The Prof G Pod with Scott Galloway - China Decode: Did the U.S. Push Its Allies Closer to China?

Episode Date: January 20, 2026

In this episode of China Decode, Alice Han and James Kynge break down Beijing’s drive to pull U.S. allies closer—from Canada’s EV tariff to Europe’s growing economic hedge. They unpack China��s lopsided economy, as exports boom while consumers pull back and the property slump deepens. Plus, a viral app meant to check if users are still alive sparks a deeper look at China’s growing loneliness epidemic. Learn more about your ad choices. Visit podcastchoices.com/adchoices

I think in a way, Trump's moves have probably pushed a lot of these countries, the Europeans, the Canadians, now maybe even the Brits, to adopt a softer trade policy towards China. There has been an understanding of the last few years that China is an overcapacity and a national security problem, but at the end of the day, there's a lot of money on the table. Welcome to China Decode. I'm Alice Han. And I'm James King. In today's episode of China Decode, we're discussing how China is pulling America's allies out of Washington's orbit, the problem with China's lopsided economy, and a viral app that exposes China's loneliness epidemic.

That's all coming up, but first, let's do a quick check-in with how the Chinese markets are starting the week. On Monday, the Shanghai A-Share Index inched up 0.3%. The Hangsang-H-Share Index fell 1.1%, dropping to a one-week low on news of events. escalating trade tensions out of the U.S. Farmer got hit the hardest, with Hansow Pharmaceutical Company declining 4% and Woshi Biologics 4.8%. All right, let's get right into it. As the U.S.-China relationship grows more strained, Beijing is aggressively courting America's allies.

Canada is breaking with Washington to cut tariffs on Chinese EVs from 100% in exchange for access to Chinese markets. European regulators attesting China's homegrown C-919 jet, and Beijing is dangling trade and diplomatic incentives across the European Union. The big question, is this smart diversification or a strategic realignment that weakens US leverage? James, a lot has been happening. Even in the last week, we've seen Connie's trip to Beijing. That's a pretty big deal. He got really high-level long meetings. We also saw more recent moves of softening from the EU on China's trade, especially EVs. And then we've also got Greenland that's impacting EU-US relations. How do you think about China's economic moves in the

midst of all of these dynamics? Well, it really feels to me a little bit like we've gone through the looking glass these days. I must say so much is in flux in the international order that it's hard to disentangle cause and effect. It's hard to know which is a move and which is a counter move. but in what I'm calling the tumble dryer of international affairs, I think a couple of big moves into China's orbit really stand out. The first was, as you just mentioned, Alice, Mark Carney, the Prime Minister of Canada, going to China last week. And the other big move is the intended visit to China by the UK Prime Minister, Kirstama, at the end of the month. Both of these countries are the staunchest and longest standing Alice. of the United States. And now we can see, certainly in the case of Canada, it's cozying up to China,

and it was clear that China lost no opportunity to make propaganda capital out of this move at the expense of the United States. Let me just tell you a couple of things that the Chinese media was saying. The China Daily, which is an official Chinese newspaper, encouraged the Canadian government, Ottawa, to adopt what it called, quote, strategic autonomy from Washington. And the longer quote was, if Ottawa still chooses to subject its China policy to the will of Washington again in the future, it will only render its previous efforts to mend ties with Beijing in vain. So it was a very clear warning that the Canadian government should not backslide, having made this visit and expended all this political capital to cozy up to Xi Jinping, that it shouldn't backslide from

this position in the future. Even more extraordinary comment came from a Chinese academic at Renmin University in Beijing. His name is Tsui Shou Jin. And he said that Canada must be feeling a lot of unease toward the U.S. these days because, quote, if the U.S. can claim Greenland, then it might lay claimed Canada. I mean, just sort of extraordinarily bold statements coming out of Beijing. I mean, just a reminder that this is an official newspaper, the China Daily, and academics in China have a sort of semi-official status. I mean, they're allowed to put their interpretation on things, but they're not allowed to stray too far from central government thinking in Beijing. So I do think these are really very interesting. Just before I come back to you,

Alice, let me just go into Keir Stama's visit at the end of the month. That is also going to be a really big moment in UK-China relations if it goes ahead. This is because it will be the first visit by a UK leader to China since 2018. And because the visit is coming. across, as it were, the issue of this Chinese mega embassy in London. In case listeners are not familiar with this, it's a very big story in the UK. The Chinese have a plan, and they want approval for the plan to build a huge embassy right in the center of London, so close to the city of London, the financial district, which is the heart of London. And part of this embassy is supposed to go over the fiber optic cables that supply,

the city with all of its information and all of its data. And so protesters and campaigners against this move has said that this is an unacceptable security risk. In other words, China could either tap into the information or potentially even cut the cables. And so it is expected that this mega embassy will be approved. That's what my sources are telling me. It may happen as soon as today or tomorrow or early this week. And after that, Kirstar, Sharma will be allowed to go to Beijing to conduct his diplomacy there. So the move to Beijing from Kirstama comes after considerable capital has been expended. And I would be expecting the Chinese when Stama gets to Beijing also to be coming out with statements about strategic

autonomy away from the United States. So we are seeing, at least in these two examples, a move from some of the U.S.'s staunchest allies toward China's sphere of influence. I'm not saying they're part of China's sphere of influence now, but we're seeing them inching toward China, I'd say that's my take anyway. What are you seeing at the moment, Alice? Well, I think we first need to distinguish the EU dimension from the Canadian dimension. I'll start with Canada. It was interesting to me that less than a year ago, Kani campaigned on this concept, partially that China was, quote-unquote, the biggest threat to Canada's security. In a way, he had to politically make that point in order to, I think, win the election, if you

recall. And he was definitely a latecomer and a dark horse in terms of the Canadian election last year. But since then, I think this is very much in lockstep with what I saw in Australia a couple of years back under Albanese. When he joined as Prime Minister of Australia, bringing in the Labour government to Australian politics, is the fact that economic rationales, wins at the end of the day, even although China is seen as a national security threat, there's a lot of money that's on the table. And certainly, there are winners and losers in Canada. The agricultural sector, I think, largely has been a winner. Order makers in Canada probably have been losers. China is going to drop substantial tariffs on Canadian canola meal,

lobster, crab, peas, and lower tariffs in canola seed. That's a big win for a lot of ag makers in Canada. But at the same time, and I thought this was pretty considerable, I was surprised by this Canada is going to slash 100% tariffs on EVs from China to Canada. It's about 49,000 per year. And that, I think when we think about the broader landscape of China's EV export machine is going to be a huge loss for Canadian auto. But I think this move is politically calculated. To your point, James Carney is unhappy with what is happening in Washington.

And I think there is somewhat of a consensus amongst the Europeans and the Canadians and maybe even the British, which you may be alluding to, James, that Washington's actions may be in Venezuela and certainly more recently in Greenland are not in alignment with those countries, the Europeans, the Canadians and the Brits' views of the world order. So I think in a way when we put Venezuela with Iran with Greenland, I think since the start of the year,

Trump's diplomatic scorecard is probably in the negative territory, which is probably what's provoking some of these recent moves. And then it comes to the European dimension where I had been predicting this, but I was a little bit late to the game. I had thought last year that the price minimums would actually be developed as a framework. It probably only started to kick into effect as of a week ago, January 12. When the European Commission said that they want to put a framework deal in place for price minimums for Chinese EVs, then that is, for Chinese auto makers, that is considerable

because China's biggest market for autos is the European market. and China is the EU's third largest trading partner for goods and services after the US and UK. So for both countries, this is pretty considerable. China, I think, made about 10% of the EV market last year. That could rise significantly if we see more of a move to reduce the 45% tariffs, for instance, on Chinese EVs. I think in a way, Trump's moves have probably pushed a lot of these countries, the Europeans, the Canadians, now maybe even the Brits, to adopt a softer trade policy. towards China. There has been an understanding of the last few years that China is an overcapacity and a

national security problem, but at the end of the day, there's a lot of money in the table and a lot of vested interests in those countries that want to see business between the two countries. You know, we can go into the numbers, but that's sort of my broad brush-stroke view of why these countries are moving, it seems, in lockstep. And everyone will be convening in Davos, as you know. They're all convening on this sleepy, snow-capped town of Davos, where I think a lot of drama will happen. Yeah, and I mean, Trump is going to be in Davos. And I must say when Mark Carney was in Beijing making all these statements and as I put it cozying up to China, I expected Trump to come out with a considerable backlash.

But so far, he seems to be quite accepting of Canada's overture to China. He was asked what he thought of the agreement. How do you see the deals, Canada and China? I've just signed trade deals between the two partners. Well, that's okay. That's what he should be doing. I mean, it's a good thing for him to sign a trade deal. If you can get a deal with China, you should do that.

So, so far it seems that Trump is moderating his response. But I would say that, you know, there is a risk for these allies of the United States. I'm talking about Canada, the UK, and really the whole of Europe. There is a risk because the U.S. remains. the most substantial economic and security partner of all of the countries in the West. And in the case of Canada, it's overwhelmingly so. Something like 74% of Canada's trade is with the US and, you know, less than 10% with China. And in the UK, I mean, it's overwhelming. Our biggest investment and trade relationship, not to mention diplomatic and security relationship is with the United States. So,

I think that, you know, there is a tightrope that these countries in the West are walking. They're trying to get the economic benefit of moving closer to China without annoying the United States so much that Washington creates a backlash against us. So it's a game of cat and mouse, I think, right now. And, you know, the world is so complicated right now. It's going to be interesting to see how this one plays out. I certainly couldn't call it. I would agree with you, James. You know, the expression, while the cats are way the mice will play, I'm thinking maybe the Canadians and the Europeans are the mice in this analogy. As long as the U.S. is subsidizing their national security and is running a trade deficit with those two trading blocks, Canada and the EU, it's just a natural bedfellow for those two regions of the world, whereas China, the opposite is a national security threat and is running massive trade sublaces. So I think this is a tactical short term. term move in order to extract some short-term gains rather than a strategic pivot.

And certainly in the short term, some agricultural producers in Canada and the EU will benefit. Airbus, we haven't talked about, will likely benefit as well. China's already considering purchasing more French European aircraft. And Airbus's market share in China is already 55%, which just recently overtook US's Boeing's market share. So there are some winners and losers, but I think I broadly agree with you, James, this is a tactical move as opposed to a strategic one. But we'll see how Greenland blows up, because if Trump's threat of tariffs do get put into place at 10% that he's threatening on the European countries,

effective February 1, we might be in for a broader EU-US trade conflict in mirror image of what we saw last year between China and the US. Yeah, it's really hard to overstate how exercise people are in Europe about Greenland. A lot of people, policymakers just can't get why the U.S. is being so aggressive on this point. You know, they feel that there's a pathway to greater U.S. influence on Greenland that takes a peaceful route rather than talking about some kind of military overture. Yeah, I mean, this might be a little bit facetious, but there probably is no better way to unify the Europeans than to hit the Greenland

button, which we've seen in the last few days. All right, we'll be back with more after a quick break. Stay with us. Support for the show. comes from LinkedIn. It's a shame when the best B2B marketing gets wasted on the wrong audience. Like, imagine running an ad for cataract surgery on Saturday morning cartoons or running a promo for this show on a video about Roblox or something. No offense to our Gen Alpha listeners, but that would be a waste of anyone's ad budget. So, when you want to reach the right professionals, you can use

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That's hungaryroot.com slash prop G code propchi to get 40% off your first box and a freed item of your choice for life. Welcome back. China's economy is sending mixed signals. Exports and high-tech manufacturing are booming according to the latest 2025 data, but lending is at its weakest level since 2018. Consumer confidence is soft and the property's, sector remains in deep, deep trouble. As Beijing leans harder on technology, trade surpluses,

and even the digital yuan to power growth, the question is whether this imbalance is sustainable or a warning sign ahead of the March National People's Congress meeting. James, let's go right into it. The economic data from 2025 as a whole year and the Q4 data have just come out. I'm excited to get into the weeds with you. What's your hot take on the data? My hot take is that, that this data shows yet again what a highly lopsided economy China is. And I think there are two numbers that absolutely show this so clearly that it's so stark. There is one great strength in the Chinese economy, and there is one, well, there are several weaknesses that lead to a particular weakness. The great strength is that China is a high-tech manufacturing powerhouse that increasingly inspires awe around the world.

And yet, the weakness is that its economy is so poor at directing the fruits of this advancement to its people that the birth rate that we've seen in China last year has fallen to its lowest level since 1949. That's the communist revolution of 1949. So, you know, we've got these two amazing things going on. This hard-charging technological superpower now, which is a peer competitor of the U.S. in technology and an economy that can't even return the fruits of labor, as it were, to people so that they feel that they can have families and have as many kids as they like. So the two numbers that I'd like to mention are high-tech manufacturing output. That rose 9.4% last year.

And the other number on the other side is retail sales, which grew only 3.7%. So what you've got is high-tech manufacturing growing at more than double the speed of the amount of money that people are spending on things to buy. And I think that really sums up the great contradiction of the Chinese economy. But you'll have your own view on this, Alice. I agree with your first principles view, which is that this is a deeply skewed, imbalanced economy. The data points that stood out to me, so exports made up a third of Chinese GDP last year. that's the highest level since 1997 and growth capital formation which is a more accurate measure to my mind of Chinese investment in the economy rather than fixed asset investment contributed just

15%. And that's the lowest since 1997 too. Ten years ago, those numbers would have been flipped. You would have seen an economy that was more driven by fixed asset investment rather than exports. But certainly as we've discussed previously, James, the fact that they've had to crack down on fixed asset investment on the real estate sector, on local government debt, has all contributed to the need to ramp up and juice up the export machine. And so I think we're seeing a China in 2025 that is heavily imbalanced and skewed towards supporting its exports rather than finding more productive areas to invest.

One last data point that I thought was pretty interesting was the fact that private investment, which is, again, a good indicator for the domestic confidence of investors and businessmen, private investment fell 6.4%. And this is in lockstep with households who, in the latest PBOC data, have increased their propensity to save rather than to spend. And again, reinforces this point that as long as this economy remains really imbalanced, they're going to have to use either fixed asset investment and or exports

rather than domestic consumption to drive growth. They could easily fix this, they decided, and this is Michael Peders' point, which I agree with, that they weren't going to do growth targets every year in the March National People's Congress and the government work report, but the fact that they are wedded to these, say, 5% growth targets means that they need to invariably keep juicing the economy. And this brings me to the March NPC meeting, which should be held in the first week of March. My sources seem to tell me that it's going to be a 5% GDP target, so the same as last year, that the fiscal deficit will be at least 4%, if not high.

Now that is a historic high for Chinese fiscal balances. And every indication points to the direction of the central government taking more debt on its balance sheet, which again by global standards is pretty low at around 20%, so they have the fiscal space to do so. But that means invariably I think that there will continue to be support for the export sector. But I also think that there will be more support through some, of these local bond programs for fixed asset investment because I think if I were in Beijing's seat right now and I looked at the economic data in both Q4 but also 2025 as a whole, I'd be very

worried about the huge fixed asset investment slump and worried about the property investment slump, which we also have talked about. Property investment dropped 17.2%. Again, that's double-digit negative territory, which has been in place, I think, over the last six years. This is something that they haven't really addressed because politically, I think they like the fact that they've succeeded in deflating the real estate asset bubble. But I remember writing a piece five years ago saying that this is not a financial risk, but it's a macro risk because as soon as the property sector, which is about a quarter of GDP historically, if not more, stays at depressed levels. That's going to have massive knock-on effects for household balance sheets, for spending,

for consumer and business confidence. So I would expect that they going into the much NPC will probably do a bit more to support the real estate sector, and that will probably look in the form of reducing mortgage rates, which again is still historically very low, reducing some of the constraints to first-home buyers as well in certain cities as well, and then more broadly, I think, probably reintroducing some of that whitelist financing program to effectively get banks to lend to developers so that they can finish their properties that have been bought, but not yet sold. So when I put it all together, it's important to remember that in spite of China's economic largesse, there's still a lot of structural problems. And it's hard for me to see

that the government is really adequately dealing with this with a solution in mind. But I will end with my takeaway from the CEWC. So, you know, I don't think we've talked about this, the Central Economic Work Conference that convened at the end of December. which is oftentimes a very good signal for what is going to happen in the March government work report for the subsequent year. They were basically pointing towards more support for domestic consumption. So there was a reintroduction or rather an extension of the subsidy program to some extent for EVs and for other durable goods. Now there probably will be some subsidy program for services is my expectation in March. But this is again too little too late because ultimately they will keep having.

having to juice both manufacturing and, I think, fixed asset investment next year. Yeah, I think it all boils down to a very simple equation. If China cannot write its lopsided economy, then sooner or later, and we're probably talking about later, several years in the future, this economy will crash. And the solution to the problem is simply to return more of the fruits of China's advancement to its people. In terms of per capita disposable incomes last year, the average in China was $6,070 US. That was up just 5%. So what you're seeing is a lot of resources going into gunning the high-tech sector of the economy, making China the manufacturing superstar in the

world. But at the expense of returning more of the earnings to all, you're going to, ordinary people to workers, white collar and blue collar. If China can't return more of the fruits of its advancement to those people, then they're not going to have enough money to spend in order to buy the things that China makes and China's going to remain in this deflationary spiral going forward and the world is going to have to continue buying incredibly cheap Chinese products and thereby boosting China's export performance at the expense of competitors all over the world. So, you know, I think a lot of economists really hope that China can do something to stimulate per capita disposable incomes in China, but my guess is that will not really

happen in 2026. Yeah, it's hard to see if real estate sector remains quite depressed because, you know, at its peak, it was about 70% of household wealth. So if you think about the knock-on effects of that on household balance rates, it's pretty considerable. But I have lost, held the view that until we see meaningful increases in wage growth, which I think is another way to look at your point about per capita disposable income, it's hard for me to see a meaningful boost in consumption. And thus far, the Chinese government has what I call a supply-side approach to boosting consumption and not a demand-side approach, because all they're really trying to do is subsidize the cost of goods and maybe even coming into March services. So I take your point. This is hard to see. And it sounds a little bit like you were, describing common prosperity, James, which is kind of died off as a subject. But I completely agree. I think that everyday Chinese need to capture more value in the economy in order for China to rebalance towards a consumer services-based economy like Japan and the U.S. And I think what a lot of people don't realize, and this is a point that I hear time and time again when I'm in China

talking to think tank people, is that there's a considerable population several hundred million in rural China, whose per capita disposal of income are significantly more depressed than their urban peers, who could see significant upside if they get moved and urbanized into the Tier 1, Tier 2, tier 3 cities. So there's still a lot of upside, I think, but it will take intelligent policymakers to try to capture that. And I haven't yet seen signs, but we should definitely read the tea leaves of the March government work report very, very closely, and the five-year plan, which will be announced as well at the March NPC meeting. All right, let's take one last quick break.

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No weird wet salad aftertaste. Better sleep can start tonight. Go to OLL.L-Y.com to choose your snooze. These statements have not been evaluated by the Food and Drug Administration. This product is not intended to diagnose, treat, cure, or prevent any disease. Welcome back. A bleak new app is going viral in China, and it says a lot about the loneliness epidemic. Its original name was Are You Dead? And the app asks users who live alone to check in every 48 hours or it alerts an emergency contact. The name of the app has recently been changed to DeMuMu, which one of the app's founders explains comes from combining death with some nonsense syllables. With as many as 200 million one-person households projected by 2030, its popularity is being seen less as a morbid humor and more as a signal

of a growing loneliness and safety crisis among young people. James, let's get right into this. I was alerted to this through a couple of friends in China. So it's a kind of comic macabre element to what I think is a real problem in China, which is the loneliness problem and the aging problem. Yeah, no, I mean, I just think it's so stark that more than the entire population of Japan in China are people living alone. You know, people between the ages of 20 and 49 living alone, not having very much social contact, a lot of their contact with other people comes through these apps. We all know what it's like. I mean, I suppose we've all sat at home and doomscrolled. I've been ill last week, so I was doom scrolling quite a bit sitting at home. And I tell you, your mental health

really gets affected by that, you know. So my heart goes out to these young people in China, you know, they're often alone at home or working in these jobs which don't remunerate very well. We've just been talking about the weakness of consumer demand linked to the fact that people's salaries are quite low. And then, you know, when people do go to the office, they're often very long hours in regimented jobs. And I think this is part of the reason why we're seeing the Chinese birth rate now fall to its lowest lowest. level since 1949 when the Chinese Communist Revolution took place. I mean, China has a whole slew of social problems. And I did spend a little bit of time reading online some of the

testimonies of young people being affected by this loneliness epidemic. And it is honestly very sad. You must have seen quite a lot of these yourself, Alice. Yeah, I have noticed this in the last five, six years that I've been traveling to China. the way in which everyday young people live, I think, is quite isolating. A lot of them tend to be more plugged into the digital matrix than in everyday life. And a lot of them are only children as well. My cousins are all only children. And as a result, unsurprisingly, you've got this dimension of the Tang Ping,

which is to lie flat and have this kind of nihilistic worldview. You know, what is the point of working or striving or struggling or doing well in your Golkhal exam and going into a Tier 1 university. I think this is all part and parcel of the fact that in China, you know, young people don't really feel like there's a sense of economic momentum and growth and they don't have siblings. And at some point, you know, 20 years down the line, they're going to have to be responsible for their aging grandparents as the single caregiver, really. And then you add to this the other dimension, which we also discussed, declining marriage rates. So the number of unmarried people in China between the ages of 20 and

49 reached 134 million in 2020. That's bigger than the entire Japanese population. And over the last decade, marriage registrations have been cut about 50%, so in half effectively. This is again, I think, feeding into this single, lonely state of a lot of Chinese youths. And then on the older end of the scale. You hear a lot of stories about elderly Chinese who get abandoned by their children or their grandchildren, their spouses have died, and they're effectively single and alone. And so I think this app really speaks to a pressing need societally amongst Chinese, everyday Chinese, to feel like they matter and that their life counts. It's interesting to see how China has evolved over the last call it for decades, the first two of which was about aligning towards a capitalist regime. The next

decade was about high-speed growth. And I sense that there is a kind of moral vacuum and a self-questioning about what is it all for. Some people, in the case of my parents, for instance, and a lot of their peers, go towards religion. Buddhism is on the rise. We have to look into the numbers, but just anecdotally, almost everyone I know their parents are now Buddhists overnight. over the last decade. And then some of them go towards the digital ecosystem, the digital life. And as a result, I think we end up with a society in China that is actually more isolated than it has ever been.

And remember, this is a very family-driven society. If you go back to Confucian thought and Confucian writings, the society is based around family. But what happens when the family only has one child? And then it's one, you know, middle-aged person taking care of elderly people. I think that is the society that we're increasingly confronting in China. But James, have you actually come across people in China who have felt lonely? The reason I feel reluctant to ask this question somewhat is that unlike in the West where I think it's more open as a discussion, the loneliness epidemic, to talk about being

lonely. This is a Chinese expression, Hang Kudu. Like, it's not really a phrase that you hear a lot in China. And so to what extent are people being self-reflective or acknowledging that they are lonely? Have you come across that? Yeah, I mean, when you were talking there, I was thinking of a close friend I have in China who has turned towards Buddhism. And she's been living alone, I guess, for at least 25 years now. And, you know, her life derives meaning from the Buddhist faith that she's adopted.

and she travels to places in Qinghai and Tibet where they have a sect of Buddhism over there, Tibetan Lama is Buddhism. And she gets a great deal of meaning from those experiences. But she is, I think, lonely, and she has said that to me before. And there's a whole nexus of rather personal pressures that she feels in her life. I'm not saying this is peculiar to China. You can see it all over London as well. But it is a human condition, I think, that we are seeing more and more of in China right now. And then we also haven't discussed the declining fertility rate aspect of this as well.

You already mentioned that China's childbirth rate is at its lowest since 1949, I believe. When I think about the next generation, that is also going to have an impact on who takes care of these older women and men who decide not to get married and have children. Is it going to be the state? that is a big question mark because, you know, the pension scheme is not as established as it is, say, in Japan or even in the US. So that is going to be a big political economic question, I think, for the Chinese government moving forward, because thus far any attempts to increase fertility has been universally, I think, problematic across all countries. I don't see any real instance in which the government has been successful. globally and really boosting and stimulating the fertility rate.

But I think this is something we should definitely track because I get the sense every time I go to China that more and more people are interested in being online, being on their phones rather than being in community. And I'm hoping that there is going to be a countercultural movement towards that. I'm already seeing some signs that people want to do community trips out in nature, for instance. But this is a country that I think historically has been very communal and to move towards this kind of unitary ecosystem

where people are more plugged in online than with each other, I think, is going to be a new normal for the Chinese society. All right, James, this is prediction time. One of my favorite times. What is your prediction as you peer into the future this week? Well, I'm pivoting from our conversation completely this week. My prediction is about the chip wars.

Last week, the US gave formal green light to Nvidia to sell its H-200 chips to China that was lifting a previous ban imposed by the US. But Chinese officials, who have been speaking to media reporters on condition of anonymity, have said that the Nvidia H-200 chips will not be permitted to enter China. So the US gives the green light, China gives the red light. My prediction is that this game of... cat and mouse will continue for most of this year. And I think it shows something fundamental about the chip wars between the US and China. And that is that China is catching up with the

US in chip technology. In fact, in 2026, it's going to be a horrible year for Nvidia sales in the China market. That's because Chinese companies like Huawei, Cambricon, more threads. We've mentioned all of those in previous episodes, are now producing chips that if combined into superclusters can compete with Nvidia's superclusters on performance. So to get down to brass tax, my prediction is that Nvidia's market share for AI processes in China will crater this year. They will fall very, very sharply. I'm not exactly sure how big a fall we're talking about, In 2024, they had 66% of the market. This year, I reckon they could fall to below 20% of the market.

So it's a very, very big call. I'm aware of that. But I think this is a massive, massive shift. This is kind of naughty for me to ask a follow-in prediction such question. Do you think that pushes Jensen Huang to ask Trump, please, can I send them more leading-edge chips? Blackwells? Leading-edge blackwell chips. What do you think will be the change?

in calculus from Jensen and Trump in the midst of that. I think you're dead right about Jensen Huang. He will be asking the White House to sell Blackwells into China because Blackwells are so much more powerful than the H-200s. Chinese buyers would definitely want to get hold of Blackwells. Whether the White House will exceed is another matter. We'll just have to see. I'm not ready to call that one.

Yeah. I'm sympathetic to this view because there is an argument, which I find quite convincing that part of the reason China is trying to restrict these AI processes from Nvidia isn't just to support domestic variants, but also to put pressure on Jensen to get them higher quality chips. I think that that's quite conceivable and it might actually happen in 2026. So my prediction is somewhat chip tangential in the sense that is about AI. We just saw MEDA purchased one of the big agentic AI companies, Manus, and that company

moved to Singapore over a year ago. I think we're in the next generation of global AI Chinese companies that are crucially going to move out of China, headquartered in, say, Singapore, and then have more of a global footprint. Some of them may decide to exit through U.S. markets, through private sales, or through public listings. But I sense that these new generation of AI tech companies, AI-native tech companies, are going to be looking at what didn't work for Baba and Tencent, mainly that they stayed Chinese tech companies, and go, well, we need to find a way like Biden did to desinicize, move out of the Chinese market so that we have even more global reach and global footprint.

That is my prediction. So we'll probably see more companies move to Singapore, more discussion of acquisitions from some of the big U.S. tech companies buying these Chinese AI companies, because, you know, as we've talked about, these AI companies in China are very, very innovative, cheap, energy efficient. So there's a comparative advantage for, say, a meta or a Google to purchase them. That is my hot take for 2026. All right, that's all for this episode. Thank you for listening to China Decode. This is a production of Prof G Media.

Our producers are David Toledo, Eric Janikis, and Ness Smith Savidoff. Thank you to Catherine Dillon, Drew Burroughs, Billy Bennett, Dan Chalahn, William Flynn, Jesse Millwood, Gil Espinoza, James Patton, and Isabella Kinsel for production help every week. Make sure to follow us wherever you get your podcast so you don't miss an episode. Talk to you again next week.