I think in in a way Trump's moves have

probably pushed a lot of these

countries, the Europeans, the Canadians

now maybe even the Brits to adopt a

softer trade policy towards China. There

is has been an understanding over the

last few years that China is an over

capacity and a national security

problem, but at the end of the day,

there's a lot of money on the table.

Welcome to China Decode. I'm Alice Han

>> and I'm James King. In today's episode

of China Decode, we're discussing how

China is pulling America's allies out of

Washington's orbit, the problem with

China's lopsided economy, and a viral

app that exposes China's loneliness

epidemic. That's all coming up. But

first, let's do a quick check-in with

how the Chinese markets are starting the

week. On Monday, the Shanghai Asshare

index inched up 0.3%.

The Hang Sang Hare index fell 1.1%

dropping to a one-week low on news of

escalating trade tensions out of the US.

Farmer got hit the hardest with Hanso

Pharmaceutical Company declining 4% and

Wooshi Biologics's 4.8%.

All right, let's get right into it. As

the US China relationship grows more

strained, Beijing is aggressively

courting America's allies. Canada is

breaking with Washington to cut tariffs

on Chinese EVs from 100% in exchange for

access to Chinese markets. European

regulators are testing China's homegrown

C919 jet and Beijing is dangling trade

and diplomatic incentives across the

European Union. The big question is this

smart diversification or a strategic

realignment that weakens US leverage.

James, a lot has been happening. Uh even

in the last week we've seen Carnie's

trip to Beijing. That's a pretty big

deal. He got really high level long

meetings. Uh we also saw uh more recent

moves of of softening from the EU on on

China's trade especially EVs. And then

we've also got Greenland uh that's

impacting EU US relations. How do you

think about China's economic moves in

the midst of all of these dynamics?

Well, it it it it really feels to me a

little bit like we've gone through the

looking glass these days. I must say so

much is in flux in the international

order that it's hard to disentangle

cause and effect. It's hard to know

which is a move and which is a counter

move. But in what I'm calling the tumble

dryer of international affairs, I think

a couple of big moves into China's orbit

really stand out. The first was, as

you've just mentioned, Alice, uh, Mark

Carney, the prime minister of Canada,

going to China last week. And the other

big move is the intended visit to China

by the UK Prime Minister Karma at the

end of the month. Both of these

countries are the staunchest and longest

standing allies of the United States.

And now we can see certainly in the case

of Canada, it's cozying up to China. And

it was clear that China lost no

opportunity to make propaganda capital

out of this move at the expense of the

United States. Uh let me just tell you a

couple of things that uh that the

Chinese media was saying. The China

Daily, which is an official Chinese

newspaper, encouraged uh the Canadian

government uh Ottawa to adopt what it

called quote strategic autonomy from

Washington. And the uh the longer quote

was, "If Ottawa still chooses to subject

its China policy to the will of

Washington again in the future, it will

only render its previous efforts to mend

ties with Beijing in vain." So it was a

very clear warning that uh the Canadian

government should not backslide having

made this visit and expended all this

political capital to cozy up to Cining

that it shouldn't backslide from this

position in the future. Even more

extraordinary uh comment came from a

Chinese academic uh at Remin University

in Beijing. His name is Sue Shojin and

he said that Canada must be feeling a

lot of unease toward the US these days

because quote if the US can claim

Greenland then it might lay claim to

Canada. Just sort of extraordinarily uh

bold statements coming out of Beijing. I

mean just a reminder that this is an

official newspaper the China Daily and

academics in China have a sort of

semiofficial status. I mean, they're

allowed to uh put their interpretation

on things, but they're not allowed to

stray too far from central government

thinking in Beijing. So, I I I do think

these are are really very interesting.

Just before I u come back to you, Alice,

um let me just go into Kia Starmer's

visit at the end of the month. That is

also going to be a really big moment in

UK China relations if it goes ahead.

This is because it will be the first

visit by a UK leader to China t since

2018

and because the visit is coming uh

across as it were uh the issue of this

Chinese mega embassy in London and um in

case listeners are not familiar with

this it's a very big story in the UK uh

the the Chinese uh have a plan um and

they want approve approval for the plan

to build a huge embassy right in the

center of London, so close to the uh the

city of London, the financial uh

district, which is the heart of of

London. And uh and and part of this

embassy is supposed to go over the fiber

optic cables that supply the city with

all of its information and all of its

data. And so protesters and and and

campaigners against this move have said

that this is an unacceptable security

risk. In other words, China could either

tap into the information or uh or

potentially even cut the cables. And so

it is expected that this mega embassy

will be approved. That's what my sources

are telling me. Uh it may happen as soon

as today or or tomorrow or or or early

this week. And after that, Karmama will

be allowed to go to Beijing and you know

to conduct his diplomacy there. Though

the move to Beijing from Karmama comes

after considerable capital has been

expended and I would be expecting the

Chinese when Starama gets to Beijing

also to be coming out with statements

about strategic autonomy uh away from

the United States. though we are seeing

at at least in these two examples a move

from some of the US's staunchest allies

toward China's sphere of influence. I'm

not saying they're part of China's

sphere of influence now, but we're

seeing them inching toward China. I'd

say that's that's my take anyway. Uh

what what are you seeing at the moment,

Alice?

>> Well, I think we first need to uh

distinguish the EU dimension from the

Canadian dimension. And I'll start with

Canada. It was interesting to me that

less than a year ago, Carney uh

campaigned on this concept that China

was quote unquote the biggest threat to

Canada's security. Uh in a way, he had

to politically make that point uh in in

order to I think win the election if you

recall. Uh and he was definitely a late

comer uh and a a dark horse in terms of

the Canadian election last year. But

since then, I think this is very much in

lock step with what I saw in Australia a

couple years back under Albani when he

joined as prime minister of Australia,

bringing in a Labor government uh to

Australian politics is the fact that

economic uh rationale wins at the end of

the day. Uh even although China is seen

as a national security threat, there's a

lot of money uh that's on the table and

certainly there are winners and losers

in Canada. The agricultural sector I

think largely has been a winner. uh

order makers in Canada probably have

been the losers. China is going to drop

uh substantial tariffs on Canadian

canola meal, lobster, crab, peas, uh and

lower tariffs on canola seed. That's a

big win for a lot of a uh a makers in

Canada. But at the same time, um and I

thought this was pretty considerable. I

was surprised by this. Canada is going

to slash 100% tariffs on EVs from China

to Canada. That's about 49,000 per year.

And that I think when we think about the

broader landscape of China's EV export

machine is going to be a huge loss for

Canadian auto. Uh but I think this move

is politically calculated to your point

James Carney is unhappy with what is

happening in Washington and I think

there is somewhat of a consensus

uh amongst um the Europeans and the

Canadians and maybe even the British

which you may be alluding to James that

uh Washington's actions maybe in

Venezuela and certainly in in um more

recently in Greenland are not in

alignment with their uh you know those

countries the Europeans, the Canadians

and Brits views of the world order. So I

think in a way when we put Venezuela

with Iran with uh Greenland, I think

since the start of the year, Trump's

diplomatic scorecard is probably in the

negative territory, which is probably

what's provoking some of these recent

moves. And then it comes to the European

dimension where I had been predicting

this, but I was a little bit late to the

game in the sense that I had thought

last year that the price minimums would

actually be developed as a framework.

It's probably only started to kick into

effect uh as of a week ago, January

12th, um when the European uh Commission

said that they want to put a framework

deal in place for price minimums for

Chinese EVs. Then that is for Chinese

automakers. That is considerable because

China's biggest market uh for autos is

the European market. Um and uh China is

the EU's third largest trading partner

for goods and services after the US and

UK. So for both countries this is pretty

considerable. Um China I think made

about uh 10% of the EV market last year.

That could rise significantly if we see

more of a a move to reduce the 45%

tariffs for instance on Chinese EVs. So

I I think in in a way um Trump's moves

have probably pushed a lot of these

countries, the Europeans, the Canadians

now maybe even the Brits to adopt a

softer trade policy towards China. There

is has been an understanding over the

last few years that China is an over

capacity and a national security

problem, but at the end of the day,

there's a lot of money in the table and

a lot of vested interests in those

countries that want to see business

still trickling uh through between the

two countries. We can go into the

numbers, but that's sort of my broad

brushstroke view of why these countries

are moving, it seems, in lock step. And

everyone will be convening in Davos, as

you know. They're all convening on this

sleepy snow capped town of Davos where I

think a lot of drama will happen.

>> Yeah. And um I I mean Trump is going to

be in Davos and I must say when Mark

Carney was in Beijing making all these

statements and as I as I put it cozying

up to China, I expected Trump to come

out with a considerable backlash, but so

far he seems to be quite um accepting of

Canada's overture to China. Uh he said

he was asked uh what he thought of the

agreement between Canada and and China

on trade and he said

>> it's okay that's what he should be

doing. I mean it's a good thing for him

to sign a trade deal. If you can get a

deal with China you should do that.

>> So so far it seems that Trump is

moderating his response. But I would say

that you know there is a risk for these

allies of the United States. I'm talking

about Canada, the UK and really the

whole of Europe. there is a risk uh

because the US remains the most

substantial economic and security

partner of all of the countries in the

west. Um and in the case of Canada, it's

overwhelmingly so. Something like 74%

of Canada's uh trade is with the US and

you know less than 10% with China. And

in the UK, I mean it's overwhelming. um

our biggest uh investment and trade

relationship, not to mention diplomatic

and security relationship is with the

United States. So I think that you know

there is a tight rope that uh these

countries in the west are walking. Uh

they're trying to get the economic

benefit of moving closer to China

without annoying the United States so

much that the Washington creates a

backlash against us. So, it's a game of

cat and mouse, I think, right now. Um,

and uh, it I, you know, the world is so

complicated right now. It's going to be

interesting to see how this one plays

out. I certainly couldn't call it.

>> I I would agree with you, James. Um, you

know, the expression, while the cats

away, the mice will play. I'm thinking

maybe the Canadians and the Europeans

and the mice in this analogy. As long as

the US is subsidizing their national

security and is running a trade deficit

with those two trading blocks, Canada

and the EU, it's just a natural bed

fellow for those two regions of the

world. Whereas China, the opposite, is a

national security threat and is running

massive trade surpluses. So I I think

this is a tactical short-term move in

order to extract some short-term gains

rather than a strategic pivot. And

certainly in the short term, some

agricultural producers in Canada and the

EU will benefit. Airbus, we haven't

talked about, will likely benefit as

well. Uh, China's already considering

purchasing a more French European

aircraft. And Airbus's market share in

China is already 55% which just recently

overtook US's Boeing's market share. So,

there are some winners and losers, but I

think I broadly agree with you, James.

This is a tactical move as opposed to a

strategic one. But we'll see how

Greenland blows up because if if Trump's

threat of tariffs do get put into place

at 10% that he's threatening uh on the

European countries uh effective February

1, uh then uh we might be in for a

broader EU US uh trade conflict in

mirror image of what we saw last year

between China and and the US.

>> Yeah, it's uh it's really hard to

overstate how exercised people are in

Europe about Greenland. um they a lot of

people uh policy makers just can't get

why uh the US is being so aggressive on

this point. You know, they they feel

that there's a pathway to greater US

influence on Greenland that takes the a

peaceful route uh rather than talking

about some kind of military overture.

>> Yeah, I mean this might be a little bit

physicious, but there probably is no

better way to unify the Europeans uh

than to hit the Greenland uh button,

which we've seen the last few days. All

right, we'll be back with more after a

quick break. Stay with us.

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Welcome back. China's economy is sending

mixed signals. Exports and high-tech

manufacturing are booming according to

the latest 2025 data. But lending is at

its weakest level since 2018. Consumer

confidence is soft and the property

sector remains in deep, deep trouble. As

Beijing leans harder on technology,

trade surpluses and even the digital yen

to power growth. The question is whether

this imbalance is sustainable or a

warning sign ahead of the March National

People's Congress meeting. James, let's

go right into it. The economic data from

2025 as a whole year and the Q4 data

have just come out. I'm excited to get

into the weeds uh with you. What's your

hot take on on the data?

>> Uh my hot take is uh that this data

shows yet again what a highly lopsided

economy China is. And I think there are

two numbers that absolutely show this uh

so clearly that it's so stark. There is

one great strength in the Chinese

economy and there is one well there are

several weaknesses that lead to a a

particular weakness. The great strength

is that China is a high techch

manufacturing powerhouse that

increasingly inspires awe around the

world. And yet the weakness is that its

economy is so poor at directing the

fruits of this advancement to its people

that the birth rate uh that we've seen

in China last year has fallen to its

lowest level since 1949. That's the the

communist uh revolution of 1949. So you

know we got these two amazing things

going on. This hard charging

technological superpower now which is a

peer competitor of the US in technology

and uh an economy that can't even you

know return the fruits of of labor as it

were to people so that they feel that

they can have families and have u as

many kids as they like. So the two

numbers that I'd like to mention are

high techch manufacturing output that

rose 9.4%

last year and the other number on the

other side is retail sales which grew

only 3.7%. So what you've got is

high-tech manufacturing growing at more

than double the speed of uh the amount

of money that people are spending on

things to buy. And I think that really

sums up the great contradiction of the

Chinese economy.

>> But I agree with your first principles

view, which is that this is a deeply

skewed, imbalanced economy. The data

points that stood out to me, so exports

made up a third of Chinese GDP last

year. That's the highest level since

1997.

And growth capital formation, which is a

more accurate measure to my mind of

Chinese investment in the economy rather

than fixed asset investment, contributed

just 15%. And that's the lowest since

1997 too. 10 years ago, those numbers

would have been flipped. You would have

seen an economy that was more driven by

fixed asset investment rather than

exports. Uh but certainly, as we've

discussed previously, James, uh the fact

that they've had to crack down on fixed

asset investment, on the real estate

sector, on local government uh debt has

all contributed to uh the need to ramp

up and juice up the export machine. And

so I think we're seeing a a China in

2025 that is heavily imbalanced and

skewed towards supporting its exports

rather than finding more productive

areas to invest. One last data point

that I thought was pretty interesting

was the fact that private investment

which is again a good indicator for the

domestic confidence of investors and

businessmen private investment fell

6.4%.

uh and this is in lock step uh with

households who in the latest PBOC data

uh have increased their propensity to

save rather than to spend and again

reinforces this point that as long as

this economy remains really imbalanced

they're going to have to uh use either

fixed asset investment andor exports

rather than domestic consumption to

drive growth. They could easily fix this

if they decided, and this is Michael

Pettis's point, which I agree with, that

they weren't going to do growth targets

every year in the March uh National

People's Congress and the government

work report. But the fact that they are

wedded to these say 5% growth targets

means that they need to invariably keep

juicing the economy. And this brings me

to uh the March NPC meeting, which

should be held in the first week of

March. My sources seem to tell me that

it's going to be a 5% GDP target. So the

same as last year. Uh that the fiscal

deficit will be at least 4% if not

higher. Now that is a historic high uh

for Chinese fiscal balances. Uh and

every indication points to the direction

of the central government taking more

debt on its balance sheet uh which again

by global standards is pretty low at

around 20%. So they have the fiscal

space to do so. But that means

invariably I think that there will

continue to be support for the export

sector. But I also think that there will

be more support through some of these uh

local bond programs for fixed asset

investment because I think if I were in

Beijing's seat right now and I looked at

the economic data in both Q4 but also

2025 as a whole, I'd be very worried

about the huge fixed asset investment

slump. Uh and worried about the property

investment slump which we also have

talked about. Uh property investment

dropped 17.2%. 2%. Uh again, that's

doubledigit negative territory which has

been in place I think over the last six

years. Uh and again this is something

that they haven't really addressed

because politically I think they like

the fact that you know they've tried to

they've succeeded in deflating the real

estate asset bubble. But I remember

writing a piece 5 years ago saying that

this is not a financial risk, but it's a

it's a macro risk because as soon as the

property sector, which is about a

quarter of GDP historically, if not

more, stays uh at depressed levels,

that's going to have massive knock-on

effects for household balance sheets,

for spending, uh for consumer and

business confidence. So I I would expect

that they going into the March NPC will

probably do a bit more to support the

real estate sector and that will

probably look in the form of you know

reducing u mortgage rates which again

are still historically very low reducing

um some of the constraints to first home

buyers as well in in certain uh cities

as well. Uh and then more broadly, I

think reintroducing some of that

whitelist financing program to

effectively uh get banks to lend to

developers so that they can finish their

properties that have been bought uh but

not yet sold. So this is a I think when

I put it all together it's it's

important to remember that in in spite

of China's economic laress there's still

a lot of of structural problems and it's

hard for me to see that the government

is is really adequately uh dealing with

this with a solution in mind but I will

end with u my takeaway from the CWC so

you know I don't think we've talked

about this the central economic work

conference that convened at the end of

December which is often times a very

good signal for what is going happened

in the March uh government work report

for the subsequent year. They uh were

basically pointing towards more support

for domestic consumption. So there was

an extension of the subsidy program uh

uh to some extent for EVs and for other

durable goods. Now there probably will

be some subsidy program for services is

my expectation in March. uh but this is

again too little too late because

ultimately they will keep having to

juice uh both manufacturing and I think

fixed asset investment uh next year.

>> Yeah, I think it all boils down to a

very simple equation. You know if China

cannot write its lopsided economy then

sooner or later and we're probably

talking about later several years in the

future this economy will crash. Um and

the solution to the problem is simply to

return more of the fruits of China's

advancement to its people. So in terms

of per capita disposable incomes last

year, the average in China was uh 6,70

US. That was up just 5%. So what you're

seeing is a lot of resources going into

gunning the high-tech sector of the

economy, making China the manufacturing

superstar in the world, but at the

expense of returning more of the

earnings to ordinary people, to workers,

white collar and blue collar. If China

can't return more of the fruits of its

advancement to those people, then

they're not going to have enough money

to spend in order to buy the things that

China makes. And China is going to

remain in this deflationary spiral going

forward. And the world is going to have

to continue buying incredibly cheap uh

Chinese products and thereby boosting

China's export performance at the

expense of competitors all over the

world. So I think a lot of economists

really hope that China can do something

to stimulate uh per capita disposable

incomes in China. But my guess is that

will not really happen in 2026.

>> Yeah, it's hard to see if real estate

sector remains quite depressed because

at its peak it was 70% of household

wealth. So if you think about the

knock-on effects of that on balance

sheets, household balance sheets, it's

pretty considerable. But I I have long

held the view that until we see

meaningful increases in wage growth,

which I think is another way to look at

your point about per capita disposable

income, it's hard for me to see a

meaningful boost in consumption. And

thus far, the uh Chinese government has

what I call a supply side approach uh to

boosting consumption and not a demand

side approach because all they're really

trying to do is subsidize the cost of

goods and maybe even uh coming into

March services. So I take your point.

This is hard to see and it sounds a

little bit like you were describing

common prosperity, James, which is kind

of died off as a as a subject. But I

completely agree. I think that everyday

Chinese uh need to capture more value in

the economy uh in order for China to uh

rebalance towards a consumer

services-based economy like Japan and

the US. And I think what a lot of people

don't realize, and this is a point that

I hear time and time again when I'm in

China talking to think tank people, is

that there's a considerable population

um several hundred million in rural

China um whose per capita disposable

income are significantly more depressed

than their urban peers who could see

significant upside if they get moved and

urbanized into uh the tier 1, tier 2,

tier three cities. So there's still a

lot of upside I think but it will take

intelligent uh policy makers to try to

capture that and I haven't yet seen

signs but we should definitely read uh

the tea leaves of the March government

work report very very closely and the

5-year plan which uh will be announced

uh as well at the March NPC meeting. All

right, let's take one last quick break.

Stay with us.

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Welcome back. A bleak new app is going

viral in China and it says a lot about

the loneliness epidemic. Its original

name was Are You Dead? And the app asks

users who live alone to check in every

48 hours or it alerts an emergency

contact. The name of the app has

recently been changed to Demo, which

Guong Chu, one of the app's founders,

explains comes from combining death with

some nonsense syllables. With as many as

200 million oneperson households

projected by 2030, its popularity is

being seen less as a morbid humor and

more as a signal of a growing loneliness

and safety crisis among young people.

James, let's get right into this. I was

alerted to this through a couple of

friends in China. So, it's a kind of um

comic macaba element to what I think is

a real problem in China, which is the

the loneliness problem and the aging

problem.

>> Yeah, I know. I mean, I just think it's

so stark that um more than the entire

population of Japan in China are people

living alone. Um you know, uh people

between the ages of of 20 and 49, uh

living alone, not having very much uh

social contact. Uh a lot of their

contact with other people comes through

these apps. We all know what it's like.

I mean, I suppose we've all um sat at

home and doomscrolled. I've been ill

last week, so I was doom scrolling quite

a bit sitting at home. And I tell you,

your mental health really gets affected

by that, you know. So, I my heart goes

out to uh these young people in China,

you know, they're often uh alone at home

or or working in these jobs which don't

remunerate very well. We've just been

talking about the weakness of consumer

demand linked to the fact that people's

salaries are quite low. And then, you

know, when people do go to the office,

they're often uh very long hours in in

regimented jobs. Uh and I think this is

part of the reason why we're seeing the

Chinese birth rate now fall to its

lowest level since 1949 when the Chinese

Communist Revolution took place. I mean,

uh, China has a a whole slew of social

problems and, uh, I I I did spend a

little bit of time reading online some

of the testimonies of of young people

being affected by this loneliness

epidemic and, uh, it is on honestly very

sad. You must have seen quite a lot of

these yourself, Alice.

>> Yeah, I um have noticed this uh, in the

last five, six years that I've been

traveling to China. Um the the way in

which everyday young people live I think

uh is quite isolating and we shouldn't

forget that uh a lot of them tend to be

more plugged into the digital matrix

than in everyday life and a lot of them

are only children as well. Um my cousins

are all uh only children and as a result

unsurprisingly you've got this dimension

of the tonging which is to lie flat and

have this kind of um nihilistic

worldview. you know, what is the point

of working or striving or struggling or

or doing well on your goal exam and

going into a tier one uh university? I

think this is all part and parcel of the

fact that uh in in China um you know

young people don't really feel like

there's a sense of of economic momentum

and growth and they don't have siblings

and at some point you know 20 years down

the line they're going to have to be

responsible for their aging grandparents

uh as the single caregiver really. And

then you add to this the other dimension

which we also discussed um declining

marriage rates. So the number of

unmarried people in China between the

ages of 20 and 49 reached 134 million in

2020. That's that's bigger than the

entire Japanese population. And over the

last decade marriage registrations have

been cut about uh 50% so in half

effectively.

This is again I think feeding into the

single lonely um state of a lot of

Chinese youths. And then on the older

end of the scale, uh you hear a lot of

stories about uh elderly Chinese who get

abandoned by their children or their

grandchildren. Their spouses have died

and they're effectively single and

alone. And so I think this app really

speaks to a pressing need society

amongst uh Chinese everyday Chinese to

feel like they matter and that their

life counts. It's interesting to see how

China has evolved over the last call it

uh four decades. The first two of which

was a about you know aligning towards a

capitalist regime. The next decade was

about high-speed growth. And I sense

that there is a kind of moral vacuum and

a self-questing about what is it all

for? Some people in the case of my

parents for instance and a lot of their

peers go towards religion. Buddhism is

on the rise. uh we have to look into the

numbers but just anecdotally almost

everyone I know uh their parents are now

Buddhists overnight over the last decade

some of them go towards digital

ecosystem the digital life uh and as a

result I think we end up with a society

in China that is actually more isolated

than it has ever been and and remember

this is a very family driven society if

you go back to Confucian thought and

confusion writings this society is based

around family. But what happens when a

family only has one child uh and then

it's one one, you know, middle-aged

person taking care of elderly people? I

think that is the society that we're

increasingly confronting in in China.

But James, uh have you have you actually

come across people in China who have

felt lonely? The the reason I I feel

reluctant to ask this question somewhat

is that unlike in the west where I think

it's more open as a discussion, the

loneliness epidemic to talk about being

lonely. Uh this is a Chinese expression

hung like it's not really a a it's not

really a phrase that you hear a lot in

China. And so to what extent are people

being uh self-reflective or

acknowledging that they are lonely? Have

you come across that? Yeah. I mean I

when you were talking there I I was

thinking of a close friend I have in

China who uh who has turned towards

Buddhism and um she she's been uh living

alone I I guess um for at least 25 years

now and um you know her life is derives

meaning from this the Buddhist faith

that she's adopted and she travels to uh

places in in Chingghai and and Tibet

where they have a a a sect of of

Buddhism over there, Tibetan llamemes

Buddhism. Um, and she gets a great deal

of uh of meaning from those experiences.

But she is, I think, lonely and she has

said that to me before and um it's um

you know that there there's a whole

nexus of rather personal pressures that

she feels um in her life. I'm not saying

this is peculiar to China. You can see

it all over London as well. Um but uh

but it is it is a uh it is a human

condition I think that we are seeing

more and more of uh in China right now.

>> And then we also have discussed the

declining fertility rate aspect of this

as well. Um that you already mentioned

at the top of the discussion that you

know China's fertility rate or child

birth uh rate is at its lowest since

1949. I believe that when I think about

the next generation that is also going

to have an impact on who takes care of

these older women and men who decide not

to get married and have children. Is it

going to be the state? Uh and that's

that is a big question mark because you

know the pension scheme is not as

established uh as it is say in Japan or

even in the US. So that is going to be a

big political economic question I think

for the Chinese government moving

forward because thus far any attempts to

uh increase fertility

has been universally I think problematic

across all countries. I don't see any

real instance in which the government

has been successful uh globally in

really boosting and stimulating the

fertility rate. But I think this is

something that we should definitely

track because I get the sense every time

I go to China that that more and more

people are interested in, you know,

being online, being on their phones

rather than being in community. Um, and

I'm hoping that there is going to be a

countercultural move movement to that

towards that. I'm already seeing some

signs that people want to do community

trips out in nature for instance. Um but

you know this is a country that I think

historically has been very communal and

to move towards this kind of unitary

ecosystem where people are more plugged

in online than with each other I think

is going to be a new normal um for for

the Chinese society. All right James

this is uh prediction time. One of my

favorite times. Uh what is your

prediction as you peer into the future

this week?

>> Okay. Well I'm pivoting from our

conversation completely this week. Uh my

prediction is about the chip wars. Um,

last week the US gave formal green light

to Nvidia to sell its H200 chips to

China. That was lifting a previous ban

imposed by the US. But Chinese officials

uh who have been speaking to media

reporters on condition of anonymity have

said that the Nvidia H200 chips will not

be permitted to enter China. So the US

gives the green light, China gives the

red light. My prediction is that this

game of cat and mouse will continue for

most of this year. And I think it shows

something fundamental

um about the chip wars between the US

and China. And that is that China is

catching up with the US in chip

technology. In fact, in 2026,

it's going to be a horrible year for

Nvidia sales in the China market. That's

because Chinese companies like Huawei,

Camrycon, More Threads, we've mentioned

all of those in previous episodes, are

now producing chips that if combined

into superclusters can compete with

Nvidia superclusters on performance. So

to get down to brass tax, my prediction

is that Nvidia's market share for AI

processors in China will crater this

year. They will fall very very sharply.

I'm not exactly sure how big a fall

we're talking about, but in 2024 they

had 66% of the market. This year I

reckon they could fall to below 20% of

the market. So it's a very very big

call. I'm aware of that. But I think

this is a massive, massive shift.

>> And do you, again, this is kind of

naughty for me to ask a following

prediction such question. Do you think

that pushes Jensen Hang to ask Trump,

please, can I send them more leading

edge black chips? What What do you

think? Yeah. What do you think will be

the change in calculus from Jensen and

Trump uh in the midst of that?

>> I think you're dead right about Jensen

Hong. He will be asking the White House

to to sell black wells into China

because black wells are so much more

powerful than the H200's. Uh Chinese

buyers would definitely want to get hold

of black wells. Whether the White House

will exceed is another matter. Uh we

we'll just have to see. I'm not ready to

call that one.

I'm sympathetic to this view because

there is an argument which I find quite

convincing that part of the reason China

is trying to restrict um these AI

processes from Nvidia not isn't just to

support domestic variants but also to

put pressure on Jensen to get them

higher quality chips. I think that

that's quite conceivable and it might

actually happen in 2026. My prediction

is somewhat chip uh tangential in the

sense that is about AI. We just saw Meta

purchased uh one of the big agentic AI

companies, Manis, and that company um

moved to Singapore over a year ago. I

think we're in a next generation of AI,

global AI Chinese companies that are

cruisely going to move out of China,

headquarter in say Singapore, and then

have more of a global I think footprint.

Um, some of them may decide to exit

through US markets, through private

sales or through uh public listings. But

I I sense that that these new generation

of AI tech companies, AI native tech

companies are going to be looking at

what didn't work for Baba and Tencent

mainly that they stayed Chinese tech

companies and go well we need to find a

way like by dance did to desininaize uh

move out of the Chinese uh market uh so

that we have even more global um reach

and global footprint. That is my

prediction. So we'll probably see more

companies move to Singapore, more

discussion of acquisitions from some of

the big US tech companies buying these

Chinese AI companies cuz you know as

we've talked about these AI companies in

China are very very innovative, cheap,

efficient, energy efficient. So there's

a comparative advantage for say a Meta

or a Google to to purchase them. That is

my my hot take for 2026. All right,

that's all for this episode. Thank you

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