Why the World Keeps Getting Shocked by China's Technological Progress

Over the last several years, the world has watched as China edges close to or past the technological frontier in more and more areas. Earlier this year, US investors were jolted even further when DeepSeek's AI model proved to be close to the state of the art American models. So what is the process by which China actually develops new tech? Why has it worked out so well? And how do priorities set by President Xi Jinping actually get transmitted to researchers and businesses? On this episode, we speak to Kaiser Kuo, the host of the Sinica podcast. He discusses the cultural dimension of tariffs, and what he sees as a fundamentally different attitude towards the benefits of technological progress in China vs. what is seen in the US. Read more:I’m a DeepSeek AI Bro Now Only Bloomberg.com subscribers can get the Odd Lots newsletter in their inbox — now delivered every weekday — plus unlimited access to the site and app. Subscribe at bloomberg.com/subscriptions/oddlotsSee omnystudio.com/listener for privacy information.

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• 1:57Joe Weisenthal?

  Hello and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

• 2:02Tracy Alloway?

  And I'm Tracy Alloway.

• 2:03Joe Weisenthal?

  Tracy, we talk a lot about the tech competition between the US and China, but I still think we talk about it in sort of broad strokes. We talk about some of the policies, obviously, made in 2025, but actually how the process of tech innovation in China still seems like important. There's more to learn about there.

• 2:23Tracy Alloway?

  I totally agree. And actually, we have a really good example recently in the form of DeepSeek, right? And this thing that people acted like it came out of nowhere, but actually a lot of the papers had been published over the course of months, but it seemed to surprise everyone, right?

• 2:40Joe Weisenthal?

  I don't know if it's true. You know, the story that, oh, it's just the side project of a quantitative hedge fund. Like, that's such a good story. I'm not entirely sure if that's true. And they made it sound like, oh, yeah, while they were doing this quant fund, they built DeepSeek on the side. Like, it's such an alluring story.

• 2:57Tracy Alloway?

  Well, not just a quant hedge fund. Isn't the story supposedly that the founder decided to go into AI after Xi Jinping was kind of complaining about how much talent and resources is being wasted on finance in various ways? I've heard that.

• 3:13Joe Weisenthal?

  Yeah, people, like, these are like, great stories, right? And of course, there is a lot of truth to them, particularly in the broad sense, that we know that, and we talked about this at the time, several years ago, there was this sort of announced hard pivot away from the sort of like, consumer internet tech, and they sort of had their legs cut out from under them, towards these more like, serious, capital T, tech.

• 3:37Tracy Alloway?

  Hardware.

• 3:37Joe Weisenthal?

  Hardware, AI, things like that, things that have like, more stakes than, say, social networking, or something like that. So like, how do you actually do that, though? How do you actually, like, direct talent in certain ways? You know, I think that if President Trump came out tomorrow and said, we want people to, and he has actually talked about this, but then we want to do more hard tech. I don't think there's like, a real easy, straightforward mechanism. And so how do you transmit certain ambitions into the actual landscape? I think there's more to be learned on that.

• 4:08Tracy Alloway?

  Well, I think also we in America are very used to thinking about technology as this like very creative process and the outcome of Jeff Bezos working in his garage.

• 4:19Joe Weisenthal?

  Yeah.

• 4:19Tracy Alloway?

  Something like that. And it's hard to imagine often the same environment existing in China. I think that's just like a cultural difference, perhaps, between Americans and Chinese. So we should talk about it.

• 4:31Joe Weisenthal?

  Totally. Well, I'm really excited to say we are going to be talking to one of the best China watchers there is, who has a lot of interesting thoughts on this topic, someone we've never had on the podcast. We're going to be speaking with Kaiser Quo. He is the host of the Sinica Podcast, which has been around since 2010.

• 4:48Tracy Alloway?

  Wow.

• 4:49Joe Weisenthal?

  Yeah, we've been doing this for about a little less than 10 years. So it's very impressive, this sort of longevity, someone who spent a lot of time in China, splits his time between the US and China, lived there for several years. Kaiser, thank you so much for coming on Outlots.

• 5:04Speaker 04

  Hi, Joe. And hey, Tracy, this is a huge honor for me. Thanks. Thanks so much for having me.

• 5:08Joe Weisenthal?

  Thank you for coming on. What is the Sinica Podcast? What has been your project in the last 15 years?

• 5:15Speaker 04

  Yeah, so Sinica is an hour-long or sometimes much longer interview format show. We bring on academics and policymakers occasionally. I've had a number of the former Assistant Secretaries of State for East Asia Pacific on, have had ambassadors and so forth on. But it's changed the mission. Initially started off as being sort of more, here's what's in the news and here's a couple of people who can talk about it intelligently, having to do with China. Since 2016, when I moved to the States, the focus has really been on US-China relations. And it's got more American guests on than previously were, but we tackle everything under the sun. I mean, US-China relations, China, India, China, Russia, China, India, what have you.

• 5:56Speaker 04

  And the Chinese macroeconomy, technology, lots on technology and culture. But the idea is that it's supposed to look at the way that we think and talk about China. Now, it's really evolved into something which I think has a longer shelf life.

• 6:11Tracy Alloway?

  Wait, why did you decide to start it? Because you were in a band, right? That was your main gig.

• 6:17Speaker 04

  Yeah, that's correct. Something for some reason everyone knows about me. I mean, I transitioned. I went out, I left that band in 1999. And like other people who didn't have many marketable skills, I went to the internet.

• 6:31Tracy Alloway?

  Into podcasting.

• 6:33Speaker 04

  Well, not right away. I mean, I worked for internet companies for a number of years, and I worked as a reporter for quite a number of years. And then in 2010, it was just sort of on a lark. I was about to start a job at Baidu as their head of international comms, and a very good friend of mine in Beijing, we got in a conversation about what podcasts we were listening to. And I, you know, I said, oh, you know, the usual This American Life and Radiolab and whatnot. And he had a few. And then we just sort of said, why don't we start a podcast? We're both talkers. We both know everybody. Let's just do one and see what happens. And we did. And it took off. It did pretty well. We got acquired in 2016, right around the time I was moving to the States. And the company that bought us folded

• 7:15Speaker 04

  in 2023. And I just sort of struck out on my own doing a Substack. And I've stuck with it, managed to find a little bit of support and those few, and hopefully after this, more subscribers. But we're continuing to put them out every week. It's just me solo, but it's a group effort.

• 7:33Joe Weisenthal?

  I'm in a band. I'm trying to go the other direction. I have a country music band, and maybe one day I'll leave podcasting behind. No, no, no, I'm never gonna leave podcasting behind.

• 7:43Speaker 04

  You know, I'm actually not gonna leave podcasting, but I've gone back into my old band reformed when I was back in China recently. So

• 7:50Joe Weisenthal?

  Are you on Spotify?

• 7:50Speaker 04

  As of this summer. We are, yeah. You can look up Chunqiu, C-H-U-N-Q-I-U. You've gotta put a space in between them for some reason. But it's spring and autumn in English.

• 8:00Joe Weisenthal?

  I'm gonna start with like a really super broad based question that maybe is not even really, that is probably a full hour long or two hour long episode. But in your years of covering China from a journalistic perspective, or at least from a sort of conversational perspective, and watching American media or American pundits talk about China, is there like a persistent blind spot, or a thing that stands out to you as something that people talk about China that does not accord with your experience of having lived there and having reported on it yourself?

• 8:34Speaker 04

  There's so many, I don't even know where to start.

• 8:36Joe Weisenthal?

  Yeah, I know.

• 8:36Speaker 04

  But I guess the one that I would usually focus on, I mean, and it's a whole cluster of issues that are related to this, but I think that people aren't mindful of just how compressed and how rapid China's transformation has been. What has happened in the course of one working lifetime? I mean, I like to tell people that if you can imagine graduating junior high or high school in 1979 on the eve of reform and opening, and then 40 years later, at the end of your life, the end of your working life, you're thinking about retiring and you've seen the per capita GDP go from about $175 at the beginning of your working life to almost $13,000 now. That transformation is just profound and it's just so quick.

• 9:19Speaker 04

  So I think that what people get wrong is that they don't see that the hardware that's visibly advanced has done so just at a much faster pace than the software. People don't change overnight. I mean, I liken to that movie, I don't know, Joe, you or Tracy have seen Big with Tom Hanks? Oh, yeah.

• 9:37Joe Weisenthal?

  I watched it a month ago with my kids. Keep going.

• 9:40Speaker 04

  Yeah, yeah, great movie. It's actually aged well, but you know, Tom Hanks makes a wish and goes to bed at, what? He's like 11 and he wakes up and he's in his 30s, right? I mean, that's kind of China, right? It's like the mind is still out of that, that 11 year old in a lot of ways, but it's in the body with 30s. So we look, we look at this fully grown adult and expect it to behave as a fully grown adult. That's what people get wrong.

• 10:05Tracy Alloway?

  You know how I measure China's technological progress?

• 10:08Joe Weisenthal?

  Go on.

• 10:09Tracy Alloway?

  So I remember in the early 2000s, I was on a trip in the countryside and I experienced one of the worst toilets I've ever experienced in my entire life, like basically just a hole in the ground. And then I went back in 2019 to Beijing and I went to one of the nicest bathrooms that I've ever been in, in like a luxury shopping mall. And I thought, wow, things have changed.

• 10:36Speaker 04

  Yeah, yeah, that's a good measure. It's a good proxy.

• 10:39Tracy Alloway?

  Yeah, I should do that all the time. Okay, so I guess I'll just jump into the technology aspect of this, but does technology come from a different place in China versus the US? Kind of getting back to the intro, there's a sense in America that technology is the product of freedom and creativity and you have the ability to start a new company in your garage, whereas in China, maybe there's a different sense of how tech actually gets started.

• 11:10Speaker 04

  Yeah, so there is that American myth about the lone genius toiling in obscurity in his garage, either in Menlo Park, New Jersey, or Menlo Park, California, right? I think there's some of that, definitely that mythology in China, but I think the reality is very, very different. I think China does place a premium on that kind of ex-Nilo, kind of from scratch, zero to one innovation, but I think it places more of a premium on the scaling up of technology and the diffusion of technology in a way that I think the American mythology has sort of blinded us to. Yeah, we're constantly caught off guard by Chinese technological advances.

• 11:48Tracy Alloway?

  Yeah.

• 11:49Speaker 04

  I think we keep seeing this tech momentum despite all the decoupling, despite the chip bands, in spite of all the economic headwinds that China is obviously facing. And I think that the reasons are pretty deep. They're actually societal and even cultural. So I think that gets to part of the way that technology is conceived of in China. You'll find pockets, of course, in America where people are still really, really techno-optimistic. They're still very solutionist. They're still very accelerationist, right? But it's incredibly common in China, whereas it's only here in pockets. I think American society now, and I think the West more broadly, has for some time now had a fear. If you look at our science

• 12:33Speaker 04

  fiction, if you look at the way technology is thought about broadly in society, there's a real anxiety over it, right? Our leading technologists, our leading natural scientists talk all the time about the existential threat that AI poses. I don't want to diminish that threat, but I have to say that in China, you just do not hear that conversation, certainly not nearly as frequently and not coming from the leading technologists themselves. So it's very different.

• 13:01Joe Weisenthal?

  Why is it different? You know, I'm thinking about your big analogy, actually. I'm going to extend the metaphor a little bit too far, but you know, my phone, I have a love-hate relationship with my phone. I'm on it all the time, but I also think it's doing significant damage to my mental health. Whereas if I were to like, you know, my daughter wants a phone, and if I were to give her one, she would probably be thrilled for a long time. I'm not going to let her have a phone for a long time, but she would be like thrilled and they're like, this is an incredible addition to my life that she would be very excited about again. Do people have the same love-hate relationships with gadgets and new technologies that we seem to have here?

• 13:38Speaker 04

  There are some people, of course, who have anxieties over it, but no, I think broadly speaking, you know, when I've sat on the sidelines of a soccer game, watching our kids play, and I'm trying to talk to the other parent about how they limit screen time, he's there scrolling on his device going, wait, hang on a second, let me answer this email. What were you saying just now about screen time? What? And I mean, it's like the question doesn't compute. They don't see it as such a threat. And part of that, of course, is because the social media environment in China is a lot more sanitized. There isn't the threat that Junior's going to be scrolling porn all day, right? That's part of it, but I think really more to the point is that for these many years

• 14:17Speaker 04

  now, ordinary Chinese people have seen their lives, their material lives, just improve pretty much in lockstep with the quality of the technology they have in their hand or in their purse or in their pocket, right? Their bandwidth at home, how fast their network speed is, and how powerful their handheld device is basically tracked with their

• 14:41Speaker 04

  Their livelihood, right? So there's not that reason for suspicion. Now, that isn't to say that everyone in China has experienced this, certainly not. But I think for the vast majority, and not just of urbanites, but the vast majority of people have seen this correlation.

• 14:57Tracy Alloway?

  Wait, but there is some negative feeling towards some technology in China. And I'm thinking specifically of Xi Jinping and his big crackdown on consumer online tech. And he's not a fan of video games precisely because he thinks it's a waste of time and kids are staring at the screen too much. So there is an element of that.

• 15:18Speaker 04

  That also tracks with the Chinese parent thing, right? They all want us to be really good on computers, but not to waste our time playing video games or just chatting up people. Yeah, I think you were saying in your intro, and I thought that was really interesting, how Donald Trump, he wouldn't be able to just simply order everyone, the physicists, to start doing physics and not go work for quantitative hedge funds. In China, he kind of can. It's not, I mean, again, that's an exaggeration. There isn't a way, I mean, there are still plenty of people who go to school and study the social sciences or who graduate with engineering degrees and then go to work for a major social media company or go to work designing complicated financial derivatives or whatever. But he doesn't like that.

• 15:59Speaker 04

  He thinks that that's been one of the pathologies of the United States is that it's over-financialized and that our best and brightest here in the US have gone to work for these companies that basically don't make anything and just suck a lot of people's time and create polarization in the country. So they're worried about that and they have more wherewithal to direct people. It's not coercive, though. Let me be clear about that. They have ways to incentivize it. And I think that this, again, this is part of the popular culture. There's all sorts of reasons. I mean, we can start at the top. If you look at the composition of the Chinese leadership, I mean, what do we have in Congress? Who do we have heading major agencies? It's almost all lawyers, people with legal training.

• 16:42Speaker 04

  And that's good in a country that really prizes rule of law, and it's good for many reasons. But in China, the analogy is that you look at the senior leadership. If you look at, you know, who runs the provinces, whether the party or the state, you look at who are the mayors or the party secretaries of cities of a million people or more. And you're almost all going to find engineers. There're going to be like 70, 80% engineers. If the ladder of success, if the people who are top it all did one thing in common, they did a four-year degree in the natural sciences or in engineering. There's a good chance that you're going to tell your kids to do the same, or your kid is the case maybe, to, yeah, to do the same.

• 17:24Speaker 04

  So I think there's a lot of pressure that way in terms just of social mobility and in terms of what the perceived path of mobility is.

• 17:33Joe Weisenthal?

  By the way, this point about engineers and lawyers, or regular Odd Lots guest Dan Wong has a book coming out August 26th, 2025. It's up for sale on Amazon right now. You can preorder it about exactly this dimension of a sort of lawyer society versus an engineering society. I'm looking forward to reading that. I'm looking forward to having Dan.

• 17:54Speaker 04

  Yeah, Dan Wong is great. So I interviewed him for this Nova documentary that I did called Inside China's Tech Boom. And the whole thesis of it was really, I mean, in many ways, inspired by some of Dan's ideas about the importance of process knowledge. How the fact that China has not stopped manufacturing, there was never a makers movement in China because there didn't need to be one. They were always making stuff, right? The fact that they still have all the hardware there, it creates this sort of frictionless ecosystem of innovation where, you know, if you're a guy with an idea for some gadget and you're in Shenzhen, you can have your designer just send you over on WeChat his latest design. You can take it to your ODM, which is just a quick bike ride down the street.

• 18:37Speaker 04

  They can have you a prototype by the afternoon. You can make some tweaks and iterate and they'll just keep changing the thing overnight. And it's practically frictionless. And I think that's a huge piece of China's innovation success as well.

• 18:50Joe Weisenthal?

  But what happens when Xi Jinping comes out and says, you know what, we're not as into social networking anymore. We're not as into video games. We really want to focus on other areas of hard tech, important tech, something like that. What is the process of here is this national priority? And then the transmission and diffusion of these priorities into choices that maybe students make or technologists make?

• 19:16Speaker 04

  That's a great question. I think it's actually one that I can answer with three letters, KPI, right? What happens when you have these kind of abstract directives, the will of the leader from on high, is that they get translated not into specific policies, not right away certainly, but into this expectation set, you know, from the leadership on down, that this is how I'm going to score my brownie points. This is how I am going to get promoted within the party is if I tick these boxes, if I do these things. Let's say, you know, we decide that the thing is, we all need to have data centers. So suddenly, every municipality and every province is going to want to build data centers. They're going to fight each other for it. They're going to figure out, here's the best place

• 19:59Speaker 04

  for us to build ours. And here's all this money that we're going to put into that. I mean, they're going to want to tick that box. This is the sort of the way that everything gets done in China. When recently, when Xi Jinping announced that they were going to be, and this is directed that came not out of just the state council, but out of the party as well, that they were going to boost consumption. A lot of people just sort of sneered and said, yeah, I don't see a lot of policy here in place to do that. But you can bet your bottom dollar that everyone on down, they took this very, very seriously. And they're all figuring out ways where in their little patch of dirt, they are going to figure out how we can boost consumption. Because that's the way that I'm going to get promoted. They did the same thing with cleaning up air pollution. They do the same

• 20:43Speaker 04

  thing with cleaning up rivers. They make it part of your KPI. That's what they're going to do with this as well. That's what they did. I mean, the question that you asked about how they made sure these physicists were doing physics, it's much the same.

• 20:56Tracy Alloway?

  There's also, I feel like, a sense of clarity in some of these policy directives. So China very often explicitly will say where it's investing, right? So when we have the consumer tech crackdown, it came with a simultaneous announcement that everyone should go into hardware, basically. And we saw that repeated in various ways. I remember Chairman Rabat was tweeting that people should go to the industries that actually fit the central government's general policies. So I feel like it's just very clear as well. And the messaging is kind of on point.

• 21:34Speaker 04

  We have a word in Chinese Fengkou, which literally means sort of wind mouth. It's the place where the wind will be blowing. It's like that little wind tunnel. And they telegraph that. They tell you well in advance, here is where we're going to do this in the 14th five year plan. In the 15th five year plan, they say exactly which industries are going to not only receive a lot of government investment, but where the paths are going to be cleared. There's going to be removal of a lot of regulatory hurdles. There's going to be favorable policy for you if you get into this. And if you're an investor, that's where you're going to put your money. That's what you're going to do. You're going to, you know, it doesn't take a genius. You just need to read the important documents and you figure out exactly what their priorities

• 22:19Speaker 04

  are, just as you say, there's that clarity.

• 22:37Speaker 00

  What's next for virtual assets? I'm Jacob Grease, host of Economy Scale, a series exploring growth in key global sectors. And in this episode, we're diving into the digital forces shaping finance. Sean McHugh from Dubai-based Virtual Assets Regulatory Authority has this to say.

• 22:53Speaker 05

  We're seeing a lot of insocial players come in, digital asset dedicated hedge funds, high frequency traders and that sort of thing, and folks who service insocial clients.

• 23:01Speaker 00

  As more capital enters the market, adaptive regulation is likely to become increasingly key. Reese Merrick of Ripple says.

• 23:09Speaker 06

  A lot of regulators globally would like to keep the industry at arm's length. That's the opposite here. I think also what you'll find is that regulation and frameworks can come out, but some of them are maybe a slight iteration on some 80-year-old policy and not actually in line with what the technology can do and offer. And again, that's very different in Dubai.

• 23:28Speaker 00

  Listen to the full episode wherever you get your podcasts. This series is brought to you by Bloomberg Media Studios and the Dubai Department of Economy and Tourism.

• 23:38Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume, so writes Bloomberg Business Week's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting

• 24:20Speaker 01

  and hiring practices, but according to recruiters, advisors, and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company, and Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates, quote, "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at ChatGPT.com.

• 25:02Joe Weisenthal?

  I have to admit, you know, like when I read, say, a Xi Jinping speech, translated into English, or maybe I just have ChatGPT translated, like there is often not a lot of like specifics or arguably even substance in them. There's a lot of like really sort of high-level, grand things, but this sort of makes sense. Now granted, the leaders around the world often don't get into a lot of specifics, but it makes a little bit more sense to me in the context of, okay, these priorities are announced and immediately on down, I have to, you know, imagine provincial leaders, leaders of school systems, universities, then immediately get the message that their futures and their success and their careers

• 25:47Joe Weisenthal?

  will be about who can show the best results on what maybe sounds like some sort of vague priority.

• 25:54Speaker 04

  And you're missing the biggest piece of it, which is parents. Oh. They're getting this message as well. They're the ones who are ultimately deciding, no, you're not going to be an intellectual historian. You're going to study, yeah, you know, you're going to study engineering physics. Sorry, buddy. Because you're going to get a job at Tencent or at BYD or at Huawei when you graduate. Yeah, so I think that's the important thing. A friend of mine once joked that a lot of people in the West have a great deal of difficulty imagining how the leader of an authoritarian nation can do all these things that seem so apparently cruel, arbitrary, but actually have your best interests in mind. But for anyone who grew up with Chinese parents, they know exactly how that works.

• 26:39Tracy Alloway?

  Wait, so just on the authoritarian point, I know you touched on this already, but just to press on this. Would you say authoritarianism is a net positive or a net negative for technological development?

• 26:52Speaker 04

  I think it's a wash in most ways. I mean, look, maybe this is my upbringing talking, but you know, I am not willing to discard the idea that a lack of intellectual freedom, of academic freedom, of freedom to query and to to experiment without any ideological fetters, that if you don't have that, in the long run, you are hobbled. I think that's probably still the case. But I think in America, we've taken it too far. We have this idea, I mean, do you remember back in 2013, 2014, when Joe Biden and even Carly Fiorina, who really ought to have known better, I mean, she was CEO of a major technology company. They were going around and they were making these speeches, you know, Biden was making these graduation speeches. Fiorina was on the campaign trail. And she was talking about, Biden was talking about, they said the same talking point.

• 27:36Speaker 04

  It's like, show me one thing that China's ever innovated. Right. You know, as long as we have freedom, we will always be in the lead of innovation. And I mean, I think that takes it from a necessary condition, which I even have quibbles with. In fact, I don't believe that it's a necessary, freedom's a necessary condition for technological innovation. But it even elevates it to sufficient condition. Yeah. Where, you know, it's like, just because we're free, we're always going to be ahead in innovation. So I mean, that's part of the reason why we're constantly just being, just sideswiped, just completely just Yeah. blindsided by Chinese tech advances.

• 28:12Joe Weisenthal?

  It's you hear that to this day, I think you hear less of it, but it is remarkable the degree to which you still hear that. What's your version of DeepSeek? Where did it come from? And how much does it fit this story of like, oh, they were doing quant stuff and then suddenly they're like, oh, we should pivot to AI. Like, what's the DeepSeek story?

• 28:32Speaker 04

  Well, I mean, the biography of Liang Wenfeng is not in question. I mean, he ran a quant fund called High Flyer, right? And he pivoted. Now, to what extent they were just developing this as a sideline hobby, or, I mean, I think more likely, they were developing AI that would help them in trades, right? Help them in high frequency, high velocity trading, right? But the pivot being attributed to Xi Jinping making this policy change, that totally tracks. I don't know the precise details, but it totally tracks. It doesn't seem suspicious to me. I have no reason to doubt that that's the case. I mean, plenty of people have made that kind of a pivot. I mean, maybe not all of them

• 29:14Speaker 04

  have enjoyed the kind of world striding success that DeepSeek has, but it certainly tracks.

• 29:20Tracy Alloway?

  I want to talk about the export controls from the Biden administration. So what role would you say those have played in China's technological progress? Because one thing I sometimes hear, people used to use the analogy of the three-body problem. I don't know. Did you ever read that, Joe?

• 29:37Joe Weisenthal?

  I never read it.

• 29:38Speaker 04

  I did, yeah.

• 29:39Tracy Alloway?

  Oh, sorry. And Kaiser, yeah.

• 29:41Speaker 04

  Oh, yeah, for sure. Neil Ferguson actually used that at Davos a few years ago. I was there. I was, you know, working this little side hustle. I'm just kind of a note taker for the World Economic Forum. But he actually, without explaining anything, he just simply said, you know, what the United States is trying to do to China right now is exactly what the Trisolarans were trying to do to Earth in three-body problem. And without explaining what he meant, but just on the assumption that everyone in the audience had read it, and probably most people had. But yeah, trying to basically stymie technological advance, right?

• 30:11Tracy Alloway?

  Right. So I feel like we should explain it now, but I guess it's the idea that in the three-body problem, Earth is threatened by this alien species, and because of that, humanity kind of reorganizes itself and technological progress thrives, at least for a while.

• 30:27Speaker 04

  Yeah, and I think that that's kind of what we've seen happen. I mean, I use a more quotidian metaphor, the one that I think not everyone has had have read this really, really long turgid science fiction classic for. I think we've basically compelled the frog to leap again. And it was happy enough just sort of hopping along well behind the US when it came to cutting edge semiconductors. But now it may leap the United States as the frog, you know, our metaphoric frog did in 5G or in renewable energy like solar and electric vehicles, right? So we have now given China both the kind of urgency and the sense of imminent threat

• 31:09Speaker 04

  that was needed to light a fire to that frog's posterior. And now it's, you know, it's in the air. It's maybe directly over our heads, maybe in front of us.

• 31:36Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Business Week's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands on experience matters more to recruiters than advanced degrees, with the company looking for people with raw innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting

• 32:18Speaker 01

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• 32:59Joe Weisenthal?

  One of the things that's really elemental to US tech is the vision and dreams of gigantic monopoly profits. This is sort of like the Peter Thiel ideas, like the goal is to like build a monopoly and get insanely rich doing it. And the people who go into tech, dreams of fortunes, et cetera. There is this huge liquid stock market that becomes the destination either for IPOs or acquisitions. Talk to us about the capital markets component of Chinese tech. Is it the same like path to getting super rich that American technologists see here? Like what incentivizes and motivates the technologist in China?

• 33:40Speaker 04

  Well, I think that they're exactly the same. I think that there's very little daylight between, well, first of all, I mean, in the 90s, in that first technology boom in China, came right on the heels of what you saw in the United States. All these people, Charles Zhang, who left MIT and went back to China in, I think it was like 97 or 98 to start this company, Sohu. All these other entrepreneurs, Robin Lee, who I used to work for at Baidu, a lot of them were returnees from the United States and they had the same glint in their eye. And you have to remember, these guys, they had American business, business models essentially. They went to American VCs from Sand Hill Road to raise their money. They went to American capital markets, right?

• 34:22Speaker 04

  When they wanted to list, their exits were always on NASDAQ or on New York Stock Exchange. Only in rare exceptions were they actually not. Tencent's an exception. Alibaba's a little bit of an exception. But most of them, I mean, hundreds of them, went to the United States forces, right? And yeah, I think it's the same motivating force. The cultures are remarkably, or were remarkably similar. So that was like the only thing I felt comfortable working. I mean, as a guileless American who just had my, I would just have my posterior handed to me in any kind of corporate setting, except in the internet where, you know, the same

• 35:03Speaker 04

  kind of Silicon Valley egalitarianism and that kind of enterprise culture prevailed. So that was like one of the only safe places for people who, you know, were clueless like me.

• 35:15Tracy Alloway?

  Since you mentioned-

• 35:16Speaker 04

  So I think they're the same. I think they're the same.

• 35:18Tracy Alloway?

  Since you mentioned culture, can I ask a slightly random question?

• 35:21Speaker 04

  Sure.

• 35:22Tracy Alloway?

  But I think you're a good person to ask about it, given your background as a musician. But China has been very successful in exporting technology. So, you know, whether it's BYD cars, or TikTok, or whatever, I think we can all agree that it's come from nowhere, basically, and is now certainly a major player. Meanwhile, in sort of pop cultural exports, the lack of Chinese pop culture exports has been a sort of long-running discussion point now. And if you compare China to a place like Japan, where there's J-pop, or Korea, where there's K-pop, it does feel like something is kind of lacking there.

• 36:05Tracy Alloway?

  I guess my question is, is it fair to say that China has fallen down on cultural exports, at least compared to technology? And then B, why is that?

• 36:15Speaker 04

  Yeah, no, that's a great question. It's something I've pondered for a very long time, too. I mean, I think there's no arguing that China's got a gigantic gap. It's not punching at its weight. But let's figure out how we calculate that weight. Because, you know, when you look at, when did we all start eating sushi and watching the Kirakuro Sawa films? Like, in the 80s, right? That's when Japan's soft power starts to really, really peak, right? We all start driving Japanese cars. This is at a point where Japan's per capita GDP was about 75% of what the United States' was at that time. And Korea's similarly, around the time where we start all listening to Gangnam Style, and then, you know, all our daughters or whatever have posters of BTS on their walls, as mine still does.

• 37:00Speaker 04

  This was at a time when South Korea's per capita GDP, it's like seventy, seventy-two, seventy-three percent of America's GDP per capita. I think that has something to do with it. I think that per capita GDP kind of shows what a nation's priorities are going to be. When it's low, it's still going to be in that stage of we've got to work really, really hard. Just, this is why, I mean, in China, I mean, I play music. So I'm constantly frustrated by the fact that for most people, for the overwhelming number of people, music is just entertainment. There's nobody who thinks of it as an art form anymore. I mean, or if there ever was, I think that it has to do with that. But I think there's also, and it's obvious to me, that the first rule of soft power should just be, don't talk about soft power.

• 37:44Speaker 04

  That China's government's obsession with trying to create soft power is one of the big impediments to it actually having soft power. Again, let me, let me be very, very clear. It has plenty of soft power in the developing world. I mean, if you look in Southeast Asia, a lot of people are watching these insufferable costume dramas about, you know, palace intrigue in the Qing Dynasty.

• 38:06Tracy Alloway?

  But there are some good ones. There are some good ones out there. A bunch of them are on Netflix nowadays.

• 38:12Speaker 04

  Yeah, yeah, I guess the Thai ones are really popular these days.

• 38:15Joe Weisenthal?

  Wait, that's interesting. So that, that's actually popular content in Southeast Asia?

• 38:20Speaker 04

  Yeah, it's huge. It's absolutely huge. All over Southeast Asia, in Indonesia, in Malaysia, Thailand, in the Philippines, even in Vietnam, anywhere in Southeast Asia you go, there's a lot of this stuff. But yeah, but no, to your point, in, in, in Europe, in the United States, no, it's not really registering. And I think there's, that's one of the reasons. But I think ultimately, the reason is, well, soft power tends to be created on the periphery. It creeps in through the cracks. You know, it's a grassroots thing. It's not supposed to be created top-down. And yeah, you can look at South Korea and say, there was a lot of government, you know, and a lot of these gigantic conglomerates who created Korean soft power, the boy bands and stuff. That, that may be sort of an anomaly.

• 39:03Joe Weisenthal?

  Kaiser, we could go on a long time. There are just so many questions, but I think that's a good spot to wrap it. Thank you so much for coming on Odd Lots. We'll have to have you back on again soon.

• 39:12Speaker 04

  I would love to come back on. Thank you so much for having me.

• 39:14Joe Weisenthal?

  Thank you.

• 39:15Tracy Alloway?

  Thank you, Kaiser. That was fun.

• 39:29Joe Weisenthal?

  I thought that was really interesting. I like the point about everyone getting the message and then everyone doing their own thing to sort of prove that they're getting a message. And we talked about this on our episode with Sam D'Amico, the Impulse Labs guy. This idea of, okay, there's some priority and then all the different provinces compete on how well they're doing at fulfilling their priority. It makes a lot of sense that that's a very broadly applicable lesson to like different sectors and different parts of the economy.

• 39:57Tracy Alloway?

  Totally. I really think the messaging is kind of key here. The message is very clear. It's if you've, if you choose this route that the Chinese government is encouraging you to take, your life is going to be a lot easier than if you take another route. And I think that's kind of different to the way industrial policy, I guess, works in the States where, you know, even, even if a president stands up and says, we want a lot more semiconductors in the US, there's still a lot of bureaucracy, a lot of uncertainty, a lot of paperwork attached to getting support from the government for a semiconductor project. And so I think that uncertainty like still feeds into the US, certainly.

• 40:40Joe Weisenthal?

  Yeah. President Trump recently gave a speech at University of Alabama. I think it was their graduation ceremony. And he said he was like, to the business students here, don't just think about your portfolios, think about your country. And I like that message, but I don't know, like, what are the levers that actually get towards that? And so, oh, also, Tracy, I have a take.

• 41:03Tracy Alloway?

  Oh, oh, really? Just one?

• 41:05Joe Weisenthal?

  Yeah, just one take.

• 41:06Tracy Alloway?

  Okay, hit me.

• 41:07Joe Weisenthal?

  This is something I've been workshopping. And so I'm leaving it to the end.

• 41:10Tracy Alloway?

  I can't believe you're not tweeting it. Are you gonna tweet it? Are you workshopping for a tweet?

• 41:15Joe Weisenthal?

  I'm workshopping it for you here. I figured a lot of people aren't listening by this point, so I can drop it here, which is, I'm kind of coming around to this idea that like, Complex financial products that they have a bad rep.

• 41:27Tracy Alloway?

  Would they have a bad rep or they are bad?

• 41:29Joe Weisenthal?

  No, that they have a bad rep. That actually, this is like a sort of contra to a lot of popular thing. It's like, oh, complex semiconductor is good. Complex financial products, bad. I'm just throwing it out there that maybe we should talk more about why people get paid so much to design complex financial products in a market economy and why they're so highly valued. I'm just throwing it out there.

• 41:54Tracy Alloway?

  We should do an episode on Ray Dalio and the chicken nugget again.

• 41:57Joe Weisenthal?

  That's exactly right. That's exactly right. Derivatives gave us the chicken nugget. Anyway, talking to Kaiser about this just reminded me of that, that I want to explore this idea. And I'm saying it here now, kind of as a remind myself, reminder to myself to think about this more.

• 42:13Tracy Alloway?

  Chicken nuggets is the ultimate example of American technological and financial supremacy.

• 42:20Joe Weisenthal?

  We do great, complicated things in the United States, but because we have this bias against finance as being extractive or something, I think we don't sufficiently recognize where we're at the cutting edge.

• 42:33Tracy Alloway?

  It is true that in China, finance and industry are often working hand in hand. And if the government says that, for instance, hardware is now very important, you will see the banks start to loosen up on lending standards and things like that. So a valid point, Joe.

• 42:48Joe Weisenthal?

  What is a supply chain but a payment chain in reverse?

• 42:52Tracy Alloway?

  That's Sultan Pozar's line.

• 42:53Joe Weisenthal?

  Oh, he said that?

• 42:54Tracy Alloway?

  You just stole that one.

• 42:55Joe Weisenthal?

  Yeah, I stole it from Sultan. That's right. Yeah, credit to Sultan. But you know, maybe we should think about this a little more.

• 43:00Tracy Alloway?

  Yeah. All right. Shall we leave it there?

• 43:02Joe Weisenthal?

  Let's leave it there.

• 43:03Tracy Alloway?

  This has been another episode of the Odd Lots Podcast. I'm Tracy Alloway. You can follow me at Tracy Alloway.

• 43:08Joe Weisenthal?

  And I'm Joe Weisenthal. You can follow me at the stalwart. Check out our guest Kaiser Kuo. He's at Kaiser Kuo and check out the Cynica podcast and Substack. Follow our producers, Kermit Rodriguez at Kermit Armad, Dashal Bennett at Dashbot and Kale Brooks at Kale Brooks. For more Odd Lots content, go to Bloomberg.com/oddlots, where we have a daily newsletter and all of our episodes. And you can chat about all of these topics 24/7 in our Discord, discord.gg/oddlots.

• 43:36Tracy Alloway?

  And if you enjoy Odd Lots, if you like it when we check in on Chinese technology and how it actually develops, then please leave us a positive review on your favorite podcast platform. And remember, if you are a Bloomberg subscriber, you can listen to all of our episodes absolutely ad-free. All you need to do is find the Bloomberg Channel on Apple Podcasts and follow the instructions there. Thanks for listening.

• 44:28Speaker 07

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