Emergency Discussion #3: Xi Visits Trump

Okay, good afternoon. I am, we are, I'm currently Hi guys.

So, if you are getting off topic or you're asking a question that's not really to the discussion, I will cut you off. All right? I apologize for that. But you know, these meetings, Zoom discussions, is really an opportunity for us to go deep into a topic and you know, US-China relations obviously is a very, very important topic and I want to make sure that everyone today has a pretty good understanding of what's going on. Okay. So first of all I want to thank everyone for your support. So I am currently, as you can see, in the woods.

There's a lot of foliage behind me and it's the fall in Canada and so it is just beautiful. Lots of autumn colors, red, orange, yellow, and my son is with me and we are staying with some family friends and it's just been wonderful. And this is a life that I've always dreamt of, you know, to have children, have children play in the woods, and you guys, because of your general support, have made this possible. So again, I can't express enough gratitude. This entire trip back to North America has been fantastic.

We've met so many wonderful people. There's a good friend Reza who hosted us in Los Angeles and when we went back to Toronto some friends helped look after my son Chris. So I could spend about 8, 10 hours a day in the library really grinding away doing some really deep research into the occult series that I will present. Now we are staying with some friends near Ottawa and so this is really the life I've always wanted and you guys have made this possible. So thank you so much everyone. Okay.

So I am going to start my presentation. So I'm going to share the screen and please, if you are new, if you just come in, please remember to mute yourself. And again, Fritz, did you have a question? I'm about to start.

And I don't even know how to I think the moderator could probably kick the fireflies.ai note.

This visit went okay but again he didn't produce anything. There are two more visits There are two more visits scheduled.

And President Xi will probably be there for the G20 summit. Okay. All right. So, we will be discussing more of China as this year progresses. And so what I'm going to do now is I'm going to provide some background on what's happening and then we can try to make predictions about what might happen. Okay. All right. So I'm going to share my screen. Okay. So again, I apologize if you guys have problems with this. I'm terrible with technology. All right. So, I'm going to play this one from the start.

Okay. All right, guys. So, before the meeting, there was a meeting between Treasury Secretary Scott Bessent and his counterpart He Lifeng in New York at the JP Morgan offices and they were trying to figure out a trade deal. And as you know there is a pause to the trade war between United States and China and they basically extended it by a few months. So it didn't seem as though there was some major results out of these meetings. They were supposed to discuss the possibility of establishing an AI committee, global committee, to discuss guard rails and all that.

I mean that didn't happen either. So these meetings are happening but for whatever reason they are extremely lackluster. Now you can make the argument and it's a very legitimate argument that right now US-China relations are under tremendous strain. Right? So remember there is another US citizen, I forgot his name, but he was in South China doing some research and he was apprehended by the Chinese authorities and detained and arrested on the suspicion of spying, and that has caused a lot of tension between China and the United States. Also the United States have accused China of providing targeting information for the Iranians which has allowed the Iranians to kill Americans.

And so there's a lot of conflict between China and the United States. And what I will say is my intuition is that a lot of this isn't really conflict between the United States and China. A lot of it is given factions within both the United States and within China who are trying to railroad each other, who are trying to embarrass each other's factions. Okay. So another thing is right now in the United States there are certain factions that want rapprochement with China. There are also many different factions that want to increase belligerence, to increase this conflict between China and the United States, and that's what's really driving a lot of these news leaks.

So that is, okay. All right. This is the schedule of the meeting. And something to note is how President Trump went directly to the Air Force Joint Base Andrews to greet President Xi. And this was a very big deal. The last time this happened was when Obama went and greeted the Pope. And this is Trump showing the greatest hospitality to President Xi. There was also a flyover and the two first ladies also spent a lot of time together. There was this big state dinner and this is only the second state dinner that Trump has hosted in his second term.

The first was for King Charles. And so again, Trump thinks very highly of President Xi of China, and he's gone really all out to welcome his friend. I want to show you this list of CEOs who attended the White House banquet. Now, sort of things to note about this list. Number one is it's unusual. Sorry JL, did you have a. Yeah. Could you unmute yourself, JL?

All right. All right. Yeah. So, certain things to note about this list. Number one is these are all CEOs. There are no cultural figures. This is unusual because traditionally when there are these White House banquets, cultural figures are invited. So you know someone like Lang Lang who is a Chinese pianist, he would have been invited, maybe Chloé Zhao who is an Oscar-winning Chinese director, she would have been invited in the past. An actor like Jackie Chan or Michelle Yeoh would have been invited in the past.

So clearly the emphasis is purely on business. That's point number one. Point number two is as you can see from this list most of these people happen to work in the AI high-tech sector and that really highlights Trump's priority. As I've mentioned many times in previous lectures, right now there's a civil war going on in the United States between the Wall Street people as well as the Silicon Valley oligarchs. And it's really a war between finance and technology. And this list shows how Trump is being supported by the Silicon Valley oligarchs.

Now you will see there are financial people on this list including Larry Fink and Stephen Schwarzman. I think it's because they sort of straddle these two worlds between finance and AI. Larry Fink and Stephen Schwarzman are heavy investors in AI databases, especially Larry Fink. Another thing I will point out is that Stephen Schwarzman is very, very close with both the White House and with Jonah High. He's been a very effective middleman between China and the United States for the longest time. So it shows the priority. So this list of CEOs shows you the priorities of the White House.

Another thing that I will point out is there were no Chinese entrepreneurs at the White House banquet. This is extremely unusual. Okay. In May when Trump visited China, he brought with him most of these people. And China invited a lot of their own entrepreneurs. So for example, one of the most famous pictures taken during that time was between Lei Jun and Elon Musk. Elon Musk of course is the world's wealthiest man and Lei Jun was at one point China's wealthiest man. I'm not sure if he's still number one, but for some time he was number one.

And he's considered the best entrepreneur China has right now. So, I was extremely taken aback. I was extremely surprised when they were not invited to the dinner. And then you ask yourself, what's going on? I mean, a lot of things that you would expect to happen are not happening. So something to appreciate about Chinese politics is it's always politics number one. Everything else is second including economics. So I think that what's really going on is Trump has been very clear and direct in his demands.

He basically wants China to open up its financial sector. He wants more Chinese students to come to the United States. Basically, he wants China to invest more in the United States and allow American companies to make more money in China. That's what Trump wants. He's a business person, right? And China has been very, very reluctant to do so. And I don't think it's because China is trying to protect its own sovereignty. I think it's because no one is in charge of China right now. No one person has the authority to make any controversial concessions.

I know this is a very provocative statement, okay? But let me slowly explain to you my logic. Okay, my argument to you today is that in China there's really no one in charge. It's rule by committee. Okay. So there are three paradoxes that I saw during this summit. Okay. The big paradox is there were no Chinese entrepreneurs present. What this is important is it violates two important Chinese principles. The principle of reciprocity and equality. Okay. So if you come to my house and I invite these Chinese entrepreneurs then when I go to your house, you know, it's expected that I bring Chinese entrepreneurs as well.

This is the idea of reciprocity. It's like giving gifts, right? If I give you a nice gift you have to give me a nice gift back in return. It also violates the principle of equality, right? So China sees itself as a peer to the United States. So the question then is why is it that all these American titans of industry were present but these Chinese titans of industry were not present. Does that mean to say that China does not have any titans? Does it mean to say that the Chinese economy is not important?

It's a really weird thing. Okay, remember in China these things happen for political purposes. So you know, things were arranged in order to deliver a certain political message to the Chinese people. And so what we're trying to figure out is what is this message? Okay, that's the first paradox. The second paradox is, so there was a rumor this year in May that China would invest $1 trillion in the United States primarily setting up these EV factories, right? So China has these EV cars that are very popular, very cheap and they dominate the global market.

So, there was this rumor that China would announce a trillion dollars in investment in the United States. It may still happen. Remember, there's still three months to go before the year ends, and they might save it for the G20. Okay? It may still happen, but it has not happened yet. And this is very strange because usually, you know, when you are a Chinese president you come to the United States, well, you want to show how powerful you are by offering a major gift, and the only thing that you know President Xi has offered so far is two pandas, right? That's kind of strange, okay? And the third paradox is there have been no major announcements during this summit. In fact you can argue that things have regressed since the May summit.

Usually they would want to create a narrative where things are progressing, but it seems as though there are these major setbacks this time around. Okay. All right. So, this is what Donald Trump said. One major agreement is China and the United States have agreed to rename artificial intelligence into super intelligence. Yippee, we did it. Okay. Yay. This is a major accomplishment, guys. We changed the name. Again, usually a Chinese president when he visits the United States tries to offer a gesture of goodwill. The gesture of goodwill is he wants to invite 100,000 young Americans to study in China over the next five years.

Okay. Sure. Elon Musk telegraphed this a few days before the actual announcement which says that, you know, they are in. Okay. So, to understand what's going on, you need to understand three things about China. And I know this is going to be hard. Okay. Once you accept these three things, then everything starts to make more sense. So, when you consume media, New York Times, BBC, CNN, you are misled into believing certain things. And I think that's why the expectations were so high for the summit. But living in China, knowing China very well.

In fact I know China better than any other country in the world. Right? I will say there are three major misunderstandings about China. The first and what people don't appreciate is the Chinese economy is in decline. Okay. It peaked back in 2014, 2015 and now it is in steady Decline.

That's not true. It's because no one's in charge. That's the real reason. And so this gets to my third point which is that China is not able to think strategically because no one's in charge. It can only respond to crisis like the US invasion or the US attack on Iran. Okay, so that's my central argument to you today. Okay.

So let's get to the first question which is why is it that no Chinese entrepreneurs showed up at the state banquet, and a lot of the reason why is Chinese entrepreneurs have been under a lot of pressure lately. Okay. It started two, three years ago with Jack Ma falling from grace. But now it's even extended to Ren Zhengfei who is the founder of Huawei. Now if you know China, you know that Huawei, it is a Chinese military company and it is probably the most powerful company in China right now.

It receives billions, possibly hundreds of billions of dollars in state subsidies mainly to create its own semiconductor ecosystem. And for the past couple of weeks, both Ren Zhengfei, the founder of Huawei, and his daughter, Meng Wanzhou, have. It is impossible for people to get in touch with them, including the executives who work under them. And this is extremely unusual. Huawei, it is a public company and it has a massive PR operation in order to squash any rumors and it has not done so. So this is extremely unusual and there are certain rumors.

Okay. There are rumors that he has fled the country. I don't know where he would go to but there are rumors that he's fled the country. There are rumors that he is under investigation. So why would he be under investigation? Well, it turns out that Huawei has been promoting the fact that it's developed its own semiconductors that are high-tech and it's been able to circumvent the US dominant global supply chain. Right? So it doesn't need fargo machines from ASML. It doesn't need to buy chips from Nvidia. And it turns out that the rumor is that this is all BS.

It turns out that whatever innovations Huawei has made in these past few years, it's because they've smuggled in Nvidia chips through other sources. And quite honestly, living in China, being Chinese, knowing China very well, I would say it is far more plausible that Huawei was smuggling in chips than Huawei developed its own innovative semiconductors. Okay, just being Chinese and knowing how China works, Chinese are much more likely to cheat than to innovate. Okay. So, regardless, I think the Huawei first family is in a lot of trouble and the reason why they haven't announced this yet is it's completely embarrassing.

It's entirely possible that Ren Zhengfei will return and everyone will pretend nothing happened. Okay? And the reason why is it would be too embarrassing for China to admit that Huawei was lying to everyone all along. Okay. But as you can see, because of this issue, the Chinese would be reluctant to showcase entrepreneurs at the White House because it really doesn't know who it can trust. Okay. All right.

Some other news is there are rumors that the Chinese are investigating Deepseek and Kimi. Okay, this is huge because Deepseek has been a source of tremendous national pride these past few years. So remember what happened was that OpenAI released ChatGPT and then using a fraction of the resources, of the time, of the personnel of OpenAI, Deepseek was able to create a much more efficient large language model than OpenAI, and again this was a source of tremendous pride. It seems like Deepseek said that it was because they created more efficient algorithms that were able to parse the internet much faster than OpenAI.

It seems like that's not what happened. It seems what happened was that Deepseek basically created thousands, possibly millions of accounts and basically mirrored or stole the beta database of OpenAI and just used it for itself. It's a practice that these Chinese AI companies are continuing to use. And the problem with that is what's been happening is that Chinese military personnel have been asking AI some really sensitive questions and providing some really sensitive Chinese military intelligence to the AI and this is going back to the US companies.

And so basically these US AI companies are now able to have their own Chinese military database, have access to the Chinese military personnel database. And as a result, this has compromised Chinese national security interests. And again, guys, I live in China. Chinese people do not innovate. They just cheat and they steal. And this is what happens when we pull this crap. Huawei thought it was being really smart by smuggling these Nvidia chips. But these chips probably had some back door that allowed the US NSA to create back doors to access Huawei secrets.

Okay? Think about this. Okay? Just a thought experiment. For years and years, you know that Huawei engineers have been stealing IP left and right from Western companies. Okay, there are videos of Huawei engineers going into, you know, telecom firms in the United States and then stealing the hardware. Okay, there are videos like that. If you know that they're going to do that and you know that all they're going to do is reverse engineer what you have and they don't really know what the source code is, then why aren't you going to create these back doors?

Sorry, Liquid Monk, did you have a question or Yeah.

And the reason for that was just to copy the whole concept of the car. So that resulted that the management pull out everything from China and started to shape the cars back as they were up to the 2012. But the technology was lost and we have a result that now the cars that Chinese are producing are much better than the cars that we produce In a sense technology is everything is power based.

But thank you so much for that, Robert Lee and Liquid Monk. Okay. So again the Chinese having problems with their entrepreneurs. It seems as though these Chinese technologists have not been transparent about what's really going on and in fact a lot of these Chinese technologists are cutting corners in order to please state officials because remember, in maybe the United States these entrepreneurs like Elon Musk have all the power but in China these entrepreneurs no matter how wealthy they become are still servants to the state.

Okay. All right. So another thing that's been happening and this is really important is on September 15th, China announced changes to its exit and entry administration. And basically the thing to remember is now China has the authority to ban any entrepreneurial and technological and scientific talent from leaving the country for no reason whatsoever. They can just say national security and they can prevent you from leaving the country. And so I think this is a response to the fact that there are a lot of wealthy entrepreneurs who are trying to flee the country.

So it's really interesting what's happened these past 30 years because, you know, in 2000, from 2000 to, if you were a Silicon Valley engineer who was of Chinese descent, what you would do is you would take your knowledge and the code that you create and maybe you would steal some IP as well. You fly back to China to create a company and you get a lot of financing and state support in order to do so and you made a lot of money that way and that's what was happening from 2000 to about 2020.

Okay, these thousands of these Chinese engineers coming back from Silicon Valley and then using their knowledge and know-how to create Chinese versions of American companies and this minted lots of millionaires and billionaires. But now what they want to do is take this money and go to the west because unlike China there's respect for private property rights in the western world and China has been trying very hard to stop this trend and now it just made the decision, you know what, we don't care if you want to leave but you made a lot of money in this country, we won't let you leave, okay? And this is scaring a lot of very wealthy people.

But it just shows you the tumultuous state of the Chinese economy and of the Chinese middle class right now. Okay. This is a new book called Broken China by Logan Wright. I've actually not read the book, but his central argument, okay, is something that I've been arguing my entire life, my entire time in China, which is that in 2008, after the subprime crisis in the United States, the Chinese leadership freaked out because they were afraid that the global economy would collapse and China would lose its export market. And so the response of the Chinese government was to invest heavily in infrastructure spending.

This is not because the Chinese think long term, okay, guys? It's not because they have this great grand vision for how to foster innovation in China. They do not. It was a response to the subprime crisis in the United States. And this bubble was great for the entrepreneurial elite, but it's led to lots and lots of debt. It led to a lot of corruption. And now we're living in a time when they're trying to unwind this debt, unwind this corruption. Okay. So you think that well China, you know, United States has $40 trillion in debt.

That's really bad. Actually, the Chinese debt situation is much, much worse than the United States. And people don't appreciate this. So if you don't believe me, then I suggest picking up this book Broken China by Logan Wright. I'm not going to read it because this is a system I've known for a long, long time and people are now slowly waking up to the fact that the Chinese are not these brilliant Machiavellian strategists. They're just corrupt as hell. Okay? It's that simple, guys. There's no magic here. They're just corrupt.

All right, let's continue. All right, another thing that has been happening in China that has gotten a lot of international attention is the political struggle within China. So this is the highest military body in China. You can say it's really the most powerful body of China. Seven people, the military commission which controls the military. And there are supposed to be seven members and after three years of purges, we are now left with two. And there are some who say, well, it just shows the consolidation of power under Xi.

Look, if you are a dictator, you don't want this crap to happen. It makes you look really, really bad. Okay? It makes you look like a fool because think about this, okay? What happened? I mean, if you're a dictator, what happened here? Why is a seven member commission only staffed by two people? Well, there are different possibilities. One is you're just stupid and you appointed people you can't trust and you had to fire them. In which case, why are you dictator? Okay, that's number one. Number two is well they were corrupt and that's what the trans media reported but again why do you appoint corrupt people to this position? Okay, what this really shows us is the intense political struggles within China where different factions are trying to knock off different people and because of the intense political struggle China is in stalemate right now. Again this makes China look really, really bad.

Seven, there's a seven member commission. What you should be doing is replacing these people as you go. Okay. The fact that this is so open and so blatant and so transparent shows you really no one's in charge and it's just these different political factions going after each other. All right. So having gone through that I want to explain to you a quick history of the People's Republic of China so you understand the context in which all this political struggle is happening. And once you understand the history I think it's fairly easy to project into the future and see where China is heading.

The year is 1949 and America happens. This guerrilla army that was basically fighting a guerrilla insurgency for the past 20 years is now ruler of China under Mao Zedong. And Mao, people don't appreciate this, right? They think of him as this communist ideologue. He was not a communist ideologue. He was first and foremost a messianic figure who believed that he was god's who would help China stand up and be a dominant power in the world. And that's why they ushered in something called the Great Leap Forward. The Great Leap Forward was a plan to within five years change China from an nation into an industrial powerhouse.

That basically meant just shifting farmers from the fields to the factories. Okay? And if you know any Chinese history, you will know that this was a disaster for China. It led to a great famine where millions of people perished. And the reason why is they focused so much on industrial production that they forgot to grow food and because at this time China was an autarky, meaning to really trade with the rest of the world. China refused to ask for help from the rest of the world. Rather than just say to the world, you know what?

Socialism doesn't really work, guys, and we need to buy some food from you. They rather just let their people starve. Eventually the Great Leap Forward, the famine caused by the Great Leap Forward, will lead to something called the Cultural Revolution which happened between 1966 and 1976. What people don't appreciate about the Cultural Revolution is it happened actually in different phases. Okay. So because of the Great Leap Forward Mao's leadership was challenged by the rest of the communist party and so the communist party elite got together and says listen Mao, you were a great leader but maybe you're too old and maybe it's time to transfer power to younger technocrats who know how to manage the affairs of the state.

And Mao went along with this for a few years but then he decided that you know what, I'm the messiah, people follow me, and these technocrats will just turn China into a corrupt oligarchy which was the case for thousands of years, and so why do we fight the revolution? So Mao promoted the Cultural Revolution where he encouraged the people to rise up against the bureaucrats, against the bureaucratic elite and overthrow them. And for about two, three years, there were these massive purges of the bureaucratic elite. But then Mao was like, you know what?

These kids, these teenagers, the Red Guards are kind of out of control. So he called in the military to purge these revolutionaries. Okay, that was the second phase of the Cultural Revolution. And now the military is in charge. And Mao appointed a successor called Lin Biao who was basically head of the military but then they had a falling out and then Lin Biao tried to escape to Russia and he was killed when his plane crashed and that created the third phase of the Cultural Revolution which is basically China became a theocracy under Mao Zedong and it remained so until 1976 when Mao died.

When Mao died, he appointed a successor who will continue his legacy. But the Chinese bureaucratic elite, the communist old guard, they got together and said, "No, we don't want any more of this crap. We want to restore our own power base." And so under Deng Xiaoping, they came back. Okay. Now what's really important for us to appreciate is from their perspective, from the perspective of the communist old guard, the worst thing that happened to China was not capitalism, it was not the Sino-Soviet split, it was Mao's messianism, okay? So they were afraid of two things. One, they were really afraid that a dictator would arise and basically restore Mao's legacy.

They were afraid of Maoism. They were also really afraid of people's religious tendencies because the Cultural Revolution was a theocracy. They were really afraid of the power of religion. And so under Deng Xiaoping they created all sorts of policies in order to ensure that these two things, Maoism and messianism, would never ever arise in China. And to facilitate this process Deng Xiaoping visited the United States. This is Deng Xiaoping in Texas putting on a ten-gallon hat. And this was of course a diplomatic breakthrough because it endeared the American population to, you know, this old communist zealot.

And this allowed China and the United States to eventually establish a very strong trading relationship which became the basis for modern day globalization. But the key for us to remember is that under Deng Xiaoping they created policies to move away from both Maoism and messianism. Okay. And they had certain rules that they all obeyed. Okay. Rule number one is the party elite, the revolutionary vanguard and their children are untouchable. The princelings are not touchable. Okay? You can go after other political opponents, but you cannot go after the families of the red nobility.

Okay? The red nobility would share in the spoils. They would split up China and divvy up the spoils and they would not go after each other like they did during the Cultural Revolution. Okay? They would maintain unity. That's rule number one. Rule number two is never again will one person be allowed to have all the power in China. It will be consensus. It will be committee decision-making. It'll be a very technocratic process. That's number two. Number three is from now on the focus will be on. Rule number four is the military will stay out of political affairs.

This is really important. All right. There'll be a clear demarcation between the military and the politics. The military will enjoy the spoils of economic reform, right? To keep them happy, but they will not engage in political affairs. All four rules are important for us to remember. Okay? Why? Because they've broken all four rules today. And this is why it's led to this political stalemate that we have in China. So to summarize the four rules, okay, number one is red nobility is untouchable. Rule number two is there will never again be a supreme leader like Mao Zedong.

Rule number three is just focus on economics. And that's good. And then number four is the military must stay out of political affairs. All right. Okay. And I'll show you that what's happened under Xi Jinping is they've broken all four rules and that's why China today is a dumpster fire. Okay. So Deng did usher in a time of a new consensus but there were certain people who felt left out and this was the intellectual class, the university students, and so yeah the military, the red nobility, they benefited from all of those reforms but the intellectual class felt they wanted to get involved as well and that's what led to the Tiananmen Square protest and that's what also led to the crackdown.

Out and of course this really damaged China's international standing and so when Deng died and Jiang Zemin and Hu Jintao came to power they were intent on institutionalizing all four of these major consensus, okay, and under Jiang they started this process but then what will happen is that Hu will then cement this process and one major result of this process is massive spending on infrastructure and a lot of people are like well this just shows you how farsighted China is. The problem is China didn't have the money to spend on this infrastructure. Why they spent money on this infrastructure again was a response to a crisis which is the 2008 great financial crisis in the United States. Remember at this time in history China's main driver of economic reform was its export industry.

But once it recognized that, you know what, the rest of the world could go bankrupt and renege on trade promises then China realized it needed to spend more money on infrastructure. And the best way to understand this infrastructure is it was not about building a modern nation. It was about trying to appease as many different political factions as possible within China. And the best way to do that is to bribe everyone. Okay? That's how Hu went about, were able to basically calm things down while global markets were in turmoil. Let this rob local elites, let these bankers, these real estate developers, these government officials steal together from the nation and then the world, China will be very peaceful and stable and for the longest time it worked right until Xi Jinping came into power and the problem with Xi Jinping is he is not of the technocratic mold.

Okay, he didn't rise in the technocracy the way that gentleman Jongi Hu Jintao did. He rose as part of the red nobility. His father is considered one of the eight immortals. Okay, one of the eight families that rule China, and as part of Deng Xiaoping's basically giving up all the spoils, right? They got Shenzhen. And as you know Shenzhen is one of the wealthiest parts of China today. What's really so when Xi rose to power he was considered a compromise candidate. So the red nobility and the technocratic elite all saw him as the least likely to rock the boat.

Now we can understand how ironic that is today. Back in 2012, 2013 when they anointed him, he was considered the most stable, the least likely to rock the boat, the most consensus candidate. Okay. And the reason why is his opponent was Bo Xilai. All right. So you had two candidates. You had Xi Jinping, you had Bo Xilai. Bo Xilai was charismatic. He was ambitious and he was a proven leader. Okay. When he was mayor of Dalian, Dalian was one of the fastest growing cities in China, and then he went over to Chongqing and he basically promoted Cultural Revolution policies and he got a lot of state subsidies for Chongqing.

He went out when he went after the mafia. And so a lot of Chinese people thought this is a great leader, but a lot of Chinese leaders were like, "Oh my god, if he comes to power, he'll probably end up like Mao Zedong." And so of these two, Xi Jinping, who at that time had absolutely no major accomplishments, and Bo Xilai, a very charismatic, ambitious person, you always pick the other guy. Okay? You pick the guy who is less likely to rock the boat. But then what happened is a series of events that no one really expected and which allowed Xi Jinping to cement power in a way that was in modern Chinese politics.

Okay, remember Deng Xiaoping created all these institutional systems to ensure no one like Mao Zedong would arise again and then Xi Jinping broke down all these systems. All right. So the first thing that happened is that after the party elders, after the Chinese picked Bo Xilai, sorry, picked Xi Jinping to be leader, Bo Xilai stages a coup. Okay. He tried to wrest power from Xi Jinping and this made the party leadership. HH, did you have a question or Oh yeah, just a really quick question.

They sent you off to a faraway place in the middle of nowhere to work as a bureaucrat and you were like screw that, I want to be in Beijing or Shanghai. Okay. So I wouldn't say it was a color revolution. I wouldn't even say it was a democracy protest. It was really about a privileged group in society, university students, who wanted more power and more rights. And honestly after Tiananmen Square they got everything that they wanted. Okay. That's what I think happened.

All right. Okay. So, back to Bo Xilai. He stages his coup d'etat and so the party leadership had no choice but to rally around Xi Jinping and give him more power in order to stamp out the threat of Bo Xilai because remember under Deng Xiaoping different families control different regions in China. So this one guy could possibly summon an army of millions. And so the only way to stamp out this threat was for everyone to unify under Xi Jinping. Okay. And so but there's a rule, the red nobility is not touchable.

He can't actually kill this guy. So he's not under house arrest even though he did try to launch a coup d'etat against the communist party. Okay. So that's one major event that helped to solidify and consolidate Xi. Another major event was a trade war, right? Because after Donald Trump and Xi's being met, Donald Trump basically launched a trade war against China and that really helped to solidify Xi's power because previously a lot of the power was centered in the entrepreneurial middle class but because they were under threat from this trade war that allowed the political system to consolidate more power.

Okay, so that's number two. Number three, of course, and the most important is COVID. I was in China during COVID and when COVID first happened, I was like, oh, you know, this will last maybe two days and it'll go away. And I know this because in 2003, I also experienced SARS. And what happened was that during SARS, there was no government mandate. There was no government order. People just decided to lock themselves in apartments for two weeks and then SARS went away. That's how diseases work.

That's how these viruses work. There has to be these infection points, contagion points for it to spread. And people are just in their apartments. Then this thing goes away really quickly. And if you know about viruses, you know, their malicious nature, their malignity, it decreases over time. But instead, China chose to lock down the country for four years, which is really weird. But why that happened is it allowed Xi Jinping to consolidate power onto himself. He created this huge bureaucracy around him in order to deal with COVID.

Now to be fair, okay, what I do know is when the virus first broke out in Wuhan, it was a bioweapon. It was killing a lot of people. The reporting back then was that when you first got the virus in Wuhan, your lungs burned. They're like a furnace, right? So, it was a real serious threat. And that's what gave Xi the authority to lock down the entire country for four years and create this really absurd authoritarian regime. Look. This is a picture of guys getting swabs. If you're a medical professional, you know for a fact these swab tests are not very accurate.

Okay? Don't tell me that just by swabbing your mouth, I'm able to diagnose effectively whether or not you have COVID. It was all just theater. Okay. But if you got unlucky, okay, if you tested positive, well, you were sent to the detention center for a month. This is what's worse in the Cultural Revolution. Okay? And why they did this was it allowed Xi to consolidate power under himself. And the other thing that he did that was really important was he collapsed the real estate bubble.

Now to be fair a lot of things he did I actually agree with because remember I said that during the Hu-Wen period it was just blatant corruption and it was just too much debt and he inherited this mess and he had to take certain steps in order to address these issues or they would just blow up.

And I agree with what he did in the real estate market, which is he basically caused the real estate bubble to collapse by refusing to bail out companies that were in default. Okay, so Evergrande was the classic example where it was basically a Ponzi scheme and they thought they were too big to fail. They could always secure funding from the local government and Xi put an end to that and that has caused this cascading effect, it's just chain reaction where China's real estate market has collapsed and again I think this is a very positive thing because the real estate market was completely unsustainable but that's also allowed him to consolidate power so these are things that he was not really in control of but there are things that were happening and it was clear that he might have had some part in them.

Okay. So remember how I said in the 1980s basically the bureaucratic elite got together and says you know we agree not to kill each other the way that we were killing each other during the Cultural Revolution. Okay, we agree to play by certain rules and conventions. We agree to play nice. And Xi Jinping broke all these rules. So one example is, so this is Ling Jihua and Ling Jihua is actually the secretary to President Hu Jintao. If you know anything about the Chinese system, you know that these people are extremely powerful people because they are the gatekeepers, right?

So if you want to meet Hu Jintao, you have to go through this guy. Also, he's basically Hu's backman. Okay? So if you want to bribe Hu Jintao for anything, you have to bribe this guy. Early on in Xi Jinping's, Ling Jihua's son died in a Ferrari car crash and it was pretty morbid. Okay. The details have not been confirmed, but there were rumors that the guy was naked with two other girls and they were both drunk when they had this horrific car crash. Because of this horrific car crash.

There's a massive investigation into Ling Jihua the father, Ling Jihua's son, and they found out of course he was corrupt and so they jailed him and this did a lot in destroying Hu Jintao's power base. There are rumors that this is a complete setup that basically some secret police create a situation in order to implicate the father. Okay. And you know Ling Jihua himself believes that his son is innocent and his son was basically murdered in order to frame him. Okay. But this event, and again I can't confirm the veracity of what happened.

Okay. The Chinese authorities say it was an accident. I can't say it was an accident or not. But this did power base and allow Xi to further consolidate power. Another thing is the New York Times got hold of Wen Jiabao's financial records which is by the way to do. I actually know the reporter who broke the story. Okay. So, in 2012, there was a New York Times reporter, David Barboza, who broke the story of the Wen family's corruption. And to break the story, he went through thousands and thousands of SEC filings.

And honestly, maybe if you had a staff of 10,000, you had 10,000 years, you could pull this off. He was able to pull this off in a matter of days which tells me someone was feeding him this information. Yes, I understand you did go for the filings and yes you did prove that these companies tie back to the Wen family. I understand that. Okay. But someone had to point you in the right direction. It was like trying to find a needle in the haystack.

Someone had to tell you exactly where to look for you to find that. All right. So and then we can speculate as to who might have pointed this reporter for the New York Times in the right direction. Okay. And we can also say because of the scandal Wen's power base was severely depleted that allowed Xi to further consolidate power. Again you're not supposed to do this crap. There's a consensus where the top leadership would not engage in these political struggles against each other because they did this during the Cultural Revolution.

They know exactly what happened during the Cultural Revolution. So you can see Deng Xiaoping's consensus breaking down. You would also have these really silly leaks where somehow US intel got news that the US Army had missiles filled with water instead of fuel. Okay. And this Sorry guys.

Okay, they spent a lot of time on this. Each of these guys, even a provincial leader, will have thousands in a PR office just going over how this person is portrayed on the internet and in the media. Okay, this is really important for these people. So the idea, okay well Hu Jintao shouldn't have been there and they have to remove him because you know he got lost somewhere, that's absurd. This is a highly choreographed event meant to embarrass Hu Jintao to show that Xi Jinping was in the ascendancy.

Okay. So 2022 basically the consensus that Deng Xiaoping had established was now completely broken and now you have one man in charge. The problem is, okay, and this is really important for you guys to remember, China's much too big for one person to control. Also, Mao was a messiah who proved himself the Messiah by obtaining power through the will of God. This guy, he inherited his throne. Okay. So because he saw himself as Mao, basically all these different political factions decided they needed to get rid of this guy and the best way to do that is you destroy the people who he put into power.

Okay. So in China, personnel is politics, politics is personnel. The way you basically struggle against each other for power is by going after each person's associates. Okay? So the first person to fall was foreign minister Qin Gang. And this is a huge scandal in China where Qin Gang was personally appointed by President Xi Jinping. And then news got out that he had a who being a decided to have a child in the United States. So this child was a US citizen. The child's father was Qin Gang. Okay. And so this got out.

We can speculate as to how they got the news. I would imagine that they got the news from the Americans. So one thing to appreciate is these US spies work very, very closely with these Chinese spies because ultimately what they're interested in are these domestic political struggles as opposed to these international political struggles and so he was forced to resign. Then the defense minister very shortly was forced to resign because of corruption and again people struggle as to how this happened.

You have two generals who are forced to resign because of corruption. Okay. So all these rules that Deng had established in the 1980s to ensure that Maoism would never arise again. Okay. Number one, never allow someone to consolidate all power. Number two, don't allow the military to engage in politics. Number three, make sure everything is consensus. Number four, focus on economy. It's all being destroyed now. Okay, the military is now forced into all these political factions, factionalism, which is destroying the military's capacity to maintain order.

And in fact, you can now argue the military is a source of a lot of disorder in China today. And you have again seven members in this military commission and now you only have two. Everyone else has been replaced. The most important has been Zhang Youxia. Zhang Youxia was considered the military equivalent to Xi Jinping. Xi Jinping was in control of politics but Zhang was in control of the gun. Okay. So again remember in the Chinese system these two forces are meant to be parallel with each other. In theory the politics controls the gun but in reality they're supposed to be equal.

And Zhang Youxia's father is also another major general. So he has the pedigree, the credibility to counter Xi Jinping. And there's a lot of rumors, there's a lot of speculation that Zhang Youxia was behind a lot of the purges against Xi Jinping's people and Zhang was trying to constrain Xi's power. But because Xi Jinping is a president and they didn't want things to blow out of control, they agreed to let him stay in power. In response, Xi Jinping decided that he would cross the Rubicon and he ordered the arrest of Zhang Youxia. And there are rumors that actually Zhang is dead but January this year Zhang Youxia was, and a couple weeks ago he has been expelled by the party for factionalism.

Okay. For engaging in fascism and so China right now it's just a dumpster fire. No one's in control and they're all trying to destroy each other which basically means that Xi Jinping himself has absolutely no power. One thing that is really strange is, so this is the list of his foreign trips in 2023 and as you can see it's really not that much. He doesn't really go out that much. 2025, look at all these countries, Vietnam, Malaysia, Cambodia, Russia, Kazakhstan, South Korea. The thing that distinguishes these places is they're really close to China.

So this guy when he leaves he doesn't go that far and the reason why is because of so much political struggle within the country you need to make sure that you're around to make sure, you know, the different factions don't conspire against you. This is even more blatant in 2026 where for the first half of the year he really didn't go out but then we see for whatever reason August, September he's going to a lot of places and we can speculate as to why. Okay, one speculation, again, we can only speculate because the Chinese system is a political black box.

We can speculate that he's consolidated power and so he's invincible and so he can do whatever he wants. Okay, that's one possibility. Another possibility is he's stripped of all power because his personnel, the people loyal to him, have been stripped of their power and so he's a lame duck president. Next year he'll be replaced and so his job is now to go out and represent China, and one piece of evidence to support this. Okay, I'll show you guys this, is he does not look healthy. All right, if you're a Supreme dictator, you tend to have a certain confidence to you.

You have a certain swagger to you. If you just look at how he's been behaving you'll see he is not. Sorry, I need to. So okay all right Professor, you're only sharing the.

And by 2023, he looks pretty tired. I mean, he does not look like a supreme. I mean, compare him to Putin or Modi or Trump really, right? Okay. But I want to show you guys another video.

This is two days ago when he came to the United States. And look at this. Okay, look at the way he holds on to his wife's hand and look at the way he is walking down the stairs.

He does not look healthy. Okay. So that is it. I have finished my. I'm sure you guys have lots of. So let's get started again guys. Let's just focus on this topic, okay? Because it's really important that we understand what's going on because US-China relations will be really important and China is really important. Okay. So let's start with Okay.

Some of it is mined in Canada and the other two countries you get it from are Belarus and Russia. But in this case for Canada, if you run, sorry, I'm going to, sorry, I need to organize my thoughts better.

So I think this thing will resolve itself naturally where the Chinese are extremely problematic, the Canadian people are extremely problematic and Trump is a business person and they'll come to an agreement at some point. But the bigger issue is not fertilizer. You can always access fertilizer. The problem is just a breakdown in global supply chains. We have absolutely no idea how things will be if you break down global supply chains. Okay. So, it's not just that fertilizers are part of the global supply chain. It's everything is part of the global supply chain.

And so, we haven't really gamed out or war gamed out what a breakdown in global supply chain looks like. No one's done it. And the reason why is it is horrifying to even contemplate the possibility that global trade stops. Okay. Are you okay with that answer, Baron? Or Yeah.

And so when you nationalize them, what happens is these tech argued the gains and socialize the losses. And we're living in a time when everyone's trying to steal as much as possible.

Right. Professor, something I've noticed in your thinking is you seem reluctant to attribute major outcomes to randomness or coincidence. So, what makes you lean towards a purposeful explanation rather than just accepting that things may be random?

And Xi Jinping is just a major beneficiary of these events. But then I also point out there are certain things that happen that were probably not random. For example, the car crash. So I'm not saying one random event. I'm just saying if you look at a pattern of things. Okay.

But if things get really bad, then what will happen is these provinces will break away. And I think this is something that will happen in the next 10 years. Look at all empires. It's basically these different warlords or these different provincial governors who basically make the decision it's probably better for them to get along than to fight each other because, you know, fighting each other there's too much cost. But you always reach a point when, well, you know, we can't settle anything politically so we're forced to fight things out and I think that China is heading in that direction.

I mean the fact that you have only two members of the seven member military commission still active tells you a lot about how bad things have deteriorated in China.

Okay. So, basically another way of saying this is US treasuries is a way for China to bribe the United States to let China export its goods to the United States. All right. Now, why would China want this? Well, first of all, it's because China is a plantation economy. It's a slave economy where all that matters is the elite. The people are just energy to be extracted, right? So from the perspective of the elite, this is a great deal because you're just taking Chinese labor and you are then selling it for US dollars which they can use to go to the United States and spend money on.

Okay, that's one real advantage to China. Another advantage for China is it keeps people busy. It keeps people employed. Right. So, even though Chinese workers aren't paid that much, they at least have something to do. It's a lot better than working in the fields. Right. So, even though we say it's a slave system, it's still better than the system they had before, which was this feudal system. Okay. That's number two. Number three is even though US debt, US treasuries is not really worth that much, it's still the main basis of the global economy.

So China can take the US treasuries and then use them as collateral to go and buy other things like soybeans, soybeans from Brazil. Okay. So the current system for many years benefited both the Chinese elite and the American elite. Okay? And I mean the people suffered, right? The US people lost a lot of manufacturing jobs to China. The Chinese people are working for slave wages, but they don't matter. All right? So why is the system breaking down? The system is breaking down because the United States has proven that it can choose to weaponize its financial system in order to maintain its hegemony.

The classic example of course is Russia where Russia has about $300 billion of its assets frozen by Western financial institutions mainly Europe. Okay, so Europe holds about $200 billion in Russian assets and starting then China's like uh-oh, what do we do now? So what they started to do was basically sell US treasuries to buy more gold. And we have to remember something. This is really important. Okay? It's not one government that controls all these US treasuries. A lot of these are Chinese corporations who are trying to better hedge risk.

Okay. So the idea is okay right now there are three major buyers of US treasuries. Japan, the GCC and China. Some of you were saying it's the UK. No guys, the UK, if you live in the UK you know the UK is not buying US treasuries because the UK has no money. It is the GCC buying US treasuries with the UK as the middleman. Okay. That's why the UK appears number two when it's really the GCC. Okay. Okay, number one is Japan, number two is GCC, number three is China. You're absolutely right in that right now if these three countries stop buying US treasuries, then the United States could not finance its debt.

Right now it's at $40 trillion. If it's forced to raise interest rates to five, 6%, it has to pay $2 trillion a year in interest payments alone. Okay. So this will create huge problems for the US economy. And so therefore what the United States wants is for Japan, the GCC and China to continue to buy US treasuries. The GCC and Japan aren't a problem because they're essentially US vassals. And so the United States can force them to buy US weapons. So the United States wants the GCC to go to war against the Houthis and the Iranians.

The United States wants Japan to go to war against China. Okay. China is a much bigger problem because China is independent. It's sovereign. It doesn't need to buy US treasuries. And you can actually make China buy US treasuries. So they're trying to think of a workaround and the workaround is something called stable coins. So I'm not sure how much you know about stable coins but stable coins are essentially digital currency that is backed by US treasuries. Right? So if China agrees to allow stable coins into the country, this is a backdoor where Chinese citizens can privately buy US treasuries with stable coins.

And that's the workaround that they want to do. But the problem is right now there's no one in charge of China. And I keep on going back to this point where no one can make this decision because it's too controversial. And Xi doesn't want to make this decision because he's still hoping that next year during party congress somehow he'll get a fourth term. But the only way you can do that is by not making a mistake. And I think letting US corporations into the country to sell stable coins.

Different factions will pounce on that. It seems like the entire world is in a stalemate right now. It seems like things aren't progressing. Look, I made a prediction that there'll be a grand bargain between China and the United States where basically China agrees to open up its financial markets and the United States tells China we won't deal with Taiwan. Okay, we won't support Taiwanese independence and basically creates a pathway for Taiwan and China to unify in the next 10 years. I think as things unfold, it seems I'm wrong about this prediction.

It's possible, you know, in two, three months time things will change, but it seems right now that I'm on track to be wrong. And if I'm wrong, I'm always asking myself, why am I wrong? I think I'm wrong because no one's in charge of China right now. So no decision can be made and that's why you have this slow death. Okay.

Okay. So, on your point about the earthquake, look, I don't know if an earthquake will happen in Tokyo, but I think you're right in that we have been really lucky in that there have been no real major natural disasters so far. And if a natural disaster were to happen somewhere then the world would be really badly affected because right now the world is not very resilient. In fact, the world is much more unstable than ever. I am of the opinion that India and China do not matter in geopolitics.

I don't think what happens in China, what happens in India actually impacts geopolitics. I think it matters more what happens to the United States or in Russia or Europe. And the reason why is if things happen in these nations they are much more likely to go to war overseas. I think if there's a civil war in China then China will just turtle up. If things break down in India then India will just turtle up as well. And I think that because of these internal domestic structural contradictions both India and China are very weak countries.

Okay. All right. Thank you. Leandrew.

For the elite, it's. Okay? Does that make sense? I mean, they're basically being offered free money because otherwise they weren't doing much with this energy anyway, right? The United States is like we'll come in and we'll buy it from you. Well, if you're elite, right, you're basically a parasite. Yeah. You would take this deal.

I finally made some money thanks to you guys on Substack. And I am now renting a room in Ottawa in the woods. And every morning and every evening I go out for these long walks out in nature and I'm like, "Wow." First of all, the air is clean. Oh my god, I finally have clean air. Number two is it's quiet. It's quiet. There's no noise. There's no people going around.

Making a lot of noise and I'm just really, really happy. Okay, if you're the Chinese elite, this is a life you want to live. You don't want to deal with Chinese people. You want to come to the United States, buy some property out in the woods and just retire and enjoy your wealth. But for that to happen, you need to basically ensure the Chinese people are still working for you.

In China it's the opposite where if you engage in politics, if you try to read too many political news you can only get into trouble. So there's really no doubt about Okay.

Okay. So what he's afraid of is the US-China trade war erupting again. Right now there's sort of a ceasefire between the two and China does not want this ceasefire to end. Okay. So that's something that all factions can agree on. Okay. All political factions within China can agree we need this guy President Xi to go to the United States and based on his personal rapport with Trump make sure Trump doesn't go wacky again and declare war on us economically, okay, so that's something that they can all agree on and that's why I think they wanted President Xi to go to the United States. That's from the nation state perspective but we also need to look at things from a personal perspective.

And what is it that both people want? Okay, Donald Trump obviously wants a third term. I mean, the guy is like 80 years old. Theoretically, this is his last term in office. Why is he working so hard? I mean, and you'd be like, well, it's to have his legacy. I know it's, but I mean if he really cared about his legacy would he have declared war on Iran? Would he have stolen millions of dollars from these crypto barons? So I think Trump wants a third term but the same applies to Xi.

He wants to continue to maintain power. So I think for these two people the purpose of meeting is how can we work together to extend our power, right? Because from Trump's perspective he wants President Xi to be in power for another four or five years, he wants Putin to be in power for another four or five years, and so my argument is at the end of the year what we'll see is the rise of the triumvirate, okay, a secret alliance among three people, Putin of Russia, Xi of China, Trump of the United States, where the three agree to help each other maintain power.

Very similar to what happened in Rome in the first triumvirate and the second triumvirate, right? The first triumvirate of course was Pompey, Crassus and Caesar and they agreed to secretly help each other win political positions. I think the same thing will transpire. Okay, that's why President Xi went to meet with Trump. Okay, if you are going to create this alliance, you need to create trust and rapport among these different players and that's why I think he ultimately went. Okay. All right.

What do you think about Okay.

So I think that the idea that people will use AI for the common good is just ridiculous, right? And the logic is very, very simple. For AI to be effective, you need economies of scale. You need to concentrate power and what we know is in an institution the more power you give it the less empathy it has, the more top down it becomes, okay, and the classic example is city planning, okay. I'm not sure if you've read about Jane Jacobs. If you read Jane Jacobs, her book the fall and decline of the great American cities, it's a wonderful book. It shows how usually alone they will develop these organic communities with lots of cross purposes and I highly recommend everyone read that book.

Okay. So why is it that her ideas never became popular? Okay. Instead you have someone like Robert Moses who was probably the most famous urban planner of the 20th century. Why did he become so dominant? And the answer is that's how power works. You put powerful people together and you give them a blueprint, they understand what a blueprint is and they understand how to implement the blueprint. But if you talk to them about human creativity and human diversity and human spirituality, they're like, "What the man? Get out of here." Okay.

People in power are psychopaths. People in power are not very imaginative. They see the world in a very top down way. So, the idea that we will use AI for the common good is just complete nonsense. If you have access to AI, it means you're a really powerful person. And then if you're a very powerful person, you're going to see the world in a very limited, very simplistic, very narrow manner. Okay.

You know, you're driving a car and the police stop you and demand a bribe. You say, "No, I did nothing wrong." They put you in prison until someone comes and pays a bribe off. And Russia is still a pretty racist society as compared to the United States. So even though at the top level there's a lot of cooperation between Russia and China, at the people-to-people level, which is what really matters, the interactions are much more limited than between Chinese and United States. People don't appreciate that.

Yeah. Even though there's a trade war going on, there's still a lot of interactions between China and the United States. So, 300,000 Chinese students are still studying in the United States. And more and more wanting of the United States. Even though Trump is not very nice to Chinese students and even though China has been trying to warn Chinese students against going to the United States, so I think in the long term the United States and China will still be very strong friends and strong partners and I'm not really sure about Russia and China. The reality is the United States and China do not have any real geopolitical conflicts.

Whereas if you look at Russia and China, there could potentially be a lot of geopolitical conflicts. Okay, one area of conflict is of course Central Asia where, you know, China is trying to create its Belt and Road Initiative and Russia is trying to create its north-south corridor. Kazakhstan has always been a source of tension between these two countries.

The Russian-Chinese border is still heavily defended. Okay. So there's lots of the Russian Far East that China considers to be historically part of China. So if I were a betting man I would just say it is much more likely for China to have a rapprochement with the United States and I think in the long term China will see Russia as a greater threat than the United States. Thank you.

So let me collect my thoughts here. My reading of that is that that's a concept that's a bit too far-sighted to just be a sound bite to present to media Or to an American audience for politics' sake.

Okay. So if you're a historian, you're willing to say China has these imperial ambitions and China is a dominant power, then the Chinese love you. And again it's because in China politics is everything. Optics is just politics. And you know if a western historian is willing to say that China is rising and rising then you'll be wined and dined by the Chinese leadership. So, Xi Jinping knows Graham Allison very well and so Xi Jinping has a personal affinity for the term the Thucydides Trap and that's why he mentions it a lot, you know, it's paying homage to his friend Graham Allison. But when he mentions the term Thucydides Trap, okay, what he's really saying is, and so he did this in May and he did this this time around, okay, what he's really saying is we need to avoid the Thucydides Trap.

The best way to do that is to transition from a relationship based on strategic competition to one based on strategic stability. Okay, the status quo. So that's what he's really saying. He's not really saying that, you know, the Thucydides Trap is inevitable and we China are on the rise. What he's really saying is we should both work hard to avoid the Thucydides Trap. It's not something that either of us want. Okay. Rhetorically, what's really interesting is both in May and in this recent summit, both leaders Trump and Xi are using very similar rhetoric.

The speeches are almost identical to the ones they gave back in May, where Trump is trying to invoke the historical friendship between the Chinese people and the American people. And Xi is trying to invoke the same friendship. So I think that there's a lot of between the both of them and I think that eventually both will come to a compromise of some sort. Not necessarily a grand bargain, right, where they settle the Taiwan issue once and for all, but basically a compromise where they agree to get along.

Xi Jinping just has a very authoritarian perspective when it comes to AI where he sees AI as solving all of China's economic problems, but he also sees AI as first and foremost a political tool used to cement the power of the Communist Party. Okay. And that's why I don't really see eye to eye on that. But it's not really an issue for the two.

It's like, who cares? So I don't really see the United States and China ever going to war against each other. At the same time what I do see is a lot of discontent within these countries. The economies of both countries are not doing very well. You have an aging crisis where basically this is an aging elite able to control all the resources leaving nothing for young people. So the similarities between these two nations, it's so stark that I think it's very hard for both these nations to avoid civil war at some point.

So a lot of that would get lost. So what could China do in a situation like that because or else their factories are going to close and then end up like the rust belts and US automobile companies.

And because once you set off this chain I think the second order, third order effects is something that's very hard for us to imagine because globalization is not something that happens just at the state-to-state level. It's embedded throughout all of society. Okay. So I mean, once the global supply chain starts breaking down, then it's complete utter chaos and something that we'll probably see in a year or two. Okay. So I don't mean, well okay once the global supply chain breaks down then there will be a new world order.

No, I think we complete chaos. I've seen so far is basically all progress during and after the industrial age that started in the UK is going to basically get wiped out because

So, you know, in my mind, why doesn't China kind of just use that technology to kind of have its own technate of Asia? Okay, so that's a good question. So, in East Asia, it's not China that wants to create a technate, it's Japan. Okay. So, historically, Japan has something called a Japanese co-prosperity sphere where it controls all of East Asia. Okay. But China doesn't do that. Why? Because culturally, China and Japan are very different. Japan, it's a very cohesive society. That is also very homogeneous.

Okay. There's a lot of equality in Japan. So, they stick together because historically they've been very poor. China is a plantation economy. It's a slave system. Meaning the elite sees its people as peasants to be exploited. So it's not interested in conquering territory. What it's interested in is maintaining stability and harmony and balance in China itself. Okay. All right. We're running out of time. Can you ask your question, please, Yeah.

They don't really have conception of the occult. They used to, but over time what the emperor did was degrade the influence of the occult because the emperor saw the occult as basically another power center that could challenge the emperor, right? Because the occult is run by priests and the emperor would not want a priesthood like India or in Israel. Okay. So the thing about the Jews is the power base isn't a rabbis. It's decentralized. There's no one emperor. Same thing with the Indian people. The Chinese are very different.

The Chinese are a very top down authoritarian system. And quite honestly that's why the Chinese are not very imaginative. Okay? I hate to say this, guys, go to university, go to Harvard, go to Yale. Smartest people are who? Jews, Indians, and Persians. Not the Chinese people. And I think a lot of it is because the Chinese don't engage in the occult the way that the Jews and the Indians do. Okay, Plato, you're next.

Plato. Okay. All right, Dan.

Okay. Almost a sort of anxiety and desperation. And in these situations of poverty, of suffering, of natural calamity, it's very easy for people to come out and say I'm the. Follow me. And so I think over the next 5, 10 years, you will see a lot of this behavior. And once it starts, it's almost impossible to stamp out because the elite sees these messianic tendencies as a political tool they can use to further their own power. Okay. Sultan Mr.

Thank you. So I think one assumption that you make that is erroneous is you think the nation state is the basis of geopolitics and that's not true. The United States actually doesn't care if it wins or loses this war in Iran. The United States doesn't care if China is helping Iran or not. What Trump wants is to further his own political interest. And there are different political factions in the United States. The AI oligarchs for example who want to further their own political interests. And focusing on geopolitics, focusing on the nation state rivalry sort of distracts us from the grander game being played.

Okay. So again, as I mentioned, Trump is just interested in a third term and that means destroying his political opponents and who are his political opponents? The globalists, right? So he wants to work with China and Russia in order to destroy the power of Europe and the British Empire. Okay, that's the game you want to watch. The game between the nationalist and the globalist. This Iran thing, it's almost a distraction. Okay, Sam, you're next.

These corporations, these multinationals become even more salient. They become even more obvious and they're looking for places to invest, places where they can find safe harbor. So what happens is you have a lot of corporations, both Chinese and American and European moving their headquarters to Israel. Because in Israel they have lots of human capital. Israelis are really hardworking, really smart, really well educated and I understand there's been lots of Israelis who are like, "No, that's not true, dude." I understand it's not, I'm talking about things in relative terms.

If I'm a US corporation, I'm like, okay, where can I go in order to find talent that's cheap and effective? Not the United States, not China. Well, I mean, it's Israel. And Israel is still in a very strategic location in the Middle East. And one example that I like to think about is the military. Okay. So yes, you can complain all you want about the IDF. Yeah. And you know they're getting their asses kicked in Lebanon, whatever. Okay.

But you compare the IDF to CENTCOM, which is just completely incompetent. Okay. And what we're seeing is CENTCOM transferring a lot of its assets and resources to Israel because of its incompetence. Right now CENTCOM is losing all its bases in the Middle East and therefore it's shifting all its assets over to Israel for protection. So I mean, you know, things aren't absolute. Yes, in absolute terms Israel has a lot of issues but I'm saying you compare Israel to other places and it seems right now that Israel will probably emerge as a dominant power in the Middle East.

After this war in Iran is done with. Okay.

Okay. If I had a choice whether to have water, electricity for free or ChatGPT for free, I'm always going to pick water, electricity. Okay? Because I need water, electricity to survive and to live a good life. Whereas I don't actually need ChatGPT. And so the only response these companies have is well, if we don't do it, then China will do it. Do you want China to get AGI first? Because China will get AGI first if we don't actually invest in data centers. Meanwhile, I think the United States has 10 times as many data centers as China.

So, it's absurd. But, you know, the media, the function of the media is to cause fear anxiety in the United States. Because fear anxiety causes obedience. And so, they're always coming up with these narratives to scare people. And right now, honestly, they're focusing a lot on the China narrative, but honestly, no one's scared of China because I mean, okay, back in the Cold War, yeah, Russia was scary. Because, you know, Russians are not afraid to die and Russia will kick your ass in a fight.

China, Chinese people, no. I mean you've gone to school of Chinese kids. Okay. You know what they're like. They are not a threat. Okay.

Its people became much more productive. They were able to build better infrastructure so that people were able to travel around the world and learn more knowledge. Okay. So my question then is if the United States were the first to achieve AGI, why would China actually be hostile towards this AGI, right? Why would China be like no, we have to create our own AGI? They wouldn't care. They'd be like no.

If AGI means our economy becomes stronger, if AGI means that our political system becomes much stronger, then we will adopt it. And I think this would be true for every country. All right. Now, let's just say China were to be the first to achieve AGI, right? This would be a problem for the United States because the United States would not surrender its sovereignty over to this Chinese AGI.

So I mean it would benefit China to achieve this AGI and honestly this is why if you look at Chinese policy these past five years China has gone all in on AGI but again I'm not really sure if China were to achieve AGI if that would be a good thing for China because the United States still controls the US dollar and the United States could in theory choose to embargo China, right? So, China has this AGI, but Japan, India, Southeast Asia, Australia have chosen to embargo China. How would the AGI respond to that?

Well, it couldn't respond to that, right? Because nuclear weapons. Then how about Russia? Would Russia surrender its sovereignty to this Chinese AGI? Probably not. Okay. So, it's a really upsetting situation where if America were to achieve AGI first, then the world would basically follow the American lead, especially China. But if China were to achieve AGI first, then the United States would basically declare war on China. All right.

So what makes, you know, these recent signals he's giving or people observations that people are making, is there anything different about them or is this just another false alarm so to speak? And also regarding something you said in your Substack about Chinese whispers, you said that there's a rumor about, you know, potentially being freed from prison and, you know, somehow staging some political action, possibly, you know, himself is already 77 years old, you know, how would that rumor have any wings when somebody's been in prison himself since 2012, is already 77 years old, I mean how would something like that possibly work Yeah, no, you make a great point which is yeah throughout the years there's always been rumors about Xi's health and the most serious rumor is he actually suffered a stroke a couple years ago and this explains the paralysis in the Chinese system.

And the answer is apparently the rumor is, again, this is all rumors. We have absolutely no idea. During a very important meeting, he had a stroke and he was hospitalized for a few days and while he's away that allowed different political factions to get together and go after all his associates and that's why we have this paralysis right now in the Chinese system. Again, this is only a rumor. I have absolutely no idea if this is true. If it were true, it would actually help explain a lot.

My main question, my main problem with what's going on in China right now is a sense of deep paralysis where, again, I live and work in China. It doesn't feel as though someone is in control. Now, all the reporting about Xi is that he's a very authoritarian person. He's very strong-willed. He's very domineering. But in China, again, it doesn't feel as though the country is moving in a certain direction. Okay. So let's just game the insistence. Okay. Well, if someone were in charge, what would be happening?

Okay. Well, first of all, I think what would be happening is the beginnings of preparation for war against Taiwan to reclaim Taiwan, right? And you would see that in the Chinese media. You would see that in schools. You would just basically see a rally around the flag. Okay, that's number one. Number two is you would see the emergence of some national maybe that are heavily supported by the state. And yeah, you do have some of these AI companies, but it seems very much like a lot of these companies are, you know, they're not as energetic as you would think they are.

Number three is you would see a much stronger Chinese voice on the geopolitical stage. Okay, so remember back 10 years ago, there was this huge trend of this wolf warrior diplomacy, right? Where you have these very outspoken Chinese diplomats speaking the Chinese narrative in different places. They were very aggressive, but it was clear they're being supported by a very strong central authority. And nowadays, you don't have these people. You don't have any real spokesperson for the Chinese interest on the geopolitical stage. It's very weird how you have this one Ukraine, you have this war in Iran, and there's no real spokesperson who's representing the Chinese interest.

You have someone like Professor Marandi representing the Iranian interest, but you don't have a designated figure going on Piers Morgan or CNN or BBC just speaking out the Chinese interest. That to me is really weird and that suggests they don't really have a narrative they want to present. So all of this is really weird to me and my only explanation is the country is in paralysis. Why is the country in paralysis? There's no leader in charge. But again, I mean I could be wrong.

But I do see some stark contrast between Xi's first five years in office and these past two years. Especially in terms of wolf warrior diplomacy, especially in terms of, you know, presenting an international agenda, like remember in his first five-year term he emphasized the Chinese dream a lot, right? The idea of an emergent China on the world stage. Now he doesn't even talk about the Chinese dream anymore, that is his singular idea, and he doesn't really talk about it. In fact he doesn't talk about any ideas and that's weird. Because traditionally these Chinese leaders, they do have a slogan or a theme that captures the essence of what they're trying to achieve.

And I don't know what he's trying to achieve. Okay. Maybe Taiwanese reunification, but that's not really discussed anymore in China, which is really weird.

No, I mean he looks like Putin who is again in his 70s and he looks extremely alert. He looks pretty healthy. Modi is also someone who looks pretty alert, pretty healthy. So I do think they have access to the best technology and, you know, let's just assume that there is this factional struggle within China right now. Well, actually it would be in the best interest of President Xi to look sick and unwell in order to throw his opponents off, okay? Because remember it's not hard for these guys to get together and overthrow him, okay?

But the problem is what happens afterwards? They don't actually trust each other, okay? They're always scrambling to figure out. They're opportunistic. They're speculative. They're trying to position themselves into power and in China the general rule is whoever is the first to act is the first to die. Okay. All right. Let's continue. Sorry. SM, you're next.

And I don't know if you know that story, but anyway, I just find it so odd that this date of Fulton Sheen's beatification, which 50,000 people filled a football stadium for in St. Louis and it had all this media coverage, it kind of really overshadowed Xi's visit. And this date for Fulton Sheen's beatification was picked 6 months ago by the Vatican which is probably before China and the US made their arrangement. So, do you think that is just pure coincidence or do you think that it was maybe kind of an insult to Xi especially since Trump was complaining that the media didn't cover his event because I guess there's all the White House media ban, all that drama going on.

But meanwhile, all these grassroots news agencies were covering this feel-good, happy grassroots, you know, we love America, we are so not communist. So, I just wanted to know if you saw the alignment of those two events and how, you know, Fulton Sheen was inspired by a martyrdom of a 10-year-old Chinese girl. So I just want to know your thoughts on perhaps the religious Vein in all of this.

So I don't know how much planning goes into these things. What I will say though is I think people are just underwhelmed by this visit where maybe I had some expectations that there would be some surprises and it's been very underwhelming. It almost seems like a rehash of the May visit, but not as interesting. I think there's just not that much media coverage of the visit, and there's been very little commentary. I don't think people are that interested in the China visit.

So that's what I find really interesting, how there just doesn't seem that much interest out there. Okay. Well, thank you for your thoughts and if you don't know who Fulton Sheen is, look him up on YouTube sometime. He was a very entertaining TV star back in his day.

I'm just saying the US treasuries are just the most convenient, right? You can do the most with US treasuries. And I think that in just a time of uncertainty, then I think that you want the most flexibility. Okay. Roberto, you're next.

Roberto, is he here? Roberto, you have your hand Hi.

You know what? I have a good question. And let me respond to this question. Okay. So, if you have a question, you can also send me a private message. Do you think, so this question is, do you think Xi is supporting Trump to get his third term by mediating between Iran and US to make a good Nobel Peace Prize theater? Yeah. I think this is much too clever. I think Trump doesn't need Xi and Putin's help to get a third term. Okay. But what I do think is that the three, Trump, Xi and Putin, they do benefit from global chaos in order to degrade the power of the globalists, especially the Europeans and the Canadians, the City of London basically.

And I think that at some point the three will get together and propose maybe a new world order where the three countries and possibly Iran get together and they agree on a new global order of stability and that will get Trump the Nobel Peace Prize. So I think that's what might happen. All right.

Okay. So, we have 10 more minutes and let us do another round. Okay. But please ask your question really quick. Okay. JL, did you have a question? A really quick question.

JL. Stephen. Stefan. Okay. Sorry. All right. We have two. Okay. And we'll end the session. Okay. Baron, did you have a Yes, I have a China related question.

Robert and then Helen. Okay. And we'll close the session.

Also professor S master go I got a I find a reason why you are admitted by the year because they have the guy who name is he lose his fun of the Time magazine, Fortune magazine. Every single US read and educated is funded by this guy. This guy is the founder of the USC century. This guy was born in the 70s.

Okay. So I have a question about the cabala. Again this is an interesting question. Question is do you think there are some Chinese elites who are trying to study the cabala? And the answer is they're not because it's too hard. The cabala is a very complex tradition. It's pretty simple if you're Jewish because you need to both access the Bible as well as the occult. And the Chinese, I mean, the Chinese elite, my god, you know, they're not that bright.

And they're kind of lazy, too. Okay. FH, did you have a question? FH.

And my desire is to explore more of the world so I can get a more global perspective. But I am not optimistic about either the United States or China. I think both countries have a lot of issues. I think these issues will become much more clear in a year or two. I will also say that regardless of the issues in the United States, the United States is still a nicer place to live than China. I mean one main takeaway I've had these two months of traveling North America is I really don't want to go back to China, man.

I really hate China. I don't like people spitting on the streets everywhere. I don't like people bubbing each other, pushing each other around. I don't like people just cursing each other out for the most minor things. I don't like the pollution in China. You know, I mean, I'm spending some time in the woods in Canada. I love the fact that my kids can just explore the woods by himself with his friends. I think that's how kids should just grow up and you can't do that in China.

So I'm looking to get out of China as soon as possible. But I do understand the limitations and problems in North America as well. Okay. So Shadur, do you want to ask your question and then that'll be it. Okay. We're at four o'clock. Yeah.

You know obviously times are bad and it causes people to, you know, worry about the future and one criticism that's come up of you a lot is that, you know, you have some sort of ulterior motive, whether people are saying that, you know, because you're from China that might have something to do with it where you're trying to stir up something or whatever it is, some ulterior motive, and you know my cousin and me, we're on the side of no, we truly believe you're doing it because you want to better the world, you want to, you know what I mean, you have a mission that you want to just expose truth basically.

So I guess kind of what we always kind of defend you but what would you say to that if that came up to you, that question?

Well, if my predictions turn out to be correct. So, you know, I blew up because of the Iran war. So, if you go back two years, okay, when I was making these predictions, everyone online would call me crazy for saying that the United States would attack Iran because they'll be like, why would we do that? That's insane. But it happened and, you know, that's why I blew up online. But just because I became popular online doesn't mean I'm going to sit back and just, you know, make money. My mission is to educate people.

So now I'm making new predictions and I'm presenting, but it's all based on my game theory model of the world. And that's what I'm trying to do. I'm trying to teach people. You don't have to listen to what I say. If you listen to what I say, what I hope you're doing is you're listening carefully as to how I'm making my analysis. But that's actually more important than my predictions. And what you also Find is I'm willing to admit when I'm wrong and then go back and analyze my model and figure out where I went wrong.