ChinaTalk Deep Tech VC On AI, Chips, and US-China Competition
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Sep 30, 2023 
Noah Smith and Matt Klein, economists and Substack writers, delve into the intricate dynamics of the Chinese economy and its global ramifications. They discuss Huawei's breakthroughs and the hurdles faced by China's AI companies. The conversation touches on the semiconductor industry's challenges and how they mirror the struggles of AI startups. They even explore unique analogies, like pizza machines, to illuminate AI's impact on the labor market. With insights on investing in deep tech, they highlight the raw talent pool and the multifaceted risks involved.
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China's Economic Slowdown
- The Chinese economy has been slowing down since a peak growth rate around 2010.
- COVID-zero policies caused significant disruption, and the expected rebound after lifting restrictions hasn't materialized.
Xi's Ideological Stance
- Xi Jinping is ideologically opposed to stimulating consumer demand, favoring state support for sectors like semiconductors and electric vehicles.
- This approach contrasts with some economists' recommendations for a consumer-driven economy.
The Welfare Debate
- Some Chinese elites believe that excessive social welfare hinders economic development, citing Latin America as an example.
- This view contradicts the reality of Chinese workers being squeezed, with purchasing power redistributed towards local governments and businesses.