Jordan Schneider: US-China Beijing summit was 'prestige on the cheap,' rare earth stalemate has years to run, and Taiwan remains critical beyond chips

Have a great rest of your day. Goodbye.

Uh and if you haven't been following, the stock is up 13% today. Spotify is a 103 billion company. Not too shabby. Our next guest, Jordan Schneider from China Talk. You know him, you love him. He's back on the show for the third, fourth, fifth, sixth time. who knows how many times it's been. We've lost count, but it's been too long and we're happy to have you here. How you doing?

I'm good. I got to be honest, was also pretty confused by the Spotify. You were confused by it. I thought

being a hundred billion dollar company can't have fun in this country.

Yeah.

What's wrong?

I'm just saying it took me long to click it. I thought I had like some weird iOS update. Whatever.

Oh, yeah. Sure, sure, sure. I just think that like the fact that you processed it, even if it slowed you down, it put you in, you know, the fast thinking, slow thinking. You were in slow thinking mode.

Your phone enough. You're not addicted to your phone enough.

Are they still Are they still rocking the Are they still rocking? It's still a disco ball. I like it. I think they should just keep this thing. It stands out so much from every other app on my phone right now. I love it. Anyway,

how are you doing? Give us maybe let's start with the postmortem on last week. How is the China summit? and then we can just go into everything else.

So boring, man.

I I knew I knew you were gonna say that. I was like, we're gonna talk about everything but China because it was so boring. But

and they let me down. I mean, look, I think there is a clear um period of stalemate which we've gotten into where the US has some leverage over China um which has been something that um really since like 2017 uh Trump won Obama uh Trump won Biden and then uh the start of Trump Truth thought that they could kind of keep turning the temperature up and squeezing on tariffs and export controls and investment restrictions. And then all of a sudden, China April 2025 punches back with rare earths and all of a sudden um they realize uh you know they run they run the experiment and it works that actually the PRC has real leverage over the US and is able to kind of con like meaningfully constrain what um American presidents want to do when it comes to um more course of actions on China's uh you know technological and economic expans. expansion. So, um both sides have kind of realized that and what we got is a you know uh what was my headline? Prestige on the cheap where uh the US decide where um you know you have the whole cabinet uh flying over you have every fancy CEO frying flying over just being a wowed by um

you know their 36-hour vacation to Beijing.

Yeah. It felt like tourism. Yeah. And look, there's an interesting debate to be had about whether the like giving them the face and giving them the atmospherics of that is actually like kind of in some level costless and maybe this like makes them feel less agrieved, less likely to start World War II. I mean, this is the argument with Putin, right? It's just like we kept disrespecting him and then he decided no, like I'm going to show you just how tough I am. So, I'm not kind of on face opposed to it, but you know, it was it was kind of just more or nothing.

Yeah. I mean, you mentioned every fancy American CEO was there, but were you surprised or were you expecting uh or did it break your expectations that uh no Sam, no Daario, no Demis, no Sundar? Uh a sort of lack of AI representation? Yes, you have Elon and yes, you have Jensen. uh very important figures in the AI American AI buildout, but no true lab leaders from my you know rough estimate if I define it a certain way. Uh and it felt like okay uh maybe this discussion should be about AI and it's and it's they're they're not even bringing the people to let them get a word in edge wise. Not even a single line uh of of conversation will happen. Was that a as expected or how'd you process that? Yeah, I mean it's interesting because like um this is phrased this is framed as like a trade delegation almost right and so almost all of those companies like Meta excluded I mean I guess they had a person there but Zuck wasn't there. Yeah.

Yeah. But but that person is like a Trump one person that's kind of just like keeping with the vibes and I guess Meta builds glasses glasses in China. Um yeah and they and they acquire a AI agent companies manage they they are a buyer of Chinese companies or formerly Chinese companies that have moved to Singapore

which they're now not allowed to do. So yeah, they had some lobbying to do, I guess. But like the, you know, the asks I think are really inco. Um, look, the US government, we just had news today that Trump um 86 a uh executive order because he doesn't know what he wants to do about this uh sort of thing about AI safety. And if like you can't even figure out what you want from a domestic regulatory perspective, like are you really ready to like put all the cards on the table and have this big, you know, grand summit with the Chinese to make sure that boweapons don't kill us all in 2029? I don't think so. I mean, it'll happen at some point, but it's it's just a little premature, I think. Maybe not from the technological perspective, but from a sort of policy perspective that um you to expect much of a serious discussion between

Yeah. Are are you uh Sebastian Malibi had an op-ed where he was sort of gesturing towards like the possibility of more collaboration on AI between America and China. You're you have your hands in your face or your face in your hands. So I assume you are uh skeptical that that will take place anytime soon. Oh, I mean also the AI 2027 folks very good at forecasting have predicted a lot of what's happened. Uh say China wakes up in 2026.

Yeah. I mean it's not impossible. I think the sort of um look if the American political system has not yet woken up to uh an understanding that you need a different regulatory strategy in order to keep humanity safe. Um I think it is unrealistic to expect a strategic adversary who does who is you know 6 12 18 months behind where you are on the sort of technology development trajectory to come to the same realization now you know it'll happen at some point I think um this stuff is really powerful and the the sort of logic that um America doesn't want uh uh you know bioweapons to be developed by al-Qaeda or ISIS or um Hezbollah just in the same way that um China wouldn't want it to be done by you know the Fallon Gong or Tibetan separatists or uh you know uh any any group that see they see as like a non-state actor that would that would want to kind of take down the party um applies right um but China I think is deeply the Chinese leadership is deeply hardware pilt. I think they're deeply skeptical of these sorts of arguments on face because they're kind of sci-fi and um the the sort of jour the the analogy or the journey that um the US and Soviet Union went on over the course of uh the cold war to start to have real kind of discussions about strategic stability and arms control happened after you had the Berlin crisis and after you had the Cuban missile crisis. So like look, anthropic putting out a paper saying Claude mythos is really scary is one thing, but it is different at a fundamental level than like completely shaking a society and like having the entire world realize that you are on the verge of apocalypse. So

I hope we don't need that. Um but I am I am not particularly optimistic that that much will come of this in the

What do you before it really accelerates?

Yeah. Yeah. How much have you read into the theories that, you know, maybe China would would fund uh data center, you know, push back in the United States? I don't know that they they would need to, but if they were, if they felt that was important enough, it would signal something about how they think about the technology.

I think this is cope by the labs. Um, look, like won the election for Trump. Okay. And I mean, you know, it it is uh I think Ben Thompson had the right take on this a few days ago. This can be solved with money.

Like if if you really um put it uh you know, put put the choice to a town saying, "Okay, we will pay everyone within a 20 mile radius $10,000 a year." Um like this ugly thing. people will start frantically TRYING TO BUY

WANTED TO LIVE NEXT DOOR or like look make the data centers beautiful build a park on top of them like give me some playgrounds

that is the one that I'm the most skeptical of in the American society I feel like they will be companies will be paying dividends and mailing checks far beyond far like long before anything looks beautiful in this country like we build massive like monolithic structures all the time it's a lot of cement over here I don't Turn the turn the turn the GPU racks into free slots.

Every time I see one of these like beautiful industrial structures, it's always in the Nordics. It's never in America. Sometimes it's in China. They build a train.

So you have the the data center. You got all the all the different

racks of GPUs and you just put a slot machine attached one of them. Walk through and and you get like three or four. I wonder we I wonder what's the you know those cell phone towers that look like trees and I don't think they look any better really but I guess they do sort of blend in. I wonder what the like economic mechanism was for going that direction because when I'm driving around LA I see normal cell phone towers and I see tree f like fake trees cell phone towers and there had to be a reason like it has extra costs to make it look like a tree. Like is that just a choice? Is this like a nonprofit that's funding this? Like who's who's lobbying for this? Is there a law? I don't know. We got to dig every time I drive.

Can we please get the TVPN segment?

Yeah, we need to dig into this.

The tree the tree phone pole.

Come for the questions, not the answers.

I'm just riffing about things I don't know and would like to know.

I drive by and and they get me. I just start slapping and I'm like, "You got me, big telecom. You got me. I thought it was a tree."

From the distance. From the distance. Yeah.

No. Every time. Well, the bad ones are like when they're five times as tall as all the other trees around. You're just like

and like the branches only start like four fifths of the way up. It's just

Yeah. Yeah. Yeah. Yeah. It's very It's very uh half-hearted in its attempt at disguising itself.

Ridiculous. Um

uh on on other China issues, uh did you see there are two sort of dueling predictions? Maybe maybe I'm making them dueling predictions. Shimath Polyapatio says Taiwan not going to be a factor geopolitically in 18 months. Uh Dan Wong uh has talked about how uh technologists over represent the chip story in the Taiwan story and in fact the discussion over Taiwan goes back much further and is grounded in more of like capitalist versus communist uh decision-making and alliances. Uh where do you stand on the on Taiwan today versus in two years?

I have to acknowledge Chamas's existence. I refuse to do that. Um uh I think that Taiwan is a place that has mattered for a while and will continue to matter for a very long time to come. I mean first only on the chips thing the idea like I don't know as semi analysis like the percentage of chips that are going to be manufactured in Taiwan uh 18 months from now is still going

to be like 85%

or 90%. So yeah, it used to, you know, it was 100% um for Window. I am glad Intel isn't uh a flaming pile of crap anymore. And it's like nice to see Samsung uh also starting to get their act together. Uh but if if really that's the only thing you care about, no, you will still have a, you know, global economic catastrophe if uh the lights go off in Taiwan in 2028. Now, um why should you care about Taiwan besides the chips? I mean, it's a it's a democracy. Uh people have, you know, deserve to have self-determination. Um we can set principles aside if we really have to do that. Um but look, I think from a from a sort of geostrategic perspectives, there's also this kind of concept of the first island chain. And I think it makes it it it makes the the you know broader uh Pacific architecture that America has has has built over the course of the past 75 years in Asia a lot more tenuous if all of a sudden um you know the the kind of anchor to both Southeast Asia as well as uh North Asia becomes you know a PL and base. So uh

yeah they're wrong.

Yeah. So, so, so many reasons that Taiwan will remain uh important into the distant future regardless of what happens with Intel and and TSMC Arizona, etc. Uh, agree with you on that. Uh, what do you think the next catalyst might be in the rare earth story? Because we're starting to see rumblings about funding for American indigenous supply chains there. Eventually that becomes at least a stocking horse if not a poker chip on the table on the bargaining table. But where are we on the rare earth stalemate that became an important uh bargaining chip somewhat recently as you put it in the intro?

I mean it's a really interesting question. I've I've read reports saying that even five years from now the leverage is going to still exist. And I think there's a sort of broader question of like uh this is the second largest country in the world uh and largest economy in the world and it's going to stay that way for a really long time and the sort of ambition to um fully decouple such that China does not have leverage over the US um economy and can kind of squeeze it coercively seems to me to be a very tricky thing. Now, you can spend lots of money to sort of make that less acute or sort of turn it down over time or or um you know protect the particular things if you're worried about um you know individ like specialized inputs into fighter jets or um uh you know something that would be really catastrophic like insulin getting cut off or something. But it is um you know this is like a this is like a a generational challenge of shoring this up and b there's also an offensive side right of um you know escalation dominance uh in deterring an adversary from from squeezing on stuff like this also requires you to be able to sort of credibly send signals that you can take pain and cause pain in a way that would require the um you know the the other party to um uh to to back down and not necessarily use these tools. So, we're, you know, we're we're at this like awkward equilibrium. I think there's a lot of like hard thinking that still needs to be done to like like really conceptualize like what's the right way to spend money and the right way to think about this relationship. We actually just ran an essay contest on China talk um uh about uh economic security. Uh, we're going to be I have uh at 400 p.m. we're doing a uh a mega pod with three of the winners. So, um maybe I'll have a better answer for you after that, but uh it's a hard one.

Does Xi day trade prolifically?

Who's the best day trader in the global power in China?

Here's the thing. I got a piece coming out about comparing American and Chinese corruption. Um, and the difference is that in China they still feel like they have to hide it.

Okay.

Well, it will be an interesting piece. Uh, shifting gears. Shifting gears both literally and figuratively. Cars. Have you driven any Chinese vehicles? Have you been outside in the BYD? Are you planning

you're doing car reviews on China Talk?

I would love to see one. Have you been in a Zeer? I keep seeing these. They look amazing.

Zeke. I watch a lot of YouTuber I watch a lot of uh YouTube and Billy Billy reviews. Okay.

Um I have been in a BYD in Norway of all places. They had like in the main like like park they had a giant setup. Um you know it's really impressive. I you should get some you should get some American car manufacturers on yell at them. It's pretty embarrassing. You know, one of the mo more interesting developments, I don't know if you guys have been tracking this, the um uh Whimo using a Zeer body.

Yeah, crazy.

And I would have thought there were import restrictions because if if Zeke is not here, BYD is not here. You would think that like the supply chain would be restricted, but they must have found a way around.

So, the trick is that it's there. It's the chassis and the battery and literally nothing else. Yeah. Um, so they are saving money on that, but like the the rules right now are just on all of the sort of like electronics and connected anything. So, um, Whimo is filling up the entire car with stuff that they make. Interesting. Okay. Yeah. Well, that's probably like more reassuring that uh Cunping won't be TA operating. you'll have a a Whimo employee beaming in if you see a traffic cone out of

what uh what do you how much attention do you pay to their uh like humanoid antics? Like I feel like they're just leaking out videos of just this like all this silly stuff to kind of just get us a little bit comfortable with it. But if you actually go there on the ground, it's like droid army, you know? They've got like 100,000 humanoids marching in in in unison. And then they just put out the video of it like dancing to Michael Jackson like collapsing and getting dragged off stage.

You know, it's interesting because there isn't a market yet, right? Like these are not these are toys and these are like things you sell to universities for research. Um but at some point there will be um and then there's going to be a really interesting challenge of like whether or not uh I think there's like some level of consensus now that uh the western makers have like smarter software but if you can like you know it's it's one thing to fast follow um uh the models themselves but like if you can only if you can apply them like at a 100x scale Right. Then um yeah, it could be really dramatic. I mean, you know, I don't I'm not doing like the the episode, you know, Star Wars episode one like droid army. like well we well that might take a that might take a few more cycles but just from a

can you imagine can you imagine a Chinese humanoid company trying to distill Tesla optimist after they have a fantastic uh data breakthrough and they're just having all the optimist work in cubes like trying to farm the data out of it like they brilliant because you have to physically distill the data for so you buy you buy a million Tesla Optimus robots and lock them in a warehouse So they can move boxes for you. So then you can distill it into your own robots or something.

This is a company. This is an RL environment. I I love it. I should start I should start this

in China.

Oh no. I mean they're just like uh

reseller

in the US.

Yeah. Yeah. Yeah. You need a haird dryer to remove the Optimus sticker and slap on some other sticker. That's where the money is being made these days.

Uh but you got to hide that corruption. And it's really great that we have a software advantage and they have a hardware advantage on this, right? Like that's really bullish for us.

Yeah, cuz software

cuz like they would never be able to copy like software off of a hard drive and put it on their hardware, right?

Well, and that's the thing is like this is the difference with AI, right? Is at least America has way more chips and way more compute as long as Taiwan still exists hardware. But that will not be the case for the like, you know, humanoid bodied AI takeoff is like the thing you need to actually use the fancy model is almost certainly going to be manufactured in China and manufactured at the scale that um uh could be like you know multiple orders of magnitude bigger than in the west. Now this may change like once this becomes economic. Yeah. Right. Um so

America can I mean like like you look at you look at space like like we have multiple companies that land rockets very capital intensive. It's an industrial process. You would assume that China would win that, but they are but we have a lead in in NASA orbit still. And so it's not impossible. But uh we do tend to let our leads languish like we have in the car industry uh seemingly.

And it'll be interesting because there'll be this lag where um China like because they already have all these humanoid companies that like have the ability to scale will scale faster um once the kind of like economic utility of these things turns on.

Yeah, definitely. Uh if you if you believe in AI progress, do you have to believe in a Taiwan invasion? Because assuming assuming you know we keep making progress or we have accelerating progress, doesn't that just increase the prize for

Yeah. But it might increase the defensive capabilities.

Sure.

Yeah. And I think there's there's like plenty of other things you can do to be obnoxious. Um and there's so much there's look this is this is why Chimath is wrong about everything is because it's not all about technology like there are other um risks and incentives at uh and like institutional dynamics and historical dynamics at play. Uh and there are a whole lot of downsides to starting something that you don't know how like you don't know how it's going to end which uh is a lesson that uh she has now got to relearn from Putin over the past 5 years. So

makes sense.

What uh last thing we touched on it briefly and then I I know we're over time. What happens with Manis? What's your prediction? Are they going to are they going to buy the company back from from Meta and just head home? Is there any precedent for something like this?

I don't really understand. I mean, like all of the employee like do they have to give the tech back? They weren't really buying the tech. They were buying the it was like an aqua hire. Everyone's in Singapore except for the two founders. So like maybe the founders just get screwed out of all this money and uh you know the employees continue on their merry way in Singapore. I think it's a uh it's a messy one and uh I don't know like Meta eats a loss.

Yeah.

Something I hope Bill Gurley is

Before you go, we have an answer to the question of telephone pole camouflage. Tyler, do you want to do you want to give us a little update on this?

Can we can we do Yeah, let's cut.

Uh yeah, telephone pole camouflage basically began after the 1996 uh telecommunications act. Uh, so it basically like restricted the ability of local communities to regulate like the actual placement of the telephone.

So a city can't say you can't put a telephone pole there, you can't put a a cell phone tower there. But they responded,

but but they basically made it so wait, they they made it so um the local governments would say you have to camouflage it, right? So So now we see there's all different

forms of these. There's there's trees, there's cacti,

uh there's like church steeples.

Yeah.

Yeah. Google.

A lot of chipmunks run up and down those uh those poles too, right?

And camouflage can add over a h 100,000 to tower construction prices, which is still cheaper than losing the sight. Tree towers can cost up to double.

Hey, two can play this game. Two can play this game.

You have a sound, too.

I got my buttons.

We have a guest with buttons. Let's see. Can he get it to work?

Uhoh.

Oh no. Oh no.

Another one. That's a narrative violation.

Will it work? Let's find out.

Uh, your buttons aren't working.

Anyway,

but uh, bring them bring them next time.