WisdomTree Investments Sep 17, 2026 17m 7m saved
With Liqian Ren, Director of Modern Alpha at WisdomTree
A Dyson hair dryer costs $400 to $500. A Chinese brand called Laifen, sold on Amazon, costs $100 to $150 for a comparable product that Liqian Ren says most people could not distinguish unless they worked with hair for a living. She uses one.
Most explanations of Chinese export strength reach for subsidies and state industrial policy. Ren said those are part of it and not the part that matters commercially, and that the same structure shows up in artificial intelligence: the best models are American, the Chinese ones are cheaper, and for cost-conscious work that is enough.
"Again not a product promotion but as an example to say that you know Chinese manufacturing are doing well because they are offering not as good but significantly cheaper but better than the third choice products and this is you know similar for AI as well."
Ren runs Modern Alpha at WisdomTree and presents its China of Tomorrow series, and she spends her summers in China. She recorded this on 14 September, ahead of Xi Jinping's expected visit to the United States.
The full episode is covered here so you can skip it. 17 minutes of audio, 10 minutes of reading.
Here are the 10 arguments that matter.
Key Takeaways
The Chinese export formula is not as good, significantly cheaper, better than the third option
The same formula applies to AI models, which she says are good enough for cost-conscious work
Tesla's waiting list runs months and its price is high against Chinese EVs, which limits how far countries can avoid Chinese cars
The trade-off is much thinner margins for Chinese companies than US firms earn
She is certain real unemployment exceeds the official 5%
Distillation runs both ways, and Chinese users fed sensitive material into US models
ByteDance and Tencent were not on Anthropic's list of Chinese distillers
1. The Hair Dryer Example
Ren opened with a consumer product rather than a policy argument. Dyson sits at the top of the category and has just extended it to a $500 toothbrush; the Chinese alternative she bought costs a quarter to a third of that, and she has used it for close to three years.
"So I think for people who care about their hair drying, we know the very high-end one is Dyson, right?" — Liqian Ren
"So obviously it's very expensive you know $400 $500 not many people can afford it" — Liqian Ren
Her point is not that the Chinese product is better. It is that a large share of buyers in the US, Europe and developing countries will take high quality at a lower price when the premium option is out of reach.
2. Good Enough, Cheaper
The formula transfers directly to artificial intelligence, and Ren stated it plainly.
"Again not a product promotion but as an example to say that you know Chinese manufacturing are doing well because they are offering not as good but significantly cheaper but better than the third choice products and this is you know similar for AI as well." — Liqian Ren
"You see the US top AI models they are still the best but they are expensive too. For China's models they are not as good but they are also good enough and then they're much significantly cheaper" — Liqian Ren
She framed it as a developer's decision: when a project is cost-sensitive, the Chinese model is a real option rather than a fallback.
3. Cars and Refrigerators
Ren applied the same logic to appliances and vehicles. Refrigerators in the US remain dominated by LG and Samsung, air conditioners in Europe increasingly are not, and on cars she separated the American market from everywhere else.
"I don't think China cars are going to be available in the US" — Liqian Ren
"The wait time for Tesla is quite a few months." — Liqian Ren
"And you know the price is on the high side if you compare to Chinese EVs." — Liqian Ren
"So a lot of other countries their citizens even is not going to be able to easily say let's not buy China because the you know the best US products are expensive and right now it has a little bit of trouble of delivering." — Liqian Ren
4. The Margin Trade-Off
The strategy has a cost, and Ren named it without softening. Selling significantly below the premium brand means earning significantly less on each unit.
"So again I think that these are great examples and then people can see but on the other hand because Chinese products is just significantly cheaper so the margin for Chinese companies is also significantly lower." — Liqian Ren
"They're not able to get the kind of profit margin that US firms can get." — Liqian Ren
5. Eating Out in China
On the domestic side Ren described a weak economy with specific pockets that are not. With housing no longer absorbing household savings, spending has moved elsewhere, and restaurants are the visible case.
"The other part is you know China's domestic economy is weak but you you do see there are you know a few not too bad areas." — Liqian Ren
"I think now that people don't have to spend on housing you you have people you know a little bit more willing to splurge." — Liqian Ren
"Mostly just eat out because the food price is so much cheaper and also variety is is there." — Liqian Ren
She said she met families in China over the summer who barely cook at home. The same competition that makes eating out cheap is what keeps wages and profits down.
"So I think again but that's a challenge for China that the the wages are low, the profits are low and then people you know the unemployment rate is also high I 100% sure higher than the official 5%." — Liqian Ren
"But again it's a it's a challenge for China but on the other hand in China you really cannot just write off China." — Liqian Ren
6. The Xi Visit
Xi Jinping is expected in the United States for a short visit. Ren thinks the meeting happens and does not think it is worth watching closely, because both sides negotiate to the deadline and the substance is already known to each of them.
"I for example, President Xi I think he is coming to the US will be similar to President Trump you know less than 36 hours maybe in the US." — Liqian Ren
"Will pre will the meeting go on? I still think it's likely, but again with President Trump, he always negotiated to the last hour." — Liqian Ren
"So I think China is going to stuck out to the last minute." — Liqian Ren
Her framing of the relationship is that the two governments are managing the risk of war, each with a stated line the other is told not to cross.
She also expects the United States to hold off on an arms sale until after the visit, then proceed, and China to protest. She described that as the usual sequence.
"I think China continues say you cannot sell, you know, arms before President Xi comes." — Liqian Ren
7. Taiwan Can Wait
Ren is not spending time on Taiwan, and gave a reason rather than a dismissal: both governments are occupied with making their own supply chains independent, which takes years.
"I think Taiwan will be the ultimate issue but actually shortterm is not the most important issue because both sides are just busy getting its own supply chain ready to for the future." — Liqian Ren
"So in the next two or three years, China is you know trying to get its supply chain to be very even more independent and get the chips ready." — Liqian Ren
"US's goal is to stay there, right?" — Liqian Ren
She named 2028 as the year that changes things, with elections in Taiwan and China watching how Taiwanese voters read the situation.
"But I think up to that point, there's really nothing that interesting, to to pay attention to Taiwan." — Liqian Ren
8. China's Selection Year
The part of Ren's analysis with no equivalent in Western coverage is the Chinese political calendar. It runs in five-year cycles, and 2027 is the year Xi takes a fourth term, with turnover at every level of government beneath him.
"You see many people are you know getting the so-called non important jobs and then many people are getting into politically important positions." — Liqian Ren
"So everybody is juggling in China to move up or you know if they cannot move up they they they try to get something else." — Liqian Ren
"So underneath every headline there is you know huge undercurrent in terms of what's going on politically." — Liqian Ren
She said economic decisions are shifting toward Premier Li Qiang, whom she described as more pragmatic, and warned against expecting a large stimulus. The party is not convinced, and, she said, neither is the public.
9. Distillation Both Ways
The story running in US media is that Chinese labs distilled American models, meaning they trained their own systems on the outputs of someone else's. Ren's reading of the same Anthropic disclosure is that it also revealed how much Chinese material had gone into US models.
"So these are the headlines and obviously at the front news in in the US is about Chinese AI's distillation of US models and here I will say that do not be misled by the headlines." — Liqian Ren
"I think at this point distillation works both ways." — Liqian Ren
"I always felt like even though they say they don't save your stuff, but they do. And it turns out it's true." — Liqian Ren
Her evidence against the simple version is which companies were missing from the list.
"Actually if you look at a lot of if you look at the two two Chinese companies one is ByteDance the other is Tencent they also have their AI models but they were not on the list of distillation Chinese companies that Anthropic release" — Liqian Ren
"So I I would say do not be misled that Chinese models is just using distillation." — Liqian Ren
She said both firms did some distillation early and stopped, judging the risk too high, and found other ways to keep their models current.
10. Do Better, Not Slower
Ren does not expect a US-China agreement on slowing AI development and does not think one would work. Her prescription for the United States is the unglamorous one.
"So at this stage the priority for the US is really you know do the best and then keep the best." — Liqian Ren
"Even though it says like oh we need to slow down or you know we need to have US China agreement it's not going to happen at this point" — Liqian Ren
"US has things that can try can try to slow China down but I don't think it's going to significantly slow China down if you look at how Chinese firms are catching up" — Liqian Ren
Bonus Insights
Ren was careful to say twice that the hair dryer was not a paid endorsement, and that she bought and uses the product herself
She said high inflation is easier for Americans to tolerate because it comes with an external competitor, and drew the same parallel for Chinese tolerance of a weak domestic economy
Her advice on the Xi visit was to skip the daily coverage: "unless you are political junkie there's no point in spending time on" it, because the underlying positions do not move
She allowed that she may be wrong about Taiwan, and said so directly: "maybe I'm going to have to eat my own words"
Ren's bottom line is that China does not need to beat the United States on quality to keep taking share, and that treating the price-performance gap as a subsidy story misreads what Chinese firms are actually selling.
Products, Companies & Tools Mentioned
Dyson (The premium benchmark at $400 to $500, now extended to a $500 toothbrush)
Laifen (The Chinese hair-care brand Ren bought on Amazon at $100 to $150; her worked example of the price-performance argument)
Tesla (Still the best EV in the US in her view, with a waiting list running months and a price above Chinese equivalents)
Anthropic (Published the report on Chinese distillation; Ren says it also showed how much Chinese data US models had absorbed)
ByteDance and Tencent (Both run their own models and were absent from the distillation list, which she treats as evidence against the simple story)
LG and Samsung (Still dominant in US refrigerators, unlike air conditioning in Europe)
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