China vs USA: A NEW World Order | Professor Jiang

China is hosting a summit in Tianjin right now. It is with the Shanghai Corporation Organization and very famous members are attending. Russia, Putin, North Korea, Kim Jong -un is attending as well. And China is really trying to understand and maybe reshape the global world order. What does that mean? I've invited a phenomenal guest to the show, Professor Jiang. He can help us understand the mentality, what is happening right now on the ground, because he is based in China, he's based in Beijing, and I love getting different perspectives on this channel. We often look from one direction to the other. Let's look the other way. Let's try to understand what is the mission here of this summit and what can we learn from it? How will that reshape future developments? What can we take away as an investor from this summit? Because things like a new development bank are being discussed and how will that challenge, for example, the IMF or the World Bank?

So lots of implications could come out of this, and I'm really excited to learn more about it. Before I switch over to my guest, hit that like and subscribe button. It helps us out tremendously, and we much, much appreciate it. Now, Professor Jiang, it's a great pleasure to have you on the channel. Thank you so much for joining us. Thank you so much for inviting me, Kai. Yeah, it is your first time on the channel, and we need to take a look into your brain first to understand where you're coming from. You're on a really interesting YouTube channel called Predictive History with a lot of videos going viral, because you're really managing to sort of connect game theory with geopolitics. Maybe tell us a bit more about the title or the name of your channel, Predictive History, and what you're doing there. Predictive History is a really

interesting channel, and I think you try to achieve.

Right. So I'm trying to start a new global intellectual academic movement, which is trying to reimagine history for the 21st century. I believe that if history is to be taught well, and it is to be relevant, then it has to accomplish three goals. The first is that it has to connect the different elements of the past. It has to tell a coherent story of humanity. The second element is that it has to explain the present. Where are things, the world, and the world as a whole? And I think that's a really interesting channel, the way they are. The third element is to predict the future, to give us insight into what could happen in the future. So my theory is that if we understand history, we understand that we are working with certain assumptions and values. These assumptions and values give us a theoretical framework to understand the present and the past.

But then we can turn this theoretical framework into a predictive model to make assumptions and predictions about the future. If these predictions turn out to be accurate, then we can turn them into a predictive model to make assumptions and predictions about the future. If these predictions turn out to be accurate, they validate our model. I believe that through this work process, we can get a better understanding of our past, present, and future. And therefore, we as humans have better control over ourselves and our society.

Very complex, but very interesting, because the history often helps us predict the future. We should learn from history, and it often repeats itself, right? Or at least it rhymes, so we should know our history, right? So really interesting. Maybe applying it to today, I mentioned the summit that is happening in Tianjin right now. How can we put that into context, like very broadly speaking at first?

Yeah, so I think this summit in Tianjin shows the disparity in approach between the United States and China. The United States very much is interested in maintaining its hegemony. It's maintaining a unipolar world. And as a result, it is angering a lot of countries, including Russia, including Iran, including China. The Chinese approach is one that is based on a multipolar institutional approach that tries to build consensus and harmony within the geopolitical system. The Americans are very much interested in projecting military might. The Chinese system focuses on ensuring that everyone benefits economically from cooperation. I'm trying to put some sense in it.

It's a very complex topic, very interesting topic, of course, because the Shanghai Corporation has members. As you said, like Russia, Iran, Pakistan, which we in the West, of course, don't regard as the most friendliest of nations. How can you put that into a framework that is seen as friendly and makes sense? Like multipolar world, everybody's doing well, I think sounds like something we should all strive to achieve. But how do you get those players at the table and achieve that?

Right. So the main difference is that Americans take an ideological approach to geopolitics. Americans have a neoliberal mindset. And they insist that if you buy into this neoliberal mindset, then you're a good guy. But if you don't buy into this neoliberal mindset, then you're a bad guy. And that's how Americans differentiate the world. It divides the world into good and bad. Good are those nations that believe in human rights, believe in individual rights, believe in free markets. And bad are those who don't. The Chinese approach is that all ideologies are important. All ideologies are relevant. Let's ignore the ideological issue and focus more on how we can work together. And the way we can work together is through trade, open trade, multilateral trade.

The positions of trade, though, and maybe China is at a bit of an advantage because it's, of course, the strongest partner in this. So, of course, it's an easy thing to say, let's work together and trade because they're the ones to be most benefiting from it, of course. What is China offering maybe other member nations of the Shanghai Comprehensive Cooperation Organization and maybe in return? Because the U.S., I like the comparisons, is dealing with massive trade deficits, of course, because it feels like it's financing the world. What can China offer in return that partner nations like, let's say, Russia buys from China?

Right. So the United States believes that it's created this rules -based national order. But if you look at it in reality, this rules -based national order is heavily biased towards the United States and its allies. Right. Basically, what we've been seeing in the developing world for the past few decades is all these resources, precious resources, are going to the United States and the Western countries really cheaply. There's tremendous money laundering, capital flight from these third world nations to the first world nations. The elite of these developing nations have been co -opted by the Americans. And that's why we have we've seen pretty limited economic development, economic development in Africa, in South America, in the Middle East. Now, China's approach is let's create a system in which there's more fairness, there's more equity, in which these developing nations have more ownership over development process. And so China has been building infrastructure in Africa, in South America.

China has 31 % of its exports that it invested in, in South America. And this infrastructure will enable these countries to better leverage their resources.

Yeah, it's interesting, because, you know, in terms of mentality as well, like Chi said that we shouldn't foster Cold War mentality between our nations, which is an interesting statement, because of course, here in the West, we're very anti -Russia, anti -China is being promoted, of course, as well, because China always wants the best of us, meaning our money. So how do we do, like, how do we get rid of that Cold War mentality? Maybe more detailed question Professor Zheng is like, what's the mentality towards the West in China? I'm curious.

Well, I mean, most Chinese I've met, love the West. The, you know, if you're a Chinese parent, your greatest ambition is to have your child learn English, and have your child go learn technology, science from Western countries. Because the perception in China is that even though China has accelerated its economic growth these past 30, 40 years, China still lacks the West in terms of creativity, innovation. So they really want their children to go the West and learn Western innovation and creativity. And that's really the power of Western soft power. The West has a great image in China. And you know, this is really the main resource. This is really the main power that the West has its image as a benevolent, creative, open, generous society. And that's why these past few years, you know, all these conflicts that America started has really done much damage to the Western image in China.

By the way, it's like, I want to make a switch on more to economic matters and turn how this SEO meeting sort of really also shapes economic trends. As well. So, Professor, this is really interesting, because, you know, China is also offering like financial support to some of its member nations to maybe start establishing banks and international, or foster international trade. What do you think is the number one takeaway from the economic side from the summit?

Well, I think that because of the war in Ukraine, Chinese still opportunity to reinvent, reimagine, reestablish the global financial order. So as you know, after the war in Ukraine, China has a huge financial advantage over Russia invaded Ukraine, the United States imposed sanctions on Russia, which in the long term discredits the credibility of the Western financial system. So the example is that right now Europe and the United States collectively have frozen $300 billion in Russian assets. Now, that's a terrifying signal if you are a Chinese investor or you're a non -Western investor, because it seems that at any time your assets can be stolen from you. Also, remember the sections included that Russia would be eliminated from the SWIFT system. So Russia would no longer be able to use the SWIFT financial system. And so this has given the opportunity to for China to build alternatives to the Western financial model, a model that would first and foremost protect the sovereignty of all assets.

So if you invest in China, then the Chinese government would never, ever steal your assets. Also to create an alternative to SWIFT to facilitate faster and and to facilitate greater economic transition.

It's an interesting aspect, because we've been talking about Project Enbridge, for example, here on this platform before as well, like new monetary, just orders, maybe financial systems being installed as well. The SEO Development Bank is an interesting idea. It's currently an idea, in my opinion, from what I've been reading here. But it's about to get executed here on the idea. How could that reshape financial markets as well? I mentioned in the intro, it could potentially challenge the World Bank. The World Bank or the IMF? And how is that maybe institutionalizing what China has been doing for decades, meaning like investing in foreign countries like in Africa, for example? How is that the new theory?

Yeah, so China's been looking for an alternative to the IMF, World Bank system, for a long, long time. The issue with the IMF and World Bank system is that, from the Chinese perspective, it's really an arm of American foreign policy. I mean, the World Bank and IMF are used in various ways. to open the markets of developing world countries and force its assets to be stolen or sold really cheaply to Western nations. And from a Chinese perspective, this is a very disadvantaged system for the third world. So let's build a system that would be less political, that will be more independent of national interests, and which is more multilateral. So having different stakeholders and ensuring that the consensus is built around the world to ensure that all nations benefit from a system. From a Chinese perspective, IMF, World Bank, they're all just an arm of American foreign policy.

It's interesting. China has been using, for example, foreign investments or foreign direct investments to secure resources, for example. So they've been using it from a political side as well. I'm just challenging you here a little bit, Professor Jiang. With bringing in the other member nations, do you think that will expand? Will they be reaching out to other members financially as well? Do you think that will be expanded?

Well, I mean, that's a great point. I mean, if you're a nation and you have control of these multilateral organizations, then you're definitely going to want to use them to expand your national interest. That's just human nature. That's just geopolitics. That's the way it should be. The argument that China would make is that America has been in control of the system for too long. Ever since the Brennan -Woods conference, it's been, and because it's always been a top dog, America has grown corrupt. It's grown arrogant. It's grown selfish. And because China's a new player in the game, then that benefits the world because China is forced to build consensus, to ensure that relationships are more win -win and not so lopsided. So China really needs to go out. And persuade the world to join its organizations. And that's a benefit to the world right now.

What kind of developments should we be monitoring over the next 10 years, perhaps, out of the Shanghai Corporation organization? What do you think will have biggest impacts also on financial markets, since we're on a financial YouTube channel here?

Well, I mean, the reality is that the Chinese system, the Chinese government is trying to build multilateral institutions that parallel and can compete with, you know, the Chinese government. The Russian model. So development banks are one aspect of it. But a really important aspect are these trade networks, right? So China is trying to conceptualize and implement its Belt and Road Initiative, both across the land and in the sea. So these trade networks and how robust they are and how viable they are, are very important indicator of how China is going, it's going to grow economically. The Chinese government is very interested in creating an alternative to the SWIFT system. The Chinese government is obviously also really interested in trying to create alternatives to the U.S. dollar. And that, I think, will be the main source of friction between China and the United States over the next five to 10 years, because as we know, the source of American power is the petrodollar.

And so, if Saudi Arabia and other Gulf state countries start using more renminbi, more Chinese currency, then that's a threat to U.S. hegemony. So I think that's where the real source of the conflict will be. The conflict will be over these trade networks. So people argue that this war between Israel and Iran, it's really disrupt China's expansion plans in the Middle East. China is trying to expand its Belt and Road, and Russia is trying to build the North -South Corridor. So Iran would be crucial in the development of new trade networks. And then the relationship between China and these Gulf state oil countries are also very important.

Yeah, you touch on lots of interesting topics here that I need to follow up on, like alternatives to the U.S. dollar. Is China really trying to place the renminbi as the alternative, or are there other potential currencies in the works? We've been discussing like a BRICS currency or maybe an SCO currency. What are you hearing? What are you seeing?

Look, I think Chinese policymakers are realistic. You know, China practices a real politic form of geopolitics. And I don't think Chinese believe that the renminbi will ever replace the U.S. dollar. The U.S. dollar right now is just too ingrained. It's too entrenched. But at the same time, there's global concern about the U.S. dollar. Because right now, the U.S. debt, the national debt has reached $3,720. So there's absolutely no way the Americans are going to pay off that debt. So I think the Chinese policymakers, they're realistic. So they will look at multiple possibilities. The first possibility is staying with the U.S. dollar. The second possibility is trying to create a basket of currencies that sort of compete against the U.S. dollar. Ideally, the renminbi would replace the U.S. dollar. And that shows that China has really made it in the world. But I think the third possibility is the most unlikely.

And I think Chinese policymakers are aware of that. And that's why they would opt for the second option, which is to create a basket of currencies that complement and supplement the U.S. dollar.

Now, interesting take there. And maybe one other thing I need to follow up with you here is Saudi Arabia. Of course, our relationship and my mind, because coming from the gold angle here is China is establishing vaults in Saudi Arabia to make trade easier. What is your take on that? How do you interpret that move?

Yeah. So the situation in Saudi Arabia, I think it's more volatile and more fragile than people really understand. I think Saudi Arabia, their oil reserves are not going to last as long as they once believed. I think that. For the past decade, Saudi Arabia has has been trying to build alternatives to its oil economy. It's it's been focusing on tourism, on on more knowledge, economy, and that has not really worked. So the situation in Saudi Arabia, it's much more volatile than people give it credit for, that people understand. And I think China has this opportunity to use this volatility to build strong relations with Saudi Arabia, because at the end of the day, China is completely dependent on China. And I think China has this opportunity to use this volatility to build strong relations with Saudi Arabia, because at the end of the day, China is completely dependent on China. And I think China has

this opportunity to use this volatility to build strong relations with Saudi Arabia, because at the end of the day, China is completely dependent on China. On the Middle East for its oil supply. And right now it gets a lot of oil from Iran. But as we know, Iran is a heavy sanctioned country. It's possible that a war breaks out between Israel and Iran. So China would want to build strong relations with Saudi Arabia to secure its oil supply in the future.

Oh my God. You just opened a whole new can of worms that we could potentially dive down. Is it just that geopolitical situation? How China would potentially back Iran? and what that could look like. Would they send troops? Maybe just humor us for a second, and humor is maybe the wrong word, but what is your take on that? Would China actually go that far?

Well, I mean, the Chinese policy for thousands of years is not to get involved overseas. And it's worked out really well for China for thousands of years. I see absolutely no reason why China would entangle itself in affairs as far away as the Middle East, especially because you can't control the risk element in the Middle East. It's entirely possible that a war between Israel and Iran could drag in the entire world because Iran would close off the Strait of Hormuz. That's all supplied to East Asia, Japan, South Korea, and China. It would be cut off, thus destroying their economies. So the first point I will make is that there's no way that China would ever send groups of people to the Middle East. There's no way that China would send ground troops anywhere in the world beyond its borders. That's the first point. Second point is that China sees its power as being the global mediator, as being the facilitator for peace.

So if a conflict ever breaks out between the United States and Iran, China would stay neutral in order to maintain its role as mediator. They would want this war to conclude as quickly as possible. They would want as less damage to the global economy as possible. And China can only do that if it stays neutral. So I guarantee you that if a war ever breaks out, China will be the neutral party. It will be the mediator. Russia, on the other hand, will probably protect Iran.

Yeah, it's interesting because Russia has been proposing China to be a guarantor of security in Iran as well, which sort of seems contrary to what you've just mentioned. Is that the wrong interpretation? And why would Russia make that suggestion sort of knowing that China would say no to that proposal?

Well, I mean, geopolitics, it's a very strange game. So I draw your attention to the fact that Putin has signed a mutual defense pact with North Korea. It's North Korea that sent troops to Ukraine. Now, the problem with this is that we imagine North Korea to be a client state of China, right? So it's almost as though Russia is, let's say, interfering in China's sphere of influence. So I just point that out to show you how complicated the game is. There are no clear lines in geopolitics. Every player, every nation is trying to maximize its opportunities, trying to maximize its best outcome. And to do that, it has to maintain different possibilities. It cannot commit to one strategy. It has to be very flexible. And... And how it sees the world.

Professor Jian, having you on the show, so many questions are popping into my head. I'm trying to get them in order because you offer very unique perspectives that we don't often have here on this channel. But on the terms of geopolitics, what is the relationship with China and India?

Yeah, so the Chinese -India relationship is extremely tense. This goes back to the border war between India and China around the year 1960. This is like... right after the founding of both the People's Republic of China as well as the Indian democracy. And India saw this as a massive betrayal of its relationship with China. They felt that the Chinese backstabbed it. And this border, you know, is extremely important because both India, China gets its water supply from the Tibetan Plateau. So if it controls the Tibetan Plateau, it controls China. It controls all of East Asia. So this is a conflict that's going to simmer in the background. Right now, we see a growing reconciliation between India and China. And that's wonderful. But long -term geopolitically, water supply is going to be a huge issue between these two countries. China is right now creating... is putting all sorts of dams around that area. And that's a major existential threat to the survival of India.

India gets more water. China gets more water from that region. If China cuts off the water supply, then India is really screwed.

Yeah, I've been calling India sort of the Trojan horse within the bricks because India is also flirting with the US, flirting with the West. So it's trying to play both sides. What do you make of that statement? Like, is India a Trojan horse? And are they really trying to play both sides to the best advantage that they get?

Yeah, I mean, but... I mean, that's not really for India because every nation is trying to do that. So we see this very strong relationship between China and India. China and Russia. But if you just look at it from a geopolitical perspective, there's going to be much more tension between Russia and China than between China and the United States. The reality is that China and the United States don't share a border. They don't have a history of conflict. And I mean, the reality is that Russia and China do have divergent geopolitical interests, especially in Central Asia. You know, they're both trying to be the top dog in Asia, which will allow them to control trade routes throughout Asia.

Yeah, interesting. Again, it's like I'm jumping around a little bit because I have so many questions for you that you can help me answer. And one of them is actually like, what is the true state of the economy in China? Like, what is it really like? Like, we're getting a lot of news here in the West. I'm just looking at China manufacturing PMI hits five -month high. But then on the other end, you hear that China might be in a deflationary scenario right now already economically. What is the true state?

Well, I mean, the problem with China is that it's a huge country, right? And the economic disparity between the cities and countryside are huge. The economic disparity between the North and South is huge. So it's hard to make generalizations about the Chinese economy. But what I will say is that China has both advantages and disadvantages in its economy. The disadvantage is the lack of consumer spending power. And so for the past 10 years, the Chinese government has been encouraging consumers to spend more and more. But because of the real estate bubble collapse, because of geopolitical issues, because of trade sanctions, Chinese consumers are more reluctant to spend money. So we are seeing some deflationary spiral in China, especially these past couple of years. At the same time, the entire economy is still very much state managed. So the debt issue is not as pressing, in China as it would be in the United States and other Western countries.

So China still has a lot of tricks up its sleeve in terms of its economy, and has yet to play them. So it's very hard to make a conclusive statement about the state of the Chinese economy.

Interesting. That's sort of the message I'm getting as well. You get very different data points, but they're all pointing in different directions, right? So it's always difficult to sort of make sense. Like debt to GDP is one thing. Deflationary scenarios you hear about. It's an interesting statement you just made there as well, Professor Zheng. So I appreciate that. Coming more to back, I don't know, zooming out geopolitics, we do have to address the U.S. tariff, or the U.S.-China tariff, let's call it a war, for lack of a better term, or debate, debacle, whatever it is you want to name it. How do you see that playing out? Like who will give in? Who will end up? Is there even a win -win scenario possible maybe?

Yeah. So I think this U.S. tariff war, it's indicative, of tensions in how the U.S. and the Chinese perceive how the financial system should develop in the future. You know, what we forget is that in 2008, the global economy basically collapsed. It was China who basically saved the global economy by taking on all this massive debt. So 2008, the Chinese economy basically saved the world. And right now, we're seeing massive economic issues throughout the Western world. The United States and Europe really want China to be the white knight again, to save the world. But China is reluctant, extremely reluctant, to make the sacrifice again, because obviously, this debt has been paid off by the Chinese people at some point. And China does not want to mortgage its future. And that's really the policy of Xi Jinping, to try to bring in the overheating Chinese economy, to try to reduce the debt levels, to make the economy much more sustainable.

So that's where the conflict is. The United States wants China to open up its financial system some more. China wants to bring its debt under control. So I think what will happen in the next six months is that, behind the scenes, China and the United States will come to a compromise. Publicly, it will seem as though China has won, and the United States has lost. But in reality, China has been forced to make compromises that will help stabilize the U.S. dollar and reduce U.S. debt. It's entirely possible, and I'm just, you know, throwing some possibilities out there. Trump did say that he wants 600,000 Chinese students in the United States. That's double the level of Chinese students in the United States right now. And so how would China pay for this? Well, Chinese consumers would take out a lot of debt in order to finance their children going to the United States to study.

And this would be a win -win for everyone, right? The United States would get more consumers. It would basically save the American higher education system. And Chinese get a better education.

Yeah, it's interesting. Compromise, I think that's what it comes down to. Basically, yeah. Yeah. It's so multifaceted. It's very difficult to actually come up with a proper scenario. And even put it in proper terms, in my opinion, especially with being bombarded with so many news items as well. Maybe from an investor perspective, like for our audience here, Joe and Jane Blow watching. Like, what can we take away from this? What do you think some of the ramifications will be over the next six months? Maybe of a tariff deal on the financial markets? Is it, you said stabilize the U.S. dollar. What does that mean for you? And what other implications could it have on the economies?

Yeah. Personally, I don't do financial investments. I don't do financial investment advice. But my main takeaway from this is that the U.S. dollar is still pretty stable. And China will eventually come to a rapprochement with the United States. I think one of the biggest surprises, one of the biggest geopolitical surprises, when next year, possibly half a year, is how quickly the U.S.-China relationship improves.

That is a statement. I like hearing that. And that'll be fascinating. Because I want to see that as well. Because right now, everything seems to be going head to head here with potential for disaster, quite honestly. And we haven't even touched on Taiwan yet. And what that actually means. And how complicated that situation is. Because it hasn't been thrown into the whole discussion. That's why I've sort of left it out. It seems to be on the periphery. Maybe just two seconds on that. What is your take on that matter? Okay.

I'll bet you a million dollars. China does not invade Taiwan. Okay. I'm willing to make that bet. I don't have a million dollars to bet. But I'm willing to make you that bet. I will go and borrow a million dollars and I'll make you the bet that China does not invade Taiwan. Right? The Pentagon has been promoting this in order to get more funding for its East Asian operations. This is not being discussed in China. No one's thinking about Taiwan right now.

Well, I've been hearing very little about it lately. So I was just in my research for this interview. It's popped up. But very on the periphery. So I was like, okay. It doesn't seem to be a big topic of negotiation or discussion at all right now. Yeah.

It's not even an issue in Taiwan. You would think that of all the countries in the world, the country that would be most afraid of an invasion, the country that would spend a lot of time in the news media discussing a possible Chinese invasion would be Taiwan. But go to Taiwan. Spend a month there. Spend a year there. They don't talk about it. They don't care. It's not relevant to them.

No. Fantastic. Really, really interesting. Professor Jun. I'm so appreciative of your time. Very unique insights. We'll definitely have to have you back in six months, the latest, to see if your predictions about the U.S.-China relations are coming true. We all hope so.

Hey. If China invades Taiwan, invite me back and I'll give you a million dollars.

I'll come and collect as well. Yeah. Yeah. No, no. Fantastic. Professor Jun. Really appreciate it. I'll definitely, as I mentioned to you before in the record, but I've downloaded quite a few episodes of your YouTube channel to my iPad for my travels this week. To catch up on really, really great contents. Thank you so much for putting that out and thanks so much for joining us. We'll send everybody to your YouTube channel. How can we direct our viewers to you?

Yeah. So, my YouTube channel is Predictive History. Just type it in YouTube and my videos will come out. And on my YouTube channel as well will also be links to my sub stack. So, yeah. Best place is to watch my videos.

Fantastic. Awesome. Thank you so much for joining us. Really, really appreciate it. Thank you. And everybody else, thanks so much for tuning in to Soar Financially. I love this episode with Professor Jun. Very different perspectives. It's really refreshing to hear different angles as well. Hope you appreciate it as well. If you did, put a comment down below. Let us know what you think. And of course, if you haven't done so, hit that like and subscribe button. Helps us out tremendously. Beat the algorithm, who's an absolute nasty beast these days. And help us thrive together. Thank you so much. And we'll be back with lots more. Take care out there.