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Sharp China: Xi Jinping Comes to Washington; US-China Agenda, Questions and Expectations; The September Politburo Meeting · Sharp China Podcast

• 0:04
  SPEAKER_00: Hello and welcome to Sharp China.
• 0:06
  SPEAKER_00: I'm Andrew Sharp and you are listening to a free preview of
• 0:09
  SPEAKER_01: today's episode.
• 0:12
  SPEAKER_00: Hello and welcome back to another episode of Sharp China.
• 0:15
  SPEAKER_00: I'm Andrew Sharp and on the other line, Bill Bishop.
• 0:19
  SPEAKER_00: Bill, how you doing?
• 0:21
  SPEAKER_01: Doing well, Andrew, although we didn't get our invitation to the events on Thursday.
• 0:26
  SPEAKER_00: Hasn't come through yet.
• 0:28
  SPEAKER_00: Still have about 24 hours.
• 0:30
  SPEAKER_00: Who knows?
• 0:31
  SPEAKER_01: I don't know if it's just the Postal Service problem or what happened, but you know...
• 0:35
  SPEAKER_00: Well, maybe we didn't put enough donations on the table to get ourselves a seat
• 0:40
  SPEAKER_00: for Thursday night at the state dinner.
• 0:43
  SPEAKER_00: Who can say?
• 0:44
  SPEAKER_00: But it is she week in Washington, D.C.
• 0:47
  SPEAKER_00: Lots of rumors flying around,
• 0:50
  SPEAKER_00: all sorts of speculation and some good rainy fall weather.
• 0:54
  SPEAKER_00: We'll be welcoming the general secretary later this week.
• 0:57
  SPEAKER_00: Although who knows what Thursday will look like?
• 1:00
  SPEAKER_00: I know the next day or so.
• 1:02
  SPEAKER_00: I think for his arrival at Andrews Air Force
• 1:04
  SPEAKER_01: Base on Wednesday,
• 1:05
  SPEAKER_01: by Wednesday late afternoon, it should
• 1:07
  SPEAKER_00: clear up.
• 1:08
  SPEAKER_00: It will have cleared.
• 1:10
  SPEAKER_00: President Trump will be greeting Xi Jinping on the tarmac at Andrews Air Force Base.
• 1:14
  SPEAKER_00: Indeed.
• 1:15
  SPEAKER_00: They're rolling out all the stuff.
• 1:17
  SPEAKER_00: Let's begin with 12 hours of bilateral presentation.
• 1:32
  SPEAKER_00: We'll see you next time.
• 1:48
  SPEAKER_00: We'll see you next time.
• 2:03
  SPEAKER_00: If any issues arise with AI over hacking,
• 2:07
  SPEAKER_00: national security concerns,
• 2:09
  SPEAKER_00: rogue AIs,
• 2:10
  SPEAKER_00: or other AI concerns,
• 2:13
  SPEAKER_00: President Trump will give a thumbs up or thumbs down on the deal this week
• 2:17
  SPEAKER_00: before meeting President Xi.
• 2:19
  SPEAKER_00: Okay, so there has not technically been a thumbs up from President Trump on this,
• 2:24
  SPEAKER_00: but how do you read that news, particularly after the past two weeks?
• 2:29
  SPEAKER_01: So that whole meeting, it's interesting, you know, they somehow...
• 2:32
  SPEAKER_01: The JP Morgan headquarters is neutral ground for the meeting.
• 2:37
  SPEAKER_01: Kind of interesting.
• 2:38
  SPEAKER_01: Nice headquarters, clearly.
• 2:41
  SPEAKER_00: Palatial in there, yes.
• 2:42
  SPEAKER_01: They needed to meet before she arrives.
• 2:44
  SPEAKER_01: I think there are still lots of things to be worked out from the readouts or
• 2:48
  SPEAKER_01: the leaking and conversations since the Sunday meeting.
• 2:52
  SPEAKER_01: And then there was a follow-up meeting on Monday, I think, with the lower-level folks.
• 2:56
  SPEAKER_01: Mm-hmm.
• 2:57
  SPEAKER_01: Doesn't lend one to think there's a lot of progress on deals on the AI thing.
• 3:06
  SPEAKER_01: I think that when she visited California and met with President Biden,
• 3:10
  SPEAKER_01: they then agreed to start some sort of an AI dialogue, which happened.
• 3:14
  SPEAKER_01: But there was a good op-ed from one of the people involved in
• 3:17
  SPEAKER_01: the Biden administration in the New York Times over the weekend.
• 3:20
  SPEAKER_01: Didn't go well.
• 3:22
  SPEAKER_01: Maybe this time will be different.
• 3:24
  SPEAKER_01: The history of US-China hotlines in other areas is not good.
• 3:28
  SPEAKER_01: The hotline doesn't work when it just rings and rings and rings and no one answers
• 3:33
  SPEAKER_01: for days on end, which is what's
• 3:34
  SPEAKER_00: happening.
• 3:35
  SPEAKER_00: Maybe they can just have an agent answer at this point, right?
• 3:38
  SPEAKER_01: Hook up like Muse or the reconfigured Manus.
• 3:41
  SPEAKER_01: Our agents talk to their agents.
• 3:44
  SPEAKER_01: Throw in, I mean,
• 3:46
  SPEAKER_01: hook it up to like 11 labs or something so you can clone Xi's voice
• 3:49
  SPEAKER_01: and Trump's voice or whatever.
• 3:50
  SPEAKER_01: That's how we will finally
• 3:53
  SPEAKER_00: construct strategic stability.
• 3:55
  SPEAKER_01: Boy, oh boy, we've solved it right here on the podcast.
• 3:59
  SPEAKER_01: So all joking aside, look,
• 4:01
  SPEAKER_01: it's good that they started to talk about having some sort
• 4:04
  SPEAKER_01: of conversation around AI.
• 4:06
  SPEAKER_01: We have no details.
• 4:08
  SPEAKER_01: We have no idea what the structure will be if it is going to happen.
• 4:12
  SPEAKER_01: It really matters who's involved.
• 4:14
  SPEAKER_01: If it's Led on the Chinese side by the Ministry of Foreign Affairs,
• 4:17
  SPEAKER_01: it's most likely going to be fairly useless.
• 4:20
  SPEAKER_01: It needs to have significant...
• 4:23
  SPEAKER_01: The fact that Holyfong is the interlocutor, he effectively oversees the NDRC.
• 4:28
  SPEAKER_01: The NDRC has an AI...
• 4:31
  SPEAKER_01: Huang or someone on her staff should absolutely have a big role in AI dialogue,
• 4:38
  SPEAKER_01: as should someone from the Cyberspace Administration of China, among other agencies.
• 4:44
  SPEAKER_01: I think one of the issues as this person, I forget his name, Seth, I forget his name up, but...
• 4:50
  SPEAKER_00: Right.
• 4:50
  SPEAKER_01: So a lack of technical expertise or a lack of authority or both in this case.
• 4:53
  SPEAKER_01: Yeah.
• 4:54
  SPEAKER_01: Yeah.
• 4:54
  SPEAKER_01: I mean, the news, it strikes me as a superficial, bare minimum signal of cooperation.
• 4:57
  SPEAKER_01: And as you said last week, you know, that's better than nothing.
• 5:00
  SPEAKER_01: We have to start somewhere.
• 5:17
  SPEAKER_00: But I did think that the framing,
• 5:19
  SPEAKER_00: at least in this particular report,
• 5:21
  SPEAKER_00: was kind of telling,
• 5:22
  SPEAKER_00: like a hotline that's similar to the military to military hotline is not actually
• 5:27
  SPEAKER_00: that encouraging, but perhaps will be pleasantly surprised.
• 5:33
  SPEAKER_01: They did announce that they've agreed to operationalize,
• 5:36
  SPEAKER_01: whatever that means, the Board of Trade.
• 5:39
  SPEAKER_01: But still, lots of details we worked out.
• 5:42
  SPEAKER_01: Politico has an article today talking to lots
• 5:44
  SPEAKER_01: of businesses saying they have no idea what this means.
• 5:47
  SPEAKER_01: So I think there's just a lot of details that are on the U.S.
• 5:51
  SPEAKER_01: side, not even between the U.S. and China, that are unclear.
• 5:53
  SPEAKER_01: Yeah.
• 5:55
  SPEAKER_01: We will not really know much about this,
• 5:59
  SPEAKER_01: any agreement around,
• 6:01
  SPEAKER_01: frankly,
• 6:01
  SPEAKER_01: around anything,
• 6:02
  SPEAKER_01: but especially around an AI dialogue until the end of this visit from Xi,
• 6:07
  SPEAKER_01: and then maybe we'll hear more.
• 6:09
  SPEAKER_01: Again, I think it's good if they set something up.
• 6:11
  SPEAKER_01: Expectations should be low, but...
• 6:14
  SPEAKER_01: The details matter and really specifically who's involved really matters.
• 6:18
  SPEAKER_01: And again, the question I think the Chinese legitimately have, well, who on the US side, right?
• 6:22
  SPEAKER_01: Because your policy seems to be in a bit of a flux.
• 6:24
  SPEAKER_01: I mean, frankly, it should be like Besant, David Sachs, Elon Musk.
• 6:30
  SPEAKER_00: Yeah.
• 6:31
  SPEAKER_00: Jensen Wang.
• 6:32
  SPEAKER_00: I mean, the people are really making the policy.
• 6:34
  SPEAKER_00: Yeah.
• 6:35
  SPEAKER_00: And you'll get different answers depending on who you're talking to in the administration.
• 6:40
  SPEAKER_00: No, Kyle Chan at Brookings highlighted some questions that I thought were useful.
• 6:45
  SPEAKER_00: A, he too asked who will participate in these talks on the PRC side.
• 6:49
  SPEAKER_00: It would be a major signal if China included senior officials from the CAC or NDRC.
• 6:55
  SPEAKER_00: How will they address the open source question?
• 6:58
  SPEAKER_00: Open source models are harder to monitor,
• 7:00
  SPEAKER_00: shut down and maintain guardrails, but they are key to China's diffusion strategy.
• 7:05
  SPEAKER_00: And then what counts as an incident worth elevating to a channel like this?
• 7:10
  SPEAKER_00: It will be a problem if the U.S.
• 7:12
  SPEAKER_00: discloses frequently, but the Chinese side does not share info on this.
• 7:16
  SPEAKER_00: We have yet to hear of a hugging face incident in China,
• 7:20
  SPEAKER_00: even though all the conditions are ripe.
• 7:22
  SPEAKER_01: Well, we do have an incident that blew up in the last few days from Z.ai,
• 7:27
  SPEAKER_01: where their coding tool was basically taking user data and shipping it
• 7:31
  SPEAKER_01: over Uploading it, right?
• 7:32
  SPEAKER_01: Uploading it.
• 7:33
  SPEAKER_01: And they had a huge uproar, and now they've had to pull that aspect of their tool.
• 7:38
  SPEAKER_01: But that wasn't escaping from a poorly constructed sandbox and then going
• 7:47
  SPEAKER_01: and starting up chat boards in China to go talk about how to take down Xi Jinping.
• 7:52
  SPEAKER_01: Right.
• 7:52
  SPEAKER_01: Right.
• 7:54
  SPEAKER_01: Which again, and I think it is a good point, you know, disclosures matter.
• 7:58
  SPEAKER_01: And, you know, look,
• 8:00
  SPEAKER_01: we're learning things from the media here that OpenAI clearly didn't want
• 8:03
  SPEAKER_01: to disclose, right?
• 8:04
  SPEAKER_01: I mean, you get these.
• 8:05
  SPEAKER_01: And so, again, I.
• 8:07
  SPEAKER_01: I don't think we should have any expectation or transparency from the Chinese side.
• 8:10
  SPEAKER_01: We're not really getting it for some of the labs here without a pretty aggressive press.
• 8:15
  SPEAKER_01: That isn't really what you're going to see
• 8:17
  SPEAKER_00: on the Chinese side.
• 8:18
  SPEAKER_00: Indeed, indeed.
• 8:19
  SPEAKER_00: Well, and this is not related to US-China, but notable after our AI conversation last week.
• 8:25
  SPEAKER_00: The information reports that China's internet regulator is investigating DeepSeq
• 8:30
  SPEAKER_00: and Moonshot AI
• 8:31
  SPEAKER_00: after Anthropic alleged both companies had been routing sensitive user data
• 8:35
  SPEAKER_00: to clawed models.
• 8:36
  SPEAKER_01: What that Anthropic Security Report,
• 8:38
  SPEAKER_01: we talked about last podcast,
• 8:40
  SPEAKER_01: what they allege are clear violations of Chinese law and also the kind of thing that
• 8:47
  SPEAKER_01: the MSS,
• 8:47
  SPEAKER_01: Ministry of Security,
• 8:48
  SPEAKER_01: has been warning about for a while and would drive the MSS batty
• 8:52
  SPEAKER_01: over what's being uploaded to foreign servers.
• 8:55
  SPEAKER_00: A hundred percent.
• 8:55
  SPEAKER_00: Yes.
• 8:56
  SPEAKER_00: Through these transactions.
• 8:56
  SPEAKER_00: This was inevitable and very foreseeable.
• 8:59
  SPEAKER_01: But it's also, you know, they're among China's top AI companies.
• 9:03
  SPEAKER_01: And so it's not at all clear that anything will happen other than they're going
• 9:06
  SPEAKER_01: to get called in and get yelled at and get told to fix it.
• 9:08
  SPEAKER_01: And that's that.
• 9:09
  SPEAKER_01: Mm-hmm.
• 9:10
  SPEAKER_01: Because you don't,
• 9:11
  SPEAKER_01: I think from a regulator perspective,
• 9:13
  SPEAKER_01: you want to scare them,
• 9:14
  SPEAKER_01: you want to force them into compliance,
• 9:16
  SPEAKER_01: but you don't want to hamper their development.
• 9:19
  SPEAKER_01: Right.
• 9:20
  SPEAKER_01: And so, again,
• 9:20
  SPEAKER_01: maybe there'll just be even more direct access or influence in these companies as
• 9:26
  SPEAKER_01: a result of this.
• 9:27
  SPEAKER_01: That would certainly be a good leverage point for the regulators to use if they,
• 9:30
  SPEAKER_01: frankly, they don't really need one, but this would be a good pretext.
• 9:33
  SPEAKER_00: Indeed.
• 9:33
  SPEAKER_00: Yeah.
• 9:34
  SPEAKER_00: Well, and it highlights a public-private tension that exists in China,
• 9:38
  SPEAKER_00: just like it exists in the United States as both governments try to grapple
• 9:43
  SPEAKER_00: with this technology.
• 9:44
  SPEAKER_00: I thought it was interesting the Cyberspace Administration of China, the CIC, Mm-hmm.
• 10:09
  SPEAKER_01: This is what the CAC does.
• 10:10
  SPEAKER_01: They summon representatives from intercom companies all the time.
• 10:13
  SPEAKER_01: A lot of it is just getting yelled at and rectification.
• 10:17
  SPEAKER_00: Reminding them who's in charge.
• 10:18
  SPEAKER_01: Right.
• 10:19
  SPEAKER_01: And then rectification on a scale from not so bad to pretty gnarly.
• 10:26
  SPEAKER_01: The issue too, though, right, is...
• 10:29
  SPEAKER_01: Going back to this idea of distillation and what these models are doing
• 10:33
  SPEAKER_01: and using these transfer stations
• 10:34
  SPEAKER_01: where their users think they're actually putting queries into, say,
• 10:37
  SPEAKER_01: DeepSeq or Chirpoo,
• 10:39
  SPEAKER_01: but in fact that the model companies are redirecting their queries off to,
• 10:42
  SPEAKER_01: say, Claude.
• 10:44
  SPEAKER_01: If they stop that,
• 10:46
  SPEAKER_01: which the MSS has warned about before and clearly wants them to stop,
• 10:49
  SPEAKER_01: what does that mean for their actual usefulness or performance for Chinese users?
• 10:53
  SPEAKER_01: Yeah.
• 10:54
  SPEAKER_00: Yeah, from a technical standpoint,
• 10:57
  SPEAKER_00: I'm honestly a little bit confused as to what's happening in terms of data going
• 11:03
  SPEAKER_00: to Claude,
• 11:04
  SPEAKER_00: but clearly it's a problem that DeepSeek and Moonshot are going to have to address.
• 11:09
  SPEAKER_01: And it's certainly interesting that Anthropic clawed these things out.
• 11:13
  SPEAKER_01: They're smart in Anthropic.
• 11:16
  SPEAKER_01: They understand how these reports are viewed.
• 11:19
  SPEAKER_01: They clearly were trying to get these
• 11:20
  SPEAKER_00: companies in
• 11:21
  SPEAKER_01: trouble.
• 11:22
  SPEAKER_00: And it worked.
• 11:23
  SPEAKER_00: In Anthropic's case, they are in trouble.
• 11:26
  SPEAKER_01: And then back to the meeting over the weekend,
• 11:27
  SPEAKER_01: I think,
• 11:28
  SPEAKER_01: honestly,
• 11:28
  SPEAKER_01: I know we started with the AI dialogue,
• 11:30
  SPEAKER_01: but I think the most interesting thing out of the meeting was actually,
• 11:33
  SPEAKER_01: and I believe it was either Secretary Besson or Ambassador Greer who runs USTR,
• 11:39
  SPEAKER_01: I think they were talking to the financial
• 11:42
  SPEAKER_01: The Chinese want this Busan agreement from last November that was cut for a year.
• 11:50
  SPEAKER_01: The Chinese really want to extend it for the remainder of Trump's term
• 11:54
  SPEAKER_01: because it lends stability and all of a sudden you have this deal and then if
• 11:58
  SPEAKER_01: the US does anything, oh, you're breaking the deal, right?
• 12:01
  SPEAKER_01: Even though from the US perspective,
• 12:03
  SPEAKER_01: the Chinese have not lived up to parts of the deal Especially
• 12:07
  SPEAKER_00: around rare earths.
• 12:08
  SPEAKER_00: And the US is drawing a line there.
• 12:10
  SPEAKER_00: And just for reference, the truce agreed upon in Busan.
• 12:13
  SPEAKER_00: It was a deal to pause offensive actions on the American side in exchange for
• 12:18
  SPEAKER_00: the PRC suspending its enforcement of a new regime of export controls on rare earths
• 12:24
  SPEAKER_00: and related rare earth refinery equipment.
• 12:27
  SPEAKER_00: I saw you write that not extending the agreement was smart.
• 12:31
  SPEAKER_00: Why do you think it was smart on the American side?
• 12:34
  SPEAKER_00: All right.
• 12:35
  SPEAKER_00: And that is the end of the free preview.
• 12:37
  SPEAKER_00: If you'd like to hear the rest of today's conversation and get access
• 12:41
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• 12:44
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• 12:47
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• 12:52
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• 12:55
  SPEAKER_00: I'm an incredibly biased news consumer, so I think both are indispensable resources.
• 13:00
  SPEAKER_00: But either way,
• 13:01
  SPEAKER_00: Bill and I are going to be here every week talking all things China,
• 13:04
  SPEAKER_00: and we would love to have you on board.
• 13:06
  SPEAKER_00: So check out your show notes, subscribe, and we will talk to you soon.