Now we're going to talk China What was just said about Elon Musk's relation to China After what was just said about Elon Musk's relation to China let's take a look and comment on do we think that's potentially true Then let's move into how is China actually competing with the United States and is it something that we should be concerned about? Let's go ahead and get started with this clip. Now this clip is a Twitter clip and it is uh, it's a it's Steve Bannon whom Elon Musk replied to this comment here by him and suggested oh I Used to think Steve Bannon was a smart but evil person now I think he's just evil Essentially right. So let's go ahead and jump into uh what Steve Bannon says right here when the question is asked, should Elon Musk get into maybe helping bail out Silicon Valley Bank or what is Elon Musk's exposure on the world stage and how does it relate to China Ready for this Here we go: What would you think about that if I mean I think until Elon Musk starts letting back on the most Uh, the true anti-ccp people that he keeps blocked off there myself includes. not that I want to go on there Oh yeah no no he's owned it.

but he's owned by the Chinese Communist Party What are you talking about Tesla is only sense of. The only thing of real value is Tesla he uses it for margin loans. he sells the stock. The Shanghai joint venture is a hundred percent controlled by the CCP.

This is why this is why he never goes after the CCP. This is why he always backs off. This is when they had the protest they had the protests about the lockdowns of Covet. He.

Well, he will not do it. Elon Musk is a total and complete phony. He is in bed in a business party. he's done some good stuff of letting stuff out.

Uh, you know we'll tell you being others, it's fine, but he is owned Lock Stock and Barrel by the Chinese Communist party and he acts like it. Well there was a story basically that they warned him to stop talking about lab leak 100 he's got and he I think there's they want him to take down the tweets he did the first time. Now he didn't take them down but you notice he didn't have any more up there after that and I wonder if he said okay I won't tweet more about it. But here's the issue.

I See with the CCP in the United States and if the United States falter is if his foreign, there's another thing they're already talking about. we think it'll be up to a third of those those Innovative companies. maybe CCP foreign. There you have it.

Well, so what do we think about that? Well, Elon Musk is is it to some degree not wrong in that he wants to expand his manufacturing in China as much as possible. In fact, he'd like to double the size of Gega Shanghai Is it potentially true then that Elon Musk is uninterested in criticizing China Yes. However, China has the equal position opposite, but equal China Through this uh, they've they've got multiple propaganda newspapers, but regularly talks up how Elon Musk is actually an example of the type of entrepreneur that they want to encourage in China China wants to encourage more Elon Musk style folks in China. So is it possible that Elon Musk doesn't want to criticize China Absolutely, because ultimately, he'd like to expand Giga Shanghai It's the most profitable Factory Tesla has right now.

Would it make sense from the future? Potentially Elon Musk to have more factories in China Yes. Is it likely? Maybe not soon. because right now it seems like more of a preference is being put on countries like Uh Mexico because of the inflation reduction act and North American production more incentivized, but potentially also India and Taiwan in the future. Or Vietnam Indonesia these these countries, but potentially being better opportunities and a tool for diversifying away from China especially in the time where the U.S government is extremely critical of China, but not just critical of China but also potentially forcing their hand in terms of innovation.

And now this is something that I think is very interesting. Look at this. Okay, this is a piece by the Foreign Affairs. This is a fantastic magazine by the way and what they talk about.

I'm going to sum up some of it here because it's quite long. But what they talk about is how back when uh Apple started making iPhones in China China was basically known for super cheap labor and they they really were known more for producing toys like Barbies or Legos or Mattel toys or whatever. Then they were actually known for hate technological, highly technologically advanced processes, right? Because it's not just like think about the iPhone It's not just a matter of making the chips, it's also making sure the chips are assembled correctly together, but then also testing the chips. see I think a lot of people forget that look China just stole patented technology and Trade Secrets these are U.S Trade Secrets uh or us related Trade Secrets From Asml to create Advanced lithography machines so that China can create their own three millimeter chips or nanometer chips rather and and create Advanced chips that Nvidia and AMD and the US government are already making Taiwan semiconductors right? The problem is, it's not just as easy as having the machine.

If you bought a three nanometer chip making machine and set it up, you would be no closer to being able to make chips as you were before having that machine because it's not just a matter of plugging in and running it. It's actually not only having the supplier contacts, but once you run the machine actually being able to assemble what you're putting together and then checking to see if it works. The checking part, the rigorous checking is something that is a very intense process that could take sometimes 50 to 100 additional steps. So the machine is just one Cog in the wheel and China has to re basically innovate to come up with all of those processes to make sure they're actually able to create quality products.

and the United States government is trying to prevent them from getting their hands on these sort of advanced chipping making. Technologies. But what's really fascinating is China back in the day used to be really not that great at solar panel production and much like back when they just started making the iPhone, they weren't that great at engineering, but now all of a sudden they're getting into Quantum Computing They're getting into artificial intelligence. You have quantum computers that potentially can now start hacking into.

Uh, I Think it's a Sha256 encryption which is very important for cryptography. Yes, that means crypto password protection, right? But not only that, take a look at this when China was forced and this is by the Foreign Affairs Here when China was forced to actually innovate rather than solely become a producer for goods for America What ended up happening? Well, not only did they come up with companies like Tick Tock which are taking away a lot of user viewership from companies like Facebook, but they also dominated the Solar Supply Chain Listen to this paragraph right here in 2010: China State Council The Central government's executive branch designated Solar Power Generation as a strategic emerging business. so in other words, very important business triggering a Cascade of government subsidies and business creation. much of it aimed at expanding manufacturing capacity in the process.

Chinese Firms learned the basics of solar Volta photovoltaics and began to improve on existing methods today. Chinese Firms dominate almost every single segment of the solar value chain, from processing Poly silicon used in solar cells to assembling solar panels. But not only do they dominating actually making solar panels, now listen to this. they have also Advanced the technology itself.

Chinese Solar panels are not only the cheapest on the market, they are also the most efficient. The breathtaking decline in solar costs over the past decade has been driven by manufacturing Innovations In China Now, not only do you have these solar Innovations but you've got the largest battery manufacturer in the world. Catl supplying a ton of batteries to companies like Tesla. In fact, Catl is probably the reason why Tesla All of a sudden is able to sell Power walls on their website and people can now without buying a whole solar system.

buy home battery backup systems directly from Tesla Tesla.com by and listen to this by showering subsidies on the newcomers. The Chinese Government has encouraged many firms to enter the field and it has provoked greater entrepreneurial risk taking, creating a brutally competitive industry in which the strong muscled out the weak. As a result, Chinese Firms today dominate the Strategic industry that the rest of the world depends on solar panels. The approach was promoting manufacturing to the point of excess capacity, which is in sharp contrast to economic Orthodoxy in much of the West.

In other words, let's throw so much money at the problem that even if you have a bunch of businesses fail, you're going to get to excess capacity and massively bring the costs down and now will be dominant in that space. Well, the same thing that happened with China for chips is or for solar panels and batteries to some extent is now happening with China for chips, so you do not want to count out China. Now there are problems with China China for example, is starting to spread its influence more right? They've got their eyes on the Middle East Ukraine Russia war is showing them that they're trying to remain neutral while potentially supplying weapons to Russia Because after all, if the U.S can supply weapons to to Ukraine, why can't China support its uh manufacturing industry, its military industrial complex and Supply weapons to Russia on the other side. Just like what North Korea is doing, they're kind of creating these almost World War III style axes right? The U.S Western Europe Ukraine on the other side.

Iran North Korea China uh and uh and Russia. It's kind of scary. Now there's this idea that these these subsidy races might end up being won by China that there will be a limit to how much political willpower we will have in the United States and then the Eurozone to actually support chip making in the chips industry whereas China Guess what Jinping has been saying While at the same time, he has been very critical of Joe Biden and Wall Street Journal just had a big piece on how Joe Biden was directly rebuked by Xi Jinping. Well, that sort of criticism is happening and Z is making it very clear that it almost feels as though uh, the the West is sort of uniting and trying to fight against uh, China What else are they saying at the same time? Well, they're coming out and saying, hey, you know what We are going to focus on capitalism.

Yeah, that's pretty remarkable. XI Jinping's speech at the end of last year was focused on: look, we still love socialism, but we really like capitalism. Don't worry, we like socialism. But when capitalism is good, it's kind of like I've made this analogy before, so sorry to sound redundant, but I feel like they've kind of like they're like oh, what's this white powder oh, that's cocaine.

Oh I Want some more of that right? So now you have China becoming this big player in not only the Middle East but also potentially India which is where United States companies are trying to go. But what if China is a big player over there now as well. So you're seeing this expansion while at the same time tensions are increasing between the U.S and China you're seeing China not only shower their manufacturing industry with more, but you're seeing this power struggle expand and The Tick Tock Bill doesn't help. We just introduced a Bill in Congress that would potentially Force the sale of Tick tock.

So that way we could keep data here in America rather than potentially have our personal contacts and our data go over to Chinese servers American Tick Tock data has already been found on Asian servers in Asia somebody can walk in take the hard drive. I mean obviously, hopefully they're encrypted, but who knows if they actually are. But anyway, uh, China selling weapons to Russia is now widely seen as this sort of quote unquote. We don't give a damn.

Attitude like Biden ain't the best of the boss of us, right? You've got really this uh, Xi Jinping argument that the US is trying to contain China and that it's not fair and as a result, they're almost sort of lashing out to expand even faster. I Mean, think about it. The U.S Chips act restricts Taiwan semiconductors from selling Advanced chips to China Asml is restricted from selling Advanced chip making machines to China they can only sell the old crap that's the last generation stuff. The US visiting Taiwan doesn't help and now potentially Taiwanese uh uh, exactly.

Well dare I say Executives Taiwanese Officials are going to come to America to meet with Kevin McCarthy much like Nancy Pelosi met with them. Uh, in uh in August The US is also rejecting China's 12 point peace plan for the Russia Ukraine disaster. We've gone through that peace plan. it's actually somewhat reasonable.

Like China is trying to come up with a negotiated solution. and at least they're trying to negotiate I have to give China credit for that. At least they're trying whether it's an Earnest or not. At least it seems like they're trying at the same time.

China is ramping up their military, especially in the South China Sea And you're getting more and more islands that are becoming weaponized Uh by China Whether that's with surface-to-air missile defense units or sort of radio towers that you're seeing built up I Mean these are propping up all over in the South China Sea And it's making people more and more nervous. And so really, what you have is potentially this big psychological warfare where where the US is kind of getting more and more nervous about China especially since they've got three to four times our population. You know it doesn't take their per capita income going up that much for us to have this pivot point where China's all of a sudden larger than the United States on an economic basis and then you wonder, what does that mean for the dollar in the future? There are a lot of things to consider, but look, is it unreasonable to say that oh Elon Musk is somehow like a you know China shill and he doesn't criticize China Um, maybe not. But then again, does it make sense that corporations are kind of like look? we don't want to get in the politics, we just want to manufacture our goods and provide our services.

And we want to do that for as many people as possible. So as businesses, we can make more money. it's totally fair. So do I think uh, Elon for example, is bought out as Bannon says by China No.

Do I Think it makes sense to be friendly with China when they have the power to potentially subsidize your manufacturing way more than the United States does. Again, remember, we have gridlock in America What do you have in China Not gridlock, right? Vastly different government system. So my big takeaway of all of this is you can't bet against China right now I Know there are always World War Three fears I Think that's relatively unlikely, but then again, it could be wrong about this. Obviously, we want I keep paying attention to it.

But this Foreign Affairs piece on China and and the solar panels really woke me up to this idea that oh my gosh, they have an unlimited and uncanny ability that if they want to be really good at something, they can throw all the money in the world at it. We can't do that in America and we have fewer people, so we have many disadvantages compared to China and I. Actually think you're seeing a little bit of a lash out in the United States and and these sort of sanctions and restrictions on China are actually just forcing China to get better and stronger so we're shooting ourselves in the foot. It's like we're trying to like make ourselves feel good now, but we're punishing ourselves in the future, so it's not great, but it's definitely going to be something we've got to pay attention to.