Kyle Chan on the Future of US-China Competition - #94

I know this is sort of like a, a hackney term now these days, but I really believe

that the areas that China is really focused on are the building blocks for the

next generation of technologies, emerging sectors that are gonna be not only sort of

like the economic growth engines, the job engines of the future, but sort of broader

progress is gonna be built on that.

You know, AI, robotics, you know, all that, all the stuff

that, that we've all heard about.

But I want to bring attention to some of those things too.

It's not just today, it's like the trend going forward that, that

people need to pay attention to.

Welcome to Manifold.

My guest today is Kyle Chan.

He is a postdoctoral researcher at Princeton University.

He is interested in many of the themes that we discuss on this

show, in particular US China technology competition, AI,

globalization multipolarity.

Kyle, welcome to the show.

Great to be here.

Yeah, it's great to have you.

Uh, as I was just saying before we started recording, I've read a lot of your stuff.

Two things I'd like to go over in some depth is the opinion piece you

had in the New York Times recently and also, something on your

Substack about industrial maximalism.

And

Oh yeah.

A theorist at Beijing University named, I think his name is Lu Fang.

And, those are two things I'd like to get into, further on in the podcast.

But, the way I like to start my podcast is to learn a little

bit more about you as a person.

So, I know that you studied economics at the University of Chicago, and then you

did your PhD at Princeton in sociology.

Maybe tell us about your, the development of your intellectual interests since,

from college, to where you are today.

Yeah.

So one of the longstanding questions that drives my research that actually

has gotten me motivated, like for now, I guess almost decades,

is, the question of development.

Actually, I. So it's funny 'cause now I talk a lot about industrial policy

in China, even in the US Europe, I mean a lot of countries, India.

And so it's like a big topic now, you know, how can the state, or can

the state even do something to help.

Move along industrial development.

But this older question, I think is still like the biggest question.

I mean, every, everyone says this about their field, right?

But I think this is the biggest question out there.

You know, why are some countries rich?

Why are some countries poor?

Why is that you're, if you were born in, I don't know, you know, some, some

country in East Africa or in South Asia or in North America, your life is just.

So deeply shaped by just that place of birth and country of birth.

And yeah, and it's, it's a puzzling question because it transcends, you know,

fields economics is where I began, and I found a lot of the tools there useful, and

especially a lot of the statistical tools, which are now kind of standards across

the social sciences, that's a good thing.

but I did find that the questions economists asked were

getting narrow and narrower.

so, you know, I'm always, I'm always up for a good RCT to, to like rigorously

test a hypothesis, but I felt like a lot of the biggest variables

were not even being considered.

And some of those are the hardest to, you know, measure, quantify to nail down.

And so I just wanted to, you know, make that shift over to sociology,

which, you know, I, I like to think of it as like the big tent discipline

in terms of methodology and the types of questions you can ask.

And so, yeah, you can study development.

By, interviewing government officials, at a organization

that, that deals with development.

You can, you can use corporate financial data.

You can, you know, do sort of all these different things.

You can mix it all together, and just try to present sort of the

strongest case you can, for whatever theory you're, you're arguing.

So that's why I, I gradually found myself being drawn to sociology and

the questions still remain the same.

I mean, now the funny thing is, you know, questions that I was asking

about China, which I think is still also the biggest story in development.

So, if I think development's the biggest question, China's the biggest case, and

it's still, I still think to this day, still begging to be explained, you know,

how did this country, transform itself?

Basically in a, in a generation, in, in a single lifetime, so dramatically and

have such huge con consequences for the rest of the world that we're, we're,

we're sort of dealing with right now.

So, yeah, to me, you know, these were such big things and, sociology, I, I started

to kind of, you know, do field work.

So I spent, several years doing field work actually in both China and India.

The comparative thing was really helpful, because honestly, the first

time I traveled to China as an adult, I went to Beijing, like, it was like

2005, 2006 or something as an adult.

And I, I was like, this place is kind of chaotic.

It's kind of like all over the place.

I remember getting, you know, a bunch of, you know, sort of,

hacked together electronics on the cheap, things like that.

And that was kind of like my association of China.

And then, you know, I traveled to India.

They have their own different issues, their own different strengths, you

know, it just opened the world to me.

So that comparative lens has also been very, important to me.

But, but yeah, that's sort of like the, the longer arc, this,

this question of, you know, how do countries become rich basically?

How do they get all the things that come along with that better healthcare,

better, better education, all the things that I think really matter still.

your dissertation work was on development of railways and comparing India to China.

Is that correct?

that's right.

Yeah.

Yeah.

Yeah.

So that was, that was really fun in part because I gotta take a

lot of trains in both countries.

And, you know, my question was like, how did China build this high speed

rail system that, is now larger than the rest of the world's, you

know, bullet train systems combined, in such a short period of time.

And India actually, you know.

As late as like the nineties, Indian railways was sort of on par in

scale and technical sophistication with a lot of Chinese railways.

and, you know, people I talk to who are, like in the international

development world who have experienced working in both countries, they

tell me that it's not the engineers.

The engineers are, extremely talented in India.

In fact, in some ways they had, Longer standing access to English-based

resources that, you know, sort of global industry standards.

So that wasn't the issue.

There was something else about why China could build this high-speed rail

network and why India struggled to kind of modernize its own, very, very used,

very useful and economically important and socially important railway system.

And yet somehow, building a a single rail, a single high-speed rail line

was a, was a monumental undertaking.

I mean, it would be for any country, frankly.

so in some ways the, the real sort of outlier is, is China's

case, but using India sort of as a foil to understand that.

And so, yeah, that, that whole project was trying to understand,

you know, at a sort of, I call it like the meso level of analysis.

Cause I think there's a lot of people who look at like what the top leaders

are thinking in any country, whether the Prime minister or the president or the,

you know, what is Xi Jinping thinking?

That's fine.

and they're great people who, who can like, read the tea leaves on that.

And then there's some people who focus on the.

Really nitty gritty, like bureaucrat level or at the, you know, single company level.

And that can be very fascinating too.

But I kind of look at the meza level organizational structures

across the bureaucracy.

looking at, you know, at a time, India and China were two of the last

countries with ministries of railways.

So looking at how those were organized and why, you know, on the surface

they look the same, but when you start to peak under the hood, the whole

structure is completely different.

I mean, China system ironically, was less top down.

In a way a lot of the responsibility was sort of, devolved or delegated down

to these like project corporations.

And there, basically, I mean, these were tiny teams relative

to the size of these projects.

I mean, you're talking about sort of like multi-billion

dollar high speed rail projects.

Basically run by a hundred or less people ultimately.

And what that did is that concentrated a lot of that power and responsibility

into like, you know, again, not the very top, but still a core group

that was, you know, living there, breathing this project all the time.

And in the Indian case, it was much more of this sort of typical matrix structure

with cross cutting, lines of authority.

You know, basically I can understand the rationale for why

they had it the way they had.

you have different functional divisions overlayed it on top of sort of

regional structures, but ultimately, it just caused a lot of confusion in

terms of who is in charge, who could finally, who can make the final say.

And a lot of these projects are about.

Trade-offs right?

You need to make a decision.

You are either gonna be on budget or you're gonna go over budget, but

you can actually hit your schedules.

So, you know, somewhere along the lines, someone's, someone's gonna make

the call and someone also has to be responsible when something goes wrong.

So that's, again, going back to the whole like, mele level structure,

like that to me was so fascinating.

So much happening at that level of

analysis.

So a after years of what I assume, included field work and also, you

know, lot reading lots of papers and studying lots of other people's work.

Do you, have you reached a conclusion for why the developed

differently than the Indian one?

Yeah.

Yeah.

So the, the theory I offer is, is the structure of the

bureaucracies in the two countries.

Yeah.

That, China sort of reformed its system from a system that looked more like

India's more top-down, more centralized, to this one that was based around, yeah.

On the one hand, these railway project companies, these sort of specialized

state owned e nterprises that were formed to manage pro railway projects.

And actually a lot of this was learned from, the Japanese.

There's actually a whole history there of like, you know, going back to the

seventies and eighties, learning from, Japanese project management techniques.

I hope to actually do one a project one day, looking at that historically.

But, but being able to sort of like have these nodes, that's, that's

sort of the argument that I make.

The sort of nodal structure, there's key nodes in the bureaucratic

organizational structure where power and responsibility are concentrated and

that that's how you get things done.

Whereas for India, I, I, I argue that it's more diffuse, that you have all

these cross cutting structures that a lot of, a lot of very mundane,

decisions are kicked up all the way to the top because nobody feels like

they can take, take responsibility.

You know?

And you know, to be fair, there are many parts of the Chinese bureaucracy elsewhere

that still have some of these same issues.

So these are not like purely Chinese or purely Indian, but focusing on the

railway bureaucracies in particular gave me that sort of leverage to control

for, you know, these are two countries with state owned railway systems and

you know, yada yada, all, all these things are observable and controlled.

And then, but this, this is something that's different.

So, yeah, that, that was sort of the overarching takeaway from

that.

I, I'm curious whether you've read any of Glen Luke's work.

Are you familiar with Glen?

It's pretty big on.

of course.

Yeah.

He's done really in depth studies of the financial, uh,

viability the Chinese rail system.

Do you have any thoughts on that?

Well, just that, some of it is not as clear to me.

I actually find Glen's analysis very interesting.

Yeah, because, but, but overall, my, my take in the whole, financial,

sustainability question is that I, I do think that a lot of, A lot

of sort of Western analysts are missing the forest for the trees

when it comes to understanding this.

I mean, this is not a project investment that's supposed to

generate an IRR on the project itself.

That's not the main goal.

he goal is to build something that will have broad economic

spillovers across the entire country.

And, and, and that's hard to measure.

And there's been very creative economists that have tried to use sort of spatial

models, land value appreciation to try to capture some of that.

And I, I look at their work a lot, and find it very useful.

But at the end of the day, yeah, it, it's just, it's a different approach

you have to take rather than focusing strictly on, okay, is this single project

in a return to profit or is the whole railway system gonna return to profit?

You gotta think about like, this is a, this is an investment in

the entire country, essentially.

And, and, and there you can still, you can solve waste for sure.

That's not to say that it, it all worked out.

but to think about the whole system and it's broader impact,

I think is really crucial.

Now after you finished your PhD and you became a postdoctoral researcher, did

you, uh, sort of consciously out your, um, that you would you would be interested in?

Yeah yeah yeah exactly.

So I started to realize that there's a lot of overlap between infrastructure

development and industrial policy that, both entail, long-term investments and

have massive coordination problems.

And there in some cases, the state can step in and help, in some way.

and, and these are also two areas where China has just been very,

very good at, at doing what it does.

so I see that, some of the strengths and some of the issues, come up in both.

That is, um, you know, sort of like airing on the side of investing too

much, focusing on scale and speed, maybe going a bit overboard when it

comes to, replication or redundancies.

and, uh, an appetite for risk taking, uh, is one way to characterize it, or

waste is another way to characterize it.

But, but both infrastructure and industrial policy, I saw

that similar patterns, even similar institutions involved.

so, but of course, you know, a, a key difference is just that, the

industrial policy was across, more sectors and involved this combination

of, in, in many cases, private sector, private company, you know, sort of

shaping, shaping markets basically.

So I found that that to be really

interesting.

You know, this, this topic of industrial policy and whether it can work or not.

You know, I'm much older than you and so I've seen this play out

over a really long period of time.

You know, with, you know, the argument shifting, you know,

quite a bit over multiple decades.

And I think right now I think you're well positioned because I think China is

providing an example where it seems like them industrial policy has worked out.

And I think for the last few decades, people in the West have been, or at

least an American, maybe American economists have, have been really

conditioned to think that, uh, that's just a recipe disaster, that

governments can't really execute properly and can't get things done.

And so maybe the, the pendulum will start swinging back now.

Yeah, I think so.

I think.

China's both, an interesting example that has sort of galvanized other

people's interests and maybe caused, you know, us in the US or elsewhere

to question our assumptions about, you know, oh, the state intervention is

always gonna be, always gonna backfire.

The, the other thing is China itself is a factor prompting a lot of countries

to reconsider industrial policy.

You know, you know, now we have rare, you know, all the news, but you can pick

sort of many different industries where, China's very strong or very dominant.

And, and there are questions about how to stay competitive

in a world with China in it.

And I think maybe our attitude towards industrial policy might be different

if there wasn't a China type player in the sy in the global system.

write a paper or you're formulating, you know, you're, you're, you're, you're

working on some your research and, and you're trying to come to a conclusion or

reach a level in the argumentation where you think, okay, this will be convincing

to, target set of, other researchers.

Who are those people?

Are they sociologists?

Are they at the Kennedy School of Government?

Are they economists?

Who do?

Who do you think of as evaluating the arguments that

you're making in your papers?

Yeah, that's a really interesting question because I have a number

of different audiences in mind.

Some are the people who also study Chinese industrial policy

and China's political economy.

And especially if I'm writing something more, I. sort of academic, then I

would have them in mind, as, as well as other sort of think tank researchers

as well, who, who focus on those areas.

But I ideally, actually I also have in mind like a more general audience like

Americans broadly, or Americans who sort of care about what's happening in the

world or care about what's happening, you know, even in their own backyards.

Because I just, I see a lot of like domestic issues are tied up with, US China

relations or what, what China's doing or what the US is doing vis-a-vis China.

And yeah, that, that's why I, what I try to do in many cases, is, is try

to use language that is not always so specialized for like China experts, or

people who are sort of like spending their, you know, 24 7 in this area.

So yeah.

And, and that's, that's part of like this New York Times piece.

I, I just, I realized that there's actually a lot of, I.

Knowledge and understanding that's kind of locked away by, um, scholars and

researchers who have been kind of like interested in this stuff for a long time.

But just talking to each other and, you know, every time I talk with

'em, I'm always reminded like there is just incredibly, incredibly deep

expertise people who have been doing field work or traveling to China

or studying China in some fashion for, for, for many, many years.

But there's not, there's a huge gap between what they know and what.

Folks in DC know what, folks in Silicon Valley know.

It's changing.

It's definitely changing for sure, but just the broader sort of American business

and investment community writ large.

so yeah, trying to kind of bridge that gap, I think is, I didn't

realize how big a gap there was.

I had been so long sort of like hanging out with my other China scholars, that

I just sort of took a lot of these for granted and realized like, oh wow,

you know, not only is there a, a, a lack of knowledge or maybe even sort

of misunderstanding, but these have really big policy consequences if you

have a a, you know, not a, not a fully informed view or a misguided view of

like how China works that can lead to really, really, bad policy decisions.

So that's also what I've, what I've been concerned about lately.

which I, I've, I've talked to various guests about at length is

the, the AI and chip competition, but may maybe we'll get there later

Oh

yeah.

the podcast definitely feel your pain because, uh, I feel like I'm position

where the people that consume my content might be academic economists or think

tank people, or actually, you know, business people that compete with Chinese

companies or actually operate in China.

So there's, there's such a broad range of understanding, uh, you know, ranging

from people who think they, you know, they actually have a you know, a social

score, social credit program to, you know, people who actually, you know, run

factories themselves and live in China.

So, such a broad gamut.

Um, Times piece, maybe we can talk about that a little bit.

So an opinion piece and, uh, I now it's got an interesting title and often

the title is by the editor, not by the author, so I'm gonna ask you about that.

The title of the piece, it's a guest essay in the New York Times opinion

section, and the title is, in the Future China will be Dominant.

The US will be Irrelevant Now, pretty strong title.

Tell me where that title came from.

I can tell you it did not come from me.

And, yeah, like I, I have to be careful what I say about that title,

but let's just say I was pretty shocked when, when I saw that and I saw it

on the day that the piece came out.

So,

did you get, specifically because of the title?

It's funny, I got like a, like a tsunami of like emails and messages

and responses to that piece.

I mean, I was really surprised 'cause I thought I. Again, this is sort of like

me coming from China research world.

I was like, this is probably not surprising to a lot of people.

Both what I'm saying about China and what I'm saying about the us I

mean, I'm not saying anything so new.

And when I talked to my fellow China experts and China scholars,

they're like, oh yeah, yeah.

I mean, that kind of put together a lot of stuff that we've been studying.

But yeah, I was like blown away by the reception and yeah, I could

tell the difference between people who just got stuck on the headline

versus people who read the piece.

And then even people who read the piece, I'm still like, that's not my best work.

My, my real work is something else.

Like, read read my other writing or read my other research.

Cause 'cause this is sort of just like an overview.

you know, I get into more like what I consider to be

more real analysis elsewhere.

But, but yeah, that, that has been, that has been quite a

journey.

Now since that article came out, are you now officially A CCP shill?

Yeah, it's so funny.

I got called all sorts of things and you know, I think both of us are pretty

active on Twitter and, and or x and, you know, you developed thick skin and yeah.

I even, even then after that piece, I still got like, some, some new ones.

Yeah.

CCP, shill on the one hand, but then also some people who really didn't

like, you know, my u my use of the word like China as a threat or something,

or you know, I, I get, I get a lot of flack from both sides, I gotta say.

So,

You can Get it from both sides.

So you know, even if you say they're a competitor.

Um, you people who say, and I think with reason, uh, they might

ask, well, why, why do you have to think of them as a competitor?

Why we couldn't, we cooperate?

And so you, you're gonna get criticized from both sides usually.

Right.

Yeah.

Yeah.

It's just part of the game.

felt that piece was totally reality based.

So in other words, you, you, you mentioned a lot of things in the piece, which I

think for people who are really following the US, China, you know, shall we say

competition these are key indicators.

Like where are, where is the EV industry, where is renewable energy?

Where is, where are chips?

You know, where ship manufacture, ship building, you know, all these things.

I think for people who are serious and follow the numbers.

Nothing you said in the piece was particularly controversial or even

necessarily new to, to people who are deep experts in the field.

But I think the average New York Times reader probably in aggregate,

it was a shocking article.

Like for the people who actually read it all the way through and thought

about it, I would tell over 50%, maybe 80% of the people who read it

were a little bit shocked by the end.

What what?

What do you think?

Yeah.

Yeah yeah.

I, I think so, and I, I did mean for it to be a little shocking.

I kind of wanted to cut through the noise a bit and connect the dots for

people because yeah, I, I think, and, and I was talking to the editor about

this that I worked with, like, there are a lot of stories about, there you

get a story about BYD or you get a story about Chinese EVs, or you get

a story about like deep seek, right?

So you have like the whole deep seek moment and people are focused on like

that particular company sometimes.

And if you're, if they're more sophisticated, they might kind

of see the industry as changing and China moving, moving up the

ladder in that particular industry.

but I just hadn't heard that many people in sort of like

mainstream media talking about.

All of these different sectors, all these different scientific

fields as well, sort of backing.

And, and that's a, that's a big story, uh, as well that I know

you've actually written about.

So there's just these bigger trends happening, behind each

of these individual sectors.

And so, yeah, like, you know, I'm sure some of the people who, who you speak

with and, and probably who listen to this, to this podcast, you know, they,

they might be, deep in the weeds on like biotech in China and being like.

Wow, there's some big changes happening here.

Some of the oncology, treatments are, are really, taking off.

the clinical, the pace of clinical trials is really incredible.

But they might not have a view into the shipbuilding world.

or it might be very sort of light.

And so to kind of put it all together and just be like, look, this is,

this is not just a single sector or a single industry or a single company.

It's not just DeepSeek or BYD or you know, any of these ones

that, that make the headlines.

It's a much, much broader pattern.

And that's why we need to wake up.

Like, you know, we can't just be like, well, you know, we'll,

we'll, we'll concede that one.

Solar panels.

Sure.

You know, we who, who need, you know, you, you can make cheap solar panels, whatever.

but.

Like a lot of these, and especially the point about the industries of the future,

I know this is sort of like a, a hackney term now these days, but I really believe

that the areas that China is really focused on are the building blocks for the

next generation of technologies, emerging sectors that are gonna be not only sort of

like the economic growth engines, the job engines of the future, but sort of broader

progress is gonna be built on that.

You know, AI, robotics, you know, all that, all the stuff

that, that we've all heard about.

But I want to bring attention to some of those things too.

It's not just today, it's like the trend going forward that, that

people need to pay attention to.

Yeah, you know, I think a moderately competent government, you don't

have to be super duper competent.

You're government officials, but if you're moderately competent and you

listen to area experts, it's not that hard to formulate a kind of China

2025 plan where, you know, you might compare a few different areas and

say, which of these should we put more weight on or more resources behind?

Because they will, as you say, be the building blocks for the future.

It's, it's not that hard, I think, for them to like pick the right ones.

Um, what, unique about China, and this is something I think both you

and I have written about, is, is, you know, there, there are a few

factors which, uh, affect verticals.

So you have what the surprising thing is, as you said there, you have all

these different verticals where if you were able to go into the weeds in each

of them and determine what, where is us versus China competitiveness in this

particular vertical of like humanoid robotics or self-driving cars or, um,

cancer whatever it is, you would see them advancing across all of the, almost

all of them simultaneously, very fast.

And, and the factors that underlie that are one human capital, they have just,

uh, you know, extremely population of

young and engineers.

Um.

They sort of have their act together at the government level.

Like I just said, the government can maybe not pick individual

winners, but they, but they do know what areas to pump resources into.

And then third, they know enough to get out of the way and let actual

market forces determine which companies actually win in the space.

So if the, if the companies, if the tion somewhat fair and different regions,

different cities have their own individual companies, car manufacturers for

instance, that have to actually compete in the, the, the, the, entire domestic

marketing globally, then like the, you know, quality will rise to the top.

And so if, if you have those three factors, then you can't

advance simultaneously in each of these verticals all at once.

But I think still most Americans don't realize that, that, that those factors

are in place and indeed that they are

Yeah.

each of those verticals at the same time, I think that even that basic idea,

which you conveyed well in the piece, is pretty new to most people in America.

I think you characterize it really well.

Yeah.

I think, again, I have to kind of like step back and see China through

someone through the eyes of someone who doesn't follow China all the time.

And that's, that's actually hard for me to do.

So like I, I think some of the ideas of how Chinese industrial policy works

that are out there are like, either it's like a very top-down system like

Beijing leaders or Xi Jinping himself says something and the everyone executes,

you know, and it's like, well, I think they tried that maybe in the past.

And the sort of a command economy structure and that

that didn't work out so well.

And also another idea is that you just kind of like.

Flood the zone with subsidies.

And again, if it were that simple, like at a, at a certain point,

you're gonna run out, right?

Like, if you're not gonna build competitive industries, if these companies

don't upgrade technologically and become, you know, not just domestically

competitive, but globally competitive to a certain extent, then you can't just

subsidize in front, you're gonna run out.

So like, at a certain point it's about, as you said, kind of like shaping the

market, shaping the ecosystem, like, providing, you know, I kind of think

about, I, I know, I know you're a, you're a physicist and I, and I love

the physics analogies, but I often reach for the biological ones more when

I, when it comes to industrial policy.

And it's like, you know, you can't just like turn, turn the knob all the

way to 11 and expect that to work.

It's, you know, you want to kind of like.

Add the ingredients that you think will help, you know, if there's

some key component or key, you know, aspect that's missing, maybe

the government can sort of backfill or, or, or contribute in that area.

And then especially looking at sort of like problems in the supply chain and,

and, and trying to, trying to, fill those in so that, that can be very useful.

But overall, it's, it's this mix.

You're right, it's not just like top down.

It's also not just flood the zone.

It's sort of like trying to cultivate this ecosystem.

And AI is like a classic example of that, where it's like DeepSeek

itself is not a state owned enterprise, you know, by any means.

It's quite the opposite, right?

But I, I would argue that, you know, even though it's not a

direct, product of industrial policy in the traditional sense.

The people who are the incredible, like researchers who are, who are doing, doing

the cutting edge research at DeepSeek, they came through the Chinese university

system, which had, investment research, grants, a lot of which was targeted AI.

So that all sort of benefited that broader, industrial ecosystem.

Yeah.

You know, one of the points I made, uh, in the wake of, mark Zuckerberg

out and, and hiring, you know, with exorbitant salaries and comp packages,

all of these top, uh, AI from companies like OpenAI and elsewhere is, you

know, a big chunk of those people were actually educated in China, at

least at the undergraduate level.

And, um, one of the things you, if you're in my position, a professor

that is in a quantitative subject, you see that in China because there's

so much emphasis on math, um, solid grounding in math, uh, the, even the

developers, people who are coders generally have much better math chops

than the coders in the United States.

And so, um, to do ai, there's a certain sort of core set of things you need

to understand, like multi-variable calculus, linear algebra, statistics,

probability, things like that.

Uh it's.

It's very, very likely that a Chinese CS major actually has

pretty good mastery of those things.

And so they could, if they wanted to do AI research, whereas in the US you're

already cutting it down by maybe like only a quarter of CS grads in the US

are strong enough in those areas that they can pick up a, they can download

a paper from Archive on AI and actually read it on large language models

and actually read and understand the matrix notation and stuff like that.

So tensor notation.

So, um, even of really basic commitment to just education STEM

education, it math itself in the pool from which, uh, they,

for example, able to draw from.

And that would be the same thing if you were doing like, uh,

computational methods in genomics or biotech or something like that.

Just a lot more people in China are able to sit down and actually read

papers in that area and actually apply what they read in those papers.

Whereas in the US it's much, much less common for a biologist

to actually have that math

background.

Yeah.

Yeah, that's, that's really interesting to have that kind of scientific foundation.

Yeah.

You know, it's funny here in Princeton, I, I like to kind of

just like pop into random seminars and fields that are not my own.

So like, and, and I, I have been to more than one CS seminar or CS

talk, where I look around the entire auditorium is like almost all Chinese.

The speaker is Chinese.

And I'm like, you literally could just have this whole talk in Chinese right now.

Right now, like in theory.

But, yeah, but it just sort of like a assessment to kind of like

the strength of the talent pool, the depth of the talent pool.

And you can, you can see it even out here in Princeton at the graduate level.

I mean, it's very, very.

Obvious.

So, so yeah, when I, when I saw that, you know, these sort of like, Damien

Ma MacroPolo had, had sort of like the tracker of AI talent and you know,

over 40%, almost 50% comes from China.

and then now, yeah, with sort of metas, super intelligence team,

like seeing how many people came from China, I was just like, on

the one hand I was, I was shocked.

I was like, wow, that is, I mean, these, those guys, their lives are like, you

can imagine their parents might have come from a generation that was like

dirt poor and they're gonna get a hundred million dollars pay packages.

I mean, what a, what a change.

But overall it was just, you know, it was surprising, but

also not, not that surprising.

I mean, it was like, yeah, I, I, if you look at the nps, co-authors on

like, virtually like, you know, a huge chunk of the papers, it's a lot of,

It's a lot of Chinese researchers, or, or Chinese origin researchers.

So yeah, it's, it's just that kind of depth, I think again, really

hasn't been emphasized enough, in, in trying to understand, you know,

the latest, you know, you know, where's the next DeepSeek coming from?

Like this, this sort of like deeper level, yeah.

the sociology world, are people hostile to, you know, if, if you break out

human capital as a separate factor for productivity or, or, you know,

development, are people hostile to that?

I mean, certainly if, certainly you couldn't link it.

I mean, you couldn't link it.

to anything like genetics, but just even saying that.

This system produces more 22 year olds that can do linear algebra

per capita than this other system.

Like, is that an okay thing to do in sociology, or do people

get mad at you over that?

Oh, I think, education, human capital, the pipeline.

I don't think those are controversial things.

In fact, I, I think there are demographers who like specialize

in, in sort of those questions.

yeah.

Because I, for example, like, uh, there's a guy called Garrett Jones,

I don't know if you know him.

He's at, uh, George Mason He's an economist and, and he, he's done studies

linking, like he tries to estimate the, the, the sort of average IQ of a whole

country, which, you know, is equivalent to

Oh yeah.

well, how well they do on PSA scores or TIM scores or something like this.

And then he relates that to their economic growth rates and things like that.

And, And, and of course he doesn't mention.

DNA or genetics or anything like that.

It's just country by country.

There's an education system.

It produces these outcomes and maybe that is an important input factor

into productivity, growth or whatever.

But even that, like I think he's found it somewhat controversial.

Like he's gotten some pushback that like, what shouldn't be looking

too closely at these things.

I, I don't know, apparently maybe you have not felt that.

Yeah, I don't know.

And also, the funny thing is like in the business world, you

talk about talent all the time.

I mean, that's like the word that you use.

So, yeah, maybe that encompasses maybe a broader set of performance

metrics or something like that.

But whatever it is, like there's a sense out there that this matters a lot.

Yeah.

And if China has a lot of it, that also matters a

lot.

Yeah, I think, I think people still, even today, underrate how big the gap is

because in almost every metric, if you look at in, in terms of human capital, if

you look at China, it, it tends to dwarf the US and it tends to be more like China

is roughly equivalent to rest of world

combined.

And,

Yeah.

you know, and I think still people can't really quite absorb

that that

fact, even though it's in the

Yeah.

Yeah.

Well, Also, I, I, I think people don't realize that like factories,

you know, like, again, like a battery plant, you, you take kind of like a

mid-level manager, you the level of technical capabilities you need to

have, and then you multiply that by.

Across an entire factory, and then times all the factories in that industry,

and then times all the industries.

I mean, you really need, you know, I, I was, I was talking to someone

about, industrial robots and industrial automation and just deploying them.

So it's not, you can't just sort of like install ' em and let them run.

You need people who have the technical skills to be able to do that, to

understand some of the mechanics, how to operate them, how to repair

them, how to deploy them properly.

And you need a lot of those people.

I mean, the scale of what's happening in China in terms of manufacturing, in

terms of the number of new factories being open, or factories where,

you know, these, automation systems have to be serviced or managed.

Yeah.

You just think about the number of people who are needed, who are at that level.

And that's, that's something that I think a lot of people don't

Yeah, So you've probably seen these videos of EV factories where they're

turning out a car like roughly every

minute, and, and there are these robot arms that are simultaneously welding

and moving a plate into place and doing.

And if you just think of the spatial reasoning required to install, like even

if the robots all came from Germany, which not true anymore, actually, mostly

they're built in China, the robots.

But you get the robots like placing them and solving these problems.

These, uh, so that all the arms work properly in the cars

placed in a certain position.

Like all of that is actually very, very g to use the verbot term.

Very g loaded.

Like a lot just can't, that like if I said This is your job and figure out

where to place these robots so all of these arms can operate simultaneously

without screwing each other up.

And, and they can do, get into the part of the car where they need to get into and

you know, we need to put it in this corner of the factory on this conveyor belt.

Um, a lot of people just solve that problem.

It's actually a pretty difficult problem to solve.

And the way you solve it affects the overall efficiency of your factory.

Like how many meters of, of factory do you need to actually

do what you want to do, right?

So, so all these things are just, uh, require a of human capability.

Totally.

Yeah absolutely.

Yeah.

Um, um, maybe we can New York Times piece to, um, the Substack post.

I, it wasn't just you, I guess there were multiple authors right on that, and

so we maybe should give credit to your co-authors, but I, I was interested in the

philosophy of this gentleman, Lou Fung, who's at, I think Beijing University.

Maybe just tell us a little bit about the article and,

and this individual.

Yeah.

So Luang, he is a very prominent, I don't know how to categorize

him now, a political economist.

Economist.

And he has done a lot of work on, industrial development,

in China in particular.

in particular this, this piece.

So, it was, Thomas at Sindification, who actually asked me.

He, he found the piece, so he should get credit.

and he asked me to write an introduction to it, given that

it was related to what I work on.

And, This piece talked about what I called industrial maximalism.

That is all the arguments that you hear of like from the west, the critiques, the

criticisms about over capacity, about how China should shift to, away from sort of

more industrial development and towards, you know, consumption or less production.

And, you know, all these things that his piece was saying,

almost the exact opposite.

He was saying China should double down on manufacturing, on industrial capacity.

He even had a whole part where like even steel, he argued was

not at a state of overcapacity.

I, I thought that was so bold.

You know, so, so if anything, I, I just found the piece almost like a, like a very

erudite troll of like a lot of the Western critiques, but I also found it to be

really fascinating, like point by point.

And I, and I wish that yeah, maybe I could find a way to, to get out the

whole, version in English, because it's just, it's, it's very, very long.

It's this very long interview where he's talking about, you know, what

he thinks are the sources of strength for China's industrial development.

Why he thinks the us can't do that.

Why other countries have struggled.

He has a lot of actually very interesting cases where he

looks at specific companies.

some of these semiconductor companies today in China, they, had

their roots going back even to the you know, to the pre-form years.

So, I find all this historical stuff very interesting as well.

But, but yeah, overall this argument that, China needs more of this, that

actually this is, this is the direction that China should, should be focused on.

I, I just find it so fascinating.

And yeah, he, he has a few little jabs too at, at, you know, JD Vans, with the

peasants comment and things like that.

So, you know, I, I, I think he had fun with this, Q and A in, in

addition to sort of making a serious

Right.

So, the original document, it, it was a Q and A, where is it published?

Like is what's the Chinese audience that it's actually aimed at?

Oh yeah, so I think this was Guancha, which is, I don't

know how to characterize it.

so it is a state affiliate media.

It is very, it's sort of a very prominent, platform, for a lot

of, you know, researchers will, will, will write pieces on there.

You know, I, I wouldn't call quite the New York Times of China, but it it has that

kind of intellectual sort of exchange.

would be other economists, academics, but also policy people,

business people?

um,

Yeah yeah.

I, I think, I think broadly speaking, yeah.

Um okay.

And, piece that I read in translation was already pretty long.

And you're saying the, the whole thing is actually even

longer.

Yeah.

Yeah, that's right.

That's right.

He goes into like sort of history lessons and I mean, it's very interesting.

Again, like he, he really pulls out a lot of, a lot of case examples,

and, and sort of dives into them.

But, but yeah, I, I think one of the biggest takeaways actually was just

thinking about like, industrial capacity is not just something about building

physical factories, but as sort of this, you know, and this, this relates to my

work, you know, the sort of organizational capacity that a society has to be able

to do this, you know, tying back to what we're talking about with talent,

tying back to what we're talking about with, you know, having a, at least sort

of like decently operating, government that can implement some of these things.

So yeah, that's, that's where I think I, I found it very useful

that he was sort of trying to cut through some of the, previous ideas

of like, oh, you know, a lot of the stuff just got outsourced to China.

Well, if it were so easy, you know.

Why isn't every other country doing that?

Right?

It things aren't just outsourced to China.

Like China created a system to make it attractive for other companies

to set up their operations there.

They did a lot of, you know, industrial policy to not only do that, but to

make sure that the learnings from those companies got transferred

over in some, some way and absorbed.

And again, all these terms, I mean even the word tech transfer

unfortunately just like it is not about handing you or handing

someone a piece of knowledge, right?

It is.

I I like the term actually sort of like absorption capacity, in a, in a way

more because, and this comes back to sort of China's scientific foundations

that you, it's one thing other countries have tried to lure foreign

companies to build plants, in their jurisdictions and train their workers,

and then it sort of just ends there.

And the question is, why has China been able to get that, technology

and understand and sort of technical knowledge and have a diffuse throughout

society more broadly and then create homegrown competitors that can not

only catch up, but then actually, you know, move beyond, beyond that.

So, so that, that's sort of, to me the most interesting question.

So I like lu fun's sort of readjustment of how to see some of these issues,

Yeah, I, I think people in China are aware of this unique aspect that,

that, you know, the foreign company, apple comes in there, is knowledge

absorption, but the Chinese are able to both contribute to, uh, Apple's

innovation in, in trying to localize the process, but then also potentially

go beyond it and create competitors.

And, um, episode of Manifold, I interviewed the author of the book, uh,

apple in China, which is a really, really exhaustive look at the operations of Apple

in China, and then how that gave rise to domestic smartphone manufacturers and

how the, actually today we discuss this at length, like the, most of the, the

leading innovation is actually happening in China when it comes to smartphones.

And in a way, apple is actually kind of a laggard now in terms

of, you know, the features

and the capability.

So, so that's a very.

Yeah.

Similar with Tesla,

And if you want a very specific, uh, in depth discussion, that that episode

of Manifold, I think is very good that I forgot the author's name, but

he he's extremely good.

He's

Patrick McGee.

Yeah, he was really great.

I actually interviewed him too for a different podcast.

so he spent a huge amount of time, uh, writing this book.

So let's maybe steelman both sides of this.

So, so from the western side where this term overcapacity comes from, the idea

is something like, wow, these autistic Chinese guys just keep building more

factories and they just kind keep wanting, make, wanting to make more stuff.

And they don't have good profit margins.

They're just driving.

It's a race to the bottom.

They're just making so much of this stuff and flooding the world with

cheap, you know, maybe high quality.

Now we grudgingly admit it's high quality, but cheap stuff, and they

should just calm down and relax like people in Europe or California and

take more time off and do other stuff.

And, uh, it's just, it's just, uh, a mistake.

them to be so frantic focused on industrial production,

um, technology, this stuff.

Um, and now you could say like, if, if, if someone said that

to Lu Fang, what would his

Mm-hmm.

Yeah, I mean, I think his response would be that this is something that,

is helping consumers in the rest of the world, and this is a product

of China's investment and trying to develop like this very sophisticated

manufacturing platform, right?

This whole system of industrial clusters of, you know, technological

upgrading that makes it Yeah.

Uniquely capable of producing relatively affordable, high quality products.

Yeah.

things I I wrote a whole thread on this in, on X 'cause I, I really

did enjoy the, you know, your art, your translation of the article.

Um.

is that throughout most of the 20th century there were, or at least

during the history of the People's Republic, there were American

sanctions, western sanctions on China.

So they, they could not get Western technology until that

opening period under dunk.

And so.

You can't blame them for wanting to like, you know, surmount those

technological hurdles as fast as possible because previously they

were denied the ability to do so.

So if they're a little bit overly indexed or overly focused on technology catch

up, you know, they, they have things like the Opium War to look back on, right?

So, so I think they still feel like they're playing catch up.

Even if they've now caught up, they still feel like they're playing catch up.

People tend to, you know, pendulums tend to overs swing, right?

So, so they feel like they still wanna overindex on this stuff and they're gonna

keep pushing and there's a little bit of paranoia, which for them is justified.

Like, like, you know, they remember during the Korean War, the US just

flatly threatened to use nuclear weapons against them, right?

Like we forgot that most Americans

can't remember that one.

Like that.

No, that never happened, did it?

And then you look it up and you realize, yeah, in fact it did.

And they never forgot that, right?

That there was a period where they were under technological embargo.

Uh, thing, uh, pisses them off so much.

But they were under technological embargo.

And at the same time, MacArthur was urging, you know, the US

to just drop nuclear weapons on Maturia, nuclear bombs on Maturia.

So they remember that.

And that is definitely gonna color their strategy, right?

They're gonna be more risk averse.

About ever falling behind in any one critical area because they

used to be behind and it caught, they, they paid dearly for that.

Right?

So I think like, just in people to put yourself in the psychology of the other

side, even if you don't disagree, even if you don't agree with it, even if you just

say like, oh, you know that anti-China Cold War hysteria, that was an aberration.

We'll never see that again.

Americans are so diverse and nice now that could never happen again.

You still have to allow for the fact that the other side doesn't believe you.

Like

they, they experienced all

Right right.

as the potential victim of it.

So they're, they're not gonna give up on that right away.

They might give up on it in 10 or 20 years, like in 10 or 20 years.

Chinese kids might be lazy and, you know, like lying around all day, like, you know,

but, but it, it won't happen for a while.

So right now they're, they're still like very, very focused

on working hard to get ahead.

Um.

Yeah.

Yeah.

And, and in fact, if anything, I think going back to the, that Lu Fang piece.

He sees it as sort of a natural kind of, progression of de industrializing.

That this is just kind of what happens in over the course of time for a

society, unless someone steps in and tries to alter, especially the financial

system, to try to allocate resources, in such a way that incentivizes

that, industrial capacity to remain.

But, but yeah, the broader point about self-reliance, this paranoia being in a

world that is very insecure, where someone can cut you off, you know, later on it

was the Soviets that were the big threat.

and then.

Now, most recently, like every, all these fears, like imagine you have been like

afraid of something your entire life and people have been telling you, don't

worry about it, don't worry about it.

It's okay, it's okay.

And then it turns, you know, you're afraid of like a robber, you

know, burglar entering your house.

And people are like, it's not gonna happen.

And then a burglar actually enters your house and then you're like,

confirmed all of my like, safe room, you know, investments were worth it.

And in fact, I'm gonna double down now.

So that's actually what's happening now.

I think with the export controls, with the Huawei sanctions, with all

of these, you know, it, it's sort of like, I, I joke that, there's

sort of like a rule of three.

A when a Chinese company gets mentioned three times in, international media,

like it will take, within three years, it'll be entity listed.

And you know, the sense that like, at any moment we could be, be cut off, you know?

And so Xiaomi Lei Jun has the whole story about how he thought,

Xiaomi was gonna get cut off.

And that was partly the reason why they pivoted EVs.

So this, this sort of fear.

Both at the policymaker level, but also at the company level.

I think has like only sort of gone like further into overdrive, with

the actual sanctions that, that sort of validated all these concerns.

So yeah, this, this, this feeling of like, could we be cut off and what do we do?

How do we prepare now that I think is, is really important for, for, for people to

understand who are not, you know, feeling that kind of sense of insecurity all the

time.

Yeah, I, I think that.

You know, it will be a while.

You know, I would guess the timescale is decades before they

feel comfortable enough that they can take their foot off the gas pedal.

I think they're gonna have their foot on the gas pedal for easily another decade.

And if, if they've actually, so in, you've probably seen me

post on x, these skull graphs

where, you know, like you look at US electricity production, it's kind of flat.

And then you look at Chinese electricity productions, this, and then during,

during this period of time where American America is really dominant

and they're the hege mine and the Chinese curve is way down there.

It's like, uh, US is like, number one.

We're number one.

And then the curves cross.

And when the curve crosses and the American guy's like, oh shit.

And then like, but they, you know, because the first derivative is so

large, this just keeps shooting up.

And eventually you end up in this era where, where the Chinese are appear

and the Americans are down here, and then there's like a little skull.

And I just

Yeah,

I don't see that, letting up in most of these metrics KPIs.

You know, for another decade or something.

Yeah yeah.

And they're making a big bet.

I mean, they're betting that more investment in these scientific fields,

more investment in these industries is the long run right thing to do.

And so it'll be very interesting.

I mean, we will watch the experiment unfold before our eyes.

Like we, we will see, you know, like these are huge, huge bets.

In, in many ways I think the US should be doing something similar.

Like

it doesn't have to be, I. Same way.

Exactly.

But but there are certain industries that, yeah, I, I think we realize now

it would be, it would be a shame to kind of like, sit back and hope that it all

works out and, and not have, you know, not have tried to do something in the

process.

You know, I, I recently tweeted there was a, there was a, a article in MIT

technology review and they interviewed, uh, this economist David Autor.

Yeah.

you know, he, I think he may have coined the term China shock.

And now they're talking about China Shock 2.0 where instead of shock on legacy

industries like making cheap furniture or dolls or t-shirts and, and of course

that did affect American employment.

Um, now it's 2.0 where it's the advanced industries where they're threatening to

take away the advanced industries from us.

I, I wasn't expecting that tweet that post on X actually get a lot of attention, but

it did because I, I think people didn't realize this was happening and when they

read David Autor saying it, they suddenly thought, okay, this has credibility.

Like this guy

has been saying this three, five years, but we just ignore him.

But this guy, David Otto said it very explicitly and so now, now we

Right.

actually working,

He's the China shock guy.

Yeah,

because he's China Sharp guy.

But, um, I obvious prescription, I think Professor Otto would agree with

me is that the, the, the main thing is America has to actually strengthen

itself and, and compete in those

industries that it wants to

Yes.

Yeah.

a level of excellence where it can retain.

Right control of those industries or leadership in those industries.

And you can't do that without all the usual things like industrial policy and R

and D investment and production of human capital here at home, or at least stealing

it from abroad or however we get it.

So, I mean, I think all these things are pretty clear.

Yeah.

Yeah definitely.

I mean this is, this is going back to like part of what got me so interested

in these topics in the first place.

I mean, how to understand them like in a broader sort of system level.

View rather than seeing like this particular company that's maybe

not profitable or this particular industry where the economics

just don't seem to work out.

You see that some of these are links in this chain or are,

nodes in this broader network.

And if you break that critical node, you're gonna have huge spiller effects

onto all the other dependent industries and upstream and downstream linkages.

You know, these are all interconnected.

And so, yeah, like to me, in some ways the, the puzzling thing is not

what China does, but what the US.

Like does or doesn't do when it comes to these things where it seems so

glaringly obvious that, you know, here here's a coordination problem that is

sitting right before our eyes and we are all like, kind of nodding our heads

being like, yeah, boy, that, that would be, that would be bad if, you know,

we got cut off from this, you know, critical part of the supply chain.

And then it happens and we're like, oh, that's, that was bad.

But we still don't really step in and, and yeah, the question is, you

know, can we, can we kind of like overcome some of our very strong priors

about what, you know, policy can do?

And, and to be fair, you know, I, I share like a, a strong sort of

skepticism of, state intervention.

There are many cases where it does do a lot more harm than good.

So, you know, this is not just like a wholesale, like, oh yeah, we should

take, you know, nationalize everything.

And, but to think carefully about where this, the government could step in and at

least support private industry in a way that wasn't just totally up to the markets

and up to, you know, global price, prices, which can be volatile or unpredictable.

Yeah.

That, that is something that I hope people think about

more.

To take a specific example, like the Biden Chips Act, I was not very optimistic

about what it would accomplish or that it would be conducted efficiently, but

directionally, I was not against it.

I was not against directionally

government saying, Hey, chips is an area we cannot lose.

We have to support some domestic activity in this area.

Uh, but of course the devil details, like, can they

actually execute properly

and make it work?

I think for people who are really actually, so, so if you've done

cutting, if you've done frontier level research in an academic lab

and you've built a company, so you've seen both the, the application in a

marketplace and also the like, where do the original ideas come from?

If you see those two things together, like then you can

understand like this ecosystem that's required for America to compete.

But if you've only done one or the other, you could be wrong.

The university guy doesn't necessarily understand, like most of the stuff

people do at the university isn't that valuable and, and can't be commercialized.

And, and, and the applied guide in Silicon Valley might not realize like, oh, this,

this thing that I'm, oh, I can now think of a hundred different uses of this thing.

Um, that came idea 20 years ago that at the time it was a crazy considered a crazy

idea and only DARPA or NSF would fund it.

Nobody else would fund it.

And so it's important to have both of those connections and not a lot of

people actually have seen both of those, uh, different, parts of the ecosystem.

Yeah.

If those people are out there, they should get to work because we, we need

that kind of, like that intersection of, of experiencing and, and capabilities.

right now we're doing everything wrong.

You know, we're, we're, you know, making it harder for foreign students to

come here and pursue their educations.

Here we're cutting funding to large chunks of science.

You know, it's, it's all gonna be, I mean, of course, maybe it's just gonna

be a transient hiccup that just lasts for a few years, but it could have

really negative long-term consequences for us competitiveness as well.

Yeah.

Yeah.

And that's the thing that I was, I don't know if I pointed it out in

that piece, but I, the thing is the, the like breakthrough treatments,

medical treatments that are gonna come out, you know, in 20, 30

years, those are being researched.

You know, to your point, those are being researched to date.

There are labs who are testing, you know, new sort of areas of research,

and exploring that now, who are getting their funding cut off.

And there are a lot of, sort of these forking paths that are just never gonna

happen because, you know, at this stage they got, they got sort of nipped in

the bud.

But it, you know, it is very hard, like if, if, if even some engineers

who are more, like, they've only worked in industry, they've only worked

very close to like the market and the customer shipping a product, even

they have a hard time understanding like, what are you physics guys

doing with, uh, superconductor?

Like, what's the point of that?

You know?

You know?

um.

sides.

Like there are people in Silicon Valley who think all these academics

are useless, and, oh, if you just give some smart agentic engineer

the problem, they can solve it.

And they just, they just lack a historical understanding of like the

innovations that they currently work with.

Where were those innovations 20 years ago?

Right.

Uh, so It's very easy to get this thing

Yeah.

Actually.

Huawei's Ren Zhengfe, Huawei's founder, he actually recently

had a piece talking about this.

It almost sounded like he was trying to convince people in China too, of the value

of sort of foundational science of, you know, even like the way he characterized.

He was like, yeah, some of them are kind of weird characters and we have to we

have to sort of like embrace them in our society because they're so valuable and

they might be kind of like a bit odd and they might have like slightly odd ideas,

but actually those are the seeds that, you know, are so later on that become

basically the next, you know, Huawei or Nvidia or, you know, whatever it may be.

So,

Yeah, I think I read at least in translation some of that.

And yeah, I mean he was, you know, Huawei itself actually hires a lot

of people who are doing sort of very mathematical or theoretical work.

And you know, a little bit surprising.

And I think he was urging other companies to do the same.

Yeah.

Yeah exactly.

Yeah.

in the future, I, for you, Kyle, the sort of US China competition or, or China,

the, you know, the, the, the biggest story of the last a hundred years, which

is probably China development or last 70 years at least, um, is, you intend

to focus most of your energy going

forward?

Yeah.

Yeah.

And to, continue to focus on, yeah, develops in, in, in Chinese technology

and science and industrial policy.

So those are the main areas.

So yeah, like I, I like to kind of like position myself as someone.

I'm not gonna be like a leading chip expert.

There are people who are deep in the weeds on specific photo resist and can tell you,

you know, why, you know, this versus that.

That's not what I'm trying to do.

But I'm trying to see again, you know, maybe the New York Times piece is actually

useful as that characterization where I'm trying to connect the dots here and

see like what are the broader, systemic factors that are contributing to this.

And, uh, how is that shaping?

Yeah.

Not just the US China relationship, but sort of the China global relationship.

And yeah, I actually look at a lot of stuff too, uh, about China's,

uh, interactions with, you know, global south countries or China and

Europe, which I think is like, um, you know, maybe Americans don't care

as much, but Europeans really care.

And, there are a lot of people who care about, you know, the rest of the world.

So, so those are all things that are, I think, very dynamic and

there's a lot of things happening.

So those are, those are areas I'm following very close

closely.

Let me, let me throw out a couple speculative things.

So, so there's one meme that's around on the internet that like China already won.

So if I were to steelman that, I would say something like, well, you look at

any of these verticals and you know, if they're not past, if they haven't

surpassed us, they're, they're coming close and their, their first derivative

is clearly much higher than ours.

And this is happening across, you know, the 20 most important areas.

Um, and we are act together.

And actually our, the rigor of our education system is, is actually

going slightly down as opposed to up.

So how could we possibly win out?

Now the, the one scenario, which I think if, if you go around Silicon

Valley and talk about this, some people will just say like, they'll just deny

that the what I just said was true.

So that's just a different, I think, perception of reality.

But for the people who accept that, that's in terms of the

metrics, that is actually a fair characterization of what's going on.

The usual place where the Silicon Valley people can still pin

their hopes is the following.

Fast takeoff in AGI led by Americans.

And that's the one thing that saves our asses, right?

Um, that's literally what people, so, so again, we could meet people who just

don't believe me that the cur, you know, the skull curve predominates, right.

Like they would argue, oh, they're not really ahead in rocketry,

or they're not really ahead in this, or, you know, they're not

really close to us in jet engines.

You know, they could argue stuff like that.

So that's a different category of person.

But for the people who accept these numbers, and I think the numbers actually

are, as I present them, are correct.

Usually if they're a technologist, the thing that they're gonna retreat to is

we're gonna win the AGI battle, and that's what's gonna keep us, that's what's gonna,

That'll be like the Trump card.

That'll yeah.

yeah.

number one.

And therefore like, please, please nationalize my company and write me a

check for, you know, for $10 billion.

So, um, but what are your thoughts on, on this?

Yeah.

Well, so one thing that's very interesting that I follow is the debate in China about

the zero to one versus one to a hundred sort of innovation, scale up thing.

And, and it's still an ongoing debate.

I mean, I think, you know, I think people still debate

like, what, what was Deep Seek?

Was it a zero to one innovation or was it another fast following thing?

And, you know, you can go back to like mRNA vaccines or sort of other, other

areas where I think there is still a sense of like, yeah, I, I don't know.

Like, could China have done this?

What counts as an innovation?

there are other people who argue that like drone technology or like lidar

systems today, are, you know, are essentially a Chinese invention now

because yes, like parts of that have been out there for a while, but to really

become a real thing in the world, is, is something that, that China did basically.

So that's all, all over the map.

And I guess one thing I I will say on, on the US side is, There, there are

possibly, I mean, maybe this applies equally well to the training side, but

I, I would just, um, have a big dose of humility for like, I don't know

what the next sort of ChatGPT might be.

'cause to me, ChatGPT was itself like so, so huge.

And I guess, you know, if I had been following a little more closely, I

would've known that like, okay, you know, GPT-3 0.5 was already out, and

that's actually not, it was actually not even the, you know, the hottest model.

But still, I, you know, there's just.

I feel like we're just living in a time of very large frequent

paradigm shifts in technology.

You know, and then you can, you can zero in on specific, specific industries

you can look at like batteries.

I mean, it, it was just yesterday I felt like when, NMC batteries were seen as the

standard, and then you have the shift to LFP and then maybe solid state or maybe

sodium ion, so sodium, will, will be next.

Like, who knows?

I now feel like we're in this, this state where it's not like a

single race or it's not like a, a one and done, you know, type deal.

So, yeah, I, I'll be curious.

Like this is sort of hedging, sort of like punting on the question, but I, I

actually think it's just sort of exciting.

I mean, I hope that both countries continue to push the scientific and

technological frontiers for humanity's sake in terms of like coming up with

better, better medical treatments, coming up with sort of like better

things to help with our, material lives.

I think, you know what, what's not to love about that.

you know, I, I like this optimistic perspective.

It's, it's so seldom articulated.

Um, China talk host Jordan Schneider.

Yeah.

So I, I was talking to him, a year or two ago about this stuff and.

at the time.

I just said, look, isn't this great?

Like, all these technologists in China, you know, they're selling you

their stuff at rock bottom prices.

Like they're making stuff more efficiently.

They're selling it to you, and they're actually starting to make

real fundamental breakthroughs like, you know, new battery technologies

or, or you know, new, new AI models.

You know, so, so what's not to love?

It's like just a, it's just like a huge number of scientists and

technologies and factories appear in one corner of the planet, but they're

sharing, they're selling everything to the rest of the world at rock

bottom prices, what's not to love?

Like, that's just a great, optimistic future.

And he just couldn't believe I was saying that.

He was like, yeah, but aren't you worried about what happens if they

become the hegemon and stuff like that?

And I'm like, no, I'm not really that worried about it.

Um, but the optimistic future we should aim for is one where the US and China can

coexist and mutually benefit each other.

Right.

It sounds like a cliche, like win-win is a cliche, but you know,

I, I, I still think it's possible

Yeah.

Yeah.

I mean, I just think like, just from a pure sort of science standpoint, like

yeah, it, it would be so sad to have so much scientific capability, bifurcated

and isolated from each other, when in fact that's really, you know, like, I

don't know what the term is, but like, you, you want that kind of multiplier

effect where like each group alone can do a lot, but you want that kind of,

you want all of it to be, you know, sort of, intermingling and fusing.

Yeah.

like hot war, I, I don't think the site science and technology ecosystems can

fully decouple between the two countries because, you know, you still have

flow of human capital back and forth.

And now with.

AI and, and people publishing papers and stuff, that the information

spread, the knowledge spreads so fast, faster than it ever has before.

So, I don't think, you know, if, sure, if we have a hot war, who knows?

Like maybe the whole planet will be destroyed.

But I think in general, we won't, we won't, we, we will benefit from all, any

investment, whether it's made in China or the United States in fundamental

research, the whole world actually does eventually benefit from that.

Yeah.

I, I would point to GitHub as like, just spend time on GitHub.

Just see who's, who's, who's contributing, who's, you know you

can see like all the different names, different people around the world.

I mean, it's just amazing people who have never met each other, people who

may never meet each other and building like, complex software that is usable,

that is actually, you know, companies use that as the foundations for some

of their, their commercial services.

Yeah.

I just think that's, that's so incredible.

Maybe, you know, I, I can see yes, there, there could be like dark cloud

in the horizon in terms of yeah, some of these issues flaring up.

But yeah, I mean, in, in some ways, again, I, I, I just think

we're also so interconnected.

I, I think you're right that, um, some of these kinds of knowledge flows.

It, it would be very, like, to cut them off would mean like quite a

severe, um, I don't know, like state of repression for yourself, essentially.

you know, much less for the other guy.

So,

Your example of GitHub is really one of the best because that, that

even goes beyond the US China thing.

Because if you look on GitHub, the, the barrier entry to write code to to

develop software is, is, is so low.

And the cost of hardware is so low now that, you know, you see names Eastern,

lots of really strong developers come from Eastern Europe, from Turkey, from

Iran, from you know, central Asia.

It's like everybody in the world is able to cont.

GitHub is probably a very unique place in which everybody

in the world can contribute.

Unlike in say, molecular biology or physics.

You need to have like access to a very high quality home institution

to be able to participate at a

frontier on GitHub.

Almost everybody can contribute.

Some poor kid in India who just has a shitty internet connection

and maybe is even coding on those.

They're coding on their phone or some a hundred dollars laptop

they can contribute on GitHub.

So that, that's probably the best example actually I.

. yeah, yeah, yeah.

So that's, that's an area where I just, if you see that world, like,

I feel like a lot of people who are not in the software or coding world

don't know about things like that.

And if, if you do know about things you, you realize like, wow, there can be

like incredible collaboration worldwide.

And, you know, talk about democratizing the process.

I mean, that is really like Yeah pretty mind blowing what you can contribute.

You don't even know who, who like, might be able to solve some

bug or some puzzle that you've, you've been able, unable to crack.

And it, it could be someone from anywhere, at any level of education almost.

that's a nice, optimistic place.

Maybe we can end our conversation.

So Kyle, thanks a lot for being on the podcast, and I wish you all the best.

Thank you.

It was my pleasure.