China Builds, The US Regulates - EP 35 Dan Wang
Timestamps are as accurate as they can be but may be slightly off. We encourage you to listen to the full context.
Podcast Summary
Dan Wang, a research fellow at the Hoover Institution, discusses his New York Times bestseller "Breakneck," which examines China's transformation into an engineering superpower over the last forty years. (01:30) Wang, who lived in China from 2017 through the end of Zero COVID, provides an insider's perspective on how China's metric-driven, engineering culture has enabled massive infrastructure development while the United States has evolved into what he calls a "lawyerly economy" focused on litigation and regulatory compliance. The conversation explores both countries' strengths and weaknesses, examining how China's rapid development has come with societal costs, while America's regulatory framework has stifled its ability to build and innovate.
- Main themes include the contrast between China's engineering mindset versus America's lawyerly approach to governance, the consequences of different cultural approaches to development, and the potential paths forward for both superpowers in an increasingly competitive global landscape.
Speakers
Dan Wang
Dan Wang is a research fellow at the Hoover Institution at Stanford University and author of the New York Times bestseller "Breakneck." Born in China and raised in Canada and the United States, Wang lived in China for six to seven years while writing his book, experiencing firsthand the country's rapid development and the entirety of the Zero COVID policy. He previously worked in Silicon Valley before moving to Hong Kong, Beijing, and Shanghai in 2017. Wang is known for his annual letters about China that have gained significant readership among policymakers and business leaders, offering thoughtful analysis of China's economic and technological development.
Ashley Vance
Ashley Vance is the host of the Core Memory podcast and a prominent technology journalist and author. He has written extensively about Silicon Valley and manufacturing, including profiles of major tech figures like Elon Musk for BusinessWeek. Vance has spent over twenty years covering the technology industry and has produced several documentaries. He is particularly focused on hardware manufacturing and has been covering the reindustrialization movement in America.
Key Takeaways
America Needs a "Correction Against the Correction"
Wang argues that while the 1960s regulatory response to unchecked industrialization was necessary to address pollution and corporate abuses, America now needs to evolve beyond constantly fighting the problems of that era. (25:57) The legal framework built to constrain government overreach has now become a constraint on the government's ability to accomplish important infrastructure projects. California's high-speed rail project, approved by voters in 2008, exemplifies this dysfunction - very little has been built despite broad public support, with the first stretch potentially connecting Bakersfield to Merced by 2030-2033. Environmental laws intended to protect the environment are now being weaponized by NIMBYs to block renewable energy projects, student housing, and even the removal of oil derricks within Los Angeles city limits.
China's Engineering State Philosophy
China's approach to governance reflects an engineering mindset that prioritizes measurable outcomes and systematic implementation. (08:35) Starting with Deng Xiaoping's rise in 1979, China deliberately promoted technocrats into leadership positions as a counterweight to Mao's "romantic misrule." By 2002, all nine members of the Politburo Standing Committee held engineering degrees, representing the peak of the engineering state. This mentality is evident in policies like the "one child" policy and "Zero COVID" - the numbers are right there in the names, reflecting a literal-minded approach to governance that treats social challenges like engineering projects with clear metrics and objectives.
Infrastructure Investment Creates Competitive Advantage
Wang's experience cycling through Guizhou province - one of China's poorest regions - revealed infrastructure superior to California, one of America's richest states. (17:05) Guizhou has 45 of the world's tallest bridges, a high-speed rail network connecting to Shanghai, and 11 airports, despite being mountainous and historically inaccessible. This infrastructure investment doesn't just serve immediate transportation needs - it creates conditions for entrepreneurship and economic development. The contrast with Silicon Valley is stark: despite being the technological heart of modern civilization, Palo Alto and Menlo Park remain unremarkable, and San Jose has barely changed despite decades of accumulated wealth.
The Manufacturing Ecosystem Requires Foundational Capabilities
America's manufacturing decline isn't just about losing factories - it's about losing the entire ecosystem of knowledge and capability. (39:50) Vance's visit to a Detroit conference revealed that even companies trying to reinvent American manufacturing rely on machines from Germany, Japan, and Portugal because the US no longer makes the foundational equipment. General Motors developed advanced battery chemistry but couldn't scale production like Chinese competitors who mastered lithium-ion manufacturing. This pattern repeats across industries: the US invents technologies like solar panels and lithium-ion batteries, but China figures out how to manufacture them at scale, creating a decisive competitive advantage.
Competition Drives Innovation Through "Steel Sharpening Steel"
China's domestic competition creates globally competitive companies through intense local rivalry. (61:21) Wang describes visiting Meituan in 2018, which survived as one of 5,000 Groupon clones - a "battle royale" that produced an extraordinarily ruthless and effective team. DJI dominates global drone markets not because they lack competition, but because they face the most intense competition from Chinese rivals constantly trying to undercut and outinnovate them. This competitive environment, while brutal for participants, produces companies that can dominate globally because they've been forged in the most demanding domestic market.
Statistics & Facts
- China has 45 of the world's tallest bridges located in Guizhou province, one of the country's poorest regions. (17:25) Wang observed this during his 600-kilometer cycling journey from Guiyang to Chongqing, highlighting how even China's poor provinces have superior infrastructure to wealthy American states.
- The US has lost about 80,000 manufacturing jobs since April and manufacturing activity has contracted for about six months. (41:43) Wang cites this statistic when discussing the failure of Trump's tariff approach to reindustrialization.
- The US has maintained approximately 25% of global GDP since about 1850, demonstrating remarkable economic stability over nearly two centuries. (84:51) Wang uses this historical context to argue against predictions of American decline, suggesting the country has shown resilience over time.
