China's Next Alpha: Opportunities in a New Growth Era

So we're gonna do the afternoon. I do hardly need to explain that mister Kevin Rudd is on a that Stepping in with remarkable grace, I have very short notice, is some someone whose understanding of China from the inside is unmatched. I'm, of course, referring to Christopher Johnson. Chris spent two decades at the top of China's end of the CIA, the vice senior warehouse on opening China, now these China strategies for you. China China we're leading When the states are too high in guesswork. So thank you, Chris, to hear. So now every China panel for the last three years will always talk about things like semiconductors carriers, decompanying In this particular panel, we might talk some of that as well, but we'll get much more because we have real practitioners on China and in China from the inside. So China engagement, as we know, is not a theoretical question in this room. The interview has seen it. So to good wing, it is about capital decision to decide if it's a market that you can build over the last forty years, and to Diana is a structural economic that you attempt to solve every single day. And to Chris, it is a geopolitical condition that you have been managing a a So question one is for each and every one of you, Are you more engaged or are you more cautious? Towards China than you were two years ago? Or two years. It simply means that your posture and how much more attention and how much more capital and how much over your thinking has shifted in that time in which direction The one. Stockton would then Kristen, Diana, and we signed one. I would say today I'm definitely more engaged two years ago. Two years ago, think it was very difficult. In China, we always say you have to repeat the TVs. You have to read what? What sector is the government allowing you to make my need and there's not. As a captain of allocator, we are we always have to say, how do you really get exits? How do we before we even make a first investment, we said, West Ham exit. How do we exit? And in China, it's particularly reward to because government policy plays such a big role. If you are in the right sector, where they want your money, you actually can make a lot of money because the size of the economy and and the inducement from the government when they want to induce it, going to the sector. But if you're caught in the wrong sector or caught midway in the wrong wrong sector, after you invest before you get out, you could be stuck. And that happened actually to the risk of business that is primarily our business. That business went from the super hot sector where we were chugging along, producing projects, producing hotels, doing office buildings, help building up these cities. And then the government all of a sudden decided that they no longer want they no longer feel real estate as a growth plan. Why? Pillar of the GDP, even though it accounts for 27% of the GDP. And even though it and GDP, for majority of the household balance sheet. Right? So that was a total surprise to all of us practicing in China. So that actually made it a bit of a very confusing complicated, and carotid unwind in this whole sector. Would the single go by the government channeling money towards made in China in 2025, advanced manufacturing. So solar, EV, semiconductor, AI catching up. Right? So they they wanna rechannel that money, but the way they did it, quite clumsy. In a buy. But then, obviously, now you have CTC, you can see China being what we're trying to And they they have to train anything from robotic arms to to manufacturing is the most abundant data in the world. China accounts for 28 out of 61 new landline being built in China. And that's number one. Okay. That's result, how does the budget mean cheap? So is it so we're more engaged, but the way we're engaging is how do our do China adjacent? By China, it's real. Many of these are real. 70% plus of of these China, so I'm not gonna say so on and so on. So China plus one means benefit you now. Manufacturing, it's gonna be now. All the AID needs, nuclear needs is gonna come out of Japan and Korea for the manufacturing side. And then Hong Kong is actually gonna wait back. Some market is is foreign, and then Our family offices are opening in Hong Kong. So China is making it very clear Hong Kong is different than China. They're allowing a lot of investment going to China. We're Well, can I ask where you are allocating kind of later on, but not now? Please. Okay. Can I would say I'm cautiously engaged, and I I choose that language very deliberately? And because I'm not I'm not engaged cautiously And, you know, I'm a political scientist. I'm someone who's followed Chinese League politics for decades. And to me, my caution comes from the fact that we have a situation where we can no longer ignore, I think, what's happening at the apex of the Chinese political system. The reality there is that we have a toilet bureau that is three members short of what it was four years ago. Two of those, pull up your members who are gone, they're the top uniformed, military officers in the Chinese military, and that's particularly important because the we have to remember the distinction In the China in China, the military, the liberation army is the armed wing of the Chinese Communist party. Not the national military of China. And therefore, its purpose is to keep the leadership in power as we saw demonstrated that Tiananmen nineteen eighty nine. And so we need to be able to explain that. And when we look at why Xi Jinping decided to move, whatever he saw troubled him enough that he was willing to gamble. That regime security by doing something so disruptive, at least a period of time. I think that's very important. In fact, it was very interesting. I happened to just be on the ground in two days after this topmost general and supposedly a close personal friend of Xi Jinping's was removed. And I think elite opinion was very split. When I was there, there was one camp that was arguing you know, this is just the latest sort of manifestation of his political acumen and his sort of calculating political Right? Whereas I think in other groups, sort of said, maybe this is a reflection of someone who is aging someone who is isolated, very isolated. Therefore, let us pair in a way to get the better. I think that really matters. When you have a situation where he is considering a four to five year term next year. So I think that's important. But, you know, that all sounds a bit pessimistic. On the engagement side, to me, it's mostly the economic area where I think we've seen some signs that some things that have been really troubling the economy in recent years are beginning to look a bit better. So we see deflation it seems, sort of bottoming out. In the first quarter. I think, yes, the property market remains a serious problem. But I think because of that, investors and individuals are increasingly realizing they've got to look elsewhere. To to generate return. And so as you then turn to the capital markets, you know, to some degree, things like that. That's a transition. Is very much in in process, but it will be an important one. And, you know, that all looked pretty promising. Obviously, the Iran war is a threat to that in in some ways, and I think she's doing eight worries. It could be very similar COVID in terms of knocking its economic agenda off off track. And, also, we see a situation where despite some of those green shoots that we wanna call them that, the government's continuing to respond We just saw it when the Polit Bureau met to review q one economic performance. Last week. They're still responding with supply side responses to demand side problems, and that's a significant problem. Right. You you mentioned about the changes that they did in the not once, but two times the entire generation of the DLA leadership. I'm sorry. What does that tell us in simple in the simplest possible language, it tells us that he's become extremely impatient with his commander's penchant for lining their pockets rather than doing he wants them to do, which as he puts it, he wants them to be able to fight them any worse. By the centenary of the people's liberation army next year. And so if you're a foreign policymaker, that should undergo Well, that by education in China is not on that radio. Well, I I think it means today they're not think part of the problem, you know, we see a number of issues. Part Hardware on the hardware side, right, they have lots of shiny and very capable equipment. What I would call the software side, which is the ability to conduct integrated joint operations. You know, these sort of things. Remember, this army hasn't fought since 1979, they didn't do so well at that time. The flip side, you can argue that by clearing the table, she could paint his saying to grapple with what we're seeing. We're seeing it every day in the Iran conflict and Ukraine changes in the revolution of military affairs and so on. Maybe I need a younger of leaders who is more aware of those issues. Would you rate the Chinese military's industrial contracts? It's very effective. I mean, you know, we my personal view, as you and I were discussing, morning, is that I see Xi Jinping in a hurry to invade Taiwan or to take Taiwan by military force. But you have to look at certain indicators and there are few things they're doing that don't make sense if they don't have that attention. And one of those is they have these missile factories going twenty four seven banging out a lot of munitions. And, of course, the lessons we're learning in the Iran conflict and others is is incredibly important. And they're doing very well. The challenge, I think, is what we saw a big motivator for this scanty corruption purge the uncomfortable relationships between the senior military commanders and the industrial companies. And there are questions then about does this gear actually work Well, Diana, you don't have to comment on PR, but go ahead. I know a lot about the BLA. So I can comment Oh, that's too. I can comment on everything because my work has been for a long time now that you can't get where the world is going. Without sort of interdisciplinary analysis. I mean, I'm my training, macroeconomist, but you have to use the macroeconomics, the geopolitics, the technology, social and cultural behavior, disciplines together. And that's the sort of team I run. And, you know, your question was engagement with China. I've engaged with China for over quarter of a century. When I say it like this, it sounds very scary. But it's true, and I'm even more engaged now than I have been before because my entire career as a global economist, I have been sort of shaped by China. And the only way to get the world right, to get global markets right, is to understand what's going on in China and how does that impact the rest of the world. If I think back my career, I started as a professional economist in the city of London. In 2000. And so 2001, my first call was the commodity, the second commodity pool. So if you were China, then my thousand and four, the loan bond yields called in The US. That was a China call. Global financial crisis. I wrote a book in 2006, the bill from the China shop, arguing that the world was headed for a global financial crisis, again, very much predicated on understanding this relationship between China and The US. 2011. Wrote another book, The American Phoenix. So the view was different Again, that wasn't necessarily you know, partly it was a China call because I saw that what we were doing in throwing that huge amount of money in the new circumstances gonna produce the equity market gains or the performance, but The US would with quantitative easing. Then China's growth slowed down. Then the great decoupling, you know, the thesis I've had since 2017, eighteen, was very much going back to making mistake in the wake of the global financial crisis. I saw I thought that we would see this tension between China and The U. S. Already in 2011. It didn't materialize In hindsight, they realized they got that one wrong. Because I expected this wholesale transformation of the world purely on my analysis as an economist And then it's when by sort of 2015, I realized to really cannot do the world anymore with just macro. So then by 2017, she had come to power. We had his first term and then Trump became president, and we had Brexit in The UK where I'm based. And I you know what? We now have the political political mass to then act on these economics that work the expression was the global financial crisis. And so then here we are today, and, you know, I'm more so okay. In China. One, because the rest of the world In particular the West, is less engaged. And it's quite because so much is going on in China that we need to understand. And the other reason which I sort of do not keep, I do feel a great sense of responsibility I'm equally trusted in Washington and in Beijing. That's very rare. And so I have to kind of really feel the feel the responsibility from a human point of view. Not just from an analyst point of view. Thank you. So much is going on in China. You say that Diana, can you tell us more about that? You site? Are you more engaged? Are you more cautious about China than you were two years ago? I've been engaged with China so many years. I was engaged in those in in marketing agreement, like, created media. I created a first television show when there was no television show in China. That was when was that time? '19 And then I started my company in 1992. Then And that was just the very beginning of at that time already, and China was surely you cannot imagine how poor it was. Imagine how how little infrastructure it had in China was. Middle place really seriously. My most wealthy friend made $50. Month. You know? And he's really very poor. I remember first time I went to China, the first first entrepreneur was a guy that was selling sweet on the street. That was the first entrepreneur. So when I started my cosmetic company, and and I registered my company and sent in I was my license is 0011 So really means that I was very You know, I went into China when nobody was really actually going into China. But through the years, through the years of seeing the growth of commerce, through the through the infrastructure, all of those things that are happening in China. I see this amazing country come to the amazing place where it is not mistaken. Biggest economy in the world. So I lived through all of that I may be conscious still living in the middle of the gym, but I would never stop engaging myself in China, even with my own brand beside we are launching all kinds of new things, and I personally am investing a lot of things in China. And I think that is very exciting place at this moment. Thank you. Well, thank you, Josiah. I hope you you've kept the zero zero one registration. You know, it might be both four different opinions, So I think that being China is both complex and necessary at the same time. Well, Chris, you spent two decades as CIA's top China analyst. You now sit across the table from the world's leading corporations as they navigate mounting geopolitical capacities. So tell us what are the people in this room invariably roam about? When they look at US China relations from the outside. Right. Well, I I guess I would probably highlight three things. I think the first is that there's a view, think, and it's getting more and more popular the more and more we see China's global power, you know, rise, that the Chinese view US China relations as some sort of great game esque competition you know, of geo strategy and thinking fifty years in the future. So there's some of that, no doubt. And of course, while every country's foreign policy is at least partially reflection of their domestic you know, concerns and and politics. In China, it's almost exclusively so. So, you know, Xi Jinping and his colleagues their number one concern every day is regime security. Ensuring that the party needs some power. And as such, my sense is that's why nature is sort of defensive. I mean, we're looking approach, you know, which definitely colors their foreign policy. And yet, are barraged almost every day by media and criteria suggestions that China is somehow on the mark globally and, you know, is a major threat to The US. And I I think we see a microcosm of this problem the current Iran conflict. I mean, I've been personally bewildered by some of the commentary that suggests somehow China is winning the Iran war. I don't think Xi Jinping agrees with them. That's my sense. And if anything, they're approach to me demonstrates a very serious campaign trying they actually are in terms of shaving both the conflict itself and certainly in its kinetic phase. But also in the trajectory that we might see after, you know, there is active diplomacy. We see their foreign minister burning up the phone lines. You know, with regional parties and so on. But we don't see them get on a plane and go to the region and engaging him, Joe McCormick, along these lines. And you know, the the Chinese, of course, have absolute leverage over Iran, but they're also absolutely unwilling to use it just like they are with Russia, right, in in those regards. That's the first one. The second one I would say, and it's close to related, again, the domestic political focus, is that you know, we're always parked with these narratives that Xi Jinping's power is either not fully consolidated or he's under some kind of personal threat. And we saw a lot of this narrative during COVID when we saw, you know, suggestions that the number two leader in the country is premier. Or others. We're pushing him to end the zero COVID policy. They his hand there. You know, this was a big thing for a while. Absolutely not for it, you know, from what I can tell. Second with these generals, the firing of these generals, that he was worried about a You know? So that's why he he took these actions. And it matters for you guys relations because if you get the framing of the domestic political standing, of your opposite number wrong, then you're gonna definitely your impression of what they would do on the international stage. And then I think the third misperception that's out there a lot is that conflict is inevitable. And that the problems are insoluble and it is a strap and so on and so forth. And, personally, I don't see it that way. You know, my view is there are clearly intractable structural tensions in the relationship. There's no question about that. All it requires is leadership. On both sides. Right? And we've seen in the past that this could work. I think, you know, from a US perspective, US presidents have certainly done well with it. When they matched their own ambitions for the relationship, with how it was being being from Beijing. You know? And I think we saw that work very effectively from the seventies to probably the early aughts. And then subsequent US presidents, I think, have done less well. And, you know, the other piece is that I think we saw a very useful thing last year which is that when tariffs went sky high to 150%, they're not deep sided. And the Chinese responded with our weapon and this sort of thing. Both presidents at that point said, oh, this is what full decoupling looks like. They looked over the precipice, and they said, don't think so. And I think that's very helpful for the pilot population. Right. Diana, do you have something to add to that? I mean, is there anything you wanna tell the audience here that seem to be looking at China very negatively. At present. We had a few years ago this peak China, at least, has kind of died down a bit. And I don't see that. I see China having a very difficult structural transformation that it has to go through, but going through it and making the right In '20 they started a wholesale supply side transformation including the Made in China 2025 policy, but a lot of sort of introducing marketization in parts of the economy that we didn't have Then September 2024 was a huge U-turn. And for the first time in my career, I see them now committed to consumer spending, to rebalancing finally the economy to consumption not least because they realize that they can no longer they're too big, they've industrialized, They are global behemoth. They is no more for, you know, they're too big, too just go via the catch up probe. They have to generate genuine demand and it's not gonna come from exports because the rest of the world has turned much more hostile. So it has to come from domestic consumption. And that's a very interesting story because a lot of the time, I think, you know, the questions I get revolved around the industrial side, the supply chain, the sort of decoupling in that domain. But I'm a forecaster, and I always look to towards the voucher. You know, what we have seen in China's industrialization already reshaped. What's the future of the industrial side? It is the AI race. And often, I think, it's not entirely clear in the West that Chinese running a very different race to the one that The US is. The US is running the AI hyperscaling rates, and China is running the AI diffusion rates. And, actually, there is a higher chance potentially of of them winning that particular race Mhmm. Then the US. And then there is this financial of the economy. That's what is going to transform and what will the rest of the world and what would if we understand correctly where this financial of their economy is going, would shape how everything else in the world works. That's right. I think China's AI is repeated towards the physical AI your SaaS model in China. Is very unlikely to go to subscription So clearly, I think what we have this year is a US channel relation is more structural. Than the headline we suggest. And it's more contested. Than one of optimism. Claim. So let's move on to the next question I got inside you in my for the next question. You can do this panel with the publication, I think. So China's next alpha is not only in the heart technology that we just talked about, like, electronics AI, and so on. It's also about consumer brands, intelligence, and emotional Pop up's US5.4 billion dollars last year, one character. Nothing coffee. Two characters. Sorry. I correct on that. I know one. It is another one, Mike. But I mean, like yeah. Locking coffee is 31 there as well. So what are Chinese companies looking to do that folks in this room may not be aware of? But they want to know. All those brands that talk to you about from TikTok, All these are looking to go out of China. That is really exciting now that we can discuss why they really want to leave China just expand the market on the policies. A number of reasons for it. I they they are really exciting. Actually, it's really exciting. Someone, they need they need to move up. Chinese market as well. Let's say, is is slower. There's no question about that. The consumer is And even real estate, money is not there anymore, really. And, therefore, he does for China. Right? So there's no question the economy slowed down. So so there's first reason. The second reason, the Chinese really are are it's really difficult to do business in China. I have been running I run a business China. So I know how impossible it is to This competition is fierce that you cannot imagine. Believe how fierce because don't forget we're 1,400,000,000 people there. Right? The moment you produce one single product that is good, that takes the morning. Somebody's already copied you, and the price is lower than yours. This is China. You know, this is if therefore, if you can remind me of the song, you can make it in New York. You can make it anywhere. You can make China. You can make it anywhere. Trust me. So the third reason is the rate Chinese overcapacity. Know, there's the the competitive I was thinking. China is so Yeah. So in in the world, you know, China really is is is about, you know, it's it's it's not an option. They really need to especially if you are a very successful company with the muscles overpourses would definitely want to go overseas. Because that is necessary. You know, I when wrote cinder road. came about. I I I understood it immediately. I said, many breaches can China build? How many tunnels can be drilled? Right? So, in China itself, they need to go outside. They can use that overcapacity to be outside. That is another important thing that Okay. Have a lot more confidence. The Chinese brands have a lot of confidence to Look at BUID. Just look at BUID. Mean, it's just going all over the place. Right? Everybody just number one selling car in Singapore. Yeah. We for sure. Everywhere. Everywhere. Everywhere. Brand. Right? I mean, you look at the brands like TikTok, I just mentioned. Right? T tingling. Tingling. I show her tingling. And, oh, of course, and and you there are many other Chinese brands today that are really quite remarkable. And they are they they have confidence now. They remember it was in those days of Chinese market was so Chinese products was only marked made in China. Remember? Now it's not. Take, you know, like Minnesol. So I am less in Minnesota for some So They're all low risk. So that the confidence is amazing. Right? And then, of course, the Chinese products, the Chinese companies today very easy to market overseas because their model is so fast. They they they produce they sent me That's a Chinese friend. But, anyway, I don't think it will ever stop. Sorry. This is just a company. What was I talking about? And they they they do everything fun. The interest infrastructure is amazing. And they purchased it in such a cheap way. You kept asking me how much is my jacket? How much do you think my jacket is? Do you hide that out? Sorry about it. Yeah. I don't know, mean, just was walking along the streets and then four guys stopped her and complimented on her jacket. Not mentioning about my time. So I want you to how much this is the China major. $80. Mhmm. Dollars. That's 550. On the Too expensive. This is I paid R250. In Sorry. You know, at the giant development forum, when I Were a lot of presentations about sort of consumption and how it's going to how are we each city is going to foster this consumer ledge. It was very interesting. One aspect I think it was They are now going to take over the whole maid to measure clothing market. Yeah. Where you get fully bespoke clothing vadina, kind of much more structured way. Done. Experiential consumption as well is where the Chinese and it just fits with Jinping being very much against those ostentatious spending. So this sense of being part and experiencing consumption rather than sort of buying her these bags. Is also another interesting dimension. We will need the Chinese to spend more and save less. Right? But in. I do want a quick question on you, and I was sitting as a capital allocator. Does the China consumer brands conversation share with you share with us? Featured in your portfolio conversation at all. Absolutely. Very very valuable. Right? So obviously, China China did achieve president's east go up mid in China 2025. Is why you do have open open capacity from highly advanced which is watered in Chinese EV companies, six out of the last ten six out of the 10 largest electric car companies are in China, set up production in the South Of China. 56% of all installed batteries is out of tactile, and VUID, batteries. So you look at all that. Right? So you have have one factor where 30 40% of the household growth actually, 27% of the household woke up rack lunch up. Doesn't risk an erection. 40% correction process, 70% of the household balance sheet is risky. So that actually affects consumption in a big way. Assumption That's one. You got which a few turns of money. As a result, actually, it's creating a very interesting dynamic. Investment opportunity. Hard knowing with many of these Right? FTI, I bet you you start really looking through the hood. There are more and more Chinese investment into US in the manufacturing. Sector in the Midwest. Right? Case in point, a fund manager, one of our our analysts, saw this company and said, good as you know, This company made these Invisalign. Right? These molds for the teeth. So Invisalign, The US company, makes more the Invisalign mode in Mexico But this Chinese company called Angel Online, listed under their search exchange under But they are making it the unit economics are cheaper. Making it in Wisconsin than they busy making it in Mexico. Lines over. And you see that on and on. You see Amta. Right? That's a buying Amtra. They own they own Salomon. They all own them. You know that a Chinese company actually owns foreign brands. After they bring the private foreign brands, they increase the penetration in China. They produce better design. Better quality, better advanced high-tech material, nano nanomaterial, and then the to the world. Right? Because China now has the ability to design and manufacture and with the technology. And so they're buying the brand in some places. And in some cases, they're actually buying the brand in in foreign countries, so it's no longer made in China. Exactly. And then enter a sign of MBA Correct. But this is rip off that, and you even know would you say, I don't want Chinese investment into opening advanced manufacturing in my even though all the employees are gonna be the blue collars. Going with that That's a, you know, from this interesting story, Diana. Suspended the surprise of this move. I spent twenty five years getting China right, very, wrong. You are turning positive on Chinese stocks. Yeah. Tell us about it. I am. I am on A shares as well. As on A shares and sort of the role of Hong Kong as a global financial hub. And the reason is related to what I started talking about earlier, is this within that the next phase of China's development has involve developing its capital markets. They've industrialized. Next. If you remember why they were why industrialized. The private sector was getting funded through NTI, and they were outsourcing their IPOs. They had a closed capital account and kept their domestic financial sector fairly isolated and as a result much more underdeveloped. Given China's might. Now the next phase is about improving the allocation of capital internally or, you know, solving all this overinvestment. As well as equitizing household wealth. And there is no better sort of that they're serious about this. Then how strict and how much they have stuck to their real estate policy. Because Goodwin is absolutely right. This was a huge blow to the well of Chinese urbanized that had the majority of their wealth in real estate And since the authorities started down, they haven't returned to, let's go and say, the real estate market. Meanwhile, they've lowered interest rates and we have the majority or half of household financial wealth in interest bearing deposits that now are being, you know, is a very interesting 2026 story term deposits in China this year that are coming to maturity are nearly very close to the size of the overall Chinese Asia market. Now they have roll over, and they have a decision. You know? They used to have 3.5% before. They're gonna have one and a half to 2% at most. So it's almost the government is creating this kind of funneling of Chinese household well. Into the equity market. And simultaneously, it is developing and professionalizing the equity market. I mean, I actually when I used to live in Hong Kong between 2009, 2013, I started advising China domestic fund managers. I think it was my first sort of experience because up until that point, I was advising much more western investors and how they could, you know, sort of play China outside of China. But when I advise the domestic guys, I just understood how what a liquidity short term play this was and how underdeveloped and casino like market it has been. So the authorities also acknowledge that, and I'm loads of reforms are underway professionalize the Chinese equity market. To make it safer, but not just for retail investors, but really institutionalize the flows into the A shares. And they're tackling evolution. Again, they're serious about that, and it's gonna take a while. These none of these reforms are going to produce positive outcomes. But ultimately, what they want to do, you know, what they've realized with created all these productive potential in the economy. But our households have not benefited from this. We have ended up in a situation where a lot of what have their money is is inactive. It's real estate. It's, you know, housing that really, sort of come with productivity growth. Yet they have been incredible at achieving sustained productivity growth over surgical of the time, if you want to create consumers that will become the engine then you need, you know, if you look at this, macro economies, if you look at wages as a share of GDP in China, they're actually the same as in The US. US. They've caught up there. There's not a lot of kind of scope. If you look though at household disposable income as a share of GDP in China, it's way lower than in The U. And the entirety of it sits in income from assets. So households have not been able to benefit from the productivity growth and take part in that. Because the equity market has really been outsourced abroad and that has changed. So now if you are a Chinese company, you're no longer going to be IPO ing anywhere else but either Hong Kong or on the Asian market or both. And what's also very interesting is that if you split the world in China's of influence and US sphere of influence, and you're putting The US sphere of influence Europe, Japan, Korea, India, pretty much everyone and on the other side. You end up with annual flows of savings of more or less equal size, but higher in China. So this recycling of Chinese savings, what is turning into a very interesting story is not just funnely wealth, primarily through equities over the long run, but the role of Hong Kong as a safety valve in that kind of vision. And Hong Kong with its CONNECT schemes, which are an extension of kind of China's capital control system that it has created. Becoming the way that if you are a foreign company and you want to access Chinese savings, you need to also be listing in home Kong. No longer will China's domestic savings be intermediated necessarily on the global scale than we can seen in the past. And that creates very interesting in The US sphere of influence I would argue that investors at this point in time are not sort of think about the cost of capital, the real cost of capital, it's high. It's about to get higher. Sustainably higher. Why? Because in The US, you have this desire to invest need to invest in so much more to replicate this reindustrialization. That you have to achieve for national security point of view and exactly the same time as how the global domestic savings that have been circulating three, let's say, more or less in China's case, to do the central bank interventions, etcetera. But nonetheless, were part of that system and were intermediated will no longer be intermediated in the same way on the same systems even. While figuring out for laying down the evidence, thesis, so clearly the ceiling is real, but the opportunity also here at the same time. Let me come back to you, Sai, on the next question. Now you're one of the very few people who have developed or synthesized a framework that you have sympathized over for the years of investing in China. That framework you call it the four d framework, can you take us through that framework and we also D. Okay. First d is you really have to design the products with the Chinese in mind. Today, for example, when I launched my cosmetic company, by the way, at the time, because we were in channels using cosmetics. I I used my tagline was the best that we'll have to offer. For Chinese women. So everything I did was promoted. But then we don't promote it, especially today. You really need this consumers are so sophisticated in China to today. So they really have to remind Number two is you have to make decisions in China. Because when I first sold my company to I I don't know. Or I was making decisions in Paris. You know? By the time we get an get an approval, the training's over. You know? And and I said, this is not gonna work, so have to change it. You have to give the local team the power and to to to make the decisions. The 30 I think I talked about is the the decision to to to to think really big Okay? Because China is huge. You know, you're ready. You think small. You're thinking if you're thinking Singapore, or you're you're just thinking. You know how big China is. Really, really, very good market. Because know, like, we we we relaunched a new product recently. A sunscreen product. Just shows you how incredible In one day, we did €6,000,000. And what's Just in one day, in one one product. So the product China China is is is amazing. I could doing doing that today. So the the the fourth day is Do I have do see that the Oh my god. Yes. Oh my god. Yes. Digital. Oh my god. Oh my god. That is You cannot you cannot think of Chinese market without thinking know, entire company is is Your So she said that ecommerce the ecommerce model in Chinese. So mature, so mature. And, you know, I I think that's your 2025 piece. They had two two hundred and fifty billion express packages sent out. That's an enormous number. A day of packages. That's how mature the ecommerce market is. So you got and then they have a whole thing with double already. They have the the the the selling platform. T t mobile to to So the PDT. So I'll So I'll more Immediately, that is managed to pay by computers and robots already got it. Immediately, they deliver people are able to deliver you. The entire China is literally blanket and yellow yellow yellow bicycle people. Right? And get there. They're my my turn people to deliver for you. So, of course, I can deliver for you. You don't know how to use a streamer. I just went to the most successful Chinese brand go, 300 people went there. 100 is a big close. They they would be 206,600. All of them. Sent me the text. They You can be selling your product. So we understand if you don't understand that, you can also You don't? Nice drive. Nice streaming. So designed for China. You decide locally. Absolutely. Right? If you if you look at The US is, you said, that may be 10¢. You look at one trading at 25 28, 30 times. One is trading at 10 to 12 times. Right? Alibaba, Amazon, you can go on and on and on. Right? What is private sector or public sector? So it it's because China said a lot of chaotic message, right? Confusing message last couple of years and and this event a lot of They all look at how do you net money? Yes. It looks cheap, but how do I ultimately make money? Are the I have to continue our views and more to come this year. It's showing that, yes, it's it's it's it's a you have to understand It's a IP high local system. And in a way, Yeah. I'm just asking. I I think that's all true. I think it's balanced against government getting in its own way so frequently. And the message really since mister Trump even has come back, which is a massive opportunity. Right? The Chinese is building towards China, you know, with our economy and really or at least we're not decoupling. We're trying to firmly cement important supply chains in China. So of people there Oh my god. Second piece I think that you you reasonably closely related is that you got to see your central situation. Where I checked these look like they're willing to give a little bit to other countries. So middle power, like, Australia or Europe. They need to get out of their own way. And part of it is a little bit of cultural hubris, I think, you know, Middle Kingdom and all that. And then part of it, I think, is that dialectical materialist mindset that they have, you know, as Marxists, tells them it's all about the material forces, and we're trying we're massive. Our economy is massive. So that's I think you look at the stock market in Taiwan, in Japan, in Korea, you see that now they have gone where money is actually generally somewhere, and even the fact that they do here is they're somewhat sparse. That the capital is certainly working in that you know, very valuable. Telling. What A concert is actually a and then someone doing dishes on paint the Right? In one picture, it said China is going to where the painter is doing but the doing the chores is actually both very quite in US picture is showing the painters being the robot. And then the drawers manufactured, which is a in inference layer, distillation, Now you have to show me that to the question for you. And congratulations on the largest real estate deal in Japan. '25. Congratulations. China, but it's still very confusing in terms of what center the government wants you to miss money when they have policy changes. Right? So what as an investor, when you are it's actually So we have to look at how do we play the rise in China and continue rate in China robotics, AI, play China adjacent. Which to me, Japan, Korea are the two deepest capital markets. We liquidity and the semiconductors space is gonna benefit dependence You have no idea this this coatings that happens to play and grow in some of these surplus racks in in the in the optical switches. That's what I'm recording. All of a sudden, that little division went to, I think, five or 7% of the project. 50% profit total maker. Right? So Japan, you go on and on and on And on, of course, in Korea. You hear Samsung, you know, MSP, HiDx, In Japan, you have Kyle Sierra. And then in Japan, also have heavy industry So you can play China adjacent. Vietnam can play as a factories from China's supply chain from China, But made in Vietnam And beyond. So you have a lot of place in Southeast Asia also think about it. You can also play China adjacent. I'll finish this at this point. Think about it. Bite dance. Right? Very large. One of the largest the the one of top large number of model play in China, a very of TikTok, short video, They they need huge amount of data center. Capacity for AI training. Where are they opening data centers? They're opening in Malaysia. Opening in Indonesia. Because that's where they actually can get access to the chips they need to do the training. So these are all ways to play China without being inside China. Okay. Last question for Chris before I ask her regarding Nubanda with ten seconds. You know, POEs or privately owned enterprises in China, generates about 80% of China's urban employment. And more than half of these tax And yet Chinese entrepreneurs are now investing with the confident that they once had Why? I think because they see that the government is not trustworthy. Right? You know, in terms of the And as Diana was pointing out earlier, only kind of the government only gets around to saying we need a private sector, but it becomes absolutely clear to state So we've seen this with technology, Increasingly, we're seeing it now with the government more overly embracing the need for high quality services. To be providing those. And yet, the political context the control factor, right, is such that if you're a private entrepreneur, recognize this. And government will always put very firm lines around the private sector can do. And we see increasingly that if the private sector firm and you're willing to play within those lines, you can do very well. Don't expect to exceed those lines or go somewhere else. Right. We're gonna wrap up the session with each of the speakers. I've got back China. Before you were born. Was a therapy kidney. The facility. The kidney was so too sure. So The beginning was so unbelievable. See what they went through at W nothing but extraordinary. So grandmother of ChatGating. I think mine would be if things go according to plan, we're gonna have potentially four leader to leader summons this year. That's never happened in the modern US China relations. Let's hope that officials on both sides thinking about why they have an opportunity and not just an opportunity to would x or y, but rather than Have to keep an eye on China to figure out how they invest. Around China in a position. A Because if you believe in the AI revolution, it's all about training data. A shares and A shares. Within that, AI diffusion in China, not AI hyperscale Keep on cool. And much more bullish on the consumer and exploration of consumption rather than clothes. On the great decoupling continuous decoupling though, even though I agree with Chris that we're likely to be more positively surprised they're not helping. In terms of China US great deal that's being coined. So the fun fundamental tech raise and great power competition will remain fierce and intact. Well, this has been a great panel, and this has because of the wonderful panel that's up here. On stage in Finland.