Arthur Kroeber

It can't just all be about endless investments in new technologies.

Most metrics that I and my team follow of return on investment in China, they're going down.

The number of zombie companies that still exist but don't even generate enough revenue to pay the interest cost in their debt, that's going up.

There's a lot of pressure that's building within the Chinese system because of this obsessive concern with the supply side of the economy.

So they'll continue to do, I think, quite well overall in technology production, but the financial constraints are rising.

So they, I think, have some self-interest here in coming up with a more balanced economic model and having some pressure from the outside to get them in that direction.

I think that would be good.

But I guess the final point I would make on this, though, is on the US side, which is, of course, where I generally sit, it really is critical to have a realistic understanding of what's happening in China and how they're interacting with the rest of the world.

So I think one of the

big dangers that we have in the current Trump administration strategy in this, which was also to some degree apparent in the Biden administration strategy, was there is this belief that China can be contained and that you can essentially construct an alliance of countries

that will stand up to China and try to constrain it with you.

It's kind of a replay or dusting off of the Cold War playbook where you had Soviet Union and the Warsaw Pact, you had United States and NATO and all of the informal allies everywhere else, and you had the blocs against each other.

and the bigger and more economically productive block won, right?

And that is just not going to work because the Chinese have seen this coming for a long time.

They have long had the view that the US was going to try and constrain them.

And they said, well, how do we get around this?

And their answer is not, you build a block, I'll build a block against that.

Their answer is, I will operate so that it is impossible for you to build the block that you want.

So you look at China's international engagements,

More countries have China as their number one trade partner than any other country in the world.