China Is BEATING the U.S. in Space?! | China Decode

0:00 I think China's space strategy is not primarily about space.

0:05 It's all about planet earth and particularly how to dominate the global

0:10 order on earth of course by enlisting space to gain advantage.

0:15 And as you've just said, you know,

0:17 when you look at what China and of course the US is doing in space,

0:21 there's a military domain and there's a commercial domain.

0:23 And then there's this sort of fuzzy hybrid domain,

0:27 dual use, I suppose, that could be military, could be commercial.

0:30 And the more you look at all of the space furniture up there,

0:34 the more you scratch your head and think, well, could that be military?

0:38 Could that be commercial?

0:39 You know, there's a lot of interoperability.

0:47 Welcome to China Decode.

0:48 I'm Alice Han.

0:49 And I'm James King.

0:50 In today's episode of China Decode,

0:53 we're discussing China's huge strides in the space race,

0:57 the looming $2 trillion generational wealth transfer,

1:00 and regulating dim sum automation.

1:03 That's all coming up.

1:04 But first, let's do a quick check-in with how the markets are starting the week.

1:08 On Monday, Chinese stock markets were closed

1:11 in observance of the Labor Day holiday.

1:13 The Shanghai Composite ended the month of April up 5.66%.

1:18 And the Shenzhen component surged over 12% thanks to strong

1:21 PMI data and notable gains in several tech stocks.

1:25 China's manufacturing PMI for April was 50.3,

1:28 slightly above forecast, suggesting expansion in the manufacturing sector.

1:34 Shares of Xiaomi, the Chinese smartphone and EV maker,

1:37 closed 6.8% higher in the Hong Kong stock exchange today.

1:41 All right, let's get into it.

1:43 In the last 5 years, they've landed a rover on Mars,

1:46 completed a space station, and collected samples from the far side of the moon.

1:51 We're talking not about the US, but China.

1:54 And in 2025 alone, the country executed over 90 orbital launches,

1:59 setting a new national record.

2:02 And in the tightening space race,

2:04 China is also pulling ahead with innovations like

2:07 a giant robotic arm to service satellites in space.

2:10 a space telescope with a wider view than the Hubble

2:14 and reusable rockets to compete with Elon Musk's SpaceX.

2:18 China is also actively developing rockets

2:20 that can take off from water-based platform.

2:24 James, we've talked about space in in the last few episodes,

2:27 and it seems like with Elon Musk uh IPOing SpaceX,

2:31 we've made space great again, but China is also a key part of this.

2:35 And some of the startling videos that I've seen like

2:38 of that orbital arm in space um seem very futuristic,

2:43 but it's it's what's actually currently happening.

2:46 And certainly, as with any kind of technology has direct contemporary use cases,

2:51 potentially even military use cases.

2:52 How are you seeing China's startling advancements in the space race?

2:57 Well, yeah, Alice.

2:58 I mean, it may be an obvious point,

3:00 but I think China's space strategy is not primarily about space.

3:06 It's all about planet Earth and particularly

3:09 how to dominate the global order on Earth,

3:12 of course, by enlisting space to gain advantage.

3:16 And as you've just said, you know,

3:17 when you look at what China and of course the US is doing in space,

3:21 there's a military domain and there's a commercial domain.

3:24 And then there's this sort of fuzzy hybrid domain,

3:27 dual use, I suppose, that could be military, could be commercial.

3:31 And the more you look at all of the space furniture up there,

3:35 the more you scratch your head and think, well, could that be military?

3:38 Could that be commercial?

3:39 You know, there's a lot of interoperability.

3:43 But when I was doing a bit of research on this, I must say I

3:46 came across one quote from a China military

3:50 expert that really stopped me in my tracks.

3:53 This was in a uh story by the Financial Times and it's written by, as I said,

3:59 a military expert in a textbook for Chinese military officers.

4:05 So this isn't sort of for public uh consumption.

4:08 This is something directed at the Chinese military

4:11 which I think uh shows that it's it's

4:14 pretty authentic and basically this expert says that China

4:20 intends to control the earth by controlling space.

4:24 Let me just give you the whole quote

4:26 because I think it is really quite startling.

4:29 Uh he says, "Looking up at the skies today,

4:32 we see that space is already shrouded in the smoke

4:37 of potential conflict." And then he continues by saying,

4:42 "The potential for high returns, the ability to control Earth by controlling

4:49 space represents a powerful strategic and military incentive.

4:55 Therefore, the development of space warfare capabilities has

4:59 become a focal point of the arms race.

5:03 So, I think that puts it pretty clearly.

5:06 China sees space quite nakedly as a power game.

5:10 And you've already mentioned the uh the satellite with a grappling

5:14 arm that sort of sidles up to uh other satellites.

5:18 And uh the US intelligence caught, I suppose, a space-based video of this.

5:24 Um they c they they saw this Chinese

5:27 satellite with a grappling arm sidling up to another

5:31 defunct Chinese satellite and literally picking it up

5:35 and hurling it into what's called a graveyard orbit.

5:38 That all happened more than 36,000 kilometers above the Earth.

5:44 Um the Chinese satellite with the with the arm is called the Shuen 21.

5:49 And it didn't take long for the US military establishment to wonder,

5:54 well, if it can do that with a defunct Chinese satellite,

5:57 then maybe it can do it the same thing to one of our satellites.

6:02 And the US has more than 8,000 satellites in space,

6:07 including 80 spy satellites or around 80 spy satellites,

6:12 some of which are trained on China's territory

6:15 and are literally monitoring every square meter of China's territory.

6:20 And you can imagine that China might not want

6:23 one of those spy satellites to be doing that.

6:25 So the in 2023 the office of the director

6:29 of national intelligence in the US warned

6:33 that this episode the one I've just described

6:36 proves China's ability to operate spacetobase counterpace weapons.

6:41 So in other words weapons that can degrade US capabilities in space.

6:47 And I think you know what we're kind of evolving into here

6:52 is not only a huge commercial market um as defined by the number

6:57 of satellites that are going up into space and all the different uses

7:00 they have and their crucial uh nature to the economy here on Earth,

7:05 but also an equally vigorous militarydriven space race.

7:11 How are you seeing it, Alice?

7:13 Well, I completely agree with with what you're saying, James.

7:15 And what's interesting to me is the uh growth in spending that we've seen.

7:21 Um just to give people a sense,

7:23 the US is still leading uh in the space tech investment era.

7:26 And this is accounting for both public and private investment.

7:29 They did around 7.3 billion of space tech investment last year.

7:33 That's 60% of global funding.

7:35 By far the largest source of of funding for space technology.

7:39 But uh China is catching up and and right now uh I believe it's

7:45 somewhere around $3.8 billion that it invested

7:48 in the commercial space sector in 2025.

7:51 For just for reference 10 years ago that was only about $340 million.

7:56 So we've seen a sort of 10x rise so to speak in the last decade.

8:00 And certainly I could see you know further growth moving

8:04 forward because it is very clear in also the five-year plan

8:08 as well as the Marchang for you recall two months

8:12 ago in the documents there was a reference to China being

8:17 a space superpower you know a manufacturing superpower technological superpower

8:21 but also a space superpower so there's a lot of attention

8:24 being paid by the Chinese government towards what you rightly call

8:28 dual use technologies names that are being deployed in this ecosystem.

8:32 What was interesting to me also about that on orbit robotic arm is

8:36 that I believe it's a private company uh that is supplying this technology.

8:40 I think it's Sanuran that is providing

8:42 commercial space technology um to the Chinese government.

8:46 So there is a really a private public ecosystem establishing around space

8:51 tech that isn't too dissimilar from what we're seeing in the states.

8:55 And this is all happening in a time where increasingly western investors

8:58 and observers are really fixated on space as the next technological frontier.

9:03 Everyone is is go is is going to be watching um with baited

9:06 breath for the biggest IPO in history this year uh which is SpaceX.

9:10 So I I think this may become another political issue potentially between the US

9:15 and China as people get more and more interested in in space technology.

9:19 One other thing that I I will say is that you

9:21 know space was a big part of of China's strategy going

9:25 back to 2013 with the launch of the belt and road

9:28 strategies referenced as part of China's broader belt and road strategy.

9:33 Uh so this has been a a long time

9:35 in the making and it will be interesting to see you know

9:37 how it shapes up in the US China not just

9:40 talks coming up very soon but sort of longerterm strategic competition.

9:44 Yeah, absolutely.

9:45 And I mean, you know, it's hard to know who will eventually win the space race.

9:50 It's clear that when it comes to commercial presence in space,

9:53 the US is far ahead.

9:55 It's got a much bigger share of the space economy,

9:59 which uh according to the space foundation is worth about 613 billion US.

10:06 Um so it's a huge market already.

10:08 The US has currently about 55% share

10:12 of that and China's much much less at about 8%.

10:16 But China's really really moving now.

10:18 You mentioned more than 90 orbital launches.

10:22 Of course, these orbital launches are sending something

10:25 into space like a satellite or a spaceship.

10:27 The US is currently doing about 180 launches per year, mostly driven by SpaceX.

10:34 But China's doing a lot of other things, too.

10:37 They've had a few other milestones.

10:39 They had a mission to the far side of the moon.

10:42 That's the dark side of the moon for Pink Floyd, Pink Floyd fans.

10:46 It's also completed its own low orbit space station uh called Tiangong.

10:53 There's a lot of activity going on in Tiangong.

10:56 There are modules going up there meeting, you know,

10:59 demand for further uh for for further advances.

11:02 My favorite space fact when it comes to China is

11:06 that China is actually officially trying to find signs of aliens.

11:13 China has a huge satellite dish.

11:16 It's 500 m across.

11:18 They call it Tenyen or Sky's eye or heaven's eye.

11:23 And it's it's it's there in in southwestern

11:26 China listening for signs of in extraterrestrial life.

11:31 I mean because it's I think the biggest dish in the world,

11:35 it probably has a higher uh capability of listening for that kind of life.

11:40 Um and recently, well in June 2022,

11:44 there was a report in the Chinese Science and Technology

11:48 Daily that said that researchers

11:50 had found multiple suspicious narrowband signals.

11:55 Uh so there was a great flurry of excitement.

11:57 Maybe the Chinese tien yen had found some sort of sign of extraterrestrial life.

12:04 But in fact later on scientists in the US

12:07 said that this was almost certainly radio interference.

12:11 But I just sort of think that it just shows the level of China's ambition.

12:15 You know this is not something crazy.

12:18 They really are listening for extraterrestrial life.

12:22 Um I think that just shows they're leaving no stone unturned.

12:26 That reminds me of the book series.

12:27 Did you ever read it?

12:28 The three body problem Santi by Sushin.

12:31 It's about these Chinese um you know astrophysicists who are also looking

12:35 for extr territorial activity and they come in the form of trisilarians.

12:40 I highly recommend the book.

12:41 And one last point, it can't be overstated how important satellite

12:45 technology is and we've definitely seen that being used in Russia Ukraine.

12:48 We've seen it being used more recently in Iran.

12:52 uh and it's it's been critical for the supply

12:55 of intelligence and tracking used to guide precision missiles and ICBMs.

13:01 So just to apply it to the current day, you know,

13:04 China having capabilities to really append American satellites out in space can

13:09 materially affect the outcomes of current battles that we're seeing in Russia,

13:14 Ukraine, in Iran, and potentially even, you know, closer to home.

13:18 So I thought that was worth definitely worth flagging.

13:21 Okay, we'll be back with more after a quick break.

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15:43 Welcome back.

15:44 For the first time in its modern history,

15:46 China is grappling with what to do about a massive generational wealth

15:50 transfer and the fact that almost none of it will be taxed.

15:54 Chinese citizens with fortunes above $5 million are expected

15:58 to pass down roughly $2.1 trillion over the next decade.

16:02 where the country only really allowing entrepreneurship

16:05 and a doorway to wealth since the 1970s

16:08 has no inheritance tax at all and limited

16:11 property tax and tax on accumulated wealth.

16:14 This is coming at a time when

16:16 the government could use the additional tax revenues.

16:19 James, you know, I'm an economist focusing on China.

16:22 It's been quite interesting to see the decline in fiscal revenues.

16:26 I know this sounds very wonkish,

16:28 but it's really important to understand where the government is today.

16:31 is the huge decline in fiscal revenues largely

16:34 driven by land sales declining and property values declining.

16:37 So last year alone we saw a 15% decline

16:40 in land sales revenue going to predominantly the local governments.

16:44 Uh and we've seen just fiscal revenues as a share of GDP continued decrease.

16:49 China's uh fiscal revenues as share of GDP um are

16:53 one of the lowest in the world is only about 15%.

16:56 Just for reference the OECD average is around 34%.

16:59 So, just to give people a sense of how cashstrapped the local governments are,

17:04 this I think really indicates the shape of things

17:07 and this is why the new 5-year plan's discussion about tax reform,

17:11 in particular the capital gains tax

17:13 and the inheritance tax is super interesting.

17:16 Why do you think it hasn't happened yet and what

17:19 it could mean moving forward uh for society and the economy?

17:22 Well, Alice, you you highlighted this topic and I must say since

17:25 you have done so and I've been looking into it a bit,

17:28 I really do think that it's indicative of so much in China.

17:32 And I think at the middle of it is a bit of a mystery,

17:36 at least an ostensible mystery to me because when you look at China,

17:40 you find what is one of the world's most unequal societies.

17:45 And yet this is a country still controlled by the Communist Party of China.

17:50 Of course, we know that it is only communist in name.

17:54 Egalitarian communism went out at least a couple of decades ago.

18:00 But if you look at the numbers,

18:01 China is more of an unequal society than any of the capitalist G7 nations.

18:08 Canada, France, Germany, Italy, Japan, UK, US.

18:13 It's more unequal than any of those countries.

18:15 I'll come to the statistics I'm using, but my main point is here,

18:20 why has it taken China so long to come up with an inheritance tax

18:26 when it could use an inheritance tax to take money from the very rich,

18:30 when the patriarchs and the matriarchs of the rich families die,

18:35 they could use an inheritance tax to redistribute some

18:40 of that enormous wealth to other people who need it much more.

18:44 And yet, as you said, Alice, China hasn't done this.

18:48 Um, and so I I really do wonder uh about this.

18:52 So, at the center of this topic to me anyway, is the big question mark.

18:56 I I don't know what your reflections would be,

18:58 but before I throw it back to you, let me just give you some numbers.

19:02 The way in which wealth inequality is

19:04 measured in a society is this genie coefficient.

19:09 And there are there are various different data sets that come up with this.

19:12 And the Chinese government also used

19:16 to publish the genie coefficient from China.

19:18 And in 2021, the genie coefficient showed that China was over what is 0.45.

19:27 That is uh put simply a threshold that shows high inequality for a society.

19:34 Right?

19:35 The US for for comparison was about 0.4.

19:39 So that's lower than China.

19:41 and places like Canada and Germany and Sweden were hovering around 0.35.

19:46 So you can see that according to the numbers,

19:49 China is genuinely one of the most unequal

19:52 societies in the world in spite of the fact

19:54 that it is still ruled by a communist party

19:57 at least one that claims to be communist in name.

20:00 Anyway, but let me could I throw it back to you Alice?

20:03 Why has China taken so long to move

20:06 on this or to consider moving on this very important topic of inheritance?

20:11 Well, I look at um the history of taxes and and what

20:16 is interesting I think it is a legacy of the Soviet system is

20:19 that China is very good at recording and and taxing and to some

20:24 degree controlling the supply side or the production

20:27 side rather than the consumption side.

20:29 So historically you know if you look back to the 80s onwards uh

20:32 a lot of the policies is about um you know subsidizing or spurring or even

20:38 to some extent price controlling um the supply side and really only in recent

20:43 years have we seen reforms to really understand the consumption side of things.

20:48 So we we had reforms very recently on value added tax which

20:52 is effectively um you know shaping consumption related outcomes and there was

20:57 talk in the last few years ongoing talk about property tax

21:02 but that is pretty much gone and it wasn't in this year's 5-year

21:05 plan even though it was mentioned many times in the previous one

21:07 because the government understands that that is going to provide very little

21:11 in terms of revenues given that we're 15 20 even uh potentially

21:16 more percent down relative to pre-

21:18 crackdown trend in terms of property valuations.

21:22 So the discussion now I think has been revived you know

21:26 after so many years because right now I think the central government

21:30 is really scratching its head to figure out where else it can

21:34 generate revenues especially now that it can't really rely on land sales.

21:39 it can't really rely um as much on on corporate

21:44 tax and income tax in a period in which you

21:47 know growth is slowing and it remains reluctant although

21:51 this has been touted as one policy choice to do reforms

21:55 to the export tax rebates uh effectively getting rid of some

21:59 of the subsidies on the taxes for Chinese exporters because

22:04 they ultimately don't want to harm and hinder China's export

22:07 machine you know basically They want to protect the Chinese manufacturers.

22:11 So what else can they do?

22:12 I think this is pretty lowhanging fruit for them

22:15 to really target what is going to be one of the biggest wealth transfers

22:20 in in in contemporary history and certainly in Chinese history.

22:24 And then the question is how are they going to do this?

22:27 I think that ultimately they're going to have to pilot

22:30 this in certain cities to see how it works.

22:34 And then they're going to have to figure out the the division

22:36 of fiscal revenues between the central and the local governments.

22:40 And here I think maybe the local governments might again be screwed

22:43 because the central government feels that it

22:45 probably needs to replenish its coffers.

22:47 We have a overall fiscal deficit that is nearing

22:51 10% potentially this year which is a historical high.

22:54 So I think this is all coming to a head because

22:58 predominantly there are little other choices in terms of tax sources,

23:02 tax revenues for the C central and local governments.

23:06 And uh you know I I predict that in the next few years

23:09 we'll probably start to see some of the piloting of these inheritance taxes.

23:13 But it's interesting because I remember reading

23:15 a couple years ago Thomas you know, writing about how, you know,

23:19 China needed to have these um inheritance taxes because ultimately what he

23:24 called patri patrimonial capitalism was going to be very bad for China.

23:29 And certainly I recall James doing my own historical research

23:32 on on the genie coefficient in the last two to three decades.

23:36 uh it has actually expanded um since really reform and opening

23:41 and and it's been a you know a flip side to the story

23:44 of of high level growth is that a lot of uh inequality

23:48 has sort of settled in the top echelons of of of Chinese society

23:52 but uh it's it's interesting because you know the government also does

23:56 care about equality I do believe

23:59 you know hence the terminology common prosperity

24:02 that Xi Jinping coined there was also a discussion a couple years back

24:05 about an olive shaped economic distribution

24:08 as opposed to an upside down triangle,

24:10 meaning that you would try to create a bigger middle

24:12 class like in America and elsewhere in the developed world.

24:16 But it's hard to see that happening.

24:17 And maybe maybe having this um wealth tax could be a step in that direction,

24:22 although I'm I'm somewhat skeptical.

24:24 Yeah.

24:24 Well, I mean, they've certainly got plenty of uh

24:27 billionaires that they could tax when obviously those people die.

24:32 Um those numbers are China has about

24:35 539 billionaires according to Forbes magazine this year.

24:40 Uh their total net worth is estimated at about 2.2 trillion US.

24:46 That by the way is equivalent to the size of the entire Australian economy.

24:52 Um and uh this is obviously is quite a lot less than the US.

24:57 The US has 989 billionaires according to Forbes magazine.

25:02 Uh but China is the country with the second highest number of billionaires.

25:06 So there's a lot of fat that the Chinese

25:10 government could tax if they if they decided

25:12 to go down this road road and I think you are of the opinion that they will.

25:17 My sense of of this when I was thinking about why

25:20 uh China hasn't done this much earlier is that I think

25:24 China wanted to create a kind of doggy dog gogetter economy

25:30 where winner takes maybe not at all but winner takes a lot.

25:34 Um and those that are left behind they're left

25:37 behind and they're hungry because they've been left behind.

25:41 That's my kind of back of the envelope explanation.

25:44 But I do find this a a rather curious topic actually,

25:48 similar to why China hasn't had a property tax.

25:51 I've never really been able to understand that.

25:54 And I I do wonder whether there is some

25:57 political reason for this that none of us know about,

26:00 whether there's some power struggle at the top

26:03 of the Communist Party with some people pro,

26:06 some people anti, and nobody finally making a decision.

26:09 But I, as I say, that is just speculation.

26:11 I have no evidence on this.

26:13 Yeah, I heard back in the day there were rumors that you

26:16 know some interests that are connected

26:17 with developers didn't want to have property

26:19 taxes and there was a debate or tension between the localities and the central

26:23 government as to who gets what part of the property tax revenues.

26:27 So I I I think it all becomes political at the end of the day.

26:31 One last thing that I'll end on that I think ties into modern day Chinese

26:35 society is an argument that I hear a couple times from my friends in China,

26:39 which is that tonging has become an issue again.

26:41 this this idea of lying flat in China or taking it easy.

26:46 And I'm hearing that this kind of wealth

26:49 transfer for the next generation who are largely only

26:52 children because of the one child policy means

26:55 that they don't have to worry too much about working

26:57 or striving and working really really hard like

26:59 their parents do and that they'll all be okay because

27:01 they have all these assets and the wealth transfer

27:03 from their parents all concentrated in this one child.

27:06 And so it all it connects to society and to uh

27:11 contemporary events with with Gen Z at the end of the day.

27:14 Um so we should definitely watch this space

27:15 and how it affects um you know Gen Z unemployment, the tonging movement.

27:20 Okay, let's take one last quick break.

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30:34 Welcome back.

30:35 We end today with dim sum,

30:37 namely the increasing automation used in dim sum production across China.

30:42 The making of the delicate dumplings and other

30:44 bite-sized dishes has long been considered an art form,

30:47 especially in southern China, where the practice originated.

30:51 Starting May the 1st in Guangjo,

30:53 tea houses will have to disclose whether their dim

30:56 sum is handmade or produced via non-traditional means,

30:59 otherwise known as manufactured.

31:02 There are also reports that restaurants in eastern China

31:04 actually using AI robots to cook dishes and save costs.

31:08 It might all seem trivial, but in some ways these changes to the food

31:12 industry are indicative of a broader trend in China.

31:15 The increase in regulation around AI

31:18 and robots as these industries rapidly develop.

31:21 James, I did research on this and what was interesting to me is

31:24 these two cases that just happened in the course of the last two years.

31:27 One in Beijing and then in one Hung where they separately ruled

31:32 that the companies couldn't fire the workers uh simply on the grounds of AI.

31:38 uh they cited China's labor contract law from over a decade ago uh

31:42 and basically said that the company's

31:44 decisions to fire their employees in question

31:47 did not constitute quote unquote major

31:49 changes in objective circumstances which is a clause that is normally reserved

31:53 for natural disasters or shut unexpected shutdowns.

31:57 This I think is interesting and it could be a precursor for further regulation

32:01 in the AI labor realm which is really I think a first of its kind globally.

32:07 But it it it hits the nail on the head when it comes to some

32:10 of these concerns people have of job displacement

32:14 of AI automation uh and of uh increasing unemployment concerns.

32:20 What's your take on this?

32:21 And do you think we're moving into a realm where

32:23 China could be a leader in globally in AI labor laws?

32:26 Well, um, just going back to dim sum, uh,

32:29 briefly before we, uh, get back onto that one.

32:32 Uh, you know, Alice,

32:33 I went to a couple of cooking schools in China to learn how to make dim sum,

32:38 and I must admit that nothing I made came out

32:41 looking remotely like what you would get in a restaurant.

32:44 Um, one of my teachers memorably said that I was no good at making dim sum,

32:49 but I was good at making didn't.

32:52 So, um I I um but so but I I know

32:57 that you as a former contestant on the TV show Master Chef,

33:01 you probably make a very mean dim sum.

33:03 Am I right?

33:04 I I do I do I do practice the art of her folding.

33:07 Yes, I I enjoy that.

33:09 I have to say that I had heard that maybe

33:11 you maybe you had heard this that at Dintyong

33:15 they apparently precise that you have to have 18 pleats

33:19 and they all obviously when you go to a dint

33:20 tyong uh chain anywhere in the world they have

33:23 people doing the folds of the dim sum but I

33:26 think that they have mandated globally that you need

33:28 to have 18 folds and 21 grams per dim sum.

33:32 That's just a side side note.

33:33 Wow.

33:34 It's amazing you know that off the top of your head.

33:36 Um, yeah.

33:37 But, uh, anyway, back to AI and AI taking people's jobs.

33:42 I mean, obviously, it's broader than AI.

33:44 I think it's amazing that a robot is now dextrous enough to make dim sum.

33:50 That's basically uh my point.

33:52 I mean, it is hard to make dim sum.

33:54 It really is hard from a sort of for a for for a human being like me,

33:58 maybe a clumsy one like me, you know.

34:00 Uh, so a robot can now do this.

34:03 We've got AI um which obviously is uh has a cognitive

34:08 ability which is now superior to human beings in many different planes.

34:14 Uh we've got robots that are now dextrous enough to make dim sum.

34:19 We've got robots that are now beating the world

34:22 record holder in half marathons by nearly 10 minutes.

34:26 Uh and then we've got factory automation all over the park uh in China.

34:32 Um, I'm not surprised the Chinese government

34:34 is getting really concerned about people's jobs.

34:37 The big job shock that's coming.

34:39 On my recent trip to China, everybody I spoke to who wasn't in the AI

34:44 robotics industry seemed to be genuinely worried about this.

34:49 So, I'm really not surprised the Chinese government is getting concerned.

34:53 And, you know, my sense of it is,

34:56 to be quite frank, I think China's going to lose this.

35:01 I don't think China can put this genie back in the bottle.

35:04 Um, you know, China is coming up with all

35:07 kinds of rules and regulations and it's even

35:10 proposed setting up a a global body to regulate

35:14 AI known as the World Artificial Intelligence Cooperation Organization.

35:19 And the aim of a lot of these Chinese rules and regulation is

35:22 to prevent the job shock from AI and automation and robotics onto society.

35:29 But frankly, I can't see how they're going to do it because

35:33 once a technology is available to do

35:36 something much more efficiently and cheaply,

35:40 then my experience of the world is that that is what generally happens.

35:44 I think what will be interesting is, you know,

35:47 whether or not the central government is going to step in and issue regulations.

35:52 I mean, several years ago, it it did offer pretty sweeping

35:56 regulations on deep fake technologies, AI algorithms,

36:01 uh, data transfers, and it, you know,

36:04 I I maybe I'd take the opposite side of the bet,

36:06 and I think that that there will be

36:08 a momentum for the central government to sort of come

36:11 in and start to mandate the threshold by which

36:16 certain people should lose their jobs due to AI.

36:19 Because if to your point James this happens so quickly

36:22 and the genie's out of the bottle uh this is going to create

36:25 a huge crisis and historically when a crisis happens I think

36:29 Beijing tends to you know intervene or come in very quickly.

36:33 I mean we saw that obviously during co but even

36:36 on the flip side when things get too hot in an industry

36:39 we see them move I would say um quite quickly

36:43 and retroactively as opposed to proactively to crack down on a sector.

36:46 I think about, you know, for instance,

36:48 the 2021 tech crackdown and and edtech crackdown on on platforms.

36:53 So, I wouldn't be surprised if if we

36:55 start to hear a lot of stories about unemployment,

36:57 about job losses, that the central government is going

37:00 to start to issue regulations that really try to protect workers.

37:04 Uh because at the end of the day,

37:06 um unemployment, to your point on previous episodes,

37:08 James, is a huge not just economic,

37:11 but political, social concern, uh for the government.

37:14 And when I was in China,

37:15 I heard from a pretty good friend of mine who's very plugged into these things.

37:20 And he said, "Look, you know, you thought EVs were big.

37:24 Robotics are going to be even bigger from China." You know,

37:26 EVs at their height, you know, were about a thousand.

37:30 Now it's winnowed down to 100 under 100 uh EV different uh makers.

37:35 Robotics, we're looking at the 100,000 or even more.

37:39 And and rather than having, you know, these general purpose robots,

37:43 these are robots that are going to be finely tuned for specific tasks,

37:47 like to your point, a specific robot for folding dim sum,

37:50 a specific robot for running races,

37:52 a specific robot um for, you know, painting cars for instance.

37:57 So, I think we're in for a real shock globally when we see the influx

38:03 of robots that might be even bigger than

38:05 the influx of Chinese EVs that we're currently living.

38:08 But how did you find it on your trip recently?

38:11 No, I mean I I I I was absolutely amazed at that very point.

38:14 I went to an exhibition center in southern Beijing where they had

38:17 robots that had been designed for all kinds of specific tasks, you know.

38:22 Um I I sort of in my mind I s I thought of it as speciation of robots.

38:27 So you don't have a general purpose robot that can do everything.

38:31 You have a robot that's able to do surgery.

38:33 You have a robot that's able to hand

38:35 people at the chemist the drugs that they need.

38:37 You have a robot that's able to score goals in soccer.

38:41 Um, you know, you have a robot that's able to shoot hoops.

38:44 You have, you know, all of these robots are designed for specific tasks,

38:48 which is going to mean that they're much better at doing those tasks.

38:52 And the humans have less and less chance to compete with them.

38:56 And of course, robots don't eat, they don't sleep,

38:59 they have natural advantages that humans simply will never be able to match.

39:04 And so this is why I left China really very concerned.

39:08 I mean obviously I was thinking about China in this context

39:11 because China's so far ahead of the rest of the world.

39:14 It's moving into this brave new automated world quicker than any other country.

39:19 Um but I'm also concerned about our countries um you know in the west.

39:24 This is coming to us next and it's not going to be long.

39:28 And I feel that here in the UK for instance we're completely unprepared.

39:33 Yeah, I completely agree.

39:35 All right, James, you know what time it is.

39:37 It is prediction time.

39:38 As you peer into the future this week, what do you see?

39:41 Well, Alice, my prediction is a kind of breaking news prediction today.

39:45 In fact, because uh the news is just coming out that even though the World Cup,

39:50 that is the World Football or Soccer Cup is only weeks away,

39:56 uh FIFA, the governing body of football worldwide,

39:59 has failed so far to sign a commercial deal with China.

40:05 This is a massive story because in the last World Cup in 2022,

40:10 China accounted for 49.8% 8% of the total TV hours.

40:18 Well, not only TV but other platforms as well.

40:20 Total visual hours worldwide uh from that particular World Cup.

40:25 So, if China doesn't sign,

40:28 it is a huge blow to FIFA and we are right now at the 11th hour.

40:34 So, I I'm going to stick my neck out and give a bit of a prediction here.

40:38 I think that FIFA will have to suck up whatever

40:42 low ball offer the Chinese are offering uh because they're desperate.

40:47 Um and this will probably be very painful for FIFA.

40:51 But I think China's got the whip hand on this one.

40:53 What are you seeing, Alice?

40:55 My prediction is more in the realm of the upcoming uh Trump visit to China.

41:00 It's clear that a couple of items will be on the agenda.

41:04 uh trade technology uh even Iran and potentially I

41:08 think North Korea might even come up on the agenda.

41:11 But I think more importantly my prediction for the second half

41:14 of the year you know after a series of meetings between Trump and she

41:18 that I believe will happen um not just the Trump visit to Beijing

41:22 she I think will go to the US towards the end of the year.

41:26 I think there will be a big push from Beijing to get some kind

41:31 of a landmark deal in the form of a Chinese green tech investment in the US.

41:38 And I'm thinking in particular some kind of JV structure.

41:41 Maybe it's a BYD Ford whereby there's a major announcement of a Chinese green

41:46 tech uh factory being set up

41:48 in America manufacturing effectively EVs on American soil.

41:53 And even although there are some interests in Washington

41:55 that would push against this, I think that it

41:58 might be uh enough incentive on both sides to have

42:01 some kind of a strategic deal to point towards.

42:04 And certainly it was referenced many times in my China trip.

42:08 And it seems that a lot of Chinese factory makers

42:11 are chomping at the bit to get presence in America.

42:14 they do want to create factories uh and and bypass these tariffs

42:19 and restrictions that they're currently facing uh as exporters from China.

42:23 So that's my prediction.

42:24 We'll have to see if it bears out as well because it's

42:26 it's very much subject to the um USChina relationship as it develops.

42:32 All right, that's all for this episode.

42:34 Thank you for listening to China Decode.

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42:43 Talk to you again next week.