The Prof G Pod: China Decode — Why Apple Can't Quit China (ft. Patrick McGee)

Podcast: The Prof G Pod with Scott Galloway
Episode: China Decode — Why Apple Can't Quit China
Co-Hosts: Alice Han & James Kynge
Guest: Patrick McGee (author, Apple in China: The Capture of the World’s Greatest Company)
Date: December 9, 2025

Episode Overview

This episode dives deep into China's relentless push for tech independence, the economic and geopolitical dimensions of the undervalued renminbi (RMB), and the seemingly inescapable grip China holds over Apple and global tech supply chains. Journalists Alice Han and James Kynge open with China's semiconductor ambitions before hosting Patrick McGee, who unpacks the complex, fraught, and deeply entwined relationship between Apple and China.

Key Topics & Insights

1. China’s Chip Race & Nvidia Rivalry

Segment Start: [02:20]

• Main Point: China is aggressively cultivating domestic champions in semiconductors, aiming to create its own Nvidia.
• Moore Threads: Startup founded by a former Nvidia China exec, saw a 425% stock surge on its first trading day ([03:30]).
• Government Support: China’s $100B “Big Fund” (National Integrated Circuit Industry Investment Fund) is fueling the sector ([06:41]).
• Industrial Policy as Statecraft: China is not just seeking profits, but aiming to de-industrialize competitor nations by flooding global markets—“industrial statecraft, if not war” ([01:37], McGee, quoting Noah Smith later at [39:15]).
• Skepticism about Sustainability: Investors’ excitement is real, but the sector’s profitability and true innovation remain to be seen ([08:01]).

Notable Quote:
“There’s just a ton of enthusiasm on the mainland for Chinese chip makers. They’re really trying to be the Nvidia of China.”
— Alice Han [03:20]

2. The Renminbi: Permanently Undervalued?

Segment Start: [13:32]

• Issue: Despite a huge trade surplus and mounting international pressure, China maintains a deeply undervalued RMB (by 30–50% on some metrics).

• Why It Matters:

  • Keeps Chinese exports cheap, sustaining trade surpluses ([17:44], King).
  • Limits the spending power of Chinese households.
  • Hinders “rebalancing” toward domestic consumption.

• Expert Voices:

  • CICC strategist Mao Yanliang and PAG’s Weijian Shan advocate for RMB appreciation ([17:44]).
  • However, skepticism remains about political will to change course ([22:31], Han).

• Big Mac Index Example:

  • “A Big Mac in the US is $6. In China, it’s $3.60. Even according to the Big Mac Index, the renminbi is severely undervalued.” — James Kynge [22:01]

• Historical Echoes:

  • Speculation about a new “Plaza Accord” (as happened with the yen in the ’80s), or a trade deal-driven appreciation ([22:31–24:26], Han).

Notable Quote:
“There really is no more important price in the whole economy than the price of its currency relative to other currencies.”
— James Kynge [22:01]

3. Apple’s “Capture” by China — Conversation with Patrick McGee

Segment Start: [26:12]

a) Apple Can’t Quit China

• Unmatched Scale & Efficiency:
  • China is the only place with the capacity, skilled labor, and infrastructure (“next door manufacturing”) to meet Apple’s quality, volume, and cost demands ([27:23], McGee).
• The Myth of Easy Relocation:
  • Diversifying to India or the US is “fanciful.” The “copy and paste” approach won’t work; Apple’s supply chain “marriage” with China is unique ([28:28]).
  • Apple's investments built not just products, but local expertise and whole industries.

Memorable Explanation:
“There’s just no other place on the planet where Apple can build products at the quality, quantity, and cost it needs... The efficiencies in China just aren’t seen anywhere else on the planet.”
— Patrick McGee [27:23]

b) The Architect of Its Own Competitors

• Building the Ecosystem:
  • Apple didn't just find local suppliers; it created their competencies—with intensive on-the-ground training and machinery installation ([32:26]).
  • The “50% rule” encouraged suppliers to diversify their customer base, unintentionally transferring expertise to future local rivals like Huawei, Oppo, Vivo, and Xiaomi.

Quote:
“Apple built up its own competitors who relied on the very competencies Apple had brought to the country.”
— Patrick McGee [34:14]

c) Can Apple (or Anyone) Decouple?

• Indian “Shenzhen” a Mirage?:
  • Indian manufacturing struggles to match China’s scale and integrated supply chains (“India speed” is a pejorative in context) ([36:43]).
  • United Nations projections suggest China’s share of global value-added manufacturing will rise from 33% now to 45% by 2030 ([38:07]).
• Geopolitical Leverage:
  • China’s dominance in “intermediate products” gives it OPEC-like power for the world’s manufacturing supply chains ([38:31]).
  • Export controls and “industrial statecraft,” such as rare earth minerals threats, serve as effective geopolitical tools ([31:00], [39:15]).

Quote:
“What sort of geopolitical power does that give China?... If China’s making 45% of the world’s manufacturing value added... can they basically hold everybody to ransom?”
— James Kynge [38:31]

d) Broader Implications

• “Made in China 2025” Triumph:
  • Apple is depicted as the largest inadvertent supporter of China’s industrial plans—“a stunning claim, but I think one that's pretty well backed up in the 400-page narrative.” ([30:42], McGee)
• De-industrializing the West:
  • China uses scale and below-cost exports to “de-industrialize” other nations—profit isn’t the goal, “industrial statecraft, if not war” ([39:15], citing Noah Smith).

4. Predictions for 2026: RMB and EU-China Trade

Segment Start: [40:21]

• James Kynge: “I think next year, 2026, the renminbi will appreciate by 10% against the US dollar... enormous impacts all over the world.” ([40:25])
• Alice Han: Predicts more “olive branches” from China (e.g., buying more Airbus planes, dropping trade investigations) but also a rise in European non-tariff barriers and efforts to “de-risk” from China ([41:17]).
  • 2026 may become “the year of non-tariff barriers in Europe aimed at keeping ... Chinese exports out to some degree.”
    — James Kynge [43:06]

Notable Quotes & Timestamps (MM:SS)

• [03:20] Alice Han: “There’s just a ton of enthusiasm on the mainland for Chinese chip makers.”
• [17:44] James Kynge: “The Chinese trade surplus for goods ... for the full year, it might be about $1.2 trillion ... among the highest trade surpluses in history.”
• [22:01] James Kynge: “There really is no more important price in the whole economy than the price of its currency relative to other currencies.”
• [27:23] Patrick McGee: “There’s just no other place on the planet where Apple can build products at the quality, quantity, and cost it needs...”
• [32:26] Patrick McGee: “Apple ... doesn’t outsource in the traditional way ... in China, they don’t find the competence, they build the competence.”
• [34:14] Patrick McGee: “Apple built up its own competitors who relied on the very competencies Apple had brought to the country.”
• [39:15] Patrick McGee: “Overcapacity is seen as a problem from a Western lens, but through China’s lens ... they’re de-industrializing other nations ... industrial statecraft, if not war. Profit is not the goal.”
• [40:25] James Kynge: “I think next year, 2026, the renminbi will appreciate by 10% against the US dollar ... enormous impacts.”
• [43:06] James Kynge: “2026 may well be the year of non-tariff barriers in Europe aimed at keeping these super hyper competitive Chinese exports out ...”

Episode Tone & Takeaways

• Tone: Engaged, analytical, occasionally wry; mixes economic analysis with geopolitical realism.
• Takeaway:
  • China’s state-directed industrial ascent is transforming global tech and trade.
  • Apple’s entanglement with China is not a temporary or easily unwound predicament—it is structural, with massive implications for innovation, national security, and geopolitical leverage.
  • Policy responses (tariffs, non-tariff barriers, currency negotiations) are all fraught with complexity, likely to intensify in coming years.

For those who haven’t listened:
This episode is essential listening for anyone interested in how China’s tech ambitions and manufacturing prowess are reshaping the global order—not just for Apple, but for big tech, Western economies, and the future of innovation itself. The conversation with Patrick McGee vividly illustrates the paradox of “decoupling” and the hard limits on Western tech independence.