The Make-Everything Economy: China, AI and What Comes Next| Damien Ma | Keris & Silicon

Damien Ma (0:00)

China has not only learned to play our game, but played it better than us, and therefore, we don't like that game anymore.

Keluar Sekejap (0:06)

And the person speaking out for globalization or openness, it's not an American, it's a Chinese leader. Perhaps what they really want is not to run the world, but for the world to not be able to run without them.

Damien Ma (0:19)

We want to be an economy that I've occasionally called the make everything economy, right? Kind of like Amazon, the everything store.

Keluar Sekejap (0:27)

You could argue the defining feature of this region is hedging.

Damien Ma (0:32)

That's going to be something that Beijing has a very, you know, strong hardline red line on. What happens when China equals or surpasses the frontier, yet still is 60 to 70 percent cheaper?

Keluar Sekejap (0:43)

I tend to hear this race narrative, that this is a race between the US and China from the US. Don't really hear it as much from China.

Damien Ma (0:51)

He's like, there may be a race, but at the end of the day, AI is basically made by Chinese.

Some Chinese are in China, some Chinese are in America. I don't think as many Chinese firms are so AGI-pilled. We don't need to have all the computer world because we're not necessarily chasing that ultimate AI god.

Keluar Sekejap (1:09)

If you're going to make a show about technology and power from where I sit, you're going to end up talking about China a lot. Because for a country like mine, China isn't a topic, it's a condition. It's our largest trading partner, it's where a lot of the capital and hardware comes from, it sets the price of our energy transition, whose models our companies increasingly build on, whose standards we end up inside. So when it comes to the great power competition, the immediate question for me isn't who wins, it's what happens to the countries sitting between them. This is the first of what I hope will be several conversations about China and technology on the show. My guest today is Damien Ma, Director of Carnegie China, the Singapore-based arm of the Carnegie Endowment, one of Washington's oldest foreign policy institutions. Before that, he founded and led Macropolo, the China think tank Hank Paulson set up after running the US Treasury, and earlier, the China practice at political risk firm Eurasia Group. We covered a lot, whether the chip controls backfired, whether China stays open source once it reaches the frontier, how Beijing actually sees Southeast Asia, and what happens when Chinese technology stops being nearly cheaper and starts being better.

Damien Ma, welcome to Keris & Silicon.

Damien Ma (2:26)

Thank you. Thank you. Great to be here.

Keluar Sekejap (2:28)

Damien, about 13 years ago, you wrote a book, a title, In Line Behind a Billion People, arguing that to understand China's story or to understand what China does at home and abroad, you had to understand what it was short of, whether it was energy, water, pensions, and not what it was ambitious for.

But I look at China today, and it makes most of the world's solar panels, it installs most of the world's industrial robots, refines most of the world's rare earths. So I wonder, as the author of this book about scarcity, how do you read China today? Is the frame that you described still relevant, or has China done something that you didn't anticipate?

Damien Ma (3:15)

So I haven't thought about that book too much in recent years, because it is about 13 years old. But the funny thing about that book was the original title we really wanted was actually China is number one, but with a question mark. Because it was trying to play off of a pretty popular book in the US in the 1980s called Japan is number one, without a question mark. Right. So, but then the editor talked us down, I was like, Oh, you're doing a book on scarcity. So, in line behind a billion people was a better metaphor. So, the scarcity prism. So, the reason we wanted to write the book was, one, this was coming out right before Xi Jinping ascended to power roughly around that time. So, part of that was at the time, I think one of our biggest badly missed assumptions was that he would stick to the norms and stay for about 10 years, which is what previous leaders did. So, we were trying to look into the next decade of China, the sorts of challenges that he would have to deal with as a new leader of China. So, that was point number one. The other purpose was, we thought at the time there weren't too many good books that were trying to produce a mental model for thinking about China and approaching China. And I'm big into having good mental models or having a scaffolding of how to think about this big giant country that is probably one of the best case studies for thinking about development. And so, we thought scarcity was a good central concept to kind of build that mental model. And scarcity to us was really about if you peel the onion a little bit further, it was about how that the Chinese government and the Chinese state in general was cursed by this supply side thinking. So, scarcity meaning they never think they have enough of something. Right, they always have to produce. So, it's not demand side thinking because for them, demand was by default because they always said, well, we have 1.4 billion people, scale is our default, demand is our default. They never really thought that much about demand, right?