Fireside with Breakneck's Dan Wang

My name is Dan Wong. I spent about six

years living in China between 2017 to

2023, which I felt like I was um

witnessing a pretty momentous time. I

was working at a um investment research

firm as a technology analyst. Um going

through the first trade war that quickly

morphed into a tech war, seeing how a

lot of uh China's tech companies had

been growing in capacity. um and uh

living through some of China's greater

repressiveness and living through the

entirety of zero COVID in China as well.

Afterwards, I became a fellow at the

Yale Law School. uh and I decided to

write this book um break neck uh China's

quest engineer the future which I wanted

to do um to move away from these 19th

century political science terms like

socialist or capitalist or neoliberal

really to try to understand the

competition between the US and China

going forward and my contribution here

is to uh think a little bit about China

as a country I call the engineering

state because at various points the

entirety of the senior leader leadership

had degrees in engineering. Um so they

treat the physical environment as an

engineering project. They build um giant

bridges, highspeed rail, hyperscalers,

homes and whatever it is as the solution

to absolutely everything. Um they treat

the economy as an engineering project.

Uh I also lived through some of CDP's

efforts to crush the real estate sector

and crush a lot of consumer internet

companies as well to reorient a lot of

smart people into working in you know

semiconductors or uh aviation or

satellites more strategic technologies

instead. Um and uh finally I uh think

about China as an engineering state

because they're also fundamentally

social engineers. I spent a lot of time

thinking about the one child policy as

well as zero COVID in which the number

is right there in the name. There's no

ambiguity about what these policies

could possibly mean. I contrast that

with um this country which I call the

lawyerly society because it seems like

every um everyone who aspires to be

president has to first go to Yale Law

School. Um the issue with lawyers is

that uh they're really good at blocking

things. Um so you know they are very

good at obstruction. um they um the

issue is that in the US uh you don't

have stupid ideas like the one child

policy you also don't have um functional

infrastructure I would say almost

anywhere my my last point on this is

that um you know if we are ever thinking

about um something like taking the train

for example from uh New York City to

Washington DC um the acceler is

reasonably fast um but it is uh really

just kind of super wobbly um a month ago

I went to go speak at the abundance

conference. I took the train from New

York City to DC and I got really excited

that there was going to be a new class

of Excella. There was a new story here

that there will be new Excella trains.

Um and when I actually read the story,

it turns out that the new acceler trains

will be something like 11 minutes slower

than the present Excella trains. Um and

so, you know, this is um just at a first

approximation, the US is moving slower

and slower yearbyear. Does not seem uh

super impressive. And what I would

really like is for us to move faster

instead.

Yeah, that was a great introduction. You

already touched upon the lawyerly versus

the engineering society and I think that

theme kind of continues across many

examples. I think uh you've given like

projects um co you've talked about zero

co one child the the railway networks

contrasting on both ones. Um if you had

to pick out one favorite example on each

side which kind of like highlights this

difference like to like you know extreme

extreme measures. Yeah.

>> Yeah. Let me give a more local example,

one example that illustrates um both the

difference between um the US and China.

So um 2008 was an important year for

highspeed rail development in both

countries. In 2008, the voters in

California approved a referendum to

build California highspeed rail meant to

link uh San Francisco with Los Angeles.

Um in 2008, China actually started

construction of their first highspeed

rail line which linked Beijing to

Shanghai. Coincidentally, um when these

lines will were all completed will all

be completed, they're about the same

length. Um all about uh 800 miles

altogether. Um what's the difference?

Well, um the difference is that three

years later, China actually completed

the highspeed rail line between Beijing

and Shanghai at the cost um state media

claims of about $40 billion uh dollars.

And over the next 10 years, um the

Chinese government announced that um

there were the this highspeed rail line

had completed about 1.4 4 billion

passenger trips over the next decade.

What is the status of California

highspeed rail? Uh well, none of it has

been built. Essentially, um 17 years

after the referendum, um none of us will

be able to take highspeed rail. I would

be somewhat surprised if um anyone was

able to take highspeed rail between San

Francisco to um uh Los Angeles three

decades after the voters approved this

referendum. Right now, the costs are

drip drifting um north of $120 billion.

Um and again this is um the first

segment that is meant to connect

Bakersfield and Merced is supposed to

open uh by the year 2030. And so this is

just one of these really stark

differences. And you know something I

find really strange is where is the

outrage among Californians that you know

we had this um plant built so many years

ago. Um still nothing has been built.

Very few heads are rolling. Um and you

know yet this has continued to be just

this national embarrassment for a very

long time.

>> Yeah that's that's a great example. Um,

one of the things I mean I love in the

book is coming from Singapore, uh, every

time I would come for the last few years

to Silicon Valley, um, people talk about

China as China, but in Singapore like we

talk about the cities, we talk about

Chongqing, we talk about Shenzhen and

Kong and and Beijing and stuff. And I

think you've done a great job in the

book highlighting like, you know, how

these cities differ and stuff. Um, I

also love the kind of like the end

personal chapter where you talk about

like your family's kind of movement

here. Um there's a line in that last

chapter which you mentioned the contest

will be won by the country that works

best for the people living in it.

Um the question I think I had was like

is it a zero sum game at the end um

between the nations?

Uh no, it is absolutely not a zero- sum

game. And I uh one of the things I

really firmly believe is that both

countries are uh really skilled at

beating themselves up. Um that both

countries are really good at um creating

all of these national policies which do

not help the people and create actually

all sorts of problems for its own

people. I think that the US and u China

are going to be in competition for a

very long time that um as soon as one

country uh races ahead and is obviously

in some sort of a lead that country will

suffer from overconfidence and hubris

and will make a lot of mistakes and the

other country will be much more

motivated to catch up. So to be a little

bit more concrete about this, um when I

was living in China between 2020 between

2017 to 2023, one of these other big

things that I lived through was

Xinping's tech crackdown which smashed a

lot of big tech companies. Um most well

known of which was um Alibaba's uh uh

Jack's Alibaba as well as an Financial

as well as a lot of the online tutoring

industry. And I think this was a classic

mistake of hubris uh in which Cinping

and the uh start of 2021 decided that

China was on the top of the world and

that the US was a mess that um China had

been able to control COVID without um

really you know and and getting the um

economy really back to life. The US was

being ravaged by COVID. January 6

happened. The US political institutions

not look um really remarkable in um

every single way. And so Cin Ping

overplayed his hand and decided to smack

a lot of tech companies around. And I

think that was a a mistake driven out of

hubris. And so I think the these are the

sort of dynamics in which um it's going

to keep the competition between these

two countries um very much alive and

very much dynamic for a very long time.

And I don't think that um you know

either country will has all of these

amazing structural advantages that is

going to definitely beat the other

country. I think both of them are very

strong. Both of them are very weak and

um I think we're going to have to think

about how to make both these countries

better uh for a very long time.

>> I mean now we are seeing um government

shutdown

uh that's that's still not resolved. Um

there's a line in the book which says

for us

uh you talk about procedure obsessed

left versus a thoughtlessly destructive

right. Of course, there's a lot of

context behind that statement, but

coming from Singapore, you know, we have

a now we have post Lee Kwanu a moderate

middle. Um, is there a middle ground in

US politics now or can we find one? I uh

certainly hope that there um will be a

middle ground um with the US because I

speak as a Canadian um not as a

Singaporean and you know something I

feel about both countries about both the

US and China is that these countries are

um giant they are maddening they are

thrilling and fundamentally both

countries both the US and China are

fundamentally bizarre uh is my view um

and you know sometimes I would drive uh

into Canada I would immediately relax

because Canada just feels much more

tidy. Um but I think this is um also

just one of these great strengths of

both the US and China. Um I think that

Chinese and Americans are actually

fundamentally pretty alike. Um they are

both very pragmatic people. Um they love

to take shortcuts um in order to get to

wealth or to you know better health as

well. That um people have a sense of

hustle. They have a sense of

entrepreneurial dynamism. um they have a

love of the technological sublime which

are these really big projects that

inspire a lot of people something like

the Golden Gate Bridge or something like

the Apollo missions and I um and both of

these countries really believe that they

are great powers superpowers uh and that

if smaller countries like Singapore,

Canada don't get in line that they

really should be pushed around um by um

you know these two much bigger

countries. And I what I would really

love is for both of them to stop beating

themselves up and to start you know

improving themselves. And I find you

know the US at this moment now um very

strange in which you know one party wins

a really narrow majority um in the

electoral college and then they

radically overstep make a lot of people

upset and then there's a whole new

coalition that shapes u in which you

know there's some narrow electoral win

and then they they they overstep again.

And so, you know, I would love for the

US to be able to break out of this

pattern. Um, actually deliver to thing

um to people things that they need. You

know, right now we have a lot of um big

cities uh which are not building enough

housing for people. Um that you know uh

San Francisco, New York City, Boston,

these are all cities that require a lot

more housing. That the transit system in

all of these places are very deeply

broken. I spend a little bit more time

in New York than I do in SF. And the New

York subway though it works reasonably

well. It's just this screechingly loud

metallic um machine that moves over. And

this is um and at least it's better than

BART who's um you know which is the the

the subway systems here are are not

working all that well. I think the US

manufacturing base um is in poor shape.

It has substantially rusted from top to

bottom. Um if we take a look at a lot of

these apex manufacturers uh in the US

whether that's a company like Intel or

that's a company like Boeing or Detroit

automakers and even Tesla is uh

suffering uh right now you know the US

has really lost a lot of manufacturing

capabilities lost a lot of its process

knowledge and this is all before we need

to build a lot more clean technology

namely solar wind nuclear uh

transmission lines in order to achieve

the green transition and so right now

the US is in um you know I would say not

great shape in all sorts of ways and I

would really like for us to you know fix

all of these giant problems that we

have.

>> Yeah. I mean you touched on all the kind

of manufacturing issues right now and I

think in the book you've mentioned u it

as I love the phrase supply side

progressivism. Um what we are seeing

like across you know US, Japan, uh

Singapore, Asia, India uh is you're

seeing leaders who have emerged who

champion this concept like whether

that's make in India in India or where

we seeing now in Japan emerge which is

also pushing a lot of that. Um do you

think that this is supply side

progressivism is the right way for all

countries to recover what has been lost?

I certainly think that um supply side

progressivism which is a term from um

Ezra Klein is part of the answer. Um and

um this term has somewhat evolved to the

abundance agenda and um this is um Ezra

Klein and Derek Thompson's excellent

book which came out about six months ago

um and uh which I recommend to everyone

here that and I am um to to make myself

clear I'm a I'm a card carrying member

of abundance. I'm an a partisan for

abundance. I spoke at the abundance

conference and I think that it really

has a lot of answers for saying that we

need to build a lot more. Um we need to

be able to you know deliver a lot of the

things that people need and we need to

improve the capacity of the government

whether that's the federal government um

or it's the local government in order to

make things a lot better for people

because otherwise we get these

absurdities like you know this

longunning um sore of California

highspeed rail which again I expect will

not deliver any passengers um between

San Francisco and California probably my

estimation is 30 years after completion

and we are getting um you know something

like the Excel trains uh which is moving

slower and slower uh year by year,

decade by decade, we're getting better

phone seats on these um on these trains,

but then the actual train experience is

still pretty wobbly and really really

slow. And so I think that um you know

something that makes me pretty

optimistic about the US is that I think

there's a deep recognition that things

have gone off track in all sorts of ways

that um it is the government is not

really able to deliver that our

manufacturing base has substantially

rusted and so you know there's a lot of

vibrant debate about what should be done

and I am just hopeful that you know in

forums like this um out in the outside

world that we are able to you know solve

a lot of these problems after we have um

you know debated about them because now

it's time to execute and really improve

a lot of our our technology needs.

>> That's awesome. Um I I want to throw it

out to the audience and like I know

there's engineers, there's investors,

there's folks, scientists. So please uh

and also like we're giving out a sign

copy book for every question asked. So

there you go.

Suddenly see more hands going off,

right? Um, so I will admit I haven't

read your book yet, but um, what's your

take on uh, the Chinese investment into

semiconductor technology through

companies like SMIC and a lot of the new

AI chips that are coming out now from

companies like Alibaba and Tencent and I

know there's a bunch of new startups

too. uh since it seems like deepseek and

the Chinese like open AI uh not like

sorry open source AI not open AI uh

market is pivoting towards those in the

wake of the Chinese like blocks on new

video chip sales.

>> Yeah. Um let me answer a slightly more

general question about um China and AI.

Um I' I've just been commissioned by the

Financial Times to write an op-ed about

you know in what scenario could it be

the case that China actually u beats a

marathon on AI? what whatever that

means. Um I don't think that's um you

know what if they win how how might they

win? How might they race to AGI more

quickly than um the US? And I think that

um first of all, I don't necessarily buy

this case, but let me just paint the

case of you know, I think it is

definitely the case that um the US has

all the compute. It has a lot of talent.

Um it has a lot of the best reasoning

models. But my case for that that China

might pull ahead is that um right now

China has about twice the electrical

capacity of the United States and China

is building far more electrical

capacity. So, China will build about 500

gawatts of solar this year. Um, the US

will build about 50. There's 33 nuclear

um power plants under construction in

China. There's zero under construction

in the US. And once um you know power

constraints become the biting

constraint, then China will actually be

able to outrace this. A lot of the uh

top researchers at um um labs like uh

Meta's lab, you know, they're publicly

disclosed um people are um researchers.

many of them attended Chinese

universities and I assume many of them

are Chinese nationals and if you know

the US isn't able to solve its problems

if the US is really interested in

driving out talented researchers from

China from Singapore from India wherever

else then you know a lot of this talent

might um go to China and build more

Chinese products and I also want to

imagine that um it's possible that there

is this world in which you know the

Chinese are able to get much better at

manufacturing because they are already

much better at manufacturing and AI

really accelerates them. Whereas the US

is much more of a um you know

servicesdriven economy. We're much more

of a healthcare driven economy. What are

we going to be using AI for? Well, maybe

I all of the Americans will get much

better at PowerPoint. Whereas the

America whereas the Chinese are just

going to get even better at making

iPhones, making munitions, making

drones. So I I want to say that you know

it it's the physical world that still

really matters and let's just not focus

all entirely on PowerPoint. Please

>> uh you mentioned earlier

situation

bills need to get approved by the house.

I guess my question is do you think the

framers were wrong?

>> Uh I don't think that the framers were

wrong but I also don't think that um the

US uh is always fated to be a country

that is unable to build um almost

anything because the US used to be a

protoengineering state itself. Uh the US

certainly built a lot. Um the US built

um in the 19th century canal systems,

railway systems, skyscrapers in Chicago

and Manhattan and um in the 20th century

it built highways, built the Manhattan

project, the Apollo missions. Uh and so

that all has been very impressive and I

think the critical shift um has been

that throughout the 1960s a lot of

Americans um really reacted against the

sins and the problems of America's

engineering state in which we had urban

planners like Robert Moses ram through

too many highways in places like New

York City uh and um you know the US

Department of Agriculture was spraying

pesticides and DDT absolutely everywhere

and there was a correct and necessary

reaction against And so um a lot of uh

students at the Yale Law School, Harvard

Law School, other places really decided

to sue the government into oblivion.

They said that the government um you

know was the creator of all of these

problems. And it fit in very well with

Ronald Reagan's slogan that government

is the problem, not the solution. And so

you had you know both the lawyers as

well as Ronald Reagan saying exactly the

same thing which is that we need to

restrain the government. And I think

that too much of the culture in the US

is still oriented towards solving the

problems of the 1960s. And I think that

we don't have exactly the same problems

today. Why don't we solve the problems

of today, which is that we need much

more housing. We need to build things

that like, you know, let's think about

something like Vaness Avenue, which took

about 20 years to add a bus lane, which

it's not simply a matter of repainting

the road. There is something more to it

than that, but you know, it should take

20 years for a road to add a bus lane.

Let's solve these problems. to today and

let's um you know build all the

infrastructure that we need. Next

question please. So one thing to think

about at least my in my opinion is that

we have a room of startups that want to

get funding. They want to post about

their innovations. If they get a

contract they're going to post about it.

You know look at me look at look at what

I did.

It it seems to me that if you were to

look at Chinese innovation and the

relationship between the government and

industry is entirely different. You have

groups like the 25th research institute

that are not only capable of research

and development but also productizing

large programs of record for use by the

state. So what we we are not going to

change right the the US government you

know DARPA is a nice idea but they're an

idea factory they don't productize

anything it's up to industry to actually

innovate and build and then deploy. So

in the long term as we see these two

different dynamics which dynamic do you

think is going to win out? Is it the

state sponsored one where everyone is

collectively trying to work together for

a

productization and P or is it the

industry base where we all talk about

everything that we do and publicize

everywhere?

>> I I want to push back slightly against

this premise um especially this um idea

that um the US isn't going to change. I

think the US must change and I think

every country um needs to be able to

change and I think that if you if any

country refuses to change um to

self-reform to develop that means that

you're stuck and I think that you know

that's not what the competition demands

and so I would really like um for the US

to you know figure out government

capacity and to also build up the

manufacturing base and for for me the

critical problem um with the US

manufacturing base is that um the US

right now has about 12 million

manufacturing workers it's gone down

very substantially over the last few

decades and um you know that trend uh

will continue because um right now so

far the tariffs continue to

de-industrialize America. China has a

manufacturing worker base of about 70

million people and they continue to go

from strength to strength. Why is that?

Well, I think it is mostly because the

Chinese understand technology as you

know um more than just the tooling and

the equipment. So technology is not just

the tooling and the equipment which in a

kitchen analogy is like the pots, pans

and the stove something to that people

to use for cooking. Technology is also

written instruction, patents and

blueprints uh which are used or

something like a recipe which we we we

we use to figure out how to do stuff. I

think the most important part of um

technology is process knowledge which is

also referred to as you know tacet

knowledge, industrial experience just

the practice of actually doing these

sort of things. And I think this is

something that China has a lot of

because imagine that you give someone

who's never cooked a day in his life,

the most, you know, well equipped

kitchen as well as the most exquisite

recipe. We can't be sure that they're

able to um, you know, cook something as

simple as frying an egg. So that's

something that China has just a lot of

process knowledge because it's the site

of a lot of factory workers who are

solving three new problems a day before

breakfast. This is where the practice

is. this where the communities of

engineering practice are and they are

really trying to get better at doing

these sort of things. This is something

that I think a lot of American

manufacturing um companies don't really

have the ability to tap into. So I don't

see it so much as a you know government

problem industrial problem. I think that

they they really have to work together

in order to build up the manufacturing

base such that we are able to figure out

our logistics, figure out our um public

infrastructure, figuring out our power

supply and then also build much better

process knowledge. This is the place

that I really want to start.

So very expensive question that I'm ask

the United States and China are just

running at each other.

Do you think there's any offs that could

be available to war in these economic

ties together that might actually

>> um I believe that war between the US and

China is uh not inevitable. It is not

necessary and maybe even growing less

likely um by the day. I mean, first of

all, I think this is something that all

of us should be spending a little bit of

time thinking about because if these two

great superpowers ever meet on the

battlefield, I think it will be pretty

apocalyptic. World War I produced

something like a few million deaths. U

World War II produced something like a

few tens of millions of deaths. We don't

want to have an order of magnitude um

increase um yet again. And so we should

all be thinking about this. Um but you

know, right now what we have is um

President Donald Trump appears to be the

most pro-China member of the White

House. Um he is always talking about

what a great friend he has in um top

leader Sin Ping. It's a real bromance

over there. You know, I've seen um that

Donald Trump called Tin Ping um so

smart, brilliant, everything nearly

perfect, great head of hair. Um you

know, and this is just like a a really

uh bizarre thing to for Trump to claim.

And so, you know, I think that um you

know, more likely than war um perhaps to

get, you know, a different scenario

which I think would be um you know, very

strange as well, which is that President

Trump decides to tie up Taiwan in a bow

and simply gift it to his friend um CDP.

And so, you know, I think just right now

we are living in a really weird and odd

time just because of how erratic Trump

can be.

>> Maybe you can take one or two more

questions.

>> Hey Dan, thanks for your remarks. My

name is Don Ely. I run a space

technology startup. I wanted to ask you

about taking some if you were to

recommend a posture that the US takes

with respect to uh AI and the great

power competition of China. You had

mentioned uh the frame of China being a

society of engineers and the US being

one of lawyers. Recently there's a lot

of focus on AI safety here in

California. We saw the bill recently

passed. Doesn't it seem like there would

be these broader forces that seem like

there's this mutually assured

destruction when it comes to pursuing AI

and what do you think the US uh posture

should be with respect to that? Um I

think that there maybe is mutually

assured destruction with AI, but I think

that um you have to assume that AI is

going to be pretty destructive and I

feel like you know there is a lot of

this attitude that AI is going to you

know completely reorder the world and um

I'm I'm a little bit skeptical of you

know um things like some things like

super intelligence. I'm a little bit

skeptical of, you know, this idea that

um, you know, of something like decisive

strategic advantage in which the AI

becomes much better all on their own.

Um, and, you know, it matters within

minutes of achieving something like

super intelligence. That doesn't um, fit

quite right with me. And what I um

certainly would love is for the US

government and the Chinese government to

speak more regularly about all sorts of

issues um about military conflict, about

AI, about climate change, um about you

know economic development. Um I think it

certainly would be more positive to have

all sorts of communication. I guess we

have one final question left. Uh yeah,

so a question relating to something you

said earlier about the energy

infrastructure in China versus the

United States. The problem in the US is

the mission lines. We do not have good

transmission systems here. But that's

being addressed by the fact that there's

about 30 companies funded most of them

by a DOE SMR small modular reactors and

that's going to end up producing

enormous amounts of power but is

probably 5 to 10 years away. What is

China doing for in the SMR market and

how are they competing because that will

dramatically change exponentially the

numbers. Um I hope that the US is able

to solve its energy problems in 5 to 10

years. I mean as you mentioned with

something like um energy lines you know

there's something like you know a few um

something like I don't know um I I have

this number in my book but something

like 15,000 megawatts of power lines

that are being awaiting approval

awaiting licensing. Um and I think that

is you know just there's so much under

licensing and they're just unable to

build. Um but you know something like

nuclear power I wonder if um you know we

are able to get all of these um SMR

technologies really u mature really

established really cross every tea and

dot every eye to the satisfaction of

regulators because the national the

nuclear regulatory commission has not

been moved very fast at approving new

facilities because you again right now

the US has zero nuclear power plants

under construction and China has 30.

Now, maybe all of that um is going to be

able to change, but I think China is

moving aggressively on not just nuclear,

but also solar, wind, um coal,

transmission lines. They're trying to

build all of it, and they have much more

of an all of the above strategy. And I

certainly would hope that, you know, we

can change some of that through

technology here, but I still see that

there's going to be a lot of regulatory

attitudes, a lot of political attitudes.

I'm not sure yet if nuclear is

universally popular everywhere among all

Americans, but if a lot of um nimbies

will change their um you know stances to

take y anytime soon. So I think that the

political system I suspect the lawyers

will still be a very substantial

restraint with that. Thank you very much

and looking forward to the next panel.

>> Yeah, thanks everyone. Thanks for all

the questions. Appreciate it.

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