The US and China Are in an All Out Race For AI Domination

Kevin Xu (0:03)

Bloomberg Audio Studios, podcasts, radio, news.

Joe Weisenthal (0:21)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:26)

And I'm Tracy Alloway.

Joe Weisenthal (0:27)

Tracy, obviously, there's a lot of, there's an infinite number of angles to artificial intelligence and what's going on in the industry. But one thing that I find striking about this that feels very different from other stories in tech, and I don't really know what it's about, is why you hear it talked about in sort of geopolitical strategic terms, and why countries, whether it's the US, China, but also Saudi Arabia, Europe, really feel like they need to have their own domestic model or champion. It's almost like it's oil or something where countries have at least been convinced that it's very important for them to have some sort of homegrown AI.

Tracy Alloway (1:08)

Yeah, you're right. I hadn't really thought about it, but that's absolutely true. People talk about it almost as a strategic resource at this point. And sort of in existential terms. And you never saw anyone talking about the need for a national SaaS strategy or something like that, right?

Joe Weisenthal (1:24)

That's exactly what I was thinking. No one is like, oh, well, we have to have our own Slack, or we have to have our own Salesforce. We have to have our own British Salesforce and the Saudi Arabian Salesforce. But there's something about AI models. And it's sort of about the chips specifically, and everyone wants the chips, right? But there also seems to be something where countries want to really develop their own models and have their own open AI or whatever it is.

Tracy Alloway (1:50)

Yeah. I also wonder how much of it has to do with the data and the idea that the data is what you're training the model on. And so there's privacy concerns isn't the right word, but countries want to have some control over their own data. They don't want full transparency. So I wonder how much that feeds into it. But you're right. We have gotten used to talking about the AI arms race in one way or another. And we should dig into why that is. Like, why is it such a competitive piece of technology?

Joe Weisenthal (2:22)

Totally. And I would say, you know, there's two other things here, which is that obviously the ultimate in everything these days, a lot of it is US. China and how US models and US companies compare to Chinese models and Chinese companies, which I don't think many Americans have much visibility on, or at least I certainly don't. I don't really know what China's AI strategy is. And then there's of course existing policy and how that might change under a Trump administration and what that might do both to U.S.-China relations in general. And I don't know if that's going to be some sort of shift in how Trump might think about AI versus a Biden administration.

Tracy Alloway (2:58)

It is true that certainly the semiconductor portion of AI is something that has been competitive for a while now. And we've seen that in both the Trump administration and continued under Biden. So there is that kind of commonality running through it. But I am very interested in getting more of a handle on exactly what China is doing in this space and what it sees potentially as like an actual threat here.

Joe Weisenthal (3:24)

Totally. Well, I'm very excited to say that we have two perfect guests who really know all the dimensions of this topic extremely well. We are going to be speaking with Jordan Schneider. He is the founder of the ChinaTalk podcast and newsletter, one of my favorite sources for understanding what's going on in China. We're also going to be speaking with Kevin Xu. He is the author of the Interconnected newsletter and also a hedge fund manager at Interconnected Capital, writes fantastic stuff like sort of really digging into some of the technical and tech sides of all this. So hopefully, we will walk out of here with a little more understanding. Jordan and Kevin, thank you so much for coming on Odd Lots.

Kevin Xu (4:00)

Thank you so much for having us.

Jordan Schneider (4:02)

First time, long time. What a treat.

Joe Weisenthal (4:04)

I love when people say that. I love hearing it. It reminds me of like listening to like Sports Talk Radio as a kid. I'll just start with the question. What is it about AI? Is it inherent or is it the industry's marketing job? But what is it about AI that unlike Tracy mentioned, different from like CRM software, social networking or whatever, that countries really seem to prize having some aspect of it be homegrown?