WEBVTT - The Story: What China Tariffs Really Signal 0:00:14.160 --> 0:00:17.200 Welcome to tech Stuff, five mans Voloscian Caroen. I'm curious 0:00:17.239 --> 0:00:20.119 if you agree, but I kind of feel like in 0:00:20.160 --> 0:00:23.320 the abstract, this idea of a kind of tech grace 0:00:23.440 --> 0:00:26.480 or even a tech war between the US and China 0:00:26.520 --> 0:00:30.480 has been brewing for almost a decade, but this year 0:00:30.480 --> 0:00:33.680 it started to feel very real in terms of really 0:00:33.720 --> 0:00:37.120 the practical power that China wields over the US and 0:00:37.440 --> 0:00:40.559 its key industries. And he's a perfect moment for this 0:00:40.600 --> 0:00:44.360 conversation and this guest, given the news about China's export 0:00:44.400 --> 0:00:46.120 controls on rare earth metals. 0:00:46.440 --> 0:00:49.120 Yeah, you know, it isn't until we started reporting on 0:00:49.159 --> 0:00:52.240 this show that I actually thought about how much China 0:00:52.280 --> 0:00:55.880 dominates what the future will look like. And I'm just 0:00:55.920 --> 0:00:58.800 not sure that the US is on a level playing field. 0:00:59.360 --> 0:01:02.320 Yeah, I mean has been this kind of rattat tat 0:01:02.480 --> 0:01:07.640 of one upmanship this year. There's been borderline frightening. Obviously, 0:01:07.680 --> 0:01:10.759 the US took the world by storm with its AI models, 0:01:11.080 --> 0:01:13.520 and then China released one that was purportedly far more 0:01:13.560 --> 0:01:17.000 efficient in deepsek R one. The US band export of 0:01:17.040 --> 0:01:21.360 advanced AI chips, so China started making its own, although 0:01:21.400 --> 0:01:24.000 they haven't caught up quite yet and now there's this 0:01:24.160 --> 0:01:28.600 reciprocal relationship between US tariffs and Chinese export controls on 0:01:28.720 --> 0:01:32.039 rare earth metals, Which is why my ears perked up 0:01:32.120 --> 0:01:34.000 when our guests today said this. 0:01:34.440 --> 0:01:37.160 I really feel like Chinese and Americans are the most 0:01:37.200 --> 0:01:40.319 alike people in the world. Both countries have a sense 0:01:40.360 --> 0:01:43.040 of hustle, They are pragmatic people. They have a sense 0:01:43.080 --> 0:01:44.600 of the technological sublime. 0:01:45.280 --> 0:01:48.760 That's Dan Wong, who's a research fellow at Stanford University's 0:01:48.880 --> 0:01:52.400 Hoover History Lab and the author of a new book, Breakneck, 0:01:52.920 --> 0:01:55.480 China's Quest to Engineer the Future. 0:01:55.880 --> 0:01:58.880 People in both countries believe they are great powers and 0:01:59.040 --> 0:02:02.720 smaller countries Canada or the UK have to listen to them. 0:02:02.840 --> 0:02:06.240 And they are also two of the greatest engines for 0:02:06.800 --> 0:02:09.240 technological change and economic change as well. 0:02:09.800 --> 0:02:12.560 You know, I never really think about China and the 0:02:12.720 --> 0:02:16.760 US as like uniquely similar in terms of culture, and 0:02:16.880 --> 0:02:19.880 I love this term the technological sublime, and I am 0:02:19.960 --> 0:02:22.760 curious to hear more of what he's talking about. Why 0:02:22.840 --> 0:02:23.799 is Dan the man here? 0:02:24.800 --> 0:02:27.520 Dan's the man because he wrote this excellent book, but 0:02:27.600 --> 0:02:29.920 also because he lived in China during kind of a 0:02:29.919 --> 0:02:34.400 crucial period between twenty seventeen and twenty twenty three, and 0:02:34.440 --> 0:02:36.920 he actually went there in part because it was during 0:02:36.919 --> 0:02:39.840 the time that the Communist Party had set this ambitious 0:02:39.880 --> 0:02:43.760 agenda to transition from being quote the world's factory I 0:02:44.120 --> 0:02:48.920 manufacturing consumer products to becoming the world's leader in advanced 0:02:48.960 --> 0:02:53.480 manufacturing so robots, batteries, aerospace, and Dan was there to 0:02:53.560 --> 0:02:57.480 kind of study this transition up close. Then came COVID, 0:02:57.680 --> 0:03:01.240 and Dan was actually in Shanghai during this zero COVID lockdown, 0:03:01.320 --> 0:03:04.200 so he got to see these kind of two faces 0:03:04.320 --> 0:03:09.200 of how China manages its economy is production and its population. 0:03:09.960 --> 0:03:11.480 And he also had a lot of time to think 0:03:11.560 --> 0:03:15.079 about the relationship between the US and China, what's similar 0:03:15.320 --> 0:03:18.720 and what's different. The framework he came up with is 0:03:18.760 --> 0:03:22.400 pretty intriguing. It's basically that one of the societies is 0:03:22.520 --> 0:03:26.680 an engineering society and the other is a loyally society. 0:03:26.880 --> 0:03:29.320 I mean, I'm going to guess that China is the 0:03:29.360 --> 0:03:30.280 engineering force. 0:03:30.760 --> 0:03:35.400 Good guess, And per Dan's framework, this engineering versus loyally 0:03:35.520 --> 0:03:39.200 disposition massively impacts how the two countries relate to one another. 0:03:39.760 --> 0:03:43.200 Take the trade war, for example, China is showing strength 0:03:43.280 --> 0:03:48.320 by leveraging its resources, production, manufacturing chops, while the US 0:03:48.440 --> 0:03:51.120 is trying to maintain control through tariffs and laws. 0:03:51.400 --> 0:03:53.800 But Dan is essentially saying, the US and China are 0:03:53.920 --> 0:03:57.280 very similar in temperament and are tackling the same goal, 0:03:57.560 --> 0:04:00.840 which is to be the world's technology superpower, but the 0:04:00.920 --> 0:04:03.240 two are approaching it in very different ways. 0:04:03.760 --> 0:04:06.160 That's right, And we talked about actually how in this 0:04:06.320 --> 0:04:10.160 very heightened moment, the US is learning all the worst 0:04:10.280 --> 0:04:13.680 lessons from China's political system, but also about what the 0:04:13.800 --> 0:04:16.000 US should do, at least in an ideal world, in 0:04:16.000 --> 0:04:19.400 response to China's engineering dominance. But I wanted to start 0:04:19.440 --> 0:04:22.880 the conversation by having Dan define this paradigm China the 0:04:22.920 --> 0:04:25.960 engineering state and US the loyally society. 0:04:26.279 --> 0:04:28.880 In his own words, China's the country I call the 0:04:29.120 --> 0:04:32.120 engineering state because at various points in the recent past, 0:04:32.560 --> 0:04:35.960 the entirety of the senior leadership had degrees in engineering. 0:04:36.560 --> 0:04:40.040 And what do engineers like to do build? They build 0:04:40.640 --> 0:04:45.680 skyscrapers and highways and bridges, solar, colwyn, nuclear, you name it. 0:04:45.800 --> 0:04:48.160 They're building a lot of these things. They also treat 0:04:48.240 --> 0:04:52.480 the economy sometimes as an engineering exercise. And China's also 0:04:52.560 --> 0:04:56.240 made up of engineers of the soul in which they 0:04:56.440 --> 0:05:00.119 are also fundamentally social engineers. So I spent a lot 0:05:00.160 --> 0:05:02.559 of time in the book talking about the one child 0:05:02.560 --> 0:05:05.359 policy as well as zero COVID, which the number is 0:05:05.440 --> 0:05:07.800 right there in the name. There's no ambiguity about what 0:05:07.839 --> 0:05:11.760 these policies could possibly mean. They're very liberal minded about 0:05:11.760 --> 0:05:16.040 engineering the population. I contrast the engineering state with the 0:05:16.120 --> 0:05:19.040 United States, which I call the loyally society, because at 0:05:19.120 --> 0:05:22.800 various points the entirety of America's leadership were all lawyers. 0:05:23.040 --> 0:05:26.560 Most of the founding fathers were lawyers. For sixteen US presidents, 0:05:26.600 --> 0:05:30.360 from George Washington to Abraham Lincoln, thirteen of them were lawyers. 0:05:30.680 --> 0:05:34.120 Every single nominee to be president from the Democratic Party 0:05:34.400 --> 0:05:37.640 between nineteen eighty to twenty twenty four went to law school. 0:05:38.000 --> 0:05:41.960 The Republicans are pretty loyally as well, And the issue 0:05:42.000 --> 0:05:44.760 with lawyers is that they block everything good and bad, 0:05:44.920 --> 0:05:47.640 so you don't have stupid ideas like the one child policy. 0:05:48.000 --> 0:05:51.920 They also don't have functioning infrastructure almost anywhere in the US. 0:05:52.400 --> 0:05:55.000 To play Devil's advocate here, would it be fair to 0:05:55.040 --> 0:06:00.159 say that most empires on the rise are engineering cultures? 0:06:00.240 --> 0:06:05.120 And most empires, when they get to maturity, become loyally societies. 0:06:05.480 --> 0:06:09.040 There are certainly something to that. I acknowledge that though 0:06:09.120 --> 0:06:11.960 the US has always been loyally at various points, it 0:06:12.000 --> 0:06:16.000 was a proto engineering state. So I think between the 0:06:16.040 --> 0:06:18.200 middle of the nineteenth century to the middle of the 0:06:18.240 --> 0:06:21.560 twentieth century, the US certainly built a lot. It built 0:06:21.720 --> 0:06:25.720 highway systems, Manhattan Project, the Apollo Missions, and these are 0:06:25.760 --> 0:06:31.279 all extraordinary achievements by American engineers. And then I think 0:06:31.680 --> 0:06:35.160 the characters changed in the nineteen sixties as people got 0:06:35.279 --> 0:06:39.400 very tired of Robert Moses ramming highways through dense neighborhoods 0:06:39.400 --> 0:06:43.600 in New York City, of the Department of Agriculture spraying 0:06:43.680 --> 0:06:47.280 DDT absolutely everywhere throughout the country, and of all sorts 0:06:47.320 --> 0:06:50.479 of projects that the engineering state in America was messing 0:06:50.560 --> 0:06:52.920 up on. And so people like Ralph Nader really took 0:06:53.000 --> 0:06:56.839 charge to tell law students that they needed to quote 0:06:56.880 --> 0:06:59.719 sue the bastards, and the bastards referred to the government. 0:07:00.120 --> 0:07:03.560 So this is where the lawyers turned into litigators as 0:07:03.600 --> 0:07:04.600 well as regulators. 0:07:05.000 --> 0:07:07.120 We'll come back to this idea of the tariffs and 0:07:07.120 --> 0:07:11.520 the export controls that successive US administrations have used as 0:07:11.600 --> 0:07:16.120 tools of leverage against China are very loyally. There's a 0:07:16.200 --> 0:07:18.520 quote of yours which is the United States has made 0:07:18.560 --> 0:07:22.280 the geopolitical mistake of bringing lawyers to a showdown with 0:07:22.440 --> 0:07:25.840 China on trade and technology. Why is a mistake? 0:07:26.240 --> 0:07:30.360 It comes down to a fundamentally different view of what 0:07:30.480 --> 0:07:33.720 are American strengths and what are Chinese strengths. So, on 0:07:33.760 --> 0:07:38.360 the one hand, China overproduces and the Americans over consume. Now, 0:07:38.480 --> 0:07:41.160 the Americans believe they are strong because they have the 0:07:41.160 --> 0:07:44.680 world's greatest market. They have the world's biggest market, and 0:07:45.040 --> 0:07:47.960 everybody needs to sell to Americans. I think that is 0:07:48.000 --> 0:07:50.440 true to some extent. If you control demand, that is 0:07:50.480 --> 0:07:54.240 pretty important. And I think that the Chinese are saying, well, 0:07:54.560 --> 0:07:57.960 you are a consumer, We are a production superpower. We 0:07:58.080 --> 0:08:01.280 make all your goods. When the Americans are unable to 0:08:01.320 --> 0:08:04.960 get essential goods, when during the early days of the pandemic, 0:08:05.040 --> 0:08:08.760 they couldn't make masks and cotton swabs, when the grocery 0:08:08.880 --> 0:08:12.600 stores ran out of particular barriers depending on which part 0:08:12.600 --> 0:08:15.520 of California or Mexico had COVID at the time, that 0:08:15.720 --> 0:08:18.200 made a lot of people quite upset. So I think 0:08:18.240 --> 0:08:20.720 the Chinese are accounting on the Americans not to have 0:08:20.800 --> 0:08:24.120 very strong pain tolerance to endure empty shelves. 0:08:24.400 --> 0:08:26.720 When you look back at the last twenty thirty years, 0:08:26.760 --> 0:08:30.480 whether it's the automotive industry, calm manufacturing, or whether it's 0:08:31.160 --> 0:08:34.320 AI more recently with deep seek, what do you think 0:08:34.320 --> 0:08:36.520 about the argument that wasn't that the United States was 0:08:36.559 --> 0:08:38.560 too loyally, It's just that it was too bad at 0:08:38.640 --> 0:08:40.760 enforcing its rules well. 0:08:41.360 --> 0:08:44.000 To be clear, the Chinese don't lack for loss. I 0:08:44.000 --> 0:08:47.400 think China drowns and loss and regulations. The difference is 0:08:47.400 --> 0:08:51.400 that the Chinese have a very serious state that is 0:08:51.640 --> 0:08:55.119 very intent on making its will clear to the population. 0:08:55.520 --> 0:08:59.160 If you're just living normally in China. I think that 0:08:59.720 --> 0:09:03.439 there is a much greater degree of seriousness in China. 0:09:03.679 --> 0:09:06.600 I think that there's something that unites the Chinese as 0:09:06.640 --> 0:09:09.960 well as folks in Silicon Valley. Official China and Silicon 0:09:10.040 --> 0:09:13.040 Valley are both very very serious. They're not only serious, 0:09:13.080 --> 0:09:16.120 they're also self serious. You know, it's almost as dangerous 0:09:16.559 --> 0:09:19.120 writing a mean tweet about a prominent VC as it 0:09:19.160 --> 0:09:21.000 is done write a mean tweet about a member of 0:09:21.000 --> 0:09:21.959 the Central Committee. 0:09:22.040 --> 0:09:24.000 You know, it's funny you mentioned this because I was, 0:09:24.160 --> 0:09:27.880 you know, as you can tell, I'm English and our 0:09:27.960 --> 0:09:32.040 highest virtue educational system was rhetoric. And I was at 0:09:32.080 --> 0:09:34.760 a wedding with a number of my English friends this 0:09:34.880 --> 0:09:36.520 summer and they were saying, oh, you spent some more 0:09:36.559 --> 0:09:39.240 time in San Francisco and Solon Valley. You know, should 0:09:39.280 --> 0:09:42.839 we go and try and make our lives there. Guys, 0:09:42.840 --> 0:09:47.240 you're your charm. What's considered your charm in Britain will 0:09:47.240 --> 0:09:51.120 not take you very far because isn't not value as 0:09:51.320 --> 0:09:54.719 of humor and conversational dexterity that a Cherish I mean, 0:09:54.720 --> 0:09:56.080 it's I don't you think. 0:09:55.960 --> 0:09:59.120 That, because there's so much self seriousness here that are 0:09:59.200 --> 0:10:02.480 really charming plishmen, so do so many bright young things. 0:10:03.400 --> 0:10:05.520 That's what I hoping by side, I think you guys 0:10:05.600 --> 0:10:07.920 are mist guy that I think you're going to be 0:10:07.920 --> 0:10:08.440 able to do it. 0:10:08.600 --> 0:10:12.760 I've always liked saying that what Britain specializes in is 0:10:12.800 --> 0:10:18.680 the sounding clever industries, namely television, journalism, finance, and consulting. 0:10:19.440 --> 0:10:22.280 Now, of course, part of the mythology of Silicon Valley 0:10:22.520 --> 0:10:25.680 is that it's the innocense, the absence of government that 0:10:25.800 --> 0:10:31.040 allowed this extraordinary technological flourishing to happen, you know, from 0:10:31.120 --> 0:10:35.280 the nineties to today. And I'm sure if you spoke 0:10:35.320 --> 0:10:38.120 to Samiltman or Jenson Wong or others and said this 0:10:38.200 --> 0:10:41.800 is a fundamentally a nation of lawyers not engineers, and 0:10:41.840 --> 0:10:44.200 in China is the other way around, they would disagree 0:10:44.200 --> 0:10:44.440 with you. 0:10:45.600 --> 0:10:49.079 Yeah, I think they will probably push back, but I'll 0:10:49.080 --> 0:10:52.760 hold on to my case, mostly because I don't feel 0:10:52.880 --> 0:10:56.960 like Silicon Maalia is quite running the world just yet. Now, 0:10:57.040 --> 0:11:00.840 it got quite close to when Eli Musk promoted to 0:11:00.840 --> 0:11:04.160 be co president, but then Elion flamed out, so he 0:11:04.280 --> 0:11:08.360 goofed and he was pretty promptly fired with this public 0:11:08.360 --> 0:11:12.440 dispute between Trump and himself. Now, I feel like there 0:11:12.440 --> 0:11:15.480 could have been a moment in which Elon Musk was 0:11:15.559 --> 0:11:19.640 running the American government and DOGE could have represented some 0:11:19.679 --> 0:11:22.600 sort of a return to the engineering state. But that 0:11:22.679 --> 0:11:26.760 also flamed out really really quickly. And so I think 0:11:26.800 --> 0:11:29.920 that it is a tragedy that Eli Musk was so misguided, 0:11:30.240 --> 0:11:33.439 turned a lot of people against this idea of government reform, 0:11:33.880 --> 0:11:37.240 and rather than building up government capabilities, he was sharing 0:11:37.280 --> 0:11:40.280 down its capabilities. I think it is pretty clear that 0:11:40.720 --> 0:11:43.280 Trump is still running the show out of Washington, DC, 0:11:43.960 --> 0:11:47.760 that when he summons the tech CEOs to hail him 0:11:47.800 --> 0:11:51.199 at a dinner, then they will promise to invest hundreds 0:11:51.200 --> 0:11:54.920 of billions of dollars in the American economy in Trump's name. 0:11:55.320 --> 0:11:57.480 And so that doesn't seem like the people who are 0:11:57.520 --> 0:12:00.280 running Masters of the Universe to me. Rather, they seem 0:12:00.360 --> 0:12:04.400 like obsequious courtiers. Now. I acknowledge that Donald Trump is 0:12:04.440 --> 0:12:06.840 learning from China, but I think it's unfortunate that he's 0:12:06.920 --> 0:12:09.319 learning some of the worst things from China. And I 0:12:09.360 --> 0:12:12.120 think the great shame here is that in America it 0:12:12.120 --> 0:12:16.760 feels like we're getting authoritarianism without the good stuff functioning 0:12:16.800 --> 0:12:20.720 logistics and public order, the buildout of mass transit, and 0:12:20.760 --> 0:12:24.960 the buildout of clean energy. Rather, what we're getting is 0:12:25.480 --> 0:12:28.240 kind of the construction of guilded ballrooms as well as 0:12:28.280 --> 0:12:31.880 detention centers, rather than the creation of more public works 0:12:31.880 --> 0:12:34.160 as well as a healthy manufacturing base. I think that's 0:12:34.160 --> 0:12:34.760 a tragedy. 0:12:35.160 --> 0:12:37.560 Would it be fair to say that the thrust of 0:12:37.600 --> 0:12:41.160 your argument is that, on the balance of things, an 0:12:41.200 --> 0:12:44.359 engineering society is preferable to a loyally society. 0:12:44.840 --> 0:12:47.400 No, I don't think so. I would say that the 0:12:47.559 --> 0:12:51.040 US and China both have virtues to teach each other. 0:12:51.520 --> 0:12:54.120 My great hope is for the Americans to become twenty 0:12:54.120 --> 0:12:58.000 percent more engineering. Because the US needs to build many 0:12:58.000 --> 0:13:01.720 more homes for people, to build much better mass transit, 0:13:01.840 --> 0:13:05.960 and needs to achieve the clean technology revolution, and it 0:13:05.960 --> 0:13:09.240 needs to revitalize its manufacturing base. It doesn't have to 0:13:09.320 --> 0:13:11.760 be like China in all respects. I think that China 0:13:11.840 --> 0:13:14.400 is a good operating model for abundance. It's not a 0:13:14.400 --> 0:13:17.080 great operating model for abundance. So I think that the 0:13:17.440 --> 0:13:20.760 US should be twenty percent more engineering at the same 0:13:20.800 --> 0:13:24.680 time I think that China should be fifty percent more Loyally, 0:13:24.880 --> 0:13:28.360 what I really wish is for the Communist Party to 0:13:28.520 --> 0:13:33.920 actually respect individual freedoms, to not strangle so hard the 0:13:34.000 --> 0:13:38.280 creative impulses of Chinese and fundamentally, what I really wish 0:13:38.320 --> 0:13:41.280 is for the Communist Party to just leave people alone 0:13:41.440 --> 0:13:43.160 for a little while and let them get on with 0:13:43.200 --> 0:13:46.320 their lives and just not feel like they're under the 0:13:46.360 --> 0:13:49.440 thumbs of the engineering state all the time, such that 0:13:49.760 --> 0:13:52.520 these engineers want to be engineers of the soul. 0:14:00.400 --> 0:14:04.360 After the break, what China thinks of Donald Trump, stay 0:14:04.400 --> 0:14:26.080 with us. Coming to the book, why did you write it? 0:14:26.760 --> 0:14:29.200 And well, the key inputs and I know one of 0:14:29.200 --> 0:14:31.840 the key inputs was living in China between I think 0:14:31.880 --> 0:14:34.840 twenty seventeen and twenty twenty three, when you do it 0:14:34.880 --> 0:14:35.840 and what came out of it. 0:14:35.920 --> 0:14:38.360 I felt I was living through a pretty momentous time 0:14:38.480 --> 0:14:41.920 over that period, Donald Trump's first trade war, something that 0:14:42.040 --> 0:14:45.240 morphed into a tech war I was living through sees 0:14:45.560 --> 0:14:49.560 greater repression than the centerpiece was being in China throughout 0:14:49.680 --> 0:14:52.680 all three years of zero COVID. There's something about living 0:14:52.760 --> 0:14:55.920 in China which feels a little bit apocalyptic. You really 0:14:55.960 --> 0:14:59.160 get the sense during zero COVID when you have all 0:14:59.200 --> 0:15:02.000 of these videos from zero COVID times of people fleeing 0:15:02.040 --> 0:15:04.920 office buildings or something because there was rumors of a 0:15:04.960 --> 0:15:08.360 potential case inside the building, and once that happens, the 0:15:08.360 --> 0:15:11.680 police will seal off the entire building, trapping everyone inside. 0:15:11.960 --> 0:15:15.280 Imagine sleeping on the office floor with all of your 0:15:15.280 --> 0:15:17.840 colleagues without being able to shower because they need to 0:15:17.880 --> 0:15:21.600 test everyone in that office. And even for me, there 0:15:21.640 --> 0:15:24.920 was a slight apocalyptic sense of the Great Firewall block 0:15:24.960 --> 0:15:27.240 my website in twenty twenty two, which is when I 0:15:27.280 --> 0:15:30.600 had to go see the Canadian Console General to ask 0:15:30.640 --> 0:15:33.440 whether they needed me to leave in a hurry. And 0:15:33.920 --> 0:15:37.040 that is something quite surprising to happen. Generally they block 0:15:37.400 --> 0:15:41.560 big platforms like Wikipedia or Twitter or The New York Times, 0:15:41.920 --> 0:15:45.280 not little RinkyDink websites like mine. And so to be 0:15:45.360 --> 0:15:47.800 quite clear, I moved to back to the US in 0:15:47.840 --> 0:15:51.760 twenty twenty three because I craved some of the pluralism 0:15:52.040 --> 0:15:53.520 of the United States. 0:15:53.920 --> 0:15:56.160 Talk about shin Zen. This is a city, as far 0:15:56.200 --> 0:16:01.560 as I understand, went from basically producing cheapies for Japanese 0:16:01.600 --> 0:16:06.480 consumer electronics in the nineties to being was the leading 0:16:06.960 --> 0:16:09.800 auto producing cities and technology cities in the world in 0:16:09.800 --> 0:16:12.400 this space of just thirty years. I mean, how did 0:16:12.400 --> 0:16:15.120 that happen? And what would be necessary to happen here 0:16:15.760 --> 0:16:16.920 to emulate a story like that. 0:16:17.600 --> 0:16:21.480 Yeah, Hinjin really started to develop throughout the nineteen eighties 0:16:21.520 --> 0:16:26.440 when Doncaping designated it a special Economic zone, and Hinjin 0:16:26.680 --> 0:16:29.800 really grew by leaps and bounds. This was the sharp 0:16:29.840 --> 0:16:33.880 tip of the spear into China's foray in becoming a 0:16:33.960 --> 0:16:38.680 much more capitalist in Chhinjin has been an interesting success 0:16:38.800 --> 0:16:42.520 in all sorts of ways. Shinjin is most famously the 0:16:42.520 --> 0:16:46.320 city that started making the first iPhones. So Tim Cook 0:16:46.360 --> 0:16:49.360 and Steve Jobs before two thousand and eight decided to 0:16:49.400 --> 0:16:52.880 situate most iPhone production in the city of Shinjin. And 0:16:52.920 --> 0:16:55.280 I think it is no wonder that Hinjin is now 0:16:55.320 --> 0:16:59.160 the global hardware capital of the world because once you 0:16:59.240 --> 0:17:02.360 start training a lot of workers, hundreds of thousands of 0:17:02.400 --> 0:17:06.560 workers producing the most sophisticated electronics in the world, what 0:17:06.640 --> 0:17:10.439 that has produced is a giant workforce able to deploy 0:17:10.480 --> 0:17:14.640 their talents into many other fields as well. So imagine 0:17:14.640 --> 0:17:18.600 that you are someone working on assembly line making iPhones 0:17:18.840 --> 0:17:21.720 this year, you're making iPhones next year, maybe you're making 0:17:21.760 --> 0:17:25.320 a Huawei phone. You're after that a Dji drone the 0:17:25.400 --> 0:17:29.160 year after that electric vehicle battery. There's just this gianted 0:17:29.240 --> 0:17:34.280 supple workforce that investors as well as academics and factory 0:17:34.280 --> 0:17:37.439 managers are rubbing shoulders with. And I think it is 0:17:37.760 --> 0:17:41.480 no surprise that it has been an innovative leader in 0:17:41.560 --> 0:17:43.880 producing all sorts of great electronics goods. 0:17:44.320 --> 0:17:47.480 Do you think the US and Silicon Valley over values 0:17:47.600 --> 0:17:51.960 innovative platform technology like AI coming back to this idea 0:17:51.960 --> 0:17:54.400 of engineered versus lawyers and whether people in Silicon Valley 0:17:54.440 --> 0:17:56.879 would agree with you. I mean it seems like people 0:17:56.920 --> 0:17:59.159 here might say, well, it's great to be able to 0:17:59.200 --> 0:18:01.200 put the technology to use, but that the real value 0:18:01.240 --> 0:18:03.080 is in laying down the tracks to the future. 0:18:03.560 --> 0:18:07.280 Yeah. First of all, I wonder what the term innovation 0:18:07.680 --> 0:18:10.439 really is. So I think the Silicon Valley model of 0:18:10.480 --> 0:18:14.480 innovation is that you take Steve Jobs, put him in 0:18:14.480 --> 0:18:18.199 a garage, put some LSD into the garage, and what 0:18:18.320 --> 0:18:21.199 comes out is an Apple computer. And I think that 0:18:21.320 --> 0:18:24.480 is a strange model of innovation. I mean, it is 0:18:24.520 --> 0:18:27.960 a valid Silicon Valley model of innovation. But I think 0:18:27.960 --> 0:18:31.159 with the Americans, really value is kind of this moment 0:18:31.240 --> 0:18:34.720 of invention, and what I challenge Americans to acknowledge is 0:18:34.720 --> 0:18:38.479 that maybe there's greater glory in the production and actually 0:18:38.520 --> 0:18:41.719 owning various industries. So I think a lot about the 0:18:41.720 --> 0:18:45.640 solar photote Excel. This is something solar PV was invented 0:18:45.680 --> 0:18:48.400 by Bell Labs in the year in nineteen fifty four, 0:18:48.800 --> 0:18:51.159 and so that could go straight into the history books 0:18:51.200 --> 0:18:54.359 as an American invention for all time. But does that 0:18:54.400 --> 0:18:57.359 really matter when China now owns ninety percent of the 0:18:57.400 --> 0:19:01.119 solar industry, everything from the police and processing to the 0:19:01.200 --> 0:19:04.520 final module assembly. I think that there's much greater glory 0:19:04.680 --> 0:19:07.280 in owning a product rather than inventing it. 0:19:08.040 --> 0:19:12.879 How do you view attempts under President Trump of technology 0:19:12.920 --> 0:19:16.960 companies to onshore manufacturing and the skating up of technologies 0:19:17.359 --> 0:19:19.800 not simply the creation of the idea. 0:19:20.240 --> 0:19:22.680 I think it's not going great if we just take 0:19:22.680 --> 0:19:27.200 a look at manufacturing employment. Since Liberation Day in April, 0:19:27.440 --> 0:19:31.680 US has lost something like forty thousand manufacturing jobs, and 0:19:32.040 --> 0:19:34.160 actually the data has stopped, so we don't know how 0:19:34.160 --> 0:19:37.520 the manufacturing employment sector has been doing. I think that 0:19:37.600 --> 0:19:40.879 it is counter productive to become a great scientific and 0:19:40.920 --> 0:19:44.320 technological superpower by cutting a lot of funding to the 0:19:44.400 --> 0:19:47.680 National Science Foundation. I don't see a scenario in which 0:19:47.720 --> 0:19:50.960 we get better science by spending less on science. I 0:19:50.960 --> 0:19:53.879 think it is a big mistake to frighten away a 0:19:53.920 --> 0:19:57.920 lot of European researchers as well as supporting a lot 0:19:57.920 --> 0:20:02.399 of the American workforce. Imagine if you are an engineer 0:20:02.760 --> 0:20:07.879 today in South Korea and Taiwan, in France, wherever else, 0:20:08.280 --> 0:20:11.160 and your boss is telling you you've gotten an assignment 0:20:11.280 --> 0:20:14.760 to go build factories in the US. Maybe they say no, 0:20:14.880 --> 0:20:17.960 thank you, because they've seen these images of South Korean 0:20:17.960 --> 0:20:20.600 engineers who are trying to build a battery facility in 0:20:20.600 --> 0:20:23.159 the state of Georgia being deported away in chains, and 0:20:23.160 --> 0:20:25.800 that does not feel like a very good prospect. And 0:20:25.840 --> 0:20:28.800 then this way, the Chinese were much more sophisticated. They 0:20:28.840 --> 0:20:32.720 really welcomed Walmart and Apple and Tesla to build in China. 0:20:33.080 --> 0:20:36.840 They welcomed the managerial expertise from the West because they 0:20:36.920 --> 0:20:39.360 recognized that they were so behind. And I would really 0:20:39.359 --> 0:20:42.080 love it if the Americans were able to have the 0:20:42.080 --> 0:20:42.960 same attitude. 0:20:43.359 --> 0:20:46.680 I've read about the reaction in Korea after the deportation 0:20:46.840 --> 0:20:50.040 of the Hundai factory workers being seen as a kind 0:20:50.040 --> 0:20:54.200 of watershed moment in terms of the relationship between South 0:20:54.280 --> 0:20:56.240 Korea and the United States, in terms of how much 0:20:56.240 --> 0:20:58.480 trust they could put in an ally that treated their 0:20:58.760 --> 0:21:01.639 citizens like that. What is the perception of the current 0:21:01.880 --> 0:21:04.600 US policies that you just outline in China. 0:21:04.720 --> 0:21:07.760 Well, really hard to figure out how they think about 0:21:07.880 --> 0:21:11.720 Donald Trump. But for the most part, rampant hostility I 0:21:11.800 --> 0:21:14.719 think is kind of a default mode that the Chinese 0:21:14.800 --> 0:21:17.480 would greet Trump. Now, there is some sense in which 0:21:17.680 --> 0:21:19.639 I think a lot of Chinese still kind of like 0:21:19.680 --> 0:21:22.880 Donald Trump. He doesn't seem like the Great Satan to them, 0:21:22.920 --> 0:21:25.280 mostly because during the First Trade War there was a 0:21:25.280 --> 0:21:29.520 little bit of a sense that Donald Trump likes Chinese. Essentially, 0:21:29.560 --> 0:21:32.679 he is very Chinese in terms of his business practices. 0:21:32.920 --> 0:21:36.480 You know, it is very strange that Donald Trump keeps 0:21:36.480 --> 0:21:39.560 praising Sees King. I dug up an interview he gave 0:21:39.600 --> 0:21:42.520 to The Wall Street Journal last year in which Trump 0:21:42.600 --> 0:21:47.439 said he was and I quote nearly verbatim, brilliant, so smart, 0:21:47.800 --> 0:21:50.679 everything nearly perfect. And so you know, there is a 0:21:50.720 --> 0:21:53.280 sense in which he wants to be friends with See. 0:21:53.359 --> 0:21:55.880 But I think that friendship would not be reciprocated by See, 0:21:55.920 --> 0:21:59.520 who finds this guy too obnoxious to deal with. But 0:22:00.119 --> 0:22:02.560 that maybe these two countries can co exist very well, 0:22:02.600 --> 0:22:06.359 because right now Donald Trump is the most pro China 0:22:06.400 --> 0:22:09.280 member of the White House. So let's see how this 0:22:09.320 --> 0:22:09.880 shakes up. 0:22:10.440 --> 0:22:12.760 There were two kind of narratives that people in the 0:22:12.760 --> 0:22:17.639 West reassured themselves with when it came to China's rise 0:22:17.880 --> 0:22:23.040 and potential supremacy. The first was that the state control 0:22:23.480 --> 0:22:30.040 over the economy in China would inevitably strangle innovation, and 0:22:30.080 --> 0:22:33.760 that would ultimately lead to economic collapse. On the one hand, 0:22:34.359 --> 0:22:36.840 on the other hand, the attempts of the state to be, 0:22:36.920 --> 0:22:39.840 as you put it, engineers of the soul or control 0:22:39.920 --> 0:22:43.000 the private individual, whether through the one child policy or 0:22:43.080 --> 0:22:46.959 zero COVID policies, would inevitably, because of the evidence of history, 0:22:47.640 --> 0:22:52.320 result in seismic revolutionary change. What is the status of 0:22:52.960 --> 0:22:54.200 those myths today. 0:22:55.000 --> 0:22:57.440 I think the first thing to do is to recognize 0:22:57.440 --> 0:22:59.960 that it is a myth that there is this American 0:23:00.080 --> 0:23:04.800 narrative that China's poised on a knife edge, that the 0:23:04.840 --> 0:23:10.120 Communist Party's entire basis for legitimacy depends on delivering economic growth, 0:23:10.560 --> 0:23:13.160 and I think that is not the case. I think 0:23:13.160 --> 0:23:16.560