China Decode: Why China Got Locked Out of SpaceX and America’s Biggest IPOs (ft. Ed Elson)

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31:11wave of tech IPOs in the US. What are you most excited about? And do you think that there could be somebody bust on the heels of Elon taking the trillionaire crown? Short answer, no. This guy is not only the richest guy in the world, but potentially the richest guy in history on a relative basis. I mean, we've just run the numbers. He's now worth more than a trillion dollars, a little bit more now that SpaceX stock has climbed further during the week. But that is equivalent to 3.2 % of US GDP. And I say this a lot because it's important. The richest American in history is known to be widely regarded to be John D.

31:57Rockefeller, who at the height of his wealth was worth 1.5 % of US GDP. So on a relative basis, Elon is more than twice as rich as the richest American ever. And so we're now getting to a point where we have to consider, I mean, who else do we compare Elon to in terms of his pure wealth? A lot of people say that Mansa Musa was the richest person to ever exist because there are stories of how much gold he had and his control over the trade routes throughout Africa. We're getting to a point where now we need to compare Elon to that. And then, compared to everyone else, I mean, no, it doesn't come close.

32:37I mean, Sam Altman is not going to become a trillionaire. Dario Amadei is not going to become a trillionaire, at least not anytime soon. The level of wealth that Elon has accumulated is just spectacular. Now, when you compare this to China, will we see a similar level of wealth out of China? I don't think so, because the richest man in China is Zhang Yiming, who is the co-founder of ByteDance, which of course owns TikTok. He's worth a reported$93 billion, though I guess it's hard to tell because it's a little bit difficult to value ByteDance at this point. It's not a publicly traded company, but certainly far off from Elon.

33:16But I do think it's a fun theoretical question is, would China ever have a trillionaire? or more importantly, would China ever let itself have a trillionaire? Because China is a communist nation. It would seem to go against all of China's principles, though at the same time, they have allowed themselves to have plenty of billionaires. The rich list in China continues to grow. So I would throw that question back to you. Would the CCP ever allow for a Chinese trillionaire? Number one, I think that you're spot on. It's hard to see and draw out the curves into the future that we'll ever get a trillionaire in the next decade, let alone the next two decades.

34:05I don't think ByteDance will IPO within the decade. I think that they don't need to. They're a highly profitable company. They're worried that if they IPO, that they'll be subject to more regulatory scrutiny, both within China and globally. So that takes that off the table in terms of his future growth curve of wealth. And he's the richest man in China, to your point. When I look at other companies, again, in China, in general, the IPO sizes are a lot less than what you see in America. But as a result, valuations of companies that are comparable in comparable fields compared to their American counterparts are just orders of magnitude lower than what you get in the US.

34:45And so by that nature, I would say we won't get the same blockbuster IPOs. Just for reference, at its height, this was at least six years ago. So in 2020, when Alibaba was trying to IPO its Ant Group, which is the big financial platform, it was seeking to raise$35 billion at the time, which was a blockbuster IPO for mainland China. As we know, the way that history played out, Jack Ma made a speech that did not play well to the regulators a few months before that IPO was supposed to happen. And then it was shut down almost the night before in a very, very dramatic fashion. And that answers my second point, which is I do suspect, and this is just a gut instinct, not necessarily based on data, that when you get into trillionaire territory, when you get too rich, that becomes politically problematic.

35:40And we've seen a crackdown on high net worth individuals displaying their wealth. We've seen a crackdown on the platform companies, partly because of the wealth factor and its political implications. But I think mainly because the government was concerned that without regulation, people's data, consumer welfare would be further compromised. You know, in a way, it was the wild west of internet platform companies from the 2010s through to the early 2020s. So all in all, I think put simply, we will not get a trillion in our lifetime, Ed, coming out of China. The stock markets in the mainland are just not at the same market cap levels as we see and valuation levels as we see in America.

36:25And I think that you're right, there is a political angle to this, which is that it gets problematic when you have a rich person who, in the case of Elon Musk, his combined wealth is larger than a country like South Africa that he's from. That becomes problematic. That's crazy. Yeah, I mean, Jack Ma seems to be like the perfect example where you had this larger-than-life, charismatic personality who sort of, you know, rags to riches story, and then he becomes this incredible billionaire, and then he gets, I guess, too cocky. He flies too close to the sun. And I forget exactly what his comments were, And maybe you could remind me, but it was something about, it was something kind of self-involved or self-aggrandizing.

37:12And then there was some slight criticism of the government, I believe, which is like just a fraction of the kinds of rhetoric that we hear from Elon, which is basically constantly shitposting the government, constantly saying how the government was getting in his way and he was able to take advantage of the system despite the fact that everyone was against him and Joe Biden didn't invite him to the White House and that was such a problem, etc. And so when that happens in China, it does seem like there is a policy of, we're going to shut you down. We're not going to let you, I mean, we're not going to let you IPO.

37:44That was one thing that they were able to do. And then it seemed like they basically just disappeared Jack Ma for several years. And we didn't hear from him for a long time. I think we're starting to hear from him a little bit more. So I guess they didn't just fully take him out, but they shut him up for sure. To me, it's a very interesting model because over in the US, when you compare it to the US, yes, we have a glorification of billionaires in a lot of ways, but the tide does seem to be turning. And we're starting to see a lot of resentment among Americans for the billionaire class. One in five Americans say that it's morally wrong to be a billionaire.

38:24They think that that's a problem. If you look at young people, especially if you look at Gen Z Americans, half of us say that there should be no billionaires whatsoever. whatever. Billionaires just shouldn't exist, which is why we're seeing a lot more interest in the wealth tax, for example. Over in California, they're talking about a wealth tax where they literally create a cutoff at, if you have a billion dollars, then we're going to issue this wealth tax. I'm going to take 5 % of your assets. And then that's becoming a lot more popular at the federal level as well, which was introduced by Ro Khanna and Bernie Sanders, and it's been co-signed by Elizabeth Warren.

38:59This is sort of the momentum is growing in America, where we say these guys have too much money, they have too much power, and this is a problem for the country, which is such an interesting parallel. When you look at it compared to China, I'm not totally sure. Maybe you can tell me how the population feels about billionaires, how they feel about people like Jack Ma. But my understanding is the government doesn't like them so much, or at least they don't like them if they ever get in their way. So I guess my question would be, what is the sentiment towards billionaires, and how does it differ between the population in China and the government in China?

39:39Yeah, it's interesting to ponder a hypothetical in which you have, in a parallel universe, Elon being Chinese, and would he have, A, become a trillionaire, and B, been as successful as he has. And I would probably argue no, in a way that Elon relies as much on America as America relies on Elon to drive the kind of growth and innovation and crazy numbers that we see. I would say that I detected in the late 2018, 90s going to 2020, funnily enough, in tandem with the crackdown on the tech platforms on Chinese microblogs and amongst the Chinese netizen community that people were starting to get very upset about the billionaire class and the tech billionaires.

40:21So, you know, if you think about the recent history, you know, you see the growth from 2010s onwards of these huge social media platform companies, you know, Tencent, Alibaba, and the search engine Baidu. In these early years, people were so keen about the Pony Mars and Jack Mars of the world, they saw them as people to look up to, that they represented Chinese heroism and innovation. And then really you start to see this nihilist, more skeptical view coming just before 2020 online, which is starting to criticize the fact that they have so much money that they can continue to monetize consumer data, that they, through M &A activity, are very anti-trust.

41:06They have these monopolistic or duopolistic effects on the internet and digital economies. And then fast forward 2020 onwards, you see this huge crackdown across tech companies in China. And it's the second part of my answer to your question, Ed, which is that there is a weird, I would say, tightrope walk that the government has to do. On the one hand, yes, it's politically problematic when you have such wealthy people, when your mandate is to achieve common prosperity and to make sure that the everyday people's livelihood standards are good. But at the same time, you need these people, which is why I think why Jack Ma was brought back into the fold after a brief stint in Japan.

41:49You need these people to be driving innovation, to be doing the necessary R &D investments into frontier emerging technologies like AI and semiconductors. So I ultimately come down to the view that, you know, they are kind of tolerated with varying degrees of tolerance, but generally tolerated because they are seen as really important cavalry for the Chinese competition with the Americans over technology. Yeah, sometimes I wonder what Xi Jinping actually thinks. Like, if it were up to Mao, there would be no billionaires, I don't think. I don't think that he would be happy with learning that almost 100 years later, you have a guy who started a tech company who's worth$93 billion.

42:43The guy who started Tencent, Mahua Teng, is worth$63 billion. The guy who started PDD, formerly known as Pinduoduo, which now owns Timo, of course. Colin Huang, he's worth$45 billion. Like, these numbers would make Mao sick to hear. And I'm sure Xi Jinping knows that and understands that. But at the same time, he clearly has an understanding of the benefits of these kinds of people, the benefits of capitalism, the fact that it creates these incredibly wealthy people, which does incentivize more innovation, more effort, more research, just a general hunger to create value and build wealth in the nation.

43:27But as you say, it's a tightrope that he has to walk, because that isn't the mandate of the nation. And it seems to be very paradoxical by its nature. And I guess I just wonder, like, how does Xi Jinping get that messaging correctly? Like, how does he present China's view on billionaires and on innovation and honestly on capitalism without defying the cultural history that created China? This is the contradiction at the heart of China's unique blend of capitalism and socialism. They call it socialism Chinese characteristics. And it is that you have, in essence, a socialist DNA, but you behave like a capitalist country.

44:22And the reason for that is because the social contract increasingly has been one of, since Deng Xiaoping forward, enriching everyday Chinese people. And you need the private companies to do that. They hire the most number of employees. I believe somewhere in the order of 80 to 90 % of the workforce is hired by private companies alone. And these aren't necessarily the big tech companies. They're also small mom-and-pop shops, manufacturers, etc. And they are the drivers of productivity and innovation far beyond what the state-owned enterprises can do. And I would also say that there is a geopolitical or global dimension, which is that, you know, as from the 90s onwards, there was this going out strategy from Jiang Zemin to tell the SOEs to go out and buy up companies or sell Chinese industrial products globally.

45:16there is a going out implicit strategy that Xi Jinping gives to the Chinese tech companies through Belt and Road initiatives, for instance, that they should go out and sell electric batteries, electric vehicles, AI models, semiconductors to the rest of the world. Because as we've spoken in the past about, you know, 30 % of GDP growth is made from the manufacturing sector. It's a key part, 25 % from net exports. It's a key part of China's growth strategy, and he deeply depends on the private sector in order to achieve this. So I don't sense that there will be a turning back or a pivot in that strategy.

45:55I think in general, he has co-opted the billionaires and the private sector, the tech companies, as part of a broader strategy to build China economically and also in technology realm to build what he calls a wealthy and strong nation. I mean, you mentioned ByteDance. This is sort of the last big tech company that should really, that everyone's been waiting to go public. I mean, the last valuation was reportedly around$600 billion. They did$186 billion estimated in revenue in 2025. That valuation is tiny, just compared to the US companies. Like if you look at like Meta, for example, Meta trades at around 10 times sales and it's down pretty significantly right now.

46:45So if you are valuing this company like you valued Meta, this is a$2 trillion company. But in the private markets valued at$600 billion, this is sort of the China tax because there's a lot of concern among the investment world that if you're trading in China, then you could get jack-mauled for whatever reason. And it's not going to go public. Why do you say that? I mean, it sounds like you believe they just don't really need to raise the money, which is an interesting point. Are there any other reasons? Yeah, I just don't think they need the cash right now. Their revenues, I mean, they do far less R &D CapEx compared to Meta.

47:28And they just disclosed that they're probably going to do CapEx up to$70 billion in 2026, mainly for data centers and AI. and I believe that's a lot less than Meta has been doing. Last year, their revenue slightly exceeded Meta's. This year, in the Q1, it was slightly down, but I'm generally positive about ByteDance's reach and its ability to continue to monetize ads. There's been some good data to show, and it's funny you ask this question, to show that of the top 100 internet platform companies and their apps. By far, the majority of the top 10 within that are from China, in terms of user reach, that is.

48:10So China has huge user reach. It's not able to monetize as effectively as Americans, probably because of the pricing at play and just the competition amongst a lot of players in the field in China. But I'm very optimistic about growth and user reach for ByteDance or for a lot of these other social media companies and these other offshoots of them. We haven't talked about this in the past. Kling AI, which is a photo editing platform that is getting a huge popularity in China and around the world. There's some speculation that that might actually be carved out for a separate IPO. Who knows? And then related to what we just talked about, Seedance, which is their video editing platform that everyone is a fan of, including people I spoke to in Hollywood.

48:58I just don't get the sense that, you know, they are looking to IPO. They don't need the cash. They're worried about the regulatory scrutiny that might come because as we know, Ed, and we've discussed in the past, they play this weird magic rabbit out of the hat game with TikTok. Like, how do you price, how do you value a ByteDance and how will the Chinese regulators approach it when clearly it is somewhat in violation of the export restrictions or export controls for Chinese data companies, because you've effectively exported some of the algorithm to a now TikTok US entity. So I think it's just a way too complicated right now.

49:41And I don't think that they really are pressed to raise the kind of cash that they need to continue to grow. They're doing pretty well in terms of growth. That's just my hard take. Yeah, which to me, I mean, if I were dictator of China for a day, I mean, one of the first things I would do is just loosen up the regulations on the public markets, because the amount of wealth and value that is waiting to be captured in China, if you didn't have this multiple overhang, which essentially just scares off Wall Street investors, I mean, if I could invest in ByteDance, I mean, I would do anything, I mean, to invest in ByteDance at a$600 billion valuation.

50:20I mean, especially the TikTok US deal, which was arguably rigged. I mean, actually, not arguably, it was rigged. And the price was just ridiculous and unbelievably cheap. I mean, these businesses are incredible. What ByteDance has done with TikTok is just totally insane, the way that they were able to disrupt the social media market, which everyone said for many years was undisruptible after Meta came out with Instagram. And TikTok entirely changed the game. And it's been such a success story. And we're continuing to see these incredible companies coming out of China. BYD, I mean, we could do a whole episode on BYD.

51:01We could do a whole episode on DeepSeek as well. Maybe that will be the next IPO. but it does seem like that is i understand they have their issues with being going public and what that means in terms of uh sharing information and perhaps what it might mean in terms of companies and their ability to or incentive to partner with other nations partner with other governments i mean china's just very sensitive about as you said cross-border capital they don't like it and so it's better for them they believe to keep everything private to keep everything within the borders, but I do believe that they are missing out on so much value, so much wealth.

51:40They could be created if they were to just click a button and say, let the markets have at it, let the IPO market rage on. But they've decided, no, it's not worth it to us. Yeah, they've optimized for control and they are very, very worried about volatility historically in stock markets. So I completely take your point, Ed. And it's just a feature, and not a bug of how the Chinese government approaches markets. Yeah. Okay, let's take one last quick break and stay with us.

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55:27Welcome back. China's Workers' Daily, the mouthpiece of the government-backed National Trade Union, recently ran a series of articles on artificial intelligence and labor rights. This comes as China's GDP grew 5 % in Q1 of 2026, but warning signs in the labor market are growing. The unemployment rate for 16 to 24-year-olds held at 16.9 % in March, while the 25 to 29 cohort hit a record high of 7.7%. And just for reference, nearly half of China's urban labor force has shifted into flexible gig employment. Ed, it's so startling to see a tale of two scenarios in the US and China play out in the AI realm.

56:11And who would have thought that on the Chinese side, we have a government that in some respects is proactively saying, hey, this AI thing could be really bad for everyday people, for the labor market, we should start to think about the implications of digital cloning through avatars or of digital platforms having way too much control over their employees and consumers' data. On the other hand, in the US scenario, which I want to get your take on, it seems that the administration hasn't really done any regulation, but is still going out and trying to willy-nilly target Anthropic because it's unhappy with Dario Amadei and it wants to make an example out of him.

56:51Again, it's not clear what their intention or their intended outcome is. But right now, it seems like on the one hand, you have a country in China that seems to be caring about its people with regards to AI. And then when it comes to America, they care more about trying to tell Anthropik who's boss. But Ed, what's your take on just the news that has come out in heaps and leaps and bounds over Anthropik v. Washington. Yeah, well, it's so funny because for the longest time, the White House said that any form of regulation when it comes to AI is a form of stifling innovation. And so that's a problem.

57:31But then suddenly, as soon as they get their feelings hurt by Anthropik, suddenly they're taking regulation seriously. Now it is a problem. Now they do want to stifle innovation. I mean, this kind of headline is exactly the sort of thing that David Sachs, if it were being done by the Biden administration, David Sachs and his group and his buddies would be all up in arms about this. You're stifling innovation, you're being too protectionist, too paternalistic about safety issues, etc. But now they've decided basically because they got into a scuffle a few months ago, now it's okay. So I just think that there's a lot of double standarding going on in the White House.

58:13Again, this goes back to our first conversation, depending on whether you're a friend of the administration or whether you are a quote-unquote enemy of the administration. So that, I think, is what's going on. But in terms of overall protection for workers, for the American people against AI, basically, the is AI going to take your job question, the White House currently is doing everything it can to make the answer to that question be no, it's not going to take your job. That is essentially their approach. And so they've been completely hands-off. They said, we're not going to have any form of regulation whatsoever.

58:49I call it the libertarian mind virus. I think that there is a mind virus that has infected the minds of many in Washington, where they view that any form of regulation whatsoever is a problem. And it's almost as if they cannot hold two truths in their head at the same time, which is that, yes, we want capitalism, we want free markets, we want innovation, But at the same time, we also want to create rules in the same way that there are rules in a sports game. And we want to make sure that there are referees there to enforce those rules. And that hasn't happened. So the question, I mean, for Americans at this point is, do you believe that the government is going to protect you from the possibility that AI is going to wipe out millions of jobs?

59:37And for most Americans at this point, they believe no, it won't. And so they're scared to death of this thing. And they have every reason to be because we are seeing tens of thousands of job cuts, which are stated to be the fault of AI. I mean, AI has been responsible. It's been said to have been responsible for nearly one in five of all job cuts in America this year, 50 ,000 jobs. We saw layoffs from Pinterest and Amazon and Block. And they all say, yes, it's because of AI. Now there is a debate as to whether they're lying. Are they just saying it's because of AI to increase their stock price because it means that we're very tech forward and we're figuring out how to implement AI into our business?

1:00:22But to me, I don't even care about that because the reality is they're saying it's AI. Jobs are being lost. So if we're policymakers, let's assume that it's probably AI. or let's at the least assume that they are doing whatever they can to use AI such that they can eliminate tens of thousands of jobs. That is clearly what's happening. And yet we have seen no regulation. In fact, we've seen an executive order that has been the directive was to limit regulation, to not allow states to come up with their own regulation for AI. That's why Americans are so freaked out about this. Maybe it's a different story in China.

1:00:59Yeah, it's slightly less of a freak out and it's more of a the government is trying to get ahead of the curve it's like if they see the tsunami and which is coming for all of us and it's trying to get ahead of the curve and i detected that on recent trip earlier this year you know the the narrative has shifted from ai is going to be a panacea for the economy to we need to start to think about digital inclusivity, inclusive growth. These are sort of catchwords for, you know, we need to avoid an AI apocalypse in the labor market. And I think it's interesting just to get into some of the details of the papers from Chinese Workers Daily.

1:01:39So the three core threats that were identified for laborers, for workers in the AI era were digital cloning. So companies requiring that employees train AI digital avatars of themselves. Sometimes this is tied to their performance reviews. This has raised concerns about data privacy and who owns IP. Number two was AI being used, to your point, Ed, in the US, but in the Chinese context as a cover for illegal firing. So some employers are using AI replacement as a pretext to fire people. And the Chinese courts have already ruled that this is unlawful termination. And number three is this concept of algorithmic digital overseers.

1:02:19So basically these opaque platform algorithms that are blurring working hours and are cutting pay and making it impossible for workers to basically gather enough evidence to defend their labor rights. That is another area of concern. And just putting it all together, it suggests to me that, you know, the government is very, very worried about what I believe will be the next decade of structural unemployment across the world as we try to figure out how AI is going to cut jobs, disrupt sectors. What are the new sectors that are going to come up in its stead? History shows that any massive technological revolution begets a period of structural change and unemployment and then begets more innovation and more labor demand as people start to transition to the new economy.

1:03:14But it's true that in the Chinese case, because they're so exposed to the gigging economy in particular, I just mentioned that half of the labor force is in this flexible gig economy work that's like delivery drivers, Chinese equivalent of Uber drivers. These are the jobs that I think are very easy to cut in the world of autonomous drones, autonomous cars, humanoid robotics or robotic installations. My bet is that China in a way is even more exposed to the AI revolution because it is so exposed to the gig economy. And we're starting to see that in the data. According to researchers from Peking University, Naming University, and a host of other universities in China, AI could displace up to 278 million Chinese workers by 2049.

1:04:03That's one in three employees in China currently. And then one recruitment site in China basically noted that job postings for college grads fell 22 % in the first half of 2025 compared to the previous year. We've also seen protests in China, in Wuhan, where drivers are protesting against Baidu bringing out robo-taxis. We're just beginning to see this wave, I think, of an AI backlash in China. And I think it would surprise people to note that people do protest in China and that the government to some extent listens. We saw this with the wealth management products coming out of the real estate sector a few years back when there was protests about illegal fraud and manipulation from these real estate companies.

1:04:48The local governments tried to intervene on the side of consumers. And we're starting to see this play out in China. But Ed, what's your view on the labor market in the US? How disruptive is this going to be? And do we end up in a scenario where it's just as bad in America as it is in China, you think? I would just want to comment on a few things that you said there about how China is dealing with this. you said that China listens, or at least the Chinese government listens. That, to me, is apparent in the framework of concerns that they have laid out as to how AI could disrupt the job market in China.

1:05:31And that is, it's quite nuanced, their observations about digital cloning, about using AI as a pretext for firing and then creating legislation around that. Like they clearly have concern, real concerns, concerns enough that they're investigating the problem, they're coming up with creative solutions to the problem. And it also goes back to our previous conversation about IPOs and, you know, allowing for trillionaires or not. And that is China has demonstrated a willingness to forego money in the name of the common good, in the name of protecting workers and protecting labor. They have demonstrated a record and a history of doing that.

1:06:16And so even if China is more structurally exposed to AI based on the way the economy is set up, based on the amount of gig workers you mentioned. And it's a really interesting point. Even if that is the case, my assumption is that the Chinese government will bend the economy to its will in order to protect Chinese workers. And I wonder if Chinese workers believe that and assume that, that ultimately at the end of the day, the government will do what it can to make sure that there is at least like a base level of economic security. What I know about America is that the total opposite is true. This White House has basically said our main priority is wealth creation.

1:07:04Our main priority is making as much money as is humanly possible. And then we'll ask all of the other questions later. What will it mean for wealth inequality? What will it mean in terms of disparity? Are we going to think about creating a floor of economic security? Are we going to think about issues related to worker displacement over the long term? No, we're not going to worry about any of that. All we're going to do is make sure how do we increase shareholder value as quickly and as much as possible. That is the MO in America. And so when you just think about how does the population feel about it, this was a survey that I looked at a few months ago.

1:07:43And maybe it's changed. And this is from KPMG in association with the University of Melbourne. they polled different populations on how excited they are about AI, whether they are excited about AI. Less than half of Americans said that they were excited about it. It was around 40%. And in China, that number was nearly 90%. Now, I don't know what their methodology was or how much we should actually trust it, but that was the number. And I wonder if one, you think that's true and two, why, if it is. Yeah, I saw that same data set. My instinct, having seen the way that the digital tech companies developed in China and how quickly adoption picked up in China, compared to, say, Japan or some of these other EM countries, let alone Germany or European countries, is that Chinese people are remarkably keen to adopt new technologies, and they generally see new technologies as being a good thing, as opposed to looking askance at it with skepticism.

1:08:52And we're seeing this play out in the AI realm where they go, hey, wouldn't it be nice to have an autonomous vehicle? And here again, I think adoption will be faster in China for AVs versus the US. Hey, wouldn't it be nice to have a robot in your home doing all these different things? And then that comes to the cultural element whereby by everyday Chinese people believe that updating yourself into new technologies will improve your life. But to bring home your point about the government, I do believe that the government is going to do its darned hardest to try to cushion the blow of AI. It has a history recently of doing this.

1:09:32If you look back to the 1990s, when you saw the last major structural unemployment phase in China, hundreds of millions of jobs lost as SOEs went bankrupt. You know, you had this policy of letting SOEs go, letting them go bankrupt because they were inefficient and highly indebted. And then you had this policy from the premier at the time, Zhu Longji, to create iron rice ball, effectively subsidies to try to offset some of the pain for these laid off workers in SOEs. That obviously led to the next wave in the 2000s, where China really rode the wave of WTO and of the export engine, creating new factories, new growth.

1:10:13But again, I think I point to that period for people just to show you that the government is a responsive organism. It is looking at real-time data. And I think we'll move quite aggressively to my suspicion is maybe put on some taxes on these AI companies or robot companies and find ways to cushion the blow for these people who will be left out by the AI wave. And I wonder if that ultimately plays to their hand in the AI race. And this is something I've been talking about, which is that the biggest obstacle to AI in America, it isn't really supply chains and it isn't really power supply. It's lack of popularity.

1:10:54It's the fact that so many Americans have decided they hate this thing, and they are now taking to the streets and protesting AI, protesting data centers, which is one of the largest reasons, it is the largest reason, why data centers aren't being built in America. Tens of billions of dollars worth of data centers were blocked in the U.S. in 2025 because of political pushback. 19 states are considering restricting the construction of data centers or just restricting it outright. And we're now seeing more and more interest in America of just a moratorium on data centers full stop. Just stop building them.

1:11:34This is a problem. The billionaires are getting too rich. It's leaving the workers behind, which I mean, I think that that is a stupid argument. I think that that doesn't make any sense. And I think it will ultimately put America behind. But it speaks to the fact that we don't really have a hold on how to, one, market this thing and two, regulate it. And the less effort you put in and the less creativity you put into regulating this stuff, the more people are going to get worried about it and the more they're going to try to make sure that it never materializes. And so I wonder if over the long term, that might actually play into China's hand where they said, we're worried about this.

1:12:13We're going to create these frameworks. We're going to make sure that workers are protected, which leads to workers feeling generally more positive about the technology, which leads to more technological innovation, more creation, more building of these data centers. I think it's just something that we should think about. And I don't glorify the CCP by any means, but there are some ways in which they seem to have their issues down correctly. And I think this is something, at least the interest in regulation, regulating AI. That's something that the White House could certainly learn from. Yeah, I would generally agree with you, which is that, you know, in the U.S., you're getting a political blowback that comes out of a vacuum of regulation or regulatory frameworking.

1:12:58My pet peeve with a lot of the CapEx numbers that get used for U.S. versus China, you know, U.S. I think will do at least 750 billion CapEx alone this year for data centers. China just announced that by 2030, it wants to do about half of that. And when you compare those numbers, I don't think it's favorable to China, obviously, because infrastructure costs are much lower in China. Energy and infrastructure costs, the build-out will cost less per unit than it does in the US. But yes, the US is ahead in CapEx, but I just think those numbers really distort the investment that is coming down the pipeline from China, because historically, they're only about half in terms of gigawatt capacity of data center build-out compared to the US.

1:13:43They have a long ways to catch up. But when people use those figures at me, I kind of am skeptical and I wish there was more thoughtfulness about cost comparison. It's a really good point. And it should also be equally applied on like the enterprise level of actual model usage where the models themselves are also orders of magnitude cheaper than the U.S. models. Like DeepSeq's model is, from my understanding, it's 96 % cheaper than the OpenAI model. And now that we're seeing a lot more sensitivity towards all of the AI spending, now that we're starting to see, at least in America, companies are trying to put spending caps on the amount that they are dishing out to these frontier labs for their AI capabilities, we're now seeing a lot more interest in cheaper ai and that means more interest in chinese ai because the reality is the chinese models are significantly cheaper it's more cheaper on the infrastructure layer cheaper in terms of energy and then there's also the fact that they are figuring out how to distill u.s models which i would say is tantamount to stealing them but that results in cheaper models over the long run too yeah i think it's a really interesting point yeah Yeah, and people ultimately, as you know, and vote with their money.

1:15:00I was surprised at this Hollywood conference, and I won't name names, but there's some big tech companies that actively are using Quen. They're actively using Chinese open source models because it's just cheaper. It's faster. They can fine tune it really easily compared to OpenAI or Claude. And I thought that was super. If you aggregate that across the industry in America, it's just indicates to you that, you know, we haven't seen the massive decoupling in AI that people have expected. I don't know if the administration will crack down on that. It might be hard, but at least from the ANIC data that I've observed, a lot of big US companies are still using Chinese open source models.

1:15:39100%. It's fascinating. All right. That's all for this episode. Thank you for listening to China Decode. This is a production of Prof G Media. Make sure to follow us wherever you get your podcasts so you don't miss an episode. Talk to you again next week.

1:16:08Scott Galloway:Formula One, so hot right now. It's like if traders in succession had a baby on wheels. Teams lying. Drivers beefing. Celebrities everywhere. And scandals. Lots of scandals. So we made a show about it, the Red Flags podcast, where we recap races and break down all the latest F1 headlines. But no nerdy tech talk. We only cover the stuff you want to hear about. Yeah, and the only thing hotter than the drivers are our takes. And now we're doing it on Vox. Oh, we're so legit now. We're basically thought leaders. TED Talk incoming. And we do a podcast with Gunter Steiner called Venka Hours. I still can't believe that's true.

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