China Decode: China Walks a Dangerous Line as Iran War Escalates

Alice Han and James Kynge break down how China is navigating a delicate balancing act as the Iran conflict intensifies — protecting its energy supply while avoiding direct alignment. They also unpack BYD’s global expansion and what it means for Tesla as the EV race heats up. And in Chongqing, a massive new escalator system offers a striking look at China’s approach to infrastructure, scale, and urban life — plus a quick check-in on the markets to start the week. Subscribe on Substack for ad-free episodes and much more! 👉 chinadecode.profgmedia.com/ Learn more about your ad choices. Visit podcastchoices.com/adchoices

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• 1:28Alice Han?

  The fact of the matter is China is still very vulnerable exposed. If this war becomes more prolonged than it seems as every day that passes, it's more likely that it is a more prolonged conflict, right? So what is your assessment as to why China hasn't really been as aggressive or visceral for us in its criticism? It's abstained from the UN resolution on the Tehran conflict and it hasn't really, to my knowledge at least, given direct military aid to Iranians.

• 1:57James Kynge?

  Well, Alice, I mean, you know, obviously, first of all, this is a tragedy that is enveloping much of the Middle East now, but at the same time, as you've just pointed out, it provides us with a very valuable chance to get an object lesson in how China conducts its diplomacy and how China's overriding priorities as the world's second most influential geopolitical actor actually play out. I mean, to put it in short, this is China's game theory.

• 2:32Alice Han?

  Welcome to China Decode. I'm Alice Han.

• 2:35James Kynge?

  And I'm James Kynge.

• 2:37Alice Han?

  In today's episode of China Decode, we're discussing how Beijing is maintaining a neutral position as the Iran conflict deepens, how Chinese automaker BYD is poised to become a global force, and an ambitious and unique infrastructure project is ready to open in Chongqing. We'll talk about how it reflects China's values. That's all coming up, but first, let's do a quick check-in with how the Chinese markets are starting the week. On Monday, the Shanghai A-share index gained 0.2%. The Hang Seng H-share index fell 0.8%, now down 12% from its January high. On news of Iran striking aluminium plants in the

• 3:19Alice Han?

  Middle East, aluminium producers Aluminium Corporation of China and China Hongqiao Group closed up 7% and 4% respectively, and EV maker BYD fell nearly 5%, but more on that later. Before we get to the episode, a quick announcement. China Decode now has a weekly newsletter. We go beyond the topics we cover here on the podcast and give you even more data and analysis on the most important stories coming out of China this week. Subscribe at china decode dot prof G media dot com. It's free for now, so be sure you get subscribed soon. That's china decode dot prof G media dot com. All right, let's get into it.

• 4:00Alice Han?

  It has been just more than 30 days since Israel and the US launched their military operations in Iran, thrusting much of the world into deep uncertainty. China gets about half of its oil through the Strait of Hormuz, but it has not offered public support for Tehran, nor offered security guarantees or military backing. In part because of the current tenuous moment in China's trade relationship with the US, Beijing is being highly cautious. Call it a fraught neutrality or call it playing the long game. China is clearly trying to project an image of calm economic stability to a global audience looking on to judge its next moves.

• 4:41Alice Han?

  James, China, I think, has been quite withdrawn from the criticism of the conflict relative to, say, Venezuela. We've discussed that previously. But the fact of the matter is China is still very vulnerable exposed. If this war becomes more prolonged than it seems as every day that passes, it's more likely that it is a more prolonged conflict, right? So what is your assessment as to why China hasn't really been as aggressive or visceral for us in its criticism? It's abstained from the UN resolution on the Tehran conflict, and it hasn't really, to my knowledge at least, given direct military aid to Iranians.

• 5:20James Kynge?

  Well, Alice, I mean, you know, obviously, first of all, this is a tragedy that is enveloping much of the Middle East now. But at the same time, as you've just pointed out, it provides us with a very valuable chance to get an object lesson in how China conducts its diplomacy and how China's overriding priorities as the world's second most influential geopolitical actor actually play out. I mean, to put it in short, this is China's game theory. What we're watching now is a real time example of how China Uses game theory to leverage advantage.

• 6:01James Kynge?

  I I've sort of boiled it down to what I consider to be three main areas. And the first one, I'm rather fancifully calling, you know, the principle of the tiger's front paw. Because a tiger uses its front paw as its prime weapon, because it's so powerful. And in China's case, it uses not military or diplomatic muscle as its prime weapon, but economic power. And so this crisis in the Middle East is one in which China has to back off in terms of military and diplomatic initiatives and concentrate on its economic power.

• 6:45James Kynge?

  And so in this regard, you've already mentioned China's main priority is to keep the oil flowing through the Strait of Hormuz and so that it can keep its cities and factories running back home. And it needs to avoid antagonizing the US, you know, too much in order to avoid economic reprisals from Washington, such as tariffs or other forms of of economic sanction. Second, I think China always tries to keep its powder dry. And in this regard, I'm talking about it strictly prioritizes its crucial theater of focus, crucial theater of interest.

• 7:30James Kynge?

  Iran and the Strait of Hormuz are of course important to China, but China's crucial focus is on the areas around its borders. Taiwan, the South China Sea, and of course, Japan and Korea. So China doesn't want to spread itself too thin. It can't focus on everywhere all the time. The official word for this is periphery diplomacy. It's focused on the countries and the regions around China. And this has been the case for actually thousands of years. So I think that's the second crucial kind of guide. ...philosophy that China's diplomacy has.

• 8:11James Kynge?

  The last and probably the most important is that China is still a highly transactional power. It doesn't have allies with the exception of one, and that is North Korea. It has a formal treaty with North Korea, signed in nineteen sixty one. But aside from that, China has no treaty obligation to go in and protect and defend any other country were that country to be attacked. It has many so-called strategic partnerships with countries around the world. And in fact, it had one, or it has one, still with Iran. But these mean really next to nothing when push comes to shove.

• 8:51James Kynge?

  A lot of these strategic partnerships are really just to flatter countries that China wants something from. And in the case of Iran, China wanted cheap oil and it got it. And it also probably wanted to use Iran somewhat to undermine the US on the world stage. Certainly in the past, I'm not so sure about the present. So these considerations, or if we prefer China's game theory, means that I think China's response in this war has been a mix of the following things, some of which you've already mentioned. It's moderated its criticism of the US. It's been using measured, relatively low-key language to criticize the US.

• 9:35James Kynge?

  It said that the US attack was unacceptable. It said that the Washington is adopting a law of the jungle. It's creating a vicious cycle. But these are fairly mild criticisms, really, in diplomatic terms. And crucially, at no point has China ever offered military support to Iran, either in terms of money or technology or combat reinforcement. So China's remained aloof in that really important sense. And lastly, China's going ahead with the delayed summit with President Trump. That is now on again for May.

• 10:18James Kynge?

  And that's hardly the action of a country that would be really annoyed with the US or wanting to score points against the US or harshly criticize the US. So I think what we can see through all of these is China focusing on its own interests, mainly economic interests, focusing on keeping its focus and discipline on the countries that surround it, where China's destiny really can be made or lost. And lastly, maintaining a transactional view of its relationship with the rest of the world. In other words, getting what it needs and not pledging too much and not getting bogged down in any kind of military adventures anywhere in the world.

• 11:00James Kynge?

  Would you agree with that, Alice, or do you have a different take on this?

• 11:04Alice Han?

  Well, I like the way that you framed this, James, as game theory. You know, to borrow the vernacular game theory, I think China's dominant strategy, and maybe you and I agree in this respect, is to have the Strait of Hormuz open, but on its own terms and ideally through diplomatic means, right? I think the fact that you have a back channel between Washington and Tehran via Pakistan is a key indication that China is probably strongly involved, right? Remember, because Pakistan is effectively a client state of China, heavily funded and military aided by Beijing. So I could see China playing a big role in if there is some kind of a peace agreement.

• 11:47Alice Han?

  Now, Iran is rejecting Trump's 15-point plan, and there may be escalation in the coming days where Trump is going to put troops on the ground, starting in Carg Island, to open the Strait on American terms. But I think China's strategy, to your point, James, is to disassociate the US-China trade talks and relationship from the Iran issue and then be seen by both the Gulf states, but even the G7 countries as being a key diplomatic. Honest broker, because remember, it's not just the relationship with Tehran that's at play, it's also the relationship with the Gulf states that have been key suppliers of oil and natural gas to China, and China wants to be on good terms with the Saudi

• 12:28Alice Han?

  Arabias of the world. So I think that, you know, moving forward, we'll have to see how involved Beijing is in the talks. I take your point, James, that, you know, Iran is not Russia, and I would, you know, the question back to you is, is why is it that China has invested so much in the Russia relationship? She personally has invested a lot in the relationship with Putin. I don't think that same sentiment is shared with the Iranians, for instance. But I agree with you, James, that Iran is seen as a key strategic partner and foothold for China within the region. Iran also creates more conflict and difficulties

• 13:12Alice Han?

  for America and the Middle East. So in this respect, it is somewhat like a client state for China. But moving forward, we'll have to see, you know, what happens with the new Ayatollah, what kind of a relationship we're going to have between Tehran and Beijing. To date, we haven't seen any Chinese direct or indirect financial or military aid to the Iranian regime. I think before the conflict started, we had a change, we saw a change in the navigation systems used by the Iranians. They now use the Chinese Bei Dou satellite navigation system. There was word on the street that the Americans, you know, before they started striking, were trying to take down some of the system and infiltrate it

• 13:54Alice Han?

  in order to pick up on where different assets were in the region. And then before that, there was talk about China selling precision missile technology to the Iranians. We'll have to see moving forward if China is willing to do that. But thus far, I think they've been reluctant to. And then one last point that I will make is that even although I think China benefits from this Geopolitical game theory, multiplayer game theory. I think we still shouldn't understate the difficulties this puts China in in terms of the energy fertilizers sides of things, right? Because, you know, you effectively have about 100 days of strategic reserves. China is now cutting down pretty much on all exports of oil and fertilizers. And I think potentially even petrochemicals.

• 14:39Alice Han?

  And right now, they're putting in oil caps to protect everyday consumers and corporates. I, you know, if this conflict drags on for longer and the strait in particular is not securitized for, you know, more than two months moving forward, I think that that puts China in a difficult position, has ramifications for the economy, where again, growth is quite fragile. But I want to end on one last question for you, James. I think this sort of sums up my thinking. Why is it that this relationship with Iran is so different from the relationship with Russia? On the surface, these are both huge oil-producing countries. They're all part of the axis of ill will. They all cause troubles for the West. Why is it that I think China is more hitched to Russia and has supported Russia throughout the conflict much more than Iran?

• 15:23James Kynge?

  Absolutely, Alex. And before I answer that, let me just say that I think you're dead right to point out that there could be things happening behind the scenes that we don't know about. You mentioned missile technology. We don't have any evidence that China is helping Iran in any regard like that at the moment. But if that was to happen, then I think we would be in different territory here. For the moment, we assume it's not happening. But anyway, Russia versus Iran, I think this very much falls into the kind of category that I mentioned in terms of periphery diplomacy, which is obviously China's core criteria. Russia and China have a border of several thousand miles.

• 16:08James Kynge?

  So that makes Russia much more important to China than Iran. China also gets a huge amount of liquefied natural gas from Russia through pipelines, which are actual fixed infrastructure. So that's another. The reason why Russia is so important. But also, Russia provides China's access to crucial other supply lines such as the Arctic. You know, shipping through the Arctic goes goes ahead in the summer months. And it's possible that in the future, it could also do so in some of the winter months if global warming continues. I do also think, and this slightly goes against the argument that I was trying to make,

• 16:50James Kynge?

  that Xi Jinping and President Putin have a bit of a personal relationship. I said that I thought China was mainly transactional and it was and it focuses on its periphery diplomacy. And and you can see that Russia falls into those categories. Russia is vital for China's supply lines, vital for China's LNG supplies. But there is a little bit of an emotional content, I think, between Putin and Xi. So, you know, perhaps that goes against my sort of framing argument of what I think motivates Chinese diplomacy. Chinese game theory in this regard actually is rather similar

• 17:32James Kynge?

  to something that goes right back into China's ancient history. There are principles of diplomacy set out in Chinese canons from about 2,500 years ago. They're called the Thirty Six Strategisms. And they're all about how one state can use psychological warfare, ruses, deception, to gain the advantage over your rivals. And I was looking through this list of these Thirty Six Strategisms. I would definitely recommend this to any listeners that don't know about these. You can find them anywhere on the internet and they are really colorful and really interesting.

• 18:14James Kynge?

  And one of the key aspects of this, of these stratagems, is that fighting is always considered a last resort. And I think that underlines what I was saying about economic development being so crucial to China's sense of statecraft. And if we apply Some of the stratagems to what's happening now between China, Iran and the US. I think there's a couple of stratagems that actually could do some work to help us understand what's happening. One of them is called kill with a borrowed knife. Jie dao sharen in Chinese. Um, I'm not saying that China's using Iran to kill the US,

• 18:58James Kynge?

  but I certainly think that it is disadvantaging the US by its tight relationship with Iran. Um, and the other stratagem that jumped out at me was Li dai tao jiang, which means sacrifice the plum tree to preserve the peach tree. And this is basically a sense of sacrificing short-term objectives in order to gain the long-term goal. In other words, keep your eye on the prize. Um, and in this regard, I would, I would say that China is sacrificing the short-term objective of being highly critical of the US, which is what China really believes in its heart,

• 19:41James Kynge?

  uh, in order to gain the longer-term objective of getting Trump to come to Beijing and hopefully, in China's eyes, to win some concessions from Trump. Maybe some de-escalation in the trade war between China and the US.

• 19:56Alice Han?

  Yeah, yeah, I think I agree with that. It's funny that you quote Chinese history. I would have said that one of the analogies that we're looking into is the Suez Crisis in fifty-seven, in which the Brits and the French were involved in trying to stop NASA from nationalizing the canal and controlling it. And the US under Eisenhower came in after diplomacy failed and basically economically coerced the Brits and the French to back down, thus paving the way for America overtaking the British Empire. And so the big question as we look forward is, is Iran the Suez Crisis of today? And does that mean that China is ascendant and the US is in decline? So I'll, I'll leave that big epic thought for, for a future episode,

• 20:39Alice Han?

  but I think that's something worth bearing in mind. Okay, we'll be back with more after a quick break. Stay with us.

• 20:52Scott Galloway?

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• 21:55Scott Galloway?

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• 23:02Scott Galloway?

  Support for the show comes from Vanta. As AI adoption grows, so does your company's security risks and requirements. New frameworks, audits, and vendors keep piling on, but your team isn't getting any bigger. Most compliance tools promise automation, but you're really stuck doing all the work by hand, chasing screenshots, validating controls, and playing catch-up when audit season comes around again. Vanta works differently. Their regentic trust platform is built to scale with you, not slow you down. With over 1,400 automated tests across 400-plus integrations, Vanta collects evidence and monitors your controls year-round, cutting your audit prep by 82%. Plus, you can access the Vanta agent everywhere you work, whether your team is in Vanta every day or living in tools including Claude or Cursor. Want proof?

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• 24:10Alice Han?

  Welcome back. BYD, the largest of Beijing's auto giants, is making serious moves. It recently signaled to analysts that it is on pace to beat its 2026 exports target by 15%. Earlier this year, the company reported a 7.7% increase in global sales, even as domestic sales declined by almost 8% in 2025. But competition from other Chinese manufacturers, along with weakened demand at home, has made them less of a behemoth domestically. BYD's net earnings declined by 19% to $4.7 billion US dollars last year, the first profit decline since 2021. But abroad, BYD is ascendant, and this comes at a time when Tesla's market dominance continues

• 24:54Alice Han?

  to decline in the US. Tesla is investing heavily in artificial intelligence and robotaxis, while BYD is pushing ultra-fast charging technology in batteries and overseas expansion. James, I think this story is timely and it somewhat links to the Iran crisis issue, right? Because if we see oil prices continue to rise in the US, for instance, I'm hearing they're up a dollar a gallon at the pump for consumers, this may incentivize a lot of consumers across the world to go, maybe I'll buy an EV instead. And actually, these Chinese EVs are very, very competitive and energy efficient, right? So I think maybe one of the winners beyond China geopolitically is Chinese EVs. What's your take on that?

• 25:39James Kynge?

  Hundred percent agree, Alice. I think that, you know, the BYD phenomenon is a true phenomenon. I mean, the growth of BYD sales outside China has just been so rapid, but I really do think that its impact is only going to grow and it's gathering a following wind by, you know, from the crisis, as you described, in Iran and obviously the rising cost of petrol gasoline around the world. But I think the bigger point here is that BYD is just the first of many, or one of the first of many. A wave of Chinese companies are finding it easier to make money abroad than back in the hyper-competitive Chinese domestic

• 26:20James Kynge?

  market. And this is why Chinese exports this year are likely to rise, in my view, above four trillion US dollars. That's up from about 3.8 trillion last year. And that will be the biggest proportion of total world exports ever in history, according to my research. So I think, you know, this BYD phenomenon is connected to a much bigger phenomenon, which is truly epoch-making in terms of global history.

• 26:53James Kynge?

  When it comes to BYD itself, I think the salient characteristics are the ones that you've described. It's technology is world-class, but it comes in at a price point that really blows Western car companies out of the water. I drove a BYD EV in Germany a couple of years ago. It seemed to me like an excellent car. The biggest problem I had was understanding the instructions because of course the car speaks to you, but I don't speak in any German, and this was all in German. So that was a bit of an issue. But the one I rode was the

• 27:27James Kynge?

  BYD ATO2. That costs about 22,990 euro, which is a lot less than, you know, the Teslas and some of the other EVs on sale in Europe. And as you've already mentioned, Alice, the key aspect now, and the new news here, is the charging technology. Because BYD this month has just unveiled something called the Blade Battery 2.0. This is a game changer, complete game changer. This means that you can charge from 10% of the charge to 70% of the battery

• 28:09James Kynge?

  charge in just five minutes. It just takes five minutes. That's equivalent, I think, to about the same amount of time that somebody spends at the pump putting gas into their car. So that is a complete game changer. I remember that BYD car that we drove in Germany, we had to spend about 35 minutes trying to charge it, all the time we were fretting about whether or not we were going to miss our plane. So I really do think that what we're seeing now in terms of BYD's penetration into global markets is just the beginning. Just a couple of numbers to put a little bit of flesh on the bones. BYD's registrations

• 28:49James Kynge?

  in Germany have jumped 10 times in January 2026 compared to a year ago. And BYD now ranks sixth globally in terms of total auto sales. So that's EVs and non EVs. And that puts it in ahead of Ford for the first time ever. And we don't have to remind any of our listeners that Ford's been around for more than a hundred years. So this is a true phenomenon that we're trying to describe here. Do you like BYD or Teslas or, you know, have you driven any of these cars?

• 29:25Alice Han?

  I've actually driven both Tesla and BYD. I, you know, they're both great cars, but I think at least from a standpoint of, of, you know, being a passenger. I think BYD was a better experience. They just have thought of a lot of the, you know, internals, the look of the car. And it feels very good. Even the operating systems within the car dashboard are pretty intuitive. I've actually been very, very impressed. And for that price point, I just think that it's a no brainer for a lot of people. If they're just purely thinking about, you know, cost per use as well as energy efficiency. BYD is a no brainer.

• 30:06Alice Han?

  But when you were talking, James, I was thinking that it actually is really significant that a company like BYD in February of this year finally saw its overseas sales, its exports exceed its domestic sales. That is, I think, a very critical turning point for a Chinese automaker. We're at a point now where it can export more to the rest of the world than it can, you know, be consumed domestically. So just for the numbers, a hundred thousand, around a hundred thousand units were sold abroad in February versus about 90,000 sold in China. And overseas sales in January to February jumped 50% year on year. That suggests to me that there is going to be legs in terms of an external overseas market for BYD.

• 30:52Alice Han?

  And remember they're, you know, building plants all over the place, you know, in Hungary and Latin America and Southeast Asia to obviously avoid some of these tariff concerns, but also some of these, you know, industrial policies in, in countries that they're selling into. If they can build local manufacturing, that helps, I think, reduce some of the trade backlash against a Chinese EV maker like BYD. But your point, James, about the batteries, that's going to be crucial. You know, a company like BYD where everything's done in-house, it has a fully closed supply chain, will continue to carry the cost advantage in a time where we could see gas prices being at sustained highs, right? I know WTI might be north of a hundred for at least the foreseeable next couple of months.

• 31:36Alice Han?

  And then the last thing that I will say that I think is super interesting is the domestic environment, right? So the stocks have, I think, seen some dampening, BYD stocks and EV maker stocks, earlier this year because of the cost pressures, the price wars that are still happening domestically. And, you know, my takeaway from the government work report and the five-year plan is that the government still cares about this anti-involusion drive, you know, the so-called drive to stop these aggressive price wars and deflationary prices in the economy and in sectors. So potentially, maybe that will reduce some of the cost pressures and profit pressures for BYD this year. But by far, the most important point is the point that you're making, James, is that

• 32:19Alice Han?

  they are, you know, really enjoying positive tailwinds in terms of overseas market demand for the cars.

• 32:27James Kynge?

  Yeah, I'm in Hong Kong at the moment, Alice, and I just had a BYD experience today, actually. Well, not really a BYD, but certainly a Chinese EV experience. I was talking to somebody at an event that I was at here, and they said to me, so I'm assuming that you drive an EV? And actually, I don't. I, back in the UK, I drive an internal combustion engine car, like an old-style car. And they looked almost offended, you know, that I would have the temerity to be using a gas guzzler at a time like this when oil prices are rising so, so much and the, and the, the environment is such a big topic.

• 33:09James Kynge?

  So I also think that peer pressure is going to have an increasing influence on this topic as well. BYD has comprehensively overtaken Tesla now in terms of vehicles sold around the world. In 2025, it sold 2.26 million vehicles against Tesla's 1.64 million. So, yeah, BYD is really streaking out ahead now when it comes to EVs globally.

• 33:39Alice Han?

  Yeah, and then one last point, just the battery side of things, China continues to dominate, right? So China's power batteries currently have about seventy percent of the global market and the anode materials overpass ninety percent. So if we just think about the other aspects of the EV supply chain, China has really continued to dominate. And then beyond that, I think what will be interesting to see is further industrial consolidation in the market. When I was in China a couple of years ago, there were four hundred odd different EVs and it seemed like every province in China, you know, from Hangzhou to Shenzhen, had its own, you know, set of national champions. And now I think there's going to be even more regulatory and and cost pressure that is going

• 34:24Alice Han?

  to force further consolidation. So apparently, according to to one outfit, Alex Partners, we could see the number of EV brands drop from about one hundred and thirty currently to fifteen in the next five years, which will be super interesting and definitely BYD, I think, will be at the front of the pack.

• 34:41James Kynge?

  That would be amazing. If that transpires, that really will be another game changer. I guess it means that more of these Chinese EV companies will be able to make a profit because there'll be less players in the market.

• 34:52Alice Han?

  Yeah, and that's a really important point because a lot of these brands are effectively not making any money. They're making negative profit because they're trying to subsidize and compete with with other makers. So really interesting. All right, let's take one last quick break. Stay with us.

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• 37:21Alice Han?

  Welcome back. In the rapidly growing area of Chongqing, a unique project has just been finished and turned on. In what is being called the world's longest outdoor escalator system, the Wushan Goddess is a system of 21 escalators, eight elevators, four moving walkways, and two pedestrian bridges spanning over 905 meters in length and traversing an elevation gain of over 240 meters. That's the equivalent of an approximately 80-story building. The project took over four years and significant engineering prowess to complete. Some nine thousand people now use the Wushan elevator every day, paying a small fee,

• 38:02Alice Han?

  the equivalent of forty three cents, that's in dollar terms, to ride in each direction, which can take twenty minutes. An official said four hundred and fifty thousand people used it during last month's Spring Festival. James, I recently watched this on the FT, I think the FT had a good piece on this, and it's really dystopic, but in a good way. It feels like you're on some kind of joyride. It's kind of crazy, it reminds me a little bit of a modern version of, you know, those Hong Kong escalators that you see in the mid-levels, central mid-levels. We know where people just can stand on them for, you know, ten, fifteen minutes as they get to the top. This seems like a similar thing, although I think the difference is that you have to pay to use this as opposed to what they do in Hong Kong, right?

• 38:47James Kynge?

  Yeah, absolutely. I was just going to mention the same thing, actually. Only today was I going up the escalator in central Hong Kong Island. But this is, well, what can I say? This is one long escalator, or series of escalators, really, isn't it? But I think it also plays to a much bigger topic in China, and that is the big trend for gigantism, for huge things, for statement projects. And I've been, I've been doing a little bit of looking around at some of the, you know, the biggest, fastest, tallest, longest, quickest, you know, the superlatives. And there really are a lot in China. A lot of them revolve around the built infrastructure.

• 39:30James Kynge?

  So there is the longest sea bridge in China, and again, that comes to Hong Kong here, and then it goes to Zhuhai, and then from there it goes to Macau. That's fifty five kilometers or thirty four miles long, that is a long bridge. There's also the highest bridge in China, the Huajiang Canyon Bridge. That is six hundred and twenty five meters above the ground. And that's not the only big bridge in China. In fact, eight of the ten- And highest bridges in the world are all in China. Of course, China has the longest high-speed rail network in the world with forty five thousand kilometres of track.

• 40:14James Kynge?

  So, you know, China's got lots of huge things, and I think it's quite interesting to think about why. One thing we can say for certain is that this goes right back into Chinese history. Of course, there's the Great Wall of China that was built more than two thousand years ago or more. And Tiananmen Square in the heart of Beijing, that's a hundred acres in size. That makes it five times larger than Red Square in Moscow. The Free Gorges Dam, that's the biggest dam in the world. I would say that really, I don't know about in the past, but certainly now.

• 40:54James Kynge?

  I'd say that some of this gigantism owes its heritage to China's self-image. An image of itself as a civilization at the centre of the world, a really consequential player. And I think this filters through into, I don't know, central government wanting to build big things, make big statements. And local governments too. What's your sense of that, Alice?

• 41:18Alice Han?

  So I'm glad you raised that because I would have taken a completely economics perspective as opposed to historical and cultural. Which is to say that, you know, embedded in the modern Chinese system is the incentive structure for local governments to have these vanity infrastructure projects that they can point to, right? Especially ahead of the big party congress in October twenty twenty seven. You know, there's an incentive for these party secretaries in each province, in this case Chongqing, to point to these big infrastructure projects that they successfully led that, you know, raised China's profile. Globally, but also employ people. They generate GDP.

• 41:59Alice Han?

  Now, we can debate whether or not it's efficient or inefficient use of of funding to make these infrastructure projects. Some of them end up not being used and end up being turning into ghost cities, for instance. But certainly, I think it makes sense at the locality level to be doing these infrastructure projects in order to get promoted in the next party congress, right? That is was my first instinct when I saw this, which is that, you know, this is this is a party secretary and, you know, a network of officials that are doing this big project so that they can get promoted next year. But, you know, your point about gigantism in Chinese culture, you know, certainly, I think that there is this desire to break records, right?

• 42:44Alice Han?

  You saw that in Olympic Games in terms of the biggest number of performers during one of the Olympic ceremonies. And China, obviously, until very recently, was the most populous country in the world. So there's also this this feeling that things need to be bigger, right? To to encapsulate the awesomeness and the grandeur and the size of of China.

• 43:05James Kynge?

  In any case, I think it looks now as if the government is wanting to curb some of the excesses of this sort of wave of gigantism. It turns out that a there is a proposed tower in Wuhan city, which is supposed to be one kilometers tall. That would make it the tallest building in the world, overtaking the Burj Khalifa, which is that huge building in Dubai. The Burj Khalifa, just for your reference, is eight hundred and twenty eight meters tall or two thousand seven hundred and seventeen feet. But this one, if it was built, the one in Wuhan, would be a full kilometer tall.

• 43:50James Kynge?

  But it looks like that has been kiboshed by the government. And there have been a couple of recent directives that have come out. In 2021, the Ministry of Housing and Urban Rural Development Said there's a ban on new skyscrapers taller than five hundred metres. And there's a smaller threshold for smaller cities. And they've started to name and shame local authorities. That kind of get too caught up in this kind of urge to build big things. So, as you said, as you said, Alice, these vanity projects.

• 44:31James Kynge?

  I guess some of them are vanity projects and some of them are not. I mean, some of them, you know, maybe this. This escalator in Chongqing seems to be, as you said, a fairly ergonomic and efficient way of moving people up a very steep hill. So, but some of these are probably vanity projects and it seems that the government wants to crack down on that. So maybe we'll never see that kilometre high building. I don't know.

• 44:59Alice Han?

  Especially if they're charging people forty cents per trip, you know, if you have like. If they said over the Spring Festival, four hundred thousand people, that's like two hundred thousand US dollars a pop. Right for the Spring Festival. So maybe the ROI on that escalator is better than a skyscraper. Maybe that's. That's the yardstick. But I remember, and you must have been in China at this time. Young decade ago in the twenty teens, China was in a competition across different cities. To build the biggest skyscrapers in the world for a time. Like the last time you had the biggest skyscraper in the world. Was in twenty fifteen Shanghai in the Peace Tower. You see that from the Bund. And since then, they have really had a hiatus because to your point, James.

• 45:40Alice Han?

  There's been a crackdown on excessive local government vanity projects in infrastructure development.

• 45:45James Kynge?

  Yeah, the craze I remember so well. This goes back to probably around two thousand and five, two thousand and six, seven, eight, sometimes around then. When local governments all over China, well, a lot of local governments in China, wanted to build replicas of the White House. As their local government headquarters. And there were some replicas that looked identical to the White House. And all of us journalists used to run around the country trying to find these places and take pictures of them or write stories about them. But that was also curbed by the government. I don't really know why, but I think they did, they weren't comfortable with the idea of too much mimicry or imitation of America.

• 46:30Alice Han?

  Yeah, they didn't want the Washington consensus in architecture, right?

• 46:34James Kynge?

  That's it.

• 46:36Alice Han?

  All right, James, you know what time it is. It is prediction time. As you look into your crystal ball for the future this week, what do you see?

• 46:43James Kynge?

  Thanks, Alice. Yes, I just want to return for my prediction to the question of Chinese exports. Last year, Chinese exports to the whole world was about 3.77 trillion US dollars. And this year, I think it will go up above 4 trillion for the first time. It'll probably come in at significantly more than 4 trillion, maybe 4.2, 4.3 trillion US dollars. But the important part of the prediction I'd like to make is that for the first time ever, Chinese exports as a proportion of total global exports will rise to about 17 or 18%,

• 47:28James Kynge?

  which is a historic record, overtaking the previous record, which was 16% by the United States way back, I think it was in 1968. So we're headed into new territory again in terms of Chinese trade and the dominance of Chinese exports around the world.

• 47:51Alice Han?

  That's such a great point. I was running the historical figures earlier this week, and we've never seen a country in our modern history that has run as big a trade surplus as a share of GDP, its own GDP, as China. The US, even at its peak, and it was a net trade surplus country in its own right from 1870 to 1970, at its peak, it was 1% of GDP, its trade surplus. China's at 6%. And if you're telling me that exports are going to continue and consumption is flat, that number, that ratio could rise, which, you know, again, this is a historical abnormality that we're currently living through. So my prediction is more germane to the present. I am befuddled by Trump's announcements, I'm befuddled by

• 48:32Alice Han?

  a lot of them, but his announcements in particular about this May trip to China. As of yet, I do not believe that the Chinese government and Foreign Ministry have yet confirmed that that trip is going to happen, Trump visiting China in mid-May. Remember, the summit was delayed from early April. I just think, especially if we see an escalation in the US's involvement in Iran and the Middle East. And the US being distracted, I don't see the US having, you know, really the attention span to do the homework before a Trump summit with Xi in Beijing. And I don't think that the Chinese are willing to, you know, have a meeting where there isn't any meat on the bones in terms of concessions and trades, right?

• 49:17Alice Han?

  So I'm a little bit skeptical about that. And I do not think that that summit will happen in May. And I, another data point that I use to reflect on this, actually two data points, is the following. Number one, the two trade probes that have been launched by the Chinese government into America. And number two, I believe in any point soon, there should be the completion of the agreed upon US arms sales to Taiwan. And remember, late last year, there was a record number that agreed by Congress that was passed as part of a deal. If that comes through from now until May, I just don't see the Chinese saying, look, we're going to have a summit right on the heels of a historically high arms sale package to Taiwan.

• 50:01James Kynge?

  Wow, that's fascinating, Alison. You've been dead right in, I think, at least two previous predictions about the summit between Trump and Xi. So I would say you're, at this point, you've got a status of summit whisperer.

• 50:16Alice Han?

  Okay, thanks so much. I'll take that. Maybe, hopefully, my probabilities are better than Trump's at this point. I'll take that. All right. Before we go, just a reminder, China Decode is now available on Substack. Subscribers get ad-free episodes, our exclusive newsletter, and a place to engage with James and me and other listeners. Find us at chinadecode.profgmedia.com. That's all for this episode. Thank you for listening to China Decode. Make sure to follow us wherever you get your podcasts so you don't miss an episode. Talk to you again next week.

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