'Deep Financial Crisis' In U.S. Could Make China The World's Largest Economy | Shaun Rein
Summary
Chinese Tech/AI: Guest is bullish on Chinese semiconductors and AI, citing policy-driven lending, strong domestic capabilities, and rising demand from the global south.
EV Adoption: China’s NEV penetration is surging, with companies like BYD, NIO, and Xiaomi positioned as winners while legacy automakers lag.
Renewables Buffer: Massive solar and wind buildout enhances energy security, reducing China’s vulnerability to Middle East oil shocks and cushioning consumer fuel prices.
China Equities: Institutional investors are rotating into Hong Kong and mainland Chinese markets, with improving liquidity and a constructive 1–2 year outlook.
Geopolitical Dynamics: China pursues non-intervention while diversifying energy partners; Iran/Russia ties are framed as survival-driven rather than alliance-based.
Export and Currency Shift: China has reduced U.S. export dependence, increased ASEAN trade share, and expanded RMB usage in cross-border commerce to mitigate dollar risk.
Macro Risks: A potential U.S. financial crisis could accelerate China’s relative ascent, shaping allocation toward Chinese assets as a hedge.
Transcript
There's a feeling in China that Trump is the best thing ever to happen to China because he's pissed off the Canadians. I'm actually really worried about a deep financial crisis in the United States, depression like worse in 2008 when you have 3940 trillion US of debt. China started to realize that the rhetoric from Trump and the rhetoric emerging from Western Europe made them realize they had to become more independent. China is an important trading partner of Iran with some reports indicating that 70% of Iran's oil exports go to China. So, how will China respond uh to ongoing conflict in the Middle East? What is China's next move? Joining us to discuss China's economy um and trade is Shawn Rain, founding manager uh founder and managing director of the China Market Research Group. Welcome to the show, Sean. Welcome back. Good to see you again. >> Happy Chinese New Year, David. I hope the god of money sends you lots of good wealth and good prosperity in 2026. It's been a slightly tough year as you said for China. Starting off, you had a lot of their oil has been disappeared essentially by the Americans. So, first by taking Maduro and Venezuela, China lost 2 to 3% of its oil imports, which is where they get from Venezuela. Now, with Japan, it's a bigger hit. uh in Iran, you know, 20% of China's oil needs are imported from Iran through the Straits of Hormos. But here's the thing, David, there's definitely a hit on on the consumer here. Definitely hit on manufacturing here because China needs imports of oil. But China over the last 10-15 years has been trying to lower its dependence and improve its energy security by not buying international oil because they've been investing billions and billions of dollars into solar panel and wind. So for example uh China increased about 380 uh gigahertz of solar technology last year which is more than the rest of the world combined. China also added for the 15th straight year in a row more solar power uh in the form of wind turbines than the rest of the world with about 280 gigahertz. So yes, China is going to be hit by the devastation and the tension in the Middle East, but it is going to be hit a lot less than the rest of the world. And one final point on this, David, is that in the United States especially, gas prices move very quickly at the pumps. So they went up 10 20% maybe even more as the price of oil crossed $100 US a barrel. China tends to raise prices one to two weeks slower than the rest of the world and it's more incremental. So they only increase prices by 3% the first week of the tension and then they only increase it again several percentage points. So while eventually prices will hit consumers, it's not hitting consumers at the pump as fast here as it is in the rest of the world because if Chinese government forces the stateowned enterprises to absorb the profit hit in the short term and yeah that leads my next question which is let's talk about the everyday person in China before we get into more of the details between of the trade details between Iran and China. How is the a average Joe in China reacting to this Iranian conflict? because on the one hand like you said maybe gas prices haven't gone up as much in China as they have in the west and on the other hand a big portion of Chinese major cities are now dominated by EVs right so h how is the average person reacting >> so that's a great point so the first thing is the price at the pump haven't gone up as much second over 50% of new auto sales in 2025 were NEVs that's why investors should be looking at NEO just posted their first profitable quarter of all time uh companies like BYD or Xiaomi which have been hit hard uh by weak sales over the last couple months, but we actually think especially in the case of BYD that sales are going to go up because they just launched some new models and last Friday they just launched new battery technology where they can charge a full car up in about 10 minutes. So I think the tension in the Middle East is going to push the Chinese consumer to adopt NEVs even more. So, it's going to be even worse for the Toyotas, the Nissan, the General Motors of the world who've been really slow at adopting NEV technology. In China, it's really, you know, cars are kind of seen as mobile phones on wheels. They're not really seen as great German or American fine engineering. And so, Chinese are saying with the weak economy, with low income, especially now with the Middle East, let's just buy more uh NEVs. Now, when it comes to politics, David, it's slightly different. They're actually more optimistic about what's happening in the Middle East. There's a feeling in China that Trump is the best thing ever to happen to China because he's pissed off the Canadians. He's pissed off the the British, the French, the Germans, everybody in the world has gotten angry at Trump. So in the last three months since we last spoke, you've seen Ker Starmer, Mark Carney, McCron, uh the Mertz from Germany, they've all come almost like beggars in a way to China and saying, you know, we've been bad to you for the last 10 years. We've been part and parcel of Biden and Trump's mechanizations to contain China's growth, but now we realize we're sorry. We need to have good economic relations with you. So even with the Middle East, the Chinese are saying, you know what, politically things are looking better now than any time since 2015. So there's I don't want to say that there's a hockey stick boom of optimism, but there's a slow increase of animal scarce and happiness in the Chinese uh consumer population because Trump is clearly hurting the United States right now. >> Okay. Well, let's jump back to geopolitics for a minute. How do you think Iran is asking China if they have already to intervene in the war? Uh given that yes, 20% of China's oil is coming from Iran, but 70% or more of Iran's oil is going to China. So Iran needs China more than China needs Iran. So is Iran asking China for help? And if so, in what form? >> So uh I think when it comes to China, they still take that sovereignty issue and non-inference really importantly and I think that's key. So people in the United States have criticized China because they didn't come military aid to Venezuela. They didn't come with military aid to Iran. I think what China wants to do right now is just keep on the economic trade with Iran. They've been a good actor when it comes to militancy by not selling dual use purpose items and raw weapons to Iran or coming in to invade or to help support in defense systems. So I think what they're Chinese are going to do is say look we would just want to buy oil. Um and you've already seen that Iran has said that Chinese ships can go through the straits of Hormos unmolested by their weapons. So I don't think you're going to see that China wants to ratchet up its military defense spending or support of Iran just like they didn't do with the Venezuelans. And here's the thing I think I want to cut through some of the misinformation comes uh in the US. two parts of this with that. One is I don't think Iran and China are as close as a lot of Americans think. I don't think there's this access of power that the Bush administration first raised up. I think China basically gets closer to Venezuela, Iran, and especially Russia as a matter of survival. When you wake up and you see the United States putting export restrictions, export controls, when you see Mark Route, the secretary general of NATO, saying that China is obviously going to force Russia to bomb NATO countries and China is their biggest threat. And when you see people like Lindsey Graham saying all of the support in Ukraine or support in Iran is aimed at deterring China. China says we don't have friends. So they're being forced to get closer to Iran, forced to get closer to Russia, not out of an access of power, but out of a matter of survivability. When you look at it, David, China's leadership over the last 40 years, none of them sent their kids or grandkids to Russia or the Soviet Union to study. They all went to the United States. You know, Dong Xiaoing's grandkids went to Duke. Hu Yang Bong's grandkids went to Yale. Xiinping's daughter went to Harvard. This is a country that loves the United States. David, >> before we continue with the video, I'd like to bring to your attention something that's perhaps even more valuable and important than your investment portfolio. And that's your personal data and your privacy. Now, your personal information is more accessible than you may think, and that's where today's sponsor, Delete Me, comes in. 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Well, speaking of uh this viewpoint that Iran matters a lot for China, here's an article from the diplomat and I'll just read to you this paragraph. It's titled the decapitation of Iran. What tan's chaos means for China. Let's evaluate this particular paragraph together. Sean, for Beijing, this is a catastrophic geo uh geoeconomic earthquake. China's entire Middle Eastern architecture has just suffered a fatal blow. As the shock waves radiate from Tyrron, Beijing faces the immediate fracturing of its energy security, the collapse of its defense exports, and the rupture of its belt and road initiative. Can you just evaluate that statement? >> Yeah, I think that's exaggeration from the diplomat, which I don't typically take too seriously as a magazine um for really understanding China. So obviously Iran hits the energy security as we've talked about. It obviously hits some belted road, but actually China's doing a lot more business with Saudi Arabia right now uh in nono related fields. When you go to Saudi Arabia, I was just there. You see huge Huawei, Alibaba signs and investments all over the place. You're actually seeing it all over the Middle East and Africa. Um, in the last few months, you know, I've been all over the or I've been all over Africa and you see that China is moving clo quickly with tech investments, acquisitions of mines like chrome ore in South Africa, you know, copper in the DNC. So, I think the diplomat is right to say that there's some tension and that there's issues, but I think they're exaggerating the real hit to China. Um, China's focused now more on increasing its energy independence by wrapping up um, nuclear, solar, and wind turbines. >> And, uh, this partnership with Saudi Arabia you're talking about, this falls into the larger umbrella of China diversifying uh, its business ties away from just one source to many places around the world uh, which you spoke about earlier in the interview. Tell us about this grander diversification effort that started years ago. What's China's grand vision here? >> Well, I think you know China was really trying to get close to the hip of the United States and I remember when Obama won the presidency, there was this huge euphoria among succeeded leadership in China. They thought how we now have a man who is not a wararmonger, somebody who's not white, who might be willing to do more business deals and more political deals with yellow people. And so they were really happy when Obama came up, but they found that he wasn't warm enough. And so by the end of eight years, they were a little disappointed. They didn't think he was evil, but they had hoped that China would get closer to the United States at the time. So when Trump emerged in 2016 and launched the trade war which was remember not was about repres represed to emerge under the lecton and talking points of Joe Biden. It was more about fair access to market which I actually agreed with. Um, but here's the thing, David. In 2016, China started to realize that the rhetoric from Trump and the rhetoric emerging from Western Europe made them realize they had to become more independent. So they spent hundreds of billions of dollars uh over the last decade focused not just on um energy independence which we've talked about but they also looked at technology which is why China has spent a lot on indigenous innovation and semiconductors and AI which is why we're very bullish on the Chinese um semiconductor companies. And this is why the Chinese aren't buying Nvidia's H200 chips because they don't need it. They already have great chips from Huawei and Manis and some of these other Chinese companies. But also third, which people don't realize, is China went um independent on food security. So now instead of needing to buy as much beef, as much blueberries from Australia or Brazil, they're there have huge cattle farms in Shandong province and coffee and fruits in Eunan province. So across the board, David, China is saying we're getting a cold war 2.0. We need to focus on independence for literally every single sector. Which is why as an investor, I'm bullish on Chinese companies, less um optimistic on the ability for foreign companies to actually sell to Chinese because the Chinese are not going to buy the beef or the blueberries like they might have 10 years ago because it's all now being grown or raised in China. >> Speaking of oil sources, is uh China still the largest buyer of Russian oil? And if so, how do you think the uh flow of Russian oil is going to change now that Iran is cut off as a supplier? >> So, China is probably the biggest buyer of Russian oil because they have ignored uh the sanctions from Trump and they're willing to buy Russian oil. But I think David, what's more interesting is what's happening with India, right? India was the largest buyer of Russian oil 6 months ago. You know, India, I think, actually has a closer friendship with Russia over 50 years than the Chinese have. And then all of a sudden, the Americans put, you know, 48% 50% tariff on Russian imports, uh, sorry, uh, Indian imports. They've also really pressed Modi. And so Modi gave in and backed down and said, "Fine, we're not going to buy any more Russian oil." And then now they've gotten a 30-day um exemption and they're able to buy Russian oil again but the Russians to their credit are selling but they're angry at India. So they're actually selling it at a global premium and there's nothing that India can do. I think Modi is showing himself to be an extremely weak power if he wants India to be a major superpower which I think it should and will come in the next problem with showing himself a vassel to the United States. He's not a close friend with the Russians who've been close to them for 50 years even longer actually and he's not particularly close to the Chinese. So people talk about China isolating themselves. I don't see that. I don't. I see India starting to isolate themselves from the big powers and it's Modi and I think poor political decisionm that could stop India from becoming the superpower that it should become. >> So let's look farther ahead now. China's economy to overtake the USA by 2030. This is a prediction market on Kowu. 22.5% chance. That seems a bit low. What do you think? What do you place the odds? >> Well, I think it's higher right now, but I mean, things change fast. I'm actually really worried about a deep financial crisis in the United States. Depression like worse in 2008. When you have 3940 trillion US of debt, when you have a country that has destroyed its relationships with even such a close ally as Canada. I mean, what did Canada ever do to the United States except for being a best friend? when you have a person, and I don't say this to joke, I don't say this to be mean because I am not anti-Trump historically, but I think he's gone mentally ill over the last six months. You know, I think dementia has started to overtake some of his thinking processes. So, he's not thinking clearly um and smartly or pragmatically about international relations. So when you have debt, when you have angering of allies, and you have a president who's not thinking clearly, that's when you get the situation that could be devastating for the American economy. I'm quite concerned what you're seeing in the private credit markets. I'm quite concerned what you're seeing in the labor markets that if there is a drop of 10 20% in the equity markets, I'm not sure that we have the leadership or the ability to get out of it unscathed. So, I'm really concerned in 2026, 2027 about a deep financial crisis. If that happens, then yes, I could see China um emerging as the largest economy over the next 5 to 10 years. Um but that's more if there's not because of China's growth up, but more because of an implosion economically and politically in the United States. There's things aren't right in DC right now. Um the it just doesn't make any sense about some of the actions that Trump's doing. I don't think Trump in 2016 would have gone after Iran like he did in 2026. There's something wrong with him and there's something wrong with his advisers around him who are more like psychopants than long-term thinking. I mean, you've seen some of the heads of the military in that region resigned or fired a week before the um acts of aggression by the Americans. There's clearly something not right. It It doesn't smell right in in Denmark, America. >> Yeah. >> King of Denmark. >> Yeah. The >> trying to do some Shakespeare illusion. >> Okay. All right. >> Very well. It's an early morning in Shanghai. It's 6 a.m. my time. And I believe >> I'm jetlagged from Africa. I just got back. >> You're still you're still lucid at the 6 a.m. We appreciate that. But what but going back to Chinese economy? Okay. So, great depression in first of all, if the US economy falls into a great depression or some sort of economic recession, maybe not even a depression, how does China's economy react? Is there a direct impact? >> China will hurt. >> Obviously, China will hurt, but I think they're better able to handle um a depression or recession in the United States, you know? So, some numbers, right? In 2017, uh, 14.5% of China's exports went to the United States. That number is down to only around 11% now. Again, because China's been derisking its export supply chain, they now export 18% to Southeast Asia. That's one. Second, China is making major moves the R&D to become a reserve currency. Now a lot of people joke about it and say the R&B is not convertible but right now about 40% of crossber trade with China is actually conducted in the R&B. Um so a lot of countries uh to offset the risk of a plummeting US dollar are willing to put R&B in their reserves and a lot of companies are willing to do the same thing. Um so third and I think this is important since this is more of an investing show. Um I have been talking with mutual funds and hedge funds in the last 6 to9 months. They missed out on the major boom of the equity rise in 2024. They missed out largely on 2025. Some of the biggies are saying, you know what, with Trump and the geopolitical tension there, maybe it's time to get exposure to the Hong Kong and the Chinese equity markets again. Um, and so I was actually talking with an investment banker from Hong Kong recently who told me that his commissions from his bank have doubled in the last 3 months in Hong Kong over the previous years because so many international institutional investors are moving out of Japan, moving out of Korea, moving out of the United States and going back into China. So, if there's a depression in the United States, obviously China is going to be hit hard, but they're going to be hit less hard than the rest of the world because of their de-risking strategy and the internationalization of the R&B. I'm actually quite optimistic for the Chinese equity markets over the next 1 to twoyear periods. And speaking of sectors within the Chinese equity markets, uh Reuters is reporting uh that Chinese state banks are now flooding uh AI and advanced manufacturers with new loans. Take a look at this headline. Uh Chinese banks boost loans to tech sector as Beijing ramps up AI push. Uh Chinese lenders plan to steer more money toward technology and innovation oriented firms. The credit allocation shift toward tech is well underway. Uh, how do uh recent developments, especially this headline, change your view on Chinese tech companies, especially semiconductors? >> Well, I've been bullish, as you read in my book, The Split, um, which I wrote a couple years ago. I said that investors should buy Chinese semiconductor and AI companies, and I was right. Um, they're booming right now. There's a lot of optimism in the space. And I think importantly, David, there's optimism because it's not just the Chinese market that they're selling into. As I said, when I was in Saudi Arabia, I saw Alibaba and Huawei signs everywhere. You go into Cape Town, you go into Jakarta, all these I've been into recently. You know, in the airports, it's all Huawei signs. Now, the reason is because the global south, I prefer to call it the global majority, is worried about getting sanctioned too by the Americans. And so they don't want to be technological vassels to America where they're forced to buy Nvidia chips, where they're forced to use Claude or Chat GPT from OpenAI. They've seen what Biden and Trump have both done to China when it comes to technology containment. And so they're saying, you know what, for the betterment of our countries, we also need to buy Chinese technology. And that's why I think these Chinese technology players are going to continue to grow over the next 1020 years. I'll give an example. Malaysia uh want spent billions of dollars. I think about $5 billion. They wanted to be a major data house center um for AI. In the last week of Biden's administration or regime, he banned the export of high-end Nvidia chips to Malaysia, putting a kebab in Malaysia's long-term plans, dreams about becoming a data center for the world and AI. So, Malaysia got screwed. So, they immediately announced they were going to buy Huawei chips. And I think, David, America's bullying and oppression of the global majority is going to come back to haunt them. is shooting themselves in the foot because now all of these other countries and I think including Saudi Arabia and the Middle East are going to say we need Chinese chips. We need Chinese AI especially the AI because it's open source and free. So the right is AI and semiconductor sector. >> Okay. Um, finally before we go, I want you to please address these concerns coming out of uh the blogersphere about Taiwan now being more of a risk or at more at risk after the Iranian um attacks or attack on Iran rather. Does Iran war make a China attack on Taiwan more likely? This is from Asia Times. Uh Time magazine has a different spin on it. Uh but I'll just read you this paragraph in time. Will she be tempted to take advantage of US potentially exhausting smart munitions and attack Taiwan even the PLA is not fully ready? Ask Professor Steve Tang, director of the SAS China Institute at the University of London. Possible, he says. What's your view on this? >> So David, for 20 years, every 6 to 12 months, I make a lot of money because hedge funds hire me for a call to ask, is China about to invade? Um, so this is something that we hear all the time. You know, at the height of co China was going to invade Taiwan because they needed to distract the Chinese population from COVID restrictions and from the weak economy. Now, here's my take on it. In the short term, uh, no, because seven of the nine members of the Central Military Commission have been arrested or detained, publicly investigated for corruption or something else. We don't know what the full allegations are. So, the entire leadership um in the military right now is not ready for a land invasion of Taiwan. That's number one. Number two, you know, as you've seen, America, even though we have America has all the firepower, we keep losing. We lost to the Taliban. You know, I wouldn't say that we have a win in Iran, even though America and Trump is saying that. We still have a closed straight promotes. So, it's a lot harder to invade in an island and control it than people think. And I think the Chinese are smart. They don't want to do that. Third, the Chinese are not wararmongers. If they were going to invade, it would have been smart to invade literally yesterday, right? Because the United States is spending all of its focus on the Middle East. They've removed the THAAD missiles from South Korea and they're moving it to the Middle East. So, that area doesn't have the THAD missile isles anymore. China's not going to do that. They are not militant. They view the Taiwanese as cousins. I think you and I have talked about it. China wants to go slowly. They definitely want to reunify. That's a red line under Chinese government policy, but they want to do it like they did with Hong Kong. They don't want to have death. They don't want to have destruction. Um, China, I think, respects life a lot more than the United States does, frankly. You know, America can bomb the Ayatollah and they say 160 school girls were killed. That's just collateral damage. Trump doesn't even apologize. I don't think Xiinping wants to kill Taiwanese. What you've seen importantly is in the last few months the vice chairman of the Guandong or the KMT, the opposition party in Taiwan has visited China, been treated like a hero. You and I have talked about this in past. President Ma, the former president of Taiwan who's from the Guandong, he has actually visited China and met with the president Xi and treated like a hero. And the new chairwoman of the KMT has said she would like to come to China soon and meet with she. So, I think you're seeing the long-term planning of wanting to have peaceful um better relations and integration if the KMT win in the next presidential election. And I think you just have the realistic day-to-day realities that the leadership of China's military is in disarray with all of the corruption or whatever the issues were that took out the Central Military Commission and several ministers of defense in a row. I don't think that there's going to be action in the next three to six months by any means, no matter how wrapped up uh Trump gets in the Middle East. I think Xiinping is going to say sit, do nothing, and win. >> Okay. Excellent. Thank you very much for your thoughts, John. Tell us where we can find your work and follow you. >> Thanks so much for having me, David. Like always, I'm available on LinkedIn and Twitter, but the best thing to do is to read my book, The Split: Finding the Opportunities in China in the New World Order. Uh it came out a year ago, but if you look at the mapping, it said exactly right where to invest. So have a great day everyone. Thank you. >> All right. Thank you very much. And uh we'll put the links down below. So make sure to follow Sean there. Thank you again, Sean. We'll speak next time and thank you for watching. Don't forget to like and subscribe.
'Deep Financial Crisis' In U.S. Could Make China The World's Largest Economy | Shaun Rein
Summary
Transcript
There's a feeling in China that Trump is the best thing ever to happen to China because he's pissed off the Canadians. I'm actually really worried about a deep financial crisis in the United States, depression like worse in 2008 when you have 3940 trillion US of debt. China started to realize that the rhetoric from Trump and the rhetoric emerging from Western Europe made them realize they had to become more independent. China is an important trading partner of Iran with some reports indicating that 70% of Iran's oil exports go to China. So, how will China respond uh to ongoing conflict in the Middle East? What is China's next move? Joining us to discuss China's economy um and trade is Shawn Rain, founding manager uh founder and managing director of the China Market Research Group. Welcome to the show, Sean. Welcome back. Good to see you again. >> Happy Chinese New Year, David. I hope the god of money sends you lots of good wealth and good prosperity in 2026. It's been a slightly tough year as you said for China. Starting off, you had a lot of their oil has been disappeared essentially by the Americans. So, first by taking Maduro and Venezuela, China lost 2 to 3% of its oil imports, which is where they get from Venezuela. Now, with Japan, it's a bigger hit. uh in Iran, you know, 20% of China's oil needs are imported from Iran through the Straits of Hormos. But here's the thing, David, there's definitely a hit on on the consumer here. Definitely hit on manufacturing here because China needs imports of oil. But China over the last 10-15 years has been trying to lower its dependence and improve its energy security by not buying international oil because they've been investing billions and billions of dollars into solar panel and wind. So for example uh China increased about 380 uh gigahertz of solar technology last year which is more than the rest of the world combined. China also added for the 15th straight year in a row more solar power uh in the form of wind turbines than the rest of the world with about 280 gigahertz. So yes, China is going to be hit by the devastation and the tension in the Middle East, but it is going to be hit a lot less than the rest of the world. And one final point on this, David, is that in the United States especially, gas prices move very quickly at the pumps. So they went up 10 20% maybe even more as the price of oil crossed $100 US a barrel. China tends to raise prices one to two weeks slower than the rest of the world and it's more incremental. So they only increase prices by 3% the first week of the tension and then they only increase it again several percentage points. So while eventually prices will hit consumers, it's not hitting consumers at the pump as fast here as it is in the rest of the world because if Chinese government forces the stateowned enterprises to absorb the profit hit in the short term and yeah that leads my next question which is let's talk about the everyday person in China before we get into more of the details between of the trade details between Iran and China. How is the a average Joe in China reacting to this Iranian conflict? because on the one hand like you said maybe gas prices haven't gone up as much in China as they have in the west and on the other hand a big portion of Chinese major cities are now dominated by EVs right so h how is the average person reacting >> so that's a great point so the first thing is the price at the pump haven't gone up as much second over 50% of new auto sales in 2025 were NEVs that's why investors should be looking at NEO just posted their first profitable quarter of all time uh companies like BYD or Xiaomi which have been hit hard uh by weak sales over the last couple months, but we actually think especially in the case of BYD that sales are going to go up because they just launched some new models and last Friday they just launched new battery technology where they can charge a full car up in about 10 minutes. So I think the tension in the Middle East is going to push the Chinese consumer to adopt NEVs even more. So, it's going to be even worse for the Toyotas, the Nissan, the General Motors of the world who've been really slow at adopting NEV technology. In China, it's really, you know, cars are kind of seen as mobile phones on wheels. They're not really seen as great German or American fine engineering. And so, Chinese are saying with the weak economy, with low income, especially now with the Middle East, let's just buy more uh NEVs. Now, when it comes to politics, David, it's slightly different. They're actually more optimistic about what's happening in the Middle East. There's a feeling in China that Trump is the best thing ever to happen to China because he's pissed off the Canadians. He's pissed off the the British, the French, the Germans, everybody in the world has gotten angry at Trump. So in the last three months since we last spoke, you've seen Ker Starmer, Mark Carney, McCron, uh the Mertz from Germany, they've all come almost like beggars in a way to China and saying, you know, we've been bad to you for the last 10 years. We've been part and parcel of Biden and Trump's mechanizations to contain China's growth, but now we realize we're sorry. We need to have good economic relations with you. So even with the Middle East, the Chinese are saying, you know what, politically things are looking better now than any time since 2015. So there's I don't want to say that there's a hockey stick boom of optimism, but there's a slow increase of animal scarce and happiness in the Chinese uh consumer population because Trump is clearly hurting the United States right now. >> Okay. Well, let's jump back to geopolitics for a minute. How do you think Iran is asking China if they have already to intervene in the war? Uh given that yes, 20% of China's oil is coming from Iran, but 70% or more of Iran's oil is going to China. So Iran needs China more than China needs Iran. So is Iran asking China for help? And if so, in what form? >> So uh I think when it comes to China, they still take that sovereignty issue and non-inference really importantly and I think that's key. So people in the United States have criticized China because they didn't come military aid to Venezuela. They didn't come with military aid to Iran. I think what China wants to do right now is just keep on the economic trade with Iran. They've been a good actor when it comes to militancy by not selling dual use purpose items and raw weapons to Iran or coming in to invade or to help support in defense systems. So I think what they're Chinese are going to do is say look we would just want to buy oil. Um and you've already seen that Iran has said that Chinese ships can go through the straits of Hormos unmolested by their weapons. So I don't think you're going to see that China wants to ratchet up its military defense spending or support of Iran just like they didn't do with the Venezuelans. And here's the thing I think I want to cut through some of the misinformation comes uh in the US. two parts of this with that. One is I don't think Iran and China are as close as a lot of Americans think. I don't think there's this access of power that the Bush administration first raised up. I think China basically gets closer to Venezuela, Iran, and especially Russia as a matter of survival. When you wake up and you see the United States putting export restrictions, export controls, when you see Mark Route, the secretary general of NATO, saying that China is obviously going to force Russia to bomb NATO countries and China is their biggest threat. And when you see people like Lindsey Graham saying all of the support in Ukraine or support in Iran is aimed at deterring China. China says we don't have friends. So they're being forced to get closer to Iran, forced to get closer to Russia, not out of an access of power, but out of a matter of survivability. When you look at it, David, China's leadership over the last 40 years, none of them sent their kids or grandkids to Russia or the Soviet Union to study. They all went to the United States. You know, Dong Xiaoing's grandkids went to Duke. Hu Yang Bong's grandkids went to Yale. Xiinping's daughter went to Harvard. This is a country that loves the United States. David, >> before we continue with the video, I'd like to bring to your attention something that's perhaps even more valuable and important than your investment portfolio. And that's your personal data and your privacy. Now, your personal information is more accessible than you may think, and that's where today's sponsor, Delete Me, comes in. 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Well, speaking of uh this viewpoint that Iran matters a lot for China, here's an article from the diplomat and I'll just read to you this paragraph. It's titled the decapitation of Iran. What tan's chaos means for China. Let's evaluate this particular paragraph together. Sean, for Beijing, this is a catastrophic geo uh geoeconomic earthquake. China's entire Middle Eastern architecture has just suffered a fatal blow. As the shock waves radiate from Tyrron, Beijing faces the immediate fracturing of its energy security, the collapse of its defense exports, and the rupture of its belt and road initiative. Can you just evaluate that statement? >> Yeah, I think that's exaggeration from the diplomat, which I don't typically take too seriously as a magazine um for really understanding China. So obviously Iran hits the energy security as we've talked about. It obviously hits some belted road, but actually China's doing a lot more business with Saudi Arabia right now uh in nono related fields. When you go to Saudi Arabia, I was just there. You see huge Huawei, Alibaba signs and investments all over the place. You're actually seeing it all over the Middle East and Africa. Um, in the last few months, you know, I've been all over the or I've been all over Africa and you see that China is moving clo quickly with tech investments, acquisitions of mines like chrome ore in South Africa, you know, copper in the DNC. So, I think the diplomat is right to say that there's some tension and that there's issues, but I think they're exaggerating the real hit to China. Um, China's focused now more on increasing its energy independence by wrapping up um, nuclear, solar, and wind turbines. >> And, uh, this partnership with Saudi Arabia you're talking about, this falls into the larger umbrella of China diversifying uh, its business ties away from just one source to many places around the world uh, which you spoke about earlier in the interview. Tell us about this grander diversification effort that started years ago. What's China's grand vision here? >> Well, I think you know China was really trying to get close to the hip of the United States and I remember when Obama won the presidency, there was this huge euphoria among succeeded leadership in China. They thought how we now have a man who is not a wararmonger, somebody who's not white, who might be willing to do more business deals and more political deals with yellow people. And so they were really happy when Obama came up, but they found that he wasn't warm enough. And so by the end of eight years, they were a little disappointed. They didn't think he was evil, but they had hoped that China would get closer to the United States at the time. So when Trump emerged in 2016 and launched the trade war which was remember not was about repres represed to emerge under the lecton and talking points of Joe Biden. It was more about fair access to market which I actually agreed with. Um, but here's the thing, David. In 2016, China started to realize that the rhetoric from Trump and the rhetoric emerging from Western Europe made them realize they had to become more independent. So they spent hundreds of billions of dollars uh over the last decade focused not just on um energy independence which we've talked about but they also looked at technology which is why China has spent a lot on indigenous innovation and semiconductors and AI which is why we're very bullish on the Chinese um semiconductor companies. And this is why the Chinese aren't buying Nvidia's H200 chips because they don't need it. They already have great chips from Huawei and Manis and some of these other Chinese companies. But also third, which people don't realize, is China went um independent on food security. So now instead of needing to buy as much beef, as much blueberries from Australia or Brazil, they're there have huge cattle farms in Shandong province and coffee and fruits in Eunan province. So across the board, David, China is saying we're getting a cold war 2.0. We need to focus on independence for literally every single sector. Which is why as an investor, I'm bullish on Chinese companies, less um optimistic on the ability for foreign companies to actually sell to Chinese because the Chinese are not going to buy the beef or the blueberries like they might have 10 years ago because it's all now being grown or raised in China. >> Speaking of oil sources, is uh China still the largest buyer of Russian oil? And if so, how do you think the uh flow of Russian oil is going to change now that Iran is cut off as a supplier? >> So, China is probably the biggest buyer of Russian oil because they have ignored uh the sanctions from Trump and they're willing to buy Russian oil. But I think David, what's more interesting is what's happening with India, right? India was the largest buyer of Russian oil 6 months ago. You know, India, I think, actually has a closer friendship with Russia over 50 years than the Chinese have. And then all of a sudden, the Americans put, you know, 48% 50% tariff on Russian imports, uh, sorry, uh, Indian imports. They've also really pressed Modi. And so Modi gave in and backed down and said, "Fine, we're not going to buy any more Russian oil." And then now they've gotten a 30-day um exemption and they're able to buy Russian oil again but the Russians to their credit are selling but they're angry at India. So they're actually selling it at a global premium and there's nothing that India can do. I think Modi is showing himself to be an extremely weak power if he wants India to be a major superpower which I think it should and will come in the next problem with showing himself a vassel to the United States. He's not a close friend with the Russians who've been close to them for 50 years even longer actually and he's not particularly close to the Chinese. So people talk about China isolating themselves. I don't see that. I don't. I see India starting to isolate themselves from the big powers and it's Modi and I think poor political decisionm that could stop India from becoming the superpower that it should become. >> So let's look farther ahead now. China's economy to overtake the USA by 2030. This is a prediction market on Kowu. 22.5% chance. That seems a bit low. What do you think? What do you place the odds? >> Well, I think it's higher right now, but I mean, things change fast. I'm actually really worried about a deep financial crisis in the United States. Depression like worse in 2008. When you have 3940 trillion US of debt, when you have a country that has destroyed its relationships with even such a close ally as Canada. I mean, what did Canada ever do to the United States except for being a best friend? when you have a person, and I don't say this to joke, I don't say this to be mean because I am not anti-Trump historically, but I think he's gone mentally ill over the last six months. You know, I think dementia has started to overtake some of his thinking processes. So, he's not thinking clearly um and smartly or pragmatically about international relations. So when you have debt, when you have angering of allies, and you have a president who's not thinking clearly, that's when you get the situation that could be devastating for the American economy. I'm quite concerned what you're seeing in the private credit markets. I'm quite concerned what you're seeing in the labor markets that if there is a drop of 10 20% in the equity markets, I'm not sure that we have the leadership or the ability to get out of it unscathed. So, I'm really concerned in 2026, 2027 about a deep financial crisis. If that happens, then yes, I could see China um emerging as the largest economy over the next 5 to 10 years. Um but that's more if there's not because of China's growth up, but more because of an implosion economically and politically in the United States. There's things aren't right in DC right now. Um the it just doesn't make any sense about some of the actions that Trump's doing. I don't think Trump in 2016 would have gone after Iran like he did in 2026. There's something wrong with him and there's something wrong with his advisers around him who are more like psychopants than long-term thinking. I mean, you've seen some of the heads of the military in that region resigned or fired a week before the um acts of aggression by the Americans. There's clearly something not right. It It doesn't smell right in in Denmark, America. >> Yeah. >> King of Denmark. >> Yeah. The >> trying to do some Shakespeare illusion. >> Okay. All right. >> Very well. It's an early morning in Shanghai. It's 6 a.m. my time. And I believe >> I'm jetlagged from Africa. I just got back. >> You're still you're still lucid at the 6 a.m. We appreciate that. But what but going back to Chinese economy? Okay. So, great depression in first of all, if the US economy falls into a great depression or some sort of economic recession, maybe not even a depression, how does China's economy react? Is there a direct impact? >> China will hurt. >> Obviously, China will hurt, but I think they're better able to handle um a depression or recession in the United States, you know? So, some numbers, right? In 2017, uh, 14.5% of China's exports went to the United States. That number is down to only around 11% now. Again, because China's been derisking its export supply chain, they now export 18% to Southeast Asia. That's one. Second, China is making major moves the R&D to become a reserve currency. Now a lot of people joke about it and say the R&B is not convertible but right now about 40% of crossber trade with China is actually conducted in the R&B. Um so a lot of countries uh to offset the risk of a plummeting US dollar are willing to put R&B in their reserves and a lot of companies are willing to do the same thing. Um so third and I think this is important since this is more of an investing show. Um I have been talking with mutual funds and hedge funds in the last 6 to9 months. They missed out on the major boom of the equity rise in 2024. They missed out largely on 2025. Some of the biggies are saying, you know what, with Trump and the geopolitical tension there, maybe it's time to get exposure to the Hong Kong and the Chinese equity markets again. Um, and so I was actually talking with an investment banker from Hong Kong recently who told me that his commissions from his bank have doubled in the last 3 months in Hong Kong over the previous years because so many international institutional investors are moving out of Japan, moving out of Korea, moving out of the United States and going back into China. So, if there's a depression in the United States, obviously China is going to be hit hard, but they're going to be hit less hard than the rest of the world because of their de-risking strategy and the internationalization of the R&B. I'm actually quite optimistic for the Chinese equity markets over the next 1 to twoyear periods. And speaking of sectors within the Chinese equity markets, uh Reuters is reporting uh that Chinese state banks are now flooding uh AI and advanced manufacturers with new loans. Take a look at this headline. Uh Chinese banks boost loans to tech sector as Beijing ramps up AI push. Uh Chinese lenders plan to steer more money toward technology and innovation oriented firms. The credit allocation shift toward tech is well underway. Uh, how do uh recent developments, especially this headline, change your view on Chinese tech companies, especially semiconductors? >> Well, I've been bullish, as you read in my book, The Split, um, which I wrote a couple years ago. I said that investors should buy Chinese semiconductor and AI companies, and I was right. Um, they're booming right now. There's a lot of optimism in the space. And I think importantly, David, there's optimism because it's not just the Chinese market that they're selling into. As I said, when I was in Saudi Arabia, I saw Alibaba and Huawei signs everywhere. You go into Cape Town, you go into Jakarta, all these I've been into recently. You know, in the airports, it's all Huawei signs. Now, the reason is because the global south, I prefer to call it the global majority, is worried about getting sanctioned too by the Americans. And so they don't want to be technological vassels to America where they're forced to buy Nvidia chips, where they're forced to use Claude or Chat GPT from OpenAI. They've seen what Biden and Trump have both done to China when it comes to technology containment. And so they're saying, you know what, for the betterment of our countries, we also need to buy Chinese technology. And that's why I think these Chinese technology players are going to continue to grow over the next 1020 years. I'll give an example. Malaysia uh want spent billions of dollars. I think about $5 billion. They wanted to be a major data house center um for AI. In the last week of Biden's administration or regime, he banned the export of high-end Nvidia chips to Malaysia, putting a kebab in Malaysia's long-term plans, dreams about becoming a data center for the world and AI. So, Malaysia got screwed. So, they immediately announced they were going to buy Huawei chips. And I think, David, America's bullying and oppression of the global majority is going to come back to haunt them. is shooting themselves in the foot because now all of these other countries and I think including Saudi Arabia and the Middle East are going to say we need Chinese chips. We need Chinese AI especially the AI because it's open source and free. So the right is AI and semiconductor sector. >> Okay. Um, finally before we go, I want you to please address these concerns coming out of uh the blogersphere about Taiwan now being more of a risk or at more at risk after the Iranian um attacks or attack on Iran rather. Does Iran war make a China attack on Taiwan more likely? This is from Asia Times. Uh Time magazine has a different spin on it. Uh but I'll just read you this paragraph in time. Will she be tempted to take advantage of US potentially exhausting smart munitions and attack Taiwan even the PLA is not fully ready? Ask Professor Steve Tang, director of the SAS China Institute at the University of London. Possible, he says. What's your view on this? >> So David, for 20 years, every 6 to 12 months, I make a lot of money because hedge funds hire me for a call to ask, is China about to invade? Um, so this is something that we hear all the time. You know, at the height of co China was going to invade Taiwan because they needed to distract the Chinese population from COVID restrictions and from the weak economy. Now, here's my take on it. In the short term, uh, no, because seven of the nine members of the Central Military Commission have been arrested or detained, publicly investigated for corruption or something else. We don't know what the full allegations are. So, the entire leadership um in the military right now is not ready for a land invasion of Taiwan. That's number one. Number two, you know, as you've seen, America, even though we have America has all the firepower, we keep losing. We lost to the Taliban. You know, I wouldn't say that we have a win in Iran, even though America and Trump is saying that. We still have a closed straight promotes. So, it's a lot harder to invade in an island and control it than people think. And I think the Chinese are smart. They don't want to do that. Third, the Chinese are not wararmongers. If they were going to invade, it would have been smart to invade literally yesterday, right? Because the United States is spending all of its focus on the Middle East. They've removed the THAAD missiles from South Korea and they're moving it to the Middle East. So, that area doesn't have the THAD missile isles anymore. China's not going to do that. They are not militant. They view the Taiwanese as cousins. I think you and I have talked about it. China wants to go slowly. They definitely want to reunify. That's a red line under Chinese government policy, but they want to do it like they did with Hong Kong. They don't want to have death. They don't want to have destruction. Um, China, I think, respects life a lot more than the United States does, frankly. You know, America can bomb the Ayatollah and they say 160 school girls were killed. That's just collateral damage. Trump doesn't even apologize. I don't think Xiinping wants to kill Taiwanese. What you've seen importantly is in the last few months the vice chairman of the Guandong or the KMT, the opposition party in Taiwan has visited China, been treated like a hero. You and I have talked about this in past. President Ma, the former president of Taiwan who's from the Guandong, he has actually visited China and met with the president Xi and treated like a hero. And the new chairwoman of the KMT has said she would like to come to China soon and meet with she. So, I think you're seeing the long-term planning of wanting to have peaceful um better relations and integration if the KMT win in the next presidential election. And I think you just have the realistic day-to-day realities that the leadership of China's military is in disarray with all of the corruption or whatever the issues were that took out the Central Military Commission and several ministers of defense in a row. I don't think that there's going to be action in the next three to six months by any means, no matter how wrapped up uh Trump gets in the Middle East. I think Xiinping is going to say sit, do nothing, and win. >> Okay. Excellent. Thank you very much for your thoughts, John. Tell us where we can find your work and follow you. >> Thanks so much for having me, David. Like always, I'm available on LinkedIn and Twitter, but the best thing to do is to read my book, The Split: Finding the Opportunities in China in the New World Order. Uh it came out a year ago, but if you look at the mapping, it said exactly right where to invest. So have a great day everyone. Thank you. >> All right. Thank you very much. And uh we'll put the links down below. So make sure to follow Sean there. Thank you again, Sean. We'll speak next time and thank you for watching. Don't forget to like and subscribe.