China Decode: China Is Beating the U.S. in Space?!

Summary

Podcast Summary: The Prof G Pod with Scott Galloway

Episode: China Decode: China Is Beating the U.S. in Space?!

Date: May 5, 2026
Guests/Co-hosts: Alice Hen and James King
Note: This summary skips advertisements and sponsorships.

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Overview

This episode of “China Decode” on The Prof G Pod focuses on China’s rapid advancements in the space race, the looming $2 trillion generational wealth transfer in China, and the regulatory complexities surrounding AI automation in traditional industries such as dim sum production. Hosts Alice Hen and James King explore how these developments are reshaping China’s society, economy, and its competition with the U.S. The episode concludes with their predictions on FIFA’s negotiations with China and forthcoming U.S.-China deals.

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Key Topics and Insights

1. China’s Breakneck Advances in the Space Race

[02:39–13:51]

• Major Milestones:

  • Within five years, China has landed a rover on Mars, completed the Tiangong space station, and returned lunar samples—some from the moon's far side.
  • China conducted over 90 orbital launches in 2025, a new national record, trailing only the U.S. (which did about 180, largely driven by SpaceX).
  • Technological innovations include a giant robotic arm (Shijian-21) capable of moving satellites, a wide-field space telescope exceeding Hubble’s view, reusable rockets, and rockets launched from water platforms.
  • Private companies (e.g., Sanyuan) are increasingly involved in supplying military-useful dual-use space tech.

• Strategic Motives:

  • James King: "China’s space strategy is not primarily about space. It’s all about planet Earth and particularly how to dominate the global order on Earth, of course, by enlisting space to gain advantage." [04:22]
  • Chinese military doctrine sees control of Earth via control of space as a key strategic and military goal.

• Military and Security Implications:

  • The U.S. intelligence community sees China’s satellite-manipulating robotic arm as a potential counterspace weapon, posing direct risks to U.S. spy satellites. [06:40]
  • Both the U.S. and China are developing dual-use technologies with blurred boundaries between commercial and military applications.

• Scale of Investment:

  • The U.S. leads with $7.3 billion in annual space tech investments (60% of global total).
  • China’s investments surged from $340 million ten years ago to $3.8 billion in 2025. [08:37]
  • Space now central in China’s “Five Year Plan” as part of its ambitions to become an all-round superpower.

• Ambitious Projects:

  • China operates “Tianyan” (Sky’s Eye), a massive radio telescope listening for extraterrestrial life—the largest in the world.
  • Reports of “suspicious narrowband signals” caused global excitement, though later attributed to interference. [11:54]
  • James: “China has a huge satellite dish… probably has a higher capability of listening for that kind of life.” [12:20]
  • Cultural references: Alice mentions "The Three-Body Problem", highlighting China’s fascination with the cosmos. [13:53]

• Geopolitical Stakes:

  • Satellite technology’s importance has been demonstrated in recent conflicts (Russia/Ukraine, Iran).
  • Alice: "China having capabilities to really append American satellites… can materially affect the outcomes of current battles." [13:51]

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2. China’s Generational Wealth Transfer and Tax Dilemmas

[18:18–28:48]

• The Issue:

  • Chinese individuals are passing down an estimated $2.1 trillion in wealth over the next decade, with little to no inheritance or wealth taxes due to historical policy. [18:18]
  • Fiscal revenues, particularly from land sales, are declining—leaving local governments cash strapped. China’s fiscal revenue as a share of GDP is just 15% (vs. ~34% OECD average). [18:50]

• Policy and Equality Challenges:

  • James: "China is more of an unequal society than any of the capitalist G7 nations. … Why has it taken China so long to come up with an inheritance tax when it could use an inheritance tax to take money from the very rich?" [19:57]
  • The Gini coefficient for China is over 0.45 (a threshold for high inequality), higher than the U.S. and other major economies. [20:37]
  • Communist ethos vs. reality: Party remains in name, but China’s wealth is more concentrated than most western nations. “Egalitarian communism went out at least a couple of decades ago.” [19:57]

• Barriers to Tax Reform:

  • Supply-side control legacy: Historically, China taxed production rather than consumption or accumulation. [22:46]
  • Property taxes and VAT reforms have been discussed but stalled due to falling property values and intergovernmental revenue disputes.

• Future Trajectory:

  • Alice expects pilot programs for inheritance tax in certain cities as a testbed, driven by fiscal urgency and societal pressures. [25:55]
  • The need for redistribution is acknowledged—policy shifts likely to follow as other revenue sources dry up.

• Societal Impact:

  • “Tangping” (lying flat): The concentration of wealth may further erode work motivation, especially for the one-child generation set to inherit assets. [28:48]
  • Generational effects on social mobility, youth unemployment, and attitudes toward work are profound and evolving.

• Notable Quote:

  • James: “China wanted to create a kind of dog eat dog go-getter economy where winner takes… maybe not all, but winner takes a lot.” [26:58]

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3. AI Automation and Regulation—in Dim Sum and Beyond

[32:39–41:38]

• Tradition Meets Automation:

  • New regulations in Guangzhou require teahouses to label whether dim sum is handmade or machine-made as AI robots enter kitchens. [32:39]
  • AI is being tailored for specific culinary and manufacturing tasks to save costs and increase efficiency.

• Legal Precedents:

  • Courts in Beijing and Hangzhou ruled against companies firing workers solely due to AI/automation, citing labor contract law. These rulings signal a global first in AI-related labor rights. [33:23]
  • Alice: "It could be a precursor for further regulation in the AI labor realm, which is really, I think, the first of its kind globally."

• Broader AI and Robotics Trends:

  • James: “A robot is now dexterous enough to make dim sum… We’ve got AI… with cognitive ability which is now superior to human beings in many planes. … I think China’s going to lose this. I don’t think China can put this genie back in the bottle.” [35:38]
  • Robotics in China now poised for an explosion that may outpace the previous EV boom: highly specialized robots for narrow tasks ("speciation of robots" as James describes it [40:15]).

• Societal Concerns:

  • Widespread anxiety over job loss; citizens outside the tech sector express deep unease about job displacement.
  • Alice posits Beijing will intervene, forecasted to impose more forceful regulations on AI-related layoffs to stymie a nascent employment crisis.

• Notable Quotes:

  • Alice: “If… this happens so quickly and the genie’s out of the bottle, this is going to create a huge crisis. And historically, when a crisis happens, I think Beijing tends to intervene or come in very quickly.” [37:49]
  • James: “Once a technology is available to do something much more efficiently and cheaply, then my experience of the world is that that is what generally happens.” [37:39]

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4. Weekly Predictions: China in FIFA’s Hands & U.S.-China Green Tech

[41:38–43:57]

James King Prediction:

[41:45]

• FIFA and China are embroiled in last-minute negotiations over World Cup broadcast/streaming rights.
• James foresees FIFA accepting a lowball Chinese offer due to China’s dominance in global viewership.
  • “I think that FIFA will have to suck up whatever lowball offer the Chinese are offering because they’re desperate and this will probably be very painful for FIFA, but I think China’s got the whip hand on this one.” [41:45]

Alice Hen Prediction:

[42:59]

• The upcoming Trump visit to China will set the stage for a landmark green tech joint venture (possibly BYD-Ford or similar), enabling Chinese electric vehicle manufacturing within the U.S.
• Alice: “There will be a big push from Beijing to get some kind of a landmark deal in the form of a Chinese green tech investment in the U.S.…Even though there are some interests in Washington that would push against this, I think it might be enough incentive on both sides to have some kind of a strategic deal.” [42:59]

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Notable Quotes and Moments

• On China’s Military Ambition in Space:

  • James: “Looking up at the skies today, we see that space is already shrouded in the smoke of potential conflict… the ability to control Earth by controlling space represents a powerful strategic and military incentive.” [05:10]

• On Economic Inequality:

  • James: “China is genuinely one of the most unequal societies in the world, in spite of the fact that it is still ruled by a Communist Party.” [20:37]

• On AI and Robotics:

  • Alice: “I think we’re in for a real shock globally when we see the influx of robots—might be even bigger than the influx of Chinese EVs we’re currently living.” [39:38]
  • James: “You have a robot that’s able to do surgery, hand people drugs at a chemist, shoot hoops… All of these robots are designed for specific tasks, which is gonna mean that they’re much better at doing those tasks.” [40:15]

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Timestamps for Key Segments

• China's space race & military strategy: [02:39–13:51]
• Wealth transfer and inheritance taxes: [18:18–28:48]
• AI, automation, and dim sum regulation: [32:39–41:38]
• Predictions segment: [41:38–43:57]

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Tone and Style

• The conversation is analytical, factual, and slightly irreverent, with both hosts making cultural and literary references (e.g., Pink Floyd, "Three-Body Problem") and sharing personal anecdotes (culinary failures, observations from China visits).
• Both hosts are candid about uncertainty and the speculative nature of forecasting in China.

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Conclusion

This episode provides a comprehensive, sharp-edged discussion of China’s ambitions and challenges—from dominating space and grappling with wealth inequality, to navigating the AI-driven transformation of its workforce. The hosts combine macroeconomic analysis, strategic insight, and cultural fluency to offer a nuanced perspective on China’s trajectory and its implications for the U.S. and the world.

Transcript

[James King]

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[James King]

Meet Klaviyo's AI agents at KL a v I-Y-O.com I think China's space strategy is not primarily about space. It's all about planet Earth and particularly how to dominate the global order on Earth, of course, by enlisting space to gain advantage. And as you've just said, you know, when you look at what China and of course the US is doing in space, there's a military domain and there's a commercial domain, and then there's this sort of fuzzy hybrid domain dual use. I suppose that could be military, could be commercial. And the more you look at all of the space furniture up there, the more you scratch your head and think, well, could that be military? Could that be commercial? You know, there's a lot of interoperability.

[Alice Hen]

Welcome to China Decode. I'm Alice Hen.

[James King]

And I'm James King.

[Alice Hen]

In today's episode of China Decode, we're discussing China. China's huge strides in the space race, the looming $2 trillion generational wealth transfer and regulating dim sum automation. That's all coming up, but first let's do a quick check in with how the markets are starting the week. On Monday, Chinese stock markets were closed in observance of the Labor Day holiday. The Shanghai composite ended the month of April up 5.66%, and the Shenzhen component surged over 12%. Thanks to strong PMI data and notable gains in several tech stocks. China's manufacturing PMI for April was 50.3, slightly above forecast, suggesting expansion in the manufacturing sector. Shares of Xiaomi, the Chinese smartphone and ev maker, closed 6.8% higher in the Hong Kong stock exchange today. Alright, let's get into it. In the last five years they've landed a rover on Mars, completed a space station and collected samples from the far side of the moon. We're talking not about the US but China. And in 2025 alone, the country executed over 90 orbital launches, setting a new national record. And in the tightening space race, China is also pulling ahead with innovations like a giant robotic arm to service satellites in space, a space telescope with a wider view than the Hubble, and reusable rockets to compete with Elon Musk's SpaceX. China is also actively developing rockets that can take off from water based platform. James We've talked about space in the last few episodes and it seems like with elon Musk IPOing SpaceX, we've made space great again. But China is also a key part of this and some of the startling videos that I've seen like, of that orbital arm in space seem very futuristic, but it's what's actually currently happening and certainly as with any kind of technology, has direct contemporary use cases, potentially even military use cases. How are you seeing China's startling advancements in the space race?

[James King]

Well, yeah, Alice, I mean, it may be an obvious point, but I think China's space strategy is not primarily about space. It's all about planet Earth and particularly how to dominate the global order on Earth, of course, by enlisting space to, to gain advantage. And as you've just said, when you look at what China, and of course the US is doing in space, there's a military domain and there's a commercial domain and then there's this sort of fuzzy hybrid domain, dual use. I suppose that could be military, could be commercial. And the more you look at all of the space furniture up there, the more you scratch your head and think, well, could that be military? Could that be commercial? You know, there's a lot of interoperability. But when I was doing a bit of research on this, I must say I came across one quote from a China military expert that really stopped me in my tracks. This was in a story by the Financial Times and it's written by, as I said, a military expert in a textbook for Chinese military officers. So this isn't sort of for public consumption. This is something directed at the Chinese military, which I think shows that it's pretty authentic. And basically this expert says that China intends to control the Earth by controlling space. Let me just give you the whole quote because I think it is really quite startling. He says, looking up at the skies today, we see that space is already shrouded in the smoke of potential conflict. And then he continues by saying the potential for high returns, the ability to control Earth by controlling space represents a powerful strategic and military incentive. Therefore, the development of space warfare capabilities has become a focal point of the arms race. So I think that puts it pretty clearly. China sees space quite nakedly as a power game. And you've already mentioned the satellite with a grappling arm that sort of sidles up to other satellites. And the US intelligence caught, I suppose, a space based video of this. They saw this Chinese satellite with a grappling arm sidling up to another defunct Chinese satellite and literally picking it up and hurling it into what's called a graveyard orbit. That all happened more than 36,000 kilometers above the Earth. The Chinese satellite with the arm is called the Shijian 21. And it didn't take long for the US military establishment to wonder, well, if it can do that with a defunct Chinese satellite, then maybe it can do it the same thing to one of our satellites. And the US has more than 8,000 satellites in space, including 80 spy satellites or around 80 spy satellites, some of which are trained on China's territory and are literally monitoring every square meter of China's territory. And you can imagine that China might not want one of those spy satellites to be doing that. So in 2023, the Office of the Director of National Intelligence in the US warned that this episode, the ones I've just described, proves China's ability to operate space based counter space weapons. So in other words, weapons that can degrade U.S. capabilities in space. And I think, you know, what we're kind of evolving into here is not only a huge commercial market, as defined by the number of satellites that are going up into space and all the different uses they have and their crucial nature to the economy here on Earth, but also an equally vigorous military driven space race. How are you seeing it, Alice?

[Alice Hen]

Well, I completely agree with what you're saying, James. And what's interesting to me is the growth in spending that we've seen. Just to give people a sense the US is still leading in the space tech investment era, and this is accounting for both public and private investment. They did around $7.3 billion of space tech investment last year. That's 60% of global funding, by far the largest source of funding for space technology. But China is catching up and right now I believe it's somewhere around $3.8 billion that it invested in the commercial space sector in 2025. Just for reference, 10 years ago that was only about $340 million. So we've seen a sort of 10x rise, so to speak, in the last decade. And certainly I could see further growth moving forward because it is very clear in also the five Year Plan as well as the March Liang Hui. Remember, for you recall, two months ago in the documents there was a reference to China being a space superpower, know, a manufacturing superpower, technological superpower, but also a space superpower. So there's a lot of attention being paid by the Chinese government towards what you rightly call Julius use technologies, James, that are being deployed in this ecosystem. What was interesting to me also about that on orbit robotic arm is that I believe it's a private company that is supplying this technology. I think it's Sanyuan that is providing commercial space technology to the Chinese government. So there is really a private public ecosystem establishing around space tech that isn't too dissimilar from what we're seeing in the States. And this is all happening in a time where increasingly Western investors and observers are really fixated on space as the next technological frontier. Everyone is going to be watching with bated breath for the biggest IPO in history this year, which is SpaceX. So I think this may become another political issue potentially between the US and China as people get more and more interested in space technology. One other thing that I will say is that space was a big part of China's strategy going back to 2013 with the launch of the Belt and Road strategies referenced as part of China's broader Belt and Road strategy. So this has been a long time in the making and it will be interesting to see how it shapes up in the U.S. china, not just talks coming up very soon, but longer term strategic competition.

[James King]

Yeah, absolutely. And I mean, you know, it's hard to know who will eventually win the space race. It's clear that when it comes to commercial presence in space, the US is far ahead. It's got a much bigger share of the space economy, which according to the Space foundation is worth about US$613 billion. So it's a huge market already. The US has currently about 55% share of that and China's much, much less at about 8%. But China's really, really moving now. You mentioned more than 90 orbital launches. Of course, these orbital launches are sending something into space, like a satellite or a spaceship. The US is currently doing about 180 launches per year, mostly driven by SpaceX. But China's doing a lot of other things too. They've had a few other milestones. They had a mission to the far side of the moon. That's the dark side of the moon for Pink Floyd fans. It's also completed its own low orbit space station called Tiangong. There's a lot of activity going on in Tiangong. There are modules going up there meeting, you know, demand for further. For further advances. My favorite space fact when it comes to China is that China is actually officially trying to find signs of aliens. China has a huge satellite dish. It's 500 meters across. They call it Tian Yan or Sky's Eye or Heaven's Eye. And it's there in southwestern China, listening for signs of extraterrestrial life. I mean, because it's, I think, the biggest dish in the world, it probably has a higher capability of listening for that kind of life. And recently, well, in June 2022, there was a report in the Chinese Science and Technology Daily that said that researchers had found multiple suspicious narrowband signals. So there was a great flurry of excitement. Maybe the Chinese, Tian Yen, had found some sort of sign of extraterrestrial life. But in fact, later on, scientists in the US said that this was almost certainly radio interference. But I just sort of think that it just shows the level of China's ambition. You know, this is not something crazy. They really are listening for extraterrestrial life. I think that just shows they're leaving no stone unturned.

[Alice Hen]

That reminds me of the book series. Did you ever read it? The Three Body Problem San Ti by Liu Cixin. It's about these Chinese astrophysicists who are also looking for extraterritorial activity, and they come in the form of trisolarians. I highly recommend the book. And one last point. It can't be overstated how important satellite technology is. And we've definitely seen that being used in Russia, Ukraine. We've seen it being used more recently in Iran. And it's been critical for the supply of intelligence and tracking used to guide precision missiles and ICBMs. So just to apply it to the current day, you know, China having capabilities to really append American satellites out in space can materially affect the outcomes of current battles that we're seeing in Russia, Ukraine, in Iran, and potentially even closer to home. So I thought that was definitely worth flagging. Okay, we'll be back with more after a quick break. Stay with us.

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[Alice Hen]

Welcome back. For the first time in its modern history, China is grappling with what to do about a massive generational wealth transfer and the fact that almost none of it will be taxed. Chinese citizens with fortunes above $5 million are expected to pass down roughly $2.1 trillion over the next decade. But the country only really allowing entrepreneurship and a doorway to wealth since the 1970s has no inheritance tax at all and limited property tax and tax on accumulated wealth. This is coming at a time when the government could use the additional tax revenues. James, you know, I'm an economist focusing on China. It's been quite interesting to see the decline in fiscal revenues. I know this sounds very wonkish, but it's really important to understand where the government is today is the huge decline in fiscal revenues largely driven by land sales declining and property values declining. So last year alone we saw a 15% decline in land sales revenue going to predominantly the local governments. And we've seen just fiscal revenues as a share of GDP continue to decrease. China's fiscal revenues as share of GDP are one of the lowest in the world. It's only about 15%. Just for reference, the OECD average is around 34%. So just to give people a sense of how cash strapped the local governments are. This, I think, really indicates the shape of things. And this is why the New Five Year Plan's discussion about tax reform, in particular the capital gains tax and the inheritance tax, is super interesting. Why do you think it hasn't happened yet and what it could mean moving forward for society and the economy?

[James King]

Well, Alice, you highlighted this topic and I must say, since you have done so, and I've been looking into it a bit, I really do think that it's indicative of so much in China. And I think at the middle of it is a bit of a mystery, at least an ostensible mystery to me, because when you look at China, you find what is one of the world's most unequal societies. And yet this is a country still controlled by the Communist Party of China. Of course we know that it is only communist in name. Egalitarian communism went out at least a couple of decades ago. But if you look at the numbers, China is more of an unequal society than any of the capitalist G7 nations. Canada, France, Germany, Italy, Japan, UK, US. It's more unequal than any of those countries. I'll come to the statistics I'm using, but my main point is here. Why has it taken China so long to come up with an inheritance tax when it could use an inheritance tax to take money from the very rich? When the patriarchs and the matriarchs of the rich families die, they could use an inheritance tax to redistribute some of that enormous wealth to other people who need it much more. And yet, as you said, Alice, China hasn't done this. And so I really do wonder about this. So at the center of this topic, to me anyway, is a big question mark. I don't know what your reflections would be, but before I throw it back to you, let me just give you some numbers. The way in which wealth inequality is measured in a society is this Gini coefficient. And there are various different data sets that come up with this. And the Chinese government also used to publish the Gini coefficient from China. And in 2021, the Gini coefficient showed that China was over what is 0.45. That is put simply a threshold that shows high inequality for a society. Right? The U.S. for comparison, was about 0.4, so that's lower than China. And places like Canada and Germany and Sweden were hovering around 0.35. So you can see that according to the numbers, China is genuinely one of the most unequal societies in the world, in spite of the fact that it is still ruled by a Communist Party, at least one that claims to be communist in name anyway. But let me, could I throw it back to you, Alice? Why has China taken so long to move on this or to consider moving on this very important topic of inheritance?

[Alice Hen]

Well, I look at the history of taxes and, and what is interesting, I think it is a legacy of the Soviet system is that China is very good at recording and taxing and to some degree controlling the supply side or the production side rather than the consumption side. So historically, you know, if you look back to the 80s onwards, a lot of the policies is about, you know, subsidizing or spurring or even to some extent price controlling the supply side. And really only in recent years have we seen reforms to really understand the consumption side of things. So we had reforms very recently on value added tax which is effectively shaping consumption related outcomes. And there was talk in the last few years, ongoing talk about property tax, but that is pretty much gone and it wasn't in this year's five year plan, even though it was mentioned many times in the previous one because the government understands that that is going to provide very little in terms of revenues given that we're 15, 20, even potentially more percent down relative to pre crackdown trend in terms of property valuations. So the discussion now I think has been revived after so many years because right now I think the central government is really scratching its head to figure out where else it can generate revenues, especially now that it can't really rely on land sales, it can't really rely as much on corporate tax and income tax in a period in which growth is slowing and it remains reluctant, although this has been touted as one policy choice to do reforms to the export tax rebates, effectively getting rid of some of the subsidies on the taxes for Chinese exporters because they ultimately don't want to harm and hinder China's export machine. Basically they want to protect the Chinese manufacturers. So what else can they do? I think this is pretty low hanging fruit for them to really target what is going to be one of the biggest wealth transfers in contemporary history and certainly in Chinese history. And then the question is, how are they going to do this? I think that ultimately they're going to have to pilot this in certain cities to see how it works. And then they're going to have to figure out the division of fiscal revenues between the central and the local governments. And here I think maybe the local governments might again be screwed because the central government feels that it probably needs to replenish its coffers. We have an overall fiscal deficit that is nearing 10% potentially this year, which is a historical high. So I think this is all coming to a head because predominantly there are little other choices in terms of tax sources, tax revenues for the central and local governments. And I predict that in the next few years we'll probably start to see some of the piloting of these inheritance taxes. But it's interesting because I remember reading a couple of years ago Thomas Piketty writing about how China needed to have these inheritance taxes because ultimately what he called patrimonial capitalism was going to be very bad for China. And certainly I recall James doing my own historical research on the Gini coefficient in the last two to three decades. It has actually expanded since really reform and opening. And it's been a flip side to the story of high level growth is that a lot of inequality has sort of settled in the top echelons of Chinese society. But it's interesting because the government also does care about equality, I do believe, hence the terminology common prosperity that Xi Jinping coined. There was also a discussion a couple years back about an olive shaped economic distribution as opposed to an upside down triangle, meaning that you would try to create a bigger middle class like in America and elsewhere in the developed world. But it's hard to see that happening. And maybe having this wealth tax could be a step in that direction. Although I'm somewhat skeptical.

[James King]

Yeah, well, I mean they've certainly got plenty of billionaires that they could tax when obviously those people die. Those numbers are. China has about 539 billionaires according to Forbes magazine. This year their total net worth is estimated at about US$2.2 trillion. That by the way, is equivalent to the size of the entire Australian economy. And this is obviously it's quite a lot less than the US. The US has 989 billionaires according to Forbes magazine. But China is the country with the second highest number of billionaires. So there's a lot of fat that the Chinese government could tax if they decided to go down this road. And I think you are of the opinion that they will. My sense of this, when I was thinking about why China hasn't done this much earlier, is that I think China wanted to create a kind of dog eat dog go getter economy where winner takes, maybe not at all, but winner takes a lot. And those that are left behind, they're left behind and they're hungry because they've been left behind. That's my kind of back of the envelope explanation. But I do find this a rather Curious topic, actually, similar to why China hasn't had a property tax. I've never really been able to understand that. And I do wonder whether there is some political reason for this that none of us know about, whether there's some power struggle at the top of the Communist Party with some people pro, some people anti, and nobody finally making decision. But as I say, that is just speculation. I have no evidence on this.

[Alice Hen]

Yeah, I heard back in the day there were rumors that some interests that are connected with developers didn't want to have property taxes and there was a debate or tension between the localities and the central government as to who gets what part of the property tax revenues. So I think it all becomes political at the end of the day. One last thing that I'll end on that I think ties into modern day Chinese society is an argument that I hear a couple times from my friends in China, which is that Tangping has become an issue again, this idea of lying flat in China or taking it easy. And I'm hearing that this kind of wealth transfer for the next generation who are largely only children because the one child policy means that they don't have to worry too much about working or striving and working really, really hard like their parents do and that they'll all be okay because they have all these assets and the wealth transfer from their parents all concentrated in this one child. And so it all connects to society and to contemporary events with Gen Z at the end of the day. So we should definitely watch the space and how it affects, you know, Gen Z unemployment, the tongping movement. Okay, let's take one last quick break. Stay with us.

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[Alice Hen]

Welcome back. We end today with dim sum, namely the increasing automation used in dim sum production across China. The making of the delicate dumplings and other bite sized dishes has long been considered an art form, especially in southern China where the practice originated. Starting May 1st in Guangzhou, tea houses will have to disclose whether their dim sum is handmade or produced via non traditional means, otherwise known as manufactured. There are also reports that restaurants in eastern China are actually using AI robots to cook dishes and save costs. It might all seem trivial, but in some ways these changes to the food industry are indicative of a broader trend in China, the increase in regulation around AI and robots as these industries rapidly develop. James I did research on this and what was interesting to me is these two cases that just happened in the course of the last two years, one in Beijing and then in one Hangzhou where they separately ruled that the companies couldn't fire the workers simply on the grounds of AI. They cited China's labor contract law from over a decade ago and basically said that the company's decisions to fire their employees in question did not constitute, quote, unquote, major changes in objective circumstances, which is a clause that is normally reserved for natural disasters or shutdown, unexpected shutdowns. This, I think, is interesting, and it could be a precursor for further regulation in the AI labor realm, which is really, I think, the first of its kind globally. But it hits the nail on the head when it comes to some of these concerns people have of job displacement of AI automation and of increasing unemployment concerns. What's your take on this? And do you think we're moving into a realm where China could be a leader globally in AI labor laws?

[James King]

Well, just going back to dim sum briefly before we get back onto that one. You know, Alice, I went to a couple of cooking schools in China to learn how to make dim sum. And I must admit that nothing I made came out looking remotely like what you would get in a restaurant. One of my teachers memorably said that I was no good at making dim sum, but I was good at making didn't sum up. So I. But I know that you, as a former contestant on the TV show MasterChef, you probably make a very mean dim sum. Am I right?

[Alice Hen]

I do. I do. I do practice the art of folding. Yes. I enjoy that. I have to say that I had heard that maybe you. Maybe you had heard this. That at Din Tai Fung, they apparently precise, you have to have 18 pleats. And they all. Obviously, when you go to a Din Tai Fung chain anywhere in the world, they have people doing the folds of the dim sum. But I think that they have mandated globally that you need to have 18 folds and 21 grams per dim sum. That's just a side note.

[James King]

Wow. It's amazing, you know that off the top of your head. Yeah. But anyway, back to AI and AI taking people's jobs. I mean, obviously it's broader than AI. I think it's amazing that a robot is now dexterous enough to make dim sum. That's basically my point. I mean, it is hard to make dim sum. It really is hard from a sort of. For a human being like me, maybe a clumsy one like me, you know, So a robot can now do this. We've got AI, which obviously has a cognitive ability which is now superior to human beings in many different planes. We've got robots that are now dexterous enough to make dim sum. We've got robots that are now beating the world record holder in half marathons by nearly 10 minutes, and then we've got factory automation all over the park in China. I'm not surprised the Chinese government is getting really concerned about people's jobs. The big job shock that's coming. On my recent trip to China, everybody I spoke to who wasn't in the AI robotics industry seemed to be genuinely worried about this. So I'm really not surprised the Chinese government is getting concerned. And, you know, my sense of it is, to be quite frank, I think China's going to lose this. I don't think China can put this genie back in the bottle. You know, China is coming up with all kinds of rules and regulations, and it's even proposed setting up a global body to regulate AI, known as the World Artificial Intelligence Cooperation Organization. And the aim of a lot of these Chinese rules and regulation is to prevent the job shock from AI and automation and robotics onto society. But frankly, I can't see how they're going to do it, because once a technology is available to do something much more efficiently and cheaply, then my experience of the world is that that is what generally happens.

[Alice Hen]

I think what will be interesting is whether or not the central government is going to step in and issue regulations. I mean, several years ago it did offer pretty sweeping regulations on deepfake technologies, AI algorithms, data transfers. And maybe I take the opposite side of the bet. And I think that there will be a momentum for the central government to sort of come in and start to mandate the threshold by which certain people should lose their jobs due to AI. Because if, to your point, James, this happens so quickly and the genie's out of the bottle, this is going to create a huge crisis. And historically, when a crisis happens, I think Beijing tends to intervene or come in very quickly. I mean, we saw that obviously during COVID But even on the flip side, when things get too hot in an industry, we see them move, I would say, quite quickly and retroactively, as opposed to proactively to crack down on a sector. I think about, for instance, the 2021 tech crackdown and Ed Tech crackdown on platforms. So I wouldn't be surprised if we start to hear a lot of stories about unemployment, about job losses, that the central government is going to start to issue regulations that really try to protect workers, because at the end of the day, unemployment, to your point on previous episodes, James, is a huge, not just economic but political, social concern for the government. And when I was in China, I heard from a pretty good friend of mine who's very plugged into these things, and he said, look, you thought EVs were big. Robotics are going to be even bigger from China. EVs at their height were about 1,000. Now it's windowed down to under 100 EV. Different makers, robotics, we're looking at the 100,000 or even more. And rather than having these general purpose robots, these are robots that are going to be finely tuned for specific tasks. Like to your point, a specific robot for folding dim sum, a specific robot for running races, a specific robot for painting cars, for instance. So I think we're in for a real shock globally when we see the influx of robots that might be even bigger than the influx of Chinese EVs that we're currently living. But how did you find it on your trip recently?

[James King]

No, I mean, I was absolutely amazed. At that very point. I went to an exhibition center in Southern Beijing where they had robots that had been designed for all kinds of specific tasks. You know, I sort of, in my mind I thought of it as speciation of robots. So you don't have a general purpose robot that can do everything. You have a robot that's able to do surgery. You have a robot that's able to hand people at the chemist the drugs that they need. You have a robot that's able to score goals in soccer. You know, you have a robot that's able to shoot hoops. You have, you know, all of these robots are designed for specific tasks, which is gonna mean that they're much better at doing those tasks. And the humans have less and less chance to compete with them. And of course, robots don't eat, they don't sleep, they have natural advantages that humans simply will never be able to match. And so this is why I left China. Really very concerned. I mean, obviously I was thinking about China in this context. Cause China's so far ahead of the rest of the world, it's moving into this brave new automated world quicker than any other country. But I'm also concerned about our countries in the West. This is coming to us next and it's not gonna be long. And I feel that here in the UK for instance, we're completely unprepared.

[Alice Hen]

Yeah, I completely agree. All right, James, you know what time it is? It is prediction time. As you peer into the future this week, what do you see?

[James King]

Well, Alice, my prediction is a kind of breaking news prediction today in, because the news is just coming out that even though the World cup, that is the world football or soccer cup, is only weeks away, FIFA, the governing body of football worldwide, has failed so far to sign a commercial deal With China, this is a massive story because in the last World cup in 2022, China accounted for 49.8% of the total TV hours. Well, not only TV, but other platforms as well. Total visual hours worldwide from that particular World Cup. So if China doesn't sign, it is a huge blow to FIFA and we are right now at the 11th hour. So I'm going to stick my neck out and give a bit of prediction here. I think that FIFA will have to suck up whatever lowball offer the Chinese are offering because they're desperate and this will probably be very painful for FIFA, but I think China's got the whip hand on this one. What are you seeing, Alice?

[Alice Hen]

My prediction is more in the realm of the upcoming Trump visit to China. It's clear that a couple of items will be on the agenda. Trade, technology, even Iran, and potentially, I think North Korea might even come up on the agenda. But I think more importantly, my prediction for the second half of the year, after a series of meetings between Trump and Xi, that I believe will happen not just the Trump visit to Beijing. Xi, I think will go to the US towards the end of the year, I think there will be a big push from Beijing to get some kind of a landmark deal in the form of a Chinese green tech investment in the US And I'm thinking in particular some kind of JV structure. Maybe it's a BYD Ford whereby there's a major announcement of a Chinese green tech factory being set up in America, manufacturing effectively EVs on American soil. And even although there are some interests in Washington that would push against this, I think that it might be enough incentive on both sides to have some kind of a strategic deal to point towards. And certainly it was referenced many times in my China trip and it seems that a lot of Chinese factory makers are chomping at the bit to get presence in America. They do want to create factories and bypass these tariffs and restrictions that they're currently facing as exporters from China. So that's my prediction. We'll have to see if it bears out as well because it's very much subject to the US China relationship as it develops. All right, that's all for this episode. Thank you for listening to China Decode. This is a production of Prof. G Media. Make sure to follow us wherever you get your podcasts so you don't miss an episode. Talk to you again next week.

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