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Breakneck— Dan Wang

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Introduction

Drive around America and China, on the other hand, and you’ll see people and places that are utterly deranged. That’s not a reproach. These two countries are messy in part because they are both engines for global change.

I’ve come to realize that there are many way that China and the United States are inversions of each other. Households save a great deal of their earnings in China, while it is really easy to borrow money or spend on credit in America. In terms of national policy, China is much more focused on the supply side of the economy: It suppresses consumption as it favours manufacturers with preferential financing and all manner of policy support. The United States, meanwhile, is focused on regulating demand, for example, by imposing rent control in expensive cities or mailing out checks to consumers during the pandemic.

Even if the United States is able to outclass China in diplomacy, finance, and innovation, the contest between these two great powers is going to be close if the United States can't build anything in the physical world.

The strongest wind in China’s sails is the entrenched technological workforce that preserves process knowledge that I wrote about in Chapter 3 on tech power. Though 50 percent of China’s economy might be dysfunctional, 5 percent is doing superbly well (an approximation I borrow from Greg Ip at the Wall Street Journal).

Sometimes I think that the United States’ tech competition with China— chaotic policymaking under Trump, porous implementation under Biden— has ended up in the worst of all worlds. These restrictions have scorched China’s most dynamic companies without killing them, which riles them up to break free of American restrictions.

As relations between the United States and China become more hostile, the chances of conflict grow. The United States is facing a peer competitor that has four times its population, an economy with considerable dynamic potential, and a manufacturing sector that can substantially counter produce itself and its allies. If China and the United States ever come to blows, they would be entering a conflagration with different strengths. Which would you rather have: software or hardware?