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0:01:50 I know that conventional wisdom is saying, yep, this is all a process.
0:01:52 They’ll get to a deal eventually.
0:01:55 But this time, the emotions are really high.
0:01:57 I just don’t know which way it’s going to fall.
0:01:59 You might have a better sense than me.
0:02:04 Well, I’ve long thought that they would rather play kabuki than have anything substantive on paper.
0:02:08 Structurally, there are too many difficult issues, intractable issues at play,
0:02:12 for them to be resolved as early as this year or even early next year.
0:02:14 So I would be in the same camp as you.
0:02:21 Welcome to China Decode.
0:02:22 I’m Alice Han.
0:02:23 And I’m James King.
0:02:26 In today’s episode of China Decode, we’re discussing
0:02:30 how Trump’s trade war with Beijing threatens the global economy,
0:02:33 the spy scandal that rocked Great Britain,
0:02:36 raising major questions about UK-China relations,
0:02:40 and experts in the U.S. see China’s capabilities in the space sector
0:02:42 quickly catching up to theirs.
0:02:45 But who will make it back to the moon first?
0:02:48 All right, James, we’ve got a lot to get into.
0:02:51 But first, let me ask, how has the last week been for you?
0:02:55 Oh, never a dull week in U.S.-China relations, Alice.
0:02:59 I mean, really, it’s just it’s keeping us on the treadmill, I can say that.
0:03:00 How about you?
0:03:02 Well, I thought I could take a little bit of a break
0:03:05 before the APEC summit and potential Trump-Xi meeting.
0:03:09 But it seems that we’ve transitioned yet again from detente to brinkmanship.
0:03:14 And now, you know, everyone is laser focused on whether or not there will be a meeting
0:03:16 and whether or not there will be a deal.
0:03:19 So no rest for the wicked, it seems.
0:03:21 All right, well, let’s get into it.
0:03:27 Last week, many observers described the escalations in the U.S.-China trade war as existential.
0:03:31 And certainly, James, I’m sure that you have felt this way.
0:03:35 We’ve been exceptionally busy, I would say, in the last week, We China Watchers.
0:03:41 We’ve seen potentially massive implications, not just for these two countries, but for the global economy.
0:03:47 We’ve got things like export controls, rare earth metal restrictions, chip embargoes, and ship docking fees.
0:03:54 Now, these can seem exceptionally bureaucratic and complicated and, frankly, a little bit hard to wrap your head around.
0:04:02 So we’re here to try to separate fact from fiction and make it a bit more straightforward, even though I think it is still quite a complicated issue.
0:04:08 It seems that the fate of the world’s economy might depend on whether or not they can cut a deal.
0:04:12 But I won’t be too dramatic, and I’ll get right into the meat of things.
0:04:21 James, you know, firstly, I want to start off with export controls, because I think a lot of people are somewhat confused about what export controls are,
0:04:26 how China and the U.S. have deployed them, what the actual implementation process looks like.
0:04:36 Certainly, what struck me when I looked at the recent bout of export controls was the fact that China has gone further than it did in previous years,
0:04:39 in which it was a simple, to some extent, licensure regime.
0:04:49 MOFCOM, the Ministry of Commerce, would basically enforce rules for exporters of rare earths to acquire a license, effectively, to export out of China.
0:04:56 Now it seems like China has cast a longer shadow and is basically mandating not just domestic companies,
0:05:05 but also foreign companies that use as little as 0.1% of the total goods from rare earths coming from China to have to apply to these licenses as well.
0:05:11 That seems to me, when I think about it from a bureaucratic perspective, exceptionally difficult to realize.
0:05:19 And even when I think about in previous years, when China put these license regimes in place, these things took time.
0:05:27 And in fact, you had issues in 12.0% when licenses weren’t delivered on time, supply was somewhat limited, it affected the market.
0:05:33 I find it very hard to believe that MOFCOM is going to sit there and physically go through every good line by line
0:05:37 that has as little as 0.1% total goods from Chinese rare earths.
0:05:39 What’s your take on this, James?
0:05:46 Well, as you said, Alice, everyone’s talking about this fight between the US and China in very, very stark terms.
0:05:48 You used the word existential.
0:05:56 Before I get to the details, and let’s do a little bit of an explainer of what these export controls really boiled down to.
0:06:02 But before I get to that, let’s have a little taste of the invective that’s reached new heights in recent days,
0:06:05 going back and forth between the US and China.
0:06:15 In the words of Gideon Rachman in the Financial Times, it’s like a couple of heavyweight boxers trash-talking each other before a fight.
0:06:19 But I think the real question is, is this actually going to come to blows?
0:06:26 Or are the two heavyweight boxers going to patch things up, patch up their differences before the fight occurs?
0:06:31 And we just don’t know at this stage what’s going to happen in that regard.
0:06:40 But anyway, in terms of the rhetorical punch-up, Scott Besant, the US Treasury Secretary, said that when it comes to trade,
0:06:44 quote, this is China versus the world.
0:06:51 He said that if Beijing does not withdraw its threat to restrict exports of these rare earth minerals,
0:06:55 then the world will have to decouple from China.
0:06:58 You really can’t get much starker than that.
0:07:00 Beijing, though, it hit back.
0:07:07 It said that the Trump administration’s threat to impose 100% tariffs on China were, quote,
0:07:11 a typical example of US double standards.
0:07:20 And just to add to the whole mood, the Chinese foreign ministry put out a video showing Chairman Mao Zedong
0:07:25 during the Korean War, that was in the 1950s, proclaiming,
0:07:30 no matter how long this war will last, we will never yield.
0:07:36 So you can see on both sides, in the US and in China, emotions are running really high.
0:07:36 Yeah.
0:07:39 I must say, I’ve been covering China for more than 35 years.
0:07:41 I’ve never seen anything like this.
0:07:43 This really is emotional.
0:07:48 But maybe I could give a little bit of a recap, Alice, on, you know,
0:07:52 the nuts and bolts of where we are on export controls and what they mean.
0:07:53 That’d be great.
0:07:55 Honestly, I think almost everyone needs this primer.
0:07:56 So fire away, James.
0:07:56 OK.
0:08:04 So on October the 9th, China’s Ministry of Commerce came out with a slew of new regulations
0:08:06 on these rare earth exports.
0:08:11 Now, these rare earths have long names that, you know,
0:08:12 normally we wouldn’t know.
0:08:18 But basically, they’re crucial minerals that are used in making everything from smartphones
0:08:26 to electric vehicles and also, and this is key, to many different weapons, such as submarine
0:08:33 engines, radar systems, missile guidance systems, even the F-35 US fighter jet.
0:08:40 So basically, what China said is that if you’re a foreign company and you want to export products
0:08:46 that are made with, as you mentioned, Alice, even a trace of these rare earths that are sourced
0:08:51 from China, then you need to apply and get a license from China.
0:09:01 And of course, this is crucial because China processes about 90% of the rare earths that are used in the world.
0:09:07 So almost everything, almost all of the high-tech technologies that use these critical minerals
0:09:15 are therefore subject to licensing from China, they added something else onto that, which is that any equipment
0:09:22 that you might buy from China in order to process your own rare earths also has to be licensed from China.
0:09:28 So it really gives China a stranglehold over this crucial aspect of global trade.
0:09:36 And it means that if China wanted to, and I’m not saying it will, but if it wanted to, it could simply stop
0:09:43 huge chunks of global trade, huge numbers of high-tech goods from being imported and exported.
0:09:47 So I think that’s the really crucial background to this.
0:09:49 How do you see it all panning out from here?
0:09:56 Well, I come back to this conclusion that China kind of bungled this announcement.
0:10:06 And the reason I think about it in this way is that I think Besant was canny to make it a China
0:10:07 versus the rest of the world argument.
0:10:12 We’ve seen, I think, more moves amongst the G7 countries, I would say in particular Europe
0:10:18 and Japan, to really start to go beyond the rhetoric of getting the act together.
0:10:23 I think that in the coming months, there may be more movements to try to get more of a collaborative
0:10:28 set of projects on the ground for alternative supply chains of critical minerals.
0:10:35 And I think that China’s, again, the long shadow that it’s cast by borrowing America’s foreign direct product rule
0:10:40 of, you know, de minimis or percentage of a component from Chinese critical minerals,
0:10:46 that framework or that approach, I think, has really discombobulated and disconcerted a lot
0:10:52 of the G7 countries because it effectively gives China the optionality at any given point
0:10:57 in time to say, well, look, Brussels, we don’t like your policy on X.
0:11:03 So we’re going to stop the sale or exports of certain types of critical minerals or certain
0:11:06 types of goods that have a component of critical minerals from China.
0:11:10 That, I think, at a strategic level is deeply worrying.
0:11:15 I sense that China is trying to backpedal a little bit on this issue because it didn’t
0:11:19 realize how big a deal it was for a lot of these G7 countries.
0:11:21 But I think the cat is out of the bag already.
0:11:27 And it reminds me somewhat of what happened in 2010, if you recall, with the Japan-China
0:11:33 Senkaku, Jiao Yutai spat over the islands, in which China then launched a two-month full
0:11:35 embargo of rare earths on Japan.
0:11:41 I think a trigger has been set in place to get the G7 countries, I think, to take a more
0:11:44 concerted effort towards supply chain resilience.
0:11:49 What I would add to what you’re saying, James, is the fact that America can’t do it alone.
0:11:51 America is so behind.
0:11:57 MP Materials is the only company that has mines of rare earths that’s actually active
0:11:57 in California.
0:12:03 And Novion is the only American company in tangent with Linus, an Australian mining company that
0:12:06 can potentially produce performance magnets.
0:12:11 Performance magnets, as you rightly say, James, that are used in military equipment, in defense
0:12:15 equipment, as well as wind turbines, batteries, and EVs.
0:12:22 So I sense that China has this window of opportunity, call it three, four, five years, to have this
0:12:25 choke point, or rather choke hold, on America.
0:12:31 But when you broaden out beyond that five-year horizon, the technology itself isn’t difficult.
0:12:31 It’s not expensive.
0:12:33 It’s just extremely pollutive.
0:12:41 And it requires, I think, in the U.S. case, private-public partnerships, which, again, we can
0:12:43 debate whether or not that is possible, given the climate.
0:12:48 But certainly, if the G7 banded together, I think that they could produce a potential
0:12:49 alternative supply chain.
0:12:53 But certainly, in this narrow amount of time, call it three years, I think China has maximum
0:12:56 pressure on the rare earths issue.
0:12:57 That’s how I think about it more broadly.
0:12:59 Yeah, absolutely.
0:13:00 I very much agree with that.
0:13:02 At least three years, I think.
0:13:06 I must say, though, I do think it’s really interesting that there has been a stock price
0:13:10 rally in a lot of these companies that produce rare earths outside China.
0:13:13 You mentioned one there, MP Materials.
0:13:20 But we’ve also seen the share price of USA Rare Earth and Australia’s Linus, that’s an Australian
0:13:23 company, that have more than doubled this year.
0:13:30 And we’re starting to see, as well, the U.S. state itself taking stakes in some of these rare
0:13:38 rare earths companies like Lithium Americas, Trilogy Metals, which are two Canadian miners, in attempts
0:13:41 to bolster their financial firepower.
0:13:48 So it certainly seems to be the case that we’re beginning to make out the contours of the U.S.
0:13:52 government being really galvanized by this issue and really putting some money into it.
0:13:58 And investors starting to follow that lead, thinking, wow, there’s going to be such a shortage
0:14:01 of rare earths that are produced outside China.
0:14:04 This has got to be an opportunity for the investors.
0:14:10 And just to also chime with your comments about the G7 getting galvanized, I noticed that there
0:14:15 is similar disquiet about rare earths within the European Union.
0:14:22 And there was a statement by the Aerospace Security and Defense Industries Association of Europe.
0:14:24 Apologies for the long name.
0:14:32 But it’s a big organization that represents about 4,000 companies, mostly in sort of aerospace
0:14:33 and military.
0:14:40 And they’ve put out a statement saying they’re keeping a watchful eye on new Chinese measures.
0:14:44 That’s kind of diplomatic language for we’re really scared about this.
0:14:46 We’re really anxious about this.
0:14:53 And so I would say the impetus in Europe for doing something perhaps with America, perhaps
0:14:55 going it alone, is fairly strong as well.
0:15:00 But as you say, Alice, that will be in the long term.
0:15:02 We’re talking several years.
0:15:06 And in the meantime, minimum three years, China has the whip hand.
0:15:12 And China, therefore, can use this leverage in its negotiations with America.
0:15:14 And that’s exactly what’s happening right now.
0:15:20 So we’re back to the analogy of the Chinese price fighter trash talking the American price
0:15:26 fighter ahead of what we think will be quite bruising negotiations between the US and China
0:15:27 to reach some kind of a deal.
0:15:31 Frankly, I don’t know if they will reach a deal.
0:15:33 I still remain sceptical.
0:15:38 I know that conventional wisdom is saying, yeah, this is all a process.
0:15:39 They’ll get to a deal eventually.
0:15:43 But this time, the emotions are really high.
0:15:45 I just don’t know which way it’s going to fall.
0:15:46 You might have a better sense than me.
0:15:51 Well, I’ve long thought that they would rather play kabuki than have anything substantive
0:15:51 on paper.
0:15:57 Structurally, there are too many difficult issues, intractable issues at play for them to be resolved
0:15:59 as early as this year or even early next year.
0:16:01 So I would be in the same camp as you.
0:16:06 And just to tack on to what you said, I was in Rome over the weekend, talked to a civil servant
0:16:07 in Roman politics.
0:16:14 And they intimated to me that before these export controls that China launched, there
0:16:19 was a feeling that Europe could hedge between US and China and maybe marginally move more
0:16:20 in the China direction.
0:16:26 But certainly that export control announcement has, I think, pushed Europe to reconsider that
0:16:26 strategy.
0:16:30 And in fact, I think that that might end up being China’s Achilles heel.
0:16:33 And in fact, it may have shot itself in the foot by doing this.
0:16:38 Two sort of quick factoids that I’ll put out there so that listeners can get a sense of
0:16:43 just the enormity of China’s advantage in this space is China has 50% of the world’s reserves
0:16:46 naturally in its own borders, more than any other country.
0:16:52 It mines 70% of the world’s rare earths and is responsible for 90% of the processing, as
0:16:52 you say, James.
0:16:56 And the US is 13% of the world’s rare earth reserves.
0:17:00 And most mining activity has stopped since the early 2000s.
0:17:06 So you get a sense of how far back the US has been because of what happened over 20
0:17:07 years ago.
0:17:08 That’s something to bear in mind.
0:17:13 Okay, James, we’ll be back with more after a quick break.
0:17:14 So stay with us.
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0:19:40 In April of last year, the UK government charged two men with gathering and providing information
0:19:41 to China.
0:19:43 Spying, in other words.
0:19:48 Christopher Cash, a former parliamentary researcher, and Christopher Berry, a teacher and consultant,
0:19:53 were alleged to have passed intelligence to a senior member of the Chinese Communist Party
0:19:58 on over 30 occasions from December 2021 to February 2023.
0:20:05 Now, this case was set to go to trial until, abruptly last month, all the charges were subsequently
0:20:05 dropped.
0:20:10 Prosecutors said that the government had failed to provide sufficient evidence that China posed
0:20:12 a national security threat.
0:20:18 Facing pressure to explain what happened last week, the UK Prime Minister, Keir Starmer, publicly
0:20:23 released three witness statements from the case, each written by Deputy National Security
0:20:29 Advisor Matthew Collins, and they contained some, I would say, pretty sensational details with
0:20:34 far-ranging consequences for the future of not just UK politics, but UK-China relations.
0:20:39 James, I have to ask you, I’m so curious, I’ve been reading up about this the last few weeks,
0:20:43 as a Brit, how significant is this case?
0:20:46 Certainly, espionage wasn’t born overnight.
0:20:49 We’ve had a long history of espionage.
0:20:53 But this seems to have really gripped the national and international imagination.
0:20:55 Can you walk us through some of the details?
0:21:00 How did we get to this stage where we’ve got these two Christophers who are implicated in
0:21:02 this national security fiasco?
0:21:05 Yeah, absolutely, Alice.
0:21:08 I mean, you know, just stepping back from the details of the case for a minute, you’re so
0:21:08 right.
0:21:11 The media has been in a frenzy over this in the UK.
0:21:15 I mean, maybe it’s something to do with the UK national psyche.
0:21:17 We all love John le Carré.
0:21:18 We love spy novels.
0:21:19 I love John le Carré.
0:21:23 Many of us live through the tail end of the Cold War.
0:21:29 You know, we remember the spy exchanges across the Misty Bridges in Berlin at the height of
0:21:29 the Cold War.
0:21:33 So this really gets the national interest ticking away.
0:21:41 But just to come back to the case itself, I think that the reason why this spy case in
0:21:45 the UK is important is because it’s much more than a spy case.
0:21:52 It shows how countries, in this case, the UK, but possibly in the future, many more countries
0:21:59 in the West have to manage the conflict between their security interests and their economic
0:21:59 interests.
0:22:04 Obviously, China is a major security player these days.
0:22:08 I’ll be talking a little bit more about things like cyber hacking, cyber spying.
0:22:13 China is clearly a big security challenge for all countries in the West.
0:22:20 But of course, at the same time, it’s a massive market for many of the biggest companies that
0:22:21 we have.
0:22:27 So that’s the fundamental dividing line that I think this case helps to illuminate.
0:22:33 As you said, Alice, the case against the two men accused of spying for China was dropped
0:22:34 last month.
0:22:40 And the director of public prosecution said that the British government had failed to provide
0:22:46 sufficient evidence that China was, quote, a threat to national security.
0:22:52 It has to be said, both of the two men accused of spying have consistently denied any allegations
0:22:53 of wrongdoing.
0:22:55 That needs to be very clear.
0:23:01 But then what happened, which really created a flurry of controversy, was that the government
0:23:09 released three witness statements from Matthew Collins, deputy national security advisor.
0:23:18 And in each of these statements, it’s clear that Collins says that China is a threat to national
0:23:19 security.
0:23:25 Just to give you the detail on that, in the first statement, he says, the Chinese state poses,
0:23:29 quote, a threat to our people, prosperity and security.
0:23:35 In the second statement, he describes various ways in which the government believes it’s been
0:23:39 hacked, cyber hacked, of course, by Chinese state actors.
0:23:46 And in the third statement, he talks of, quote, active espionage threats posed by China to
0:23:47 the UK.
0:23:49 So which is it?
0:23:55 Is it, you know, as the government said throughout this case, that you couldn’t provide sufficient
0:23:58 evidence that China is a threat to national security?
0:24:04 Or is it, as Matthew Collins suggested in his three statements, that China is indeed a threat
0:24:06 to national security?
0:24:10 I’m not saying that one of these precludes the other.
0:24:14 The important thing to mention here is the case was never tried.
0:24:20 So we don’t know if countervailing evidence would have come out in the case that would have
0:24:26 weakened the assertion of the British state that indeed China is a threat to national security.
0:24:30 We just don’t know that because the case was never tried.
0:24:36 But there is, it seems to me, an objective discrepancy between what Matthew Collins says and what
0:24:38 the British government ruled.
0:24:42 So that’s the basic contradiction that we’re dealing with here.
0:24:50 Now, added to all of this is the sense, certainly among some politicians, that the reason the British
0:24:55 government threw the case out was nothing to do with the merits of the case itself.
0:24:57 It was actually political.
0:25:04 And in this regard, we’ve got the conservative leader, Kemi Badenoch, saying that the events,
0:25:06 i.e. the events around the case, leave.
0:25:09 And I should be careful about what I’m quoting here.
0:25:36 So you can see from Kemi Badenoch’s statement there, she’s saying effectively that this was a political decision.
0:25:42 You know, honestly, we have no clue because we don’t know all of the ins and outs of the case
0:25:43 that was never tried.
0:25:49 But it is certainly, as you said at the beginning, Alice, this is certainly creating a storm of
0:25:54 controversy here and raising all kinds of questions about the UK’s relations with China.
0:25:59 I mean, the irony I was thinking as you were talking, James, is that this really happened
0:26:01 during the conservative government.
0:26:05 I mean, one of the Christophers, I believe it was Christopher Cash, who was the parliamentary
0:26:05 researcher.
0:26:10 He was working for Tom Tugendhat, a backbencher in the conservative government at the time.
0:26:17 So for Kemi Badenoch to come out and say this, I think might be a little bit hypocritical or
0:26:21 strike one as being ironic, given that even before the Labour government, the conservative government,
0:26:27 say, under Cameron, was trying to pave the way for a golden relationship with China.
0:26:30 That’s something that sort of struck me as you were talking.
0:26:38 But it sort of begs the broader question, which is the UK, I think, has oftentimes treated
0:26:42 China from a more commercial point of view rather than an ideological point of view.
0:26:49 I think it differs from the US, again, primarily for strategic reasons, because China is not
0:26:52 considered a strategic rival in the same way that it is by the US.
0:26:56 But certainly, I think the UK feels as though there are a lot of commercial stakes at play,
0:27:01 which potentially is driving this, you know, arguably more dovish position on China.
0:27:06 But I was hearing from some people in the national security community that there are concerns about
0:27:12 Chinese malware being added to electronics and goods that are then delivered and shipped to the UK.
0:27:18 What’s your sense of this broader strategic and espionage challenge that China poses for the UK?
0:27:22 Because it doesn’t seem to have the same restrictions on Chinese goods and technologies
0:27:24 that, say, Washington has.
0:27:26 Yeah, absolutely.
0:27:29 I mean, this is the big background to the whole case.
0:27:31 And I was just doing some research.
0:27:39 There is a fascinating new report out by the UK National Cyber Security Center this month
0:27:43 that shows a big increase in cyber attacks on the UK.
0:27:48 And many of these cyber attacks, of course, are trying to get sensitive information, whether
0:27:51 it be corporate sensitive information or government sensitive information.
0:28:01 And the report found that 74% of UK IT leaders, these are people that were canvassed by the report,
0:28:06 identified China as a top concern.
0:28:09 In other words, a top concern behind the cyber attacks.
0:28:14 And that was a bigger percentage than was applied to any other country.
0:28:19 So in other words, China is seen by the UK’s leading IT professionals
0:28:25 as the biggest concern in terms of a country when it comes to cyber attacks.
0:28:34 Now, 18 of the cyber attacks mentioned in this report significantly impacted essential services
0:28:36 in the UK or the wider economy.
0:28:40 So these are regarded as really big, significant cyber attacks.
0:28:48 And the report also says that a, quote, serious incident of cyber hacking or cyber attacking is
0:28:53 now occurring at a rate of nearly one every two days in the UK.
0:28:58 So, you know, if you ask me about this sort of trade-off between economic interests, many
0:29:02 of our biggest companies sell lots of products and goods in China.
0:29:08 Many of them invest in the Chinese economy and they need good relations with China.
0:29:14 But on the other side of the ledger, we’ve got this really worsening security situation that
0:29:20 makes China look like the perpetrator, as you mentioned, of espionage and also of cyber hacking,
0:29:26 cyber attacking on, you know, really important government and corporate entities.
0:29:28 So it’s a tough one.
0:29:35 If you force me to make a judgment, I think that the security concerns will gradually eclipse
0:29:37 the economic benefits.
0:29:43 And I think the orientation of policy will turn gradually more cautious towards China.
0:29:49 Yeah, you arguably have seen the same thing with immigration, where reform has moved the
0:29:54 Overton window towards the Labour Party having a more hawkish position on immigration.
0:29:57 And I think I would agree with you, James.
0:30:02 And again, to put it into the context of our first segment, which was about China shooting
0:30:04 itself in the foot of a rare earths.
0:30:09 I sense that China’s peak geopolitical power was probably just after the summer.
0:30:13 I sense the tides are shifting because, to your point, we’re hearing more stories about
0:30:18 cybersecurity risks in the US posed by China and in the UK as well.
0:30:20 So I sense that there is somewhat of a shift.
0:30:25 But one last thing that I’ll add is that China is planning a super embassy, so to speak, in
0:30:26 London.
0:30:27 But this may be at risk.
0:30:32 Apparently, this proposed facility would stretch across 20,000 square meters, and it will be
0:30:35 the largest embassy in all of Europe.
0:30:41 So apparently, the proposal of the future of this project has been delayed until December
0:30:42 10th.
0:30:45 It may be delayed beyond that, but that’s certainly something to keep in mind.
0:30:46 All right.
0:30:47 So let’s take a quick break.
0:30:48 Stay with us.
0:31:06 My name is Tom Elias.
0:31:08 I’m one of the co-founders at Bedrock Robotics.
0:31:12 Bedrock Robotics is creating AI for the built world.
0:31:17 We are bringing advanced autonomy to heavy equipment to tackle America’s construction crisis.
0:31:22 There is a tremendous demand for progress in America through civil projects, yet half a
0:31:24 million jobs in construction remain unfilled.
0:31:29 We were part of the 2024 AWS Gen AI Accelerator program.
0:31:31 As soon as we saw it, we knew that we had to apply.
0:31:37 The AWS Gen AI Accelerator program supports startups that are building ambitious companies using
0:31:38 Gen AI and physical AI.
0:31:44 The program provides infrastructure support that matches an ambitious scale of growth for companies
0:31:45 like Bedrock Robotics.
0:31:50 Now, after the accelerator, about a year later, we announced that we raised about $80 million
0:31:51 in funding.
0:31:55 We are scaling our autonomy to multiple sites.
0:31:58 We’re making deep investments in technology and partners.
0:32:04 We have a lot more clarity on what autonomy we need to build and what systems and techniques
0:32:06 and partners we need to make it happen.
0:32:10 It’s the folks that we have working all together inside Bedrock Robotics.
0:32:16 But it’s also our partners like Amazon really all trying to work together to figure out what
0:32:20 is physical AI and how do we affect the world in a positive way.
0:32:35 Well, welcome back.
0:32:40 James, this has to be my favorite segment for today, and that is whether or not China can
0:32:40 get to the moon.
0:32:45 China’s advancements in science and technology aren’t just in artificial intelligence.
0:32:50 They’re making huge strides into outer space, with many observers noting that China may have
0:32:53 the resources to beat America back to the moon.
0:32:59 In the US, NASA, along with Elon Musk’s SpaceX as a partner, announced the Artemis 3 mission
0:33:03 just a couple of years ago, which is planned for 2027.
0:33:09 But some high-profile launch failures have raised concerns that SpaceX might be behind schedule,
0:33:13 and the budget cuts and ongoing government shutdown have hollowed out NASA.
0:33:18 The White House, I was looking at this the other day, proposed a 24% cut to NASA’s budget
0:33:23 in 2026, bringing the budget to the lowest levels seen since 1961.
0:33:26 And that was before they landed a man on the moon.
0:33:30 Meanwhile, China successfully completed their mission on the far side of the moon last year,
0:33:33 which was the first of its kind.
0:33:37 And Beijing has said that they want to land humans on the moon by 2030.
0:33:41 I find this fascinating because as a kid, I’ve always loved space.
0:33:44 But I also think this is fascinating for two reasons, James.
0:33:48 One is in the context of great power rivalry.
0:33:54 And the other one is the way in which a lot of these space technologies have dual use
0:33:54 implications.
0:34:00 What struck me when I was researching this was the similarities between the Soviet and U.S.
0:34:03 relationship during the early part of the Cold War.
0:34:05 It was really Sputnik.
0:34:11 The Soviets launching of the first satellite into space in 57 that prompted the creation of NASA
0:34:14 by Eisenhower a year later in 1958.
0:34:22 And it was subsequently the Soviets who got Yuri Gagarin and a dog into space that prompted Kennedy’s famous speech,
0:34:23 we choose to go to the moon.
0:34:31 The U.S. in some respects was propelled by the Soviets to race to the moon and to race to space.
0:34:38 And as soon as the Soviet Union collapsed, it was almost as if NASA and the whole project to go to the moon collapsed as well.
0:34:48 But I think the dynamic is shifting again now with China really wanting to get what it calls taikonauts, so to borrow a Chinese term, its version of astronauts into space.
0:34:57 That project, I think, is propelling the Trump administration to launch Project Artemis, which is to get American men and women back onto the moon.
0:35:05 I think this is a really, really interesting case study of how great power rivalry pushes people along the technological frontier
0:35:10 and a great story for how conflict really breeds technological innovation,
0:35:14 whether you look at shipbuilding through the 17th, 18th century,
0:35:19 you look at the nuclear bomb in the middle of the 20th century,
0:35:23 and fast forward to now, you look at the space race and all the attendant technologies.
0:35:25 Part of this is going to be a satellite discussion,
0:35:28 and I’m curious to hear what your thoughts are on this, James,
0:35:32 where China has roughly about 900 satellites in orbit,
0:35:36 and it’s overtaken the UK as this country with the second most satellites,
0:35:39 but it’s still quite a bit behind the US.
0:35:42 I mean, the US has 9,000 satellites in orbit,
0:35:47 and I was calculating it spends about 10 times more than the Chinese on the space sector,
0:35:49 although China is exponentially growing it.
0:35:55 So it remains to be seen how this all pans out in this greater space race,
0:35:58 but again, I’m very curious what you have to say on this, James,
0:36:00 and whether or not you’re a fan of space.
0:36:03 Yeah, I’m a big fan of space.
0:36:05 Just like Xi Jinping, the Chinese leader,
0:36:09 I’ve been coming up with some quotes that he’s had on space recently.
0:36:10 But as I see it,
0:36:24 this race back to the moon because of course the US put a man on the moon in 1972 and China has yet to put a man on the moon or a woman on the moon is really focusing people’s attention.
0:36:41 So that seems way beyond the current schedule for the SpaceX system, which is called Starship Human Landing System,
0:36:45 which is scheduled for 2027.
0:36:53 But as you alluded to, there is a sense that the SpaceX program could be delayed.
0:36:55 There seems to be some issues.
0:36:59 And of course, the SpaceX lunar lander needs to be built.
0:37:04 So we really don’t know who is ahead at the moment.
0:37:11 By the way, in August this year, China successfully tested its own lunar lander,
0:37:14 not in space, but on dry land in a northern Chinese province.
0:37:17 And everything seemed to work fine.
0:37:22 The ascend systems, the descent systems, it all seemed to go well, according to reports.
0:37:29 And this lunar lander, which is called Lan Yue, which means embrace the moon in Chinese,
0:37:36 is going to serve as a living space, a power source and a data center after it lands on the moon.
0:37:39 So it’s quite an ambitious project in itself.
0:37:46 And this brings me to Xi Jinping and what the nature of China’s true lunar ambitions really are.
0:37:50 First of all, Xi Jinping is what we would call a big space nut.
0:37:58 I mean, he talks boldly about going into space, using celestial bodies for human advancement.
0:38:01 He talks about intraplanetary exploration.
0:38:04 He really loves the whole topic.
0:38:09 And last year, he went into rhetorical raptures when, as you said,
0:38:15 this China lunar module picked up samples from the dark side of the moon for the first time ever.
0:38:21 But to me, it raises questions as to what China’s endgame is.
0:38:23 You know, what are its lunar ambitions?
0:38:29 Is it just wanting to put somebody onto the moon and gain the propaganda success that that will bring?
0:38:33 Or is it going after what’s on the moon?
0:38:34 Resources.
0:38:38 Maybe even some of the rare earths that we were talking about at the top of the program.
0:38:41 Maybe China wants to claim parts of the moon.
0:38:46 I think these questions are sort of lurking out somewhere in mid-orbit.
0:38:51 And they may become a lot more germane as China goes forward.
0:38:57 But in general, as you said, Alice, the U.S. is still quite a long way ahead when it comes to space.
0:38:57 Yeah.
0:39:07 You mentioned the U.S. has gotten many more successful orbital launches than China.
0:39:11 And the U.S. has been spending much more than China over many years.
0:39:12 So the U.S. is ahead.
0:39:28 But this effort by China to put somebody on the moon before 2030 really, I think, focuses the attentions on what China’s really planning for space and what it’s going to do when it gets there, when it gets to the moon.
0:39:32 I mean, I think about this in relation to how China conceives of great power politics.
0:39:38 It wants to have a seat at the table, whether it’s in the Arctic or whether it’s in the multilateral institutions.
0:39:46 I think it’s China saying, look, we want to be front and center more than we have ever been and actually have a stake.
0:39:55 I thought it was quite interesting that in 2024, so last June, China planted a national flag made from basalt fiber on the far side of the moon.
0:39:57 And apparently this is indestructible.
0:40:03 And the whole point is that Americans can see this or the rest of the world can see this without it being ever destroyed.
0:40:07 I thought that was an interesting visual depiction of China’s ambitions.
0:40:17 But the other two ways that I think about this issue at play, number one is China is not privy to the research sharing of the Artemis Accord that the U.S. launched.
0:40:24 So the U.S. shares information with, I would say, largely allied countries when it comes to space-related data.
0:40:32 China instead launched its own rival initiative called the International Lunar Research Station Initiative with Russia and a host of other countries.
0:40:37 I would say largely small global south countries like Senegal and Venezuela and Nicaragua.
0:40:41 But that, again, shows you how China really does want to have a seat at the table.
0:40:48 The second thing that I would say is the way that I think about this is kind of like the race to the vaccine back in COVID.
0:41:02 Is that the U.S. benefited from this strong relationship between a very innovative private sector, in the case of the vaccines Moderna, the mRNA technology, and the military-industrial complex led by the government.
0:41:08 So Operation Warp Speed really made America the front-runner in the vaccine race.
0:41:15 And I think a similar dynamic is at play when we think about SpaceX, Elon Musk’s SpaceX relationship with the U.S. government.
0:41:29 I mean, it’s baffling to me, James, that I wonder what Kennedy would actually think if he were to come to the present day and realize that actually most of the satellites and most of the successful launches are made by a private company owned by Elon Musk, a South African.
0:41:38 So, you know, SpaceX conducts 52% of all global orbital launches, and it controls more than 7,600 satellites.
0:41:42 That’s 65% of all active satellites in orbit.
0:41:50 And Musk has made it very clear that he wants Starlink to be the de facto broadband backbone of space.
0:41:57 So I think, again, we’ve got this Rockefeller-like figure who’s playing a decisive role and may ultimately put the U.S. ahead.
0:41:58 That’s my hot take.
0:42:00 That’s a very good point.
0:42:06 It’s a private company led by a South African, contracted by the U.S. space agency, NASA.
0:42:12 And this is so different from the Chinese effort, which is obviously state-led, state-funded, state-controlled.
0:42:16 It’s basically the Chinese state that’s going to space.
0:42:16 Exactly.
0:42:20 So, yeah, two very different models at play in this space race.
0:42:26 All right, James, last week we did skip this, so now it’s time for prediction time.
0:42:31 Each week, James and I are going to put forward one prediction about something China-related.
0:42:33 So why don’t you go first and then I’ll share mine.
0:42:38 Okay, Alice, I think, you know, we’ve got some big Chinese meetings coming up.
0:42:41 We’ve got the fourth plenum, which I won’t go into.
0:42:44 Just suffice it to say it’s a big Communist Party meeting.
0:42:53 I think the most important technology aspect of the Chinese plenum this month will be artificial intelligence.
0:43:00 And I think it will also be the most important technology aspect of the five-year plan,
0:43:04 which will be announced next spring and which will follow the plenum.
0:43:12 The reason why I think this is important is because China’s got a different approach to AI from the United States.
0:43:23 In the U.S., a lot of the energies with regard to artificial intelligence are about a moonshot towards what’s called artificial general intelligence, AGI,
0:43:28 which is supposed to be the time when machines can basically teach themselves.
0:43:35 But China’s approach, as will be seen in this plenum and subsequently in the five-year plan published next spring,
0:43:44 is to use AI as applications to drive just about every other form of human endeavor.
0:44:00 And so I think that there will be a plan explicitly which will say that AI needs to be incorporated in 90% of the equipment and applications by 2030 in six broad sectors.
0:44:08 And these are science and technology, industrial development, consumption, people’s well-being, governance capability, and global cooperation.
0:44:18 So the point I’m trying to make is that China wants to use AI to power technologies and to make money, and that’s its main concern.
0:44:24 Of course, it’s also going for artificial general intelligence, just like the U.S. is.
0:44:34 But on the way there, it’s trying to make money from AI and use AI, harness AI to power basically the whole country.
0:44:36 So it couldn’t be more important.
0:44:46 I think that this plenum and the subsequent five-year plan will be seen as historic with regard to how much it pushed artificial intelligence.
0:44:48 Yeah, I would agree with that.
0:44:55 And I think a lot of the focus will be on some of these chokepoint industries where China may relatively be somewhat vulnerable.
0:44:59 Chips, for instance, some aspects of biotech and aviation equipment.
0:45:01 And to your point, James, I would agree with you.
0:45:05 I think this might be one of the most consequential five-year plans we’ve seen in a while.
0:45:07 So watch this space.
0:45:12 This time next week, we’ll give everyone a lowdown of what actually happened at the five-year plan.
0:45:17 All right, so my take is somewhat left-field or rather more Japanese-shaped.
0:45:27 I’ve been reading a lot about the future potential prime minister of Japan, who in some circles is known as the Japanese Thatcher, the Iron Lady.
0:45:30 She will be the first female prime minister of Japan.
0:45:35 And she will lead a very, I think, hawkish pivot again on China policy.
0:45:42 When you read some of her works, and she’s apparently a prolific writer, China is a big focus in her writings.
0:45:45 It’s a strategic rival, an adversary.
0:45:51 I sense that under her leadership, we may see more inroads into nuclearization.
0:45:54 Japan may ultimately get a nuclear bomb.
0:46:01 That may change the strategic balance on the Korean Peninsula, on Taiwan, straight relations, on the China issue writ large.
0:46:15 And secondly, back to the critical minerals point, I think she could be part of the pivot amongst the G7 to lean in a more hawkish direction, to collaborate more amongst each other, and to decouple further from China.
0:46:22 I sense that maybe Xi and Trump will be the new Thatcher and Reagan of our times.
0:46:24 That’s my hot take for the week.
0:46:27 All right, that’s all for this episode.
0:46:29 Thank you for listening to China Decode.
0:46:31 This is a production of Prof G Media.
0:46:33 Our producer is David Toledo.
0:46:36 Our associate producer is Eric Janikas.
0:46:39 Our research associate is Dan Shalan.
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0:46:44 Our engineer is William Flynn.
0:46:47 And our executive producer is Catherine Dillon.
0:46:52 Make sure to follow us wherever you get your podcasts so you don’t miss an episode.
0:46:54 And we’ll talk to you again next week.
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0:01:50 I know that conventional wisdom is saying, yep, this is all a process.
0:01:52 They’ll get to a deal eventually.
0:01:55 But this time, the emotions are really high.
0:01:57 I just don’t know which way it’s going to fall.
0:01:59 You might have a better sense than me.
0:02:04 Well, I’ve long thought that they would rather play kabuki than have anything substantive on paper.
0:02:08 Structurally, there are too many difficult issues, intractable issues at play,
0:02:12 for them to be resolved as early as this year or even early next year.
0:02:14 So I would be in the same camp as you.
0:02:21 Welcome to China Decode.
0:02:22 I’m Alice Han.
0:02:23 And I’m James King.
0:02:26 In today’s episode of China Decode, we’re discussing
0:02:30 how Trump’s trade war with Beijing threatens the global economy,
0:02:33 the spy scandal that rocked Great Britain,
0:02:36 raising major questions about UK-China relations,
0:02:40 and experts in the U.S. see China’s capabilities in the space sector
0:02:42 quickly catching up to theirs.
0:02:45 But who will make it back to the moon first?
0:02:48 All right, James, we’ve got a lot to get into.
0:02:51 But first, let me ask, how has the last week been for you?
0:02:55 Oh, never a dull week in U.S.-China relations, Alice.
0:02:59 I mean, really, it’s just it’s keeping us on the treadmill, I can say that.
0:03:00 How about you?
0:03:02 Well, I thought I could take a little bit of a break
0:03:05 before the APEC summit and potential Trump-Xi meeting.
0:03:09 But it seems that we’ve transitioned yet again from detente to brinkmanship.
0:03:14 And now, you know, everyone is laser focused on whether or not there will be a meeting
0:03:16 and whether or not there will be a deal.
0:03:19 So no rest for the wicked, it seems.
0:03:21 All right, well, let’s get into it.
0:03:27 Last week, many observers described the escalations in the U.S.-China trade war as existential.
0:03:31 And certainly, James, I’m sure that you have felt this way.
0:03:35 We’ve been exceptionally busy, I would say, in the last week, We China Watchers.
0:03:41 We’ve seen potentially massive implications, not just for these two countries, but for the global economy.
0:03:47 We’ve got things like export controls, rare earth metal restrictions, chip embargoes, and ship docking fees.
0:03:54 Now, these can seem exceptionally bureaucratic and complicated and, frankly, a little bit hard to wrap your head around.
0:04:02 So we’re here to try to separate fact from fiction and make it a bit more straightforward, even though I think it is still quite a complicated issue.
0:04:08 It seems that the fate of the world’s economy might depend on whether or not they can cut a deal.
0:04:12 But I won’t be too dramatic, and I’ll get right into the meat of things.
0:04:21 James, you know, firstly, I want to start off with export controls, because I think a lot of people are somewhat confused about what export controls are,
0:04:26 how China and the U.S. have deployed them, what the actual implementation process looks like.
0:04:36 Certainly, what struck me when I looked at the recent bout of export controls was the fact that China has gone further than it did in previous years,
0:04:39 in which it was a simple, to some extent, licensure regime.
0:04:49 MOFCOM, the Ministry of Commerce, would basically enforce rules for exporters of rare earths to acquire a license, effectively, to export out of China.
0:04:56 Now it seems like China has cast a longer shadow and is basically mandating not just domestic companies,
0:05:05 but also foreign companies that use as little as 0.1% of the total goods from rare earths coming from China to have to apply to these licenses as well.
0:05:11 That seems to me, when I think about it from a bureaucratic perspective, exceptionally difficult to realize.
0:05:19 And even when I think about in previous years, when China put these license regimes in place, these things took time.
0:05:27 And in fact, you had issues in 12.0% when licenses weren’t delivered on time, supply was somewhat limited, it affected the market.
0:05:33 I find it very hard to believe that MOFCOM is going to sit there and physically go through every good line by line
0:05:37 that has as little as 0.1% total goods from Chinese rare earths.
0:05:39 What’s your take on this, James?
0:05:46 Well, as you said, Alice, everyone’s talking about this fight between the US and China in very, very stark terms.
0:05:48 You used the word existential.
0:05:56 Before I get to the details, and let’s do a little bit of an explainer of what these export controls really boiled down to.
0:06:02 But before I get to that, let’s have a little taste of the invective that’s reached new heights in recent days,
0:06:05 going back and forth between the US and China.
0:06:15 In the words of Gideon Rachman in the Financial Times, it’s like a couple of heavyweight boxers trash-talking each other before a fight.
0:06:19 But I think the real question is, is this actually going to come to blows?
0:06:26 Or are the two heavyweight boxers going to patch things up, patch up their differences before the fight occurs?
0:06:31 And we just don’t know at this stage what’s going to happen in that regard.
0:06:40 But anyway, in terms of the rhetorical punch-up, Scott Besant, the US Treasury Secretary, said that when it comes to trade,
0:06:44 quote, this is China versus the world.
0:06:51 He said that if Beijing does not withdraw its threat to restrict exports of these rare earth minerals,
0:06:55 then the world will have to decouple from China.
0:06:58 You really can’t get much starker than that.
0:07:00 Beijing, though, it hit back.
0:07:07 It said that the Trump administration’s threat to impose 100% tariffs on China were, quote,
0:07:11 a typical example of US double standards.
0:07:20 And just to add to the whole mood, the Chinese foreign ministry put out a video showing Chairman Mao Zedong
0:07:25 during the Korean War, that was in the 1950s, proclaiming,
0:07:30 no matter how long this war will last, we will never yield.
0:07:36 So you can see on both sides, in the US and in China, emotions are running really high.
0:07:36 Yeah.
0:07:39 I must say, I’ve been covering China for more than 35 years.
0:07:41 I’ve never seen anything like this.
0:07:43 This really is emotional.
0:07:48 But maybe I could give a little bit of a recap, Alice, on, you know,
0:07:52 the nuts and bolts of where we are on export controls and what they mean.
0:07:53 That’d be great.
0:07:55 Honestly, I think almost everyone needs this primer.
0:07:56 So fire away, James.
0:07:56 OK.
0:08:04 So on October the 9th, China’s Ministry of Commerce came out with a slew of new regulations
0:08:06 on these rare earth exports.
0:08:11 Now, these rare earths have long names that, you know,
0:08:12 normally we wouldn’t know.
0:08:18 But basically, they’re crucial minerals that are used in making everything from smartphones
0:08:26 to electric vehicles and also, and this is key, to many different weapons, such as submarine
0:08:33 engines, radar systems, missile guidance systems, even the F-35 US fighter jet.
0:08:40 So basically, what China said is that if you’re a foreign company and you want to export products
0:08:46 that are made with, as you mentioned, Alice, even a trace of these rare earths that are sourced
0:08:51 from China, then you need to apply and get a license from China.
0:09:01 And of course, this is crucial because China processes about 90% of the rare earths that are used in the world.
0:09:07 So almost everything, almost all of the high-tech technologies that use these critical minerals
0:09:15 are therefore subject to licensing from China, they added something else onto that, which is that any equipment
0:09:22 that you might buy from China in order to process your own rare earths also has to be licensed from China.
0:09:28 So it really gives China a stranglehold over this crucial aspect of global trade.
0:09:36 And it means that if China wanted to, and I’m not saying it will, but if it wanted to, it could simply stop
0:09:43 huge chunks of global trade, huge numbers of high-tech goods from being imported and exported.
0:09:47 So I think that’s the really crucial background to this.
0:09:49 How do you see it all panning out from here?
0:09:56 Well, I come back to this conclusion that China kind of bungled this announcement.
0:10:06 And the reason I think about it in this way is that I think Besant was canny to make it a China
0:10:07 versus the rest of the world argument.
0:10:12 We’ve seen, I think, more moves amongst the G7 countries, I would say in particular Europe
0:10:18 and Japan, to really start to go beyond the rhetoric of getting the act together.
0:10:23 I think that in the coming months, there may be more movements to try to get more of a collaborative
0:10:28 set of projects on the ground for alternative supply chains of critical minerals.
0:10:35 And I think that China’s, again, the long shadow that it’s cast by borrowing America’s foreign direct product rule
0:10:40 of, you know, de minimis or percentage of a component from Chinese critical minerals,
0:10:46 that framework or that approach, I think, has really discombobulated and disconcerted a lot
0:10:52 of the G7 countries because it effectively gives China the optionality at any given point
0:10:57 in time to say, well, look, Brussels, we don’t like your policy on X.
0:11:03 So we’re going to stop the sale or exports of certain types of critical minerals or certain
0:11:06 types of goods that have a component of critical minerals from China.
0:11:10 That, I think, at a strategic level is deeply worrying.
0:11:15 I sense that China is trying to backpedal a little bit on this issue because it didn’t
0:11:19 realize how big a deal it was for a lot of these G7 countries.
0:11:21 But I think the cat is out of the bag already.
0:11:27 And it reminds me somewhat of what happened in 2010, if you recall, with the Japan-China
0:11:33 Senkaku, Jiao Yutai spat over the islands, in which China then launched a two-month full
0:11:35 embargo of rare earths on Japan.
0:11:41 I think a trigger has been set in place to get the G7 countries, I think, to take a more
0:11:44 concerted effort towards supply chain resilience.
0:11:49 What I would add to what you’re saying, James, is the fact that America can’t do it alone.
0:11:51 America is so behind.
0:11:57 MP Materials is the only company that has mines of rare earths that’s actually active
0:11:57 in California.
0:12:03 And Novion is the only American company in tangent with Linus, an Australian mining company that
0:12:06 can potentially produce performance magnets.
0:12:11 Performance magnets, as you rightly say, James, that are used in military equipment, in defense
0:12:15 equipment, as well as wind turbines, batteries, and EVs.
0:12:22 So I sense that China has this window of opportunity, call it three, four, five years, to have this
0:12:25 choke point, or rather choke hold, on America.
0:12:31 But when you broaden out beyond that five-year horizon, the technology itself isn’t difficult.
0:12:31 It’s not expensive.
0:12:33 It’s just extremely pollutive.
0:12:41 And it requires, I think, in the U.S. case, private-public partnerships, which, again, we can
0:12:43 debate whether or not that is possible, given the climate.
0:12:48 But certainly, if the G7 banded together, I think that they could produce a potential
0:12:49 alternative supply chain.
0:12:53 But certainly, in this narrow amount of time, call it three years, I think China has maximum
0:12:56 pressure on the rare earths issue.
0:12:57 That’s how I think about it more broadly.
0:12:59 Yeah, absolutely.
0:13:00 I very much agree with that.
0:13:02 At least three years, I think.
0:13:06 I must say, though, I do think it’s really interesting that there has been a stock price
0:13:10 rally in a lot of these companies that produce rare earths outside China.
0:13:13 You mentioned one there, MP Materials.
0:13:20 But we’ve also seen the share price of USA Rare Earth and Australia’s Linus, that’s an Australian
0:13:23 company, that have more than doubled this year.
0:13:30 And we’re starting to see, as well, the U.S. state itself taking stakes in some of these rare
0:13:38 rare earths companies like Lithium Americas, Trilogy Metals, which are two Canadian miners, in attempts
0:13:41 to bolster their financial firepower.
0:13:48 So it certainly seems to be the case that we’re beginning to make out the contours of the U.S.
0:13:52 government being really galvanized by this issue and really putting some money into it.
0:13:58 And investors starting to follow that lead, thinking, wow, there’s going to be such a shortage
0:14:01 of rare earths that are produced outside China.
0:14:04 This has got to be an opportunity for the investors.
0:14:10 And just to also chime with your comments about the G7 getting galvanized, I noticed that there
0:14:15 is similar disquiet about rare earths within the European Union.
0:14:22 And there was a statement by the Aerospace Security and Defense Industries Association of Europe.
0:14:24 Apologies for the long name.
0:14:32 But it’s a big organization that represents about 4,000 companies, mostly in sort of aerospace
0:14:33 and military.
0:14:40 And they’ve put out a statement saying they’re keeping a watchful eye on new Chinese measures.
0:14:44 That’s kind of diplomatic language for we’re really scared about this.
0:14:46 We’re really anxious about this.
0:14:53 And so I would say the impetus in Europe for doing something perhaps with America, perhaps
0:14:55 going it alone, is fairly strong as well.
0:15:00 But as you say, Alice, that will be in the long term.
0:15:02 We’re talking several years.
0:15:06 And in the meantime, minimum three years, China has the whip hand.
0:15:12 And China, therefore, can use this leverage in its negotiations with America.
0:15:14 And that’s exactly what’s happening right now.
0:15:20 So we’re back to the analogy of the Chinese price fighter trash talking the American price
0:15:26 fighter ahead of what we think will be quite bruising negotiations between the US and China
0:15:27 to reach some kind of a deal.
0:15:31 Frankly, I don’t know if they will reach a deal.
0:15:33 I still remain sceptical.
0:15:38 I know that conventional wisdom is saying, yeah, this is all a process.
0:15:39 They’ll get to a deal eventually.
0:15:43 But this time, the emotions are really high.
0:15:45 I just don’t know which way it’s going to fall.
0:15:46 You might have a better sense than me.
0:15:51 Well, I’ve long thought that they would rather play kabuki than have anything substantive
0:15:51 on paper.
0:15:57 Structurally, there are too many difficult issues, intractable issues at play for them to be resolved
0:15:59 as early as this year or even early next year.
0:16:01 So I would be in the same camp as you.
0:16:06 And just to tack on to what you said, I was in Rome over the weekend, talked to a civil servant
0:16:07 in Roman politics.
0:16:14 And they intimated to me that before these export controls that China launched, there
0:16:19 was a feeling that Europe could hedge between US and China and maybe marginally move more
0:16:20 in the China direction.
0:16:26 But certainly that export control announcement has, I think, pushed Europe to reconsider that
0:16:26 strategy.
0:16:30 And in fact, I think that that might end up being China’s Achilles heel.
0:16:33 And in fact, it may have shot itself in the foot by doing this.
0:16:38 Two sort of quick factoids that I’ll put out there so that listeners can get a sense of
0:16:43 just the enormity of China’s advantage in this space is China has 50% of the world’s reserves
0:16:46 naturally in its own borders, more than any other country.
0:16:52 It mines 70% of the world’s rare earths and is responsible for 90% of the processing, as
0:16:52 you say, James.
0:16:56 And the US is 13% of the world’s rare earth reserves.
0:17:00 And most mining activity has stopped since the early 2000s.
0:17:06 So you get a sense of how far back the US has been because of what happened over 20
0:17:07 years ago.
0:17:08 That’s something to bear in mind.
0:17:13 Okay, James, we’ll be back with more after a quick break.
0:17:14 So stay with us.
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0:19:34 Welcome back.
0:19:40 In April of last year, the UK government charged two men with gathering and providing information
0:19:41 to China.
0:19:43 Spying, in other words.
0:19:48 Christopher Cash, a former parliamentary researcher, and Christopher Berry, a teacher and consultant,
0:19:53 were alleged to have passed intelligence to a senior member of the Chinese Communist Party
0:19:58 on over 30 occasions from December 2021 to February 2023.
0:20:05 Now, this case was set to go to trial until, abruptly last month, all the charges were subsequently
0:20:05 dropped.
0:20:10 Prosecutors said that the government had failed to provide sufficient evidence that China posed
0:20:12 a national security threat.
0:20:18 Facing pressure to explain what happened last week, the UK Prime Minister, Keir Starmer, publicly
0:20:23 released three witness statements from the case, each written by Deputy National Security
0:20:29 Advisor Matthew Collins, and they contained some, I would say, pretty sensational details with
0:20:34 far-ranging consequences for the future of not just UK politics, but UK-China relations.
0:20:39 James, I have to ask you, I’m so curious, I’ve been reading up about this the last few weeks,
0:20:43 as a Brit, how significant is this case?
0:20:46 Certainly, espionage wasn’t born overnight.
0:20:49 We’ve had a long history of espionage.
0:20:53 But this seems to have really gripped the national and international imagination.
0:20:55 Can you walk us through some of the details?
0:21:00 How did we get to this stage where we’ve got these two Christophers who are implicated in
0:21:02 this national security fiasco?
0:21:05 Yeah, absolutely, Alice.
0:21:08 I mean, you know, just stepping back from the details of the case for a minute, you’re so
0:21:08 right.
0:21:11 The media has been in a frenzy over this in the UK.
0:21:15 I mean, maybe it’s something to do with the UK national psyche.
0:21:17 We all love John le Carré.
0:21:18 We love spy novels.
0:21:19 I love John le Carré.
0:21:23 Many of us live through the tail end of the Cold War.
0:21:29 You know, we remember the spy exchanges across the Misty Bridges in Berlin at the height of
0:21:29 the Cold War.
0:21:33 So this really gets the national interest ticking away.
0:21:41 But just to come back to the case itself, I think that the reason why this spy case in
0:21:45 the UK is important is because it’s much more than a spy case.
0:21:52 It shows how countries, in this case, the UK, but possibly in the future, many more countries
0:21:59 in the West have to manage the conflict between their security interests and their economic
0:21:59 interests.
0:22:04 Obviously, China is a major security player these days.
0:22:08 I’ll be talking a little bit more about things like cyber hacking, cyber spying.
0:22:13 China is clearly a big security challenge for all countries in the West.
0:22:20 But of course, at the same time, it’s a massive market for many of the biggest companies that
0:22:21 we have.
0:22:27 So that’s the fundamental dividing line that I think this case helps to illuminate.
0:22:33 As you said, Alice, the case against the two men accused of spying for China was dropped
0:22:34 last month.
0:22:40 And the director of public prosecution said that the British government had failed to provide
0:22:46 sufficient evidence that China was, quote, a threat to national security.
0:22:52 It has to be said, both of the two men accused of spying have consistently denied any allegations
0:22:53 of wrongdoing.
0:22:55 That needs to be very clear.
0:23:01 But then what happened, which really created a flurry of controversy, was that the government
0:23:09 released three witness statements from Matthew Collins, deputy national security advisor.
0:23:18 And in each of these statements, it’s clear that Collins says that China is a threat to national
0:23:19 security.
0:23:25 Just to give you the detail on that, in the first statement, he says, the Chinese state poses,
0:23:29 quote, a threat to our people, prosperity and security.
0:23:35 In the second statement, he describes various ways in which the government believes it’s been
0:23:39 hacked, cyber hacked, of course, by Chinese state actors.
0:23:46 And in the third statement, he talks of, quote, active espionage threats posed by China to
0:23:47 the UK.
0:23:49 So which is it?
0:23:55 Is it, you know, as the government said throughout this case, that you couldn’t provide sufficient
0:23:58 evidence that China is a threat to national security?
0:24:04 Or is it, as Matthew Collins suggested in his three statements, that China is indeed a threat
0:24:06 to national security?
0:24:10 I’m not saying that one of these precludes the other.
0:24:14 The important thing to mention here is the case was never tried.
0:24:20 So we don’t know if countervailing evidence would have come out in the case that would have
0:24:26 weakened the assertion of the British state that indeed China is a threat to national security.
0:24:30 We just don’t know that because the case was never tried.
0:24:36 But there is, it seems to me, an objective discrepancy between what Matthew Collins says and what
0:24:38 the British government ruled.
0:24:42 So that’s the basic contradiction that we’re dealing with here.
0:24:50 Now, added to all of this is the sense, certainly among some politicians, that the reason the British
0:24:55 government threw the case out was nothing to do with the merits of the case itself.
0:24:57 It was actually political.
0:25:04 And in this regard, we’ve got the conservative leader, Kemi Badenoch, saying that the events,
0:25:06 i.e. the events around the case, leave.
0:25:09 And I should be careful about what I’m quoting here.
0:25:36 So you can see from Kemi Badenoch’s statement there, she’s saying effectively that this was a political decision.
0:25:42 You know, honestly, we have no clue because we don’t know all of the ins and outs of the case
0:25:43 that was never tried.
0:25:49 But it is certainly, as you said at the beginning, Alice, this is certainly creating a storm of
0:25:54 controversy here and raising all kinds of questions about the UK’s relations with China.
0:25:59 I mean, the irony I was thinking as you were talking, James, is that this really happened
0:26:01 during the conservative government.
0:26:05 I mean, one of the Christophers, I believe it was Christopher Cash, who was the parliamentary
0:26:05 researcher.
0:26:10 He was working for Tom Tugendhat, a backbencher in the conservative government at the time.
0:26:17 So for Kemi Badenoch to come out and say this, I think might be a little bit hypocritical or
0:26:21 strike one as being ironic, given that even before the Labour government, the conservative government,
0:26:27 say, under Cameron, was trying to pave the way for a golden relationship with China.
0:26:30 That’s something that sort of struck me as you were talking.
0:26:38 But it sort of begs the broader question, which is the UK, I think, has oftentimes treated
0:26:42 China from a more commercial point of view rather than an ideological point of view.
0:26:49 I think it differs from the US, again, primarily for strategic reasons, because China is not
0:26:52 considered a strategic rival in the same way that it is by the US.
0:26:56 But certainly, I think the UK feels as though there are a lot of commercial stakes at play,
0:27:01 which potentially is driving this, you know, arguably more dovish position on China.
0:27:06 But I was hearing from some people in the national security community that there are concerns about
0:27:12 Chinese malware being added to electronics and goods that are then delivered and shipped to the UK.
0:27:18 What’s your sense of this broader strategic and espionage challenge that China poses for the UK?
0:27:22 Because it doesn’t seem to have the same restrictions on Chinese goods and technologies
0:27:24 that, say, Washington has.
0:27:26 Yeah, absolutely.
0:27:29 I mean, this is the big background to the whole case.
0:27:31 And I was just doing some research.
0:27:39 There is a fascinating new report out by the UK National Cyber Security Center this month
0:27:43 that shows a big increase in cyber attacks on the UK.
0:27:48 And many of these cyber attacks, of course, are trying to get sensitive information, whether
0:27:51 it be corporate sensitive information or government sensitive information.
0:28:01 And the report found that 74% of UK IT leaders, these are people that were canvassed by the report,
0:28:06 identified China as a top concern.
0:28:09 In other words, a top concern behind the cyber attacks.
0:28:14 And that was a bigger percentage than was applied to any other country.
0:28:19 So in other words, China is seen by the UK’s leading IT professionals
0:28:25 as the biggest concern in terms of a country when it comes to cyber attacks.
0:28:34 Now, 18 of the cyber attacks mentioned in this report significantly impacted essential services
0:28:36 in the UK or the wider economy.
0:28:40 So these are regarded as really big, significant cyber attacks.
0:28:48 And the report also says that a, quote, serious incident of cyber hacking or cyber attacking is
0:28:53 now occurring at a rate of nearly one every two days in the UK.
0:28:58 So, you know, if you ask me about this sort of trade-off between economic interests, many
0:29:02 of our biggest companies sell lots of products and goods in China.
0:29:08 Many of them invest in the Chinese economy and they need good relations with China.
0:29:14 But on the other side of the ledger, we’ve got this really worsening security situation that
0:29:20 makes China look like the perpetrator, as you mentioned, of espionage and also of cyber hacking,
0:29:26 cyber attacking on, you know, really important government and corporate entities.
0:29:28 So it’s a tough one.
0:29:35 If you force me to make a judgment, I think that the security concerns will gradually eclipse
0:29:37 the economic benefits.
0:29:43 And I think the orientation of policy will turn gradually more cautious towards China.
0:29:49 Yeah, you arguably have seen the same thing with immigration, where reform has moved the
0:29:54 Overton window towards the Labour Party having a more hawkish position on immigration.
0:29:57 And I think I would agree with you, James.
0:30:02 And again, to put it into the context of our first segment, which was about China shooting
0:30:04 itself in the foot of a rare earths.
0:30:09 I sense that China’s peak geopolitical power was probably just after the summer.
0:30:13 I sense the tides are shifting because, to your point, we’re hearing more stories about
0:30:18 cybersecurity risks in the US posed by China and in the UK as well.
0:30:20 So I sense that there is somewhat of a shift.
0:30:25 But one last thing that I’ll add is that China is planning a super embassy, so to speak, in
0:30:26 London.
0:30:27 But this may be at risk.
0:30:32 Apparently, this proposed facility would stretch across 20,000 square meters, and it will be
0:30:35 the largest embassy in all of Europe.
0:30:41 So apparently, the proposal of the future of this project has been delayed until December
0:30:42 10th.
0:30:45 It may be delayed beyond that, but that’s certainly something to keep in mind.
0:30:46 All right.
0:30:47 So let’s take a quick break.
0:30:48 Stay with us.
0:31:06 My name is Tom Elias.
0:31:08 I’m one of the co-founders at Bedrock Robotics.
0:31:12 Bedrock Robotics is creating AI for the built world.
0:31:17 We are bringing advanced autonomy to heavy equipment to tackle America’s construction crisis.
0:31:22 There is a tremendous demand for progress in America through civil projects, yet half a
0:31:24 million jobs in construction remain unfilled.
0:31:29 We were part of the 2024 AWS Gen AI Accelerator program.
0:31:31 As soon as we saw it, we knew that we had to apply.
0:31:37 The AWS Gen AI Accelerator program supports startups that are building ambitious companies using
0:31:38 Gen AI and physical AI.
0:31:44 The program provides infrastructure support that matches an ambitious scale of growth for companies
0:31:45 like Bedrock Robotics.
0:31:50 Now, after the accelerator, about a year later, we announced that we raised about $80 million
0:31:51 in funding.
0:31:55 We are scaling our autonomy to multiple sites.
0:31:58 We’re making deep investments in technology and partners.
0:32:04 We have a lot more clarity on what autonomy we need to build and what systems and techniques
0:32:06 and partners we need to make it happen.
0:32:10 It’s the folks that we have working all together inside Bedrock Robotics.
0:32:16 But it’s also our partners like Amazon really all trying to work together to figure out what
0:32:20 is physical AI and how do we affect the world in a positive way.
0:32:35 Well, welcome back.
0:32:40 James, this has to be my favorite segment for today, and that is whether or not China can
0:32:40 get to the moon.
0:32:45 China’s advancements in science and technology aren’t just in artificial intelligence.
0:32:50 They’re making huge strides into outer space, with many observers noting that China may have
0:32:53 the resources to beat America back to the moon.
0:32:59 In the US, NASA, along with Elon Musk’s SpaceX as a partner, announced the Artemis 3 mission
0:33:03 just a couple of years ago, which is planned for 2027.
0:33:09 But some high-profile launch failures have raised concerns that SpaceX might be behind schedule,
0:33:13 and the budget cuts and ongoing government shutdown have hollowed out NASA.
0:33:18 The White House, I was looking at this the other day, proposed a 24% cut to NASA’s budget
0:33:23 in 2026, bringing the budget to the lowest levels seen since 1961.
0:33:26 And that was before they landed a man on the moon.
0:33:30 Meanwhile, China successfully completed their mission on the far side of the moon last year,
0:33:33 which was the first of its kind.
0:33:37 And Beijing has said that they want to land humans on the moon by 2030.
0:33:41 I find this fascinating because as a kid, I’ve always loved space.
0:33:44 But I also think this is fascinating for two reasons, James.
0:33:48 One is in the context of great power rivalry.
0:33:54 And the other one is the way in which a lot of these space technologies have dual use
0:33:54 implications.
0:34:00 What struck me when I was researching this was the similarities between the Soviet and U.S.
0:34:03 relationship during the early part of the Cold War.
0:34:05 It was really Sputnik.
0:34:11 The Soviets launching of the first satellite into space in 57 that prompted the creation of NASA
0:34:14 by Eisenhower a year later in 1958.
0:34:22 And it was subsequently the Soviets who got Yuri Gagarin and a dog into space that prompted Kennedy’s famous speech,
0:34:23 we choose to go to the moon.
0:34:31 The U.S. in some respects was propelled by the Soviets to race to the moon and to race to space.
0:34:38 And as soon as the Soviet Union collapsed, it was almost as if NASA and the whole project to go to the moon collapsed as well.
0:34:48 But I think the dynamic is shifting again now with China really wanting to get what it calls taikonauts, so to borrow a Chinese term, its version of astronauts into space.
0:34:57 That project, I think, is propelling the Trump administration to launch Project Artemis, which is to get American men and women back onto the moon.
0:35:05 I think this is a really, really interesting case study of how great power rivalry pushes people along the technological frontier
0:35:10 and a great story for how conflict really breeds technological innovation,
0:35:14 whether you look at shipbuilding through the 17th, 18th century,
0:35:19 you look at the nuclear bomb in the middle of the 20th century,
0:35:23 and fast forward to now, you look at the space race and all the attendant technologies.
0:35:25 Part of this is going to be a satellite discussion,
0:35:28 and I’m curious to hear what your thoughts are on this, James,
0:35:32 where China has roughly about 900 satellites in orbit,
0:35:36 and it’s overtaken the UK as this country with the second most satellites,
0:35:39 but it’s still quite a bit behind the US.
0:35:42 I mean, the US has 9,000 satellites in orbit,
0:35:47 and I was calculating it spends about 10 times more than the Chinese on the space sector,
0:35:49 although China is exponentially growing it.
0:35:55 So it remains to be seen how this all pans out in this greater space race,
0:35:58 but again, I’m very curious what you have to say on this, James,
0:36:00 and whether or not you’re a fan of space.
0:36:03 Yeah, I’m a big fan of space.
0:36:05 Just like Xi Jinping, the Chinese leader,
0:36:09 I’ve been coming up with some quotes that he’s had on space recently.
0:36:10 But as I see it,
0:36:24 this race back to the moon because of course the US put a man on the moon in 1972 and China has yet to put a man on the moon or a woman on the moon is really focusing people’s attention.
0:36:41 So that seems way beyond the current schedule for the SpaceX system, which is called Starship Human Landing System,
0:36:45 which is scheduled for 2027.
0:36:53 But as you alluded to, there is a sense that the SpaceX program could be delayed.
0:36:55 There seems to be some issues.
0:36:59 And of course, the SpaceX lunar lander needs to be built.
0:37:04 So we really don’t know who is ahead at the moment.
0:37:11 By the way, in August this year, China successfully tested its own lunar lander,
0:37:14 not in space, but on dry land in a northern Chinese province.
0:37:17 And everything seemed to work fine.
0:37:22 The ascend systems, the descent systems, it all seemed to go well, according to reports.
0:37:29 And this lunar lander, which is called Lan Yue, which means embrace the moon in Chinese,
0:37:36 is going to serve as a living space, a power source and a data center after it lands on the moon.
0:37:39 So it’s quite an ambitious project in itself.
0:37:46 And this brings me to Xi Jinping and what the nature of China’s true lunar ambitions really are.
0:37:50 First of all, Xi Jinping is what we would call a big space nut.
0:37:58 I mean, he talks boldly about going into space, using celestial bodies for human advancement.
0:38:01 He talks about intraplanetary exploration.
0:38:04 He really loves the whole topic.
0:38:09 And last year, he went into rhetorical raptures when, as you said,
0:38:15 this China lunar module picked up samples from the dark side of the moon for the first time ever.
0:38:21 But to me, it raises questions as to what China’s endgame is.
0:38:23 You know, what are its lunar ambitions?
0:38:29 Is it just wanting to put somebody onto the moon and gain the propaganda success that that will bring?
0:38:33 Or is it going after what’s on the moon?
0:38:34 Resources.
0:38:38 Maybe even some of the rare earths that we were talking about at the top of the program.
0:38:41 Maybe China wants to claim parts of the moon.
0:38:46 I think these questions are sort of lurking out somewhere in mid-orbit.
0:38:51 And they may become a lot more germane as China goes forward.
0:38:57 But in general, as you said, Alice, the U.S. is still quite a long way ahead when it comes to space.
0:38:57 Yeah.
0:39:07 You mentioned the U.S. has gotten many more successful orbital launches than China.
0:39:11 And the U.S. has been spending much more than China over many years.
0:39:12 So the U.S. is ahead.
0:39:28 But this effort by China to put somebody on the moon before 2030 really, I think, focuses the attentions on what China’s really planning for space and what it’s going to do when it gets there, when it gets to the moon.
0:39:32 I mean, I think about this in relation to how China conceives of great power politics.
0:39:38 It wants to have a seat at the table, whether it’s in the Arctic or whether it’s in the multilateral institutions.
0:39:46 I think it’s China saying, look, we want to be front and center more than we have ever been and actually have a stake.
0:39:55 I thought it was quite interesting that in 2024, so last June, China planted a national flag made from basalt fiber on the far side of the moon.
0:39:57 And apparently this is indestructible.
0:40:03 And the whole point is that Americans can see this or the rest of the world can see this without it being ever destroyed.
0:40:07 I thought that was an interesting visual depiction of China’s ambitions.
0:40:17 But the other two ways that I think about this issue at play, number one is China is not privy to the research sharing of the Artemis Accord that the U.S. launched.
0:40:24 So the U.S. shares information with, I would say, largely allied countries when it comes to space-related data.
0:40:32 China instead launched its own rival initiative called the International Lunar Research Station Initiative with Russia and a host of other countries.
0:40:37 I would say largely small global south countries like Senegal and Venezuela and Nicaragua.
0:40:41 But that, again, shows you how China really does want to have a seat at the table.
0:40:48 The second thing that I would say is the way that I think about this is kind of like the race to the vaccine back in COVID.
0:41:02 Is that the U.S. benefited from this strong relationship between a very innovative private sector, in the case of the vaccines Moderna, the mRNA technology, and the military-industrial complex led by the government.
0:41:08 So Operation Warp Speed really made America the front-runner in the vaccine race.
0:41:15 And I think a similar dynamic is at play when we think about SpaceX, Elon Musk’s SpaceX relationship with the U.S. government.
0:41:29 I mean, it’s baffling to me, James, that I wonder what Kennedy would actually think if he were to come to the present day and realize that actually most of the satellites and most of the successful launches are made by a private company owned by Elon Musk, a South African.
0:41:38 So, you know, SpaceX conducts 52% of all global orbital launches, and it controls more than 7,600 satellites.
0:41:42 That’s 65% of all active satellites in orbit.
0:41:50 And Musk has made it very clear that he wants Starlink to be the de facto broadband backbone of space.
0:41:57 So I think, again, we’ve got this Rockefeller-like figure who’s playing a decisive role and may ultimately put the U.S. ahead.
0:41:58 That’s my hot take.
0:42:00 That’s a very good point.
0:42:06 It’s a private company led by a South African, contracted by the U.S. space agency, NASA.
0:42:12 And this is so different from the Chinese effort, which is obviously state-led, state-funded, state-controlled.
0:42:16 It’s basically the Chinese state that’s going to space.
0:42:16 Exactly.
0:42:20 So, yeah, two very different models at play in this space race.
0:42:26 All right, James, last week we did skip this, so now it’s time for prediction time.
0:42:31 Each week, James and I are going to put forward one prediction about something China-related.
0:42:33 So why don’t you go first and then I’ll share mine.
0:42:38 Okay, Alice, I think, you know, we’ve got some big Chinese meetings coming up.
0:42:41 We’ve got the fourth plenum, which I won’t go into.
0:42:44 Just suffice it to say it’s a big Communist Party meeting.
0:42:53 I think the most important technology aspect of the Chinese plenum this month will be artificial intelligence.
0:43:00 And I think it will also be the most important technology aspect of the five-year plan,
0:43:04 which will be announced next spring and which will follow the plenum.
0:43:12 The reason why I think this is important is because China’s got a different approach to AI from the United States.
0:43:23 In the U.S., a lot of the energies with regard to artificial intelligence are about a moonshot towards what’s called artificial general intelligence, AGI,
0:43:28 which is supposed to be the time when machines can basically teach themselves.
0:43:35 But China’s approach, as will be seen in this plenum and subsequently in the five-year plan published next spring,
0:43:44 is to use AI as applications to drive just about every other form of human endeavor.
0:44:00 And so I think that there will be a plan explicitly which will say that AI needs to be incorporated in 90% of the equipment and applications by 2030 in six broad sectors.
0:44:08 And these are science and technology, industrial development, consumption, people’s well-being, governance capability, and global cooperation.
0:44:18 So the point I’m trying to make is that China wants to use AI to power technologies and to make money, and that’s its main concern.
0:44:24 Of course, it’s also going for artificial general intelligence, just like the U.S. is.
0:44:34 But on the way there, it’s trying to make money from AI and use AI, harness AI to power basically the whole country.
0:44:36 So it couldn’t be more important.
0:44:46 I think that this plenum and the subsequent five-year plan will be seen as historic with regard to how much it pushed artificial intelligence.
0:44:48 Yeah, I would agree with that.
0:44:55 And I think a lot of the focus will be on some of these chokepoint industries where China may relatively be somewhat vulnerable.
0:44:59 Chips, for instance, some aspects of biotech and aviation equipment.
0:45:01 And to your point, James, I would agree with you.
0:45:05 I think this might be one of the most consequential five-year plans we’ve seen in a while.
0:45:07 So watch this space.
0:45:12 This time next week, we’ll give everyone a lowdown of what actually happened at the five-year plan.
0:45:17 All right, so my take is somewhat left-field or rather more Japanese-shaped.
0:45:27 I’ve been reading a lot about the future potential prime minister of Japan, who in some circles is known as the Japanese Thatcher, the Iron Lady.
0:45:30 She will be the first female prime minister of Japan.
0:45:35 And she will lead a very, I think, hawkish pivot again on China policy.
0:45:42 When you read some of her works, and she’s apparently a prolific writer, China is a big focus in her writings.
0:45:45 It’s a strategic rival, an adversary.
0:45:51 I sense that under her leadership, we may see more inroads into nuclearization.
0:45:54 Japan may ultimately get a nuclear bomb.
0:46:01 That may change the strategic balance on the Korean Peninsula, on Taiwan, straight relations, on the China issue writ large.
0:46:15 And secondly, back to the critical minerals point, I think she could be part of the pivot amongst the G7 to lean in a more hawkish direction, to collaborate more amongst each other, and to decouple further from China.
0:46:22 I sense that maybe Xi and Trump will be the new Thatcher and Reagan of our times.
0:46:24 That’s my hot take for the week.
0:46:27 All right, that’s all for this episode.
0:46:29 Thank you for listening to China Decode.
0:46:31 This is a production of Prof G Media.
0:46:33 Our producer is David Toledo.
0:46:36 Our associate producer is Eric Janikas.
0:46:39 Our research associate is Dan Shalan.
0:46:42 Our technical director is Drew Burrows.
0:46:44 Our engineer is William Flynn.
0:46:47 And our executive producer is Catherine Dillon.
0:46:52 Make sure to follow us wherever you get your podcasts so you don’t miss an episode.
0:46:54 And we’ll talk to you again next week.
In this episode of China Decode, Alice Han and James Kynge break down Beijing’s new export restrictions on rare earth minerals and what they mean for global supply chains, a British spy scandal rattling UK–China relations, and the growing space race that could determine who gets back to the moon first.
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