The Prof G Pod with Scott Galloway

China Decode: Trump’s Trade War Turns Into a Win for China

February 24, 2026

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  • The US Supreme Court ruling striking down Trump-era emergency tariffs reduces trade pressure on China, potentially undermining the IMF's call for Beijing to pivot away from its export-led growth model. 
  • China's push for medical tourism, supported by initiatives like the 'Healthy China 2030' plan and special zones like Hainan, is poised to significantly grow, offering cheaper and faster care than in many Western nations, despite domestic concerns about resource strain and corruption. 
  • The rapid advancement of Chinese AI video models like ByteDance's Seedance 2.0 is creating hyper-realistic deepfakes, alarming Hollywood and outpacing Western legal and regulatory responses, suggesting a major disruption to content creation is imminent. 

Segments

US Tariff Ruling Impact on China
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(00:03:24)
  • Key Takeaway: The Supreme Court striking down tariffs reduces the effective tariff rate on Chinese goods exported to the US by 7%, weakening Trump’s negotiating position ahead of the Xi meeting.
  • Summary: The effective tariff rate on Chinese exports to the US decreased by seven percentage points following the Supreme Court ruling, impacting $525.6 billion in trade from last year. This reduction lessens President Trump’s leverage for the upcoming summit with Xi Jinping. Furthermore, this outcome reduces external pressure on China to immediately pivot its economic model away from exports.
IMF Advice vs. Chinese Reality
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(00:06:38)
  • Key Takeaway: Despite IMF warnings, China is unlikely to shift its export-heavy economic model due to domestic corporate necessity and a focus on high-tech manufacturing superpower status.
  • Summary: The IMF urged China to boost domestic consumer spending instead of relying on exports, but hosts believe this advice is wishful thinking, citing China’s massive 26.6% contribution to global GDP growth this year. Evidence shows Chinese EV exports surged 104% year-on-year in January, indicating continued export focus. The upcoming National People’s Congress is expected to reinforce China’s commitment to high-tech manufacturing.
China’s Property Crisis and Consumption
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(00:12:14)
  • Key Takeaway: A prolonged contraction in China’s property market, not expected to bottom out until 2027 or 2028, structurally suppresses consumer spending because household wealth is heavily tied to real estate.
  • Summary: Chinese consumer spending remains weak because property transactions are projected to fall another 10-14% this year, and property constitutes 60% of household wealth, down from 70% in 2020-2021. Falling property values reduce collateral available for borrowing against essential services like education and healthcare. Policy support to rapidly inflate the property bubble is unlikely at the upcoming NPC meeting.
Rise of Chinese Medical Tourism
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(00:17:25)
  • Key Takeaway: China is rapidly becoming a global medical tourism hub, attracting Western patients with significantly faster service and lower costs than strained national health systems like the UK’s NHS.
  • Summary: Foreign patients are seeking care in China due to long wait times elsewhere; one British patient received extensive testing and diagnosis for about $400 immediately upon arrival. This trend aligns with Beijing’s ‘Healthy China 2030’ goal to boost the services sector, with 850 hospitals already offering international services. Hainan Island is designated a special medical zone allowing access to cutting-edge treatments.
AI Video Models Threaten Hollywood
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(00:28:10)
  • Key Takeaway: ByteDance’s Seedance 2.0 and similar AI video models are generating cinema-quality content cheaply, leading major studios to issue cease and desist letters over systemic intellectual property infringement.
  • Summary: Seedance 2.0 can generate hyper-realistic video with sound and dialogue from simple text prompts, costing significantly less than US alternatives like Google’s VEO. Hollywood giants like Disney and Paramount accuse ByteDance of treating their IP as ‘free public domain clip art.’ The technology’s rapid advance is outpacing legal sanctions, especially against Chinese entities operating outside US jurisdiction.
Predictions on Litigation and Markets
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(00:38:24)
  • Key Takeaway: Litigation against Chinese AI video apps by Hollywood is predicted to begin around 2026 but will lag behind technological advancement, while Chinese mainland stocks are expected to perform well leading up to the March 4th NPC meeting.
  • Summary: The prediction is that Hollywood lawsuits will pile up while Chinese AI apps continue to disrupt the film industry, similar to the historical issue of Chinese piracy DVDs. Anticipation for announcements regarding hardware, semiconductors, and AI at the upcoming NPC meeting is expected to drive positive momentum in mainland Chinese stocks.