The Case for Making Up with China, and Which Car Company Is Winning the Energy Crisis?

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1:41Welcome to Office Hours with Prof G. This is the part of the show where we answer questions about business, big tech, entrepreneurship, and whatever else is on your mind. If you'd like to submit a question for next time, you can send a voice recording to officehoursofprofitimedia.com. Again, that's officehoursofprofitimedia.com. Or post your question on the Scott Galloway subreddit, and we just might feature it in our next episode. Question number one. Our first question comes from Simple on Reddit. They say, you have an entire podcast about China, but we don't hear you speak about China too often.

2:09What are your thoughts on China closing the gap as a global superpower? general thoughts about the progress in technology, manufacturing, green energy, military capabilities, economic positioning, and infrastructure growth. Where do you see the China and the U.S.-China relationship ending up in a few years? Whew, I need a bigger boat. So China isn't rising anymore. It's risen. They're here. They've arrived. The framing of China as emerging is outdated. At Davos most recently, in February this year, the World Economic Forum noted that China is no longer—oh, it's in January. And China is no longer asking the world to believe in its future potential.

2:46It's asking the world to adjust to what has already become. It's decided, look, potentially we're the superpower now. And now more people globally trust China or believe China is a force of good in the world versus the U.S., which is more of an indictment on the U.S. than it is a plus statement for China. China is the first middle-income country to crack the top 10 most innovative economies globally, ranked 10th in the 2025 Global Innovation Index ahead of Germany, Japan, and France, according to the LSE Business Review. It achieved a set GDP per capita of around$13 ,000, which is roughly one-sixth of America's GDP per capita.

3:19No country's ever done that before. So in technology and manufacturing, it's not really a race anymore. Deep Seek demonstrated two things, that China can match frontier AI at a fraction of U.S. training costs, and chip export controls would not stall them. That was sort of a, I don't even call it, an Apollo moment or a Spondek moment. Made in China 2025, that's the policy the U.S. laughed at, quietly delivered. China now dominates EVs, batteries, solar, wind, robotics. Look at what's going on in Iran. This is all about fucking energy. The flow of energy is the flow of power. And if you construct the flow of energy, you have power.

3:59And China said, we don't want to be dependent upon the Gulf or the U.S. or other oil exporting nations. And we're going to make, you know, they lead in EVs. They lead in solar panel production. They brought online more nuclear power plant capacity in the last 10 years than we've ever brought on. They produced more solar last year than we've ever produced. China now files more generative AI patents annually than all other economies combined. So think about that. And they count for 41 % of the world's industrial robots, more than 70 % of high-speed rail, and more than 75 % of batteries sold globally.

4:34Jesus. The real mode isn't any single technology. It's their ability to move from design to scale to deployment. And it's remarkably faster than any of its peers. So they regulate for speed. We regulate for control. some of their key advantages china doesn't need to match u.s economic scale to win it controls choke points 94 of rare earth magnets critical to u.s defenses and tech manufacturing they control this exposes sort of you know what is arguably a real flaw in trump's strategy the u.s is fighting with broad economic pressure while china has already secured the specific pressure points that actually matter.

5:12And then China is embracing something that we're expunging or getting rid of, and that is an investment in soft power. And it makes sense. A global Oxford study found that Trump's America first posture is actively repelling countries toward Beijing. His disavowal of the liberal international order may have given people license to build stronger ties with Beijing. They're seen as the more reliable partner right now, which is scary. According to Pew, 41 % of people globally, and I mentioned this before, now see China as the world's leading economy versus 39 % for the U.S., a dramatic shift from just two years ago.

5:47And it's getting worse. The Iran war is handing China more diplomatic capital. The U.S. is pulled back into the Middle East, while Beijing positions itself as the stable, peaceful alternative. Some of the counterarguments, you know, it's definitely not game over. China's economy is lopsided. Its exports are booming, but consumer spending is pulling back. The property sector is depressed and over leveraged. The IMF has warned that export led model is having its limits. Demographics are kind of a, if you listen to Peter Zion would say it's a crisis, aging population, cratering birth rate, same structural drag that stalled Japan, and then involution.

6:28And the feeling among young Chinese that hard work won't be rewarded is driving real disillusionment. Youth unemployment is a growing problem. And she's recent purge of the top military commander raises concerns about loyalty, institutional competence, and how secure he actually is. Bloomberg noted a tale of two Chinas, empty streets and economic anxiety alongside cutting edge autonomous factories. So, where is China? I personally believe we should kiss and make up with China. I think that if you were to, the largest tax cut in history would arguably be that China and the U.S. are cooling in the thought of U.S.

7:02Sino Relations. We have IP and innovation and capital formation. They have the world's greatest supply chain and manufacturing capabilities. So I think working together, you just bring down the cost of everything everyone buys around the world by three to 10%. At the same time, we need to recognize that we have had an asymmetric trade policy with China that has benefited them more than us. They effectively steal our IP and then sell us, our ship back to us at 40 to 60 cents on the dollar. So really thoughtful, strategic trade policy. Stop all the finger pointing. Can you imagine how powerful we'd be if the Chinese and the U.S.

7:38decided they had shared interests in militarily or kinetically and diplomatically tried to coordinate? I mean, that would just be staggering. And I think some of that comes from a recognition that we are no longer the, you know, there's no longer a hegemony here, that while we'd like to stay the singular superpower, that's not going to be possible. And while we should probably, in my view, maintain our military leadership, 700 bases overseas, nobody can deliver violence like us. I don't think China has an operating aircraft carrier. If they do, it doesn't have the capability. I think they have two overseas air bases or military bases.

8:10Anyways, I think there's reason to try and do a better job of getting along. I would go long China from an investment standpoint, although I think you have to be engaged in stock picking because the controls of the sec there it's definitely seems a little bit more i don't know sketchy if you will and they their sec and their regulation is for control ours is for growth but there's just like there's just no getting around it every time i go to china and i haven't been since pre-covid i'm sort of blown away and i'm like it's impossible not to take these people very very seriously and if you look at what's happening um i think we're probably ceding power to china in the iranian conflict because they are, I mean, they're dependent upon energy, but they've built a lot of their own energy.

8:57They're seen as a more rational actor. You know, just, I think it's like, quite frankly, despite the demographic problems, despite the over-leverage real estate market, they have the ability, and this is the advantage of an autocracy, to think more long-term. They have 50-year plans. We have five-month plans. They're high-speed rail. Well, you know, they're able to, a third of air traffic is now between certain cities. And that's a good thing because they have the largest network of high-speed rail now in the world. Whereas our Citizens United lets airlines and automobile companies get in the way of any, it's just fucking unbelievable.

9:33We don't have a high-speed rail system in the United States. It's just unbelievable. But we have entrenched interests that get in the way. At the same time, you know, our tech sector is still dominant. We still take more risks. We still have much better brands, much more creativity. So this is all a word salad to say, yeah, who's the winner here, the U.S. or China? And I think the answer is yes. Answer the question. Question number two comes from previousgolf95-41 on Reddit. They say, what company is the next Subaru? Before the 70s oil crisis, no American had ever heard of this Japanese carmaker.

10:09Suddenly, Americans need cheap, small, fuel-efficient cars, and Subaru boomed along with Toyota, Honda, Datsun, and others. What company is best positioned to boom during the current oil crisis? Will BYD and other Chinese EV companies nominate? So you stole my thunder. I was going to say absolutely BYD. Energy crises can change driving habits permanently. A crisis is a terrible thing to waste. It brings on innovation. In 1973, Americans needed small and cheap. And today, according to Reuters, the experience of extreme supply shortages and higher petrol prices is obviously pushing people towards or to reconsider EVs.

10:44The data is already showing that Tesla competitors tripled in France in March, 9 ,500 units up 203 % year-on-year or Tesla competitor sales. UK monthly EV sales hit a record, 86 ,000 units up 24 % year-on-year. In Australia, Combank recorded a 162 % spike in new EV loan volumes in March compared to the February weekly average starting on exactly March 1st, the day the Iran crisis hit fuel markets. One of the silver linings here, Mike Crane, frankly, is that it was probably hard to get a lot of alternative energy startups funded with$60 a barrel oil. It's going to be a lot easier with$100 oil. EVs are also just more attractive now.

11:25Batteries now cost half what they did when the last time oil topped$100 after Russia invaded Ukraine in 2022. In the UK, HSBC estimates that owning an electric Renault 5 over four years costs about 7 ,000 pounds less than a comparable diesel VW. So what could be the next Subaru? You answered it. BYD. Maybe Geely, who accounted for nearly a quarter of all EVs sold globally in Q4 2025. Geely shares are up almost 50 % since the beginning of the Iran war. And BYD showrooms across Southeast Asia are packed. One Manila dealer told Reuters he saw a month's worth of orders in just two weeks. According to Prof G Media's own analyst, Alice Han, from China Decode, with the war continuing to rage in Iran, China's EV industry is likely to emerge as a winner.

12:15Surging oil prices will give consumers even more incentive to buy the vehicles. I've driven in both Teslas and BYDs, said Alice. From my standpoint, BYD has the edge. In fact, it's probably a no-brainer given the cost, style, energy efficiency, and intuitive. operating system. Tesla could be the accidental winner in North America, and BYD is the intentional winner globally. Tesla has no tariff while in the U.S. in high gas prices and free advertising, but it lost almost half its European market share in 2025 due to less political baggage, and U.S. sales are still declining down 8 % in March. The European rebound is real but partial.

12:56Western automakers bet against EVs at the wrong time. Ford, GM, Stellantis, and Honda collectively wrote off$70 billion in EV investments when demand slowed a few years ago. Jesus, I just can't get it right. When they exit, then the war happens and EVs go crazy. They kept EVs in their portfolios, but deprioritized them. Now the market is moving again and they're behind. So what's the danger if oil prices fall? Some of the urgency fades, but history suggests the memory of scarcity outlasts the crisis itself. That's interesting. The 1973 shock didn't just sell Subarus. It reshaped energy policy for decades.

13:27This could do the same for EVs. I would argue that the better analogy is not Subaru, but Honda. I've been in a BYD in Brazil. The way I saw it is it's like 70 or 80 % of a Tesla for 40 % of the price. I think it's the Old Navy or the Southwest of EVs. And those companies are the fastest$0 to$1 billion retailer and airline, respectively, in history. I think BYDs, I mean, you can hold them from your shores, but eventually that just means you lose all share internationally. And at some point, you have to take them in and you're behind because you haven't had the forces of competition keeping you kind of innovative.

14:00Also, I think Elon Musk has basically, I don't want to say given up on Tesla, but has focused on SpaceX and X. And I think the Tesla lineup, quite frankly, just feels a little bit stale. All right. We'll be right back after a quick break.

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17:43I'd love to hear your thoughts. I'm sure it does, but the answer is I don't have a thoughtful answer here. So one piece of data the team got was that every 10 minutes of commuting reduces all forms of social capital by 10%. If you're spending all your time in a car, you don't have time to join sports leagues or go to church or go to bars. I think that there's a really weird dynamic, and that is cities offer so much opportunity. Two-thirds of all economic growth is going to take place in 20 cities globally. And the aesthetic draw, the kind of fabulous draw, I think is a stronger pull for young women than young men.

18:18That's a sexist thing to say, but I'm sticking to it. And there's data that shows men have a tendency or young men have a tendency to stay on the farm. A lot of them don't even live out of their house. One in three men under the age of 25 are still living at home. And women head to cities. The result is an imbalance. And there's usually more women than men in cities. And also, it is so expensive to be in a city that your currency as a man is even more dependent upon your ability to make a living such that you can date. Like, I imagine dating, and this is a bit of a stereotype, in a mid-sized city or a rural area.

18:52It's like, okay, there's not a lot to do. Let's go to the high school football game or let's go see a movie. And it's not crazy fucking expensive and maybe you can afford a home and you're, quote-unquote, a viable mate. To be a viable mate as a man in a city means you just got to make a shit ton of money. and there'll be a bunch of, you know, Brooklyn sandaled wokeness that, oh, men don't need to make a lot of money. That's not all the other criteria. Bullshit. In a big city, you're just not viable as a mate, as a man, if you're not clocking it, unless you're smart enough to be born to rich parents.

19:21So more women in cities than men and the men that are there tend to be making a very good living, which helps them engage in portion polygamy, which means that they don't have incentive to create long-term relationships. So a lot of the women can't find emotionally available or economically viable men. And, you know, cities are optimized. Well, I'm talking about New York. Cities are optimized for two people. And this is gonna upset people, I'm gonna say it anyway. It's rich men and hot women. And for everyone else, it's a soul-crushing experience. And I realize that's a broad generalization, but it is the ultimate in capitalism.

19:54It's the ultimate in consumption. So what happens if you're just a nice dude making a good living? You're really fucking lonely. If you're a nice woman who's attractive and making a good living, you're really fucking lonely. And so I find that cities are the most crowded places in the world with the most lonely people. At the same time, if you want to get ahead and have influence, you've got to get to the city. Because the reason I spend so much time in New York and L.A. is this morning I do four podcasts. I have a meeting with a guy about this great documentarian about turning my last book into a documentary.

20:25And then I'm going on the Andrew Huberman podcast. When I go to New York, I'll do, you know, I'll do like five meetings every goddamn day. I mean, it's just so productive. if you bump into something, and then every night I'll go to something cool or a new members club. The density and collision of capital, creativity and cool is just extraordinary. You're gonna make more progress if you can figure out a way to survive in a city in three years than you might make in a rural area in 10 years. So, but yeah, I do think in a strange way, it creates a lot of loneliness. So what is the answer? I don't know, more affordable housing, better infrastructure and transportation such that people can live in peripheral areas that aren't as expensive and still get into the city.

21:06But effectively, I would argue New York right now is Elysium. I think it's in a golden age. You never realize when you're in a golden age. You realize it in retrospect. We are in a golden age in New York. New restaurants shed a skin from COVID. I find it clean. I don't find that many homeless in Manhattan. A members club opening every three weeks, incredible events. It's just amazing. The problem is there's basically a giant velvet rope around Manhattan, and that is, It's just so goddamn expensive unless you have rich parents or you're extraordinary. You're in tech or finance. Making a living.

21:38When I first moved to New York, you could kind of dance between the raindrops. I had friends who are artists, musicians. And it wasn't easy, but they could figure it out. And they'd live downtown and sure it was more dangerous, but they could find a loft somewhere and share with two other people. My first apartment on the up west side, I shared with two guys. It was$1 ,900,$633 a person. We took the subway everywhere. You know, it was doable. Now, you're a young person. Unless you have rich parents, you're making a shit ton of money in tech or finance. There's just no fucking way. No way. Ubers are crazy expensive.

22:07Not that you can't take the subway, which I still think is the best transportation infrastructure in the world. But, you know, try going out and having a good time and meeting people. You're talking about three, 400 bucks. I mean, it's just, anyways, higher pay, more, you know, elevated minimum wage, more low-income housing, better infrastructure to help people commute in and out of work. No one has a birthright to live in a city. But I do think it's gotten to the point where we want to create more economic incentives for, I want to call it low-income, affordable housing in the U.S. And also, quite frankly, more men just need to realize the agency they have, have a plan, get their shit together and take that leap and move it out of their parents' house and move to a city and just try and do what a lot of young people do.

22:48And that is figure out a way to make it. But yeah, there's something about cities being incredibly crowded and at the same time being incredibly lonely. See above, I don't know. I don't know. But I very much appreciate the question. That's all for this episode. If you'd like to submit a question, please email a voice recording to officehours at PropGmedia.com. That's officehours at PropGmedia.com. Or if you prefer to ask on Reddit, just post your question on the Scott Galloway subreddit and we just might feature it in an upcoming episode. This episode was produced by Jennifer Sanchez and Laura Janair.

23:22Cammie Rieke is our social producer. Brad Williams is our editor. And Drew Burrows is our technical director. Thank you for listening to the PropG pod from PropG Media.