China Doesn't Need Better Al to Beat America | Stanford China Researcher, Dan Wang

1. 0:00 – 1:26

   Intro

   1. DWDan Wang0:00

      Chinese are, I think, far ahead of the Americans. Last year, the United States built around five ships. China built about fifteen hundred ships. It takes on average five or six years for an American automaker to think of a new model and then release that model onto the streets. In China, the speed of iteration is much closer to eighteen months, moving three times faster than the Americans. Last year, China built about three hundred gigawatts of solar power alone. The US built about thirty gigawatts. China right now has forty nuclear power plants under construction. The United States has zero. Who is going to be a clear winner? Right now, it looks like the US and China are both very intent on losing, both these countries making very big mistakes, self-beatings, and try to hobble themselves. My name is Dan Wang. I am the author of Breakneck: China's Quest to Engineer the Future. I'm also a research fellow at Stanford's Hoover Institution. For six years in China, I was a technology analyst at an economic research firm called Gavekal Dragonomics. And what I was really trained to do was to, uh, think about China through the lens of political economy, um, everything that it wants to achieve, especially in the realm of technology. [pen scribbling] [keyboard clicking]

   2. UHUnknown Host1:25

      OpenAI

2. 1:26 – 6:48

   Does the Future Belong to China? - America's Biggest Mistake

   1. UHUnknown Host1:26

      just launched the most powerful AI model in the world.

   2. DWDan Wang1:28

      Elon Musk announces Grok is the best AI on the planet.

   3. UHUnknown Host1:30

      Google claims their new model outperforms-

   4. DWDan Wang1:32

      Anthropic says they've built the smartest AI ever made. The United States can build and maintain the largest, most powerful, and most advanced AI infrastructure. I think that there's no doubt that the US is ahead of China on artificial intelligence, and the only question is whether the US has a very substantial lead or only a moderate lead. And my view is that the US has, at best, a moderate lead over China, and that it's not so much of a decisive lead. We're sitting here in Silicon Valley, which is very capable of magical thinking. But I think that the Silicon Valley sort of magical thinking does not translate very well to Washington, D.C., which engages in all sorts of magical thinking about how it could out-compete China if it could only have somewhat better artificial intelligence, which could really promote a decisive strategic advantage because, uh, the US will be able to invent super intelligence and the Chinese will not. That is a category of magical thinking which does not seem very compelling to me because they assume that, uh, China will not be able to catch up pretty quickly. Every country is complex, and a country as big as China with about one point four billion people is especially complex. One of the things I really appreciated after spending years living in China was just how different its three main economic hubs feel. Beijing was a city that, uh, we in Shanghai called Western Pyongyang because it is just so centralized. It is so Stalinist, defining the political system. See so much of these concrete buildings with these dust storms. Uh, Shanghai, which is much more of a commercial hub. In Shanghai, we refer to ourselves as the Paris of the East, much more designed by the French with these leafy boulevards, cafe-lined streets, uh, much better weather. The southwest, which is much more defined by regional beauty, a lot of different mountains, very distinct personalities, amazing ethnic diversity. And that is something, um, in which China is, uh, somewhat similar to the United States, where we're speaking from the San Francisco Bay Area. It is very, very different from New York City, which is still very, very different from Texas, which is different from Washington, D.C. That's something that really brings to mind the differences, uh, between China as well. I think that the Chinese economy is incredibly competitive, and my view is that if you're selling any products, China is the most competitive economic system, uh, in the world. By most indications, it looks like China is, in fact, far ahead of the United States because what we have seen with, uh, the Chinese companies is that they have actually produced a lot of excellent models in spite of pretty substantial export controls that the US government has asserted by now close to a decade on some of China's leading firms. And China has produced a lot of models which are not substantially behind a lot of the American alternatives. The Chinese companies are producing open source, uh, models. They seem to be more cheaply run. If we're taking a look at some of these particular video generation models coming out of China, they seem to be maybe even ahead of the United States. If we look a little bit beyond just who is making the best models right now, well, it doesn't look to me like China is substantially behind at all. What is far more important, perhaps in the next few years as we start to deploy AI, is that China is just vastly outbuilding the United States in electrical power. So China is building so much more coal, so much more nuclear, so much more solar and wind than the United States. Last year, China built about three hundred gigawatts of solar power alone. The US built about thirty gigawatts. China right now has forty nuclear power plants under construction. The United States has zero. China is made up of some of the most advanced factories in the world today. What they have are these, uh, things that they refer to as dark factories. Essentially, it is dark because most of the lights are off because you hardly need any human workers, in which everything is very well automated. But it is not just these dark factories that matter so much. I think that we don't have to take a look at these glistening, most advanced factories. What really defines the backbone of Chinese manufacturing are the broader masses of factories that are able to make iPhones, consumer electronics, electric vehicles, and their batteries, in which the Chinese are, I think, far ahead of the Americans in terms of all sorts of, uh, manufactured products. China has these very well-developed production ecosystems. So for any part that you care to name, all of these factories, whether it's batteries, whether it's sensors, they're all right next to each other, in which the factory managers can just go next door and have another part. China has these dense networks of, uh, workers. It's about seventy million workers in manufacturing. So you have, uh, mass workers. You have medium-skilled workers. You have very high-skilled engineers, or probably the most skilled engineers in the world today. These sort of disparities, um, can become a little bit scary. When you combine all of these sort of things, I'm not sure if this is much less valuable than the US, which is able to build more sophisticated models by every measure. But how much is that greater sophistication, uh, really, really worth? I'm not sure I would trade it for a much more vibrant industrial manufacturing ecosystem.

3. 6:48 – 11:32

   The Dark Side of the Engineering State

   1. DWDan Wang6:49

      China's leadership is made up of a lot of engineers, and for the most part, I think that the engineers have done a good job in terms of promoting physical dynamism in the country. If you are growing up in China, probably, uh, twenty years ago, your city had no subway lines, and now you can have maybe a thousand, maybe two thousand subway lines to get around. China built its very first high-speed rail system about fifteen years ago, and now it has about twice as many high-speed rail lines as the, uh, rest of the world combined. And so having the sort of really tall bridges that connect villages, having subways, rail, electrical power, a manufacturing base, these are all good things that the engineering state has been able to produce. But there is a problem with the engineering state. I think the fundamental problem with country made up of engineers is that they cannot stop themselves from entering social engineering, from entering population engineering, from stopping themselves from treating the population as yet another building material to be torn down and remolded as they wish. Especially, uh, something like the one-child policy in which the Chinese leadership really believed in the Western doomerism of the 1970s that there were these mathematical formulas that determined the optimal population. All countries had to reduce the population as much as possible so that the environmental carrying capacity could be maintained, and all of these calculations were bunk. But the Chinese took it a little bit too seriously. They involved a missile scientist by the name of Song Jian to really get into the ears of the leadership and offer the mathematical justification for something as brutal as the one-child policy, which eventually involved, over thirty-five years, around, uh, three hundred million abortions, as well as a hundred million sterilizations of women. This was something that I think of as a campaign of rural terror that ran throughout the countryside. This is the problem when you have a leadership that does not respect [camera clicking] . Living in China produces all sorts of new adventures. One of the unexpected things in terms of the geopolitical competition was that my personal website, danwang.co, where I publish my annual letters, uh, was blocked one day in the spring of twenty twenty-two. This is a very small casualty of twenty twenty-two, but I was a little bit surprised to see that my rinky-dink website, which is hardly as big as Facebook or Wikipedia or The Wall Street Journal, um, ought to be blocked as well. But this is the, uh, sort of information environment that people in China simply have to deal with, in which if one sends a message on WeChat to, uh, someone else in China, they may not have received it because the state and the censors inside, uh, Tencent have already decided to block it already, that the state has, uh, already shuttered most journalism, most independent journalism in China. There are some very strict controls in the information ecosystem in China. Many people are aware of the censorship apparatus, and there has been this, uh, wonderful analogy produced by a professor named Perry Link, and this metaphor of an anaconda in a chandelier. So imagine if all of us are sitting around a, a dinner table with a, a chandelier above us, and inside the chandelier is this giant anaconda that is just coiled there. That is a lot of what the censorship apparatus feels like. None of us need to fear for the anaconda to emerge and strangle one of us. All we just have to do is to know that there's an anaconda hanging there that might come down, uh, might not, and that is enough to intimidate and introduce fear in a lot of people. And I think that this is one of these things in China's information ecosystem, where you never really know when the anaconda might come down before people automatically self-censor. And I think that sort of attitude is corrosive to aspects of creative thinking in China. Now, one of my determinations as a writer has been not to be intimidated by whatever are the machinations in China and to just tell the truth as best as I can. Within China, talking about what I saw were some spectacular achievements around manufacturing as well as public works, at the same time as acknowledging that the Communist Party made these pretty grave mistakes, as I saw it, during the zero COVID, uh, program. I think it was really important for us to just be able to see, uh, both of these things. And I think that it is really important for all of us who value independent thinking, critical thinking not to be too given into that and not to allow censorship, uh, inflict our consciousness too much.

4. 11:32 – 16:01

   Winning by Losing Less

   1. DWDan Wang11:33

      [typing] Who is going to be a clear winner? Right now, it looks like the US and China are both very intent on losing, and both of these countries have this remarkable skill in delivering self-beatings and try to hobble themselves in this, uh, very big race. Now, my model of the US-China competition is that whichever country is ahead is going to make mistakes out of overconfidence and hubris, and whichever country is behind is going to really feel the crack of the whip in order to really catch up. And I am suspicious of any argument that says that China must win because of manufacturing or China must lose because of demographics. I think that both these countries have a lot of strengths and that this is a dynamic process in which both countries are gonna try to run faster. I was living in China in twenty twenty-one when top leader Xi Jinping decided to have a controlled demolition of the property sector, as well as smack around a lot of tech entrepreneurs, most notably Jack Ma, because he felt that he was in a very good spot after managing COVID very, very well. And actually, what we've seen is that this property slowdown, this smacking around of tech entrepreneurs, has been exactly the problem of the cause of a lot of China's economic problems today. So the US felt like it was ahead for a little while. And, uh, what did it do? President Trump is now doing what President Trump is doing, namely eroding a lot of alliances that the US has had with these tariffs, uh, deindustrializing America. Under, uh, Trump's first term, the US has lost about eighty thousand manufacturing jobs, and President Donald Trump has done these pretty hurtful things to US manufacturing. One of the most hurtful was last year when the Department of Homeland Security deported around three hundred South Korean engineers from the state of Georgia who were working at a Hyundai plant trying to build electric vehicle batteries. And I think this was not a pleasant experience for the engineers. I think that this did not look good to much of the rest of the world, such that if I were an engineer in France or Taiwan or South Korea, maybe I will have some doubts about whether I wanna take a job in Georgia in the future, or Alabama in the future, or Texas in the future. And so what we see are both these countries making very big mistakes, and I think the country will go to the one that stops making so many of these mistakes. I think one of these challenges with China is that it could do much better if the Communist Party could just learn to be a little bit more restrained and do a little bit less, and try less to be these intense social engineers, to be engineers of the soul. At the same time, the United States could do much, much better if it were not so intent on trying to have these very strange fig- political figures that have also been beating up on America's allies on the home front as well. So my message to both of these countries is, "Do less, please." I think a decade from now, the label of Made in China is going to be viewed as excellent quality in the way that Made in Germany, Made in Japan has been viewed as excellent quality. I think over the next 10 years, the future of manufacturing is going to move more and more towards China. Silicon Valley founders have been some of the most inspirational, hardest-working, most ambitious people, uh, ever in history, and they have been rewarded for it by driving a lot of economic value. But I would say that Silicon Valley has not necessarily delivered value throughout the rest of the country, in which feels that, uh, the entrepreneurs in California are very, very different from that. That's not usually Silicon Valley's fault. That is the fault of the San Francisco government, the California government, the American government, which have not been able to deliver some of these basic services that people want, like orderly streets that are clean, that do not have too much crime, in which people feel that they can have affordable housing, in which they feel that they are living in a, a growing, thriving country. Instead, the California government has driven a lot of people away from the state of California. Net outmigration from California, especially to states like Texas and Arizona, have been pretty considerable. So there are all sorts of, uh, deficiencies with the US, and I hope that the Silicon Valley founders can also think a little bit more broadly, um, and be supported by the politicians, and deliver these benefits to ordinary Americans who don't always feel that they are very well connected to some of these, uh, strange people here in Silicon Valley.

5. 16:01 – 16:47

   Next Episode

   1. UHUnknown Host16:01

      If we look at within companies and we compare jobs that are more exposed to AI versus less exposed to AI, we're seeing that the jobs that are more exposed to AI, the young workers in those jobs are seeing 16% slower employment growth. So that's pretty large. It's actually high-income jobs because they do the ki- kind of knowledge work that AI is more capable of doing right now. We're not gonna be in a world where there's no AI. That- we're just not going back to that. That's not gonna be what's happening going forward. But I also think that's an enormous opportunity. So whether you're more automated or augmented really depends on what are the tasks that you're focusing on. Are you increasing the scope of tasks that you can do, or are your tasks getting shrunk by the introduction of this technology? [upbeat music]

Episode duration: 16:56