The Prof G Pod with Scott Galloway
China Decode: Why Apple Can't Quit China (ft. Patrick McGee)
09 Dec 2025
Chapter 1: What is the main topic discussed in this episode?
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It's the only business software you'll ever need. It's an all-in-one, fully integrated platform that makes your work easier. CRM, accounting, inventory, e-commerce, and more. And the best part? Odoo replaces multiple expensive platforms for a fraction of the cost. That's why over thousands of businesses have made the switch. So why not you? Try Odoo for free at odoo.com. That's O-D-O-O dot com.
Overcapacity is seen as a problem from a Western lens, but through China's lens, this is just something where by producing more than they need and then exporting it at cutthroat prices or even losing money in certain respects, I mean, they're just de-industrializing other nations. And that's not good for sort of capitalism in the profit sense.
But if you're using this as industrial statecraft, if not war, profit is not the goal.
Welcome to China Decode. I'm Alice Han.
And I'm James King.
In today's episode of China Decode, we're discussing China's strategy to compete with Nvidia, why the Renminbi remains so undervalued, and later we'll speak with Patrick McGee, author of the fascinating book, Apple and China, the Capture of the World's Greatest Company, about Apple's complex relationship with China. That's all coming up.
But first, let's do a quick check-in with how the Chinese markets are starting the week. On Monday, the Shanghai A share index rose 0.5%. The Hang Seng H share index closed down 1.2%, its largest loss in over two weeks. PopMart International closed down over 8% on continued fears over North American sales trends.
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Chapter 2: How is China's chip race evolving with Moore Threads?
And the reason this matters is because it is fundamental to China's trade surplus with America. with Europe, with many countries in the rest of the world. And it's fundamental to the fact that Chinese economy remains structurally very imbalanced.
You know, when you have a weak currency, it benefits the exporters, it benefits China's export-led growth model, but it does not benefit everyday households, everyday Chinese who are buying and choosing to use the CNY to purchase, say, foreign goods that are relatively then more expensive.
So it's baffling, I think, to a lot of Western observers why, as China wants to rebalance its economy, it remains still wedded to a low CNY model, because at the end of the day, it seems to be a disservice to the rebalancing efforts to support the household, to support domestic demand. But my own take, and I want to get yours very quickly, James, is that
At the end of the day, as much as they talk about rebalancing, this whole economic model is still highly dependent on exports. It's still highly dependent on the manufacturing sector. And if anything, the five-year plan that we'll see unveiled fully in March seems to suggest that they want to double down on this manufacturing-led growth.
So I think even although they want to talk about more recently in domestic China, a stronger CNY, it's hard for me to see them let go of this weaker CNY policy. But I looked at the data of China's currency devaluation since about 2021. We've seen it go down 18%, whereas the other currencies like the dollar and the euro have risen since the end of 2021.
And more importantly than that, actually what we saw this year is In spite of the fact that the currency has been relatively strong to the dollar, if you look at the trade weighted basket, and this is important, the CFETS and MEB index, that's China's currency relative to a basket of other trade related foreign currencies. It's been going down since the beginning of this year.
It's been depreciating relative to the euro, to the GPY. to a lot of these other trading currencies. And this is excluding the US, where obviously we've seen this weak dollar story that's driven some degree of relative CNY strength this year. But James, enough of my rambling about this. What's your hot take on the CNY and why it matters?
Yeah, no, I mean, we're speaking just a few hours after China announced its trade surplus for November. And that means that in the first 11 months of this year, the Chinese trade surplus for goods already is in excess of one trillion U.S. dollars.
And that means that for the full year, it might be about $1.2 trillion, which, according to various estimates that I've been looking at, means that this could be one of the highest trade surpluses in history, roughly equivalent to some of the huge surpluses we saw the U.S. have. in the last years of the Second World War. So we're really talking about exceptionally high trade surpluses.
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