Transcript: Cyrus Janssen Interviews Shaun Rein on US China Relations in 2025

We’re going to start off with a big question here.

What is the biggest thing that Westerners are misunderstanding about China in 2025?

Shaun Rein: I think a lot of top people right now in the United States and in Europe are saying China’s uninvestable. I’ll give a story, and I wrote about it in my book. I was interviewing with this major multibillionaire.

I think he earned four or five billion US dollars last year in profit for himself. He’s one of America’s wealthiest men. I was talking to him recently, and he said, “Shaun, China is uninvestable. I’m never going to put money in there again.” When I pushed him on it, it was because he had gotten hit hard during the whole Alipay IPO fiasco when Jack Ma in 2020 criticized China, and then China’s government stopped the IPO of Alipay. When that hit, the entire international investment community said, we’re not going to invest in China anymore.

It’s basically been four or five years. American investors in New York and San Francisco say, we just don’t want to invest in China because Xi Jinping himself is anti-capitalist. We’re turning to a cultural revolution 2.0, and we don’t want to get access into China. That’s why you look at it, the MCI China index has a PE ratio of only 11, while India’s is at 20. We’re at historical lows right now, and I’m a contrarian. I actually think we’re about to see the start of a long bull market.

The reason, Cyrus, is because I think people like this big hedge fund billionaire in New York misunderstood the reason for the crackdown on Jack Ma, Tencent, and Alibaba, and the entire tech sector. You have to remember, in those days, five, six years ago, there was basically a duopoly in the economy. Alibaba and Tencent controlled everything.

They stifled innovation, they stifled fair competition, and they stifled fair market access. One of my clients, a big sports apparel company, said, “We sell a lot on Alibaba, which is great, but they’re basically like mafia. When Jack Ma says to discount, we have to discount. When Jack Ma says to jump, we have to jump.” This was causing really an unfair playing field for retail brands and for consumers. I think the biggest mistake a lot of Western brands make about China is that it’s uninvestable, because they misunderstood why China cracked down on Jack Ma.

I believe the crackdown was good. If you didn’t have it, I don’t think you would have seen the rise of China’s little dragons, companies like Xiaohongshu, or Red, or DeepSeek, or Pinduoduo, or Shine, and Tenmu. This crackdown was good.

However, I do agree with a lot of criticism of the crackdown. I think the party cut too deep. They did it too fast.

One of the biggest issues is they did an okay job at communicating to domestic investors why they cracked down, but they did a terrible job, once again, at their international communication. Something China really needs to bone up and improve on is how they communicate to the outside world. They’re just not doing that well enough, which is why so many investors and so many companies say China’s uninvestable.

That’s the biggest mistake companies make. China is still the next China.

China’s Economic Scale and Growth

Cyrus Janssen: Yeah, I love that point. I love when you say China’s the next China, because we’re often hearing this in Western media like, who is going to be the next China? Is it going to be India?

Is it going to be these smaller countries like Vietnam, whose economy is growing very fast? One of the things that you pointed out in “The Split” that I was reading is we hear that, okay, China’s economy is collapsing. It’s not growing anymore.

Yet, you look at the rate, and it’s a 5% growth. You said that’s almost because of China’s scale, that would be equivalent to adding a Vietnam-sized economy every year. We still forget that scale of China and how massive the country is.

I think that’s also why there’s a lot of misconceptions in Western media and amongst Westerners.

Shaun Rein: That’s a great point, Cyrus. I think a lot of people say, let’s go invest in Thailand. Let’s go invest in Vietnam. Let’s go invest in India. The reality is scale matters, as you rightly point out. China’s economy is weak.

Don’t get me wrong. It’s growing about 5%. I think it easily could grow only 4.5%, 4.6% in 2025. Even if it grows at that number, that’s like adding an entire Thai and Vietnam economy to China’s. China’s already the world’s largest retail market. We estimate that there are about 400 million middle-class Chinese. That number is going to swell to 800 million over the next 10 years. That’s where multinationals, companies like a Canada Goose, like a Lululemon, like an Adidas need to figure out how to target because China is continuing to grow.

Now, a lot of people look at India, and they say, India is booming. When you look at it, India’s GDP growth in Q3 of 2024 was 5.7%. China’s was 5.4%. China’s GDP per capita is five times that of India’s. When you actually break down the numbers, it doesn’t make sense that everybody is rushing to India as being the major growth driver for the next three to five years. It’s still going to be China.

China’s going to count for about a third of overall global growth over the next five years, according to the IMF. Now, don’t get me wrong. India is a great place potentially to invest over the next 5, 10-year period, but if you’re looking to get profits in the coming one to two years, I still think China is the best place to be, especially when you see all the global chaos of the last month after Trump became president.

He said he wants to seize Greenland. He wants to take over the Panama Canal. He jokes that he wants Justin Trudeau to be the 51st governor of a state in the United States.

What you’ve seen, Cyrus, is a lot of European companies are starting to say, wait a minute, this de-risking goal that Ursula von der Leyen and Jorge Vutki wanted is stupid. We need to pivot back to China. Then you’re seeing the global south, I prefer to call it the global majority, are also saying, can we trust the United States right now under Trump?

We need to look for a stable trading partner. That’s going to be China. I think for the next three to five years, you have to be cautious.

It’s not a must-win, must-investment destination that it was 10 years ago, but China is still going to see a lot of growth for a lot of companies.

China’s AI Revolution and DeepSeek

Cyrus Janssen: Yeah, that’s a great point, Shaun. I think what’s really good is I want to shift here to one of the most important industries is going to be AI. I think the biggest story that came out a few weeks ago, obviously, DeepSeek R1 that completely revolutionized the entire future of the AI.

Quite frankly, they put Open AI on a high alert because they basically did the same thing, and they did it for 90% of the cost. It’s completely open source. I thought what was amazing with this is you had some legendary investors like Mark Andreessen, who helped create the first web browser, said DeepSeek R1 is simply amazing.

This is so profound. It’s open source. This is a gift to the world.

Tell me a little bit from your perspective because I know this is one of the chapters in your book is the war of artificial intelligence dominance. There’s certainly a battle between the US and China for the future of AI. Let us know your insights into the AI industry and what China’s been able to do with DeepSeek.

Shaun Rein: So let me take a step back and paint a negative picture of China’s economy because I think if we’re going to be balanced at looking at what China’s economy is like, we have to look at the negatives. Then I’m going to get into what’s happening with AI and the positive. I’ve been in China for most of the last 28 years, and there have only been two times that I have been worried about China’s economy from a systemic financial threat standpoint.

The first was in October of 2022. You and I talked about it the last time we spoke together where we’re at the height of zero COVID madness. No business was done in October of 2022 because when people went to a restaurant or when they went to a store, they were worried that their kid would be a close contact of a close contact and be sent to a quarantine hospital for a couple of weeks.

No business was done then. The second time that I got really nervous about the economy, frankly, was last year in August of 2024. We saw that housing prices had dropped about 30%.

Youth unemployment rates hit about 18.8%. Nobody wanted to hire anybody. Nobody was firing anybody because it’s actually very expensive to fire somebody in China. If somebody has been working for you for five years and you let them go, you have to give them a five-month salary plus 30 days notice.

What happened in August was a lot of companies said, let’s make life miserable for their employees. Let’s demote them essentially. Cut their salaries by 20%.

If they were a vice president, they might be demoted down to a director. In August, there was a lot of depression, a lot of anxiety. It was a very toxic time in the country.

That’s why the government launched their stimulus in September of 2024, a monetary policy stimulus to try to get the equity markets and the economy growing again. You know what, Cyrus? It didn’t work.

We saw that the equity markets went up for about four weeks, five weeks, and then everything flatlined or dropped in the November, December, January period. People remain nervous, which is why you see in the run-up to Chinese New Year, retail sales were anemic. People weren’t traveling abroad except to cheap places like Japan or Thailand because the whole country was in a very negative, anxious situation.

Here’s the great thing. Here’s what you just brought up about AI and what Marc Andreessen calls the gift to the world. That was DeepSeek.

DeepSeek came out in the middle of Chinese New Year and completely has transformed the feeling and the excitement in the country over the last three weeks. There’s a feeling now that despite the crippling sanctions from the Biden and Trump regimes on China, that China can overcome sanctions, overcome export controls, and become an innovative nation. What we’ve seen in the last three weeks, Cyrus, is that the 10% of China, these are what I define as the wealthy Chinese, people living in tier one cities in my book, these are the ones who are the movers, the shakers.

Their animal spirits have started to come back. We’ve seen some green shoots of optimism and excitement. So DeepSeek was a Sputnik moment for America, but for Chinese, it probably meant even more.

It meant that we could overcome the geopolitical tension. We’ve seen in the last three weeks, consumer confidence has gone up, sales are going up, equity markets are going up, there’s a stabilization in the real estate sector. It’s a long-winded answer, but I wanted to show how bad the economy was the last six months and how marked and fast that change was because of DeepSeek.

That’s why you saw earlier this week, Xi Jinping himself, for the first time since 2018, which was way too long, by the way, seven years, held a symposium with China’s leading entrepreneurs like Jack Ma, Pony Ma. So there’s this green shoots of excitement coming back into China. Investors still need to be very cautious, but I’m more optimistic now than I have been at any point in the last five or six years for China’s economy. It really changed things.

Cyrus Janssen: Oh, fantastic. No, Shaun, what I love with that answer is that, you know, you don’t sugarcoat the entire story about China, right? We share the good, the bad, the positive, the negative, and you have a very objective view of China, which is of course very hard to find in media today.

And I appreciate you giving us the history because that is certainly what the viewers and what our guests certainly want to understand is the whole story behind that. And I do think it is incredible now that you do see this symposium with Jack Ma, Pony Ma, also the DeepSeek founder as well. He was there meeting with Xi Jinping.

China’s AI and Semiconductor Race

Cyrus Janssen: I agree with you, that should have happened a lot earlier, but hopefully this is a new shift that we’re going to see in China. Certainly more opening up and the entrepreneurial spirit is alive again in the country. I want to talk a little about AI, which naturally leads to the discussion of semiconductors. I want to get your thoughts on, again, a very similar battle. We see the United States and China battling over semiconductors. Tell us a little bit more about this, because I think China is very good at doing more with less. Let me know your thoughts on semiconductors right now.

Shaun Rein: Eric Schmidt, the former CEO of Google, a couple of years ago said that China was 10 years behind the United States on AI. Just a few months ago, he said China was two or three years behind. And now we’ve seen with DeepSeek that China is as good, if not better, than ChatGPT and OpenAI.

This has been a constant theme in the United States, where even supposedly the smartest, the best and the brightest, like Eric Schmidt, denigrate China’s ability to innovate or don’t see the trend lines. And so Eric Schmidt, I think shamefully, is calling on Trump to add even more export controls onto China. Alexander Wong, another billionaire in the AI world, is also saying that the United States should slap more tariffs, more sanctions and more export controls to cripple China’s semiconductor sector.

But it’s very clear with DeepSeek and with the government policies that China is going to catch up to the United States on semiconductors. If the Dutch can do it, if the Taiwanese can do it, if the Americans can do it, it’s very clear that the Chinese can do it too. They’ve got the STEM brains, they’ve got the government policy, and they’ve got hundreds of billions of dollars that are being allocated towards investing in semiconductors.

So it’s not a question of if, but when China catches up. And the angle that I want to answer this on, Cyrus, is not so much about SMIC or Huaheng or the semiconductor companies themselves, but how big a mistake these export controls and sanctions were on shooting America in the foot. You know, I am an American like you, we both love the United States, we both like China, but I think we’re both red-blooded American patriots.

I would love it for Donald Trump to finally fire Marco Rubio and name me next Secretary of State. I’ve thought about running for Senate. So I’m American, even though I’ve spent most of my life in China.

And I see that these sanctions are not stopping the Chinese from innovating, but they are hurting American industry. You see, Intel is tottering on the brink of being a takeover target by TSMC and Broadcom. You see, NVIDIA, one of their largest clients before was Huawei.

And now NVIDIA has said, well, actually, Huawei is now one of our largest competitors. So the Biden regime’s sanctions have really hurt us. They’ve really hurt Americans and American industry.

And I think going forward with Trump, we need to come up with a smarter, more pragmatic way to deal with China. You can’t contain China’s rise. If you try to contain it, you’re running the risk of turning China into an enemy.

You’re also starting to see the global South, or again, what I like to call the global majority, are starting to view American hypocrisy. And they’re starting to gravitate more towards China when it comes to technology. You know, I was just in Saudi Arabia with my son, Tom Ryan.

And when we were there, Huawei was everywhere. Alibaba was everywhere. And when we spoke to senior people from Saudi Arabia, they all said, “You know what, Shaun, we want to buy Chinese technology now.”

They don’t want to buy technology from the United States because they don’t trust it. They feel that the Americans will weaponize not just SWIFT and the currency and financial system, but also technology. And so they worry that if they base their economic hopes on buying NVIDIA chips or Intel chips and other forms of American technology, in two, three years, if the Americans don’t like what they’re doing, they’ll cut it off.

And that’s why you see that countries like Kenya, countries like Saudi Arabia, Thailand, Singapore are all starting to buy more and more Chinese technology because they trust that the Chinese can be a stable partner. So I really hope that Trump takes a step back and says, wait a minute, if we’re going to maintain American prestige, if we’re going to maintain America as an economic and technology powerhouse, we have to stop all these sanctions. We have to stop all these export controls because the Chinese, they’re just going to out-innovate us.

They’re going to do more with less. And the global majority is going to buy their products, not ours. That’s shameful for what’s happening to the United States.

Intel’s almost out. Pat Gelsinger, the CEO, was fired a couple of months ago.

The Tariff War

Cyrus Janssen: Yeah, it’s incredible because Intel was actually the worst performing stock in the S&P 500, which is just remarkable considering it has been for many decades a staple in the American stock exchange. And I want to talk a little about this perfect segue into the next topic, which is going to be this tariff war. We have seen Donald Trump certainly loves the tariffs.

I mean, even threatening our close allies and neighbors, Canada, Mexico, with 25 percent tariffs. I think that would have been a disaster on the U.S. economy. I like what you said, if we’re tariffing and sanctioning, it’s not so much slowing down China, it’s actually shooting ourselves in the foot.

We have seen increased tariffs. Donald Trump did pass the 10 percent tariffs on China. Can you share a little bit your thoughts on a specific tariff war?

And do you think that this is a lesson that Trump’s going to be able to learn that tariffs ultimately do not work? Or is this going to be his strategy in this next Trump 2.0 term?

Shaun Rein: So nobody wins with tariffs and a trade war. I mean, the Chinese industry is going to get hit hard, let’s be honest, but they’re better set up now than they were in 2018 during round one of the trade war. At that point, 18 percent of Chinese exports went to the United States.

Now it’s down to only about 14 percent, only about 2.5 percent of China’s overall GDP is actually in exports to the United States. China is largely a domestic driven economy, unlike Vietnam. Vietnam should worry because about 20-30 percent of their economy is based off of exports to the United States.

And there’s a worry that Trump might put tariffs on them as well, as well as he’s been going after the EU. But again, you’re right. Americans also will get hit hard with tariffs.

The average spending per American is going to go up by about thirteen hundred U.S. dollars for all of these tariffs. Walmart just saw their stock drop six to eight percent last night because they said that if tariffs come in against China, that’s going to hurt their earnings. So, again, tariffs would be a way that Trump is shooting the United States in the foot unless—and this is like an odd statement—unless he really does abolish the IRS, gets rid of the personal income tax and only use tariffs almost like a consumption tax as a way to raise money for the federal government.

But I don’t like tariffs. I think it’s a huge mistake. Now, that said, this might surprise many of your audience members.

Chinese actually like Trump over Biden and prefer him over Harris and Walz. There was a feeling with Biden that he was an ideologue, an imperialist, and he was of the view that it was the United States and liberal democracies versus China, evil communist parties. And we needed to contain communism from an ideological, almost a religious-like fervor.

And then that was also backed by the normal realist international relation thinkers who think when you have a rising power, you have to keep them down. So there was a lot of worry that Biden would win the presidency. And that’s why in July, August, before he stepped down last year as a candidate, the economy here dropped.

When Harris came up, there was also worry because she was the vice president. Would she continue with this ideological attacks on China? You know, when the Chinese got good at telecom and Huawei, the Americans said it was a national security threat.

When the Chinese get good at apps like TikTok or Shine or Temu, the Americans say this is a national security threat. When the Chinese get good at cotton, remember, 20 percent of the world’s cotton comes from Xinjiang province. The Americans say, oh, there’s forced labor and genocide there.

So there was a feeling that under a Harris presidency, many of the same ideological attacks would hit China. And you also have to look at Tim Walz, the vice presidential candidate at the time. He lied and he said he was in Tiananmen in 1989 during the Tiananmen incident.

He wasn’t there. But you know when he got married? He got married on June 4th, 1994, the fifth anniversary of the Tiananmen incident.

So there was a fear in China that he was an ideologue and they were going to try to fight against China from a democracy ideological standpoint. When it comes with Trump, they say he’s transactional. He’s not an ideologue.

Maybe a deal can be done. Maybe there’s a pathway for Chinese business to be able to work with the United States. Let’s give an example.

Trump said, I don’t want the Chinese to export their NEV autos to the United States. I want them to build factories in the US, hire American workers, create jobs. Well, that’s fair, right?

That’s what the Chinese did to GM and the Chinese did to Ford in the 1990s. They said, if you want access to China’s economy, you need to build not just factories, but you have to set up JVs in China. So I think when Trump says that and when Trump says, well, maybe we’ll keep TikTok in the United States if they sell a 50% stake to an American investor, there’s a feeling from the Chinese that even with this overhang of a tariff war, it’s actually not that bad.

Unlike Biden and Harris, with Trump, there’s a way that a deal can be made. I think Trump has a pathological need to win. He’s going to say he needs to have a deal with the Chinese.

I don’t know if it’ll happen in year one or in year two or year three, but it’ll happen before he leaves presidency, hopefully in four years. He says, I beat the Chinese. And it doesn’t matter if he really wins or not.

It’s the MAGA people just follow him. So if he says he won, then that’s the reality.

The Closure of USAID

Cyrus Janssen: Yeah, certainly. I like that thought a lot. And I do agree with your sentiments 100% because it would be amazing to see a joint venture and to actually bring these Chinese EVs because the simple reality is that China is leading the world in this technology. When you go to China and you see that 50% of the cars on the roads are these EVs, there’s dozens and dozens of brands that are truly amazing.

And I mean, it’d be incredible to have that here in the United States and follow a similar fashion, right? When Ford and GM went to China, they opened JVs, they created factories, jobs for locals. It would be great to see that.

I agree with you. I think there is that ability potentially to get a deal. Obviously, Trump loves deals. He loves to win. And I think there’s already talks of him working on a “big deal” with China to try to cut a deal. But I want to talk about another interesting story that’s happened in the last few weeks, which is the closing of USAID.

And I think this is a very fascinating story because we have seen, this is an interesting organization that certainly does a lot of very good charitable events, activities around the world. But unfortunately, there’s a tremendous amount of corruption. And there’s been a lot of anti-China propaganda within this organization.

Tell us your thoughts about the closure of this government agency and what that really means for people wanting to get information on China.

Shaun Rein: Well, what’s interesting is just today, the Hong Kong Democratic Society announced that they’re going to dissolve. So is that a coincidence? Just a couple of weeks after USAID is dismantled and Trump stops all foreign aid?

I don’t know. You know, there’s rumors that Mark Clifford, who is the former editor in chief of the South China Morning Post, who wrote books about how good Jimmy Lai, who’s in jail right now for I think it’s treason or sedition or working with foreign interference powers, that he was paid from USAID. So I think it’s been clear, with some of the initial information coming out, that 9,000 journalists were paid by USAID.

And I think that they had a very negative narrative on what China is. And I hope that Elon Musk, and I hope that Trump will sort of go through this and say, you know what, let’s make sure we have balanced coverage of China. If a journalist wants to write something negative about China, I’m totally fine with that, as long as it’s true.

So you see, the Financial Times often writes a lot of hit pieces or hard-hitting pieces on China, criticizing them. But it’s founded in fact for the most part. We need to see, are some of these other ones funded?

I’ll give an example. A couple of weeks ago, I spent several hours filming for a PBS frontline documentary on Tibet. And they interviewed exiles. And they basically said, “Shaun, you’re one of the few Westerners that traveled to Tibet in the last couple of years.” I went all over the place. I went three times in the last few years.

# Exploring Tibet and Xinjiang: Firsthand Accounts

[SHAUN REIN:] I went to schools. I went to hospitals. I went to monasteries.

So I sat there for three hours telling them what I found, that kids still learn Tibetan in the classroom. That most parents that I interviewed liked the boarding schools, because instead of their kids traveling for three hours every day from their homes in the middle of nowhere to the villages, they now can live at the schools, so they don’t have to commute for three hours a day. So it makes everybody’s lives a lot better.

I was cut out of that. They took every single quote, soundbite, piece of evidence that I did, and they took it out of the Tibet documentary. So I just wonder how much of that funding came from USAID.

When you look at their funders, it’s a lot of NGOs who do have USAID backing. So I’m hoping that we’re going to have a more balanced view of China going forward. Again, not a pro-China view, a pro-truth view, which is what I like to have on, where China’s doing well, where China’s not doing well.

They needed to improve their zero COVID implementation, as I’ve mentioned before. They need to have Xi Jinping meet with entrepreneurs and the foreign business community more to let everyone here know, actually, it’s okay to try to be greedy. It’s okay to try to be rich again.

It’s okay to try to be capitalist and help the economy grow. But I do think that the crackdown on USAID is highly coincidental that so many different organizations from ASPI to the Hong Kong Democratic Association are all complaining about the lack of funding.

[CYRUS JANSSEN:] Shaun, I want to share a tweet with everybody. I’m going to put this on screen, but it says, this is a tweet that you sent out just today on the day of our interview. You said, “No, I’m not a China defender. I’m a defender of truth. If China was committing genocide in Xinjiang, I’d be the first person to condemn the actions, but I haven’t seen evidence of genocide. I visited Xinjiang three times to investigate. Same with Tibet. So I defend the truth, not China.” I know that pretty much mirrors exactly what you said.

Tell us a little bit about Xinjiang though, specifically. I know that is a talking point for many people. You’ve broken down your visits to Tibet.

I’d like to get a little bit of insights into Xinjiang because I think you’re one of the few who have traveled there the most. And, you know, interesting enough when we, it kind of goes in these interesting cycles, these news cycles. Sometimes the Xinjiang stories are very prevalent in Western media. Then it goes quiet for six, seven months, and then they’re back up in the press again. Tell us your experience in that. And that would probably be China’s most controversial province, you know, at least in the Western media eyes.

Experiences in Xinjiang

[SHAUN REIN:] Well, I absolutely love Xinjiang. It’s one of my favorite places in the world to visit. I’m actually half Chinese and half Jewish.

So when I’m in the United States, people view me as Chinese. When I’m in China, in a place like Shanghai, they view me as a foreigner, a Laowai. When I’m in Xinjiang, they think that I look the same.

So it’s actually the only place in the world where I feel that physically I look like everybody else. And they come up and they talk to me, you know, in the local language, in Uyghur. Absolutely love it.

I think two points before I get into my analysis of it. First is if you don’t believe me, go on to Xiao Hongshu, go on to Red Note, go on to Little Red, whatever you want to call it, and have real conversations with Uyghurs. I think one of the great things about Red Book over the last couple of weeks is that Chinese have seen that maybe America’s not as good as they envision. And a lot of Americans have realized maybe China’s not as bad as they thought it was. And you can actually talk to Uyghurs. There are a lot of Uyghur people that are on there. You can see real life.

Second, come visit. There are absolutely zero restrictions on Xinjiang. An American can get on a plane, fly into China, go to Xinjiang, and look around. But from my experience, it’s one of the most optimistic populations in the country today. And I think you can view it with some criticism that China didn’t invest enough in infrastructure, in heavy investment in real estate over the last 20 years.

Xinjiang was one of the least developed, one of the poor regions. And so it’s only been in the last 5, 10 years that the government has allocated huge infrastructure spend. And you’re starting to see that create new malls, new apartment complexes, and an optimism in the Xinjiang local Uyghur population that life is getting better.

So you can view it as a criticism of China that they took too long to get to Xinjiang, but now they’re doing it. And now it’s one of the most heavily touristed spots in China. Chinese from all over the country are going there to go skiing.

They’re going there to go view these just absolutely stunning rivers and stunning mountains. It’s one of the nicest places in the world to visit. Now, for me personally, I went three times.

I actually taught at a local school there, a group of Americans. We all went up to Xinjiang, and we worked with ethnic minorities to teach them for a week or two. We lived at the school campus.

It was a great experience. Amazing. I didn’t see any of the allegations of genocide or cultural genocide being true, but I did see a couple areas that you could criticize.

So I went out and I went on my own and just got into a taxi and just drove around and started interviewing people to see if anything bad was happening. And I was called in by the authorities to have tea. And they sat down with me and they were very pleasant.

And they said, well, what are you doing? We hear that you’re going around and interviewing people. And I said, I am interviewing people. I want to know the truth about Xinjiang. I also had a drone with me, and they said, we want to see your paperwork to make sure that your drone is legal in China. And I said, OK, here’s my paperwork.

I’m asking questions to find out the truth about Xinjiang. I’m doing everything 100 percent legal, aren’t I? They said yes. I left. I never heard from them again. And I was free to go anywhere in the province that I wanted to interview people.

Now, some things that I found there that might have been a little heavy-handed, and I write about this in my book. There was an 18-year-old village girl that I met who said she wanted to take my son and me to visit her village to see how locals live. And then she said, you know what?

I don’t want to do it because it’s too mafat or too troublesome. If I do it, I have to register with the local neighborhood committee that I have guests. Now, to me as an American, that’s a hit on freedom.

That’s a hit on human rights. Like, how dare I have to tell government whenever somebody from outside my village comes to my home for a visit. But you can also understand that they are doing it to crack down on terrorism, to crack down on some of the separatism and violence from before.

There are other things that you could criticize, such as you can’t take your kids to mosque until they’re 18. After the age of 18, they’re allowed to freely practice Islam. But when they’re younger, they can’t.

But that, Cyrus, isn’t targeted just at Islam. It’s also true for Buddhism, Taoism, Christianity, all the major religions. The government says you can’t practice officially until the age of 18.

Now, I can understand why a lot of people would criticize that because they want to raise their kid in their own faith. But I don’t consider that cultural genocide or genocide. I view that as a pragmatic approach to the historical narrative in China, where tens of millions of people died in the 19th century because somebody said he was the second younger brother or something like that of Jesus Christ.

So there’s been a lot of unrest because of religion. And to me, frankly, there’s a lot of wars around the world because of religion. So you see what’s happening in Gaza right now.

So I think you can understand why the government cracks down on that. But overall, Xinjiang is awesome. I can’t wait to go back. I hope everybody in your audience goes and visits. I haven’t seen any evidence. Again, I’ve been to cotton fields, I’ve been to cotton factories, I’ve been to hospitals, I’ve been to schools. I haven’t seen anything that would hit me that I would need to complain greatly is something evil.

[CYRUS JANSSEN:] Well, thank you, Shaun. I appreciate your insights into Xinjiang. And I do think it’s awesome because what we’ve seen now with China as well is there’s been a big opening up because I think there’s 65 countries around the world that are now visa-free to China, even including our home country of the United States, which you can now get a 10-day transit visa, which is really great because it really makes it much more accessible.

And I think that’s a message that I preach as well is get out there. If you want to experience China, get a plane ticket, go. I mean, there’s never been a better time to explore China. And I want to switch over to our next topic.

[SHAUN REIN:] It’s cheap right now. Because the D word, deflation, is hovering over the country. China has the best deals for tourism because so many hotels were built in the last 10 years.

They’re brand spanking new and they’re cheap. I stayed about 150 nights at the Park Hyatt at Suzhou, my favorite hotel. If you ever go there, tell them you know me.

150 nights writing my book because it was only $200 a night. The Park Hyatt in New York is $1,000 or $2,000 a night. So it’s a great deal to come travel now.

[CYRUS JANSSEN:] Agreed. Agreed. Yeah.

And actually, we’re going to be traveling back to Shanghai this summer. I think we’re going to get a chance to meet up there, which would be really great. Maybe do an on-the-ground vlog in the streets of Shanghai.

The Taiwan Question

[CYRUS JANSSEN:] Shaun, I want to talk about another controversial topic here, which is going to be Taiwan. I think many people probably know that the cornerstone of the US-China relationship really does hinge on the Taiwan question or relationship, however you want to call it. Obviously, for over 50 years, the United States has officially recognized Taiwan as part of China under the One China policy.

What are your thoughts on Taiwan in 2025 and moving forward, especially with Donald Trump as president and knowing just how important Taiwan is to China and the future of the US-China relationship?

[SHAUN REIN:] So a lot of people, Cyrus, say that Taiwan, that China wants to threaten the way of life of other countries and conquer other countries.

[CYRUS JANSSEN:] Right.

[SHAUN REIN:] David Perdue, former senator who’s now Trump’s pick to be the next ambassador of China, wrote an article a couple of months ago where he said China is trying to implement the CPC into the United States, threaten our way of life, and implement their political and value system. To me, this is just garbage. China, historically, is not looking to invade.

There are issues when it comes to areas where it considers its own nation, its sovereignty, Hong Kong, Xinjiang, Tibet, Taiwan. I don’t see China ever saying they want to go to Australia like ScoMo was threatening about or fear-mongering about. I don’t think they’re going to go to the Philippines or they’re going to try to seize Vietnam.

I just don’t think that’s going to happen. I’ve seen zero evidence of that. They will fight, and there is a red line over Taiwan.

That’s a very complicated issue where, because of the civil war that never ended properly, the Chinese have been taught from a very early age that Taiwan is part of the mainland. And it’s something core to the Chinese DNA and identity, that they will never allow it to go independent. I don’t want to get into who’s right and wrong on this, because I can understand many different sides, frankly.

But what I would say is I am not worried about Xi and the CPC launching a military attack anytime soon. A lot of people say that if China’s economy goes bad, that the Chinese are going to attack to divert attention from their own failings and the falling economy. Well, wait a minute, they would have done that at the height of zero COVID in 2020 or 2021, when the economy was really going bad.

Or even better, they would have done it in 2022, like I said, when the first time I was scared about a systemic financial threat. That would have been a great time to divert attention. They didn’t do that.

What has China actually done in the last two years, and I write about it in my book, is they’ve launched a charm offensive to Taiwan’s government officials, the opposition party, the KMT or the Kuomintang, and to Taiwanese businessmen. So one of the things they’ve announced is that if you’re Taiwanese, you get special economic benefits if you want to buy a house in Fujian province, which is the province closest to Taiwan. You can get access to health care, and you can get access to education.

This clearly is something where China is trying to win the hearts and minds of the Taiwanese population and Taiwanese business community by helping them make money in Fujian province. They’ve also launched a huge charm offensive with the opposition party or the KMT. They met with Taiwan’s former President Ma.

He came to China. He actually met with Xi Jinping himself, which was unprecedented. And he was feted as a hero.

China’s Approach to Taiwan

Shaun Rein: He and other senior Kuomintang officials throughout China over the last couple of years. So to me, unless the United States provokes a proxy war in Taiwan or does something where many Chinese think that the United States and NATO provoked Russia over Ukraine, unless they do something like that in Taiwan, I don’t see China doing anything in the next five years. It’s clear that these sort of charm offensive take five to 10 years to come to fruition.

China doesn’t want to attack Taiwan. They view Taiwan as their cousins or their brothers. A much bigger risk, frankly, Cyrus, is the South China Sea.

I think you see what’s in the Philippines with Bongbong Marcos and his own political struggles with Duarte’s daughter, who was just pushed out. You know, she was the vice president. There’s a bigger risk of a Chinese naval ship or Coast Guard hitting a Filipino naval ship or fishing trawler and people dying.

And I think that there’s enough hatred or dislike between the Filipinos and Chinese. And I think, frankly, there’s racism from both sides. The Filipinos look down on Chinese and Chinese look down on Filipinos that I’m not worried about Taiwan, but I am worried about the South China Sea.

You see that under Biden, the United States has started reopening some of the military bases like Subic and Clark’s in the Philippines. I actually used to live in the Philippines. I lived in the Philippines before I even moved to China.

And they always considered themselves the 51st state. So I see that’s a greater flashpoint for risk. Taiwan, I just don’t see that. Not anytime soon.

Cyrus Janssen: No, I completely share your sentiments as well. And I think that’s one thing that a lot of people here in the United States fail to understand. They think, hey, you know, China, they’re going to just wake up one day and just start bombing Taiwan.

And I said, we need to just go to the most basic element here. Chinese people look at Taiwan as their brothers and sisters. You know, it’s not like they’re trying to invade a sovereign country or we need to take over Thailand. We need to take over Japan. We’re going to make this aggressive move. And then we look at the history.

I mean, China hasn’t been involved in a war for over four decades. And, you know, you look at their they’re also not irrational. I don’t think, you know, Xi Jinping is going to wake up one day and just irrationally decide to make a move like that. There’s just too many things that are going on behind the scenes.

Shaun Rein: You can see they always try to use money. Right. So like I said, they’re investing heavily into Tibet and Xinjiang, which is why those populations, you know, obviously some people in those regions don’t like the CPC, but they’re slowly winning over the majority.

China’s launched Greater Bay in southern China to integrate Hong Kong, Guangzhou, Shenzhen. It’s clear that they’re trying to win over Hong Kong support. And so to me, it’s similar. It’s very clear they’re trying to launch a charm offensive on Taiwan. They want to win over the hearts and minds. It’s not going to be easy.

This is not an easily solvable thing, especially with the DPP. But on the good side is I think a deal can be had with Trump. Right. Trump has been attacking Taiwan, saying, why are we paying for Taiwan’s defense? Taiwan should pay five percent more of their annual GDP on defense. And you see President Lai has run to say we’re going to bolster our defense spending.

And then Trump has said it’s not fair because the Taiwanese have stolen our chip industry. So TSMC needs to invest more in Arizona and invest more in opening up projects and maybe get them to buy or bail out Intel. So I think you’re going to see under Trump who’s not he’s very much I win, you lose mentality. He’s not a win win mentality. Right. He wants to extract as much as he can from Taiwan.

I think Taiwan’s in a very precarious position. If I was Taiwan, I would lessen the rhetoric. You know, don’t make calls for independence. Don’t say China’s CPC is evil. Try to keep the status quo and be calm with it. And hopefully there will be a reunification that’s peaceful or there will be a separation that’s peaceful and goes over several decades.

Predictions for China’s Future

Cyrus Janssen: Fantastic insights, as always, Shaun. I want to as we’re coming here to the end of our interview, I have two more questions for you. First one, I want you to give a little bit of prediction for us for China in 2025 in the next few years.

I think you started today’s interview by definitely showing some optimism, talking about this symposium with Xi Jinping and some of China’s greatest tech leaders. Do you think are you feeling more optimistic for the Chinese economy and the future in general? I mean, are you advocating for people to be open to do some due diligence, potentially start investing in China again?

It was a little bit your predictions on how you feel the rest of this year and maybe the next couple of years, you know, under Trump, you know, as the U.S. president. What are your feelings for China in the future?

Shaun Rein: For investors, so the equity markets, that’s the easiest place to make money. I usually recommend to retail investors to get 10, 15 percent of their portfolio to get exposure to China. As I started off, key ratios are too low.

The MISC China index is only at an 11 P ratio. India is at 20. And India’s already dropped 20 percent in the last several months in value. Foreign investors have pulled 50 billion dollars out of Japan in the last year. I think that valuations in Japan and in India are still too high when people pull money out there. Where are they going to put their money? I think it’s going to be China.

The second thing is I’m worried about the United States. I don’t know when it could be this year. It could be two years from now. It could be five years from now. But there’s going to be a major financial risk, a major crash in the United States.

You can’t double your debt in a five, 10 year period. We’re sitting on 36 trillion U.S. dollars of debt. The spending is absolutely out of control, especially in the military, where we’re spending 850 billion U.S. dollars a year. And one of the key things is we are at record highs of the amount of foreign money that has flowed into the United States over the last year, chasing profits in the equity markets. We are at absolute historic highs. At some point, there’s going to be a crash.

Too much of the economy or the equity markets have boomed because of Feng and the Magnificent Seven. At some point, the American equities are going to drop. Japanese equities are going to drop. Indian equities are going to drop. And where are you going to look for profits? It’s going to be China, which is at all time historical lows.

I tend to be a contrarian when it comes to investing. And like I said, when I started off this interview, we talked about that hedge fund billionaire in New York. He wanted to invest in China because he thought Xi Jinping himself was anti-business. He felt that Xi Jinping was closed off to foreign investment. But as you and I have talked about, China’s opened up visa free for dozens and dozens of countries, including the United States. My 28 years in China, certainly since 2008, China is more open to FDI now than any time in the last 20 years.

So when I hear the bear case for China, it doesn’t jive with what I’m seeing on the ground. So from an equity market, I would be putting money into Chinese Hong Kong and A-shares right now. Now, the overall economy is still facing some structural issues.

We’re still going to deal with several years of pain. It’s not easy shifting from a heavy investment infrastructure and export led economy to one that’s based off of consumption. We have to build animal spirits. We have to build confidence amongst Chinese consumers before they go out and spend again. You can see last year, retail sales only went up 3%, 4%. Fixed asset investment was anemic, around 0.1% for SMEs in the private side because everybody is holding on to their dollars. They’re worried that there’s going to be a geopolitical fight that’s going to last 20 or 30 years with the United States. So nobody wants to spend money.

What the Chinese government needs to do, more than a monetary policy stimulus, more than a fiscal stimulus, is they have to do more events like Xi Jinping meeting with senior business leaders in China and abroad and make it very clear to everybody, China is pro-business, pro-profits, pro-capitalism, and open for business again.

Chinese households, Cyrus, are sitting on $20 trillion of household savings. There’s money in China. We just have to get people feeling confident to spend it again. That’s why I like the equity markets. That’s the first place that investors are going to be able to gain from any tweaks and any shows that China’s open for business.

Final Thoughts on China

Cyrus Janssen: Yeah, fantastic. Well, Shaun, I love your insights and I love your bullish sentiment because for the last 45 minutes, you just backed it up with a lot of solid research and numbers and everything. Got one final question for you.

What is one thing that you want the world to know about China?

Shaun Rein: That it’s safe. I think when I talk to a lot of foreign businessmen, they think that it’s dangerous. They’ve read in the Wall Street Journal that China is randomly arresting executives.

I’ll give a couple examples. I was supposed to give a keynote to the top 60 executives in November 2023 of one of America’s largest sports apparel companies. They canceled on me because they were too scared to come to China. They ended up coming last year and they said, wow, China’s safe. The Chinese people are so friendly to us. The Chinese government was perfectly fine with us.

And that company is seeing about 30% growth year on year now in their sports apparel products in China because they actually came. I think people just need to know it’s completely open, completely safe. It’s wonderful to travel.

You can have your wife or your daughter or your kid walk around at two in the morning, you know, anywhere in China and it’s perfectly safe. That is wonderful. That to me is human rights. Being able to go outside and not be worried about being gunned down by a drug addict or homeless person. That to me is a more important human right than carrying a gun or freedom of speech.

Cyrus Janssen: Yeah. Well said, Shaun. Thank you so much for all of your analysis and your insights and everybody.

And again, once again, if you are looking for the best book about China in 2025 and what the future is, we talk about so many of the things that we talked about in today’s, but a lot more, you’re going to find that on the split. We’re going to drop the links down to this. Also, you can follow Shaun on Twitter. Fantastic. Follow, connect with him on LinkedIn. We’re going to put all those links down in the description.

Shaun, fantastic to see you again. Thank you for coming on Real Talk. And I can’t wait to see you in China later this year.

Shaun Rein: Great to see you, Cyrus. And my son is so excited to meet you in person in June. Hope we can make that work.

Cyrus Janssen: We’ll definitely make it work. And we’ll feature him in a video as well, because I know that your son has won numerous awards and he’s a fantastic entrepreneur building his own drones. I think it’s a fantastic story.

We’re going to bring that to the YouTube channel as well. Everyone, thank you for making it to this point of the video. And if you enjoyed Shaun’s interview, please check out his bestselling book, The Split.

I’ll leave an Amazon link in the description for you below. I’m honored to be inviting amazing guests like Shaun to the channel for the best insights into China and make sure you click here to access some of our other interviews with other noteworthy China insiders, including Singapore’s Kishore Mapubani and also economist Stephen Roach. Finally, make sure that you’re also subscribed to my geopolitical newsletter.

I’ll also include that link down in the description below. As always, I want to thank you for your amazing support and we look forward to seeing you in our next video soon.

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