Your Undivided Attention - A Fresh Take on Tech in China — with Rui Ma and Duncan Clark

Episode Date: December 10, 2021

Who do you think the Chinese government considers its biggest rival? The United States, right? Actually, the Chinese government considers its biggest rival to be its own technology companies. It's China's tech companies who threaten its capacity to build a competitive China. That's why the Chinese government is cracking down on social media — for example, by limiting the number of hours youth can play video games, and banning cell phone use in schools. China's restrictions on social media use may be autocratic, but may also protect users more than what we see coming from the US government.It’s a complicated picture.This week on Your Undivided Attention, we're having a surprising conversation about technology in China. Here to give us a fresh take are two guests: investor, analyst, and co-host of the Tech Buzz China podcast Rui Ma, and China internet expert and author of Alibaba: The House That Jack Ma Built, Duncan Clark.

This episode is about China. China lacks free and fair elections, they restrict freedom of expression, and they have a horrible record on human rights. We condemn China's human rights abuses in the strongest terms. And today, we're going to talk about something different. Specifically, who do you think the Chinese government considers its biggest rival to its power? You'd say the United States, right? Well, actually, the Chinese government considers its biggest rival to be its own technology companies. Chinese tech companies are the ones who threaten its capacity to build a competitive China, and China's tech companies are the ones who influence how its children are being

educated. That's why the Chinese government has been cracking down on social media. That's why they've cracked down on Doyin, the Chinese version of TikTok, so Chinese youth under the age of 14 can only use TikTok for 40 minutes per day, and only between 6 a.m. 10 p.m. Now we may have opinions about how the Chinese government is cracking down, but the important point is the Chinese government is cracking down. It's a complicated picture. I'm Tristan Harris, and I'm Azaraskin. And this is your undivided attention, the podcast from the Center for Humane Technology. Today in the show, we're going to have a surprising conversation about

China. And it's going to be surprising because we're going to learn about the ways that China is actually responding to the issues raised by the social dilemma, and surprising because it's going to be less black and white than we might expect. And here to give us a fresh look at China, our two guests, Ray Ma and Duncan Clark. Ray is an investor and analyst in U.S. and China tech, and she spent her childhood in China, and is now based in Silicon Valley. And Duncan is a leading expert in China's technology and consumer sectors. He's lived and worked in Beijing and Shanghai for more than 20 years. Duncan and Ray, welcome to your undivided attention.

Thank you for having me. Thank you for having me too. I'd like for you guys to really put us into the minds and the eyes and the hands of what it's like to be someone in China using technology. I think it's really easy for us just to assume in the West that we have a set of apps and that's just the way things are and that's the way things work. You know, this was now over eight years ago. I was really surprised this was the last time I visited. China. I was walking down the street and there was a woman who was begging. But she didn't have like a hat out. She had her cell phone out with a QR code that I was supposed to scan and send her money that way. And it sort of blew my mind because that's something you would never see in the

U.S. I think many Americans don't realize how many foreign apps are just not available. Like Signal just doesn't work in China. In fact, thousands of apps just don't appear in the app store. There are these sort of super apps and you can do everything you need from within one app. When I was there, I felt like a second-class citizen. I couldn't catch a cab. I felt left out. So anyway, I really just want you to paint a clear picture so that the audience knows what does it like to be there? There are so many differences, but I'll cover one. I think what I think is really important difference. You already alluded to it, which is the super app experience. And the main manifestation of that is WeChat in China, right? And I think it's really hard for Westerners to understand because WeChat is not just a messaging app.

It takes the place of many other tools that we take for granted here. And that's primarily because PCs never took off. And related to that, as email never really took off, right? And then with messaging, messaging became quickly, extremely spammy in China. And messaging costs money. There was not a free messaging plan early. on. So therefore, people were, I guess people were frugal with their text messaging. So when WeChat came out with this mobile, completely mobile native experience that replaced

email, which people never used anyways, but also messaging, and then replaced the fact that there was no existing dominant social network, right? There are many apps that don't work in China. Facebook has been banned, but Facebook also never even really had that much traction anyway. people just weren't connected from a social perspective. Basically, WeChat replaced email messaging and became the social network that was built when internet usage really started to take off, right? Because while there were plenty of internet users hundreds of millions on a percentage basis by 2010, it was still far below the U.S.

I believe numbers I looked up, it was about 70% penetration in the U.S. by that time. But in China, it was less than a third. So when we're talking about when did the Internet Revolution really start, it's really only in the last 10 years. And an app like WeChat was able to take advantage of that and build an entire operating system because there were so many things that didn't exist and it could effectively replace. Now, when you have all those functions that were built up in the West over time and that are discrete and separate combined in one platform, it actually becomes very powerful. So one thing, for example, you don't really have spam in WeChat, right?

Because messaging is a permission-based system. So I have to add you, right? You have to know my account or have it give it to you somehow. Or they also have subscription accounts. But again, that's also permission-based. And WeChat also controls how many messages that subscription account can send you every day. So that's why in China, communications is. is very, very different.

So what you're saying is that instead of a user going to different apps and doing different transactions and actions, they're just staying within WeChat. And they're getting all their email communications within it. And they're doing experiences like hailing a cab. Yeah, I'd agree with Ray on that. I got a cab in Paris last year. And basically, I realized I didn't have any money in me.

That would never happen in China to give the guy a metro ticket. When you leave China, you feel, like I said, you're going backwards. You have to think, oh my gosh, I'm going to a developing country now. You know, this phone is not going to do everything for me. And similarly, though, when I'm overseas, I can run my house in China through these mini-apps that Ray was saying. I can pay my utility bills, you know, can say hi to the cats, you know, all kinds of stuff. It is the most convenient environment that anybody's ever experienced, I would say. It's just seamless.

And yes, at the expense, perhaps, of competition. And now that's being addressed, of course, by the Chinese government to open up these walled gardens. But I would almost call them walled jungles. I mean, there's so much you can do. You don't even feel like you're hemmed in. It is just so convenient that actually now they're forcing interoperability and openness. But in a way, the whole story of China has been trading convenience against privacy, but it's overstated in the West.

We'll get into that, I guess, the black mirror sort of vision of China. It is so convenient there that you yourselves find yourself embracing this convenience. Just that superior user experience is something people have embraced and has been extremely powerful. There's an emotional attachment. I mean, of course, Tristan, you've talked a lot about this. You guys focus on this, but in China, it is a very emotional attachment, particularly because China has hundreds of millions of netizens, but not really citizens, right? People have more rights in their digital world, and they're going to be very quick to demand those rights

are protected than they do, frankly, offline. In a sense, it's an alternative universe that people live in there. And it's in many ways a better universe than in the West, on the digital side. And I think a key point is that people in China associate the Internet with many positive changes in their lives. Of course, some never knew the world before internet, but those who do remember the inconvenience, for example, going to the bank in China was a nightmare. You have to like pick a number here, wait four hours, go somewhere else, and then they say, sorry, we're close for lunch. That's all gone. You know, so the power of the internet in China is almost

like extracting oil from the ground of inefficiency. There was so much inefficiency in state on enterprises and the way society was set up, and the internet came in and changed that. So So people have a very positive, an optimistic view of technology, much more now, frankly, than the West. This is one of the things, Duncan, that I think I found most fascinating in our first conversation, which is just in the West, we have a totally black mirror dystopian view of the future of technology increasingly. And obviously, our work and the social dilemma are certainly externalizing that perception into the balance sheets of societies around the West. And the idea that in China, it's actually this very optimistic view. And the idea that this is the thing that's liberated us, that you said,

especially in contrast, because of the leapfrogging effects that you're talking about. I actually had no idea, never heard that there was a permission-based communication system. Is there not a concept of email overload or just, I mean, so many of us probably spend a good, you know, 3% of our day if you're in the West clearing out basically spam communications. Is that not exist in China the same way? People don't use email, right? Right? I mean, good luck emailing anybody.

People don't really use email except in, you know, tech companies. Like, of course, in business activities, they still do. but it's very, very diminished compared to the U.S. And the permission base, what I was trying to say is that we chat, like I said, if we are already connected, then of course it's a messaging program and you can message me whenever you want. You could spam me every second if you want. I could delete you, of course.

But for the branded accounts, for the sort of business-oriented accounts where I have to usually have an entity, you're subscribing to me, then that account is limited by we chat and how often they can spam you, or I shouldn't say spam, just message you, right? So media accounts usually once a day. If you're very large or very high quality, you might get an exception and maybe up to three times a day for business account. So if you're a brand and I subscribe to your WeChat, what's called a service account, then you can actually only send me messages four times a month. Is my memory correct that groups work very differently in WeChat? So that is there's a maximum limit of 500 people in a group.

group and that if your group, if a group grows to 100 people, if you want to join that group, you have to link your, I think it's your bank account to WeChat in order to join. Is that right? Increasingly, there is a real, real name registration that the government has been pushing out. So that is true. There was an early kind of free-for-all people could get a, you know, a burner, you know, SIM card and then just, but that those days have kind of come to a close, I think. But one thing is interesting, I think to note also about We-Chat. It's like if Ray and I are friends on WeChat, I think we are, I cannot see who her friends are, and she cannot see who my friends are. It's very interesting. You don't have to expose, unlike Instagram, Facebook and so on, you don't need to let people know who your friends are. It's quite interesting. So there's an element of privacy kind of built in and protection, as Ray said, which is very clever, I would say.

So there's a business interest into maximizing your connectivity to many other people that I think people don't necessarily appreciate. The idea that it was designed with more intimacy in mind, is that a cultural value? Or is that the government said, hey, we need to go more intimate because we see that it's actually having this perverse effect. I would love to hear more about that sentiment. Oh, yeah. So probably preface that everything we talk about, WeChat, is an exception even in the Chinese ecosystem. And Alan Zhang, the creator, his focus on intimacy is unique, I would say, in China. And in fact, so many of the decisions he did in the beginning, and he was very, very upfront about all this,

he wanted people to be more intentional about who they connect with, right? He didn't make it actually as easy for people to, it's very easy for you to create a Facebook account today. right? If I wanted to just create another account and I don't know, just play around with the app or something. It's actually extremely hard for WeChat. They have a ton of anti-spam, anti-fraud measures in place. In fact, even in China, sometimes people are like, I want dual identities for my business persona and my personal persona. How can I get a second WeChat account? It actually takes a lot of work. So the reason why they did that was because he really had this philosophy that even though in the short term, sacrifice the engagement. He completely understands about engagement and growth. He felt that in the

long run. This would be better for the ecosystem. And I think that has been true. Rae, if I can just add to that, that's made possible by games, right? In a sense, this was a prepaid app because Tencent makes so much money from its online games thing that it could actually be kind of chill on this monetization. And that's made it so wonderful as a user for many people because it isn't spammy. It doesn't have the ads. You know, this is all subsidized by those, you know, the teens who are, you know, teens subsidizing older people. I mean, teens do use WeChat, but I mean, it really is a transfer of wealth from, you know, gaming to a better social experience. Like, games is this ultimate subsidy.

This is all fascinating. What I'm hearing is that that future is already here in China. We're living in this virtual world. But to go back to, I think, what we're just getting into, which is the government in China, seeing the effects of all of these internet platforms and saying no to them is fascinating. We were in a conversation with a U.S. senator who is recounting a story of being in Europe talking to one of his counterparts who asked him the question, hey, who do you think China believes is their biggest rival in power? And of course, the answer in like my head would be the U.S.,

but what he responded was like, no, it's the Chinese tech company. companies because they have the power to control who sees what. They have, you know, if culture is upstream politics, these infotech platforms are upstream both politics and culture. They control both. We were talking with Francis Hogan, the Facebook whistleblower recently on a previous episode. One of her points, and one of the disclosures that the Facebook files made, was that it changed in 2018 to a Facebook.

algorithm forced political parties to go much more negative and attack, even though they didn't want to. And it sort of showed that Zuckerberg has this digital hand that is more powerful than government. It's almost as if Xi Ping saw the social dilemma, sees this fist coming for the face of culture, and he's like, oh, cool, I'll just sidestep that, and bans their version of TikTok, doyin, so kids can only use it for, what, three days a week, 40 minutes a day, adds mandatory pauses between videos bands populator rankings of celebrities

and in the U.S. we're just watching this fist come right at our face and then it hits us. So I'd love to hear your reactions, your thoughts about these two different models and worldviews. What I would say is that I think for the internet platforms it's not just that they're so sure they have

a lot of powers but I think it's already implied that the government has more power than them, right? So if you look at some of the publicly listed companies, Billy Billy is very popular with youth. And after the year it went IPO, which was 2018, they had some content issue and they were taken off app stores for a couple months. D.D. has a different situation. It's more of a data security situation. But actually, when I started the podcast, the very first episode was about how that safe. week, you had Zhang Iming, who was the founder of Bike Dance, apologized publicly for

having this app called Nehan Duanz, but like memes and jokes, a lot of inappropriate, you know, risque content, and it was permanently taken off of shelves. And then that same week, Mark Zuckerberg was in Congress testifying about, you know, something Facebook related. And he wasn't nearly as contrite. So it is, the government clearly has like ways they can say, I'm just going to stop your business, right? Permanently closing down an app, by the way, is one of the worst things they can do. It actually rarely happens. Most of the time you're given 30 days, 60 days, whatever indefinite amount of time to fix it. The government, and let's say it's the Communist Party basically is the steward ultimately of where things are heading. And so when they look at the West and see the

inaction by government, they don't even understand it, and they feel increasingly proud about their ability to lead in this area. Now, there are many side effects and negative things we can talk about, but there is a confidence in government to take on big tech. So let's talk about how the Chinese government is cracking down on big tech compared to the United States. They're putting protections in place for how young people interact with technology. That includes things like limiting.

the number of hours that youth under the age of 18 can play video games to just one hour between 8 p.m. and 9 p.m. on Friday, on Saturday, and on Sunday. And they have to sign in with their real names. They even limit the monthly amount that minors can spend inside a video game. For Doyen, which is their version of TikTok, they limit kids to just 40 minutes per day, and they ban all cell phone use in schools. After a certain number of videos in Doyen, the government requires a five-second mandatory delay to prevent mindless scrolling. And China's government also wants to influence what content gets most amplified. They boost science experiments and educational videos for youth under the age of 14.

And they order Chinese websites and apps to stop giving excessive exposure to celebrities and prohibit their fans from forming fan clubs. The Chinese government specifically makes a point to boost content that they support. Algorithm recommendation systems must actually uphold, quote, mainstream values. and, quote, actively spread positive energy. The algorithms must not be used to encourage indulgence or excessive spending. And the Chinese government is also creating restrictions on how their military can access technology.

For platforms that influence public opinion and the potential to mobilize the masses, algorithms have to go through a security assessment after registration. Their phones are also tracked remotely, with many websites off-limits, not just to prevent the leaking of sensitive information, but also to reduce the potential. for psychological manipulation of Chinese military personnel by foreign actors.

We also see the Chinese government pushing for less anonymity online, requiring face scans for all mobile users. So the next question is, what is the impact of China's crackdown on social media? And how is China's ban on cell phone use in schools, for example, affecting tech addiction among youth and influencer culture? Ray gave us a surprising answer. I think a lot of it is the same. So what I like to say is that a lot of the same issues, same complaints, same user experience deficiencies that you see in the West is present in China, sometimes to an even greater degree because of the fact that more people are connected digitally and depend on their digital identities sometimes for a living because of the situation we said earlier about leapfrogging infrastructure.

So, like, influencer culture where everyone is wanting to be an influencer. I remember there was this very popular post that was somewhat viral, and it was something like people asked U.S. youth what they wanted to do, and it was like YouTube influencer was the top, and then China was like astronaut. Well, I think they must have asked a very specific school in China because they have definitely done that exact same survey in China. and influencer is also number one in China. So that must have been a survey that was not very representative statistically.

So the narcissism, the anxiety that people have about looking at their friends' moments, even though Duncan earlier had explained that's a little bit more private than Facebook in many ways because WeChat does try to focus on building intimate relationships versus completely open relationships. that's part of the product philosophy. Nonetheless, especially I would say starting two, three years ago, there was a lot of talk about how, why I don't want to post on moments anymore, because it just makes me too anxious,

because I feel like I'm being judged, because everyone is posting about their latest promotion, latest international trip, upgrading their house, etc. Or in China, a lot of it's about their children doing really well, and this is just making me so depressed that I don't want to post. So a lot of the same issues, I think, Tristan, that you talk about, absolutely exist in China and for some reason

don't get discussed in Western media So I think the point is there are some of the nefarious effects of the internet and algorithms are definitely there to be seen in China for sure But you have one important You have some cultural differences

And you have the government And the government, the empire is striking back And you know, as we've seen on games restricting the number of hours or when and who can play We've seen, of course, in the last year just a raft of new measures, even things that we couldn't even imagine, you know, 18 months ago

just sort of shut down the whole online trading sector, you know, billions of investment destroyed just because socially, the government doesn't like it. One of the things you both were talking about earlier is how that requires a culture to want the government to take that action. So it requires a coherence among the culture, both of the citizens, to align enough with the government so that currently if, because in demand,

just compared to the web, model right now. So right now in the United States, we see sort of culture going off the rails. We see shared sense making going off the rails. We see social media continuing to kind of split us in fractal ways from our shared sense of reality. So now when any mistake by any institution or any person, by the way, the same thing with cancel culture. It's never been easier to distrust anything in everyone. And so now when the government tries to take some action, we'll say, well, we would never trust them to do anything, right? Because we've all seen the clip that go viral of Zuckerberg, what is your business model, says,

oh, Senator, we sell ads. I mean, so that the thing goes viral, which creates maximum distrust of government. So now the citizens don't really want or wouldn't trust the government to do something, whereas you're saying in China, they see a problem is going on, and they would expect, they're saying, hey, government, why aren't you coming in and doing something about this?

And to do that, they have to have had a culture that was coherent enough from the start among citizens and then a culture that's coherent at the top that they want to continue to evolve in a direction. It's the government having this idea that they have the responsibility to, not control, but like to guide moral and social beliefs, right, and what the culture of the society should be. And not just the government, the people expect them to do the same, right?

So I would say all these, like, if none of these, if only one of these pieces were in place, then it wouldn't be very successful. But if the government already has this power to just stop you in your tracks when you're doing things that they consider to be out of bounds, but then also they have this responsibility that they innately feel and the people expect them to take action. I actually have in front of me, I wrote up for my investment community what the China Communist League, they put together a report along with the internet agency, CNN and I see, on usage of the internet by minors in China, and then they had some recommendations.

But I wanted to highlight just some specific things that you might not have expected. Right. So number one, only 50% of the parent survey thought it was the family's responsibility to oversee internet use. So about a quarter thought it was society, aka the government's responsibility. And 20% thought it was the school's responsibility. So, again, very different cultural environment and expectations in China, right? So schools, by the way, schools and teachers play a tremendous role in the youth's life, right?

And what you might not have expected to hear from the parents is that the number one reason why they wanted to limit screen time was actually worsening vision. So myopia, nearsightedness. Yeah, is the number one reason. By far, it's 82% of parents pick this. And by the way, that has made it into the government's goals. for society. They literally have, like, by, you know, five years from now, we want the myopia rate of children in the country

to be this percentage decline from what it is now, et cetera, et cetera. That's fascinating. I haven't heard any stats about myopia in the U.S. It makes me wonder if that's actually a thing that's... Where did that idea? Big loss I'm from. Conspiracy. Warby Parker.

It's all a Warby Parker. Just like Pfizer wants the vaccine. Warby Parker secretly wants. I'm secretly wants everybody be addicted to screens. Right, big glass. Got it. So people, yeah, people don't really, again, the parents, that's her number one concern. And then second concern, 69% picked inappropriate content.

And then it was addiction and decreased physical activity. But even within inappropriate content is the definition of inappropriate content is very different in China, right, versus the U.S. So what they thought was inappropriate content was things like. showing off your personal wealth or your family background, because that is sort of the wrong cultural values, right, showing off. Of course, pornographic, you know, and violent content and suicidal content is bad, but also things that are superstitious content is considered inappropriate. Anything that glorifies colonizing countries. And out of this list, the number one most common content that the minors surveyed said they saw and what the, I guess, this percentage they wanted

to go down to zero is that is the showing off of personal wealth or family background. That's the most common type of inappropriate content that minors see and that presumably what the government wants to cut down on. Yeah. In fact, when things are going wrong in society, the most common thing you hear from regular Chinese citizens is, why isn't the government doing anything about this, right? So the government has like a very different role, I think, in Chinese society and culture than in the West, right?

Like, if someone defames you on the internet, what do you do in China? You call the cops. That's not what you do here, right? So like, um... If someone defames you on the internet, you can call the police and they'll do something about it? Yeah.

How's it like, what do they do? Well, you usually have to provide evidence, but they'll usually take it. Ray, I apologize for that incident already. You're bringing enough your friends from getting it. They'll take them. So this happens multiple times, actually. So usually it's, you know, some celebrity getting pissed that, you know, they didn't do something and some paparazzi or someone say they did.

Then they'll say, like, you have one chance to apologize or else I'm handing you over to the police. If they don't, usually the police comes and grabs you for questioning. I think, you know, the role of the police in China often is just, you know, calming down situations, right? You see it at the street level, and so why would it be any different online than offline? Yeah, well, I mean, this is all fascinating, and it relates to the conversation about China's tech crackdown. I think there's multiple ways to view that crackdown, right? So the cynical person from the United States might say something like, well, of course they're cracking down on this. They're a totalitarian or authoritarian kind of regime in that they want to control everything.

And so this is just a cynical view of they're doing it in a way that represents values that we don't care about. so we would not take seriously any good faith learnings from why they would be doing that. But then there's a post-synical view that says, yes, it's true that they have a more authoritarian form of government, but they also realize, and they're watching, as basically, again, these set of technology companies are destabilizing many Western societies in various ways

with either inequality, frustration, social media polarizing, and breaking down shared truth, creating January 6th. They probably look at something like January 6th and say, oh, my God, do we allow that kind of insanity to those kinds of explosive movements to sort of show up at any moment and put that in our society. And so it's actually saying we need to make sure that technology lives inside of the values of the Chinese Communist Party. And as Shoshana Zubov says in democracies, we are not currently saying, how do we make sure we harness the power of all these technologies to make a stronger set of social structures

and superstructures that reflect the embodied values of a democracy? Instead, we're allowing technology to debase social structure and law and debase culture. And she says the solution would be, how do we have technology be reminded that it lives in democracy's house? I'm just curious, your reactions to that when you think about that model

being applied to what China's doing in their recent tech crackdown. Just one comment on that, Tristan. I mean, it's been interesting that in the U.S., you've seen some support for some elements of how the government is taking on big tech in China from the right and the left, right?

You've got the right saying, oh, you know, these evil, evil games, you know, they're polluting our kids' minds. And on the left, you know, sort of taking on some of the bigger capitalistic elements, including labor. Right. Well, yeah, that's one of the, was it called in China, is it Maitwan, the notion of common prosperity? That's the what Xi Jinping sort of is emphasizing culturally. Yes. Yeah. Oh, yeah, since I think since 2017, but really I've heard in the public consciousness in this past year,

but you can actually see the government really formally started talking about it in 2017, this idea of common prosperity. It's always been in the Communist Party's literature. It's just that it was considered the next stage, right? So in the beginning, we're all super poor, so some of us need to get rich. And now some of us are rich. We'll need to make sure the ones who have fallen really far behind also get some help. So that's the idea that now we're in the stage where, hey, we're at $10,000 per capita GDP, and some of you are really rich now.

So go help the rest, yeah. Yeah. And what Ray's talking about is, yeah, I mean, basically the neuralgia for the party is the middle-income trap. Will China get old before it gets rich? It's kind of happening. I mean, China is aging faster than any society on earth. I mean, okay, Japan has already aged. But the demography, it's dramatic.

And yet, we know that from experience, it's very difficult for countries to break through, you know, to have a middle class big enough to then make the switch away from traditional. industries and in Chinese case export and infrastructure. And that is the big concern right now. So common prosperity is a must for the government to achieve broader levels of prosperity to break through the middle income trap. And people focus on common prosperity. They focus more on the common perhaps in the West, the sort of redistributive elements. But it's also about the prosperity. It's also, you know, for example, can you release, reduce the burden on people, for example, parents with these big training companies or the real estate costs, nobody can afford

to buy, or they can't have a second or third kid if they can't buy an apartment with a second or third bedroom, even if they have triple bunk beds, it's going to be tough. So there's a lot of effort in common prosperity to focus on the latter as well in China. And whether they can do it, it's a big gamble, particularly because in the past the government has relied heavily on the private sector, including these tech companies, to drive, you know, economic growth, innovation, nearly all the jobs that are created in China from the private sector. But we've seen investment increasingly recently skew away from the private sector and going to the public. Now, will that mean that China stops innovating, stops growing at the same levels?

I mean, currently it's not looking good, but China has some domestic outbreaks, small scale. But they also have the trade war, they have legacy issues like the world is experiencing supply chain problems and power issues. So, you know, China's pretty nervous right now about can they make this switch. We often talk on this in our work about the two attractors that we're heading towards in the future. One attractor is digital closed societies where you're maximally employing all the technology into these sort of centralized surveillance dystopias, where all the power and sort of rulemaking, decision making is increasingly in a smaller and smaller number of hands that affect everyone else. And then the other side is sort of decentralized chaos where basically there's no control and we allow everything to grow and whatever scale it does and inequality grows to what. whatever it does and whatever thing goes viral goes viral and whatever influence or culture emerges

from a race to the bottom of the brainstem teen mental health app, you know, that's just what it does. And so these two attractors of dystopia or chaos is kind of what we're heading towards. And I think of it like a bowling alley where we have to bowl and we've got a gutter on the left called centralized power and dystopia. And we've got a gutter on the right called decentralized chaos. Except each gutter is getting bigger. So the Chinese, the centralized powers of whether that Zuckerberg and Facebook get, more and more powerful over time and getting a trillion-dollar market cap growing every day.

That's one gutter that's getting bigger, or it's the Chinese government getting bigger and bigger and its use of power. The other gutter that's getting bigger is more and more people having more and more power in ways that are actually destabilizing to society, whether that's drones, CRISPR, memes that can go viral to anyone, crazy amounts of inequality, that kind of decentralized chaos. So both those gutters are getting bigger and there's this question of, okay, if neither of those take us to a direction we want to go or will allow civilization to kind of make it, we have to hit a strike. So we have to basically make, you know, throw this bowling ball down

this increasingly thin kind of bowling alley. And that's the prompt of what a digital open society could be. You emailed us, I think, in May Duncan, and you said that we need to understand China, of course, but also it's part of healing ourselves, healing thyself, is to understand China, that China is a great mirror to reveal our own weaknesses, but also our strengths. And so I'm really curious, given that lens and thinking about how we roll the ball down the very center of the bowling alley, like what you would draw from that. And I think a big, like, the second part of the question that comes is, like, what does China want? Like, where is it going? Like, is it, does it want total world domination? Or like, what is it inside

of China say that, like, here's our end goal? You know, and I understand people don't agree with this statement, but I don't think China is particularly interested in, quote, unquote, taking over the world. Historically, that's not what it's really done. And in fact, that's, you know, it's always historically been more inward looking and fighting off other invaders. On the Silicon Valley front, though, what I would say is when you talk to people in America, of course, course that there is this dichotomy of like U.S. versus China, but just go anywhere outside of America, right? Like European. Like I was on this European podcast and that the conversation of US versus China just became very heated of, well, why should it be either? What about Europe?

You know, what about the rest of the world? Well, first of all, American companies have taken it sort of for granted, not just in tech, but in many other industries that they have the biggest global brand names, right? Everyone in all over the world is drinking. Starbucks, you eating McDonald's, and, you know, wearing Nikes. But nowadays, now there is a new country, China, where a lot of the brands want to be global brands. They define that as having at least 50% of my revenues coming outside of China. And they're either thinking of doing that from day one, from the get-go for a lot of the tech companies, or maybe for some of the physical good companies, they're thinking about doing it a little bit later on. But that is a very

natural sort of, I think, evolution as the economy upgrades and as your talent and access to capital upgrades. And it's not just going to come from China. It's going to come from India. It's also going to come from, you know, many parts of Europe. Pretty soon, it'll probably be also MEDA as well. And Latin America. I don't want to leave anyone out, Antarctica. I'm probably, excuse me, I think Southeast Asia is probably the most interesting place where you see this interplay between U.S. tech firms and Chinese, you know, particularly the gaming culture, very strong companies like SEA in Singapore and ASEAN, you're seeking investments by Tencent in Indonesia. And it's been a bit of a wake-up call

to companies like Amazon and Facebook and others to, hey, you need to raise your game. But that is playing out all over the world. And very interestingly, in some cases, Chinese entrepreneurs are dominating in markets like the Middle East, in chat or in parts of Africa, whether it's handsets or content. Some of them are actually fleeing. China's too complicated, but I know how to do this stuff. I'll go, you know, build a business in Nigeria that's happening. It's very interesting. The Chinese talent versus Chinese companies, we need to break that down. And Chinese capital as well is flooding around the world. There's a lot of capital sloshing around here. But I think one thing, before we move on, I think it's very important that we say, we're coming

from this consumer internet perspective and media and the equivalence of Facebook and so on. But China has a very deeper vision now on technology. They're looking at reducing dependence in areas. As Ray said, there's been this fear of invasion, fear of foreign control. What's the number one product China buys is semiconductors, right? So they're investing huge amounts, including in the private sector, gobs of cash going into build a domestic capability in semiconductors, in AI, in quantum. So deep tech, the more serious tech, they look at the stuff we've been talking about. It's kind of frivolous, and they can control that. Their game at the Commerce Party's level now for the next 10, 20, 30 years is really on this deep tech, building their own

capabilities. Because after the trade war, and even before, they felt increasingly, you dependent, particularly on TSM in Taiwan, in semiconductors, but across the road. And in some cases, we know that China has been pulling ahead in certain aspects by sheer force of money that putting in their amazing engineering talent. Now, can they catch up or overtake the U.S. in a number of areas? This, of course, has led to things like Eric Schmidt and leading the AI commission and other things to push back and understand what can the U.S. do. That's the mirror aspect as well.

I think we need to understand, you know, the U.S. needs to benchmark itself against China. and they need to understand. It's quite difficult because you don't always know what's going on there. But in terms of the number one prescription, I think, for U.S. continued dominance in some areas will be, you know, stapling the green card to the Ph.D., right, which hasn't, you know, recently has been stepping back. And that's the one thing that the U.S. can do is attract global talent and retain it. China cannot do. I mean, China doesn't, I mean, China has tremendous domestic talent encoding, but it has some, frankly, deficiencies in some areas that they're addressing. Anyway, so it's interesting.

this is the global chess game but China's thinking much more the deep tech the longer term and I think we can be a bit distracted a little bit by the social stuff which we really need to address in the West but China has kind of figured they fixed that already and so right now we're sort of using this frame

of rivalrousness which I think there's a lot of merit to that and I'm curious if we were to transcend a rivalness dynamic with China like what would that look like? More hamburgers in China and better dim sum better food Chinese food is really good.

There's a lot of hamburgers in China. Actually, that's true. Shake shack is all over the place now. So, yeah, I mean, space, maybe that's the final frontier, right? I mean, how is that going to work? It's sad right now that, you know, the International Space Station is sort of somewhat legacy with Russian corporation, but China's building its own infrastructure. So it isn't happening right now.

having more people-to-people contact, which is suspended right now because of travel and COVID and so on, that's really dangerous that we kind of reduce each other to stick-figure characterizations both sides. So I think, you know, the first step is to resume people-to-people exchanges. I'm on the board of Asia Society. We're all about promoting engagement and education and language training, all that stuff. But we need, you know, it's going to take a long time to turn the ship around from the current pretty scary, frankly, situation on geopolitics. If we mentioned East China Sea, South China Sea, and you name it, it's been a really rough patch. So I think first it's kind of

heal the damage, put a line under it. I think, you know, there were some positive signs from the Xi Biden discussion. You know, Xi Jinping has not left China for over two years, right? So how can, and all of us, I mean, I'm able to go back and forth, a few people can but we don't have students. We don't have foreign

students in China. Very, very few are able to go. Like, there's going to be a generation, three now, years, four of no contact, you know, that's a problem. We need to focus on ways to, without being naive, build greater understanding to look at things like that. Climate change is the ultimate, you know, endgame solution. And the U.S. China came out with, you know, something positive. People can

question how, how effective it's going to be, but at least it was a sense of stepping back from the precipice. So I think climate change, space, this kind of stuff, and ultimately nuclear agreement not to sort of expand insanely on that, which, you know, game theory is coming into play here. But for both sides, you know, the problem, China and the U.S. need each other more than they care to admit. And they're both very proud. countries with, you know, tremendous capabilities, but sometimes they actually do need to work together. Yeah, I guess since we're just talking about all of the different ways in which we are headed towards this, like, massive, rivalist dynamic, like, what's one thing that you know,

that others don't, that give you hope? So maybe starting with Ray and then to Duncan. Wow. Wait, I don't think about this. Neatley, no. Is that I think, over. Overall, the Chinese people, they have a lot of the same concerns about where the world is going, especially around common shared future potential catastrophes like climate change, as we do. And I've been very cheered by the fact that that's something that I saw changed very, very rapidly in the past decade when I was there from basically no one around me caring at all. like when I ran to China, I was vegetarian and I explained that it was for environmental reasons and everyone looked at me like I was an alien. And now that has become an acceptable explanation and a lot of the common concerns we have as a species. I think the Chinese people feel it

very keenly and maybe even more kingly than we do here in the West because obviously they're looking at not as great quality of life and generally lower incomes. So hopefully that will make us all more motivated to do these things together. I mean, specifically on climate change, I'm not sure people realize, but China's so far, right, their plan for carbon neutrality is only basically giving the country 30 years, right? China doesn't plan to peak in carbon emissions until 2030, and then it's only giving itself 30 years. But if you look at the U.S. and if you look at Europe, Europe actually peaked in the 1979 or something, and then U.S. in the early 2000s,

you know, U.S. and Europe have actually a much longer runway and China's being quite aggressive. And I think it's good for the world that China is willing to adhere itself to this kind of timeline. It's one of those really big, hairy, audacious goals that I think because it's out there, they're really going to have to realize it, and that would be just great for the whole planet.

Yeah, I think there's an inbuiltness in both China and the United States. So in the in-builtness in China, if it really is going, as some people say, a dystopia and top-down direction, can they do that and maintain the innovation, the dynamism, and the economy,

or is there going to be like an in-built reset to say, look, if economic growth drops too much, if the company stop producing and the population starts to question things, I mean, I have faith in the fact that the Chinese consumers, Chinese individuals will not tolerate too much going, a strong.

from this agenda of prosperity. I mean, commerce parity is, that's what everybody wants, of course. But if there's too much of a focus on side projects or political nature of things which undermine the middle classes, which are big already in China and, you know, the aspirations, then there should be an adjustment. I think the Chinese and Americans are more like each other than they actually know. They both have the same aspirations, and governments in both China and the U.S. need to deliver on those aspirations.

And by cooperating with each other, they're ultimately going to have greater success of that. They can, of course, choose in some areas to fight each other, hopefully not literally, but the cost of that of becoming apparent from the trade war and the aftermath. So hopefully there's going to be new consensus for at least

more subtlety in this relationship. And we can see some wins. And one thing, for example, is working together on cancer research. The U.S. and China and Asian society is involved in this as well. If we can't cooperate on this or climate change, what can we do? I think we're going to find

areas of collaboration that lead us back away from this path that we've been on? Well, because I'm sitting at a place where I am trying to work on cross-border deal flow, what I would say is that while I do think it is different, the environment today is different from a couple years ago when there was a lot of flows in capital and talent between the two countries, I don't think that's quite diminished as much as people might think it has. I think there are still a lot of curiosity, there is still a lot of sharing, and there are still a lot of mutual learning, especially in areas where it is about hopefully saving the whole world or humanity as a whole. There is actually a lot of motivation to collaborate and to cooperate. So I hope that goodwill extends and that goodwill helps us all.

Yeah, but I think I'm hearing Duncan as you saying that we're more similar. than we think. And Ray, what I'm hearing you say is that we're actually collaborating more than we think. So I want to thank both of you for coming on your undivided attention. It's been a completely fascinating eye-opening and sometimes very surprising conversation. Duncan Clark is a recognized expert on the internet and entrepreneurship in China. He's the chairman of BDA China, an advisory firm serving investors in the technology and consumer sector in China and other Asian markets. He's also the author of Alibaba, the house that Jack Ma built, which was named Book of the Year by The Economist. And Ray Ma is an investor and analyst who

worked with funds and companies to identify technology investment opportunities in the U.S. and China. She maintains a community for investors and operators interested in China Tech at TechBuzzChina.com and co-hosts the TechBuzzChina podcast. Your invited attention is produced by the Center for Humane Technology, a nonprofit organization working to catalyze a humane future. Our executive producer is Stephanie Lep. Our senior producer is Julius Scott. Engineering on this episode by Jeff Sudakin.

Dan Kedmi is our editor at large, original music and sound design by Ryan and Hayes Holiday, and a special thanks to the whole Center for Humane Technology team for making this podcast possible. You can find show notes, transcripts, and much more at HumaneTech.com. A very special thanks goes to our generous lead supporters, including the Omidiar Network,

Craig Newmark Philanthropies, and the Evolve Foundation, among many others. And if you made it all the way here, let me just give one more thank you to you for giving us your undivided attention.