The 2nd China Shock: Why Chinese Companies Are Making Zero Profit
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Jul 15, 2025
The hosts dive into the dynamics of U.S.-China economic relations amidst global political changes. They discuss the challenges facing Chinese companies, particularly in the electric vehicle sector, and examine the implications of government support for low-quality firms. The conversation touches on China's ambitious Belt and Road Initiative and its unintended diplomatic repercussions. Finally, they explore the potential parallels between China and Japan’s economic hurdles, especially regarding industrial output and demographic shifts.
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insights INSIGHT
Middle East Conflict and U.S. Interests
The Israel-Iran conflict is regionally significant but the U.S. should seek to disengage from Middle East conflicts.
A peaceful regime change in Iran could remove America's interest in the region sustainably.
insights INSIGHT
U.S. Recession and Industrial Policy
A U.S. recession needs consecutive quarters of GDP shrinkage, which is borderline happening now.
Tariffs alone won't revive U.S. manufacturing; complex industrial policy is required for growth.
insights INSIGHT
Growth Resistance by Blue States
Blue states generally resist growth due to environmental and cultural reasons.
Red states have a stronger pro-growth culture, enabling more industrial development and factory building.
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The Long Game
China’s Grand Strategy to Displace American Order
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Rush Doshi's "The Long Game" meticulously examines China's grand strategy since the end of the Cold War. Drawing from extensive primary source material, including party documents and memoirs, Doshi unveils China's long-term ambitions. The book details China's strategic phases: blunting, building, and expansion, highlighting shifts in approach based on perceived power dynamics with the US. Doshi's analysis provides crucial insights into China's intentions and the implications for US policy. The book's comprehensive research and clear presentation make it a valuable resource for understanding the complexities of US-China relations.
Abundance
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In this book, Peter H. Diamandis and Steven Kotler present a contrarian view that the future is brighter than commonly perceived. They document how exponential technologies, DIY innovators, technophilanthropists, and the rising billion (the world's poor empowered by modern communication technology) are conspiring to solve global problems such as access to clean water, food, energy, healthcare, education, and freedom. The authors provide examples and strategic roadmaps for governments, industries, and entrepreneurs to address these challenges, offering a optimistic outlook on the potential for technological innovation to improve human living standards[2][4][5].
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The Capture of the World's Greatest Company
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This week, Noah Smith and Erik Torenberg analyze recent global events—from a political shift in New York to the Israel-Iran conflict—while exploring U.S.-China economic dynamics, evolving industrial policies, and the risk of a recession. The conversation also touches on historical economic shifts, tariffs, and manufacturing trends.
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SEND US YOUR Q's FOR NOAH TO ANSWER ON AIR: Econ102@Turpentine.co
New York City Politics: Discussion of a "Muslim socialist" winning what appears to be a NYC mayoral race.
Middle East Geopolitics: Analysis of recent Iran bombing and its economic implications.
China's Current Industrial Policy Problems: Xi Jinping's aggressive subsidization of strategic industries (EVs, semiconductors, batteries, solar panels).
Key Economic Insights: China's export percentage of GDP is now lower than many developed countries, but the absolute volume still creates massive global impact due to China's size.
US Manufacturing Revival: The importance of reducing regulatory barriers to enable more "sub-Elons" (entrepreneurs like Elon Musk).
"Econ 102" with Noah Smith and Erik Torenberg 
