Jordan Schneider on US-China AI tensions: rare earth retaliation, Huawei's play, and humanoid robot risk

products. Uh meet the meet the system for modern software development. Streamline issues, projects, and product road maps. Uh, let's bring in Jordan Schneider from China Talk. Jordan, how are you doing? I'm doing all right. You should have kept me on with that last guest. That was great. I know.

Yeah, we we we started doing a little bit of that earlier this week. We had like Brian Armstrong and Brian Chesy kind of next to each other for a little bit. Call him back in because the answer is we will all be so distracted by our AI boyfriends and girlfriends that we won't be stressed out about losing our jobs.

I I think I I actually it's very it's very dark, but I think that the world is so entertained now that almost nothing matters. Mhm. And it's sad, but uh no matter how dark certain futures could be, the it's it's it's expected that everyone will have infinite entertainment constantly.

And it it's so much harder for people to stand up and protest and try to create change if you know you can go back to your phone and and uh oh here's another funny video. I just saw Stephen Hawkings of the X Games and it was awesome and I'm going to send it to a friend and it it actually is awesome though. It is sick.

It's really sick. It's totally worth paying a lot for that. Totally worth the extra. is the duality of TVPN. I haven't even seen my dog and yet just wait once I see my dog at the X Games. No, I think I think it's important.

I I I think like you can't, you know, I I've I continue to be a firm believer that that technology is a, you know, massive net positive for the world, but it it has a dark side and it's important to talk about it and it's will be important to continue to talk about it and um it's it's numbing.

There's like a there's like a taking anti-depressants lens to it, right? Where you just kind of feel less if you get these dopamine hits. And we've, you know, we have not evolved to have the dopamine hits with, you know, within literally 5 seconds.

Anytime you feel bad about yourself or bad about the world or something that happened around you or, you know, someone disappointed you in your life, it's like, oh, okay.

like instead of like addressing that or you know going to protest to Jord's point um you know we can be consoled by these things that live in our pockets and they're only going to get better at it which is the sort of um I guess this is the worst this is the worst the the dopamine feedback loop will ever be.

This is the worst the infinite chest will ever be. Uh do you think China is less uh dopamine adultled like like pro like brain rotted because we hear these feels a little bit no brain raw Tik Toks. Their Tik Tok is just science videos. Absolutely not. Absolutely not.

I mean look like who needs who needs opiates for the masses more? Like a country with 20% youth unemployment um or a country that has like what 3. 5% unemployment? I think the the party has successfully kind of like Wait, which country has 20% unemployment? You thought unemployment? Yeah.

Which country are you talking about? Well, yeah. Give us get let let AI run for an extra year or two, I guess. But over those are rookie numbers. Like, if you told me that was America, I'm not that far off. I I mean, I've heard that the numbers are going up, they might have spiked, obviously.

But no, I think I think there is I think the sort, you know, it's funny. You guys should have Jasmine and son on. I asked her this like um uh cuz she just came back from a trip to China. I was like who walks around looking down at their phone more people in the Bay Area?

Um and she couldn't really distinguish between the two. Um I don't uh just like like just like equally sort of like zoned in while like walking down the street. You are like simultaneously swiping. Ben Ben Sand in our chat says iOS liquid glass is the best line of defense against phone addiction. I totally agree.

This is like the worst software Apple's released in so long and it it just makes using your phone worse. I I'm sure I hope I hope my screen time is going down. Don't worry, Johnny IV will come in to save the day, Jordy. We won't be safe. That's not that that won't save us for long. Yeah. Okay. Wait. Uh zoom out.

The original reason we wanted to chat was because of the I mean it's always fun to have you on the show but uh obviously about the rare earth like just give us the the highle update on like the trade war.

This has been what since the entire time since your very first appearance it's a year is it even worth like thinking about like what the highle summary is of the of the status of the debate? Sure. I mean, I think like like look, we've seen this administration swing from side to side on lots of different things.

You know, we were yelling at Zilinski in the Oval Office, and now we're finally doing the sanctions that Biden couldn't bring himself to do around oil. Um, you know, we had Trump trying to, you know, doing uh Liberation Day, taking it off. Um, you know, giving them H20s, they don't want them now.

um uh were trying now now they sort of tried to tighten the the the grip with the um 50% rule from from BIS. So sort of Huawei subsidiaries can't buy equipment and China came back with rare earths.

I think the sort of the the fundamental fact is that like both countries have the you know the the sort of both countries have the ability to do significant economic harm to each other and it's a bit of um you know there's an aspect of playing chicken um and there's a and there's this kind of question of escalation dominance like which side can take more pain and which side really cares more um on both of them have have basically a rank list of of tools in the tool chest, chips on the poker table, and something like we're not going to sell you rare earth is extremely painful to America, maybe not that painful to China.

And then we're going to tax happy meal toys or whatever is is maybe, you know, something in the American tool chest or and the Nvidia thing.

And I is the process that we should think about the lens of this year more thinking about just every both sides are trying to actually understand the shape of how painful each tool in in the tool chest is because it feels like we're we're very much like turning these things on turning them off to understand okay if rare earths are plus 60 points uh Nvidia chips we thought it was plus 20 points for the US it's actually plus It feels like we're just trying to like map all these out and then we will go to the meeting and actually say, "Okay, what's equal?

" Is that what's happened? Yeah. Well, the the problem is I think the the shei has had a longstanding goal which he's which he's repeated in speeches numerous times that he wants to make China more self-reliant. He and he wants to make the rest of the world reliant um you know more reliant on China.

And the problem with what you're seeing out of the Trump administration's policy towards this is what they're optimizing for changes literally week to week. Um so you know tariffs are for revenue, tariffs are for um you know this trade war is to bring manufacturing back.

This trade war is to um actually help Nvidia gain market share in China. This vid u the trade war is to crush the Chinese semiconductor companies.

Um, and the the problem is it's like it would be easier to sort of get to some sort of equilibrium where each side is just going to run as fast as they can at their things like if this administration had a um sort of grand vision that it was working towards consistently for.

But um I think the um the dance that we've seen now play out over they've met each other like 15 times is it seems like the negotiators every time they go are actually operating under kind of like different um a different incentive structure.

So and I think this just plays to China's benefit um because the fact of the matter is America has an enormous amount of power and leverage that it could bring to bear.

Um but the first time that China bit back um in the case of rare earths um that kind of really freaked out the Trump administration uh and it showed and uh sort of the uh so what'll be interesting sorry yeah please. Yeah.

To make to make this more tangible, like how how is this netting out for China's AI industry, the the messaging has been obviously, you know, we're not you're not going to buy uh Nvidia chips. Maybe we'll look the other way on on Malaysia and Singapore data centers.

Uh we're going to invest as much as possible in catching up to the leading edge in our own, you know, domestic semi-industry. We're going to dominate in power.

And in 5 to 10 years like we're going to be uh you know relatively you know you know in their view hopefully you know relatively equal in terms of like overall computing power and then I want to get a sense of like on the rare earth side how solvable that is for the US in your view.

Well, uh, uh, Chris Miller on China Talk had a good line like, "We're just we're about to see what's easier to do. Build an EUV machine or build a rare earth's mining, uh, uh, you know, rare earth mines and and refining facilities.

" So, um, from the Chinese AI perspective, I do think that their decision to sort of say, "We don't even want your H20s" is fascinating. Um, on the one hand, it may just be a ploy to get Blackwell um, uh, to be like, "Oh, okay. " Like, "We don't want this. We'll sell you even harder drugs.

" Uh, to use Lutnik's like addiction, uh, phrase, but there also may be some sort of, um, information mismatch.

Um because there obviously are lots and lots of uh sort of Chinese uh AI labs and uh hyperscalers who would love to buy Nvidia chips, but Huawei may have gotten into the ear of the state council saying, "Yo, like we got this. Don't worry.

" Like um you know, we'll But isn't there also haven't you know hasn't like Singapore and Malaysia like spiked quite a bit? Like can that can that demand not just flow there? Yeah.

So it turns into a bit of a bridge and this is something that the administration seems to be well look if you're if you're fine selling the chips into into China uh yeah why not just sell them into into Malaysia and Singapore. I mean I for one am more comfortable with that as a kind of intermediate step.

Um but the problem with that is like what you're doing is providing this bridge for all these um competitors of uh the US uh AI stack to kind of like keep developing and stay on the frontier such that when um Huawei really is able to scale, you know, potentially is able to scale to a level to compete with Nvidia, you have these firms still running.

And the question I really want to know is like look, if we're if we want to sell the AI stack to the world, um why don't we just make why aren't we selling like all of it?

Like why is it cool that we're just doing the Nvidia stack and then like we're having we're we're allowing Nvidia to do uh partnerships with like Alibaba cloud abroad and like sell that into into Malaysia. I mean, it would not be that hard to say, okay, like you want Nvidia chips.

um you should also be working with American hyperscalers and you should be buying from AI and buying western models. That seems to me to be like a like a like there aren't too many like uh alternatives um on the table.

The US does have the the leverage there and I think it's a shame that um that's not the line we're pushing. We're we're instead just sort of like ending the monopoly of the AI stack at the chip layer and letting the the the clouds and models just you know go whichever way they want.

I think America needs a deepseek for energy. An American deepseek for energy. Right. So what that would mean is like what did Deepseek do? Like they got they jumped to our front. Jordan Schneider is the cash state. Yeah. Really cheap. Really fast.

And but they stole like our fundamental thing and like we need to steal how fast they can build energy over there and make it an American company. So however they or just like invent nuclear fusion. Yes, John. Well, it's not that confusion. No, no, no. It's something that they're doing, right?

Aren't they Aren't they inst They're growing way more energy. So, what is the company that's doing that over there? What's the organization over there? What do they have that's special? Let's let's copy that. Is that possible?

I mean, the the answer is like it would like the reason I went to nuclear fusion is like it would be really nice to have a shortcut. Um because the answer is like really boring and frustrating.

Don't you think America will Don't you think America will just get lucky like we always do discover you know some novel you know method of energy but we always anytime we need a resource we just find some of it I feel like we'll have hearing about this yeah this is the this is the whole Tyler Cowan thing like do not underestimate the elasticity of supply um it's not just finding it right it's like all these you know global capitalism is now scared of their dependence on Chinese rare earths and they kind of got a taste of that in April.

Um, you know, they should have learned their lesson in 2014 when China did this to Japan, but now it's really now, you know, all all your VC friends that come on the show are are going to understand that this is a this is a much more investable, you know, finding like the solution to Ubium and like um, you know, manufacturing like lab grown diamonds.

Like people are going to be willing to pay a premium for that stuff in a way that they maybe weren't. Um even why why are lab grown diamonds important? There is actually a cyan banister company long journey is in uh something called diamond age. But is that important in the rare earth context? Yeah. Yeah. Yeah.

It's an input to I think China. This is actually one of the ones that uh uh the world is doing okay on. China has like 70% of the market. But yeah, it's it's part of the sort of uh um uh the you know it's it's used in fabs. as part of the sort of manufacturing process. Yeah, that makes a lot of sense.

Uh how are you tracking uh the the backlash to uh data center buildout? We were just talking to Sager and Jetty about this like he thinks that like there's going to be a serious backlash. What's the deep state saying, Jordan? So, here's the answer.

Um you you saw these uh you may have seen these articles come out with um the Secretary of the Army talking uh to PE firms about how they're going to lease out land. It's like, "All right, we'll just like build this stuff on Yeah. Just build this stuff on military bases. " Exactly. Yeah.

No, no one's going to complain if it's just like in the middle of nowhere. Um and and you know, you can pollute all you want on those. There are all these sort of regulatory exemptions for these places. Um I think the money's going to find a way.

The problem with this is like um sure you know the the the nimi stuff is useful when it's like you're going when it's like one neighborhood, right? Or two neighborhoods, but like you can put this stuff almost anywhere and it is like 97% as useful as if you get to build it in in Virginia, right?

So, I'm not I'm not all that pessimistic. I think, okay, maybe a few a few a few localities will be like uh loud enough to kick it out, but America's pretty big. There's a lot of places. I like that. Uh what what do you think's going to happen on the humanoid front?

We saw this really insane demo of a Uni Tree robot that was transitioning from walking to like crawling like an insect. And now Uni Tree is selling in Walmart.

And it just feels like we're going to repeat the DJI thing where we let uh one of every American have a humanoid in their home that uh uh you know a Chinese humanoid in their home. And I'm I'm sort of surprised that we're running this back. It's interesting.

I mean there's there aren't real competitors at scale for the consumer market in the US yet. I mean there are very straightforward regulatory things that the Trump administration could do to ban them.

Um there's also a handful of kind of dependencies that the Chinese robotics ecosystem still has on the U um still has uh connected to the US. So you know a lot of those chips come from TSMC like there's a there's a sort of like Nvidia software layer.

Um maybe this is something that the Trump administration is thinking about when they're saying oh we're going to like ban critical software. So there are things that the US can do to kind of slow down the um the ecosystem if they really want to.

Humanoids are not, you know, even in uni unit robots current form, it's not like they're delivering incredible value to Americans and by banning them, you're like, you know, reducing, you know, the productivity of businesses or anything like that.

And so it feels like maybe in 2 years they're actually providing some value across the economy. It'll be much harder to go out and say we're going to ban the cheap ones and you have to buy American. And it just feels, you know, I don't Well, what's really interesting is like in Ukraine, UGVs are a real thing now.

Um, so you know, a lot of the like uh sort of resupplying uh infantry that's on the front line is an incredibly dangerous thing and now they just have these little track robots that go back and forth.

You've even seen videos of like Kazak, so people who are injured um that they can't, you know, carry out in any other way being sort of like uh rolling themselves onto some like bed um and and having a drone drive them out. So, um I'm I'm with you, Jordy.

This stuff like they're kind of cute and fun for now, but we'll get like we'll get there pretty soon. It's not going it's it's not impossible. Yeah, they're cute.

They're cute, but at the same time, when it when the humanoid starts crawling across your floor and you real and and your your your human alarm, you you have a biological alarm bell going off that says like this thing like looks like it like from all the sci-fi movies I've seen, this thing looks like it wants to kill me.

Yeah, it it feels way more attractable to me. Like self-driving cars, like you know, you know, OCRing text in an image. It feels like something that we can just like chop chip away at versus like the novel scientist scientific discovery thing that feels like very uniquely human, very complex, like much further out.

This is just like make the motors work the right ways. It feels very simple like we're not trying to make someone superhuman at moving like it's just do the thing that any human can do and we have tons of training data for. So how are what's happening in in Chinese markets right now? I don't know, man.

I'm just the tech guy. Uh, I'm gonna pass on that. Let me let me go back to the You should You should spin up a spin up a small venture front on the side. Then you'd be able to answer that question. Well, no.

Well, the thing the thing that I am spinning up that I'm look that I want your blessing from actually is so I've started a new series um about war. I think it is actually just Sports Center for War. We've been doing it once a week.

Um, the current name is Second Breakfast, but I think WBPN would probably be a better thing. So, I don't know what the licensing arrangement is here. Maybe this is a conversation for offline. I love the Second Breakfast uh concept. I love the I love the topic selection.

I would not recommend Sports Center for War because the because like there are just gonna be episodes that are sensitive and it's hard to bring humor and levity to something that's really dark and sports center is about providing an entertainment layer over existing entertainment and like I'm sure it's been a little dark this week with all of the the gambling uh uh ring action, but uh but in general I don't think you want You might I don't think you want your face across the New York Times being like Jordan Schneider guy.

Yeah, it it it is tricky. I mean, people have people have pitched us like, "Oh, are you going to do a trading card for the hostages being released or something in geopolitics and stuff and it's like it just feels like that's not our space?

" And when you recontextualize it, even if it's a positive story, it still feels like, oh, there's like there's real lives at stake versus like, you know, just money at stake, which is what we talk about, or just or just points on in the imaginary sports world.

Uh like in the literal sports world, like it's it is just a game. Yes, it's extremely high stakes for at the Super Bowl, but it is just a game. And so, uh you can have a lot of fun with that. And you can also have fun with just some VCs who are writing checks.

But the war thing is a little bit it requires a little bit more sensitivity I think. Yeah. I mean it's interesting because like this community is just chalk full of dark humor. Um so um you know I've told this to a few people and they just like think it's the funniest thing in the world.

Um even like going back conversational element of of talking about the the war history that makes so much sense like for sure. Yeah. Um um but all right point point point where can people where can people check it out? I know it's in the China talk RSS feed. Do you have to hit hit substack?

How are people getting into the ecosystem? Yeah, it's just uh it's just on the China talk uh podcast feed for now. Maybe end up metastasizing. But yes, Second Breakfast if you need more Venezuela content in your life.

What is what I I have been I've been out of the loop on what what what do you think happens with Venezuela over the next month while we're while we're here. You can give a little taste taster of your of your of your new show. Well, there's two there's two paths where well I guess there's three paths they're on.

One he's just bluffing and we're going to move on to something else in a month. But like having this many boats in the Caribbean, sending a carrier makes me feel like it's a little more than that. So then there's path number two where America fights like a covert war with a cartel.

Um and then there's path number three where we sort of like kill exfiltrate um end up intimidating out of the country sort of Maduro and his like leadership team. And um I don't think uh this administration is necessarily going to be the if you break it you buy it mindset.

So, um, you know, then I guess the cartel takes over the country. I don't know. It is not clear to me that, um, this has been entirely thought out. It just seems a lot like a Sakario cosplay at like a giant horrific on a giant and like really horrific scale. Maybe there's a better idea out there behind all of this.

Um but the the sort of head of Southcom um for whom this operation would have been like the crowning achievement uh decided like said he was going to retire one year into his three-year tour of duty which has basically like never happened um in the past 40 years or so. So um I don't know it's going to be really messy.

Um the US actually does have like a kind of nice case study in what in Colombia and what uh we were able to do to sort of like get the you know bring the like talk and fight the FARC out of existence uh over the course of the 2010. So that's the happy story that might manifest.

But the thing there is like you were working with the central government. There were only 50 Americans on the ground doing the thing and like now we're trying to get rid of a cartel that um apparently the president is saying is like one in the same with the government itself.

So I don't know big mess uh very far from like pivoting to China. Um but we'll we'll get there eventually. You know this is uh it's only a matter of time. I know. I think you got to maybe start with updating China talk. Maybe it's just maybe it's just globe talk. World talk world just world talk.

Globe globe world globe radio. No, I think just Jordan Schneider. I don't know. Uh, I mean all these all these Somebody in the chat said Saturday Night Live for human rights violations. So that's what you wanna that's what you want to avoid with your whole sports center for war thing. Rough.

Although maybe if you just own it. I mean like you listen to Tim Dylan. He's like extremely candid. Uh anyway, we we do have a guest waiting. So thank you so much for coming on the show. Always a great time. Let's do it again soon. We'll talk to you later and have a great weekend. Good to see you. See you guys. Cheers.

Uh before we bring in Chase from Crusoe, let me tell you about