← Sharp China with Bill Bishop
Sharp China with Bill Bishop
(Preview) The ‘Raising a Lobster’ Frenzy; Iran and US-China as Trump’s Visit Looms; Two Sessions Takeaways
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Foreign.
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Welcome to Sharp China. I'm Andrew Sharp and you are listening to a free preview of today's episode.
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Hello, and welcome back to another episode of Sharp China. I'm Andrew Sharp and on the other line, Bill Bishop. Bill, how you doing?
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Hello, Andrew. I'm doing well. Hi everybody.
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We made it to spring. It's a wonderful week here in Washington, D.C. i don't want to spike the football too early, but I feel like the worst is behind us. We can definitely put away the shovels for the remainder of March here and also it's been like 75 degrees the past couple days. It's wonderful.
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I hope you're not the Jim Cramer of weather. Oh, boy, it is all me too. It's only March 11, so that would
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be a really horrible legacy for me. I hope I didn't just ruin it for everybody who's listening in the DMV area here. Well, as for the show, we are actually going to zag at the top of the show. Obviously, the war in Iran is ongoing. There are all sorts of implications for the US And China. And of course, Trump's visit to Beijing looms. We're only about two weeks out here, but we will begin with tech and a Wall Street Journal story that reads china's tech titans are embracing an unlikely outsider, OpenClaw, a project created by an Austrian developer that is making waves across the country. Last week, a line of people queued outside ten Cent headquarters in Shenzhen wanting help installing the artificial intelligence assistant on their computers. OpenClaw's emergence marks a pivot from previous consumer facing AI chatbots like OpenAI's ChatGPT and Chinese model Deepseek, which answers questions to now technology that can also perform tasks. The open source AI assistant created by Peter Steinberger, can make and carry out decisions on the user's behalf and has become a hit in China's tech community. Shares of tencent rose 7.3% on Tuesday after it launched a suite of open claw compatible AI products, while shares of startup Minimax added over 20% as investors expect it to become a key beneficiary to Open Claw adoption. The term raising a lobster has been trending on Chinese social media, a nod to OpenClaw's lobster logo, as users rush to adopt the AI agent, which can do things such as managing calendars, sending emails and research topics on its own. So, Bill, you wrote about this two days in a row this week and called the trend fascinating. What fascinates you about this phenomenon? And will you be raising a lobster of your own? And participating in this trend.
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So, so it's a frenzy. This is actually not me, this is my lobster. This is the open, open podcast. No, no, I'm not putting that thing anywhere near anything that matters to me. There are already too many stories of it taking over, lots of things it's not supposed to do. But in all seriousness, the frenzy is something to watch and I think you've, you've got this really fascinating mix of sort of incentives both in terms of both economic and policy. You've got a couple of local governments. I think a district in Shenzhen has been pushing this. I think it was in Wuxi, another city, there was local officials pushing it. For local officials. It's, hey look we're, you know, the central government has, you know, AI is a big part of the future. It's in, you know, there's this AI plus plan. There's, it's in the, it's in the government work report that has come out during this, the two sessions that concludes tomorrow Thursday. It's in the 15 five year plan that's going to be voted on tomorrow Thursday and then enacted. So if you're a local official, you think, hey, if I'm pushing this stuff, it looks like I'm skating where the policy puck is, right? I look like I'm on the forefront of what we should be doing from an economic interest perspective. You've got the companies that actually host the infrastructure or have the host the models, you know, they need people paying for tokens, distinct burns tokens, so they're getting paid there. You've got this whole cottage industry of people who are, especially Shenzhen, I think you know, that you know, build computers. Well now we're going to install the open claw for you. We'll install the instance for you. Right? And then now we're seeing, because there have been, while this is happening at kind of a local level and some of the companies are pushing it, the bodies in Beijing that actually focus on things like security and network security are like, wait a minute, wait, wait, wait, maybe there's some problems here. And so now the folks who are getting paid to install it are also now offering services to uninstall it.
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Right? There's all these shoulder industries springing up here and every layer of the AI stack can profit from the frenzy at least as long as it's allowed to continue.
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And so you mentioned this minimax, the stock is gone crazy. It's now worth, the market cap is now higher than by dues. Right. And I think, you know, there was a story from Bloomberg today. Completely unsurprising that the. The government has now put out directives to like SOEs and other government entities that, you know, don't be using this thing and, you know, don't. Some of your employees, in some cases they shouldn't have it on their personal devices. You know, I mean, it's, it's a very interesting agent. It's also completely, I mean, you stories, well, you see stories like someone in some, some senior person in Meta who did. I was like, oh, I installed and deleted everything, you know.
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Yeah, I mean, I mean, I can't
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figure that out, Grandma. And Shenzhen is not going to figure it out, right?
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100%. Yeah. It's funny, like hosting Sharp Tech. Any trend that takes the tech community by storm, I'm immediately inundated with emails to the Sharp Tech inbox. So this was initially referred to as Claude Bot. And Claude Bottom took tech by storm for about 72 hours and then like 96 hours in, we started reading stories about how it was insecure, it had a mind of its own.
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Trading your crypto.
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Exactly. So like that's a risk for anyone using the product. And then the risks posed to the state are also pretty interesting.
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And so, and so, you know, you now again, this frenzy you've seen, this is sort of how China is. There are so many people, when a trend happens, it's not a small trend. Right. And so, you know, one of the questions, if your Open Claw agent decides to say, set up a VPN and go over the great firewall or decides that maybe they should start investing in crypto, you're breaking the law, potentially, at least with the VPN who's responsible.
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Yeah. Are you liable in that?
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Are you liable? Is your agent liable? The installer liable? So what's going to happen? I think if you're seeing it and especially Tencent is rolling out, I mean, they're going to end up. It's not going to be open claw, it's going to be sort of claw with Chinese characteristics, where it's going to be, I think, put in a cage, so to speak. And then you'll see the big companies, especially like Tencent, which, you know, because of its dominance with WeChat, it's effectively, you know, its own OS in China.
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Yeah.
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And there's, you know, the information had a story yesterday about how the Tencent has multiple versions or multiple things they're working on to effectively harness the claw while controlling it. That I think is where you'll end up seeing a much more, you know, a lot More of an adoption. But it won't be this sort of free for all. It'll be somehow contained within the Tencent ecosystem and they'll be safe. Right? Yeah, there's a good, there's a good subset called hello China Tech. This who they cover China. The Chinese tech from. From China. It's very good. They've been writing a lot about this. They have a good piece today about sort of what Tencent is probably doing. We'll link to it in the show notes. But the point is that Tencent may actually be the bigger winner both because it'll, you know, because it controls the application layer with WeChat. If they can make it easy for anyone with WeChat to decide to install some instance of their version of like Tencent Claw, whatever they're going to call it, then you'll see a lot of adoption, but it'll be in a much more managed way and much safer.
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And is it a case where Tencent, because of its resources and existing infrastructure, is best positioned to sort of rein in this Claude bot?
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Sounds like it.
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Open Claw.
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And also if they, if you end up with people using it and there are lots of token requests, you know, Tencent, whether or not they're using Tencent's model or they're using other models hosted in Tencent Cloud, Tencent will still be the beneficiary. Right. As an infrastructure provider. And so. But it also is in the context of the broader competition between like Tencent and ByteDance and Alibaba and now I
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think the growth is crazy.
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Yeah. But there. But again it's, it's. That's the model. But I think it is who, who's got the applications people using and how do you integrate this into those applications as opposed to new applications? Yeah. And so I think the Tencent as a winner here is a valid thesis, but the sort of free for all local government officials encouraging like literally like the aunties to install Open Claw at a open, you know, sort of a big, kind of a big event outside headquarters and oh, let's all every put your openclaw on your computer and see what it does. I think those days are probably that frenzy will be tamped down because it is just something that is so fundamentally in opposition to how the government likes to manage the Internet.
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Yeah, well. And for anybody who hasn't seen photos of some of these install meetups, I don't know how to characterize it exactly. But just like masses of people outside of Tencent headquarters installing open cloth and it's happened in the US as well. And I'm surprised that that many people are doing it in the us. I was really surprised to see that that many people were being allowed to do that in China. And for anybody who has no idea what we're talking about here, I looked up this post from Cisco Systems before we came on to record, just to sort of ground people in what this technology is. Over the past few weeks, claudebot, then renamed Multbot, later renamed Open Claw because I think Claude bot ran afoul of Claude has achieved virality as an open source, self hosted personal AI assistant that runs locally and executes actions on the user's behalf. The bot's explosive rise is driven by several factors. Most notably, the assistant can complete useful daily tasks like booking flights or making dinner reservations by interfacing with users through popular messaging applications including WhatsApp and iMessage and now potentially WeChat. OpenClaw also stores persistent memory, meaning it retains long term context preferences and history across user sessions, rather than forgetting when the session ends. From a capability perspective, Open Claw is groundbreaking. From a security perspective, it's an absolute nightmare. Open Claw can run shell commands, read and write files, and execute scripts on your machine. Granting an AI agent high level privileges enables it to do harmful things if misconfigured, or if a user downloads a skill that is injected with malicious instructions. OpenClaw has already been reported to have leaked plaintext API keys and credentials which can be stolen by threat actors via prompt injection or unsecured endpoints. Open clause integration with messaging applications extends the attack surface to those applications where threat actors can craft malicious prompts that cause unintended behavior.
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I mean, if you're a scammer or a government age, this is a dream. You'd be nuts to not try and, you know, build skills that people download that then do all sorts of things that the user doesn't want to do or right think is happening. I mean this is, it's insane. That's why I'm not going anywhere near my devices.
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I mean that's the thing for you or I. It could delete large reams of data, share private data, take all sorts of actions you don't intend. Seems like more trouble than it's potentially worth. I'll wait but until there's a more secure version.
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If you're, if you're, if you bought one of these Chinese AI companies that listed in Hong Kong, you're loving it, right? This is a great frenzy, right? This is why I called it. You know, it's a Frenzy.
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Well, you absolutely, you love any product that people are going to use that are going to eat up tokens. I mean that's sort of the.
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But I think this has been headed, I mean the Bloomberg story today. But there's more. The crack that, I mean, you know, they're going to rein it in. There's no, there's no question. It's not, it's going to be, it's not going to be the lobster running free. It's going to be the lobster in a little cage that occasionally gets boiled.
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Yeah, the lob, no, maybe it's in a pot and gets spoiled by the authorities. I was going to nominate the grocery store lobster tank as the preferred analogy, but I imagine there will be some agent boiling along the way as well because look for the state. Cisco lays this out actually pretty clearly in this random blog post from a couple weeks ago. AI agents with system access can become covert data leak channels that bypass traditional data loss prevention proxies and endpoint monitoring. And to the extent that these are used by individuals who work for any sort of security adjacent company, it creates the potential for employees to just unknowingly introduce these agents into workplace environments.
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I'm surprised the Chinese authorities don't think that this maybe is like an NSA op.
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And maybe it is.
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I mean that'd be great if it is, right? I guess. But you know, there's also, there was a paper I think that came out a few days ago about Alibaba's work on one model where they discovered that the, that the model decided on its own to go over the great firewall and start trading crypto.
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Great.
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Right. And so you wonder like, well, how did they do that? What was the training data? I mean, you know, it's just like, so again, what are these things going to do? It's, it's, it's really insane in, I think it's insane here in the US but in the, in a system that with China where they're so much more focused on control, information management and control around the Internet, this thing is like, I mean it, it, it is just kind of mind blowing that this thing went crazy so quickly. But I think again it's, there's all these different incentives and certainly the local officials, you know, Taishin had a story where they talked about one of the things, I think it was from Shenzhen the officials were talking about is the, you know, the benefits are allowing people to set up what they call OPCs or one person company. So the idea is, oh, they can set up their you know, an open call, install, and then they'll have a company and make money, right? And part of that is, well, guess what? Employment's still an issue, right? So this is the way to deal with unemployment or underemployment. So all of a sudden we have all these people who started companies, so therefore they're not employed. So, look, we're, as a local official, we're doing well, right? Look how, look how, look how great our local government is doing. And like me, local official, look how great I'm doing. I'm. I'm at the forefront of our AI policy. I'm resolving employment, you know, yada, yada, yada, right? So that's the incentive for local officials to really push this. Whereas in Beijing, from these different ministries that care about security and information management, I think they're more like, holy crap, this is really not a great idea.
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All right. And that is the end of the free preview. If you'd like to hear the rest of today's conversation and get access to full episodes of Sharp China each week, you can go to your Show Notes and subscribe to either Bill's newsletter, Cynicism, or the Strathechary Bundle, which includes several other podcasts from me and daily writing from my friend Ben Thompson. I'm an incredibly biased news consumer, so I think both are indispensable resources. But either way, Bill and I are going to be here every week talking all things China, and we would love to have you on board. So check out your show Notes, subscribe, and we will talk to you soon.