Welcome to Kobe Time, a podcast series on Markets and Economies from D BS Group Research. I'm Tam Rbe, chief economist. Welcoming you to our 135th episode today. We will welcome back Alexander Capri to the podcast. Alex is a writer, academic and former partner in the Asia Pacific Practice of KPMG. He has done a lot of work on global value chains, trade and geopolitics, Global tech, the digital economy and the industries of the future.

Welcome to Kobe Time, a podcast series on Markets and Economies from D BS Group Research. I'm Tam Rbe, chief economist. Welcoming you to our 135th episode today. We will welcome back Alexander Capri to the podcast. Alex is a writer, academic and former partner in the Asia Pacific Practice of KPMG. He has done a lot of work on global value chains, trade and geopolitics, Global tech, the digital economy and the industries of the future.

Alex has recently published a book Techno Nationalism, how it's reshaping trade, geopolitics and society. Alexander Capri, a warm welcome back to Copy time. Thank you. It's great to have you, Alex. We did this once before back in April 2020 just as we were being engulfed by the global pandemic. Alex. When I look at the transcript of that conversation, I think we kind of had it right. We talked over the push and pull factors driving the realignment of the global supply chain.

Alex has recently published a book Techno Nationalism, how it's reshaping trade, geopolitics and society. Alexander Capri, a warm welcome back to Copy time. Thank you. It's great to have you, Alex. We did this once before back in April 2020 just as we were being engulfed by the global pandemic. Alex. When I look at the transcript of that conversation, I think we kind of had it right. We talked over the push and pull factors driving the realignment of the global supply chain.

Uh We asserted barely a couple of months into the pandemic that the crisis would provide additional motivation to lean toward resiliency over efficiency. Well, those issues remain alive today, Alex, and you've written a lot rather large book on it. So let's start, how do you define techno nationalism?

Uh We asserted barely a couple of months into the pandemic that the crisis would provide additional motivation to lean toward resiliency over efficiency. Well, those issues remain alive today, Alex, and you've written a lot rather large book on it. So let's start, how do you define techno nationalism?

Good question.

Good question.

Uh II, I would say that we would throw in a few other words. Uh So let, let's start with geo economics, right? If we're thinking about supply chains, let's replace uh just in time with, just in case. Uh you know, if, if we're thinking about a purely cost driven model that seeks efficiencies and hyper rationalized supply chains, now, geo poli geopolitics and other issues stemming from great power competition

Uh II, I would say that we would throw in a few other words. Uh So let, let's start with geo economics, right? If we're thinking about supply chains, let's replace uh just in time with, just in case. Uh you know, if, if we're thinking about a purely cost driven model that seeks efficiencies and hyper rationalized supply chains, now, geo poli geopolitics and other issues stemming from great power competition

are now factoring into how a supply chain is structured. Um You know, where a manufacturing process is going to take place, how a strategic partner is chosen. Um So, so I I would break down techno nationalism into six very distinct elements.

are now factoring into how a supply chain is structured. Um You know, where a manufacturing process is going to take place, how a strategic partner is chosen. Um So, so I I would break down techno nationalism into six very distinct elements.

Um The first is uh supply chains. So supply chain weaponization, governments looking to control or stem the flow of technology to perceived adversaries and that happens through things like export controls, ah the imposition of sanctions. Um Then I would, I would break it down into uh decoupling and Deris. And if decoupling and deris is happening, then we're looking at reshoring near shoring friend, shoring

Um The first is uh supply chains. So supply chain weaponization, governments looking to control or stem the flow of technology to perceived adversaries and that happens through things like export controls, ah the imposition of sanctions. Um Then I would, I would break it down into uh decoupling and Deris. And if decoupling and deris is happening, then we're looking at reshoring near shoring friend, shoring

uh from, from a sort of a G to G basis. Um And even a G to B basis. We're looking at government driven innovation, industrial policy if you will. Uh we're also looking at um an increase in basically, frankly, you know, hybrid warfare, right? We're looking at espionage. We're looking at uh elevation of cyber intrusions, that sort of thing.

uh from, from a sort of a G to G basis. Um And even a G to B basis. We're looking at government driven innovation, industrial policy if you will. Uh we're also looking at um an increase in basically, frankly, you know, hybrid warfare, right? We're looking at espionage. We're looking at uh elevation of cyber intrusions, that sort of thing.

And then the final element would be uh basically what we call tech uh diplomacy, right? So governments working with other governments and working with businesses to forge these new strategic alliances around strategic technologies.

And then the final element would be uh basically what we call tech uh diplomacy, right? So governments working with other governments and working with businesses to forge these new strategic alliances around strategic technologies.

Why is it just not nationalism? Why is it techno nationalism?

Why is it just not nationalism? Why is it techno nationalism?

Because uh technology is a power multiplier. And so if we put this in the context of a a nation, a nation state uh technology, I, if we're putting this in the terms of techno nationalism ah is about the linkage between the technological prowess of a particular country or organizations within that country

Because uh technology is a power multiplier. And so if we put this in the context of a a nation, a nation state uh technology, I, if we're putting this in the terms of techno nationalism ah is about the linkage between the technological prowess of a particular country or organizations within that country

and their ability to project national security and, and, and defense related uh power, uh the linkage to economic strength, prosperity. And then finally, really, there's a third element which is societal and that is uh you know, as technology becomes uh essential to controlling narratives, to releasing information or disinformation

and their ability to project national security and, and, and defense related uh power, uh the linkage to economic strength, prosperity. And then finally, really, there's a third element which is societal and that is uh you know, as technology becomes uh essential to controlling narratives, to releasing information or disinformation

uh towards uh in, in uh authoritarian regimes, towards uh suppression of populations, censorship that, that sort of thing. Technology is central to all of that. And so all of these would be power multipliers.

uh towards uh in, in uh authoritarian regimes, towards uh suppression of populations, censorship that, that sort of thing. Technology is central to all of that. And so all of these would be power multipliers.

Is this a brand new thing that basically goes back to Donald Trump, becoming the president of the United States or it's been going on for long before that,

Is this a brand new thing that basically goes back to Donald Trump, becoming the president of the United States or it's been going on for long before that,

as long as there as there have been nation states, there has been techno nationalism.

as long as there as there have been nation states, there has been techno nationalism.

Ah So, for example, in the book I talk about the founding of the United States. Uh Alexander Hamilton, first Secretary of the Treasury, really one of his top priorities, if not, the top priority was to get access to British technology when it, when it came to the, you know, textile milling machines and, and, and so on. So, um

Ah So, for example, in the book I talk about the founding of the United States. Uh Alexander Hamilton, first Secretary of the Treasury, really one of his top priorities, if not, the top priority was to get access to British technology when it, when it came to the, you know, textile milling machines and, and, and so on. So, um

and there were adversaries at that time, so you basically had to steal it

and there were adversaries at that time, so you basically had to steal it

and that's precisely what happened. I mean, that was really item number one on the agenda was, you know, steal, acquire, figure out how to get access to technology. So, um that sort of if you want to, let's just stick with the term techno nationalist uh approach to, to real politik and, and, and international relations, ah has been around for a very long time.

and that's precisely what happened. I mean, that was really item number one on the agenda was, you know, steal, acquire, figure out how to get access to technology. So, um that sort of if you want to, let's just stick with the term techno nationalist uh approach to, to real politik and, and, and international relations, ah has been around for a very long time.

It's fascinating and I think going back to the Cold War era, some would argue that some of the decoupling that happened between the US and Russia put Russia under a lot of economic strike because they had to sort of create homegrown tech stack, which was never really good. Enough incentives were not aligned. And that was one of the key elements that drove the victory if you will, the Cold War in favor of the West over the

It's fascinating and I think going back to the Cold War era, some would argue that some of the decoupling that happened between the US and Russia put Russia under a lot of economic strike because they had to sort of create homegrown tech stack, which was never really good. Enough incentives were not aligned. And that was one of the key elements that drove the victory if you will, the Cold War in favor of the West over the

Soviet bloc.

Soviet bloc.

Yeah, I mean, that's a, that's a widely held view. Um I, I certainly, I, I certainly would, would say that um the amount of, of resources that, that, that needs to go into uh you know, pushing the, the envelope if you will from a technological standpoint and the, the idea that um the, for example, the, the Star Wars system that the Reagan administration uh was pushing whether or not it was e even feasible.

Yeah, I mean, that's a, that's a widely held view. Um I, I certainly, I, I certainly would, would say that um the amount of, of resources that, that, that needs to go into uh you know, pushing the, the envelope if you will from a technological standpoint and the, the idea that um the, for example, the, the Star Wars system that the Reagan administration uh was pushing whether or not it was e even feasible.

Uh you know, the, the theory is, is, is that it bankrupted the, the Soviets because they thought it was, and they were putting a lot of, you know, time and effort and money into it. And, and of course, you know, they, they it, it helped in the collapse. So, um

Uh you know, the, the theory is, is, is that it bankrupted the, the Soviets because they thought it was, and they were putting a lot of, you know, time and effort and money into it. And, and of course, you know, they, they it, it helped in the collapse. So, um

but from a techno nationalist standpoint, uh if you look at really, if you go back 100 years, uh and let's go back to the first World War, right? I mean, there were chemistry wars, right? To figure out how to, how to produce nitrates, to produce uh explosives, for example, right? And that, that was really the war of the scientists, right to come up with those innovations. And if you trace this theme of techno nationalism really back the last 100 years plus, um

but from a techno nationalist standpoint, uh if you look at really, if you go back 100 years, uh and let's go back to the first World War, right? I mean, there were chemistry wars, right? To figure out how to, how to produce nitrates, to produce uh explosives, for example, right? And that, that was really the war of the scientists, right to come up with those innovations. And if you trace this theme of techno nationalism really back the last 100 years plus, um

there really is this very important correlation between the industrial revolutions

there really is this very important correlation between the industrial revolutions

and uh and what what I call the technology feedback loop, which is essentially this virtuous cycle that exists between um you know, governments, national governments, the defense establishment, academia,

and uh and what what I call the technology feedback loop, which is essentially this virtuous cycle that exists between um you know, governments, national governments, the defense establishment, academia,

private business and or markets. Uh and as they all work together, uh you have this phenomenon where you have innovation taking place, uh it's, it's generating profit, it's generating more innovation, which it becomes a network effect sort of thing. So if you, if, if you look at this, this view of the world that some have described as, um the west versus the rest,

private business and or markets. Uh and as they all work together, uh you have this phenomenon where you have innovation taking place, uh it's, it's generating profit, it's generating more innovation, which it becomes a network effect sort of thing. So if you, if, if you look at this, this view of the world that some have described as, um the west versus the rest,

uh you know, going back really 3, 400 years. Uh I mean, we could trace this all the way back to the Dutch East India company, right. And that, that sort of symbiotic relationship that emerged between the state and a for profit organization and all those elements in the feedback loop, right? But if you, if you project forward um

uh you know, going back really 3, 400 years. Uh I mean, we could trace this all the way back to the Dutch East India company, right. And that, that sort of symbiotic relationship that emerged between the state and a for profit organization and all those elements in the feedback loop, right? But if you, if you project forward um

that has combined with the, now we're in the fourth industrial revolution. But when you, when you, when you look at the fortuitous results of the industrial revolutions, the technology feedback loop

that has combined with the, now we're in the fourth industrial revolution. But when you, when you, when you look at the fortuitous results of the industrial revolutions, the technology feedback loop

uh on a nation state level that has essentially laid the, laid the groundwork for the international system as we see it today,

uh on a nation state level that has essentially laid the, laid the groundwork for the international system as we see it today,

right? Uh Alex, I want to get one thing clear, which is when you are referring to techno nationalism and especially when I think about the totality of the measures that particularly the US has taken against China in the last decade or so. A lot of it is

right? Uh Alex, I want to get one thing clear, which is when you are referring to techno nationalism and especially when I think about the totality of the measures that particularly the US has taken against China in the last decade or so. A lot of it is

rationalize under the guise of national security. We don't want our data to fall into the wrong hands. We don't want our technology to be weaponized in an armed conflict or something like that by our adversaries. But it seems to me that you, when you take this big historical sweep,

rationalize under the guise of national security. We don't want our data to fall into the wrong hands. We don't want our technology to be weaponized in an armed conflict or something like that by our adversaries. But it seems to me that you, when you take this big historical sweep,

you're also putting it in the context of economic security. I don't want you to rise to my level of economic prosperity and I would sort of prevent you from rising to some extent. Yeah,

you're also putting it in the context of economic security. I don't want you to rise to my level of economic prosperity and I would sort of prevent you from rising to some extent. Yeah,

I, I

I, I

think that's, that's somewhat of a zero sum view. Right? And, and I actually don't think that, that techno nationalism puts us in a world of zero sum. Right? I think the world has become way too complex right now, too many overlapping interests. And, and we're actually in a paradox. So the paradox is this,

think that's, that's somewhat of a zero sum view. Right? And, and I actually don't think that, that techno nationalism puts us in a world of zero sum. Right? I think the world has become way too complex right now, too many overlapping interests. And, and we're actually in a paradox. So the paradox is this,

if you look at the, if you look at the grand sort of the mega trends that are defining the international system today, right? Um you know, you look at

if you look at the, if you look at the grand sort of the mega trends that are defining the international system today, right? Um you know, you look at

uh the fragmentation of a global supply chains because of geopolitical pressures, right? This move towards regionalization, even localization. Um the the the the idea that uh the world is bifurcating, right um around these, these two nodes, right? That basically the GSG G7 US plus plus China, I mean, if if you look at that, um

uh the fragmentation of a global supply chains because of geopolitical pressures, right? This move towards regionalization, even localization. Um the the the the idea that uh the world is bifurcating, right um around these, these two nodes, right? That basically the GSG G7 US plus plus China, I mean, if if you look at that, um

we're not de globalizing, this is not a de globalization process, this is a reorganization process. So the global economy is, is reorganizing itself and it's, it's, it's a correction if you will. Um III I actually refer to it um as a geopolitical version of creative destruction. All right. So

we're not de globalizing, this is not a de globalization process, this is a reorganization process. So the global economy is, is reorganizing itself and it's, it's, it's a correction if you will. Um III I actually refer to it um as a geopolitical version of creative destruction. All right. So

there, there is a, there there are many new economic opportunities that are rising as, you know, as a banker. Uh and the work that, that the bank is doing, you know, that, that, that when you have these shifts in supply chains in, in global value chains, um

there, there is a, there there are many new economic opportunities that are rising as, you know, as a banker. Uh and the work that, that the bank is doing, you know, that, that, that when you have these shifts in supply chains in, in global value chains, um

there's rebuilding, there's restructuring, there's, there's the services industry, you know, there, there's, it's, it's a real knock on effect. And I should point out the paradox that I that I refer to is that on one hand, we have all of these things that I've just described happening with strategic technologies. So, so the value chains around there's really 12 core technologies and we can get back into that in a little bit of course, semiconductors, quantum biotech, you know that sort of thing. Um

there's rebuilding, there's restructuring, there's, there's the services industry, you know, there, there's, it's, it's a real knock on effect. And I should point out the paradox that I that I refer to is that on one hand, we have all of these things that I've just described happening with strategic technologies. So, so the value chains around there's really 12 core technologies and we can get back into that in a little bit of course, semiconductors, quantum biotech, you know that sort of thing. Um

But even as that's happening, even even as we're seeing this bifurcation, we're seeing increases in trade volumes including between the US and China, right? So um

But even as that's happening, even even as we're seeing this bifurcation, we're seeing increases in trade volumes including between the US and China, right? So um

the way I look at that, the way I dissect that is I look at global value chains as a, as a sort of a striation like three levels. OK. So on the top level, we have all the strategic goods, right? And that's where that's where the decoupling and the deris is happening, the restructuring and so forth in the middle, the second, the second layer down, we have this nebulous gray area.

the way I look at that, the way I dissect that is I look at global value chains as a, as a sort of a striation like three levels. OK. So on the top level, we have all the strategic goods, right? And that's where that's where the decoupling and the deris is happening, the restructuring and so forth in the middle, the second, the second layer down, we have this nebulous gray area.

And uh within that gray area, we have uh dual use goods. So these are commercial goods that are used for a wide array of industries and sectors, you know, everything from a SIM card in your phone, literally to the brake pads in the car you're driving. But they could be considered dual use, meaning they're commercial, but they could be used for military purposes. And therefore, if they're being sent

And uh within that gray area, we have uh dual use goods. So these are commercial goods that are used for a wide array of industries and sectors, you know, everything from a SIM card in your phone, literally to the brake pads in the car you're driving. But they could be considered dual use, meaning they're commercial, but they could be used for military purposes. And therefore, if they're being sent

to um you know, an identified entity, a blacklisted entity somewhere, it's going to require an export license or it's just gonna be blocked throughout, that's the real gray area. And that's really where the scenario mapping and the the the really serious analysis has to take place if you're a company

to um you know, an identified entity, a blacklisted entity somewhere, it's going to require an export license or it's just gonna be blocked throughout, that's the real gray area. And that's really where the scenario mapping and the the the really serious analysis has to take place if you're a company

and then the and then the third level is just the the rest of the stuff. Uh that is essentially innocuous, right? I mean, do we care where your shoes come from? You know, your bottle of shampoo, you know, that type of thing.

and then the and then the third level is just the the rest of the stuff. Uh that is essentially innocuous, right? I mean, do we care where your shoes come from? You know, your bottle of shampoo, you know, that type of thing.

But even that evolves Alex, I'll give you an example five years ago. If you bought an Osim massage chair, it'd give you a massage. Today's Osim chairs have Bluetooth capability and you can connect to your phone and you can run the chair through your phone. So all of a sudden now it has

But even that evolves Alex, I'll give you an example five years ago. If you bought an Osim massage chair, it'd give you a massage. Today's Osim chairs have Bluetooth capability and you can connect to your phone and you can run the chair through your phone. So all of a sudden now it has

mini Bluetooth application and data transmission capabilities. So then it starts going on from the third, completely innocuous. A chair that does no harm. That's right to somewhere in the middle. I guess that's where lawyers and regulators and consultants. Everybody come in and they fight it out to the company gets a buy or not.

mini Bluetooth application and data transmission capabilities. So then it starts going on from the third, completely innocuous. A chair that does no harm. That's right to somewhere in the middle. I guess that's where lawyers and regulators and consultants. Everybody come in and they fight it out to the company gets a buy or not.

That's right.

That's right.

And so if you take, uh if you take a dual use technology that's in a, a fairly ubiquitous kind of product that everybody buys. And then there's this uh a sudden geopolitical event, uh an accidental flare up in the South China Sea or some kind of an event. It's quite possible that literally overnight,

And so if you take, uh if you take a dual use technology that's in a, a fairly ubiquitous kind of product that everybody buys. And then there's this uh a sudden geopolitical event, uh an accidental flare up in the South China Sea or some kind of an event. It's quite possible that literally overnight,

ah what was a commercial, what was considered purely a commercial good going to a particular importer or buyer in say China um is now off limits,

ah what was a commercial, what was considered purely a commercial good going to a particular importer or buyer in say China um is now off limits,

right? And so, I mean, these are the types of things that companies need to be uh mapping out, right? They need to be looking at what parts of their supply chain are in this gray dual use area and given different scenarios in the world, what would happen if you know, scenario one, scenario two, perfect example of that is um electric vehicles

right? And so, I mean, these are the types of things that companies need to be uh mapping out, right? They need to be looking at what parts of their supply chain are in this gray dual use area and given different scenarios in the world, what would happen if you know, scenario one, scenario two, perfect example of that is um electric vehicles

and all of the, you know, w what is an electric vehicle, right? It's, it's, it's a computer on wheels, right? And it's, it's, it's sending and receiving information not only about where you're going but everything that's around you. Uh what's coming in on communication networks and other smart devices. And as you saw, I think it was just yesterday that Washington has announced that both the software and the hardware that goes into electric vehicles in the states cannot be of Chinese origin,

and all of the, you know, w what is an electric vehicle, right? It's, it's, it's a computer on wheels, right? And it's, it's, it's sending and receiving information not only about where you're going but everything that's around you. Uh what's coming in on communication networks and other smart devices. And as you saw, I think it was just yesterday that Washington has announced that both the software and the hardware that goes into electric vehicles in the states cannot be of Chinese origin,

right? So no export and no import around those things.

right? So no export and no import around those things.

Yeah, so

Yeah, so

that's an example of how in anything that's considered strategic, we're going, we're going to continue to see a very clear bifurcation of supply chains, value chains.

that's an example of how in anything that's considered strategic, we're going, we're going to continue to see a very clear bifurcation of supply chains, value chains.

Uh Maybe this question is too early to ask. But since you were talking about it, it sort of follows to me almost naturally do these restrictions work.

Uh Maybe this question is too early to ask. But since you were talking about it, it sort of follows to me almost naturally do these restrictions work.

You know, a semiconductor is super tiny, a lot of stuff just are uploaded and transmitted through the cloud over the air. It's not a question of a Department of Commerce inspectors sitting in Vietnam or somewhere else and making sure that everything is up and up.

You know, a semiconductor is super tiny, a lot of stuff just are uploaded and transmitted through the cloud over the air. It's not a question of a Department of Commerce inspectors sitting in Vietnam or somewhere else and making sure that everything is up and up.

Um What has, what is the report card so far?

Um What has, what is the report card so far?

Well, look export controls, le le let's start historically, I'll, I'll, I'll give you the answer historically and then, and then maybe we can apply it to say semiconductor today, right? What's what's going on? So historically,

Well, look export controls, le le let's start historically, I'll, I'll, I'll give you the answer historically and then, and then maybe we can apply it to say semiconductor today, right? What's what's going on? So historically,

the record shows that um an export control will slow down the transmission or the, you know, the, the the dissemination of a certain kind of technology, but it's not going to stop it eventually. Um You know, it's, it's going to make its way into sort of the, the, the broader environment. Now,

the record shows that um an export control will slow down the transmission or the, you know, the, the the dissemination of a certain kind of technology, but it's not going to stop it eventually. Um You know, it's, it's going to make its way into sort of the, the, the broader environment. Now,

we also have to be careful about what kinds of technology we're talking about. So if we're talking about satellite technology, which in the, in the eighties, you know, the eighties and nineties there were controls, but eventually everybody figured out how to make satellites. Um That's one thing. But if we're talking about making a two nanometer chip

we also have to be careful about what kinds of technology we're talking about. So if we're talking about satellite technology, which in the, in the eighties, you know, the eighties and nineties there were controls, but eventually everybody figured out how to make satellites. Um That's one thing. But if we're talking about making a two nanometer chip

where the barriers to entry are so incredibly

where the barriers to entry are so incredibly

high,

high,

basically one company makes it or

basically one company makes it or

or you know, it's it's right. So in the case of one company, you're probably talking about a SML which which makes the lithography lithography equipment.

or you know, it's it's right. So in the case of one company, you're probably talking about a SML which which makes the lithography lithography equipment.

But even beyond that, within that, within that value chain, within that fabrication process, the the hyper specialization and the companies that specialize in that. So it's it's essentially with, in that case, we're we're looking at the emergence of a cartel, right. We're looking at the emergence of a chip cartel along geopolitical lines, right? So to answer the question, do do export controls work.

But even beyond that, within that, within that value chain, within that fabrication process, the the hyper specialization and the companies that specialize in that. So it's it's essentially with, in that case, we're we're looking at the emergence of a cartel, right. We're looking at the emergence of a chip cartel along geopolitical lines, right? So to answer the question, do do export controls work.

Uh it's two fold, it depends how sophisticated the technology is and, and how, how high the barriers to entry are. But it also um it it also comes down to um how can these export controls be circumvented? What are the workarounds? What are the back doors and to that effect, there are quite a few, right? So let's let's talk about NVIDIA, nvidia's A I chips, right?

Uh it's two fold, it depends how sophisticated the technology is and, and how, how high the barriers to entry are. But it also um it it also comes down to um how can these export controls be circumvented? What are the workarounds? What are the back doors and to that effect, there are quite a few, right? So let's let's talk about NVIDIA, nvidia's A I chips, right?

So ex you know, export controls on them. Are they continuing to make their way into China, for example? And the answer is yes um uh you know, are ex and how, how is that happening? There's there's a few ways that's happening. The first is the export control process itself

So ex you know, export controls on them. Are they continuing to make their way into China, for example? And the answer is yes um uh you know, are ex and how, how is that happening? There's there's a few ways that's happening. The first is the export control process itself

and the way it works is before an export control is actually enforced and it becomes mandatory to get a license. There's this long period where they make an announcement where they say yes, we're uh you know, it's a public, it's a public announcement process. We're, we're going to uh be implementing export controls and it's going to take effect in such and such time. So what does that do?

and the way it works is before an export control is actually enforced and it becomes mandatory to get a license. There's this long period where they make an announcement where they say yes, we're uh you know, it's a public, it's a public announcement process. We're, we're going to uh be implementing export controls and it's going to take effect in such and such time. So what does that do?

Uh that incites a AAA binge buying sessions, right. So to load all the purchases as much as possible, I mean, just soak up everything that's out on the market, stockpile it and you've got chips for the next two years. That's what Huawei did when they were placed on the entity list, the the the Chinese telecommunications equipment manufacturing company. Um

Uh that incites a AAA binge buying sessions, right. So to load all the purchases as much as possible, I mean, just soak up everything that's out on the market, stockpile it and you've got chips for the next two years. That's what Huawei did when they were placed on the entity list, the the the Chinese telecommunications equipment manufacturing company. Um

So there's, there's that, so there's the, the issue that everybody goes out in stockpiles. And we're seeing that now with uh DUV uh deep ultraviolet lithography machines uh being stockpiled. Uh you know, in China, right? The huge, huge, you know, spikes in, in, in the numbers going up because

So there's, there's that, so there's the, the issue that everybody goes out in stockpiles. And we're seeing that now with uh DUV uh deep ultraviolet lithography machines uh being stockpiled. Uh you know, in China, right? The huge, huge, you know, spikes in, in, in the numbers going up because

the EU vs are not available at all. The

the EU vs are not available at all. The

EU vs which is the extreme ultraviolet. Uh But the Duvs um um are are being basically purchased because

EU vs which is the extreme ultraviolet. Uh But the Duvs um um are are being basically purchased because

um you know, just to divert a little bit. Um So, so Huawei worked with SMIC uh and they came up with a seven nanometer chip using uh imported DUV equipment. Basically, they used that for the, the, the mate 60 phone which was

um you know, just to divert a little bit. Um So, so Huawei worked with SMIC uh and they came up with a seven nanometer chip using uh imported DUV equipment. Basically, they used that for the, the, the mate 60 phone which was

not considered likely, but they pull it off,

not considered likely, but they pull it off,

they, they pulled it off. But again, if you look, I mean, uh I'm kind of detracting but

they, they pulled it off. But again, if you look, I mean, uh I'm kind of detracting but

uh I'll come back to the, you know, do the, do export controls work. Um But yeah, so in the case of Huawei, what they did with the, with, with that, with that process is it's a, it's a, it's a much more labor intensive process. You know, when you're in the lithography process, you have to pass over again and again and again,

uh I'll come back to the, you know, do the, do export controls work. Um But yeah, so in the case of Huawei, what they did with the, with, with that, with that process is it's a, it's a, it's a much more labor intensive process. You know, when you're in the lithography process, you have to pass over again and again and again,

yield, you get a lot of commercial,

yield, you get a lot of commercial,

it costs a lot more money. So unless somebody's basically, you know, reimbursing you for all that, that leakage, that cost leakage, it's not competitive, basically. OK. So, so coming back, so we got binge buying

it costs a lot more money. So unless somebody's basically, you know, reimbursing you for all that, that leakage, that cost leakage, it's not competitive, basically. OK. So, so coming back, so we got binge buying

uh which is happening. Um the other is, of course, is just black market and gray market, you know, achieving chips uh you know, on the black market and the other uh and this is why this is a game of whack a mole, right? When we talk about um the US administration trying to, trying to enforce um

uh which is happening. Um the other is, of course, is just black market and gray market, you know, achieving chips uh you know, on the black market and the other uh and this is why this is a game of whack a mole, right? When we talk about um the US administration trying to, trying to enforce um

uh but you know, the the other is when, when we're talking about uh cloud computing, for example, and and accessing the power of those chips to to do whatever computer processing you want, you can access that in the cloud from a third

uh but you know, the the other is when, when we're talking about uh cloud computing, for example, and and accessing the power of those chips to to do whatever computer processing you want, you can access that in the cloud from a third

party.

party.

So the data center can be in the Middle East, the company could be in China, right? I mean, right, they're accessing all the cutting edge chips being used over there.

So the data center can be in the Middle East, the company could be in China, right? I mean, right, they're accessing all the cutting edge chips being used over there.

So, so this is, this is a a game that's in progress.

So, so this is, this is a a game that's in progress.

And uh you know, we're going to continue to see, you know, efforts to sort of uh clamp down on these types of, of things. And I think maybe maybe another time we can come back and talk about what I call the surveillance supply chain. Basically, the the way new technologies are going to be used to essentially achieve much, much greater transparency and traceability in supply chains, right, to trace the actual movement.

And uh you know, we're going to continue to see, you know, efforts to sort of uh clamp down on these types of, of things. And I think maybe maybe another time we can come back and talk about what I call the surveillance supply chain. Basically, the the way new technologies are going to be used to essentially achieve much, much greater transparency and traceability in supply chains, right, to trace the actual movement.

Uh And a lot of this is gonna be focused on A I right on, on A I chips and it's gonna be focused on cloud infrastructure. You mentioned uh data centers. This is where all this is going to be playing out. So it's

Uh And a lot of this is gonna be focused on A I right on, on A I chips and it's gonna be focused on cloud infrastructure. You mentioned uh data centers. This is where all this is going to be playing out. So it's

not just a question of I buy something from you and then I do whatever I want with it.

not just a question of I buy something from you and then I do whatever I want with it.

In fact, even after buying it from you, I remain liable to how I use it

In fact, even after buying it from you, I remain liable to how I use it

or, or even the the original seller will be able to trace where it actually is including embedded in a finished product basically. So I think we'll see more of that and that is that's going to be a growth industry, think about the amount of money that's gonna be made just around the compliance like the reg tech that's gonna go into that and that's gonna be big

or, or even the the original seller will be able to trace where it actually is including embedded in a finished product basically. So I think we'll see more of that and that is that's going to be a growth industry, think about the amount of money that's gonna be made just around the compliance like the reg tech that's gonna go into that and that's gonna be big

rec tech huh so many different techs out there. Um

rec tech huh so many different techs out there. Um

You know, we began this discussion in a very general term. We said techno nationalism define it. I don't think you even mentioned the US initially. When you responded to my question, you definitely did not touch on China, but we have naturally veered toward the US China dynamic because let's be clear that is the big story behind techno nationalism. Um I want you to talk to me about something that you devote quite a bit of space in your book, which is the Digital Belt and Road by China.

You know, we began this discussion in a very general term. We said techno nationalism define it. I don't think you even mentioned the US initially. When you responded to my question, you definitely did not touch on China, but we have naturally veered toward the US China dynamic because let's be clear that is the big story behind techno nationalism. Um I want you to talk to me about something that you devote quite a bit of space in your book, which is the Digital Belt and Road by China.

Yeah, so, so you know, yes, absolutely. This is all about great power competition us China. Um you know, the Belt in the Road, the original Belt and Road, of course, is a, you know, it's a ma major Chinese initiative to essentially connect China to the rest of the world through massive infrastructure projects, ports, rail, et cetera, roads, roads and and so on.

Yeah, so, so you know, yes, absolutely. This is all about great power competition us China. Um you know, the Belt in the Road, the original Belt and Road, of course, is a, you know, it's a ma major Chinese initiative to essentially connect China to the rest of the world through massive infrastructure projects, ports, rail, et cetera, roads, roads and and so on.

Uh And that of course, is beneficial because a it connects the Chinese economy to the rest of the world. It allows for frankly a lot of excess capacity from steel companies and all kinds of other things in China to actually go out and build these big projects and so forth. But those who have gotten very expensive and, and as you know, uh as a banker and you're following these things, there are a lot of um countries that are on the verge of defaulting,

Uh And that of course, is beneficial because a it connects the Chinese economy to the rest of the world. It allows for frankly a lot of excess capacity from steel companies and all kinds of other things in China to actually go out and build these big projects and so forth. But those who have gotten very expensive and, and as you know, uh as a banker and you're following these things, there are a lot of um countries that are on the verge of defaulting,

uh they can't pay back the money that the Chinese lent them and so forth. And then we've had this, this, this, this, this notion of, you know, debt diplomacy and that sort of thing. So in a geopolitical and techno nationalist context, um so China has, has uh really turned its focus along the Belt and Road to building digital infrastructure. It's not as expensive, but at the same time, you, you get more bang for your Renminbi, right? And, and, and that is because if you have

uh they can't pay back the money that the Chinese lent them and so forth. And then we've had this, this, this, this, this notion of, you know, debt diplomacy and that sort of thing. So in a geopolitical and techno nationalist context, um so China has, has uh really turned its focus along the Belt and Road to building digital infrastructure. It's not as expensive, but at the same time, you, you get more bang for your Renminbi, right? And, and, and that is because if you have

uh Chinese companies like Huawei and, and you have, you know, Alibaba cloud and, and, and you know, Tencent and all these other companies building the digital infrastructure, you have sense time, the the big A I uh software makers hike vision, the the uh the the uh the camera surveillance technology, facial recognition, you have um Baidu, the the the Chinese uh satellite network. So you have this ecosystem of Chinese companies

uh Chinese companies like Huawei and, and you have, you know, Alibaba cloud and, and, and you know, Tencent and all these other companies building the digital infrastructure, you have sense time, the the big A I uh software makers hike vision, the the uh the the uh the camera surveillance technology, facial recognition, you have um Baidu, the the the Chinese uh satellite network. So you have this ecosystem of Chinese companies

that are building this digital infrastructure and then you overlay on top of that uh Beijing's um you know, Beijing's efforts to, to roll out its digital currency for and, and of course, this is all part of the de dollarization efforts. Uh you know that they've been involved with, with other BRICS countries and also with, you know, their client states along the Belt and the Road, this becomes a, a very, very

that are building this digital infrastructure and then you overlay on top of that uh Beijing's um you know, Beijing's efforts to, to roll out its digital currency for and, and of course, this is all part of the de dollarization efforts. Uh you know that they've been involved with, with other BRICS countries and also with, you know, their client states along the Belt and the Road, this becomes a, a very, very

um compelling and very attractive uh formula if you will for extending influence economic influence and, and you know, ee extending as, as sort of the duality of that is it, you know, it doubles as a, as a, as a force multiplier and projector.

um compelling and very attractive uh formula if you will for extending influence economic influence and, and you know, ee extending as, as sort of the duality of that is it, you know, it doubles as a, as a, as a force multiplier and projector.

I just

I just

want to ss before I want to talk about the digital currency part in a moment, but I just want to stay with the digital infrastructure part a little longer. Um When we talk about this

want to ss before I want to talk about the digital currency part in a moment, but I just want to stay with the digital infrastructure part a little longer. Um When we talk about this

digital stack, if you will coming from the various Chinese ah providers of technology, is it ubiquitous? Is it interoperable? So, could I have Cisco routers in my country? And routers made by I don't know Huawei or something and they can all talk to each other or Cisco routers will have a problem dealing with

digital stack, if you will coming from the various Chinese ah providers of technology, is it ubiquitous? Is it interoperable? So, could I have Cisco routers in my country? And routers made by I don't know Huawei or something and they can all talk to each other or Cisco routers will have a problem dealing with

interoperability with Chinese technology.

interoperability with Chinese technology.

Well, that's a, that's a great question. So, so the currently the way things stand, you know, you have very few players building this kind of technology. Um There, there have been many efforts through the, the O A uh network which is essentially efforts to basically open source. A lot of the technologies that go into the whole value chain around five G wireless. And the the rationale behind that is

Well, that's a, that's a great question. So, so the currently the way things stand, you know, you have very few players building this kind of technology. Um There, there have been many efforts through the, the O A uh network which is essentially efforts to basically open source. A lot of the technologies that go into the whole value chain around five G wireless. And the the rationale behind that is

you don't just have Ericsson and Nokia and Qualcomm and, and, and, and Huawei basically, uh so

you don't just have Ericsson and Nokia and Qualcomm and, and, and, and Huawei basically, uh so

as it stands now, if you have one big provider, it's a lot more complicated, right? It's, and, and it's very difficult to get these companies to work together. Basically, it's almost impossible, basically. Right? Um So um

as it stands now, if you have one big provider, it's a lot more complicated, right? It's, and, and it's very difficult to get these companies to work together. Basically, it's almost impossible, basically. Right? Um So um

the i the answer is it works better. And certainly if we're talking about the Digital Belt and Road, and we're talking about, you know, um China's China's view and China's strategy, it's, it's about having a, a fully Chinese ecosystem.

the i the answer is it works better. And certainly if we're talking about the Digital Belt and Road, and we're talking about, you know, um China's China's view and China's strategy, it's, it's about having a, a fully Chinese ecosystem.

I heard this uh onion analogy from an executive recently where they said that if you have core infrastructure that is very security sensitive of an organization, you tend to still stay very Western with respect to buying those technologies and capabilities. But if there are outer layers of that company's infrastructure, you're OK, buying something rather ubiquitous, which doesn't have that much of a tech related sensitivity.

I heard this uh onion analogy from an executive recently where they said that if you have core infrastructure that is very security sensitive of an organization, you tend to still stay very Western with respect to buying those technologies and capabilities. But if there are outer layers of that company's infrastructure, you're OK, buying something rather ubiquitous, which doesn't have that much of a tech related sensitivity.

But it does come with very large scale from the Chinese and it's very reasonably priced and it does make commercial sense to have the outer layers, having some degree of Chinese layering, but not the inner

But it does come with very large scale from the Chinese and it's very reasonably priced and it does make commercial sense to have the outer layers, having some degree of Chinese layering, but not the inner

layers.

layers.

And, and that's an ongoing debate and it's a very contentious debate that is taking place in European countries in particular, right? Where um you know, the the consensus is moving though uh to the point to where nobody wants potentially adversarial

And, and that's an ongoing debate and it's a very contentious debate that is taking place in European countries in particular, right? Where um you know, the the consensus is moving though uh to the point to where nobody wants potentially adversarial

uh technology in the core of their networks anywhere uh to, you know, uh on if you peel, you know, if you have, if you leave the outer layers of the onion out there, um there's there's now increasing debate as to who should be, who should be providing that kind of technology. So

uh technology in the core of their networks anywhere uh to, you know, uh on if you peel, you know, if you have, if you leave the outer layers of the onion out there, um there's there's now increasing debate as to who should be, who should be providing that kind of technology. So

um that

um that

is out

is out

and, and, but that's where the tech diplomacy takes place, right? That's where governments, you know, they have, they, they deal with pressure from in Washington, in particular, if we're talking about Huawei.

and, and, but that's where the tech diplomacy takes place, right? That's where governments, you know, they have, they, they deal with pressure from in Washington, in particular, if we're talking about Huawei.

Ok. So now let's come to the digital currency aspect. So you see there being two sides of the same coin, the digital infrastructure diplomacy and then using the digital currency as

Ok. So now let's come to the digital currency aspect. So you see there being two sides of the same coin, the digital infrastructure diplomacy and then using the digital currency as

a compliment uh additional offering if you will from the Chinese.

a compliment uh additional offering if you will from the Chinese.

Well, the the the the issue with, with digital money uh or in particularly uh central bank backed digital currencies, right? As, as, as they become, as they sort of are rolled out if you will. Um is you're, you're dealing with um a central bank of a of a sovereign state, basically that is overseeing uh this particular currency. So

Well, the the the the issue with, with digital money uh or in particularly uh central bank backed digital currencies, right? As, as, as they become, as they sort of are rolled out if you will. Um is you're, you're dealing with um a central bank of a of a sovereign state, basically that is overseeing uh this particular currency. So

uh the question then becomes, is this a democratic state that uh adheres to specific kinds of values, privacy values? How do you know how to use, how you know what, what can be done once somebody's data is harvested to what may it be linked and applied? Can it be applied to some kind of a social credit system essentially? Right? Because our our commercial daily activities

uh the question then becomes, is this a democratic state that uh adheres to specific kinds of values, privacy values? How do you know how to use, how you know what, what can be done once somebody's data is harvested to what may it be linked and applied? Can it be applied to some kind of a social credit system essentially? Right? Because our our commercial daily activities

uh that's our lifeblood, right? And if, if, if you know if, if we can't buy a cup of coffee or if we can't buy a train ticket because we've got a low social credit score, right? You know, that is that's, that, that's a problem. Right. And certainly from a, from a liberal democratic value standpoint, that's a problem. Right. So,

uh that's our lifeblood, right? And if, if, if you know if, if we can't buy a cup of coffee or if we can't buy a train ticket because we've got a low social credit score, right? You know, that is that's, that, that's a problem. Right. And certainly from a, from a liberal democratic value standpoint, that's a problem. Right. So,

so I think we're, when, when we look at different systems where we have a potential um

so I think we're, when, when we look at different systems where we have a potential um

Chinese hegemony, uh digital money hegemony, particularly around uh around the Belt and Road, some of the countries in the Belt and Road. Um that's a, that's a, that's a train, that's a head, head on train crash, right? Uh With, with, with Western values when it comes to what kind of money is used and how it's used and how that data is used, right?

Chinese hegemony, uh digital money hegemony, particularly around uh around the Belt and Road, some of the countries in the Belt and Road. Um that's a, that's a, that's a train, that's a head, head on train crash, right? Uh With, with, with Western values when it comes to what kind of money is used and how it's used and how that data is used, right?

But there's so many countries in the world which run large trade deficits vis A vis China

But there's so many countries in the world which run large trade deficits vis A vis China

and

and

add to that the dynamic of weaponization of the US dollar seizing the central bank assets of Afghanistan of Russia.

add to that the dynamic of weaponization of the US dollar seizing the central bank assets of Afghanistan of Russia.

I would think that there would be actually increased motivation for countries that have pretty deep trade relationship with China and are a bit spooked by what the US has done in recent years to reduce their reliance on the US

I would think that there would be actually increased motivation for countries that have pretty deep trade relationship with China and are a bit spooked by what the US has done in recent years to reduce their reliance on the US

dollar.

dollar.

I totally agree. I, I think we're going to see, I mean, we're seeing efforts and we're seeing a lot of enthusiasm around de dollarization, right? And uh so I, I think I, I, well, the green back is going to be,

I totally agree. I, I think we're going to see, I mean, we're seeing efforts and we're seeing a lot of enthusiasm around de dollarization, right? And uh so I, I think I, I, well, the green back is going to be,

ah, a very powerful reserve currency for decades to come, but there clearly is an impetus right? There clearly is, is a very conscious effort to move away. And in the process of doing that,

ah, a very powerful reserve currency for decades to come, but there clearly is an impetus right? There clearly is, is a very conscious effort to move away. And in the process of doing that,

uh the rise of digital currencies bring, you know, bring with them all kinds of issues,

uh the rise of digital currencies bring, you know, bring with them all kinds of issues,

right?

right?

So

So

the

the

funny thing, Alex is that while we're discussing this in the context of frontier technology,

funny thing, Alex is that while we're discussing this in the context of frontier technology,

the biggest beneficiary of this motivation to de dollarization is actually an old asset, which is gold. That's the thing that has rallied in the last couple of years, unlike any other things. Whereas you know, cryptos they go up and down CBD CS, the things that we you and I are talking about is still a work in progress. We're not sure whether the Chinese or any other country would really be enthusiastically replacing their paper currency with digital currency, but the potential is certainly there.

the biggest beneficiary of this motivation to de dollarization is actually an old asset, which is gold. That's the thing that has rallied in the last couple of years, unlike any other things. Whereas you know, cryptos they go up and down CBD CS, the things that we you and I are talking about is still a work in progress. We're not sure whether the Chinese or any other country would really be enthusiastically replacing their paper currency with digital currency, but the potential is certainly there.

Um OK, so that takes me to the transatlantic alliance, you mentioned earlier that Europe and both at the government and corporate level, there is some degree of, you know, rethinking about how to engage with China on the US. We've seen it already pretty clear there is no daylight between the Democrats and Republicans. Everybody is becoming pretty antagonistic to Chinese technology. So how are the Europeans thinking? How are the Americans thinking in terms of their collaboration?

Um OK, so that takes me to the transatlantic alliance, you mentioned earlier that Europe and both at the government and corporate level, there is some degree of, you know, rethinking about how to engage with China on the US. We've seen it already pretty clear there is no daylight between the Democrats and Republicans. Everybody is becoming pretty antagonistic to Chinese technology. So how are the Europeans thinking? How are the Americans thinking in terms of their collaboration?

Yeah, so there there are different views on this, right? So the the the diehard neo li uh you know, basically look at all of these, these big initiatives like the Chips and Science Act, you know, the chips for America Act, which are big subsidies for um the semiconductor sector to reso or bring back fabrication to the United States government subsidized. Uh They look at things like that, they look at things like the um

Yeah, so there there are different views on this, right? So the the the diehard neo li uh you know, basically look at all of these, these big initiatives like the Chips and Science Act, you know, the chips for America Act, which are big subsidies for um the semiconductor sector to reso or bring back fabrication to the United States government subsidized. Uh They look at things like that, they look at things like the um

the uh the Ira Act, right? Which is, which is the, the Inflation Reduction Act, which has a lot of buyer and it has a lot of subsidies and sweeteners for companies to, to, to move things home and, and, and, and, and, and, and do production that otherwise they may have offshored somewhere else.

the uh the Ira Act, right? Which is, which is the, the Inflation Reduction Act, which has a lot of buyer and it has a lot of subsidies and sweeteners for companies to, to, to move things home and, and, and, and, and, and, and do production that otherwise they may have offshored somewhere else.

So the neo, the, the neo liberal argument says, look, this is a race to the bottom, right? Because it's not just the US that is offering these kinds of subsidies. But now, of course, then the Europeans have to respond and like, and the South Koreans have to do the same thing. And all of the, you know, all of these regions are in fact putting up big, big amounts of money, particularly for semiconductors. But I would say that that it's not a race to the bottom and that, and we have not seen that. Yes, there have been European companies that have gone to the US,

So the neo, the, the neo liberal argument says, look, this is a race to the bottom, right? Because it's not just the US that is offering these kinds of subsidies. But now, of course, then the Europeans have to respond and like, and the South Koreans have to do the same thing. And all of the, you know, all of these regions are in fact putting up big, big amounts of money, particularly for semiconductors. But I would say that that it's not a race to the bottom and that, and we have not seen that. Yes, there have been European companies that have gone to the US,

but there are us companies that are still looking to invest in Europe, right? We look at Intel, for example, you know, Intel is a little bit stalled in some of their efforts, but nonetheless, uh they'll get on track, right. They, you know, to do a lot of a lot more research and development and actually fabrication in in Europe. And they, and they will avail themselves of European money basically. So, so I think

but there are us companies that are still looking to invest in Europe, right? We look at Intel, for example, you know, Intel is a little bit stalled in some of their efforts, but nonetheless, uh they'll get on track, right. They, you know, to do a lot of a lot more research and development and actually fabrication in in Europe. And they, and they will avail themselves of European money basically. So, so I think

that will happen. Um now

that will happen. Um now

there, there, there's no doubt that that as we see this reconfiguration, this restructuring around strategic supply chains, that more and more innovation and more and more investment is concentrating in these different nodes that otherwise may have been spread out a little bit more, you know, in a much more open trading, less geo economic paradigm.

there, there, there's no doubt that that as we see this reconfiguration, this restructuring around strategic supply chains, that more and more innovation and more and more investment is concentrating in these different nodes that otherwise may have been spread out a little bit more, you know, in a much more open trading, less geo economic paradigm.

Um So in that respect,

Um So in that respect,

um certainly developing countries that may have had, you know, may have been playing a bigger role in global value chains, they're losing out that, that, that clearly is happening. Um So the, so the renaissance, if you will uh the the technology and the innovation renaissance, which is happening because of the public, private partnerships that are being so well funded in these nodes, right? That's happening.

um certainly developing countries that may have had, you know, may have been playing a bigger role in global value chains, they're losing out that, that, that clearly is happening. Um So the, so the renaissance, if you will uh the the technology and the innovation renaissance, which is happening because of the public, private partnerships that are being so well funded in these nodes, right? That's happening.

And yes, there is going to be there is going to be economic opportunity in those places, but it's going to be a lot more uneven,

And yes, there is going to be there is going to be economic opportunity in those places, but it's going to be a lot more uneven,

right? But is there alignment full alignment between the Americans and the Europeans on how to deal with China? No,

right? But is there alignment full alignment between the Americans and the Europeans on how to deal with China? No,

no.

no.

Has the alignment improved in the last 3.5 years under Biden? I I

Has the alignment improved in the last 3.5 years under Biden? I I

think uh I think you have to go country by country in Europe, right? The Germans are really struggling, right? They're really divided because they've had just a core, small group of companies that have invested very, very heavily right in, in, in China. Right. Siemens and the auto, the big automotive companies,

think uh I think you have to go country by country in Europe, right? The Germans are really struggling, right? They're really divided because they've had just a core, small group of companies that have invested very, very heavily right in, in, in China. Right. Siemens and the auto, the big automotive companies,

their, their global sales come from China. Yeah, that's right. BMW s of

their, their global sales come from China. Yeah, that's right. BMW s of

the world. Exactly. Exactly. They bet big right. Under Chancellor Merkel. Um, they really bet big on China and, and, but then if you look at sort of the middle tier companies in Germany and you look at, you know, uh the labor, you know, the the labor pool there, um they want,

the world. Exactly. Exactly. They bet big right. Under Chancellor Merkel. Um, they really bet big on China and, and, but then if you look at sort of the middle tier companies in Germany and you look at, you know, uh the labor, you know, the the labor pool there, um they want,

they want jobs to come back to Germany, they want more investment to, you know, to, to sort of gravitate in the tech sector uh to, to Germany. So that Germany is one example. Um So again, I think I mentioned early on there is no way to analyze this whole situation through a zero sum uh you know, kind of lens, right? It's, there's just, there's so many different overlapping interests, some peop some lose some win.

they want jobs to come back to Germany, they want more investment to, you know, to, to sort of gravitate in the tech sector uh to, to Germany. So that Germany is one example. Um So again, I think I mentioned early on there is no way to analyze this whole situation through a zero sum uh you know, kind of lens, right? It's, there's just, there's so many different overlapping interests, some peop some lose some win.

Uh There's a great deal of, of uncertainty, but I think in general, I think in general the transatlantic um relationship, of course, we have some elections coming up here, right? Just a few. Just yes. So we have a big presidential election coming up. Uh You know, III I would say this uh I think uh uh a Trump two term I think would, would put much more strain on the transatlantic relationship. Of course, because of his tariff plans and so forth

Uh There's a great deal of, of uncertainty, but I think in general, I think in general the transatlantic um relationship, of course, we have some elections coming up here, right? Just a few. Just yes. So we have a big presidential election coming up. Uh You know, III I would say this uh I think uh uh a Trump two term I think would, would put much more strain on the transatlantic relationship. Of course, because of his tariff plans and so forth

than a Harris uh administration. But having said that there still are too many uh uh mutual interests across the Atlantic. Uh you know, uh interests around A I standards, basically rule frameworks around tech interests to, to cooper on supply chain resilience around critical minerals, rare earths uh

than a Harris uh administration. But having said that there still are too many uh uh mutual interests across the Atlantic. Uh you know, uh interests around A I standards, basically rule frameworks around tech interests to, to cooper on supply chain resilience around critical minerals, rare earths uh

uh incentives. I think uh I mentioned this a around semiconductors. Uh I think there are incentives uh around, you know, things like lithium batteries and, and electric vehicles and so forth. So I think there are, there still are quite a few incentives and then of course, there's the NATO angle and the security angle when it comes to Ukraine.

uh incentives. I think uh I mentioned this a around semiconductors. Uh I think there are incentives uh around, you know, things like lithium batteries and, and electric vehicles and so forth. So I think there are, there still are quite a few incentives and then of course, there's the NATO angle and the security angle when it comes to Ukraine.

Um So II, I think, I think the transatlantic relationship will, will be just fine.

Um So II, I think, I think the transatlantic relationship will, will be just fine.

I want to stay on that for a second because you made a, you know, great premise, which is that we should look at country by country. The European Union is not a single entity. There are countries, especially on the eastern side of the European Union, which are very friendly to China and then there are others who are not. Um So is there a risk that eu itself could fracture as a result of the US China conflict?

I want to stay on that for a second because you made a, you know, great premise, which is that we should look at country by country. The European Union is not a single entity. There are countries, especially on the eastern side of the European Union, which are very friendly to China and then there are others who are not. Um So is there a risk that eu itself could fracture as a result of the US China conflict?

Um There's always a risk that, you know, when you have a uh a union or certainly a customs union that big uh when, when you have a block of countries that big. Yes. Uh There's always a risk of that. And, and I totally agree. I mean, I think, you know, if you look at the eastern eastern European countries, they're very eager to absorb investments, you know, from China, they're very eager for infrastructure. Um uh But at the end of the day,

Um There's always a risk that, you know, when you have a uh a union or certainly a customs union that big uh when, when you have a block of countries that big. Yes. Uh There's always a risk of that. And, and I totally agree. I mean, I think, you know, if you look at the eastern eastern European countries, they're very eager to absorb investments, you know, from China, they're very eager for infrastructure. Um uh But at the end of the day,

I think there is a tipping point uh even in eastern Europe, when uh the view becomes that, that any outside power, China or anybody else, in this case, of course, it's China is overstepping its bounds when it comes to trying to exert influence. And we've seen that we've seen that over the last decade, particularly during the COVID crisis, right. So uh even that uh I think we, you know, we will, we will, we will continue to see,

I think there is a tipping point uh even in eastern Europe, when uh the view becomes that, that any outside power, China or anybody else, in this case, of course, it's China is overstepping its bounds when it comes to trying to exert influence. And we've seen that we've seen that over the last decade, particularly during the COVID crisis, right. So uh even that uh I think we, you know, we will, we will, we will continue to see,

you know, if I had to make a prediction of, you know, what the global economy is going to look like from a supply chain standpoint over the next decade, I would say that

you know, if I had to make a prediction of, you know, what the global economy is going to look like from a supply chain standpoint over the next decade, I would say that

what is deemed desking today uh with from strategic Chinese or single source kind of Chinese supply chains that DERIS is going to slowly evolve into decoupling

what is deemed desking today uh with from strategic Chinese or single source kind of Chinese supply chains that DERIS is going to slowly evolve into decoupling

essentially. And we'll just see those supply chains basically coalesce,

essentially. And we'll just see those supply chains basically coalesce,

you know, under different in different regions.

you know, under different in different regions.

I'm curious to see what happens to the EV supply chain. If Chinese companies invest in Hungary and Poland and Turkey and starts making B DS and other cars, they should be credible within Europe under eu rules of origin

I'm curious to see what happens to the EV supply chain. If Chinese companies invest in Hungary and Poland and Turkey and starts making B DS and other cars, they should be credible within Europe under eu rules of origin

and they should be classified as made in Europe cars. But clearly in the context of U MC, the Americans have said they are not going to accept that, that even if we already make something in Mexico, it will be considered a made in China car. So I can sort of think about this alignment that if you are more open to investment in the EU than the US is within the U MC A.

and they should be classified as made in Europe cars. But clearly in the context of U MC, the Americans have said they are not going to accept that, that even if we already make something in Mexico, it will be considered a made in China car. So I can sort of think about this alignment that if you are more open to investment in the EU than the US is within the U MC A.

Uh how do these things?

Uh how do these things?

Yeah, I mean, look there uh this is just playing out. Now, now, one thing I would say about um sort of the, the, the the the movement of, of, in this case, Chinese electric vehicle assembly, uh manufacturing, you know, out of China into, into the European Union.

Yeah, I mean, look there uh this is just playing out. Now, now, one thing I would say about um sort of the, the, the the the movement of, of, in this case, Chinese electric vehicle assembly, uh manufacturing, you know, out of China into, into the European Union.

Um what is still going to be a very contentious issue, there is going to be the fact that they may be assembling the cars there. But if all the parts and components are also still coming from China, then I think we're going to run into issues around local content requirements and we're already hearing about that, right? So, you know, if you look at uh if you look at a typical uh free trade agreement that in that involves automotive, um they're usually pretty high

Um what is still going to be a very contentious issue, there is going to be the fact that they may be assembling the cars there. But if all the parts and components are also still coming from China, then I think we're going to run into issues around local content requirements and we're already hearing about that, right? So, you know, if you look at uh if you look at a typical uh free trade agreement that in that involves automotive, um they're usually pretty high

local content requirements or even local labor, uh you know, the US MC A which is the, you know, us, Canada Mexico replacement of what was used with NAFTA. Um I mean, they've, they've, they've got in very, very high, um you know, local origin content, uh requirements that even include, you know, you know, proving that uh that, that labor was paid a certain wage. Right. So I, I think