Nina Xiang Podcast Notes

Nina Chiang – Outline & Podcast Notes – August 2019


Sam:  I recently read your book, and it is very interesting. It covers the development of AI technology in China over the past decade. As a person living in the West, getting most of my news from Western media sources, it is an eye opening look into how Chinese business operates and the development of a very specialised sector that is going to have a lot of importance in the future, and is already having an effect now, which is creating a lot of tensions between the United States and the West.  Before we hop into the book. Could you give a quick background into how you created the China Money Network and what led you to write the book?

Nina: Sure. It is actually not during the past decade. It is actually much more recent. AI is something that has become commercially viable, and especially we see companies being created based on the latest innovations in the AI sector… this didn’t really happen until around 2012/2013, that’s when a lot of AI Chinese Star Unicorn companies were founded.  In the past three to four years we have seen a lot of changes in the AI sector.

A little bit of introduction about myself, I am a storyteller and an investigator. I also consider myself an interpreter because I was born in China, I went to university in China, but I also did my graduate studies in the United States, and I have worked in New York. So I have worked and studied in both China and the US. On a daily basis I read what has been reported in western media, but at the same time I read a lot on Chinese media. I am really someone who sees how things are happening in both worlds, and often I see the contrast, and perhaps most importantly I see things that are lost in translation. I think that was the starting point for my book because I was covering the AI sector for the last four or five years based out of Hong Kong, but travel to Shanghai and Shenzhen where I talk to the founders, investors and people who work in these companies and I feel there is a mismatch between the perception of what is really happening in the Chinese AI sector and what is being reported by western media.

That was a point where I thought a book from my perspective, from my experience of talking to those people in those companies, having seen them growing their companies, provides a very detailed recount of how the industry has grown in the past few years, and I think that was the starting point for the book. My position as a long term journalist and investigator also affords me a unique position to write something like this because I am independent and I am not an investor in any of those companies.  I have no conflict of interest. I really tried in the book to be very balanced, to be neutral and to have a very independent position, so that’s the purpose of the book.

On a more high level thinking, my idea is to better inform western policymakers so that they can perhaps get their facts right and therefore make better policies. Because what we have seen is the misperception or misleading facts being reported in western media has led to unsound policy making.  If this book can make some of the policymakers realise the facts need to be recalibrated and perhaps they need rethink the strategy for their policy decision process. This would be the best outcome.

Sam: The general overview of the book is that AI is a burgeoning sector in China and like you said it has been developing since 2012 start. The areas where AI is being developed in China is for facial recognition (which we have seen a lot about in the new), Robotics, autonomous driving, AI chips, speech recognition, FinTech and Healthcare AI. Those are the broad topics you cover. You essentially sit down and speak with a bunch of different companies in these sectors… and the broad theme that you cover in the book is the 4S/3L – to describe China’s AI industry. I was wondering if you could go over that and explain the strengths and weaknesses inherent in 4S/3L.

Nina: Sure, so when I was writing the book, I thought most people would like a very simple framework for how to think about China’s AI sector. I came up with the 4S/3L structure which is very simple. 4S stands for Speed, Scale, State-Support and Social Indifference.  Those are the factors that have been the driving force and also the reasons why AI technology has been able to be applied on such a massive scale and much faster than anywhere else.

The 3L stand for Lag, Late, Long-time. So that basically describes the other side of the coin: China’s technology and AI technology in most aspects still lag behind global leaders and also in terms of China’s technology development, China is a late comer, people don’t think about this. Think about 40 year ago, when the country just started reform and opening up, there was really nothing to speak of in China in terms of technological capabilities. China is a latecomer, and the gap is huge. It is going to take a long time for China to close that gap and really become the country that has been described in the Western media as a global technological leading country. China is far away from becoming a country that is advancing. It is on the way. If there is no disruption and things continue on as they have the last 10 to 20 years, China is still far away from becoming an advanced society in terms of technological innovation. That is the 4S/3L structure; which I think is contrary to perceptions people read from the news now, and I think the focus is on the 3L and not the 4S.

Sam: I think the phrase that you used in a different interview is that China has a big economy, but it doesn’t mean that it is an advanced economy.

Nina: Right, it is actually in the Chinese flagship policy document, Made in China 202. If you read the introduction of that document, China says about itself that we have a big sector but not a strong one. We are big but not strong. So really China realises it. Made in China 2025 is a wish list; it is an inspirational piece of document that sets goals, that China will miss probably most of those objectives that are set in that document, particularly what is happening in the US/China trade and tech frictions.

Sam: Correct. So from my understanding, the Made in China 2025 lays out the national plan for certain sectors, specifically for AI where China has taken a large interest in when they define certain industries that should be at the forefront of technological development. Governments should fund smaller start up companies if they have an idea, this state support also creates a lot of largesse in the sector because the companies that make it through this initial phase of government funding and get stuck in the place of mediocre. This is my simplistic summary of the book.

Nina: Yes, you are right that once Beijing starts a national policy like Made in China 2025. China’s provinces and cities all compete against each other to implement these policies. I was visiting my home town this summer in China. My hometown is considered a small 3rd tier city – it has a population of 2.5 million, it’s in a western province. I was on my way back home in the middle of nowhere, and there was a robotics industrial park. This is what you will see across the country; you see AI, robotics etc. industrial parks being set up in often very remote places, governments provide funding and favourable policy to attract companies and to tell them to go there to set up their companies and hopefully develop a product in order to grow a profitable business. We have to realise that perhaps a lot of those industrial parks will not turn out to be fruitful. It is nothing but numbers because products and supply chains are limited and clustered around certain regions, but we do see this sort of national frenzy to implement central government policies almost in a similar fashion as a political movement or campaign, sort of like the cultural revolution or the great leap forward. It is not as extreme as the great leap forward, but you see a very similar pattern of behaviour, the pattern of local versus central decision making; so a lot of this tech frenzy and tech fads that you see across the country, I see this as a fundamental flaw in how China’s tech sector is being built. It is built on the basis of implementing national policy of fulfilling central government objectives, and some portion of that will be market-based businesses funded with private investors selling to real clients, but a lot of others who have this tech frenzy element in them, those will be something that when the tide goes out, we will see how that phenomenon will end up and what kind of impact there will be in terms of china’s core technology build up.

Sam: How successful are these companies that exist outside the tier on cities? Are there any stand out stories of companies that have been able to grow and turn out profits? Do they tend to centralise in the major cities?

Nina: If you really look at the successful companies, I think we have over 20 companies in China, in the AI sector that have become unicorn valuation levels; that means that their valuations stand at over a billion dollars or more. All those are based in first tier cities, and I think very rarely a couple may be outside the central Beijing, Shanghai, tier one cities/regions. The talent resource clusters are not that high, so again China is a huge country but as we have see in Chengdu, companies there have to cater to regional demands in sectors like healthcare and education, but I am not aware of any other companies that go down to the lower cities that are successful. I think it is highly unlikely that those companies can become successful.

Sam: You talk about these local governments have different agendas than the companies themselves. Are they aligned for the long term in a positive way or are there serious dichotomies between what the local bureaucrats who are trying to find business to come in and set up, versus the companies that want to come in, grow and establish their business?

Nina: Well it’s difficult to say because for Chinese politicians rotate throughout the country, certain city or province could be one to three terms. They are there for a limited time and need to ensure during their time there they have concrete achievements they can show to their superior as their performance metrics for milestones and boxes you can tick, showing how many innovation centres you have created and how many fortune 500 companies you got to set up there.

But on the entrepreneurs’ part, we have seen that a lot of the companies, the start up companies that have received a lot of venture capital funding also have the pressure to exit, so they have a limited timeframe too. They want to exit at 5 to 6 years as the limited time frame. Like the politicians they want something that they can show for their critical career advancement for entrepreneurs, and returning profit to their investors and also rewarding their teams will be some of their top concerns. I think it is hard to say. We do see that in a lot of times, the venture capital investors are pushing in certain directions and very real and very visible. It is shifting how companies want to grow and how they want to go to capital markets, have a public listing etc. So there is that. I think it is hard to say black and white. I think it is a vast grey region.

Sam: One of the stories I find interesting in the book is about Tencent and their AI translation software which they used to transcribe a speech which was very different to what was spoken versus what was in their WeChat group. You mentioned about bureaucrats need to have wins to show off, and companies need to ensure they deliver results like this, it was a common theme in the book.  This is not something you see in American companies; you just keep pushing until there is breakthrough product that comes out.  In China it seems like there is a need for more of a finished complete product that is a bit showy at the same time.

Nina: I remember visiting a very high profile AI company in China, that is not well known elsewhere, but this company has been very active in marketing. I remember visiting their office, any of the tech companies in china if they have an exhibition hall where they display their products and their technology; there will also be a wall with pictures of high-level officials who have visited this exhibition hall or this company. Usually the photos are displayed by the rank of the government official from government ministry level down to provincial governors and city mayors. I was being shown around the showroom, and I was being shown the technology.  Clearly some of the technology is not ready; they are on the verge of potentially being commercialised; there is still the last mile to travel before it can become a commercially viable product. But nonetheless they are displaying the technology and the people who were showing it to me said that for now we are showing the technology for the officials that are coming to visit because it is still very interesting for them to see it and to experience it whether or not it is ready to go to market; it is important to show this company has achieved technological milestones, something other cities or provinces haven’t been able to do so that this government official can boast about this too.

So you do see that a companies are walking this fine line. AI overall is in the development stage where certain technology is mature, and we are still seeing companies and research teams coming out with new ways to apply this technology in any way you can imagine. We are still in the very initial creation stage where people all around the world are thinking very hard about how to use this technology in different ways. We saw a team at MIT come out with AI assisted meeting program, so that allows people to meet their custom hat or gloves.  We have seen apps that let people see a picture and then see that person naked without clothes using AI technology, so we are still in this stage where commercially viable products are being explored. At the same time, on the other side of the coin, people will find there are places where in its current state AI will not be able to solve these problems. The translation software that is doing this in real time that you used as an example, for interpretation of very complex subject by a person may not be something that technology can do as well as a person nowadays. Who knows given time if AI will be able to deliver this solutions.  At the time Tencent was trying to do that was two years ago and even today interpretation software and voice recognition of speech and text, we have seen high error rates. Too high for any product that consumers are willing to pay for. So we are trying to figure out where this technology can be commercially viable and where it cannot be. This process will take a long time.

Sam: I think you wrote in the book, it is one of the things I took away, for AI it is more about defining tasks, it is much easier to teach it how to play go fish than it is to go through credit records and determine people’s credit scores which is much easier than learning a language which is vastly easier than teaching a robot movement. If a one-year old child displays more ability to move and operate in the world, than some sort of AI would in certain aspects. The AI starts with logic and moves back towards more specific movements (actual movements in the world) and more complex tasks; while the child starts with very basic tasks and moves toward more complex tasks in the future. It is a strange relationship between developing AI and what tasks it can do.

Nina: Yes, it is a paradox. The human evolution process whereby the skills we learned during the long time of evolution, such as walking, running, etc. are the most difficult for machines to learn.  The abilities we learned later such as logic, language, math; those skills will be easier for machines to learn and excel in.  We are seeing real evidences of this idea. Although we can see Boston dynamic robots that can do amazing tasks, like opening a door and walking on snow. Most of the robots today cannot perform something as simple as going to your coffee table and pouring a cup of coffee; most robots will fail at that simple task.  In this way we are looking at the AI evolution. We have had machines excel at tasks such as reading text and recognising voices, recognising images, getting a car to drive on its own in certain conditions; so these are the perception level capabilities, that in this deep learning AI-based evolution, we will be able to see significant improvements and viable products and services will be created to make people’s lives much more happy I guess. We can delegate the boring repetitive jobs to machines.

Sam: One of the things that is covered in the book, which we see a lot in the west is the social credit program. I think you provided a very nuanced and detailed view of how the credit program is being influenced. I knew that China had no credit system until recently, that the fintech development of identifying people and some kind of credit score for them hadn’t existed before. So people had been able to operate in fraudulent manners and take loans from any different providers, and there was no connecting network between those providers to identify those people or prevent fraud. One of the major reasons for implementing the social credit score was to create some overarching credit score that could be applied to Chinese citizens overall and rolled out to protect businesses and to ensure safety in the country. Now the thing that I really liked about the book, is that you went in and gave a much more detailed look at the overlap between traditional financial credit scores and the social credit score; and some of the issues that are attributed to the social credit score that are extraneous and not needed.  Do you think these vast data collections will be reined in by local or national government and establish something much clearer and more concise or do you think we will be in this grey area for a while where all data is collected and used for your social credit score?

Nina: The Social Credit System really has been misreported by Western Media. Wired has an article provided with the correct facts.  In the past Western Media has reported on the social credit score as one encompassing personal social credit score that encompasses an individuals data to give them a  social score and rewards or punishes them for their behaviour. But of course as the Wired article pointed out, all of this is known to anyone who has looked into the subject with any seriousness that (1) no such national social credit score system exists in China presently, the current conditions are that local authorities are running trials to figure out how best to set up such a system, (2) based on misreporting of information, western media have basically called china big brother and an authoritarian society and all those labels.  I am glad that the facts are being set straight now by journalists outside of china, that is a great thing. I hope I can contribute to things not getting lost in translation; this wrong reporting is doing a lot of damage.

Back to the social credit system, for sure the purpose as you know in many of Chinese reform initiatives is to have local authorities to run experiments to see what works and what doesn’t work and draw from all those lessons so central government can consider the best way forward. We are in that stage. Perhaps it looks like the timeline for setting up the national social credit scoring system will be delayed as often happens.  Some of the ridiculous behaviour by local authorities before collecting too much personal data and abusing this position and therefore gave them too much punishments or rewards. Going forward we will have to see what kind of policy framework Beijing comes up with after all these local experiments and the lessons both good and bad that have been learned from it. But one thing that cannot be mistaken is that Chinese government will have a much more intrusive behaviour pattern when it comes to getting their hands on their citizens data and it is a complicated issue. The way to think about personal data privacy is not that we want to protect the utmost personal data privacy because that is the best solution… perhaps it is not one benchmark, but rather more nuanced than that. Maybe they have different views on how much privacy they want to give up for convenience. Maybe in the future we will be able to see a more flexible regulatory environment or even ethics discussion around this issue where it’s the range of choices that each country, each city, each individual may be able to set their own benchmarks, their own goalposts basically.

Sam: Have there been any major data privacy breaches in China yet?

Nina: Yes, so much.  There is a very healthy and vibrant black market for personal data. You can pretty much buy personal data in that black market rather easily. In terms of personal privacy breaches, outside of the black market, we see that businesses are not so careful in terms of setting up proper security measures, for example, we know that security cameras are exposed, they are basically naked without any protection.

Sam: There was a story that came out that some city’s entire CCTV surveillance cameras were on a public server, and anyone could come take as much video as they wanted from it.

Nina: These security measures are not properly in place in many areas. Malicious attacks happen all the time. It is a bit like the Wild West in terms of personal data in China. Sometimes it can be augmented for some companies strangely, but for sure I think it has to be better policed and best practices should be adopted, and hopefully, that will be able to improve over time in the future.

Sam: Are there any repercussions from these data breaches? If it is a private company, are they held liable? Are they any damages paid out? What happens if there is a breach within the government sector?

Nina: Well I think China’s privacy law is still being drafted, but certain areas like security and IP infringement are protected under laws so for sure if it leads to sizeable commercial loss, companies in China nowadays are using legal means to protect themselves. This is not for example in terms of dealing with each other’s business secrets or hiring away your talent. We see lots of lawsuits in this type of cases increasingly in the last decade. Because even though in terms of privacy and ID protection, China still has a lot of work to do. Overall it has improved a lot over the last decade. We see a lot of the big tech companies are suing each other over these difference issues. We are seeing that companies and individuals are becoming much more aware of their legal responsibilities and legal liabilities. They are increasing using legal means to protect themselves.

Sam: It will be interesting to see how a robust data privacy law will be implemented in China?

Nina: It is not going to be robust for a long time. It is going to be a slow process. If you look at China’s track record things, have moved very slowly in most places. So hopefully the same goes for Data. It is going to be such a long process because there is so much work to do.

Sam: For a country of that size and the number of providers that are there, it is a hugely overwhelming task and especially given the scale at which things grow, it will be I think one of the bigger policy issues to work toward in the future. I wanted to jump into the trade war that is happening right now. Over the past 6 months to a year, we can say from the beginning of Trump coming into power as President of the United States, one of his big pushes has been to address China and to renegotiate a new trade deal. He thinks China is harming US manufacturing and other businesses in a negative way and the three major recent news stories which have occurred recently: (1) that the US have levied $600 billion dollars of tariffs on Chinese goods and businesses, (2) People’s Bank of China has devalued the RNB to over 7 which is a first for them, they are continuing that future and (3) the issues in Hong Kong are really starting to bubble over. You are starting to see the growth of massive protests which Mainland China are not looking to happily upon. Concerning all of these broadly together, how are trade war and these issues in Hong Kong affecting business in mainland China?

Nina: I really agree with someone who mentioned that this is not a trade war; this is the contest of the century. This is long in the coming, and it’s much more beyond trade or technology. In one extreme we see famous investor Ray Dalio saying this is about a fundamental disagreement and contest between two ways of living, how the Americans like to live and how they organise their government, their markets and how the Chinese like to live. It’s about the fundamental divide, how do you live as an individual, what kind of country you want to build, what kind of political and economic system you want to have.

On the other hand, people would limit the contest to something like this is about trade, tariffs, 5G and Huawei.  I tend to agree with the former. This is a much longer and deeper contest and friction between the world’s two greatest powers. Even though most people don’t realise how disadvantaged China is in this contest. Even though China is the world’s second largest economy, let’s not forget it’s population is 3 to 4 times that of the United States. If you look at GDP per capita, China’s GDP per capital is still much lower than Mexico or Iran or Thailand. In terms of per capital basis, China is still very much a poor country. We heard the President of America calling China one of the richest countries which is completely not true.  So if you look at the current trade and technology system, part of that contest of the century framework, then perhaps you will realise some of the issues will not be very rapid for them to find solutions and you would have a much longer view of things for talking about the resolution to the trade dispute a couple of months ago. We might find a temporary solution to the current situation, but there are deeper and wider disagreements within this contest of the century that will continue for decades to come. The outcome is very uncertain. This is putting the global economy and the global balance of power into a very unstable state.

When you look at the technology piece of the puzzle, it is not so much about 5G or Huawei; those are the symptoms. The deeper ideological divide means that the US is trying to contain China’s rise and China is trying to rise in a US dominated global order. I think a lot of US politicians agree that China has no intention to disrupt a US led global order, it wants to thrive and prosper in the current world order as set and led by the US. But it looks increasing unattainable to achieve that objective. So in this process, we will have to see how things play out. But we should all have a very long-term mindset and timeframe when looking at all these issues.

Sam: Some of the claims America has made must be justified. This is more to do with the systemic way that Chinese businesses have been built over the last 40 years, which has been copy to China, where you have seen Chinese businesses take ideas and technologies from the West and implement them in China. Now they may be a few generations behind, or they may not be up to the advanced standards that are in the West, but this has been an outright policy of the Chinese for the past few decades.

Nina: If you are talking about IP theft and forced technology transfer, yes for sure. We have seen that President Trump redefine reality or redefine how people should consider these issues, and because of that the trade negotiations is stalling right now. Some of the structural issues that the US is very concerned about in China includes state owned enterprise. This is such a sticky issue for china to deal with. It’s been dealing with it for decades, is a very difficult issue to deal with and we are not going to be able to solve it with a trade deal. As I mention in the book as well we have seen as long as China has been a unified country, there has always been state control of its major economic pillars. This has been a cornerstone of its political and economic systems so that’s why the trade discussion will a very difficult and a very long one. I am not arguing that China has done everything right, I am also not arguing that the US concerns are not justified; I am merely trying to present the other side of the argument and that perspective for the other side so we can all try to look at these issues from the other side rather than from your own side.

I think the broad arguments is that the US economy has been open to Chinese businesses, completely open, except maybe military or defence sector which are necessary for national security. But in every other sector Chinese businesses can come and open businesses. For US investors and companies it is much more difficult to enter the Chinese market, there is almost a bartering.

Right of course if you are allowed to come to china freely, then China will have no chance to build its local industries. It is so far behind in technology, management, in everything and China will not be able to have its own market. Its car market will be completely overtaken by foreign companies. At least China nowadays has some of its own domestic companies.  We see in most sectors, China is dominated by foreign companies, especially in sectors such as semiconductors, healthcare equipment, and robotics. I am not arguing for having a closed system; I am just saying it is a process that is going to take some time. For China it is something that is difficult to balance and manage well. China needs to definitely move forward in terms of opening up, and the country knows that which is why we are engaging in trade talks. But I think the US needs to be mindful of one stop solutions; there is just not going to be one perfect solution to the structural issues and provide all the guarantees and assurances for execution. I think China needs to be given more time and the US needs to be a little bit more patient.

Sam: We have four-year cycles.

Nina: Exactly.

Part of the issue I see with China is decades of 8% year on year growth to GDP are coming to an end. The economy has reached some sort of scale, which after this point, it cannot grow at the pace it did before. That’s good; it means it coming into a more mature developed economy. But the result of that it puts strains on the government to expand into other areas and extend their influence, this is what you seeing now, in Hong Kong, this is what you are seeing in the South China Sea, I don’t want to talk about those issues.  China’s interactions with its regional Asian partners is about establishing itself as a figure head and dominant leader in the Asian markets now that its reached full capacity and greater development of its economy.

Nina: I think China realises it made a mistake in becoming so high profile in its ambitions. It has already taken steps to withdraw from that. Now it doesn’t talk about Made in China 2025; you can’t find any thing in Chinese language about the South China Plans. Rumour has it that the propaganda bureau has taken the knife because of what Beijing sees as strategic mistake. I think the consequence of that mistake which is becoming so high profile and so overt with its ambitions has cause the US caution and feeling threatened which has cause the containment. So we have seen mistakes lead to more mistakes.

If both sides can sit down and look the facts and see how … places where we can both work. Because innovation is still very much if you are coming up with brand new ideas and making scientific discoveries and breakthroughs, most of those are still happening in the US. What China is good at is using these technological advancement in commercial applications, so I see a lot of potential for cooperation between the countries. China is still very much behind in indigenous or what do you call it, fundamental innovation, China has very little of that, and the US is still the global capital for that.

Sam: Correct.

Nina: I mean China is great for implementation and mostly inside its own borders. Huawei is probably the exception.  In that, we see potentially a scenario where both countries can benefit.

Sam: Huawei is interesting. The founder was part of the military for nine years. The first thing you talk about in the book is that when a company hits a certain size the Chinese communist party sets up an office in the company. The Party office is there to oversee the company and handle worker affairs. You are essentially putting party bureaucrats in the company to oversee things once the company hits a certain size or has achieved a certain level of success. I wouldn’t see this as foreigner, any company you are working with; you are not dealing with an independent entity, you are dealing with a state-owned entity and the Chinese communist party. I can see where the fears come from. If you assume that any workers I interact with, assume I am an American company. There has to be an assumption that those workers have to be members of the Chinese communist party. There must be some fears that come from technology being stolen or malicious intent from these companies even if it is not there, because of the relationship that exists between the businesses themselves and the political entities involved. Is that warranted?

Nina: I am not sure how to answer the questions is that fear warranted? We have seen a lot of foreign companies and doing really well. They have made a lot of money. They have entered into very lucrative contracts with Chinese counterparts. And we have also seen companies that come here and they claim technology has been somehow illegally stolen, it also happens. In the Huawei case, the only case where it has been reported forever is the T-Mobile robot case. So I guess in Huawei case, where you can make a legal accusation is not that many. Because otherwise, they would have made many multiple legal accusations.

I would also see when it comes to intelligence, a lot of the time, many of the discoveries will not be reported because they do not want to give away their sources or how they found it.

From the US side, the fear is being highlighted and perhaps increased recently .With all the media headlines and rhetoric, on the other side in China’s side, companies are becoming more inward looking. Huawei is going to launch its own operating system, and they are going to become more independent. If this continues then we will see a break up in our digital technological landscape then we see this divide being perpetuated and deepened, then we are facing a very different future than the one people imagined a couple of years ago which is people are brought together more; what we will see is the opposite. We make our future, and  it depends on each company’s, each individual’s actions. The current atmosphere points to a future where the world will become more divided.

Sam: I guess that is one of the issues. One of the things I noticed when reading through the book, is that the majority of all founders of these AI companies in China, studied in the US, completed their PhD programmes at some of the best American universities and spent many, many years there and then went back to bring their research home to build these companies there. One of the things that the US has clamp down upon is exactly this. Chinese student visa applications and the number of students that can study inside the United States. If the divide continues how much of an impact does a reduction in STEM field students in the US? Would this have a devastating effect on Chinese businesses?

The impact is felt mostly through our world’s future, and that world will be facing… our future generation will be living in a world where hostility is a mainstream sentiment and friendship is hard to find. Understanding each other is overtaken by being fearful of each other; basically a world with a much darker future but if that happens, then China will try to do everything on its own. Perhaps other countries cooperation will lessen. I don’t know what kind of future my children and your children will live in. It is a very gloomy future. I hope there is some way we can reverse it.  But everything points to a less optimistic direction.  I was reviewing a talk by the President of the Lee Hong Centre in Singapore he was making a comment about why was the US changing its response to hundreds of thousands of students in the United States. He was just wondering when the US will wake up and realise what it has done.  Again as I said before is it really a terrible thing for the US to be training so many Chinese students? It has done China very well and to a certain extent has done the world a great service. Not all of the Chinese companies are stealing IP; not all of the Chinese companies are doing terrible things like facial recognition or social profiling. Those are the small percentages; there will always be bad apples.  But if you look at the other side, all the training of the Chinese students in the US has had great benefits for China and the world. I myself studies in the US, it has taught me about broadening my own perspectives and my own horizons and contributed to my international perspective that is more tolerant and incorporates multiple different viewpoints. So if you look at it from that perspective, the US has not done anything terribly wrong. Instead it has done humanity a great service, I think it depends on what kind of framework you want your worldview and decision making process to be in.

Globalisation has generally been great, but with a lot of problems so now we are trying to fix the problems globalisation has created but not throwing away the whole idea of international cooperation and mutual understanding. Like I said before, China wants to thrive in the world, but the US still leads the world order as maintained in the last many decades. China has many problems. I think many people don’t realise the challenges China faces in fixing those problems and issues. I think challenges and difficulties are not being highlighted enough. Slowly given time China will move toward solving those long standing issues. But right now in the US, the idea that is taking hold is that China is moving toward an opposite direction. If you take this assumption, then everything is turned upside down, then companies shouldn’t come to china, you shouldn’t train Chinese students, and you shouldn’t allow Chinese companies to even operate in the US.  So I think that is a dangerous direction.

Sam: It is a very difficult political question that we are going to have to work through in the next few years as China comes into its full economic development and  more of its middle class are brought up from poverty and become consumers like the US is.

Nina: I really believe there is great wisdom in previous Chinese leaders of kicking the can down the road. Sometimes economic growth actually solves some of the issues  that are really unsolvable at certain times. Remember at the initial opening up stage in system, the system of registration where everyone had to be registered somewhere. China had a two-tier system with urban and rural. Urban citizens enjoy a lot of benefits, including healthcare, education etc. Rural resident have very little benefits.  China just let the issue go on. It created a lot of dissatisfaction.  But other time this is being addressed by cities competing for people to come and register. They want you regardless of your rural or urban status to buy a property in their city.    Now there is a solution with economic development – these issues are being solved with time. We all need to be more patient.

Sam: That is a good place to stop. Is there anything you would like to promote here on the podcast other than your book.

Nina:  If you are interested in China’s AI sector, at the same time, China Money Network has a Chinese tech and venture capital podcast.