How DC makes investment in the USA risky

Yeah, certainly a lot of countries around the world are looking at China, developing countries, and they're thinking, how can we achieve what China has achieved? And all of them are looking at every kind of possible magical formula to try to get what Beijing has accomplished.

On that, a lot of people in the West talk about subsidies, that China is accomplishing these feats by subsidies.

So Beijing's emphasis on new productive forces and more unified domestic market is usually translated as...

They are just paying for it through the government.

Can you tell us what's actually happening and how does China's reality maybe diverge from Western interpretation?

Every government around the world provides some level of subsidies to industry.

I don't think that there is a government anywhere in the world that doesn't do that in either direct form or indirectly through the provisioning of public goods infrastructure, tax offsets, et cetera, et cetera.

So broadly speaking, what China does is in that sense not particularly unique.

The complaint often is that it is of a level that is far more significant than other parts of the world.

There have been debates around whether or not that is, in fact, the case.

And I think the realization is that, in fact, the levels of subsidies in aggregate terms, how much subsidies go towards, say, the motor vehicles industry, is relatively small in the scheme of things, particularly if you're looking for understanding the factors that drive competitiveness, cost reductions, etc., etc., One of the complaints is that Chinese companies are able to access low-cost finance.

Well, it is true that Chinese finance is low-cost, but that's a policy choice.

There's nothing that stops, in theory, countries elsewhere in the world making those same policy choices.

The cost of money is a distributional question.

The question is, do you want industrial activities or households getting the benefit of low-cost finance, or do you want the finance sector making money off the back of other people? And socialist finance, which is there to serve the real economy, takes the view that the cost of finance should actually be low because it's there to serve the real economy, not to serve bankers.

What China has been able to very successfully do on the back of this liquidity support is build industrial ecosystems.

So we're talking about supply chains, industrial chains, and the entire ecosystem that actually makes it possible to operate at speed and at incredible efficiency.

You've got a motor vehicle industry or an EV industry now where automated manufacturing is turning out a new car every 76 seconds.

And this is remarkable.

You've got humanoid robot factories that are now turning out 10,000 robots a year with machines making machines.

This sort of productivity was unheard of five years ago.

So China is implementing automation.

It is making its energy systems more efficient, delivering lower cost energy into its productive capabilities.

It is creating geographical clusters where over 80% of the value that goes into a complex manufactured product like an EV is actually comes from within a two-hour drive distance of the principal factory and assembly plant.

This again is a remarkable piece of economic engineering.