bargaining this is really necessarily a bargaining chip because if you chip because if you chip because if you really see what the Chinese thinks about really see what the Chinese thinks about really see what the Chinese thinks about Taiwan, it goes beyond economics. It Taiwan, it goes beyond economics. It Taiwan, it goes beyond economics. It goes beyond the logical. It is about um goes beyond the logical. It is about um goes beyond the logical. It is about um you know realizing a dream which you know realizing a dream which you know realizing a dream which even I I I tended to um even I I I tended to um even I I I tended to um not place enough importance. But when I not place enough importance. But when I not place enough importance. But when I talk to the young people in China, I talk to the young people in China, I talk to the young people in China, I realize that it's still their dream.

realize that it's still their dream. realize that it's still their dream. >> It's just unfortunate that this dream is >> It's just unfortunate that this dream is >> It's just unfortunate that this dream is mixed up in the fact that Taiwan with mixed up in the fact that Taiwan with mixed up in the fact that Taiwan with TSMC has been incredibly good at TSMC has been incredibly good at TSMC has been incredibly good at manufacturing. It's just like a manufacturing. It's just like a manufacturing. It's just like a interesting puzzle of why it's so interesting puzzle of why it's so interesting puzzle of why it's so difficult difficult difficult at low cost at scale to manufacture at low cost at scale to manufacture at low cost at scale to manufacture chips. And it's just chips. And it's just chips. And it's just incredible that they were able to do it. incredible that they were able to do it. incredible that they were able to do it. And it's a interesting puzzle for how And it's a interesting puzzle for how And it's a interesting puzzle for how China can do it domestically and how US China can do it domestically and how US China can do it domestically and how US can do it domestically. can do it domestically. can do it domestically. And it seems like there's increasing And it seems like there's increasing And it seems like there's increasing urgency on that. And I think if we look urgency on that. And I think if we look urgency on that. And I think if we look out in the next 100 years, out in the next 100 years, out in the next 100 years, uh the urgency is good because it's uh the urgency is good because it's uh the urgency is good because it's probably good for each individual probably good for each individual probably good for each individual country to be manufacturing majority of country to be manufacturing majority of country to be manufacturing majority of their chips, right? It's just it's less their chips, right? It's just it's less their chips, right? It's just it's less likely to lead to conflict. likely to lead to conflict. likely to lead to conflict. >> Well, this is the trend that you need to >> Well, this is the trend that you need to >> Well, this is the trend that you need to manufacturing things that are important manufacturing things that are important manufacturing things that are important for national security. Um it's not for national security. Um it's not for national security. Um it's not efficient but it's so-called efficient but it's so-called efficient but it's so-called strategically safer. strategically safer. strategically safer. >> You mentioned one child policy. So can >> You mentioned one child policy. So can >> You mentioned one child policy. So can we speak a little bit more to that? Like we speak a little bit more to that? Like we speak a little bit more to that? Like what broadly what impact has it had on what broadly what impact has it had on what broadly what impact has it had on the Chinese society on culture? You the Chinese society on culture? You the Chinese society on culture? You already mentioned some of it uh uh some already mentioned some of it uh uh some already mentioned some of it uh uh some of the impact on the economics on the of the impact on the economics on the of the impact on the economics on the culture on the demographics of China.

culture on the demographics of China. culture on the demographics of China. >> It's probably one of the most radical >> It's probably one of the most radical >> It's probably one of the most radical policies that China has enacted through policies that China has enacted through policies that China has enacted through in its history. in its history. in its history. And the enforcement was very strict. And the enforcement was very strict. And the enforcement was very strict. In my class, nobody had a sibling except In my class, nobody had a sibling except In my class, nobody had a sibling except my friend who was a we were. Uh 98% of my friend who was a we were. Uh 98% of my friend who was a we were. Uh 98% of urban households had only one child. The urban households had only one child. The urban households had only one child. The other 2% are twins, which you're allowed other 2% are twins, which you're allowed other 2% are twins, which you're allowed to keep, thank goodness. um if you had to keep, thank goodness. um if you had to keep, thank goodness. um if you had the good fortune of giving birth to the good fortune of giving birth to the good fortune of giving birth to twins, twins, twins, it had lots of unintended consequences it had lots of unintended consequences it had lots of unintended consequences on the economy and society as well. Uh on the economy and society as well. Uh on the economy and society as well. Uh maybe on the good side, maybe on the good side, maybe on the good side, it's actually a golden age for Chinese it's actually a golden age for Chinese it's actually a golden age for Chinese women because the Chinese girls never women because the Chinese girls never women because the Chinese girls never had as much education investment aortion had as much education investment aortion had as much education investment aortion to them as they've had after being the to them as they've had after being the to them as they've had after being the only child in the family. and you raised only child in the family. and you raised only child in the family. and you raised a daughter like a son. And if we look at a daughter like a son. And if we look at a daughter like a son. And if we look at all the skill gaps and uh the education all the skill gaps and uh the education all the skill gaps and uh the education gaps and the returns to education, gaps and the returns to education, gaps and the returns to education, actually girls fared better apart from actually girls fared better apart from actually girls fared better apart from the top top top leadership in the the top top top leadership in the the top top top leadership in the Chinese political class. Um you look at Chinese political class. Um you look at Chinese political class. Um you look at the CEOs, the major companies, the CEOs, the major companies, the CEOs, the major companies, uh the in the ministry, civil servants, uh the in the ministry, civil servants, uh the in the ministry, civil servants, there are a lot of Chinese women. And there are a lot of Chinese women. And there are a lot of Chinese women. And actually recently, if you look at the actually recently, if you look at the actually recently, if you look at the surveys, the Chinese families would surveys, the Chinese families would surveys, the Chinese families would prefer to have a daughter than a son prefer to have a daughter than a son prefer to have a daughter than a son because they've seen how much bargaining because they've seen how much bargaining because they've seen how much bargaining power

power power um you as a Chinese woman and as a rare um you as a Chinese woman and as a rare um you as a Chinese woman and as a rare bride uh or a scarce supply of brides bride uh or a scarce supply of brides bride uh or a scarce supply of brides goes, you have raised your bargaining goes, you have raised your bargaining goes, you have raised your bargaining power and you can command high amounts power and you can command high amounts power and you can command high amounts of dowy. That was the unintended thing of dowy. That was the unintended thing of dowy. That was the unintended thing about uh the one child policy. And uh uh about uh the one child policy. And uh uh about uh the one child policy. And uh uh to the opposite, the recent relaxation to the opposite, the recent relaxation to the opposite, the recent relaxation of the one child policy actually women of the one child policy actually women of the one child policy actually women are now encouraged to have many as many are now encouraged to have many as many are now encouraged to have many as many kids as they possibly can. The flip side kids as they possibly can. The flip side kids as they possibly can. The flip side of the one child policy has not of the one child policy has not of the one child policy has not necessarily been good for to women in necessarily been good for to women in necessarily been good for to women in the job dark market because they think, the job dark market because they think, the job dark market because they think, "Oh, well, you've only had one child. "Oh, well, you've only had one child. "Oh, well, you've only had one child. Oh, guess what? You can have another Oh, guess what? You can have another Oh, guess what? You can have another child. So that's not necessarily good child. So that's not necessarily good child. So that's not necessarily good for long-term employability. for long-term employability. for long-term employability. Um Um Um but uh on the economic side, I've but uh on the economic side, I've but uh on the economic side, I've written about this in my academic written about this in my academic written about this in my academic papers. It's been one of the very papers. It's been one of the very papers. It's been one of the very important causes of high saving rate. important causes of high saving rate. important causes of high saving rate. You know, I always tell people, you want You know, I always tell people, you want You know, I always tell people, you want to stimulate consumption, we'll have to stimulate consumption, we'll have to stimulate consumption, we'll have more kids. You know how much one of more kids. You know how much one of more kids. You know how much one of those costs, right?

those costs, right? those costs, right? >> Yeah. >> Yeah. >> Yeah. >> Especially in China, the tutorial ships, >> Especially in China, the tutorial ships, >> Especially in China, the tutorial ships, education, and they have to buy a house. education, and they have to buy a house. education, and they have to buy a house. you have to buy a house for them so that you have to buy a house for them so that you have to buy a house for them so that they can get married eventually. they can get married eventually. they can get married eventually. >> Um so it's very very expensive to have a >> Um so it's very very expensive to have a >> Um so it's very very expensive to have a have a child. If have more children have a child. If have more children have a child. If have more children >> uh you spend more but maybe people don't >> uh you spend more but maybe people don't >> uh you spend more but maybe people don't want to have more children because the want to have more children because the want to have more children because the the cost of having a child is so high. the cost of having a child is so high. the cost of having a child is so high. And this is driven by the competition. And this is driven by the competition. And this is driven by the competition. And why is there so much competition? And why is there so much competition? And why is there so much competition? Because there's a one child policy Because there's a one child policy Because there's a one child policy generation, right? You want your child generation, right? You want your child generation, right? You want your child to be the dragon or the phoenix and you to be the dragon or the phoenix and you to be the dragon or the phoenix and you put everything into that one child. That put everything into that one child. That put everything into that one child. That makes the child more anxious, makes the makes the child more anxious, makes the makes the child more anxious, makes the whole environment more competitive and whole environment more competitive and whole environment more competitive and in the end these one child policy in the end these one child policy in the end these one child policy children don't want to have a lot of children don't want to have a lot of children don't want to have a lot of kids because they don't want to them to kids because they don't want to them to kids because they don't want to them to see them suffer what they have suffered. see them suffer what they have suffered. see them suffer what they have suffered. Right? So there are all these kind of uh Right? So there are all these kind of uh Right? So there are all these kind of uh uh unexpected consequences but also uh unexpected consequences but also uh unexpected consequences but also changing the social fabric. I'd like to changing the social fabric. I'd like to changing the social fabric. I'd like to say that it broke the hierarchy of the say that it broke the hierarchy of the say that it broke the hierarchy of the family where the parents had the family where the parents had the family where the parents had the dominant role. Now the kids are the dominant role. Now the kids are the dominant role. Now the kids are the boss. They they boss everybody around.

boss. They they boss everybody around. boss. They they boss everybody around. They boss the grandparents around. They boss the grandparents around. They boss the grandparents around. >> Yeah. >> Yeah. >> Yeah. >> Uh uh there it relates to the puzzle, >> Uh uh there it relates to the puzzle, >> Uh uh there it relates to the puzzle, the housing puzzle. Uh how is it the housing puzzle. Uh how is it the housing puzzle. Uh how is it possible that the Chinese youth can possible that the Chinese youth can possible that the Chinese youth can afford these really expensive real afford these really expensive real afford these really expensive real estate with their meager income? Well, estate with their meager income? Well, estate with their meager income? Well, one common saying is that they have six one common saying is that they have six one common saying is that they have six wallets, right? you and your spouse wallets, right? you and your spouse wallets, right? you and your spouse together with the parents and maybe even together with the parents and maybe even together with the parents and maybe even the grandparents would chip in. So the grandparents would chip in. So the grandparents would chip in. So there's this kind of intergenerational there's this kind of intergenerational there's this kind of intergenerational family dynamics family dynamics family dynamics that makes our models focused on the that makes our models focused on the that makes our models focused on the individual consumption just completely individual consumption just completely individual consumption just completely inappropriate to describe these inappropriate to describe these inappropriate to describe these dynamics. dynamics. dynamics. Um but the demographic side is the other Um but the demographic side is the other Um but the demographic side is the other challenge which is they were so strict challenge which is they were so strict challenge which is they were so strict about the one child policy and they kept about the one child policy and they kept about the one child policy and they kept it in for too long. So that once they it in for too long. So that once they it in for too long. So that once they decide to loosen it and decided that uh decide to loosen it and decided that uh decide to loosen it and decided that uh fertility rates were way too low to fertility rates were way too low to fertility rates were way too low to sustain the Chinese economy and its sustain the Chinese economy and its sustain the Chinese economy and its future, it was already too late. And now future, it was already too late. And now future, it was already too late. And now they're all they're kind of finding all they're all they're kind of finding all they're all they're kind of finding all kinds of creative ways to make people kinds of creative ways to make people kinds of creative ways to make people have more kids. This is not something have more kids. This is not something have more kids. This is not something that they can demand and command in ways that they can demand and command in ways that they can demand and command in ways that they can demand and command uh that they can demand and command uh that they can demand and command uh emerging strategic sectors, right? Um so emerging strategic sectors, right? Um so emerging strategic sectors, right? Um so all these really interesting social all these really interesting social all these really interesting social anecdotes where they're encouraging even anecdotes where they're encouraging even anecdotes where they're encouraging even single women in a highly conservative single women in a highly conservative single women in a highly conservative society encouraging single women to

society encouraging single women to society encouraging single women to raise children. Nothing to be afraid raise children. Nothing to be afraid raise children. Nothing to be afraid about that. Lots of support system going about that. Lots of support system going about that. Lots of support system going going there. I mean they're radically going there. I mean they're radically going there. I mean they're radically changing the whole you know thinking changing the whole you know thinking changing the whole you know thinking around these kind of issues. around these kind of issues. around these kind of issues. >> Well it seems like even the west a lot >> Well it seems like even the west a lot >> Well it seems like even the west a lot of the developed countries of the developed countries of the developed countries are have a demographics problem. Seems are have a demographics problem. Seems are have a demographics problem. Seems like a lot of countries not having like a lot of countries not having like a lot of countries not having enough babies. enough babies. enough babies. >> South Korea uh South Korea very very >> South Korea uh South Korea very very >> South Korea uh South Korea very very very low fertility rate. It's just that very low fertility rate. It's just that very low fertility rate. It's just that for China's stage of development it for China's stage of development it for China's stage of development it should be having more babies than it is should be having more babies than it is should be having more babies than it is currently having. So the one top policy currently having. So the one top policy currently having. So the one top policy accelerated that demographic transition, accelerated that demographic transition, accelerated that demographic transition, right? It really squeezed in many many right? It really squeezed in many many right? It really squeezed in many many decades into two. Um but my view about decades into two. Um but my view about decades into two. Um but my view about the demographic aspects for the economy the demographic aspects for the economy the demographic aspects for the economy is not as pessimistic as most people is not as pessimistic as most people is not as pessimistic as most people because because because meanwhile we're talking about aging meanwhile we're talking about aging meanwhile we're talking about aging um there are also high rates of um there are also high rates of um there are also high rates of unemployment right um when we're talking unemployment right um when we're talking unemployment right um when we're talking about about about is there enough people to do the jobs we is there enough people to do the jobs we is there enough people to do the jobs we have things like AI and not enough jobs have things like AI and not enough jobs have things like AI and not enough jobs and these kind of questions that are and these kind of questions that are and these kind of questions that are first order.

first order. first order. We haven't even figured out the We haven't even figured out the We haven't even figured out the relationship between labor force relationship between labor force relationship between labor force productivity you know what are the productivity you know what are the productivity you know what are the factors of production that will be most factors of production that will be most factors of production that will be most important for future economy important for future economy important for future economy and so we shouldn't be terrified that and so we shouldn't be terrified that and so we shouldn't be terrified that there's a looming aging problem because there's a looming aging problem because there's a looming aging problem because I think the more important question is I think the more important question is I think the more important question is that skill gap right what kind of skills that skill gap right what kind of skills that skill gap right what kind of skills do we actually need the in the economy do we actually need the in the economy do we actually need the in the economy what kind of education system should we what kind of education system should we what kind of education system should we design in the economy to better suit the design in the economy to better suit the design in the economy to better suit the country to an ever evolving and country to an ever evolving and country to an ever evolving and transformative technological society transformative technological society transformative technological society >> because if that's successful then we'll >> because if that's successful then we'll >> because if that's successful then we'll be able to respond to whatever puzzle be able to respond to whatever puzzle be able to respond to whatever puzzle the demographic situation creates. the demographic situation creates. the demographic situation creates. >> Yeah. If you look at the most recent >> Yeah. If you look at the most recent >> Yeah. If you look at the most recent evidence on this issue they found that evidence on this issue they found that evidence on this issue they found that post 1990 post 1990 post 1990 aging economies became richer aging economies became richer aging economies became richer not the other way around which was true not the other way around which was true not the other way around which was true for the pre990 sample. And the reason is for the pre990 sample. And the reason is for the pre990 sample. And the reason is that these aging societies much more that these aging societies much more that these aging societies much more rapidly adopted new technologies rapidly adopted new technologies rapidly adopted new technologies uh automation that actually helped the uh automation that actually helped the uh automation that actually helped the entire economy. Uh so should we be entire economy. Uh so should we be entire economy. Uh so should we be panicking about this now when we're panicking about this now when we're panicking about this now when we're actually also panicking about the fact actually also panicking about the fact actually also panicking about the fact there are not enough jobs around? Um there are not enough jobs around? Um there are not enough jobs around? Um there are other issues that are more there are other issues that are more there are other issues that are more relevant for the Chinese economy today.

relevant for the Chinese economy today. relevant for the Chinese economy today. >> There are constant predictions of >> There are constant predictions of >> There are constant predictions of China's economy collapsing. You have China's economy collapsing. You have China's economy collapsing. You have pushed against that narrative. what um pushed against that narrative. what um pushed against that narrative. what um but you've also spoken some of the but you've also spoken some of the but you've also spoken some of the challenges challenges challenges it's going through. What's the GDP going it's going through. What's the GDP going it's going through. What's the GDP going to look like? Uh is the Chinese economy to look like? Uh is the Chinese economy to look like? Uh is the Chinese economy going to collapse? Is it going to going to collapse? Is it going to going to collapse? Is it going to flourish? What do you think? flourish? What do you think? flourish? What do you think? Collapse is such a strong word and the Collapse is such a strong word and the Collapse is such a strong word and the west has been using this word repeatedly west has been using this word repeatedly west has been using this word repeatedly if I remember correctly maybe four to if I remember correctly maybe four to if I remember correctly maybe four to five times maybe even six times since five times maybe even six times since five times maybe even six times since 1980s during the period of China's 1980s during the period of China's 1980s during the period of China's fastest growth. fastest growth. fastest growth. Um I tend to not think that Chinese Um I tend to not think that Chinese Um I tend to not think that Chinese economy will collapse but will the economy will collapse but will the economy will collapse but will the slowdown continue? Will it be able to slowdown continue? Will it be able to slowdown continue? Will it be able to lift up again? Will it be able to come lift up again? Will it be able to come lift up again? Will it be able to come out of this cycle um soon? Uh I think out of this cycle um soon? Uh I think out of this cycle um soon? Uh I think that's more relevant and that's more relevant and that's more relevant and the Chinese economy has a lot of the Chinese economy has a lot of the Chinese economy has a lot of potential because the fundamentals are potential because the fundamentals are potential because the fundamentals are still there. All right. When we talk still there. All right. When we talk still there. All right. When we talk about the fundamentals, it's the skills, about the fundamentals, it's the skills, about the fundamentals, it's the skills, it's the human capital, it's the it's the human capital, it's the it's the human capital, it's the physical capital, it's the macroeconomic physical capital, it's the macroeconomic physical capital, it's the macroeconomic stability and political stability.

stability and political stability. stability and political stability. That's a lot going for a country if you That's a lot going for a country if you That's a lot going for a country if you look around the world right now, right? look around the world right now, right? look around the world right now, right? And this is why the entrepreneurialism And this is why the entrepreneurialism And this is why the entrepreneurialism is still there because the fundamentals is still there because the fundamentals is still there because the fundamentals are there. Even though the economy is are there. Even though the economy is are there. Even though the economy is weak, consumers are not confident and weak, consumers are not confident and weak, consumers are not confident and private investment is insufficient, the private investment is insufficient, the private investment is insufficient, the fundamentals are there. Is China where fundamentals are there. Is China where fundamentals are there. Is China where it should be? far far far from it it should be? far far far from it it should be? far far far from it because China's potential based on the because China's potential based on the because China's potential based on the fundamentals is a much higher level of fundamentals is a much higher level of fundamentals is a much higher level of per capita income than where it is per capita income than where it is per capita income than where it is currently. It's kind of currently in a currently. It's kind of currently in a currently. It's kind of currently in a $10,000 bracket. And this is also a $10,000 bracket. And this is also a $10,000 bracket. And this is also a puzzle because you're a $10,000 per puzzle because you're a $10,000 per puzzle because you're a $10,000 per capita income country that can actually capita income country that can actually capita income country that can actually do leading edge technology and can be do leading edge technology and can be do leading edge technology and can be neck-to-neck with US companies on these neck-to-neck with US companies on these neck-to-neck with US companies on these high-tech. That's the first time in high-tech. That's the first time in high-tech. That's the first time in history. Even the Soviet Union which was history. Even the Soviet Union which was history. Even the Soviet Union which was very technologically advanced did not very technologically advanced did not very technologically advanced did not have the extent of commercializable have the extent of commercializable have the extent of commercializable civilian technology and the the civilian technology and the the civilian technology and the the technologies that were pervasive technologies that were pervasive technologies that were pervasive throughout the economy. throughout the economy. throughout the economy. But fundamentally we have to understand But fundamentally we have to understand But fundamentally we have to understand how much of this real estate crisis has how much of this real estate crisis has how much of this real estate crisis has impeding on the economy and explains the impeding on the economy and explains the impeding on the economy and explains the persistent slowdown.

persistent slowdown. persistent slowdown. >> Can you explain the real estate crisis? >> Can you explain the real estate crisis? >> Can you explain the real estate crisis? A few years ago, A few years ago, A few years ago, uh there was a crackdown on the real uh there was a crackdown on the real uh there was a crackdown on the real estate sector and uh again it comes back estate sector and uh again it comes back estate sector and uh again it comes back to the a lot of the social issues we to the a lot of the social issues we to the a lot of the social issues we were discussing. You know, why aren't were discussing. You know, why aren't were discussing. You know, why aren't people having kids? Well, maybe it's people having kids? Well, maybe it's people having kids? Well, maybe it's because housing is too expensive. Maybe because housing is too expensive. Maybe because housing is too expensive. Maybe it's because education system is too it's because education system is too it's because education system is too competitive. Uh the speculative bubbles competitive. Uh the speculative bubbles competitive. Uh the speculative bubbles in the real estate is making housing in the real estate is making housing in the real estate is making housing unaffordable and that's not part of the unaffordable and that's not part of the unaffordable and that's not part of the Chinese social characteristics, right? Chinese social characteristics, right? Chinese social characteristics, right? Um and so when they decided that uh the Um and so when they decided that uh the Um and so when they decided that uh the property investors were going to be property investors were going to be property investors were going to be reigned in that housing was to be lived reigned in that housing was to be lived reigned in that housing was to be lived in not speculated it really brought down in not speculated it really brought down in not speculated it really brought down the whole sector in terms of investment the whole sector in terms of investment the whole sector in terms of investment in terms of the financing of the sector. in terms of the financing of the sector. in terms of the financing of the sector. But ultimately it made such a massive But ultimately it made such a massive But ultimately it made such a massive impact or such a massive dent on the impact or such a massive dent on the impact or such a massive dent on the economy because it really embodied the economy because it really embodied the economy because it really embodied the two fundamental pillars of the economy.

two fundamental pillars of the economy. two fundamental pillars of the economy. One is the fiscal system and one is a One is the fiscal system and one is a One is the fiscal system and one is a financial system. So coming back to our financial system. So coming back to our financial system. So coming back to our local mayor economy, what where did you local mayor economy, what where did you local mayor economy, what where did you think the local mayors got their funds? think the local mayors got their funds? think the local mayors got their funds? Right? Through real estate. They sold Right? Through real estate. They sold Right? Through real estate. They sold land. Um real estate property developers land. Um real estate property developers land. Um real estate property developers came in. they can develop the entire came in. they can develop the entire came in. they can develop the entire local economy because the services will local economy because the services will local economy because the services will come in, the jobs will come in and by come in, the jobs will come in and by come in, the jobs will come in and by the way you're an equity owner of the the way you're an equity owner of the the way you're an equity owner of the entire city. So you want these property entire city. So you want these property entire city. So you want these property developers around. developers around. developers around. Um many countries throughout history all many countries throughout history all have this property transition, right? have this property transition, right? have this property transition, right? You need to wean the economy off of You need to wean the economy off of You need to wean the economy off of property. property. property. In a good situation, it takes 3 to 5 In a good situation, it takes 3 to 5 In a good situation, it takes 3 to 5 years. In a bad situation, it can take years. In a bad situation, it can take years. In a bad situation, it can take 10 years. I don't know where China 10 years. I don't know where China 10 years. I don't know where China belongs currently. But belongs currently. But belongs currently. But the real estate collapse also meant the the real estate collapse also meant the the real estate collapse also meant the local finances, local government local finances, local government local finances, local government finances also shrunk dramatically. Uh finances also shrunk dramatically. Uh finances also shrunk dramatically. Uh real estate uh was a really important real estate uh was a really important real estate uh was a really important part of the financial industry. It part of the financial industry. It part of the financial industry. It brought that down. together it really brought that down. together it really brought that down. together it really had a major impact on the economy but had a major impact on the economy but had a major impact on the economy but also from the consumer side their wealth also from the consumer side their wealth also from the consumer side their wealth was primarily tied into real estate not was primarily tied into real estate not was primarily tied into real estate not the stock market not other kind of the stock market not other kind of the stock market not other kind of investment opportunities it was real investment opportunities it was real investment opportunities it was real estate so they felt poor they consumed estate so they felt poor they consumed estate so they felt poor they consumed less so in the spirit of understanding less so in the spirit of understanding less so in the spirit of understanding China better uh maybe to to get a bit of China better uh maybe to to get a bit of China better uh maybe to to get a bit of your advice if I were to visit China

your advice if I were to visit China your advice if I were to visit China what's the right way to visit to what's the right way to visit to what's the right way to visit to experience it experience it experience it to see the people to talk to other to see the people to talk to other to see the people to talk to other people maybe outside of the big cities. people maybe outside of the big cities. people maybe outside of the big cities. Is there any advice you can give to Is there any advice you can give to Is there any advice you can give to somebody going to China? somebody going to China? somebody going to China? >> Check out speed. >> Check out speed. >> Check out speed. >> Mhm. >> Mhm. >> Mhm. >> Um his travels into China. >> Um his travels into China. >> Um his travels into China. >> Yes. >> Yes. >> Yes. >> I think they represent >> I think they represent >> I think they represent um a more uh dynamic reality than just um a more uh dynamic reality than just um a more uh dynamic reality than just visiting Beijing and Shanghai and visiting Beijing and Shanghai and visiting Beijing and Shanghai and Shenzhen, the big cities. I actually Shenzhen, the big cities. I actually Shenzhen, the big cities. I actually think a lot of the opportunities, think a lot of the opportunities, think a lot of the opportunities, especially economic opportunities are in especially economic opportunities are in especially economic opportunities are in the second, third tier cities now. the second, third tier cities now. the second, third tier cities now. uh in China and there's a return of uh in China and there's a return of uh in China and there's a return of talent. talent. talent. You know, these companies um You know, these companies um You know, these companies um PopMart, they're coming from these PopMart, they're coming from these PopMart, they're coming from these second tier cities that care about the second tier cities that care about the second tier cities that care about the local economy, about fun entertainment. local economy, about fun entertainment. local economy, about fun entertainment. That's what the new generation is about. That's what the new generation is about. That's what the new generation is about. They they don't want to be lining up They they don't want to be lining up They they don't want to be lining up some factory, you know, doing some factory, you know, doing some factory, you know, doing manufacturing jobs. If you think that manufacturing jobs. If you think that manufacturing jobs. If you think that the Chinese New Generation is still all the Chinese New Generation is still all the Chinese New Generation is still all about that, you know, you you should about that, you know, you you should about that, you know, you you should really study them a little bit more. Um, really study them a little bit more. Um, really study them a little bit more. Um, they're all about making their lives they're all about making their lives they're all about making their lives more fun and more interesting, right?

more fun and more interesting, right? more fun and more interesting, right? That's the cycle, right? In the That's the cycle, right? In the That's the cycle, right? In the beginning, Chinese people are hungry. beginning, Chinese people are hungry. beginning, Chinese people are hungry. They want to look for jobs and they find They want to look for jobs and they find They want to look for jobs and they find these jobs in manufacturing. Now, they these jobs in manufacturing. Now, they these jobs in manufacturing. Now, they want a work life balance. Uh, they are want a work life balance. Uh, they are want a work life balance. Uh, they are uh uh spearheading fashion, right? They uh uh spearheading fashion, right? They uh uh spearheading fashion, right? They spent so much more on entertainment, spent so much more on entertainment, spent so much more on entertainment, travel, travel, travel, clothing, restaurants. Uh they have come clothing, restaurants. Uh they have come clothing, restaurants. Uh they have come out with these amazing coffee chains out with these amazing coffee chains out with these amazing coffee chains that have beaten completely Starbucks that have beaten completely Starbucks that have beaten completely Starbucks within a very short amount of time. This within a very short amount of time. This within a very short amount of time. This is all the new generation. is all the new generation. is all the new generation. Where are the opportunities? It's in the Where are the opportunities? It's in the Where are the opportunities? It's in the local areas. It's all about localism, local areas. It's all about localism, local areas. It's all about localism, not globalism, localism. being rooted in not globalism, localism. being rooted in not globalism, localism. being rooted in your local economy, you will actually your local economy, you will actually your local economy, you will actually find so many more opportunities. Um, you find so many more opportunities. Um, you find so many more opportunities. Um, you go to Chongqing, I actually was watching go to Chongqing, I actually was watching go to Chongqing, I actually was watching a video about Chong. I thought we were a video about Chong. I thought we were a video about Chong. I thought we were in Shanghai. I was so surprised and uh in Shanghai. I was so surprised and uh in Shanghai. I was so surprised and uh you go to Chungdu, it's fun, you know, you go to Chungdu, it's fun, you know, you go to Chungdu, it's fun, you know, people work a little bit less, but uh people work a little bit less, but uh people work a little bit less, but uh it's really exciting. It's very fun. it's really exciting. It's very fun. it's really exciting. It's very fun. People are really nice. Go to take a People are really nice. Go to take a People are really nice. Go to take a look for yourself. there's ski resorts look for yourself. there's ski resorts look for yourself. there's ski resorts being open there. Um, you you have a being open there. Um, you you have a being open there. Um, you you have a very interesting, colorful, dynamic, very interesting, colorful, dynamic, very interesting, colorful, dynamic, complex country and it's not defined by complex country and it's not defined by complex country and it's not defined by Beijing and Shanghai.

Beijing and Shanghai. Beijing and Shanghai. >> So, the small cities are flourishing and >> So, the small cities are flourishing and >> So, the small cities are flourishing and and are developing a personality of and are developing a personality of and are developing a personality of their own. their own. their own. >> They are flourishing more than the first >> They are flourishing more than the first >> They are flourishing more than the first major tier cities. major tier cities. major tier cities. >> Interesting. What is uh what's the most >> Interesting. What is uh what's the most >> Interesting. What is uh what's the most beautiful thing to you about China and beautiful thing to you about China and beautiful thing to you about China and its people that you wish more people its people that you wish more people its people that you wish more people knew? knew? knew? >> Behind all this competition and the >> Behind all this competition and the >> Behind all this competition and the ambition, ambition, ambition, you have a very genuine group of people. you have a very genuine group of people. you have a very genuine group of people. Uh they are funny. They are Uh they are funny. They are Uh they are funny. They are they are community- based. Uh they are they are community- based. Uh they are they are community- based. Uh they are authentic. Actually, it's it's it's not authentic. Actually, it's it's it's not authentic. Actually, it's it's it's not contradictory, right? you have a society contradictory, right? you have a society contradictory, right? you have a society which is heavily controlled but they which is heavily controlled but they which is heavily controlled but they find ways to be truly truly authentic. find ways to be truly truly authentic. find ways to be truly truly authentic. Um and Um and Um and ultimately they're just a very social ultimately they're just a very social ultimately they're just a very social group. Right? Again I keep on coming to group. Right? Again I keep on coming to group. Right? Again I keep on coming to this being lonely aspect of the western this being lonely aspect of the western this being lonely aspect of the western society and increasingly living alone.

society and increasingly living alone. society and increasingly living alone. That is not China. Still very very warm That is not China. Still very very warm That is not China. Still very very warm country. Um and uh they're warm to country. Um and uh they're warm to country. Um and uh they're warm to foreigners and they are friendly. foreigners and they are friendly. foreigners and they are friendly. Well, I'm very grateful for you being a Well, I'm very grateful for you being a Well, I'm very grateful for you being a voice of balance, a voice of reason in voice of balance, a voice of reason in voice of balance, a voice of reason in this world and for the book you've this world and for the book you've this world and for the book you've written on China that a lot of people written on China that a lot of people written on China that a lot of people deeply respect and for talking today. deeply respect and for talking today. deeply respect and for talking today. Ku, thank you so much. This is an honor. Ku, thank you so much. This is an honor. Ku, thank you so much. This is an honor. >> Great to be with you. It's a pleasure. >> Great to be with you. It's a pleasure. >> Great to be with you. It's a pleasure. >> Thanks for listening to this >> Thanks for listening to this >> Thanks for listening to this conversation with Ku Jin. To support conversation with Ku Jin. To support conversation with Ku Jin. To support this podcast, please check out our this podcast, please check out our this podcast, please check out our sponsors in the description and consider sponsors in the description and consider sponsors in the description and consider subscribing to the channel. And now let subscribing to the channel. And now let subscribing to the channel. And now let me leave you with some words from me leave you with some words from me leave you with some words from Confucious. Confucious. Confucious. It does not matter how slowly you go as It does not matter how slowly you go as It does not matter how slowly you go as long as you do not stop. long as you do not stop. long as you do not stop. Thank you for listening and hope to see Thank you for listening and hope to see Thank you for listening and hope to see you next time.