Fast Retailing, the Japanese company that owns Uniqlo, trades at about 50 times earnings. China's export-oriented consumer brands trade at about 10 times.
The consensus allocation in Asia is long Japan and Korea and heavily underweight China. Bin Gao runs the opposite position, and he wants the currency as well as the stocks.
"The Japan bubble is signified by consumption companies which are priced at extremely high multiples."
Gao's macro fund returned 76% in 2024, a result that made him briefly famous in Hong Kong, and he was a physicist before he moved into finance — which is where his argument about whether China can innovate comes from.
The full interview is covered here so you can skip it. 33 minutes of audio, 17 minutes of reading.
Here are the 12 calls that matter.
👤 Guest: Bin Gao, CEO and Co-CIO of Kaifeng Investment Management in Hong Kong, whose macro fund returned 76% in 2024, and a physicist before he moved into finance
🎙️ Host: John Lee of Bloomberg Intelligence, who presents Asia Centric from Hong Kong
📰 Published: 16 September 2026 on the Asia Centric feed · recorded 14 September 2026
🟣 Apple Podcasts | 🔗 Episode page | ⏱️ 33 min | ✅ Time saved: 16 min
Key Takeaways
Japan's consumer stocks are the bubble, not China's, at 50 times earnings against about 10
His trade is long Chinese export consumer brands and short Japanese ones
He called no September rate increase with the market pricing 85% to 86% for one
He thinks the dollar-renminbi rate should be 3.5 to 4, against about 7.4 now
Goldman Sachs was calling for 5.5, and he says that is not far enough
Weak Chinese retail sales are partly a saturation effect, not only the property slump
Shenzhen households have 22 square meters of living space each; Hong Kong's have 16
China has 300 golf courses against 16,000 in the United States, and the cause is regulation
He calculates that opening the sector could create millions of jobs
Export controls have already failed in space, electric vehicles and solar panels
Chinese government bond yields are far too low for the growth story he describes
The 30-year is 2.2% to 2.3% and the 10-year under 1.7%, against more than 4% in the United States
China is the only large economy with the inflation headroom to run quantitative easing again
1. The G2 Case in Numbers
Lee opened on the shift from a G7 world to a G2 world dominated by the United States and China, and asked Gao to explain it. Gao said he first researched the idea 10 years ago when he set up the fund, and broke it down by sector of gross domestic product.
China, not the United States, is the largest agricultural producer, at about $2 trillion a year against a quarter of that from each of India and the United States. Gao said the ranking surprises most people.
In manufacturing China produces nearly $5 trillion a year, the United States about half that, and no other country more than $1 trillion.
The United States dominates services at $22 trillion a year, with China at $11 trillion and the next few countries each under $3.3 trillion. His conclusion from the three sectors is that both countries are multiples of everyone else.
On geopolitics, he said China was the only country directly confronting the United States in the trade and technology wars of the last two years. It is too early to claim victory, he said, but China has gained ground toward a G2 balance.
Lee stopped to explain the G7 to the audience — the United States, United Kingdom, Japan, Canada, France, Germany and Italy — and restated the argument as the other six losing economic weight while China gains it.
Gao corrected the framing rather than accepting it. He said he would not put it as G7 versus China: the better description is developed markets against emerging markets, or the G7 and G10 against the BRICS bloc, which he sees growing as the developed bloc shrinks.
2. Entangled, Not Decoupled
Lee asked whether supply chains will bifurcate, with the United States and its allies on one side and China on the other. Gao's answer was that the direct links shrink while the indirect ones grow.
China will become less dependent on the United States, he said, because its economy already uses little American input beyond chips and high-end upstream technology — the part Washington is actively cutting off and Beijing is eager to replace. "So I do see that China will become less dependent on the U.S. in the supply chain."
The United States will buy less directly from China and more from it indirectly, which he called the more important half of the story. He reduced the question to two: whether you believe in markets or in government control, and which government is more effective at guiding and enforcing on the market.
If you believe in markets, he said, a country cannot cut off the most globally competitive products in the supply chain — semiconductors and artificial-intelligence tokens, industrial machines and humanoid robots — all areas where he says China has spread into the mainstream.
His two examples of the indirect link are Waymo buying 3,200 Chinese vehicles for its autonomous fleet, and Vietnam: "Vietnam runs the same amount of trade surplus with the U.S. as it runs trade deficit with China, right?"
On enforcement he used prohibition and then fentanyl. Americans could buy alcohol during prohibition, which he offered as evidence of the power of the market over government control. Today drugs remain readily available, and the American government needs the Chinese government to help limit the precursor chemicals — which are themselves legal products. "It actually illustrates China's incredible power in the legal part of the supply chain."
3. The 0-to-1 Myth
Lee asked whether American policy is narrowly targeted — the electric-vehicle supply chain, Nvidia chips, ASML lithography machines. Gao agreed it is selective, and said it will fail anyway.
He said the controls have already failed in the space industry, electric vehicles and solar panels, all areas where Europe and the United States subsidized domestic production and tried to keep the core technology away from China.
Semiconductors are following. "Last month, I think semiconductor export increased 130-some percent from China."
The underlying question he poses is whether knowledge can be contained at all: "I think the key issue is that can you really prevent knowledge from spreading?"
He then attacked the standard defense of American advantage directly: "I challenge the notion of U.S. is good at 0 to 1, and China is only good at 1 to N."
His reason is his own training. "We still live in the world of quantum physics and relativity," he said, and everything since has been a step up in technology rather than fundamental science. Given money, talent and access to knowledge — by study or, as the United States accuses China of doing, by distillation — a country can work its way there. "China now is no short of capital, no short of talent, and no short of knowledge, and China will be able to catch up with whatever U.S. has right now."
The mirror image is that American reshoring is hard because the margins are bad. Once people are used to the high margins of finance, law and healthcare, he said, it is very difficult for them to sit down and work a manufacturing production line and be happy with a low-margin business.
Asked directly whether the measures to limit China have failed, he pointed at the trade surplus. Lee said it has ballooned toward $1.2 trillion; Gao said the first eight months alone are $800 billion and this is the sixth year of the trade war, so front-loading no longer explains it.
4. Why Retail Sales Are Weak
Lee put the two-tiered economy to him: strong export manufacturing against retail sales growing 1% year on year. Gao said the standard explanations are incomplete.
He accepted the usual causes and ranked them as partial. Five years of falling house prices carry a wealth effect. Precautionary saving is real, though he said social security has genuinely improved, which he has seen himself. Price wars delay purchases.
His first addition is saturation in what he called, in quotation marks, an advanced economy. The comparison is Shenzhen against Hong Kong: about $20,000 of GDP per head against $50,000, but 22 square meters of living space per resident against 16, and car ownership of 22 per 100 people against 12. "Well, it's two cities next to each other, right? This is the developed economy. That's called emerging economy."
Lee's aside was that Hong Kong apartments are tiny.
His second addition is a base effect. Last year's trade-in incentives have lapsed; strip out cars and electronics and he puts retail growth nearer 3%.
He was careful not to claim the economy is strong. Going from 6% to 2%, or 3% retail growth, is still weak. But the nature of the weakness matters: "The real problem is that in the real or physical side of the consumption, it reaches a saturation point."
Where he sees room is services, and he blames government restriction. "The living standard in China, around the household, is quite good, actually, right?"
5. China's 300 Golf Courses
Gao's worked example of a blocked service sector is golf, and he said his back-of-the-envelope arithmetic has it creating millions of jobs on its own.
China has about 300 golf courses on an 18-hole equivalent basis. Korea has 500, Japan 3,000 and the United States 16,000. Per million people that is 50 in the United States, 25 in Japan, 12.5 in Korea and under half a course in China.
Lee said Chinese consumers are culturally close enough to Korean and Japanese ones that he would expect the game to have taken off.
The popular explanation is the current leadership. "If you ask ordinary Chinese or the entrepreneurs, the rich guys who like to play golf, they all complain, the current government does not like golf." China used to have 600 courses.
Gao said the real cause is older and duller. The restriction dates from 2002 and 2003, under the previous administration, when China was still relatively poor: "And because golf courses uses a lot of water and also claim land, which is supposed to produce food, right?"
The rule was not enforced, so roughly 300 courses were built without proper permits. When the current administration arrived and enforced the regulation, those closed. The anti-corruption curb on official spending removed the customers, and local officials concluded Beijing disliked the game and closed more.
He said the pattern is specific to golf, not to expensive sport. "It's not like Beijing does not encourage high-end sports." Skiing, skating and tennis are all booming. Yachts are his other example: common in Hong Kong, rare in Shenzhen.
Lee read it as residual discomfort about displaying wealth, and Gao agreed the framing is what matters. Arguing for the rich to show off gets nowhere, he said; arguing that a richer country wants higher-quality life, and that golf is an outlet for the government's own shift from high-speed growth to high-quality development, might. He added that he is not a government official and does not know.
6. The Allocation Shift
Lee turned to what the G2 view means for asset allocation. Gao said the rotation into emerging markets has already started but has gone everywhere except China.
Money chased India, which then cooled for 18 months, then semiconductors and high-tech hardware, then Japan and Korea — which, he noted, are not emerging markets.
"And the whole world is really underweighting China right now."
The question he puts to allocators is whether they can afford to underweight the biggest economy in the world. China is already the largest economy at purchasing-power parity and he expects it to be the largest at market exchange rates within a few years.
That gap between the two measures is the trade. He framed it as the dollar-renminbi rate moving from 7.4 to 6.7 to the 5.5 Goldman Sachs was calling for, and then to the 3.5 or 4 he thinks it should be.
7. The Renminbi Call
Asked how to play the theme across equities, currency and fixed income, Gao put the currency first.
Renminbi appreciation is the primary position, with volatility around it.
What holds investors back is the carry and the central bank. Chinese rates are low, so few want a heavy position, and the market believes the People's Bank of China dislikes appreciation.
His answer is the same test he applied to supply chains — market or government control. "And that catch up is a market force even the PBOC could not fight." The trigger is the American economy slowing, the Federal Reserve moving from hikes to cuts, and China's property market stabilizing; at that point the global underweight has to be covered.
"I think RMB will have a quick and rapid appreciation, just like before 2013."
His analogy is Japan in the 1970s rather than the 1990s, and he says the comparison people make is the wrong one. Those pointing at demographics and a property correction are looking at 1990; he says magnitude and stage of development make the 1970s the better fit.
The 1970s parallel runs on an energy shock. The 1974-75 oil crisis, which he called "a big luck for Japan," let Japanese cars into the global market. "We can say that the US-Iran war is a luck for China," he said: energy independence pushes buyers toward electric vehicles, which run on electricity a country can generate with its own solar panels, which is why he says Chinese electric-vehicle exports are exploding.
The payoff in the analogy is large. From 1975 to 1985 the yen went from about 300 to the dollar to about 150, and he said the Nikkei outperformed the United States by 200% to 300%, though he did not vouch for the exact number.
8. Calling a No-Hike Fed
Lee asked whether Gao's view is that Kevin Warsh will be less hawkish than the market expects. Gao made the call on the record, with the decision days away.
"We are recording on the 14th, right? The decision will be three days from now or two and a half days from now." The market was pricing 85% to 86% for a September increase.
"But I'm willing to stick my head out and calling for a no hike." He said he might be wrong and that being wrong on a podcast is a bad thing, but that the cost of the wrong call is limited when 85% is already priced.
His reasoning is political and behavioral rather than economic. He said neither the Federal Reserve nor the American government has much claim to credibility after 20 years of money printing and deficit spending into an overheating economy, and that politicians will do what wins the next election, with the midterms less than two months away.
He allowed the constraint on that argument himself: Trump does not control the Federal Reserve, and the decision is the chairman's. Trump wants lower rates, which he called no secret.
On the chairman's own position, he said the argument put to the market is that low rates are justified by productivity gains from artificial intelligence, paired with a smaller balance sheet. His own phrasing on the inflation constraint was this: "The current inflation is a stone in his shoe, but it's not super high." Against 2022, he said, it is quite low.
The mechanics of the committee are what make the call possible. The chairman does not need a unanimous vote, only half of it, and Gao's read is that he does want to wait until December to see the election result and take advice from his committees.
Lee called it a brave call, because the answer would be public by the time the episode aired.
9. Chinese Rates Too Low
Asked whether he is bullish Chinese equities, Gao said yes, and then explained why he is not buying them.
He thinks China deserves a beta rally over the next decade on the Japan-1970s comparison.
He does not want to be the one selling it. Long equity beta is not where he adds value, he said, because many managers can produce beta for allocators.
The two positions he does want are the renminbi and its proxies. If the renminbi appreciates, he said, neighboring currencies such as the Korean won and the Australian dollar can benefit, and the Australian dollar carries a higher rate.
The second is a rates position on both sides. "So I think long front-end U.S. rates make sense against short, the back-end Chinese rates."
The levels are the argument. The Chinese 30-year is 2.2% to 2.3% and the 10-year under 1.7%; Japan is over 3% and the United States more than 4%. If China is a mix of 1970s and 1990s Japan rather than 1990s Japan alone, "I think your Chinese rates are way too low."
10. Size, Tension, Attention
Lee asked what it is actually like running a macro hedge fund out of Asia. Gao's answer was a framework, and a complaint.
"In many years, Asia macro sounds like an oxymoron. Many people tried and left, tried and left, right?" The opportunity, he said, only comes every 10 years, and it has historically come on the downside — the 1997 Asian financial crisis, then 25 years of waiting for the Chinese collapse Gordon Chang has been predicting since 2001, then the bets on a Japanese collapse between 2009 and 2012.
What is different now is the direction. "It is also exciting now because we know China is not collapsing, but instead is challenging the U.S. for number one in all areas and has succeeded in many areas."
Japan has gone the other way, from crisis to what he calls a bubble — the product, in his account, of a decade of quantitative and qualitative easing.
He argues China is now the only large economy with room for another round of quantitative easing. Japan cannot because of inflation and the United States cannot because inflation is high. "China is the country which can do a lot of QE if it wants to." He does not think it is doing so or will, but says the option is a real asset.
His three conditions for macro investing are size, tension and attention. On size, China including Hong Kong is nearly 30% of the United States by equity market capitalization and about 40% by debt market, with a higher share of trading volume than either.
On tension, the G2 confrontation sits on top of a strategic game between China, Japan and Korea, with Korean and Japanese equities hot and Chinese equities not — a gap he expects to reverse in a year or two.
On attention, he credits the American political class. China is on the front page constantly, and he said politicians cannot seem to speak without mentioning it; in media terms there is no bad publicity.
His complaint is that the attention has not produced understanding. He described a sickening lack of it among politicians, commentators, investors and allocators. His test is RCEP, the largest free-trade agreement in the world, which he bets 80% to 90% of listeners could not identify, against the much smaller TPP that Trump withdrew from in his first term.
The three conditions resolve into a thesis: "So combined, the size means Asia can accommodate big capital, the tension implies risk and opportunity, and the attention means risk will become lower gradually, and trend become more prominent."
11. Japan Is the Bubble
Lee picked up the word Gao had used in passing and asked him to defend it. Gao narrowed it first.
He said the bubble is Japan specifically, not northeast Asia, and that he did not call Korea one.
The bubble is not in the hot sector, which is what makes it one. In a bubble, he said, everything flies — and he allowed that whether artificial intelligence is a bubble is a separate debate.
"The Japan bubble is signified by consumption companies which are priced at extremely high multiples." His example is Fast Retailing, the listed owner of Uniqlo: "Right now, PE is 50 times."
"You can have a retail sales at 50 times by not calling it a bubble."
The paired trade is the other side of the same view. Chinese export-oriented consumer brands are selling at about 10 times, and he expects the trade — long Chinese consumer names, short Japanese ones, particularly the export-oriented names — to work over a couple of years.
12. After the 76% Year
Lee raised the number that made Gao's name — a 76% return in one of his funds in 2024, covered by Bloomberg at the time — and asked what has happened since.
2025 was a mid-20s year, which he agreed is a good return.
2026 has been the reverse of exciting. Up a lot in the first two months, gave it back in March, down in April, up slightly in May, down in June, and made money in July when others were losing it.
"Overall, this year is still kind of flat."
His framing of the flat year is the job description. A macro fund's role is to deliver returns at the right time and to diversify an allocator's book. He said the firm is working hard and he is reasonably optimistic about making money for investors in what is left of the year.
Bonus Insights
Lee's response to the Asia-macro framework was that the thing he remembered from it was the word bubble, and that Japan and north Asia could carry a whole episode of their own.
Gao's fund has been on the show before; this was a return appearance, and he referred back to the developed-to-emerging rotation theme he brought the last time, about 18 months earlier.
The episode was produced and edited by Clara Chen, and Lee closed by pointing listeners to Apple Podcasts and Spotify.
Gao's bottom line is that the world is underweight the economy that dominates two of the three sectors of global output, and that the way to correct it is the renminbi and Chinese rates rather than Chinese equity beta — with the short leg in Japanese consumer stocks at 50 times earnings rather than anywhere in China.
Products, Companies & Tools Mentioned
Kaifeng Investment Management (Gao's Hong Kong macro fund, up 76% in 2024, mid-20s in 2025 and flat so far in 2026)
Waymo (His example of indirect entanglement: 3,200 Chinese vehicles bought for the autonomous fleet)
Nvidia and ASML (The two named targets of selective export controls he says are failing)
Fast Retailing (The listed owner of Uniqlo, at 50 times earnings, and the short leg of his consumer trade)
Goldman Sachs (Whose 5.5 dollar-renminbi call he says does not go far enough)
The People's Bank of China (The institution he says cannot fight the appreciation once the underweight is covered)
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