Why the N.B.A. is Betting Big on China

Summary

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The Prof G Pod with Scott Galloway

China Decode: "Why the N.B.A. is Betting Big on China"

Date: October 14, 2025
Hosts: Alice Han and James King (Vox Media Podcast Network)

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Episode Overview

This China Decode episode dives into three major stories shaping China's role on the global stage:

• The escalating U.S.–China tensions over rare earth mineral export restrictions and the implications for global trade and geopolitics.
• The NBA’s high-profile return to China, exploring what this means for sport, business, and U.S.–China cultural exchange.
• A world-first medical breakthrough: Chinese surgeons performing a pig-to-human liver transplant, signaling China's rapid advances in biotechnology.

The discussion blends deep economic and political analysis with insights into tech, culture, and the emerging biotech sector.

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Key Topics & Insights

1. Rare Earth Export Restrictions Heighten U.S.–China Trade Tensions

(01:31–16:28)

• Rare Earths as “Choke Point” in Superpower Rivalry

  • China processes ~90% of global rare earths; new controls are a major escalation in the trade and tech war with the U.S.
  • U.S. threatened severe economic retaliation following China’s announcement of stricter export controls.

• Policy Details & Market Impact

  • As of December 1, all rare earths exported from China are subject to license approvals—a move modeled closely after U.S. export control frameworks.
  • Even minuscule amounts of Chinese rare earth content in tech products trigger these controls.
  • The export controls shocked Washington and global markets, but both sides quickly tried to de-escalate.

• Political & Strategic Implications

  • Trump administration’s initial aggressive stance, followed by volatile messaging.
  • China’s short- and long-term leverage: disrupting the U.S. military–industrial supply chain, responding to U.S. port fee increases, and potentially pushing for U.S. concessions on Taiwan and semiconductor policy.

• Supply Chain & Global Industry Risks

  • China’s wider dominance: 80% of solar panels, 70% of wind equipment, half of cellular modules, and a major share of semiconductor production.
  • By 2030, China may produce 45% of global manufactured goods, giving it enormous leverage in future trade disputes.

Notable Quotes

• “If you are looking for one choke point...it would probably have to be at this stage anyway, rare earths. It really is that important.”
  — James King, 02:28

• “China is trying to mimic again what the U.S. is doing in this kind of long dance of a divorce... Ultimately, they’ve realized decoupling is a settlement that they cannot afford.”
  — Alice Han, 13:13

• "China has shown itself now to be willing to weaponize its supply chain."
  — James King, 14:10

Segment Timestamps

• 01:31 — Setting the scene: U.S.–China rivalry, rare earths as the critical battleground.
• 03:47 — Why China imposed the restrictions; policy details and reasons for timing.
• 09:01 — Possible outcomes for the trade dispute and diplomatic tactics.
• 14:10 — Long-term implications of China’s growing supply chain dominance.

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2. The NBA Returns to China: Business, Culture, and Politics

(16:28–23:06)

• Significance of the NBA’s Return

  • First NBA games in China since the politically charged 2019 fallout (over Houston Rockets' “Stand with Hong Kong” tweet).
  • Brooklyn Nets and Phoenix Suns played pre-season games; greeted with huge excitement, signifying China’s deep-rooted basketball passion.

• Business Impact

  • NBA lost ~$300 million during the six-year rift.
  • Enormous Chinese audience: Over 490 million viewers for NBA games in China (2018–2019).

• Cultural Commentary

  • Basketball has overtaken soccer as China’s top sport by media rights value ($316M).
  • Renewed government emphasis on "sport tourism" and consumption in the service sector.

Notable Quotes

• “I remember once I was in the foothills of the Himalayas at a Tibetan Lamaist monastery and I saw monks in their saffron robes...and then there was a basketball hoop.”
  — James King, 18:46

• "Basketball has overtaken football or soccer as the top sport by media rights value... That's pretty significant."
  — Alice Han, 21:34

Segment Timestamps

• 16:28 — The NBA’s “long overdue reunion” with China: economic and cultural significance.
• 21:34 — Government’s strategy to stimulate consumption and the rise of basketball over other sports.

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3. China’s Biotech Breakthrough: Pig-to-Human Liver Transplant

(23:46–32:28)

• Medical First: Xenotransplantation Milestone

  • Chinese surgeons transplant a genetically modified pig liver into a human; patient survived 171 days (a global record).
  • Points to China’s rapid progress and willingness to test biotech frontiers, sometimes pushing ethical boundaries.

• Gene Editing & Chinese Scientific Prowess

  • Success attributed to editing pig livers to replace certain genes with human equivalents, for lower rejection risk.
  • Context: Includes reference to China’s notorious “designer baby” gene-editing case (2019).

• Economic & Regulatory Analysis

  • Biotech is the best-performing sector on Chinese markets in 2025.
  • China’s regulatory approach is relatively laissez-faire, facilitating faster clinical trials and lower costs than in the West.
  • Strong government backing; biotech is a pillar in industrial policy (Made in China 2025, Five-Year Plan).
  • Expected surge in global licensing and FDA approvals for drugs originating in China.

Notable Quotes

• “I think the liver is good if we can get enough human genes into the pig.”
  — Dr. Beicheng Sun, quoted by James King, 25:43

• “We’re very much living in this Frankenstein dystopian future in China because ultimately regulation is a lot less hands-on when it comes to these ethical concerns.”
  — Alice Han, 29:56

• “Global licensing of Chinese biotech products is up over 700% in the past five years.”
  — James King, 30:50

• “Revenue from drugs originating in China could jump to $34 billion by 2030, and $220 billion by 2040.”
  — Alice Han, citing Morgan Stanley, 32:28

Segment Timestamps

• 23:46 — Breaking the news: pig-to-human liver transplant.
• 24:53 — Gene editing, medical ethics, and previous Chinese advances in genetics.
• 28:28 — Economic outlook: the rise of biotech in China.
• 32:28 — Projected global impact; deepening U.S.–China biotech ties.

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Memorable Moments & Final Thoughts

• James King’s vivid story about monks playing basketball in the Himalayas (18:46) underscores the omnipresence of the sport in China.
• Alice Han’s observation about government-led consumer and sports policy shows the underlying economics of the NBA thaw (21:34).
• Both hosts agree: decoupling between the U.S. and China is all but impossible—especially evident in supply chains and cutting-edge industries like biotech.

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Summary Table: Segment Highlights

| Segment | Timeframe | Key Points | |-------------------------|--------------|-----------------------------------------------------------------------------------------| | Rare Earths & Trade War | 01:31–16:28 | Export controls, political leverage, supply chain weaponization, strategic implications | | NBA in China | 16:28–23:06 | Return of NBA games, economic and cultural impact, basketball’s rise | | Biotech Milestone | 23:46–32:28 | Pig-to-human liver transplant, gene editing, China’s biotech dominance and predictions |

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For listeners seeking to understand the fast-changing, interlinked dynamics of U.S.–China relations, this episode offers sharp insight into the economic, political, and cultural forces reshaping the world—one rare earth shipment, basketball game, and medical breakthrough at a time.

Transcript

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[James King]

I think it's really fascinating how we've seen, you know, on the trade side in areas like soybeans and rare earths. Really, China and America can't seem to catch a break. They've been slugging it out in all types of different arenas, but in basketball things are going a lot better. This is a rather interesting situation.

[Alice Han]

Foreign welcome to China Decode. I'm Alice Han.

[James King]

And I'm James King.

[Alice Han]

So in today's episode of China Decode, we're discussing Trump's war of words with Xi heating up after Beijing clamps down on rare earth exports, why the NBA returned to China for the first time in six years, and how Chinese surgeons pull off a world first a pig to human liver transplant. There's a lot of exciting topics, James, but I know that you've probably been very busy like I have in the last few days, mainly because of the whole rare earths shenanigan.

[James King]

It's been really frantic, actually. This is a massive story for us, Alice. We're both in the China commentary business and I must say, if I could just start off with a few Top lines. It seems to me that if you are looking for one choke point, one issue that might do more than anything else to decide the superpower rivalry between the US And China, it would probably have to be at this stage anyway. Rare earths, it really is that important, it seems to me. And the reason is that China has a stranglehold. It processes about 90% of the rare earths that are used around the world. And these days, it restricts the export of about 12 of the 17 rare earths that are known to exist. Now, these rare earths, they all come with long names. It's all, I'm not gonna belabor it, but they're all crucial. All kinds of things, you know, from smartphones to defense systems to all sorts of electronics that we use in our daily lives. But anyway, Alice, I know you've been spending a lot of time on this. Could you tell us, why is China putting restrictions on the export of rare earths, not only to the US but to everybody around the world? And why are they doing it now?

[Alice Han]

Well, firstly, let me backtrack a bit and say, I'm sure the same for you. I've had more back and forth in my clients and interested individuals in the last few days than I would say since April. So that gives you a sense of how dramatic and drastic both the Chinese policy was and how it was interpreted. So again, to give it a bit of context, this is a big escalation. On the US China trade and tech front. President Donald Trump is now threatening economic retaliation against Beijing after China moved to expand export controls on five additional rare earth minerals. The US President blasted Xi Jinping on social media, calling China's hostile and saying he no longer sees any reason to meet with President Xi during his upcoming trip to Asia. That was the mood music as of Friday. But of course, in Trump world, things move and progress very, very rapidly. Since Friday, we've seen a bit of, I would say a walk back, a withdrawal on both sides, a de escalation attempt. And certainly Donald Trump's tweet this Monday I think gave markets less cause for panic because he basically tweeted, don't worry about China, it will all be fine. Highly respected President Xi just had a bad moment. He doesn't want a depression for his country and neither do I. And I think since then, people watching this believe that we're in a de escalation moment. And certainly if you look at the S and p, which dropped 2.7% Friday, it's walked back some of that decline as of Monday. But certainly I think people were taken aback by both China's policy, which I'll get into just a bit, and Obviously the rapid 0 to 100% escalation of tariffs that Trump was threatening on the back of these export restrictions. Now, firstly, I want to give everyone a sense of what these export restrictions are, because I think there's still a lot of confusion about what these export restrictions entail and secondly, why rare earths are still so critical for the global economy. So on the first level, I would say these export controls have been part of a way in which the Chinese government is formalizing an export control regime that is very much mimicked on what the US has done over the last few years, ever since the Trump administration. So as of 2020, we saw the announcement of these export control law frameworks and they were designed to basically give China more strategic control on the exports of what they consider high advanced core technologies. The move on Friday was I think, significant because it meant that five of the remaining critical minerals that were not yet subject to export controls were added to the list, as you correctly identified, James. So basically all rare earths are subject to now export controls as of December 1st. And China basically has this licensure framework, meaning that companies that are seen to be exporting critical minerals, or even parts of critical minerals within a bigger technology like semiconductors will have to get approval from mofcom. And I think what really shocked a lot of people was the fact that that even, and I was looking into the details of this, even a good or a technological product that has 0.1% content of Chinese rare earths is subject to these export restrictions. So effectively it increases the scope and depth of China's control. And certainly again to go on to the second element of this. Rare earths are so significant not only because China dominates about 90% of the higher end heavy rare earths and 70% of the complete total rare earth mining, but also because they are so critical in different components and different technologies around the world, whether it's defense grade equipment, semiconductors, data centers, heavy magnets used in EVs and batteries. These are basically, I would say, the, the DNA of a lot of the technologies that we use today. And it's going to take a couple of years for the US to follow Japan's path. I would say if you remember the Senkaku Islands incident back in 2010, where Japan had to learn very quickly after a rare earths embargo was put upon it by China to create its own domestic supply chain, the US and other Countries are going to have to do so as well. But certainly I think this has been a bit of a wake up call for Washington. They were definitely caught up by surprise. But I also think, and curious what you think here, James, that Beijing was caught by surprise as well because it didn't expect the Trump administration to go so aggressive in response to this. My own, and you know, forgive me if it's a little bit of a contrarian view, my own view is that they wanted to announce this to give them future optionality if trade talks weren't to go well so that they could deploy effectively the rare earths card. And at the same time they are trying to do, I would say, a formalizing of these export control frameworks ahead of the 4th plan and 15th five year plan, where I think a big focus will be on trying to indigenize and securitize China's supply chains. But I'm curious what you think about this. I know that there's a lot of different views out there as to why China timed it right now and what China's intent was.

[James King]

Yeah, I mean, I think that China has short term and long term aims in this. And as you've said, I think the short term aims are mostly about giving themselves leverage ahead of negotiations with Donald Trump over some kind of trade settlement between China and the US as we mentioned last episode, Alice, we saw the soybeans issue last time. In other words, China not buying a single soya bean from the United States yet this autumn harvest in the US that's one source of leverage. Now we've got this rare earth one which is far and away greater than the soybean leverage. Because as you've already said, these rare earths go into so many products that are essential for the US Military industrial complex. These are essential for the weapons that the US Makes and uses to defend itself. And if there's anything I think that gets minds and pulses really racing in Washington, it is precisely that. So the idea that China has a stranglehold over the ability of the US to make weapons. So that's another piece of leverage that Xi Jinping is giving himself. And then there's been a couple of other things, such as a retaliation by China on a US Measure to increase port fees. So now China is putting port fees, increased port fees on US Ships going to China. So there's a whole load of different leverage which is being built up by both sides ahead of what we think is going to be talks to resolve these trade frictions and the tariff war et CETERA et cetera. But at this stage, we really don't know how this is gonna be resolved. We're all assuming there are gonna be talks, but if both sides keeps on piling on the leverage, to me it's more than possible that we'll just get into a slugfest. We'll just have one side slugging the other, and at a certain point, maybe one or the other side may lose an appetite to reach a deal. So I really think that this is a very major issue. Of course it could all be resolved. You know, China and the US have been known to do this before, bring it to the brink and then bring it back to reach a resolution. But you know, at the moment this looks serious. I would say, do you think it's gonna go to a deal or do you think that this is just gonna be a big bust up?

[Alice Han]

I don't think either scenario happens and I think ultimately we'll get a deal. That is no deal. In effect, both sides will agree to keep talking and to try to freeze any escalation in trade and tech related sanctions. On the Chinese side, they think it's to their advantage if the status quo ex ante continues because they've been able to lodge the additional 30% tariffs that have been put on place earlier this year. They have been able to find workarounds for the semiconductor sanctions, and ultimately they believe that they're in a position of strength again, which is why I think they hit hard to demand more. And I think they will demand more in Taiwan, where they might ask Trump to oppose Taiwanese independence. And they may demand more in terms of walking back some of these higher end semiconductor restrictions. On the Trump side, certainly the people around him, like Besant, will want to see tariffs not escalate for business financial related reasons. But it's worth bearing in mind that he's got a lot of hawks around him who've been remarkably silent thus far. I'm thinking of Mark Marco Rubio, chief among them, who may use this as ammunition, going to 2026 for a more hawkish posture. The way that I've always thought about this relationship is that this trade war is a divorce that neither of the US nor China can afford. And so ultimately they've realized that decoupling is a settlement that they cannot afford. So they have to continue to be seen to talk. And unfortunately, talking is its own form of, I would say, resolution, meaning that both sides decide not to escalate. But I think as a will probably still have ongoing negotiations that deliver a degree of stability with Some obviously volatility on the sides like Friday's announcement. One thing that I do want to end on is something that I found very interesting is that China is using a lot of the regulatory frameworks that the US has adopted. So the new export control actually is the first time China has used a foreign direct product rule and FDPR. This is a mechanism that was introduced in the US in 1959 and then recently used to restrict exports of semiconductors to China. So in a way, China is trying to mimic again what the US Is doing in this kind of long dance of a divorce. But ultimately I think both sides will keep talking. I think Xi and Trump will probably meet in Korea. There will be a lot of glad handing, but there won't be a real formal deal is my take.

[James King]

My sense of this also, Alice, is that there's a bigger, longer term shift here and that is that China has shown itself now to be willing to weaponize its supply chain. I mean, the supply chain, its dominance in the rare earth supply chain is what allows it to use this leverage against the United States and other countries. But I think we should be clear that China has dominance like this in many different industries and many different supply chains. And we don't know in the future whether they might be willing to use that leverage as well. So China makes 80% of the world's solar panels. It makes about 70% of the world's wind power equipment, about half of all of the world's cellular modules. These are little devices that turn basically a piece of equipment into a networked piece of equipment. And it even controls about 35% of so called legacy semiconductors. Those are the old form of semiconductors, more than 28 nanometers that are used in most products. And according to Unido, the United Nations Industrial Development organization, China by 2030 will account for about 45% of all of the manufactured products in the world. So when that day comes, they'll have even greater leverage. And so this is why I think this is such a crucial issue. It shows the potential shape of things to come. It shows how China could use its massive trading power to really get geopolitical ends or to aim at geopolitical concessions. And it's taking on America this time, the world's biggest superpower. So we really need to see how this works out. You know, if China wins the this, we're in a totally different world from the one that we were brought up in. I mean, to me, I've been following China's trade rise since China joined the WTO in 2001. I never thought that I would get to the day when China was potentially the boss, beating America, as it were, or dictating terms to the us but we might just be there on this issue.

[Alice Han]

It's fascinating stuff and I'm sure by the time we see each other again next week, a lot will have changed. Okay, stay tuned. We'll be back for more after a quick break. This episode is brought to you by Amazon Business. We could all use more time. Amazon Business offers smart business buying solutions so you can spend more time growing your business and less time doing the admin. I can see why they call it smart. Learn [e-mail] when did making plans get this complicated? It's time to streamline with WhatsApp, the secure messaging app that brings the whole group together, use polls to settle dinner plans, send event invites and pin messages so no one forgets mom's 60th and never miss a meme or milestone. All protected with end to end encryption. Description it's time for WhatsApp message privately with everyone. Learn [e-mail] welcome back. The NBA seems to be well and truly back in China for the first time in six years. Over the weekend, the Brooklyn Nets and Phoenix Suns faced off in two preseason games at the Venetian, marking the league's first major event in China since the fallout over the 2019 Hong Kong protest. Brooklyn Nets owner Joe Tsai says he is thrilled to bring his team back, and Celtics co owner Mario Ho says the city is buzzing like nothing before. And Chinese legend Yao Ming, who I'm a big fan of, is calling it a long overdue reunion for the basketball sport. Okay, James, I have to confess, I am not a big basketball fan. If this were a conversation about tennis, I'd be better equipped. So I'm going to have to lean on your basketball expertise. How significant is this moment for the NBA to be back in business in after several years of a thaw?

[James King]

Well, I mean, I'm no basketball player myself. I did play quite a lot when I was at university in China. It was definitely a daily occurrence over there. And I think this is really major for the NBA. Basketball is such a passion in China. Everywhere you go, all over the country, you find people playing basketball. I remember once I was sort of in the foothills of the Himalayas at a Tibetan Lamaist monastery and I saw monks in their saffron robes coming out of prayer, streaming into the courtyard, and then there was a basketball hoop in the end and they all started to play basketball with sort of raucous excitement. It's just one of many experiences you get like that in China. It really is a national passion. I also remember Alice, if I can just start with this story. About five years ago, there were a couple of viral sensations in China. One involved a young star named Li who was two years old. And you would see video of this baby sucking a lollipop in their family bathroom and then shooting hoops with extraordinary accuracy. I mean, the baby would put it into the hoop most of the time. And then more recently, there was Another kid, also 2 years old, called Wang, who also went viral with the same kind of routine. So it really is a big deal in China. I think that from the NBA's perspective, this is big. Obviously it's big in terms of money. The NBA lost about US$300 million as a result of its rift in 2019 with Beijing. Just to jog everyone's memory, that rift came about after the general manager of the Houston Rockets basketball team tweeted the words, fight for freedom, stand with Hong Kong. And that was in the middle of the Hong Kong demonstrations for greater democracy. Obviously, Beijing took a very dim view of that and basically took a sanction against the NBA. And that resulted in the NBA losing about US$300 million in various forms of revenue in the mainland. About 490 million people watched NBA games in China between 20 and 2019 on various different platforms. That just gives you a sense of how massive basketball is and American basketball is in China. And I think it's really fascinating how we've seen, you know, on the trade side, as we've just been discussing, in areas like soybeans and rare earths, really, China and America can't seem to catch a break. They've been slugging it out in all types of different arenas. But in basketball, things are going a lot better. This is a rather interesting situation. I don't know how you read that, Alice. Why is the relationship with basketball improving while in just about all the other areas we've discussed, things are getting much worse?

[Alice Han]

Well, my hot take on this is that effectively the government is trying to boost the kind of tourism that happens with, with cultural sport related travel. And I think the more that they can get people to spend on games, the more tangential revenue that they can draw from these sorts of cultural sports related activities. So I think this is part of a bigger push that we've seen in the last year to get people out more and spending more. And certainly it chimes with the push that I've sensed from Beijing to also boost consumption and services in particular, which hires more people than the goods sector and is a bigger share of gdp. So I think my own understanding of this is within the framework of Beijing trying to get people out there to spend money. And what I found very interesting from monetary perspective is that basketball has overtaken football or soccer as the top sport by media rights value totaling $316 million. I think that's pretty significant given this is a that a couple years ago was very much into soccer. Xi Jinping was all for it. It was a big campaign to get kids active and playing soccer. But there's been a big, I think, cultural turnaround. And I really saw that when I was in Shanghai and staying in the same hotel as LeBron James. I saw a huge mass of young Chinese people in Lakers sweatshirts standing outside the hotel hoping to get a glimpse of the tall giant.

[James King]

Fascinating.

[Alice Han]

Well, okay, let's take look a quick break and stay with us.

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[Alice Han]

Well, welcome back of Medical first out of China Surgeons in China have successfully transplanted part of a genetically modified pig liver into a human patient, marking a major step forward in xenotransplantation. The 71 year old man lived for 171 days after the procedure, including more than a month with the pig organ functioning inside of his body. Researchers say it is a breakthrough that could one day help bridge the global shortage of donor organs, though some experts caution it's still very early days for this kind of science. I have to confess, James, when I came across this report, I was very shocked. This seems to be Blade Runner esque or dystopian and I'm not a biotech expert, but certainly it reminds me a little bit of that scene in Spider man where they're getting parts of animals and turning them into superpowers. It seems like China is already in that future and it seems to be ahead in this global race to make animal to human organ transplants. How do you feel about this and what's your hot take?

[James King]

Well, I'm learning a lot of things doing this podcast, Alice, and xenotransplantation is a new word for me, that's something I've learned doing this. I think you're right. I think China is ahead of the rest of the world in doing this type of transplant. And I think what's crucial about it is that Chinese scientists are doing gene edits, in this case on the pig liver before it's transplanted into the human body. And it seems to me that that's the crucial part of the puzz. So the idea is that if you replace those genes that are inherent in the pig liver and are likely to be rejected by, you know, human systems, particularly the immune system in the human body, and you put human genes into the place of those pig genes that you take out, then it's more likely that the liver will be accepted by the human host body. And so that apparently is what has happened this time. And there's a very interesting quotation from somebody called Mr. Beicheng sun, he's the doctor at a hospital in Anhui Medical University that's in Anhui Province, who identified this as the problem. He said, I think the liver is good. If we can get enough human genes into the pig. In other words, if they can put enough human genes into the pig liver, genetically modify it, then maybe these pig livers will not be rejected so much going into the future. But as you've already mentioned, Alice, this is not the first type of xenotransplantation that's happened in China. Earlier on this year, surgeons put a pig lung into a human, and this one lasted only nine days before the lung stopped working. And then there are other, earlier examples of genetic modification in China, some of which are much more controversial. Probably many listeners will remember, in 2019, China put in jail a scientist who'd created the world's first gene edited babies. This was called the designer baby case. And the genes were edited in these twins. They were twin girls in order to make them immune to hiv. I was just doing a little bit of research on that. Now that researcher is back out of jail and he's back into the lab. I don't think he's doing any gene editing for humans at this stage. And the two twin girls, they're apparently in kindergarten. They're about five or six years old at the moment. But that was an issue that became very controversial in China and around the world. But obviously China is continuing with this gene editing in order to try to aim at medical breakthroughs like this one. And just to say, finally, There are about 300,000 people each year in China that experience liver failure. And so if China was able to come up with, you know, a sustainable transplant of pig livers into humans. Obviously that would help a great deal. It would extend many people's lives. So, yeah, there's really a lot going on. It's quite a happening scene in China. Have you been looking at this from an economic perspective or from a market perspective at all?

[Alice Han]

Well, mainly from an economic perspective. Biotech has been, I think, still the strongest performing sector in Chinese markets in terms of year to date performance. So it's even outstripped the tech platform companies. And a lot of that has to do with, with obviously a lot of government investment and attention being paid to the biotech sector. It was one of the core pillars of made in China 2025 and it will probably be in the five year plan, I think. And the other aspect of it is that China is becoming an even more popular destination for a lot of Western pharmaceutical companies to do very quick clinical trials. So the pipeline for clinical trials to product is very, very rapid and affordable in China compared to outside of China. So I think as a biotech ecosystem, it's become more and more developed. We've seen R and D spending as a percentage of GDP rising to around 2.7% in 2023. That's up from 0.9%, admittedly 20 years ago, but certainly we've seen more attention being paid. They produce a record number of students every year. STEM graduates make up about about 50% of the world's total every year. Now a lot of them are going to AI, that's for sure, but there's definitely, I think, a strong contingent that are going into biotech, which remains one of the hot industries in China. I just noticed on Friday, as we were all paying attention to the Trump tariffs and export controls, that the State Council approved new regulations for biomedical trialing. And my own reading of it is that it gives a fairly laissez faire approach to some of the issues that we talk about. So they list among these areas gene and cell therapies, new organ and tissue transplants, and research that involves human reproductive cells, zygotes and embryos. So I think we're very much living in this Frankenstein dystopian future in China because ultimately regulation is a lot less hands on when it comes to a lot of these more ethical concerns about gene editing or designer babies. So it'll be interesting to see what other organs that they will use moving forward. But I think this story is just one example of the way in which China has less barriers to push the frontier in biotech Absolutely.

[James King]

And I think we're already seeing huge growth in this area. I mean, I read that global licensing of Chinese biotech products is up over 700% in the past five years. So this stuff is all happening in China. As we can see, there's plenty of breakthroughs going on in biotech, such as in this example of the pig liver, but then it's being licensed to companies all over the world. And so what's happening in China today may well be a product or a procedure that's in our hospitals or on our pharmacy shelves over here, either in the UK or in the US or somewhere else in the world. So. So this is an area where I think we should be looking at China for a sense of what's coming down the track. And in some cases, we've already seen some big pharmaceutical companies in the west get disrupted by little known Chinese upstarts that are making drugs that the big foreign pharmaceutical company sort of relied on for a significant part of their revenue. And of course, like everything else it seems that we talk about on this podcast, the China drug costs a fraction of what the foreign multinational charges for its drugs abroad. So China's going to be a source of big disruption to the pharmaceutical companies, I feel, in this area of biotech and several other areas. So, you know, it's not just unusual stories about pig livers. This is going to hit the bottom line of some of the biggest companies in the world.

[Alice Han]

Yeah. And just to quote Morgan Stanley on this, so the revenue from drugs they're predicting originating in China could jump to 34 billion by 2030 and 220 billion by 2040. That gives you a sense of the scale and growth. And they also project that approvals by the US fda, so that's the Food and Drug Administration for Chinese biotech products could rise from 5% to 35% of all approvals in the near future. I think that's a pretty startling statistic and again a sign that to backtrack to the beginning of the discussion, that full decoupling between us and China is an outcome that neither side can afford. And there are ways in which I think the relationship is actually getting more integrated and more codependent. So definitely something to track in the future. All right, that's all for this episode. Thank you so much for listening to China Decode. This is a production of Prof. G Media. Our our producer is David Toledo. Our associate producer is Eric Janikas. Our research associate is Dan Shalan. Our technical director is Drew Burrows. Our engineer is William Flynn. And Our executive producer is Catherine Dillon. Make sure to follow us wherever you get your podcasts so you don't miss an episode and talk to you again next.

[James King]

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