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

Episode Date: May 10, 2025

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

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Hello and welcome to another episode of the Odd Lots podcast. I'm Joe Wisenthal. And I'm Tracy Allaway. Tracy, we talk a lot about the tech competition between the U.S. and China. But I still think we talk about it in sort of broad strokes. We talk about some of the policies, obviously made in 2025. But actually how the process of tech innovation in China still seems like important.

There's more to learn about there. I totally agree. And actually, we have a really good example recently in the form of deep seek, right? And this thing that people acted like it came out of nowhere, but actually a lot of the papers had been published over the course of months. But it seemed to surprise everyone, right? I don't know if it's true. You know, the story that, oh, it's just the side project of a quantitative hedge fund. Like, that's such a good story.

I'm not entirely sure if that's true. And they made it so like, oh, yeah, while they were doing this quant fund, they built Deep Seek on the side. Like, it's such an alluring story. Well, not just a quant hedge fund. Isn't the story supposedly that the founder decided to go into AI after Xi Jinping was kind of complaining about how much talent and resources is being wasted on finance in various ways? Yeah.

I've heard that. People, like, these are like great stories, right? And of course, there is a lot of truth to them. in the, particularly in the broad sense, that we know that, and we talked about this at the time, several years ago, there was this sort of announced hard pivot away from the sort of like consumer internet tech and they sort of had their legs cut out from under them towards these more like serious capital T tech. Hardware.

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

And how do you transmit certain ambitions into the actual landscape? I think there's more to be learned on that. Well, I think also we in America are very used to thinking about technology as this like very creative process and the outcome of Jeff Bezos working in his garage or something like that. And it's hard to imagine often the same environment existing in China. I think that's just like a cultural difference perhaps between Americans and Chinese. So we should talk about it. Totally. Well, I'm really excited to say we're going to be talking to one of the best China watchers there is who has a lot of interesting thoughts on this topic. Someone we've never had on the

podcast. We're going to be speaking with Kaiser Quo. He is. is the host of the Seneca podcast, which has been around since 2010. Wow. Yeah, we've been doing this for a little less than 10 years. So it's very impressive. This sort of longevity, someone who spent a lot of time in China, splits his time between the U.S. and China, lived there for several years. Kaiser, thank you so much for coming on Outlots.

Hi, Joe, and hey, Tracy, this is a huge honor for me. Thanks so much for having me. Thank you for coming on. What is the Seneca podcast? What has been your project in the last 15 years? Yeah, so Cynica is an hour long or sometimes much longer interview format show. We bring on academics and policymakers occasionally. I've had a number of the former assistant secretaries of state for East Asia Pacific on,

have had ambassadors and so forth on. But it's changed in addition. It initially started off as being sort of more, here's what's in the news and here's a couple of people who can talk about it intelligently, having to do with China. Since 2016, when I moved to the states, The focus has really been on U.S.-China relations, and it's got more American guests on than previously were.

But we tackle everything under the sun. I mean, U.S. China relations, China, India, Russia, China, India, what have you. And the Chinese macroeconomy, technology, lots of technology and culture. But the idea is that it's supposed to look at the way that we think and talk about China now. It's really evolved into something which I think has a longer shelf life. Wait, why did you decide to start it? Because you were in a band, right? That was your main gig. Yeah, that's correct. Something for some reason, everyone knows about me. I mean, I transitioned. I went out, I left that band in 1999 and like other people who didn't have many marketable skills. I went into the internet. Well, not right away. I mean, I worked for internet companies for a number of years and I worked as a reporter for quite a number of years.

And then in 2010, it was just sort of on a lark. I was about to start a job at Baidu as their head of international comms. And a very good friend of mine in Beijing, we got in a conversation about what podcasts we're listening to. And I said, oh, you know, the usual, this American life and radio lab and whatnot. And he had a few. And then we just sort of said, why don't we start a podcast? We were both talkers. We both know everybody.

Let's just do one and see what happens. And we did. And it took off. It did pretty well. we got acquired in 2016 right around the time I was moving to the States. And the company that bought us folded in 2023. And I just sort of struck out on my own doing a substack and I've stuck with it. I managed to find a little bit of support.

And those few and hopefully after this, more subscribers. But we're continuing to put them out every week. It's just me solo. Nice. But it's a group effort. I'm in a band. I'm trying to go the other direction. I have a country music band.

and maybe one day I'll leave podcasting behind. No, no, no, I've never going to leave podcasting behind. You know, I'm actually not going to leave podcasting, but I've gone back into, my old band reformed when I was back in China recently. Are you on Spotify? As of this summer. We are, yeah, you can look up Twin Cho, C-H-U-N-Q-Q-I-U.

You've got to put a space in between them for some reason, but it's spring and autumn in English. I'm going to start with like a really super broad-based question that maybe it's not even really, that you is probably a full hour long or two hour long episode but in your years of covering china from a journalistic perspective or at least from a sort of conversational perspective and watching American media or American pundits talk about China is there like a persistent blind spot or a thing that stands out to you as something that people talk about China that does not accord with

your experience of having lived there and having reported on it yourself. there's so many i don't even know where to start yeah i know that i would usually focus on i mean it's a whole cluster of issues that are related to this but i think that people aren't mindful of just how compressed and how how rapid china's transformation has been what has happened in the course of one working lifetime i mean i like to tell people that if you can imagine graduating junior high or high school in 1979 on the eve of reformed opening and then 40 years later at the end of your life, the end of your working life, you're thinking about retiring, and you've seen the per capita GDP go from about $175 at the beginning of your working life

to almost $13,000 now. That transformation is just profound, and it's just so quick. So I think that what people get wrong is that they don't see that the hardware that's visibly advanced has done so just at a much faster pace than the software. People don't change overnight. I mean, I liken to that movie, I don't know, Joe, you or Tracy have seen big with Tom Hanks. I wash it a month ago with my kids.

Keep going. Yeah, great movie. It's actually aged well. But, you know, Tom Hanks makes a wish and goes to bed. What, he's like 11 and he wakes up in his 30s, right? I mean, that's kind of China, right? It's like the mind is still out of that 11-year-old in a lot of ways, but it's in the body with 30.

So we look at this fully grown adult and expect it to behave. as a fully grown adult. That's what people get wrong. You know how I measure China's technological progress? Go on. So I remember in the early 2000s, I was on a trip in the countryside, and I experienced one of the worst toilets I've ever experienced in my entire life, like basically just a hole in the ground.

And then I went back in 2019 to Beijing, and I went to one of the nicest bathrooms. that I've ever been in in like a luxury shopping mall. And I thought, wow, things have changed. Yeah, yeah. That's a good measure. It's a good proxy. Yeah, I should do that all the time.

Okay, so I guess I'll just jump into the technology aspect of this. But does technology come from a different place in China versus the U.S.? Kind of getting back to the intro. There's a sense in America that technology is the product of freedom and creativity. and you have the ability to start a new company in your garage, whereas in China, maybe there's a different sense of how tech actually gets started. Yeah, so there is that American myth about the lone genius toiling in security in his garage,

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

I think we keep seeing this tech momentum despite all the decoupling, despite the chip bands in spite of all the economic headwinds that China is obviously facing. And I think that the reasons are pretty deep. They're actually societal and even cultural. So I think that gets to part of the way that technology is conceived of in China. You'll find pockets, of course, in America where people are still really, really techno-optimistic. They're still very solutionist. They're still very accelerationist, right?

But it's incredibly common in China, whereas it's only here in pockets. I think American society now, and I think the West. more broadly has for some time now had a fear. If you look at our science fiction, if you look at the way technology is thought about broadly in society, there's real anxiety over it, right? Our leading technologists, our leading natural scientists talk all the time about the existential threat that AI poses. I don't want to diminish that threat, but I have to say that in China, you just do not hear that conversation certainly not nearly as frequently and not coming from the leading technologists themselves. So it's very different. Why is it different? You know, I'm

thinking about your big analogy, actually. I'm going to extend the metaphor a little bit too far, but you know, my phone, I have a love, hate relationship with my phone. I'm on it all the time, but I also think it's doing significant damage to my mental health. Whereas if I were to like, you know, my daughter wants a phone and if I were to give her one, she would probably be thrilled for a long time. I'm not going to let her have a phone for a long time. But she would be like thrilled and they're like this is an incredible addition to my life that she would be very excited about again. Do people have the same love-hate relationships with gadgets and new technologies that we seem to have here? There are some people, of course, who have anxieties over it. But no, I think

broadly speaking, you know, when I've sat on the sidelines of a soccer game watching our kids play and I'm trying to talk to the other parent about how they limit screen time, he's there scrolling on his device going, wait, hey, second, let me answer this email. What were you saying just now about screen time? What? And I mean, it's like the question doesn't compute. They don't see it as such a threat. I mean, part of that, of course, is because the social media environment in China is a lot more sanitized. There isn't the threat that Junior is going to be scrolling porn all day, right?

That's part of it. But I think really more to the point is that for these many years now, ordinary Chinese people have seen their lives, their material lives, just improve pretty much in lockstep with. the quality of the technology they have in their hand or in their purse or in their pocket, right? Their bandwidth at home, how fast their network speed is and how powerful their handheld device is basically tracked with their livelihood, right? So there's not that reason for suspicion. Now, that isn't to say that everyone in China has experienced. This is certainly not. But I think for the vast majority, and not just of urbanites, but the vast majority of people have seen this correlation. Wait, but there is some negative feeling towards some technology in China. And I'm

thinking specifically of Xi Jinping and his big crackdown on consumer online tech. And he's not a fan of video games precisely because he thinks it's a waste of time and kids are staring at the screen too much. So there is an element of that. That also tracks with the Chinese parent thing, right? They all want us to be really good on computers, but not to waste our time playing video games. are just chatting up people. Yeah, I think you were saying in your intro, and I thought that was really interesting, how Donald Trump, he wouldn't be able to just simply order everyone,

the physicists to start doing physics, and not go work for quantitative hedge funds. In China, you kind of can. It's not, I mean, again, that's an exaggeration. There isn't a way, I mean, there are still plenty of people who go to school and study the social sciences or who graduate with engineering degrees and then go to work for a major social media company

or go to work designing complicated financial derivatives or whatever. But he doesn't like that. He thinks that that's been one of the pathologies of the United States is that it's over-financialized and that our best and brightest tier in the U.S. have gone to work for these companies that basically don't make anything and just suck a lot of people's time and create polarization in the country. So they're worried about that. And they have more wherewithal to direct people.

It's not coercive, though. Let me be clear about that. they have ways to incentivize it. And I think that this, again, this is part of the popular culture. There's all sorts of reasons. I mean, we can start at the top. If you look at the composition of the Chinese leadership, I mean, what do we have in Congress? Who do we have heading major agencies? It's almost all lawyers, people with illegal training. And that's good in a country that really prizes rule of law. And it's good for many reasons. But in China, the analogy is that you look at the senior leadership. If you look at, you know, who runs the provinces, whether the party or the

You look at who are the mayors or the party secretaries of cities of a million people or more. And you're almost all going to find engineers. They're going to be like 70, 80 percent engineers. If the ladder of success, if the people who are top it all did one thing in common, they did a four-year degree in the natural sciences or in engineering, there's a good chance that you're going to tell your kids to do the same, or your kid is the case maybe, yeah, to do the same. I think there's a lot of pressure that way in terms just of social mobility and in terms of what the perceived path of mobility is.

By the way, this point about engineers and lawyers, or regular odd law at-law guest, Dan Wong, has a book coming out of August 26, 2025. It's up for sale on Amazon right now. You can pre-order it about exactly this dimension of a sort of lawyer society versus an engineering society. I'm looking forward to reading that. I'm looking forward to having done. Dan Wong is great. So I interviewed him for this Nova documentary that I did called Inside China's Tech Boom. And the whole thesis of it was really, I mean, in many ways inspired by some of Dan's ideas about the importance of process knowledge. How the fact that China has not stopped manufacturing.

There was never a maker's movement in China because there didn't need the B-1, they were always making stuff, right? The fact that they still have all the hardware there, it creates this sort of frictionless ecosystem of innovation where, you know, if you're a guy, with an idea for some gadget and you're in Shenzhen, you can have your designer just send you over on WeChat, his latest design. You can take it to your ODM, which is just a quick bike ride down the street. They can have you a prototype by the afternoon.

You can make some tweaks and iterate, and they'll just keep changing the thing overnight. And it's practically frictionless. And I think that's a huge piece of China's innovation success as well. But what happens when Xi Jinping comes out and says, you know what, we're not as into social networking anymore. We're not as into video games. We really want to focus on other areas of hard tech, important tech, something like that. What is the process of here is this national priority and then the transmission and diffusion of

these priorities into choices that maybe students make or technologists make? That's a great question. I think it's actually one that I can answer with three letters, KPI. Right. What happens when you have the kind of abstract directives, the will of the leader from on high, is that they get translated not into specific policies, not right away, certainly, but into this expectation set, you know, from the leadership on down, that this is how I'm going to score my brownie points. This is how I am going to get promoted within the party, is if I tick these boxes, if I do these things. Let's say, you know, we decide that the thing is we all need to have data centers.

So suddenly every municipality and every province is going to want to build data centers. They're going to fight each other for it. They're going to figure out, here's the best place for us to build ours, and here's all this money that we're going to put into that. I mean, they're going to want to tick that box. This is the sort of the way that everything gets done in China. Recently, when Xi Jinping announced that they were going to be, and this is a director that came not out of just the state council,

but out of the party as well, that they were going to boost consumption. A lot of people just sort of sneered and said, yeah, I don't see a lot of policy here in place to do that. But you can bet your bottom dollar that everyone on down, they took this very, very seriously. And they're all figuring out ways where in their little patch of dirt, they are going to figure out how we can boost consumption because that's the way that I'm going to get promoted. They did the same thing with cleaning up air pollution. They do the same thing with cleaning up rivers.

They make it part of your KPI. That's what they're going to do with this as well. That's what they did. I mean, the question that you asked about how they made sure these physicists were doing physics, it's much the same. There's also, I feel, like, a sense of clarity in some of these policy directives. So China very often explicitly will say where it's investing, right? So when we have the consumer tech crackdown, it came with a simultaneous announcement that everyone should go into hardware, basically. And we saw that repeated in various ways.

I remember Chairman Rabbit was tweeting that people should go to the industries that actually fit the central government's general policies. So I feel like it's just very clear as well. And then messaging is kind of on point. We have a word in Chinese, funco, which literally means sort of wind mouth. It's the place where the wind will be blowing. It's like that little wind tunnel. And they telegraph that. They tell you, you know, well in advance, here is where we're going to the Zidde,

It was in the 14th five-year plan, this, you know, in the 15th five-year plan, they say exactly which industries are going to not only receive a lot of government investment, but where the paths are going to be cleared. There's going to be removal of a lot of regulatory hurdles. There's going to be favorable policy for you if you get into this. And if you're an investor, that's where you're going to put your money. That's what you're going to do. You're going to, you know, it doesn't take a genius. You need to read the important documents and you figure out exactly what their priorities are. Just as you say, there's that clarity.

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I have to admit, you know, like when I read, say, a Xi Jinping speech translated into English, or maybe I just have a chat Chupit translated, like there is often not a lot of like specifics or arguably even substance in them. There's a lot of like really sort of high level grand things. But this sort of makes sense. Now granted, the leaders around the world often don't get into a lot of a specific but it makes a little bit more sense to me in the context of, okay, these priorities are announced

and immediately on down, I have to imagine provincial leaders, leaders of school systems, universities, immediately get the message that their futures and their success and their careers will be about who can show the best results on what maybe sounds like some sort of vague priority. And you're missing the biggest piece of it, which is parents. Oh, interesting. They're getting this message as well. They're the ones who are ultimately deciding, no, you're not going to be an intellectual historian. You're going to study, yeah, you're going to study engineering physics. Sorry, buddy. Because you're going to get a job at Tencent or at BID or at Huawei when you graduate. Yeah. So I think that's the important thing. A friend of mine once joked that a lot of people in the West have a great deal of difficulty imagining how the leader of an authoritarian nation. can do all these things that seem so apparently cruel, arbitrary, but actually have your best interests in mind. But for anyone who grew up with Chinese parents, they know exactly how that works. Wait, so just on the authoritarian point, I know you touched on this already, but just to press on this,

would you say authoritarianism is a net positive or a net negative for technological development? I think it's a wash in most ways. I mean, look, maybe this is my upbringing talking, but, you know, not willing to discard the idea that a lack of intellectual freedom, of academic freedom, of freedom to query and to experiment without any ideological fetters, that if you don't have that, in the long run, you are hobbled. I think that's probably still the case. But I think in America, we've taken it too far. We have this idea. I mean, do you remember back in 2013, 2014, when Joe Biden and even Carly Fiorena, who really ought to have known better? I mean, she was the CEO of a major technology company.

They were going around and they were making these speeches. You know, Biden was making these graduation speeches. Firina was on the campaign trail. And she was talking about, and Biden was talking about it. They said the same talking point. It's like, show me one thing that China's ever innovated. Right. You know, as long as we have freedom, we will always be in the lead of innovation.

And, I mean, I think that takes it from a necessary condition, which I even have quibbles with. In fact, I don't believe that it's a necessary freedom is a necessary condition. for technological innovation. But it even elevates it to sufficient condition, yeah? Where, you know, it's like just because we're free, we're always going to be ahead in innovation. So, I mean, that's part of the reason why we're constantly just being just sideswiped, just completely just blindsided by Chinese tech advances. It's, you hear that to this day.

I think you hear less of it. But it is remarkable the degree to which you still hear that. What's your version of DeepSeek? Where did it come from? And how much does it fit this story of like, oh, they were doing quant stuff? And then suddenly they were like, oh, we should pivot to AI. Like what's the deep seek story? Well, I mean, the biography of Liang Wen Feng is not in question.

I mean, he ran a quant fund called High Flyer, right? And he pivoted. Now, to what extent they were just developing this as a sideline hobby or, I mean, I think more likely, they were developing AI that would help them in trades, right? It may help them in high frequency, high velocity trading, right? But the pivot being attributed to Xi Jinping making this policy change, it makes that totally tracks. I don't know the precise details, but it totally tracks.

It doesn't seem suspicious to me. I have no reason to doubt that that's the case. I mean, plenty of people have made that kind of a pivot. I mean, maybe not all of them have enjoyed the kind of world striding success that DeepSeek has, but it certainly tracks. I want to talk about the export controls from the Biden administration. So what role would you say those have played in China's technological progress? Because one thing I sometimes hear, people used to use the analogy of the three-body problem.

I don't know. Did you ever read that, Joe? I never read it. I did, yeah. Oh, sorry, and Kaiser. Yeah. Oh, yeah, for sure. Neil Ferguson actually used that at Davos a few years ago.

I was there. I was, you know, working this little side hustle. It's kind of a note taker for the World Economic Force. him. But he actually, without explaining anything, he just simply said, you know, what the United States is trying to do to China right now is exactly what the trisolarans were trying to do the Earth in three-body problem. And without explaining what he meant, but just done the assumption that everyone in the audience had read it, and probably most people had. But yeah, trying to basically stymie technological advance, right. Right. So I feel like we should explain it now. But I guess it's

the idea that in the three-body problem, Earth is threatened by this alien species and because of that humanity kind of reorganizes itself and technological progress thrives, at least for a while. Yeah. And I think that that's kind of what we've seen happen. I mean, I use a more quotidian metaphor, the one that I think not everyone has to have read this really, really long turgid science fiction classic form. But I think we've basically compelled the frog to leap again. And it was happy enough just sort of hopping along well behind the U.S. when it came to cutting edge semiconductors. But But now it may leap the United States, as the frog, you know, our metaphoric frog did in 5G or in renewable energy like solar and electric vehicles, right?

So we have now given China both the kind of urgency and the sense of imminent threat that was needed to light a fire to that frog's posterior. And now it's, you know, it's in the air. It's maybe directly over our heads and maybe it'll land in front of us. I'm Francine Lacqua, an award-winning journalist, and I've got a new podcast, Leaders with Francine Laquois from Bloomberg Podcasts. I've interviewed everyone from Heads of State to fashion icons about the news of the moment. But I've always been curious, who are these people as leaders? I don't think there's one right way to be a leader.

Make decisions. A poor decision is always better than no decision. Listen to new episodes every other Monday. Follow leaders with Francine Lacois wherever you get. your podcasts. One of the things that's really elemental to U.S. tech is the vision and dreams of gigantic monopoly profits. This is sort of like the Peter Thiel ideas. Like the goal is to like build a monopoly and get insanely rich doing it. And the people who go into tech dreams of fortunes, etc. There's this huge liquid stock market that becomes the destination either for IPOs or

acquisitions. Talk to us about the capital markets. component of Chinese tech. Is it the same, like, path to getting super rich that American technologists see here? Like, what incentivizes and motivates the technologist in China? Well, I think that they're exactly the same. I think that there's very little daylight between, well, first of all, I mean, in the 90s, in that first technology boom in China, came right on the heels of what you saw in the United States. All these people, Charles Zhang, who left MIT and went back to China in, I think it was like 97 or 98, to start this company Sohu. All these other entrepreneurs, Robin Lee, who I used to work for at Bidu, a lot of them, were

returnees from the United States, and they had the same glint in their eye. And you have to remember, these guys, they had American business models, essentially. They went to American VCs from Sand Hill Road to raise their money. They went to American capital markets, right, when they wanted to list. Their exits were always on NASDAQ or on New York. stock exchange, only in rare exceptions were they actually not, 10 cents an exception. Alibaba's a little bit of an exception. But most of them, I mean, hundreds of them went to the United States forces, right? And yeah, I think it's the same motivating force. The cultures are remarkably

or were remarkably similar. So that was like the only thing I felt comfortable working, I mean, as a guileless American who just had my, I would just have my, my posterior handed to me in any kind of corporate setting except in the internet where, you know, the same kind of Silicon Valley egalitarianism and that kind of enterprise culture prevailed. So that was like one of the only safe places for people who, you know, were clueless like me. Since you mentioned. So I think they're the same. I think they're the same. Since you mentioned culture, can I ask a slightly random question? But I think you're a good person to ask about it, given your background as a musician.

But China has been very successful in exporting technology. So, you know, whether it's BYD cars or TikTok or whatever, I think we can all agree that it's come from nowhere, basically, and is now certainly a major player. Meanwhile, in sort of pop cultural exports, the lack of Chinese pop culture exports has been a sort of long-running discussion point now. And if you compare China to a place like Japan, where there's J-pop or Korea, where there's K-pop, it does feel like something is kind of lacking there. I guess my question is, is it fair to say that China has fallen down on cultural exports, at least compared to technology? And then B, why is that? Yeah, that's a great question. It's something that I've pondered for a very long time, too.

I mean, I think there's no arguing that China's got a gigantic gap. It's not punching at its weight. But let's figure out how we calculate that weight. Because, you know, when you look at when did we all start eating sushi and watching the Kira Kurosawa films, like in the 80s, right? That's when Japan's soft power starts to really, really peak, right? We all start driving Japanese cars. This is at a point where Japan's per capita GDP was about 75% of what the United States

was at that time. And Korea's similarly, around the time where we start all listening to Gangnam style and then, you know, all our daughters or whatever are have posters of BTS on their walls, as mine still does. This was at a time when South Korea's per capita GDP, it's like 70 to 73 percent of America's GDP per capita. I think that has something to do with it. I think that per capita GDP kind of shows what a nation's priorities are going to be. When it's low, it's still going to be in that stage of we've got to work really. really, really hard. This is why, I mean, in China, I mean, I play music. So I'm constantly frustrated by the fact that for most people, for the overwhelming number of people,

music is just entertainment. There's nobody who thinks of it as an art form anymore. I mean, or if there ever was. I think that it has to do with that. But I think there's also, and it's obvious to me, that the first rule of soft power should just be, don't talk about soft power. The China's government's obsession with trying to create soft power is one of the big impediments to it actually having soft power. Again, let me be very, very clear. It has plenty of soft power in the developing world.

I mean, if you look in Southeast Asia, a lot of people are watching these insufferable costume dramas about, you know, the palace intrigue in the Qing dynasty. But there are some good ones. There are some good ones out there. A bunch of them are on Netflix nowadays. Yeah, yeah. I guess the Thai ones are really popular these days. That's interesting.

So that's actually popular content in Southeast Asia? Yeah, it's huge. It's absolutely huge. All over Southeast Asia, in Malaysia, Thailand, and the Philippines, even in Vietnam. Anywhere in Southeast Asia, you go, there's a lot of this stuff. But, yeah, but no, to your point, in Europe, in the United States, no, it's not really registering. And I think there's, that's one of the reasons.

But I think ultimately the reason is, well, soft power tends to. to be created on the periphery. It creeps in through the cracks. You know, it's a grassroots thing. It's not supposed to be created top down. And yeah, you can look at South Korea and say there was a lot of government, you know, and a lot of these gigantic conglomerates who created Korean soft power, the boy bands and stuff. But that may be sort of an anomaly. Kaiser, we could go on a long time. There are just so many questions. But I think that's a good spot to wrap it. Thank you so much for coming on Adlots. We'll have to have you back on again soon. I would love to come back on. Thank you so much for having me. Thank you. Thank you, Kaiser.

That was fun. I thought it was really interesting. I like the point about everyone getting the message. And then everyone doing their own thing to sort of prove that they're getting a message. And we talked about this on our episode with Sam D'Amico, the Impulse Labs guy, this idea of, okay, there's some priority, and then all the different provinces compete on how well they're doing and fulfilling their priority. it makes a lot of sense that that's a very broadly applicable lesson to like different sectors and different parts of the economy. Totally. I really think the messaging is kind of key here. The message is very clear. It's if you if you choose this route that the Chinese government is encouraging you to take, your life is going to be a lot easier than if you take another route. And I think that's kind of different to the way industrial policy, I guess, works in the states where, you know, even, you know, even, you. even if a president stands up and says, we want a lot more semiconductors in the U.S.,

there's still a lot of bureaucracy, a lot of uncertainty, a lot of paperwork attached to getting support from the government for a semiconductor project. And so I think that uncertainty, like, still feeds into the U.S., certainly. Yeah, President Trump recently gave a speech at University of Alabama. I think it was their graduation ceremony.

And he said that he was like, to the business students here, don't just think about your portfolios, think about your country. And I like that message. But I don't know, like, what are the levers that actually get towards that? And so, oh, also, Tracy, I have a take. Oh, oh, really? Just one? Yeah, just one take. Okay. Hit me. This is something I've been workshopping. And so I'm leaving it to the end. I can't believe you're not tweeting it. Are you going to tweet it? Are you workshopping for a tweet? I'm workshopping it for you here. I figure a lot of people aren't listening. By this point, so I can drop it here, which is I'm kind of coming around to this idea that, like, complex financial products, that they have a bad rep.

Would they have a bad rep or they are bad? No, that they have a bad rep. That actually, this is like a sort of contra to a lot of popular thing. It's like, oh, complex semiconductors, good, complex financial products, bad. I'm just throwing it out there that maybe we should talk more about why people get paid so much to design. complex financial products in a market economy and why they're so highly valued. I'm just throwing it out there. We should do an episode on Ray Dalio and the chicken nugget again.

That's exactly right. That's exactly right. Derivatives gave us the chicken nugget. Anyway, talking to Kaiser about this just reminded me of that, that I want to explore this idea. And I'm saying it here now kind of as a reminder to myself to think about this more. Chicken Nuggets is the ultimate example of American technological and financial supremacy. We do great, complicated things in the United States, but because we have this bias against finance as being extractive or something, I think we don't sufficiently recognize where we're at the cutting edge. It is true that in China, finance and industry are often working hand in hand.

And if the government says that, for instance, hardware is now very important, you will see. the banks start to loosen up on lending standards and things like that. So a valid point, Joe. What is a supply chain, but a payment chain in reverse? That's Zoltan Pozar's line. Oh, he said that. Yeah, I stole it from Zulton. All right. Yeah, credit to Zulton. But, you know, maybe we should think about this a little more. Yeah. All right. Shall we leave it there? Let's leave it there. This has been another episode of the Odd Thoughts podcast. I'm Tracy Allaway. You can follow me at Tracy Allaway. And I'm Joe Wisenthall. You can follow me at the stalwart. check out our guest Kaiser Quo. He's at Kaiser Quo and check out the Cynica podcast and substack.

Follow our producers, Carmen Rodriguez, at Carmen Armid, Dashel Bennett at Dashbot and Kail Brooks at Kail Brooks. For more Odd Lots content, go to Bloomberg.com slash Oddlots, where we have a daily newsletter and all of our episodes. And you can chat about all of these topics 24-7 in our Discord, Discord.g.g. And if you enjoy Oddlots, if you like it when we check in on Chinese technology and how it's actually develops, then please leave us a positive review on your favorite podcast platform. And remember, if you are a Bloomberg subscriber, you can listen to all of our episodes, absolutely add free. All you need to do is find the Bloomberg channel on Apple Podcasts and follow the instructions there. Thanks for listening. This is Caroline Hyde. And I'm Ed Ludlow inviting you to join us for Bloomberg

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