China Builds, The US Regulates - EP 35 Dan Wang

I don't know, man, you've done these things. It's like having a chat. Um, uh, but yeah, if you, you feel good. I feel good. You feel good. Okay. Dan Wong, thank you for coming on the show.

Thanks for having me, Ashlee Vance.

I'm really excited about this. Okay, let's start with the— we'll start at the very beginning, which is, is you've just written this amazing book. We'll make sure I get it there on the screen just as a fellow author. Well, I know most people are listening, we'll, we'll call it out. So Breakneck, um, it's a New York Times bestseller, which is hard to do. So congratulations on that.

And It's, it's, it's good. I mean, actually, you, you've done it, and this is, um, this is a— it's a nice experience.

It's a good feeling, right?

Yeah.

Um, so the— obviously we're going to talk, we're going to talk about the book, so we'll get into everything, but it's about, it's, it's about China, and, and, um, China is this engineering culture and, and its relationship to the United States. It's kind of about both countries in a lot of ways and, and where they're heading or could be heading, and And you— we arranged this podcast pretty quick, so I had to race through the book. You know, I didn't— I did get through the whole thing, but kind of quicker than I had hoped. And so because I really wanted to marinate with this, it's a topic that's near and dear to my heart. It's a fantastic book. Like, thank you. I'm not saying this just because you're sitting here. It's one— it's very easy to read. It's smart. It's very clear. It moves quickly. So that's nice.

It's—

it's It's like, for anyone who just wants to have a sense of what China has accomplished over the last 4 decades, this is a, a path to get there, um, very directly. And, and it's, it's just wonderfully written. I mean, I, I was, I was really taken back, taken away. And, and then, you know, just so people know, I mean, I don't think it's, it's not like pro-China, anti-China. It's not pro-US, anti-US. It's, it's, you kind of give both sides and, and, um, And, and you offer, um, kind of like you, you do a thing that most people don't, which is, is do some criticism but not really come back with any ideas for what each country could do differently or maybe better. And, and you do do that throughout, throughout the book. So I, I found that, um, really fantastic. Anyway, congratulations. It's a wonderful book. Um, I, I shamefully, you're People have been following your work for many years, many prominent, um, people. You're a scholar and, and have— I think you were born in China and grew up in Canada, U.S. and Canada, right? And then have, while writing this book, lived in China for 6 or 7 years.

That's right.

Okay. And then now you're back in the U.S. And is it fair to— you're an intellectual, you're an academic. Is that, is that fair?

I'm an egghead, I admit it.

I'm sorry. Is— and I, um, what is the Hoover— is that the best place Where should we anchor you?

I'm a research fellow at the Hoover Institution.

Okay, okay. And then, and so, and for years you've been writing this like annual letter about China that's very well read and just, just incredibly thoughtful on, on the country, what's happened. All right, so that's my, that's my intro. We do okay so far?

Sounds great.

Okay, I've got a million questions. I mean, what you are writing about, okay, you kind of frame it as China as this engineering economy versus the U.S. Which you argue, especially since the 1960s, has turned into this lawyerly economy, and that the U.S. has managed to, um, yeah, kind of like in some ways sue itself into inaction. It has not tended to its infrastructure at all while China has been building at this incredible clip. You note that China's top politicians tend to be engineers, whereas in the U.S. they tend to be lawyers. And, and yeah, I mean, it's quite, you know, it's just These are things that I've known and followed. You just lay it out so, so starkly in this book. And so obviously you'd been thinking about this for a long time. I mean, you did—

you—

when you went back to China, did you go there with like doing a book in mind, or all these ideas came from your experience and just watching this firsthand?

These ideas came as I lived through, um, what I felt were pretty big issues in China. I moved to China at the start of 2017 after working here in Silicon Valley. And at the start of 2017, when I moved to Hong Kong and then subsequently to Beijing and Shanghai, I didn't realize all of these big changes that I would be expecting. At the start of 2017, I remember watching some of the Senate confirmation hearings of Donald Trump's first cabinet meetings., and the whole world was totally unsure about what was going to come with the first Trump administration. And I lived through Trump's first trade war, which morphed into a technology war that smashed a lot of Chinese tech companies. I lived through China's great economic and some technological successes over this period, as well as new and tightening forms of repression under Xi's consolidating rule. And the centerpiece of that was spending the entirety of Zero-COVID in China. And so, you know, when we thought about— when I thought about something like Zero-COVID, when I thought about something like the one-child policy, which took place a few decades ago and ended in about 2015, you know, the numbers in these policies are right there in the name. You have one child, Zero-COVID, no ambiguity about what these things mean.

I liked how you put that in the book. It's not like in the US where we try to market everything or frame it or It was just that they were very, very on point about what they were trying to do.

It felt like engineering projects. It felt like social engineering projects. Yeah. All right.

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And as I saw China's amazing infrastructure, bridges, high-speed rail, subways, these things I was using on a daily basis, sometimes weekly basis, sometimes it felt like this is a country that is just much more metric-driven, literal-minded, perhaps in the governance of the people.

Yeah, and you— in— you have two chapters, one on, on the zero-COVID policy and one on the one-child policy. And to your point, I just hadn't thought about them quite like that as a reflection of this engineering culture. I mean, everybody thinks about the factories and, and all the consumer products and manufacturing and all this stuff, but I— yeah, I mean, it was interesting for me just to look at it as this, this mindset. And so you're You kind of argue, and it is this— I think it's this roughly 40-year period, um, that, that it is just— I mean, maybe put it in your own words, that this engineering, um, culture, like, what is the heart of that?

So, you know, I think China's engineering roots really took place throughout the 1980s. When Deng Xiaoping took over as China's top leader, basically by 1979, he surveyed the wreckage of China during the Mao years when Mao had overseen some famines and the Cultural Revolution and all sorts of disasters. And Deng Xiaoping took a look and said, whatever Mao did, let's do the opposite of that. And so Deng decided that The counterstroke to Mao's romantic misrule was to promote a lot of technocrats into China's top leadership. And so throughout the 1980s, throughout the 1990s, a lot more people with engineering degrees became top leaders. And the peak of this was in the year 2002 when the previous General Secretary of the Communist Party took over. His name was Hu Jintao. He trained as a hydraulic engineer. He took part in building a dam. His deputy, the premier Wen Jiabao, was a geologist. And all 9 members of the Standing Committee of the Politburo, which is the 9 highest ruling echelon of the Communist Party, all 9 of them had engineering degrees of a very Soviet sort. And this was the peak of the engineering state. Afterwards, it sort of lessened. There were more lawyers and economists in China's cabinet. Xi himself could be kind of a hybrid. He studied chemical engineering as an undergrad and has a doctorate in Marxist economics. But I also want to draw a little bit on this idea that China's engineering state has older roots, that ancient imperial China— we don't have to take this too seriously, but, you know, they built a lot of stuff. I mean, what are the some big projects that we associate with ancient China? Well, Could be something like the Great Wall, which is a vast fortification system. Could be something like the Grand Canal, which is a big waterway management system. The emperors rarely hesitated to completely reorder a peasant's relationship to her land. And this is also the country that famously administered a basically 1,000-year-old exam that started about 1,200 years ago to find smart people and bring them into the court and elevate them as mandarins in this highly rigorous metric-based exam system. And so I don't want to be too literal, I want to be playful with this device, but that's how I want to think of China as an engineering state.

And you, you write that the— there's a bit that I actually want to read. I mean, that the U.S. and China share in a lot of these, um, share a lot of similar traits. And obviously, you know, for the last century plus, I mean, the U.S. has had many engineering feats. In the book you talk about The US sometimes gets, especially these days, a little too obsessed with the moment of invention and then not seeing things through. But you also write that, um, to some of the things you were just talking about, both countries share in this kind of like forward-looking, um, we are going to do great things type of mentality. And so there is like a, some of the projects you were just outlining, I mean, you know, going to the moon, um, the Manhattan Project, you know, you can see the the US also clearly, um, you know, has similarities.

Yeah, absolutely. Yeah.

And you write, you write, let's see, you, um, I mean, right at the beginning of the book you just go right at it, you know. I am sure that no two peoples are more alike than Americans and Chinese. A strain of materialism, often crass, runs through both countries, sometimes producing veneration of successful entrepreneurs, sometimes creating displays of extraordinary tastelessness. Overall contributing to a spirit of vigorous competition. Chinese and Americans are pragmatic. They have a get-it-done attitude that occasionally produces hurried work. Both countries are full of hustlers peddling shortcuts, especially to health and wealth. Their people have an appreciation for the technological sublime, the awe of grand projects pushing physical limits. This is kind of what we're talking about. American and Chinese elites are often uneasy with the political views of the broader populace, but masses and elites are united in the faith that theirs is a uniquely powerful nation that ought to throw its weight around if smaller countries don't get in line. I'm going to shut up in a second, but there's one other bit that I want to read. Um, these two countries are messy in part because they are both engines for global change. I, I hop forward just a little bit. Europeans have a sense of optimism only about the past, stuck in their mausoleum economy because they are too sniffy to embrace American or Chinese practices. And the rest of the world is either too mature or too young to match the impact of these two superpowers. It is Americans and Chinese, Silicon Valley, Shenzhen, Wall Street, and Beijing that will determine what people everywhere will think and what they will buy. I read this because it Resonates deeply with me. I've been arguing in my writing and on this podcast, um, that seems fairly clear to me that China and the US are shaping our collective future. And sometimes I feel as if they're racing forward so quickly on an almost science fiction-like, um, pace and things that are being invented. And it strikes me that most of the rest of the world will just be renting or participating in what these two countries produce. And so this is like, this is a very important question, you know, as to how these two countries push forward. Um, you, like I said, you, you do offer hope for the US and hope for China, but you know, when you read this book, it is disheartening for Americans, I think. Just to see what China has done and how little the U.S. has done over the last 40 years. I mean, I was, I was, I was depressed on some level, you know, just to really have it put in your face.

Well, I hope it's, um, I, uh, I tried my best to capture what China was doing well. And if there's anyone that could be disheartened, I think it should not be only Americans, it should also be Chinese, because I also try to capture what America does really well. And I think that maybe I would add, if I could rewrite that paragraph that you just read, Ashlee Vance, I would add just one more line to say that both countries are also extraordinarily gifted at delivering self-beatings on themselves and setting themselves back in super big ways, because I think that both countries have also made these tremendous mistakes., that have hurt their people, that have hurt their economies, that have hurt their companies in really serious ways. And what I'm really trying to do is to offer a rousing call to China, the Chinese, to know that, you know, life could be a lot better. And also for the Americans to know that life ought to be a lot better as well.

Yeah.

Okay.

And I want to, I want to dive in on a couple of those ideas. Just one more thing, just to You, you, do you know that guy Arnaud Bertrand on Twitter? Yes. Yeah, I'm kind of curious how you feel about him, but sometimes he'll go to these, um, more rural cities and show how fantastic— in China— and show how fantastic their infrastructure is. You also go on this bike ride and this journey to a city that seems to have like the economy the equivalent of like, I don't know, like Wichita, Kansas or something like— I mean, I mean, not a, not a, um It sounds like a region that's not super rich. It's not like the center of capital. And what you saw was that its infrastructure was really like better than New York or Los Angeles.

Much better. Yeah. So I was in, um, the city of Guiyang in the province of Guizhou, which is deep in China's southwest. This place is heavily mountainous, very far away from the coasts. Historically has been poor forever, um, because of various issues with malaria and inaccessibility, and still one of China's poorest provinces. I went there to cycle for 5 days, about 600 kilometers, with 2 friends to go from Guiyang to Chongqing, which was China's wartime capital and also a super mountainous place. And in China's 4th poorest province, I saw much better levels of infrastructure than California, one of America's richest states. Guizhou has 45 of the world's tallest bridges. It's not China's title of tallest bridges. It's the world's tallest bridges. It has something that California has been trying to build for more than 15 years now. It has a high-speed rail network. It is pretty easily connected to Shanghai, where I was traveling. It has 11 airports. And so, you know, generally what I was trying to make sense of is kind of this puzzle of For China being so poor, and it has about 1/6 the GDP per capita levels of the US, by some measures it might be on par with the American economy. But Guizhou is certainly much, much poorer than California. And yet here we are, you know, chatting in the technological beating heart of our, you know, the beating heart of our technologically accelerating civilization. Is Palo Alto very pleasant? It's okay. Is Menlo Park very pleasant? Absolutely not. Um, and so, um, you know, we're in such a rich place. Why are things so unfunctional here?

Yeah.

Yeah.

It's shocking. I mean, Palo Alto, Menlo, they're like, you know, they're just kind of innocuous. I mean, it's nice, you know, there's good weather, nice trees, but there's nothing, there's nothing very spectacular. You know, this is not where you would think Silicon Valley would be. I always think that San Jose is the, is actually the saddest. Um, it makes no sense to me. I mean, if, if we are living in modern-day Florence and we have such an absurd amount of the world's wealth collected here in this, this relatively small spot, I mean, you know, the last 30 or 40 years, San Jose should be like the most spectacular city on planet Earth, and it has kind of like not changed at all in the entire time I've lived here, which is 20+ years.

Uh, we have a few more parking garages, right? How about that?

Yeah, but I can like never understand this. I mean, it's just— and I talked to it about this with some friends, and it's just, it's like, well, nobody with money wants to go through the ordeal of what it would take to do some grand project. It's just like not worth the time an effort.

Yeah, I mean, there is something also strange about the philanthropic culture of Silicon Valley. They don't give as much as the folks in New York and LA.

100%.

Now, it could be the case that they don't give so much because, I mean, that maybe the New Yorkers and the, um, Angelenos are just giving money to the ballet and the opera. I, I like the opera a lot, but maybe that's not the best use of our money. And maybe they're a little bit too effective altruist to give money to traditional institutions. But I feel strongly that there's a sense in which America works really well for the rich. They don't really have to suffer through the issues of the working class or even the middle class. You don't have to take these subways or Caltrain systems that can be screeching loud. You don't really have to deal with you know, all sorts of the housing unaffordability issues. In New York, you have these super tall skyscrapers that are pencil thin, and maybe you can take the helicopter to your private jet. And so what I also want to say is that the US can't stay as a great power if it works only for the rich. And Silicon Valley, to me, one of the things I find quite distasteful about this place is that seems to work well for the rich, not so well for anyone else. Yeah.

Yeah, it's interesting. When I, I've been the last few years, I've been doing documentaries and when I try to raise money, when I first went about this, I was like, oh, like I, you know, I have more billionaires in my cell phone than, you know, than anyone should. And, and they're all, you know, into technology. I'm making documentaries about technology. I was like, this is gonna be easy, man. I'm just asking for like $500K, a million bucks. They won't even, even notice it, you know what I mean? And I, I would have these meetings around Silicon Valley and like nobody wanted to do it. I went to New York, talked to 3 people, raised all my money. 3 meetings, you know, 3 checks. And, and these are kind of like hedge fund type people. And I was like, oh, okay. So, so they, they're just like kind of more interested in funding the arts and, and these types of projects and sort of having their name. And my sense with the Silicon Valley folks is more— if they're giving money, it has to be to a startup. It's like, I'm willing to fund like the next big idea, and that's, that's, that's, that's almost like philanthropy.

That's interesting. Okay, can you say more about that? Is that— are they just thinking about this more in terms of investments? Is this more about EA dynamics?

No, I think it's like what resonates with them. I think they have trouble like wrapping— but first of all, I'm not even sure many of them like watch many movies or TV shows. I mean, some, but like not— it's not like it's the arts. It's not— it's not part of the culture, right? And they see— I don't think they get— when I, when I do these raise money in New York, people get a kick out of like having their name on the movie and like being part of the whole going to the premiere process and stuff like that. That seems not to appeal to these folks. I think it's, it's— and then you have to frame everything like a startup in order for somebody to like wrap their head around it, you know what I mean? Because a documentary is not a money-making enterprise, at best you're like kind of getting your money back and like maybe just enough to have made 4 years of work like vaguely tolerable. And, and when you talk to the folks in New York, they don't even really expect their money to come back. Whereas when I would pitch it here, you like had to be like, and we'll get a 20% return, you know what I mean? And, and it was just that mentality. Yeah. But I, I, that was the first time I, it really jumped out at me of this like kind of cultural difference, right?

So they expect a return. Um, I mean, I, I, well, the billionaires don't need any defense, but I guess to defend the billionaires a little bit, it is that maybe, maybe the opera and the documentaries are not going to change the world, but which is, is, is fair.

And then I also think though, they, they underestimate like the storytelling part of stuff and, and the knock-on effects that it can have. Um, as well, this is hard because your book covers a lot of ground and I want people to read it and I don't want to just rehash what's in the book. And then I had like 20 different things that were a little more specific that I wanted to get into, but I don't want to jump so far ahead that people don't like have a full sense of kind of where you're coming from. But, um, so I was battling with this in my head. That's not, that's not your, your problem. It's my problem. Um, you, you talk, there's, there was one thing. I wanted to explore with you. You, you talk so much about how obviously the U.S. has— okay, let's, let's do one bit of framing real quick for people. I mean, this 1960s moment that you talk about, you, you lay out that, that the— for 100, 150 years, the U.S. was doing what China was doing today. We were building, building, building. Industry was booming. All this infrastructure that we still rely on was being laid. And then kind of like, and then, you know, and there were problems. I mean, there was pollution, and, and, um, the industrialists were just kind of barging through wherever they wanted. And so in the '60s, you had this natural, um, counterforce to that, which was these lawyers from Harvard and Yale come on the scene, and they're like, let's, let's do this better, let's, let's kind of put some checks in place, let's, let's fix the environment, we can't just have these industrialists, you know. So there's parts of this that you understand, right? I mean, nobody wants their river to be like catching on fire and uninhabitable. But you, you detailed that. I mean, in my sense, just from the way you write about it, is that then this like spirals out of— it goes too far.

I think the US used to be an engineering state. It certainly built these incredible projects from basically about 150 years, from canals and trains and skyscrapers in the 19th century to Manhattan, Apollo, uh, it, uh, interstate highway system, uh, basically terminating in the 1960s. We needed a correction. We needed a correction because Robert Moses was ramming highways through dense urban neighborhoods in New York. We needed a correction because the U.S. Department of Agriculture was spraying DDT and other pesticides absolutely everywhere and killing a lot of the wildlife. We needed a correction because Ralph Nader correctly pointed out that Automotive executives were way too cozy with the regulators, and the military-industrial complex and the Defense Department lost a lot of credibility after the war in Vietnam. And I think what we need now is a correction against the correction in some minor form. We need to keep evolving as a society and not keep confronting the problem of the 1960s. And so what the 1960s built, starting from Mostly Ralph Nader. He was a really crucial policy entrepreneur, organizer about all of these things. He had been recently out of law school. He was organizing a lot of other elite law students. I believe he went to Harvard Law and he went to, you know, other— he organized other students to say under this banner of we need to sue the bastards. And the bastards was essentially the government because the government had been the perpetrator of a lot of this, these misdeeds. And by suing the government, I think what it has done is that it has constrained a lot of abuses and it has also constrained its ability to do important things. California High-Speed Rail. You know, we can talk about this because here we are in Silicon Valley. Voters approved the referendum to build California High-Speed Rail in 2008. How much of that has been built so far? Very, very little. And perhaps the first stretch will connect Bakersfield to Merced in the year 2030 to 2033. And this is, I think, a giant failure, and nobody seems to really care very much anymore. You know, no heads have rolled over this giant failure.

Um, I mean, in fact, you know, Gavin Newsom walks around with a straight face, just sort of— I mean, still like vaguely talking about— I, I, I, I, with— I think people should be ashamed and, and I mean, it's shocking to me.

And all of this—

embarrassing—

important environmental laws, I think, are being used against environmental interests. A lot of NIMBYs have been using environmental laws to hold up construction of wind turbines off the coast of Massachusetts, solar, you know, out in places that are barely habited, and transmission lines as well. And so there's something really perverse about using 1960 laws to, you know, not solve climate change. I'll just cite two examples here of the perversities of environmental law. Los Angeles has these oil derricks that are still operating kind of within city limits.

Yeah, you see them near LAX. Yeah.

And the people have tried to remove them, and NIMBYs have used environmental laws to defeat the removal of oil derricks, as if removal of oil derricks can be harmful to the environment. And the other point that I think is very strange here is that UC Berkeley tried to expand its campus and try to build some dormitories on a vacant lot. And neighbors alleged that UC Berkeley and the state did not sufficiently study students as a source of noise pollution, as if students themselves are polluting. You know, they're going to have extra trash. How are we going to deal with that? And, you know, students are an environmental problem as well.. And so I think we needed a correction against the American engineering state, engineering state with American characteristics. But now we need to actively evolve and think about whether the laws are fit for purpose still.

And you, and you do, you, you get into, to China's similar, what the US was facing in the 1960s, the repercussions of, of this buildout. I mean, you note not, not all is well with, with like the, the results of, of China's mass expansion as well. And there are consequences to this, but you, you kind of argue, I mean, because the government is set up so differently, um, there's consequences, but we're still— China's still pushing forward with their agenda. Like, there's not gonna be lawyers, you know, slowing, slowing them down.

Law students are not going to organize and slow the party down. There's been some signs that people have been distressed at some aspects of development. There, I'm thinking of a case in which the Shanghai government tried to build a trash compactor and incinerator near folks, and then people protested, and then the government moved things away. And so that, that sounds, that sounds like a recognizably American act. You can sue the government in China in some, in most cases, but the courts may not respect your lawsuit. Um, but I certainly don't see any movement that emerged in China, and that would be analogous to what happened in the United States, in which a bunch of students, a bunch of elites organize— they're not really happy about student organizers in China— to really try to defeat some elements of the government's agenda that it doesn't really like. Now, I think that China's government does have more than cursory environmental reviews. Sometimes the environmental reviews can be pretty robust. And often they do listen to the people, um, in the case of the trash incinerator that I just mentioned. But in general, my view is that the government is going to do what it wants to do by hook or by crook, right?

But, and then I kind of want to go a different direction, but, but I mean, your example of the, the zero COVID and the one-child policy where, where this engineering at all cost mentality had severe repercussions. I mean, you, you have men trying to find wives, the country, you know, I mean, like deep societal issues from the one-child policy. And then you had people kind of losing their mind, um, during Zero COVID. And, and you write in another chapter about, um, a generation of youth, you know, leaving, leaving the country despite how prosperous it is because they're, they're kind of not really getting what they, um, had dreamed out of it, right? So there are, there are these like societal repercussions. Absolutely. Yeah. Um, let's talk about like the Elon Musk of this all, because, you know, very controversial figure for many, many reasons. But let's focus for a moment on sort of the manufacturing end of Elon and, and not get into, uh, you know, like Twitter persona Elon, um, if people can do that. But, you know, when I wrote my book, so much of what you wrote resonated with me because, you know, my book came out in 2015, but I was researching it for 3, 4 years before that, and I was writing this series of stories for Business Week I got very sad, you know, I felt like Silicon Valley had become, especially during like the peak Facebook, rise of Facebook, just obsessed with what I saw as like trivial kind of nonsense. I mean, it was like, you know, there was a guy who's quoted in my book and he says, you know, the best minds of my generation are thinking about how to make better ads. And this just kept running through my head. I was like, oh my God, yes, we have like a generation of geniuses trying to like algorithmically get you to buy a, BMW. I'm like, this does not seem like the best use of our human capital. And Elon was kind of like emerging in the middle of this, um, California, completely dysfunctional. And yet, you know, he, he was lucky because he got to take over an existing car plant, um, in Northern California, but still took use of that and, and built Tesla. SpaceX was just, you know, we're told you can't build anything in California, and somehow in the last 20 years, this guy right in the middle of Los Angeles builds the world's most impressive rocket company, which even with China's like ambition and investment, you know, SpaceX outclasses the entire world, um, in terms of like rockets and satellites and, and what it can do, um, in many, many, many ways. So this guy has pulled this off. I've spent the last kind of like 12 years— when you write at the end of your book, you're like, I mean, it is, it is, it will be hard for some Americans, I think, to digest what is near your last line, which is that the US needs to think of of itself as a developing nation, and the optimistic note that you leave us with is like, we should embrace this let's build mentality, and this will fill the nation with optimism and things to look forward to and all that. I am still perplexed, like, why, you know, this, this desire seems to be here, but in my— I, I cover hardware more than anyone on Earth, I think. Um, especially among startups and manufacturing in the US. Elon still strikes me, whatever he figured out, he seems to be the major person that's figured it out. And I think, you know, if you look at the last 20 years, Tesla and SpaceX are the clear, um, manufacturing marvels that the US has produced. Like, if he knows how to do this and there is this will and desire, like, why, why don't we see more of this? Why is there one? Guy in the US? I mean, is it for all these reasons you've laid out? Like, there seems to be a— everyone wants to be like this guy, but, but yet what, there's just too many forces against this stuff? I have trouble figuring this out.

Yeah. Well, first of all, does that make sense?

Absolutely.

I think first of all, I should mention that I remember your Businessweek articles very well. And I remember in particular, probably I think this was— must have been the big profile you wrote. Of Elon, and something like the last or second-to-last paragraph mentioned something like a big tube to transport people across vast distances at extremely high speeds. I think he did not use the word Hyperloop. Maybe Hyperloop was not there at the time.

He was flirting with the idea before.

And that was one of these things I remember tweeting about this article and saying, wow, this is amazing. Perhaps that was one of the reasons in 2016 that I decided to depart from Silicon Valley and all of these ad chasers to go to China to study Made in China 2025 with electric vehicle batteries and ultra-high voltage transmission and memory chips. So if I have anyone to blame for this book, perhaps it should be you, actually. Perhaps it should be you.

Well, this makes me happy in some ways.

Yes.

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And I think there is, you know, there is something I want to get your take on this, because if I take a look at Tesla right now, I don't follow Tesla almost at all, but it seems to be struggling. And, you know, maybe the share prices are not a great reflection of that, but its sales have not done well, in part because of competition, in part because of its own faults. Elon in particular, I don't know how much he thinks about his companies today. He's been quiet after being terminated as co-president, and he— it's— I'm not even seeing his tweets all that often anymore.

That's hard to do.

But I think that You know what, what is a little bit strange is how I feel like Tesla has had more operational problems. So even that has rusted. It is joining the ranks of other apex manufacturers like Intel, Boeing, Detroit automakers. Previously, Tesla was the standout success. Now it seems to be pulled down by the broader morass. And what I would say is that there are some really visionary folks in the US, absolutely visionary people that you speak to a lot in California in particular. And I feel like they're fighting against this broader morass of declining manufacturing ability, declining process knowledge in the manufacturing industry, a million and one laws and regulations and problems that they have to face down, a million and one conventions and norms that are pulling at them at all times. And so my functional model for this is not that the US lacks any visionaries. There are so many brilliant people here, but there's also just so many forces that are tugging at them at all points that are dragging down a little bit of their optimism, their confidence, their ability to get stuff done. And so that's the beginning of a hypothesis that I would offer you, that that's why the US isn't doing very well anymore.

I think it's why Elon went crazy. I think COVID was kind of like his breaking point. He was just like, uh, you're not gonna let me make stuff? I can't take it anymore, you know?

Yeah.

And he kind of snapped. I, I agree with you so much. I don't want to prattle on because I'm more interested in what you're saying. I just, you know, I went to this Reindustrialize conference in Detroit, um, I don't know, like a month or 6 weeks ago. And to your point, these are like people I talk to all the time. I'm so— I'm, I'm into them. I mean, it's like this generation of people that want to bring manufacturing back to the States. They have like interesting products. They— and, and I, I do not mean this to like undermine— I think they are doing the right thing. There's part of it where I came back and I'm like, not like it's play acting, but I'm like, you know, if this is it— this was a conference, there's like 1,200 people there, they're, they're all kind of preaching to the choir, they've bought in. I'm like, man, this should be the biggest thing in America right now because like this is the last hope as far as I could see. And it still seemed like a pittance, you know. You know, I went around Detroit, I went to Atomic Industries. So they're trying to kind of reinvent tool and die making, which is fantastic. They want to do this like modern take on it. So it's like, we're not going to— like you write in the book, it's like the ship has kind of sailed on catching up to China at this point. So you got to do something different. So they want to do tool and die making a different way. But, you know, like every machine in their building that they rely on to develop this new tool and die making technology comes from Germany, Japan, Italy, even Portugal. Like, the US doesn't make the foundational machines anymore. So that left me sort of depressed. Then I went to GM. They have this huge battery R&D operation. They're working on new chemistries for car batteries, which is fantastic. They've kind of like, with alongside Panasonic, I believe, come up with a new recipe for future batteries. But, you know, then they're telling me it's like, oh, well, the University of Texas developed the lithium-ion technology that pretty much the entire world relies on. We just didn't happen to do anything with it. China mastered, you know, making those. You write about like tons of these instances. The US invents something, solar, um, and then China figures out how to make it. And so yeah, I don't know, my general takeaway is really weird because I was like excited that these other people were all excited to like do this. And obviously Trump is kind of like putting some policies in place to make some of this possible. But man, it really— like, when you write at the end about this, this is what we need, is like, I agree with you, but then I'm, I'm— it feels very small. I don't, I don't feel that like most people even remotely— like, I would urge people to read your book so they can understand how far— what we would be talking about is like a national everybody getting behind this sort of movement to try to make this happen, and I feel like we're far, far from that.

Yeah, I mean, when we bring up the tariffs, maybe the paradox in the US is that the sentiments are always in place, the goal and the objectives are always correct, but it's always the implementation that fails in some pretty significant way. Trump wants to reindustrialize America. Biden wants to reindustrialize America. How are they doing? Well, I'm more sympathetic to the Biden approach, which is to fund chips and clean energy buildout. But it didn't really— I mean, the CHIPS money was allocated, but we haven't had much infrastructure build-out. Right. And so the implementation was just not there. And if we take a look at Trump's approach, I mean, I think that is just flawed from the start. If we take a look at the tariffs since April, the US has lost about 80,000 manufacturing jobs. Manufacturing activity has contracted for about 6 months now. It doesn't make sense to become a technological scientific superpower by denying funding to NSF and NIH and all the other funding agencies. It doesn't make sense to deport our manufacturing workforce, especially not the high-skilled Korean type. It doesn't make sense to frighten researchers away. Now, maybe there's something good about energy policy. Maybe there's something good about the deregulatory agenda. I'm sure there will be something good about the deregulatory agenda, but most of these don't seem to work very well. And I'm curious to hear a little bit more about your take on the Reindustrialize. I wasn't able to make it. But I heard, I mean, there are some people who went and said there have been some protests, in part because Secretary of Defense Hegseth was one of the keynote speakers. I understand the impulse, but I mean, was there— did it feel partisan? Did it feel weird? Did it feel interesting in good ways? Was it optimistic?

The conference itself was optimistic. It was partisan in the sense that it was like a very patriotic— it was, it was like hardcore America thumping. Um, the protests were sort of stupid. Um, it was probably like, I want to say like 30, 40 people. It was kind of like this like anti-Pal— it was, it was all Palantir related, and it was like a, it was more like a Palestine thing. I don't think the people protesting had any idea of like what the conference stood for, or, or they just knew Palantir and Andrew were there, and it was mostly Palantir. And, and so And that was that part of it. I, um, I can tell something has changed in that I've been covering hardware all this time and I used to be, um, it wasn't like fringe, but I was one of like not many people focusing on this sort of stuff. And obviously in the last 2 years now people are like, oh, we're in, we're in this new age of, uh, manufacturing and hardware. And we are, you know, people are kind of. Are finding those things and attaching to them. The New York Times wrote about the Reindustrialized Conference. I assumed it would have taken them like 5 or 6 years to sort of figure out that that conference was taking place. So I was, I was, I guess I was impressed by that. So like, I do feel like there's, there's bits of this, but then going back to what I was saying from your book, I mean, you know, there is this part where it's like no one probably ever will match what China has already achieved at point. And you know, it has the population size, it's got so many factors that like, even if the US was like, no, we are going to become the world center for all manufacturing, I mean, it probably like, it doesn't work out for a bunch of reasons you lay out. I mean, the standard of living here, the wages, the workers wouldn't tolerate the conditions needed to pull that off. So then I'm just left, I'm, again, I'm with you. I'm like, I want this optimistic call. I want these re-industrialized people to work, but then it's almost like, to what end, I guess? Because we can't get all the way to, uh, apples-to-apples type thing. And so, so what are you arguing, that that's okay, but if we focus on improving our infrastructure and modernizing the country and bringing some of this back, that that's enough? Is that kind of, um—

let me make you more pessimistic. Okay. I think right now the U.S. has about 12 million people employed in manufacturing. It never recovered to its 2008 highs after, after plunging. And I worry that there will be another big China shock in which China initially took all of these textile and jobs that are not terribly important, but now it is just much, much more competitive in all sorts of advanced technologies. I strongly believe that Made in China is now a marker of excellent quality, whereas it was known for shoddy quality in the past. You can see this in the trade data in which German exports of automotives in particular has started to fall pretty substantially over the— essentially the last year, as Chinese automakers have outcompeted German automakers in all of these cars.. And I think that China will eat the lunch of other industrialized countries, namely Japan, South Korea, Germany, in terms of all these machine tools, all of these automotive components. It's going to get a lot better. And I worry that the US right now has not super exposed to China, in part because it doesn't specialize in these sort of things. But for the 12 million manufacturing workers, Could I see that to go down by a couple of million over the next 5 years? I think there could be a case. That's true. And once these job losses start to take place, I don't think our economics writ large will get much better. I don't think our political dysfunctions will get much better when these manufacturing jobs disappear. And so that is really what I'm worried about.. And I think that, you know, we should try to resist that as best as we can, um, because right now, you know, the failures of Boeing, Intel, Detroit automakers has not been primarily due to Chinese competition. It's been mostly due to management failures, I would argue, engineering quality failures as well. Um, and I think we need to get much better infrastructure in America, not to outcompete China in high-speed rail or anything, but just because we need much better Caltrain service such that workers can get in between Silicon Valley and San Francisco. And so these are like the sort of the basics that let's just get the basics right, not out of geopolitical competition, but because people need them. And then hopefully if we can have much better levels of infrastructure, then we have a little bit more margin to resist the industrialization as well because the companies would have a little bit more buffer to operate in. And so that is a lot of what I'm saying. It's not about competition. Let's just do things better for our own people.

What is the thing you said that she calls the kind of like this, the software-based attention economy?

Yeah.

It's like the stupid economy or the—

They use two terms. One is the fictitious economy and another is the bubble economy. Not so much as a financial bubble, but a bubble that could pop at any point.

Okay. So, you know, I've always, I've thought of software as the US's superpower. Um, you know, every time Silicon Valley comes under threat, it always comes back to me that, that we just have so many software— the world's best software engineers here, and it seems to, to bail us out. Larry Ellison just became the world's richest person the week that we're recording this. You know, Oracle, Windows, so many of these products are just at the heart of the worldwide economy, and nobody's really been able to challenge them. When you started writing about that, and so that stuff is real, but some of the stuff on top of it— the Facebook, all the entertainment, the crypto, the, um, all these places we put our attention— yeah, man, that resonated with me. And then I started to see, oh, okay, so for the last 40 years we've built this kind of like software skill, and China has just doubled, doubled, doubled, doubled down on hardware. And, and now— and that this is like this polar opposite of sort of cultures to me. Yeah. And I don't know, that just came in stark relief reading your book, right?

Well, I think the Chinese are getting pretty good at software itself.

Yeah.

Um, and what they don't have are the valuations. I mean, you know, $4 trillion valuations for companies like NVIDIA and Apple. Chinese companies are just not so highly valued. But I think the talent in China is there. Maybe the market conditions are not really there for the software, but I feel like Chinese software has improved by leaps and bounds over the last, call it 15 years, while American manufacturing has lost ability by leaps and bounds over the similar time period. So the Chinese are catching up, but the Americans are not. And where, you know, maybe the best possible case that one could make for Silicon Valley's approach is that who knew that video game design could produce AI? And yet here we are, right? And maybe all of this entertainment, even with the crypto stuff, even with Facebook stuff, actually produces some breakthrough that none of us could see. Maybe. Maybe America will figure out AI and achieve— I learned this acronym recently— a decisive strategic event, decisive strategic advantage, DSA. And maybe we will invent the AGI, the superintelligence, and then within seconds they will solve all of our problems. I'm highly skeptical of that approach, and I wouldn't trade AI, the best algorithms, all of the— every genius you can get in the data center. I wouldn't trade that for a robust manufacturing base because what you need for a military are drones and munitions and ships. And right now China can make them and the US is not so good at making them. So let's have the hardware.

I think this is so smart and fascinating because people talk about AGI, all these things, the AI wakes up and, and the next day it's solving all these problems and, and everybody's out of work. There's always this like physical manifestation of the technology that I feel like is very short shrift, which is, is like, even in this crazy scenario they lay out, I'm like, well, who's, who's like making the stuff that, that is out in the world enacting what the AI wants? And it's, it's like, well, how is AI gonna build my high-speed rail, right? You know? And, and then I just always, I was Well, obviously China. So I've been doing these stories on these robot fights that are taking place, um, in San Francisco. I had not fully realized, uh, because I see Tesla's Optimus and I see figures, humanoid robots all the time. I, I live kind of near American, um, humanoid robot valley, and I, you know, they're quite advanced for what they are. And I did not realize that like Unitree from China, Booster Robotics were not just like a— not just either comparable or ahead, but that they are selling these to like anyone that wants to buy them. Whereas like Tesla is just making robots for itself, Figure's kind of making robots for itself. The, the, um, you know, I can just see like if this AI plays out the way some of these companies want it to and you need a physical manifestation, it's like China's going to win robots as well. And, and, and the the physical end of this AI is going to take place there. And so this, yeah, that just seems like a massive problem to me. And like, God, if the US does not actually win on just the software piece of this, the foundational model, I think that's like our last stand, 'cause it's like, what do we have left that we do better? Yeah, I don't know. That part gets me sad. I can see you grimacing a little bit. So it looks like you've had this thought. How does you— there are a couple things you wrote about in the book that I hadn't— I had not really realized. I always think of like the communist state as taking care of the poor and, and rising all tides. And I mean, you write in here that, um, people are— so there isn't much a great social safety net. The people are kind of like not taxed as high as even in the liberal— like seem like barely taxed at all in some ways except for a consumption tax. Um, how does like all this get paid for? The— it's just this growth that the government has been able to piggyback off to. Like, doesn't the, the reaper come? It's— I know we've had crashes in real estate and different things, but I mean, like, isn't this like a Ponzi scheme? It's—

at some point, uh, I don't think it's a Ponzi scheme, but I mean, first I acknowledge the idea that, I mean, China feels like kind of a Reaganite fantasy. You're right that income taxes are pretty low. I think something I cited in my book, that something like only like 40% of people pay an income tax. Most of the taxes are on consumption, which is regressive. The poor people pay relatively more than the rich. Xi Jinping has— Xi is actually like a lot of Communist Party speeches are really boring, but Xi often has these great lines that I enjoy reading. He has denounced welfarism, and, you know, we don't want to get people— we don't want people to get lazy, which sounds totally like Reagan. I mean, Reagan would be called insensitive if he said something— half the things Xi has said, right? Um, where China's growth is— has come from is that, well, the, the savings rates has been very high among Chinese for, for a long time. China has a pretty robust financial system, which the government has been pretty clever about selling off pieces of land and then expecting that infrastructure development will pay for itself. And that has been a strategy for, for its growth for a while. I think that China has been pretty savvy at financial management and trying to clear out the risks in its own financial system. Endlessly studies Japan. It endlessly studies the US financial crisis, and it says, let's not do any of these sort of things. Its banking system is pretty boring. And indeed, you know, often growth pays for itself. That doesn't mean that they don't have fiscal challenges, but I think that people have been calling China's financial system Ponzi-like or very fragile for a very long time. I think that, that is not the big concern with China.

Okay, okay. I mean, and then you write a— I think this is true for BYD and similar companies. I mean, just really don't make much in the way of profit, if any profit at all, right? I mean, there's, there's a different mentality to some of this, whereas in the U.S. you've got the bankers and the shareholders trying to eke out the last dollar and like not chasing big projects because it's too costly and, and we just want have our nice software, uh, SaaS business that's high margin. Um, in China, they're willing to have like a giant hardware maker that just doesn't make that much money.

Yeah, BYD does, uh, have pretty healthy profits, but BYD is, uh, has healthy profits only because it's the biggest in the industry. If you take a look at, let's say, the 7th largest, uh, EV maker in China, the profit margins there would be pretty, pretty thin. Um, in the solar industry, almost no one makes any profits at all because people are making mostly undifferentiated products. So this is, you know, when I started thinking about this, I came to understand, you know, maybe this is what socialism with Chinese characteristics means. You have brutally competitive industry dynamics in which the companies themselves don't make that much money. The investors don't make that much money. I mean, if you take a look at the Chinese stock market, the Shanghai Exchange over the last 35 years, it's mostly been pretty flat. It's not at all commensurate with an economy that grows. 8 to 9% on average. And what we have is the state winning, which completely dominates critical industries. Consumers win because solar prices plunge like a stone and companies and investors kind of lose. And so that, that, that is the curious dynamic.

So, but then, you know, everything, most things come down to incentives at some point. So like, how do you, how do you keep people coming up with big ideas? How do you keep them working hard? How do you keep that competitive spirit if there isn't some bucket full of gold at the end, or it's just so brutal on the march there?

Well, no general wakes up and decides to fight a protracted war. Every general decides to fight a lightning war. And every entrepreneur wakes up and says, I'm going to build a trillion-dollar company. So I think people decide to get into this because they feel like there might be a pot of gold and that pot of gold might, might be there, just that everybody can only take a few pieces out of it. I remember visiting the company Meituan in 2018. Meituan was, was already a big company then, and now it's one of China's 5 largest internet companies. And in 2018, part of their founding mythos is that At the time they started, they were about one of 5,000 clones of Groupon. And out of this battle royale, out of this grand melee, you know, it survived and 4,999 other companies did not. So imagine how ruthless and effective this team must be. I think that's kind of just the dynamic of China in which you have a lot of people who are really hungry. To do big things. And I think that hunger is absolutely real. You find them in Beijing, you find them in Shenzhen. People really want to get ahead. They just try things and they're up against other people also trying things. I don't think people there are lazy. They just want to give up, broadly speaking. And you don't need that large of a share of the population to really decide to be crazy and be entrepreneurs. And so they all hope to become the next Elon Musk. And there's so much Elon Musk worship there that, um, some of them try to succeed, and— but often what ends up happening is just this brutal competition.

And you don't— and you think that that can carry on? It doesn't just start— it just feels like at some point there must be unrest, as you know, as people maybe start to give up on the notion that they can— they can be that one that succeeds. It just becomes too brutal.

Well, there's maybe it's too brutal and then they decide to lie flat. There's this term tangping in China in which people decide to lie flat and quiet quit. I mean, there's analogous sentiments over in the US as well. People decide to opt out of the system and we see that a lot. We see a lot of folks in Shanghai, Beijing, Shenzhen say, I don't want this crazy life of 996, working from 9 AM to 9 PM, 6 days a week. I'm going to open a café instead. And sometimes these cafés last weeks or maybe even days before, like they lose customers and then they're outcompeted again. But a lot of people now are trying to opt out of that lifestyle. I spend time with a bunch of creative kids in northern Thailand, in Chiang Mai, who are just smoking dope and opting out of the brutally competitive life in Shenzhen. But I think I go back to this idea that you don't need that many people to have really advanced industries. How large is the semiconductor industry broadly defined in America? It's a few hundred thousand people, maybe at most 1 or 2 million in the broadest possible definition. And yet the US has a pretty leading semiconductor industry, and China doesn't need, you know, every young person to be fully motivated. It just needs a certain percentage, and that it has, in order to further deindustrialize the US.

And there's this, like, there is that steel sharpening steel aspect. I remember I went to visit DJI in Shenzhen and, you know, I was just looking at what had happened to the American drone market. And, and then while I was there, I just got this palpable sense. I mean, DJI, they're not, they're not even worried about like whatever the US cooks up because their next 3 competitors in China are doing like everything in their power to like steal, you know, undercut, um, DJI, like DJI just all the time as the most ruthless competition in its backyard. And so it's just improving at this dramatic rate to like survive just there, you know. Um, it was like I could feel it. I mean, it was, it was when I went to Shenzhen the last time, which was like 2018. Now after reading your book, I want to go back so badly because it seems like it was, uh, must be a totally different world. Although even you talk about like kind of Shenzhen's maybe on the, on the decline in some ways. Yeah, I mean, you could feel the energy. I'm, you know, I remember going to another factory where they were building the machines that were going to replace the workers on the line, and it was just 25-year-old dudes sleeping in the hallway next to the machine with like a screwdriver, you know, in the thing. I mean, it was just relentless and impressive and visceral. Um, yeah, it was amazing. Um, you've read so much of what Xi has written over all these years. Like, what is—

what's—

I mean, it's a giant question, I guess, but what is like your net takeaway on, on this man? And, um, clearly wants to stick around and definitely did the things like going after Jack Ma and that whole class of kind of internet entrepreneurs who, who were a little too focused on the fictitious economy However, I remember when I saw that, I was like, "Oh, this is the beginning of the end. You are gonna wreck that entrepreneurial spirit if you start whacking people like this." Yeah, what's your take on his personality and if this is like his approach is sustainable and like net positive or net negative?

Net negative for sure. I think that Xi is— I think the first word that comes to mind to describe Xi is just very patient. He, his family, his father in particular was one of maybe the top 10 most important lieutenants under Mao. And his dad was purged, I think something like 5 times. And he just knows how to keep his piehole shut and not reveal his intentions and just be very calm and strategic about doing different things. And some of these things can be positive, but I think most of the time I see him as being craving power above all else. He does not want to be displaced as the emperor. He is quite paranoid about everything else going on around him, and his instincts are always for more control. And so, you know, maybe the three adjectives to think about with Xi is patient, paranoid, and controlling. And maybe sometimes we should have Donald Trump not shoot out of his mouth all the time and display a little bit more patience. That'll be nice. And I think it would be, you know, maybe good for Trump to be just strategic in every other way. But I think in general, Xi cares much more about maintaining his own position within the Communist Party, maintaining the domineering position of the Communist Party within China. And then third, he thinks about what's best for China. And I think, you know, the tension in China is that you have a state that is really, really strong and has a pretty robust state tradition over the last 2,000 years. And sometimes it really helps entrepreneurs, I think mostly by making these giant investments in traditional infrastructure, in data connectivity, and building out electrical power. These are all things that make entrepreneurial lives a lot easier. Sometimes it just crushes certain particular entrepreneurs it really doesn't like. Overall, on net, probably helping more, more than hurting. But, you know, you have this state that is running up against this highly creative, competitive entrepreneurial class. And I don't know if the domineering instincts of the Communist Party is going to win out or if somehow, um, you know, the entrepreneurial spirit is just robust enough to achieve a great rejuvenation of the Chinese people, more in spite of the state rather than because of the state.

And so do you think, um, it was interesting— ah, I'm generalizing off of like a handful of conversations the last time I was in China, so I feel like this is bad. When I went to Russia the last time, if I hung out with 20, 30, 40-year-olds, they all sort of knew that the news was fake and that they were being served propaganda. Um, when I went to China the last couple times and was hanging out with similar cohorts, you know, they were people who were like on VPNs, um, getting their news, and, and, but, um, were far less like politically charged to me, a bit less questioning of the government. I mean, maybe because it's like, you know, Russia is a shit show of suffering and, and economic malaise, and China is prosperous. And so it's, it's kind of like, well, probably care a little bit less. But I mean, what you just laid out, um, I mean, you were kind of hinting that if things got dire enough, I mean, there could be a possibility of some sort of unrest. Or do you think the system is just so strong it's— we'll never see something like Tiananmen Square?

Again? I—

or like, is there even a— do you even see like a— the conditions where something like that would even be desired? Or, you know, among, among the young people?

If I had to bet, I would bet on regime stability over the next decade or two. Now, I think the first thing to say is that regimes can collapse and no one sees it coming, and then afterwards everyone declares, of course, that was obvious and necessary. So that happens again and again. But if I had to place my money, it would be for regime stability. We saw some protests. We saw extraordinary protests in 2022 when I was still living in China. And that was because mostly of Zero Covid. In Shanghai, in the bar district, in the most hip part of the French Concession, young people staggered out of their cocktail bars at around 3, 4 AM and chanted, "Down with the Communist Party! Down with Xi Jinping!" I would not have expected that the night before. I knew there was tremendous discontent in Shanghai in particular because it suffered probably the most ambitious lockdown ever attempted in the history of humanity, in which 25 million people were unable to leave their homes for about 8 weeks in the spring of 2022.. But I didn't think that students and young people would chant these things and the police would— were standing by. We have the videos of police doing nothing to restrain them. Um, we saw some protests in some Foxconn factories. There were scattered protests throughout China, but that took the most ambitious lockdown in the history of humanity really to get to that point. And what we also saw was that to enforce this lockdown, China didn't even unveil the full sweep of its security services. It didn't bring out the army. It didn't even bring out the paramilitary troops, which are dressed almost identically to the army, known as the People's Armed Police. I think municipal police was all it took to enforce this quite severe lockdown. And so the other point is not only that the security apparatus is big and sophisticated. It is also that economic growth in China has been real. People's lives generally have gotten better in a way that I think is not so real in Russia. In Shanghai, you know, you keep seeing new cafes and keep seeing new noodle shops. I loved living in Shanghai. You're never very far from a subway station. The city just works in a way that I think works much better than New York City does. It had 500 parks in the year 2020, and the government announced by the year 2025 it will have 1,000 parks. And so when you see this sort of physical dynamism, and again, this is something I want Americans to experience in the way that Chinese have been able to experience. Even though your life, you have a lot of competition in your life, for a lot of urbanites, you're able to have some sort of support from your parents. Your parents were probably allocated 2, 3, maybe even 4 units from the state. And a lot of these have really high value. They have the ability to live perhaps at home or bunk with friends. Um, you have the ability to keep getting new sorts of noodles. Um, I feel like consent of the governed is still pretty strong in China because most people, uh, have freedom to do what they want to do most of the time. And so, um, It doesn't feel like the conditions are ripe, but again, you never know. But I think that, you know, part of the virtues of the engineering state to build more subway stations, to build more parks, is not only to stimulate the economy, but it is also to construct political resilience because people feel like people can have a sense of optimism about the future.

I know your wife, your wife works here, but like you, you, Yeah. Why would you— why did you come back? China sounds like a more exciting place to live.

China is a much more exciting place to live, but it's a bit too exciting of a place. I came back because, I mean, first of all, I thought I wanted to write a book and being in the daily news flow of China is just not super conducive. And so when the Yale Law School's Paul Tsai China Center very generously offered me a perch to do some thinking, I thought, well, you know, retreating to the scholastic life at Yale is probably a good thing. I missed a degree of pluralism after having been in China for 3 years of zero-COVID, unable to get out. I was ready for a break. I thought that, you know, the consumption is amazing in China, but I care about more than consumption. Call me an egghead if you wish. But I like to read books and I couldn't get books in China.

What do you mean? Like the books you wanted?

They don't ship to China. Like Amazon doesn't ship to China. The only way I could buy— I could get the books that I wanted was that I ordered them to my parents who live in Pennsylvania, and they would mail these out in like 20-kilogram batches. And sometimes the censors would just take one of these books before I got my hands on them. Um, it's very random.

They would grab it out of the mail. Yeah.

Okay.

Yeah. But then still send you the rest of the package.

Yeah. Um, like one— it's very random. Like one time I lost the book on Mozart and it's like, oh, it's Mozart. Political? Definitely not. Um, so I miss being able to get books because you can't really get books in China. I mean, the information environment is generally highly censored. It's not just the internet.

Yeah. Sorry, what do you mean when you say that? I mean, I've been to bookstores in China. You can't get certain books.

You can't get The good books, let's say. Okay, good books.

Will this, will this be published in China?

Uh, I would love to have a Chinese publisher. Um, I haven't, uh, found one yet. I hope they publish this.

Would you let them? Because they always ask to censor my books. Yeah, yeah. And I, I, I didn't— first time I went through it on the Elon one, I was like, ah, there's nothing even in there. The last two times I've said no. And I, uh, yeah, I just don't love— I don't like the thought of that at all.

I expect that if I can get a mainland publisher, they're going to take a big axe and trim this into the size of a pamphlet, in which case, you know, it's probably not worth it for anyone. And, you know, I like having pluralism. I like having debate. I mean, I love being part of debates in the US now. I'm a research fellow at the Hoover Institution. Last week this time, I was speaking at the Abundance conference in Washington, DC. There's so much energy that you're part of as well to try to make America better in some ways. And, you know, this sort of robust conversation is, I think, just a sign of health for civil society. And that's what makes me optimistic about America. On the other hand, you know, what we see is that in spite of pretty robust debate and conversation, generally America's leading manufacturing firms are losing their leading positions. The infrastructure is still not really being built. There's some more housing construction in California, but it doesn't seem to be meeting the needs. And so this is, this is one of these other paradoxes. America has so much energy for reform, but it always gets lost in the implementation when a million and one, I would say, lawyerly forces manage to tug away all of that dynamic spirit.

Like, honestly, if California fucks us up completely, I'll be so pissed. I mean, you This is the promised land. I mean, you, you couldn't have more, you know, just the more beauty, more perfect conditions, the world's richest, most like forward-thinking companies. And we're like systematically fucking this up. I've been, I've been writing about California forever, covering California forever, and we have a big video piece coming out. I mean, like, I get it can feel a little, I don't know, sinister billionaires, buying a huge chunk of land to make a new city. On the other hand, there's like nothing else on that land. If a bunch of rich people want to get together and take a crack at making like a new city, I mean, the conspiratorial stuff around that is like, there's nothing there. It's, you know, like you have nothing to lose. Let them, let them go spend their money. And the roadblocks that are being put up to that, I just sometimes I, yeah, I just, I, I'm like You guys, you're holding, you know, everything in your hand. You cannot mess this up. It's like shocking to me. Yeah.

Well, they're fucking it up. You know, it's like, it doesn't seem like it's, uh, we're being saved here, Dad.

Um, we, the, okay, so there's one thing you don't write about as, as much in the, in the book. You focus on the, the lawyerly part. I mean, isn't there a part of this where we've just kind of dumbed ourselves I was down— my entire adult life has been spent, I think, fighting about abortion and guns. And, um, and like, until kind of recently because of Trump, I guess. I mean, that used to just be the heart of like every election to me, was like kind of like how you fell on those two issues. And then there was this little sliver of like, you know, undecided people in the middle. Um, yeah, like sometimes I just feel like— and I say this with all due respect, I, I love living here, but like, we're just too stupid to get out of our— it's not just the lawyers, it's, it's like, we just, we're gonna fight with each other about the same 2 or 3 things ad infinitum while you have this other country that has like a 40-year plan that is, you know, executing on, on strategic objectives. I feel like when we talk about climate change or something, it's just like so pointless because It's so far down the list of things people care about and are actually going to act upon.

Yeah, but actually, if you were in China, you would see that they were— they're also dumbing themselves down in tremendous ways.

This gives me hope.

It gives us hope. I mean, this is— this is the thing. This is what I want to always come back to, that the US is delivering self-beatings, and the only country that could match its self-beatings is China. And TikTok is like or Douyin over there, it's like it's making everyone dumb. Yeah, it's really reducing social interactions. People would be in business meetings chatting and they would be on their phone, they'd be on their WeChat. People, you can watch people go to restaurants together and everybody would be on their phone, barely chatting. Couples, friends, you know, people are just looking at stuff all the time. People aren't having kids there. And that's, that's a pretty obvious thing. And that's as weird as America is, at least it has like some sort of self-confidence in which people want to have kids. And yeah, that is a pretty damning fact about China. And so, um, and it's not just the people that are dumbing each other down. The government is also actively dumbing the people down because it restricts access to information, because it wants its own voice to speak above everyone else. And it really treats the population like children. This is something that I also really didn't like, that there's this kind of infantilizing element of being in China because there's just so little trust of the government for its people, even though the people are just incredibly creative. They have amazing memes and they have all of this great artwork they could achieve if only the government trusted its people more. And so this is also one of these reasons I feel like, you know, yes, they're able to build a lot. Yes, the cities are highly functional, but It is not just about material improvement in our lives. That's not the only measure of flourishing. I have a broader measure of flourishing.

Is there— I remember reading Lu Xun, just like classic Chinese writer. Yeah. Like kind of 1800s, right?

Like maybe 19, early 19. Yeah.

Late 18 going into 19. I mean, sort of like it's been 20 years since I read him, but I remember it being almost like postmodern-ish. I mean, it felt more contemporary than when he was writing, but kind of this critic on society. You write about a couple people who, you know, say things online, but I don't know, is there some writer we should all be reading who's doing this sort of like almost satirical commentary?

Yeah, I am a big fan of the movies of Jia Zhangke. He did the more recent— he's more arthouse, but the more recent movies are A Touch of Sin, Mountains May Depart. And it is not so much super satirical, but it captures an element of the absurdities of officialdom, I think, quite well. And I, in terms of if I could offer other suggestions for people to read in China, I'm a mega fan of The Three-Body Problem by Liu Cixin. I think that is a total work of genius.. And I think that speaks a little bit more to at least the strand of the ruling ideology, which, which, not to give too much away, but humanity faces an otherworldly threat and more or less unites under a technocratic world government in order to confront this threat. And I think there is an element in China in which people are really happy to, you know, just throw the entire nation at producing science and technological goods. And so that, I think that, you know, that is kind of the tension. But ironically, maybe even Liu Cixin could not write his work anymore because his output was entirely published or almost entirely published before Xi Jinping took office. And that was before Xi took office. That was a much more permissive time. I mean, not that permissive, but still much more permissive, relatively speaking. And I wonder whether someone like Liu Cixin could still write a major scene of the Cultural Revolution in the middle of the book as Liu did.

That's what I was kind of curious about.

I suspect not. Yeah.

Yeah.

If you—

I mean, it's totally— you put all the— you made me think about so much stuff, which is the point of the book.

Good.

Yeah.

So, but I don't want to bake your noodle here.

But no, it's good. It was good. But if you— I mean, it's an unfair question in some ways, but it is the one that was floating through my mind as I walked out of this. I mean, you know, you, you set this up where again, you go, you go through the pros and the cons and then, but you know, if you take this away, I mean, people would obviously, a lot of people would argue like this is gonna be the Chinese century. And, and I mean, the way you leave it is, is, is kind of the great inventions of the next 50 years seem poised to come out of China. I mean, like, so if you have to fast forward with all these things we have covered, and you're urging the US to pay attention to different things and to rewire itself some, I mean, you know, realistically, like 50, 100 years from now, um, what do you— like, what do you think people are saying? Is this still like some US versus China battle and there's two superpowers, or, or has the US, you know, become Europe and And it's China alone.

I want to say that it's going to be a competition for a very long time. I don't think that the US has a decisive advantage in the way that I don't think that China has a decisive advantage. We can take a look at all of China's cons and have a pretty ugly outlook on life. And then we can do exactly the same exercise with the United States. And I feel like the more that the US is going to be behind here, the more that China is going to be overconfident, make a lot of mistakes, and the more that's going to create urgency in the US to catch up, and vice versa. I think that both countries are going to, again, deliver humiliating self-beatings all the time against themselves. I don't think that there is a single decisive advantage here. I don't think that AI is going to represent some sort of a decisive strategic advantage here. I worry that as the US deindustrializes, that will create all sorts of economic and political problems, but I'm not sure it has to defeat the country writ large. And I think the world is dynamic and Something that I keep in mind is that the US has been a pretty stable share of global GDP for a very long time. It's essentially been about 25% of global GDP since about 1850. Now, could that shrink? Yeah, perhaps. But the history here is that the trend has been that the US has been doing pretty well, especially if we fast forward to 50, 100 years from now. China's demographic woes are not really biting at the moment. The curve of the decline is not very steep, but by the year 2100, China's population is expected to halve, maybe even more so. They still will have 700 million people, but many of them will be pretty old. But 700 million is still going to be larger than the United States. So, you know, I think the competition is live. It's always out there, and no country should ever throw up its hands and submit and then decide not to get up again.

Yeah. And there's— I mean, oh, I'm going to let you go in one second. Thank you so much for your time. I mean, there's something that strikes me as silly in like those bits that I read from the very beginning of the book. I mean, it's like two countries that do so much business together that are really capitalist at heart and competitive, and, you know, shares all those characteristics that you so eloquently wrote about. Um, there's something— I'm not naive, but, you know, there is something so silly about, about all of this, and that there has to be us versus them. I mean, the Cold War felt a little more obvious to me, um, whereas China's economy, I think, is, is clearly, yes, has some of these like more, um, communist, uh, state-run elements. But like, look, everybody's ultimately the capitalist in this exercise, trying to, trying to make some money. I think we're a lot more united. And I could see— this is my, my naive vision of the world— you could just see a world where, my God, if we teamed up on science and, and you could make so much progress with the brilliance across these two countries and the resources. And, you know, the thought that like somehow we end up in some war over Taiwan and this only gets worse just makes me like, makes me want to beat my head against the wall.

Well, that's not very much the D.C. perspective, Ashlee Vance. I think if you said this in D.C., they would accuse you of taking drugs that are legal in the state of California. But Um, you know, maybe, maybe that is the, maybe that is the right perspective after all. Yeah.

I mean, there's something cool about it because I just, I think the, during the Cold War, the, it would be except around space where some things did happen. It'd be hard to imagine the US and the Soviets like uniting on causes. Whereas like, to me, um, we live in this like amazing moment where you could do so much for health and energy and everything. If, you know, we can align. So anyway, yes, I'm probably crazy. We'll leave that out there. Um, the book is Breakneck. Um, hopefully everyone can see it.

I—

you should buy it. You should 100%. I bought it twice. I thank you. The hardback and the audio, audio version. I didn't even use my credit. I actually, uh, I paid, I paid hard cash. And Dan, thank you so much for coming on. Is there anywhere— I mean, you have a website. Where should I point people to the book? What else should I point people to?

That's good enough. Okay.

Okay. I mean, please, please do buy it. You'll learn so much. And it's just, it's like, it's just fantastic. So congratulations. And thank you so much for coming on the show.

Ashlee, this is a lot of fun.

Okay. Thank you. The Core Memory Podcast is hosted by me, Ashlee Vance. It is produced by David Nicholson and me. Our theme song is by James Mercer and John Sortland, and the show is edited by the John Sortland. Thanks as always to Brex and A1 Ventures for making this possible. Please visit our Substack, YouTube, and and podcast channels to get more of what Core Memory makes. Thanks, y'all!