Leslie Hannah, an eminent business historian, has shown how the ‘rationalisation’ of industry, which was favoured by the British Government (represented by the Bank of England), set the stage for the new ‘corporate economy’ which would characterise Britain for decades. The 1920s saw the creation by merger of ICI (chemicals), the Distillers Company (Scotch whisky) and Unilever (soap and margarine). A similar wave of mergers in Germany established IG Farben and Vereinigte Stahlwerke as the dominant chemical and steel producers respectively. (Both these companies were dissolved by the victorious Allies in 1945.)

As the United States lost its enthusiasm for engineers, China embraced engineering in all its dimensions. Its leaders aren’t only civil or electrical engineers. They are, fundamentally, social engineers. Emperors didn’t hesitate to entirely restructure a person's relationship to the land, ordering mass migration into newly opened territories and conscripting the people to build great walls or grand canals. Modern rulers are here, too, far more ambitious than the emperors of the past. The Soviet Union inspired many of Beijing’s leaders with a love of heavy industry and an enthusiasm to become engineers of the soul— a phrase from Joseph Staling repeated by Xi Jinping— heaving China’s population into modernity and then some.

But is has had, at best, a surface-level understanding of its success. Silvia Lindtner, a professor at the University of Michigan and my wife, has spent more than a decade studying Shenzhen’s technology ecosystems. In 2015, the Austrian government asked her how to create a Shenzhen in the Alps; in 2016, the White House invited her to present on how the United States might learn from the success of Shenzhen. She has felt, as I do, that these agencies misunderstood the point of Shenzhen. They were still more interested in individual inventors rather than understanding it as a community of engineering practice. The obsession with invention has clouded Silicon Valley’s ability to appreciate China’s actual strength. Rather than seeing tools and blueprints as the ultimate ends of technological progress, I believe we should view them as milestones in the training of better scientists and manufacturers. Viewing technology as people and process knowledge isn’t only more accurate; it also empowers our sense of agency to control the technologies we are producing.

Xi has forcefully reminded China’s tech companies that they cannot represent a power center that challenges the state’s sovereignty. It was, in other words, an attempt to change the cultural mindset of companies. The Communist Party reminded them that it retains the discretionary power to engineer all aspects of society, which means putting tech companies in their place.

There might be something to be said for this sort of approach. What if, say, the US government had responded to the 2008 financial crisis by reshaping Wall Street’s risk management culture rather than engaging in the endless negotiations that yielded a 2,300-page statute that nobody understands? But Xi’s attempt to achieve cultural change has left people disgruntled and whole industries disfigured.

The trouble with Xi Jinping is that he is perhaps 60 percent correct on everything. He’s driving toward a usually admirable long-term goal. But in the name of achieving change, the engineering state delivers such beatings on people or industries that they are unable to pick themselves back up again. Even if Xi’s judgments are right, his brute-force solutions reliably worsen things. Does big tech have too much power? Fine, but stomping out their businesses has traumatized entrepreneurs. Are housing developers taking on too much debt? Yes, but driving many of them toward default subsequently triggered a collapse in homebuyer confidence, prolonging a property slump. Does the government need to rein in corruption? Definitely, but Xi has terrorized the bureaucracy to the point of paralysis.

The engineering state still has many strengths. There is one thing I haven’t changed my mind about since 2017: I remain more confident than ever that China will become a technological leader in manufacturing industries.

Marxists like to reason through contradictions. What is the central contradiction facing China? I submit that we must reconcile two realities when we read the headlines. First, the rich, the creative, and the desperate have chosen to rùn from the economic and political gloom that pervades Xi’s third term. Second, the manufacturing sector continues to go from strength to strength in the mastery of electric vehicles, clean technology, and other advanced technologies.

How might they be reconciled? With the idea of the engineering state.