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00:00Hello, Telesur English presents a new episode of China Now, our media's production that
00:13showcases the culture, technology, and politics of the Asian giant.
00:17In this first segment, China Currents dives into top stories of the week, such as Western
00:22tech giants going to China, Japanese Prime Minister visiting the country, and China's
00:26breaking through in-brain computer interface technology.
00:30Let's take a look.
00:36China Currents is a weekly news talk show from China to the world.
00:39We cover viral news about China every week and also give you the newest updates on China's
00:44cutting-edge technologies.
00:46Let's get started.
00:56Welcome to China Currents, a weekly news report on the latest developments in China.
01:01I'm Chris, and in this episode, Western tech giants come to China, Chinese Foreign Minister
01:07visits Japan, China's breakthrough in brain-computer interface technology.
01:12First, let's move to Beijing.
01:15The 2025 China Development Forum was held in Beijing from March 24th to 25th.
01:20As a platform for direct dialogue between Chinese leaders and multinational corporations,
01:26international organizations, and foreign scholars, the forum outlines China's annual
01:31development priorities, making it one of the most closely watched events by global investors.
01:38This year's forum attracted 750 foreign delegates, including 86 executives from multinational
01:45companies across 21 countries.
01:47Among them were tech and semiconductor giants from the US and Europe, including CEOs from
01:53Apple, Siemens, Samsung, Qualcomm, and SK Hynix.
01:58John Neuffer, president of the US Semiconductor Industry Association, also attended.
02:04Ironically, Bloomberg recently reviewed that Trump's administration is sketching out tougher
02:09versions of US semiconductor curbs and pressuring key allies to escalate their restrictions
02:14on China's chip industry.
02:17Why do Western tech giants still turn to China?
02:19A key breakthrough in China that can resolve critical challenges in AI and chip development
02:25may tell the truth.
02:27The AI industry's relentless pursuit of higher computing power and advanced chips has hit
02:32a roadblock – overheating.
02:34As transistors and chips become increasingly dense, heat dissipation has emerged as a bottleneck.
02:40In November 2024, Reuters reports revealed overheating issues in NVIDIA's Blackwell
02:46AI chips and server ranks.
02:48By January 2025, unresolved thermal problems, causing reduced computing power and melted
02:55interfaces, forced Microsoft, Amazon, Google, and Meta to slash orders for new chips and
03:01revert to older models.
03:03The information reveals that NVIDIA reportedly pushed suppliers to redesign components, but
03:08solutions remain elusive.
03:11Silicon-based materials, it seems, have reached their thermal limits.
03:15Unfortunately, China's synthetic diamonds can help.
03:19Diamonds' thermal conductivity is 13 times that of silicon and 4 times that of silicon
03:24carbide.
03:25Chips made with diamond substrates could drastically lower operating temperatures.
03:29A report by China's climate securities estimates that diamond cooling technology could save
03:35data centers millions in cooling costs annually.
03:39The diamond thermal solutions market is currently valued at just $20 million.
03:43It is projected to soar to $15.2 billion by 2030.
03:47Western firms are taking note.
03:49U.S. startup Akash Systems, for instance, developed a diamond-cooled GPU technology
03:54securing $18.2 million in federal grants and $50 million in tax breaks.
04:00Yet, considering China produces 70% of the world's synthetic diamonds, most of these
04:05funds may ultimately flow to Chinese companies.
04:09Beyond raw materials, China also holds key patents for diamond chips manufacturing.
04:14Previously, diamond films were either too small, too rough, or too expensive for mass
04:18production.
04:19But in December 2024, researchers from Peking University, Southern University of Science
04:24and Technology, and the University of Hong Kong unveiled a breakthrough method to produce
04:29large, ultra-thin, and ultra-smooth diamond films at a reasonable cost.
04:34Published in Nature, this innovation paves the way for industrial-scale diamond chip
04:38production.
04:39China is also spearheading other next-generation semiconductor technologies.
04:44In March 2025, Hangzhou Jiaren Semiconductor launched the world's first 8-inch gallium
04:50oxide wafer.
04:51While the U.S. poured resources into computing power hegemony, China's focus on practical
04:57applications has driven its rise.
05:00Chinese strategist Professor Wang Xiangshui notes that U.S. tech development is capital
05:04and AI hype-driven, with over half of its wealth funneled into seven tech giants like
05:10NVIDIA and Microsoft.
05:12This obsession with computing power has neglected real-world applications and diversified semiconductor
05:17use cases.
05:18In contrast, China's tech sector prioritizes solving tangible challenges.
05:23Its advancements in aerospace, electric vehicles, and 5G networks have created diverse demands
05:29for chips.
05:30For example, Huawei began developing Diamond Chips technology in 2023 to address heat dissipation
05:36in 5G base stations and low-orbit satellites, following patterns with Harbin Institute of
05:41Technology.
05:42Though Chinese tech firms lag behind U.S. giants in market value, their demand-driven
05:47model – emphasizing affordability, energy efficiency, and practicality – offers lessons
05:52for global players.
05:53That's why, in 2025, Beijing has become a classroom for the world's tech elites.
05:59Hello Tokyo!
06:00On March 22, Chinese Foreign Minister Wang Yi met with Japanese counterpart in Tokyo
06:06during the 6th China-Japan High-Level Economic Dialogue.
06:09The meeting marked Wang's first visit to Japan in four and a half years.
06:13The two sides reached a consensus on 20 key issues, expanding collaboration beyond traditional
06:19economic ties to prioritize marine environmental protection, combat marine debris, and strengthen
06:25monitoring mechanisms for nuclear wastewater.
06:28On March 12, Tokyo Electric Power Company released a new round of 7,800 tons of nuclear
06:35contaminated water into the Pacific Ocean.
06:38Since August 2023, the total amount has reached 85,800 tons.
06:44China has emphasized in their 20 consensus that there is no change in China's position
06:49of opposing the unilateral activation of a discharge by the Japanese side.
06:54The stance underscores Beijing's dual focus on safeguarding public health and addressing
06:59ecological risks to Pacific neighbors.
07:02Pacific Island Forum Secretary-General Baron Waka said,
07:05We have done our best to get Japan not to commence the discharge until there is full
07:09agreement that it is verifiably safe to do so.
07:12But Japan has taken a sovereign decision.
07:14What we need to focus on now is to hold Japan to account.
07:19China conducted independent sampling in October 2024.
07:23On January 23, this year, the China Atomic Energy Agency announced the test results for
07:27the first time.
07:28The activity concentrations of tritium, caesium-137, and strontium-90 in the samples were normal.
07:35However, CAEA emphasized that the results only reflect the radiation level of a specific
07:41time and place.
07:42China will continue to carry out international monitoring and independent sampling to prevent
07:47the discharge of Fukushima nuclear-contaminated water into the sea from causing irreversible
07:52consequences.
07:53Moving on, China is promoting public health in the most challenging field.
07:58On March 20, a Chinese patient who can't speak due to amyotrophic lateral sclerosis regained
08:05ability with the brain-computer interface's help.
08:08Assisted by a neurosurgical robotic system, Chinese doctor Zhao Guoguang precisely implanted
08:14the device into the region of the brain responsible for language motor control.
08:19Although the patient is unable to speak physically, the brain still generates specific electrical
08:24signals when attempting to form words.
08:27The BCI system captures these signals and decodes them using advanced algorithms, effectively
08:33translating the patient's thoughts into spoken phrases.
08:36Remarkably, after just three hours of training, the patient was able to produce full sentences
08:42such as, I want to drink water, and I want to go for a walk with my family, through brain
08:48signals.
08:49Clinical data shows the single-word decoding latency of under 100 milliseconds set the
08:53highest performance benchmark globally.
08:56The system, called Beinao-1, was developed by the Chinese Institute of Brain Research
09:01and marks the world's first successful wireless, implantable BCI designed specifically for
09:07the Chinese language.
09:08Although this technology is just being introduced for clinical application, China's National
09:13Health Care Security Administration established a market guidance price for treatment costs
09:18on March 12, ensuring that this medical technology remains accessible and affordable for different
09:25income groups.
09:26That's all for today.
09:27Thank you for watching this episode of China Currents.
09:30If you have any thoughts or comments, please leave it below.
09:33See you next time.
09:38We have a short break, but don't go away because we'll be right back.
10:09Welcome back to China Now.
10:11Today, Thinkers Forum welcomes Professor Shulan, Peter Chunxin, and Louise Vincent-Gade.
10:18Let's see.
10:25If you follow China's S&T development since the late 1970s, China's reform, S&T has been
10:33an area that every generation of Chinese leaders have paid a lot of attention and pushed for
10:40reform and promoted the development of the area.
10:43So, I think that has really led to a very strong research base in almost all major fields
10:52in the S&T area.
10:54I think that provided a very strong base, both in terms of research, but also in terms
10:59of talents.
11:00So, in fact, I think that you all know that the deep seekers, all of the people are trained
11:06locally in China.
11:08But that's certainly, I think, the Chinese government's role.
11:12But let me also say that the local government in Hangzhou has also played a very important
11:19role.
11:20So, it's not coincident to see that deep seekers actually grew out of Hangzhou, where Alibaba
11:26also claimed Hangzhou as a home.
11:29Hangzhou has become a hotspot for innovation, particularly on AI and internet and so on.
11:36And because the local government has been very supportive and they were able to create
11:41an ecosystem that's really very nice for the new startups, for companies to work in the
11:49area without feeling the pressure.
11:51If you think of support research as an industrial policy, then people can say that China has
11:59had an industrial policy for many years.
12:02Because I think China has supported AI research since as early as the 1980s.
12:08I know the Chinese Association of AI Research was started in the 1980s.
12:13So, there were, I think, some national R&D plans that AI has been part of that.
12:20But that's mainly supporting academic research in universities, in research institutes.
12:27If you saw the industrial policies more of supporting enterprises, I think that that's
12:33a different story.
12:34If you see Chinese AI industry, it's mainly private enterprise.
12:38They have been playing a very active role, a leading role.
12:41If you know the story about deep seek, this is somebody who's done quantitative trading
12:47and used the money he earned to get into this AI.
12:52There, I think the government policy is more about how to provide proper governance.
12:58I think there were a lot of hypes about so-called geopolitical competition in AI.
13:04If you look at it domestically, AI has been developed more in the sense of how actually
13:11it can generate services and efficiency and so on.
13:16So, I think for many of the companies, they worry about how to actually find applications
13:21and how to find business models to make money out of it.
13:24I don't think Alibaba is concerned about geopolitics and Tencent is worried about U.S. companies
13:32and so on.
13:33So, they are very much focused on domestic market.
13:36They're focused on commercial applications.
13:41So, I think that's probably the general context of AI development.
13:46Of course, since 2022, large models became a hot thing for people to pursue.
13:56So, I think many of these companies also wanted to try to follow suit and develop big models.
14:02You might argue that that might be a competition indeed.
14:07Today, this model performs better.
14:09Tomorrow, the other performs better.
14:11But still in the context of a commercial competition rather than in the geopolitics sense.
14:17So, I would say that that's sort of more the general context of AI development in China
14:22if you look at it from inside.
14:24Basically, if you ask companies, they are much more concerned about how actually they
14:30can get a big model, how they can find applications.
14:34So, I would argue that many people internationally view DeepSeek as a major turning point in geopolitics,
14:45in geopolitical competition of AI between U.S. and China.
14:50But I think domestically, a lot of people see this as a turning point of really making
14:56the big model into what people call the vertical application.
15:00That is in specific application.
15:03It really lowers the threshold for many companies to join, to use the big models.
15:09So, I think that thousands of institutions of all kinds began to use DeepSeek.
15:14And also, I think probably several hundreds of millions of people are now using whatever
15:21software they can, the hardware they use.
15:24Indeed, certainly, I think Chinese media is very similar to the media you saw.
15:29They certainly wanted to put those in the geopolitical context.
15:34But I think in terms of you look at the company and look at the researchers in the universities
15:41and the research institutes, they are much different from what you saw in, say, UK, U.S.
15:47People focus on what they do, and they are indeed very excited about the abilities being
15:53offered by all these kind of AI models.
15:56So, AI for science and so on.
15:58There, I think there's not much difference.
16:00AI is such a wide thing, trying to separate global AI development ecosystem into different pieces.
16:08I don't think that's easy.
16:10If you look at the research communities, I think before the year of 2018 or 2019, there
16:20was a very intense collaboration between U.S. and China in terms of academia.
16:26Very strong collaborations.
16:28And also, in terms of an AI system, I think there's also very wide applications and collaborations
16:38and also people circulating back and forth.
16:41So, I think there's a sort of kind of global ecosystem that's open source.
16:49And people learn from each other.
16:51And so, you know, for example, I think that some people argue that actually there are
16:58some Chinese AI papers were cited probably most in the AI field.
17:03So, you might argue that the Metas model maybe have some roots in the Chinese research institute.
17:10And you can also argue Alibaba's model may have also something from the U.S.
17:15So, I don't know whether you can have some, whether you're able to say, okay, this technology
17:22is U.S.
17:23Indeed, I think there are indeed models from different companies.
17:27If you use that as a way, of course, we know there are, you know, all kinds of models from
17:34different companies.
17:36So, in fact, back in 2010, I published a short article in the premier science journal called
17:51Nature, where I have published a forecast, which said that given the trends that had
17:57been developing prior to 2010, predicts that the United States will get into high instability
18:04situation by 2020.
18:06At that point, I had no idea about Donald Trump or that it would be called MAGA movement
18:13or whatever.
18:14If Donald Trump was not there, was probably, was assassinated, things would still happen,
18:19maybe not now, but four years later.
18:22So, we are looking to multiple years of social turbulence and political instability.
18:28My research group here in Vienna, at the Complexity Science Hub, we have collected
18:34data now on hundreds of past societies over the last 5,000 years since the first state
18:42appeared.
18:43And so, what we see is that states can actually function well for a period of time, about
18:50a century or so, sometimes less, sometimes more, but then inevitably, at least in the
18:55past, they enter into the period of social turbulence, political violence.
19:00So, those are end times about which the book is about.
19:04So, the United States had a previous period of political turbulence, which peaked during
19:10the American Civil War, and then it continued until, roughly speaking, 1920s, when there
19:17was another peak of instability, like urban riots, assassinations, many other political
19:24turbulence events, which did not fortunately lead to any kind of revolution or civil war,
19:30because the American elites managed to push through a set of reforms that essentially
19:39rebalanced the economy and allowed the United States to become a very prosperous nation.
19:44So, the period after the New Deal, even despite the World War II, the wages of American workers
19:52grew very rapidly, they grew together with the GDP.
19:56But what happened in the 1970s, two generations later, the American leaders have become sort
20:03of complacent.
20:04This is what I call the iron law of oligarchy.
20:08They basically started to go back away from the reforms of the New Deal era.
20:15For example, they allowed suppression of labor unions, or many different types of things.
20:21They started to reduce taxes on themselves, and so on.
20:24What I call this, they turned on what I call the wealth pump, right?
20:28The productivity continued to grow, but the wages stagnated and even declined.
20:33And so, all that extra wealth, that flowed from workers to the economic elites.
20:40All right.
20:41So, that set up these three factors which drove the country into crisis.
20:48First of all, it created what we call popular immiseration.
20:51This was stagnating and even declining living standards of the majority of the population.
20:57Secondly, it has created a huge number of wealth holders.
21:03So, the numbers of deca-millionaires, so people with $10 million or more in wealth, has grown
21:10tenfold over the past 40 years.
21:13And the numbers of billionaires has grown even more.
21:16All right.
21:17The third outcome is because of the immiseration to escape precarious living conditions.
21:24Many people from the common American class, right, they wanted to escape.
21:29And how do you do it if you don't inherit wealth?
21:31You go to college, and then college degree is not enough, right?
21:35So, you try to get a professional degree, like law degree, or PhD, like what I have,
21:40and so on and so forth.
21:42So, what this created, it has created what the situation you call elite overproduction.
21:48All right.
21:49So, many, not all, but many of the wealth holders, Trump is, of course, the best example,
21:55but not the only one.
21:56Michael Bloomberg is another, and many others.
21:58They actually try to convert their wealth into political power.
22:03All right.
22:04They either themselves become candidates or support other people running for office.
22:10All right.
22:11And so, you have many more people now competing for those offices.
22:15And on the other side, on the credential side, we have huge numbers of especially lawyers.
22:21All right.
22:22Law degree is the good route to political office.
22:25And again, you have four, five times as many lawyers as there are positions for them.
22:30And so, there is, again, a lot of elite aspects.
22:33So, this elite wannabes, what the problem is, is that some competition for power positions
22:41is good, but too much competition starts to corrode the societal frameworks.
22:49So, because we have now three, four, five times as many people competing for, I mean,
22:55even maybe 10 times as many people competing for the limited number of power positions.
22:59So, in politics, for example, only one president, 100 senators, and so on and so forth.
23:04Right.
23:05So, what happens to those who lose in this competition?
23:09Frustrated.
23:10Many of them turn into counter elites.
23:13These are people who actually start working against the established elites.
23:18So, they attempt now to overthrow them.
23:22And that's precisely what we saw in the French Revolution, for example, with people like
23:30Robespierre or the Russian Revolution, Vladimir Lenin, and many other examples in the history.
23:37What happened was that the counter elites, so they have overthrown the established elites.
23:43So, who are the established elites?
23:46Prior to 2016, for example, we had two parties, and one of them was the Republicans, was the
23:52party of the wealth, 1%, and Democrats were the party of the credentialed people, so the
23:5910%.
24:00So, the rest of the population did not really get any voice in politics.
24:05And then what happened was that as Trump, in his MAGA movement, took over the Republican
24:11Party, they converted it from the party of wealth holders to, at least they claim it,
24:17the party of the right-wing populist party to represent the common people.
24:22And meanwhile, there was some sorting going back and forth.
24:25So, Democrats became simply the party of the ruling class because some of the Republicans
24:31left the Republican Party and went to the Democrats.
24:34So, many neocons, for example, did that.
24:38And vice versa, some of the former members of the Democratic Party, like Robert F. Kennedy
24:44Jr. or Tulsi Gabbard, they switched to the MAGA movement within the Republican Party.
24:51So, we have this coalition of counter elites, which is, of course, Trump is sort of the
24:57center, figuratively, but it would be a mistake to think that it focuses just on him.
25:02He has, as I mentioned, politicians like Tulsi Gabbard and RFK Jr.
25:06He has also brought up people like J.D. Vance.
25:11J.D. Vance moved up through the ranks of the Republican Party.
25:15And then, of course, we have wealth holders like Musk, which is very important.
25:20And he also is a counter elite because he was very unhappy with how he was treated.
25:27And on the ideological front, we have people like Tucker Carlson.
25:32So, you can see it's a power network.
25:35And so, they have now managed to get into power.
25:38Everybody now understands.
25:39When I was writing my book two years ago, I said we are in a revolutionary situation.
25:45But now we are in a true revolution because, first of all, there are two aspects of revolution.
25:50First of all, it's a revolution of the elites, right?
25:53And that's what Trump and his, our network is trying to do.
25:57They're trying to replace the established elites with their own members.
26:01But also, not all revolutions are transformative.
26:04But the intent is to make this revolution transformative.
26:08So, for example, they are trying to change the attitudes towards D.E.I., genders, towards their role.
26:17Very important, the role of America in the geopolitical scene.
26:21It is a very typical thing that once revolutionaries come to power, they tend to start fighting amongst themselves.
26:30So, there is a saying, I forget who said it, but about the French Revolution.
26:35They said that revolution devours its children.
26:39That revolution eats its children.
26:42So, it is a very interesting question whether this coalition will break apart.
26:46Because we see the tensions already.
26:49There are some right-wing populists like J.G. Wess and also Steve Bannon, who does not have any formal position.
26:57But he is influential, right?
27:00And then we have libertarian Silicon Valley types.
27:04So, already Steve Bannon is, for example, is criticizing Elon Musk a lot.
27:10So, it all depends on the personalities.
27:14Whether it looks like, for example, Musk and Trump have a personal friendship.
27:21How well it will survive the tensions and the stresses that they will undoubtedly go through is a big question.
27:29I don't think that Trump and his movement really understand the forces that drive the societies.
27:36For example, they worry about the well-being of common Americans.
27:40But notice that none of what they have done so far has really helped the workers.
27:47And, of course, it is a very difficult problem.
27:50So, there are many ways that they would need to do it.
27:53Increase the minimum wage.
27:55Actually, increase taxes on the rich.
27:57But Trump has done the opposite.
27:59Then, industrial policy, which would bring well-paying jobs back to the states.
28:04Actually, Trump is for that.
28:05But that takes a long time to implement.
28:08There is another element on the road to crisis.
28:12Which is the weakness of the state that results from, becomes much greater than revenues.
28:18And so, the states get into debt.
28:21That doesn't always happen, but it's a very common feature.
28:25So, what Musk is doing with his doge is actually trying to reverse this problem.
28:34But I don't see them yet understanding that they have to turn off the wealth pump.
28:40So, that I don't see happening yet.
28:44Essentially, if you give people power, they are tempted to use it for their own ends.
28:53For their own enrichment.
28:56That's why human societies go into cycles.
28:59This is the iron law of oligarchy.
29:02One of the Davos, I forget, a year or two ago, was about inequality.
29:06It was the actual, the main theme.
29:09And they all talked about it.
29:10But I think they agreed that, yeah, economic growth will take care of it.
29:14That's a very self-serving attitude.
29:16Economic growth is not taking care of it.
29:18We have lots of economic growth, but its fruits are not going to the common people.
29:22So, it's the vested powers.
29:25They have interest in, they have selfish interest.
29:29And as a result of that, they undermine the societies that sustain them.
29:33And that's how they end up oftentimes in revolutions.
29:37So far, I'm actually very heartened that we have not had huge amounts of violence.
29:43But we are in a very fragile situation.
29:47It can escalate.
29:49One group starts using methods, the other side will respond.
29:53And that can quickly escalate into the actual civil war.
29:56Then territorial fragmentation along the lines of American Civil War in 1860s.
30:03That still is possible because now the more liberal states, like California, for example,
30:10is the left coast.
30:12So, California, Oregon, and Washington, they have been actually fairly quiet right now.
30:19But it's only been one month.
30:21We'll see.
30:22Because they are planning to resist, for example, their forced deportations.
30:27That is a potential flashpoint that can lead to more violence.
30:31But for now, it looks like that the previous ruling elites, they have been so shocked by what's happening
30:41that they actually don't know how to react.
30:44They have not yet organized themselves into a reactionary counter-revolutionary party.
30:51This will probably happen.
30:53But we'll see.
31:02It is the start of an important bull market in China.
31:05I think we're going through a very, very important shift in narrative,
31:09both amongst domestic investors and foreign investors when looking at Chinese equities.
31:14Now China essentially dominates every industry in the world, even at the very pinnacle of technology.
31:20I think this is why DeepSeek matters.
31:22DeepSeek shows that even at the very top of technology, China can compete with the West
31:28or even go above the West.
31:30This gives a lot of comfort to the leadership.
31:34All of a sudden, the fears that China's growth could be contained by a Western blockade are essentially gone.
31:42Now we're entering into a new phase where the leadership keeps talking about boosting domestic consumption,
31:48about boosting the domestic consumer.
31:51If you want to do that, the simplest way to boost confidence,
31:56because what China suffers from is a lack of confidence,
31:59one way to boost confidence is to get a stock market bull market going.
32:02And I think that started last, in basically February 2024.
32:08So it's a little over a year old now.
32:10And for a year, Chinese stocks have been moving higher.
32:13I think a Chinese equity bull market is starting.
32:16Foreigners are just waking up to it.
32:18Domestic investors are just waking up to it.
32:20Flows are starting to pick up.
32:22But it's just the beginning of a story that should last many years.
32:26I'm sure you've heard the saying that bull markets climb a wall of worry.
32:30That's what bull markets do.
32:31You have all these concerns, and the bull markets just drive through them.
32:35And I think that today you're seeing this.
32:37It's very typical behavior where everybody focuses on the negative because we've had three, four years of really bad stock markets.
32:46Everybody focuses on negatives.
32:47Oh, this isn't going to last.
32:48Oh, real estate, bad news.
32:50Oh, confidence is so bad, et cetera.
32:54But the markets just continue to move ahead.
32:56It's very, very typical of how bull markets evolve.
32:59When you have to be worried about the bull market is when everybody thinks it's going to keep going higher.
33:04When everybody says, oh, sunshine every day, ice cream for breakfast, when everything is awesome, that's when you have to worry about the bull markets.
33:13And in China, to your point, we're not there.
33:15Now, there's no doubt that the Chinese economy has had basically five, six really rough years.
33:21Some of that was self-inflicted, to be honest.
33:23The COVID lockdowns lasted for too long and really shook people's confidence.
33:29Now, the reality, though, remains that if you take a step back, China's economy today is by far the most competitive economy in the world.
33:38And you see this through Chinese trade numbers.
33:41China's trade surplus keeps on making new highs every single month.
33:46China's trade surplus right now is about $90 billion a month, U.S. dollars.
33:52No country has ever run a trade surplus this big.
33:55And it's a real testimony to how competitive Chinese businesses are.
34:00You take any field, you take automobiles, you take industrial robots, you take train building, power plant building, solar panels, batteries, you name it.
34:09China's at the top of the global game today and to the point where very few can compete.
34:14When you start off with that, like what should be happening is all the people making money selling solar panels, selling batteries, selling all the things that China is selling.
34:24They should be taking that money and reinvesting it at home or consuming.
34:28But because their confidence has been crushed, because people are so afraid, they just do one of three things with it.
34:36They either take that money and leave it at the bank.
34:39And the banks, because there's no demand for credits, the banks have nothing to do but buy bonds and bond yields go to new lows, option one.
34:48Option two, they buy gold.
34:50And then the third thing they do if they can is they keep that money abroad.
34:54So you look at Hong Kong.
34:56Hong Kong, U.S. dollar bank deposits in Hong Kong have grown by $250 billion over the past couple of years.
35:04It's like it's just enormous amounts of money.
35:07Now, if the Chinese government manages to boost people's confidence, both the businesses and the individuals, the money is there and the money keeps coming in, $19 billion a month.
35:18So I think we're in the process of mending that confidence.
35:22And so I actually think that the government's 5% target is achievable.
35:27So really, very few people have traveled in China in the past five years, which is crazy because it's obviously the second biggest economy in the world.
35:36And it's still growing decently.
35:39Just walking around the streets, there's so many car brands that didn't exist five years ago, 10 years ago, producing really high quality cars and at very, very affordable price points.
35:51So the Western world is completely missed out on this story.
35:55I keep saying, look, you have to go see China.
35:58You can't underestimate how much it has changed in five years on so many different fronts, because it's not just the manufacturing.
36:05It's also the fintech.
36:07I wrote this piece about a year ago now called Prejudice in China.
36:11People are holding on to past prejudices.
36:14They might have gone to China 10 years ago, 15 years ago.
36:17And back then, China was an economy that essentially produced cheap goods cheaply.
36:24China quality was seen as inferior.
36:27For a lot of people, if you haven't been to China in the past five years, that's what they're still stuck with.
36:32It's a frame of reference that has been bypassed.
36:34The assumption I think most Westerners have is it's communist, therefore it's going to fail because all the other communist countries have failed.
36:43Now, I always say, well, look, the interesting thing today about China is the CCP has been in power longer than the Soviet Union existed.
36:52China doesn't feel like it's collapsing at all.
36:55You're getting better trains.
36:57You're getting less pollution.
36:59You're getting airports being built everywhere.
37:02China now is even producing its own plane.
37:05China is sending missions to the dark side of the moon.
37:08So I think there's a communist element is a big part of that bias.
37:13I do tend to believe as well that, look, in the Western world, we have this conception that people from Asia can't be creative, that it's almost like we have a monopoly on creativity.
37:25We're always surprised when Asians do better.
37:28And so I think we have this tendency to always underestimate the resiliency and the hard work, frankly, of Asians.
37:35And, you know, today, it's amazing.
37:38I was being interviewed by American TV channel.
37:41One of the first questions they asked was, you know, yeah, but there's no creativity in China.
37:45I said, how do you figure?
37:46Like, they're producing better cars.
37:48They're producing better movies.
37:50Like, go see Ninja 2.
37:52It's like the world's highest grossing cartoon.
37:55But people hold on to these prejudices long after they're proving to be not true.
38:00You can't understand the Chinese progress, the economic progress, the growth that you've seen, et cetera, if you don't understand the level of competition.
38:10That most Chinese businesses have to deal with.
38:14To be a successful businessman in China means that you're going through just insane levels of competition.
38:22And if you don't run twice as fast as the next guy, you're not going to win.
38:27If you look at the U.S., it's like, OK, they decide to do electric cars.
38:32So essentially, they tell Ford, GM and Tesla, we'll give you big subsidies to do electric cars.
38:40And then GM and Ford fail and Tesla succeeds.
38:43And the end result is you get Tesla's for 70,000 U.S. dollars and Elon Musk gets to be worth 100 billion dollars or whatever the number is.
38:52In China, capitalism works differently.
38:54In China, OK, you know what, we need to produce electric cars.
38:57And then what happens is that every local party secretary, every mayor, every provincial governor says, I'm going to call my bank and I'm going to say, hey, Agricultural Bank of China.
39:09I've got a local car producer here.
39:11You need to give him loans so he can start producing electric cars.
39:15And before you know it, you have 130 car producers in China and it becomes what I've come to call the Hunger Games of capitalism.
39:23And this is what happens in an industry after industry.
39:26But the end winner is actually the consumer, because the consumer, instead of having one guy who's worth 100 billion dollars like Elon Musk, what you end up with is many car companies.
39:39And the consumer in China today has a wide choice of cars that are much cheaper than cars anywhere else in the world and sometimes now much better than cars.
39:49And this is how capitalism is supposed to be.
39:51More competition.
39:53Capitalism isn't supposed to be one or two companies like Microsoft, Google, Tesla that control an entire industry and make super fat margins and end up in a quasi-monopoly situation and then spend a bunch of money lobbying the government to maintain their quasi-monopoly situations.
40:11That's not what capitalism is about.
40:13Capitalism is about companies fighting it out and, yes, like sometimes making very, very slim margins.
40:20Now, that's part of the equation.
40:22The other part of the equation is a government that does deliver on infrastructure needs.
40:27So it does deliver on the roads.
40:29Does deliver on the railroads.
40:31Does deliver on the airports.
40:33And basically on the backbone that you need to have a modern economy.
40:37Does deliver on the electricity grid.
40:39And now a lot of people say, oh, yeah, but they've overinvested in this, etc.
40:42And that's probably true.
40:44But I think if you're the Chinese government, you say, okay, we're never going to hit it quite right.
40:49We're not going to hit the perfect number for investment.
40:52So do we want to overinvest or do we want to underinvest?
40:55If you underinvest, you end up with power outages, which means that you're then hurting industry.
41:00It always makes sense to overinvest.
41:03So the whole system in China is built towards always excess competition and excess overinvestment.
41:11That's how the system works.
41:13But that's how you get a lot of progress.
41:15And that's how you take out whatever it is, 600 or 700 million out of poverty.
41:24So I think nobody had China catching up on AI as quickly as they've done on their bingo card.
41:29It's been a very rapid development.
41:32I think it's very exciting.
41:34It highlights a number of trends.
41:36One of the reasons the U.S. was so successful was you had the whole Silicon Valley ecosystem.
41:42And it seems pretty obvious to me now that there's a whole ecosystem in Hangzhou.
41:47You look at all these companies that are coming out, they seem to be all in Hangzhou now.
41:52You have a whole ecosystem in Shenzhen.
41:54So you already have like two Silicon Valleys now.
41:56China has caught up on AI.
41:58China hasn't yet caught up on semiconductors.
42:01But clearly the government is throwing money at this.
42:04It's throwing human resources at this.
42:06When you look at pretty much every major semiconductor company in the world,
42:11whether TSMC, NVIDIA, Broadcom, AMD, now Intel, they're all run by people of Chinese ancestry.
42:21Maybe Taiwanese, maybe.
42:23So very clearly there's something in the Chinese culture that works well with semiconductors.
42:31So I think China will catch up.
42:33Now, look, I've been thinking for more than a year that Chinese equity is the place you want to be today.
42:39Look, the way I look at it, Chinese equities right now are still not very expensive.
42:45They have massive government support.
42:47Because bond yields are very low in China, retail investors are taking money out of the bank.
42:52You're earning 0% at the bank.
42:54You're still getting good dividend yields on a lot of stocks.
42:57So the gap between dividend yield and bond yields is close to record highs.
43:02You've got strong momentum now after a lot of bad momentum.
43:05So you go through your checklists like, okay, good valuation, good momentum, good policy support, good earnings yields.
43:13It's like check, check, check, check, check.
43:15If you don't buy now, when are you going to buy?
43:17So I am optimistic on China.
43:20Again, I think it's the most competitive economy in the world.
43:23I think that's a fact.
43:25It's not an opinion.
43:28And this was another episode of China Now,
43:32a show that opens a window to the present and the future of the iQIYI.
43:35Hope you enjoy it and see you next time.