The Chinese state builds gleaming public works and doesn’t flinch from locking up ethnic minorities or locking down whole cities. Too many outsiders see only the enrichment or the repression. Living there puts you face to face with both a sustained rise in living standards and authoritarian pulses emanating out of Beijing. It became no contradiction for me to appreciate the things that are getting better and getting worse. I saw how China is made up of both strong entrepreneurs and a strong government, with a state that both moves fast and breaks things and moves fast and breaks people.

Never mind that China has gotten less growth from each unit of new investment since its big infrastructure binge of 2008. The Communist Party continues to build because it’s full of engineers and also because Marxist-Leninists don’t want to cede economic agency to the people.

China would be better off if it built less and built better. But we should also resist judging it by the standards of the United States, which is frankly underprovisioned in public infrastructure. Because there is perhaps one thing worse than an overactive state that can’t stop moving— and that is a state that can’t move at all.

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.

Throughout this book, I’ve avoided calling Xi’s regulatory storm a “tech crackdown.” While disciplining digital platforms and the real virtual economy with one hand, Beijing has with its other dispensed favour to harder technologies like semiconductors. Xi was trying to reorient technology companies to be less focused on virtual or financial innovation, and for the best and brightest from Tsinghua and Peking Universities to work in strategic industries instead.

Underlying Beijing’s actions against digital platforms is a suspicion that tremendously profitable digital companies are not producing value for the rest of society. Entrepreneurial dynamism in online education, social media, or fintech are producing various forms of social harm. The virtual economy, including cryptocurrencies and the metaverse, sucked up too much talent and money. Xi and the rest of the Politburo were discomfited that the cutting edge of the economy seemed to have been driven by the vagaries of investors rather than the interests of the state.