- China's a country I describe as the engineering state because they build a lot.

They also treat society as a big engineering project.

It really feels like people are yet another building material that the leadership just wanna tweak and remold, and destroy if necessary.

(uptempo music) - Hello and welcome to GZERO World.

I'm Ian Bremmer and today we are talking about China, the United States, and the race to build the future.

These two countries have been locked in an escalating trade war.

After successful meeting between Presidents Trump and Xi, they may be entering a period of relative stability, but long-term, the trajectory is still fierce competition for power, for influence, and for technological might.

My guest calls China an engineering state, a nation that believes almost anything can be designed, optimized, and controlled for better and for worse.

Is Washington falling behind Beijing?

Can the United States learn from China's rapid rise and avoid repeating its mistakes?

I'm joined today by Dan Wang, technology analyst and author of the new book, "Breakneck: China's Quest to Engineer the Future."

Don't worry, I've also got your Puppet Regime.

- Welcome back to me and Xi's podcast, "This Authoritarian Life," where we seek to crush any opposition to our wellness and mental peace.

- But first, a word from the folks who help us keep the lights on.

- [Announcer] Funding for GZERO World is provided by our lead sponsor, Prologis.

- [Narrator] Every day, all over the world, Prologis helps businesses of all sizes lower their carbon footprint (bright music) and scale their supply chains (bright music) with a portfolio of logistics and real estate and an end-to-end solutions platform addressing the critical initiatives of global logistics today.

Learn more at prologis.com - [Announcer] And by.

Cox Enterprises is proud to support GZERO.

Cox is working to create an impact in areas like sustainable agriculture, clean tech, healthcare, and more.

Cox, a family of businesses.

Additional funding provided by Carnegie Corporation of New York.

Koo and Patricia Yuen.

Committed to bridging cultural differences in our communities.

And.

(bright music) (uptempo music) - We talk a lot about competition between the United States and China, but they actually have quite a bit in common.

They are the world's two largest economies.

They're restless, ambitious, addicted to growth.

They dream big, they spend bigger, and both are betting their futures on infrastructure.

Over the past two decades, China has poured more concrete than the United States did in the entire 20th century.

High-speed rail, check.

Mega-dams, bridges, airports, entire cities built from scratch.

Check, check, and check.

Meanwhile, the United States is building servers, chips, algorithms, data centers.

Tech companies are spending extraordinary amounts to build the highways of the digital future.

Earlier this year, OpenAI, SoftBank, and Oracle announced a $500 billion AI infrastructure investment at the White House called Stargate.

- It's the largest AI infrastructure project by far in history and it's all taking place right here in America.

- They are trying to invest in the growth of artificial intelligence infrastructure in the US, that is data centers, but also the electricity, the water resources that are needed, the computer chips.

- Google, Amazon, and Microsoft are in the middle of record spending sprees.

NVIDIA's Jensen Huang says his company will build seven new supercomputers for the Department of Energy.

By 2030, total AI infrastructure spending in the US could hit several trillion dollars.

That's trillion with a T. For comparison, the entire US interstate system cost about 600 billion in today's dollars.

What's happening now?

Data centers the size of towns, massive grid updates, global chip supply chains is unlike anything the west has ever seen, but there is one parallel.

China.

No country has spent more on infrastructure, many, many trillions over the past two decades and the results are staggering.

More high-speed rail than the rest of the world combined.

Mega cities built from nothing.

Soaring GDP growth, hundreds of millions lifted into the middle class.

But after the boom comes the bust, because it turns out China didn't just build, it overbuilt.

Country is now littered with underused rail lines, half vacant industrial parks and ghost cities with enough apartments to house the population of France.

Local governments that finance all that construction are drowning in debt.

The housing market is in the midst of a multi-year collapse.

Deflation is creeping in.

Youth unemployment China, it's around 20%.

China's experience is both a roadmap and a warning.

Bold coordinated investment can transform the nation.

United States long paralyzed by political gridlock and regulatory red tape could use a dose of that ambition for its own infrastructure.

If America wants to lead in AI, it needs to build.

Fast.

But when spending outpaces strategy, innovation becomes speculation.

And just as China assumed cities would fill themselves, Silicon Valley believes that AI will eventually justify its cost and it very well might or maybe we'll build too much too fast.

China's bet on physical infrastructure.

The US is gambling on digital and if AI doesn't deliver on its promise, both could end up in the same place, buried under the weight of their own ambitions.

Here to help us understand the limits of that ambition and what the United States can learn from China's growth is Dan Wang, author of the new book "Breakneck."

Dan Wang, thanks so much for joining us today.

- Great to be here, Ian.

- So, lots of ways into the US-China conversation.

I wanna start with, you know, one that I'm sure you've been asked before, which is you say that in the opening of your book that there are no two peoples that are more alike than Americans and Chinese.

I always thought it was Americans and Canadians.

So you're gonna have to explain that to me.

- Well, I am Canadian and plenty of us blend in very well with the US and we've exported a lot of comedians over to the US who- - That is true.

Too many, some would say.

Yes.

- Not enough, others would say.

So, maybe Americans need a little bit more comedy at this very moment.

I think that Europeans and Japanese are very alike.

There is a sense of coziness, comfort, there is a sense of perfectionism in these two big regions in which they are really good at making a lot of things really well and everything is super pleasant.

I think that Chinese and Americans are much more alike.

There is a sense of hastiness with these two people and there's a sense of the technological sublime that really wanna, you know, pursue these big engineering technological projects.

There is a sense in which these are two great powers and other countries like puny Canada is not, and that the US and China are the countries that are going to be changing the world.

And when I'm in the us, when I'm in China, I feel like there is just this sense of entrepreneurial hustle.

There's this hunger.

There's people who want to make donuts in a way that the Europeans don't really have anymore.

And so that I think is the big uniting feature between the Chinese and the Americans.

- Look, as a kid that grew up in Boston, time to make the donuts really does resonate with me, right?

But when I hear that people talk about China of late and especially the youth in China, I hear about laying flat.

I don't hear about hustle, I hear about Chinese young people that are less entrepreneurial.

Am I wrong?

- You're not wrong.

But there is also a sense of the American kids who are quiet quitting.

And so, that is just yet another analog here.

I'm speaking to you from San Francisco where there are a lot of youths who have decided to quietly quit.

But there is also a sense of entrepreneurial drive that you can see very visibly in Silicon Valley that you would be able to see very visibly in China that there are electric vehicle makers, there are still all sorts of consumer internet companies, there are still kids starting hedge funds much in the same way that people from Boston might.

And so, I think that there is still quite a lot of entrepreneurial energy where people wanna wake up and smell the donuts.

- There's been a lot of private sector question mark in China over the past 15 years.

To what extent it's okay to get rich, to what extent it's okay to be an individual entrepreneur and to be liked, even loved by Chinese society.

The Jack Ma, out again, back again, but certainly not what he used to be when, you know, young kids would sometimes have his photo up in their rooms, you know, like a rock star.

How clear is it to an entrepreneur in China that the system actually wants them to succeed?

- I think that there are deep uncertainties here.

And can you imagine anything more terrifying than Xi Jinping smothering love as he sometimes greets some of these entrepreneurs?

I think that there is some uncertainty among a lot of entrepreneurs, whether they are going to be still able to pursue all of the activities that makes them get up in the morning, or whether the Communist Party will decide to smash a lot of their businesses as the Communist Party did in 2020 and 2021.

I think there is going to be, I think a lingering sense that if the Chinese economy somehow vastly improves in some sort of a miraculous way, that Xi Jinping won't be up to its own tricks and really try to have smothering love or smack a lot of companies around just because he can.

But here again, Ian, I promised you this last time, I wanna apply, you know, some American equivalents to what's going on in China because you know, President Donald Trump has also treated a lot of tech entrepreneurs with smothering love.

And I feel that Xi Jinping would be a little bit embarrassed and a little bit blushing if he had so many tech leaders organized around him over dinner essentially singing his praises.

And so, you know, here's where you know, Xi goes into the entrepreneurs and you know, gives them blessings upon the head and that is something that Donald Trump is doing as well.

- Well, the fundamental difference of course, and I'm not suggesting that you're saying that one is better or worse, is that in the United States, that smothering love is actually coming with a lot of money from these technology companies that's meant to ensure that the regulatory environment, the tax environment is actually one that they get to write principally, that they get to determine their own regs.

Life under the Chinese Communist Party is very, very different from that perspective.

- There is no doubt.

I think that if you are an elite in Beijing, your life is precarious in much more severe ways than if you're an elite in New York, Boston, DC, San Francisco, wherever else.

That if you are in upper middle class, upper class person in Beijing, maybe you're working in something like finances and Xi Jinping announces as he does last year, that there's a salary cap in the financial sector such that people can't make more than $300,000 a year.

And some who do make over that, then they have to give back some of their back pay.

Entrepreneurs never know if Xi Jinping will smash one of their companies again as he did with online tutoring.

a lot of video games, cryptocurrencies, Jack Ma, you name it.

And if you're in the military party state elite, you never really know if one of your patrons will be felled for corruption, in which case his entire network goes down.

And so, I definitely agree that there is a much greater sense of precarity in China such that even many elites are put off guard and many of them wanna have foreign passports, foreign homes, foreign options, and send their kids abroad as well.

- Now you've lived in China for what, about 10 years total?

- Six years.

- 2017 to 2023.

- Six years.

A long time.

A long time.

And enough to have more than a passing acquaintance.

From that time, from that experience, what's the thing that you would most like to see exported to the United States?

- How about a sense of love of heavy industry manufacturing, a sense that the industrial physical world is really, really important.

I think that there are ways in which China is showing up the United States in all sorts of, let's say public works as well as the manufacturing base.

I'm speaking to you from San Francisco where this is a state that has been trying to build a high-speed rail now for about 17 years.

This is in 2008, California voters approved a referendum to build high-speed rail between San Francisco and Los Angeles.

How many people have taken high-speed rail?

The number is zero and probably for the next 10 years, the number will still be zero between San Francisco and Los Angeles.

The Chinese are able to build a lot of things that meet the material needs of the people, namely homes, namely solar, wind, nuclear, coal plants, roads, bridges, high-speed rail.

I think that really gives people a sense of optimism for the past.

If you are a resident of Shanghai, you're getting new parks on a yearly basis.

You might be getting new subway stations, you might get new high-speed rail connections.

And given that your life has been better and better over the past decade, you also expect the future will be better as well.

And that is something that I want Americans to have as well as a more robust manufacturing base.

- So are you saying that the China dream, as Xi Jinping has put it, is something that even still today really does resonate with the average Chinese citizen?

- I don't know what an average Chinese citizen means.

I don't know what an average American citizen means, but I think for broad swaths of the Chinese public, life is still getting better in pretty crucial ways.

As I said, if you're a resident of Shanghai, you're getting more ways to get around the city.

If you're a resident of Guizhou, which is a province in China's deep southwest, very inaccessible, highly mountainous, China's fourth poorest province.

I spent five days cycling through the southwestern province of Guizhou in the year 2021, Guizhou just now opened the world's tallest bridge.

- It is an extraordinary, the one with the restaurant on top, right?

- [Dan] Restaurant, cafe, dancing hall, arcade.

You know, they- - [Ian] And they built it in four years?

- Built it probably something like that under a heavy debt load.

But they are constructing a lot of these mountain villages that are going to be better connected through these bridges.

And so, I think that, you know, if you are a resident of the urban areas, as well as the countryside, you're getting better infrastructure.

If you're in Guizhou, you're getting tied up with other villages, other towns, perhaps you can take the high-speed rail to Shanghai because Guizhou is tied up into the network.

And so, I think there is still a broad sense in which you're looking at the landscape transform around you and feeling more optimistic about the future.

- So, I think back not so many years ago to the pandemic when of course the Chinese had put Zero-COVID rules in place for the country for far longer than anyone else and with far greater consequence.

They were very, very proud of it.

And then a lot of people got really, really fed up with it.

That seemed to undermine trust.

Was that not so significant or has that been forgotten, washed away in the context of everything else that's happening?

- I think that it was significant and also to some extent it is being forgotten.

So, part of what I write about in my book is that China's a country I described as the engineering state because it is made up of so many elites within the Politburo who have had training in engineering.

They treat the environment as a engineering project.

They build a lot.

They treat the economy as an engineering project by smashing companies or trying to direct investment away from real estate.

They also treat society as a big engineering project.

And so, I spend a lot of time writing about the horrors of the one-child policy as well as Zero-COVID in which it really feels like people are yet another building material that the leadership just wanna tweak and remold, and destroy if necessary.

I think that Zero-COVID is important.

I situate it as one of the several enormous traumas that the Communist Party has visited against the Chinese people over the nearly eight decades of its rule.

I think about the famine that was created by the Great leap forward.

I think about the madness of the cultural revolution.

I think about the brutality of the one-child policy.

- One-child policy, yes, sure.

- As well as the insanity of Zero-COVID.

And I think there are two things that really help people get through Zero-COVID, one of which is alcohol, another is economic growth.

And I think that this is something that the Shanghainese are able to indulge in both and past a certain point, I think people don't really wanna dwell on their national traumas.

The COVID experience in the US also radicalized a lot of people and I think people have to some extent been able to move on in the US just as they have in China.

- And what about the state of China?

I mean the United States in some ways, the headlines overdo the level of dysfunctionality in the US social and political systems, in China they whitewashed them.

I mean, back when I was a student in Soviet Union, of course there was a lot of cynicism about what you'd read in the press and a recognition that you were being lied to constantly.

How aware are young people in China?

How cynical are they about what they're being fed by state news organs?

- I think there is a general level of skepticism about what is going on in the news because the lived experience for many young people has not been excellent for the last few years.

That young people were disproportionately affected by the crackdowns on the consumer internet sector, people working in online education, people working at Jack Ma's companies, either Alibaba or Ant Financial.

A lot of people have suffered through that.

A lot of the people who have started new businesses catering to tourists or other consumers, whether that is some sort of a new cafe, bubble tea shop, some sort of thing in the services industry, a lot of tourism has been smashed.

And I think it is absolutely the case that youth unemployment is pretty high and people are having a hard time finding jobs.

And so, I think that is a question of balance about how people feel about, you know, life is pretty convenient in all sorts of ways in Shanghai.

Perhaps many young Chinese live with their parents, which is culturally much more common in China and the rest of East Asia.

Maybe they are pretty thrilled about getting still new noodle shops that they're able to try, new parks that they're able to try.

But I think, you know, that is balanced with the general unease.

I think the young people who have suffered the most are people involved in some aspect of journalism, some creative types involved in filmmaking, standup comedy in which the regime has gotten much more censorious in the recent past.

I've met many young Chinese who have decided to emigrate.

And so, many of them have felt the strangling chokehold of the sensors in the recent few years and they have decided to take leave of that regime.

- Talk about the US-China relationship for me a little bit, Dan.

Do you think that there is a sense of reality from both sides as to what they are trying to achieve?

- Probably not.

I think reality, asking for reality from within the Communist Party or the White House right now would be stretching.

It would be stretching it a little bit.

I think that the relationship between the US and China is uncertain.

And right now it actually appears relatively friendly against my expectations at least.

I think that is very substantially because right now Donald Trump appears to be the most pro-China member of the White House, which you know, could have gone in a very different way, especially if the trade war unfolded with, you know, 150% tariffs on all Chinese goods.

And I always felt that even when I was living through the first trade war in Beijing, I'd never really felt that Trump really was, you know, antagonistic necessarily towards the Chinese people.

That many Chinese remarked that he usually says great things about China.

His granddaughter, the daughter of Ivanka Trump, has learned Mandarin.

He seems to be much more upset with the Germans and the Japanese, which is very, very strange.

And right now the bromance between Xi and Trump is real.

It seems like there will be state visits in Beijing as well as Washington, D.C.

I'm not especially optimistic that they will, that this relationship will not somehow fall into peril once again.

Because again, throughout the first trade war, the US and China were often at odds, even after they seemed to be really close to making a deal.

So, I'm not sure that this will be all lovey-dovey for a very long time.

- Well, one thing that we know is that Trump is very much opposed to people that can make Trump's life more difficult and Xi Jinping has that capacity in ways that virtually maybe perhaps no other leader on the global stage does.

That's because I mean obviously after Liberation Day, Trump's willingness to escalate against China was also unprecedented, right?

But I mean, so it's not like you were wrong in suggesting that Trump was gonna come out of the gates hot.

It's just that he's backed off very, very substantially.

So perhaps the surprise is that China was willing to be as assertive as quickly this time around compared to in the first term.

- That's right.

I think that especially there was one thing that Beijing did, which was to control the export of rare earth magnets.

- Yeah, the licensing regime.

Yeah.

- That's right.

And defense materials as well as automotives and all sorts of other goods.

But what was really striking to me was still, even though the Chinese were indeed, I agree, pretty aggressive, there was still relative restraint there because I think that rare earth magnets are not China's only chokehold.

There are all sorts of chokeholds available to the Chinese.

I'm thinking about all sorts of electronic products, all sorts of batteries.

- Pharmaceuticals.

- Pharmaceuticals, almost all fermented antibiotics.

Almost all ibuprofen is made in China.

So imagine if they actually had a chokehold over ibuprofen.

Imagine if they had more of a chokehold over all sorts of electronic products.

I think that they only flex but one finger and if they flex more, they could really have put the US economy into a stranglehold.

Perhaps this is one of the reasons that Trump is actually quite nice at the moment.

Dan Wang, thanks for joining us today.

- Thank you very much, Ian.

(ambient music) - And now it's time to visit a land far less organized than China's engineering state, but a lot more funny.

I've got your Puppet Regime.

- Welcome back to me and Xi's podcast, "This Authoritarian Life," where we seek to crush any opposition to our wellness and mental peace.

This week we are joined by friend of podcast, Indian Prime Minister Narendra Modi.

- I am glad to be.

- Friendship is important.

Not every friendship has no limits.

- (chuckles) Facts.

- Take Donald Trump, for example.

He recently sanctioned my oil companies.

- Yeah.

Pretty crazy.

- Like what?

He thinks this will hurt me?

He thinks it's gonna stop you guys, my boys from buying?

(chuckles) But of course it will not.

(clears throat) I said, but of course it will not.

Guys?

- It is complicated.

- Complicated?

Three-day invasion that lasts three years is complicated.

Supporting your friends is not.

- We don't want to get dragged into this legal stuff.

- Legal stuff?

Unbelievable.

And have I ever abandoned friend in need?

(phone trills) - [Maduro] Senor Putin.

Here is Maduro.

- Who?

- Donald, I need your help.

The gringos, they are going to try to kill me, to throw me from a power to shave my mustache, to take my oil.

They think it will be easy like Noriega.

(Maduro speaking in foreign language) They trained the majority of people just to fix no to war.

Just to fix no to- (phone beeps) - Okay, so next week we will be discussing importance of releasing ourselves from those who drain our peace.

♪ Puppet regime ♪ - That's our show this week.

Come back next week.

If you like what you see here or even if you don't, but you have a plan to engineer your own country from the ground up, come share the blueprints with us at gzeromedia.com.

(uptempo jazz music) (uptempo jazz music continues) (uptempo jazz music continues) (uptempo jazz music ends) (uptempo music) - [Announcer] Funding for GZERO World is provided by our lead sponsor, Prologis.

- [Narrator] Every day, all over the world, Prologis helps businesses of all sizes lower their carbon footprint (bright music) and scale their supply chains.

(bright music) With a portfolio of logistics and real estate and an end-to-end solutions platform addressing the critical initiatives of global logistics today.

Learn more at prologis.com - [Announcer] And by.

Cox Enterprises is proud to support GZERO.

Cox is working to create an impact in areas like sustainable agriculture, clean tech, healthcare, and more.

Cox, a family of businesses.

Additional funding provided by Carnegie Corporation of New York.

Koo and Patricia Yuen.

Committed to bridging cultural differences in our communities.

And.

(bright music) (upbeat music)