Breakneck: China's Quest to Engineer the Future
Most serious Americans should be thinking about China. Whether you’re a human rights type, an imperialist, or just concerned about where all the stuff of our lives comes from and where all the jobs went, China is the focus. The flip side of that is that most Americans know something between nothing and weird racist lies about China. Dan Wang knows better. A Chinese-Canadian-American tech analyst, Wang spent several years in China working for Gavekal Dragonomics, an economic market intelligence firm, before returning to America in 2022.
Wang’s thesis is that China is an engineering nation, which means it can combine ambitious effort with immense arrogance. It’s hard to discount that. General Secretary Xi Jinping was educated as a chemical engineer. The current 20th Politburo is heavy with technical backgrounds (and lacks a single woman or non-Han Chinese member). China is also the center of the world’s industry, with roughly as much production capacity as the rest of the G8 combined.
On the positive side, the engineering culture has created immense material prosperity, with multiple decades of GDP growth approaching 10%. Even relatively poor provinces and cities have robust transit infrastructure. Mass transit and high speed rail sit comfortably next to millions of new electric cars. Solar panels cover hills, with nuclear plants and coal providing baseline backup. Whole cities housing millions of people spring up like mushrooms. The only industrials in which China is not the world’s leader are aerospace and computer chips, and they are making robust progress in both. Since 2010, China has gone from just a factory to a key partner in precision mass-production. If you need anything built, from guitars to drones, you can set up a local production system at immense complexity (which will rely on Chinese components anyways) or go to Shenzhen and just do it.
The flip side is that when the engineering state errs, it errs big. The One Child policy was a barbaric campaign of mass sterilization and forced abortion which left wrenching psychological and social wounds and did massive demographic damage. While China did have a high birthrate in 1970, by 1980 the reproduction rate was down to 2.7 per woman and falling, along the same lines as neighboring countries. In Wang’s read, the CCP did a bunch of horrific crimes to individual women on a population scale to achieve nothing (certainly, The Population Bomb/Limits to Growth types were wrong) and has never admitted an error, even as it removed all restrictions and encouraged children in the 2020s.
One Child has a modern counterpart in zero-COVID. While COVID-19 originated in China, strict quarantine measures managed to keep the disease at bay as it spread through the rest of the world, killing millions. By 2022, life in China was basically back to normal (plus regular testing and contact tracing apps). But as the omicron strain emerged in 2022, the zero-COVID policy collapsed, particularly in Shanghai. The entire city went into an 8-week lockdown. There was no backup plan, and food distribution basically fell apart as quarantine shut down logistics at scales from trucking to delivery drivers. Every civilization is three meals away from Chaos, and the Shanghai lockdown brought China very close. While other countries had used the years to implement a new normal, better respiratory care, and vaccines, China coasted on its satisfaction.
Wang and his wife fled to Dali and then Cheng Mai, where they encountered dispossessed young elites, from crypocurrency entrepreneurs to artists. These 20 and 30 somethings saw little future for themselves in China, with its arbitrary political repression. While the CCP’s ability to marshal physical resources is its greatest strength, its inability to persuade and utter fear of mass revolt is its greatest weakness.
I think Wang knows what he’s talking about, and his personal experiences liven up what could be a rather dry and technical book, but ultimately he’s an amateur and not an academic, and his framing lacks rigor. While he’s right to contrast America as a lawyerly society, with an obsession about process and a respect for individual rights that factually shades to favoring the wealthy, the missing link is finance.
Wang mentions this in an aside, that the Shanghai index has been the worst performing stock market index. There are two reasons for this. First, arbitrary government regulation has wiped out billions in value in Chinese stocks. But more importantly, the Chinese market is brutally competitive, and Chinese firms are forced to reinvest in productive capital rather than stock-buybacks if they don’t want to be undercut next year. Conversely, American companies are valued on vibes and quarterly returns rather than actual capacity, and grotesque monopolies are protected by regulators rather than forced to divest and compete. America didn’t lose the ability to build, rather “the market” (an abstraction of analysts and speculators) decided it was more profitable to offshore than get American hands dirty.
This is a major blindspot for a prior analyst.