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Welcome to the Seneca Podcast, the weekly discussion of current affairs in China. In this program, we look at books, ideas, new research, intellectual currents, and cultural trends that can help us better understand what's happening in China's politics, foreign relations, economics and society. Join me each week for in depth conversations that shed more light and bring less heat to how we think and talk about China. I'm Kaiser Guo, coming to you this week from my home in Chapel Hill, North Carolina. Last time from Chapel Hill for quite a while. I'm going to be heading off to Beijing at the end of this week. Sinica is supported this year by the center for East Asian Studies at the University of Wisconsin, Madison, a national resource center for the study of East Asia. The Sinica Podcast is and will remain free. But if you work for an organization that believes in what I'm doing with the show and with this newsletter, you know the drill. Please consider lending your support. I know that you've come to think of this as boilerplate by now. You've even come to think of my saying this is. You know, you think of this as boilerplate. As boilerplate. But seriously, I am looking for new institutional support. The lines are open as always. You can reach me@seneca podmail.com Step up. Do your part. Help out and listeners. You can help out too by becoming paying subscribers@cynical podcast.com seriously, I need help man. I know there are a lot of substacks out there. A lot of them are awesome. I subscribe to a bunch of them and I know they start to add up, but I think this one delivers real value. You get my essays, of course, the podcast, the transcript of the podcast, the China Global south podcast, the great content from Trivium, including their excellent weekly podcast and also their super useful weekly recap. You get Andrew Methven's column on the Chinese Phrase of the week, which is always fun. You get James Carter's wonderful this Week in China's History column. You get my narration of said column. I am really trying to deliver value for your hard earned dollars, so please do sign up. Things are tough. I get it. Consider helping me out though. Over the past few years, one of the most consistently sharp and empirically grounded voices helping us to think about US China, technology relations and much more beyond that has been Kyle Chan. He is a fellow at the John L. Thornton China center at Brookings, was previously a postdoc at Princeton. He writes the absolute, absolutely fantastic high capacity newsletter on Substack and this is an important Seneca Credential is the record holder all time for the most name checks on this show since Paying it Forward became a thing a couple of years ago. In fact, I had to stop his colleague Ryan from giving him yet another Paying it Forward shout out. He is no longer eligible. It's like you win Guitarist of the Year for Guitar Player three times and you're no longer eligible. He's been paid forward and then some. Kyle recently published a Financial Times op ed. I think it was his first in Financial Times, arguing that we're witnessing a great reversal in global technology flows that after decades of Western firms transferring know how into China, we are now actually seeing a growing number of cases where Chinese firms sit at or near the global frontier and Western companies are the ones doing the learning. This is no casual claim lightly tossed off, as we shall see. And he, you know, he's really dug into this and we will in turn dig into his idea. Kyle has also written a longer piece in his high capacity newsletter, pushing back against the dominant decoupling narrative, suggesting that even as politics tries to pull the US And China apart, there are powerful structural forces. Scale, market incentives, technology. Technology complementarity is one of the hardest words to say. Scale, market incentives, technological complementarity. These things keep pulling us back together. You will find links to both of those pieces, as always, in the show notes. I will encourage you to hit pause right now and read them if you haven't already. I'll wait. Okay. Anyway, today I Want to use those two pieces as a jumping off point to talk about what's actually happening beneath the rhetoric, where decoupling is real, where recoupling is quietly happening anyway, and what all this means for innovation, for choke points, for global tech ecosystems. Kyle Chan, welcome at long last to Seneca.
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It's great to finally be here.
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Yeah. Kyle Mother Chan all right, so before we dive into the substance here, I actually want to step back for a moment and talk about how you came to be doing the work that you're doing. I mean, because there's something a little uncanny about it. I mean, the particular mix of things you've made yourself expert in. Industrial policy, manufacturing systems, technology diffusion, supply chains, firm behavior under geopolitical constraint, electrification. These are things that are just absolutely crucial for us to understand the world that we live in and China's place in it. It's hard not to look at this and think, how did anyone have the foresight to focus on exactly this set of questions before they became so obviously central? So I want to ask this partly as a serious question and partly with a bit of levity. How did you become Kyle Chan, not in the LinkedIn biography sense, but in the intellectual sense. What drew you into these topics in the first place? Were you consciously trying to understand where the global economy and the tech world were heading? Or maybe did this grow more organically out of just personal interests and skills, opportunities, and only later revealed to you to be the master keys? Looking back, also, are there particular habits of mind, cognitive style, that you have, particular analytical tools, mentors, people in your life, or personal inclinations that you think just turned out to really matter for the kind of work that you do, Especially in this world where I think understanding technology increasingly means understanding systems, that's not a simple thing. Incentives, unintended consequences, all these second and third order effects rather than just, you know, breakthroughs in this or that? Right. So how did you become Kyle?
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CHAD well, so a lot of these topics, they turn out to be deeply, deeply interrelated. When we talk about technology, when we talk about industrial policy, when we talk about geopolitics, markets, economics, firm behavior, the role of the state in all this, they are very, very much interrelated. And so my interest in all this actually comes from a different place originally, and that is an interest in development. So this idea, which seems almost antiquated now, this idea that countries want to get richer, they want to become more educated, there are certain sorts of public goods that they would like to have along the way, and how to obtain These is, I think, one of the most fascinating questions and one of the most important questions one could ask. And for me, China, in addition to the fact that my family comes from Hong Kong, so I have some language and some background there, but China is like one of the most fascinating case studies in the story of development more broadly. So if you want to understand development, you have to understand China and vice versa.
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No doubt, no doubt.
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Yeah, yeah. So. And I actually began going way back as an undergraduate at the University of Chicago, which is famous for their Chicago School of Economics.
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Milton Friedman. Yeah.
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Oh yeah, oh yeah. All the greats, right, who emphasized the role of market forces, letting the state step back and unleashing sort of private entrepreneurship, the power of individuals to reshape the world. And the funny thing is I learned a lot. It was very intellectually rigorous, but I was deeply unsatisfied with this view of how the world actually is unfolding. And this really sort of came home when I spent time in China and also in India, when I could see things that economists kind of dismiss as secondary. Right. Externalities, coordination problems, market failures. They're looking for areas where their theory might have a few holes and maybe they got to plug those holes. To me, I saw that as the story itself. Right, yeah. These coordination problems are everywhere in China, in India, here in the United States as well. And so the question became to me, you know, is there a way to solve them? What is the best mechanism? Is there a role for the state to play in all this? And that's where I started to dig further into, into this process. And, you know, when I was doing my PhD work, I decided a really interesting sort of way to enter this research problem was to study railway development. So your listeners might be aware that China has now built the world's largest high speed rail system going from zero to 47,000 kilometers. That's right. More than the rest of the world combined. And you'll hear that phrase a lot, I think, when it comes to a lot of things that China makes and produces. And actually I did a comparative study looking at sort of China's railway development and India's railway development. And I think here in the US we might think of like Amtrak. Maybe Americans don't think that much about rail and train transportation, but it turns out to be a really interesting lens for understanding systems like the deep political economy of an entire nation. And so through understanding railway development, I could understand state owned enterprises in China, how they actually operate, rather than just looking at the percent of the economy that is under under sort of state owned enterprises. I could look at the various ministries and agencies and also look at the role of local governments in this whole process. You know, you could look at the role of learning from abroad, learning from foreign technology, joint ventures, acquiring this technology from, say, global leaders in the space, and then taking that extra step of internalizing it, making it sort of your own and trying to build on top of that. Right. So it wasn't just a matter of buying a bunch of bullet trains from Siemens or from elsewhere. It was about building in China with as much Chinese technology as possible, moving up that whole value chain. So the infrastructure question and the railway problem to me were like a way to start to understand all these different pieces of the puzzle. And the deeper I dug, the more I saw they were all connected and then they also fed into industrial policy and technology more broadly. So that's sort of like a long winded way of saying it's all connected. Once you start pulling at a certain thread and you have a systems level approach to this, rather than looking at, say, you know, profitability for this one firm or the role of this single ministry, when you see how it all kind of stitches together, I think that gives you a richer picture for understanding the question of development like I originally sought out to investigate, but also the problem, the puzzle that I see as China today.
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A little over a year ago you published an infographic, should we call it a chart? That I think maybe is the thing that really, really put you on the map that had everyone talking about your work, in which you sort of show the overlapping tech industrial ecosystems of China. So just now as you were talking about this, that that was what was coming to mind is that you have always had a sense of this very, very complex Venn diagram that that is, you know, the, the, the entirety of the system. Right. You are a systems thinker. I think you understand that, that very well. And that's, I think, what's really, really drawn me to your work. But in that you look at all these different things that seem, you know, possibly unrelated. You know, what do autonomous vehicles really have to do with smartphones or you know, what do semiconductors have to do with, with, you know, lidar or electric vehicles and these all sort of do overlap and it's just a fantastic chart. I think I could stare at this thing for hours and still feel like I haven't, I haven't fully grasped the full significance of it. So highly recommend that everyone do that. Let's get in now to the Financial Times piece that you wrote. And it's called the Great Reversal. I don't know if some of you might be aware, I wrote an essay called the Great Reckoning. So we share a lot of letters in common. You argue that we're seeing a great reversal in global technology flows for a long time and probably still for most people, I think the dominant story is that China learned absorbed scaled technologies that were developed elsewhere. Now, I think anyone who listens to this show will probably be aware that there's an argument that when it comes to diffusion, platforms, ecosystems, China actually has been exceptionally strong for quite some time. You might have heard my conversations with people like Jeff Ding, right, who has really popularized this idea that diffusion not 0 to 1 but 1 to 100 is sort of more important. Kendra Schaefer, Paul Triolo, of course, but that's not quite the claim you're making here. You go further and you suggest that in a growing number of sectors, and I would include the EVs, obviously batteries, biotech, China is now right up at the frontier itself, not just excelling at scale or execution. So I want to slow that down a bit. What in your view, Let me see, how to ask. This is maybe the cleanest way to explain what is actually reversing now. What's different in kind, not just in degree from the China we thought we understood even just a few years ago, a decade ago. Before you answer, let me maybe frame this up in a kind of comparative way. I know you've worked on India, but I know you're also very aware as the guy who started off in development, the other model, students in the East Asian development model, Japan in the post war period, South Korea and Taiwan later on, we also saw these societies move from learning and scaling to genuine innovation at the frontier, but often within pretty clear technological or corporate lanes. Like when you look at China today, does this moment feel analogous to those earlier transitions or do you see something fundamentally different happening this time in terms of breadth, in terms of speed, or the way that it's so intimately tied in with manufacturing and deployment?
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Yeah, so I do think this time is different. I do think that the kinds of scale and the kinds of scope that we're seeing in China's overall sort of tech industrial ecosystem is for lack of a better term, sort of world historical. I think there are many areas where Japan, especially South Korea, you think about semiconductors or smartphones or you know, go back to the Sony, Walkman or automotive, right. And you know, they have some areas where they're very strong, other areas where they, they are Weaker. I think one thing that's very interesting in the Chinese sort of ecosystem is the breadth of the strength in all these different areas. So you mentioned EVs is one area, electric vehicles, where now it's hard to open up a newspaper these days without seeing a headline about BYD storming markets in Asia, Africa, Latin America, Europe, maybe even the US it's hard to sort of like pass up on stories about China's prodigious output and solar capacity and sort of lapping the world multiple times. And I think what's interesting is in China's case, these are all sort of blending together, right? You, you're seeing a whole bunch of supply chains and a whole bunch of firms that kind of span across all these different areas and strength in one area starts to feed into another. This is sort of like going back to that kind of ridiculous Venn diagram that, that I had in that piece where EVs batteries, okay. It's easy to see how those are linked. But it turns out there are a lot of semiconductors that go into EVs and it turns out having a really strong EV foundation is really important for autonomous vehicles. And then it turns out actually if you have some of those supply chains existing, they might help you with robots, humanoid robots, say, or drones or industrial automation.
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So I mean, I guess the shorthand for it is anything with a battery, semiconductors and a motor in it. Now China is just killing it.
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A
That's right, yeah. Yeah. There's this term now that's becoming more popular, like the electro industrial tech stack or the electric tech stack. And I would, I like that term. It captures a lot. But I would even argue it's broader than that. Right. It's sort of like AI autonomy, sort of all these software and hardware elements all being combined together. And I think that's something that is fairly unique.
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B
Wow, when was the last time you added another circle to that Venn diagram? Has that changed in the years since you published it?
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Yeah, I probably need to add more. I mean, probably some more in the material sciences world, probably some more on the biotech side with sort of overlaps between AI, automation and genomics? Oh yeah, totally. Totally. It's all blending together.
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Crazy. Yeah. So just to be clear, when you describe China as being at the global frontier in these areas, what distinguishes that from being simply very good at industrialization and incremental improvement and cost reduction? I mean, where concretely do you see the line between scale or even scope driven excellence and genuine frontier innovation actually start to blur or even disappear? In other words, what constitutes frontier innovation for you?
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Yeah, so I'll give one concrete example, and that's BYD's megawatt charging capabilities for its electric vehicles. So I think for a long time, a key barrier for a lot of people who are considering electric cars but are not sure is, you know, charging and charging infrastructure is a big problem. But then also, once you find a charging station, you know, you don't want to be sitting there for half an hour, an hour waiting to, you know, quote, unquote, fill up the tank. And what BYD has done is, you know, they actually released new capabilities for their batteries, plus their vehicles, where you can charge basically an EV as fast as you can, you can fill up a tank of gas. And that's a real game changer. Not just because of the technology. Like, that level of technology is just completely new in the world. But then that actually changes our entire relationship with cars and EVs. It switches this whole sort of like, balance between convenience and between sort of like economic value. So that's a classic example there. And you can see that it wasn't just byd. And this is like, you know, a crucial part of the whole China story. It's not just one firm. I think in the US we're used to like a Tesla and that might push the frontier in electric vehicles. But then, you know, where are the other players? And I think for China, what's interesting is not long after BYD came out with megawatt charging. Very impressive, stole a lot of headlines. A couple other Chinese players also came out with megawatt charging. Now they're actually on Gen 2 of this with greater than megawatt charging, even faster charging capabilities. So it gives you a sense there of something that is not only unique technologically in China, but also something that's not confined to one firm. It's almost sort of like a broader national capability.
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B
You got another one. Besides megawatt charging, is there another example that you can cite?
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Yeah. So I think in the battery space we see that being able to produce lithium iron phosphate batteries at scale and, you know, really drive down the cost per kilowatt hour and have them be stable, safe, operable in multiple kinds of climate conditions is also fairly unique. And you see, you know, one example I like to point to is Ford's partnership with catl. So that is a tech licensing partnership. So I think some people who might be kind of skeptical about China's technological capabilities, they might say, oh, you know, it's like it's state subsidized or they have sort of access to cheap, you know, cheap components or, you know, whatever it is. But in this case, you have kind of like a pure test case of technology itself that is being bought. The IP that Ford wants and doesn't have and is willing to pay a Chinese company for. So that's another sort of example of this that you can point to concretely being like, okay, this is a real tech edge here.
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B
When we're talking about the IP here, we're not just talking about the chemistry of lithium, iron phosphate. We're talking about something beyond that. It's the whole manufacturing process, right?
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A
Absolutely, yeah. Not just the recipe, but how you kind of cook the whole thing, how you do it in a way that can get rid of impurities, that can ensure that kind of quality control that later on you can scale up and mass produce and offer at a very compelling price point.
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B
Let's hope it works out. I mean, God, I keep seeing, you know, these rumors, you know, dropping about an American auto manufacturer. It's usually Ford for some reason. So where there's smoke, there's fire. They're clearly in talks with, with a lot of Chinese EV manufacturers. I see them, you know, with Xiaomi, with Geely, who knows what's actually happening. Anyway, let's talk a little bit about industrial strategy and time horizons because one thing that really struck me about your Financial Times piece is how it's just not sensationalistic about Chinese industrial policy. I mean, you describe actually this very long standing deliberate effort to acquire and to sort of absorb and internalize and improve upon foreign technologies. You don't either romanticize it or treat it as uniquely nefarious. But it made me wonder whether the real source of Western surprise isn't so much what China did, but how long it was willing and able to work at it and how it turns out how compressed time horizons have become in the US and other advanced economies. By comparison, between you get your quarterly earnings pressure, you got electoral cycles, you have this kind of general investor aversion along payback periods, there's a lot of patient capital available. It's not obvious that Western systems are even built to sustain this kind of effort. Not that I buy the gulf about China running, you know, 100 year marathons or master plan spanning, you know, decades and decades, but still. Yeah. I'm curious how you think about this at a deeper level. To what extent is China's current position the product of particular policy tools? Subsidies, JVs with IP transfers, localization requirements for Western partners, and to what Extent Is it really about just institutional continuity and patience? And it's like a willingness to tolerate long stretches that might look inefficient or like money pits or that just may look completely misguided at the time that they start. What's the secret sauce here?
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Yeah, I love that framing. I would point to this sort of like potent combination of both persistence over the long term and adaptability over time. And I think you can actually take the automotive industry sort of before electric vehicles as an interesting example where you go back, you know, to the 90s. Beijing Jeep. Yeah, yeah, yeah, you have. That's right. You have an earlier strategy of joint ventures where basically if you want to sell a car in China, you as a foreign automaker, you needed to form a joint venture, partner up with a back then Chinese state automaker and then produce locally within China for, you know, basically for the Chinese market. And that strategy, you know, ironically is now viewed today as kind of a failure. Right. At the time it was also sort of like seen as, you know, this is not really going anywhere. The foreign automakers, you think about The Volkswagens, the GMs of the world, they were making money hand over fist.
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B
I mean, oh boy, were they?
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Yeah, yeah. And especially when they were going through their rough patches, you know, thinking about the financial crisis, the China market was really crucial for them. So they kind of walked into this with eyes open and they were pretty happy with making that kind of money. Now on the Chinese side, there was a lot of dissatisfaction. Actually. There is a view that, okay, these foreign automakers are making a bunch and the technology is not really diffusing through the Chinese automotive industry. It's not really, you know, internal combustion engine technology is not really being sort of mastered at the deep sort of core tech level. And one other thing is that you hardly get any, any kind of like national champion that becomes a global champion from the Chinese automotive industry during this period. Right. Like, you know, before the rise of Chinese EVs, you know, how many people could name a Chinese automotive brand, you know, where was China's version of Toyota or Ford on the world stage? And so for a while this was seen as a slow moving, even sclerotic kind of industry where industrial policy wasn't really doing what it was meant to do, which is to kind of build, build up China's capabilities. And to be sure, there was definitely a buildup of capabilities, a buildup of say, automotive supply chains. But then later on you have this shift into electric vehicles, so called new energy vehicles. An idea this is Such a Chinese business phrase, but sort of overtaking on the curve or changing lanes to overtake. Okay, you might not be able to beat The Toyotas and GMs of the world on traditional gas powered cars, but could you beat them on electric vehicles? And even there, even there, for a long time that was hotly debated within China because the technology was still very immature. The cost of batteries was extremely high. Getting reliability, dealing with charging, it was seen as potentially a losing battle, a losing proposition. And yet China persisted. They kept going after this. And to be sure, they also pursued a portfolio approach. Right. It wasn't just battery electric vehicles. They also pushed hard on hybrids, they also pushed hard on fuel cells. And to this day, I think that portfolio approach has paid off. Sometimes we see, maybe in China it's battery electric vehicles that are the most popular, the ones that are purely electric. But maybe in other parts of the world now, hybrids are kind of the transition powertrain. So then Chinese EV companies are also poised to take advantage of that. They've developed technology across this broader portfolio. And so you see, even where mistakes were made, they sort of ran into dead ends along the way with industrial policy and with the development of the technology, they continued to try to find new ways because overall, in the long run, China was like, automotive is really important and it makes sense. You look at Japan, you look at South Korea, Korea, I mean, you look back at the US and Germany and so the automotive industry is literally this engine for a whole bunch of related capabilities. Technology, industrial production, all of that. So I think China's persistence there, you might have thought it was a failure in 1990, you might have thought it was a failure in 2001, you might have thought it was even a failure in 2015. But now we look back and a, sometimes seems like some great master plan, right? Like, oh, you know, they, they had this, you know, 100 year plan to dominate the auto industry from the, from the, from the start. And I don't think that's quite how it is, but I do think they emphasize the importance of that in the long run. And then we're willing to kind of take steps to, to figure out how to get there.
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Yeah, and take steps and then make mistakes. And I think it's great that you're complicating this narrative which has, I think become really kind of oversimplified now, sitting here in hindsight, just looking like. And it tends of course to miss out on all the muddling through that was actually done. But I think that what, what we're not wrong about is that there was this, this determination and this patience. And I guess that's what I want to press you on. I mean, do you think that it's possible now for the US or other Western manufacturing powers to break out of their, you know, kind of short time horizon constraints? I mean, are there plausible pathways, institutional pathways, political pathways that would allow them to sustain long term industrial strategies without, I mean, without completely upending their political economies? Is the more realistic outcome maybe kind of just an uneasy coexistence where Western systems just intervene, maybe selectively, but never fully escape these, I mean, pretty forbidding structural limits? Where are you on that?
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A
Yeah, so I have kind of a mixed view on this. So when you look at something like clean energy, when you look at the efforts at industrial policy, especially under the Biden administration, but even going back further, actually there was a lot of progress, I would argue there was a lot of progress on helping to build out the EV industry. There is a lot of progress on building up battery production. There's a lot of progress even going, going to other sort of related sectors like solar. And so I think that that were sort of some of the green shoots of what could have been a longer term American industrial policy or industrial policy with American characteristics. Right, yeah. And then obviously we have a change in the political wins and unfortunate.
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B
Whatever are you speaking about?
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A
That's right. And to see what's really sad, I think, is not that the current Trump administration is not enthusiastic about renewable energy, but to see them actively block its development, that is really shutting down offshore wind and. Exactly. So, you know, it's like, what's the opposite of industrial policy? Right. Can you slow your own tech industrial development down? And I think the answer is yes, unfortunately. So while we were hitting the gas before, it feels like we're hitting the brakes now. My caveat to this though, is that in areas where there is bipartisan support, in areas where there's a broader consensus that this is a really important technology, Americans might differ. What are the best tools for going after this? How should we really tackle this problem? But there are, I think, real cases that we can look to for progress. And I think the CHIPS act is one of those where the ability to bring in a whole range of chip makers, not just intel domestically or Micron, but tsmc, Samsung. Yeah. In a way, those are some of the best parts of industrial policy. Right. Learning from the best that the world has to offer, not just sort of like giving a handout to your own local players and hoping that they will innovate and make progress. So I think that's one area where you see broader support, broader consensus. Maybe it took a shock to get us there, right? Maybe it took the supply chain shocks of COVID Whatever it is. Now it does seem like there's progress being made. Of course, nothing's guaranteed. And so the hope is that this sort of fragile political consensus might continue and that capacity can continue to develop.
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B
In the U.S. well, I am optimistic about it. I think there's a lot of will these days. I mean, I feel it. I feel like that there's a lot of willingness to actually learn these days. There's no shortage of MBA programs. What's harder to find is one that still feels connected to the real world, to people, to place, and to the way business is actually changing. The MBA at the Hong Kong University of Science and Technology has that connection. The campus sits above the South China Sea. And yes, the view really is as good as they say. But what makes it special is the mix of perspectives it brings together. Students come from everywhere, and the faculty don't just teach business models. They push you to question the assumptions behind them. If you want to understand how China's economy works on the ground and how it fits into the larger global picture, HKUST is one of the few programs that can genuinely offer that you'll graduate with more than a credential. You'll have a clearer sense of how to lead in a world that keeps surprising us. Find out more at MBA hkust. Edu HK so let's turn now from the FT op ed to the high capacity essay about recoupling. Because, you know, this is where you really push against what's become something close to conventional wisdom. Even as both governments actually, you know, are really trying to address these vulnerabilities, are trying to, you know, de risk at the very least through, you know, tariffs, export controls, investment screening, and all that. You argue that the US and China are actually recoupling in important ways, often quietly, in places that don't get a whole ton of attention. But let's start there. What do you see as the strongest forces making that recoupling so persistent, even in the face of fairly determined political efforts to pull the two systems apart?
- [35:55]
A
One is just the nature of technology and markets and global supply chains themselves. Right. There's this idea that technology, it's hard to kind of control it as like a single thing, like a concrete. You can have patents, discrete, right? Yeah, yeah. And the idea that it can be controlled along borders is kind of a slippery idea. You can try to do it. But overall, we see, for example, the rise of the Internet and the emergence of, in some ways, different forms of technology built on that that have emerged. And I think one thing that's really interesting too is continued progress in technology development means that a lot of engineers, a lot of developers, a lot of companies, they are looking to partner with the best out there. Their motivations are to find other people who have specialized, the really incredible chip specialists. I don't have to make my own chips. I can just buy it from, I can have TSMC build it and I can send them my designs and they can send me back the chips or on batteries, for example. That's another area where it's like, I could try to reinvent the wheel or reinvent the battery, as it were, and ramp up and try to catch up on these battery capabilities. Or if today I want to be able to offer really compelling electric vehicles, maybe I will partner with the catls and the byds of the world, since they've already put in all this time and effort and money into building out these capabilities. So I try to point out some concrete cases too, where you see some of this tech recoupling. Like for example, Google's Waymo, the robo taxi service, is using Zeekr electric vehicles from China's Geely. And there I think the argument is those Chinese EVs are a cost effective, highly reliable, scalable platform to use. And then Waymo can add their own sort of autonomous vehicle systems on top of that. Another example is robotics, right? So a lot of the robotic supply chains are in China. When you talk about actuators, servos, batteries, obviously, sensors like lidar camera modules, a lot of that is in China. And if you are an American robotics startup, right, like, do you want to like source all of that from the few suppliers in the US or, or would you rather go to China and, you know, at least in the near term, start to build up capacity in that way. And then another example actually is, you know, speaking of robots, is the way that Unitree, the Chinese humanoid robot company, the one that we. Yeah, the one that, where we see sort of like the, the videos of the dancing robots at the spring gala. So Unitree robots are very popular in, in other parts of the world, including at American Robotics Labs. Again, if you want to be pushing the frontier on the AI models that are operating these robots, you might not want to be spending all your time building, assembling these complex machines in the first place. You could buy them off the shelf. Actually, I joke that you can buy them on Walmart.com or Amazon, at least that's. That's when I checked over the holidays, and they were, you know, there's some lead time for that. But that kind of availability means that you can build off of that platform as an American researcher, so you don't have to go through, you know, sort of building out all the hardware yourself. There are other examples I can give, but these are some areas where you see strong forces trying to pull the two sides together despite the geopolitical forces pulling them apart.
- [39:41]
B
I mean, if they get to the point where they can actually be sous chefs and do dishes, seriously. So, Kyle, you invoke that good old gravity model when you talk about how these. And you've given some examples of this, but just to simplify it, the sheer size, the technological sophistication in these two economies, they act like mass. And effective distance is shaped by things like regulation, controls geopolitics. I mean, I won't argue with you about the mass. I mean, it is absolutely enormous. And, you know, it's like the sum of the masses, right. So gravity, though, falls off pretty fast, as per Newton. It's, you know, it's. What is it? It's the sum of the masses over the distance squared. Right. So because it's being squared, right. I mean, politics has been trying very hard to increase that distance, and every little bit of distance really kind of diminishes gravity. So, I mean, at what point do those structural forces actually overwhelm political intent or are overwhelmed by, you know, politics? Are we already, as I hope, are we past that point in sectors like. It's the ones that you mentioned, sure, in robotics and things like that, but these are still pretty small. These are pretty narrow little sectors. You know, Waymo, great. But I would reckon maybe less than 1% of the American population has even ridden in a driverless taxi by this point. Sure. Robots, right. But they can't. They're not soup chefs yet, and they're not doing dishes, and they can't really do much for child care, so they're not super popular yet either. Are we going to see the terrain shaped in more meaningful ways, or are governments and politics and bad blood just going to just diminish that gravity by increasing the regulatory distance?
- [41:38]
A
That's a really interesting question. I think that we will see sort of an ongoing tension, an ongoing sort of tug of war between all these different forces. On the one hand, you have the forces pulling the two sides together. The technology, the commercial side, the consumers. Right. When you think about, you know, these are, we're talking about products in many cases where consumers, you know, how, how much are they willing to pay a premium for, you know, made in America versus they just want the best for the best price. So on the one hand you have those forces. On the other hand you do have greater efforts from both the US and from China to try to decouple in certain areas or de risk. And, and I do think this will kind of unfold. And one thing that, that I would sort of point out is on the one hand there, there actually is quite a large base already of existing relationship. So that kind of decoupling process would happen over like a pretty large surface area. And so out of that surface area, I think we are actually only seeing still relatively limited decoupling. Right. So you kind of pointed out that recoupling is kind of limited. Well, in some ways the decoupling is kind of limited too. But on the flip side, and this is one thing that I really tried to bring out in that piece, and maybe even the FT op ed as well, is as China continues to move up the technology ladder, as Chinese companies move up the value chain, we're going to see those forces pulling them together even more in some ways. So we're going to see for example, more and more demand. I keep coming back to the Chinese EV example, but we're going to see more and more demand for trying to figure out what to do with Chinese EV technology and Chinese EV industrial capacity. And I think biotech is another area where as the Chinese biotech firms move up from sort of me too drugs or running some of the outsourced clinical trials, once they move up into deeper drug discovery, novel drugs, that will mean that they will become more attractive to work with because they have more to offer. Right. They're not just offering cheaper, quicker services that could be outsourced. They're offering like real intellectual property that other pharmaceutical companies are willing to pay, you know, millions or even billions of dollars for. So I think that's something that we're going to see actually increase over time.
- [44:05]
B
Yeah, that's encouraging. The higher up the value chain, the bigger the surface area and the bigger sort of sticky area. Right? Yeah, yeah, that's good. I mean, I think we should also. We can all do our part. More and more Americans are being met at a very Chinese moment in their lives. Right. We gotta fan the flames of this China maxing trend because more China maxing is going on. That's an increase of surface area as well. I like this, this is, you know, this one thing about that piece is that it just brought a smile to my face. It's like all this stuff that, you know, has had me so depressed, especially since COVID It's just like.
- [44:44]
A
Well, there's a.
- [44:45]
B
Thanks, Kyle. Yeah, exactly. One thing that really comes through in that high capacity piece is just how variegated these US China linkages are. I mean, they're not all the same kind of dependency, they're not all flowing in the same direction. I mean as you say, you know, some of them hardware, some are software, some of them are also about data talent, manufacturing, know how. And often they seem to stack on top of one another and reinforce one another. I always think back to this, the golden moment for me. You know, the early days of the Chinese Internet, there was just so much cross platform pollination. I mean you had American capital, you had American trained entrepreneurs, so it was startup capital. The VCs they went to were all Sandhill Road VCs typically. And when they went public they were all aiming for NASDAQ and New York Stock Exchange. But also there was just so much corporate governance, know how that crossed from the United States toward China. All these companies wanted to be Sarbanes, Oxley Compliance. And so they learned a lot. Really good times back then. And I feel like it'd be just wonderful for this to happen again. But I'd love for you to zoom out, map this out for us a little bit. When you think about US China, technological complementarities today, how you break them down, what are the other. You know, you've named a few, but what are some other categories or even layers where each side still brings something the other genuinely lacks? I guess I'm more interested. We know, we know where the Chinese bring stuff up. Let's, let's, let's talk more about, you know, sort of what China still wants, why China is still incentivized to stay coupled.
- [46:32]
A
Yeah, that's a great question. So from the Chinese side, there's still a lot of American products, services, institutions that are in high demand and that are very, very cool to use in China. So one example is in the AI world, tools like Cursor coming out of the US are really popular among Chinese developers.
- [46:55]
B
What is that? I'm not familiar.
- [46:57]
A
It sort of helps you with AI powered coding basically. Okay, yeah. So there's still a lot of reverence for American platforms like GitHub that are super popular, that contribute to the global open source community. And another huge area, you know, you started to touch on this is talent and universities and the way that many of China's best and brightest, they. They want to study at American universities, they contribute very actively to American research programs. And now many of them have been contributing actually to American AI labs like OpenAI Anthropic. I'm sure you saw that list of Meta's superintelligence team.
- [47:47]
B
I did.
- [47:48]
A
AI superintelligence team. And the number of. So these are folks who are sort of like the 0.00001% of AI talent in terms of software engineers and researchers. And Meta was willing to pay some of these folks, like astronomical.
- [48:08]
B
Absolutely.
- [48:09]
A
Compensation. Yeah. Like millions, hundreds of millions. Even something reaching like the billion dollar.
- [48:14]
B
Range and questioning my life choices every.
- [48:18]
A
Day I'm like, if I could just work for them and serve them coffee, like maybe a couple of days.
- [48:25]
B
Yeah, yeah.
- [48:28]
A
Providing more value. But quite a number of those researchers that Meta scooped up through this like very ambitious talent recruitment program were Chinese or Chinese educated at schools like Tsinghua or Zheda. And so you see that these town flows, the human capital, the institutional sort of like co development, like it's very, very much deeply embedded. And I think. And this is actually kind of related to like another piece that I had about Cold War tools. Right. Like to the extent that there is a kind of tech war or economic battle between or contest between the two countries, to the extent that you try to use export controls on the other side as a form of punishment or coercion or retaliation, like you just have to keep in mind that there is going to be a cost back to yourself. Right, right. And this applies for both the US and China. Right. So you know, when you think about what you are banning or blocking off or not allowing your own consumers to buy. Right. There is going to be a cost back to you. And maybe on net you say that it's worth it, but just don't forget that it's not simply like I could do this to you and not worry about it. That overall the two countries are so deeply interconnected that it's going to end up having this broader net effect across both countries and across the whole global economy.
- [49:50]
B
Yeah. I think it's useful for us when we're thinking about this stuff to keep in mind directionality for one thing, but also sort of like the stickiness. I mean some of these complementarities are going to persist even under tighter controls because they're just hard to substitute. They're very deeply embedded. But there's other ones that feel kind of contingent, less sticky they could disappear pretty quickly if political pressure intensifies or if alternatives mature and both sides are working toward making sure those alternatives are maturing. So when you think about this though, do you see these complementarities as kind of a transitional phase, something, you know, we should expect is just going to erode over time as each side pushes for self reliance? Or are they maybe better understood as structural features of a world that are going to persist? You know, where two very large, very capable tech systems are, you know, developing maybe in parallel, but never in isolation. There's too much cross pollination. Is this the kind of complementarity that is just inherently unstable under conditions of, you know, like we have of geopolitical mistrust, that's pretty deep rooted. Or could it pull it back the other way? Does the complementarity, the stickiness, the gravity make policymakers less prone to even push for the kind of decoupling that they've been pushing for? I hope for the latter.
- [51:17]
A
Yeah, no, I see the forces pulling in sort of like both directions. Right. Where I do think actually when push comes to shove, when we're talking about again, the people, the consumers, the businesses that are involved in all this, when they are sort of thinking about this at that sort of level, I think there's a lot of folks sort of like trying to push, pull us back from the brink. Right. And so I think that that will end up being sort of like a counterweight to just sort of like the rip the band aid off. We're going to just go our own ways. And I think we're going to see time and again, especially as China moves up more in some of these different industries, different product categories, that those ties can grow and the whole sort of like, nature of these technology relationships can shift over time. And so, yeah, I think that could be a pull factor. I think to give another example or to think about like a different, you know, framework for this, you imagine a world where we decided to just actually go ahead and decouple. Right. You can imagine how dramatically that would slow down, let's just say from the US side, that would slow down our entire robotics industry. How that would slow down our AI development, how that would slow down, you know, so many different areas that are meaningful, you know, just the US alone and similarly for China. So I think that once you start to really grapple with what decoupling means, once you really start to see, you know, the full scale, not just in terms of, you know, like this product area or this sort of technology, but the broader effect that Might be enough to help just at least put us back in reality in terms of like, what do we really want here? What direction do we want all this to take?
- [53:08]
B
Reality for you. Reality for me. But unfortunately, the disease of securitization has created a whole lot of people for whom that is a price they're happy to pay, even if it slows down our robotics or our AI, whatever. If I had to pick a sort of geopolitical phrase of the year for the year 2025, it would be weaponized interdependence. Right? I mean, it's such a concept anymore. It's probably, I, I think it's like this massive conspicuous geopolitical fact in, in daily life right now. I mean, it was, you know, it was last year, I think it was 2025. That was when it really kind of came home for all of us. I mean, it was obviously something that, that China had understood because it was on the receiving end of a lot of it for years. But supply chains, standards, platforms, choke points from semiconductors and design software, that was all stuff that China had experienced, EUV lithography, of course. But then, you know, October with the rare earth export controls, they just sort of felt like, you know, the shoes on the other foot. And everyone now knows this, right? I mean, and I think that recognition has changed how, how policymakers think. I mean, every new linkage just seems like it immediately gets scanned for vulnerability. Every dependency looks like a potential liability suddenly. And there's this sense that if you don't go, if you don't act first, if you're not the one who's weaponizing interdependence first, then you're going to have it weaponized against you. So, I mean, in the examples that you lay out, so batteries, robotics, but all other stuff, like cloud platforms, they're hosting foreign models and stuff like that. It's in your essay. These linkages exist because they are able to enable faster progress, right? They're able to lower costs for people, speed up development. They're able to offer better performance. These are productive dependencies. But these days they're getting treated as these unacceptable security risks. I wonder if there's a way for us to start to educate our policymakers, help them to distinguish between the interdependencies that are genuinely dangerous and those that are simply a little uncomfortable. I mean, the kind that feel risky because they work so well. So I wonder, Kyle, do you worry that both the US and China are now kind of over learning the whole lesson of choke points? I mean, Are they just weaponizing everything in sight in ways that ultimately just impose much larger opportunity costs that, like you said, slow innovation make everyone just kind of worse off? I mean, is there a danger that in trying to eliminate vulnerability, both sides end up just eliminating complementarities that made progress possible in the freaking first place? I mean, that's. That's where we are, right?
- [56:04]
A
Yeah, I think you can. Yeah, you can. You can really end up shooting yourself in the foot if you are overly paranoid. And again, this applies to both the US And China. If you're overly paranoid, if you see security risks behind every shadow around every corner, and you are trying to just sort of like cut out every kind of interconnection and de. Risk or decouple completely, then you really end up going down this sort of slippery slope where you kind of retreat back within your own sort of territory, within your own sort of sphere, and your ability to not just innovate at home, but to be competitive globally starts to shrink. And so I think there's a balance here. I think there's a way to see this in terms of different kinds of risks, a way to think about this in a thoughtful manner where you're doing sort of real technical investigations. Right. The connected vehicles rule about Chinese EVs in the US that basically has blocked Chinese EVs from coming to the US where they're worried that they're going to send data back to China or something like that. Well, let's. Let's do an investigation into that. Let's actually try to understand what are the security risks here. Are there ways to mitigate that? What can be done rather than simply sort of like ban DJI, ban Chinese EVs, ban sort of the next thing. And I think at a certain point you could ban almost everything, but then you are cutting yourself off from the rest of the world. So where do you want to end up as a nation in terms of the global trading system and the global technology system?
- [57:44]
B
Well, Kyle, you're very admirably and sensibly calling for us to look into this question on things like the connected vehicle rule, but to me, just sort of at my distance, it just seems like that was so slapdash. It was so transparently just a protectionist measure that that was sort of an afterthought. Let's find some reason that's not just, we don't want to have to compete against Chinese EVs. I mean, and I think it was actually connected to. Well, I mean, because during the Biden administration, as you recall, primary Voting in states like Michigan, and especially in districts that had very large Arab and Muslim populations. And they voted, declined to vote, even when Biden was on the Or Gaza. Right. So they saw this sort of connection between October 7th and the November election, and they decided we need to throw Detroit to bone. And so I feel like this was rushed out, and I feel like that's the case in a lot of these. But let's bring this down to the firm level. Not just talk about nations, but let's talk about how firms are navigating weaponized interdependence. Because I think a lot of what we were talking about shows up in how they're actually behaving. So in the FT piece, you discuss cases like Manus or Heygen, right? These are our firms. Manus is an agentic AI firm. It made a lot of a big splash in China. It was like the second kind of shock after Deepseek, I think it was, like in March So of 2025 that that came. And Heygen. I've played around with Heygen. It's kind of mind blowing. You know, you can film yourself for a little bit. It'll sort of sample you, get your voice and your facial expressions, and then it will create sort of you as an AI avatar. So you can just feed a script in. Right now, this isn't actually me talking, but you could do that, right? You could sort of just have a text in there, and then it would produce a video that looks convincingly like you or me, you know, reading that text in our voice with all the correct intonations. It's a pretty impressive piece of technology. Anyway, these are firms that were both founded in China and then relocated. They completely unwound ownership stakes. They restructured to stay viable, you know, as the geopolitical pressures intensified. So what struck me is that these firms, they're not trying to make a political statement. It doesn't seem like they're just trying to live to survive and grow in this world where interdependence itself, or Chinese origin, has just become a liability. It's become, you know, weaponized. I'm curious how you think about these moves, you know, hey, Jen, moving to L. I think they're in la. Is that right?
- [60:31]
A
Yeah, I think so.
- [60:32]
B
Yeah. Yeah. And then, you know, madness is entirely in Singapore now, Right? So are we seeing the emergence of. By the way, madness, of course, is in the news a lot because Metta is. Is. Is buying them, if the Chinese will allow this. I mean, but. But are we seeing the emergence of a stable playbook for companies that are, you know, navigating this environment. I'm hearing more and more about it from lawyers that I talk to. A lot of Chinese firms are looking to de China fy themselves to decentify themselves somehow. Or is this kind of improvisation under conditions of uncertainty?
- [61:11]
A
Yeah, I think it's generally the latter, where everyone's trying to figure out a way to survive and thrive, ideally. And they're willing to be pragmatic and just try to navigate whatever the geopolitics of the day is, Whether it's something coming from Beijing or something coming from Washington or out of Brussels. They're trying to figure out what's best for their company and what's best for their long term survival. And I think Manus is one of those examples where they moved to Singapore, they sort of eventually shed their staff in China and rehired in Singapore and called themselves a Singaporean company. And now Meta is acquiring sort of Aqua hiring or acquiring them for I believe it's, you know, 2 billion plus dollars, which is a huge amount. I mean, that's a big exit. So that sends a signal back to actually even perhaps the Chinese start a community like, oh, wow, that is a pretty nice landing spot.
- [62:15]
B
Yeah, Singapore is not so bad.
- [62:17]
A
That's right. But at the same time, I think we're seeing Beijing maybe not entirely happy about that turning into a pattern. And you can understand why if they think that AI is a critical technology and that a company like Manus is sort of at the forefront of this. So cutting edge. This comes back to this idea of where is Chinese technology sort of at the frontier. But Manus is like an example of an agentic AI company that was so cutting edge that one of the biggest of the big tech companies in the US Meta, was willing to pay money to buy them rather than bill at that capacity in house. So what I think overall we're seeing is maybe not one playbook, but a whole different sort of set of playbooks circulate out there. You know, whether it's like a Chinese startup trying to navigate all of this or whether it's a big US multinational like Apple trying to figure out like what to do whether to ramp up iPhone production in India or oh wait, it turns out there's India's tariffs are actually rising or US tariffs on India are rising, so maybe we'll go back. Or even Chinese firms like solar, solar panel companies relocating some of their production to Southeast Asia. And then, you know, I keep coming on to the EVs, but you see like BYD trying to build out plants in Thailand, in Hungary, in Brazil. I think that these are all different ways to kind of deal with a changing geopolitical and trade environment. And I think that, you know, I think for the companies, they probably wish that they didn't have to make all of these changes. They wish they could probably make longer term investment decisions and then just stick with that. But you see a lot of hedging and a lot of bifurcation of supply chains, fragmentation of markets here. And I think they're all just trying to make sense of this.
- [64:14]
B
Yeah, but this is not the first time that we've seen corporate adaptation. And sometimes the government have tolerated these as kind of pressure release valve. But then sometimes the workarounds start to look like a problem and a sign that your controls are being undermined, that you're letting go of really valuable tech personnel. And there's something hopefully that they're going to allow to persist in the absence of more fulsome recoupling. But let's talk about everyone else, the middle powers, the global South, I mean, the viewers. There's this old Swahili proverb, you know, you're probably familiar with, it says when elephants fight, it's the grass that suffers. And it strikes me that a lot of what we've been talking about, you know, selective decoupling, quiet recoupling, firms learning to, you know, navigate this weaponized interdependence like we've just been talking about it, risks being framed as just a US China story, when in reality the effects are, you know, they're being felt way beyond just Washington and Beijing. I mean, look, just to show that I don't completely lack self awareness, it's not lost on me, and maybe not lost on listeners either, that we're both Chinese Americans, we're both talking about the US China rivalry largely from the vantage point of, well, the two elements in the room. All the more reason, I think, to try to widen the lens a bit here. So how does this evolving tech rivalry look from the perspective of middle powers countries across the Global South? Places that, you know, obviously want to hedge, they don't want to pick sides. You know, I call it now hedging between hegemons. The orthography doesn't work perfectly, but at least it sounds good. Or a podcast, you know, listen to the pod, don't read the transcript. These, these countries do obviously want access to cutting edge tech at a workable cost and it'd be nice if they could have it. But you know, Building on what we've been discussing, what, what happens when third countries start adopting, you know, the same playbooks that we're seeing, you know, firms use today, when governments and companies in Southeast Asia or Latin America or South Asia or the Middle east start, you know, positioning themselves maybe as intermediaries, hopefully they're going to be, you know, like we're talking about hosting production, hosting data, hosting capital, posting these talent flows that are being squeezed out from both sides in this bilateral relationship. I mean, I see that as kind of like an opportunity.
- [66:45]
A
Yeah, yeah. So it can cut both ways for the rest of the world. It can make life harder, especially if they feel like they're being forced to choose a side. But it can also certainly present opportunities. And on the opportunity side, I would point out two, actually three regions that have sort of benefited in some ways from all this, at least so far, and those are the Gulf states, the Southeast Asian countries, and to a certain extent India as well. So the Gulf states, you see a lot of Gulf states working with both China and the US say, buying data centers, boatloads of Nvidia chips to build data centers, which don't tell anyone, but those might be powered by Chinese solar panels. Right. So there's huge actually Chinese clean tech investment in some of the Gulf states.
- [67:38]
B
And they might be used to train Chinese LLMs too, right?
- [67:41]
A
That's right. So coming back to this sort of recoupling or mix and match approach is sort of what I call it. Similar story perhaps with Southeast Asia, where with the tariffs on Chinese exports coming from the US and maybe from the EU as well, Southeast Asia was like in the perfect spot for a lot of companies, Chinese and non Chinese, to start to move some of their production out to places like Thailand, Indonesia and Malaysia and take advantage of almost sort of this geopolitical arbitrage moment. And of course, that may not always last. And they've gotten some heat along the way, terms like transshipment have been thrown around. But then the third region I would point out, is India. And for a while it had seemed like India was in a tough spot where they were supposed to be the next China. But China was not really letting go of sort of the lower end manufacturing. China was sort of doing it all this industrial maximalism kind of idea. But with the shift towards like a China plus one strategy, a lot of companies, and I mentioned Apple earlier as probably exhibit A, they were looking to India to shift some of their production at least. And some of them, you know, we're thinking, okay, you know, we'll we'll keep some production in China for these parts of the world, and we'll keep, we'll move some production to India for say, the US market or elsewhere. So you can see that India could gain in some ways from, from that whole process. On the downside though, you do have potential risk of getting squeezed, of being forced to choose a side. And you know, this might come down to things like over chips or hardware or AI data centers. Will one side, will the US Say to countries even in the Gulf states, you can work with us, but you can't work with say, Huawei or Alibaba or vice versa. And so that's one area where they might start to get squeezed. And I think for European countries in particular, I think there's, they're sort of worried about losing their U.S. market, facing Greater tariffs, but then also facing greater competition from Chinese companies that they used to sell to and now have become their competitors, especially sort of industrial equipment and stuff like that. So it can be a messy picture. Right. There's sort of not a single story here, but I think that's what's so interesting about this. There's both sort of growing risks, but also perhaps growing opportunities. And each country is going to have to navigate their way through this landscape.
- [70:20]
B
Yeah, let's just hope that it turns out to be just sort of a good stabilizing pressure release mechanism that keeps global innovation moving in spite of the elephants doing their thing. But I worry that it's just going to add another layer of fragility. You got maybe even multiplying choke points, multiplying dependencies, and then this real ramped up pressure to make, make them choose. But I don't know. I'm encouraged. Some of the things that I'm seeing from Carney and Keir Starmer, their trips to China recently, there's, there's this effort to hedge, I think, all right, let me pull all this together or try to anyway, and then we can kind of move toward wrapping up. But let's. We take seriously, I take seriously everything we've discussed, the great reversal and technologies flows, persistence of recoupling under political pressure. In spite of all this weaponized interdependence, the kind of firm level workarounds that we've talked about, the way that this all ripples out to the middle powers, it starts to feel like we're no longer really arguing about whether the US and China should be connected, but about how that connection is going to be structured under conditions of deep and probably pretty durable mistrust. Right. So I guess my last question is, are we already, whether we admit it or not, in a phase where the challenge is less about decoupling or engagement as slogans and more about actually engineering resilience, deciding which forms of interdependence we can live with, which ones we can't, how to manage the trade offs without freezing innovation or escalating conflict, Heaven forbid. So if that's the world we're living in, and I think we agree, I mean, I see you nodding your head, that's kind of where we're at. What do you think policymakers are still most likely to underestimate about the systems they're actually building? What is the thing that they're getting wrong? Not what they say they want, but what features of the reality that they in fact face are they not clear on?
- [72:26]
A
Yeah. So I think you're right to point out on the positive side, we could see in some ways greater resilience. I think we've now seen what happens when you have overdependence on a just in time supply chain, on having only one company that can produce some critical component and the whole world is dependent on that one company. So that has been useful in order to build up broader resilience for the whole global system. And then each country is trying to figure out its own way here. But on the flip side, I think what should policymakers reconsider? What should they think about more carefully here? I would urge especially us policymakers to think about where we want to build up that domestic capacity, how we want to build up that kind of resilience, what it's really aimed at, what is really feasible and what's really the best approach here. So in other words, it might be easy to reach for a blanket solution like you know, ban DJI drones, but then you don't have a plan for building up a domestic industry of your own. Right. Or you might decide to tariff some kind of product coming from China or coming from anywhere else, and you might try to bring back manufacturing, but then it turns out those tariffs are actually increasing the costs of the components of the equipment that would go into building up your manufacturing base.
- [73:51]
B
It's funny, we talked about that. Your colleague, Patty Kim.
- [73:54]
A
Oh great, great.
- [73:56]
B
And she very much agrees that re industrialization sounds like a nice idea. But tariffs are not the tool to get you there because they end up making the machine tools and the capitalism you need to import and all the components make them prohibitively expensive and make absolutely no sense to re industrialize. And as she concludes, we've really not made strides toward it right now, despite what the Trump administration has been trying to do, or even the Biden administration. I mean, we, I think there are bright spots in semiconductors. The chips act, as he said. But hey, yeah, man, what a fantastic conversation with you. I mean, I imagine that we're going to be doing a lot more of this now that I finally so just, just so that the listeners understand why I have not had Kyle on before. It was just overwhelming. There was just, I couldn't draw discrete lines around a topic of conversation because I have this massive, complicated Venn diagram constantly staring me in the face. It's like we can't talk about this without also talking about this that the other thing. And then it's going to be six hours. So anyway, glad we could finally find something that we could kind of draw some parameters around. Maybe the conversation sprawled a little bit, but thank you so much. So much. Let's move on to paying it forward. I appreciate the irony here that you are the most paid forward person of all time on Seneca, but I'm curious who you want to name check.
- [75:20]
A
I'd like to name check two folks. The first is Katrina Northrup. Oh, I love Katrina, who is a fantastic China reporter. Outstanding work recently with the Washington Post, and I'm sure the next chapter in her story is going to be even more impressive. But I would say stay tuned for the work that she's doing.
- [75:45]
B
You know what? I could use help here. If a couple of hundred people out there become paying subscribers, I will make Katrina an offer.
- [75:54]
A
There you go. There you have it, folks. And the other person is Grace Xiao. She is based in Hong Kong. I actually just recently, recently had her on my podcast and she is the author of the AI ProEM newsletter. She's really smart. Not just looking at the latest AI models, how they do on the benchmarks, but what are the strategies that Chinese AI companies are pursuing? How are they actually trying to roll out this technology?
- [76:22]
B
Tell us a little bit more about your podcast. I have listened to a couple of apps and it's great. You can get it on Kyle Substack, of course, but plug it. Tell me what it's all about.
- [76:32]
A
Oh yeah. So it's sort of related to my newsletter and the idea is to focus on Chinese tech developments. So we have an episode on robotics, another episode on AI, another episode on EVs, and I have another one coming out on autonomous vehicles. And the idea is to kind of do a deep dive with one expert and, you know, sort of like get A bit nerdy. Dig into the details. And so if you are just curious about understanding, you know, what is actually happening on the ground in China, you know, I would encourage you to listen.
- [77:09]
B
Yeah, I encourage it as well. I think it's. It's fantastic. You've got a really, really good interviewing style and you contribute so much to those conversations as well. Definitely. Check it out. All right, let's move to recommendations. I'm really curious what you got for us here, but those are two fantastic ones. I mean, I think both Grace and Katrina are people whose work I really admire. And of course, Katrina. And there's so many of her colleagues at the Washington Post who the evil Jeff Bezos has now kicked to the curb, who are just doing such fantastic work. I mean, Christian Shepherd. Unbelievable that they let him go because he's great. Jerry Shi, who was in the Middle east, was a longtime China reporter. Fantastic work. I mean, there's so many of them that, that, that it's just. It's a travesty. Travesty.
- [77:56]
A
Well, and especially for China reporting, we need that now more than ever, right? Like, we need more, not less. Yeah, yeah.
- [78:03]
B
It's absolutely insane.
- [78:05]
A
Yeah, definitely.
- [78:05]
B
Okay. All right, all right, Recommendations.
- [78:08]
A
So I have two recommendations. One is Wired magazine. They have a Made in China newsletter run by Ziya Yang and Luis Matsakis. Yeah, they're fantastic. All sorts of different angles on the China tech story there. Social, political, all of it. The second recommendation is this publication called the Wire China. So I know it sounds kind of confusing. It's not Wired magazine. I'm also talking about the Wire China. But they have a fantastic group of reporters. Katrina actually used to be one of theirs. One of their reporters.
- [78:44]
B
Yeah. Used to write for us too, back in Sub China China project days.
- [78:48]
A
Oh, yeah, yeah, yeah. They have really great pieces about, you know, delivery robots in China or the low altitude economy of, you know, flying taxis and things like that. So I highly recommend checking out the Wire China.
- [79:04]
B
Yeah, it's David Barbosa's project. There's. Yeah, I couldn't agree with you more. It's fantastic. Even if it's the competition. They have a new podcast as well.
- [79:17]
A
Oh, yeah. Okay.
- [79:18]
B
Yeah, they just launched a new podcast.
- [79:20]
A
Oh, wow.
- [79:22]
B
All right, so the Wired China is great, but also Wired's China newsletter is also fantastic. And as you probably know, I had a show very recently where I talked to Afro Wong. I hope you've heard that one. That was actually one of my favorite podcasts that I've done in recent times about the Crazy collective science fiction novel Morningstar Lingao and its connection to the industrial party. It was a very worthwhile podcast. Aphra is just absolutely brilliant. But that is a piece of hers in Wired's China issue, which is out right now. And check it out, there's a ton of stuff in there. We've met them at a very Chinese time in their lives and they are not China maxing as well. So all stuff to be encouraged. Okay, so my recommendation very, very sort of on topic for us. The Wall Dancers, a new book by Eileen Liu, who is a terrific writer. She's just, just great. I've had the pleasure of knowing her for a couple of years. I'm going to be interviewing her for about the book during Chinese New Year. So she focuses, she hangs it on individual life stories but tells about the Internet in China, the sort of whole story of the Internet. And it's really, really just masterfully concocted. It's just put together really well with these compelling stories about everyone from a gay policeman who starts this super important website to the gay community. And that's something I had sort of a personal connection to because my little brother, who was really big on the gay scene in Beijing in the 1990s and a lot of the people who are mentioned in that, a lot of the places are very familiar to me because of that. Actually, it's weird how much that story, not surprisingly, because I spent so much of my life in the Internet in China, how much of her book intersects with my own experiences in my own life. And so I look forward to that conversation. I think it's going to be really good, but the book is fabulous. The Wall Dancers by Eileen Liu. All right, Kyle, what a pleasure, man. Let's do this again soon.
- [81:34]
A
Absolutely. Thank you, Kaiser.
- [81:37]
B
You've been listening to the Seneca Podcast. The show is produced, recorded, engineered, edited and mastered by me, Kaiser Guo. Support the show through substack@sinicapodcast.com, where you will find a growing offering of terrific original China related writing and audio. Email me@cinecopodmail.com if you've got ideas on how you can help out with the show or if you just want to say hey, don't forget to leave a review on Apple Podcasts. Enormous gratitude to the University of Wisconsin Madison's center for East Asian Studies for supporting the show again this year. Huge thanks to my guest, Kyle Chan. Thanks for listening and we'll see you next week. Take care. Working across teams is tough, but Asana helps you handle it. Asana AI can spot roadblocks and assign work to keep everything on track. That's how work gets handled. Visit us@asana.com finding a hoodie that lasts through the season can be tough. The American Giant Classic Full Zip Hoodie is made to last a lifetime, so you can count on it year after year. Every American Giant piece is made in America and designed to last, no exceptions. The result is durable clothing that become part of your life. Snag the hoodie that will bring you comfort for life. The American giant classic full zip save 20% off your first order at american-giant.com when you use code staple20 at checkout.