Welcome to tech Stuff, five mans Voloscian Caroen. I'm curious if you agree, but I kind of feel like in the abstract, this idea of a kind of tech grace or even a tech war between the US and China has been brewing for almost a decade, but this year it started to feel very real in terms of really the practical power that China wields over the US and its key industries. And he's a perfect moment for this conversation and this guest, given the news about China's export controls on rare earth metals.
Yeah, you know, it isn't until we started reporting on this show that I actually thought about how much China dominates what the future will look like. And I'm just not sure that the US is on a level playing field.
Yeah, I mean has been this kind of rattat tat of one upmanship this year. There's been borderline frightening. Obviously, the US took the world by storm with its AI models, and then China released one that was purportedly far more
efficient in deepsek R one. The US band export of advanced AI chips, so China started making its own, although they haven't caught up quite yet and now there's this reciprocal relationship between US tariffs and Chinese export controls on rare earth metals, Which is why my ears perked up when our guests today said this.
I really feel like Chinese and Americans are the most alike people in the world. Both countries have a sense of hustle, They are pragmatic people. They have a sense of the technological sublime.
That's Dan Wong, who's a research fellow at Stanford University's Hoover History Lab and the author of a new book, Breakneck, China's Quest to Engineer the Future.
People in both countries believe they are great powers and smaller countries Canada or the UK have to listen to them. And they are also two of the greatest engines for technological change and economic change as well.
You know, I never really think about China and the US as like uniquely similar in terms of culture, and I love this term the technological sublime, and I am curious to hear more of what he's talking about. Why is Dan the man here?
Dan's the man because he wrote this excellent book, but also because he lived in China during kind of a crucial period between twenty seventeen and twenty twenty three, and he actually went there in part because it was during the time that the Communist Party had set this ambitious agenda to transition from being quote the world's factory I manufacturing consumer products to becoming the world's leader in advanced manufacturing so robots, batteries, aerospace, and Dan was there to
kind of study this transition up close. Then came COVID, and Dan was actually in Shanghai during this zero COVID lockdown, so he got to see these kind of two faces of how China manages its economy is production and its population. And he also had a lot of time to think about the relationship between the US and China, what's similar and what's different. The framework he came up with is
pretty intriguing. It's basically that one of the societies is an engineering society and the other is a loyally society.
I mean, I'm going to guess that China is the engineering force.
Good guess, And per Dan's framework, this engineering versus loyally disposition massively impacts how the two countries relate to one another. Take the trade war, for example, China is showing strength by leveraging its resources, production, manufacturing chops, while the US is trying to maintain control through tariffs and laws.
But Dan is essentially saying, the US and China are very similar in temperament and are tackling the same goal, which is to be the world's technology superpower, but the two are approaching it in very different ways.
That's right, And we talked about actually how in this very heightened moment, the US is learning all the worst lessons from China's political system, but also about what the US should do, at least in an ideal world, in response to China's engineering dominance. But I wanted to start the conversation by having Dan define this paradigm China the engineering state and US the loyally society.
In his own words, China's the country I call the engineering state because at various points in the recent past, the entirety of the senior leadership had degrees in engineering. And what do engineers like to do build? They build skyscrapers and highways and bridges, solar, colwyn, nuclear, you name it. They're building a lot of these things. They also treat the economy sometimes as an engineering exercise. And China's also made up of engineers of the soul in which they
are also fundamentally social engineers. So I spent a lot of time in the book talking about the one child policy as well as zero COVID, which the number is right there in the name. There's no ambiguity about what these policies could possibly mean. They're very liberal minded about engineering the population. I contrast the engineering state with the United States, which I call the loyally society, because at various points the entirety of America's leadership were all lawyers.
Most of the founding fathers were lawyers. For sixteen US presidents, from George Washington to Abraham Lincoln, thirteen of them were lawyers. Every single nominee to be president from the Democratic Party between nineteen eighty to twenty twenty four went to law school. The Republicans are pretty loyally as well, And the issue with lawyers is that they block everything good and bad, so you don't have stupid ideas like the one child policy.
They also don't have functioning infrastructure almost anywhere in the US.
To play Devil's advocate here, would it be fair to say that most empires on the rise are engineering cultures? And most empires, when they get to maturity, become loyally societies.
There are certainly something to that. I acknowledge that though the US has always been loyally at various points, it was a proto engineering state. So I think between the middle of the nineteenth century to the middle of the twentieth century, the US certainly built a lot. It built highway systems, Manhattan Project, the Apollo Missions, and these are
all extraordinary achievements by American engineers. And then I think the characters changed in the nineteen sixties as people got very tired of Robert Moses ramming highways through dense neighborhoods in New York City, of the Department of Agriculture spraying DDT absolutely everywhere throughout the country, and of all sorts of projects that the engineering state in America was messing
up on. And so people like Ralph Nader really took charge to tell law students that they needed to quote sue the bastards, and the bastards referred to the government. So this is where the lawyers turned into litigators as well as regulators.
We'll come back to this idea of the tariffs and the export controls that successive US administrations have used as tools of leverage against China are very loyally. There's a quote of yours which is the United States has made the geopolitical mistake of bringing lawyers to a showdown with China on trade and technology. Why is a mistake?
It comes down to a fundamentally different view of what are American strengths and what are Chinese strengths. So, on the one hand, China overproduces and the Americans over consume. Now, the Americans believe they are strong because they have the world's greatest market. They have the world's biggest market, and everybody needs to sell to Americans. I think that is true to some extent. If you control demand, that is pretty important. And I think that the Chinese are saying, well,
you are a consumer, We are a production superpower. We make all your goods. When the Americans are unable to get essential goods, when during the early days of the pandemic, they couldn't make masks and cotton swabs, when the grocery stores ran out of particular barriers depending on which part of California or Mexico had COVID at the time, that made a lot of people quite upset. So I think the Chinese are accounting on the Americans not to have very strong pain tolerance to endure empty shelves.
When you look back at the last twenty thirty years, whether it's the automotive industry, calm manufacturing, or whether it's AI more recently with deep seek, what do you think about the argument that wasn't that the United States was too loyally, It's just that it was too bad at enforcing its rules well.
To be clear, the Chinese don't lack for loss. I think China drowns and loss and regulations. The difference is that the Chinese have a very serious state that is very intent on making its will clear to the population. If you're just living normally in China. I think that there is a much greater degree of seriousness in China. I think that there's something that unites the Chinese as well as folks in Silicon Valley. Official China and Silicon
Valley are both very very serious. They're not only serious, they're also self serious. You know, it's almost as dangerous writing a mean tweet about a prominent VC as it is done write a mean tweet about a member of the Central Committee.
You know, it's funny you mentioned this because I was, you know, as you can tell, I'm English and our highest virtue educational system was rhetoric. And I was at a wedding with a number of my English friends this summer and they were saying, oh, you spent some more time in San Francisco and Solon Valley. You know, should we go and try and make our lives there. Guys,
you're your charm. What's considered your charm in Britain will not take you very far because isn't not value as of humor and conversational dexterity that a Cherish I mean, it's I don't you think.
That, because there's so much self seriousness here that are really charming plishmen, so do so many bright young things.
That's what I hoping by side, I think you guys are mist guy that I think you're going to be able to do it.
I've always liked saying that what Britain specializes in is the sounding clever industries, namely television, journalism, finance, and consulting.
Now, of course, part of the mythology of Silicon Valley is that it's the innocense, the absence of government that allowed this extraordinary technological flourishing to happen, you know, from the nineties to today. And I'm sure if you spoke to Samiltman or Jenson Wong or others and said this is a fundamentally a nation of lawyers not engineers, and in China is the other way around, they would disagree with you.
Yeah, I think they will probably push back, but I'll hold on to my case, mostly because I don't feel like Silicon Maalia is quite running the world just yet. Now, it got quite close to when Eli Musk promoted to be co president, but then Elion flamed out, so he goofed and he was pretty promptly fired with this public dispute between Trump and himself. Now, I feel like there could have been a moment in which Elon Musk was running the American government and DOGE could have represented some
sort of a return to the engineering state. But that also flamed out really really quickly. And so I think that it is a tragedy that Eli Musk was so misguided, turned a lot of people against this idea of government reform, and rather than building up government capabilities, he was sharing
down its capabilities. I think it is pretty clear that Trump is still running the show out of Washington, DC, that when he summons the tech CEOs to hail him at a dinner, then they will promise to invest hundreds of billions of dollars in the American economy in Trump's name. And so that doesn't seem like the people who are running Masters of the Universe to me. Rather, they seem
like obsequious courtiers. Now. I acknowledge that Donald Trump is learning from China, but I think it's unfortunate that he's learning some of the worst things from China. And I think the great shame here is that in America it feels like we're getting authoritarianism without the good stuff functioning logistics and public order, the buildout of mass transit, and
the buildout of clean energy. Rather, what we're getting is kind of the construction of guilded ballrooms as well as detention centers, rather than the creation of more public works as well as a healthy manufacturing base. I think that's a tragedy.
Would it be fair to say that the thrust of your argument is that, on the balance of things, an engineering society is preferable to a loyally society.
No, I don't think so. I would say that the US and China both have virtues to teach each other. My great hope is for the Americans to become twenty percent more engineering. Because the US needs to build many more homes for people, to build much better mass transit, and needs to achieve the clean technology revolution, and it needs to revitalize its manufacturing base. It doesn't have to be like China in all respects. I think that China is a good operating model for abundance. It's not a
great operating model for abundance. So I think that the US should be twenty percent more engineering at the same time I think that China should be fifty percent more Loyally, what I really wish is for the Communist Party to actually respect individual freedoms, to not strangle so hard the creative impulses of Chinese and fundamentally, what I really wish is for the Communist Party to just leave people alone for a little while and let them get on with
their lives and just not feel like they're under the thumbs of the engineering state all the time, such that these engineers want to be engineers of the soul.
After the break, what China thinks of Donald Trump, stay with us. Coming to the book, why did you write it? And well, the key inputs and I know one of the key inputs was living in China between I think twenty seventeen and twenty twenty three, when you do it and what came out of it.
I felt I was living through a pretty momentous time over that period, Donald Trump's first trade war, something that morphed into a tech war I was living through sees greater repression than the centerpiece was being in China throughout all three years of zero COVID. There's something about living
in China which feels a little bit apocalyptic. You really get the sense during zero COVID when you have all of these videos from zero COVID times of people fleeing office buildings or something because there was rumors of a potential case inside the building, and once that happens, the police will seal off the entire building, trapping everyone inside. Imagine sleeping on the office floor with all of your colleagues without being able to shower because they need to
test everyone in that office. And even for me, there was a slight apocalyptic sense of the Great Firewall block my website in twenty twenty two, which is when I had to go see the Canadian Console General to ask whether they needed me to leave in a hurry. And that is something quite surprising to happen. Generally they block big platforms like Wikipedia or Twitter or The New York Times,
not little RinkyDink websites like mine. And so to be quite clear, I moved to back to the US in twenty twenty three because I craved some of the pluralism of the United States.
Talk about shin Zen. This is a city, as far as I understand, went from basically producing cheapies for Japanese consumer electronics in the nineties to being was the leading auto producing cities and technology cities in the world in this space of just thirty years. I mean, how did that happen? And what would be necessary to happen here to emulate a story like that.
Yeah, Hinjin really started to develop throughout the nineteen eighties when Doncaping designated it a special Economic zone, and Hinjin really grew by leaps and bounds. This was the sharp tip of the spear into China's foray in becoming a much more capitalist in Chhinjin has been an interesting success in all sorts of ways. Shinjin is most famously the city that started making the first iPhones. So Tim Cook and Steve Jobs before two thousand and eight decided to
situate most iPhone production in the city of Shinjin. And I think it is no wonder that Hinjin is now the global hardware capital of the world because once you start training a lot of workers, hundreds of thousands of workers producing the most sophisticated electronics in the world, what that has produced is a giant workforce able to deploy
their talents into many other fields as well. So imagine that you are someone working on assembly line making iPhones this year, you're making iPhones next year, maybe you're making a Huawei phone. You're after that a Dji drone the year after that electric vehicle battery. There's just this gianted supple workforce that investors as well as academics and factory
managers are rubbing shoulders with. And I think it is no surprise that it has been an innovative leader in producing all sorts of great electronics goods.
Do you think the US and Silicon Valley over values innovative platform technology like AI coming back to this idea of engineered versus lawyers and whether people in Silicon Valley would agree with you. I mean it seems like people here might say, well, it's great to be able to put the technology to use, but that the real value is in laying down the tracks to the future.
Yeah. First of all, I wonder what the term innovation really is. So I think the Silicon Valley model of innovation is that you take Steve Jobs, put him in a garage, put some LSD into the garage, and what comes out is an Apple computer. And I think that is a strange model of innovation. I mean, it is
a valid Silicon Valley model of innovation. But I think with the Americans, really value is kind of this moment of invention, and what I challenge Americans to acknowledge is that maybe there's greater glory in the production and actually owning various industries. So I think a lot about the solar photote Excel. This is something solar PV was invented by Bell Labs in the year in nineteen fifty four, and so that could go straight into the history books
as an American invention for all time. But does that really matter when China now owns ninety percent of the solar industry, everything from the police and processing to the final module assembly. I think that there's much greater glory in owning a product rather than inventing it.
How do you view attempts under President Trump of technology companies to onshore manufacturing and the skating up of technologies not simply the creation of the idea.
I think it's not going great if we just take a look at manufacturing employment. Since Liberation Day in April, US has lost something like forty thousand manufacturing jobs, and actually the data has stopped, so we don't know how the manufacturing employment sector has been doing. I think that it is counter productive to become a great scientific and technological superpower by cutting a lot of funding to the National Science Foundation. I don't see a scenario in which
we get better science by spending less on science. I think it is a big mistake to frighten away a lot of European researchers as well as supporting a lot of the American workforce. Imagine if you are an engineer today in South Korea and Taiwan, in France, wherever else, and your boss is telling you you've gotten an assignment
to go build factories in the US. Maybe they say no, thank you, because they've seen these images of South Korean engineers who are trying to build a battery facility in the state of Georgia being deported away in chains, and that does not feel like a very good prospect. And then this way, the Chinese were much more sophisticated. They really welcomed Walmart and Apple and Tesla to build in China. They welcomed the managerial expertise from the West because they
recognized that they were so behind. And I would really love it if the Americans were able to have the same attitude.
I've read about the reaction in Korea after the deportation of the Hundai factory workers being seen as a kind of watershed moment in terms of the relationship between South Korea and the United States, in terms of how much trust they could put in an ally that treated their citizens like that. What is the perception of the current US policies that you just outline in China.
Well, really hard to figure out how they think about Donald Trump. But for the most part, rampant hostility I think is kind of a default mode that the Chinese would greet Trump. Now, there is some sense in which I think a lot of Chinese still kind of like Donald Trump. He doesn't seem like the Great Satan to them, mostly because during the First Trade War there was a little bit of a sense that Donald Trump likes Chinese. Essentially, he is very Chinese in terms of his business practices.
You know, it is very strange that Donald Trump keeps praising Sees King. I dug up an interview he gave to The Wall Street Journal last year in which Trump said he was and I quote nearly verbatim, brilliant, so smart, everything nearly perfect. And so you know, there is a sense in which he wants to be friends with See. But I think that friendship would not be reciprocated by See,
who finds this guy too obnoxious to deal with. But that maybe these two countries can co exist very well, because right now Donald Trump is the most pro China member of the White House. So let's see how this shakes up.
There were two kind of narratives that people in the West reassured themselves with when it came to China's rise and potential supremacy. The first was that the state control over the economy in China would inevitably strangle innovation, and
that would ultimately lead to economic collapse. On the one hand, on the other hand, the attempts of the state to be, as you put it, engineers of the soul or control the private individual, whether through the one child policy or zero COVID policies, would inevitably, because of the evidence of history, result in seismic revolutionary change. What is the status of those myths today.
I think the first thing to do is to recognize that it is a myth that there is this American narrative that China's poised on a knife edge, that the Communist Party's entire basis for legitimacy depends on delivering economic growth, and I think that is not the case. I think that the Communist Party certainly values economic growth, but its sources of legitimacy are more robust than that part. Because
there's been excellent momentum from the engineering state. Because if you're a resident of Shanghai, what you've gotten over the last decade are more and more subway stations throughout the city, better in better parks, better air quality, as well as well as around networks that allow you to go throughout the country. The engineering state has managed to build quite a lot of political resilience by delivering people a sense of physical dynamism, and so I think that has given
people some degree of optimism. Whereas if you're living in San Francisco or a bunch of other mostly blue cities and your physical environment does not change almost at all, the only way can imagine that your life could be a little bit better, as if there's another coffee shop around the corner, I think you really don't have a sense that the future will be different from the past.
And so that is also something I'm really trying to encourage that people have a sense of physical dynamism and develop greater optimism too.
These is only a very interesting earlier in our conversation about the United States learning the worst lessons from China. Right now, how do you when you look at these two countries next to each other, how do you look at what those wrong lessons the United States is learning are and what the consequences will be if it continues to focus on those learnings and perhaps lose its ownership of the American dream mythology.
I think it is still pretty clear that most of the world's most successful people are still really eager to work and establish their lives in the United States. There is just so much more economic opportunity, much better compensation, much higher levels of energy and dynamism in the US relative to let's say Europe or Canada, and I think that is still clear and obvious. At the same time, I think the United States is doing its very best to erode a lot of its attractiveness to a lot
of global migrants. And my view is that the United States is a superpower in many dimensions and that China will not overcome the US and all of its dimensions. The US is also a financial superpower, it is also a cultural superpower. It is also a diplomatic superpower. And China will not overcome these sort of things because, for example, it can't be a financial superpower because it imposes really
stiff capital controls on the financial system. But there is one area in which China can be a very big threat to the US, which is in advanced manufacturing. So China produces so many things, and I think it is on track to continue to the industrial the US as well as Europe. Right now, America's APEX manufacturers companies like Intel and Boeing and Detroit automakers in Tesla. They haven't been doing very well for a long time. And that's not mostly because of China. That's mostly because of their
own missteps. So I think that China will not do very well rid large but if it wins even narrowly on this narrow victory of advanced manufacturing could be pretty devastating to the West.
Dan final question in a sentence, whatsh the United States do.
Build more and have a little bit more seriousness about recognizing its own problems, not demonizing the Chinese, and recognize what are the Chinese successes that it's able to learn from, because the Chinese have done very well and much better in learning from the Americans rather than the other way around. And I believe that was one sentence with just one semi colon.
Thank you so much, appreciate you taking the time.
Thank you very much.
As for tech stuff, I'm Kara Price and I'm Oz Valoshian.
This episode was produced by Eliza Dennis, Melissa Slaughter, and Tyler Hill. Was executive produced by me Oz Valoshian, Julia Nutter, and Kate Osborne for Kaleidoscope and Katrina Norvell for iHeart Podcasts. Jack Insley mixed this episode and Kyle Murdoch wrote our theme song.
Join us on Friday for the Weekend tech when Karen and I will run through the tech headlines you may have missed.
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