Pablo Ducru on China's fast-growing economy and technology

Hello and welcome to the Rich Robinson Show. I'm your host, Rich Robinson. Over the past 25 years, I've been an entrepreneur, investor, advisor, and professor here in Asia. After nearly a quarter of a century in China, I'm now based here in Bali, Indonesia, the island of the gods. Asia is my home now. 60% of the world's population also lives here, but I would contend 80% of the world's dynamism and opportunity is right here in the region. On the show, you'll hear candid and fun conversations with some of my friends and colleagues, people I've met along my journey, entrepreneurs, operators, experts. It will help you unlock actionable insights around the Asia region and the entrepreneurial agility that actually defines it. This first season, season 1 of The Rich Robinson Show, is titled At the Speed of China. Like, wait for it, at the speed of light. Things happen fast in China, and in this season 1, we're gonna take a deeper look at that. The rapid economic development over the past few decades, as well as the speed and cycles of innovation taking place all day, every day, right now.

Let's go, Jio! And showtime, and we are back. Pablo Ducru, ladies and gentlemen, welcome. To the pod.

Thank you, Rich. This is great to be here with you.

Excellent. And you are in New York City right now, but you're going to your homeland of Europe tomorrow. So thanks for the time.

Exactly. Exactly. I'm leaving for France tomorrow. Right now, live from New York City.

Terrific. So live from New York, it's Thursday morning, Wednesday evening. It's Wednesday night. And, uh, yeah, we were chatting before I hit record and you were like, hey, I'm going to start off with a story. So I'm just going to let you. Jump in because I know that you're a good storyteller.

Yeah. So yeah, let's go with this, Rich. So here we're talking here about the speed of China. And I think I have last year, right before the pandemic struck, I was in China at Tsinghua University, the Schwarzman Scholars Program. And of course, usually I tend to spend Christmas with my parents. And of course, there's no such thing as Christmas in China. So I call them and tell them, hey. How about I don't have a holiday for Christmas? I actually have an exam on the 24th, Christmas Eve. But how about you come to China? Exactly. That was a very kind, good present. You know, every day, you know, 好好学习，天天好上。Right? Yeah. Work hard, work hard every day, and you'll get somewhere. And so I tell them, how about you come to China and I'll organize a trip for you? And what I can do is I'll come in the weekends and we'll travel around. And so they came and this was a big trip for them. My father is not so young now. He's 75. And so that he was going to turn actually 74 during the trip. And he had never come to China. And, you know, he grew up in a day, in an area when he was a kid, China was the Maoist China. Uh, you know, it was the middle of the Cold War and knew from afar that China was now the biggest, uh, the second biggest economy or the biggest in purchasing power. You all think about the rise of China, if you can see it. He was himself a shipbroker. And actually he did most of his business through the rise of China, where China was just buying all these goods. Actually, most of it was minerals. He was a bulk carrier broker. And so they would just buy tons and tons of copper and irons and steel. And, you know, when China was just the maker of most things in the world. And that was, I think, what stayed in his mind. At least that's what he recalled me because I made them a full trip. They went to Shanghai, to, you know, Suzhou, Hangzhou.

Wow.

We even went to Harbin.

Wow.

Went to Beijing. I sent them off to Yunnan, you know, to Kunming, Dali, Shangri-La. I made a big trip for them and I would just go during the weekends. And of course, so during all those trips, you know, I made them take the fast train from Beijing, for instance, to Shanghai. And this was a big deal for my father because the first country to really have a state dirigiste, you know, a state capitalism program for fast rail was France, right? France had this first TGV, you know, great high-speed rail, and France was very proud in the '70s to have the first big national— exactly. And actually, this, I think, is a telling story about going at the speed of China. And this is in defense of the state-owned enterprises, the SOEs, which is not necessarily what strikes most foreigners when they come first, you know, what first strikes them is Alibaba and Tencent and all these things, which is rightfully, rightfully so. But what really struck my father was China had imported technology through transfers of technology from France on high-speed trains. And actually, I'll tell later, they did the same thing with nuclear. Actually, it was the first partnership with nuclear through the Atoms for Peace program. And so from my father's perspective, he was still in this mindset that China was this big, you know, factory of the world and that they had imported the technologies from France for the high-speed train. And then I just sat him in the, you know, there's like the first class, the second class, and then you have like the supreme class. It's like, because in China, they're at the very tip of the nose, they're insanely luxurious and you just sit in this bed and everything is just amazingly comfortable. And my father was taken aback. He just could not believe when you arrive at these huge train stations, right? Railway stations are bigger than airports. And you come and you don't even need to show your ticket. You have like facial recognition with your passport. You just show your passport, it opens the gates automatically. He can just get into the train and within the train he can order food on his phone and the food will be delivered to him when he's laying on the tip of the train. of these super fast speed trains. You know, this really captures, as you say, the speed of China. He's going fast speed from Shanghai to Beijing and he is just blown away. And so when I received him in Beijing, I said, so how was the trip? And he's like, I can't believe it. This is not what I had in mind. This is, this is way above the expectations that I had. And I think that's a very good first perception as a foreigner coming from abroad, especially Europe, where everything is so slow. And they had stayed in their mind, you know, okay, China looks like this like 20 years ago. And they kind of think that that's still the way it is. And so I said, so what's your takeaway of the whole trip following? Now he lives in the South of France. He's retired there. Very, very pretty place. He says, well, I understand that my only path to salvation is wearing my little, you know, baguette under the armpit and my little beret hat and go outside in the street and the Chinese can come and take pictures of me. And that's how I'm going to make my money.

That's great. Love it.

And I think that's really a story from, as you said, a foreigner's perspective coming into China, especially a European foreigner that had their mindset. And my father had done business with China. Like he had made them grow. He saw how much they were producing because he was a broker. He would see all the ship brokers, all the materials, the prime matter that China had to import to produce all these goods that are everywhere made in China. And yet he could not expect such technological freshness and superiority and the speed at which they had acquired. And, you know, it's like this, the Padawan, you know, becomes better than the master. That's exactly what's with the first AI in the trade. And I think that's really a good image with that speed of China.

Now, that's funny because, you know, I very proudly am a mentor at Schwarzman and we can dig into that a little bit. You know, of all the mentees that I have, I think of you, Pablo, I'm like, the force is strong with this one. But I think also with China, right? I mean, like, you're right. It's basically been kind of like an apprentice Padawan and then it's, you know, surpassed the Yodas around the world. And yeah, I mean, I love taking people on the high-speed rail because it goes, you know, city center to city center. And one of the great tricks is because it's, you know, a very compact train, like the food can't be that great on the train. But you can use these delivery apps and they've got it down to a science and you get really, really excellent high-end food. And there's a couple of stops along the way and then it's right there and they know the seat number. And then like, like all this beautiful, hot, like with really nice packaging, like high-end food and like, you know, great price. And it's like right there and you're like, wow.

I mean, when you tell to a foreigner that you can take your home on the super app that doesn't exist in the West, right? And on that super app, you can just order food from Meituan or something online through WeChat. And you can order it saying, I am on the fastly train and that it will arrive at the stop. Somebody will enter the train, run at your seat, give you the food and run out before the gate closed on him. Because otherwise he's off to Shanghai or some other city. It's mind-blowing for foreigners. They can't believe this is true.

Yeah.

Like, especially in France where the service is so poor for everything, there's no way you're ever going to get someone front to give you any form of service. And that's exactly what's happening here for this app. And I think it's all the more striking that not only I'm French, but I'm also Mexican. And as a Mexican, Mexico has been this country of eternal hope for decades now. You know, it'd been like, actually even more than that, more than that actually, right? Even since the American-Mexican War, Mexico was seen as the future, was the new frontier. And yet. Mexico grows at, you know, about 1 or 2% per year, which is nothing next to the 6% growth of China per year. And this has been sustained over decades. This is insane. When you see this, it's again, another form of seeing when I was there as a Schwartzman scholar in China, I was thinking, this is incredible. What's the magic? How do you make it? I'd say the mayonnaise, you know, when you batter it, suddenly it takes shape. What has happened in China that suddenly All of these elements come together to reinforce each other. And suddenly you don't have this stagnant thing where it's the middle income trap.

Yes.

And because what is striking, right? The first time I went to China, it was in 2006. It was before the Beijing Olympics and Beijing was being destroyed. All the hutongs were being destroyed so that they could build the whole, you know, stadiums and they wanted to have a prime city for that. And I remember even in those days, it was the first big mall. in Beijing. Now today you have like super first world malls, but at the time it was the very first one. And there were still, I remember that you had like these garment things you can go and they would do tailor suits in it. And it felt very far away from today. It's not today's Beijing. 2006 Beijing was much more like, actually, I would guess some places in Turkey today or some places in Mexico.

I often say it was closer to Mao than to now, right? I mean, like people from Mao era would kind of feel comfortable there, but people from the Mao era now are like, where am I? I'm in another planet.

Yeah, exactly. And when I came back from that trip, my mother said, well, what do you think about it? My mother is Mexican. I said, well, no, you'll be surprised how close and similar Mexico and China are. It's this place where you have a lot of folklore culture, you know, and of course in Mexico you eat the tacos and, you know, in China you'll have the, you know, baozi, jiaozi and all these things. But, you know, you go in every single taxi and you'll have a little Buddha hanging there. Or you'll have in Mexico a little, you know, Guadalupe Virgin there. And so far you have this huge culture melting pot of various cultures from the north, from the south, you know, and it's very buzzy and busy and everybody's building and aspiring to do things and so on. And so I told her, actually, you'd be surprised. It feels very similar to Mexico. It's very aspirational and very culturally rich and very dynamic and so on. And that was yesterday. That was 15 years ago. Now today, when she goes to Beijing today, today Beijing is, you know, a very modern, clean city, unlike Mexico City. No, Mexico City has a lot of charm. I love it. I think it's one of the best cities in the world, an unfound jewel, but it's certainly not as clean and as modern as modern Beijing is. And you just see this transformation within 10 years. When my mom came, she couldn't recognize it. I don't see how you can say that You're like Mexico. Yeah. See what you get. But things are changing so fast.

That's fascinating. I love that.

Yeah.

Because then you can actually take like different errors. Oh, I'm sorry. Keep going. Finish your thought.

Yeah. Yeah. So that was one of the things while I was at Wharton. What is the mystery? What has China managed to accomplish that Mexico hasn't? And China is not the only one, right? Before them, you certainly had, you know, Japan did it. South Korea did it. Singapore did it. The whole island of Taiwan also had this huge growth. So you have many places that have achieved this incredible growth. And actually Vietnam right now is the place. Vietnam is in the rocket seat. And so I was always thinking at Schwarzman while we were studying, actually what happened to China from Deng Xiaoping to today? What was the secret? And is that replicable somewhere else?

Yeah. Fascinating. So I think, you know, that's the thesis of my book that, you know, this isn't the first time that we've seen this, but this is the first time that we've seen it at such scale because You know, I have in the book from 1900 to 2020 and, you know, 1990 to 2020, it's pretty much the GDP growth of US and China over 100 years or 30 years is pretty much maps right on top of each other. It's like a 4 to 1 ratio, just, just on that. And Japan and Korea and so many other places did have this up into the right trajectory, but it wasn't as fast, as large, or as sustainable. So there really is something there, but I really love how you're like, okay, this era. Is like Mexico right now, or, you know, I think it would be fun and maybe I'll do that in the book to show different eras of China and what it corresponds to in terms of GDP and, you know, lifestyle and in other nations and how quickly that's transformed and how that's like, okay, next, next, we're just like molting skin and getting more and more evolved, you know, more quickly. But, you know, I said that I was your mentor at Schwarzman and I love that program and we can dig into that in a little bit, but You know, actually we take turns of being mentor and mentee to each other. I mean, like, you're a brilliant guy and you just finished your PhD at MIT, you know, defended that thesis. Congratulations. And you've studied, it's kind of rare. You've studied at the top universities in Europe, in North America, and in China. And I'd love to hear, you know, your perspective and, you know, like just for the podcast listeners, tell them like where and what you studied and then, you know, a little anecdote or two to compare.

Sure. So that's actually very interesting indeed. I did this very competitive system in France that's called the Grande École. It's somewhat very similar to China. We can talk more about that, a bit like the Gaokao and so on. And so I did that. And actually, when I was talking, let's talk about this right now. When I was talking with my fellow classmates at Schwarzman, when we were talking with the Chinese scholars and we were comparing the systems, and I think one of the things that is extremely striking Is especially in the West, but I think almost in the world. I cannot find another country like the closest system that I know to China's system today. It's probably Korea. And that's very strange. That's not something that comes to mind to most people originally, right? That you don't associate these. But these two countries are extremely stated. And what I mean stated is that the state has played a central role. Since in China, millennia, right? In Qin Shi Huangdi that unified the whole of China and created like a unified way of writing and the first administration with bureaucracy.

The Qin Dynasty, which is where the word China comes from, right? Yeah.

Exactly. Exactly. Right. And so essentially you can almost say that China and the notion of a bureaucratic administrative state are one and the same. Like literally the name, as you say, the Qin Dynasty. come to the central administration of China. And very early on in the history of China, they started having like these systems of how do we select the top, you know, civil servants, the people that are going to govern the country. Since it's a big administration, we need to have top talent coming in. And they create these systems of exams, which are the Mandarin exams. And to this day, they kind of have morphed into the Gaokao and then the party exams to enter and so on. It's still this like pyramid of exams on top of exams. To achieve higher and higher rank in public service, and that is an old China way of selecting talent to govern the country in an administrative state that essentially governed in a strong central power. And actually, somehow France has done the same for at least 500 years since the Cardinal Richelieu and so on. There were a system of civil servants that had to be selected, and so they created this thing that they called it you know members corps of the state. Where people have to take exams that are very competitive to enter them. And to date, this is still a pyramid system that really much resembles the Mandarin system in China. We have people coming into the prep schools to take the exam, see who gets in. And once you get ranked, you get to higher level prestige administrations within the state, and then you can evolve and so on. And so when I was talking to my Chinese scholars and my friends there at Schwarzman, they found the comparison quite remarkable. Indeed, that is certainly not the case. how it works in the United States, where everybody has to craft their own story and figure out how you can make your place and your name. Here, the path is directed. It's in that sense, they consider it very meritocratic. Everybody has the same, you know, bar to take, even though of course you don't come from the same place to jump that hurdle, but at least the hurdle is the same for everyone. So that was one thing that was quite striking is I took exams in a very competitive fashion, very similar to what China have to do with the Galois group. And after that, uh, it was very theoretical at École Polytechnique, so very high level. Actually, most of the physics and math I learned, because I'm a physicist, I do nuclear physics. That's where I just graduated from my PhD at MIT. And I said, let's go to the United States because somebody told us this in France. They said, look, you can know how hard a mathematical problem is by looking at the proportion of Russians that are working on it.

Excellent.

Because the Russians, they're hardcore, right? They work, they look at the toughest problems, they just bang their heads on them. But you can look at how lucrative and profitable the outcome of a problem is by looking at the proportion of Americans that are working on it. And that's why it looks like all these mathematical problems about, you know, American stock option pricing, all that, all the Americans are on that because it's dead on and find it. It's like that in France. The only thing that matters is how elegant is the problem and how elegant is your solution to the problem. That's the metric of success. Like if the thing looks elegant, that's great. And so I thought, hey, how about I go to the United States to learn a bit more about this pragmatism? But it was not such an easy call for me. I actually hesitated at that time between going to the U.S. and going to Tsinghua, actually, back in the day, years ago. And for various reasons, I got admitted to MIT and I thought, hey, let's go there. I'll do my PhD at MIT, but I always had this will to do, you know, something in China. I've always been attracted there for, you know, Personal reason, we can talk much more about that later. And so once I was there at MIT after like 4 years of doing my PhD in nuclear physics and computational engineering, this opportunity of going to Schwarzman Scholars and Tsinghua University came up. And I said, hey, why should I need to choose? I can take this kind of gap year and go to China and live the experience I've always wanted. And what a year to go, right? It was a very particular year. Of course, it was COVID. But also you had the whole protest in Hong Kong. You had the trade war with, uh, of course Donald Trump doing that. You also had the big global public criticism of, you know, what was happening in Xinjiang with the Uyghur and all that. It was a very particular year to be in China. And nonetheless, it was a great year, even though it was cut by half because of the pandemic. So that's it. And actually what was very striking too is me coming from MIT, I would say The school I did in France, the Cultural Technique, actually resembles Tsinghua University in also many aspects in that it's the engineering school for the top public service people. And if you look at the top French companies, and there's a lot of them out there in the Fortune 500 that people don't necessarily know of, like from Veolia, Suez Environnement, Engie, Total, you know, so Saint-Gobain, there's a couple of them, Sanofi, that are big, big companies, L'Oréal, of course, and LVMH now. Most of them are run either by people from my university, École Polytechnique, or from École des Champs de Mars, which is like, I should say, those are the two schools that are very famous in France. One is for commerce and business, and the other one is like for engineering and science. It's not really an engineering school. It's more like an applied science school. And in that sense, it's very similar to Tsinghua, which is an engineering school, but that selects top, you know, civil service people that then end up working at SOEs and A bit like in France, in China, you have a lot of links between big companies and the state. And it's not, they're not literally state-owned companies. A lot of companies are not state-owned, they're private companies, but the state is one of the major stakeholders and they just talk to each other. It's like a realm of elite that has to do with public administration. And so in that sense, those 2 schools are very similar. And I even felt that because the school I went to in France is a bit like military service. And actually Tsinghua has the same. When you arrive, they take these young students that just come out of the gaokao and they put them into these like, you know, military things and they try to make them walk and they look very awkward because they're not very athletic whatsoever. But they try to make the whole story about this. And in that, I found a lot of resemblance. And something that struck me a lot is not only the resemblance between the Ganpuitechnik and Tsinghua University, which I totally understand because it's these two stated systems, but also it was the discourse, you know, the speech that The president of Tsinghua University greeted us. He greeted us with a speech where he showed a graph comparing the world rankings of Tsinghua University and MIT. And the goal of Tsinghua University was to say, look, look on this department, we may be overtaking them in 5 years. And this other department, we're trying to beat them in 3 years. And department by department, they were saying, The goal of Tsinghua University is to become better than MIT, which is the top engineering school in the world. And I felt very interesting. It would never have come to mind when you are at MIT, someone talking to you saying, hey, Tsinghua is catching up. You've got to, you've got to work faster, produce more research here.

Indeed, right? Yeah. And it's not, it's not guaranteed, right? It's not, I think in some ways people think, oh, of course, like Harvard, MIT, Stanford, but that can be challenged just like anything.

Oh, they are challenging it and they're on a mission. I mean, that's what the president said. And so I think this was very interesting to see the competition between these schools, how they think, the similarities, the differences, and also how clearly Tsinghua was on a mission to beat MIT. So I was like, well, I'm already at MIT, so that's good. But I can also see, and at MIT, actually, a lot of my friends from China at MIT had done Tsinghua University as undergraduate students, and they were accepted at MIT, and they went to do their studies there. And that's an interesting story about the speed of China too, is that it used to be that 80% of the students that leave China for the United States stay in the United States. This was true 10 or 20 years ago, but now it's not the case anymore. Actually, more than 80% of them come back.

It's totally switched. It's crazy, right?

They come back. And the reason, and actually what's even more incredible is not only they come back, but some people that have left, you know, went to Stanford, stayed, started a startup in Silicon Valley. After a couple of years, they decide to come back because they think there's more startup opportunity in China today. And I think some of them, and many of them are right to say that, you know, the speed at which China is developing, the early startup ecosystem is just And so you have seen like there's a stop to the brain drain to the United States. I wrote this paper while I was at Schwarzman. One of the topics we had to pick, you know, for one of them that has this mini thesis. And I wrote this comparison between 2 systems. The Chinese had built this thousand talent policy to try to bring back top talent. And they are giving them, you know, these semi golden packages to come and be great professors at the top universities in China. And so they would give you like. you know, 5 years of research funding and you have a lab and they will even help you move in and all this. It's a great package for people to come back. And thousands and thousands of talents have come back. So actually the name of Thousand Talents Policy is well named. And on the opposite, the U.S. is very different, right? So that's what I called, the way I called it is the Thousand Talents versus a Billion Dreams. Because you have a billion people from Earth that are trying to go to the U.S. to fulfill their dreams, but then it happens or it doesn't happen in this very U.S. creative destruction fashion. And so it was a very different way. There's no such thing as like these packages that the state is doing in China to try to attract talent. But I don't think they need it anymore because most people that are going back, they're not going back because of the 1,000 talents. They're going back because they sense opportunity.

They do. They want to be—

They want opportunity.

I'm a gladiator. I want to be in the arena in Rome. I don't want to be the one in Spain and the far-flung sort of, you know, you know, area, I want to be right in the middle of it.

Right. That's exactly what it is.

Be in the epicenter. So for our listeners, give them a little bit of a background about this Schwarzman, I mean, you know, program. I mean, it's a super select, amazing visionary program.

I love it. It was a fantastic year. The program is, so some call it the Rhodes Scholarship of the 21st century. But the truth is most people on earth don't know what the Rhodes is, the scholarship. Only Americans really know that, or some English people. But I think more strikingly was the vision behind it. So Steve Schwarzman was the founder and CEO of Blackstone. And he was one of the first big investors to enter into the Chinese markets in the '90s when it was still, you know, a new frontier. It was not what it is today. It was very risky to get there. And he was one of the first ones to open up the gates of foreign capital and foreign direct investment in China. And one of the things that struck him early on and still today was that already 10 years ago, he had this idea. He said, Seeing the growth and the size of China, and as you said it rightly, right? China has taken 750 million people out of poverty in the last 40 years.

Miraculous.

Yeah. This is more than all the population of Latin America. All of it. Actually, it's not more, but it's more than Latin America plus Canada combined. It's almost all of the Americas, not all, but close. It's just huge. It's more than all of the population of Europe. And all of those people have been lifted out of poverty by this immense growth of China. And so when you see that at a macro scale, what Steve Schwarzman said is like, by far the biggest story of the 21st century is going to be the relationship between the United States and China. That's what's going to direct the whole narrative and what's going to be happening in the 21st century, a bit like the second half of the 20th century. On the relationship between the USSR and the U.S., at least for years. And in that aspect, he said, the thing is, the Chinese are very well prepared for this relationship because they send like 3 million students to top universities, to Harvard, MIT, Stanford each year. And then they come back. And if you look at the whole system of selection within the party and all that, it's such that they have top level people that know very well what the U.S. is like and what the rest of the world is like, right? They send people everywhere. But the thing is, the United States is utterly unprepared for this relationship. Very few people in the United States, especially at the government and so on, actually know China, have never been there, lived there, and so on. And so the idea of Steve Schwarzman is that it was to say, we need to create this program that selects top talent throughout the world and brings it to China so that they can understand China. And have Chinese, you know, friends that they can meet that are also top people there. And the hope is that perhaps one day in, if in 20 years, some international businesses and cooperations happen because some people have met and became friends there at the Schwarzman Program and that they can exchange ideas on, you know, on a high level, or if some diplomacy managed to happen thanks to these type of things. some business, some ideas, some new technologies, whatever type of exchanges, then the program will have been a success. And the initial idea was to have half of the people coming from the US and half of the people coming from China. And actually the Chinese government said, nope, no, no, no, we're going to have a third from the US, a third from China, and a third from the rest of the world. And so I'm one of those rest of the world people. And that was very smart because I think it really shows also the ambition of China to say we're a global power and we're interested in having relationships with all the world, not only the United States. And I think this was a very good move. And so that was the big idea and ambition of the program. And so the program itself is like a part MBA, part international relations, part China studies. And it's extremely interesting. You learn. Also, the professors are, half of them are Chinese scholars. Half of them are academics from around the world, from the UK, from the US, from everywhere, from Europe, in a way that it's very compelling because you contract a foreign perspective, a local perspective. And it's extremely interesting to see what the Chinese think about how have they achieved so much growth, so much technological heft, and also seeing a foreign perspective. And so I think this was, and also the people are super well. So I was very fortunate to be there because most of my classmates were absolutely fantastic and I was just humbled to be next to them.

Oh man. Yeah. I've been a mentor there the last 2 years. I've had 4 mentees and it is just, I'm like a vampire, just sucking energy from, you know, just incredible group. Before we move on, I just describe the building. Like, I think just the building itself is so extraordinary. It's right in the middle of the Tsinghua campus. So you're right, you're in the middle of everything, but it's just like, I don't even know, you go to like the bathroom and you feel like, wow, this bathroom stall is going to be around in 100 years. Like they built an amazingly solid, beautiful building, but it's so unique. Maybe you could just describe it to everybody.

I think it's a fabulous place because it's both old and new at the same time. And that is because the geopolitics of this, Steve Schwarzman, I think had to talk at least probably at some level to Xi Jinping. to talk about this, which was, hey, we cannot attract people from Stanford or from Oxford to China if they cannot have access to the internet freely. You must have academic freedom and you must be able to, you know, surf on Google and find your research papers or, you know, use Facebook to talk to your parents because otherwise you'll never bring these people here. And so at a very high level, it had to be accepted that they will build a place where within that place you will have Full academic freedom and unfettered and access to the internet and free speech and all this, which is a big step to take. It's a big, you know, step of confidence for China to say, you know what, we'll do, we'll let the gates open. But one of the reasons why the building is the way it is, which it looks like this, the way it's built, you know, it's called Sushenming Shuyuan. And Shuyuan were these old places in China where people would go to prepare the Mandarin system. And in those places, they're a bit like the madrasas in the Arab world. You would live and study at the same place.

So I studied at Cambridge University. I did an exchange there and there's these quadrangles, right? So you have like this. Yeah. And it's like a 4-walled courtyard, right?

Exactly. It's a courtyard. Exactly like an old Chinese building.

Gigantic courtyard.

Yeah. So it had like an old Chinese building has an internal courtyard. Where you have these internal exchanges, so it's the interior exterior, and then you have all the dorms above, like three stories above, and then in the middle you have a big. When you enter, you enter through these doors. It looks a bit like an old Chinese mansion, a bit like a very prestigious hutong. When you arrive, it has this old Chinese vibe, and you enter. It's a very modern look inside. Actually, looks a bit like HBS from Harvard Business School, but a Chinese. With Chinese characteristics to put it in the sense of the time. And with a very, you know, Chinese vibe and this red color is very, very pretty. And so the first floor, like when you arrive, the ground floor, sorry, is you have like a whole place where you can go eat. You have the kitchen there, and then you have some classrooms and all administrative buildings. And then you can go down. And when you go down, you arrive to the courtyard and more classrooms and so on. And then when you go up, you arrive to all the living, like the dorm.

Where people live in the dorms and so you study in your own pub and like, it's just, it's magical.

You cannot hate it. It's incredible. Uh, the problem is that it's so convenient that you can also not leave the building.

But the one thing I love too is that they have like the Ray Dalio, you know, sponsored room. Like, you know, Steve Schwarzman probably tapped up Ray, who's been involved in China for decades as well too. It's a, hey, I need, you know, $50 million and you get a giant, um, you know, uh, auditorium.

It's very much like an American university. If you go to like the Sloan School. That was Mr. Sloan that, you know, gave a huge donation, endowment fund to MIT to create the business school. So it's very similar. All these buildings have, so now the whole building is the Schwarzman Building, but then the rest, all the rooms have been endowed. And so for instance, Ray Dalio, this great hedge fund manager, endowed one of the biggest auditoriums there. But the pub is like the Master Cohen Pub because that's who gave the money for it. It's great. And so on and so forth. We have like the Chinese Corporation Office for all the rooms. And I think this is a great mix. Actually, this is kind of what works in the U.S. You know, people coming and down and commercial and academic, and it's bringing them together in a way that is both American and Chinese. And in that sense, I think the program is a total success. That's, it's a total success.

That's beautiful. Hey, let's go 10 more minutes if you don't mind, Pablo. And I'd love to hear, you know, your idea of China speed sort of in comparison again to your home country. Right. And this is not to like. disparage, you know, any countries. I mean, like I said, you know, China's 4 times faster than the US, right? And it's going to be probably, you know, 10 times faster than some other, you know, really developing countries. Right. But like China is just faster. And that's not to say that it is always to be, you know, aspired to just go fast. There's upsides and many, many downsides, I think, to it, but just sort of objectively is true that it is faster. And like, why don't you talk about that energy example?

Yeah.

Let's start with a very vivid example.

And the story from Schwarzman School. And when we arrived at Schwarzman, the building next to Schwarzman, which is, as I said, a very pretty building, the Schwarzman Building, right next door, they were starting to close off the building because they had a plan to tear it down and build something new. And also next to Schwarzman, they wanted to do, there's the dorms that are another Schwarzman dorms. And in between the dorms, they wanted to create like this park and garden. And that was the scene at the very beginning of the program when we arrived in late August early September, they started doing this. And I remember very vividly, one day I was walking back from some other building in Tsinghua University where I was taking another class at the School of Economics and Management Science. And when I was coming back, suddenly I realized, wait a minute, there's no building anymore next to the Building of Fortune. What happened? They had just teared the whole building down within a couple of weeks. It was super fast. And then like a week later, I go to the little store where we can go and buy our grocery. And that very morning, I remember I leave and that's where they were doing the garden. And the garden was all these brown fields of earth and they kind of sealed off the whole area. And that afternoon I left for the whole day and the afternoon I came back and when I came back. The garden was there. They had arrived, put the trees, put all the grass. They had done the garden in one day. Of course, it took a lot of preparation to do that. But when you see that in one day, it's like, wow, I have never seen such a rapid transformation of a landscape, a landscape. And I think this is to your point of the speed of China. When I arrived to the U.S. first and then to China, coming from France and also from Mexico, actually, as I said, I also lived in and grew up a bit in Mexico. I tended to believe that something, when I told you that China grows at 6% per year and the U.S. grows at about 2 or 3% per year and Europe grows at like 1% per year, I tended to believe that that was like a number. It's just a concept. It was an abstract notion. And suddenly I realized actually it's something very tangible. It's something you can see and perceive in the rate of change of the city in which you are. Within 6 months, the campus of Tsinghua University just around me at Swarthmore College had totally changed. You had a new garden, a building was teared down. You had, you know, cranes to start building a new building right next door. In 6 months, this was done. And then when I go back to MIT, actually MIT is also changing quite fast, but not as fast. But you still see all the cranes, they're building new buildings and so on. And then when I go back to Paris, nothing has changed. Like absolutely not a single thing has changed in all my street. And I'm next to Chinatown and I actually love where I grew up. That's how I learned Chinese. I used to go to Chinatown in Paris. Fantastic place. But almost nothing has changed. Like the same restaurant I used to go 10 years ago is still there. Even 20 years ago, it's still there. And I started calculating this literally the other day I was at the Boston skyline and I started counting the cranes I could see in the horizon. And I think that the ratio of cranes you can see in the new buildings and the new restaurants that you can see in your street. It's a direct measure of the GDP difference.

Excellent.

Like, if China is growing at 6% a year, and the U.S. is growing at, let's say, 2.5% a year, what it means, in the end, is that it's 3 or almost 4 times faster. You have 3 or 4 times more cranes, or 3 or 4 times new restaurants opening and closing on the same street in the same year. And that it takes the same amount of change in China. It takes 6 years in France. Actually, France is more at 0.5, so it was almost 12 years, at least 10 years. And I can clearly sense that it's been almost 10 years now that I know it's 7 years that I've left France. And I've clearly seen in my streets pretty much as much change that I saw in 6 months in China or a year. And that's a very tangible way of seeing when you say 6% growth rate, it means something very clear. It means the number of buildings that you will not recognize when you leave for a year and come back. That's what it means. And that was a very striking, I think, very vivid image of exactly of these speeds, these growth rates comparing the United States, France, China.

Terrific. Love that. I know also that in your experience, you've been working in the energy sector and looking at the energy sector as well too. Is there something that you can share around that?

Oof, don't start me on that topic because we're here for hours. But I think if we want to talk about speeds of China, I think I won't even enter the massive scale at which China is doing renewables, solar, wind. It is like the number one producer of solar panels in the world. I mean, they're just huge and they're taking this very seriously. Actually, I don't think they're taking it seriously as much for climate change as for just public health, which is a very good reason in the sense they're doing the energy transition very fast because one of the major reasons of protests years ago in China was the bad air quality.

Yeah.

And the bad air quality kills people. And you can, you know, if you're in one of these ugly days in Beijing, you can barely see the, you know, they know that a big reason of that is all the pollution coming from the cars. Another reason is because most of the electricity used to come from coal power plants and the coal comes from Datong and all these mines and all the, you know, power plants themselves, all the fumes come in and come into the city and it just gets stuck there. And when you breathe this, you can have very tangible number of deaths and respiratory diseases, and they count in the millions, in the millions. And so one of the number one factors of protests in China was environmental concerns, also bad air, water quality, and so on. And so the Chinese government, you know, reacts to these things. They don't like unrest. So they may want to make sure, okay, can we do something? And sure they can. They've driven down the price of solar panels. Now they're so cheap, it's unbelievable. They're like, More than 10 times cheaper than 10 years ago. It's insane. And it continues and continues. Now, I won't even delve into this, which is incredible. I think another story that is interesting that is probably less well known is that of the nuclear industry in China. And the reason why I'm saying this is it resembles a bit that of the train in China. Again, one of the things that impresses a lot of foreigners when they enter China is They have instant payments with everything, with Alipay, with, you know, Tencent, with WeChat. And you go to the restaurant, they don't give you a menu. You have a QR code and you can just pay everything there. And, you know, this is very striking. Actually, this is changing because with COVID you see QR codes now in restaurants in New York, which was not the case a year ago. So this is changing through the rest of the world. But that is one of the first things that you see is how high-tech and, and tech savvy the Chinese economy is, and especially in the fintech and the payment system and so on and internet related. And you're a pro of that. I'm not even going to talk about this. You're the internet pro in China, but those are private companies and that's extremely interesting. And everybody sees them. They're very famous, you know, and with all the tragedy that happens with it, you know, Jack Ma and so on. But regardless, there's also another part of the story that it's probably less often, but as you can see with the nuclear industry. So China has a huge nuclear industry and they're growing fast. It's the fastest growing nuclear country in the world. They're building. More than 10 reactors right now, which is huge. They're just growing so much. And they're also testing almost any form of technology that's out there in nuclear. They're not only doing, you know, pressurized water reactors or boiling water reactors, which has the standard technology that's been there since, you know, half a century or more. They're also testing the new ones like molten salt, small modular reactors. They're even doing offshore nuclear barges and reactors to power their islands there in the South China Sea. And in contested regions, they're very, very dynamic in new technologies. Actually, a good example of this was TerraPower is a company that was founded by Bill Gates that is trying to build new reactors in order to address climate change and say, if we really want to build, you know, zero carbon power at scale, we're going to need nuclear in the mix. We cannot only do this with solar and wind, good as they may be. They're fantastic technologies, but we're going to have to use all the bullets we can. And nuclear is certainly a good one there. And so he said, let's do new technologies of nuclear so that we can scale this up. And it took a long process in the West, especially in the U.S., because regulation is extremely stringent on nuclear. It's extremely costly to do that. And so after decades and billions of dollars, or at least hundreds of millions of dollars spent of research R&D, they finally got the license of the reactor. They look, here's the reactor. Now we've got license. We proved to the Nuclear Regulatory Commission that this is safe to build. Now, can we build it? And they did not get a building license. The U.S. said, nope, we won't give you a building license. So they said, hey, I spent so much time and effort to prove that this is good. You agree that it's good and you won't let me build it. You know what? Some other people will. China will buy it. And the Chinese say, we'll buy one. Let's go and become Bill Gates, build one of your reactors here. And then you have the export control, the CFIUS, you know, that became to crack, started cracking down in the Donald Trump era, you know, saying, nope, you cannot export these sensitive technologies to China. And so this shows how it has been so hard to develop new technologies in nuclear in general, especially in the West, because of these regulatory hurdles. But it also shows how, you know, what's the appetite in China to try new things. And that's what we were saying before the podcast, iteration is the key. And that's what China is so good at. It just iterates it so much. It's going to try a bit of everything. And I think nuclear is a prime example of this. The first partnership of a foreign company with Communist China was the French nuclear company.

Oh, I didn't know that.

They decided with a program of Atoms for Peace, they had this project when I think it was Framatome at the time. They came and sold when France was doing this huge project of building the nuclear fleet in France. France is an anomaly in the world. 75%, almost 80% powered by nuclear power. So people talk a lot about energy transition and it's fantastic. But if you add the 75% of nuclear power plus the 10% plus of hydropower in France, the electricity grid in France is pretty much zero carbon.

Wow.

It's 100% zero carbon. It's green. It's green. So people have been doing energy transitions for different reasons. This was after the oil crisis and they wanted to do it for national security. And I think Churchill said this, France has no oil, no gas, no coal, no choice. We've got to do nuclear. That's how you do national security, right? You're at least independent. And so at the time in the '80s, um, China was like, hey, how about we start building our new industry that's nuclear? And they had this agreement with French technology. And so the French came and started building the first nuclear power plant in China that was really pretty much a copy paste of what they had done in France. And they had done that very successfully. And then there was a transfer of knowledge agreement where the Chinese will start building their own. And that's like the Chinese Nuclear Power Corporation that does this. And if you fast forward to today, France is now trying to reinvent or rejuvenate its own nuclear fleet of, it has like more than 60 gigawatts of nuclear power. So it has about 60 reactors in France. And they want to rebuild a new generation of them because these ones are old and they think, okay, we built them in the '70s, we got to build a new one. And so it's been in the books for probably 20, if not more, 30 years to have these new European pressurized reactors, the EPR. And it's been under construction for 20 years now, not only in France, but in Olkiluoto in Sweden. And they've been building these 2 and it's been a disaster. They have not still managed to build it in Sweden. It has caused the bankruptcy of Areva that used to be one of the biggest companies in the world, actually. You know, you had Atomic Anne, Anne Wibble, that was the CEO that was on Time magazine as the most powerful woman on earth at the time. And just a decade later, the company is bankrupt, dismantled, doesn't exist anymore, or has been pieced down because it failed to produce this one single reactor. And in France, they've been trying to build one for years. Still haven't got it. And now they want to sell one to the UK and it's another, you know, big problem. And when you see how hard it has been for the French to build these new reactors, it's for one simple reason. They have not built one for decades. They haven't iterated. But meanwhile, they sold this reactor, the same technology to China years ago, actually, like let's say 5, 10 years ago. They said, we're going to do exactly what we're trying to do with Sweden and France. We're going to sell one to China. And the Chinese said, great, you come with your know-how, your engineers and the plans, but we know how to build the reactors because we've been building so many of them. We're building 10 right now. So we're going to take our engineers and we're going to build a reactor with your plans and our engineers. Well, guess what? It's been 3 years now. The EPR in China, in Taishan, is online and producing electricity.

It's actually, it's live.

They just built it. It's live. It's live. The first EPR, the first European pressurized reactor in the world. Was built, that is functioning, producing electricity onto the grid, is in China, was built by an accord from French technology transfer. It's a French company that built with Chinese engineering, and they did it in 5 years or even less. They just finished on time, on budget, on schedule, and boom, they're online and they've been producing for 3 years. And it's the biggest nuclear reactor on Earth. So I think this really shows the pace of iteration. And even if you think about this, right, you were saying it's 4 to 1 ratio. Like it's 4 times faster in China. I think it's about, my personal take is I think it's about 3 times faster in China than the US and probably 6 times faster in China than in Europe.

I'm still putting together, I want to stress test, you know, one of the best things to do as an entrepreneur is go, hey, you're really smart. Tell me why I'm wrong. Right. You should be like, not like, hey, you're really smart. Tell me why I'm right. You know, tell me why you have a different idea.

Right.

And that's exactly. What you should be doing. So I think you're right. I don't think it can be, I think it's a nice idea to, you know, do that ratio maybe based on GDP growth.

It would be roughly the same between GDP growth or number of cranes or even the speed at which you can produce the EPR.

That's beautiful. I'm giving, you know, some credit to you, you know, Dr. Ducruet, because what I'm going to do is the first part of the book is just going to be what my friend calls chart porn. Like I'm just going to do like the first 45 years, you know, roughly 30 to 45 years of China opening up. I'm just going to do 20 graphs or charts. Just to be like, okay, 70% out of poverty. And like, look at the GDP growth and look at Shanghai before and after, or, you know, look at these 6 cities before and after the last 30 years, right? Where you can just flip through and just like Shenzhen, right? Before and after.

Right.

Yeah. And if it's a book about speed, I don't want to read, you know, really deep, you know, analyses of, you know, how fast it is. I want to be able to flip through and go, okay, got it. And then I want to have anecdotes and stories because people are hardwired for stories and anecdotes and, you know, intuitively. know that. And many of these anecdotes are going in the book, but anyway, you know, I love the fact that you actually also were a rower. So whenever I think of your name, Pablo Ducruet, I'm like, Pablo Ducruet, he does do crew. Not that that's the first time you ever heard that.

It's great talking to you, Richard. You're a rower. You're a real rower. I just did the Hamburger Cup at MIT, which I probably won't.

I'm a gym rower. But hey, that was excellent. Thank you so much for taking the time, my friend.

And absolutely, anytime you want. It's always a pleasure, Rich.

All right. Thanks.

That's a wrap. Thanks for listening to this episode of the Rich Robinson Show, Season 1, At the Speed of China. Visit the rich robinson.com. .com/show to smash that subscribe button. Please also go to iTunes or whatever platform of choice, rate and comment. And until next time, thank you very much. Zaijian.

Cheers, y'all.