Why the World Keeps Getting Shocked by China's Technological Progress

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1:13Hello and welcome to another episode of the Odd Lots podcast. I'm Joe Weisenthal. And I'm Tracy Alloway. Tracy, we talk a lot about the tech competition between the U.S. and China, but I still think we talk about it in sort of broad strokes. We talk about some of the policies obviously made in 2025, but actually how the process of tech innovation in China still seems like important. There's more to learn about there. I totally agree. And actually, we have a really good example recently in the form of DeepSeek. And this thing that people acted like it came out of nowhere, but actually a lot of the papers had been published over the course of months.

1:54But it seemed to surprise everyone, right? I don't know if it's true. You know, the story that, oh, it's just this side project of a quantitative hedge fund. Like, that's such a good story. I'm not entirely sure if that's true. And they made it so like, oh, yeah, while they were doing this quant fund, they built DeepSeek on the side. Like, it's such an alluring story. Well, not just a quant hedge fund. Isn't the story supposedly that the founder decided to go into AI after Xi Jinping was kind of complaining about how much talent and resources is being wasted on finance in various ways? I've heard that.

2:29People like these are like great stories, right? And of course, there is a lot of truth to them in the particularly in the broad sense that we know that and we talked about this at the time several years ago. There was this sort of announced hard pivot away from the sort of like consumer Internet tech and they sort of had their legs cut out from under them towards these more like serious capital T tech. Hardware. hardware, AI, things like that, things that have like more stakes than say social networking or something like that. So like, how do you actually do that though? How do you actually like direct talent in certain ways?

3:07You know, I think that if president Trump came out tomorrow and said, we want people to, and he has actually talked about this, but then we want to do more hard tech. I don't think there's like a real easy, straightforward mechanism. And so how do you transmit certain ambitions into the actual landscape. I think there's more to be learned on that. Well, I think also we in America are very used to thinking about technology as this very creative process and the outcome of Jeff Bezos working in his garage or something like that. And it's hard to imagine often the same environment existing in China.

3:42I think that's just like a cultural difference perhaps between Americans and Chinese. So we should talk about it. Totally. Well, I'm really excited to say we are going to be talking to one of the best China watchers there is who has a lot of interesting thoughts on this topic, someone we've never had on the podcast. We're going to be speaking with Kaiser Kuo. He is the host of the Seneca podcast, which has been around since 2010. Wow. Yeah, we've been doing this for about a little less than 10 years. So it's very impressive, this sort of longevity. Someone who spent a lot of time in China splits his time between the U.S.

4:15and China, lived there for several years. Kaiser, thank you so much for coming on OutLots. Hi, Joe. And hey, Tracy. This is a huge honor for me. Thanks so much for having me. Thank you for coming on. What is the Seneca podcast? What has been your project in the last 15 years? Yeah, so Seneca is an hour long or sometimes much longer interview format show. We bring on academics and policymakers occasionally. I've had a number of the former assistant secretaries of state for East Asia Pacific on, have had ambassadors and so forth on. But it's changed initially. It initially started off as being sort of more, here's what's in the news, and here's a couple of people who can talk about it intelligently, having to do with China.

4:56Since 2016, when I moved to the States, the focus has really been on U.S.-China relations, and it's got more American guests on than previously were. But we tackle everything under the sun. I mean, U.S.-China relations, China-India, China-Russia, China-India, China, what have you. And the Chinese macroeconomy, technology, lots on technology and culture. But the idea is that it's supposed to look at the way that we think and talk about China now. It's really evolved into something which I think has a longer shelf life. Wait, why did you decide to start it? Because you were in a band, right? That was your main gig.

5:34Yeah, that's correct. something that for some reason everyone knows about me. I transitioned. I went out. I left that band in 1999. And like other people who didn't have many marketable skills, I went into the internet. Into podcasting. Well, not right away. I mean, I worked for internet companies for a number of years. And I worked as a reporter for quite a number of years. And then in 2010, it was just sort of on a lark. I was about to start a job at Baidu as their head of international comms. And a very good friend of mine in Beijing, we got into a conversation about what podcasts we were listening to.

6:10And I said, oh, you know, the usual, This American Life and Radiolab and whatnot. And he had a few. And then we just sort of said, why don't we start a podcast? We're both talkers. We both know everybody. Let's just do one and see what happens. And we did. And it took off. It did pretty well. We got acquired in 2016, right around the time I was moving to the States. and the company that bought us folded in 2023. And I just sort of struck out on my own doing a sub stack and I've stuck with it, managed to find a little bit of support and those few and hopefully after this more subscribers. But we're continuing to put them out every week.

6:47It's just me solo, but it's a group effort. I'm in a band. I'm trying to go the other direction. I have a country music band and maybe one day I'll leave podcasting behind. No, no, no. I'm never going to leave podcasting behind. You know, I'm actually not going to leave podcasting, but I've gone back into it. My old band reformed when I was back in China recently. Are you on Spotify? As of this summer. We are. Yeah, you can look up Chunqiu, C-H-U-N-Q-I-U. You've got to put a space in between them for some reason, but it's spring and autumn in English. I'm going to start with like a really super broad-based question that is not even really.

7:22It's probably a full hour long or two hour long episode. But in your years of covering China from a journalistic perspective, or at least from a sort of conversational perspective, and watching American media or American pundits talk about China, is there like a persistent blind spot or a thing that stands out to you as something that people talk about China that does not accord with your experience of having lived there and having reported on it yourself? There's so many. I don't even know where to start. I guess the one that I would usually focus on. I mean, it's a whole cluster of issues that are related to this.

7:58But I think that people aren't mindful of just how compressed and how rapid China's transformation has been. What has happened in the course of one working lifetime? I mean, I like to tell people that if you can imagine graduating junior high or high school in 1979 on the eve of reform and opening, and then 40 years later at the end of your life, the end of your working life, you're thinking about retiring and you've seen the per capita GDP go from about$175 at the beginning of your working life to almost$13 ,000 now. That transformation is just profound and it's just so quick. So I think that what people get wrong is that they don't see that the hardware that's visibly advanced has done so just at a much faster pace than the software.

8:47People don't change overnight. I mean, I liken to that movie. I don't know, Joe, if you or Tracy have seen Big with Tom Hanks. I watched it a month ago with my kids. Keep going. Yeah, great movie. It's actually aged well. But, you know, Tom Hanks makes a wish and goes to bed at what? He's like 11 and he wakes up and he's in his 30s, right? I mean, that's kind of China, right? It's like the mind is still out of that 11-year-old in a lot of ways, but it's in the body of the 30s. So we look at this fully grown adult and expect it to behave as a fully grown adult. That's what people get wrong. You know how I measure China's technological progress?

9:25Go on. So I remember in the early 2000s, I was on a trip in the countryside and I experienced one of the worst toilets I've ever experienced in my entire life. Like basically just a hole in the ground. And then I went back in 2019 to Beijing and I went to one of the nicest bathrooms that I've ever been in, in like a luxury shopping mall. And I thought, wow, things have changed. Yeah, yeah. That's a good measure. It's a good proxy. Yeah, I should do that all the time. Okay. So I guess I'll just jump into the technology aspect of this. But does technology come from a different place in China versus the U.S.?

10:08Kind of getting back to the intro, there's a sense in America that technology is the product of freedom and creativity. And you have the ability to start a new company in your garage. Whereas in China, maybe there's a different sense of how tech actually gets started. Yeah. So there is that American myth about the lone genius toiling in security in his garage, either in Menlo Park, New Jersey or Menlo Park, California. Right. I think there's some of that, definitely that mythology in China, but I think the reality is very, very different. I think China does place a premium on that kind of ex-Nilo, kind of from scratch, zero to one innovation.

10:49But I think it places more of a premium on the scaling up of technology and the diffusion of technology in a way that I think the American mythology has sort of blinded us to. Yeah, we're constantly caught off guard by Chinese technological advances. I think we keep seeing this tech momentum despite all the decoupling, despite the chip bans, in spite of all the economic headwinds that China is obviously facing. And I think that the reasons are pretty deep. They're actually societal and even cultural. So I think that gets to part of the way that technology is conceived of in China. You'll find pockets, of course, in America where people are still really, really techno-optimistic.

11:32They're still very solutionist. They're still very accelerationist, right? But it's incredibly common in China, whereas it's only here in pockets. I think American society now, and I think the West more broadly, has for some time now had a fear. If you look at our science fiction, if you look at the way technology is thought about broadly in society, there's real anxiety over it, right? Our leading technologists, our leading natural scientists talk all the time about the existential threat that AI poses. I don't want to diminish that threat, but I have to say that in China, you just do not hear that conversation, certainly not nearly as frequently and not coming from the leading technologists themselves.

12:16So it's very different. Why is it different? You know, I'm thinking about your big analogy, actually. I'm going to extend the metaphor a little bit too far. But, you know, my phone, I have a love-hate relationship with my phone. I'm on it all the time, but I also think it's doing significant damage to my mental health. Whereas if I were to like, you know, my daughter wants a phone and if I were to give her one, she would probably be thrilled for a long time. I'm not going to let her have a phone for a long time, but she would be like thrilled. And they're like, this is an incredible addition to my life that she would be very excited about again.

12:48Do people have the same love-hate relationships with gadgets and new technologies that we seem to have here? I mean, there are some people, of course, who have anxieties over it. But no, I think broadly speaking, you know, when I've sat on the sidelines of a soccer game watching our kids play and I'm trying to talk to the other parent about how they limit screen time. He's there scrolling on his device going, wait, hang on a second. Let me answer this email. What were you saying just now about screen time? What? I mean, it's like the question doesn't compute. They don't see it as such a threat.

13:19I mean, part of that, of course, is because the social media environment in China is a lot more sanitized. There isn't the threat that Junior is going to be scrolling porn all day, right? That's part of it. But I think really more to the point is that for these many years now, ordinary Chinese people have seen their lives, their material lives, just improve pretty much in lockstep with the quality of the technology they have in their hand or in their purse or in their pocket, right? Their bandwidth at home, how fast their network speed is and how powerful their handheld device is basically tracked with their livelihood, right?

14:00So there's not that reason for suspicion. Now, that isn't to say that everyone in China has experienced this, certainly not. But I think for the vast majority, and not just of urbanites, but the vast majority of people have seen this correlation. Wait, but there is some negative feeling towards some technology in China. And I'm thinking specifically of Xi Jinping and his big crackdown on consumer online tech. And he's not a fan of video games precisely because he thinks it's a waste of time and kids are staring at the screen too much. So there is an element of that. That also tracks with the Chinese parent thing, right?

14:38They all want us to be really good on computers, but not to waste our time playing video games or just chatting up people. Yeah, I think you were saying in your intro, and I thought that was really interesting, how Donald Trump, he wouldn't be able to just simply order everyone, the physicists, to start doing physics and not go work for quantitative hedge funds. In China, he kind of can. It's not, I mean, again, that's an exaggeration. There isn't a way, I mean, there are still plenty of people who go to school and study the social sciences or who graduate with engineering degrees and then go to work for a major social media company or go to work designing complicated financial derivatives or whatever.

15:15But he doesn't like that. He thinks that that's been one of the pathologies of the United States is that it's over-financialized and that our best and brightest here in the US have gone to work for these companies that basically don't make anything and just suck a lot of people's time and create polarization in the country. So they're worried about that. And they have more wherewithal to direct people. It's not coercive, though. Let me be clear about that. they have ways to incentivize it. And I think that this, again, this is part of the popular culture. There's all sorts of reasons. I mean, we can start at the top.

15:48If you look at the composition of the Chinese leadership, I mean, what do we have in Congress? Who do we have heading major agencies? It's almost all lawyers, people with legal training. And that's good in a country that really prizes rule of law. And it's good for many reasons. But in China, the analogy is that you look at the senior leadership. If you look at, who runs the provinces, whether the party or the state. You look at who are the mayors or the party secretaries of cities of a million people or more. And you're almost all going to find engineers. They're going to be like 70, 80 % engineers.

16:22If the ladder of success, if the people who are top it all did one thing in common, they did a four-year degree in the natural sciences or in engineering, there's a good chance that you're going to tell your kids to do the same, or your kid is the case maybe, yeah, to do the same. So I think there's a lot of pressure that way in terms just of social mobility and in terms of what the perceived path of mobility is. By the way, this point about engineers and lawyers, regular odd law guest Dan Wong has a book coming out August 26th, 2025. It's up for sale on Amazon right now. You can pre-ordered about exactly this dimension of a sort of lawyer society versus an engineering society.

17:08I'm looking forward to reading that. I'm looking forward to having Dan. Yeah, Dan Wong is great. So I interviewed him for this Nova documentary that I did called Inside China's Tech Boom. And the whole thesis of it was really, I mean, in many ways inspired by some of Dan's ideas about the importance of process knowledge, how the fact that China has not stopped manufacturing. There was never a maker's movement in China because there didn't need to be one. They're always making stuff, right? The fact that they still have all the hardware there, it creates this sort of frictionless ecosystem of innovation where, you know, if you're a guy with an idea for some gadget and you're in Shenzhen, you can have your designer just send you over on WeChat his latest design.

17:50You can take it to your ODM, which is just a quick bike ride down the street. They can have you a prototype by the afternoon. You can make some tweaks and iterate and they'll just keep changing the thing overnight. And it's practically frictionless. And I think that's a huge piece of China's innovation success as well. But what happens when Xi Jinping comes out and says, you know what, we're not as into social networking anymore. We're not as into video games. We really want to focus on other areas of hard tech, important tech, something like that. What is the process of here is this national priority and then the transmission and diffusion of these priorities into choices that maybe students make or technologists make?

18:32That's a great question. I think it's actually one that I can answer with three letters, KPI, right? What happens when you have these kind of abstract directives, the will of the leader from on high, is that they get translated not into specific policies, not right away, certainly, but into this expectation set, you know, from the leadership on down that this is how I'm going to score my brownie points. This is how I am going to get promoted within the party is if I tick these boxes, if I do these things, let's say, you know, we decide that the thing is we all need to have data centers. So suddenly every municipality in every province is going to want to build data centers.

19:13They're going to fight each other for it. They're going to figure out, here's the best place for us to build ours, and here's all this money that we're going to put into that. I mean, they're going to want to tick that box. This is the sort of the way that everything gets done in China. When recently, when Xi Jinping announced that there were going to be – and this is a directive that came not out of just the state council but out of the party as well, that they were going to boost consumption. A lot of people just sort of sneered and said, yeah, I don't see a lot of policy here in place to do that.

19:40But you can bet your bottom dollar that everyone on down, they took this very, very seriously. And they're all figuring out ways where in their little patch of dirt, they are going to figure out how we can boost consumption. Because that's the way that I'm going to get promoted. They did the same thing with cleaning up air pollution. They do the same thing with cleaning up rivers. They make it part of your KPI. That's what they're going to do with this as well. That's what they did. I mean, the question that you asked about how they made sure these physicists were doing physics, it's much the same.

20:12There's also, I feel, like a sense of clarity in some of these policy directives. So China very often explicitly will say where it's investing, right? So when we had the consumer tech crackdown, it came with a simultaneous announcement that everyone should go into hardware, basically. And we saw that repeated in various ways. I remember Chairman Rabbit was tweeting that people should go to the industries that actually fit the central government's general policies. So I feel like it's just very clear as well. And the messaging is kind of on point. We have a word in Chinese, fengko, which literally means sort of wind mouth.

20:56It's the place where the wind will be blowing. It's like that little wind tunnel. And they telegraph that. They tell you well in advance, here is where we're going to do this in the 14th five-year plan, this in the 15th five-year plan. They say exactly which industries are going to not only receive a lot of government investment, but where the paths are going to be cleared. There's going to be removal of a lot of regulatory hurdles. There's going to be favorable policy for you if you get into this. And if you're an investor, that's where you're going to put your money. That's what you're going to do.

21:29You're going to – it doesn't take a genius. You need to read the important documents and you figure out exactly what their priorities are. Just as you say, there's that clarity.

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22:53Easy Cater, your business tool for food. To learn more, visit easycater.com slash podcast. I have to admit, you know, like when I read, say, a Xi Jinping speech translated into English, or maybe I just have a Chai Chupiti translated, like there is often not a lot of like specifics or arguably even substance in them. There's a lot of like really sort of high level grand things. But this sort of makes sense. Now, granted, the leaders around the world often don't get into a lot of specifics, but it makes a little bit more sense to me in the context of, OK, these priorities are announced and immediately on down, I have to imagine provincial leaders, leaders of school systems, universities, then immediately get the message that their futures and their success and their careers will be about who can show the best results on what maybe sounds like some sort of vague priority.

23:52And you're missing the biggest piece of it, which is parents. Oh, interesting. They're getting this message as well. They're the ones who are ultimately deciding, no, you're not going to be an intellectual historian. You're going to study, yeah, no, you're going to study engineering physics. Sorry, buddy. Because you're going to get a job at Tencent or at BYD or at Huawei when you graduate. Yeah. So I think that's the important thing. A friend of mine once joked that a lot of people in the West have a great deal of difficulty imagining how the leader of an authoritarian nation can do all these things that seem so apparently cruel, arbitrary, but actually have your best interests in mind.

24:32But for anyone who grew up with Chinese parents, they know exactly how that works. Wait, so just on the authoritarian point, I know you touched on this already, but just to press on this, would you say authoritarianism is a net positive or a net negative for technological development? I think it's a wash in most ways. I mean, look, maybe this is my upbringing talking, but I am not willing to discard the idea that a lack of intellectual freedom, of academic freedom, of freedom to query and to experiment without any ideological fetters, that if you don't have that, in the long run, you are hobbled.

25:10I think that's probably still the case. But I think in America, we've taken it too far. We have this idea. I mean, do you remember back in 2013, 2014, when Joe Biden and even Carly Fiorina, who really ought to have known better. I mean, she was the CEO of a major technology company. They were going around and they were making these speeches. You know, Biden was making these graduation speeches. Fiorina was on the campaign trail. And she was talking about, and Biden was talking about, they said the same talking point. It's like, show me one thing that China's ever innovated. You know, as long as we have freedom, we will always be in the lead of innovation.