James, first of all, just to set the scene for us, how did China build such a major manufacturing advantage?

The Chinese industrialization story, I guess, really starts in the late 70s when Deng Xiaoping becomes the leader of China and the country embarked on an industrialization campaign to both undo the ravages of the Cultural Revolution and also to increase incomes to benefit the country and they started with heavy industry but really realized really quickly that that was actually a dead end and so they switched really quickly to to light industry so they started making things like clothes shoes simple toys t-shirts and that kind of stuff and then you know through the 80s and through the 90s they sort of moved up the value chain so they went to making slightly more transformed and just making cloth but making clothing out of that and more complicated clothing or they're making furniture And so you see them through the 80s and 90s, they're increasingly competing with manufacturers of chairs and tables and shoes in America and Europe.

And then in 2001, they joined the WTO and that sort of supercharges their exports.

And not only do Chinese companies start exporting a lot more because their tariffs fall down, but then American and European and Japanese companies as well, which already had been investing in China somewhat, pumped massive amounts of money into the Chinese economy to build up their capacity to build and make in China.

And one of the things that the Chinese government did very cleverly was they made sure that Chinese companies could learn from those investments.

So it wasn't just an American company coming in and saying, we're going to build here, but we're going to keep all the IP ourselves.

We're going to keep control of all the manufacturing processes.

And how has China managed to maintain its cost advantage through all of this?

What are the old scabs, the old wounds in this relationship that might be now being bloodied right now?

Obviously, the biggest issue between Japan and China is leftover from World War II.

And by World War II, I mean not 1939 to 1945.

The Chinese definition of World War II or their fight against the Japanese now is 1931 to 1945.

Because Japan was a colonial power, Japan held Korea, Japan held Taiwan, Japan took over a large chunk of northern China, and then they gradually took more and more, and then they invaded Shanghai and Nanjing and southern China in 1937.

And so that history of being invaded by Japan over decades and millions and millions of Chinese people being killed by the Japanese or dying because of the effects of those wars and that conflict.

So there's this resentment and hatred because of the events of that period to 1945.

So that might not damage Takeuchi's support rate in particular.

... support rate in particular.

And also, tourism is an important source of foreign currency revenue for the country, but a slight reduction in tourist revenue isn't going to be as damaging as the risk or the possibility of Japanese companies in China being targeted or seeing boycotts.

Japanese car companies still have billions of dollars of investments here.

Other Japanese companies have billions and billions of, of dollars of investment here.

7-Eleven, Uniqlo, Family Mart, Panasonic, Canon, Fujitsu.

You know, these are huge companies that do a lot of revenue here, and if you start to see real consumer boycotts, if you start to see businesses pulling back from doing business with Japanese companies, then the hit to Japan Inc. could be substantial.

While tourism is very vivid and in, in your face, the bigger threat is gonna be if this goes on for a long time and Toyota sales in China crater even more than they've already been falling.

I think from the Japan side, they will just continue making these very sort of low-key and modest but steady efforts to try and smooth things over.

On the way to look for the data centers, James Mayger stumbled across miles and miles of renewable energy installations.

The desert was just a dusty, rocky plain.

And scattered across the desert was just windmill after windmill after solar panel installation after solar panel installation.

And then there was also this power generation, which is where The company uses mirrors to concentrate sunlight onto a tower which is filled with molten sodium.

And then that heat is generated by concentrating all that sunlight is then used to generate electricity.

And you can see this like 20, 30 kilometers away because the sunlight is so blinding as it's concentrated onto this tower.

Using the data team's coordinates, James was able to locate massive building complexes in the desert, right where Andy said the data centers were being built.

There was a lot of construction in Yiwu, and there was some construction going on up in the area with all the solar panels.

On the way to look for the data centers, James Mayger stumbled across miles and miles of renewable energy installations.

The desert was just a dusty, rocky plain.

And scattered across the desert was just windmill after windmill after solar panel installation after solar panel installation.

And then there was also this power generation, which is where The company uses mirrors to concentrate sunlight onto a tower which is filled with molten sodium.

And then that heat that is generated by concentrating all that sunlight is then used to generate electricity.

And you can see this like 20, 30 kilometers away because the sunlight is so blinding as it's concentrated onto this tower.

Using the data team's coordinates, James was able to locate massive building complexes in the desert, right where Andy said the data centers were being built.

There was a lot of construction in Yiwu, and there was some construction going on up in the area with all the solar panels.