How worried should we be about China?

29:45there have been big issues over transparency, over corruption, over the ability of China even to sustain the sort of levels of spending which it has been putting into these countries. And also in a lot of these areas, there's been a growing scepticism and wariness about China for several reasons, because the money, which apparently was going to come without strings, inevitably has strings, which usually involves supporting China's position at the UN or elsewhere, whether it's on Hong Kong or Taiwan. So that's why they would do it. I was going to ask, why would they build bridges in Africa? But it's...

30:21Well, it's to extend their influence. I think, effectively, the BRA, this program, is a means through which China extends its influence internationally. It's economic influence, but as a result of the economic influence, it's political clout. I think they're running into more issues because the Chinese economy can't sustain that level of spending because of the indebtedness that it's created, the wariness in those countries. And I sometimes use the analogy that when the Chinese economy was like an express train, everybody wanted a part of it. Everybody wanted to jump on board it. But now that it's slowing, may even go into the sidings, may even hit the buffers.

31:03I mean, its ability to seduce is quite severely restricted when it starts to have those problems. So I think the BRI is in trouble. They're trying to reinvent it as a more digital silk road, as they call it, as a way of exporting the Chinese-made technological ecosystem, which then has all sorts of, to go back to what you were talking about with Snowden, If you control the pipes, it gives you a lot of power. And China is trying to put the pipes into many parts of the world. The developing world as well. The places have got rapid population growth and lots of resources. Africa. If you can control Africa, you've got a good place.

31:52It's cheap labour. It's all the things that China maybe, if they grow in middle class, it means China loses its key asset, which is cheap labour, right? Well, it's also classic colonialism. Yeah. Is that the British playbook? Yeah, it is. I mean, if we want to use historic analogy. Because, you know, you're there and you're exporting your stuff, your surplus, whether it was steel before, whether it's now the glut of renewable technology. So you're exporting your stuff and you're lending them money to buy your stuff. But does that mean we should also be worried if there, God forbid, there is a war or, like, there's conflict?

32:29They have a lot of allies, like they've got Russia, Africa. Like, do you think they're using it as, like, financial means, but also political reasons so they have allies? Yeah, I mean, it's interesting when you look at allies, because China historically has never really had any allies. And one of the reasons for that is because they've always regarded themselves as the center of the world, the Middle Kingdom. And the notion of an alliance implies a certain equity, a certain responsibility. And China's… And it implies people are on your level. Yeah, China's always regarded itself as the first amongst equals.

33:03I mean, they are, no, they're the Middle Kingdom. And I'm even skeptical to some extent about the Russian partnership or friendship, however they describe it, because I think it's driven by assured animosity towards the West and towards the current international system. but how deep is that friendship i mean one of the interesting things that was pointed out to me is yes you've got xi jinping and vladimir putin who have similar world views putin's got his notion of the ruski mir recreating the russian-speaking world very imperialist notion i'm not learning russian that's too hard then you try chinese mate no mandarin tries learning some Mandarin.

33:48Yeah, I mean, that's a tough one. Then you've got Xi Jinping and his Chinese dream, which is similar lines, really. It's restoring national greatness, beginning with grabbing Taiwan. But a lot of those around him would regard the rightful borders of China as being the old Qing dynasty borders. I mean, the problem is that those Qing dynasty borders include a huge chunk of what is now modern Russia. So, you know, how's that going to play out? A lot of the area north of the Amor River, the Russian Far East, including Vladivostok, these were parts of Qing dynasty China, and China bangs on about 100 years of humiliation, unequal treaties.

34:32But Russia was perhaps the country that imposed more unequal treaties and more humiliation on the Qing empire than anybody else grabbing huge swathes of lands. And a lot of Chinese nationalists haven't forgotten that. Do you think the war in Ukraine, I mean, you say that they've learned from it in the sense of they've seen maybe how war is fought in the modern world, how they might need to react and stuff. And they've also probably learned that Russia are not as strong a military force as the world expected, so might not be as big an ally. Do you think it's emboldened them or do you think it's made them more cautious about seizing Taiwan and what that would bring with it?

35:13I think initially more cautious. I was in Taiwan not long after the Russian invasion of Ukraine, and that was the question everybody was asking themselves. What does this mean for us? Because clearly the PLA is the... Is this the Chinese? Sorry for the audience. Yeah, the Chinese, the People's Liberation Army. And the war fighting principles, the way they're organized, there's quite a lot of similarity between the PLA and the Russian army. And they would have looked at the bungled early days of the invasion and perhaps had second thoughts about planning for an invasion of Taiwan. And people in Taiwan at that time were saying to me, well, you know, the highway down from Belarus to Kiev, along which Russia suffered some quite severe defeats, that's like the Taiwan Straits for us.

36:05and an invasion would take a lot of manpower, a lot of resources, would be very complicated. You know, Taiwan has a number of things going for it, from the geography to the climate. You've got to get across the water. And they've got that porcupine defence strategy where they've switched from big arms to just, like the Ukrainians, little drones. These things can be cheap, printed, and you can cause a lot of havoc to very expensive equipment, can't you? That's been one of the biggest changes in Taiwan, this discussion of asymmetric warfare. Be a porcupine. Lots of spikes. Yeah. So you can't be swallowed.

36:38Yeah. But China's also changed its strategy more and is emphasizing to keep the animals go, the anaconda strategy. The idea that you squeeze Taiwan into submission instead of necessarily invading it. It's like siege warfare of the old. You just wrap yourself around the castle and starve them out, basically. And a lot of the military exercises we've been seeing around Taiwan have been rehearsing for an embargo to stop stuff getting in and out of the island. You combine that with cyber attacks, with misinformation. At the moment, there's a lot of discussion about communication cables that have been cut in the Baltic Sea.

37:22Well, Matsu Island, which is close to the – it's a Taiwanese-controlled island, which is close to the Chinese mainland, has had its communications cables cut 17 times. By accident, quote, unquote. Oops. Not again. Chinese ships accidentally dragging the – That big pair of scissors. Yeah. And it's dubbed a sort of gray means of warfare. And I think that, yeah, Taiwan has learned from the Ukraine war, but so has China. And they've looked at how can they make their economy a bit more resistant to sanctions? How can they change their approach to Taiwan? And I don't think China wants to necessarily invade Taiwan if it can manage to squeeze it into submission.

38:12We all saw the economic impact of the Russian invasion on Ukraine. We lived with that and we continue to live with the effects, inflation being one. you say that you think the war there would be much bigger in terms of economic impact over a trillion i think you said in terms of like a global impact how how do how credible is it that that might happen and how does the west or us prepare for that sort of thing do we prepare for war do we prefer to fight or do we you know i think the important thing is i mean i'm reasonably optimistic in the sense that i think there are lots of different ways that you can sort of counter Chinese influence without necessarily, without it coming to a hot conflict.

38:56But I think one of the ways, the most sensible ways is to recognize that dependencies on a tyrant, whether that person is sitting in Moscow or Beijing is not a good idea, especially when it comes to sort of things that are critical to your economy. And it sometimes concerns me that we have, and we're seeing now with the new British government, Keir Starmer meeting Xi Jinping, that the government believes that you can separate, on the one hand, concerns over human rights and security, where, to quote him, he wants to be frank, although we haven't seen much of that, from the economic side of things, a belief that China is an important economy, as indeed it is, and there are economic benefits to be had by engaging economically with China.

39:47I mean, the problem with that approach is it's not one that Beijing recognizes. It's never separated the two. So trade, investment, market access have always been seen as a means of coercion. It's, you know, China's essentially is a predatory economy. Battle of Empire. And it's very hard to separate those. And we've seen it in numerous ways, in numerous places. There were embargo imposed on Lithuania not long ago after they had the audacity to allow Taiwan to open a diplomatic compound in that country's name. We saw an embargo against Australia because Australia demanded inquiry into the origins of COVID-19.

40:33And indeed, it turned out that the Australian economy was more important to China than the Chinese economy was to Australia. And the Australians managed to, where they had stuff that was affected, like wine, like lobsters, they managed to find grain, they managed to find other markets for it. And in fact, the wine and lobster was increasingly smuggled through Hong Kong, which returned to its roots as a sort of smuggling centre. And there were these stories. What, they just wanted that Australian wine? Yeah, well, the Chinese banquets that had relied on Aussie wine and lobster, they wanted to get this stuff into southern China.

41:13So there were these reports in Hong Kong newspapers of huge customs raids. Just needed that Sauvignon Blanc. On boxes full of lobster. And these were breathless accounts in the Chinese press, which made it sound like it was cocaine or something. Found, confiscated, 25 kilos of the reds. Yeah, the white. And it was lobster. But so is this a point then? Is this like, you know, first of all, maybe there's this perception that China is clever, but actually they might not be and they might not act in their best interests. We almost have this perception of they're like logical and the leadership is well thought out and over hundreds of years they plan rather than our political systems with jerks left and right constantly.

41:58And then do we have lots of power here? Are they scared of us in the terms of they need the West? They do. And I think we do have power. And I sometimes think we don't realise just how much power we have and just how important it is to stand up. You know, there's always been this notion that, oh, we don't want to offend China. I mean, as you probably noticed from the book, I have no issue with offending China. No, I was going to say, you're not going back. You're not going back. But I just think politically, it's very short-sighted to take this view, oh, we've got to be terribly cautious. It's China.

42:31We don't want to offend China. Because I think that China has many vulnerabilities. I think that the point that you mentioned about China being technocratic, in the course of research in this book, I went to Singapore. Technocratic. Thank you. What is technocratic? I just have to tell you to hit the button. The notion that you have these experts and you have this long-term vision and you can plan and you can calculate in a way that's not available for pesky democracies who are on five-year cycles and have to think short term. And this was always this notion that China – and this has been cultivated by Chinese leaders.

43:16You know, we've got this expertise where we promote on the basis of who knows best. And I went down to Singapore and I talked to a guy who for years was their top civil servant. And I said, what do you think of this? And he said, it's a little baloney. He said, the thing is, he said, it doesn't matter how good your civil servants are, how good your experts are, your technocrats are. If you've got someone up the top that's not listening or thinks that his or her views are the only views that matter, then there's a sense that people will then be afraid of telling them something which goes against their views.

43:57And you literally tell the emperor what they want to hear. And in fact, this notion, and we're seeing it more recently with Xi Jinping's move more towards control, towards security, even at the expense of the economy, and the sense that there are a lot of experts, a lot of very good economists in China, who believe they know how the economy needs to be changed, how the focus needs to be moved. But that's not happening because it would challenge Xi Jinping's notion of control and security. And that's how he's maybe similar to Putin in the sense of the most important thing is the power, maintaining a small circle.

44:39Like he wants to control everything rather than what's best for the country, it's what's best for the CCP. I think that's what's driven so-called reform and opening from the beginning when it was kicked off by Deng Xiaoping, the principal leader from 1978. I think it's always been about the survival of the party. And when you look at the changes in openness and closing of the economy, it's all about the survival of the party. The party is a remarkable beast. I mean, it has survived, often against the odds. But that's always been the principal driver of change in China. and it continues to be. Easy to survive when a country's booming and everyone's getting richer and the Chinese have got richer, right?

45:25Now, one area that I want to look at that I think people will really, they'll know because the story broke internationally is the property bubble and Evergrande. How is that shifting things there now? And do you think CCPC, that as a threat to them? Because 70 % of Chinese wealth is held in property that's now collapsing. That's right. And that's a middle class who were among the biggest supporters of the CCP. Well, the economy was built very much on three pillars. One was property, which by some estimates was a quarter or a third of the economy. And a huge property bubble took shape, which not only involved speculation in property, which was tied to ever-rising prices, but massive debts among local governments.

46:12No one knows how much because a lot of it's hidden, because they relied upon selling land to the developers. They obtained the land by stealing it from the farmers. It was sort of a vicious and surreal circle of debt. But you had the property crisis and the bubble bursting in the last two or three years, which have seen sales and prices fall quite sharply. Then you have the second pillar, which was this massive investment in infrastructure in China, from airports to roads to trains. and there's diminishing returns in that because there's only so much money you can throw at that then there's the cheap exports which flooded out of out of china made in china yeah and that that is that i think even chinese economists regard that as unsustainable and they want to shift to what they call a more innovation driven economy um an economy um which which depends more on on higher quality growth, as they put it.

47:11They want to have more consumption in the economy because Chinese consumers, compared with America or here, is a small proportion of the economy. But the problem with all that is you need, it implies that you give more power to the market, to your, and they are successful Chinese technological companies, but these are companies that have been targeted. Entrepreneurs have simply disappeared or been removed. And the party or Xi Jinping's obsession with control runs completely contrary to what most economists regard to be the necessary moves to get the economy moving and to change the dynamic of the economy.

47:53The problem as well is you've got endemic corruption. I mean, a lot of the corruption that takes place in China, well, the difficulty with taking corruption out of the system is hard when corruption is the system. And when corruption campaigns have become thinly disguised purges against political opponents. And this is a very difficult atmosphere to make that kind of transformation, to change the way the economy operates. And one of the figures which I find quite significant is the soaring rates of youth unemployment, which by some measures, well, they went up to about 20 % last year, at which point they stopped publishing them.

48:44Because no one likes good news, especially not the CCP. So you stop publishing them. Then they began again after a few months recalculating the way they did it without really saying how that was. And even now they're creeping back up again. This is mainly graduates, because there was such a big expansion of Chinese colleges. But the problem is, this comes back to your point about political stability, is you've almost had this unwritten rule in China, this pact, whereby the party would deliver growth, the party would deliver stability. and in return for that you had political docility people didn't question the party you know you you embrace the economic opportunities we're giving you but you know just leave the politics to us and one issue question is whether that breaks down because if you're in a situation where the party is no longer delivering those rates of growth and where you're getting more instability, it starts to challenge the legitimacy of the party, because the party's legitimacy doesn't rest on elections.

49:56It's not electoral democratic legitimacy. It's what's been dubbed performance legitimacy. So you judge us on what we deliver. And if you're not delivering anymore, then that brings into doubt, or potentially brings into doubt, the legitimacy of the party. There's a lot of people that bought homes that have never been built, right? And they've just, the money's gone and stuff. It's not just, oh, my house has lost 10 % on paper. It's people who've... Yeah, I mean, it's surreal. You have these huge conurbations of ghost cities across China, which are places which have been built entirely on speculation, a lot of them of which have been bought, but no one lives in them.

50:39Then on top of that, you've got people estimated 30 million. The empty homes is maybe 50, 60 million. So you're getting on towards 100 million homes. So that's almost one for everybody in the UK, more than one for everyone in the UK. But you have a situation where people now have put down deposits because they tend to buy off plan. And you have houses that have not been completed, houses that have not been built, people very much in limbo, lots of resentment. and this isn't a great atmosphere where you can say look we want you to spend more because we want more consumption in the economy in your book you said the raw addictive power of made in china is what attracts a lot of people to do business in china and we're all still feeling like the effects of brexit and how expensive everything's gotten since we've left europe since we left the eu do you not think that if we start doing stand up to china everything is going to become more expensive, like Apple headphone, like everything we like, because everything's made in China.

51:38So is it feasible for us to not conform to what they want? Because who's the alternative for the supply chain? Well, I think you're right that there is a cost or there might be a cost for reducing our dependence on China. And at a time when there is a cost of living crisis, and at a time when China is producing and pushing out a lot of cheap stuff, whether it's from renewable energy to consumer goods. I think that supply chains are shifting, perhaps not as fast as they should. For instance, Vietnam has been a big beneficiary of companies shifting out of China, where costs supposedly are even less than they are in China.

52:23Other parts of Southeast Asia has benefited quite considerably, especially on the sort of more lower end stuff. I think a lot of The headphones now are made in Vietnam. And I suppose it depends upon the pace at which you do it and the alternatives which companies are finding. I mean, they'll always look for where they can produce stuff cheap, cheap and efficient. I mean, supply chains used to be driven by price and efficiency, but I think the difference now is they've introduced this new buzz term, resilience, by which they mean reducing their dependence on factories in China for a number of reasons, because companies are finding an increasingly hostile environment to operate in because of the deteriorating geopolitics, the threat of sanctions, all sorts of stuff means they're looking for different ways and different places to produce goods.

53:22And that is happening. I think that when it comes to, say, investment in China or sourcing from China. I think the most important initial thing is to be aware of what we're dealing with, is to be aware of what happened with Russia, to be aware of the dangers of what might happen with China, is to be aware of the way that dependencies could come back to bite you. I think it's not necessarily a case of let's immediately cut all links to China. I mean, it's going to continue to be an important source of goods. And let's face it, the majority of goods coming from China are not necessarily threatening or critical or are going to be highly damaging if they are suddenly cut off.

54:12It's more thinking about critical goods. It's more thinking about stuff, whether it's EVs, for example, or whether it's critical minerals, stuff which could be highly damaging if it were to be abruptly cut off in the case of deteriorating relations. Where do you think China is heading in the next five to 10 years then, rather than, you know, our reaction to it? Like, where do you think that's going as a train, as you call it? Yeah, I mean, I think the economic situation in China is probably worse than even we imagine it to be. I think that the days of double-digit growth are over. The days, I think, of reform and opening, as far as that was ever a clearly defined project, and I question whether it ever was, are over.

55:05That's not where Xi's going. He's building a technocratic security state. He's building – his emphasis is on security. It's on survival of the party. It's on control. So I think we're in for quite a turbulent period economically in China. And we're already seeing more instances of social instability in the country. We're seeing cases of which suggest political issues at the top in the party. We've seen just over recent months, the purging of a foreign minister, two defence ministers, very senior people at a military level. I think that we're going to see more turbulence, more economic problems.

55:53I think the danger is that this inflames a more xenophobic nationalism. There's a danger that you could see more aggression around Taiwan, although, and in the South China Sea, which we haven't spoken about. So I think there are multiple reasons that over the next five years, I think we have seen what I would describe as peak China. But peak China is not necessarily a more or less dangerous China, because it could become more unpredictable. But I think also peak China, China is very overstretched internationally. I don't think it's particularly loved internationally. There's more wariness, even amongst countries that have borrowed a lot of money from China.

56:42And I think that a smart Western policy would recognize that there are multiple ways to push back, multiple weaknesses that could be exploited, multiple ways to try and reassert influence with countries who were neglected before, like Africa. I mean, part of the reason why China has been so successful in Africa is because of Western neglect. And I think there are multiple smart ways of dealing with the threat from China. if you if if western governments and i take the point that it's not you know there are a variety of it's not a single superpower like yeah and and perhaps more so under trump um but i think you know a smart policy would find multiple ways of of pushing back and sort of reasserting do you think we could do you think india is an opportunity in terms of embracing india for its characteristics that are similar to China.

57:38And that's where we move. I think there's a certain wariness about, I mean, India is always unpredictable. It has been particularly under Modi, but it's a very successful economy. And clearly, American leaders, European leaders see embracing India as an important counterweight to China. And in fact, the Indian economy is growing at a faster rate than China. Lots of issues there, though, as well, with youth unemployment and things like that as well, isn't there? Yeah, I mean, you talk to people who have looked at shifting production, shifting their attention away from China to India, and they will tell you that India can still be a nightmare to do business.

58:20Your book concludes that Xi is the issue, like he's the guy that's in the way of China changing, and your interviews alluded to that as well in terms of, He cares more about power and the party. He's 71, is he? 71, 72, is he? Yeah, I mean, Wikipedia had him at 71, so he might be 72. The man might not be around for too much longer, right? So what happens then? Well, he's now made himself leader for life, effectively, because he abolished time limits. So one question is, how do you get rid of him? Yes, certainly. because there's no mechanism. I mean, the mechanism was always a fairly clunky one before.

59:03And it's the problem with somebody who, like Putin, in fact, who decide that they have jobs for life. And the cultivation of any possible successor is seen as a threat. And therefore, you pose the question, well, how do you replace them? And what is the mechanism? and can you do it in a way that isn't turbulent or possibly even violent? And I think that there are those in China that recognize that he's an obstacle to reform, that the things that need to be done to affect a change in the economy in China can't be done as long as he is in charge. It's how long has he got? Will he be pushed aside?

59:48There's certainly opposition there. there's certainly been progressive purges. But I remember one of the things that struck me most in the early days when I started covering China, I remember going to Beijing and having a discussion with a French diplomat. It was, I think, 1995, my first visit up there. And I was told he was pretty well connected and he knew how things operated. He was a veteran in Beijing. And I said, what are you thinking? You know, what's going to happen? What goes next? And he looked at me and he said, well, he said, well, he only said, he said, I think that anybody who claims to understand the Chinese Communist Party is misinformed, which to me was, I mean, that made me more determined to try and understand the party, but it also brought home to me just how even for people who have spent a lifetime trying to figure out what goes on behind closed doors at Zhongnanhai, which is their leadership compound, just how difficult that can be.

1:00:54But I think I would certainly say that we're probably in for a few turbulent years, not just on geopolitics, but within China itself, as it tries to grapple with what are really significant economic problems. What do you think about the Chinese stock market and how the West interacts with it then? Because so late, great Charlie Munger, probably he got burnt pretty bad with Alibaba, or said that that was one of his bigger mistakes. And then Ray Dalio, who was probably the world's biggest China bull, has now admitted or has said that he still thinks there's loads of potential, but we're getting out, was what I read last night anyway.

1:01:30I think there's this feeling that it's become uninvestable. I mean, to call the Chinese stock market a casino is probably a disservice to casinos.

1:01:43I think I read in the Financial Times not long ago, when it was talking about looking for the sort of corporate governance and fundamentals of Chinese companies, they said it's still somewhere back in the Qing dynasty. I mean, there is no disclosure. It's very difficult to understand what is really going on. And the Chinese stock market tends to move on rumors of government support or government crackdowns rather than from anything intrinsic about the companies that compose it. And I think it's very, the stock market goes in waves of boom and bust. It always has done. And now and again, that sentiment gets transferred onto the property market, which has had the same sort of behavior.

1:02:38But I think that there is a view now among Western investors, certainly, that the stock market, the Chinese stock market. It's had a bounce recently because of a big stimulus package that the company announced pumping billions into to try and revive the property market and the stock market. And that gave it a bit of a bounce in the short term. But I think that most seasoned investors, I mean, there are a few gamblers out there who won't be able to resist the punt. But in our most seasoned investors, I think are giving the Chinese market quite a wide berth. so the um the ownership of chinese companies is quite obtuse you don't be doing through adr's is it american depository receipts which are kind of like you know i mean yeah so they're buying another it's like a derivative right so you can't buy direct into the company so they either have to list on markets like the american market or you buy these adr's which are kind of recognized kind of not yeah it's not like an iou really i mean what the the classic um model which is used quite by a lot of Chinese companies is, you know, you're actually not buying a share in the company, you're buying a promise to give you various dividends.

1:03:52And this is issued by a company that's typically, say, based in the Cayman Islands. And it's of dubious legality. And essentially, because a lot of these companies aren't allowed to have the party, you won't allow them to have foreign owners. So in a sense, you're buying a promise of a share of future dividends. But it's a very, you know, again, it's one of those structures which sounded okay in the good days when you never saw any real problems ahead. And it was a way of getting part of the China action without actually owning shares in the company because that wasn't allowed. uh but but is it another um like disguised nuclear bomb that they could set off oh yeah they could you know like with the electric cars they turn those off i mean we're getting a bit conspiracy here and i don't want to say that that's going to happen but the adr's are certainly something where there's a lot of money sat in in the markets i mean even a global index fund would be maybe eight percent china i don't know what there's maybe it's less but there's there's billions and billions, maybe trillions of Western money invested through these kind of vehicles, that they could just go, no, we don't recognize those.

1:05:06And they delete that money in an instant. Yeah, they could do that. I mean, they have no legal standing. So it could be withdrawn at any time. I mean, it would do, I think, a lot of damage to China and Chinese companies. So that would suggest that it wouldn't be. But this isn't a share in a company. It's something which is very different so when um in the past there was there was companies listed on the the american markets chinese companies that reached billions in valuation and when they went and looked so there was like famous short selling businesses that they basically investigate companies so that they can go we think this is a load of crap we're going to short it so we can make money they went to say this company that was listed on i don't know the new york stock exchange and when they went to the offices there was no one there there was it was just like a hot they they argued that the business had 5 000 staff they go and there's like there's nothing there's like a security guard and an empty lot and it just come out that at every layer they'd fabricated the numbers so because it was like well hold on this business has accounts that have been signed off by the largest accountancy firm in china like an ey or a big four pwc so you've just lied and then it was like oh see you later Do you think that that's a common attitude in China towards the West?

1:06:26Very common. I mean, the accounting standards, the American Stock Exchange, when it was so keen to get these companies listed, allowed far lower standards of accounting standards and also other disclosure standards than it was allowing of American companies to be listed because it wanted these Chinese companies. And it's only now is that beginning to change and companies are being required to disclose more and to have higher accountancy standards. But I think it's very commonplace. It's interesting that then they would come to the UK because the UK is desperate for its markets to be bolstered.

1:07:11You don't list in the UK if you want a big valuation. You list in America, look at Arm and companies like this that we build these companies and then they go list elsewhere. So for Shen, is it Shen? Yeah. To come here, it's almost like they know that we will give them a bit of grace or something. Yeah, they weren't allowed to list it. Well, they decided not to list in New York because they read the writing on the wall because there was growing opposition. I mean, not just politically, but also because of the disclosures that would have been required and because of unease about certain practices of the company.

1:07:47And they clearly see the UK as giving them legitimacy as an important market. And they hope where they can find a regulator who is not so strict. Do you think there's any good news here? Do you think because we sat here now, they're going to turn off our cars, they're going to delete all our money. Do you think there's any good news here, any positives for people about China and its impact on the world and working with that? Yeah, I think the good news is that people are waking up to the reality of China. What worried me and what deeply frustrated me when I first started writing these books was that people just didn't appreciate just what was going on, didn't appreciate the threat that China was becoming, didn't appreciate the risks that were being taken.

1:08:33And I think now there is a greater awareness of what's going on. I think we've almost gone from an issue of almost naivety about dealing with China, the so-called golden era under David Cameron, where Chinese investment was courted and the only due diligence, it seemed, was the number of zeros on the check, to the point now that I think there is the far greater awareness. um but you know every day there's we sort of discover a new dependency and there's oh the other day i was reading um about so cellular modules um which china has a virtual monopoly on cellular modules cellular modules yeah go on hit it hit it it feels good doesn't it it does well and i asked the made in china now it blatantly is as well well and it should be talking into this yeah yeah yeah um um the fridge cellular modules i i said to um the guy who i was talking to well you know where where do you he said you know they they basically connect stuff to the internet i said well yeah well so um where are they he says oh they're everywhere he says everything you know the iot cars, everything has a cellular module because it's what, you know, it's the gatekeeper in the system.

1:10:00And I said, how do you, and he's written a couple of reports about this. And he said he talks to officials, and he'll say, and now he first mentioned cellular modules, and he'd see the face drop. And it was like, another one? You know, how do we even begin to comprehend And sometimes the degree of dependence that's been and is being built up. And I think that's where we're at at the moment. We have this greater awareness of the dangers of dependence upon China in numerous ways, or dependence on an increasingly hostile China. But I think we've now reached the point, well, how do we even begin to deal with that?

1:10:42And I don't see politicians having a very easy or coherent answer to that. And it comes back to, again, the world's second biggest economy, an economy you can't ignore, but how no one's saying don't engage with China, but we need to look at the terms of the engagement and what we talk to them about and how we reduce the dependencies, especially in critical areas.

1:11:15Please remember this is not financial advice. Like we say a lot on the podcast, investments can fall and rise. In fact, it's pretty much a guarantee. Past performance is no guarantee of future results. So your money is at risk with investing and other fees may apply. As with everything financial, please do your own research. We really encourage that because no one cares more about your money than you. I'm Damo. I'm T. This was an episode of Making Money from Our Company Most. It was filmed and edited by the team at Flowspire, Jack and Ben. It was produced by Ruth Edwards and brought together by Will Stollerman.

1:11:45What about Ruth and Tifflet's a dog? Yeah, shout out them too.