Latest / Uncomfortable Conversations with Josh Szeps / What's China Up To?

Transcript

What's China Up To? · Uncomfortable Conversations with Josh Szeps

• 0:03
  G'day humans!
• 0:04
  Welcome to the safe space for dangerous ideas.
• 0:07
  Here's a dangerous question
• 0:08
  for you.
• 0:09
  What exactly is China up to?
• 0:13
  There have been military purges.
• 0:17
  DeepSeek AI has
• 0:19
  released its latest model.
• 0:21
  Is it true that China has social credit scores?
• 0:24
  What are they
• 0:24
  planning on Taiwan.
• 0:26
  It is the Lunar New Year, the largest migration of human beings on the planet,
• 0:32
  where nearly 10 million people in China travel to celebrate an extended Lunar New Year this year.
• 0:38
  And I thought it was time to sit down with the world's leading expert on China.
• 0:42
  He's certainly
• 0:42
  the most read China analyst in the world.
• 0:45
  Bill Bishop lived in China initially in the late 1980s.
• 0:49
  He was there for Tiananmen Square.
• 0:50
  He was a junior reporter, I guess, at CBS News while that was all taking place.
• 0:56
  And he went back to live in China for 10 years at a time when China was just introducing
• 1:01
  its great firewall and starting to block itself off from the internet and becoming
• 1:06
  more paranoid, I suppose, more controlling of information.
• 1:10
  Now, next month, the Chinese Communist Party will enact its 15th five-year plan.
• 1:15
  and it's big this time because next year, 2027, is the 100th anniversary of the founding of the
• 1:22
  People's Liberation Army.
• 1:24
  And that is a moment in time in which many people in Chinese authority
• 1:28
  have said the Chinese military should be ready to undertake major military combat.
• 1:34
  Will it?
• 1:35
  What does that even mean?
• 1:37
  And what should we in the West be doing to understand better the threat
• 1:40
  and the opportunity that China poses.
• 1:43
  Bill Bishop's Substack is one of the biggest publications on Substack.
• 1:46
  That's why I say he's probably the most read China analyst in the world.
• 1:49
  Hundreds of thousands of people receive his newsletter.
• 1:52
  I was delighted and honored, and I hope you enjoy it as much as I did.
• 1:55
  The one, the only, Bill Bishop.
• 2:05
  We were going to chat last year, I was hoping,
• 2:07
  while I was on my Zets Live world tour,
• 2:11
  which was great fun.
• 2:13
  It's good to have a tax-deductible excuse
• 2:16
  to travel around the world
• 2:18
  and talk to interesting people.
• 2:21
  How are you, Bill?
• 2:21
  And where is your head at in this crazy...
• 2:24
  There's a lot of news coming out of America at the moment,
• 2:26
  and I always like to check in with people about...
• 2:28
  Well, thank you.
• 2:30
  I'm doing well.
• 2:30
  I'm sorry I missed your world tour last...
• 2:33
  I think it was last fall, right?
• 2:34
  No problem.
• 2:35
  Yeah.
• 2:35
  But that was a very-
• 2:36
  In the summer.
• 2:37
  It was a big, big success.
• 2:39
  And I think actually I was in Italy when you were here.
• 2:42
  So, I mean, where do we begin with the news?
• 2:45
  Right now, China's on holiday.
• 2:46
  Today is the first day of the new year, the year of the horse.
• 2:51
  So happy year of the horse to everyone who celebrates.
• 2:54
  Indeed.
• 2:54
  I mean, on this side of the world, it is.
• 2:56
  In your side of the world, it's still yesterday.
• 2:58
  We're still waiting to eat dumplings.
• 2:59
  I'm having dumplings as soon as this podcast is over.
• 3:03
  Excellent.
• 3:03
  Very good.
• 3:03
  Are you going to get a little red envelope with money?
• 3:06
  I'm too old for that.
• 3:07
  I got to give those out.
• 3:08
  Although our kids are in college,
• 3:10
  so they'll be getting Apple Cash
• 3:12
  that doesn't actually support a red envelope,
• 3:14
  but they'll just be getting numbers.
• 3:17
  I'm sure that Apple Cash in China, if it exists,
• 3:20
  has a little red envelope emoji that opens up
• 3:22
  and sprinkles gold coins all over you.
• 3:25
  And the kids don't really care
• 3:26
  as long as it comes with the right number.
• 3:28
  Yes, exactly.
• 3:30
  Fortunately, I have eight-year-olds,
• 3:32
  So that number could be 50 cents or 20 cents.
• 3:37
  You said, so you have twins?
• 3:38
  As long as it sounds big.
• 3:39
  Yeah.
• 3:40
  Oh, so do I.
• 3:40
  So do we.
• 3:41
  Oh, great.
• 3:41
  How old are you?
• 3:42
  We have two girls.
• 3:43
  They will be 20 in three weeks.
• 3:44
  Crazy.
• 3:45
  Wow.
• 3:45
  It's like looking into my future.
• 3:48
  Eight is a great age.
• 3:48
  Are boys or girls?
• 3:50
  A boy and a girl.
• 3:51
  See, in China, that's the ideal combination.
• 3:54
  They call the Longfeng Tai like the dragon phoenix twins.
• 3:58
  And when we were walking around our kids in the push cart, the dual wide in China,
• 4:03
  literally everyone said, oh, which is the boy?
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  Because they all were like projecting in the hope
• 4:06
  that we would actually be so lucky that we had one boy.
• 4:09
  Bill, you cannot imagine every time we go to like a nail salon
• 4:13
  or a Chinese dumpling place or like the, I mean,
• 4:17
  it's like royalty has just walked in.
• 4:18
  You're living the dream.
• 4:19
  And they realize that it's boy and girl twins.
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  They're like, this is incredible.
• 4:22
  You guys have nailed it.
• 4:23
  I'm like, yes, that's absolutely true.
• 4:27
  And politically speaking, are you engaged in the day-to-day
• 4:31
  flotsam and jetsam of the Trump administration psychologically, or have you found a way to
• 4:35
  tune out?
• 4:36
  I mean, you can't avoid it.
• 4:38
  I think that working on China-related stuff, so my focus,
• 4:43
  professional focus is around China and China policy, and a lot that's coming out of the
• 4:48
  Trump administration.
• 4:50
  In terms of day-to-day life, I mean, living in DC, the city has changed.
• 4:54
  We
• 4:55
  now have the Trump Kennedy Center.
• 4:56
  We're going to have the Arc de Trump, I think, at some point,
• 5:00
  for the 250th celebration of the U.S. independence this year.
• 5:05
  And what can you say?
• 5:07
  I mean, we're a year into the Trump administration.
• 5:12
  We got at least three more to go.
• 5:14
  And it's certainly an interesting time for American politics.
• 5:19
  I mean, the naming of things feels especially sort of,
• 5:22
  it feels like a desecration that's different from the other stuff
• 5:26
  that happens in an administration
• 5:27
  because it would be so hard to wind back.
• 5:30
  It would seem petty to remove Trump's name from something.
• 5:33
  Oh, I think, well, if the next administration is Democrat,
• 5:38
  I don't think there'll be any concern about pettiness
• 5:41
  in removing the names.
• 5:42
  Well, then aren't we just screwed
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  because then each successive administration
• 5:45
  just becomes about fighting the cultural wars of the last?
• 5:50
  It's quite possible.
• 5:52
  On that sunny note, let's talk about China.
• 5:56
  this purge that has been going i think everyone's ears pricked up uh hearing about the fact that the
• 6:02
  chinese military has been completely reshaped at the top by xi jinping um you know people paid
• 6:08
  attention recently but this is something that's been going on for some time and has only just
• 6:12
  become sort of noticeable to the normie or the layperson um what's he doing so xi jinping so i
• 6:19
  think you're probably referring to the most recent news a few weeks ago where he took out the number
• 6:23
  two general and kind of the number four, number five.
• 6:28
  This guy, Zhang Youxia, who was a vice
• 6:30
  chairman of the Central Military Commission, which is the top body that oversees the military,
• 6:35
  and then a member of the CMC named Liu Zhenli.
• 6:39
  And it was surprising because Zhang Youxia was
• 6:44
  supposedly a Xi ally, someone who was close to Xi.
• 6:47
  Their parents had worked together.
• 6:52
  they had known each other for a long time through their careers.
• 6:54
  She had actually
• 6:55
  let him stay beyond the usual retirement age to take this very senior role in the PLA.
• 7:02
  And then suddenly we wake up one Saturday and there've been rumors for three days and all of
• 7:05
  a sudden it's announced that he's now under investigation for unspecified disciplinary
• 7:12
  issues related to maybe corruption, maybe political issues we don't really know.
• 7:17
  And but what's I think what's what has been the focus for a lot of people the last couple of years has been there's this rolling purge in various parts of the People's Liberation Army that have taken out dozens of very senior officials, senior officers.
• 7:33
  And people, you're wondering what's really going on.
• 7:36
  Is it just about corruption?
• 7:37
  Is it about politics?
• 7:38
  Was there some sort of were there were there certain senior officers who were somehow opposing Xi?
• 7:45
  You have to step back to really the early part of Xi Jinping's reign in China, where starting in around 2014, he really started to push on reshaping the PLA.
• 8:00
  The PLA historically was through the 90s, the 2000s, into the 2010s, was really corrupt.
• 8:09
  They ran businesses.
• 8:10
  It was hard to get promoted unless you were paying for your promotion.
• 8:15
  You're actually buying your way up the system.
• 8:17
  And that was well known, but the PLA was really its own fiefdom that the political guys could not actually crack.
• 8:28
  And so Xi Jinping came in and he realized how corrupt the PLA was.
• 8:34
  He realized that the PLA probably couldn't actually fight and win a war.
• 8:37
  He realized that the corruption and the ideological kind of laxity in the PLA was potentially a threat to him and to the party in terms of politically a threat.
• 8:52
  And so he's launched a campaign in really 2014.
• 8:57
  He kicked it off.
• 8:58
  He took the top brass to this place down in Fujian province in southeastern China, this place called Gutian, where Mao in the 20s had convened a meeting where they, you know, basically that was where the party took over the army.
• 9:11
  I mean, I'm simplifying, but it was sort of this key milestone in the creation of the People's Liberation Army as an army of the party.
• 9:18
  The PLA is actually, it's not a national, it's not a state army.
• 9:21
  It's an army for the Communist Party.
• 9:23
  It's the armed wing of the Communist Party.
• 9:25
  And so Xi, you know, it was very symbolic.
• 9:29
  He took these generals back in 2014 to kind of have this second Gutean conference.
• 9:34
  And that was then where he really, really kicked off this sweeping anti-corruption crackdown.
• 9:41
  But at the same time, what he was trying to do was reshape the military and push through reforms, force structure reforms that his predecessors had tried and had failed at doing.
• 9:52
  And he actually has been successful in reshaping the PLA and changing the structure of the PLA, modernizing it.
• 10:00
  And then he's had these rolling corruption crackdowns for now.
• 10:03
  We're in the 12th, 13th year, so to speak.
• 10:07
  It has accelerated over the last couple of years.
• 10:09
  And so the question and the problem is it really is a black box.
• 10:12
  And so we don't actually know, is it solely about corruption?
• 10:16
  Is it about some sort of political opposition?
• 10:18
  Is it about, we just don't actually know.
• 10:23
  What we do know, what we can see is that so far, Xi Jinping is still in charge.
• 10:26
  Xi Jinping is still able to take out the number two, number four, and the number four and other generals in the PLA.
• 10:33
  And life goes on, business goes on as normal.
• 10:36
  And so the two big questions around the latest investigations of these two generals over the last couple weeks, the two really big questions are, one, why?
• 10:48
  And actually, I will tell you, I don't know.
• 10:50
  People are speculating.
• 10:53
  I actually, I don't have a good answer for it.
• 10:55
  And the folks I know who've looked at the PLA, studied the PLA for decades, professionally, worked in government, everyone is guessing at this point.
• 11:03
  The other question is, what does it mean for the PLA?
• 11:05
  Can it fight?
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  And specifically, what does it mean for Taiwan?
• 11:08
  And, you know, there was an initial reaction, oh, this is good news for Taiwan.
• 11:11
  He's decapitating all these generals.
• 11:13
  There's no way they can, the force can actually fight.
• 11:16
  not actually convincing argument because of the way he's restructured the force and he's pushed
• 11:21
  down operations into sort of down a little further in the chain.
• 11:25
  And so we don't, again,
• 11:28
  we don't have a solid answer.
• 11:30
  But what I've told people, what I've said in my newsletter,
• 11:33
  what I've said on my own podcast and other interviews is that assuming that this round
• 11:41
  of purges means that the PLA is incapable of doing something around Taiwan, if Xi Jinping
• 11:45
  intelligence to do it is a pretty risky assumption that I don't think is really based in facts.
• 11:51
  It's
• 11:52
  more based in, I think, kind of hopium.
• 11:54
  And Bill, in terms of the rationale for
• 11:56
  these purges, I mean, it may be the case that there's legitimate concerns about corruption
• 12:02
  that Xi Jinping has, but the Economist had a front page.
• 12:06
  I don't know if it was on the US
• 12:07
  edition, but in the Asia-Pacific edition, it had a front page of all of the senior people in the
• 12:13
  Chinese military and the party, I think as well, who were there three years ago, five years ago,
• 12:19
  or something like little boxes of faces.
• 12:22
  And like every single one was gone except for like one or
• 12:24
  two, including I think five of the seven most senior people.
• 12:29
  Right.
• 12:29
  The members of the Central
• 12:30
  Military Commission.
• 12:31
  Normally there's seven.
• 12:32
  She's the chair, there are two vice chair,
• 12:33
  and then there are four members and it is now she and one vice chair.
• 12:37
  Right.
• 12:37
  Yeah.
• 12:38
  So there are only two people out of the seven left and one of them is him.
• 12:41
  uh so you know the the when i hear that my bullshit detector goes off and i think well of
• 12:47
  of course it's not purely about corruption because the whole thing is corrupt and so
• 12:51
  you know even getting to the top of the chinese communist party is an act of corruption in a way
• 12:54
  uh and you know nobody rises in that system without some level of backroom dealing and
• 13:00
  handshakes and you know money under the table therefore he's probably getting rid of people
• 13:05
  who he feels might be threats and consolidating his power.
• 13:10
  Is that a naive Westerner's assumption?
• 13:13
  No, I mean, that is one of the hypotheses, and it's possible.
• 13:18
  It's possible.
• 13:19
  It's a mixture.
• 13:20
  The thing is, is he's 14 years into his, 13 and a half years
• 13:24
  into being general secretary and being chairman
• 13:26
  of the Central Military Commission.
• 13:27
  He's consolidated his power.
• 13:30
  There's, sorry, Tashi, sorry, my dog.
• 13:33
  I love hearing a dog and or a baby.
• 13:35
  in the background.
• 13:36
  So since we can't get babies
• 13:37
  because your kids are 20,
• 13:39
  I'll take the job.
• 13:39
  This is Tashi.
• 13:40
  He is,
• 13:43
  I think there are a couple things going on.
• 13:44
  One is that, again,
• 13:46
  it's certainly possible
• 13:47
  that there was something going on
• 13:48
  more political
• 13:49
  that he viewed,
• 13:50
  he sort of identified
• 13:51
  as some kind of a threat.
• 13:54
  There's also the fact that, again,
• 13:56
  through the 2010s,
• 14:00
  through into the early part,
• 14:01
  at least,
• 14:01
  of his reign
• 14:04
  as General Secretary
• 14:05
  and chairman of the Central Military Commission, you couldn't have been a general effectively
• 14:10
  without being corrupt.
• 14:11
  And so he, I think, has also perhaps realized that he needed to decapitate several generations
• 14:17
  of the PLA to get to younger, more professional generals.
• 14:23
  One of the things that supports the idea that certainly there's a big element of this is
• 14:27
  corruption is he's also taken out, or the system has taken out the heads of most of
• 14:32
  the military industrial-based companies.
• 14:35
  Most of the defense contractors, several of the military
• 14:40
  related research institutes, all of their heads have been taken out.
• 14:44
  And so that would lead to,
• 14:46
  okay, obviously China has been on this massive arms buildup, spending huge amounts of money on
• 14:53
  building up high-tech weapons.
• 14:55
  And so I think it's reasonable to guess that there probably
• 14:58
  has been some graft.
• 14:59
  What's interesting about China is even when it's corrupt,
• 15:01
  The stuff usually still works.
• 15:03
  They just take 10, 20% and it works.
• 15:04
  Whereas other countries, right, you take 80, 100% and it doesn't get delivered.
• 15:08
  Yeah, right, right.
• 15:08
  I mean, the interesting thing about, just to unpack what you were saying about the, you know, the generals are all basically corrupt.
• 15:15
  corrupt.
• 15:16
  I hadn't realized until I came across your work, really, the extent to which the Chinese
• 15:22
  military is a kind of a mafia where you go into it with, you know, a young person will go in with
• 15:28
  their eye on a particular position and they will bribe their way into that position and they will
• 15:36
  actually raise funds from friends and family members like they were an elite sports star or
• 15:41
  something.
• 15:42
  Go fund me for my future promotion.
• 15:45
  And those funds will be used for the bribes such
• 15:48
  that when they get into their position of power, they know that they'll be able to extort other
• 15:53
  people and then pay back their investors a return on their investment for having backed them in the
• 15:58
  first place.
• 15:59
  I mean, that's the mafia, basically.
• 16:01
  Yeah, no, and that's how it worked.
• 16:03
  And I think
• 16:03
  that that is something that Xi Jinping has tried to break.
• 16:08
  And then we don't know how
• 16:10
  successfully he has been.
• 16:11
  Clearly, he found something repeatedly with these people that
• 16:14
  made him uncomfortable.
• 16:18
  There was also, I've certainly heard from friends that there was also
• 16:23
  some of these folks who needed money for funds were getting their money from the CIA,
• 16:29
  which was very useful, right?
• 16:30
  Because then the return isn't necessarily monetary, but the return
• 16:35
  is pretty significant information.
• 16:37
  I think that also helps explain...
• 16:39
  The return for the United States, you mean.
• 16:41
  Yeah, or another foreign intelligence service.
• 16:44
  There might be a young person who's on the up in the army
• 16:49
  and they'll take money from a foreign intelligence agency,
• 16:52
  not necessarily to spy or not to flip,
• 16:56
  but just so that they are indebted to that entity later on.
• 17:02
  That is what I've heard.
• 17:03
  And, you know, again, I think that if you see, you know, there has been a significant crackdown on, you know, sort of a counter espionage crackdown over the years and even in the military.
• 17:13
  And I think some of that is also because they found some pretty, you know, they found some pretty disturbing stuff that was going on.
• 17:20
  What is the Chinese political system at the moment?
• 17:22
  Can you just put some color on the cartoon cutout that many people have of, well, it's an authoritarian communist democracy.
• 17:31
  But you look at it and it's not very communist and it's hard to understand exactly what to make of how politics and the economy intertwine.
• 17:37
  If you were explaining China to someone who'd never heard of the place, how would you say it's ruled?
• 17:42
  It is a one-party authoritarian system that refers to itself as communist, says it is a Marxist-Leninist system.
• 17:52
  It puts a lot of effort into justifying or explaining how they are still Marxist and how they're evolving Marxism, what they call sinifying or sinicizing Marxism, Marxism with Chinese characteristics.
• 18:06
  It is very much a has a very heavy state driven component to the economy.
• 18:12
  They are they still do five year plans.
• 18:14
  The 15th five year plan is going to be released in about three weeks,
• 18:20
  which is not a plan where they say we're going to make 436 million screws.
• 18:25
  But it's a plan that identifies the key areas where they want to focus,
• 18:30
  where they want to develop the society and the economy over the next five years.
• 18:36
  very big focus on high tech now,
• 18:38
  but also on certain areas
• 18:40
  of social reforms
• 18:42
  and sort of improving
• 18:44
  the social welfare net for people.
• 18:46
  So overall though,
• 18:47
  I mean, they will,
• 18:48
  if you say they're not communists,
• 18:50
  they'll be on it.
• 18:50
  They call themselves communists, right?
• 18:52
  So they have to say that
• 18:55
  because they can't,
• 18:56
  they're the Chinese,
• 18:57
  the Communist Party of China, right?
• 19:00
  It is, has a flavor of capitalism to it,
• 19:03
  but again, it's very much a state,
• 19:06
  state-influenced kind of capitalism.
• 19:11
  But it's also, even though you say it's authoritarian
• 19:14
  and Xi Jinping is a dictator, I think there was a hubbub a couple of years ago about whether or
• 19:19
  not Xi Jinping is a dictator.
• 19:21
  He is certainly the top leader in the country.
• 19:28
  He and the party will
• 19:30
  set the direction, but it is a very large country with multiple layers of bureaucracy,
• 19:35
  many, many bureaucracies and bureaucrats.
• 19:37
  And so even though he'll say something in Beijing,
• 19:39
  that doesn't necessarily mean it gets implemented perfectly
• 19:43
  as it sort of flows through the system
• 19:46
  through the rest of the country,
• 19:48
  which is, again, one of the things when you see these
• 19:50
  on the civilian side or the political side,
• 19:53
  you see the sort of unending anti-corruption crackdowns
• 19:58
  and ideological education campaigns,
• 20:03
  A big focus of those is to ensure that the policies from the party center are being implemented faithfully because they continue to see how these policies get sort of somehow shifted or discounted as they flow down through the provinces to the cities to the lower levels.
• 20:20
  And, you know, they also call themselves a democracy.
• 20:26
  They say they have whole process democracy.
• 20:29
  They have a National People's Congress, which is their parliament, and it meets every March.
• 20:36
  So the next meeting is coming up in just about two weeks.
• 20:39
  And they, at the localities, they elect delegates who then elect delegates up each level and then ultimately get the delegates.
• 20:45
  Who elects the delegates at a local level?
• 20:48
  um so it's it's not a sort of a fully open election like you would say in for example
• 20:58
  australia um and it's it's it's a process where they ensure that they have the right candidates
• 21:04
  selected as they sort of go up the system and then they end up but just would it be closer to
• 21:09
  a party pre-selection in the west i don't know if you have those but in the parliamentary democracy
• 21:13
  where senior members of the party at a local level
• 21:16
  will select the person rather than the citizens voting.
• 21:20
  Yeah, and there are actually six other non-communist parties
• 21:23
  that are, they all have a vice,
• 21:26
  the chair of those parties each is a vice chairman
• 21:28
  of this National People's Congress.
• 21:31
  They are, there's even a, I mean, they are there for,
• 21:37
  they consult, they have some,
• 21:42
  but they're not really influential in terms of the party.
• 21:45
  The only party that matters is the Communist Party.
• 21:48
  Right.
• 21:48
  And as you were saying, Beijing is a long way from the western provinces,
• 21:53
  so it's a long game of telephone from something that Xi Jinping says
• 21:56
  to it being implemented on the ground.
• 21:58
  So it's not a totalitarian system in that way
• 22:00
  where there's total authority from the top,
• 22:02
  but it's probably an authoritarian one or a dictatorial one
• 22:07
  in the sense that there's only one party,
• 22:08
  and the party controls the army, and the party controls the police.
• 22:12
  And controls the police and controls security services.
• 22:14
  And, you know, the technology does help.
• 22:16
  And so, you know, it's not North Korea, but the technology has allowed for much better surveillance coverage than in years past.
• 22:28
  And that doesn't just apply to normal citizens.
• 22:30
  That also applies to party members, right, to enforce discipline, to enforce ideological discipline as well as policy discipline as well as corruption.
• 22:38
  I mean, one of the things they talk about, the party body that investigates bad behaving cadres, is they talk a lot about how they're increasingly using big data and AI to discover who's been corrupt.
• 22:53
  And I mean, I probably...
• 22:54
  What could possibly go wrong?
• 22:55
  I mean, that sounds pretty innocuous, right?
• 22:57
  Yeah.
• 22:58
  I'm sure the big data tells them who's corrupt, and I'm sure the big data tells them lots of other things that can be interpreted as corrupt.
• 23:03
  And gives them the wrong answer about someone who shouldn't be known as corrupted, then that gets deleted.
• 23:08
  Exactly.
• 23:08
  Exactly.
• 23:08
  That's right.
• 23:09
  And just in terms of economic freedom, the economic freedom of people,
• 23:12
  you know, like under Marxism, under true Marxism, the way that Karl Marx would recognize it,
• 23:17
  if I want to set up a shop that sells, you know, banana pancakes, I can't do that because there's
• 23:23
  no private property.
• 23:24
  So I wouldn't own bananas and I wouldn't be able to keep the sale of the
• 23:28
  bananas.
• 23:29
  Everything is produced for everybody from each, according to his ability to each,
• 23:32
  according to his need.
• 23:34
  That's never been implemented in practice.
• 23:37
  But if I'm in a
• 23:37
  Chinese village and I want to set up a banana pancake shop and keep the profits.
• 23:43
  Can I?
• 23:43
  And
• 23:43
  if so, how?
• 23:44
  Yeah.
• 23:45
  I mean, China unleashed, the Chinese are the best capitalists in the world.
• 23:48
  And so- This is why the Marxist thing is throwing me for a loop a little.
• 23:52
  Right, right.
• 23:52
  So, I mean, one of the things you have to really be able to master is cognitive
• 23:56
  dissonance when you're trying to think about China.
• 24:00
  Yeah, you could set up a business, right?
• 24:01
  I mean, you have to go through the process of what kind of permit do you need for, you know,
• 24:06
  If it's a food business, there's going to be certain types of permits.
• 24:10
  So you go through that process.
• 24:12
  And, you know, in a lot of places, you have to deal with bureaucrats, frankly, the way you deal with them in New York, right?
• 24:17
  In terms of, I don't know about Cindy or Kimber.
• 24:21
  I mean, in New York, you probably don't have to give them a bribe.
• 24:24
  Yes, you do.
• 24:27
  I lived in New York for 12 years, but fortunately, I never set up a banana shop.
• 24:30
  You never set up a bar or a club or something?
• 24:32
  No.
• 24:33
  So now that is allowed.
• 24:36
  I mean, the private property is, again, you can buy real estate.
• 24:42
  Most places, if you buy an apartment, usually it ends up, it comes with a 70-year lease
• 24:45
  because you can't actually own the land outright.
• 24:48
  And we haven't gotten to the renewal of most of those leases.
• 24:52
  The assumption is, you're going to Shanghai or Beijing or some of the bigger cities, these
• 24:56
  apartments are worth millions and millions of dollars.
• 24:58
  The assumption is always that when the 70-year deadline hits, they'll just roll it over for
• 25:02
  a nominal fee.
• 25:03
  We'll find out.
• 25:04
  I think they probably would, but we won't know until they do it.
• 25:08
  You look at, they've been working really hard to build a functioning capital market.
• 25:14
  The stock market is up more than 50% since the lows of September 2024.
• 25:20
  You mentioned the Economist cover earlier that right before, I think, August of 2024,
• 25:26
  the Economist had two covers in a row that basically said, China's uninvestable.
• 25:33
  and then they rolled out a series of policies,
• 25:35
  announced a series of policies at the end of September 2024
• 25:38
  and the stock market's up over 50% since then
• 25:40
  because they realized that they need to have
• 25:44
  a much better functioning financing process
• 25:48
  for all these private companies that they know they need
• 25:50
  to harness to be able to really push forward
• 25:56
  on the technological frontier and compete with the United States.
• 25:59
  And so one of the things that Xi Jinping,
• 26:01
  Back to this whole Marxist discussion.
• 26:03
  So he introduced, and I might get my time here, I think it was about two years ago, this concept of new quality productive forces, which was a, again, was Xi Jinping's contribution to the Marxist theory of productive forces.
• 26:16
  But really what it's about is it's about pushing on the frontier of technology, being the leader in the key frontier technology.
• 26:25
  The technology is the future.
• 26:26
  And obviously, China has...
• 26:28
  I mean, you look at things like clean energy, EVs.
• 26:30
  China has...
• 26:31
  They put together this plan called Made in China 2025 10 years ago, more than 11 years ago, I guess now.
• 26:38
  They hit most of those.
• 26:39
  Not all of them, but they did a really good job.
• 26:40
  And so this ties back to the...
• 26:43
  Yes, they do have this five-year planning cycle.
• 26:45
  The next one is about to come out.
• 26:47
  What we've seen so far and what's announced is a heavy focus on these frontier areas of technology.
• 26:53
  And so, you know, the stock market is one of the best performing in the world in the last 18 months.
• 27:01
  So, yeah, they're communists, they're Marxists, but hey, their stock market's booming.
• 27:04
  So you tell me.
• 27:04
  I mean, they're not communists and they're not Marxists.
• 27:06
  I mean, you can call a cat a pig, but like, you know, it's a cat.
• 27:11
  What was it?
• 27:12
  In fact, cat reminds me of the, was it Mao who said the black cat?
• 27:16
  Dong, as long as it catches a mouse.
• 27:19
  Yeah, as long as it catches a mouse, who cares what you call it.
• 27:22
  Just the five-year plan that you mentioned.
• 27:23
  So we got inklings about what it's going to contain.
• 27:26
  It doesn't come out for another few weeks.
• 27:28
  Late last year, it's partly green energy.
• 27:31
  It's partly big tech.
• 27:33
  Is there anything else in it that is worth understanding
• 27:36
  about the way that Chinese leaders see the next five years unfolding?
• 27:39
  Well, part of it is really looking at their – a lot of it is from the way they talk about what they need to develop.
• 27:49
  It's about reacting to the U.S., competing with the U.S., breaking through the various technological chokeholds that the U.S. has put in place.
• 27:58
  There's an emphasis on things like food security, resource security.
• 28:03
  You know, there's this idea of Fortress China, where China has been working really hard under Xi Jinping to become really self-reliant in a whole bunch of areas where they have identified vulnerabilities in the event of, you know, some sort of external contingency that leads to massive sanctions from the U.S. and, say, U.S. allies, for example, Taiwan.
• 28:25
  And so by becoming more self-sufficient in around natural resources, stockpiling, they're building massive stockpiles of key goods, breaking through some of the technological chokeholds that are coming from, say, US and ally sanctions.
• 28:43
  If they can become more self-reliant, that then gives them much more optionality when it comes to, say, they need to do something or they decide they need to do something on Taiwan.
• 28:52
  Same thing, Bill, sorry to interrupt,
• 28:54
  but how self-reliant are they currently
• 28:56
  in terms of food production?
• 28:58
  And also, I mean, I thought that their Achilles heel was oil.
• 29:01
  They don't have oil, do they?
• 29:02
  Don't they get their oil on ships from abroad?
• 29:04
  They get a lot.
• 29:06
  They have some reliance on ship-borne oil.
• 29:10
  They are stockpiling.
• 29:12
  It would be a problem if they were completely shut off
• 29:14
  from ship-borne oil.
• 29:15
  The Russia relationship has helped them
• 29:19
  in the sense at least they're getting,
• 29:21
  They get a lot of resources directly from Russia.
• 29:25
  There's a land border.
• 29:28
  But they're not there yet is the answer.
• 29:31
  But when you look also at what they're – when they're looking at how they've changed, they've shifted their energy mix, so much more clean energy, whether it's wind, solar, hydropower, pushing on nuclear power, lots.
• 29:46
  They still do a lot of coal power.
• 29:47
  They're still building coal plants.
• 29:48
  They're doing a lot around clean coal.
• 29:51
  That's all well and good for electricity, but in terms of what they put in their trucks and what they put in their cars.
• 29:56
  But the trucks and cars are, I think when it comes to cars, last year, the majority of new cars sold were batteries.
• 30:04
  Yeah, sure.
• 30:04
  And they're undergoing, I don't know the number for freight trucks, but there's significant shift as well in terms of transitioning their freight fleet to batteries.
• 30:16
  Okay.
• 30:16
  So that only end up being ships and planes that actually need liquid gasoline.
• 30:22
  So it's not zero, but they have made progress in reducing those dependencies.
• 30:26
  And so then they also, you'll see in the five-year plan, there's around the financial sector because they are also trying to, they see themselves as, they see the US as effectively waging a financial war.
• 30:39
  They talk a lot about the risks of a financial war.
• 30:42
  And so they are, again, trying to harden their financial system, trying to make their RMB not necessarily a new reserve currency, but more
• 30:52
  increase its usage globally, setting up, trying to set up alternative payment networks so that
• 30:58
  they are not as vulnerable to US financial sanctions than they would have been, say,
• 31:03
  five years ago.
• 31:04
  They're not there yet, but they've made progress, right?
• 31:09
  It's an ongoing thing,
• 31:10
  and they are making progress towards that.
• 31:12
  And one reason why this five-year plan, I thought,
• 31:15
  will be interesting to look at is that next year is 2027, which is the centenary of the revolution,
• 31:21
  i guess or the centenary of no it's the 100th it's the 100th anniversary of the pla
• 31:24
  of the pla is that not the same thing is that not the same time uh party was 21 and the um
• 31:31
  uh uh the prc was founded in 49 so the army so so next year is the centenary of the pla
• 31:39
  okay and they have their centenary goals and for the 100th year of the of the people's liberation
• 31:45
  army the goal was what for it to be capable of waging a major military conflict have they
• 31:54
  articulated what their centenary goal for the army is i think it's to fight and win wars it is not
• 31:59
  it is not stated that it is not stated to take over taiwan as some people had said like like
• 32:04
  but but the assumption is that involves being um ready to take over taiwan if called upon
• 32:10
  I mean, a party as mercurial as the Chinese Communist Party would never be so gauche as to just say that we're going to take, we want it to be able to take over Taiwan.
• 32:18
  So I suppose one has to read between the lines a little bit.
• 32:20
  It's like build a world-class armed forces, and then you can sort of define what that actually means.
• 32:28
  Right.
• 32:28
  They have three aircraft carriers now.
• 32:29
  They have more under construction.
• 32:31
  They're massively building up their submarine.
• 32:33
  I mean, they have impressive weapon systems.
• 32:35
  Again, back to the discussion of corruption, the folks who monitor this stuff and watch these exercises they've run, for example, around Taiwan and some of the tests they do, looks like this stuff works in spite of this supposed corruption.
• 32:51
  I mean what's your understanding of their actual feeling about the practicality of moving on Taiwan
• 32:58
  this is obviously a huge issue here in Australia last year a flight between Australia and New
• 33:04
  Zealand had to turn around because it saw flashes of explosions between Sydney and Auckland and it
• 33:11
  was an unapproved unauthorized no one told the Australian government that there'd be Chinese
• 33:16
  warships between Australia and New Zealand blowing shit up.
• 33:20
  And so they were worried, you know, for the safety of airline passengers.
• 33:23
  Like that occurs for Australians as being an obvious provocation.
• 33:27
  What the hell are they doing there?
• 33:29
  And so the conversation always seesaws between it's going to happen and they're going to
• 33:35
  regard us as inimical because they know that we are allied en masse, you know, sort of
• 33:41
  in the block of Western nations.
• 33:43
  and therefore there's no harm in being as aggressive and assertive as we can be versus
• 33:51
  carve out a low profile, placate them a bit, accept that they probably deserve a larger
• 33:56
  position on the world stage in the 21st century than they did in the 20th,
• 34:00
  and they have legitimate concerns.
• 34:02
  So just hunker down and deal with them as best you can.
• 34:05
  And then the other side says, that's totally foolhardy.
• 34:07
  You're going to walk us off a cliff.
• 34:08
  And I end up scratching my head, not knowing who to believe.
• 34:12
  uh that sounds i mean i'm not that familiar with australian politics although that sounds
• 34:17
  that sounds like a fair summary um i think when you um which one do you mean the conundrum is
• 34:24
  is intractable or the one side seems to have a great hold on the truth i think there's no
• 34:28
  question that that you know china deserves a larger role in the region and in the world
• 34:36
  economy.
• 34:36
  I mean, look at how they've grown, right?
• 34:40
  The challenge is what kind of China,
• 34:43
  right?
• 34:43
  A China that is trying to better integrate into the existing order and looks like it has
• 34:48
  more peaceful intentions or a China that is basically aggressively taking what the Philippines
• 34:56
  say is their territory in the South China Sea is now going nuts over Japan and the foreign
• 35:05
  minister is at the Munich Security Conference talking about how Japan is like, militarism is
• 35:09
  coming back and they want to make Taiwan a colony again.
• 35:11
  I mean, just kind of like, kind of out
• 35:13
  there.
• 35:15
  You know, what's happened on the border with India.
• 35:19
  So the question is, you know, I think
• 35:20
  the assumption was always, look, China deserves a bigger role.
• 35:23
  But we, you know, the belief was
• 35:25
  that they would somehow be more of a, more willing to integrate into the existing setup, right?
• 35:31
  Now,
• 35:31
  Now, of course, the problem is they don't want to.
• 35:33
  They want to change the setup.
• 35:35
  And then that's a question for each country is, well, do you want to accept that you have to just roll with it because China is so big and so rich and really you can't do anything because you're in a relatively small country?
• 35:47
  Or do you want to say, you know, wait a minute, we understand why China wants this, but we don't agree with how they're going about it or sort of what they're projecting in terms of their view of reforming the world order.
• 36:03
  I mean, the whole point of NATO was that it shouldn't be up to Liechtenstein to figure out what to do about the Soviet Union's designs on other countries.
• 36:15
  And so part of the feeling would be it shouldn't be up to the Philippines to figure out what to do about China.
• 36:21
  It should be the Philippines and Japan and South Korea and Australia and New Zealand and Singapore and Malaysia and Indonesia and the United States and whoever else wants to join that club to have some kind of a coherent and consistent framework within which we can push back.
• 36:37
  Oh, I agree.
• 36:38
  I mean, but there was never, you know, there was never a function.
• 36:40
  There was never really an Asian NATO.
• 36:42
  There was talk in the Biden administration of NATO setting up an office in Japan, which the Chinese freaked out over.
• 36:48
  And then, of course, in the Trump administration, that obviously isn't happening.
• 36:53
  I think, you know, on none of those countries.
• 36:56
  I mean, again, this goes back to the U.S. role.
• 36:57
  Those countries, without the U.S. saying, we want to do this and we're going to work with all of these countries that are historically our allies or like-minded countries, there's no way they can push back on China.
• 37:10
  Well, I mean, with all due respect to America's military might, if you included India and I mean, it would it would certainly increase the impediment to China of bullying the countries around it.
• 37:23
  If it felt that those countries were part of a bloc that included three or four of the five largest militaries in the Asia Pacific.
• 37:32
  That's why they hate the idea of the Quad, even though the Quad was never sort of this formal grouping.
• 37:37
  right i mean the quad i think was originally explain what the quad is well that was the
• 37:41
  brain shot i think of your former prime minister rudd wasn't it um it's it's the u.s japan um
• 37:46
  india and australia and it's sort of a i mean it primarily i think is a defense focused and it was
• 37:52
  really you know they would have meetings and then the readouts would come out and they wouldn't
• 37:56
  necessarily really say it's about china but it's always really about china and it's it's a bit
• 37:59
  about i think what you're talking about basically getting the four countries that actually have
• 38:04
  workable militaries and large economies, Japan, Australia, India, and the U.S.
• 38:10
  Right.
• 38:10
  And two of them, Japan and Australia, are traditional U.S. allies.
• 38:13
  India is always, you know, non-aligned, but obviously has their own, you know, concerns
• 38:18
  with China, primarily because of the ongoing border disputes they have.
• 38:23
  And they're all democracies.
• 38:25
  Yes.
• 38:25
  And they're all democracies.
• 38:26
  And I think that got a fair amount of momentum in the Biden administration, but now is, again, one of those groupings that, depending on the week or the day, it just isn't as much a focus, at least of President Trump, it doesn't seem like.
• 38:46
  No.
• 38:47
  Yeah.
• 38:48
  And it seems to have lacked a certain focus in Australia as well since the centre-left government that set it up was swept out of power and we had a long interlude of conservative government that, I don't know, didn't seem to be quite as enthusiastic about it.
• 39:04
  But moving away from, I guess, regional politics onto the question of what China thinks it's going to do about Taiwan and how it sees its chances, what is your best guess at reading the tea leaves or the minds of people in Beijing?
• 39:17
  So, I mean, I think the Chinese would view having to take some sort of kinetic action like, say, an invasion as actually a political failure.
• 39:30
  They have invested a lot in political work, trying to find – work with – it's primarily the KMT, the Kuomintang, which was their opponent in the civil war.
• 39:45
  And then Chiang Kai-shek went to Taiwan.
• 39:50
  And when the PRC was set up in 1949, then Taiwan was the Republic of China.
• 39:55
  They've been set up for a while, but they were the – then Taiwan became – was the Republic of China.
• 39:59
  Um, they, uh, right now the, the KMT is, um, the president is from this democratic progressive
• 40:06
  party, which has historically been more pro-independent, uh, pro-independence.
• 40:10
  Um, but the KMT with a coalition partner controls the legislature.
• 40:14
  And so from Beijing's perspective, even though they don't, they don't like the current president,
• 40:18
  they didn't like his predecessor, Tai Ing-Wan, who was there for eight years, also from this
• 40:22
  DPP party.
• 40:23
  The fact that the Taiwan electorate voted for this effectively, that they didn't vote for the DPP to also control the legislature, is actually a sign of hope that there is a way to sort of find a pathway to some sort of a political accommodation.
• 40:41
  I don't think their patience is bottomless, but as long as they are able to see that the Taiwan electorate hasn't completely foreclosed on the idea of some sort of deal, then they will continue to try and work around.
• 41:00
  They worked through various influence operations.
• 41:03
  They spent a lot of time wooing people from businessmen, people, politicians from Taiwan who are more sort of pro-unification or pro, let's figure out a way to have some sort of a deal.
• 41:19
  And so that is, at this point, I think the best hope is that Beijing still sees some pathway towards a political solution.
• 41:27
  When you say it is the best hope, it may be the best hope for China to achieve its outcomes, and it may be the best hope to avoid a war.
• 41:36
  But is it the best hope for a Taiwanese person who wants to remain outside of the control of the Chinese Communist Party?
• 41:43
  That's a great question.
• 41:45
  But I agree with you.
• 41:46
  I think the challenge for Taiwan is just that it is a small place.
• 41:55
  And if China really wants to move on Taiwan, it will be devastating.
• 42:07
  and it will not be like Ukraine
• 42:11
  because one of the things the Chinese have been exercising,
• 42:14
  the PLA has been running these exercises
• 42:15
  or some US military officials call them rehearsals,
• 42:19
  is effectively encircling the island
• 42:21
  and blocking any resupply routes.
• 42:25
  And so I think, I mean,
• 42:28
  the best outcome is really the status quo.
• 42:32
  Find a way to just continue to push this off,
• 42:34
  kick the can down the road as long as possible.
• 42:36
  Let Taiwan be Taiwan.
• 42:38
  Taiwan is a flourishing
• 42:38
  democracy.
• 42:39
  Taiwan is very important economically, very important technologically.
• 42:44
  But I think if
• 42:45
  you're looking at the question of sort of what is Beijing's calculus, back to my point, I think the
• 42:50
  best case scenario is they still believe that there is a pathway or a hope that there is a
• 42:56
  pathway towards some sort of a political accommodation so they don't have to pull the
• 43:00
  trigger.
• 43:01
  The flip side, right?
• 43:02
  And what I think you certainly... And even though there's the latest,
• 43:07
  the US, the Trump administration, national security strategy, the national defense strategy
• 43:11
  that came over the last six weeks or so, there's some commentary, oh, they're backing off on Taiwan.
• 43:17
  I mean, if you read the national security strategy, there's language around the first
• 43:21
  island chain, which includes Taiwan.
• 43:23
  It's very clear that the Trump administration
• 43:27
  does think it's a real problem
• 43:29
  if Taiwan were to come under the control of the PRC.
• 43:33
  And so I think what the US
• 43:37
  or the people who are advocating for more,
• 43:40
  say more arms sales to Taiwan,
• 43:42
  more training for Taiwan is again,
• 43:43
  just to make it,
• 43:44
  I think the quote from like the Indo-Pakom chief is,
• 43:47
  you know, we want Xi Jinping to wake up every day
• 43:50
  and say, today's not the day
• 43:51
  because it's going to be too costly.
• 43:53
  And that is about just helping
• 43:55
  to maintain their current status quo.
• 43:57
  And when we talk about a deal,
• 43:58
  like the idea is that they'd be able to do a deal,
• 44:01
  is that a deal the likes of which
• 44:03
  the people of Hong Kong have been able to enjoy of late?
• 44:06
  See, that's the issue.
• 44:08
  I used to go to Hong Kong and I had a lot of friends there
• 44:09
  and it is a shell.
• 44:10
  I was there last year and it's a shell of its former self.
• 44:13
  I mean, so that's the thing, right?
• 44:15
  So there was this idea of this one country, two systems.
• 44:18
  That's what Hong Kong got.
• 44:20
  The idea was maybe Taiwan could get it.
• 44:22
  The crackdown in Hong Kong has, again,
• 44:24
  And just anyone paying attention in Taiwan can't possibly imagine that there could be a one country, two systems deal that the Chinese side would live up to.
• 44:32
  And so what I think...
• 44:34
  And just flesh that out for people who aren't the same, who aren't in Hong Kong's backyard as I am and aren't Hong Kong-ophiles.
• 44:41
  What did China do basically after reunification with Hong Kong?
• 44:45
  Well, when they took it back, they said, you'll continue your system for 50 years around sort of freedom of speech, freedom of press.
• 44:52
  and then there was a series of protests
• 44:54
  and the ones that the big ones were in 2019
• 44:57
  and then they passed this national security law
• 44:59
  and they cracked down on,
• 45:01
  it's now the press
• 45:02
  and the freedom of speech environment
• 45:04
  is better than the PRC,
• 45:08
  but a lot closer to what it is on the mainland
• 45:10
  than it was before.
• 45:12
  And now it's,
• 45:15
  there are elections,
• 45:16
  but they're very much,
• 45:18
  only people qualified can run
• 45:19
  and the party qualifies those people and they have to be patriots.
• 45:22
  And so it's very much a hand-picked group of legislators.
• 45:29
  And I would just add to people who haven't been there lately
• 45:32
  that as a consequence of the feeling that you can now be hustled off the street
• 45:37
  for some offense against the pieties of the Communist Party
• 45:42
  that you weren't even aware necessarily that you were guilty of
• 45:46
  for liaising with somebody who you didn't know was a persona non grata in the eyes of the party.
• 45:51
  As a result, a lot of the best and brightest people have just left Hong Kong because people
• 45:54
  don't want to live under thought police.
• 45:58
  I think that does as much to corrode the
• 46:00
  country as anything else.
• 46:03
  And the people in Taiwan are very much aware of that.
• 46:04
  And so I think that
• 46:06
  my view is I don't see how there is a political deal, but we want Beijing to hope there could be
• 46:11
  one yeah got it um big data you mentioned you hear sometimes in the west talk about like you know how
• 46:20
  i don't know covet 19 was that was a uh all of the lockdowns were a way of kind of in implementing a
• 46:26
  a chinese style social credit score where everybody gets scored according to how good
• 46:31
  they are as citizens and uh you know you you only get a loan if you have pledged fealty to
• 46:37
  the state and they're bringing big data into everything i never quite know what to make of
• 46:42
  those plans that's over that's over how are they using data and what is the so so the social credit
• 46:49
  system as it exists and as it is used is really primarily around um building uh sort of trusts for
• 46:58
  um primarily economic transactions so corporations people so for example you can be blacklisted if
• 47:04
  you owe someone money and you're not paying and then you're not allowed to say, leave the country.
• 47:08
  You're not allowed to stay in certain types of hotels.
• 47:12
  You're not allowed to take the high-speed
• 47:13
  rail.
• 47:14
  It's not a, oh, before you can enter this place, we're going to check Bill's social credit
• 47:20
  score.
• 47:21
  Did he sort of read the 16 she quotes today and therefore he gets a 10 and so he can
• 47:26
  go buy this thing.
• 47:27
  And that is not where it is.
• 47:30
  What you saw though, with the health codes during
• 47:34
  the, during COVID, right, was basically people, you know, they had the massive testing regime.
• 47:42
  Everyone had to, to feel like, like leave your apartment building or go to certain places.
• 47:46
  You
• 47:46
  had to have show that you had a green code.
• 47:49
  And then they would, based on if someone in your
• 47:51
  certain, one of your contacts or was known to be one of your contacts or someone in your,
• 47:56
  your sort of residential area or someone where you've been in a shopping mall and then someone
• 48:00
  and also the shopping mall tested positive,
• 48:02
  then your code might turn red,
• 48:03
  and then you were restricted from movement.
• 48:06
  We did exactly the same thing in Australia and New Zealand.
• 48:09
  You did?
• 48:10
  Basically, yeah.
• 48:11
  I mean, we had contact tracing,
• 48:13
  and if you were a close contact of,
• 48:16
  if you turned out to be a close contact,
• 48:17
  you would get a call from the Department of Health,
• 48:20
  and they'd say, don't leave your house for X number of days.
• 48:24
  You're now under lockdown.
• 48:24
  And if you didn't, would you be hauled off to a quarantine tip?
• 48:29
  No, in practice, you probably wouldn't get caught.
• 48:31
  And if you were caught, you would be fined.
• 48:33
  But nonetheless, the principle remained that there was a robust system of contact tracing.
• 48:39
  I think the U.S. tried it, but they weren't particularly competent at it.
• 48:43
  You couldn't.
• 48:45
  I mean, yes.
• 48:46
  God bless the U.S.
• 48:47
  I love the place, but it is a chaotic and unmanageable place.
• 48:52
  So this system was used really around COVID, but it became a big deal after the sort of COVID ended and the lockdowns, their whole dynamic zero COVID approach where they would lock down whole cities or residential areas and then they would actually haul off people and put them in these quarantine camps.
• 49:12
  They got rid of all that suddenly, right?
• 49:13
  Basically woke up and said, we're not doing it anymore.
• 49:17
  But then sometime later, there's a case, a number of these banks in Hunan province, which is in the center of China, they had attracted deposits from all over China.
• 49:30
  They needed cash, so they offered these really high interest rates.
• 49:33
  So savers would go online from other provinces, deposit their money in these banks.
• 49:38
  A bunch of them went bust.
• 49:39
  The guy who controlled all of them ran away with a whole bunch of money.
• 49:43
  So these poor depositors, some of them lost their life savings.
• 49:47
  They've been protesting.
• 49:48
  And they would try and go to take the train or the fly to the capital of Hunan province.
• 49:54
  And one time they tried and all of a sudden they were blocked from getting on the train or getting out of the train station because their code turned red.
• 50:04
  and people online
• 50:05
  freak out and say,
• 50:05
  wait a minute,
• 50:06
  this was supposed to be
• 50:06
  for COVID and for help,
• 50:08
  but now they're using it
• 50:09
  for social control
• 50:10
  around preventing protest.
• 50:12
  And actually,
• 50:13
  it became a big issue online
• 50:16
  and the central government
• 50:17
  had to tell them
• 50:18
  to stop doing it.
• 50:19
  And so,
• 50:21
  at least publicly,
• 50:21
  they're not doing it
• 50:22
  in that way.
• 50:23
  I mean,
• 50:24
  the reality is
• 50:25
  the data is there
• 50:26
  and it could be used
• 50:27
  in other ways
• 50:27
  if and when they wanted to,
• 50:29
  but most of the reporting
• 50:31
  about the social credit system
• 50:32
  has been, I think, quite over-egged
• 50:36
  in terms of what it actually is
• 50:38
  in day-to-day practice right now in China.
• 50:40
  Right.
• 50:40
  I mean, it sounds like the only difference
• 50:42
  is that in countries like Australia and New Zealand,
• 50:44
  you have a democratic population
• 50:46
  who you're responsible to,
• 50:47
  so you have to unwind things further and faster.
• 50:49
  And you can...
• 50:51
  Sorry, go ahead.
• 50:51
  Sorry.
• 50:51
  Well, I was just going to say,
• 50:52
  there was actually one example.
• 50:54
  So we had contact tracing here
• 50:56
  where they quickly set up a QR code system
• 51:00
  because we eliminated COVID completely
• 51:02
  from the country within three months or whatever it was,
• 51:05
  12 weeks of the outbreak through contact tracing and lockdowns.
• 51:09
  And so then there was a long period in most Australian states
• 51:12
  where life went on as normal, but you would have a QR code on,
• 51:15
  you would scan a QR code before going into any pub or cafe
• 51:18
  or restaurant or movie theater or whatever,
• 51:21
  and it would log that you were there.
• 51:22
  And then if someone else tested positive and you had been there,
• 51:26
  then you would be required to stay at home.
• 51:29
  and they promised that contact tracing,
• 51:32
  in other words, the pings that your phone was registering
• 51:35
  when you went everywhere.
• 51:37
  Right, so it was your location tracking.
• 51:37
  Yeah, well, it wasn't even location tracking.
• 51:39
  It was you checking in with QR codes
• 51:41
  in order to get into anywhere, right,
• 51:42
  to get onto a bus or whatever.
• 51:45
  And they promised that that would never be used
• 51:46
  by law enforcement.
• 51:47
  And there was one case in Western Australia
• 51:49
  where law enforcement was looking for somebody
• 51:52
  and they were able to access that data
• 51:55
  and there was a national outcry.
• 51:57
  It should have been.
• 51:57
  It was a political crisis, and that was the only known time that that ever happened.
• 52:03
  The difference in China is a political outcry isn't necessarily going to be as quite as swift in being recognized by people in power because they can't be voted out.
• 52:11
  But I take your word on the fact that it was isolated.
• 52:14
  No, but there was a real outcry.
• 52:16
  And so, I mean, these protesters still can't go to Hunan, but they're not necessarily using this particular code system.
• 52:21
  But again, the data is there.
• 52:24
  These systems to track people are there.
• 52:26
  and you know at least australia the u.s i mean we can go on the streets you can bitch about it on
• 52:32
  social media um not quite the same option and of course vote people out eventually um not really
• 52:40
  the same options as much in china no on the question of you know not paying people back
• 52:45
  and having a credit score tail you around i mean we have credit rating agencies here they don't
• 52:50
  now the government doesn't enforce their rules right so it's not like you can't get on a train
• 52:54
  or it's not like you can't leave the country or something.
• 52:57
  But of course, in the United States,
• 52:58
  if you take out a bunch of credit cards
• 53:00
  and you don't pay them back,
• 53:02
  then your life is going to be dramatically impeded
• 53:03
  in all kinds of ways in terms of
• 53:05
  being able to open bank accounts and get loans
• 53:07
  and buy a home or rent an apartment.
• 53:10
  There's a logic to the system.
• 53:12
  One of the problems has been
• 53:15
  that once you got put on the social credit blacklist,
• 53:18
  it was really hard to get off.
• 53:19
  They've actually announced a process,
• 53:21
  reforms to that process to make it easier
• 53:23
  for people to, you know, their mistakes are made, right?
• 53:26
  But also people, you pay your money back, whatever.
• 53:27
  So now they're building a process,
• 53:30
  which is actually really important
• 53:31
  because, you know, China doesn't have really
• 53:35
  the kind of bankruptcy laws or systems
• 53:37
  that we have in the US or I assume Australia has.
• 53:40
  And so it actually, it's really hard for entrepreneurs
• 53:42
  if your business goes bust, you're pretty screwed.
• 53:45
  So a very long time.
• 53:46
  And so they're actually trying,
• 53:48
  I think the policymakers understand on the one hand,
• 53:52
  they want to make sure that people are, you know, they're not just completely running away from
• 53:55
  their debts.
• 53:56
  But on the other hand, they want to start building the pathways so that people can
• 53:59
  try and be entrepreneurs, try and build businesses and understanding that, yes, you might fail.
• 54:03
  And
• 54:03
  then if you fail, you can actually rebuild your life and repair your credit over time.
• 54:08
  Because otherwise, it really suppresses a lot of economic activity.
• 54:13
  Just going back to the kicking the can down the road day by day on Chinese aggression towards
• 54:17
  Taiwan and hoping that the Chinese premier is just going to wake up every morning and say,
• 54:21
  not today that how much did chinese leaders pay attention to western posturing and western
• 54:27
  conversations when making these kinds of calculuses and what should we be what sort of position should
• 54:32
  we be taking in the west um sorry can we i i just lost the video can you hear me yeah i can hear you
• 54:42
  okay i've got you i can see you can you see i'm i'm seeing a please keep this tab open until the
• 54:47
  upload is done oh okay did i somehow hit something uh maybe but we're still live and i can still see
• 54:54
  you so just keep talking and it's probably loading in the back sorry sorry everybody who's live i
• 54:58
  apologize um i can't see you anymore that's too bad you're such a nice host um um okay how
• 55:05
  if it doesn't come back i'll i'll check in in one sec okay can you repeat the question
• 55:09
  yeah um so in terms of like trying to get china to kick the can down the road as many days as
• 55:15
  possible before acting on Taiwan.
• 55:18
  How much do Chinese leaders pay attention to what Western
• 55:21
  countries are saying?
• 55:22
  And what should we be saying to maximize the chance that they think that's the
• 55:27
  best option, kicking the can down the road rather than taking action?
• 55:30
  They pay a lot of attention.
• 55:31
  I mean, they pay mostly, they pay a lot of attention to what the U.S. says and what the U.S.
• 55:35
  does.
• 55:37
  That's why, you know, in the U.S., for example, the Trump administration announced
• 55:40
  11 billion arms sales packages to Taiwan in December, and they got very upset.
• 55:47
  The Trump administration, the Financial Times reported it.
• 55:50
  Other people talked about it, that the Trump administration is preparing another big package.
• 55:55
  Chinese got wind of it, have threatened to cancel the April summit.
• 55:59
  You know, they don't want Taiwan to be able to improve its military.
• 56:05
  They don't want foreign countries, especially the US or Japan, which we can talk about, or Australia, giving support or even rhetorical support because they want the Taiwan polity to think that resistance is futile.
• 56:27
  that there is no help coming.
• 56:29
  And again, so that then ultimately they have to decide,
• 56:33
  have to figure out what kind of deal they're willing to accept
• 56:36
  to be able to, from the Chinese perspective,
• 56:39
  for Taiwan to become, to be quote, reunified,
• 56:42
  even though Taiwan, they'd say, well, we were never part of it.
• 56:46
  So it's not reunification.
• 56:49
  And Bill, if it puts your mind at ease,
• 56:52
  I've opened the live stream and you're still looking good.
• 56:54
  Okay, yeah, I'm good.
• 56:55
  It was operator on my part.
• 56:57
  And then the other thing, right, is so the Chinese have, there's this UN General Assembly resolution from the 70s called UN 2758, which was where the PRC took over the Republic of China, Taiwan's UN seat.
• 57:14
  And the PRC has launched this very forceful campaign to get countries around the world to agree that UN 2758 also says that Taiwan is a part of China, even though it doesn't.
• 57:28
  And what that is about is making sure that Beijing is trying to make sure that as many countries as possible around the world agree fully that Taiwan is an internal matter so that if Beijing has to do something, say, using force around Taiwan, no one will get involved because it's their own business.
• 57:51
  It's not an international incident.
• 57:53
  Right.
• 57:53
  And so any countries that would talk about, again, talk about Taiwan as independent or give them any sort of treatment that looks like they're treating Taiwan as a state, Beijing has to have a very forceful response, usually rhetorical, but then also will break out bits of their economic coercion toolbox.
• 58:18
  We're not going to buy this for some period of time.
• 58:20
  I mean, you guys in Australia got smacked over the 14 demands.
• 58:24
  I don't think they're about Taiwan, but you all know, you're all familiar with the economic coercion toolbox.
• 58:29
  Yeah, yeah.
• 58:30
  I mean, I think that was over COVID because I think our prime minister at the time made some sort of…
• 58:36
  Called for an independent investigation into the origins of COVID.
• 58:39
  Yeah, he wanted an independent investigation into the…
• 58:41
  Which would be a fine thing to do.
• 58:42
  But if you're going to do that, then call up the US and the UK and France and Germany and Japan and South Korea
• 58:48
  and get on the same page and say,
• 58:50
  hey, what's the shrewdest way to do this?
• 58:51
  You don't just bluster up to a press conference
• 58:53
  and just mouth off and then suffer the consequences
• 58:57
  of China finding some pretext to ban all Australian beef
• 59:00
  and Australian wheat for the next three years
• 59:02
  or whatever it was.
• 59:03
  But they didn't, interestingly,
• 59:04
  they didn't ban what they really needed.
• 59:05
  They didn't really ban iron ore, right?
• 59:07
  No, exactly.
• 59:08
  They only banned the stuff that wouldn't hurt them
• 59:10
  and would hurt us.
• 59:11
  Although it didn't hurt us massively
• 59:12
  because we have enough customers
• 59:15
  that we can pile our goods onto.
• 59:17
  And that's what's interesting is most countries who've been subject to this economic coercion have actually been able to find other markets.
• 59:25
  Yeah.
• 59:25
  I mean, it just helps other people.
• 59:26
  It encourages them to diversify.
• 59:28
  It reminds me a little bit of the way that the Trump administration is shooting itself in the foot with tariffs, which is, you know, all it does is just encourage all of your allies to go, okay, well, we're not going to rely on you anymore.
• 59:37
  So we'll find other ways of doing business.
• 59:38
  That is.
• 59:40
  Yes.
• 59:41
  That would be a fair summation of what's going on, I think, as an American.
• 59:45
  Yeah.
• 59:46
  Yeah.
• 59:47
  I mean, I'm just reminded when you talk about the language around Taiwan and how sensitive they are and how hypersensitive we can be about pandering to their sensitivities.
• 59:57
  Was it John Cena, the actor and wrestler who accidentally said that he had a great time promoting his film in Taiwan?
• 1:00:06
  or he was like, I love all these countries.
• 1:00:09
  He mentioned a bunch of countries.
• 1:00:10
  He mentioned Taiwan in it.
• 1:00:12
  And all of a sudden, the movie wasn't going to be released
• 1:00:14
  and the studio was going to be banned from China.
• 1:00:17
  And he went onto Instagram in this groveling apology,
• 1:00:20
  which he delivered in Mandarin.
• 1:00:23
  And he actually speaks.
• 1:00:24
  He can speak.
• 1:00:25
  He can make, like, he can string together sentences.
• 1:00:27
  His accent isn't particularly great.
• 1:00:30
  But it was, I mean, he's a big guy.
• 1:00:32
  And it was like, wow, that's a real grovel.
• 1:00:34
  It was impressive.
• 1:00:35
  That was, I mean, it's pathetic that that is the point.
• 1:00:37
  But there's a lot of money at stake.
• 1:00:38
  I mean, there's a lot of money at stake, right?
• 1:00:40
  I mean, the movie, and it was for Fast and Furious 9.
• 1:00:44
  And in an interview, in a Mandarin language interview,
• 1:00:47
  he called Taiwan a country.
• 1:00:49
  Right.
• 1:00:49
  And so, yeah, no, and again, they have to, you know,
• 1:00:53
  they scour for these kind of mentions,
• 1:00:56
  and then they can't allow anyone to get away with it
• 1:00:59
  because, you know, it's like you just can't let it start snowballing.
• 1:01:04
  Right?
• 1:01:04
  And so John Zanuck was an example on that.
• 1:01:06
  Everyone in Hollywood, if they didn't know already, now they know.
• 1:01:09
  I know.
• 1:01:10
  But I mean, I think about the censors who are going through, who are pouring over the transcripts of American-
• 1:01:15
  Big data.
• 1:01:16
  AI now.
• 1:01:16
  It's much easier.
• 1:01:18
  Get a day job, bro.
• 1:01:19
  I mean, like they're a bigger fish to fry.
• 1:01:20
  But okay, if they want to go after that, that's fine.
• 1:01:23
  So just in terms of our strategy, like what is the best containment strategy then?
• 1:01:26
  Because coming back to those two worldviews that I was articulating earlier, which I'm sure have an analog in the United States and everywhere.
• 1:01:33
  One is we need to be maximally bullish against Taiwan.
• 1:01:37
  We have to be maximally committed to signaling that we would defend,
• 1:01:42
  sorry, toward China, that we would defend Taiwan.
• 1:01:45
  And we need to, you know, the Australian government has done this deal
• 1:01:48
  to buy a bunch of nuclear submarines from the UK and the US.
• 1:01:51
  And then there's another group that sort of thinks,
• 1:01:57
  well, don't antagonize, don't poke the bear.
• 1:01:59
  You're probably going to do better in the long run
• 1:02:02
  if you just let them have their silliness about Taiwan
• 1:02:05
  and their squabbles in the South China Sea
• 1:02:07
  and see where it goes.
• 1:02:09
  And then the other side says,
• 1:02:10
  yeah, but you're Neville Chamberlain.
• 1:02:12
  So what is the best?
• 1:02:14
  Is it better to be Churchill now or Chamberlain towards China?
• 1:02:20
  Easy question.
• 1:02:22
  No, I mean, it's not funny because it's so serious.
• 1:02:25
  And I think for people, one of the things I don't think gets talked enough about is, well, for example, you want to be Churchill, what costs are you willing to bear?
• 1:02:42
  Because there are going to be economic costs.
• 1:02:44
  There are going to be – China will – we talked about the economic coercion that Australia suffered.
• 1:02:52
  There would be more of that.
• 1:02:54
  There are costs in terms of, well, then you need to spend a lot more on defense, right?
• 1:02:59
  So then your political system has to make a decision about how they allocate the limited resources that every country has.
• 1:03:06
  um you know a lot of it though i think and certainly where the trump administration is
• 1:03:10
  coming back to it seems to be pushing even harder on taiwan to do more for its own defense
• 1:03:18
  um and but i i don't i don't i'll be honest i don't have a good answer because
• 1:03:24
  you know you have you have i don't i don't think a chinese official has said it yet but you've
• 1:03:27
  certainly had some of these um sort of propaganda mouthpieces there's one guy victor gao who works
• 1:03:32
  at this Chinese think tank who's like, he's sort of a foreign, like a barbarian handler.
• 1:03:36
  He always
• 1:03:37
  talks on media.
• 1:03:38
  He's like, thinks threatened.
• 1:03:39
  He said, if, you know, Australia gets involved,
• 1:03:41
  you know, there'll be within range of, you know, PRC nuclear missiles.
• 1:03:46
  Right.
• 1:03:46
  And so, you know,
• 1:03:47
  the rhetoric is kind of unhinged.
• 1:03:50
  And so the question really, you know, the question really
• 1:03:52
  is, well, for example, for Australia, I mean, the Australian government has to decide whether or not
• 1:03:57
  like Taiwan becoming part of the mainland China is a risk.
• 1:04:00
  And, you know, my view, and again,
• 1:04:01
  I hate saying what people should do because the costs are so immense on either side.
• 1:04:09
  But I think we haven't yet had the right debate about, well, what are those actual costs and how do you think through, again, what really happens if Taiwan is not able to, you know, the status quo fails and Taiwan becomes part of China, you know, gets absorbed in the mainland.
• 1:04:25
  or the US and allies like Australia and Japan are willing to do much more to make sure that
• 1:04:31
  the status quo can continue.
• 1:04:33
  And you're seeing that with Japan, right?
• 1:04:35
  The new, you know,
• 1:04:36
  the Takahishi, the Japanese prime minister on early November in the diet, the Japanese
• 1:04:41
  legislature, she was asked a question about sort of, I forget the exact phrasing, but it was
• 1:04:46
  basically like around a Taiwan contingency.
• 1:04:48
  And she gave this answer that used the term,
• 1:04:52
  And I think it was, she said it was like, if it was right, basically, if the US got involved, if the PRC did something around Taiwan, the US got involved and the US was attacked, then that might be a survival threatening scenario for Japan and Japan's military might have to get involved.
• 1:05:07
  And the Chinese have gone crazy over this, right?
• 1:05:09
  You've seen this.
• 1:05:11
  We're now in the month three of this incredibly harsh rhetorical campaign against Japan, against Prime Minister Takeuchi.
• 1:05:21
  You know, it backfired.
• 1:05:23
  This vitriol from the Chinese side appears to have helped her and her party, the Liberal Democratic Party, win the biggest majority they've ever had in Japan last Sunday.
• 1:05:35
  And that is going to then open up pathways for the Japanese government to increase defense spending, potentially change the constitution, do a whole bunch of things that the Chinese don't want that make Japan even more of a formidable military force.
• 1:05:50
  But again, it's easy to say, oh, well, if China gets control of Taiwan, then it is true.
• 1:06:04
  They would have a lot more control over the key semiconductor manufacturer in the world that we all rely on.
• 1:06:12
  Australia relies on, the US relies on.
• 1:06:14
  So the US is pushing hard to build up its own chip fabs to get TSMC to move more fabs to the US.
• 1:06:21
  I mean, it's kind of the risk for Taiwan is if the US and the US allies become less reliant on Taiwan-based chip fabrication, then the concern is, well, then Taiwan is less important.
• 1:06:32
  And so if TANU moves on Taiwan, then people maybe care less, right?
• 1:06:36
  It's a real conundrum for Taiwan.
• 1:06:38
  All of those concerns are the narrow concerns about what the outcome of Taiwan being part of China are.
• 1:06:46
  But I think the sort of geo-strategic, like big picture wonky worry is that we just, and it's the lesson of Ukraine, I suppose, is that we don't want to live in a world where big powers gobble up smaller neighbors.
• 1:07:01
  and we lived in that world for most of human history
• 1:07:03
  and it was really expensive
• 1:07:05
  because we spent lots of our money on defense
• 1:07:08
  and it was really destabilizing
• 1:07:09
  because we had constant wars.
• 1:07:11
  And the post-war peace is a thing
• 1:07:14
  that we should try to keep going.
• 1:07:16
  And so if we made it clear to Putin in 2014
• 1:07:19
  that his meddling around was not going to be tolerated
• 1:07:24
  and we were going to stand up to him
• 1:07:25
  and we were going to give all of the long range weaponry
• 1:07:27
  to Ukraine that they might want,
• 1:07:31
  or if we'd done that in the early days of 2022, of 2020 rather.
• 1:07:34
  When was it?
• 1:07:35
  2022, yeah.
• 1:07:36
  2022.
• 1:07:37
  Then, you know, it's conceivable that things could have gone differently
• 1:07:40
  and that there's an interest in maintaining a global order
• 1:07:44
  that trumps the interest in semiconductors.
• 1:07:48
  So I think that is the thinking, isn't it?
• 1:07:50
  Like try to take a policy now that is going to make it least likely
• 1:07:54
  that the confrontation is going to have to happen
• 1:07:56
  by making it crystal clear that we're willing to go
• 1:07:59
  create a world war in order to defend
• 1:08:01
  the post-war order?
• 1:08:04
  That is a thinking, but a world war
• 1:08:05
  is a nuclear world war, right?
• 1:08:07
  I mean, this is the problem.
• 1:08:09
  You look at how...
• 1:08:09
  Which is why, presumably,
• 1:08:11
  the Chinese wouldn't do it, is the thinking.
• 1:08:16
  It's like a mutually
• 1:08:17
  short-destruction logic, isn't it?
• 1:08:18
  You would hope, but I wouldn't
• 1:08:20
  certainly say I could guarantee that.
• 1:08:23
  I mean, this is the problem.
• 1:08:24
  The risks are so
• 1:08:25
  immense, and so that's where I think the
• 1:08:27
  default is.
• 1:08:29
  people talk about this porcupine strategy for Taiwan.
• 1:08:31
  Basically, give them the kind of weapons
• 1:08:33
  that would make it so costly for the PLA to try.
• 1:08:36
  They have to cross almost 100 mile wide straight
• 1:08:40
  and often has rough seas.
• 1:08:43
  It's not an easy thing for them to do.
• 1:08:46
  It's actually quite hard and could
• 1:08:47
  be quite devastating for the PLA.
• 1:08:51
  And if the PLA weren't actually successful, it would probably
• 1:08:53
  bring down the Communist Party, right?
• 1:08:55
  Which again is their number one,
• 1:08:57
  their number one goal is to remain in power.
• 1:09:00
  And so the thinking,
• 1:09:03
  and again, this thinking has been,
• 1:09:05
  and that certainly seems what it's coming out of
• 1:09:07
  like the U.S. National Defense Strategy
• 1:09:08
  is just make sure that Taiwan is able to defend itself.
• 1:09:12
  And Taiwan spent a long time under investing
• 1:09:14
  in its defense,
• 1:09:16
  spent a long time, you know,
• 1:09:19
  thinking that this wouldn't ever really happen
• 1:09:21
  because the world had changed
• 1:09:22
  and they were integrating with,
• 1:09:23
  with the mainland on economics.
• 1:09:25
  And, you know, it just, so they're behind.
• 1:09:29
  And then I think one of the risks,
• 1:09:31
  one of the risks is if they really start moving much faster
• 1:09:34
  and building up their defenses
• 1:09:35
  and look like they actually could have a very good chance
• 1:09:39
  at say repelling an invasion if it were to come
• 1:09:42
  or some sort of a blockade around the island,
• 1:09:48
  then the Chinese side would decide,
• 1:09:51
  well the window's closing so we better move faster right so no it is a horror i mean it is it is the
• 1:09:58
  the honestly you we should all wake up every day and hoping the status quo prevails because it is
• 1:10:03
  a horribly risky problem where the risks are existential yes and just on the military question
• 1:10:11
  of like china if china's war games where they surround taiwan and blockade it and starve out
• 1:10:17
  the Taiwanese.
• 1:10:19
  Is it your understanding that we don't have the military capability to just blow
• 1:10:23
  those warships out of the water?
• 1:10:27
  Well, I mean, if we say the US starts attacking their warships,
• 1:10:34
  if the PLA hasn't already launched preemptive strikes on, say, Guam or some of the US bases
• 1:10:39
  in Japan to disable those capabilities, they will then.
• 1:10:43
  And so it's not a scenario any of us should
• 1:10:47
  want to have happen.
• 1:10:48
  Yeah.
• 1:10:49
  Yeah.
• 1:10:50
  Okay.
• 1:10:51
  Let's talk about, I'm also interested before we wrap in your
• 1:10:53
  time in China.
• 1:10:55
  I mean, you were there for a decade at an interesting time when the great firewall
• 1:10:59
  came in and when freedoms were restricted.
• 1:11:01
  I first went in 89.
• 1:11:02
  I was a student in 1989.
• 1:11:03
  So that was my first experience, the spring of 89 in Beijing.
• 1:11:07
  Tell me about 89 in Beijing and then
• 1:11:08
  fast forward to the 2010s.
• 1:11:11
  So 89 in Beijing, I was a student at Peking University and
• 1:11:14
  And that was, my Chinese wasn't very good, but we, our cohort happened to come upon the
• 1:11:25
  protests that started in the third week of April after this one leader had died.
• 1:11:30
  And then that spiraled into what became the occupation of Tiananmen Square and then the
• 1:11:35
  crackdown on June 3rd and June 4th.
• 1:11:39
  And then I stayed until June 20th.
• 1:11:41
  I was working as a translator fixer for CBS News for that whole time.
• 1:11:46
  So I slept several nights on Tiananmen Square.
• 1:11:49
  Wow.
• 1:11:51
  Where were you on the 3rd and 4th of June?
• 1:11:52
  On the 3rd and 4th, I was actually up at Peking University.
• 1:11:56
  And then afterwards, I then moved down to the Beijing Hotel.
• 1:12:00
  So if you remember the photo of the guy, the tank man, right?
• 1:12:05
  So one of the photos was taken from a couple of rooms down from where we were, the CBS camera crew.
• 1:12:10
  But I was like a 19-year-old kid, a junior in college, and I was clueless.
• 1:12:15
  And so my job when I was in the hotel was to take the big, the old brick-sized Motorola mobile phones.
• 1:12:21
  You remember those?
• 1:12:21
  You may be too young, but they were literally the size of a brick.
• 1:12:24
  I've seen them in-
• 1:12:25
  Yeah, you've seen them in museums, right?
• 1:12:29
  And whenever we heard gunfire, my job was to call the number of the radio desk in New York and say,
• 1:12:35
  roll tape, and then crawl out on the balcony and hold the phone off to pick up the gunfire sounds.
• 1:12:40
  Wow.
• 1:12:41
  And what did you make of that, of the third and fourth?
• 1:12:45
  Were you aware at the time that you were seeing something?
• 1:12:47
  Yeah, no, because we were getting reports.
• 1:12:50
  I mean, it was a horrible tragedy.
• 1:12:51
  We were getting reports of, you know, because there were CBS camera crews out in the city and they were certainly getting reports of, you know, what was happening and, you know, video from morgue, you know, sort of all the dead bodies.
• 1:13:06
  And it was awful.
• 1:13:08
  um and then um you know it's just one of those great tragedies and you know there's still
• 1:13:16
  you still you people will say you know there's an argument that it would had to happen and you
• 1:13:21
  hope people say that in beijing and but there are a lot of people in beijing who lived through that
• 1:13:26
  who you know given the chance would want to make that right because it was it was a very um
• 1:13:36
  it was just a very
• 1:13:39
  awful and traumatizing event.
• 1:13:42
  But, you know, now
• 1:13:43
  37 years
• 1:13:45
  later, you know, one thing
• 1:13:47
  is we're probably not likely to see it ever happen
• 1:13:49
  again because the system, the party, and the
• 1:13:51
  security services have been extremely focused ever
• 1:13:53
  since on making sure it could never happen
• 1:13:55
  again.
• 1:13:56
  Right.
• 1:13:57
  Not to mention the fact that instead of having gigantic
• 1:13:59
  brick telephones, everyone has
• 1:14:01
  a cell phone in their pocket.
• 1:14:02
  Right, but they're also much
• 1:14:03
  easier but you know there are lots of protests all the time in china there tend to be small scale
• 1:14:07
  there you know they have a lot of practice in making sure that the protests don't spread
• 1:14:11
  geographically um and they're also very good at um making sure like if there's a protest somewhere
• 1:14:17
  they can turn off the internet they can turn off the cell service that that stuff still filters out
• 1:14:22
  but um the technology works both ways and so how good is the firewall you were there you were
• 1:14:28
  blogging in 2005 yeah no 2012 i was there i mean 2015 i was there i lived so i lived in beijing i
• 1:14:35
  actually lived there from 91 to 93 and then i lived there from uh 2005 to 2015 and um no by the
• 1:14:42
  time by the time we left it was you know the firewall was pretty good it was porous you had
• 1:14:46
  the right vpn you get through it was slower but um it would work uh they were able to when you
• 1:14:51
  got there in 2005 and you and your blog started becoming successful that was that was without a
• 1:14:57
  firewall, right?
• 1:14:58
  Was the internet open in?
• 1:14:59
  There were lots of sites that were unblocked.
• 1:15:04
  There were still sites that were blocked, but it was really the dawn of social media.
• 1:15:08
  And so
• 1:15:08
  a lot of things you could still access because they hadn't really focused on them as potential
• 1:15:14
  sources of political risk or instability.
• 1:15:18
  But then over time, they realized they had to build
• 1:15:22
  this filter system.
• 1:15:23
  And so they spent a lot of money perfecting and they're still working on it,
• 1:15:27
  the Great Firewall.
• 1:15:28
  They have the ability to shut it off.
• 1:15:30
  I mean, you would see during some of the
• 1:15:31
  big events in Beijing, like during a party Congress where they would suddenly no longer
• 1:15:38
  tolerate certain VPNs, right?
• 1:15:39
  They would work for a while and then all of a sudden the party
• 1:15:41
  Congress happens and none of the VPNs would work.
• 1:15:44
  And then the party, or they would work,
• 1:15:46
  but they'd only work for a little while and they'd cut off and then you'd have to do all
• 1:15:48
  It was crazy stuff to get reconnected.
• 1:15:50
  And then the party congress would end, and then they'd sort of loosen up again.
• 1:15:53
  Because I think they also realized they can't be North Korea.
• 1:15:56
  They can't just shut it off completely.
• 1:15:58
  They just want to make it increase the friction to the point that most people don't actually bother.
• 1:16:04
  Technically, using a VPN is illegal, and they have arrested people.
• 1:16:07
  And every few months or so, it seems like they make an example of somebody for scaling the wall, as they call it,
• 1:16:14
  using a VPN or a proxy to go to the rest of the world internet.
• 1:16:18
  and visit sites that they're not supposed to be on.
• 1:16:21
  And how do they articulate the morality of prosecuting somebody for seeking information?
• 1:16:29
  It's a violation of law.
• 1:16:30
  They are, you know, getting harmful information.
• 1:16:35
  It's not really a moral question.
• 1:16:39
  From the perspective of how they present it, it's not really about morality.
• 1:16:44
  but they must they must feel they must enjoy some kind of a broader public sentiment that the
• 1:16:50
  laws are founded on something that's necessary and aren't just paranoid arbitrary capricious
• 1:16:57
  you know communist party nonsense or do people think that way i would have assumed that someone
• 1:17:01
  who uses a vpn and is arrested for it um earns the scorn of their peers and that their peers
• 1:17:07
  probably think that that was a bad thing to do as well as just an illegal thing to do
• 1:17:11
  I think it's more they just think the guy was unlucky to get caught.
• 1:17:16
  Oh, okay.
• 1:17:16
  But in terms of rule of law, I mean, under Xi Jinping especially, the party has put a huge amount of effort into building out a much more robust body of laws.
• 1:17:28
  And so they will tell you they have – China is a country that is under the – they call it the really rule by law.
• 1:17:38
  And so average citizens are subject to lots of laws.
• 1:17:43
  The party, though, sits above the rule of law.
• 1:17:46
  And so the party has its own sort of disciplinary regulatory system.
• 1:17:53
  Got it.
• 1:17:55
  It sounds delightful.
• 1:17:56
  But back to the internet question, which is really interesting, is they have to keep it porous because China obviously makes a lot of money selling, exporting goods.
• 1:18:06
  sell a lot of, you know, whether, I don't know how big Timu is in Australia or Xi'an.
• 1:18:10
  We have that crap.
• 1:18:11
  Yeah, yeah, yeah.
• 1:18:14
  So, but, you know, you look at Facebook, you look at Google or Meta and
• 1:18:17
  Alphabet, I mean, they are making billions and billions of dollars a year from Chinese companies
• 1:18:23
  who are selling goods to the rest of the world, advertising on their platform.
• 1:18:27
  So these companies
• 1:18:27
  have to be able to access the rest of the world internet, right?
• 1:18:29
  And so they can't just shut it
• 1:18:32
  off completely and then you look at you know what's the biggest uh video social media app in
• 1:18:37
  australia uh instagram rails not tiktok oh probably neck and neck could be okay the chinese company
• 1:18:46
  could be yeah yeah i mean in terms of free speech on the firewall and what you can say online in
• 1:18:53
  2012 when the firewall came in and you had been blogging publicly about the well power structures
• 1:19:01
  in China.
• 1:19:02
  Did you then feel like it was becoming increasingly dangerous to be able to speak freely
• 1:19:06
  in China?
• 1:19:07
  I know you shifted over to doing a newsletter instead of a blog.
• 1:19:11
  So I primarily wrote in English and I didn't push anything inside China for those reasons.
• 1:19:18
  It was
• 1:19:19
  really more for an external audience.
• 1:19:21
  I had a blog and the reason I got it became a newsletter
• 1:19:24
  is because a friend of mine who had a massive following on Weibo, a Chinese friend,
• 1:19:31
  One day, this was during that whole downfall of Bois Selye, whose wife murdered this British guy, and they're both in jail.
• 1:19:41
  This person pointed to my blog on their Weibo saying, this is a great source of what's going on.
• 1:19:46
  Then within three hours, I was blocked.
• 1:19:49
  Then at the time, I was using Google.
• 1:19:51
  I won't get into technology, but then I realized actually you could turn on this ability to create an automated newsletter so that every day your thing would go out as a newsletter.
• 1:19:59
  That's where I started my newsletter.
• 1:20:00
  Thanks to the Great Firewall.
• 1:20:02
  And why did you leave in 2015?
• 1:20:04
  I mean, I've been there for 10 years.
• 1:20:06
  I'm not Chinese.
• 1:20:07
  My kids or our kids had finished third grade.
• 1:20:09
  They were at a Chinese school.
• 1:20:10
  The education was great, but you could start seeing how the education, sort of more the political elements started coming in.
• 1:20:18
  You know, my parents were getting older.
• 1:20:21
  It just seemed, you know, the air pollution back then was pretty bad.
• 1:20:26
  And, you know, it just seemed like the right thing to do.
• 1:20:28
  And up until the pandemic, we went back every summer.
• 1:20:32
  And, you know, my wife, she spent a big chunk of last year there, although she's not this year.
• 1:20:38
  But we just, you know, it was a great time to be there and joke with, sort of sadly joke with friends who were there, Chinese and foreign friends, that that period up until like 2013, 2014, the sort of the zeros to the 13, 14.
• 1:20:58
  which probably the most open China has been to sort of foreigners going there to building a life,
• 1:21:03
  building their lives there than it has been in decades and maybe for some time.
• 1:21:09
  Would you go back now for what would you fear?
• 1:21:11
  I don't know, political reprisal?
• 1:21:16
  It's a great question.
• 1:21:17
  And I have not been back since COVID and it is a long time.
• 1:21:20
  I have had
• 1:21:22
  mixed signals.
• 1:21:23
  A couple of years ago, I got a signal from somebody on the Chinese side who
• 1:21:29
  made me think it would be a bad idea.
• 1:21:32
  That may have changed.
• 1:21:34
  China is much more
• 1:21:37
  sort of trying to present a much more sort of open... Today was the spring festival,
• 1:21:45
  the CCTV gala, where that's their annual, the big show for the Lunar New Year.
• 1:21:49
  and they had three foreign acts this year.
• 1:21:52
  They had Lionel Richie, Don Legend,
• 1:21:55
  and then some group called like the Whiteys
• 1:21:58
  or Whiteleys or something, Whitleys.
• 1:22:01
  So it was actually more of like a more foreign friendly show
• 1:22:04
  than it has been, I think, in quite some time.
• 1:22:06
  Okay.
• 1:22:06
  Well, I mean, if you get invited to do a rock concert,
• 1:22:09
  then I think you're safe going.
• 1:22:11
  No, and so the honest answer though is that,
• 1:22:17
  and I know this from friends who go back
• 1:22:19
  and who used to live there,
• 1:22:21
  is it's just not what it was.
• 1:22:23
  And so even if I go back,
• 1:22:24
  it's like most of my Chinese friends are gone.
• 1:22:26
  I see my Chinese friends here or in Europe.
• 1:22:29
  And the life I had there,
• 1:22:32
  you go there, you'll stay in some nice hotel,
• 1:22:34
  maybe you're on one of these think tank tours
• 1:22:36
  and you get the atmosphere,
• 1:22:41
  but it's not the same as actually living there
• 1:22:43
  and having a life and having-
• 1:22:44
  Sure, but I mean, you don't have to do it.
• 1:22:45
  that way you could go backpacking around some far-flung province i mean i i would i ask for
• 1:22:51
  selfish selfish reasons are you gonna go packing around why i went backpacking around china as
• 1:22:55
  many australians go around southeast asia and so we ended up crossing over into china from laos and
• 1:23:01
  and back oh you did that trip i went i went to laos in 89 but we we went up to um we went south
• 1:23:06
  from vientiane but i would was dying to find a way to go go but back then you couldn't you you
• 1:23:11
  couldn't go over the border you couldn't go north now you can take the train yeah yeah i would
• 1:23:16
  We came back into Vietnam by train.
• 1:23:18
  We took a little, we just sort of hitchhiked on little informal buses, basically.
• 1:23:23
  This was 2000 and early 2000s.
• 1:23:28
  Good for you.
• 1:23:29
  Travel's a lot easier now.
• 1:23:30
  Did you make it to Tibet?
• 1:23:32
  It was, no, no, we didn't go that far.
• 1:23:34
  We ended up in Jinghong and we went to Kunming.
• 1:23:39
  I went on a couple of trips.
• 1:23:40
  We got an overnight train down into Vietnam, into Hanoi.
• 1:23:43
  Anyway, I went a couple of times and thought nothing of it.
• 1:23:47
  Now I've worked at the Australian Public Broadcaster,
• 1:23:50
  which is not beloved by the CCP,
• 1:23:53
  and I've done tens of thousands of hours of commentary
• 1:23:57
  about all kinds of things.
• 1:23:59
  I'm sure in my time I've said things that would not please the authorities,
• 1:24:03
  and it would probably be fine.
• 1:24:05
  I'd love to go back and visit.
• 1:24:07
  It would probably be fine.
• 1:24:10
  But you just never know whether or not some, I don't know,
• 1:24:13
  either big data or some bored apparatchik
• 1:24:18
  is going to be sitting in a back room
• 1:24:19
  just surfing through the names of people
• 1:24:21
  who recently came into China
• 1:24:22
  and is going to blunder across something
• 1:24:24
  and then think that it might be worth
• 1:24:26
  bringing you in for questioning.
• 1:24:28
  How do you rate the odds of such things?
• 1:24:33
  The problem is they're not zero.
• 1:24:36
  Yeah.
• 1:24:37
  And the problem is the downside is almost existential.
• 1:24:40
  That's the problem.
• 1:24:43
  and then if it does happen
• 1:24:45
  I mean I don't know if you had Michael Kovrig
• 1:24:47
  on your podcast I've talked to him a few times
• 1:24:49
  I mean he's one of the Canadians who was there
• 1:24:50
  he was held for like a thousand days
• 1:24:53
  I mean you don't want
• 1:24:55
  to be in that situation
• 1:24:58
  and so
• 1:24:58
  you know and like back to me
• 1:25:01
  I mean again I'm an individual I got no
• 1:25:02
  institutional support I got nobody behind me
• 1:25:05
  I don't think they'd waste time with me but
• 1:25:08
  you know what you have
• 1:25:09
  to figure out what sort of the
• 1:25:11
  the risk weighting like well that's also a downside it's also a downside in the sense
• 1:25:15
  that if i'd gone when i still was a face of the australian public broadcaster then i would have
• 1:25:20
  had institutional weight to get me out and i would have had all of the all of the levers of
• 1:25:23
  australian diplomacy would have rushed into gear but now that i'm independent like nobody's really
• 1:25:27
  gonna give a shit it's me against the it's me against she um last uh the last thing i just
• 1:25:33
  wanted to touch on was ai and technology and whether or not i mean i guess broadly speaking
• 1:25:38
  Let's just wrap it up with the question of, is China going to eat our lunch or are they going to slowly atrophy and we're all going to be okay over the course of the 21st century?
• 1:25:47
  And what, if any, role does AI and technology play in answering that question?
• 1:25:51
  I don't think China is going to atrophy.
• 1:25:53
  I mean, I think China is a formidable technological country now.
• 1:26:00
  Just really, really smart people, hardworking, massive state support, massive capital now, as we talked about earlier, the reforming the financial markets.
• 1:26:14
  A lot of that is really around finding ways to channel more money to these high-tech startups, these companies or technologies in the new quality productive forces bucket, so to speak.
• 1:26:27
  On AI, the Chinese are constrained by access to the most cutting edge chips that NVIDIA makes.
• 1:26:37
  They have capacity to make good enough chips for some cases.
• 1:26:41
  They are also, because of how they are compute constrained, they are very creative at maximizing efficiencies around their AI models.
• 1:26:54
  They are also, as people have talked about, energy is not an issue for them.
• 1:26:59
  Getting permits to build a data center is not an issue for them.
• 1:27:03
  Using access, finding ways to access the US frontier models to sort of suck out some of what they've done, like OpenAI accused DeepSeek of doing last week, is not a problem for them.
• 1:27:18
  Sorry, what was the accusation?
• 1:27:20
  Well, that DeepSeq was distilling, they were basically sucking out some of the training that OpenAI, I'm vastly oversimplifying, but that they were leveraging on all the work that OpenAI had done to extract information to then build their models and build it that they could have their model be better, even though they had less compute because OpenAI had done a bunch of work in certain areas.
• 1:27:45
  Oh, I see.
• 1:27:45
  So they're basically, I mean, this comes back to a longstanding criticism of China, isn't it?
• 1:27:49
  Which is that they make things very attractive to Western companies.
• 1:27:54
  This is a slightly unrelated issue, but making things very attractive for Western countries to companies to do business in China, then stealing all of their intellectual property, figuring out how to do it for themselves, and then undercutting them on price and selling it back to us.
• 1:28:10
  And then also in the market, the market is so competitive in China that the companies that survive are world-class competitors and are able to operate at scale and at cost, at sort of cost levels that the foreign competitors really can't.
• 1:28:26
  And so that makes them much fitter when they want to go out and compete globally.
• 1:28:30
  On the AI side, though, so the Chinese strategy, too, is Alibaba released their latest open source model.
• 1:28:37
  I think it was Quen 3.5 just a couple hours ago.
• 1:28:39
  I think DeepSeek is releasing one today or maybe they released it in the last hour.
• 1:28:44
  China's approach is open source.
• 1:28:47
  And that allows those models to diffuse much faster within China, but then also globally.
• 1:28:53
  Because most countries don't want to pay for ChatGPT.
• 1:28:57
  They don't want to pay for OpenAI.
• 1:28:58
  They don't want to pay for Claude.
• 1:28:59
  And then you have these good enough Chinese models that are free, right?
• 1:29:03
  And so China is a formidable competitor on AI.
• 1:29:07
  And then when you look at what they – I think the term is like embodied AI, which is basically robotics.
• 1:29:14
  China, the Spring Festival Gala tonight we were talking about earlier, this four-plus-hour TV spectacular, four of the skits involved robots doing things.
• 1:29:24
  It's a skit, but they're pretty impressive, right?
• 1:29:25
  And so China has a scale.
• 1:29:27
  They're producing robots in ways that, for example, the U.S. isn't able to produce at that scale.
• 1:29:32
  And so China is going to be a competition for the foreseeable future.
• 1:29:39
  And both sides have advantages.
• 1:29:44
  And the thing is, on the chip side, the U.S. does have superiority in chips.
• 1:29:53
  The export controls have been leaky and poorly designed.
• 1:29:56
  So the Chinese are actually building up a pretty formidable semiconductor manufacturing industry, not quite at the frontier like the US is able to do or Taiwan is able to do or South Korea or Japan, but close to good enough in some use cases.
• 1:30:12
  And sorry, do you mean that they're making their own or that they're buying from back doors?
• 1:30:15
  They're making their own chips up to a certain threshold, which isn't the cutting edge now, but they're making a lot of chips that are pretty good.
• 1:30:21
  And it is a coming straight from the top.
• 1:30:24
  It's coming straight from Xi Jinping that they have to become self-reliant and break through these technological chokeholds in semiconductors.
• 1:30:30
  Also, sorry, Bill, is it not true?
• 1:30:33
  I mean, you just said that the ban on selling the high-end chips to China is porous.
• 1:30:39
  I had read some claims that it was very porous in the sense of them being able to get them from the United Arab Emirates or get them through other things or even just use compute that is offshore.
• 1:30:51
  by using it remotely and parachuting it on the internet?
• 1:30:54
  One of the big loopholes is that they can access these chips
• 1:30:57
  and overseas clouds with no restrictions.
• 1:31:00
  So, for example, ByteDance just released this video generation model
• 1:31:03
  called SeedDance 2.0, which is the best video AI model out there.
• 1:31:09
  I mean, it's crazy what you can make.
• 1:31:11
  And that's because they can do it.
• 1:31:13
  They can use the same top-end media chips that Google,
• 1:31:17
  or not Google, they don't use their own, but OpenAI,
• 1:31:20
  or Anthropi can use.
• 1:31:22
  And so the computer's running on a server
• 1:31:25
  in an Amazon warehouse?
• 1:31:28
  Or their own company set it up.
• 1:31:30
  There's all these big data centers in Malaysia.
• 1:31:33
  Nvidia has a pretty big business
• 1:31:35
  selling to Southeast Asia,
• 1:31:36
  and some of it then gets trend-shipped into China,
• 1:31:39
  but a lot of it goes to these Southeast Asian data centers
• 1:31:43
  where they have Chinese customers.
• 1:31:44
  Yeah, and does China fund any of these data centers?
• 1:31:47
  Good question.
• 1:31:48
  And I think whether or not the government funds it, I think some of the companies certainly do.
• 1:31:52
  I mean, it would certainly make sense if I were China.
• 1:31:54
  I would set up a bunch of shell companies in Malaysia and all over the place, and I would just build all of my AI there.
• 1:32:02
  I mean, there are issues with some of the data and the data they use for training and the sensitivity of the data.
• 1:32:07
  They don't want it to go offshore.
• 1:32:08
  And then China has pretty strict data protection laws around exporting data.
• 1:32:13
  And so some of that they can't actually send out of the country.
• 1:32:17
  But it's one of the loopholes.
• 1:32:18
  for sure.
• 1:32:19
  And there is smuggling.
• 1:32:20
  And then the Chinese were able to buy some fairly advanced
• 1:32:24
  semiconductor.
• 1:32:25
  Really for them, the most important thing is going to make their own chips.
• 1:32:27
  And so
• 1:32:28
  they can't get the most cutting edge stuff from this Netherlands company, ASML, but they can get
• 1:32:32
  pretty close.
• 1:32:34
  And then they're doing what they can to try and reverse engineer it or
• 1:32:37
  sort of find the next breakthrough technology to be even better.
• 1:32:41
  And they're not there yet,
• 1:32:42
  But given the intellectual firepower, given the number of talented engineers they have, and given the massive resources the state is putting behind this, both in terms of actual money, but then political, making it a political task for local officials, we would be nuts to think that they won't be able to achieve significant breakthroughs at some point in the, maybe not immediately short term, but sometime in the medium range future.
• 1:33:12
  And do you agree with the sentiment that it's a winner-takes-all game here,
• 1:33:16
  that whichever country gets to general intelligence first
• 1:33:21
  basically takes the cake?
• 1:33:24
  I'm not.
• 1:33:25
  I think that that is facile, but I'm not a specialist there.
• 1:33:29
  I just don't think that, I mean, again, I use,
• 1:33:34
  I mean, the way these things still hallucinate,
• 1:33:35
  I mean, I think we're all screwed if that's the case.
• 1:33:38
  I assume.
• 1:33:41
  No, honestly, and again, this is where the Chinese are more practical because this is one of the things where the U.S. big labs all are focused on this, like the holy grail of artificial general intelligence.
• 1:33:51
  The Chinese are like, let's make our factories smarter with AI.
• 1:33:55
  Let's make robots that have embodied AI.
• 1:33:58
  Let's do all these things where we – let's put AI into the medical system so we can – because China has – they have so many people and they have limited medical resources.
• 1:34:07
  And so technology is a wonderful gift for them to help improve medical care for their citizens.
• 1:34:13
  So I think they're being much more pragmatic about how they're trying to diffuse this technology throughout society, throughout the economy in ways that are not like we're going to have this holy grail and all of a sudden it's the singularity, artificial general intelligence, and then we win, right?
• 1:34:26
  Because I think that is a mistake if that is what the big US labs are moving towards.
• 1:34:34
  And I think in some ways, again, I think it's a bit of an over-egged argument.
• 1:34:37
  I mean, you look at sort of like Claude and the way they're changing software development.
• 1:34:42
  I mean, that's diffusing through the economy incredibly quickly in ways that do improve economic efficiency that isn't necessarily, you know, here's the machine god, right?
• 1:34:53
  Yes.
• 1:34:53
  Yes.
• 1:34:53
  Yes, although it's getting close if you talk to the, you know,
• 1:34:57
  did you read the Matt Schumer article that went viral last week?
• 1:35:01
  I don't know if this has come across on the radar or not,
• 1:35:03
  but, you know, we all got to.
• 1:35:05
  So next year we don't even have a podcast.
• 1:35:07
  We just write some prompts and we'll have another conversation.
• 1:35:10
  I'll have you back on long after we're dead.
• 1:35:13
  There'll just be a couple of avatars having a hopefully more insightful
• 1:35:16
  conversation than the one that we just had.
• 1:35:18
  Ooh.
• 1:35:20
  No, no.
• 1:35:20
  it i mean no i mean if agi comes true it's going to be even better than the great conversation but
• 1:35:25
  what accent we'll have we'll have an australian accent a kiwi accent an american accent french
• 1:35:30
  accent bill have you ever seen any i don't know if you know they probably didn't exist when your
• 1:35:34
  kids were young but there are children's shows now that seem to be made by either ai or by russian
• 1:35:41
  like bot farms or something because they're like they're just rinky dink in fact some of them are
• 1:35:46
  even animated movies they might just be very very very bad animated movies and some of them get a
• 1:35:51
  theatrical release but like you can tell that within the first five seconds that this is not
• 1:35:56
  a pixar film you know this is like very very very bad and i was my kids were watching something on
• 1:36:01
  tv the other day and it's an american it's ostensibly american because the characters
• 1:36:04
  have american accents they're all little animals and along comes one character who is obviously
• 1:36:09
  robert irwin uh the you know steve irwin's son yeah the um right yeah he's got the the australian
• 1:36:16
  bushman's hat with crocodile teeth in it and everything he's got a like a whip and he's wearing
• 1:36:20
  australian outfit and he opens his mouth and he starts speaking in a thick like southern u.s
• 1:36:27
  brawl like he's a cowboy and i was like okay that's my first hint this is not made in america
• 1:36:34
  or australia because i don't know who thinks that this character is supposed to have
• 1:36:39
  a texan accent and did your kids understand that was off too
• 1:36:43
  Well, they couldn't.
• 1:36:45
  They insisted that it was an Australian accent.
• 1:36:47
  At eight, they don't quite really.
• 1:36:49
  They also have an American.
• 1:36:50
  My husband is an American guy,
• 1:36:53
  and their grandparents are American,
• 1:36:54
  so they have a bunch of accents going on around,
• 1:36:57
  and I think they're just not quite tuned in yet
• 1:36:59
  to what Australian and American is.
• 1:37:00
  It sounded different,
• 1:37:01
  but a very, very, very strong Australian accent.
• 1:37:03
  Yeah, no, I have missed all those, thankfully,
• 1:37:07
  and my kids are beyond that.
• 1:37:09
  But it makes sense, right?
• 1:37:09
  Because you probably put them on YouTube, whatever,
• 1:37:11
  and you get the ad share,
• 1:37:12
  and kids don't really care.
• 1:37:14
  Exactly.
• 1:37:15
  It was probably an AI voice
• 1:37:17
  or they've just selected from a drop-down list of accents.
• 1:37:20
  Yeah, but just pick the Australian voice.
• 1:37:22
  I mean, how hard can it be?
• 1:37:22
  Exactly.
• 1:37:23
  I mean, if we've given to you the world,
• 1:37:28
  the genius that is Robert Irwin.
• 1:37:30
  Shrimp on a barbie.
• 1:37:31
  I remember from the old Foster's Lager ads that he would do.
• 1:37:34
  Like, put another shrimp on the barbie, mate.
• 1:37:36
  The Crocodile Dundee ads.
• 1:37:39
  Yeah, yeah, yeah.
• 1:37:40
  Yeah, it was Crocodile Dundee.
• 1:37:41
  You're getting Australian crocodile wrestlers mixed up.
• 1:37:46
  If you're watching this and you don't follow Bill on Substack,
• 1:37:50
  Sinicism is the excellent blog where you can get all kinds of insights
• 1:37:53
  like the ones that you've heard and more.
• 1:37:55
  If you're coming in from Bill's side and you're just blundering into this,
• 1:37:57
  follow Uncomfortable Conversations.
• 1:37:59
  We have conversations about things that generally make people uncomfortable
• 1:38:02
  if you express a strident opinion about them at a cocktail party
• 1:38:06
  with all kinds of interesting people from entertainers to politicians
• 1:38:09
  to academics.
• 1:38:10
  Bill, it's been a joy.
• 1:38:11
  Thank you.
• 1:38:12
  Thanks for having me.
• 1:38:13
  It's been a real pleasure.
• 1:38:14
  Thanks a lot.