China, China, China. Breaking Down China’s Tech Surge | BG2 w/ Bill Gurley and Brad Gerstner

Summary

• Bill Gurley returned from his first post-COVID China trip with one framing quote that carries the episode: “every founder and every VC in China studies the West at a nauseating level… The West doesn’t do that of China.” His core argument — if China is the most consequential relationship for America, “I don’t understand how you’d want to know less” — and he notes that I think all but four of the 24 members of the Select Committee on the CCP have never been to China.
• The auto data is the tradeable shock: likely Xiaomi builds 1,000 cars a day with 2,000 employees (vs. ~6 employees per car/day in the US), is sold out with a 30-40 week backlog, and its ~$40K car made Ford CEO Farley say “if we lose this we do not have a future at Ford.” Implication Gurley draws: reshoring auto jobs may find “there may not be any jobs” — global car manufacturing could total ~400K in 5-10 years.
• The US is only ~14% of China’s exports and ~3% of its GDP — Brad’s point that America overestimates its leverage. BYD’s $10-20K EVs illustrate the comparative-advantage argument: why would Mexico buy the $50K one from America?
• Hidden-value call: likely Baidu’s Apollo robotaxi rival to Waymo could cost ~$30K per vehicle, if that figure is right, vs. reportedly $150K+ for Waymo (partly China’s solid-state LiDAR edge), while people value Waymo at $170B inside Google — yet “you can buy shares of Baidu for zero enterprise value,” a $30B market cap with $30B cash.
• On AI: China’s 14th five-year plan mentioned open source; likely Qwen matters because Gurley thinks Alibaba is roughly a 70% player in China cloud, ByteDance is the company to watch on consumer AI, and open models helping each other create hyper-competition “maybe more” intense than EVs. Entrepreneurs there aren’t particularly concerned about a model monopolist.
• Gurley’s debunk of the “they only win by stealing and subsidies” narrative: BYD’s Stella Li — “come show me the money I’m getting from the government” — plus the thought experiment that free Tesla patents + subsidies still wouldn’t make Ford/GM competitive. Brad’s warning: the cheating narrative “allows us to delude ourselves into believing we don’t need to get better ourselves.”
• Policy stance (both in the “tech pragmatist” camp with Jensen and Cook): compete, don’t decouple — invite Chinese JVs in EVs/solar, including some 49/51 ownership arrangements of the kind used in China, let Korea build US nuclear at 1/4 the cost, reserve tariffs for genuine national-security industries (rare earths, chips, pharma), and strip the regulatory “mud.” A pragmatic Trump-China deal “could easily get done” if the rhetoric isn’t derogatory.
• Watch items: China’s new K visa may allow people studying technology to come without a job requirement, just as Gurley heard stories of groups of 50-100 admitted PhD students being told they could not attend in the US; China’s VC market is in a lull (Sequoia/GGV split, provinces investing on “non-starter” terms, “don’t be the tallest tree”) — yet entrepreneurial energy in Shenzhen is undiminished.

Deep dive

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