The Prof G Pod with Scott Galloway - China Decode: What's at Stake Ahead of Trump and Xi's September Meeting, and China's Biotech Surge

Episode Date: September 8, 2026

Alice Han and James Kynge look ahead to Trump and Xi's September 24 meeting in Washington, set against a busy stretch of Xi diplomacy, from the SCO summit to a first-ever trip to India, plus talk of a possible Trump-Putin-Xi trilateral in November. They dig into how trade, rare earths, and soybean purchases are shifting the leverage between the two powers, and whether the fight over AI dominance deserves more attention than the trade deficit. Then: Ruby Wang, author of China Cure: The Rise of a Biotech, AI Medicine and Global Health Superpower, joins to unpack China's rapid rise in pharmaceuticals — from faster, cheaper clinical trials to a wave of global licensing deals now worth tens of billions of dollars. She explains what changed since China was a clear follower in the market as recently as 2010, and what it means for U.S. pharma competitiveness. Subscribe to China Decode on Substack for weekly analysis, livestreams, and deep dives into the biggest story shaping the global economy: chinadecode.profgmedia.com. Learn more about your ad choices. Visit podcastchoices.com/adchoices

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And that's continuing. I think there is competition from India and from other countries too, but China remains a core global, you know, source of basic drug building blocks. Welcome to China Decode. I'm Alice Han. And I'm James King. In today's episode of China Decode, we're discussing the future of US-China competition as another Trump-Shee meeting approaches, the booming Chinese farmer industry

and what that means for the rest of the globe. All right, let's get into it. James, an undercurrent in so many of the stories we do is the ongoing competition between the US and China and what that means for global power that cuts across geopolitical and economic lines and every lobby back and forth between these two superpowers has impacts. Trump and Xi Jinping will meet next

in Washington, D.C. September 24, a reciprocal visit for Trump's trip to China this past spring. And their conversation is likely to focus on trade and artificial intelligence, as well as other economic and political issues. But a lot can shift in just a few weeks. So James, you know, we've got a major trip coming up on the part of Xi Jinping, going to the U.S. There has been very little in the media that's been leaked about what they're actually going to come out. with in terms of deals. So I'm skeptical we get any major announcements.

But the two pressing deadlines that are fast upon us on November 10, the trade truce and the rare us extension truce deadlines, they probably will be extended, but I'd imagine this will be a subject for that meeting. The general feeling is that nothing is really going to come out of it, and they're teeing themselves up for Trump potentially going to Shenzhen in November, mid-November. for APEC. But when I broadened out, you know, compared to when Trump visited Xi back in May, it feels that the U.S. is in a weaker geopolitical position. It has kind of botched its Middle East

Iran policy. It's got the midterms coming up and the probabilities of the Democrats sweep in the House and Senate are rising, it seems, every day. And meanwhile, Trump doesn't seem to be improving his relations with, you know, G7 countries, allies, including Europe and now Canada. So do you agree with me, James, that Trump is meeting Xi in a weaker position than when they last met? Yes, I mean, I do, Alice. I think at the time when Trump and C met in May, I think I was saying that I thought China was now the senior partner in this relationship. And, you know, that was somewhat controversial at the time. some people contacted me to say that that was not the case.

I think that's even more the case now than at that time. And I think the reason for this is that, as you mentioned, the US has been botching several of its policies around the world, and obviously it's now much more bogged down in the Iran war than it was previously. I don't think that this has to be the end of the story. Obviously, these are two huge, hugely powerful superpower. the U.S. could start to get things right and could take the initiative in the future.

But as we move towards this summit on September the 24th, you have to say that China is making more of the diplomatic running around the world. And the thing that's particularly interested me over the last few days has been the Shanghai Cooperation Organization meeting, which took place in Kyrgyzstan, which is the Central Asian Republic. And what we've seen there is another sense that China is trying to show Trump, also to show the American people, and probably most importantly show the rest of the world that China's offering better global leadership than the United States. I think we'll probably remember that around this time last year at the last Shanghai Cooperation Organization meeting, Trump said,

quote, that the U.S. had lost India and Russia to deepest, darkest China. And I think that, you know, probably in New Delhi and Moscow, they would respond by saying that India and Russia never belonged to America or Trump in the first place. But certainly, the element of truth in Trump's statement is that things are slipping China's way and out of the grasp of American influence, to some extent at least. And I think that if we look at the Shanghai Cooperation Organization, we can see this in real time. This is 10 countries, and none of them, with the possible exception of India, is an ally or even really a friend of the United States. This group consists of China, Russia, Iran, Pakistan, Kazakhstan, Kazakhstan, Tajikistan, Uzbekistan, and Belarus.

You may say, well, you know, these are all also rands in the global nexus of power. But if you look at what these countries together represent, they represent 3.4 billion people. they represent about 24% of the world's area, 42% of the world's population, and in 2024, the nominal GDP of all of these countries together was around 23% of the total world's GDP and approximately 36% of the world's total GDP,

if you calculate it by purchasing power parity. India is also in that group, India is much more of an ally of the United States and much more of a friend to the West than the other countries that I just mentioned there. So that's a little bit of a swing factor. But when we look at what the Shanghai Cooperation Organization could do, it is fundamentally anti-Western. A lot of people talk about the idea of an eastern NATO. And while I think that is going too far, this is. is not a coordinated military bloc so far, but the Shanghai Cooperation Organization does military cooperation already. It does joint military exercises. It's moving into political, logistical, and economic areas as well. And it repeatedly stresses the West as a problem, on the Western-led global order as something in decline. The last thing I'd say about it is that, obviously, China always leads its multilateral

organizations through the prism of trade and economic development. And within this grouping, the Shanghai Cooperation Organization, there is a trade of $523 billion in 2025. So you can see it's already a big chunk of world trade, and the organization is setting up its own bank, the Shanghai Cooperation Organization Development Bank. The aim of that bank, according to Vladimir Putin, is to act as a bulwark against financial sanctions from the West. So what we can see is a whole panoply of efforts by China in leading its multilateral organizations, the SEO is just one of them,

to counter the West or counterbalance the West or portray a world vision that is very different from that of the West. To me, that's the essential background as Xi Jinping prepares to meet Trump. But what are you seeing, Alice? How do you see its importance? Well, I kind of think it's a bit of a nothing burger.

I think that they'll glad hand each other. they're all about the positive mood right now. Trump, I believe, needs to have a good relationship with China to show that he's got a handle on foreign policy when it comes to the China profile. I take what you say about the growth of non-US or counter-US multilateral institutions like the SEO and RCEP, and I think that, you know, in a way,

Trump's botching of foreign policy in the Middle East and its corollary in terms of bringing up oil prices globally has probably made those China-centered or trying to run multilateral institutions more attractive on the margin. I take a differing view and I think actually it's not just the geopolitics that have been mishandled by Trump. It's also the PR over US-led AI. And this is where when we talked last week about the hugging face incident, the cybersecurity hack coming out of open AI and a US closed model company becomes important because I do think that she's spearheading of the open source ecosystem,

open weight, open source ecosystem in China and globally. has become more and more influential. You know, compared to the start of the year, we're now at a stage where Chinese open source models dominate the open source ecosystem globally in terms of tokens used. We also are at a stage in which more and more companies are using open source models, including from China,

hugging face used Jepaurs' GLM 5.2 to solve its cybersecurity hack. I think in general people are going to think twice, and these are not just countries, but as a companies outside of the U.S. about fully relying on U.S. closed models. If these autonomous agents can run rogue coming out of these closed models and then wreak havoc on other corporates or even on critical infrastructure. And I would not be surprised if, you know, come the end of the year, at APEC or even going into next year,

there is more and more of a discussion multilaterally about how we manage AI security risks with or without the US. I think we're in the first innings of that, but certainly the increase in cybersecurity attacks coming out of AI agents will push a lot of these countries to come together and build some kind of a multilateral framework.

And here I think China has an incentive to be seen as a leader, it remains to be seen the extent to which it will lead, and actually put in governance guardrails domestically and globally. I don't think it's a surprise that Bill Gates is going to China in November to meet with Xi to discuss this. So I think increasingly we may be looking to China for some degree of governance leadership on AI. So long as Trump, I think, is in the administration, is in power in Washington. Yeah, I must say, I think you're really, astute to point to AI and the ability of AI to run rogue, which I believe is focusing the minds of

people in Beijing and people in Washington. And potentially, this is one area of cooperation between the two countries where they really can do something. I'm not going to say that the US and China are going to agree a legal code or a regulatory code for AI globally. But I think in certain key areas, where both countries are really at risk, potentially biotech or the weaponization of biotech to create bio-weapons, and, you know, AI agents such as what you just described with the attack on hugging face, running rogue and getting out of control and what to do in that kind of type of situation, I believe it is quite possible that we might begin to see some cooperation between the US and China in that regard.

this summit between C and Trump will further those efforts. But returning to the big picture, the issue of whether or not China is now the senior partner. To me, the crucial big stick that China has really that runs through the whole relationship now is rare earths. China is accounting for about 70% of global rare earth mining. and as we've often discussed on China Decode, its dominance of the processing of rare earth is around more than 90% of the production of rare earth globally. And so it has the ability to choke the supply of rare earths to the United States.

And many of those rare earths are used in the production of weapons by the Pentagon or by Pentagon affiliated companies. And as the U.S. burns through its arsenal of weapons in Iran, its need for rare us that are used in the production of weapons is becoming more and more acute. And that strengthens the chokehold that China has or the potency of the chokehold that China has in this regard. And if you ask me, that changes the whole complexion of the summit between C and Trump. other words, China holds the biggest stick. Therefore, I don't really see that much of a bust up. I think both sides will try to manage, you know, their differences and their points of conflict and the rivalries and the competitions, etc. fairly well in the run-up to this summit. But

we'll see. We'll see. Maybe I'll be wrong about that. All right. We'll be back with more after a quick break. So stay with us. support for the show comes from NetSuite. They say every day your business is late to AI. You might fall two days behind. So how do you keep up with the competition when they're only moving faster? Enter NetSuite next. You probably know NetSuite, the AI-powered business management suite that securely connects all your data.

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Try Gusto today at gusto.com slash prop G and get three months free when you run your first payroll. That's three months of free payroll at gusto.com slash prop G. One more time, gusto.com slash prop G. Welcome back. we're excited now to be able to deep dive into a particular interesting and growing sector in China, the pharmaceutical industry. And joining us to help paint the picture as Ruby Wong, author of the new book, China Cure, the rise of a biotech, AI medicine, and global health superpower. Ruby is a UK-trained physician, strategist, and founder of the China Health Pulse newsletter and podcast

with prior experience as a health advisor to the United Nations in China and founder of the Strategy, Consultancy, Linteress, Health. Ruby, thanks so much for joining us. I want to go right into it, because for me, this is a super exciting topic. We talk a lot about AI and semiconductors and other aspects of technology, but biotech is also a huge one. I think in the last couple months, it's become apparent that, according to the Chinese government and policymakers, biotech is one of the quote-unquote new three news, that is AI, robotics, and now

biotech. So it's a huge policy focus for the Chinese government. My big sort of initial question to you is how has the Chinese biotech industry evolved? Really from, and it's seen in your book, the constraints of over a decade ago in terms of both production capacity of drugs, but also research, to a real superpower across a vast array of areas from APIs, generic drugs, now patented drugs, as well as, clinical research. Thank you so much, Alice, and thanks to you and James for having me on the show. I'm a big fan, so it's great to be here. Well, so I've worked on health all of my life. I'm a doctor.

I was working in health policy, as you said, for the UK government and the UN, and now I'm a consultancy and I'm a writer. But, you know, my professional life is focused all around health and all about China and how it interacts with the rest of the world on health too. But as you said, it's only recently in the past few years that China's biotech strengths have really risen into global attention. But the story is actually decades old. I would go back as far as the 1980s, over four decades ago, under Zhang Xiaoping when he was trying to develop and open up China. He visited Japan, the U.S., saw the technical and science capabilities of other countries and realized that China had a long way to go in terms of developing its own internal science and technology

capability. But he recognized that it was a necessary move to make. And so then began sort of this long strategic vision in building up China's S&T. So he initiated industrial park building, incentives, support for science and technology, talent and returnees over the following decades then, what we call haigwe or sea turtles. So scientists trained in the best US, Europe universities coming back to China to integrate and build, having tax exemptions, having funding support, having the density and the synergy of industrial parks bringing together skill set, but also capital. And that kind of escalating through time with the, you know, under Hu Jing Tao and then under Deng Xiaoping. And then I think another big moment.

was in 2015 to 2017 when China entered global regulatory standards into the ICH. And that meant that China's regulatory capabilities in determining which drugs and medical products were safe for patients were up to global standards, whereas before they weren't really as much so. So firstly, kind of building up the talent and the pool and the skill set and the trainees, but then regulatory reform. And then as China developed, is healthcare infrastructure developed too, so the hospitals,

the access to the patients, of which China has a huge advantage in a massive population with a huge and rich potential data pool set. And then I think, finally, in recent years, the intense competition that, you know, I'm sure you both have expertise

across, you know, multiple sectors, that intense commercial competition has meant that, you know, companies small and big are pushed to move, iterate, try to win. And though there might be a lot of waste along the way, there's a forward momentum driven and supported by top down and bottom up long-term vision and governance. So I think all of these factors, on top of that, I think in the healthcare sector and in life sciences, there have been various crises that have even further driven the pain. including SARS in 2003, including vaccine scandals where fake vaccines were found to have been sold,

the melanin scandal where babies were given fake milk. So each of these crises also pushed for reform and iteration and a transitioning landscape, creating what we see today, which is a cost-effective, scaled, very, very fast biotech ecosystem where they have. It has a cost-effective, a cost-effective, scale, where it has been sort of brewing, but only in the past couple of years we've seen sort of the tip of the iceberg break through the waves to Western narratives, Western media, Western investors,

and now it's kind of no turning back. There's just too much good quality products and drugs in China that the rest of the world really has no choice but to work with, partner with, signed deals with because these drugs are potentially beneficial to patients all around the world. Ribby, I very much enjoyed reading your book, The China Cure. It's beautifully written. There's a lot of personal detail, detail from your family there. But the one big thumping, overarching theme that there's no turning back and that China's innovation in pharmaceuticals these days and in biotech

is really startling. China's climbing the tech ladder so quickly. And I just read a recent report that says that by 2030, China could be responsible for creating 30% of pharmaceutical innovation globally. So in other words, if I read that correctly, it could be creating 30% of the world's newly innovative drugs. Do you agree with that? Do you see that future emerging? And perhaps you can give us a little bit of a flavor of what type of drugs or what specific drugs you think are really eye-catching that are coming out of China? Yeah, I think 30% is a huge number and it feels impossible to imagine today, even in 2026, not that many of the world's drugs for patients, populations around the world are from China, but it's definitely set to change. If we look at the percentage of outlicensing

deals of Chinese drug assets and pipelines to global markets signed with global multinational companies, the numbers have just been exponentially accelerating. So they're often quoted, impressive figures are something like in 2021 or 2020, five, six years ago. It was Chinese outlicensing, drug and biopharma deals were about 5%, the ones above $50 million. And then last year, so five years later, it jumped from 5% to 30%, which is huge. And then now this year, we're only about halfway through 2026, but also already in the first half of the year, it's 42%. So another 12, 13% increase, which is more than 90% of what was there the total last year.

So the numbers of outlicensing deals are truly impressive. And you see these multinational companies, AstraZeneca, Pfizer, Merck and so on, signed huge, huge deals in March of this year when ex-Prime Minister Kirstama of the UK visited China, AstraZeneca signed the biggest global deal to date with CSPC. There was at 18.5 billion. So, you know, huge numbers. But I would say, whilst the numbers represent, And assets and potential drugs in biopharma, it is well known that the chances of success are always

low. There's no predictions. This is biology. This is nature and medicine. And so perhaps 90% of those deals won't go anywhere. They will fell along the way at some phase of the clinical trials and they will never come to market. But because of the momentum and the scale and the number and frequency of these deals, it means

that, of course, some of them will go through to the... final stages and will reach patients around the world. So I would say 30% sounds ambitious. I personally can't predict what a number might be, but, you know, it can be likely. And this is one of the reasons why I wrote my book. I just felt like there was not yet an accessible narrative focused on China and health, even though it's such an important and urgent sector. There's lots of books on China. There's books about global. global health and about farmer maybe, but not one which looks at this intersection. And James, as you said, I try to make it more accessible because I do think in technical spaces like health

and life sciences, sometimes the lingo, the terms, the technicality of it might put people off. I guess I'm always thinking, you know, having trained in practical practices doctor, I'm thinking about this at the end of the day will impact us as patients for us. for our families when we might fall sick. So it's a really important topic to better understand what is going on and coming out of China. When you say out licensing, what are we talking about that? Are we talking about drugs that are developed or innovated in China and then are licensed to users outside China?

Is that right? Yes. So out licensing from China would be a drug asset. It might be at any stage from phase one to more mature phase two or three. And what's interesting is now even pre-clinical are being licensed or even the talent teams in Chinese biotech companies are, you know, signing collaborations with foreign companies. So they will sign a deal to bring that product to an ex-China market. It might be just the US or it might be ex-China global. And the idea is that the foreign company can then be the one to take that drug from whatever stage,

they signed at to maturity and then commercialize it. When they work with some of these clinical companies in China, what is it that they are attracted to? I think it's a spectrum, which is not really an answer. So they're looking at the quality of the drug asset. It could be that the drug is what we call a first in class, so a new product, a completely novel mechanism of action that hasn't existed before for a certain disease or many diseases, depending on the indication, or it could be a best in class, which means that sort of drug, the way it works, already exists, may be designed and already in the market by an American Western company, but that this drug will beat it in terms of how it works, whether that's efficacy or even safety or lack of side effects, and those markers will be

defined and, you know, reviewed in scientific journals at scientific conferences. And then from the clinical angle, you can decide whether that's a best or a better in class and therefore be preferred than an existing older drug. So it's the quality and the novelty, perhaps, of the drug asset itself. So the promise of whether it works, maybe it helps a certain cancer, you know, 70% chance of survival versus 30, or it could make sure the patient lives slightly longer or has less side effects. And each of those factors might be really important to patients or families. There's no right or wrong answer. But also, the China way of doing things is increasingly attractive. So the fact that China innovates so quickly and so cheaply, those are hugely advantageous factors.

and what we're seeing in terms of trends. It's really interesting. I mentioned before that the deals are being signed not only for maybe a portfolio of assets, but also to be able to work with those teams. So Chinese biotech talent is now increasingly sought after two. And I think that's potentially a good thing because wouldn't it be better if Western teams

can be more efficient and work more cheaply to get drugs faster to patients that really need them. But then you can look at the flip side and think, you know, what about jobs? What about the older ways of doing things? So there's pros and cons either way. Ruby, can I ask you a little bit about the patent cliff that's coming up and the implications from that for China? As we understand it, the pharmaceutical industry is approaching the largest patent cliff in its history.

this means effectively a lot of drugs that are currently under patent and therefore exclusively the property of the company that makes them are going off their patents. So they'll lose exclusivity. And we think, or according to estimates that I've read, up to about 400 billion US dollars in annual revenue is at risk by 2030. that's annual revenue for the big drug companies as this patent cliff, you know, transpires.

So if so many drugs are losing their patent exclusivity, does this give up-and-coming Chinese pharmaceutical companies a chance to, you know, to get into those areas? Is this another kind of revenue-generating opportunity for those Chinese companies? Yeah, that's a great question. The patent-knows situation is really interesting. I guess it's always been a continuous process. When drugs are innovated and come to market, all of them, you know, throughout history, have had a period of time where they're protected by patents.

And then they will lose that exclusivity. It's sort of, you know, for moral good so that those drugs can become cheaper and be more accessible and then, you know, be copied, be used as generics and so on. But it's interesting that in the next few years, there's kind of a huge pool of them that are going to lose patents at sort of the same time. So, James, as you just said, there's a huge bucket of money there at risk. And this means that big farmer companies who are always continuously, their constant business model is to seek new drugs and bring them in.

and take them to maturity and commercialize them. They are pushing more urgently than ever to make sure they fill those gaps. And, you know, as I said earlier, when you make these bets on potential drug assets, you can't tell at this stage whether that's promising enough to take you to the end. You know, billions might be lost in the process.

They always are. It's kind of just the way this sector works. But, you know, you want to look for the most promising science, the best quality assets that you make the right bets. And what we're seeing is that, you know, in terms of the global farmer innovation pool, there are assets coming out from everywhere. The UK, the US, Europe. We're all producing drug assets, and so is China. But now we're seeing that China's producing so many, that the global proportion, relatively speaking, there's more coming from China because China's becoming really good at it.

And so that means, you know, multinational companies are buying up where the good stuff is. And it just happens to be China, regardless of politics or anything else. Well, on this topic of politics, it's the numbers of U.S. dependence on China are startling. You know, China has 50% of the world's API, advanced pharmaceutical inputs capacity globally. but around about half of the U.S. APIs imported come from China. WS.J ran a piece, I think, a couple months ago, citing certain antibiotics and their compounds that are no longer produced in America and largely sourced from China.

I know this is an unfair question to ask a doctor, but do you get a sense that your field is getting more politicized, that we are moving in the direction of more domestic procurement or supply chain resilience, fighting alternative supply chains outside of China within the biotech space? Or do you think that that's actually really hard to do within the fields, even though some legislators on the hill, for instance, will try to move the discussion in that direction?

I guess in terms of biopharmar and China from a geopolitical security point of view, we have this China as a biotech emerging, rising biotech superpower, which is now becoming undeniable. But we also have this longer-standing recognition that China is a manufacturer, a cheap goods, scaled, fast manufacturer. And that's been going on pre-this biotech wave, generics APIs, as you said.

And that's continuing. I think there is competition from India and from other countries too, but China remains a core global, you know, source of basic drug building blocks, it's hard to say what will happen, but I think from a health point of view, it's important to make sure that vulnerable populations that need health products, which are not dangerous risks. They're not semiconductors, they're not semiconductors, they're not even EVs. They're separate from AI. Health remains health, and biotech might be a power

and a risk, but it's still at the end of the day meant to become medicine and meant to be for good. So I think that piece is really important to keep in mind. And definitely, you know, having worked in government, now, you know, working with health policy and global health, sometimes the politics, the politics gets in the way because the idea of power and competition, it's often actually the angle in which biotech is being discussed. This is the angle I'm asked most about the economics piece and the security piece rather than the health piece or the global good piece. And I understand why that is, but it's important to keep in mind both sides of the dichotomy to make sure we remember what medicines are for. Could you give us a sense,

of the cost advantage that China has in developing drugs? I mean, is it possible to put a number on it, like it's 30% cheaper or 40% cheaper to develop a typical drug in China, or maybe that's too simplistic? And then the second question I have is that everybody these days is transfixed by AI. Are we seeing the deployment of AI to actually develop drugs or, you know, biotech molecules in China already. I feel like I'm not answering any of your questions today, but the numbers I would say vary. So 30%, 50%, it depends on the company. And also, it's hard to say right now because, you know, they might not share exactly what they are, you know, using. And also if we're looking

at different drugs, different disease indications, those costs differently. If we're looking at a cancer drug versus an obesity drug, you know, the way they're made, the way patients access them, whether it's a daily tablet or a weekly injection, all of that changes. And then the way those pieces are manufactured, the vials they come in, the equipment, the robots, the machines, all of that will differ. So the cost benefits will vary, but I would, you know, agree with you. It would, you know, likely be a third if not more. And alongside cost, direct cost efficiencies, also the time efficiency will, you know,

link to the cost overall. So we've seen that timelines for drug development can be, you know, 30 to 60 percent faster. We've seen that. And as you said exactly, James, you know, the role of AI is increasingly important. So Chinese biotech companies, some of them use AI native drug discovery, like in silico medicine or exalti. Some of them might use AI integrated pathways, for example, in optimizing efficiency or manufacturing. And then some of them, it's more AI might be present somewhere, but we're not really sure.

And depending on where they are on the AI spectrum, they will have more or less efficiencies. So for example, in my book I wrote about in silico medicine, where they have this drug for lung fibrosis, and they reported 70% reduction in discovery time from initial hypothesis to finding a preclinical candidate. And not only that, they reported that they only had to look at 78 candidates, which is a tiny number. Normally you look at 100,000, if not more. So the role of AI is very exciting.

But I'm sure that, you know, as in any sector, for a company to be affected, using AI and not just labelling it as hype or feeling like they need to, you know, jump on the train of AI, so to speak. They need to have that capacity and that talent and to convert what they have existing into more tech-savvy ecosystem. And that can be really, really difficult to do. And I wouldn't say necessarily that China is better at AI-driven drug development than other countries. I haven't seen that in action. I've just seen examples of good usage of this. But in this field, I wouldn't say China is winning yet. What were they using the AI for in the example that you gave, the lung example?

So it would be anything from precision medicine using AI to think about what molecules are worthwhile creating in the lab to then test. It could be efficiency standards. It could be any number of things, but certain companies are standing up and saying AI is at the core of our methodology from start to finish and some are less so. But I think with this example, this is a defined, AI-enabled drug discovery company. And, you know, with this example, with other assets they're delivering, they're doing very well. They've signed with many multinationals in recent months. We've learned so much, Ruby. I think this has probably been the most nuanced and complete conversation I've had on biotech in China.

And it's really thanks to you, a real expert across the field. So thank you so much for your time, Ruby. Okay, we'll be back with more after a quick break and stay with us. Support for the show comes from Lisa. There are several things you can do to try and upgrade your health. New tracking tech and fitness equipment are all designed to improve your daily life. But nothing has the impact that quality sleep has on your health. Lisa mattress can transform the way you recover every night.

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As you peer into the future this week, what do you see? I'm going to expand on something that Ruby was talking about, and that is China's ability to conduct clinical trials. This is a crucial aspect of the pharmaceutical industry all over the world. In 2024, China conducted three. 15% of the world's clinical trials for new drugs. That was up 67% from 2019, and it was by far the biggest increase of any geography in the world. But it meant that China was conducting fewer clinical trials than either North America or Western Europe. And what I'd like to predict is that by 2030,

China will be conducting more clinical trials for new drugs than North America. In other words, it will then be the second largest destination for new clinical trials for drugs in 2030. Really interesting. So my prediction is in the financial market. So as you recall, James, back in 2019, the Chinese government started Star Market, which is the Shanghai Stock Exchange, which is science and tax. Technology Innovation Board, and it's kind of the Chinese equivalent to the Americans NASDAQ.

And now it's currently the combined market cap of about 600 listed companies is about $2.3 trillion. It is generally skewed towards high-tech and advanced manufacturing, including semiconductors, AI companies, robotics. We had some mega IPOs this year from Unitary, the leading humanoid robotics company out of China and CXMT, China's leading memory player. I predict that within the next decade, maybe even within five years, the star markets combined market cap, which is again, $2.3 trillion, will exceed the Hong Kong stock exchanges total market

cap, which is around $6.25 trillion today. I think that that's very likely, given the skew towards the high-tech manufacturing AI players that are really going to be at the frontier of Chinese innovation and exports by volume and value. Whereas Hong Kong remains, you know, industrials, banks, you know, sort of what I see is the legacy companies, the SOEs, but also the large cap Chinese tech platforms like Baba and Tencent. So I think the new Chinese innovation will largely be in the star market and that will drive the market cap to north of the Hong Kong Stock Exchange within the next decade. Wow. That's a big call, Alice. I'm looking forward to watching that one.

It's a big call, but I'm feeling optimistic because, you know, the future of Chinese tech is really being listed in the mainland. And it's an interesting topic for another discussion because whereas in the past few decades, you know, companies wanted to go and list abroad in New York, in Hong Kong, there is a real incentive now to list in Shanghai. And I think that that's going to be a trend moving forward for Chinese high-tech manufacturers. That's all for this episode. Thank you for listening to China Decode. This is a production of ProfG Media. Make sure to follow us wherever you get your podcast.

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